ITO, New Delhi V. M/s. Gopi Constech Pvt. Ltd., New Delhi

ITA 2384/DEL/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 4099 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 8 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-01-2018
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 29-04-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAVIKANT GUPTA
• Keywords: Rule of consistency; Question of law; Reasonable cause
• Section: 143(3); 142(1); 80IB; 80G; 147; 148; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI A BENCH, NEW DELHI BEFORE SHRI B.P. JAIN, ACCOUNTANT MEMBER, AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO. 2384 /DEL/201 6 [ASSESSMENT YEAR: 200 7 - 08 ] THE I.T .O VS. M/S GOPI CONSTECH PVT. LTD. WARD 10 ( 2 ) A - 52, CHANAKYA PLACE, PANKHA ROAD NEW DELHI UTTAM NAGAR, NEW DELHI PAN : AAECA 0864 D [APPELLANT] [RESPONDENT] DATE OF HEARING : 0 2 .01.2018 DATE OF PRONOUNCEMENT : 22 .01.2018 ASSESSEE BY : SHRI VIVEK BANSAL , ADV REVENUE BY : SHRI RAVI KANT GUPTA, SR. DR ORDER PER B.P. JAIN, ACCOUNTANT MEMBER, THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST ORDE R PASSED BY CIT(A) - 4, NEW DELHI DATED 03 - 02 - 2016 FOR ASSESSMENT YEAR 2007 - 08. 2. BRIEF FACTS OF THE CASE ARE THAT A SSESSMENT IN THE PRESENT CASE HAS BEEN FRAMED VIDE ORDER DATED 07 - 03 - 2014 PASSED U/S 147 R.W.S 143(3) OF THE INCOME - TAX ACT, 1961 [HEREINAFTER REFERRED TO AS 'THE ACT' FOR SHORT] BY THE INCOME TAX OFFICER, WARD 2(1), NEW DELHI. THE CASE 2 OF THE ASSESSEE W AS REOPENED U/S 147 OF THE ACT IN PURSUANCE TO INFORMATION RECEIVED FROM ITO WARD 26(3), NEW DELHI. IT WAS INFORMED THAT ACTION U/S 147 OF THE ACT FOR THE A.Y. 20 07 - 08 WAS TAKEN IN THE CASE OF NARESH KUMAR TOMAR AND DURING THE COURSE OF HIS ASSESSMENT PRO CEEDINGS, IT WAS CLAIMED THAT HIS PROPRIETARY CONCERNED NAMED AS M/S GOPI CONSTRUCTION WAS TAKEN OVER BY M/S ARHAM TECHNOLOGIES PVT. LTD. (THE ASSESSEE WAS FORMERLY KNOWN BY THIS NAME) W.E.F 01 - 04 - 2005 AND THEREFORE IT WAS CLAIMED THAT INCOME OF M/S GOPI C ONSTRUCTION SHOULD HAVE BEEN ASSESSED IN THE NAME OF PRESENT ASSESSEE. IT WAS ALSO CLAIMED THAT BY WAY OF MISTAKE, THE INCOME M/S ARHAM TECHNOLOGIES PVT. LTD WAS TAKEN INTO ACCOUNT IN THE HANDS OF SHRI NARESH KUMAR TOMAR WHILE FILING THE RETURN OF INCOME OF SHRI NARESH KUMAR TOMAR FOR A.Y 20 07 - 08. 3 . I T WAS FURTHER POINTED OUT THAT M/S ARHAM TECHNOLOGIES PVT. LTD HAD NOT FILED ITS RETURN OF INCOME FOR A.Y. 20 07 - 08. THUS, THE PROCEEDINGS U/S 147 OF THE ACT WERE INITIATED IN THE CASE OF THE ASSESSEE VIDE NOTICE DA T ED 26 - 03 - 2013 ISSUED U/S 148. IN RESPONSE TO SUCH NOTICE, THE ASSESSEE VIDE REPLY FILED ON 23 - 04 - 2013 SUBMITTED THAT ORIGINAL RETURN WAS FILED WITHIN TIME ON 03 - 09 - 2007 IN WHICH THE DEDUCTION WAS C LAIMED U/S 80IA. IT WAS SUBMITTED THAT PAN WAS MISTAKENLY QUOTED OF NARESH KUMAR TOMAR INSTEAD OF M/S ARHAM 3 TECHNOLOGIES PVT. LTD. IT WAS SUBMITTED THAT RETURN ALREADY FILED U/S 139(1) OF THE ACT ON 03 - 09 - 2007 VIDE ACKNOWLEDGEMENT NO. 0000009215 MAY BE TR EATED AS RETURN FILED IN RESPONSE TO U/S 148. HOWEVER , VIDE LETTER DATED 30 - 04 - 2013, THE ASSESSEE SUBMITTED COPY OF RETURN ELECTRONICALLY FILED ON 29 - 04 - 2013 VIDE E - FILLING ACKNOWLEDGEMENT NO. 618240451290413 AT GROSS TOTAL INCOME OF RS. 92,22,111/ - AND T OTAL INCOME WAS DECLARED AT NIL AFTER CLAIMING DEDUCTION U/S 80IA . 4. THE COPY OF REASONS WAS SUPPLIED TO THE ASSESSEE. AS ASSESSEE DIDNT FILE OBJECTIONS, THE A.O, INITIATED ASSESSMENT PROCEEDINGS BY ISSUE OF NOTICE U/S 143(2) OF THE ACT DATED 16 - 12 - 2 013 ALONG WITH NOTICE ISSUED U/S 142(1) REQUIRING THE ASSES SEE TO SUBMIT CERTAIN DETAILS. THE ASSESSEE VIDE LETTER DATED 03 - 01 - 2014 SUBMITTED THAT IT IS A CIVIL CONTRACTOR AND HAD TAKEN ONLY GOVERNMENT CONTRACTS. IT WAS CONTENDED THAT THE ASSESSEE IS ELIG IBLE FOR DEDUCTION U/S 80IA(4)(I)(B) OF THE ACT AS THE ASSESSEE IS ENGAGED IN DEVELOPING, MAINTAINING AND OPERATING INFRASTRUCTURE FACILITY. IT WAS SUBMITTED THAT CONTRACT CHARGES WERE RECEIVED AT RS. 5,87,35,065/ - FOR GOVERNMENT CONTRACTS AND INTEREST ON FDR AND NSC WAS EARNED AT RS. 4,31,338/ - AND INTEREST ON INCO ME TAX REFUND AT RS. 11,058/ - . V IDE LETTER DATED 16 - 01 - 2014, THE ASSESSEE FURNISHED FURTHER INFORMATION AND ALSO COPY OF FORM NO. 4 10CCB (AUDIT REPORT U/S 80 - I(7)/80 - IA(7)/80 - IB/80 - IC) FOR CLAIM REGARDING DEDUCTION U/S 80IA OF THE ACT. 5. THE A.O HAS REJECTED ALL THE CONTENTIONS OF THE ASSESSEE. HE HELD THAT THE CONTENTIO N OF THE ASSESSEE THAT WHILE FILING THE RETURN OF INCOME ON 03 - 09 - 2007, THE PAN NO OF SHRI NARESH KUMAR TOMAR WAS QUOTED BY M ISTAKE, IS NOT TENABLE. SUCH CONTENTION WAS REJECTED BY HIM ON THE GROUND THAT FOR CORPORATE ASSESSES, THE APPLICABLE FORM WAS ITR FORM 6 AS AGAINST ITR FORM NO. 4 APPLICABLE IN THE CASE OF INDIVIDUAL AND HUFS. BOTH THE FORMS ARE DIFFERENT AND A PERSON WITH AVERAGE INTELLIGENCE COULD IMMEDIATELY REALIZE SUCH MISTAKE. 6. THE A.O ISSUED NOTICE U/S 142(1) DATED 25 - 02 - 2014 ASKING THE ASSESSEE TO ANSWER THE QUER IES RAISED IN ANNEXURE WHICH HAVE BEEN REPRODUCED BY THE A.O IN PARA 4 OF HIS ORDER. IN PARA 4. 1 THE A.O ASKED TO PRODUCE LEDGER ACCOUNT OF SUB - CONTRACT CHARGES OF RS. 3,22,77,55 0 / - ; ROYALTY PAID AT RS. 23,16,634/ - AND LABOUR CHARGES PAID AT RS. 28,24,520/ - . HE ALSO ASKED TO PROVIDE COPY OF TAX AUDIT REPORT IN FORM 3CD, AUDITOR'S REPORT AND FORM NO. 29B. IN PARA 4. 2, THE A.O REQUIRED THE ASSESSEE TO EXPLAIN CERTAIN DEFICIENCIES IN FORM 10CCB. IN PARA 4 .4 , THE A.O ASKED THE ASSESSEE TO PROVIDE DETAILS OF LOANS AND ADVANCES; INVENTORIES AND ALSO REQUIRED THE ASSESSEE TO PROVIDE ALL 5 BANK STATEMENTS FOR THE PERIOD FROM 01 - 04 - 2006 TO 31 - 03 - 2010. IN PARA 4. 5 THE A.O REQUIRED THE ASSESSEE TO EXPLAIN AS TO HOW THE ASSESSEE IS QUALIFIED AS A DEVELOPER. THE ASSESSEE , IN REPLY TO SUCH NOTICE DATED 25.02.2014 , HAS FILED LETTER WHICH WAS SUBMITTED ON 04 - 03 - 2014 COPY OF WHICH HAS BEEN FILED AT P A G E S 31 TO 33 OF THE PAPER BOOK. THEREAFTER, A.O HAS PROCEEDED TO DISALLOW THE CLAIM OF DEDUCTION OF U/S 80IA OF THE ACT . 7. THE A.O HAS REJECTED THE CLAIM OF DEDUCTION U/S 80IA OF THE ACT MAINLY ON THE GROUND THAT T HE ASSESSEE HAS FAILED TO SUBMIT ITS RETURN OF INCOME U/S 139 (1) OF THE ACT . HE OBSERVED THAT FOR THE FIRST TIME ONLY ON 29 - 04 - 2013, THE ASSESSEE HAD FILED ITS RETURN OF INCOME FOR A.Y 07 - 08 IN RESPONS E TO NOTICE U/S 148 OF THE ACT AND T HE CONTENTION OF THE ASSESSEE THAT FIRST RETURN OF INCOME WAS FILED ON 03 - 09 - 2007 BY MISTAKE UNDER INCORRECT PAN IS NOT ACCEPTABLE. HE HELD THAT S ECTION 80AC INSERTED W.E.F 01 - 04 - 2006 CLEARLY PROVIDES THAT TO CLAIM DEDUCTION, RETURN HAS TO BE FILED U/S 13 9(1) OF THE ACT AND SUCH POSITION HAS BEEN EXPLAINED IN THE EXPLANATORY NOTES BY CIRCULAR NO. 40/2006 DATED 28 - 12 - 2006 AND THUS A.O HAS HELD THAT IN VIEW OF PROVISIONS OF 80AC, THE DEDUCTION CANNOT BE ALLOWED TO THE ASSESSEE. 6 8. THE A.O ALSO OBSERVED THAT THE ASSESSEE WAS NOT ABLE TO PROVE THAT IT IS A D EVELOPER . HE OBSERVED THAT EXPLANATION AFTER SUB - SECTION ( 13 ) OF SECTION 80IA CLEARLY STATES THAT DEDUCTION U/S 80IA(4) SHALL NOT BE AVAILABLE WHERE BUSINESS IS IN THE NATURE OF A WORKS CONTRACT AWARDED BY ANY PERSON INCLUDING CENTRAL AND STATE GOVERNMENT. HE OBSERVED THAT ASSESSEE IS A SIMPLE CONTRACTOR AND DOES NOT POSSESS ANY PLANT OR MACHINERY WHICH IS GENERALLY USED BY DEVELOPERS. THE TOTAL OPENING WDV OF PLANT AND MACHINERY WAS MERELY RS. 7,50 5/ - . ACCORDING TO A.O, TO QUALIFY TO BE A DEVELOPER, ONE HAS NORMALLY TO POSSESS HUGE CRANES, EARTH EXCAVATION EQUIPMENTS ETC. WORTH MULTIPLE OF CRORES OF RUPEES. HE ALSO OBSERVED T HAT ASSESSEE DOES NOT HAVE ON ROLE EMPLOYEES WHO HAVE THE CAPABILITY OF CREATING AND EXECUTING OWN DESIGNS FOR INFRASTRUCTURAL PROJECTS. HE OBSERVED THAT MERELY ENGAGING SUB - CONTRACTORS AND MANUAL LABOUR FOR DOING SOME EARTH EXCAVAT ION WORK CANNOT MAKE ENTITLE A CORPORATE TO QUALIFY ITSELF AS A DEVELOPER. HE ALSO OBSERV ED THAT R EPORT INITIALLY SUBMITTED ALONG WITH LETTER DATED 16 - 01 - 2014 IN FORM 10CCB DID NOT CONTAIN COMPLETE PARTICULARS AS REQUIRED . I N THIS MANNER, THE A.O HAS DISALLOWED THE CLAIM OF THE ASSESSEE OF RS. 92,22,111/ - AND MADE THE ADDITION TO THE NIL RETURN INCOME. 7 9. AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE LD. CIT( A). THE SUBMISSIONS MADE BEFORE THE A.O WERE REITERATED AND RELIANCE WAS PLACED ON SEVERAL DECISIONS TO CONTEND THAT PROVISIONS OF SECTION 80AC REQUIRING TO FILE RETURN WITHIN STATUTORY PERIOD PRESCRIBED IN SECTION 139(1) ARE DIRECTORY IN NATURE AND SINCE THE ASSESSEE HAD FILED THE ORIGINAL RETURN MISTAKENLY IN THE NAME OF ERSTWHILE PROPRIETARY CONCERN WHICH WAS WELL WITHIN TIME, THE SUBSEQUENT RETURN FILED BY THE ASSESSEE SHOULD BE CONSIDERED AS ELIGIBLE FOR CLAIMING DEDUCTION U/S 80IA(4) OF THE ACT. SO FAR AS IT RELATES TO THE ISSUE REGARDING NON - ELIGIBILITY OF THE ASSESSEE TO CLAIM SUCH DEDUCTION ON ACCOUNT OF ITS NOT BEING DEVELOPER, AS ACCORDING TO THE A.O, THE ASSESSEE WAS A SIMPLE CONTRACTOR AND DID NOT POSSESS ANY PLANT AND MACHINERY LIKE CRANES , EARTH EXCAVATION EQUIPMENTS ETC., IT WAS SUBMITTED THAT THE PROJECTS WERE AWARDED TO THE ASSESSEE AS A DEVELOPER INCLUDING MAINTENANCE THEREOF WHICH WERE ELIGIBLE CRITERIA PROVIDED U/S 80IA OF THE ACT. REGARDING POSSESSION OF PLANT AND MACHINERY IT WAS SUBMITTED THAT AS A MAT TER OF POLICY, THE ASSESSEE HAS AVAILED THE SERVICE OF OUTSIDE AGENCIES FOR SUCH EQUIPMENTS AND HAS INCURRED SUBSTANTIAL COST THEREON AGGREGATING TO APPROXIMATELY RS. 353 LACS INCLUDING SUB - CONTRACT CHARGES, HIRE CHARGES AND LABOUR COST ETC. IT WAS ALSO SUBMITTED THAT UNDER SAME SCENARIO FOR A.Y 2010 - 11 AND A.Y 2012 - 13, THE A.O HAD 8 ACCEPTED THAT THE ASSESSEE IS ENTITLED TO CLAIM DEDUCTION U/S 80IA. TO SUPPORT SUCH CONTENTION, COPIES OF BOTH THE ASSESSMENT OR DERS WERE FILED . 10. SO FAR AS IT RELATES TO ELIGIBILITY OF INTEREST INCOME FOR DEDUCTION U/S 80IA OF THE ACT AMOUNTING TO RS. 4,31,338/ - , WHICH WAS ASSESSED BY THE A.O UNDER THE HEAD INCOME FROM OTHER SOURCES, IT WAS SUBMITTED THAT THE INTEREST WAS INCOME IN THE NATURE OF BUSINESS AND IS ELIGIBLE FOR DEDUCTION U/S 80IA. IT WAS SUBMITTED THAT THE AMOUNT DEPOSIT ED IN FDR AND NSC WERE MADE AS A MANDATORY SECURITY DEPOSIT TO GET THE INFRASTRUCTURE PROJECTS, THEREFORE, THERE WAS NEXUS WITH THE BUSINESS, HENCE, THE SAME IS ELIGIBLE FOR U/S 80IA. FOR THIS PURPOSE ALSO, RELIANCE WAS PLACED ON SEVERAL JUDICIAL PRONOUNC EMENTS. THE GIST OF THESE DECISIONS ARE ALSO REPRODUCED IN THE ORDER OF THE LD. CIT(A), WHILE REPRODUCING THE SUBMISSIONS OF THE ASSESSEE IN PARA 3 OF THE IMPUGNED ORDER. 11. AFTER CONSIDERING ALL THE SUBMISSIO NS MADE BY THE ASSESSEE, LD CIT(A) HAS SHORT LISTED THREE REASONS POINTED OUT BY THE A.O FOR HOLDING THAT ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION U/S 80IA. FIRST REASON IS REGARDING APPLICABILITY OF SECTION 80AC. S INCE ASSESSEE DID NOT FILE ITS RETURN WITHIN STATUTORY PERIOD PRESCRIBED IN SECTION 139 (1) OF THE ACT , 9 THE ASSESSEE IS NOT ELIGIBLE TO CLAIM DEDUCTION U/S 80IA(4) OF THE ACT . SECOND REASON IS THAT THE ASSESSEE DIDNT PROVE THAT IT IS A DEVELOPER; THE ASSESSEE IS SIMPLE CONTRACTOR AND DOES NOT POSSESS A NY PLANT OR MACHINERY ETC. THE T HIRD REASON IS THAT THE REPORT INITIALLY SUBMITTED IN FORM NO. 10CCB DID NOT CONTAIN COMPLETE PARTICULARS AS REQUIRED. HE OBSERVED THAT HE HAS GONE THROUGH THE DETAILS , SUBMISSIONS, ASSESSMENT ORDER AND EVIDENCE AVAILABLE ON RECORD. HE OBSERVED THAT IT TRANSP IRE S THAT APPELLANT COMPANY HAD NOT FILED THE PROPER RETURN OF INCOME FOR THE IMPUGNED A.Y WITHIN DUE DATE PROVIDED U/S 139(1) OF THE ACT . HOWEVER, THERE WAS NO DISPUTE THAT THE COMPANY FILED ITS RETURN OF INCOME ORIGINALLY ON 3RD SEPTEM BER 2007 BUT WITH WRONG PAN OF D IRECTOR AND LATER ON PROPER RETURN IN THE NAME OF THE COMPANY WAS FILED ON 29TH APRIL 2013 IN RESPONSE TO NOTI CE U/S 148. HE OBSERVED THAT UNDER THESE FACTS AND CIRCUMSTANCES, THE ISSUE INVOLVED WAS THAT WHETHER A.O WAS JUSTIFIED IN DISALLOW ING THE DEDUCTION U/S 80IA OF THE ACT . HE REFERRED TO SEVERAL DECISION RELIED UPON BY THE ASSESSEE IN ITS WRITTE N SUBMISSIONS. KEEPING IN VIEW ALL THESE DECISIONS AND FACTS IN MIND, HE HAS OBSERVED THAT PROVISIONS OF SECTION 80AC ARE DIRECT ORY IN NATURE AND NOT MANDATORY, THEREFORE, NON - FILING OF RETURN WITHIN PERIOD PRESCRIBED U/S 139(1) OF THE ACT DOES NOT DEPRIVE THE ASSESSEE TO CLAIM DEDUCTION U/S 80IA OF THE ACT . 10 12. SO FAR AS IT RELATES TO SECOND REASON, LD. CIT( A), AFTER CONSIDERING THE AVAILABLE RECORD HAS COME TO A CONCLUSION THAT ASSESSEE COMPANY HAS COMPLIED WITH THOSE CONDITIONS. REGARDING DOUBTS IN THE MIND OF A.O OF ASSESSEE NOT BEING A DEVELOPER, HE OBSERVED THAT AS PER SUBMISSIONS, THE PROJECTS WERE A WARDED TO THE COMPANY AS A DEVELOPER INCLUDING MAINTENANCE THEREOF WHICH WAS ELIGIBLE IN THE CRITERIA PROVIDED U/S 80IA FOR CLAIMING DEDUCTIONS FROM PROFIT THEREOF. REGARDING POSSESSION OF PLANT AND MACHINERY HE REFERRED TO THE SUBMISSIONS ACCORDING TO WHICH, AS A MATTER OF POLICY THE ASSESSEE HAD AVAILED THE SERVICES OF OUTSIDE AGENCIES FOR WHICH THE ASSESSEE HAD INCURRED SUBSTANTIAL COST. HE ALSO OBSERVED THAT UNDER SIMILAR FACTS AND CIRCUMSTANCES DEDUCTION WAS ALLOWED TO THE ASSESSEE COMPANY BY THE A SSESSING OFFICER IN RESPECT OF A.YS 2010 - 11 AND 2012 - 13. 13. REGARDING THIRD REASON OF NON - SUBMISSION OF COMPLETE FORM NO. 10CCB, LD. CIT(A) HAS OBSERVED THAT FORM NO. 10CCB COMPLETE IN ALL RESPECT WAS FILED BEFORE COMPLETION OF ASSESSMENT. THUS, KEEPI NG IN VIEW ALL THESE FACTS AND DISCUSSIONS, HE HAS HELD THAT THE ASSESSEE IS ENTITLED TO DEDUCTION CLAIMED U/S 80IA AND HE HAS DIRECTED TO THE A.O. TO MODIFY THE ASSESSMENT ORDER ACCORDINGLY. LD. CIT(A) HAS ALSO HELD THAT INTEREST EARNED BY THE ASSESSEE F ROM FDRS AND NSCS, HAVING CLOSE NEXUS WITH THE BUSINESS OF THE ASSESSEE WAS ALSO ELIGIBLE FOR DEDUCTION 11 U/S80IA IN VIEW OF SEVERAL JUDICIAL PRONOUNCEMENTS RELIED UPON BY THE ASSESSEE. THUS, LD. CIT(A) DELETED THE AD DITION MADE BY THE A.O. THE DEPARTMENT IS AGGRIEVED WITH THE DELETION AND HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 92,22,110/ - ON ACCOUNT OF DISALLOWANCE MADE U/S 80IA OF THE INCOME TAX ACT, 1961. 2. THE APPELLANT CRAVES TO LEAVE TO ADD, ALTER, AMEND OR MODIFY ANY/ALL GROUNDS OF APPEAL AT ANY TIME BEFORE OR DURING THE COURSE OF HEARING OF THE APPEAL. 13. THE LD. DR SHRI RAVI KANT GUPTA, SUBMITTED THAT THE ASSESSEE DID NOT FILE THE RETURN OF INCOME WITHIN PERIOD PRESCRIBED U/S 139(1) OF THE ACT . THE RETURN WAS FILED BY THE ASSESSEE ONLY IN RESPONSE TO NOTICE U/S 148 OF THE ACT ON 29TH APRIL 2013. THE EARLIER RETURN CLAIMED TO BE SUBMITTED ON 30TH SEPTEMBER 2007 CANNOT BE TREATED TO BE RETURN FILED BY THE ASSESSEE. HE SUBMITTED THAT UNLESS RETURN IS FILED BY THE ASSESSEE WITHIN THE TIME PRESCRIBED U/S 139(1) OF THE ACT, DEDUCTION CANNOT BE ALLOWED. HE , IN THIS REGARD , RELIED UPON THE PROVISIONS OF SECTION 80AC OF THE ACT WHICH DESC RIBE THAT DEDUCTION U/S 80IA SHALL NOT BE ALLOWED UNLESS THE RETURN IS FILED ON OR BEFORE DUE DATE SPECIFIED UNDER SUB - SECTION (1) OF SECTION 139 OF THE ACT . THEREFORE, 12 HE CONTENDED THAT THE DEDUCTION WAS RIGHTLY DISALLOWED BY THE A.O. AND IT HAS WRONGLY BEEN ALLOWED BY THE CIT(A). LD. DR FURTHER SUBMITTED THAT ASSESSEE DID NOT FULFILL THE REQUIREMENT OF BEING A DEVELOPER FOR THE REASONS STATED IN THE ASSESSMENT ORDER WHERE A.O. HAS MENTIONED THAT AS PER EXPLANATION AFTER SUB - SECTION (13) OF SECTION 80I A, THE ASSESSEE WOULD NOT BE ELIGIBLE TO CLAIM SUCH DEDUCTION AS IT IS INVOLVED IN THE NATURE OF A WORK CONTRACT AWARDED BY ANY PERSON INCLUDING CENTRAL OR STATE GOVERNMENT. FOR HOLDING SO , THE A.O. HAS REFERRED TO THE OPENING WDV OF PLANT AND MACHINERY W HICH IS MERELY RS. 7,505/ - . HE SUBMITTED THAT FOR THIS PURPOSE THE A.O. HAS MENTIONED THAT AN ENTITY CAN BE CLASSIFIED AS DEVELOPER IF IT NORMALLY POSSESS HUGE CRANES, EARTH EXCAVATION EQUIPMENTS ETC. WORTH MULTIPLE CRORES OF RUPEES. THE ASSESSEE ALSO DOES NOT HAVE ON ROLL EMPLOYEES TO HAVE THE CAPABILITY TO CREATE AND EXECUTE OWN DESIGNS FOR I NFRASTRUCTURAL PROJECTS. LD. DR SUBMITTED THAT MERELY ENGAGING SUB - CONTRACTORS AND MANUAL LABOURS FOR DOING SOME EARTH EXCAVATION WORK DOES NOT ENTITLE ANY COR PORATE TO QUALIFY ITSELF AS A DEVELOPER. LD. DR ALSO SUBMITTED THAT THE ASSESSEE INITIALLY DID NOT SUBMIT COMPLETE FORM NO. 10CCB, THEREFORE, THE A.O. WAS RIGHT IN DISALLOWING THE DEDUCTION AND LD. CIT(A) HAS WRONGLY DELETED THE SAME. HE SUBMITTED 13 THAT ORDER PASSED BY THE A.O. SHOULD BE RESTORED AND THAT PASSED BY THE CIT(A) SHOULD BE SET ASIDE. 14. ON THE OTHER HAND, IT WAS SUBMITTED BY THE L D. COUNSEL OF THE ASSESSEE SHRI VIVEK BANSAL THAT INITIALLY THE RETURN WAS FILED ON 30TH SEPTEMBER 2007 BY THE ERSTWHILE ENTITY. THUS, THE CLAIM OF DEDUCTION WAS MADE WELL WITHIN THE TIME PRESCRIBE D BY THE STATUTE U/S 139(1) OF THE ACT. HE SUBMITTED THAT FILLING OF RETURN IN THE NAME OF ERSTWHILE PROPRIETARY CONCERN WAS AN INADVERTENT MISTAKE. IN RESPONSE TO NOTICE ISS UED U/S 148, THE RETURN WAS FILED IN WHICH THE SAME CLAIM OF SECTION 80IA WAS MADE. HE SUBMITTED THAT THE DEDUCTION CANNOT BE DISALLOWED TO THE ASSESSEE FOR THE SIMPLE REASON THAT THE ASSESSEE DID NOT SUBMIT RETURN WITHIN THE PRESCRIBED PERIOD UNDER THE PROVISIONS OF SECTION 139(1) OF THE ACT. 15. HE SUBMITTED THAT THE MAIN REASON TO DISALLOW THE CLAIM, AS STATED BY THE A.O IN THE ASSESSMENT ORDER, IS THE APPLICABILITY OF PROVISIONS OF SECTION 80AC OF THE ACT AS THE ASSESSEE DID NOT FILE ITS R ETURN U/S 139(1), THEREFORE, THE DEDUCTION HAS BEEN HELD TO BE NOT ALLOWABLE BY THE A.O. IT WAS SUBMITTED BY THE LD. COUNSEL THAT THE PROVISIONS OF SECTION 80AC HAVE BEEN HELD TO BE DIRECTORY IN NATURE IN SEVERAL JUDICIAL PRONOUNCEMENTS AND FOR THIS REASO N L D. CIT(A) HAS HELD 14 THAT THE DEDUCTION CANNOT BE DISALLOWED MERELY FOR THE REASON THAT ASSESSEE HAS FAILED TO FILE ITS RETURN OF INCOME WITHIN THE PRESCRIBED TIME STATED IN SECTION 139(1). TO CONTEND SO, LD. AR HAS RELIED UPON THE DECISION OF ITAT DELHI BENCH IN THE CASE OF FIBERFILL ENGINEERS VS. CIT [2017] 177 TTJ 556(DEL.) DATED 25TH FEBRUARY 2016, WHEREIN IT HAS BEEN HELD THAT DEDUCTION U/S 80IC CANNOT BE DISALLOWED EVEN IF THE ASSESSEE DID NOT FILE ITS RETURN OF INCOME WITHIN THE PERIOD PRESCRIBED U /S 139(1) OF THE ACT. IT HAS BEEN HELD THAT EVEN IF THE RETURN IS FILED U/S 139(4), THE ASSESSEE WOULD BE ENTITLED TO CLAIM DEDUCTION U/S 80IC AS THE PROVISIONS OF 80IC ARE INCENTIVE PROVISIONS AND HAS TO BE INTERPRETED IN A MANNER SO AS TO ADVANCE THE OBJ ECTS OF ECONOMIC ACTIVITIES IN THE COUNTRY AND NOT TO DENY THE CLAIM MERELY ON TECHNICAL GROUNDS. 16. LD. COUNSEL FURTHER SUBMITTED THAT WITHOUT PREJUDICE TO THE ABOVE CONTENTION, IF THE RETURN FILED BY THE ASSESSEE IS EVEN TREATED TO BE FIRST FILED IN R ESPONSE TO NOTICE U/S 148 OF THE ACT, THEN ALSO DEDUCTION CANNOT BE DISALLOWED AND THIS HAS SO BEEN HELD BY HONBLE KERALA HIGH COURT IN THE CASE OF CHIRAKAL SERVICE CO - OPERATIVE BANK LTD. KANUR VS. CIT [2016] 384 ITR 490(KERALA) DECISION DATED 15TH FEBRUA RY 2016. HE SUBMITTED THAT A PARTICULAR QUESTION OF LAW WAS CONSIDERED BY HONBLE KERALA HIGH COURT THAT WHETHER OR NOT RETURNS 15 FILED BY THE ASSESSEE BEYOND THE PERIOD STIPULATED U/S 139(1)/(4) OR SECTION 142(1) CAN BE HELD AS NON EST IN LAW AND INVALID F OR THE PURPOSE OF DECIDING EXEMPTION. THE OTHER QUESTION CONSIDERED BY HONBLE KERALA HIGH COURT WAS THAT WHETHER TRIBUNAL WAS JUSTIFIED IN DENYING EXEMPTION ON THE MERE GROUND OF BELATED FILING OF RETURN BY THE ASSESSEE. BOTH THE QUESTI ONS WERE ANSWER ED IN FAVOUR OF A SSESSEE. LD. COUNSEL RELIED UPON PARA S 18 TO 21 OF THE SAID JUDGMENT . LD. COUNSEL FURTHER REFERRED TO THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CHURCHS AUXILIARY FOR SOCIAL ACTION VS. DGIT (EXEMPTIONS) [2010] 325 ITR 362 (DEL.) TO CONTEND THAT EVEN WHERE A PARTICULAR PROVISION OF A STATUTE WHICH ON THE FACE OF IT APPEARS TO BE MANDATORY IN AS MUCH AS IT USED THE WORD SHALL CAN BE INTERPRETED TO BE DIRECTORY AND FOR THAT PURPOSE I T WOULD BE NECESSARY TO TAKE INTO CONSIDERATION THE PURPOSE FOR WHICH THE PROVISION HAS BEEN MADE, THE OBJECT TO BE ATTAINED, INT ENTION OF THE LEGISLATURE IN MAKING THE PROVISIONS, THE SERIOUS INCONVENIENCE OR INJUSTICE WHICH MAY RESULT IN TREATING THE PROVISION ONE WAY OR THE OTHER, THE RELATION OF THE PROVISION TO OTHER CONSIDER WHICH MAY ARISE ON THE FACTS OF ANY PARTICULAR CASE HAVE ALL TO BE TAKEN INTO ACCOUNT IN ARRIVING AT THE CONCLUSION WHETHER THE PROVISION IS MANDATORY OR DIRECTORY. HE CONTENDED THAT THEIR LORDSHIPS IN THE SAID CASE AFTER TAKING INTO CONSIDERATION VARIOUS DEFINITIONS AND 16 AVAILABLE CASE LAWS, HAVE COME TO A CONCLUSION THAT REAL INTENTION OF THE LEGISLATURE WHILE ENACTING SUB - SECTION (5C) OF SECTION 80G OF THE ACT WAS TO ENSURE APPLICATION OF DONATION TO SPECIFIC PURPOSE BY SPECIFIED DATE AND THAT PART OF THE PROVISION WAS MANDATORY. IN ORDER TO FIND OUT TH E DONATIONS ARE APPLIED FOR STIPULATED PURPOSE, REQUIREMENT OF RENDITION OF ACCOUNT WAS INTRODUCED. IT WAS NEVER THE INTENTION OF THE LEGISLATURE THAT SUCH INSTITUTIONS OR FUNDS SHOULD PAY THE TAXES ON THE DONATIONS RECEIVED EVEN WHEN NECESSARY APPLICATIO NS WITH THE PROVISIONS BY EXPENDING THE DONATIONS FOR SPECIFIED PURPOSE MADE. THUS, THEIR LORDSHIPS HAVE HELD THAT EXEMPTION U/S 80G(5C)(V) COULD NOT BE DISALLOWED MERELY FOR NON - RENDITION OF ACCOUNT WITHIN STATUTORY PRESCRIBED PERIOD BY TREATING THE PROV ISION OF RENDITION OF ACCOUNT AS MANDATORY. THUS, IT WAS PLEADED BY LD. AR THAT THE WORD SHALL USED IN SECTION 80AC CANNOT BE HELD TO BE MANDATORY AND IS REQUIRED TO BE CONSIDERED AS DIRECTORY AS HAS BEEN HELD BY CIT(A) AND ALSO BY THE ITAT DELHI BENCH IN THE CASE OF FIBERFILL ENGINEERS (SUPRA). 17. S O FAR AS IT RELATES TO CONTENTION OF LD. DR THAT ASSESSEE COUL D NOT BE TREATED AS DEVELOPER AND THEREFORE IS NOT ELIGIBLE TO CLAIM DEDUCTION, LD. AR INVITED OUR ATTENTION TOWARDS THE FINDING OF LD. CIT(A) GIVEN IN PARA 5. HE ALSO INVITED OUR ATTENTION TOWARDS OBSERVATIONS OF THE A.O. IN THE ASSESSMENT ORDER TO CONTEND THAT 17 ASSESSING OFFICER HAS DOUBTED THE C LAIM OF ASSESSEE BEING A DEVELOPER FOR THE REASON THAT THE WORK CARRIED OUT BY THE ASSESSEE WAS IN THE NATURE OF WORK CONTRACT AND IT DOES NOT POSSESS PLANT OR MACHINERY WHICH IS GENERALLY USED BY DEVELOPER. REFERRING TO THESE OBSERVATIONS OF THE A.O. IT WAS SUBMITTED TO CIT(A) THAT AS A MATTER OF POLICY THE ASSESSEE WAS AVAILING THE SERVICES OF OUTSIDE AGENCIES FOR EQUIPMENTS ON WHICH IT HAS INCURRED SUBSTANTIAL COST. HE SUBMITTED THAT THE AO HAS CONVENIENTLY IGNORED THE LETTER FILED BY THE ASSESSEE O N 04 - 03 - 2014. THEREFORE, HE PLEADED THAT MERELY ON THE BASIS OF THE FACT THAT THE WORK WAS BEING OUTSOURCED, THE ASSESSEE CANNOT BE DENIED OF THE BENEFIT OF BEING DEVELOPER. HE SUBMITTED THAT IT CAN BE SEEN THAT UNDER SIMILAR FACTS AND CIRCUMSTANCES, TH E ASSESSEE WAS TREATED TO BE ELIGIBLE FOR CLAIMING DEDUCTION U/S 80IA(4) BY THE A.O. IN RESPECT OF A.Y 2010 - 11 AS WELL AS FOR A.Y 2012 - 13 BY WAY OF ORDER PASSED U/S 143(3) OF THE ACT. HE IN THIS REGARD REFERRED TO THE ASSESSMENT ORDERS DATED 28 - 03 - 2013 IN RESPECT OF A.Y 2010 - 11 AND DATED 27 - 02 - 2015 IN RESPECT OF A.Y 2012 - 13. THE COPIES OF BOTH THESE ASSESSMENT ORDERS WERE PLACED ON RECORD AND WERE GIVEN TO LD. DR. IN ASSESSMENT ORDER FOR A.Y 2010 - 11 THE DEDUCTION U/S 80IA(4)(I)(B) HAS BEEN ALLOWED BY THE A.O EXCEPT FOR A SUM OF RS. 10,08,925/ - WHICH WAS EARNED ON FDRS AND NSCS . SIMILARLY, IN ASSESSMENT ORDER DATED 18 27 - 02 - 2015 FOR A.Y 2012 - 13 THE DEDUCTION U/S 80IA HAS BEEN ALLOWED EXCEPT A SUM OF RS. 5,20,041/ - WHICH WAS NET INTEREST EARNED BY THE ASSESSE E AND THE SAME WAS NOT CONSIDERED TO BE ELIGIBLE FOR DEDUCTION U/S 80IA OF THE ACT . HE SUBMITTED THAT TAKING INTO CONSIDERATION THESE ASSESSMENT ORDERS WHEREIN FOR SIMILAR ACTIVITY THE ASSESSEE WAS CONSIDERED TO BE ELIGIBLE FOR CLAIMING DEDUCTION U/S 80IA AND ALSO THE SUBMISSION OF THE ASSESSEE THAT THE WORK WAS OUTSOURCED, L D. CIT(A) HAS HELD THAT THE ASSESSEE IS ELIGIBLE FOR CLAIMING DEDUCTION U/S 80IA OF THE ACT . HE FURTHER SUBMITTED THAT A FRESH FORM NO. 10CCB WAS FILED DURING THE COURSE OF ASSESSMENT PROCEEDINGS IN WHICH ALL THE DEFICIENCIES MENTIONED BY THE A.O. WERE REMOVED AND REFERRED TO THE LETTER SUBMITTED BY THE ASSESSEE TO THE A.O. ON 04 - 03 - 2014 COPY OF WHICH IS FILED AT PAGES 31 TO 33 OF THE PAPER BOOK. THEREFORE, HE PLEADED THAT ON THIS GRO UND ALSO, THE CLAIM OF THE ASSESSEE HAS RIGHTLY BEEN HELD TO BE ALLOWABLE BY THE LD. CIT(A). 18. WE HAVE HEARD BOTH OF PARTIES AND THEIR CONTENTION HAVE CAREFULLY BEEN CONSIDERED. ON THREE GROUNDS, THE A.O. HAS REJECTED THE CLAIM OF THE ASSESSEE REGARDING DEDUCTION U/S 80IA(4)(I)(B) OF THE ACT . THE FIRST GROUND TAKEN BY THE A.O IS THAT THE ASSESSEE HAS FAILED TO MEET THE MANDATORY REQUIREMENT AS SPECIFIED IN SECTION 80AC OF THE ACT FILLING ITS RETURN U/S 139(1) OF THE ACT , THEREFORE , IT IS NOT ELIGIBLE 19 TO CLAIM DEDUCTION U/S 80IA OF THE ACT . THE L D. CIT(A) HAS ADMITTED THE CLAIM OF THE ASSESSEE ON THE GROUND THAT PROVISIONS OF 80AC ARE DIRECTORY IN NATURE. LD. COUNSEL OF THE ASSESSEE HAS RELIED UPON DECISION O F THE COORDINATE BENCH IN THE CASE OF FIBERFILL ENGINEERS (SUPRA) WHEREIN WHILE EXAMINING THE CLAIM OF DEDUCTION U/S 80IC IN A CASE WHERE RETURN WAS NOT FILED WITHIN PRESCRIBED STATUTORY TIME U/S 139(1) OF THE ACT , IT HAS BEEN HELD THAT THE ASSESSEE WOULD BE ELIGIBLE TO CLAIM DEDUCTION AS THE PROVISIONS OF SECTION 80AC OF THE ACT ARE DIRECTORY IN NATURE AND PROVISIONS OF SECTION 80IC OF THE ACT BEING INCENTIVE PROVISIONS HAS TO BE INTERPRETED IN A MANNER SO AS TO ADVANCE THE OBJECTS OF ECONOMIC ACTIVITIES I N THE COUNTRY AND NOT TO DENY THE CLAIM MERELY ON TECHNICAL GROUNDS. THEREFORE, IN THAT CASE, FOR THE RETURN FILED U/S 139(4), IT IS HELD THAT ASSESSEE WOULD BE ELIGIBLE FOR CLAIMING DEDUCTION U/S 80IC. THE RELEVANT OBSERVATIONS FROM THAT DECISION ARE RE PRODUCED BELOW: ' 54. THE THIRD ISSUE FOUR OUR CONSIDERATION IS WHETHER IN VIEW OF THE PROVISION OF SECTION 80AC, THE ASSESSEE IS ENTITLED TO DEDUCTION U/S 80IC ON ACCOUNT OF LATE FILING OF RETURN. SECTION 80AC READS AS UNDER: 'DEDUCTION NOT TO BE ALLOWED UNLESS RETURN FURNISHED. 80AC. WHERE IN COMPUTING THE TOTAL INCOME OF AN ASSESSEE OF THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR COMMENCING ON THE 1 ST DAY OF 20 APRIL, 2006 OR ANY SUBSEQUENT OF ASSESSMENT YEAR, ANY DEDUCTION IS ADMISSIBLE UNDER SECTION 80IA OR SECTION 80IAB OR SECTION 80IB OR SECTION 80IC[ OR SECTION 80ID OR SECTION 80IE], NO SUCH DEDUCTION SHALL BE ALLOWED TO HIM UNLESS HE FURNISHES A RETURN OF HIS INCOME FOR SUCH ASSESSMENT YEAR ON OR BEFORE THE DUE DATE SPECIFIED UNDER SUB - SEC TION (1) OF SECTION 139.' 55. WHILE REFERRING TO THE FINDING OF ASSESSMENT ORDER, WE HAVE NOTED VARIOUS DECISIONS RELIED UPON BY LD. COUNSEL FOR THE ASSESSEE, WHICH HELD THAT SECTION 139(4) IS TO BE READ AS PROVISO TO SECTION 139(1). IT IS TRUE THAT THE H EADING OF SECTION 80AC CLEARLY SHOWS THAT DEDUCTION IS NOT TO BE ALLOWED UNLESS RETURN IS FURNISHED ON OR BEFORE THE DUE DATE SPECIFIED UNDER SUB - SECTION (1) TO SECTION 139. HOWEVER, IT CANNOT BE DENIED THAT SECTION 80IC IS AN INCENTIVE PROVISION AND IN V IEW OF VARIOUS JUDICIAL PRONOUNCEMENTS PARTICULARLY IN THE CASE OF BAJAJ TEMPO LTD. ( SUPRA ), THE INCENTIVE PROVISION HAS TO BE INTERPRETED IN A MANNER SO AS TO ADVANCE THE OBJECTS OF ECONOMIC ACTIVITIES IN THE COUNTRY AND NOT TO DENY THE CLAIM MERELY ON TE CHNICAL GROUNDS. 56. SECTION 139(4) READS AS UNDER: '139(4) ANY PERSON WHO HAS NOT FURNISHED A RETURN WITHIN THE TIME ALLOWED TO HIM UNDER SUB - SECTION (1), OR WITHIN THE TIME ALLOWED UNDER A NOTICE ISSUED UNDER SUB - SECTION (1) OF SECTION 142, MAY FURNISH THE RETURN FOR ANY PREVIOUS YEAR AT ANY TIME BEFORE THE EXPIRY OF ONE YEAR FROM THE END OF THE RELEVANT ASSESSMENT YEAR OR BEFORE THE COMPLETION OF THE ASSESSMENT, WHICHEVER IS EARLIER. 21 PROVIDED THAT WHERE THE RETURN RELATES TO A PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR COMMENCING ON THE 1ST DAY OF APRIL, 1988, OR ANY EARLIER ASSESSMENT YEAR, THE REFERENCE TO ONE YEAR AFORESAID SHALL BE CONSTRUED AS A REFERENCE TO TWO YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR.' 57. A BARE PERUSAL OF THIS SECTI ON MAKES IT CLEAR THAT THE LEGISLATURE ITSELF HAS ALLOWED THE ASSESSEE TO FILE RETURN BELATEDLY SUBJECT TO FULFILLMENT OF CONDITIONS WRITTEN IN THE SAID SECTION. THEREFORE, ONCE THOSE CONDITIONS ARE MET, THEN RETURN FILED BY THE ASSESSEE WOULD FOR ALL TECH NICAL PURPOSES BE CONSIDERED BEING FILED U/S 139(1). THUS, KEEPING IN VIEW THE VARIOUS DECISIONS NOTED EARLIER, WE DO NOT FIND ANY REASON TO DENY THE CLAIM OF ASSESSEE ON THE GROUND OF FILING THE RETURN BELATEDLY.' 19. IN THE CASE OF CHIRAKAL SERVICES CO - OPERATIVE BANK LTD. KANNUR (SUPRA), RELIED UPON BY LD. AR, IT HAS BEEN HELD THAT EVEN IN THE RETURNS WHICH ARE FILED BELATEDLY, THAT IS TO SAY, BEYOND THE PERIOD STIPULATED UNDER SUB - SECTION (1) OR (4) OF SECTION 139; AND, WHICH ARE RETURNS FI LED AFTER THE PERIOD WITH REFERENCE TO SECTIONS 142(1) AND 148 OF THE IT ACT, DEDUCTION CANNOT BE DISALLOWED ON THE GROUND THAT RETURN WAS NOT FILED WITHIN THE STIPULATED PERIOD PRESCRIBED UNDER SECTION 139(1). THEIR LORDSHIPS IN THAT CASE COMPARED THE PR OVISIONS OF 80A(5) WITH THE PROVISIONS CONTAINED IN SECTION 80AC AND HAVE REACHED A CONCLUSION THAT IN A CASE WHERE RETURN IS FILED EVEN U/S 148, THE 22 CLAIM OF THE ASSESSEE FOR DEDUCTION HAS TO BE CONSIDERED AND ALLOWED. REFERENCE IN THIS REGARD CAN BE MAD E TO THE RELEVANT OBSERVATIONS REGARDING QUESTIONS OF LAW AND THE DECISION RENDERED THEREON IN THE SAID CASE , WHICH ARE AS UNDER: '(B) WHETHER THE TRIBUNAL IS JUSTIFIED IN DENYING THE EXEMPTION UNDER SECTION 80P OF THE INCOME TAX ACT, 1961, ON THE MERE GROUND OF BELATED FILING OF RETURN BY THE ASSESSEE? (C) WHETHER A RETURN FILED BY THE ASSESSEE BEYOND THE PERIOD STIPULATED UNDER SECTION 139(1)/(4) OR SECTION 142(1)/148 CAN BE HELD AS NON EST IN LAW AND INVALID FOR THE PURPOSE OF DECIDING EXEMPTION UN DER SECTION 80P OF THE INCOME TAX ACT, 1961?' 20. HERE, QUESTIONS WOULD ARISE AS TO WHETHER BELATED RETURNS FILED BEYOND THE PERIOD STIPULATED UNDER SECTION 139(1) OR SECTION 139(4) AS WELL AS FOLLOWING SECTIONS 142(1) AND 148 PROCEEDINGS COULD BE CONSIDERED FOR EXEMPTION. IF THOSE RETURNS ARE ELIGIBLE TO BE ACCEPTED IN TERMS OF LAW, GOING BY THE PROVISIONS OF THE STATUTE AND THE GOVERNING BINDING PRECEDENTS, IT GOES WITHOUT SAYING THAT THE CLAIM FOR EXEMPTION WILL ALSO STAND EFFECTUATED AS A CLAIM DULY MADE AS PART OF THE RETURNS SO FILED, FOR DUE CONSIDERATION. 21. WHEN A NOTICE UNDER SECTION 142(1) IS ISSUED, THE PERSON MAY FURNISH THE RETURN AND WHILE DOING SO, COULD ALSO MAKE CLAIM FOR DEDUCTION REFERABLE TO SECTION 80P. NOT MUCH DIFFERENT IS THE 23 SITUATION WHEN PRE - ASSESSMENT ENQUIRY IS CARRIED FORWARD BY ISSU ANCE OF NOTICE UNDER SECTION 142 (1) OR WHEN NOTICE IS ISSUED ON THE PREMISE OF ESCAPED ASSESSMENT REFERABLE TO SECTION 148 OF THE IT ACT. THIS POSITION NOTWITHSTANDING, WHEN AN ASSESSMENT IS SUBJECTED TO FIRST APPEAL OR FURTHER APPEALS UNDER THE IT ACT OR ALL QUESTIONS GERMANE FOR CONCLUDING THE ASSESSMENT WOULD BE RELEVANT AND CLAIMS WHICH MAY RESULT IN MODIFICATION OF THE RETURNS ALREADY FILED COULD ALSO BE ENTERTAINED, PARTICULARLY WHEN IT RELATES TO CLAIMS FOR EXEMPTIONS. THIS IS SO BECAUSE THE FINALIT Y OF ASSESSMENT WOULD NOT BE ACHIEVED IN ALL SUCH CASES, UNTIL THE TERMINATION OF ALL SUCH APPELLATE REMEDIES. UNDER SUCH CIRCUMSTANCES, THE TRIBUNAL WAS NOT JUSTIFIED IN DENYING EXEMPTION UNDER SECTION 80P OF THE IT ACT ON THE MERE GROUND OF BELATED FILIN G OF RETURN BY THE ASSESSEE CONCERNED. A RETURN FILED BY THE ASSESSEE BEYOND THE PERIOD STIPULATED UNDER SECTION 139(1) OR 139(4) OR UNDER SECTION 142(1) OR SECTION 148 CAN ALSO BE ACCEPTED AND ACTED UPON PROVIDED FURTHER PROCEEDINGS IN RELATION TO SUCH AS SESSMENTS ARE PENDING IN THE STATUTORY HIERARCHY OF ADJUDICATION IN TERMS OF THE PROVISIONS OF THE IT ACT. IN ALL SUCH SITUATIONS, IT CANNOT BE TREATED THAT A RETURN FILED AT ANY STAGE OF SUCH PROCEEDINGS COULD BE TREATED AS NON EST IN LAW AND INVALID FOR THE PURPOSE OF DECIDING EXEMPTION UNDER SECTION 80P OF THE IT ACT. WE THUS ANSWER SUBSTANTIAL QUESTIONS OF LAW B AND C FORMULATED AND ENUMERATED ABOVE.' 20. FROM THE ABOVE POSITION OF LAW, IT EMERGES THAT THE PROVISIONS CONTAINED IN SECTION 80AC ARE DIRE CTORY IN NATURE AND IF THE RETURN IS FILED BY THE ASSESSEE UNDER EITHER OF THE SECTIONS 139(1), 139(4), 24 142(1) AND 148, THEN THE ASSESSEE WOULD BE ENTITLED TO CLAIM DEDUCTION. THE REASON GIVEN BY HONBLE KERALA HIGH COURT IS THAT SUCH CLAIM CANNOT BE DISA LLOWED MERELY ON THE GROUND THAT RETURN WAS FILED BELATEDLY. A RETURN FILED BY THE ASSESSEE BEYOND THE PERIOD STIPULATED U/S 139(1) OR 139(4) OR U/S 142(1) OR SECTION 148 CAN ALSO BE ACCEPTED AND ACTED UPON PROVIDED FURTHER PROCEEDINGS IN RELATION TO SUCH ASSESSMENTS ARE PENDING IN THE STATUTORY HIERARCHY OF ADJUDICATION IN TERMS OF THE PROVISIONS OF THE IT ACT. IN ALL SUCH SITUATIONS, IT CANNOT BE TREATED THAT A RETURN FILED AT ANY STAGE OF SUCH PROCEEDINGS COULD BE TREATED AS NON EST IN LAW AND INVALID FOR THE PURPOSE OF DECIDING EXEMPTION. IN THIS MANNER THE AFOREMENTIONED QUESTIONS OF LAW B AND C HAVE BEEN ANSWERED IN FAVOUR OF ASSESSEE. APPLYING THE AFOREMENTIONED POSITION OF LAW, AS THE PRESENT ASSESSMENT IS MADE BY THE A.O. U/S 147 R.W.S 143(3) ON THE BASIS OF RETURN FILED BY THE ASSESSEE IN RESPONSE TO NOTICE U/S 148 AND SUCH ASSESSMENT IS PENDING IN STATUTORY HIERARCHY OF ADJUDICATION, THE BENEFIT OF CLAIMING DEDUCTION U/S 80IA CANNOT BE DENIED TO ASSESSEE, THEREFORE, WE ARE OF THE OPINION THAT DE DUCTION CANNOT BE DISALLOWED MERELY ON THE GROUND THAT THE RETURN FILED BY THE ASSESSEE WAS FILED IN RESPONSE TO NOTICE U/S 148 AND IT WAS NOT FILED U/S 139(1). THIS IS APART FROM MAIN CLAIM OF THE ASSESSEE THAT IN ANY CASE THE DEDUCTION WAS CLAIMED IN TH E RETURN 25 FILED U/S 139(1) INADVERTENTLY BY THE ERSTWHILE PROPRIETARY CONCERN OF SHRI NARESH KUMAR TOMAR, WHICH MAY BE CONSIDERED TO BE A REASONABLE CAUSE FOR THE PRESENT ASSESSEE FOR NOT FILING THE RETURN WITHIN THE PRESCRIBED STATUTORY PERIOD U/S 139(1) O F THE ACT. 21. NOW, COMING TO THE SECOND REASON STATED BY THE A.O. FOR WHICH HE HAS HELD THAT THE DEDUCTION CANNOT BE ALLOWED TO THE ASSESSEE AS THE ASSESSEE CANNOT BE CATEGORIZED AS DEVELOPER. THE A.O. WHILE HOLDING SO HAS RESTED HIS DECISION MAINLY ON TWO FACTORS NAMELY, THE ASSESSEE DID NOT OWN PLANT AND MACHINERY USUALLY OWNED BY DEVELOPERS AND THE ASSESSEE ALSO DOES NOT HAVE OWN ROLE EMPLOYEES WHO HAVE THE CAPABILITY TO CREATE AND EXECUTE OWNED DESIGNS FOR INFRASTRUCTURAL PROJECTS. HE OBSERV ED THAT MERELY ENGAGING SUB - CONTRACTORS AND MANUAL LABOR FOR DOING SOME EARTH EXCAVATION WORK DOES NOT ENTITLE ANY CORPORATE TO QUALIFY ITSELF AS A DEVELOPER. AGAINST SUCH REASON GIVEN BY THE A.O. LD. CIT(A) HAS TAKEN INTO CONSIDERATION THE SUBMISSIONS OF THE ASSESSEE THAT THE PROJECTS AWARDED TO THE ASSESSEE WERE IN CAPACITY OF DEVELOPER WHICH INCLUDED MAINTENANCE THEREOF ALSO AND ASSESSEE HAS AVAILED THE SERVICES OF OUTSIDE AGENCIES FOR EQUIPMENTS ETC. ON WHICH THE ASSESSEE HAS I N CURRED HUGE COST OF RS. 353 LAKHS INCLUDING SUB - CONTRACT CHARGES, HIRE CHARGES AND LABOUR COST ETC. HE HAS ALSO TAKEN INTO CONSIDERATION 26 THE ASSESSMENT ORDERS PASSED BY THE A.O. IN RESPECT OF A.YS 2010 - 11 AND 2012 - 13 IN WH ICH UNDER SAME FACTS THE A.O HAS ADMITT ED THE CLAIM OF THE ASSESSEE REGARDING DEDUCTION U/S 80IA EXCEPT INTEREST INCOME WHICH WAS NOT CONSIDERED TO BE ELIGIBLE FOR DEDUCTION U/S 80IA OF THE ACT . 22. REFERENCE IS MADE TO THE LETTER FILED BY THE ASSESSEE BEFORE THE AO ON 04 - 03 - 2014 . C OPY OF S UCH LETTER IS FILED AT PGS. 31 TO 33 OF THE PAPER BOOK. IN RESPONSE TO QUERY OF THE AO REGARDING ADMISSIBILITY OF CLAIM OF DEDUCTION U/S 80IA(4), THE SUBMISSIONS OF THE ASSESSEE ARE INCORPORATED IN PARA 4 OF THE LETTER. THE ASSESSEE AFTER REPRODUCING THE L ANGUAGE OF SECTION 80IA(4) AND RELYING UPON THE DECISION OF ITAT IN THE CASE OF GVPR ENGINEERS LTD. VS. ACIT [2012] 21 TAXMANN.COM 25(HYDERABAD) HAS CONTENDED THAT THE DEDUCTION IS ELIGIBLE TO THE ASSESSEE. IN THE SAME PARA, THE ASSESSEE HAS ALSO RELIED UP ON ASSESSMENT ORDER DATED 28 - 03 - 2013 PASSED IN RESPECT IN OF AY 2010 - 11 BY THE SAME WARD 2(1) IN WHICH IT WAS HELD BY THE AO THAT THE ASSESSEE COMPANY IS ENGAGED IN DEVELOPING INFRASTRUCTURE PROJECTS WHICH IS ALSO AWARDED BY IRRIGATION CONTRACTS FROM STATE GOVERNMENT AND IS ENTITLED TO DEDUCTION ON THE PROJECTS DERIVED DIRECTLY FROM ELIGIBLE ACTIVITY I.E. FROM DEVELOPMENT OF INFRASTRUCTURE PROJECT. THE RELEVANT REPLY OF THE ASSESSEE WITH REGARD TO ASSESSMENT ORDER FOR AY 2010 - 11 ARE AS UNDER: - 27 ' FURTHER, TO BRING IN YOUR KIN D ATTENTION THAT IN ORDER DATED 28/03/2013 FOR THE A/Y 2010 - 11 THE SAME WARD 2(1) CONFIRMED THAT THE ASSESSEE COMPANY IS A COMPANY ENGAGED IN DEVELOPING INFRASTRUCTURE PROJECTS WHICH IS ALSO AWARDED BY IRRIGATION CONTACTS FROM STATE GOVERNMENT AND IS ENTITL ED TO DEDUCTION ON THE PROJECTS DERIVED DIRECTLY FROM THE ELIGIBLE ACTIVITY I.E. FROM DEVELOPMENT OF INFRASTRUCTURE PROJECTS.' 23. THE ASSESSMENT ORDER PASSED IN RESPECT OF A.Y. 2010 - 11 IS DATED 28 - 03 - 2013. THUS, THE ASSESSMENT FOR A.Y 2010 - 11 WAS PASS ED ABOUT ONE YEAR BACK FROM THE DATE OF THE ASSESSMENT ORDER FOR THE IMPUGNED ASSESSMENT YEAR. SIMILARLY, THE ASSESSMENT ORDER FOR A.Y. 2012 - 13 WAS PASSED ON 27 - 03 - 2015 I.E. ABOUT ONE YEAR AFTER THE ASSESSMENT ORDER PASSED FOR THE IMPUGNED ASSES SMENT YEAR . IN BOTH THESE ORDERS, THE CLAIM OF THE ASSESSEE REGARDING DEDUCTION U/S 80IA HAS BEEN ACCEPTED. ASSESSMENT ORDER FOR A.Y. 2010 - 11 WAS ALREADY IN EXISTENCE AND WAS PASSED BY A.O. OF THE SAME WARD AND UN DER SAME PAN NUMBER AND REFERENCE TO THIS ORDER WAS MADE BEFORE THE AO IN THE WRITTEN SUBMISSIONS FILED ON 04 - 03 - 2014 I.E. BEFORE COMPLETION OF THE ASSESSMENT FOR THE IMPUGNED ASSESSMENT YEAR WHICH IS COMPLETED ON 07 - 03 - 2014. THUS, WHEN THE ORDER FOR IMPUGNED A.Y. WAS PASSED, THE CLAIM OF DEDUCTION U/S 80I A WAS ALREADY ACCEPTED BY THE REVE NUE AND NO MATERIAL HAS BEEN BROUGHT ON RECORD BY THE REVENUE TO SUGGEST THAT 28 THE CLAIM OF DEDUCTION GRANTED FOR A.Y. 2010 - 11 HAS EVER BEEN SOUGHT TO BE WITHDRAWN AFTER TAKING THE VIEW IN THE CASE OF THE ASSESSEE ITSELF TH AT SUCH DEDUCTION WAS NOT AVAILABLE TO THE ASSESSEE ON ACCOUNT OF ITS NOT BEING CLASSIFIED AS DEVELOPER IN RESPECT OF IMPUGNED ASSESSMENT YEAR . RATHER, AFTER ABOUT ONE YEAR, THE CLAIM OF THE ASSESSEE REGARDING DEDUCTION U/S 80IA WAS AGAIN ACCEPTED BY TH E A.O. IN RESPECT OF A.Y. 2012 - 13. THE AO HAS CONVENIENTLY IGNORED THE SUBMISSIONS OF THE ASSESSEE IN LETTER FILED ON 04 - 03 - 2014 AND IT HAS NOT BEEN DESCRIBED BY HIM THAT HOW THE ASSESSEE WHICH WAS ALREADY CONSIDERED ELIGIBLE FOR CLAIMING DEDUCTION U/S 80IA BEING A DEVELOPER IN RESPECT OF A.Y. 2010 - 11 CANNOT BE CONSIDERED AS DEVELOPER FOR A.Y. 2007 - 08. KEEPING IN VIEW ALL THESE FACTS AND ALSO THE PRINCIPLE OF CONSISTENCY, WE ARE OF THE OPINION THAT IT WILL BE INCORRECT TO DENY THE CLAIM OF THE ASSESSEE REGARDING DEDUCTION U/S 80IA ON THE GROUND THAT THE ASSESSEE DOES NOT FALL WITHIN THE CATEGORY OF DEVELOPER. 22. NOW COMING TO THE THIRD REASON GIVEN THE A.O. TO DENY THE CLAIM OF DEDUCTION U/S 80IA THAT INITIALLY THE ASSESSEE DID NOT SUBMIT COMPLETE FORM NO. 10CCB. IN THIS REGARD LD. AR, D URING THE COURSE OF HEARING, HAS RELIED UPON REPLY FILED BEFORE A.O. DATED 04 - 03 - 2014, COPY OF WHICH HAS BEEN FILED AT PAGES 31 TO 33 OF THE PAPER BOOK. IN POINT NO. 2, THE ASSESSEE HAS DESCRIBED THE PARTICULARS REGARDING 29 DEFICIENCIES POINTED OUT BY THE A.O. IN FORM NO. 10CCB SUBMITTED INITIALLY . T HE RELEVANT PORTION OF REPLY OF T HE ASSESSEE IS REPRODUCED BELOW: THE FORM NO. 10CCB FOR THE A.Y. 2007 - 08 I N WHICH THE MISSING INFORMATION IN THE BELOW MENTIONED ROWS HAS BEEN COMPILED ALONG WITH THIS LETTER: 1. R. NO. 8 - DATE OF COMMENCEMENT OF OPERATION/ A C TIVITY BY THE UNDERTAKI NG OR ENTERPRISE. 2. R. NO. 9 - INITIAL ASSESSMENT YEAR FROM WHICH DEDUCTION IS CLAIMED. 3. R. NO 11, 12, 13 WHICH WERE LEFT BLANK HAVE ALSO BEEN FILLED. 4. R. NO. 30 - NON APPLICABLE ACTIVITIES HAVE BEEN STRUCK OFF. 5. THE DECLARATION SHEET HAS BEEN MODIFIED AND ADDITIO N HAS BEEN MADE IN RESPECT OF NAME OF M/S ARHAM TECHNOLOGIES PVT. LTD. 6. THE PLACE AND DATE OF SIGNING THE REPORT HAS BEEN NOW MENTIONED. 30 ALONG WITH THE ABOVE LETTER, THE ASSESSEE ALSO FILED FORM NO. 10CCB FULFILLING ALL THE DEFICIENCIES POINTED OUT BY THE A.O AND COPY OF SUCH FORM HAS BEEN FILED AT PAGES 34 TO 39 OF THE PAPER BOOK. THE CIT(A) ALSO HAS TAKEN INTO CONSIDERATION THE FACT THAT FORM NO. 10CCB, COMPLETE IN ALL RESPECT WAS FILLED BEFORE THE COMPLETION OF THE ASSESSMENT. THE A.O. ALSO HAS NOT DENIED THAT THE SAID FORM COMPLETE IN ALL RESPECTS WAS FILLED BEFORE HIM AS HE HAS OBSERVED THAT INITIALLY INCOMPLETE FORM WAS FILLED BY THE ASS ESSEE. TAKING INTO CONSIDERATION ALL THESE FACTS, WE ARE OF THE OPINION THAT DEDUCTION U/S 80IA OF THE ACT CANNOT ALSO BE DENIED TO THE ASSESSEE ON THE GROUND THAT THE REPORT INITIALLY SU B MITTED ALONG WITH LETTER DATED 16 - 01 - 2014 IN FORM NO. 10CCB DID NOT CONTAIN COMPLETE PARTICULARS AS THE ASSESSEE HAD SUBMITTED COMPLETE FORM DURING THE COURSE OF ASSESSMENT PROCEEDING ITSELF ON 04 - 03 - 2014 . 23. IN VIEW OF ABOVE DISCUSSION, SO FAR AS IT RELATES TO ALLOWABILITY OF DEDUCTION U/S 80IA ON BUSINESS PROFITS, WE ARE OF THE OPINION THAT LD. CIT(A) DID NOT COMMIT ANY ERROR IN HOLDING THAT UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ASSESSEE IS ELIGIBLE FOR CLAIMING DEDUCTION U/S 80IA AND HE WAS RIGHT IN DI RECTING THE A.O. TO MODIFY THE ASS ESSMENT ORDER ACC ORDINGLY. 31 24. IT MAY BE SEEN FROM THE ORDER OF THE CIT(A) THAT ISSUE REGARDING ALLOWABILITY OR OTHERWISE OF DEDUCTION U/S 80IA OF THE ACT ON THE NTEREST EARNED ON FDRS AND NSCS WAS DECIDED BY WAY OF SEPARATE GROUND WHICH INVOLVES A SUM OF RS. 4,31,338/ - . SUCH ISSUE HAS BEEN DECIDED BY CIT(A) VIDE PARA 6 OF THE IMPUGNED ORDER. HOWEVER, WHILE FILLING THE APPEAL, THE REVENUE HAS IMPUGNED THE ENTIRE AMOUNT OF DEDUCTION AMOUNTING TO RS. 92,22,111/ - WHICH COMPRISES OF TWO COMPONENTS NAMELY A SUM OF RS.87,90,773/ - BEING AN INCOME FROM BUSINESS AND RS. 4,31,338/ - BEING INTEREST EARNED ON FDRS AND NSCS. IN THE ABOVE PART OF THIS ORDER, WE HAVE ALREA DY HELD THAT CIT(A) IS CORRECT IN HOLDING THAT THE ASSESSEE IS ELIGIBLE FOR CLAIMING DEDUCTION U/S 80IA ON BUSINESS PROFIT. THEREFORE, ADDITION OF RS. 87,90,773/ - HAS RIGHTLY BEEN DEL E TED BY CIT(A) AND WE DECLINE TO INTERFERE IN THE DELETION TO THE EXTENT OF RS. 87,90,773. 25. TO THE EXTENT OF DELETION OF ADDITION OF RS. 87,90,773/ - , WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A) AND ACCORDINGLY , TO THAT EXTENT, GROUND OF REVENUE IS DISMISSED. HOWEVER, SO FAR AS IT RELATES TO THE ISSUE OF ALLOWABILI TY OR OTHERWISE OF A SUM OF RS. 4,31,338/ - BEING INTEREST EARNED ON FDRS AND NSCS, THE ISSUE HAS TO BE ADJUDICATED SEPARATELY. IN RESPECT OF A.YS. 2010 - 11 AND 2012 - 13, SIMILAR DISALLOWANCE HAS BEEN MADE BY THE A.O. I N RESPECT OF IMPUGNED 32 ASSESSMENT YEA R L D. CIT(A) HAS ALLOWED THE CLAIM ON THE GROUND THAT THERE IS DIRECT AND CLOSE CONNECTION BETWEEN CARRY ING ON OF BUSINESS AND INCOME D E RIVED BY WAY OF INTEREST FROM INVESTMENT IN FDRS ETC. WHICH WERE PROVIDED AS SECURITY FOR AVAILING INFRASTRUCTURE PROJECTS FROM GOVERNMENT DEPARTMENTS. IT MAY BE MENTIONED HERE THAT THIS ISSUE WAS NOT ARGUED DURING THE COURSE OF HEARING BEFORE US BY BOTH THE PARTIES. THEREFORE, WE CONSIDER IT JUST AND PROPER TO RESTORE THE ISSUE REGARDING ALLOWABILITY OR OTHERWISE OF DEDUCTI ON U/S 80IA IN RESPECT OF INTEREST INCOME EARNED BY THE ASSESSEE ON FDRS AND NSCS TO THE FILE OF A.O. FOR FRESH ADJUDICATION AS PER PROVISIONS OF LAW AFTER GIVING THE ASSESSEE A REASONABLE OPPORTUNITY OF HEARING. 2 6 . IN THE RESULT , THE APPEAL OF THE REVENUE IS PARTLY ALLOWED FOR ST A TISTICAL PURPOSE S . THE ORDER IS PRONO UNCED IN THE OPEN COURT ON 2 2 .01.2018. SD/ - SD/ - [ KULDIP SINGH ] [B.P. JAIN] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 22 N D JANUARY, 2018 VL/ 33 COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT(A) 5 . DR ASST. REGISTRAR, ITAT, NEW DELHI