Gujarat Urban Development Co. Ltd. , Gandhinagar V. ITO, Ward-4, Gandhinagar

ITA 634/AHD/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 2124 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 4 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-07-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 13-03-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SU RENDRA KUMAR
• Assessee Lawyers: S N SOPARKAR
• Keywords: Retrospective amendment; Initiation of penalty proceedings
• Section: 143(3); 80IA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH (BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER) ITA. NO: 634/AHD/2018 (ASSESSMENT YEAR: 2014-15) GUJARAT URBAN DEVELOPMENT CO. LTD. BLOCK NO. 6, 5 TH FLOOR, UDYOG BHAVAN, SECTOR-11, GH ROAD, GANDHINAGAR- 382011 V/S INCOME TAX OFFICER, WARD- 4, GANDHINAGAR (APPELLANT) (RESPONDENT) PAN: AABCG 1330R APPELLANT BY : SHRI S. N. SOPARKAR, AR RESPONDENT BY : SHRI SURENDRA KUMAR, CIT/D.R . ( )/ ORDER DATE OF HEARING : 18 -07-201 9 DATE OF PRONOUNCEMENT : 25 -07-2019 PER MAHAVIR PRASAD, JUDICIAL MEMBER 1. THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF THE LD. CIT(A), GANDHINAGAR, AHMEDABAD DATED 19.01.2018 PER TAINING TO A.Y. 2014- 15 AND FOLLOWING GROUNDS HAVE BEEN TAKEN: ITA NO. 634/ AHD/2018 . A.Y. 2014-1 5 2 1. LD. CIT (A) ERRED IN LAW AND ON FACTS IN C ONFIRMING ACTION OF AO MAKING ADDITION OF RS. 5, 50, 03, 352/- DENYING DEDUCTION U/S 80IA (4) OF THE ACT. 2. LD. CIT (A) ERRED IN LAW AND ON FACTS TO H OLD THE APPELLANT AS A CONTRACTOR TO DENY DEDUCTION U/S 80IA (4) OF THE ACT BY MECHANICA LLY FOLLOWING APPELLATE ORDER OF A Y 2012/13 & 2013/14 IGNORING JUDGMENT SUBMITTE D BY THE APPELLANT DIRECTLY APPLICABLE TO THE FACTS OF THE CASE 3. LD. CIT (A) ERRED IN LAW AND ON FACTS NOT CONSIDERING THE SUBMISSIONS OF THE APPELLANT DISTINGUISHING FACTS OF JUDGMENT FOLLOWED BY HON'BLE ITAT IN A Y 2011/12 WITH THE FACTS OF APPELLANT'S CASE. 4. LD. CIT (A) ERRED IN LAW AND ON FACTS IN H OLDING APPELLANT A BUFFER AGENCY GRANTING WORK CONTRACT TO LOCAL BODIES ON BEHALF OF GOVERNMENT OF GUJARAT IS NOT A DEVELOPER OF INFRASTRUCTURE FACILITY FOLLOWING EA RLIER ORDERS. 5. LD. CIT (A) ERRED IN LAW AND ON FACTS CONF IRMING THE VIEW THAT APPELLANT DID NOT CARRY ANY RISK OR REWARD FOR THE EXECUTION OF W ORK AS IT WAS ENTITLED TO ONLY FIXED PERCENTAGE OF THE PROJECT COST FOLLOWING EARL IER ORDERS. 6. LD. CIT (A) ERRED IN LAW AND ON FACTS IN I GNORING DOCUMENTARY EVIDENCE IN THE FORM OF LEGAL SUITS LODGED AGAINST THE APPELLAN T FOR COMPENSATION THAT SUBSTANTIATED BUSINESS RISKS UNDERTAKEN BY THE APPE LLANT AS A DEVELOPER. 7. LEVY OF INTEREST U/S 234A/B & C OF THE ACT IS NOT JUSTIFIED. 8. INITIATION OF PENALTY PROCEEDINGS U/S 271( L)(C) OF THE ACT IS NOT JUSTIFIED. 2. AT THE OUTSET, LD. A.R. SHRI S.N. SOPARKAR FAIRLY C ONCEDED THAT THIS APPEAL IN QUESTION IS AGAINST THE ASSESSEE AND SUBMITTED AN O RDER OF CO-ORDINATE BENCH IN ITA NO. 1910/AHD/2017 FOR PRECEDING ASSESSMENT Y EAR 2013-14 AND COPY OF THE SAID JUDGMENT IS REPRODUCED: THE INSTANT APPEAL PREFERRED BY THE ASSESSEE IS D IRECTED AGAINST THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX(A PPEALS) GANDHINAGAR, AHMEDABAD ( IN SHORT ''LD.CIT (A)'' ), DATED 15.06. 2017 ARISING OUT OF THE ORDER DATED 29.01.2016PASSED BY THE D.C.I.T, GANDHINAGAR UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961( HEREIN AFTER REFERRED TO AS THE ACT) FOR THE ASSESSMENT YEAR 2013-14. 2. THE MAIN CHALLENGE IN THIS APPEAL IS AGAINST THE ORDER PASSED BY THE ''LD.CIT (A)'' IN CONFIRMING DENIAL OF DEDUCTION OF RS.3,01,63,284/- CLAIMED U/S.80IA (4) OF THE ACT IN CONCURRING WITH THE AO T HAT APPELLANT A BUFFER AGENCY ITA NO. 634/ AHD/2018 . A.Y. 2014-1 5 3 GRANTED WORK CONTRACT TO LOCAL BODIES ON BEHALF OF THE GOVERNMENT OF GUJARAT, NOT CARRYING ANY ELIGIBLE BUSINESS, IS NOT A DEVELO PER OF INFRASTRUCTURE FACILITY. 3. AT THE TIME OF THE HEARING OF THE INSTANT APPEAL THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE FAIRLY SUBMITTED BEF ORE US THAT THE ISSUE IS COVERED AGAINST THE ASSESSEE BY NUMBER OF ORDERS INCLUDING THE ORDER PASSED BY THE CO- ORDINATE BENCH IN ASSESSEES OWN CASE IN ITA NO/185 /AHD/2017 FOR ASSESSMENT YEAR 2011-12. A COPY OF THE SAME HAS BEEN SUBMITTED BEFORE US. 4. ON THE CONTRARY THE LD.DR, RELIED UPON THE ORDER PASSED BY THE AUTHORITIES BELOW: 5. WE HAVE HEARD THE RIVAL SUBMISSION MADE BY THE R ESPECTIVE PARTIES, WE HAVE ALSO PERUSED THE RELEVANT MATERIALS AVAILABLE ON RECORD INCLUDING THE ORDER PASSED BY THE CO-ORDINATE BENCH; THE RELEVANT PORTI ON WHEREOF IS AS FOLLOWS: 3. THOUGH THE ASSESSEE HAS TAKEN THREE GROUNDS O F APPEAL, BUT ITS GRIEVANCES REVOLVES AROUND A SINGLE ISSUE VIDE WHIC H IT HAS CHALLENGED DISALLOWANCE OF CLAIM AMOUNTING TO RS. 1,97,04,712/ - UNDER SECTION 80IA(4) OF THE INCOME TAX ACT, 1961. 4. THE ID.DR AT THE OUTSET SUBMITTED THAT IDENTICAL ISSUE WAS INVOLVED IN EARLIER YEARS, AND IN THE IMMEDIATELY PRECEDING YEA R I.E. ASSTT.YEAR 2011- 12. THE TRIBUNAL HAS CONFIRMED THE DISALLOWANCE VID E ITS ORDER IN ITA NO. 19727AHD/2014. THE ID.COUNSEL FOR THE ASSESSEE WAS UNABLE TO CONTROVERT TO THIS CONTENTIONS OF THE REVENUE. COPY OF ORDER O F THE TRIBUNAL IN ITA NO. 19727AHD/2014 DATED 28.8.2014 HAS BEEN PLACED O N RECORD. THE DISCUSSION MADE BY THE TRIBUNAL ON THIS ISSUE READS AS UNDER: '6. WE FIND THAT THE TRIBUNAL IN ASSESSEE'S OW N CASE, VIDE A CONSOLIDATED ORDER DATED 19.03.2014, HAS HELD AS UN DER:- '10.1. BRIEFLY STATED FACTS ARE THAT THE CASE OF THE ASSESSEE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND THE ASSESSMENT U/S. 143 (3) OF THE ACT WAS FRAMED VIDE ORDER DATED 10/12/2010, THEREBY THE AO DISALLOWED THE CLAIM OF THE ASSESSEE MADE U/S.80IA(4) OF THE ACT. AGAINS T THIS, THE ASSESSEE ITA NO. 634/ AHD/2018 . A.Y. 2014-1 5 4 FILED AN APPEAL BEFORE THE ID. CIT(A), WHO AFTER CO NSIDERING THE SUBMISSIONS OF THE ASSESSEE, REJECTED THE APPEAL. 