DCIT, CIR-12(2), KOLKATA, Kolkata V. M/s Tantia Construction Ltd, Kolkata

ITA 1405/KOL/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 1053 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-11-2017
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 20-11-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A K TIWARI
• Assessee Lawyers: M TIWARI
• Keywords: Revised return
• Section: 143(3); 153A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH : KOLKATA [BEFORE HONBLE SHRI M.BALAGANESH, AM & SHRI S.S. VISWANETHRA RAVI, JM] I.T.A NO. 1405/KOL/20 15 ASSESSMENT YEAR : 2012-1 3 DCIT, CIRCLE-12(2), KOLKATA -VS- M/S TAN TIA CONSTRUCTION LTD. [PAN: AABCT 0811 E] (APPELLANT) (RESPONDENT) FOR THE APPELLANT : SHRI A.K.T IWARI, CIT FOR THE RESPONDENT : SHRI M. TIWARI DATE OF HEARING : 09.11.2017 DATE OF PRONOUNCEMENT : 22.11.2017 ORDER PER M.BALAGANESH, AM 1. THIS APPEAL BY THE REVENUE ARISES OUT OF THE OR DER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-4, KOLKATA [IN SHORT THE LD CIT (A)] IN APPEAL NO.1938/CIT(A)- 4/CIRCLE-12(2)/KOL/14-15 DATED 07.09.2015 AGAINST T HE ORDER PASSED BY THE DCIT, CIRCLE-12(2), KOLKATA [ IN SHORT THE LD AO] UNDER S ECTION 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) DATED 23.03.2015 FOR THE ASSESSMENT YEAR 2012-13. 2. THE FIRST ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER THE LD CITA WAS JUSTIFIED IN ALLOWING THE DEDUCTION CLAIMED U/S 80IA OF THE A CT TO THE ASSESSEE, IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 2 ITA NO.1405/KOL/2015 M/S TANTIA CONSTRUCTION LTD. A.YR.2012-13 2 2.1. THE BRIEF FACTS OF THIS ISSUE IS THAT THE ASSE SSEE FILED ITS RETURN OF INCOME FOR THE ASST YEAR 2012-13 DECLARING TOTAL INCOME OF RS NIL ON 29 .9.2012. IN THE SAID RETURN, THE ASSESSEE CLAIMED DEDUCTION U/S 80IA OF THE ACT TO T HE TUNE OF RS 68,90,60,412/- BEING PROFIT FROM INFRASTRUCTURE DEVELOPMENT IN RESPECT O F 18 CONSTRUCTION PROJECTS. THE ASSESSEE FURNISHED THE COPIES OF AGREEMENTS ENTERED INTO WITH DIFFERENT AUTHORITIES FOR CONSTRUCTION OR DEVELOPMENT WORKS IN THE ASSESSMENT PROCEEDINGS FOR VERIFICATION BY THE LD AO. IT WAS EXPLAINED THAT THE ASSESSEE IS ENGAG ED IN THE BUSINESS OF DEVELOPING INFRASTRUCTURE FACILITIES LIKE CONSTRUCTION OF ROAD S, BRIDGES, RAILWAY SYSTEM ETC PURSUANT TO AGREEMENTS ENTERED WITH CENTRAL GOVERNMENT, STAT E GOVERNMENT OR LOCAL AUTHORITIES VIZ KOLKATA MUNICIPAL CORPORATION , CENTRAL PUBLIC WORKS DEPARTMENT (CPWD) AND OTHERS. THE COMPANY HAS INVESTED SUBSTANTIAL AMOUN T SOURCED FROM ITS OWN FUND AND FROM OVERDRAFTS WITH BANKS AND DEPLOYED ITS OWN MAC HINERY AND MANPOWER TO EXECUTE SUCH PROJECTS. ON COMPLETION OF SUCH PROJECTS, THE Y ARE HANDED OVER TO THE AUTHORITIES CONCERNED. IT WAS EXPLAINED THAT THE ABOVE ACTIVIT IES OF BUSINESS FALL WITHIN THE DEFINITION OF INFRASTRUCTURAL FACILITY AS SPECIFIED IN EXPLANATION ATTACHED TO SECTION 80IA OF THE ACT. THE LD AO HOWEVER OBSERVED THAT ASSESS EE HAS ONLY CARRIED OUT THE ENTIRE PROJECTS ONLY IN THE CAPACITY OF WORKS CONTRACTOR A ND HENCE AS PER THE EXPLANATION TO SECTION 80IA BY THE FINANCE ACT 2007 WITH RETROSPEC TIVE EFFECT FROM 1.4.2000 , IT IS NOT ENTITLED FOR DEDUCTION U/S 80IA(4) OF THE ACT. TH E LD AO ALSO OBSERVED THAT THE ASSESSEE HAD NOT FULFILLED THE CONDITIONS PRESCRIBE D U./S 80IA(4) OF THE ACT AND REJECTED THE CLAIM OF DEDUCTION OF THE ASSESSEE THEREON. 