TMI Blog2020 (6) TMI 196X X X X Extracts X X X X X X X X Extracts X X X X ..... . Accordingly, the grounds raised by the assessee allowed. Disallowing the deduction claimed u/s 80-IA (4) with respect to the eligible infrastructure project - HELD THAT:- Assessee is in development of the infrastructure facilities eligible for deduction under section 80 IA(4) of the Act. The ground of appeal of the assessee is allowed and ground of appeal of the Revenue is dismissed. Deduction u/s 80-IA (4) - Denial of claim assessee is not executing any projects eligible for deduction specified - AY 2009-10 - HELD THAT:- We note that the assessee is supplying heavy earthmoving machinery on hiring basis to GMDC. CIT (A) held that there cannot be any deduction with respect to such projects under section 80-IA(4) of the Act, as the assessee is not executing any projects eligible for deduction specified under section 80-IA(4) of the Act. AR at the time of hearing before us has not advanced any argument against the finding of the learned CIT(A). Accordingly in the absence of any information/assistance from the side of the learned AR for the assessee, we do not find any reason to interfere in the finding of the learned CIT (A). Appeal of the assessee is dismissed. Order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as not a developer of infrastructure facility in respect of projects specified by him and listed in ground No. 2 above. 4. The learned Commissioner of Income Tax (Appeals) - 11, Ahmedabad erred in confirming the action of A.O. in disallowing ₹ 28,000/- u/s 40A(2)(b) and ₹ 88,432/- u/s 40A(3) of the act. 4. In ITA No. 199/RJT/2015 for A.Y. 2005-06 the Grounds of appeal raised by the Revenue are as follows: 1) The Ld.CIT(A) has erred in law and on facts in allowing the deduction U/s 80IA(4) in respect of various projects by treating the assessee as developer instead of work contracts' as treated by the A.O. 2) The Ld.CIT(A) has erred in law and on facts in deleting the disallowance is made U/s 36(1)(va) r.w.s. 2(24)(x) of IT. Act. 3) On the facts and in the circumstances of the case and in law, the CIT(A) ought to have upheld the order of the A.O.. 5. In ITA No. 220/RJT/2015 for A.Y. 2006-07 the Grounds of appeal raised by the assessee are as follows: 1. The learned Commissioner of Income Tax (Appeals) - 11, Ahmedabad erred in upholding the validity of order passed u/s 153A r.w.s. 143(3} of the particularly in respect of deductions c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .12.2006 respectively which were assessed u/s 143(3) of the Act vide order dated 03-01- 2007, and 26-12-2008 respectively. Thus, as on the date of search i.e. 24.06.2010, both the assessment years became unabated. 9. The ld. AR before us has challenged the assessment proceedings framed under section 153A of the Act in ground no. 1 on the reasoning that the additions made by the AO in the assessment years 2005-06, 2006-07 represents the items of the regular assessments being deduction under section 80-IA(4) of the Act and disallowance under section 40A(2)(b), 40A(3), 36(1)(va) of the Act including ad-hoc disallowance which were disclosed in the original income tax returns. As such the deduction under section 80-IA(4) of the Act was subject to the regular assessment framed under section 143(3) of the Act. 10. As per the ld. AR there was no incriminating material found during the search in respect of the unabated proceedings. Therefore no additions can be made. The assessments were framed u/s 153A/143(3) of the Act after making the addition of regular items as discussed above which were disclosed in the income tax return. 11. The Ld. AR accordingly argued in respect of asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e course of the proceedings under section 153A establish that the reliefs granted under the finalised assessment/reassessment were contrary to the facts unearthed during the course of 153A proceedings. If there is nothing on record to suggest that any material was unearthed during the search or during the 153A proceedings, the Assessing Officer while passing order under section 153A read with section 143(3) cannot disturb the assessment order 15. We draw support and guidance from the judgment of Hon ble Bombay High Court in the case of CIT vs. Gurinder Singh Bawa reported in 79 taxmann.com 398 wherein it was held as under: 7. In view of the above, on issue of jurisdiction itself the issue stands concluded against the revenue by the decision of this Court in Continental Warehousing Corpn. (NhavaSheva) Ltd. (supra). In the appeal before us, the revenue has made no grievance with regard to the impugned order of the Tribunal holding that in law the proceedings under Section 153A of the Act are without jurisdiction. This in view of the fact that no assessment were pending, so as to abate nor any incriminating evidence was found. The grievance of the revenue is only with regard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowing grounds of the appeal 1. The learned Commissioner of Income Tax (Appeals) - 11, Ahmedabad Ahmedabad erred in upholding the validity of order passed u/s 153A r.w.s. 143(3) of the Act. 2. The learned Commissioner of Income Tax (Appeals) - 11, Ahmedabad erred in confirming the action of the assessing officer in disallowing the claim of deduction u/s 80IA(4) in respect of following infrastructure project undertaken by the appellant: Sr. No. of site referred by CIT (Appeals) Name of the site 4 Bhuj Sublate Bhuj Khavda 3. The learned Commissioner of Income Tax (Appeals) - 11, Ahmedabad erred in holding that appellant was not a developer of infrastructure facility in respect of project specified by him and listed in ground No. 2 above. 