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2012 (12) TMI 330 - AT - Income TaxDisallowance of deduction u/s 80IA - no element of developing, operating and maintaining any infrastructural facility - Held that - Considering the description of the work executed by the assessee in the relevant period is certainly not the development of any infrastructure as the Champakara and Udyogmandal canals in Kerala were constructed/developed decades ago. What work the assessee executed in respect of these two canals and the Tapi riverbank viz. rip-rap masonary for protection of the canal bank and river bank can at best be work which is a sub-activity in the category of repairs and maintenance thereof rather than development of an infrastructure facility namely, inland waterways which has been done by IWAI. We are of the considered view that the assessee executed works contracts on behalf of the concerned Government bodies and there is certainly no element of developing or operating and maintaining or developing, operating and maintaining of any infrastructure facility as envisaged in clause ( c ) to the Explanation to sub-section(4) of section 80IA - against assessee. Addition being the amount of shortfall in the contract receipts - Held that - As the assessee was not able to controvert the findings of the AO and CIT(A) that the assessee was unable to explain or reconcile the difference of Rs.40,582 in the contract receipts declared by the assessee and the contract receipts reflected in the TDS Certificates of Indian Oil Corporation, Mangalore Chemicals & Fertilisers and The Indian Navy. As this fact was acknowledged by the assessee before the AO in the course of assessment proceedings no hesitation in confirming the addition made by the AO in respect of undeclared contract receipts - against assessee.
Issues Involved:
1. Deduction under section 80IA of the Income Tax Act, 1961. 2. Addition of shortfall in contract receipts. 3. Charging of interest under sections 234B and 234D. Detailed Analysis: 1. Deduction under Section 80IA: The primary issue in these appeals was the assessee's claim for deduction under section 80IA of the Income Tax Act, 1961. The assessee, a marine works contractor, claimed this deduction on the grounds of undertaking construction, operation, and maintenance of infrastructure facilities. The facilities in question included bank protection work in the Champakara and Udyogamandal Canals in Kerala and protection of the Tapi river bank in Gujarat. The Assessing Officer disallowed the claim, concluding that the agreements were merely works contracts for refurbishment, not involving the development, operation, or maintenance of infrastructure facilities. The Commissioner of Income Tax (Appeals) upheld the Assessing Officer's decision, determining that the assessee was a contractor executing civil works and not eligible for the deduction under section 80IA. The assessee contended that their work on the canals and riverbank constituted the development of infrastructure facilities and cited judicial decisions in support. However, the Tribunal found that the work executed was merely repairs and maintenance, not the development of new infrastructure. The Explanation to section 80IA, inserted retrospectively from 1.4.2000, clarified that the deduction does not apply to works contracts. The Tribunal held that the judicial decisions cited by the assessee were distinguishable and did not support their claim. Consequently, the assessee's appeal on this issue was dismissed. 2. Addition of Shortfall in Contract Receipts: For the Assessment Year 2006-07, the assessee challenged the addition of Rs. 40,582, representing the shortfall in contract receipts declared in their final accounts compared to the amounts in TDS certificates from Indian Oil Corporation, Mangalore Chemicals & Fertilisers, and The Indian Navy. The assessee argued that they were not given adequate opportunity to reconcile the differences. However, the Tribunal noted that the assessee could not explain or reconcile the difference during the assessment proceedings and had admitted the discrepancy before the Assessing Officer. As a result, the Tribunal upheld the addition made by the Assessing Officer and dismissed this ground of appeal. 3. Charging of Interest under Sections 234B and 234D: The assessee also contested the charging of interest under sections 234B and 234D of the Act. The Tribunal noted that the charging of interest under these sections is mandatory and consequential, leaving no discretion to the Assessing Officer. Therefore, the Tribunal upheld the Assessing Officer's action in charging interest. Conclusion: The appeals for the Assessment Years 2005-06 and 2006-07 were dismissed, with the Tribunal upholding the decisions of the lower authorities on all issues. The assessee was found not eligible for deduction under section 80IA, the addition of shortfall in contract receipts was confirmed, and the charging of interest under sections 234B and 234D was upheld.
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