Harish Chandra ARSSPL JV, Bhubaneswar V. ACIT, Circle-2(1), Bhubaneswar, Bhubaneswar

ITA 116/CTK/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 81452 (ITAT-CUTTACK)
• Duration Of Justice: 1 year(s) 7 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-10-2014
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 15-10-2014
• Assessment Year: 2005-2006
• Appeal Filed On: 22-02-2013
• Court: TRIBUNAL
• Department Lawyers: K AJAY KUMAR
• Assessee Lawyers: K K AGARWAL
• Keywords: Principle of natural justice; Retrospective amendment
• Section: 143(3); 194C; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH , CUTTACK BEFORE S/SHRI S.V.MEHROTRA (AM) AND GEORGE MATHAN (JM) I.T.A. NOS.116 TO 119 /CTK/2013 ASSESSMENT YEARS: 2005-06 TO 2008-09 HARISH CHANDRA ARSSPL JV PLOT NO.38, SECTOR-!, ZONE-D, MANCHESWAR INDUSTRIAL ESTATE, BHUBANESWAR. PA NO.AAAAH 1493 H VS ACIT, CIRCLE - 2( 1), RAJASWA VIHAR, BHUBANESWAR. APPELLANT RESPONDENT FOR THE APPELLANT: SHRI K.K.AGARWAL FOR THE RESPONDENT: SHRI K.AJAY KUMAR DATE OF HEARING: 15/10/.2014 DATE OF PRONOUNCEMENT: 17 /10/2014 ORDER PER S.V.MEHROTRA, AM THESE APPEALS FILED BY THE ASSESSEE ARE DIRECTED A GAINST SEPARATE ORDERS ALL DATED 10.12.2012 OF LD CIT(A)-III, BHUBANESWAR FOR THE ASSESSMENT YEARS 2005-06 TO 2008-09. 2. IN ALL THESE APPEALS, ASSESSEE HAS TAKEN COMMON GROUNDS AS UNDER: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ORDER PASSED BY THE LD. CIT(A) IS ARBITRARY, EXCESSIVE AND BAD IS LAW. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) IS ERRED IN CONFIRMING THE DISALLOWANCE MADE BY THE LD. A.O. WI TH REGARD TO THE DEDUCTION CLAIMED BY THE APPELLANT U/S 80IA (4) OF THE INCOME TAX ACT' 1961. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ORD ER PASSED BY LD. CIT(A) CONFIRMING THE ORDER OF THE LD. A.O. PASSED U/S 263 IS WITHOUT AUTHORITY AND PASSED WITHOUT GIVING ANY OPPORTUNITY WHICH IS AGAINST THE PRINCIPLES OF NATURAL JUSTICE AND HENCE BAD IN LAW. 2 I.T.A. NOS.116 T O 119 /CTK/2013 ASSESS MENT YEARS: 2005-06 TO 2008 -09 4. ON THE FACTS AND CIRCUMSTANCES, THE LD. CIT (A) IS NOT JUSTIFIED IN NOT ACCEPTING THE RATIO OF THE DECISION OF THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF SPECIAL CIVIL APPLICATION NO. 7926 OF 2 006 FOR AVANI EXPORTS AND OTHERS VS. COMMISSIONER OF INCOME TAX, RAJKOT & OTHERS, WITH REGARD TO THE RETROSPECTIVE AMENDMENTS WHICH IS FOU ND THAT THE SAME SHOULD NOT BE DETRIMENTAL TO THE ASSESSEE. 5. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) OUGHT NOT TO HAVE CONFIRMED THE ORDER OF THE LD. A.O. WITHOUT CO NSIDERING THE GENUINE AND LEGITIMATE CLAIM OF DEDUCTION U/S 80IA( 4) OF THE APPELLANT. 3. THE ASSESSING OFFICER WHILE GIVING EFFECT TO THE ORDER OF LD CIT PASSED UNDER SECTION 263 DENIED THE DEDUCTION CLAIMED BY THE ASSESSEE UNDER SECTION 80-IA BEING 100% OF THE INCOME DERIVED FROM RECEIPT ON ACCOUNT OF INFRASTRUCTURAL DEVELOPMENT . LD CIT (A) CONFIRMED THE ACTION OF THE AO, INTER ALIA, OBSERVING THAT THERE IS NO MISTAKE IN THE AOS ACTION IN PASSING AN ORDER GIVING EFFECT TO THE DIRECTIONS OF THE CIT U/ S.263. AS REGARDS THE CONTENTIONS OF THE ASSESSEE THAT RETROSPECTIVE AMENDMENT BY WAY OF INS ERTION BELOW TO SECTION 80IA(13) WAS CONTRARY TO THE MAIN PROVISIONS OF SECTION. LD CIT (A) OBSERVED AS UNDER: THE CONTENTIONS OF THE APPELLANT REGARDING THE AME NDMENT AND ITS RETROSPECTIVE OPERATION BEING ILLEGAL IN AS MUCH AS IT IS ULTRA V IRES, CANNOT BE JUDGED BY ME BECAUSE THIS JUDGMENT PERTAINING TO AN AMENDMENT OF STATUTE IS BEYOND MY JURISDICTION. 4. BEING AGGRIEVED BY THE ORDER OF LD CIT(A), ASSES SEE IS IN APPEAL BEFORE US FOR THE ABOVE ASSESSMENT YEARS. 5. AT THE OUTSET, LD COUNSEL FOR THE ASSESSEE SUBMI TTED THAT THIS ISSUE IS COVERED BY THE DECISION OF ITAT CUTTACK IN THE CASE OF ARSS INFRAS TRUCTURE PROJECTS LTD VS.ACIT (ITA NOS.142 & 143/CTK/2010 AND OTHERS, ORDER DATED 13.6.2013. 6. LD CIT (DR) SUBMITTED THAT THE ASSESSEE ITSELF H AD CLASSIFIED AS CIVIL CONTRACTOR AND NOT DEVELOPER UNDER THE CATEGORY OF BUILDER. IN THIS R EGARD LD D.R. FILED BEFORE US COPY OF ITR -5 (INCOME TAX RETURN) FOR A.Y. 2009-2010 FILED BY THE ASSESSEE TO DEMONSTRATE THAT IN THE 3 I.T.A. NOS.116 T O 119 /CTK/2013 ASSESS MENT YEARS: 2005-06 TO 2008 -09 COLUMN MEANT FOR NATURE OF BUSINESS, ASSESSEE HAS S HOWN CODE 0501-CIVIL CONTRACTOR AND NOT CODE 0403 MEANT FOR BUILDER-PROPERTY DEVELOPERS AS PER ITR -5 7. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH PARTI ES AND PERUSED THE RECORD OF THE CASE. THE ASSESSEE, IN THE RELEVANT ASSESSMENT YEAR, WAS ENGAGED IN THE BUSINESS OF DEVELOPMENT OF INFRASTRUCTURE ACTIVITIES OF ROADWAYS PROJECT OF ST ATE GOVERNMENT. ASSESSEE HAD CLAIMED DEDUCTION U/S. 80IA WHICH WAS ALLOWED BY THE AO UND ER SECTION 143(3) OF THE ACT. HOWEVER, SUBSEQUENTLY, THE PROCEEDINGS UNDER SECTION 263 WER E INITIATED BY THE CIT DIRECTING THE AO TO WITHDRAW THE DEDUCTION. THE ASSESSMENT ORDER PASSE D IS IN CONSEQUENCE TO THE ORDER PASSED UNDER SECTION 263. BEFORE WE REFER TO TRIBUNALS DE CISION RELIED UPON BY LD COUNSEL FOR THE ASSESSEE, WE MAY OBSERVE THAT MERELY BECAUSE ASSESS EE HAD SHOWN ITS NATURE OF BUSINESS UNDER A PARTICULAR CODE WILL NOT BE DECISIVE OF THE TRUE NATURE OF ASSESSEES BUSINESS. THE TRIBUNAL IN THE CASE OF ARSS INFRASTRUCTURE PROJECT S LTD VS.ACIT(SUPRA) HELD AS UNDER: NOW COMING TO THE MERITS OF THE DEDUCTION U/S. 80I A(4) OF THE ACT. A PERUSAL OF THE PROVISIONS OF SECTION 80IA(4) OF THE ACT SHOWS THAT IN THE EXPLANATION INFRASTRUCTURE FACILITY' HAS BEEN SPECIFIED TO MEAN A ROAD INCLUDING A TOLL ROAD, A BRIDGE OR A RAIL SYSTEM.' ADMITTEDLY, THE AS SESSEE IS DOING THE BUSINESS OF DEVELOPMENT OF RAILWAY TRACKS AND BRIDGES THEREO F AS ALSO ROADS. IF, WE ARE TO ACCEPT THE CONTENTION OF THE LD. CIT THAT THE PROVI SIONS OF SECTION 80IA(4) OF THE ACT AFTER THE SUBSTITUTION OF. THE EXPLANATION TO S ECTION 80IA OF THE ACT WAS INTRODUCED WAS ONLY FOR THE PURPOSE OF GIVING THE B ENEFIT TO BOT CONTRACTS THEN, THE EXPLANATION TO SECTION 80IA(4) OF THE ACT BECOM ES OTIOSE. THIS IS AS EXPLANATION TO SECTION 80IA(4) OF THE ACT SPECIFICA LLY PROVIDES FOR THE ROAD TO INCLUDE A TOLL ROAD, A BRIDGE OR A RAIL SYSTEM. BOT CONTRACT IN RESPECT OF THE RAILWAY SYSTEM CAN NEVER EXIST. FURTHER, A PERUS AL OF THE PROVISIONS OF SECTION 80IA OF THE ACT SHOWS THAT THE TERM 'WORKS CONTRACT ' IS NOT DEFINED IN THE SAID SECTION. HOWEVER, THE TERMS 'WORKS' AND 'CONTRA CT' IS DEFINED IN THE PROVISIONS OF SECTION 194C OF THE ACT. IF A PARTICULAR WORD OR TERM IS NOT DEFINED IN THE SPECIFIC SECTION THEN, ONE COULD GO TO OTHER SECTIO NS IN THE SAID ACT WHERE THE DEFINITION WOULD BE AVAILABLE TO DRAW A MEANING TO THE SAID TERMS. IN THE PROVISIONS OF SECTION 194C OF THE ACT, WORK HAS BEE N GIVEN AN INCLUSIVE DEFINITION BUT IN THE SUBSEQUENT PORTION IT HAS EXCLUDED TH E MANUFACTURING ON SUPPLYING A PRODUCT ACCORDING TO REQUIREMENT OR SPECIFICATION OF A CUSTOMER BY USING MATERIAL PURCHASED FROM A PERSON OTHER THAN SUCH CU STOMER. AS HAS BEEN SPECIFIED BY THE LD. AR, THE ASSESSEE IS DOING CONT RACT WORK BUT THAT WORK IS ACCORDING TO THE REQUIREMENT AND SPECIFICATION OF T HE CUSTOMER AND THE SAME HAS BEEN DONE BY USING MATERIALS PURCHASE FROM THIRD PA RTIES OTHER THAN THE CUSTOMERS. THUS, THOUGH THE ASSESSEE IS DOING A WOR KS CONTRACT THE SAME WOULD NOT FALL WITHIN THE MEANING OF THE WORD 'WORKS CONT RACT' FOR THE PURPOSE OF THE ACT DUE TO THE EXCLUSION PROVIDED IN THE MEANING OF 'WORK' IN SECTION 194C OF THE 4 I.T.A. NOS.116 T O 119 /CTK/2013 ASSESS MENT YEARS: 2005-06 TO 2008 -09 ACT. THE ISSUE RAISED BY THE LD. CIT THAT THE ASSE SSEE IS NOT DOING THE DEVELOPMENT WORK BUT IS ONLY DOING THE CONTRACT ALS O DOES NOT STAND TO TEST AS THE ASSESSEE ADMITTEDLY IS DEVELOPING THE ROADS AND RAILWAY LINES AND THE BRIDGES THEREOF. DEVELOPMENT ENCOMPASSES WITHIN ITSELF CONT RACT WORK. THE AGREEMENT BETWEEN THE ASSESSEE AND THE CUSTOMER BEING THE GOV ERNMENT IS FOR THE DEVELOPMENT OF THE INFRASTRUCTURE FACILITY BEING RO ADS AND RAIL SYSTEMS AND BRIDGES BY PARTICIPATING IN THE TENDERS. UNDER TH ESE CIRCUMSTANCES,, WE ARE OF THE VIEW THAT THE AO WAS RIGHT IN LAW IN GRANTING T HE ASSESSEE THE BENEFIT OF DEDUCTION U/S. 80IA(4) OF THE ACT. ON THIS GROUND ALSO, WE ARE OF THE VIEW THAT THE LD. CIT'S ORDER PASSED U/S. 263 OF THE ACT IS U NSUSTAINABLE AND IS LIABLE TO BE QUASHED AND WE DO SO. HERE, WE MAY SPECIFICALLY MEN TION THAT IN VIEW OF THE FACT THAT THE EXPLANATION TO SECTION 80IA(4) OF THE ACT WHICH HAS BEEN SUBSTITUTED BY THE FINANCE, ACT, 2009 WITH RETROSPECTIVE EFFECT OF 01.04.2000 IS ATTEMPTING TO TAKE AWAY THE STATUTORY BENEFIT GRANTED TO THE ASSESSEE U/S. 80IA(4) OF THE ACT WITHOUT MAKING ANY AMENDMENT TO THE EXPLANATIO N TO SECTION 80IA(4) OF THE ACT, THE SAID EXPLANATION SUBSTITUTED BY THE FI NANCE ACT, 2009 W.E.F. 01.04.2000 BEING AN HINDRANCE TO THE STATUTORY DEDU CTION AVAILABLE TO THE ASSESSEE UNDER THE PROVISIONS OF SECTION 80IA(4), T HE SAID EXPLANATION WOULD HAVE TO STAND DOWN IN VIEW OF THE DECISION OF THE H ON'BLE SUPREME COURT IN THE CASE OF S. SUNDARAM PILLAI, REFERRED TO SUPRA. CONS EQUENTLY, ON TIJTHIS GROUND ALSO THE ORDER PASSED U/S. 263 OF THE ACT BY THE LD . CIT FOR AY 2006-07 AND 2007-08 STANDS QUASHED. APPEALS OF THE ASSESSEE ARE ALLOWED. 8. TE ASSESSMENT YEARS UNDER CONSIDERATION ARE FROM A.Y. 2005-06 TO 2008-09 AND, THEREFORE, THE ASSESSEES CASE IS SQUARELY COVERED BY THE AFORESAID DECISION. ACCORDINGLY, RESPECTFULLY FOLLOWING THE SAME, WE ALLOW ASSESSEE S APPEALS. 9. IN THE RESULT, APPEALS FILED BY THE ASSESSE ARE ALLOWED. PRONOUNCED IN THE OPEN COURT ON 17 TH OCTOBER, 2014. SD/- SD/- ( GEORGE MATHAN) (S.V.MEHROTRA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED, CUTTACK 17 /10/2014 B.K.PARIDA, SR. PS 5 I.T.A. NOS.116 T O 119 /CTK/2013 ASSESS MENT YEARS: 2005-06 TO 2008 -09 COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT: HARISH CHANDRA ARSSPL JV PLOT NO.38, SECTOR-1, ZONE-D, MANCHESWAR INDUSTRIAL ESTATE,BHUBANESWAR 2. THE RESPONDENT: ACIT, CIRCLE-2(1),RAJASWA VIHAR, 3. BHUBANESWAR 4. THE CIT, 5. THE CIT(A), 6. DR, CUTTACK BENCH 7. GUARD FILE. TRUE COPY// BY ORDER ASST. REGISTRAR, ITAT, CUTTACK