M/s Khajurho Builders and Construction Co. Ltd., Chhatarpur V. C.I.T., Gwalior

ITA 111/AGR/2013

• Counselvise Citation: [2016] 134 COUNSELVISE.COM (IT) 0008 (ITAT-AGRA)
• Duration Of Justice: 2 year(s) 9 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 24-06-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 16-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Retrospective amendment
• Section: 143(3); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AGRA BENCH, AGRA BEFORE : SHRI BHAVNESH SAINI, JUDICIAL MEMBE R AND MRS. ANNAPURNA MEHROTRA, ACCOUNT ANT MEMBER ITA NO. 111/AGRA/2013 ASSTT. YEAR : 2008-09 M/S. KHAJURHO BUILDERS & CONSTRUCTION VS. COMMISSI ONER OF CO. LTD., 6 KM, SAGAR ROAD, DHADRI, INCOME-TAX, G WALIOR. CHHATARPUR. [PAN: AACCK 2207 L] (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ASHISH GOYAL, ADVOCATE RESPONDENT BY : SHRI WASEEM ARSHAD, SR. DR DATE OF HEARING : 27.01.2016 DATE OF PRONOUNCEMENT : 01.02.2016 ORDER PER BHAVNESH SAINI, JUDICIAL MEMBER: THIS APPEAL BY THE ASSESSEE HAS BEEN DIRECTED A GAINST THE ORDER OF LD. CIT, GWALIOR DATED 25.02.2013 FOR THE ASSESSMENT YE AR 2008-09 U/S. 263 OF THE IT ACT. 2. THE RECORD REVEALS THAT EARLIER THIS APPEAL WAS HEARD BY THE DIVISION BENCH OF ITAT, AGRA ON 24.06.2014. THE DRAFT ORDER WAS PUT UP BEFORE THE LEARNED ACCOUNTANT MEMBER, WHO, HOWEVER, KEPT IT PE NDING FOR A VERY LONG PERIOD AND ULTIMATELY DID NOT PASS ANY ORDER AND TH EN THE ORDER SHEET FURTHER ITA NO.111/AGRA/2013 2 REVEALS THAT THE LEARNED ACCOUNTANT MEMBER FIXED TH IS MATTER FOR FRESH HEARING BEFORE THE DIVISION BENCH WITH THE APPROVAL OF THE ZONAL VICE- PRESIDENT. THE NOTINGS OF THE LEARNED ACCOUNTANT ME MBER AND VICE-PRESIDENT ARE ON RECORD. THIS APPEAL WAS ALSO TAKEN UP FOR HE ARING EARLIER AND NOW, IT WAS FIXED FOR HEARING ON 27.01.2016. IN VIEW OF THE ABOVE, THIS APPEAL IS AGAIN HEARD BY THE PRESENT CONSTITUTION OF BENCH. 3. BRIEFLY, THE FACTS OF THE CASE ARE THAT THE ASSE SSEE FILED RETURN OF INCOME DECLARING INCOME OF RS.16,62,910/-. THE ASSESSMENT U/S. 143(3) WAS COMPLETED ON 05.05.2010 AND INCOME OF THE ASSESSEE WAS DETERMINED AT RS.22,79,810/-. THE AO EXAMINED THE RECORD AND NOTI CED THAT THE ASSESSEE HAD CLAIMED AND HAS BEEN ALLOWED DEDUCTION U/S. 80I A(4) OF THE IT ACT AMOUNTING TO RS.2.24 CRORES. AS PER EXPLANATION TO SECTION 80IA(13), THE DEDUCTION WILL NOT BE ALLOWED U/S. 80IA(4) TO THE P ERSONS ENGAGED IN THE CONTRACT WORK (WORKS CONTRACTORS). THE ASSESSEE WAS CONSIDERED AS WORKS CONTRACTOR PROVIDED BY THE GOVERNMENT AND THUS, WAS NOT FOUND ENTITLED TO DEDUCTION. THE AO MOVED PROPOSAL U/S. 263 OF THE IT ACT BEFORE THE LEARNED COMMISSIONER WHO ACCORDINGLY ISSUED NOTICE TO THE A SSESSEE, WHICH HAVE BEEN RESPONDED BY THE ASSESSEE AND THE ASSESSEE EXPLAINE D THAT THE DEDUCTION U/S. 80IA(4) HAS BEEN CLAIMED FROM ASSESSMENT YEAR 2003- 04 REGULARLY AND ITA NO.111/AGRA/2013 3 DEDUCTION HAS BEEN ALLOWED U/S. 143(3) OF THE IT AC T. THE AO IN THE ASSESSMENT YEAR UNDER APPEAL CONDUCTED DETAILED ENQ UIRY REGARDING ALLOWABILITY OF DEDUCTION U/S. 80IA OF THE IT ACT. THE AO AT THE ASSESSMENT STAGE REQUIRED THE ASSESSEE TO JUSTIFY THE DEDUCTIO N UNDER THE ABOVE PROVISION AND THE ASSESSEE FILED REPLY TO THE SAME. THE EXPLA NATION TO SECTION 80IA(13) WAS ALSO CONSIDERED AND THE ASSESSEE MADE SUBMISSIO NS IN THIS BEHALF. THE ASSESSEE HAS BEEN ALLOWED DEDUCTION U/S. 80IA ON TH E BASIS OF EVIDENCE AND MATERIAL ON RECORD. THE EXPLANATION OF THE ASSESSEE REVEALED THAT THE DECISIONS RELIED UPON BY THE LD. CIT WERE CLEARLY D ISTINGUISHABLE ON FACTS. THE LD. CIT, HOWEVER, FOUND THAT THE ASSESSEE EXECUTED THE WORKS CONTRACT IN RESPECT OF EACH OF THE PROJECTS, FOR WHICH DEDUCTIO N U/S. 80IA(4) HAS BEEN CLAIMED. IT WAS NOTICED THAT EXPLANATION TO SECTION 80IA(13) IS APPLICABLE TO THE CASE OF ASSESSEE BECAUSE THE ASSESSEE MERELY EX ECUTED WORKS CONTRACT FOR DEVELOPMENT OF RAIL SYSTEM AS AWARDED TO IT BY THE RAILWAYS. THEREFORE, THE DEDUCTION U/S. 80IA IS NOT ALLOWABLE TO THE ASSESSE E. THE LD. CIT ALSO NOTED THAT IN VIEW OF THE REASONS MENTIONED IN THE NOTICE , AS ADEQUATE ENQUIRIES HAVE NOT BEEN CONDUCTED WITH REGARD TO ALLOWABILITY OF DEDUCTION U/S. 80IA(4) OF THE ACT, THEREFORE, THE ASSESSMENT ORDER WAS CON SIDERED TO BE AN ERROR WHICH IS PREJUDICIAL TO THE INTEREST OF REVENUE AND ACCORDINGLY, ASSESSMENT ORDER WAS SET ASIDE AND THE MATTER WAS RESTORED TO THE AO TO DECIDE THE SAME ITA NO.111/AGRA/2013 4 BY CARRYING OUT PROPER ENQUIRIES AS PER LAW BY PROV IDING THE ASSESSEE ADEQUATE OPPORTUNITY OF BEING HEARD. 4. THE LEARNED COUNSEL FOR THE ASSESSEE RELIED UPON THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND ALSO FILED SYNOPSI S OF HIS ARGUMENTS. HE HAS CONTENDED THAT THE ASSESSEE IS ENGAGED IN THE BUSIN ESS OF DEVELOPING AND CONSTRUCTION OF INFRASTRUCTURE FACILITIES IN THE FO RM OF RAILWAY TRACKS AND CANALS ON BEHALF OF GOVERNMENT AND THEIR AGENCIES. ASSESSMENT YEAR 2003-04 WAS THE FIRST YEAR OF OPERATION OF THE ASSESSEE-COM PANY. THE ASSESSEE- COMPANY CLAIMED DEDUCTION U/S. 80IA(4) OF THE IT AC T AS IT WAS ENGAGED IN DEVELOPING OF INFRASTRUCTURE FACILITIES. IN THE ASS ESSMENT YEAR UNDER APPEAL ALSO, THE AO AFTER EXAMINATION OF THE MATERIAL ON R ECORD ALLOWED THE SAME CLAIM U/S. 80IA(4) OF THE IT ACT. HE HAS RELIED UPO N THE ORDER OF ITAT, AGRA BENCH IN THE CASE OF SHREE NARAYAN BUILT-UP (I) PVT . LTD. 40 TAXMANN.COM 104 AND ALSO REFERRED TO DETAILED REPLY FILED BEFORE TH E AO, COPY OF WHICH IS FILED AT PAGES 66 TO 68 OF THE PAPER BOOK AND SUBMITTED THAT EXPLANATION TO SECTION 80IA(13) WAS ALSO CONSIDERED AT THE ASSESSMENT STAG E AS PER EXPLANATION OF THE ASSESSEE. THE AO EXAMINED THE RECORD AND BOOKS OF ACCOUNT OF THE ASSESSEE AND VERIFIED THE CLAIM OF THE ASSESSEE. TH E ASSESSEE RELIED UPON CERTAIN DECISIONS OF DIFFERENT BENCHES OF TRIBUNAL. THE AO AFTER CONSIDERING ITA NO.111/AGRA/2013 5 THE DETAILED SUBMISSIONS AND THE DECISIONS OF DIFFE RENT BENCHES OF TRIBUNAL AND HIGH COURTS, ALLOWED THE CLAIM OF ASSESSEE. THE REFORE, IT IS NOT A CASE OF INADEQUATE ENQUIRIES. SIMILAR CLAIM WAS ALLOWED BY THE AO U/S. 143(3) IN PRECEDING ASSESSMENT YEARS 2006-07 AND 2007-08. THE COPIES OF THE ORDERS DATED 27.12.2008 AND 23.11.2009 HAVE BEEN PLACED ON RECORD. THE VIEW TAKEN BY THE AO WAS LEGALLY PERMISSIBLE AFTER CONDUCTING DETAILED ENQUIRY IN THE MATTER. THE AMENDMENT IN EXPLANATION TO SECTION 80I A(13) WAS ALSO ON RECORD BEFORE THE AO WHEN HE PASSED THE ASSESSMENT ORDER ON 05.05.2010. IT WAS FURTHER SUBMITTED THAT THE EXPLANATION TO SECTI ON 80IA(13) INTRODUCED BY FINANCE ACT 2007 AND FINANCE ACT 2009 ARE ALMOST SA ME AND DEAL WITH THE WORKS CONTRACT. BOTH THE EXPLANATIONS IN SUM AND SU BSTANCE WERE SIMILAR IN SO FAR AS THEY DENY EXEMPTION TO ASSESSEES WHO WERE ACTING AS MERE WORKS CONTRACTORS. BOTH THESE EXPLANATIONS WERE BEFORE TH E AO AT THE ASSESSMENT STAGE WHILE EXPLAINING SIMILAR EXPLANATIONS IN THE CONTEXT OF SECTION 80IB(10) OF THE IT ACT IN THE CASE OF CHALLENGING VALIDITY O F REOPENING U/S. 147. HONBLE GUJRAT HIGH COURT IN THE CASE OF GANESH HOUSING COR PORATION LTD. VS. DCIT, 31 TAXMANN.COM 359 HELD THAT IF AN EXPLANATION IS ADDE D TO A SECTION OF A STATUTE FOR THE REMOVAL OF DOUBTS, THE IMPLICATION IS THAT THE LAW WAS THE SAME FROM THE VERY BEGINNING AND THE SAME IS FURTHER EXPLAINE D BY WAY OF ADDITION TO THE EXPLANATION. THUS, IT IS NOT A CASE OF INTRODUCTION OF NEW PROVISION OF LAW BY ITA NO.111/AGRA/2013 6 RETROSPECTIVE OPERATION. THE LD. COUNSEL FOR THE AS SESSEE SUBMITTED THAT IT IS A FACT THAT THE ASSESSEE IS A DEVELOPER AND NOT MEREL Y A WORKS CONTRACTORS AND THIS POINT IS EXAMINED BY THE AO AND ACCEPTED BY HI M. HE HAS RELIED ON THE DECISION OF SUPREME COURT IN THE CASE OF MALABAR IN DUSTRIAL CO. LTD. 243 ITR 83 ON THE PROPOSITION THAT WHERE TWO VIEWS ARE POSS IBLE AND THE ITO HAS TAKEN ONE VIEW, WITH WHICH THE CIT DOES NOT AGREE, IT CANNOT BE TREATED AS AN ERRONEOUS ORDER PREJUDICIAL TO THE INTERESTS OF THE REVENUE UNLESS THE VIEW TAKEN BY THE ITO IS UNSUSTAINABLE IN LAW. HE HAS AL SO RELIED UPON THE DECISION OF DELHI HIGH COURT IN THE CASE OF CIT VS. ANSAL HO USING AND CONSTRUCTION LTD., 45 TAXMANN.COM 223, IN WHICH IT WAS HELD THAT ON DE BATABLE ISSUE, ON WHICH MORE THAN ONE PERMISSIBLE VIEW IS POSSIBLE AND IF T HE AO TAKES ONE PLAUSIBLE VIEW, IT CANNOT BE SAID THAT THE ASSESSMENT IS ERRO NEOUS OR PREJUDICIAL TO THE INTEREST OF REVENUE. HE HAS ALSO RELIED UPON THE OR DER OF ITAT PUNE BENCH DATED 08.06.2011 IN THE CASE OF LAXMI CIVIL ENGG. P . LTD. VS. ADDL. CIT, COPY OF WHICH IS PLACED ON RECORD. THE LD. CIT HAS NOT GIVE N ANY REASONS AS TO HOW THE ASSESSEE IS A WORKS CONTRACTOR. THE ASSESSEE HAS SU BSTANTIAL INTEREST IN THE PROJECT, AS THE ASSESSEE HAS FIXED ASSETS OF RS.4.3 0 CRORES (PB-30) AND ALSO FURNISHED SECURITY DEPOSIT TO THE TUNE OF RS.3.23 C RORES FOR GETTING THE DEVELOPMENT CONTRACT (PB 30). THE ASSESSEE HAS NOT ONLY TAKEN THE BUSINESS RISK BUT HAS ALSO TAKEN INVESTMENT RISK. A PERSON W HO MAKES ANY INVESTMENT ITA NO.111/AGRA/2013 7 ON DEVELOPMENT WORK AND CARRIES OUT THE CIVIL WORK SHALL BE ELIGIBLE FOR TAX BENEFIT U/S. 80IA(4) OF THE IT ACT. THE ASSESSEE EX ECUTED THE PROJECT AS A DEVELOPER AND ENTIRE ACTIVITIES WERE TAKEN BY THE A SSESSEE AND HUGE INVESTMENT HAS BEEN MADE IN THE CONTRACT. HE HAS RE LIED ON THE CBDT CIRCULAR NO. 3 DATED 12.03.2008, IN WHICH IN PARA 34.2, IT I S EXPLAINED AS UNDER : 34.2. THE TAX BENEFIT WAS INTRODUCED FOR THE REASON THAT INDUSTRIAL MODERNIZATION REQUIRES A MASSIVE EXPANSI ON OF, AND QUALITATIVE IMPROVEMENT IN, INFRASTRUCTURE (VIZ., E XPRESSWAYS, HIGHWAYS, AIRPORTS, PORTS AND RAPID URBAN RAIL TRAN SPORT SYSTEMS) WHICH WAS LACKING IN OUR COUNTRY. THE PURPOSE OF THE TAX BENEFIT HAS ALL ALONG BEEN FOR ENCOURAGING PRIVATE SECTOR PARTI CIPATION BY WAY OF INVESTMENT IN DEVELOPMENT OF THE INFRASTRUCTURE SECTOR AND NOT FOR THE PERSONS WHO MERELY EXECUTE THE CIVIL CONSTR UCTION WORK OR ANY OTHER WORKS CONTRACT. THE INCENTIVE HAS ALL ALON G BEEN INTENDED TO BENEFIT DEVELOPERS WHO UNDERTAKE ENTREPRENEURIAL AND INVESTMENT RISK AND NOT CONTRACTORS WHO ONLY UNDERT AKE BUSINESS RISK. 4.1 THE LD. COUNSEL FOR THE ASSESSEE, THEREFORE, SU BMITTED THAT SINCE THE AO HAS TAKEN ONE OF THE PERMISSIBLE VIEW UNDER THE LAW , THEREFORE, ASSESSMENT ORDER COULD NOT BE STATED TO BE ERRONEOUS IN SO FAR AS PREJUDICIAL TO THE INTEREST OF REVENUE. HE HAS ALSO RELIED UPON THE OR DER OF ITAT INDORE BENCH IN THE CASE OF SANEE INFRASTRUCTURE PVT. LTD. VS. ACIT , 23 TAXMANN.COM 345, IN WHICH IT WAS HELD AS UNDER : AFTER AMENDMENT BY FINANCE ACT, 2002 FOR CLAIMING DEDUCTION UNDER SECTION 80-IA(4) INFRASTRUCTURE FAC ILITY IS ONLY REQUIRED TO BE DEVELOPED AND THERE IS NO CONDITION THAT ASSESSEE SHOULD ALSO OPERATE SAME. ITA NO.111/AGRA/2013 8 5 . ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REPRESE NTATIVE RELIED ON THE IMPUGNED ORDER AND SUBMITTED THAT THE AO SHOULD HAVE PASSED A SPEAKING ORDER AND IN ASSESSMENT YEAR 2007-08 (PB-60), THE A O HAS MENTIONED THE NATURE OF BUSINESS TO BE CIVIL CONSTRUCTION. HE HAS SUBMITTED THAT THE AO DID NOT EXAMINE THE FACTS AND RELEVANT PROVISION OF LAW AT THE STAGE OF ASSESSMENT. THEREFORE, THE LD. CIT RIGHTLY SET ASIDE THE IMPUGN ED ASSESSMENT ORDER. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND THE MATERIAL ON RECORD. IT IS NECESSARY TO REPRODUCE THE EXPLANATION TO SECTIO N 80IA(13) OF THE IT ACT, WHICH IS THE MAIN ISSUE INVOLVED IN THE PRESENT APP EAL. THE EXPLANATION AS INSERTED BY FINANCE ACT, 2007 W.E.F. 01.04.2000 REA DS AS UNDER : FOR THE REMOVAL OF DOUBTS, IT IS HEREBY DECLARED T HAT NOTHING CONTAINED IN THIS SECTION SHALL APPLY TO THE PERSON WHO EXECUTES WORKS CONTRACT ENTERED INTO WITH THE UNDERTAKING OR ENTERPRISES, AS THE CASE MAY BE. 6.1 THE ABOVE EXPLANATION WAS SUBSTITUTED BY THE FI NANCE ACT, 2009 W.E.F. 01.04.2000, WHICH READS AS UNDER EXPLANATION. FOR THE REMOVAL OF DOUBTS, IT IS HE REBY DECLARED THAT NOTHING CONTAINED IN THIS SECTION SHALL APPLY IN RELATION TO A BUSINESS REFERRED TO IN SUB-SECTION (4) WHICH IS IN THE NATURE OF A WORKS CONTRACT AWARDED BY ANY PERSON (INCLUDING THE CENTRAL OR STATE GOVERNMENT) AND EXECUTED BY THE UNDERTAKING O R ENTERPRISE REFERRED TO IN SUB-SECTION (1). ITA NO.111/AGRA/2013 9 THE AO AT THE ASSESSMENT STAGE ASKED THE ASSESSEE T O JUSTIFY THE CLAIM OF DEDUCTION U/S. 80IA OF THE IT ACT AND THE ASSESSEE SUBMITTED DETAILED REPLY BEFORE THE AO WHICH WERE SUPPORTED BY THE DECISIONS OF DIFFERENT BENCHES OF ITAT AND HIGH COURTS. THE AO AFTER CONSIDERING THE MATERIAL ON RECORD, ACCEPTED THE CLAIM OF THE ASSESSEE U/S. 80IA(4) OF THE IT ACT. COPIES OF THE REPLIES OF THE ASSESSEE ARE FILED IN THE PAPER BOOK , IN WHICH THE ASSESSEE EXPLAINED THAT IT IS REGISTERED COMPANY IN INDIA EN GAGED IN DEVELOPMENT FOR RAILWAY DEPARTMENT SINCE 2002. THE WORK OF THE ASSE SSEE IS TO DEVELOP RAILWAYS TRACKS AND AFTER THE TRACKS ARE DEVELOPED THE SAME ARE HANDED OVER TO THE DEPARTMENT. AFTER ENTERING INTO THE AGREEMEN TS WITH THE RAILWAYS, THE ASSESSEE PLANS, MOBILIZES AND SYNTHESIZING PEOPLE, PLANS TECHNICAL EXPERTISE, SUPERVISION, COORDINATING CONTROL AND FINANCE ETC. TO DEVELOP AND CREATE THE RAILWAY TRACKS. IT MEANS THAT THE PROJECT, WHEN IT WAS DEVELOPED, IS INITIALLY FINANCED BY THE ASSESSEE AND RISK OF ANY DAMAGE IS BORNE BY THE ASSESSEE COMPANY. THE ASSESSEE, THEREFORE, EXPLAINED THAT IT SATISFIES THE CONDITIONS OF SECTION 80IA(4) OF THE IT ACT. THE LD. COUNSEL FOR THE ASSESSEE HAS REFERRED TO THE SAMPLE COPY OF VARIOUS AGREEMENTS IN RESPECT OF THE CONTEXT. THE ASSESSEE ALSO EXPLAINED THAT EXPLANATION TO SECTION 80IA(13) FIRST INSERTED BY FINANCE ITA NO.111/AGRA/2013 10 ACT, 2007 AND AMENDED BY FINANCE ACT, 2009 AS REPRO DUCED ABOVE WOULD NOT APPLY TO THE ASSESSEES CASE FIRST BECAUSE THE NATU RE OF THE WORK IS NOT OF WORK CONTRACT AND SECOND, THAT THIS EXPLANATION APPLIES TO ONLY SUB-CONTRACTORS. ITAT, PUNE BENCH IN THE CASE OF LAXMI CIVIL ENGG. P . LTD. VS. ADDL. CIT VIDE ORDER DATED 08.06.2011, CONSIDERING THE DECISION OF BOMBAY HIGH COURT IN THE CASE OF ABG HEAVY ENGG. LTD. IN PARA 5 & 6 HELD AS UNDER : 5. WE HEARD BOTH THE PARTIES AND PERUSED THE ORDER S OF THE REVENUE. THE CONTENTIONS ISSUES BEFORE US ARE (I) WH ETHER THE CONTRACTOR IS SYNONYMOUS WITH THE DEVELOPER WITHIN THE MEANING OF SECTION 80IA(I) OF THE ACT; (II) WHETHER THE CONDIT ION PLACED IN CLAUSE (C) IS APPLICABLE TO THE CASE OF A DEVELOPER, WHO I S NOT CARRYING ON BUSINESS OF OPERATING AND MAINTAINING THE INFRASTRU CTURAL FACILITIES. IN OUR OPINION, THE ANSWER TO THESE QUESTION ARE PR OVIDED BY THE JUDGMENT OF THE BOMBAY HIGH COURT IN THE CASE OF AB G HEAVY ENGG. LTD. (SUPRA). IN THIS REGARD WE PERUSED THE ABOVE C ITED PARA -22 OF THE SAID JUDGMENT AND FOR THE SAKE OF COMPLETENESS, THE SAID PARAGRAPH IS REPRODUCED AS UNDER : 22. THE SUBMISSION WHICH WAS URGED ON BEHALF OF THE REVENUE IS THAT CLAUSE (III) OF SUB-SECTION (4A) OF SECTION 80- IA, ONE OF THE CONDITIONS IMPOSED WAS THAT THE ENTE RPRISE MUST START OPERATING AND MAINTAINING THE INFRASTRUC TURE FACILITY ON OR AFTER 1 ST APRIL, 1995. THE SAME REQUIREMENT IS EMBODIED IN SUB-CLAUSE (1) OF SUB-CLAUSE (4) OF THE AMENDED PROVISIONS. IT WAS URGED THAT SINCE THE ASSESSEE WA S NOT OPERATING AND MAINTAINING THE FACILITY, HE DID NOT FULFILL THE CONDITION. THE SUBMISSION IS FALLACIOUS BOTH IN FACT AND IN LAW. THAT THE ASSESSEE WAS MAINTAINING THE FACILITY IS NO T IN DISPUTE. THE FACILITY WAS COMMENCED AFTER 1 ST APRIL, 1995. THEREFORE, THE REQUIREMENT WAS MET IN FACT. MOREOVER , AS A MATTER OF LAW WHAT THE CONDITION ESSENTIALLY MEANS IS THAT THE INFRASTRUCTURE FACILITY SHOULD HAVE BEEN OPERATIONA L AFTER 1 ST ITA NO.111/AGRA/2013 11 APRIL, 1995. AFTER SECTION 80 IA WAS MENDED BY THE FINANCE ACT, 2001, THE SECTION APPLIES TO AN ENTERPRISE CAR RYING ON THE BUSINESS OF (I) DEVELOPING; OR (II) OPERATING AND M AINTAINING; OR (III) DEVELOPING, OPERATING AND MAINTAINING ANY INFRASTRUCTURE FACILITY WHICH FULFILLS CERTAIN COND ITIONS. THOSE CONDITIONS ARE (1) OWNERSHIP OF THE ENTERPRISES BY A COMPANY REGISTERED IN INDIA OR BY A CONSORTIUMS; (II) AN AG REEMENT WITH THE CENTRAL OR STATE GOVERNMENT, LOCAL AUTHORI TY OR STATUTORY BODY; AND (III) THE START OF OPERATION AND MAINTENANCE OF THE INFRASTRUCTURE FACILITY SHOULD C OMMENCE AFTER 1 ST APRIL, 1995. THE REQUIREMENT THAT OPERATION AND MAINTENANCE OF THE INFRASTRUCTURE FACILITY SHOULD C OMMENCE AFTER 1 ST APRIL, 1995 HAS TO BE HARMONIOUSLY CONSTRUED WITH THE MAIN PROVISION UNDER WHICH DEDUCTION IS AVAILAB LE TO AN ASSESSEE WHO DEVELOPS OR OPERATES AND MAINTAINS, OR DEVELOPS, OPERATES AND MAINTAINS AN INFRASTRUCTURE FACILITY. A HARMONIOUS READING OF THE PROVISIONS IN ITS ENTIR ETY WOULD LEAD TO THE CONCLUSION THAT THE DEDUCTION IS AVAILA BLE TO AN ENTERPRISE WHICH (I) DEVELOPS; OR OPERATES AND MAIN TAINS; OR (III) DEVELOPS, MAINTAIN AND OPERATES THAT INFRASTR UCTURE FACILITY. HOWEVER, THE COMMENCEMENT OF THE OPERATIO N AND MAINTENANCE OF THE INFRASTRUCTURE FACILITY SHOULD B E AFTER 1 ST APRIL, 1995. IN THE PRESENT CASE THE ASSESSEE CLEAR LY FULFILLED THIS CONDITION. BEFORE THE AMENDMENT THAT WAS BROUGHT ABOUT BY PARL IAMENT BY FINANCE ACT, 2001, WE HAVE ALREADY NOTED THAT TH E CONSISTENT LINE OF CIRCULARS OF THE BOARD POSTULATE D THE SAME POSITION. THE AMENDMENT MADE BY PARLIAMENT TO S. 80- IA(4) OF THE ACT, SET THE MATTER BEYOND ANY CONTROVERSY B Y STIPULATING THAT THE THREE CONDITIONS FOR DEVELOPME NTS, OPERATION AND MAINTENANCE WERE NOT INTENDED TO BE CUMULATIVE IN NATURE. 6. THE ABOVE JUDGMENT OF THE HONBLE HIGH COURT IS DELIVERED IN THE CASE OF ABG HEAVY ENGG. LTD. (SUPR A), WHO IS A CONTRACTOR FOR THE NJP TRUST AND THAT CONTRACTOR, AS SESSEE IS FOUND TO BE AN ELIGIBLE DEVELOPER FOR MAKING CLAIM OF DED UCTION U/S. 80IA (4) OF THE ACT. FROM THE ABOVE, IT IS EVIDENT THAT THE PERSON WHO ONLY ITA NO.111/AGRA/2013 12 DEVELOPS THE INFRASTRUCTURE DO NOT HAVE THE OCCASIO N TO OPERATE AND MAINTAIN THE INFRASTRUCTURE. IT IS FURTHER EVIDENT THAT THE HARMONIOUS READING IS NECESSARY AND MANDATORY IN VI EW OF HIGH COURTS JUDGMENT IN THE CASE OF AN ENTERPRISE CARRY ING ON BUSINESS OR DEVELOPING WHICH IS THE CASE OF THE ASSESSEE, AL L THE CONDITIONS REFERRED TO CLAUSE (I) OF SECTION 80IA (4) SHOULD R EFER TO THE CONDITIONS AS APPLICABLE TO THE DEVELOPER. IN OTHER WORDS, THE DEVELOPER WHO IS ONLY DEVELOPING THE INFRASTRUCTURE FACILITIES SINCE HE DOES NOT OPERATE AND MAINTAIN INFRASTRUCTURAL FA CILITIES, CANNOT BE EXPECTED TO FULFILL THE CONDITION AT SUB-CLAUSE (C) WHICH IS AN IMPOSSIBILITY AND THE REQUIREMENTS TO FULFILL THE S AID CONDITION SHALL AMOUNT TO ABSURDITY AND THEREFORE UNCALLED FOR. THER EFORE, WE FIND REQUIREMENT OF HARMONIOUS READING OF SUB-CLAUSE (C) VIS--VIS OF CLAUSE (I) OF SECTION 80IA(4) OF THE ACT. THUS, THE DISCUSSION IN HIGH COURTS DECISION IN PARAGRAPH-22 EXTRACTED ABOVE, I S DIRECTLY APPLICABLE TO THE FACTS OF THE CASE AND EVENTUALLY IS ENTITLED FOR THE DEDUCTION UNDER SECTION 80IA (4) OF THE ACT. ACCORD INGLY, THE MODIFIED GROUND, WHICH IS COMMON IN ALL THE FOUR AP PEALS IS ALLOWED IN FAVOUR OF THE ASSESSEE. 7. IN THE RESULT, ALL FOUR APPEALS OF THE ASSESSEE ARE ALLOWED. 7. THE ADMITTED FACTS OF THE CASE ARE, THEREFORE, C LEAR THAT WHILE MAKING ORIGINAL ASSESSMENT, THE ASSESSEE SUBMITTED PROPER EXPLANATION AND EVIDENCE BEFORE THE AO TO JUSTIFY THE CLAIM U/S. 80IA(4) OF THE IT ACT. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF DEVELOPING AND CONSTRUCT ING INFRASTRUCTURE FACILITIES IN THE FORM OF RAILWAY TRACKS AND CANALS ON BEHALF OF THE GOVERNMENT AND THEIR AGENCIES. THE ASSESSEE WAS GRANTED EXEMPT ION IN INITIAL ASSESSMENT YEAR 2003-04 BEING FIRST YEAR OF OPERATION ACCEPTIN G THAT THE ASSESSEE IS ENGAGED IN DEVELOPING OF INFRASTRUCTURE FACILITIES. SIMILAR CLAIM WAS ALSO ITA NO.111/AGRA/2013 13 ALLOWED IN ASSESSMENT YEAR UNDER APPEAL. THUS, THE AO WAS SATISFIED THAT THE ASSESSEE WAS ENTITLED FOR EXEMPTION U/S. 80IA(4) OF THE ACT. IT IS ALSO PROVED ON RECORD THAT THE ASSESSEE HAS A HISTORY OF GRANTI NG EXEMPTION U/S. 80IA(4) OF THE ACT. IN PRECEDING ASSESSMENT YEARS 2006-07 A ND 2007-08, THE AO ALLOWED SIMILAR CLAIM OF ASSESSEE U/S. 143(3) OF TH E ACT. COPIES OF THE ASSESSMENT ORDERS ARE PLACED ON RECORD. THEREFORE, THE AO IN PRECEDING ASSESSMENT YEARS AS WELL AS IN THE ASSESSMENT YEAR UNDER APPEAL HAS CONSIDERED THE EXPLANATION TO SECTION 80IA(13) OF T HE IT ACT AND WAS SATISFIED WITH THE EXPLANATION OF THE ASSESSEE ON THE ELIGIBI LITY FOR DEDUCTION U/S. 80IA(4) OF THE IT ACT. THE AO, THEREFORE, TOOK ONE OF THE PLAUSIBLE VIEW IN THE MATTER AND THEREFORE, THE ASSESSMENT ORDER COULD NO T BE TREATED AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. THERE I S NO CHANGE IN THE FACTS AND CIRCUMSTANCES OF THE CASE. HONBLE GUJRAT HIGH COUR T IN THE CASE OF GANESH HOUSING COPRN. LTD. 31 TAXMANN.COM 359 IN PARA 17 T O 19 HELD AS UNDER : 17. AFTER HEARING THE LEARNED COUNSEL FOR THE PARTI ES AND AFTER GOING THROUGH THE AFORESAID MATERIALS ON RECORD, WE FIND THAT THE MAIN REASON FOR OPENING THE ASSESSMENT IS THAT IN T HE LIGHT OF THE EXPLANATION INSERTED TO SECTION 80-IB(10) BY THE FI NANCE (NO. 2) ACT, 2009 WITH RETROSPECTIVE EFFECT FROM APRIL 1, 2 001, DEDUCTION UNDER SECTION 80IB(10) SHALL NOT BE ADMISSIBLE TO A CONTRACTOR IN RESPECT OF WORKS CONTRACT AWARDED BY ANY PERSON. 18. APART FROM THE ABOVE FACT, THE ASSESSING OFFIC ER HAS ON THE BASIS OF THE MATERIALS ORIGINALLY PLACED BY THE ASS ESSEE HELD THAT THE ASSESSING OFFICER IN THE ASSESSMENT PROCEEDINGS UND ER SECTION 143(3) DID NOT GIVE ANY OPINION REGARDING THE ALLOW ABILITY OR ITA NO.111/AGRA/2013 14 OTHERWISE OF DEDUCTION UNDER SECTION 80-IB(10) OF T HE ACT. IF AN ISSUE HAS NOT BEEN EXAMINED IN CORRECT PERSPECTIVE IN THE INITIAL ASSESSMENT PROCEEDINGS, NOTHING PREVENTS THE ASSESS ING OFFICER TO TAKE A SUITABLE REMEDIAL ACTION BY WAY OF REOPENING THE ASSESSMENT. 19. IT IS NOW A SETTLED LAW THAT IF AN EXPLANATION ADDED TO A SECTION OF A STATUTE FOR THE REMOVAL OF DOUBTS, THE IMPLICATION IS THAT THE LAW WAS THE SAME FROM THE VERY BEGINNING AND TH E SAME IS FURTHER EXPLAINED BY WAY OF ADDITION OF THE EXPLANA TION. THUS, IT IS NOT A CASE OF INTRODUCTION OF NEW PROVISION OF LAW BY RETROSPECTIVE OPERATION. WE FIND THAT THE PETITIONER HAD DISCLOSE D ALL THE MATERIALS RELEVANT FOR THE PURPOSE OF GETTING THE B ENEFIT UNDER SECTION 80-IB OF THE ACT AND THERE WAS NO SUPPRESSI ON OF MATERIALS. IN SPITE OF FULL DISCLOSURE, THE ASSESSING OFFICER GAVE BENEFIT OF THE PROVISION BY CONSIDERING THE MATERIALS ON RECORD AN D THUS, IT CANNOT BE SAID THAT ANY INCOME ESCAPED ASSESSMENT IN ACCOR DANCE WITH LAW. WE FIND THAT THE ASSESSING OFFICER HAS NOW GIVEN A SECOND THOUGHT OVER THE SAME MATERIALS. 7.1 THE ABOVE JUDGMENT SUPPORTS THE CLAIM OF ASSESS EE THAT IF AN EXPLANATION IS ADDED TO A SECTION OF STATUTE FOR RE MOVAL OF DOUBTS, THE IMPLICATION IS THAT THE LAW WAS THE SAME FROM THE V ERY BEGINNING AND THE SAME IS EXPLAINED BY WAY OF ADDITION TO EXPLANATION. THU S, INSERTION OF EXPLANATION TO SECTION 80IA(13) BY FINANCE ACT, 2007 AND FINANC E ACT, 2009 WERE IN CONSCIOUS CONSIDERATION OF THE AO NOT ONLY IN ASSES SMENT YEAR UNDER CONSIDERATION BUT IN PRECEDING ASSESSMENT YEARS AS WELL. HONBLE ALLAHABAD HIGH COURT IN THE CASE OF GOYAL PRIVATE FAMILY SPEC IFIC TRUST, 171 ITR 698 HELD THAT THE ORDER OF THE ITO MAY BE CRYPTIC, BUT THAT BY ITSELF IS NOT SUFFICIENT REASON TO BRAND THE ASSESSMENT ORDER AS ERRONEOUS A ND PREJUDICIAL TO THE ITA NO.111/AGRA/2013 15 INTEREST OF REVENUE. HONBLE GUJRAT HIGH COURT IN T HE CASE OF CIT VS. R.K. CONSTRUCTION COMPANY, 313 ITR 65 HELD THAT WHEN ALL THE NECESSARY DETAILS WERE FURNISHED TO THE AO, THERE WAS NO REASON FOR T HE COMMISSIONER TO INVOKE THE REVISIONAL JURISDICTION U/S. 263 OF THE ACT. SL P FILED BY THE DEPARTMENT IN THIS CASE HAS BEEN DISMISSED AS REPORTED IN 313 ITR (STATUTE) 5. 8. THE LEARNED CIT IN PARA 32 OF THE IMPUGNED ORDER HAS SET ASIDE THE ORIGINAL ASSESSMENT ORDER BECAUSE NO ADEQUATE ENQUI RY HAS BEEN CARRIED OUT BY THE AO ON THE ISSUE OF ALLOWABILITY OF DEDUCTION U/S. 80IA(4) OF THE IT ACT AS RAISED IN THE SHOW CAUSE NOTICE, BUT SUCH FINDING O F THE CIT HAVE NOT BEEN APPROVED BY THE HONBLE DELHI HIGH COURT IN THE CAS E OF CIT VS. ANIL KUMAR SHARMA, 335 ITR 83, IN WHICH IT WAS HELD THAT INADE QUATE ENQUIRY WOULD NOT GIVE AN OCCASION TO THE COMMISSIONER TO PASS ORDER U/S. 263 OF THE ACT. 9. ITAT, AGRA BENCH ON IDENTICAL FACTS IN THE CASE OF SHREE NARAYAN BUILT- UP (I) P. LTD. VS. CIT 40 TAXMANN.COM 104 HELD AS U NDER : AN ASSESSMENT ORDER COULD NOT BE SAID TO BE ERRONEO US BY COMMISSIONER MERELY BECAUSE, ACCORDING TO HIM, ASSE SSING OFFICER SHOULD MAKE ADEQUATE ENQUIRY AND ITS ORDER BE WRI TTEN MORE ELABORATELY. ITA NO.111/AGRA/2013 16 10. HONBLE SUPREME COURT IN THE CASE OF MALABAR INDUST RIAL CO. LTD. , 243 ITR 83 HELD THAT WHERE TWO VIEWS ARE POSSIBLE AND I TO HAS TAKEN ONE VIEW WITH WHICH THE CIT DOES NOT AGREE, IT CANNOT BE TRE ATED AS ERRONEOUS OR PREJUDICIAL TO THE INTEREST OF REVENUE UNLESS THE V IEW TAKEN BY THE ITO IS UNSUSTAINABLE IN LAW. THE SAME VIEW HAS BEEN TAKEN BY THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. MAX INDIA LTD., 295 IT R 282. SINCE THE ASSESSEE HAS BEEN GRANTED SIMILAR DEDUCTION IN PRECEDING ASSESSM ENT YEARS AND NO CHANGE IN THE FACTS HAVE BEEN REPORTED, THEREFORE, WHEN TH E AO ACCEPTED THE CLAIM OF ASSESSEE ON THE BASIS OF SAME MATERIAL ON RECORD, T HE LD. CIT COULD NOT BE ALLOWED TO TAKE A DIFFERENT VIEW WHICH WAS TAKEN NO TE OF BY THE AO IN THE ASSESSMENT YEAR UNDER APPEAL AND IN EARLIER YEARS. THE EXPLANATIONS TO THE ABOVE PROVISION HAVE ALREADY BEEN CONSIDERED IN ASS ESSMENT YEAR UNDER APPEAL AS WELL AS IN EARLIER YEARS. SINCE THERE IS NO CHANGE IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THEREFORE, EXERCISE OF P OWER U/S. 263 IS WHOLLY UNJUSTIFIED. WE ARE FORTIFIED IN OUR VIEW BY THE JU DGMENT OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. ESCORTS LTD. 338 ITR 4 35, IN WHICH IT WAS HELD WHERE A FUNDAMENTAL ASPECT OF A TRANSACTION IS FOU ND TO HAVE PERMEATED THROUGH DIFFERENT ASSESSMENT YEARS A ND THIS FUNDAMENTAL ASPECT HAS STOOD UNCONTESTED THEN THE R EVENUE CANNOT BE ALLOWED TO CHANGE ITS VIEW TAKEN IN EARLIER ASSE SSMENT YEARS UNLESS IT IS ABLE TO DEMONSTRATE A CHANGE IN CIRCUM STANCES IN THE SUBSEQUENT ASSESSMENT YEAR. ITA NO.111/AGRA/2013 17 HELD, THAT THE COMMISSIONERS ORDER DID NOT CONTAI N A FINDING TO THE EFFECT THAT THE STAND TAKEN BY THE ASSESSEE THAT THE UNITS PURCHASED FROM THE UNIT TRUST OF INDIA HAD ACTUALLY BEEN PHYSICALLY DELIVERED ALONG WITH EXECUTED TRANSFER DEED WAS FAL SE. WITHOUT SUCH A FINDING THE ALLEGATION THAT THE TRANSACTIONS WERE SPECULATIVE COULD NOT BE SUSTAINED. THE FUNDAMENTAL NATURE OF THE TRAN SACTIONS WAS EXAMINED YEAR AFTER YEAR MORE IMPORTANTLY IN THE AS SESSMENT YEAR 1986-87 IT WAS SPECIFICALLY CONSIDERED BY THE COMMI SSIONER (APPEALS) AND IT REMAINED THE SAME. GIVEN THE FACT THAT THE ASSESSEE HAD BEEN ENGAGED IN THESE TRANSACTIONS IN THE PRECE DING ASSESSMENT YEARS, THE COMMISSIONER COULD HAVE HAD NO OCCASION TO HAVE RECOURSE TO THE REVISIONAL POWERS UNDER SECTION 263 OF THE ACT ON THE FUNDAMENTAL ASPECTS OF THE TRANSACTIONS IN ISSU E ON WHICH A VIEW HAD BEEN TAKEN AND NOT SHOWN TO HAVE BEEN CHALLENGE D. 11. IT MAY BE NOTED HERE THAT THE LD. CIT CALLED FO R THE EXPLANATION OF THE ASSESSEE WITH REFERENCE TO EXPLANATION TO SECTION 8 0IA(13) OF THE ACT, BUT IN THE IMPUGNED ORDER, IT IS NOWHERE CLARIFIED AS TO H OW THE ASSESSEE HAS BECOME WORKS CONTRACTOR DESPITE COMPLETE DETAILS HAVE BEEN FILED BEFORE HIM. THE LD. COUNSEL FOR THE ASSESSEE ALSO REFERRED TO PAPER BOO K PAGE 30 TO SHOW THAT THE ASSESSEE HAS SUBSTANTIAL INTEREST IN THE DEVELOPMEN T CONTRACT AS AWARDED BY THE RAILWAYS. CBDT CIRCULAR AS REFERRED TO ABOVE AL SO SUPPORTS THE CLAIM OF THE ASSESSEE. THE CONTENTION OF THE ASSESSEE CLEARLY MA KES OUT A CASE THAT THE ASSESSEE HAS ACTED AS DEVELOPER AND HAS MADE INVEST MENT AS WELL AS TAKEN BUSINESS RISK BY DEPLOYING HUGE FUNDS IN DEVELOPING AND CONSTRUCTING INFRASTRUCTURE FACILITY IN THE FORM OF RAILWAY TRAC KS ETC. SINCE THE AO EXAMINED IDENTICAL ISSUE IN EARLIER AS WELL AS IN THE YEAR U NDER APPEAL AND HAD ACCEPTED ITA NO.111/AGRA/2013 18 THE CLAIM OF ASSESSEE BY APPLYING THE RELEVANT PROV ISIONS OF LAW, THEREFORE, THE LD. CIT CANNOT BE ALLOWED TO TAKE A DIFFERENT VIEW WITHOUT ANY JUSTIFICATION. 12. IN VIEW OF THE ABOVE, WE ARE OF THE VIEW THAT T HE ASSESSMENT ORDER IN QUESTION COULD NOT BE SAID TO BE ERRONEOUS IN SO FA R AS PREJUDICIAL TO THE INTEREST OF REVENUE. THEREFORE, THE LD. CIT WAS NOT JUSTIFIED IN EXERCISING JURISDICTION U/S. 263 OF THE IT ACT. WE ACCORDINGLY SET ASIDE THE IMPUGNED ORDER DATED 25.02.2013 U/S. 263 OF THE ACT AND QUAS HING THE SAME, RESTORE THE ORIGINAL ASSESSMENT ORDER. 13. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 1 ST FEB. 2016. SD/- SD/- (ANNAPURNA MEHROTRA) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 01.02.2016 *AKS/- COPY OF ORDER FORWARDED TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR