TMI Blog2021 (1) TMI 1154X X X X Extracts X X X X X X X X Extracts X X X X ..... art of highways or not? - We note that Finance Act, 2001 has modified the definition of infrastructure facility which means a highway project including housing or other activities being an integral part of the highway project. It is clear from the amended definition that any infrastructure which is part of the high way falls within the definition of infrastructure - examining the terms and conditions of award of contract to the assessee to construct, build or operate the said terminal on BOT basis, we find that this is an integral part of highway though the highway was existing already and it was only a stand alone project awarded to the assessee later on - As noticed that the said terminal was having various facilities as stated hereinabove. The case of the assessee finds support from the decision of Dy. Commissioner of Income Tax Vs. Vintage Advertising Pvt. Ltd.[ 2015 (6) TMI 593 - ITAT KOLKATA] wherein it has been held that assessee is entitled for deduction under section 80IA of the Act on bus shelter and foot over bridge - we direct the AO to allow the deduction under section 80IA. Disallowance on account of labour charges equal to 1% of the total purchases - disallowa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... retained may please be deleted. 3. Without prejudice to above, in the facts and circumstances of the case and in law, the Ld. CIT(A) had erred in restricting to 1% of purchases for A.Y. 2011-12 of ₹ 4,16,43,098/- instead of 1% of purchases for A.Y. 2012-13 of ₹ 3,03,80,063/-. In the facts and circumstances of the case and in law, the Ld. CIT(A) had erred in upholding the addition of ₹ 34,541/- u/s 14A read with rule 8D of the Act. The addition retained may please be deleted. 4. Without prejudice, in the facts and circumstances of the case and in law, the Ld CIT(A) has erred in retaining the working under rule 8D, which is defective and erroneous. 3. The issue raised in ground No.1 is against the confirmation of disallowance of ₹ 68,22,830/- by Ld. CIT(A) as made by the AO by rejecting the claim of the assessee under section 80IA of the Act in respect of parking lot developed on CIDCO land at truck terminal. 4. The facts in brief are that AO on the basis of computation of income noticed that assessee has claimed a deduction under section 80IA of the Act amounting to ₹ 68,22,830/-. Accordingly, the assessee was called upon to furnish the aud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ped the parking lot and is collecting parking charges from the persons parking their vehicles. The assessee is also paying certain specified amount to CIDCO as per the agreement. In the submission reproduced above the main contention of the assessee is that the project is an integral part of a high way project. However the fact is that the parking lot developed by the assessee is in Kalamboli steel market and not on any highway. Thus the contention that the project is an integral part of a highway project is factually incorrect. 4.1 In this context it is also worthwhile to look at the claim, done by the assesee. During A. Y. 2011-12 the assessee has claimed deduction u/s. 80IB on this very project. However during A. Y. 2012-13 deduction has been claimed u/s. 80IAB. Thus even the assessee is not clear under which section it is claiming the deduction. In this context it is also worthwhile to have a look at the relevant portion of the audit report in form No. 10CCB wherein the project is specified. For the sake of clarity the same is reproduced below: 16. Development, operation, Maintenance of . (a) . (b) .. 4.2 In this case the assessee has developed a pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act are initiated separately. 6. In the appellate proceedings, the Ld. CIT(A) dismissed the appeal of the assessee by observing and holding as under: 9. I have carefully gone through the facts of the case, findings of the AO in the assessment order, submissions of the Ld. AR and material placed on record. From the facts of the case it is noticed that in the return of income the appellant had claimed the deduction of ₹ 8,73,817/- u/s 80IB of the Act in A Yr 2011-12 and ₹ 68,22,830/- u/s 801AB of the Act in AYr 2012-13. In the absence of audit report with the return of income, the AO could not ascertain the exact nature of income against which the said deductions have been claimed. Accordingly the AO resorted to call for audit reports along with the other details for justifying the genuineness of above claims. In compliance the AR of the appellant attended the proceedings and reclassified the claim of above deductions u/s 80IA of the Act instead of 80IB/80IAB of the Act claimed in the original returns of income. As regard non filing of audit reports along with IT returns iS conducted it is stated that merely not filling the audit report along with IT returns wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urther observed that the CIDCO has awarded the contract of truck parking terminal to the appellant for repair, maintenance and operating it for certain period, by way of contract, hence the same cannot be classified as infrastructure developed by the appellant, as has been defined in the provisions of Explanation (b) to Sec 80IA(4) of the Act, which inter-alia state that (b) a highway project including housing or other activities being an integral part of the highway project . The AO further noticed that the appellant is collecting truck parking charges from various truck owners and the same is shared with the CIDCO, as per their agreement, with annual increment of 10%, on commercial basis. 