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TMI Blog2020 (3) TMI 328X X X X Extracts X X X X X X X X Extracts X X X X ..... n of both the parties so as to enable the assessee to rebut the contentions raised by the Assessing Officer on the basis of their statements. Copy of the submission is enclosed at pages 108-115 of the paper book. However, the learned Assessing Officer did not provide opportunity for cross-examination which had lead to violation of the principles of natural justice. Payments have been made through banking channels after deduction of TDS and the Assessing Officer has failed to bring any cogent evidence on record to demonstrate that these documents/evidence are false. Therefore, addition made by the Assessing Officer needs to be deleted The mandate of law to conduct enquiry by the Assessing Officer on due information coming to him to verify authenticity of information was not done as per section 142 of the Act. Therefore, mere receipt of unsubstantiated statement recorded by some other officer in some other proceedings more particularly having no bearing on the transaction with the assessee does not create any material evidence against the assessee. This is because section 142(2) mandates any such material adverse to the facts of the assessee collected by the Assessing Officer u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is dismissed. Deduction under section 80-IA - assessee-company is simply a contractor who merely executed work contract on the basis of quoted tender funded by the Government/semi-Government organisation and hence not entitled to deduction under section 80-IA - HELD THAT:- Assessee was not a works contractor simpliciter and was a developer and hence Explanation to section 80IA(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 under section 80-IA. As the issue is squarely covered in favour of the assessee by the decision of the co-ordinate Bench, in the assessee's own case in CIT (Dy.) v. SPML Infra Ltd. [ 2016 (11) TMI 75 - ITAT KOLKATA] for the assessment years 2006-07 and 2009-10 and there is no change in facts and law and the Revenue is unable to produce any material to controvert the aforesaid findings of the Division Bench (supra). - Decided against revenue Addition u/s 36(1) - payment for employees' contribution to provident fund/ESI which were paid before due date of filing of return - HELD THA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Income-tax (Appeal)-3, Kolkata in Appeal No. 10812/CIT(A)3/R-8/Kolkata/15-16, which in turn arise out of the assessment order passed by the Assessing Officer under section 263/143(3) of the Income-tax Act, 1961 (in short the Act ) dated December 20, 2016. 2. Since these cross-appeals pertain to the same assessee, the same assessment year, common and identical issues are involved therefore these have been clubbed and heard together and a consolidated order is being passed for the sake of brevity. 3. Now, we shall take the assessee's appeal in I. T. A. No. 1228/Kolkata/ 2018 for the assessment year 2011-12, wherein the grounds of appeal raised by the assessee are as follows : 1. That, on the facts and in the circumstances of the case, the learned Commissioner of Income-tax (Appeals) erred in upholding the disallowance of genuine expenditure of ₹ 5.42 crores by way of payment to sub-contractor M/s. Sintex Infra Projects (P.) Ltd. (Sintex) through banking channel subject to TDS as bogus expenses on the alleged ground that the appellant was unable to establish by any material or evidence that the said sub-contractor had rendered services in lieu of payments receiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same should be quashed and your appellant be given such relief(s) as prayed for. 7. That the appellant craves leave to amend, alter, modify, substi tute, add to, abridge and/or rescind any or all of the above grounds. 4. The facts of the case which can be stated quite shortly are as follows. An information has been received by the Assessing Officer from the Joint Commissioner of Income-tax, Range-8, Ahmedabad stating that the assessee-company had taken accommodation entries in the nature of bogus expenses amounting to ₹ 5,42,00,000. The information contains that during the assessment proceeding in the case of M/s. Sintex Infra Projects (P.) Ltd. for the assessment year 2011-12, which is assessed with the Deputy Commissioner of Income-tax, Circle-8, Ahmedabad, information was received from the Deputy Commissioner of Income-tax, Central Circle-XXI, Kolkata that the director of M/s. Silicon Real Estate (P.) Ltd. (PAN : AALCS3385C) which was assessed with him for the assessment year 2011-12 has admitted that this company has not executed any work in reality and only provided accommodation entry for turnover and/or expenses. M/s. Sintex Infra Projects (P.) Ltd. (PAN : AAN ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no transactions with the said party. All projects in respect of which work was given to M/s. Sintex Infra Projects Ltd. are Government projects and are duly monitored by the various authorities. However, the Assessing Officer rejected the contention of the assessee and made addition amounting to ₹ 5,42,00,000. 