2000 (7) TMI 225 - AT - Income Tax

Summary

Issues Involved:
1. Legality of the CIT(A)'s order.
2. Compliance with section 80-IA(4A) of the Income Tax Act, 1961.
3. Treatment of income from infrastructure and assignment of the contract.
4. Interpretation of assignment of contract u/s 80-IA(4A).
5. Charging of interest u/s 234B.

Summary:

1. Legality of the CIT(A)'s Order:
The assessee contended that the CIT(A)'s order was "bad in law as well as in facts" due to incorrect interpretation of law and facts. The Tribunal examined the rival submissions and documents on record, ultimately finding the CIT(A)'s order unsatisfactory and set it aside.

2. Compliance with Section 80-IA(4A) of the Income Tax Act, 1961:
The assessee claimed a deduction u/s 80-IA(4A) for constructing a bridge on a Build, Operate, and Transfer (BOT) basis. The Assessing Officer (AO) denied the deduction, arguing that the assessee did not directly enter into an agreement with the State Government but was merely an assignee. The Tribunal, however, found that the assessee had fulfilled all the requirements of section 80-IA(4A) through a valid assignment recognized by the State Government, thus entitling the assessee to the deduction.

3. Treatment of Income from Infrastructure and Assignment of the Contract:
The AO treated the income from the infrastructure as that of the appellant but contended there was no assignment of the contract in favor of the appellant. The Tribunal noted that the assessee had entered into an agreement with the original tenderer, M/s. Ajay Construction, which was recognized by the State Government. The Tribunal concluded that the assessee had stepped into the shoes of the original tenderer, thereby meeting the requirements for the deduction.

4. Interpretation of Assignment of Contract u/s 80-IA(4A):
The Tribunal emphasized the legislative intent behind section 80-IA(4A), which aimed to promote infrastructure development by providing tax incentives. The Tribunal interpreted the term "assignment" in a manner that aligned with the legislative intent, recognizing the assessee's valid assignment and subsequent fulfillment of all contractual obligations as equivalent to entering into an agreement with the State Government.

5. Charging of Interest u/s 234B:
The assessee argued that interest u/s 234B could not be charged without a specific order in the assessment order. The Tribunal agreed, referencing the Patna High Court's judgment in Uday Mistanna Bhandar & Complex v. CIT, which held that a specific order is required to charge interest under sections 234A, 234B, or 234C. Since no such specific order was present in the assessment order, the Tribunal deemed the notice of demand charging interest u/s 234B illegal. Additionally, since the Tribunal set aside the CIT(A)'s order and deleted the addition, no interest was chargeable under section 234B.

Conclusion:
The Tribunal allowed the appeal, setting aside the CIT(A)'s order, recognizing the assessee's entitlement to the deduction u/s 80-IA(4A), and ruling that the interest u/s 234B was improperly charged.