TMI Blog2022 (6) TMI 1062X X X X Extracts X X X X X X X X Extracts X X X X ..... and started deduction under section 80-IA of the Act from AY 2006-07. On this objection, we are also in agreement with the submissions of learned Senior Counsel for the assessee that pursuant to insertion of sub-clause (c) in Explanation to section 80IA(4)(i) with effect from 01.04.2001, by new sub-clause so as to include Solid Waste Management System within the meaning of infrastructure facility, the assessee-company is covered under the amended definition of Infrastructure Facility and fulfills all the conditions as specified in subclause (a) to (c) of section 80IA(4) (i). Accordingly the assessee is eligible for claim of deduction under section 80IA - Decided in favour of assessee. Computation of deduction u/s 80IA - excluding the interest earned on delayed payment received from customer, interest earned from GEB deposits and interest on other deposits - HELD THAT:- Considering the decision of Tribunal in assessee s group case [ 2017 (2) TMI 1493 - ITAT AHMEDABAD] 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, s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g for this relevant year, thus adjustment of refund was erroneous - HELD THAT:- As 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. Penalty u/s 271(1)(c) - HELD THAT:- Considering the fact that we have deleted the entire disallowance in quantum assessment therefore, the penalty levied by Assessing Officer under Section 271(1)(c) will not survive. In the result, appeal of the assessee is allowed. - ITA No(s). 2018, 2019/Ahd/2014 And ITA Nos. 497 & 498/Ahd/2015 And ITA No. 1845/Ahd/2016 And ITA No. 1471/Ahd/2017 And ITA No. 1473 & 1474/Ahd/2017 - - - Dated:- 8-6-2022 - Shri Pawan Singh, Judicial Member And Dr. Arjun Lal Saini, Accountant Member For the Assessee : Shri S N Soparkar, Senior Advocate with Ms. Urvashi Shodhan, Advocate For the Department : Shri H.P. Meena, CIT-DR with Shri Deependra Kumar, Sr. DR ORDER UNDER SECTION 254(1) OF INCOME TAX ACT PER PAWAN SI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A was granted in the initial assessment year, it ought to be allowed in the subsequent years for the remaining period. 6. On the facts and in the circumstances of the case and in law, it is submitted that interest earned on delayed payments received from customers amounting to Rs. 10,25,225/- and interest on other deposits amounting to Rs. 33,176/- ought not to be excluded while computing deduction under section 80IA of the Act. 7. On the facts and in the circumstances of the case and in law, it is submitted that expenditure estimated at 10% of interest earned on fixed deposits, loan and income- tax refund aggregating to Rs.8,17,273/- ought to be deducted while excluding the interest income for the purpose of computing the deduction under section 80IA of the Act. 8. On the facts and in the circumstances of the case and in law, the CIT(A) erred in not deleting the interest levied under section 234D by stating that it is consequential in nature. 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. 3. Brief facts of the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duction under Section 80IA of the Act of Rs. 1.18 crores, provision of sludge disposal charges of Rs. 25,093/- and depreciation of Rs. 1,94,778/-. The Assessing Officer also held that the assessee was not having any agreement with the State/Central Govt., local government or statutory body. On appeal before the ld. CIT(A), the action of Assessing Officer was upheld. Further aggrieved, the assessee has filed the present appeal before this Tribunal. 5. We have heard the submission of Shri Sourabh N. Suparkar Ld. Senior counsel with Ms. Urvashi Shodhan, ld. Authorised Representative (AR) for the assessee and Shri H.P. Meena, learned Commissioner of Income-tax (ld. CIT-DR) with Shri Deependra Kumar, ld. Sr. Departmental Representative (DR) for the Revenue. Ground No. 1 relates to validity of reopening under section 147 of the Act. The Ld. Senior counsel for the assessee submits that during scrutiny assessment completed vide assessment order dated 24/12/2010 and Assessing Officer examined the entire claim of assessee on the eligibility of deduction under section 80IA. The Assessing Officer has no right to reopen the assessment completed after making full enquiry, if the Assessing Off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ma Industries Ltd. vs. DCIT (2006) 155 TAXMAN 330 (Guj). Ld. Sr. counsel for the assessee submits that on merit all the grounds of appeal are covered by the decision of Tribunal in ITA Nos. 1849 1867/AHD/2014 for AY 2008-09 dated 27.12.2021. 7. On the other hand, Ld. CIT-DR for the Revenue has vehemently supported the orders of the lower authorities. The ld CIT-DR for the revenue submits that during the original assessment the assessing officer has not exmined the eligibility criteria under section 80IA. The assessing officer has not examined the agreement with GIDC as there is no reference in the assessment order as such the action of reopening is not based on the change of opinion. 8. We have considered the rival submissions of both the parties and have also gone through the order of authorities below carefully. We have also deliberated on various case law relied by Ld. CIT(A) as well as Ld. Senior Counsel for the assessee at the time of making his submission. We find that there is no dispute that initially assessee filed its return of income for AY 2008-09 on 27/09/2008 declaring income of Rs.83,58,410/-and book profit under Section 115JB of the Act of Rs. 1,62,37,896/-. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claim of deduction under section 80IA of the Act. The Assessing Officer while recording reasons recorded extracted in para-6.1 in the order of Ld. CIT(A). The Ld. Senior Counsel for the assessee vehemently argued that the claim of deduction under section 80IA was examined and one component of working of profit was partly allowed by Assessing Officer. We find that the claim of deduction under section 80IA was not only examined by Assessing Officer but was a subject-matter of appeal before Ld. CIT(A). The Hon'ble jurisdictional High Court in the case of Cliantha Research Ltd. (supra), wherein the Hon'ble court held that where during the original assessment assessee s claim was processed at length and after calling for detailed submission, the same was accepted, merely because a certain element or angle was not in the mind of Assessing Officer while accepting such a claim, could not be a ground for issuing notice under section 148 for reassessment. 10. Further, the Hon'ble jurisdictional High Court in the case of Sai Consulting Engineers (P) Ltd. (supra) when re-opening of assessment was within the period of four years on the ground that re-opening was nothing but chang ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g grounds of appeal: 1. 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. 91,02,996/- on the ground that the appellant had not fulfilled the conditions specified in section 80IA(4) of the Act. 2. 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 developed any new infrastructure facility as envisaged under section 80IA(4)(i)(b) of the Act and only operated/ maintained an old infrastructure facility. 3. On the facts and in the circumstances of the case and in law, the CIT(A) erred in observing that the deduction allowed in the initial assessment year i.e. 2006-07 was denied by reopening the assessment without appreciating the fact that the assessment for AY 2006-07 was not reopened under section 147 of the Act. 4. On the facts and in the circumstances of the case and in law, the CIT(A) erred in not appreciating that once deduction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d and maintained or developed, operated and maintained on the basis of an agreement with the specified authority and asked as to why the claim of deduction under Section 80IA should not be disallowed. The assessee filed its reply. The contents of reply of assesse is recorded in para 5.5 of assessment order. In the reply, the assessee stated that Ankleshwar Industrial Estate is one of the largest chemical industrial zones of Asia. One of the major challenge faced by the chemical industries is the treatment of effluents generated by the chemical industries. Most of the large and medium scale industries assessment order having their own effluent water treatment facilities. Majority of the small scale industries were unable to provide such treatment facilities. To address the issue, Akleshwar Industrial Association (AIA) alongwith other social/professional organizations like Ankleshwar Environment Preservation Society (AEPS), Rotary Pollution Control Cell( RPCC) etc. carried out detailed studies and discussions at various forums and decided to make representation to GIDC and Gujarat Pollution Control Board(GPCB) for formation of common effluent treatment plant (CETP). Considering the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sub-clause (iv) of sub-Section (4) of Section 80IA. As per report in Form 10CCB furnished by assessee, the date of commencement of operation/activity by undertaking is 15/02/1997. The sub-clause (b) was substituted by the Finance Act, 2001 w.e.f. 01/04/2002. The Assessing Officer after recording the amended provisions, held that new infrastructure facility came into existence on 15/02/1997 as shown in the audit report in Form NO. 10CCB for claiming deduction under Section 80IA of the Act, the assesse was required to entered into an agreement with any of the authorities either Central Government, State Government, local authority or some other statutory bodies before (i) developing or (ii) operating and maintaining or (iii) developing, operating and maintaining new infrastructure facility. The assessee was asked to furnish the evidence in support of its claim under Section 80IA of the Act. The assessee furnished copy of lease deed executed by GIDC in favour of assessee. On the basis of lease deed, one does not become eligible for deduction under Section 80IA of the Act. The assessee submitted agreement dated 15/12/2006 with GIDC and claimed deduction on the basis of that agreement. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in business of developing, operating and maintaining common effluent treatment plant which is set up for the purpose of water treatment system involving treatment of effluent generated by the chemical industries in and around Ankleshwar. And after inclusion of solid waste management system as an eligible infrastructure facility by the Finance Act 2000 w.e.f AY 2000-01, the assessee entered in to agreement with GIDC on 5th December 2006, a statutory body. This fact was communicated to the assessing officer and copy of the agreement was furnished to vide letter dated 05.12.2011. On entering in agreement with GIDC, the assessee fulfill the necessary conditions to claim deduction under section 80-IA of the Act, copy of which is filed on record. The assessee company entered into an agreement with GIDC on 05.12.2006 and started claiming deduction under section 80-IA of the Act from AY 2006-07 onwards being the 4rd year of operations. The learned CIT(A) has held that the project of assessee is not a new undertaking on the ground that the appellant had not entered into an agreement during the FY 2001-02 being the year in which the appellant became eligible to claim deduction under secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A(4)(i) of the Act and accordingly, is eligible to claim the deduction under section 80-IA of the Act.. It is submitted that the word new used in section 80-IA(4)(i)(b) only implies that the facility must have started operating on or after 1st April 1995. The word new has reference to a facility not existing before 1st April 1995 from which date the incentive was given to new infrastructure facility. When the assessee had put forward the proposal before GIDC, it was to set up a new infrastructure facility. No such infrastructure facility existed there before. The facility need not be new on the date on which an assessee chooses to claim deduction under section 80-IA, since the section permits an assessee to claim deduction at his option for any 10 consecutive years out of the first 20 years from the date of commencement. If the unit has to be a new unit in the first year of claim for deduction then the option provided in the section would become redundant. Further, it is also to be noted that the fourth condition uses the expression it has started or starts operating. The learned Senior Counsel explained that this wording clearly supports the view that an enterprise which has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as opted to claim deduction from AY 2006-07 being the third year of the operation which is as per the provisions of section 80- IA(2) of the Act. There is no provision for withdrawal of deduction in the subsequent years if the said deduction has been allowed in the initial year. 20. The learned Senior Counsel submitted that once the deduction under section 80-IA of the Act is allowed in the initial year of the claim, then in the subsequent years the conditions cannot be re-examined with a view to determine the eligibility of the assessee making the claim for deduction. In such cases the deduction ought to be allowed for the stipulated duration as specified in the provisions of section 80-IA of the Act. It is pertinent to note that, there is no provision for withdrawal of deduction for the subsequent years for breach of certain conditions if the said deduction has been allowed in the initial year in section 80-IA of the Act. In this connection, reliance is placed on the decision of the Hon ble Gujarat High Court in the case of PCIT vs. Maps Enzymes Ltd [2019] (111 taxmann.com 73) that the deduction under section 80-IA once allowed in the initial year cannot be re-examined or deni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on, ownership status, and agreement with the GIDC and submitted that the assessee is entitled for deduction under section 80IA of the Act separately for each of three Undertakings for ten consecutive years from the date of claim made in the return of income. The AO while passing the assessment order disallowed deduction under section 80IA by taking view that the assessee operated and maintained old infrastructure undertaking in contravention of the term of agreement and the assessee has not developed infrastructure facilities and is not eligible for deduction under section 80IA. 23. On appeal against the finding of AO in treating the undertaking as not eligible for deduction under section 80IA, the assessee filed detailed written submissions as recorded in para 5.2 of order of CIT(A). We find that in the written submissions the assessee retreated similar submissions as submitted before assessing officer and also relied on certain case laws, wherein it was held that once the deduction is allowed in earlier years, it cannot be withdrawn in subsequent years. The ld CIT(A) after considering the submissions of assessee held the assessee started claiming deduction under section 80IA(4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial year of the claim, then in the subsequent years the conditions cannot be re-examined with a view to determine the eligibility of the assessee making the claim for deduction. We are convince with the submissions of the learned Senior Counsel of the assessee that once the deduction under section 80-IA of the Act is allowed in the initial year of the claim, then in the subsequent years the conditions cannot be re-examined with a view to determine the eligibility of the assessee making the claim for deduction as has been held in various case laws by Jurisdictional High Court. 25. Hon ble Jurisdictional High Court in PCIT Vs Maps Enzymes Ltd (supra), while considering the question of law whether Tribunal erred in law and on facts in deleting the disallowance of claim under section 80JJA of Act, though the years was eight year of business operation. The Hon ble Court held that Tribunal committed no errors, not to speak of law in passing the impugned order. It was held that when the department thought fit to grant the deduction for four consecutive years, there was no reason to raise any objection with regards to maintainability of such deduction under section 80JJA in the fifth an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion No. 2 thus will have to be answered in the negative and in favour of the assessee. 28. In view of the above factual and legal discussions, we are of the view that once, the assessee has fulfilled all the conditions as laid down in section 80IA (4) of the Act and was allowed deduction in the earlier assessment years in respect of undertaking in AY 2006-07 that is in the initial year, therefore, deduction under section 80-IA in respect of the infrastructure facility should have been allowed to the assessee. We noted that the Ld. CIT(A) in his finding recorded that assessment for A.Y. 2006-07 was reopened under section 147 is factually wrong. There is no reopening notice under section 147 for A.Y. 2006-07. So far as the objection of the Ld. Sr DR for the revenue is concerned that the assessee has made agreement with GIDC and no new infrastructure facilities was set up by the assessee. We find that the submissions of the Ld. DR for the revenue is based on the finding of Ld. CIT(A). The assessee has entered into agreement dated 15.12.2006 with GIDC and started deduction under section 80-IA of the Act from AY 2006-07. On this objection, we are also in agreement with the submissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th bank for the purpose of claiming deduction under Section 80IA passed the following order: 39. We have considered the rival submissions of the parties and have gone through the order of the lower authorities carefully. We have also seen the order of the Tribunal in assessee s own case for AY 2007-08 in ITA No. 2223/AHD/2010, wherein on similar set of fact similar interest income, the coordinate bench by following order of AY 2002 -03 to 2004-05 passed the following order; 9. We now proceed to deal with assessee's appeal ITA No.2223/Ahd/2010. Its first substantive ground pleads that both the lower authorities have erred in excluding interest income of Rs.42,88,461/- and one time membership fee for incinerator plan of Rs.11.20 lacs for the purpose of computing Section 80IA deduction claim by following hon'ble apex court's decision in Pandian Chemical's case 262 ITR 278 (SC) that the same could not be held to have been derived from the above stated solid waste disposal plant. 10. Heard both sides. It emerges that the assessee's interest income in question arises from fixed deposits maintain with bank in order to comply with Gujarat Pollution Contr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the 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 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 developed any new infrastructure facility as envisaged under section 80IA(4)(i)(b) of the Act and only operated/ maintained an old infrastructure facility. 4. On the facts and in the circumstances of the case and in law, the CIT(A) erred in observing that the deduction allowed in the initial assessment year i.e. 2006-07 was denied by reopening the assessment without appreciating the fact that the assessment for AY 2006-07 was not reopened under section 147 of the Act. 5. On the facts and in the circumstances of the case and in law, the CIT(A) erred in not appreciating that once deduction under section 80IA was granted in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 in upholding the action of the Assessing Officer ('AO') in not granting deduction under section 80IA in respect of profits of the eligible undertaking 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 developed any new infrastructure facility as envisaged under section 80IA(4)(i)(b) of the Act and only operated/ maintained an old infrastructure facility. 4. On the facts and in the circumstances of the case and in law, the CIT(A) erred in observing that the deduction allowed in the initial assessment year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve grounds of appeal. 41. We find that ground No. 1 to 5 raised in this appeal are similar to the grounds No. 1 to 4 in appeal for A.Y. 2009-10 and ground No. 1 to 5 in A.Y. 2010-11 which we have allowed supra. Therefore, following the principle of consistency, these grounds of appeal are allowed with similar direction. 42. Ground No. 6 relates to not including interest on fixed deposit for computing eligible profit and interest and ground No. 7 is raised without prejudice to ground No. 6 that if interest on fixed deposit is excluded then interest debited to P L account on membership deposit ought not to be included in the expenditure computing profit. We find that ground No. 6 is similar to the ground No. 6 in appeal for A.Y. 2010-11 and ground No. 5 in A.Y. 2009-10 which we have allowed. Thus, with similar observation, ground No. 6 of appeal is allowed. As we have allowed ground No. 6, therefore, adjudication on alternative and without prejudice ground No. 7 has become academic. 43. Ground No. 8 relates to 10% of estimated expenses on interest earned. Ld. Sr. Counsel for the assessee at the time of his submission, submits that he is not pressing this ground of appeal, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibuted. The ld. AR of the assessee submits that during the year, the assessee paid dividend distribution tax of Rs. 392820/- on 01/11/2010. In the assessment order, the interest on distributed profit amounting to Rs. 392820/- has been levied. The assessee made application under Section 154 of 18/08/2014 and brought to the notice of Assessing Officer about the mistake apparent and for seeking rectification. Copy of the application is also placed on record. Before ld. CIT(A), the assessee prayed for direction to Assessing Officer for deleting such interest. The ld. CIT(A) held that assessee failed to submit any explanation or evidence that assessee complied with the time limit under Section 115-O(3) r.w.s. 115P of the Act. The ld. Sr. counsel submits that assessee furnished the challan of dividend distribution of tax paid on 01/11/2010. The ld. Sr. Counsel prayed for appropriate direction to the Assessing Officer for deleting the levy of such interest. 51. On the other hand, the ld. CIT-DR relied on the order of the Ld. CIT(A). 52. We have considered the submission of parties and perused the order of ld. CIT(A). We find that before the Ld. CIT(A), the assessee specifically cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... holding that after the agreement with GIDC was entered into on 15 December 2006 the appellant had not developed any new infrastructure facility as envisaged under section 80IA(4)(i)(b) of the Act and only operated/ maintained an old infrastructure facility. 4. On the facts and in the circumstances of the case and in law, the CIT(A) erred in observing that the deduction allowed in the initial assessment year i.e. 2006-07 was denied by reopening the assessment without appreciating the fact that the assessment for AY 2006-07 was not reopened under section 147 of the Act. 5. On the facts and in the circumstances of the case and in law, the CIT(A) erred in not appreciating that once deduction under section 80IA was granted in the initial assessment year, it ought to be allowed in the subsequent years for the remaining period. 6. On the facts and in the circumstances of the case and in law, the CIT(A) has erred in rejecting the ground in respect of exclusion of interest earned on membership deposits amounting to Rs.29,07,959/- while computing eligible profits for the purpose of deduction under section 801A on the ground that the appellant is not entitled to deduction unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1961 ('the Act') in respect of profits 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 in upholding the action of the Assessing Officer ('AO') in not granting deduction under section 80IA in respect of profits of the eligible undertaking 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 developed any new infrastructure facility as envisaged under section 80IA(4)(i)(b) of the Act and only operated/ maintained an old infrastructure facility. 4. On the facts and in the circumstances of the case and in law, the CIT(A) erred in observing that the deduction allowed in the initial assessment year i.e. 2006-07 was denied by reopening the assessment without appreciating the fact that the assessment for AY 2006-07 was not reopened under section 147 of the Act. 5. On the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2/2011. The Assessing Officer while passing the assessment order, made disallowance of deduction under Section 80IA of Rs. 9102996/-, sludge disposal charges of Rs. 137374/- and disallowed excess depreciation of Rs. 310022/- and initiated penalty under Section 271(1)(c) of the Act. On appeal before Ld. CIT(A) in quantum assessment, the disallowance of deduction under section 80IA was upheld. However, the disallowance of sludge disposal charges and depreciation was allowed. 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. 3094110/- vide order dated 18/02/2016. On further appeal against the penalty order, the penalty was upheld by the Ld. CIT(A) vide order dated 08/03/2017, further aggrieved, the assessee has filed present appeal before this Tribunal. 70. Considering the fact that we have deleted the entire disallowance in quantum assessment in ITA No. 2019/Ahd/2014, therefore, the penalty levied by Assessing Officer under Section 271(1)(c) will not survive. In the result, appeal of the assessee is allowed. 71. Copy of this order be placed in each of the case re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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