Asst. Commissioner of Income Tax, Central Circle-2(4), Hyderabad V. Gayatri Projects Limited , Hyderabad

ITA 2051/Hyd/2018

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 9775 (ITAT-HYDERABAD)
• Duration Of Justice: 3 year(s) 3 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-01-2022
• Appeal Filed By: Department
• Order Result: PartlyAllowed
• Bench Allotted: DB-A
• Assessment Year: 2014-2015
• Appeal Filed On: 14-10-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SOLGY KOTTARAM
• Keywords: Unexplained expenditure; Depreciation; Search and seizure; TDS
• Section: 143(3); 80IA; 13

Judgement Text

ITA Nos 2051 and 2052 of 2018 and ITA No.481 of 2020 Gayatri Projects Ltd Hyderabad Page 1 of 18 IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘ A ‘ Bench, Hyderabad (Through Video Conferencing) Before Shri A.M. Alankamony, Accountant Member and Shri S.S. Godara, Judicial Member ITA Nos.2051 & 2052/Hyd/2018 & ITA No.481/Hyd/2020 Assessment Years:2015-15, 2016-17 & 2017-18 A.C.I.T Central Circle-2(4) Hyderabad Vs. Gayatri Projects Ltd Hyderabad PAN:AAACG8040K (Appellant) (Respondent) Revenue by: Sri Solgy Kottaram CIT(DR) Assessee by : Sri B. Shanti Kumar & Shri Mohan KumarDR Date of hearing: 02/01/2022 Date of pronouncement: 24/01/2022 ORDER Per S. S. Godara, J.M. These three Revenue’s appeals for A.Ys 2014-15, 2016-17 & 2017-18 arise against the CIT (A)-12, Hyderabad’s, separate orders dated 12/7/2018 passed in case Nos.10122 & 10471/2017-18 for the former two and CIT(A)-2 Hyderabad-2 order dated 29.05.2020 in case No.13302/2019-20/ CIT(A)-2 respectively, involving proceedings u/s 143(3) of the Income Tax Act,1961, in short, “the Act.” Heard both the parties. Case files perused. 2. It transpires during the course of hearing that the Revenue has pleaded its identical twin substantive grounds seeking to revive the Assessing Officer’s action involving disallowance of the expenditure pertaining to assessees’ ITA Nos 2051 and 2052 of 2018 and ITA No.481 of 2020 Gayatri Projects Ltd Hyderabad Page 2 of 18 Dummugudam project involving varying sums on account of the fact that the same had been incurred on cash basis only. It’s case therefore, is that the CIT (A) has erred in law and on facts in restricting the same to the extent of 12.5% only. We note in this factual position that the instant issue is no more res integra since the Tribunal’s coordinate bench in assessee’s own case for preceding A.Ys 2008-09 to 2013-14 dated 24.4.2021 in ITA Nos 1412/Hyd/2016 & other cases has upheld the CIT (A)’s very findings as under: “3. We note with the able assistance of both the learned representatives that the department had made identical substantive disallowance(s) in case of M/s. Gayathri Projects wherein the CIT(A) granted part relief thereby confirming the same to that @ 12.5% only as upheld in Revenue's batch of appeals ITA 1412/Hyd/2016 & five other cases for Assessment Years 2008- 09 to 2013-14 decided on 24.4.2021 reading as under : " 2. It transpires at the outset that the Revenue has raised its identical twin substantive grounds seeking to challenge correctness of the CIT(A)'s action inter alia restricting disallowance of assessee's certain identical expenditure claim pertaining to Dummugudem Project to the tune of Rs.15.82 crores (in lead case ITA No.943/Hyd/2016) to the extent of 12.5% and in deleting un- explained credits addition of Rs.20,50,99,560/- (involving varying sum in all these six assessment years); respectively. We advert to its foregoing former substantive grievance and notice that the CIT(A)'s detailed lower appellate discussion deleting the impugned addition under challenge reads as follows: ITA Nos.945, 946 & 1586/Hyd/2016 "8.0 Addition on account of expenditure incurred in cash, for payments made on Dummugudem Project - Rs.15,82,00,000/-: 8.1 While finalizing the assessment order, the AO had observed that the appellant had drawn an amount of Rs.15.82 cr. From various bank accounts, during the period 02-04-2009 to 30-03-2010, in the denominations ranging from 7 lakhs to 9 lakhs on each occasion, with the description of purpose as 'Dummugudem Tail Pond, PK-8 labour advance'. As per the AO, these amounts were not explained during survey proceedings and were not supported by bills/vouchers and no TDS was made on such amounts. During the asst. proceedings, only self-made Vouchers were shown to have been produced and some of the amounts were also used for payment as expenses against public policy such as penalty, gratuitous payments etc. For the said reasons the AO disallowed the entire a mounts of Rs. 15,83,00,000/-, treating it as unexplained expenses. ITA Nos 2051 and 2052 of 2018 and ITA No.481 of 2020 Gayatri Projects Ltd Hyderabad Page 3 of 18 8.2 The appellant objected. for such addition and it has been submitted that the disallowance of Rs.15.82 cr. also forms part of total Expenditure On Dumugudem Project, which has been put at Rs.37.07 cr., against which the AO made separate disallowance of Rs.32.81 cr., which are agitated separately. On the issue of withdrawal of Rs.15.82 cr., and treatment of the entire amount as unexplained expenditure by the AO, the submissions of the appellant run as under: (i) the amount of Rs.15.82 cr. cannot be treated as unexplained expenses, as the source for the said amounts are explainable through books, which in turn received from Gayatri Ratna JV, routed through banking channels, (ii) No finding by AO in asst. order, to show that work related to the above expenditure, was not executed and on contrary, RA bills released by EE, NSC Division, Miryalaguda, show the total value the work done at Rs.34.10 cr. (iii) AO failed to consider the fact that an amount of Rs.10.09 cr. were paid to M/s.Mohan Projects Contractors Pvt Ltd (MPCPL), a subcontractor and the same were accounted in their books and assessed to tax. (iv) The observations of the AO as regards unverifiable nature of vouchers in sweeping, with the specific reference made to only few bills/vouchers. (v) The