TMI Blog2018 (3) TMI 1984X X X X Extracts X X X X X X X X Extracts X X X X ..... ACIT Vs. Mahalaxmi Infraprojects Ltd. [ 2018 (1) TMI 1103 - ITAT PUNE ] had allowed the aforesaid claim of deduction under section 80IA(4) of the Act in the case of assessee engaged in executing infrastructure projects. Following the same line of reasoning, we hold the assessee to be eligible to claim the aforesaid deduction under section 80IA(4) of the Act. Claiming the deduction u/s 80IA(4) on the additional income offered by the assessee on account of wages - Applying the ratio laid down in CIT Vs. (1) Continental Warehousing Corporation (Nhava Sheva) Ltd. and All Cargo Global Logistics Ltd. [ 2015 (5) TMI 656 - BOMBAY HIGH COURT ] and the ratio laid down in Shri Gajendra D. Pawar [ 2017 (10) TMI 1299 - ITAT PUNE ] we hold that the assessee is not entitled to the claim of deduction under section 80IA(4) of the Act both on original income and on additional income offered, even if the assessee in principle is entitled to claim the aforesaid deduction. We hold that in the years, where the assessment had not been abated, the assessee could not make any fresh claim of deduction under section 80IA(4) of the Act, even if in principle the assessee was entitled to claim the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T(A) has erred in relying on the decision in the case of CIT vs. ABG Heavy Industries Ltd. (2010) (322 ITR 323) (Bom.) when facts of the case are different. 4. On the facts and in the circumstances of the case, the CIT(A) has erred in facts in ignoring the instruction No.3 of 2008 giving clarification in respect of the provisions of the Finance Act, 2007 wherein clarification in respect of Developer and Contractor is also given. It is specifically stated that Contractor is not eligible for deduction u/s 80IA(4) of the Act. 5. The order of CIT(A) may be vacated and that of the Assessing Officer be restored. 4. The Revenue has raised additional ground of appeal No.I, which reads as under:- 1) In the facts and the circumstances of the case, whether the assessee is entitled to deduction under section 80IA(4) based on the claim made under section 153A when there was no such claim made in the original return of income of the assessee for the year under consideration and no audit report in form 10CCB as mandated under section 80IA(7) was filed with the original return. 5. Thereafter, the Revenue vide letter dated 27.03.2017 raised additional ground of appeal No.II, which rea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vidences collected during the course of search and post-search enquiries, the Director of assessee company admitted unaccounted income in the case of assessee amounting to ₹ 34.50 crores for different assessment years respectively, which is summarized under para 7 at page 3 of assessment order. The assessee thus, declared ₹ 2 crores on account of unaccounted payment of wages in the return of income filed under section 153A of the Act as additional income due to result of search. The assessee had declared the said additional income on account of bogus self made vouchers for wages, fictitious payments to sub-contractor and by inflating expenses. The basis for disclosure of additional income was as per the source and application statement prepared by the assessee based on seized documents. Further, the assessee in the return of income had claimed deduction under section 80IA(4) of the Act amounting to ₹ 3.83 crores, both on original and additional income. The assessee was asked to explain as to why the same should be allowed. In response thereto, the assessee pointed out that the claim for deduction under section 80IA(4) of the Act was made in the original return of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uction under section 80IA(4) of the Act would not be available to works contractor. Reference was made to CBDT s Circular No.3/2008, dated 12.03.2008. The Assessing Officer also perused the TDS certificate in which the nature of work was contract. Moreover, the assessee had to pay VAT as contractor under the Sales Tax Act, whereas such was not the position for developer. Accordingly, the claim of deduction under section 80IA(4) of the Act of assessee amounting to ₹ 3.83 crores was dismissed. The Assessing Officer also referred to various judicial precedents on the issue and denied the deduction claimed by assessee and assessed the income in the hands of assessee i.e. on account of original income offered to tax and additional income offered pursuant to search on the premises of assessee. 