D.C.I.T. CENT. CIR. - 7(2), MUMBAI V. RAJAHMUNDHRY EXPRESSWAY LTD., MUMBAI

ITA 6487/MUM/2017

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 3583 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 4 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-03-2020
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2008-2009
• Appeal Filed On: 03-11-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: VINOD MODI
• Assessee Lawyers: FAROOKH V IRANI
• Keywords: Bogus purchase; Depreciation; Search and seizure; Earning of tax free income; Wrong claim; Validity of assessment; Tax effect; Rule 8D
• Section: 143(3); 153A; 14A; 115JB; 250; 80IA; 43; 48; 13; 153; 22; 132; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER AND SHRI G. MANJUNATHA , ACCOUNTANT MEMBER ITA NO. 6 487 / MUM . /201 7 ( ASSESSMENT YEAR : 2008 09 ) DY. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 7(2), MUMBAI . APPELLANT V/S RAJAHMUND RY EXPRESSWAY LTD. 2 ND FLOOR, CENTRIC PLAZA PLOT NO.8, POCKET 4, SECTOR 11 DWARAKA, NEW DELHI 110 075 PAN AABCR0929A . RESPONDENT CROSS OBJECTION NO.67/MUM./2019 ( ARISING OUT OF ITA NO. 6487 /MUM. /2017 ) ( ASSESSMENT YEAR : 2008 09 ) RAJAHMUND RY EXPRESSWAY PVT. LTD. 803, 7 TH FLOOR, A WING, ONE BKC G BLOCK, BANDRA KURLA COMPLEX BANDRA (E), MUMBAI 400 051 PAN AABCR0929A . CROSS OBJECTOR (ORIGINAL RESPONDENT) V/S DY. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 7(2), MUMBAI . RESPONDENT (ORIGINAL APPELLANT) ITA NO. 6484 /MUM. /2017 ( ASSESSMENT YEAR : 2005 06 ) DY. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 7(2), MUMBAI . APPELLANT V/S RAJAHMUND RY EXPRESSWAY LTD. 2 ND FLOOR, CENTRIC PLAZA PLOT NO.8, POCKET 4, SECTOR 11 DWARAKA, NEW DELHI 110 075 PAN AABCR0929A . RESPONDENT 2 RAJAHMUNDRY EXPRESSWAY LTD. CROSS OBJECTION NO.64/MUM./2019 ( ARISING OUT OF ITA NO. 6484 /MUM. /2017 ) ( ASSESSMENT YEAR : 2005 06 ) RAJAHMUND RY EXPRESSWAY PVT. LTD. 803, 7 TH FLOOR, A WING, ONE BKC G BLOCK, BANDRA KURLA COMPLEX BANDRA (E), MUMBAI 400 051 PAN AABCR0929A . CROSS OBJECTOR (ORIGINAL RESPONDENT) V/S DY. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 7(2), MUMBAI . RESPONDENT (ORIGINAL APPELLANT) ITA NO. 6486 /MUM. /2017 ( ASSESSMENT YEAR : 2006 07 ) DY. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 7(2), MUMBAI . APPELLANT V/S RAJAHMUND RY EXPRESSWAY LTD. 2 ND FLOOR, CENTRIC PLAZA PLOT NO.8, POCKET 4, SECTOR 11 DWARAKA, NEW DELHI 110 075 PAN AABCR0929A . RESPONDENT CROSS OBJECTION NO.65/MUM./2019 ( ARISING OUT OF ITA NO. 6486 /MUM. /2017 ) ( ASSESSMENT YEAR : 2006 07 ) RAJAHMUND RY EXPRESSWAY PVT. LTD. 803, 7 TH FLOOR, A WING, ONE BKC G BLOCK, BANDRA KURLA COMPLEX BANDRA (E), MUMBAI 400 051 PAN AABCR0929A . CROSS OBJECTOR (ORIGINAL RESPONDENT) V/S DY. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 7(2), MUMBAI . RESPONDENT (ORIGINAL APPELLANT) 3 RAJAHMUNDRY EXPRESSWAY LTD. ITA NO. 6485 /MUM. /2017 ( ASSESSMENT YEAR : 2007 08 ) DY. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 7(2), MUMBAI . APPELLANT V/S RAJAHMUND RY EXPRESSWAY LTD. 2 ND FLOOR, CENTRIC PLAZA PLOT NO.8, POCKET 4, SECTOR 11 DWARAKA, NEW DELHI 110 075 PAN AABCR0929A . RESPONDENT CROSS OBJECTION NO.66/MUM./2019 ( ARISING OUT OF ITA NO. 6485 /MUM. /2017 ) ( ASSESSMENT YEAR : 2007 08 ) RAJAHMUND RY EXPRESSWAY PVT. LTD. 803, 7 TH FLOOR, A WING, ONE BKC G BLOCK, BANDRA KURLA COMPLEX BANDRA (E), MUMBAI 400 051 PAN AABCR0929A . CROSS OBJECTOR (ORIGINAL RESPONDENT) V/S DY. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 7(2), MUMBAI . RESPONDENT (ORIGINAL APPELLANT) ITA NO. 6488 /MUM. /2017 ( ASSESSMENT YEAR : 2009 10 ) DY. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 7(2), MUMBAI . APPELLANT V/S RAJAHMUND RY EXPRESSWAY LTD. 2 ND FLOOR, CENTRIC PLAZA PLOT NO.8, POCKET 4, SECTOR 11 DWARAKA, NEW DELHI 110 075 PAN AABCR0929A . RESPONDENT 4 RAJAHMUNDRY EXPRESSWAY LTD. CROSS OBJECTION NO.6 8 /MUM./2019 ( ARISING OUT OF ITA NO. 6488 /MUM. /2017 ) ( ASSESSMENT YEAR : 2009 10 ) RAJAHMUND RY EXPRESSWAY PVT. LTD. 803, 7 TH FLOOR, A WING, ONE BKC G BLOCK, BANDRA KURLA COMPLEX BANDRA (E), MUMBAI 400 051 PAN AABCR0929A . CROSS OBJECTOR (ORIGINAL RESPONDENT) V/S DY. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 7(2), MUMBAI . RESPONDENT (ORIGINAL APPELLANT) ITA NO. 6489 /MUM. /2017 ( ASSESSMENT YEAR : 2010 11 ) DY. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 7(2), MUMBAI . APPELLANT V/S RAJAHMUND RY EXPRESSWAY LTD. 2 ND FLOOR, CENTRIC PLAZA PLOT NO.8, POCKET 4, SECTOR 11 DWARAKA, NEW DELHI 110 075 PAN AABCR0929A . RESPONDENT CROSS OBJECTION NO.6 9 /MUM./2019 ( ARISING OUT OF ITA NO. 6489 /MUM. /2017 ) ( ASSESSMENT YEAR : 2010 11 ) RAJAHMUND RY EXPRESSWAY PVT. LTD. 803, 7 TH FLOOR, A WING, ONE BKC G BLOCK, BANDRA KURLA COMPLEX BANDRA (E), MUMBAI 400 051 PAN AABCR0929A . CROSS OBJECTOR (ORIGINAL RESPONDENT) V/S DY. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 7(2), MUMBAI . RESPONDENT (ORIGINAL APPELLANT) 5 RAJAHMUNDRY EXPRESSWAY LTD. ITA NO. 6490 /MUM. /2017 ( ASSESSMENT YEAR : 2011 12 ) DY. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 7(2), MUMBAI . APPELLANT V/S RAJAHMUND RY EXPRESSWAY LTD. 2 ND FLOOR, CENTRIC PLAZA PLOT NO.8, POCKET 4, SECTOR 11 DWARAKA, NEW DELHI 110 075 PAN AABCR0929A . RESPONDENT CROSS OBJECTION NO.70 /MUM./2019 ( ARISING OUT OF ITA NO. 6490 /MUM. /2017 ) ( ASSESSMENT YEAR : 2011 12 ) RAJAHMUND RY EXPRESSWAY PVT. LTD. 803, 7 TH FLOOR, A WING, ONE BKC G BLOCK, BANDRA KURLA COMPLEX BANDRA (E), MUMBAI 400 051 PAN AABCR0929A . CROSS OBJECTOR (ORIGINAL RESPONDENT) V/S DY. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 7(2), MUMBAI . RESPONDENT (ORIGINAL APPELLANT) ITA NO. 6515 /MUM. /2017 ( ASSESSMENT YEAR : 2005 06 ) RAJAHMUND RY EXPRESSWAY PVT. LTD. (FORMERLY KNOWN AS RAJAHMUNDRY EXPRESSWAY LTD.), 803, 7 TH FLOOR A WING, ONE BKC, G BLOCK BANDRA KURLA COMPLEX BANDRA (E), MUMBAI 400 051 PAN AABCR0929A . APPELLANT V/S DY. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 7(2) , MUMBAI . RESPONDENT 6 RAJAHMUNDRY EXPRESSWAY LTD. ITA NO. 6516 /MUM. /2017 ( ASSESSMENT YEAR : 2006 07 ) RAJAHMUND RY EXPRESSWAY PVT. LTD. (FORMERLY KNOWN AS RAJAHMUNDRY EXPRESSWAY LTD.), 803, 7 TH FLOOR A WING, ONE BKC, G BLOCK BANDRA KURLA COMPLEX BANDRA (E), MUMBAI 400 051 PAN AABCR0929A . APPELLANT V/S DY. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 7(2) , MUMBAI . RESPONDENT ITA NO. 6517 /MUM. /2017 ( ASSESSMENT YEAR : 2007 08 ) RAJAHMUND RY EXPRESSWAY PVT. LTD. (FORMERLY KNOWN AS RAJAHMUNDRY EXPRESSWAY LTD.), 803, 7 TH FLOOR A WING, ONE BKC, G BLOCK BANDRA KURLA COMPLEX BANDRA (E), MUMBAI 400 051 PAN AABCR0929A . APPELLANT V/S DY. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 7(2), MUMBAI . RESPONDENT ITA NO. 6518 /MUM. /2017 ( ASSESSMENT YEAR : 2008 09 ) RAJAHMUND RY EXPRESSWAY PVT. LTD. (FORMERLY KNOWN AS RAJAHMUNDRY EXPRESSWAY LTD.), 803, 7 TH FLOOR A WING, ONE BKC, G BLOCK BANDRA KURLA COMPLEX BANDRA (E), MUMBAI 400 051 PAN AABCR0929A . APPELLANT V/S DY. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 7(2), MUMBAI . RESPONDENT 7 RAJAHMUNDRY EXPRESSWAY LTD. ITA NO. 6519 /MUM. /2017 ( ASSESSMENT YEAR : 2009 10 ) RAJAHMUNDRY EXPRESSWAY PVT. LTD. (FORMERLY KNOWN AS RAJAHMUNDRY EXPRESSWAY LTD.), 803, 7 TH FLOOR A WING, ONE BKC, G BLOCK BANDRA KURLA COMPLEX, BANDRA (E) MUMBAI 400 051 PAN AABCR0929A . APPELLANT V/S DY. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 7(2), MUMBAI . RESPONDENT ITA NO. 6520 /MUM. /2017 ( ASSESSMENT YEAR : 2010 11 ) RAJAHMUNDRY EXPRESSWAY PVT. LTD. (FORMERLY KNOWN AS RAJAHMUNDRY EXPRESSWAY LTD.), 803, 7 TH FLOOR A WING, ONE BKC, G BLOCK BANDRA KURLA COMPLEX, BANDRA (E) MUMBAI 400 051 PAN AABCR0929A . APPELLANT V/S DY. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 7(2), MUMBAI . RESPONDENT ITA NO. 6521 /MUM. /2017 ( ASSESSMENT YEAR : 2011 12 ) RAJA H MUNDRY EXPRESSWAY PVT. LTD. (FORMERLY KNOWN AS RAJAHMUNDRY EXPRESSWAY LTD.), 803, 7 TH FLOOR A WING, ONE BKC, G BLOCK BANDRA KURLA COMPLEX , BANDRA (E) MUMBAI 400 051 PAN AABCR0929A . APPELLANT V/S DY. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 7(2), MUMBAI . RESPONDENT ASS ESSEE BY : SHRI FAROOKH V. IRANI REVENUE BY : SHRI VI NOD MODI DATE OF HEARING 05.12.2019 DATE OF ORDER 04.03.2020 8 RAJAHMUNDRY EXPRESSWAY LTD. O R D E R PER BENCH T HIS BUNCH CONSISTS OF SEVEN SETS OF CROSS APPEALS AS WELL AS CROSS OBJECTIONS FILED BY THE ASSESSEE WHICH ARISE OUT OF APPEALS FILED BY THE REVENUE. ALL THE APPEALS AND CROSS OBJECTIONS ARE AGAINST A COMMON ORDER DATED 30 TH AUGUST 2017, PASSED BY THE LEARN ED COMMISSIONER OF INCOME TAX (APPEALS) 47, MUMBAI, PERTAINING TO THE ASSESSMENT YEAR S 2005 06, 2006 07, 2007 08, 2008 09, 2009 10, 2010 11 AND 2011 12. 2. SINCE ALL THESE APPEALS AND CROSS OBJECTIONS PERTAIN TO THE SAME ASSESSEE INVOLVING COMMON ISSUES ARISING OUT OF IDENTICAL SET OF FACTS AND CIRCUMSTANCES, THEREFORE, AS A MATTER OF CONVENIENCE, THESE APPEALS AND CROSS OBJECTIONS WERE HEARD TOGETHER AND ARE BEING DISPOSED OFF BY WAY OF THIS CONSOLIDAT ED ORDER. ITA NO.6518/MUM./2017 ASSESSEES APPEAL A.Y. 2008 09 3. IN GROUNDS NO.1 TO 5, THE ASSESSEE HAS CHALLENGED THE VALIDITY OF THE ASSESSMENT FRAMED UNDER SECTION 143(3) R/W SECTION 153A OF THE INCOME TAX ACT, 1961 (FOR SHORT 'THE ACT' ). WHEREAS, IN GROUNDS NO.6, 7, 8 AND 9, THE ASSESSEE HAS CHALLENGED THE DISALLOWANCE OF DEDUCTION CLAIMED UNDER SECTION 80IA(4) OF THE ACT. SINCE THE ISSUES RAISED IN ALL 9 RAJAHMUNDRY EXPRESSWAY LTD. THESE GROUNDS ARE OVERLAPPING AND INTERCONNECTED, WE PROPOSE TO DEAL WITH AND DISPOS E OFF THESE GROUNDS TO GETHER. 4. BEFORE WE PROCEED TO DECIDE THE ISSUES , IT IS NECESSARY TO PROVIDE A BRIEF FACTUAL BACKDROP R ELATING TO THEM . THE GOVERNMENT OF INDIA, FOR THE PURPOSE OF WIDENING NATIONAL HIGHWAY NO.5, ENTRUSTED THE NATIONAL HIGHWAY AUTHORIT Y OF INDIA TO CONVERT THE EXISTING ROAD BETWEEN VIJAYAWADA AND VISHAKHAPATNAM SECTION FROM KMS. 200 TO KMS. 25 0 TO A 4 LANE EQUAL CARRIAGE WITH PRIVATE SECTOR PARTICIPATION ON BUILD, OPERATE AND TRANSFER (BOT) BASIS. ACCORDINGLY, NHAI FLOATED A BID FOR CON STRUCTION OF THE 4 LANE PROJECT ON BOT BASIS UNDER ANNUITY SCHEME. AS PER THE BID REQUIREMENT, TWO ENTITIES I.E., GAMMON INDIA LTD. (GIL) AND PUNJ LLOYD LTD., CAME FORWARD TO COMPETE FOR THE BID BY FORMING A CONSORTIUM AND BEING SUCCESSFUL, BOTH GAMMON IND IA LTD. AND PUNJ LLOYD LTD. INCORPORATED THE ASSESSEE COMPANY AS A SPECIAL PURPOSE VEHICLE (SPV) TO IMPLEMEN T THE PROJECT. ACCORDINGLY, NHAI ENTERED INTO A CONCESSION AGREEMENT WITH THE ASSESSEE ON 30 TH OCTOBER 2001, FOR IMPLEMENTING THE 4 LANE PROJECT. TH EREAFTER, THE ASSESSEE COMPANY ENTERED INTO A ENGINEERING PROCUREMENT CONTRACT (EPC) AND OPERATION AND MAINTENANCE (O & M) CONTRACT WITH GAMMON INDIA LTD. FOR CONSTRUCTION OF THE PROJECT. ON COMPLETION OF THE BOT PROJECT ON 20 TH SEPTEMBER 2004, THE ASSESSE E STARTED ITS COMMERCIAL OPERATION. IN THE RETURN OF INCOME FILED FOR THE ASSESSMENT YEAR 2006 07, FOR THE FIRST 10 RAJAHMUNDRY EXPRESSWAY LTD. TIME THE ASSESSEE CLAIMED DEDUCTION UNDER SECTION 80IA . IN RESPECT OF THE AFORESAID PROJECT. THE CLAIM FOR SUCH DEDUCTION CONTINUED IN THE SUBS EQUENT ASSESSMENT YEARS AND FOR THE IMPUGNED ASSESSMENT YEAR, THE ASSESSEE FILED ITS RETURN OF INCOME ON 29 TH SEPTEMBER 2008, DECLARING TOTAL INCOME OF ` 6,72,99,474, AFTER CLAIMING DEDUCTION OF ` 11,64,44,163, UNDER SECTION 80IA. THE ASSESSMENT IN CASE OF THE ASSESSEE WAS COMPLETED UNDER SECTION 143(3) , VIDE ORDER DATED 30 TH NOVEMBER 2010 DISALLOWING ASSESSEES CLAIM OF DEDUCTION UNDER SECTION 80IA OF THE ACT ON THE REASONIN G THAT SUCH DEDUCTION I S ALLOWABLE ONLY ON A NEW INFRASTRUCTURE PROJECT AND NOT ON REPAIR WIDENING OF AN EXISTING ROAD. THE ASSESSEE CONTESTED THE DISALLOWANCE BEFOR E THE HIGHER APPELLATE AUTHORITIES AND WAS SUCCESSFUL. 5. BE THAT AS IT MAY, SUBSEQUENTLY, A SEARCH AND SEIZURE OPE RATION UNDER SECTION 132 OF THE ACT WAS CONDUCTED IN CASE OF GAMMON INDIA LTD. AND OTHER GROUP COMPANIES ON 8 TH JULY 2010. THE ASSESSEE WAS ALSO COVERED UNDER SUCH SEARCH AND SEIZURE OPERATION. IN PURSUANCE TO THE NOTICE ISSUED UNDER SECTION 153A OF THE AC T, THE ASSESSEE FILED ITS RETURN OF INCOME DECLARING TOTAL INCOME AT ` 6,72,99,474, AFTER CLAIMING DEDUCTION UNDER SECTION 80IA OF THE ACT FOR AN AMOUNT OF ` 9,27,62,638. THE ASSESSING OFFICER ULTIMATELY COMPLETED THE ASSESSMENT DISALLOWING ASSESSEES CLAI M OF DEDUCTION UNDE R SECTION 80IA OF THE ACT ON IDENTICAL REASONING ON THE BASIS OF WHICH SIMILAR 11 RAJAHMUNDRY EXPRESSWAY LTD. CLAIM MADE BY THE ASSESSEE WAS DISALLOWED IN THE ORIGINAL ASSESSMENT PROCEEDINGS. FURTHER, THE ASSESSING OFFICER ALSO MADE COUPLE OF OTHER DISALLOWANCES. AGAI NST THE ASSESSMENT ORDER SO PASSED, THE ASSESSEE PREFERRED APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. 6. BEFORE LEARNED COMMISSIONER (APPEALS), THE ASSESSEE RAISED AN ADDITIONAL GROUND CHALLENGING THE VALIDITY OF THE ASSESSMENT MADE UNDER SECTION 143(3) R/ W SECTION 153A OF THE ACT . IT WAS SUBMITTED BY THE ASSESSEE THAT IN THE ABSENCE OF ANY INCRIMINATING MATE RIAL FOUND AGAINST THE ASSESSEE AS A RESULT OF SEARCH AND SEIZURE OPERATION, NO ADDITION/DISALLOWANCE WHICH IS SUBJECT MATTER OF THE ORIGINAL ASSESSMEN T PROCEEDING CANNOT BE MAD E IN THE SEARCH ASSESSMENT. OF COURSE, THE ASSESSEE ALSO CONTESTED THE DISALLOWANCE OF DEDUCTION UNDER SECTION 80IA OF THE ACT ON MERITS. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, LEARNED COMMISSIONER (APPEALS) HELD THAT IN THE COURSE OF SEARCH OPERATION CARRIED OUT ON GAMMON INDIA LTD., INCRIMINATING MATERIAL AND O THER DOCUMENTS WERE FOUND WHICH REVEAL ED THAT THE ASSESSEE HAS NOT DEVELOPED THE INFRASTRUCTURE FACILITY (BOT PROJECT) FOR WHICH IT HAS CLAIMED DEDUCTION UNDER SECTION 80IA OF THE ACT. THUS, HE OBSERVED , DUE TO AVAILABILITY OF SUCH INCRIMINATING MATERIAL, THE ASSESSING OFFICER WAS C OMPETENT TO INITIATE PROCEEDING UNDER SECTION 153A OF THE ACT. FURTHER, HE OBSERVED , THE EPC CONTRACT CLEARLY REVEALS THAT THE ASSESSEE AFTER BEING AWA RDED THE BOT PROJECT 12 RAJAHMUNDRY EXPRESSWAY LTD. HAS SUB CONTRACTE D IT TO GAMMON INDIA LTD. O N A BACK TO BACK BASIS. HE OBSERVED , THE ASSESSEE HAS NOT CARRIED OUT ANY ACTIVITY TO DEVELOP THE PROJECT AND THE ENTIRE DEVELOP MENT WORK INCLUDING DESIGN, IMPLEMENTATION, ETC., WAS PERFORMED BY GAMMON INDIA LTD. THUS, HE HELD THAT THE ASSESSEE MERELY IS A PAPER COMPANY WITHOUT HAV ING ANY BUSINESS ACTIVITY. L EARNED COMMISSIONER (APPEALS) OBSERVED , SINCE GAMMON INDIA LTD. HAS ACTUAL LY DEVELOPED THE BOT PROJECT , IF AT ALL , THE DEDUCTION UNDER SECTION 80IA OF T HE ACT WOULD BE AVAILABLE TO GAMMON INDIA LTD. AND NOT TO THE ASSESSEE. ON THE BASIS OF THE AFORESAID REASONING, LEARNED COMMISSIONER (APPEALS) UPHELD THE DISALLOWANCE OF DEDUCTI ON CLAIMED UNDER SECTION 80IA OF THE ACT , THOUGH , ON A COMPLETELY DIFFERENT REASONING. 7. SHRI FAROOKH V. IRANI, LEA R NED SR. COUNSEL FOR THE ASSESSEE SUBMITTED , THE NHAI HAD ENTERED INTO A CONCESSION AGREEMENT WITH TH E ASSESSEE FOR DEVELOPING, OPERATING AND M AINTAINING THE 4 LANE CARRIAGE WAY FROM KMS. 200 TO KMS. 250 ON BETWEEN VIJAYAWADA AND VISHAKHAPATNAM SECTION ON NATIONAL HIGHWAY NO.5, OTHERWISE KNOWN AS RAJAHMUNDRY DHARMABHARAM TUN I TOLL ROAD , A 53 KMS. STRETCH OF ROAD ON BOT BASIS. HE SUBMITTED , ON AN APPLICATION MADE BY THE ASSESSEE, THE CENTRAL GOVERNMENT HAS APPROVED THE ASSESSEE UNDER SECTION 10(23G) OF THE ACT AS AN ELIGIBLE COMPANY ENGAGED IN DEVELOPMENT OF INFRASTRUCTURE AS PROVIDED UNDER SECTION 80IA(4) OF THE 13 RAJAHMUNDRY EXPRESSWAY LTD. ACT FOR THE AFORESAID BOT PR OJECT. HE SUBMITTED , IN CONSIDERATION FOR DEVELOPING , OPERATING AND MAINTAINING THE ROAD NHAI HAS PAID A FIXED SUM OF ANNUITY OF ` 1,000 CRORE OVER THE CONCESSION PERIOD OF 17 AND 1/2 YEARS. HE SUBMITTED , THE NHAI AFTER CONSIDERING COMPETITIVE BIDS R ECEIVE D FROM VARIOUS PARTIES HAD ULTIMATELY ACCEPTED THE BID OFFERED BY A CONSORTIUM BETWEEN GAMMON INDIA LTD. AND PUNJ LLOYD LTD. HE SUBMITTED , AS PER THE TERMS OF THE WORK ALLOTMENT LETTER OF NHAI , THERE WAS A MANDATORY REQUIREMEN T THAT THE SUCCESSFUL BIDDER W ILL HAVE TO INCORPORATE A COMPANY AS A SPECIAL PURPOSE VEHICLE ( SPV ) TO IMPLEMENT THE PROJECT . IN THIS CONTEXT, THE LEANED SR. COUNSEL DREW OUR ATTENT ION TO THE LETTER OF ALLOTMENT DATED 5 TH SEPTEMBER 2001, ISSUED BY NHAI, A COPY OF WHICH IS AT PAGE 120 OF THE PAPER BOOK. HE FURTHER SUBMITTED , NHAI HAD ALSO PUT A CONDITION THAT THE SPV F ORM ED FOR THE PURPOSE OF DEVELOPING THE PROJECT SHOULD NOT UNDERTAKE ANY OTHER BUSINESS ACTIVITY EXCEPT THE BOT PROJECT. HE SUBMITTED , COMPLYING WITH THE CONDITION IMPOSED BY THE N HAI IN THE LETTER OF ALLOTMENT THE ASSESSEE COMPANY WA S INCORPORATED TO IMPLEMENT THE BOT PROJECT. HE SUBMITTED , AFTER ENTERING INTO THE CONCESSION AGREEMENT WITH NHAI, THE ASSESSEE E NTERED INTO E PC AND O & M CONTRACT S WITH GAMMON INDIA LTD. H E SUBMITTED , THE FUNCTION, RO L E AND RESPONSIBILITY OF EACH PARTY UNDER THE CONCESSION AGREEMENT AS WELL AS E PC AND O & M CONTRACTS IS WILL DEFINED. HE SUBMITTED , WHILE THE ASSESSEE IS TO RECEIVE A NNUITY OF ` 1,000 CRORE FROM NHAI OVER THE 14 RAJAHMUNDRY EXPRESSWAY LTD. PERIOD OF CONCESSION, THE EPC CONTRACT IS FOR THE VALUE OF ` 400 CRORE WHICH HAS TO BE INCURRED DURING THE DEVELOPMENT PHASE OF THE PROJE CT AND O & M CONTRACT IS FOR A VALUE OF ` 150 CRORE WHICH WILL BE AMORTIZED OVER THE TENURE OF CONCESSION AGREEMENT. HE SUBMITTED , THE ASSESSEE HAS FINANCED THE ENTIRE BOT PROJECT BY RAISING LOANS AND FINANCES FROM BANKS / FINANCIAL INSTITUTIONS. HE SUBMITTED , IN THE AUDITED FINANCIAL STATEMENTS, THE ASSESSEE HAS CREDITED ANNUITY INCOME RECEIVED FROM NHAI AND DEBITED VARIOUS EXPENSES INCURRED BY IT WITH RESPECT TO THE PROJECT, WHICH INCLUDED OPERATION AND MAINTENANCE COST, FINANCE COST, INSURANCE COST, TRAVELLING EXPENSES, PROFESSIONAL FEE, ETC. TO SUBSTANTIATE HIS CONTENTION, LEAN ED COUNSEL DREW OUR ATTENTION TO THE FINANCIAL STATEMENT SUBMITTED IN PAPER BOOK. HE SUBMITTED , THOUGH , THE PROJECT WAS COMPLETED IN THE FINANCIAL YEAR 2004 05, THE ASSESSEE STARTED CLAIMING DEDUCTION UNDER SECTION 80IA OF THE ACT FROM ASSESSMENT YEAR 2006 07 ONWARDS. HE SUBMITTED , NO DEDUCTION WAS CLAIMED IN THE ASSESSMENT YEAR 2005 06, SINCE THERE WAS A LOSS. TO EMPHASIZE UPON THE FACT THAT THE ASSESSEE IS THE DEVELOPER OF THE INFRASTRUCTURE PROJECT AND IS ALSO RESPONSIBLE FOR OPERATION AND MAINTENANCE, T HE LEANED COUNSEL DREW OUR ATTENTION TO VARIOUS CLA USES OF THE CONCESSION AGREEMENT . HE SUBMITTED , AS PER THE TERMS OF THE AGREEMENT, THE ASSESSEE IS REQUIRED TO DEVELOP, OPERATE AND MAINTAIN THE PROJECT AT ITS OWN COST, EXPENDITURE AND RISK . M AKE FINANCING ARRANGEMENT AS WOULD BE NECESSARY TO FINANCE THE COST OF THE PROJECT 15 RAJAHMUNDRY EXPRESSWAY LTD. AS WELL AS OTHER OBLIGATIONS UNDER THE AGREEMENT IN A TIMELY MANNER. HE SUBMITTED , THE ASSESSEE AT ITS OWN COST AND EXPENSES, PURCHASE AND MAINTAIN BY DUE REINSTATEMENT OR O THERWISE , SUCH INSURANCE AS ARE NECESSARY DURING THE PERIOD OF IMPLEMENTATION OF THE PROJECT. THE LEANED COUNSEL SUBMITTED , IN ASSESSMENT YEAR 2006 07 ASSESSEES CLAIM OF DEDUCTION UNDER SECTION 80IA OF THE ACT WAS ALLOWED BY THE ASSESSING OFFICER WHILE CO MPLETING THE ASSESSMENT UNDER SECTION 143(3) OF THE ACT. HE SUBMITTED , IN ASSESSMENT YEARS 2007 08 AND 2008 09, THE ASSESSING OFFICER DISALLOWED ASSESSEES CLAIM OF DEDUCTION UNDER SECTION 80IA OF THE ACT ON THE REASONING THAT THE ASSESSEE HAS NOT DEVELOPE D A NEW INFRASTRUCTURE FACILITY, BUT HAS ONLY WIDENED THE EXISTING ROAD. HOWEVER, WHILE D ECIDING THE ISSUE IN APPEAL, LEARNED C OMMISSIONER (APPEALS) ALLOWED ASSESSEES CLAIM BY HOLDING THAT WIDENING O F AN EXISTING ROAD WOULD ALSO BE ELIGIBLE FOR DEDUCTION UNDER SECTION 80I A OF THE ACT, AS IT AMOUNTS TO DEVELOPMENT, OPERATION AND MAINTENANCE OF AN INFRASTRUCTURE FACILITY. HE SUBMITTED , THE AFORESAID DECISION OF THE FIRST APPELLATE AUTHORITY WAS ALSO UPHELD BY THE TRIBUNAL WHILE DECIDING THE APPEAL S FILED BY THE REVENUE. THE LEANED SR. COUNSEL SUBMITTED , WHILE COMPLETING THE ASSESSMENT FOR THE IMPUGNED ASSESSMENT YEAR UNDER SECTION 143(3) R/W SECTION 153A OF THE ACT, THE ASSESSING OFFICER HAS REPEATED THE DISALLOWANCE UNDER SECTION 80IA OF THE ACT ON THE VERY SAME REASONING ON WHICH IT WAS DISALLOWED IN THE ORIGINAL ASSESSMENT ORDER. HE 16 RAJAHMUNDRY EXPRESSWAY LTD. SUBMITTED , IN THE COURSE OF SEARCH AND SEIZURE OPERATION NO INCRIMINATING MATERIAL WHATSOEVER WAS FOUND FROM THE ASSESSEE. HE SUBMITTED , EVEN THE ASSESSING OFFICER HAS NOT REFER RED TO ANY INCRIMINATING MATERIAL IN THE ASSESSMENT ORDER TO SHOW THAT THE ASSESSEE IS MERELY A PAPER COMPANY. IN FACT, HE SUBMITTED , NO SUCH ALLEGATION WAS EVER MADE BY THE ASSESSING OFFICER. HE SUBMITTED , EVEN IN TH E REMAND REPORT SUBMITTED TO LEARNED CO MMISSIONER (APPEALS), THE ASSESSING OFFICER HAS NEITHER REFERRED TO ANY INCRIMINATING MATERIAL NOR HAS ALLEGED THAT THE ASSESSEE IS A MERE PAPER COMPANY. HE HAS SIMPLY STATED THAT THE DISALLOWANCE OF DEDUCTION CLAIMED UNDER SECTION 80IA OF THE ACT WAS MADE ONLY ON TH E BASIS OF THE REASONING ON WHICH SUCH DISALLOWANCE WAS MADE IN THE ORIGINAL ASSESSMENT ORDER. THUS, THE LEANED SR. COUNSEL SUBMITTED , SINCE THE IMPUGNED ASSESSMENT YEAR IS A CASE UNABATED ASSESSMENT, NO ADDITION / DISALLOWANCE COULD HAVE BEEN M ADE WITHOUT ANY INCRIMINATING MATERIAL CONCERNING SUCH ISSUE . THE LEANED SR. COUNSEL SUBMITTED , IN SUCH CIRCUMSTANCES THE RATIO LAID DOWN BY THE HON'BLE JURISDICTIONAL HIGH COURT IN CIT V/S CONTINENTAL WAREHOUSE CORPORATION ( NHAVA SHEVA ) LTD., [2015] 374 I TR 645 (BOM.) WOULD SQUARELY APPLY. HE SUBMITTED , THE ALLEGATION OF LEARNED COMMISSIONER (APPEALS) THAT THERE ARE INCRIMINATING MATERIALS AGAINST THE ASSESSEE IS WITHOUT ANY BASIS AS NO SUCH MATERIAL HAS BEEN BROUGHT ON RECORD EITHER BY THE ASSESSING OFFICER OR BY LEARNED COMMISSIONER (APPEALS). HE SUBMITTED , NOT ONLY ALL THE RELEVANT 17 RAJAHMUNDRY EXPRESSWAY LTD. MATERIAL INCLUDING THE CON CESSION AGREEMENT AS WELL AS E PC AND O & M CONTRACT S WERE EXECUTED LONG BEFORE AND AVAILABLE ON RECORD BEFORE THE ASSESSING OFFIC ER, BUT THEY HAVE BEEN EXAMINED BY T HE ASSESSING OFFICER AND THE APPELLATE AUTHORITIES WHILE DECIDING ASSESSEES APPEAL S ON THE VERY SAME ISSUE IN THE ASSESSMENT YEAR S 2007 08 AND 2008 09 ARISING OUT OF THE ORIGINAL ASSESSMENT PROCEEDINGS. THUS, HE SUBMITT ED , THE ISSUE RELATING TO ASSESSEES CLAIM OF DEDUCTION UNDER SECTION 80IA OF THE ACT HAVING BEEN ALREADY EXAMINED BY THE ASSESSING OFFICER AS WELL AS THE APPELLATE AUTHORITIES EARLIER, IT CANNO T BE RE VISITED IN A PROCEEDING UNDER SECTION 153A OF THE ACT WHICH CAN ONLY BE DONE ON THE BASIS OF INCRIMINATING MATERIAL FOUND DURING THE SEARCH. WITHOUT PREJUDICE, THE LEANED SR. COUNSEL SUBMITTED , THE ALLEGATION OF LEARNED COMMISSIONER (APPEALS) THAT THE ASSESSEE IS A PAPER C OMPANY ALSO DOES NOT EMANATE FROM ANY INCRIMINATING MATERIAL FOUND DURING THE SEARCH AND SEIZURE OPERATION. HE SUBMITTED , ONCE ASSESSEES CLAIM OF DEDUCTION UNDER SECTION 80IA OF THE ACT HAS BEEN ACCEPTED BY THE TRIBUNAL IN ASSESSMENT YEAR S 2007 0 8 AND 2008 09, IT CANNOT BE REVIEWED AND LEARN ED COMMISSIONER (APPEALS) CANNOT DISALLOW ASSESSEES CLAIM OF DEDUCTION UNDER SECTION 80IA OF THE ACT ON THE TEETH OF THE ORDERS PASSED BY THE TRIBUNAL. 8. THUS, HE SUBMITTED , EXERCISE OF POWER UNDER SECTION 153 A OF THE ACT TO MAKE DISALLOWANCE UNDER SECTIO N 80IA OF THE ACT IS WHOLLY 18 RAJAHMUNDRY EXPRESSWAY LTD. WITHOUT JURISDICTION, HENCE, UNTENABLE. AS REGARDS THE MER ITS OF THE ISSUE, THE LEANED COUNSEL SUBMITTED , THE ALLEGATION OF THE LEARNED COMMISSIONER (APPEALS) THAT THE ASSESSEE IS MERELY A PAPER ENTITY IS COMPLETELY CONTRARY AND INCONSISTENT WITH HIS OWN FINDING ELSEWHERE IN THE ORDER . HE SUBMITTED , THOUGH , THE ASSESSEE HAS OFFERED THE ANNUITY INCOME RECEIVED FROM NHAI IN TE RMS OF CONCESSION AGREEMENT, LEARNED COMMISSIONER (APPEALS) HAS NOT DIRECTED FOR EXCLUDIN G THE ANNUITY INCOME WHILE COMPU TING INCOME OF THE ASSESSEE. HE SUBMITTED , LEARNED COMMISSIONER (APPEALS) HAS ALSO NOT DISTURBED VARIOUS EXPENDITURES INCURRED AND CLAIMED BY THE ASSESSEE IN RESPECT O F BOT PROJECT. ADDITIONALLY, LEARNED COMMISSIONER (APPEALS) HAS ALSO AL LOWED DEPRECIATION ON THE CAPITAL EXPENDIT URE INCURRED ON THE PROJECT. LEA R NED COUNSEL SUBMITTED , WHILE TREATING THE ASSESSEE AS A PAPER ENTITY, LEARNED COMMISSIONER (APPEALS) HAS OV ERLOOKED THE FACT THAT CREATION OF THE ASSESSEE AS A SPV WAS A MANDATORY R EQ UIREMENT OF NHAI. THE LEANED COUNSEL SUBMITTED , AS PER THE TERMS OF THE CONCESSION AGREEMENT, THE ENTIRE RESPONSIBILITY, RISK AND REWARD OF BUILDING, OPERATING AND MAINTAINING THE INFRASTRUCTURE FACILITY IS WITH THE ASSESSEE. TO SUBSTAN TIATE THE AFORESAI D CLAIM, LEANED COUNSEL DREW OUR ATTENTION TO VARIOUS CLAUSES OF THE CONCESSION AGREEMENT. THE LEANED COUNSEL SUBMITTED , ENTIRE FINANCE FOR THE PROJECT HAS BEEN PROVIDED BY THE ASSESSEE BY INCURRING LOANS WITH INTEREST COST. HE SUBMITTED , MERELY BECAUSE TH E ASSESSEE HAS ENTERED INTO THE EPC AND 19 RAJAHMUNDRY EXPRESSWAY LTD. O & M CONTRACT S WITH GIL AND THE CONSTRUCTION WORK WAS CARRIED OUT BY THE GIL, IT CANNOT BE SAID THAT THE ASSESSEE IS A MERE PAPER ENTITY. HE SUBMITTED , THE VERY FACT THAT THE ASSESSEE HAS EARNED ANNUITY INCOME AND I T HAS BEEN ASSESSED AT THE HAN DS OF THE ASSESSEE NULLIFIES LEARNED COMMISSIONER (APPEALS)S FINDING REGARDING ASSESSEES STATUS AS A GENUINE COMPANY. THE LEANED COUNSEL SUBMITTED , EVEN , ACCEPTANCE OF ASSESSEES CLAIM OF EXPE NDITURE SHOWS THAT THE ASSESSEE IS A GENUINE COMPANY HAVING BUS INESS ACTIVITIES. THE LEANED COUNSEL SUBMITTED , VERY FACT THAT THE TRIBUNAL WHILE DECIDING REVENUES APPEAL IN ASSESSMENT YEAR S 2007 08 AND 2008 09 ARISING OUT OF THE ORIGINAL ASSESSMENT PROCEEDINGS HAS ALLOWED ASSESSEES CLA IM OF DEDUCTION UNDER SECTION 80IA OF THE ACT VINDICATES ASSESSEES STAND THAT IT IS A GENUINE COMPANY AND HAS DEVELOPED THE INFRASTRUCTURE FACILITY. FURTHER, HE SUBMITTED , THE ALLEGATION OF LEARNED COMMISSIONER (APPEALS) THAT GIL HAS ALSO CLAIMED DEDUCTIO N UNDER SECTION 80IA OF THE ACT FOR TH E SAME INFRASTRUCTURE FACILITY IS TOTALLY ERRONEOUS AS THE GIL HAS NOT CLAIMED ANY DEDUCTION UNDER SECTION 80IA OF THE ACT FOR THE BOT ROAD. DRAWING OUR ATTENTION TO THE PROVISIONS OF SECTION 80IA(4) OF THE ACT, LEANED COUNSEL SUBMITTED , GIL HAS ACTED MERELY AS A CONTRACTOR, HENCE, IS NOT ELIGIBLE TO CLAIM DEDUCTION UNDER SECTION 80IA OF THE ACT. FURTHER, HE SUBMITTED , THE GIL HAS NOT EMPLOYED ANY FINANCE FOR DEVELOPMENT OF PROJECT AS THE ENTIRE PROJECT WAS FINANCED BY THE ASSESSEE. HE SUBMITTED , EVEN AFTER THE SEARCH OPERATION WAS 20 RAJAHMUNDRY EXPRESSWAY LTD. CONDUCTED , IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2012 13 LEARNED COMMISSIONER (APPEALS) HAS ALLOWED DEDUCTION CLAIMED UNDER SECTION 80IA OF THE ACT. FURTHER, HE SUBMITTED , THE FACT TH AT THE ASSESSEE COMPANY WAS PURCHASED BY A SINGAPORE BASED COMPANY IN FINANCIAL YEAR 2015 1 6, DEMOLISHES THE FINDING OF LEARNED COMMISSIONER (APPEALS) THAT THE ASSESSEE IS A MERELY PAPER COMPANY. HE SUBMITTED , THOUGH, THE ISSUE WAS OTHERWISE CONCLUDED BY THE DECISION OF THE TRIBUNAL IN ASSESSMENT YEAR S 2007 08 AND 2008 09 , ONLY TO GET OVER THE OR DERS PASSED BY THE TRIBUNAL, LEARNED COMMISSIONER (APPEALS) HAS DISALLOWED ASSESSEES CLAIM OF DEDUCTION UNDER SECTION 80IA OF THE ACT ON A COMPLETELY DIFFERENT REASONING WITHOUT ANY MATERIAL BASIS. THUS, HE SUBMITTED , ASSESSEES CLAIM OF DEDUCTION UNDER SECTION 80IA SHOULD BE ALLOWED. I N SUPPORT OF HIS CONTENTION, LEA NED SR. COUNSEL RELIED UPON THE FOLLOWING DECISIONS: I) RADHASWAMY SAT SANGH V/S CIT, [2992] 193 ITR 221 (SC); AND II) CIT V/S PAUL BROS., [2995] 216 ITR 548 (BOM.) . 9. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED , IN COURSE OF SEARCH AND SEIZURE OPERATION CONDUCTED IN CASE OF THE ASSESSEE AS WELL AS GIL INCRIMINATING MATERIAL RELATING TO ASSESSEES CLAIM OF DEDUCTION UNDER SECTION 80IA OF THE ACT WAS FOUND. HE SUBMITTED , THE INCRIMINATING MATERIAL FOUND DURING THE SEARCH AND SEIZER OPERATION REVEALED THAT THE ASSESSEE IS A PAPER ENTITY AND HAS NOT CARRIED OUT 21 RAJAHMUNDRY EXPRESSWAY LTD. ANY DEVELOPMENT OF WORK AT ALL. THEREFORE, ON THE BASIS OF SUCH INCRIMINATING MATERIAL FOUND AS A RESULT OF SEARCH , INITIATION OF PROCEEDING UNDER SECTION 153A OF THE ACT IS VALID. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED , THOUGH , I N THE ORIGINAL ASSESSMENT ORDER THE ISSUE OF ASSESSEES CLAIM OF DEDUCTION UNDER SECTION 80IA(4) OF THE ACT WAS EXAMINED AND DISALLOWED BY THE ASSESSING OF FICER, HOWEVER, AT THAT POINT OF TIME THERE WAS NO MATERIAL BEFORE THE ASSESSING OFFICER TO REVEAL THAT THE ASSESSEE IS A MERE PAPER COMPANY AN D HAS NOT DEVELOPED, OPERATED OR MAINTAINED THE INFRASTRUCTURE FACILITY TO BECOME ELIGIBLE FOR DEDUCTION UNDER SE CTION 80IA OF THE ACT. HE SUBMITTED , LEARNED COMMISSIONER (APPEALS) WHILE EXAMINING THE ISSUE HAS GIVEN A CATEGORICAL FINDING THAT SINCE THE DISALLOWANCE OF DEDUCTION UNDER SECTION 80IA OF THE ACT IS ON THE BASIS OF INCRIMINATING MATERIAL, THE VALIDITY OF ASSESSMENT ORDER PASSED UNDER SECTION 153A OF THE ACT WITH REFERENCE TO THE SAID ISSUE CANNOT BE QUESTIONED. THUS, HE SUBMITTED , THE RATIO LAID DOWN BY THE HON'BLE JURISDICTIONAL COURT IN CONTINENTAL WAREHOUSE CORPORATION (NHAVA SHEVA) LTD. (SUPRA) WILL NO T BE APPLICABLE. WITHOUT PREJUDICE , THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED , AS PER SECTION 80IA(4) OF THE ACT, ONLY IF A PERSON IS CARRYING ON BUSINESS OF DEVELOPING , OR OPERATING AN D MAINTAINING , OR DEVELOPING, OPERATING AND MAINTAINI NG ANY INF RASTRUCTURE FACILITY IS ELIGIBLE TO CLAIM DEDUCTION. HE SUBMITTED , IN THE FACTS OF THE PRESENT CASE, THE 22 RAJAHMUNDRY EXPRESSWAY LTD. MATERIALS ON RECORD SHOW THAT IN RESPONSE TO THE BID FLOATED BY THE CENTRAL GOVERNMENT / NHAI, GAMMON INDIA LTD. AND PUNJ LLOYD LTD., FORMED A CONSORTI UM TO OFFER THE BID AND THE ASSESSEE WAS NOT THE BIDDER. ONLY AFTER THE CONSORTIUM BECAME SUCCESSFUL IN THE BID , THE ASSESSEE COMPANY WAS CREATED AS A SPV AND IT ENTERED INTO A CONCESSION AGREEMENT WITH THE NHAI. AFTER THE EXECUTION OF THE CONCESSION AGREE MENT, THE ASSESSEE IMMEDIATELY ENTERED INTO TWO SEPARATE CONTRACTS WITH THE GIL I.E., EPC AND O & M CONTRACTS UNDER WHICH THE ENTIRE WORK RELATING TO DEVELOPMENT , OPERATION AND MAINTENANCE OF THE BOT PROJECT WAS HANDED OVER TO GIL ON PURELY BACK TO BACK BA SIS. HE SUBMITTED , ALL THE RESP ONSIBILITIES AND LIABILITIES UNDER CONCESSION AGREEMENT AS CONFERRED ON T HE ASSESSEE COMPANY WERE SHIFTED TO GIL UNDER THE EPC AND O & M CONTRACTS. FURTHER, HE SUBMITTED , THE PRICING OF THE EPC CONTRACT WITH THE GIL IS NOT TR ANSPARE NT AS THE ASSESSEE HAS DEFLATED THE PRICE TO INCREASE ITS PROFITABILITY. HE SUBMITTED , EXCEPT MAKING FINANCIAL INVESTMENT, THE ASSESSEE IS NOT CONTRACTUALLY EXPOSED TO ANY RISK OR LIABILITY. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED , UNLESS THE PERSON CLAIMING DEDUCTION UNDER SECTION 80IA OF THE ACT HIMSELF CARRIES OUT ANY ONE OF THE ACTIVITIES AS PROVIDED UNDER SECTION 80IA(4)(I) OF THE ACT, IT WILL NOT QUALIFY FOR DEDUCTION. HE SUBMITTED , IN THE FACTS OF THE PRESENT CASE, ADMITTEDLY, THE AS SESSEE HAS NOT CARRIED OUT EVEN A SINGLE ACTIVITY RELATING TO EITHER DEVELOPMENT OR OPERATION OR 23 RAJAHMUNDRY EXPRESSWAY LTD. MAINTENANCE OF THE INFRASTRUCTURE FACILITY . THE ENTIRE WORK WAS CARRIED OUT BY GIL. THE ASSESSEE MERELY RECEIVED THE ANNUITY INCOME FROM NHAI ON THE BASIS OF T HE CONCESSION AGREEMENT. THEREFORE, HE SUBMITTED , THE ASSESSEE IS NOT ELIGIBLE TO CLAIM DEDUCTION UNDER SECTION 80IA OF THE ACT. HE SUBMITTED , THOUGH ASSESSEES CLAIM OF DEDUCTION UNDER SECTION 80IA OF THE ACT WAS ALLOWED IN THE PROCEEDINGS ARISING OUT OF ORIGINAL ASSESSMENT ORDERS, HOWEVER, THAT WAS ON A COMPLETELY DIFFERENT REASONING AS IN THOSE PROCEEDINGS ASSESSEES CLAIM WAS DISA LLOWED ON THE GROUND THAT FOUR LANING OF THE RO AD CANNOT BE CONSIDERED AS A NEW INFRASTRUCTURE FACILITIES. HE SUBMITTED , ON T HE BASIS OF MATERIAL FOUND DURING T HE SEARCH AND SEIZURE OPERATION IT CAME TO THE NOTICE OF THE DEPARTMENT THAT THE ASSESSEE IS NEITHER A DEVELOPER OF THE INFRASTRUCTURE FACILITY NOR IS INVOLVED IN OPERATION AND MAINTENANC E OF THE PROJECT. THEREFORE, ASSES SEES CLAIM OF DEDUCTION WAS RIGHTLY DISALLOWED. 10. WE HAVE PATIENTLY AND CAREFULLY CONSIDERED RIVAL SUBMISSIONS IN THE LIGHT OF THE DECISION S RELIED UPON AND PERUSED THE MATERIAL ON RECORD. BASI CALLY, TWO ISSUES ARI SE FOR OUR CONSIDERATION. FIRSTLY , WHETHER AS A RESULT OF SEARCH INCRIMINATING MATERIAL CAME TO THE POSSESSION OF THE ASSESSING OFFICER ENABLING HIM TO MAKE THE DISALLOWANCE UNDER SECTION 80IA , IN A PROCEEDING UNDER SECTION 153A OF THE ACT AND SECONDLY, THE MERITS OF THE ISSUE AS TO WHETHER THE 24 RAJAHMUNDRY EXPRESSWAY LTD. AS SESSEE IS ELIGIBLE TO CLAIM DEDUCTION UNDER SECTION 80IA , ON THE BOT PROJECT. BEFORE WE DELVE INTO THE ISSUE S, AT THE COST OF REPETITION, WE THINK IT APPROPRIATE TO BRIEFLY NARRATE THE RELEVANT FACTS. UNDISPUTEDLY, IN THE RETURN OF INCOME FILED FOR THE IMP UGNED ASSESSMENT YEAR, THE ASSESSEE HAD CLAIMED DEDUCTION UNDER SECTION 80IA , IN RESPECT OF THE PROFIT/ INCOME EARNED FROM THE DEVELOPMENT OF THE TOLL (BOT) ROAD FORMING PART OF NATIONAL HIGHWAY NO.5. THE AFORESAID CLAIM OF THE ASSESSEE WAS EXAMINED IN THE COURSE OF ORIGINAL ASSESSMENT PROCEEDING UNDER SECTION 143(3) OF THE ACT. AFTER EXAMINING THE ISSUE WITH REFERENCE TO THE RELEVANT MATERIALS, THE ASSESSING OFFICER FORMED AN OPINION THAT THE ASSESSEE IS INELIGIBLE TO CLAIM DEDUCTION UNDER SECTION 80IA OF T HE ACT SINCE THE FOUR LANING OF THE EXISTING ROAD CANNOT BE CONSIDERED AS A NEW INFRASTRUCTURE FACILITY. ACCORDINGLY, HE DISALLOWED AS SESSEES CLAIM OF DEDUCTION. OF COURSE, IT IS A DIFFERENT MATTER THAT THE AFORESAID DECISION OF THE ASSES SING OFFICER WAS REVERSED BY LEARNED COMMISSIONER (APPEALS) WHILE ACCEPTING ASSESSEES CLAIM AND THE TRIBUNAL ALSO UPHELD THE AFORESAID DECISION OF LEARNED COMMISSIONER (APPEALS). 11. THE ISSUE WHICH N EEDS EXAMINATION IS, WHAT IS THE INCRIMINATING MATERIAL FOUND AS A RESULT OF SEARCH CONDUCTED IN CASE OF THE ASSESSEE , THAT COULD HAVE ENABLED THE ASSESSING OFFICER TO AGAIN RE VISIT THE ISSUE OF DEDUCTION CLAIMED UNDER SECTION 80IA OF THE ACT IN THE SEARCH 25 RAJAHMUNDRY EXPRESSWAY LTD. ASSESSMENT . ON A PERUSAL OF THE ASSESSMENT ORDER PASSED UNDER SECTION 14 3(3) R/W SECTION 153A OF THE ACT, IT IS VERY MUCH EVIDENT THAT THE ASSESSING OFFICER HAS NOT REFERRED TO ANY INCRIMINATING MATERIAL INSOFAR AS IT RELATES TO DEVELOPMENT OF THE BOT PROJECT OR ASSESSEES CLAIM OF DEDUCTION UNDER SECTION 80ITA OF THE ACT. IN FACT, WHILE DEALING WITH THE SPECIFIC ISSUE RELATING TO ASSESSEES CLAIM OF DEDUCTION UNDER SECTION 80IA OF THE ACT, THE ASSESSING OFFICER HAS VERY CLEARLY RELIED UPON THE REASONING ON THE BASIS OF WHICH SIMILAR DISALLOWANCE WAS MADE IN THE ORIGINAL ASSESS MENT ORDERS PASSED UNDER SECTION 143(3) OF THE ACT FOR THE ASSESSMENT YEARS 2007 08 AND 2008 09. IN FACT, ADOPTING THE VERY SAME REASONING IN THE EARLIER ASSESSMENT ORDERS , THE ASSESSING OFFICER DISALLOWED ASSESSEES CLAIM ON THE CONCLUSION THAT THE BOT RO AD DEVELOPED BY THE ASSESSEE NOT BEING A NEW INFRASTRUCTURE FACILITY , THE ASSESSEE IS NOT ELIGIBLE TO CLAIM DEDUCTION UNDER SECTION 80IA OF THE ACT. THERE IS NEITHER REFERENCE TO A SINGLE INCRIMINATING MATERIAL FOUND AS A RESULT OF SEARCH WITH REGARD TO AS SESSEES CLAIM OF DEDUCTION UNDER SECTION 80IA OF THE ACT NOR THE RE IS EVEN A WHISPER BY THE ASSESSING OFFICER THAT THE ASSESSEE IS A PAPER ENTITY. THOUGH, THE ASSESSING OFFICER WAS AWARE OF BOTH THE CONCESSION AGREEMENT AS WELL AS EPC AND O & M CONTRACTS, STILL HE NEVER TREATED THE ASSESSEE AS A PAPER ENTITY. NOWHERE IN THE ASSESSMENT ORDER HAS THE ASSESSING OFFICER ALLEGED THAT THE ASSESSEE HAS NOT CARRIED OUT THE DEVELOPMENT OF THE BOT PROJECT. IN FACT, 26 RAJAHMUNDRY EXPRESSWAY LTD. ASSESSEES CLAIM OF DEDUCTION UNDER SEC TION 80IA OF THE ACT WAS NEVER DISALLOWED BY T H E ASSESSING OFFICER ON THE ALLEGATION OF NOT DEVELOPING , OPERATING AND MAINTAINING THE INFRASTRUCTURE FACILITY . 12. KEEPING IN VIEW THE AFORESAID FACTS, IF WE EXAMINE THE ORDER OF LEARNED COMMISSIONER (APPEALS), I T IS TO BE N OTED THAT WHILE DEALING WITH ASSESSEES GROUND CHALLENGING THE VALIDITY OF THE PROCEEDING UNDER SECTION, LEARNED COMMISSIONER (APPEALS) HAS OBSERVED THAT DURING THE SEARCH OPERATION CO NDUCTED IN CASE OF THE ASSESSEE NO I NCRIMINATING MATERIAL WAS FOUND. TO PUT IT SIMPLY, HE HAS NOT REFERRED TO A SINGLE INCRIMINATING MATERIAL FOUND FROM THE ASSESSEE. ONLY OBSERVATION HE HAS MADE IS, IN COURSE OF SEARCH OPERATION CONDUCTED IN CASE OF GIL, INCRIMINATING DOCUMENTS RELATING TO GIL WERE FOUND FROM TH EIR PREMISES. FURTHER, HE HAS STATED THAT ON THE BASIS OF SUCH INCRIMINATING DOCUMENTS FOUND DURING THE SEARCH WHICH RELATES TO UNACCOUNTED SCRAP SALES WHICH HAS GENERATED UNACCOUNTED CASH, BOGUS PURCHASE AND BOGUS SUB CONTRACTS AND MISC. INCOME, GIL HAS D ECLARED INCOME OF ` 50 CRORE. OF COURSE, TO JUSTIFY THE VALIDITY OF THE PROCEEDINGS UN DER SECTION 153A, LEARNED COMMISSIONER (APPEALS) HAS OBSERVED THAT INCRIMINATING MATERIAL SEIZED FROM GIL IS INTIMATELY AND INSEPARABLY CONNECTED TO THE ASSESSEE WITHOUT SPECIFYING THE NATURE OF SUCH INCRIMINATING MATERIAL AND HOW THEY ARE CONNECTED TO THE ASSESSEE OR ITS CLAIM OF DEDUCTION UNDER SECTION 80IA OF THE ACT. 27 RAJAHMUNDRY EXPRESSWAY LTD. 13. FURTHER, TO NEGATE ASSESSEES OBJECTIONS REGARDING THE VALIDITY OF THE PROCEEDING UN DER SECTION 153A OF THE ACT, LEARNED COMMISSIONER (APPEALS) H AS REFERRED TO A REPORT OF THE F RESCHMANN PRABHU INDIA PVT. LTD., RELATING TO ACTUAL COST OF THE PROJECT AS A NEW MATERIAL AVAILABLE TO THE ASSESSING OFFICER. HOWEVER, THE ASSESSEES CONTENTION THAT THE SAID REPO RT IS NOT AN INCRIMINATING MATERIAL FOUND AS A RESULT OF SEARCH, BUT WAS SUBMITTED