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2016 (1) TMI 241 - ITAT HYDERABAD

2016 (1) TMI 241 - ITAT HYDERABAD - TMI - Disallowance for deduction under section 80IA - whether the assessee is entitled to make a new claim for deduction under section 80IA in the returns of income filed in response to notices issued under section 153A? - Held that:- Mumbai Bench of this Tribunal in the case of DCIT vs. Eversmile Construction Co. P. Ltd., ( 2014 (4) TMI 347 - ITAT MUMBAI ), wherein while dealing with a similar issue, the main features of the relevant provisions were noticed .....

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inate Bench of this Tribunal in various cases and respectfully following the same, we uphold the impugned order of the Ld. CIT(A) holding that the assessee is entitled for deduction under section 80IA on merit in all the seven years under consideration. It is pertinent to note here that although this aspect of the matter relating to the assessee’s claim for deduction under section 80IA is decided by the Ld. CIT(A) vide his impugned orders in favour of the assessee in all the seven years under co .....

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able on record, the Ld. CIT(A) held that the pattadar passbook relied upon by the A.O. to deny the claim of the assessee of ownership of agricultural land was irrelevant as the purpose of the same was only to facilitate taking a loan from bank and it was never a document to establish the ownership of agricultural land. He also noted that it was common practice adopted in giving agricultural lands on oral agreements and the claim of the assessee of having given its agricultural land to farmers wh .....

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the assessee had discharged his onus to support and substantiate its claim of sub-contract expenses by establishing on evidence that the relevant work assigned to the said sub-contractors was actually executed, payments were made for the subcontract to the concerned two sub-contractors by cheque and tax was also duly deducted while making such payments. Moreover, there was no evidence brought on record by the A.O. to show that the amount of subcontract expenses allegedly inflated by the assesse .....

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so incurred by the assessee are excessive or unreasonable. As such, considering all the facts and circumstances of the case, we find ourselves in agreement with the Ld. CIT(A) that the disallowance made by the A.O. on account of alleged inflated sub-contract expenses by the assessee in the relevant two years i.e., A.Ys. 2011-12 and 2012-13 was not sustainable either in law or on the facts of the case - Decided in favour of assessee. - ITA.No. 946/H/2015, 947/H/2015, 948/H/2015, 983/H/2015, 984/H .....

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r appeals that are filed by the Revenue, two appeals being ITA.No.983 & 984/H/15 are directed against the common order of the Ld. CIT(A)-12, Hyderabad dated 21.05.2015 for A.Ys. 2009-10 and 2010-11, the third appeal being ITA.No.985/Hyd/2015 is directed against the Order of Ld. CIT(A)-12, Hyderabad, dated 21.05.2015 for A.Y. 2011-12 and the 4th appeal being ITA.No.986/Hyd/2015 is directed against the order of Ld. CIT(A)-12, Hyderabad dated 21.05.2015 for A.Y. 2012-13. Since the main issue in .....

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the first three years i.e., A.Ys. 2006-07, 2007-08 and 2008-09. Consequent to the conclusion of the search and seizure action on 03.02.2012 when the last of the authorizations was executed, notices under section 153A were issued by the A.O. on 09.10.2012 for the six years i.e., A.Ys. 2006-07 to 2011-12. In response to the said notices, the returns of income for the relevant six years were filed by the assessee claiming therein deduction under section 80IA. Meanwhile, the return of income for A.Y .....

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e found that the deduction under section 80IA was not claimed by the assessee either in its returns originally filed for the relevant six years i.e., A.Ys. 2006-07 to 2011-12 or even during the course of assessment proceedings for the said years and the same was made for the first time in the returns filed in response to notices under section 153A for the said years. Relying on the decision of Hon ble Supreme Court in the case of CIT vs. Sun Engineering Pvt. Ltd., 198 ITR 297 and that of Hon ble .....

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sidered the claim of the assessee for deduction under section 80IA on merit and held that since the infrastructure facility developed by the assessee was not owned by it, the basic condition stipulated in sub-clause (a) of clause (1) sub-section (4) of section 80IA was not satisfied and the assessee therefore, was not entitled for deduction under section 80IA on merit also. In support of this conclusion, he relied on the decision of the Mumbai Special Bench of ITAT in the case of BB Patil & .....

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ppeals filed before Ld. CIT(A). During the course of appellate proceedings before the Ld. CIT(A), various submissions were made by the assessee in support of its claim for deduction under section 80IA, which as summarized by the Ld. CIT(A) in his impugned orders, were as under : a) Section 153A clearly states that the return filed in response to the notice u/s 153A(1)(a) is a return which is required to be furnished u/s 139 of the I.T. Act. Further the section starts with a Nonobstante clause. T .....

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hich are to be given while computing the said income have to be given including claim of deduction u/s 80IA. d) Explanation to sub-section 2 of section 153A provides that all other provisions of the Act shall apply to the assessment made under this section. Therefore, deduction u/s 80IA which is there in the rest of the provisions of the Act, will apply. e) The Hon ble ITAT Mumbai in the case of Eversmile Constructions Pvt Ltd., (ITA No.423/Mum/2010) has clearly held that deduction claimed under .....

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t with a search assessment u/s 153A. Section 148/147 talks of assessment of escaped income which is clearly distinct from the assessment of total income which is mentioned in section 153A. Further, this decision of the Hon ble Supreme Court in the case of Sun Engineering was already distinguished by the Hon ble ITAT in the case of M/s Eversmile Constructions cited supra. h) The appellant also submitted that the facts of the case of M/s Jai Engg (Hon ble Rajasthan High Court decision) differ. The .....

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se of CIT Vs Pruthvi Brokers and Shareholders Pvt. Ltd., (ITA NO.3908/2010 dated 21.06.2012) to claim that Appellate Authorities have powers to entertain fresh claim of deduction either in the form of grounds of appeal or additional grounds of appeal when the same was rejected by the AO on the ground that claim was not made by the assessee either in the original return or revised return or in the assessment proceedings. j) The appellant cited CBDT circular no.14 (F.No.35, dated 11.04.1955) to su .....

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ch is developing the infrastructure facility which is being discussed in the sub-section. The Enterprise should belong to a company or a consortium of companies registered in India. The appellant cited the following decisions of jurisdictional Tribunal ITAT to claim that it is eligible for deduction u/s 80IA. (i) KMC Constructions vs. ACIT (ITA No.338/Hyd/2009). (ii) Koya & Company Constructions Pvt. Ltd., vs., ACIT (ITA.No. 180/Hyd/2006, 167 and 168/Hyd/2008 and 221/Hyd/2008). (iii) Ocean S .....

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ship of the infrastructure facility was not the condition for claiming deduction under section 80IA. He held that what is contemplated by sub-clause (a) of clause (1) of sub-section (4) of section 80IA is the ownership of the enterprise and not the ownership of the infrastructure facility. For this conclusion, he relied on the various case laws cited by the assessee wherein a similar proposition was propounded. He therefore, did not agree with the view of the A.O. that the assessee was not entit .....

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eas the assessments for A.Ys. 2009-10 to 2011-12, which were pending on the date of search, had got abated. 2.4. As regards the A.Ys. 2006-07 to 2008-09, he held that the original assessments having been already completed before the date of search, the assessments that were made by the A.O. under section 143(3) read with section 153A were re-assessments during the course of which, assessee was not entitled to make a new claim for deduction under section 80IA which had not been made in the origin .....

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laim for deduction under section 80IA. For this conclusion, he again relied on the decision of Rajasthan High Court in the case of Jai Steel (India) vs. ACIT (supra), wherein these two distinct situations were considered as basis for deciding whether assessee is entitled or not for making a new claim during the course of proceeding under section 153A. The claim of the assessee for deduction under section 80IA thus was allowed by the Ld. CIT(A) for A.Ys. 2009-10 to 2012-13 whereas, the action of .....

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tives of both the sides, besides strongly relying on the relevant portions of the orders of the authorities below which are in their favour, have also cited various case laws in support of their respective stand on the issue relating to the assessee s claim for deduction under section 80IA. We have carefully gone through and deliberated upon the judicial pronouncements cited by the learned representatives of both the sides. 3.1. As regards the preliminary issue as to whether the assessee is enti .....

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he Tribunal and after analysing the same, it was held by the Tribunal that any deduction claimed by the assessee in the proceedings under section 153A could not be rejected simply on the ground that it was not claimed in the original assessment. The relevant observations recorded by the Tribunal as contained in paragraph Nos. 6 to 9 of its order are extracted below : 6. From the prescription of the above section the following features are noticeable in so far as we are concerned with the instant .....

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nt years. - The second proviso to sub-section (1) provides that the assessment or reassessment, if any, relating to any of the six assessment years pending on the date of search u/s 132 or making requisition u/s 132A, shall abate . - Sub-section (2) of Section l53A provides that if due to one reason or the other the assessment made u/s l53A is annulled in any appeal or any other proceedings then the assessment or reassessment which had abated in second proviso to subsection (1) shall stand reviv .....

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, there is no restriction on the assessee to claim any deduction Which was not allowed in the original assessment. The requirement of section 153A is to compute the total income of each of such assessment years. Such determination of the total income has to be done afresh without any reference to what was done in the original assessment. Of course, the AO is entitled to make any addition in the fresh assessment, which he made in the original assessment, provided he is satisfied with the merits o .....

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ctibility of any item, which was earlier disallowed, counters the very concept of fresh assessment of total income. 8. The reliance of the learned Departmental Representative on the judgment of the Hon ble Supreme Court in the case of CIT Vs. Sun Engineering Works Pvt. Ltd [ (1992) 198 ITR 297 (SC) ] is misconceived. The reason for the same is that in that case the Hon ble Supreme Court was considering the provisions of section 147 and it was held that once an assessment is validly reopened it i .....

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such belief, the AO is called upon to record reasons for the reopening of the assessment before issuing mandatory notice u/s 148. If the foundation of reassessment, being the reasons about the escapement of some income do not exist, then it is impermissible to go ahead with the assessment u/s 147. It is sine qua non that some escaped income must be brought to charge in order to make a fresh assessment u/s 147. On the contrary, the search action itself mandates on the Assessing Officer to pass or .....

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he special procedure for assessment of search cases under Chapter XIV -B starting with section 158B. Whereas Chapter XIV - B required the assessment of undisclosed income as a result of search, which has been defined in section 158B(b), section 153A dealing with assessment in case of search with effect from 01.06.2003 requires the Assessing Officer to determine total income and not undisclosed income. 3.2. For the reasons given above, it was held by the Tribunal that the starting point of the as .....

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in the case of Sun Engineering (supra) as in the present case, but the same was found to be misconceived by the Tribunal for the reasons given in paragraph No.8 of its order which are already extracted above. 4. Besides the decision of Hon ble Supreme Court in the case of Sun Engineering (supra), the A.O. has relied upon the decision of Hon ble Rajasthan High Court in the case of Jai Steel (India) vs. ACIT (supra) to hold that assessee is not entitled to claim deduction under section 80IA for th .....

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rt in the case of Jai Steel (India) vs. ACIT (supra), we find that the facts involved therein were materially different from the facts involved in the present case as rightly pointed out by the Ld. Counsel for the assessee. First of all, the claim made by the assessee in the said case in the return filed in response to the notice under section 153A for the first time was that the Sales Tax incentive received by it was a capital receipt and the same being a subject matter of claim and not a regul .....

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the assessment passed earlier may have to be reiterated. In this regard, Hon ble Rajasthan High Court referred to the decision of Hon ble Delhi High Court in the case of CIT vs. Anil Kumar Bhatia (2013) 352 ITR 493 (Del.) wherein it was held that where an assessment order has already been passed either under section 143(1)(a) or 143(3), the A.O. is empowered to reopen those proceedings and reassess the total income taking note of the undisclosed income, if any, un-earthed during the search. Whil .....

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ts without any fetters, if need be. 4.1. Hon ble Rajasthan High Court in the case of Jai Steel (India) vs. ACIT (supra) also did not accept the arguments of the assessee that the new claim can be made for the first time even in the return filed in response to notice under section 153A when the original assessment had already been completed by observing that if the same is taken to its logical end would mean that even in cases where the appeal arising out of the completed assessment has been deci .....

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he situation as contemplated by the Hon ble Rajasthan High Court would not arise at all as there is no occasion in such case for the A.O. to un-do something which has been concluded up to the High Court as the assessee having not made any such claim during the course of original proceedings, there would not be any conclusion arrived at on the said issue even up to the High Court level arising from the original assessment proceedings. In our opinion, the decision of Hon ble Rajasthan High Court i .....

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in the case of CIT vs. Murali Agro Products Ltd., (I.T. Appeal No.36 of 2009 dated 29.10.2010) and that of the Hon ble Delhi High Court in the case of CIT vs. Kabul Chawla (Income Tax Appeal No.707 of 2014 and others dated 28th August, 2015) in support of Revenue s case. It is, however, observed that the issue involved in both these cases was whether the A.O. was empowered to make additions to the total income of the assessee in the assessments completed under section 153A without there being an .....

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ll as CIT vs. Kabul Chawla (supra) before Hon ble Delhi High Court thus was entirely different than the issue involved in the present case and the ratio of the said decisions cited by the learned D.R. is not applicable in the present case. 6. In the case of ACIT vs. VN Devodoss 157 TTJ 165 cited by the Ld. Counsel for the assessee, the Chennai Bench of this Tribunal had an occasion to decide a similar issue as involved in the present case. In this context, reliance was placed by the Tribunal on .....

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furnished under section 139. It was held by the Tribunal that it is because of this provision of law stated in section 153A(1)(a) that a statutory presumption is made that a return filed under section 153A is a return required to be filed under section 139(1) of the Act. The Tribunal also took note of the nonobstante clause contained in section 153A and held that said provision over-rides all other provisions stated in the Act in matters of filing of return of income consequent to a search and t .....

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denied on the ground that the claim was not made earlier. The Tribunal also relied on the decision of its Coordinate Bench in the case of DCIT vs. Eversmile Construction Co. P. Ltd., (supra) and held that the returns filed by the assessee under section 153A are to be treated as returns filed under section 139(1) by virtue of the law stated in section 153A(1)(a) and the assessees therefore, are entitled for deduction available under section 80IB(1). 7. It is thus that the decision of Mumbai Benc .....

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t that has been rendered without considering such statutory provisions that are directly relevant. We, therefore, follow the decision of the Chennai Bench of this Tribunal in the case of ACIT vs. VN Devodoss 157 TTJ 165 (supra) as well as the decision of Mumbai Bench in the case of DCIT vs. Eversmile Construction Co. P. Ltd., (supra) to hold that the assessee is entitled to claim deduction under section 80IA in the returns filed in response to the notices issued under section 153A for the releva .....

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is issue for A.Ys. 2009-10 to 2011-12 are dismissed. 8. During the course of assessment proceedings for all the seven years under consideration, the claim of the assessee for deduction under section 80IA was also examined by the A.O. on merit and on such examination, he held that the assessee not being the owner of the infrastructure facility as required by sub-clause (a) of clause (i) of sub-section (4) of section 80IA was not eligible to claim deduction under section 80IA. In support of this c .....

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the decision of Hon ble Bombay High Court in the case of CIT vs. ABG Heavy Industries Ltd., 322 ITR 323 wherein it was held that after section 80IA was amended by the Finance Act, 2001, the section applies to an enterprise carrying on the business of (i) developing or (ii) operating and maintaining, or (iii) developing, operating and maintaining any infrastructure facility which fulfills certain conditions and one of those conditions are that the ownership of the enterprise is by a company regi .....

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d not that the infrastructure facility should be owned by a company. It was held that the provisions are made applicable to the person to whom such enterprise belongs to, as explained in sub-clause (a) and the word Ownership used therein is attributable only to the enterprise carrying on the business which would mean that only companies are eligible for deduction under section 80IA(4) and not any other person like individual, HUF, firm etc. This issue thus is squarely covered in favour of the as .....

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claim for deduction under section 80IA is decided by the Ld. CIT(A) vide his impugned orders in favour of the assessee in all the seven years under consideration, the department has not disputed the same for A.Ys. 2006-07, 2007-08 and 2008-09 and it is disputed only in A.Ys. 2009-10 to 2012-13. We, therefore, dismiss the grounds raised by the Revenue on this issue in its appeals for the said four years. 9. In ground No.3 of its appeals for A.Ys. 2009-10 to 2012-13, the Revenue has challenged th .....

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agricultural land as well as declaration of the concerned farmers who had taken the said land on lease were filed by the assessee. From the perusal of the said documents as well as other material available on record, the A.O. recorded the following findings/observations. i) The assessee could not produce any lease agreement entered into between the assessee and the farmers. ii) The assessee could not produce Pattadar Pass book to support its claim. iii) It is found from the prospectus of the as .....

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enue authorities for mutation of the said free hold lands in the name of our Company, we are yet to receive any communication from the said authorities. Though we have entered into a registered sale deeds with the respective vendors of the land, pending the mutation of title deeds the name of our Company will not be reflected in the record of rights maintained with the relevant subregistrar. From the above, it is evident that the assessee company s name does not appear as agriculturist in the re .....

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or agricultural income could not be accepted and the lease rent received by it for all the relevant four years under consideration was added by him to the total income of the assessee as unexplained cash credits. The additions made by the A.O. by denying its claim for exemption on account of agricultural income in all the four relevant years were challenged by the assessee before the Ld. CIT(A) and the following submissions were made by it in support of the said claim before the Ld. CIT(A). a) M .....

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jects and reasons Act No.1 of 1999 AP Rights and Pattadar Pass Book Acts, 1971 section 6A extract was filed. b) A written lease agreement with the farmers is not required and an oral agreement or understanding is sufficient especially where it is an issue between the tenant farmers and the land owners. Secondly, keeping the low quantum rent which is 2,00,000/- and the nature of payment being agricultural income, the common practice adopted is giving lands on oral agreements. One has to take into .....

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1. d) The A.O. cited clause no.36 of the Prospectus of the assessee submitted to SEBI in 2007. This clause mentioned the risk pertaining to not obtaining the mutation of title deed by the company even though an application was made to the relevant revenue authorities for mutation of said land in the name of the company. A disclosure to SEBI regarding pending transfer of ownership of agricultural lands in the revenue records does not mean that there are no agricultural lands or there is no leasin .....

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o the appellant, the ownership of the land as testified by the title deeds and the giving of lands for lease as testified by the declaration of the farmers cannot be denied. I also find it somewhat incongruent to hold that an appellant declares 82.37 crores as total income but disguises ₹ 2,00,000/- income as agricultural income to avoid tax payment on that portion. Other than questioning the ownership in absence of pattadar passbook, I do not find any evidence either in seized material or .....

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10 to 2012-13. 10. We have heard the arguments of both the sides and also perused relevant material on record. It is observed that the claim of the assessee for exemption on account of agricultural income was accepted by the Ld. CIT(A) after having found that the ownership of agricultural land by the assessee was duly evidenced by the sale deed. He also found that the claim of the assessee of having given the said land to the farmers on lease was duly supported by the declaration filed by the sa .....

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on oral agreements and the claim of the assessee of having given its agricultural land to farmers which was duly supported by the declarations filed by the concerned farmers could not be denied merely for want of written agreement as done by the A.O. Having regard to all these finding of facts recorded by the Ld. CIT(A) based on the relevant documentary evidence, which have not been controverted or rebutted by the learned D.R. at the time of hearing before us, as well as other findings given by .....

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account of alleged inflation of subcontract expenses. 11.1. In its returns of income for A.Ys. 2011-12 and 2012-13, substantial sub-contract expenses were claimed by the assessee. On verification of the said expenses, it was found by the A.O. that one of the contractors namely M/s. General Trading Corporation (in short GTC ) to whom sub-contract payment of ₹ 25.76 crores was made by the assessee for A.Y. 2011-12 was a Delhi based party while the area of operation was at Nirmal, Andhra Prad .....

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xplanation. A detailed explanation in this regard was furnished by the assessee which was summarized by the A.O. in his assessment order. He however, did not find the same to be acceptable and on the basis of adverse findings recorded by him in relation to the case of the sub-contractor M/s. GTC, the A.O. came to the conclusion that there was no evidence to establish that the work was carried out by the said sub-contractor as claimed by the assessee. He however, agreed that such work as per the .....

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curred by the GTC on the works given by the assessee by taking the percentage of receipts from the assessee to the total gross receipts at 89.81% and by applying the said percentage to the outstanding liability of ₹ 9.9 crores shown by the assessee as payable to GTC, he estimated the amount of inflated expenditure at ₹ 8.89 crores. From the said amount, he reduced a sum of ₹ 3.04 crores being 89.81% of the profit of ₹ 3.39 crores offered by the GTC and arrived at the amou .....

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m sub-contract payment of ₹ 8.1 crores was made by the assessee, was used as conduit to inflate sub-contract expenditure. He however, adopted a different method to quantify the alleged inflated sub-contract expenditure for A.Y. 2012-13. In this regard, he adopted the rates given in NHAI Data Book 2009 and applying the same to the work of excavation of soil and embankment construction stated to be done by the concerned sub-contractor, he arrived at the estimated value of work of the said wo .....

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ssee in the appeals filed before the Ld. CIT(A). During the course of appellate proceedings before the Ld. CIT(A), the following submissions were made by the assessee while challenging the disallowance made by the A.O. on this issue in A.Y. 2011-12. a) The addition is based on assumptions, presumptions and surmises. Even the very computation is based on such assumptions. b) The total project cost was 503 crores and during the execution of the work, part of the works relating to bus shelters, ser .....

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e taken up simultaneously. The total sub contract works given to M/s GTC were for ₹ 25,76,57,655/-. c) The bills raised by the GTC were duly verified and signed by the site engineers, quantity surveyors, project manager and the proprietor of GTC. d) A separate due diligence inspection is also done by NHAI by an independent third party consultant and the copy of certificate of such independent consultation of NHAI confirming the completion of project physically on ground, was submitted. Eve .....

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GTC during the relevant year and proceeded to consider the total contract receipts of ₹ 25.76 crores from M/s KNRCL, the appellant as M/s GTC s receipts. Copy of the asst. order dated 25.03.2015 was submitted as part of the second paper book. This assertion and action of the AO in the assessment order of the GTC actually goes in favour of the appellant. g) Sworn statement was recorded from the proprietor of GTC and it was confirmed that GTC has executed the work on its own. h) Photographs .....

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itted to the A.O. which clearly proved that M/s GTC had executed the work. Content of the certificate was reproduced in the second paper book filed in course of appellate proceedings. The letter indicated names of five sub-contractors who are involved in execution of works, among them GTC is one of the sub contractor. k) The A.O. opined that inflation of expenditure cannot be ruled out and proceeded to make an estimate of the expenditure incurred on the work. If at all the AO had any such issue, .....

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) CIT vs. Chandar Chemouse P. Ltd., (2008 ITR 98) (Rajasthan). (iii) Jaya S. Shetty vs. ACIT (69 ITD 336) (Mum.) (ITAT). l) Addition of ₹ 6 crores is an arbitrary figure which is basically 89.81% of liabilities of 9.91 crores appearing in the GTC Balance Sheet for AY 2011-12.This is totally unwarranted as disallowance on the basis of outstanding liabilities of subcontractor is not at all tenable. m) If the A.O. is not satisfied about the accounts of sub contractors, disallowance of expendi .....

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ed sub-contract expenses for A.Y. 2012-13. After considering the submissions made by the assessee on this issue as well as the material available on record, the Ld. CIT(A) recorded his findings/observations on this issue in his impugned order for A.Y. 2011-12 as under : (a) The AO found that actually works were completed and all the payments were by way of cheques and the same were also offered to tax by the sub contractor. In fact, if one excludes the suppressed turnover of ₹ 7.83 crores .....

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that 89% of this outstanding liability relates to the works given by the appellant. Then the second presumption is that this 89% of liabilities in the books of the sub contractor are inflated and are income of the main contractor. Now, liabilities in the books are linked to either capital or revenue expenditure and revenue expenditure is debited to P & L acct. The expenditure was accepted without rejecting books but the consequent liabilities, without any reference to the actual creditor in .....

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e of CIT Vs Consulting Engineering Group Ltd (365 ITR 284) (2014). (d) As far as the main contractor, the appellant M/s KNRCL is concerned, it had a sub contract agreement, it had made payments by way of cheques, it had deducted TDS and the works were also actually found to have been executed and certified by independent third party inspection of NHAI and the presence of the sub contractor was also certified by the contemporary certificate of Village Sarpanch in 2010 during the relevant previous .....

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cation. (b) The disallowance was quantified on the basis of estimation of what could have been correct expenditure on the works executed based on a guideline book of NHAI for 2009. Apart from the doubts regarding the applicability of 2009 rate in 2011, however, much we enhance and adjust to the rates, the fundamental problem in the addition made is the assumption made. The AO, going by the NHAI rate book, perhaps is drawing first a conclusion that the main contractor should have paid only say 5 .....

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ng flowing back of cash on account of such inflation to the main contractor. In this manner, the AO can estimate and overturn every expenditure debited by comparing with the rate book and estimating what should be correct expenditure and deem everything above such rates as inflation of expenditure. Thus, not only the quantification of what should be correct expenditure is questionable, the inference drawn being that of inflation by main contractor is equally questionable. 11.6. On the basis of t .....

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enue s case on this issue and submitted that various adverse findings recorded by the A.O. pertaining to the case of the concerned contractors, which have been overlooked by the Ld. CIT(A), may be considered while deciding this issue. 13. The Ld. Counsel for the assessee on the other hand, strongly supported the impugned orders of the Ld. CIT(A) giving relief to the assessee on this issue and submitted that the detailed submissions made by the assessee before the Ld. CIT(A), which have been reli .....

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aimed to be incurred by the assessee on execution of the said work on sub-contract basis. The A.O. however, did not accept the claim of the assessee that the said two contractors have done the said work and by presuming that the said work might have been done by some other sub-contractors, he inferred that the concerned two contractors were used by the assessee as conduit to inflate the sub-contract expenses. For taking this stand, the A.O. mainly relied on the various defects noticed by him in .....

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roceeded to draw an adverse inference against the assessee by alleging the inflation of expenditure relying on the defects or deficiencies in the books of account and other record maintained by the concerned two sub-contractors, which are third parties not related to the assessee. It is pertinent to note here that no such adverse inference however was drawn by the A.O. in the case of the concerned two sub-contractors and in the assessments completed under section 143(3) in their cases, the amoun .....

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