M/s. Sneus Hydel Pvt. Ltd., & R.J. Shah & Co., Pune V. Income-tax Officer,

CO 10/PUN/2016

• Counselvise Citation: [2018] 123 COUNSELVISE.COM (IT) 3619 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 1 month(s) 26 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 28-03-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 26-03-2018
• Assessment Year: 2005-2006
• Appeal Filed On: 02-02-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: C V CHITALE
• Keywords: Reopening of assessment; Search and seizure; Retrospective amendment; Difference of opinion; Change of opinion
• Section: 143(3); 153A; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO. 948 /P U N/20 1 4 / ASSESSMENT YEAR : 20 05 - 06 THE INCOME TAX OFFICER , WARD 3(4), PUNE . / APPELLANT VS. M/S. SNEUS HYDEL PVT. LTD. & R.J. SHAH CO. (JV), RAHUL COMPLEX, E - 20, 4 TH FLOOR, JAI BHAWANI BUS STOP, PAUD R D, PUNE - 4110 38 . / RESPONDENT PAN: A BCFS0064R . /CO NO. 10 /PUN/201 6 / ASSESSMENT YEAR : 2005 - 06 (OUT OF ITA NO.948/PUN/2014 ) M/S. SNEUS HYDEL PVT. LTD. & R.J. SHAH CO. (JV), RAHUL COMPLEX, E - 20, 4 TH FLOOR , JAI BHAWANI BUS STOP, PAUD RD, PUNE - 411038 / CROSS OBJECT OR PAN: ABCFS0064R VS. THE INCOME TAX OFFICER, WARD 3(4), PUNE . / RESPONDENT ASSESSEE BY : SHRI C.V. CHITALE REVENUE BY : SHRI AJAY MODI / DATE OF HEARING : 26 . 0 3 .201 8 / DATE OF PRONOUNCEMENT: 28 . 0 3 .201 8 ITA NO. 948 /P U N/20 1 4 CO NO.10/PUN/2016 2 / ORDER PER SUSHMA CHOWLA, J M : TH E APPEAL FILED BY THE REVENUE IS AGAINST THE ORDER OF CIT(A) - II , PUNE , DATED 04.01.2014 RELATING TO ASSESSMENT YEAR 20 05 - 06 AG AINST ORDER PASSED UNDER SECTION 143(3) R.W.S. 147 OF THE INCOME - TAX ACT , 1961 (IN SHORT THE ACT) . THE ASSESSEE FILED CROSS OBJECTIONS AGAINST THE APPEAL OF REVENUE. 2. THE APPEAL FILED BY THE REVENUE AND CROSS OBJECTIONS FILED BY THE ASSESSEE WERE HEA RD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 3. THE REVENUE IN ITA NO.948/PUN/2014 H AS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1) THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) ERRED IN ALLOWING DEDUCTIO N U/S.80IA(4) OF THE INCOME TAX ACT, 1961. 2) THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) ERRED IN HOLDING THAT THE ASSESSEE WAS A DEVELOPER WITHIN THE MEANING OF SUB SEC. (4) OF SECTION 80IA OF THE ACT AND NOT A CONTRACTOR, AS HAD BEEN HELD BY THE A SSESSING OFFICER, WITHOUT APPRECIATING THAT THE ASSESSEE HAD MERELY CARRIED OUT WORKS CONTRACTS AWARDED TO IT BY CONTRACTING AUTHORITIES. 3) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN FAILING TO APPRECIATE THAT AS PER THE AGREEMENTS, THE AS SESSEE WAS UNDER THE DIRECT CONTROL & SUPERVISION OF THE CONTRACTING AUTHORITY AND THAT IT HAD NO FREEDOM WHATSOEVER TO DEVELOP, DESIGN OR MODIFY THE WORK PLAN AND WAS BOUND TO ACCEPT ANY MODIFICATIONS AS WOULD BE ISSUED BY THE ENGINEER - IN - CHARGE OF THE CO NTRACTING AUTHORITY. 4) THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) ERRED IN FAILING TO APPRECIATE THAT IN THE AGREEMENTS ENTERED INTO BY THE ASSESSEE WITH VARIOUS AUTHORITIES, THE ASSES S EE HAD BEEN CATEGORICALLY TERMED AS A 'CONTRACTOR WHO HAS ENTER ED INTO A CONTRACT AND WOULD EXECUTE THE WORK IN ACCORDANCE WITH THE CONTRACT' AND NOT AS A 'DEVELOPER'. 5) THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) ERRED IN FAILING TO APPRECIATE THAT EXPLANATION TO SUB SECTION (13) OF SECTION 80IA HAS MADE IT AM PLY CLEAR THAT THE DEDUCTION ADMISSIBLE U/S.80LA(4) WOULD NOT BE APPLICABLE TO A BUSINESS WHICH IS IN THE NATURE OF WORKS CONTRACT ITA NO. 948 /P U N/20 1 4 CO NO.10/PUN/2016 3 AWARDED BY ANY PERSON INCLUDING THE CENTRAL OR STATE GOVERNMENT AND EXECUTED BY THE UNDERTAKING OR ENTERPRISES REFERRED TO IN SUB SECTION (1) AND IN THE GIVEN FACTS & CIRCUMSTANCES OF THE CASE THE ASSESSEE WAS CERTAINLY A CONTRACTOR AND NOT A DEVELOPER. 6) THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) ERRED IN NOT APPRECIATING THE CONCEPT OF 'DEVELOPING' AND IN EQUATING TH E SAME WITH 'CONTRACTING' AND IN HOLDING THAT EXPLANATION TO SUB SECTION (13) OF SECTION 80IA WOULD APPLY TO A SUB - CONTRACTOR AND NOT TO A CONTRACTOR. 7) THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) ERRED IN NOT APPRECIATING THE FACT THAT THE CONTRACT EE AGENCIES HAD DEDUCTED TAX AT SOURCES U/S.194C FROM THE PAYMENTS MADE TO THE ASSESSEE WHICH SUBSTANTIATES THE CONTRACTOR - CONTRACTEE RELATIONSHIP BETWEEN THE ASSESSEE AND THE DEVELOPING AGENCIES. 4 . THE ASSESSEE IN CO NO.10/PUN/2016 HAS RAISED THE FOLLOW ING GROUNDS OF OBJECTIONS: - A) THE LEARNED ASSESSING OFFICER HAS ERRED IN ISSUING NOTICE UNDER SECTION 148 WHEN HE COULD NOT HAVE EXERCISED POWERS UNDER SECTION 147 AND THAT THE LEARNED ASSESSING OFFICER ERRED IN NOT APPRECIATING THE FACTS THAT HIS ACTION AMOUNTED TO A CHANGE OF OPINION ON THE SAME MATERIAL AND SET OF FACTS AND THE COMMISSIONER OF INCOME TAX (APPEALS) - II HAS ERRED IN CONFIRMING THE SAME. B) THE LEARNED ASSESSING OFFICER ERRED IN NOT PASSING A SPEAKING ORDER DISPOSING OF THE OBJECTIONS OF T HE APPELLANT TO THE NOTICE UNDER SECTION 148 AND THUS DEPRIVED THE ASSESSEE TO REBUILT THE ASSESSING OFFICERS VERSION AND THE COMMISSIONER OF INCOME TAX (APPEALS) - II ERRED IN CONFIRMING THE SAME. 5 . THE REVENUE IS IN APPEAL AGAINST THE ORDER OF CIT(A) IN ALLOWING THE CLAIM OF ASSESSEE UNDER SECTION 80IA(4) OF THE AC. 6. BRIEFLY, IN THE FACTS OF THE CASE, THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION HAD FURNISHED RETURN OF INCOME DECLARING INCOME AT NIL AFTER CLAIMING THE DEDUCTION UNDER SECTION 80IA(4) OF THE ACT. THE CASE OF ASSESSEE WAS THAT IT WAS ENGAGED IN THE DEVELOPMENT OF INFRASTRUCTURE FACILITIES. HOWEVER, THE ASSESSING OFFICER RECORDED REASONS FOR REOPENING THE ASSESSMENT ON THE GROUND THAT THE ASSESSEE WAS CARRYING ON WORKS CONTRACT. IN RES PONSE TO NOTICE ISSUED UNDER SECTION 148 OF THE ACT, THE ASSESSEE ITA NO. 948 /P U N/20 1 4 CO NO.10/PUN/2016 4 REQUESTED THAT THE RETURN OF INCOME FILED EARLIER, MAY BE TREATED IN COMPLIANCE TO THE NOTICE ISSUED UNDER SECTION 148 OF THE ACT. THE ASSESSEE FILED OBJECTIONS AGAINST REOPENING OF ASSESSM ENT AND ALSO IN SUPPORT OF CLAIM OF DEDUCTION UNDER SECTION 80IA(4) OF THE ACT. THE ASSESSING OFFICER WAS OF THE VIEW THAT WHERE SPECIFIC CONTRACT WORK WAS ENTRUSTED TO THE ASSESSEE BY EXECUTIVE ENGINEER, IRRIGATION DEPARTMENT, RATNAGIRI ON TENDER BASIS, THEN THE ASSESSEE CANNOT BE HELD TO BE IN THE BUSINESS OF DEVELOPING, OPERATING AND MAINTAINING INFRASTRUCTURE FACILITIES AS ENVISAGED UNDER SECTION 80IA(4) OF THE ACT, BUT MERELY CARRIED OUT WORK CONTRACT ASSIGNED TO IT BY THE STATE GOVERNMENT. HENCE, TH E CLAIM OF DEDUCTION UNDER SECTION 80IA(4) OF THE ACT WAS DENIED TO THE ASSESSEE. 7. THE CIT(A) FIRST DECIDED THE ISSUE OF REOPENING OF ASSESSMENT UNDER SECTION 147 / 148 OF THE ACT AGAINST THE ASSESSEE. THEREAFTER, HE DECIDED THE ISSUE OF CLAIM OF DEDUC TION UNDER SECTION 80IA(4) OF THE ACT, WHEREIN THE PLEA OF ASSESSEE WAS THAT IN TERMS OF AGREEMENT WITH MAHARASHTRA STATE GOVERNMENT, IT HAD UNDERTAKEN DEVELOPMENT OF IRRIGATION PROJECTS, WHICH ENVISAGED BUILDING AN EARTHEN DAM ACROSS RIVER NALA IN RATNAGI RI DISTRICT ; THE SAID WORK WAS DONE AS DEVELOPER AS THE SAID DAM HAD BEEN DEVELOPED. IN THIS REGARD, THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE PLACED RELIANCE ON DECISION OF HONBLE BOMBAY HIGH COURT IN CIT VS. ABG HEAVY INDUSTRIES LTD. (2010 ) 322 ITR 323 (BOM) AND DECISIONS OF PUNE BENCH OF TRIBUNAL . THE CIT(A) AFTER NOTING DOWN THE NATURE OF BUSINESS OPERATIONS OF ASSESSEE, RELIED ON THE RATIO LAID DOWN BY PUNE BENCH OF TRIBUNAL IN LAXMI CIVIL ENGG. PVT. LTD. IN ITA NOS.766//PN/09, 254/PN/0 8, 431/PN/07 & 435/PN/07, FOR ASSESSMENT YEARS 2003 - 04 TO 2006 - 07, VIDE ORDER DATED 08.06.2011, WHERE RELIANCE WAS PLACED ITA NO. 948 /P U N/20 1 4 CO NO.10/PUN/2016 5 ON THE DECISION OF HONBLE BOMBAY HIGH COURT IN CIT VS. ABG HEAVY INDUSTRIES LTD. (SUPRA), HELD THAT THE ASSESSEE IS ENTITLED TO CLAIM THE SAID DEDUCTION. THE RELEVANT PORTION OF ORDER OF TRIBUNAL IS REPRODUCED AT PAGES 17 TO 19 OF APPELLATE ORDER. WITH REGARD TO OBSERVATIONS OF ASSESSING OFFICER VIS - - VIS INSERTION OF EXPLANATION VIDE RETROSPECTIVE AMENDMENT IN SECTION 80IA OF THE ACT I.E. EXPLANATION TO SUB - SECTION (13) OF SECTION 80IA OF THE ACT, IT IS PROVIDED THAT NOTHING CONTAINED IN SECTION SHALL APPLY TO A PERSON WHO EXE CUTES A WOR K CONTRACT ENTERED WITH THE UNDERTAKING OR ENTERPRISE, AS THE CASE MAY BE. THE SAID EXPLANATION IN SERTED BY FINANCE ACT, 2007 WITH RETROSPECTIVE EFFECT FROM 01.04.2000. THE CIT(A) OBSERVED THAT SINCE THE ASSESSEE WAS A DEVELOPER BEING THE PRINCIPAL PARTY EXECUTING WORK IN PURSUANCE OF AGREEMENT WITH THE GOVERNMENT AND THE EXPLANATION REFERS TO A CONTR ACT ENTERED INTO WITH THE UNDERTAKING OR ENTERPRISE AND NOT WITH THE GOVERNMENT OF INDIA, HENCE, IT DENIES RELIEF ONLY TO THE SUB - CONTRACTORS AND NOT THE PRINCIPAL CONTRACTORS. RELIANCE IN THIS REGARD WAS FURTHER PLACED ON THE DECISION OF THE HONBLE BOMB AY HIGH COURT IN ITS ORDER DATED 24.01.2013 . ON SIMILAR ISSUE IN THE CASE OF B.T. PATIL & SONS, BELGAUM CONSTRUCTION PVT. LTD. VS. ACIT (2010) 1 ITR (TRIB) 703 (MUM) (TM) , THE TRIBUNAL HAD DECIDED THE ISSUE AGAINST THE ASSESSEE. HOWEVER, THE HONBLE BOMB AY HIGH COURT HAD SET ASIDE THE MATTER TO THE TRIBUNAL, WHICH IN TURN, FOLLOWING THE RATIO LAID DOWN IN CIT VS. ABG HEAVY INDUSTRIES LTD. (SUPRA) DECIDED THE ISSUE IN FAVOUR OF ASSESSEE. CONSEQUENTLY, THE CIT(A) HAS DECIDED THE ISSUE IN FAVOUR OF ASSESSEE , AGAINST WHICH, THE REVENUE IS IN APPEAL. ITA NO. 948 /P U N/20 1 4 CO NO.10/PUN/2016 6 8. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE RELIED ON DIFFERENT DECISIONS OF PUNE BENCH OF TRIBUNAL AND POINTED OUT THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF ASSESSEE. 9. THE LEARNED DEPARTME NTAL REPRESENTATIVE FOR THE REVENUE PLACED RELIANCE ON THE ORDER OF ASSESSING OFFICER. 10. WITH REGARD TO CROSS OBJECTIONS, THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT THE ISSUE OF REOPENING OF ASSESSMENT UNDER SECTION 148 OF T HE ACT IS NOT PRESSED, SINCE THE ISSUE STANDS COVERED BY THE ORDER OF HONBLE BOMBAY HIGH COURT. 11. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE WHICH ARISES IN THE PRESENT APPEAL IS THE CLAIM OF DEDUCTION UNDER SECTION 80IA(4) OF THE ACT, WHERE THE CASE OF ASSESSEE WAS THAT IT WAS A DEVELOPER AND IT WAS THE PRINCIPAL CONTRACTOR TO WHOM THE GOVERNMENT OF MAHARASHTRA HAD AWARDED DEVELOPMENT OF IRRIGATION PROJECT, WHICH ENVISAGED BUILDING AN EARTHEN DAM ACROSS RIVER NALA IN RATNAGI RI DISTRICT. SINCE THE SAID DAM HAD BEEN DEVELOPED, THE ASSESSEE POINTS OUT THAT IT IS PROVED THAT IT WAS THE DEVELOPER. THE CASE OF ASSESSING OFFICER ON THE OTHER HAND, WAS THAT THE ASSESSEE WAS ONLY A CONTRACTOR AS THE SAID WORK WAS AWARDED. THE CIT(A ) VIDE PARA 4.1 HAS NOTED THE SUBMISSIONS OF ASSESSEE VIS - - VIS NATURE OF SAID DEVELOPMENT WORK CARRIED OUT BY THE ASSESSEE AND HAS HELD THAT IT IS NOT WORKS CONTRACT. FURTHER, RELIANCE WAS PLACED ON THE RATIO LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN CIT VS. ABG HEAVY INDUSTRIES LTD. (SUPRA). ITA NO. 948 /P U N/20 1 4 CO NO.10/PUN/2016 7 12. WE FIND THAT THE ISSUE OF ALLOWABILITY OF CLAIM OF DEDUCTION UNDER SECTION 80IA(4) OF THE ACT HAS ARISEN BEFORE THE TRIBUNAL IN THE CASE OF ACIT VS. MAHALAXMI INFRAPROJECTS LTD. IN ITA NOS.142 TO 147/PUN/201 6, RELATING TO ASSESSMENT YEARS 2007 - 08 TO 2012 - 13, ORDER DATED 17.01.2018, WHEREIN IT HAS BEEN HELD AS UNDER: - 13. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. IN THE FACTS OF THE PRESENT CASE, THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF EXECUTING CONTRACTS OF CIVIL WORK. IN THE RETURN OF INCOME FILED FOR THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD CLAIMED DEDUCTION UNDER SECTION 80IA(4) OF THE ACT. THE ASSESSEE HAD FURNISHED THE RETURN OF INCOME ON 31.10.2007 DECLARING TOTAL INCOME O F RS.1.26 CRORES AFTER CLAIMING THE AFORESAID