BY THE ASSESSEE ITSELF REMAINS UNCONTROVERTED. THUS, FROM THE AFORESAID FACTS, IT BECOMES CLEAR THAT NO INCRIMINATING MATERIAL RELATING TO THE ASSESSEE WAS FOUND AS A RESULT OF SEARCH. FURTHER, LEARNED COMMISSIONER (APPEALS) WHILE JUSTIFYING THE INITIATION OF PROCEEDING UNDER SECTION 15 3A OF THE ACT, HAS OBSERVED THAT THE INCRIMINATING FINDING BY HIM THAT THE ASSESSEE IS A PAPER COMPANY IS DIRECTLY RELATED TO ASSESSEES CLAIM OF SECTION 80IA OF THE ACT AND THESE ARE NEW FACTS ON RECORD WHICH ARE NEVER EXAMINED EARLIER, HENCE, EMPOWERS THE ASSESSING OFFICER TO EXAMINE THE CLAIM OF DEDUCTION UNDER SECTION 80IA OF THE ACT. THUS, THE OBSERVATIONS MADE BY LEARNED COMMISSIONER (APPE ALS) , AS DISCUSSED ABOVE , CLEARLY ESTABLISHES THE FACT THAT IN THE COURSE OF SEARCH AND SEIZURE OPERATION CONDUCTED IN ASSESSEES CASE NO INCRIMINATING MATERIAL WAS FOUND TO DEMONSTRATE THAT THE ASSESSEE IS A PAPER COMPANY AND HAS MADE A WRONG CLAIM OF DEDUCTION UNDER SECTION 80IA OF THE ACT. THE INCRIMINATING FINDING, IF ANY, HAS TO BE ON THE BASIS OF INCRIMINATING MATERIAL FOUND AS A RESULT 28 RAJAHMUNDRY EXPRESSWAY LTD. OF SEARCH. IT IS LEARNED COMMISSIONER (APPEALS) , WHO ONLY HAS TERMED THE ASSESSEE AS A PAPER COMPANY ON THE BASIS OF HIS OWN REASONING TO D ENY ASSESSEES CLAIM OF DEDUCTION UNDER SECTION 80IA OF THE ACT. AS DISCUSSED EARLIER, NOWHERE IN THE IMPUGNED ASSESSMENT ORDER, THE ASSESSING OFFICER HAS EITHER REFERRED TO ANY INCRIMINATING MATERIAL OR HAS RECORDED ANY FINDING THAT THE ASSESSEE IS A PAPE R COMPANY AND HAS NOT DEVELOPED, OPERATED OR MAINTAINED THE INFRASTRUCTURE FACILITY . THIS FACT IS FURTHER CORROBORATED FROM THE OBSERVATIONS OF THE ASSESSING OFFICER IN TH E REMAND REPORT SUBMITTED TO LEARNED COMMISSIONER (APPEALS) . ON A READING OF PARA 3.1 1 OF THE ORDER OF LEARNED COMMISSIONER (APPEALS), IT IS EVIDENT, THE ASSESSING OFFICER HAS VERY CLEARLY AND CATEGORICALLY STATED IN THE REMAND REPORT THAT THE ORDER PASSED UNDER SECTION 143(3) R/W SECTION 153A OF THE ACT ON THE ISSUE OF ASSESSEES CLAIM OF DEDUCTION UNDER SECTION 80IA OF THE ACT WAS ONLY A REITERATION OF ASSESSING OFFICERS REASONING WHILE MAKING SIMILAR DISALLOWANCE IN THE ORIGINAL ASSESSMENT ORDER PASSED U /S 143(3). 14. THUS, THE AFORESAID FACTS MAKE IT ABSOLUTE LY CLEAR THAT NO MATERIAL , MU CH LESS , ANY INCRIMINATING MATERIAL WAS FOUND DURING THE SEARCH AND SEIZURE OPERATION WITH REFERENCE TO ASSESSEES CLAIM OF DEDUCTION UNDER SECTION 80IA(4) OF THE ACT WHICH COULD HAVE ENABLED TH E ASSESSING OFFICER TO RE VISIT THE ISSUE AGAIN IN AN UNABATED ASSESSMENT PROCEEDING WHEN THE ISSUE HAS ALREADY BEEN EXAMINED 29 RAJAHMUNDRY EXPRESSWAY LTD. AND STANDS CONCLUDED IN THE ORIGINAL ASSESSMENT PROCEEDING . THEREFORE, IN OUR CONSIDERED OPINION, ONCE ASSESSEES CLAIM OF DEDUCTION UNDER SECTION 80IA OF THE ACT HAS BEEN EXAMINED IN THE ORIG INAL ASSESSMENT PROCEEDING , THE SAME COULD NOT HAVE BEEN E XAMINED AGAIN IN THE PROCEEDING UNDER SECTION 153A OF THE ACT IN THE ABSENCE OF ANY INCRIMINATING MATERIAL FOUND AS A RESULT OF SEARCH. THE RATIO LAID DOWN BY THE HON'BLE JURISDICTIONAL COURT IN CON TINENTAL WAREHOUSE CORPORATION (NHAVA SHEVA) LTD. (SUPRA) , THEREFORE, WOULD SQUARELY APPLY. THEREFORE, THE DISALLOWANCE OF DEDUCTION CLAIMED UNDER SECTION 80IA OF THE ACT HAVING ALREADY BEEN KNOCKED OFF BY LEARNED COMMISSIONER (APPEALS) AND THE TRIBUNAL, I T CANNOT BE REVIVED AGAIN IN T HE SEARCH ASSESSMENT PROCEEDING . 15. AS IT APPEARS, KNOWING FULLY WELL THAT THE REASONING ON THE BASIS OF WHICH THE ASSESSING OFFICER HAS DISALLOWED ASSESSEES CLAIM OF DEDUCTION UNDER SECTION 80IA OF THE ACT WOULD NOT BE SUSTAI NABLE IN VIEW OF TRIBUNALS DECISION ON SUCH ISSUE IN ASSESSEES OWN CASE, LEARNED COMMISSIONER (APPEALS) HAS ATTEMPTED TO INTRODUCE THE THEORY OF PAPER ENTITY TO DISALLOW ASSESSEES CLAIM OF DEDUCTION UNDER SECTION 80I A OF THE ACT BY REFERRING TO INCRIM INATING MATERIAL WHICH, IN REALITY, NEVER EXISTED . THEREFORE, WE ARE UNAB LE TO UPHOLD THE DECISION OF LEARNED COMM ISSIONER (APPEALS) ON THE ISSUE OF VALIDITY OF ASSESSMENT MADE UNDER SECTION 153A OF THE ACT . ACCORDINGLY, WE HOLD 30 RAJAHMUNDRY EXPRESSWAY LTD. THAT THE ADDITIONS MADE IN THE ASSESSMENT ORDER WHICH ARE NOT ON THE BASIS OF ANY INCRIMINATING MATERIAL FOUND AS A RESULT OF SEARCH ARE NOT SUSTAINABLE. 16. HAVING HELD SO, WE COULD HAVE RESTRAINED OURSELVES FROM DECIDING THE ISSUE ON MERIT S. HOWEVER, SINCE THE ISSUE ARISES IN O THER ASSESSMENT YEARS AS WELL WHERE THE ASSESS MENTS HAVE ABATED, WE CONSIDER IT APPROPRIATE TO DEAL WITH THE MERITS OF THE ISSUE AT THIS JUNCTURE. UNDISPUTEDLY, THE ASSESSING OFFICER ADOPTING THE VERY SAME REA SONING ON THE BASIS OF WHICH ASSESSEES CLAIM OF DED UCTION UNDER SECTION 80IA OF THE ACT WAS DISALLOWED IN THE ORIGINAL ASSESSMENT PROCEEDINGS FOR THE ASSE SSMENT YEAR S 2007 08 AND 2008 09 HAS DISALLOWED ASSESSEES CLAIM OF DEDUCTION IN THE IMPUGNED ASSESSMENT YEAR AS WELL . AS DISCUSSED EARLIER, THE REASON F OR SUCH DISALLOWANCE IN ALL THESE YEARS IS , THE BOT ROAD NOT BEING A NEW INFRASTRUCTURE FACILITY IS INELIGIBLE FOR DEDUCTION UNDER SECTION 80IA OF THE ACT . HOWEVER, KNOWING THE FALLACY OF THE AFORESAID REASONING OF THE ASSESSING OFFICER, WHICH HAS BEEN REV ERSED BY THE APPELLATE AUTHORITIES IN PROCEEDINGS ARISING OUT O F ORIGINAL ASSESSMENT ORDER, LEARNED COMMISSIONER (APPEALS) HAS MADE AN ATTEMPT TO SUSTAIN THE DISALLOWANCE BY COMPLETELY DEVIATING FROM THE REASONING OF THE ASSESSING OFFICER AND IN THE PROCES S HAS PROVIDED HIS OWN REASONING. R EFERRING TO THE CONCESSION AGREEMENT AS WELL AS THE EPC AND O & M CONTRACTS LEARNED 31 RAJAHMUNDRY EXPRESSWAY LTD. COMMISSIONER (APPEALS) H AS TRIED TO MAKE OUT A CASE THAT THE ASSESSEE IS A MERE PAPER COMPANY AND AFTER GETTING THE WORK FROM NHAI HAS AW ARDED THE WORK TO GIL ON BACK TO BACK BASIS WITHOUT CARRYING OUT ANY WORK ITSELF . HOWEVER, FACTS ON RECORD REVEAL THAT IT IS THE ASSESSEE WITH WHOM NHAI HAS ENTERED INTO THE CONCESSION AGREEMENT FOR DEVELOPING, OPERATING A ND MAINTAINING THE TOLL ROAD. A PE RUSAL OF THE CONCESSION AGREEMENT REVEALS THAT THE ENTIRE RESPONSIBILITY, RISK AND REWARD ARISING OUT OF THE BOT PROJECT WERE WITH THE ASSESSEE. THOUGH, ASSESSEE WAS ENTRUSTED THE JOB OF DEVELOPING, OPERATING AND MAINTAINING THE PROJECT BY THE NHAI, H OWEVE R, THE CO NCESSION AGREEMENT ALSO PROVIDES THAT THE ASSESSEE CAN GET THE DEVELOPMENT WORK DONE THROUGH A CONTRACTOR BY ENTERING INTO EPC CONTRACT. FURTHER, THE CONCESSION AGREEMENT ALSO PROVIDED THAT THE ASSESSEE CAN ENTER INTO A SEPARATE CONTRACT FOR OPERA TION AND MAINTENANCE OF THE BOT PROJECT. THUS, IT IS EVIDENT , THE EPC AND O & M CONTRACT S ENTERED INTO BY THE ASSESSEE WITH GIL ARE AS PER THE TERMS OF THE CONCESSION AGREEMENT AND ALSO WITH THE APPROVAL OF NHAI. IT IS ALSO A FACT ON RECORD THAT THE ASSESS EE HAS FINANCED THE ENTIRE PROJECT BY AVAILING LOAN FROM FINANCIAL INSTITUTIONS. FURTHER, AS PER THE CONCESSION AGREEMENT ASSESSEE AT ITS OWN COST IS REQUIRED TO INSURE THE PROJECT DURING THE PERIOD OF IMPLEMENTATION. THE WORK OF GIL IS LIMITED TO CARRYING OUT THE DEVELOPMENT AS WELL AS OPERATION AND MAINTENANCE OF THE INFRASTRUCTURE PROJECT AS PER THE PRICE FIXED UNDER 32 RAJAHMUNDRY EXPRESSWAY LTD. THE CONTRACTS. THUS, THE STATUS OF GIL IS THAT OF A CONTRACTOR . W HEREAS , THE ASSESSEE AS PER THE TERM S OF THE CONCESSION AGREEMENT IS THE DEVELOPER OF THE INFRASTRUCTURE FACILITY. IT IS RELEVANT TO OBSERVE , THE CONCESSION AGREEMENT WAS EXECUTED ON 30 TH OCTOBER 2001 . W HEREAS , THE EPC CONTRACT WAS ENTERED INTO ON 13 TH FEBRUARY 2002. THUS, BOTH THESE CONTRAC TS WERE MUCH PRIOR TO ASSESSMENT YEAR 2006 07 , WHEREIN , FOR THE FIRST TIME ASSESSEE CLAIM ED DEDUCTION UNDER SECTION 80IA OF THE ACT. IT IS ALSO A FACT ON RECORD THAT IN THE COURSE OF ASSESSMENT PROCEEDING IN ASSESSMENT YEAR 2006 07, THE ASSESSING OFFICER A FTER EXAMINING ASSESSEES CLAIM ALLOWED THE DEDUCTION UNDER SECTION 80IA OF THE ACT. THOUGH , IN ASSESSMENT YEAR S 2007 08 AND 2008 09 WHILE COMPLETING THE ASSESSMENT S UNDER SECTION 143 (3) OF THE ACT, THE ASSESSING OFFICER DISALLOWED THE DEDUCTION UNDER SECT ION 80IA OF THE ACT ON THE GROUND THAT IT IS NOT A NEW INFRASTRUCTURE FACILITY, HOWEVER, BOTH THE APPELLATE AUTHORITIES I.E., LEARNED COMMISSIONER (APPEALS) AND THE TRIBUNAL HAVE ALLOWED ASSESSEES CLAIM. THE FACTS AND MAT ERIALS ON THE BASIS OF WHICH ASSES SEES CLAIM OF DEDUCTION UNDER SECTION 80IA OF THE ACT WAS ALLOWED BY THE APPELLATE AUTH ORITIES HAVE NOT CHANGED AS THE CONCESSION AGREEMENT AND THE EPC AND O & M CONTRACTS HAVE REMAINED SAME. IN FACT, IN THE IMPUGNED ASSESSMENT ORDER, THE ASSESSING OFFICE R HAS EXAMINED THE EPC CONTRACT, HOWEVER, HE HAS NOT RAISED ANY DOUBT REGA RDING ASSESSEES STATUS AS A DEVELOPER. L EARNED COMMISSIONER (APPEALS) ON 33 RAJAHMUNDRY EXPRESSWAY LTD. THE BASIS OF THE V ERY SAME DOCUMENTS HAS HELD THE ASSESSEE A S A PAPER COMPANY AND NOT A DEVELOPER. THIS IS M ERELY FOR THE FACT THAT THE ASSESSEE HAS ENTERED INTO THE EPC CON TRACT WITH GIL. IN OUR VIEW, A READING OF SECTION 80IA OF THE ACT MAKES IT CLEAR THAT AS PER THE QUALIFYING CONDITION S , THE COMPANY ELIGIBLE FOR CLAIMING DEDUCTION FIRSTLY, MUST HAVE BEEN CRE ATED BY A CONSORTIUM , SECONDLY, IT MUST HAVE ENTERED INTO AN AGREEMENT WITH THE CENTRAL GOVERNMENT OR A STATE GOVERNMENT OR A LOCAL AUTHORITY OR ANY OTHER STATUTORY BODY FOR DEVELOPING OR OPERATING AND MAINTAINING OR DEVELOPING, OPERATING AND MAINTAINING A NEW INFRASTRUCTURE FACILITY AND THIRDLY, IT HAS STARTED OR STARTS OPERATING AND MAINTAINING THE INFRASTRUCTURE FACILITY ON/OR AFTER FIRST DAY OF APRIL 1995. THERE CANNOT BE ANY DOUBT THAT THE ASSESSEE HAS FULFILLED THE FIRST AND THIRD CONDITION S. IF , AT ALL , THERE IS SOME DOUBT REGARDING THE SECOND CONDITION AS TO WHETHER THE ASSESSEE CAN BE REGARDED AS A DEVELOPER OR ENGAGED IN OPERATING AND MAINTAINING THE INFRASTRUCTURE FACILITY. A READING OF SECTION 80IA AS A WHOLE AS WELL AS THE CONCESSION AGREEM ENT WOULD MAKE IT CLEAR THAT IT IS THE ASSESSEE WHO HAS BEEN ENTRUSTED THE WORK OF DEVELOPING, MAINTAINING, OPERATING THE INFRASTRUCTURE FACILITY. THE PROJECT HAS BEEN FINANCED ENTIRELY BY THE ASSESSEE. GIL HAS EXECUTED THE WORK MERELY AS A CONTRACTOR. 34 RAJAHMUNDRY EXPRESSWAY LTD. 17. T HOUGH, LEARNED COMMISSIONER (APPEALS) HAS STATED THAT FOR THE SAME INFRASTRUCTURE FACILITY BOTH THE ASSESSEE AND THE GIL ARE CLAIMING DEDUCTION, HOWEVER, THE AFORESAID FINDING IS FACTUALLY INCORRECT. IN FACT, FROM THE MATERIAL PLACED ON RECORD, IT IS EVIDE NT, GIL HAS WITHDREW ITS CLAIM OF DEDUCTION UNDER SECTION 80IA OF THE ACT AFTER THE AMENDMENT BROUGHT TO PROVISION PROHIBITED ALLOWANCE OF DEDUCTION TO A CONTRACTOR. THUS, AS PER THE FACTS ON RECORD, IT IS THE ASSESSEE WHO IS ONLY CLAIMING DEDUCTION UNDER SECTION 80IA OF THE ACT. FURTHER, THE ALLEGATION OF LEARNED COMMISSIONER (APPEALS) THAT THE ASSESSEE IS A MERE PAPER COMPANY IS UNACCEPTABLE CONSIDERING THE FACT THAT AN AGENCY OF THE CENTRAL GOVERNMENT HAS ENTERED INTO A CONTRACT WITH THE ASSESSEE. EVEN, THE ANNUITY INCOME RECEIVED BY THE ASSESSEE FROM NHAI HAS BEEN ASSESSED AT THE HANDS OF THE ASSESSEE. EXPENDITURE CLAIMED INCLUDING FINANCE COST, DEPRECIATION, ETC. HAVE ALSO BEEN ALLOWED. THUS, IT IS VERY MUCH CLEAR THAT THE ASSESSEE IS A GENUINE COMPANY DOING BUSINESS AND CANNOT BE REGARDED AS A PAPER ENTITY. THE MOST CRUCIAL FACTOR WHICH NEEDS TO BE KEPT IN MIND IS, ASSESSEES CLAIM OF DEDUCTION UNDER SECTION 80IA OF THE ACT IN RESPECT OF THE SAME INFRASTRUCTURE FACILITY WAS ALLOWED BY LEARNED COMMISSION ER (APPEALS) IN THE ASSESSMENT YEARS 2007 08 AND 2008 09 AND THE TRIBUNAL ALSO APPROVED IT. IT IS WORTH MENTIONING, WHILE DECIDING IDENTICAL ISSUE IN ASSESSMENT YEAR 2012 13, WHICH IS AFTER THE DATE OF SEARCH AND SEIZURE OPERATION, LEARNED COMMISSIONER (AP PEALS) FOLLOWING THE 35 RAJAHMUNDRY EXPRESSWAY LTD. DECISION OF THE TRIBUNAL HAS ALLOWED ASSESSEES CLAIM OF DEDUCTION UNDER SECTION 80IA OF THE ACT. THUS, IT IS VERY MUCH CLEAR THAT THE APPELLATE AUTHORITIES ON VERIFYING IDENTICAL FACTS AND MATERIALS HAVE NEVER CONSIDERED THE ASSESSEE AS A PAPER COMPANY OR IT IS NOT A DEVELOPER OF THE INFRASTRUCTURE FACILITY, HENCE, ALLOWED ASSESSEES CLAIM OF DEDUCTION. IN OUR VIEW, WHEN THE ISSUE RELATING TO ASSESSEES CLAIM OF DEDUCTION STANDS CONCLUDED BY THE TRIBUNAL, LEARNED COMMISSIONER (APPEALS) CANNOT TAKE A DIFFERENT VIEW TO DISALLOW ASSESSEES CLAIM OF DEDUCTION BY TREATING IT AS A PAPER COMPANY, THAT TOO, WITHOUT ANY MATERIAL BASIS. FOR COMING TO SUCH CONCLUSION, WE ARE SUPPORTED BY THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN PAU L BROS. (SUPRA). 18. THE OBSERVATION OF THE LEARNED COMMISSIONER (APPEALS) THAT THE ASSESSEE IS A MERE PAPER COMPANY AND BY ENTERING INTO EPC CONTRACT, IT HAS INFLATED ITS PROFIT BY DEFLATING THE VALUE OF THE CONTRACT CANNOT ALSO BE ACCEPTED AS IT IS MERELY O N THE BASIS OF A PRESUMPTION. AS DISCUSSED EARLIER, VIDE NOTIFICATION NO.266, DATED 19 TH SEPTEMBER 2002, THE CENTRAL GOVERNMENT HAS GRANTED APPROVAL UNDER SECTION 10(23G) OF THE ACT RECOGNIZING THE ASSESSEE AS AN UNDERTAKING WHOLLY ENGAGED IN DEVELOPING, O PERATING AND MAINTAINING INFRASTRUCTURE FACILITY. MEANING THEREBY, T HE CENTRAL GOVERNMENT RECOGNIZES THE ASSESSEE AS AN ELIGIBLE UNDERTAKING UNDER SECTION 80IA(4) OF THE ACT FOR DEVELOPING, OPERATING AND MAINTAINING THE BOT TOLL ROAD. THEREFORE, 36 RAJAHMUNDRY EXPRESSWAY LTD. ONLY BECAU SE THE WORK HAS BEEN EXECUTED THROUGH A CONTRACTOR, THE ASSESSEE CANNOT BE TREATED AS A PAPER COMPANY. 19. AS REGARDS THE OBSERVATION OF LEARNED COMMISSIONER (APPEALS) THAT, IF AT ALL, GIL WOULD BE ELIGIBLE FOR DEDUCTION UNDER SECTION 80IA, IN OUR VIEW, SUCH FINDING IS TOTALLY MISPLACED. A READING OF SECTION 80IA(4)(I) OF THE ACT WOULD MAKE IT CLEAR THAT GIL DOES NOT FULFILL ANY OF THE CONDITIONS MENTIONED THEREIN. MOREOVER, BY INSERTION OF EXPLANATION BELOW SECTION 80IA (13) OF THE ACT, IT HAS BEEN MADE CLEAR THAT A CONTRACTOR IS NOT ELIGIBLE TO CLAIM DEDUCTION UNDER SECTION 80IA OF THE ACT. THE FINANCIAL STATEMENTS OF BOTH THE ASSESSEE AS WELL AS GIL, CONCESSION AGREEMENT, EPC AND O & M CONTRACTS CLEARLY DEMONSTRATE THAT GIL IS EXECUTING THE WORK IN THE STATU S OF A CONTRACTOR. FOR THIS REASON ALONE, GIL WITHDREW ITS CLAIM OF DEDUCTION UNDER SECTION 80IA OF THE ACT WHICH IS EVIDENT FROM THE ORDER PASSED BY THE TRIBUNAL IN ITA NO.5149& 7430/MUM./2007, DATED 27 TH APRIL 2011. THE PROVISION OF SECTION 80IA(4) OF TH E ACT CERTAINLY DOES NOT GIVE AN IMPRESSION THAT THE ASSESSEE HAS TO DO THE DEVELOPING, OPERATING AND MAINTAINING THE INFRASTRUCTURE FACILITY ALL BY ITSELF WITHOUT ENGAGING ANY CONTRACTOR. THIS, IN OUR VIEW, CANNOT BE THE MEANING OF SECTION 80IA(4) OF THE ACT. THIS IS WHY, WHILE DEALING WITH THE ISSUE EARLIER, THOUGH, THE FACT OF EPC AND O & M CONTRACTS WERE VERY MUCH IN THE KNOWLEDGE OF THE ASSESSING OFFICER AS WELL AS THE APPELLATE 37 RAJAHMUNDRY EXPRESSWAY LTD. AUTHORITIES, THEY NEVER QUESTIONED ASSESSEES STATUS AS THE DEVELOPER OF T HE INFRASTRUCTURE FACILITY AND THE DISALLOWANCE OF DEDUCTION UNDER SECTION 80IA OF THE ACT WAS MADE ONLY ON THE REASONING THAT THE INFRASTRUCTURE FACILITY IS NOT A NEW ONE. THEREFORE, WHEN THE STATUS OF THE ASSESSEE HAS BEEN ACCEPTED AS A DEVELOPER, EVEN B Y THE ASSESSING OFFICER IN THE IMPUGNED ASSESSMENT ORDER, LEARNED COMMISSIONER (APPEALS) CANNOT CHANGE THE STATUS PURELY ON THE BASIS OF CONJECTURE AND SURMISES WITHOUT ANY CONTRARY MATERIAL AVAILABLE ON RECORD. IN FACT, LEARNED COMMISSIONER (APPEALS) HAS NOT REFERRED TO EVEN A SINGLE PIECE OF MATERIAL WHICH CAN EVEN REMOTELY SUGGEST THAT THE ASSESSEE IS A MERE PAPER COMPANY AND DOES NOT QUALIFY THE CONDITIONS OF SECTION 80IA(4) OF THE ACT. THERE IS NO DOUBT THAT THE BOT TOLL ROAD BUILT BY THE ASSESSEE IS A INFRASTRUCTURE FACILITY AS DEFINED UNDER SECTION 80IA(4) OF THE ACT. THEREFORE, AN ENTITY WHICH DEVELOPED SUCH A FACILITY IS ELIGIBLE TO CLAIM DEDUCTION, PROVIDED, HE FULFILLS THE CONDITIONS OF SECTION 80IA(4)(I) OF THE ACT. IN THE FACT OF THE PRESENT CAS E, IF NEITHER THE ASSESSEE NOR GIL ARE HELD AS INELIGIBLE THEN NO ONE ELSE COULD GET THE BENEFIT OF SECTION 80IA OF THE ACT AND THE VERY OBJECT FOR WHICH THE PROVISION HAS BEEN BROUGHT WOULD FAIL. UNLESS THE ENTITY COMING FORWARD TO MAKE THE INVESTMENT IN DEVELOPING INFRASTRUCTURE FACILITY IS GRANTED THE STATUTORY DEDUCTION NO ONE WILL COME FORWARD TO MAKE HUGE INVESTMENT FOR DEVELOPMENT OF INFRASTRUCTURE FACILITY WHICH ULTIMATELY LEADS TO DEVELOPMENT OF COUNTRYS ECONOMIC CONDITION. 38 RAJAHMUNDRY EXPRESSWAY LTD. THEREFORE, KEEPING IN V IEW ALL THE RELEVANT FACTS INCLUDING THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE AS REFERRED TO ELSEWHERE IN THE ORDER, WE HOLD THAT THE ASSESSEE IS ELIGIBLE TO CLAIM DEDUCTION UNDER SECTION 80IA OF THE ACT. THEREFORE, THE ASSESSING OFFICER IS DIRE CTED TO VERIFY THE CORRECTNESS OF ASSESSEES COMPUTATION OF DEDUCTION UNDER SECTION 80IA AND ALLOW THE SAME. FURTHER, TO ENSURE THAT DEDUCTION FOR THE SAME INFRASTRUCTURE FACILITY IS NOT ALLOWED TO BOTH THE ASSESSEE AND GIL, THE ASSESSING OFFICER IS DIRECT ED TO VERIFY THE RELEVANT FACTS AND THEREAFTER COMPUTE DEDUCTION UNDER SECTION 80IA OF THE ACT. THESE GROUNDS ARE ALLOWED. 20. IN GROUND NO.10, THE ASSESSEE HAS CHALLENGED THE DISALLOWANCE OF DEPRECIATION CLAIMED ON THE RIGHT TO COLLECT ANNUITY BY TREATING IT AS INTANGIBLE ASSET. 21. BRIEF FACTS ARE, IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS AWARDED THE EPC CONTRACT TO THE GIL, A RELATED PARTY, AT A RATE WHICH IS HIGHER BY 2.5%. HE OBSERVED, THE CONSORTIUM BANKERS WHO HAVE EXTENDED LOA NS TO THE ASSESSEE HAD APPOINTED AN INDIVIDUAL ENGINEERING FIRM FRISCHMANN PRABHU INDIA PVT. LTD., WHO HAD INDEPENDENTLY EVALUATED, EXAMINED AND ESTIMATED THE PROJECT COST AT ` 231.53 CRORE. THUS, HE HELD THAT THE PROVISIONS OF SECTION 40A(2) OF THE ACT AR E ATTRACTED. FURTHER, ON VERIFYING THE BOOKS OF ACCOUNT HE FOUND THAT THE ASSESSEE HAS 39 RAJAHMUNDRY EXPRESSWAY LTD. CAPITALIZED A SUM OF ` 226 CRORE TOWARDS EPC CHARGES. COMPARING THE EPC CONTRACT COST AWARDED BY THE ASSESSEE TO GIL WITH CONTRACT COST AWARDED BY AN ASSOCIATE AS WELL AS THE INDEPENDENT ENGINEERS REPORT, THE ASSESSING OFFICER DISALLOWED CAPITALIZATION OF EXCESS COST AMOUNTING TO ` 5.47 CRORE. CONSEQUENTLY, HE DISALLOWED CORRESPONDING DEPRECIATION ON SUCH COST WORKED OUT AT ` 39,87,630. THE ASSESSEE CONTESTED THE AFORESAID DISALLOWANCE BEFORE THE FIRST APPELLATE AUTHORITY. 22. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE IN T HE CONTEXT OF THE FACTS AND MATERIAL ON RECORD, LEARNED COMMISSIONER (APPEALS) HELD THAT THE ASSESSING OFFICER HAS NO POWER TO SUBSTITUTE THE ACTUAL COST OF THE PROJECT RECORDED IN THE BOOKS OF ACCOUNT WITH AN ESTIMATED COST WITHOUT REJECTING THE BOOKS OF ACCOUNT. ACCORDINGLY, HE DELETED THE DISALLOWANCE OF DEPRECIATION MADE BY THE ASSESSING OFFICER. HOWEVER, RELYING UPON CBDT CIRCULAR NO.9/2014, DATED 23 RD APRIL 2014, HE HELD THAT THE PROJECT COST HAS TO BE AMORTIZED OVER THE CONCESSION PERIOD AND THE DEPR ECIATION CLAIMED BY THE ASSESSEE HAS TO BE DISALLOWED. ACCORDINGLY, HE DISALLOWED THE DEPRECIATION CLAIMED BY THE ASSESSEE AT ` 2,8 2 ,47,295 . 23. BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED, BY ACQUIRING THE RIGHT TO COLLECT ANNUITY, THE ASSESSEE HAS ACQUIRED A VALUABLE COMMERCIAL RIGHT WHICH IS AN INTANGIBLE ASSET WITHIN THE 40 RAJAHMUNDRY EXPRESSWAY LTD. MEANING OF SECTION 32(1)(II). THUS, HE SUBMITTED, ASSESSEES CLAIM OF DEPRECIATION HAS TO BE ALLOWED. IN SUPPORT OF SUCH CONTENTION, THE LEARNED COUNSEL FOR THE ASSESSEE RELI ED UPON THE FOLLOWING DECISIONS: I) ACIT V/S PROGRESSIVE CONSTRUCTION LTD., ITA NO.1845/HYD./ 2014, AND C.O. NO.36/HYD./2015, DATED 14.02.2017 (SB) ; AND II) ACIT V/S WEST GUJARAT EXPRESSWAY LTD., [2015] 154 ITD 103 (MUM.). 24. THE LEARNED DEPARTMENTAL REPRESENTATIVE RELIED UPON THE OBSERVATIONS OF LEARNED COMMISSIONER (APPEALS). 25. WE HAVE CONSIDERED RIVAL SUBMISSIONS IN THE LIGHT OF THE DECISIONS RELIED UPON AND PERUSED THE MATERIAL ON RECORD. THE ISSUE RAISED BEFORE US IS NOW FAIRLY WELL SETTLED IN VIEW OF THE SPECIAL BENCH DECISION OF THE TRIBUNAL, HYDERABAD BENCH, REFERRED TO ABOVE. UNDISPUTEDLY, THE ASSESSEE WAS AWARDED THE WORK OF CONSTRUCTING A PART OF THE NATIONAL HIGHWAY NO.5, UNDER BOT BASIS. THEREFORE, ENTIRE INVESTMENT/FINANCE FOR DEVELOPING TH E INFRASTRUCTURE FACILITY WAS BORNE BY THE ASSESSEE. BY MAKING SUCH INVESTMENT WHAT THE ASSESSEE RECEIVED IN RETURN WAS A RIGHT TO COLLECT ANNUITY OVER THE PERIOD OF CONCESSION. THUS, THE INVESTMENT MADE BY THE ASSESSEE FOR ACQUIRING SUCH RIGHT CERTAINLY I S AN INTANGIBLE ASSET COMING WITHIN THE PURVIEW OF SECTION 32(1)(II) OF THE ACT. THEREFORE, THE ASSESSEE WOULD BE ELIGIBLE TO CLAIM DEPRECIATION. THE DECISION OF THE LEARNED COMMISSIONER (APPEALS) ON THE ISSUE IS HEREBY REVERSED. 41 RAJAHMUNDRY EXPRESSWAY LTD. 26. IN GROUNDS NO.11, THE ASS ESSEE HAS CHALLENGED THE DISALLOWANCE OF DEDUCTION CLAIMED UNDER SECTION 14A OF THE ACT. 27. BRIEF FACTS ARE, DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT, THOUGH, IN THE RETURN OF INCOME ORIGINALLY FILED FOR THE IMPUGNED ASSESSMENT Y EAR, THE ASSESSEE ON ITS OWN HAS DISALLOWED AN AMOUNT OF ` 2,36,81,525, UNDER SECTION 14A R/W RULE 8D, HOWEVER, IN THE RETURN OF INCOME FILED IN PURSUANCE TO THE NOTICE ISSUED UNDER SECTION 153A OF THE ACT, THE ASSESSEE WITHDREW SUCH DISALLOWANCE STATING TH AT THE ASSESSEE HAS NOT INCURRED ANY EXPENDITURE FOR EARNING THE EXEMPT INCOME. NOTICING THAT DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE HAD RECEIVED EXEMPT INCOME BY WAY OF DIVIDEND, THE ASSESSING OFFICER HELD THAT DISALLOWANCE UNDER SECTION 14A OF THE ACT HAS TO BE MADE IN ACCORDANCE WITH RULE 8D. NOTICING THAT THE ASSESSEE ITSELF HAS WORKED OUT THE DISALLOWANCE UNDER SECTION 14A OF THE ACT IN THE ORIGINAL RETURN OF INCOME AT ` 2,36,81,525, THE ASSESSING OFFICER MADE THE DISALLOWANCE OF THE VERY SAME AMOUNT WHILE COMPUTING INCOME UNDER THE NORMAL PROVISIONS. FURTHER, HE MADE SIMILAR DISALLOWANCE WHILE COMPUTING BOOK PROFIT UNDER SECTION 115JB OF THE ACT. THE ASSESSEE CHALLENGED THE AFORESAID DISALLOWANCE BEFORE THE FIRST APPELLATE AUTHORITY. 42 RAJAHMUNDRY EXPRESSWAY LTD. 28. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE IN THE CONTEXT OF THE FACTS AND MATERIAL ON RECORD, LEARNED COMMISSIONER (APPEALS) FOUND THAT THE ISSUE RELATING TO THE DISALLOWANCE UNDER SECTION 14A OF THE ACT, WAS ALREADY A SUBJECT MATTER IN THE ORIGINA L ASSESSMENT PROCEEDINGS. THEREFORE, HE HELD THAT IT CANNOT BE A SUBJECT MATTER OF DISPUTE IN THE ASSESSMENT PROCEEDINGS UNDER SECTION 153A OF THE ACT, AS NO INCRIMINATING MATERIAL WAS FOUND. ACCORDINGLY, APPLYING THE RATIO LAID DOWN BY THE HON'BLE JURISDI CTIONAL HIGH COURT IN CONTINENTAL WAREHOUSE CORPORATION (NHAVA SHEVA) LTD. (SUPRA) , HE HELD THAT SINCE THE ISSUE RELATING TO THE DISALLOWANCE OF ` 2,36,81,525, MADE UNDER SECTION 14A OF THE ACT ALREADY STANDS CONCLUDED IN THE ORIGINAL ASSESSMENT, IT CANNOT BE RE VISITED AGAIN. HOWEVER, APPLYING THE SAME PRINCIPLE, HE DELETED THE DISALLOWANCE MADE UNDER SECTION 14A OF THE ACT WHILE COMPUTING BOOK PROFIT UNDER SECTION 115JB OF THE ACT. 29. THE LEARNED SR. COUNSEL FOR THE ASSESSEE SUBMITTED, AS PER THE SUBSEQUENT DEVELOPMENT IN LEGAL POSITION, THE DISALLOWANCE UNDER SECTION 14A OF THE ACT SHOULD NOT EXCEED THE EXEMPT INCOME. THUS, HE SUBMITTED, THE DISALLOWANCE UNDER SECTION 14A OF THE ACT SHOULD BE RESTRICTED TO THE EXEMPT INCOME EARNED DURING THE YEAR. 30. THE LEAR NED DEPARTMENTAL REPRESENTATIVE SUPPORTED THE DECISION OF THE ASSESSING OFFICER. 43 RAJAHMUNDRY EXPRESSWAY LTD. 31. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. UNDISPUTEDLY, IN THE ORIGINAL RETURN OF INCOME FILED FOR THE ASSESSMENT YEAR UNDER DISPUTE, THE ASSES SEE HAD VOLUNTARILY MADE DISALLOWANCE OF ` 2,36,81,525. IT IS ALSO A FACT ON RECORD THAT BEFORE THE SEARCH AND SEIZURE OPERATION TOOK PLACE IN CASE OF THE ASSESSEE ASSESSMENT FOR THE IMPUGNED ASSESSMENT YEAR WAS COMPLETED UNDER SECTION 143(3) ACCEPTING THE DISALLOWANCE MADE UNDER SECTION 14A OF THE ACT. IN THE RETURN OF INCOME FILED IN PURSUANCE TO THE NOTICE ISSUED UNDER SECTION 154A OF THE ACT, THE ASSESSEE WITHDREW THE DISALLOWANCE MADE UNDER SECTION 14A OF THE ACT. IN OUR VIEW, SINCE THE ISSUE RELATING TO ASSESSEES CLAIM OF DEDUCTION UNDER SECTION 14A OF THE ACT, ALREADY STOOD CONCLUDED BY VIRTUE OF THE ORIGINAL ASSESSMENT ORDER, NO FURTHER DELIBERATION ON THE ISSUE CAN BE MADE IN THE IMPUGNED ASSESSMENT ORDER. THEREFORE, WE FULLY AGREE WITH THE DECISIO N OF LEARNED COMMISSIONER (APPEALS) ON THE ISSUE EVEN WITH REGARD TO DELETION OF DISALLOWANCE MADE WHILE COMPUTING BOOK PROFIT UNDER SECTION 115JB OF THE ACT. THIS GROUND IS DISMISSED. 32. IN THE RESULT, ASSESSEES APPEAL FOR IS PARTLY ALLOWED. ITA NO.6487/M UM./2017 REVENUES APPEAL A.Y. 2008 09 33. THE ONLY ISSUE RAISED BY THE REVENUE IS WITH REGARD TO THE DELETION OF DISALLOWANCE MADE UNDER SECTION 40A(2) OF THE ACT. 44 RAJAHMUNDRY EXPRESSWAY LTD. 34. AS DISCUSSED EARLIER, WHILE DEALING WITH GROUND NO.10, RAISED BY THE ASSESSEE IN ITS APPEAL BEING ITA NO.6518/MUM./2017, THE ASSESSING OFFICER BEING OF THE VIEW THAT THE ASSESSEE HAS PAID CONTRACT COST TO THE GIL AT A HIGHER RATE, INVOKED THE PROVISIONS OF SECTION 40A(2) OF THE ACT AND DISALLOWED A PART OF DEPRECIATION EXPENDITURE CORRESPONDING T O THE EXCESS COST CAPITALIZED BY THE ASSESSEE. 35. LEARNED COMMISSIONER (APPEALS) WHILE DEALING WITH THE ISSUE HAS DELETED THE DISALLOWANCE ON THE REASONING THAT THE COST OF CONTRACT AS ENTERED IN THE BOOKS OF ACCOUNT CANNOT BE SUBSTITUTED WITH AN ESTIMATED COST WITHOUT REJECTING THE BOOKS OF ACCOUNT. 36. HAVING CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT FACTS AND MATERIAL ON RECORD, WE DO NOT FIND ANY INFIRMITY IN THE AFORESAID DECISION OF LEARNED COMMISSIONER (APPEALS). BEFORE INVOKING THE PROVI SIONS OF SECTION 40A(2)(B) OF THE ACT, THE ASSESSING OFFICER HAS TO ESTABLISH THROUGH COGENT MATERIAL THAT THE PRICE PAID BY THE ASSESSEE IS NOT AT ARM'S LENGTH. IN THE FACTS OF THE PRESENT CASE, AS RIGHTLY OBSERVED BY THE LEARNED COMMISSIONER (APPEALS), T HE ASSESSING OFFICER HAS SUBSTITUTED THE PRICE OF CONTRACT WITH AN ESTIMATED COST. THEREFORE, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE DECISION OF THE LEARNED COMMISSIONER (APPEALS). EVEN, OTHERWISE ALSO, THE TAX EFFECT ON THE AMOUNT DISPUTED BY THE REVENUE IN THE PRESENT APPEAL IS BELOW THE MONETARY LIMIT OF ` 50 LAKH APPLICABLE TO 45 RAJAHMUNDRY EXPRESSWAY LTD. APPEALS BEFORE THE TRIBUNAL, AS PER CBDT CIRCULAR NO.17 OF 2019, DATED 8 TH AUGUST 2019. FURTHER, HE SUBMITTED, NONE OF THE EXCEPTIONS PROVIDED IN CBDT CIRCULAR NO.3 OF 20 18, DATED 11 TH JULY 2018 R/W CIRCULAR F. NO.279/MISC./142/2007 ITJ (PT) DATED 20 TH AUGUST 2018, WOULD APPLY TO REVENUES APPEAL. FOR THAT REASON ALSO, REVENUES APPEAL IS NOT MAINTAINABLE. 37. IN THE RESULT, APPEAL STANDS DISMISSED. ITA NO.6515/MUM./2017 ASSESSEES APPEAL A.Y. 2005 06 38. IN GROUNDS NO.1 TO 4, THE ASSESSEE HAS CHALLENGED THE VALIDITY OF ASSESSMENT ORDER PASSED UNDER SECTION 143(3) R/W SECTION 153A IN THE ABSENCE OF ANY INCRIMINATING MATERIAL FOUND AS A RESULT OF SEARCH. 39. THESE GROUNDS ARE IDENTICAL TO THE GROUNDS NO.1 TO 4, RAISED BY THE ASSESSEE IN ITS APPEAL BEING ITA NO.6518/MUM./2017, FOR THE A.Y. 2008 09. SINCE FACTS RELATING TO THE AFORESAID ISSUE ARE IDENTICAL, FOLLOWING OUR DECISION THEREIN, WE HOLD THAT THE ASSESS MENT ORDER PASSED IS INVALID. ACCORDINGLY, THESE GROUNDS ARE ALLOWED. 40. IN GROUND NO.5, THE ASSESSEE HAS CHALLENGED THE DISALLOWANCE OF DEPRECIATION CLAIMED ON ACQUIRING OF RIGHT TO RECEIVE ANNUITY BY TREATING IT AS AN INTANGIBLE ASSET. IN VIEW OF OUR DECIS ION IN GROUNDS NO.1 TO 4 OF THIS APPEAL, THERE IS NO NEED TO ADJUDICATE THIS GROUND. 46 RAJAHMUNDRY EXPRESSWAY LTD. HOWEVER, FOR THE SAKE OF COMPLETENESS, WE PROCEED TO DECIDE THE GROUND. 41. AS COULD BE SEEN, IDENTICAL WAS ISSUE RAISED BY THE ASSESSEE IN GROUND NO.10 OF ITS APPEAL BEING I TA NO.6518/MUM./2017. FOLLOWING OUR DECISION THEREIN, WE DELETE THE DISALLOWANCE MADE. ACCORDINGLY, THE GROUND RAISED BY THE ASSESSEE IS ALLOWED. 42. IN THE RESULT, APPEAL IS ALLOWED. ITA NO.6484/MUM./2017 REVENUES APPEAL A.Y. 2005 06 43. THE ISSUE IN DISPUT E RELATES TO DELETION OF DEPRECIATION BY INVOKING PROVISIONS OF SECTION 40A(2) OF THE ACT. 44. THIS ISSUE IS IDENTICAL TO THE ISSUE RAISED BY THE REVENUE IN ITS APPEAL BEING ITA NO.6487/MUM./2017. FOLLOWING OUR DECISION THEREIN, THE GROUND RAISED BY THE REVENUE IS DISMISSED. 