Assistant Commissioner of Income-tax, V. M/s. B.T. Patil & Sons Belgaum Construction Pvt. Ltd., Belgaum

ITA 2305/PUN/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 0383 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 10 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-11-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 30-12-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: AMOL KAMAT
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 92; 80IA; 143(2); 255(4)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUN E , , !'#'' $ , % & BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM / ITA NO. 2305/PN/2014 %' ( ')( / ASSESSMENT YEAR : 2011-12 ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE 2, KOLHAPUR ....... / APPELLANT ' /VS. M/S. B.T. PATIL & SONS BELGAUM CONSTRUCTION PVT. LTD. 4112, PATSON HOUSE, P.B. ROAD, BELGAUM, KARNATAKA PAN : AAACB7343N / RESPONDENT ASSESSEE BY : N O N E REVENUE BY : SHRI AMOL KAMAT / DATE OF HEARING : 17-11-2016 / DATE OF PRONOUNCEMENT : 25-11-2016 * / ORDER PER VIKAS AWASTHY, JM : THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS), KOLHAPUR DATED 21-10 -2014 FOR THE ASSESSMENT YEAR 2011-12 IN DELETING THE ADDITION OF ` 10,88,85,428/- MADE ON ACCOUNT OF DISALLOWANCE OF DEDUCTION U/S. 2 ITA NO. 2305/PN/2014, A.Y. 2011-12 80IA(4) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). 2. THE BRIEF FACTS OF THE CASE AS EMANATING FROM RECORD S ARE: THE ASSESSEE-COMPANY IS ENGAGED IN EXECUTION OF CIVIL ENGINEER ING CONTRACTS. THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2011-12 ON 30-09-2011 DECLARING TOTAL INCOME OF ` 43,72,530/-. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY THR OUGH CASS AND ACCORDINGLY NOTICE U/S. 143(2) OF THE ACT WAS ISSUED TO TH E ASSESSEE ON 10-09-2012. DURING THE COURSE OF SCRUTINY ASSESSMENT P ROCEEDINGS, THE ASSESSING OFFICER HELD THAT THE ASSESSEE IS NOT A DEV ELOPER OF INFRASTRUCTURE PROJECTS BUT IS MERELY EXECUTING WORKS C ONTRACT AND HENCE, THE ASSESSEE IS NOT ELIGIBLE TO CLAIM DEDUCTION U/S. 8 0IA(4) OF THE ACT. APART FROM THE DISALLOWANCE OF DEDUCTION U/S. 80IA(4) T HE ASSESSING OFFICER MADE CERTAIN MORE ADDITIONS/DISALLOWANCES IN THE ASSESSMENT ORDER DATED 24-05-2013. AGGRIEVED BY THE ADDITIONS/DISALLOWANCES MADE DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE FILED AN APPEAL BEFO RE THE COMMISSIONER OF INCOME TAX (APPEALS). THE COMMISSIONER OF I NCOME TAX (APPEALS) VIDE IMPUGNED ORDER DELETED THE ADDITION MA DE U/S. 80IA(4) BY FOLLOWING THE DECISION OF TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEARS 2000-01 AND 2001-02 AND BY FURTHER PLACING RELIANCE