11. GROUND NOS.L, 2 & 3 ARE INTER-CONNECTED AND, TH EREFORE, THE SAME ARE DECIDED TOGETHER. 11.1. THE ID.SR.COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE IS A DEVELOPER AND, THEREFORE, HE IS ENTITLED FOR DEDUCT ION U/S.80-IA(4) OF THE ACT. 11.2. ON THE CONTRARY, ID.CIT-DR/SR.DR SUBMITTED TH AT THE ORDER OF THE ID. CIT(A) IS JUSTIFIED. HE DREW OUR ATTENTION TOWARDS THE DECISION OF THE ID.CIT(A) AS CONTAINED IN PARA-5.1 OF HIS ORDER. AF TER SOME ARGUMENT, ID.SR.COUNSEL FOR THE ASSESSEE FAIRLY CONCEDED THAT THE ISSUE IS DECIDED AGAINST THE ASSESSEE BY THE HON'BLE JURISDICTIONAL HIGH COURT RENDERED IN THE CASE OF KATIRA CONSTRUCTION VS. UNION OF INDIA REPORTED AT (2013) 352 ITR 513 (GUJ.). 12. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED TH E MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. WE FIND THAT THE ID. CIT(A) HAS GIVEN A FINDING ON FACT, WH ICH READS AS UNDER:- '5.1. I HAVE CONSIDERED THE FACTS OF THE CASE, T HE SUBMISSIONS, THE ASSESSMENT ORDER, THE AMENDMENT IN THE LAW AND THE DECISIONS OF THE COURTS. THE FOLLOWING PERTINENT OBSERVATIONS ARE MA DE AFTER CONSIDERING THESE: - THERE IS NO DOUBT THAT THE APPELLANT WORKS AS A NOD AL AGENCY FOR IMPLEMENTATION OF VARIOUS WORKS UNDERTAKEN/DECIDED BY THE GOVERNMENT. THE APPELLANT BEARS NO RISK WHATSOEVER OF THE COST OR SUCCESS OF THE PROJECTS. THE APPELLANT GETS A FIXED PERCENTAGE OF THE MONEY SPENT ON THE PROJECT. SUPPOSEDLY, ON A PROJECT ORIGINALLY ESTIMATED AT RS .100 CRORE, THE ACTUAL COST OVER RUNS TO ANY AMOUNT MAY BE EVEN RS.500 CRO RE; THE ASSESSEE LOOSES NOTHING. IN FACT ITS OWN ALLOCATION INCREASE S AND IT GAINS. SIMILARLY, IT DOESN'T GET ANY BENEFIT WHEN IT SAVES COST OR IS MORE EFFICIENT. ITA NO. 634/ AHD/2018 . A.Y. 2014-1 5 5 IN FACT, THE GRANTS FOR THE PROJECTS IS NOT ITS REV ENUE INCOME AT ALL. IN FACT, IN VARIOUS DECISIONS THE GRANTS WHICH ARE UTILIZED FOR SPECIFIED PROJECTS HAVE BEEN HELD TO BE NOT INCOME BUT DIVERSION OF FU NDS AT SOURCE. THE DECISIONS INCLUDE THAT OF HON'BLE IT AT, AHMEDABAD BENCH IN THE CASE OF GUJARAT SAFAIKAMDARVIKAS NIGAM VS. ACIT, GANDHINAGA R CIRCLE, GANDHINAGAR (ITA NO.3232/AHD/2008, ORDER DATED 17/0 4/2009, AND GUJARAT STATE DISASTER MANAGEMENT AUTHORITY VS. ACI T, GANDHINAGARCIRCLE,IN THE ENTIRETY OF FACTS AND CIRC UMSTANCES, THE APPELLANT IS DOING THE WORK OF A CONCERN ENGAGED IN WORK WHICH IS IN THE NATURE OF A WORKS CONTACT AWARDED BY ANY PERSON (IN CLUDING THE CENTRAL OR STATE GOVERNMENT) AND EXECUTED BY IT. HERE IT IS TO BE NOTED THAT AS PER THE AMENDED EXPLANATION BELOW SECTION 80IA(13) WITH RETROSPECTIVE EFFECT FROM 1.4.2000; THE WORK SHOULD NOT BE OF THE NATURE (EMPHASIS SUPPLIED) OF CONTRACT AND NOT ONLY CONTRACT. HERE THE PROJECT COSTS AND SOURCE THEREOF NOT BEING REVENUE OF THE APPELLANT, IT BEIN G NOT AFFECTED BY THE ACTUAL COST AND EFFICIENCY OF WORK, THE ASSETS CREA TED AND THE SOURCE NOT BEING OF THE APPELLANT AT ANY STAGE AND IT BEING EN TITLED TO A FIXED REMUNERATION FOR ITS PROFESSIONAL SERVICES; IT CLEA RLY IS FALLING IN THE EXCLUDED CATEGORY AS PER THE AMENDED EXPLANATION BE LOW SECTION 80IA(13); AND THEREFORE, NOT ELIGIBLE FOR DEDUCTION . THE DECISION OF THE HON'BLE MUMBAI HIGH COURT IN TH E CASE OF CIT VS. ABG HEAVY INDUSTRIES LTD. 322 ITR 323 IS NOT ON THE ISS UE OF WHETHER THE ACTIVITY OF THE CONCERN IS OF THE NATURE OF A WORKS CONTACT. THE DECISION OF HONORABLE SUPREME COURT IN THE CASE OF GUJARAT INDU STRIAL DEVELOPMENT CORPORATION 227 ITR 414 IS ALSO NOT APPLICABLE AS I N THAT CASE THE QUESTION WAS NOT WHETHER THE APPELLANT WAS DOING THE ACTIVIT IES IN ITS OWN RIGHT OR AS A NODAL AGENCY AS IN THE PRESENT CASE. SIMILARLY , THE FACTS AND QUESTION ARE DISTINGUISHABLE IN OTHER CASES CITED BY THE APP ELLANT. THE APPELLANT IS HELD NOT ELIGIBLE FOR DEDUCTION CLAIMED U/S.80IA(4) AND THE DECISION OF THE AO IS UPHELD. THE FIRST TWO GROUNDS OF APPEAL ARE T HEREFORE, DISMISSED.' 12.1. WE FIND ONE OF THE OBJECTIONS OF THE ID.CIT(A ) WAS THAT THE ASSESSEE DOES NOT BEAR ANY RISK AND CONSEQUENCES ARISING FRO M THE PROJECT. IN VIEW OF THE RATIO LAID DOWN BY THE JURISDICTIONAL HIGH C OURT RENDERED IN THE CASE OFKATIRA CONSTRUCTION LTD. UNION OF INDIA( SUPRA), WE DO NOT FIND ANY ITA NO. 634/ AHD/2018 . A.Y. 2014-1 5 6 INFIRMITY IN THE ORDER OF THE ID. CIT(A), THEREFORE GROUND NOS.L TO 3 OF THE ASSESSEE'S APPEAL ARE REJECTED.' 7. FACTS BEING IDENTICAL, RESPECTFULLY FOLLOWING THE PRECEDENT, WE DISMISS THESE ADDITIONAL GROUNDS OF APPEAL OF THE ASSESSEE. ' 5. THERE IS NO DISPARITY OF THE FACTS, AND THEREFOR E, FOLLOWING THE ORDER OF CO-ORDINATE BENCH OF THE TRIBUNAL (SUPRA), WE DO NO T FIND ANY MERIT IN THE APPEAL OF THE ASSESSEE. IT IS DISMISSED. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS D ISMISSED RESPECTFULLY RELYING UPON THE SAME, WE FIND NO REAS ON TO INTERFERE WITH THE ORDER PASSED THE AUTHORITIES BELOW. THE ASSESSEES APPEAL IS THUS FOUND TO BE DEVOID OF ANY MERIT, HENCE DISMISSED. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DIS MISSED. 3. SINCE LD. A.R. HAS FAIRLY CONCEDED THAT THIS MATTER IS AGAINST THE ASSESSEE AND IN PARITY WITH THE CO-ORDINATE BENCH, WE DISMISSED THE APPEAL OF THE ASSESSEE. 4. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS DISM ISSED. ORDER PRONOUNCED IN OPEN COURT ON 25 - 07- 2019 SD/- SD/- (PRADIP KUMAR KEDIA) (MAHAVIR PRASAD) ACCOUNTANT MEMBER TRUE COPY JUDICIAL MEMBER AHMEDABAD: DATED 25/07/2019 RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED.