ACIT CEN CIR 41, MUMBAI V. RAJAHMUNDRY EXPRESSWAY LTD, NEW DELHI

ITA 253/MUM/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 92706 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 4 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-06-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 05-02-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 10-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: VINOD MODI; Y P TREVEDI
• Section: 143(3); 147; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL ' D ' BENCH, MUMBAI BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI SANJAY ARORA , ACCOUNTANT MEMBER ITA NO. 253/MUM/2012 (ASSESSMENT YEAR: 2008 - 09 ) ACIT, CENTRAL CIRCLE - 41 VS. M/S. RAJAHMUNDRY EXPRESSWAY LTD. ROOM NO. 655, 6TH FLOOR AYAKAR BHAVAN, M.K. ROAD MUMBAI 400020 CENTRIC PLAZA, 2ND FLOOR, PLOT NO. 8 POCKET 4, SECTOR 11, DWARKA NEW DELHI 110075 PAN - AABCR9029A APPELLANT RESPONDENT APPELLANT BY: SHRI SANTOSH KUMAR RESPONDENT BY: SHRI Y.P. TREVEDI & SHRI VINOD MODI DATE OF HEARING: 02.06. 2015 DATE OF PRONOUNCEMENT: 02.06.2015 O R D E R PER D. MANMOHAN, V.P. THIS APPEAL PERTAINS TO A.Y. 2008 - 09. 2. THE ONLY GROUND URGED BEFORE US IS WHETHER THE ASSESSEE IS ENTITLED TO DEDUCTION UNDER SECTION 80IA(4)(I) OF THE ACT. ASSESSEE IS ENGAGED IN THE BUSINESS OF CONSTRUCTION, OPERATION AND MAINTENANCE OF HIGHWAYS AND IT COMPLETED THE PROJECT ON 20.09.2004 AND COMMENCED COMMERCIAL OPERATION FROM THAT DATE. THE COMPANY CLAIMED 100% TAX HOLIDAY UNDER SECTION 80IA OF THE ACT UNTIL MARCH, 2015. THE AO WAS OF THE OPINION THAT ASSESSEE IS NOT ENGAGED I N DEVELOPMENT OF INFRASTRUCTURE FACILITIES BECAUSE THE AGREEMENT WI TH N HAI AND THE CERTIFICATE THEREOF SHOWS THAT IT IS NOT A NEW INFRASTRUCTURE FACILITY BUT WIDENING OF THE ROADS. IN HIS OPINION THE WORD NEW DESERVES TO BE EMPHASISED AND WIDENING CANNOT BE EQUATED WITH NEW CONSTRUCTION, IN WHICH EVENT ASSESSEE CANNOT B E CONSIDERED AS ELIGIBLE FOR THE PURPOSE OF CLAIMING DEDUCTION UNDER SECTION 80IA OF THE ACT. IN PARA 2.4.10 THE AO OBSERVED THAT AS PER THE AGREEMENT OF CONTRACT IT IS CLEAR THAT THERE WAS AN EXISTING ROAD AND IT WAS FURTHER WIDENED AND HENCE IT CANNOT ITA NO. 253/MUM/2012 M/S. RAJAHMUNDRY EXPRESSWAY LTD. 2 BE EQUATED WIT H DEVELOPMENT OF INFRASTRUCTURE FACILITIES BUT IT CAN ONLY BE CONSIDERED AS IMPROVEMENT OR RENOVATION OF SOMETHING WHICH IS ALREADY IN EXISTENCE. 3. ON AN APPEAL FILED BY THE ASSESSEE THE LEARNED CIT(A) FOLLOWED THE ORDER PASSED BY THE FIRST APPEL LATE AUTHORITY IN ASSESSEES OWN CASE FOR A.Y. 2007 - 08 WHEREIN THE CIRCULAR ISSUED BY CBDT WAS TAKEN INTO CONSIDERATION TO HOLD THAT WIDENING OF EXISTING ROADS CONSTITUTE CREATION OF NEW INFRASTRUCTURE FACILITY FOR THE PURPOSE OF SECTION 80IA(4) OF INCOME TAX ACT (CIRCULAR NO. 4/2010 DATED 18.05.2010). SINCE DETAILED ORDER WAS PASSED IN THE APPEAL FOR 2007 - 08 THE REASONS GIVEN THEREIN ARE EXTRACTED FOR THE SAKE OF READY REFERENCE: - 4.1 I HAVE CAREFULLY CONSIDERED THE ASSESSMENT ORDER AND THE SUBMISSION MADE BY THE LD. AR. AS PER THE FACTS OF THIS CASE, THE APPELLANT HAS ENTERED INTO A CONCESSION AGREEMENT DATED 30.10.2001 WITH THE NATIONAL HIGHWAYS AUTHORITY OF INDIA (NHAI) FOR THE CONSTRUCTION, OPERATION AND MAINTENANCE OF RAJAHMUNDRY DHARMAVARAM TUNI T OLL ROAD ANNUITY PROJECT, A 53KM STRETCH OF ROAD VISHAKAPATNAM DISTRICT IN THE STATE OF ANDHRA PRADESH IN INDIA ON NH - 5 ON BOT BASIS FOR A PERIOD OF 17 YEARS AND 6 MONTHS. THE APPELLANT HAS, ACCORDINGLY, STARTED OPERATING AND MAINTAINING THE SAID HIGHWAY R OAD, BEING THE INFRASTRUCTURE FACILITY, FROM 20.09.2004 AND THUS COMMENCED COMMERCIAL OPERATIONS FROM THAT DATE. THE APPELLANT HAS CLAIMED DEDUCTION U/S 801A IN RESPECT OF THE ABOVE PROJECT FROM A.Y. 2006 - 07. IN A.Y 2006 - 07, THE APPELLANT CLAIMED DEDUCTION U/S 801A IN RESPECT OF THE ABOVE AT RS. 1,85,80,756/ - WHICH WAS ALLOWED BY THE AO VIDE ORDER U/S 143(3) OF THE ACT. IN A.Y. 2007 - 08, THE APPELLANT HAD CLAIMED THE AMOUNT OF RS. 9,90,17,861/ - U/S 801A IN RESPECT OF THE ABOVE PROJECT. THE AO HAS, HOWEVER, DISALLOWED THE SAME ON THE GROUND THAT THE ASSESSEE HAS UNDERTAKEN THE ABOVE PROJECT OF NHAI WHICH ENVISAGED STRENGTHENING OF THE EXISTING 2 LANES FROM KILOMETER 200/0 TO KELOMETER 253/0 AND WIDENING THEREOF TO 4 LANE EQUAL CARRIAGE WAY WITH PRIVATE SECTOR PARTICIPATION ON BUILD OPERATE AND TRANSFER (BOT) BASIS. IT IS OBSERVED BY THE AO THAT SINCE THE OLD TWO LANE ROAD WAS ALREADY IN EXISTENCE, THE ACTIVITY UNDERTAKEN BY THE ASSESSEE WAS IN THE NATURE OF WIDENING THE ROAD AND MAKING IMPROVEMENT ON IT WHICH CANNOT QUALIFY AS NEW INFRASTRUCTURAL FACILITY' TO BE ELIGIBLE FOR DEDUCTION U/S 801A(4)(I)(B) OF THE ACT. 4.2 IT IS ARGUED BY THE ID. AR THAT THE PROJECT UNDERTAKEN BY THE APPELLANT INVOLVED CONSTRUCTION OF A NEW 4 - LANE DIVIDED CARRIAGEWAY WITH A RAISED CENTRAL MEDIAN BY DISMANTLING THE EXISTING 2 - LANE ROAD BY CONSTRUCTING PROFILE CORRECTIVE COURSE, BY CONSTRUCTING BITUMEN LAYERS, BY CONSTRUCTING PAVED SHOULDERS AND EARTHEN SHOULDERS. IT IS POINTED OUT BY ITA NO. 253/MUM/2012 M/S. RAJAHMUNDRY EXPRESSWAY LTD. 3 THE ID. AR THAT AS PER THE CLARIFICATION ISSUED BY CBDT VIDE CIRCULAR NO. 4/2010 DATED 18.05.2010, 'WIDENING OF AN EXISTING ROAD BY CONSTRUCTING ADDITIONAL LANES AS A PART OF A HIGHWAY PROJECT BY AN UNDERTAKING WOULD BE REGARDED AS A NEW INFRASTRUCTURE FACILITY FOR THE PURPOSE OF SECTION 801A(4)(I) OF THE ACT'. THE ID. AR HAS FILED A COPY OF THE ABOVE SAID CIRCULAR. 4.3 ON CAREFUL EXAMINATION OF THE MATTER, I FIND THAT THE ISSUE HAS BEEN SET TO REST BY THE ABOVE CIRCULAR OF CBDT WHICH READS AS UNDER: 'CIRCULAR NO. 4/2010 SUBJECT: - WIDENING OF EXISTING ROAD - DEFINITION OF A NEW INFRASTRUCTURE FACILITY CLARIFICATION REGARDING. REFERENCE HAVE BEEN RECEIVED BY THE BOARD AS TO WHETHER WIDENING OF EXISTING ROADS CONSTITUTES CREATION OF NEW INFRASTRUCTURE FACILITY FOR THE PURPOSE OF SECTION 80IA(4)(1) OF THE IN COME TAX ACT, 1961. SECTION 80IA(4)(I) PROVIDES FOR A DEDUCTION TO AN UNDERTAKING ENGAGED IN DEVELOPING, OR OPERATING AND MAINTAINING, OR DEVELOPING, OPERATING AND MAINTAINING ANY INFRASTRUCTURE FACILITY SUBJECT TO SATISFACTION OF THE CONDITIONS LAID DOWN IN THE SECTION. THE EXPLANATION TO SUBSECTION 80IA(4)(I) STATES THAT FOR THE PURPOSE OF THIS CLAUSE, INFRASTRUCTURE FACILITY MEANS INTER ALIA: - (A) A ROAD INCLUDING TOLL ROAD, A BRIDGE OR A RAIL SYSTEM; (B) A HIGHWAY PROJECT INCLUDING HOUSING OR OTHER AC TIVITIES BEING AN INTEGRAL PART OF THE HIGHWAY PROJECT;' T HE ISSUE HAS BEEN EXAMINED BY THE BOARD. IT HAS BEEN DECIDED THAT WIDENING OF AN EXISTING ROAD BY CONSTRUCTING ADDITIONAL LANES AS A PART OF A HIGHWAY PROJECT BY AN UNDERTAKING WOULD BE REGARDED AS A NEW INFRASTRUCTURE FACILITY FOR THE PURPOSE OF SECTION 80IA(4)(I). HOWEVER, SIMPLY RELAYING OF AN EXISTING ROAD WOULD NOT BE CLASSIFIABLE AS A NEW INFRASTRUC TURE FACILITY FOR THIS PURPOSE. CONSIDERING THE ABOVE, THE PROJECT UNDERTAKEN BY THE APPELLANT QUALIFIES AS A NEW INFRASTRUCTURE FACILITY FOR THE PURPOSE OF DEDUCTION U/S 80IA(4)(I) OF THE ACT. THE IMPUGNED DISALLOWANCE MADE BY THE AO IS, THEREFORE, DELETED. 4. AT THE TIME HEARING THE LEARNED COUNSEL ALSO SUBMITTED THAT THE FIRST YEAR OF THE CLAIM O F DEDUCTION UNDER SECTION 80IA WAS A.Y. 2006 - 07 WHEREIN THE AO, IN THE PROCEEDINGS UNDER SECTION 143(3) OF THE ACT, ACCEPTED THAT ASSESSEE IS ELIGIBLE TO CLAIM DEDUCTION OF ` 1,85,80,756/ - AND THIS ORDER WAS NOT REVERSED BY THE REVENUE EITHER BY ISSUANCE OF NOTICE UNDER SECTION 147 OR BY TAKING RECOURSE TO THE POWERS VESTED UNDER IN THE COMMISSIONER OF INCOME TAX UNDER SECTION 263 OF THE ACT AND THUS THE SAME ATTAINED ITA NO. 253/MUM/2012 M/S. RAJAHMUNDRY EXPRESSWAY LTD. 4 FINALITY. THOUGH HE SUBMITTED THAT IN RESPECT OF A.Y. 2007 - 08 THE MATTER IS PENDING BEFORE THE ITAT, DELHI BENCHES BUT AT THE SAME TIME SUBMITTED THAT THE FACTS BEING NOT IN DISPUTE THE ISSUE CAN BE DECIDED IN ANY YEAR AND IT IS NOT NECESSARY TO KEEP THE MATTER IN ABEYANCE TILL THE DISPOSAL OF THE EARLIER YEARS ORDER. HE ALSO RELIED UPON THE DE CISION OF THE ITAT PUNE IN THE CASE OF ROHAN & RAJDEEP INFRASTRUCTURE (ITA NO. 1214.PN/2010 DATED 05.04.2013 WHEREIN CIRCULAR NO. 4/2010 WAS APPLIED BY THE TRIBUNAL TO HOLD THAT WIDENING OF ROADS WOULD AMOUNT TO NEW INFRASTRUCTURE FACILITY FALLING WITHIN THE PURVIEW OF SECTION 80IA OF THE ACT. 5. ON THE OTHER HAND, THE LEARNED D.R. SUBMITTED THAT SECTION 80IA(4) SPEAKS OF DEVELOPING OF AN INFRASTRUCTURE FACILITY WHICH IMPLIES THAT IT SHOULD BE A NEW INFRAS TRUCTURE FACILITY; DEVELOPMENT OF ALREADY EXISTING INFRASTRUCTURE FACILITY WOULD NOT COVER UNDER SECTION 80IA(4) OF THE ACT. HE THUS SUPPORTED THE ORDER PASSED BY THE CIT(A). 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY PERUSED THE RECORD. SECTION 80I A MAINLY SPEAKS OF DEVELOPMENT OF INFRASTRUCTURE FACILITY; WHETHER WIDENING OF ROADS WOULD AMOUNT TO DEVELOPMENT OF INFRASTRUCTURE FACILITY HAS BEEN CLARIFIED BY THE CBDT AND THE SAME IS BINDING ON THE REVENUE. IN THE LIGHT OF THE CIRCULAR ISSUED BY CBDT A ND ALSO THE DECISION OF ITAT PUNE BENCH, THE EXPRESSION DEVELOPMENT OF INFRASTRUCTURE FACILITY INCLUDES WIDENING OF ROADS. UNDER THESE CIRCUMSTANCES WE DO NOT FIND ANY INFIRMITY IN THE ORDER PASSED BY THE CIT(A). 7. IN THE RESULT, THE APPEAL FILED BY THE REVE NUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 2 ND J UNE, 2015. SD/ - SD/ - ( SANJAY ARORA ) (D. MANMOHAN) ACCOUNTANT MEMBER VICE PRESIDENT MUMBAI, DATED: 2 ND JUNE, 2015 ITA NO. 253/MUM/2012 M/S. RAJAHMUNDRY EXPRESSWAY LTD. 5 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A), NEW DELHI - XVIII 4. THE CIT, NEW DELHI - V 5. THE DR, D BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.