6. Aggrieved by the stand so taken by the Assessing Officer, the assessee carried the matter in appeal before the learned Commissioner of Incometax (Appeals) who has confirmed the addition made by the Assessing Officer. The learned Commissioner of Income-tax (Appeals) disallowed the expense only on the basis of statement of Sri Pranay Kumar Sinha, director of M/s. Silicon Real Estate Pvt Ltd. and statement of Sri Narayan Maheshwari, CFO of M/s. Sintex Infra Projects Ltd. Aggrieved by the order of the learned Commissioner of Income-tax (Appeals), the assessee is in appeal before us. 7. Shri S. K. Tulsiyan, the learned counsel for the assessee, begins by pointing out that labour job was given to M/s. Sintex Infra Projects Ltd. in relation to projects and the said party had duly raised bills on the assessee in respect of the said work. All payments were made by accou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (i) T K Hally Projects : TK Hally Project was awarded by the original party BWSSB (Government) to joint venture SPML and Kirloskar. SPML Infra Ltd. the assessee-company provided the labour contract for hard rock chiselling to Sintex Infra Projects Ltd. The total work done by Sintex in this project is ₹ 4,68,32,646. (ii) Jamui Projects : The total work done by Sintex Infra Projects Ltd. in this projects is ₹ 74,48,980. The total amount paid to Sintex Infra Projects Ltd. is to the tune of ₹ 5,42,81,626 (copies of invoices issued by M/s. Sintex Infra Projects Ltd. are enclosed at pages 284-293 of the paper book). As per the invoices, the activities undertaken by M/s. Sintex Infra Projects Ltd. are as under : Sl. No. Invoice Description of labour services provided Quantity 1. Bill No. 22 Hard rock chiselling using rock hammer and chisels and stacking on road side for pipe line trenches 7977.737 Sq Mtr. 2. Bill No. 20 Hard rock chiselling using rock hammer and chisels and stackin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5490 5c. Levelling and compaction of sub grade and watering as per approved drawing. 5490 5d. Levelling and compaction GSB and watering as per approved drawing. 5490 5e. Levelling and compaction of WMM and watering as per approved drawing. 5490 8. Bill No. 19 Hard rock chiselling using rock hammer and chisels and stacking on road side for pipe line trenches 9454.54 sq mtr. 9. Bill No. 23 Hard rock chiselling using rock hammer and chisels and stacking on road side for pipe line trenches 8348.79 sq mtr. From the above table, it is apparent that M/s. Sintex Infra Projects Ltd. has well described the type of work undertaken by it for the assessee. In the case of TK Hally Projects, Sintex Infra Projects Ltd. provided firstly, chiselling hard rock, then shifting of hard rock and finally carting excess earth and removing soft rock. In the case of Jamui Project, Sintex Infra Projects Ltd. had constructed road including clearin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is seen that the said section lays down the procedure of the enquiries that are to be conducted before assessment whereby vide section 142(1), it is laid out that the Assessing Officer is to serve notice on the assessee and the assessee is to produce all relevant accounts/documents as the Assessing Officer may require. Next, vide section 142(2) it is laid out that the Assessing Officer is required to make all such inquiry as he considers necessary for the purpose of obtaining full information in respect of the income or loss of the asses see. In immediate succession is section 142(3) which lays down that in respect of the material gathered on the basis of the said inquiry and which is proposed to be utilised for the purposes of the assessment, the Assessing Officer is to give the assessee an opportunity of being heard on the same. Applying the above sections to the case of the assessee, it is firstly seen that the learned Assessing Officer vide the notice dated September 3, 2016, asked the assessee to show cause why the said expenses of ₹ 5.42 crores should not be treated as bogus. The assessee in response to the said notice furnished all the details and documents before the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ein the Joint Commissioner of Income-tax had supplied the copy of the statement of Sri S N Maheshwari recorded in the case of Sintex Infra Projects Ltd. It is not known when the