9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2017 (12) TMI 1204 - AT - Income TaxRevision u/s 263 - AO has not verified claim of deduction U/s 80IA on account of income from Railway Siding, Water project and captive power consumption and committed an error in passing the Assessment Orders - Held that - The assessee company had claimed the deduction u/s. 80IA(4) of the Act in accordance of the provisions of the Act and the assessing officer has rightly allowed the same after making elaborate enquiry regarding the eligibility of assessee s claim, before specifically denying this deduction in respect of CER and allowing the same in respect of CPP, Water Supply and Treatment Plant and Rail System. The order of the Assessing Officer may not have dealt specifically on all these issues in the assessment order but that by itself is not sufficient reason to hold that the assessment order is erroneous and prejudicial to the interest of revenue. It is for the Ld.PCIT to point out as to what error was committed by the Ld. AO in taking a particular view. On a perusal of the agreement dated 16.01.2007 entered with South Western Railway, Hubli division for railway system we find clauses in the agreement are exactly identical to the agreement entered into by M/s.Ultratech Cements Limited for the railway siding in its premises. On analyzing the agreement and clauses thereon and the provisions of the Act it has been held by the Coordinate Bench in the case of M/s.Ultratech Cements Limited (2017 (12) TMI 1134 - ITAT MUMBAI) that the Railway System operated by the assessee is an infrastructure facility and entitled for the deduction u/s. 80IA of the Act. Section 80-lA was an instrument of legislative policy, conceived with a view to provide an impetus to private sector participation in infrastructural projects. We also find from the letter dated 04.03.2014 submitted to the Assessing Officer it was clearly stated that this facility is being operated and maintained by the assessee company. Therefore, it can be said that the assessee is operating and maintaining the infrastructure facility in the form of water supply project. Therefore, applying the same principles as was held in the case of Railway system we hold that the Water Supply Project operated and maintained by the assessee is an infrastructural facility and is eligible for deduction u/s. 80IA of the Act. - Decided in favour of assessee.
Issues Involved:
1. Jurisdiction under Section 263 of the Income Tax Act. 2. Violation of principles of natural justice. 3. Disallowance of deduction under Section 80IA for Railway Siding and Water Supply Systems. Analysis: Jurisdiction under Section 263 of the Income Tax Act: The primary issue was whether the Principal Commissioner of Income Tax (PCIT) was justified in invoking jurisdiction under Section 263 of the Income Tax Act, asserting that the assessment orders were erroneous and prejudicial to the interests of the revenue. The assessee argued that the Assessing Officer (AO) had thoroughly investigated the allowability of deductions under Section 80IA(4) and had made a reasoned decision. The Tribunal noted that the AO had made extensive inquiries, obtained necessary details, and applied his mind before allowing the deductions. Therefore, it held that the PCIT's invocation of Section 263 was not justified, citing precedents like CIT vs. Fine Jewellery (I) Ltd. and Malabar Industrial Co. Ltd. vs. CIT. Violation of Principles of Natural Justice: The assessee contended that the PCIT violated the principles of natural justice by not sharing relevant correspondences and documents that formed the basis of the initiation of proceedings under Section 263. The Tribunal found that the PCIT did not provide the assessee with the information gathered from the Railway Department, which was used to rebut the assessee's claims. This lack of transparency was deemed a violation of natural justice, referencing the Supreme Court's decision in Kishinchand Chellaram and the Bombay High Court's decision in H R Mehta v. ACIT. Disallowance of Deduction under Section 80IA: The PCIT disallowed the deduction under Section 80IA for income derived from the Railway Siding and Water Supply Systems, arguing that these were not infrastructure projects and were for private use. The Tribunal examined the agreements and found that the assessee had entered into valid agreements with the Government for developing, operating, and maintaining these facilities. Railway Siding: The Tribunal referenced the case of M/s. Ultratech Cements Limited, where similar deductions were allowed. It noted that the agreements with the Railway authorities were for developing, operating, and maintaining the railway sidings, fulfilling the conditions of Section 80IA(4). The Tribunal also highlighted that the Bombay High Court had refused to question the applicability of Section 80IA to railway sidings in a related case, thus supporting the assessee's claim. Water Supply System: The Tribunal found that the assessee had developed a water supply system under an agreement with the Government of Karnataka, which allowed the assessee to lay a pipeline and draw water from Tungbhadra dam. The Tribunal held that the water supply project qualified as an infrastructure facility under Section 80IA(4), referencing the Bombay High Court's decision in CIT v. ABG Heavy Industries Limited, which emphasized the legislative intent to encourage private sector participation in infrastructure development. Conclusion: The Tribunal concluded that the assessee was entitled to deductions under Section 80IA for both the Railway Siding and Water Supply Systems. It set aside the PCIT's orders under Section 263 for the assessment years 2008-09 to 2011-12, thereby allowing the appeals of the assessee. The Tribunal's decision was based on the thorough inquiries made by the AO, adherence to judicial precedents, and the fulfillment of conditions under Section 80IA(4).
|