7. The CIT(A) noted that Mumbai Bench of Tribunal in the case of BT Patil Sons Belgaum Construction Pvt. Ltd. reported in 126 TTJ (Mumbai) (TM), order dated 26.10.2009 and Pune Bench of Tribunal in the case of Laxmi Engineering Service Pvt. Ltd. in ITA Nos.431, 435/PN/2007 254/PN/2008, order dated 18.02.2010 had allowed the deduction under section 80IA(4) of the Act, wherein it was hel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g procurement of material, construction, installation of mechanical, electrical and instrumentation components, co-ordination between all activities, so that the project is on smooth track, erection and commissioning of the entire project, undertaking of all the risks involved in the project, inverting its own funds and also borrowed funds for the development of the project and thereafter recording the same from the client in form of R.A. bills. 31. After completion of project the assessee undertakes maintenance of the project till defect liability period as prescribed in the tender, which is normally one year and finally after completion of the project in all respect, the project is handed over to Government/ local authority/statutory authority. 32. The assessee has demonstrated that it has undertaken risks in terms of deployment of technical personnel, plant and machinery, technical know-how, expertise and financial resources. Due to the fact that the contracts for the project undertaken by the appellant involve design, development, and construction of shafts, tunnels, barrages, canals, gates, earthen dams, lift irrigations systems, erection and maintenance of cranes, hydra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Departmental Representative for the Revenue pointed out that the assessee had filed return of income in response to notice under section 153A of the Act and the issue which arises is whether in such return of income, the assessee can claim additional benefits? For the above said, reliance was placed on the following decisions:- i) Charchit Agarwal Vs. ACIT (2009) 34 SOT 348 (Del) ii) CIT Vs. Sun Engineering Works (P.) Ltd. (1992) 198 ITR 297 (SC) iii) Sarla Handicrafts (P.) Ltd. Vs. Addl.CIT (2008) 296 ITR 94 (P H) iv) Suncity Alloys (P.) Ltd. Vs. ACIT (2009) 124 TTJ 674 (JD) v) Dhanush General Stores Vs. CIT (2011) 339 ITR 651 (Chhattisgarh) vi) Shri Gajendra D. Pawar Vs. DCIT in ITA Nos.1009 to 1012/PUN/2015, relating to assessment years 2005-06 to 2008-09, order dated 31.10.2017 11. The learned Authorized Representative for the assessee in reply, pointed out that the assessee was engaged in development of infrastructure facilities. During the course of search on 25.08.2011, the assessee surrendered ₹ 34.50 crores mainly on account of inflated wages. However, in the revised surrender, ₹ 9.50 crores was surrendered on account of wages and ₹ 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT Vs. (1) Continental Warehousing Corporation (Nhava Sheva) Ltd. (2) All Cargo Global Logistics Ltd., (2015) 374 ITR 645 (Bom). The learned Authorized Representative for the assessee stressed that in principle the assessee was entitled to claim the deduction. He also admitted that in original return of income, no such claim was made. However, if it was 148 proceedings, then the assessee could offer additional income and also to make fresh claim in this regard. He placed reliance on the ratio laid down by Hon ble Bombay High Court in CIT Vs. Caixa Economica De Goa (1994) 210 ITR 719 (Bom). He further placed reliance on the decision of Pune Bench of Tribunal in DCIT Vs. Tapi Prestressed Products Ltd. in ITA No.2139/PN/2013, relating to assessment year 2009-10, order dated 31.07.2015 and on Mahalakshmi Infra Projects Ltd. Vs. DCIT in ITA Nos.2571 to 2577/PN/2012 and cross appeals in ITA Nos.50 to 56/PN/2013, relating to assessment years 2004-05 to 2010-11, vide order dated 09.12.2015. 12. We have heard the rival contentions and perused the record. In the facts of the present case before us, the assessee was awarded contract work for Arjuna Irrigation Project. Search under section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Claimed in return U/s. 153A(a) As per regular Books of account In respect of undisclosed income declared during search action Total 1 2005-06 2006-07 30/11/2006 1,83,83,760.00 2,00,00,000.00 3,83,83,761.00 2 2006-07 2007-08 31/10/2007 59,92,806.00 2,00,00,000.00 2,59,92,806.00 3 2007-08 2008-09 01/10/2008 41,46,520.75 1,25,00,000.00 1,66,46,520.75 4 2008-09 2009-10 26/09/2009 7,15,65,861.64 1,25,00,000.00 8,40,65,861.64 5 2009-10 2010-11 30/09/2010 10,01,50,501.00 1,25,00,000.00 11,26,50,501.00 6 2010-11 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion, then the same was not allowable as the assessee was only a contractor and not a developer. The Revenue is also aggrieved by the order of CIT(A) in ignoring Instruction No.3/2008 giving clarification in respect of provisions of Finance Act, 2007. The Revenue is also aggrieved by the order of CIT(A) in holding the assessee to be eligible for the aforesaid deduction relying on the ratio laid down by the Hon ble Bombay High Court in CIT Vs. ABG Heavy Industries Ltd. (2010) 322 ITR 323 (Bom). 