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TMI Blog2021 (5) TMI 724X X X X Extracts X X X X X X X X Extracts X X X X ..... f the assessment order has made it clear that the assessee itself satisfies all the three components of development, operation, and maintenance thereof along with financial involvement and risk factor involved in the corresponding infrastructure projects. Revenue s argument raised before us goes contrary to the assessment findings therefore. We thus are of the opinion that there is neither any irregularity nor illegality in the order of the CIT(Appeals) s identical findings allowing the assessee's sec.80-IA deduction claim. Both these lower appellate orders are upheld therefore. - ITA Nos.190 & 191/Hyd/2018 - - - Dated:- 23-4-2021 - Shri S.S. Godara, Judicial Member And Shri Laxmi Prasad Sahu, Accountant Member For the Appellant : Smt. Nivedita Biswas Shri Sunil Kumar Pandey (D.Rs) For the Respondent : Shri S. Rama Rao. ORDER PER SHRI S.S. GODARA, J.M. : These Revenue s appeals for Asst. Years 2013-14 2014-15 arise from the Commissioner of Income Tax (Appeals)-12, Hyderabad s order both dt.20.11.2017, passed in the case Nos.0011 0015/2016-17 in the proceedings under Section 143(3) of Income Tax Act, 1961 ( the Act ); respectively. Heard bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the observations made by various Judicial Authorities, including the decision of Hon'ble ITAT, Hyderabad in the case of M/s.sushee Hitech Constructions M/s.Ramky Infrastructure Ltd, etc., wherein, the criteria enumerated for claiming deduction u/s.80IA(4) of I.T.Act are as under : a. The project agreement has to be entered with either a Department or a Statutory Body. b. The scope of the contract should be for either Development or Operation Maintenance or both in respect of an infrastructure facility. c. The contractor should be liable for any defects arising in the case of the project for a specific. d. The contractor has to bear all the risks involved with the project. e. The project work should be carried on by the contractor without hindrance to the normal public activity. The assessee shall facilitate the people to use the available existing facility even while the process of development is in progress. Any loss to the public caused in the process would be the responsibility of the assessee. f. Material is not supplied by the Government. The assessee itself has to incur the expenditure for purchase of materials required to execution of the proje ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing on Judicial decisions. As to the specific issue of eligibility of constituent of JV for deductions u/s.80IA(4), the assessee company relied on the decision of ITAT, Visakhapatnam, in the case of M/s.Transtroy (India) Ltd Vs ITO (in ITA No.540 of 2009), where in the Hon'ble ITAT had held that for all practical purposes, the works awarded to the JVs/Consortia are executed by the constituents, as such the constituents are eligible for deduction u/s.80IA(4). However, the Assessing Officer disallowed the claim of deduction u/s.80IA{4} to the extent of Rs.l,60,09,903/- representing the profits attributable to the projects awarded to JVs/consortia. The disallowance was made on the ground that the decision of ITAT, Visakhapatnam, as relied upon by the assessee, had not been accepted by the department. 5.2 The appellant has contested the said disallowance, and it has been submitted that in course of assessment proceeding, the appellant filed comprehensive explanation about the eligibility of its claim basing on various facets of the work executed by it so as to entitle it for the deduction under section 80IA(4), which are also duly supported by various principles evolved by decis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m, the agreement was entered into by the Jv, whereas the deduction u/s. 8O-IA was claimed by its constituent member, which is in violation to the provisions of the section 80-la. In this regard, the assessee was asked to furnish explanation as to why the deduction u/s.8O-IA in respect of the projects awarded to JVs, should not be disallowed. In response thereto the assessee vide its written submissions stated as under . 2.3 The above query of the AO raised a question of law, whether the constituent JV partner can claim deduction U/ s. 80-IA(4) in respect of profits from the work taken from the JV, when the assessee did not directly enter into agreement with Govt. The assessee submitted a detailed written submission along with decisions of various Tribunals and High Courts in favour of the assessee on the allowability of deduction U/ s. 80-IA(4) in respect of projects of JV executed by the assessee, which is self explanatory from para no. 1 to 4 on page no. 10 to 11 of the assessment order . 5.2.1 It was further submitted by the appellant that the above aspects were considered by the Assessing officer and there is no dispute that the appellant acted as a developer. It was expl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f section 80 IA(4) and the observations of judicial decisions. Though satisfied with the eligibility of profits of 7 of such projects representing profits of ₹ 20.69 crores, for the year under reference, the AO restricted the benefit of deduction u/s.80 IA(4), to the profits related to direct projects. Thus, the AO disallowed the deduction claimed on profits of Rs.l,60,09,903/-, on the ground that the said amounts represent the profits attributable to two projects/work awarded to JVs, where the assessee constituent and the claim of deduction on such profits is violation of provisions 0: 80IA(4}, as the contracts have been awarded by Govt'/Statutory Authorities only to such Joint Ventures/Consortia. In this regard, the AD disregarded the submissions of the assessee, that the profits so earned by assessee company through JVs/Consortia neither formed part of total income of JVs nor any deductions u/s.80IA(4) were claimed by JVs, on such incomes. The reliance of the assessee on the decision of ITAT, Visakhapatnam in case of M/s.Transtroy India Ltd Vs lTO (supra), as regard to allowance of deduction u/s.80IA(4) on the profits of JVs and assessability to tax, was not accepted b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion given by Hon'ble ITAT, Visakhapatnam in the case of M/s.Transtroy India ltd Vs ITO (supra). As per the said decision, the assessee, being the constituent of the JVs/Consortia, having executed the contracts, was clearly held to be justified in claiming the deduction u!s.80IA(4). Thus, the facts of the present case, being akin to the facts of case in M/s.Transtroy India Ltd., the assessee is considered eligible for deduction u!s.80 IA(4) on profits attributable to the projects executed as a constituent as well, which is to the tune of Rs.l.60 crores. 5.3.2 On the issue of binding nature of ITAT decision, the case laws in the following cases support the cause and stand of the assessee. (i) Union of India Vs Kamalakshi Finance Cor where in the Hon'ble Apex Court held that the mere fact that the order of the appellate authority 'is not acceptable' to the department-in itself is an objectionable phrase-and is the subject matter of on appeal, can furnish no ground for not following it, unless it's operation has been suspended by a competent court.' (ii) CIT vs RaIson Industries Ltd 158 Taxman 160 SC : Where in the Hon'ble Apex Court held that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -, claimed as deduction u/s.80IA(4) for the year, including the deduction of Rs.l,60,09,903/-, claimed on profits of JVs, as a constituent, as claimed in return of income. Accordingly, this ground of appeal is treated as ALLOWED. 4. Learned CIT-DR vehemently contended during the course of hearing that the Assessing Officer has rightly disallowed the assessee's claim of deduction on the ground that the same is not eligible for as per the provisions of Section 80-IA since only the enterprise which enters the corresponding agreement with the Govt./Statutory Body is eligible for the impugned deduction. And also that Section 80IA explanation also applies in facts of the instant case since the assessee is only a works contractor not entitled the impugned deduction. Learned authorized representative vehemently supported the orders of CIT(A) s above findings. 5. We have given our thoughtful consideration to rival pleadings. Coming to Revenue s first and foremost argument regarding consortiums and JVs entitlement to claim 80IA deduction relief, we make it clear that the tribunal s co-ordinate bench order in M/s. Transtroy India Limited(supra) has already decided the same issue i ..... 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