Appeal details
Counselvise Citation
[2017] 130 COUNSELVISE.COM (IT) 6060 (ITAT-HYDERABAD)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
3 month(s) 20 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
14-03-2017
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
B
Assessment Year
2012-2013
Appeal Filed On
24-11-2016
Judgement Text
THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ITA NO. 1578/HYD/2016 ASSESSMENT YEAR: 2012-13 THE DCIT, CIRCLE- 1(1) HYDERABAD VS. M/S AYYAPPA INFRA PROJECTS PVT. LTD., HYDERABAD PAN AAGCA8840B (APPELLANT) (RESPONDENT) REVENUE BY : SHRI K.J. RAO ASSESSEE BY : SHRI K.C. DEVDAS DATE OF HEARING : 14-03-2017 DATE OF PRONOUNCEMENT : 14-03-2017 ORDER PER D. MANMOHAN, VICE PRESIDENT: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A)-1, HYDERABAD AND IT PERTAINS TO THE ASSESSMENT YEAR 2012-13. THE FOLLOWING GROUNDS WERE RAISED BY THE REVENUE. 1. THE ORDER OF THE LD.CIT(A) IS ERRONEOUS ON FACTS AS WELL AS IN LAW. 2. THE LD. CIT(A) ERRED ON FACTS AND IN LAW IN ALLOWING THE BENEFIT OF DEDUCTION OF RS.3,54,52,944/- CLAIMED BY THE ASSESSEE U/S 80IA OF THE IT ACT, 1961. 3. THE LD. CIT(A) OUGHT TO HAVE APPRECIATED THAT THE ASSESSEE HAS EXECUTED ONLY WORKS CONTRACT AS PER THE SPECIFICATIONS OF CONTRACTEE DEPARTMENTS AND NOT A DEVELOPER OF INFRASTRUCTURE FACILITY AS ENVISAGED U/S 80IA OF ACT. 4. THE LD. CIT(A) OUGHT TO HAVE CONSIDERED THAT IN VIEW OF THE EXPLANATION TO SEC.80IA(13) AS SUBSTITUTED BY THE FINANCE (NO.2) ACT, 2009 WITH RETROSPECTIVE EFFECT FROM 01.04.2000, ANY UNDERTAKING OR ENTERPRISE WHO EXECUTES WORKS CONTRACT AS A CONTRACTOR DOES NOT QUALIFY FOR DEDUCTION U/S 80IA OF THE LT. ACT. 2 ITA NO. 1578/HYD/2016 M/S AYYAPPA INFRA PROJECTS PVT., LTD.,, HYD. 5. THE LD. CIT (A) OUGHT TO HAVE FURTHER APPRECIATED THAT THE DECISION OF THE IT AT, PUNE IN THE CASE OF M / S B T PATEL & SONS REFERRED IN THE FIRST APPELLATE ORDER IS NOT APPLICABLE TO THE CASE OF THE ASSESSEE AS THE ASSESSEE HAS EXECUTED ONLY WORKS CONTRACT DURING THE YEAR AND THEREFORE, THE PROFITS DERIVED FROM SUCH WORKS CONTRACT ARE NOT ELIGIBLE FOR DEDUCTION U/S 80IA. 6. THE APPELLANT CRAVES LEAVE TO ADD, SUBSTITUTE, AMEND, ALTER ANY OF THE GROUNDS OF APPEAL AS STATED ABOVE. 7. FOR THESE AND OTHER GROUNDS OF APPEAL THAT MAY BE URGED AT THE TIME OF THE HEARING OF APPEAL, IT IS PRAYED THAT ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DISALLOWANCE OF DEDUCTION CLAIMED BY THE ASSESSEE U / S 80IA BE RESTORED. 2. FACTS NECESSARY FOR DISPOSAL OF THE APPEAL ARE STATED IN BRIEF. ASSESSEE COMPANY IS ENGAGED IN BUSINESS OF CIVIL CONSTRUCTION. ACCORDING TO THE ASSESSEE, DURING THE YEAR UNDER CONSIDERATION, IT HAD MOSTLY UNDERTAKEN CONSTRUCTION OF SEWERAGE SYSTEMS AND WATER TREATMENT PLANTS. THE GROSS RECEIPTS OF THE ASSESSEE WAS 50.90 CRORES ON WHICH A NET PROFIT OF 3.83 CRORES WAS DECLARED, AFTER CLAIMING DEDUCTION OF 3.54 CRORES U/S 80IA OF THE ACT. THE BOOK PROFIT COMPUTED U/S 115JB OF THE ACT WORKED OUT TO 3.88 CRORES. 2.1 THOUGH THE RETURN WAS PROCESSED ORIGINALLY U/S 143(1) OF THE ACT, IT WAS LATER SELECTED FOR SCRUTINY BY ISSUING NOTICE U/S 143(2) OF THE ACT. IN RESPONSE TO THE NOTICES THE ASSESSEE SUBMITTED THAT IT WAS ENGAGED IN THE BUSINESS OF EXECUTION OF INFRASTRUCTURE WORKS AND IT IS ENTITLED FOR DEDUCTION OF 100% PROFITS ON SUCH WORKS. 3. ON THE OTHER HAND THE STAND OF THE REVENUE WAS THAT THE ASSESSEE IS MERE CIVIL CONTRACTOR AND IT HAS NOT MAINTAINED ANY INFRASTRUCTURE PROJECTS; IT IS THE 3 ITA NO. 1578/HYD/2016 M/S AYYAPPA INFRA PROJECTS PVT., LTD.,, HYD. MUNICIPALITIES WHICH MAINTAINED INFRASTRUCTURE PROJECTS AND THE ASSESSEE MERELY EXECUTED A PART OF THE BIGGER PROJECT AND, AFTER EXECUTION, THE ASSESSEE HAS NO FURTHER ROLE IN MAINTENANCE OF THE PROJECT AND THEREFORE IT IS NOT ELIGIBLE FOR DEDUCTION U/S 80IA OF THE ACT. 4. THE A.O FURTHER OBSERVED THAT AS PER THE LEGISLATIVE INTENT OF SEC. 80IA OF THE ACT THE OWNERSHIP OF THE INFRASTRUCTURE FACILITY SHOULD LIE WITH THE ASSESSEE AND IT IS EXPECTED TO DEVELOP THE FACILITY WITH IT OWN RESOURCES, BUT NOT FROM THE RESOURCES PROVIDED BY THE GOVERNMENT. SINCE THE ASSESSEE IS EXECUTING WORKS CONTRACTS BASED ON THE TENDERS QUOTED BY THE GOVERNMENT AGENCIES, THE A.O CONCLUDED THAT THE ASSESSEE COMPANY IS NOT ENTITLED TO THE BENEFIT OF DEDUCTION U/S 80IA OF THE ACT. 5. IT MAY BE NOTICED THAT IDENTICAL ISSUE, IN THE ASSESSEES OWN CASE FOR THE ASSESSMENT YEARS 2008-09 AND 2009-10, CAME UP BEFORE ITAT WHEREIN DEDUCTION U/S 80IA OF THE ACT WAS ALLOWED. EVEN THE CIT(A) ALLOWED THE CLAIM OF DEDUCTION U/S 80IA, FOR THE ASSESSMENT YEARS 2010-11 AND 2011-12. 6. THE A.O WAS OF THE VIEW THAT THE DEPARTMENT HAVING FILED FURTHER APPEAL TO THE ITAT AGAINST THE ORDER OF THE CIT(A) FOR THE ASSESSMENT YEARS 2010-11 AND 2011-12 AND FURTHER APPEAL TO THE HONBLE HIGH COURT AGAINST THE ORDER OF THE ITAT FOR THE ASSESSMENT YEARS 2008-09 AND 2009-10, THE DECISION TAKEN THEREIN NEED NOT BE FOLLOWED. ACCORDINGLY, THE A.O REJECTED THE CLAIM OF DEDUCTION U/S 80IA OF THE ACT. 4 ITA NO. 1578/HYD/2016 M/S AYYAPPA INFRA PROJECTS