DCIT CENTRAL CIRCLE 5(1), MUMBAI V. ITD CEMENTATION INDIA LIMITED , MUMBAI

ITA 2090/MUM/2023

• Counselvise Citation: [2024] 100 COUNSELVISE.COM (IT) 2320 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-05-2024
• Appeal Filed By: Department
• Order Result: PartlyAllowed
• Bench Allotted: C
• Next Hearing Date: 21-02-2024
• Assessment Year: 2017-2018
• Appeal Filed On: 04-06-2023
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: COORDINATE BENCHES SINCE AY; MATTER IS PENDING
• Keywords: Transfer pricing; Earning of tax free income; Additional evidence; Rule 8D
• Section: 37; 28; 143(3); 14A; 115JB; 40(a)(ia); 37(1); 80IA; 13; 119; 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, MUMBAI BEFORE SHRI AMIT SHUKLA, JM AND SHRI PRASHANT MAHARISHI, AM ITA No.1400/Mum/2023 (Assess ment Year: 2017-18) ITD Ce mentation India Ltd. 9 th Floor, Pri ma B a y, Tower-B, Gate No .5, Saki Vihar Road, Powai, Mu mbai-400 072 Vs. DCI T Central Circle 5(1), 19 th Floor, Roo m No.1928, Air India Building, Mu mbai-400 021 (Appellant) (Respondent) PAN No. AAACT1426A ITA No. 2090/Mum/2023 (Assess ment Year: 2017-18) DCI T Central Circle 5(1), 19 th Floor, Roo m No.1928, Air India Building, Mu mbai-400 021 Vs. ITD Ce mentation India Ltd. 9 th Floor, Pri ma B a y, Tower-B, Gate No .5, Saki Vihar Road, Powai, Mu mbai-400 072 (Appellant) (Respondent) Assessee by : Shri Vija y Mehta, AR Revenue by : Shri Jagdish Jangid, CI T DR & Shri H.M. Bhatt, DR Date of hearing: 22.02.2024 Date of pronouncement : 16.05.2024 O R D E R PER PRASHANT MAHARISHI, AM: Page | 2 ITA Nos.1400 & 2090/Mum/2023 ITD Cementation India Ltd; A.Y. 2017-18 01. ITA No.2090/Mum/2023 is filed by the Dy. Commissioner of Income Tax-5(1), Mumbai (the learned Assessing Officer) and ITA No. 1400/Mum/2023 is filed by ITD Cementation India Ltd. (assessee / appellant) being cross appeals for A.Y. 2017- 18 against the appellate order passed by the Commissioner of Income-tax (Appeals)-53, Mumbai, dated 2 nd March, 2023, wherein the e-appeal filed by the assessee against the assessment order passed under Section 143(3) of the Income- tax Act, 1961 (the Act) dated 31 st December, 2019, was partly allowed. Therefore, both the parties were aggrieved by the appellate order. 02. In ITA No. 1400/Mum/2023, assessee has raised following grounds of appeal:- “Ground 1. The Hon'ble Commissioner of Income tax (Appeals)-53 ['Hon'ble CIT(A)-53'] has erred in upholding the disallowance made by the Learned Assessing Office ['Ld. AO'] of the deduction claimed under Section 80-IA of the Act amounting to Rs. 1,69,27,38,721 in respect of the contracts entered into with non- government entities without appreciating the fact that the said contract is originally awarded by the Government to these parties. Ground2. The Hon'ble CIT(A) - 53 has erred in confirming the action of the Ld. AO in computing the book profits under Section Page | 3 ITA Nos.1400 & 2090/Mum/2023 ITD Cementation India Ltd; A.Y. 2017-18 115JB without considering the claim of Rs. 1,22,07,000 on account of IND AS transition adjustment and Rs. 1,83,88,000 towards OCI - Item that will not be re-classified to P & L Account - Section 115JB(2A)(B) by way of filing revised computation of total income during the course of assessment proceedings.” 03. In ITA No. 2090/Mum/2023, the learned Assessing Officer has raised following grounds of appeal:- “1. On the facts and circumstances of the case and in law, Ld. CIT(A) erred in deleting the addition of Rs.29,32,554/- u/s.14A of the IT Act, 1961 r.w. Rule 8D without appreciating the facts that the expenses such as administrative expenses and other expenses incurred facilitate the earning of all income including exempt income, and hence disallowance u/s.14A r.w. Rule 8D of the IT Rules. 2. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of Rs.4,22,02,468/- on account of provisions for unforeseen losses which are not an ascertained liability and are contingent losses and therefore are not allowable under section 37 of the IT Act, 1961. Page | 4 ITA Nos.1400 & 2090/Mum/2023 ITD Cementation India Ltd; A.Y. 2017-18 The appellant craves to leave, to add, to amend and / or to alter any of the ground of appeal if need be.” 04. The brief fact of the case shows that the assessee is a company engaged in the business of civil, mining, marine and engineering and construction activities. It undertakes constructions of dams, projects, highways, etc. The assessee e- filed the return of income on 30 th November 2017, at total income of ₹nil and book profit under Section 115JB of the Income-tax Act, 1961 (the Act) of ₹123,38,64,000/- was shown. The return was selected for scrutiny. 05. During assessment proceedings :- i. It was found that the assessee has made certain investments and income arising from that are not chargeable to tax and therefore, assessee was questioned about disallowance under Section 14A of the Income-tax Act, 1961 (the Act). The assessee stated that it has not earned any exempt income and has earned loss from unincorporated joint venture which is covered under Section 86 of The Act. It was further stated that the assessee has not incurred any expenditure towards earning exempt income. The learned Assessing Officer applied provisions of Rule 8D and made disallowance under Section 14A of the Act of 0.5% of annual average of opening and closing balances of investment of ₹29,32,554/-. Page | 5 ITA Nos.1400 & 2090/Mum/2023 ITD Cementation India Ltd; A.Y. 2017-18 ii. It was found that the assessee has also claimed a sum of ₹4,22,02,468/- on account of foreseeable losses. The assessee was asked about the above losses and their allowability. The assessee submitted that as the assessee is engaged in construction activity it has executed projects at various places. In some of the contracts, the total cost exceeds the contract value of the project and thus, it has incurred losses. The assessee relied upon the Accounting Standard (AS) 7 of accounting for construction contracts prescribed by ICAI and stated that the same is allowable. It was further stated that the co-ordinate Bench in assessee‟s own case has allowed such losses as deduction. The assessee submitted the detail project wise working of such losses. The same was reproduced on page no.10 of the assessment order. The learned Assessing Officer held that provision for foreseeable losses is not an expenditure incurred in the year under consideration and these are likely losses and therefore, though it may be required to be provided as per AS 7, but same is not allowable under the Income Tax Act. Therefore, same was disallowed. iii. The assessee has claimed deduction under Section 80IA of the Act of ₹209.30 crore in respect of 12 projects. The learned Assessing Officer found that out of those six projects are in the nature of working received from Government whereas other six projects are non- Government entities. He found that in respect of contract with Government, 80IA deduction of ₹40.03 Page | 6 ITA Nos.1400 & 2090/Mum/2023 ITD Cementation India Ltd; A.Y. 2017-18 crore and in respect of non-government contract is ₹169.27 crore. He perused the provision of Section 80IA of the Act and found that u/s 80IA of the Act deduction is to be allowed only if the assessee has entered into a contract or agreement with the Central Government or State Government or local authority, etc. Therefore, the assessee was asked to justify the allowability of the claim. The assessee submitted on 16 th December 2019, that the contracts are awarded to the assessee by the private players for which those private players have been granted contract from the Government. As the role of the assessee is to develop the project, the eligibility criteria are to be satisfied and same is allowable. The learned Assessing Officer held that the deduction is allowable only if the work is awarded by the Government or Statutory Body, etc. and not by the private parties. Accordingly, he disallowed the claim of deduction under Section 80IA of the Act of ₹169,27,38,721/-. 06. Accordingly, the assessment order under Section 143(3) of the Act was passed on 31 st December 2019, at a total income of ₹167,50,429/- and book profit was computed by making a disallowance or addition of disallowance under Section 14A of the Act and foreseeable losses at ₹127,89,99,022/-. 07. Assessee aggrieved with the assessment order preferred the appeal before the learned Commissioner of Income tax (Appeals). The Appellate Order states that Page | 7 ITA Nos.1400 & 2090/Mum/2023 ITD Cementation India Ltd; A.Y. 2017-18 i. On the issue of disallowance under Section 14A of the Act of ₹29,32,554/-, the learned CIT (A) deleted the disallowance following the decision of the co-ordinate bench in assessee‟s own case for A.Y. 2014-15 and 2015-16 in ITA No.5869 & 5870/Mum/2018, dated 21 st April 2021. ii. With respect to the deduction of foreseeable losses provision, he deleted the disallowance following the order of the co-ordinate Bench in the assessee‟s own case for A.Y. 2004-05 in ITA No.2991/Mum/2011, dated 17 th May 2013. iii. With respect to the deduction under Section 80IA of the Act, the learned CIT (A) examined the claim of the assessee, he held that the assessee has not been recognized and authorized by the Government authority to carried out the work and therefore, there is no agreement between the government and assessee. He held that strict interpretation needs to be applied and therefore, he rejected the contention of the assessee that the condition of the agreement with the Government should be relaxed and non-fulfillment of the same will not deny the assessee for deduction under Section 80IA of the Act. During the course of proceedings on 10 th January 2023, the assessee was directed to submit the scope etc. Of the contract work done and to demonstrate whether the assessee is merely a sub-contractor or developer. The assessee did not furnish any such information and therefore, he held that Page | 8 ITA Nos.1400 & 2090/Mum/2023 ITD Cementation India Ltd; A.Y. 2017-18 in absence of such information eligibility of deduction cannot be verified. The learned CIT (A) further found that assessee has claimed deduction on contracts where there are no contracts with the Government by the other party as well and therefore, he held that the contracts which are awarded by the private players for which the private players have been assigned contract from Government is also not substantiated and therefore, the claim of the assessee is not allowable. Accordingly, he dismissed and confirmed the disallowance of deduction under Section 80IA(4) of the Act. iv. On issue of computation of Book profit where assessee claimed deduction on account of Implementation of First adoption of Ind As holding that such claim was raised before ld. AO without filing any revised return and before him assessee could not substantiate the claim. 08. Aggrieved by the above appellate order, both the parties are in appeal. 09. We first come to the appeal of the learned Assessing Officer, wherein two grounds of appeal are raised regarding deletion of the disallowance under Section 14A of the Act of ₹29,32,554/- and deletion of disallowance of foreseeable loss of ₹4,22,02,468/-. 010. With respect to the first ground of appeal, the learned Departmental Representative vehemently supported the order Page | 9 ITA Nos.1400 & 2090/Mum/2023 ITD Cementation India Ltd; A.Y. 2017-18 of the learned Assessing Officer, and the learned Authorized Representative supported the order of the learned CIT (A), wherein the disallowance was deleted based on the orders of co-ordinate Benches in assessee‟s own case. 011. On careful consideration of the rival contentions and on the basis of orders of the co-ordinate Benches in assessee‟s own case for A.Y. 2014-15 and 2015-16, in ITA No.5869 and 5870/Mum/2018 dated 21 st April 2021, the learned CIT (A) has deleted the disallowance of ₹29,32,554/- under Section 14A read with section 8D(2)(iii) of the Act. It was the reasoning of the co-ordinate bench that the amount of investment shown in the joint ventures is the share of profit of the joint venture with respect to the amount shown under the head of investment. It was held to be a current account transaction for loans given by the assessee to the joint ventures. Therefore, the co-ordinate Bench held that the provision of Section 14A of the Act fails and no disallowance can be made. The learned CIT (A) has followed the decision of the co-ordinate Bench. 012. Before us, Both the parties confirmed that there is no change in the facts and circumstances of the case and therefore, we respectfully following the decision of the co-ordinate Bench in assessee‟s own case confirmed the order of the learned Commissioner of Income tax (Appeals). Thus, ground no.1 of the appeal is dismissed. 013. Ground no. 2 of the appeal is against the deletion of the disallowance of provision for foreseeable losses claimed by Page | 10 ITA Nos.1400 & 2090/Mum/2023 ITD Cementation India Ltd; A.Y. 2017-18 the assessee as per AS 7 issued by Institute of Chartered Accountants of India, disallowed by the learned Assessing Officer. The learned CIT (A) deleted the above disallowance holding that for A.Y. 2004-05, the co-ordinate Bench in ITA No.2991/Mum/2011 dated 17 th May 2013, has allowed the identical claim of the assessee. The reasoning of the Tribunal was that if the assessee followed the accounting standard though may not be notified by the Central Government, the result of the business would be showing more credibility. Therefore, the co-ordinate Bench held that the assessee is undertaking fixed price contracts, and, in that circumstance, the assessee is entitled to the deduction of the provision for foreseeable losses. The co-ordinate Bench in Paragraph no.18 further followed several judicial precedents. Based on this, the learned CIT (A) deleted the above disallowance. 014. The learned Departmental Representative vehemently submitted that though in the case of the assessee for earlier years starting from 2004-05 till 2015-16, the co-ordinate Bench has allowed the claim but for A.Y. 2016-17, the co- ordinate Bench in ITA No.642/Mum/2023 dated 31 st July 2023 has held otherwise. He referred to paragraph no.6 of the order. He submits that the argument of the learned Departmental Representative shows that foreseeable losses have been computed by the assessee on the basis of expenses which were not incurred in the year under consideration but to be incurred in future years for completion of the relevant works contract project. Therefore, it was contended that expenditure is not an ascertained liability for the year under Page | 11 ITA Nos.1400 & 2090/Mum/2023 ITD Cementation India Ltd; A.Y. 2017-18 consideration. The learned Departmental Representative further stated that the assessee has not filed any details of expenses which would be incurred in future years and in absence of which, even the estimate was without any foundation or documentary basis. The co-ordinate Bench in paragraph no.6.3, 6.4, held that the claim of the assessee is neither supported by the AS 7 nor allowable under the provisions of the Act, Following the decision of the co- ordinate Bench in case of L‟OrealIndia in ITA No.1198/Mum/2021, claim was rejected. With respect to the earlier decisions of co-ordinate Bench in assessee‟s own case it was held that rule of consistency cannot be a substitute for perpetuating an error. It was further held that the claim of foreseeable losses would be allowable in the year of incurring expenses and not in the year prior to that. It further rejected the contention of the assessee that if the expenses are allowed in the subsequent year without incurring , instead of the year in which the provision is made for foreseeable losses, the co- ordinate Bench rejected the same stating that unless the expenditure quantified, these arguments cannot be accepted. The co-ordinate bench also did not restore the issue in dispute to the file of the learned Assessing Officer for the reason that there is nothing to verify for this year by ld. AO. Accordingly, the appeal of the Revenue to that extent is allowed. Thus, the learned Departmental Representative submitted that now the issue has been decided by the co-ordinate Bench in favor of the Revenue, all the earlier year decisions in assessee‟s own case are held to be incorrect and therefore, those decisions cannot be followed now. The learned Departmental Page | 12 ITA Nos.1400 & 2090/Mum/2023 ITD Cementation India Ltd; A.Y. 2017-18 Representative vehemently submitted that now judicial discipline demands that this order of the co-ordinate Bench that has confirmed disallowance by the learned Assessing Officer should be followed. 015. The learned Authorized Representative vehemently submitted that assessee has been allowed the deduction in all these earlier years. He submits that for A.Y. 2004-05 onwards till A.Y. 2015-16, the assessee is consistently allowed the deduction on the same set of facts. He submits that the assessee is following an Accounting standard and consistent policy of revenue recognition according to which the revenue from constriction contract is always recognized on the basis of Percentage Completion Method (PCM). If it is accepted that the contract will make a loss the estimated loss is immediately provided for in the books of account. This policy is backed by the principles of prudence in accounting. He also referred to page no.92 of the Paper Book wherein on account of 16 contracts, the foreseeable losses of ₹4.22 crores were recognized. He explained the chart and the methodology of the provision. He submitted that these losses are neither contingent and nor merely a provision but accounted for on the basis of accepted accounting practices. He referred to the AS 7 issued by the Institute of Chartered Accountants of India on construction contracts and referred to the paragraph no.22 thereof to show that when the outcome of the construction contract can be estimated reliably, then revenue and their expenses thereof should be accounted at the stage of contract activity at the time of reporting date and if there is a loss then Page | 13 ITA Nos.1400 & 2090/Mum/2023 ITD Cementation India Ltd; A.Y. 2017-18 it should be recognized as an expense immediately. He further referred to paragraph no.31 of the AS. He also referred to paragraph no.35, wherein it is stated that where the total contract costs will probably exceed the total contract revenue expected loss should be recognized as an expense immediately. He further referred to the fact that these losses are also stated on page no.106 of the paper book. He also referred to the income computation and disclosure standard relating to construction contracts and submitted that it also provides that the contracts which have not been completed up to31 st March 2016, shall be recognized as per the method of accounting followed. He further referred to several judicial precedents of the co-ordinate Benches and Hon'ble High Court to support his claim. He submitted that the co-ordinate Bench for A.Y. 2016-17 disagreed with the earlier year‟s orders of the co-ordinate Benches in assessees‟ own case should have referred the matter to the Special Bench if it wishes for any reason to deviate from the same. However, it has been decided against the assessee. He also referred to chart and submitted that the accepted additional cost provided in A.Y. 2017-18 is far less than the additional cost incurred actually by the assessee in subsequent A.Y. 2018-19. To precisely state that the provision of ₹84.52 crores for A.Y. 2017-18 culminated into actual additional cost of ₹119.48 crores thus, excess cost incurred for the provision in A.Y. 2018-19 is ₹34.96 crores. Thus, it is not the case that the claim of the assessee is not supported by robust working or followed by universally accepted account practices and principles. He submits that anyway for this year the decision of coordinate bench which Page | 14 ITA Nos.1400 & 2090/Mum/2023 ITD Cementation India Ltd; A.Y. 2017-18 decided issue against the assessee does not apply for the reason that assessee has submitted the various cost which are incurred subsequently by the assessee, which are much higher than the provision and such cost to the extent allowed in this year are not claimed in subsequent year. Therefore, he submits that earlier year decision may be followed, and claim is rightly allowed . He also referred to four volumes of paper books filed. 016. We have carefully considered the rival contentions and perused the orders of lower authorities. We have also considered the various decisionsof coordinate benches in case of the assessee wherein identical claim of the assessee is allowed. We have also been informed that revenue is in appeal against that decision of the coordinate bench before honorable High court and issue is admitted. We have also considered the decision of coordinate bench in case of assessee itself where in it held that earlier orders of coordinate bench are incorrect and claim of the assessee is not allowable. We find that in AY 2016-17 ITAT in ITA No. 642/MUM/2023 dated 26/07/2023 has confirmed disallowance of claim of the assessee for following reason :- i. Foreseeable loss in expenditure claimed as deduction u/s 37(1) of the Act which is yet to be incurred and not incurred during the year, therefore such expenses are not allowable in this year but allowable in the year in which it is incurred. Page | 15 ITA Nos.1400 & 2090/Mum/2023 ITD Cementation India Ltd; A.Y. 2017-18 ii. It followed deduction of coordinate bench in ITA No 1198/ M/2021 in case of Loreal India Limited holding that this is not allowable u/s 37(1) of The Act as unascertained liability, thus As 7 issued by ICAI is also not allowable [ para no 6.4 where extract from that decision is quoted.] iii. Earlier decision of ITAT are not applicable as those deductions does not record a factual finding that whether such expenditure is ascertained liability [ Para 6.4 of the decision } 017. We find that issue in case of 1198/Mum/2021 in Loreal was disallowance of claim of Provision for expenses. The assessee had made “Provision for outstanding expenses” to the tune of Rs.96,28,68,265/- as per the requirement of mercantile system of accounting and claimed the same as deduction. Since it had not deducted tax at source from the above said provision claimed as deduction, the assessee voluntarily disallowed 30% of the above said claim u/s 40(a)(ia) of the Act. The AO treated the above said provision as „unascertained liability‟ and accordingly took the view that the same is not allowable as deduction. Thus, it was not the case of the deductibility of foreseeable losses but deduction of normal expenses. 018. Foreseeable loss is a claim u/s 28 as it is not a claim of expenses u/s 37 (1) of The Act. It is determined by looking at total revenue generated , less cost of expenses to be Page | 16 ITA Nos.1400 & 2090/Mum/2023 ITD Cementation India Ltd; A.Y. 2017-18 incurred for the contract and if there is a profit same is not recognized but if there is a loss , same is recognized as loss in the books as per principle of “prudence” in accounting. It is same method where the closing stock is valued at cost or market value whichever is less, when market value is higher than the actual cost , such profit is ignored and when market value is less than actual cost such losses are recognized immediately in books . This is also based on the principle of prudence in accounting. The prudence principle deviates from conventional accounting as it provides for all possible losses, but does not anticipate profits. It is allowable u/s 28 itself. In this case the assessee has not claimed the expenditure u/s 37 (1) of the Act which is evident from the chart extracted in ITAT order for AY 2016-17 at page no 9 in para no 6.2 of that order. 019. Undisputedly Accounting standard 7 applies to the assessee, in para no 21 it provides that When the outcome of a construction contract can be estimated reliably, contract revenue and contract costs associated with the construction contract should be recognized as revenue and expenses respectively by reference to the stage of completion of the contract activity at the reporting date. An expected loss on the construction contract should be recognized as an expense immediately in accordance with paragraph 35. 020. Further in Para no 35 and 36 it provides for „Recognition of Expected Losses‟ stating that When it is probable that total contract costs will exceed total contract revenue, the expected loss should be recognised as an expense immediately. Page | 17 ITA Nos.1400 & 2090/Mum/2023 ITD Cementation India Ltd; A.Y. 2017-18 021. Further this issue is decided in favour of the assessee by coordinate benches since AY 2004-05 and matter is pending before honourable high court, and in immediately subsequent year, assessee has shown that it has incurred higher expenses then the loss claimed in this year. It is not the case of double deduction of expenses in the guise of loss. Off course, if later on the losses which is provided in this year reduces assessee has to apply para no 37 of the As which provides that when the percentage of completion method is applied on a cumulative basis in each accounting period to the current estimates of contract revenue and contract costs. Therefore, the effect of a change in the estimate of contract revenue or contract costs, or the effect of a change in the estimate of the outcome of a contract, is accounted for as a change in accounting estimate (see Accounting Standard (AS) 5, Net Profit or Loss for the Period, Prior Period Items and Changes in Accounting Policies). The changed estimates are used in determination of the amount of revenue and expenses recognized in the statement of profit and loss in the period in which the change is made and in subsequent periods. 022. Determination of profit based on the accounting standard where there is no contrary provision in the Income tax Act , requires to be accepted, as accounting standards are based on sound principle of Accounting and determines real income. 023. Determination of Income as per As-7 „ Construction Contract' is also judicially accepted in Panchsheel Colonizers (P.) Ltd.[2019] 111 taxmann.com 460 (SC) By Honourable Supreme court . Page | 18 ITA Nos.1400 & 2090/Mum/2023 ITD Cementation India Ltd; A.Y. 2017-18 024. In earlier decision of the ITAT in assessee‟s own case are also based on the above concept and we have drawn above analogy also from those decisions and as facts are different from Ay 2016-17, and as the Honourable High court has also admitted the issue on appeal of Revenue in earlier years, we hold that assessee is entitles to expected loss provided in the manner explained by the Accounting Standard 7 “ Construction Contracts‟ Issued by ICAI. Thus, on principle assessee is entitled to the same. 025. However now the issue of quantification arises, on perusal of orders of lower authorities, we do not find that any of the authorities have examined quantification of the claim of the assessee. Assessee has submitted a chart before us where in the loss is stated to be quantified. However, we do not find any back up documents produced before us, so that we can quantify the same. In absence of such complete information available with us, we restore the issue before the ld. AO to grant deduction on the above issue by verifying the claim of the assessee with supporting documents. Assessee is directed to quantify such claim and substantiate before the ld. AO , he may verify the same and allow the claim in accordance with the law. 026. Accordingly Ground no 2 of the appeal is dismissed and for verification of quantum restored to the file of The Ld. AO. 027. In the result, appeal of the ld. AO is dismissed subject to quantification of loss in Ground 2 . Page | 19 ITA Nos.1400 & 2090/Mum/2023 ITD Cementation India Ltd; A.Y. 2017-18 028. Coming to the appeal of the Assessee, in ground no 1 , assessee has filed modified ground of appeal as under:- " The Commissioner of income tax (appeals) – 53 has erred in upholding the disallowance made by the learned assessing officer of the deduction claimed under section 80 IA of the act amounting to ₹ 1,230,024,019/– of contacts and 13 to 20 following non-government entities without appreciating the fact that the said contract was originally awarded by the government to these parties:- serial number project number name of the client Amount (Rs) 1 35515DM Bharat Mumbai container terminal private limited 99,00,01, 47,263 2 33714DM Nhava Sheva India Gateway terminal private limited 23,98,76,756 Total 123 24,0219/- 029. assessee has filed additional evidence with a request to admit the sameby letter dated 16/8/2023 wherein it is stated that the learned CIT – A has order forwarded details as per order dated 10 January 2023 not furnish copies of the agreement which were lying in the court on and same were taking longer time Page | 20 ITA Nos.1400 & 2090/Mum/2023 ITD Cementation India Ltd; A.Y. 2017-18 for its retrieval. Therefore, the assessee could not submit those evidences before the learned CIT – A. Assessee referred to page number 94 – 524 number 3 additional evidences. 030. The learned authorized representative submitted that identical issue arose in the case of the assessee for assessment year 2018 – 19 wherein the coordinate bench admitted those evidence and referred the matter back to the file of the learned CIT – A to consider them. Therefore, these evidence may be admitted and matter may be restored back to the file of the learned CIT – A accordingly. 031. The learned departmental representative vehemently objected to the same and submitted that theseevidence, could have been furnished before the learned CIT – A. Therefore, now those evidences should not be admitted at all. 032. We have carefully considered the rival contentions and perused the application for admission of additional evidence. We also find that identical issue arose in case of assessee in ITA No 1401/M/ 2023 for Ay 2018-19 decided on 22-02- 2024 where identical application for admission of additional evidences were made and coordinate bench admitted the same are restored issue bask to the file of the ld. CIT (A) directing to just examine the additional evidences and decide the issue, if such additional evidences makes any difference to his judgement, after giving an opportunity of hearing to the assessee. It has been held as under :- “09. On this ground, assessee also made a prayer for admission of the additional evidence under Rule 29 of Page | 21 ITA Nos.1400 & 2090/Mum/2023 ITD Cementation India Ltd; A.Y. 2017-18 the ITAT Rules. In the application, assessee submitted that assessee has claimed deduction of ₹28,982/- lacs in respect of 16 projects on account of contracts entered with Government and non-Government parties. The learned Assessing Officer has disallowed the entire deduction claimed. The learned CIT (A) has deleted the disallowance to the extent of ₹11,47,19,144/- in respect of contract entered into with certain government entities. It was further stated that the partial disallowance confirmed by the learned CIT (A) is with respect to certain non- government contracts on the ground that assessee has failed to provide a documentary evidences. Now it is the claim of the assessee that contracts entered into with non- Government entities are originally awarded to them by the Government. It was also pointed out that on 26 th October, 2021, there was a survey on the premises of the assessee resulting into several reassessments and ongoing transfer pricing proceedings with which assessee was fully occupied. The assessee has given brief of several notices issued in such proceedings. It was stated that during this period ld. CIT (A) has called for several details vide order sheet entry dated 10th January 2023, which was submitted by the assessee on 15th February 2023, along with several Page | 9 ITD Cementation India Ltd; A.Y. 2018-19 agreements on sample basis showing scope of work. As the contract copies were lying in godown, those could not be retrieved in time and therefore, those could not be submitted before the learned CIT (A). Subsequently, the assessee was able to procure those contracts and now produced before us as additional evidences. The assessee submitted three paper books containing page no.41 to 1488 of such additional evidences and requested for admission of the same. Certain judicial precedents were also relied upon. 010. The learned Authorized Representative also referred to paragraph no.7.3.1 of the order of the learned CIT (A), wherein non-submission of such detail was mentioned. He submitted that because of this reason also amongst others the deduction was Page | 22 ITA Nos.1400 & 2090/Mum/2023 ITD Cementation India Ltd; A.Y. 2017-18 denied. He submits that though the scope of work of various contracts were made available to the learned CIT (A), but in absence of these contracts, as assessee has failed to produce , deduction under Section 80IA of the Act is denied . His argument is that assessee was prevented because of sufficient cause for not producing these details and therefore, it should be admitted. 011. The learned Departmental Representative vehemently contested that these additional evidences should not be admitted at this stage and even otherwise these additional evidences are irrelevant for the reason that :- i. As assessee has failed to submit the same before the learned Assessing Officer and before the learned CIT (A), despite adequate opportunities provided. ii. These additional evidence are not relevant at all to decide the issue as assessee is merely a subcontractor iii. This is not the reason for which deduction u/s 80 IA is denied. iv. Assessee is merely a works contractor and has not entered any contract with government, which are placed in additional evidences, which is main condition of 80 IA. 012. We have carefully considered the contentions mentioned in application under Rule 29 of ITAT Rules, 1963. It is apparent that in paragraph no.7.3, the learned CIT (A) specifically asked the assessee to produce the contract copies to ascertain whether the claim of the assessee falls within the parameter laid down under Section 80IA of the Act or not. Undoubtedly, assessee failed to produce the same before the lower authorities. Before us, it is submitted that assessee has submitted the scope of the work of the various contracts but could not submit the contract copies. It is stated that a survey took place on 26th October, 2021 and the case of the assessee were reopened for various assessment years and further transfer pricing proceedings of 7 years were going on. It is also the claim of the assessee that the Page | 23 ITA Nos.1400 & 2090/Mum/2023 ITD Cementation India Ltd; A.Y. 2017-18 contracts were Page | 11 ITD Cementation India Ltd; A.Y. 2018-19 placed in the godown and its retrieval was taking long time. It is also the fact that assessee has submitted sample copies of some of the contract showing the scope of work. The learned CIT (A) has rejected the claim of the assessee for this reason also. This is evident as per paragraph no.7.3 of the order. In paragraph no.7.3.5, he mentioned that assessee did not file the full particulars of the contracts before the learned Assessing Officer also. In view of the above facts it is evident that complete details were not filed before the lower authorities. 013. According to Rule 29 of ITAT Rules, the parties to the appeal are not entitled to produce additional evidences either orally or in documents. However, the Tribunal can allow the parties to do so for any other substantial cause or the revenue authorities having provided inadequate opportunity to the assessee. In this case, we find that sufficient opportunities were provided to the assessee. But in this case, the disallowance of deduction claimed by the assessee is also confirmed for one of the reason of non- production of the evidences which assessee was prevented because of its non-availability or delay in its retrieval coupled with ongoing several reassessment and transfer pricing assessments pursuant to survey. Therefore, for these reasons, we allow the additional evidences to be adduced by the assessee. 014. It is also the argument of the learned Departmental Representative that whether the additional evidences submitted by the assessee are relevant to decide the issue Page | 12 ITD Cementation India Ltd; A.Y. 2018-19 or not should be examined, as the assessee has not been awarded the contracts by the Government Authorities but is merely a contractor. It is also pressed by the learned Authorized Representative that the argument of the learned Departmental Representative is not sustainable for the reason that judicial precedents provide that direct agreement with the Government Authorities is not necessary. Page | 24 ITA Nos.1400 & 2090/Mum/2023 ITD Cementation India Ltd; A.Y. 2017-18 015. As we have admitted the additional evidences, without going into the merits of the additional evidences, we restore the issue before the learned CIT (A) to examine these evidences and decide the issue of allowability of claim of deduction under Section 80IA of the Act with respect to the additional evidences. This is also so for the reason that the disallowance is confirmed for one of the reasons being non-production of the contracts. The learned CIT (A) may examine additional evidences, look at their relevance in claim of deduction of the assessee and decide the issue whether the assessee fulfils conditions under Section 80IA (4) of the Act or not. Accordingly, the ground no.1 and 2 to the extent indicated above are allowed.” 033. As in earlier year, these additional evidences were admitted, we also admit the same following the decision of the coordinate bench in assessee‟s own case for assessment year 2018 – 19. 034. Both the parties agreed that issue in this appeal is similar to AY 2018-19, their arguments and submission are also the same, and additional evidence are also identical, Therefore, we follow this order of ITAT for AY 2018-19, with similar direction restore it back to the dl CIT (A). Thus, ground no 1 of the appeal is allowed accordingly. 035. Ground no 2 is on the issue of provision of section 115 JB of the Act regarding computation of book profit u/s 115JB of The Act pursuant to adoption of Ind AS. Fact shows that the assessing officer the assessee computed the book profit was 15 JB of the act of Rs. 12,338.64 lakhs. This book profit was derived at by adjusting by an adjustment of 1669.65 lakhs and reducing the same by 3159.76 Lacs. Thus, the book profit of Page | 25 ITA Nos.1400 & 2090/Mum/2023 ITD Cementation India Ltd; A.Y. 2017-18 Rs. 12,338.64 lakhs. During the course of assessment proceedings,the assessee found that it has failed to claim 1/5 of Ind As transition amount amounting to Rs. 565.05 lakhs. Thus, the deduction in the profit of Rs 113.01 lakhs was not claimed. This claim was raised before the assessing officer by letter dated 6 December 2019 wherein the revised computation of the book profit was also submitted. In the revised book profit computation assessee has claimed deduction of Rs. 183.88 lakhs under section 115JB (2A) (b) of the act where the book profit was required to be decreased by all the amounts debited to other comprehensive income in the statement of profit and loss under the head items there could not be classified to profit and loss and further sum of Rs. 122.07 lakhs were also claimedof 1/5 of the transition amount defined under explanation (iii) of the act. However, the learned assessing officer did not discussed the same in the assessment proceedings and consequently adopted book profit as per assessee‟s own computation. Further adjustment was made by the learned assessing officer by making an addition of disallowance under section 14 A and foreseeable losses. Thus, the book profit was computed at 12,78,99,9022/- . Assessee aggrieved with the same raised the issue before the learned CIT – A who decided the issue rejecting the claim of the assessee. The reason for rejection of the claim was that the assessee did not make the claim by filing a revised return or by application under section 119 (2) (b) of the act. The learned CIT – A further stated that the assessee has not substantiated the adjustment along with its audited financial accounts as to how such conditions are fulfilled. Page | 26 ITA Nos.1400 & 2090/Mum/2023 ITD Cementation India Ltd; A.Y. 2017-18 036. The learned authorized representative referred to the balance sheet of the assessee company wherein the same is demonstrated by showing income in profit and loss account which would not be classified subsequent to the profit and loss account being loss on fair value of the defined benefit plans in valuation of amount of Rs. 183.88 lakhs. Further assessee has also referred to letter dated 6 December 2019 wherein gross amount of Rs. 565.05 lakhs were stated to be the impact of the transition to adoption Ind AS with effect from 1 January 2070. Accordingly, this sum is allowable to the assessee in this year. Such sum is Rs. 113.01 lakhs. Thus, the claim of the assessee is that book profit is further required to be reduced by Rs. 183.88 lakhs and Rs. 113.01 lakhs which in the original computation of the profit could not be made.Assessee also find revised form number 29B wherein as per part B and part C, above claim is made. 037. The learned departmental representative submitted that the claim was not made by the assessee before the learned assessing officer by filing a revised return and further before the learned CIT – A assessee could not substantiate the same and therefore the disallowance is made.Therefore,disallowance is proper. 038. We have carefully considered the rival contention and perused the orders of the lower authorities. It is an admitted fact that the assessee originally did not claim either of the above deductions from the book profit computation under section 115JB of the act. However,before the ld. assessing officer assessee made this claim by way of a letter, the learned Page | 27 ITA Nos.1400 & 2090/Mum/2023 ITD Cementation India Ltd; A.Y. 2017-18 assessing officer did not consider the same. The issue was also raised before the learned CIT – A though he correctly upheld order of the learned assessing officer as no fresh claim could have been raised before him without filing a revised return.But it does not apply to an appellate authority. Thus, when the details are available before ld. CIT(A) he should have examined the same and should have granted deduction from book profit of the above two items, if allowable to the assessee. Now before us the assessee has filed revised form number 29B of the computation of the book profit duly certified by the auditor. No doubt, a claim was not made in the original return of income, however when such claim is made before the appellate authorities, same deserves to be considered. In view of this, we direct the learned assessing officer to reconsider the computation of the book profit in view of revised form number 29B filed by the assessee.If the claim of the assessee is found to be in accordance with the law, same be granted as deduction to the assessee from the book profit computation. Assessee is directed to explain the above claim before the assessing officer. If the learned AO does not agree with the contention of the assessee, the opportunity of hearing deserves to be granted. After that the AO may pass the order in accordance with the law. Accordingly ground number 2 of the appeal of the assessee is allowed as indicated above. 039. In the result, an appeal filed by the assessee is allowed for statistical purposes. Page | 28 ITA Nos.1400 & 2090/Mum/2023 ITD Cementation India Ltd; A.Y. 2017-18 040. In the result, the cross appeals are disposed of wherein the appeal of the learned assessing officer is dismissed subject to verification of computation of foreseeable loss claim and appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on 16.05.2024. Sd/- Sd/- (AMIT SHUKLA) (PRAS HANT M AHAR ISHI) (JUDIC IAL M EM BER) (ACC OUNTANT MEMB ER) Mumbai, Dated: 16.05.2024 Sudip Sarkar, Sr.PS/ Dragon Copy of the Order forwarded to: 1. The Appellant 2. The Respondent 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. BY ORDER, True Copy// Sr. Private Secretary/ Asst. Registrar Income Tax Appellate Tribunal, Mumbai