2022 (2) TMI 1092 - AT - Income Tax

Deduction u/s.80IA(4)(i) - assessee failed to satisfy the applicability clause u/s.80IA(4)(i) of the Act, for the reason that the assessee is only a partnership firm - Also assessee taken part in tender process floated for rate contract - HELD THAT - As the assessee being a partnership firm in the relevant assessment years is legally not eligible to claim deduction u/s.80IA(4)(i) and also, even on merit, the assessee is found to have executed works contract attracting the explanation to sub-section 13 of 80IA. Therefore, the appeal of the Department may be allowed. As assessee could not controvert the above submissions. As the issue is squarely covered in assessee s own case 2013 (12) TMI 299 - ITAT CHENNAI we consistently following the same allow these three appeals of the Revenue.

Summary

Issues Involved:
1. Condonation of delay in filing appeals.
2. Eligibility for deduction under Section 80IA(4)(i) of the Income Tax Act, 1961.

Issue-Wise Detailed Analysis:

1. Condonation of Delay in Filing Appeals:
The appeals for assessment years 2009-10 and 2010-11 were filed 136 days late. The Revenue filed a condonation petition with an affidavit explaining that the combined appeal for three years was filed within the time limit, but separate appeals were subsequently required, leading to the delay. The Tribunal found the cause reasonable, condoned the delay, and admitted the appeals for both years.

2. Eligibility for Deduction under Section 80IA(4)(i):
The primary issue was whether the assessee, a contractor for Indian Railways, was eligible for deduction under Section 80IA(4)(i) for developing infrastructure facilities. The AO disallowed the claim, considering the assessee as a works contractor, not a developer, and cited the explanation to Section 80IA(4) introduced by Finance Act (No.2) 2009, which excludes works contracts from the deduction.

The CIT(A) allowed the deduction based on various case laws and CBDT Circular No.4/2010. However, the Tribunal noted that the issue was already decided against the assessee in its own case for the assessment year 2008-09, where it was held that the assessee, being a partnership firm, did not satisfy the conditions of Section 80IA(4)(i). The Tribunal emphasized that the statutory provision requires the enterprise to be a company or a consortium of companies, and a partnership firm does not qualify.

Further, the Tribunal reiterated that the assessee participated in tender processes as a works contractor, which attracts the explanation to Section 80IA(4) excluding such contracts from the deduction. Consequently, the Tribunal allowed the Revenue's appeals, denying the deduction under Section 80IA(4)(i) to the assessee.

Conclusion:
The Tribunal condoned the delay in filing the appeals and ruled that the assessee, being a partnership firm and executing works contracts, was not eligible for the deduction under Section 80IA(4)(i). All three appeals filed by the Revenue were allowed, and the deduction claims were disallowed.