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2016 (1) TMI 241 - AT - Income TaxDisallowance for deduction under section 80IA - whether the assessee is entitled to make a new claim for deduction under section 80IA in the returns of income filed in response to notices issued under section 153A? - Held that - Mumbai Bench of this Tribunal in the case of DCIT vs. Eversmile Construction Co. P. Ltd., ( 2014 (4) TMI 347 - ITAT MUMBAI ), wherein while dealing with a similar issue, the main features of the relevant provisions were noticed by the Tribunal and after analysing the same, it was held by the Tribunal that any deduction claimed by the assessee in the proceedings under section 153A could not be rejected simply on the ground that it was not claimed in the original assessment. This issue thus is squarely covered in favour of the assessee inter alia, by the decision of Hon ble Bombay High Court in the case of ABG Heavy Industries Ltd., (2010 (2) TMI 108 - BOMBAY HIGH COURT ), which has been followed by the Coordinate Bench of this Tribunal in various cases and respectfully following the same, we uphold the impugned order of the Ld. CIT(A) holding that the assessee is entitled for deduction under section 80IA on merit in all the seven years under consideration. It is pertinent to note here that although this aspect of the matter relating to the assessee s claim for deduction under section 80IA is decided by the Ld. CIT(A) vide his impugned orders in favour of the assessee in all the seven years under consideration, the department has not disputed the same for A.Ys. 2006-07, 2007-08 and 2008-09 and it is disputed only in A.Ys. 2009-10 to 2012-13. We, therefore, dismiss the grounds raised by the Revenue on this issue in its appeals for the said four years.- Decided in favour of assessee. Rejection of claim for exemption on account of agricultural income - CIT(A) deleted the addition - Held that - On the basis of these findings recorded by him in the light of documentary evidence available on record, the Ld. CIT(A) held that the pattadar passbook relied upon by the A.O. to deny the claim of the assessee of ownership of agricultural land was irrelevant as the purpose of the same was only to facilitate taking a loan from bank and it was never a document to establish the ownership of agricultural land. He also noted that it was common practice adopted in giving agricultural lands on oral agreements and the claim of the assessee of having given its agricultural land to farmers which was duly supported by the declarations filed by the concerned farmers could not be denied merely for want of written agreement as done by the A.O. No justifiable reason to interfere with the impugned order of the Ld. CIT(A) accepting the claim of the assessee for exemption on account of agricultural income in all the four relevant years.- Decided in favour of assessee. Addition on inflation of subcontract expenses - CIT(A) deleted the addition - Held that - held by the Ld. CIT(A), the assessee had discharged his onus to support and substantiate its claim of sub-contract expenses by establishing on evidence that the relevant work assigned to the said sub-contractors was actually executed, payments were made for the subcontract to the concerned two sub-contractors by cheque and tax was also duly deducted while making such payments. Moreover, there was no evidence brought on record by the A.O. to show that the amount of subcontract expenses allegedly inflated by the assessee had come back to it from the sub-contractors. Furthermore, as rightly pointed out by the Ld. Counsel for the assessee at the time of hearing before us, both the concerned subcontractors are not related to the assessee and once it is established that the concerned sub-contract work was actually done or executed and this fact was accepted even by the A.O. by allowing partly the sub-contract expenses, no disallowance on account of sub-contract expenses can be made on the ground that the expenses so incurred by the assessee are excessive or unreasonable. As such, considering all the facts and circumstances of the case, we find ourselves in agreement with the Ld. CIT(A) that the disallowance made by the A.O. on account of alleged inflated sub-contract expenses by the assessee in the relevant two years i.e., A.Ys. 2011-12 and 2012-13 was not sustainable either in law or on the facts of the case - Decided in favour of assessee.
Issues Involved:
1. Entitlement to claim deduction under section 80IA in returns filed in response to notices issued under section 153A. 2. Ownership of infrastructure facility for claiming deduction under section 80IA. 3. Exemption on account of agricultural income. 4. Alleged inflation of subcontract expenses. Detailed Analysis: 1. Entitlement to Claim Deduction under Section 80IA in Returns Filed in Response to Notices Issued under Section 153A: The primary issue is whether the assessee can claim deduction under section 80IA in the returns filed in response to notices under section 153A. The assessee argued that the returns filed under section 153A should be treated as fresh returns, allowing all claims, including those not made in the original returns. The assessee cited various case laws, including the ITAT Mumbai decision in Eversmile Constructions Pvt Ltd., supporting the claim that deductions under section 153A cannot be rejected solely because they were not claimed in the original assessment. The Tribunal noted that the decision of the Hon'ble Rajasthan High Court in Jai Steel (India) vs. ACIT, which the AO relied on, was not applicable as the facts differed. The Tribunal observed that section 153A requires the AO to assess the total income afresh, allowing the assessee to make new claims. The Tribunal followed the decisions in Eversmile Constructions and VN Devodoss, holding that the assessee is entitled to claim deduction under section 80IA in the returns filed in response to section 153A notices for A.Ys. 2006-07 to 2011-12. 2. Ownership of Infrastructure Facility for Claiming Deduction under Section 80IA: The AO disallowed the deduction under section 80IA, arguing that the infrastructure facility was not owned by the assessee, a requirement under sub-clause (a) of clause (1) sub-section (4) of section 80IA. The CIT(A) disagreed, stating that the ownership of the infrastructure facility is not a condition; rather, the ownership of the enterprise is required. The Tribunal upheld the CIT(A)'s view, citing the decision of the Hon'ble Bombay High Court in CIT vs. ABG Heavy Industries Ltd., which clarified that the enterprise carrying on the development of infrastructure should be owned by a company, not the infrastructure facility itself. 3. Exemption on Account of Agricultural Income: The AO denied the assessee's claim of agricultural income exemption, citing the absence of lease agreements and Pattadar Pass books. The CIT(A) found merit in the assessee's submissions, noting that the ownership of land was evidenced by sale deeds and declarations from farmers. The CIT(A) held that the Pattadar Pass book was irrelevant for proving ownership and that oral agreements for leasing land were common. The Tribunal upheld the CIT(A)'s decision, finding no reason to interfere with the acceptance of the agricultural income claim. 4. Alleged Inflation of Subcontract Expenses: The AO disallowed a portion of the subcontract expenses, suspecting inflation. The CIT(A) found that the work assigned to subcontractors was completed and payments were made by cheque with TDS deducted. The CIT(A) noted that the AO's method of estimating inflated expenses based on subcontractor liabilities or NHAI Data Book rates was flawed. The Tribunal agreed, stating that the AO's presumption of inflated expenses was not justified and that the assessee had substantiated its claim with evidence. The Tribunal upheld the CIT(A)'s deletion of the disallowance. Conclusion: The Tribunal allowed the assessee's appeals for A.Ys. 2006-07 to 2008-09, holding that the assessee is entitled to claim deduction under section 80IA in returns filed in response to section 153A notices. The Tribunal dismissed the Revenue's appeals for A.Ys. 2009-10 to 2012-13, upholding the CIT(A)'s decisions on the ownership of infrastructure facilities, exemption of agricultural income, and the deletion of disallowances for alleged inflated subcontract expenses.
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