MMK TOLL ROAD P.LTD, MUMBAI V. DCIT CIR 1, KALYAN

CO 110/MUM/2012

• Counselvise Citation: [2015] 123 COUNSELVISE.COM (IT) 0415 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 9 month(s) 10 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 25-03-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 03-09-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 14-06-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: N PADMANABAN
• Assessee Lawyers: F V IRANI SHRI MITESH SHA H
• Section: 80HHC; 147

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI , , BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI N.K . BILLAIYA, A CCOUNTANT M EMBER / I .T.A. NO. 5602/MUM/2011 ( / ASSESSMENT YEAR : 2008 - 09 THE DCIT, CIR - 1, KALYAN, 1 ST FLOOR, MOHAN PLAZA, WAYALE NAGAR, KHADAKPADA, KALYAN (W) / VS. M/S. MMK TOLL ROAD PVT. LTD., IRB COMPLEX, CHANDIVALI FARM, CHANDIVALI VILLAGE, ANDHERI (E), MUMBAI 400 072 C.O. NO. 110/MUM/2012 (ARISING OUT OF I .T.A. NO . 5602/MUM/2011 ( / ASSESSMENT YEAR : 2008 - 09 M/S. MMK TOLL ROAD PVT. LTD., IRB COMPLEX, CHANDIVALI FARM, CHANDIVALI VILLAGE, ANDHERI (E), MUMBAI 400 072 / VS. THE DCIT, CIR - 1, KALYAN, 1 ST FLOOR, MOHAN PLAZA, WAYALE NAGAR, KHADAKPADA, KALYAN (W) ./ ./ PAN/GIR NO. : AADCM 4969J ( / APPELLANT ) .. ( / RESPONDENT ) / REVENUE BY: SHRI N. PADMANABAN / ASSESSEE BY : SHRI F.V. IRANI SHRI MITESH SHAH / DATE OF HEARING : 23 . 0 3 .2015 / DATE OF PRONOUNCEMENT : 25 .03 .2015 ITA. NO. 5602/M/2011 C.O. NO. 110/M/12 2 / O R D E R PER N.K. BILLAIYA, AM: THESE ARE APPEAL BY THE REVENUE AND THE CROSS OBJECTION BY THE ASSESSEE AGAINST THE VERY SAME ORDER OF THE LD. CIT(A) - I THANE DT. 29.4.2011 PERTAINING TO ASSESSMENT YEAR 2008 - 09. THESE WERE HEARD TOGETHER AND DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. ITA NO. 5602/M/2011 REVENUES APPEAL 2. THE REVENUE HAS RAISED 5 SUBSTANTIVE GROUNDS OF APPEAL. THE SUM AND SUBSTANCE OF THE GRIEVANCE OF THE REVENUE IS THAT THE LD. CIT(A) ERRED IN ALLOWING THE CLAIM OF DEDUCTION U/S. 80IA OF THE ACT. 3. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT THE ORIGINAL RETURN WAS FILED ON 26.9.2008. THE RETURN WAS PROCESSED U/S. 143(1) ON 2 6.8.2009. THE ASSESSMENT WAS REOPENED AFTER RECORDING REASONS ON 3.2.2010. IN RESPONSE TO THE NOTICE U/S. 148, THE ASSESSEE STATED THAT THE ORIGINAL RETURN MAY BE TREATED AS RETURN FILED. 3.1. AT PARA - 2.1. OF THE ASSESSMENT ORDER, THE ASSESSING OFFIC ER HAS REPRODUCED THE REASONS FOR TAKING THE RECOURSE TO SEC. 147 OF THE ACT. THE MAIN REASON RELATES TO THE CLAIM OF DEDUCTION U/S. 80IA AMOUNTING TO RS. 2.06 CRORES AND AMORTIZATION AT RS. 1,85,37,482/ - . DURING THE COURSE OF THE REASSESSMENT PROCEEDING S AUDIT REPORT IN FORM NO. 10CCB DULY CERTIFIED BY THE AUDITOR FOR HAVING CLAIMED DEDUCTION U/S. 80IA WAS FURNISHED ALONGWITH OTHER DETAILS. THE AO NOTICED THAT THE ASSESSEE HAS UNDERTAKEN AN INFRANSTRUCTURE CONTRACT OF IMPROVING AND MAINTAINING THE MOH OL - MANDRUP - KAMTI SECTOR ON NH - 13 ON BOT BASIS. A TRIPARTITE ITA. NO. 5602/M/2011 C.O. NO. 110/M/12 3 AGREEMENT EXECUTED ON 29.5.2002 AND ENTERED INTO BY THE COMPANY WITH THE GOVERNMENT OF MAHARASHTRA AND IDEAL ROAD BUILDERS PVT. LTD. WAS FURNISHED. THE AO FURTHER NOTICED THAT THE ASSESSEE HAS D ECLARED GROSS TOTAL INCOME AT RS. 2,06,03,063/ - AND THE SAME WAS CLAIMED AS DEDUCTION U/S. 80IA FOR INFRASTRUCTURE FACILITY. THE AO PROCEEDED BY EXAMINING THE CLAIM OF DEDUCTION MADE BY THE ASSESSEE U/S. 80IA OF THE ACT AND FINALLY CONCLUDED BY DENYING TH E CLAIM MADE BY THE ASSESSEE. 3.2. IN DISMISSING THE CLAIM, THE AO STRONGLY RELIED UPON THE DECISION OF THE TRIBUNAL, SPECIAL BENCH IN THE CASE OF M/S. B.T. PATIL & SONS BELGAUM, CONSTRUCTION PVT. LTD. & ORS VS ACIT. DRAWING SUPPORT FROM THE DECISION OF THE TRIBUNAL (SUPRA), THE AO FINALLY HELD THAT THE ASSESSEE IS NOT ENTITLED DEDUCTION U/S. 80IA(1) R.W. S. 80IA(2) IN RESPECT OF INFRASTRUCTURE FACILITY. 4. AGGRIEVED BY THIS, THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A). BEFORE THE LD. CIT (A), THE ASSESSEE EXPLAINED THE NATURE OF TRANSACTION AND HOW THE TRIPARTITE AGREEMENT CAME INTO EXISTENCE. THE ASSESSEE ALSO GAVE P OINT - WISE EXPLANATION TO THE OBJECTIONS MADE BY THE AO IN HIS ASSESSMENT ORDER. AFTER CONSIDERING THE SUBMISSIONS AND THE FACTS ON RECORD, THE LD. CIT(A) OBSERVED THAT U/S. 80IA(4) A DEDUCTION IS ALLOWED TO ANY ENTERPRISE CARRYING ON THE BUSINESS OF (1) DEVELOPING OR (2) OPERATING AND MAINTAINING OR (3) DEVELOPING, OPERATING AND MAINTAINING ANY INFRASTRUCTURE FACILITY SUBJEC T TO FULFILLMENT OF THE CONDITION LAID DOWN IN CLAUSE A TO C. THE LD. CIT(A) FURTHER OBSERVED THAT IN THE CASE IN HAND, THE INFRASTRUCTURE FACILITY IS A TOLL ROAD AT MOHOL KURI KAMTI MANDROOP ROAD. THE LD. CIT(A) NOTICED THAT THE ENTIRE COST OF DEVELOPI NG THE SAID TOLL ROAD IS BORNE BY THE ASSESSEE WHICH IS REFLECTED IN ITS AUDITED ANNUAL ACCOUNTS. THE LD. CIT(A) NOTICED THAT THE ENTIRE ITA. NO. 5602/M/2011 C.O. NO. 110/M/12 4 COST OF DEVELOPING THE SAID TOLL ROAD IS BORN BY THE ASSESSEE WHICH IS REFLECTED IN ITS AUDITED ANNUAL ACCOUNTS. THE L D. CIT(A) FURTHER OBSERVED THAT THE ENTIRE MAINTENANCE AND OPERATING EXPENSES HAS ALSO BEEN DEBITED BY THE ASSESSEE IN ITS PROFIT AND LOSS ACCOUNT. THE LD. CIT(A) FURTHER OBSERVED THE ELIGIBILITY OF THE ASSESSEE UNDER CLAUSE A,B AND C OF SEC. 80IA(4) AN D HELD THAT THE ASSESSEE IS ELIGIBLE TO CLAIM DEDUCTION U/S. 80IA(4) OF THE ACT. 5. AGGRIEVED BY THIS, THE REVENUE IS BEFORE US. 6. SUPPORTING THE ASSESSMENT ORDER, THE LD. DEPARTMENTAL REPRESENTATIVE STRONGLY STATED THAT THE ASSESSEE IS NOT ENTITLED FOR DEDUCTION U/S. 80 - IA OF THE ACT AS IT IS ONLY CARRYING OUT THE WORK GIVEN TO ITS PARENT COMPANY IRB PVT. LTD. THE LD. DR DREW OUR ATTENTION TO THE NATURE OF BUSINESS OF THE ASSESSEE AS MENTIONED IN FORM NO. 3CD AND ALSO RELIED UPON THE DECISION OF T HE HONBLE KARNATAKA HIGH COURT IN THE CASE OF SKYLINE ADVERTISING (P) LTD. 269 CTR 289. 7. PER CONTRA, THE LD. COUNSEL FOR THE ASSESSEE REITERATED WHAT HAS BEEN SUBMITTED BEFORE THE LOWER AUTHORITIES. THE LD. COUNSEL FOR THE ASSESSEE STATED THAT THE ISSUE INVOLVED IN THE PRESENT APPEAL HAS BEEN DECIDED BY THE HONBLE JURISDICTIONAL HIGH COURT I N FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE IN THE CASE OF CIT VS ABG HEAVY INDUSTRIES LTD. 322 ITR 323. THE LD. COUNSEL CONCLUDED BY SAYING THAT SINCE THE ISSUE HAS BEEN DECIDED BY THE HONBLE JURISDICTIONAL HIGH COURT IN FAVOUR OF THE ASSESSEE, THE GRIEVANCE OF THE REVENUE DOES NOT HOLD ANY WATER. ITA. NO. 5602/M/2011 C.O. NO. 110/M/12 5 8. HAVING HEARD THE RIVAL SUBMISSIONS, WE HAVE CAREFULLY PERUSED THE ORDERS OF THE AUTHORITIES BELOW AND THE RELEVANT DOCUMENTARY EVIDENCES BROUGHT ON RECORD BEFORE US. 8.1. AN AGREEMENT WAS MADE ON 29 TH MAY, 2002 BETWEEN THE GOVT. OF MAHARASHTRA AND IRB PVT. LTD AND MMK TOLL ROAD PVT. LTD (ASSESSEE). IN THIS AGREEMENT, IT IS PROVIDED THAT M/S. IRB PVT. LTD., HAS SUBMITTED THEIR BID FOR THE PROJECTS WHICH HAS BEEN ACCEPTED BY THE GOVERNMENT. IT IS FUR THER PROVIDED THAT AS PER PROVISIONS IN TENDER DOCUMENTS, ENTREPRENEUR HAS FORMED A S PECIAL P URPOSE V EHICLE MMK TOLL ROAD PVT. LTD (ASSESSEE) TO IMPLEMENT THE PROJECT AS CONCESSIONA IRE TO WHOM ALL THE BENEFITS OF THE PROJECTS WILL GET ACCRUED. WE, FURTH ER FIND THAT UNDER THE BOMBAY MOTOR VEHICLE TAX A CT, 1958, A NOTIFICATION WAS ISSUED ALLOWING THE ASSESSEE TO COLLECT TOLL AS PER THE BOT SCHEME. THIS NOTIFICATION IS PLACED AT PAGE - 56 OF THE PAPER BOOK. 8.2. WE FURTHER FIND THAT THE ENTIRE EXPENDITU RE HAS BEEN SHOWN BY THE ASSESSEE AS INTANGIBLE ASSET IN ITS BALANCE SHEET. THESE FACTUAL DATAS/DOCUMENTS CLEARLY ESTABLISH THAT THE ENTERPRISE OWNED BY A COMPANY REGISTERED IN INDIA WHICH HAS ENTERED INTO AN AGREEMENT WITH THE GOVERNMENT FOR DEVELOPING O R OPERATING AND MAINTAINING OR DEVELOPING, OPERATING AND MAINTAINING ANY INFRASTRUCTURE FACILITY AND HAS STARTED OPERATION ON OR AFTER 1.4.1995. THUS ALL THE THREE CONDITIONS SPECIFIED UNDER CLAUSE A,B AND C OF SEC. 80IA(4) ARE FULFILLED BY THE ASSESSEE. WE FIND THAT THE AO HAS HEAVILY RELIED UPON THE DECISION OF THE TRIBUNAL IN THE CASE OF M/S. B.T. PATIL & SONS (SUPRA). THIS DECISION IS NO MORE A GOOD LAW AS THE HONBLE BOMBAY HIGH COURT IN THE CASE OF ABG HEAVY INDUSTRIES LTD. H ELD AS UNDER: ITA. NO. 5602/M/2011 C.O. NO. 110/M/12 6 HELD, DISMISSING THE APPEAL, THAT ON MAY 31,2004, JNPT ISSUED A CERTIFICATE CONFIRMING THE AWARD OF CONTRACTS TO THE ASSESSEE ON SEPTEMBER 2,1994 AND OCTOBER 16, 1995 FOR SUPPLY, INSTALLATION, TESTING, COMMISSIONING AND MAINTENANCE OF CONTAINER HANDLING E QUIPMENT ON LEASE FOR A PERIOD OF TEN YEARS FOR LOADING AND UNLOADING OF CONTAINERS AT THE PORT AND THAT THE CRANES THAT WERE TO BE SUPPLIED BY THE ASSESSEE FORMED AN INTEGRAL PART OF THE POWER. JNPT CLARIFIED THAT THE CONTRACTS HAD BEEN EXECUTED UNDER T HE BOLT SCHEME AND IN ACCORDANCE WITH ITS DIRECTIONS, THE CRANES WOULD BE TRANSFERRED TO THE PORT TRUST AT NO COST ON THE EXPIRY OF A PERIOD OF TEN YEARS OF THE COMMENCEMENT OF THE CONTRACT. THE OBLIGATIONS WHICH HAD BEEN ASSUMED BY THE ASSESSEE UNDER THE TERMS OF THE CONTRACT WERE OBLIGATIONS INVOLVING THE DEVELOPMENT OF AN INFRASTRUCTURE FACILITY. SECTION 80 - IA OF THE ACT ESSENTIALLY CONTEMPLATED A DEDUCTION IN A SITUATION WHERE AN ENTERPRISE CARRIED ON THE BUSINESS OF DEVELOPING, MAINTAINING AND OPERAT ING AN INFRASTRUCTURE FACILITY. A PORT WAS DEFINED TO BE INCLUDED WITHIN THE PURVIEW OF THE EXPRESSION INFRASTRUCTURE FACILITY. THE OBLIGATIONS WHICH THE ASSESSEE ASSUMED UNDER THE TERMS OF THE CONTRACT WERE NOT MERELY FOR SUPPLY AND INSTALLATION OF THE CRANES, BUT INVOLVED A CONTINUOUS OBLIGATION RIGHT FROM THE SUPPLY OF THE CRANES TO THE INSTALLATION, TESTING, COMMISSIONING, OPERATION AND MAINTENANCE OF THE CRANES FOR A TERM OF TEN YEARS AFTER WHICH THE CRANES WERE TO VEST IN JNPT FREE OF COST. AN ASS ESSEE DID NOT HAVE TO DEVELOP THE ENTIRE PORT IN ORDER TO QUALIFY FOR A DEDUCTION UNDER SECTION 80 - IA. THE CONDITION OF A CERTIFICATE FROM THE PORT AUTHORITY WAS FULFILLED AND JNPT CERTIFIED THAT THE FACILITY PROVIDED BY THE ASSESSEE WAS AN INTEGRAL PART OF THE PORT. THE ASSESSEE DEVELOPED THE FACILITY ON A BOLT BASIS UNDER THE CONTRACT WITH JNPT. ON THE FULFILLMENT OF THE LEASE OF TEN YEARS, THERE WAS A VESTING IN THE JNPT FREE OF COST . THE FINDING THAT THE ASSESSEE HAD DEVELOPED THE INFRASTRUCTURE FAC ILITY AND THAT IT WAS ENGAGED IN OPERATING THE CRANES WAS, THEREFORE, BASED ON THE MATERIAL ON RECORD. THE FACT THAT THE ASSESSEE WAS ALSO MAINTAINING THE CRANES WAS NOT DISPUTED. THE FACILITY WAS COMMENCED AFTER APRIL 1,1995. THE ASSESSEE WAS ENTITLED TO THE SPECIAL DEDUCTION U/S. 80IA. 8.3. THE DECISION RELIED UPON BY THE LD. DR IS TOTALLY MISPLACED, RESPECTFULLY FOLLOWING THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT, WE DECLINE TO INTERFERE WITH THE FINDINGS OF THE LD. CIT(A). ITA. NO. 5602/M/2011 C.O. NO. 110/M/12 7 9. IN THE RE SULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. C.O. NO. 110/M/2012 10. IN GROUND NO. 1, THE ASSESSEE HAS CHALLENGED THE JURISDICTION OF THE AO FOR REOPENING THE ASSESSMENT U/S. 147 OF THE ACT. 11. SINCE WE HAVE DISMISSED REVENUES APPEAL IN ITA NO. 5602/M/11 AND ALLOWED THE CLAIM OF DEDUCTION MADE U/S. 80IA OF THE ACT, IN OUR CONSIDERED OPINION, THIS GRIEVANCE OF THE ASSESSEE BECOME IS OF ACADEMIC IN NATURE , THEREFORE, WE DO NOT FIND IT NECESSARY TO ADJUDICATE UPON THE SAME. 12. THE SECOND ISSU E RELATES TO THE DENIAL OF DEDUCTION U/S. 80IA OF THE ACT IN RESPECT OF INTEREST OF RS. 6,75,170/ - . 13. FACTS INVOLVED IN THIS ISSUE ARE THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD EARNED INTEREST INCOME OF RS. 6,75,120/ - ON FIXED DEPOSIT WITH BANK. WHILE COMPUTING DEDUCTION U/S. 80IA, THE ASSESSEE HAS CONSIDERED THIS INTEREST INCOME AS ELIGI BLE FOR DEDUCTION U/S. 80IA. THIS CLAIM WAS DENIED BY THE AO. 14. BEFORE THE LD. CIT(A), THE ASSESSEE STRONGLY SUBMITTED THAT THE INTEREST WAS EARNED ON FIXED DEPOSIT WHICH WAS PLACED WITH THE BANK FOR AVAILING THE TERM LOAN. IT WAS FURTHER BROUGHT TO THE NOTICE OF THE LD. CIT(A) THAT THE ASSESSEE HAS PAID INTEREST OF RS. 1,35,70,398/ - ON THE SAID TERM LOAN AVAILED FROM THE BANK. HENCE, THERE IS NO QUESTION OF DISALLOWANCE ANY DEDUCTION U/S. 80IA(4). 14.1. AFTER CONSIDERING THE FACTS AND THE SUBMIS SIONS, THE LD. CIT(A) OBSERVED THAT ALL THE DECISIONS RELIED UPON BY THE ASSESSEE RELAT E TO THE DEDUCTION U/S. 80HH AND 80HHC WHICH ARE DEFINITELY WORDED THEN SEC. ITA. NO. 5602/M/2011 C.O. NO. 110/M/12 8 80IA. THE LD. CIT(A) FURTHER OBSERVED THAT INTEREST ON FIXED DEPOSIT IS ASSESSABLE UNDER TH E HEAD NCOME FROM OTHER SOURCES. RELYING ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF STERLING FOOD 237 ITR 579, THE LD. CIT(A) HELD THAT RS. 6,75,170/ - IS NOT ELIGIBLE FOR DEDUCTION U/S. 80IA(4) OF THE ACT. 15. AGGRIEVED BY THIS, THE A SSESSEE IS BEFORE US. 16. THE LD. COUNSEL FOR THE ASSESSEE REITERATED WHAT HAS BEEN SUBMITTED BEFORE THE LOWER AUTHORITIES. 17. THE LD. DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDERS OF THE AO. 18. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE AUTHO RITIES BELOW. WE AGREE WITH THE LD. CIT(A) THAT INTEREST ON FIXED DEPOSIT IS TAXABLE UNDER THE HEAD NCOME FROM OTHER SOURCES. IN OUR CONSIDERED OPINION, ENTIRE INCOME OF THE ASSESSEE DOES NOT QUALIFY FOR THE DEDUCTION, ONLY THAT INCOME WHICH IS DIRECTL Y RELATED TO PROFITS AND GAINS DERIVED FROM ELIGIBLE BUSINESS IS ENTITLED FOR THE CLAIM OF DEDUCTION. WE, THEREFORE DECLINE TO INTERFERE WITH THE FINDINGS OF THE LD. CIT(A). GROUND NO. 2 IS ACCORDINGLY DISMISSED. 19. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED AND THE CROSS OBJECTION FILED BY THE ASSESSEE IS PARTLY ALLOWED. OR DER PRONOUNCED IN THE OPEN COURT ON 25 TH MARCH, 2015 SD/ - SD/ - ( VIJAY PAL RAO ) (N.K. BILLAIYA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED : 25TH MARCH, 2015 . . ./ RJ , SR. PS ITA. NO. 5602/M/2011 C.O. NO. 110/M/12 9 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI