M/s. Borse Brothers Infrastructures Private Limited, Dhule V. Deputy Commissioner of Income tax,

ITA 2705/PUN/2016

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 7592 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 5 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-05-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 01-12-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SHRI
• Keywords: Opportunity of being heard; Principle of natural justice; Difference of opinion; Change of opinion
• Section: 142(1); 144

Judgement Text

- IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC, PUNE . , , BEFORE SHRI D. KARUNAKARA RAO, AM . / ITA NOS. 2705 TO 2707/PUN/2016 !' # $# / ASSESSMENT YEARS : 2008-09 TO 2010-11 M/S. BORSE BROTHERS INFRASTRUCTURE PRIVATE LIMITED. 23, ANAND NAGAR DEOPUR, NEAR INDIRA GARDEN, DHULE- 424 002. PAN : AACCB4963A ....... / APPELLANT %' / V/S. THE DEPUTY COMMISSIONER OF INCOME TAX, 3(1), DHULE. / RESPONDENT APPELLANT BY : NONE RESPONDENT BY : SHRI PANKAJ GARG. / DATE OF HEARING : 15.05.2018 / DATE OF PRONOUNCEMENT : 17.05.2018 & / ORDER PER D. KARUNAKARA RAO, AM THIS BUNCH OF THREE APPEALS FILED BY ASSESSEE ARE DIRECTED AGAINST THE COMMON ORDER OF COMMISSIONER OF INCOME TAX (APPEAL)-1, NA SHIK DATED 09.09.2016 FOR ASSESSMENT YEARS 2008-09 TO 2010-11. 2 ITA NOS. 2705 TO 2707/PUN/2016 A.YS. 2008-09 TO 2010-11 2. THE ASSESSEE HAS RAISED IDENTICAL GROUNDS IN ALL THE TH REE APPEALS FOR A.Y. 2008-09 TO 2010-11. FOR THE SAKE OF THIS ORDER, GROU NDS AND FACTS PERTAIN TO ASSESSMENT YEAR 2008-09 ARE CONSIDERED. GROUNDS RA ISED BY ASSESSEE FOR ASSESSMENT YEAR 2008-09 ARE EXTRACTED AS UNDER: 1. THE ASSESSEE SUBMITS THAT THE RE-OPENING OF THE ASS ESSMENT IS BAD IN LAW AS THE RE-OPENING IS BEYOND 4 YEARS FROM THE EN D OF THE ASSESSMENT YEAR AND ALL THE MATERIAL FACTS WERE FULLY AND TRUL Y DISCLOSED TO THE LEARNED ASSESSING OFFICER IN THE ORIGINAL ASSESSMENT ORDER. 2. THE ASSESSEE FURTHER SUBMITS THAT THE RE-OPENING IS BASED ON THE CHANGE OF OPINION AND HENCE THE RE-ASSESSMENT U/S.1 43(3) R.W.S 147 IS NOT VALID IN LAW. 3. ON FACTS AND CIRCUMSTANCES OF THE CASE AS WELL A S IN LAW THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-1, NASIK ERRED IN CONFIRMING THE DISALLOWANCE U/S.80IA OF RS.30,47,211 ON THE GROUND THAT THE APPELLANT WAS NOT THE DEVELOPER OF THE INFRASTRUCTURE FACILIT Y AND ONLY ACTED AS A SUB-CONTRACTOR. 4. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS), 1, NASIK FAILED TO APPRECIATE THAT AS PER THE SUBSTITUTION AGREEMENT D ATED 25-02-2004, THE GOVERNMENT OF MAHARASHTRA HAD RECOGNISED THE APPELL ANT COMPANY AS THE DEVELOPER OF THE INFRASTRUCTURE FACILITY AND THEREF ORE, SINCE ALL THE OTHER CONDITIONS OF SECTION 80IA HAS BEEN FULFILLED, THE DEDUCTION CLAIMED BY THE APPELLANT WAS JUSTIFIED IN LAW. 5. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WE LL AS IN LAW THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) 1, NAS IK ERRED IN NOT ALLOWING AMORTIZATION OF RS.33,19,398 IN ACCORDANCE WITH CIRCULAR NO.9 OF 2014 DATED APRIL 23, 2014 BY TREATING THE APPELLANT AS SUB-CONTRACTOR. 6. THE APPELLANT CRAVES YOUR LEAVE TO ADD, ALTER, A MEND, EXPAND AND/OR DELETE ANY OF THE ABOVE GROUND OR GROUNDS OF APPEAL BEFORE THE FINAL DISPOSAL OF THE APPEAL. 3. AT THE OUTSET, IT IS RELEVANT TO MENTION HERE THAT HE ARING OF NOTICE WAS ISSUED INITIALLY ON 01.12.2016 AND SUBSEQUENTLY, THE CASE W AS POSTED FOR HEARING ON 20.03.2018. ON THE SAID DATE, ASSESSEE FILED ADJO URNMENT LETTER DATED 19.03.2018. ACCORDINGLY, THE CASE WAS ADJOURNED AN NOUNCING THE DATE IN OPEN COURT AND POSTED THE CASE FOR HEARING ON 15.05.20 18. ON THE SAID DATE OF HEARING I.E. ON 15.05.2018, NONE APPEARED ON BEHALF OF THE AS SESSEE. CONSIDERING THE SERVICE OF NOTICE AND ADJOURNMENT IN RESP ONSE TO THE 3 ITA NOS. 2705 TO 2707/PUN/2016 A.YS. 2008-09 TO 2010-11 ASSESSEES LETTER, ALL THE APPEALS ARE TAKEN UP FOR ADJUD ICATION CONSIDERING THE COMMONNESS OF THE ISSUES IN ALL THE THREE APPEALS. 4. GROUND NO. 1 AND 2 RELATES TO THE RE-OPENING OF ASSE SSMENT AND GROUND NO. 3 AND 4 RELATE TO CLAIM OF DEDUCTION U/S. 80IA OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). GROUND NO. 5 DEALS WITH CLAIM OF AMORTIZATION OF EXPENSES. 5. WITH REGARD TO GROUND NO. 1, VALIDITY OF RE-ASSESSMENT PROCEEDINGS, THE ASSESSEE HAS RAISED THIS LEGAL ISSUE FOR THE FIRST TIME BEFOR E THE TRIBUNAL. IT IS THE CLAIM OF THE ASSESSEE, AS CLAIMED IN THE GROUND, THAT THE REASSESSMENT ORDER IS BAD IN LAW AS THE RE-OPENING IS DONE BEYOND 4 Y EARS AND THERE IS NO DEFAULT OF THE ASSESSEE OF DISCLOSURE RELEVANT FACTS FULLY A ND TRULY, WHICH ARE REQUIRED FOR MAKING OF THE ORIGINAL ASSESSMENT ORDER. THE SAID DEFAULT IS THE REQUIREMENT OF THE LAWS I.E. PROVISO TO SECTION 147 OF THE A CT FOR REOPENING THE COMPLETED ASSESSMENT. THE ASSESSEE SUBMITTED THAT THE PRESENT REASSESSMENT CONSTITUTES CHANGE OF OPINION ON THE ISSUE RELATING TO DED UCTION U/S. 80IA OF THE ACT. 6. THE LD. DR FOR THE REVENUE NARRATED THE RELEVANT FAC TS AND SUBMITTED THAT THIS LEGAL ISSUE MAY BE REMANDED TO THE FILE OF CIT(A) FOR FRESH ADJUDICATION AFTER INVESTIGATION OF THE REAL FACTS REQUIRED ON THIS LEGAL ISSUE. ON THE ISSUE RELATING TO CORRECTNESS OF CLAIM OF DEDUCTION U/S. 80IA OF THE ACT AS WELL AS ON THE ISSUE OF AMORTIZATION OF EXPENDIT URE, THE LD. DR RELIED HEAVILY ON THE ORDER OF ASSESSING OFFICER AND CIT(A). 4 ITA NOS. 2705 TO 2707/PUN/2016 A.YS. 2008-09 TO 2010-11 7. RELEVANT FACTS IN THIS REGARD INCLUDES THAT THE ASSESS ING OFFICER FURNISHED COPIES OF REASONS RECORDED FOR RE-OPENING TO T HE ASSESSEE AND ASSESSEE DID NOT FILE ANY OBJECTIONS TO THE REASONS RECO RDED. NOTICE U/S. 142(1) WAS ISSUED TO THE ASSESSEE TO EXPLAIN THE CLAIM OF DEDUCT ION BUT THE ASSESSEE FAILED TO FURNISH ANY RESPONSE WITH REGARD TO SAID NOTICE. ASSESSING OFFICER ISSUED NOTICE U/S. 144 OF THE ACT GIVING A FINAL OPPORTUNITY TO THE ASSESSEE AND IN RESPONSE TO THE SAID NOTICE, ASSESSEE FILED WRITTEN SUBM ISSION WHICH IS PLACED AT PARA 6 OF THE REASSESSMENT ORDER. EVENTUALLY , THE CIT(A) FOUND THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TOLL COLLECTION O F BOT WORKS AND CONTRACT OF WORK WAS ISSUED TO BORSE BROTHERS ENGINEER S AND CONTRACTORS AND NOT TO THE ASSESSEE I.E. M/S. BORSE BROTHERS INFRASTRUCT URE PRIVATE LIMITED, DHULE. ON FINDING THAT THERE IS NO AGREEMENT BETWEEN GOVE RNMENT OF INDIA AND BORSE BROTHERS ENGINEERS AND CONTRACTORS, THE ASSESSIN G OFFICER IS OF THE OPINION THAT THE ASSESSEE IS NOT A CONTRACTOR WITHIN THE MEANING OF SUB SECTION 4 OF SECTION 80IA OF THE ACT AND ASSESSEE IS NOT ENTITLE D TO CLAIM DEDUCTION. CONTENTS OF PARA 6.1 TO 6.3 ARE RELEVANT IN THIS REGARD AND SAME ARE EXTRACTED AS UNDER: 6.1 THE SUBMISSION OF THE ASSESSEE HAS BEEN PERUSED . IT IS CLEAR FROM THE MATERIAL AS PER RECORD THAT THE WORK ORDER WAS NOT GRANTED TO THE ASSESSEE COMPANY BUT IN FACT TO M/S BORSE BROTHERS ENGINEERS. THIS IS A BASIC PREREQUISITE UNDER THE PROVISION AS LAID OU T IN S. 80IA WHICH HAS NOT BEEN COMPILED BY THE ASSESSEE. THE ASSESSEE HAS BEEN UNABLE TO DISPUTE THIS FACT. THE ASSESSEE HAS STATE D THAT THE WORK WAS ALLOTTED TO THE ASSESSEE COMPANY AS 'ENTREPRENE UR' FOR THIS WORK. AS PER THE LETTER PRODUCED FOR THIS FACT, IT IS SEE N THAT THE CONCERNED PWD EXECUTIVE ENGINEER HAS MERELY RECOGNIZED THAT T HE WORK IS BEING DONE BY THE ASSESSEE COMPANY. THE LETTER IS REPRODU CED AS UNDER ANNEXURE-1 NO. AB/TC/492/03 OFFICE OF THE EXECUTIVE ENGINEER, P.W. DIVISION, AHMEDNAGAR, DATED 21/6/2003 5 ITA NOS. 2705 TO 2707/PUN/2016 A.YS. 2008-09 TO 2010-11 TO, M/S. BORSE BROTHERS ENGINEERS & CONTRACTORS, A/P VARSHI, TAL. SHINDKHEDA DIST.- DHULE. SUB : ALLOTMENT OF WORK TO M/S. BORSE BROTHER INFRA STRUCTURES PVT. LTD. REF.- WORK ORDER NO.AB/TC/51 OF 2003 DTD. 28/1/03 A ND AGREEMENT WITH PWD, AHMEDNAGAR. WITH REFERENCE TO THE WORK ORDER NO. AB/TC/6 OF 20 03 DATED 28.1.2003 AND AGREEMENT WITH P.W.D, AHMEDNAGAR, WE CONFIRM THAT AS THE SAID WORK HAS BEEN ALLOTTED BY M/S.BORSE BRO THERS ENGINEERS AND CONTRACTORS TO M/S.BORSE BROTHERS INFRASTRUCTUR E PVT. LTD., WE ARE REGISTERING M/S. BORSE BROTHERS INFRASTRUCTURES PVT . LTD AS ENTREPRENEUR FOR THE SAID WORK. M/S. BORSE BROTHERS INFRASTRUCTURES PVT LTD. WILL HAVE ALL THE RIGHTS AND OBLIGATION UNDER THE SAID WORK ORDER WHI CH ARE AT PRESENT WITH M/S. BORSE ENGINEERS AND CONTRACTORS. SD/- EXECUTIVE ENGINEER, PUBLIC WORKS DIVISION, AHMEDNAGAR 6.2 AS CAN BE SEEN FROM ABOVE, THE EXECUTIVE ENGINE ER HIMSELF HAS NOT ALLOTTED THE WORK TO ASSESSEE COMPANY. IN FACT, WHA T IS APPARENT IS THAT THE WORK IS ALLOTTED BY M/S.BORSE BROTHERS ENG INEERS TO THE ASSESSEE COMPANY AND ONLY THIS FACT HAS BEEN RECOGN IZED. THE CONTENTION OF THE ASSESSEE IS HENCE WITHOUT MERIT. 6.3 THUS IT IS CLEAR FROM ABOVE THAT THE ASSESSEE C OMPANY HAS IN FACT DONE WORK IN THE NATURE OF WORKS CONTRACT BEING AWA RDED FROM BY M/S. BORSE BROTHERS ENGINEERS. SUCH WORK CONTRACTS IS CL EARLY COVERED UNDER EXPLANATION TO S.80IA AND THE DEDUCTION CLAIMED IS NOT ALLOWABLE. FURTHER, THERE IS NO DIRECT AGREEMENT OF THE ASSESS EE COMPANY WITH LOCAL AUTHORITY AS IS THE BASIC PREREQUISITE. THE A SSESSEE HAS SUBMITTED FORM 10CCB AS REQUIRED BUT DOES NOT MEET PREREQUISITES AS PROVIDED UNDER SECTION 80IA OF THE INCOME TAX ACT, 1961. THE CLAIM OF THE ASSESSEE IS CLEARLY NOT ALLOWABLE AND THE SAME IS BEING DISALLOWED AND ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE. THEREFORE THE AMOUNT OF RS.30,47,211/- IS DISALLOWED AND ADDED BA CK TO THE TOTAL INCOME OF THE ASSESSEE. THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF HIS INCOME AND CONCEALED HIS INCOME. PENALTY PROCEEDINGS U/S.271(1)(C) ARE INITIATED SEPARATELY. THERE IS NO ADDITION IN REASSESSMENT ORDER ON ACCOUNT O F AMORTIZATION EXPENSES. PROBABLY, THIS CLAIM IS RAISED BEFORE THE APPELLAT E BODIES AS AN ALTERNATIVE ONE. 6 ITA NOS. 2705 TO 2707/PUN/2016 A.YS. 2008-09 TO 2010-11 8. DURING FIRST APPELLATE PROCEEDINGS, ASSESSEE RAISED THE ISSUE RELATING TO CLAIM OF DEDUCTION U/S.80IA(IV) OF THE ACT AND SUBMITTED THA T ASSESSEE IS ENTITLED TO GET AMORTIZATION AS PER CIRCULAR DATED 23.04.20 14. HOWEVER, THE ASSESSEE DID NOT RAISE SAID LEGAL ISSUE RELATING TO THE RE- OPENING OF THE ASSESSMENT AT THAT STAGE. ON CONSIDERING THE WRITTEN R EPLY GIVEN BY ASSESSEE BEFORE FIRST APPELLATE PROCEEDINGS, THE CIT(A) DISCUSSED THE ISSUE IN PARA 4 OF THE ORDER AND HELD THAT THE SUBSTITUTION AGREEMENT FURN ISHED BY ASSESSEE DO NOT GRANT ANY AWARD TO THE ASSESSEE IN PRINCIPLE WHICH WAS SUBSTITUTED FOR M/S. BORSE BROTHERS ENGINEERS AND CONTRACTORS. IT APPE ARS THAT THERE IS SUB CONTRACT AGREEMENT DATED 21.05.2003 FOR ALLOTMENT OF THE PROJECT WORK AND ASSIGNMENT OF RIGHTS DESCRIBED IN BOT AGREEMENT TO THE A SSESSEE. THE CIT(A) IS OF THE VIEW THAT THE ASSESSEE IS NOT THE ORIGINAL DEVELOPE R BUT A SUB CONTRACTOR. THE CIT(A) DISCUSSED THIS ISSUE RELYING ON THE ORDER OF CH ENNAI BENCH OF THE TRIBUNAL IN THE CASE OF SHRI B. DHANASEKARAN DATED 6/11/2 015 IN ITA NO. 620 OF 2013 AND 360 OF 2015 AS WELL AS DECISION OF HON'BLE JU RISDICTIONAL HIGH COURT IN THE CASE OF ABG SHIPYARD FOR THE PROPOSITION THA T IN SIMILAR FACTS, CONDITIONS SPECIFIED UNDER PROVISIONS OF SECTION 80IA(4)(I) OF THE ACT CANNOT BE CONSIDERED MEET BY THE ASSESSEE. 9. REGARDING THE ISSUE OF AMORTIZATION OF EXPENSES, CIT(A) DISMISSED THE SAME GIVING REASONS IN PARA 5 AND ITS SUB PARAS OF THE O RDER. WITH REGARD TO ASSESSMENT YEAR 2009-10 & 2010-11, THE CIT(A) HAS GIVEN SAME FINDIN GS. 10. AGGRIEVED BY THE ORDER OF CIT(A), ASSESSEE FILED APPEALS BEFORE US AND CONTINUOUSLY FAILED TO APPEAR BEFORE TRIBUNAL. 11. ON HEARING THE SUBMISSION OF LD. DR FOR THE REVENUE, I FIND THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TOLL COLLECTION AND THE SAID CONTRACT WORK 7 ITA NOS. 2705 TO 2707/PUN/2016 A.YS. 2008-09 TO 2010-11 WAS NOT ORIGINALLY GRANTED TO THE ASSESSEE. BUT THERE W AS AN AGREEMENT BETWEEN THE PARTIES CONCERNED WITHOUT MAKING GOVERNMEN T OF INDIA AS PARTY TO THE SAID AGREEMENT. FROM THIS POINT OF VIEW, THE QUESTION WHICH ARISES IS WHETHER THE ASSESSEE FALLS WITHIN THE SCOPE OF PROVISION OF SUB SECTION (4) OF SECTION 80IA OF THE ACT. FURTHER, ON THE LEGAL ISSUE, I FIN D THAT THE ASSESSING OFFICER WHO HAS ONUS TO DISCHARGE FAILED TO DISCHARGE THE S AME, SPECIFYING THE DETAILS WHICH ARE NOT FULLY AND TRULY DISCUSSED BY ASSESS EE, RELEVANT FOR MAKING OF ASSESSMENT IN THE FIRST ROUND. THE ISSUE RELATING TO AMO RTIZATION IS FOUND FIRST TIME BEFORE THE CIT(A) AND NOT BEFORE ASSESSMENT PROC EEDINGS. CONSIDERING THE SAME, I AM OF THE VIEW THAT THERE IS REQUIREMENT OF FR ESH ADJUDICATION OF ALL THE ISSUES AFTER CONSIDERING THE FACTS AND DECISIONS RELATIN G TO THE ISSUE OF CLAIMING DEDUCTION U/S.80IA(4) OF THE ACT QUA DEVELOPER VS. CONTRACTOR. ACCORDINGLY, I REMAND ALL THE ISSUES RAISED IN ALL THE THREE APPEALS TO THE FILE OF CIT(A) FOR WANT OF SPEAKING ORDER. THE CIT(A) SHALL GRANT R EASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE IN ACCORDANC E WITH SET PRINCIPLES OF NATURAL JUSTICE. ACCORDINGLY, GROUNDS RAISED BY ASSESSEES IN ALL THE THREE APPEALS ARE ALLOWED FOR STATISTICAL PURPOSES. 12. IN THE RESULT, ALL THREE APPEALS OF THE ASSESSEES ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 17 TH DAY OF MAY, 2018. SD/- ( . / D. KARUNAKARA RAO ) / ACCOUNTANT MEMBER / PUNE; ! ' / DATED : 17 TH MAY, 2018. SB 8 ITA NOS. 2705 TO 2707/PUN/2016 A.YS. 2008-09 TO 2010-11 &'(!)*+,+$) / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(APPEAL)-1, NASHIK. 4. THE PR. CIT-1, NASHIK. 5. %&' (( )* , + )* , - ,-. , / DR, ITAT, SMC BENCH, PUNE. 6. '/ 01 / GUARD FILE. // TRUE COPY // +2 / BY ORDER, ( 3 ). /PRIVATE SECRETARY + )* , / ITAT, PUNE.