9911796707
TMI Blog2023 (2) TMI 342X X X X Extracts X X X X X X X X Extracts X X X X ..... ) TMI 1414 - ITAT DELHI] wherein held the average investments, the disallowance made by the Revenue u/r 8D(2)(iii) by considering 0.5% of the average investment is hereby sustained. Addition on account of advances written off - HELD THAT:- On the ground that, no details regarding advances written off has been filed by the assessee before the AO. CIT(A) held that the expenditure was already allowed in the year in which the material was purchased and the same cannot be allowed twice when the same has been returned by the sub-contractor. Ongoing through the facts, we decline to interfere with the ratio of the ld. CIT(A). The appeal of the assessee on this ground is dismissed. Before us distinguishing feature in the facts of the present case at that of A.Y. 2014-15 has been pointed out by learned AR. In such a situation we find no reason to interfere with the order of Ld. CIT(A) on this ground. Thus this ground of the assessee is dismissed. Deduction u/s. 80-IA - CIT(A) held Deduction to be allowable to the assessee - HELD THAT:- We find that identical issue arose in assessee s own case for A.Y. 2014-15 and the co-ordinate bench of the Tribunal in [ 2022 (9) TMI 1414 - ITAT DELHI] has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cted for scrutiny and thereafter assessment was framed under section 143(3) of the I.T. Act, 1961 vide order dated 27.12.2013 in order no. ITBA/AST/S/143(3)/2018-19/1014622659(1) and the total taxable income of the assessee was determined at Rs.468,53,22,800/-, and the book profit u/s. 115JB was computed at Rs. 520,13,72,607/-. 2.2. Aggrieved by the order of the A.O, assessee carried the matter in appeal before the Ld. CIT(A) who vide order dated 29.05.2019 in appeal no. 216-18/19 granted partial relief to the assessee. 3. Aggrieved by the order of the Ld. CIT(A), the Assessee and Revenue is now in appeal before the Tribunal. The grounds raised by the assessee in ITA no. 6044/Del/2019 reads as under:- "1. (a)That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in treating the foreign income of Rs.159,62,39,471/- as taxable in India whereas this income is not taxable in India in any manner and more so when assessee is following exemption method and paid taxes on the said income under the tax laws of the Host Country as per the provisions of Double Taxation Avoidance agreement and impugned addit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,608/- 3. That having regard to the facts and circumstances of the case, Ld. AO has erred in law and on facts in framing the impugned assessment order without assuming jurisdiction as per law. 4. (a) That having regard to the facts and circumstances of the case, Ld. A.O has erred in law and on facts in denying the benefit of deduction of Rs.33,71,10,185/- claimed by assessee u/s 80IA and that too without observing the principles of natural justice and by disregarding the submissions/evidences of the assessee and further erred in observing that assessee is a contractor whereas the fact is that assessee is a developer and without observing the principles of natural justice. 4(b) That in any case and in any view of the matter, action of Ld. AO in denying the benefit of deduction of Rs.33,71,10,185/- claimed by assessee us 80IA, is bad in law and against the facts and circumstances of the case. 6(b) That in any case and in any view of the matter, action of Ld. AO in treating the global income of Rs. 159,62,39,471/- taxable in India is 5. (a)That having regard to the facts and circumstances of the case, Ld. A.O has erred in law and on facts in making disallowance of Rs.33,73,7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n account of Global Income in Malaysia and Sri Lanka while computing the total income under MAT. 10. That having regard to the facts and circumstances of the case, Ld. A.O has erred in law and on facts in making addition of Rs.33,73,74,583/- account of provision for maintenance being unascertained liability while computing the total income under MAT. 11. That having regard to the facts and circumstances of the case, Ld. A.O has erred in law and on facts in making addition of Rs.4,30,42,385/- w/s 14A while computing the total income under MAT. 12. That in any case and in any view of the matter, impugned assessment order and all the additions/disallowances made therein are bad in law, illegal, unjustified, barred by limitation, contrary to facts & law and based upon recording of incorrect facts and finding, without giving adequate opportunity of hearing, in violation of principles of natural justice and the same deserves to be quashed and same are not sustainable on various legal and factual grounds. 13. That having regard to the facts and circumstances of the case, Ld. A.O. has erred in law and on facts in not allowing the credit of prepaid taxes (including foreign tax credi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Sri Lanka, be given as per DTAA entered with Malaysia and Sri Lanka. 8. Aggrieved by the order of AO, assessee carried the matter before Ld. CIT(A), who by following the order his predecessor for A.Y. 2012-13 and his decision in the case of assessee for A.Y.'s 2013-14, 2014-15 and 2015-16 upheld the addition for working out the taxable income but however directed the deletion under the provisions of section 115JB of the Act. 9. Aggrieved by the order of Ld. CIT(A), assessee is now in appeal before us and Revenue vide ground no. 4 is aggrieved to the extent relief granted by the Ld. CIT(A). 10. Before us at the outset Ld. AR submitted that the issue raised in the present grounds by the Assessee and Revenue is covered in assessee's favour by the decisions of Hon'ble Tribunal in assessee's own case for earlier years. He further submitted that the Hon'ble Tribunal while deciding the identical issue in assessee's own case for A.Y. 2014-15 vide order dated 07.09.2022 in ITA No. 1400/Del/2018 and 2062/Del/2018 and by following the order of the Tribunal in assessee's own case for A.Y. 2000-01 has decided the issue in favour of the assessee. He pointed to the relevant findings of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evant material on record. The Tribunal in ITA No. 2596/Del/2004 in the case of the assessee for assessment year 2000-01 has adjudicated on the identical issue in dispute involved as under: "9. We considered the above heard the rival submissions made by the parties in respect of Ground No.7 and it is seen that income earned from permanent establishment in foreign countries is liable to be excluded from the computation of book profit in view of the decision in the case of the bank of Tokyo-Mitsubishi UFJ Ltd vs .ADIT 152 1TD 796 (Del.), which has been affirmed by Hon'ble High Court of Delhi. When such income is not to be taxed as per DTAA, it cannot be brought to tax indirectly under the deeming fiction under section 115JA . Accordingly, this ground of appeal is decided in favor of the appellant." 22.6 The issue in dispute involved in the present ground of the appeal, being identical to the issue adjudicated by the Tribunal (supra) above, respectfully following the finding of the Tribunal (supra), we direct the Assessing Officer to exclude the income which is subject matter of dispute under this ground of the appeal from the ambit of the computation of book profit under section 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e suo motto disallowance made by assessee of Rs. 14,58,115/- disallowed the net amount of Rs. 4,30,42,385/-. 16. Aggrieved by the order of AO, assessee carried the matter before Ld. CIT(A). 17. CIT(A) by following the decision of jurisdictional Delhi High Court in the case of ACB India vs. ACIT directed the disallowance to be restricted to Rs. 1.638975 crores and also directed the AO to allow the credit of the suo motto disallowance of Rs. 14.58 lacs. He thus directed the AO to restrict the disallowance to Rs. 1,49,31,635/-. He also noted that Ld. CIT(A)-39 by allowing the appeal of the assessee on this ground for earlier year had followed the aforesaid decision of Hon'ble Delhi High Court. He further following the decision of Hon'ble ITAT Special Bench in the case of ACIT vs. Vineet Investment Pvt. Ltd. (2017) 58 ITR 313 (Trib) held that disallowance made u/s. 14A cannot be added for computing book profit. He thus directed accordingly. 18. Aggrieved by the order of Ld. CIT(A), assessee is now in appeal before us. 19. Before us learned AR reiterated the submissions made before AO and CIT(A) and further submitted that identical issue arose in assessee's own case in A.Y. 2014-15 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ACB India Vs. ACIT, where Hon'ble High Court held that the disallowance u/s 14A cannot be more than 0.5% on the average of the investments made on which the assessee received the dividend income. ld. CIT(A) held that in the present case, the assessee has sub mitted the details of the dividend received and also worked out the disallowance following the decision of the Hon'ble Delhi High Court, which works out to Rs. 137.105 Lacs. The ld. CIT( A) following the judgment of the Hon'ble Delhi High Court restricted the amount to Rs. 137.105 lacs and determined at Rs. 134.585 lacs owing to the disallowance of Rs.2.52 lakhs made by the assessee. 29. Placing reliance on the judgment of the Hon'ble jurisdictional High Court, keeping in view, the average investments, the disallowance of Rs. 134.585 lacs ( Rs. 137.105 - Rs.2.5 lacs) made by the Revenue u/r 8D(2)(iii) by considering 0.5% of the average investment of Rs.271.21 Cr. is hereby sustained. 22. Before us Revenue has not placed any material on record to demonstrate any distinguishing feature in the facts of the case in the year under consideration and that of earlier years nor has placed any material on the record demons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that identical issue was decided by the co-ordinate Bench of Tribunal in A.Y. 2014-15. We find that the co-ordinate Bench while dismissing the grounds of the assessee noted as under:- 18. This ground relates to disallowance made by the A.O. amounting to Rs.8,26,887/- on account of advance written off. On the ground that, no details regarding advances written off has been filed by the assessee before the AO. 19. The ld. CIT(A) held that the expenditure was already allowed in the year in which the material was purchased and the same cannot be allowed twice when the same has been returned by the sub-contractor. 20. Ongoing through the facts, we decline to interfere with the ratio of the ld. CIT(A). The appeal of the assessee on this ground is dismissed. 32. Before us distinguishing feature in the facts of the present case at that of A.Y. 2014-15 has been pointed out by learned AR. In such a situation we find no reason to interfere with the order of Ld. CIT(A) on this ground. Thus this ground of the assessee is dismissed. 33. In the result the appeal of assessee is partly allowed. Now we proceed with Revenue appeal 34. Ground no 1 is with respect to the deduction u/s. 80-IA w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ided the issue in favour of the assessee. He also noted that for A.Y. 2000-01 the Tribunal has allowed the claim of the assessee and the CIT(A) in A.Ys. 2013-14, 2014-15 & 2015-16 by following the decision of the Tribunal had allowed the claim of the assessee. He therefore following the order in assessee's own case allowed the claim of the assessee. 39. Aggrieved by the order of Ld. CIT(A), Revenue is now in appeal before us. 40. Before us learned DR supported the order of AO, learned AR on the other hand reiterated the submissions made before AO and CIT(A) and further submitted that identical issue arose in A.Y. 2014-15 and the co-ordinate bench of the Tribunal has decided the issue in favour of the assessee by dismissing the ground of Revenue. He pointed to page no. 255 to 259 of the paper book. He therefore submitted that since the facts of the case in the year under consideration are identical to that of A.Y. 2014-15, no interference to the order of Ld. CIT(A) is called for. 41. We have heard the rival submissions and perused the material available on record. The issue in the present ground is with respect to the claim of deduction of u/s. 80- IA which was denied by AO but a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yment was received. Various clauses of the agreement would show that the jobs done by the appellant were planning, execution, construction and making the infrastructure facility ready for operations. Ld. Assessing Officer has not pointed out any specific clauses of any agreement, which shows that all attributes of development were not present. Making a bald assertion that assessee was a contractor does not serve any purpose. Merely using the terms contractor in the agreement would not make any difference as what has to be seen is the substance. Anybody who enters into a contract is closely called a contractor but that does not mean that such person entering into the contract cannot be developer. The other agreement with MSRDC shown to us as one as instance clearly shows mat appellant was engaged in investigation, planning, organizing and construction of road over bridge within the stipulated time. If the activities undertaken by the appellant cannot be termed as development, we are afraid then what can be called development? Therefore, we do not have any hesitation in holding in view of the arguments advanced from the sides of both parties and decisions relied upon that appellant w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is issue. Thus this ground of the Revenue is dismissed. 43. Ground no 2 and 3 are with respect to deleting the addition of Rs. 33,73,74,583/- on account of provision for maintenance. 44. During the course of assessment proceedings AO noted that the assessee has debited of Rs. 33,73,74,583/- towards provision for maintenance. The assessee was asked to file the details of expenditure and also explain as to why the amount not be disallowed. Assessee inter alia submitted that the provision for maintenance expenses related to the projects executed in India and abroad and it was provided to cover the expenditure of liability towards defect rectification/or maintenance cost to be incurred by the assessee after completion of the contract. It was further submitted that as per the agreement with the clients the assessee was liable to maintain the works executed by it even after the projects are completed and handed over to the clients for a period of 12 to 24 months from the date of completion. It was thus submitted that provision was an allowable expenditure. The submissions of the assessee was not found acceptable to AO. AO noted that assessee had not provided any details regarding the b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s past experience and on scientific basis, therefore, such provision is an allowable expenditure. 10. It was submitted that the provision for maintenance expenditure is provided to cover the company's expenditure to liability towards defect rectification and/or maintenance incurred by the company after completion of the contract. Such provision is made taking into account contractual provisions, operating turnover for the year, type of project, period of maintenance, contractual obligations of the subcontractors and other relevant factors, if any. As per the agreement with the client, the company is liable to maintain the works executed by it even after the projects are completed and handed over to the clients, for a period of 12 or 24 months from the date of completion. During this period, all the defects are to be rectified free of cost even though the Company has already handed over completed project to the client. The total project cost i.e. contract receipts, have already been received from the client in respect of the said projects before handing over the same to the client and no separate consideration is receivable During the year an amount of Rs.2,27,42,328/- has bee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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