ON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. ABG HEAVY INDUSTRIES LIMITED REPORTED AS 322 ITR 323 AND VARIOUS OTHER DECISIONS. AGAINST THE FINDINGS OF COMMISSIONER OF INC OME TAX (APPEALS) IN DELETING THE ADDITION AND ALLOWING THE CLAIM OF DED UCTION U/S. 80IA(4), THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 3 ITA NO. 2305/PN/2014, A.Y. 2011-12 3. SHRI AMOL KAMAT REPRESENTING THE DEPARTMENT SUPPORT ED THE FINDINGS OF ASSESSING OFFICER IN REJECTING THE CLAIM OF ASSESSEE U/S. 80IA(4) OF THE ACT. HOWEVER, THE LD. DR ADMITTED THAT THE ISSUE IN PRESENT APPEAL HAS BEEN DECIDED IN FAVOUR OF THE ASSESSE E BY THE CO- ORDINATE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE IN THE EARLIER ASSESSMENT YEARS. 4. NONE HAS APPEARED ON BEHALF OF THE ASSESSEE DESPITE SERVICE OF NOTICE. THEREFORE, WE ARE DECIDING THE APPEAL ON THE BAS IS OF SUBMISSIONS OF LD. DR AND THE MATERIAL AVAILABLE ON RECORD. 5. THE SOLITARY ISSUE RAISED BY THE DEPARTMENT IN APPEA L IS AGAINST THE ALLOWING OF DEDUCTION U/S. 80IA(4) TO THE ASSESSEE BY T HE COMMISSIONER OF INCOME TAX (APPEALS). THE CO-ORDINATE BEN CH OF THE TRIBUNAL IN ASSESSEES OWN CASE IN ITA NOS. 1408 & 1409/ PN/2013 FOR THE ASSESSMENT YEARS 2000-01 AND 2001-02 DECIDED ON 28-02-2013 REPORTED AS 59 SOT 61 (PUNE) HAS HELD THAT THE ASSESSE E IS ELIGIBLE TO CLAIM DEDUCTION U/S. 80IA(4) OF THE ACT. INITIALLY, LARGER BENC H OF THE TRIBUNAL IN THE AFORESAID APPEALS OF THE ASSESSEE FOR ASSES SMENT YEARS 2000-01 AND 2001-02 HAD REJECTED THE CLAIM OF ASSESSE E. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE HONBLE BOMBAY HIGH COURT IN ITA NO. 1307 OF 2011 AND ITA NO. 1640 OF 2011 FOR ASSESS MENT YEARS 2000-01 AND 2001-02, RESPECTIVELY. THE HONBLE BOMBAY HIGH COURT REMITTED THE MATTER BACK TO THE TRIBUNAL WITH A DIRECTION TO CONSIDER THE MATTER AFRESH AFTER TAKING INTO CONSIDERATION THE DE CISION OF HIGH COURT IN THE CASE OF CIT VS. ABG HEAVY INDUSTRIES LIMITED (SUPRA). THEREAFTER, IN THE SECOND ROUND OF LITIGATION THE TRIBUNAL DE CIDED THE APPEALS OF THE ASSESSEE BY ALLOWING THE CLAIM OF DEDUCTION U /S. 80IA(4) 4 ITA NO. 2305/PN/2014, A.Y. 2011-12 OF THE ACT. THE COMMISSIONER OF INCOME TAX (APPEALS) IN THE ASSESSMENT YEAR UNDER APPEAL HAS DECIDED THE ISSUE BY FOLLOWING THE DECISION OF TRIBUNAL AND THE JUDGMENT OF HONBLE JURISDICTIO NAL HIGH COURT IN THE CASE OF CIT VS. ABG HEAVY INDUSTRIES LIMITED (SUPRA) AND VARIOUS OTHER DECISIONS OF THE TRIBUNAL ON THE SIMILAR ISSUE . THE QUESTION FOR ADJUDICATION BEFORE THE TRIBUNAL IN ASSESSEE S APPEALS FOR ASSESSMENT YEARS 2000-01 AND 2001-02 WAS; WHETHER TH E ASSESSEE IS DEVELOPER OR CONTRACTOR, AND WHETHER THE ASSESSEE IS E LIGIBLE TO CLAIM DEDUCTION U/S. 80IA(4)? THE TRIBUNAL ANSWERED THE QUEST ION IN AFFIRMATIVE BY HOLDING AS UNDER : 7. STAND OF ASSESSEE BEFORE US IS THAT ISSUE AT HA ND IS COVERED BY THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN TH E CASE OF ABG HEAVY INDUSTRIES LTD. & OTHERS (SUPRA). IN VIEW OF THE A MENDMENT TO SECTION 80IA(4A) BY FINANCE ACT, 1999 EFFECTIVE FROM 01.04. 