21. The assessee in the 1st ground of appeal has challenged the validity of the assessment framed under section 153A r.w.s. 143(3) of the Act. 22. At the outset it was noticed that the year under consideration was the abated assessment year and therefore the AO is empowered to dist ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been challenged before the Hon ble Gujarat High Court which is pending for adjudication. Thus the issue whether the assessee is acting as developer or as work contractor has not been reached to its finality. 27. The AO also noted that the principles of rest judicata does not apply to the income tax proceedings. Therefore the decision of the earlier year period cannot be applied for the year under consideration. 28. The AO after verifying the contracts awarded to the assessee reached to the conclusion that the assessee is not acting as developer. Therefore he was of the view that the assessee cannot be allowed the deduction provided under section 80-IA (4) of the. Accordingly he disallowed the deduction claimed by the assessee for ₹ 10,48,13,775/- and added to the total income of the assessee. 29. Aggrieved assessee preferred an appeal to the learned CIT (A) who has partly allowed the appeal of the assessee by observing as under: Findings in appeal 9. After perusal of the ratio laid down by the different courts and Tribunals and the relevant provisions of the Act, it emerged that an enterprise has to enter into an agreement with the Central or State Governm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtaken by the assessee. Rather, the assessee was held responsible for any damage or loss to the property and manpower. It is also worth mentioning that the AO. had wrongly interpreted the word owned in section 80IA(4)(i) (a) of the IT Act by relying on the decision of B.T. Patil Sons Belgaum (Supra). As discussed hereinabove, it is concluded that the assessee developed the eligible infrastructure facilities by himself or as a consortium of companies duly registered in India. 9.4 The Act does not prescribe that the infrastructure facility is to be owned by such an enterprise. The infrastructure facility is always the property of the Government and an enterprise is bound by the agreement to transfer the same after the settled period. The assessee's execution of most of the works fall within first category i.e.developing of infrastructure facilities.. It was incorrect on the part of the AO to hold that the assessee being fallen within the first category was not entitled for the deduction. The decisions in the cases of ABG Heavy Industries Ltd. (supra), Koya Co. Construction (P.) Ltd. (supra), Radhe Developers (supra), Bharat Udyog Ltd. (supra), Rohan and Rajdeep Infrast ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eveloping any infrastructure facility for public utility. After having regard to the terms and conditions of the agreement for development of the infrastructure facility, the rulings of the courts and position of law on the issue, in my opinion, the assessee acted as a developer because he developed infrastructure facility and handed over the same to the authority concerned with guarantee period for maintenance thereof. Therefore, the assessee was eligible for claim of deduction u/s.80IA (4) (i) of the Act. Accordingly, the same is allowed. The contract at Sr.No.2 was an agreement between the appellant and Water Resources Deptt, Govt. of Goa for construction of RCC Conduit from Ch. 28.970 km. to 37,425 km. of Left Bank Main Canal of Tillari Irrigation Project in Bardez Taluka - Goa State.lt was a work for construction of RCC Conduit on turnkey basis within stipulated period of 450 days along with defects liability period of 3 years. The cost of Project was of ₹ 51,43,72,473/-. The terms and conditions of the tender were examined and it was observed that the assessee developed infrastructure facility for public purpose. The infrastructure developed was handed over to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en the appellant and other person was allotted the contract by the principal. The terms and conditions of the contract were perused and it was noticed that the work was originally not allotted to the appellant but he got the contract on subletting basis. The relevant provisions of section 80IA(4) of the IT. Act are very clear on this issue that benefit of deduction is allowable only for executing originally allotted contract for developing an infrastructure facility for public use. In view of the above facts and circumstances, the claim of the assessee is rejected. The terms and conditions of the contract were examined and it was revealed that the assessee executed the work of other contractor on subletting basis which was not in accordance with the provisions of section 80IA(4) the Act. Therefore, the assessee was not eligible for claim of deduction u/s.80IA (4) of the IT. Act. Accordingly, the action of the A.O. is confirmed. The contract at Sr.No.5 was an agreement between the appellant and Vidarbh Irrigation Development Corporation, Nagpur for construction of Central Spillway Masonry Dam, Head Regulators and Balance Earth Work of khadakpurna Project.Tahsil-Deulga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er it involved construction of a particular item as agreed to in the agreement or not. The agreement was not for a specific wok, it was for development of the facility as a whole. The assessee was not entrusted with any specific work to be done by him. The material required was to be brought in by the assessee by adhering to the quality and quantity irrespective