9911796707
TMI Blog2019 (3) TMI 470X X X X Extracts X X X X X X X X Extracts X X X X ..... vised return of income on 30/03/2013, declaring the same income. The Assessing Officer completed assessment u/s 143(3) of the Act on 30/03/2014 interalia making disallowances on account of (a) bogus purchases and bogus sub-contract expenses, (b) deduction u/s 80-IA(4) of the Act, (c) disallowance u/s 14A r.w.r. 8D and (d) disallowance of employee's contribution towards ESI & PF. Aggrieved the assessee carried the matter in appeal. The ld. CIT(A) deleted all the disallowance made by the Assessing Officer, except disallowance on account of bogus purchases/sub-contract expenses. 3. Further aggrieved both the assessee as well as the revenue are in appeal before us. 4. We have heard Shri, S.K. Tulsiyan, the ld. Counsel for the assessee and Shri A.K. Nayak, the ld. CIT D/R on behalf of the revenue. On careful consideration of the facts and circumstances of the case, perusal of the papers on record, orders of the authorities below as well as case law cited, we hold as follows:- 5. We first take up the assessee's appeal in ITA No.1572/Kol/2017; Assessment Year 2011-12. 6. The sole issue that is agitated by the assessee is the disallowance of purchases and disallowances of sub-contract ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he five parties, the ld. Counsel for the assessee submits that wrong inferences were drawn based on certain discrepancies in the statements. Even otherwise, it was submitted that no opportunity for cross-examination of the parties was given to the assessee. He listed out the reasons cited out by the Assessing Officer for the above disallowances and controverted the same point wise. He submitted that simply because these parties were found to provide accommodation entries to M/s. Soma Enterprises and M/s. Navyuga Engineering, which are third party infrastructure companies, it cannot be stated that similar bogus accommodation entries were given to the assessee. He relied on a number of case-law and prayed that the disallowance be deleted. The ld. D/R, on the other hand, disputed the contentions of the ld. Counsel for the assessee and submitted that the Assessing Officer as well as the ld. CIT(A) have given very detailed reasons as to why the purchases in question and the labour payments in question were treated as bogus. He submitted that the Assessing Officer has not made the disallowance merely on the basis of information sent by the investigation wing. He pointed out that the act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n requirement of materials and labour at its various construction sites placed orders through purchase orders (purchase orders are enclosed at pages 1-53 of the paperbook) and the six parties provided required materials and labour at the construction sites, pursuant to which their payments were made by the assessee through proper banking channels (copy of bank statements are enclosed at pages 1- 04, 11-12, 23-24, 32-36, 44 of the paperbook). Thus there were high value frequent deposits made by the assessee in the accounts of those six parties for providing material and labour regularly at its construction sites. Further it needs to be noted that whether these six parties acted in concert with each other in order to supply materials and labour to the assessee or for any other purpose, is not the assessee's lookout. Aslong as the assessee got delivery of the required materials and labour from the said parties and made their due payments for providing the same, the assessee's obligation towards those parties ended. Thereafter no liability can be fastened on the assessee in consequence to any action of those six parties. It is common knowledge that in any business if a seller/supplie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation, Chanchal Tube Corporation to be Hawala parties. In this regard it is submitted the assessee would like to submit that the four parties namely Siddhi Vinayak Steel, Asian Steel Corporation, Suraj Tube Corporation, Chanchal Tube Corporation, being declared Hawala by the Maharashtra Sales Tax Department cannot be a basis for declaring the assessee's purchases as bogus since the purchases were not made by the assessee from these four parties. Moreover, though it does not effect or concern the assessee in any way, it would like to submit that the fact that these parties were declared as Hawala Parties is an observation/declaration of a third party, i.e. the Maharashtra Sales Tax Department, which cannot be the sole basis for holding any transactions as bogus. 4 In case of search in one Soma Enterprises and Navyuga Engineering of Hyderabad, both the concerns admitted to taking accommodation entries from the six parties, from whom the assessee purchased labour and materials during the relevant A.Y. In this regard it is submitted that the assessee made payments to the six parties for supply of materials and sub contract of labour provided at its various sites. All the payments ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee). The assessee while placing orders with the six parties for supply of materials and labour contracts were provided with their respective bank accounts for the purpose of making payment. Thereafter, the assessee was not concerned about how and for what other purpose the six parties were using their bank accounts. Also, even for the sake of argument if it is accepted that the said six parties were providing accommodation entries and hence received payments from several parties, it cannot be said that the deposits received by them from the assessee for labour contract and supply of materials were bogus as the said purchases are backed by relevant documents. Further the fact that the accounts of the six parties were opened from addresses located in Kurla (West), which are in close vicinity to one another cannot be a basis to doubt the purchases made by the assessee. Though, it is not the assessee's lookout as to in which branch of a particular bank, its suppliers' and contractors' bank accounts rested but still the assessee would like to submit that the bank where the bank accounts of the six parties existed was ICICI Bank, Bandra Kurla Complex, Mumbai and their addresses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Thereafter, the assessee was under no obligation to keep knowledge/track about the further treatment or movement of those payments made by it. Further, although it does not affect the assessee's purchases in any way but still the assessee would like to mention that the proprietors of the five concerns (out of the six), in their statements given u/s 131 of the Income tax act, 1961 (enclosed at pages 106 to 150 of the paper book) have mentioned that they knew each other and transferred funds to each other sometimes on temporary basis because of mutual relations and also hired labour from each other when required, in return of due payment. They would also take supply of labour from other parties to supply to the assessee or other clients in return of due payment to them. Thus payment by the said parties to each other or other parties can be because of any of the said reasons. It definitely does not imply or prove that the assessee had been transferring funds to the six parties for routing the same through a web of bank accounts and receive the funds back again by inflating expenses in the garb of purchases especially, when its purchases are backed by documentary details. 9 The pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urers working at the project sites by the said suppliers/subcontractors as long as the assessee's requirement of materials/labour at its project site is supplied and the assessee makes due payment in return. Therefore, observation by the Ld. AO on this account cannot be a basis to fasten liability on the assessee of having made bogus purchases. 10 The Ld. AO alleged that the assessee being a company with a turnover exceeding Rs. 5,500 Crore, would have a completely professional system of hiring labour contractors and suppliers of material for quality construction and would not appoint labour contractors who are individuals located only in Mumbai for the purpose of supplying at its various sites, all over the country. In this regard, the assessee would like to submit that it having a professional system of hiring labour contractors and suppliers of material for quality construction does not cease to exist if such suppliers/labour contractors are individuals. There are no set of rules/guidelines to determine the professional system of hiring labour contractors or suppliers of materials which the assessee did not abide by. Further, the assessee would like to invite your goodself' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e's concern or duty to keep a track as to the amount of money withdrawn by the said contractors and suppliers. The said contractors and suppliers having withdrawn amounts below Rs. 10,00,000/- thus, does not concern the assessee in any way since post payment it is their money and when and how such money is to be withdrawn and its further utilization is not the assessee's domain. It is also not clear as to what was the reason of the benchmarking of Rs. 10 lakhs by the Ld. AO since under Income Tax Act, no such benchmarking prevails. 13 The Ld. AO held that the said six parties knew each other and the high frequencies of cheque movement amongst themselves through their respective bank accounts prove that they were acting in concert to provide accommodation entries to the assessee for inflating its expenses. In response to the above observation of the Ld. AO, the assessee would like to submit that materials and labour were supplied by each of the six parties to the assessee, individually, as and when requirement arose and payments were also made by the assessee to them individually. Therefore, the six parties knowing each other or there being high frequencies of cheque movement a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Further, without prejudice to the above, the assessee would like to submit that the Ld. AO has raised a doubt regarding contradiction in Supreme Construction's proprietor's statement regarding payment of labour wages in the F.Y. 2009-10whereas the instant case of the appeal is concerning the A.Y. 2011-12. Hence, the same cannot be linked with the assessee's purchases made in the relevant A.Y. The relevant documents supporting such purchase from Supreme Construction is enclosed at pages 11 to 22 of the paper book. 16. The Ld. AO alleged that there has been contradictions in the statement given by the proprietor of Brytex Industries u/s 131 of the Income Tax Act, 1916 and the representation made by him before the AO at the time of completing his assessment for the A.Y. 2010-11 since before the AO he submitted that the entire wage expenditure was paid by him in cash whereas at the time of giving statement he mentioned that he was trading in materials under the name 'Brytex Industries' and in materials under the name 'Insha Construction' (another of his proprietorship concerns) and that he made purchases in cash and through cheque from the other five parties out of the six partie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t controverted by the revenue. 9. Further on the observations made by the ld. CIT the assessee replied to the same as follows:- Sl.No. observations of the Ld. CIT Reply of the Assessee Company 1. * On a perusal of the statements of the five persons following point emerges: * Although they got orders from big and established companies, but they were not selected through any tenders. * All of them claimed to have started business arounf F.Y. 2008-09 and filed returns of income only upto A.Y. 2011-12. Businesses of all these persons had closed down and they had closed their bank account in the ICICI Bank. * All of them were conducting business from chawls/residential areas and employed very few persons. They claimed to have travelled to far away places by train on several occasions carrying cash for payments to labourers working at construction sites, but none of them had kept the train tickets. If they were involved in genuine business activities they could have claimed travelling expenses on the basis of these train tickets or other supporting documents. * Assessee company had produced all the evidences to prove the genuineness of the transactions with the six par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in case of third parties, is not correct. A.O. has applied his mind to the facts gathered, recorded statements of the suppliers, pointed out discrepancies in their statements and has established that these parties were not capable of providing any services/materials. In the process of establishing that the six parties were not involved in any genuine business transactions, A.O. has also pointed out the dubious nature of activities which these parties indulged in while dealing with others and information in respect of those activities collected through various sources. It is not on the basis of third party information A.O. has reached a conclusion in assessee's case. The assessee's case is backed by documentary evidences with regard to purchases made from Brytex Industries, Nikhil Enterprises, Supreme Construction, Purnima Construction and Nova Construction like bank statement, purchase order, item supplier's invoice, tax invoice, delivery challan (specimen copies enclosed at pages 01 to 53 of paper book (complete details submitted before AO at the time of assessment) and statements of the parties recorded by the Ld. AO himself under section 131 of the Act confirming the said tran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts placed on record. Transactions are backed by proper evidence. The conclusion drawn by the Ld. A.O. as well as the Ld. CIT(A) is totally based on surmises and conjectures. There is no direct connection between the facts of the assessee company and the conclusion drawn by the Ld. A.O. that the purchases are bogus. In this light it is submitted that until and unless there is a direct nexus between the conclusion drawn by the Ld. A.O. and the facts of the case, addition cannot be made merely on surmises and conjectures. ii. 4. Assessee submits that once the payments were made to the six parties, it was not its responsibility to keep watch as to how payments are made to the labourers. These parties have claimed that they withdrew cash from their bank accounts in Mumbai and carried the cash physically to work sites. This claim does not appear genuine as the banks are providing facility of "anywhere banking" to its customers. This means a bank customer can withdraw cash from any branch of the bank in India. When this facility exists, no prudent person would take the risk of physically carrying cash by train or bus. Besides these persons did not furnish proof of journey by train, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee would not associate with such parties in the normal course of business, unless there are ulterior motives. These people have no experience and no infrastructure to execute the work give to them. Besides their dealings with others have been proved to be only Hawala in nature. There is no doubt about the professional nature of assessee's activities. That is why its dealings with the six persons, under the circumstances mentioned does not appear to be genuine. One of the parties has claimed to have received contract from SAIL and other public sector companies. However, no evidence was produced in this regard. In this connection the assessee submits that the assessee company having a professional system of hiring labour contractors and suppliers of materials for quality management does not cease to exist if such suppliers/labour contractors are individuals. There are no set of rules/guidelines to determine the professional system of hiring contractors or suppliers of materials which the assessee company did not abide by. Further it needs to be noted that it is usual trend of the contractors to shift their business place after the completion of the work at that particula ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee had asked for cross examination of the supplier but same was not given, that the AO had not supplied the copy of the statements of Shiv Sagar to the assessee, that in the books of accounts of the assessee all the purchases and sales were recorded, that payments were made through banking channels, that the AO had made addition of entire purchases u/s.69 of the Act, that the FAA had reduced it to 20%. It is a fact that the AO had not rejected the sales of the assessee and the assessee was maintaining the quantative details and stock register. In our opinion, once the sales are accepted as genuine or not doubted the AO cannot reject the entire purchase. In the case of Nikunj Eximp (supra)the Hon'ble Bombay High Court has held if sales were not doubted by the AO and copies of bank statement showing entries of payment through account payee cheques to the suppliers, copies of invoices for purchases and