2000 TO AVAIL THE DEDUCTION UNDER SUCH SECTION FOR THE A.YS. 2000-01 & 2001-02, ASSESSEE SHOULD CARRY ON ALL THREE ACTIVITIES I.E. DEVELOPIN G, MAINTAINING & OPERATING CUMULATIVELY. BY DEVELOPING THE INFRASTRU CTURE FACILITY AND TRANSFERRING IT TO ANOTHER PERSON FOR MAINTAINING A ND OPERATING, THE BENEFIT CAN BE AVAILED ONLY FROM THE A.Y. 2002-03. IN VIEW OF THE AMENDMENT TO SECTION BY FINANCE ACT, 2001 WHERE IN 'OR' IS INSERTED BETWEEN DEVELOPING AND MAINTAINING & OPERATING I.E. DEVELOPING OR MAINTAINING & OPERATING. IN CASE OF ABG HEAVY IND USTRIES LTD. & OTHERS (SUPRA), THE HON'BLE BOMBAY HIGH COURT HAS OBSERVED AS UNDER: 'WITH EFFECT FROM 1 ST APRIL, 2000, BY THE FINANCE ACT OF 1999, CERTAIN CHANGES WERE BROUGHT ABOUT. SECTION 80-IA & 80-IR W ERE SUBSTITUTED FOR SECTION 80-IA. SUB-SECTION (4) OF SECTION 80-IA OF THE ACT PROVIDED THAT THE SECTION SHALL APPLY TO ANY ENTERPRISE CARRYING ON T HE BUSINESS OF (I) DEVELOPING, (II) MAINTAINING & OPERATING, OR (III) DEVELOPING, MAINTAINING AND OPERATING AN INFRASTRUCTURE FACILITY WHICH FULF ILS CERTAIN CONDITIONS. BY THE FINANCE ACT OF 2001, THE WORD 'OR' CAME TO B E INTRODUCED AFTER THE WORD DEVELOPING, TO CLARIFY IN EFFECT THAT THE AGRE EMENT BETWEEN THE ENTERPRISE AND THE AUTHORITY OF THE CENTRAL OR THE STATE GOVT. OR, AS THE CASE MAY BE, A LOCAL AUTHORITY OR A STATUTORY BODY MAY PROVIDE FOR (I) DEVELOPING, OR (II) MAINTAINING & OPERATING, OR (II I). DEVELOPING, MAINTAINING & OPERATING A NEW INFRASTRUCTURE FACILI TY. IT WAS FURTHER HELD THAT THE REQUIREMENT OF OPERATION & MAINTENANCE OF INFRASTRUCTURE FACILITY SHOULD COMMENCE AFTER 1 ST APRIL, 1995 HAS TO BE HARMONIOUSLY CONSTRUED 5 ITA NO. 2305/PN/2014, A.Y. 2011-12 WITH THE MAIN PROVISION UNDER WHICH THE DEDUCTION I S AVAILABLE. THUS, JURISDICTIONAL HIGH COURT HELD THAT THE AMENDMENT OF FINANCE ACT 2001 OF INSERTING 'OR' BETWEEN 'DEVELOPING' AND 'MAINTAI NING & OPERATING' IS CLARIFICATORY IN NATURE TO CURE THE AMBIGUITY OF TH E AMENDMENT OF FINANCE ACT, 1999 AND THEREFORE SUCH AMENDMENT WILL BE APPL ICABLE RETROSPECTIVELY FROM THE A.Y. 2000-01 & ONWARDS. IN ORDER TO BE ELIGIBLE FOR DEDUCTION THE ASSESSEE SHOULD DEVELOP THE INFRASTRUCTURE FACILITY AS A WHOLE AND NOT IN A PAR TICULAR PART OF IT. WE FIND THAT HON'BLE BOMBAY HIGH COURT IN THE CASE OF ABG HEAVY INDUSTRIES HAS OBSERVED AS UNDER: THE ASSESSEE DID NOT HAVE TO DEVELOP THE ENTIRE PR OJECT IN ORDER TO QUALIFY FOR A DEDUCTION UNDER S. 80-IA. THE PARLIAM ENT DID NOT LEGISLATE A CONDITION IMPOSSIBLE OF COMPLIANCE.' 