disallowance of expenses of Rs.15.82 cr results in abnormal profits on project which is not practical or feasible in the line of business. Accordingly, it was contended by the assessee that with the work done is not disputed, expenditure not disproved and sources for same explained, the disallowance is uncalled for. 8.3 Perused the submissions of the appellant and the brief observations of the AO in asst. order. As could be made out from the facts of the case, the appellant shown to have drawn reasonably huge amounts in cash, from various bank accounts, with the intention of meeting the expenses related to ITA Nos.945, 946 & 1586/Hyd/2016 Dummugudem Project. Since the amounts were drawn in cash and the expenses not supported by reasonable details, the AO was of the opinion that the claim of entire amount as expenses is not allowable. In this regard it may be pertinent to mention that an amount of Rs.10.09 crores were shown to be given as 'advance to M/s.Mohan Projects Constructions Pvt Ltd (MPCPL) which is one of the sub-contractors, who are assessed to tax and what has been claimed as direct expense in hands of the assessee company is only Rs.5.73 cr. It was also submitted that out of Rs.15.82 cr., only an amount of Rs.9.38 cr. was directly met through assessee and Rs.3.66 cr. were incurred through M/s.MPCPL who submitted bills for said a unt of Rs.l0.09 cr. given as advance. Further, with the amounts of Rs.32.80 cr shown as the expenses for Dummugudem Project, been disallowed by the AO separately, I am of the considered opinion that there is no need to treat the amounts of ITA Nos 2051 and 2052 of 2018 and ITA No.481 of 2020 Gayatri Projects Ltd Hyderabad Page 4 of 18 Rs.15.82 cr. as income separately, on the ground of disallowance of expenses related to Dummugudem Project. Accordingly, the addition of Rs.15.82 cr. held to be unsustainable as separate addition, with the said amounts merged with disallowance of Rs.32.82 cr., related to Dummugudem, which has been disallowed on same issue. Thus, this ground to this extent is treated as Partly Allowed". 2.1. Learned CIT-DR vehemently contended during the course of hearing that the CIT(A) has erred in law and on facts in deleting the impugned cash expenditure additions. Her case is that the assessee had failed to prove its cash expenditure regarding Dummugudem Project during the course of assessment. She fails to dispute that the Assessing Officer's assessment order dt.31-03-2013 had already disallowed the assessee's entire expenditure pertaining to the very project to the tune of Rs.32,18,13,943/- as bogus under a separate head. The CIT(A) therefore has rightly held it to be an instance of the double addition apart from all other factual and legal aspects. We therefore find no merit in the Revenue's instant former substantive grievance in all these appeals in view of the foregoing clinching reason(s). This identical former substantive ground in the instant six appeals stand declined therefore." 3. The Revenue is fair enough in not pinpointing any distinction on facts or law in all these assessment years as the project concerned is “Dummagudum” only. We thus adopt judicial consistency to affirm the CIT (A)’s findings deleting the impugned disallowance. Revenue fails in its identical former substantive grievance in all these appeals therefore. 4. Next comes the later identical issue of section 80IA(4) deduction of Rs.40,02,85,766, Rs.58,14,26,419 and Rs.91,69,09,826 assessment year wise respectively which was disallowed by the Assessing Officer and reversed in the CIT (A)’s detailed discussion reading as under: “9.0 Addition on a/c of disallowance of claim of deduction u/s 80IA(4)- Rs.40,02,85,766/- 9.1 The AD disallowed the deduction claimed by the appellant u/s 80IA(4), on the ground that the profits under reference were pertaining to the projects executed by the assessee-company as a constituent of the JV on which the assessee is not eligible for- ITA Nos 2051 and 2052 of 2018 and ITA No.481 of 2020 Gayatri Projects Ltd Hyderabad Page 5 of 18 deduction u/s.80IA(4). The AD examined the facts of the case vis- a-vis the conditions stipulated u/s.80IA(4) of I.T.Act, with special reference to important factors such as nomenclature used in work order, nature of agreement, Execution vs Development, Nature of risks borne including the financial risks, operation/put to use of infrastructure facility, role in designing etc, and applied the said yard sticks to all the seven projects under reference/listed below, which were claimed as exempted by the assessee company during the year under reference. 1. ORR, Hyderabad 2. HKR Road Works(SH-1) 3. Indore-Dewas Road Works 4. National High Way No.25/26 in the state of UP Package- NSI/BOT/UP-2). 5. National High Way No.26 in the state of UP Package- NSI/BOT/UP-1). 6. Panikoili-Rimuli Project 7. Meerut-Muzzafarnagar, UP. Accordingly, during the course of proceedings, the assessee- company was asked to furnish copies of agreements and substantiate the deduction u/s.80-IA and information furnished by the assessee in the form of letters of acceptance, contract agreements and agreements entered with Central/State Governments and Local Authorities in respect of the projects executed during the year, were examined, and the AD arrived at the conclusion that the Projects executed by the assessee either do not come under the purview of 'Development of Infrastructure Facility' or have not fulfilled the conditions laid down in Section 80-IA(4) of the Act. The common finding for all the seven projects has been as under: "As has been stated in the agreement, only contract bid has been given to Joint Venture concern. Hence, this Project has not fulfilled the conditions laid down in Section 80-IA of the Act." The other common observation on each of the project made by the AD runs as under: "In the present case, the undertakings or enterprises i.e., Hyderabad Expressways (P) Limited, HKR Road Ways Limited, Indore Dewas Tollways Limited, Gayatri Jhansi Roadways Limited, Gayatri Lalitpur Roadways Limited, Sai Maatarini Tollways Limited and Western UP Tollway Limited are SPV formed for this purpose. However, it is seen that it has no Plant & Machinery of its own. The only asset it has is Carriageway, on which it claims Depreciation [now amortization as per (CBDT Circular] and other incidental Office equipment. The entire Plant & Machinery is owned and provided by Gayatri Projects Limited only. As such, the entity is formed by transfer of Plant & Machinery previously used for any purpose and accordingly, it has not fulfilled the condition laid down in Section 80-IA(3)(ii) of the Act." ITA Nos 2051 and 2052 of 2018 and ITA No.481 of 2020 Gayatri Projects Ltd Hyderabad Page 6 of 18 The other common observation by the AD on the issue was as under: "Apart from the above, the decision of the Hon'ble ITAT in the case of M/s. Transstroy India Limited wherein it was held that deduction u/s.80-IA is allowable to Joint Ventures, was not accepted by the Revenue and further appeal has been filed before the Hon'ble High Court, against the order of the Hon'ble ITAT. Keeping this in view, in order to keep the issue alive, the claim of deduction u/s.80IA on the project awarded to JVs and Consortiums is disallowed". 9.2 The appellant objected to the said disallowance and the submissions on the issue run as under: "We humbly submit to the Hon'ble Commissioner that the deduction u/s 80IA(4) was claimed only on 6 SPV projects and not all the projects executed during the year. The details of these 6 projects for which the deduction u/s 80IA(4) was claimed as under: Sl Name of the SPV Name of Project & Nature Value of Contract Rs. in crores Turnover during the year Rs. 1 Gayatri Jhansi Roadways Ltd UP-2 Road Project 345.00 16,20-,60,702 2 Gayatri Lalitpur Roadways Ltd UP-3 Road Project 253.00 3,50,12,923 3 Hyderabad Expressways Ltd ORR-4 Road Project 362.00 3,28,69,730 4 Indore Dewas Roadways Ltd Indore Dewas Road work 475.00 1,03,60,80,643 5 HKR Roadways Ltd Hyderabad- Karimnagar- Ramagundam (HKR) Road work 102.83 1,38,86,62,257 6 HKR Roadways Ltd Hyderabad- Karimnagar- Ramagundam (HKR) Road work-4 1,30,65,10,822 7 Sai Maatarin Tollways Ltd Panikoli Rimuli Road work Package-1 1410.00 1,87,92,30,315 Panikoli Rimuli Road work Package-2 1,99,13,82,897 Applying the provisions of the said section it may be seen that the Company has incurred expenditure on its own for purchase of materials and towards labour charges and itself executes the ITA Nos 2051 and 2052 of 2018 and ITA No.481 of 2020 Gayatri Projects Ltd Hyderabad Page 7 of 18 development work, it will be eligible for deduction under section 801A of the Act. The word 'owned' in sub-clause (a) on clause (1) of sub-section (4) of section 801A of the Act referred to the enterprise. In other words, the enterprise carrying on development of the infrastructure facilities should be owned by a company or consortium of companies. The infrastructure facilities need not be owned by a company. It was held that the word 'ownership' is attributable only to the enterprise carrying on the business which would mean that only companies are eligible for deduction under section 80lA (4) and not any other person like new HUF Firm etc., and that for arriving at a conclusion as to whether the work done is to develop the infrastructure or it involves construction of a particular item, the agreement is to be read as a whole. The Company utilized its funds, its expertise, its employees and takes the responsibility of developing the infrastructure facilities, it cannot be considered as a mere works contract but has to be considered as a development of infrastructure facilities. The word "contractor" held that every agreement entered into between the parties is a contract and for the purpose of the agreement a person may be called as a contractor as he enters into a contract. But the word "contractor" is used only to denote a person entering into an agreement or contract. A person undertaking the development of infrastructure facilities under a contract is also a contractor. Therefore, the contractor and the developer cannot be viewed differently. Every contractor may not be a developer, but every developer developing infrastructure facilities on behalf of the Government is a contractor. The Tribunal, in a recent case of Transstory (India) Ltd, has held that Section SO·IA extends the benefits to a consortium of companies as well and hence, the JV partners who are actually executing the contract would be eligible for tax holiday In the case of M/s. Sushee Hightech Construction Pvt. Ltd. vs. DCIT, ITA 414/ Hyd/2012 dt 17/06/2013. The Company has not acted merely as a contractor but was involved in planning, designing, financing and coordinating and all other ancillary and incidental activities of developing the infrastructure facilities as per the contract. In the case of M/s. Sushee Hitech Construction Pvt. Ltd. ITA 414/ Hyd 2012 dt. 17/06/2013, Tribunal held as under: "Therefore, in our considered view, the assessee should not be denied the deduction under section 80lA of the Act as the contracts involves development, operating, maintenance, financial involvement and defect correction and liability period, then such contracts cannot be called as simple works contract. In our opinion the contracts which contain above features to be segregated and on this deduction u/s. 8o-IA has to be granted and the other agreements which are pure works contracts hit by the Explanation ITA Nos 2051 and 2052 of 2018 and ITA No.481 of 2020 Gayatri Projects Ltd Hyderabad Page 8 of 18 section 80IA(13), those work are not entitle for deduction u/s. 80lA of the Act. The profit from such contracts which involves development, operating, maintenance, financial involvement and defect correction and liability period is to be computed by Assessing Officer on pro-rata basis of turnover. In the case of M/s. KMC Construction Ltd., vs. AClT ITA 996/ Hyd / dt. 16/03/2012 ITA T, Hyderabad also the allowed the claim of deduction under section 80lA of the Act as the assessee had clearly demonstrated that it had undertaken huge risk in terms of development of technical personnel, plant and machinery, technical knowhow expertise and financial resources. Thus, the principle that would emerge from the above said decisions of the Coordinate Bench is that Company would be entitled for deduction under section 801A(4) of the Act, if it develops the infrastructure facilities . .......................................................................................................... ......................................... The facts of the case and the decisions of the Jurisdiction Tribunal i.e., ITAT, Hyderabad, all in favour of the Company. Further in the A.V 2011-12 also, the same road works were carried on by GPL and pursuant to the order of Hon'ble Commissioner of Income Tax (Appeals), wherein the Hon'ble CIT in para 14.3.7 of the order has directed AO as under: "Accordingly, the AO is directed to give opportunity to the assessee to explain his claim for allowing the deduction, after examining the same and subject to the fulfilling the conditions stipulated in the Sec. 801A(4), the claim for the deduction of Rs.28,51,56,595/- may be considered for allowance. On these lines this ground of appeal is treated as allowed". Further in the A.V 2012 - 13 also, the same road works were carried on by GPL and pursuant to the order of Hon'ble Commissioner of Income Tax (Appeals), wherein the Hon'ble CIT in para 13.3.6 of the order has directed AO as under: "Accordingly, the AD is directed to allow the amount of Rs.6,45,23,517/-, claimed as deduction u/s.80IA( 4), being the profits of JVs, as claimed in return of income, while computing the total income. Accordingly, this ground of appeal treated as Allowed". Further in the A.V 2013 -14 also, the same road works were carried on by GPL and pursuant to the order of Hon'ble ITA Nos 2051 and 2052 of 2018 and ITA No.481 of 2020 Gayatri Projects Ltd Hyderabad Page 9 of 18 Commissioner of Income Tax (Appeals), wherein the Hon'ble CIT in para 11.3.6 of the order has directed AO as under: "Accordingly, the Assessing Officer is directed to allow the total amount of Rs. 28,06,60,883/-, claimed as deduction u/s.80IA(4), being the profits of JVs, as claimed in return of income, while computing the total income. Accordingly, this ground of appeal treated as Allowed". Further in the A.V 2004 - 05 also, the same road works were carried on by GPL and pursuant to the order of Hon'ble Commissioner of Income Tax (Appeals), wherein the Hon'ble OT in para 13.3.6 of the order has directed AO as under: "Accordingly, the AO is directed to allow the amount of Rs.6,45,23,517/- claimed as deduction u/s 80IA(4), being the profits of JVs, as claimed in return of income, while computing the total income. Accordingly, this ground of appeal treated as Allowed." Further in the A.V 2005 - 06 also, the same road works were carried on by GPL and pursuant to the order of Hon'ble Commissioner of Income Tax (Appeals), wherein the Hon'ble OT in para 13.3.6 of the order has directed AO as under: "Accordingly the AO is directed to allow the amount of Rs.6,45,23,517/- claimed as deduction u/s 801A(4), being the profits of JVs, as claimed in return of income, while computing the total income. Accordingly this ground of appeal treated as Allowed." Further in the A.V 2006 - 07 also, the same road works were carried on by GPL and pursuant to the order of Hon'ble Commissioner of Income Tax (Appeals), wherein the Hon'ble CIT in para 13.3.6 of the order has directed AO as under: "Accordingly the AO is directed to allow the amount of Rs.6,45,23,517/- claimed as deduction u/s 80IA(4), being the profits of JVs, as claimed in return of income, while computing the total income. Accordingly this ground of appeal treated as Allowed." As per the above direction the AO then called for details of all the works for which deduction was claimed, examined whether the respective works satisfied the conditions prescribed u/s 801A(4) and then proceeded to allow deduction claimed u/s 80IA(4) for the A.V 2011-12,2012-13,2013-14,2004-05,2005-06 and 2006-07. As the same road works have been continued in the current year, it is prayed that the deduction u/s 80IA(4) be allowed in the current year also". 9.2.1 The assessee's submission runs further as under: ITA Nos 2051 and 2052 of 2018 and ITA No.481 of 2020 Gayatri Projects Ltd Hyderabad Page 10 of 18 "By making the above statement it is clear that AO admits that as per the Tribunal's order the deduction is allowable to the members of the joint venture and accordingly as the infrastructure facility was developed by GPL, who is a member of N, GOPL is eligible for deduction u/s. 80IA(4). The decision in the case of Transstroy (India) Limited vs. Income Tax Officer, Ward-2(2), in ITA No.540/Vizag/2009 wherein it was categorically decided that joint venture and ITA No.l0122/2016-17,C1T (A)-12, Hyd Gayatri Projects Limited A.Y.2014-15 consortium was formed only to obtain the contract work from the Government body and the JV did not execute the work awarded to it, but merely was used as a pass through entity. The Joint venture and Consortium was only a paper entity for all purposes. They also have not offered any income out of the work executed by its constituents nor did they claim any deduction u/s. 801A(4) of the Act. Therefore for all practical purposes, the contract was awarded to the constituents of the joint venture i.e., GPL and the work was executed by GPL. As per the provisions of Sec.80IA(4), the benefit of deduction under this section is to be given only to the entity which carried on the classified business, which in the case is the appellant and it was also submitted that the contention of the AD that the decision of Hon'ble (TAT in Transstroy case was not accepted by the revenue and further appeal has been filed before the Hon'ble High Court, is not acceptable as it is emphasized that judicial discipline, mandates that the same should be followed unreservedly in all its aspects and therefore the decision of the ITAT is binding on all lower authorities unless reversed by a superior Court. Hence, the AD is not justified in claiming that in order to keep the issue alive, the claim of deduction u/s. 801A(4) on the project awarded to JV's and consortium is allowed." 9.3 In this connection, similar issue came up for adjudication in the assessee's own case for the A.Yrs.2011-12, 2012-13 & 2013- 14 on the allowability of deduction u/s.80IA in the case of Joint Ventures. The issue has been examined by my predecessor in appeals in ITA No.0267/14-15, 0037/15-16 and 0036/15-16 dtd.17-03-16, 21-07-16 & 21-07-16. The operative part of the said order for A.Y.2012-13, dtd.21-07-16 in para No.13.3 to 13.3.6 is as under: 13.3 Perused the submissions of the appellant and the brief observations of the AO in assessment order. As could be seen from the facts/information brought on record, the assessee company shown to be engaged in infrastructural activity of various kind, as enumerated in this order and among the works the company from whom the company derived profits for the year, were awarded to JVs/Consortia but executed by assessee company as constituent of the said JV, as such. The profits related to the projects under reference are claimed for deduction ITA Nos 2051 and 2052 of 2018 and ITA No.481 of 2020 Gayatri Projects Ltd Hyderabad Page 11 of 18 u/s.80IA(4). On these lines the assessee claimed deduction on Rs.6,45,23,517/- u/s.80IA(4), stating to represent the profits from eligible 6 projects for the year under reference. The AO examined of these projects as regard to their eligibility for deduction 80IA(4), with reference to the conditions as stipulated in provisions of section 80IA(4) and the observations of judicial decision. Though satisfied with the eligibility of profits of 6 of such projects representing of Rs. 6.45 crores for the year under reference, the AO disallowed the benefit of deduction u/s. 80lA (4), related to such projects under reference, on the ground that the said amounts represent the profits attributable to projects/works awarded to JVs, where the assessee company is only a constituent and the claim of deduction on such profits is violation of provisions of 80IA(4), as the contracts are being awarded by Govt./Statutory Authorities only to such Joint Ventures/Consortia. In this regard the AO disregarded the submissions of assessee, that the profits so earned by assessee company through JVs/Consortia were neither formed part of total income on JVs nor any deductions u/s.80IA(4) were claimed by JVs, on such incomes. The reliance of the assessee on the decision of ITAT, Visakhapatnam in case of M/s. Transstroy India Ltd Vs ITO (supra), as regard to allowance of deduction u/s.80IA(4) on the profits of JVs and assessability to tax, was not accepted by the AO, on the ground that the decision of Hon'ble ITAT was not accepted by the department. 13.3.2 The appellant's objection on this issue is strengthened by the fact that the AO has not disputed the eligibility of profits for deduction u/s.80IA(4), as claimed by the assessee and the issue on assessability of incomes of JV or it's constituent, is already settled by Judicial decisions. The further objection of the appellant to the decision of the AO for not allowing deduction u/s. 80lA (4), on the ground that decision of ITAT was not accepted by department, is not based on any legal basis. The AO did not distinguish or dispute the facts as upheld by ITAT Visakhapatnam, which has been further supported by the decision of ITAT Agra, in the case of PNC Constructions Co Pvt Ltd Vs DCIT (144 ITO 577), which have been further upheld by Allahabad High Court, and AO preferred not to allow deduction merely because order of ITAT, Vishakhapatnam Bench in the decision relied by the assessee, was not accepted by the department and a further appeal preferred before High Court. As regard to the binding nature of decision of ITAT, the similar issue is discussed by CIT(A)-12, Hyderabad in the case of M/s.Megha Engineering & Infrastructure Ltd., in Appeal No.0292/2014- 15/CIT(A)-12/Hyd/15-16, wherein the claim of deduction u/s.80IA(4) on the profits attributable to JV/Consortia are held to be allowed, in spite of the fact of further appeal against the order of ITA T, Visakhapatnam, made by the Department based on the judicial discipline. Turning to the further facts of the case, the AO is satisfied with the claim for deduction u/s.80IA(4), having explained the nature of income that are attributable to the projects awarded to JVs but executed by the assessee, as constituent. Thus, based on facts of the case, and ratio of judicial decisions in ITA Nos 2051 and 2052 of 2018 and ITA No.481 of 2020 Gayatri Projects Ltd Hyderabad Page 12 of 18 this regard, the claims were held to be allowable as deduction in the hands of the constituent, has been based on the clear finding given by Hon'ble ITAT, Vishakapatnam in the case of M/s.Transtroy India Ltd Vs ITO (supra). The assessee, being the constituent of the JVs/Consortia, having executed the contracts, thus held to be justified in claiming the deduction u/s. 80lA (4), for the said amount of Rs.6,45,23,517/-, based on the decision of ITAT, Visakhapatnam(Supra). 13.3.3 On the issue of binding nature of ITAT decision, the case laws in the following cases support the cause and stand of the assessee. (i) Union of India Vs Kamalakshi Finance Corpn Ltd (AIR 1992 SCC 711): where in the Hon'ble Apex Court held that "the mere fact that the order of the appellate authority 'is not acceptable' to the department-in itself is an objectionable phrase- and is the subject matter of an appeal, can furnish no ground for not following it, unless it's operation has been suspended by a competent court.” (ii) CIT vs Ralson Industries Ltd {158 Taxman 160 (SC)l: Where in the Hon'ble Apex Court held that : "when an order is passed by a higher Authority the lower Authority is bound thereby, keeping in view of the principles of judicial discipline" This view was also endorsed by the Hon'ble Apex Court in the case of Bhopal Sugar Industries Ltd Vs ITO (AIR 1961 SC 182). (iii) Aggarwal Warehousing & Leasing Ltd Vs CIT (257 ITR 235 (MP): Where in the Hon'ble High Court has held that "needless to say, that the orders passed by the Tribunal are binding on the revenue Authorities functioning under the jurisdiction of the Tribunal." 