D.C.I.T Cir - 11,kolkata, Kolkata V. M/s Senbo Engineering Ltd, Kolkata

ITA 1159/KOL/2013

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 1490 (ITAT-KOLKATA)
• Duration Of Justice: 4 year(s) 3 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2017
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 02-05-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 09-05-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MD USMAN
• Keywords: Business income; Business expenditure; Opportunity of being heard; Principle of natural justice; Revised return
• Section: 143(3); 148

Judgement Text

I.T.A. NO. 1159/KOL./2013 ASSESSMENT YEAR: 2009-2010 & I.T.A. NOS. 991 TO 995/KOL/2016 ASSESSMENT YEAR:2004-05 TO 2008- 09 PAGE 1 OF 24 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA A BENCH, KOLKATA BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER I.T.A. NO. 1159/KOL/ 2013 ASSESSMENT YEAR: 2009-2010 DEPUTY COMMISSIONER OF INCOME TAX,................. ...................APPELLANT CIRCLE-11, KOLKATA, AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, KOLKATA-700 069 -VS.- M/S. SENBO ENGINEERING LIMITED,.................... .......................RESPONDENT 87, LENIN SARANI, KOLKATA-700 013 [PAN: AADCS 6138 B] & I .T.A. NOS. 991, 992, 993, 994 & 995/KOL/ 2016 ASSESSMENT YEARS: 2004-05, 2005-06, 2006-07, 2007-0 8 & 2008-09 INCOME TAX OFFICER,................................ ....................................APPELLANT WARD-12(3), KOLKATA, AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, KOLKATA-700 069 -VS.- M/S. SENBO ENGINEERING LIMITED,.................... .......................RESPONDENT 87, LENIN SARANI, KOLKATA-700 013 [PAN: AADCS 6138 B] APPEARANCES BY: MD. USMAN, CIT, D.R., FOR THE DEPARTMENT SHRI SANJAY BHATTACHARYA, C.A., FOR THE ASSESSEE DATE OF CONCLUDING THE HEARING : AUGUST 29, 2017 DATE OF PRONOUNCING THE ORDER : AUGUST 31, 2017 O R D E R PER SHRI P.M. JAGTAP, A.M. .: OUT OF THESE SIX APPEALS, FIVE APPEALS BEING ITA NO S. 991 TO 995/KOL/2016 ARE THE APPEALS PREFERRED BY THE REVEN UE AGAINST FIVE I.T.A. NO. 1159/KOL./2013 ASSESSMENT YEAR: 2009-2010 & I.T.A. NOS. 991 TO 995/KOL/2016 ASSESSMENT YEAR:2004-05 TO 2008- 09 PAGE 2 OF 24 SEPARATE ORDERS OF THE LD. COMMISSIONER OF INCOME T AX (APPEALS)-4, KOLKATA, ALL DATED 24.02.2016, WHILE THE REMAINING ONE APPEAL BEING ITA NO. 1159/KOL/2013 IS THE APPEAL PREFERRED BY THE RE VENUE AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEAL S)-XII, KOLKATA DATED 07.02.2013 FOR ASSESSMENT YEAR 2009-10. SINCE THE M AIN ISSUE INVOLVED IN ALL THESE APPEALS IS COMMON, THE SAME HAVE BEEN HEA RD TOGETHER AND ARE BEING DISPOSED OF BY A SINGLE CONSOLIDATED ORDER. 2. THE MAIN COMMON ISSUE INVOLVED IN THESE APPEALS RELATES TO THE DELETION BY THE LD. CIT(APPEALS) OF THE DISALLOWANC E MADE BY THE ASSESSING OFFICER ON ACCOUNT OF ASSESSEES CLAIM FO R DEDUCTION UNDER SECTION 80IA OF THE INCOME TAX ACT, 1961. 3. THE ASSESSEE IN THE PRESENT CASE IS A COMPANY, W HICH IS ENGAGED IN THE BUSINESS OF HIGH TECHNOLOGY CONSTRUCTION WORK F OR DIFFERENT ORGANIZATIONS AS PER THE CONTRACTS AWARDED TO IT ON THE BASIS OF TENDERS. THE RETURN OF INCOME FOR A.Y. 2004-05 WAS ORIGINALL Y FILED BY IT ON 28.10.2004 DECLARING TOTAL INCOME OF RS.1,15,25,709 /-. THE SAID RETURN WAS SELECTED BY THE ASSESSING OFFICER FOR SCRUTINY AND A NOTICE UNDER SECTION 143(2) WAS ISSUED BY HIM TO THE ASSESSEE ON 13.04.2005. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE- COMPANY FILED A REVISED RETURN ON 31.03.2006 DECLARING TOTAL INCOME AT NIL AFTER CLAIMING DEDUCTION UNDER SECTION 80IA IN RESPECT OF ITS ENTIRE BUSINESS INCOME OF R.1,15,25,709/-. THE SAID CLAIM OF THE AS SESSEE FOR DEDUCTION UNDER SECTION 80IA WAS EXAMINED BY THE ASSESSING OF FICER AND ON SUCH EXAMINATION, HE FOUND THAT THE CONDITIONS FOR CLAIM ING DEDUCTION UNDER SECTION 80-IA WERE NOT SATISFIED BY THE ASSESSEE AS UNDER:- (I) THE ASSESSEE-COMPANY WAS NOT DEVELOPING ANY RO AD, BRIDGE OR RAILWAY SYSTEM. (II) THERE WAS NO AGREEMENT ENTERED INTO BY THE AS SESSEE-COMPANY WITH CENTRAL OR STATE GOVERNMENT OR LOCAL AUTHORIT Y FOR DEVELOPMENT OF INFRASTRUCTURE FACILITY. I.T.A. NO. 1159/KOL./2013 ASSESSMENT YEAR: 2009-2010 & I.T.A. NOS. 991 TO 995/KOL/2016 ASSESSMENT YEAR:2004-05 TO 2008- 09 PAGE 3 OF 24 (III) NO AUDIT REPORT UNDER SECTION 10CCB WAS FILE D BY THE ASSESSEE- COMPANY ALONG WITH ORIGINAL RETURN OF INCOME. (IV) THE ASSESSEE-COMPANY WAS AWARDED CONTRACT JOB FOR PART CIVIL CONSTRUCTION OF THE PROJECTS FOR WHICH IT RECEIVED CONTRACT PAYMENT AFTER DEDUCTING TDS AS PER THE PROVISION OF SECTI ON 194C. ON THE BASIS OF THE ABOVE FINDINGS, THE CLAIM OF TH E ASSESSEE FOR DEDUCTION UNDER SECTION 80IA WAS DISALLOWED BY THE ASSESSING OFFICER IN THE ASSESSMENT COMPLETED UNDER SECTION 143(3) VIDE AN O RDER DATED 29.11.2006 FOR A.Y. 2004-05. 4. FOR A.Y. 2005-06, A SIMILAR CLAIM MADE BY THE AS SESSEE FOR DEDUCTION UNDER SECTION 80IA BY FILING A REVISED RE TURN WAS ACCEPTED BY THE ASSESSING OFFICER UNDER SECTION 143(1)/154 OF T HE ACT. THEREAFTER IN THE RETURN OF INCOME FILED FOR A.Y. 2006-07, DEDUCT ION WAS CLAIMED BY THE ASSESSEE UNDER SECTION 80IA, BUT THE SAME WAS DISAL LOWED BY THE ASSESSING OFFICER IN THE ASSESSMENT COMPLETED UNDER SECTION 143(3) VIDE AN ORDER DATED 24.12.2008 FOR THE SIMILAR REASONS A S GIVEN FOR A.Y. 2004- 05. SIMILARLY THE CLAIM OF THE ASSESSEE FOR DEDUCTI ON UNDER SECTION 80IA AS MADE IN THE RETURN OF INCOME FILED ORIGINALLY FO R A.YS. 2007-08 AND 2008-09 WAS DISALLOWED BY THE ASSESSING OFFICER IN THE ASSESSMENTS COMPLETED UNDER SECTION 143(3) VIDE ORDERS DATED 10 .12.2009 AND 29.03.2010 RESPECTIVELY. THEREAFTER THE ASSESSMENT FOR A.Y. 2005-06 WAS ALSO REOPENED BY THE ASSESSING OFFICER BY ISSUING N OTICE UNDER SECTION 148 ON 30.04.2010 AND IN THE ASSESSMENT COMPLETED U NDER SECTION 147/143(3) VIDE AN ORDER DATED 01.04.2010, THE CLAI M OF THE ASSESSEE FOR DEDUCTION UNDER SECTION 80IA WAS DISALLOWED BY THE ASSESSING OFFICER. 5. AGAINST THE ORDERS PASSED BY THE ASSESSING OFFIC ER DISALLOWING ITS CLAIM FOR DEDUCTION UNDER SECTION 80IA FOR A.YS. 20 04-05 TO 2008-09, I.T.A. NO. 1159/KOL./2013 ASSESSMENT YEAR: 2009-2010 & I.T.A. NOS. 991 TO 995/KOL/2016 ASSESSMENT YEAR:2004-05 TO 2008- 09 PAGE 4 OF 24 APPEALS WERE PREFERRED BY THE ASSESSEE BEFORE THE L D. CIT(APPEALS). OUT OF THE SAID APPEALS, THE APPEAL OF THE ASSESSEE FOR A.Y. 2006-07 CAME TO BE DISPOSED OF BY THE LD. CIT(APPEALS) FIRST VIDE AN O RDER DATED 30.10.2009 WHEREBY HE ALLOWED THE CLAIM OF THE ASSESSEE FOR DE DUCTION UNDER SECTION 80IA AFTER DISCUSSING ALL THE RELEVANT ASPECTS IN T HE LIGHT OF SUBMISSION MADE BY THE ASSESSEE AS UNDER:- I HAVE CAREFULLY CONSIDERED THE DETAILED SUBMISSIONS/SUPPLEMENTARY SUBMISSIONS OF THE APPELL ANT AND ALSO VARIOUS DETAILS FILED BY WAY OF PAPER BOOK CONTAINI NG DETAILS OF PROJECTS EXECUTED AND OTHER RELATED DOCUMENTS. I HA VE ALSO CONSIDERED THE OBSERVATIONS OF THE AO WHILE ARRIVIN G AT THE DECISION DENYING EXEMPTION U/S 80IA OF THE ACT. MY OBSERVATIONS AND DECISION ARE AS UNDER:- THE APPELLANT CLAIMED DEDUCTION U/S 80IA SINCE ACC ORDING TO THE APPELLANT THE BUSINESS CARRIED ON WAS TOWARDS DEVEL OPMENT OF INFRA STRUCTURAL FACILITIES VIZ. FLYOVER (BRIDGE PR OJECT) AND METRO RAILWAY (RAILWAY SYSTEM PROJECT). ON THE OTHER HAND , THE AO IS OF THE VIEW THAT THE CONDITION REQUIRED FOR CLAIMING D EDUCTION U/S 80LA HAS NOT BEEN FULFILLED BY THE APPELLANT. ACCOR DING TO THE AO THE THREE BASIC CONDITIONS VIZ. (1) ENTERPRISE IS R EQUIRED TO CARRY ON THE BUSINESS OF DEVELOPING A ROAD, A BRIDGE OR A RAILWAY SYSTEM (2) ENTERPRISE IS ENTERED INTO AN AGREEMENT WITH CE NTRAL