8. IN THE CASE OF ABG HEAVY INDUSTRIES (SUPRA), THE ASSESSEE THEREIN HAD NOT DEVELOPED THE ENTIRE PORT BUT WAS ONLY THE SUPPLIER OF CRANES AT THE LOADING AND UNLOADING TERMINAL AT THE SAID JNPT PORT. THUS ASSESSEE WAS NOT REQUIRED TO EXECUTE THE ENTIRE PRO JECT AS OBSERVED BY THE THIRD MEMBER. ANOTHER SIGNIFICANT WORD USED HE RE IS 'OWNED', WHICH INDICATES THAT THE INFRASTRUCTURE FACILITY SHOULD B E OWNED BY A COMPANY SO AS TO BE ENTITLED TO DEDUCTION UNDER THIS SECTIO N. THE WORK DONE BY THE ASSESSEE IS NOT OWNED BY IT, IT DOES NOT SATISFY SU B CLAUSE (A) OF SECTION 80IA(4)(I). THE INFRASTRUCTURE FACILITY SHOULD BE O WNED BY THE ASSESSEE IS NOT CORRECT INTERPRETATION. IT IS EVIDENT FROM SEC TION ITSELF AS CLARIFIED BY THE JURISDICTIONAL HIGH COURT IN ABG HEAVY INDUSTRI ES (SUPRA) INTER ALIA HELD THAT THE ASSESSEE HAS SHOULDERED OUT INVESTMEN T & TECHNICAL RISK IN RESPECT OF THE WORK EXECUTED AND IT IS LIABLE FOR L IQUIDATED DAMAGES IF FAILED TO FULFILL THE OBLIGATION LAID DOWN IN THE A GREEMENT. THE LIABILITY WHICH HAS BEEN ASSUMED BY THE ASSESSEE UNDER TERMS OF THE CONTRACT ARE OBLIGATIONS INVOLVING THE DEVELOPMENT OF AN INF RASTRUCTURE FACILITY. THE ASSESSEE HAS ALSO IN ITS EMPLOYMENT TECHNICALLY AND ADMINISTRATIVELY QUALIFIED TEAM OF PERSONS AND THER EFORE IT IS NOT CORRECT TO SAY THAT ASSESSEE IS MERELY A CONTRACTOR & NOT A DEVELOPER. THE ASSESSEE IS ELIGIBLE FOR BENEFIT U/S 80-1 A EVEN IF PART OF THE INFRASTRUCTURAL PROJECT WORK IS EXECUTED. 9. IT WAS FOUND BY THE ERSTWHILE JUDICIAL MEMBER TH AT ASSESSEE FULFILLED THE CONDITIONS OF BEING A DEVELOPER AS SU BSEQUENTLY INTERPRETED BY THE HON'BLE BOMBAY HIGH COURT. WITH REGARD TO C LARIFICATORY AMENDMENT TO SUB-SECTION (13) OF SECTION 80IA BY FI NANCE ACT 2007 & 2009 WHEREBY THE ASSESSEE IS NOT HELD ELIGIBLE FOR DEDUCTION U/S 6 ITA NO. 2305/PN/2014, A.Y. 2011-12 80IA(4A). IN THIS REGARD, WE FIND THAT THE AMENDME NT OF 2007 DEBARS THE SUB-CONTRACTOR FROM AVAILING BENEFITS U/S. 80IA(4A) . THE AMENDMENT OF 2009 IS NOT APPLICABLE IN THE CASE WHERE THE ASSESS EE EXECUTES THE WORK BY SHOULDERING INVESTMENT & TECHNICAL RISK BY EMPLO YING TEAM OF TECHNICALLY & ADMINISTRATIVELY QUALIFIED PERSONS AN D IT IS LIABLE FOR LIQUIDATED DAMAGES IF FAILED TO FULFILL THE OBLIGAT ION LAID DOWN IN THE AGREEMENT AND ALSO SECURING BY BANK GUARANTEE. AS T HE ASSESSEE HAS FULFILLED THE SAID CONDITIONS IS EVIDENT AS DISCUSS ED ABOVE. PRACTICALLY, THE OPINION OF THE THIRD MEMBER OF THE HON'BLE TRIB UNAL HAS BEEN OVERRULED BY THE HON'BLE BOMBAY HIGH COURT THAT EVE N A CONTRACTOR IS A DEVELOPER AND FURTHER INTERPRETATION OF THE AMENDME NTS BY FINANCE ACT 2009 AND THE CONDITIONS TO BE FULFILLED BY AN ASSES SEE TO BE TERMED AS DEVELOPER FOR THE PURPOSE OF SECTION 80IA HAS BEEN FOLLOWED BY VARIOUS TRIBUNALS. 10. IN VIEW OF THE ABOVE, WE FIND THAT LAW AS INTER PRETED BY THE THIRD MEMBER OF THE HON'BLE TRIBUNAL IS NO LONGER GOOD LA W. MORE SPECIFICALLY IN LIGHT OF THE OBSERVATIONS MADE BY THE HON'BLE BO MBAY HIGH COURT IN THE CASE OF ABG HEAVY INDUSTRIES LIMITED AND WHILE GIVING THE EFFECT AS PER PROVISIONS 255(4) OF THE ACT THE HON'BLE TRIBUN AL WAS CLEARLY DIRECTED TO CONSIDER THE SAID DECISIONS AND ALLOW THE DEDUCT ION U/S. 80IA OF THE ACT FOR ALL THE PROJECTS UNDERTAKEN BY THE ASSESSEE . 11. THE ASSESSEE COMPANY HAS BEEN INCLUDED AS A SUB CONTRACTOR FOR THE ALL THE OTHER PROJECTS EITHER THE CONTRACTS ARE DIRECTLY IN THE NAME OF ASSESSEE COMPANY OR IN THE NAME OF THE JOINT VENTUR E ENTERPRISE. THE ASSESSEE HAS UNDERTAKEN THE WORK ON BACK TO BACK AG REEMENT CONCEPT UNDER SUB CONTRACT FROM PATEL ENGINEERING COMPANY L IMITED (HEREINAFTER REFERRED TO AS PEC) VIDE SUB-CONTRACT AGREEMENT DAT ED 15.10.1992 FOR CONSTRUCTION OF TUNNEL WHICH SUPPLIES THE WATER FOR M RIVER KOYNA AND MAKES IT AVAILABLE TO POWER HOUSE. IN FACT THE ASSE SSEE AND PEC HAD PROPOSED A JOINT VENTURE TO THE RELEVANT AUTHORITIE S FOR THE EXECUTION OF THE SAID PROJECT. AS THE PROJECT WAS BEING FINANCED BY WORLD BANK THE RELEVANT AUTHORITIES FORWARDED THE PROPOSAL TO WORL D BANK. WORLD BANK HOWEVER DID NOT ACCEPT THE PROPOSAL BUT THEY SUGGES TED THAT M/S. PATEL ENGINEERING COMPANY LTD., MAY EMPLOY THE ASSESSEE C OMPANY AS SUB CONTRACTOR. IT WAS AT THE SUGGESTION OF WORLD BANK THAT THE ASSESSEE COMPANIES NAME WAS INCLUDED AS A SUB CONTRACTOR INS TEAD OF FORMING OF A JOINT VENTURE. THE PROJECT AUTHORITIES INCLUDING WORLD BANK HAVE APPROVED AND CERTIFIED THE ASSESSEE AS SUB-CONTRACT OR FOR THE ABOVE SAID WORK AFTER THOROUGH SCRUTINY AND DETAIL DESCRIPTION OF THE WORK TO BE UNDERTAKEN BY THE ASSESSEE COMPANY. THE ASSESSEE CO MPANY NAME IS 7 ITA NO. 2305/PN/2014, A.Y. 2011-12 INCLUDED IN MAIN CONTRACT AGREEMENT ENTERED INTO BE TWEEN THE EMPLOYER AND PEC AS SUB CONTRACTOR FOR KOYNA PROJECT WORKS B Y PROJECT AUTHORITIES. IN FACT THE GOVERNMENT OF MAHARASHTRA HAS ENTERED IN TRIPARTITE AGREEMENT WITH THE ASSESSEE COMPANY AND PEC. WORKS COMPLETION CERTIFICATE HAS BEEN ISSUED IN FAVOUR OF THE ASSESSEE COMPANY FOR THE EXECUTION OF THE WORK. POWER OF ATTORNEY IS GIVEN BY PRIME CONTRACTOR TO SUB CONTRACTOR AND ACCEPTED AND EXCEE DED BY PROJECT AUTHORITIES. 