DEDUCTION AT RS.7.89 CRORES. SEARCH AND SEIZURE OPERATIONS WERE CARRIED OUT ON 23.09.2009. IN 153A PROCEEDINGS, THE ASSESSEE WAS HELD TO BE NOT ELIGIBLE FOR CLAIMING DEDUCTION UNDER SECTION 80IA(4) OF THE ACT ON THE RETURN OF INCOME FILED BY IT. FURTHER, DURING THE COURSE OF SEARCH, CERTAIN ADDITIONAL INCOME WAS OFFERED BY THE ASSESSEE ON ACCOUNT OF CERTAIN EXPENSES, ON WHICH THE ASSESSEE CLAIMED DEDUCTION UNDER SECTION 80IA(4) OF THE ACT. THE ASSESSING OFFI CER DENIED DEDUCTION UNDER SECTION 80IA(4) OF THE ACT ON BASIC PROFITS OF BUSINESS AND ALSO DEDUCTION ON ADDITIONAL INCOME. THE CASE OF ASSESSEE TRAVELLED UPTO THE TRIBUNAL AND IN ITA NOS.2571 TO 2577/PN/2012, RELATING TO ASSESSMENT YEARS 2004 - 05 TO 2010 - 11 AND CROSS APPEALS IN ITA NOS.50 TO 56/PN/2013, THE FIRST ISSUE WHICH WAS RAISED BEFORE THE TRIBUNAL WAS THE CLAIM OF DEDUCTION UNDER SECTION 80IA(4) OF THE ACT ON ACCOUNT OF INFRAPROJECTS CARRIED ON BY THE ASSESSEE. THE TRIBUNAL DELIBERATED UPON THE IS SUE AND NOTED THE FACTUAL ASPECTS AND ALSO THE GROUNDS ON WHICH THE SAID DEDUCTION WAS NOT ALLOWED TO THE ASSESSEE THAT THE ASSESSEE WAS A CONTRACTOR. THE TRIBUNAL VIDE PARAS 127 TO 129 AT PAGES 72 TO 75 OF THE ORDER DATED 09.12.2015 HELD THE ASSESSEE TO BE ENTITLED TO CLAIM THE DEDUCTION UNDER SECTION 80IA(4) OF THE ACT CONSIDERING THE FACT THAT IRRIGATION PROJECT OF ASSESSEE WAS AN INFRA PROJECT. IT ALSO NOTED THE DECISION IN FAVOUR OF ASSESSEE BY THE TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2003 - 04 VIDE ITA NO.433/PN/2007, ORDER DATED 06.02.2012. THE RELEVANT FINDINGS OF THE SAID ORDER OF TRIBUNAL ARE REPRODUCED UNDER PARA 128 OF THE ORDER OF TRIBUNAL. HENCE, IN 153A PROCEEDINGS, AFTER SEARCH ON THE PREMISES OF ASSESSEE, THE FIRST ISSUE WHI CH WAS ADJUDICATED BY THE TRIBUNAL FOR THE YEARS, WHICH ARE IN APPEAL BEFORE US WAS THAT THE ASSESSEE FULFILS THE CONDITIONS OF EXECUTING INFRA PROJECT AND HENCE, WAS ENTITLED TO CLAIM DEDUCTION UNDER SECTION 80IA(4) OF THE ACT. 13. IN VIEW THEREOF, WE H OLD THAT THE ASSESSEE HAVING EXECUTED DEVELOPMENT OF DAM, WAS ENTITLED TO THE CLAIM OF DEDUCTION UNDER SECTION 80IA(4) OF THE ACT. 14. THE CROSS OBJECTIONS FILED BY THE ASSESSEE ARE NOT PRESSED AND HENCE, THE SAME ARE DISMISSED AS NOT PRESSED. IN ANY CASE, THE SAID CROSS ITA NO. 948 /P U N/20 1 4 CO NO.10/PUN/2016 8 OBJECTIONS ARE FILED AFTER DELAY OF 102 DAYS. HENCE, GROUNDS OF APPEAL RAISED BY REVENUE AND GROUNDS OF OBJECTIONS RAISED BY ASSESSEE ARE THUS, DISMISSED. 1 5 . IN THE RESULT, BOTH THE APPEAL OF REVENUE AND CROSS OBJECTIONS OF ASSESSEE ARE DISMISSED. ORDER PRONOUNCED ON THIS 28 TH DAY OF MARCH , 201 8 . SD/ - SD/ - ( ANIL CHATURVEDI ) (SUSHMA CHOWLA) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 28 TH MARCH , 201 8 . G G C C V V S S R R / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE C I T (A) - II , PUNE ; 4. THE C I T - II , PUNE ; 5. , , / DR A , ITAT, PUNE; 6. / GUARD FILE . / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE