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TMI Blog2017 (5) TMI 1797X X X X Extracts X X X X X X X X Extracts X X X X ..... g appeal for the AY. 2008-09 (ITA/5503/Mum/2011, dt. 14. 11. 2014). We are reproducing relevant portion of the order of the Tribunal and it reads as under : "2. Rival contentions have been heard and perused the records. So far as ground with regard to the claim of deduction u/s 80IA of the Income Tax Act, 1961 is concerned, the Tribunal has decided the issue in favour of the assessee in ITA No. 4842/Mum/2006, ITA No. 514/Mum/ 2009,ITA No. 7885/Mum/2010 & ITA No. 283/Mum/2011 order dated 20-6-2014. 3. The Tribunal vide its order dated 25th June, 2014 for A. Ys 2004-05, 2005-06 and 2007-08 after following the decision of Hon'ble Bombay High Court in the case of CIT vs. ABG Heavy Industries Ltd. , 189 Taxmann 54 held that the assessee was entitled for claim of deduction u/s 80IA(4) of the Act. The precise observation of the Tribunal was under:- "10. We have heard both the parties and their contentions have carefully been considered. We have carefully gone through the assessment order for A. Y 2004-05 which is the base year for which the assessee is claiming that it is entitled to get deduction under section 80 IA(4). The first and foremost objection of the AO is that assessee, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opment" has not been artificially defined for the purpose of section 80 IA(4) of the Act must, therefore, received its ordinary and natural meaning. Under the terms of the contract between the assessee and JNPT the assessee undertook an obligation to supply, installing, testing, commissioning and maintenance of container handling equipments namely the cranes in question. Their Lordships in para-17 have observed that the obligations which have been assumed by the assessee under the terms of the contract are obligations involving the development of an infrastructure facility. Section 80 IA(4) of the Act essentially contemplated a deduction in a situation where an enterprise carried on a business of developing, maintaining and operating infrastructure facility. A port was defined to include within the purview of the expression "infrastructure facility". The obligations, which the assessee assumed under the terms of the contract were not merely for supply and installation of the cranes but involved a continuous obligation from the supply of the cranes to the installation, testing, commissioning, operation and maintenance of cranes for a term of 10 years, after which the cranes were to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y High Court, it cannot be said that assessee did not act in the capacity of developer and it has already been mentioned that to be entitled to claim deduction under section 80 IA(4) it is not necessary that entire infrastructure project should be developed by the assessee. 10. 5 Now the next question will be that whether to claim deduction under section 80 IA(4) it is necessary for an assessee not only to develop the project but also to operate and maintain the infrastructure facility. This issue is also no more res-integra and is covered by the aforementioned decision of Hon'ble Bombay High Court in the case of CIT vs. ABG Heavy Industries Ltd. (supra). In that case it was the contention of the Revenue that for assessment year 1997- 98 and 1998-99, it was necessary for the assessee to cumulatively fulfill the requirement of developing, operating and maintaining infrastructure facility. It was pleaded by the Revenue that, even if it be held to have developed the facility it cannot be regarded as operating the facility. Their Lordships have referred to such contention of Revenue in para-19 of the decision and they observed that it is not possible to accept such submissions. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as to be harmoniously construed with the main provision under which a deduction is available to an assessee who develops; or operates and maintains; or develops, operates and maintains an infrastructure facility. Unless both the provisions are harmoniously construed, the object and intent underlying the amendment of the provision by the Finance Act of 2001 would be defeated. A harmonious reading of the provision in its entirety would lead to the conclusion that the deduction is available to an enterprise which (i) develops; or (ii) operates and maintains; or (iii) develops, maintains and operates that infrastructure facility. However, the commencement of the operation and maintenance of the infrastructure facility should be after 1- 4-1995. In the present case, the assessee clearly fulfilled this condition( emphasis ours). 23. In the view which we have taken, all the assessment years in question to which this batch of appeals relates would be governed, by the same principle. The subsequent amendment of section 80-IA(4A) of the Act to clarify that the provision would apply to an enterprise engaged in (i) developing; or (ii) operating and maintaining; or (iii) developing, operating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2001-02 is as under: "1. Since the Tribunal has recalled the impugned order dated 23. 03. 2011, the appellant is withdrawing its appeal. 2. Further, while considering the matter afresh, the Tribunal will take into consideration all decisions including the decision of this court in the matter of CIT v. ABG Heavy Industries Ltd. Reported in 322 ITR 323. All contentions are kept open. " 3. The appeal is dismissed of in above terms. " 10. 8 In the order the Tribunal after considering the decision of Hon'ble Bombay High Court in the case of CIT vs. ABG Heavy Industries Ltd. (supra) has decided the issue in favour of assessee. While deciding the present appeal vide order dated 9/2/2010 it was found by the Tribunal that both sides were in agreement that the facts and circumstances are mutatismutantis similar to those considered by the Larger Bench of the Tribunal in the case of B. T. Patel & Sons Belgaun Construction Pvt. Ltd. (supra). The said order of the Tribunal was recalled only for the reason that the Larger Bench decision in the case of M/s. B. T. Patel & Sons Belgaum Construction Pvt. Ltd. (supra) was no more good law in view of subsequent decision of Hon'ble Bombay High Court in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntitled for deduction under section 80 IA(4) and Departmental appeal for A. Y 2004-05 and 2005-06 are dismissed. 11. So far as it relate to appeals of the assessees for A. Y 2007-08, it has already been mentioned that following the aforementioned decision of Larger Bench in the case of B. T. Patel & Sons Belgaun Construction Pvt. Ltd. (supra), Ld. CIT(A) has held that assessee is not entitled to get deduction under section 80 IA(4). It has already been pointed out that the Larger Bench decision in the case of B. T. Patel & Sons Belgaun Construction Pvt. Ltd. (supra) is no more a good law and in the case of that assessee itself, Division Bench has held that assessee is entitled for deduction under section 80 IA(4) of the Act. We have already held that assessee is entitled for deduction under section 80 IA(4) in respect of A. Y. 2004-05 and 2005-06. That decision will be applicable for A. Y 2007-08 in case of both the assesees. Therefore, these appeals of the assessees are also allowed. " 4. We have carefully gone through the order of the Tribunal in assessee's own case/associated concern's case as reproduced above and found that issue 80IA(4) was decided by the Tribunal. The facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of the previous year under reference and therefore need not even have to see the availability of own funds within a short period of time and other conditions. 9. Reliance was also on the decision of Hon'ble Gujarat High Court in the case of UTI Bank Ltd. , 32 taxmann. com 370, Gujarat State Fertilisers & Chemicals Ltd. , 36 taxmann. com 230 and Gujarat State Fertilisers & Chemicals Ltd. , 36 taxmann. com 557. He further drawn our attention to the audited P&L account of the company to indicate that cash profit of the assessee company was in excess of the investments made in JVs as on the cut-off date. 10. We have considered the rival contention and deliberated upon the judicial pronouncements cited. We found that there was a cash profit of Rs. 14. 62 crores against which investment in JVs was Rs. 8. 27 crores after excluding investment in Akurti-SMC JV for which separate disallowance has been considered by the A. O. 11. The Hon'ble jurisdictional High Court in the case of CIT vs. Reliance Utilities & Power Ltd. [2009] 313 ITR 340 held that if there are funds available, both interest free and overdraft/loans taken, then presumption would arise that investments would be out of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the ld. Counsel for the assessee on the decision of the Tribunal in the case of Binayak Tex Processors Ltd. wherein it was held that the provisions of section 14A are not applicable "where the assessee is able to show near proximity of availability of own funds, may be exactly not on date of investment or advancement of loan but in a very near future date or within a reasonable short period of time, even then presumption will be made that investment was made by assessee from his own funds or in anticipation of availability of its own funds within a short period of time". Considering the said proposition, the facts of the case on hand is on a much stronger footing inasmuch as the assessee has interest free funds in the form of share capital and reserves and surplus which are far in excess of the investment made in the joint venture entities as at the commencement of the previous year under reference and therefore need not even have to see the availability of own funds within a short period of time and other conditions. 9. Reliance was also on the decision of Hon'ble Gujarat High Court in the case of UTI Bank Ltd. , 32 taxmann. com 370, Gujarat State Fertilisers & Chemicals Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n be made u/s 36(1)(iii) of the act. For this purpose, reliance was placed on the decision of Hon'ble Bombay High Court in the case of Tata Chemicals Ltd. reported in 256 ITR 395. 13. It was further submitted that outstanding balance in the account of Chafal Developers Pvt. Ltd. as at the beginning of the year was Rs. 510 lacs and at the end of the year was Rs. 479 lacs. As per the ld. Counsel for the assessee, no disallowance of interest was made in the earlier years and since the amount in the outstanding account of Safal Developers Pvt. Ltd. during the year has reduced, no fresh advance was given during the year, no disallowance could be made u/s 36(1)(iii) of the Act and for this purpose reliance was placed on the decision of Hon'ble Supreme Court in the case of Munjal sales Corp. reported in 298 ITR 298. 14. Attention was also invited by the ld. Counsel for the assessee to the fact that Chafal is a subsidiary company of the assessee company (holding 74. 5% of the total shareholding) promoted by the assessee company specifically for the purpose of implementing the project of the GoM and hence the monies advanced is for business expediency and hence allowable. Further, the u ..... X X X X Extracts X X X X X X X X Extracts X X X X
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