Mahalaxmi Construction Corporation Ltd, Kolhapur V. ACIT Cir- 2, Kolhapur

ITA 478/PUN/2009

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 2007 (ITAT-PUNE)
• Duration Of Justice: 6 year(s) 11 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-04-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 29-03-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 22-04-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B; DHEERAJ KUMAR JAIN JAIN

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE . . , , ' # BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO.478/PN/2009 '% % / ASSESSMENT YEAR : 2006-07 MAHALAXMI CONSTRUCTION CORPORATION LTD., 223/3, S-I(B), MALATI TOWERS, TARABAI PARK, KOLHAPUR PAN NO.AADCM2170P . / APPELLANT V/S ACIT, CIRCLE-2, KOLHAPUR . / RESPONDENT / APPELLANT BY : SHRI NIKHIL PATHAK / RESPONDENT BY : SHRI DHEERAJ KUMAR JAIN JAIN & B / ORDER PER R.K. PANDA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE O RDER DATED 25-02-2009 OF THE CIT(A)-KOLHAPUR RELATING TO ASSE SSMENT YEAR 2006-07. 2. ALTHOUGH A NUMBER OF GROUNDS HAVE BEEN RAISED BY TH E ASSESSEE THEY ALL RELATE TO DENIAL OF DEDUCTION U/S.80IA(4) AMOUNTING TO RS.1,55,18,839/- BY THE AO AND UPHELD BY THE CIT(A). / DATE OF HEARING :29.03.2016 / DATE OF PRONOUNCEMENT:06 .04.2016 2 ITA NO.478/PN/2009 3. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME ON 12-12-2006 DECLARING GROSS TOTAL INCOME OF RS.2,97,47,979/- ON WHICH DEDUCTION OF RS.1,55,18,839/- WAS CLAIMED U/S.80IB(4). THE AO FOLLOWING THE ORDER OF HIS PREDEC ESSOR IN ASSESSEES OWN CASE FOR PRECEDING YEARS DENIED THE C LAIM OF DEDUCTION U/S.80IB(4) ON THE GROUND THAT THE ASSESSEE COMPANY IS NOT A DEVELOPER BUT A CONTRACTOR/SUB CONTRACTOR. FUR THER, THE RECEIPTS DISCLOSED IN THE PROFIT AND LOSS ACCOUNT AS PER S CHEDULE L TO THE PROFIT AND LOSS ACCOUNT HAS NO IMMEDIATE NEXUS WITH THE CONTRACT BUSINESS AND WOULD NOT QUALIFY FOR THE DEDUCTION U/S.80IA(4) OF THE I.T.ACT. 4. IN APPEAL THE LD.CIT(A) FOLLOWING HIS ORDER IN ASSESSEES OWN CASE FOR A.Y. 2003-04 UPHELD THE ACTION OF THE AO. 5. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASSESSEE IS IN APPEAL BEFORE US. 6. THE LD. COUNSEL FOR THE ASSESSEE AT THE OUTSET SUBM ITTED THAT AGAINST THE ORDER OF THE CIT(A) FOR A.Y. 2003-04 THE ASSES SEE APPROACHED THE TRIBUNAL AND THE TRIBUNAL ALSO UPHELD THE ORDER OF THE CIT(A). SUBSEQUENTLY, THE ASSESSEE APPROACHED THE HONBLE BOMBAY HIGH COURT AND THE HONBLE BOMBAY HIGH COURT RE STORED THE MATTER TO THE FILE OF THE TRIBUNAL FOR FRESH ADJUDICATIO N. THE TRIBUNAL VIDE ITA NO.433/PN/2007 ORDER DATED 06-02-2012 DECIDED THE ISSUE OF ALLOWABILITY OF DEDUCTION U/S.80IA(4) IN FAVOUR OF TH E ASSESSEE. FOLLOWING THE DECISION OF THE TRIBUNAL FOR A.Y. 200 3-04, THE TRIBUNAL VIDE ITA NO.968/PN/2007 AND ITA NO.106/PN/2 008 ORDER DATED 25-08-2015 FOR A.YRS. 2004-05 AND 2005-06 HAS ALSO DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY HOLDING TH AT THE 3 ITA NO.478/PN/2009 ASSESSEE IS ENTITLED TO CLAIM DEDUCTION U/S.80IA(4). SINCE THE TRIBUNAL HAS ALREADY DECIDED THE ISSUE IN FAVOUR OF THE ASS ESSEE IN THE PRECEDING 3 ASSESSMENT YEARS, THEREFORE, THE GROUND S RAISED BY THE ASSESSEE HAS TO BE ALLOWED. 7. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER H AND FAIRLY CONCEDED THAT THE ISSUE HAS BEEN DECIDED IN FAVOUR OF TH E ASSESSEE BY THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR A .Y. 2003-04 TO 2005-06. 8. AFTER HEARING BOTH THE SIDES, WE FIND IDENTICAL ISSUE HAD COME UP BEFORE THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.YRS. 2 004-05 AND 2005-06 IN ITA NO.968/PN/2007 AND ITA NO.106/PN/20 08. WE FIND THE TRIBUNAL VIDE ORDER DATED 25-08-2015 HAS DECI DED THE ISSUE IN FAVOUR OF THE ASSESSEE BY OBSERVING AS UNDER : 6. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BO TH THE SIDES. WE FIND AFTER THE ORDER FOR A.Y. 2003-04 WAS SET ASID E BY THE HONBLE BOMBAY HIGH COURT TO THE FILE OF THE TRIBUNAL, THE TRIBUNAL VIDE ITA NO.433/PN/2007 ORDER DATED 06-02-2012 DECIDED THE I SSUE OF ALLOWABILITY OF DEDUCTION U/S.80IA(4) IN FAVOUR OF T HE ASSESSEE BY OBSERVING AS UNDER : 7. WE FIND THAT THE HONBLE JURISDICTIONAL HIGH CO URT IN THE APPEAL PREFERRED BY THE ASSESSEE HAS BEEN PLEASED T O RESTORE THE MATTER TO THE FILE OF THE TRIBUNAL FOR FRESH DECISI ON ON THE ISSUE IN ACCORDANCE WITH LAW. ON EARLIER OCCASION THE TRIBUN AL HAD DECIDED THE ISSUE IN FAVOUR OF THE REVENUE BY RELYING UPON THE DECISION OF THIRD MEMBER BENCH OF THE TRIBUNAL IN THE CASE OF B .T. PATIL & SONS BELGAM CONSTRUCTION (P) LTD VS. ACIT 126 TTJ (MUM) (TM) 577. THE HONBLE HIGH COURT HAS OBSERVED THAT IT IS NOT IN DISPUTE THAT THE SAID DECISION OF THE TRIBUNAL IN THE CASE OF B. T. PATIL & SONS (SUPRA) HAS BEEN RECALLED BY THE TRIBUNAL BY ORDER DATED 18.2.2011 AS EVIDENT FROM THE ORDER PASSED BY THE TRIBUNAL IN ITA NO.766/PN/2009 DATED 8.6.2011. THE HONBLE HIGH CO URT HAS ACCORDINGLY QUASHED AND SET ASIDE THE IMPUGNED ORDE R OF THE TRIBUNAL DATED 24.2.2010 PASSED IN ITA NO.433/PU/20 03 RELATING TO AY 2003-04, AND HAS RESTORED THE MATTER TO THE FILE OF THE TRIBUNAL FOR FRESH DECISION. 8. HAVING GONE THROUGH THE CITED DECISIONS BY THE L EARNED AR WE FIND THAT AN IDENTICAL ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY HONBLE BOMBAY HIGH COURT IN THE CASE O F CIT VS. ABG HEAVY INDUSTRIES LTD & ORS (SUPRA). RELEVANT P ARA NOS. 22 & 23 OF THE SAID DECISION OF HONBLE HIGH COURT IS BE ING REPRODUCED HERE UNDER FOR A READY REFERENCE. 4 ITA NO.478/PN/2009 22. ANOTHER SUBMISSION WHICH WAS URGED ON BEHALF OF THE REVENUE IS THAT UNDER CL. (III) OF SUB-SEC. (4A) OF SEC. 80-IA, ONE OF THE CONDITIONS IMPOSED WAS THAT THE ENTERPRISE MUST START OPERATING AND MAINTAINING THE INFRASTRUCTURE FACILITY ON OR A FTER 1 ST APRIL, 1995. THE SAME REQUIREMENT IS EMBODIES IN SUB-CL. (C) OF SUB-SEC. (4) OF THE AMENDED PROVISIONS OF SEC. 80-IA. ON THIS BASI S, IT WAS URGED THAT SINCE THE ASSESSEE WAS NOT OPERATING AND MAINT AINING THE FACILITY, HE DID NOT FULFIL THE CONDITION. THIS SU BMISSION IS FALLACIOUS BOTH IN FACT AND IN LAW. AS A MATTER OF FACT, THE TRIBUNAL HAS ENTERED A FINDING THAT THE ASSESSEE WAS OPERATING THE FACIL ITY AND THIS FINDING HAS BEEN CONFIRMED EARLIER IN THIS JUDGMENT. THAT THE ASSESSEE WAS MAINTAINING THE FACILITY IS NOT IN DISPUTE. THE FA CILITY WAS COMMENCED AFTER 1 ST APRIL, 1995. THEREFORE, THE REQUIREMENT WAS MET IN FACT. MOREOVER, AS A MATTER OF LAW, WHAT TH E CONDITION ESSENTIALLY MEANS IS THAT THE INFRASTRUCTURE FACILI TY SHOULD HAVE BEEN OPERATIONAL AFTER 1 ST APRIL, 1995. AFTER SEC. 80-IA WAS AMENDED BY THE FINANCE ACT OF 2001, THE SECTION APPLIED TO AN ENTERPRISE CARRYING ON THE BUSINESS OF (I) DEVELOPING; OR (II) OPERATING AND MAINTAINING; OR (III) DEVELOPING, OPERATING AND MAI NTAINING ANY INFRASTRUCTURE FACILITY WHICH FULFILS CERTAIN CONDI TIONS. THOSE CONDITIONS ARE : (I) OWNERSHIP OF THE ENTERPRISE BY A COMPANY REGISTERED IN INDIA OR BY A CONSORTIUM; (II) AN AGR EEMENT WITH THE CENTRAL OR STATE GOVERNMENT, LOCAL AUTHORITY OR STA TUTORY BODY; AND (III) THE START OF OPERATION AND MAINTENANCE OF THE INFRASTRUCTURE FACILITY ON OR AFTER 1 ST APRIL, 1995. THE REQUIREMENT THAT THE OPERATION AND MAINTENANCE OF THE INFRASTRUCTURE FACILITY SHOU LD COMMENCE AFTER 1 ST APRIL, 1995 HAS TO BE HARMONIOUSLY CONSTRUED WITH THE MAIN PROVISION UNDER WHICH A DEDUCTION IS AVAILABLE TO A N ASSESSEE WHO DEVELOPS OR OPERATES AND MAINTAINS, OR DEVELOPS, OP ERATES AND MAINTAINS AN INFRASTRUCTURE FACILITY. UNLESS BOTH THE PROVISIONS ARE HARMONIOUSLY CONSTRUED, THE OBJECT AND INTENT UNDER LYING THE AMENDMENT OF THE PROVISION BY THE FINANCE ACT OF 20 01 WOULD BE DEFEATED. A HARMONIOUS READING OF THE PROVISION IN ITS ENTIRETY WOULD LEAD TO THE CONCLUSION THAT THE DEDUCTION IS AVAILABLE TO AN ENTERPRISE WHICH (I) DEVELOPS; OR (II) OPERATES AND MAINTAINS; OR (III) DEVELOPS, MAINTAINS AND OPERATES THAT INFRASTRUCTUR E FACILITY SHOULD BE AFTER 1 ST APRIL, 1995. IN THE PRESENT CASE, THE ASSESSEE CLE ARLY FULFILLED THIS CONDITION. 23. IN VIEW OF WHICH WE HAVE TAKEN, ALL THE ASSESSM ENT YEARS IN QUESTION TO WHICH THIS BATCH OF APPEALS RELATES WOU LD BE GOVERNED BY THE SAME PRINCIPLE. THE SUBSEQUENT AMENDMENT OF SEC. 80- IA(4A) OF THE ACT TO CLARIFY THAT THE PROVISION WOU LD APPLY TO AN ENTERPRISE ENGAGED IN (I) DEVELOPING; OR (II) OPERA TING AND MAINTAINING; OR (III) DEVELOPING, OPERATING AND MAI NTAINING AN INFRASTRUCTURE FACILITY WAS REFLECTIVE OF A POSITIO N WHICH WAS ALWAYS CONSTRUED TO HOLD THE FIELD. BEFORE THE AMENDMENT THAT WAS BROUGHT ABOUT BY PARLIAMENT BY FINANCE ACT OF 2001, WE HAVE ALREADY NOTED THAT THE CONSISTENT LINE OF CIRCULARS OF THE BOARD POSTULATED THE SAME POSITION. THE AMENDMENT MADE BY PARLIAMENT TO SEC. 80-IA(4) OF THE ACT SET THE MATTER BEYOND ANY CONTROVERSY BY ST IPULATING THAT THE THREE CONDITIONS FOR DEVELOPMENT, OPERATION AND MAI NTENANCE WERE NOT INTENDED TO BE CUMULATIVE IN NATURE. 9. WE FIND FROM THE DECISION OF HONBLE BOMBAY HIGH COURT IN AFORESAID CASE OF CIT VS. ABG HEAVY INDUSTRIES LTD & ORS (SUPRA) THAT EVEN IN THE CASE BEFORE THE HONBLE HIGH COURT , THE ASSESSEE ACTED AS A CONTRACTOR FOR GOVERNMENT AGENCY, WAS HE LD ELIGIBLE FOR THE PURPOSES OF CLAIM OF DEDUCTION U/S 80-IA(4) OF THE INCOME TAX ACT. AS PER THE SAID DECISION OF THE HONBLE HIGH COURT ASSESSEE WHO ONLY DEVELOPS INFRASTRUCTURAL FACILITY (EVEN AS A CONTRACTOR) BUT DOES NOT HAVE AN OCCASION TO OPERATE AND MAINTAIN I S ALSO ELIGIBLE FOR CLAIM OF DEDUCTION U/S 80-IA(4) OF THE ACT. TH E HONBLE HIGH COURT HAS BEEN PLEASED TO OBSERVE THAT QUA SUCH A P ERSON THE CONDITION STATED IN SUB-SECTION (C) OF SEC.80-IA(4) (I) HAS TO BE READ 5 ITA NO.478/PN/2009 HARMONIOUSLY WITH THE MAIN PROVISION UNDER WHICH DE DUCTION IS AVAILABLE TO AN ASSESSEE, WHO DEVELOPS; OR OPERATES AND MAINTAIN; OR DEVELOPS, MAINTAINS AND OPERATES AN INFRASTRUCTU RAL FACILITY. IN OTHER WORDS A DEVELOPER WHO ONLY DEVELOPS (I.E., CO NSTRUCTS) AN INFRASTRUCTURAL FACILITY IS NOT ENVISAGED TO OPERAT E AND MAINTAIN SUCH FACILITY, CANNOT BE ACCEPTED TO FULFIL THE CONDITIO N IN CLAUSE (C) OF SEC. 80-IA(4) SINCE IT WOULD BE AN IMPOSSIBILITY. THERE FORE, IN VIEW OF THE CONSTRUCTION PLACED BY THE HONBLE BOMBAY HIGH COUR T ON THE REQUIREMENTS OF CLAUSE (C) OF SEC. 80-IA(4)(I) REQU IRING IT TO BE HARMONIOUSLY READ WITH THE MAIN SEC. 80-IA(4), WE D O NOT FIND SUBSTANCE IN THE OBJECTION RAISED BY THE REVENUE. WE THUS RESPECTFULLY FOLLOWING THE DECISION OF THE HONBLE BOMBAY HIGH COURT ON THE ISSUE IN THE CASE OF CIT VS. ABG HEAVY INDUSTRIES LTD & ORS (SUPRA) DECIDE THE MATTER IN FAVOUR OF THE AS SESSEE WITH THIS FINDING THAT ASSESSEE IS ELIGIBLE TO CLAIM THE DEDU CTION IN QUESTION U/S 80-IA (4). THE ISSUE IS THUS DECIDED IN FAVOUR OF THE ASSESSEE. THE RELATED GROUNDS ARE THUS ALLOWED WITH THIS DIRE CTION TO THE AO TO ALLOW THE CLAIMED DEDUCTION TO THE ASSESSEE. 10. CONSEQUENTLY THE APPEAL IS ALLOWED. 7. RESPECTFULLY FOLLOWING THE DECISION OF THE TRIBUNA L IN ASSESSEES OWN CASE FOR A.Y. 2003-04 AND IN ABSENCE OF ANY CONTR ARY MATERIAL BROUGHT TO OUR NOTICE AGAINST THE ORDER OF THE TRIBU NAL IN ASSESSEES OWN CASE FOR A.Y. 2003-04 THE CLAIM OF DEDUCTION U/S. 80IA(4) AMOUNTING TO RS.84,02,555/- FOR A.Y.2004-05 AND RS.1, 46,85,364/- FOR A.Y. 2005-06 ARE ALLOWED. THE GROUNDS RAISED BY THE ASSESSEE FOR BOTH THE ASSESSMENT YEARS ARE ACCORDINGLY ALLOWED. 9. SINCE THE FACTS OF THE INSTANT CASE ARE IDENTICAL TO T HE FACTS OF THE CASE IN THE PRECEDING ASSESSMENT YEARS WHICH HAS B EEN DECIDED BY THE TRIBUNAL IN FAVOUR OF THE ASSESSEE, THEREFORE, IN AB SENCE OF ANY CONTRARY MATERIAL BROUGHT TO OUR NOTICE, WE HOLD THA T THE ASSESSEE IS ENTITLED TO DEDUCTION U/S.80IA(4) AMOUNTING TO RS.1,55,18,839/- FOR THE IMPUGNED ASSESSMENT YEAR. THE GR OUNDS RAISED BY THE ASSESSEE ARE ACCORDINGLY ALLOWED. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 06-04-2016. SD/- SD/- ( VIKAS AWASTHY ) ( R.K. PANDA ) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE ; DATED :06 TH APRIL 2016 6 ITA NO.478/PN/2009 ( )'+ , / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. % ( ) , / THE CIT(A), KOLHAPUR 4. % / THE CIT, KOLHAPUR 5 . 6. ( ++,, ,, / DR, ITAT, A PUNE; 1 / GUARD FILE. / BY ORDER , ( + //TRUE COPY // ( + //TRUE COPY// 34 + , / SR. PRIVATE SECRETARY ,, / ITAT, PUNE