TMI Blog2016 (3) TMI 407X X X X Extracts X X X X X X X X Extracts X X X X ..... orders are placed on record. Therefore, the AO in preceding assessment years as well as in the assessment year under appeal has considered the Explanation to section 80IA(13) of the IT Act and was satisfied with the explanation of the assessee on the eligibility for deduction u/s. 80IA(4) of the IT Act. The AO, therefore, took one of the plausible view in the matter and therefore, the assessment order could not be treated as erroneous and prejudicial to the interest of revenue. - Decided in favour of assessee - ITA No. 111/Agra/2013 - - - Dated:- 1-2-2016 - BHAVNESH SAINI, JUDICIAL MEMBER AND MRS. ANNAPURNA MEHROTRA, ACCOUNTANT MEMBER For The Appellant : Shri Ashish Goyal, Advocate For The Respondent : Shri Waseem Arshad, Sr. DR ORDER Per Bhavnesh Saini, Judicial Member: This appeal by the assessee has been directed against the order of ld. CIT, Gwalior dated 25.02.2013 for the assessment year 2008-09 u/s. 263 of the IT Act. 2. The record reveals that earlier this appeal was heard by the Division Bench of ITAT, Agra on 24.06.2014. The draft order was put up before the learned Accountant Member, who, however, kept it pending for a very long period an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... works contract for development of rail system as awarded to it by the Railways. Therefore, the deduction u/s. 80IA is not allowable to the assessee. The ld. CIT also noted that in view of the reasons mentioned in the notice, as adequate enquiries have not been conducted with regard to allowability of deduction u/s. 80IA(4) of the Act, therefore, the assessment order was considered to be an error which is prejudicial to the interest of Revenue and accordingly, assessment order was set aside and the matter was restored to the AO to decide the same by carrying out proper enquiries as per law by providing the assessee adequate opportunity of being heard. 4. The learned counsel for the assessee relied upon the submissions made before the authorities below and also filed synopsis of his arguments. He has contended that the assessee is engaged in the business of developing and construction of infrastructure facilities in the form of railway tracks and canals on behalf of Government and their agencies. Assessment year 2003-04 was the first year of operation of the assessee-company. The assesseecompany claimed deduction u/s. 80IA(4) of the IT Act as it was engaged in developing of infra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontractors and this point is examined by the AO and accepted by him. He has relied on the decision of Supreme Court in the case of Malabar Industrial Co. Ltd. 243 ITR 83 on the proposition that where two views are possible and the ITO has taken one view, with which the CIT does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the Revenue unless the view taken by the ITO is unsustainable in law. He has also relied upon the decision of Delhi High Court in the case of CIT vs. Ansal Housing and Construction Ltd., 45 taxmann.com 223, in which it was held that on debatable issue, on which more than one permissible view is possible and if the AO takes one plausible view, it cannot be said that the assessment is erroneous or prejudicial to the interest of Revenue. He has also relied upon the order of ITAT Pune Bench dated 08.06.2011 in the case of Laxmi Civil Engg. P. Ltd. vs. Addl. CIT, copy of which is placed on record. The ld. CIT has not given any reasons as to how the assessee is a works contractor. The assessee has substantial interest in the project, as the assessee has fixed assets of ₹ 4.30 crores (PB-30) and also furnished security depos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rival submissions and the material on record. It is necessary to reproduce the Explanation to section 80IA(13) of the IT Act, which is the main issue involved in the present appeal. The Explanation as inserted by Finance Act, 2007 w.e.f. 01.04.2000 reads as under : For the removal of doubts, it is hereby declared that nothing contained in this section shall apply to the person who executes works contract entered into with the undertaking or enterprises, as the case may be. 6.1 The above Explanation was substituted by the Finance Act, 2009 w.e.f. 01.04.2000, which reads as under Explanation. For the removal of doubts, it is hereby declared that nothing contained in this section shall apply in relation to a business referred to in sub-section (4) which is in the nature of a works contract awarded by any person (including the Central or State Government) and executed by the undertaking or enterprise referred to in sub-section (1). The AO at the assessment stage asked the assessee to justify the claim of deduction u/s. 80IA of the IT Act and the assessee submitted detailed reply before the AO which were supported by the decisions of different Benches of ITAT and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A, one of the conditions imposed was that the enterprise must start operating and maintaining the infrastructure facility on or after 1st April, 1995. The same requirement is embodied in sub-clause (1) of sub-clause (4) of the amended provisions. It was urged that since the assessee was not operating and maintaining the facility, he did not fulfill the condition. The submission is fallacious both in fact and in law. That the assessee was maintaining the facility is not in dispute. The facility was commenced after 1st April, 1995. Therefore, the requirement was met in fact. Moreover, as a matter of law what the condition essentially means is that the infrastructure facility should have been operational after 1st April, 1995. After Section 80 IA was mended 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. Those conditions are (1) ownership of the enterprises by a company registered in India or by a consortiums; (II) an agreement with the central or State Government, local author ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... absurdity and therefore uncalled for. Therefore, we find requirement of harmonious reading of sub-clause (c) vis- -vis of clause (i) of section 80IA(4) of the Act. Thus, the discussion in High Court s decision in paragraph-22 extracted above, is directly applicable to the facts of the case and eventually is entitled for the deduction under section 80IA (4) of the Act. Accordingly, the modified ground, which is common in all the four appeals is allowed in favour of the assessee. 7. In the result, all four appeals of the assessee are allowed. 7. The admitted facts of the case are, therefore, clear that while making original assessment, the assessee submitted proper explanation and evidence before the AO to justify the claim u/s. 80IA(4) of the IT Act. The assessee is engaged in the business of developing and constructing infrastructure facilities in the form of railway tracks and canals on behalf of the Government and their agencies. The assessee was granted exemption in initial assessment year 2003-04 being first year of operation accepting that the assessee is engaged in developing of infrastructure facilities. Similar claim was also allowed in assessment year under ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ls relevant for the purpose of getting the benefit under section 80-IB of the Act and there was no suppression of materials. In spite of full disclosure, the Assessing Officer gave benefit of the provision by considering the materials on record and thus, it cannot be said that any income escaped assessment in accordance with law. We find that the Assessing Officer has now given a second thought over the same materials. 7.1 The above judgment supports the claim of assessee that if an Explanation is added to a section of statute for removal of doubts, the implication is that the law was the same from the very beginning and the same is explained by way of addition to Explanation. Thus, insertion of Explanation to section 80IA(13) by Finance Act, 2007 and Finance Act, 2009 were in conscious consideration of the AO not only in assessment year under consideration but in preceding assessment years as well. Hon ble Allahabad High Court in the case of Goyal Private Family Specific Trust, 171 ITR 698 held that the order of the ITO may be cryptic, but that by itself is not sufficient reason to brand the assessment order as erroneous and prejudicial to the interest of Revenue. Hon ble Guj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it was held Where a fundamental aspect of a transaction is found to have permeated through different assessment years and this fundamental aspect has stood uncontested then the Revenue cannot be allowed to change its view taken in earlier assessment years unless it is able to demonstrate a change in circumstances in the subsequent assessment year. Held, that the Commissioner s order did not contain a finding to the effect that the stand taken by the assessee that the units purchased from the Unit Trust of India had actually been physically delivered along with executed transfer deed was false. Without such a finding the allegation that the transactions were speculative could not be sustained. The fundamental nature of the transactions was examined year after year more importantly in the assessment year 1986-87 it was specifically considered by the Commissioner (Appeals) and it remained the same. Given the fact that the assessee had been engaged in these transactions in the preceding assessment years, the Commissioner could have had no occasion to have recourse to the revisional powers under section 263 of the Act on the fundamental aspects of the transactions in issue ..... X X X X Extracts X X X X X X X X Extracts X X X X
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