×Latest Case Laws on Income Tax by various Income Tax Appellate Tribunals in India
These are the latest case laws decided by various Income Tax Appellate Tribunals (ITAT) of India on Income Tax which have been published recently. The case laws are open for discussion and we invite expert comments from our members on its applicability and effect on relevant issues.
04-09-2019, CRG Infratech, Section 80IA(4), 144A, 234B, Tribunal Pune
These cross appeals preferred by the Revenue as well as assessee emanates from the order of the Ld. CIT(Appeals)-2, Kolhapur dated 06.12.2016 for the assessment year 2013-14 as per the grounds of appeal on record.
2. These cases were heard together. Since issues common, facts are similar, these cases are being disposed of vide this consolidated order. First we would take up Revenue‟s appeal in ITA No.469/PUN/2017 for adjudication.
ITA No.469/PUN/2017 (By Revenue)
3. The brief facts of this case are that the assessee is a domestic company engaged in the business of development of infrastructure work such as water supply, water treatment system, irrigation projects etc. The Assessing Officer of Maharashtra & Karnataka. In this case, the JCIT, Range-2, Kolhapur issued directions to the Assessing Officer u/s.144A of the Income Tax Act, 1961 (hereinafter referred to as „the Act‟) directing him to examine the allowability of claim u/s.80IA of the Act to the assessee as he was a contractor and therefore, prima facie he was not eligible for any deduction under that section. The Assessing Officer then incompliance with the directions u/s.144A of the Act took up the assessment proceedings and called for various details. The Assessing Officer noted that the assessee has executed various contracts taken from Zilla Panchayat and Gram Panchayat, Engineering Department in Karnataka State at Beniwad, Belgavi, Bagalkot and Kogonoli etc. Most of the contracts are fixed price contracts. The Assessing Officer discussed and analyzed the explanations to Section 80IA(4) introduced in 2007 and 2009 w.r.f. 01.04.2000 and held that the assessee is a works contractor and therefore not eligible to claim deduction u/s.80IA of the Act. The Assessing Officer was of the view that the deduction u/s.80IA is allowable only to developers of infrastructural projects and not to contractors who only undertake business risk by way of executing fixed price contracts.
3.1 On the other hand, the case of the assessee was that he is a developer of infrastructural projects as all of them have been awarded to him by the Central or State Govts. The assessee made detailed written submissions before the Assessing Officer which have been reproduced in Para 8 pages 5 to 12 of the assessment order. However, this contention of the assessee did not find favour with the Assessing Officer who disallowed the claim of deduction u/s. 80IA(4) of the Act.
4. Aggrieved by the assessment order, the assessee preferred appeal before the Ld. CIT(Appeals). That before the Ld. CIT(Appeals), the assessee filed detailed written submission which are there on record. In those written submissions, the assessee highlighted the facts that they are developing, operating and maintaining infrastructure facility and is having ownership of the enterprise by a company registered in India. There is agreement with Central or State Govt., local Authority or statutory body and that the start of operation and maintenance of the infrastructure facility on or after 1st April, 1995. These contentions were even analyzed by the Hon‟ble Bombay High Court in the case of CIT Vs.ABG Heavy Industries Ltd & Ors, (2010) 37 DTR (Bom.) 233. This was also followed by the Pune Bench of the Tribunal in the case of M/s. Laxmi Civil Engg. Services (P) Ltd. Vs. Addl. CIT, Range-2 in ITA No. 766/PN/2009, ITA No.254/PUN/2008, ITA No.431/PUN/2007 and ITA No.435/PUN/2007 for the assessment years 2006-07, 2005-06, 2003-04 and 2004-05 dated 08.06.2011. In this decision, the Tribunal has held as follows:
“5. We heard both the parties and perused the orders of the revenue. The contentious issues before us are (i) whether the contractor is synonymous with the developer within the meaning of section 80IA (4)(i) of the Act; (ii) whether the condition placed in clause (c) is applicable to the case of a developer, who is not carrying on business of operating and maintaining the infrastructural facilities. In our opinion, the answer to these questions are provided by the judgment of the Bombay High Court in the case of ABG Heavy Engg. Ltd (supra). In this regard, we perused the above cited para-22 of the said judgment and for the sake of completeness; the said paragraph is reproduced as under:
“22. under Clause (iii) of sub-section (4A) of Section 80-IA, one of the conditions imposed was that the enterprise must start operating and maintaining the infrastructure facility on or after 1st April, 1995. The same requirement is embodied in sub-clause (1) of sub-clause (4) of the amended provisions. It was urged that since the assessee was not operating and maintaining the facility, he did not fulfill the condition. The submission is fallacious both in fact and in law.
That the assessee was maintaining the facility is not in dispute. The facility was commenced after 1st April 1995. Therefore, the requirement was met in fact. Moreover as a matter of law, what the condition essentially means is that the infrastructure facility should have been operational after 1st APril,1995. After Section 80-IA was amended by the Finance Act;, 2001, the section applies to an enterprise carrying on the business of (1) developing; or (ii) operating and maintaining ; or (iii) developing, operating and maintaining any infrastructure facility which fulfills certain conditions. Those conditions are (1) ownership of the enterprises by a company registered in India or by a consortiums; (ii) an agreement with the central or State Government: local authority or statutory body; and (iii) The start of operation and maintenance of the infrastructure facility should commence after 1st April 1995.
The requirement that operation and maintenance of the infrastructure facility should commence after 1st April,1995 has to be harmoniously construed with the main provision under which deduction is available to an assessee who develops or operates and maintains, or develops, operates and maintains an infrastructure facility.
A harmonious reading of the provisions in its entirety would lead to the conclusion that the deduction is available to an enterprise