of cost of such material. The employer did not provide any material to the assessee. Thus, the contract was provided for the works in package and not as a works contract. The assessee utilized its funds, its expertise, its employees and took the responsibility of developing the infrastructure facility. The losses suffered either by the employer, the workers of the developer or the people in the process of such development would be that of the assessee. The appellant as to hand over the developed infrastructure facility to the Vidarbh Irrigation Development Corporation, Nagpur on completion of the infrastructure facility. Thereafter, the assessee had to undertake maintenance of the said infrastructure for a period of as per terms of the agreement. If any damage occurred during this period, it was the responsibility of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... im of deduction u/s.80IA (4) (i) of the Act. Accordingly, the same is allowed ^ The contract at Sr. No.7 was an agreement between the appellant and Madhya Pradesh State Road Sector Development Project. For construction of Vidisha-Korwai (SH-19) in Madhya Pradesh (Project Road No. 11) . The work of construction included mainly construction, provision and maintenance of temporary diversion of public traffic, traffic management and safety during construction. Planting and maintenance of tree saplings as replacement of removed trees at road side and new planting at designated locations, clearing of site including cutting and stacking of trees, saw-cut existing pavement for clean edges, scarifications of existing granular surface and bituminous pavement etc., It was a work for construction of road within stipulated period of 24 months along with defects liability period of 3 years. The cost of the Project was of ₹ 44,45,80,0151-. The appellant, after completion of the work, handed over the developed infrastructure facility to the Madhya Pradesh Public Works Department. Thereafter, the assessee had to undertake maintenance of the said infrastructure for a period as spe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for claim of deduction u/s.80IA (4) (i) of the Act and the same is allowed. The contract at Sr.No.8 was an agreement between the appellant and Narmada Water Resources and Kalpsar Department for construction of Waste Weir, Earthen Dam and Head Regulator near village at Bhakharwad, Malia Hatina Taluka of Junagadh District. The main work consists of construction of composite earthen dam with waste weir, earthen dam on both flanks, Head Regulator having discharging capacity of 45 Cusecs in left bank, excavation of tail channel A/c. and approach channel, other miscellaneous work like D/s road etc. However, the above information was only general outline of the project for the guidance of the tender. The construction work was to be completed within stipulated period of 24 months along with defects liability period of 3 years. The cost of the project was of ₹ 13,69,61,987/-. The appellant undertook an obligation to design the project which was approved by the competent authority of Gujarat and was assigned with the duty to develop the facility, the appellant was fully responsible to execute and complete the work. He was given possession of the land and property du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d stuff as and where directed including sorting and stacking useful materials as required up to lead of 200 mt. all lifts etc. complete, (2) Providing and laying R.C.C. M-10 Class (Comparison to nominal mix proportion 1:3:6) using cement sand and crushed metal (up to 40 mm size) including providing necessary centering shuttering and form work vibrating smooth finishing curing as directed with ^all leads and lifts etc. complete, (3) Providing and laying M.S./Tor steel bar reinforcement for R.C.C. works and anchor bars with providing binding wire including cutting, bending binding in position, hooking placing in position with all leads and lifts etc. complete, (4) Providing the weep holes of 10 cm dia A.C. pipe in the retaining wall with required fixtures as directed etc. complete, (5) Pucca pitching of hammer dressed stones in specified thickness including laying to correct slopes after necessary trimming of earth work with necessary panels of 3 mt. clear size in stone masonry in C.M. (1:6) with 45 cms. Thick walls, hand packing of rubble stones with earth sluicing pointing of surface in C.M. (1:4) exclusive of filter base as directed etc. complete (a) 30 CM thick and (6) Supplyin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the courts and position of law on the issue, in my opinion, the assessee acted as a developer because he developed infrastructure facility and handed over the same to the authority concerned with guarantee period for maintenance thereof. Therefore, the assessee ,vas eligible for claim of deduction u/s.80IA 4) (i) of the Act. Accordingly, the same is allowed. This contract S.No.11 was entered between the appellant and Tapi Irrigation Development Corporation, Jalgaon for the Planning, Designing, Providing and Errecting vertical lift type mild steel gates of size 15 m x 11m for Sarangkheda Barrage in Tal. Shahada Dist. Nandurbarjncluding hoisting arrangement with all appurtenant works and testing it with further operation and maintenance for 3 years after satisfactory erection testing etc. entire work (on turnkey basis). The contract cost was of ₹ 7357.969 lakhs. Terms and conditions of the agreement were examined. This contract was made for the project included planning, designing and developing all the necessary and required works as prescribed in the tender of contract. The