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TMI Blog2023 (11) TMI 536X X X X Extracts X X X X X X X X Extracts X X X X ..... hands of the assessee during the assessment proceedings on account of any incriminating material. Further, the issues which have attained finality, in an unabated assessment are required to be restricted having a live link with the incriminating material. We are of the opinion that re-assessment proceedings u/s 153A is not a denovo re-assessment as the re-assessment can only be made with respect to the incriminating material found during the course of search. We are of the opinion that the assessee cannot be permitted to make a fresh claim of deduction in the re-assessment proceedings u/s 153A of the Act. The above said finding is not only based on the interpretation of the provision of section 153A r.w.s. 139(1) of the Act, but also based on the mandatory provisions which require the assessee to file the audit report along with the original return of income for claiming the deduction under Chapter VI of the Act. Once the assessment proceedings have attained finality, then the additions can only be made in the hands of the assessee based on the incriminating material unearthed during the search. The Assessing Officer has no reason to entertain any fresh claim, which was n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1165/Hyd/2009 and ITA No.1171/Hyd/2010, dated 16.03.2012) to determine whether the assessee is (i) developing or (ii) operating and maintaining or (iii) developing, operating and maintaining any infrastructure facility. 3. The appellant prays that the order of the CIT(A) on the above grounds be set aside and that of the Assessing Officer be restored. 3.1 The brief facts of the case are that the assessee is a Private Limited Company engaged in the business of infrastructural activities, filed the Return of Income originally, declaring income of Rs. 28,99,19,830 for the A.Y. 2009-10 and assessment was completed u/s. 143(3) of the Act determining the total income at Rs. 30,60,90,932/-. A search seizure operation took place on 26.03.2012 in the case of assessee company and the assessee company in response to notice u/s. 153A of the Act, filed return of income declaring income at Rs. 26,50,14,278/- after claiming deduction u/s. 80IA of the Act for Rs. 2,50,55,348/- The Assessing Officer disallowed the claim of the assessee u/s. 80IA stating that the deduction was not claimed in the original return of income and the assessee is not the owner of infrastructure facility, so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... improvements to the reservoir South Canal from Km 0.000 to Km.44.440 and its distributor system to brin under irrigation 25,000 acres. 6. Telugu Ganga Project, Kadapa Providing Lift-Irrigation facilities under lift scheme to left over lands within and nearby the general boundary of Pulivendula Branch canal on both sides from Km. 0.00 to 35.025 Package 92A and Km.35.025 to 68.00 - Package 93A and formation of distributor system for new additional ayacut including formation of new tanks and improvements to existing tanks. 7. Dr. B.R. Ambedkar Pranahita-Chevella Sujala Sravanthi Package No.24: Investigation, Designs and execution of water conveyor system consisting of lined gravity canal, CM CD works, lined tunnel and lift with a carrying capacity of 7920 cumecs from Rawulapally village to Hussainpur village from Km 11500 to Km.124.250 and Pargi main canal from Km. 0.00 to Km37 80 and distributor system for an Aaycut of 13,200 acres under Pargi main canal Reach 5. 8. Polavaram Project Package 62 Indira Sagar Project. From the abo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mentioned in the sub-clause a, b and c. As per clause-a, the basic eligibility is that the infrastructure facility should be owned by the assessee claiming deduction u/s.80IA(4). As has been discussed earlier, the assessee has awarded the contract of Construction, Modernisation, Excavation, preparation of estimates and investigation of facility by the concerned Govt. Dept. and the question of ownership of the infrastructure facility is totally out of place. The Department's Circular No. 717 14/8/1995 in respect of Sec. 80IA states as under: ... a ten year concession including a five year tax holiday has been allowed for any enterprise which develops, maintains and operates any new infrastructure facility such as roads, highways, expressways, bridges, airports and rail system or any other public facility of similar nature as may be notified by the Board on BOT or BOOT or Similar other basis (where there is an ultimate transfer of the facility to a government or a public authority ... The period within which the infrastructure facility has to be transferred needs to be stipulated in the agreement between the undertaking and the Government concerned . In the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A of the Act. It was submitted that once the assessee has not claimed the benefit of deduction u/s 80IA in the original return of income, then the same cannot be claimed while filing the return of income in pursuance to the notice issued u/s 153A. The Ld. DR also relied upon the provisions of section 80AC and 80A(5) in support of the case of the revenue. 7.1. Further, it was submitted by the ld. DR that the Assessing Officer was correct in disallowing the claim of 80IA as the assessee was not the owner of the infrastructural facilities laid / installed / created by it. In fact, the owner of the said infrastructural facilities were the Superintendent Engineer / Chief Engineer / Project Director of the concerned Government Department. He drew our attention to pages 3 to 5 of the assessment order and had also drawn support from the decision of ITAT, Mumbai Bench in the case of B.B. Patil Vs. ACIT and the decision of Co-ordinate Bench of the Tribunal in the case of NEC NCC Maytas JV (supra). He has specifically drawn our attention to Paras 8, 13 to 17 of the said decision. 8. On the other hand, the ld.AR submitted that the case of the assessee is covered in its favour by the deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lenged the order of Tribunal passed in the case of Megha Engineering and Infrastructure (supra) before the jurisdictional High Court and the same is pending for adjudication. It was submitted that no stay has been granted by the hon ble jurisdictional High Court in the case of Megha Engineering and Infrastructure (supra) and KNR Constructions (supra). Therefore, the decisions of the co-ordinate Bench rendered in the case of Megha Engineering and Infrastructure (supra) and KNR Constructions (supra) are binding on the Tribunal. 9.2. The ld.AR further referred to the following written submissions and submitted that assessee is entitled to relief u/s 80IA(5) of the Act for the following reasons : The Assessee Company is engaged in the business of Contracts for Civil Works and development of Infrastructure Projects. During the Financial Year 2008-2009 relevant to Asst. Year 2009-2010, some of the major projects executed and developed by the Company are: 1. Package No.42: Construction of pick up weir and regulator near Kristipadu village, excavation and formation of Yadiki Canal system and excavation of Link Channel from chagallu to Pendekallu reservoir with 2200 cusecs cap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d entered into agreement with the Govt. Authorities and the work of the assessee is not confined to a part of the work but the work was undertaken on turnkey basis. The entire site has been handed over to the Assessee for carrying out the work as per requirements and also operating system for certain period mentioned therein and completed the project at the end of above said period and as such Assessee is the developer and also operating the system for certain period. The Assessee developed infrastructure projects relating to water supply scheme by designing, erecting, testing and functioning of the project. The ld.AR had drawn our attention to section 80IA(4) as the assessee fulfilled the essential conditions laid down by the said section. The Assessee submits the above projects being developed, operated, and maintained by the Assessee are covered under the definition of infrastructure facility. Therefore, there cannot be any dispute with regard to the fact that the Assessee herein is engaged in the activity of developing infrastructure facility. 9.4 The ld.AR submitted that from the plain reading of the section, it is clear that the Assessee is an enterprise for developing o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enefit of Section 80-IA(4) would be available to a developer and not to a contractor simpliciter. 10. He submitted that the Assessing Officer has denied the benefit of Section 80IA(4), on the assumption that the Assessee is engaged in executing merely a work contract and it is not carrying on the business of developing an infrastructure facility. The Assessee has undertaken entirely and exclusively the projects awarded by the government authorities, as it is evident from the details of contracts given above. The difference between a developer and a contractor has to be properly analyzed and understood after relying various case laws, various Appellate Fora have laid down the following parameters when to treat an Assessee as a developer or contractor. The Assessee does not have to develop the entire infrastructure facility to qualify for deduction u/s. 80IA(4) and if only a part of the infrastructure facility is developed, the Assessee would be eligible for deduction. The three requirements of section 80IA(4) viz. development, operation and maintenance are not cumulative. Thus, an enterprise which only develops facility would also be entitled to the benefit of section 80IA(4) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder: (i) that in case of search under section 132 or requisition under section 132A, the AO assumes the jurisdiction for block assessment under section 153A; (ii) all pending assessments/reassessments shall stand abated; (iii) in case any incriminating material is found/unearthed, even, in case of unabated/completed assessments, the AO would assume the jurisdiction to assess or reassess the 'total income' taking into consideration the incriminating material unearthed during the search and the other material available with the AO including the income declared in the returns; and (iv) in case no incriminating material is unearthed during the search, the AO cannot assess or reassess taking into consideration the other material in respect of completed assessments/unabated assessments. Meaning thereby, in respect of completed/unabated assessments, no addition can be made by the AO in absence of any incriminating material found during the course of search under section 132 or requisition under section 132A of the Act, 1961. However, the completed/unabated assessments can be re- opened by the AO in exercise of powers under sections 147/148 of the Act, subj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, assessee is required to cross the first hurdle i.e., whether the assessee can be permitted to make a fresh claim in the return of income filed pursuant to notice u/s 153A of the Act. 14.1. For the above-said controversy, it is necessary to look into the provisions of Section 153A, 80AC, 80IA and 139 of the Act. From the bare reading of the provision of section 153A of the Act, it is clear that the assessee was required to file the return of income after receipt of notice in the search assessment for all the six assessment yeaRs. However, clause (a) of section 153A provides that the return of income so filed shall be filed in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139 ; 15. It is essential for the assessee to file the return of income in the manner provided under section 139 and further, it is essential for the assessee to furnish such other particulars as may be required to be filed in accordance with law. The statute has used the word such other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther person during the previous year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed : Provided that a person referred to in clause (b), who is not required to furnish a return under this sub-section and residing in such area as may be specified by the Board in this behalf by notification3 in the Official Gazette, and who 4[during the previous year incurs an expenditure of fifty thousand rupees or more towards consumption of electricity or] at any time during the previous year fulfils any one of the following conditions, namely : (i) is in occupation of an immovable property exceeding a specified floor area, whether by way of ownership, tenancy or otherwise, as may be specified5 by the Board in this behalf; or (ii) is the owner or the lessee of a motor vehicle other than a two-wheeled motor vehicle, whether having any detachable side car having extra wheel attached to such two-wheeled motor vehicle or not; or (iii) 6[***] (iv) has incurred expenditure for himself or any other person on travel to any foreign country; or (v) is the holder of a credit card7, not being a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) or sub- section (4D) 67[***] of section 139, be in Form No. ITR-7 and be verified in the manner indicated therein; 69 [(2) The return of income required to be furnished in Form SAHAJ (ITR-1) or Form No. ITR-2 or Form No. ITR-3 or 70[Form SUGAM (ITR-4)] or Form No. ITR-5 or Form No. ITR-6 71[or Form No. ITR-7] shall not be accompanied by a statement showing the computation of the tax payable on the basis of the return, or proof of the tax, if any, claimed to have been deducted or collected at source or the advance tax or tax on self-assessment, if any, claimed to have been paid or any document or copy of any account or form or report of audit required to be attached with the return of income under any of the provisions of the Act:] 72 [Provided that where an assessee is required to furnish a report of audit specified under sub-clause (iv), (v), (vi) or (via) of clause (23C) of section 10, section 10A 73[, section 10AA], clause (b) of sub-section (1) of section 12A, section 44AB 73[, section 44DA, section 50B], section 80-IA, section 80-IB, section 80-IC, section 80-ID, section 80JJAA, section 80LA, section 92E, 74[section 115JB 75[, section 115JC] or section 115VW] 76[ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e approved Government Authority. In the present case, neither the deduction was claimed by the assessee nor the agreement / approval etc. were filed along with the original return as required as per Rule 18BBB r.w Form 10 CCB in this regard. In our view, the filing of the audit report and claiming the deduction in the return of income before filing the original return of income is mandatory. As the assessee failed to file the required audit report claiming the deduction under the prescribed Rules 12 and 18BBB r.w Form 10 CCB in the return of income filed on 30.09.2009, hence, the assessee in our opinion would not be entitled to claim any deduction. 22. In the present case, as per the assessment order, the assessee has not claimed any deduction in the original return of income filed on 30.09.2009. The assessee has not claimed such deduction under section 80IA during the assessment proceedings for the said assessment year, though order was passed under section 143(3) of the Act. 23. The assessee has claimed deduction for the first time in the return of income filed in response to notice under section 153A of the Act. The paper return was filed by the assessee on 09.10.2013, whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th the return of income and at page 47, at Sl. Nos. 26, 27 and 30, it was mentioned as under : 26 For claim of deduction under section 80-IA(4)(ii) and (iv)/80-IB(3), (4), (5), (7) and (11)/80-IC please indicate : Yes No (a) Whether the undertaking or enterprise has been formed by the splitting up or the reconstruction of a business already in existence ✓ (b) If yes, whether the circumstances and the period specified in section 33B is applicable (please give details) (c) Has the undertaking or enterprise received any machinery or plant on transfer which was previously used for any purpose ✓ (d) If yes, please specify value of machinery or plant received on transfer (e) Total value of machinery or plant used in business Rs. 27,71,93,962/- 27 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (c) Has the undertaking or enterprise received any machinery or plant on transfer which was previously used for any purpose ✓ (d) If yes, please specify value of machinery or plant received on transfer (e) Total value of machinery or plant used in business Rs. 25,14,66,543/- 27 Total Sales of the undertaking Rs. 502,88,62,039/- 30 Deduction under section 80-I/80-IA/80-IB/80-IC (strike out whichever is not applicable) Rs. 3,13,58,465/- 27.3. Thereafter, at page 63 for the A.Y. 2012-13 at Sl.Nos.26, 27 and 30, it was mentioned as under : 26 For claim of deduction under section 80-IA(4)(ii) and (iv)/80-IB(3), (4), (5), (7) and (11)/80-IC please indicate : Yes No (a) Whether the undertaking or enterprise has been formed by the splitt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h were not otherwise claimed in the regular return of income. The first decision relied upon by the Revenue was GMR Infrastructure Limited Vs. DCIT in ITA 1036 of 2017, wherein the Hon ble Karnataka High Court, relying upon the decision in the case of Jai Steels (India) Jodhpur Vs. ACIT reported in 36 Taxmann.com 523, had held in Para 6 as under : 6. We have considered the submissions made on both sides and have perused the record. The Tribunal, by placing reliance on the decision of JAI STEELS, supra, has held that the assessment or re-assessment made in pursuance to Section 153A of the Act, is not a de novo assessment and therefore, it was not open to the assessee to claim and be allowed such deduction or allowance of expenditure which it had not claimed in the original assessment proceedings which in the case of the assessee stood completed vide order dated 15.01.2009 passed under Section 143(1) of the Act. The Tribunal, in our opinion, has followed the decision of Rajasthan High Court and we confer the view taken by Rajasthan High Court in JAI STEELS, supra. 31. On the other hand, the ld.AR had relied upon the decision of Hon ble Bombay High Court in the case of PCIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sub section (5) which was inserted in section 80A of the Act by Finance(2) Act, 2009 with retrospective effect from 1-4-2003, ultimately held as under: '5. As per this provision, where the assessee fails to make a claim in his return of income for any deduction under section 10A or section 10AA or section 10B or section 10BA or under any provision of the said Chapter - VI A under the heading C.-Deduction in respect of certain incomes , no deduction would be allowed to him under the said provision. In plain terms, this sub-section (5) of section 80A of the Act imposes an additional condition for claim of deduction in relation to income under any of the provisions mentioned therein. Apart from the requirement of fulfillment of individual set of respective conditions for the purpose of claiming the concerned deduction, this plenary condition requires that the claim ought to have made in the return of income by the assessee and if the assessee fails to make such claim in the return of income, such deduction shall not allowed to him under the relevant provision. Admittedly, in the present case, the Petitioners had not raised any such claim in the return of income. In plain t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... istakes on account of which he was over assessed after the assessment was completed. We do not read any such embargo in the CIT's power as read by the CIT in the present case. It is open to the CIT to entertain even a new ground not urged before the lower authorities while exercising revisional poweRs. Therefore, though the Petitioner had not raised the grounds regarding under-totalling of purchases before the ITO, it was within the power of the CIT to admit such a ground in revision. The CIT was also not right in holding that the over-assessment did not arise from the order the assessment. Once the Petitioner was able to satisfy that there was a mistake in totaling purchases and that there was under- totalling of purchases to the tune of Rs. 20,000, it is obvious that there was over-assessment. In other words, the assessment of the total income of the assessee is not correctly made in the assessment order and it has resulted in over-assessment. The CIT would not be acting de hors the IT Act, if he gives relief to the assessee in a case where it is proved to his satisfaction that there is over-assessment, whether such over-assessment is due to a mistake detected by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n (5) of section 80A is a statutory interdict which would prevent the CIT from granting any such claim in exercise of his revisional jurisdiction under section 264 of the Act. As is often times stated, even High Court in exercise of Writ jurisdiction under article 226 of the Constitution of India would not issue directions contrary to statutory provisions. Width of the powers of the CIT under section 264 of the Act would not permit him to ignore the requirement of section 80A(5) of the Act or allow the claim of an assessee in breach of the condition contained therein. We are therefore not in agreement that the expression given by the Income-tax Tribunal in case of Madhav Construction (supra) holding that the restriction contained in sub-section (5) of section 80A of the Act is to restrict the power of Assessing Officer and not higher Income Tax Authorities. 10. The Petitioners having given up the challenge to the constitutionality of the retrospectivity to section 80A(5) of the Act, cannot bring in the concept of the reading down of the provision in order to save if from unconstitutionally. In plain terms, our duty would be to enforce the provision contained in sub-section (5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me under section 139(1) of the Act in the prescribed form. As per the prescribed form, the assessee is required to claim deduction and also file the audit report in the form and manner provided under Rule 18BBB. In the present case, the assessee failed on all counts. Lastly, the Hon ble High Court has mentioned the no other authority has been brought to the notice of the Court. Admittedly, the decision of Jai Steel (supra) is of 2013 by the Hon ble Rajasthan High Court and the decision in the case of Vijay Infrastructure (supra) was rendered without even referring to the decision in the case of Jai Steel (supra). For the above said reasons, the decision in the case of Vijay Infrastructure (supra) is not applicable. The Judgment in the case of JSW (supra) is also not applicable as the said judgment was rendered by the hon ble Bombay High Court in the case of an abated assessment and not in the case of an unabated assessment. 35. The hon ble Delhi High Court in the case of Neeraj Jindal (supra) had explained the concept and held that for all purposes, the return of income filed by the assessee in response to the notice under section 153A would be a return of income filed under sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ertain any fresh claim, which was not raised in the original return of income. Hence, we are of the considered opinion that the assessee is not entitled to file fresh return of income under Section 153A of the Act, with respect to claiming the deductions which had not been claimed by the assessee earlier in the original return of income. 38. Hence, respectfully relying upon the above said decisions, we are of the opinion that the legal ground raised by the Revenue regarding the claim of fresh deduction u/s 80IA at the time of filing the return of income u/s 153A of the Act is sustainable. 39. In the light of the above discussions, we are of the considered opinion that the findings of the ld.CIT(A) is not in accordance with law and the assessee cannot be permitted to make a fresh claim of deduction for the first time in the return filed in response to notice u/s 153A of the Act. Thus, the legal ground is decided in favour of the Revenue and against the assessee. 40. As we have decided the legal ground against the assessee and in favour of the Revenue, therefore, there is no question of granting the deduction to the assessee. In view of the above, the remaining grounds of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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