2023 (11) TMI 503 - AT - Income Tax

Revision u/s 263 - Disallowance of deduction claimed for Industrial Undertaking u/s. 80IA - PCIT observed that the assessee was involved for development and setting up of the motor vehicle weighbridge check post, this particular service was not covered in scope of infrastructure facilities as defined in section 80IA and that bridge and weighbridge were entirely different from each other - HELD THAT - We find that the return of assessee was selected for scrutiny on the limited issue of claim of deduction u/s 80IA - assessee has duly furnished all the information relevant to AO and answered the various queries raised - AO was satisfied that the motor vehicle weighbridge along with toll road of 1 kilometre was integral part of the highway/toll road, thus accordingly accepted the claim of the assessee. In our view, the ld. PCIT has misconstrued the purpose for which the Government has entered into concession agreement for construction of motor vehicle weighbridge along with connecting road with the highway/toll road. The said infrastructure facilities have to be developed under Motor Vehicle Rules alongside the toll road so as to discourage unnecessary movement of heavy vehicles on the toll road and further to collect toll charges from heavy vehicles on account of damage to the toll road because of the heavy vehicles. The said motor vehicle weighbridge is constructed and connected with the toll road and the heavy vehicles are diverted to the motor vehicle weighbridge toll road and pass to the same and are charged toll charges as per Government Rules according to the weight of the vehicle and then are allowed to pass through the main highway/toll road. Motor vehicle weighbridge in, itself, is not a separate infrastructure project, rather, it is a part and parcel of the highway/toll road and is constructed for the purpose of passing and monitoring of movement of heavy vehicles on the toll road and collection of toll charges from the heavy vehicles and the said infrastructure facilities independently will be of no use, rather, it is part and parcel of the highway project. Thus the order of the Assessing Officer was not erroneous - Decided in favour of assessee.

Summary

Issues involved:
The appeal against the order of the Principal Commissioner of Income Tax exercising revision jurisdiction under section 263 of the Income Tax Act regarding the deduction claimed for Industrial Undertaking under sections 80ID/80IE10A/10AA.

Summary:

Issue 1 - Eligibility of Deduction under Section 80IA:
The assessee's return was selected for scrutiny due to the deduction claimed for an Industrial Undertaking. The Principal Commissioner of Income Tax (PCIT) observed that the construction of a motor vehicle weighbridge check post under a Public-Private Partnership (PPP) model did not fall under the definition of "infrastructure facility" as per section 80IA(4) of the Act. The PCIT held that the weighbridge was not part of the highway and therefore not eligible for the deduction.

Issue 2 - Assessee's Explanation and Objection:
The assessee explained that the construction of the motor vehicle weighbridge was part of a toll road under the PPP model with the Government of West Bengal. The assessee argued that the weighbridge was an integral part of the highway project, supported by the Concession Agreement and other documents. The assessee objected to the PCIT's decision, stating that the Assessing Officer had conducted thorough inquiries and issued detailed questionnaires before allowing the deduction under section 80IA.

Issue 3 - Tribunal's Decision:
The Appellate Tribunal disagreed with the PCIT's interpretation, stating that the motor vehicle weighbridge was indeed an integral part of the highway/toll road project. The Tribunal emphasized that the purpose of the weighbridge was to monitor heavy vehicle movement, collect toll charges, and prevent damage to the toll road. Therefore, the Tribunal concluded that the Assessing Officer's decision to allow the deduction was not erroneous. The Tribunal allowed the appeal, quashing the PCIT's order for a fresh assessment.

This summary provides a detailed overview of the issues involved in the legal judgment, including the eligibility of deduction under section 80IA, the assessee's explanation and objection, and the Tribunal's decision to allow the appeal.