D.C.I.T., Circle-12, Kolkata, Kolkata V. M/s Vantage Advertising Pvt. Ltd., Chennai

ITA 2616/KOL/2013

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 1862 (ITAT-KOLKATA)
• Duration Of Justice: 4 year(s) 1 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-01-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 28-03-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 18-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MD USMAN
• Assessee Lawyers: J P KHAITAN; P
• Keywords: Depreciation; Rule of consistency; Earning of tax free income; Non-deduction of tax; Difference of opinion
• Section: 14A; 80IB; 133(6); 194C; 263; 15

Judgement Text

ITA NO.2616/KOL/2013-M/S. VANTAGE ADVERTISING PVT. LTD. A.Y.2010-11 1 IN THE INCOME TAX APPELLATE TRIBUNAL B B ENCH : KOLKATA [BEFORE HONBLE SRI N.V.VASUDEVAN, JM & DR.ARJUN LAL SAINI, AM] I.T.A NO.2616/KOL/2013 ASSESSMENT YEAR : 2010-11 D.C.I.T., CIRCLE-12, -VS.- M/S. VANTAGE A DVERTISING PVT. LTD. KOLKATA KOLKATA. [PAN : AABCV1202 B] (APPELLANT) (RESPONDENT) FOR THE APPELLANT : MD. USMAN, CIT(DR) FOR THE RESPONDENT : SHRI J.P.KHAITAN, S R.ADVOCATE & SHRI PRATYUSH JHUNJHUNWALA, ADVOCATE DATE OF HEARING : 19.12.2017. DATE OF PRONOUNCEMENT : 03.01.2018. ORDER PER N.V.VASUDEVAN, JM THIS IS AN APPEAL BY THE REVENUE AGAINST THE ORDER DATED 08.08.2013 OF CIT(A)-XII, KOLKATA RELATING TO A.Y.2010-11. 2. GROUND NO.1 RAISED BY THE REVENUE READS AS FOLLO WS :- 1.IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE L D. CIT(A) ERRED IN DELETING THE DISALLOWANCE OF RS.15,55,200/ - ON ACCOUNT OF PURCH ASE FROM. M/S. B.M.SALES CORPORATION DESPITE THE FACT THAT THIS PARTY HAS DE NIED ANY TRANSACTION WITH THE ASSESSEE COMPANY. 3. THE ASSESSEE IS A COMPANY. IT IS ENGAGED IN THE BUSINESS OF OUTDOOR ADVERTISING AND MEDIA ADVERTISING, INFRASTRUCTURE D EVELOPMENT AND MAINTENANCE. IN THE COURSE OF ASSESSMENT PROCEEDINGS FOR A.Y.2010-11 TH E AO NOTICED THAT THE ASSESSEE HAD CLAIMED TO HAVE PURCHASED ANGLES AND CHANNELS F ROM M/S. B.M.SALES CORPORATION OF THE VALUE OF RS.15,55,200/- FOR THE PURPOSE OF D ISPLAY OF HOARDINGS. THE SAID SUM WAS CLAIMED AS AN EXPENDITURE AND DEDUCTION WHILE C OMPUTING THE INCOME FROM BUSINESS. THE AO NOTICED THAT IN A.Y.2009-10 PURCHA SE FROM M/S. B.M.SALES CORPORATION WAS HELD BY THE AO IN THE ORDER OF ASSE SSMENT FOR A.Y.2009-10 TO BE NOT ITA NO.2616/KOL/2013-M/S. VANTAGE ADVERTISING PVT. LTD. A.Y.2010-11 2 GENUINE. THIS WAS BASED ON THE REPLY RECEIVED FROM M/S. B.M.SALES CORPORATION IN RESPONSE TO A NOTICE BY THE AO U/S 133(6) OF THE AC T THAT IT HAD NEVER SUPPLIED ANY MATERIAL WHATSOEVER TO THE ASSESSEE. FOLLOWING THE FINDINGS IN THE ORDER OF ASSESSMENT FOR A.Y.2009-10, THE AO DISALLOWED THE CLAIM OF THE ASSESSEE FOR DEDUCTION OF A SUM OF RS.15,55,200/-. 4. ON APPEAL BY THE ASSESSEE THE CIT(A) DELETED THE ADDITION MADE BY THE AO AS IN THE ORDER OF THE CIT(A) AGAINST THE ORDER OF THE AO FOR A.Y.2009-10, IT WAS HELD THAT PURCHASE FROM M/S. B.M.SALES CORPORATION WERE GENUINE. THE CIT(A) FOUND THAT EXCEPT PLACING RELIANCE ON THE ORDER OF ASSESSMENT FOR A.Y.2009-10 THE AO HAD MADE THE DISALLOWANCE OF EXPENDITURE ON PURCHASE OF RS.1 5,55,200/- IN THE PRESENT A.Y.2010-11 AND THAT NO NEW FACTS OR FINDINGS WERE BROUGHT ON RECORD BY THE AO TO DISALLOW THE CLAIM FOR DEDUCTION OF THE AFORESAID E XPENDITURE. SINCE THE DISALLOWANCE FOR A.Y.2009-10 WAS DELETED BY CIT(A), THE DISALLO WANCE FOR A.Y.2010-11 WAS ALSO DELETED BY THE CIT(A). 5. AGGRIEVED BY THE ORDER OF CIT(A) THE REVENUE HAS RAISED GROUND NO.1 BEFORE THE TRIBUNAL. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS. AT THE TIME OF HEARING IT WAS BROUGHT TO OUR NOTICE THAT AS AGAINST THE ORDER OF CIT(A) FOR A.Y.2009-10 DATED 12.06.2012 (CIT(A)-XII, KOLKATA) THE REVENUE PREFERRED AN APPE AL BEFORE THE HONBLE ITAT BUT THE ADDITION ON ACCOUNT OF DISALLOWANCE OF PURCHASE FROM M/S. B.M.SALES CORPORATION WAS NOT CHALLENGED BY THE REVENUE. THUS THE ORDER O F CIT(A) FOR A.Y. 2009-10 HAS BECOME FINAL. SINCE THE IMPUGNED DISALLOWANCE IS BA SED ONLY ON THE FINDINGS IN THE ORDER OF ASSESSMENT FOR A.Y.2009-10 AND SINCE THE S AID DISALLOWANCE HAS NOW BEEN DELETED WE ARE OF THE VIEW THAT CIT(A) WAS FULLY JU STIFIED IN DELETING SIMILAR ADDITION MADE IN A.Y.2010-11. WE FIND NO GROUND TO INTERFERE WITH THE ORDER OF CIT(A). ACCORDINGLY, GROUND NO.1 RAISED BY THE REVENUE IS D ISMISSED. ITA NO.2616/KOL/2013-M/S. VANTAGE ADVERTISING PVT. LTD. A.Y.2010-11 3 7. GROUND NO.2 RAISED BY THE REVENUE READS AS FOLLO WS :- 2. IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD.CIT(A) ERRED IN DELETING THE DISALLOWANCE OF RS.2,64,548/- COMPUTED ULS.14A READ WITH RULE 8D. 8. THE ASSESSEE EARNED DIVIDEND INCOME OF RS.2,10,5 6,437/-. THE DIVIDEND INCOME DOES NOT FORM PART OF THE TOTAL INCOME AND I S EXEMPT. IN TERMS OF SECTION 14A OF THE INCOME TAX ACT, 1961 (ACT), THE ASSESEE HAD DISALLOW EXPENDITURE INCURRED IN EARNING EXEMPT INCOME. THE ASSESSEE QUANTIFIED THE EXPENSES INCURRED IN EARNING DIVIDEND INCOME AT RS.8,66,839/- WHICH COMPRISES OF PAYMENTS MADE TO RELIANCE PORTFOLIO MANAGEMENT SERVICES AND SECURITY TRANSACT ION TAX (STT) AS EXPENSES INCURRED IN EARNING THE EXEMPT INCOME. THE AO DID N OT AGREE WITH THE AFORESAID COMPUTATION MADE BY THE ASSESSEE. HE WAS OF THE VIE W THAT FACILITIES AND OTHER SET UP OF THE COMPANY HAS ALSO BEEN USED TO MANAGE THE INV ESTMENTS. THEREFORE A PART OF THE TOTAL EXPENSES SHOULD BE CONSIDERED AS INCURRED FOR EARNING THE DIVIDEND INCOME. HE THEREFORE APPLIED THE PROVISION OF RULE 8D OF THE I T RULES AND DISALLOWED A SUM OF RS.11,31,387/- . SINCE THE ASSESSEE HAD ALREADY DIS ALLOWED A SUM OF RS.8,66,839/- THE AO MADE AN ADDITION OF RS.2,64,548/- (11,31,387 - 866839) TO THE TOTAL INCOME OF THE ASSESSEE BY WAY OF DISALLOWANCE U/S 14A OF THE ACT. 9. ON APPEAL BY THE ASSESSEE THE CIT(A) DELETED THE ADDITION MADE BY THE AO. THE CIT(A) HELD THAT THE AO HAS NOT BROUGHT ANY MAT ERIAL ON RECORD TO SHOW THAT THE CLAIM MADE BY THE ASSESSEE THAT ONLY A SUM OF RS.8 ,66,839/- WAS INCURRED TO EARN THE EXEMPT INCOME WAS INCORRECT. HENCE THE ADDITION MAD E BY THE AO WAS DELETED BY CIT(A). 10. AGGRIEVED BY THE ORDER OF CIT(A) THE REVENUE HA S RAISED GROUND NO.2 BEFORE THE TRIBUNAL. 11. ON A PERUSAL OF THE ORDER OF AO IT IS CLEAR TH AT THE AO HAS NOT BROUGHT ANY MATERIAL ON RECORD TO SHOW THAT THE CLAIM MADE BY T HE ASSESSEE REGARDING DISALLOWANCE U/S 14A OF THE ACT WAS INCORRECT. IT IS MANDATORY O N THE PART OF THE AO TO FIRST REJECT ITA NO.2616/KOL/2013-M/S. VANTAGE ADVERTISING PVT. LTD. A.Y.2010-11 4 ON AN OBJECTIVE BASIS THE CLAIM OF THE ASSESSEE WIT H REGARD TO EXPENSES INCURRED TO EARN EXEMPT INCOME BEFORE RESORTING TO HIS OWN BASI S OF EXPENSES TO BE DISALLOWED U/S 14A OF THE ACT. WITHOUT DOING SO THE AO IS NOT ENTITLED TO APPLY THE PROVISION OF RULE 8D TO MAKE DISALLOWANCE OF EXPENSES U/S 14A OF THE ACT. THE FOLLOWING DECISIONS RELIED UPON BY CIT(A) IN COMING TO THE AF ORESAID CONCLUSION SUPPORT THE CONCLUSION OF CIT(A). 1. ADVANCE CONSTRUCTION CO.PVT. LTD, MUMBAI VS ACIT (2 008-TIOL-281-ITAT- MUM): 2. ACIT VS EICHER LTD. (2006) (101 TTJ 369) (DEL-ITAT) : BIRLA GROUP HOLDINGS VS DCIT (2007) 13 SOT 642 (ITA T MUMBAI). 3. WIMCO SEEDLING LTD. VS DCIT (2007) 109 TTJ 462 (DEL ) (TM) WE FIND NO GROUNDS TO INTERFERE WITH THE ORDER OF T HE CIT(A). ACCORDINGLY, GROUND NO.2 RAISED BY THE REVENUE IS DISMISSED. 12. GROUND NO.3 RAISED BY THE REVENUE READS AS FOLL OWS :- 3.IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE L D.CIT(A) HAS ERRED IN HOLDING THE ADVERTISEMENT HOARDINGS AS TEMPORARY STRUCTURE AND ALLOWING DEPRECIATION @ 100% WITHOUT APPRECIATING THAT THE HOARDINGS ARE IN FACT PERMANENT STRUCTURES MEANT FOR LONGER DURATION AND NEEDS TO B E TREATED AS PLANT & MACHINERY WHICH ATTRACTS 15% DEPRECIATION ONLY; THE REBY DELETING DISALLOWANCE OF RS.1 ,86,71,881/- 13. THE ASSESSEE HAD CLAIMED DEPRECIATION AT 100% O N HOARDINGS STRUCTURE. THE ASSESSEE IS A COMPANY. IT IS ENGAGED IN THE BUSINES S OF OUT-DOOR ADVERTISEMENT. THE ASSESSEE CLAIMED DEPRECIATION AT 100% ON HOARDING S TRUCTURES. UNDER PART-A IN APPENDIX-I TO THE INCOME TAX RULES, 1962 (RULES) UN DER THE HEAD TANGIBLE ASSETS ENTRY (4) DEPRECIATION AT 100% ON PURELY TEMPORARY ERECTIONS SUCH AS WOODEN STRUCTURE IS ALLOWED. 14. ACCORDING TO THE AO ERECTION OF HOARDINGS IS DO NE BY FIRST CREATING AN IRON STRUCTURE FABRICATED ACCORDING TO THE REQUIREMENTS. THE IRON STRUCTURE IS ERECTED ON A CEMENT BASE WHICH IS A PERMANENT STRUCTURE. ON THIS IRON STRUCTURE THERE IS A WOODEN ITA NO.2616/KOL/2013-M/S. VANTAGE ADVERTISING PVT. LTD. A.Y.2010-11 5 BOARD ON WHICH THE FINAL ADVERTISEMENT SHEET IS DIS PLAYED. ACCORDING TO THE AO HOARDINGS THEREFORE HAVE LIFE TIME FOR A CONSIDERAB LE PERIOD AND THEREFORE CANNOT BE REGARDED AS PURELY TEMPORARY ERECTION. IN ITA NO S.1054 & 1055/KOL/2008 DATED 30.06.2009 FOR A.Y.2004-05 AND 2005-06 IN ASSESSEE S OWN CASE AND ITA NOS. 1388 TO 1392/KOL/2012 ORDER DATED 10.03.2015 FOR A.Y. 20 04-05, 2006-07 TO 2009-10 IN ASSESSEES OWN CASE THE TRIBUNAL ALLOWED 100% DEPRE CIATION ON HOARDING STRUCTURES IRRESPECTIVE OF WHETHER HOARDINGS WERE USED FOR LES S THAN OR MORE THAN 180 DAYS DURING THE RELEVANT PREVIOUS YEAR. IT WAS THE PLEA OF THE ASSESSEE THAT HOARDINGS HAD A LIFE OF ONE OR TWO MONTHS OR LESS THAN A YEAR AS TH EY WERE EXPOSED TO SUN, RAIN AND ADVERSE WEATHER CONDITIONS AND WERE TO BE REGARDED AS TEMPORARY STRUCTURES WHICH ARE ELIGIBLE FOR DEDUCTION AT 100% DEPRECIATION. ACCORD ING TO THE AO IN NONE OF THOSE DECISIONS RENDERED IN ASSESSEES OWN CASE, THE QUES TION WHETHER ADVERTISEMENT HOARDINGS CAN BE REGARDED AS PERMANENT OR TEMPORARY STRUCTURE WAS EVER DECIDED. THE AO THEREFORE DISALLOWED THE DEPRECIATION CLAIMED AT 100% HOARDINGS. ACCORDING TO THE AO HOARDINGS HAVE TO BE REGARDED AS PLANT AND M ACHINERY ON WHICH ALLOWABLE DEPRECIATION AS PER RULES WAS ONLY 15%. THE AO ACCO RDINGLY DISALLOWED THE DIFFERENCE BETWEEN THE DEPRECIATION CLAIMED BY THE ASSESSEE AND THAT ALLOWED BY THE AO. 15. ON APPEAL BY THE ASSESSEE, THE CIT(A) ALLOWED D EPRECIATION AT 100% ON HOARDINGS. IN DOING SO THE CIT(A) FOLLOWED THE DECI SIONS RENDERED BY THE TRIBUNAL REFERRED TO IN THE EARLIER PARAGRAPHS OF THIS ORDER . THE CIT(A) DIRECTED THE AO TO ALLOW THE CLAIM OF THE ASSESSEE FOR DEPRECIATION AT 100% ON HOARDINGS. 16. AGGRIEVED BY THE ORDER OF THE CIT(A), THE REVE NUE HAS RAISED GR.NO.3 BEFORE THE TRIBUNAL. THE LD. DR, SUBMITTED THAT UNDER PAR T-A IN APPENDIX-I OF THE RULES, UNDER THE HEAD TANGIBLE ASSETS ENTRY (4) DEPRECI ATION AT 100% ON PURELY TEMPORARY ERECTIONS SUCH AS WOODEN STRUCTURE IS ALLOWED. AC CORDING TO HIM THE HOARDINGS IN QUESTION CANNOT BE REGARDED AS PURELY TEMPORARY ERE CTION. 17. WE HAVE GIVEN A VERY CAREFUL CONSIDERATION TO T HE RIVAL SUBMISSIONS. WE ARE OF THE VIEW THAT THE TRIBUNAL HAS ALREADY TAKEN A VIEW IN FAVOUR OF THE ASSESSEE IN THE ITA NO.2616/KOL/2013-M/S. VANTAGE ADVERTISING PVT. LTD. A.Y.2010-11 6 PAST ASSESSMENT REFERRED TO IN THE EARLIER PART OF THIS ORDER. IT CANNOT BE ARGUED BY THE LD. DR AT THIS STAGE THAT IN NONE OF THESE DECISION S THE QUESTION WHETHER THE HOARDINGS WERE TEMPORARY OR PERMANENT STRUCTURE WAS CONSIDERE D BY THE TRIBUNAL. GOING BY THE PRINCIPLE OF CONSISTENCY WE ARE OF THE VIEW THAT IT WOULD BE JUST AND PROPER NOT TO TAKE A VIEW DIFFERENT FROM THE VIEW WHICH HAS ALREADY BE EN TAKEN IN ASSESSEES OWN CASE IN THE PAST. EVEN IN THE ORDER OF ASSESSMENT THE FACTS TO SUBSTANTIATE A STAND TAKEN BY THE REVENUE HAVE NOT BEEN BROUGHT OUT. 18. KEEPING IN MIND THE PRECEDENTS ON THE ISSUE WE ARE OF THE VIEW THAT THE ORDER OF CIT(A) DOES NOT CALL FOR ANY INTERFERENCE. ACCOR DINGLY GROUND NO.3 RAISED BY THE REVENUE IS DISMISSED. 19. GROUND NO.4 RAISED BY THE REVENUE READS AS FOLL OWS :- 4. IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD.CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE OF THE CLAIM OF DEDUCTION U/S.80IA OF RS.1 ,74,42,469/- WITHOUT APPRECIATING THE FACT THAT THE FOOT OVER-BRIDGES AS WELL AS BUS SHELTERS ARE NOT 'ROAD' THE REVENUE FROM WHICH IS ELIGIBLE FOR DEDUC TION U/S. 80IA. 20. THE ASSESSEE CLAIMED DEDUCTION U/S 80IA (4) (I) OF THE INCOME TAX ACT, 1961 (ACT) OF A SUM OF RS. 1,74,42,469 /-. THE AFORESAID SUM WAS CLAIMED BY THE ASSESSEE TO BE REVENUE GENERATED BY DISPLAYING ADVERTISEMENT ON FOOT OVER BRIDGE THAT HAD BEEN DEVELOPED BY THE ASSESSEE FOR VARIOUS MUNICIPALITIE S/CORPORATIONS. IT WAS EXPLAINED BY THE ASSESSEE THAT THE MUNICIPALITIES AND CORPORATIO NS ALLOW THE ASSESSEE TO DEVELOP INFRASTRUCTURAL FACILITY IN THE FORM OF FOOT BRIDGE AND ROADS (INCLUDING ROAD MEDIAN AND STREET LIGHTS) THE ASSESSEE HAS TO BUILD AND MA INTAIN THE AFORESAID INFRASTRUCTURE FACILITY. THE ASSESSEE WAS ALLOWED TO DISPLAY ADVER TISEMENT HOARDINGS ON FOOT BRIDGE AND ROAD MEDIANS AND STREET LIGHTS. THE ASSE SSEE DERIVED INCOME FROM ADVERTISEMENT DISPLAY ON FOOT OVER BRIDGE AT RS.8 0,61,448/- AND ROADS INCLUDING ROAD MEDIANS AND STREET LIGHTING AMOUNTING TO RS.93 ,81,021/-. THE REVENUE GENERATED BY ADVERTISEMENT WAS TO RECOUP THE COST OF DEVELOPM ENT. THIS WAS CLAIMED BY THE ASSESSEE TO BE INCOME DERIVED BY THE ASSESSEE FROM CARRYING ON THE BUSINESS OF ITA NO.2616/KOL/2013-M/S. VANTAGE ADVERTISING PVT. LTD. A.Y.2010-11 7 DEVELOPING, OPERATING AND MAINTAINING INFRASTRUCTUR E FACILITY WITHIN THE MEANING OF SECTION 80IA(4)(I) OF THE ACT. 21. THE PROVISIONS OF SEC.80-IA(4)(I) READS THUS: DEDUCTIONS IN RESPECT OF PROFITS AND GAINS FROM IN DUSTRIAL UNDERTAKINGS OR ENTERPRISES ENGAGED IN INFRASTRUCTURE DEVELOPMENT, ETC. 80-IA. (1) WHERE THE GROSS TOTAL INCOME OF AN ASSESSEE INC LUDES ANY PROFITS AND GAINS DERIVED BY AN UNDERTAKING OR AN ENTERPRISE FROM ANY BUSINESS REFERRED TO IN SUB- SECTION (4) (SUCH BUSINESS BEING HEREINAFTER REFERR ED TO AS THE ELIGIBLE BUSINESS), THERE SHALL, IN ACCORDANCE WITH AND SUBJECT TO THE PROVIS IONS OF THIS SECTION, BE ALLOWED, IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE, A DEDUC TION OF AN AMOUNT EQUAL TO HUNDRED PER CENT OF THE PROFITS AND GAINS DERIVED F ROM SUCH BUSINESS FOR TEN CONSECUTIVE ASSESSMENT YEARS.] (2) THE DEDUCTION SPECIFIED IN SUB-SECTION (1) MAY, AT THE OPTION OF THE ASSESSEE, BE CLAIMED BY HIM FOR ANY TEN CONSECUTIVE ASSESSMENT Y EARS OUT OF FIFTEEN YEARS BEGINNING FROM THE YEAR IN WHICH THE UNDERTAKING OR THE ENTERPRISE DEVELOPS AND BEGINS TO OPERATE ANY INFRASTRUCTURE FACILITY OR ST ARTS PROVIDING TELECOMMUNICATION SERVICE OR DEVELOPS AN INDUSTRIAL PARK OR DEVELOPS A SPECIAL ECONOMIC ZONE REFERRED TO IN CLAUSE ( III ) OF SUB-SECTION (4) OR GENERATES POWER OR COMMENCE S TRANSMISSION OR DISTRIBUTION OF POWER OR UNDERTAKES SUBSTANTIAL REN OVATION AND MODERNISATION OF THE EXISTING TRANSMISSION OR DISTRIBUTION LINES : PROVIDED THAT WHERE THE ASSESSEE DEVELOPS OR OPERATES AND MA INTAINS OR DEVELOPS, OPERATES AND MAINTAINS ANY INFRASTRUCTURE FACILITY REFERRED TO IN CLAUSE ( A ) OR CLAUSE ( B ) OR CLAUSE ( C ) OF THE EXPLANATION TO CLAUSE ( I ) OF SUB-SECTION (4), THE PROVISIONS OF THIS SUB-SECTION SHALL HAVE EFFECT AS IF FOR THE WORDS 'FIFTEEN YEARS', THE WORDS 'TWENTY YEARS' HAD BEEN SUBSTITUTED. (4) THIS SECTION APPLIES TO ( I ) ANY ENTERPRISE CARRYING ON THE BUSINESS OF ( I ) DEVELOPING OR ( II ) OPERATING AND MAINTAINING OR ( III ) DEVELOPING, OPERATING AND MAINTAINING ANY INFRASTRUCTURE FACILITY WHICH FULFILS ALL THE FOLLO WING CONDITIONS, NAMELY : ( A ) IT IS OWNED BY A COMPANY REGISTERED IN INDIA OR BY A CONSORTIUM OF SUCH COMPANIES 1 [OR BY AN AUTHORITY OR A BOARD OR A CORPORATION OR ANY OTHER BODY ESTABLISHED OR CONSTITUTED UNDER ANY CENTRAL O R STATE ACT; ( B ) IT HAS ENTERED INTO AN AGREEMENT WITH THE CENTRA L GOVERNMENT OR A STATE GOVERNMENT OR A LOCAL AUTHORITY OR ANY OTHER STATUT ORY BODY FOR ( I ) DEVELOPING OR ( II ) OPERATING AND MAINTAINING OR ( III ) DEVELOPING, OPERATING AND MAINTAINING A NEW INFRASTRUCTURE FACI LITY;] ( C ) IT HAS STARTED OR STARTS OPERATING AND MAINTAINI NG THE INFRASTRUCTURE FACILITY ON OR AFTER THE 1ST DAY OF APRIL, 1995: PROVIDED THAT WHERE AN INFRASTRUCTURE FACILITY IS TRANSFERRE D ON OR AFTER THE 1ST DAY OF APRIL, 1999 BY AN ENTERPRISE WHICH D EVELOPED SUCH INFRASTRUCTURE FACILITY (HEREAFTER REFERRED TO IN T HIS SECTION AS THE TRANSFEROR ENTERPRISE) TO ANOTHER ENTERPRISE (HEREA FTER IN THIS SECTION ITA NO.2616/KOL/2013-M/S. VANTAGE ADVERTISING PVT. LTD. A.Y.2010-11 8 REFERRED TO AS THE TRANSFEREE ENTERPRISE) FOR THE P URPOSE OF OPERATING AND MAINTAINING THE INFRASTRUCTURE FACILITY ON ITS BEHA LF IN ACCORDANCE WITH THE AGREEMENT WITH THE CENTRAL GOVERNMENT, STATE GO VERNMENT, LOCAL AUTHORITY OR STATUTORY BODY, THE PROVISIONS OF THIS SECTION SHALL APPLY TO THE TRANSFEREE ENTERPRISE AS IF IT WERE THE ENTERPR ISE TO WHICH THIS CLAUSE APPLIES AND THE DEDUCTION FROM PROFITS AND GAINS WO ULD BE AVAILABLE TO SUCH TRANSFEREE ENTERPRISE FOR THE UNEXPIRED PERIOD DURING WHICH THE TRANSFEROR ENTERPRISE WOULD HAVE BEEN ENTITLED TO T HE DEDUCTION, IF THE TRANSFER HAD NOT TAKEN PLACE. EXPLANATION .FOR THE PURPOSES OF THIS CLAUSE, 'INFRASTRUCTURE FACILITY' MEANS ( A ) A ROAD INCLUDING TOLL ROAD, A BRIDGE OR A RAIL S YSTEM; ( B ) A HIGHWAY PROJECT INCLUDING HOUSING OR OTHER ACT IVITIES BEING AN INTEGRAL PART OF THE HIGHWAY PROJECT; ( C ) A WATER SUPPLY PROJECT, WATER TREATMENT SYSTEM, IRRIGATION PROJECT, SANITATION AND SEWERAGE SYSTEM OR SOLID WASTE MANAG EMENT SYSTEM; ( D ) A PORT, AIRPORT, INLAND WATERWAY, INLAND PORT OR NAVIGATIONAL CHANNEL IN THE SEA; 22. THE DETAILS OF VARIOUS AGREEMENTS WITH MUNICIPA LITIES/CORPORATIONS BETWEEN THE ASSESSEE WERE AS FOLLOWS :- 23. IT WAS NOT DISPUTED BY THE AO THAT ON IDENTICA L FACTS THE HONBLE ITAT, KOLKATA BENCH IN THE CASE OF VANTAGE ADVERTISING PVT. LTD IN ITA NOS. 1054 & 1055/KOL/2008 ORDER DATED 30.06.2009 (ASSESSEES OW N CASE) AND IN ANOTHER CASE SELVEL ADVERTISING P. LTD. IN ITA NO.820/KOL/2008 H AS TAKEN A VIEW THAT INCOME ITA NO.2616/KOL/2013-M/S. VANTAGE ADVERTISING PVT. LTD. A.Y.2010-11 9 FROM THE BUSINESS SIMILAR TO THE ONE CARRIED ON BY THE ASSESSEE IN THE PRESENT CASE WAS ENTITLED TO DEDUCTION U/S 80IA(4)(I) OF THE ACT. 24. THE AO WAS HOWEVER OF THE VIEW THAT SUBSEQUE NT TO THE DECISION RENDERED BY THE TRIBUNAL REFERRED TO IN THE EARLIER PARAGRAPH, THE HONBLE SUPREME COURT IN THE CASE OF LIBERTY INDIA LTD. 83 TAXMAN 349 (SC) HELD THAT THE WORD DERIVED FROM HAS NARROWER CONNOTATION AS COMPARED TO THE WORDS ATTR IBUTABLE TO. ACCORDING TO THE AO BY USING THE WORD DERIVED FROM, THE PARLIAMENT INTENDED TO COVER THE SOURCES NOT BEYOND THE FIRST DEGREE. AO WAS FURTHER OF THE VIEW THAT INCOME FROM DISPLAYING OF ADVERTISEMENT BOARDS ON TOILET BLOCKS AND FOOT B RIDGES CANNOT BE REGARDED AS A SOURCE OF THE FIRST DEGREE. 25. ON APPEAL BY THE ASSESSEE, THE CIT(A) ALLOWED THE CLAIM OF THE ASSESSEE. ACCORDING TO CIT(A), THE AO DISALLOWED THE CLAIM OF THE ASSESSEE DISREGARDING THE DECISIONS RENDERED IN ASSESSEES OWN CASE ON IDENTI CAL ISSUE BY PLACING RELIANCE ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF LIBERTY INDIA VS. CIT (SUPRA). ACCORDING TO CIT(A), THE FACTS OF THE ASSESSEES CA SE WAS DISTINGUISHABLE FROM THE FACTS IN THE CASE OF LIBERTY INDIA(SUPRA). ACCORD ING TO CIT(A), THE HON'BLE SUPREME COURT IN THE SAID CASE HAS DEALT WITH THE ISSUE OF WHETHER THE DEPB CREDIT/DUTY DRAWBACK RECEIPT CAN BE CONSIDERED AS PROFIT 'DERIV ED' FROM THE INDUSTRIAL UNDERTAKING. ACCORDING TO CIT(A), IN THE CASE OF THE ASSESSEE, PROFIT DERIVED BY THE ASSESSEE HAS TO BE REGARDED AS ONLY FROM THE FIRST DEGREE OF SOU RCE AND IN FACT THERE IS NO OTHER SOURCES FROM WHERE THE PROFIT CAN BE DERIVED. ACCOR DING TO CIT(A), THE ASSESSEE HAD COLLECTED ADVERTISEMENT REVENUE IN CONSIDERATION O F CONSTRUCTION AND MAINTENANCE OF THE INFRASTRUCTURE FACILITY. THE ASSESSEE HAS ONLY BEEN GIVEN THE RIGHT TO COLLECT ADVERTISEMENT REVENUE BY DISPLAY OF ADVERTISEMENT P ANELS THE ASSESSEE DID CARRY ON THE BUSINESS OF DEVELOPING, OPERATING AND MAINTAINI NG THE INFRASTRUCTURE FACILITY CONTINUOUSLY AND SYSTEMATICALLY BY THE APPLICATION OF ITS LABOUR AND SKILL WITH A VIEW TO EARNING ADVERTISEMENT INCOME. SINCE THE CENTRAL LOCAL AUTHORITY/OTHER STATUTORY BODY, DID NOT HAVE THE FUNDS TO COMPENSATE THE ASSE SSEE FOR COSTS IT INCURRED FOR DEVELOPING INFRASTRUCTURE FACILITY, THE ASSESSEE WA S GIVEN LICENSE TO COLLECT ITA NO.2616/KOL/2013-M/S. VANTAGE ADVERTISING PVT. LTD. A.Y.2010-11 10 ADVERTISEMENT REVENUE BY DISPLAY OF ADVERTISEMENT P ANELS. THE ADVERTISEMENT REVENUE COLLECTED BY THE ASSESSEE RETAINED THE CHARACTER OF INCOME DERIVED FROM THE BUSINESS OF THE ASSESSEE FROM DEVELOPING AND MAINTAINING 'LN FRASTRUCTURE FACILITY' AND DOES NOT CHANGE AS INCOME FROM 'ADVERTISEMENT BUSINESS'. THE IMMEDIATE SOURCE OF ADVERTISEMENT INCOME IS THE INFRASTRUCTURE FACILITY BUSINESS AND THE EFFECTIVE SOURCE OF THE GENEALOGY OF THE SOURCE OF THE ADVERTISEMENT IN COME IS THE INFRASTRUCTURE FACILITY BUSINESS. THERE WAS A DIRECT NEXUS BETWEEN THE ADVE RTISEMENT REVENUE AND INFRASTRUCTURE FACILITY BUSINESS OF THE ASSESSEE. A CCORDING TO THE CIT(A) FROM THE TERMS OF THE AGREEMENTS BETWEEN THE ASSESSEE AND TH E VARIOUS MUNICIPAL AUTHORITIES, IT WAS CLEAR THAT THE ADVERTISEMENT REVENUE WAS PART O F AND DIRECTLY RELATED TO SAID INFRASTRUCTURAL FACILITY. THE CIT(A) ALSO REFERRED TO THE DECISION OF THE MUMBAI BENCH OF ITAT IN THE CASE OF ITO VS. E. A. INFRASTRUCTUR E OPERATIONS PVT. LTD. (2011) 135 TTJ 239 (MUM ITAT) WHEREIN ON AN IDENTICAL CLAIM SU CH AS THE ONE MADE BY THE ASSESSEE IN THE PRESENT CASE, THE CONCEPT OF 'DERIV ED FROM' WAS EXPLAINED AS HEREUNDER: '9.ON GOING THROUGH THE PRINCIPLE LAID DOWN IN ABOV E JUDICIAL PRONOUNCEMENTS, IT IS MANIFEST THAT THE EXPRESSION 'DERIVED FROM' IS CONSTRICTED I N ITS AMBIT WHEN CONSIDERED IN JUXTAPOSITION TO THE EXPRESSION 'ATTRIBUTABLE TO' IN ORDER. TO BE CO VERED WITHIN .THE FORMER EXPRESSION IT IS SINE QUO NON THAT THE RELATION BETWEEN THE INCOME AND SO URCE MUST BE THAT OF. THE FIRST DEGREE. IN OTHER WORDS, INCOME MUST DIRECTLY SPRING FROM THE S OURCE, WHICH IS SUBJECT MATTER OF CONSIDERATION IN THE LANGUAGE OF SECTION. WHERE THE RELATION BETWEEN INCOME AND SOURCE SLIPS FROM FIRST TO SECOND DEGREE, INCOME STANDS EXCLUDED FROM THE SCOPE OF EXPRESSION 'DERIVED FROM' AND MAY FALL WITHIN THE PURVIEW OF 'ATTRIBUTABLE TO '. CONSEQUENTLY AN INCOME, SO AS TO BE CHARACTERIZED AS 'DERIVED FROM' AN UNDERTAKING, SHO ULD DIRECTLY RESULT FROM IT. TO PUT IT SIMPLY, IT SHOULD BE 'GENERATION OF PROFITS (OPERATIONAL PROFI TS)' [AS HELD IN LIBERTY INDIA (SUPRA)] OF THE ELIGIBLE UNDERTAKING. IF HOWEVER THE INCOME HAS GOT SOME INDIRECT OR REMOTE RELATION WITH THE INDUSTRIAL UNDERTAKING BUT DOES NOT SPRING FROM IT, THE SAME CANNOT BE HELD TO BE DERIVED FROM IT. FURTHER, MY ATTENTION IS ALSO DRAWN TO A REC ENT DECISION OF THE BANGALORE TRIBUNAL IN THE CASE OF M/S SKYLINES ADVERTISING PVT. LTD FOR AYS 2006-07, 2007-08 & 2008-09, WHEREIN HON'BLE TRIBUNAL HAS ALLOWED THE CLAIM OF DEDUCTION UNDER SECTION 80IA OF THE ACT ON STRUCTURE FACILITIES SUCH AS CENTER ROAD MEDIAN. FOOT OVER BR IDGE, BUS SHELTER AND STREET LIGHTING, BY RELYING ON THE DECISION OF THE KOLKATA TRIBUNAL IN APPELLAN T'S OWN CASE FOR AY 2005-06. IT IS ALSO FOUND THAT THE ISSUE HAS BEEN DEC IDED IN FAVOUR OF APPELLANT BY MY PREDECESSOR WHILE DISPOSING THE APPEAL OF THE APPELLANT FOR A.Y S. 2008-09 & 2009-10 IN APPEAL NO. 430/XII/R-12/1 0-11 & 482/XII/CIR-12/11-12, RESPECT IVELY. ITA NO.2616/KOL/2013-M/S. VANTAGE ADVERTISING PVT. LTD. A.Y.2010-11 11 IN THE LIGHT OF THE ABOVE FACTUAL POSITION O F THE CASE, AFTER CONSIDERING THE APPELLANTS SUBMISSION AND AS THE ISSUE IS COVERED BY THE HONB LE TRIBUNAL'S DECISION IN APPELLANT'S OWN CASE STATED ABOVE AND FOLLOWING THE DECISION OF MY PREDECESSOR IN THE A YS.2008-09 & 2009-10 ON THE SAME SET OF FACTS. I DECIDE THESE GROUNDS OF APPEAL IN FAVOUR OF THE APPELLANT AND DIRECT THE AO TO ALLOW THE CLAIM OF THE APPELLANT ACCORDI NGLY. HENCE THESE GROUNDS OF APPEAL ARE ALLOWED. 26. AGGRIEVED BY THE ORDER OF THE CIT(A) THE REV ENUE HAS RAISED GROUND NO.4 BEFORE THE TRIBUNAL. 27. THE LD. DR SUBMITTED BEFORE US THAT THE CIT(A) HAS NOT SEEN THAT THE ASSESSEE WAS IN THE BUSINESS OF ADVERTISEMENT AND NOT DEVELO PMENT OF INFRASTRUCTURE FACILITY. HIS FURTHER SUBMISSION WAS THAT HE HAS ALSO NOT EXA MINED THAT THE QUANTIFICATION OF THE AMOUNT OF ELIGIBILITY OF DEDUCTION U/S 80IA OF THE ACT. ACCORDING TO HIM A PART OF THE ADVERTISEMENT CANNOT BE CONSIDERED AS DERIVED FROM DEVELOPMENT OF INFRASTRUCTURE FACILITY. ACCORDING TO HIM THE CIT(A) HAS CO-TERMIN US POWER WITH THAT OF THE AO AND HE OUGHT TO HAVE EXAMINED THE QUANTUM OF DEDUCTION THAT SHOULD BE ALLOWED U/S 80IA OF THE ACT. HE PRAYED THAT THE MATTER SHOULD BE REM ANDED TO THE CIT(A) ON THE ABOVE ASPECTS. 28. THE LD. COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND, POINTED OUT THAT THE ONLY ISSUE RAISED IN GROUND NO.4 BY THE REVENUE AS TO WH ETHER FOOT OVER BRIDGES CAN BE CONSIDERED AS DEVELOPMENT OF ROAD FOR THE PURPOSE O F ALLOWING DEDUCTION U/S 80IA OF THE ACT. HE POINTED OUT THAT THERE IS A REFERENCE T O BUS SHELTERS IN THE GROUNDS OF APPEAL WHICH IS ERRONEOUS AND HAD OBVIOUSLY REFERRE D TO ONLY ROAD MEDIAN AND LIGHTING CARRIED OUT BY THE ASSESSEE FOR MUNICIPALI TIES AND CORPORATIONS. HE BROUGHT TO OUR NOTICE THAT IN SUPPORT OF THE QUANTUM OF DEDUCT ION U/S 80IA OF THE ACT CLAIMED BY THE ASSESSEE FORM NO.10CCB HAS BEEN FILED AND COPIE S OF THE SAME ARE PLACED AT PAGE NOS. 456 TO 460 OF THE ASSESSEES PAPER BOOK. HE AL SO SUBMITTED THAT EVEN ON THE BASIS THAT THE ASSESSEE IS NOT A DEVELOPER AND ONLY A WOR KS CONTRACTOR THE CLAIM FOR DEDUCTION CANNOT BE DISREGARDED AS ACCORDING TO THE AGREEMENT WITH THE MUNICIPALITIES AND CORPORATIONS, THE ASSESSEE UNDERTOOK THE DEVELO PMENT OF INFRASTRUCTURE FACILITY AND ITA NO.2616/KOL/2013-M/S. VANTAGE ADVERTISING PVT. LTD. A.Y.2010-11 12 ASSUMED ALL THE RISKS AND HAD NOT ACTED AS A CONTR ACTOR. HE POINTED OUT THAT THE AO HAD NOT DISPUTED THE QUANTUM OF DEDUCTION U/S80IA O F THE ACT CLAIMED BY THE ASSESSE. HE ALSO SUBMITTED THAT THE HONBLE SUPREME COURT IN THE RECENT DECISION RENDERED IN THE CASE OF CIT VS MEGHALAYA STEELS LTD.383 ITR 217 (SC) HAS DISTINGUISHED THE DECISION RENDERED BY THE HONBLE SUPREME COURT IN T HE CASE OF LIBERTY INDIA 317 TR 218 (SC) IN THE CONTEXT OF A SIMILAR DEDUCTION U/S 80IB AND 80IC OF THE ACT AS FOLLOWS :- LIBERTY INDIA BEING THE FOURTH JUDGMENT IN THIS LI NE ALSO DOES NOT HELP THE REVENUE. WHAT THIS COURT WAS CONCERNED WITH WAS AN EXPORT INCENTIVE, WHICH IS VERY FAR REMOVED FROM REIMBURSEMENT OF AN ELEMENT O F COST. A DUTY ENTITLEMENT PASS BOOK DRAWBACK SCHEME IS NOT RELATED TO THE BUS INESS OF AN INDUSTRIAL UNDERTAKING FOR MANUFACTURING OR SELLING ITS PRODUC TS. DUTY ENTITLEMENT PASS BOOK ENTITLEMENT ARISES ONLY WHEN THE UNDERTAKING GOES O N TO EXPORT THE SAID PRODUCT, THAT IS AFTER IT MANUFACTURES OR PRODUCES THE SAME. PITHILY PUT, IF THERE IS NO EXPORT, THERE IS NO DUTY ENTITLEMENT PASS BOOK ENTI TLEMENT, AND THEREFORE ITS RELATION TO MANUFACTURE OF A PRODUCT AND OR SALE WI THIN INDIA IS NOT PROXIMATE OR DIRECT BUT IS ONE STEP REMOVED. ALSO, THE OBJECT BE HIND THE DUTY ENTITLEMENT PASS BOOK ENTITLEMENT, AS HAS BEEN HELD BY THIS COURT, I S TO NEUTRALISE THE INCIDENCE OF CUSTOMS DUTY PAYMENT ON THE IMPORT CONTENT OF THE E XPORT PRODUCT WHICH IS PROVIDED FOR BY CREDIT TO CUSTOMS DUTY AGAINST THE EXPORT PRODUCT. IN SUCH A SCENARIO, IT CANNOT BE SAID THAT SUCH DUTY EXEMPTIO N SCHEME IS DERIVED FROM PROFITS AND GAINS MADE BY THE INDUSTRIAL UNDERTAKIN G OR BUSINESS ITSELF. 29. WE HAVE GIVEN A VERY CAREFUL CONSIDERATION. WE FIND THAT IDENTICAL ISSUE HAS BEEN CONSIDERED AND DECIDED IN ASSESSEES OWN CASE IN THE DECISION CITED BY THE LD. COUNSEL FOR THE ASSESSEE. FOR THE SAKE OF READY REF ERENCE WE MAY REFER TO THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE IN ITA NOS. 138 8 TO 1390/KOL/2012 FOR A.Y.2004-05, 2006-07 TO 2009-10 DATED 10.03.2015 WH EREIN THIS ASPECT HAS BEEN CONSIDERED AND THE TRIBUNAL AS FOLLOWS :- 8. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIO NS AND PERUSED THE RECORDS. WE FIND THAT THE ISSUE ON MERITS AS TO WHE THER THE ASSESSEE IS ENTITLED TO DEDUCTION U/S 80IA OF THE ACT FOR CONSTRUCTION OF F OOT OVER BRIDGE AS WELL AS BUS SHELTER IS COVERED IN FAVOUR OF ASSESSEE BY THE DEC ISION OF THE TRIBUNAL AND THE HONBLE CALCUTTA HIGH COURT AS REFERRED IN THE SUBM ISSIONS OF THE LD. COUNSEL OF THE ASSESSEE. THE TRIBUNAL IN ASSESSEES OWN CASE A S WELL AS IN THE CASE OF DCIT VS SELVEL ADVERTISING PVT. LTD. (SUPRA) HAS HELD TH AT BUS SHELTERS AND FOOT OVER BRIDGES SHOULD BE CONSIDERED AS PART OF THE INFRAST RUCTURE FACILITY FOR CLAIMING DEDUCTION U/S 80IA OF THE ACT. THIS ISSUE WAS ALSO SUPPORTED BY THE DECISION OF THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF SELV EL ADVERTISING PVT. LTD. ITA NO.2616/KOL/2013-M/S. VANTAGE ADVERTISING PVT. LTD. A.Y.2010-11 13 WHEREIN THE HONBLE HIGH COURT HAS UPHELD ITATS DE CISION QUASHING THE REVISION ORDER PASSED BY LD. CIT U/S 263 OF THE ACT WHEREIN BUS SHELTERS AND FOOT OVER BRIDGES WERE NOT TO BE CONSIDERED AS PART OF T HE INFRASTRUCTURE FACILITY FOR CLAIMING DEDUCTION U/S 80IA OF THE ACT. 8.1. AS REGARDS THE ISSUE RAISED BY THE LD. DR THAT THE INCOME WHICH IS THE SUBJECT MATTER OF CLAIM OF DEDUCTION U/S 80IA OF TH E ACT WAS NOT DERIVED FROM THE BUSINESS OF ADVERTISING OF BUS SHELTERS AND FOOT OV ER BRIDGES, WE FIND THAT THIS IS ALTOGETHER A NEW ISSUE WHICH IS NOT EVEN THE CASE O F AO. THE AO HAS MADE THE DISALLOWANCE ONLY ON THE GROUND THAT CONSTRUCTION O F BUS SHELTER AND FOOT OVER BRIDGE CANNOT BE TREATED AS DEVELOPMENT OF INFRASTR UCTURE FACILITY. HENCE THEY DO NOT QUALIFY FOR DEDUCTION U/S 80IA OF THE ACT. THIS ASPECT OF AOS DISALLOWANCE HAS BEEN DULY OVER RULED BY LD. CIT(A) AS WELL AS I TAT. THE SAME ALSO DRAWS SUPPORT FROM THE HONBLE CALCUTTA HIGH COURT DECISI ON IN THE CASE OF DCIT VS SELVEL ADVERTISING P.LTD. IN THESE CASES IT HAS BE EN HELD THAT DEVELOPMENT OF FOOT OVER BRIDGES AND BUS SHELTERS DO QUALIFY FOR DEDUCT ION U/S 80IA OF THE ACT ON ACCOUNT OF INFRASTRUCTURE DEVELOPMENT. WHEN THE AO HAS NOT RAISED ANY ISSUE AS TO WHETHER THE INCOME OF THE ASSESSEE CAN BE CONSID ERED TO BE INCOME DERIVED FROM THE INDUSTRIAL UNDERTAKING AND THE SAME WAS AL SO NOT THE SUBJECT MATTER OF CONSIDERATION BEFORE THE LD. CIT(A) NOR ANY SUCH GR OUND HAS BEEN RAISED BEFORE THE ITAT, IN OUR CONSIDERED OPINION THE LD. DR CAN NOT NOW ENLARGE THE SCOPE OF THE REVENUES APPEAL BEFORE US. 8.2. IN THIS REGARD WE ALSO DRAW SUPPORT FROM THE H ONBLE MADHYA PRADESH HIGH COURT EXPOSITION IN THE CASE OF KAMAL KISHORE AND CO. VS CIT 232 ITR 668 FOR THE FOLLOWING PROPOSITION : SECTION 253 OF THE INCOME-TAX ACT, 1961, PERMITS A PPEALS TO THE APPELLATE TRIBUNAL. UNDER SUB-SECTION (2) OF THIS SECTION, THE COMMISSI ONER MAY, IF HE OBJECTS TO ANY ORDER, DIRECT THE ASSESSING OFFICER TO APPEAL TO THE APPELLATE TR IBUNAL AGAINST THE ORDER. IT IS THUS CLEAR THAT THERE HAS TO BE AN APPEAL AND THERE HAS TO BE A SPECIFIC OBJECTION. UNDER ORDER 41, RULE 2, OF THE CODE OF CIVIL PROCEDURE ALSO IT IS CLEAR THAT THE APPELLANT SHALL NOT EXCEPT BY LEAVE OF THE COURT, URGE OR BE HEARD IN SUPPORT OF ANY GROUN D OF OBJECTION NOT SET FORTH IN THE MEMORANDUM OF APPEAL. ON THE BASIS OF THE ABOVE RATIO THE HONBLE HIGH CO URT HAD HELD THAT ADMITTEDLY THE GROUND OF STATUS WAS NOT TAKEN BY THE DEPARTMEN T IN TERMS OF SECTION 253(2) OF THE ACT. NO LEAVE WAS OBTAINED TO URGE THE GROUN D IN REGARD TO THE STATUS AS REGARDS THE LIABILITY TO TAX. THE TRIBUNAL ERRED IN LAW IN SETTING ASIDE THE FINDINGS GIVEN BY THE APPELLATE ASSISTANT COMMISSIONER THAT THE ASSESSEE WAS A SEPARATE ENTITY AND THE ASSESSMENT MADE IN THE CASE OF THE A SSESSEE SHOULD BE TREATED AS SUBSTANTIVE. 8.3. THUS FROM THE ABOVE WE HOLD THAT THE ISSUE WHI CH WAS NOT THE BASIS OF DISALLOWANCE BY THE AO AND THE SAME WAS NOT THE SUB JECT MATTER OF CONSIDERATION BY THE LD. CIT(A) AND THE SAME WAS ALSO NOT THE SUB JECT MATTER OF THE GROUND OF ITA NO.2616/KOL/2013-M/S. VANTAGE ADVERTISING PVT. LTD. A.Y.2010-11 14 APPEAL TAKEN BEFORE ITAT THE ISSUE NOW BEING RAISED BY THE LD. DR NEED NOT BE ADJUDICATED BY US. HENCE ON THE ISSUE AS TO WHETHER FOOT OVER BRIDGES AND BUS SHELTERS QUALIFY FOR DEDUCTION OF SECTION 80IA OF T HE ACT WE HOLD THAT THE LD. CIT(A) IS CORRECT IN HOLDING THE ASSESSEES ENTITLE MENT FOR DEDUCTION U/S 80IA OF THE ACT. ACCORDINGLY THIS GROUND OF APPEAL RAISED B Y THE REVENUE STANDS DISMISSED. 30. RESPECTFULLY FOLLOWING THE DECISION OF THE TRIB UNAL WE HOLD THAT THERE IS NO MERIT IN GROUND NO.4 RAISED BY THE REVENUE. 31. WITH REGARD TO THE OTHER CONTENTIONS OF THE LD. DR BEFORE US WE ARE OF THE VIEW THAT THESE ISSUES WERE NEVER RAISED BY THE AO OR TH E CIT(A) AND IT IS NOT OPEN TO THE REVENUE TO SET UP A NEW CASE WHICH DOES NOT EMANATE EITHER FROM THE ORDERS OF THE REVENUE AUTHORITIES OR GROUNDS OF APPEAL FILED BEFO RE THE TRIBUNAL. FOR THE REASONS GIVEN ABOVE WE FIND NO MERITS IN GROUND NO.4 RAISED BY THE REVENUE AND THE SAME IS DISMISSED. 32. GROUND NOS. 5 AND 6 RAISED BY THE REVENUE READ AS FOLLOWS :- 5. IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD.CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE OF RS. 10,12,45,605/- BY HOLDING T HAT THE PAYMENT FOR RENTING OF HOARDING SPACE ATTRACTS TDS @ 2% ULS.194C (CONTRACT UAL IN NATURE) AND NOT @ 10% U/S. 1941 (RENTAL IN NATURE) 6. IN THE FACTS AND CIRCUMSTANCES OF THIS CASE THE LD.CIT(A) HAS ERRED IN NOT APPRECIATING THAT TDS HAS TO BE DEDUCTED UNDER THE SPECIFIC PROVISION. THE PROVISIONS UNDER RESIDUARY SECTION CAN BE INVOKED O NLY IF THERE IS NO SPECIFIC SECTION UNDER THE I.T.ACT. TDS ON PAYMENT OF RENT W ILL ATTRACT TDS ONLY U/S. 1941 AND NOT U/S.194C WHICH IS A RESIDUARY SECTION FOR A NY TYPE OF CONTRACTUAL PAYMENTS. 33. DURING THE AY UNDER CONSIDERATION, THE ASSESSEE HAS DEDUCTED TDS UNDER SECTION 194C OF THE ACT ON PAYMENT OF RS. 101,245.6 05 MADE FOR OBTAINING RIGHT OF DISPLAYING THE ADVERTISEMENT ON HOARDINGS. THE CLAI M OF THE ASSESSEE WAS THAT THE RIGHT TO DISPLAY ADVERTISEMENT HOARDING AND NOT TAK ING HOARDING ON RENT. THEREFORE ITA NO.2616/KOL/2013-M/S. VANTAGE ADVERTISING PVT. LTD. A.Y.2010-11 15 PROVISIONS OF SEC.194C OF THE ACT IN RESPECT OF PAY MENT FOR EXECUTION OF WORK WILL APPLY FOR TDS AND NOT SECTION 194I OF THE ACT WHICH APPLIES TO PAYMENT OF RENT. THE ASSESSEE CONTENDED THAT IT NEVER HAD ANY RIGHT TO U SE THE HOARDING STRUCTURES BUT ONLY HAD A LIMITED RIGHT OF DISPLAYING ADVERTISEMENT ON HOARDING STRUCTURES BELONGING TO OTHERS. IT WAS ALSO POINTED OUT THAT THE HOARDING S TRUCTURES WERE NOT OPERATED AND MAINTAINED BY THE ASSESSEE BUT WAS OPERATED AND MAI NTAINED (INCLUDING MAINTAINING OF OUTDOOR MEDIA, ILLUMINATION OF LIT MEDIA 'ETC.) BY ADVERTISING AGENCIES. 34. ACCORDING TO THE AO THIS PAYMENT WAS THE PAYMEN T IN QUESTION WAS NOT A PAYMENT UNDER CONTRACT FOR PUTTING UP A HOARDING AN D THEREFORE THE ASSESSEE OUGHT TO HAVE DEDUCTED TAX AT SOURCE ON THE AFORESAID PAYMEN T U/S 194I OF THE ACT AT 10% AND IT WAS NOT IN THE NATURE OF PAYMENT MADE TO A CONTR ACTOR FOR CARRYING OUT ANY WORK U/S 194-C ON WHICH TDS WAS REQUIRED TO BE MADE AT 2%. 35. THE AO REFERRED TO CBDT CIRCULAR NO.715 DATED 08.08.1995 WHEREIN THE SCOPE OF AN ADVERTISING CONTRACT HAS BEEN EXPLAINED BY CB DT AS FOLLOWS :- ' .. QUESTION 1 : WHAT WOULD BE THE SCOPE OF AN ADV ERTISING CONTRACT FOR THE PURPOSE OF SECTION 194C OF THE ACT? ANSWER: THE TERM 'ADVERTISING' HAS NOT BEEN DEFINED IN THE ACT. DURING THE COURSE OF THE CONSIDERATION OF THE FINANCE BILL, 1995, THE FINANCE MINISTER CLARIFIED ON THE FLOOR OF THE HOUSE THAT THE AMENDED PROVISIONS OF TAX DEDUCTION AT SOURCE WOULD APPLY WHEN A CLIENT MAKES PAYMENT TO AN ADVER TISING AGENCY AND NOT WHEN ADVERTISING AGENCY MAKES PAYMENT TO THE MEDIA, WHIC H INCLUDES BOTH PRINT AND ELECTRONIC MEDIA. THE DEDUCTION IS REQUIRED TO BE M ADE AT THE RATE OF 1 PER CENT. IT WAS FURTHER CLARIFIED THAT WHEN AN ADVERTISING AGEN CY MAKES PAYMENTS TO THEIR MODELS, ARTISTS, PHOTOGRAPHERS, ETC., THE TAX SHALL BE DEDUCTED AT THE RATE OF 5 PER CENT AS APPLICABLE TO FEES FOR PROFESSIONAL AND TEC HNICAL SERVICES UNDER SECTION 194J OF THE ACT. .. ' 36. THE AO THEREAFTER CAME TO THE FOLLOWING CONC LUSION FOR DISALLOWING AND ADDING A SUM OF RS.10,12,45,605/- TO THE TOTAL INCOME OF T HE ASSESSEE U/S 40(A)(IA) OF THE ACT FOR NON DEDUCTION OF TDS AS PER SECTION 194I OF THE ACT : ITA NO.2616/KOL/2013-M/S. VANTAGE ADVERTISING PVT. LTD. A.Y.2010-11 16 IT MEANS THAT THE PAYMENTS MADE BY COMPANY ADVERTI SING ITS PRODUCTS WILL BE TERMED AS ADVERTISING PAYMENTS. THE PAYMENTS MADE B Y THE ASSESSEE COMPANY IS NOT TO ADVERTISE ITS PRODUCTS HENCE THE PAYMENTS CA NNOT BE TERMED AS ADVERTISING AND TDS IS LIABLE TO BE DEDUCTED U/S 194I AND NOT 1 94C. ASSESSEE HAS DEDUCTED TDS AT LOWER RATE U/S 194C AND NOT THE RATE PRESCRI BED U/S 194C. LOWER DEDUCTION IS EQUIVALENT TO NON DEDUCTION OF TDS AND HENCE RS.10,12,45,605/- SHOULD BE DISALLOWED FOR LOWER DEDUCTION OF TDS. 37. IN THE APPEAL AGAINST THE ORDER OF THE AO, THE ASSESSEE SUBMITTED BEFORE THE CIT(A) THAT THE PAYMENT ON WHICH THE TAX WAS DEDUCT ED AT SOURCE U/S 194C OF THE ACT HAS TO BE REGARDED AS PAYMENT TO A CONTRACTOR FOR C ARRYING OUT WORK AND DOES NOT ACTUALLY RELATE HIRING OF ADVERTISEMENT HOARDING SI TES. THOUGH THE ENTIRE PAYMENT WAS SHOWN IN THE PROFIT AND LOSS ACCOUNT, UNDER THE HEA D SITE HIRING CHARGES, THE ASSESSEE MAINTAINED THIS DISTINCTION WHENEVER PAYME NT WAS MADE WHICH WAS CARRYING OUT WORK AND THAT WHICH WAS IN THE NATURE OF RENT A ND DEDUCTED TAX AT SOURCE AS PER THE RELEVANT STATUTORY PROVISIONS OF SEC.194C OR SEC.19 4I OF THE ACT. THE ASSESSEE THEREFORE SUBMITTED THAT THE ASSESSEE HAD RIGHTLY D EDUCTED TAX AT SOURCE U/S 194C OF THE ACT. THE ASSESSEE FURTHER SUBMITTED THAT THE AS SESSEE HAS DEDUCTED TAX U/S 194C OF THE ACT BEING PAYMENTS MADE TO CONTRACTORS AND SUB- CONTRACTORS AND IT IS NOT A CASE OF NON-DEDUCTION OF TAX OR NO DEDUCTION OF TAX AS IS T HE IMPORT OF SECTION 40(A)(IA) OF THE ACT. THE CONDITIONS LAID DOWN U/S 40(A)(IA) OF THE ACT FOR DISALLOWANCE OF THE DEBIT IS THAT TAX IS DEDUCTIBLE AT SOURCE AND SUCH TAX HAS N OT BEEN DEDUCTED. IF BOTH THE CONDITIONS ARE SATISFIED THEN SUCH PAYMENT CAB BE D ISALLOWED .U/S 40(A)(IA) OF THE ACT. BUT WHERE TAX IS DEDUCTED BY THE ASSESSEE, EVEN UND ER BONAFIDE WRONG IMPRESSION, UNDER WRONG THE PROVISIONS OF TDS, THE PROVISIONS O F SECTION 40(A)(IA) OF THE ACT CANNOT BE INVOKED. THE ASSESSEE HAS DEDUCTED TAX U/ S 194C OF THE ACT AND NOT U/S 194I OF THE ACT AND PAID THE SUM DEDUCTED WITHIN THE PRE SCRIBED TIME. THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT HAS TWO LIMBS, ONE IS WHERE, INTER ALIA, ASSESSEE HAS TO DEDUCT TAX AND THE SECOND WHERE AFTER DEDUCTING TAX , INTER ALIA, THE ASSESSEE HAS TO PAY INTO GOVERNMENT ACCOUNT. THERE IS NOTHING IN THE SA ID SECTION TO TREAT, INTER ALIA, THE ASSESSEE AS DEFAULTER WHERE THERE IS IT SHORTFALL I N DEDUCTION. WITH REGARD TO THE SHORTFALL, IT CANNOT BE ASSUMED THAT THERE IS A DEF AULT AS THE DEDUCTION IS NOT AS REQUIRED BY OR UNDER THE ACT, BUT THE FACTS IS THAT THIS EXP RESSION, 'ON WHICH TAX IS DEDUCTIBLE AT ITA NO.2616/KOL/2013-M/S. VANTAGE ADVERTISING PVT. LTD. A.Y.2010-11 17 SOURCE UNDER CHAPTER XVII-B AND SUCH TAX HAS NOT BE EN DEDUCTED OR, AFTER DEDUCTION HAS NOT BEEN PAID ON OR BEFORE THE DUE DATE SPECIFI ED IN SUB-SECTION (1) OF SECTION 139. IT WAS ARGUED THAT SECTION 40(A)(IA) OF THE ACT REFERS ONLY TO THE DUTY TO DEDUCT TAX AND PAY TO GOVERNMENT ACCOUNT. IT THERE IS ANY SHORTFALL DUE TO ANY DIFFERENCE OF OPINION AS TO THE TAXABILITY OF ANY ITEM OR THE NAT URE OF PAYMENTS FALLING UNDER VARIOUS TDS PROVISION, THE ASSESSEE CAN BE DECLARED TO BE A N ASSESSEE IN DEFAULT U/S 201 OF THE ACT AND NO DISALLOWANCE CAN BE MADE BY INVOKING THE PROVISION OF SECTION 40(A)(IA) OF THE ACT. 38. THE ASSESSEE ALSO RELIED ON THE DECISION OF TH E HONBLE JURISDICTIONAL HIGH COURT, IN ITS JUDGEMENT VIDE CIT VS. M/S S.K. TEKRIWAL 36 1 ITR 432 (CAL) WHEREIN IT HAS BEEN HELD THE SAME ISSUE AND DECIDED THE SAME I N THE FAVOUR OF THE ASSESSEE THAT 'IF THERE IS ANY SHORTFALL DUE TO ANY DIFFERENCE OF OPINION AS TO THE TAXABILITY OF ANY ITEM OR THE NATURE OF PAYMENTS FALLING UNDER VARIOU S TDS PROVISIONS, THE ASSESSEE CAN BE DECLARED TO BE AN ASSESSEE IN DEFAULT U/S 201 OF THE ACT AND NO DISALLOWANCE CAN BE MADE BY INVOKING THE PROVISIONS OF SEC 40(A)(IA) OF THE ACT'. 39. THE CIT(A) DELETED DISALLOWANCES MADE BY THE AO BY FOLLOWING THE DECISION OF THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF M/S. S.K.TEKRIWAL (SUPRA) WHEREIN IT WAS HELD THAT SECTION 40(A)(IA) OF THE ACT CANNOT B E INVOKED WHERE THERE IS A SHORT DEDUCTION AND CAN BE INVOKED ONLY WHEN THERE IS NON -DEDUCTION. THE CIT(A) DID NOT GO INTO THE QUESTION AS TO WHETHER THE PAYMENT IN Q UESTION FELL WITHIN THE AMBIT OF SECTION 194C OR 194I OF THE ACT. 40. AGGRIEVED BY THE ORDER OF THE CIT(A) THE REV ENUE HAS RAISED GROUND NO.3 BEFORE THE TRIBUNAL. 41. THE LD. DR WHILE CONCEEDING THAT THE ISSUE I S COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE HONBLE CALCUTTA HIGH COURT NEVERTHELESS BROUGHT TO OUR NOTICE THE DECISION OF KERALA HIGH COURT IN ITA NO.16 OF 2 014 ORDER DATED 20.07.2015 WHEREIN THE HONBLE KERALA HIGH COURT HAS TAKEN A V IEW CONTRARY TO THE VIEW TAKEN BY THE HONBLE CALCUTTA HIGH COURT. ITA NO.2616/KOL/2013-M/S. VANTAGE ADVERTISING PVT. LTD. A.Y.2010-11 18 42. WE ARE OF THE VIEW THAT THE DECISION OF THE HONBLE CALCUTTA HIGH COURT IS BINDING ON THIS TRIBUNAL BEING ON THE DECISION OF T HE JURISDICTIONAL HIGH COURT. WE ARE THEREFORE OF THE VIEW THAT THE ORDER OF CIT(A) ON T HIS ISSUE DOES NOT CALL FOR ANY INTERFERENCE. ACCORDINGLY GROUND NO.5 & 6 RAISED BY THE REVENUE ARE DISMISSED. 43. IN THE RESULT THE APPEAL BY THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE COURT O N 03.01.2018. SD/- SD/- [DR.A.L.SAINI] [ N.V.VASUDEVAN ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 03.01.2018. [RG SR.PS] COPY OF THE ORDER FORWARDED TO: 1. M/S. VANTAGE ADVERTISING PVT. LTD., C-56, FIRST AVENUE, ANNA NAGAR EAST, CHENNAI-600 102. 2. D.C.I.T.-CIRCLE-12, KOLKATA. 3. C.I.T.(A)-XII, KOLKATA 4. C.I.T.-IV, KOLKAT A. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER SENIOR PRIVATE SECRETARY HEAD OF OFFICE / D.D.O., ITAT KOLKATA BENCHES