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2023 (11) TMI 1223 - AT - Income TaxDeduction u/s 80IA - claim denied as projects executed by the contractee companies are neither Central Government nor State Government or a local authority nor any other statutory body and assessee is only an EPC contractor for carrying out work awarded by NHAI to Mokama-Munger Highway Ltd - HELD THAT - Issue decided in favour of assessee as relying on own case 2022 (11) TMI 1446 - ITAT DELHI to prove that the assessee fulfils all requisite conditions to claim deduction under section 80IA of the Act was given. For ease of ready reference as to how the conditions were complied with two projects namely Meghalaya Project and Danapur ROB were taken up. As submitted that submissions have been made for above two projects. It is however clarified that all other projects have also been executed in a like manner and there is parity of facts. The assessee was prepared to make submission for all the projects if required. However the assessee submitted agreements of all other projects including Sonbarsa Project and SH-83 Project. It was clarified that Mokama-Munger Project and Sonbarsa Project were awarded by NHAI to the assessee company. Neither the Ld. AO nor the Ld. DRP required the assessee to demonstrate as to how the necessary conditions for claiming deduction under section 80IA were fulfilled for Sonbarsa Project and SH-83 Project even though the assessee had offered to do so. None-the-less the fact remains that copy of agreement for these two projects were submitted before the Ld. AO. If he wanted he could have gone into further details but the Ld. AO chose not to do so. Therefore we do not find any substance in the argument of the Ld. CIT-DR that because claim of deduction under section 80IA has been made first time during the year for these two projects the decision (supra) of the Tribunal does not cover the issue. Tax benefit under section 80IA was introduced for encouraging private sector participation by way of investment in development of the infrastructure sector and not for the person who merely execute the civil construction work or any other works contract. Assessee is not a developer but contractor - Assessee is liable for all risks for loss damage to physical property personal death insurance in consequence of performance of contract liable for liquidated damages to the employer due to delay in execution of contract liable for cost of repairs for the loss or damages to the works or materials. Assessee is responsible for whole work from the date of takeover of the site till completion responsibility for maintenance of the road portion including the portions where the work is not started. All these clauses goes to show that the assessee is not a simplicitor contractor rather the assessee is a developer of the project. Therefore the contention of the AO that the assessee is not a developer but only a contractor is misconceived. On the face of the clear cut finding of the Tribunal that the assessee is a developer of the Projects and not only a contractor the contention of the Ld. CIT-DR is rejected being devoid of merit. We decide Ground in favour of the assessee holding that the assessee is eligible to claim the impugned deduction under section 80IA of the Act. Deduction of expenses u/s 40(a)(ia) disallowed in earlier years - AR submitted that before the Ld. DRP the assessee objected to non-acceptance of the revised computation of income and submitted complete details as also comparison of original and revised return in this regard along with necessary documentary evidence - HELD THAT - We deem it fit to remit the matter to the file of the Ld. AO to examine the details and supporting documentary evidence and decide the issue afresh in accordance with law after affording reasonable opportunity of hearing to the assessee. We order accordingly. This ground is treated as allowed for statistical purposes. TP adjustment - interest receivable on advance given - HELD THAT - Every item of receivables appearing in accounts of entity which may have dealings with foreign AE would not automatically be characterized as an International Transaction. It is also observed that there has to be a proper enquiry by the TPO by analyzing the statistics for a period of time to discern a pattern which would indicate that vis- -vis the receivables for the supplies made to an AE the arrangement reflects an International Transaction intended to benefit the AE in some way. On perusal of the TPO s order we find that no such exercise has been carried out by the TPO in benchmarking the interest on receivables We send the matter back to the Ld. AO/TPO for deciding the issue afresh keeping in view the evidence submitted by the assessee as also the observations of the Hon ble Delhi High Court in PCIT vs. Kusum Health Care (P) Ltd 2017 (4) TMI 1254 - DELHI HIGH COURT and as per law. Addition of retention money retained by the employer - application of provisions of section 43CB(2) - HELD THAT - It is not in dispute and the parties agree that the Finance Act 2018 has inserted section 43CB with retrospective effect from 01.04.2017 and thus apply to AY 2017-18 and subsequent years. It is also not in dispute that in the case of the assessee the amended law has to be applied. We therefore consider it fit and in the interest of justice to restore the matter back to the file of the Ld. AO with a direction to him to apply the provisions of section 43CB(2) and decide the issue afresh after allowing reasonable opportunity of hearing to the assessee. We order accordingly and treat these grounds as allowed for statistical purpose. Late deposit of EPF contribution of employees though deposited before due date of filing ITR - HELD THAT - we deem it fit to restore the issue to the file of the Ld. AO with a direction to him to verify the veracity of the contention raised by the Ld. AR before us and if his contention is found to be correct and in accordance with the settled position of law as enshrined by the Hon ble Supreme Court in Checkmate Services (P) Ltd. 2022 (10) TMI 617 - SUPREME COURT modify the assessment accordingly. TDS credit - as stated that the Ld. AO has allowed credit of TDS less that is allowable to the assessee according to the income offered for taxation by the assessee - HELD THAT - It is a matter which requires verification from the records. We therefore direct the Ld. AO to look into the assessee s claim and after due verification take remedial action in accordance with law. Appeal of the assessee is partly allowed for statistical purposes.
Issues Involved:
1. Computation of Gross Total Income 2. Disallowance of Deduction under Section 80IA(4)(i) 3. Disallowance of Expenses under Section 40(a)(ia) 4. Transfer Pricing Adjustment 5. Addition on Account of Retention Money 6. Disallowance on Account of Late Deposit of EPF Contribution 7. Credit of TDS 8. Addition of Income-tax Refund to Total Demand Summary of Judgment: 1. Computation of Gross Total Income: The assessee contended that the AO erred in computing the Gross Total Income by taking into effect a loss of Rs. 13,65,60,299/- instead of Rs. 14,22,89,453/- as declared in the revised computation of income filed on 04.09.2021. The Tribunal directed the AO to verify the revised computation and take remedial action as per law. 2. Disallowance of Deduction under Section 80IA(4)(i): The AO/DRP disallowed the deduction of Rs. 2,26,31,98,158/- claimed under Section 80IA(4)(i) on the grounds that the contractees were not recognized under Section 80IA(4)(1)(b) and the assessee was merely a contractor and not a developer. The Tribunal found that the issue was covered in favor of the assessee by the decision of the Tribunal in the assessee's own case for AY 2016-17, holding that the assessee is a developer and not a mere contractor. The Tribunal directed the AO to allow the deduction under Section 80IA. 3. Disallowance of Expenses under Section 40(a)(ia): The AO disallowed Rs. 38,34,16,688/- on account of expenses disallowed in earlier years due to lack of supporting evidence. The Tribunal remitted the matter back to the AO for verification of details and supporting documentary evidence and to decide the issue afresh. 4. Transfer Pricing Adjustment: The AO/TPO made an adjustment of Rs. 41,22,717/- on account of interest receivable on advance given to M/s BSC C&C JV Nepal Pvt. Ltd. The Tribunal found that the issue was covered by the decision in the assessee's own case for AY 2016-17 and remanded the matter back to the AO/TPO for fresh adjudication. 5. Addition on Account of Retention Money: The AO added Rs. 18,84,08,295/- on account of retention money retained by the employer. The Tribunal directed the AO to apply the provisions of Section 43CB(2) and decide the issue afresh. 6. Disallowance on Account of Late Deposit of EPF Contribution: The AO disallowed Rs. 1,42,72,894/- on account of late deposit of EPF contribution. The Tribunal directed the AO to verify the assessee's contention that a suo-moto disallowance of Rs. 1,40,86,958/- was already made and to modify the assessment accordingly. 7. Credit of TDS: The AO allowed TDS credit of Rs. 10,64,37,556/- instead of Rs. 12,40,95,837/- claimed by the assessee. The Tribunal directed the AO to verify the claim and take remedial action as per law. 8. Addition of Income-tax Refund to Total Demand: The AO added an income-tax refund of Rs. 5,83,17,340/- to the total demand of income-tax. The Tribunal did not specifically address this issue separately, implying it would be covered under the overall verification and adjustment process directed for other issues. Conclusion: The appeal was partly allowed for statistical purposes, with directions to the AO to verify and re-adjudicate various issues as per the Tribunal's findings and applicable law.
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