DCIT, CHENNAI V. Shriram Engineering Construction Company Ltd., CHENNAI

ITA 553/CHNY/2013

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 2470 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-06-2013
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 13-06-2013
• Assessment Year: 2002-2003
• Appeal Filed On: 01-04-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: T N BETGIRI
• Assessee Lawyers: R SIVARAMAN
• Keywords: Retrospective amendment
• Section: 148

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL C BENCH, CHENNAI. BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER & SHRI V. DURGA RAO, JUDICIAL MEMBER ITA NO S . 553 AND 554/MDS/2013 ASSESSMENT YEARS : 2002-03 AND 2003-04 THE DEPUTY COMMISSIONER OF INCOME TAX, COMPANY CIRCLE VI(2), AAYAKAR BHAVAN, NEW BLOCK, M.G. ROAD, 7 TH FLOOR, CHENNAI 600 034. VS. M/S. SHRIRAM ENGINEERING CONSTRUCTION COMPANY LTD. (NOW MERGED SHRIRAM EPC LTD.), NO. 9, VANAGARAM ROAD, AYANAMBAKKAM, CHENNAI 600 095. [PAN:AAACS4644R] (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI T.N. BETGIRI, JCIT RESPONDENT BY : SHRI R. SIVARAMAN, ADVOCATE DATE OF HEARING : 13 .0 6 .2013 DATE OF PRONOUNCEMENT : 18.06.2013 O R D E R PER V. DURGA RAO, JUDICIAL MEMBER : THESE APPEALS OF THE REVENUE ARE DIRECTED AGAINST D IFFERENT ORDERS OF THE COMMISSIONER OF INCOME TAX (APPEALS)- V, CHENNA I BOTH DATED 31.12.2012 RELEVANT TO THE ASSESSMENT YEARS 2002-03 AND 2003-04. SINCE THESE APPEALS BELONG TO SAME ASSESSEE ARE HEARD TOG ETHER AND IS BEING DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF BR EVITY. SINCE COMMON ISSUE IS INVOLVED, WE SHALL TAKE UP I.T.A. NO. 553/ MDS/2013 AS LEAD CASE. 2. THE ONLY EFFECTIVE GROUND RAISED BY THE REVENUE IS THAT THE LD. CIT(APPEALS) HAS ERRED IN DELETING THE DISALLOWANCE MADE BY THE ASSESSING I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. . 553 & 554/MDS/13 553 & 554/MDS/13 553 & 554/MDS/13 553 & 554/MDS/13 2 OFFICER UNDER SECTION 80IA OF THE INCOME TAX ACT. 3. FACTS IN BRIEF ARE THAT THE ASSESSEE IS IN THE ENGINEERING CONTRACT BUSINESS, FILED ITS RETURN DECLARING INCOME OF ` .NIL. THE RETURN WAS INITIALLY PROCESSED UNDER SECTION 143(1) ON 10.12.2002. SUBSE QUENTLY, A NOTICE UNDER SECTION 148 WAS ISSUED ON THE ASSESSEE ON 01. 09.2006. IN RESPONSE THERETO, THE ASSESSEE HAS FILED A LETTER ON 05.07.2 007 STATING THAT RETURN ALREADY FILED MAY BE TREATED AS ONE FILED IN RESPON SE TO NOTICE UNDER SECTION 148. THE ASSESSING OFFICER AGAIN ISSUED A NOTICE UN DER SECTION 143(2) AND ASSESSMENT WAS COMPLETED VIDE ASSESSMENT ORDER DATE D 18.12.2007 BY DENYING ASSESSEES CLAIM OF DEDUCTION UNDER SECTION 80IA OF THE ACT. 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, TH E ASSESSING OFFICER HAS OBSERVED THAT THE ASSESSEE HAS CLAIMED DEDUCTIO N UNDER SECTION 80IA OF ` .64,61,209/- IN RESPECT OF THE RECEIPTS FROM PUBLIC HEALTH DEPARTMENT, RAJAMUNDRY, PUBLIC HEALTH ENGINEERING DEPARTMENT, S AMALKOTE, PUBLIC HEALTH ENGINEERING DEPARTMENT, AMALAPURAM, KARANTAK A URBAN WATER SUPPLY AND DRAINAGE BOARD, TAMIL NADU WATER SUPPLY AND DRAINAGE BOARD, KERALA WATER AUTHORITY, MALAMPUZHA FOR DEVELOPING I NFRASTRUCTURE FACILITY. WHEN THE ASSESSEE WAS ASKED TO STATE WHY THE DEDUCT ION CLAIMED UNDER SECTION 80IA SHOULD NOT BE DISALLOWED, THE ASSESSEE BEFORE THE ASSESSING OFFICER SUBMITTED THAT THE ASSESSEE COMPANY HAS DES IGNED, DEVELOPED AND MAINTAINED WATER SUPPLY PROJECTS AS REQUIRED BY THE TAMIL NADU WATER I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. . 553 & 554/MDS/13 553 & 554/MDS/13 553 & 554/MDS/13 553 & 554/MDS/13 3 SUPPLY AND DRAINAGE BOARD AND OTHER AUTHORITIES LIK E ANDHRA PRADESH PUBLIC HEALTH DEPARTMENT, KERALA WATER SUPPLY AUTHORITY, K ARNATAKA WATER SUPPLY AND DRAINAGE BOARD. FOR WATER SUPPLY PROJECTS, THE ENTIRE WORK HAD TO BE DONE ON LUMP SUM TURNKEY BASIS AND MATERIAL WAS NOT SUPPLIED BY THE ABOVE SAID CUSTOMERS. THE ENTIRE INFRASTRUCTURE FACILITY WAS DESIGNED INVOLVING CIVIL, ELECTRICAL AND MECHANICAL DISCIPLINES, FABRICATED A ND BUILT AS PART AND PARCEL OF DEVELOPMENT THE PROJECT BY THE ASSESSEE COMPANY AND THE INFRASTRUCTURE FACILITY WAS COMMISSIONED, MAINTAINED BY THE ASSESS EE FOR SIX MONTHS AND THERE AFTER TRANSFERRED TO THE RESPECTIVE AUTHORITI ES, THE PROPERTY IN THE CIVIL, ELECTRICAL AND MECHANICAL WORKS PASSING ON TO THE R ESPECTIVE AUTHORITIES. THE COMPANY, AS PART OF ITS ENTERPRISE, COMMANDS CO NSIDERABLE TECHNICAL EXPERTISE IN PLANNING, DESIGNING, DEVELOPING AND BU ILDING WATER SUPPLY PROJECTS AS AN INTEGRAL SYSTEM. THE ENTIRE WORK HAS DONE ON PRINCIPAL-TO- PRINCIPAL BASIS AND THE ASSESSEE WAS NOT SIMPLE CON TRACTOR CARRYING OUT THE MANDATE OF THE CLIENTS AND SUBMITTED THAT THE ASSES SEE IS ELIGIBLE FOR CLAIMING DEDUCTION UNDER SECTION 80IA OF THE ACT. 5. THE ASSESSING OFFICER AGAIN ASKED THE ASSESSEE TO FILE DETAILS OF WORK DONE IN RESPECT OF VARIOUS PARTIES. OUT OF SIX PART IES, THE ASSESSEE FILED DETAILS IN RESPECT OF ONLY THREE PARTIES NAMELY: (A ) TAMILNADU WATER SUPPLY & DRAINAGE BOARD (RWAD), TRICHY, (B) KARNATAKA URBA N INFRASTRUCTURE DEVELOPMENT AND FINANCE CORPORATION LTD., AND (C) K ERALA WATER AUTHORITY, I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. . 553 & 554/MDS/13 553 & 554/MDS/13 553 & 554/MDS/13 553 & 554/MDS/13 4 THRISSUR. NO DETAILS WERE FILED IN RESPECT OF WORK DONE RELATING TO PUBLIC HEALTH ENGINEERING DEPARTMENT, RAJAMUNDRY, PUBLIC H EALTH ENGINEERING DEPARTMENT, SAMALKOTE, PUBLIC HEALTH ENGINEERING DE PARTMENT, AMALAPURAM. THE ASSESSING OFFICER, AFTER CONSIDERIN G THE ABOVE EXPLANATION OF THE ASSESSEE, HAS OBSERVED AS UNDER: FOR AVAILING THE BENEFIT OF DEDUCTION U/S 80IA, TH E INFRASTRUCTURE FACILITY HAS TO BE OWNED BY A COMPAN Y OR A CONSORTIUM OF SUCH COMPANIES. FROM THE COPY OF AGREEMENTS AND OTH ER PAPERS FILED BY THE ASSESSEE IT IS CLEAR THAT THE ASSESSEE COMPA NY WAS NOT THE OWNER OF THE INFRASTRUCTURE FACILITY. A WORK CONTRACTOR I S NOT ENTITLED TO THE BENEFIT OF SEC. 80IA. FROM THE TERMS OF CONTRACT THE ASSESSEE HAS TO EXEC UTE THE WORK AS A CONTRACTOR TO THE AUTHORITIES TO THEIR SPECIFI CATIONS, TERMS AND CONDITIONS PRESCRIBED BY THE AUTHORITIES. THUS, THE FIRST AND FOREMOST IMPORTANT LEGAL STIPULATION TO MAKE ASSESSEE ELIGIB LE FOR DEDUCTION U/S 80IA IS NOT SATISFIED BECAUSE THE ASSESSEE IS NEITH ER DEVELOPING OR OPERATING AND MAINTAINING NOR DEVELOPING, OPERATING AND MAINTAINING THE INFRASTRUCTURE FACILITY. THE TDS CERTIFICATE ISSUED BY EXECUTIVE ENGINEER NO . 1 KUWS & DS DIVISION MENTIONS THAT THE AMOUNT IS PAID TOWA RDS WORK BILL. THE TDS CERTIFICATE ISSUED BY EXECUTIVE ENGINEER KWAPH DIVN., PALAKAD SHOWED THAT THE AMOUNT WAS TO THE ASSESSEE AS CONTR ACT PAYMENT. THESE DOCUMENTS INDICATES THAT THE ASSESSEE HAS DONE ONLY A CONTRACT WORK. THE ASSESSEE HAS CLAIMED DEDUCTION U/S 80IA OF ` .64,61,209. THE ASSESSEE WAS ASKED TO FURNISH BASIS FOR ARRIVING AT THE ABOVE AMOUNT VIDE ANNEXURE TO NOTICE U/S 142 DT. 23/08/07. THE A SSESSEE DID NOT FURNISH THE DETAILS. SUB-SECTION (5) OF SEC. 80IA STATES THAT FOR THE PU RPOSE OF DETERMINING THE QUANTUM OF DEDUCTION UNDER THE SUB- SECTION FOR THE ASSESSMENT YEAR IMMEDIATELY SUCCEEDING THE INITIAL ASSESSMENT YEAR OR ANY SUBSEQUENT ASSESSMENT YEAR, BE COMPUTED AS IF S UCH ELIGIBLE BUSINESS WERE THE ONLY SOURCE OF INCOME OF THE ASSE SSEE DURING THE PREVIOUS YEAR RELEVANT TO THE INITIAL ASSESSMENT YE AR AND TO EVERY SUBSEQUENT ASSESSMENT YEAR UPTO AND INCLUDING THE A SSESSMENT YEAR FOR I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. . 553 & 554/MDS/13 553 & 554/MDS/13 553 & 554/MDS/13 553 & 554/MDS/13 5 WHICH THE DETERMINATION IS TO BE MADE. THIS INDICATES THAT SEPARATE COMPUTATION HAS TO BE MADE FOR AVAILING THE BENEFIT OF DEDUCTION U/S 80(IA). THE A SSESSEE HAS NOT FURNISHED THIS COMPUTATION. THE ASSESSEE HAS FURNIS HED DETAILS OF 80IA PROJECTS FOR THIS YEAR. AS PER THE DETAILS THE TOTA L RECEIPT WAS ` .67,81,152. IN THE STATEMENT OF COMPUTATION OF INCO ME, THE ASSESSEE HAS CLAIMED DEDUCTION U/S 80IA OF ` .64,61,209 (BY RESTRICTING TO THE TOTAL INCOME AVAILABLE) FROM THE RECEIPTS OF ` .67,81,152. AT THE TIME OF HEARING ON 12.12.07, THE ASSESSEE WAS ASKED TO STAT E WHY NO EXPENDITURE WAS TAKEN INTO ACCOUNT WHILE ARRIVING A T THE ABOVE AMOUNT OF ` .6781152. THE ASSESSEE WAS ALSO REQUESTED TO COMPLY TO THE REQUIREMENT OF SEC. 80IA(5). THE ASSESSEE DID NOT F URNISH ANY INFORMATION. THUS IT IS CLEAR THAT THE ASSESSEE HAS NOT GIVEN ANY BASIS FOR ARRIVING AT THE DEDUCTION CLAIMED U/S 80IA. THE FOLLOWING EXPLANATION HAS BEEN INSERTED IN SEC. 80IA BY FINANCE ACT, 2007 WITH RETROSPECTIVE EFFECT FROM 1. 