TMI Blog2020 (4) TMI 520X X X X Extracts X X X X X X X X Extracts X X X X ..... explanation to section 194C and it would also be out of the scope of explanation to sub section (13) of section 80IA . The Koltaka Bench of the Tribunal in the case of Adhunik Infrasture (P) Ltd vs JCIT KOLKATA [ 2018 (6) TMI 89 - ITAT KOLKATA] held that deduction u/s 80IA(4) cannot be denied to an assessee merely because the assessee has been paid by the Government for development work. Neither the Ld. PCIT could even point out how the fact and nature of the projects carried out during the year under consideration were different from the projects earlier taken by the assessee which have already been held to be eligible for deduction u/s 80IA(4) being Infrastructure Facility Development Project, nor the Ld. PCIT could point out from the clauses of the agreement that they would not fall within the definition of infrastructure development project as provided u/s 80IA(4) . PCIT has exercised her jurisdiction u/s 263 totaling bye- passing and in contradiction of the findings given by the Tribunal in the own cases of the assessee for earlier assessment years - all the material was put before the Assessing Officer including the copies of the contracts - AO has duly taken note ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g assessment proceedings as held above by us and therefore there was no error in the order of the Assessing Officer. - Assessee appeal allowed. - ITA No. 749/CHD/2018 (Assessment Year : 2013-14) - - - Dated:- 29-1-2020 - SHRI N.K. SAINI, VICE PRESIDENT AND SHRI SANJAY GARG, JUDICIAL MEMBER Assessee by : Sh. Sudhir Sehgal, Advocate And Shri A.K. Sood, CA Revenue by : Sh. Krishan Kumar, CIT DR ORDER Per Sanjay Garg, Judicial Member: The present appeal has been preferred by the assessee against the order dated 31.03.2018 of the Principal Commissioner of Income Tax-1, Chandigarh [hereinafter referred to as PCIT ] agitating the action of the Ld. PCIT in passing the impugned order u/s 263 of the I.T. Act exercising his revision jurisdiction. 2. In this appeal, the assessee has raised following grounds of appeal:- That the orders of the Pr. Commissioner of Income Tax - I assuming jurisdiction u/s 263 of the Act are contrary to law and facts of the appellant's case. 1. That the worthy Pr Commissioner of Income Tax-I, Chandigarh is not justified in holding that the Assessment Order passed u/s 143(3) dated 30-07-2015 is erroneous and prejudi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se (13) of sub section (4) to section 80IA of the Income Tax Act. It was further submitted that as per the nature of the contracts executed, the assessee had to supply items such as pipes, valves etc. which transactions were in the nature of transfer of property in goods for the execution of the contract. That the assessee was bound by the exact specification, design and directions given by the government departments and, therefore, the contract allotted to the assessee was covered under the definition of Works Contract' and, therefore, the assessee was not entitled to deduction u/s 80IA(4) of the Act, as was claimed and wrongly allowed. 4. The learned Pr.CIT found that the Assessing Officer had not examined the above issue during the assessment proceedings. Accordingly, proceedings under section 263 of the Act were initiated and show cause notice was issued to the assessee which mentioned the discrepancies noted in the assessment order as under:- ... i) From the agreement, it is seen that the company was involved in sale of goods for purpose of construction/ erection etc to the state Government and thus falls in definition of Work Contracts, accordingly, the profits ea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld the nature of the contract to be a works contracts in view of explanation to sub-section (13) of Section 80IA which excludes business in the nature of works contract from claiming benefit of deduction u/s 80IA (4). However, the facts in that year were, that the assessee company had claimed this deduction only w.r.t. one project i.e. the one awarded to it by the Irrigation and Public Health Department Thural, Distt Kangra. The Hon'ble ITAT in its order no. 361/Chd/2016 for A.Y 2011-12 decided the issue by stating that against revenue, the preceding year i.e. A.Y. 2010-11 was the first year of claim of deduction u/s 80IA w.r.t this project and the same having been allowed u/s 143(3) of the Act, could not in the succeeding be disturbed now on the same parameters with the same set of facts. Therefore, the revisionary powers of the Pr. CIT could not have been exercised on this issue in A.Y. 2011-12. This order was not accepted but on account of low tax effect, no appeal was filed. (b) In the A.Y. 2012-13, too the Pr.CIT passed a revisionary order u/s 263 and set aside the order u/s 143(3) on various grounds. The facts w.r.t the claim for deduction u/s 80IA, were differe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upply Scheme was to be completed / developed within a period of one to three years and thereafter operation and maintenance was to be carried out by the appellant for another one to five years. She further observed that the Thural Project was in its fourth year, which meant that the Lift Water Supply Scheme had already been developed in the first three years and in the fourth year only operation and maintenance was to be carried out. She further referred to the provisions of sub section (4) to section 80IA, which for the sake of ready reference are reproduced as under:- (4) This section applied to: - (i) any enterprise carrying on the business of (i) developing or (ii) operating and maintaining or (iii) developing, operating and maintaining any infrastructure facility which fulfills all the following conditions, namely :- (a) it is owned by a company registered in India or by a consortium of such companies or by an authority or a board or a corporation or any other body established or constituted under any Central or State Act; (b) it has entered into an agreement with the Central Government or a State Government or a local authority or any other stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er dated 6.2.2017 and vide order dated 1.12.2017 in relation to the appeal of the assessee for assessment year 2012-13, quashing the order passed u/s 263 of the Act by the Ld. PCIT, were not applicable for the year under consideration. She also observed that so far as the reliance of the assessee on the order of the Tribunal in the case of sister concern M/s Kaveri Infrastructure (P) Ltd., Chandigarh vs ACIT for the assessment year 2012-13 in ITA No. 14/Chd/2017 dated 22.3.2017 was concerned, the facts of the same are also not applicable to the year under consideration as in the said case also, in the relevant assessment year 2012-13, the sister concern of the assessee had not carried out any activity of development of infrastructure facility but also carried out only maintenance and infrastructure project, where the assessee was a developer or a works contract had not been there for adjudication. She further observed that the 08 contracts undertaken by the assessee in the assessment year 2013-14 except the Thural Contract were in the first and the second year of functioning and, hence, the same were at the development stage, therefore, the question which the Assessing Office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded by the assessee to the third parties. That the Assessing Officer did not examine the allowability of deduction of sub contracts, hence, the order passed by the Assessing Officer is erroneous and pre-judicial to the interest of Revenue. The Ld. PCIT further in respect of issue No.3 observed that the expenditure claimed for the Hamirpur bye-pass being the non-exempt unit, were not proportionate to the other none projects which were eligible for deduction u/s 80IA. That the Assessing Officer had accepted the bifurcation given by the assessee without raising any query or seeking any explanation or justification in this respect from the assessee. She, therefore, held that the order of the Assessing Officer was erroneous and prejudicial to the interest of Revenue on this issue also. 10. Being aggrieved by the said order, the assessee has come in appeal before us. 11. We have heard the rival contentions and have also gone through the record. So far as the issue No.1, as to whether the projects carried out by the assessee and the contracts thereto would fall under the definition of development contract eligible for deduction u/s 80IA(4) of the Act or the same would be works cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are five new contracts in this year and nothing is mentioned about them in the order clearly indicates that no enquiry was done with reference to the nature of work and eligibility of the contracts w.r.t the huge claim of 80IA. In view of these facts it is clear that this is a case of not making enquiries or verifications which should have been made. Reference is made here to the newly inserted explanation 2 of Section 263 which was inserted w.e.f. 01.06.2015 and reads as under: ....For the purpose of this section, it is hereby declared that an order passed by the Assessing Officer shall be deemed to be erroneous in so far as it is prejudicial to the interest of the revenue, if, in the opinion of the Principal Commissioner of Commissioner- a) The order is passed without making inquiries or verification which should have been made; b) The order is passed allowing any relief without inquiring into the claim; c) The order has not been made in accordance with any order, direction or instruction issued by the Board under section 119; or d) The order has not been passed in accordance with any decision which is prejudicial to the assessee, rendered by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 80IA(13) which reads as under: ...[Explanation. - For the removal of doubts, it is hereby declared that nothing contained in this section shall apply in relation to a business referred to in sub-section(4) which is in the nature of a works contract awarded by any personfincluding the Central or State Government) and executed by the undertaking or enterprise referred to in sub-section(l)]... Thus, the five new contracts awarded in this year and the four awarded in the immediately preceding year were distinguishable from the Thural project and being new were required to have been examined in detail by the A.O so as to test them on the grounds of not being work contracts . The AO failed to do that, even though it was incumbent on him. Most respectfully, it is stated that the Honhle ITAT too had observed in its order for A.Y. 2012-13 that the 80IA deduction on the three new projects apart from the Thural project, could not be denied without demonstrating how these were different from that project. The analysis made above shows that the facts of the Thural project are different in this year from the others, as it is only doing the activity of operating and maintaining a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and also bears the risk for the entire project and its execution and financial risks. However, after going through the award letters and technical bids which were duly confronted, it appears that the assessee is involved in just a part of the project for a limited period of 3-5 years. The land in question belongs to the Government. The contractor it is seen can only function within the strict frame work issued by the Government, who is apparently the actual developer who outsources part of the work of its infrastructure development project. There is no actual freedom or space for the assessee contractor to go beyond the frame work laid down. Infact, the preface to the technical bid reads as under: .....The departmental drawings for all the components appended in Volume TV are based on the preliminary drawings evolved by the department. As such structural as well as architectural design and drawings based on the site conditions are to be submitted by the tenderer/firm without any extra cost subject to final approval of the department. Technical parameters specified in the data sheets are based on sample designs evolved by the department as such tenderer/firm shall subm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ters and the technical bids, makes it clear, that the assessee contractor could not go beyond the strict frame work laid down. Therefore, the argument put forth by the assessee in support of his claim of not being a works contractor, in that it does the designing of the project fails. However, it should be stated that, designing is very common in most of the civil contractor business like buildings, roads etc. Besides, the Government Departments, in its technical bids, have clearly mentioned the scope and the detailed specifications which should be followed by the contractor. The contractor can design only within the framework issued by the Department concerned and there is no actual freedom or space for the contractor to go beyond the framework given by the contractee, i.e. the Himachal Pradesh Irrigation cum public Health Department/ Government of Uttrakhand Peyjal Nigam, Pauri Rudraparyag, PHED, Jaipur, Rajasthan etc. (vii) Further, the claim of the assessee that the contract was a BOT i.e. Build, Operate and Transfer and therefore, was a development contract is also not borne out from the award letters. In a BOT, the total cost of building and operating the reject is to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... actually in the nature of a Work Contract'. The work allotted to the assessee company being covered under the definition of Work Contract'. Therefore, by not examining the nature of the contracts, in my considered opinion, it is a case of inadequate or lack of inquiry on the part of the A.O resulting into non-application of mind before allowing such a huge deduction u/s 80IA of the Act. The Explanation 2 of section 263, clauses (a) and (b) are also clearly attracted. 8. Reliance is also placed in this regard in the ruling in the case of ACIT vs. Pratibha Industries Ltd. in ITA Nos. 2197 to 2199/Mum/2008 dated 19.12.2012 in para-77, it is held as under:- The next question is to be answered is whether the assessee is a developer or mere works contractor. The Revenue relied on the amendments brought in by the Finance Act 2007 and 2009 to mention that the activity undertaken by the assessee is akin to works contract and he is not eligible for deduction under section 80L\(4) of the Act. Whether the assessee is a developer or works contractor is purely depends on the nature of the work undertaken by the assessee. Each of the work undertaken has to be analyzed and a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on has been duly examined and adjudicated by the Tribunal in favour of the assessee in respect of the identical contract, not only, in assessee s appeal against order of the PCIT passed u/s 263 of the Act relevant to assessment year 2011-12 vide its order dated 6.2.2017 (supra), but also, in the appeal of the assessee against the order of the PCIT u/s 263 of the Act for assessment year 2012-13 vide order dated 1.12.2017. However, the Ld. PCIT has proceeded to distinguish and differentiate the project undertaken by the assessee in the assessment year 2011-12 i.e. Thural Project from the other projects on vague and baseless grounds. She has observed that for the assessment year under consideration, the Thural Project had reached to its fourth year of commencement and that the project was already developed / completed in the first three years and further that in the fourth year, the assessee had been carrying the activity of only operation and maintenance of the said project and therefore, was eligible for deduction u/s 80IA (4) of the Act in respect of the said project for the said year. That, since the other projects were not completed in the year consideration and hence the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... discussed the matter in detail and vide order dated 6.2.2017 in ITA No.361/Chd/2016 for assessment year 2011-12 also vide subsequent order dated 1.12.2017 (ITA No. 867/Chd/2017) for assessment year 2012-13 and held that the Ld. PCIT had failed to differentiate the nature of the other three projects from the Thural Project . After detailed discussion, the appeals of the assessee were allowed and the order of the Ld. PCIT u/s 263 of the Act was quashed. From the above facts, it comes out that the nature of the contracts and development activities of the assessee have been examined by the Tribunal and after extensive discussion, it has been held that the contract of the development of the said project was an infrastructure development contract and, hence, eligible for deduction u/s 80IA(4)of the Act. In the year under consideration, as per the Ld. PCIT, the assessee has been awarded five new contracts, however, the PCIT has not pointed out or discussed as to how the nature of theese five new development projects undertaken during the year was different from the nature / facts of the Thural Project as carried out by the assessee in the assessment year 2011-12 when it was in its d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee is eligible for deduction in respect of the Thural Project for the year under consideration being the fourth year of the project and that the assessee has to only operate and maintain the said infrastructure facility namely Thural Project. By saying so, the Ld. PCIT herself has impliedly admitted that the Thural Project is an Infrastructure Development Project and as per the provisions of section 80IA(4) of the Act, the deduction has been allowed for developing or Operating and maintaining or for Developing, Operating and maintaining a new project facility. 14. So far as the observation made by the Ld. PCIT that the Development activity carried out by the assessee, whether, would fall in the definition of the works contract, the said issue has been thoroughly discussed by the Tribunal in order dated 6.2.2017 in ITA No.361/Chd/2016 for assessment year 2011-12 dated 1.12.2017, ITA No. 867/Chd/2017)for assessment year 2012-13, the relevant findings of the Tribunal given in order dated 6.2.2017 for assessment year 2011-12 (supra) in this respect, are reproduced as under:- 8. We have heard the rival contentions, perused the order of the learned Pr. CIT and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndertaken contract for providing lift water supply scheme from Executive Engineer, IPH and claimed this income as exempt u/s 80IA and got sub-contract from NKG Infra in which income is taxable. Please provide the complete details in this regard alongwith copy of contract with them. Please also provide details how you are eligible for exemption u/s 801A when you are conducting activities under contract. 6. You have also claim exemption amounting to ₹ 52,35,708/- u/s 10(2A) and ₹ 12, 11, 810/- u/s 80IA. Please provide the complete details in this regard alongwith documentary evidence. 7. As per audit report col. No. 26, the auditor has shown deduction under chapter VI-A at 'Nil' on the other hand in the computation you have claimed under chapter Vl-A at ₹ 12,11,810/-. Please explain this. 11. Please state the date on which the company came into existence. As per Form No. 10CCB annexed with audit report at Para 8 the auditor has mentioned commencement of operation/activity as 13.04.2010. And at para 9 the initial assessment year from when deduction u/s 80 -1A is for the A.Y. 2011-12. On the other hand, under the detail of fixed assert as on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Kangra HP Complete construction of the project including operation Maintenance of the whole scheme is covered under section 80IA. The copy of contract with Executive Engineer HP IPH Divn. Thural for Lift water supply scheme is enclosed herewith. A copy of agreement as sub contractor of NKG Infrastructure Ltd is also enclosed herewith. d) Reply dated 29.08.2013 for the purpose of claim of deduction under section 80IA placed at paper book page 41 number. The relevant portion of the reply is as follows: Please refer to the Assessment proceedings in the case of Unipro Techno Infrastructure Private Limited, SCO 36, Sector 7, Chandigarh for the A/Y 2011-12 PAN AACFU1025F. The information/documents asked for is as under; 2. The partnership firm of Unipro Techno Infrastructure was converted into private limited company with effect from 13.04.2010 with all its assets and liabilities with the same sales tax registration number. The deduction u/s 8Q1A was first claimed in the A/Y 2010-11. The-year under reference is the second year for claiming deduction u/s 801A. e) The order passed by the Assessing Officer dealing with the issue of 80IA at paras 3 to 4. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . This year, the assessee has claimed an amount of ₹ 12,11,810/- as deduction u/s 80IA. The assessee vide its reply, which is placed on record, has himself admitted that the year under reference is the second year for claiming deduction u/s 801A. 10. Relying upon the above documents Ld. counsel for the assessee stated that relevant queries relating to eligibility of the claim of assessee of deduction under section 80IA was raised by the Assessing Officer during assessment proceedings, due reply was filed by the assessee after considering which and after applying his mind to which the assessing officer passed a detailed reply allowing deduction under section 80IA to the assessee. Thereafter Ld. counsel for the assessee drew our attention to the fact that the view taken by the Assessing Officer in allowing the claim of the assessee under section 80IA was correct since it was adequately proved before him that the contract awarded to the assessee was a composite contract awarded on build, operate and transfer basis for the execution of which the machinery installed including its components, engineers and labour employed, designing, execution, financing in the form of capita ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment proceedings for the assessment year in question including ' the subsequent year as illegal and totally without jurisdiction:- Present: Sh. A.K. Sood, CA. The Id. Counsel again submits that proceedings u/s 148 need to be dropped as there was no non disclosure by the assessee. He has again been told that the case is being proceeded with on merit as the matter is one of interpretation of the Statute. The clarification received from the Executive Engineer, l PH, Division Barsar, Distt. Hamirpur vide letter dt. 1/8/2016 in response to query u/s 133(6) is on record. Perusal of the same shows that the assessee was awarded the complete project contract on BOT basis and no other agency was involved in the same. The Id. Counsel has also cited CBDT Circular No. 10/2005 dt. 16.12.2005 which though specific to ports interprets Section 80IA as being applicable to projects/ structures built under BOT basis. Perusal of clarification received from i H.P. Govt. Deptt. and the language of the contract agreement shows that the activity of the assessee is not in the nature of works contract for the purposes of 80IA. It appears that the assessee has implemented an Infrastruct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder section 263 in the present case is that the Assessing Officer had not examined the claim of the assessee to deduction under section 80IA(4) vis-a-vis Explanation 13 to the said section which excludes profits earned from works contracts from deduction under section 80IA(4) of the Act. 15. On this account we are unable to agree with the learned Pr. CIT. It is amply clear from the pleadings and documents placed before us by the Ld.Counsel for the assessee that the said issue was raised during assessment proceedings, due inquiries were made and after proper application of mind the Assessing Officer allowed the claim of the assessee. 16. We find that the assessee had filed return of income claiming deduction under section 80IA amounting to ₹ 12,11,810/-. Certificate in Form No.10CCB, certifying the assessee s claim of deduction under section 80IA of the same amount was also filed giving all details of he undertaking claiming the said deduction. Further, during the assessment proceedings, the assessee was specifically asked to provide complete details of the contract undertaken for providing lift water site scheme from Executive Engineer, IPH, the income from which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Therefore, for all purposes, it can be said that the claim of the assessee had been duly verified during the assessment proceedings. Clearly the contention of the learned Pr. CIT that no enquiries were made is incorrect. 19. We may add that it cannot also be a case of inadequate enquiry. All explanations and evidences were placed before the Assessing Officer to explain the nature of the contract and demonstrate that it was not merely a Works Contract . We fail to understand what further inquiry was required to be made in the case to settle the issue of the nature of contract or for that matter how the present inquiry was not adequate to arrive at the correct conclusion. Moreover we find that even the learned Pr. CIT has not spelt out the same in his order. Even before us the Ld. DR has failed to show how the inquiry made was inadequate and what further investigation was required in the matter or why on the basis of explanation and evidences filed by the assessee the correct nature of the contract could not be deduced. In such circumstances, we hold, it cannot be said that there was any error in the order of the Assessing Officer so as to cause prejudice to the Revenue. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erestingly, we find ,that all the explanations and evidences which were filed before the AO by the assessee to support its claim of deduction u/s 80IA was also filed before the learned Pr. CIT and despite so there is not a whisper in the entire order as to how the view of the AO that it was an infrastructure project and not works contract, is incorrect. The learned Pr. CIT has not referred to a single document, clause or otherwise of the agreement to lend credence to his view. The entire thrust of the learned Pr. CIT in exercising revisionary powers is that adequate enquiry vis- -vis claim of deduction under section 80IA of the Act was not carried out, which as we have stated above, the Ld. counsel for the assessee has demonstrated is incorrect. Adequate enquiries were carried out, adequate replies were filed by the assessee and the Assessing Officer after having applied his mind to the explanations and evidences filed by the assessee had arrived at a plausible conclusion that the assessee was unable to deduction under section 80IA of the Act. We are, therefore, in complete agreement with the Ld. counsel of the assessee that the issue was examined and verified during assessment pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ld. counsel for the assessee. There is no dispute about the fact that in the preceding assessment year i.e. AY 2010-11, which was the 1 s t year of claim of deduction under section 80IA, the assessee was allowed the same under section 143 (3) of the Act. This means that for all purposes the claim of the assessee having been examined in the light of the parameters of eligibility laid down under section 80IA, it could not be said that in the succeeding year those very same parameters had changed on the same set of facts. The Assessing Officer, after considering all the documents placed before it, had in the preceding year concluded that the assessee was carrying out an infrastructure related project which was not in the nature of works contract as defined under section 80IA, read with Explanation-13 and thus the assessee was eligible to claim deduction under section 80IA of the Act. In the impugned case, which is the succeeding year, on the very same set of facts the findings of the preceding year on the fact that the assessee was carrying out eligible infrastructure project and not works contract, cannot now be disturbed, which is exactly what has been stated by the High Court in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fficer has enquired into the said issue also. It is seen that the AO while passing the order proceeded to look into the claim of depreciation for the exempted and non-exempt units and thus the suspicion of the Pr. CIT, Chandigarh that the facts for considering the bifurcation of expenses between the exempted income and non-exempt income have not been looked into is without any justification and in the peculiar facts of the present case based entirely on suspicions. 4.20 Accordingly in view of the detailed reasons given herein above, we find that there was no basis for the principal CIT-A to conclude that it is a case of inadequate enquiries. We find from the record that the assessing officer has inquired into the issues the assessee has demonstrated the correctness of the claim having been allowed the revenue having failed to point out as to what is the error in the specific contracts considered by the Pr. CIT, Chandigarh namely the contract entered into with the Himachal Pradesh government in regard to the Dehra Project and the two specific contracts entered into with the Uttrakhand Government of Pauri and Rudraprayag Project. Accordingly we have no hesitation in quashing th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee was tasked with making it functional post completion operation and maintenance of the same for a specific period. The Contracts were available with the Pr. CIT and the stated claim of the assessee if it was found to have been incorrect, should have been demonstrated in the order itself. Even in the course of the arguments, ld. CIT-DR could not bring any fact to our notice in support of the order passed. The power vested by the Statute comes with onerous responsibilities which cannot be allowed to be shirked. The assessee in the facts of the present case is able to demonstrate that full facts were available on record on which enquiries have been made and the assessment order itself shows that the calculations carried out even though for the purposes of depreciation by the AO qua the exempted units and non-exempt units demonstrate that facts have been seen. In the face of these facts and arguments, the Pr. CIT should have referred to some error in the order passed after considering the new three contracts and the earlier continuing contract of Thural Project which is not so in the facts of the present case. Nor has the ld. CIT-DR pointed out to any such error. Accordingly, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Nigam, Construction Division, Pauri vis- -vis the contract entered into with Executive Engineer, IPH Thural (HP) on the basis of which they could not be said to be Composite Infrastructure Development Contracts on a BOT basis with added responsibilities towards its maintenance for specific period. The order passed, accordingly for the detailed reasons given herein above is held to be arbitrary and the order is quashed. Accordingly, the grounds raised are allowed. 6. In the result, appeal of the assessee is allowed. 16. The Ld. PCIT vide impugned order has tried to distinguish between the works contract and a Development contract by holding that since the development of the projects in question was to be carried out by the assessee as per the specifications / designs approved by the Government, hence, it would fall within the definition of works contract and not Infrastructure Development contract . 17. We have gone through the discussion made by the Ld. PCIT on this issue and also considered the arguments of the Ld. DR on this point. The observation of the Ld. PCIT that only if the project is to be developed by the assessee as per the specifications and desig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n in the own case of the aforesaid assessee i.e. Simplex Subhash JV and M/s Somdatt Builders JV vide ITA No. 1684/Kol/2011 and 1685/Kol/2011 dated 8.6.2013, wherein, it has been observed that if the project is a turnkey project involving the activity of development of infrastructure facility, it will be an activity as provided u/s 80IA(4) of the Act. The Tribunal considered that a perusal of the turnkey contract agreement entered into by the assessee with the irrigation department clearly showed that the construction of all the structure of whole of the canal system was to be as per the approved design, drawings of the Department etc. Survey is to be done as per the investigation and drawing criteria of the Irrigation Department. The assessee has to procure the material independently and those materials are to be conformed to the specifications provided. The assessee has also to make arrangement for storage of the materials. The Tribunal held that such work carried out by the assessee would fall in the exclusion provided to the meaning of the work given in the explanation to section 194C of the Act and it would also be out of the scope of explanation to sub section (13) of sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xecuted by a subcontractor was not eligible for deduction under section 80IA and since this issue had not been examined by the Assessing Officer during the course of assessment proceedings it had resulted in loss of revenue causing prejudice to the revenue. 27. Before us Ld. counsel of the assessee reiterated the contentions made in relation to the previous issue that the examination of the claim of the assessee for deduction under section 80IA had been done in detail by the Assessing Officer and after examining the same the Assessing Officer had allowed the claim. The Ld. counsel for the assessee stated that it cannot now be said that the claim of the assessee had not been duly examined by the Assessing Officer during assessment proceedings. The Ld. counsel of the assessee further stated that the job work done by subcontractors was not a separate contract but sub contract of the main project awarded to it and the assessee as per the provisions of section 80IA was entitled to claim deduction of the entire profits earned by it on the project executed on infrastructure development. The fact that it had sub-contracted a part of the work did not affect its claim of deduction of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gathered from the findings of the learned Pr. CIT is that the assessee is eligible for deduction under section 80IA only on account of work/contract/project executed by it. We find that this understanding of the provisions of section 80IA is incorrect and has no judicial precedents at all and on account of the same we hold that there is no error in the order of the Assessing Officer on this count also and set aside the same for this reason. 20. Similarly, the third issue has also already been examined by the Tribunal vide order dated 6.2.2017 in the appeal for assessment year 2011-12. The relevant findings of the Tribunal are reproduced as under;- 30. The 3rd reason given by the learned Pr. CIT for exercising revisionary powers under section 263 is that while the receipts from the water supply project and Hamirpur bypass project in the ratio of 2.8:1, the expenses incurred on freight and carriage, fuel and wages and salary are comparatively higher in case of Hamirpur bypass project and the comparative details have not been examined by the Assessing Officer vis-avis the provisions of section 80IA(8)/80IA(10) of the Income Tax Act, 1961 causing error in the order of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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