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TMI Blog2019 (2) TMI 1201X X X X Extracts X X X X X X X X Extracts X X X X ..... orders of CIT(A) 12, Hyderabad for AYs 2010-11 to 2015-16. As identical issues are involved in all these appeals, they were clubbed and heard together and therefore, a common order is passed for the sake of convenience. 2. Brief facts as taken from AY 2010-11 are, the assessee filed its return of income on 12/10/2010 declaring total income of ₹ 4,00,05,00,410/-. AO passed the assessment order u/s 143(3) on 22/02/2012 determining the total income of ₹ 4,00,40,19,698/-. 2.1 While finalizing the assessment, the AO observed that the assessee company filed the return of income in pursuance of notice u/s 153A, admitting net income of ₹ 2,21,04,67,400/- after claiming deduction u/s 80IA(4) of Income-tax Act, 1961 (in short the Act ) to the extent of ₹ 1,88,00,33,014/- on eligible projects, which is shown to have not been claimed in return of income filed originally on 12-10-2010, where in the total income admitted was shown at ₹ 4,00,05,00,413/-. The revised return of income for the year was filed on 10-12-2013, in pursuance of notice u/s 153A dtd. 16-11-2012, served on 26-11-2012, in consequence to the search proceedings in this case on 24-04-2012. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Court in the case of Sun Engineering Pvt Ltd. Accordingly, the AO disallowed the claim of the assessee to the extent of ₹ 188,00,33,012/- which was claimed in the return of income, filed in response to notice u/s.153A, on the premise that the assessment for the year under reference was unabated or achieved finality and amount which was to be added to the total income, was computed at ₹ 400,05,00,413/-, which is equal to the total income as enshrined in original return of income. 3. Aggrieved by the order of AO, the assessee preferred an appeal before the CIT(A). 4. Before the CIT(A), the assessee filed written submissions, which were extracted by the CIT(A) in his order at pages 7 to 12. 5. After considering the submissions of the assessee as well as analysing the order passed by the AO, the CIT(A) directed the AO to allow the claim of the assessee u/s 80IA(4), by observing as under: 6.0 However, while finalizing the assessment, the AO denied the deduction of ₹ 188,00,33,012/- made by assessee in return of income filed in response to the notice u/s.153A, holding that such claim would be made in return filed u/s.153A in completed assessment, based o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n favour of the assessee, holding that assessee company is eligible for deduction u/s.80IA(4), on the profits related to JVs/consortia, as a constituent. The relevant portion of the order runs as under: Thus, based on the ratio of the judicial decisions cited, it is reasonable to hold that the AO is not justified in denying the deduction u/s.80IA(4), on the profits of JVs to the assessee, as a constituent, based on the decision of ITAT, Vishakapatnam, which was not stayed in it's operation and as such binding on the AO. It is not correct on the part of the AO to not to implement the said order, merely on the ground that such decision was not accepted by department. Further, the order of Allahabad High Court upheld the allowance of claim of deduction u/s.80IA(4), on the profits from the Joint Ventures, in the hands of the constituents. 6.2.1 Thus, on similar facts, the AO is directed to allow the total amount of ₹ 188,00,33,012/-, claimed as deduction u/s.80IA(4), for the year including the deduction of ₹ 148,18,62,369/-, claimed on profits of JVs, as claimed in return of income. Accordingly, this ground of appeal also treated as Allowed. 6. Aggriev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... used to advantage by the appellant to make claims which are not made earlier. It is also submitted that neither the AO nor the appellant can seek unfettered jurisdiction in case of search assessments u/s 153A. In the case of Kabul Chawla (380 ITR 573), the Hon'ble Delhi High Court held (at para 37 of the decision) that In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word 'assess' in Section 153 A is relatable to abated proceedings (i.e. those pending on the date of search) and the word 'reassess' to completed assessment proceedings . 4. Reliance is also placed on the decision of Hon'ble Supreme Court in the case of Sun Engineering Works Pvt Lt (198 ITR 297) and in the case of Chettinad Corporation Pvt. Ltd. Vs. CIT reported in (200 ITR 320) on the point that fresh claim of deductions cannot be made in reassessment proceedings. In the present case, the proceedings are in the nature of reassessment proceedings because the original assessments were concluded earlier for most of the years. The return in response to notice u/s 153A is also not filed within the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ameters of the exemption clause or exemption notification. (2) When there is ambiguity in exemption notification which is subject to strict interpretation, the benefit of such ambiguity cannot be claimed by the subject/assessee and it must be interpreted in favour of the revenue. In the light of the above decision, it is humbly submitted that section 80lA has to be interpreted strictly both with regard to its substantive nature as well as procedural nature and the benefit of ambiguity, if any has to be passed on to the Revenue. 7. It is also submitted that in the case of Katira Constructions Ltd, the Hon'ble Gujarat High Court in its decision dated 04/03/2013 in SCA 11781/2009 held that deduction u/s 80lA is not applicable to a business in the nature of works contracts. It is humbly submitted that the contracts executed by the appellant upon assignment from JVs and Consortia are in the nature of works contracts as it does not carry any risk of the developer and the entire risk is carried by the main contractee or JV in most of the cases. The appellant carries only a business risk which is present in case of all enterprises in general and there is no risk of deve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ards the preliminary issue as to 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 as involved in six out of seven years under consideration i.e., A.Ys. 2006-07 to 2011-12, the Ld. Counsel for the assessee has relied on the decision of the Mumbai Bench of this Tribunal in the case of DCIT vs. Eversmile Construction Co. P. Ltd., (supra), 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. The relevant observations recorded by the Tribunal as contained in paragraph Nos. 6 to 9 of its order are extracted below : 6. From the prescription of the above section the following features are noticeable in so far as we are concerned with the instant appeal :- - Assessment pursuant to search is to be made notwithstanding anything contained inter alia in section 147 ; - C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut the deductibility of any item, which was earlier disallowed, counters the very concept of fresh assessment of total income. 8. The reliance of the learned Departmental Representative on the judgment of the Hon'ble Supreme Court in the case of CIT Vs. Sun Engineering Works Pvt. Ltd [ (1992) 198 ITR 297 (SC) ] is misconceived. The reason for the same is that in that case the Hon'ble Supreme Court was considering the provisions of section 147 and it was held that once an assessment is validly reopened it is not open to an assessee to seek a review of concluded items unconnected with the escapement of income. Here it is pertinent to note that the conditions for taking action u/s 147 vis- vis under section 153A are altogether different. Even though assessment u/s 147 is made read with section 143(3), but the initiation of assessment or reassessment u/s 147 originates from the belief of the AO, on the basis of some tangible material, that income chargeable to tax has escaped assessment. After forming such belief, the AO is called upon to record reasons for the reopening of the assessment before issuing mandatory notice u/s 148. If the foundation of reassessment, being the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in response to notice issued under section 153A for the relevant six years i.e., A.Ys. 2006-07 to 2011-12. The Ld. CIT(A) has also relied on the said decision of Hon'ble Rajasthan High Court to uphold the decision of the A.O. on this issue in so far as the A.Ys. 2006-07 to 2008-09 are concerned where the original assessments under section 143(3) had already been completed prior to the date of search. After going through the Judgment of Hon'ble Rajasthan High Court in the case of Jai Steel (India) vs. ACIT (supra), we find that the facts involved therein were materially different from the facts involved in the present case as rightly pointed out by the Ld. Counsel for the assessee. First of all, the claim made by the assessee in the said case in the return filed in response to the notice undersection 153A for the first time was that the Sales Tax incentive received by it was a capital receipt and the same being a subject matter of claim and not a regular allowable deduction as per the provisions of the Act, it was considered that the same required the initiation of claim and conclusion on the basis of facts and other judicial pronouncements. Moreover, no incriminating mate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as there is no occasion in such case for the A.O. to un-do something which has been concluded up to the High Court as the assessee having not made any such claim during the course of original proceedings, there would not be any conclusion arrived at on the said issue even up to the High Court level arising from the original assessment proceedings. In our opinion, the decision of Hon'ble Rajasthan High Court in the case of Jai Steel (India) vs. ACIT (supra), thus is not applicable to the fact situation involved in the present case and the reliance of the Ld. CIT(A) thereon to hold that the assessee is not entitled to make a new claim for deduction under section 80IA for A.Ys. 2006-07 to 2008-09 wherein the assessments had been originally completed under section 143(3) is clearly misplaced. 5. At the time of hearing before us, the learned CIT/DR has relied on the decision of Hon'ble Bombay High Court in the case of CIT vs. Murali Agro Products Ltd., (I.T. Appeal No.36 of 2009 dated 29.10.2010) and that of the Hon'ble Delhi High Court in the case of CIT vs. Kabul Chawla (Income Tax Appeal No.707 of 2014 and others dated 28th August, 2015) in support of Revenue's c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at where an assessee has filed its return of income as prescribed by law, even if as a consequence of search carried out under section 132 and in consequence of notice issued under section 153A, the assessee is obviously entitled for claiming corresponding deductions provided in law and the deduction claimed in return filed under section 153A cannot be denied on the ground that the claim was not made earlier. The Tribunal also relied on the decision of its Coordinate Bench in the case of DCIT vs. Eversmile Construction Co. P. Ltd., (supra) and held that the returns filed by the assessee under section 153A are to be treated as returns filed under section 139(1) by virtue of the law stated in section 153A(1)(a) and the assessees therefore, are entitled for deduction available under section 80IB(1). 7. It is thus that the decision of Mumbai Bench of this Tribunal in the case of Eversmile Construction Co. P. Ltd., (supra) as well as the Chennai Bench in the case of V.N. Devodoss (supra) is based on the relevant provisions of law including especially that of section 153A(1)(a). In the case of Hyderabad Chemicals Supplies Ltd., (ITA.No.352/Hyd/2005 dated 21.01.2011) it was held that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sortium, it has been made clear that work/project awarded to the joint venture would be executed by the joint venturers or the constituents. As per mutually agreed terms and conditions between them, it was also agreed that each party shall be responsible for the provisions of contract without limitation on resources required for the purpose of fulfilment of the scope and also solely responsible for the performance of its scope of work and shall bear all technical, commercial and facing risk involved in performing its scope of work. It was also agreed that none of the party shall assign its rights and obligations to any other party without written consent of other party. From a careful perusal of this joint venture agreement and the consortium agreement, it is evidently clear that the joint venture and the consortium was formed only with an object to bid contract. Once the project or contract is awarded to the joint venture or the consortium, it is to be executed by its constituents or the joint ventures in a ratio agreed upon by the parties. In the instant case in case of a joint venture agreement, the assessee was entitled to execute the 40 per cent of total work awarded by the An ..... X X X X Extracts X X X X X X X X Extracts X X X X
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