12. THE FACT THAT THE ASSESSEE HAS A TRIPARTITE AGR EEMENT WITH THE RELEVANT AUTHORITIES MAKES THE ASSESSEE A PARTY TO THE MAIN CONTRACT WORK ITSELF AND WHICH CLEARLY SHOWS THAT THE ASSESS EE ON THEIR OWN RIGHT ARE CONTRACTORS AND NOT JUST SUB CONTRACTORS AS NOR MALLY UNDERSTOOD. THE ASSESSEE IS THE CONTRACTOR VIS-A-VIS THE PORTION AL LOTTED TO THEM AND NOT ONLY SUBCONTRACTORS, I.E. A DIRECT PARTY TO THE MAI N AGREEMENT. THE ASSESSEE HAS ENTERED INTO A MAIN AGREEMENT, IN THEI R OWN RIGHT, CAN CLAIM THE BENEFIT OF SECTION 80IA. AS THE ASSESSEE BEING DIRECTLY UNDER CONTRACT TO THE CONCERN FOR THE WORK DONE AND ARE A LSO DIRECTLY DEALING WITH THE GOVERNMENT ON WHOSE BEHALF THE ASSESSEE AR E DOING THE WORK, THEY CAN BE CONSIDERED AS MAIN CONTRACTORS ALONGWIT H PEC AND ARE NOT SIMPLY SUB CONTRACTORS VIS-A-VIS THE WORK UNDERTAKE N BY THEM. AS SUCH THE ASSESSEE IS OTHERWISE FULFILLING ALL THE CONDIT IONS THEY ARE ENTITLED TO DEDUCTION UNDER THE PROVISIONS OF SECTION 80IA. SI MILAR VIEW HAS BEEN TAKEN BY ITAT INDORE IN THE CASE OF AYUSH AJAY CONS TRUCTION LTD. VS ITO 79 ITD 213, WHEREIN THE ENTIRE PROJECT WAS ASSIGNED BY THE PARTY GETTING THE TENDER TO ANOTHER COMPANY. IN SUCH CIRCUMSTANC ES THE ITAT INDORE, HAS HELD AS UNDER: 'IT IS A SETTLED POSITION OF LAW THAT THAT WHILE CO NSTRUING THE TAX PROVISIONS BESIDES DETERMINING THE INTENTION OF THE LEGISLATURE FOR ITS INTRODUCTION TO THE STATUTE, THE EXPRESSION USED TH EREIN SHOULD ORDINARILY BE UNDERSTOOD IN A SENSE IN WHICH THEY BEST HARMONI SE WITH THE OBJECT OF THE STATUTE AND WHICH EFFECTUATE THE OBJECT OF THE LEGISLATION. THE PROVISIONS OR PROMOTING ECONOMIC GROWTH SHOULD BE I NTERPRETED LIBERALLY AND THE RESTRICTION ON IT TOO HAS TO BE CONSTRUED S O AS TO ADVANCE THE OBJECTIVE OF THE PROVISIONS AND NOT TO FRUSTRATE IT . IF THE FACTS OF THE CASE WERE PUT WITHIN THE ABOVE PARAMETER, THE ASSESSEE, THOUGH IT NOT ENTERED INTO AN AGREEMENT W ITH THE STATE GOVERNMENT AT THE INITIAL STAGE, HAD OBTAINED THE T ENDER/CONTRACT BY VIRTUE OF A VALID ASSIGNMENT, WHICH WAS DULY RECOGN ISED BY THE STATE GOVERNMENT. THEREFORE, IT SHOULD BE DEEMED TO HAVE ENTERED INTO AN AGREEMENT WITH THE STATE GOVERNMENT FOR CONSTRUCTIO N OF THE SAID BRIDGE 8 ITA NO. 2305/PN/2014, A.Y. 2011-12 ON BOT BASIS. IT WAS NOT THE CASE OF THE REVENUE TH AT THE ENTIRE EXPENDITURE INCURRED IN THE CONSTRUCTION OF THE AFO RESAID BRIDGE WAS NOT BORNE BY THE ASSESSEE BUT BY 'A ', THE MAIN TENDERE R. ' THE REVENUE HAD REJECTED THE CLAIM OF THE ASSESSEE FOR THE SIMPLE REASON THAT THE ASSESSEE HAD NEVER ENTERED INTO ANY CONTRA CT WITH THE STATE GOVERNMENT AND THE ASSESSEE-COMPANY WAS NOTHING BUT A COLOURABLE DEVICE TO EVADE TAX. IT IS A SETTLED POSITION OF LA W THAT THE COMPANY IS A JURISTIC ENTITY AND IT SHOULD BE CONSIDERED INDEPEN DENT FROM THE SHAREHOLDERS OR THE DIRECTORS. THE ACTION OF THE AS SIGNING AND THE WORK OF CONSTRUCTION UNDERTAKEN BY THE ASSESSEE WAS RECOGNI SED BY THE STATE GOVERNMENT AND A TRIPARTITE AGREEMENT WAS EXECUTED BETWEEN THE ASSESSEE A AND THE STATE GOVERNMENT THROUGH WHICH THE STATE GOVERNMENT HAD RECOGNISED THAT THE ASSESSEE HAD STE PPED INTO THE SHOES OF A AND NOTIFIED AUTHORISING THE ASSESSEE TO COLLECT THE TOLL TAX FOR A PARTICULAR PERIOD. SINCE THE ASSESSEE COMPANY HAD RECTIFIED ALL ACT AND DEEDS OF ITS PROMOTER U' AND OWNED ALL THE AS SETS AND LIABILITIES OF ITS PROMOTER THROUGH AN AGREEMENT OF ASSIGNMENT EXE CUTED BETWEEN THE ASSESSEE AND A AFTER OBTAINING APPROVAL FROM THE STATE GOVERNMENT, THE ASSESSEE SHOULD BE DEEMED TO HAVE UNDERTAKEN TH E CONSTRUCTION WORK SINCE 1-4-1995. SINCE THE GOVERNMENT HAD PROVI DED THIS DEDUCTION IN ORDER TO ENCOURAGE ECONOMIC GROWTH OF THE COUNTR Y, THE PLENITUDE OF EXEMPTION SHOULD NOT BE WHITTLED DOWN, BY LAYING ST RESS ON AMBIGUITY HERE AND THERE. IF IT WAS PROVED THAT, THE ASSESSEE -COMPANY HAD OBTAINED THE STATUS OF A TENDERER BY VIRTUE OF A VA LID ASSIGNMENT, IT SHOULD NOT BE DENIED THE BENEFIT OF DEDUCTION PROVI DED BY THE CENTRAL GOVERNMENT THROUGH INTRODUCTION OF SUB-SECTION (4A) OF SECTION 80 IA. THE ACTION OF 'A' AND THE ASSESSEE COULD ONLY BE TERMED AS A VALID TAX PLANNING WHICH WAS PERMISSIBLE UNDER THE LAW. THERE FORE, THE ASSESSEE HAD FULFILLED THE REQUIREMENTS PROVIDED IN SECTION 80IA (4A)(II) FOR CLAIMING DEDUCTION, AND, THEREFORE, THE ASSESSING O FFICER SHOULD HAVE ALLOWED THE DEDUCTION CLAIMED BY THE ASSESSEE COMPA NY. 13. XXXXXXXXXX 14. IN THIS BACKGROUND, THE ASSESSEE COULD CERTAINL Y CLAIM THE DEDUCTIONS UNDER THE PROVISION OF SECTION 80IA. ONE HAS TO SEE THE SUBSTANCE AND NOT THE FORM ESSENTIALLY, THOUGH IT W AS A JOINT VENTURE, IT WAS CONVERTED INTO ASSESSEE'S VENTURE. THE OTHER VE NTURER WITHDREW AND THE ENTIRE WORK WAS EXECUTED BY THE ASSESSEE TH OUGH IN THE NAME OF JOINT VENTURE. THE JOINT VENTURE IS NOTHING BUT TH E VENTURE OF THE ASSESSEE COMPANY AND THE OTHER PERSON NOT BEING A P ARTY AFTER WITHDRAWING THE QUESTION OF JOINT VENTURE DOES NOT ARISE. THE VENTURE WAS FULLY CARRIED OUT BY THE ASSESSEE AND IT WAS EN TIRELY EXECUTED BY THE ASSESSEE COMPANY. TAKING THE SUBSTANCE OF THE TRANS ACTION, THE 9 ITA NO. 2305/PN/2014, A.Y. 2011-12 ASSESSEE ARE ENTITLED TO ALL THE PROFITS IN RESPECT OF THE CONTRACT EXECUTED BY THEM, HENCE THE ASSESSEE WOULD CERTAINLY BE ENTI TLED TO DEDUCTION UNDER THE PROVISIONS OF 80IA AS THEY HAVE FULFILLED ALL THE OTHER CONDITIONS. THIS VIEW GET STRENGTH FROM DECISION I N THE CASE OF ITAT, INDORE BENCH, IN CASE OF AYUSH AJAY CONSTRUCTIONS L TD. (SUPRA). THUS, WILE GIVING EFFECT TO THE OPINION OF THIRD MEMBER U /S.255(4) OF THE ACT, WE TAKE VIEW IN CONFORMITY WITH ORDER OF JURISDICTIONA L HIGH COURT IN CASE OF ABG HEAVY INDUSTRIES LTD. (SUPRA) AVAILABLE AT THI S TIME THOUGH CONTRARY TO THE OPINION EXPRESSED BY THE THIRD MEMBER. SO I N VIEW OF ABOVE DISCUSSION, FOLLOWING THE RATIO OF JURISDICTIONAL H IGH COURT IN CASE OF ABG HEAVY INDUSTRIES LTD. (SUPRA), THE ASSESSING OFFICE R IS DIRECTED TO ALLOW DEDUCTION U/S.80IA(4) OF THE ACT TO THE ASSESSEE WI TH REGARD TO THE PROJECTS IN QUESTION FOR BOTH THE YEARS. THE MATTE R IS DISPOSED OFF ACCORDINGLY. 6. WE FIND THAT THERE IS NO MATERIAL CHANGE IN THE FACTS IN THE PRESENT APPEAL. FURTHER, THE LD. DR HAS NOT BEEN ABLE TO CONTROVERT THE FINDINGS OF CO-ORDINATE BENCH OF THE TRIBUNAL. THE COMMISSION ER OF INCOME TAX (APPEALS) WHILE DECIDING THE ISSUE IN FAVOUR OF THE ASSESSEE HAS ALSO REFERRED TO THE DECISIONS OF : HYDERABAD BENCH OF THE TRIBUNAL IN THE CASE OF CHETTINAD LIGNITE TRANSPORT SERVICES (P) LTD . IN ITA NO. 1179/MDS/2008 DECIDED ON 26-02-2010, CHENNAI BENCH OF T HE TRIBUNAL IN THE CASE OF EAST COAST CONSTRUCTIONS & INDUS TRIES LTD. VS. DCIT IN ITA NO. 554/MDS/2010 DECIDED ON 13-09-2011, MUM BAI BENCH OF THE TRIBUNAL IN THE CASE OF INDIAN HUME PIPE CO. L TD. VS. DY. CIT IN ITA NO. 5172/MUM/2008 DECIDED ON 29-07-2011, HYD ERABAD BENCH OF THE TRIBUNAL IN THE CASE OF KMC CONSTRUCTIONS LT D. VS. ACIT REPORTED AS 21 TAXMANN.COM 138. 7. IN VIEW OF THE FACTS OF THE CASE AND VARIOUS DECISIONS ON THE ISSUE MENTIONED ABOVE, WE DO NOT FIND ANY ERROR IN THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) IN ACCEPTING THE CLAIM OF THE 10 ITA NO. 2305/PN/2014, A.Y. 2011-12 ASSESSEE AND ALLOWING THE CLAIM OF DEDUCTION U/S. 80IA(4) OF T HE ACT. ACCORDINGLY, THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) IS UPHELD AND THE APPEAL OF THE REVENUE IS DISMISSED BEING D EVOID OF ANY MERIT. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED ON FRIDAY, THE 25 TH DAY OF NOVEMBER, 2016. SD/- SD/- ( . . / R.K. PANDA) ( ! ' / VIKAS AWASTHY) #' / ACCOUNTANT MEMBER $ % #' / JUDICIAL MEMBER / PUNE; &# / DATED : 25 TH NOVEMBER, 2016 RK *+,%-.#/#)- / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. ' () / THE CIT(A), KOLHAPUR 4. ' / THE CIT-I/II, KOLHAPUR/CIT (CENTRAL), PUNE 5. !*+ %%,- , ,- , . ./0 , / DR, ITAT, B BENCH, PUNE. 6. + 1 23 / GUARD FILE. // ! % // TRUE COPY// #4 / BY ORDER, %5 ,0 / PRIVATE SECRETARY, ,- , / ITAT, PUNE