2019 (2) TMI 1201 - AT - Income Tax

Assessment u/s 153A - Fresh claim in the return of income filed in response to notice issued u/s 153A - Held that - We hold that the assessee can make a fresh claim in the return of income filed in response to notice issued u/s 153A. Accordingly, ground raised by the revenue in this regard is dismissed. Eligible to claim deduction u/s 80IA - Contracts awarded to JVs - Held that - Assessee can claim the same as a constituent of the above JVs, the coordinate bench of ITAT, Visakhapatnam in the case of Transstory (India) Ltd. (2011 (7) TMI 810 - ITAT VISAKHAPATNAM ) held that the constituents of JVs are eligible to claim deduction u/s 80IA. - Decided in favour of assessee

Issues Involved:
1. Claim of deduction under section 80IA(4) for the first time in return filed in response to notice under section 153A.
2. Eligibility of deduction under section 80IA(4) for contracts received from Joint Ventures (JVs) and consortia.

Issue-wise Detailed Analysis:

1. Claim of Deduction under Section 80IA(4) in Return Filed in Response to Notice under Section 153A:

The assessee filed its return of income on 12/10/2010, declaring a total income of ?4,00,05,00,410/-. The assessment order passed under section 143(3) on 22/02/2012 determined the total income at ?4,00,40,19,698/-. Subsequently, in response to a notice under section 153A, a revised return was filed on 10/12/2013, declaring net income of ?2,21,04,67,400/- after claiming a deduction under section 80IA(4) amounting to ?1,88,00,33,014/-. The AO disallowed this fresh claim, referencing the Supreme Court decision in Sun Engineering Pvt Ltd and the Rajasthan High Court decision in Jai Steel (India) Ltd, which held that new claims cannot be made in reassessment proceedings.

The CIT(A) allowed the claim, stating that the assessee is eligible for deduction under section 80IA(4) on the profits related to JVs/consortia as a constituent, referencing the decision of the ITAT, Visakhapatnam in the case of Transtroy (India) Ltd. The CIT(A) directed the AO to allow the total claimed deduction of ?188,00,33,012/-.

Upon appeal, the Tribunal relied on the decision of the coordinate bench in the case of M/s KNR Constructions Ltd., which distinguished the facts from those in the cases of Sun Engineering and Jai Steel. The Tribunal held that the assessee can make a fresh claim in the return of income filed in response to a notice under section 153A, as the assessment under section 153A is meant to determine the total income afresh. Therefore, the Tribunal dismissed the revenue's ground on this issue.

2. Eligibility of Deduction under Section 80IA(4) for Contracts Received from JVs and Consortia:

The AO disallowed the deduction on profits related to JVs/consortia, asserting that the contracts were awarded to the JVs/consortia and not directly to the assessee. The CIT(A) disagreed, stating that the assessee, as a constituent of the JVs, is eligible for the deduction, referencing the ITAT decision in Transtroy (India) Ltd.

The Tribunal upheld the CIT(A)'s decision, referencing the ITAT Visakhapatnam's findings in Transtroy (India) Ltd., which clarified that the constituents of JVs are eligible to claim the deduction under section 80IA(4). The Tribunal noted that the JVs/consortia were formed to obtain contracts, but the actual work was executed by the constituents, and the JVs did not claim any deductions or offer any income from the work executed by the constituents. Thus, the Tribunal dismissed the revenue's ground on this issue as well.

Conclusion:

The Tribunal dismissed all the appeals filed by the revenue, affirming that:
1. The assessee can claim a deduction under section 80IA(4) for the first time in a return filed in response to a notice under section 153A.
2. The assessee, as a constituent of JVs/consortia, is eligible for the deduction under section 80IA(4) for the profits derived from the contracts executed.

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