GOVT. OR STATE GOVTS. OR LOCAL AUTHORITIES FOR DEVELOPMENT O F INFRA STRUCTURAL FACILITY AND (3) AUDIT REPORT U/S 10CCB SHOULD BE FILED ALONG WITH RETURN OF INCOME, ARE NOT FULFILLED BY T HE APPELLANT FOR CLAIMING DEDUCTION U/S 80LA OF THE ACT. THE LD. AR OF THE APPELLANT, HOWEVER, SUBMITTED TH E WRITTEN ARGUMENTS WITH REGARD TO SPECIFIC OBJECTION RAISED BY THE AO WHERE IN EACH OF THE POINTS OF THE OBJECTION OF THE AO HAS BEEN COUNTERED. THE LD. AR PRODUCED THE COPIES OF THE RELEVANT CON TRACTS (PROJECTS) ENTERED INTO BY THE APPELLANT WITH HRBC AND OMRC. IT IS OBSERVED FROM THE CONTRACTS THAT THESE CONTRACTS DO NOT JUST REQUIRE THE APPELLANT TO EXECUTE ANY WORK CONTRACT ON THE BASIS OF ANY SPECIFICATIONS MADE BY HRBC/OMRG. THE APPELLANT HAS BEEN ENTRUSTED WITH THE DESIGNING OF IMPLEMENTING OF THE ENTIRE PROJECT RELATING TO THE CONCERNED INFRASTRUCTURAL FACILITIE S. THE DEVELOPMENT WORKS ENTRUSTED TO THE APPELLANT BY THE ABOVE REFERRED LOCAL AUTHORITIES AS DIFFERENT PARTS OF WO RK SUCH AS DESIGNING, CONCEPTUALIZING DEVELOPING CONSTRUCTING, COMMISSIONING AND THEREFORE RELEASING THE INFRASTRU CTURAL FACILITIES (FLYOVER AND METRO RAILWAY) FOR PUBLIC U SE. IT IS NOTED I.T.A. NO. 1159/KOL./2013 ASSESSMENT YEAR: 2009-2010 & I.T.A. NOS. 991 TO 995/KOL/2016 ASSESSMENT YEAR:2004-05 TO 2008- 09 PAGE 5 OF 24 THAT THE BUSINESS ACTIVITIES CARRIED OUT BY THE APP ELLANT ARE NOT TO BE COMPARED WITH THE CONTRACTOR'S MERE EXECUTION OF A WORK 'CONTRACT'. IN THE CASE OF THE APPELLANT THE ENTIRE MATTER OF DEVELOPING THE INFRASTRUCTURAL FACILITIES HAS BEEN HANDED OVER TO THE APPELLANT BY THE LOCAL AUTHORITIES. FOR OFFICIA L PURPOSES IN THE RELEVANT DOCUMENTS, THE ASSIGNED DEVELOPMENT WORK I S REFERRED TO AS 'CONTRACT' BUT THAT DOES NOT MEAN THAT IT WAS FO R EXECUTION OF ANY WORKS CONTRACT AS PER THE DIRECTION OF THE CONC ERNED CONTRACTEE. ON GOING THROUGH THE TECHNICAL DUTY PLA NS THAT HAS BEEN SUBMITTED BY THE APPELLANT TO THE LOCAL AUTHOR ITIES. IT IS APPARENT THAT THE ENTIRE RESPONSIBILITIES IN RELATI ON TO INFRASTRUCTURAL FACILITIES (FLYOVER/METRO RAILWAY) HAVE BEEN LYING WITH THE APPELLANT FROM THE COMMENCEMENT TO THE COM PLETION OF THE CONCERNED DEVELOPMENT PROJECTS. IT IS ALSO OBSE RVED THAT DURING THE ASSESSMENT PROCEEDINGS A DETAILED NOTE A IONG WITH VARIOUS SUPPORTING DOCUMENTS EVIDENCING THE NATURE OF WORKS CARRIED OUT BY THE APPELLANT IN DEVELOPING INFRASTR UCTURAL FACILITIES IN A PAPER BOOK FORM HAS BEEN FURNISHED BY THE APPELLANT TO THE A.O. FOR RECOGNIZING THE APPELLANT AS A DEVELOPER ENTITLING TO A DEDUCTION U/S. 80IA. 4.3.4. THE LD. AR BROUGHT TO MY NOTICE ABOUT THE H ON'BLE MUMBAI ITAT DECISION IN THE CASE OF ACIT. CENTRAL CIRCLE-1 , MUMBAI VS BHARAT UDYOG LTD (ITA NO.6137 OF 2005 DT. 30. 06. 2 00B) WHEREIN IT WAS HELD THAT IF THERE EXIST ANY CONTRACT THAT D OES NOT NECESSARILY MEAN THAT THE RELEVANT CONTRACT COULD N OT BE A DEVELOPER. THE TRIBUNAL DEALT THE ISSUE OF (A) 'DEV ELOPER' BEING ELIGIBLE FOR DEDUCTION AND THE CONCEPT OF DEVELOPER VIS-A-VIS 'CONTRACTOR' WITH REFERENCE TO DEVELOPMENT OF A INF RASTRUCTURAL FACILITIES. BRIEF FACTS OF THIS CASE ARE THAT THE A SSESSEE WAS ENGAGED IN THE DEVELOPMENT OF ROADS. THE ASSESSING OFFICER RELYING ON SUB-CLAUSE (C) OF CLAUSE (I) OF SECTION 80IA(4), OPINED THAT DEDUCTION UNDER SECTION 80-IA WAS AVAILABLE TO A PERSON WHO WAS NOT ONLY DEVELOPING THE INFRASTRUCTURAL FACILIT Y BUT ALSO MAINTAINING AND OPERATING THE SAID FACILITY. ACCORD INGLY, THE ASSESSING OFFICER DENIED THE BENEFIT OF DEDUCTION U NDER SECTION 80-IA TO THE ASSESSEE, WHO WAS INVOLVED ONLY IN DEV ELOPING THE INFRASTRUCTURAL FACILITY, I.E. ROADS AND NOT OPERAT ING OR MAINTAINING IT. ON APPEAL, THE COMMISSIONER (APPEAL S) ALLOWED THE DEDUCTION STATING THAT SUBSEQUENT TO THE AMENDM ENT BY THE FINANCE ACT, 1999 AND THE FINANCE ACT, 2001, WITH E FFECT FROM 01.04.2002, THE DEDUCTION IS AVAILABLE TO AN ENTERP RISE, WHICH IS CARRYING ON THE BUSINESS OF DEVELOPING OF AN INFRAS TRUCTURAL FACILITY. ON APPEAL THE TRIBUNAL HELD AS UNDER :- 'THE AMENDMENT SECTION 80-IA WAS BROUGHT ABOUT BY THE FINANCE ACT, 1995, WITH EFFECT FROM 01.04.1996. BY VIRTUE O F THIS AMENDMENT, THE DEDUCTION UNDER SECTION 80-IA WAS PR OVIDED TO I.T.A. NO. 1159/KOL./2013 ASSESSMENT YEAR: 2009-2010 & I.T.A. NOS. 991 TO 995/KOL/2016 ASSESSMENT YEAR:2004-05 TO 2008- 09 PAGE 6 OF 24 ANY ENTERPRISE CARRYING ON THE BUSINESS OF DEVELOPI NG, MAINTAINING AND OPERATING THE INFRASTRUCTURE FACILI TY. THUS, TO BE ELIGIBLE FOR THIS DEDUCTION. AN ASSESSEE WAS REQUIR ED TO CARRY OUT ALL THE THREE ACTIVITIES, I. E. (I) TO DEVELOP, (II ) TO MAINTAIN AND (III) TO OPERATE. AFTER THE AMENDMENT EFFECTED IN S ECTION 80-IA BY THE FINANCE ACT,1999 WITH EFFECT FROM 01.042000, TH E DEDUCTION UNDER SECTION 80-IA(4) BECAME AVAILABLE TO ANY ENTE RPRISE CARRYING ON THE BUSINESS OF (I)DEVELOPING OR (II) MAINTAINING AND OPERATING OR (III) DEVELOPING, MAINTAINING AND OPER ATING ANY INFRASTRUCTURE FACILITY. SUB-CLAUSE (C) OF SECTION 80-IA(4) IS APPLICABLE T O AN ENTERPRISE WHICH IS ENGAGED IN 'OPERATING AND MAINTAINING' THE INFRASTRUCTURE FACILITY ON OR AFTER 01 04 1995. IT IS NOT APPLICABLE TO THE CASE OF AN ENTERPRISE, WHICH IS ENGAGED IN M ERE DEVELOPMENT' OF INFRASTRUCTURE FACILITY AND NOT ITS 'OPERATION' AND 'DEVELOPMENT OF INFRASTRUCTURE FACILITY AND NOT ITS 'OPERATION AND 'MAINTENANCE. THEREFORE, THE QUESTION OF 'OPERATING AND MAINTAINING' OF INFRASTRUCTURE FACILITY BY SUCH AN ENTERPRISE BEFORE OR AFTER ANY CUT OFF DATE CANNOT ARISE, WHEN THE ACT PROVIDES FOR DEDUCTION UNDER SECTION 80-IA(4), UNDI SPUTEDLY FOR AN ENTERPRISE, WHICH IS ONLY 'DEVELOPING' THE INFRA STRUCTURE FACILITY, UNACCOMPANIED BY 'OPERATING AND MAINTAINI NG' THEREOF BY SUCH ENTITY, THERE CANNOT BE ANY QUESTION OF PROVID ING A CONDITION FOR SUCH AN ENTERPRISE TO START OPERATING AND MAINT AINING THE INFRASTRUCTURE FACILITY ON OR AFTER 01.04.1995. SIN CE THE ASSESSEE WAS ONLY A DEVELOPER OF THE INFRASTRUCTURE PROJECT AND IT WAS NOT MAINTAINING AND OPERATING THE INFRASTRUCTURE FACILI TY, SUB-CLAUSE (C) OF SUB-SECTION (4) OF SECTION 80-IA WAS NOT APP LICABLE. FURTHER, FROM THE ASSESSMENT YEAR 2000-01, DEDUCTI ON UNDER SECTION 80-IA(4J IS AVAILABLE IF THE ASSESSEE CARRI ES ON THE BUSINESS OF ANYONE OF THE ABOVEMENTIONED THREE TYPES OF ACTI VITIES. WHEN AN ASSESSEE IS ONLY DEVELOPING AN INFRASTRUCTURE FA CILITY/PROJECT AND IS NOT MAINTAINING NOR OPERATING IT, OBVIOUSLY SUCH AN ASSESSEE WOULD BE PAID FOR THE COST INCURRED BY IT, OTHERWISE, HOW WOULD THE PERSON WHO DEVELOPS THE INFRASTRUCTURE FA CILITY PROJECT, REALIZE ITS COST? IF THE INFRASTRUCTURE FACILITY, J UST AFTER ITS DEVELOPMENT, IS TRANSFERRED TO THE GOVERNMENT, NATU RALLY THE COST WOULD BE PAID BY THE GOVERNMENT. IF A PERSON WHO ON LY DEVELOPS THE INFRASTRUCTURE FACILITY IS NOT PAID BY THE GOVE RNMENT, THE ENTIRE COST OF DEVELOPMENT WOULD BE A LOSS IN THE H ANDS OF THE DEVELOPER AS HE IS NOT OPERATING THE INFRASTRUCTURE FACILITY, WHEN THE LEGISLATURE HAS PROVIDED THAT THE INCOME OF THE DEVELOPER OF THE INFRASTRUCTURE PROJECT WOULD BE ELIGIBLE FOR DE DUCTION. IT PRESUPPOSES THAT THERE CAN BE INCOME TO DEVELOPER, I. E. TO THE PERSON WHO IS CARRYING ON THE ACTIVITY OF ONLY DEVE LOPING INFRASTRUCTURE FACILITY OBVIOUS, AS IT IS, A DEVELO PER WOULD HAVE I.T.A. NO. 1159/KOL./2013 ASSESSMENT YEAR: 2009-2010 & I.T.A. NOS. 991 TO 995/KOL/2016 ASSESSMENT YEAR:2004-05 TO 2008- 09 PAGE 7 OF 24 INCOME ONLY IF HE IS PAID FOR DEVELOPMENT OF INFRA STRUCTURAL FACILITY, FOR THE SIMPLE REASON THAT HE IS NOT HAVI NG THE RIGHT/AUTHORIZATION TO OPERATE THE INFRASTRUCTURE F ACILITY AND TO COLLECT TOLL THERE FROM AND HAS NO OTHER SOURCE OF RECOUPMENT OF HIS COST OF DEVELOPMENT. THEREFORE, THE BUSINESS AC TIVITY OF THE NATURE OF BUILD AND TRANSFER ALSO FALLS WITHIN ELIG IBLE CONSTRUCTION ACTIVITY, THAT IS, ACTIVITY. ELIGIBLE FOR DEDUCTION UNDER SECTION 80- IA IN AS MUCH AS MERE 'DEVELOPMENT' AS SUCH AND UNASSOCIATED/UNACCOMPANIED WITH OPERATE' AND 'MAINT ENANCE' ALSO FALLS WITHIN SUCH BUSINESS ACTIVITY AS IS ELIG IBLE FOR 'DEDUCTION UNDER SECTION 80-IA THEREFORE, MERELY BECAUSE THE A SSESSEE WAS PAID BY THE GOVERNMENT FOR DEVELOPMENT WORK, IT SHO ULD NOT BE DENIED DEDUCTION UNDER SECTION 80-IA(4). A PERSON W HO ENTERS INTO A CONTRACT WITH ANOTHER PERSON WOULD BE A CONTRACTO R NO DOUBT. AND THE ASSESSEE HAVING ENTERED INTO AN AGREEMENT W ITH THE GOVERNMENT AGENCIES FOR DEVELOPMENT OF THE INFRASTR UCTURE PROJECT WAS OBVIOUSLY A CONTRACTOR BUT THAT DID NOT DEROGATE THE ASSESSEE FROM BEING A DEVELOPER AS WELL THE TERM C ONTRACTOR' IS NOT ESSENTIALLY CONTRADICTORY TO THE TERM 'DEVELOPE R ON THE OTHER HAND, RATHER SECTION 80-IA(4) ITSELF PROVIDES THAT THE ASSESSEE SHOULD DEVELOP TILE INFRASTRUCTURE FACILITY AS PER THE AGREEMENT WITH THE CENTRAL GOVERNMENT. STATE GOVERNMENT OR A LOCAL AUTHORITY. SO ENTERING INTO A LAWFUL AGREEMENT AND THEREBY BECOMING A CONTRACTOR SHOULD, IN NO WAY, BE A BAR T O THE ONE BEING A DEVELOPER. THEREFORE, MERELY BECAUSE. IN TH E AGREEMENT FOR DEVELOPMENT OF INFRASTRUCTURE FACILITY, ASSESSE E WAS REFERRED TO AS CONTRACTOR OR BECAUSE SOME BASIC SPECIFICATIO NS WERE LAID DOWN, IT DID NOT DETRACT THE ASSESSEE FROM THE POSI TION OF BEING A DEVELOPER, NOR WOULD IT DEBAR THE ASSESSEE FROM CLA IMING DEDUCTION UNDER SECTION 80-IA(4) (UNDERLINE SUPPLEM ENTED). THEREFORE, THE ASSESSEE, WHO WAS ONLY ENGAGED IN D EVELOPING THE INFRASTRUCTURAL FACILITY, I.E., ROAD. AND NOT ENGAG ED IN THE 'OPERATING AND MAINTAINING' THE SAID FACILITY. WAS ENTITLED TO THE BENEFITS OF THE DEDUCTION UNDER SECTION 80-IA(4). T HE PROVISIONS OF SUB-CLAUSE (C) OF CLAUSE (I) OF SECTION 80-IA(4) WERE INAPPLICABLE TO THE INSTANT CASE. HENCE, THE ORDER OF THE COMMISSIONER (APPEALS) WAS CORRECT'. 4.3.5 THE REASON CITED BY THE AO FOR DENYING THE A PPELLANT'S CLAIM FOR DEDUCTION U/S 80-IA HAVE BEEN COUNTERED IN ENTI RETY BY THE A/R OF THE APPELLANT WHERE FROM IT APPEARED THAT TH E APPELLANT HAD DULY COMPLIED WITH ALL THE REQUIREMENTS AS PRES CRIBED U/S 80- IA FOR AN ASSESSEE TO BE ENTITLED TO DEDUCTION U/S. 80-IA (PARA 4.2.4) THE RELEVANT DOCUMENTS IN SUPPORT OF A/R'S S UBMISSIONS HAVE BEEN PRODUCED. I.T.A. NO. 1159/KOL./2013 ASSESSMENT YEAR: 2009-2010 & I.T.A. NOS. 991 TO 995/KOL/2016 ASSESSMENT YEAR:2004-05 TO 2008- 09 PAGE 8 OF 24 4.3.6. THE POINT TO BE DECIDED HERE IS AS TO WHETH ER THE BUSINESS ACTIVITIES CARRIED OUT BY THE APPELLANT COULD BE TE RMED TO BE ONLY EXECUTION OF WORKS CONTRACT AWARDED BY ANY PERSON F OR BEING COVERED BY THE EXPLANATION OF SECTION 80-IA. USUALL Y BY A WORKS CONTRACT IT IS UNDERSTOOD THAT THE RELEVANT CONTRAC TEE ASKS THE CONTRACTOR TO EXECUTE CERTAIN WORK AS FOR THE SPECI FICATIONS ON PLANNING OF THE CONTRACTEE AND A CONTRACTOR DOES NO T HAVE ANY ROLE TO PLAY AS REGARDS THE DESIGNING AND FOR MAKIN G PLANS FOR IMPLEMENTATION OF THE DESIRED WORK. IN A CASE WHERE THE WORKS RELATING TO DESIGNING AS WELL AS CONCEPTUALIZINQ A DEVELOPMENT ARE ENTRUSTED TO A PERSON AND THE SAID PERSON DOES THE DESIGNING AND ALSO SUBMITS A PROCEDURE WHICH SHOULD BE FOLLOW ED IN IMPLEMENTING THE DESIRED PROJECT, THE SAID WORKS CA NNOT BE CONSIDERED AS A MERE WORKS ' CONTRACT'. HOWEVER HER E ALSO THE PERSON TO WHOM THE ABOVE MENTIONED WORKS ARE ALLOTT ED WILL BE KNOWN AS 'CONTRACTOR'. AFTER THE CONTRACTOR SUBMITS THE DESIGN AS WELL AS TILE PLANS OF IMPLEMENTATIONS, THE NECESSAR Y APPROVAL/SANCTION IS GIVEN BY THE CONTRACTEE TO THE SAID CONTRACTOR TO PROCEED WITH THE IMPLEMENTATION BY WA Y OF CONSTRUCTION. IN MY OPINION THIS TYPE OF CASE MAY N OT BE COMPARABLE WITH THE MERE EXECUTION OF A WORK CONTRA CT. 4.3.7. THE AMENDMENT MADE IN THE INCOME TAX ACT W. E.F. 01.04.2002 ENTITLING A 'DEVELOPER' TO CLAIM DEDUCTI ON U/S.890-IA GIVEN THE IMPRESSION THAT THE GOVT. DESIRES TO ALLO W DEDUCTION TO THE PERSON WHO DEVELOPS THE INFRA STRUCTURAL FACILI TY AND THAT MEANS A PERSON WHO CONSTRUCTS THE FACILITY WILL BE ENTITLED TO THE DEDUCTION. IN THE APPELLANT'S CASE THE DEVELOPMENTA L WORK STARTING FROM THE DESIGNING TILL THE COMPLETION OF THE CONSTRUCTION OF THE OF INFRASTRUCTURAL FACILITY, HAD BEEN WITH T HE APPELLANT AND ACCORDINGLY IT APPEARS THAT THE APPELLANT IS TO BE CONSIDERED AS A DEVELOPER WHO WOULD BE ENTITLED TO DEDUCTION U/S. 8 0-IA. 4.3.8 THE LD. A/R OF THE APPELLANT ARGUED THAT THE APPELLANT HAD TO GUARANTEE ITS DESIGNS FOR 120 YEARS FOR CIVIL EN GINEERING STRUCTURE AND FOR 50 YEARS FOR THE ABOVE GROUND BUI LDING STRUCTURE AND SO A SUBSTANTIAL RISK FACTOR IS ALWAY S PRESENT IN THE DEVELOPMENT WORK. IT IS ALSO ARGUED THAT THE EN TIRE FINANCING OF THE PROJECTS WERE ME BY THE APPELLANT FROM ITS O WN SOURCES AND LATER RECEIVED THE PAYMENTS ON THE COMPLETION O F PHASE-WISE DEVELOPMENTS. IT IS FURTHER ARGUED THAT THE APPELLA NT'S DIFFERENT UNITS WERE IN THE BUSINESS OF DEVELOPING INFRASTRUC TURE FACILITIES AND THAT THOSE UNITS WERE OWNED BY THE APPELLANT WH ICH IS AN INDIAN COMPANY. ON CAREFUL CONSIDERATION OF THE ARG UMENTS I FIND THERE IS MERIT IN THE ARGUMENTS WHICH SUPPORT THE VIEW THAT THE APPELLANT COMPANY IS A 'DEVELOPER' OF AN INFRAS TRUCTURE FACILITY AND NOT A 'CONTRACTOR' TO EXECUTE THE WORK OF A PROJECT. I.T.A. NO. 1159/KOL./2013 ASSESSMENT YEAR: 2009-2010 & I.T.A. NOS. 991 TO 995/KOL/2016 ASSESSMENT YEAR:2004-05 TO 2008- 09 PAGE 9 OF 24 4.3.9. DECISION: IN VIEW OF THE ABOVE FACTS AND OBSERVATION, I AM O F THE OPINION THAT THE APPELLANT, IN RELATION TO ITS INFRA STRUCT URAL FACILITY'S PROJECTS OF FLYOVER AT KOLKATA AND METRO RAILWAY PR OJECT AT DELHI, SHOULD BE CONSIDERED AS A DEVELOPER AND ACCORDINGLY , IT IS ENTITLED TO A DEDUCTION U/S. 80-IA IN RESPECT OF THE PROFITS END FROM THE SAID ACTIVITIES. THE AO IS DIRECTED TO ALLOW THE APPELLANT'S CLAIM FOR DEDUCTION U/S. 80-IA. THEREAFTER THE ASSESSEES APPEALS FOR A.YS. 2004-05 , 2005-06, 2007-08 AND 2008-09 WERE ALSO DISPOSED OF BY THE LD. CIT(AP PEALS) VIDE APPELLATE ORDERS DATED 26.09.2011, 19.09.2011, 30.06.2010 AND 26.09.2011 RESPECTIVELY, WHEREBY HE ALLOWED THE CLAIM OF THE A SSESSEE FOR DEDUCTION UNDER SECTION 80IA BY FOLLOWING THE VIEW TAKEN IN A .Y. 2006-07. 6. AGAINST THE ORDERS OF THE LD. CIT(APPEALS) FOR A .YS. 2004-05 TO 2008-09 ALLOWING THE CLAIM OF THE ASSESSEE FOR DEDU CTION UNDER SECTION 80IA, APPEALS WERE PREFERRED BY THE REVENUE BEFORE THE TRIBUNAL AND WHILE DISPOSING OF THE SAME VIDE ITS COMMON ORDER D ATED 25.07.2014 PASSED IN ITA NOS. 1601/KOL/2011, 135/KOL/2010, 152 2/KOL/2011, 1523/KOL/2011 AND 1726/KOL/2010 FOR A.YS. 2004-05, 2006-07, 2005- 06, 2008-09 AND 2007-08 RESPECTIVELY, THE TRIBUNAL REMITTED THE MATTER BACK TO THE LD. CIT(APPEALS) AFTER HAVING FOUND THA T NO OPPORTUNITY WAS GIVEN BY THE LD. CIT(APPEALS) TO THE ASSESSING OFFI CER OF BEING HEARD BY SERVING THE REQUIRED NOTICE AND THERE WAS THUS VIOL ATION OF THE PRINCIPLES OF NATURAL JUSTICE. THE LD. CIT(APPEALS) ACCORDINGL Y WAS DIRECTED BY THE TRIBUNAL TO DECIDE THE APPEALS OF THE ASSESSEE FOR A.YS 2004-05 TO 2008- 09 AFRESH AFTER GIVING THE ASSESSING OFFICER PROPER AND SUFFICIENT OPPORTUNITY OF BEING HEARD. 7. AS PER THE DIRECTION OF THE TRIBUNAL, OPPORTUNIT Y WAS GIVEN BY THE LD. CIT(APPEALS) TO THE ASSESSING OFFICER TO PUT FO RTH THE CASE OF THE I.T.A. NO. 1159/KOL./2013 ASSESSMENT YEAR: 2009-2010 & I.T.A. NOS. 991 TO 995/KOL/2016 ASSESSMENT YEAR:2004-05 TO 2008- 09 PAGE 10 OF 24 REVENUE ON THE ISSUE RELATING TO THE ASSESSEES CLA IM FOR DEDUCTION UNDER SECTION 80IA AND AVAILING THE SAME, A REMAND REPORT WAS SUBMITTED BY THE ASSESSING OFFICER TO THE LD. CIT(APPEALS) MAKING HI S SUBMISSIONS ON THE ISSUE WHICH, AS SUMMARISED BY THE LD. CIT(APPEALS) IN HIS IMPUGNED ORDER FOR A.Y. 2006-07, WERE AS UNDER:- (1) SINCE A CONTRACT HAS BEEN ALLOTTED TO THE APPE LLANT IT WILL BE CONSIDERED THAT THE APPELLANT WAS APPOINTED TO E XECUTE THE CONTRACT AND THE APPELLANT COULD NOT BE TREATED A D EVELOPER. (IJ) THE FACT OF TDS AT 2.3% PROVED THAT THE APPE LLANT WAS A MERE CONTRACTOR. (III) THE APPELLANT HAD NOT MADE ANY INVESTMENT FOR PROCEEDING WITH THE WORK ALLOTTED TO IT SINCE NOTHING HAD BEEN SHOWN UNDER THE HEAD 'INVESTMENTS' IN THE APPELLANTS ACCOUNTS. (IV) THE RELEVANT CONTRACT/AGREEMENT HAD SPECIFIED ONLY THE TIME WITHIN WHICH THE CONTRACTS WERE TO BE COMPLETE D RATHER THAN SPECIFYING THE TIME FOR DEVELOPING THE FACILIT Y TRANSFERRING THE SAME. (V)THE TRANSFER OF THE PROJECT HAD NOT BEEN AS PER THE SCHEME OF BOT/BOOT;THE APPELLANT'S CLAIM FOR DEDUCTION HAD BE EN IN RESPECT OF THE INCOME RECEIVED ON THE FULFILMENT OF THE CONTRACTUAL OBLIGATION AND NOT ON INCOME DERIVED FR OM THE USE OF THE CONTRACTUAL WORK /PROJECT COMPLETED BY THE A PPELLANT. (VI) THE RELATIONSHIP BETWEEN THE APPELLANT AND THE GOVERNMENT AGENT HAD BEEN DEFINED AS CONTRACTOR AND EMPLOYER; (VII) IF DEDUCTION WOULD BE ALLOWED TO THE APPELLAN T U/S 80-IA THERE WOULD NOT BE ANY DIFFERENCE BETWEEN THE APPEL LANT EXECUTING THE CONTRACT WORKS AND THOSE ENTERPRISE/U NDERTAKING REALLY PARTICIPATING IN DEVELOPING AND OPERATING TH E INFRASTRUCTURE FACILITIES DEPLOYING THEIR OWN FUNDS . 8. WHEN THE REMAND REPORT SUBMITTED BY THE ASSESSIN G OFFICER WAS CONFRONTED BY THE LD. CIT(APPEALS) TO THE ASSESSEE, THE ASSESSEE FILED REJOINDER OFFERING ITS EXPLANATION IN RESPECT OF VA RIOUS POINTS RAISED BY THE ASSESSING OFFICER AS UNDER:- (A) THE APPELLANT HAD BEEN IN THE BUSINESS OF CAR RYING OUT HIGH TECHNOLOGY CONSTRUCTION ACTIVITIES. IN PURSUANCE OF AGREEMENTS ENTERED INTO WITH THE GOVERNMENT OF INDIA AND/OR CE RTAIN STATE I.T.A. NO. 1159/KOL./2013 ASSESSMENT YEAR: 2009-2010 & I.T.A. NOS. 991 TO 995/KOL/2016 ASSESSMENT YEAR:2004-05 TO 2008- 09 PAGE 11 OF 24 GOVERNMENTS INCLUDING LOCAL AUTHORITIES, THE APPELL ANT HAD DEVELOPED A NUMBER OF INFRASTRUCTURE PROJECTS SUCH AS THE METRO RAILWAY IN KOLKATA AS WELL AS IN DELHI, SEVERAL FLY OVERS IN KOLKATA, ETC. THE METRO RAILWAY PROJECTS WERE TAKEN UP AND C OMPLETED BY THE APPELLANT AS PER THE AGREEMENTS ENTERED INTO WI TH DELHI METRO RAILWAY CORPORATION (DMRC), WHICH WAS A JOINT VENTU RE OF THE GOVERNMENT OF INDIA AND GOVERNMENT OF DELHI. THE FLYOVERS/BRIDGES WERE DEVELOPED AS PER THE AGREEMEN TS ENTERED INTO WITH THE LOCAL AUTHORITIES/STATUTORY BODIES FO RMED BY THE RESPECTIVE STATE GOVERNMENTS. (B) EACH OF THE RELEVANT DEVELOPMENT PROJECTS FOR FLYOVER AND/OR METRO RAILWAY, THE APPELLANT CARRIED ON THE WORKS I N PURSUANCE OF AN AGREEMENT ENTERED INTO WITH THE CENTRAL GOVERNME NT OR THE APPROPRIATE STATE GOVERNMENT OR ANY PRESCRIBED LOCA L AUTHORITY UNDER ANY OF THOSE GOVERNMENTS. THE WORKS ENTRUSTED TO THE APPELLANT BY THE GOVERNMENT AND/OR ANY LOCAL AUTHOR ITY UNDER THE SAME, HAD DIFFERENT PARTS, SUCH AS DESIGNING, CONCE PTUALISING, DEVELOPING, CONSTRUCTING, COMMISSIONING AND THEREAF TER RELEASING THE INFRASTRUCTURE FACILITY FOR THE PUBLIC USE. UND ER NO CIRCUMSTANCE THE WORKS CARRIED ON BY THE APPELLANT COULD BE COMPARED WITH THE WORKS CARRIED ON BY A CONTRACTOR WHO WOULD CARRY OUT THE WORK ALLOTTED TO IT AS PER THE PLAN G IVEN TO IT BY THE CONCERNED CONTRACTEE. IN THE CASE OF THE APPELLANT, THE ENTIRE MATTER OF DEVELOPING THE INFRASTRUCTURE FACILITY HA D BEEN HANDED OVER TO THE APPELLANT BY THE GOVERNMENT AND/OR ITS PRESCRIBED LOCAL AUTHORITY. FOR THE PURPOSE OF OFFICIAL DOCUME NTS THE ASSIGNED DEVELOPMENT WORK MIGHT HAVE BEEN REFERRED TO AS CONTRACT' BUT THAT DID NOT MEAN THAT IT WAS FOR EX ECUTION OF ANY WORK CONTRACT AS PER THE DIRECTION OF THE CONCERNED CONTRACTEE. THE ENTIRE RESPONSIBILITY IN RELATION TO THE INFRAS TRUCTURE FACILITY, VIZ., FLYOVER AND/OR METRO RAILWAY LIED WITH THE AP PELLANT FROM THE COMMENCEMENT TO THE COMPLETION OF THE CONCERNED PROJECT. THE WORKS INVOLVED DEVELOPMENT OF THESE INFRASTRUCT URE FACILITIES WHICH WERE HIGHLY TECHNICAL IN NATURE AND IN THE PR OCESS SUCH DEVELOPMENT HAD TO PASS THROUGH VARIOUS PHASES. A D ETAILED NOTE ALONG WITH VARIOUS SUPPORTING DOCUMENTS EVIDENCING THE NATURE OF WORKS CARRIED OUT BY THE APPELLANT IN DEVELOPING IN FRASTRUCTURE FACILITIES IN A BOUND BOOK FORM, HAD BEEN PRODUCED BEFORE THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDING FOR APPRECIATING THE FACT THAT THE APPELLANT HAD BEEN A DEVELOPER OF INFRASTRUCTURE FACILITIES SUCH AS FLYOVERS(BRIDGES) AND METRO RAILWAY (RAILWAY SYSTEM). HOWEVER, THE ASSESSING OF FICER DID NOT CONSIDER THE ABOVE-MENTIONED NOTE IN A PROPER WAY A ND WENT ON TO HOLD THAT THE APPELLANT WAS ALLEGEDLY NOT ENTITL ED TO DEDUCTION U/S 80-1A. I.T.A. NO. 1159/KOL./2013 ASSESSMENT YEAR: 2009-2010 & I.T.A. NOS. 991 TO 995/KOL/2016 ASSESSMENT YEAR:2004-05 TO 2008- 09 PAGE 12 OF 24 (C) THE ASSESSING OFFICER DID NOT APPRECIATE THAT F OR ANY CONTRACT THERE HAD TO BE A DEDUCTION OF TAX AT SOURCE AS PER THE RELEVANT PROVISIONS OF THE INCOME-TAX LAW. THE TDS ITSELF CA NNOT LEAD TO THE CONCLUSION THAT THERE COULD NOT BE ANY DEVELOPMENTA L WORK. HENCE, THE ASSESSING OFFICER'S OBSERVATION THAT IN VIEW OF THERE BEING TDS @2.3% THE APPELLANT COULD ALLEGEDLY NOT BE TREATED AS A DEVELOPER, HAS BEEN UNJUSTIFIED; (D) THE EXECUTION OF A CONTRACT FOR DEVELOPMENT OF INFRASTRUCTURE FACILITIES IS ALSO A 'CONTRACT' AND THE CONTRACT IS ALSO A PART OF BUSINESS. THE ASSESSING OFFICER SHOULD HAVE APPRECI ATED THAT WHAT THE APPELLANT WAS CARRYING ON WAS NOT A MERE EXECUT ION OF A WORKS CONTRACT BUT THE APPELLANT'S WORKS COMPRISED OF SEV ERAL PARTS SUCH AS DESIGNING, 'CONCEPTUALISING, DEVELOPMENT, CONSTR UCTING, COMMISSIONING AND THEREAFTER RELEASING THE INFRASTR UCTURE FACILITIES FOR THE PUBLIC USE. (E) THE AGREEMENTS ENTERED INTO BETWEEN THE APPELLA NT AND THE PRESCRIBED GOVERNMENT AUTHORITIES, VIZ., HRBC AND D MRC, HAD BEEN FOR DEVELOPMENT OF INFRASTRUCTURE FACILITIES SUCH A ~ FLYOVER AND METRO RAILWAY. THE APPELLANT HAD NOT MERELY BEEN RE QUIRED TO EXECUTE ANY WORK CONTRACT AS PER THE SPECIFICATIONS GIVEN BY HRBC AND/OR DMRC. ON THE BASIS OF THE DESIRE OF THE ABOV E-MENTIONED LOCAL AUTHORITIES, THE APPELLANT HAD BEEN REQUIRED TO GIVE ITS OWN IDEAS SUPPORTED BY HIGHLY TECHNICAL DIAGRAMS/PLANS AS REGARDS THE VIABILITY OF THE DEVELOPMENT OF A FLYOVER AND/OR ME TRO RAILWAY AT THE PLACES OWNED BY THE GOVERNMENT. IT WAS ONLY AFT ER SEVERAL SETS OF DISCUSSIONS HELD BETWEEN THE APPELLANT AND THE G OVERNMENT AUTHORITIES IN THE PRESENCE OF TECHNICAL PERSONNEL THAT THE DECISIONS HAD BEEN FINALLY TAKEN FOR THE DEVELOPMENT OF FLYOV ERS AT KOLKATA AND METRO RAILWAY AT DELHI. THE ENTIRE PROCESS TO B E ADOPTED FOR CARRYING OUT THE DEVELOPMENTAL WORKS, HAD BEEN PLAN NED BY THE APPELLANT AND AFTER THOROUGH EXAMINATION THEREOF AN D NECESSARY SANCTIONING BY THE GOVERNMENT AUTHORITIES. THE APPE LLANT COULD PROCEED WITH THE CONSTRUCTION OF FLYOVERS AS WELL A S THE METRO RAILWAY. (F) FOR DESIGNING AND CONCEPTUALISING THE ABOVE-REF ERRED INFRASTRUCTURE FACILITIES, THE APPELLANT HAD TO ARR ANGE SUBSTANTIAL FUNDS OF ITS OWN THROUGH BORROWING OR OTHERWISE AND ALL THE RELATED EXPENSES WERE ON THE APPELLANT'S ACCOUNT. IT HAD NO T BEEN A CASE THAT THE APPELLANT'S OUTGOINGS WERE BEING PROVIDED BY THE GOVERNMENT AUTHORITIES AS WOULD HAVE HAPPENED IN TH E CASE OF A NORMAL EXECUTION OF A WORKS CONTRACT. ANY RISK IN R ELATION TO THE DESIGNING AND CONCEPTUALISINQ THE PROJECTS HAD BEEN WITH THE APPELLANT AND NOT WITH THE GOVERNMENT AUTHORITIES, VIZ., HRBC AND DMRC. THE ASSESSING OFFICER STATED THAT NO AMOUNT H AD BEEN REFLECTED UNDER THE HEAD 'INVESTMENTS' IN THE ACCOU NTS OF THE I.T.A. NO. 1159/KOL./2013 ASSESSMENT YEAR: 2009-2010 & I.T.A. NOS. 991 TO 995/KOL/2016 ASSESSMENT YEAR:2004-05 TO 2008- 09 PAGE 13 OF 24 COMPANY AND ON THAT BASIS HE WAS OF THE OPINION THA T THE APPELLANT HAD NOT BEEN REQUIRED TO INVEST ITS OWN MONEY FOR P ROCEEDING WITH THE DEVELOPMENT PROJECT. THE APPELLANT SUBMITS THAT THE ASSESSING OFFICER SHOULD HAVE APPRECIATED THAT WHEN FUNDS ARE FOR CARRYING ON THE BUSINESS ACTIVITIES THE UTILISED FUND IS NOT TO BE SHOWN AS 'INVESTMENTS' BUT IT IS REQUIRED TO BE SHOWN UNDER THE HEAD 'CURRENT ASSETS' CLASSIFYING INTO THE APPROPRIATE S UB-HEADS. (G) ALL ESSENTIAL ELEMENTS FOR AN AGREEMENT WERE C ONTAINED IN THE RELEVANT TENDER DOCUMENTS IN RELATION TO THE DEVELO PMENT CONTRACTS ENTERED INTO BETWEEN THE APPELLANT ON ONE SIDE AND HRBC OR DMRC ON THE OTHER SIDE. COPIES OF SUCH TENDER DO CUMENTS HAD BEEN PRODUCED BEFORE THE ASSESSING OFFICER FOR EXAM INATION THEREOF. IT WILL BE CLEAR FROM THE AFORESAID DOCUMENTS THAT THE APPELLANT HAD BEEN ENTRUSTED WITH THE DEVELOPMENTAL WORKS AS PER THE WRITTEN AGREEMENTS WHICH IN SOME CASES HAD BEEN IN THE FORM OF TENDER DOCUMENTS. DMRC USED TO ISSUE LETTER OF ACCE PTANCE (LOA) IN DUPLICATE AND ON SIGNING THEREOF BY THE APPELLAN T SUCH LOA BECAME AN AGREEMENT. A COMPREHENSIVE NOTE SPECIFYIN G THE NATURE OF WORKS CARRIED OUT BY THE APPELLANT FOR THE DEVEL OPMENT OF FLYOVERS AND METRO RAILWAY, HAD EARLIER BEEN GIVEN TO THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS. FROM THE SAID NOTES IT WILL BE CLEAR AS TO WHY THE RELEVANT DOCUMENTS ARE TO BE CONSIDERED AS 'CONTRACT FOR DEVELOPMENTS' AND NOT MERE 'WORKS CONTRACTS'. THE APPELLANT SUBMITS THAT AS REGARDS THE DEVELOPME NT WORKS OF METRO RAILWAY (DMRC) SOME PARTICULAR WORKS RELATING TO ELECTRIFICATION OF THE CONCERNED STATIONS HAD BEEN ASSIGNED TO CERTAIN CONTRACTORS AS PER DMRC'S CHOICE. HOWEVER, THE DESIGNING OF THE ENTIRE PROJECT AS WELL AS THE TUNNELLING AND CONSTRUCTION OF THE STATIONS HAD BEEN CARRIED OUT BY THE APPELLANT. IN THE CASES OF FLYOVERS AT KOLKATA THE ENTIRE PROJECT COVERING ALL THE ASPECTS HAD BEEN ENTRUSTED TO THE APPELLANT. (H) THE APPELLANT, IN RESPECT OF ALL THE ABOVE-REF ERRED DEVELOPMENTAL PROJECTS, HAD TO GUARANTEE THE DESIGN S MADE BY IT AND IN THE CASE OF METRO RAILWAY PROJECT SUCH GUARA NTEE WOULD REMAIN FOR 120 YEARS FOR CIVIL ENGINEERING STRUCTUR ES AND FOR 50 YEARS FOR ABOVE GROUND BUILDING STRUCTURES. SO, A S UBSTANTIAL RISK FACTOR HAD ALWAYS BEEN PRESENT IN THESE DEVELOPMENT AL WORKS. HOWEVER, THIS ISSUE HAS BEEN TOTALLY OVERLOOKED BY THE ASSESSING OFFICER WHILE PREPARING HIS REMAND REPORT. (I) THE APPELLANT FURTHER SUBMITS THAT IT WAS ONL Y FROM THE ASSESSMENT YEAR 2002-03 THAT THE GOVERNMENT HAD AME NDED THE PROVISIONS OF SECTION 80-IA(4)(I) TO PROVIDE THAT A BUSINESS OF DEVELOPING ANY INFRASTRUCTURE FACILITY WOULD ALSO Q UALIFY FOR DEDUCTION U/S 80-1A. THE EARLIER REQUIREMENT OF MAINTENANCE/OPERATION ALONG WITH DEVELOPMENT, FOR B EING ENTITLED I.T.A. NO. 1159/KOL./2013 ASSESSMENT YEAR: 2009-2010 & I.T.A. NOS. 991 TO 995/KOL/2016 ASSESSMENT YEAR:2004-05 TO 2008- 09 PAGE 14 OF 24 TO DEDUCTION, WAS CHANGED. FROM THIS ITSELF IT BECO MES CLEAR THAT WHAT THE GOVERNMENT INTENDED WAS TO ALLOW DEDUCTION TO THAT PERSON WHO JUST DEVELOPS THE INFRASTRUCTURE FACILIT Y. IT HAS TO BE APPRECIATED THAT THE LAND ON WHICH THE INFRASTRUCTU RE FACILITIES, VIZ., FLYOVER(BRIDGE) AND/OR METRO RAILWAY(RAILWAY SYSTEM) WOULD BE CONSTRUCTED, WOULD ALWAYS BELONG TO THE GOVERNME NT AND, THEREFORE, IF THE DEVELOPMENT WORK WOULD BE CARRIED OUT BY THE GOVERNMENT ITSELF THERE WOULD BE NO MEANING OF ALLO WING ANY DEDUCTION U/S 80-IA(1)/(4)(I). IT IS ONLY IN A CASE WHERE A PERSON OTHER THAN THE GOVERNMENT UNDERTAKES THE DEVELOPMEN TAL WORK THAT THE SAID PERSON BECOMES ENTITLED FOR DEDUCTION . SINCE THE PERSON ENGAGED BY THE GOVERNMENT OR ANY OF ITS AUTH ORITIES WOULD EARN ITS CHARGES FOR DEVELOPMENT WORKS AND NOT THRO UGH OPERATION/MAINTENANCE OF THE CONCERNED INFRASTRUCTU RE FACILITY, THE DEDUCTION U/S 80-IA WOULD BE IN RELATION TO THE SAI D CHARGES FOR DEVELOPMENT WHICH WOULD MAINLY COMPRISE OF CHARGES FOR CONSTRUCTION OF THE FACILITIES. IN THE APPELLANT'S CASE THE GOVERNMENT AUTHORITIES AFTER ALL THE PROCEDURAL FOR MALITIES, HAD DECIDED TO ENGAGE THE APPELLANT FOR DEVELOPMENT OF THE INFRASTRUCTURE FACILITIES, VIZ., FLYOVERS AND METRO RAILWAY AND THE BUSINESS OF DEVELOPMENT OF INFRASTRUCTURE FACILITIE S AS CARRIED ON BY THE APPELLANT WOULD ACCORDINGLY BE ENTITLED FOR DED UCTION U/S 80- 1A. (J) THE PROVISIONS OF SECTION 80-I(A) AS HAD BEEN EFFECTIVE FOR AND UP TO THE ASSESSMENT YEAR 1999-2000, HAD REQUIRED THE TRA NSFER OF THE 'INFRASTRUCTURE FACILITY' TO THE GOVERNMENT OR THE LOCAL AUTHORITY/STATUTORY BODY, AS THE CASE MAY BE, WITHI N A SPECIFIED PERIOD. SO THERE HAD BEEN THE REQUIREMENTS FIRSTLY OF 'OWNERSHIP' AND THEREAFTER 'TRANSFER' OF THE INFRASTRUCTURE FACILIT Y. HOWEVER, WITH EFFECT FROM THE ASSESSMENT YEAR 2000-01 SUCH CONDITIONS OF 'OWNERSHIP' AND 'TRANSFER' OF THE INFRASTRUCTURE FACILITY WERE WITH DRAWN. HENCE, IN THE APPELLANT'S CASE THERE HAD NOT BEEN ANY REQUIREMENT OF OWNERSHIP OF THE 'INFRASTRUCTURE FACILITY' BY THE APPELLANT AND CONSEQUENTLY QUESTION OF 'TRANSFER' OF THE INFRASTRUCTURE FACILI TY COULD NOT ARISE. HENCE, THE ASSESSING OFFICER'S REMARK THAT THE TRAN SFER OF THE PROJECTS HAD NOT BEEN AS PER THE SCHEME OF BOT/BOOT DOES NOT HAVE ANY RELEVANCE FOR THE PURPOSE OF DEDUCTION U/S 80-IA. (K) THE APPELLANT'S CASE WAS NOT A CASE WHERE ONLY A PART OF A DEVELOPMENT PROJECT HAD BEEN ENTRUSTED TO A PERSON FOR EXECUTION THEREOF. IN RESPECT OF THE INFRASTRUCTURE FACILITIE S, VIZ., METRO RAILWAY (DELHI) AS WELL AS FLYOVERS(KOLKATA) THE AP PELLANT HAD BEEN RESPONSIBLE FOR DESIGNING, CONCEPTUALISING, PL ANNING, DEVELOPING, CONSTRUCTING, COMMISSIONING AND THEREAF TER RELEASING THE INFRASTRUCTURE FACILITIES FOR THE PUBLIC USE. A CCORDINGLY, IT MAY KINDLY BE APPRECIATED THAT THE APPELLANT'S CASE WAS NOT THAT OF A MERE CONTRACTOR WHO WORKS ACCORDING TO THE PLANNING MADE BY THE I.T.A. NO. 1159/KOL./2013 ASSESSMENT YEAR: 2009-2010 & I.T.A. NOS. 991 TO 995/KOL/2016 ASSESSMENT YEAR:2004-05 TO 2008- 09 PAGE 15 OF 24 CONTRACTEE, BUT THE APPELLANT'S BUSINESS WAS FOR DE VELOPING THE CONCERNED INFRASTRUCTURE FACILITIES. (I) STARTING FROM THE COMMENCEMENT, I.E., DESIGNING TILL THE COMPLETION OF THE INFRASTRUCTURE FACILITIES DEVELOP MENT PROJECTS THE ENTIRE FINANCING OF THE PROJECTS WERE MET BY TH E APPELLANT FROM ITS OWN SOURCES AND/OR BORROWINGS. IT WAS ONLY ON T HE BASIS OF COMPLETION OF PHASE-WISE DEVELOPMENTS THAT THE RELE VANT GOVT. AUTHORITIES MADE PAYMENTS TO THE APPELLANT. THE ENT IRE TECHNICAL EXPERTISE REQUIRED FOR THE DESIGNING, CONCEPTUALISI NG AND PLANNING OF THE INFRASTRUCTURE FACILITIES PROJECTS, HAD TO B E ARRANGED BY THE APPELLANT AT ITS OWN COST. (M) IN RELATION TO DMRC RAILWAY PROJECTS IT HAD BE EN REQUIRED OF THE APPELLANT TO INCUR THE NECESSARY EXPENSES TOWAR DS THE DEVELOPMENT OUT OF ITS OWN FUND AT THE FIRST INSTAN CE AND ONLY AFTER COMPLETING SUBSTANTIAL PORTION OF THE PROJECT, THE APPELLANT COULD RAISE PROGRESSIVE BILLS ON DMRG. FROM THESE FACTS I T WOULD BE CLEAR THAT THE ENTIRE RISK FOR THIS PROJECT TOWARDS DEVEL OPMENT OF INFRASTRUCTURE FACILITY, HAD TO BE BORNE BY THE APP ELLANT ON ITS OWN. IT WAS ONLY AFTER THE PROGRESS OF THE DEVELOPMENT T O A PARTICULAR EXTENT, THE APPELLANT COULD RAISE BILLS ON DMRC. TH E RELEVANT DETAILS OF INCURRING EXPENSES AND RAISING OF THE BILLS HAD EARLIER BEEN PRODUCED BEFORE THE ASSESSING OFFICER, BUT THOSE WE RE NOT CONSIDERED BY THE ASSESSING OFFICER WHILE EXAMINING THE ELIGIBILITY OF THE APPELLANT TO DEDUCTION U/S 80-1A. (N) THE APPELLANT FURTHER SUBMITS THAT THE AUTHORI TIES OF THE DMRC CERTIFIED THAT THE APPELLANT' HAD BEEN ENTRUSTED WI TH THE WORK OF DESIGN, DRAWING AND CONSTRUCTION TOWARDS THE DEVELO PMENT OF METRO RAILWAY PROJECT IN DELHI. A COPY OF THE CERTI FICATE WAS SUBMITTED BEFORE THE ASSESSING OFFICER ALONG WITH T HE WRITTEN SUBMISSIONS, BUT HE DID NOT MAKE ANY REFERENCE THER ETO. THE APPELLANT SUBMITS THAT THIS CERTIFICATE CLEARLY IND ICATES THAT THE APPELLANT HAD NOT BEEN APPOINTED JUST FOR EXECUTION OF ANY WORKS CONTRACT TOWARDS THE DEVELOPMENT OF THE INFRASTRUCT URE FACILITIES BUT IT HAD BEEN ENTRUSTED WITH THE ENTIRE WORK OF T HE DEVELOPMENT OF THE INFRASTRUCTURE FACILITIES TOWARDS METRO RAIL WAY IN DELHI. (O) IN RELATION TO HRBC FLYOVER PROJECTS IT HAD BE EN REQUIRED OF THE APPELLANT TO INCUR THE NECESSARY EXPENSES TOWARDS T HE DEVELOPMENT OUT OF ITS OWN FUND AT THE FIRST INSTANCE AND ONLY AFTER COMPLETING SUBSTANTIAL PORTION OF THE PROJECTS, THE APPELLANT COULD RAISE PROGRESSIVE BILLS ON HRBC. FROM THESE FACTS IT WOUL D BE CLEAR THAT THE ENTIRE RISK FOR THESE PROJECTS TOWARDS DEVELOPM ENT OF INFRASTRUCTURE FACILITIES HAD TO BE BORNE BY THE AP PELLANT ON ITS OWN. IT WAS ONLY AFTER THE PROGRESS OF THE DEVELOPM ENT TO A PARTICULAR EXTENT THE APPELLANT COULD RAISE BILLS O N HRBC. THE I.T.A. NO. 1159/KOL./2013 ASSESSMENT YEAR: 2009-2010 & I.T.A. NOS. 991 TO 995/KOL/2016 ASSESSMENT YEAR:2004-05 TO 2008- 09 PAGE 16 OF 24 RELEVANT DETAILS OF INCURRING EXPENSES AND RAISING OF THE BILLS HAD EARLIER BEEN PRODUCED BEFORE THE ASSESSING OFFICER, BUT THOSE WERE NOT CONSIDERED BY THE ASSESSING OFFICER WHILE EXAMI NING THE ELIGIBILITY OF THE APPELLANT TO DEDUCTION U/S 80-1A . (P) AS REGARDS THE INFRASTRUCTURE DEVELOPMENT PROJE CTS RELATING TO PARK STREET FLYOVER AND GARIAHAT FLYOVER, THE AUTHO RITIES OF HRBC ISSUED CERTIFICATES CERTIFYING THAT DESIGN/DEVELOPM ENT AND DETAILED WORKING DRAWINGS OF THE FLYOVERS HAD BEEN ENTRUSTED TO THE APPELLANT AND THE APPELLANT DULY CARRIED OUT THE SA ME. COPIES OF THE RELEVANT CERTIFICATES WERE SUBMITTED TO THE ASS ESSING OFFICER ALONG WITH THE WRITTEN SUBMISSIONS, BUT HE DID NOT MAKE ANY REFERENCE THERETO. THE APPELLANT SUBMITS THAT THESE CERTIFICATES CLEARLY INDICATE THAT THE APPELLANT HAD NOT BEEN AP POINTED JUST FOR EXECUTION OF ANY WORKS CONTRACT TOWARDS THE DEVELOP MENT OF THE INFRASTRUCTURE FACILITIES BUT IT HAD BEEN ENTRUSTED WITH THE ENTIRE WORK OF THE DEVELOPMENT OF THE INFRASTRUCTURE FACIL ITIES TOWARDS FLYOVERS AT PARK STREET AND GARIAHAT. (Q) THE REQUIREMENT OF SECTION 80-IA(4)(I) IS THAT THE CONCERNED ENTERPRISE MUST BE CARRYING ON THE BUSINESS OF DEVE LOPING AN INFRASTRUCTURE FACILITY AND IT SHOULD BE OWNED BY A N INDIAN COMPANY. FURTHER, THE ENTERPRISE MUST HAVE ENTERED INTO AN AGREEMENT WITH THE GOVERNMENT OR LOCAL AUTHORITY/ST ATUTORY BODY FOR DEVELOPING A NEW INFRASTRUCTURE FACILITY. THE A PPELLANT'S DIFFERENT UNITS WERE IN THE BUSINESSES OF DEVELOPIN G INFRASTRUCTURE FACILITIES AND THOSE UNITS WERE OWNED BY THE APPELL ANT WHICH IS AN INDIAN COMPANY. ALL THE INFRASTRUCTURE FACILITY DEV ELOPMENTS WERE CARRIED ON AND COMPLETED BY THE APPELLANTS' RESPECT IVE UNITS AS PER THE TERMS AND CONDITIONS CONTAINED IN THE RELEVANT AGREEMENTS ENTERED INTO BY THE APPELLANT WITH DMRC AND HRBC WH ICH WERE JOINT VENTURE OF THE GOVERNMENT OF INDIA AND GOVERN MENT OF DELHI AND PRESCRIBED LOCAL AUTHORITY RESPECTIVELY AS EXPL AINED HEREINBEFORE. THE MAIN REQUIREMENT WAS AS TO WHO HA D BEEN DEVELOPING THE INFRASTRUCTURE FACILITY. IT WAS THE APPELLANT WHO THROUGH ITS DIFFERENT UNITS HAD BEEN CARRYING OUT T HE DEVELOPMENT OF INFRASTRUCTURE FACILITIES. (R) USUALLY BY A WORK CONTRACT IT IS UNDERSTOOD TH AT THE RELEVANT CONTRACTEE ASKED THE CONTRACTOR TO EXECUTE CERTAIN WORK AS PER THE SPECIFICATIONS OR PLANNING OF THE CONTRACTEE AND IN SUCH A CASE THE CONCERNED CONTRACTOR DOES NOT HAVE ANY ROLE TO PLAY AS REGARDS THE DESIGNING AND/OR MAKING PLANS FOR IMPLEMENTATION OF THE DESIRED WORK. HOWEVER. IN A CASE WHERE WORK RELATING TO DES IGNING AS WELL AS CONCEPTUALISING A DEVELOPMENT ARE ENTRUSTED TO A PERSON AND THE SAID PERSON DOES THE DESIGNING AND THEREAFTER SUBMI TS A PROCEDURE WHICH SHOULD BE FOLLOWED IN IMPLEMENTING THE DESIRE D PROJECT, THE SAID WORK CANNOT BE CONSIDERED AS MERE WORK CONTRAC T. IN ANY CASE I.T.A. NO. 1159/KOL./2013 ASSESSMENT YEAR: 2009-2010 & I.T.A. NOS. 991 TO 995/KOL/2016 ASSESSMENT YEAR:2004-05 TO 2008- 09 PAGE 17 OF 24 IN THE LATTER CASE ALSO THE PERSON TO WHOM THE ABOV E-MENTIONED WORKS INCLUDING THE DESIGNING AND PLANNING ARE ALLO TTED WILL BE KNOWN AS A 'CONTRACTOR'. ON SUBMISSION OF THE DESIG N AS WELL AS THE PLANS OF IMPLEMENTATION, THE NECESSARY APPROVAL OR SANCTION IS GIVEN BY THE CONTRACTEE TO THE SAID CONTRACTOR TO P ROCEED WITH THE IMPLEMENTATION BY WAY OF CONSTRUCTION. IT MUST BE A PPRECIATED THAT FOR SUCH A CASE THE RELEVANT WORK CANNOT BE STATED TO BE A MERE EXECUTION OF A WORK CONTRACT. IN THE APPELLANT'S CA SE THE ENTIRE WORK RELATING TO DESIGNING AND PLANNING HAD BEEN EN TRUSTED TO THE APPELLANT AND, THEREFORE, SUCH WORKS SHOULD BE TREA TED AS WORK FOR DEVELOPMENT OF INFRASTRUCTURE FACILITIES FURTHER, T HE FACT OF APPELLANTS INVESTMENTS OF ITS OWN FUND FOR PROCEED ING WITH THE WORK AND AFTER COMPLETION OF THE PROJECT HAS TO GIV E GUARANTEE FOR A PERIOD OF 120 YEARS IN RESPECT OF ITS DEVELOPED I NFRASTRUCTURE FACILITIES, SHOULD BE CONSIDERED AS EVIDENCES FOR T REATING THE ENTIRE WORK AS BEING FOR THE PURPOSE OF DEVELOPMENT OF INF RASTRUCTURE FACILITIES. (S) IT IS TO BE NOTED THAT THE PREDECESSOR CIT(APP EALS)-XII, KOLKATA VIDE HIS APPELLATE ORDER DATED 30-10-2009 (APPEAL N O. 606/XII/CIR.11/09-10) FOR THE ASSESSMENT YEAR 2006- 07 HAD HELD THAT THE APPELLANT IN RELATION TO ITS INFRASTRUCTUR E FACILITIES PROJECTS OF FLYOVERS AT KOLKATA AND METRO RAILWAY A T DELHI, SHOULD BE CONSIDERED AS A DEVELOPER AND ACCORDINGLY THE AP PELLANT WAS ENTITLED TO A DEDUCTION U/S 80-IA IN RESPECT OF THE PROFITS EARNED FROM THE SAID ACTIVITIES AND THE ASSESSING OFFICER WAS DIRECTED TO ALLOW THE APPELLANT'S CLAIM OF DEDUCTION U/S 80-1A. IN THE ASSESSING OFFICER'S REMAND REPORT, NO REFERENCE WAS MADE TO T HE ABOVE- MENTIONED APPELLATE ORDER DATED 30-10-2009 WHICH WA S SET ASIDE BY THE INCOME-TAX APPELLATE TRIBUNAL IN VIEW OF CER TAIN TECHNICAL IRREGULARITIES AND THE SAID APPEAL IS BEING AGAIN H EARD ACCORDINGLY. 9. THE LD. CIT(APPEALS) IN HIS IMPUGNED ORDER EXTRA CTED THE RELEVANT PORTION OF THE REMAND REPORT SUBMITTED BY THE ASSES SING OFFICER AS WELL AS THE REJOINDER FILED BY THE ASSESSEE. HE, HOWEVER , HELD THAT THE ISSUE RELATING TO THE ASSESSEES CLAIM FOR DEDUCTION UNDE R SECTION 80IA WAS ALREADY CONSIDERED AND DECIDED BY HIS LD. PREDECESS OR IN THE FIRST ROUND VIDE AN ORDER DATED 30.10.2009 AND AFTER REPRODUCIN G THE RELEVANT PORTION OF THE SAID ORDER, HE ALLOWED THE CLAIM OF THE ASSESSEE FOR DEDUCTION UNDER SECTION 80IA BY ENDORSING THE FINDI NG AND DECISION AS RECORDED BY HIS PREDECESSOR IN THE APPELLATE ORDER PASSED IN THE FIRST ROUND. ACCORDINGLY THE DISALLOWANCE MADE BY THE ASS ESSEE ON ACCOUNT OF I.T.A. NO. 1159/KOL./2013 ASSESSMENT YEAR: 2009-2010 & I.T.A. NOS. 991 TO 995/KOL/2016 ASSESSMENT YEAR:2004-05 TO 2008- 09 PAGE 18 OF 24 ASSESSEES CLAIM FOR DEDUCTION UNDER SECTION 80IA F OR A.Y. 2006-07 WAS DELETED BY THE LD. CIT(APPEALS) AND THE APPEAL OF T HE ASSESSEE FOR A.Y. 2006-07 WAS ALLOWED BY HIM VIDE AN ORDER DATED 24.0 2.2006. EVEN THE APPEALS OF THE ASSESSEE FOR A.YS 2004-05, 2005-06, 2007-08 AND 2008-09 WERE ALLOWED BY THE LD. CIT(APPEALS) ON THE ISSUE R ELATING TO THE ASSESSEES CLAIM FOR DEDUCTION UNDER SECTION 80IA B Y FOLLOWING THE SAME ORDER VIDE HIS APPELLATE ORDERS DATED 24.02.2006. A GAINST THE SAID ORDERS PASSED BY THE LD. CIT(APPEALS) FOR A.YS. 2004-05 TO 2008-09 DELETING THE DISALLOWANCE MADE BY THE ASSESSING OFFICER ON ACCOU NT OF ASSESSEES CLAIM FOR DEDUCTION UNDER SECTION 80IA, THE REVENUE HAS P REFERRED THESE APPEALS BEFORE THE TRIBUNAL BEING ITA NOS. 991 TO 9 95/KOL/2016. 10. MEANWHILE THE APPEAL FILED BY THE ASSESSEE AGAI NST THE ORDER PASSED BY THE ASSESSING OFFICER UNDER SECTION 143(3) DATED 05.12.2011 DISALLOWING THE SIMILAR CLAIM OF THE ASSESSEE FOR D EDUCTION UNDER SECTION 80IA WAS DISPOSED OF BY THE LD. CIT(APPEALS) VIDE A N ORDER DATED 07.02.2013 WHEREBY HE DELETED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER UNDER SECTION 80IA BY FOLLOWING THE ORDER O F HIS PREDECESSOR PASSED IN ASSESSEES OWN CASE FOR A.Y. 2006-07 IN T HE FIRST ROUND. AGAINST THE SAID ORDER OF THE LD. CIT(APPEALS) DATED 07.02. 2013, THE REVENUE HAS ALSO FILED AN APPEAL BEING ITA NO. 1159/KOL/2013. 11. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES O N THE MAIN ISSUE INVOLVED IN THESE SIX APPEALS FILED BY THE REVENUE AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS OBSERV ED THAT WHILE DISPOSING OF THE APPEALS FILED BY THE ASSESSEE FOR A.YS. 2004 -05 TO 2008-09 VIDE HIS ORDERS PASSED IN THE FIRST ROUND, THE CLAIM OF THE ASSESSEE FOR DEDUCTION UNDER SECTION 80IA WAS ALLOWED BY THE LD. CIT(APPEA LS) BY DELETING THE DISALLOWANCE MADE BY THE ASSESSING OFFICER ON THIS ISSUE. WHEN THE REVENUE FILED APPEALS BEFORE THE TRIBUNAL CHALLENGI NG THE SAID ORDERS OF THE LD. CIT(APPEALS) GIVING RELIEF TO THE ASSESSEE ON THE ISSUE OF DEDUCTION UNDER SECTION 80IA, THE TRIBUNAL WHILE DISPOSING OF THE SAID APPEALS VIDE I.T.A. NO. 1159/KOL./2013 ASSESSMENT YEAR: 2009-2010 & I.T.A. NOS. 991 TO 995/KOL/2016 ASSESSMENT YEAR:2004-05 TO 2008- 09 PAGE 19 OF 24 ITS COMMON ORDER DATED 25.07.2014 (SUPRA) REMITTED THE MATTER BACK TO THE LD. CIT(APPEALS) FOR DECIDING THE ISSUE RELATIN G TO THE ASSESSEES CLAIM FOR DEDUCTION UNDER SECTION 80IA AFRESH IN ACCORDAN CE WITH LAW AFTER GIVING THE ASSESSING OFFICER PROPER AND SUFFICIENT OPPORTUNITY OF BEING HEARD. THE OBSERVATIONS RECORDED BY THE TRIBUNAL IN THIS REGARD IN PARA 9 AND 10 OF ITS ORDER ARE REPRODUCED BELOW:- 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFUL LY CONSIDERED THE SAME ALONG WITH THE ORDER OF THE TAX AUTHORITIES BELOW AS WELL AS THE RELEVANT PROVISION OF SECTION 250 OF THE IT ACT. SECTION 250 OF THE IT ACT DEALS WITH THE PROCE DURES FOR DISPOSING OF THE APPEAL. SUB-SECTION (L) OF SECTION 250 OF THE ACT HAS LAID DOWN THAT THE COMMISSIONER OF APPEAL FIXES THE DATE AND PLACE FOR HEARING OF THE ASSESSEE AND SHALL GIV E NOTICE OF THE SAME TO THE ASSESSEE AND TO THE AO AGAINST THE ORDER OF CIT(A). SUB-SECTION (2) OF SECTION 250 OF THE ACT T HEREIN STATES THAT THE AO HAS THE RIGHT TO BE HEARD EITHER IN PER SON OR BY AR ON THE DATE FIXED FOR HEARING. IT IS A SETTLED LAW THAT THE PROCEEDINGS BEFORE CIT(A) IS A QUASI JUDICIAL PROCE EDING AND THEREFORE HE IS UNDER AN OBLIGATION TO PASS AN ORDE R IN CONFORMITY WITH THE RULES OF NATURAL JUSTICE. ITNS 51 HAS BEEN PRESCRIBED FOR SERVICING OF NOTICE OF HEARING TO TH E AO. WE NOTED THAT WHILE DISPOSING OF THE APPEAL FOR AYR.2004-05, 2005-06 AND 2008-09 IT HAS BEEN SPECIFICALLY MENTIONED BY CIT(A ) THAT ITNS 51 DATED 7.7.2011, DATED 8.9.2011 AND DATED 2.9.201 1 RESPECTIVELY WERE SERVED ALONG WITH THE NOTICE U/S 250 OF THE IT ACT TO THE AO, EVEN THE DATE OF THE SERVICE OF THE NOTICE HAS ALSO BEEN MENTIONED IN EACH OF THE APPELLATE ORDER. FOR AYR.2006-07, WE NOTED THAT CIT(A) HAS NOT MENTIONED ABOUT THE SE RVICE OF ITNS 51 ALONG WITH THE NOTICE U/S 250 OF THE ACT TO THE AO. WE HAVE LOOKED INTO THE FILE OF THE CIT(A) AS WELL AS THE ORDER SHEET. WE NOTED THAT IN THE ORDER SHEET CIT(A) NOWHERE HAS MENTIONED ABOUT THE ISSUE OF NOTICE TO THE AO EVEN THERE IS N O NOTING IN RESPECT OF THE ISSUANCE OF ITNS 51 WHAT TO TALK OF THE SERVICE OF THE NOTICE ON THE AO, WE FOUND THAT THERE ARE THREE NOTICES. THERE ARE NOTICES OF DATE ON THEM. NOTICES ARE ADDR ESSED TO THE ASSESSEE AND NONE OF THE NOTICES IS ADDRESSED TO TH E AO. WE HAVE ALSO EXAMINED AND VERIFIED THE COPY OF THE NOTICES AS AVAILABLE ON WHICH THE LD. SR. ADVOCATE HAS RELIED ON. THESE NOTICES, WE FOUND THAT NONE OF THE NOTICE IS ADDRESSED TO THE A O BUT ADDRESSED TO THE ASSESSEE. THE ACKNOWLEDGEMENT SLIP DOES NOT INDICATE THAT NOTICE HAD BEEN RECEIVED BY THE AO EV EN THOUGH THE ACKNOWLEDGEMENT PROVES THAT THE NOTICE HAS BEEN RECEIVED BY THE ASSESSEE ON 28.10.2009. IT IS ALSO A FACT TH AT THE HEARING HAS TAKEN PLACE ON 30.10.2009. THERE CANNOT BE COMB INED ACKNOWLEDGEMENT FOR THE ASSESSEE AS WELL AS FOR THE AO. I.T.A. NO. 1159/KOL./2013 ASSESSMENT YEAR: 2009-2010 & I.T.A. NOS. 991 TO 995/KOL/2016 ASSESSMENT YEAR:2004-05 TO 2008- 09 PAGE 20 OF 24 ACKNOWLEDGEMENT FOR THE SERVICE OF THE NOTICE FOR B OTH THE PARTIES HAVE TO BE SEPARATELY TAKEN. WE THEREFORE D ISMISS THIS PLEA OF THE ID. SENIOR COUNSEL. IN OUR OPINION THER E IS NO NECESSITY OF FILING AN AFFIDAVIT BY THE ID. DR AS T HE ID. DR HAS PRODUCED BEFORE US THE ORIGINAL FILE OF THE CIT(A) WHICH CONTAINS THE COPY OF THE NOTICES ISSUED, SERVED AND NOTING ON THE ORDER SHEET. WE HAVE VERIFIED THE FILE. IF WE HAD R ELIED ON THE SUBMISSIONS OF THE ID. DR WITHOUT VERIFYING THE ORI GINAL RECORD, WE HAVE TO ASK FOR AN AFFIDAVIT. THIS IS AN UNDISPU TED FACT THAT THE ASSESSEE MADE A CLAIM U/S 80IA OF THE ACT FOR T HE FIRST TIME IN AYR.2004-05 WHICH WAS DISALLOWED BY THE AO. BEFO RE THE ID. CIT(A) THE ASSESSEE HAS FILED AN APPEAL FOR A.YR.20 04-05 BUT THE ID.CIT(A) HAS FOR THE FIRST TIME ALLOWED THE ELIGIB ILITY OF THE CLAIM OF THE ASSESSEE U/S 80LA OF THE ACT DURING AY R.2006-07 AS THAT APPEAL WAS HEARD FIRST. IN THE APPELLATE ORDER FOR AYR.2006-07, THE CIT(A) AFTER EXAMINING THE CLAIM O F THE ASSESSEE TOOK A VIEW THAT THE ASSESSEE IS ELIGIBLE FOR THE CLAIM OF DEDUCTION U/S 80IA OF THE ACT. THE ORDER FOR AYR.20 06-07 HAD BEEN FOLLOWED IN AYR.2004-05, 2005-06, 2007-08 AND 2008-09 BY THE CIT(A). IN VIEW OF THIS FACT IN AYR.2006-07 IN WHICH THE CLAIM OF THE ASSESSEE U/S 80IA WAS EXAMINED ON MERI T FOR THE FIRST TIME BY THE CIT(A). THE CIT(A) NOT SERVING TH E NOTICE TO THE AO HAS VIOLATED THE PROVISION OF SUB-SECTIONS (L) A ND (2) OF SECTION 250 OF THE IT ACT AND THUS DENIED THE NATUR AL JUSTICE TO THE REVENUE SO THAT THE REVENUE COULD HAVE PLACED I TS CASE BEFORE THE ID. CIT(A). THEREFORE WE HOLD THAT THE O RDER PASSED BY THE ID. CIT(A) IS IN VIOLATION OF PRINCIPLES OF NATURAL JUSTICE AND WE THEREFORE SET ASIDE THE MATTER TO THE FILE O F THE ID. CIT(A) WITH THE DIRECTION TO THE ID.CIT(A) TO GIVE THE AO PROPER AND SUFFICIENT OPPORTUNITY OF BEING HEARD AND TO DE CIDE THE ISSUE AFRESH IN ACCORDANCE WITH LAW. 10. SINCE WE HAVE SET ASIDE THE ORDER OF THE ID. CI T(A) FOR AYR.2006-07 IN WHICH THE CIT(A) FOR THE FIRST TIME ALLOWED THE CLAIM OF THE ASSESSEE U/S 80IA OF THE ACT AND IN SU BSEQUENT YEAR CIT(A) ALLOWED THE CLAIM OF THE ASSESSEE U/S 80IA O F THE ACT BY FOLLOWING THE ORDER FOR A.YR.2006-07. WE, THEREFORE , SET ASIDE THE ORDER OF THE ID. CIT(A) FOR A.YR.2004-05, 2005- 06, 2007-08 AND 2008-09 ALSO AND RESTORE THE ISSUE INVOLVED TO THE FILE OF THE ID. CIT(A) WITH THE DIRECTION THAT THE ID. CIT(A) S HA11 RE-DECIDE THE APPEAL FOR ALL THESE ASSESSMENT YEARS AFRESH AF TER DECIDING THE APPEAL FOR THE A.YR. 2006-07. 12. IT IS MANIFEST FROM THE ABOVE OBSERVATIONS RECO RDED BY THE TRIBUNAL THAT THE CLAIM OF THE ASSESSEE FOR DEDUCTION UNDER SECTION 80IA WAS I.T.A. NO. 1159/KOL./2013 ASSESSMENT YEAR: 2009-2010 & I.T.A. NOS. 991 TO 995/KOL/2016 ASSESSMENT YEAR:2004-05 TO 2008- 09 PAGE 21 OF 24 ALLOWED BY THE LD. CIT(APPEALS) INITIALLY IN A.Y. 2 006-07 WITHOUT SERVING THE NOTICE TO THE ASSESSING OFFICER AS REQUIRED BY THE PROVISION OF SUB- SECTIONS 1 & 2 OF SECTION 250 AND THERE WAS THUS A DENIAL OF NATURAL JUSTICE TO THE REVENUE AS FOUND BY THE TRIBUNAL. TH E TRIBUNAL ACCORDINGLY HELD THAT THE ORDER PASSED BY THE ASSESSING OFFICER AND LD. CIT(APPEALS) FOR A.Y. 2006-07 GIVING RELIEF TO THE ASSESSEE ON T HE ISSUE OF DEDUCTION UNDER SECTION 80IA WAS IN VIOLATION OF PRINCIPLES O F NATURAL JUSTICE AND THE MATTER WAS ACCORDINGLY SET ASIDE BY THE TRIBUNA L TO THE LD. CIT(APPEALS) WITH A DIRECTION TO GIVE THE ASSESSING OFFICER PROPER AND SUFFICIENT OPPORTUNITY OF BEING HEARD AND TO DECIDE THE ISSUE AFRESH IN ACCORDANCE WITH LAW. SINCE THE ORDER PASSED BY THE LD. CIT(APPEALS) FOR A.Y. 2006-07 WAS FOLLOWED BY HIM TO GIVE RELIEF TO THE ASSESSEE ON THE ISSUE OF DEDUCTION UNDER SECTION 80IA FOR A.YS. 200 4-05, 2005-06, 2007- 08 AND 2008-09, THE ORDERS OF THE LD. CIT(APPEALS) FOR THE SAID YEARS WERE ALSO SET ASIDE BY THE TRIBUNAL WITH A DIRECTION TO THE LD. CIT(APPEALS) TO DECIDE THE MATTER AFRESH AFTER DECIDING THE APPEAL OF THE ASSESEE FOR A.Y. 2006-07. 13. AS PER THE DIRECTION OF THE TRIBUNAL GIVEN BY I TS ORDER DATED 21.07.2014, OPPORTUNITY WAS GIVEN BY THE LD. CIT(AP PEALS) TO THE ASSESSING OFFICER IN THE SECOND ROUND AND AVAILING THE SAME, THE ASSESSING OFFICER SUBMITTED A REMAND REPORT PUTTING FORTH THE CASE OF THE REVENUE ON THE ISSUE RELATING TO THE ASSESSEES CLA IM FOR DEDUCTION UNDER SECTION 80IA. AS ALREADY NOTED, THE SAID REMAND REP ORT WAS CONFRONTED BY THE LD. CIT(APPEALS) TO THE ASSESSEE AND IN RESPONS E THERETO, A REJOINDER IN WRITING WAS ALSO FILED BY THE ASSESSEE OFFERING ITS EXPLANATION ON THE ISSUES RAISED BY THE ASSESSING OFFICER IN THE REMAN D REPORT. ALTHOUGH THE POINTS RAISED BY THE ASSESSING OFFICER IN THE REMAN D REPORT AS WELL AS THE EXPLANATION OFFERED BY THE ASSESSEE IN THE REJOINDE R ARE DULY EXTRACTED BY THE LD. CIT(APPEALS) IN HIS IMPUGNED ORDER PASSED F OR A.Y. 2006-07, A PERUSAL OF THE OPERATIVE PORTION OF THE SAID ORDER SHOWS THAT HE HAS NEITHER DISCUSSED NOR CONSIDERED THE SAME, INASMUCH AS, NO COMMENT I.T.A. NO. 1159/KOL./2013 ASSESSMENT YEAR: 2009-2010 & I.T.A. NOS. 991 TO 995/KOL/2016 ASSESSMENT YEAR:2004-05 TO 2008- 09 PAGE 22 OF 24 WHATSOEVER HAS BEEN MADE BY HIM EITHER ON THE REMAN D REPORT SUBMITTED BY THE ASSESSING OFFICER OR EVEN ON THE REJOINDER F ILED BY THE ASSESSEE. HE HAS SIMPLY HELD THAT THE ISSUE RELATING TO THE ASSE SSEES CLAIM FOR DEDUCTION UNDER SECTION 80IA WAS ALREADY CONSIDERED AND DECIDED IN FAVOUR OF THE ASSESSEE BY HIS LD. PREDECESSOR VIDE HIS ORDER DATED 30.10.2009 PASSED IN THE FIRST ROUND AND AFTER EXTR ACTING THE RELEVANT PORTION OF THE SAID ORDER, HE ALLOWED THE CLAIM OF THE ASSESSEE FOR DEDUCTION UNDER SECTION 80IA BY SIMPLY FOLLOWING TH E SAME. AS ALREADY NOTED BY US, THE SAID ORDER OF THE LD. CIT(APPEALS) DATED 30.10.2009 PASSED IN THE FIRST ROUND WAS SET ASIDE BY THE TRIB UNAL ON THE GROUND OF VIOLATION OF PRINCIPLES OF NATURAL JUSTICE AFTER HA VING FOUND THAT NO OPPORTUNITY OF BEING HEARD WAS GIVEN BY THE LD. CIT (APPEALS) TO THE ASSESSING OFFICER AND THE MATTER WAS ACCORDINGLY RE MITTED BACK TO THE LD. CIT(APPEALS) FOR DECIDING THE SAME AFRESH IN ACCORD ANCE WITH LAW AFTER GIVING THE ASSESSING OFFICER PROPER AND SUFFICIENT OPPORTUNITY OF BEING HEARD. IN THESE FACTS AND CIRCUMSTANCES OF THE CASE , WHEN THE OPPORTUNITY GIVEN TO HIM BY THE LD. CIT(APPEALS) IN THE SECOND ROUND AS PER THE DIRECTION OF THE TRIBUNAL WAS AVAILED BY THE ASSESS ING OFFICER BY SUBMITTING A REMAND REPORT PUTTING FORTH THE CASE O F THE REVENUE ON THE ISSUE AND THE REJOINDER WAS ALSO FILED BY THE ASSES SEE IN RESPONSE TO THE SAID REMAND REPORT, WE ARE OF THE VIEW THAT THE ACT ION OF THE LD. CIT(APPEALS) IN ALLOWING THE CLAIM OF THE ASSESSEE FOR DEDUCTION UNDER SECTION 80IA BY SIMPLY RELYING ON THE ORDER OF THE LD. CIT(APPEALS) DATED 30.10.2009 PASSED BY HIS PREDECESSOR IN THE FIRST R OUND, WHICH WAS SET ASIDE BY THE TRIBUNAL AND WITHOUT APPLYING HIS MIND TO THE ISSUES RAISED BY THE ASSESSING OFFICER IN THE REMAND REPORT AND W ITHOUT MAKING ANY DISCUSSION WHATSOEVER THEREON IS TOTALLY UNTENABLE AS THE SAME HAS NOT ONLY IGNORED THE CLEAR DIRECTION GIVEN BY THE TRIBU NAL BUT HAS ALSO DEFEATED THE VERY PURPOSE FOR WHICH THE MATTER WAS REMITTED BACK TO THE TRIBUNAL BY THE LD. CIT(APPEALS). WE, THEREFORE, SE T ASIDE THE IMPUGNED ORDERS OF THE LD. CIT(APPEALS) FOR A.Y. 2004-05 TO 2008-09 AS WELL AS THAT OF 2009-10 AND REMIT THE MATTER BACK TO THE LD. CIT (APPEALS) FOR DECIDING I.T.A. NO. 1159/KOL./2013 ASSESSMENT YEAR: 2009-2010 & I.T.A. NOS. 991 TO 995/KOL/2016 ASSESSMENT YEAR:2004-05 TO 2008- 09 PAGE 23 OF 24 THE SAME AFRESH AFTER TAKING INTO CONSIDERATION THE ENTIRE MATERIAL AVAILABLE ON RECORD INCLUDING THE REMAND REPORT SUB MITTED BY THE ASSESSING OFFICER AND THE REJOINDER FILED BY THE AS SESSEE. THE REVENUES APPEALS ON THIS ISSUE FOR ALL THE YEARS UNDER CONSI DERATION ARE ACCORDINGLY TREATED AS ALLOWED FOR STATISTICAL PURP OSES. 14. AS REGARDS THE ONLY OTHER ISSUE AS RAISED IN TH E APPEAL OF THE REVENUE FOR A.Y. 2009-10 RELATING TO THE DELETION B Y THE LD. CIT(APPEALS) OF THE DISALLOWANCE OF RS.3,55,741/- MADE BY THE AS SESSING OFFICER ON ACCOUNT OF PENALTY FOR LATE SAFETY ARRANGEMENT, IT IS OBSERVED THAT THE PENALTY FOR LATE SAFETY ARRANGEMENT IMPOSED ON THE ASSESSEE IS NOT AN EXPENDITURE INCURRED BY THE ASSESSEE FOR ANY PURPOS E, WHICH IS AN OFFENCE AND WHICH IS PROHIBITED BY LAW AND THE SAME NOT BEI NG COVERED BY EXPLANATION 1 TO SECTION 37, WE FIND NO INFIRMITY I N THE IMPUGNED ORDER OF THE LD. CIT(APPEALS) ALLOWING THE SAME AS BUSINESS EXPENDITURE OF THE ASSESSEE. WE ACCORDINGLY UPHOLD THE IMPUGNED ORDER OF THE LD. CIT(APPEALS) ON THIS ISSUE AND DISMISS THE RELEVANT GROUND OF THE REVENUES APPEAL FOR A.Y. 2009-10. 15. IN THE RESULT, THE APPEALS OF THE REVENUE BEING ITA NOS. 991 TO 995/KOL/2016 ARE TREATED AS ALLOWED FOR STATISTICAL PURPOSES, WHILE THE APPEAL OF THE REVENUE FOR A.Y. 2009-10 IS TREAT ED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON AUGUST 31, 20 17. SD/- SD/- (S.S. VISWANETHRA RAVI) (P.M. JAGTAP) JUDICIAL MEMBER ACCOUNTANT ME MBER KOLKATA, THE 31 ST DAY OF AUGUST, 2017 COPIES TO : (1) DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-11, KOLKATA, AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, KOLKATA-700 069 I.T.A. NO. 1159/KOL./2013 ASSESSMENT YEAR: 2009-2010 & I.T.A. NOS. 991 TO 995/KOL/2016 ASSESSMENT YEAR:2004-05 TO 2008- 09 PAGE 24 OF 24 (2) INCOME TAX OFFICER, WARD-12(3), KOLKATA, AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, KOLKATA-700 069 (3) M/S. SENBO ENGINEERING LIMITED, 87, LENIN SARANI, KOLKATA-700 013 (4) COMMISSIONER OF INCOME TAX (APPEALS)-XII, KOLKATA; (5) CIT(APPEALS)-4, KOLKATA, (6) COMMISSIONER OF INCOME TAX ,KOLKAT A (7) THE DEPARTMENTAL REPRESENTATIVE (8) GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY, HEAD OF OFFICE/DDO INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.