appellant was to complete the project within 36 months including maintenance for 3 year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... employer did not provide any material to the assessee. Thus, the contract was provided for the works in package and not as a works contract. The assessee utilized its funds, its expertise, its employees and took the responsibility of developing the infrastructure facility. The losses suffered either by the employer, the workers of the developer or the people in the process of such development would be that of the assessee. The appellant as to hand over the developed infrastructure facility to the Tapi Irrigation Development Corporation of Jalgaon on completion of the infrastructure facility.Thereafter, the assessee had to undertake maintenance of the said infrastructure for a period of 3 years. If any damage occurred during this period, it was the responsibility of the appellant and the entire infrastructure had to be maintained by him alone. After having regard to the terms and conditions of the agreement for erection of vertical lift type gates of the barrage and other assigned works, the rulings of the courts and position of law on the issue, in my opinion, the assessee acted as a developer because he developed infrastructure facility. Accordingly, he is eligible for claim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder is reproduced as under: 7. We have carefully considered the rival submissions put forth before us by both the sides. We have also perused the orders of lower authorities and the case law cited before us alongwith the material on record. The main issue in controversy which is the subject matter of appeal before us is, whether the claim of the assessee-appellant for deduction of its profits and gains can be said to be admissible in law, in view of the specific provisions of Sec. 80-1A(4) read with the impugned Explanation as applied to the facts and circumstances of the case. While answering this question, it would first be relevant and appropriate for us to examine the past records of assessments of the assessee and of other similar cases dealt with by us and involving similar kinds of businesses. In this context, we find, and there is no dispute from either side in this regard, that the issue regarding nature of business in such cases came to be examined by this Bench in various cases for various assessment years. In I.T.A. Nos. 837 838/R/2009 for A.Ys. 2003-04 2004-05, in I.T.A. Nos. 835 836/R/2009 for A.Ys. 2003-04 2004-05, in I.T.A. Nos. 850 851/R/2009 for A. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ground of said Explanation. While so holding, we are conscious of the fact that the said Explanation was not on the statute book at the time of passing of our said orders in above-referred ITAs but our finding regarding nature of business of the respective assessees continues to apply even after the insertion of the said Explanation. The factual position regarding nature of business being same as in earlier years of the very same assessee as also in similar other casers before us, has not been controverted before us. Hence, in our view, although it is held that the principle of res judicata does not apply to income tax proceedings, at the same time, the equally well-established rule of consistency also cannot be overlooked. In the case of Radhasoami Satsang vs C.I.T. 193 ITR 321 (SC) the Hon'ble Supreme Court has laid down the rinciple which is well accepted all along that absence of any material change, a different than that taken in earlier years, could not be taken in later years. We are of the i that this proposition of law read with the rule of consistency in tax proceedings n applied all the more while granting various deductions from total income in the f another we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... echnical and other manpower, materials etc. and also funded the same out of its own capital and borrowings. The appellant was required to furnish guarantees including free maintenance of the Infrastructure facilities. All these factors combined clearly go to show that the appellant also assumed considerable risk in the capacity of a businessman and the such tasks as undertaken, although under a contract as mandated by the Section, would require skills of planning of work, employing technical know-how to execute the work and to face the consequences of attendant risks. We find that the risks are upon the assessee and not upon the Govt. These elements are generally missing in the case of a sub-contractor. Here, the is directly engaged in performing its functions Further, in the case of Om Metals Infraprojects Ltd. (supra), it is held that if it is the assessee mobilizing people, plants, technical expertise etc., the assessee can be said to be a developer and that the assessee cannot be denied deduction from the profits of developing the infrastructure facility though it may not operate or maintain the same, particularly in view of the insertion of the word or in Sec. 80-IA(4). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iew different from the one taken by another Judge on a question of law, he does not finally pronounce his view and the matter is referred to a Division Bench. Similarly if a Division Bench differs from the view taken by another Division Bench it does not express disagreement and pronounce its different views, but has the matter posted before a Fuller Bench for considering the question. If that is the position even with regard to a question of law, the position will be a fortiori with regard to a question of fact. If the Tribunal wants to take an opinion different from the one taken by an earlier Bench, it should place the matter before the President of the Tribunal, so that he could have the case referred to a Full Bench of the Tribunal consisting of three or more members for which there is provision in the IT Act itself. 37. We also find that the Hon ble supreme court case of AmbikaParsad Mishra Vs. State of U.P. and Others vide writ petition no 1543 of 1977 vide order dated 09-05-1980 has taken the similar view as taken by the Hon ble High court (supra) as under: Thus we get the statutory perspective of agrarian reform and so, the constitutionality of the Act has to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve ingenuity and presented with high-pressure advocacy, cannot persuade us to re-open, what was laid down for the guidance of the nation as a solemn pre-posion by the epic Fundamental Rights case. From Kameshwar Singh and GolakNath (supra) through Kesavananda (supra) and Kanan Devan to Gwalior Rayons and after Art. 31A has stood judicial scrutiny although, as stated earlier, we do not base the conclusion on Art. 31A. Even so, it is fundamental that the nation's Constitution is not kept in constant uncertainty by judicial review every season because it paralyses, by perennial suspense, all legislative and administrative action on vital issues deterred by the brooding threat of forensic blowup. This, if permitted, may well be a kind of judicial destabilisation of State action too dangerous to be indulged in save where national. crisis of great moment to the life, liberty and safety of this country and its millions are at stake, or the basic direction of the nation itself is in peril of a shakeup. It is surely wrong to prove Justice Roberts of the United States Supreme Court right when he said. 38. In view of the identical issue raised before us in the ground of appeal n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the assessment year 2008-09 which we have decided against the assessee vide paragraph No. 22 of this order. For detailed discussion please refer the relevant paragraph. Hence the ground of appeal of the assessee is dismissed. 43. The 2nd issue raised by the assessee and the revenue are common therefore we have clubbed both of them for the purpose of the adjudication. Both the assessee and the revenue has disputed on the allow ability of the claim for the deduction under section 80-IA (4) of the Act. 44. At the outset both the learned AR for the assessee and the DR for the Revenue has submitted that the issue raised in the respective appeals are identical to the issue raised in the appeal for the assessment year 2008-09 which have been elaborately discussed in the preceding paragraph except the figures involved in the dispute. Accordingly both the parties agreed that whatever will be the decision of the ITAT for the assessment year 2008-09 in ITA No. 221/RJ T/2015 and ITA No. 201/RJ T/2015 will be applied for the year under consideration. 45. From the preceding discussion we find that the assessee has been held as developer with respect to all the projects involved in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ronouncing the order within 90 days of time by observing as under: 9. Let us in this light revert to the prevailing situation in the country. On 24th March, 2020, Hon ble Prime Minister of India took the bold step of imposing a nationwide lockdown, for 21 days, to prevent the spread of Covid 19 epidemic, and this lockdown was extended from time to time. As a matter of fact, even before this formal nationwide lockdown, the functioning of the Income Tax Appellate Tribunal at Mumbai was severely restricted on account of lockdown by the Maharashtra Government, and on account of strict enforcement of health advisories with a view of checking spread of Covid 19. The epidemic situation in Mumbai being grave, there was not much of a relaxation in subsequent lockdowns also. In any case, there was unprecedented disruption of judicial wok all over the country. As a matter of fact, it has been such an unprecedented situation, causing disruption in the functioning of judicial machinery, that Hon ble Supreme Court of India, in an unprecedented order in the history of India and vide order dated 6.5.2020 read with order dated 23.3.2020, extended the limitation to exclude not only this lockdown ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ired to interpreted. The interpretation so assigned by us is not only in consonance with the letter and spirit of rule 34(5) but is also a pragmatic approach at a time when a disaster, notified under the Disaster Management Act 2005, is causing unprecedented disruption in the functioning of our justice delivery system. Undoubtedly, in the case of Otters Club Vs DIT [(2017) 392 ITR 244 (Bom)] , Hon ble Bombay High Court did not approve an order being passed by the Tribunal beyond a period of 90 days, but then in the present situation Hon ble Bombay High Court itself has, vide judgment dated 15th April 2020, held that directed while calculating the time for disposal of matters made time-bound by this Court, the period for which the order dated 26th March 2020 continues to operate shall be added and time shall stand extended accordingly . The extraordinary steps taken suo motu by Hon ble jurisdictional High Court and Hon ble Supreme Court also indicate that this period of lockdown cannot be treated as an ordinary period during which the normal time limits are to remain in force. In our considered view, even without the words ordinarily , in the light of the above analysis of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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