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2016 (8) TMI 271 - GUJARAT HIGH COURT

2016 (8) TMI 271 - GUJARAT HIGH COURT - TMI - Reopening of assessment - Eligibility for deduction under section 80IA(4) - as per AO assessee was not carrying on the business of developing or operating and maintaining or developing, operating and maintaining any infrastructure facility - Held that:- The petitioner's sole claim that the return was for deduction under section 80IA(4) of the Act, came to be examined by the Assessing Officer during the scrutiny assessment. During such assessment, the .....

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hus full details pertaining to the assessee's activities were at large before the Assessing Officer. Conscious of such details, he had framed the assessment. - It would therefore, not be permissible for the Assessing Officer to reopen such issue and that too beyond a period of four years from the end of relevant assessment year. Quite apart from the question of change of opinion, there was simply no failure on part of the assessee to disclose truly and fully material facts. As noted, in the .....

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lready on record. - It can thus be seen that the Assessing Officer merely desires to revisit the claim which was granted after full scrutiny in the original assessment. His opinion that the claim was not properly examined during such assessment would not authorise him to reopen the assessment. The reasons are based on materials already on record. - Decided in favour of assessee - SPECIAL CIVIL APPLICATION NO. 9474 of 2016 - Dated:- 2-8-2016 - MR. AKIL KURESHI AND A.J. SHASTRI, JJ. FOR THE P .....

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d filed return of income showing gross total income of ₹ 70.52 lacs (rounded off) claiming entire amount by way of deduction under section 80IA(4) of the Income Tax Act ( the Act for short). The Assessing Officer scrutinised such returns and framed assessment under section 143(3) of the Act on 24.3.2013. To reopen such assessment, respondent Assessing Officer issued impugned notice. To do so, he had recorded the following reasons : M/s. Avadh NILP(JV),Rajkot (PAN:AAQFA7091P), Rajkot, AY 20 .....

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worked awarded vide order dtd. 12.06.2009. However, M/s. Avadh Infrastructure Pvt. Ltd. and Narayan Infra Pvt. Ltd has constituted a joint venture in the name of M/s. Avadh NIPL (JV) vide partnership deed dated06.11.2009. Thereafter, the assessee firm (JV) had carried out the construction work of bridge on behalf of the M/s. Avadh Infrastructure Pvt. It is seen that the receipts in the case of assessee mainly consist of works contract with the Govt./Semi Govt. Bodies. On perusal of computation .....

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tion 80IA(13) which as been substituted by the Finance (No.2), Act, 2009 w.e.f. 01.04.2000, the deduction u/s 80IA(4) of the Act shall not be allowed to the persons who are doing business in the nature of works contract awarded by any person (including the Central & State Govt.) On the basis of details collected during the course of assessment it is seen that the receipts are mainly from works contract with Valsad (R&B) Division, Valsad which is a Government body. On further perusal of c .....

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ng or developing, operating and maintaining any infrastructure facility. 4. Thus, it is abundantly clear that the assessee has been executing the works contracts from the Govt./Semi Govt. Bodies. In view of the above provisions of the Act, it is evident that undertakings or enterprise carrying out work as per contract awarded by person (including the Central or State Government) shall not be eligible for claiming deduction within the meaning of section 80IA(4). The details of work carried out by .....

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80IA(4) is available to a developer of the infrastructural facilities as provided within the meaning of the said section and not to the contractors who simply execute work as per work contract received from either Central Govt. or State Govt. or any other agency. The Explanation, below sub section (13) of section 80IA, as inserted by the Finance Act, 2009 with retrospective effect from 01.04.2000 has only clarified that the deduction is not available to business referred to in subsection (4) wh .....

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0IA and hence, they are not eligible for deduction in respect of their business income from executing work orders as per contract with either Central Govt. or State Govt. or any other agency. The explanation does not in any manner provide for restricting or altering the meaning of the said provision, Rather, the position which was earlier apparent on a careful look of the provisions of subsection( 4) has now been made available even at the cursory look through the Explanation by clarifying the h .....

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ion( 1). From the memorandum explaining the rationale behind the substitution of Explanation, it can easily be seen that the legislature clarified its intention beyond any doubt that the deduction cannot be allowed in relation to a business which is in the nature of works contract. 6. In consideration of the above discussion and in view of the provision of section 80IA of the Income Tax Act, 1961 as applicable for the year under consideration, it is clear that the assessee is not eligible for de .....

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to be erroneous and prejudicial to the interest of revenue in allowing the deduction of a sum of ₹ 70,52,150/- u/ s 80IA(4)(i) of the IT Act to the assessee and therefore the order dated 24.3.2013 passed u/s 143(3) needs to be reopened u/s. 147 of the IT Act. In view of the above, I have reason to believe that the income to the extent of ₹ 70,52,150/- as stated above had escaped assessment within the meaning of section 147 of the Income Tax Act, 1961. 3. The petitioner raised objecti .....

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ned by the Assessing Officer during the original scrutiny assessment. Any attempt on his part to now reopen the assessment would not be permissible. 5. On the other hand, learned counsel Shri Desai for the department submitted that the petitioner had raised wrong claim. Deduction under section 80IA(4) of the Act would not be available for carrying out the works contract since the petitioner was not engaged in development of the specified project. 6. The Assessing Officer had recorded elaborate r .....

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.4.2000 which provides that deduction under section 80IA(4) is not available to persons who are doing business in the nature of works contract awarded by any person including the Central or State Government. 7. In this background, we may refer to the materials on record. The assessee had filed the returns showing gross total income of ₹ 70.52 lacs and entire sum was claimed by way of deduction under section 80IA of the Act. Along with the returns, the petitioner had produced audit report i .....

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rnish the following : (i) Nature of work carried out justifying deduction claimed u/s 80IA. (ii) As per Rule 18BBB, separate report is to be furnished by each undertaking or enterprise of the assessee claiming deduction u/s.80IA and shall be accompanied by the Profit and Loss account and Balance Sheet of the undertaking or enterprise as if the undertaking or the enterprise were a distinct entity. Please furnish the same. (iii) As per Rule 18BBB, if the case of an enterprise carrying on the busin .....

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anied by a copy of the agreement, approval or permission, as the case may be, to carry on the activity signed or issued on the Central Government or the State Government or the local authority for carrying on the eligible business. Please furnish the same. (v) Contract wise details in following proforma along with working of 80IA of the Act. Sl No. Particulars of the contract/project Amount of profit earned (Rs.) Nature of work done Please furnish consolidated contract income account. 9. In resp .....

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: 3. During the course of assessment proceedings, details were called for regarding fulfillment of conditions for claim of deduction u/s 80IA of the Act. The assessee is a partnership firm came into existence with effect from 12.6.2009, is an enterprise of two partners (1) Avadh Infrastructure Pvt. Ltd. (2) Narnarayan Infrastructure Pvt. Ltd. had jointly applied to the Executive Engineer, Valsad (R&B) Division, Valsad and tender sanctioned by the Government of Gujarat, R&B department, G .....

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eement No. is B2/80 Year 200910. 5. After verification of details furnished, the total income of the assessee is recomputed as under : Gross total income as per Return of Income Rs.70,52,150/- Less : Deduction u/s80IA(4)(i) of the Act Rs.70,52,150/- Return total income Rs. NIL Assessed total income Rs.NIL 11. It can thus be seen that the petitioner's sole claim that the return was for deduction under section 80IA(4) of the Act, came to be examined by the Assessing Officer during the scrutiny .....

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ent of Gujarat for construction of bridge. Thus full details pertaining to the assessee's activities were at large before the Assessing Officer. Conscious of such details, he had framed the assessment. 12. It would therefore, not be permissible for the Assessing Officer to reopen such issue and that too beyond a period of four years from the end of relevant assessment year. Quite apart from the question of change of opinion, there was simply no failure on part of the assessee to disclose tru .....

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