13.3.4 All the above decisions unanimously hold the view that order of ITAT are bound on the Revenue Authorities under it's jurisdiction and in this case, the decision of the ITAT, Vishakapatnam, is held to be binding on the AD under reference, unless the said order is stayed or suspended by a Superior Court or a different view is taken by the another Tribunal in the said jurisdiction. In this case, it was not the case of the AD to show that the decision of ITAT, Vishakapatnam, in the case of Transtroy India Ltd (supra), as relied by the assessee, is not binding on him. 13.3.5 Apart from application of the order of ITAT, Visakhapatnam in case of Transtroy (India) Ltd, (supra), whose decision is very ITA Nos 2051 and 2052 of 2018 and ITA No.481 of 2020 Gayatri Projects Ltd Hyderabad Page 13 of 18 much binding on the AD, the decision of ITAT, Agra, in the case of PNC Constructions Co. Ltd Vs DCIT reported in 144 ITO 577 is also applicable to the facts of the case, where the assessee was constituent in JV and project agreements were between the State Government and JV/consortia and the deduction claimed by assessee as constituent of JV/Consortia, was held to be allowable. It is also relevant to refer to the citation of judicial decision where the Hon'ble Allahabad High Court has upheld the order of ITAT Agra, in case of PNC Constructions Co. Ltd (supra). The relevant portion of the decision runs as under: "The statutory provision under section-80IA(4) states that where the total income of the assessee includes any profit and gain from the enterprises i,e., joint venture or Special Private Venture (S.P. V.) carrying on the defined business of developing or operating or maintaining any infrastructure finally then assessee would be liable for deduction. It is also provided that the project should be owned by the company or consortium of companies, who got the contract from the State, as mentioned in Articfe-12 of the Constitution. But this facility is available only w.e.f 01-04-1995, as per the amended provision and for the assessment year it is applicable. When it is so, then we find no reason to interfere with the impugned order passed by the Tribunal. The same is hereby sustained along with the reasons mentioned therein." 13.3.6 Thus, based on the ratio of the judicial decisions cited, it is reasonable to hold that the AD is not justified in denying the deduction u/s.80IA(4), on the profits of JVs to the assessee, as a constituent, based on the decision of ITAT, Vishakapatnam, which was not stayed in it's operation and as such binding on the AD. It is not correct on the part of the AD to not to implement the said order, merely on the ground that such decision was not accepted by department. Further, the order of Allahabad High Court upheld the allowance of claim of deduction u/s.80IA(4), on the profits from the Joint Ventures, in the hands of the constituents. Thus, on similarity of facts, the AD is directed to allow the amount of Rs.6,45,23,517/-, claimed as deduction u/s.80IA(4), being the profits of JVs, as claimed in return of income, while computing the total income. Accordingly, this ground of appeal treated as Allowed. Accordingly, in order to have uniformity on the issue of assessability of incomes of JV or its constituents, the above adjudication holds good for the year under consideration and the Assessing Officer is directed to allow deduction u/s.80IA(4), being the profits of JVs, as claimed by the assessee, while computing the total income. Accordingly, deduction u/s.80IA is allowable on the above projects, the agreements of which have been entered into by the constituent members of JV with the Govt. and the Grounds in this regard are Allowed”. ITA Nos 2051 and 2052 of 2018 and ITA No.481 of 2020 Gayatri Projects Ltd Hyderabad Page 14 of 18 5. We further note from the case records that yet another coordinate bench in Revenue’s and Assessee’s cross appeals common order for A.Y 2004-05 to 2006-07 in assessee’s case itself has adjudicated the very same issue in former’s favour as follows: “6. We have given our thoughtful consideration to rival contentions and find no merit in the assessee’s foregoing arguments supporting the CIT(A)’s action holding it partly eligible for the impugned section 80IA deduction relief. There is hardly any dispute about the assessee having undertaken irrigation and road projects from the concerned government departments in the nature of “works contract” only wherein it not only received mobilization advances in the initial stage but also there was no risk element involved as it had to carry out the construction of the irrigation project or and widening the road (supra) concerned as per the specific terms and conditions and prescribed specifications only. We notice in this factual backdrop that this tribunal’s recent co-ordinate bench’s decision in M/s. NEC NCC MAYTAS – JV Vs. DCIT (supra) has considered the “Explanation” regarding “works contract” u/s 80IA of the Act holding as follows : “4.1 We find no merit in the assessee’s stand. This tribunal’s co-ordinate bench recent order dt.12.05.2021 in ITA No.496/Hyd/2018 M/s. NEC NCC MAYTAS – JV Vs. DCIT has already decided the issue that development of such irrigation works in furtherance to government agencies / “works contracts” come under the statutory explanation to section 80IA inserted by the Finance Act 2009 w.e.f. 01.04.2000 substituting the earlier one introduced by the Finance Act 2007 w.e.f. 01.04.2007 as under : “8. We have heard the foregoing rival submissions qua the instant issue of section 80IA deduction. The assessee has admittedly claimed the same taking itself as the developer by court that a corresponding commercial project firm of “infrastructural facility” as per section 80IA(4) Expln.(c) covering “a water supply project, water treatment system, irrigation project, sanitation and sewerage system or solid waste management system” only. Our attention has been invited to the corresponding project’s architectural design (supra). The assessee has thereafter pleaded that it has undertaken the business risk not only in the development of the said lift channel forming part of the irrigation project which has turned barren uneven tracks of land to a canal but also it had deployed all of the corresponding plant and machinery, labour force followed by retention money’s project thereby satisfying all the conditions of development of infrastructure facility. All these assessee's arguments fail to evoke our concurrence for the reasons given hereunder. 9.1 The assessee's first and foremost plea that we ought to adopt liberal interpretation while considering section 80IA(4) claim in the light of relevant facts in the instant case deserves to reject. Suffice to say, such a course of liberal interpretation is no more available while dealing with the Income Tax Act’s provisions as per honourable apex court’s recent constitutional bench’s decision in Commissioner of Customs (Import) Vs. Dilip Kumar and Co. (2018) 9 SCC 1 settling the law that a fiscal statute as well as an exemption clause incorporated ITA Nos 2051 and 2052 of 2018 and ITA No.481 of 2020 Gayatri Projects Ltd Hyderabad Page 15 of 18 therein ought to be construed in stricter parlance only. Their lordships make it clear that benefit of doubt in case of taxing provision goes to the tax payer and vice versa in an instance of an exemption provision. The assessee’s first argument is rejected therefore. 10. We next examine the merits of the assessee's claim in light of section 80IA(4) r.w. Explanation ( c ) thereof. This is for the reason that the legislature has reintroduced the Explanation; formerly inserted by the Finance Act, 2007 w.e.f. 1.4.2007 that “For the removal of doubts, it is hereby declared that nothing contained in this section shall apply to a person who executes a works contract entered into with the undertaking or enterprise as the case may be,” followed by its substitution by the Finance Act, 2009 w.e.f. 1.4.2000 that “for the removal of doubts, it is hereby declared that nothing contained in this section shall apply in relation to a business referred to in subsection (4) which is in the nature of a works contract awarded by any person (including the central or state government) and executed by the undertaking or enterprise referred in sub-section (1).” 11. Learned CIT-DR at this stage quoted Katira Constructions Limited Vs. Union of India and Others (2013) 352 ITR 513 (Guj) upholding vires of the latter explanation that the same is purely explanatory in nature than amending the existing provision and therefore, the question of it being levying any tax with retrospective effect would not rise. It is thus explicitly clear that their lordships have held this latter explanation in the nature of a plain and simple one; neither adding nor subtracting anything to the earlier explanation, inserted vide Finance Acts, 2009 and 2007; respectively. Learned CIT-DR further sought to pin point the fact that the latter explanation inserted vide Finance Act, 2009 w.e.f. ;1.4.2000 has rather covered a work contract as not entitled for the impugned deduction despite the fact that the concerned assessee satisfied all other conditions in sub-section (4) of section 80IA of the Act. We find force in Revenue’s instant argument as the Finance Act, 2009 substitutes the earlier explanation that the same would not cover a works contract for the purpose of providing deduction qua industrial undertaking or enterprise engaged in infrastructure development, etc. 12. There is yet another equally important aspect which requires our apt adjudication at this stage i.e. of the clinching legislative expression in the latter explanation “nothing contained in this section shall apply in relation to a business referred to in sub-section (4) which is in the nature of a works contract awarded by any person (including the central or the state government)”. We note that honourable apex court yet another larger bench decision in Kartar Singh Bhadana Vs. Hari Singh Nalwa & Ors Civil Appeal No.6931 of 2000 decided on 27.03.2001 had an occasion to deal with the expression “works” used in section 9-A of the Representation of People Act, 1951. Hon’ble court therein went by the shorter Oxford English Dictionary’s meaning that “work means a structure or apparatus of some kind; an architectural or engineering structure, a building edifice. When it was used in the plural, that is, as works, it meant architectural or engineering operations, a fortified building, a defensive structure, fortification or any of the several parts of such structures”. Their lordships also took note of honourable jurisdictional high court’s judgment in B. Laxmikantha Rao Vs. D Chinna Mallaiah AIR 1979 AP 132 whilst adopting the dictionary meaning of “work” in foregoing terms. We further quote Raghunath Rai Baraza Vs. PNB (2007) 135 Company cases 163 (SC) that it is the cardinal rule of interpretation that words used by the legislature are to be understood in their natural, ordinary or popular sense or constructed as per their grammatical meaning unless such a construction lead to ITA Nos 2051 and 2052 of 2018 and ITA No.481 of 2020 Gayatri Projects Ltd Hyderabad Page 16 of 18 some absurdity or there is something in the context or in the object of the statute to the contrary. 13. We go by the foregoing observations of their lordships and observe that the stages I & II of the Bhima Lift Irrigation project undertaken by the assessee containing “ all the civil works like canal approach to the tunnel, tunnel, surge pool pump house, delivery mains manufacturing, testing, inspection, packing, supply, erection and commissioning of electro mechanical and hydro mechanical equipment” indeed formed an architectural as well as engineering structure and therefore, amounts to an execution of a “works contract awarded by the state government” through its irrigation development only and covered u/s. 80IA Explanation incorporated in the Act by the Finance Act, 2009 w.e.f. 1.4.2000. Learned CIT-DR at this stage invited our attention to page 18 in assessee's Paper Book II Part 1 that it had purely executed “works contract” only in view of the fact that the irrigation department had issued it mobilization advances on multiple occasions from time to time. He next took us to agreement clause 3.15 containing “contract price and payment” making it evident that the assessee had to be paid on “fixed lump sum monthly basis” only. And further that the assessee was entitled to get “fixed lump sum monthly instalment payments provided value of the work executed is more than or equal to the fixed lump sum monthly instalment as indicated in the agreement.” The said agreement stipulated advance payments to the assessee qua supply of goods at the site. All these facts sufficiently indicate that the assessee, assuming that not accepting that it is the developer u/s. 80IA(4) of the Act, executed a works contract only under Explanation to section 80IA of the Act and therefore, not entitled for the impugned deduction. 14. The assessee next made a very strong endeavour to place reliance on a catena of case law (supra) including CIT Vs. ABG Heavy Industries Limited (2010) 322ITR 323 (Bom). We find that neither of these decisions deals with the interplay between the section 80IA(4) Vs. 80IA Explanation involving execution of works contract as is the factual position before us. The said case law distinguished, therefore. 15. Mr. Afzal’s last argument seeks to buttress the point that such a strict interpretation employed in dealing with an instance of development of an infrastructure project would tantamount to closing the deduction chapter altogether and more particularly, when this assessee has borne all risks and responsibilities of the lift irrigation project by paying reduction money and performance guarantee(s) as well. We hold that this last argument also fails to cut any ice since the assessee has merely performed a works contract and its retention money or the so called performance guarantee only gave an assurance to the irrigation development that it had carried out the corresponding construction etc. as per the specified design norms than involving any business risk. We accordingly hold the view of our independent appreciation of facts as well as assessment findings that the assessee is a contractor having executed works contract only. 16. We also deem it appropriate to quote Adam Smith’s ‘The Wealth of Nations’ (published in 1776 and called as the founding work on modern economics) that “ It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.” 17. Nevertheless, the same connotation applies in the facts of the instant case. It is clear that the assessee has first of all been paid mobilization advances by the state government’s department on periodic basis, and, then only it executed the ITA Nos 2051 and 2052 of 2018 and ITA No.481 of 2020 Gayatri Projects Ltd Hyderabad Page 17 of 18 corresponding lift irrigation project works contract followed by its yet another claim of section 80IA of the Act deduction (supra). We are afraid that such a liberal interpretation would amount to going against the stricter interpretation principle in view of honourable apex court decision (supra). We accordingly conclude both the learned lower authorities have rightly disallowed assessee's 80IA deduction claim involving varying sum(s) (supra) in their respective orders. The same stands confirmed. These assessee's appeals are dismissed therefore.” 7. We thus hold that section 80IA’s Explanation(s) is squarely attracted herein that even if the assessee itself is treated as the developer under sub-section (4) of the very provision, the impugned claim shall be hit by the foregoing Explanation as its business is in the nature of a “works contract” only. Reliance placed on all earlier orders (supra); not considering the statutory “Explanation(s)”, are not forced to be binding precedent in light of CIT Vs. B.R. Constructions (1993) 202 ITR 222 (AP). The Revenue’s lead appeal ITA 1331/Hyd/2017 is allowed and assessee’s cross-appeal ITA 1340/Hyd/2017 is dismissed in above terms. 6. Learned AR at this stage vehemently invited our attention to the fact that the assessee has filed a letter before the hon'ble President of the tribunal seeking to constitute a Special Bench u/s 255(3) of the Act and therefore, we ought not to proceed further with the instant appeal till a final decision is taken therein. We note from a perusal of section 255(3) of the Act that there is no such pre-condition of keeping the issue in abeyance so as to await the foregoing representation. We accordingly adopt judicial consistency qua the instant letter as well as in absence of any distinction on the relevant facts involved and restore the impugned section 80IA disallowance in all these three assessment years in Revenue’s favour. 7. No other ground has been pressed before us. 8. These three Revenue’s appeals are partly allowed in above terms. A copy of this common order be placed in the respective case files. ITA Nos 2051 and 2052 of 2018 and ITA No.481 of 2020 Gayatri Projects Ltd Hyderabad Page 18 of 18 Order pronounced in the Open Court on 24 th January, 2022. Sd/- Sd/- (A.M.ALANKAMONY) ACCOUNTANT MEMBER (S.S. GODARA) JUDICIAL MEMBER Hyderabad, dated 24 th January, 2022. Vinodan/sps Copy to: S.No Addresses 1 ACIT, Central Circle 2(4), 6 th Floor, Aayakar Bhavan, Basheerbagh, Hyderabad 2 M/s. Gayatri Projects Ltd 6-3-1090, B-1, TSR Tower, Rajbhavan Road, Somajiguda, Hyderabad 3 CIT (A)- 12,Hyderabad 4 Pr. CIT – Centra, Hyderabad 5 DR, ITAT Hyderabad Benches 6 Guard File By Order