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TMI Blog2018 (2) TMI 1583X X X X Extracts X X X X X X X X Extracts X X X X ..... eneration, which are in the nature of infrastructure facilities as defined u/s 80IA(4). The scope and nature of work and terms of contract clearly establishes an undisputed fact that the assessee is a developer of infrastructure facility which would entails the assessee deduction u/s 80IA(4) of the Act. AO has erred in denying deduction claimed u/s 80IA(4). CIT(A), though in principle accepted the fact that the nature of works undertaken by the assessee in respect of three new projects are similar to the nature of works undertaken by the assessee in respect of projects already considered by the ITAT, denied the deduction claimed u/s 80IA by holding that the assessee is merely a works contractor executing works for development of infrastructure facility. Hence, we reverse the findings of the CIT(A) in respect of three new projects - Decided in favour of assessee. Disallowance of expenditure in relation to exempt income u/s 14A - Held that:- We find merits in the arguments of the assessee for the reason that the assessee has demonstrated with evidences that its investment in shares of subsidiaries and capital account of joint ventures are strategic investments for the purpose of cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e as and when the work is completed and running bill is submitted to the assessee on which again TDS has been deducted at the time of payment. The advance received from the clients has been adjusted against running bill either in the year of receipt of advance or in the subsequent year which leads to difference in income recognized in the books of accounts and information appeared in AIR database. The assessee claims that it has reconciled every entry appeared in the AIR information with its books of accounts. Therefore, we are of the considered view that the issue needs to be examined by the AO in the light of our observations and also reconciliation filed by the assessee Short TDS credit - Held that:- credit for TDS needs to be given if resultant income from such TDS has been considered in the books of accounts. But facts are not clear whether the assessee has filed reconciliation before the AO to explain TDS credit appeared in Form 26-AS with corresponding receipts in its books of accounts. Therefore, we are of the considered view that the issue needs to be re-examined by the AO in the light of claim of the assessee. If the assessee is able to reconcile TDS credit as per Form 26 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the facts and circumstances of the case and in law, the learned CIT(A) erred in directing the AO to grant short credit of TDS. after verification. 6. On the facts and circumstances of the case and in law, the learned CIT(A) erred in holding that the levy of interest under section 234B is consequential, thereby confirming its levy." The Revenue has raised following grounds of appeal: - "1. On the facts and in the circumstances of the case and in law, whether the CIT(A) was justified in holding the assessee as a developer and not a contractor in four projects out of the seven projects and allowing the deduction u/s 80IA(4) of the IT Act, 1961 and thus failed to appreciate section 80I4(4) as amended by the Finance Act, 2007, retrospectively from AY 2000-01 by inserting Explanation to section 80IA, which states that nothing contained in this section shall apply to a person who executes a work contract entered into with the undertaking or enterprise" 2. On the facts and in the circumstances of the case and in law, whether the CIT(A) was justified in allowing relief, amounting to ₹ 3,73,00,835/- out of total amount of ₹ 22,97,86,725/- added by the AO, to the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... porting evidences including copies of agreement entered into with authorities for development of infrastructure facility which has been reproduced by the learned CIT(A) at Paragraph 6, page no. 4 to 54 of his order. The assessee also relied upon the decision of ITAT, Mumbai Bench in assessee's own case for the AY 2005-06 in ITA No. 6605/Mum/2013 dated 18-11-2015 and also the decision of Hon'ble Bombay High Court in the case of CIT Vs ABG Heavy Industries Ltd. (2010) 322 ITR 323. The sum and substance of arguments of the assessee before the CIT(A) is that the assessee is developing infrastructure projects for various government authorities for development of dams and hydro-electric power projects which are in the nature of infrastructure facilities as defined u/s 80IA and qualifies for deduction u/s 80IA(4) of the Act. The assessee has filed details of each and every project developed by the assessee and also explained the nature of infrastructure facility developed, scope of work, risk assumed, responsibilities undertaken, indemnities given, financial and technical resources committed, performance guarantees given, interim payments receipt, liability towards liquidity damages and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of work done and payments are made by the Government. At times, the assessee has executed only a part of the project so, it just cannot claim that it developed the full project so is to entitled for benefit u/s 80IA(4) of the Act. The CIT(A) after analyzing the scope of work and terms and conditions of contract between the assessee and the principles opined that the assessee is neither developed any infrastructure facility nor maintain any such facility. It is simply a works contract for development of the infrastructure facility and hence, not eligible for deduction under section 80IA(4) of the Act. The CIT(A), however, further observed that the ITAT Mumbai bench in assessee's own case vide its order dated 18-11-2015 in ITA No. 6605/Mum/2013 has allowed the claim of the assessee u/s 80IA of the Act, in respect of the first four projects. Therefore, by following the ITAT order allowed relief in respect of four projects, viz,. Ghatghar dam, Kameng hydro-electric project package 1, Kameng Hydro-electric project package 2 and Kameng hydro-electric project package 3. since, all projects are on-going projects and covered by the decision of ITAT. In so far as, three new projects, i.e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ub-section (1) or sub-section (2), the deduction in computing the total income of an undertaking providing telecommunication services, specified in clause (ii) of sub-section (4), shall be hundred per cent of the profits and gains of the eligible business for the first five assessment years commencing at any time during the periods as specified in sub-section (2) and thereafter, thirty per cent of such profits and gains for further five assessment years. (3) This section applies to an undertaking referred to in clause (ii) or clause (iv) of sub-section (4) which fulfils all the following conditions, namely :- (i) it is not formed by splitting up, or the reconstruction, of a business already in existence : Provided that this condition shall not apply in respect of an undertaking which is formed as a result of the re-establishment, reconstruction or revival by the assessee of the business of any such undertaking as is referred to in section 33B, in the circumstances and within the period specified in that section; (ii) it is not formed by the transfer to a new business of machinery or plant previously used for any purpose: Provided that nothing contained in this sub-se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the infrastructure facility on or after the 1st day of April, 1995: Provided that where an infrastructure facility is transferred on or after the 1st day of April, 1999 by an enterprise which developed such infrastructure facility (hereafter referred to in this section as the transferor enterprise) to another enterprise (hereafter in this section referred to as the transferee enterprise) for the purpose of operating and maintaining the infrastructure facility on its behalf in accordance with the agreement with the Central Government, State Government, local authority or statutory body, the provisions of this section shall apply to the transferee enterprise as if it were the enterprise to which this clause applies and the deduction from profits and gains would be available to such transferee enterprise for the unexpired period during which the transferor enterprise would have been entitled to the deduction, if the transfer had not taken place. Explanation.-For the purposes of this clause, "infrastructure facility" means- (a) a road including toll road, a bridge or a rail system; (b) a highway project including housing or other activities being an integral part of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terprise develops and begins to operate any infrastructure facility. The word 'and' has been used between develops and begins to operate. The use of the word 'and' clearly brings out that both the conditions need to be simultaneously satisfied by the eligible business. Therefore, the eligibility of deduction cannot be prior to the development and operation of the infrastructure facility. Thus sub section (I) read with Sub section (4) and sub section (2) requires that enterprise of the assessee should be carrying on business of developing any infrastructure facility or business of operating and maintaining any infrastructure facility or business of developing, operating and maintaining any infrastructure facility. Therefore, for claiming deduction under this section, the infrastructure facility should not only be developed but also operated by the assessee, so as to make the profits derived from the infrastructure facility qualified for section 80IA. In other words, unless the assessee really develops and begins to operate infrastructure facility, there is no question of granting any deduction for the reason that the period of deduction cannot commence unless the ent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... way of investment in development of the infrastructure section and not for the persons who merely execute the civil construction work or any other works contract. Accordingly, it is proposed to clarify that the provisions of section 8011% shall not apply to a person who executes a works contract entered into with the undertaking or enterprise referred to in the said section. Thus, in a case where a person makes the investment and himself execute the development work i.e. carries out the civil construction work, he will be eligible for tax benefit u/s. 8014. In contrast to this, a person who enters into a contract with another person (i.e. Undertaking or enterprise referred to in Sec. 80IA) for executing works contract, will not be eligible for the tax benefit u/s. 80IA. The amendment will taken retrospective effect from I" April, 2000 and will accordingly, apply in relation to the A. V. 2000-01 and subsequent years. From the above, it is clear that where an enterprise itself makes an investment to execute the civil construction work it will be eligible for tax benefit u/s. 801A. However, if an enterprise enters into a contract with another person including