9.2 From the above facts it is seen that this truck parking terminal was already existing in the Kalamboli Steel Market and the contract was awarded to the appellant for renovating/repairing, maintaining and operating it for certain period, to generate income for itself as well as for CIDCO, on commercial basis. It is pertinent to mention here that in the country where ever there are big market hubs/shopping centers/malls, such parking lots are maintained by the contractors on contract basis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alls within the definition of infrastructure. After perusing the facts on record carefully and also examining the terms and conditions of award of contract to the assessee to construct, build or operate the said terminal on BOT basis, we find that this is an integral part of highway though the highway was existing already and it was only a stand alone project awarded to the assessee later on. We have also noticed that the said terminal was having various facilities as stated hereinabove. The case of the assessee finds support from the decision of Dy. Commissioner of Income Tax Vs. Vintage Advertising Pvt. Ltd. (2015) 60 taxmann.com 162 (Kolkata- Tribunal) wherein it has been held that assessee is entitled for deduction under section 80IA of the Act on bus shelter and foot over bridge. The operative part is reproduced as under: 9. We have heard both counsel and carefully perused the records. The learned Departmental representative submitted that the assessee is not at all eligible for deduction under section 80-IA of the Act on bus shelters and foot overbridges. The learned Departmental representative submitted that as in this case it is not the case that the assessee has gained ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 , has held that the benefit under section 80-IA of the Act can be extended only to those assessees who have developed infrastructure facility as defined under section 80-IA(4) of the Act. The hon'ble High Court discussed the fact of the case that the assessee has not developed road or a toll road, bridge, highway or a rail system. However, it had developed the existing road median, erected bus shelters and light poles for its advertisement business, which, in any case cannot be treated as infrastructure development. Accordingly, the hon'ble High Court decided the question of law in favour of the Revenue and against the assessee. In view of the above the learned Departmental representative prayed that the assessee cannot be allowed any deduction under section 80-IA of the Act. 9. We have heard both counsel and carefully perused the records. The learned Departmental representative submitted that the assessee is not at all eligible for deduction under section 80-IA of the Act on bus shelters and foot overbridges. The learned Departmental representative submitted that as in this case it is not the case that the assessee has gained any profit or gain from the said business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 80-IA of the Act can be extended only to those assessees who have developed infrastructure facility as defined under section 80-IA(4) of the Act. The hon'ble High Court discussed the fact of the case that the assessee has not developed road or a toll road, bridge, highway or a rail system. However, it had developed the existing road median, erected bus shelters and light poles for its advertisement business, which, in any case cannot be treated as infrastructure development. Accordingly, the hon'ble High Court decided the question of law in favour of the Revenue and against the assessee. In view of the above the learned Departmental representative prayed that the assessee cannot be allowed any deduction under section 80-IA of the Act. 10. Learned counsel for the assessee, on the other hand, submitted that the issue is squarely covered in favour of the assessee by the Tribunal's decision as mentioned above. In the said order the Tribunal had held as under : After hearing both sides, we find that the assessee has claimed deduction under section 80-IA on bus shelters treating the same as integral part of highway and development infrastructure. For the purpose of h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re facility at its own cost provided for revenue generation by the assessee by the display of commercial advertisement on the infrastructure facility developed by it. Learned counsel further submitted that the assessee was also not to charge any amount from the public users of the infrastructure facility developed by it. That the assessee was however permitted to use the infrastructure facility developed by it to raise revenue by display of commercial advertisements on it. That the provision in the agreements relating to generation of revenue in the manner aforesaid is inextricably and directly connected with the development, operation and maintenance of the infrastructure facility provided for in the agreements. Learned counsel further submitted that the assessee did not merely develop the infrastructure facility but the assessee also operated and maintained the infrastructure facility which activity are also covered by section 80-IA of the Act. In this regard learned counsel further referred to the decision of the hon'ble Calcutta High Court in the case of CIT v. Cement Mfg. Co. Ltd. [ITAT No. 130 of 2014, dated 15-1-2015]. In this case the hon'ble Calcutta High Court has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s disallowed. 