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2016 (11) TMI 1237 - ITAT DELHI

2016 (11) TMI 1237 - ITAT DELHI - TMI - Revision u/s 263 - Eligibility of claim u/ section 80IA(4)- Held that:- The income from sale/lease of plots has been in very categoric terms been held to be eligible for deduction under clause (a) of Explanation to section 80IA(4). We further note that in para 57 considering the gamut of business activities on the basis of the Agreements and documents on record which admittedly had accepted that the only aim and object of the assessee was developing infras .....

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acility having been temporarily parked in banks and used for raising loans from the banks against Guarantees etc. The utilization of these amounts admittedly is again for the very same sole purpose of infrastructural facility. In the circumstances, we find the income is necessarily, directly and inextricably linked with the eligible business of the assessee. Considering the character of the same, the facts and circumstances of the specific and peculiar nature of assessee’s business, the nexus is .....

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t:- interest income is to be treated as business income of the assessee. The miscellaneous income qua sale of scrap etc. again being directly and inextricably linked with the development of infrastructural facility it is to be treated as business income. Same is the position for money forfeited in the peculiar facts of the present case. However, on these last two sources of income since supporting evidences are not available the issue is restored for verification on facts. The claims principally .....

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d as business income. - Disallowance of depreciation - Held that:- On a consideration of the reasoning qua depreciation recorded by the AO and upheld by the CIT(A), we find that the only reasoning taken is that since the project of toll road construction was in progress where from no receipt was declared the profit being solely from sale/lease of plots the claim was disallowed. In view of the categoric finding of the Co-ordinate Bench that the business has commenced the reasoning adopted can .....

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uction of tds for payment of interest u/s 194A and for payment of lease rent in term of section 194I - disallowance u/s 40(a)(ia) - Held that:- where the assessee has not claimed it as an expense the occasion to make an addition by way of a disallowance does not arise and if at all it had to be made it could be limited only to ₹ 10,149/- which is the amount claimed as an expense. We also find that reliance has been placed on the decision of the Jurisdictional High Court to argue that as fa .....

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self are not applicable is left open as the issue becomes academic at this stage. - Appeal partly in favour of assessee for statistical purposes. - I.T.A .No.-414/Del/2015 - Dated:- 6-9-2016 - SMT DIVA SINGH, JUDICIAL MEMBER AND SH.L.P.SAHU, ACCOUNTANT MEMBER For The Assessee : Sh. Anil Chopra, CA and Sh. Vinod Garg, CA For The Revenue : Sulekha Verma, CIT DR ORDER PER DIVA SINGH, JM The present appeal has been filed by the assessee assailing the correctness of the order dated 12.01.2015 of .....

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ortunity to the appellant and Ld. CIT(A) has erred in riot quashing the same. 3. That the unlawful assessment as made and order of Ld. CIT(A) are based on erroneous views, non appreciation of facts and law on suspicion and conjectures contrary to binding case laws in the appellant's favour, without proper consideration and rebuttal of filings and submissions on record. 4. That the Ld. CIT(A) has erred in not admitting the additional evidence as filed by the appellant arid riot considering th .....

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#8377; 19,92,85,259/- as business income derived from the eligible infrastructure facility and in not allowing deduction u/s 80IA in respect of the same. The Ld. CIT(A) has erred in upholding the view of the Ld. AO. 7. That the Ld. AO has erred on facts and in law in riot netting the interest income on FDRs of ₹ 14,50,06,637/- in other income against the substantially higher amount of interest paid having a nexus and common business with the said interest earned. The said interest is deriv .....

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been netted against interest paid under capital work in progress as per AS-16. In any case, the said income is also derived from infrastructure facility and its lousiness income eligible for deduction u/s 80IA as an intrinsic part of the business of the infrastructure facility. The Ld. CIT(A) has erred in upholding the view of the Ld. AO. DISALLWOANCE OF DEDUCTION U/S 80IA 9. That the Ld. AO has erred on facts and in law in riot allowing deduction u/s 80IA on the entire business income earned b .....

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ernately under explanation (b) as a highway project where housing or other activities are an integral part of a highway project as read with section 80IA(6). The appellant's claims in this matter are without prejudice to each other. The Ld. CIT(A) has erred in upholding the view of the Ld. AO. 11.That a provision should be interpreted in such a mariner so that it subserves the purpose for which it is enacted and does not frustrate such purpose. Moreover, the beneficial provisions for tax ded .....

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intaining the same in view of direct decisions in its favour including inter alia reported in ACIT v. Bharat Udyog Ltd. 118 ITD 336 which follows the decision of the Hon'ble Apex Court in K. P Verghese v. ITO 131 ITR 597 (SC) and as in TRG Industries (P) Ltd. v. DCIT (2013) 35 Taxrnann.com 253 (Amritsar - Tribunal). DISALLOWANCE OF EXPENSES U/S 40(A)(IA) 13.That the Ld. AO has erred on facts arid in law in making a disallowance u/s 40(a)(ia) for impugned non deduction from interest and rent .....

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82/- is debited to capital work in progress, ₹ 2,42,132/- to Project Under Development and only ₹ 10,149/- has been claimed as expense. 14.That moreover, the Ld. AO has erred in making the said disallowance without verifying or holding that the tax involved has not been paid by the payee. As such too, the said disallowance u/s 40(a)(ia) is liable to be deleted. DISALLOWNACE OF DEPRECIATION 15.That the Ld. AO has erred on facts and in law in disallowing depreciation of ₹ 6,08.09 .....

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18.That the appellant craves leave to add, amend, modify and/or forgo any of the grounds of appeal. 2. Ld. AR inviting attention to the grounds raised submitted that primarily the assessee s main prayer is addressed vide Ground Nos. 9 to 12 i.e. namely that the assessee s claim of deduction is covered under clause (a) of Explanation to section 80IA(4)(i). Only in the eventuality if the said prayer is held to be not allowable, then without prejudice to the main argument the assessee would be seek .....

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Ground No. 4 in the present proceedings. 2.1. Addressing the grounds it was submitted Ground No. 1 may be treated as a general ground and it addresses the entire addition and may not require any specific adjudication independently. Ground No. 2 it was submitted addresses lack of opportunity and the assessee would not want to press the said ground. Ground No. 3 it was submitted may be taken as an argument on the issues agitated in the subsequent grounds. 2.2. By way of Ground No. 5 and 6 it was .....

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come paid and earned. Ground No.13 it was submitted addresses the grievance against the disallowance made u/s 40(a)(ia). On this issue decision of the Jurisdictional High Court which being the Allahabad High Court it was submitted is in assesse s favour. Alternately even otherwise addressing Ground No. 14 it was submitted reliance is placed on the decision of the Hon ble Apex Court in the case of the Hindustan Coca-Cola Beverage P. Ltd. vs CIT [2007] 293 ITR 226 (SC). By Ground No. 15 it was sub .....

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essed in Ground Nos.9 to 12 and also another separate written submissions on the remaining grounds supported by paper Books consisting of case laws etc. relied upon addressing the arguments on facts and law. 3. Addressing first the main issue addressed vide Ground Nos.9 to 12, reliance was placed on the Synopsis and the written submissions filed. Inviting attention to the same it was submitted that the order of the ITAT dated 13.04.2015 in assessee s own case in ITA No. 3339/Del/2014 pertaining .....

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as submitted have been raised in the case of an assessee where the material facts continue to remain the same. Reading from the synopsis/written submissions it was argued that the assessee company which is incorporated under the Companies Act, 1956 was formed as a Special Purpose Vehicle (SPV) on 05/04/2007 for developing, operating and maintaining the toll road between Noida and Agra along with Service Road and associated structures with rights allotted to it to collect toll during the Concessi .....

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14.05.2001 for development, operation and maintenance of 6 lane access controlled Expressway. 3.1.2. M/s Jaiprakash Associates Ltd. (formerly known as Jaiprakash Industries Ltd.) it was submitted was declared the successful Bidder. Reading from the synopsis filed it was submitted that these are admitted facts and are being addressed so as to demonstrate that the assessee scrupulously adhering to the requirements of the Agreement performed its end of the bargain and delivered a world class Expre .....

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h has been subjected to rigorous and intense judicial scrutiny, media glare etc. and has faced various investigations, public interest litigation, Enquiry etc. where grant, purpose, aim and object of each and every aspect of this activity has been repeatedly enquired into at various levels right upto the level of the Apex Court. These intense legal and socio-economic scrutiny it was submitted is not withstanding the economic downturn and financial crunch experienced in the economy world over whi .....

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n held out to the assessee in terms of clause (a) of Explanation to section 80IA(4) and even after facing the brunt of the order of the tax authorities u/s 263 the assessee finds its confidence shaken when despite the fact that this is not the initial year the tax authorities still want to depart from the accepted position. 3.1.3. Reverting to the facts of the case it was submitted that the State Government, in exercise of the power as vested under section 3 of the said Act, constituted, just pr .....

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na River. For the said purposes it was granted rights for land development of 25 million sq. mtrs of land on 90 years lease along the proposed 100 meters wide Expressway for creating commercial, amusement, industrial, institutional and residential development to the SPV Company. TEA accordingly it was submitted provided the "land for development" along the Expressway at five or more locations of which one location was in Noida or Greater Noida with an area of 5 million sq. mtrs. The af .....

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Jaiprakash Industries Ltd. (now Jaiprakash Associates Ltd.) and Taj Expressway Industrial Development Authority (TEA). Elaborating the Project Details it was submitted that the concept of the Project Taj Expressway was an outcome of the Policy decision of the Government of U.P. under the statute called U.P. Industrial Area Development Act, 1976 (UP. Act No of 1976). These facts have been fully examined and considered by the Inquiry Commission headed by Shri. Sidheshwar Narayan, Justice (Retired .....

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retain the amounts from rights to further lease out the developed/undeveloped land (at five or more locations with an area of 5 million sq. mtrs. per land parcel) to subleases/end-user. It was agreed that 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" accordingly it was submitted is a Concession like the toll fee since the toll fee alone it was well understood would not have .....

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see and the state etc. amongst others the Project was cleared by the Inquiry Commission Report and in the PIL also the issue was decided in assessee s favour and in favour of the State Government of U. P. The Apex Court it was submitted in the said case of Nand Kishore Gupta & Ors V. State of UP & Others held that the Expressway is a work of immense public importance and the creation of land parcels would give impetus to the industrial development of the State creating more jobs and help .....

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ired) High Court Patna and Calcutta in unambiguous terms concluded 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 Project by some mechanism and, accordingly, it was decided to provide 2500 hectares of Land for Development to the successful Bidder along the Expressway". It was submitted that the Commission further held that: "The Taj .....

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ery same activity the Assessing Officer in 2009-10 Assessment year by an order dt. 30.12.2011 passed u/s 143 (3) allowed deduction claimed u/s 80IA. The said year it was submitted was the initial year. In the next assessment year, it was submitted a different Assessing Officer in 2010- 11 assessment year again assessed the income of the assessee by an order passed u/s 143 (3) and allowed the deduction claimed u/s 80IA. Thus where in the two immediately preceding assessment year, the revenue has .....

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ng that there has been non-application of mind by the AO as the order was held to be based on erroneous views and non-appreciation of facts. The said order it was submitted has been quashed by the ITAT. Relying upon the order dated 13.04.2015 in ITA No. 3339/Del/2014 it was submitted that the ITAT examined these issues in detail and by a detailed order came to the conclusion that the benefit granted by the legislature vide clause (a) of Explanation to section 801A(4) of the act cannot be denied .....

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s the assessee is concerned which is why attention right at the outset has been invited to Ground Nos. 9 to 12 as the assessee is confident that the assessee need not argue the grounds relatable to the alternate prayer addressing section 80IA(6) and consequently to seek admission of additional evidence which has been denied by the CIT(A). 3.4. It was his submission that the activity of the assessee revolves around a toll road and it is the initial year which has to be seen in regard to the deduc .....

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into by the judicial inquiry commission constituted under the Chairmanship of retired Justice Sh. Sidheshwar Narayan and it was also a subject matter of litigation by a PIL filed before the Hon ble Apex Court and in the said decision of Nand Kishore Gupta and others vs State of UP and others. Considering the specific terms and conditions of the integrated project. 3.5. It was his submission that the legislature has made a distinction between a highway and a toll road and the modalities for both .....

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for developing operating and maintaining the six lane toll road between Noida and Agra along with service roads and associated structures was granted 5 parcels of land thereby allowing the assessee to develop and utilise the profits so generated from the development of these lands for utilising in the construction of the Taj Expressway. It was his submission that it is nobody s case that the Expressway has not been built. The Expressway has been built meeting the high standards required. It was .....

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contemplated the situations realistically and made the deduction available to any enterprise carrying on the business of developing; or operating and maintaining; or developing, operating and maintaining any infrastructure facility. Relying on Iswar Singh Bindra 1968 AIR 1450 (SC) it was submitted that the word and had to be read as or . Referring to the written submissions placed on record it was submitted that the Hon ble Court held in the context of interpretation of statute that in certain c .....

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he case of Spentex Industries Ltd. v. Commissioner of Central Excise, 920150 62 taxmann.com 101 (SC). 3.5.1. The CIT, Orissa vs Ganganam Chapolia [1976] 103 ITR 613 (ORI) F Bench decision was also relied upon so as to submit that it has been held by the Court that the word and should be construed as or where the context so requires. 3.5.2. Accordingly it was submitted that the words develops and begins to operate……………. In section 80IA(2) in the context of secti .....

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t was his submission that the legislature does not use superfluous words and by contemplating both situations that is develops or operates the assessee is entitled to the deduction. The mere fact that the assessee is developing itself entitles the assessee to the deduction and the Revenue is not correct in its insistence upon the argument that the deduction is available only if the toll fee is collected and because the toll-fee is not collected in the year under consideration the benefit of the .....

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ur. 3.6. Inviting further attention to sub-section section (4) of section 80IA and Explanation (a) and (b) thereunder it was his submission that infrastructure facility has been defined as a road including toll road, a bridge or a rail system etc under clause (a); and in Explanation (b) it has been defined as a highway project including housing or other activities an integral part of the highway project. In the facts of the present case it was his submission that right from the judgement of the .....

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ssessee who acting on the promise held out by the Legislature to the assessee undertook this herculean activity to develop in the barren undeveloped land an Expressway competing with the highest standards in the world. The tax authorities it was submitted in these circumstances are not justified in attempting to withdraw the legislative benefit available to the assessee on its whims and misreading the provisions and discarding precedent available. It was his submission that without any exaggerat .....

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rtook the task never visualized would be visited upon it. It was submitted that the assessee not willing to hide behind excuses and changed realities has full on tackled the impediments and taken them in its stride to ensure that its work ethics is not compromised and has done and continues to follow through. However in these facts to still be subjected to the concerted departmental actions to misread the provisions of the Act and that too not in the first year but in the subsequent years it was .....

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d at length and argued by both the sides before the ITAT. It was submitted that when these facts are coupled with the various decisions which have been considered by the ITAT and would be referred to again herein also which have also been considered by the ITAT, it was his submission that the claim of the assessee has to be allowed. Heavy reliance was placed upon the said decision on the basis of which it was argued that the issue is covered in assessee s favour. However, the Ld AR was required .....

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bsequently. 3.7.1. Referring to the impugned order it was his submission that after reproducing the facts as found by the Assessing Officer, the submissions of the assessee have been reproduced verbatim by the CIT(A) and thereafter from pages 60 onwards, the CIT(A) has come to the conclusion wherein after reproducing the specific section, he has referred to the fact that the assessee has admitted that toll road was inaugurated on 09.08.2012 an event occurring in 2013-14 AY. Accordingly without a .....

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thereafter referring to the said fact, a discussion on how the AO has proceeded and without caring to address the facts, arguments and decisions relied upon on behalf of the assessee which though have been reproduced by him he has proceeded to dismiss the assessee s claim and also dismissed the prayer for moving additional evidence relying on section 119 subsection (c) of the Income Tax Act 1961 ignoring the fact that Rule 46A of the Income Tax Rules permit and contemplate situations where asse .....

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he relevant provisions of the law, I am convinced that appellant s claim for deduction u/s 80IA in respect of various heads of income declared in the return of income are not covered by the provisions contained in sections 80IA(4) as well as 80IA(6). Accordingly, AO s action in rejecting the claim for such deduction is upheld. 3.8. Addressing the remaining Grounds, attention was invited to the separate written submissions addressing Grounds Nos. 5, 6 and 7. Referring to the facts and the decisio .....

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d as a single object company. The income from sale / development of land and the other income in its P&L account is an integral part of the business income of the infrastructure facility and being business income it is eligible for deduction under section 80IA. It was submitted that admittedly the assessee is carrying on infrastructure development. In the facts of the case, Interest income on facts it was submitted has both been paid and received and is related only to the infrastructure dev .....

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arned as both have been used for the common business and common objective. For netting the assessee relies on CIT v. Eastern Tar P. Ltd.301 ITR 427 (JHAR); CIT v. Pawan Kumar Jain 298 ITR 443 (DEL); CIT v Nectar Life Sciences Ltd, 203 Taxmann 318 (DEL); CIT v. Shahi Export House 195 Taxman 163 (DEL); CIT Vs Lok Holdings 308 ITR 356 (BOM); and ACG Associated Capsules (P) Ltd. v. CIT 343 ITR 89 (SC). 3.8.2. The FDRs it was submitted were part of total current assets which were sourced from real es .....

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income by the AO as deduction u/s 80IA. 3.8.3. Addressing foreign currency fluctuation, it was submitted that the same is in the course of business of the infrastructure facility relating to amounts received from business constituents and should be assessed as business income. Reliance was placed on various decisions of Courts including CIT Vs Racha Udyog 230 CTR 72 (BOM) wherein it been held considering the decision of the Apex Court in CIT vs Liberty India that gains from exchange rate fluctu .....

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t was submitted included income from sale of scrap/earth material and earnest money forfeited and forms a part of the main business income of the assessee. 3.8.5. Relying on the written submissions it was submitted that Ground No. 8 specifically addresses the interest income on the basis of which it was submitted that the said income is derived from infrastructure facility and was business income and not income from other sources. The assessee it was submitted is a SPV constituted to carry on th .....

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were kept in bank temporarily and interest is earned thereon. The same source of funds (FDRs) it was submitted is used for development of infrastructure facility. The assessee has also charged the FDRs to banks for obtaining finance for the infrastructure facilities. Making of FDRs for working capital management was in the course of the business. It was submitted that the capitalization in the two respective parts of Expressway and project under development is based on the related funds as per .....

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lized as per AS-16. Thus, both as per AS-16 and correct treatment in tax, the said interest would be netted and balance interest paid capitalized. 3.8.7. Reliance was also placed on 236 ITR 315 (SC) in the case of CIT v. Bokaro Steel Ltd., 247 ITR 268 (SC); CIT v. Karnataka Power Corporation, 315 ITR 255 (SC); Indian Oil Panipat Power Consortium Ltd. v. ITO. Hon'ble High Court in Pr. CIT Vs. Facor Power Limited, 66 taxmann.com 178 (Delhi) so as to submit that interest on FDRs placed with ban .....

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7; 75.75 crores. Balance 4.91 crores it was submitted was interest on FDRs, the source of funds of which were used for Project Under Development, being real estate development forming part of current asset/infrastructure facility. Here too netting of interest was to be allowed and the said amount cannot be taxed as income from other sources. It was submitted that the assessee has adjusted the interest against expressway capital work-in-progress i.e. project under development being real estate de .....

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e where business has not commenced. 3.9. Addressing the next issue addressed vide Ground Nos. 13 and 14 relying upon the written submissions again placed on record it was submitted that the Concession Agreement granted to the assessee an exclusive license and authority to operate and maintain the expressway for a period of 36 years from the date of commissioning and, during this period, to collect appropriate fees from the users of the expressway and rights for the development of 25 million squa .....

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per AS 19 and AS 17 it was submitted was a finance lease or capital lease and not operating lease. Reliance was placed on the judgement of the Apex Court in Sri Shanti Sharma & Others v. Smt Ved Prabha & Others (1987) 4 SCC 193 and 1987 AIR 2028 wherein it has been held that the ownership of land is recognized on leasehold basis. It was argued the alleged non-deduction of TDS on what is stated to be rent and interest is erroneous. The so-called rent is lease expense which is part of the .....

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urt in the case of CIT v. Vector Shipping Services (P) Ltd. reported in (2013) 38 taxmann.com 77 (Alla). It was submitted that the SLP against the said decision had been dismissed by the Apex Court in CC No. 8068/2014. Reliance was also placed upon Merilyn Shipping & Transporters Vs ACIT (Vishakhapatnam SB) 20 taxmann.com 244. It was submitted that the disallowance had been made u/s 40(a)(ia) read with section 1941 and section 194A for alleged non deduction of TDS. It was submitted that ther .....

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to Project under development and only ₹ 10,149/- has been claimed as expense). 3.9.3. Addressing the rent component the assessee also it was submitted reliance is placed on Krishak Bharati Cooperative Ltd v. ACIT (2012) (Delhi High Court) wherein it has been held that lease premium paid in long-term leases of land is capital expenditure and not allowable as advance payment of rent. Section 1941 of the Act it was submitted refers to rent for the use of any land. The said section it was sub .....

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t was submitted would not be liable for deduction of tax at source under s. 1941. Reliance was placed on the decision of the Apex Court in the case of Podar Cement Pvt Ltd 226 ITR 625 (SC) for the proposition that income tax provisions do not operate by de jure ownership but de facto ownership. 3.9.4. Addressing the interest component it was submitted that under the terms of the Concession Agreement as well the Lease Agreement, the lessor (YEIDA) has undertaken to carry out some external develop .....

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ear, which in this case was the year 2010. Since the actual external development as well as the payments in respect of the same become due in phases and were to be spread over a number of years, YEIDA provided for an additional payment, over and above the rate fixed with reference to the base year, by way of inflation or compensation for the escalation in the cost of development. This component of EDC which was charged, in reality and substance, to neutralize the escalation-cost of external deve .....

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so not in respect of any debt incurred because, at the time the land was demised to the assessee company under the lease, no external development-assets exist in the books of YEIDA, and no services by way of external development were made available to company (the lessee). Accordingly, no debt by way of any cost of external development could be said to have been incurred by the company at the time of execution of the lease deed, as no external development had actually been provided by YEIDA at t .....

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also submitted that interest as defined in 2(28A) of the Act means interest payable on money borrowed or debt incurred- There is no money borrowed or debt incurred in this case and accordingly there was no interest or related TDS liability. Reliance was placed on 335 ITR 94 (DEL). Relying upon Ghaziabad Development Authority v. Dr N. K.Gupta 258 ITR 337 (NCDRC); CIT v. HP. Housing Board 340 ITR 388 (HP); Delhi Development Authority v. ITO 53 ITD 19 (DEL- ITAT), it was argued that it has been hel .....

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formly ruled that once tax on any income has been paid by the payee the Department cannot collect tax on the same income from the payer u/s 201 of the Act. Reliance was placed CIT v. Ansal Landmark Township (P) Ltd. (2015) 61 Taxmann.com 45 (Del.) to rely on the law declared wherein the Hon ble Apex Court has held that Second proviso to sec. 40(a)(ia) was declaratory and curative in nature and it was to be given retrospective effect from 1.4.2005. It was submitted that the Ld. CIT (Appeals) has .....

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to increase in taxable business income. Since the entire business income is deductible u/s 80-IA accordingly without prejudice to the argument that no disallowance is called for in the alternative this addition would lead to enhanced deduction u/s 80-IA which has erroneously not been considered by the Ld. AO. 3.10. Addressing the next issue pertaining to disallowance on depreciation made by the AO and sustained by the CIT(A) it was submitted that the tax authorities had proceeded on the basis of .....

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eciation is admissible against the business income involved. The depreciation it was submitted was claimed on assets owned by the assessee and used for the purposes of the business and all provisions of section 32 and relevant provisions of the Act have been complied with. It was submitted that admittedly expressway was under construction as capital work in progress, depreciation on assets having direct nexus with the same have in any case not been claimed as deduction but capitalized as part of .....

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n submissions it was his contention that the issues are covered in favour of the assessee. 4. The Ld. CIT DR referring to the facts of the case submitted that in the facts of the case the assessee is not clear whether its case is covered under section 80IA(4) or 80IA(6). Addressing the relevant provision it was her submission that the arguments of the assessee are based on incorrect facts and incorrect appreciation of the decision of the ITAT. The tax authorities it was submitted have consistent .....

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that the claim has correctly been rejected. It was submitted that it is an admitted fact and not under dispute that the assessee was given parcels of land for development. The specific parcels of land it was emphasized were not small measly parcels but were huge parcels of land for the purposes of developing housing and road of specific requirements. Accordingly in the circumstances it was her submission it is sub-section (6) of section 80IA which would be relevant and the requirements of the sa .....

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time. It was her argument that infact the assessee is completely unclear as to which is the relevant section under which its claim can be said to be covered. Reliance placed upon the order of the ITAT, it was her submission is of no help and the reliance placed by the assessee is a mistake as the ITAT at specific page 65 vide para 22 has decided the issue in favour of the Revenue. It was also her argument that the ITAT in the 263 proceedings was required only to consider whether the power of rev .....

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requirements of it section 80IA(6) were required to be fulfilled. 4.1. Referring to the facts of the case it was her submission that the Assessing officer noticed that the toll road was inaugurated on a specific date which fell in assessment year 2013-14. Thus once it was noticed that when the toll road had not even been inaugurated, the occasion to collect toll charges did not arise. Referring to the facts it was her submission that the ITAT in the aforesaid order was only considering the grou .....

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n, the income declared from business did not contain any income from the infrastructure facility being the toll road and after considering the reply of the assessee read alongwith the relevant provisions of the Act, the claim made under subsection has been rejected. 4.2. Attention was invited to page 8 of the assessment order so as to bring out the fact that the assessee in the year under consideration has earned income from sale of plots, sale of built-up properties, lease rentals, transfer fee .....

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allowed to claim deduction under section 80IA(6) it was her submission that the CIT(A) has examined and considered the said claim and come to the conclusion that it was not allowable as the mandatory requirements of creating a special reserve account of such profits has not been fulfilled. 4.4. In the midst of the arguments the ld.CIT DR inviting attention to the Paper Book page No. 20 and 21 submitted that the General Certification appended by the assessee on record that documents were filed be .....

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sought permission to highlight that the Certification is not general and is specific. Referring to the Paper Book, it was submitted that although the final line in the Certificate does read as Certified to be compiled from the Papers on record and/or filed before the authorities as detailed above but the description in the Index itself it was submitted makes it clear as to a description of the specific document included in the Paper Book and before which authority, it had been filed. 5.1. As an .....

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ssessing Officer dated 29.03.2014. Serial No. 12, 13 and 14 it was submitted have been shown to have been filed before the CIT(A). The document at Sl.No. 15 it was submitted has been described as the copy of the Remand Report Document at Serial No.16 it was submitted is described as a reply to the Remand Report. The document at Serial No. 17 it was submitted is the order of the ITAT and the document at Serial No. 18 is described as a copy of the assessment order for 2009-10 and 2010-11 assessmen .....

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tion is without any basis. 6. Reverting back to her arguments, the Ld.CIT DR invited attention to the paper book page No. 20 and 21 which is the copy of the form 10CCB certified by an Chartered Accountant. Referring to column No. 14 of the same it was submitted that where the assessee is required to indicate the nature of the infrastructure facility the assessee has indicated it as Road including toll road and thus it was her argument that the AO in the present proceedings has been guided by ass .....

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n and addressing the requirements therein the CIT(A) on facts dismissed the prayer of the assessee for placing additional evidence on record holding as under:- During the assessment proceedings, the appellant has submitted additional evidence under Rule 46(A) of the income Tax Rule,1962 with the request for its acceptance and consideration, in the appellant proceedings on the plea that assessee was prevented by sufficient cause from producing the same before the AO. In this regard the assessee h .....

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the same was forwarded to the assessee for rejoinder which has since been received in this office on 23.12.2014. For the sake of convenience both remand report as well as appellant's rejoinder have been reproduced in the foregoing para of this order. I have carefully considered the rival contentions and find that the AO has vehemently argued for rejection of additional evidence. 6.2. Relying upon the findings arrived at therein it was her submission that considering the fact that special re .....

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the assessee only after the claim before the CIT(A) u/s 80IA(4) was dismissed by the Assessing Officer and it was then that the assessee came up with a claim that the exemption should be considered under section 80IA(6). The arguments of the assessee that the compliances prescribed under section 80IA(6) being procedural in nature should be interpreted leniently and the claim for exemption should be considered under section 80IA(6) it was submitted have all been considered and found to be devoid .....

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t which could have relaxed the conditions as the requirements for waiving even for the Board are very stringent as has been noticed by the CIT(A). 6.3. Addressing the arguments advanced in support of the claim that interest income miscellaneous income etc has wrongly been treated as income from other sources , it was her submission that the issue is wellsettled by the judgement of the Hon ble Apex Court in the case of Pandian Chemicals Ltd. vs CIT [2003] 262 ITR 278 (SC)/[2003] 183 CTR 99 (SC) w .....

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ji Topanbhai vs ACIT [2000] 243 ITR 192 (Kerala). 6.4. It was her submission that these were surplus funds of the assessee and the assessee s Notes to Accounts states that these were temporary placement of surplus funds. Thus, it was submitted that they could not be said to be interlinked with the business of the assessee. 7. At the close of the arguments Ld. CIT DR filed Paper Book containing written submissions from page 1 to 11 of Principal CIT, Noida; Copy of Assignment Agreement dated 19.10 .....

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missible for a period of ten consecutive years out of 20 years beginning with the year in which the undertaking develops and begins to operate the infrastructural facility referred in clauses (a), (b) and (c) to Explanation to sub-section (4). 3. As per sub-section (2A), the admissible deduction 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 &q .....

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b-section (6) states that notwithstanding anything contained in subsection (4), where housing and other 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...". 6. The basis and manner in which the prof .....

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income. 7. From the above, it is apparent 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 pan 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 .....

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the assessment. Further, every such order is to be laid before each House of Parliament. 9. 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 could have made a claim for deduction under Section 80-IA only w.e.f Assessment Year 2013-14. 10. T .....

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parate accounts for housing and other activities nor has it furnished Form 10CCC during either with return of income or during the assessment proceedings. 12. 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 valid grounds and has been upheld as such by the CIT (Appeals) in the appellate order for A.Y.2011-12 dated 12.01.2015. 13. The plea of the assessee that it has complied with the provisions of Section 80-IA(6) in .....

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dated 15.11.2014 is irrelevant for determining the eligibility of the deduction. 7.2. The written submission of the Revenue filed by the Ld.CIT DR also contains the following written submissions under the name and signature of Pr. CIT, Noida addressing the issues raised by the assessee in the grounds moved. These are extracted hereunder for ready-reference:- 1(a) On this, a brief of technicalities involved has been discussed in preceding pages. In addition to the above, the assessee's claim .....

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rms Toll Road, Highway and Expressway, on one hand and toll, toll gate and toll plaza on the other are not analogous terms. b) Road is a generic term and Highway & Expressway members of the same genus. c) Levy of toll will not denigrate the character of a highway. From the above cited case law, it is noteworthy to mention that 'Highway and Expressway are of same genus' and 'Levy of toll will not denigrate the character of a highway'. Thus in essence expressway is a highway an .....

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Expressway at toll plazas. 1(c) It has been contended by the assessee in scrutiny proceedings that land received for sale and/or development under the concession agreement is in fact a part of the compensation received by us for developing, operating and maintaining the toll road, contradicting the facility as defined in concession agreement. It contradicts with concessionaire agreement as there isn't mention of toll road whereas Expressway finds repeated mentions. Again only toll booth and .....

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at the facility is an Expressway rather than at toll road. Highway as per definition, is a public road specially an important road that joins cities or towns together. Intertwining the objects of agreement and the definition of Highway the facility refers to highway and not just toll road as contended by the assessee. Hence it does not fall in clause (a) of explanation to Section 80IA(4)(i). Correlating it with case law cited, (MCD Vs. Mohd.Yasin (142 ITR 737).), Highway and Expressway are membe .....

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ex Court. 2(a).On the issue of whether profits and gains earned from sale/sublease of land during the financial period as this activity is in ambit of infrastructure facility development, clause (b) of Explanation to section 80IA(4)(i) of the Act is quoted which refers to a "highway project including housing or other activities being an integral part of the highway project" is applicable to the extant case. 2(b)As per agreement, it mentions under the head "Grant of Concession" .....

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ssion for a period of 36 years commencing from the date of commencement, is it willing to give back the land given as incentive after 36 years to the TEA? The law is clear that allied activities cannot fall in clause (a). During the year, the entire profits were derived from allied activities and hence the deduction granted for profits derived from allied activities cannot be adjudicated under clause (a) of Explanation to Section 80IA(4). If the allied activities eligible for deduction is includ .....

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issue pertaining to allowability of deduction u/s 80IA(2) is with regards to commencement of actual operations. Sub-section (2) of Section 80 IA reads as under: "The deduction specified in sub-section (1) may, at the option of the assesses be claimed by him for any 10 consecutive assessment years out of fifteen years beginning from the year in which the undertaking or the enterprise develops and begins to operate any infrastructural facility.....". 3(a) The language is clear from sub-s .....

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ssee has begun to operate the infrastructure facility w.e.f. 09.08.2012 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 and therefore, the assessee would be ineligible for deduction/exemption u/s 80IA of the Act for AY 2011-12". 3(b) As per sub-clause (c) of clause (i) of sub-section (4) of section 80IA of the Act, the deduction would be admissible to the enterprise which &quo .....

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f clause (c) of sub-section (4) reiterates the condition of sub-section (2) in as much as it makes the start of the operation and maintenance of infrastructure facility, a prerequisite for the grant of deduction. 3(c) As per 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, meaning thereby the enterprise which only develops .....

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sessee has not entered into an agreement only for developing of infrastructure facility as envisaged in sub-clause (i) of clause (c) of sub-section (4) and as per provisions of the Act, the deduction would be admissible only on the commencement of the operation. 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 of development, the developer assessee transfers suc .....

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ars till AY 2012-13, there was huge boom in real estate in National Capital Region of Delhi, including Noida and Greater Noida where the assessee concern has been given vast land parcel as part of incentives for building Expressway. If one analyzes the trend of profits from sale of the land from AY 2008-09 to the present day, the figures show that the huge profits were achieved from AY 2009-10 to AY 2012-13 as there was spurt in real estate. The assessee concern was the biggest real estate playe .....

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use (a) of Explanation to Section 80IA(4), then what is the intent of clause (b) in the Income tax Act, 1961. Also then, what is the utility of clause (b). Moreover, then what is the intent of Clause (b) of Explanation to Section 80IA(4), utility and usage of Section 80IA(6) along with its associated Rule 18BBE and Form 10CCC. On grounds of appeal no. 2.3. and 4 The assessee has raised the grounds of Ld CIT(Appeals) going against law and principles of natural justice, has based the order on erro .....

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income Grounds no. 5-8 have been raised on additions main on other grounds and the same has been exhaustively discussed in orders of l_d CIT(Appeals) as well as that of Assessing Officer. On disallowance of deduction u/s 80IA Grounds no. 9-12 have been raised on disallowance of deduction u/s 80IA which dealt at length in preceding pages. Even going by the principles laid down in this case, the facts say that as per agreement between TEA (Taj Expressway Authority) and the assessee group, an expr .....

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s thereof. 8. The Ld.AR in reply submitted that the argument of the Ld. CIT DR that the claim can be made under section 80IA(6) but in 2013-14 assessment year and not in the year under consideration, is neither here nor there as it amounts to making a mockery of assessee s claim. It was his submission that before advancing such an argument the Revenue needs to first cross the hurdle as to how a toll road can be classified to be a highway project . It was re-iterated that the parties concerned we .....

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It was submitted that the fact that the assessee has constructed the Agra Expressway which is probably one of the best in the world, it was submitted is a fact on record and it was his argument the assessee is confident that considering the relevant provisions, facts and circumstances, the past history of the issue evident from the orders of the Assessing Officers in 2009- 10 & 2010-11 AYs and the order of the ITAT quashing the Revisionary order passed by CIT, Noida u/s 263 the issue is ful .....

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the first year wherein the position was sought to be upset by the Revenue the issue of allowability of claim u/s 80IA(4) is a settled issue. As the legal position is well settled as the allowability of the claim has to be considered in the first year and admittedly the first year is in favour of the assessee. 8.1. It was vehemently submitted that the innuendo by the Ld.CIT DR that the date of inauguration as 09.08.2012 was discovered by the Assessing Officer was incorrect on facts as the record .....

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cannot be allowed relying on the findings recorded by the CIT(A) and supplemented by the arguments before the Bench the Ld.AR was directed to complete his arguments on the grounds raised unless the grounds are being given up. Once the issues had been argued by the Revenue where we understand that the departmental stand clarified by Ms. S.Verma, CIT DR was that if at all the deduction was to be allowed it could be considered in 2013-14 AY only and as far as the claim in the year under considerat .....

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m under section 80IA(4). It was submitted that a perusal of the assessment order would show that the Assessing Officer has discussed, considered and dismissed the said issue. Thus, the submissions of the Ld.CIT DR that the assessee is not sure under which section the deduction is to be claimed it was submitted is without merit. It was his submission that the record would show that all along the assessee has been sure that the deduction was to be claimed under sub-section (4) of section 80IA howe .....

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the date from which the toll collection started. However on a reading of the specific section which specifically uses the word develops the Legislature was well aware that it is an ongoing activity as the Statute has not used the word developed . The specific provision at the cost of reiteration, it was submitted has been interpreted by two different Assessing Officers in a certain manner and the interpretation which the Revenue wants to put forward has already been tested and examined by the I .....

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s by the creation of the five zones for industry, residence amusement which would be complimentary to the Expressway leading to planned development of this industrially backward area holding the Expressway and the five parcels of land being complementary to each other and parts of an integral scheme and thus for a public purpose. In these facts and circumstances, it was submitted there can be said to be no doubt in holding that the assessee was correct in making its claim under section 80IA(4). .....

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) as admittedly the compliances for making the claim u/s 80IA(6) were not complied within the year under consideration and have been complied with in the balance sheets for 31.03.2009 to 30.03.2011 in 2013-14 AY. The conclusion of the CIT(A) that the issue has to be decided under section 119(2)(c) by the Board it was submitted is an incorrect and mischievous reading of the statutory provisions. The said conclusion it was submitted is oblivious to Rule 46 A of the IT Rules which on facts permit t .....

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AO also rejecting the prayer relied on the fact that in terms of sub-section (6) the assessee was required to maintain a Reserve in a specific manner and to utilize it in a specific manner which also formed the basis of dismissing the alternate prayer. In the circumstances, it was submitted the assessee was required to file additional evidence before the CIT(A) who failed to exercise his authority fairly and appropriately. The fact that the evidences sought to be filed were not available at the .....

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ermitted even during the assessment stage. Accordingly this harsh and unreasonable reading of the legal provisions invoked was assailed. It was submitted that the assessee has no objection if after admitting the evidence its correctness and sufficiency is examined by the AO. The additional evidences, it was submitted is available at pages 52 to 55 of the paper book. Accordingly it was a prayer that in the eventuality the assessee fails in the main ground then the prayer made in the alternate gro .....

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nds have been kept in banks waiting for opportunities to invest. The following judgements, copies of which have been placed at Serial No. 7 of the case law Paper Book was heavily relied upon Commissioner of Income Tax vs Dharam pal Prem Chand Ltd. 317 ITR 0353 (Del); CIT vs Eltek SGS P.Ltd. [2008] 300 ITR 6 (Delhi); CIT vs Lok Holdings (Bom.) 308 ITR 356. Infact it was his submission that the nature of assessee s business as considered by the ITAT has already considered these issues conclusively .....

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in the order dated 13.04.2015 of the Co-ordinate Bench in ITA No.3339/Del/2014 pertaining to 2009-10 AY, we find that the Ld.AR on facts was justified in his claim that the issue addressed in the present appeal is covered by the aforesaid order of the ITAT. We note that the Ld. AR was at pains to canvass that the issues on facts including the specific provision invoked; the statutory principles invoked to interpret the same have all been taken into consideration by the ITAT and we note that aft .....

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of the issues addressed by the Co-ordinate Bench in the aforesaid order that the reluctance to address the alternate claim on facts was thus not misplaced as the Coordinate Bench, it is seen has fully considered the issues considering more or less similar arguments of the parties before the Bench. Thus on facts the preliminary belief expressed by the Ld.AR that the assessee deserves to succeed on its main plea we find was not misplaced. The reasons for coming to the above preliminary conclusion .....

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dvanced in respect to the challenge posed to the Revisionary order passed by Commissioner, Noida u/s 263 in 2009-10 AY alleging that it was bad in law as the assessment order u/s 143(3) was claimed to be neither erroneous nor prejudicial to the interests of Revenue and was claimed to have been passed correctly after due enquiry wherein it was submitted the ITAT held that the AO instead of taking one of the possible views infact took the only correct view available. The departmental stand conside .....

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e year under consideration. We find similar arguments have been advanced before us also. We note that the Co-ordinate Bench accordingly in order to decide the claims and counter-claims of the parties undertook a detailed enquiry and made an examination of facts and the relevant provisions of the Act going on to finally to quash the proceedings u/s 263 and went on to hold that the claim of deduction was allowable and has been correctly allowed u/s 80IA(4) holding that the business activities of t .....

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er:- Deduction in "respect of profits and gains from' industrial undertakings or enterprises engaged in infrastructure development, etc. 80IA [(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 t .....

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rvice or develops an industrial 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 infrastruc .....

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assessment 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. 10.2. It may be appropriate to refer .....

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ch, we find addresses the disallowance of interest on FDRs and depreciation i.e. the issues addressed in Ground Nos.5 to 8 in the present proceedings. The issue addressed in Ground No. 9 addresses the alternate claim advanced by the assessee. For ready-reference, these respective grounds are reproduced hereunder:- GROUNDS COSNDIERED BY ITAT IN ITA NO.3339/DEL/2014 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 infrastru .....

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aims 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 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. 8. T .....

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ided. 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 is eligible for deduction under section 80IA(6), even as per the view of the Ld. CIT, then in any case on the facts and law involved, th .....

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f assessee s claim of deduction u/s 80IA(6) can be better appreciated and as we had noted infact the Ld.AR had to be directed to complete his arguments on all the grounds which the assessee wished to press as the allowability of the alternate claim also stood opposed by the Revenue. However now, as noted on minutely going through the arguments of the respective parties and the facts on record which necessarily include the reasoning on facts and law adopted by the Assessing Officer which has been .....

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ignature of Principal Chief Commissioner of Income Tax, Noida which has been extracted in the earlier part of this order, it is seen are verbatim to what has been argued before the Co-ordinate Bench and has been reproduced by the Co-ordinate Bench at pages 40 to 43 of the said order. We further find that the Co-ordinate Bench in order to decide whether the Revisionary power exercised by the Ld. Commissioner qua the assessment order under challenge dated 30.12.2011 in 2009-10 AY was erroneous and .....

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llip;…………….. ……………………….. (i) Whether in view of concession agreement and allied documents, the assessee claim falls u/s 80IA(4)(i) Explanation clause (a) or (b) and whether the assessee is developing a road (including toll road) or highway? (ii) Whether in the background of concession agreement and judgment of the Hon ble Supreme Court in the case of Nand Kishore Gupta vs State of UP, the AO was cor .....

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ther the assessment order questioned and alleged by the ld. CIT, is unsustainable and not in accordance with law and has been passed without application of mind, in the peculiar facts and circumstances of the case, specially in the light of the provisions of section 80IA(4) r/w its sub-sections (2) & (6) and other relevant provisions of the Act and the Income Tax Rules, 1962. (v) Whether the CIT Noida was in error by invoking provisions of section 263 of the Act in the peculiar facts and cir .....

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ue of allowability of depreciation and, therefore, the same is not valid and void ab initio on these issues. (emphasis provided) 10.4. A perusal of the issues as summed up in issue (i) to issue (iii) would show that the issues addressed in the main plea of the assessee in the present proceedings stands considered and addressed by the Co-ordinate Bench. A careful reading of the aforesaid order, we note would show that the Co-ordinate Bench has extracted the specific provision in para 19 and there .....

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ch shows that the very same arguments have been repeated before us. It is seen from the aforesaid order of the Co-ordinate Bench that the arguments advanced on behalf of the assessee are a virtual repetition of what has been argued before us. It is seen that the Co-ordinate Bench has considered these arguments and on a reading of para 25 to 29 addressing the legal position on the specific provisions as settled by the various Courts in Para Nos. 30 and 31 of their order and taking note of the obj .....

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re the Co-ordinate Bench proceeded from para 39 onwards to record, the submissions of the assessee on facts on record including the Agreements; the objects guiding the same and project details and the facts on record. Specific note may be made of para 43 at pages 80 wherein before the Co-ordinate Bench it was argued on behalf of the assessee that land for development is actually a consideration like the toll-fee since the toll fee alone would not have been able to insure positive return on equit .....

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the same shows that the arguments are identical in the present proceedings also. The Co-ordinate Bench it is seen considering these undertook to consider the meaning of the words Highway , Expressway, Toll plaza and road including toll road in paras 52 to 57 and thereafter considering how these words have been used in the Agreement proceeded to reject the departmental view canvassed namely that the assessee is engaged in the development of infrastructure facility of a highway including housing .....

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b-section (6) of section 80IA become academic and infructuous. 10.5. A perusal of para 61 to 63 of the order of the Co-ordinate Bench brings out the submissions on facts relatable to the other issues canvassed in the present proceedings. A further reading of Paras 64 to 69 would bring out that the submissions before the Co-ordinate Bench have been repeated by the Revenue in the present proceedings also. Similarly the reply of the assessee thereon addressed in para 70 by the Co-ordinate Bench it .....

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Issue No.(i),(ii) and(iii) were to be decided in favour of the assessee. 10.6. In the face of this clear cut finding of the Co-ordinate Bench available on record as far as the present proceedings are concerned we find that no case has been made out by the Ld. CIT DR on the basis of repeating the arguments already considered by the Co-ordinate Bench wherein no distinguishing fact, circumstance, position of law was cited on behalf of the Revenue to canvass a contrary view except a repetition of t .....

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ments u/s 143(3). This is also notwithstanding the fact that the issue has to be settled in the first year i.e. the initial year which was 2009 - 10 assessment year. 10.7. In the said background, we would briefly sum up the facts in the present proceedings wherein we find that the view expressed by the AO has been upheld by the CIT(A) without addressing the submissions extracted in the order. A perusal of the reasoning adopted by the AO in the present proceedings shows that the fact that the tol .....

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. 13.03.2014 was issued to the assessee requiring clarification and justification on the claims made by the assessee u/s. 80IA(I), which has been abstracted above. The existence of this fact was also one of the main reasons considered by CIT, Noida. The replies of the assessee in the AO s words shows that the arguments advanced before the Co-ordinate Bench and repeated before us intact were argued before us also. The assessee has argued before the AO as found recorded in the assessment order tha .....

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carrying on the business of (i) developing or (ii) operating and maintaining or (iii) developing, operating and maintaining any infrastructure facility which fulfils all the conditions. A reading of the following reasoning of the AO shows that the factum of income from sale of plots etc. as before the CIT, Noida was a fact taken note of. The AO notes that the issue of deduction u/s. 80 IA has been carefully examined w.r.t. material on record and various explanations and documents filed by the as .....

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he facts of the case. The reasoning adopted in subsequent paras it is seen is identical to what has been canvassed by the Revenue before the Co-ordinate Bench and considered by it and also re-iterated in the present proceedings before us by the Revenue. It is seen that the AO considering the provisions in the facts where toll road was inaugurated on 09.08.2012; where the disclosures in the Notes to Accounts refered to road including toll road and the income is derived from sale of plots, built o .....

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o quoted the decision reported at 191 ITR 321 (SC) in the case of RADHA SWAM1SATSANG VS. CIT for the legal preposition that the principle of consistency should have been followed, In this regard, there is no dispute that initially in Asstt.'s u/s. 343 (3) the said deduction was allowed to the assessee. However, vide order u/s. 263 dtd. 30.03.2014 passed by Commissioner of Income Tax Noida has already cancelled the said deduction u/s. 80 IA in A.Y. 2009 - 2010 and the said issue set-aside to .....

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een is dated 12.01.2015 and thus admittedly was passed before the order of the ITAT which is dated 13.04.2015. Thus the benefit of the said order was not available to the Ld.CIT(A) also. We note that though the Ld.CIT DR in her Paper Book of 98 pages has filed copy of Assignment Agreement dated 19.10.2007 entered into between the assessee; JAL and Taj Expressway Industrial Development Authority at pages 12 to 90 of the Paper Book however, no argument was advanced on behalf of the Revenue referri .....

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the Revenue at all. The observation is significant as the claim of the assessee has been that the aforesaid order of the ITAT in the initial year has considered the facts which continue to remain identical and concluded the issue in favour of the assessee thus judicial precedent available deserves to be followed. Thus in this background, we note that no change in fact or circumstances despite filing a copy of the Assignment Agreement has been pleaded by the Revenue. Reverting to the facts as co .....

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een raised before the Co-ordinate bench. Thereafter the arguments of the Revenue have been extracted. A perusal of the same as we have already noted shows that they are identically worded as in the present proceedings a fact which has been noticed by us in the earlier part of this order. The Co-ordinate Bench after setting out the facts; the specific provision of law; the Agreement dated 07.02.2003 between the Taj Expressway Industrial Development Authority (TEA) Statutory body constituted under .....

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the same was released by the TEA, as per terms of 4.1 and 4.2, respectively, of Chapter IV of the agreement. As per above provisions and terms of the agreement, the TEA has to provide land for expressway and land for development to the assessee on 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 .....

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IT DR) took cognizance of this specific act of State which was questioned by a litigant before the Apex Court in PIL in Civil Appeal No.7468 of 2010 in the case of Nandkishore Gupta vs State of UP and concluded that on a reading of paras 30 and 34 of the said judgement the work of development of the Expressway and development of the land are integral and inseparable part of the project/scheme. The aforesaid paras extracted in para 22 by the Coordinate Bench from the decision of the Apex Court ar .....

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are meters of land being acquired for the five parcels of land. In fact, in our opinion, as has rightly been commented upon by the High Court, the 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 tha .....

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to each other and can be viewed as parts of an integral scheme. Therefore, it cannot be said that it is not a public purpose. .................. (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) (emp .....

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able part of the project/scheme. We may also point out that the land for development was not allotted only for residential/housing purpose but also for the purpose of industrial, commercial and amusement etc., hence the concession agreement 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). (emphasis provided) 10.11. .....

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tion of above rival submissions of both the sides, firstly we are in agreement with the contentions of the ld. AR that the allegation of non-compliance of 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 subsection (2) of section 80IA of the Act and used by the CBDT in Circular No. 1/2006 (supra) are similar viz. develops and .....

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velopment is paramount consideration for grant of exemption u/s 80IA of the Act. If the literal meaning is given to the conjunctive 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 .....

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ar No.1/2006 (supra) respectively. 30. At this juncture, we respectfully take cognizance of the 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 s .....

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even do some violence to it, so as to achieve the obvious intention of the legislature 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 legisla .....

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for checking abuse is found to have resulted into nullifying the very 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 Ba .....

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which are inextricably linked with the 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 gr .....

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provision or removing 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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re 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 construed so as .....

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2. The Co-ordinate Bench again in para 38 summed up the controversy in the following manner:- 38. Having heard arguments of both the sides and after having gone through relevant material placed on record, written submissions, gist of case laws relied by both the parties, we note that the main controversy in this case is mainly that 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 .....

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the assessee had not started its operation in the period related to AY 2009-10, therefore, the AO wrongly allowed the claim of the assessee. (emphasis provided) 10.13. On a reading of para 50 of the said decision, it is seen that the arguments as advanced before the CO-ordinate Bench have been re-iterated in the present proceedings also as these form the basis of the denial of assessee s claim before the AO:- 50. ……………The ld. CIT DR further contended that since .....

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ip;….The following reply of the assessee as extracted in para 51 has been considered. 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 that in consideration of the assessee, in agreeing to develop, design, engineer, finance, procur .....

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CB 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 . 10.14. As noted earlier in order to adjudicate upon the claims and counterclaims, the Co-ordinate Bench undertook to consider the meaning of highway , expressway , toll , toll gate so as to address the terms as used in the Concessionaire Agreement. After considering these, it was conclud .....

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clause (1) of Explanation 80IA(4) of the Act. The reasoning and conclusion is extracted hereunder:- 52. On careful consideration of above rival submissions, we note that firstly it would be just and proper to consider the meaning of the highway , Expressway , Toll , Toll gate , toll plaza and road including toll road which are being repeatedly used by both the sides during arguments. We may point out that these words have not been defined in Income Tax Act and neither the ld. AR nor ld. CIT-DR .....

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nary, 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 exit points (Ref. Chamberlain dictionary, first Indian edition 2001 at page 462 & 892.) - A wide road built for fast moving traffic travelling long distances with a limited number of points at which drivers can enter and leave it. (Ref. Cambridge dictionary, low price edition 1996 at page 485) (C) Toll - a charge payable to use of .....

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ertinent 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 purpose of regulating the entry/exit of vehicles in accordance with the provisions of this Agreement. The word Tolling contract has been also defined at page 9 of the agreement as the contract, if any, entered into by the concessionaire i.e. assessee with tolling contractor for operation of Toll Plazas , including collection of fees for and on .....

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the use of road or bridge; and Toll plaza is a row of toll booths on a toll road. 54. Turning to the facts of the present case, we may note that in the concessionaire agreement the words, highway and toll road have not been used and the word Expressway has been used several times which has been defined at page 6 of the agreement as the access controlled 6-lane Expressway between Noida and Agra with service roads and associated facilities and on the same page 6 of the agreement the word Fees has .....

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was payable to assessee company for vehicles using the Expressway at toll plazas i.e. at row of toll booths on toll road. 55. Ld. DR placing reliance on the decision of Hon ble Supreme Court in the case of Ishikawaijima Harima Heavy Industries Ltd. vs DIT, Mumbai (2007) 288 ITR 408 (SC) submitted that the object of the contract in question may be inferred from the stipulation and terms and conditions of the contract and as per intention of the parties to the contract, any other meaning or inten .....

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ontract must be construed keeping in view the intention of the parties. No doubt, the applicability of the tax laws would depend upon the nature of the contract, but the same should not be construed keeping in view the taxing provisions. 57. On the basis of foregoing discussion, we are of the considered opinion that the business activities of the assessee company fall within the ambit of clause (a) of Explanation to section 80IA(4)(i) of the Act. We decline to agree with the ld. CIT-DR that the .....

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in ourselves to deliberate further on the alternate claim of the assessee as well as legal objections of ld. CIT DR. (emphasis provided) 10.15. A careful reading of the order of the Co-ordinate Bench brings out that considering the above reasoning which happens to be the main plea in the present proceedings the Co-ordinate Bench also was required to address the issue specifically considering the facts that since the income available then was only from sale/sub-lease of land for 2009-10 AY. Thus, .....

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t is identical to what has been considered by the AO in the present proceedings and argued by the Ld.CIT DR before us. These facts and discussions are even relevant for considering the departmental stand in respect of the arguments in support of Other Income as not being derived from eligible business directly. These arguments also address the facts relatable to the disallowance made by the AO u/s 40(a)(ia) in the present proceedings which issues we shall come to subsequently. For the moment we .....

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canvassed that the income from sale/development of land was indeed income derived from Business of development of toll road and would be eligible for deduction. We find that similar arguments have been advanced before us also. Considering the arguments advanced on behalf of the Revenue in paras 64 to 69 it is noted the Co-ordinate Bench finally in paras 71 to 81 came to the conclusion that development is a continuous process which starts from the date of commencement of business and beginning of .....

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essway between Noida and Agra and assessee was given a right to collect toll/fees from the users of Expressway, hence, Expressway was actually a toll road. Ld. AR further pointed out that the assessee company, in addition to collection of toll right, was also granted 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 constr .....

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cession agreement executed between assessee and the TEA and relevant extracts, conditions and clauses clearly demonstrate that the assessee was under obligation of development, operation and maintenance of the Expressway and development of 25 million 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 acquisiti .....

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d assessee was granted land for development with right to further sublease developed or undeveloped land to sub lessees or land users. 62. Ld. DR has further drawn our attention towards Chapter IV of concession agreement clauses 4.3(d), 4.4 and 4.5 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 commer .....

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. Ld. AR vehemently contended that in view of above facts, the revenue/profits generated from subleasing of plots/land earned by the assessee are definitely an income derived from the Business of development of road and would be eligible 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 .....

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3. Ld. AR has again drawn our attention towards submissions of the assessee dated 23.12.2011 before the AO and submitted that the income from sub-lease of land for development is income derived from the business 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, .....

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ll cost/capital expenditure was for exceeding from the income derived therefrom and as such there was no taxable income. 10.17. The Assessee s re-joinder as recorded by the Co-ordinate Bench is also reproduced hereunder for the sake of completeness:- 70. Ld. AR placing rejoinder to the 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 .....

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aining the infrastructure facility but only developing the same is also eligible for deduction u/s 80IA of the Act. Ld. AR also contended that if a view is taken that as per clause (c) of section 80IA(4)(i) 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 such an enterprise would never operate or mainta .....

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clause (a) of Explanation to sub-section 80IA(4)(i) of section 80IA rejecting the conclusions drawn by the CIT, Noida as the activity of sub-lease or sale of land for development which was received by the assessee was found to be a major part of consideration of project and it was found to be an inseparable part of the main business activity of development of infrastructural facility. 10.19. For ready-reference, these relevant extracts are reproduced hereunder:- 71. In our humble understanding, .....

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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 subsection (4) thereof, under sub-section (2) the admissible deduction is 100% of the profits and gains of eligible business for ten (10) consecutive assessment years (AY) out of twenty (20) AYs .....

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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 maintaining the infrastructure facility on or after 1st day of April, 1995. As per proviso to sub-clause (c) above in case of transfer .....

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ein. 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 encourage entrepreneurs to put their resources and endeavours towards infrastructure development. In sub-section (2) the words develo .....

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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-section (4)(i) as per our humble understanding, we note that the development is a continuous process which starts from the date of commencem .....

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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. transferor enterprise, meaning thereby the enterprise which only develops infrastructure facility is eligible for deduction and in case dev .....

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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 preconditions in clause (i) of sub-section (4) viz. (a), (b) and (c) and it is required for the enterprise which claim deduction that all three conditions should be fulfilled simultaneously. If the inte .....

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nfrastructure 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 develops, operates and maintains but also to an enterprise which only develop infrastructure facility. We, therefore, decline to acceptance inte .....

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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 inseparable part of main business activity of development of infrastructure facility, therefore, income/profits derived during AY 2009-10 from sub-le .....

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cture 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 operation and maintenance starts only after creation of entire or part development of infrastructure facility as per requirement. Further, the development work m .....

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ear 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 created a reserve as required in Rule 18BBC and has not field required utilization certificate in Form 10CCC, therefore, the assessee is not entitled for deductio .....

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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 Supreme Court and High Court including decision in the case of Hon ble Apex Court in the case of CIT vs Vatika Township Ltd. 367 ITR 466 (SC). 10.20. The position was again re-it .....

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evant provisions of the Act in the light of the character, facts and circumstances of the business of the assessee. Hence, we are of the considered 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. 10.21. Considering the ratio of t .....

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ication 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 respectfully hold that the benefit of the ratio of these orders/ judgments are not available for the .....

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d. (2013) 350 ITR 555 (Delhi) to see whether the assessment order passed by the AO could be considered to be unsustainable in law. Considering the ratio of the said judgement, the Co-ordinate Bench found that the requisite shortcoming was not evident in the assessment order. 10.23. The Co-ordinate Bench in para 119 it is seen even proceeded to consider the issue of allowability of deduction on the income earned by the assessee from interest on fixed deposits of surplus funds with banks and allow .....

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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 further hold that the development of the Expressway between Noida and Agra and development of Five la .....

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ded) 10.24. Accordingly on considering the peculiar facts and circumstances of the present case and the relevant provisions which have been considered by the Co-ordinate Bench in the base year and considering the assessment order which was u/s 143(3) in the base year which remains undisturbed and the assessment order u/s 143(3) in the immediately preceding assessment year which has been passed by a different Assessing Officer then the one who passed the order in the base year, we find that the R .....

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he absence of any infirmity justifying deviation from the view taken in the base year, we find no justification for deviating therefrom on same set of facts and law. Finding ourselves in agreement with the conclusions arrived at by the Co-ordinate Bench in the base year, we find that the assessee succeeds in its main prayer. Accordingly the without prejudice claim u/s 80IA(6) becomes academic and requires no adjudication at this stage. 10.25. We find that the issues of other income and depreciat .....

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nd 7 the assessee before the Co-ordinate Bench addressed the denial of deduction in respect of interest on FDRs and depreciation. Qua Depreciation, it is seen that the arguments on behalf of the parties before the Bench have been found recorded in paras 93 onwards by the Co-ordinate Bench. A perusal of the same shows that the Revenue argued that that the assessee had claimed deduction u/s 80IA of the Act on interest income on FDs made by deploying its surplus funds in the bank and the same has b .....

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nterest and other income received during the year, therefore, the order of the AO was held to be erroneous and prejudicial to the interest of the Revenue and the Tribunal upheld the order of the CIT u/s 263 of the Act. We find that the Co-ordinate Bench also proceeds to record the arguments of the Ld. CIT DR by noting that it was also pointed out before them that the Assessee had claimed depreciation amounting to ₹ 22.97 crores and had been granted by the AO even while the highway project .....

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as the AO raised several queries during assessment proceedings and the assessee submitted detailed replies supported by various documents and evidence to show that the claim of the assessee is sustainable and further, the AO adjudicated the queries by passing a detailed note sheet vide dated 30.12.2011 and therefore, it cannot said that the AO did not make adequate, proper and required enquiry while allowing the claim of the assessee. The Ld. AR also pointed out that the AO took a reasonable and .....

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the Co-ordinate Bench proceeded to consider the issues in the following manner:- 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. 10.29. As extracted earlier the Co-ordinate Bench observed that prima-facie there must be material on record to show that the order was not sustainable. The following paras 101 and 103 .....

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aracter, facts and circumstances of the business of the assessee. Hence, we are of the considered 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. ………….. 103. In the present case, the AO has raised a nu .....

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for deduction u/s 80 IA (4) of the Act. We may respectfully take note of the decision of Hon ble Bombay 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 .....

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there should be an element of unsustainability in the order of the Assessing Officer which was found to be missing. In the said background, addressing the claim of the assessee addressed vide Ground No.5 to 8 clubbed under the heading Other income we find that apart from the argument that identical claims have been allowed by two different Assessing Officers in 2009- 10 and 2010-11 AYs in the scrutiny assessment order passed u/s 143(3) with due enquiry wherein the correctness of the base year h .....

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ness. The Bombay High Court in the said decision it was submitted had considered the decision of Hon ble Apex Court in the case of Tuticorin Alkali (supra). 10.31. We further find that the income from sale/lease of plots has been in very categoric terms been held to be eligible for deduction under clause (a) of Explanation to section 80IA(4). We further note that in para 57 considering the gamut of business activities on the basis of the Agreements and documents on record which admittedly had ac .....

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nt of plots which were to be utilized for developing the infrastructure facility having been temporarily parked in banks and used for raising loans from the banks against Guarantees etc. The utilization of these amounts admittedly is again for the very same sole purpose of infrastructural facility. In the circumstances, we find the income is necessarily, directly and inextricably linked with the eligible business of the assessee. Considering the character of the same, the facts and circumstances .....

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f. 10.32. A perusal of the reasoning in the assessment order shows that AO has held that interest income is not derived from eligible business. The order u/s 263 order it is seen is the reason to deviate from the view taken in two consecutive years and hence proceeded to deviate from the precedent and disallowed the claim. As discussed earlier, the issue of what constitutes the eligible business has already been examined by the Co-ordinate Bench. These amounts shown as interest admittedly procee .....

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The miscellaneous income qua sale of scrap etc. again being directly and inextricably linked with the development of infrastructural facility it is to be treated as business income. Same is the position for money forfeited in the peculiar facts of the present case. However, on these last two sources of income since supporting evidences are not available the issue is restored for verification on facts. The claims principally we find are directly linked to the only business activity of the assesse .....

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e that facts relatable to it have already been addressed in the earlier part of this order. We find that consistently it has been canvassed that depreciation relates to the assets which have been used for the business and the requirement relatable to its claim stand fulfilled. The Ld.AR has also argued that when business income of the assessee was exempted u/s 80IA(4) of the Act, then why assessee would assail a wrong disallowance of depreciation as in such an eventuality the deduction would sta .....

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and the fact that the only income of the assessee is the business income wherein deduction is claimed and allowable the purpose of denying the same departing from the precedent with no purpose was questioned. We find on considering the orders of the tax authorities and the precedent including the aforesaid order of the Co-ordinate Bench the claim of the assessee subject to verification on facts deserves to be allowed. On a consideration of the reasoning qua depreciation recorded by the AO and u .....

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iture anyway would go to inflate the income and result in an enhanced deduction on a fact which may have escaped the tax authorities. Accordingly, we hold that principally depreciation on assets used in the developing of infrastructural facility and owned by the assessee has to be allowed. We restore the issue for verification on facts. 10.34. Coming to the next issue addressed in the present proceedings i.e the disallowance made and sustained u/s 40(a)(ia), we find considering the arguments and .....

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rstood and is part of capital acquisition of lease hold land and capitalized. The Ld.AR has also raised the argument that in terms of the decision of the Jurisdictional High Court in the case of CIT vs Vector Shipping Services [2013] 38 taxmann.com 77 (All.) there is no amount of the so-called rent or interest payable in the year under consideration and the said decision it has been submitted has not been upset till date as SLP against the said decision has been rejected by the Apex Court in Co .....

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