the gout, or an undertak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e presents running bills to the government/ undertaking, which are paid to it. The moment running bills are not paid, the assessee stops the work. It means that the assessee puts in only that much of work for which payments or advance payments are made to it by the government. Therefore, clearly there is no financial risk at the end of the assessee. He is already paid for whatever he has done and ultimately the project succeeds or not, does not affect the assessee. No doubt in civil construction projects, a portion is retained by the government as 'retention money but the same is meant for ensuring quality checks as also complying to various conditions laid down. The retention money in any case is a very small amount of the overall project cost and may not be more than 2% to 5% of the project cost and is invariably released within six months of completion of the project. So its not a big deal and by keeping retention money doesn't mean that the assessee is taking any risk. The assessee has also argued that he has to carry out surveys and also create some infrastructure on the site including the access roads etc. to execute the project. However, these things are minor issues ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on'ble ITAT in assessee's own case is binding upon me and as the initial 4 projects viz. Ghatghar Dam, Kameng Hydro Electric Project Package 1, Kameng Hydro Electric Project Package 2, Kameng Hydro Electric Project Package- 2 are only ongoing projects, therefore, respectfully following the decision of the Hon'ble ITAT, Mumbai in the assessee's own case, the deduction u/s 80-IA claimed by the assessee in respect of these four projects, is directed to be allowed. 16.1 However, the remaining 3 projects viz. Turial Lot II, Turial Lot III and LNP, are the new projects and deduction u/s. 80IA (4) has been claimed on them for the first time, therefore the claim of the assessee in respect of these projects need to be examined on the basis of principles laid down by the law, as discussed by me in the paragraphs S to 13 of this order. I would like to add over here that there is no order of any higher judicial forum, in respect of the above mentioned 3 projects regarding claim of deduction u/s. SOIA, therefore this issue need to be discussed completely on merits. It is gathered that for Turial Lot If and Turial Lot III projects, the assessee has entered into an agreement wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... '…. The scope of the Contract, Consideration, Terms of Payment, Loans and Advances, Price variation, security deposit taxes wherever applicable, Insurance, agreed Time Schedule, Liquidated Damages and all other terms and conditions contained in NTPC's letter of acceptance No. 01/C&5506-9082-LOA-4 709 dated 0610712006 read In conjunction with aforesaid Contract Documents - The contract shall be duly performed by the contractor strictly and faithfully in accordance with the terms of this contract. The Scope of work shall also include all such items which are not specially mentioned in the contract documents but which are reasonably implied for the satisfactory completion of the entire scope of work envisaged under this contract unless otherwise specifically excluded from the scope in the letter of acceptance." 16.2 From the above clauses it is quite clear that the assessee is acting only as a contractor while NTPC remains the owner of the project and is executing contract as per terms of agreement /contract. 16.3 Similarly as per agreement dated 20/03/2003 between the assessee and North Eastern Electric Power Corporation Limited the assessee is acting only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ms as may become payable, such payment to be made at such time and in such manner as is provided by the contract. 16.4 Subsequently a works order has been given to the assessee in respect of Tuirial Hydro Electric Power Station Project, Mizoram (herein after called 'the work') mentioned stating as under:- Dear Sir, It is evident from the recorded notes of minutes of meeting held on 2410112003 in New-Delhi wherein the time of completion has been reduced to 43 months against the work of construction of power house, switch yard and Power Water Way (Lot-III) the technical aspects of the Work were discussed on 24/01/2003 after the issue of the letter of Intent on 30/12/02 in presence of your representative and accordingly the same was reflected therein. The work order as issued will automatically supersede the to! in this respect. Please confirm the unconditional acceptance of the work order immediately for drawl of formal agreement. 16.5 Therefore as per the terms of agreement, the assessee is executing only a works contract, in respect of the above projects. From the facts of the case, it cannot be said that the assessee is either developing the infrastructure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... luding construction of spillway and other works for Ghatghar Dam storage scheme. As regards Kameng I, II, III developed for North Eastern Electric Power Corporation Limited (in short 'NEEPCO') for the project hydel power generation plant which includes construction of Thenga dam river diversion, and other works. All these works are on-going projects coming from earlier years and has been considered by the ITAT in its order for the AY 2005-06 where it has categorically held that the assessee is a developer and eligible for deduction u/s 80IA(4) of the Act. In so far as, three new projects developed for NEEPCO, i.e. Tuirial lot II and III and Lohari Nagpala projects are also infrastructure facility developed for Tuirial hydro-electric power project for which the scope of work and other terms and condition are similar to works which are already executed by the assessee and considered by the assessee for the purpose of section 80IA of the Act. 6. The learned AR for the assessee refereeing to the paper books filed submitted that the scope of work and terms & conditions of contract is identical to each other as per which the assessee needs to develop civil and hydro mechanical works for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tailed drawings thereof. Likewise, the assessee has submitted scope of work and terms and conditions of contract with the principles in respect of all seven projects and argued that the nature of work and the terms and conditions in each of the work are exactly in the nature of development of infrastructure facility. Therefore, after considering the scope of work and terms and conditions, the ITAT has held that the assessee is a developer of infrastructure facility eligible for deduction u/s 80IA(4) of the Act. 7. The learned AR for the assessee referring to the provision of section 80IA(4) of the Act, submitted that as per the provision of section 80IA(4) of the Act it applies to any enterprise carrying on the business of developing or operating and maintaining or developing, operating and maintaining any infrastructure facility which fulfils the conditions specified therein, which means any enterprise which develops any infrastructure facility and handover to the principal for operating and maintaining will also qualify for deduction u/s 80IA of the Act. The section nowhere specifies that the person who develops infrastructure facility also needs to operate and maintain the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he DR further submitted that if you go through the terms and conditions of agreement with the principles, the agreements entered into by the assessee clearly specify the principles as owner of the project and the assessee as contractor. The DR further submitted that the assessee has bid for particular projects on the basis of terms and conditions given by the principles to carry out a particular works contract as per the specifications provided and other terms and conditions associated with the project. The assessees, from time to time submit running bills for portion of works done and the payments were made by the Government. The assessee has executed only a part of big project and not total project. The moment construction work is over, the assessee hand over the same to the principal party. Though the assessee claims that its works on turn-key basis and is responsible for planning and designing, scheduling and resourcing for the contract, deciding on machinery, equipments, personnel and services to be installed in the infrastructure facility, to conduct zoological and geotechnical investigation and other services, the facts remains that the above activities are only a part of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the principles have developing the infrastructure facility and the assessee only a contractor executing certain works but not developing total infrastructure facility. The assessee neither owned the facility nor taken the risk and responsibility in the project is so as to claim that it has developed the project. The assessee has also been unable to establish as to how it made investment in the various projects executed apart from not been able to prove that it had not executed a work contract as is evident above. The AO referring to the explanation inserted by the Finance Act 2009, observed that the provisions of section 80IA is not applicable and assessee would not be eligible for deduction, if the business referred to in sub section 4 which is in the nature of works contract awarded by any person including the central or state government and executed by the undertaking or enterprise referred to in sub section (1). The AO has discussed each and every project undertaken by the assessee in the light of provision of section 80IA of the Act and terms and conditions of agreement between the assessee and the principles to come to the conclusion that the nature of work undertaken b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at all these projects are identical to each other and in all projects the assessee is carrying out similar nature of work with similar terms and conditions. The assessee has filed a chart in a tabular format in respect of all seven projects explaining the nature of works undertaken, scope of work, terms and conditions of contract to argue that all these contracts including those contracts commenced development work during the year under consideration or all related to developing an infrastructure facility within the meaning of section 80IA of the Act and hence, the CIT(A) was erred in rejecting the deduction claimed u/s 80IA(4) of the Act in respect of three new projects. 