9911796707
TMI Blog2024 (9) TMI 1562X X X X Extracts X X X X X X X X Extracts X X X X ..... audited financial statements for each project . All the four projects were awarded to the assessee by UPPWD for infrastructure development. All the relevant conditions for claim of deduction under section 80IA of the Act are fulfilled. The business activities of all the four projects are covered in the scope of work defined u/s 80IA (4) of the Act and clarified vide CBDT s Circular No.4/2010 where the assessee acted as a developer in these projects. Therefore, the Assessing Officer was not justified to reject the claim of the assessee for deduction under section 80IA of the Act. We, accordingly reject grounds No.1 2 taken by the Revenue. Addition due to unverified credit balance - CIT(A) has deleted the addition, relying on the judgment of Jagdish Tiwari [ 2013 (10) TMI 85 - ALLAHABAD HIGH COURT ] observing that where payments are made to creditors through cheque and reflected in books of accounts, then addition cannot be made merely because of non-confirmation. We do not find any error in the order of the ld. CIT(A) on this issue. Disallowances of various expenses and adhoc disallowance of wages/labour charges - We find that the ld. CIT(A) has deleted the ad hoc disallowances made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent : Shri Neil Jain, CIT (DR) For the Assessee : Shri Jitendra Kumar Yadav, Advocate ORDER PER SUBHASH MALGURIA, J.M.: This appeal has been filed by the Revenue against the order of the ld. CIT(A)-3, Lucknow dated 10.11.2016 for the assessment year 2014-15. The assessee has also filed Cross Objection. The grounds of appeal taken by the Revenue are as under: 1. On the facts and in the circumstances of the case the CIT(A) has erred in deleting the addition of Rs. 4,66,10,927/- u/s 80-IA of I.T. Act by ignoring the facts that assessee did not file Audit Report in form 10CCB separately for all projects and also did not claim to in the original return as required by the Income Tax Act, 1961. 2. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in law as well as on facts in recording the finding that the assessee was entitled to claim the deduction U/s 80IA(4)(i) by filing the return in compliance of notice U/s 143(3) ignoring the judicial pronouncements of Hon'ble Supreme Court, various High Courts and ITATs in following cases: i. Commissioner of Income-tax Versus Sun Engineering Works P. Ltd. [1992] 198R 297 (SC). ii. Vishwanath Products, Prop. Shri vs Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax(Appeals) -3, Lucknow has grossly erred in sustaining the addition of Rs. 3,30,126/ towards prior period expenses, which items of expenditure are liable to be allowed in computing the Real income of the assessee, as the obligation to spend and the corresponding right to receive the money by the recipient arose in the instant year. Further for the A.Y. 2013-14, similar items of expenses have already been allowed by the CIT(A). 4. Because on the facts and in the circumstances of the case the Ld. Commissioner of Income Tax(Appeals) -3, Lucknow has grossly erred in sustaining the addition of Rs. 3,30,126/- towards prior period expenses without appreciating the ratio of the Judgment of the Hon'ble Apex Court in the case of E D Sasoon. 5. Because on the facts and in the circumstances of the case the Ld. Commissioner of Income Tax(Appeals) -3, Lucknow has grossly erred in sustaining the addition of Rs. 22,355/- towards foreign travel expenses, without properly appreciating the True and Correct facts involved in the case. 6. Because on the facts and in the circumstances of the case the Ld. Commissioner of Income Tax(Appeals) -3, Lucknow has grossly erred in sustaining the addition o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of cash found and seized during the course of search and seizure operation. The Assessing Officer completed the assessment under section 143(3) of the Act on a total income of Rs. 61,84,13,530/- by making various additions/disallowances to the tune of Rs. 5,13,50,850/-. 5. Aggrieved, assessee preferred appeal before the ld. CIT(A), who partly allowed the appeal of the assessee. The Revenue is in further appeal before this Tribunal against the deletion of disallowance of claim of deduction of Rs. 4,68,60,927/- under section 80IA of the Act. 6. The facts relating to the claim of deduction under section 80IA of the Act are that the assessee filed its revised return of income on 19.3.2016 declaring total income of Rs. 61,24,23,603/- and claimed deduction of Rs. 4,68,60,927/- under Chapter VI-A of the Act. The assessee thereafter again revised its return of income on 21.3.2016 wherein the assessee claimed deduction of Rs. 4,66,10,927/- under section 80IA of the Act. The Assessing Officer was of the view that deduction under section 80IA of the Act is allowable only if return is filed claiming such deduction before the due date specified in section 139 of the Act, which was 30.11.2014 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich are defined in relevant section. The relevant provision of Section 80IA (4)(i) also be produced for ready reference. This section applies to (i) Any enterprise carrying on the business of (i) developing or (ii) operating and maintaining or (iii) developing, operating and maintaining any infrastructure facility which fulfills all the following conditions, namely:- (a) It is owned by a company registered in India or by a consortium of such companies [or by an authority or a board or a corporation or any other body established or constituted under any Central or State Act]. (b) It has entered into an agreement with the Central Government or a State Government or a local authority or any other statutory body for (i) developing or (ii) operating and maintaining or (iii) developing, operating and maintaining a new infrastructure facility). (c) It has started or starts operating and maintaining the infrastructure facility on or after the 1st day of April, 1995. [Explanation For the purposes of this clause, infrastructure facility means- (a) A road including toll road, a bridge or a rail system. (b) A highway project including housing or other activities being an integral part of the h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it replaces the original return as held by Hon'ble High court (All) in the case of Dhampur sugar Mills Ltd. The reliance is also placed on recent judgment of Hon'ble ITAT (All) Lucknow Bench in the case of Vijay infrastructure Ltd. where it has been categorically held that where time was available for revising the return of income to revise the return originally filed u/s 139 (1) as in A. Y. 2009- 10 or to file the return u/s 139 (1) as in A. Y. 2010-11, the return filed u/s 153A should be considered as a return filed u/s 139 (1) and hence all claim raised in these returns should be decided on merit but where the time available to file revised return has elapsed before search as in A.Y. 2007- 08 and 2008-09, the new claim raised in the return filed u/s 153A is not acceptable. That Assessing officer has also objected that assessee has not furnished Audit report in form no. 10CCB for each project separately. In this regard it is relevant to mention that during the course of assessment proceeding assessee has submitted separate Audited financial statement for each projects namely- 1. KACHWA-Widening Strengthening of Varanasi, Adalpur, Chunor, Kochwa (S.H.-74) Road km. 11.00-45 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in dispute that the assessee has widened the road and therefore, activity of the assessee falls within the definition of infrastructure. The CIT(A) has also referred to several judicial pronouncements as per which it was held that there is no requirement that the assessee should have been the owner of the infrastructure facility. The facts in the case of Koya Co. (Supra) are identical. In that case, the relevant paras of the Tribunal Order are Para No. 21 to 28 and the same are reproduced below for ready reference: We find that the decision relied on by the learned counsel for the assessee in the case of CIT vs. Laxmi civil Engineering works (supra) squarely applicable to the issue under dispute which is in favour of the assessee wherein it was held that mere development of a infrastructure facility is an eligible activity for claiming deduction under section 80IA of the Act after considering the Judgment of the Mumbai High Court in the case of ABG Heavy Engineering [supra). The case of ABG is not the pure developer whereas, in the present case, the assessee is the pure developer. We also find that Section 80IA of the Act, intended to cover the entities carrying out developing, op ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 80IA of the Act if the contracts involves design, development, operating maintenance, financial involvement, and defect correction and liability period, then such contracts cannot be called as simple works contract to deny the deduction u/s 80IA of Act. In our opinion the contracts which contain above features to be segregated on this deduction u/s. 80-IA has to be granted and the other agreements which are pure works contracts hit by the explanation section 80IA(13), those work are not entitle for deduction u/s 80IA of the Act. The profit from the contracts which involves design, development, operating maintenance, financial involvement, and defect correction and liability period is to be computed by assessing officer on pro-rata basis of turnover. The assessing officer is directed to examine the records accordingly and grant deduction on eligible turnover as directed above. It is needless to say that similar view has been taken by the Chennai Bench of the Tribunal and deduction u/s. 80IA was granted in the case of M/s. Chettinad Lignite Transport Services (P) Ltd., in ITA No. 2287/Mds/06 order dated 27th July, 2007 for the assessment year 2004-05. Later in ITA No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder rendered in the case of Koya Co. (Supra) is squarely applicable because the facts are similar. In the order of CIT (A), he has followed this tribunal order and various other judicial pronouncements as noted by him in his order, as reproduced above. Considering this factual and legal position, we find no infirmity that the order of CIT (A) on this aspect that in the facts of the present case, it cannot be said that the assessee company was mere a contractor and not a developer. Therefore, on issue No. 3, we find no infirmity in the order of CIT(A). This issue is decided in favour of the assessee. 8. The ld. CIT(A), considering the detailed submissions made by the assessee, allowed deduction claimed by the assessee under section 80IA(4) of the Act, vide para 8.2(c) of his impugned order holding as under: 8.2(c) The undersigned has gone through the assessment order, written submissions and judgements relied upon by appellant. The findings are as under:- The appellant carried out 4 projects related to infrastructure development. Deduction of Rs. 4,66,10,927/- has been claimed u/s 80IA(4)(1) of the Act in the revised return of income filed on 21.03.2016 with total income of Rs. 56, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contended that separate records of each of the four projects were filed before the AO and no defect was pointed out by the AO in respect of these accounts submitted. In view of the above facts and discussion and judgement of Hon'ble Jurisdictional ITAT in the case of M/s Vijay Infrastructure Ltd the deduction claimed u/s 80IA(4) of the Act is allowed. Ground of appeal No, 7 is allowed. 9. Before us, the ld. D.R., with regard to the issue relating to claim of deduction under section 80IA of the Act, supporting the order of the Assessing Officer, vehemently argued that since the assessee has filed the return for the year under consideration belatedly, the claim of deduction under section 80IA of the Act is not allowable. He further submitted that the assessee has not submitted the audit report for all the four of its projects in Form No.10CCB along with the original return of income before 30.11.2014 and assessee failed to maintain separate books of account for each of the four projects under Rule 18BB of the Act and also failed to furnish audit report in Form No.10CCB for each project separately. Therefore, the claim of deduction under section 80IA is not allowable to the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted under subsection 1 or 4 of section 139; and, there are also returns filed after the period with reference to sections 142(1) and 148 of the I.T Act. 19. Section 80A(5) provides that where the assessee fails to make a claim in his return of income for any deduction, inter alia, under any provision of Chapter VIA under the heading C.-Deductions in respect of certain incomes , no deduction shall be allowed to him thereunder. Therefore, in cases where no returns have been filed for a particular assessment year, no deductions shall be allowed. This embargo in section 80A(5) would apply, though section 80P is not included in section 80AC. This is so because, the inhibition against allowing deduction is worded in quite similar terms in sections 80A(5) and 80AC, of which section 80A(5) is a provision inserted through the Finance Act 33/2009 with effect from 1.4.2013 after the insertion of section 80AC as per the Finance Act of 2006 with effect from 1.4.2006. This clearly evidences the legislative intendiment that the inhibition contained in subsection 5 of section 80A would operate by itself. In cases where returns have been filed, the question of exemptions or deductions referable to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the assessee has not claimed the deduction in the original return filed but in the revised return, is not justified. We find that the ld. CIT(A) has passed a well-reasoned order allowing the claim of the assessee for deduction under section 80IA of the Act and therefore, no interference is called for in the order of the ld. CIT(A). 14. We find that the books of account of the eligible projects were separately maintained by the assessee and separate audited financial statements for each project namely, (i) KACHWAWidening Strengthening of Varanasi, Adalpur, Chunor, Kochwa (S.H.-74) Road km. 11.00-45.500, (ii) JEEVNATHNPURWidening Strengthening of Jeevnathpur-Kanchanpur- Sikandarpur-Chakiya-Naugarh-Madhupur (SH-97), (iii) BABATPUR-Widening Strengthening of Existing Two Lane to four lane of Bhadohi-Kapsethi-Babatpur state highway in District of Bhadohi Varanasi, and (iv) DUMARIYAGANJ-Construction and Strengthening of Dumariyaganj Dhebrua state highways no. 76 from km 0.000-42.000 in the district of Siddarthnagar. All the four projects were awarded to the assessee by UPPWD for infrastructure development. All the relevant conditions for claim of deduction under section 80IA of the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order held as under: 13.3 The AO has made adhoc disallowances of Rs. 2,50,000/- out of various expenses and adhoc disallowance of Rs. 7,50,000/- out of wages/labour charges. The appellant has submitted that books of accounts are properly maintained and all bills/vouchers for expenses debited are fully maintained. I have examined the facts and circumstances of the case. The NP rate for the year under consideration is higher than NP rate of immediately preceding year. The AO has not specified as to which expenses could not be verified out of these expenses. The AO has not specified as to which are those expenses for which there were no supporting bills/vouchers. Not even a single bill/voucher has been identified by the AO in this regard. In the present case proper books of accounts are maintained and audited. The auditor has not pointed out any adverse inference in respect of non-maintenance of bills/vouchers in the Audit report. Nor has the AO identified the specific bills/vouchers which could not be verified. The issue of adhoc disallowance of expenditure has been decided upon by Hon'ble jurisdictional ITAT in the below mentioned judgements The Hon'ble ITAT, Lucknow Bench i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the ld. CIT(A), who has rightly deleted the ad hoc disallowances made by the Assessing Officer. Accordingly, we confirm the order of the ld. CIT(A) on these issues and reject grounds No.4 5 of the appeal of the Revenue. 19. Ground No.6 of the appeal of the Revenue relates to the deletion of addition of Rs. 6,75,950/- made by the Assessing Officer under section 40(a)(ia) of the Act. The ld. CIT(A) deleted the said disallowance vide paras 14.1 to 14.3 of his order, observing as under: 14.1 Ground of appeal No. 6 (Disallowance of Rs. 675950/- u/s 40(a)(ia)) AO noted that appellant had paid a sum of Rs. 6,75,950/- under the head commission but TDS was not deducted u/s 194H of the Act. The AO disallowed this amount u/s 40(a)(ia) of the Act and added it to total income of the appellant. 14.2 The written submissions of the appellant on this issue are outlined in para 7 of this order. 14.3 During the course of appellate proceeding the ledger account and bills/vouchers for these expenses were produced. On examination of the same it is clear that these payments have been made to different persons and all these payments are petty payments. None of the payment exceeds Rs. 5,000/- Thus, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rity has not issued the requisite Form No.5, certifying that the dispute has been resolved for the year under consideration, the same cannot be considered under VSVS. 24. As per copy of Form No.3 (Form for Certificate under sub-section (1) of section 5 of the Direct Tax Vivad Se Vishwas Act, 2020) dated 23.12.2020 issued to the assessee by the designated authority, i.e., Ld. PCIT, Lucknow-1, the assessee opted for Direct Tax Vivad Se Vishwas Scheme (VSVS) in relation to the tax arising from its cross objection, as per which assessee is to discharge the tax liability under VSVS to the tune of Rs. 5,12,370/- by 31.03.2021. As against the identified tax settlement, since the assessee has already paid tax of Rs. 1,62,12,835/-, thus the excess payment of taxes resulted into refund of Rs. 1,57,00,465/-. We also find from record that the assessee has written letters to the designated authority for issuance of Form No.5, but the same has not yet been issued. As per Form No.3 dated 23.12.2020, the amount payable by the assessee for the year under consideration under VSVS by 31.3.2021 is only Rs. 5,12,370/- and the amount refundable to the assessee is Rs. 1,57,00,465/-. Therefore, considerin ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