4.2000. FOR THE REMOVAL OF DOUBT, IT IS HEREBY DECLARED TH AT NOTHING CONTAINED IN THIS SECTION SHALL APPLY TO A PERSON W HO EXECUTES A WORKS CONTRACT ENTERED INTO WITH THE UNDERTAKING OR ENTER PRISE, AS THE CASE MAY BE. FOR THE REASONS STATED ABOVE, I HOLD THAT THE ASSES SEE HAS NOT SATISFIED THE CONDITIONS FOR AVAILING DEDUCTION U/S 80IA AND THAT IT IS NOT ENTITLED FOR DEDUCTION U/S 80-IA. AS THE ASSESSEE HAS FAILED TO FURNISH THE BASIS FOR ARRIVING AT THE ELIGIBLE AMOUNT OF DEDUCTION U/S 80IA, THE ELIGIBLE AMOUNT IS TAKEN AS NIL AGAINST ` .6781152. 6. ON BEING AGGRIEVED, THE ASSESSEE CARRIED THE MA TTER BEFORE THE LD. CIT(APPEALS). 7. THE LD. CIT(APPEALS), BY FOLLOWING THE DECISION FOR THE ASSESSMENT YEAR 2006-07 IN ASSESSEES OWN CASE IN I.T.A. NO. 4 63/2008-09 DATED 31.01.2012 HELD THAT SINCE THE PROJECTS EXECUTED BY THE ASSESSEE FOR THE ASSESSMENT YEAR UNDER CONSIDERATION ARE SIMILAR TO THOSE DONE DURING THE I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. . 553 & 554/MDS/13 553 & 554/MDS/13 553 & 554/MDS/13 553 & 554/MDS/13 6 FINANCIAL YEAR 2000-01, THE ASSESSEE IS ENTITLED TO DEDUCTION UNDER SECTION 80IA ON THE SIMILAR PROJECTS IN THE PRESENT ASSESSM ENT YEAR ALSO. 8. AGGRIEVED BY THE ORDER OF THE LD. CIT(APPEALS), THE REVENUE PREFERRED APPEAL BEFORE THE TRIBUNAL. 9. AT THE TIME OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ISSUE INVOLVED IN THIS APPEAL IS COVERED BY THE DECISIONS OF THE COORDINATE BENCH IN ASSESSEES OWN CASE FOR THE ASS ESSMENT YEARS 2004- 05, 2005-06 TO 2007-08 AND 2000-01 IN I.T.A. NO. 54 1/MDS/2013, I.T.A. NOS. 895 TO 897/MDS/2012 AND I.T.A. NO. 1359 & 1360/MDS/ 2006 RESPECTIVELY. 10. ON THE OTHER HAND, THE LD. DR SERIOUSLY OBJECT THAT THE DEDUCTION UNDER SECTION 80I HAS TO BE CONSIDERED PROJECT WISE EACH YEAR AND THE FACTS OF THE PRESENT CASE INVOLVED IS DIFFERENT FROM EARL IER YEARS. HE FURTHER SUBMITTED THAT OUT OF SIX PROJECTS UNDERTAKEN BY TH E ASSESSEE, ONLY IN RESPECT OF THREE PROJECTS DETAILS WERE FILED. FOR R EMAINING THREE PROJECTS, NO DETAILS WERE FILED. IN REPLY, THE LD. COUNSEL FOR T HE ASSESSEE HAS SUBMITTED THAT THE ASSESSEE HAS ONLY CLAIMED DEDUCTION UNDER SECTION 80IA IN RESPECT OF ONLY THREE PROJECTS AND DETAILS ARE FILED. IN RE SPECT OF OTHER THREE PROJECTS, NO DETAILS WERE FIELD AND NO CLAIM UNDER SECTION 80 IA WAS MADE. 11. WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIAL S ON RECORD AND ALSO GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THE C ASE OF THE ASSESSEE IS THAT THE ASSESSEE IS IN THE BUSINESS OF ENGINEERING CONTRACT AND HAS UNDERTAKEN VARIOUS CONTRACTS AND THE ASSESSEE COMPA NY HAS DESIGNED, I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. . 553 & 554/MDS/13 553 & 554/MDS/13 553 & 554/MDS/13 553 & 554/MDS/13 7 DEVELOPED AND MAINTAINED WATER SUPPLY PROJECTS AS R EQUIRED BY THE PARTIES. IT IS ALSO SUBMITTED BEFORE THE ASSESSING OFFICER T HAT THE ASSESSEE COMPANY DEVELOPED INFRASTRUCTURE FACILITY AND IT WAS MAINTA INED BY THE ASSESSEE FOR SIX MONTHS AND THEREAFTER TRANSFERRED TO THE RESPEC TIVE AUTHORITIES. THEREFORE, IT WAS SUBMITTED BEFORE THE ASSESSING OF FICER THAT THE ASSESSEE IS ELIGIBLE FOR DEDUCTION UNDER SECTION 80IA OF THE ACT. HOWEVER, THE ASSESSING OFFICER HAS REJECTED THE CLAIM OF THE ASS ESSEE ON THE GROUND THAT THE ASSESSEE IS ONLY A CONTRACTOR AND NOT ELIGIBLE FOR 80IA DEDUCTION. IT IS NOT CLEAR FROM THE ORDER OF THE ASSESSING OFFICER THAT THE AMOUNT OF ` .64,61,209/- CLAIMED BY THE ASSESSEE IN RESPECT OF SIX PROJECTS EXECUTED BY IT OR FOR ONLY THREE PROJECTS FOR WHICH IT HAS FILE D DETAILS. IT IS ALSO NOT CLEAR FROM THE ORDER OF THE ASSESSING OFFICER THAT WHETHE R THE ASSESSEE HAS MAINTAINED THE PROJECT FOR A PERIOD OF SIX MONTHS O R NOT. THE LD. CIT(APPEALS) BY SIMPLY FOLLOWING HIS EARLIER ORDER FOR THE ASSES SMENT YEAR 2006-07 IN ITA NO. 463/2008-09 DATED 31.01.2012 ALLOWED THE APPEAL OF THE ASSESSEE. MOREOVER, IT IS ALSO NOT CLEAR FROM THE ORDER OF TH E LD. CIT(APPEALS) THAT IN EARLIER YEARS, WHETHER THE ASSESSEE HAS EXECUTED SI MILAR PROJECTS ARE NOT. NO MATERIAL WAS BROUGHT TO OUR NOTICE BY THE LD. CO UNSEL FOR THE THAT THE FACTS OF THE PRESENT CASE IS SIMILAR TO EARLIER ASS ESSMENT YEARS. THOUGH, THE LD. COUNSEL FOR THE ASSESSEE, BEFORE US, HAS RELIED ON THE DECISIONS OF THE TRIBUNAL IN ASSESSEES CASE FOR VARIOUS ASSESSMENT YEARS, THE LEGALITY OF THE CLAIM IS UNDER DISPUTE AND ALSO FOR WANT OF OTHER D ETAILS, WE SET ASIDE THE I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. . 553 & 554/MDS/13 553 & 554/MDS/13 553 & 554/MDS/13 553 & 554/MDS/13 8 ORDER OF THE LD. CIT(APPEALS) AND REMIT THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER WITH THE DIRECTION TO EXAMINE THE FACTS AND ALL DETAILS, KEEPING IN VIEW OF THE ORDERS OF THE TRIBUNAL PASSE D FOR VARIOUS ASSESSMENT YEARS IN I.T.A. NO. 541/MDS/2013, I.T.A. NOS. 895 T O 897/MDS/2012 AND I.T.A. NO. 1359 & 1360/MDS/2006 AND DECIDE THE ISSU E IN ACCORDANCE WITH LAW AFTER ALLOWING SUFFICIENT OPPORTUNITY OF HEARIN G TO THE ASSESSEE. 12. IN I.T.A. NO. 554/MDS/2013 FOR THE ASSESSMENT YEAR 2003-04 ALSO SIMILAR ISSUE HAS BEEN RAISED ON THE SAME FACTS AND CIRCUMSTANCES. A CCORDINGLY, IN THE LIGHT OF OUR ABOVE DISCUSSIONS O N THE VERY SAME ISSUE IN I.T.A. NO. 553/MDS/2013 DECIDED HEREINABOV E, WE ALSO REMIT THE ISSUE WITH SIMILAR DIRECTIONS. 13. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON TUESDAY, THE 18 TH OF JUNE, 2013 AT CHENNAI. SD/- SD/- (ABRAHAM P. GEORGE) ACCOUNTANT MEMBER (V. DURGA RAO) JUDICIAL MEMBER CHENNAI, DATED, THE 18.06.2013 VM/- TO: THE ASSESSEE//A.O./CIT(A)/CIT/D.R.