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TMI Blog2025 (2) TMI 1076X X X X Extracts X X X X X X X X Extracts X X X X ..... e common issues are involved in both these appeals, these appeals were heard together and are being disposed of by this single consolidated order for the sake of convenience and brevity. First, we take-up appeal ITA.No.872/Hyd./2024 for the A.Y. 2017-2018 as the "lead" appeal and both the parties are agreed to that the decision taken in this appeal be applicable in appeal ITA.No.873/Hyd./ 2024 for the A.Y. 2018-2019. ITA.No.872/Hyd./2024 - A.Y. 2017-2018 : Facts of the case, in brief, are that the assessee M/s. Thrissur Expressway Limited, is a Special Purpose Vehicle ["SPV"] in corporated for the purpose of Design, Engineering, Finance, Procurement, Construction, Operation and Maintenance of "6 Laning of Vadakanchery- Thrissur section of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... debited to P & L A/c in the return filed, estimated the income of the assessee @ 8% i.e., at Rs. 32,79,23,520/- on the gross receipts declared by the assessee of Rs. 409,90,44,000/- and made addition u/sec.28 of the Act. 2.2. On being aggrieved, the assessee carried the matter in appeal before the learned CIT(A) and the learned CIT(A) deleted the addition of Rs. 32,79,23,520/- by observing as under : "AO has misunderstood the cost of construction incurred during the year as receipt which is only a matching entry in Profit and Loss account to balance the expenditure incurred on ongoing road construction work. This amount is only part of cost of work which is to be taken to balance sheet as the accumulating figure to be added to balance of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T(A) erred in not enhancing the income shown by the assessee to the tune of Rs. 183.67 Cr. i.e. grants received from NHAI 179.90 Cr. and Utility Shifting Work Rs. 3.76 Cr. 5. Appellant prays for other grounds/grounds that may be urged at the time of hearing. 4. The Learned DR on the other hand, vehemently relied on the order of the Assessing Officer. He submitted that the Assessing Officer estimated the income of the assessee @ 8% of the gross receipts which is common in line of construction activities and based on judicial precedents and principles. He submitted that during the course of assessment proceedings the assessee did not produce books of accounts and in absence of documentary evidence to verify bills/vouchers and TDS etc., and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ordingly pleaded that the order of the learned CIT(A) is in accordance with the Accounting Standards, as per the Board's circular and therefore, the order of the learned CIT(A) be sustained and the grounds raised by the Revenue be dismissed in the interest of substantial justice. 6. We have considered the rival submissions of both the parties, written submissions of the Learned DR, paper books filed by the assessee and perused the material available on record. We find that admittedly there is no dispute between the parties with regard to the assessee's engagement for execution of construction and maintenance contract of 6 lane Vdakancherry-Thrissur section of NH-47 in Kerala from the existing 2 lane through a concession agreement dated 24. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly over the remaining period of toll concessionaire agreement and that the impugned circular applicable only to those infrastructure projects for development of road/highways on BOT basis where ownership is not vested with the assessee under the concessionaire agreement. We note that the assessee is not creating any capital asset of it's own by creating the infrastructure facility i.e., construction of National High Way and the owner is NHAI-Government of India. The assessee was allowed to construct highway and on completion of the work, the assessee is allowed to collect the amount by way of Toll. Therefore, till the completion of the national high way, the assessee could not receive any sum in his hands and as such, it is not a "capital w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... confirm his order. Accordingly, the grounds raised by the Revenue are dismissed. 7. In the result, ITA.No.872/Hyd./2024 of the Revenue is dismissed. ITA.No.873/Hyd./2024 - A.Y. 2018-2019 : 8. In the assessment year 2018-2019 [ITA.No.873/Hyd./2024] the Assessing Officer estimated the income of the assessee @ 8% at Rs. 14,36,28,439/- on the gross receipts of Rs. 179,53,55,488/- besides making addition of Rs. 38,41,46,752/- u/sec.40(a)(ia) and addition of Rs. 37,97,29,195/- u/sec.43B of the Act. 9. Same order to follow for the impugned assessment year 2018-2019 with respect to the estimation of income @ 8% on the gross receipts. The order of the learned CIT(A) in deleting the addition on this ground is confirmed. The grounds raised by the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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