9911796707
TMI Blog2024 (9) TMI 1562X X X X Extracts X X X X X X X X Extracts X X X X ..... well as on facts in recording the finding that the assessee was entitled to claim the deduction U/s 80IA(4)(i) by filing the return in compliance of notice U/s 143(3) ignoring the judicial pronouncements of Hon'ble Supreme Court, various High Courts and ITATs in following cases: i. Commissioner of Income-tax Versus Sun Engineering Works P. Ltd. [1992] 198R 297 (SC). ii. Vishwanath Products, Prop. Shri vs The Dy. CIT on 29 June, 2007. [Equivalent citations: (2008) 117 TTJ Luck 549. iii. The Hon'ble High Court Jodhpur in the case of Suncity Alloys (P) Ltd Vs. АСIT [2009] 124 TTJ 674(JD). iv. Charchit Agarwal. Versus Assistant Commissioner of Income-Tax.2009 (8) TMI 127-ITAT DELHI-B. 3. On the facts and in the circumstances of the case the CIT(A) has erred in deleting the addition of Rs. 1,21,000/- by ignoring the facts that the assessee could not produce any evidence for credit balance appearing in the ledger account of M/s Mallard Holidays and failed to furnish the cogent material in this regard and could not explain when confronted. 4. On the facts and in the circumstances of the case the CIT(A) has erred in deleting the addition of Rs. 2,50,000/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se on the facts and in the circumstances of the case the Ld. Commissioner of Income Tax(Appeals) -3, Lucknow has grossly erred in sustaining the addition of Rs. 22,355/- towards foreign travel expenses, without properly appreciating the True and Correct facts involved in the case. 6. Because on the facts and in the circumstances of the case the Ld. Commissioner of Income Tax(Appeals) -3, Lucknow has grossly erred in sustaining the addition of Rs. 74,451/-, without properly appreciating the true and correct facts, involved in the case and the addition is wholly illegal and liable to be quashed. 7. Because on the facts and in the circumstances of the case the order passed by the Ld. Commissioner of Income Tax(Appeals) -3, Lucknow in relation to the aforementioned Grounds of Cross-Objection is unsustainable in law and is liable to be quashed and set-aside. 8. The humble appellant craves for leave to add/amend any or all of the aforementioned Grounds of Cross Objection with the leave of the Hon'ble Tribunal. 3. During the course of hearing, both the parties sought for adjournment. We find that the impugned order giving substantial relief to the respondent assessee was passed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd claimed deduction of Rs. 4,68,60,927/- under Chapter VI-A of the Act. The assessee thereafter again revised its return of income on 21.3.2016 wherein the assessee claimed deduction of Rs. 4,66,10,927/- under section 80IA of the Act. The Assessing Officer was of the view that deduction under section 80IA of the Act is allowable only if return is filed claiming such deduction before the due date specified in section 139 of the Act, which was 30.11.2014. The Assessing Officer was also of the view that the assessee should have submitted the audit report for all the four of its projects in Form No.10CCB along with original return before 30.11.2014. Moreover, according to the Assessing Officer, the assessee failed to maintain separate books of account for each of the four projects under Rule 18BB of the Act and failed to furnish the audit report in Form No.10CCB for each project separately. Accordingly, he disallowed the claim of deduction of Rs. 4,66,10,927/- under section 80IA of the Act. 7. Before the ld. CIT(A), the assessee filed a detailed submission which, for the sake of clarity, is reproduced hereunder: "That in the relevant year assessee had filed its return of income on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authority or any other statutory body for (i) developing or (ii) operating and maintaining or (iii) developing, operating and maintaining a new infrastructure facility). (c) It has started or starts operating and maintaining the infrastructure facility on or after the 1st day of April, 1995. [Explanation For the purposes of this clause, "infrastructure facility means- (a) A road including toll road, a bridge or a rail system. (b) A highway project including housing or other activities being an integral part of the highway project. (c) A water supply project, water treatment system, irrigation project, sanitation and sewerage system or solid waste management system. (d) A port, airport, inland waterway [inland port or navigational channel in the sea]]. The Central Board of Direct taxes vide circular No. 4/2010 dated 18.05.2014 has clarified widen of existing road as infrastructure facility is covered by section 80IA 4(1). The relevant circular is reproduced hereunder Section 80IA (4)(i) provides for a deduction to an undertaking engaged in developing, or operating and maintaining, or developing, operating and maintaining any infrastructure facility subject to satisfa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... revised return has elapsed before search as in A.Y. 2007- 08 and 2008-09, the new claim raised in the return filed u/s 153A is not acceptable." That Assessing officer has also objected that assessee has not furnished Audit report in form no. 10CCB for each project separately. In this regard it is relevant to mention that during the course of assessment proceeding assessee has submitted separate Audited financial statement for each projects namely- 1. KACHWA-Widening & Strengthening of Varanasi, Adalpur, Chunor, Kochwa (S.H.-74) Road km. 11.00-45.500 2. JEEVNATHNPUR-Widening & Strengthening of Jeevnathpur-Kanchanpur-Sikandarpur-Chakiya-Naugarh- Madhupur (SH-97) 3. BABATPUR-Widening & Strengthening of Existing Two Lane to four lane of Bhadohi-Kapsethi-Babatpur state highway in District of Bhadohi & Varanasi 4. DUMARIYAGANJ-Construction and Strengthening of Dumariyaganj Dhebrua state highways no. 76 from km 0.000-42.000 in the district of Siddarthnagar However while uploading the audit report, due to technical reasons each and every audit report separately could not be uploaded. Therefore assessee requested his auditor to consolidate all audit report of above said 4 projec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Laxmi civil Engineering works (supra) squarely applicable to the issue under dispute which is in favour of the assessee wherein it was held that mere development of a infrastructure facility is an eligible activity for claiming deduction under section 80IA of the Act after considering the Judgment of the Mumbai High Court in the case of ABG Heavy Engineering [supra). The case of ABG is not the pure developer whereas, in the present case, the assessee is the pure developer. We also find that Section 80IA of the Act, intended to cover the entities carrying out developing, operating and maintaining the infrastructure facility keeping in mind the present business models and intend to grant the incentives to such entities. The CBDT, on several occasions, clarified that pure developer should also be eligible to claim deduction under section 80IA of the Act, which ultimately culminated into Amendment under section 80IA of the Act, in the Finance Act 2001, to give effect to the aforesaid circulars issued by the CBDT. We also find that, to avoid misuse of the aforesaid amendment, an Explanation was inserted in Section 80IA of the Act, in the Finance Act-2007 and 2009, to clarify that mere w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... operating & maintenance, financial involvement, and defect correction and liability period is to be computed by assessing officer on pro-rata basis of turnover. The assessing officer is directed to examine the records accordingly and grant deduction on eligible turnover as directed above. It is needless to say that similar view has been taken by the Chennai Bench of the Tribunal and deduction u/s. 80IA was granted in the case of M/s. Chettinad Lignite Transport Services (P) Ltd., in ITA No. 2287/Mds/06 order dated 27th July, 2007 for the assessment year 2004-05. Later in ITA No. 1179/Mds/08 vide order dated 26th February, 2010 the Tribunal has taken the same view by inter-alia holding as follows: Moreover, the reasons for introducing the Explanation were clarified as providing a tax benefit because modernization requires a massive expansion and qualitative improvement in infrastructures like expressways, highways, airports, ports and rapid urban rail transport systems. For that purpose, private sector participation by way of investment in development of the infrastructure sector and not for the persons who merely execute the civil construction work or any other work contract has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issue is decided in favour of the assessee." 8. The ld. CIT(A), considering the detailed submissions made by the assessee, allowed deduction claimed by the assessee under section 80IA(4) of the Act, vide para 8.2(c) of his impugned order holding as under: "8.2(c) The undersigned has gone through the assessment order, written submissions and judgements relied upon by appellant. The findings are as under:- The appellant carried out 4 projects related to infrastructure development. Deduction of Rs. 4,66,10,927/- has been claimed u/s 80IA(4)(1) of the Act in the revised return of income filed on 21.03.2016 with total income of Rs. 56,70,62,680/-. In the original return filed on 28.11.2014 (within due date as per section 139(1) of the Act) this deduction was not claimed and returned income of Rs. 61,21,73,600/- was shown. The AO did not allow the deduction u/s 80IA of the Act for the reason that it was not claimed in the original return filed within the due date prescribed. All the four projects were awarded to appellant buy UP PWD for infrastructure development. All the relevant conditions for claim of deduction under section 80IA of the Act are fulfilled. Business activiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer, vehemently argued that since the assessee has filed the return for the year under consideration belatedly, the claim of deduction under section 80IA of the Act is not allowable. He further submitted that the assessee has not submitted the audit report for all the four of its projects in Form No.10CCB along with the original return of income before 30.11.2014 and assessee failed to maintain separate books of account for each of the four projects under Rule 18BB of the Act and also failed to furnish audit report in Form No.10CCB for each project separately. Therefore, the claim of deduction under section 80IA is not allowable to the assessee and the ld. CIT(A) was not justified to allow the claim of deduction under section 80IA of the Act to the assessee. He submitted that the order of the ld. CIT(A) on this issue may be set aside and the order of the Assessing Officer be restored. 10. On the other hand, the ld. counsel for the assessee, with the regard to the issue relating to claim of deduction under section 80IA of the Act, supported the order of the ld. CIT(A) and made submissions as made before the ld. CIT(A). He submitted that the Assessing Officer has rejec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons shall be allowed. This embargo in section 80A(5) would apply, though section 80P is not included in section 80AC. This is so because, the inhibition against allowing deduction is worded in quite similar terms in sections 80A(5) and 80AC, of which section 80A(5) is a provision inserted through the Finance Act 33/2009 with effect from 1.4.2013 after the insertion of section 80AC as per the Finance Act of 2006 with effect from 1.4.2006. This clearly evidences the legislative intendiment that the inhibition contained in subsection 5 of section 80A would operate by itself. In cases where returns have been filed, the question of exemptions or deductions referable to section SOP would definitely have to be considered and granted if eligible. 20. Here, questions would arise as to whether belated returns filed beyond the period stipulated under section 139(1) or section 139(4) as well as following sections 142(1) and 148 proceedings could be considered for exemption. If those returns are eligible to be accepted in terms of law, going by the provisions of the statute and the governing binding precedents, it goes without saying that the claim for exemption will also stand effectuated as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AWidening & Strengthening of Varanasi, Adalpur, Chunor, Kochwa (S.H.-74) Road km. 11.00-45.500, (ii) JEEVNATHNPURWidening & Strengthening of Jeevnathpur-Kanchanpur- Sikandarpur-Chakiya-Naugarh-Madhupur (SH-97), (iii) BABATPUR-Widening & Strengthening of Existing Two Lane to four lane of Bhadohi-Kapsethi-Babatpur state highway in District of Bhadohi & Varanasi, and (iv) DUMARIYAGANJ-Construction and Strengthening of Dumariyaganj Dhebrua state highways no. 76 from km 0.000-42.000 in the district of Siddarthnagar. All the four projects were awarded to the assessee by UPPWD for infrastructure development. All the relevant conditions for claim of deduction under section 80IA of the Act are fulfilled. The business activities of all the four projects are covered in the scope of work defined under section 80IA (4) of the Act and clarified vide CBDT's Circular No.4/2010 where the assessee acted as a developer in these projects. Therefore, the Assessing Officer was not justified to reject the claim of the assessee for deduction under section 80IA of the Act. We, accordingly reject grounds No.1 & 2 taken by the Revenue. 15. With regard to ground No.3 of the Revenue's appeal, relating to dele ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cified as to which expenses could not be verified out of these expenses. The AO has not specified as to which are those expenses for which there were no supporting bills/vouchers. Not even a single bill/voucher has been identified by the AO in this regard. In the present case proper books of accounts are maintained and audited. The auditor has not pointed out any adverse inference in respect of non-maintenance of bills/vouchers in the Audit report. Nor has the AO identified the specific bills/vouchers which could not be verified. The issue of adhoc disallowance of expenditure has been decided upon by Hon'ble jurisdictional ITAT in the below mentioned judgements The Hon'ble ITAT, Lucknow Bench in U.P. Corporative Federation Vs. Deptt. Of Income Tax in ITA No. 33/lkw/2011 dated 22.03.2011 held that there was no justification is suspecting the genuineness of entire claim and resorting to estimated disallowance. The AO has not given any reason for estimating the disallowance at 5% of the claim. The AO has not doubted the correctness of books of accounts regularly maintained by the assessee. None of the auditors have given any adverse comment in the report. The disallowance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, observing as under: "14.1 Ground of appeal No. 6 (Disallowance of Rs. 675950/- u/s 40(a)(ia)) AO noted that appellant had paid a sum of Rs. 6,75,950/- under the head commission but TDS was not deducted u/s 194H of the Act. The AO disallowed this amount u/s 40(a)(ia) of the Act and added it to total income of the appellant. 14.2 The written submissions of the appellant on this issue are outlined in para 7 of this order. 14.3 During the course of appellate proceeding the ledger account and bills/vouchers for these expenses were produced. On examination of the same it is clear that these payments have been made to different persons and all these payments are petty payments. None of the payment exceeds Rs. 5,000/- Thus, the appellant was not under legal obligation to deduct TDS on these payments. In view of these facts the provisions of section 40(a)(ia) cannot be invoked in respect of these payments. Thus, the disallowance of Rs. 6,75,950/- made by the AO u/s 40(a)(ia) is hereby deleted. The ground of appeal No. 6 is allowed." 20. The observation of the ld. CIT(A) was that since the payments have been made by the assessee to different persons are petty payments and none of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SVS) in relation to the tax arising from its cross objection, as per which assessee is to discharge the tax liability under VSVS to the tune of Rs. 5,12,370/- by 31.03.2021. As against the identified tax settlement, since the assessee has already paid tax of Rs. 1,62,12,835/-, thus the excess payment of taxes resulted into refund of Rs. 1,57,00,465/-. We also find from record that the assessee has written letters to the designated authority for issuance of Form No.5, but the same has not yet been issued. As per Form No.3 dated 23.12.2020, the amount payable by the assessee for the year under consideration under VSVS by 31.3.2021 is only Rs. 5,12,370/- and the amount refundable to the assessee is Rs. 1,57,00,465/-. Therefore, considering these facts, we allow the request of the assessee for withdrawal of the Cross Objection. However, we make it clear that the Revenue will be at liberty to approach the Tribunal for restoration of this appeal, in accordance with law, if the dispute is not finally settled under VSVS. In that event, the assessee will also be at liberty to approach the Tribunal for restoration of its Cross Objection. For statistical purposes, the appeal of the Revenue an ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
