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2015 (5) TMI 73 - ITAT DELHI

2015 (5) TMI 73 - ITAT DELHI - TMI - Revision u/s 263 - Deduction in respect of profits and gains from Industrial undertaking or enterprises engaged in infrastructure development etc - AO finalised the assessment proceedings with a final conclusion that on the facts of the case, the assessee is eligible for deduction u/s 80IA(4) - Held that:- The assessee company is in the business of developing, operating and maintaining infrastructure facility project since its incorporation w.e.f. 5.4.2007. W .....

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erived from the business of development of Infrastructure facility for AY 2009-10 after commencement of its business w.e.f. 5.4.2007 at the option of the assessee which cannot be denied by wrongly putting the case of the assessee in clause (b) of Explanation to section 80IA(4)(i) of the Act.

The view taken by the AO while granting deduction u/s 80IA(4) of the Act, in respect to income from sale/ sub lease of land for development, is reasonable, plausible and the same cannot be held as .....

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ointed out in the notice issued u/s 263 of the Act and thus, it is not open and permissible for the Ld. CIT to revise the assessment order on these grounds. Since assumption of jurisdiction u/s 263 of the Act was not valid on these two issues, the grounds raised by the assessee on merit become academic and infructuous.

Ld. CIT has not conclusively decided the issue with a conclusion in one way or the other and has left it midway, which covers this case in favour of the assessee by the .....

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ICIAL MEMBER This appeal has been filed by the assessee against the order of the ld. CIT(A), Noida dated 30.3.2014 for AY 2009-10, passed u/s 263 of the Income Tax Act, 1961 (for short the Act). 2. The assessee has raised following grounds in this appeal:- "1. That the Learned CIT (Ld. CIT) has erred on facts and in law in setting aside the assessment to be made de novo. 2. That the order of the Ld. CIT is unlawful and beyond permissible jurisdiction under section 263 of the Income Tax Act .....

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and the Ld. AO cannot form the basis of action under section 263. Provisions of section 263 do not permit substitution of the Ld. CIT's opinion for the opinion of the Ld. AO, particularly when the view of the Ld. CIT are contrary to the record, to precedents and case laws in appellants favour and contrary to the provisions of the Act. 4. That the appellant is entitled to the deduction under section 80IA(4) as allowed by the Ld. AO in the assessment under section 143(3). Appellant is entitled .....

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iberally, so as to advance their objectives. 5. That, inter alia, the appellant is entitled to deduction u/s 80IA(4) on the facts and law involved as a developer of the infrastructure facility, even if it has not commenced operating and maintaining but is developing the same, in view of direct decisions in its favour including inter alia reported in ACIT v. Bharat Udyog Ltd. 118 ITO 336 which follows the decision of the Hon'ble Apex Court in K. P. Verghese v. ITO 131 ITR 597 (SC) and as held .....

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such too his order deserves to be quashed. 7. That the Ld. CIT has erred in stating that the Ld. AO has not applied his mind to other claims for example deduction in respect of interest on FDs and whether depreciation was admissible even while the project was not complete. These claims have been processed and correctly allowed after due consideration. There is no final finding by the Ld. CIT that these claims are incorrect. The assessee was duly entitled to these claims which are correctly allow .....

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e of K.P. Vargheese v. ITO wherein it was held that literal construction that leads to absurdity, unjust result or mischief is to be avoided. Construction which permits achieving the obvious intention of the legislature and provisions of rational construction are to be adopted. As such too, the assessee's claim under section 801A(4) has been correctly allowed by the Ld. AO. The Ld. CIT has erred in setting aside the assessment. 9. That without prejudice, in the alternative, as the appellant .....

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are that the assessee filed its return of income declaring nil income on 30.03.2009 for AY 2009-10 through e-filing acknowledgement. Subsequently, the case was selected for scrutiny through CASS and accordingly notice u/s 143(2) of the Act was issued on 25.8.2010. In response to the said notice, Senior Vice President (Finance) and DGM (Finance) of the assessee company attended the assessment proceedings from time to time and furnished details and replies to the queries raised during the course o .....

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d the assessee also furnished tax details and documents from time to time during the assessment proceedings that have been looked into and verified. The AO also noted that the assessee has also furnished Form No. 10CCB regarding computation of book profit u/s 115JB of the Act. 3.1 The AO, after having gone through and considering the replies submitted by the assessee, inter alia concession agreement and assignment agreement with the Taj Expressway Industrial Development Authority (TEA) held that .....

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eedings for examination and noted that the regular assessment was completed by the AO by passing the assessment order u/s 143(3) of the Act on 30.12.2011. The CIT, Noida made a prima facie opinion that the AO not only overlooked the applicability of provisions of section 80IA(2), (4) and (6) of the Act but also ignored the clarificatory and Circular No. 1/2006 dated 12.1.2006 issued by CBDT and the other relevant statutory provisions of the Act and the Income Tax Rules 1962. The CIT, Noida issue .....

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rd- A perusal of the assessment order for the Assessment Year (hereafter A. Y.) 2009-10 passed on 30-12-2011 shows that the assessee M/s Jaypee Infratech Ltd., sector-128, Noida (UP) furnished its return of income on 30-09-2009 through e-filing declaring Nil income. The assessment record shows that the case has been picked up for scrutiny (i.e. regular assessment) through CASS (i.e. Computer Assisted Scrutiny Selection). The nature of business of the company is reported by the assessee as develo .....

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Policies' in A. Y. 2008- 09 under the heading 'Revenue Recognition', it is declared that the company is carrying on the business of developing a highway project including housing or other activities being an integral part of the highway project. Many other crucial documents such as the following further show that clause (b) of the Explanation to sub-section (4)(i) of section BO-IA is the 'infrastructure facility' in assessee's case and housing or residential development .....

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he Final Report in Volume I on Traffic and Revenue Forecast Study for Yamuna Expressway in the State of Uttar Pradesh at page 9 under the heading Revenues states as under: The Revenues from the Project will come from two streams as under: a} From Land for Development b) From toll from the users of the Expressway Revenues from Land Development Land for Development measuring about 2500 hectares shall be made available at 5 or more locations along the Expressway for commercial, amusement, industria .....

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uch as roads, water supply, drainage, electric supply etc. This will require additional investment and additional period to realize the revenue. c) By selling fully developed plots for different purposes after completing all external and internal development. This will require further additional investment and additional period to realize the revenue. d) By constructing residential/ commercial building, including all internal and external developments and then selling it either during constructi .....

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ng residential/commercial building, including all internal and external developments and then selling it either during construction stage itself or after complete construction. This will require further additional investment and additional period to realize the revenue.' IV. Most importantly, a concession agreement was entered into between the Taj Expressway Development Authority and Jay Prakash Industries Ltd. on 07-02-2003. In this agreement the word 'Project' (which is assigned to .....

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sq. mts. of land along the proposed Expressway for commercial, amusement, industrial, institutional, and residential development. This would, therefore, show that land development and institutional and residential development are integral part of the highway project unambiguously and indisputably establishing that the 'infrastructure facility' of the assessee falls in clause (b) of the Explanation appearing at the end of sub-section (4)(i) of section 80-IA of the IT Act 1961. 3. All the .....

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n the part of the assessee as to its one of the avowed objects of residential and institutional development consisting of sale of plots and buildings, these activities of housing and sale of land etc. are an integral part of the assessee's proposed highway project. Since, no change is certified in the nature of business in this assessment year the same business continues as 'eligible business' in terms of section 80-IA (1) and the business of the assessee company by its own admission .....

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the assessee company have though reiterated its nature of business being the same as what is mentioned at para 2 & 3 above, but, under the heading 'Eligible Business Under Section BO-IA', they have specified the 'infrastructure Facility' as Road including toll road. The A.D. has failed to notice this contradiction while passing the erroneous assessment order allowing deduction u/s 80-IA not realizing that the assessee has not begun to operate the toll road which is a mandator .....

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see company gets out of the ambit of section 80-IA for the simple reason that in order to qualify for deduction u/s 80-IA (2), it has to have profits derived from the operation of the road including the toll road which is not the case here as assessee company's Expressway became operational only in F. Y. 2012-13 and would in that case qualify for deduction (of course subject to fulfilling all other attendant conditions under the section) for the first time in A. Y. 2013-14. This is because t .....

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. Ironically, as mentioned earlier, the assessing officer has failed to notice the contradiction on the same page of Form no. 10CCB mentioning at S.no. 6 thereof the following: Yamuna Expressway Project- Development, Operation and Maintenance of Noida and Agra along with service road and associated structures and sale/development of lease hold land along the proposed Expressway. Whereas at the S. no. 14 (b) on the same page of form no. 10CCB the tax auditors have specified the 'infrastructur .....

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r its significant accounting policy and as per the concession agreement between TEA and JPI Ltd. is carrying on the business of developing a highway project including housing or other activities being an integral part of the highway project. In fact, in this assessment year, the assessee has itself made the claim of deduction against the profits from sale of land which are otherwise never eligible for deduction u/s 80-IA but for the non-obstante provision under sub-section (6) which if complied .....

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s a highway project including housing or sale/development of lease hold land along the Expressway and all other activities are an integral part of the highway project. 6. After examination of the above facts and issues from the assessment records for AY 2009-10, it is noticed that the AO has stated at para 4 of the assessment order that the assessee is eligible for deduction u/s 80-IA of the IT Act, 1961 after getting a clarification from the assessee (vide order sheet entry dated 23-12-2011) to .....

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nd; as is the case of the assessee, is an integral part of the highway project, it is the non-obstante provisions of sub-section (6) of section 80-IA which carve out an exception for such profits to be transferred to a special reserve account so that such profits are actually utilized for the highway project only, before the expiry of three years following the year in which profits were transferred to the reserve account. Further, such profits do not qualify for deduction u/s 80-IA (6) of the IT .....

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E and has not filed Form No. 10CCC prescribed under that rule, the profits from sale of land worked out by it are entirely taxable and deduction in respect of such profits without creation of the special reserve is not envisaged under section 80-IA of the IT Act, 1961. It is ironic that the assessee company on the one hand contends that its infrastructure facility is only road, including toll road and yet it claims deduction in respect its profits derived from the infrastructure facility as per .....

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of section 80-IA (6) where the project is integrated such as this particular project. 7. By allowing an absolutely incorrect claim of deduction u/s 80-IA in A. Y. 2009-10 in the regular assessment made by the A.O. u/s 143 (3) of the IT Act, 1961 on 30-12-2011 as brought out in the foregoing paragraphs, he has passed an assessment order which is erroneous as the order has completely glossed over the provisions of sub-section (2), (4) and sub-section (6) of the IT Act, 1961, the latter read with .....

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ppearance or through a duly authorized representative. (D. P. Semwal) Commissioner of Income Tax, Noida. " 5. In response to the said notice u/s 263 of the Act (supra) as reproduced hereinabove, the assessee submitted the first reply dated 19.3.2014 and the Joint Managing Director and officers of the assessee company along with Assessee's Representative (the AR) made detailed submissions, on the statutory aspects elaborating written submissions concerning the admissibility of the claime .....

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30.3.2014. The main operative part of the impugned order reads as under:- "14. Shri Anil Kumar Chopra, CA, elaborated on the merit of the case also in the written submissions beginning from page no. 2 to 9 of the reply dated 19-03-2014 and the same are contained in Annexure A to this order. As heard during the proceedings and explained in the other two written submissions dated 25-03- 2014 {Annexure B} and 27-03-2014 (Annexure C) and as also dealt with in the preceding paragraphs, the asse .....

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O. dated 28-12-2011 which explained that assessee's claim for eligibility was u/s 80-IA (4) (i) in the context of 'developing' the 'Infrastructure Facility', The said letter to the A.O., it is stated, further explained how 3D-lA (2) did not cast any restriction on the assessee's claim. In the context of this reply of the assessee, it is necessary to clarify here that deduction u/s 80-IA is not admissible in terms of sub- section (4) as this sub-section only mandates appli .....

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as to avoid unworkable, unreasonable, or absurd interpretation which is not reconcilable with the rest of the statued/section 3D-lA (4). The assessee has also referred to the ruling in 103 ITR 613 (ORI) (FB) wherein it has been held that the word 'and' should be construed as 'or' where the context so requires. The asseessee has cited the ruling in the case of Ishwar Singh Bindra 1968 AIR 1450 where the Hon'ble Supreme Court held that the word 'and' had to be read as & .....

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d as 'or' the assessee would be let off on the ground that both the conditions should not be complied with to attract the penalty and if only one is complied with no penalty would be imposable. The situation and the context with reference to the expression (develops and begins to operate' used in section 80-IA (2) is entirely different as replacement of 'and' by 'or' here would not be in consonance with the other words used in respect of other eligible businesses such .....

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ained above that its replacement would be incongruous and discordant to the use of other words in the same sub-section in respect of other activities, the following observations of the Hon'ble Apex Court in Smt. Tarulata Shyam v. CIT [108 ITR 345 (SC)] would put to rest all doubts and clarify that the expressions used under a taxing statute should receive a strict construction so that the interpretation therefrom is in consonance with the avowed aim and object of the legislature and not such .....

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y intendment. There is n9 equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used". Once it is shown that the case of the assessee comes within the letter of the law, he must be taxed, however great the hardship may appear to the judicial mind to be." (ii) The assessee has then referred to its letters written to the A.O. dated 23-11-2011, 21-12-2011, 23-12-2011, 28-12-2011, and 29-12-2011 .....

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s assumed. (iii) On page 4 of the aforesaid letter dated 19-03-2014, the assessee has explained that through the aforementioned letters it was clarified to the A.O. that deduction was available u/s 80-IA (4)(i) even to an enterprise only ( developing the 'the' Infrastructure Facility' and as to how section 80-IA (4)(i) would override 80- lA (2). While asserting so, the Ld. Counsel Shri Chopra, CA, explained that a provision should be interpreted in a manner that it subserves the purp .....

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ssessment years out of 20 years beginning from the year in which the assessee develops and begins to operate the 'Infrastructure Facility'. The assessee picks up half the sub-section on the one hand to claim that the deduction is available to it in 10 A.Ys. out of 20 years and on the other states that the other half of sub-section (2) is not applicable to it. The assessee has been reluctant to answer the question that if this sub-section {2} is not applicable to it how it contends that i .....

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, the assessee has further contended that the profit derived by it is from the toll road and includes the profit from sale/sub lease on development of land which form intrinsic part of the Infrastructure Facility/toll road. The assessee has in the same paragraph mentioned that the Hon'ble Supreme Court in the matter of Nand Kishore Gupta & Ors. Vs State of U.P. & Ors., has held that the creation of the Expressway and the Five land parcels are complementary to each other and the entir .....

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way project and the provisions of sub-section (6) subserve the same objective by providing for utilization of the profits from sale of land, etc. only for the highway project. Here also it is not difficult to discern that the assessee on the one hand contends that the provisions of sub-section (6) are not applicable to it and on the other draws support from the observations of the Hon'ble Supreme Court in the aforementioned PIL. It would, therefore, seem that Assessee's contradictory con .....

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e sale of land is no reason for not complying with the statutory conditions of creating the special reserve to channelize the profits therefrom for utilization for the highway project. The sub-section, as stated earlier, carves out an umbilical relationship between the profits earned from the 'other activities' and their utilization for the highway project only, so that the profits earned from the 'other activities' are not utilized for further acquiring or expanding housing and .....

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s and thus these are anti-abuse provisions which cannot be brushed aside by branding them as procedural aspect or relating to entries in books of account or mere nomenclature etc. Accordingly, it is consciously felt that reliance placed on the rulings of the Hon'ble Apex Court in the context of the anti-abuse objective is misdirected. (vi) The extracts from Explanatory Memorandum to Finance Bill, 1999, 2001 and circular no. 14/2001 dated 09-11-2011 have been carefully gone through and these .....

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eduction under that section and no other income. In any case, interest income falls under the head 'income from other sources' as per the settled law in TUTICORIN ALKALIES VS. CIT 227 ITR 172 (Se). The A.O. has not even considered this decision of the Hon'ble Apex Court while making assessment. Similarly, the assessee has claimed depreciation amounting to ₹ 22,67,17,792 in the computation of income. The A.O. has not examined whether this was admissible even while the highway pr .....

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rors which has led to loss of revenue and has the effect of perpetuating losses in subsequent years; the order , therefore, simultaneously being prejudicial to the interests of revenue. The A.O. has not applied his mind to other claims also, for example whether he should have allowed deduction in respect of interest on FDs in the face of the relevant ruling of the Hon'ble Supreme Court and whether depreciation was admissible even while the project was not complete, thereby, further rendering .....

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and did not apply the correct law to the facts and circumstances of the case of the assessee company and also opined that the AO did not apply his mind to the assertions made by the assessee and did not comply with the CBDT Circular No. 01/2006 dated 12.1.2006 and other relevant provisions of the Act and the Income Tax Rules, 1962. With these observations, the ld. CIT, Noida concluded that the AO passed an order which was erroneous and prejudicial to the interest of revenue and the CIT Noida set .....

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mportant events which would be referred subsequently during our further deliberation and adjudication in this order, which are as follows:- Chart showing sequence of dates & events. (i) Date of filing of Return for A.Y 2009-10 30/9/2009 (ii) Date of Notice u/s 143(2) of the Act 25/8/2010 (iii) Date of Query raised by the AO (iv) Dates of Replies filed by the assessee before AO, 23/11/2011, 21/12/2011, 23/12/2011 28/12/2011& 29/12/2011 (v) Date of 18 pages office note sheet of the AO whic .....

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t of case laws relied upon by the appellant assessee, brief written submissions of the assessee, written submissions of ld. CIT-DR and paper book of case laws spread over 22 pages relied by the ld.CIT- DR. 9. For just and proper adjudication of the case, we also find it appropriate to reproduce brief written submissions made by the ld. AR, on behalf of the assessee, which read as under: "In the above matter, the appellant begs to submit herein brief written submissions. These are in additio .....

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ar involved i.e. 2009-10 in assessment order dated 30.12.2011 the appellant was correctly allowed deduction u/s 801A. The Learned CIT, Noida (Ld.CIT) has set aside the assessment order to be made de novo after opportunity by Ld. AO to the appellant vide his order dated 30.03.2014 u/s 263 of the Act. Similar deduction u/s 80lA has been allowed to the appellant vide assessment order dated 12.03.2013 in assessment year 2010-11 i.e. in the next year. In short, the deduction was held to be allowable .....

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nt also has alternate claims based on which its income from the infrastructure facility would be entirely eligible for deduction of 100% of its profits and gains derived from its eligible business. The above appeal is against order u/s 263 dated 30.03.2014 of Ld. CIT. Order is patently erroneous, unlawful and contrary to the facts and accordingly the same is unsustainable and liable to be quashed. This is seen inter alia from the grounds of appeal filed in this case. The issues on which relief i .....

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of the Act. Order of the Ld. AO is not an erroneous order, prejudicial to the interest of revenue within the meaning of section 263 of the Act. 3. The assessment under section 143(3) has been processed by the Ld. AO after duly considering the material explanations and submissions on record including in context of applicable law. Mere difference of view between the view of the Ld. CIT and the Ld. AO cannot form the basis of action under section 263. Provisions of section 263 do not permit substit .....

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invoking jurisdiction under section 263 and setting aside the assessment to be made de novo. Moreover, it is settled law that even if two views are reasonably possible, the view favouring the appellant is to be adopted and further the beneficial provisions of deductions from taxable income to promote investment in and development of infrastructure facility are to be interpreted liberally, so as to advance their objectives. Regarding Ground No. 1 - as seen from Page 28, Para 16 of the Ld. CIT ord .....

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binding on the appellant and in fact supports the appellant. Similarly the Ld. CIT has not applied his mind to other claims, for example deduction in respect of FD income and whether depreciation was admissible. These claims have been processed and correctly allowed after due consideration. There is no final finding by the Ld. CIT that these claims are incorrect. As such too setting aside assessment to be made de novo is unlawful. Moreover, the Ld. CIT has also erred in setting aside the assessm .....

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ly set aside assessment to be made de novo: • 203 ITR 108 (Born.) CIT v. Gabriel India Ltd. It was held that Commissioner, exercising powers under section 263, cancelled order of the ITO observing that order of ITO did not contain discussion in regard to allowability of claim for deduction which indicated non-application of mind and that claim of assessee required examination as to whether expenditure in question was a revenue or capital expenditure and directed ITO to make a fresh assessme .....

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Commissioner was justified in setting aside assessment order - Held, no. In CIT v. Hotz Industries Ltd 49 Taxmann.com 267 (Del.), it was held that remanding matter for fresh examination was not permissible as Commissioner must reach finding that final finding in assessment order was erroneous and incorrect. We also rely on: • 12 Taxmann.com 118 (Alla.) CIT v. Shiv Prasad • 171 ITR 698 (Alla.) CIT v. Goyal Private Family Specific Trust • 297 ITR 99 (Alla.) CIT v. Mahendra Kumar Ba .....

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d. AO has recorded a 17 pages long 'office note' to the assessment order. Mere difference of view between the Ld. CIT and Ld. AO does not permit action u/s 263. Section 263 does not permit substitution of the Ld. CIT's opinion for the opinion of the Ld. AO particularly when two views are reasonably possible and when there are precedents and case laws in appellant's favour. If two views are possible and the Ld. AO has taken one view with which the Ld. CIT does not agree, it cannot .....

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etween Greater Noida and Agra along with service road and associated structures with rights to collect toll during the Concession period and also the rights for sub lease/ development of land as integral part of the Yamuna Expressway Project. b) Taj Expressway Industrial Development Authority (TEA) (constituted by Government of Uttar Pradesh (GoUP) vide Notification No. 697/77-4-2001-3(N)/2001 dated 24.04.2001 under U.P. Industrial Area Development Act, 1976) invited offers from interested parti .....

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cial Purpose Vehicle (SPV) viz. Jaypee Infratech Limited for development, operation and maintenance of 6 lane access controlled Expressway. e) An Assignment Agreement was executed amongst JAL, JIL and TEA for assignment of the Concession Agreement in the name of Jaypee Infratech Limited OIL) on 19/10/2007. f) Objects of Jaypee Infratech Limited Main Objects: To implement all the objects of the Concession Agreement dated 7/2/2003 between Jaiprakash Industries Ltd. (now Jaiprakash Associates Ltd.) .....

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t Authority" (in Short TEA). iii) The length of the expressway connecting Noida with Agra was about 160 Kms and it was to pass through a virgin area along the Yamuna River. iv) Land Offered: TEA has granted rights for land development of 25 million sq. mtrs of land on 90 years lease along the proposed 100 meters wide Expressway for commercial, amusement, industrial, institutional and residential development to the SPV Company. TEA provided the "land for development" along the Expr .....

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ther lease out the developed/undeveloped land (at five or more locations with an area of 5 million sq. mtrs. per land parcel) to sub-leases/ end-user. The toll fee to be charged from the customers was not to exceed the fee as may have been notified by GOUP (Government of State of UP) "Land for Development" is a Concession like the toll fee since the toll fee alone would not have been able to ensure positive return on equity on the Project. This is further substantiated by: • Notic .....

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ee as set forth under the Concession Agreement. • The Constitutional documents of the Assessee viz Memorandum of Association (MOA) that bars the Company from the undertaking any other business except all the objects of the Concession Agreement dated 07.02.2003. h) Observation of Supreme Court Judgment in Appellant's favour: A Public Interest Litigation was filed for inadequate consideration of acquisition of land. The Project was cleared by the Inquiry Commission Report and the PIL also .....

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No. 1889/77-4-2004-10N/2004, Lucknow dated June 22, 2004 to ascertain the facts and position of transparency of the Project. • Findings of the Hon'ble Commission of Inquiry under the chairmanship of Shri Sidheshwar Narayan, Justice (Retired) High Court Patna and Calcutta, which states that "Considering the capital cost, gestation period and the uncertainties involved in the revenue from toll collection, inflation etc, it was necessary to strengthen the economic viability of the Pro .....

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9; Net Present Value (NPV) of the toll fee during the entire concession period (Refer Halcrow Report August, 2013). There is no obligation under the Concession Agreement to carry out housing on "Land for Development". Section 801A In the instant case the infrastructure facility is the toll road (160 kms long six lane access controlled expressway) and the consideration for developing, operating and maintaining the said infrastructure facility, is by way of toll fee and through the right .....

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the Income Tax Act 1961. Section 80IA applies as provided in clause (i) of sub- section (4) to any enterprise carrying on the business of (i) developing or (ii) operating and maintaining or (iii) developing, operating and maintaining any infrastructure facility which fulfills the following conditions, namely: a) It is owned by a company registered in India or by a consortium of such companies 28[or by an authority or a board or a corporation or any other body established or constituted under any .....

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or starts operating and maintaining the infrastructure facility on or after the 1st day of April, 1995". The expression 'has started' indicates events which have already occurred whereas the expression 'starts' indicates the events which would occur. Moreover 'it has started or starts operating and maintaining the infrastructure facility' in context of this section means started developing the infrastructure facility, which has duly been done by the Assessee Company .....

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toll fee. We refer with advantage to the under- mentioned decisions that the income from business would include all income emanating from the same. Please refer gist of case law attached. • 317 ITR 353 (Del.) CIT v. Dharam Pal Prem Chand Ltd. (SLP rejected against Dharam Pal Prem Ch and (SC) in 2010 TIOL-1S-SC-IT) • 300 ITR 6 (Del.) CIT v. Eltek SGS P. Ltd. Income during the year from sale of plots, built up properties, FDRs, bank interest etc. is derived from and forms an intrinsic p .....

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iness of toll road development. It is humbly submitted that since sub-lease of the plots of land is made pursuant to the authority granted under the Concession Agreement, there can be no doubt that the sub-lease income is income derived from the 'business' of toll road development. Where income falls under anyone head of exemption [say explanation (a)], it would be free from tax even if the condition of another head of exemption [say explanation (b)] was not satisfied. The Assessee Compa .....

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mpany. As seen from order of Ld. CIT itself, assessment order, office note to assessment order and paper book, the issues regarding 80lA and its admissibility was intensively processed, enquired into and considered by the Ld. AO who after due consideration correctly allowed the claim. On mere difference of view, Ld. CIT cannot substitute his view for view of AO. The view of the Ld. AO is correct in law and facts and even if two views be possible even then revision u/s 263 is not permissible. The .....

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igh Courts, as seen from gist of case law filed. Jurisdictional High Court decisions are reported in Page 3 of Annexure-A to CIT order: 297 ITR 99 (All.) CIT v. Mahendra Kumar Bansal 171 ITR 698 (All.) CIT v. Goyal Private Family Specific Trust 12 Taxmann.com 118 (Alia.) CIT v. Shiv Prasad We have respectfully and humbly explained at length that our case is covered by section 80IA(4)(i) as read with explanation (a). We have also explained at length as to how we fall under explanation (a) to the .....

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lities that fall in the definition of highway project including housing or other activities being an integral part of the highway project as defined in the said explanation (b) and not to infrastructure facility referred in the said explanation (a). The deduction provided u/s 80IA(4)(i) is the relevant deduction for infrastructure facility as in our case. There is no restriction in our case u/s 80IA(6). The limits and requirements of 80IA(6) apply to highway project as defined in the said explan .....

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le under said explanation (b). Regarding reference to accounting note to balance sheet in earlier financial year 2007-08 when no claim for deduction was made u/s 80IA, the same has been clarified fully including inter alia on Page-6 of Annexure A to Ld. CIT order. Please note that Paper Book-Page 79, Tax Audit Report states business of the company as follows "the company is engaged in development, operation and maintenance of the six-lane access controlled expressway along with service road .....

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nlawful order under section 263 Further regarding lack of jurisdiction u/s 263 and unlawful order u/s 263, it is submitted as under: The Hon'ble Supreme Court in the case of Malabar Industrial Co. Ltd. vs. CIT (243 ITR 83) has held that a bare reading of section 263 makes it clear that the pre-requisite to exercise of jurisdiction by the Commissioner is that the order of the AO is erroneous in so far as it is prejudicial to the interests of the Revenue. The Commissioner has to be satisfied w .....

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TO is unsustainable in law. In this regard, it is humbly submitted that where there has been a detailed application of mind by the AO during the assessment proceedings, after which a view has been formed by him, the said view cannot be said to be erroneous or prejudicial to the interest of the revenue and be revised by invoking the provisions of section 263. The Hon'ble Supreme Court in the case of Malabar Industrial Co. Ltd. vs. CIT (243 ITR 83) has held that the provisions of section 263 c .....

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taken, mere fact that different view could be taken, should not have been basis for an action u/s. 263. Attention is also invited to another decision of the Delhi High Court in CIT vs. Honda Siel Power Products Ltd. (194 TAXMAN 175). In that case, the Assessing Officer had allowed deduction under sections 80HHC and 80-lB. The Commissioner, while exercising his powers under section 263, held that the assessment orders passed by the Assessing Officer were erroneous and prejudicial to the interests .....

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e order has been passed upon an application of mind. No doubt, this presumption is rebuttable, but there must be some material to indicate that the Assessing Officer had not applied his mind. In the instant case, there was no material to indicate that the Assessing Officer had not applied his mind to the provisions of section80-IB(13), read with section 80-IA (9). The presumption that the assessment order passed under section 143(3) by the Assessing Officer had been passed upon an application of .....

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the amount of deduction allowed under section BO-IB from the profits and gains. He did not say so in so many words, but that was the end result of his assessment order. It could not be said that the Assessing Officer had failed to make any enquiry because no further enquiry was necessary and all the facts were before the Assessing Officer". (underlined for emphasis) Further, in (IT vs. Honda Siel Power Products Ltd. (194 TAXMAN 175) (DEL), it is held that in cases where the Assessing Offic .....

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sment year, the AO has rightly allowed us deduction u/s. 80IA( 4) for the profits derived from sale of land and other income since the same are profits and gains derived from the business of developing, operating or maintaining an infrastructure facility i.e. a road including toll road. It is humbly submitted that as is clear from the activities carried out by us as also the Concession Agreement, the land received for sale and/or development under the Concession Agreement is in fact a part of th .....

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s, the profits derived by us from sale of land is a profit derived from our business of developing, operating and maintaining the toll road and accordingly, the deduction allowed to us by the AO u/s. 80IA(4) is neither erroneous nor prejudicial to the interest of the revenue. The Hon'ble Gauhati High court has in case of Bongaigaon Refinery and Petrochemicals Ltd. Vs. Union of India And others (287 ITR 120) stated that error in the order of the Assessing officer and resultant prejudice to th .....

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according to him, the order should have been written more elaborately. This section does not visualise a case of substitution of the judgment of the Commissioner for that of the ITO, who passed the order. Also, the Supreme Court in CIT v. Max India Ltd. (295 ITR 282) has held that since different views existed on day when the Commissioner passed his order and moreover mechanics of section have become so complicated over years that two views were inherently possible. Where two views are possible .....

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erpretation of taxing statutes should be in consonance with the avowed aim and object of the legislature which is the interpretation being sought by the appellant for grant of allowance and for removal of any doubts. The Ld. CIT has also not been able to properly rebut or distinguish much binding case law relied by the appellant. Moreover, it is well known decision like in the K.P. Verghese v. ITO 131 ITR 597 (Se) which governs interpretation of statute in India wherein it was held that a statut .....

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Interactive of Statutes-Taxing Statute-Incentive for growth and development- Provision interpreted liberally- Restriction on exemption- To be construed so as to advance objective and not frustrate it. (b) 2371TR 662 (Mad.) CIT v. Salem Textiles Ltd. Interpretation of taxing statutes-Liberal construction of beneficial provisions. The provisions of section 33 of the Act have to be construed purposefully and beneficially to achieve the object behind section 33 of the Act and it cannot be construed .....

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o be adopted: Inter alia in the following, it has been held that in interpretation of taxing statute, meaning of words and phrases has to be seen as understood in common parlance in commercial circles i.e. the meaning that people conversant with the subject matter would attribute to it. 144 ITR 225 (SC) CIT v. Mahindra and Mahindra Ltd. Our case is also clearly supported by the decision of the Supreme Court in 231 ITR 814 (SC) Kerala State Co-operative Marketing Federation Ltd. v. CIT wherein it .....

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ther head of exemption are not satisfied and such income is not free from tax under that head of exemption. A word acquires meaning only with reference to its text and context. Please note that it is also settled law that specific provisions would override general provisions. Toll roads would generally be highways which are toll road. In context of the special terms, as in the Concession involved relating to right of the assessee to gather toll and to develop, operate and maintain the facility a .....

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377; 10,159 crores. A certificate was filed in this regard from M/s. R. Nagpal Associates, Chartered Accountant and statutory auditor of the assessee. The overall utilization and investment in the project far exceeds the income of the year and as such even the alternate claim u/s 80IA(6) would be eligible to the appellant. Ground No. 5 "That, inter alia, the appellant is entitled to deduction u/s 80IA(4) on the facts and law involved as a developer of the infrastructure facility, even if it .....

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submissions in Annexure- Band C to Ld. CIT order. Please see gist of case law attached on this ground on which we rely. Moreover, it is humbly submitted that there is no requirement at under section 80IA( 4) that the deduction would be available only after the assessee has begun the operation of the infrastructure facility. If that was the case, then the deduction available under section 80IA( 4) to enterprises that are only into 'development' of infrastructure facility would never be a .....

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ecommunication service or develops an industrial park 23[or develops 24[***J a special economic zone referred to in clause (iii) of sub-section (4)J or generates power or commences transmission or distribution of power 25[or undertakes substantial renovation and modernisation of the existing transmission or distribution lines." (Underlining ours) With reference to our various earlier submissions and further to the same, it is once again submitted that 80IA(2) is subservient to 80IA(4) and i .....

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developing, operating and maintaining any infrastructure facility which fulfills all the following conditions, namely.-" (Underlining ours) When and in context of 80IA(2) as aforesaid includes or and is to be read as and / or that would further make it clear that an enterprise 'developing' an infrastructure facility is entitled to the said deduction. When 'and' is read as 'or' it would make the provisions of section 80IA(4)(i) and 80IA(2) harmonious, workable and be .....

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ial Dictionary, 3rd ED to state that sometime 'and' by force of contents, reads as 'or'. They also quoted Maxwell on interpretation of statute, 11th ED that to carry out the intention of the legislature, it is occasionally found necessary to read 'or' or 'and' one for the other. Kindly also see our submissions as contained in Annexures to Ld. CIT order including particularly Annexure- C. Ground No. 6 "That the Ld. CIT has erroneously relied on non applicable .....

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hway project. It is not binding on appellant. It in fact supports appellant by saying that the deduction is available even to an enterprise carrying on the business of developing any infrastructure facility. The purpose of the circular was to clarify availability of the deduction to effluent treatment and conveyance system. There is nothing in the circular which says that the benefit would not be available to an enterprise developing any infrastructure facility. The use of the word 'and' .....

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eduction in respect of interest on FDs and whether depreciation was admissible even while the project was not complete. These claims have been processed and correctly allowed after due consideration. There is no final finding by the Ld. CIT that these claims are incorrect. The assessee was duly entitled to these claims which are correctly allowed and as such too setting aside the assessment to be made de novo is unlawful and the order of the Ld. CIT deserves to be quashed". Here too, these .....

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ess has commenced and business income has been earned and assessed correctly for interest income. In Lok Holdings - 308 IT 356 (BOM)- business income assessed in respect of bank interest for an assessee engaged in construction business. This was for surplus money with bank in course of the business. Tuticorin distinguished as above in this case." 10. Further, we also find it just and proper to reproduce reply and submissions of the ld. DR on behalf of the revenue which read as under:- &bull .....

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ction is 100% of the profits and gains of eligible business for first five Assessment Years, "commencing at any time during the period as specified in sub-section (2)" i.e., from the year in which "the undertaking or enterprise develops and begins to operate any infrastructural facility" and thereafter, 30% of profits and gains for the further period of five years. • As per clause (c) of sub section( 4), the start of the operation and maintenance of a infrastructure proj .....

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r activities are an integral part of the highway project and the profits of which are computed on such basis and manner as may be prescribed, "such profit shall not be liable to tax where the profit has been transferred to a special reserve account and the same is actually utilized for the highway project. .. before the expiry of three years ... ". • The basis and manner in which the profits of housing and other activities are to be computed for the purposes of sub- section (6) ar .....

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engaged in building and infrastructural facility in the nature of a highway project including housing and other activities being an integral part of the highway project, the profits arising from housing and other activities would be exempt from tax under sub-section (6) whereas the profits arising exclusively from highway project would be admissible for deduction under sub-section (1) read with sub-section (2) and (2A). • Any relaxation of the provisions of Chapter VI-A (including the presc .....

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ent. • The assessee has begun to operate the infrastructural facility w.e.f. 09.08.2012 and hence prior to this date it had only profits which are attributable to sale of land, transferred to it in terms of Concessionaire Agreement. Therefore, in respect of profits exclusively from the highway project, the assessee would be eligible for deduction under Section 80-1A only w.e.f Assessment Year 2013-14. • The case of the assessee squarely falls within clause (b) of Explanation to sub-sec .....

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; Without prejudice to the contention that the claim of the assessee is squarely covered under sub-section (6) of section 80lA of the Act, even if the argument of the assessee that its case falls under sub section (4) thereof is accepted, it is undeniable that the assessee has entered into an agreement with the State Government for 'Developing, operating and maintaining a new infrastructure facility and therefore its activity squarely falls within (iii) of clause (b) of sub section (4) of se .....

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t the deduction would be admissible to the enterprise which, inter alia, "has started or starts operating and maintaining the infrastructural facility on or after 1st day of April, 1995." Thus the deduction to the assessee which has entered into an agreement for developing, operating and maintaining an infrastructure facility, under the provisions of sub section (4), would be admissible only from the year the operation of the facility begins. • The A.O. had raised this issue in th .....

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ed to cover cases where the operation and maintenance has commenced prior to 114/1995 and the work "starts is intended to cover cases where the commencement is after 114/95. Clause (c) specifies one of the conditions of eligibility of deduction and only clarifies that projects which has started operation and maintenance prior to the specified date or after the specified date will be eligible for the deduction. The said clause in no way can or is intended to override the stipulation in sub s .....

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the statute, sub section (4A) of section 80lA as it stood prior to 114/1999, w.e.f. A.Y. 1996- 97 (i.e.lst April, 1995) and clause (c) brings into the ambit of eligibility projects which has started before this date and also subsequent to this date. The second argument taken is that the deduction u/s 801A(4 )(i) is admissible also to an undertaking which only develops the infrastructure facility but does not operate it. Therefore the admissibility cannot be reckoned with reference to the commenc .....

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n case of the assessee, the unambiguous provision of the statute is that the deduction would be admissible only on the commencement of the operation. The AO, in accepting the said argument of the assessee, was indisputably in error in rendering the consequential assessment order erroneous. • Without prejudice to the contention made in the preceding point, the question that the developer of an infrastructural facility, who is an eligible entity, will not be able to claim the same since it do .....

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in the case and had no relevance to the case and was therefore clearly in error. Secondly, actually there is no ambiguity. There can be an instance where an assessee has entered into an agreement with the Centre/State Govt./Statutory Authority only for development of the infrastructure facility but thereafter transfers such facility to another entity or the Centre/State Govt/Statutory Authority and in consideration thereof, is entitled to the reverse stream arising to the transferor entity, eit .....

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rate accounts for housing and other activities nor has it furnished Form 10CCC during either with return of income or during the assessment proceedings. Acceptance of the claim of deduction by the AO without ensuring the fulfillment of the aforesaid statutory prescription applicable to the case of the assessee, or even without seeking a response from the assessee in respect of such failure undoubtedly was an error on the part of the AO and the consequential order granting the deduction squarely .....

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, in compliance of the provisions contained therein, a 'Special Reserve' aggregating ₹ 2800,69,052 (F.Y.2008-09 ₹ 255,36,26,035; F.Y. 2009-10 ₹ 362,48,77,424; F.Y. 2010-11 ₹ 1168,12,74,807 & F.Y. 2011-12 ₹ 1014,71,29,786) has been created during the year for the respective years. Since the said sum has been utilised by the Company for development of the infrastructure facility (the Yamuna Expressway) during the respective years an aggregate amount of  .....

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highway project. • The denial of claim for deduction by the Assessing Officer In the proceedings under Section 143(3) for A.Y.2011- 12 was based on identical grounds and has been upheld as such by the CIT (Appeals) in the appellate order for A.Y.2011- 12 dated 12.01.2015, notwithstanding that during the course of the appellate proceedings Form No. 10CCC for that year and had also filed a copy of its annual account for F.Y. 2013-14, wherein, as referred to above, a special reserve had been c .....

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tion 80-IA(6) in spirit is fallacious in as much as firstly, the substantive provisions of the statute, which grants a vested right either to the revenue ought to the assessee, cannot be ignored and secondly that the circumstances under which the provisions of Chapter VI-A can be relaxed has been provided for in the statute itself in Section 119(2)( c) of the Act. The assessee's action of creating special reserve post facto after the conclusion of assessment proceedings and furnishing a cert .....

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orically states that "the inescapable and logical conclusions would be that the assessee ought to have ITA NO. 3339/Del/2014 complied with provisions of sub-section (6) of Section 80- IA which it has not". Further, the CIT has also noted that the assessee had claimed deduction u/s 80lA on interest income from FDs made by deploying its surplus funds and the same has been erroneously accepted by the A.O. In this context, reference is invited to the decision of the ITAT Chandigarh Bench A .....

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and circumstances of the case it was validly exercised. Moreover, the assessee has claimed depreciation amounting to ₹ 22.67 crores and had been granted by the Assessing Officer even while the highway project had not been completed. The order of the Assessing Officer, which allowed the deduction under Section 80-IA and the depreciation, was patently erroneous and prejudicial to the interest of the revenue and was, without an iota of doubt, liable for the exercise of revisionary jurisdicti .....

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abad High Court reiterated the principle that grant of exemption to an assessee, without any discussion and without any application of mind, was erroneous and prejudicial to the interest of revenue. In the case of Tara Devi Agarwal (88 ITR 323), it was held that where the AO fails to make inquiries which are called for in the facts and circumstances of the case such order would be rendered erroneous. Merely making some queries without addressing the basic issues involved would amount to non appl .....

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aside the relevant provisions of the Act and IT Rules 1962 and CBDT Circular No. 1/2006 dated 12.1.2006. The ld. CIT DR mainly harping on the factual and legal contention that the assessee is in the business of development of a highway project including housing and other activities being an integral part of the highway project and defined in clause (b) of Explanation to section 80IA(4)(i) of the Act. Ld. CIT-DR further contended that the income from sale or sub lease & land is not an income .....

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/Del/2014 inaugurated and hence the assessee is not entitled for deduction on the income from such activity which is not a part of infrastructure facility development business. Ld. CIT-DR further pointed out that if for the sake of argument it is accepted that the income of the assessee is entitled for deduction, then again the same cannot be allowed for the assessee was the assessee has not complied with the mandatory provisions of sub-section (6) of section 80IA of the Act and Rule 18BBE of IT .....

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essee is not entitled for deduction u/s 80IA(4) of the Act on the profits and gains earned from sale/sub lease of land during the financial period under consideration as first, this activity is out of ambit of infrastructure facility development, secondly, the assessee did not commence its business operations during the financial year under consideration and thirdly, the assessee did not comply with the mandatory provisions of sub-section (6) of section 80IA of the Act and Rule 18BBE of IT Rules .....

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novo. Ld. CIT DR also pointed out that as extracts from assessee's Annual Report/Account for AY 2013-14 and certificate of Auditor in Form 10CCC dated 15.11.2014 (Paper Book of the Revenue/submissions of case laws page 13 to 19) shows that the assessee tried to patch up deficiency in statutory compliance of sub section (6) and the IT Rule 18BBC of Income Tax Rules. 14. The ld. AR placed a brief rejoinder to aforesaid contentions of the Revenue and submitted that as per stipulations, terms a .....

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Agra. The ld. AR, repeating his written submissions, also submitted that, since the assessee was under obligation to pay cost of land acquisition plus ₹ 100/- per hectare per annum lease rent on land for construction and development of Expressway, in addition to bearing cost of construction of Expressway and development of land, therefore, the project could not be viable unless the absolute rights on the land for development are given to the assessee as the only toll revenue was not suffic .....

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on, then the income earned from sale/sub lease of land for development is an income of first degree business operations and hence, the same is eligible for deduction u/s 80IA(4) of the Act. The ld. AR also contended that since the asessee has developed toll road and opted to avail deduction u/s 80IA(4) of the Act for AY 2009-10, therefore, the assessee also complied with the provisions of Rule 18BBB of the Income Tax Rules, 1962 and also submitted certificate in Form no. 10CCB. 16. The ld. AR ha .....

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olves around the fact that the assessee has claimed deduction u/s 80IA(4) of the Act on the basis that as per concession agreement between the TEA and the assessee company, the assessee develops "infrastructural facility" as per clause (a) of Explanation to section 80IA(4)(i) which was granted by the AO and subsequently, the ld. CIT, Noida issued notice u/s 263 of the Act on the contention that the claim of the assessee does not fall in clause (a) of Explanation to section 80IA(4)(i) o .....

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ent proceedings, office note dated 29/30.12.2011 of the AO, original assessment order passed u/s 143(3) of the Act, notice issued by ld. CIT Noida u/s 263 of the Act (supra), written submissions and contentions of the assessee objecting to the ITA NO. 3339/Del/2014 proceedings u/s 263 of the Act dated 19.3.2014, 25.3.2014 and 27.3.2014, impugned order, rival written submissions and contentions of both the sides (as reproduced hereinabove) placed before us and the ratio of the case laws relied by .....

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agreement and judgment of the Hon'ble Supreme Court in the case of Nand Kishore Gupta vs State of UP, the AO was correct in treating the subject year as falling in the eligible period u/s 80IA(2) of the Act in the light of the fact that the assessee did commence the development of the infrastructure facility since 5.4.2007 and was actively developing the infrastructure facility during the assessment year under consideration? (iii) Whether the AO took a plausible reasonable and sustainable vi .....

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2. (v) Whether the CIT Noida was in error by invoking provisions of section 263 of the Act in the peculiar facts and circumstances of the present case, specially when he has not decisively concluded the issue i.e. whether the assessee is developing a toll road or a highway project and left it midway without any decisive conclusion/direction? (vi) Whether the ld. CIT exercised its powers u/s 263 of the Act in revising the assessment order on the issue of allowability of deduction u/s 80IA(4) of t .....

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pect of profits and gains from' industrial undertakings or enterprises engaged in infrastructure development, etc. [(1) Where the gross total income of an assessee includes any profits and gains derived by an undertaking or an enterprise from any business referred to in sub-section (4) (such business being hereinafter referred to as the eligible business), there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, .....

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park (or develops a special economic zone) rendered to in clause (iii) of sub-section (4) or generates power or commences transmission or distribution or power (or undertakes substantial renovation and modernisation of the existing transmission or distribution lines." (3) xxxxxx (4) This section applies to- (i) any enterprise carrying on the business l[of (i) developing or (ii) operating and maintaining or (iii) developing, operating and maintaining] any infrastructure facility which fulfil .....

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essment year provided that the ship - (i) is owned by an Indian company and is wholly used for the purposes of the business carried on by it ; (ii) was not, previous to the date of its acquisition by the Indian company, owned or used in Indian territorial waters by a person resident in India; and (iii) is brought into use by the Indian company at any time during the period beginning on the 1st day of April, 1991 and ending on the 31st day of March, 1995." 20. First of all, we may point out .....

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EA for anchoring development of Taj Express way Project, which, interalia, includes construction of six lane, 160 km long Super Expressway with service roads and associated facilities connecting Noida and Agra, passing through a virgin area along the Yamuna River. B. TEA has invited bids for development of a Techno Economic Feasibility Report (TEFR) and Detailed Project Report (OPR), arrangement of finance, construction and operation of the said Expressway subject to and on the terms and conditi .....

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for "Schedule For land release" as per Option-II specified in Notice Inviting Offer, to develop the Project in three phases. E. TEA and the Company have mutually agreed on the terms and Conditions of the Concession Agreement to be executed between the Parties." CHAPTER - II SCOPE OF WORK 2.1 The "Work" shall include preparation of TEFR and Detailed Project Report (DPR), arrangement of finances, design, engineering, construction and operation of six-lane Expressway alongw .....

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k also includes operation and maintenance of the Expressway, including collection and retention of Fees during the term of the Concession Period. 2.3 The Expressway shall be developed in following 3 phases :- Phase 1 : Expressway stretch between Greater Noida and the proposed Taj International Airport. Phase 2 : Expressway stretch between the proposed Taj International Airport and an intermediate destination between the proposed Taj International Airport and Agra as may be mutually agreed betwee .....

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oject. 3.2 Subject to and on the terms and conditions set forth in this Agreement, the Concession hereby granted shall oblige the Concessionaire to undertake the following in accordance with the provisions of this Agreement, the Applicable Laws and the Applicable Permits. i To develop, design, engineer, finance, procure and construct the Expressway within the Construction Period; ii Upon completion of the Expressway and during the Concession Period to manage, operate & maintain the Expresswa .....

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3.3 The Concessionaire shall be granted, by TEA, rights for land development of 25 million sq. Mtrs of land along the proposed Expressway for commercial, amusement, industrial, institutional and residential development. The land for the purpose of development shall be provided by TEA along the Expressway at five or more locations of which one location shall be in Noida or Greater Noida with an area of 5 million sq. mtrs. The aforesaid land for development shall be in addition to the land for co .....

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ssionaire, which shall be repaid by the Concessionaire to TEA in 15 equal yearly instalments starting from 11th year of the Concession Period. 3.5 The Concessionaire shall submit TEFR / DPR within 2 years of signing the Concession Agreement. 3.6 The Concession Period shall commence on COD and shall end on the date of expiry of period of 36 (thirty six) years plus any extensions thereto provided in accordance with the ITA NO. 3339/Del/2014 provisions of this Agreement. However in case COD is not .....

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inalised by the Concessionaire in consultation with TEA. CHAPTER - IV LAND 4.1 Land for construction of Expressway shall be provided by TEA to the Concessionaire, generally in a width of 100 meters along the alignment of the Expressway with additional land width, where required, for developing other facilities like Toll Plazas etc., on following terms & conditions. a. The land for construction of Expressway shall be released as per following 3 stages: Stage - 1 - Land for Phase 1 of Expressw .....

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nd shall be free from Encumbrances. d. The sole premium of the transferred land shall be equivalent to the acquisition cost plus a lease rent of ₹ 100.00 (Rupees one hundred) only per hectare per year. The acquisition cost shall be the actual compensation paid to the land owners without any additional charge and shall be payable by the Concessionaire as per applicable rules. The lease rent shall be payable annually. 4.2 The land for development shall be released as per following 3 stages : .....

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nt would be made available within 12 (twelve) months of stage -1, provided TEA accepts the DPR / TEFR study prepared Concessionaire. - TEA is satisfied with the physical progress of phase - 1 and phase - 2 - Concessionaire makes financial arrangement for phase -3 to the satisfaction of TEA. For the purpose of satisfaction of TEA in respect of Financial Arrangement as aforesaid, the Concessionaire shall submit phasing of estimated expenditure, source of funds including own funds and copies of com .....

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per the request and choice of the Concessionaire subject to availability, in such a manner that the Concessionaire is entitled to achieve 150 Floor Area Ratio (FAR) on such land. If due to local byelaws or other statutory provisions, it shall not be possible to achieve 150 FAR, then TEA shall evolve suitable mechanism, as may be mutually agreed between the TEA and the Concessionaire, so as to enable the Concessionaire to achieve 150 FAR. c. The sole premium of the transferred land shall be equi .....

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in its sole discretion without any further consent or approval or payment of any charges / fee etc. To TEA or any other relevant authority. e. After sub-lease of part of the land by the Concessionaire, the same can be transferred / assigned without requiring any consent or approval of or payment of any additional charges, transfer fee, premiums etc. To TEA or to any other relevant ITA NO. 3339/Del/2014 authority and/or there can be subsequent multiple sub-leases of the land in smaller parts. Th .....

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hundred) per hectare per year. f. Each sub-lease and/or transfer shall after the execution thereof be notified by the transferor or the transferee or the sub-lessor/sub-leassee to TEA and till such time it is so notified the transferor/sub-lessor shall remain jointly and severally liable alongwith the transferee / sub-lessee for payment of lease rent to TEA. g. The Concessionaire may make a request to TEA to execute the lease deed directly in favour of Concessionaire's subsidiaries, assigns, .....

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ose for which transferred land will be used i.e. for commercial, amusement, industrial, institutional, residential etc. And also for the area of land to be allocated for different uses. The Concessionaire shall also be free to decide whether the sub'-leased land shall be in the form of plots or constructed properties. No permission of TEA shall be required either for the land use or for transfer of leasehold / sub-leasing / multiple sub-leasing of land. The land use shall however be as per a .....

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the Concessionaire at Stages 1, 2 & 3 according to the schedule mentioned in Clause 4.1 and 4.2 above for any reason other than attributable to the Concessionaire, TEA, at its discretion, shall either reimburse to the Concessionaire the additional cost and loss of revenue occasioned to the Concessionaire on account of the said delay or the Concessionaire shall be compensated by suitably extending the Concession Period." 21. In view of above agreement, the assessee was under obligation .....

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cost of acquisition plus a lease rent of ₹ 100/- per hectare per year. The assessee was under obligation to construct Expressway between Agra and Noida in U.P. and concession as mentioned in Chapter-III was granted to the assessee. From vigilant perusal of the concession agreement, we note that the assessee, in turn, was given the right to collect toll fees from expressway users and also granted right to decide the disbursement and purpose of land given for development and the rights to us .....

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ect resulted into existence of five developed parcels/centres in the state for the use of citizens and creation of these five parcels was also insuring the maximum utilisation of the Expressway. The ld. AR also submitted that the creation of the Expressway and five land parcels was complimentary to each other and can be viewed as important parts of integral scheme. The relevant observations of Hon'ble Apex Court read as follows:- "The Expressway is a work of immense public importance. T .....

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e creation of the five zones for industry, residence, amusement etc., would be complimentary to the creation of the Expressway. It cannot be forgotten that the creation of land parcels would give impetus to the industrial development of the State creating more jobs and helping the economy and thereby helping the general public. There can be no doubt that the implementation of the Project would result in coming into existence of five developed parcels/centers in the State for the use of the citiz .....

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(last part of para 30) We have already considered this question that in the present case, there is nothing to indicate that the acquisition is for the Company i.e. for Jaiprakash Industries Ltd. It is only, therefore, that we are at pains to point out that the Government was only using the Company for implementing its policy." (last part of para 34) 23. Hence, in view of above observations of Hon'ble Apex Court in para 30, we may safely infer that the land for development of the Express .....

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was intended to use the assessee company for implementation of the development policy of U.P. Government as observed by Hon'ble Apex Court in last operative part of para 34 of the judgment in the case of Nand Kishore Gupta (supra). 24. The ld. DR vehemently contended that as per language used by the legislature in sub-section (2) to section 80IA of the Act and the similar language which was again used by the CBDT in Circular No. 1/2006 stipulates that the assessee will be entitled for exempt .....

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ultaneously and the assessee has begun to operate the infrastructure facility only when the toll road was actually inaugurated by the Hon'ble Chief Minister of UP on 9.8.2012, which is related to FY 2012-13 pertaining to AY 2014-15, then exemption is not allowable for AY 2009-10 i.e. the assessment year under appeal. 25. Ld. AR replied that the assessee is entitled to deduction u/s 80IA(4) of the Act on the fact and law involved and relevant to the issue as a developer of the infrastructure .....

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the ratio of these judgments and orders. 26. Ld. AR reiterating its argument submitted before the ld. CIT Noida and relying on written submissions dated 19.3.2014, 25.3.2014 and 27.3.2014 (annexed to order of CIT as Annexure A, B & C) placed before the ld. CIT during proceedings u/s 263 of the Act, submitted that there is no requirement u/s 80IA(4) that the deduction would be available only after the assessee has begun the operation of the infrastructure facility. Ld. AR strenuously contende .....

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d, that deduction u/s 80IA(4)(i) of the Act would be available only after assessee has begun the operation of the infrastructure facility then the deduction u/s 80IA(4) would be available only after completion of project which is obviously spread over several years and exemption to those enterprises, which are involved only into the "development" of infrastructure facility, would never be available and this interpretation would defeat and frustrate the very purpose of the beneficial ta .....

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al meaning of sub-section (4). Ld. AR placing reliance on the decision of Hon'ble Supreme Court in the case of Ishwar Singh Bindra vs State of UP 1968 AIR 1450 (SC) and decision of Full Bench of Hon'ble Orissa High Court in the case of CIT vs Gangaram Chapolia (1976) 103 ITR 613 (Orissa-FB), submitted that the conjunctive "and" in sub-section (2) of section 80IA of the Act between "develops" and "begins to operate" and should be construed as "or" t .....

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the CBDT Circular No. 1/2006 (supra) has not been mentioned by the ld. CIT Noida in the notice issued to the assessee u/s 263 of the Act (supra). Secondly, the construction of language and words used by the legislature in sub-section (2) of section 80IA of the Act and used by the CBDT in Circular No. 1/2006 (supra) are similar viz. "develops and begins to operate". The heading given by the legislation to section 80IA of the Act reads as "Deductions in respect of profits and gains .....

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word "and" between "develops" and "begins to operate" then the enterprise would be entitled to exemption only when the enterprise develops and begins to operate infrastructure facility on or after 1.4.1995, as required by condition (c) of section 80IA(4)(i) of the Act. 29. Under said interpretation as given by the Revenue authorities, the enterprise would be entitled for exemption u/s 80IA(4) of the Act only after completion of the project even if development takes .....

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e decision of Hon'ble Supreme Court in the case of K.P. Verghese (supra) and decision of Full Bench of Hon'ble Orissa High Court in the case of Gangaram Chopalia (supra) and decision of Hon'ble Jammu & Kashmir High Court in the case of CIT vs J&KTDC (2001) 248 ITR 94 (J&K), as relied by the ld. AR. In the case of K.P. Varghese v ITO (supra), the Apex Court held that the interpretation of a statute being an exercise in the ascertainment of meaning, everything which is logi .....

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egislature and produce a rational construction. Speeches made by the members of the legislature on the floor of the House when the bill is being debated are inadmissible for the purpose of interpreting the statutory provision but the speech made by the mover of the Bill explaining the reason for its introduction can certainly be referred to for the purpose of ascertaining the mischief sought to be remedied by the legislation and the object and purpose for which the legislation is enacted. This i .....

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ery purpose of its enactment then the provisions of taxing statutes should be interpreted liberally so as to advance the objective of the provisions and not frustrate it. Ld. AR has further drawn our attention towards decision of Hon'ble Bombay High Court in the case of CIT vs ABG Heavy Industries Ltd. (2010) 322 ITR 323 (Bombay) and submitted that after considering the ratio of the decision of Hon'ble Apex Court in the case of Bajaj Tempo Ltd. (supra) it was also held that an assessee d .....

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he main object and scope of work, commencement of business operation are eligible for exemption u/s 80IA of the Act. Firstly, we note that Hon'ble Apex Court laid a basic principle for interpretation of beneficial taxation statutes in the case of Bajaj Tempo Ltd. (supra) which reads as follows:- "A provision in a taxing statute granting incentives for promoting growth and development should be construed liberally; and since a provision for promoting economic growth has to be interpreted .....

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g it." 33. In the decision of ABG Heavy Industries (supra) the Hon'ble Bombay High Court referring to the ratio of the decision of Hon'ble Apex Court in the case of Bajaj Tempo (supra) held the assessee did not have to develop the entire port/project into to qualify for a deduction u/s 80IA of the Act. Their lordships further held that the Parliament did not legislate a condition impossible of compliance. The relevant operative part of this order reads as follows:- "19 . The ob .....

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terms of the contract were not merely for supply and installation of the cranes, but involved a continuous obligation right from the supply of the cranes to the installation, testing, commissioning, operation and maintenance of the cranes for a term of ten years after which the cranes were to vest in JNPT free of cost. An assessee did not have to develop the entire port in order to qualify for a deduction under section 80-IA. Parliament did not legislate a condition impossible of compliance. A .....

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e was a vesting in the JNPT free of cost." 34. Therefore, in view of ratio laid down by Hon'ble Apex Court in the case of Bajaj Tempo (supra) and by Hon'ble Bombay High Court in the case of ABG Heavy Industries (supra), we respectfully note that a provision in taxing statute granting incentives for promoting growth and development should be construed liberally and since a provision for promoting economic growth has to be interpreted liberally, the restriction on it also has to be co .....

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ondition impossible of compliance. 35. Turning to the facts and circumstances of the present case, we note the ld. AR has contended that at the instance of the AO, the assessee submitted various replies to the queries of the AO including reply dated 28.12.2011(PB page 187 to 193) wherein it was submitted that as per requirement of section 80IA(4)(i) of the Act the assessee company is a special purpose vehicle (SVP) company incorporated and registered in India and it has entered into a concession .....

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ing the infrastructure facility but only developing the same is also eligible for exemption u/s 80IA of the Act. The ld. AR also pointed out that if a view is taken that as per clause (c) of section 80IA(4)(i) of the Act, the deduction is available only after the enterprise starts "operating and maintaining" the infrastructure facility, the enterprise only developing such infrastructure facility would never be eligible for any deduction under this section, because after completion of o .....

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the purpose of section 80IA(4)(i) i.e. to make even income from development of infrastructure facility eligible for deduction u/s 80-IA(4)(i) of the Act, clause (c) of the same provision of the Act should be read as "has started or starts developing or operating or maintaining or developing, operating and maintaining the infrastructure facility on or after 1st day of April 1995." 37. Ld. AR strenuously contended that if clause (c) is interpreted in the manner as adopted by the ld. CIT, .....

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s case is mainly that ITA NO. 3339/Del/2014 the assessee is claiming that as per objects of the company, concession agreement and main activities of the company, the company developed a toll road between Noida and Agra and his claim for deduction falls on four corners within the ambit of clause (a) of Explanation to section 80IA(4)(i) of the Act. Per contra, the main contention of the ld. CIT, Noida is that the assessee developed "a highway project" which was inaugurated on 9.8.2012 by .....

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4.2007 for developing, operating and maintaining the toll road between Noida and Agra along with service road and associated structures with rights to collect toll during the concession period and also given rights for sub-lease/development of land as an integral part of Expressway project. Ld. AR further submitted that Taj Expressway Industrial Development Authority (TEA) was constituted by Government of UP vide Notification No. 697/77-4-2001-03(N)/2001 dated 24.04.2001 under UP Industrial Area .....

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uiry Commission headed by the former Hon'ble Judge of High Court of Patna and Calcutta, the TEA and the JAL incorporated Special Purpose Vehicle (SPV) viz. Jaypee Infratech Limited the assessee company, for development operation and maintenance of 6 lane access controlled Expressway by way of execution of an Assignment Agreement for the purpose of assigning the assignment of the Concession Agreement in the name of assessee company i.e. Jaypee Infratech Limited (JIL) on 19/10/2007. The ld. AR .....

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of the Taj Expressway project was an outcome of the Policy decision of the Government of U.P. under the statute called U.P. Industrial Area ITA NO. 3339/Del/2014 Development Act, 1976 (U.P. Act No of 1976) and in exercise of the power as vested under section 3 of the said Act, the Government of UP constituted an Implementing Authority namely, "Taj Expressway Industrial Development Authority" (TEA) just prior to launching the project viz. the expressway connecting Noida with Agra was ab .....

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t five or more locations of which one location was in Noida or Greater Noida with an area of 5 million sq. mtrs. The aforesaid land for development was in addition to the land for construction of Expressway and was an integral and inseparable part of the infrastructure facility project. Ld. AR also contended that the land for expressway and land for development was made available by the TEA for the assessee company at the consideration of cost of acquisition plus ₹ 100 per hectare per year .....

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/undeveloped land (at five or more locations with an area of 5 million sq. mtrs. per land parcel) to sub- leases/end-user out of the land provided by the TEA to the assessee. Ld. AR further submitted that the toll fee to be charged from the customers was not to exceed the fee as may have been notified by Government of UP. Ld. AR strongly pointed out that the "Land for Development" is actually a consideration like the toll fee since the toll fee alone would not have been able to ensure .....

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portance and creation of land parcels by way of land development along with expressway would give impetus to the industrial development of the state creating more jobs and helping the state economy and thereby helping the general public. Ld. AR has further drawn our attention towards findings of the Inquiry Commission headed by Hon'ble Former High Court Judge, and submitted that Inquiry Commission also held that it was necessary to strengthen economic viability of the project by some mechani .....

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he land for development which is a narrow area and land for development was given along the proposed the 100 metre expressway, for industrial, commercial, institutional, amusement and residential development to the assessee company. 45. Ld. AR also again took us to the provisions of section 80-IA of the Act and submitted that the deduction u/s 80IA(1) is to be given on profits and gains derived from an undertaking or enterprise from any business referred to in sub- section 4 i.e. eligible busine .....

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(Del.) submitted that the term "income from business" would include all income emanating from the same. 46. Ld. AR turning to the facts of the present case submitted that any income arising from such land, allotted to the assessee for development, would also be regarded as income derived from the business of development, operation and maintenance of the infrastructure facility i.e. the toll road and it is that income which the assessee company has claimed as deduction under clause (a) .....

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perating and maintaining "road including toll road" which was commenced on 5.4.2007, therefore, the conditions laid down in clause (c) of sub-section 4(i) of section 801A is satisfied in the present case and accordingly, the deduction under section 801A ought to be allowed to the Assessee Company and the view taken by the AO while granting exemption to the assessee is a plausible and reasonable view which cannot be said to be a view erroneous or prejudicial to the interest of revenue a .....

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tegral and inseparable part of the consideration to the assessee company in respect of facility involved being toll road the rider created in section 80IA(6) apply to the infrastructure facility entity that fall in the definition of "highway project including housing or other activities being an integral part of the highway project" as defined in clause (b) of explanation to section 80IA(6) of the Act. Ld. AR vehemently contended that the restriction imposed by the legislature u/s 80IA .....

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ideration for the infrastructure facility project. 48. Ld. AR also submitted that the assessee company is eligible for exemption under clause (a) of Explanation 80IA(4)(i) of the Act, the assessee company, without prejudice to the aforesaid contentions, have also made an alternative claim u/s 80IA(6) of the Act, that if it is concluded that the assessee company is not eligible for exemption under clause (a) of explanation, then the assessee company may be considered eligible under clause (b) of .....

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assessee's paper book page no. 85 and submitted that as per auditor's report, form no. 10CCB for AY 2009-10, the assessee company's business was development, operation and maintenance of six lane access controlled Expressway between Noida and Agra along with service road and associated structures and sale/development or leasehold land along with the proposed Expressway. 49. Precisely, the contentions of the appellant company are that the assessee has entered into a contract with TEA .....

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which the business has commenced on 5.4.2007, therefore, the operation and maintenance of such road had started after 1.4.1995, accordingly, the condition laid down in clause (c) of sub-section 4(i) of section 80IA of the Act is satisfied in the assessee's case and exemption under clause (a) of Explanation to Section 80IA(4)(i) of the Act was rightly allowed to the assessee. 50. The precise reply and contentions of the revenue is that the assessee's business activities fall under clause .....

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e attributable to sale of land which was transferred to it in the terms of concession agreement, therefore, the assessee would be eligible for deduction u/s 80IA only w.e.f. AY 2013-14. On this issue, it was also contended by the ld. CIT DR that in respect of an assessee claiming to be engaged in building infrastructure facility in the nature of a highway project including housing and other activities being an integral part of the highway project, the profits arising from housing and other activ .....

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the relevant previous year for highway project and it was also required that such certificate is to be furnished in Form 10CCC which should be submitted along with return of income. 51. Ld. AR also placed a rejoinder to the above submissions of the ld. CIT DR that the concession agreement was executed for development of expressway and development of road. Ld. AR has further drawn our attention towards assessee's paper book page 180 to 184 and submitted that it was clarified before the AO th .....

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s from all activities that are integral part of the business of the road development. Ld. AR also invited our attention towards Form No. 10CCB r/w auditor's certificate under Rule 18BBB that the assessee is certified to be engaged in developing, operating and maintaining the infrastructure facility which is certified to be "road including toll road". 52. On careful consideration of above rival submissions, we note that firstly it would be just and proper to consider the meaning of .....

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ing of these terms/words for proper adjudication of actual aspects of this case, which read as under:- (A) Highway - a public road that everyone has right to use (Ref. Chamberlain dictionary, First Indian Edition 2001 at page 635) - A public road especially an important road that joins cities or towns together (Ref. Cambridge Dictionary, low price edition 1996 at page 669) (B) Expressway - a major road for fast moving traffic, especially with three lane per carriageway and limited access and exi .....

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xford Dictionary, Edition at page 1507). - A gate at the start of a road or a bridge at which you pay an amount of money in order to use the road or bridge.(Cambridge Dictionary, low price edition 1996 at page 1533) (E) Toll Plaza - a row of toll booths on a toll road (Ref. Concise Oxford Dictionary edition at page 1507) (F) It is pertinent to note that "Toll plaza" has also been defined at page 9 of the concession agreement as structures and barriers erected on the Expressway. For the .....

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ot; is a public road that everyone has right to use; an "Expressway" is major road for fast moving traffic with three lane per carriage way, meaning thereby both way six lane, with controlled limited access and exit points; whereas a "Toll" is a fee or charge payable to use of a road or bridge; Tollgate" is a gate at the start of a road or bridge at which user pays an amount of money (toll). For the use of road or bridge; and "Toll plaza" is a row of toll booth .....

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d as "Fees means the charges levied on and payable for vehicles using the Expressway in accordance with the fees as may be settled under this agreement." The cumulative meaning of these words used in definitions and other stipulations of the agreement make it vivid that there was a contract between assessee company and the TEA for developing, operating and maintaining a six lane controlled access Expressway with limited access and exit points between Noida and Agra and a fees/toll was .....

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ion can not be given to the contract and the agreement (supra) between the assessee company and TEA is intended to develop, operate and maintain a "toll road", therefore, the AO took a reasonable and plausible view in allowing exemption u/s 80IA(4) of the Act. 56. The relevant operative part of decision of Hon'ble Supreme Court in the case of Ishikawaijima Harima Heavy Industries Ltd. (supra) reads thus:- "In constructing a contract, the terms and conditions thereof are to be .....

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h the ld. CIT-DR that the assessee is engaged in the development of infrastructure facility of a "highway including housing or other activities being an integral part of the highway project". 58. Although the ld. AR has also placed an alternative claim u/s 80IA(6) but in view of our observations and findings, as set out above, the alternative said claim of the assessee and objections of ld. CIT DR about non-compliance of requirement of sub-section (6) of section 80IA of the Act becomes .....

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Act not only in AY 2009-10 but the same deduction under similar set of facts and circumstances was also granted to the assessee for AY 2010-11. Ld. AR placing reliance on the decision of Hon'ble Supreme Court/High Court in the case of Ishika (supra) submitted that the meaning and object of a contract can only be understood by the contents of contract and the intention and purpose of the contracting parties and no authority including taxing authorities are allowed to interpret the contract i .....

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ted 25 million sq. Meter land for development on cost of acquisition plus lease premium of ₹ 100/- per hectare per annum and in turn the assessee company was under obligation to develop, design, engineer, frame, procure and construct toll road and hence, the income from sale/development of land was indeed income derived from "Business" of development of road and would be eligible for deduction. 61. Ld. AR, reiterating assessee's arguments and submissions before AO vide letter .....

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on sq. Metre land along the proposed Expressway for commercial, industrial, institutional, amusement and residential development. It was also explained that as per concession agreement, the assessee company was under obligation to pay cost of acquisition plus lease rent of ₹ 100/- per hectare per annum for the land proposed to be used for construction of Expressway and also for the 25 million square Meter land for development along the proposed expressway at five or more locations. Ld. AR .....

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5 and submitted that the object of the infrastructure scheme can be seen from the global tender notice inviting offers to show that the infrastructure facility as envisaged was road including toll road along with development of infrastructure for commercial, industrial, amusement, residential and institutional development. Further, the land was to be offered on acquisition cost on lease for 90 years by the TEA and the development of the said land and works thereon was a means for compensation an .....

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ble for deduction. Ld. AR pointed out that the development of land was an integral and inseparable part of the business of road development due to its inextricable proximity with financial viability of the project and the word "Business" is wide enough to cover within its scope the profits from all activities that are integral part of road development. To support assessee's claim, ld. AR also pointed out that since sub-lease of plots is made pursuant to the rights granted under the .....

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siness of infrastructure facility. Ld. AR further illustrated that in case the assessee had received a sum of money as consideration from the state government, then undisputedly the said sum of money would be income from the business of infrastructure facility and if instead of a sum of money, the assessee has been allotted land for development with related rights and obligations, then obviously the income on sub-lease of the land is just a sum of money in kind on its realisation and is income f .....

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n to section 80IA(4)(i) of the Act refers to a "highway project including housing or other activities being an integral part of the highway project" is applicable to the extant case and so sub section (6) states that notwithstanding anything contained in sub-section (4) of section 80IA of the Act, where housing and other activities are integral part of the highway project and the profits of which are computed on such basis and manner in which the profits of housing and other activities .....

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apparent from the concession agreement and other relevant facts that in respect of an assessee claiming to be engaged in building and infrastructural facility in the nature of a highway project including housing and other activities being an integral part of the highway project, the profits arising from housing and other activities would be exempt from tax under sub-section (6) of section 80IA of the Act whereas the profits arising exclusively from highway project would be admissible for deducti .....

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during the year under consideration. 65. Ld. CIT DR also contended that the assessee has begun to operate the infrastructure facility w.e.f. 9.8.2012 when the Expressway was inaugurated by the Hon'ble Chief Minister of UP and hence prior to this date, it had only earned profits from sale or sub lease of land which was admittedly transferred to the assessee under terms of the concession agreement and therefore the assessee would be eligible for deduction/exemption u/s 80IA of the Act only w.e .....

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e its business activities squarely falls within clause (b) of Explanation to section 80IA(4)(i) f/w clause (iii) of the Act and since sub-section (2) of section 80IA categorically states that the deduction will be admissible "beginning from the year in which the undertaking or the enterprise develops and begins to operate any infrastructure facility" no deduction for income generated by activities of such infrastructure facility and/or any allied activity would be eligible for deductio .....

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ing an infrastructure facility, under provisions of section 80IA(4) of the Act would be admissible only from the year in which the operation of facility begins. 67. Ld. CIT DR pressing its written submissions, further argued that in response to query raised by the AO, the assessee advanced twin arguments, firstly, referring to the words and language of clause (c) of sub section (4) "it has started or starts operating and maintaining the infrastructure facility" the assessee submitted t .....

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er pointed out that clause (c) specifies one of the mandatory conditions of eligibility of deduction and only clarifies that the projects which have started operation and maintenance prior to the specified date or after the specified date will be eligible for deduction and clause ( c), in no way can or is intended to override the stipulation in sub-section (2) which mandates availing of deduction, in the cases of eligible projects, only from the beginning of the operation facility. Ld. CIT DR al .....

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ity but does not operate it, therefore, the admissibility cannot be reckoned with reference to the commencement of operation. Ld. CIT DR vehemently contended that this argument of the assessee is not acceptable because the case of the assessee is one in which it has entered into an agreement for developing, operating and maintaining infrastructure facility a distinct category of eligible project specifically covered under sub-clause (iii) of clause (c) of section 80IA(4) of the Act and the asses .....

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mption if the commencement of operation of infrastructure facility is accepted as pre- requisite for exemption as the assessee has not entered into an agreement only for development of infrastructure facility but for development, operation and maintenance of infrastructure facility. Ld. CIT DR also submitted that there can be an instance where an assessee has entered into an agreement with Centre/State Govt./Statutory Authority only for development of infrastructure facility and after completion .....

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e above legal contentions of the revenue, submitted that the language used in clause (c) is "has started" or "starts". The expression "has started" indicates the events which have already occurred whereas the expression "starts" indicates the events which would occur and since the assessee is in the business of developing, operating and maintaining "road including toll road" which business has commenced on 5.4.2007, therefore, the condition laid .....

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ion is available only after the enterprise starts "operating and maintaining" the infrastructure facility, the enterprise only developing such infrastructure facility would never be eligible for any deduction under this section, because such an enterprise would never "operate or maintaining" the infrastructure facility. Ld. AR repeated his earlier arguments and submitted that it is a settled legal preposition that a provisions should be interpreted in such a manner so that it .....

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es engaged in infrastructure development etc. " 72. Meaning thereby the provisions of Section 80IA of the Act is related to the deduction in respect of profits and gains from enterprises engaged in infrastructure development etc. We further note that as per language used therein sub-section (1) grants deduction in respect of any profits and gains derived by an undertaking or an enterprise from any business referred to in sub- section (4) thereof, under sub-section (2) the admissible deducti .....

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developing, operating and maintaining any infrastructure facility which fulfils the following conditions:- (a) It is owned by a company registered in India or by consortium of such companies; (b) It has entered into an agreement with Central Government or a State Government or a local authority or any Statutory Body for (i) developing or (ii) operating and maintaining or (iii) developing, operating and maintaining a new infrastructure facility. (c) It has started or starts operating and maintain .....

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for the remaining or unexpired period. The above noted meaning of aforesaid provisions is apparent from the language used therein. 74. Now if we consider the object of legislation, then as we have noted earlier that as per the heading given to the provision of section 80IA of the Act, the object of legislation is to provide deduction to the enterprises which are engaged in infrastructure development etc. It means that the infrastructure development is the main object of this provision to encour .....

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ntaining or (iii) developing, operating and maintaining any new infrastructure facility will be entitled for deduction explaining the third condition for eligibility of deduction whereas in clause (c) to sub-section (4)(i) it has been prescribed that the enterprise would be eligible for deduction when it started or starts operating and maintaining the infrastructure facility on or after 1st day of April 1995. 76. Before going further to interpret third condition prescribed in clause (c) of sub-s .....

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intended to grant deduction for the enterprises which only develops or which operates and maintains or which develops, operate and maintain infrastructure facility. Our aforesaid view also finds support from proviso to sub clause (c) to section 80IA (4)(i) of the Act, wherein it is also provided that if developer of an infrastructure facility transfers the same, then the transferee enterprise would also be eligible for deduction as if it were the enterprise to which this clause (c) applies i.e. .....

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April 1995 for mandatory starting or commencement date of infrastructure facility development and the enterprises which started developing or starts operating and maintaining infrastructure facility on or after 1str day of April, 1995 are held to be eligible for deduction u/s 80IA(4)(i) of the Act. 77. We may further observe that the elaborate meaning of collective and cumulative reading of sub section (2) and (4)(i) mandates three pre-conditions in clause (i) of sub-section (4) viz. (a), (b) a .....

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n (a) and (b) thereto. This interpretation also finds support from proviso to sub- clause (c) i.e. third condition wherein the transferee of infrastructure facility is also held to be eligible in the same manner in which the transferor which developed such infrastructure facility, is eligible for the remaining or unexpired period of deduction. In this situation, we may safely infer or draw a conclusion that the intention of the legislation is to grant deduction not only to an enterprise which de .....

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#39;ble Chief Minister of UP Government on 9.8.2012, the assessee is eligible for deduction w.e.f. AY 2009-10 (relevant to Financial Year 2008-09) and onwards as and when business activities of developing infrastructure has begun, then income derived from business would be certainly eligible for deduction. Ld. AR has also contended that the activity of sub lease or sale of land for development, which was received by the assessee as a major part of consideration of project, is an integral and ins .....

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ucture facility are eligible for deduction u/s 80IA(4)(i) of the Act from the date when it begins to operate its business activity of development of infrastructure facility. Ld. CIT DR could not demolish these contentions of the assessee including the contention that the business operations of eligible enterprises visualises the development of infrastructure facility. When development activities come to an end or completed and such activity begins to facilitate the intended users, the act of ope .....

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ay have spread over several years, for want of this impractical condition. In this situation, the eligible enterprise would become eligible only in the last year of development wherein development work ends and infrastructure facility begins to operate, this certainly can not be an intention of the beneficial taxation legislation. 80. We further decline to accept the contention of ld. CIT, Noida and ld. CIT DR that since the assessee has not maintained separate books of accounts and has not crea .....

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lause (a) of Explanation to sub-section (4)(i) of section 80IA of the Act and allegations and conclusion of ld. CIT, Noida are contrary to the facts and circumstances of the Act. 81. In view of foregoing discussion, we are of the considered view that the beneficial taxation provisions deserve a liberal interpretation which actually subserve the very purpose and object of the legislation and does not defeat or frustrate the same as has been held in several decisions and orders of Hon'ble Supr .....

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uth Arcot City 176 ITR 117 at page 119 (SC). In the judgment of Hon'ble Supreme Court in the case of CIT vs. Mahindra 144 ITR 225 at page 239 (SC) it was further held that the beneficial taxation provisions should be so construed as to effectuate the object of the legislature and not to defeat it . 83. The Hon'ble Supreme Court in the judgment in the case of Prabhakar P.R. Vs. CIT 284 ITR 549 (SC) held that although the exemption provisions are to be construed strictly as regards the app .....

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ld be assigned such meaning as it would enable the assessee to secure benefit intended to be given by the legislature to the assessee. 84. We are sincerely conscious about our limits that we cannot amend, alter or modify the statutory provision in any manner and also it would not be ITA NO. 3339/Del/2014 reasonable or permissible for the court to rewrite the section or substitute the words of its own for the actual words used by the Legislature in the name of giving effect to the reposed or supp .....

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basic features, which runs through our Constitution. It is for this reason, specific provisions are made in the Constitution, empowering the Legislature to make laws for levy of taxes, including the income-tax. The rationale behind collection of taxes is that revenue generated therefrom shall be spent by the Governments on various developmental and welfare schemes, among others. At the same time, it is also mandated that there cannot be imposition of any tax without the authority of law. Such a .....

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t;fairness"doctrine as it lays down that if it is not very levied to a particular class of persons or not, the subject should not be fastened with any liability to pay tax. This principle also acts as a balancing factor between the two jurisprudential theories of justice - Libertarian theory on the one hand and Kantian theory along with Egalitarian theory propounded by John Rawls on the other hand. Tax laws are clearly in derogation of personal rights and property interests and are, therefo .....

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on on the income earned from sub-lease/sale of land which was provided by the TEA to the assessee with an absolute right to use it, undisputedly the assessee company has started its business of developing the infrastructure facility w.e.f. 5.4.2007 and the same was continuing during relevant period pertaining to relevant assessment year under consideration i.e. AY 2009-10, and if assessee wants to avail its legal option to claim deduction u/s 80IA(4)(i) of the Act, then the assessee cannot be de .....

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g reliance on the decision of Hon'ble Supreme Court in the case of Malabar Industries Co. Ltd. Vs. CIT (supra) submitted that as per 263 of the Act it is clear that the pre requisite to exercise of jurisdiction by the Commissioner is that the order of the AO, in question, is erroneous in so far as it is prejudicial to the interest of the Revenue and the commissioner has to be satisfied with twin conditions, namely, (i) the order sought to be revised is erroneous; and (ii) prejudicial to the .....

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acing reliance on the decision of the Hon'ble Gujrat High Court in the case of CIT Vs. Arvind Jewellers (Supra) submitted that where the relevant material was on record which was duly considered by the AO and a reasonable and sustainable view was taken then merely because different view can be taken, should not have been the basis for invoking the revisionary powers under the section 263 of the Act. The Ld. AR, further contended that when a regular assessment is made u/s 143(3) of the Act, a .....

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e in law or where two views are possible and the AO has taken one of the possible views then the commissioner cannot exercise his powers under section 263 of the Act to differ with the view taken by the AO, even if there has been a loss of Revenue. 88. The Ld. AR has further drawn our attention towards assessee's paper book from page 93 to 196 and submitted that the AO has made detailed enquiries and after proper application of mind, has passed assessment order u/s 143(3) of the Act. The Ld. .....

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by the assessee under concession agreement, was, in fact, an important part of consideration received by the assessee for developing, operating and maintaining the toll road and without earning the revenue from said land, the toll road project would not be viable because only collection of the toll from such road would not even meet the cost of construction of toll road. The Ld. AR strenuously contended that aforesaid facts were submitted before the AO replying to the queries of the AO during a .....

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ercise and detailed enquiry conducted by the AO prior to allowing the deduction to the assessee, the Ld. CIT, Noida was not correct in holding that the AO passed assessment order without making proper enquiry and without application of mind and the same was erroneous and prejudicial to the interest of the Revenue. 89. Placing reliance on the decision of Hon'ble Gauhati High Court in the case of Bongaigaon Refinery and Petro Chemicals Ltd. vs. Union of India (Supra), the Ld. AR contended that .....

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. Gabriel India Ltd. (Supra), the Ld. AR pressed into service another proposition that if the AO, while framing assessment in accordance with law, makes certain assessment, then the same cannot be branded as erroneous unless it is not in accordance with law, by the Commissioner simply because, according to him, i.e. the Commissioner, the order should have been written more elaborately, as the section 263 of the Act does not allow substitution of the order of the AO for that of the commissioner. .....

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iterating the ratio laid down in its earlier order in the case of Malabar Industries Ltd. (supra), has held that where two views are possible and the AO has taken one view in the assessment order with which the commissioner does not agree, then the same cannot be termed as an erroneous order prejudicial to the interest of revenue unless the view taken by the AO is "unsustainable" in law. 90. The Ld. AR, vehemently contended that a plethora of judgments of Hon'ble Supreme Court and .....

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91. The Ld. AR has also drawn our attention towards recent decisions/ judgment of Hon'ble Delhi High Court in the case of CIT vs. DLF Ltd. (2013) 350 ITR 555 (Delhi), decision of Hon'ble Andhra Pradesh High Court in the case of Spectra shares and Scrips Pvt. Ltd. (2013) 354 ITR 35(AP) and decision of Hon'ble Calcutta High Court in the case of CIT vs. J.L. Morrison (India) Ltd. (2014) 366 ITR 593 (cal.) and submitted that there should be an essential element of "unsustainability .....

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esh de novo and remanding the matter for fresh examination is not permissible as the commissioner must reach to a conclusion and finding that final finding in assessment order was erroneous and incorrect. The Ld. AR also reiterated his arguments and lastly contended that in view of several decisions on this issue including decisions of Hon'ble Delhi High Court in the case of Honda Siel Power Products Ltd. (Supra) , decision of the Hon'ble Gujarat High Court in the case of CIT vs. Nirma C .....

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o revise the order. 93. To above submissions of the Ld AR, on behalf of the Revenue, the Ld. CIT- DR, drawing our attention towards last page 7 & 8 of her written submissions (as reproduced hereinabove), contended that the Ld. CIT in his order categorically states that "the inescapable and logical conclusions would be that the assessee ought to have complied with the provisions of sub section (6) of section 80IA which it has not" and the Ld. CIT also noted that the assessee had cla .....

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ke proper investigation into the eligibility of the assessee in violation to the claim of deduction u/s 80 IA of the Act on the business profits, interest and other income received during the year, therefore, the order of the AO was held to be erroneous and prejudicial to the interest at the Revenue and the Tribunal upheld the order of the CIT u/s 263 of the Act. 94. The Ld. CIT-DR also pointed out that the Assessee had claimed depreciation amounting to ₹ 22.97 crores and had been granted .....

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ssee company, did not apply his mind to the assertions made by the assessee and did not even comply with the CBDT circular no. 1/2006 dated 12.1.2006 and thus, due to these reasons, order passed by the AO u/s 143(3) of the Act was erroneous and also has the effect of perpetuating losses in the subsequent years, therefore, the same was also prejudicial to the interest of the Revenue. 95. The Ld. AR placed brief rejoinder to the above submissions and contentions of the Ld. CIT-DR and pointed out t .....

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the assessee. The Ld. AR also pointed out that the AO took a reasonable and plausible view which cannot be held as unsustainable by any stretch of imagination. The Ld. AR finally submitted that the Ld. CIT did not conclusively hold that the order of the AO is not sustainable and the Ld. CIT is not empowered to set aside the assessment order, without any conclusion, for fresh adjudication without any legal cause or basis, hence, impugned order is not valid and justified. 96. On vigilant and care .....

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s erroneous in so far as it is prejudicial to the interest of the Revenue and for this purpose, having regard to the stipulation and fabric of language of section 263 of the act it is vivid that the Commissioner may exercise his powers by calling and examining the records in the manner as indicated above and at this stage of consideration of the appearance of intended assessee or his representative is not required and therefore, there is no question or situation for the assessee to appear, objec .....

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d the same requires the commissioner to discharge his duties as per letter and spirit of the section 263 of the Act, which reads as under :- (1) The Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the [Assessing] Officer is erroneous in so far as it is prejudicial to the interests of the revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquir .....

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ty Commissioner] or the Income-tax Officer on the basis of the directions issued by the [Joint] Commissioner under section 144A; (ii) an order made by the [Joint] Commissioner in exercise of the powers or in the performance of the functions of an Assessing Officer conferred on, or assigned to, him under the orders or directions issued by the Board or by the Chief Commissioner or Director General or Commissioner authorised by the Board in this behalf under section 120; (b) "record" [sha .....

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considered and decided in such appeal.] [(2) No order shall be made under sub-section (1) after the expiry of two years from the end of the financial year in which the order sought to be revised was passed.] (3) Notwithstanding anything contained in sub-section (2), an order in revision under this section may be passed at any time in the case of an order which has been passed in consequence of, or to give effect to, any finding or direction contained in an order of the Appellate Tribunal, [Natio .....

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ssioner may, after giving an opportunity being heard for the assessee and after making such enquiry, as he deems necessary, pass such order as per facts and circumstances of the case including an order enhancing or modifying the assessment, or cancelling the assessment and directing the AO for fresh assessment. Meaning thereby, that the Commissioner must give an opportunity of being heard on the issues raised by the Commissioner in the notice u/s 263 of the act and it also confers on the Commiss .....

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assessment. 99. In the light of above stages emerged from the language used in section 263 of the Act and the proposition & ratio of the decisions relied by both the parties, we proceed to examine the validity of assumption of jurisdiction. 100. On careful consideration of aforesaid rival contentions of both the sides, at the very outset, we find it appropriate to go through the paper book filed by the assessee wherein the AO has raised several queries by way of note sheet entries and letter .....

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of queries and replies in regard to said claim by passing a detailed note sheet entry spread over 18 pages, which we are making part of this order, as Annexure - A, for sake of proper and just appreciation of assessment proceedings, said note sheet entry clearly shows the deliberations between the AO and the assessee company on the said issue and adjudication by the AO supporting the allowability of the claim of deduction to the assessee company. 101. We may further note that by the earlier part .....

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red opinion that the prepositions of two views is not applicable to the present case and even if view posed by the Ld. CIT is analysed then we note that the Ld. CIT himself has not conclusively decided that the assessees' claim of deduction falls under ambit of clause (b) of explanation to section 80IA (4) (i) of the Act. 102. In the case of CIT vs. Gabriel India Ltd. (supra), the Hon'ble Bombay High Court has held that the power u/s 263 (1) of the Act is in the nature of supervisory jur .....

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s certain assessment, the same cannot be branded as erroneous by the Commissioner simply because, according to him (Ld. CIT), the order should have been written more elaborately. Their Lordships further went on to hold that there must be some prima facie material on record to show that the tax which was lawfully eligible has not been imposed. 103. In the present case, the AO has raised a number of queries regarding the claim of the assessee u/s 80IA (4) of the Act which were replied by the asses .....

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High Court in the case of Gabriel India Ltd. (supra) and hold that the order of the AO cannot be held as erroneous merely because, according to the Ld. Commissioner, the order should have been written more elaborately in so many words for invoking supervisory provisions u/s 263 of the Act. There must be some prima facie material on the record to show that the order is unsustainable in law and the tax which was legally eligible has not been imposed. 104. The ratio of the judgments of Hon'ble .....

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he cases of Malabar Industries Co. Ltd. vs. CIT 243 ITR 83 (SC) and Smt. Tara Devi Aggarwal vs. CIT (1973) 88 ITR 323 (SC) and submitted that the incorrect application law and ignorance of binding board circular or order passed without application of mind would render it erroneous. 105. Furthermore, the Ld. CIT-DR placing reliance on the decisions of Hon'ble Jurisdictional High Court of Allahabad in the case of Jagdish Kumar Gulati vs. CIT (2004) 269 ITR 71 (All.) submitted that in the asses .....

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stigate the investments made by the assessee in construction of a particular house property. The Ld. AR vehemently contended that the present case is that wherein proper, detailed and adequate enquiry has been made. 106. The Ld. CIT-DR has also pressed the ratio of the judgments as Hon'ble Jurisdictional Allahabad High Court in the case of CIT vs. Bhagwandas (2005) 272 ITR 367 (All.) and submitted that if it is found that there was no discussion in the assessment order regarding the question .....

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lied by the assessee followed by detailed note sheet entry adjudication hence, present case is not case wherein as enquiry has been made or the claim of the assessee is allowed without any discussions and without application of mind. 107. The Ld. CIT-DR also pointed out that the Ld. CIT has rightly followed judgment of ITAT Chandigarh in the case of Vodaphone Essar Ltd. vs. CIT (supra), as no enquiry or investigation was made by the AO while considering the admissibility of claim of deduction vs .....

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upra) is the case of no enquiry and in the present case there is detailed enquiry, hence, facts of the present case are not similar. 108. On thoughtful perusal and consideration of the judgments relied by Ld. CIT-DR, we note that the decisions of Hon'ble Delhi High Court in the case of Gee Vee Enterprises (Supra) and Duggal & Co. (supra) are pertaining to the situation when there was no enquiry about the issues raised by the Ld. CIT and the AO failed to make any enquiry regarding claims .....

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ex Court, in the case of Smt. Taradevi Agarwal (supra) held that where an income has not been earned and is not assessable , merely because the assessee wants it to be assessed in his or her hands in order to assist someone else who would have been assessed to a larger amount, an assessment so made can certainly be erroneous and prejudicial to the interest of the revenue. 109. The judgment of Hon'ble Jurisdictional High Court of Allahabad in the case of Jagdish Kumar Gulati, (supra) as relie .....

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. CIT-DR, in the case of Bhagwandas (Supra) we note that the order of the commissioner passed u/s 263 of the Act was upheld in a peculiar situation wherein the assessing officer passed an order without any discussion and without application of mind and there was no discussion regarding the question as to whether the amount of income shown by the assessee which was claimed being exempt had actually been earned by him or not. It is also pertinent to note that the order of ITAT, Amritsar in the cas .....

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et, we sincerely note that judgments are the light houses in the path of adjudication of taxation appeals but we respectfully observe that the benefit of the ratio of the same is not available to the Revenue as the present case is neither a case of "no enquiry" nor is a case where the AO, failed to make necessary enquiry and the assessment order was passed without any discussion or enquiry and the AO allowed the claim of the assessee without application of mind and thus, we respectfull .....

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we note that as per land mark decision of Hon'ble Apex Court in the case of Malabar Industrial Co. Ltd. (supra), prerequisite for exercise of jurisdiction u/s 263 of the Act is satisfaction of the AO by twin conditions namely (i) the order of the AO sought to be revised is erroneous and (ii) it is prejudicial to the interest of the Revenue. It was further held that where two views are possible and the AO has adopted one of the two views then the assessment order is not erroneous and prejudi .....

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submitted that it is not mere prejudice to the Revenue or a mere erroneous view which can be revised u/s 263 of the Act but also there should be the element of "unsustainability" in the order of the assessing officer, which empowers the commissioner to issue notice and to proceed to pass an appropriate order. On careful reading of the same we note that Hon'ble High Court has held as under (at page 562) : "In this case, the record reveals that the Assessing Officer had issued .....

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t be lost sight of, equally, such a requirement has to be viewed in the context and circumstances of each given case. In the present case, it was repeatedly emphasized that the assessee's dividend income was confined to what it received from investment made in a sister concern, and that only one dividend warrant was received. These facts, in the opinion of this court, were material, and had been given weightage by the Tribunal in its impugned order. There is no dispute that the investment to .....

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as warranted, was a debatable fact. In any event, even if it were not debatable, the error by the Assessing Officer is not "unsustainable". Possibly he could have taken another view; yet, that he did not ITA NO. 3339/Del/2014 do so, would not render his opinion an unsustainable one, warranting exercise of section 263." 113. The Ld. AR has also placed reliance on the decision of Hon'ble Gujarat High Court in the case of Arvind Jewellers (Supra) wherein it was held thus : " .....

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n be taken should not be the basis for an action under section 263. The order of revision was not justified." Hence, as per the preposition and ratio laid down by Hon'ble Gujarat High Court is that when the assessee had produced relevant material and offered explanation in pursuance of notices u/s 143(2) and 142(1) of the Act and after considering the material and explanations, the AO had come to a definite conclusion. Their Lordship further held that in this situation, since the materi .....

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he case of ITA NO. 3339/Del/2014 CIT vs. Shiv Prasad (2011) 12 Taxmann. Com 118 (All.) and submitted that the proceedings u/s 263 of the act can only be taken in case if the assessment order is found to be erroneous and prejudicial to the interest of the Revenue and if one condition does not exist the revisional powers u/s 263 can not be exercised. The Ld. AR further submitted that as per ratio of the judgment of Hon'ble High Court of Allahabad in the case of CIT vs. Goyal Private Family spe .....

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tablish that the assessment order passed u/s 143(3)/148 of the Act is erroneous and prejudicial to the interest of the Revenue. In this case, their Lordship further held that even though, in the assessment order, there was no mention that the detailed enquiry had been made nor any evidence had been discussed, yet the returned income was accepted even then the order was not erroneous and could not be revised u/s 263 of the Act. 116. On behalf of the assessee, it was also contended that the Commis .....

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nion or finding on merits, the CIT has tocome to the conclusion and himself decide that the order is erroneous, by conducting necessary enquiry, if required and necessary, before the order under Section 263 is passed. In such cases, the order of the Assessing Officer will be erroneous because the order passed is not sustainable in law and the said finding must be recorded. CIT cannot remand the matter to the Assessing Officer to decide whether the findings recorded are erroneous. In cases where .....

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mandated further enquiry or investigation but the Assessing Officer had erroneously not undertaken the same. However, the said finding must be clear, unambiguous and not debatable. The matter cannot be remitted for a fresh decision to the Assessing Officer to conduct further enquiries without a finding that the order is erroneous. Finding that the order is erroneous is a condition or requirement which must be satisfied for exercise of jurisdiction under Section 263 of the Act. In such matters, t .....

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e. In most cases of alleged "inadequate investigation", it will be difficult to hold that the order of the Assessing Officer, who had conducted enquiries and had acted as an investigator, is erroneous, without CIT conducting verification/inquiry. The order of the Assessing Officer may be or may not be wrong. CIT cannot direct reconsideration on this ground but only when the order is erroneous. An order of remit cannot be passed by the CIT to ask the Assessing Officer to decide whether .....

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erial which the CIT can rely includes not only the record as it stands at the time when the order in question was passed by the Assessing Officer but also the record as it stands at the time of examination by the CIT [see CIT vs. Shree Manjunathesware Packing Products, 231 ITR 53 (SC)]. Nothing bars/prohibits the CIT from collecting and relying upon new/additional material/evidence to show and state that the order of the Assessing Officer is erroneous. 18. It is in this context that the Supreme .....

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his has resulted in loss to Revenue; or two views were possible and the Assessing Officer has taken one view with which the CIT may not agree; the said orders cannot be treated as an erroneous order prejudicial to the interest of Revenue unless the view taken by the Assessing Officer is unsustainable in law. In such matters, the CIT must give a finding that the view taken by the Assessing Officer is unsustainable in law and, therefore, the order is erroneous. He must also show that prejudice is .....

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amined at the time of assessment then it was held that the order of revision u/s 263 of the Act was not valid. 118. Continuing with arguments on the validity of assumption of jurisdiction u/s 263 of the Act, the Ld. AR also brought to our notice the recent decision of Hon'ble High Court of Delhi in the case of CIT vs. Hotz Industries Ltd. (2014) 49 Taxmann. Com.267 (Delhi) and contended that once inquiries were conducted and a decision was recorded by the AO, it cannot be said that it was a .....

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aused any inquiries or investigation, but accepted the contention of the assessee. Commissioner observed, "therefore, meaningful inquiry should be conducted". This does ITA NO. 3339/Del/2014 not meet the requirement that the decision of the Assessing Officer should be erroneous. Once inquiries were conducted and a decision was reached by the Assessing Officer, it cannot be said that it was a case of no inquiry. In such cases, the Commissioner must reach a finding that the finding of th .....

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impugned order (as reproduced hereinabove) of the Ld. CIT, Noida. Firstly, the Ld. AR pointed out that these two issues were not mentioned by the Ld. CIT in the notice u/s 263 of the Act, hence, revision on these two issues is not permissible for the commissioner u/s 263 of the Act. The Ld. CIT-DR pointed out that the assessee has not taken this ground, hence, the same cannot be entertained. The Ld. AR, vehemently contended that in all the grounds raised by the assessee specially in grounds no. .....

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on of jurisdiction and impugned order passed u/s 263 of the Act, hence, the assessee has legal right to question the validity of revisional action of the of the Ld. CIT in the impugned order on all four corners specially under Ground no. 7 and other grounds raised before us. 120. The ld. AR has drawn our attention to para 15 of the impugned order, as reproduced hereinabove in para 4 of this order and vehemently contended that the CIT Noida has disputed only sole issue pertaining to allowability .....

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ch was yet to be completed in addition to the main issue which is not permissible. To support above contention, the ld. AR has placed reliance on the decision of Hon'ble Andhra Pradesh High Court in the case of CIT vs G.K. Kabra (1995) 211 ITR 336 (AP) and deicison of ITAT Delhi in the case of B.S. Sangwan vs ITO (2015) 53 Taxman.com 402 (Delhi- Tribunal) to which one of us (C.M. Garg, JM) was the co-author. ITA NO. 3339/Del/2014 121. Ld. DR replied that the AO did not examine and verify the .....

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DR also submitted that the AO wrongly allowed claim of depreciation in computation of income without examining the fact whether the same was admissible even while the project was still going on and yet to be completed. 122. The ld. AR, placing rejoinder to the above submissions of the revenue, replied that it is not open and allowable to the CIT Noida to issue notice on one and only one reason and revising the assessment u/s 263 of the Act on two more issues or reasons which were not mentioned i .....

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d ITA NO. 3339/Del/2014 depreciation have been processed and correctly allowed by the AO after due consideration and examination by the AO. The ld. AR placing reliance on the decision of Hon'ble Bombay High Court in the case of Lok Holding 308 ITR 356 (Bombay) submitted that the business income assessed in respect of earned bank interest for an assessee engaged in construction business is business income as this has been earned from parking of surplus funds with the banks in the course of bu .....

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tted that when business income of the assessee was exempted u/s 80IA(4) of the Act, then why assessee would assail wrong claim of depreciation. On careful consideration of above rival submissions of both the parties, at the very outset, we note that the CIT, Noida has issued notice u/s 263 of the Act (supra), only raising and disputing the sole issue, the AO allowed exemption to the assessee under clause (a) of Explanation to Section 80IA(4)(i) of the Act and the assessee was showcaused on this .....

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vt. Ltd. (supra) had also considered the ratio of the decisions of Hon'ble High Court of Delhi in the cases of CIT vs Ashish Rajpal (2010) 320 ITR 674 Delhi and decision in the case of CIT vs Contimeters Electricals P. Ltd. (2009) 317 ITR 249 (Delhi) wherein dismissing the appeal of the Revenue, it was held that the issue which had not been part of notice u/s 263 of the Act could not form basis for revision of the assessment order u/s 263 of the Act. In the light of decision of Hon'ble H .....

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on interest income and allowability of claim of depreciation and this factum is fatal to the assessment order. This issue is covered in favour of the assessee on all four corners, Accordingly, we are inclined to accept the contention of the ld. AR that the ld. CIT was not empowered to revise assessment order u/s 253 of the Act on the issue of allowability of deduction u/s 80IA(4) of the Act on the interest earned from ITA NO. 3339/Del/2014 deposit of surplus funds, which were undisputedly receiv .....

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ra 7, we note that the Ld. CIT has annexed reply of the assessee, as Annexure A to the impugned order, thereafter, mentioning the cases laws relied by the assessee the Ld. CIT pointed out that an incorrect assumption of the facts or an incorrect application of law will satisfy the requirement of the order being erroneous as it is passed after wrong appreciation of fact available before the AO and non-application of mind on the part of the AO which has resulted in allowing the deduction u/s 80IA .....

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due to such omission of the part of the AO to follow sub sections (2), (4) & (6) of section 80IA of the Act, CBDT Circular (Supra), and Rule 18BBE of the Income Tax Rules, 1962. This allowance of deduction has lead to loss of Revenue, therefore order is also prejudicial to the interest of the Revenue. In subsequent para, the Ld. CIT further note that an order is erroneous deviating from law and the expression prejudicial to the interest of Revenue is of wide import which is not confined to .....

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fore Ld. CIT, himself or before the AO during assessment proceedings. 125. We may further note that the Ld. CIT has not conclusively decided that the claim of the assessee does not fall under clause (a) of Explanation to section 80IA (4) (i) of the Act and same falls under clause (b) of same provision. There is no further logical findings by the Ld. CIT to this effect that since the claim of the assessee falls under clause (b) Explanation to section 80IA (4) (i) and hence, the provisions of sub .....

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hat while invoking section 263 of the Act the commissioner should take a final decision that the law applied by the assessee to the facts of case is not in accordance with law and thus it is not sustainable. Mere set aside of assessment order to be made de novo without any conclusion on facts and applicability of law is not valid. 126. We further note that the judicial propositions and opinion are unanimous that the expression and essence as appearing in the fabric & language of the Section .....

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the light of facts and circumstances of the particular case under revision. We may further point out that when the AO takes a view and the commissioner, without recording any finding, that the view taken and order passed by the AO is not correct and therefore, the same is erroneous ITA NO. 3339/Del/2014 and prejudicial to the Revenue; holds that the assessment order is revisable u/s 263 of the Act, then the order of the Commissioner is not valid and sustainable. We may further note that it woul .....

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3 of the Act. 127. In the light of aforesaid discussion, if we analyse the facts and circumstances of the present case, we observe that the assessee company is in the business of developing, operating and maintaining infrastructure facility project since its incorporation w.e.f. 5.4.2007. We also observe that the development of the toll road with controlled access and exit points and right to collect toll from the users clearly put the Expressway within the ambit of road which is a toll road. We .....

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d by wrongly putting the case of the assessee in clause (b) of Explanation to section 80IA(4)(i) of the Act. 128. In view of our aforesaid observations and conclusion, on the facts of the case, we are inclined to hold that the view taken by the AO, while granting deduction u/s 80IA (4) of the Act to the assessee, is a reasonable and plausible which cannot be held as legally unsustainable and not in accordance with law and also being passed without application of mind. We, therefore, are of the c .....

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n of the assessment order on the issue of allowability of deduction u/s 80IA(4) of the Act in regard to the income of interest accrued to the assessee from the deposit of surplus funds in the fixed deposit banks accounts and allowability of depreciation is also not valid because these issues had not been raised or pointed out in the notice issued u/s 263 of the Act and thus, it is not open and permissible for the Ld. CIT to revise the assessment order on these grounds. Since assumption of jurisd .....

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