TMI Blog2018 (9) TMI 2131X X X X Extracts X X X X X X X X Extracts X X X X ..... to when the assessee had for the first time exercised its option and claimed deduction under Sec. 80-IA, as observed by us at length hereinabove, would be the only decisive factor for identifying the initial assessment year opted by the assessee for claim of deduction u/s 80-IA. We thus not being impressed with the adverse inferences drawn by the lower authorities by referring to the opinion of Mr. Bharat Agarwal(consultant-an associate of the auditor of the assessee company), thus vacate the adverse inferences drawn by the lower authorities on the said count in the hands of the assessee. Before parting, we may herein observe that as concluded by us hereinabove after necessary deliberations that no infirmity emerges arises from the claim of the assessee that it had opted A.Y 2007-08 as the initial assessment year for claim of deduction under Sec. 80-IA(4)(ii) and the same had wrongly been taken by the lower authorities as A.Y 2006-07, thus the observations of the A.O that the assessee alongwith its authorized representatives, CAs and tax auditors had intentionally provided misleading information to the department would not survive and are thus vacated. We herein conclude t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prejudice and notwithstanding each other. The appellant craves leave to add, alter, amend, vary, omit or substitute any or all the above grounds of appeal, at any time before or at the time of hearing of the appeal. 2. Briefly stated, the assessee company which is engaged in the business of providing telecommunication services and related support services in India and abroad had e-filed its return of income for A.Y 2008-09 on 30.09.2008, declaring total income of Rs. 75,94,258/- after claiming deduction under Sec. 80-IA of Rs. 61,85,61,820/- and a book profit under Sec. 115JB at Rs. 49,13,89,369/-. The return of income was revised by the assessee on 10.02.2010, declaring total income of Rs. 75,94,258/- after claiming deduction under Sec. 80-IA of Rs. 61,85,61,820/- and a book profit under Sec. 115JB at Rs. 49,13,89,369/-. The return of income was initially processed as such under Sec. 143(1) of the Act. Subsequently, the case of the assessee was selected for scrutiny assessment under Sec. 143(2). 3. During the course of the assessment proceedings it was observed by the A.O that the assessee had claimed deduction under Sec. 80-IA of Rs. 61,85,61,820/-. It was noticed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see in A.Y 2006-07 observed that the same was prompted by an apprehension of certain disallowances which the assessee was anticipating if its case for the said year would have been selected for scrutiny assessment. It was observed by the A.O that as no disallowances were made in A.Y 2006-07 and the case of the assessee was not selected for scrutiny assessment for A.Y 2007-08, thus the assessee intentionally changed the initial assessment year to A.Y 2007- 08 from A.Y 2006-07 . The A.O fortified his aforesaid view by taking B.T Global Communications India Pvt. Ltd. vs. JCIT(OSD), Range 8(1), Mumbai support of the fact that as the audit report in Form No. 10CCB was filed by the assessee only on 14.10.2010, therefore, the assessee had sufficient time for manipulating its records. The A.O further observed that in the Written opinion taken by the assessee from a consultant viz. Mr. Bharat Agarwal, C.A (an associate of the auditor of the assessee company Ms. Ritika Garg, C.A who had signed Form No. 10CCB‟ for A.Y 2006-07), dated 04.09.2006 (forming part of the record of A.Y 2006-07 and A.Y 2007-08) the assessee was advised that it was eligible to treat A.Y 2006-07 as the fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was allowed by the A.O in the assessment framed by him under Sec. 143(3) of the Act. It was averred by the ld. A.R that though the A.O while framing the assessment for A.Y 2008-09 had allowed 100% deduction under Sec. 80-IA as claimed by the assessee, but had dislodged its claim of having opted A.Y 2007-08 as the initial assessment year for deduction under Sec. 80-IA(2), and observed that A.Y 2006-07 was to be taken as the initial assessment year. The ld. A.R taking us through sub-section (2A) of Sec. 80-IA submitted that as per the mandate of law, in the case of an undertaking providing telecommunication services, the deduction under Sec. 80-IA shall be one hundred percent of the profits and gains of the eligible business for the first five assessment years commencing at any time during the period as specified in sub-section (2) of Sec. 80-IA and thereafter, thirty percent of such profits and gains for further five assessment years. In the backdrop of the aforesaid settled position of law, it was submitted by the ld. A.R that as the assessee which had started providing telecommunication services from the F.Y 2003-04 had opted A.Y 2007-08 as the initial assessment year for claim o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld. A.R controverting the observations of the CIT(A) submitted that the assessee had never opted to claim deduction under Sec. 80-IA from A.Y 2006-07. The ld. A.R in order to buttress his aforesaid contention that no option was exercised to claim deduction under Sec. 80-IA in A.Y 2006-07, drew our attention to Column No. 30‟ of the audit report in Form No. 10CCB r.w Rule 18BBB for A.Y 2006- 07 (Page 133 of APB‟). The ld. A.R submitted that against Column No. 30‟ it was clearly mentioned that though the profit derived as mentioned in point no. 29 was eligible for claim of deduction 80IA(4)(ii), however since the gross total income was Nil, hence no such deduction was being claimed during the year. The ld. A.R in order to support his claim that where because of losses the assessee had not claimed any deduction under Sec. 80-IA and had for the first time claimed the same in the year in which it came in profit, then it would be incorrect to relate the first year of the deduction to an earlier year in which due to losses no such deduction was claimed, relied on the order of the ITAT, Jaipur Bench (Third Member) in the case of ACIT, Circle-6, Jaipur Vs. Rajasthan Sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deduction under Sec. 80-IA(4)(ii) by the assessee. It is the claim of the assessee that A.Y 2007-08 is the initial assessment year for claim of deduction under Sec. 80-IA(4)(ii). Before proceeding further, it would be pertinent to point out that the claim of deduction under Sec. 80-IA(4)(ii) raised by the assessee in its return of income for the year under consideration has been accepted by the revenue and it is only the finding arrived at by lower authorities that the initial assessment year for claim of deduction under the said statutory provision is to reckoned from A.Y 2006-07, which has been assailed before us by the assessee. 8. We have deliberated at length on the issue under consideration and find that the adjudication of the issue involved would require construing of Sec. 80-IA(2) in the backdrop of the facts of the case, which as it was then available on the statute read as under: (2). The deduction specified in sub-section (1) may, at the option of the assessee, be claimed by him for any ten consecutive assessment years out of fifteen years beginning from the year in which the undertaking or the enterprise develops and begins to operate any infrastructure facili ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deduction under Sec. 80-IA(4)(ii), and actual deduction whether claimed or not was not relevant at all. We are unable to persuade ourselves to subscribe either to the aforesaid view or the reasoning accorded by the lower authorities. We are of the considered view that the lower authorities were so much swayed by the aspect of the mention of A.Y 2006-07 as the initial assessment year in the audit report in Form No. 10CCB of the assessee for A.Y 2006-07, that they lost sight of the mandate of sub-section (2) of Sec. 80-IA. We find that sub-section (2) of Sec. 80-IA in unequivocal terms refers to the exercise of option by the assessee in context of claim of deduction under Sec. 80-IA(1) of the Act. Admittedly, once the assessee had claimed the deduction under Sec. 80-IA(1) in any assessment year (falling within the stipulated fifteen years), thereafter its entitlement for claim of such deduction is restricted to the ten consecutive years beginning from the year in which it was first claimed. We are of the considered view that as it remains as a matter of fact that the assessee had not claimed any deduction under Sec. 80-IA in A.Y 2006-07, therefore, it would be incorrect to conclude t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , in the backdrop of our aforesaid observations our view that the assessee had not claimed any deduction under Sec. 80-IA(1) in A.Y 2006-07 is further supplemented by the fact that as in the said year the gross total income of the assessee was Nil, therefore, no such deduction even otherwise as per the settled position of law could have been claimed by the assessee. Still further, we find that our aforesaid view is also fortified by a similar view arrived at by the Third Member‟ bench of ITAT, Jaipur in the case of Assisstant Commissioner of Income-tax, Circle-6, Jaipur Vs. Rajasthan State Road Development Construction Corp. Ltd. (2017) 82 taxmann.com 410 (Jaipur-Trib)(TM), as had been relied upon by the ld. A.R before us. We find that in the aforesaid case the assessee which had commenced the operations of its project viz. Chall Neem Ka Thana Project‟ on 01.05.2005, had due to losses suffered in its project during A.Y 2006-07 and A.Y 2007- 08 not claimed any deduction under Sec. 80-IA and had chosen A.Y 2008- 09 in which it came into profit as the initial year for claim of such deduction. It was observed by the Tribunal that no infirmity did arise from choosing of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. We are of the considered view that the auditor had in clear words stated that though the assessee was eligible for claim of deduction under Sec. 80IA(4)(ii), the same was however not being claimed as the gross total income of the assessee for the said year viz. A.Y 2006-07 was Nil. We would not hesitate to observe that the lower authorities had drawn self suiting inferences without appreciating the audit report in toto, despite the fact that the said remarks of the auditor were specifically brought to their notice. We thus, are of the considered view that the aforesaid technical ground that had formed the basis for the lower authorities to conclude that the assessee had adopted A.Y 2006-07 as the initial assessment year for claim of deduction under Sec. 80-IA fails. 11. We further find that the assessee had since inception stated that the mentioning of A.Y 2006-07 as the initial assessment year for claim of deduction under Sec. 80-IA was on account of an inadvertent mistake on the part of the Chartered Accountant. However, the lower authorities without assigning any reason, much the less a cogent reason had rejected the said contention of the assessee. We find that as the sam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e for claim of deduction under Sec. 80-IA(4)(ii), however as its gross total income was Nil, hence it had not claimed any deduction under the said statutory provision also cannot be lost sight of. We thus are of the considered view that the contention of the ld. D.R as regards the filing of the audit report in Form 10CCB by the assessee for A.Y 2006-07, in the absence of any claim of deduction by the assessee having been raised under Sec. 80-IA at any stage, thus would not assist the case of the revenue. 13. We shall now advert to the written opinion which was taken by the assessee from a consultant viz. Sh. Bharat Agarwal , C.A, dated 04.09.2006, which had been pressed into service by the A.O for drawing adverse inferences in the hands of the assessee. On a perusal of the written opinion it emerges that on a query raised by the assessee the aforesaid person by referring to the relevant provisions of Sec. 80-IA, had opined that as the assessee had started providing telecommunication services from F.Y 2003- 04, hence its eligibility to claim deduction under Sec. 80-IA(4) which is to be reckoned for a period of ten consecutive years falling within the block of fifteen years from t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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