Asst. Commissioner of Income Tax,Circle-8(1)., Hyderabad V. Somdutt Builders-NCC(JV)., Hyderabad

ITA 1432/Hyd/2017

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 5934 (ITAT-HYDERABAD)
• Duration Of Justice: 9 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-05-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 21-05-2018
• Assessment Year: 2008-2009
• Appeal Filed On: 11-08-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C SRINIVAS REDDY
• Assessee Lawyers: A KIRAN MANOHAR
• Section: 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B BENCH: HYDERABAD BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA. NOS. 1431 TO 1433/HYD/2017 ASSESSMENT YEARS: 2007 - 08 TO 2009 - 10 ACIT, CIRCLE - 8(1), HYDERABAD. VS. SOMDUTT BUILDERS - NCC (JV), HYDERABAD. PAN: AAQFS 2933 Q (APPELLANT) (RESPONDENT) FOR ASSESSEE: SHRI A. KIRAN MANOHAR FOR REVENUE : C. SRINIVAS REDDY, CIT - DR DATE OF HEARING : 21.05.2018 DATE OF PRONOUNCEMENT : 21.05.2018 ORDER PER D. MANMOHAN, VP: THESE APPEALS BY THE REVENUE ARE DIRECTED AGAINST THE ORDER PASSED BY CIT (A) - 6, HYDERABAD AND THEY PERTAIN TO ASSESSMENT YEARS 2007 - 08 TO 2009 - 10. 2. ISSUE INVOLVED IN ALL THESE APPEALS BEING IDENTICAL, WE PROCEED TO DISPOSE OF THESE APPEALS BY A COMBINED ORDER, FOR THE SAKE OF CONVENIENCE. FOLLOWING COMMON GROUNDS WERE URGED BEFORE US: 1. THE LD. CIT(A) ERRED BOTH ON FACTS OF THE CASE AND IN LAW. 2. THE LD. CIT(A) BY MERELY FOLLOWING THE DECISION OF HONBLE ITAT IN THE CASE M/S. SUSHEE HITECH, HELD THAT THE ASSESSEE IS ENTITLED FOR DEDUCTION U/S 80IA OF THE IT ACT. 3. THE LD. CIT(A), WITHOUT REFERRING TO THE CIT(A) CATEGORICAL FINDINGS OF THE ASSESSIN G OFFICER, ERRED IN HOLDING THAT THE ASSESSEE IS ENTITLED FOR DEDUCTION U/S 80IA OF THE IT ACT. 4. THE LD. CIT(A) OUGHT TO HAVE APPRECIATED THE FACT THAT THE ASSESSEE IS NOT A DEVELOPER AND IS ONLY A WORKS CONTRACTOR. 5. THE LD. CIT(A) OUGHT TO HAVE SEEN T HAT THE ASSESSEE DID NOT UNDERTAKE THE OPERATION AND MAINTENANCE OF THE FACILITY. 6. THE LD. CIT(A) OUGHT TO HAVE SEEN THAT THE ASSESSEE WAS PAID ON RUNNING BILLS BASIS FOR THE CONSTRUCTION ACTIVITY. 2 3 . FACTS IN SHORT ARE THAT THE ASSESSEE FIRM IS ENGAGE D IN THE BUSINESS OF UNDERTAKING CIVIL CONTRACTS. IT IS A MAIN CONTRACTOR ENGAGED IN EXECUTION OF TWO PROJECTS AWARDED BY M/S. GUJARAT STATE HIGHWAY PROJECTS (GSHP) AND NATIONAL HIGHWAYS AUTHORITY OF INDIA (NHAI), BIHAR. ASSESSEE CLAIMED DEDUCTION U/S 80 IA OF THE ACT ON THE ENTIRE BUSINESS PROFITS ON THE GROUND THAT TWO INFRASTRUCTURAL FACILITIES WERE DEVELOPED BY THE ASSESSEE BY LAYING ROADS WHICH FALLS WITHIN THE MEANING OF EXPRESSION INFRASTRUCTURE FACILITY AS PER THE EXPLANATION TO SUB - CLAUSE (4) OF THE SAID SECTION. IT WAS ALSO STATED THAT THE FIRM HAS FULFILLED THE FOLLOWING CONDITIONS I.E., (A) IT IS OWNED BY A CONSORTIUM OF COMPANIES REGISTERED IN INDIA; (B) IT HAS STARTED OPERATION AFTER 01.04.1995 AND (C) IT IS WORKING IN PURSUANCE OF AGREEM ENTS WITH STATE GOVERNMENTS / STATUTORY BODIES. IT WAS ALSO STATED THAT THE ASSESSEE FULFILS CONDITIONS PRESCRIBED THEREIN. 4. ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS NEITHER DEVELOPED THE FACILITY ON BOT NOR AGREEMENT STIPULATES THE PERIOD WITH IN WHICH THE FACILITY HAS TO BE TRANSFERRED TO NHAI BECAUSE THE ASSESSEE NEVER OWNED THE ENTERPRISE AND HENCE, THE QUESTION OF TRANSFER OF THE INFRASTRUCTURE FACILITY DOES NOT ARISE. HE THEREFORE DENIED THE CLAIM OF DEDUCTION TO THE ASSESSEE FOR ALL THE Y EARS UNDER CONSIDERATION. 5. ON AN APPEAL FILED BY THE ASSESSEE, LD. CIT(A) OBSERVED THAT THE ASSESSEE - JOINT VENTURE IS ENGAGED IN EXECUTION OF TWO PROJECTS AND IT WAS A CONSORTIUM OF TWO DOMESTIC COMPANIES, FORMED EXCLUSIVELY FOR DEVELOPMENT OF TWO ROAD PRO JECTS I.E., (I) CONVERSION OF FOUR LANE FROM EXISTING TWO LANE IN NH - 2, BIHAR STATE AND (II) STRENGTHENING AND PAVING OF SHOULDERS OF SH - 24 IN RAJKOT REGION. IT WAS CONTENDED THAT BOTH THE INFRASTRUCTURAL FACILITIES (ROAD PROJECTS) DEVELOPED BY THE JOINT VENTURE F A LL WITHIN THE DEFINITION OF INFRASTRUCTURE FACILITY AS PER EXPLANATION TO SUB - SECTION (4) OF SECTION 80IA OF THE IT ACT, 1961. IT WAS ALSO SUBMITTED 3 THAT THE CLAIM FOR DEDUCTION U/S 80IA WAS MADE FROM A.Y. 2004 - 05 ONWARDS AND THE SAME WAS ALLO WED IN ALL THE EARLIER YEARS. FOR THE AYS 2005 - 06 AND 2006 - 07, THOUGH THE ASSESSING OFFICER DISALLOWED THE CLAIM, WHICH IN TURN WAS CONFIRMED BY THE CIT (A), ON AN APPEAL FILED BEFORE THE ITAT HYDERABAD BENCH, THE TRIBUNAL, VIDE ITA NO S . 148 AND 481 /HYD/2 009, DATED 03.02.2017, ALLOWED THE DEDUCTION CLAIMED U/S 80IA OF THE ACT. IT WAS ALSO SUBMITTED THAT THE PROJECTS EXECUTED DURING THE CURRENT YEARS WERE ALSO THE SAME AS IN THE EARLIER YEARS AND THEREFORE, THE ASSESSEE IS ENTITLED TO DEDUCTION U/S 80IA OF THE ACT. LD. CIT(A) GAVE A FINDING THAT THE ISSUE INVOLVED IN THE YEAR S UNDER CONSIDERATION IS IDENTICAL TO THE EARLIER AYS 2005 - 06 AND 2006 - 07 WHEREIN THE TRIBUNAL HAS ACCEPTED THE PLEA OF THE ASSESSEE. IN THIS REGARD, CIT (A) OBSERVED AS UNDER: 5.1 THE ISSUE FOR THE ASSESSMENT YEAR UNDER CONSIDERATION IS IDENTICAL TO THAT OF A.Y. 2005 - 06 AND 2006 - 07. THE ASSESSEE HAD CARRIED OUT THE SAME WORK AS IN THOSE YEARS FOR WHICH THE HONBLE ITAT, HYDERABAD HAS HELD THE ASSESSEE TO BE A DEVELOPER U/S 80IA(4) AND HAS ALLOWED THE CLAIM OF DEDUCTION U/S 80IA OF THE ACT. IN VIEW OF IT, RESPECTFULLY FOLLOWING THE DECISION OF ITAT (SUPRA), IN ASSESSEES OWN CASE, THE ASSESSEES CLAIM FOR DEDUCTION U/S 80IA IS ALLOWED AND THE ADDITION OF RS. 5,85,99,111/ - IS DELETED . THUS, THE REVENUE IS IN APPEAL BEFORE US. 6. WE HAVE HEARD THE LEARNED DEPARTMENTAL REPRESENTATIVE AS WELL AS THE LEARNED COUNSEL FOR THE ASSESSEE, SHRI A. KIRAN MANOHAR ON BEHALF OF SHRI S. RAMA RAO, AND ALSO CAREFULLY PERUSED THE RECORD. AS COULD BE NOTICED FROM THE GROUNDS OF APPEAL, THE ONLY CONTENTION OF THE REVENUE IS ASSESSEE IS NOT A DEVELOPER AND IT IS ONLY A WORKS CONTRACTOR AND IT DID NOT UNDERTAKE THE OPERATION AND MAINTENANCE OF THE FACILITY AND T HE ASSESSEE WAS PAID ON RUNNING BILLS BASIS FOR THE CONSTRUCTION ACTIVITY. HOWEVER, THE FACT REMAINS THAT IDENTICAL ISSUE WAS CONSIDERED BY THE ITAT HYDERABAD BENCH IN THE ASSESSEES OWN CASE FOR THE EARLIER YEARS 2005 - 06 AND 2006 - 07 (CITED SUPRA) WHE REIN THE BENCH CONSIDERED 4 THE ISSUE ELABORATELY WHILE GIVING FACTUAL FINDING THAT THE ASSESSEE IS NOT MERELY A CONTRACTOR BUT AN ENTITY WHICH HAS TAKEN RISK AND INVESTED HUGE FUNDS IN THE PROJECT, WHICH DEMONSTRATES, COUPLED WITH THE CLAUSES IN THE AGREEME NT, THAT IT OWNS THE PROJECTS TILL IT IS HANDED OVER TO THE GOVERNMENT. IN FACT THE JOINT VENTURE HAS AGREED TO UNDERTAKE ALL THE RISKS TILL THE PROJECT IS COMPLETED. UNDER THIS PREMISE THE HONBLE TRIBUNAL OBSERVED THAT THE ASSESSEE WOULD FALL WITHIN TH E DEFINITION OF DEVELOPER AS ENUMERATED IN SECTION 80IA(4) OF THE ACT AND THEREFORE ASSESSING OFFICER WAS DIRECTED TO ALLOW DEDUCTION U/S 80IA OF THE ACT. SINCE THE ISSUE RAISED BEFORE US BY THE REVENUE IS ALREADY ANSWERED BY THE TRIBUNAL IN THE ASSESSE ES OWN CASE, FOR THE EARLIER YEARS, IN THE ABSENCE OF ANY DECISION OF A SUPERIOR FORUM WHEREIN A CONTRARY VIEW IS TAKEN, WE HAVE TO NECESSARILY FOLLOW THE DECISION OF THE ITAT HYDERABAD BENCH IN THE ASSESSEES OWN CASE FOR THE EARLIER YEARS AND THUS WE AR E OF THE VIEW THAT THE ASSESSEE IS ELIGIBLE TO CLAIM DEDUCTION U/S 80IA OF THE ACT . S INCE THE VIEW TAKEN BY THE LD. CIT(A) IS IN CONSONANCE WITH THE VIEW TAKEN BY THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR THE EARLIER YEARS, WE DO NOT FIND ANY INFIRMITY TO INTERFERE WITH THE ORDERS PASSED BY THE LD. CIT(A) AND THUS THE APPEALS FILED BY THE REVENUE ARE DISMISSED. PRONOUNCED ACCORDINGLY IN THE OPEN COURT ON 21 ST MAY, 2018. S D/ - SD/ - (S. RIFAUR RAHMAN) (D.MANMOHAN) ACCOUNTANT MEMBER VICE PRESIDENT HYDERABAD, DATED: 21 ST MAY, 2018. OKK, SR.PS COPY TO 1. M/S. SOMDATT BUILDERS - NCC (JV), 9 TH FLOOR, NCC HOUSE, MADHAPUR, HYDERABAD. 2. THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE - 8(1), HYDERABAD. 3. CIT (A) - 6 , HYDERABAD. 4. PR. CIT - 6 , HYDERABAD. 5. DR, ITAT, HYDERABAD. 6. GUARD FILE