11. The provisos of section 80IA of the Act, provides for deduction in respect of profits and gains from industrial undertakings or enterprises engaged in infrastructure development, if such undertakings or enterprises satisfied certain conditions specified therein. As per sub section (4), any enterprise carrying business of (i) developing, or (ii) operating and maintaining or (iii) developing, operating and maintaining any infrastructure facility which fulfils certain conditions can claim deduction u/s 80IA of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the development of infrastructure facility, but itself develops infrastructure facility. The assessee shall undertake all the risk of executing works and all obtain materials required for the purpose of the contract and all works executed shall be at his own risk until a completion certificate for works has been issued by the principles. The developer has to ensure all works at sight including third party insurance to persons and damage to property. The assessee shall be liable to indemnify the principle against damage to persons and properties. All these terms and conditions of contract along its scope of work clearly proves an undisputed fact that the nature of works undertaken by the assessee is certainly in the nature of developing infrastructure facility which would qualify for deduction u/s 80IA of the Act. 13. Having said so, let us come to the order of ITAT, Mumbai bench in assessee own case for earlier year. The co-ordinate Bench of ITAT, in assessee own case for the AY 2005-06 in ITA No. 6605/Mum/2013 dated 18-11-2015 has considered the issue of deduction claimed u/s 80IA of the Act, in respect of projects develop by the assessee in the light of provision of section 80 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rted in 94 ITD 411 (paras 46 and 47) and Bharat Udyog Ltd. 24 SOT 412 to hold that the assessee is a developer and not a contractor. 7. We had also gone through the tender document filed by the assessee which is placed on record, after analyzing the major clause of the agreement to determine the scope and nature of work undertaken, we found that assessee was a developer, therefore, eligible for claim of deduction u/s.80IA(4). After considering and deliberating on the meanings of the words "developer" and "contractor", scope of the work, responsibilities and risks undertaken by the assessee in each of the contracts on page 60 to 62 para 6.14 of her order, the CIT(A) recorded a finding to the effect that the assessee is not a contractor but a developer. In coming to the above finding, in para 6.15, the CIT{A} also considered the clarificatory amendment by way of Explanation below sub section (13) of section 80lA by the Finance Acts 2007 and 2009 and held, after considering various judicial pronouncements, that the amendment does not impact development contracts. On pages 63 to 66 paras 6.16 and 6.17, the ClT(A) noted that for the Koyna and Udhampur projects, the assessee has alrea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 33/Pn/2007 has been relied upon; iii) ACIT v. Bharat Udyog Ltd. 24 SOT 412 (Mum) As regards the CIT DR's argument that the decision of the larger Bench in B.T. Patil & Sons Belgaum Construction Pvt. Ltd. 126 TTJ 577 (Mum) is still good law, we rely on the confirmatory order [reported in 34 Taxmann.com 97) (Pune)] passed by the Pune Bench. 10. In view of the above discussion, we uphold the action of CIT(A) for allowing claim of deduction u/s.80IA(4) in respect of all the projects." 14. We further noticed that during the year under consideration, out of the total seven projects on which deduction claimed u/s 80IA of the Act, four projects, i.e. Ghatghar Dam, Kameng I, II and III are on-going projects which have been already considered by the ITAT in the light of provision of section 80IA(4) of the Act and held that the assessee is eligible for deduction u/s 80IA(4) of the Act. In respect of remaining of 3 projects, i.e. Tuirial lot II and III and Lohari Nagpala, we find that the scope of work, risk assumed, responsibilities undertaken, indemnities given, financial and technical resources committed, performance guarantee, interim payments received, liabilities towards l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see has made suo moto disallowance ₹ 1500/- u/s 14A of the Act. Therefore, called upon the assessee to explain the mode of computation of disallowance u/s 14A of the Act, in respect of expenses incurred in relation to exempt income. In response to notice, the assessee submitted that its investment in shares and capital account of partnership firms are strategic investments in group of companies in which the assessee is having deep business interest as infrastructure development project are undertaken through SPVs and hence, no disallowance u/s 14A of the Act is called for. The assessee further submitted that its investment in subsidiaries and JVs (Joint Ventures) is fully covered by its own interest free funds in the form of share capital and reserves and no part of interest bearing fund has been used in investments, therefore no disallowance can be made u/s 14A of the Act. The AO after considering the relevant submissions of the assessee and also following the ITAT's order in assessee's own case for AY 2005-06, observed that no disallowance u/s 14A was called for in respect of investments made in JVs with a view to have controlling stake. However, in respect of investment ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8377; 1,500 u/s 14A of the Act. If the assessee accepts applicability of section 14A, then it has also to follow provision of Rule 8D which provides for mechanism of disallowance, however the same has not been done. With these reservations, upheld disallowance worked out by the AO u/s 14A of the Act. 18. The learned AR for the assessee submitted that the learned CIT(A) was erred in confirming the disallowance worked by the AO u/s 14A of the Act, without appreciating fact that its investment in shares of subsidiaries and capital in JVs are in the nature of strategic investments for the purpose of controlling interest in JVs and subsidiaries, but not investments in shares for the purpose of earning exempt income. The AR further submitted the CIT(A) fails to appreciate the facts that its investment are out of its own funds in the form of share capital and reserves which is more than the investment in subsidiaries and JVs and hence no disallowance can be made u/s 14A, if own funds are more than investments. In so far as administrative expenses, it is submitted that all the JVs are integrated and functions independent of the assessee and hence, no disallowance of administrative expense ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l disallowance is required it should be restricted to the extent of exempt income earned for the year. 21. Having heard both the sides and considered material on record, we find merits in the arguments of the assessee for the reason that the assessee has demonstrated with evidences that its investment in shares of subsidiaries and capital account of joint ventures are strategic investments for the purpose of controlling interest as its infrastructure projects are developed under JVs and in the name of subsidiaries. We further noticed that the assessee's own fund in the form of share capital and reserves is more than its investment in shares and capital account of subsidiaries and JVs. Once, its own funds are more than its investment, then it is deemed that its investment are out of its own funds and no interest bearing fund is used for making investment and hence, no disallowance is called for in respect of interest expenses. This legal proportion is supported by the decision of Hon'ble Bombay high court in the case of CIT vs Reliance utilities and power ltd. (supra) and CIT vs HDFC Bank ltd. 366 ITR 515 wherein it is held that if the assessee is having both interest free as well ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rther condition that such credit can be given only in the year in which such income is assessable as provide u/s 199(2) of the Act. It is the contention of the assessee that if tax has been deducted at source, the credit for such TDS is allowed in the year of deduction. The assessee further contended that a similar issue has been considered by the ITAT, Mumbai Bench in assessee own case for the AY 2005-06 in ITA No. 6605/Mum/2013, wherein under similar circumstances it was held that the credit for TDS needs to be allowed in the year of deduction itself. 24. Having heard both the sides and considered material on record, we find that the coordinate Bench of ITAT, Mumbai in assessee own case for the AY 2005-06 in ITA No. 6605/Mum/2013 has considered a similar issue of credit for TDS and after considering relevant facts has held that credit for TDS shall be given in the year of deduction or in the year in which such income is assessable to tax. The co-ordinate Bench, after considering another order of ITAT, in the case of CIT vs. Patil & Sons Belgaum Constructions (P.) Vs. ACIT CC (2013) 34 taxmann.com 97 (Pune -Trib), held that credit for TDS shall be given in the year of deduction. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uced by the CIT(A) in his order at paragraph 33 page No 93 to 97. The CIT(A) after considering the relevant submissions of the assessee and also taken into account the remand report of the AO, has analyzed credits appearing in AIR information in respect of each party and out of the total additions of ₹ 22.97 crores an amount of ₹ 3,73,00,835/- has been deleted and the balance amount of ₹ 19,24,85,890/- has been confirmed. The relevant portion of the CIT(A) is extracted below. 25. Ground No 3 of the appeal is with regard to non-grant of TDS deducted from advances received. During the course of assessment proceedings, the AO observed that during the year the assessee has claimed TDS of ₹ 19.63 crores on advances and the same being in nature of advances was disallowed. During the course of appellate proceedings, the IA AR submitted as under: Re: Ground No. 3. TDS Claimed on Advances 1. The Appellant has claimed TDS of ₹ 19,62,82,2631 on advances received by it. The AO held that, in view of the provisions of section 199, the Appellant is not entitled to claim the credit of the said TDS. A.O. failed to consider the decision of Hon'ble TTAT in asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sions of section 194C of the Act, whereas, the assessee is recognizing the Revenue as and when the work is completed and running bill is submitted to the assessee on which again TDS has been deducted at the time of payment. The advance received from the clients has been adjusted against running bill either in the year of receipt of advance or in the subsequent year which leads to difference in income recognized in the books of accounts and information appeared in AIR database. The assessee claims that it has reconciled every entry appeared in the AIR information with its books of accounts. Therefore, we are of the considered view that the issue needs to be examined by the AO in the light of our observations and also reconciliation filed by the assessee. Hence, we set aside the issue to the file of the AO and direct him to consider the issue afresh after a reasonable opportunity of hearing to the assessee. 30. The next issue that came up for our consideration is short TDS credit of ₹ 5,12,80,700/-. During the year, the assessee claimed TDS credit of ₹ 47,77,43,535/- in the return of income, whereas in form no. 26-AS the TDS amount reflected was at ₹ 52,84,41,065/- ..... X X X X Extracts X X X X X X X X Extracts X X X X
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