2020 (12) TMI 210 - AT - Income Tax

Revision u/s 263 - PCIT's revision action on the ground that the AO had wrongly treated not as a works contractor under 80IA(4) Explanation as per the corresponding show-cause notice - HELD THAT - We find no reason to sustain the PCIT's revision order under challenge. It has sufficiently been highlighted in the preceding paragraphs that this assessee is a company engaged in road infrastructure development and maintenance business from assessment year 2005-06 onwards. It has developed at least 17 projects (supra) from assessment year 2010-11 out of which some of the projects i.e. Shivgunj has formed part of tribunal's adjudication on the very issue from assessment year 2010-11 and 2011-12 vide order dated 23.12.19 holding it as a entity for similar section 80IA relief. Learned coordinate bench holds in very clear terms that it is the assessee only who has not only employed plant and machinery and to other assets along with the staff but also it had been bearing all the risks involved in the said infrastructure projects and therefore, it could not have been treated a mere works contractor. The corresponding twin infrastructure development agreements involving identical project stipulations to be performed at the assessee's behest which sufficiently reveal that there has not been any deviation vis- -vis all other similar projects in the impugned assessment year. AO has also accepted assessee's section 80IA deduction in succeeding assessment years 2013-14 and 2014-15 as well and the corresponding preceding assessment years since assessment orders to this effect. No disallowance has been made qua section 80IA deduction claim in any of these assessments which have attained finality. We conclude that the Assessing Officer had taken only the plausible view in accepting the assessee's section 80IA deduction claim in his assessment dated 30.03.2015 u/s. 143(3) of the Act. The PCIT exercise of impugned revision jurisdiction is held as not sustainable in the eyes of law going by the foregoing settled legal proposition (supra). The same is accordingly reversed. PCIT's revision show-cause notice had treated the section 143(3) assessment herein as a case of Assessing Officer having erroneously accepted the assessee's section 80IA deduction claim whereas his section 263 order under challenge has merely restored the issue back to the Assessing Officer for afresh adjudication. We adopt the foregoing detailed reasoning mutatis mutandis to accept the assessee's above-stated arguments on this latter aspect as well to set aside and reverse the PCIT's revision order under challenge dated 20.03.2017. - Decided in favour of assessee.

Summary

Issues Involved:
1. Delay in filing the appeal.
2. Validity of the Principal Commissioner of Income-tax (PCIT)'s revision order under Section 263 of the Income Tax Act, 1961.
3. Eligibility of the assessee for deduction under Section 80IA of the Income Tax Act, 1961.

Issue-wise Detailed Analysis:

1. Delay in Filing the Appeal:
The appeal was delayed by 291 days. The assessee attributed this delay to the pendency of insolvency and bankruptcy proceedings before the National Company Law Tribunal, which admitted the case on 30.03.2017. The tribunal condoned the delay, citing the Supreme Court's decision in Collector, Land Acquisition vs. Mst. Katji & Ors [1987] 167 ITR 0471 (SC), emphasizing that technical aspects should not impede substantial justice. The delay was deemed neither intentional nor deliberate but due to circumstances beyond the assessee's control.

2. Validity of the PCIT's Revision Order under Section 263:
The PCIT issued a show-cause notice under Section 263, questioning the Assessing Officer's (AO) decision to allow the assessee's deduction under Section 80IA without proper inquiry. The PCIT's revision order directed the AO to frame a fresh assessment after adequate verification. The tribunal referred to several landmark judgments, including Malabar Industries Ltd. [2000] 243 ITR 83 (SC), which held that for a revision under Section 263, the assessment must be both erroneous and prejudicial to the interest of the Revenue. The tribunal concluded that the AO had taken a plausible view supported by the assessee's detailed submissions and previous tribunal orders. The PCIT's order was deemed unsustainable as it lacked a clear finding of error and merely directed further inquiry, which is not permissible under Section 263.

3. Eligibility for Deduction under Section 80IA:
The assessee, engaged in road infrastructure development and maintenance, claimed a deduction under Section 80IA. The PCIT's revision order questioned this claim, suggesting the assessee was a mere "works contractor" and not eligible for the deduction. The tribunal examined the assessee's agreements and previous tribunal orders, which consistently upheld the assessee's eligibility for the deduction. The tribunal noted that the assessee bore significant business risks and fulfilled all conditions under Section 80IA. The AO's acceptance of the deduction was thus a plausible view, and the PCIT's revision was not justified.

Conclusion:
The tribunal allowed the assessee's appeal, setting aside the PCIT's revision order and restoring the AO's original assessment. The tribunal emphasized that the AO had conducted adequate inquiries and that the PCIT's order lacked a clear finding of error, merely directing further inquiry, which is not permissible under Section 263. The assessee's eligibility for the deduction under Section 80IA was upheld based on previous tribunal orders and the nature of the assessee's business activities.