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TMI Blog2020 (12) TMI 1156X X X X Extracts X X X X X X X X Extracts X X X X ..... that when there is no exempt income, no disallowance under section 14A of the Act can be made. Ld. CIT(A) also followed the judgment of the Hon'ble Supreme Court in the case of Principal CIT Vs. Oil Industry Development Board [ 2019 (3) TMI 1571 - SC ORDER ]. We therefore in the absence of any contrary decision brought on record, do not see any valid ground to interfere with the view taken by the Ld. CIT(A). - Shri. N.K. Saini, VP And Shri, R.L. Negi, JM For the Assessee : Shri Sudhir Sehgal, Advocate, Shri A.K. Sood, C.A For the Revenue : Shri Sandip Dahiya, CIT ORDER PER N.K. SAINI, VICE PRESIDENT This is an appeal by the Revenue against the order dt. 19/11/2019 of Ld. CIT(A)-1, Chandigarh. 2. Following grounds have been raised in this appeal: 1. On the facts and circumstances of the case, the Ld. CIT(A) has erred in partly allowing the appeal of the assessee without appreciating the facts of the case. 2. The Ld. CIT(A) is not justified in not upholding disallowance of ₹ 81,348/- under section 14A of the Income Tax Act on the ground that disallowance cannot be made where there is no exempt income without appreciating fact that there is no such restriction stipulated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A) has erred in law and fact in following the decision of Hon'ble High Court In Lakhani Marketing decided following decisions in the case of Hero Cycles Ltd., 323 ITR 204 and CIT vs. Winsome Textile Industries Ltd., 319 ITR 204 whose facts are distinguishable from the taxpayers, ignoring the principal of apportionment laid down by Hon'ble Supreme Court decision in CIT vs. Walfort Share and stock Brokers P Ltd. 326 ITR 1(SC), which has been confirmed in 91 Taxman.com !54(SC) and thus litigation relying on Winsome Textiles industries Ltd(Supra) stands superceded. 9. The order of the Ld. CIT(A) is perverse in nature and against law as it grossly overlooked the scheme of the Income TaxAct,1961 and material available on record. 10. The Ld. CIT(A) has erred in by making observation that issue at hand has been decided by him on identical factsln Appeal no. 10657/16-17 dated 24.01.2019 for A.Y. 2011-12 wherein it was held assessment made in compliance to the said revision order cannot be sustained as the order of PCIT made u/s 263 of the Income Tax Act, 1961 has been set aside by the Hon'ble ITAT. Howeyer, in the present case, no order u/s 263 of the Income Tax act, 1961 has be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l in assessee s own case vide order dt. 13/10/2020 in ITA No. 1582/Chd/2018 for the A.Y. 2014-15 in assessee s own case wherein by following the earlier order dt. 29/01/2020 in ITA No. 749/Chd/2018 for the A.Y. 2013-14 in assessee s own case, the relevant findings have been given at page no. 3 to 21 of the order dt. 13/10/2020 which read as under : 13. Before proceeding further it is pertinent to mention here that as per provisions of section 80IA(4), deduction has been allowed to an assessee who has entered into an agreement either with the Central or a State Government or a Local Body or any statutory body for - (i) Developing or (ii) Operating and maintaining or (iii) Developing, Operating and maintaining a new Infrastructure facility. The assessee, admittedly, had entered into nine agreements up to the year under consideration for developing / providing Lift Irrigation schemes/ Lift Water Supply Scheme with various State Authorities such as Irrigation and Public Health Deptt, of Himachal Pradesh Govt. and that of Govt. of Uttrakhand. The contracts were composite contracts requiring the assessee not only to develop facility but also to operate and maintain the facilities for spe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent projects undertaken during the year was different from the nature / facts of the Thural Project as carried out by the assessee in the assessment year 2011-12 when it was in its development stage. She had not discussed as to why findings of this Tribunal for assessment year 2011-12, which was in relation to the nature of the Thural Project when it was in development stage, would not be applicable to the new projects undertaken. However, she has taken an entirely inappropriate and illogical plea that this year Thural Project is entered into the fourth year and, thus, the activity carried out by the assessee for the year under consideration in respect of the Thural Project is only operation and maintenance, therefore, the facts of the Thural Project for the year under consideration are different from other projects. It is pertinent to mention here that the nature of the Thural Project and the activity carried out by the assessee for the assessment year under consideration, when the Thural Project is reached in its fourth year was not under consideration or adjudication by the Tribunal in respect of the appeal of the assessee for assessment year 2011-12 and even in the appeal for a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 (supra) in this respect, are reproduced as under:- 8. We have heard the rival contentions, perused the order of the learned Pr. CIT and the documents placed before us. 9. On perusal of the order of the learned Pr.CIT we find that the first reason for invoking revisionary powers under section 263 was that the Assessing Officer had not examined the claim of the assessee of deduction under section 80IA of the Act vis-a-vis the applicability of the Explanation to sub-section(13) of section 80IA of the Act. The learned Pr. CIT has held that as per the aforesaid explanation to the section work contracts are not eligible for deduction under section 80IA(4) and apparently the project undertaken by the assessee is covered under the definition of works contract . Moreover the Assessing Officer has not examined this aspect during the course of assessment and no verifications were made by the Assessing Officer, therefore, as per the learned Pr. CIT, the assessee has been wrongly allowed deduction of its profits under section 80IA(4) of the Act causing prejudice to the revenue. Before us Ld. counsel for the assessee made arguments challenging the jurisdiction of the Pr.CIT to invoke revisiona ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /s 80 -1A is for the A.Y. 2011-12. On the other hand, under the detail of fixed assert as on 31.03.2011, you have shown WDV of the fixed asset as on 01.04.2010 at ₹ 1,81,58,128/-. Please furnish details of how WDV comes to exist on 01.04.2010 when your date of commencement of operation started on 13.04.2010 and show cause why depreciation claimed by you should not be disallowed as it seems that you are furnishing inaccurate particulars. Please also furnish whether you have claimed such exemption u/s 80-lA in the previous year also or not? 12. Further at para 12 of Form No.10CCB, you have shown sales tax registration No. in which it has ascertained that you were got registered with sales tax on 09.07.2009. Please state whether you have got sale tax No. before the company came into existence. c) The reply filed by the assessee in response to the query raised dated 13.08.13 placed at paper book page No. 36 to 40. The relevant reply of the assessee in the same pointed out to us by the Ld. counsel for the assessee is as follows: 5. The assessee company was awarded contract by Himachal Pardesh Government, Irrigation and Public Health Department, Division Thural as under; providing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 80IA at paras 3 to 4.2 of the order as follows placed at paper book page Nos. 44 to 52 : 3. The case of the assessee selected under CASS with the reasons that AO to examine the reasons genuineness for high claim of refund out of TDS . When confronted, the assessee vide its reply dated 13.08.2013, has submitted that in the year 2011-12 a refund of ₹ 10,47,850/- was claimed as a part of the income of the company amounting to Rs. 12,11,810/- was exempt u/s 80IA and TDS was deducted on the total receipt of the company, the excess amount of TDS deducted was claimed as refund. 4. The assessee-Commissioner came into existence w.e.f. 13.04.2010 after conversion from partnership firm, namely M/s Unipro Techno Infrastructure to M/s Unipro Techno Infrastructure Private Ltd. with all its assets and liabilities with Sale Tax Registration number and also carried forwarded the same WDV of the firm as on the last date of 13.04.2013. 4.1 The assessee company is a partner in the firm Kaveri Infrastructure Private Ltd. JV Unipro Techno Infrastructure in which it is holding 95% share. Copy of the partnership deed is placed on record. The asessee has earned a profit of ₹ 52,35,708/- as part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e risk, performance guarantee etc was the responsibility of the assessee. The Ld. counsel for the assessee pointed out that the contract in any case could not be said to be a works contract for the purpose of Explanation to sub-section (13) to section 80IA(4) and the Assessing Officer on the basis of documents produced before it had rightly arrived at the conclusion that the assessee was eligible to claim deduction under section 80IA of the Act. In support of its contention that the view taken by the Ld. counsel for the assessee was a correct and plausible view Ld. counsel for the assessee drew our attention to the fact that on an application filed by the assessee to the CIT (TDS) for issuing a certificate for deduction of tax at lower rate on account of the deduction claimed by the assessee under section 80IA of the Act, the assessee was awarded a certificate for assessment years 2010-11 to 2013-14 placed at PB-126 to 134 after considering all the necessary and relevant documents proving that the assessee was eligible to claim deduction under the same. Ld. counsel for the assessee pointed out the fact that the assessee had been awarded a certificate for deduction of tax at lower r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and has also been engaged in its operation and mgt. Such arrangement is typical to Infrastructure Development Project of the Govt. and cannot be seen as mere works contract. Case adjourned to 17.08.2015. Insp. to place copy of file notings on all files of connected relevant assessment years in the case. 11. The Ld. counsel of the assessee also drew our attention to the fact that in the preceding year i.e. assessment year 2010-11 as also in the succeeding year i.e A.Y 2012-13 2013-14, the assessee had been allowed its claim of deduction under section 80IA in the order passed under section 143 (3) of the Act. The Ld. counsel for the assessee, therefore, stated that the claim of the assessee for deduction under section 80IA having been duly examined in the course of regular assessment proceedings and the Assessing Officer having allowed the claim which was consistent with the view taken by the CIT (TDS) while granting certificate of lower deduction of tax, the Assessing Officer in the preceding and succeeding years, as also with the view taken by the Assessing Officer in the case of another assessee undertaking identical work, it cannot be said that any error had crept in the order o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asked to prove his eligibility for such claim when the activities were being undertaken under contract. Thus specific and pointed queries vis-a-vis eligibility of claim of deduction u/s 80IA were raised and the assessee was specifically asked to justify its claim in the light of undertaking the work under contract meaning thereby that it was a works contract . 17. In reply to the same, the assessee furnished complete detail of the work undertaken stating that it had undertaken contract for providing lift water supply scheme from the Executive Engineer, Irrigation Public Health Division, Thural, Distt. Kangra on account of providing rehabilitation and Source Level Agumentation of various schemes in different Tehsils of District Kangra. The assessee, we find, had also stated that the complete construction of the project alongwith operation and maintenance of the whole scheme was to be undertaken by it. Complete detail of the construction work to be undertaken was also given and it was reiterated that the post-completion operation and maintenance of the whole scheme for 16 months including automation was the responsibility of the assessee under the scheme. The assessee had clarified ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the same in his assessment order and recorded his satisfaction regarding the assessee s claim for such deduction stating that the activity undertaken by the assessee clarifies for deduction under section 80IA of the Act. The Assessing Officer further added that this was the second year of claim of deduction since the assessee company had been awarded the same project by the same Government. Thus, we find that the Assessing Officer after having applied his mind to the explanations and evidences filed by the assessee arrived at a logical and reasonable conclusion that the assessee was eligible to claim deduction under section 80IA of the Act as its activity qualified for the said claim. We find that the view taken by the Assessing Officer is a plausible view since as demonstrated before us, the assessee had been granted a certificate of lower deduction of tax for assessment years 2010-11 to 2013-14 after considering the eligibility of the claim of the assessee to deduction under section 80IA of the Act. The assessee has also demonstrated before us that in the preceding and succeeding assessment years, identical claim on account of very same project had been allowed to it by the As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out by it that the assessee was eligible to claim deduction under section 80IA of the Act and therefore there was no error in the order of the Assessing Officer so as to cause prejudice to the Revenue. The action of the learned Pr. CIT in exercising his revisionary powers on this ground is set aside. 22. Besides the above argument Ld. Counsel for the assessee also argued before us that the issue of eligibility of claim of deduction under section 80IA of the Act having been examined in the 1st year of claim of the assessee i.e. AY 2010-11, the same could not have been disturbed in the succeeding years. In support of its contention the Ld. Counsel relied upon the decision of the Punjab and Haryana High Court in the case of CIT versus Micro Instrument Company in ITA. No. 958/2008 dated 2.9.2016 more specifically at para 12 of its order had stated as follows: 12. However, while undertaking this exercise, the Assessing Officer is not entitled to reopen an issue that had been decided in respect of a previous assessment year. In other words, an Assessing Officer is not entitled to question the validity of the grant of a deduction under Section 80-IB in a previous assessment year on any gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... visionary powers since the claim of the assessee had been decided in the preceding year itself and without disturbing the same it could not have been dislodged in the impugned year. 25. In view of the above we set aside the order of the learned Pr. CIT on this count. 15. Further, the aforesaid issue was again considered by the Tribunal for assessment year 2012-13 also. The Tribunal vide order dated 1.12.2017 has again decided the issue in favour of the assessee. The relevant findings of the Tribunal are reproduced as under:- 4.18 Accordingly we find that infact there is nothing on record except the suspicion of the Department that the assessing officer has not carried out adequate enquiries. We have gone through the record and seen that the issues have been enquired into replies have been placed on record nothing has been brought by the Department to show that the view taken by the assessing officer was incorrect on facts. The requisite agreements alongwith site plan Schedule etc. attached thereto were all available before the AO and before the Pr. CIT alongwith photographs etc. No effort to distinguish the Contract entered into with Himachal Pradesh Govt. in respect of Thural Proj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i High Court in the case of Bongaigaon Refinery and Petrochemical 287 ITR 120 (Gau) where the Court at page 131 para 17 and 18 held as under: 17. Entertainment of a view different from the one adopted by the Assessing Officer, if plausible would not clothe the Commissioner with the power to interfere therewith under the said provision of the Act. Differently put, an error within the jurisdiction of the Assessing Officer on an evaluation of the materials available would not be exposed to interference in exercise of suomotu revisional powers under section 263 of the Act. The provision though permits the Commissioner to initiate an enquiry as he may deem necessary does not authorise a roving probe into the facts with the disposition to pick out errors to sustain the eventual interference. This assumes great significance in the context of the statutory frame work of the Act outlining the jurisdictional contours of different authorities to adjudicate the issues as legislatively stipulated. The Commissioner in exercise of his revisional powers cannot arrogate to himself a status to surrogate the other authorities and supplant their roles under the Act. 18. The jurisdiction exercisable un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nced. Unless and until the Revenue demonstrates that the order has been passed without due and adequate enquiry or an error which is prejudicial to the interests of the Revenue is pointed out only then the order passed can be upheld. Merely because the assessee would have an opportunity available before the Assessing Officer once again cannot be said to be a justifiable reason for setting aside an assessment order. If the said argument is accepted, then each and every assessment order can be set aside as opportunity to the assessee is any way granted by the Rule of Law. 5.2 Before parting, we may also refer to the decision of the Allahabad High Court in the case of CIT Vs Goyal Private Family Specific Trust (1988) 171 ITR 698, 701-702 (All). A perusal of the said decision would show that the Court has held in unambiguous terms that merely because the orders of the Assessing Officer are brief and cryptic, the said fact by itself cannot be a ground for branding the assessment orders as erroneous and prejudicial to the interests of the Revenue. The Court was careful to observe that writing a detailed order no doubt may be a legal requirement, but the order not fulfilling this requirem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut infrastructure development project in a contracts with a Union Government or State Government or Local Authority. Such / stated projects are to be carried out as per the term of the Government. However, what distinguishes and work contract from Infrastructure Development Contract as per section 11A of the Act is that whether the contract has been granted for a specific work or it is a development of a facility as a whole and whether day to day control on the project and its manner of development is of the Government authorities or of the contractor. The Coordinate Lucknow Bench of the Tribunal in the case of M/s Vijay Infrastructure Limited, Lucknow vs ACIT , ITA No. 254/LKO/2015 Others, order dated 30.10.2015 observed that if the assessee's duty is to develop infrastructure whether it involves construction of a particular item as agreed to in the agreement or not and that the agreement is not for a specific work, it is for development of facility as a whole, 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 assessee utilizes its funds, its expertise, its employees and takes the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter considering the observations and objections made by the Ld. PCIT and in the light of the proposition laid down in the case laws, as discussed above, , we find that neither the Ld. PCIT could even point out how the fact and nature of the projects carried out during the year under consideration were different from the projects earlier taken by the assessee which have already been held to be eligible for deduction u/s 80IA(4) of the Act being Infrastructure Facility Development Project, nor the Ld. PCIT could point out from the clauses of the agreement that they would not fall within the definition of infrastructure development project as provided u/s 80IA(4) of the Act. In our view, the Ld. PCIT has exercised her jurisdiction u/s 263 of the Act totaling bye- passing and in contradiction of the findings given by the Tribunal in the own cases of the assessee for earlier assessment years i.e. 2011-12 and 2012-13 vide orders dated 6.2.2017 1.12.2017(supra). Further, it is found that all the material was 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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