THE ACIT, CIRCLE - 2(1), Guntur V. M/sTransstroy(India) Limited, Guntur

ITA 17/VIZ/2014

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 9544 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 1 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-03-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 15-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: OMKARESWARA RAO
• Assessee Lawyers: T CHAITANYA KUMAR
• Keywords: Rule of consistency; Retrospective amendment

Judgement Text

ITA NO.17 OF 2014 TRANSSTROY INDIA LTD GUNTUR PAGE 1 OF 6 IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO.17/VIZAG/2014 ASSESSMENT YEAR: 2010-11 ACIT, CIRCLE 2(1) 2 ND FLOOR, RAJKAMAL COMPLEX, LAKSHMIPURAM, GUNTUR M/S. TRANSSTROY (INDIA) LTD, 8-24- 42, TOBACCO COLONY, GUNTUR (APPELLANT) VS. (RESPONDENT) PAN NO:AABCT 4226 B DEPARTMENT BY: SHRI OMKARESWARA RAO, CIT-DR ASSESSEE BY: SHRI T.CHAITANYA KUMAR DATE OF HEARING: 25/02/2015 DATE OF PRONOUNCEMENT: 03/03/2015 ORDER PER SAKTIJIT DEY. THIS IS AN APPEAL BY THE DEPARTMENT AGAINST THE OR DER DATED 30.10.2013 PASSED BY THE LEARNED CIT (A) GUNTUR FOR THE ASSESSMENT YEAR 2010-11. 2. THE SOLITARY ISSUE ARISING OUT OF THE GROUNDS RA ISED BY THE DEPARTMENT IS WITH RELATION TO ACCEPTANCE OF ASSESS EES CLAIM OF DEDUCTION UNDER SECTION 80IA(4) BY THE LEARNED CIT (A). 2. BRIEF FACTS RELATING TO THE ISSUE IN DISPUTE ARE , ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF EXECUTION OF CIVIL CONTR ACT WORK. FOR THE ASSESSMENT YEAR UNDER CONSIDERATION, ASSESSEE FILED ITS RETURN OF INCOME DECLARING NIL INCOME AFTER CLAIMING DEDUCTION UNDER SECTION 80IA(4) TO THE TUNE OF RS.120,66,07,275. DURING THE ASSESSMENT PRO CEEDINGS, AFTER CONSIDERING THE INFORMATION SUBMITTED BY THE ASSESS EE AS WELL AS OTHER ITA NO.17 OF 2014 TRANSSTROY INDIA LTD GUNTUR PAGE 2 OF 6 MATERIALS ON RECORD, IT WAS NOTICED BY THE ASSESSIN G OFFICER THAT THE ASSESSEE HAD BEEN EXECUTING THE WORK FOR VARIOUS IN FRASTRUCTURE PROJECTS IN THE STATES OF AP, MP AND OTHER PLACES. HE NOTED TH AT FOR THE IRRIGATION PROJECTS IN A.P THE ASSESSEE HAD FORMED A JOINT VEN TURE WITH NAVAYUGA ENGINEERING LTD WHICH HAS BEEN ALLOTTED TWO IRRIGAT ION PROJECTS BY THE GOVT. OF ANDHRA PRADESH AND THE CONSTITUENTS OF THE JOINT VENTURE ARE EXECUTING THE WORK WITH REVENUE SHARING RATIO OF 60:40. HE AL SO NOTED THAT THESE TWO CONTRACTS HAVE BEEN GOING ON SINCE THE YEAR 2007-08 AND THE RECEIPT FROM THE SAME FORMS PART OF THE GROSS RECEIPTS FOR THE Y EAR UNDER CONSIDERATION. APART FROM THE ABOVE, ASSESSEE COMPANY WAS FOUND TO HAVE BEEN ALLOTTED IRRIGATION PROJECT DIRECTLY BY THE GOVT. OF A.P., W HICH WAS COMMENCED IN THE YEAR 2008-09. AS FAR AS THE JOINT VENTURE IS CONCER NED, THE ASSESSING OFFICER FOUND THAT BOTH THE CONSTITUENTS RAISED BILLS ON TH E JOINT VENTURE WHICH IN TURN RAISED A CONSOLIDATED BILL ON THE IRRIGATION D EPARTMENT OF THE GOVT. OF ANDHRA PRADESH WITHOUT ADDING ANY FURTHER CHARGES. THE CONSTITUENTS OF THE JOINT VENTURE FILED THEIR INDIVIDUAL RETURNS REFLEC TING THE AMOUNTS RECEIVED BY THEM INDEPENDENTLY AND CLAIMED ALLOWABLE DEDUCTION, WHEREAS THE JOINT VENTURE ALSO FILED ITS INCOME TAX RETURNS SEPARATEL Y, BUT DID NOT CLAIM DEDUCTION UNDER SECTION 80IA(4). ASSESSING OFFICER NOTED THAT IN THE RETURN FILED FOR THE IMPUGNED ASSESSMENT YEAR, ASSESSEE HA S CLAIMED DEDUCTION UNDER SECTION 80IA(4) IN RESPECT OF ALL THE AFORESA ID CONTRACT WORK EXECUTED BY HIM. ASSESSING OFFICER WAS OF THE VIEW THAT AS F AR AS THE WORK AWARDED TO JOINT VENTURE IS CONCERNED, A CONSTITUENT OF THE JOINT VENTURE IS NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 80IA AS THE CO NTRACT IS BETWEEN THE STATE GOVERNMENT AND THE JOINT VENTURE. FURTHER THE ASSESSING OFFICER REFERRING TO THE PROVISIONS OF SEC 80IA AND MORE SP ECIFICALLY TO THE EXPLANATION TO SEC 80IA INTRODUCED BY FINANCE ACT, 2007 WITH RETROSPECTIVE EFFECT FROM 1.4.2000 HELD THAT DEDUCTION UNDER SECT ION 80IA(4) WILL NOT BE AVAILABLE TO A PERSON EXECUTING THE WORKS CONTRACT ENTERED INTO WITH AN UNDERTAKING OR AN ENTERPRISE. ACCORDINGLY THE ASSES SING OFFICER REFERRING TO THE DECISION OF THE ITAT MUMBAI BENCH IN THE CASE O F B.T. PATIL & CO. (ITA NOS. 1408 & 1409/B/2003) ULTIMATELY CONCLUDED THAT THE ASSESSEE IS NOT ITA NO.17 OF 2014 TRANSSTROY INDIA LTD GUNTUR PAGE 3 OF 6 ELIGIBLE TO AVAIL DEDUCTION UNDER SECTION 80IA(4). BEING AGGRIEVED OF THE DISALLOWANCE OF CLAIM OF DEDUCTION UNDER SECTION 80 IA(4), ASSESSEE PREFERRED APPEAL BEFORE THE LEARNED CIT (A). 3. IN COURSE OF HEARING BEFORE THE FIRST APPELLATE AUTHORITY, ASSESSEE SUBMITTED THAT SIMILAR ISSUE ARISING OUT OF DISALLO WANCE OF CLAIM OF DEDUCTION UNDER SECTION 80IA(4) FROM THE SAME CONTRACT WORK C AME UP FOR CONSIDERATION BEFORE THE ITAT VISAKHAPATNAM BENCH I N ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2006-07 AND THE ITAT HAS UP HELD ASSESSEES CLAIM OF DEDUCTION UNDER SECTION 80IA(4). IT WAS FURTHER SUBMITTED THAT WHEN DEPARTMENT CAME IN APPEAL AGAINST THE ORDER OF THE CIT (A) ALLOWING ASSESSEES CLAIM OF DEDUCTION UNDER SECTION 80IA(4) FOR THE ASSESSMENT YEARS 2007-08 AND 2008-09, ITAT FOLLOWING ITS EARLI ER ORDER IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2006-07 DISMISSED THE APPEALS OF THE DEPARTMENT. 4. THE LEARNED CIT (A) AFTER CONSIDERING THE SUBMIS SIONS OF THE ASSESSEE AND HAVING FOUND THAT THE ITAT VISAKHAPATN AM BENCH IN ASSESSEES OWN CASE HAS ALLOWED THE CLAIM OF DEDUCT ION UNDER SECTION 80IA(4) IN RESPECT OF SAME CONTRACT WORK, ALLOWED A SSESSEES CLAIM OF DEDUCTION UNDER SECTION 80IA(4) BY HOLDING AS UNDER : 5.4 I HAVE PERUSED THE CASE OF ITAT FOR ASSESSMEN T YEAR 2006-07, 07-08, 08-09 & 09-10. THE FACTS OF THE CAS E RELATING TO DISALLOWANCE OF DEDUCTION UNDER SECTION 80IA(4) ARE SIMILAR IN ALL THE YEARS INCLUDING THE PRESENT ASSESSMENT YEAR. IN FACT THE APPELLANT HAS REFLECTED RECEIPTS FROM THE SAME GROUP OF CONTRACTS IN ALL THE RELEVANT YEARS. THE ITAT HAS HELD THAT EVEN WHERE THE CONTRACT HAS BEEN AWAR DED TO THE JOINT VENTURE ENTITY AND THE CONSTITUENTS ARE S HARING THE RECEIPTS AND PROFITS AS PER THE TERMS OF AGREEMENT BETWEEN THEM, SUCH CONSTITUENTS ARE ENTITLED TO DEDUCTION U NDER SECTION 80IA(4) ON PROFITS FROM ELIGIBLE BUSINESS. IN THE COMBINED ORDER FOR ASSESSMENT YEARS 2007-08 & 2008- 09 IN ITA NOS. 325 & 326/VIZ/2011, THE HON'BLE ITAT VISAKHAPATNAM BENCH HAS HELD THAT THE ORDER OF TRI BUNAL FOR ASSESSMENT YEAR 2006-07 HAS NOT BEEN REVERSED S O FAR, ITA NO.17 OF 2014 TRANSSTROY INDIA LTD GUNTUR PAGE 4 OF 6 THEREFORE, IT HOLDS THE FIELD AND THE LOWER AUTHORI TIES ARE SUPPOSED TO FOLLOW THE SAME IN ITS LETTER AND SPIRI T. THE CIT (A) HAS ADJUDICATED THE ISSUE FOLLOWING THE ORDER O F THE TRIBUNAL. WE THEREFORE, FIND NO INFIRMITY IN THE OR DER. WE ACCORDINGLY CONFIRM THE SAME. IN THE ASSESSMENT O RDER FOR ASSESSMENT YEAR 2009-10 THE ASSESSING OFFICER RAISE D SIMILAR ISSUES, HOLDING THAT IN THE APPELLANTS CASE, NEIT HER THE JV NOR ITS CONSTITUENT MEMBERS HAVE DEVELOPED THE SAID INFRASTRUCTURE PROJECT AND AS ABOVE MENTIONED THE A SSESSEE IS ONLY A SUCCESSFUL BIDDER OF THE PROJECT CONCEIVE D AND DEVELOPED BY THE CONTRACTEE I.E. IN THAT THE GOVT. OF ANDHRA PRADESH AND GOVT. OF MADHYA PRADESH. THEREFORE, IT CANNOT BE SAID THAT THE ASSESSEE IS IN THE BUSINESS OF CAR RYING ON THE BUSINESS OF DEVELOPING INFRASTRUCTURE FACILITY . HE FURTHER REFERRED TO THE DECISION OF MUMBAI ITAT IN THE CASE OF B.T. PATIL & COMPANY (ITA NOS.1408 & 1409/PN/2003) WHERE IN IT WAS HELD THAT THE ASSESSEE BEING A CIVIL CONTRACTOR , ASSIGNED THE JOB OF CIVIL CONSTRUCTION, CANNOT BE CONSIDERED AS A DEVELOPER OF INFRASTRUCTURE. THE ITAT VISAKHAPATNAM BENCH, IN ITS APPELLATE ORDER FOR ASSESSMENT YEAR 2009-10 IN ITA NO.292/VIZAG/2012 HAS TAKEN THE OBSERVATIONS OF THE ASSESSING OFFICER INTO ACCOUNT AND ALSO REFERRED TO THE ABOVE CITED DECISION OF MUMBAI ITAT IN THE CASE OF B.T. P ATIL & CO. THE HON'BLE ITAT VISAKHAPATNAM BENCH, IN ITS ORDER IN THE APPELLANTS OWN CASE FOR ASSESSMENT YEAR 2009-10 ST ATED THAT THE DECISION OF HON'BLE ITAT MUMBAI BENCH IN T HE CASE OF B.T. PATIL & CO. HAS BEEN OVERRULED BY THE HON'B LE BOMBAY HIGH COURT IN THE CASE OF ABG HEAVY ENGG. LT D (37 DTR (BOM.) 233). IT HENCE HAS UPHELD THE CIT (A) GU NTUR ORDER FOR ASSESSMENT YEAR 2009-10 AND DISMISSED THE APPEAL FILED BY THE REVENUE. 5.5 SINCE THE FACTS OF THE CASE REMAIN UNCHANGED AN D THE DECISION OF ITAT VISAKHAPATNAM BENCH IN THE APPELLA NTS OWN CASE HAS NOT BEEN REVERSED RESPECTFULLY FOLLOWI NG THE ITAT VISAKHAPATNAM BENCH DECISION, THE APPEAL FILED BY THE APPELLANT IS BEING ALLOWED. 