Mahalaxmi Construction Corporation Ltd., Kolhapur V. ACIT, Circle-2, Kolhapur

ITA 106/PUN/2008

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 1207 (ITAT-PUNE)
• Duration Of Justice: 7 year(s) 7 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-08-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 16-01-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B; VERMA HEERAJ JAIN
• Keywords: Question of law

Judgement Text

, IN THE INCOME TAX APPELLATE T RIBUNAL PUNE BENCH A, PUNE . . , , BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS A WASTHY, JM . / ITA NOS.968/PN /2007 & 106/PN/2008 / ASSESSMENT YEA RS : 2004-05 & 200 5-06 MAHALAXMI CONSTRUC TION CORPORATION LTD., 223/3, S-I(B), MALAT I TOWERS, TARABAI PARK, KOLHAP UR PAN NO.AADCM2170 P . / APPELLANT V/S ACIT, CIRCLE-2, KOLHA PUR . / RESPONDENT / APPELLANT BY : SHRI SUNIL PATHAK/ SHRI NIKHIL PATHAK / DEPARTMENT BY : SMT. M.S. VERMA HEERAJ JAIN & B / ORDER PER R.K. PANDA, A M : THE ABOVE 2 APPEA LS FILED BY THE ASS ESSEE ARE DIRECTED AGAINST THE SEPARATE ORDERS DATED 09-05 -2007 AND 16-11-20 07 OF THE CIT(A)-KOLHAPUR FOR ASSESSMENT YEAR S 2004-05 AND 2005 -06 RESPECTIVELY. FOR TH E SAKE OF CONVENIENC E, BOTH THE APPEALS WERE HEARD TOGETHER AND A RE BEING DISPOSED OF BY THIS COMMON ORDE R. / DATE OF HEARING :26. 06.2015 / DATE OF PRONOUNCEM ENT: 25.08.2015 2 ITA NO.968/PN/2007 & IT A NO.106/PN/2008 2. ALTHOUGH A N UMBER OF GROUNDS HAVE BEEN TAKEN B Y THE ASSESSEE FOR BOTH THE ASSESSMENT YEARS, H OWEVER, THEY ALL RELAT E TO THE ORDER OF THE C IT(A) IN UPHOLDING THE DENIAL OF DEDU CTION U/S.80IA(4) OF RS.84 ,02,555/- FOR ASSESS MENT YEAR 2004-05 AND RS.1,46,85,364/- FOR ASSESSMENT YEAR 20 05-06 RESPECTIVELY. 3. FACTS OF THE C ASE, IN BRIEF, ARE TH AT THE ASSESSEE FILED THE RETURN OF INCOME ON 01-11-2004 DEC LARING TOTAL INCOME OF RS.28,80,290/- AFTER CLAIMING DEDUCTION OF RS.84,02,555/- U/S. 80IA(4). THE AO, FO R THE REASONS RECORD ED AT PARA 4.1 TO 4. 13 OF THE ORDER PASSED U/ S.143(3) ON 22-12-20 06, DISALLOWED THE C LAIM OF DEDUCTION U/S.80 IA(4). IN APPEAL TH E LD.CIT(A) FOLLOWING THE ORDER FOR A.Y. 2003-0 4 IN CASE OF THE ASSE SSEE UPHELD THE ACTIO N OF THE AO. THE TRIBUN AL VIDE ITA NO.968/P N/2007 ORDER DATED 08- 12-2010 FOLLOWING TH E ORDER OF THE TRIBUN AL IN ASSESSEES OWN CASE FOR A.Y. 2003-04 UPH ELD THE ORDER OF THE C IT(A) AND DISMISSED THE APPEAL FILED BY THE AS SESSEE. 4. SIMILARLY FOR A SSESSMENT YEAR 200 5-06 THE AO DISALLO WED CLAIM OF DEDUCTION O F RS.1,46,85, 364/- U/S.80IA(4) IN THE O RDER PASSED U/S.143(3) D ATED 25-04-2007 WH ICH WAS UPHELD BY THE CIT(A) VIDE ORDER DAT ED 16-11-2007. THE TRIBUNAL VIDE ORDER DATED 25-11-2010 FOLLOWING THE ORDER FOR A.Y. 20 03-04 IN ASSESSEES O WN CASE VIDE ITA NO.433 /PN/2007 ORDER DATE D 24-02-2010 UPHELD THE ORDER OF THE CIT(A) AN D DISMISSED THE APPE AL FILED BY THE ASSESS EE. 5. THE ASSESSEE FILED SEPARATE APPE ALS BEFORE THE HON BLE BOMBAY HIGH COURT FOR BOTH THE YEARS. THE HONBLE HIGH C OURT VIDE SEPARATE ORDERS DATED 11-02-2013 VIDE ITA NOS. 458 AND 459/2011 FOR A.YRS. 2004-05 & 2005-06 RESPECTIVELY RESTORED THE MATTER TO THE FILE O F THE TRIBUNAL FOR F RESH ADJUDICATION. THE 3 ITA NO.968/PN/2007 & IT A NO.106/PN/2008 RELEVANT OBSERVATIONS OF THE HONBLE HIGH COURT READ AS UNDER (FOR A.Y. 2004-05) : 2. IN THIS APPEAL, TH E ASSESSEE HAS IN RESPE CT OF ASSESSMENT YEAR 200506 RAISED THE FOLLO WING QUESTION OF LAW FOR OUR CONSIDERATION. WHETHER ON THE FACTS AN D IN THE CIRCUMSTANCES O F THE CASE ON A PROPER AND REASONAB LE INTERPRETATION OF S.80IA(4), THE TRIBUNAL IS RIGHT IN HOLD ING THAT GOVERNMENT OR STATUTORY BODY IS THE DEVELOPER OF INFRA STRUCTURE FACILITY AND HE RE APPELLANT IS NOT ENTITLED TO DEDUCTIO N UNDER THAT SECTION? 3. THE TRIBUNAL, WH ILE DISMISSING THE ASSES SEES APPEAL FOLLOWED ITS ORDER FOR ASSESSMEN T YEAR 200304 WHILE D ENYING THE DEDUCTION CLAIMED UNDER SECTION 80IA(4) OF THE INCOME TAX ACT. THE ORDER OF THE TRIBUNAL FOR THE ASS ESSMENT YEAR 200304 HAS BEEN SET ASIDE BY THIS COURT IN APPEAL FILE D BY THE APPELLANT BEIN G I.T. APPEAL NO.4610 OF 2010 ON 30 TH AUGUST, 2011 AND RESTO RED TO THE TRIBUNAL FOR A FRESH DECISION. 3. FRO THE REASONS MENTIONED IN THE ORD ER DATED 30 TH AUGUST 2011, WE SET ASIDE THE IMPUGNED ORDER RELATI NG TO ASSESSMENT YEAR 200506 AND RESTORE TH E MATTER TO THE FILE OF T HE TRIBUNAL, FOR FRESH DECISION IN ACCORDANCE W ITH LAW. 4. ALL THE CONTENTIO NS OF THE PARTIES ARE K EPT OPEN TO BE URGED BEFORE THE TRIBUNAL. 5. THE APPEAL IS A CCORDINGLY DISPOSED OF WITH NO ORDER AS TO COSTS. (IDENTICAL ORDER HAS B EEN PASSED BY THE H ONBLE HIGH COURT FOR A.Y. 2005-06) 6. WE HAVE CONSI DERED THE RIVAL ARGU MENTS MADE BY BOTH THE SIDES. WE FIND AFTER THE ORDER FOR A.Y. 200 3-04 WAS SET ASIDE BY THE HONBLE BOMBAY HIGH COURT TO THE FILE OF TH E TRIBUNAL, THE TRIBU NAL VIDE ITA NO.433/PN /2007 ORDER DATED 06-02-2012 DECIDED THE ISSUE OF ALLOWABILITY OF DEDUCTION U/S.8 0IA(4) IN FAVOUR OF THE ASSESSEE BY OBSERVIN G AS UNDER : 7. WE FIND THAT THE HONBLE JURISDICTIONAL H IGH COURT IN THE APPEAL PREFERRED BY THE ASSESS EE HAS BEEN PLEASED TO RESTORE THE MATTER TO THE FILE OF THE TRIBUNAL FOR FRESH DECISION ON TH E ISSUE IN ACCORDANCE WITH LAW. ON EARLIER OC CASION THE TRIBUNAL HAD DECIDED THE ISSUE IN FAVOUR OF THE REVENUE B Y RELYING UPON THE DECI SION OF THIRD MEMBER BENCH OF THE TRIBUNA L IN THE CASE OF B.T. PATIL & SONS BELGAM CONSTRUCTION (P) LTD VS . ACIT 126 TTJ (MUM) ( TM) 577. THE HONBLE HIGH COURT HAS OBSERVE D THAT IT IS NOT IN DISPUT E THAT THE SAID DECISION 4 ITA NO.968/PN/2007 & IT A NO.106/PN/2008 OF THE TRIBUNAL IN THE CASE OF B.T. PATIL & S ONS (SUPRA) HAS BEEN RECALLED BY THE TRIBUNAL BY ORDER DATED 18.2.20 11 AS EVIDENT FROM THE ORDER PASSED BY THE TRI BUNAL IN ITA NO.766/PN /2009 DATED 8.6.2011. THE HONBLE HIGH COUR T HAS ACCORDINGLY QUAS HED AND SET ASIDE THE IMPUGNED ORDER OF TH E TRIBUNAL DATED 24.2 .2010 PASSED IN ITA NO.433/PU/2003 RELATI NG TO AY 200304, AND H AS RESTORED THE MATTER TO THE FILE OF THE TRIBUNA L FOR FRESH DECISION. 8. HAVING GONE THRO UGH THE CITED DECISIONS BY THE LEARNED AR WE FIND THAT AN IDEN TICAL ISSUE HAS BEEN DECI DED IN FAVOUR OF THE ASSESSEE BY HONBLE BO MBAY HIGH COURT IN THE CASE OF CIT VS. ABG HEAVY INDUSTRIES LTD & ORS (SUPRA). RELEVANT P ARA NOS. 22 & 23 OF THE SAID DECISION OF HO NBLE HIGH COURT IS BEIN G REPRODUCED HERE UNDER FOR A READY REFERE NCE. 22. ANOTHER SUBMISS ION WHICH WAS URGED O N BEHALF OF THE REVENUE IS THAT UNDER CL . (III) OF SUBSEC. (4A) OF S EC. 80IA, ONE OF THE CONDITIONS IMPOSED WAS THAT THE ENTERPR ISE MUST START OPERATING AND MAINTAIN ING THE INFRASTRUCTURE FA CILITY ON OR AFTER 1 ST APRIL, 1995. THE SAME REQUIREMENT IS EMBODIES IN SUBCL. (C) OF SUBSEC. (4) OF THE AM ENDED PROVISIONS OF SEC. 80IA. ON THIS BASIS, IT WAS URGED THAT S INCE THE ASSESSEE WAS NO T OPERATING AND MAINTAINING THE FACILITY , HE DID NOT FULFIL THE C ONDITION. THIS SUBMISSION IS FALLACIOUS BOTH IN FACT AND IN LAW. AS A MATTER OF FACT, THE TRIBUNAL HAS E NTERED A FINDING THAT TH E ASSESSEE WAS OPERATING THE FACILITY AN D THIS FINDING HAS BEEN C ONFIRMED EARLIER IN THIS JUDGMENT. THAT T HE ASSESSEE WAS MAINTAI NING THE FACILITY IS NOT IN DISPUTE. THE FACILITY WAS COMMENCED AFTER 1 ST APRIL, 1995. THEREFORE, THE REQ UIREMENT WAS MET IN FAC T. MOREOVER, AS A MATTER OF LAW, WHAT TH E CONDITION ESSENTIALLY M EANS IS THAT THE INFRASTRUCTURE FACILITY S HOULD HAVE BEEN OPERA TIONAL AFTER 1 ST APRIL, 1995. AFTER SEC. 8 0IA WAS AMENDED BY TH E FINANCE ACT OF 2001, THE SECTION APPL IED TO AN ENTERPRISE C ARRYING ON THE BUSINESS OF (I) DEVELOPIN G; OR (II) OPERATING AND MAINTAINING; OR (III) DEVELOPING, OPERATI NG AND MAINTAINING AN Y INFRASTRUCTURE FACILITY WHICH FULFILS CERT AIN CONDITIONS. THOSE CO NDITIONS ARE : (I) OWNERSHIP OF THE ENTERP RISE BY A COMPANY REGIST ERED IN INDIA OR BY A CONSORTIUM; (II) A N AGREEMENT WITH THE C ENTRAL OR STATE GOVERNMENT, LOCAL AUTHO RITY OR STATUTORY BODY; AN D (III) THE START OF OPERATION AND MAINTE NANCE OF THE INFRASTRUCTU RE FACILITY ON OR AFTER 1 ST APRIL, 1995. THE REQUI REMENT THAT THE OPERAT ION AND MAINTENANCE OF THE IN FRASTRUCTURE FACILITY SH OULD COMMENCE AFTER 1 ST APRIL, 1995 HAS TO BE H ARMONIOUSLY CONSTRUED W ITH THE MAIN PROVISION UNDER WHICH A DEDUCTION IS AVAILABLE TO AN ASSESSEE WHO DEVELOPS O R OPERATES AND MAINTAI NS, OR DEVELOPS, OPERATES AND MAINTAINS AN INFRASTRUCTURE FACILI TY. UNLESS BOTH THE PROVISIONS ARE HARMO NIOUSLY CONSTRUED, THE OB JECT AND INTENT UNDERLYING THE AMENDME NT OF THE PROVISION BY THE FINANCE ACT OF 2001 WOULD BE DEFEATED . A HARMONIOUS READING OF THE PROVISION IN ITS ENTIRETY WOULD LEA D TO THE CONCLUSION THAT THE DEDUCTION IS AVAILABLE TO AN ENTERPRIS E WHICH (I) DEVELOPS; OR ( II) OPERATES AND MAINTAINS; OR (III) DE VELOPS, MAINTAINS AND OPERATES THAT INFRASTRUCTURE FACILITY S HOULD BE AFTER 1 ST APRIL, 1995. IN THE PRESENT CASE, THE ASSESSE E CLEARLY FULFILLED THIS CON DITION. 23. IN VIEW OF WHICH WE HAVE TAKEN, ALL THE A SSESSMENT YEARS IN QUESTION TO WHICH T HIS BATCH OF APPEALS RE LATES WOULD BE GOVERNED BY THE SAME P RINCIPLE. THE SUBSEQUEN T AMENDMENT OF SEC. 80IA(4A) OF THE ACT TO CLARIFY THAT THE PROVIS ION WOULD APPLY 5 ITA NO.968/PN/2007 & IT A NO.106/PN/2008 TO AN ENTERPRISE ENGAGED IN (I) DEVELOPING; OR (II) OPERATING AND MAINTAINING; OR (III) DEV ELOPING, OPERATING AND MAINTAINING AN INFRASTRUCTURE FACILITY W AS REFLECTIVE OF A POSIT ION WHICH WAS ALWAYS CONSTRUED TO HOL D THE FIELD. BEFORE THE A MENDMENT THAT WAS BROUGHT ABOUT BY P ARLIAMENT BY FINANCE A CT OF 2001, WE HAVE ALREADY NOTED THA T THE CONSISTENT LINE OF CIRCULARS OF THE BOARD POSTULATED THE SA ME POSITION. THE AMEN DMENT MADE BY PARLIAMENT TO SEC. 80IA (4) OF THE ACT SET THE MA TTER BEYOND ANY CONTROVERSY BY STIPULA TING THAT THE THREE CONDITIONS FOR DEVELOPMENT, OPERATION AND MAINTENANCE WERE NOT INTENDED TO BE CUMULATIVE IN NATURE. 9. WE FIND FROM TH E DECISION OF HONBLE B OMBAY HIGH COURT IN AFORESAID CASE OF CIT VS . ABG HEAVY INDUSTRIES LTD & ORS (SUPRA) THAT EVEN IN THE CASE BEFORE THE HONBLE HIGH COURT, THE ASSESSEE ACTED AS A CONTRACTOR FOR GOVERNM ENT AGENCY, WAS HELD ELI GIBLE FOR THE PURPOSES OF CLAIM OF DEDUCTION U/ S 80IA(4) OF THE INCOM E TAX ACT. AS PER THE SAID DECISION OF THE HO NBLE HIGH COURT ASSESS EE WHO ONLY DEVELOPS INFRASTRUCTURAL FACILITY (EVEN AS A CONTRACTOR) BUT DOES NOT HAVE AN OCCASION TO OPERATE AND MAINTAIN IS ALSO ELIGIBLE FOR CLAIM OF DEDUCTION U/S 80IA(4) OF THE ACT . THE HONBLE HIGH COU RT HAS BEEN PLEASED TO OBSERVE THAT QUA SUCH A PERSON THE CONDITION ST ATED IN SUBSECTION (C) OF SEC.80IA(4)(I) HAS TO BE READ HARMONIO USLY WITH THE MAIN PROVISION UNDER WHICH DEDUCTION IS AVAILABLE TO AN ASSESSEE, WHO DEVELOPS; OR OPERATES AND MAINTAIN; OR DEVE LOPS, MAINTAINS AND OPERATES AN INFRASTRUCTU RAL FACILITY. IN OTHER WO RDS A DEVELOPER WHO ONLY DEVELOPS (I.E., CO NSTRUCTS) AN INFRASTRU CTURAL FACILITY IS NOT ENVISAGED TO OPERATE AN D MAINTAIN SUCH FACILITY, CANNOT BE ACCEPTED TO FULFIL THE CONDITION IN CL AUSE (C) OF SEC. 80IA(4 ) SINCE IT WOULD BE AN IMPOSSIBILITY. THEREFOR E, IN VIEW OF THE CONST RUCTION PLACED BY THE HONBLE BOMBAY HIGH C OURT ON THE REQUIREMEN TS OF CLAUSE (C) OF SEC. 80IA(4)(I) REQUIRING IT TO BE HARMONIOUSLY RE AD WITH THE MAIN SEC. 80IA(4), WE DO NOT FI ND SUBSTANCE IN THE OB JECTION RAISED BY THE REVENUE. WE THUS RESP ECTFULLY FOLLOWING THE D ECISION OF THE HONBLE BOMBAY HIGH COURT ON THE ISSUE IN THE CASE OF CIT VS. ABG HEAVY INDUSTRIES LTD & ORS (SUPRA) DECIDE THE MA TTER IN FAVOUR OF THE ASSESSEE WITH THIS FIN DING THAT ASSESSEE IS ELIGIBLE TO CLAIM THE DEDUCTION IN QUESTION U/S 80IA (4). THE ISS UE IS THUS DECIDED IN FAVOUR OF THE ASSESSEE. T HE RELATED GROUNDS ARE T HUS ALLOWED WITH THIS DIRECTION TO THE AO TO AL LOW THE CLAIMED DEDUCTI ON TO THE ASSESSEE. 10. CONSEQUENTLY THE APPEAL IS ALLOWED. 7. RESPECTFULLY F OLLOWING THE DECISI ON OF THE TRIBUNA L IN ASSESSEES OWN CASE FOR A.Y. 2003-04 AND IN ABSENCE OF ANY CONTRARY MATERIAL BR OUGHT TO OUR NOTICE AGAINST THE ORDER OF THE TRIBUNAL IN ASSESSE ES OWN CASE FOR A. Y. 2003-04 THE CLAI M OF DEDUCTION U/S.80IA(4 ) AMOUNTING TO RS.8 4,02,555/- FOR A.Y.2 004- 05 AND RS.1,46,85, 364/- FOR A.Y. 200 5-06 ARE ALLOWED. THE 6 ITA NO.968/PN/2007 & IT A NO.106/PN/2008 GROUNDS RAISED BY TH E ASSESSEE FOR BOTH T HE ASSESSMENT YEARS ARE ACCORDINGLY ALLOWED. 8. IN THE RESULT, BOTH THE APPEALS FI LED BY THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 25 -08-2015. SD/ SD/ ( VIKAS AWASTHY ) ( R.K. PANDA ) JUDICIAL MEMBER ACCOUNTANT MEM BER PUNE ; DATED : 25 TH AUGUST, 2015. / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) , / THE CIT(A), KOLHAPU R 4. / THE CIT, KOLHAPUR 5 . 6. , , / DR, ITAT, A PUNE; / GUARD FILE. / BY ORDER , //TRUE C //TRUE COPY// / SR. PRIVATE SECRETA RY , / ITAT, PUNE