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TMI Blog2024 (10) TMI 1273X X X X Extracts X X X X X X X X Extracts X X X X ..... inal return filed u/s 139(1) of the Act, the Revenue authorities/ ld. DR failed to bring on record any concrete evidence which could negate the rightful claim made by the assessee u/s 80IA of the Act which is duly supported by the documents demonstrating that the assessee is a developer and has carried out the business of designing, constructing, testing, commissioning, operating and maintenance of water works for Bihar Rajya Jal Parisad (unit of state Government of Bihar) therefore, under the given facts and circumstances of the case the settled judicial precedents, we fail to find any infirmity in the finding of the ld. CIT (A) allowing the claim of deduction u/s 80IA - Decided in favour of assessee. - Shri Rajpal Yadav, Vice President And Dr. Manish Borad, Accountant Member For the Assessee : Shri AK Rastogi, AR For the Revenue : Shri Rinku Singh, DR ORDER PER DR. MANISH BORAD, ACCOUNTANT MEMBER : The captioned appeals filed by the Revenue, pertaining to assessment years 2018-19 to 2021-22 are directed against the orders passed by the Learned Commissioner of Income Tax (Appeals), Patna 3 (hereinafter referred to as the ld. CIT(A) ) even dated 03.07.2023 passed u/s 250 of the I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... turn u/s 139. 5. That on the facts and in the circumstances of the case and in law, Ld. CIT(A)-3, Patna failed to appreciate the fact that the auditor in his audit report did not confirmed eligibility of deduction u/s 80IA. 6. That the order of the Ld. CIT (A) being erroneous in law and on facts to be vacated and the order/notice of the A.O. be restored. 7. That the applicant craves leave to add, alter, delete, modify the grounds of appeal before the Hon'ble ITAT 5. Facts in brief are that the assessee is a private limited Company engaged in the business of development and construction. Search and seizure action u/s 132 of the Act was carried out on assessee on 29th October, 2020, being part of Janardhan Prasad Group. The regular return of income u/s 139(1) of the Act furnished on 31st October, 2018, declaring total income of ₹4,47,04,930/-. Subsequent to search notice u/s 153A of the Act was issued and in compliance return of income was furnished on 24th December, 2021, declaring total income of ₹60 lacs after claiming deduction u/s 80IA of the Act at ₹4,47,04,929/-. This deduction u/s 80IA of he Act was not made in the original return filed u/s 139(1) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Balance Sheet and Profit Loss account along with its schedule. 33-49 (iv) Copy of 26AS. 50-55 (v) Copy of payment certificate. 56-66 (vi) Copy of agreement between the appellant and Bihar Rajya Jal Parishad through its Executive Engineer. 67-73 (vii) Copy of the form-10CCB along with e-filing acknowledgment. 74-81 (viii) Copy of the e-filing acknowledgment regarding filing of Form 29B. 82 (ix) Copy of order of rectification order u/s 154 dated 17.02.2023. 83-87 (x) Copy of Letter dated 24/12/2021 to A.O. 88 (xi) Copy of the notice u/s 153A for the A.Y.2017-18 8 along with the copy of the return filed. 89-90 (xii) Copy of the circular dated 11/04/1955. 91 (xiii) Copy of activities undertaken by the appellant pursuant to contract awarded by Govt. of Bihar (Bihar Rajya Jal Parishad). 92-100 2. Comparative Chart of income declared in return u/s 139(1), 153A and book profit u/s 115JB and tax payable/ refundable 101 3. Copy of acknowledgment of Rol u/s 139(1) for A.Y.2018- 19 102 4. Copy of acknowledgment of Rol u/s 153A for A.Y.2018-19 along with computation of income. 103-105 5. Copy of order giving effect to order of CIT(A) in proceedings u/s 153A for A. .2018-19. 106-107 9. We have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... portunity of being heard was given to the appellant. It is a matter on record and fact that during the course of assessment proceeding the appellant has submitted the computation of income as well as Form 10 CCB. Further, a detailed submission was submitted on 27/03/2022 with regard to fresh deduction claimed u/s 80IA while fling the return in response to section 153A. Ground no. 03 - As far as the eligibility of the appellant was concerned, the appellant has complied with all the requirements of section 80IA. It was submitted that the appellant is engaged in the business of designing, constructing, testing, commissioning, operating and maintenance of water works for five years for Bihar Rajya Jal Parisad and, thus, is engaged in developing, operating and maintaining new infrastructure facility. It was submitted that the work was done after entering into agreement with the unit of Bihar Government, Bihar Rajya Jal Parisad. It was further submitted that merely because the assessee had entered into an agreement with Bihar Rajya Jal Parisad it cannot be treated only as a works contractor as the statute specifically required the assessee to enter into agreement with the Central Governm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ipt from Bihar Rajya Jal Parishad, audited balance sheet and P L account, copy of 26AS, payment certificate received from Bihar Rajya Jal Parishad and the agreement entered into by the appellant which makes it clear that the appellant was required not only to construct the infrastructure for water supply but was also required to maintain the same for next five years. The appellant has further submitted that its revenue receipts is 100% from the water supply scheme and not from any other activity. The appellant has deployed its resources (material, machinery, labour) in construction work which involves design, execution and maintenance. The project involves risks which were clearly borne by the appellant itself. The appellant has also submitted that the definition of word developer or contractor is neither defined in the Act nor in the General Clauses Act. Thus, the appellant has borrowed the meaning of these words from the Oxford Advanced Learners Dictionary. The appellant has referred to the judgement of Hon ble Bombay High Court in the case of Abdulgafar A. Nadiadwala vs/ ACIT (2004) 267 ITR 488 (Bom.) wherein the Hon'ble High Court was looking into the meaning of the words g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erefore, in our considered view, the assessee should not be denied the deduction under section 80IA of the Act as the contracts involves development, operating, maintenance, financial involvement and defect correction and liability period, then such contracts cannot be called as simple works contract. In our opinion the contracts which contain above features to be segregated and on this deduction under section 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 under section 80IA of the Act. The profit from such contracts which involves 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 and grant deduction on eligible turnover as directed above. Reliance was placed on order of ITAT Jaipur Bench in the case of Om Metals Infraprojects Limited v. CIT in ITA Nos. 722 and 723/JP/2008 wherein the ITAT Jaipur Bench, while relying on another order of ITAT Mumbai Bench in the case of Patel Engineering Company Ltd. v. AC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e facilities, and in turn is entitled, and entitled justifiably, to claim deduction under section 80IA(4). I have considered the entire gamut of this issue. There is no dispute on the fact that the appellant has entered into an agreement with Bihar Rajya Jal Parishad for construction of Drinking Water Supply. There is also no dispute that the deduction u/s 80IA was not claimed by the appellant in its original return u/s 139(1). The deductions u/s 80IA were claimed in the return in response to the notice u/s 153A. The only dispute here is that whether the appellant is developer or the contractor since the deductions u/s 80IA are available to developers and not to the contractors. The AO has disallowed the claim of the appellant since the return of the appellant reveals the profession of the appellant as civil contractor. The appellant has declared its profession as civil contractor possibly because there is no better option allowed by the ITR form. Accordingly, such a choice cannot be stated to be evidence. It is only indicative. The work of a developer in this case is in the nature of civil contract as distinguished from a defence contract. Further, the AO was of the opinion that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d risks which is not in the case of a contractor. A developer, as in this case, has to carve out a complete execution plan to develop an integrated project whereas the contractor has to execute the work on the basis of pre-decided guidelines or plan. The contractor does not own a right to change or alter the pre-decided plan whereas in case of the developer, there can be change or modification in the design or the execution of the works as per the requirements. In the present case, the appellant was given a contract to develop a drinking water supply system. No execution plan or design was supplied to the appellant by Bihar Rajya Jal Parishad. The appellant had to develop the drinking water facility system which involves the survey of site, planning of execution of work and also to maintain the same. Further on perusal of the said agreement, it has been observed that the appellant was not only liable to execute the construction of work but also to design and maintain the same. Accordingly, I find that the execution of the work involved designing, creation of master plan, execution of water supply distribution network, elevated service reservoirs and thereafter operation and mainten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellant is body corporate and the commencement of business was before 01.04.2017. The audit report in form 10CCB was filed online and available before the AO. Accordingly, I find that the appellant fulfills all the criteria to claim the deduction of sec. 80IA. With these remarks, the claim of the appellant for deduction u/s 80IA is sustained and the addition is deleted. The grounds taken are accordingly allowed. 11. From going through the above finding of the ld. CIT (A) and also the ratio of various judgments referred above mainly that Hon'ble Gujarat High Court in case of Kirit Dahyabhai Patel vs. ACIT (supra), where it has been held that the return filed u/s 153A of the Act will be construed to be return filed u/s 139 of the Act. We also observe that the ld. CIT (A) rightly taking note of the judicial precedents that the appellant can make or modify the claim at any time before the completion of the assessment. Ld. CIT (A) has also rightly observed that apart from the fact that the assessee failed to make claim of deduction u/s 80IA of the Act in its regular / original return filed u/s 139(1) of the Act, the Revenue authorities/ ld. DR failed to bring on record any concrete e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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