M/S. SANEE INFRASTRUCTURE PVT. LTD., Bhopal V. THE ACIT 3(1), Bhopal

ITA 263/IND/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 5855 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 2 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-07-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 20-04-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAJEEV JAIN
• Keywords: Retrospective amendment

Judgement Text

M/S SANEE INFRASTRUCTURE PVT. LTD ITA NO. 263/IND/2015 1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI D.T. GARASIA, JM & SHRI N.S. SAINI, AM ITA NO. 263/IND/2016 A.Y.2009-10 M/S SANEE INFRASTRUCTURE PVT. LTD BHOPAL PAN AAGCS 8307M ::: APPELLANT VS ASSTT. COMMR. OF INCOME TAX INDORE ::: RESPONDENT APPELLANT BY SHRI ARUN JAIN RESPONDENT BY SHRI RAJEEV JAIN DATE OF HEARING 11 .7.2016 DATE OF PRONOUNCEMENT 1 1 .7.2016 O R D E R THIS IS AN APPEAL PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF THE LEARNED CIT(A), BILASPUR, DATED 19.1.2015 ON THE FOLLOWING GROUNDS :- M/S SANEE INFRASTRUCTURE PVT. LTD ITA NO. 263/IND/2015 2 (I) THAT IN THE FACTS AND UNDER THE CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) ERRED IN FACTS AND ALSO IN LAW IN CONFIRMING DISALLOWANCE OF THE DEDUCTION OF RS.7335681/- U/S 80IA(4) OF THE ACT IN RESPECT OF INFRASTRUCTURE FACILITY. (II) THAT IN THE FACTS AND UNDER THE CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) ERRED IN FACTS AND ALSO IN LAW IN CONFIRMING ADDITION OF RS.1103779/- IN RESPECT OF CLAIM U/S 80IA(4) OF THE ACT. (III) THAT IN THE FACTS AND UNDER THE CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) ERRED IN FACTS AND ALSO IN LAW IN CONFIRMING DISALLOWANCE OF RS.7335681/- U/S 80IA(4) OF THE INCOME TAX ACT, 1961 DEEMING THAT ASSESSEE HAS WORKED SIMPLICITOR AS A CONTRACTOR AND NOT AS A DEVELOPER OF INFRASTRUCTURE FACILITY AS A WHOLE. M/S SANEE INFRASTRUCTURE PVT. LTD ITA NO. 263/IND/2015 3 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSING OFF ICER OBSERVED THAT THE ASSESSEE HAS EXECUTED WORK CONTRACT ALLOTTED BY GOVERNMENT DEPARTMENTS/AUTHORITIES FOR CONSTRUCTION OF ROADS. HE OBSERVED THAT A PERUSAL OF TH E CONTRACT AGREEMENT SHOWS THAT A TENDER OF WORK CONTRACT IS ALLOTTED BY THE CONCERNED DEPARTMENT AND THE WORK CONTRACTEE SUBMITS RATE. THE WORK CONTRACT IS PROVIDED IN THE FORM OF WORK ORDER. THE SPECIFICATION OF THE WOR K IS MENTIONED IN THE WORK ORDER. THE CONTRACTOR ONLY EX ECUTED THE WORK ORDER. THE WORK DONE BY HIM IS INSPECTED B Y THE ENGINEER OF THE CONCERN CENTRAL/STATE DEPARTMENT. TIM E TO TIME PAYMENTS ARE MADE BASED ON BILLS EVALUATED BY THE ENGINEER ONLY AFTER SATISFACTION THAT THE WORK IS BEING EXECUTED AS PER THE CONTRACT. THE ASSESSEE HIMSELF HAS ACCEPTED THAT HE IS A CONTRACTOR AND ONLY EXECUTES THE W ORK ORDER. A TENDER AND WORK ORDER IS PROVIDED ONLY IN C ASE OF WORK CONTRACT. THEREFORE, HE HELD THAT IT IS CLEAR THAT THE M/S SANEE INFRASTRUCTURE PVT. LTD ITA NO. 263/IND/2015 4 WORK CONTRACTOR IS AWARDED BY THE CENTRAL/STATE GOVERNMENT AND IT IS EXECUTED BY THE ASSESSEE. HE OBSERVED THAT WITH EFFECT FROM 1.4.2000 THE FINANCE ( NO. 2) ACT, 2009 HAS ADDED AN EXPLANATION WHICH PROVIDES THAT FOR THE REMOVAL OF DOUBTS IT IS HEREBY DECLARED THAT N OTHING CONTAINED IN THIS SECTION SHALL APPLY IN RELATION TO TH E BUSINESS REFERRED TO IN SUB-SECTION (4) WHICH IS IN THE NATURE OF A WORKS CONTRACT AWARDED BY ANY PERSON INCLUDING CENTRAL/STATE GOVERNMENT AND EXECUTED BY THE UNDERTAKING OR ENTERPRISES REFERRED TO IN SUB-SECTIO N (1). THEREFORE, THE ASSESSING OFFICER HELD THAT THE IS EX ECUTING ONLY A WORK CONTRACT AWARDED BY THE CENTRAL/STATE GOVERNMENT AND, THEREFORE, NO DEDUCTION U/S 80IA(4) CAN BE ALLOWED TO THE ASSESSEE. 3. ON APPEAL, THE LEARNED CIT(A) CONFIRMED THE ACTION O F THE ASSESSING OFFICER WITH THE FOLLOWING OBSERVATION S :- M/S SANEE INFRASTRUCTURE PVT. LTD ITA NO. 263/IND/2015 5 THE FACTS AND CIRCUMSTANCES LEADING TO WITHDRAWAL OF DEDUCTION U/S 80IA(4) IN THE YEAR UNDER CONSIDERATION IS EXACTLY SIMILAR TO THE FACTS AND CIRCUMSTANCES LEADING TO DENIAL OF DEDUCTION UNDER THE AFORESAID SECTION IN THE A.Y. 2007-08 BY HOLDING THAT THE APPELLANT HAS NOT DEVELOPED ANY NEW INFRASTRUCTURE FACILITY AND EXPLANATION SUBSTITUTED BY FINANCE ACT, 2009 WITH RETROSPECTIVE EFFECT FROM 01.04.2000 THAT BENEFIT IS NOT AVAILABL E TO A PERSON WHO MERELY EXECUTES WORK CONTRACT. PLACING RELIANCE IN THE ORDER OF THE A.O. AND ORDER OF CIT(APPEALS)-II, BHOPAL DATED 24.10.2009 FOR A.Y. 2007-08 I DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE A.O. DENYING DEDUCTION TO THE APPELLANT U/S 80IA(4) FOR THE YEAR UNDER REFERENCE. THAT APART, KEEPING IN VIEW OF THE DIRECTIONS ISSUED BY THE HON'BLE TRIBUNAL REQUIRED TO BE FOLLOWED BY THE A.O . M/S SANEE INFRASTRUCTURE PVT. LTD ITA NO. 263/IND/2015 6 IN THE COURSE OF SET ASIDE ASSESSMENT PROCEEDINGS FOR A.Y. 2007-08, THE LD. AR WAS ASKED TO PRODUCE ALL CONTRACT AGREEMENTS EXECUTED DURING THE YEAR UNDER CONSIDERATION. THE LD. AR PRODUCED LIST OF 80IA AND NON-80IA PROJECTS AND ON PERUSAL OF THE LIST IT APPEARS THAT ALL 15 NON-80IA NAMELY BALAGHA T WARASEONI RAMPAYLI, TUMSAR ROAD, BALAGHAT; DHARNA DHARAMKUAN ROAD, SEONI; BILASPUR SALAIYA ROAD, CHHINDWARA; CHHINDWARA CHAND ROAD, CHHINDWARA (55%), CHOURY AMARWARA ROAD, CHHINDWARA; PARASIYA EKLEHRA DAMUA ROAD, CHHINDWARA; SEONI KATANGI ROAD KM 17/4 TO 18/8, SEONI; DHARNA ASTHA DONDIWARA ROAD, SEONI; BARGHAT KANHIWARA ROAD, SEONI; SEONI KANTANGI ROAD, SEONI; GOPALGANJ CHAKKI KHAMIRIYA ROAD, SEONI; SAGAR MARBUNDI MUNTGWANI ROAD, SEONI; GOPALGANJ CHAKKI KHAMRIYA ROAD, SEONI; SAGAR M/S SANEE INFRASTRUCTURE PVT. LTD ITA NO. 263/IND/2015 7 MARBUNDI MUNGWANI ROAD, SEONI; KHWASA TIRUDI ROAD, SEONI; MENDLI LINGMRA DINI ROAD, BALAGHAT; MOWAD BONKATTA ROAD, BALAGHAT, THE WORKS DONE WERE IN THE NATURE OF WORK CONTRACTS. REGARDING 80IA(4) PROJECTS, THE APPELLANT HAS GIVEN THE LIST OF THE PROJECTS NAMELY PMGSY-3556, SEHORE; PMGSY- 3629, SEONI PMSGSY-4243, TIKAMGARH; PMGSY 0716, CHHINDWARA; PMGSY-4023, SHIVPURI AND OUT OF THE ABOVE FIVE PROJECTS, TWO PROJECTS NAMELY PMGSY 3556, SEHORE AND PMGSY-0716, CHHINDWARA WERE ALSO PROJECTS APPEARING IN THE LIST OF PROJECTS EXECUTED BY THE APPELLANT IN F.Y. 2006- 07 RELEVANT TO A.Y. 2007-08. IT IS PERTINENT TO MENTIO N HERE THAT IN COURSE OF ASSESSMENT PROCEEDINGS FOR THE A.Y. 2007-08 THE A.O. CONDUCTED ENQUIRIES AND GOT CONFIRMATION FROM THE CORRESPONDING DEPARTMENT THAT THE WORKS DONE WERE FOR UPGRADATION OF M/S SANEE INFRASTRUCTURE PVT. LTD ITA NO. 263/IND/2015 8 ROAD/BRIDGE/CULVTER. THAT APART, THE LD. AR DID NOT FILE CONTRACT AGREEMENTS FOR THE ABOVE WORKS THOUGH CATEGORICALLY REQUISITIONED VIDE APPELLATE PROCEEDINGS DATED 22.11.2013 BUT HE HAS SIMPLY FILED THE RUNNING BILLS OF WORKS DONE AND ON PERUSA L OF THE RUNNING BILL IT IS CLEARLY EVIDENT THAT THE WORKS ASSIGNED WERE IN THE NATURE OF UPGRADATION OF RURAL ROADS, IMPROVEMENT AND WIDENING OF EXISTING ROADS ONLY. IN ABSENCE OF ANY CONTRACT AGREEMENTS, WHETHER THE APPELLANT DEVELOPED ANY INFRASTRUCTURE PROJECT WHOLLY OR NOT IS NOT ASCERTAINABLE. THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF KATIRA CONSTRUCTION LIMITED VS. UOI 31 TAXMAN.COM 250 DISCUSSED THE SCOPE OF THE EXPLANATION SUBSTITUTED BY FINANCE ACT, 2009 W.E.F. 01..4.2000 AND RELEVANT PORTION OF THE OBSERVATION OF HON'BLE M/S SANEE INFRASTRUCTURE PVT. LTD ITA NO. 263/IND/2015 9 HIGH COURT DECIDING THE CASE IN FAVOUR OF THE REVENUE IS REPRODUCED HEREUNDER :- IN 2007 AN EXPLANATION WAS ADDED BELOW SUB- SECTION (13) OF SECTION 80IA BY THE FINANCE ACT, 2007 WITH RETROSPECTIVE EFFECT FROM01.04.2000. SUCH EXPLANATION READS AS UNDER : EXPLANATION FOR THE REMOVAL OF DOUBTS, IT IS HERE BY DECLARED THAT NOTING CONTAINED IN THIS SECTION SHAL L APPLY TO A PERSON WHO EXECUTES A WORKS CONTRACT ENTERED INTO WITH THE UNDERTAKING OR ENTERPRISE, AS THE CASE MAY BE. EXPLANATORY MEMORANDUM FOR INTRODUCTION OF SUCH AMENDMENT READS AS UNDER :- SECTION 80IA, INTER ALIA, PROVIDES FOR A TEN YEAR TAX BENEFIT TO AN ENTERPRISES OR AN UNDERTAKIN G ENGAGED IN DEVELOPMENT OF INFREASTRUCTURE FACILITIE S, INDUSTRIAL PARKS AND SPECIAL ECONOMIC ZONES. M/S SANEE INFRASTRUCTURE PVT. LTD ITA NO. 263/IND/2015 10 THE TAX BENEFIT WAS INTRODUCED FOR THE REASON THAT INDUSTRIAL MODERNISATION REQUIRES A MASSIVE EXPANSION OF AND QUALITATIVE IMPROVEMENT IN INFRASTRUCTURE (VIZ. EXPRESS WAYS, HIGH WAYS, AIRPORTS AND RAPID URBAN RAIL TRANSPORT SYSTEMS) WHICH WAS LACKING IN OUR COUNTRY. THE PURPOSE OF THE TAX BENEFIT HAS ALL ALONG BEEN FOR ENCOURAGING PRIVATE SECTOR PARTICIPATION BY WAY OF INVESTMENT I N DEVELOPMENT OF THE INFRASTRUCTURE SECTOR AND NOT FO R THE PERSONS WHO MERELY EXECUTE THE CIVIL CONSTRUCTION WORKS OR ANY OTHER WORKS CONTRACT. ACCORDINGLY IT IS PROPOSED TO CLARIFY THAT THE PROVISIONS OF SECTION 80IA SHALL NOT APPLY TO A PERSON WHO EXECUTES A WORKS ENTERED INTO WITH THE UNDERTAKING OR ENTERPRISES REFERRED TO IN THE SAID SECTION. THUS, IN A CASE WHERE AN PERSON MAKES THE INVESTMENT AND HIMSELF EXECUTES THE DEVELOPMENT M/S SANEE INFRASTRUCTURE PVT. LTD ITA NO. 263/IND/2015 11 WORK, I.E. CARRIES OUT THE CIVIL CONSTRUCTION WORK, HE WILL BE ELIGIBLE FOR TAX BENEFIT U/S 80IA. IN CONTR ACT TO THIS, PERSON WHO ENTERS INTO A CONTRACT WITH ANOTHER PERSON (I.E. WITH SOME ENTERPRISES REFERRED TO IN SECTION 80IA FOR EXECUTING WORKS CONTRACT WIL L NOT BE ELIGIBLE FOR THE TAX BENEFIT U/S 80IA. KEEPING IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE LEGAL PROPOSITIONS DISCUSSED ABOVE, I FIND THAT THE APPELLANT IS NOT ENTITLED TO DEDUCTION U/S 80IA(4) AND, THEREFORE, THE A.O. HAS RIGHTLY DENIED THE DEDUCTION AND ADDED IT BACK TO THE TOTAL INCOME. THE GROUNDS OF APPEAL ARE REJECTED. 4. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES. HE COU LD NOT BRING ANY MATERIAL TO CONTROVERT THE FINDINGS OF T HE ASSESSING OFFICER AS WELL AS THE LEARNED CIT(A). WE, M/S SANEE INFRASTRUCTURE PVT. LTD ITA NO. 263/IND/2015 12 THEREFORE, FIND NO GOOD AND JUSTIFIABLE REASON TO INTE RFERE WITH THE ORDER OF THE LEARNED CIT(A) WHICH IS CONFIR MED. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMIS SED. PRONOUNCED IN OPEN COURT ON 11 TH JULY, 2016 SD/- SD/- (D.T. GARASIA) (N.S. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER JULY, 2016 DN/- M/S SANEE INFRASTRUCTURE PVT. LTD ITA NO. 263/IND/2015 13