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TMI Blog2020 (11) TMI 469X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee against the order dated 01.09.2018 of the Commissioner of Income Tax-4, Ludhiana [hereinafter referred to as CIT(A) ] 2. The assessee in this appeal has taken following grounds of appeal:- 1. That the orders of the. Commissioner of Income Tax(A)-4, Ludhiana confirming the disallowance of ₹ 81,61,783/- u/s 80IA are contrary to law and facts of the case. 2. That the Ld. CIT(A)-4, Ludhiana has erred in confirming the disallowance of ₹ 81,61,783/- u/s 80IA of the Income Tax Act, 1961 by the Ld. DCIT in her orders u/s 143(3) on the plea that the assessee is a contractor not a developer. 3. The sole issue involved in this appeal is relating to the eligibility of the assessee to claim deduction u/s 80IA of the Income Tax Act, 1961 (in short 'the Act'). 4. The brief facts relating to the issue are that the assessee is primarily engaged in developing / providing Lift Irrigation Scheme/ Lift Water Supply Scheme for different state governments. The assessee claims that the said development work carried out by the assessee falls within the definition and scope of Infrastructure development, maintenance and operation activity, hence, assessee is elig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to operate and maintain projects for one to five years. So far as the Thural Project is concerned, the question as to whether the project developed by the assessee was an Infrastructure development project / contract awarded by the Government, came into consideration before this Tribunal in the appeal of the assessee for assessment year 2011-12 and the Tribunal after considering the facts and circumstances of the case held that the Thural Project was developed by the assessee as per the composite contract awarded by the Government and would be eligible for deduction u/s 80IA(4) of the Income-tax Act. Then in the next year relevant to AY 2012-13, the assessee was awarded three more contracts of similar nature. The Ld. PCIT citing similar reasons as were given in her order for AY 2011-12, exercised her jurisdiction u/s 263 of the Act and held that the Assessing Officer had not properly examined the issue as to whether the contracts entered into by the assessee in respect of the three new projects were Infrastructure Development contracts allowable for deduction u/s 80IA or the same were simple works contracts specifically excluded from the applicability under the provisions of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... velopmental stage, hence, the Tribunal considering the nature of the contract held that it was an Infrastructure development project. Since the Ld. PCIT has not brought any differentiating or distinguishing fact about the development activity carried in the Thural Project as compared to the other eight projects undertaken by the assessee, hence, under the circumstances, the findings arrived at by the Tribunal in respect of Thural Project are squarely applicable to the other projects also. It is also pertinent to mention here that the nature of the other three projects which were started in the year 2012-13 has also came for consideration in the appeal of the assessee against the order passed u/s 263 of the PCIT and it has been specifically held that the Ld. PCIT had failed to point out any difference between the Thural Project and the other three projects carried out by the assessee in the said year. However, again vide impugned order, the Ld. PCIT though, fully aware of the earlier findings of the Tribunal, yet, proceeded to pass the impugned order u/s 263 of the Act without brining any distinguishing fasts regarding the nature of the new contract when compared to the ear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the claim of deduction under section 80IA(4). Challenging the assumption of jurisdiction of the learned Pr. CIT, the Ld. counsel of the assessee stated that this issue had been examined during assessment proceedings and the Assessing Officer, after due application of mind, had allowed the assessee s claim of deduction under section 80IA(4). The Ld. counsel for the assessee stated that review of the order was only on account of change of opinion and could not be exercised under section 263 of the Act. In support of its contention that the issue had been examined by the AO during assessment proceedings the Ld. counsel for the assessee drew our attention to the following: a) The return of income for the impugned year accompanied by Audit Report under section 80 IA in form No. 10 CCB on the basis of which deduction under section 80 IA was claimed by the assessee placed at paper book page No. 1 to 26 b) The questionnaire received from the Assessing Officer and the relevant queries raised at serial No. 5,6,7 and 11 of the same relating to the claim of the assessee under section 80 IA placed at paper book page No. 29 to 35. The relevant queries raised in the questionnaire are as fol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Source Level Agumentation of various schemes in Changer area in Tenhil Jaisinghpur, Palampw, Khwidian and Dera in District Kangra (HP) Sub Head:- Construction of Civil Work i.e. Percolation Well, Pump House, Dtaff Quarters, Laboratory Building, Inspection Hut Storage Tanks, Compound Walls, retaining/breast -walls, Wire Crate Works, roads, street truss bridge, providing, lowering, laying and jointing of pipe lines including supply and fixing of required valves and specials, construction of anchor blocks/thrust blocks and supporting pillars etc for rising main, gravity main and supply of lab equipments, inspection vehicle and maintenance van etc. supply and installation of pumping machinery including accessories and electromechanical equipments required for stepping down of 11KVA power supply and post completion operation and maintenance of the whole scheme for 60 months including automation. The composite project awarded to the assessee in providing lift water supply scheme from Executive Engineer, Irrigation Public Health, Division Thural, Distt. Kangra (HP) on account of providing rehabilitation and source level augmentation of various schemes in changer area in Tehsil J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 52,35,708/- as partner on account of 95% share of profit from the firm and claimed exempt u/s 10(2A) of the IT Act, 1961. Farther, the assessee company was awarded contract by Himachal Pardesh Government, Irrigation and Public Health Department, Division Thural. The composite project awarded to the assessee in providing lift water supply scheme from Executive Engineer, Irrigation Public Health, Division Thural, Distt. Kangra (HP) on account of providing rehabilitation and source level augmentation of various schemes in changer area in Tehsil Jaisinghpur, Palampur, Khundian and Dehra in Distt. Kangra HP complete construction of the project of the project including operation Maintenance of the whole scheme. 4.2 The activity undertaken by the company for IPH Thural qualifies exemption u/s 80!A of the IT. Act 1961, and the income is 100% exempt for 10 years. It may he mentioned here that this the 2nd year for claiming exemption u/s (i.e. lst year in the hand of Unipro Techno infrastructure for the F.Y. 09-10 and 2nd year in the hand of Unipro Techno Infrastructure Private Limited w.e.f. 13.04.2010, i.e. for the F.Y. 2010-11) since the company has awarded the same project ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ificate for deduction of tax at lower rate on account of its eligibility to claim deduction under section 80IA of the Act proved that the view taken by the Assessing Officer on the basis of documents before it was correct. Ld. counsel for the assessee further drew our attention to the fact that a similar contract in the case of M/s Kaveri Infrastructure Private Limited/Unipro Techno Infrastructure was held as infrastructural contract for the assessment year 2008-09 to A.Y 2011-12 by another Assessing Officer. Ld.Counsel for the assessee drew our attention to the relevant order sheet entry in the case of M/s Kaveri Infrastructure Private Limited, JV Unipro Techno Infrastructure placed at PB-70 and 71, which reads as under : 04.08.2015 The reply to the notices issued under Section 133(6) of the Act by respondent no. 2 to the Irrigation Department, H.P. Government was received on 03.08.2015 from the Executive Engineer (I PH) Division, H.P. Government, by the said respondent no. 2, in pursuance of which the case of the petitioner was fixed for 04.08.2015. The Assessing Officer i.e. respondent no: 2, passed the following order in favour of the petitioner which rendered the very initi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot be said that any error had crept in the order of the Assessing Officer causing prejudice to the revenue and therefore the action of the learned Pr. CIT in assuming jurisdiction under section 263 for reviewing the order of the Assessing Officer on this count was bad in law and needed to be quashed. 12. Ld.DR, on the other hand, we find, relied upon the order of the learned Pr. CIT and stated that the aspect of application of Explanation to sub-section (13) of section 80IA, to the contract awarded to the assessee was not examined by the Assessing Officer which being crucial to the claim of deduction under section 80IA, an error had crept into the order of the Assessing Officer and since apparently the project undertaken by the assessee was covered under the definition of works contract the assessee had been wrongly granted deduction under section 80IA causing loss to the revenue and thus the action of the learned Pr. CIT was justified on this account. 13. We have heard the contentions of both the parties and perused the order of the learned Pr. CIT as also the documents placed and referred to before us. 14. The only reason for exercising revisionary powers under se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e responsibility of the assessee under the scheme. The assessee had clarified that it was a composite project awarded to it and thus was covered under section 80IA of the Act. Thus, the assessee had clarified that it was not merely works contract awarded to it but a project awarded to it was on a turnkey basis which included postcompletion operation and maintenance of the same also for a specified period. Copy of the contract was also placed before the Assessing Officer. The assessee had also clarified that the impugned deduction under section 80IA was first claimed by it in assessment year 2010-11 and the year under reference was the second year for claiming the said deduction. 18. It is amply clear from the above that necessary enquiries regarding the assessee s claim for deduction under section 80IA of the Act vis- -vis the lift water site scheme contract received from the Executive Engineer, IPH, District Kangra were made during the assessment proceedings by the Assessing Officer. Further all necessary explanations regarding the claim of deduction alongwith evidences were placed by the assessee to prove its claim of deduction under section 80IA of the Act. Therefore, for all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... years, identical claim on account of very same project had been allowed to it by the Assessing Officer and also that for identical project another Assessing Officer had granted deduction under section 80IA of the Act to a sister concern of the assessee M/s Kaveri Infrastructures Pvt. Ltd. in collateral proceedings before the DCIT, for the assessment years 2008-09 to 2011-12, that too after exercising powers under section 133(6) and receiving clarification from the Executive Engineer, IPH, on perusal of which the Assessing Officer found that the contract was on Built Operate Transfer (BOT) basis and not in the nature of works contract and that the project was on turnkey basis in which the assessee was involved in operation and management also. The AO in that case also noted that such arrangements were typical for infrastructure development projects of the Government and cannot be seen as mere works contract. All these facts have not been rebutted by the Ld. DR before us. Therefore, without any doubt it can be said the view taken by the Assessing Officer with regard to the claim of the assessee under section 80IA of the Act was a plausible view. 21. Interestingly, we find ,that al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he validity of the grant of a deduction under Section 80-IB in a previous assessment year on any ground. The Assessing Officer would not be entitled to say that a particular condition was not fulfilled in an earlier assessment year if the assessee had been granted the deduction in that year. The Assessing Officer, therefore, cannot deny a deduction in the assessment year in question before him on the ground that the assessee had failed to fulfill a condition precedent to the grant of a deduction in another assessment year. That would amount to an Assessing Officer reopening an assessment in respect of another assessment year without following the provisions of the Act. 23. Ld.DR, on the other, hand relying upon para 11 of the order stated that certain issues could have been disturbed in the succeeding years also. Ld.DR stated that merely because the assessee had been allowed claim in the 1 s t year did not mean that the same for all purposes could not be disturbed in the succeeding years at all. 24. We have gone through the order of the jurisdictional High Court relied upon by both the parties and find merit in the contention of the Ld. counsel for the assessee. There is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... photographs etc. No effort to distinguish the Contract entered into with Himachal Pradesh Govt. in respect of Thural Project with the subsequent contracts entered into by the assessee with Himachal Pradesh Government in respect of Dehra Project or with the Uttrakhand Govt. in respect of Pauri and Rudraprayag Projects have been referred to in his order by the Pr. CIT or in his arguments by the ld. CIT-DR. Mere argument that the three Projects were different without any supporting fact cannot be given a judicial approval. Suspicion may be said to be sufficient for the purposes of issuance of Show Cause Notice but thereafter, the suspicion has to be backed by hard facts. 4.19 On giving our consideration to the issues remaining at hand, we find that ultimately on the issue on which the order was passed setting aside the order admittedly was not the subject matter of the two show cause notices issued by the Pr. CIT Chandigarh and thus notwithstanding the settled legal position thereon even otherwise we find that in the facts of the present case on a reading of the assessment order itself it is demonstrated that the Assessing Officer has enquired into the said issue also. It is seen t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate to himself a status to surrogate the other authorities and supplant their roles under the Act. 18. The jurisdiction exercisable under section 263 of the Act being supervisory in nature, permitting suo motu review of any assessment already made, the statutorily enjoined sanctions circumscribing the same have to be rigorously construed. The legislative intendment of conditioning the plenitude of the power conferred is manifest in the two preconditions lodged in the section. To sustain the delicate balance between this supervisory and other remedial jurisdictions, as designed by the lawmakers, a constricted connotation and purport of the enabling prerequisites for the exercise of the revisional powers is an imperative necessity. 5.1 Thus, no doubt the power to set aside has been vested with the Pr. CIT. However, the power has to be exercised judiciously and fairly. The Revisionary order cannot be silent in the face of the challenge of the assessee that the Contracts are identical composite Infrastructure Development Contracts on BOT basis i.e. were trunkey projects where after initially setting up, the assessee was tasked with making it functional post completion operation a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Court was careful to observe that writing a detailed order no doubt may be a legal requirement, but the order not fulfilling this requirement, cannot be said to be erroneous and prejudicial to the interests of the Revenue. The Court in unambiguous terms has fastened the responsibility for exercising the Revisionary Power on the Commissioner to necessarily point out as to what error was committed by the Assessing Officer in having reached the conclusion which was sought to be set aside. The said effort was found to be missing in the facts of the said case as in the facts of the present case also. In the facts of the present case, the Pr. CIT having failed to point out any error, let alone an error which is prejudicial to the interests of the Revenue as the necessary exercise for addressing the error has not been done in the order nor has the ld. CIT-DR been able to demonstrate that there were clauses and conditions in the Contracts entered into with Executive Engineer, IPH Dehra (HP), Executive Engineer, Uttrakhand Peyjal Nigal, Construction Division, Rudraprayag and Executive Engineer, Uttrakhand Peyjal Nigam, Construction Division, Pauri vis- -vis the contract entered into wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee by sticking to the quality and quantity irrespective of the cost of such material. The assessee utilizes its funds, its expertise, its employees and takes the responsibility of developing the infrastructure facility, the losses suffered 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 and if the assessee has to undertake maintenance of said infrastructure for a particular period and during the said period, if any damages are occurred, it shall be the responsibility of the assessee , then such a contract would fall within the purview and scope of Infrastructure Development contract. Even on the identical issue in relation to the development of the irrigation project, the ITAT Koltka Bench of the Tribunal in the case of DCIT Kolkata vs M/s Simplex Projects Ltd, Kolkata ITA No. 169/Kol/2016 order dated 8.11.2017 has observed that irrigation project is as infrastructure facility within the scope of section 80IA(4) of the Act. The Tribunal further relied upon the decision in the own case of the aforesaid assessee i.e. Simplex Subhash JV and M/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as put before the Assessing Officer including the copies of the contracts. The Assessing Officer has duly taken note of the nature of contract entered into by the assessee and held that the same were infrastructure facilities development contracts and eligible for deduction u/s 80IA of the Act. Hence, it cannot be said that the order passed by the Assessing Officer was erroneous or prejudicial to the interest of Revenue on this issue. 5. The Ld. DR has not pointed out any distinguishing fact for the assessment year under consideration. 6. Moreover, the deduction u/s 80IA of the Act for the relevant projects i.e. Thural and Dehra has already been allowed in the earlier years and this year being a subsequent year, the findings arrived for the same project in earlier years will mutatis-mutandis apply to the subsequent assessment year also with the condition that the total number of years for claiming deduction will be subject to the other conditions relating to the time period of claiming deduction and percentage of the deduction as provided u/s 80IA of the Act. In view of the above discussion, the appeal of the assessee stands allowed. Order pronounced in the Open Co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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