9911796707
TMI Blog2022 (6) TMI 1062X X X X Extracts X X X X X X X X Extracts X X X X ..... e has raised certain common grounds of appeals, certain facts are common in all the appeals, thus, all the appeals are clubbed and heard and are decided by this consolidate order to avoid the conflicting decision. With the consent of parties, the appeal for A.Y. 2008-09 in ITA No. 2018/Ahd/2014 is treated as 'lead' case, wherein the assessee has raised following grounds of appeal:- "1. On the facts and in the circumstances of the case and in law, the Commissioner of Income-tax (Appeals) ['CIT (A)'] erred in upholding the re-opening of the assessment under section 148 of the Income-tax Act, 1961 ('Act'). 2. On the facts and in the circumstances of the case and in law, the CIT(A) erred in upholding the action of the Assessing Officer ('AO') in not granting deduction under section 80IA in respect of profits of the eligible undertaking amounting to Rs. 1,18,74,445/- on the ground that the appellant had not fulfilled the conditions specified in section 80IA(4) of the Act. 3. On the facts and in the circumstances of the case and in law, the CIT(A) erred in holding that after the agreement with GIDC was entered into on 15 December 2006 the appellant had not d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 94,51,000/-. The Assessing Officer while passing the assessment order, restricted the deduction under Section 80IA to the extent of Rs. 99,98,852/-. The Assessing officer also disallowed sludge disposal charges of Rs. 25,093/- and disallowed depreciation of Rs. 1,94,778/-. Aggrieved by the action of Assessing Officer, the assessee filed appeal before the ld. CIT(A). The ld. CIT(A) vide order dated 21/06/2013 allowed certain reliefs to the assessee. 4. Later on, the case of assessee was reopened under section 147 of Income-tax Act. Notice under Section 148 of the Act dated 28/03/2012 which was served to the assessee on 30/03/2012. The notice under Section 148 was served after recording reasons of reopening "that the deduction under Section 80IA was disallowed in A.Y. 2009-10 on the ground that the assessee did not fulfill the prerequisite condition for claiming deduction under Section 80IA of the Act. The assessee entered into an agreement with Gujarat Industrial Development Corporation (GIDS) o 15/12/2006, thus there was no agreement prior to that date with a local authority or statutory body. The Assessing Officer further recorded that on verification of record, it was found that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ties on the basis of agreement as required under section 80IA(4)(i)(b) and has only operated old infrastructure facilities. The provision of section 80IA(4) does not stipulate that the agreement should have been entered into on or before a particular date and even otherwise. There is enough evidence in the form of correspondence with the Gujarat Industrial Development Corporation ('GIDC') and the assessee that a agreement exist right from the inception. The Central Board of Direct Taxes ('CBDT') in its Circular No.1/2006 dated 12.01.2006 clarified that effluents treatment facilities as developed, operate and maintain by assessee is eligible for deduction under section 80IA(4) and subsequent to the aforesaid clarification by CBDT, the assessee entered into formal with GIDC on 15.12.2006 for development, operation and maintenance of effluent treatment plant. Thus, assessee is eligible condition for claiming under section 80IA was fulfilled by assessee. 6. The Ld. Senior Counsel for the assessee submits that he has two fold legal arguments; firstly, the action of Assessing Officer is based on mere of change of opinion. To support his submission, Ld. Sr. counsel for assessee relied up ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecording the reasons that in case of assessee for AY 2009-10, the assessment under section 143(3) was completed on 30.12.2011. As per the same, deduction claimed under section 80IA was disallowed and assessee did not fulfil the perquisite the claiming of deduction under section 80IA in this year also and the assessee has claimed deduction of Rs.1.01 crores which was not allowable. On receipt of reasons recorded, the assessee filed objection dated 18.12.2012 against re-opening and said objection of assessee was rejected. The Assessing Officer after rejecting the objection for re-assessment, Assessing Officer recorded that for eligible claim of deduction under section 80IA, the assessee was required to enter into an agreement with government, local authority or statutory body. Before developing or operating and maintaining a new infrastructure facilities, the claim of assessee under section 80IA have been made on the basis of such agreement with GIDC dated 15.12.2006. In this case, infrastructure facilities came into existence on 15.02.1997 which is not before the date on which agreement has been entered into. No infrastructure facilitieshas been developed for operating or maintainin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... change of opinion' is removed as contemplated on behalf of revenue, then in the garb of reopening the assessment, review would take place. It was further held that after 01.04.1989, the assessing officer has a power to re-open, provided there is 'tangible material' to come to the conclusion that there is escapement of income. 11. We find that notice under section 148 of the Act in the present case was issued on 28.03.2012 i.e., within the period of four years from the end of relevant assessment year. Therefore, no tangible material has come to the notice of Assessing Officer as there is no such reference in the reasons recorded. The Assessing Officer solely relied on the material information available on record. Further, we find that the assessment order passed by Assessing Officer was the subject-matter of appeal before Ld. CIT(A) and principle of natural justice would apply. Therefore, we hold that the action of Assessing Officer for re-opening is not valid as the original scrutiny assessment was the subject-matter of appeal before Ld. CIT(A) and again appeal before Tribunal, moreover, the action of Assessing Officer is based on "change of opinion" on similar set of fact. Consid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re estimated at 10% of interest earned on amounting to Rs.10,13,769/- ought to be deducted while excluding the interest income for the purpose of computing the deduction under section 80IA of the Act. The appellant craves, to consider each of the above grounds of appeal without prejudice to each other and craves leave to add, alter, delete or modify all or any of the above grounds of appeal." 15. Brief facts for adjudication of various grounds of appeal are that for the year under consideration i.e. A.Y. 2009-10, the assessee filed return of income on 28/09/2009 declaring total income of Rs. 90,45,667/-. The case was selected for scrutiny. The Assessing Officer while passing the assessment order, noted that the assessee has claimed deduction under Section 80IA of Rs. 91,02,996/-. The assessee has included under the claim of Section 80IA of interest on fixed deposits and other deposits of Rs. 12,13,380/- and interest on GEB of Rs.1,28,136/- and interest on fixed deposit and other deposits amounting to Rs. 12,13,380/-. The Assessing Officer excluded the interest income from the profit eligible for deduction under Section 80IA. The Assessing Officer recorded that the assessee claim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee was not formed by splitting up or reconstruction of a business already in existence.The assessee is registered under the companies Act.The assessee entered into an agreement with GIDC for developing, operating and maintaining new infrastructure facility. The assessee entered into an agreement on 15/12/2006 with GIDC, a statutory authority owned by the Government of India established under the Gujarat Industrial Development Act, 1962. The assessee is solely authorised by Gujarat Pollution Control Board (GPCB) and Central Pollution Control Board. The assessee stated the operating and maintaining infrastructure facility on or after 1st day of April, 1995. Further the old clause (b) of Section 80IA(4)(i) and appreciated clause (b) of Section 80IA(4)(i) w.e.f. 01/04/2002 nowhere stipulates that the agreement should be in writing or should be entered into on or before a particular date. Accordingly, the assessee stated that they fulfilled all the conditions for claiming deduction under Section 80IA of the Act. The assessee also relied on circular of CBDT No. 1/2006 dated 12/01/2006 wherein it was clarified that under the treatment of effluents and its conveyance system, the effluent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osal charges. The Assessing Officer further disallowed the same by considering the opening written down value of asset on the basis of assessment order passed in earlier years and held that the assessee claimed excess depreciation of Rs. 3,10,022/-. 16. On appeal before the ld. CIT(A), the action of Assessing Officer in disallowance of deduction under Section 80IA and depreciation was upheld, however, on other two disallowances, the assessee was granted relief i.e. excess depreciation on sludge disallowances. The ld. CIT(A) held that eligibility was available to the assessee from A.Y. 2007-08 only. Thus initial allowance from A.Y. 2006-07 is not as per law. If the assessee had entered into an agreement with GIDC during this Financial Year 2006-07, it could have been eligible for deduction under section 80-IA(4) on account of such infrastructure facility already in existence, as this infrastructure facility had been started in A.Y. 1997-98. But since this has not been done, hence the assessee is not eligible for deduction under section 80- IA(4) as this is not a new infrastructure facility established in pursuance of an agreement entered into by the appellant with GIDC. The Ld. CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the agreement was not entered in FY 2001-02. The assessee is claiming deduction under section 80IA form A.Y. 2006-07. Further, the learned Senior Counsel invited our attention to the provisions of Section 80-IA(4)(i) and Explanation (c) to the aforesaid provision which reads as under; "(4) This section applies 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 local authority or any statutory body for (i) developing or (ii) operating and maintaining or (iii) developing, operating and maintaining anew infrastructure facility: (c) it has started or starts operating and maintaining the infrastructure facility on or after 1st day of April, 1995: ....... Explanation- For the purpose of this clause, "infrastructure facility ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e requisite requirements as per the provisions of the Act. The assessee sought registration as a STP on 27th March 2002 whereas it had commenced production in the Financial Year 1999-00 itself. The revenue contended that since the assessee was already in the said business, it does not qualify to be a 'new' industrial undertaking. The Tribunal decided the issue in favour of the assessee and has held that "the fact of the assessee being in the business prior to the date of the registration of the STPI would not stand in the way of granting relief to the assessee". On further appeal before the High Court issue was held in favour of the assessee. 19. The learned Senior Counsel submitted that it is well settled position that if a deduction or exemption is granted subject to fulfillment of conditions, an assessee is entitled to claim the deduction/ exemption from the year in which he satisfies the conditions, so long as he is within the overall exemption period. In the instant case, as stated above the assessee entered into an agreement with GIDC on 05th December 2006 and started claiming deduction under section 80-IA of the Act from AY 2006-07 onwards being the third year of operations ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eduction under section 80-IA in respect of the infrastructure facility ought to be allowed to the appellant. To buttress his submissions the ld Counsel relied on the following decisions; * Shri Nagesh Chunder Vs CIT 358 ITR 521 (Mad), * CIT Vs Satellite Engineering Ltd (113 ITR 208 Gujarat), * PCIT Vs Maps Enzymes Ltd [2019] 111 taxmann.com 73 (Gujarat High Court), * Saurashtra Cement & Chemical Ltd Vs CIT (123 ITR 669) (Gujarat), * CIT Vs Paul Brothers (216 ITR 548 Bombay). 21. On the other hand the Ld. Sr DR for the revenue supported the order of the lower authorities. The assessee has not established new undertaking. Thus, no cognizance can be taken of the agreement dated 05th December 2006 with GIDC. 22. We have considered the rival submissions of the parties and deliberated on the various case laws relied by learned Senior Counsel. We find that during the assessment the AO raised quarry about the eligibility of deduction under section 80IA(4)(i) of eligible unit vide show cause notice dated 13.12.2011 (Para 5.4 of assessment order) . The assessee in its reply specifically stated that pursuant to insertion of sub-clause (c) in Explanation to section 80IA(4)(i) with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Y. 1997-98. But since this has not been done, hence the assessee is not eligible for deduction under section 80-IA(4) as this is not a new infrastructure facility established in pursuance of an agreement entered into by the appellant with GIDC. The Ld. CIT(A) also held that assessment for 2006-07 and 2007-08 were reopened under section 147 and assessment was completed under section 143(3)/ 147 denying the claim of deduction under section 80IA. 24. Before us, the learned Senior Counsel for the assessee vehemently argued that it is well settled position in law that if a deduction or exemption is granted subject to fulfillment of conditions, an assessee is entitled to claim the deduction/ exemption from the year in which he satisfies the conditions, so long as he is within the overall exemption period. It was further argued that sub-section (2) of section 80-IA lays down that the deduction specified in sub-section (1) may at the option of the assessee be claimed for any 10 consecutive years out of 20 years beginning from the year in which the undertaking develops or begins to operate the infrastructure facility and that the assessee can choose to claim deduction for any 10 consecutiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment year under reference, i.e., 1969-70, without disturbing the relief for the initial year The next question to which the Tribunal addressed itself, and in our opinion rightly, was whether the ITO was justified in refusing to continue the relief of tax holiday granted to the assessee-company for the asst. yr. 1968-69, in the assessment year under reference, that is, 1969-70, without disturbing the relief granted for the initial year. It should be stated that there is no provision in the scheme of s. 80J similar to the one which we find in the case of development rebate which could be withdrawn in subsequent years for breach of certain conditions. No doubt, the relief of tax holiday under s. 80J can be withheld or discontinued provided the relief granted in the initial year of assessment is disturbed or changed on valid grounds. But without disturbing the relief granted in the initial year, the ITO cannot examine the question again and decide to withhold or withdraw the relief which has been already once granted." 27. Further Hon'ble Bombay High Court in the case of CIT vs. Paul Brothers (216 ITR 548), has held as under: "Either in s. 80HH or in section 80J, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... result, ground No. 1 to 4 of the appeal are allowed. 30. Ground No. 5 relates to excluding the interest earned on delayed payment received from customer, interest earned from GEB deposits and interest on other deposits. The learned Senior Counsel for the assessee submits that this ground of appeal is covered by the decision of Tribunal in assessee's group case in Bharuch Enviro Infrastructure Ltd in ITA No. 1849/Ahd/2014 dated 27.12.2021. 31. On the other hand the Ld. CIT-DR for the revenue supported the order of lower authorities. The Ld. CIT-DR for the revenue submits that income of impugned receipt has no nexus with the business carried out by undertaking. 32. We have considered the rival submissions of the parties and have gone through the orders of the lower authorities carefully. We find that this issue consist of three components of income that is, (i) interest on delayed payments received from customers of Rs. 10,10163/-, (ii) interest earned on deposit with Gujarat Electricity Board (GEB) of Rs. 1,28,136/- and (iii) interest on other deposits of Rs. 12,13,380/-. The assessing officer disallowed the receipt to include in the deduction of 80IA by taking view that the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... principle of consistency, we direct the AO to follow the order of Tribunal in AY 2007-08 dated 27.02.2017 and recomputed the eligible deduction under section 80IA accordingly." 33. Considering the decision of Tribunal in assessee's group case wherein interest income from fixed deposit in bank was allowed for deduction under Section 80IA, thus, the interest on deposits are allowed. So far as interest on delayed payment from customers is concerned, such payments were made by various members have direct nexus with the profit and gains derived from undertaking. So far as interest earned on deposits with GEB is concerned, the same is not derived from the business activity of the assessee nor flowing directly from the industrial undertaking therefore, not eligible for deduction under Section 80IA of the Act. Thus, the assessee partly succeeded on this ground of appeal. 34. Ground No. 6 of appeal relates to expenditure estimated at 10% on interest income. The Ld. Sr. Counsel for the assessee at the time of his submission, submits that he is not pressing this ground of appeal, therefore, this ground of appeal is dismissed as not pressed. 35. Now we take ITA No. 497/Ahd/2015 for the A.Y. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8. Without prejudice to the above grounds of appeal, it is submitted that where the conditions necessary for claiming the deduction are fulfilled at any date subsequent to date from which the undertaking is eligible to claim such deduction, the deduction shall be allowable from such subsequent date. The appellant craves, to consider each of the above grounds of appeal without prejudice to each other and craves leave to add, alter, delete or modify all or any of the above grounds of appeal." 36. We find that ground No. 1 to 5 raised by assessee is similar as raised in ground No. 1 to 5 in appeal for A.Y. 2009-10 in ITA No. 2019/Ahd/2014 which we have allowed (supra). Thus, following the principle of consistency, these grounds of appeal are allowed with similar directions. 37. Ground No. 6 relates to excluding of interest income on bank deposit and other deposits. This ground of appeal is similar to the ground No. 5 in appeal for A.Y. 2009-10 wherein we have allowed the component of similar income for eligible deduction under Section 80IA of the Act, thus this ground of appeal is allowed with similar direction. 38. Ground No. 7 relates to estimated expense of 10% of interest inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,07,149/- is excluded then the interest in respect of membership deposit amounting to Rs.28,28,709/- debited to Profit and Loss Account ought not to be included the expenditure while computing the eligible profits. 8. On the facts and in the circumstances of the case and in law, it is submitted that expenditure for earning interest income estimated at 10% of interest earned on loan amounting to Rs.13,76,818/- ought to be deducted while excluding the interest income for the purpose of computing the deduction under section 80IA of the Act. 9. On the facts and in the circumstances of the case and in law, the CIT(A) erred in upholding the action of the AO in granting credit in respect of prepaid taxes amounting to Rs. 90,92,718/- instead of Rs. 91,72,744/- as claimed in the return of income. 10. On the facts and in the circumstances of the case and in law, the CIT(A) erred in upholding the action of the AO of levying interest under section 234D of the Act amounting to Rs. 3,92,951/-. 11. On the facts and in the circumstances of the case and in law, the CIT(A) erred in upholding the action of the AO in levying interest on distributed profits amounting to Rs. 3,92,820/-. 12. On ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n. Needless to order that before passing the order, the Assessing Officer shall grant adequate opportunity to the assessee. In the result, this ground of appeal is allowed for statistical purposes. 47. Ground No. 10 relates to interest under Section 234D of the Act. The ld. Sr. Counsel of the assessee submits that this ground of appeal is covered by the decision of Hon'ble Madras High Court in CIT Vs. United India Insurance Company Ltd. 438 ITR 301 (Mad), wherein the High Court has held that "interest under section 234D is leviable only if refund granted to assessee becomes collectable in order passed under regular assessment; hence, where assessment in pursuance to reassessment proceedings could not be termed as 'first assessment' so as to come within meaning of expression 'regular assessment' for purposes of section 234D, no interest could have been levied on assessee for excess income tax refund." The ld. Sr. Counsel submits that Assessing Officer may be directed to calculate the interest by following the aforesaid decision. 48. On the other hand, the ld. CIT-DR for the Revenue supported the order of ld. CIT(A). 49. We have considered the rival submissions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... justment of refund was erroneous. 54. On the other hand, the Ld. CIT_DR submits that the Assessing Officer may be directed to verify the defect. 55. We have considered the submissions and considering the fact that assessee claimed that no demands were outstanding, therefore, adjustment of refund is not correct. Therefore, the Assessing Officer is directed to verify the facts and pass the order if any adjustment of refund for relevant years were pending. In the result, this ground of appeal is allowed for statistical purpose. 56. In the result, this appeal is partly allowed. 57. Now we take ITA No. 1845/Ahd/2016 for the A.Y. 2012-13, wherein the assessee has raised following grounds of appeal: "1. On the facts and in the circumstances of the case and in law, the Commissioner of Income-tax (Appeals) [CIT(A)] erred in upholding the action of the Assessing Officer AO') in not granting deduction under section 80IA of the Income-tax Act, 1961 ('the Act') in respect of profit derived from effluent treatment plant being an eligible infrastructure facility under section 80IA(4) of the Act. 2. On the facts and in the circumstances of the case and in law, the CIT(A) erred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s leave to add, alter, delete or modify all or any of the above grounds of appeal." 58. We find that grounds No. 1 to 5 of this appeal are similar to the grounds No. 1 to 5 in appeal for A.Y. 2009-10 which we have allowed. This is seventh year of claim under Section 80IA of the Act. Thus, following the principle of consistency, these grounds of appeal are allowed with similar directions. 59. Ground No. 6 relates to excluding interest earned on membership deposit. This ground of appeal is similar to the ground No. 6 in appeal for A.Y. 2009- 10, which we have allowed. Thus, this ground of appeal is allowed with similar observation. 60. Ground No. 7 relates to addition in respect of fixed asset written off while computing deduction under Section 80IA and ground No. 8 relates to excluding interest on income tax paid while computing deduction under Section 80IA of the Act. At the time of hearing, Ld. Sr. Counsel for the assessee submits that he is not pressing these grounds of appeal, therefore, these grounds of appeal are dismissed being not pressed. 61. In the result, this appeal of the assessee is partly allowed. 62. Now we take ITA No. 1471/Ahd/2017 for the A.Y. 2013-14, wherei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed under Section 271(1)(c) of the Act) vide order dated 09/03/2015. 66. We find that the assessment order for A.Y. 2008-09 was initially completed under Section 143(3) on 24/12/2010. Thereafter, the case of assessee was reopened under Section 147. Later on, the case of assessee was reopened under Section 147 and assessment was completed under Section 143(3) r.w.s. 147 on 28/02/2013. The Assessing Officer while passing the reassessment order, made disallowance of deduction under Section 80IA of Rs. 99.98 lacs. On appeal before Ld. CIT(A) in quantum assessment, the disallowance of deduction was upheld. The Assessing Officer after receipt of order of Ld. CIT(A), levied the penalty under Section 271(1)(c) @ 100% of tax sought to be evaded and worked out penalty of Rs. 3089645/- vide order dated 09/03/2015. On further appeal against the penalty order, the penalty was upheld vide order dated 08/03/2017, further aggrieved, the assessee has filed present appeal before this Tribunal. 67. Considering the fact that we have deleted the entire disallowance in quantum assessment in ITA No. 2018/Ahd/2014, therefore, the penalty levied by Assessing Officer under Section 271(1)(c) will not surviv ..... X X X X Extracts X X X X X X X X Extracts X X X X
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