45. IN THE RESULT, APPEAL IS DISMISSED. ITA NO.6516/MUM./2017 ASSESSEES APPEAL A.Y. 2006 07 46. GROUNDS NO.1 TO 9, ARE IDENTICAL TO GROUNDS NO.1 TO 9 RAISED BY THE ASSESSEE IN ITS APPEAL BEING ITA NO.6518/MUM./2017. FOLLOWING OUR DECISION THEREIN, THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. 47 RAJAHMUNDRY EXPRESSWAY LTD. 47. I N GROUND NO.10, THE ASSESSEE HAS CHALLENGED THE DISALLOWANCE OF DEPRECIATION CLAIMED ON RIGHT TO COLLECT ANNUITY. 48. THIS GROUND IS IDENTICAL TO GROUND NO.10, RAISED BY THE ASSESSEE IN ITS A PPEAL BEING ITA NO.6518/MUM./2017. IN VIEW OF OUR DECISION THEREIN, WE DELETE THE DISALLOWANCE MADE BY THE ASSESSING OFFICER AND CONFIRMED BY LEARNED COMMISSIONER (APPEALS). THE GROUND RAISED BY THE ASSESSEE IS ALLOWED. 49. IN GROUND NO.11, THE ASSESSEE HAS C HALLENGED THE DISALLOWANCE OF EXPENDITURE UNDER SECTION 14A OF THE ACT. 50. THIS GROUND IS IDENTICAL TO GROUND NO.11, RAISED BY THE ASSESSEE IN ITS APPEAL BEING ITA NO.6518/MUM./2017. FOLLOWING OUR DECISION THEREIN, THE GROUND RAISED BY THE ASSESSEE IS DISMIS SED. 51. IN THE RESULT, APPEAL IS PARTLY ALLOWED. ITA NO.6486/MUM./2017 REVENUES APPEAL A.Y. 2006 07 52. IN GROUNDS NO.1 AND 2, THE REVENUE HAS CHALLENGED THE DELETION OF DISALLOWANCE OF DEPRECATION BY INVOKING THE PROVISIONS OF SECTION 40A(2) OF THE ACT. 48 RAJAHMUNDRY EXPRESSWAY LTD. 53. THIS ISSUE IS IDENTICAL TO THE ISSUE RAISED BY THE REVENUE IN ITS APPEAL BEING ITA NO.6587/MUM./2017. FOLLOWING OUR DECISION THEREIN, THE GROUND RAISED BY THE REVENUE IS DISMISSED. 54. IN GROUNDS NO.3 AND 4, THE REVENUE HAS CHALLENGED THE DELETION OF DISALLOWANCE MADE UNDER SECTION 14A OF THE ACT WHILE COMPUTING THE BOOK PROFIT UNDER SECTION 115JB OF THE ACT. 55. WE HAVE DEALT WITH THIS ISSUE WHILE DECIDING GROUND NO.11, RAISED BY THE ASSESSEE IN ITS APPEAL BEING ITA NO.6518/MUM./2017, WHEREIN WE HAVE UPH ELD THE DECISION OF THE LEARNED COMMISSIONER (APPEALS). FACTS BEING IDENTICAL, FOLLOWING OUR DECISION THEREIN, WE DISMISS THE GROUND RAISED BY THE REVENUE. 56. IN THE RESULT, APPEAL IS DISMISSED. ITA NO.6517/MUM./2017 ASSESSEES APPEAL A.Y. 2007 08 57. GROUND S NO.1 TO 9, RAISED BY THE ASSESSEE ARE IDENTICAL TO GROUNDS NO.1 TO 9, RAISED BY THE ASSESSEE IN ITS APPEAL BEING ITA NO. 6518/MUM./2017. FOLLOWING OUR DECISION THEREIN, THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. 58. IN GROUND NO.10, THE ASSESSEE HAS CH ALLENGED THE DISALLOWANCE OF DEPRECIATION. 49 RAJAHMUNDRY EXPRESSWAY LTD. 59. THIS GROUND IS IDENTICAL TO GROUND NO.10, RAISED BY THE ASSESSEE IN ITS APPEAL BEING ITA NO.6518/MUM./2017. FOLLOWING OUR DECISION THEREIN, WE ALLOW ASSESSEES CLAIM OF DEPRECIATION. 60. IN GROUND NO.11, THE ASSESSEE HAS CHALLENGED THE DISALLOWANCE MADE UNDER SECTION 14A OF THE ACT. 61. THIS GROUND IS IDENTICAL TO GROUND NO.11, RAISED BY THE ASSESSEE IN ITS APPEAL BEING ITA NO.6518/MUM./2017. FOLLOWING OUR DECISION THEREIN, THE GROUND RAISED BY THE ASSESSEE IS DI SMISSED. 62. IN THE RESULT, APPEAL IS PARTLY ALLOWED. ITA NO.6485/MUM./2017 REVENUES APPEAL A.Y. 2007 08 63. THE ONLY ISSUE RAISED BY THE REVENUE IS AGAINST THE DELETION OF DISALLOWANCE OF DEPRECATION MADE BY INVOKING THE PROVISIONS OF SECTION 40A(2) OF THE ACT. 64. THIS GROUND IS IDENTICAL TO THE ISSUE RAISED BY THE REVENUE IN ITS APPEAL BEING ITA NO.6487/MUM./2017. FOLLOWING OUR DECISION THEREIN, THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 65. IN THE RESULT, APPEAL IS DISMISSED. 50 RAJAHMUNDRY EXPRESSWAY LTD. ITA NO.6519/MUM./2017 ASSESSEES APPEAL A.Y. 2009 10 ITA NO.6520/MUM./2017 ASSESSEES APPEAL A.Y. 2010 11 ITA NO.6521/MUM./2017 ASSESSEES APPEAL A.Y. 2011 12 66. IN GROUNDS NO.1 TO 9, WHICH ARE COMMON IN ALL THESE APPEALS, THE ASSESSEE HAS CHALLENGED THE VALIDITY OF ASSESSMENT FRAMED UNDER SECTION 153A OF THE ACT, AS WELL AS DISALLOWANCE OF DEDUCTION CLAIMED UNDER SECTION 80IA OF THE ACT. 67. AS REGARDS THE VALIDITY OF ASSESSMENT FRAMED UNDER SECTION 153A OF THE ACT, ADMITTEDLY, ON THE DATE OF SEARCH, THE ASSESSMENT PROC EEDINGS FOR ALL THESE ASSESSMENT YEARS WERE IN PROGRESS, HENCE, ABATED. THEREFORE, THE ASSESSING OFFICER IS NOT REQUIRED TO CONFINE HIMSELF ONLY TO INCRIMINATING MATERIALS FOR MAKING ANY ADDITION. AS PER THE RATIO LAID DOWN BY THE HON'BLE JURISDICTIONAL HI GH COURT IN CONTINENTAL WAREHOUSE CORPORATION (NHAVA SHEVA) LTD. (SUPRA) IN CASE OF ABATED ASSESSMENT PROCEEDING, THE ASSESSING OFFICER RETAINS THE POWER TO EXAMINE ALL THE ISSUES IRRESPECTIVE OF THEIR LINKAGE TO ANY INCRIMINATING MATERIAL FOUND DURING THE SEARCH. THEREFORE, WE ARE UNABLE TO ACCEPT THE GROUNDS RAISED BY THE ASSESSEE CHALLENGING THE VALIDITY OF THE ASSESSMENT ORDERS PASSED UNDER SECTION 153A OF THE ACT. HOWEVER, ON MERITS, WE ALLOW ASSESSEES CLAIM OF DEDUCTION UNDER SECTION 80IA OF THE ACT BY FOLLOWING OUR DECISION WHILE DECIDING SIMILAR 51 RAJAHMUNDRY EXPRESSWAY LTD. ISSUE RAISED BY THE ASSESSEE IN ITS APPEAL BEING ITA NO.6518/MUM./ 2017. ACCORDINGLY, GROUNDS NO.1 TO 5, ARE DISMISSED. WHEREAS, GROUNDS NO.6 TO 9, ARE ALLOWED. 68. IN GROUND NO.10, THE ASSESSEE HAS CLAIMED DEP RECIATION ON RIGHT TO COLLECT ANNUITY BY TREATING IT AS AN INTANGIBLE ASSET. 69. WHILE DECIDING GROUND NO.10, RAISED BY THE ASSESSEE IN ITS APPEAL BEING ITA NO.6518/MUM./2017, IN PRINCIPLE, WE HAVE ACCEPTED ASSESSEES CLAIM THAT THE ASSESSEE IS ENTITLED TO CLAIM DEPRECIATION ON THE RIGHT TO COLLECT ANNUITY BY TREATING IT AS INTANGIBLE ASSET. FOLLOWING THE SAME, WE ALLOW ASSESSEES CLAIM. THE GROUND RAISED BY THE ASSESSEE IS ALLOWED. 70. IN GROUND NO.11, RAISED BY THE ASSESSEE IN ITS APPEAL BEING ITA NO. 6519/MU M./2017 AND ITA NO.6520/MUM./2017, THE ASSESSEE HAS CHALLENGED THE DISALLOWANCE OF EXPENDITURE U/S 14A R/W RULE 8D. 71. IT IS THE CONTENTION OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT DISALLOWANCE UNDER SECTION 14A R/W RULE 8D, IF ANY, HAS TO BE RESTRICTED TO THE EXEMPT INCOME EARNED BY THE ASSESSEE. WE FIND SUBSTANTIAL STRENGTH IN THE SUBMISSIONS OF LEARNED COUNSEL FOR THE ASSESSEE. NOW, IT IS FAIRLY WELL SETTLED THAT THE DISALLOWANCE UNDER SECTION 14A R/W RULE 8D CANNOT EXCEED THE EXEMPT INCOME EARNED DURI NG THE YEAR. FURTHER, IF NO EXEMPT INCOME HAS BEEN EARNED IN A PARTICULAR ASSESSMENT YEAR, 52 RAJAHMUNDRY EXPRESSWAY LTD. NO DISALLOWANCE UNDER SECTION 14A OF THE ACT CAN BE MADE. THE ASSESSING OFFICER IS DIRECTED TO VERIFY THE RELEVANT FACTS AND IF IT IS FOUND THAT DURING THE RELEVANT ASSESSMENT YEAR, THE ASSESSEE HAS NOT EARNED ANY EXEMPT INCOME, NO DISALLOWANCE UNDER SECTION 14A OF THE ACT CAN BE MADE. OTHERWISE, THE DISALLOWANCE UNDER SECTION 14A R/W RULES 8D SHOULD BE RESTRICTED TO THE EXEMPT INCOME EARNED DURING THE YEAR. INSOFAR A S THE DISALLOWANCE OF EXPENDITURE IN RELATION TO THE EXEMPT INCOME EARNED FOR COMPUTING THE BOOK PROFIT UNDER SECTION 115JB OF THE ACT, THOUGH, THE ASSESSING OFFICER CAN MAKE SUCH DISALLOWANCE UNDER EXPLANATION 1(F) TO SECTION 115JB(2) OF THE ACT, HOWEVER, SUCH DISALLOWANCE HAS TO BE RESTRICTED TO THE ACTUAL EXPENDITURE INCURRED FOR EARNING THE EXEMPT INCOME. WITH THESE OBSERVATIONS, THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. 72. IN THE RESULT, APPEALS ARE PARTLY ALLOWED. ITA NO.6488/MUM./2017 REVENUES APPEAL A.Y. 2009 10 ITA NO.6489/MUM./2017 REVENUES APPEAL A.Y. 2010 11 ITA NO.6490/MUM./2017 REVENUES APPEAL A.Y. 2011 12 73. THE FIRST COMMON ISSUE RAISED IN GROUNDS NO.1 AND 2, IN ALL THESE APPEALS RELATES TO THE DELETION OF DISALLOWANCE OF DEPRECATION INVOKING THE PROVISIONS OF SECTION 40A(2) OF THE ACT. WHILE DECIDING IDENTICAL 53 RAJAHMUNDRY EXPRESSWAY LTD. ISSUE RAISED BY THE REVENUE IN ITS APPEAL BEING ITA NO.6487/MUM./ 2017, WE HAVE UPHELD THE DECISION OF LEARNED COMMISSIONER (APPEALS) IN DELETING SUCH DISALLOWANCE. FACTS BEING IDENTICAL, FOLLOWING OUR DECISION THEREIN, WE UPHOLD THE ORDER OF LEARNED COMMISSIONER (APPEALS) ON THE ISSUE. GROUNDS ARE DISM ISSED. 74. THE NEXT COMMON ISSUE WHICH ARISES IN ASSESSMENT YEARS 2009 10 AND 2010 11, RELATES TO THE DELETION OF DISALLOWANCE MADE UNDER SECTION 14A OF THE ACT WHILE COMPUTING BOOK PROFIT UNDER SECTION 115JB OF THE ACT. 75. IN VIEW OF OUR DECISION IN GROUND NO.11, RAISED BY THE ASSESSEE IN ITS APPEAL BEING ITA NO.6519/MUM./2017 AND ITA NO.6520/MUM./2017 WE UPHOLD THE DECISION OF LEARNED COMMISSIONER (APPEALS) ON THE ISSUE. GROUNDS RAISED ARE DISMISSED. 76. IN THE RESULT, APPEALS ARE DISMISSED. CROSS OBJECTION N O.67/MUM./2019 CROSS OBJECTION NO.64/MUM./2019 CROSS OBJECTION NO.65/MUM./2019 CROSS OBJECTION NO.66/MUM./2019 CROSS OBJECTION NO.68/MUM./2019 CROSS OBJECTION NO.69/MUM./2019 CROSS OBJECTION NO.70/MUM./2019 77. IN VIEW OF OUR DECISION IN THE CROSS APPEALS DEC IDED IN THE EARLIER PART OF THIS ORDER, ALL THESE CROSS OBJECTIONS HAVE BECOME INFRUCTUOUS, 54 RAJAHMUNDRY EXPRESSWAY LTD. HENCE, NO SEPARATE ADJUDICATION IS REQUIRED. ACCORDINGLY, THESE CROSS OBJECTIONS ARE DISMISSED. 78. TO SUM UP, ASSESSEES APPEALS ARE PARTLY ALLOWED; REVENUES APPEALS AND ASSESSEES CROSS OBJECTIONS ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 04.03.2020 SD/ - G. MANJUNATHA ACCOUNTANT MEMBER SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: 04.03.2020 COPY OF THE ORDER FORWARDED TO : (1) THE ASSESSEE; (2) THE REVENUE; (3) THE CIT(A); (4) THE CIT, MUMBAI CITY CONCERNED; (5) THE DR, ITAT, MUMBAI; (6) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY ASSISTANT REGISTRAR ITAT, MUMBAI