15. The first issue which needs adjudication is whether the assessee was developing infrastructure facility enabling it to claim the aforesaid deduction under section 80IA(4) of the Act. The first aspect of the issue is the claim of deduction under section 80IA(4) of the Act on profits of Infra projects carried on by the assessee. The said deduction under section 80IA(4) of the Act was not claimed by the assessee in assessment years 2006-07 to 2009-10, in the original return of income filed on the respective dates. Thereafter, for the first The second aspect of the issue time, the said claim was made in assessment years 2010-11, 2011-12 and 2012-13. The Assessing Officer denied the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... additional income was offered by the assessee, on which it claimed the aforesaid deduction under section 80IA(4) of the Act. The Tribunal vide paras 132 to 136 at pages 80 to 85 had considered the second issue of allowability of deduction under section 80IA(4) of the Act on the additional income declared during the course of search. The said additional income was offered on account of certain non-genuine expenditure being debited in the books of account. The Tribunal in turn, relied on the ratio laid down by the Hon ble Bombay High Court in the case of Gem Plus Jewellery India Ltd. 333 ITR 175 (Bom) and in the case of CIT Vs. Sheth Developers (P) Ltd. in ITA No.3724/2010, vide order dated 27.07.2012 and also other decisions of Pune Bench of Tribunal. The Tribunal held the assessee to be eligible to claim the said deduction on the additional income offered. 17. After deciding the basic issue, let us now take up the grounds of appeal raised by the Revenue year-wise. 18. The case of Revenue is that the assessee is not entitled to the said claim of deduction under section 80IA(4) of the Act, which was claimed in the return of income filed pursuant to issue of notice under sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rved upon the assessee. In response thereto, in the return of income filed by the assessee, fresh claim of interest expenditure and depreciation on certain assets was made. The said claim was not allowed by the authorities below. The assessments for assessment years 2005-06 to 2008-09 i.e. appeals listed before us have not abated. In such cases, where the assessment has not abated, then the Hon ble Bombay High Court (supra) has laid down that only undisclosed income and undisclosed assets detected during the course of search could be brought to tax. Applying the said ratio to the facts of the present case, we hold that the assessee is not entitled to claim any deduction on account of fresh claim i.e. on account of interest and depreciation in the respective years. Applying the ratio laid down by the Hon ble Bombay High Court in CIT Vs. (1) Continental Warehousing Corporation (Nhava Sheva) Ltd. (2) All Cargo Global Logistics Ltd. (supra), we hold that in the years under appeal, where the assessment has not abated, then no deduction is to be allowed in respect of fresh claim made in the return of income filed in response to notice under section 153A of the Act. Consequently, the firs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessed in the hands of assessee, in addition to the original income offered in the original return of income filed by the assessee. 21. Now, let us take up the appeals for assessment years 2010-11 to 2012-13. The assessment proceedings for assessment year 2010-11 were pending on the date of search, hence were abated proceedings. Similarly, the assessee for assessment years 2011-12 and 2012-13 filed fresh returns of income and made the said claim of deduction under section 80IA(4) of the Act. In respect of assessment year 2010-11, the assessee in response to return of income filed under section 153A of the Act, claimed the aforesaid deduction. 22. Since, we have in the paras hereinabove already decided the issue that the assessee is entitled to claim the deduction under section 80IA(4) of the Act in principle, then the years under appeal being abated proceedings, any fresh claim of deduction can be made by assessee. Accordingly, we hold that the assessee is entitled to claim the aforesaid deduction under section 80IA(4) of the Act in assessment years 2010-11 to 2012-13. In respect of additional income offered, the assessee is also entitled to make this claim as held by the T ..... 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