Income-tax Officer, V. Rohan and Rajdeep Infrastructure, Pune

ITA 1920/PUN/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 6987 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 4 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-03-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 27-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: R G NAHAR
• Section: 143(3)

Judgement Text

] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE , ! ' , $ % BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO.1920/PUN/2014 ' ' / ASSESSMENT YEAR : 2010-11 INCOME TAX OFFICER, WARD-3(1), PUNE. . / APPELLANT V/S ROHAN AND RAJDEEP INFRASTRUCTURE, THE REVERIE, 1 ST FLOOR, 805, BHANDARKAR INSTITUTE ROAD, PUNE 411 004. PAN :AAFFR9455F. . / RESPONDENT / APPELLANT BY : SHRI SUHAS KULKARNI / RESPONDENT BY : SHRI R.G. NAHAR. ( / ORDER PER ANIL CHATURVEDI, AM : THIS APPEAL FILED BY THE REVENUE IS EMANATING OUT OF TH E ORDER OF COMMISSIONER OF INCOME TAX (A) II, PUNE DT.09.06.2014 FOR THE ASSESSMENT YEAR 2010-11. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON RECORD ARE AS UNDER :- 2.1 ASSESSEE IS A PARTNERSHIP FIRM STATED TO BE ENGAGED IN THE BUSINESS OF EXECUTION OF INFRASTRUCTURE PROJECTS ON CON TRACTS. / DATE OF HEARING : 12.01.2017 / DATE OF PRONOUNCEMENT: 10.03.2017 2 ITA NO.1920/PUN/2014 AY.NO.2010-11 ASSESSEE FILED ITS RETURN OF INCOME FOR A.Y. 2010-11 ON 23.09.2010 SHOWING TOTAL TAXABLE INCOME AT RS.NIL AND THE C ASE WAS SELECTED FOR SCRUTINY AND THEREAFTER ASSESSMENT WAS FRAMED U/S 143(3) OF THE ACT VIDE ORDER DT.18.03.2013 AND THE TO TAL INCOME WAS DETERMINED AT RS.1,75,65,950/- BY DENYING THE CLAIM OF DEDUCTION U/S 80IA(4) OF THE ACT. AGGRIEVED BY TH E ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE LD. CIT(A), WHO VIDE ORDER DT.09.06.2014 ALLOWED THE APPEAL OF THE ASSESSEE. AGGRIEVED BY THE ORDER OF LD. CIT(A), REVENUE IS NOW IN APP EAL BEFORE US AND HAS RAISED THE FOLLOWING GROUNDS : 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME -TAX (APPEALS) IS CONTRARY TO LAW AND TO THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEAL S) ERRED IN ALLOWING DEDUCTION U/S. 80IA(4) OF THE ACT WHEN THE ASSESSEE WAS NOT ENGAGED IN DEVELOPMENT OF NEW INFRASTRUCTURE PROJECT. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEAL S) ERRED IN NOT APPRECIATING THE FACT THAT MERELY INCR EASING THE THICKNESS & WIDENING OF AN EXISTING ROAD WOULD NOT QUALIFY AS A NEW INFRASTRUCTURE PROJECT. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEAL S) ERRED IN HOLDING THAT THE CONTRACT WORK UNDERTAKEN BY THE ASSESSEE WAS OF ADDING EXTRA LANE. 5. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEAL S) ERRED IN NOT APPRECIATING THE FACT THAT THE CLAIM O F THE ASSESSEE FOR DEDUCTION U/S 80IA(4) DOES NOT FULFILL CONDITIONS AS PER THE CIRCULAR OF CBDT BEARING NO.4/ 2010 WHICH STATES THAT WIDENING OF AN EXISTING ROAD BY CONSTRUCTING ADDITIONAL LANES AS A PART OF A HIGHWAY PROJECT BY AN UNDERTAKING WOULD BE REGARDED AS NEW INFRASTRUCTURE FACILITY FOR THE PURPOSE OF S ECTION 80IA(4). 3 ITA NO.1920/PUN/2014 AY.NO.2010-11 6. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEAL S) ERRED IN ALLOWING THE DEDUCTION U/S 80IA(4) ON THE INTEREST INCOME OF RS. 9,60,890/- ON ACCUMULATED BALANCE OF FIXED DEPOSITS CLAIMED TO BE DERIVED FROM THE BU SINESS OF THE UNDERTAKING. 3. BEFORE US, LD.D.R. SUBMITTED THAT THOUGH ASSESSEE HAS SUBMITTED VARIOUS GROUNDS BUT THE SOLE CONTROVERSY IS W ITH RESPECT TO GRANTING DEDUCTION U/S 80IA(4) OF THE ACT. 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AO NOT ICED THAT DURING THE YEAR ASSESSEE HAD EXECUTED HANUMANGA RH SUTARGARH ROAD PROJECT AND AHMADNAGAR ASHTI JAMK HED PROJECT. AO NOTICED THAT DURING THE YEAR UNDER CONSIDE RATION ASSESSEE HAD EARNED PROFIT OF RS.1,02,93,746/- ON AHMADNAG AR ASHTI-JAMKHED-BHOOM-PARDI ROAD PROJECT WHICH WAS AWAR DED TO IT BY PWD GOVERNMENT OF MAHARASHTRA IN 2004 AND THE PROFITS EARNED WAS CLAIMED AS DEDUCTION U/S 80IA(4) OF THE ACT. HE ALSO NOTICED THAT ASSESSEE HAD ALSO EARNED PROFIT OF RS.63,11,30 1/- FROM AHMADNAGAR ASHTI JAMKHED BHOOM - PARDI ROA D PROJECT PHASE I & II AND THE PROFITS EARNED FROM THE PROJECT W AS CLAIMED AS EXEMPT U/S 80IA(4) OF THE ACT. AO WAS OF THE VIEW THAT THE PROJECTS WERE WITH RELATION TO IMPROVEMENT O F THE ROAD AND THE WIDENING OF THE ROADS WHICH HAS BEEN UNDERTAKE N BY THE ASSESSEE HAS NOT RESULTED INTO ADDITIONAL LANES AND THERE FORE THE WORK UNDERTAKEN BY ASSESSEE CANNOT BE CLASSIFIED AS NE W INFRASTRUCTURAL FACILITY WITHIN THE MEANING OF U/S 80IA(4) OF TH E ACT. HE THEREFORE HELD THAT THE CLAIM OF THE ASSESSEE FOR DEDUCTION WAS NOT ALLOWABLE AND IN SUPPORT OF HIS VIEW, H E PLACED RELIANCE ON CIRCULAR NO.4 OF 2010 DT.18.05.2010 ISSUED 4 ITA NO.1920/PUN/2014 AY.NO.2010-11 BY CBDT. HE ACCORDINGLY DENIED THE CLAIM OF AGGREGATE DEDUCTION OF RS.1,06,05,047/-. AO ALSO NOTICED THAT ASSES SEE HAD RECEIVED ACCRUED INTEREST OF RS.9,60,898/- ON THE ACCUMULATED BALANCES OF FIXED DEPOSITS AND THE ACCURUED INTEREST EARNED ON THE FIXED DEPOSITS WAS CONSIDERED TO BE DERIVED FROM UNDERTAKING AND ON SUCH INTEREST ASSESSEE HAD CLAIMED DEDUCTION U/S 80IA(4) OF THE ACT. AO WAS OF THE V IEW THAT THE INTEREST INCOME EARNED BY THE ASSESSEE WAS N OT DERIVED FROM THE BUSINESS OF THE UNDERTAKING AND WAS THEREFORE N OT ELIGIBLE FOR DEDUCTION. HE ACCORDINGLY DENIED THE CLAIM. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATT ER BEFORE LD. CIT(A), WHO DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY HOLDING AS UNDER : 3.3 DURING THE APPELLATE PROCEEDINGS THE LD COUNSE L OF THE APPELLANT HAS SUBMITTED THAT TWO PROJECTS WERE EXECUTED BY THE APPELLANT AND THE CLAIM OF DEDUCTIO N U/S 80IA(4) WAS REJECTED ON THE GROUND THAT THE SPECIFI CATION AND THE NATURE AND CHARACTER DO NOT MATCH TO THE SI TUATION REFERRED TO IN CIRCULAR NO 4 OF 2010. THE LD COUNS EL HAS CONTENDED THAT THE AO HAS GIVEN FINDING THAT IT IS MERELY A CASE OF WIDENING OF THE ROAD WHICH HAS NOT RESULTED IN THE ADDITIONAL LANES AND MERELY RELAYING OF EXISTING RO ADS HAS BEEN LOW. THE LD COUNSEL HAS SUBMITTED THAT WITH R ESPECT TO THE ROAD PROPOSED AHMEDNAGAR TAKLIKAZI-JAMKHED - KHARADE HAD MANY SUGAR CANE TRAFFIC AND FOR THIS PU RPOSE THE ROAD WAS REQUIRED TO BE STRENGTHENED BY PROVIDI NG 45 MM THICK BBM APART FROM WIDENING OF THE SAME TO 10 MTRS AND SIMILARLY CARRIAGEWAY IS TO BE WIDENED TO 5.5 M ETERS ON CERTAIN SECTIONS OF THE ROAD. THE APPELLANT HAS FURTHER ADDED THAT IN CERTAIN SECTIONS BUILT UP GUTTERS WER E ALSO PROVIDED AS PER THE TERMS REFERRED TO IN SE 4 OF TH E CONTRACT DOCUMENTS. IT HAS BEEN CONTENDED THAT THIS WAS A C ASE OF IMPROVING AND STRENGTHENING OF STATE HIGHWAY AND NO T MERELY RELAYING IT. THE APPELLANT HAS ALSO EMPHASI ZED THAT THE ENTIRE WORK WAS CARRIED OUT AS PER THE DETAILED SPECIFICATION IN 2002 EDITION OF THE SPECIFICATION FOR ROAD AND BRIDGE WORK OF THE MINISTRY OF SURFACE TRANSPOR T, GOVT. OF INDIA. THE APPELLANT HAS DRAWN ATTENTION TO THE ORDER OF THE ITAT PUNE IN THE APPELLANTS OWN CASE FOR A.Y. 2006-07 BEARING ITA NO 1214/PN/2010 DATED 5-4-2013 ON WHICH RELIANCE HAS ALSO BEEN PLACED FOR THE PROPOSITION T HAT 5 ITA NO.1920/PUN/2014 AY.NO.2010-11 IMPROVING AND STRENGTHENING OF THE ROAD AMOUNTS TO CREATING NEW INFRASTRUCTURE FACILITY AND ENTITLE TO DEDUCTION U/S 80IA(4). A COPY OF THE SAID ORDER HA S ALSO BEEN FILED. 3.4 THE MATERIAL BROUGHT ON RECORD HAS BEEN DULY CONSIDERED ALONG WITH THE SUBMISSION MADE BY THE APPELLANT. THE ONLY ISSUE CONTESTED BY THE APPELLA NT IN THIS GROUND OF APPEAL RELATES TO THE DISALLOWANCE OF THE CLAIM OF DEDUCTION U/S 80IA(4) IN RESPECT OF THE TWO ROAD PR OJECTS AMOUNTING TO RS.1,02,93,746/- AND RS.63,11,301/-. THE CLAIM OF DEDUCTION HAS BEEN DISALLOWED BY THE AO ON THE PLEA THAT THE SPECIFICATION, THE NATURE AND CHARACT ER OF WHICH DO NOT MATCH TO THE SITUATION REFERRED TO IN CIRCULAR NO 4 OF 2010, THOUGH THE AO HAS GIVEN THE FINDING THAT THE CASE IS MERELY OF WIDENING OF THE ROAD WHICH HAS NO T RESULTED INTO THE ADDITIONAL LANES AND THUS IT WAS MERELY OF WIDENING OF THE ROAD WHICH HAS NOT RESULTED INTO TH E ADDITIONAL LANES AND THUS IT WAS MERELY RELAYING OF EXISTING ROAD. THUS IT IS NOT DISPUTED THAT THE APPELLANT H AS WIDENED THE ROAD BY 10 MTRS AND CARRIAGEWAY WIDENED TO 5.5 METERS AND 7 METERS RESPECTIVELY IN THE TWO PRO JECTS AND ALSO STRENGTHENED THE ROAD BY PROVIDING 75MM/50 MM THICK BBM AND ALSO PROVIDED BUILT UP GUTTERS. HENC E IT IS A CASE OF IMPROVING AND STRENGTHENING OF THE STATE HI GHWAY AND NOT MERELY A CASE OF RELAYING. THE HON. ITAT P UNE IN APPELLANTS OWN CASE FOR A.Y. 2006-07 COVERING SIMI LAR PROPOSITIONS ON SIMILAR FACT IN RESPECT OF THE PROJE CT HANUMANGARH SUTARGARH ROAD RAJASTHAN ON SIMILAR F ACT AND ALSO REFERRING TO CIRCULAR NO 4 /2010 CONCLUDED THAT IMPROVING AND STRENGTHENING OF THE ROAD AMOUNTS TO CREATING NEW INFRASTRUCTURE FACILITY AND, THEREFO RE, ENTITLED TO DEDUCTION U/S 80IA(4). THE ITAT HELD AS UNDER: 10. THE CBDT HAS CLARIFIED THE EXPRESSION NEW INFRASTRUCTURE FACILITY. IN FACT THE SAID CIRCULA R SUPPORTS THE CLAIM OF THE ASSESSEE THAT THE WIDENIN G OF EXISTING ROAD BY CONSTRUCTING ADDITIONAL LANE AS A PART OF THE HIGHWAY PROJECT IS A NEW INFRASTRUCTURE FACILITY. SO FAR AS THE HANUMANGARH SURATGARH ROAD IS CONCERNED THE WIDTH IS ALSO INCREASED AS ON E ADDITIONAL LANE IS DEVELOPED. IN ADDITION TO INCREASING THE THICKNESS OF THE ROAD, IT IS PERTINE NT TO NOTE HERE THAT THE PROJECT REPORT WHICH IS THE PART OF THE AGREEMENT CLEARLY SUGGEST THAT THE EXISTING ROA D WAS NOT CAPABLE OF TAKING THE INCREASED LOAD OF THE VEHICLES AND HENCE, THERE WAS NECESSITY FOR STRENGTHENING AS WELL AS WIDENING THE SAID ROAD. I T IS NOT THE CASE THAT MERELY SOME MINOR WORK LIKE CARPETING HAS BEEN DONE TO BE DONE BUT THE ADDITIONAL LANE OF 1 MTR. WIDENING WITH 12 CUM INCREASED THICKNESS HAS BEEN DONE. 11.IN THE CASE OF TATA HYDRO ELECTRIC POWER SUPPLY CO. (SUPRA) THE OLD IRRIGATION DAM WAS STRENGTHENED BY USING MODERN TECHNIQUE. ON THE EXPENDITURE INCURRED FOR STRENGTHENING OF THE DAM, THE ASSESSEE 6 ITA NO.1920/PUN/2014 AY.NO.2010-11 CLAIMED THE DEVELOPMENT REBATE WITH THE PLEA THAT I T WAS A NEW PLANT. AS PER THE PROVISIONS OF LAW DEVELOPMENT REBATE WAS ALLOWABLE ON A NEW PLANT. WHEN THE MATTER REACHED BEFORE HON'BLE HIGH COURT THE ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE AND HON'BLE HIGH COURT HELD THAT THE ASSESSEE INCURRED A HUGE EXPENDITURE WHICH RESULTED IN INCREASING THE LIFE OF THE EXISTING DAM AND IT WAS THE WORK OF THE CREATING OF NEW PLANT AND THE ASSESSEE WAS ENTITLED FOR THE DEVELOPMENT REBATE. IT IS TRUE THAT THE PARAMETERS FOR THE DEVELOPMENT REBATE ARE DIFFERENT THAN THE DEDUCTION TO BE CLAIMED FOR DEVELOPING INFRASTRUCTURE FACILITIES BUT THE PRINCIPLES UNDERL INE THE CONCEPT WHETHER THE NEW INFRASTRUCTURE MEAN WHICH IS NEVER IN EXISTENCE AT ALL AND THE SAID PRINCIPLES CAN BE APPLIED TO THE ASSESSEES CASE. WE FIND THAT IN THE CASE OF SHRISTI INFRASTRUCTURE DEVELOPMENT CORPORATION LTD. (SUPRA) ON THE IDENTIC AL FACTS I.E. FOR STRENGTHENING AND IMPROVING OF THE EXISTING ROAD THE TRIBUNAL HELD THAT THE WORK IS TO BE CONSIDERED AS NEW INFRASTRUCTURE FACILITIES. 12. IT IS TRUE THAT EACH CASE IS TO BE EXAMINED ON ITS OWN FACTS. SO FAR AS THE PRESENT CASE IS CONCERNED , WE DO NOT AGREE WITH THE AUTHORITIES BELOW THAT IT IS MERELY WORK OF THE MAINTENANCE AND REPAIRS BUT IN FACT IT IS A WORK OF BRINGING INTO EXISTENCE NEW INFRASTRUCTURE FACILITY WHICH IS IN THE NATURE OF R OAD. WE, THEREFORE, ALLOW THE GROUND TAKEN BY THE ASSESSEE AND HOLD THAT THE ASSESSEE IS ENTITLED FOR DEDUCTION U/S 80IA(4) OF THE ACT AND DIRECT THE ASSESSING OFFICER TO ALLOW DEDUCTION TO THE ASSESSEE. 3.5 IN VIEW OF THE ABOVE FACTS THE CLAIM OF DEDUCTI ON OF RS.1,06,05,047/- (1,02,93,746/- + 63,11,301/-) U/S 80IA (4) IS LIABLE TO BE ALLOWED AND GROUND OF APPEAL NO. 1 RAISED BY THE APPELLANT IS ALLOWED. 4. IN GROUND OF APPEAL NO. 2 RAISED THE APPELLANT H AS CONTESTED THE DISALLOWANCE OF INTEREST INCOME OF RS . 9,60,898/- EARNED BY THE APPELLANT-COMPANY ON ACCOU NT OF FIXED DEPOSITS CREATED AS DEBT SERVICE RESERVE ACCO UNT AGAINST THE TERM LOAN TAKEN FOR THE PURPOSE OF BUSI NESS. DURING THE ASSESSMENT PROCEEDINGS THE AO NOTICED TH AT THE ASSESSEE FIRM HAD RECEIVED INTEREST OF RS.9,60,898/ - ON ACCUMULATED BALANCE OF FIXED DEPOSITS OF RS.98,23,7 43/- AS ON 1-4-2009. THE AO FOUND THAT THE ASSESSEE HAD CL AIMED THE SAID INTEREST AS PROFIT DERIVED FROM THE UNDERT AKING AND THE DEDUCTION U/S 80IA(4) CLAIMED. THE EXPLANATION SOUGHT BY THE AO FROM THE ASSESSEE WAS FOUND TO BE NOT ACCEPTABLE AND HELD THAT THE INTEREST ACCRUED OF RS.9,60,898/- WAS NOT DERIVED FROM THE UNDERTAKING AND THE CONTENTION OF THE ASSESSEE THAT FD WAS REQUIRED TO BE MADE AS PER THE TERMS AND CONDITIONS OF THE LOAN FO R BUSINESS OF THE PROJECT NOT TENABLE AND THUS THE SA ID 7 ITA NO.1920/PUN/2014 AY.NO.2010-11 AMOUNT WAS ADDED TO THE TOTAL INCOME. THE AO HAS DISCUSSED THE ISSUE IN PARA 3.1 OF THE ORDER. 4.1 DURING THE APPELLATE PROCEEDINGS THE LD COUNSEL OF THE APPELLANT HAS FILED THE DOCUMENT SPECIFYING THE TERMS OF LOAN WHICH REVEALS THAT KEEPING AN FD WAS AN ESSENT IAL PART FOR AVAILING THE LOAN AND THUS IT HAS A DIRECT NEXUS WITH THE EARNING OF INCOME DERIVED FROM FD WHICH OU GHT TO HAVE BEEN TREATED AS INCOME FROM BUSINESS OF THE PR OJECT ELIGIBLE FOR 80IA(4) DEDUCTION. THE APPELLANT REFE RRING TO THE TERMS AND CONDITIONS OF THE LOAN FROM SBI, CONDITIO N NO 9B(C) REQUIRED THE APPELLANT TO MAINTAIN DEBT SERVI CE RESERVE ACCOUNT DURING THE CURRENCY LOAN ACCOUNT AN D TO FULFILL THE CONDITION THE CD KEPT THE FD FROM WHICH THE SAID INTEREST ACCOUNT. THE APPELLANT IN THIS REGARD HAS PLACED RELIANCE ON THE FOLLOWING JUDICIAL DECISIONS. 1. JAIPRAKASH POWER VENTURE LTD VS DCIT ITA NO 4249/DEL/2011 2. MAXCARE LABORATORIES LTD VS ACIT (2005) 95 ITD 11 CUTTACK 4.2 THE SUBMISSION MADE BY THE APPELLANT HAS BEEN CONSIDERED AND MATERIAL ON RECORD PERUSED. THE AO HAS HELD THAT THE INTEREST ACCRUED OF RS.9,60,898/- IS NOT DERIVED FROM THE UNDERTAKING. HOWEVER, THE MATERIA L BROUGHT ON RECORD DO INDICATE THAT THE FD WAS AN E SSENTIAL PART OF AVAILING THE LOAN WHEREBY THE APPELLANT WAS REQUIRED TO MAINTAIN DEBT SERVICE RESERVE ACCOUNT D URING THE CURRENCY LOAN ACCOUNT AND FOR THAT PURPOSE MAIN TAINED A FD THROUGH WHICH THE SAID INTEREST HAS ACCRUED. IN THE CASE OF JAIPRAKASH POWER VENTURE LTD VS DCIT CITED SUPRA, OF ITAT DELHI, THE ASSESSEE HAD BORROWED FUND FROM FINANCIAL INSTITUTE FOR BUSINESS PURPOSE NEEDS TO K EEP CERTAIN AMOUNT AS FDS, THE INTEREST INCOME EARNED FROM SUCH FDS NETTED OFF AGAINST THE INTEREST EXPENSES ON BORROWED FUND. IT HAS BEEN HELD BY THE ITAT THAT S UCH INCOME IS TO BE TREATED AS INCOME EARNED FROM BUSIN ESS AND ELIGIBLE FOR DEDUCTION U/S 80IA(4). LIKEWISE I N THE CASE OF MAXCARE LABORATORIES LTD VS ACIT (SUPRA) THE TRI BUNAL HELD THAT INTEREST INCOME EARNED ON DEPOSITS IS TO BE TREATED AS ELIGIBLE INCOME FOR THE PURPOSE OF DEDUCTION U/S 80IA(4). THUS IN VIEW OF THE ABOVE RATIO OF THE AFORESAID DE CISION WHEREIN THE FACT OF THE CASE ARE SIMILAR TO THEM, T HE DEDUCTION U/S 80IA(4) IS LIABLE TO BE ALLOWED TO TH E APPELLANT ON THE SAID INTEREST INCOME EARNED. AGGRIEVED BY THE ORDER OF LD. CIT(A), REVENUE IS NOW IN APP EAL BEFORE US. 5. BEFORE US, LD.D.R. SUPPORTED THE ORDER OF AO. WITH RESPE CT TO THE ISSUE OF INTEREST ON F.D.R. BEING NOT ALLOWABLE FOR 8 ITA NO.1920/PUN/2014 AY.NO.2010-11 DEDUCTION U/S 80IA(4), HE RELIED ON THE DECISION OF AHMEDA BAD TRIBUNAL IN THE CASE OF LINCOLN PHARMACEUTICALS LTD., VS. DCI T IN ITA NO.4374/AHD/2007 ORDER DT.07.10.2010. HE ALSO PLACE D ON RECORD A COPY OF THE AFORESAID DECISION. LD.A.R. ON THE OTH ER HAND REITERATED THE SUBMISSIONS MADE BEFORE AO AND LD. C IT(A) AND FURTHER SUBMITTED THAT THE RELIANCE PLACED BY THE LD .A.R IN THE CASE OF LINCOLN PHARMACEUTICALS LTD., (SUPRA) IS MISPLAC ED AS THE FACTS IN THOSE CASE ARE DIFFERENT FROM THAT OF THE ASS ESSEE AND THEREFORE IT IS NOT APPLICABLE. HE SUBMITTED THAT IN THE CA SE OF ASSESSEE, THE ASSESSEE WAS REQUIRED TO KEEP THE FIXED DEPOSITS FOR AVAILING LOANS AND ON SUCH FIXED DEPOSITS ASSESSEE HAD EA RNED INTEREST. HE THEREFORE SUBMITTED THAT THE PLACING OF FI XED DEPOSITS WAS DIRECTLY CONNECTED WITH THE BUSINESS OF TH E ASSESSEE AND THE LD. CIT(A) HAS RIGHTLY ALLOWED THE CLAIM O F DEDUCTION. HE THUS SUPPORTED THE ORDER OF LD. CIT(A). 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT CASE IS WIT H RESPECT TO DENIAL OF DEDUCTION U/S 80IA(4) OF THE ACT. 7. IT IS AN UNDISPUTED FACT THAT DURING THE YEAR, ASSES SEE HAD EARNED PROFITS FROM 2 PROJECTS AND THE PROFITS EARNED TH EREFROM WAS CLAIMED AS DEDUCTION U/S 80IA(4) OF THE ACT. WE FIND TH AT LD. CIT(A) WHILE DECIDING THE ISSUE HAS GIVEN A FINDING THAT TH E ASSESSEE HAD UNDERTAKEN THE STRENGTHENING OF THE ROA DS AS WELL AS WIDENING OF THE ROADS ON CERTAIN SECTIONS OF THE ROAD AND HAD 9 ITA NO.1920/PUN/2014 AY.NO.2010-11 ALSO BUILT UP GUTTERS AS PER THE TERMS OF THE CONTRACT AND IT WAS A CASE OF IMPROVING AND STRENGTHENING OF THE STATE HIGHWAY AND NOT MERELY A CASE OF RELAYING OF EXISTING ROADS. HE HAS FURTHER GIVEN A FINDING THAT THE ENTIRE PROJECT WAS CARRIED OUT A S PER THE DETAILED SPECIFICATION FOR ROAD AND BRIDGE WORK ISSUED BY MINISTRY OF TRANSPORT AND GOVERNMENT OF INDIA AND FURTHER IN ASSE SSEES OWN CASE IN A.Y. 2006-07, THE HONBLE TRIBUNAL HAS HELD TH AT IMPROVING AND STRENGTHENING OF ROAD AMOUNTS TO CREATING NEW INFRASTRUCTURE FACILITY AND IS ENTITLED TO DEDUCTION U/S 80IA (4) OF THE ACT. BEFORE US, REVENUE HAS NOT PLACED ANY MATERIA L ON RECORD TO POINT OUT ANY DISTINGUISHING FEATURE IN THE FACTS OF THE CASE UNDER CONSIDERATION AND THE FACTS IN ASSESSEES OWN CASE FOR A.Y. 2006-07 NOR PLACED ANY MATERIAL ON RECORD TO DEMON STRATE THAT THE DECISION OF TRIBUNAL IN ASSESSEES OWN CASE FOR A .Y. 2006-07 HAS BEEN SET ASIDE BY THE HIGHER JUDICIAL AUTHOR ITIES. WITH RESPECT TO THE INTEREST INCOME BEING ELIGIBLE FOR DEDU CTION U/S 80IA(4), WE FIND THAT LD. CIT(A) HAS GIVEN A FINDING THAT THE FIXED DEPOSIT WAS AN ESSENTIAL PART FOR AVAILING THE LOAN W HEREBY ASSESSEE WAS REQUIRED TO MAINTAIN DEBT SERVICES RESERVE ACCOUNT AND FOR THAT PURPOSE IT HAD TO NECESSARILY PLA CE FIXED DEPOSIT AND ON SUCH FIXED DEPOSITS THE ASSESSEE HAD EA RNED INTEREST. HE THEREFORE HELD IT TO BE CONNECTED WITH THE BUSINESS OF THE ASSESSEE. LD. CIT(A) THEREAFTER RELYING ON THE VA RIOUS DECISIONS CITED THEREIN HAS ALLOWED THE CLAIM OF THE ASSESSE E. BEFORE US, REVENUE HAS NOT PLACED ANY MATERIAL ON RECORD TO DEMONSTRATE THAT AS TO HOW THE DECISIONS RELIED UPON B Y LD. 10 ITA NO.1920/PUN/2014 AY.NO.2010-11 CIT(A) WOULD NOT APPLICABLE TO THE PRESENT FACTS OF THE ASS ESSEE. CONSIDERING THE TOTALITY OF THE AFORESAID FACTS, WE FIND NO RE ASON TO INTERFERE WITH THE ORDER OF LD. CIT(A) AND THUS THE GROUNDS OF THE REVENUE ARE DISMISSED. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED ON 10 TH DAY OF MARCH, 2017. SD/- SD/- ( SUSHMA CHOWLA ) ( ANIL CHATURVEDI ) / JUDICIAL MEMBER $ / ACCOUNTANT MEMBER PUNE; ! DATED : 10 TH MARCH, 2017. YAMINI ( ) *!+, -,! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3 . 4. 5. 6. COMMISSIONER OF INCOME TAX-1, PUNE. COMMISSIONER OF INCOME TAX (A) -1, PUNE. #$% &&'(, * '(, / DR, ITAT, A PUNE; %+, - / GUARD FILE. ( / BY ORDER, // //// // TRUE COPY // T // // TRUE // //COPY // // TRUE COPY // // . /012 / ASSISTANT REGISTRAR, * '( , / ITAT, PUNE.