Income Tax Appellate Tribunal - Rajkot
M/S. Ketan Construction Ltd.,, ... vs The Dy. Commr. Of Income Tax, Cen. ... on 3 June, 2020
IN THE INCOME TAX APPELLATE TRIBUNAL
RAJKOT BENCH, RAJKOT
Before: Shri Waseem Ahmad, Judicial Member
and Ms. Madhumita Roy, Accountant Member
ITA No. 219 & 199/Rjt/2015
Assessment Year 2005-06
M/s. Ketan Construction The Deputy CIT/ACIT,
Ltd., KCL Amin Marg Central Circle-2, Rajkot
Corner, Near 150 Ft. Vs (Respondent/Appellant)
Ring Road, Rajkot
PAN: AABCK5548H
(Appellant/Respondent)
ITA No. 220 & 200/Rjt/2015
Assessment Year 2006-07
M/s. Ketan Construction The DCIT/ACIT,
Ltd., KCL Amin Marg Central Circle-2,
Corner, Near 150 Ft. Vs Rajkot
Ring Road, Rajkot (Respondent/Appella
PAN: AABCK5548H nt)
(Appellant/Respondent)
ITA No. 221 & 201/Rjt/2015
Assessment Year 2008-09
I.T.A Nos. 219, 199, 220 & 200/Rjt/2015 A.Y. 2005-06 & 2006-07 Page No 2
M/s. Ketan Construction Ltd. vs. DCIT/ACIT
M/s. Ketan Construction The Deputy
Ltd., KCL Amin Marg CIT/ACIT, Central
Corner, Near 150 Ft. Vs Circle-2, Rajkot
Ring Road, Rajkot (Respondent/Appella
PAN: AABCK5548H nt)
(Appellant/Respondent)
ITA No. 222 & 202/Rjt/2015
Assessment Year 2009-10
M/s. Ketan Construction The ACIT,
Ltd., KCL Amin Marg Central Circle-2,
Corner, Near 150 Ft. Vs Rajkot
Ring Road, Rajkot (Respondent/Appella
PAN: AABCK5548H nt)
(Appellant/Respondent)
Revenue by: Shri M.N. Maurya, CIT-D.R.
Assessee by: Shri D.M. Rindani, A.R.
Date of hearing : 27-02-2020
Date of pronouncement : 03-06-2020
आदे श/ORDER
PER BENCH:-
These eight appeals filed four by assessee and four by revenue for A.Y. 2005-06, 2006-07, 2007-08 & 2008-09 arise from order of the CIT(A)- 11, Ahmedabad, in proceedings under section 153A r.w.s.143(3) of the Income Tax Act, 1961; in short "the Act".
2. Since, common issues are arising in all the appeals and facts being identical, we dispose of all these appeal by this consolidated order for the sake of convenience and brevity.
I.T.A Nos. 219, 199, 220 & 200/Rjt/2015 A.Y. 2005-06 & 2006-07 Page No 3 M/s. Ketan Construction Ltd. vs. DCIT/ACIT
3. In ITA No. 219/RJT/2015 for A.Y. 2005-06, the Grounds of appeal raised by the assessee are as follows:
"1. The learned Commissioner of Income Tax (Appeals) - 11, Ahmedabad erred in upholding the validity of order passed u/s 153A r.w.s. 143(3) of the particularly in respect of deductions claimed originally and allowed in original order u/s 143(3) of the Act and not related to any incriminating material found during action u/s 132 of the Act.
2. The learned Commissioner of Income Tax (Appeals) - 11, Ahmedabad erred in confirming the action of the assessing officer in disallowing the claim of deduction u/s 80IA(4) in respect of following infrastructure projects undertaken by the appellant:
Sr. No. of site referred by CIT Name of the site (Appeals) 1 Naroda Sampa 3 Bhuj Sublate 4 Vanthali 5 Mehsana 8 Bhuj Khavda 11 Akalpada
3. The learned Commissioner of Income Tax (Appeals) - 11, Ahmedabad erred in holding that appellant was not a developer of infrastructure facility in respect of projects specified by him and listed in ground No. 2 above.
4. The learned Commissioner of Income Tax (Appeals) - 11, Ahmedabad erred in confirming the action of A.O. in disallowing Rs. 28,000/- u/s 40A(2)(b) and Rs.88,432/-
u/s 40A(3) of the act."
4. In ITA No. 199/RJT/2015 for A.Y. 2005-06 the Grounds of appeal raised by the Revenue are as follows:
"1) The Ld.CIT(A) has erred in law and on facts in allowing the deduction U/s 80IA(4) in respect of various projects by treating the assessee as developer instead of work contracts' as treated by the A.O.
2) The Ld.CIT(A) has erred in law and on facts in deleting the disallowance is made U/s 36(1)(va) r.w.s. 2(24)(x) of IT. Act.
3) On the facts and in the circumstances of the case and in law, the CIT(A) ought to have upheld the order of the A.O.."
5. In ITA No. 220/RJT/2015 for A.Y. 2006-07 the Grounds of appeal raised by the assessee are as follows:
I.T.A Nos. 219, 199, 220 & 200/Rjt/2015 A.Y. 2005-06 & 2006-07 Page No 4 M/s. Ketan Construction Ltd. vs. DCIT/ACIT "1. The learned Commissioner of Income Tax (Appeals) - 11, Ahmedabad erred in upholding the validity of order passed u/s 153A r.w.s. 143(3} of the particularly in respect of deductions claimed originally and allowed in one; order u/s 143(3) of the Act and not related to any incriminating material fou during action u/s 132 of the Act.
2. The learned Commissioner of Income Tax (Appeals) - 11, Ahmedabad erred in confirming the action of the assessing officer in disallowing the claim of deduction u/s 80IA(4) in respect of following infrastructure projects undertaken by the appellant:
Sr. No. of site referred by Name of the site CIT (Appeals) 1 NarodaSampa 3 Bhuj Sublate 4 Mehsana 7 Bhuj Khavda 10 AVM Total
3. The learned Commissioner of Income Tax (Appeals) - 11, Ahmedabad erred in holding that appellant was not a developer of infrastructure facility in respect of projects specified by him and listed in ground No. 2 above."
6. In ITA No. 200/RJT/2015 for A.Y. 2006-07 the Grounds of appeal raised by the Revenue are as follows:-
"1) The Ld.CIT(A) has erred in law and on facts in allowing the deduction U/s 80IA(4) in respect of various projects by treating the assessee as developer instead of work contracts' as treated by the A.O.
2) On the facts and in the circumstances of the case and in law, the CIT(A) ought to have upheld the order of the A.O..
3) It is, therefore, prayed that the order of the CIT (A) be set aside and that of the A.O. be restored to the above extent."
7. The preliminary issue to be decided in all these appeals is as to whether in respect of unabated assessments (no pending proceedings) as on the date of search, the AO could frame the search assessment u/s 153A of the Act by making additions without any incriminating materials found during the course of search.
I.T.A Nos. 219, 199, 220 & 200/Rjt/2015 A.Y. 2005-06 & 2006-07 Page No 5 M/s. Ketan Construction Ltd. vs. DCIT/ACIT
8. The brief facts appearing in these cases are that there was a search and seizure operation conducted u/s 132(1) of the Act at the premises of the assessee dated 24-06-2010. The assessee is a contractor and mainly dealing in Government Contracts. The assessee had originally filed its returns of income for the Assessment Years 2005-06 and 2006-07 on 31.10.2005 & 25.12.2006 respectively which were assessed u/s 143(3) of the Act vide order dated 03-01- 2007, and 26-12-2008 respectively. Thus, as on the date of search i.e. 24.06.2010, both the assessment years became unabated.
9. The ld. AR before us has challenged the assessment proceedings framed under section 153A of the Act in ground no. 1 on the reasoning that the additions made by the AO in the assessment years 2005-06, & 2006-07 represents the items of the regular assessments being deduction under section 80-IA(4) of the Act and disallowance under section 40A(2)(b), 40A(3), 36(1)(va) of the Act including ad-hoc disallowance which were disclosed in the original income tax returns. As such the deduction under section 80-IA(4) of the Act was subject to the regular assessment framed under section 143(3) of the Act.
10. As per the ld. AR there was no incriminating material found during the search in respect of the unabated proceedings. Therefore no additions can be made. The assessments were framed u/s 153A/143(3) of the Act after making the addition of regular items as discussed above which were disclosed in the income tax return.
11. The Ld. AR accordingly argued in respect of assessment years 2005-06 and 2006-07 being unabated assessments, the Ld. AO has made the addition, for which absolutely no incriminating materials were found during the course of the search. Hence he prayed to delete disallowance made for assessment years 2005-06 and 2006-07 in the assessment framed under section 143(3)/153A of I.T.A Nos. 219, 199, 220 & 200/Rjt/2015 A.Y. 2005-06 & 2006-07 Page No 6 M/s. Ketan Construction Ltd. vs. DCIT/ACIT the Act. He placed reliance on the decisions of the Hon'ble Gujarat High Court in the case of PCIT vs. SaumyaConstrcution reported in 387 ITR 529.
12. The Ld. DR, on the other hand, vehemently supported on the validity of the assessment completed u/s 153A/143(3) of the Act, by placing reliance on the orders of the subordinate authorities.
13. We have perused the case record, analyzed the facts and circumstances of the case and heard the rival contentions. We find that it would be necessary to address the preliminary issue, whether assessment could be framed u/s 153A of the Act, in respect of concluded proceeding without the existence of any incriminating materials found during the course of the search. The scheme of the Act provides for abatement of pending proceedings as on date of search. It is not in dispute that the assessment for the assessment year 2005-06 and 2006-07 falls under the ambit of unabated assessment as on the date of search. There is no differentiation as found in the intent of the legislature to discriminate whether the assessments were originally framed u/s 143(1) or 143(3) or 147 of the Act. Therefore, if any incriminating material was not found during the course of search related to those concluded years, the Act does not confer any power to the Ld. AO to disturb the finding given thereon and income determined thereon as finality has been already reached and no proceeding was pending as on the date of search.
14. We find that the judgment of the Hon'ble Bombay High Court in the case of CIT vs. Continental warehousing corporation (Nhava Shiva) Ltd. and All Cargo Global Logistics ltd. reported in 374 ITR 645 has decided the impugned issue in favor of the assessee. The relevant extract is reproduced below:
I.T.A Nos. 219, 199, 220 & 200/Rjt/2015 A.Y. 2005-06 & 2006-07 Page No 7 M/s. Ketan Construction Ltd. vs. DCIT/ACIT "Once it is held that the assessment has attained finality, then the Assessing Officer while passing the independent assessment order under section 153A read with section 143 (3) could not have disturbed the assessment/reassessment order which has attained finality, unless the materials gathered in the course of the proceedings under section 153A establish that the reliefs granted under the finalised assessment/reassessment were contrary to the facts unearthed during the course of 153A proceedings. If there is nothing on record to suggest that any material was unearthed during the search or during the 153A proceedings, the Assessing Officer while passing order under section 153A read with section 143(3) cannot disturb the assessment order"
15. We draw support and guidance from the judgment of Hon'ble Bombay High Court in the case of CIT vs. Gurinder Singh Bawa reported in 79 taxmann.com 398 wherein it was held as under:
"7. In view of the above, on issue of jurisdiction itself the issue stands concluded against the revenue by the decision of this Court in Continental Warehousing Corpn. (NhavaSheva) Ltd. (supra). In the appeal before us, the revenue has made no grievance with regard to the impugned order of the Tribunal holding that in law the proceedings under Section 153A of the Act are without jurisdiction. This in view of the fact that no assessment were pending, so as to abate nor any incriminating evidence was found. The grievance of the revenue is only with regard to finding in the impugned order on the merits of the individual claim regarding gifts and deemed dividend. However once it is not disputed by the revenue that the decision of this Court in Continental Warehousing Corporation (NhavaSheva) Ltd. (supra) would apply to the present facts and also that there are no assessments pending on the time of the initiation of proceedings under Section 153A of the Act. The occasion to consider the issues raised on merits in the proposed questions becomes academic."
16. We also draw support & guidance from the case of Saumya Construction(supra) where the Hon'ble Gujarat High Court has held as under:
"the Assessing Officer is obliged to issue notice to such person to furnish returns of income for the six years preceding the assessment year relevant to the previous year in which the search is conducted or requisition is made, any addition or disallowance can be made only on the basis of material collected during the search or requisition. In case no incriminating material is found, the earlier assessment would have to be reiterated.
17. Once the proceeding u/s 153A of the Act is initiated which are special proceedings, the legislature provides different treatments for abated and unabated assessments. However, in respect of unabated assessments the legislature has not conferred powers on the Ld. AO to disturb the assessments already concluded unless incriminating materials are found in the course of search.
I.T.A Nos. 219, 199, 220 & 200/Rjt/2015 A.Y. 2005-06 & 2006-07 Page No 8 M/s. Ketan Construction Ltd. vs. DCIT/ACIT
18. In view of the reasons stated above and considering various judicial pronouncements, we hold that the disallowances made for the Assessment years i.e. 2005-05 and 2006-07 which were unabated/concluded assessments as on date of search cannot be made in the absence of any incriminating material found during the the course of search and accordingly all those additions are directed to be deleted. Since the legal issues are addressed, we refrain to give our findings on merits of additions under the provisions of the Act. Accordingly, the grounds raised by the assessee for Assessment Years 2005-06 and 2006-07 are allowed and the appeal of the Revenue for Assessment Years 2005-06 and 2006-07 are dismissed.
19. In the result, both the appeals of the assessee are partly allowed and the appeals of the Revenue are dismissed.
20. Coming to ITA No. 221/RJT/2015 for the AY 2008-09, the assessee has raised the following grounds of the appeal "1. The learned Commissioner of Income Tax (Appeals) - 11, Ahmedabad Ahmedabad erred in upholding the validity of order passed u/s 153A r.w.s. 143(3) of the Act.
2. The learned Commissioner of Income Tax (Appeals) - 11, Ahmedabad erred in confirming the action of the assessing officer in disallowing the claim of deduction u/s 80IA(4) in respect of following infrastructure project undertaken by the appellant:
Sr. No. of site Name of the site
referred by CIT
(Appeals)
4 Bhuj Sublate & Bhuj Khavda
3. The learned Commissioner of Income Tax (Appeals) - 11, Ahmedabad erred in holding that appellant was not a developer of infrastructure facility in respect of project specified by him and listed in ground No. 2 above."
21. The assessee in the 1st ground of appeal has challenged the validity of the assessment framed under section 153A r.w.s. 143(3) of the Act. I.T.A Nos. 219, 199, 220 & 200/Rjt/2015 A.Y. 2005-06 & 2006-07 Page No 9 M/s. Ketan Construction Ltd. vs. DCIT/ACIT
22. At the outset it was noticed that the year under consideration was the abated assessment year and therefore the AO is empowered to disturb the items of regular income, expenditures and deductions without finding out any incriminating materials during the search for the reasons which has been discussed in detail somewhere in the preceding paragraph. The learned AR has also not brought anything on record contrary to the finding of the learned CIT (A). Accordingly we dismiss the ground of appeal raised by the assessee.
23. The 2nd issue raised by the assessee is that the learned CIT (A) erred in disallowing the deduction claimed under section 80-IA (4) of the Act, with respect to the eligible infrastructure project.
24. During the year under consideration assessee has claimed deduction u/s 80-IA of the Act, for Rs. 10,48,13,775/- with respect to the eligible projects carried out by it. As per the assessee it has fulfilled all the conditions for claiming the deduction under section 80-IA (4) of the Act. The assessee in support of its contention submitted as under:
i. It is acting as developer of the infrastructure facilities as evident from the audited financial statements.
ii. It has deployed its own funds as well as borrowed fund in the execution of such projects.
iii. It has given guarantee for the maintenance of the infrastructure facilities.
iv. It has in its possession the requisite technical knowledge, human resources which was utilised for the development of the infrastructure facilities.
v. It has prepared the designs for the infrastructure projects which were duly approved by the Government.
I.T.A Nos. 219, 199, 220 & 200/Rjt/2015 A.Y. 2005-06 & 2006-07 Page No 10 M/s. Ketan Construction Ltd. vs. DCIT/ACIT vi. It has purchased materials at its own which was utilised in the execution of the infrastructure facilities.
vii. It has not sublet any work to the third party.
25. The assessee in addition to the above also claimed that the ITAT in its own case of the assessee for the assessment year 2007-08 has held it as developer bearing ITA No. 1108/RJT/2010 vide order dated 27-09-2010. As such the projects in respect of which the ITAT has given a finding that the assessee is acting as the developer, same projects were continued for the year under consideration. Therefore deduction in respect of the same project should also be allowed in the year under consideration.
26. However, the AO disagreed with the contention of the assessee by observing that the order passed by the ITAT in the own case of the assessee bearing ITA No. 1108/RJT/2010 vide order dated 27-09-2010 has been challenged before the Hon'ble Gujarat High Court which is pending for adjudication. Thus the issue whether the assessee is acting as developer or as work contractor has not been reached to its finality.
27. The AO also noted that the principles of rest judicata does not apply to the income tax proceedings. Therefore the decision of the earlier year period cannot be applied for the year under consideration.
28. The AO after verifying the contracts awarded to the assessee reached to the conclusion that the assessee is not acting as developer. Therefore he was of the view that the assessee cannot be allowed the deduction provided under section 80-IA (4) of the. Accordingly he disallowed the deduction claimed by the assessee for Rs. 10,48,13,775/- and added to the total income of the assessee. I.T.A Nos. 219, 199, 220 & 200/Rjt/2015 A.Y. 2005-06 & 2006-07 Page No 11 M/s. Ketan Construction Ltd. vs. DCIT/ACIT
29. Aggrieved assessee preferred an appeal to the learned CIT (A) who has partly allowed the appeal of the assessee by observing as under:
"Findings in appeal
9. After perusal of the ratio laid down by the different courts and Tribunals and the relevant provisions of the Act, it emerged that an enterprise has to enter into an agreement with the Central or State Government or a Local Authority or any Statutory Authority for development of an infrastructure facility. The infrastructure facility should undisputedly I belong to the Government, therefore, the infrastructure facility is owned by the Government. But the enterprise which is developing or constructing the infrastructure facility is to be owned by a Company registered in India. The Act also says that an enterprise which is constructing or developing the infrastructure facility can be a consortium of such companies. Such an arrangement is eligible for the claim of deduction.
9.1 Several Tribunals and Courts have elaborately discussed in their decisions the provisions of section 80IA (4) and laid down broad criteria for eligibility to a developer to claim deduction u/s 80IA (4) of the Act.
9.2 The terms and conditions of the agreements of works have been individually examined in the light of broad criteria laid down by several Tribunals and Courts for eligibility of a developer to claim deduction u/s 80IA (4) of the Act. The total turnover of the assessee, during the year under consideration, was earned, as listed and reproduced in the later part of the order, both from development of infrastructure facilities in the form of development of roads, construction or widening of dams, canals, water supply projects .industrial park, Solid Waste Management Treatment Plant etc. and from repairing and re-habilitation of the roads. On the basis of this examination, it was found that though the appellant executed civil work but in some cases there was no development of any infrastructure facility i.e. developed area from an undeveloped area. Therefore, it was wrong, in my opinion, on the part of the AO to hold that the assessee had merely acted as a contractor. By analyzing the nature ofjmckpf each contract executed by the assessee, it can be gathered that the assessee had acted as a developer for some of the projects and for some other projects which did not result into an infrastructure facility, he acted merely as a contractor.
9.3 The assessee has undertaken the responsibility of execution of the work, developed its own design and on getting approval applied the technology for completion of infrastructure facility. Terms and conditions of the agreements executed with Government Departments have also established that the risk in execution of work was also undertaken by the assessee. Rather, the assessee was held responsible for any damage or loss to the property and manpower. It is also worth mentioning that the AO. had wrongly interpreted the word "owned" in section 80IA(4)(i) (a) of the IT Act by relying on the decision of B.T. Patil & Sons Belgaum (Supra). As discussed hereinabove, it is concluded that the assessee developed the eligible infrastructure facilities by himself or as a consortium of companies duly registered in India.
9.4 The Act does not prescribe that the infrastructure facility is to be owned by such an enterprise. The infrastructure facility is always the property of the Government and an enterprise is bound by the agreement to transfer the same after the settled period. The assessee's execution of most of the works fall within first category i.e.developing of infrastructure facilities.. It was incorrect on the part of the AO to hold that the assessee being fallen within the first category was not entitled for the deduction. The decisions in the cases of ABG Heavy Industries Ltd. (supra), Koya & Co. Construction (P.) Ltd. (supra), Radhe Developers (supra), Bharat Udyog Ltd. (supra), Rohan and Rajdeep Infrastructure 61 SOT 9 (Pune) (2014), Sushee Infra (P)Ltd 36Taxmann.com 397 (Hydr), KMC Construction Ltd 36 Taxmann.com 415(Hyder), 59 SOT 64 (Amrit) (2013). are clearly applicable to the facts of the case of the appellant.
I.T.A Nos. 219, 199, 220 & 200/Rjt/2015 A.Y. 2005-06 & 2006-07 Page No 12 M/s. Ketan Construction Ltd. vs. DCIT/ACIT 9.5 The assessee has executed the construction of infrastructure facility in respect of the Government Projects, as is evident from the terms and conditions of the nature of work mentioned in the agreements placed on record. Therefore, in my considered opinion, the assessee is eligible for deduction u/s.80IA (4) to the extent of the profits earned from the eligible projects as discussed in the subsequent part of this order. 9.6 The appellant furnished list of the contracts, for claim of deduction u/s 80IA (4), which were executed during the period under consideration as below:-
Sr.No. Name of site
1. Opa - Goa
2. Tillari - Goa
3. Akalpada
4. Bhuj Sublate & Bhuj Khavda
5. Khadkpurna
6. Kutchh Canal
7. Vidisha
8. Bhakharwad
9. Sujlam Suflam
10. Machhu
11. Sarangkheda
10. The contract at Sr.No.1 was an agreement between the appellant and Water Resources Deptt., Govt. of Goa. for construction of Barrage at Opa in Village Panchayat Khandepar in Ponda Taluka (Civil Work). It was a project on Turnkey basis to be completed within a period from 22-05-2008 to 14-08-2009 with the cost of Rs. 20,51,58,7157-. The terms and conditions of the tender were examined and it was observed that the assessee developed infrastructure facility for public purpose. The infrastructure developed was handed over to Water Resources Deptt, Govt. of Goa.
The terms and conditions of the tender were examined and it was observed that the assessee developed infrastructure facility. The terms and conditions of the contract were similar to those as mentioned in the contracts entered between a developer and the government or its agencies for developing any infrastructure facility for public utility. After having regard to the terms and conditions of the agreement for development of the infrastructure facility, the rulings of the courts and position of law on the issue, in my opinion, the assessee acted as a developer because he developed infrastructure facility and handed over the same to the authority concerned with guarantee period for maintenance thereof. Therefore, the assessee was eligible for claim of deduction u/s.80IA (4) (i) of the Act. Accordingly, the same is allowed.
The contract at Sr.No.2 was an agreement between the appellant and Water Resources Deptt, Govt. of Goa for construction of RCC Conduit from Ch. 28.970 km. to 37,425 km. of Left Bank Main Canal of Tillari Irrigation Project in Bardez Taluka - Goa State.lt was a work for construction of RCC Conduit on turnkey basis within stipulated period of 450 days along with defects liability period of 3 years. The cost of Project was of Rs.51,43,72,473/-.
The terms and conditions of the tender were examined and it was observed that the assessee developed infrastructure facility for public purpose. The infrastructure developed was handed over to Goa Tillari Irrigation Development Corporation of Govt. of India. The terms and conditions of the contract were similar to those as mentioned in the contracts entered between a developer and the government or its agencies for developing any infrastructure facility for public utility. After having regard to the terms and conditions of the agreement for development of the infrastructure facility, the rulings of the courts and position of law on the issue, in my opinion, the assessee acted as a developer because he developed infrastructure facility and handed over the same to the authority concerned with guarantee period for maintenance thereof. Therefore, the I.T.A Nos. 219, 199, 220 & 200/Rjt/2015 A.Y. 2005-06 & 2006-07 Page No 13 M/s. Ketan Construction Ltd. vs. DCIT/ACIT assessee was eligible for claim of deduction u/s.80IA (4) (i) of the Act. Accordingly, the same is allowed.
The contract at Sr.No.3 was an agreement between the appellant and Tap! Irrigation Development Corporation, Jalgaon of Govt. of Maharashtra, it was a Lower Panzara (Akkalpada) Medium Project for manufacturing & Errection of Radial Gates of size 12mx8m radial gates 17 nos. in over flow section of spillway and construction spillway bridge for tunnel outlet for left bank canal and constructing diversion to Surat Chule Road N.H. 6 from 557/030 to 560/984 to the existing N.H. 6 coming under submergence due to Akkalpada Dam near village Akkalpada in Dhule Dist. Thereafter, the assessee had to undertake maintenance of the said infrastructure for a period of 3 years. If any damage occurred during this period, it was the responsibility of the appellant and the entire infrastructure had to be maintained by him alone.
The terms and conditions of the tender were examined and it was observed they were similar to those as mentioned in the contracts entered between a developer and the government or its agencies for developing any infrastructure facility for public utility. After having regard to the terms and conditions of the agreement for development of the infrastructure facility, the rulings of the courts and position of law on the issue, in my opinion, the assessee acted as a developer because he developed infrastructure facility and handed over the same to the authority concerned with guarantee period for maintenance thereof. Therefore, the assessee was eligible for claim of deduction u/s.80IA (4) (i) of the Act. Accordingly, the same is allowed.
The contract at Sr.No.4 was an agreement between the appellant and other person was allotted the contract by the principal. The terms and conditions of the contract were perused and it was noticed that the work was originally not allotted to the appellant but he got the contract on subletting basis. The relevant provisions of section 80IA(4) of the IT. Act are very clear on this issue that benefit of deduction is allowable only for executing originally allotted contract for developing an infrastructure facility for public use. In view of the above facts and circumstances, the claim of the assessee is rejected.
The terms and conditions of the contract were examined and it was revealed that the assessee executed the work of other contractor on subletting basis which was not in accordance with the provisions of section 80IA(4) the Act. Therefore, the assessee was not eligible for claim of deduction u/s.80IA (4) of the IT. Act. Accordingly, the action of the A.O. is confirmed.
The contract at Sr.No.5 was an agreement between the appellant and Vidarbh Irrigation Development Corporation, Nagpur for construction of Central Spillway Masonry Dam, Head Regulators and Balance Earth Work of khadakpurna Project.Tahsil-Deulgaon Raja Dist. Buldana, Maharashtra. The contract value was of Rs61 .007- crore.
Terms and conditions of the agreement were analyzed. The contract was made for the project included planning, designing and developing all the necessary and required work as prescribed in the tender for contract. The appellant was to complete the project within 60 months and maintenance for 3 years after satisfactory erection and testing on turnkey basis.
The terms and conditions of the contract were examined and it was noticed that .the appellant was required to execute the contract work wherein he was to plan and design with drawings and after approval by the competent authority for fabrication and execution of spillway radial gate, stop log gate, etc: of Khadagpurna Project in Buldhana, Maharashtra. The appellant was required to obtain approval and clearance of all applicable national laws, safety codes and local regulations from the concerned statutory authorities. The project was to be developed by the appellant as per specifications of the employer and to hand- over the same after its completion.
The appellant undertook an obligation to design the project which was approved by tne competent authority of the Vidarbh Irrigation Development Corporation, Nagpur I.T.A Nos. 219, 199, 220 & 200/Rjt/2015 A.Y. 2005-06 & 2006-07 Page No 14 M/s. Ketan Construction Ltd. vs. DCIT/ACIT and was assigned with the duty to develop the facility, the appellant was fully responsible to execute and complete the work. He was given possession of the land and property during the period of development agreement and he used to exercise complete domain over the land and the project, he had to arrange finances, suitable man- power, machinery and equipments and managerial force. The risk in execution of work was also undertaken by the assessee as he was responsible for any damage or loss to the property. The assessee had to develop the infrastructure facility and in the process all the works were to be executed by him. It may be laying of drainage system, provision of way for traffic etc. without any hindrance. Before commencement of the construction works, the contractor was to show details of the arrangements he proposed to make for safe and convenient passage of traffic during construction, design of barricades, the delineators, signs, markings, lights, flagmen etc. proposed to be used by him, and get the same approved by the Engineer. The assessee's duty was to develop infrastructure whether it involved construction of a particular item as agreed to in the agreement or not. The agreement was not for a specific wok, it was for development of the facility as a whole. The assessee was not entrusted with any specific work to be done by him. The material required was to be brought in by the assessee by adhering to the quality and quantity irrespective of cost of such material. The employer did not provide any material to the assessee. Thus, the contract was provided for the works in package and not as a works contract. The assessee utilized its funds, its expertise, its employees and took the responsibility of developing the infrastructure facility. The losses suffered either by the employer, the workers of the developer or the people in the process of such development would be that of the assessee. The appellant as to hand over the developed infrastructure facility to the Vidarbh Irrigation Development Corporation, Nagpur on completion of the infrastructure facility. Thereafter, the assessee had to undertake maintenance of the said infrastructure for a period of as per terms of the agreement. If any damage occurred during this period, it was the responsibility of the appellant and the entire infrastructure had to be maintained by him alone.
After having regard to the terms and conditions of the agreement for construction and its operation on Turnkey basis, the rulings of the courts and position of law on the issue, in my opinion, the assessee acted as a developer because he developed infrastructure facility. Accordingly, he is eligible for claim of deduction u/s.80IA (4) (i) of the Act and the same is allowed.
The contract at Sr.No.6 was an agreement between the appellant and Narmada Water Resources and Kalpsar Department for constructing Kachchh branch Canal Reach 54.90 to 65.00 km. (Eathwork, Lining, Structures and Service Road) Package-VI. Kachchh branch Canal- Package-VI (Ch. 54.90 to 65.00), Kachchh branch Canal_offtakes at Ch. 385.814 k.m. of Narmada Main Canal. The length the branch canal is 352 km. having C.C.A. of 63100 ha. in Banaskantha and Patan Districts and 112700 ha. in Kachchh Districts. The capacity of branch canal at head is 220 cumecs with canal section at head is 16.50 x 5.80 (FSD), Total no. of structure along the alignment for Package-VI (Ch. 54.90 to 65.00 km) are 15 nos. The approximate quantity of earthwork for Package-Vi is 15.75 L.C.M. whereas the quantity of concrete for structure and lining for Package-VI is 76 TCM. The important towns in the vicinity of branch canal and command are Radhanpur (Patan Dist.) and Santalpur (Patan Dist.). It was a work for construction of tunnel and other allied works for Manjarpada Diversion Scheme within stipulated period of 18 months along with defects liability period as mentioned the agreement after completion of the work and the cost of Project was of Rs.31,50,52,4507- The terms and conditions of the tender were examined and it was observed that they were similar to those as mentioned in the contracts entered between a developer and the government or its agencies for developing any infrastructure facility for public utility. After having regard to the terms and conditions of the agreement for development of the infrastructure facility, the rulings of the courts and position of law on the issue, in my opinion, the assessee acted as a developer because he developed infrastructure I.T.A Nos. 219, 199, 220 & 200/Rjt/2015 A.Y. 2005-06 & 2006-07 Page No 15 M/s. Ketan Construction Ltd. vs. DCIT/ACIT facility and handed over the same to the authority concerned with guarantee period for maintenance thereof. Therefore, the assessee was eligible for claim of deduction u/s.80IA (4) (i) of the Act. Accordingly, the same is allowed ^ The contract at Sr. No.7 was an agreement between the appellant and Madhya Pradesh State Road Sector Development Project. For construction of " Vidisha-Korwai (SH-19) in Madhya Pradesh (Project Road No. 11) ". The work of construction included mainly construction, provision and maintenance of temporary diversion of public traffic, traffic management and safety during construction. Planting and maintenance of tree saplings as replacement of removed trees at road side and new planting at designated locations, clearing of site including cutting and stacking of trees, saw-cut existing pavement for clean edges, scarifications of existing granular surface and bituminous pavement etc., It was a work for construction of road within stipulated period of 24 months along with defects liability period of 3 years. The cost of the Project was of Rs. 44,45,80,0151-.
The appellant, after completion of the work, handed over the developed infrastructure facility to the Madhya Pradesh Public Works Department. Thereafter, the assessee had to undertake maintenance of the said infrastructure for a period as specified in the terms of the contract. If any damage occurred during this period, it was the responsibility of the appellant and the entire infrastructure had to be maintained by him alone.
The appellant undertook an obligation to design the project which was approved by the competent authority and was assigned with the duty to develop the facility, the appellant was fully responsible to execute and complete the work. He was given possession of the land and property during the period of development agreement and he used to exercise complete domain over the land and the project, he had to arrange finances, suitable manpower, machinery and equipments and managerial force. The risk in execution of work was also undertaken by the assessee as he was responsible for any damage or loss to the property. The assessee had to develop the infrastructure facility and in the process all the works were to be executed by him. It may be laying of drainage system, provision of way for traffic etc. without any hindrance. The assessee's duty was to develop infrastructure whether it involved construction of a particular item as agreed to in the agreement or not. The agreement was not for a specific wok, it was for development of the facility as a whole. The assessee was not entrusted with any specific work to be done by him. The material required was to be brought in by the assessee by adhering to the quality and quantity irrespective of cost of such material. Thus, the contract was provided for the works in package and not as a works contract. The assessee utilized its funds, its expertise, its employees and took the responsibility of developing the infrastructure facility. The losses suffered either by the employer, the workers of the developer or the people in the process of such development would be that of the assess :. The appellant handed over the developed infrastructure facility to the Madhya Pradesh Public Works Department on completion of the infrastructure facility.
After having regard to the terms and conditions of the agreement for development of infrastructure facility, the rulings of the courts and position of law on the issue, in my opinion, the assessee acted as a developer because he developed infrastructure facility from an un-developed area and handed over the same to the Madhya Pradesh Public Works Department. Therefore, he was eligible for claim of deduction u/s.80IA (4) (i) of the Act and the same is allowed.
The contract at Sr.No.8 was an agreement between the appellant and Narmada Water Resources and Kalpsar Department for construction of Waste Weir, Earthen Dam and Head Regulator near village at Bhakharwad, Malia Hatina Taluka of Junagadh District.
The main work consists of construction of composite earthen dam with waste weir, earthen dam on both flanks, Head Regulator having discharging capacity of 45 I.T.A Nos. 219, 199, 220 & 200/Rjt/2015 A.Y. 2005-06 & 2006-07 Page No 16 M/s. Ketan Construction Ltd. vs. DCIT/ACIT Cusecs in left bank, excavation of tail channel A/c. and approach channel, other miscellaneous work like D/s road etc. However, the above information was only general outline of the project for the guidance of the tender.
The construction work was to be completed within stipulated period of 24 months along with defects liability period of 3 years. The cost of the project was of Rs13,69,61,987/-.
The appellant undertook an obligation to design the project which was approved by the competent authority of Gujarat and was assigned with the duty to develop the facility, the appellant was fully responsible to execute and complete the work. He was given possession of the land and property during the period of development agreement and he used to exercise complete domain over the land and the project, he had to arrange finances, suitable man- power, machinery and equipments and managerial force. The risk in execution of work was also undertaken by the assessee as he was responsible for any damage or loss to the property. The assessee had to develop the infrastructure facility and in the process all the works were to be executed by him. It may be laying of drainage system, provision of way for traffic etc. without any hindrance. The assessee's duty was to develop infrastructure whether it involved construction of a particular item as agreed to in the agreement or not. The agreement was not for a specific wok, it was for development of the facility as a whole. The assessee was not entrusted with any specific work to be done by him. The material required was to be brought in by the assessee by adhering to the quality and quantity irrespective of cost of such material. The employer did not provide any material to the assessee. Thus, the contract was provided for the works in package and not as a works contract. The assessee utilized its funds, its expertise, its employees and took the responsibility of developing the infrastructure facility. The losses suffered either by the employer, the workers of the developer or the people in the process of such development would be that of the assessee.The appellant handed over the developed infrastructure facility to the Narmada Water Resources and Kalpsar Department on completion of the infrastructure facility.
After having regard to the terms and conditions of the agreement for development of infrastructure facility, the rulings of the courts and position of law on the issue, in my opinion, the assessee acted as a developer because he developed infrastructure facility from an un-developed area and handed over the same to Narmada Water Resources and Kalpsar Department.Therefore, he was eligible for claim of deduction u/s.80!A (4) (i) of the Act and the same is allowed.
This contract at S.No.9 was entered between the appellant and Narmada Water Resources and Kalpsar Department for construction of Weir Package No. SB-1 across River Sukhbhadar of Sujlam Suflam Yojana.
The work included (1) Excavation in all sorts of soil strata and formations including disposing the un-useful excavated stuff as and where directed including sorting and stacking useful materials as required up to lead of 200 mt. & all lifts etc. complete, (2) Providing and laying R.C.C. M-10 Class (Comparison to nominal mix proportion 1:3:6) using cement sand and crushed metal (up to 40 mm size) including providing necessary centering shuttering and form work vibrating smooth finishing curing as directed with ^all leads and lifts etc. complete, (3) Providing and laying M.S./Tor steel bar reinforcement for R.C.C. works and anchor bars with providing binding wire including cutting, bending binding in position, hooking placing in position with all leads and lifts etc. complete, (4) Providing the weep holes of 10 cm dia A.C. pipe in the retaining wall with required fixtures as directed etc. complete, (5) Pucca pitching of hammer dressed stones in specified thickness including laying to correct slopes after necessary trimming of earth work with necessary panels of 3 mt. clear size in stone masonry in C.M. (1:6) with 45 cms. Thick walls, hand packing of rubble stones with earth sluicing pointing of surface in C.M. (1:4) exclusive of filter base as directed etc. complete (a) 30 CM thick and (6) Supplying Marble data slabs of different size including engraving and painting figures and I.T.A Nos. 219, 199, 220 & 200/Rjt/2015 A.Y. 2005-06 & 2006-07 Page No 17 M/s. Ketan Construction Ltd. vs. DCIT/ACIT fixing in C.M. etc. complete (a) Size 45C.M. x 30C.M. x2.5C.M. Cost of Contract was of Rs.5,24,00,913/-
The terms and conditions of the tender were examined and it was observed that they were similar to those as mentioned in the contracts entered between a developer and the government or its agencies for developing any infrastructure facility for public utility. After having regard to the terms and conditions of the agreement for development of the infrastructure facility, the rulings of the courts and position of law on the issue, in my opinion, the assessee acted as a developer because he developed infrastructure facility and handed over the same to the authority concerned with guarantee period for maintenance thereof. Therefore, the assessee was eligible for claim of deduction u/s.80IA (4) (i) of the Act. Accordingly, the same is allowed.
The contract at Sr.No.10 was an agreement between the appellant and Narmada Water Resources and Kalpsar Department for the work of construction of Earthen Dam, Spillway, Masonry Dam, Head Regulator & Spillway Bridge for Machhu-lll Water Resources Project Taluka Murve, Dist. of Rajkot. The work, in brief, consisted of Masonry spillway having length 302.12 m., Earthen dam on both flanks having length 220.45m., Spillway bridge having 4.89 m. carriage width, Head regulator having discharging capacity of 46 cusecs in left bank, canal work on left bank having approximate length 26 km., 20 nos. radial gates of size 12.497 x 8.23 rn. are proposed to be provided over spillway crest for discharging flood of 474978 cusecs, excavation of tail channel up to 500 ml D/s in river and other miscellaneous work like buildings, approach road etc. It was a work for construction of Earthen Dam, Spillway, Masonry Dam, Head Regulator & Spillway Bridge on turnkey basis within stipulated period of 36 months and the cost of Project was of Rs. 13,78,31,079/-.
The terms and conditions of the tender were examined and it was observed that they were similar to those as mentioned in the contracts entered between a developer and the government or its agencies for developing any infrastructure facility for public utility. After having regard to the terms and conditions of the agreement for development of the infrastructure facility, the rulings of the courts and position of law on the issue, in my opinion, the assessee acted as a developer because he developed infrastructure facility and handed over the same to the authority concerned with guarantee period for maintenance thereof. Therefore, the assessee ,vas eligible for claim of deduction u/s.80IA 4) (i) of the Act. Accordingly, the same is allowed.
This contract S.No.11 was entered between the appellant and Tapi Irrigation Development Corporation, Jalgaon for the Planning, Designing, Providing and Errecting vertical lift type mild steel gates of size 15 m x 11m for Sarangkheda Barrage in Tal. Shahada Dist. Nandurbarjncluding hoisting arrangement with all appurtenant works and testing it with further operation and maintenance for 3 years after satisfactory erection & testing etc. entire work (on turnkey basis).
The contract cost was of Rs. 7357.969 lakhs. Terms and conditions of the agreement were examined. This contract was made for the project included planning, designing and developing all the necessary and required works as prescribed in the tender of contract. The appellant was to complete the project within 36 months including maintenance for 3 years after satisfactory erection and testing on Turnkey Basis.
The terms and conditions of the contract were examined and it was noticed that the appellant was required to execute the contract work wherein he was to plan and design with drawings and after approval by the competent authority to erect vertical lift type steel gates for Sarangkheda Barrage including hoisting arrangement and its operation on turnkey basis. The appellant was required to obtain approval and clearance of all applicable national laws, safety codes and local regulations from the concerned statutory authorities. The project was to be developed by the appellant as per specifications of the employer and to hand-over the same after its completion.
The appellant undertook an obligation to design the project which was approved by the competent authority of Tapi Irrigation Development Corporation, Jalgaon and was I.T.A Nos. 219, 199, 220 & 200/Rjt/2015 A.Y. 2005-06 & 2006-07 Page No 18 M/s. Ketan Construction Ltd. vs. DCIT/ACIT assigned with the duty to develop the facility, the appellant was fully responsible to execute and complete the work. He was given possession of the land and property during the period of development agreement and he used to exercise complete domain over the land and the project, he had to arrange finances, suitable man-power, machinery and equipments and managerial force. The risk in execution of work was also undertaken by the assessee as he was responsible for any damage or loss to the property. The assessee had to develop the infrastructure facility and in the process all the works were to be executed by him. It may be laying of drainage system, provision of way for traffic etc. without any hindrance. Before commencement of the construction works, the contractor show details of the arrangements he proposed to make for safe and convenient passege of traffic during construction, design of barricades, the delineators, signs, marking, lights, flagmen etc. proposed to be used by him, and get the same approved by the Engineer. The assessee's duty was to develop infrastructure whether it involved construction of a particular item as agreed to in the agreement or not. The agreement was not for a specific wok, it was for development of the facility as a whole. The assessee was not entrusted with any specific work to be done by him. The material required was to be brought in by the assessee by adhering to the quality and quantity irrespective of cost of such material. The employer did not provide any material to the assessee. Thus, the contract was provided for the works in package and not as a works contract. The assessee utilized its funds, its expertise, its employees and took the responsibility of developing the infrastructure facility. The losses suffered either by the employer, the workers of the developer or the people in the process of such development would be that of the assessee. The appellant as to hand over the developed infrastructure facility to the Tapi Irrigation Development Corporation of Jalgaon on completion of the infrastructure facility.Thereafter, the assessee had to undertake maintenance of the said infrastructure for a period of 3 years. If any damage occurred during this period, it was the responsibility of the appellant and the entire infrastructure had to be maintained by him alone.
After having regard to the terms and conditions of the agreement for erection of vertical lift type gates of the barrage and other assigned works, the rulings of the courts and position of law on the issue, in my opinion, the assessee acted as a developer because he developed infrastructure facility. Accordingly, he is eligible for claim of deduction u/s.80IA (4) (i) of the Act and the same is allowed."
30. Being aggrieved by the order of the learned CIT (A), both the assessee and the Revenue are in appeal before us. The assessee is in appeal before us against the denial of the deduction claimed by the assessee with respect of project namely ' Bhuj Sublate & Bhuj Khavda' whereas the Revenue is in appeal against the deletion of the disallowance made by the AO for the deduction under section 80-IA (4) of the Act with respect to the remaining project.
31. The Revenue has raised the grounds in ITA No. 201/RJT/2015 for the assessment year 2008-09 as detailed under:
"1) The Ld.CIT(A) has erred in law and on facts in allowing the deduction U/s 80IA(4) in respect of various projects by treating the assessee as developer instead of'work contracts' as treated by the A.O. I.T.A Nos. 219, 199, 220 & 200/Rjt/2015 A.Y. 2005-06 & 2006-07 Page No 19 M/s. Ketan Construction Ltd. vs. DCIT/ACIT
2) On the facts and in the circumstances of the case and in law, the CIT(A) ought to have upheld the order of the A.O..
3) It is, therefore, prayed that the order of the CIT (A) be set aside and that of the A.O. be restored to the above extent."
32. The learned AR before us submitted that the tribunal in the own case of the assessee for the assessment year 2007-08 has already held that the assessee is acting as a developer for the projects which are continued in the year under consideration.
33. On the other hand the learned DR claimed that the principles of rest judicata does not apply to the income tax proceedings. Therefore the order of the ITAT for the earlier year does not have any relevance to decide the issue in the year under consideration.
34. Both the learned AR and the DR before us vehemently supported the order of the authorities below to the extent favourable to them.
35. We have heard the rival contentions of both the parties and perused the materials available on record before us. From the preceding discussion we note that the assessee in the year under consideration has executed certain projects which were also there in the assessment year 2007-08. As such the assessee has been held as developer for the assessment year 2007-08 with respect to all the projects as discussed above by the ITAT in its own case supra. We also find that the explanation 13 to section 80 IA of the Act has also been duly considered for holding the assessee as the developer. The relevant extract of the order is reproduced as under:
"7. We have carefully considered the rival submissions put forth before us by both the sides. We have also perused the orders of lower authorities and the case law cited before us alongwith the material on record. The main issue in controversy which is the subject matter of appeal before us is, whether the claim of the assessee-appellant for deduction of its profits and gains can be said to be admissible in law, in view of the specific provisions of Sec. 80-1A(4) read with the impugned Explanation as applied to the I.T.A Nos. 219, 199, 220 & 200/Rjt/2015 A.Y. 2005-06 & 2006-07 Page No 20 M/s. Ketan Construction Ltd. vs. DCIT/ACIT facts and circumstances of the case. While answering this question, it would first be relevant and appropriate for us to examine the past records of assessments of the assessee and of other similar cases dealt with by us and involving similar kinds of businesses. In this context, we find, and there is no dispute from either side in this regard, that the issue regarding nature of business in such cases came to be examined by this Bench in various cases for various assessment years. In I.T.A. Nos. 837 & 838/R/2009 for A.Ys. 2003-04 & 2004-05, in I.T.A. Nos. 835 & 836/R/2009 for A.Ys. 2003-04 & 2004-05, in I.T.A. Nos. 850 & 851/R/2009 for A.Y. 2003-04 & 2004-05, on the issue concerning deduction u/s 80-1A(4) and other connected issues, we have already upheld the claims for deduction u/s 80-IA(4) of the Act after duly examining the nature of businesses. Besides, in I.T.A. No. 168/R/08 for A.Y. 2004-05 and in I.T.A. No. 145/R/08 for A.Y. 2003-04, we find that the assessments were completed u/s 143(3) of the Act under which the impugned deduction was granted but thereafter the C.I.T. passed orders u/s 263 of the Act on the ground that the assessees were contractors and not developers. Against the said orders, appeals were filed wherein after duly examining the nature of business of those assessees, we have given a finding that although the assessees had entered into agreements with Govt. for infrastructure facilities, the same were in the nature of development by the assessees within the ambit of infrastructure facility, which aspect was also noted from the accounts of the assessees and thereafter it was held by us that the assessees being developers, they were entitled to deduction-u/s 80-IA(4) of the Act. In the case of Gujarat Industrial Development Corporation and Others 227 1TR 414 has considered the meaning of "Developer" and has held that the word "Development" should be understood in its wider sense and that development means the realisation of potentiality of land or territory by building or mining. In this context therefore, based on facts on record and after examining the nature of business, it was held that the assessees were developers and not mere contractors carrying out works contract only. We find that in the present case before us, the facts relating to nature of business are not shown to be different than those already examined by us in the aforesaid appeals decided by us. That being the case, even if the impugned Explanation is to be considered for the year under present appeal, we find that the Explanation clearly refers to the business in the nature of works contract. This clearly implies that the Explanation is limited in its scope and as the nature of business of the present assessee, both in view of the facts for the year under appeal as also for the view already taken by us in similar cases for earlier years cited supra, the assessee being developer of infrastructure facility, in our considered opinion, the deduction under subsection (4) cannot be denied on the ground of said Explanation. While so holding, we are conscious of the fact that the said Explanation was not on the statute book at the time of passing of our said orders in above-referred ITAs but our finding regarding nature of business of the respective assessees continues to apply even after the insertion of the said Explanation. The factual position regarding nature of business being same as in earlier years of the very same assessee as also in similar other casers before us, has not been controverted before us. Hence, in our view, although it is held that the principle of res judicata does not apply to income tax proceedings, at the same time, the equally well-established rule of consistency also cannot be overlooked. In the case of Radhasoami Satsang vs C.I.T. 193 ITR 321 (SC) the Hon'ble Supreme Court has laid down the rinciple which is well accepted all along that absence of any material change, a different than that taken in earlier years, could not be taken in later years. We are of the i that this proposition of law read with the rule of consistency in tax proceedings n applied all the more while granting various deductions from total income in the f another well recognized proposition that any provision granting rebate or benefit assessee should be liberally construed generally in favour of the assessee. If the present case is viewed in the light of the aforesaid perspectives and judicial propositions laid down by the highest Court of land, we find that the intention behind granting such deductions is for creation of infrastructure facilities in the country as a special benefit or rebate to eligible persons and therefore even if there I.T.A Nos. 219, 199, 220 & 200/Rjt/2015 A.Y. 2005-06 & 2006-07 Page No 21 M/s. Ketan Construction Ltd. vs. DCIT/ACIT could be more than one view regarding the particular nature of business of the assessee, the view favourable to the assessee can be taken.
8. The C.I.T. D.R. relied upon the decision of the Hon'ble Mumbai Bench in the case cited supra. We have carefully perused the said judgement and from the facts narrated therein, we find that in that case the assessee namely B. T. Patil & Sons therein is stated to have been employed as a sub-contractor by M/s. Patel Engineering Co. to carry out civil work and that a portion of the contract was assigned to that assessee who carried out the assigned work in the capacity of a sub-contractor. In this context, we find that in the present case before us, it is nobody's case that the appellant is a sub-contractor. The appellant is stated to be the person who entered into the contract with the Govt. in respect of infrastructure facility and directly was involved in executing the same. We find force in the argument of the A.R. before us that entering into a contract and that too with the Govt. only is a pre-condition u/s 80-IA(4) and hence merely because there is a contract between the Govt. and the assessee, that does not make the assessee a contractor for the purpose of a works contract only. Any person carrying on business may be required to carry out some work or the other in the course of pursuing its overall business objectives. But that does not mean that such a person does not or cannot carry out something more than such work only. In the present case, we have already held that although the appellant entered into a contract with the Govt., the contract is part of the primary condition of Sec. --80-1 A(4) and further the nature of work carried out shows that the appellant not only directly (and not indirectly) carried out work as per the contract but it employed various resources of its own by way of machineries, technical knowledge, technical and other manpower, materials etc. and also funded the same out of its own capital and borrowings. The appellant was required to furnish guarantees including free maintenance of the Infrastructure facilities. All these factors combined clearly go to show that the appellant also assumed considerable risk in the capacity of a businessman and the such tasks as undertaken, although under a contract as mandated by the Section, would require skills of planning of work, employing technical know-how to execute the work and to face the consequences of attendant risks. We find that the risks are upon the assessee and not upon the Govt. These elements are generally missing in the case of a sub-contractor. Here, the is directly engaged in performing its functions Further, in the case of Om Metals Infraprojects Ltd. (supra), it is held that if it is the assessee mobilizing people, plants, technical expertise etc., the assessee can be said to be a developer and that the assessee cannot be denied deduction from the profits of developing the infrastructure facility though it may not operate or maintain the same, particularly in view of the insertion of the word "or" in Sec. 80-IA(4). "9. Considering the totality of the facts on record as also the development of law concerning the granting of deductions from gross total income, we are of the considered view that the appellant is entitled to deduction u/s 80-IA(4) of the Act as it has been found to have fulfilled all conditions of eligibility. Accordingly, we direct that the deduction as claimed be allowed. In the result, both the grounds of appeal are allowed."
36. As the facts in the case on hand are identical to the facts of the case as discussed above, therefore we are bound to follow the same. We cannot change the stand taken by the ITAT in the own case of the assessee in the earlier year involving identical facts. Regarding this we find support & guidance from the judgment of Hon'ble Madras High Court in the case of CIT v. L.G. I.T.A Nos. 219, 199, 220 & 200/Rjt/2015 A.Y. 2005-06 & 2006-07 Page No 22 M/s. Ketan Construction Ltd. vs. DCIT/ACIT Ramamurthi 1977 CTR (Mad.) 416 : [1977] 110 ITR 453 (Mad.) wherein it was held as under:
"No Tribunal of fact has any right or jurisdiction to come to a conclusion entirely contrary to the one reached by another Bench of the same Tribunal on the same facts. It may be that the members who constituted the Tribunal and decided on the earlier occasion were different from the members who decided the case on the present occasion. But what is relevant is not the personality of the officers presiding over the Tribunal or participating in the hearing but the Tribunal as an institution. If it is to be conceded that simply because of the change in the personnel of the officers who manned the Tribunal, it is open to the new officers to come to a conclusion totally contradictory to the conclusion which had been reached by the earlier officers manning the same Tribunal on the same set of facts, it will not only shake the confidence of the public in judicial procedure as such, but it will also totally destroy such confidence. The result of this will be conclusions based on arbitrariness and whims and fancies of the individuals presiding over the Courts or the Tribunals and not reached objectively on the basis of the facts placed before the authorities.
If a Bench of a Tribunal on the identical facts is allowed to come to a conclusion directly opposed to the conclusion reached by another Bench of the Tribunal on an earlier occasion, that will be destructive of the institutional integrity itself. That is the reason why in a High Court, if a single Judge takes a view different from the one taken by another Judge on a question of law, he does not finally pronounce his view and the matter is referred to a Division Bench. Similarly if a Division Bench differs from the view taken by another Division Bench it does not express disagreement and pronounce its different views, but has the matter posted before a Fuller Bench for considering the question. If that is the position even with regard to a question of law, the position will be a fortiori with regard to a question of fact. If the Tribunal wants to take an opinion different from the one taken by an earlier Bench, it should place the matter before the President of the Tribunal, so that he could have the case referred to a Full Bench of the Tribunal consisting of three or more members for which there is provision in the IT Act itself."
37. We also find that the Hon'ble supreme court case of AmbikaParsad Mishra Vs. State of U.P. and Others vide writ petition no 1543 of 1977 vide order dated 09-05-1980 has taken the similar view as taken by the Hon'ble High court (supra) as under:
"Thus we get the statutory perspective of agrarian reform and so, the constitutionality of the Act has to be tested on the touchstone of Art 31A which is the relevant protective armour for land reform laws. Even here, we must state that while we do refer to the range of constitutional immunity Art. 31Aconfers on agrarian reform measures we do not rest our decision on that provision. Independently ofArt. 31A, the impugned legislation can withstand constitutional invasion and so the further challenge to Art. 31A itself is of no consequence. The comprehensive vocabulary of that purposeful provision obviously catches within its protective net the present Act and, broadly speaking, the antiseptic effect of that Article is sufficient to immunise the Act against invalidation to the extent stated therein. The extreme argument that Art. 31A itself is void as violative of the basic structure of the Constitution has been negatived by my learned brother, Bhagwati, J. in a kindred group of cases of Andhra Pradesh. The amulet of Art. 31A is, therefore, potent, I.T.A Nos. 219, 199, 220 & 200/Rjt/2015 A.Y. 2005-06 & 2006-07 Page No 23 M/s. Ketan Construction Ltd. vs. DCIT/ACIT so far as it goes, but beyond its ambit it is still possible, as counsel have endeavoured, to spin out some sound argument to nullify one section or the other. Surely, the legislature cannot run amok in the blind belief that Art. 31A is omnipotent. We will examine the alleged infirmities in due course. It is significant that even apart from the many decisions upholding Art. 31A, GolakNath's case decided by a Bench of 11 Judges, while holding that the Constitution (First Amendment) Act exceeded the constituent power still categorically declared that the said amendment and a few other like amendments would be held good based on the doctrine of prospective over-ruling. The result, for our purpose, is that even GolakNath's case has held Art. 31A valid. The note struck by later cases reversing Golaknath does not militate against the vires of Art. 31A. Suffice it to say that in the KesavanandaBharati's case. Article 31A was challenged as beyond the amendatory power of Parliament and, therefore, invalid. But, after listening to the marathon erudition from eminent counsel, a 13 Judges Bench of this Court upheld the vires of Article 31A in unequivocal terms. That decision binds, on the simple score of stare decisis and the constitutional ground of Art. 141. Every now discovery or argumentative novelty cannot undo or compel reconsideration of a binding precedent. In this view, other submissions sparkling with creative ingenuity and presented with high-pressure advocacy, cannot persuade us to re-open, what was laid down for the guidance of the nation as a solemn pre-posion by the epic Fundamental Rights case. From Kameshwar Singh and GolakNath (supra) through Kesavananda (supra) and Kanan Devan to Gwalior Rayons and after Art. 31A has stood judicial scrutiny although, as stated earlier, we do not base the conclusion on Art. 31A. Even so, it is fundamental that the nation's Constitution is not kept in constant uncertainty by judicial review every season because it paralyses, by perennial suspense, all legislative and administrative action on vital issues deterred by the brooding threat of forensic blowup.
This, if permitted, may well be a kind of judicial destabilisation of State action too dangerous to be indulged in save where national. crisis of great moment to the life, liberty and safety of this country and its millions are at stake, or the basic direction of the nation itself is in peril of a shakeup. It is surely wrong to prove Justice Roberts of the United States Supreme Court right when he said."
38. In view of the identical issue raised before us in the ground of appeal no. 2 which has already been considered by the ITAT in its own case with respect to all the project, we are taking the same view and accordingly holding that the assessee is in development of the infrastructure facilities eligible for deduction under section 80 IA(4) of the Act. The ground of appeal of the assessee is allowed and ground of appeal of the Revenue is dismissed.
In the result, the appeal of the assessee is allowed and the appeal of the Revenue is dismissed.
I.T.A Nos. 219, 199, 220 & 200/Rjt/2015 A.Y. 2005-06 & 2006-07 Page No 24 M/s. Ketan Construction Ltd. vs. DCIT/ACIT
39. Coming to the ITA No. 222/RJT/2015 for the AY 2009-10 where the assessee has raised the following grounds:
"1. The learned Commissioner of Income Tax (Appeals) - 11, Ahmedabad Ahmedabad erred in upholding the validity of order passed u/s 153A r.w.s. 143(3) of the Act.
2. The learned Commissioner of Income Tax (Appeals) - 11, Ahmedabad erred in confirming the action of the assessing officer in disallowing the claim of deduction u/s 80IA(4) in respect of following infrastructure projects undertaken by the appellant:
Sr. No. of site referred by Name of the site CIT (Appeals) 2 Bhavnagar 5 Bhuj Khavda 12 Bagodara Dholka
3. The learned Commissioner of Income Tax (Appeals) - 11, Ahmedabad erred in holding that appellant was not a developer of infrastructure facility in respect of projects specified by him and listed in ground No. 2 above."
40. Coming to the ITA No. 202/RJT/2015 for the AY 2009-10 where the Revenue has raised the fllowing grounds:
"1) The Ld.CIT(A) has erred in law and on facts in allowing the deduction U/s 80IA(4) in respect of various projects by treating the assessee as developer instead of work contracts' as treated by the A.O.
2) On' the facts and in the circumstances of the case and in law, the CIT(A) ought to have upheld the order of the A.O..
3) It is, therefore, prayed that the order of the CIT (A) be set aside and that of the A.O. be restored to the above extent."
41. The 1st issue raised by the assessee is against the validity of the assessment framed under section 153A read with section 143(3) of the Act.
42. At the outset we note that, similar issue was also raised by the assessee in the assessment year 2008-09 which we have decided against the assessee vide paragraph No. 22 of this order. For detailed discussion please refer the relevant paragraph. Hence the ground of appeal of the assessee is dismissed. I.T.A Nos. 219, 199, 220 & 200/Rjt/2015 A.Y. 2005-06 & 2006-07 Page No 25 M/s. Ketan Construction Ltd. vs. DCIT/ACIT
43. The 2nd issue raised by the assessee and the revenue are common therefore we have clubbed both of them for the purpose of the adjudication. Both the assessee and the revenue has disputed on the allow ability of the claim for the deduction under section 80-IA (4) of the Act.
44. At the outset both the learned AR for the assessee and the DR for the Revenue has submitted that the issue raised in the respective appeals are identical to the issue raised in the appeal for the assessment year 2008-09 which have been elaborately discussed in the preceding paragraph except the figures involved in the dispute. Accordingly both the parties agreed that whatever will be the decision of the ITAT for the assessment year 2008-09 in ITA No. 221/RJ T/2015 and ITA No. 201/RJ T/2015 will be applied for the year under consideration.
45. From the preceding discussion we find that the assessee has been held as developer with respect to all the projects involved in the dispute in the earlier assessment year as discussed somewhere in the preceding paragraph except one project located at Bhavnagr. As such the project located at Bhavnagar was not there in the assessment year 2007-08 and therefore we need to adjudicate the issue limited to this contract whether the assessee is acting of the developer or works contractor.
46. On perusal of the finding of the learned CIT (A), we note that the assessee is supplying heavy earthmoving machinery on hiring basis to GMDC. Accordingly, the learned CIT (A) held that there cannot be any deduction with respect to such projects under section 80-IA(4) of the Act, as the assessee is not executing any projects eligible for deduction specified under section 80-IA(4) of the Act.
I.T.A Nos. 219, 199, 220 & 200/Rjt/2015 A.Y. 2005-06 & 2006-07 Page No 26 M/s. Ketan Construction Ltd. vs. DCIT/ACIT
47. The learned AR at the time of hearing before us has not advanced any argument against the finding of the learned CIT(A). Accordingly in the absence of any information/assistance from the side of the learned AR for the assessee, we do not find any reason to interfere in the finding of the learned CIT (A). Hence the ground of appeal of the assessee is dismissed. In the result the ground of appeal of the assessee is partly allowed whereas the appeal of the Revenue is dismissed.
48. In the result, the appeal of the assessee is partly allowed whereas appeal of the revenue is dismissed.
49. Before we part with the issue/appeal as discussed above, it is pertinent to note that the clause © of rule 34 of the Appellate Tribunal Rules 1963 requires the bench to make endeavour to pronounce the order within 60 days from the conclusion of the hearing. However the period of 60 days can be extended under exceptional circumstances but the same should not ordinarily be further extended beyond another 30 days. In simple words the total time available to the Bench is of 90 days upon the conclusion of the hearing.
However, during the prevailing circumstances where the entire world is facing the unprecedented challenge of Covid 2019 outbreak, resulting the lockdown in the country, the orders though substantially prepared but could not be pronounced for the unavoidable reasons within the maximum period of 90 days. In such circumstances we find that the Hon'ble Mumbai Tribunal in the case of JSW Limited Vs Deputy Commissioner of Income Tax in ITA No. 6103/MUM/2018 vide order dated 14-5-2020 extended the time for pronouncing the order within 90 days of time by observing as under:
9. Let us in this light revert to the prevailing situation in the country. On 24th March, 2020, Hon'ble Prime Minister of India took the bold step of imposing a nationwide I.T.A Nos. 219, 199, 220 & 200/Rjt/2015 A.Y. 2005-06 & 2006-07 Page No 27 M/s. Ketan Construction Ltd. vs. DCIT/ACIT lockdown, for 21 days, to prevent the spread of Covid 19 epidemic, and this lockdown was extended from time to time. As a matter of fact, even before this formal nationwide lockdown, the functioning of the Income Tax Appellate Tribunal at Mumbai was severely restricted on account of lockdown by the Maharashtra Government, and on account of strict enforcement of health advisories with a view of checking spread of Covid 19. The epidemic situation in Mumbai being grave, there was not much of a relaxation in subsequent lockdowns also. In any case, there was unprecedented disruption of judicial wok all over the country. As a matter of fact, it has been such an unprecedented situation, causing disruption in the functioning of judicial machinery, that Hon'ble Supreme Court of India, in an unprecedented order in the history of India and vide order dated 6.5.2020 read with order dated 23.3.2020, extended the limitation to exclude not only this lockdown period but also a few more days prior to, and after, the lockdown by observing that "In case the limitation has expired after 15.03.2020 then the period from 15.03.2020 till the date on which the lockdown is lifted in the jurisdictional area where the dispute lies or where the cause of action arises shall be extended for a period of 15 days after the lifting of lockdown". Hon'ble Bombay High Court, in an order dated 15th April 2020, has, besides extending the validity of all interim orders, has also observed that, "It is also clarified that while calculating time for disposal of matters made time-
bound by this Court, the period for which the order dated 26th March 2020 continues to operate shall be added and time shall stand extended accordingly", and also observed that "arrangement continued by an order dated 26th March 2020 till 30th April 2020 shall continue further till 15th June 2020". It has been an unprecedented situation not only in India but all over the world. Government of India has, vide notification dated 19th February 2020, taken the stand that, the coronavirus "should be considered a case of natural calamity and FMC (i.e. force majeure clause) maybe invoked, wherever considered appropriate, following the due procedure...". The term 'force majeure' has been defined in Black's Law Dictionary, as 'an event or effect that can be neither anticipated nor controlled' When such is the position, and it is officially so notified by the Government of India and the Covid- 19 epidemic has been notified as a disaster under the National Disaster Management Act, 2005, and also in the light of the discussions above, the period during which lockdown was in force can be anything but an "ordinary" period.
10. In the light of the above discussions, we are of the considered view that rather than taking a pedantic view of the rule requiring pronouncement of orders within 90 days, disregarding the important fact that the entire country was in lockdown, we should compute the period of 90 days by excluding at least the period during which the lockdown was in force. We must factor ground realities in mind while interpreting the time limit for the pronouncement of the order. Law is not brooding omnipotence in the sky. It is a pragmatic tool of the social order. The tenets of law being enacted on the basis of pragmatism, and that is how the law is required to interpreted. The interpretation so assigned by us is not only in consonance with the letter and spirit of rule 34(5) but is also a pragmatic approach at a time when a disaster, notified under the Disaster Management Act 2005, is causing unprecedented disruption in the functioning of our justice delivery system. Undoubtedly, in the case of Otters Club Vs DIT [(2017) 392 ITR 244 (Bom)], Hon'ble Bombay High Court did not approve an order being passed by the Tribunal beyond a period of 90 days, but then in the I.T.A Nos. 219, 199, 220 & 200/Rjt/2015 A.Y. 2005-06 & 2006-07 Page No 28 M/s. Ketan Construction Ltd. vs. DCIT/ACIT present situation Hon'ble Bombay High Court itself has, vide judgment dated 15th April 2020, held that directed "while calculating the time for disposal of matters made time-bound by this Court, the period for which the order dated 26th March 2020 continues to operate shall be added and time shall stand extended accordingly". The extraordinary steps taken suo motu by Hon'ble jurisdictional High Court and Hon'ble Supreme Court also indicate that this period of lockdown cannot be treated as an ordinary period during which the normal time limits are to remain in force. In our considered view, even without the words "ordinarily", in the light of the above analysis of the legal position, the period during which lockout was in force is to excluded for the purpose of time limits set out in rule 34(5) of the Appellate Tribunal Rules, 1963. Viewed thus, the exception, to 90-day time-limit for pronouncement of orders, inherent in rule 34(5)(c), with respect to the pronouncement of orders within ninety days, clearly comes into play in the present case. Of course, there is no, and there cannot be any, bar on the discretion of the benches to refix the matters for clarifications because of considerable time lag between the point of time when the hearing is concluded and the point of time when the order thereon is being finalized, but then, in our considered view, no such exercise was required to be carried out on the facts of this case.
11. To sum up, the appeal of the assessee is allowed, and appeal of the Assessing Officer is dismissed. Order pronounced under rule 34(4) of the Income Tax (Appellate Tribunal) Rules, 1962, by placing the details on the notice board.
Considering the above, we express to pronounce the order beyond the period of 90 days. Accordingly, we proceed to pronounce the order as on date.
50. In the combined results, appeal ITAs 219/Rjt/2015, 220/Rjt/2015, 221/Rjt/2015, 222/Rjt/2015 filed by assessee are partly allowed and Appeal ITAs 199/Rjt/2015, 200/Rjt/2015, 201/Rjt/2015 & 202/Rjt/2015 filed by Revenue are dismissed.
Order pronounced in the open court on 03-06-2020
Sd/- Sd/-
(MADHUMITA ROY) (WASEEM AHMAD)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Ahmedabad : Dated 03/06/2020 True Copy
आदे श क त ल प अ े षत / Copy of Order Forwarded to:-
1. Assessee
2. Revenue
I.T.A Nos. 219, 199, 220 & 200/Rjt/2015 A.Y. 2005-06 & 2006-07 Page No 29 M/s. Ketan Construction Ltd. vs. DCIT/ACIT
3. Concerned CIT
4. CIT (A)
5. DR, ITAT, Ahmedabad
6. Guard file.
By order, Assistant Registrar, Income Tax Appellate Tribunal, Rajkot