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TMI Blog2013 (8) TMI 832X X X X Extracts X X X X X X X X Extracts X X X X ..... e case observed that the assessee is a developer of infrastructure projects and is entitled for deduction under S.80IA(4) of the Act. While giving such findings, the Tribunal considered 28 infrastructure projects carried out by the assessee for the assessment year 2005-06, and held 21 of them as projects eligible for deduction under S.80IA(4). Further, learned counsel submitted that the Tribunal has given a clear factual finding that the deduction under S.80IA(4) would be allowable proportionately based on the total turnover of the projects. Thus, for assessment year 2005-06, since as against 28 projects, 21 only are eligible for deduction under S.80 IA(4), and deduction is not allowable on seven projects, it was held that allowable deduction should be computed in proportionate manner. For the assessment year 2006-07, the Tribunal noted that there are 18 projects, out of which seven are eligible for deduction, and similarly, for assessment year 2007-08, the Tribunal held that five out of twenty projects executed by the assessee are eligible for deduction under S.80IA(4). 3. The learned Authorised Representative submitted that in spite of the clear-cut direction of the Tribunal in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opment work i.e., carries out the civil construction work, he will be eligible for tax benefit under section 80 IA of the Act. In contrast to this, a assessee, who enters into a contract with another person including Government or an undertaking or enterprise referred to in Section 80 IA of the Act, for executing works contract, will not be eligible for the tax benefit under section 80 IA of the Act. We find that the word "owned" in sub- clause (a) of clause (1) of sub section (4) of Section 80IA of the Act refer to the enterprise. By reading of the section, it is clears that the enterprises carrying on development of infrastructure development should be owned by the company and not that the infrastructure facility should be owned by a company. The provisions are made applicable to the person to whom such enterprise belongs to is explained in sub-clause (a). Therefore, the word "ownership" is attributable only to the enterprise carrying on the business which would mean that only companies are eligible for deduction under section 80IA (4) and not any other person like individual, HUF, Firm etc. 32. We also find that according to sub-clause (a), clause (i) of sub section (4) of Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cular item as agreed to in the agreement or not. The agreement is not for a specific work, it is for development of facility as a whole. The assessee is not entrusted with any specific work to be done by the assessee. The material required is to be brought in by the assessee by sticking to the quality and quantity irrespective of the cost of such material. The Government does not provide any material to the assessee. It provides the works in packages and not as a works contract. The assessee utilizes its funds, its expertise, its employees and takes the responsibility of developing the infrastructure facility. The losses suffered either by the Govt. or the people in the process of such development would be that of the assessee. The assessee hands over the developed infrastructure facility to the Government on completion of the development. Thereafter, the assessee has to undertake maintenance of the said infrastructure for a period of 12 to 24 months. During this period, if any damages are occurred it shall be the responsibility of the assessee. Further, during this period, the entire infrastructure shall have to be maintained by the assessee alone without hindrance to the regular ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facility keeping in mind the present business models and intend to grant the incentives to such entities. The CBDT, on several occasions, clarified that pure developer should also be eligible to claim deduction under section 80IA of the Act, which ultimately culminated into Amendment under section 80IA of the Act, in the Finance Act 2001, to give effect to the aforesaid circulars issued by the CBDT. We also find that, to avoid misuse of the aforesaid amendment, an Explanation was inserted in Section 80IA of the Act, in the Finance Act-2007 and 2009, to clarify that mere works contract would not be eligible for deductions under section 80IA of the Act. But, certainly, the Explanation cannot be read to do away with the eligibility of the developer; otherwise, the parliament would have simply reversed the Amendment made in the Finance Act, 2001. Thus, the aforesaid Explanation was inserted, certainly, to deny the tax holiday to the entities who does only mere works contact or sub-contract as distinct from the developer. This is clear from the express intension of the parliament while introducing the Explanation. The explanatory memorandum to Finance Act 2007 states that the purpose o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iew by inter-alia holding as follows: "7. Moreover, the reasons for introducing the Explanation were clarified as providing a tax benefit because modernisation requires a massive expansion and qualitative improvement in infrastructures like expressways, highways, airports, ports and rapid urban rail transport systems. For that purpose, private sector participation by way of investment in development of the infrastructure sector and not for the persons who merely execute the civil construction work or any other work contract has been encouraged by giving tax benefits. Thus the provisions of section 80IA shall not apply to a person who executes a works contract entered into with the undertaking or enterprise referred to in the section but where a person makes the investment and himself executes the development work, he carries out the civil construction work, he will be eligible for the tax benefit under section 80IA." 36. The above order was followed in subsequent assessment years 2007-2008 & 2008-09 in ITA Nos. 1312 & 1313/Mds/2011 vide order dated 18.11.2011 in the case of the same assessee. Further, in similar circumstances, this Tribunal in the case of M/s. GVPR Engineers Lt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . At the outset, it may be appropriate to point out the well settled legal position that what is binding on the courts is the ratio of a decision. There is a clear distinction between on the courts is the ratio of the decision, obiter dicta and observations from the point of view of precedent value or their binding effect. It will be necessary in this case to explain this distinction. But before we do so, we may discuss the principle of binding precedent. This will take us to the question whose decision binds whom. 10. For deciding whose decision is binding on whom, it is necessary to know the hierarchy of the courts. In India, the Supreme Court is the highest court of the country. That being so, so far as the decisions of the Supreme Court are concerned, it has been stated in article 141 of the Constitution itself that : "The law declared by the Supreme Court shall be binding on all courts within the territory of India." 11. In that view of the matter, all courts in India are bound to follow the decisions of the Supreme Court. 12. Though there is no provision like Article 141 which specifically lays downs the binding nature of the decisions of the High Courts, it is a well ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss than legal propriety forms the basis of judicial procedure. If one thing is more necessary in law than any other thing, it is the quality of certainty. That quality would totally disappear if judges of co-ordinate jurisdiction in a High Court start overruling one another's decisions. If one Division Bench of a High Court is unable to distinguish a previous decision of another Division Bench, and holding the view that the earlier decision is wrong, itself gives effect to that view, the result would be utter confusion. The position would be equally bad where a judge sitting singly in the High Court is of opinion that the previous decision of another single judge on a question of law is wrong and gives effect to that view instead of referring the matter to a larger Bench." 16. The above decision was followed by the Supreme Court in Baradakanta Mishra v. Bhimsen Dixit (AIR 1972 SC 2466), wherein the legal position was reiterated in the following words (at page 2469): "It would be anomalous to suggest that a Tribunal over which the High Court has superintendence can ignore the law declared by that court and start proceedings in direct violation of it. If a Tribunal can do so, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an obiter dictum. So also, opinions on questions which are not necessary for determining or resolving the actual controversy arising in the case partake of the character of obiter. Obiter observations, as said by Bhagwati J. (as his Lordship then was) in Addl. District Magistrate, Jabalpur v. Shivakant Shukla(AIR 1976 SC 1207), would undoubtedly be entitled to great weight, but "an obiter cannot take the place of the ratio. Judges are not oracles." Such observations do not have any binding effect and they cannot be regarded as conclusive. As observed by the Privy Council in Baker v. The Queen [1975] 3 All ER 55 (at page 64), the court's authoritative opinion must be distinguished from propositions assumed by the court to be correct for the purpose of disposing of the particular case. This position has been made further clear by the Supreme Court in a recent decision in CIT v. Sun Engineering Works P. Ltd. [1992] 198 ITR 297, at page 320, where it was observed : "It is neither desirable nor permissible to pick out a word or a sentence from the judgment of this court, divorced from the context of the question under consideration and treat it to be the complete 'law' dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t with the same, the proper procedure is to refer the binding decision and direct the papers to be placed before the Chief Justice to enable him to constitute a larger Bench to examine the question (see Food Corporation of India v. Yadav Engineer and Contractor(AIR 1982 SC 1302). (ii) A Division Bench of a High Court should follow the decision of another Division Bench of equal strength or a Full Bench of the same High Court. If one Division Bench differs from another Division Bench of the same High Court, it should refer the case to a larger Bench. (iii) Where there are conflicting decisions of courts of co-ordinate jurisdiction, the later decision is to be preferred it reached after full consideration of the earlier decisions. (d) The decision of one High Court is neither binding precedent for another High Court nor for courts or Tribunals outside its own territorial jurisdiction. It is well settled that the decision of a High Court will have the force of binding precedent only in the State or territories on which the court has jurisdiction. In other States or outside the territorial jurisdiction of that High Court it may, at best, have only persuasive effect. By no amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or to sit in judgment over the order of the Tribunal by interpreting the same in the manner he wanted. 23. In the case of Winter Misra Diamond Tools Ltd. V/s. Collector of Central Excise (1996) 83 ELT 670 Tri Del, considering the role of a subordinate authority while implementing the orders of the superior appellate/judicial authorities, following the decision of the Apex Court in the case of Union of India V/s. Kamalakshi Finance Corporation Ltd. (1991) 55 ELT 433(SC), it was held as follows- "45. At the same time, the appellants are correct in pointing out that once the Assistant Collector has passed an order and it is confirmed by the Collector (Appeals) and no appeal is filed against the order of the Collector (Appeals), the order attains finality. Therefore, the Department was bound to follow the Assistant Collector's order of 17/4/1989 as confirmed by the Collector (Appeals)' order dated 28-8-1991 and finalise all the pending matters in the light of these orders. These will include cases in which the assessment was made provisional as well as those in which cases demand/show cause notices had been issued but not disposed of till then as all the subordinate authorit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce on the decision of the jurisdictional High Court in the case of State of Andhra Pradesh V/s. CTO and Another (169 ITR 564), wherein it has been held as follows- "The Tribunal's functioning within the jurisdiction of a particular High Court in respect of whom the High Court has the power of superintendence under article 227 are bound to follow the decisions of the High Court unless, on an appeal to the Supreme Court, the operation of the judgment is suspended. It is not permissible for the authorities and the Tribunals to ignore the decisions of the High Court or to refuse to follow the decisions of the High Court on the pretext that an appeal has been filed in the Supreme Court which is pending or that steps are being taken to file an appeal. If any authority or the Tribunal refuses to follow any decision of the High Court on the above grounds, it would be clearly guilty of committing contempt of the High Court and is liable to be proceeded against." At this juncture, it is pertinent to mention the observations of the High Court, by placing reliance on the judgment of the Bombay High Court in the case of Subramanian ITO V/s Siemens India Ltd. (156 ITR 11), which are as fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... passed by the Assessing Officer constitute independent proceedings, and not part of the proceedings which led to the passing of the order of the Tribunal dated 16.3.2012 on the second appeals of the assessee, and they, if the assessee is aggrieved, may give rise to first appellate proceedings there against or further appellate proceedings by the assessee. However, the grievance of the assessee on account of alleged mistakes in such consequential orders, either on account of interpretational differences or even on account of disrespect/disregard to the directions of the Tribunal, shall not vest any power or jurisdiction back with the Tribunal, to oversee the correctness of the correctness of the consequential orders passed, much less, to give directions to revise or rectify the same, even if there is any mistake in the same. If the consequential orders passed by the Assessing Officer are de hors the directions of the Tribunal, or if there is any grievance to the assessee on account of such consequential orders, as already noted above, the remedy for the assessee lies elsewhere, viz. in the fresh proceedings commencing with such consequential orders and not in the proceedings that cu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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