DCIT, Central Circle - 3(3), Kolkata V. M/s. Kaushalya Infrastructure Development Corporation Ltd., Kolkata

ITA 2544/KOL/2018

AI Insights

The case involves appeals by the revenue against the orders of the CIT(A) which allowed deductions under section 80IA of the Income Tax Act to M/s Kaushalya Infra. Development Corp. Ltd for the assessment years 2006-07 and 2007-08. The original assessments had disallowed these deductions, which was contested and led to a series of appeals. The ITAT had previously remanded the matter back to the CIT(A) for a fresh determination of the deduction claims, considering contracts directly awarded by the government to the assessee. The CIT(A) allowed a higher deduction than originally claimed, which the revenue appealed against, arguing that it exceeded the gross total income of the assessee, violating section 80A(2) of the Act.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 128274 (ITAT-KOLKATA)
• Duration Of Justice: 4 year(s) 4 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-04-2023
• Appeal Filed By: Department
• Order Result: PartlyAllowed
• Bench Allotted: B
• Next Hearing Date: 04-04-2023
• Assessment Year: 2007-2008
• Appeal Filed On: 05-12-2018
• Other Referred Cases: Ahmedabad Electricity Company Ltd. vs. CIT, Godavari Sugar Mills Ltd. vs. CIT, CIT vs. Pruthvi Brokers and Shareholders Pvt. Ltd., Gujarat Gas Ltd. vs. JCIT, Shri Chandrashekhar Bahirwani
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Bonafide mistake; Set aside
• Section: 143(3); 250; 80IA; 251; 119

Judgement Text

आयकर अपीलȣय अͬधकरण, कोलकाता पीठ ‘बी’, कोलकाता IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH KOLKATA Įी संजय गग[, ÛयाǓयक सदèय एवं Įी मनीष बोरड, लेखा सदèय के सम¢ Before Shri Sanjay Garg, Judicial Member and Dr. Manish Borad, Accountant Member I.T.A Nos.2543&2544/Kol/2018 Assessment years: 2006-07 & 2007-08 DCIT, Central Circle-3(3), Kolkata..................................................Appellant vs. M/s Kaushalya Infra. Development Corp. Ltd..............................Respondent HB-170, Sector-III, Salt Lake City, Kolkata-700106. [PAN: AACCK1581F] Appearances by: Shri P. P Barman, Addl. CIT-DR, appeared on behalf of the appellant. Shri Miraj D. Shah, AR, appeared on behalf of the Respondent. Date of concluding the hearing : April 05, 2023 Date of pronouncing the order : May 01, 2023 आदेश / ORDER संजय गग[, ÛयाǓयक सदèय ɮवारा / Per Sanjay Garg, Judicial Member: Both the appeals have been preferred by the revenue against the separate orders dated 28.09.2018 of the Commissioner of Income Tax (Appeals)-21, Kolkata [hereinafter referred to as the ‘CIT(A)’] passed u/s 250 of the Income Tax Act (hereinafter referred to as the ‘Act’). Since, common issues are involved in both the appeals, hence these have been heard together and are being disposed of by this common order. The appeal in ITA No.2543/Kol/2018 for assessment year 2006-07 is taken as lead case for the purpose of narration of facts. 2. The brief facts of the case are that the original assessment in the case of the assessee was completed u/s 143(3) of the Act on 31.12.2008. In the said assessment, the claim of deduction u/s 80IA(4) of Rs. I.T.A Nos.2543&2544/Kol/2018 Assessment years: 2006-07 & 2007-08 M/s Kaushalya Infra. Development Corp. Ltd 2 2,72,01,280/- was disallowed as the conditions were not fulfilled. The Ld CIT(A)-VIII, Kolkata had dismissed the appeal of the assessee and confirmed that the AO has rightly disallowed the claim of deduction u/s 80IA(4) vide order dated 23/03/2010. On an appeal of the assessee, the ITAT, Kolkata vide order dated 08/11/2016 sent the matter back to the file of the Ld. CIT (A) for determination of the claim u/s 80IA afresh in accordance with law with all issues thereon left open after giving reasonable opportunity of being heard. The operative part of the order of the Tribunal, restoring the matter back to the CIT(A), is reproduced as under: “7.7. We have heard the rival submissions and perused the materials available on record. It is not in dispute that the sub-contract work awarded by WSFL to the assessee is in the nature of works contract. This fact has been unconditionally accepted by the assessee before the lower Authorities. But we find that the assessee has also obtained certain contracts directly from the Government for which deduction u/s 80IA of the Act should not be denied to the assessee. We find that the breakup of contracts had not been submitted by the assessee and no findings ad been given in this regard by the Ld. CIT(A), and we feel that the claim of deduction u/s 801A of the Act had to be examined in the light of the said breakup of contract receipts. Accordingly, in the interest of justice and fair play, we deem it fit and appropriate, to set-aside this issue of claim of deduction u/s 801A of the Act, to the file of the Ld. CIT(A) for determination of such claim afresh, in accordance with law, with all issues thereon left open. Needless to mention that the assessee be given reasonable opportunity of being heard. Since, this appeal pertains to old assessment years, we deem it fit to fix a time frame for the ld. CIT(A) to dispose of these appeals. The Ld. CIT(A) is accordingly directed to dispose off these appeals within a period of 6 months from the date of receipt of this order. The assessee is directed to cooperate with the Ld. CIT(A) in disposing of these appeals expeditiously. Since we have decided to set- aside this issue to the file of the Ld. CIT(A) to decide the issue afresh, the various case laws relied upon by the Ld. A.R are not discussed herein. The Ld. CIT(A) ids directed to dispose of this issue in all the appeals uninfluenced by decision taken earlier in this regard. The decision rendered by us herein would apply with equal force for other assessment years also as far as the issue of claims of deduction u/s 80IA of the Act is concerned. Accordingly, the grounds raised on the claim of deduction u/s 80IA of the Act are allowed for statistical purposes.” I.T.A Nos.2543&2544/Kol/2018 Assessment years: 2006-07 & 2007-08 M/s Kaushalya Infra. Development Corp. Ltd 3 3. In the set aside proceedings, the ld. CIT(A) vide impugned order dated 28.09.2018 has allowed the deduction u/s 80IA of the Act at Rs.43901295/-, whereas, the original claim of the assessee relating to deduction u/s 80IA was Rs.27201280/- only. Now, the Revenue has come in appeal pleading that in the set aside proceedings, the ld. CIT(A) was not justified in allowing more deduction than that was claimed by the assessee in its original return of income which was assessed u/s 143(3) of the Act. It has been claimed that the total income of the assessee as per return was Rs.7846260/- after claiming deduction of Rs.2,72,01280/- u/s 80IA of the Act. The Assessing Officer had disallowed the deduction u/s 80IA and assessed the income of the assessee at Rs.3,50,47,540/-. However, the ld. CIT(A) in the set aside proceedings has allowed the deduction more than that was claimed in the original return and after allowance of the said deduction, there will be loss of Rs.88,53755/-. That as per section 80A(2) of the Act, the aggregate amount of deduction in Chapter VIA shall not in any case cross the gross total income of the assessee. 4. We have heard the rival contention and gone through the record. A perusal of the aforesaid reproduced operating part of the order of this Tribunal dated 08.11.2016 would reveal that the Tribunal had observed that the assessee would be entitled to the deduction u/s 80IA in respect of contract directly obtained by the assessee from the Government. The Tribunal, therefore, restored the matter to the file of the CIT(A) to examine the claim of deduction u/s 80IA of the Act to the assessee afresh in accordance with all issues thereof left open. The assessee filed fresh details of break-up of contracts etc. and thereby, claimed the total deduction at Rs.43901295/-. The ld. CIT(A) after examining the claim of the assessee has allowed the said deduction. In this case, there was no I.T.A Nos.2543&2544/Kol/2018 Assessment years: 2006-07 & 2007-08 M/s Kaushalya Infra. Development Corp. Ltd 4 direction of the Tribunal that the deduction claimed by the assessee should be restricted to a particular amount, rather, the Tribunal after giving finding that the assessee would be entitled to the deduction in respect of the contracts directly awarded by the Government has directed the assessee to furnish bifurcation/break-up of contracts and thereafter, directed the CIT(A) to examine the claim afresh in accordance with all the issues left open. Therefore, there was no restriction to the CIT(A) to restrict the deduction to the extent it was originally claimed in the return of income. The ld. CIT(A) was justified to examine all the details furnished by the assessee to determine the eligible claim of deduction to the assessee. 5. The full bench of the Hon’ble Bombay High Court in the cases of “Ahmedabad Electricity Company Ltd. vs. CIT” and “Godavari Sugar Mills Ltd. vs. CIT” by way of a common order dated 30.04.1992 (1993) 199 ITR 351 has observed that the basic purpose of an appeal procedure in an income tax matter is to ascertain the correct tax liability of the assessee in accordance with law. Therefore, at both the stages, either by the Appellate Assistant Commissioner or before the Appellate Tribunal, the appellate authority can consider the proceedings before it and the material on record before it for the purpose of determining the correct tax liability of the assessee. The appellate authorities, of course, cannot travel beyond the proceedings and examine new source of income, for that purpose other separate remedies are provided to the department under the Income Tax Act. The Hon’ble full bench of the Bombay High Court observed that apart from the above, there was nothing in section 254 or section 251 which would indicate that the appellate authorities are confined to considering only the objections raised before them or allowed to be raised before them either by the assessee or by the I.T.A Nos.2543&2544/Kol/2018 Assessment years: 2006-07 & 2007-08 M/s Kaushalya Infra. Development Corp. Ltd 5 department, as the case may be. They can consider the entire proceedings to determine the tax liability of the assessee. The Hon’ble Bombay High Court in the case of “CIT vs. Pruthvi Brokers and Shareholders Pvt. Ltd.” (2012) 349 ITR 336 (Bom.) has observed that the assessee is entitled to raise not merely additional legal submissions before the appellate authorities, but is also entitled to raise additional clams before them. The appellate authorities have jurisdiction to deal not merely with additional grounds, which became available on account of change of circumstances or law, but with additional grounds which were available when the return was filed. The words ‘could not have been raised’ must be construed liberally and not strictly. There may be several factors justifying the raising of a new plea in an appeal and each case must be considered on its own facts. The co-ordinate bench of the Tribunal in the case of “Shri Chandrashekhar Bahirwani” ITA No.7810/M/2010 and 6599/M/2011 vide order dated 17.06.2015 while deciding the question as to whether the income cannot be assessed less than the returned income has observed as under: “5. Now coming to the finding of the Ld. CIT(A), that income cannot be assessed less than the returned income, the Ld. A.R. of the assessee has submitted before us that the action of the Ld. CIT(A) in rejecting the claim of the assessee on this ground was not justified. He has further relied upon the decision of the Hon’ble Gujarat High Court in the case of “Gujarat Gas Ltd. vs. JCIT” (2000) 245 ITR 84. In the said case, the words of the Circular No.549, para 5.12, dt. 31st October, 1989, providing that the assessed income under section 143(3) shall not be less than the returned income was considered by the Hon’ble High Court and it was held that as per proviso to section 119 of the Act, the Board cannot issue instructions to the Income Tax Authority to make a particular assessment or to dispose of a particular case in a particular manner as well as not to interfere with the discretion of the Commissioner in exercise of his appellate functions. It was further held that the AO, while exercising his quasi judicial powers, was not bound by the said circular and should have exercised his powers independently. The Hon’ble High Court, therefore, directed the AO to make the assessment without keeping in mind the said circular. It may be I.T.A Nos.2543&2544/Kol/2018 Assessment years: 2006-07 & 2007-08 M/s Kaushalya Infra. Development Corp. Ltd 6 further observed that the Hon’ble Bombay High Court in the case of ‘Pruthvi Brokers & Shareholders Pvt. Ltd.’ ITA No.3908 of 2010 decided on 21.06.12, while relying upon the various decisions of the Hon’ble Supreme Court and other Hon’ble High Courts has held that even if a claim is not made before the AO, it can be made before the appellate authorities. The jurisdiction of the appellate authorities to entertain such a claim is not barred. The Hon’ble High Court has further observed that the decision of the Hon’ble Supreme Court in the case of ‘Goetze (India) Limited v. CIT’ (2006) 157 Taxman 1, relating to the restriction of making the claim through a revised return was limited to the powers of the Assessing Authority and the said judgment does not impinge on the power or negate the powers of the appellate authorities to entertain such claim by way of additional ground. Even otherwise, the Ld. CIT(A) ought to have considered the claim of the assessee in exercise of his appellate jurisdiction under section 250 of the Act. Moreover, if the assessee is, otherwise, entitled to a claim of deduction but due to his ignorance or for some other reason could not claim the same in the return of income, but has raised his claim before the appellate authority, the appellate authority should have looked into the same. The assessee cannot be burdened with the taxes which he otherwise is not liable to pay under the law. Even a duty has also been cast upon the Income Tax Authorities to charge the legitimate tax from the tax payers. They are not there to punish the tax payers for their bonafide mistakes. In view of our above observations, it is held that the assessee is not liable to pay Capital Gains Tax, though originally he had subjected himself to the said tax as per his return of income. The AO is directed to process the claim of refund in this respect as per provisions of the law.” 6. In view of the aforesaid settled proposition of law, we do not find any infirmity in the order of the CIT(A) in considering the claim of the assessee for deduction u/s 80IA in the set aside proceedings, even if the same was more than the originally claimed in the return of income. 7. However, we find force in the contention of the ld. DR that as per the provisions of section 80A(2) of the Act, the claim of deduction under Chapter VIA shall not in any case exceed the gross total income of the assessee. Therefore, it is directed that the claim of deduction u/s 80IA will be allowed to the assessee to the extent of gross total income of the assessee and the assessee will not be entitled to any claim of carry forward of loss resulting from the allowance of claim of deduction u/s I.T.A Nos.2543&2544/Kol/2018 Assessment years: 2006-07 & 2007-08 M/s Kaushalya Infra. Development Corp. Ltd 7 80IA of the Act by the CIT(A) more than the originally claimed. With the above observation, the appeal of the assessee is treated as partly allowed. 8. Both the ld. representatives of the parties have submitted that the facts and issues involved to the present appeal are identical to the above discussed appeal No.ITA 2543/Kol/2018. Since the facts and issues involved are identical in both the appeals, therefore, our findings given above, will mutatis mutandis apply to ITA No.2544/Kol/2018. 8. In the result, both the appeals of the assessee are treated as partly allowed. Kolkata, the 1 st May, 2023. Sd/- Sd/- [डॉÈटर मनीष बोरड /Dr. Manish Borad] [संजय गग[ /Sanjay Garg] लेखा सदèय /Accountant Member ÛयाǓयक सदèय /Judicial Member Dated: 01.05.2023. RS Copy of the order forwarded to: 1. DCIT, Central Circle-3(3), Kolkata 2. M/s Kaushalya Infra. Development Corp. Ltd 3. CIT(A)- 4. CIT- , 5. CIT(DR), //True copy// By order Assistant Registrar, Kolkata Benches