Appeal details
Counselvise Citation
[2018] 126 COUNSELVISE.COM (IT) 2411 (ITAT-HYDERABAD)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
5 month(s) 7 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
20-03-2018
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
A
Assessment Year
2013-2014
Appeal Filed On
13-10-2017
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER ITA NO.1737/HYD/2017 ASSESSMENT YEAR: 2013-14 DY. COMMISSIONER OF INCOME TAX, 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 : 20-03-2018 DATE OF PRONOUNCEMENT : 20-03-2018 ORDER PER D.S. SUNDER SINGH, A.M: THE ASSESSEE IS ENGAGED IN THE BUSINESS OF CIVIL CONSTRUCTION, CONSTRUCTION OF SEWERAGE SYSTEMS AND WATER TREATMENT PLANTS FOR THE MUNICIPAL CORPORATION OF VISAKHAPATNAM, MUNICIPAL CORPORATION OF VIJAYAWADA, HMDA AND HMWSSB ETC.. DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE HAD ADMITTED THE TURNOVER OF RS. 62,71,67,189/- AND DECLARED THE NET PROFIT OF RS. 4,49,18,758/- AND CLAIMED THE DEDUCTION OF RS. 3,12,57,959/- U/S 80IA OF THE IT ACT. THE A.O TAKEN UP THE CASE FOR SCRUTINY AND ISSUED THE NOTICE U/S 143(2) OF THE IT ACT AND OBSERVED THAT THE ASSESSEE HAS UNDERTAKEN THE FOLLOWING NINE PROJECTS PROJECTS OUT OF WHICH TWO FROM HMDA AND SEVEN FROM HMWSSB AS UNDER: 2 ITA NO. 1737YD/2017 M/S AYYAPPA INFRA PROJECTS PVT LTD, HYD. S. NO PROJECT NAME AWARDED BY ORDER VALUE 80IA TURNOVER 80IA EXPENSES 80IA PROFIT 1 4.0 MLD STP AT NOOR HYDERABAD METROPOLITAN DEVELOPMENT AUTHORITY 57,44,910 19,08,175 DETAILS NOT FURNISHED DETAILS NOT FURNISHED 2 MARUTHINAGAR SEWERAGE HYDERABAD METROPOLITAN DEVELOPMENT AUTHORITY 72,84,007 80,20,563 DETAILS NOT FURNISHED DETAILS NOT FURNISHED 3 30 MLD STP CGM, HMWSSB 17,05,993 1,22,20,249 DETAILS NOT FURNISHED DETAILS NOT FURNISHED 4 800 MS, ATTAPUR CGM, HMWSSB 1,23,06,148 69,11,341 DETAILS NOT FURNISHED DETAILS NOT FURNISHED 5 RAJENDRANAGA R SEWERAGE CGM, HMWSSB 257,81,90,583 35,06,88,015 DETAILS NOT FURNISHED DETAILS NOT FURNISHED 6 ALLABANDA INLET AND OUTLET CGM, HMWSSB 6,01,55,858 2,38,00365 DETAILS NOT FURNISHED DETAILS NOT FURNISHED 7 BOLAKPUR SEWERAGE LINE CGM, HMWSSB 1,21,80,487 1,02,299 DETAILS NOT FURNISHED DETAILS NOT FURNISHED 8 FATEHNAGAR CGM, HMWSSB 10,24,92,912 1,20,43,823 DETAILS NOT FURNISHED DETAILS NOT FURNISHED 9 SHAIKPET MS LINE CGM, HMWSSB 15,21,64,647 85,60,731 DETAILS NOT FURNISHED DETAILS NOT FURNISHED 2. THE A.O OBSERVED THAT AS PER SEC. 80IA OF THE IT ACT THE ASSESSEE IS ENTITLED FOR DEDUCTION U/S 80IA ONLY IF IT UNDERTAKES EITHER DEVELOPMENT WORK OR OPERATION & MAINTENANCE WORK OR BOTH IN RESPECT OF AN INFRASTRUCTURE FACILITY AND RELIED UPON ON THE DECISION OF THIS TRIBUNAL IN THE CASE OF M/S SUSHEE HI-TECH CONSTRUCTIONS IN ITA NO.26/HYD/2009 DATED 16/03/2012 AND M/S RAMKY INFRASTRUCTURES NO.472/HYD/2009 ITA DT.17/07/2013 AND IS OF THE VIEW THAT ASSESSEE WOULD BE ENTITLED TO DEDUCTION U/S 80IA OF THE ACT ONLY IF THE FOLLOWING CONDITIONS ARE SATISFIED: A. THE PROJECT AGREEMENT HAS TO BE ENTITLED WITH EITHER A GOVERNMENT DEPARTMENT OR A STATUTORY BODY. B. THE SCOPE OF THE CONTRACT SHOULD BE FOR EITHER DEVELOPMENT OR OPERATION & MAINTENANCE OR BOTH IN RESPECT OF AN INFRASTRUCTURE FACILITY. 3 ITA NO. 1737YD/2017 M/S AYYAPPA INFRA PROJECTS PVT LTD, HYD. C. THE CO TRACT SHOULD BE LIABLE FOR ANY DEFECTS ARISING IN THE CASE OF THE PROJECT FOR A SPECIFIC. D. THE CONTRACTOR HAS TO BEAR ALL THE RISKS INVOLVED WITH THE PROJECT. E. THE PROJECT WORK SHOULD BE CARRIED ON BY THE CONTRACTOR WITHOUT HINDRANCE TO THE NORMAL PUBLIC ACTIVITY. THE ASSESSEE SHALL FACILITATE THE PEOPLE TO USE THE AVAILABLE EXISTING FACILITY EVEN WHILE THE PROCESS OF DEVELOPMENT IS IN PROGRESS. ANY LOSS TO THE PUBLIC CAUSED IN THE PROCESS WOULD BE THE RESPONSIBILITY OF THE ASSESSEE. F. MATERIAL IS NOT SUPPLIED BY THE GOVERNMENT. THE ASSESSEE ITSELF HAS TO INCUR THE EXPENDITURE FOR PURCHASE OF MATERIALS REQUIRED TO EXECUTION OF THE PROJECT. G. THE ASSESSEE IS RESPONSIBLE FOR DOING ALL THE ACTS TILL THE INFRASTRUCTURE FACILITY IS HANDED OVER BACK TO THE GOVERNMENT. H. THE AGREEMENT SHOULD NOT BE FOR A SPECIFIC WORK, IT SHOULD BE FOR DEVELOPMENT OF FACILITY AS A WHOLE. I. THEREAFTER, THE ASSESSEE HAS TO UNDERTAKE MAINTENANCE OF THE SAID INFRASTRUCTURE FOR A PERIOD OF 12 TO 24 MONTHS. J. THE ASSESSEE IS FREE TO RAISE LOANS FROM OUTSIDERS FROM EXECUTION OF PROJECT AS THERE ARE NO PROVISIONS IN THE SEC 80IA RESTRICTING THE SAME. 3. AFTER HAVING VERIFIED THE PROJECTS, AGREEMENTS ETC., THE A.O OBSERVED THAT THE PROJECTS IN RESPECT OF THE FOLLOWING WORKS, THE AGREEMENTS WERE ENTERED INTO BY THE JOINT VENTURES (JVS), HENCE HELD THAT THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION U/S 80IA OF THE IT ACT. S. NO PROJECT NAME ORDER VALUE 80IA TURNOVER AGREEMENT ENTERED WITH 3 30 KLD STP 17,05,993 1,22,20,249 AYYAPPA INFRA PROJECTS PVT LTD (JV WITH M/S GSJENVO LTD, DELHI) 5 RAJENDRANAGAR SEWERAGE 257,81,90,583 35,06,88,015 M/S MEIL-BRCPL-AIIPL (JV) 6 ALLABAND INLET AND OUTLET 6,01,55,858 2,38,00,365 M/S AIPPL-TAIPL (JV) 9 SHAIKPET MS LINE 15,21,64,647 85,60,731 AYYAPPA INFRA PROJECTS PVT LTD (JV WITH M/S PRATIBHA INDUSTRIES LTD.) 4 ITA NO. 1737YD/2017 M/S AYYAPPA INFRA PROJECTS PVT LTD, HYD. 4. IN RESPECT OF THE FOLLOWING PROJECTS THE A.O WAS OF THE VIEW THAT SINCE THE PROJECTS DO NOT INVOLVE ANY DEVELOPMENT WORK, SURVEY, PLANNING, DESIGN, DRAWING, ESTIMATION ETC., THE PROJECTS DO NOT QUALIFY FOR DEDUCTION U/S 80IA OF THE ACT, EXCEPT THE PROJECT IN THE CASE OF FOLLOWING SL NOS.1, I.E 4.0 MLD STP AT NOOR MOHAMMED KUNTA. S. NO PROJECT NAME NATURE OF WORK ORDER VALUE 80IA TURNOVER 1 4.0 MLD STP AT NOOR MOHAMMED KUNTA THIS WORK INVOLVES OPERATION AND MAINTENANCE OF 4.0 MLD ST P 57,44,910 19,08,175 2 MARUTHINAGAR SEWERAGE HUSSAIN SAGAR LAKE & CATCHMENT AREA IMPROVEMENT PROJECT LAYING OF 800MM DIA RCC NP2 PIPE LINE FOR STORM WATER DISPOSAL TO HUSSAIN SAGAR LAKE AND 400 MM DIA RCC NP2 PIPE LINE FOR SEWERAGE FROM MARUTHINAGAR TO A MAIN. THIS IS PURELY A JOB WORK AND NO ELEMENT OF DEVELOPMENT, OPERATION AND MAINTENANCE IS PRESENT IN THIS PROJECT 72,84,007 80,20,563 3 800MS, ATTAPUR MANUFACTURING, SUPPLY, LAYING, JOINTING, TESTING AND COMMISSIONING OF 800MM DIA MS RISING MAIN FROM MUGALKA NALA PUMPING STATION TO INTEL CHAMBER AT ATTAPUR STP SITE. THIS IS PURELY A JOB WORK AND NO ELEMENT OF DEVELOPMENT, OPERATION AND MAINTENANCE IS PRESENT IN THIS PROJECT 1,23,06,14 8 69,11,341 4 BALAKPUR SEWERAGE LINE MANUFACTURING, SUPPLY, LOWERING, LAYING, JOINTING, TESTING AND COMMISSIONING OF 400/500/600MM DIA RCC NP4 CLASS PIPES FROM SHIVA SAI WINES, GANDHINAGAR UPTO MUSHEERABAD X ROAD (SVS HYDRAULICS) VIA PRAGATOOLS KAVADIGUDA- PACKAGE-II. THIS IS ALSO PURELY A JOB WORK AND NO ELEMENT OF DEVELOPMENT, OPERATION AND MAINTENANCE IS PRESENT IN THIS PROJECT. 1,21,80,48 7 1,02,299 5 FATEHNAGAR REACH II HUSSAIN SAGAR LAKE & CATCHMENT AREA IMPROVEMENT PROJECT TAKEN UP BY HUDA MANUFACTURING. SUPPLY, LOWRING, LAYING, JOINTING, TESTING AND COMMISSIONING OF 1400MM DIA RCC NP4 CLASS PIPES AT BALANAGAR MAIN FROM AIRPORT TO FATEHNAGAR TO PROPOSED 1600 MM DIA RING MAIN AT NECKLACE ROAD REACH II. THIS IS ALSO PURELY A JOB WORK AND NO ELEMENT OF DEVELOPMENT, OPERATION AND MAINTENANCE IS PRESENT IN THIS PROJECT 10,24,92,9 12 1,20,43,823 5 ITA NO. 1737YD/2017 M/S AYYAPPA INFRA PROJECTS PVT LTD, HYD. 5. ACCORDINGLY THE A.O DISALLOWED THE DEDUCTION CLAIMED U/S 80IA OF THE IT ACT TO THE EXTENT OF RS. 3,12,46,179 AND ALLOWED THE DEDUCTION OF RS. 11,780/- ON PROPORTIONATE TURNOVER BASIS IN RESPECT OF PROJECT 4.0 MLD STP AT NOOR MOHAMMED KUNTA. 6. AGGRIEVED BY THE ORDER OF THE A.O THE ASSESSEE WENT ON APPEAL BEFORE THE CIT(A) AND THE LD. CIT(A) ALLOWED THE APPEAL OF THE ASSESSEE FOLLOWING THE ORDER OF THIS TRIBUNAL IN THE ASSESSEES OWN CASE FOR THE A.YS 2008-09 AND 2009-2010. 7. AGGRIEVED BY THE ORDER OF THE CIT(A) THE REVENUE HAS FILED THE APPEAL BEFORE THE TRIBUNAL AND RAISED THE FOLLOWING GROUNDS OF APPEAL: 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, 12,46,179/- CLAIMED BY THE ASSESSEE U IS 801A OF THE IT ACT, 1961. 3. THE LD. CLT(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 IS 801A OF ACT. 4. THE LD. CIT(A) OUGHT TO HAVE CONSIDERED THAT IN VIEW OF THE EXPLANATION TO SEC.80!A(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 IT ACT. 5. THE LD. CIT(A) OUGHT TO HAVE FURTHER APPRECIATED THAT THE DECISION OF THE LTAT, 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 ITA NO. 1737YD/2017 M/S AYYAPPA INFRA PROJECTS PVT LTD, HYD. 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. 8. ON IDENTICAL FACTS IN THE ASSESEES OWN CASE FOR THE A.YS 2008-09, 2009-10 AND 2012-13 THE HONBLE COORDINATE BENCH OF THIS TRIBUNAL ALLOWED THE APPEAL OF THE ASSESSEE. FOR SAKE OF CLARITY AND CONVENIENCE WE EXTRACT THE RELEVANT PART OF THE ORDER OF THE ITAT B BENCH HYDERABAD IN ASSESSEES OWN CASE IN ITA NO. 1578/HYD/2016 DATED 14.03.2017. 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. 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. . 7 ITA NO. 1737YD/2017 M/S AYYAPPA INFRA PROJECTS PVT LTD, HYD. 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. 9. SINCE THE FACTS ARE IDENTICAL, RESPECTFULLY FOLLOWING THE VIEW TAKEN BY THE TRIBUNAL WE UPHOLD THE ORDER OF THE LD. CIT(A), AND ACCORDINGLY DISMISS THE REVENUE APPEAL. 10. IN THE RESULT THE APPEAL FILED BY THE REVENUE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 20TH MARCH, 2018 SD/- SD/- (P. MADHAVI DEVI) (D.S. SUNDER SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED: 20 TH MARCH , 2018. KRK 1 M/S AYYAPPA INFRA PROJECTS PVT LTD., H. NO. 6-3-907/1, FLAT NO. 201, T.L. KAPADIA LANE, SOMAJIGUDA, HYDERABAD. 2 DY. CIT, CIRCLE-1(1), HYDERABAD. 3 CIT(A)-1, HYDERABAD. 4 THE PR. CIT-1, HYDERABAD. 5 THE DR, ITAT HYDERABAD 6 GUARD FILE
