TMI Blog2023 (2) TMI 342X X X X Extracts X X X X X X X X Extracts X X X X ..... by considering 0.5% of the average investment is hereby sustained. Addition on account of advances written off - HELD THAT:- On the ground that, no details regarding advances written off has been filed by the assessee before the AO. CIT(A) held that the expenditure was already allowed in the year in which the material was purchased and the same cannot be allowed twice when the same has been returned by the sub-contractor. Ongoing through the facts, we decline to interfere with the ratio of the ld. CIT(A). The appeal of the assessee on this ground is dismissed. Before us distinguishing feature in the facts of the present case at that of A.Y. 2014-15 has been pointed out by learned AR. In such a situation we find no reason to interfere with the order of Ld. CIT(A) on this ground. Thus this ground of the assessee is dismissed. Deduction u/s. 80-IA - CIT(A) held Deduction to be allowable to the assessee - HELD THAT:- We find that identical issue arose in assessee s own case for A.Y. 2014-15 and the co-ordinate bench of the Tribunal in [ 2022 (9) TMI 1414 - ITAT DELHI] has decided the issue in favour of the assessee and held appellant is entitled to claim deduction 80IA, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of the assessee was selected for scrutiny and thereafter assessment was framed under section 143(3) of the I.T. Act, 1961 vide order dated 27.12.2013 in order no. ITBA/AST/S/143(3)/2018-19/1014622659(1) and the total taxable income of the assessee was determined at Rs.468,53,22,800/-, and the book profit u/s. 115JB was computed at Rs. 520,13,72,607/-. 2.2. Aggrieved by the order of the A.O, assessee carried the matter in appeal before the Ld. CIT(A) who vide order dated 29.05.2019 in appeal no. 216-18/19 granted partial relief to the assessee. 3. Aggrieved by the order of the Ld. CIT(A), the Assessee and Revenue is now in appeal before the Tribunal. The grounds raised by the assessee in ITA no. 6044/Del/2019 reads as under:- 1. (a)That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in treating the foreign income of Rs.159,62,39,471/- as taxable in India whereas this income is not taxable in India in any manner and more so when assessee is following exemption method and paid taxes on the said income under the tax laws of the Host Country as per the provisions of Double Taxation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ok profit of Rs.520,13,72,607/- as against the declared book profit of Rs.318,82,48,608/- 3. That having regard to the facts and circumstances of the case, Ld. AO has erred in law and on facts in framing the impugned assessment order without assuming jurisdiction as per law. 4. (a) That having regard to the facts and circumstances of the case, Ld. A.O has erred in law and on facts in denying the benefit of deduction of Rs.33,71,10,185/- claimed by assessee u/s 80IA and that too without observing the principles of natural justice and by disregarding the submissions/evidences of the assessee and further erred in observing that assessee is a contractor whereas the fact is that assessee is a developer and without observing the principles of natural justice. 4(b) That in any case and in any view of the matter, action of Ld. AO in denying the benefit of deduction of Rs.33,71,10,185/- claimed by assessee us 80IA, is bad in law and against the facts and circumstances of the case. 6(b) That in any case and in any view of the matter, action of Ld. AO in treating the global income of Rs. 159,62,39,471/- taxable in India is 5. (a)That having regard to the fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9. That having regard to the facts and circumstances of the case, Ld. A.O has erred in law and on facts in making addition of Rs.163,27,07,031/- on account of Global Income in Malaysia and Sri Lanka while computing the total income under MAT. 10. That having regard to the facts and circumstances of the case, Ld. A.O has erred in law and on facts in making addition of Rs.33,73,74,583/- account of provision for maintenance being unascertained liability while computing the total income under MAT. 11. That having regard to the facts and circumstances of the case, Ld. A.O has erred in law and on facts in making addition of Rs.4,30,42,385/- w/s 14A while computing the total income under MAT. 12. That in any case and in any view of the matter, impugned assessment order and all the additions/disallowances made therein are bad in law, illegal, unjustified, barred by limitation, contrary to facts law and based upon recording of incorrect facts and finding, without giving adequate opportunity of hearing, in violation of principles of natural justice and the same deserves to be quashed and same are not sustainable on various legal and factual grounds. 13. That h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 159,62,39,471/- to be taxable under normal provisions as well as for the purpose of computing MAT under section 115JB of the Act. He however held that the credit of taxes paid in Malaysia and Sri Lanka, be given as per DTAA entered with Malaysia and Sri Lanka. 8. Aggrieved by the order of AO, assessee carried the matter before Ld. CIT(A), who by following the order his predecessor for A.Y. 2012-13 and his decision in the case of assessee for A.Y. s 2013-14, 2014-15 and 2015-16 upheld the addition for working out the taxable income but however directed the deletion under the provisions of section 115JB of the Act. 9. Aggrieved by the order of Ld. CIT(A), assessee is now in appeal before us and Revenue vide ground no. 4 is aggrieved to the extent relief granted by the Ld. CIT(A). 10. Before us at the outset Ld. AR submitted that the issue raised in the present grounds by the Assessee and Revenue is covered in assessee s favour by the decisions of Hon ble Tribunal in assessee s own case for earlier years. He further submitted that the Hon ble Tribunal while deciding the identical issue in assessee s own case for A.Y. 2014-15 vide order dated 07.09.2022 in ITA No. 140 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r DTAA, it cannot be brought to tax indirectly under the deeming fiction under section 115JB of the Act. 22.4 The Ld. DR, on the other hand relied on the order of the lower authorities. 22.5 We have heard rival submission and perused the relevant material on record. The Tribunal in ITA No. 2596/Del/2004 in the case of the assessee for assessment year 2000-01 has adjudicated on the identical issue in dispute involved as under: 9. We considered the above heard the rival submissions made by the parties in respect of Ground No.7 and it is seen that income earned from permanent establishment in foreign countries is liable to be excluded from the computation of book profit in view of the decision in the case of the bank of Tokyo-Mitsubishi UFJ Ltd vs .ADIT 152 1TD 796 (Del.), which has been affirmed by Hon ble High Court of Delhi. When such income is not to be taxed as per DTAA, it cannot be brought to tax indirectly under the deeming fiction under section 115JA . Accordingly, this ground of appeal is decided in favor of the appellant. 22.6 The issue in dispute involved in the present ground of the appeal, being identical to the issue adjudicated by the Trib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also did not accept the contention of the assessee that it has incurred only of Rs. 14,58,115/- for earning exempt income. He thereafter by following the methodology described in Rule 8D worked out the total disallowance u/s. 14A at Rs. 4,45,00,500/- and after given the credit of the suo motto disallowance made by assessee of Rs. 14,58,115/- disallowed the net amount of Rs. 4,30,42,385/-. 16. Aggrieved by the order of AO, assessee carried the matter before Ld. CIT(A). 17. CIT(A) by following the decision of jurisdictional Delhi High Court in the case of ACB India vs. ACIT directed the disallowance to be restricted to Rs. 1.638975 crores and also directed the AO to allow the credit of the suo motto disallowance of Rs. 14.58 lacs. He thus directed the AO to restrict the disallowance to Rs. 1,49,31,635/-. He also noted that Ld. CIT(A)-39 by allowing the appeal of the assessee on this ground for earlier year had followed the aforesaid decision of Hon ble Delhi High Court. He further following the decision of Hon ble ITAT Special Bench in the case of ACIT vs. Vineet Investment Pvt. Ltd. (2017) 58 ITR 313 (Trib) held that disallowance made u/s. 14A cannot be added for computing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a disallowance of Rs.1,94,86,000/- after considering the disallowance made by the assessee itself amounting to Rs.2.52 lakhs. 28. During the course of appellate proceedings, it was argued before ld. CIT(A) that the case of assessee is covered with the decision of the Jurisdictional Delhi High Court in the case of M/s ACB India Vs. ACIT, where Hon'ble High Court held that the disallowance u/s 14A cannot be more than 0.5% on the average of the investments made on which the assessee received the dividend income. ld. CIT(A) held that in the present case, the assessee has sub mitted the details of the dividend received and also worked out the disallowance following the decision of the Hon'ble Delhi High Court, which works out to Rs. 137.105 Lacs. The ld. CIT( A) following the judgment of the Hon'ble Delhi High Court restricted the amount to Rs. 137.105 lacs and determined at Rs. 134.585 lacs owing to the disallowance of Rs.2.52 lakhs made by the assessee. 29. Placing reliance on the judgment of the Hon ble jurisdictional High Court, keeping in view, the average investments, the disallowance of Rs. 134.585 lacs ( Rs. 137.105 Rs.2.5 lacs) made by the Revenue u/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cordingly. 29. Ld. DR on the other hand supported the order of lower authorities. 30. We have heard the rival submissions and perused the material on record. The issue in the present ground is with respect to the disallowance of amount of advances written off which was disallowed by the AO and upheld by the Ld. CIT(A). 31. Before us, learned AR submitted that identical issue was decided by the co-ordinate Bench of Tribunal in A.Y. 2014-15. We find that the co-ordinate Bench while dismissing the grounds of the assessee noted as under:- 18. This ground relates to disallowance made by the A.O. amounting to Rs.8,26,887/- on account of advance written off. On the ground that, no details regarding advances written off has been filed by the assessee before the AO. 19. The ld. CIT(A) held that the expenditure was already allowed in the year in which the material was purchased and the same cannot be allowed twice when the same has been returned by the sub-contractor. 20. Ongoing through the facts, we decline to interfere with the ratio of the ld. CIT(A). The appeal of the assessee on this ground is dismissed. 32. Before us distinguishing feature in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the total cost of the work and the payments which was to be released by the work awarding agencies was on the basis of progress of project/cost incurred by the assessee. AO therefore concluded that the contract entered by the assessee was in the nature of works contracts and assessee cannot be stated to be a developer of those facilities. He further noted the identical issue arose in earlier assessment years wherein the claim of the assessee was disallowed and in most of the years the disallowance was upheld by Ld. CIT(A). He further noted that for A.Y. 2013-14, CIT(A) had deleted the addition by placing reliance on the decision of Tribunal of A.Y. 2000-01 but against the order of Tribunal, Revenue had filed appeal before Hon ble Delhi High Court. He therefore concluded that assessee is not eligible for deduction u/s. 80-IA and accordingly denied the claim of deduction to the extent of Rs.33,71,10,185/- 37. Aggrieved by the order of AO, assessee carried the matter before CIT(A). 38. CIT(A) noted that identical issue arose in assessee s own case for A.Y. 2012-13 and his predecessor vide order 30.06.2017 and decided the issue in favour of the assessee. He also noted tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3.5 Considering the arguments advanced by the parties and after going through the orders and material placed before us, we hold as under Regarding the claim of deduction u/s 801A, it is seen that appellant is a company and has entered into contracts with various Central Government, State Government, State Government and Local Authority and other statutory bodies. A close reading of the agreement (for instance agreement with MSRDC enclosed in the paper book) clearly shows that appellant developed the infrastructure facility and has not acted merely as contractor as sought to be made out by Assessing Officer and C1T (Appeals). The Oxford dictionary defines the term developer as a person that designs and crate new products, whereas contractor is a person or a company that has a contract to do work or to provide goods or services. Various clauses of the above referred agreement to which reference has been made by us little below would show that the construction rail over bridge projection (ROB) 23 awarded by MSRDC to the appellant is nothing but development of infrastructure facility, which was to be legally handed over to the Railways and MSRDC after the payment was received. Var ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re Assessing Officer yet assessing officer chose to make sweeping observation that the assessee is not developer. Such sweeping and bald assertion cannot be approved by us. Therefore, taking into the facts of the present case, we are the considered view that appellant is entitled to claim deduction 80IA, which was wrongly denied. We set aside the order of the ld. CIT (Appeals) and direct the Assessing Officer to allow deduction u/s 801A has claimed by the appellant. Ground No. 1 is allowed. 8. As no new facts have been brought on record for the year under consideration, respectfully following the findings of the co-ordinate bench, we direct the Assessing Officer to allow deduction u/s 80IA of the Act. 42. Before us Revenue has not placed any material on record to demonstrate any distinguishing feature in the facts of the case in the year under consideration and that of earlier years nor has placed any material on the record demonstrate that the order of the coordinate bench in assessee s own case for earlier years has been set aside/overruled/stayed by higher judicial forum. In such a situation we find no reason to interfere with the order of CIT(A) on this issue. Thu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urther submitted that identical issue arose in assessee s own case for 2014-15 and the co-ordinate bench of the Tribunal has decided the issue in favour of the assessee by dismissing the ground of Revenue. He pointed to para 11 to 14 at page no. 261 of the paper book. He therefore submitted that no interference to the order of CIT(A) is called for. 49. We have heard the rival submissions and perused the material on record. The issue in the present ground is w.r.t disallowance of provision for maintenance made by AO that deleted by CIT(A). We find that on identical issue the co-ordinate Bench of Tribunal in A.Y. 2014-15 has decided the issue by observing as under:- 9. The assessee has challenged disallowance of provision for maintenance for the project executed by the assessee amounting to Rs.105,96,46,297/- The Assessing Officer has held that this provision has been made on estimated basis and unascertained liability. The assessee submitted that it has to maintain or repair the defects in the projects executed by it during the defect liability period as specified in the contract agreement. The assessee claimed that these are mandatory expenses and provision has been made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessing Officer that the liability has not arisen during the year as it has been quantified on estimated basis is not correct. 12. It is also a fact not disputed by the Assessing Officer in the assessment order that all along the provision for maintenance of expenses have been allowed to the assessee company except the disallowances made in A.Y. 1985-86 and 1995-96. 13. We find that the same matter of provision for maintenance stands adjudicated by the Co-ordinate Bench of the Tribunal The assessee has been providing for expenses to b e incurred on demobilization, maintenance and other expenses since by inception of the Company. The same has been allowed by the Department all along excep t in the Assessment Years 1985-86, 1995-96 2001-02, 2002-03, 2003-04, 2004- 05 and 2005-06. In these years, the A.O. disallowed the aforesaid provisions. Further, in appeal before the Ld. C IT(A), in the assessment year 1985-86, 1995-96 and 2001-02 and 2002-03, these were allowed on the basis of the aforesaid judicial analysis. 14. Since, the decision of the ld. CIT(A) is based on the decision of the earlier years which stands upheld, we decline to interfere with the order o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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