PVT., LTD.,, HYD. 7. ON AN APPEAL FILED BY THE ASSESSEE, THE LD. CIT(A) REFERRED TO THE ORDER PASSED BY ITAT FROM AYS 2008-09 TO 2011-12 AND OBSERVED THAT EVEN IN THE ASSESSMENT YEAR 2010-11, THE ITAT, HYDERABAD BENCHES ALLOWED THE CLAIM OF THE ASSESSEE (ITA NO. 1521/HYD/2014 DATED 24-08-2016 AND ITA NO. 1688/HYD/2013 DATED 01-04-2014) WHEREIN THE BENCH OBSERVED THAT THOUGH IT WAS JOINT VENTURE BUT IT WAS ESSENTIALLY A VENTURE OF THE ASSESSEE COMPANY WHICH WAS CARRIED OUT BY THE ASSESSEE FULLY. IT WAS FURTHER OBSERVED THAT ONE HAS TO SEE THE SUBSTANCE AND NOT THE FORM ESSENTIALLY. 7.1 IN THE INSTANT CASE THE ASSESSEE IS A CONTRACTOR VIS-A- VIS THE PORTION OF WORK ALLOTTED TO THEM AND THEREFORE IT CAN CLAIM BENEFIT OF DEDUCTION U/S 80IA OF THE ACT. THE VIEW TAKEN BY THE ITAT FOR THE ASSESSMENT YEARS 2008-09 AND 2009-10 WAS FOLLOWED BY THE TRIBUNAL IN THE LATER YEARS ALSO. UNDER THESE CIRCUMSTANCES LD. CIT(A) ACCEPTED THE CONTENTION OF THE ASSESSEE AND DIRECTED THE A.O TO ALLOW THE CLAIM OF DEDUCTION U/S 80IA OF THE ACT. 8. AGGRIEVED BY THE ORDER OF THE CIT(A) THE REVENUE IS IN APPEAL BEFORE US. AT THE TIME OF HEARING LD. DR FAIRLY ADMITTED THAT THE ISSUE STANDS COVERED BY THE DECISIONS OF THE ITAT, IN THE ASSESSEES OWN CASE FOR EARLIER ASSESSMENT YEARS. HOWEVER, HE STRONGLY RELIED UPON THE ORDER PASSED BY THE A.O. 8.1 ON THE OTHER HAND THE LD. COUNSEL APPEARING ON BEHALF OF THE ASSESSEE REFERRED TO THE DECISIONS OF THE ITAT, HYDERABAD BENCHES TO SUBMIT THAT EVEN IN THE EARLIER 5 ITA NO. 1578/HYD/2016 M/S AYYAPPA INFRA PROJECTS PVT., LTD.,, HYD. YEARS THIS VERY ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE AND THE LD. CIT(A) HAVING FOLLOWED THE DECISION OF THE ITAT, SUCH ORDER CANNOT BE SAID TO BE ERRONEOUS. 9. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE RECORD. SINCE THE VIEW TAKEN BY THE LD. CIT(A) IS IN CONSONANCE WITH THE VIEW TAKEN BY THE ITAT IN THE ASSESSEES OWN CASE FOR THE EARLIER YEARS, WE DO NOT FIND ANY INFIRMITY IN THE ORDER PASSED BY THE LD. CIT(A). WE THEREFORE, AFFIRM THE ORDER OF THE LD. CIT(A) AND DISMISS THE APPEAL FILED BY THE REVENUE, AS PRONOUNCED IN THE OPEN COURT ON 14 TH MARCH, 2017. SD/- SD/- (G. MANJUNATHA) (D. MANMOHAN) ACCOUNTANT MEMBER VICE PRESIDENT HYDERABAD, DATED: 14 TH MARCH, 2017 KRK 1) M/S AYYAPPA INFRA PROJECTS PVT. LTD. H.NO. 6-3-907/1, FLAT NO. 201, SS NIVAS, T.L.KAPADIA LANE, SOMAJIGUDA, HYD -82. 2) DCIT, CIRCLE -1(1) HYDERABAD 3) CIT -1, HYDERABAD 4) PCIT-1, HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDERABAD. 6) GUARD FILE