2.2. THE LD CITA GRANTED RELIEF TO THE ASSESSEE BY OBSERVING AS UNDER:- 5.1. I HAVE CONSIDERED THE SUBMISSION OF THE APPEL LANT AND PERUSED THE ASSESSMENT ORDER. IT IS OBSERVED THAT THE SIMILAR ISSUE ARISIN G IN AYS 2006-07 TO 2008-09 & 2011- 12 WAS ADJUDICATED UPON WHEREIN MY PREDECESSOR HAD HELD THAT THE ASSESSEE-COMPANY WAS ENGAGED IN THE BUSINESS OF DEVELOPMENT OF INFRA STRUCTURAL FACILITIES ON WHICH DEDUCTION U/S 80IA WAS ALLOWABLE. IN VIEW OF THE AB OVE FACTS AND FOLLOWING THE PRINCIPLES LAID DOWN IN VARIOUS JUDICIAL DECISIONS, IT IS OBSERVED THAT THE ISSUE REQUIRES TO BE DECIDED IN FAVOUR OF THE ASSESSEE BECAUSE THE FACTS ARE SIMILAR AND IDENTICAL IN 3 ITA NO.1405/KOL/2015 M/S TANTIA CONSTRUCTION LTD. A.YR.2012-13 3 NATURE. HENCE, FOLLOWING THE DECISIONS IN EARLIER Y EARS AND TO MAINTAIN JUDICIAL CONSISTENCY, IT IS HELD THAT THE AO WAS NOT JUSTIFI ED IN DENYING THE DEDUCTION U/S 80IA OF THE ACT. ACCORDINGLY, AO IS DIRECTED TO ALLOW THE C LAIM FOR DEDUCTION U/S 80IA OF THE ACT AS ADMISSIBLE UNDER LAW. GROUND NO. 2 IS ALLOWED. 2.3. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUND:- 1. IN THE FACTS & CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED N ALLOWING DEDUCTION U/S. 80IA OF THE ACT TO THE ASSE SSEE. 2. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD. CIT(A) HAS ERRED IN NOT APPRECIATING THE FACT THAT THE CONTRACT WAS GIVEN TO THE ASSESSEE BY THE GOVERNMENT BODY TO SET UP THE GOVT. PROJECTS WITHOU T ANY OWNERSHIP STAKE IN INCOME FROM OPERATIONS WHEN THE PROJECT IS COMPLETE AND DUE TO WHICH THE BASIC INTENT OF THE LEGISLATURE FOR ALLOWING TAX RELIEF U /S. 80LA BECAME INFRUCTUOUS. 3. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD. CIT(A) HAS ERRED IN IGNORING THE FACT THAT THE CONSTRUCTION OF ROADS , BRIDGES ETC. WAS MERELY A WORK CONTRACT BY THE LICENSOR, I.E. GOVT. BODY AND HENCE, THE SAME DOES NOT CONSTITUTE INFRASTRUCTURAL FACILITY UNDER THE MEANI NG OF SEC. 80IA OF THE ACT, RELIANCE IS PLACED IN THE CASE OF MV OMNI PROJECTS (INDIA) LTD, ITAT, AHMEDABAD. 4. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD. CITCA) HAS ERRED IN IGNORING THE FACT THAT BASIC PURPOSE FOR A LLOWANCE OF DEDUCTION U/S. 80IA FOR DEVELOPMENT OF INFRASTRUCTURAL FACILITY, AS REQ UIRED BY LEGISLATURE, DID NOT GET SOLVED IN PERFORMANCE OF SUCH TYPE OF WORK AS PERFO RMED BY THE ASSESSEE AS THE MERELY WORK CONTRACT, IN NO WAY, CAN COME UNDER THE ELIGIBLE BUSINESS' FOR THE PURPOSE OF DEDUCTION U/S. 80IA OF THE ACT. 5. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD. CITCA) HAS ERRED BY IGNORING THE FACT THAT THE BASIC INTENT OF THE LEGISLATURE IS ABSENT IN THE WORK DONE BY THE ASSESSEE DURING THE RELEVANT PREVI OUS YEAR FOR CLAIMING DEDUCTION U/S. 80LA OF THE ACT IN ASSESSEE'S CASE A ND AT BEST, THE WORK OF THE ASSESSEE CAN BE REGARDED AS 'WORK CONTRACT'. 6. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD. CITCA) HAS ERRED BY OVERLOOKING THE FACT THAT BY PERFORMING TH E ALLOTTED WORK BY THE LOCAL AUTHORITY, SOURCE OF EARNING OF INCOME INSTEAD OF I NCOME FROM DEVELOPMENT, OPERATION AND MAINTENANCE OF INFRASTRUCTURE FACILIT Y. 4 ITA NO.1405/KOL/2015 M/S TANTIA CONSTRUCTION LTD. A.YR.2012-13 4 7. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD. CIT(A) HAS ERRED BY OVERLOOKING WHETHER THE RECEIPT FROM CONSTRUCTIO N WORK WOULD FALL WITHIN THE AMBIT OF THE EXPRESSION DERIVED FROM INFRASTRUCTUR E FACILITY AS DEFINED IN SECTION 80IA OF THE IT ACT, 1961, IN PARTICULAR THE EXPLANATION APPENDED TO SUB- SECTION (4) THEREOF W.E.F. 01.04.2002 AND AS HELD I N THE CASE OF LIBERTY INDIA (S.C.) 317 ITR 218. 2.4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND WE FI ND THAT THE SIMILAR ISSUE HAD CROPPED UP BEFORE THIS TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASST YEAR 2011-12 IN ITA NO. 1758/KOL/2014 DATED 6.9.2017. IN THE SAID ORDER, THIS TRIBUNAL HAD HELD AS UNDER:- 3.5. WE HAVE HEARD THE RIVAL SUBMISSIONS. IT IS NO T IN DISPUTE THAT THE ASSESSEE IS ENTITLED FOR DEDUCTION U/S 80IA OF THE ACT FOR THE DEVELOPMENT OF INFRASTRUCTURAL ACTIVITIES CARRIED OUT BY IT. WE FIND THAT THIS TR IBUNAL IN ASSESSEES OWN CASE FOR THE ASST YEARS 2004-05 TO 2008-09 VIDE ORDER DATED 23.9.2016 HAD DECIDED THE SAME IN FAVOUR OF THE ASSESSEE, WHEREIN IT WAS HELD AS UNDER:- 14. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE DR VEHEMENTLY SUPPORTED THE ORDER OF THE ID AO. HE FUR THER STATED THAT THE RELIANCE PLACED THE ID CITA ON THE CERTAIN DECISIONS ARE NOT RELEVANT AS I N THOSE CASES, THE ISSUE WAS ONLY REMANDED BACK TO ID AO FOR VERIFICATION. ACCORDINGLY HE PRAY ED FOR SETTING ASIDE OF THE ISSUE THE FILE OF THE ID AO. IN RESPONSE TO THIS, THE ID AR VEHEMENTLY SU PPORTED THE ORDERS OF THE CITA. HE STATED THAT THE DECISIONS RELIED UPON BY THE ID CITA ARE S QUARELY APPLICABLE TO THE FACTS OF THE INSTANT CASE, IN AS MUCH AS, IN THOSE CASES, THE RELEVANT C LAUSES OF THE AGREEMENTS/CONTRACTS WERE NOT LOOKED INTO BY THE LOWER AUTHORITIES AND HENCE THE TRIBUNAL HAD IN THE INTEREST JUSTICE HAD REMANDED THE MATTER BACK TO THE FILE OF THE ID AO T O GO THROUGH THE AGREEMENTS/CONTRACTS. WHEREAS, IN THE INSTANT CASE, THE ENTIRE AGREEMENTS /CONTRACTS WERE VERY MUCH PRODUCED BEFORE THE ID AO BOTH IN THE ORIGINAL SCRUTINY ASSESSMENT PROCEEDINGS U/S 143(3) AND ALSO IN SECTION L53A PROCEEDINGS WHICH ONLY ENABLED THE LD AO TO PR EPARE A TABULATION IN TABLE A AND TABLE B IN HIS ASSESSMENT ORDER. THE ID AR FURTHER ARGUED T HAT ABSOLUTELY NO INCRIMINATING MATERIALS WERE FOUND DURING THE COURSE OF SEARCH WHICH WOULD ENABLE THE DEPARTMENT TO CHANGE ITS STAND ABOUT THE STATUS OF THE ASSESSEE, BEING A DEVELOPE R OR CONTRACTOR. ACCORDINGLY HE PRAYED THAT THE STATUS OF THE ASSESSEE BEING A DEVELOPER AND CL AIM OF DEDUCTION U/S 80IA CANNOT BE DISTURBED IN SECTION 153A PROCEEDINGS. HE PLACED RE LIANCE IN THIS REGARD ON THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF ACIT VS KANCH AN OIL INDUSTRIES LTD IN ITA NO. 725/KO//2011 , ITA NOS. 1390,1391 & 1553/KOL/2010 D ATED 9.12.2015. 14.1. WE FIND LOT OF FORCE IN THE ARGUMENTS OF THE ID AR THAT ALL THE AGREEMENTS / CONTRACTS WERE FILED BEFORE THE LOWER AUTHORITIES AND THE ID CITA HAD GONE INTO THE RELEVANT CLAUSES OF THE AGREEMENTS/ CONTRACTS, ANALYSED THE SAME IN HIS ELA BORATE ORDER AND THEN ARRIVED AT A CONCLUSION THAT THE ASSESSEE IS ONLY A DEVELOPER AN D NOT MERELY A WORKS CONTRACTOR AND ACCORDINGLY ELIGIBLE FOR DEDUCTION U/S 80IA OF THE ACT. WE ALSO FIND THAT THE CO-ORDINATE BENCH OF CHENNAI TRIBUNAL IN THE CASE OF ACIT VS R.R.CONS TRUCTIONS IN ITA NO. 2061/MDS/2010 DATED 3.10.2011 HAD AN OCCASION TO CONSIDER SIMILAR ISSUE WHEREIN IT WAS HELD AS UNDER :- 'THE ASSESSEE HAS ALSO PRODUCED ALL SIX AGREEMENTS REGARDING SIX PROJECTS UNDERTAKEN BEFORE THE AO, WHOSE COPIES ARE AVAILABLE BEFORE US ALSO. IT IS A FACT THAT EVEN AFTER 5 ITA NO.1405/KOL/2015 M/S TANTIA CONSTRUCTION LTD. A.YR.2012-13 5 TAKING A CONTRACT FROM GOVERNMENT, IF THE ASSESSEE DEVELOPS INFRASTRUCTURE FACILITIES. IT WOULD BE REGARDED AS A 'DEVELOPER: AND 110T AS A 'W ORKS CONTRACTOR'. THE 'ASSESSEE HAS CARRIED ON ENTIRE CONSTRUCTION/DEVELOPMENT OF THE I NFRASTRUCTURE FACILITIES AND SATISFY ALL THE CONDITIONS OF SECTION 80IA(4)(I)(A). IT IS UNDE NIABLE FACT THAT THE ASSESSEE HAS TAKEN DEVELOPMENT OF INFRASTRUCTURE FACILITY AGREEMENT FR OM THE STATE GOVERNMENT/ LOCAL AUTHORITY. A CONTRACTOR WHO DEVELOPS THE INFRASTRUC TURE FACILITY BECOMES A DEVELOPER TO CLAIM DEDUCTION U/S 80IA(4). THE HON'BLE BOMBAY BEN CH OF ITAT WHILE DECIDING THE CASE OF PATEL ENGINEERING LTD. V. DCIT IN ITA NO. 1 221 /MUM/2004 HAS GONE THE EXTENT OF HOLDING THAT THE ASSESSEE, A CIVIL CONTRACTOR. H AVING EXECUTED A PART OF CONTRACTS OF IRRIGATION AND WATER SUPPLY ON 'BUILD AND TRANSFER' BASIS AND HANDED OVER THEM TO CONTRACTEE GOVERNMENTS, WAS ELIGIBLE FOR DEDUCTION U/S 80LA( 4). THE SIMILAR VIEW WAS TAKEN BY US IN THE CASE OF EAST COAST CONSTRUCTIONS & INDUSTRIES LTD. V. DCIT. ITA NO. 554/MDS/201O DATED 13.09.2011. THEREFORE. WE CONFIR M THE FINDINGS OF THE CIT(A) AND DO NOT FIND ANY VALID MERIT IN REVENUE'S APPEAL.' 14.2. WE FIND THAT THE ID CITA HAD GRANTED RELIEF F OR CLAIM OF DEDUCTION U/S 80IA OF THE ACT IN RESPECT OF PROFITS MENTIONED IN THE PROJECTS IN TAB LE A OF THE ASSESSMENT ORDER. THE LD. CIT(A) OBSERVED THAT PROFIT TO THE TUNE OF RS. 1,79,33,518 / MENTIONED IN THE PROJECTS IN TABLE B OF THE ASSESSMENT ORDER, THE ASSESSEE FAILED TO SUBSTANTIA TE ITS CLAIM OF DEDUCTION U/S 80LA OF THE ACT AND ACCORDINGLY CONFIRMED THE DISALLOWANCE MADE THE REON. WE FIND THAT AGAINST THIS, THE ASSESSEE HAD NOT PREFERRED ANY APPEAL BEFORE US. HE NCE WE REFRAIN TO GIVE OUR COMMENTS ON THE SAME. 14.3. WE ALSO FIND THAT THE LD CITA HAD DULY MET ON E OF THE OBSERVATIONS OF THE ID AO THAT THE ASSESSEE SUO MOTO REFRAINED FROM MAKING ANY CLAIM O F DEDUCTION U/S 80IA OF THE ACT FOR ASST YEARS 2009-10 AND 2010-11 IN THE RETURN PURSUANT TO THE EXPLANATION BROUGHT OUT IN FINANCE (NO. 2) ACT, 2009 W.R.E.F. 1.4.2000. WE FIND THAT THE LD. CIT(A) IN THIS REGARD HAD STATED THAT EACH ASSESSMENT YEAR IS A SEPARATE UNIT AND THE DEC ISION HAS TO BE TAKEN ON THE BASIS OF FACTS IN THAT PARTICULAR YEAR. WE FIND THAT THE REVENUE CANN OT TAKE UNDUE ADVANTAGE OF THE IGNORANCE OF AN ASSESSEE BY COLLECTING UNDUE TAXES WHICH WOULD A DMITTEDLY BE AGAINST ARTICLE 265 OF THE CONSTITUTION. 14.4. WE FIND THAT, IN ANY CASE, THE REVENUE HAD C ONCEDED TO THE FACT THAT THERE WAS ABSOLUTELY NO INCRIMINATING MATERIALS FOUND DURING THE COURSE OF SEARCH WHICH WOULD ENABLE THE LD AO TO TAKE A DIFFERENT STAND WITH REGARD TO THE STATUS OF THE ASSESSEE (WHETHER A DEVELOPER OR CONTRACTOR). ADMITTEDLY, THE ASSESSMENT FRAMED IN T HE IMPUGNED APPEAL IS PURSUANT TO SEARCH CONDUCTED U/S 132 OF THE ACT WHEREIN NO INCRIMINATI NG MATERIALS WERE FOUND, WHICH FACT IS NOT DISPUTED BEFORE US. MOREOVER, IT IS NOT IN DISPUTE THAT THE CLAIM OF DEDUCTION U/S 80IA OF THE ACT HAS BEEN ACCEPTED BY THE. REVENUE IN SECTION 143(3) PROCEEDINGS AND THERE IS NO REASON TO DISTURB THE SAME IN SECTION 153A PROCEEDINGS WITHOU T THERE BEING ANY INCRIMINATING MATERIALS TO THE CONTRARY. IN THIS REGARD, WE FIND THAT THE I SSUE IS SQUARELY COVERED BY THE CO-ORDINATE BENCH DECISION OF THIS TRIBUNAL IN THE CASE OF KANC HAN OIL INDUSTRIES LTD SUPRA. 14.5. WITH REGARD TO THE ADDITIONAL GROUND RAISED B Y THE ASSESSEE, IN VIEW OF OUR AFORESAID FINDINGS, WE DO NOT DEEM IT FIT TO GO INTO THE ADDI TIONAL GROUND RAISED BY THE ASSESSEE AS THE SAME WOULD ONLY BE SUPERFLUOUS IN NATURE. 15. IN VIEW OF OUR AFORESAID FINDINGS AND RESPECTFU LLY FOLLOWING THE VARIOUS JUDICIAL PRECEDENTS RELIED UPON HEREINABOVE, WE HOLD THAT THE ASSESSEE HAS TO BE TREATED ONLY AS A DEVELOPER IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND NOT MERELY AS A WORKS CONTRACTOR THEREBY ELIGIBLE FOR 6 ITA NO.1405/KOL/2015 M/S TANTIA CONSTRUCTION LTD. A.YR.2012-13 6 DEDUCTION U/S 80LA OF THE ACT IN RESPECT OF PROFITS DERIVED FROM PROJECTS MENTIONED IN TABLE A OF THE ASSESSMENT ORDER TO THE TUNE OF RS. 4,12,88,960 1- WHICH HAS BEEN RIGHTLY ALLOWED BY THE LD. CIT(A) . IN ANY CASE, WE HOLD THAT THE SAID CLAIM C ANNOT BE DISTURBED BY THE ID AO IN SECTION 153A PROCEEDINGS IN THE ABSENCE OF ANY INCRIMINATIN G MATERIALS TO THE CONTRARY FOUND IN THE COURSE OF SEARCH. HENCE, WE DO NOT FIND ANY INFIRMI TY IN THE ORDER OF THE LD. CIT(A) IN THIS REGARD. ACCORDINGLY, THE GROUNDS RAISED BY THE REVE NUE ARE DISMISSED. HOWEVER, WE FIND THAT THE SEGREGATION OF PROJECTS C ARRIED OUT BY THE ASSESSEE IN TABLE A AND TABLE B AS WAS DONE IN THE EARLIER YEARS , AS R IGHTLY POINTED OUT BY THE LD DR BEFORE US, WERE NEITHER DONE BY THE LD AO NOR BY THE ASSES SEE DURING THE YEAR UNDER APPEAL. MOREOVER, IT IS NOT IN DISPUTE THAT THE ASSESSEE HA D INDEED CARRIED OUT SOME PROJECTS WHICH WERE CARRIED FORWARD FROM EARLIER YEARS. HE NCE IN THE INTEREST OF JUSTICE AND FAIRPLAY, WE DEEM IT FIT AND APPROPRIATE TO REMAND THIS ISSUE TO THE FILE OF THE LD AO TO FIND OUT THE LIST OF PROJECTS THAT ARE ELIGIBLE FOR DEDUCTION U/S 80IA OF THE ACT IN THE LIGHT OF THE DECISIONS OF THIS TRIBUNAL FOR THE EARLIER Y EARS AND DECIDE THE SAME AFRESH IN ACCORDANCE WITH LAW . ACCORDINGLY THE GROUND NO. 5 RAISED BY THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. 2.5. WE FIND THAT THE ISSUE INVOLVED IN THIS YEAR UNDER APPEAL IS IDENTICAL TO THAT OF ASST YEAR 2011-12 AND HENCE RESPECTFULLY FOLLOWING THE A FORESAID DECISION, WE DEEM IT FIT AND APPROPRIATE TO REMAND THIS ISSUE TO THE FILE OF THE LD AO TO FIND OUT THE LIST OF PROJECTS THAT ARE ELIGIBLE FOR DEDUCTION U/S 80IA O F THE ACT IN THE LIGHT OF THE DECISIONS OF THIS TRIBUNAL FOR THE EARLIER YEARS AND DECIDE THE SAME AFRESH IN ACCORDANCE WITH LAW. ACCORDINGLY, THE GROUNDS 1 TO 7 RAISED BY THE REVEN UE ARE ALLOWED FOR STATISTICAL PURPOSES. 3. THE LAST ISSUE TO BE DECIDED IN THIS APPEAL IS A S TO WHETHER THE LD CITA WAS JUSTIFIED IN DELETING THE ADDITION MADE ON ACCOUNT OF RETENTI ON MONEY OF RS 10,60,18,958/- AS INCOME OF THE YEAR, IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 3.1. THE BRIEF FACTS OF THIS ISSUE IS THAT THE ASSE SSEE COMPANY BEING A DEVELOPER OF INFRASTRUCTURAL FACILITIES RAISES RUNNING BILLS BEF ORE COMPLETION OF THE PROJECT AS PER AGREED TERMS AND CONDITIONS. THE AUTHORITIES GENERA LLY RELEASE 90% OF THE BILL AMOUNT IMMEDIATELY BUT RETAIN 10% OF EACH AND EVERY BILL T ILL THE VERIFICATION AS TO SATISFACTORY 7 ITA NO.1405/KOL/2015 M/S TANTIA CONSTRUCTION LTD. A.YR.2012-13 7 PERFORMANCE OF THE WHOLE PROJECT IS COMPLETE. NORMA LLY, COMPLETION OF THE PROJECT AND VERIFICATION TAKES CONSIDERABLE TIME RESULTING IN D ELAY IN PAYMENT OF RETENTION MONEY BEING 10% OF THE BILL AMOUNT AND THE DEVELOPER COMP ANY HAS NO RIGHT TO RECEIVE THE SAME. IT WAS THE EARLIER PRACTICE OF THE APPELLANT COMPANY TO CREDIT ITS PROFIT AND LOSS ACCOUNT WITH THE ENTIRE AMOUNT OF BILL RAISED ON PR INCIPLES AND TO SHOW THE RETENTION MONEY RECEIVABLE UNDER A SEPARATE HEAD IN THE BALAN CE SHEET. THE LEGAL POSITION REGARDING YEAR OF ASSESSABILITY OF RETENTION MONEY AS CLARIFIED IN SEVERAL JUDICIAL DECISIONS CAME TO THE KNOWLEDGE OF THE ASSESSEE REC ENTLY. THEREFORE, THE ASSESSEE FILED REVISED RETURN TO REDUCE ITS BUSINESS PROFIT TO THE EXTENT OF RS. 10,60,18,958/- AS RETENTION MONEY SINCE AOS OBSERVATIONS READ AS FOL LOWS: SOME OF THE PRINCIPALS RETAINED PART OF THE CONTRA CT PAYMENT MADE BY THEM AS RETENTION MONEY. DURING THE YEAR RETENTION MONEY OF RS. 10,60,18,958/- WAS RETAINED FROM CONTRACT RECEIPT OF THE CURRENT YEAR. 3.2. THE ASSESSEE PLACED RELIANCE ON THE FOLLOWING DECISIONS OF VARIOUS HIGH COURTS INCLUDING THAT OF HONBLE JURISDICTIONAL HIGH COURT :- A) CIT VS IGNIFLUID BOILERS (I) LTD REPORTED IN 283 ITR 295 (MAD) B) CIT VS P & C CONSTRUCTIONS (P) LTD REPORTED IN 2 TAXMANN.COM 47 (MAD) C) CIT VS SIMPLEX CONCRETE PILES (I) PVT LTD REPORT ED IN 179 ITR 8 (CAL) 3.3. THE ASSESSEE EXPLAINED THAT IN VIEW OF THE AFO RESAID DECISIONS, THE COMPANY WHILE FILING RETURN U/S 139(1) IN ITS COMPUTATION DID NOT INCLUDE THE SUM OF MONEY RETAINED IN ITS BUSINESS PROFIT AS PER ACCOUNTS. SIMILARLY, A SUM OF RS. 6,22,37,760/- RETAINED IN EARLIER YEARS AND NOT INCLUDED IN COMPUTATION OF IN COME AS A TAXABLE INCOME HAS BEEN INCLUDED IN COMPUTATION OF INCOME DURING THE YEAR A S THE SUM OF MONEY WAS RECEIVED BY THE ASSESSEE DURING THE RELEVANT ASSESSMENT YEAR . THE ASSESSEE ALSO BROUGHT TO THE NOTICE OF THE LD AO THAT AS PER NOT 1, PART 3(A) OF THE FINANCIAL STATEMENTT AS AT AND FOR THE YEAR ENDED MARCH 31, 2012. DURING THE YEAR UND ER REVIEW THE COMPANY HAS CREDITED GROSS BILL AMOUNT AS REVENUE, INSTEAD OF N ET OF RETENTION AS IT WAS THOUGHT TO BE 8 ITA NO.1405/KOL/2015 M/S TANTIA CONSTRUCTION LTD. A.YR.2012-13 8 A BETTER PRESENTATION OF FINANCIAL STATEMENT. DUE T O SUCH CHANGE THERE HAS BEEN AN INCREASE OF GROSS CONTRACT RECEIPT TO THE EXTENT OF RS. 7,07,91,419/- RELATING TO LAST YEAR. THUS, A SUM OF RS. 7,07,91,419/- WAS REDUCED FROM THE COMPUTATION AS RELATED TO LAST YEAR AND WAS ALREADY TAXED BY THE INCOME TAX DEPART MENT IN THE ASSESSMENT PROCEEDING DURING THE A.Y. 2011-12 (COPY OF ASSESSM ENT ORDER U/S 143(3) ENCLOSED). IT IS WORTH MENTIONING HERE THAT THE CLAIM OF RETENTIO N MONEY WAS ALLOWED TO THE ASSESSEE IN A.Y. 2010-11 & 2011-12. THUS, AS A PRINCIPLE OF JUDICIAL CONSISTENCY THE SUM OF RS. 16,82,56,718/- SHOULD NOT BE INCLUDED IN GROSS TOTA L INCOME OF THE ASSESSEE COMPANY. 3.4. THE LD AO OBSERVED THAT ASSESSEE IS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING. THE ASSESSEES CONTENTION IS THAT IN RESPECT OF RET ENTION MONEY, THE INCOME ARISE TO THE ASSESSEE ONLY WHEN THE SAID AMOUNT OF RETENTION MON EY IS RECEIVED BY THE ASSESSEE AND NOT AT THE TIME OF RAISING OF THE BILLS. HOWEVER, W HENEVER A CONTRACTOR EXECUTES A JOB AND RAISES A BILL TO THE CONTRACTEE IN THE MERCANTI LE SYSTEM OF ACCOUNTING, THE WHOLE BILL VALUE IS CREDITED TO THE PROFIT AND LOSS ACCOUNT OF THE ASSESSEE IRRESPECTIVE OF THE FACT WHETHER SUCH BILL AMOUNT IS RECEIVED BY IT DURING T HE PREVIOUS YEAR OR NOT. IT MAY HAPPEN THAT THE SOME OF THE CONTRACTEES/ PRINCIPALS DO NOT PAY THE WHOLE AMOUNT AS CLAIMED BY THE CONTRACTOR AND PAY AN AMOUNT LESSER THAN THAT CLAIMED BY THE CONTRACTOR AFTER MAKING SOME DEDUCTION ON ACCOUNT OF SOME SHOR TFALL, IMPROPER WORK OR OTHER CONTINGENCIES. SIMILARLY, WHEN THE CONTRACTEE RETAI NS SOME AMOUNT FROM THE BILL VALUE IT IS ASSUMED THAT THE AMOUNT WITHHELD WHICH IS RECEIV ABLE BY THE ASSESSEE WILL BE RECEIVED BY THE ASSESSEE EXCEPT IN A SITUATION WH EN THE CONTRACTEE FINDS SOME FAULT WITH THE WORK. BUT THE TAXATION OF THE AMOUNT RETAINED C ANNOT BE WITHHELD FOR THE CONTINGENCY THAT THE CONTRACTEE WILL FIND SOME FAUL T WITH THE WORK AND THE ASSESSEE WILL NOT GET BACK THE AMOUNT. THE TREATMENT OF THE RETEN TION MONEY ON ANTICIPATION OF A CONTINGENCY DEFIES THE VERY BASIS OF ACCOUNTING. IN THE PRESENT CASE, THERE WAS NO CHANGE IN THE BUSINESS MODEL OR MODUS OPERANDI OF T HE BUSINESS CARRIED ON BY THE ASSESSEE FOR MORE THAN A DECADE. THIS METHOD OF ACC OUNTING WAS BEING REGULARLY 9 ITA NO.1405/KOL/2015 M/S TANTIA CONSTRUCTION LTD. A.YR.2012-13 9 FOLLOWED BY THE ASSESSEE. THE HON'BLE SUPREME COUR T IN THE CASE OF RADHASWAMI SATSANG REPORTED IN 193 ITR 321 HELD THAT CONSISTEN CY IS THE HALL MARK OF LAW AND JUSTICE. IF THE ASSESSEE HAS BEEN FOLLOWING A METHO D YEAR AFTER YEAR BY INCLUDING RECEIVABLE AMOUNT IN ITS INCOME IT WOULD NOT BE JU STIFIED IN SUDDENLY EXCLUDING SUCH RECEIVABLE FORM ITS INCOME TO REDUCE THE PROFIT. S O THE ACT OF THE ASSESSEE IS NOT JUSTIFIED. 3.5. THE LD CITA BY GIVING DUE CREDENCE TO THE VAR IOUS JUDGMENTS OF THE HIGH COURTS INCLUDING THAT OF HONBLE CALCUTTA HIGH COURT IN TH E CASE OF CIT VS SIMPLEX CONCRETE PILES INDIA (P) LTD REPORTED IN 179 ITR 8 (CAL) OP INED THAT THE LD AO WAS NOT JUSTIFIED IN REJECTING THE CLAIM OF THE ASSESSEE ON ACCOUNT O F RETENTION MONEY CLAIMED IN THE RETURN. HE ALSO OBSERVED THAT THE LD AO HAD RELIED ON CERTAIN JUDICIAL PRONOUNCEMENTS IN HIS ORDER BUT NONE OF THEM ARE DIRECTLY RELATED TO THE ISSUE INVOLVED IN THE INSTANT CASE. HE OBSERVED THAT THE CONTENTIONS OF THE LD AO THAT SINCE THE ASSESSEE COMPANY HAD CREDITED THE ENTIRE AMOUNT OF JOB RECEIPTS IN ITS P ROFIT AND LOSS ACCOUNT AND THEREFORE THE DEDUCTION OF RETENTION MONEY CANNOT BE ALLOWED IN T HE COMPUTATION OF INCOME DOES NOT APPEAR TO BE CORRECT. HE FURTHER OBSERVED THAT SINCE IN THE YEAR UNDER CONSIDERATION, THE FACTS ARE SIMILAR TO THE FACTS IN IMMEDIATELY P RECEDING YEARS, I.E ASST YEARS 2010-11 & 2011-12 AND HENCE FOLLOWING THE ORDER OF HIS PRED ECESSOR FOR THE EARLIER YEARS, HE HELD THAT THE AMOUNT OF RETENTION MONEY OF RS 10,60 ,18,958/- IS NOT TAXABLE IN THE YEAR UNDER APPEAL AND ASSESSEE HAD RIGHTLY CLAIMED THE R EDUCTION OF THE SAID AMOUNT. 3.6. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUNDS:- 8. IN FACTS AND CIRCUMSTANCES OF THE CASE AND IN LA W, THE LD. CIT(A) ERRED BY NOT APPRECIATING THE FACT THAT THE ASSESSEE HAS BEEN FO LLOWING MERCANTILE SYSTEM OF ACCOUNTING AND AS PER MERCANTILE SYSTEM OF ACCOUNTI NG, THE ASSESSEE IS REQUIRED TO CREDIT CONTRACT RECEIPT AS PER WHOLE BILLS AND N OT AFTER DEDUCTION OF RETENTION MONEY RETAINED BY THE RESPECTIVE PRINCIPALS/CLIENTS . FURTHER LD. CIT(A) GROSS IGNORED THE DECISION IN THE CASE OF DCIT VS. AMARSH IV CONSTRUCTION (P) LTD. 88 ITD 381. 10 ITA NO.1405/KOL/2015 M/S TANTIA CONSTRUCTION LTD. A.YR.2012-13 10 3.7. WE HAVE HEARD THE RIVAL SUBMISSIONS. WE FIND T HAT THE ISSUE UNDER DISPUTE IS SQUARELY COVERED BY THE DECISION OF THIS TRIBUNAL I N ASSESSEES OWN CASE FOR ASST YEAR 2011-12 IN ITA NO. 1758/KOL/2014 DATED 6.9.2017 WHE REIN IT WAS HELD AS UNDER:- 2.4. WE HAVE HEARD THE RIVAL SUBMISSIONS. THE LD A R STATED THAT THE ISSUE UNDER DISPUTE IS COVERED BY THE DECISION OF THIS TRIBUNAL IN ASSE SSEES OWN CASE FOR THE ASST YEAR 2010- 11 IN ITA NO. 2384 & 2392/KOL/2013 DATED 16.6.2017, WHICH WAS FAIRLY CONCEDED BY THE LD DR. IN THE SAID ORDER , IT WAS HELD THAT :- 13. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH TH E PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. AT THE OUTSET, WE FIND T HAT T HE INSTANT ISSUE HAS ALREADY BEEN ALLOWED BY CO-ORDINATE BENCH IN ASSESSEES OWN CASE (SUPRA) IN ITS FAVOUR AND RELEVANT EXTRACT IS REPRODUCED BELOW: 6.12. ON MERITS, RETENTION MONEY IN WORKS CONTRACT WITH GOVERNMENT IS TAXABLE ONLY ON RECEIPT BASIS AS HELD BY THE JURISDICTIONAL HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME-TAX VS. SIMPLEX CONCRETE PIL ES (INDIA) 1989 179ITR 8 (CAL). THUS, GROUND NO. 1 OF THE ASSESSEE IS ALLOWE D. RESPECTFULLY FOLLOWING THE SAME WE UPHOLD THE ORDER OF LD. CIT(A). THIS GROUND OF REVENUES APPEAL IS DISMISSED. RESPECTFULLY FOLLOWING THE SAME, WE UPHOLD THE ORDE R OF THE LD CITA . ACCORDINGLY GROUND NO. 8 RAISED BY THE REVENUE IS DISMISSED. 4. IN THE RESULT, THE APPEAL OF THE REVENUE IS PART LY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 22.11.2017 SD/- SD/- [S.S. VISWANETHRA RAVI] [ M.BALAGA NESH ] JUDICIAL MEMBER ACCOUNTANT MEM BER DATED : 22.11.2017 SB, SR. PS 11 ITA NO.1405/KOL/2015 M/S TANTIA CONSTRUCTION LTD. A.YR.2012-13 11 COPY OF THE ORDER FORWARDED TO: 1. DCIT, CIRCLE-12(2), KOLKATA, AAYAKAR BHAWAN, P-7 , CHOWRINGHEE SQUARE, KOLKATA- 69. 2. M/S TANTIA CONSTRUCTION LTD., 25-27, N.S. ROAD, KOLKATA-700001 3.C.I.T.- 4. C.I.T.- K OLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER SENIOR PRIVAT E SECRETARY HEAD OF OFFICE/D.D.O., ITAT, KOLKATA BENCHE S