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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 ..... m 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 eligible for deduction u/s 80IA(4) of the Act. The assessee, had entered into agreements in earlier years for developing / providing Lift Irrigation Schemes / Lift Water Supply Scheme at different places with respective State Authorities such as Irrigation and Public Health Department of Himachal Pradesh Govt. and that of Govt. of Uttrakhand and also with Govt. of Rajasthan. Admittedly, the issue relating to the eligibility of the assessee to claim deduction u/s 80IA of the Act in respect of the above projects including similar types of other projects / contracts entered into by the assessee has already been considered by the Tribunal in the own case of the assessee for earlier assessment years. The Tribunal in iden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 section 80IA as per explanation to sub section (13)of section 80IA of the Act. The Tribunal discussed the matter in detail and vide order dated 6.2.2017 in ITA No.361/Chd/2016 for assessment year 2011-12 & also vide subsequent order dated 1.12.2017 (ITA No. 867/Chd/2017) for assessment year 2012-13 and held that the Ld. PCIT had failed to differentiate the nature of the other three projects from the 'Thural Project'. After detailed discussion, the appeals of the assessee were allowed and the order of the Ld. PCIT u/s 263 of the Act was quashed. From the above facts, it comes out that the nature of the contracts and development activities of the assessee have been examined by the Tribunal and after extensive discussion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd 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 earlier four contracts carried out by the assessee. Moreover, the Ld. PCIT has held that the assessee is eligible for deduction in respect of the 'Thural Project' for the year under consideration being the fourth year of the project and that the assessee has to only operate and maintain the said infrastructure facility namely 'Thural Project. By saying so, the Ld. PCIT herself has impliedly admitted that the 'Thural Project' is an Infrastructure Development Project and as per the provisions of section 80IA(4) of the Act, the deduction has been allowed for developing or Operating and maintaining or for Developing, Operating and maintaining a new project facility. 14. So far as the observation made by the Ld. PCIT that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpanied 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 follows: "5. As per information filed by you, it has seen that you had undertaken contract for providing lift water supply scheme from Executive Engineer, IPH and claimed this income as exempt u/s 80IA and got sub-contract from NKG Infra in which income is taxable. Please provide the complete details in this regard alongwith copy of contract with them. Please also provide details how you are eligible for exemption u/s 801A when you are conducting activities under contract. 6. You have also claim exemption amounting to Rs. 52,35,708/- u/s 10(2A) and Rs. 12, 11, 810/- u/s 80IA. Please provide the complete details in this regard alongwith documentary evidence. 7. As per audit report col. No. 26, the auditor has shown deduc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Jaisinghpur, Palampur, Khundian and Dehra in Distt Kangra HP Complete construction of the project including operation & Maintenance of the whole scheme is covered under section 80IA. The copy of contract with Executive Engineer HP IPH Divn. Thural for Lift water supply scheme is enclosed herewith. A copy of agreement as sub contractor of NKG Infrastructure Ltd is also enclosed herewith." d) Reply dated 29.08.2013 for the purpose of claim of deduction under section 80IA placed at paper book page 41 number. The relevant portion of the reply is as follows: "Please refer to the Assessment proceedings in the case of Unipro Techno Infrastructure Private Limited, SCO 36, Sector 7, Chandigarh for the A/Y 2011-12 PAN AACFU1025F. The information/docume ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PH 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 by the same Govt. This year, the assessee has claimed an amount of Rs. 12,11,810/- as deduction u/s 80IA. The assessee vide its reply, which is placed on record, has himself admitted that the year under reference is the second year for claiming deduction u/s 801A. 10. Relying upon the above documents Ld. counsel for the assessee stated that relevant queries relating to eligibility of the claim of assessee of deduction under section 80IA was raised by the Assessing Officer during assessment proceedings, due reply was filed by the assessee after considering which and after applying his mind to which the assessing officer passed a detailed reply allowing deduction under section 80IA to the assessee. Thereafter Ld. counsel for the assessee drew our attention to the fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 initiation of reassessment proceedings for the assessment year in question including ' the subsequent year as illegal and totally without jurisdiction:- "Present: Sh. A.K. Sood, CA. The Id. Counsel again submits that proceedings u/s 148 need to be dropped as there was no non disclosure by the assessee. He has again been told that the case is being proceeded with on merit as the matter is one of interpretation of the Statute. The clarification received from the Executive Engineer, l&PH, Division Barsar, Distt. Hamirpur vide letter dt. 1/8/2016 in response to query u/s 133(6) is on record. Perusal of the same shows that the assessee was awarded the complete project contract on BOT basis and no other agency was involved in the same. The Id. Counsel has also cited CBDT Circu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 section 263 in the present case is that the Assessing Officer had not examined the claim of the assessee to deduction under section 80IA(4) vis-a-vis Explanation 13 to the said section which excludes profits earned from works contracts from deduction under section 80IA(4) of the Act. 15. On this account we are unable to agree with the learned Pr. CIT. It is amply clear from the pleadings and documents placed before us by the Ld.Counsel for the assessee that the said issue was raised during assessment proceedings, due inquiries were made and after proper application of mind the Assessing Officer allowed the claim of the assessee. 16. We find that the assessee had filed return of income claiming deduction under section 80IA amounting to Rs. 12,11,810/-. Certificate in Form No.10C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 80IA of the Act vis-à-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 purposes, it can be said that the claim of the assessee had been duly verified during the assessment proceedings. Clearly the contention of the learned Pr. CIT that no enquiries were made is incorrect. 19. We may add that it cannot also be a case of inadequate enquiry. All explanations and evidences were placed before the Assessing Officer to explain the nature of the contract and demonstrate that it was not merely a "Works Contract". We fail to understand what further inquiry was required to be made in the case to settle the issue of the nature of contract or for that matter how the present inquiry was not adequate to arrive at the correct conclusion. Moreover we find that even the learned Pr. CIT has not spelt out the same in his order. Even before us the Ld. DR has failed to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 all the explanations and evidences which were filed before the AO by the assessee to support its claim of deduction u/s 80IA was also filed before the learned Pr. CIT and despite so there is not a whisper in the entire order as to how the view of the AO that it was an infrastructure project and not works contract, is incorrect. The learned Pr. CIT has not referred to a single document, clause or otherwise of the agreement to lend credence to his view. The entire thrust of the learned Pr. CIT in exercising revisionary powers is that adequate enquiry vis-à-vis claim of deduction under section 80IA of the Act was not carried out, which as we have stated above, the Ld. counsel for the assessee has demonstrated is incorrect. Adequate enquiries were carried out, adequate replies were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isturbed 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 dispute about the fact that in the preceding assessment year i.e. AY 2010-11, which was the 1 s t year of claim of deduction under section 80IA, the assessee was allowed the same under section 143 (3) of the Act. This means that for all purposes the claim of the assessee having been examined in the light of the parameters of eligibility laid down under section 80IA, it could not be said that in the succeeding year those very same parameters had changed on the same set of facts. The Assessing Officer, after considering all the documents placed before it, had in the preceding year concluded that the assessee was carrying out an infrastructure related project which was not in the nature of works contract as defined under section 80IA, read with Explanation-13 and thus the assessee wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 that the AO while passing the order proceeded to look into the claim of depreciation for the exempted and non-exempt units and thus the suspicion of the Pr. CIT, Chandigarh that the facts for considering the bifurcation of expenses between the exempted income and non-exempt income have not been looked into is without any justification and in the peculiar facts of the present case based entirely on suspicions. 4.20 Accordingly in view of the detailed reasons given herein above, we find that there was no basis for the principal CIT-A to conclude that it is a case of inadequate enquiries. We find from the record that the assessing officer has inquired into the issues the assessee has demonstrated the correctness of the claim having been allowed the revenue having failed to point out as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted 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 and maintenance of the same for a specific period. The Contracts were available with the Pr. CIT and the stated claim of the assessee if it was found to have been incorrect, should have been demonstrated in the order itself. Even in the course of the arguments, ld. CIT-DR could not bring any fact to our notice in support of the order passed. The power vested by the Statute comes with onerous responsibilities which cannot be allowed to be shirked. The assessee in the facts of the present case is able to demonstrate that full facts were available on record on which enquiries have been made and the assessment order itself shows that the calculations carried out even though for the purposes of depreciation by the AO qua the exempted units and non-exempt units demonstrate that facts have been se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing 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-à-vis the contract entered into with Executive Engineer, IPH Thural (HP) on the basis of which they could not be said to be Composite Infrastructure Development Contracts on a BOT basis with added responsibilities towards its maintenance for specific period. The order passed, accordingly for the detailed reasons given herein above is held to be arbitrary and the order is quashed. Accordingly, the grounds raised are allowed. 6. In the result, appeal of the assessee is allowed. 16. The Ld. PCIT vide impugned order has tried to distinguish between the 'works contract' and a 'Development contract' by holding that since the development of the projects in question was to be carried out by the assessee as per the specifications / designs approved by the Government, hence, it would fall within the definition of 'works co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gation 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 Somdatt Builders JV vide ITA No. 1684/Kol/2011 and 1685/Kol/2011 dated 8.6.2013, wherein, it has been observed that if the project is a turnkey project involving the activity of development of infrastructure facility, it will be an activity as provided u/s 80IA(4) of the Act. The Tribunal considered that a perusal of the turnkey contract agreement entered into by the assessee with the irrigation department clearly showed that the construction of all the structure of whole of the canal system was to be as per the approved design, drawings of the Department etc. Survey is to be done as per the investigation and drawing criteria of the Irrigation Department. The assessee has to procure the material independently and those materials are to be conformed to the specifications provided. The asse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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