12. Learned counsel for the assessee further submitted that section 80-IA of the Act provides for deduction on account of profits and gains derived by an industrial undertaking from any business referred to therein. Learned counsel further submitted that the hon'ble apex court in the case of Liberty India (supra ) dealt with the question whether the profit from the Duty Entitlement Pass Book Scheme (DEPB) and the Duty Drawback Scheme could be said to be profit derived from the business of an industrial undertaking eligible for deduction under section 80-IB of the Income-tax Act. Hence he submitted that this case law does not support the case of the Department. He further submitted that the very agreements under which the assessee has developed, operated and maintained the infrastructure facility at its own cost provided for revenue generation by the assessee by the display of commercial advertisement on the infrastructure facility developed by it. Learned counsel further submitted that the assessee was also not to charge any amount from the public users of the infrastructure facility developed by it. That the assessee was however permitted to use the infrastruc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s regards the issue raised by the learned Departmental representative that the income which is the subject matter of claim of deduction under section 80-IA of the Act was not derived from the business of advertising of bus shelters and foot overbridges, we find that this is altogether a new issue which is not even the case of the Assessing Officer. The Assessing Officer has made the disallowance only on the ground that construction of bus shelter and foot overbridge cannot be treated as development of infrastructure facility. Hence they do not qualify for deduction under section 80-IA of the Act. This aspect of the Assessing Officer's disallowance has been duly overruled by the learned Commissioner of Income-tax (Appeals) as well as the Income-tax Appellate Tribunal. The same also draws support from the hon'ble Calcutta High Court decision in the case of Selvel Advertising (P.) Ltd. (supra). In these cases it has been held that development of foot overbridges and bus shelters do qualify for deduction under section 80-IA of the Act on account of infrastructure development. When the Assessing Officer has not raised any issue as to whether the income of the assessee can be con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct. Accordingly, this ground of appeal raised by the Revenue stands dismissed. 8. Since the facts of the assessee s case are similar to the one as decided by co-ordinate bench of the Tribunal, we are therefore respectfully following the same, set aside the order of Ld. CIT(A) and direct the AO to allow the deduction under section 80IA of the Act. 9. The issue raised in ground No.2 is against the part confirmation of disallowance on account of labour charges equal to 1% of the total purchases which comes to ₹ 4,16,430/- by Ld. CIT(A) as against the disallowance on adhoc basis of ₹ 7,25,120/- made by the AO on the ground that these expenses were incurred in cash whereas the issue raised in ground No.3, a without prejudice ground that the Ld. CIT(A) has erred in restricting the disallowance to 1% of the purchases for assessment year 2011-12 of ₹ 4,16,43,098/- instead of 1% of the purchases for assessment year 2012-13 i.e. ₹ 3,03,80,063/-. 10. The facts in brief are that the AO noticed from the profit loss account that assessee has claimed the labour charges under the head direct expenses of ₹ 3,03,80,063/-. The AO noticed on the basis of bi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing both the parties and perusing the material on record, we find merit in the contentions of the Ld. A.R. that the disallowance under rule 8D2(iii) was wrongly made at 1.5% of the average investment instead of .5%. Therefore, the same is required to be rectified. Accordingly, we set aside the order of Ld. CIT(A) on this issue and direct the AO to make a disallowance at .5% of average investment. Needless to say that disallowance computed under rule 8D(ii) is correct. Accordingly, we direct the AO to delete the disallowance to the extent of ₹ 10,750/-. Ground is partly allowed. ITA No.742/Mum/2018 AY 2011-12 16. The issue raised in ground no. 2 is similar to one as decided by us in ITA No. 743/Mum/2018 AY 2012-13. Therefore our decision on ground no. 1 ITA No. 743/Mum/2018 would, mutatis mutandis , appeal to ground no. 2 of this appeal as well. Consequently the ground no. 2 of assessee s appeal is allowed. 17. The issue raised in ground no. 3 and 4 is similar to one as decided by us in ITA No. 743/Mum/2018 AY 2012-13. Our findings in ITA No. 743/Mum/2018 would, apply to these grounds as well. Accordingly ground no. 3 is partly allowed whereas ground no. 4 is not b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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