5. BEING AGGRIEVED BY THE DECISION OF THE CIT (A), DEPARTMENT IS IN APPEAL BEFORE US. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS ON RECORD. BOTH THE COUNSELS AGREED BEFORE US THAT THE ISSUE IS SQUARELY COVERED BY THE DECISION OF THE ITAT VISAKHAPATNAM B ENCH IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEARS 2006-07 TO 2009-1 0. AS CAN BE SEEN ITA NO.17 OF 2014 TRANSSTROY INDIA LTD GUNTUR PAGE 5 OF 6 THERE IS NO DISPUTE TO THE FACT THAT THE PROJECTS E XECUTED BY THE ASSESSEE IN THE IMPUGNED ASSESSMENT YEAR ARE ONGOING PROJECTS H AVING COMMENCED FROM PRECEDING YEARS. IN THE ASSESSMENT YEAR 2006-0 7 WHEN THE ASSESSING OFFICER DISALLOWED ASSESSEES CLAIM OF THE DEDUCTIO N UNDER SECTION 80IA(4), ASSESSEE CAME IN APPEAL BEFORE THE LEARNED CIT (A). THE LEARNED CIT (A) HAVING CONFIRMED THE DECISION OF THE ASSESSING OFFI CER, ASSESSEE CAME BEFORE THE ITAT. ITAT VISAKHAPATNAM BENCH WHILE DEC IDING THE ISSUE IN ASSESSEES APPEAL REGISTERED AS ITA NO.540/VIZ/2009 PASSED AN ORDER ON 14.7.2011 ALLOWING ASSESSEES CLAIM OF DEDUCTION UN DER SECTION 80IA(4). SIMILAR DISALLOWANCE WAS AGAIN MADE BY THE ASSESSIN G OFFICER IN ASSESSMENT YEARS 2007-08, 2008-09 AND 2009-10. THE LEARNED CIT (A), HOWEVER, ALLOWED ASSESSEES CLAIM OF DEDUCTION UNDER SECTION 80IA. WHEN THE REVENUE CAME IN APPEAL BEFORE THE ITAT VISAKHAPATNA M BENCH CHALLENGING THE DECISION OF THE CIT (A), THE ITAT VISAKHAPATNAM BENCH DISMISSED THE APPEALS OF THE DEPARTMENT IN ITA NOS.325 & 326/VIZ/ 2011 DATED 13.04.2012 FOR ASSESSMENT YEAR 2007-08 AND 2008-09 AND IN ITA NO.292/VIZ/2012 DATED 5.11.2012 FOR ASSESSMENT YEAR 2009-10. THUS, AS IS EVIDENT THE ITAT HAS CONSISTENTLY TAKEN A VIEW THAT ASSESSEE IS ELIGIBLE FOR DEDUCTION UNDER SECTION 80IA(4) OF THE ACT. THAT BE ING THE CASE, FOLLOWING THE RULE OF CONSISTENCY, AS WELL AS THE VIEW EXPRES SED BY THE COORDINATE BENCH IN ASSESSEES OWN CASE IN THE PRECEDING ASSES SMENT YEARS, WE UPHOLD THE DECISION OF THE LEARNED CIT (A) IN ALLOW ING ASSESSEES CLAIM OF DEDUCTION UNDER SECTION 80IA(4). ACCORDINGLY GROUND S RAISED BY THE DEPARTMENT ARE DISMISSED. 7. IN THE RESULT APPEAL OF THE DEPARTMENT IS DISMIS SED. PRONOUNCED IN THE OPEN COURT ON 03.03.2015 SD/- SD/- (J. SUDHAKAR REDDY) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATE:03.03.2015 ITA NO.17 OF 2014 TRANSSTROY INDIA LTD GUNTUR PAGE 6 OF 6 PVV/SPS CAMP: VISAKHAPATNAM, COPY TO 1 ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE 2(1), 2 ND FLOOR, RAJ KAMAL COMPLEX, LAXMIPURAM, GUNTUR 2 M/S. TRANSSTROY (INDIA) LTD, 8-24-42, TOBACCO COL ONY, GUNTUR 3 THE CIT (A) GUNTUR 4 THE CIT GUNTUR 5 THE DEPARTMENTAL REPRESENTATIVE, ITAT VISAKHAPATN AM 6 GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM