9911796707
TMI Blog2014 (6) TMI 263X X X X Extracts X X X X X X X X Extracts X X X X ..... der before the Commissioner of Income Tax (Appeals) which partly allowed such appeal. The Revenue challenged the order of the CIT (Appeals) and the Revenue's appeal came to be allowed by the Tribunal. 5. Notice of reopening in the meantime was issued on the ground that with effect from 1.4.2000, as per the amendment in the Finance Act, 2009, an explanation to sub-section (13) of section 80IA has been inserted and the petitioner does not fulfill the conditions laid down in section 80IA(4) of the Act. The reasons recorded on 10th March 2010 requires reproduction: "On perusal of the assessment records, it is noticed the assessee is a contractor engaged in the business of construction activities. The assessee has claimed deduction of Rs.64086418/- u/s 80IA of the IT Act, 1961 in its return of income. 2. As per the amendment by Finance Act, 2009, w.e.f. 1.4.2000, as per the explanation to sub section (13) of section 80IA, the assessee company does not fulfill all the conditions, as laid down in section 80IA(4) of the IT Act, therefore, the assessee is not entitled for the deduction of Rs.64086418/-claimed u/s.80IA of the Income Ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... huge sum of Rs.6.40 crores claimed by way of deduction escaped the assessment. It needs to be mentioned at this stage that there is nothing to indicate that there was any suppression on the part of the petitioner-assessee though contended by way of an additional affidavit that the petitioner claimed deduction giving wrong particulars of his status. Moreover, the reasons recorded are totally silent on such aspect and do not indicate any suppression. This of course is the notice of reopening issued within the period of four years from the end of relevant assessment year and hence criteria of non-disclosing fully and truly all materials facts as such even otherwise is not the requirement of law. However, simultaneously, when the original return filed by the petitioner-assessee had been scrutinized by the Assessing Officer, it would be necessary to refer to the original assessment order in context of such contention of non-revelation. In the order dated 26.12.2008, the Assessing Officer having noted that the assessee is in the business of developing and constructing infrastructural projects as assigned by the Government and other agencies, in detail and also discussed the various provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se engaged in developing any infrastructure facility is eligible for deduction but in the case of maintenance of infrastructure facility deduction is available only if the assessee is engaged in either 'operating and maintaining' or developing, operating and maintaining' the infrastructure facility. Hence, deduction is not available to the assessee in respect of these projects also for the reason that the assessee is involved in only maintaining these projects. It is accordingly, held that income of the assessee amounting to Rs.4878968 (4126686 + 734951+17331) in respect of the above projects are not eligible for deduction u/s 80IA and the claim of the assessee for deduction to this extent is denied and the Rs.48,78,968 is accordingly, added back to the total income of the assessee. Penalty proceedings u/s 271(1)(c) is initiated separately for filing inaccurate particulars of income." 10. From the discussion made in the original assessment order and as rightly not reflected in the reasons recorded, it does not appear to be a case of the assessee not having disclosed its true activities. 11. Only on account of the introduction of explanation by way of Finance Act, 2009 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at profit linked deductions were prone to considerable misuse. With a view to preventing such misuse of the tax holiday under section 80IA, it was proposed to amend the explanation to the said section to clarify that nothing contained in the section shall apply in relation to a business which is in the nature of a works contract executed by an undertaking. 36. We, therefore, notice that from the inception, deduction was envisaged for development of infrastructure facilities with private participation. Of course, post 2002, certain relaxations were granted and in addition to extending tax holiday period, requirement for claiming such deduction was split into developing or operating and maintaining or developing, operating and maintaining infrastructure facility. The Revenue could therefore, legitimately contend that no such deduction was envisaged for mere execution of works contract. If this was the position, in our understanding, what the explanation, did was to clarify a statutory provision which was at best possible of a confusion. If that be so, the explanation must be seen as one being in the nature of plain and simple explanation and not either addin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e found that the petitioner had disclosed all the materials regarding its activities and there was no suppression of materials. In spite of such disclosure, the Assessing Officer gave benefit of the provision by considering the then Explanation which was substantially the same and thus, it could not be said that any income escaped assessment in accordance with the then law. We have already pointed out that the Assessing Officer has now given a second thought over the same materials and according to him, as the assessee is a contractor or supplier of irrigation products, it cannot be called a developer of any new infrastructural facility. 26. From the materials placed before him by the petitioner, the Assessing Officer earlier did not arrive at such conclusion and thus, the amended Explanation subsequently added cannot be of any help to him in arriving at the second opinion based on the alleged new law. The Court was thus of the opinion that introduction of the explanation in question did not amount to introduction of a new provision of law with retrospective operation. The assessee was, therefore, given the benefit of deduction co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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