a stock statement, i.e. stock reconciliation statement are filed 4547/14,2545/14 &1275/14, Hiralal CJ purchased could not be rejected. In the case of Rajeev Kalathil (supra) the Tribunal has held as under: "2.4. We find that AO had made the addition as one of the supplier wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2.1. The ld. CIT(A) followed the proposition of law laid down by the ITAT Kolkata Bench's decision in the assessee's own case for the Assessment Year 2007-08. At para 3.3.2, page 25 to 37, he held as follows:- "3.3.2. I have considered the facts of the case and the submission of the assessee. Perusal of the ITAT order for assmt. Year 2007-08 shows that Hon'ble ITAT, Kolkata have upheld the order of the Ld. CIT(Appeal)-XII, mentioning as under: 3.1 The aforesaid projects were awarded by Central / State Government /Local Authority / Statutory Body on turnkey basis. The Assessing Officer, during the course of assessment proceedings observed that assessee is acting as a contractor. Accordingly, AO opined that assessee is executing the projects as works contractor within the meaning of Explanation to Sec. 80IA of the Act. On question by the AO for the non-deduction of deduction under section 80IA of the Act, the assessee submitted that the writ petition has been filed challenging explanation to Section 80IA of the Act in the Hon'ble jurisdictional High Court and further requested not to consider the effect of the explanation to Section 80IA of the Act till the disposal of writ pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng and maintaining" said facility, it can claim the benefits of deduction under section 80- IA. The ratio laid down in the reported cases are squarely applicable to the facts of the appellant's case and hence the appellant being a developer of infrastructure facility discussed above is entitled for deduction under sec. 80-I of the Act. It is also observed that there Hon'ble jurisdictional ITAT 'B' Bench, Kolkata in the cases of M/s Simplex Som Datta Builders J.V. vs. ITO Ward 33(4), Kolkata in Appeal No. 1684/Kol/2011 for AY 2007-08 and in the case of M/s Simplex Subhas J.V. vs. ITO Ward 33(4) Kolkata in Appeal No.1685/Kol/2011 for AY 2007-08, respectively vide their order dated 18.06.2013, held in para 11 & 12 of the order while deciding on the issue having identical set of facts of the cases that the assessee were entitled to get the benefit deduction u/s. 80IA of the Act as claimed them. In the light of the above discussion and findings, perusing the facts of the case and respectfully following the principles laid down in various judicial pronouncements relied upon by the appellant on the issue as discussed above, it is held that the appellant company is enga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith 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. 6.1 From the above it is clear in order to avail deduction u/s 80-IA all the following conditions should be satisfied: (i) The assessee is a company or a consortium of companies; (ii) There exists an agreement with the Central Government, State Government, Local authority or any other statutory body and (iii) Pursuant to the agreement specified in point (ii) the company engages itself in any of the following activities: (a) Development of infrastructure facility (b) Operation and maintenance of infrastructure facility (c) Development, operation and maintenance of infrastructure facility 6.2 Now the assessee in the given case is a company which, pursuant to agreements with various Government bodies, engaged itself in the develo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) Broadcasting and telecasting including production of programmes for such broadcasting or telecasting; (c) Carriage of goods or passengers by any mode of transport other than by railways; (d) Catering; (e) Manufacturing or supplying a product according to the requirement or specification of a customer by using material purchased from such customer, but does not include manufacturing or supplying a product according to the requirement or specification of a customer by using material purchased from a person, other than such customer." Thus as per section 194C also, "works contract" does not include a contract wherein the contractor in addition to employing labour, procures material from a third party. Thus, contracts involving mere labour of the contractor are included in the purview of "works contract". Further, attention is invited to the judgment of the Supreme Court in case of Associated Cement Co. Ltd. vs. CIT [201 ITR 435], wherein the Hon'ble Court while interpreting the term 'work' u/s 194C held that "Words `any work' in sub-s. (1) of s. 194C means any work including supply of labour to carry out work and is not intended to be confined to or restricte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nfrastructure facilities, industrial parks and special economic zones. The tax benefit was introduced for the reason that industrial modernization requires a passive expansion of, and qualitative improvement in, infrastructure (viz., expressways, highways, airports, ports and rapid urban rail transport systems) which was lacking in our country. The purpose of the tax benefit has all along been {or encouraging private sector participation by way of investment in development of the infrastructure sector and not {or 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 80- IA 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 executes the development 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 person who enters into a contract with another person (i.e., undertaking or enterprise referred to in section 80-IA) for executing works cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... way for the cattle and bullock carts in the village; provision for traffic without any hindrance, the assessee's duty is to develop infrastructure whether it involves construction of a particular 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loyed its labour under the projects from the various government authorities. The assessee was a developer. In addition to employing labour it made investments, it developed an enterprise/infrastructure to support the work under the various projects. In addition to labour, it deployed its machinery, materials and did all the things necessary (i.e. provided an enterprise) to support the construction work undertaken under the various projects. The assessee was provided with the site alone and by putting its own inputs (not labour alone) he converted the site into an infrastructural facility. 6.5 Further, ITAT (Hyderabad) in case of Siva Swathi Constructions Pvt. Ltd. vs DCIT, Circle-3(2) in ITA No.1008-09/Hyd/2013 for AYs 2009-10 & 2010-11 dated 25.10.2013 held that "The next reason given by the CIT(A) is with regard to nonfinancial participation by the assessee, as the assessee has got mobilization advance. The mobilization advance has not been given freely. It has been given only after the assessee furnished a bank guarantee, and the bank guarantee has been given by the bank only after getting enough security from the assessee, to protect itself from any risk on account of any def ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perate and maintain the facility. Parliament when it amended the law was obviously aware of the administrative practice resulting in the circulars of the Central Board of Direct Taxes. The fact that in such a scheme. An enterprise would not operate the facility itself was not regarded as being a statutory bar to the entitlement to a deduction under section 80-IA of the Act. " 6.6 From the above it is clear that even if an assessee is merely developing the infrastructural facility (without operating and maintaining the same), it is entitled to deduction u/s 80-1A. Further, condition (b) laid out in sub-section 4 of section 80-IA mandates the existence of an agreement with the Government. Moreover, if section 80-IA grants deduction on profits from the activity of development carried out in pursuance of an agreement with the Government it presupposes that assessee will earn some profits from mere development (without operating and maintaining) of the infrastructure facility. Now the relevant question that arises here is that how would an assessee engaged in mere developmental activity (and no operation) pursuant to an agreement with the Government earn profits? The obvious answer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able. The interpretation of Revenue is absurd also in view of the rationale of the provisions of s. 80-IA(4)(i). From the asst. yr. 2000-01, deduction is available if the assessee carries on the business of any one of the three types of activities. When an assessee is only developing an infrastructure facility project and is not maintaining nor operating it, obviously such an assessee will be paid for the cost incurred by it; otherwise, how will the person who develops the infrastructure facility project, realise its cost ? If the infrastructure facility, just after its development, is transferred to the Government, naturally the cost would be paid by the Government. Therefore, merely because the transferee has paid for the development of infrastructure facility carried out by the assessee, it cannot be said that the assessee did not develop the infrastructure facility. If the interpretation canvassed by the Revenue authorities is accepted, no enterprise, carrying on the business of only developing the infrastructure facility, would be entitled to deduction under s. 80-IA(4), which is not the intention of the law. If a person who only develops the infrastructure facility is not pai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... structural facility i.e., road and not engaged in the 'operating and maintaining' the said facility is entitled to the benefits of the deduction under s. 80-IA(4).--Patel Engineering Ltd. vs. Dy. CIT (2004) 84 TTJ (Mumbai) 646 followed. Provisions of sub-cl. (c) of cl. (i) of s. 80-IA(4) are inapplicable to the assessee which is engaged in mere developing of the infrastructure facility and, therefore, an assessee who is only engaged in developing the infrastructure facility and not in 'operating and maintaining' the said facility is entitled to the benefit of deduction under s. 80-IA(4); merely because assessee is referred to as 'contractor' in the agreement for development of infrastructure facility or some basic specifications are laid down, would not debar the assessee from claiming deduction under s. 80-IA(4)." If a person who only develops the infrastructure facility was not paid by the Government, the entire cost of development would be a loss in the hands of the developer as he was not operating the infrastructure facility. Merely because the assessee was paid by the Government for development work it could not be denied deduction under section 80-I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly, it is the Government who will make payment to assessee in respect of infrastructure facility developed by it in terms of agreement so entered with Government. Thus, we do not find any infringement of conditions {or claim of deduction" 6.7 Thus from the above, it is clear that the fact that the assessee had received payments from the Government in progress of its work has no bearing on eligibility of deduction u/s 80- IA. Further, the Revenue in all the grounds has contended that the contracts entered into by the assessee were merely 'construction contracts' since the assessee is not exposed to any entrepreneurial and investment risk. In this regard, the AO has observed that the assessee is executing the contract against predetermined revenue w.r.t the above, it is submitted that under the impugned contracts, the assessee was merely carrying out the civil construction work. It was responsible for overall development of the infrastructure facility. It was merely provided with the site which it had to develop into an infrastructural facility by deploying his resources i.e. material, plant & machinery, labour, supervisors etc. It was responsible for any damage/loss caused ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tutions on the basis of the project. These are few broad qualities of a developer through which the character of a developer can be defined. " (ii) ITAT(Hyderabad) in case of Koya and Co. Construction (P) Ltd. vs ACIT [51 SOT 203] held that "The explanatory memorandum to Finance Act 2007 states that the purpose of the tax benefit has all long been to encourage investment in development of infrastructure sector and not for the persons who merely execute the civil construction work. It categorically states that the deduction under section 80IA of the Act is available to developers who undertakes entrepreneurial and investment risk and not for the contractors, who undertakes only business risk. Without any doubt, the learned counsel for the assessee clearly demonstrated before the court that the assessee at present has undertaken huge risks in terms of deployment of technical personnel, plant and machinery, technical knowhow, expertise and financial resources." Thus, the fact that the assessee deploys its resources (material, machinery, labour etc.) in the construction work clearly exhibits the risks undertaken by the assessee. Further, the assessee vide the agreements has clearly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the explanation to section 80- 1A. 7. From the perusal of the terms and conditions in the agreement, it is clear that the assessee was not a works contractor simplicitor and was a developer and hence Explanation to section 80- IA(13) does not apply to the assessee. Further, in addition to developing the infrastructure facility, the assessee was even operating and maintaining the same. Thus, clearly the assessee is eligible for deduction u/s 80-1A. In our considered view do not find any reason to uphold the order of ld. CIT(A). Hence this ground of appeal of the Assessee is allowed. We also find that the facts of the case of the assessee are identical as that of the above case of the assessee's own case (supra). In the light of above reasoning, we hold that the order of the Ld. CIT(A) is correct and in accordance with law and no interference is called for. We uphold the same. Hence, this ground of Revenue's appeal is dismissed." As Hon'ble ITAT in assessee's own case in a recent decision has upheld its eligibility of claiming deduction u/s 80IA, respectfully following the decision of the Hon'ble ITAT, Kolkata, A.O. is directed to allow assessee's claim of deduction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r as to whether they are projects on which the assessee is eligible for deduction u/s 80-IA of the Act. On a query from the Bench, the assessee submitted that the details of the duties and responsibilities of the assessee company as a contractor have been place in the paper book. In our view, this needs to be examined by the Assessing Officer as the Assessing Officer has not considered the same. For the earlier Assessment Years 2011-12 & 2012-13, this Bench of the Tribunal under similar circumstances has restored four projects to the file of the Assessing Officer for examining whether they fall within the ken of exemption u/s 80-IA of the Act. These are as follows:- a) Development of Bust Terminal Complex for Karnataka State transport Corporation at Bangalore b) Development of launch pad for GSLV Mark III facilities of Satish Dhawan Space Centre SHAR at Sriharikota, Andhra Pradesh c) Development of a turbine building, emergency power supply building, cable and pipe tunnel etc. for Kundankulam Nuclear Power Project. d) Development of a Jetty at the Naval Base at Visakhapatnam. 12.2.2. The Assessing Officer in an order passed u/s 143(3) r.w.s. 254 of the Act, dt. 21/11/2018 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecord, orders of the authorities below as well as case law cited, we hold as follows:- 19. Disallowance on account of bogus purchases and sub-contract expenses. This issue has been discussed in detail for the Assessment Year 2011-12. The facts, arguments and the conclusions of the Bench apply mutatis mutandis to this ground also. Consistent with the view taken therein, we allow this ground of the assessee. In the result, this appeal of the assessee is allowed. 20. We now take up the revenue appeal in ITA. No. 1765/Kol/2017 for Assessment Year 2012-13. 21. Ground No. 1 is against the deletion of disallowance made u/s 80-IA(4) of the Act. The projects on which deduction is claimed are as follows:- Sl.No. Name of the projects Contract Number Deduction Claimed (Rs) Remarks 1. National Highway Authority of India 2124 10,27,17,740 Already allowed by Hon'ble ITAT, Kolkata 2010-11 2. Indore Municipal Corp 2339 1,53,70,937 Already allowed by Hon'ble ITAT, Kolkata in A.Y. 2010-11 3. Bangalore Development Authority 2463 99,79,770 New Project started in A.Y. 2011-12. Agreement enclosed at pages 80-140 with the paperbook of A.Y. 2011-12 4. Kolkata Mun ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