Assessing Officer came to acquire this information and what enquiry the Assessing Officer has conducted after coming to know of such information. It is also an admitted fact that the fact of any such information and any such enquiry on the same was never made known to the assessee as mandated by section 142(3) of the Act. Thus it is not understood as to how the learned Assessing Officer framed the assessment in the case of the assessee by utilising such information and how the Assessing Officer drew adverse conclusion at to the claim of the assessee that it had incurred bogus expenditures. The learned counsel submitted before us that assessment order framed by the Assessing Officer is not as per the scheme of section 142 of the Act as explained above, therefore the order passed by the Assessing Officer should be quashed. The learned counsel further submitted before us that it is also the matter of fact that both the projects undertaken by the assessee were Government projects and were duly monitored by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e find that on the merits a disallowance of ₹ 19,39,60,866 was based solely on third party information, which was not subjected to any further scrutiny. Thus, the Commissioner of Income-tax (Appeals) allowed the appeal of the assessee stating : 'Thus, the entire disallowance in this case is based on third party information gathered by the Investigation Wing of the Department, which have not been independently subjected to further verification by the Assessing Officer who has not provided the copy of such state ments to the appellant, thus denying opportunity of cross-examina tion to the appellant, who has prima facie discharged the initial burden of substantiating the purchases through various documenta tion including purchase bills, transportation bills, confirmed copy of accounts and the fact of payment through cheques, and VAT regis tration of the sellers and their Income-tax return. In view of the above discussion in totality, the purchases made by the appellant from M/s. Padmesh Realtors Pvt. Ltd. is found to be acceptable and the consequent disallowance resulting in addition to income made for ₹ 19,39,60,866, is directed to be deleted.' The Incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed counsel also submitted that the learned Assessing Officer relied on the statement of Sri Narayan Maheshwari, CFO of M/s. Sintex Infra Projects Ltd. In this regard it is submitted that the said statement was not recorded by the jurisdictional Assessing Officer of the assessee but was recorded by the jurisdictional Assessing Officer of Sintex Infra Projects Ltd. The statement was recorded during the assessment stage in the case of Sintex Infra Projects Ltd. on the basis of the statement provided by P. K. Sinha in the case of Silicon Real Estate Pvt. Ltd. The relevant extract of the statement is produced as under: Question 13 : Whether your company has sub-contracted work to M/s. Silicon Real Estate Pvt. Ltd. ? Answer 13 : Sir, our company has received the five sales work order from Shapoorji Pallonji and Co. Ltd., Adhunik Infrastructures Pvt. Ltd. ARSS Infrastructures Projects Ltd. SPML Infra Ltd. and Kandla Estate Movers Pvt. Ltd. through Mr. Anshu Balbir. Our company has sub-con tracted all these work order to M/s. Silicon Real Estate Pvt. Ltd. as advised by Mr. Anshu Balbir. Again this was decided that above mentioned companies will supervise these works and we have to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of bank statement, receipts and payments details and also the documents/ evidence which shows the projects of the assessee were actually sub-contracted by Sintex Infra Projects Ltd. to Silicon Real Estate Pvt. Ltd. 13. The learned counsel submitted before the Bench that in the construction line of business, the costs of the projects are high, and therefore, the cost and accounting records are required to be maintained project-wise. The assessee has also been maintaining the project-wise cost records. There-fore, the learned Assessing Officer should have also examined whether the company maintains records project-wise from where it can be ascertained that inflation of expenditure was for certain type of project which was also not done by him. Furthermore, it was duly explained before the learned Assessing Officer as well as the learned Commissioner of Income-tax (Appeals) that the assessee was not aware of the concern, M/s. Silicon Real Estate (P.) Ltd. and had not done transaction with the said party. The assessee had no direct or indirect connection with the said party and the contract for both the projects was awarded to one, M/s. Sintex Infra Projects Ltd. However, the conten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0.10 per cent. to 0.15 on the total credit. From the above statement, it is clear that no information has been received against the assessee and nowhere the name of the assessee-com pany was mentioned. Even the assessee-company was not aware that their sub-contractor has further sub-contracted the impugned work. Further, no such material or evidence was obtained by the Assessing Officer from Silicon Real Estate Pvt. Ltd. from which it can be ascertained that M/s. Sintex Infra Projects Ltd. had sub-contracted projects of the assessee-company to them. Hence, this statement cannot be considered as basis for disallowing the expenses of ₹ 5.42 crores. Moreover, it is also a matter of fact that both the aforesaid statements of the third party were recorded at the back of the assessee and therefore these statements could not be the basis for making the addition. The assessee vide submission dated October 31, 2016 submitted on November 2, 2016 requested the learned Assessing Officer to afford an opportunity of cross-examination of both the parties so as to enable the assessee to rebut the contentions raised by the Assessing Officer on the basis of their statements. Copy of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see collected by the Assessing Officer under section 142(1) has to be necessarily put to the assessee under section 142(3) before utilising the same for assessment so as to constitute as reliable material evidence through the process of assessment under section 143(3) of the Act. Admittedly as discussed above, it is evident that the assessee had nothing to do with M/s. Silicon Real Estate Pvt. Ltd. The fact of contract between M/s. Sintex Infra Projects Ltd. and M/s. Silicon Real Estate Pvt. Ltd. is not a matter of record nor any such material was provided by the Assessing Officer to the assessee. Therefore, there was nothing to suggest that any wrong doing between Sintex Infra Projects Ltd. and Silicon Real Estate Pvt. Ltd. infringe upon the transaction at hand or can operate as reliable evidence against the assessee. We note that during the assessment stage, the assessee submitted the following documents and evidence : (i) Bills raised by M/s. Sintex Infra Projects Ltd. (ii) Ledger copy of M/s. Sintex Infra Projects Ltd. (iii) Bank statement highlighting the payments made to the said party. (iv) TDS has been deducted properly as per the rate prescribed in the Incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s placed in the assessment record. However, the Assessing Officer rejected the contention of the assessee and held that anticipated loss is not allowable in mercantile system of accounting. In view of the above, the claim of deduction of ₹ 14,83,51,419 on account of provision for future loss was disallowed and added to the income of the assessee. 18. Aggrieved by the order of the Assessing Officer, the assessee carried the matter in appeal before the learned Commissioner of Income-tax (Appeals), who has deleted the addition made by the Assessing Officer. Aggrieved, the Revenue is in appeal before us. 19. We have heard both the parties and carefully gone through the submission put forth on behalf of the assessee along with the documents furnished and the case law relied upon, and perused the fact of the case including the findings of the learned Commissioner of Income-tax (Appeals) and other materials available on record. Before us, the learned Departmental representative for the Revenue has primarily reiterated the stand taken by the Assessing Officer which we have already noted in our earlier para and the same is not being repeated for the sake of brevity and on the ot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (unexecuted percentage of work x contract value) to arrive at the future loss, i. e., loss on unexecuted portion of the project. The above may be explained with the help of an example. Suppose contract value is ₹ 100. Budgeted cost is 110. Costs incurred till date is 90. Then the provisions for future losses shall be computed as below: (i) Percentage of work completed = Cost incurred till date/budgeted cost 90/100 = 81.82% (ii) Profit margin = Contract value - Budgeted cost/contract value 100 - 110/100 = -10% (iii) Unexecuted portion of contract value = (1-% of work completed) x Contract value (1-0.8182) x 100 = ₹ 18.18 (iv) Provision for future loss = Unexecuted portion of contract value ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vision for losses recognised in accordance with Accounting Standard 7 is allowable under the Act. The findings of the co-ordinate Bench is given below (page 322) : As far as the factual position is concerned the assessee has given detailed explanation for estimating the future losses which in fact it had suffered and the final loss was already determined by the Assess ing Officer in the next assessment year, the order of which does not contain any disallowance. There is evidence on record that the asses see has suffered loss and loss claimed in that year on completion of the project stood allowed. No adjustments have been made to the loss claimed in later year. In view of this we are of the opinion that as far as quantification of loss is concerned the assessee has made a justifiable claim in arriving at the future loss for this year. The asses see's claim for provision for loss, which was made in accordance with the guidelines of Accounting Standard 7 and duly debited in the audited accounts of the company is an allowable expenditure. We note that the same view was upheld by the co-ordinate Benches of the Income-tax Appellate Tribunal, Mumbai and Pune in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s been recognised by the assessee therefore the estimated future losses on the same should be allowed. A similar issue regarding fixed price contract and future losses claimed as per Accounting Standard 7 came before the hon'ble Income-tax Appellate Tribunal, Mumbai Bench in the case of Dredg ing International N. V. v. Asst. DIT [2012] 14 ITR (Trib) 299 (Mum) ; [2011] 15 taxmann.com 198 (Mum). The facts in the said case were as follows : 'The assessee made provision for foreseeable loss amounting to ₹ 32,86,17,293 and claimed deduction on the same. The Assessing Officer disallowed the said claim on the reason that the expenses were contingent upon occurrence or non-occurrence of certain events and the assessee itself had classified it as a provision for future losses. The contingent liability did not constitute expenditure as the same could not be subject matter of deduction and the expenditure which was deductible for this purpose was only those liabilities which were not contingent. By holding this, the Assessing Officer disallowed the provisions for future losses. The assessee raised objection against the said disallowance before the Dispute Resolution Pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o pass necessary modification order, if necessary in the assessment year 2007-08 with drawing the claim to that extent being allowed in this year. (para 29)' Further, the hon'ble Income-tax Appellate Tribunal, Pune Bench in the case of Asst. CIT v. Ashoka Buildcon Ltd. [2015] 61 taxmann.com 330 (Pune) on the issue of allowability of future losses has held as under : '15. It is not in dispute that the assessee is executing fixed price contract which means that the contractor has agreed to a fixed contract price or rate in some cases subject to cost escalation prices. As per Accounting Standard 7, the assessee is entitled to make provision for foreseeable losses. 16. A perusal of the accounting statement of the assessee for the year under consideration shows that at para 1.6 to the notes to the financial statement, the auditors have provided as under: Revenue recognition on contracts Contract prices are either fixed or subject to price escalation clause. Revenue from contracts is recognised on the basis of percent age completion method, and the level of completion depends on the nature and type of each contract including unbilled work-in-progress ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owable deduction. However, merely because the change in method of accounting was bona fide, it could not lead to the inference that the income was also deducible properly under the Act. This aspect is very evident from the first proviso to section 145 as it stood prior to the amendment by the Finance Act, 1995 with effect from April 1, 1997. It could not be disputed that from the method adopted by the assessee, the assessee's income could not be deduced properly in the year in which the loss had been anticipated. As a matter of fact this aspect was not disputed by the Assessing Officer also. He had swayed more by the revenue loss than by the correct principle to be applied. The matching principle of accounting was not of much significance in the present context because if the loss had been prop erly estimated in the year in which the contract had been entered into, then it had to be allowed in that very year and could not be spread over the period of contract. The matching principle is of rel evance where income and expenditure, both are to be considered together. However, in the instant case, the effect of valuation of work-in-progress would automatically affect the profits of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal Bench, Mumbai. In the said case the facts as follows : During the remand report proceedings, the Assessing Officer issued show-cause notice to the assessee requiring to explain as to why 100 per cent. loss was claimed even when the project was not completed 100 per cent. He asked the assessee to explain why loss should not be allowed only up to the per cent. of work completed and why the excessive loss should not be disallowed and added back to its income of the assessment year 2004-05. The Assessing Officer further after considering the submissions of the assessee observed that the assessee had claimed the entire foreseeable losses of future years in the assessment year 2004-05. He opined that such claim could not be allowed because it was only based on estimate and was contingent in nature. The Commissioner (Appeals) held that the expenses relating to business were allowable as per the provisions of sections 28 to 43. The expenses allowable had been specifically mentioned in the relevant section of the Act. The residuary expenses were allowable under section 37(1) only. He concluded that the assessee's claim of future losses was not fitting in the frame ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT [2009] 29 SOT 356 (Mum), Jacobs Engg. India Pvt. Ltd. v. Asst. CIT [2011] 14 tax mann.com 186 (Mum) and Dredging International N. V. v. Asst. DIT [2012] 14 ITR (Trib) 299 (Mum) ; [2011] 48 SOT 430 (Mum) ; 15 taxmann.com 198 (Mum.), the Assessing Officer was to be directed to recompute the business profits by allow ing the losses provided by the assessee in its books. (para 19) The salient features emerging from the above discussion are as follows : (i) The contract should be fixed price contracts. (ii) The contractor is liable to claim foreseeable losses on the basis of Accounting Standard 7. (iii) Accounting Standard 7 is acceptable for contract accounting. (iv) The losses are not contingent or unascertained. Further in this case it is observed as follows : (i) In the tax audit report it has been stated that the loss of ₹ 14,83,51,419 has been provided as per Accounting Standard 7. (ii) In the notes to account it has been stated that one of the companies has terminated the contract. However, on account of prudency, the company has revised the contract value and contract cost and estimated the future loss which has been duly provided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 22. We note that ground No. 2 raised by the Revenue is no longer res integra. The learned counsel pleaded before us that the assessee has not earned any exempt income therefore there should not be any disallowance. The written submission of the learned counsel, in this regard is reproduced below : The assessee had not earned any exempt income during the year under appeal, hence, no expense can be said to have been incurred in relation to exempt income. Hence the question of disallowing any expense does not arise. In this regard, reliance is placed on the judg ment of the Delhi High Court in the case of Cheminvest Ltd. v. CIT [2015] 378 ITR 33 (Delhi), (copy enclosed at page 63-67 of the paper book) where it is held that if no exempt income has been earned, then no disallowance is warranted. Further reliance is also placed on the following decisions : The decision of the Allahabad High Court in I. T. A. No. 88 of 2014, CIT v. Shivam Motors (P.) Ltd. decided on May 5, 2014 reported in [2014] 272 CTR 277 (All) (copy enclosed at pages 68-71 of the paper book). In the said decision it was held that : 'As regards the second question, section 14A of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsidering only those investments which have yielded the exempted income in the form of dividend. Here we would like to interfere in the direction given by the learned Commissioner of Income-tax (Appeals) to the Assessing Officer to consider only dividend bearing security to workout the disallowance under rule 8D of the Income-tax Rules. Since the learned counsel submitted before us that the assessee has not earned any exempt income therefore no disallowance is warranted as supported by the abovenoted judgments therefore, we direct the Assessing Officer to delete the entire disallowance under section 14A read with rule 8D of the Rules. Ground No. 2 raised by the Revenue is dismissed. 24. Ground No. 3 raised by the Revenue reads as follows : 3. Whether on the facts and in the circumstances of the case and in law, the learned Commissioner of Income-tax (Appeals) erred in law as well as on facts in allowing the deduction under section 80-IA of the Income-tax Act. Whereas the assessee-company is simply a contractor who merely executed work contract on the basis of quoted tender funded by the Government/semi-Government organisation and hence not entitled to deduction under sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ' as envisaged under section 80-IA. (b) The assessee is only executing civil construction contract and is not taking any entrepreneurial or investment risks. (c) The assessee is merely a works contractor as per the Expla nation to 80-IA(13) and hence not eligible for deduction under section 80-IA. (d) The definition of work as provided in the Explanation to section 194C is only for the purposes of TDS only and is not appli cable to the case of the assessee. During the course of appellate proceedings the authorised repre sentative furnished the detailed analysis of the scope of work with reference to various projects, stating, inter alia, facts regarding labour and material supplied, risk undertaken, investment made, etc. Before me the authorised representative of the appellant has argued that it is engaged in all the three activities as required under section 80-IA. It was further stated that in some projects the appellant is involved only in the development of infrastructure facility. In some projects it was involved in operation and maintenance of infrastructure facility, and in some projects it was involved in development, maintenance and operation of inf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the infrastructure facility would be entitled to deduction under section 80-IA(4). (vi) As regards the observation of the Assessing Officer that the assessee is executing the contract of civil construction at the pre-determined rate, and hence it is a works contract the hon'ble Income-tax Appellate Tribunal has observed that 'the assessee was respon sible for overall development of the infrastructure facility. It was merely provided with the site which it had to develop into an infra structural facility by deploying his resources, i. e., material, plant and machinery, labour, supervisors, etc. It was responsible for any damage/loss caused to any property or life in course of execution of the works. It was even responsible for remedying of the defects in the works at its cost'. (vii) The assessee vide the agreements has clearly demonstrated the various risks undertaken by it. The assessee was to furnish a secu rity deposit to the employer and indemnify the employer of any losses/damage caused to any property/life in course of execution of works. Further, it was responsible for the correction of defects arising in the works that the assessee had not undertake ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1)(va) clearly state that the payment will be allowed on payment on or before the due date. 29. Brief facts qua the issue are that during the assessment proceedings the Assessing Officer noticed that the assessee paid the employees' contribution to provident fund/ESI beyond the prescribed due date mentioned in the relevant Acts. Therefore, the Assessing Officer made the disallowance of ₹ 2,26,32,986 and ₹ 9,28,918 being employees' contribution to provident fund and ESI respectively. 30. On appeal, the learned Commissioner of Income-tax (Appeals) deleted the addition. Aggrieved by the order of the learned Commissioner of Income-tax (Appeals) the Revenue is in appeal before us. 31. The learned Departmental representative has primarily reiterated the stand taken by the Assessing Officer which we have already noted in our earlier para and the same is not being repeated for the sake of brevity and on the other hand, the learned counsel for the assessee has relied on the order of the learned Commissioner of Income-tax (Appeals). 32. We have heard both the parties and carefully gone through the submission put forth on behalf of the assessee along with th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the purpose of applicability of section 14A read with rule 8D, the computation of total income has to be under some heads in Chapter IV of the Income-tax Act, 1961. Section 14A clearly says for the purpose of computing the total income under this Chapter, no deduction shall be allowed in respect of expenditure incurred by the assessee in relation to income which does not form part of the total income under this Act . Whereas the computation of total income under section 115JB falls under Chapter XII-B of the Income-tax Act, 1961. Therefore, it is very clear that the disallowance/computation for section 14A read with rule 8D will not be applicable for the purpose of calculation of income under section 115JB of the Income-tax Act, 1961. Hence, the disallowance under section 14A relatable to exempt income cannot be added for computation of book profit under section 115JB. For that we rely on the decision of the hon'ble Bombay High Court in the case of CIT v. Bengal Finance and Investments Pvt. Ltd. (I. T. A. No. 337 of 2013), wherein it was held as follows : 4. So far as question (b) is concerned, the impugned order of the Tribunal followed the decision in Essar Teleholding ..... X X X X Extracts X X X X X X X X Extracts X X X X
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