Income Tax Appellate Tribunal - Pune
Uttam Bhagwanrao Jadhav (Patil), ... vs Department Of Income Tax on 22 August, 2012
IN THE INCOME TAX APPELLATE TRIBUNAL
PUNE BENCH "A", PUNE
Before Shri Shailendra Kumar Yadav, Judicial Member,
and Shri G.S.Pannu, Accountant Member.
ITA.No.481, 480/PN/2011 and 1085/PN/2007
(Asstt. Year : 2003-04, 2002-03 and 2001-02)
ACIT, Circle-3,
Nanded. .. Appellant
Vs.
Shri Uttam Bhagwanrao Jadhav (Patil),
Prop. Of Satya Sai Construction,
Latur. .. Respondent
AND
CO No.15/PN/2011, 16/PN/2011 and 34/PN/2010
(Asstt. Year : 2002-03, 2003-04 and 2001-02)
Shri Uttam Bhagwanrao Jadhav (Patil),
Prop. Of Satya Sai Construction,
Latur. .. Appellant
Vs.
ACIT, Circle-3,
Nanded. .. Respondent
Assessee by : Shri M.K.Kulkarni
Department by : Ms.Ann Kapthuama
Date of Hearing : 22.08.2012
Date of Pronouncement : 27.08.2012
ORDER
PER SHAILENDRA KUMAR YADAV, JM:
All these appeals of Revenue and Cross Objections of assessee pertain to respective order of CIT(A) for same assessee, so they are being disposed of by common order for the sake of convenience.
In ITA.No.481/PN/2011, the Revenue has filed this appeal on following ground:
21. On the facts and circumstances of the case, the Hon'ble CIT(A)-II, Aurangabad, has erred in deleting the addition of Rs.29,09,542/- in respect of disallowance of deduction u/s.80IA(4)(a)(i), as the assessee was not a Registered company under the Companies Act, 1956, at the time of claiming of such deduction.
2. At the outset of hearing, the Ld. Departmental Representative for Revenue pointed out that there is a delay of about 4½ years in filing Revenue appeal for A.Y. 2003-04 and A.Y. 2002-03. The Ld. Departmental Representative drew our attention to its condonation application dated 12.04.2011 wherein delay in filing of the appeal is attributed to inadvertent mistakes of concerned revenue authorities. We are aware that in a big department like Income Tax Department, there is a possibility of communication gap due to various administrative reasons and cause of Revenue should not suffer for such inadvertent mistakes committed due to communication gap between the concerned revenue authorities.
Taking liberal approach, we condone the delay. Similar view has been taken by Hon'ble Supreme Court in the case of Lanka Venkateswarlu (Deceased) through legal heirs vs. State of Andhra Pradesh (2011) 4 SCC 363, in the case of Balwant Singh (Deceased) through legal heirs vs. Jagdish Singh & Ors. AIR 2010 SC 3043. We have also taken into consideration the case of Post Master General and Others vs. Living Media India Ltd. and Another reported in (2012) 3 Supreme Court Cases 563, wherein the Hon'ble Supreme Court held that condonation of delay is an exception and should not be used as an anticipated benefit for Government departments and offering usual explanation that file was kept pending due to procedural red tape. The case before us is not a case of procedural red tapism but of inadvertent mistake on part of Revenue officers. Inadvertent mistake can be attributed to so many facts. Taking overall view of the situation, we condone the delay in both the years and appeals are being decided on merit.
3. The assessee is an individual engaged in business of civil construction. During the year under consideration, i.e., A.Y. 2003-04, assessee also derived income from Gharni Bridge Project 3 and claimed deduction of Rs.29,09,542/- in respect of profits of Gharni Bridge Project and accordingly return was filed declaring total income of Rs.5,44,574/-. The return was scrutinized and the income was assessed u/s.143(3) at Rs.61,58,644/- including agricultural income amounting to Rs.8,43,837/- and Long Term Capital Gains on sale of plot amounting to Rs.7,34,221/-. Among other additions, one of the addition was made on account of disallowance of claim u/s.80IA(1) of Rs.29,09,542/-. With regard to this claim u/s.80IA(1), we find that the assessee has constructed Bridge at Gharni, District Latur, under Build Operate Transfer (BOT) basis allotted by the Government of Maharashtra. In this scheme, contractor has to construct a bridge from their own funds and Government gives permission to collect Toll from the transporters on that road. After some period Bridge has to be transferred to the Government. The Public Works Department issues work order for BOT work and gives rates and period for collection to assessee. As per work order, the assessee constructed the Bridge from their own funds and claimed the income from Toll collection as exempt u/s.80IA. However, this exemption claimed by the assessee was disallowed by the Assessing Officer for the year under consideration for the reasons mentioned in his order u/s.143(3) dated 30.12.2005 in detail. The main reason for denial of the exemption u/s.80IA has been stated that assessee is an individual and not a company and runs its business in the name of Vaishali Construction, Proprietorship of Shri U.B.Jadhav. As the assessee did not fulfil the condition under sub-section (4)(i)(a) of section 80IA of the Act, in as much as enterprise is required to be owned by a company registered in India or by consortium of such company, the exemption was denied by the Assessing Officer. Matter was carried before the first appellate authority who, after taking into consideration the submissions filed on behalf of the assessee, allowed the claim of the assessee by observing as under:
"3.6. From the above it is clear that at the time of making the agreement with the State Government for a project on B.O.T. basis it is not necessary the enterprise is owned by the company. What is essential is that at the time of claiming the 4 deduction the enterprise must be owned by the company. In the present case as soon as the appellant entered into an agreement with the State Government in the name of Vaishali Construction Co. Pvt. Ltd. and later on changed to Satya Sai Construction Pvt. Ltd. The appellant applied to the Registrar of Companies for the registration proposing the following name of the company:
i) M/s.Vaishali Construction Co. Pvt. Ltd.
ii) M/s.Satya Sai Construction Pvt. Ltd.
iii) M/s.Vaishali Construction Pvt. Ltd.
iv) M/s.Vithalsai Construction Pvt. Ltd.
3.7. This application was received by Registrar of Companies on 20-09-1998. The same has been placed on record. However, there was delay in granting the registration to the company because of which the appellant was denied the exemption u/s.80IA. But finally the enterprise was registered as per the certificate of incorporation submitted by the appellant.
3.8. Therefore, in view of the above discussions, speech of the Hon'ble Finance Minister, the observations of the Hon'ble ITAT quoted supra and the other substantial evidence it is true that the appellant has fulfilled categorically all the condition as mentioned u/s.80-IA and the conditions mentioned u/s.80-IA(4)(i)(a) has also been later on fulfilled by the appellant as the enterprises as on date is owned by the company. In view of these facts the appellant is entitled for exemption u/s.80-IA in respect of the income from Gharni Bridge Project. Hence, the addition made by the A.O. on this point is hereby deleted."
3.1. Same has been opposed before us by Revenue, inter alia stated that CIT(A) erred in deleting addition of Rs.29,09,542/- in respect of disallowance of deduction u/s.80IA(4)(a)(i) of the Act as assessee was not a registered company under Companies Act, 1956 at the time of claiming such deduction. On the other hand, Ld. Authorised Representative heavily relied on the decision of the CIT(A) and submitted that appeal by Revenue be dismissed.
3.2. Provisions of section 80IA deals with deduction in respect of profits and gains from industrial undertaking or enterprise engaged in infrastructure development. The provisions of section 80IA(4)(i)(a) applicable in present case, reads as under:
5"(4) This section applies to -
(i) any enterprise carrying on the business of (i) developing or
(ii) operating and maintaining or (iii) developing, operating and maintaining any infrastructure facility which fulfils all the following conditions, namely :--
(a) it is owned by a company registered in India or by a consortium of such companies or by an authority or a board or a corporation or any other body established or constituted under any Central or State Act.
(b) .....
(c) ....."
The objection of Assessing Officer in this case is that assessee is an individual and not a company and business was in the name and style of Vaishali Constructions under Proprietorship of Shri U.B.Jadhav, the assessee. Claim of the assessee was found incorrect because the provisions of sub-section (4)(i)(a) of section 80IA in as much as the project is required to be owned by a company registered in India or by consortium of such company. Assessee was an individual and not company at the relevant point of time. Business was in the name of Vaishali Constructions, under Proprietorship of Shri U.B.Jadhav. Hence, it could not claim such deduction. The language of sub-section (4)(i)(a) of section 80IA of the Act is clear which imposes the condition for allowance of deduction on any enterprise carrying on business of (i) developing or (ii) operating and maintaining or (iii) developing, operating and maintaining any infrastructure facility which is owned by company registered in India or a consortium of such company. Thus, the income earned from Gharni Bridge Project is, therefore, termed to be income from business, not eligible for deduction u/s.80IA(1) of the Act. As per condition prescribed by the law itself, the assessee not being a company at the relevant point of time, so the deduction u/s.80IA(4)(i)(a) is not available to him. In view of this, order of the CIT(A) is set aside and that of the Assessing Officer is restored.
4. In ITA.No.480/PN/2011 for A.Y. 2002-03, facts being similar, so following the same reasoning, the order of the CIT(A) is set aside and that of the Assessing Officer is restored.
65. The assessee has also filed Cross Objections in C.O.No.16/PN/2011 arising from ITA.No.481/PN/2011 for A.Y. 2003-04, CO.No.15/PN/2011 arising from ITA.No.480/PN/2011 for A.Y. 2002-03, and CO.No.34/PN/2010 arising from ITA.No.1085/PN/2007 for A.Y. 2001-02.
5.1. In C.O.No.16/PN/2011, the assessee has opposed the condonation of delay of 4½ years, inter alia stated that there is no prayer for condonation of delay in the appeal memo leave aside factual disclosure about delayed filing of appeal. Such inordinate delay without any sufficient cause be not condoned and appeal be not admitted. We have dealt this issue of condonation of delay in para 2 of this order. For the sake of brevity, the same is not repeated here because the same has been taken care by the said order in favour of Revenue.
5.2. The next issue raised by way of Grounds 2 of cross objections is with regard to allowability of deduction u/s.80IA(4)(i)(a) which has been taken care by us while deciding the Revenue's appeal on merit in para 3 of this order. Ground No.3 is with regard to depreciation. This being legal issue can be raised before us. In the interest of justice, this issue is restored to Assessing Officer with direction to decide the same as per facts and law. In view of this, the C.O. is partly allowed.
5.3. With regard to C.O.No.15/PN/2011, similar issues arose in CO.No.16/PN/2011 arising from ITA.No.481/PN/2011 for A.Y. 2002-03. Facts being similar, following the same reasoning, the cross objections for A.Y. 2002-03 are partly allowed as indicated in para 5.2 of this order.
6. In ITA.No.1085/PN/2007, the Revenue has raised the following ground:
1) On the facts and circumstances of the case, the learned CIT(A)-II, Aurangabad, has erred in deleting the addition of Rs.30,60,052/- in respect of disallowance of deduction u/s.80IA(i)(a) as the assessee was not a Registered Company under the Companies Act, 1956, at the time of claiming of such deduction.7
6.1. The CIT(A) following its order in A.Y. 2003-04 has allowed the assessee's appeal. We have discussed and decided the appeal for A.Y. 2003-04 vide para 3 of this order wherein order of the CIT(A) has been set aside and that of the Assessing Officer has been restored. Facts being similar, so following same reasoning, we set aside the order of the CIT(A) and that of the Assessing Officer is restored.
7. The assessee in its Cross Objections has supported the allowability of claim of assessee u/s.80IA. This issue has been dealt by us in para 3 of this order. Other issue raised by way of Cross Objections is with regard to framing of assessment order u/s.143(3) r.w.s. 147. A notice u/s.148 was issued by the Assessing Officer on 16.01.2006. Further notice u/s.143(2) was issued on 17.02.2006. To adore jurisdiction over the case, notice u/s.143(2) was issued on 16.06.2006 followed by notices u/s.142(1) on 17.07.2006, 06.10.2006 and 14.11.2006. In response to notices issued, the Authorised Representative of the assessee attended from time to time and explained the case. On 28.12.2006, the assessee himself alongwith his Authorised Representative attended the proceedings. Books of account were produced on behalf of the assessee with supporting vouchers. Same was verified and on verification of accounts and other documents, addition to the total income was made including disallowance of deduction u/s.80IA of Rs.30,60,052/-. In view of this, we are not inclined to hold that assessment is bad in law because it was validly reopened by invoking provisions of section 147. Regarding the objection on behalf of the assessee with regard to invoking provisions of section 292BB is not well founded because it has not agitated the same at relevant point of time. Without prejudice to above, the Assessing Officer as decided the issue after taking all facts and circumstances into consideration. Regarding alternate claim raised by way of cross objections in Ground No.5, it was submitted on behalf of assessee that in case no claim is allowable u/s.80IA of the Act, the 8 expenditure incurred and brought forward as WIP be allowed as Revenue expenditure in the year 2001-02.
8. This is a legal issue which can be raised by the assessee at any stage. Revenue authorities had no occasion to adjudicate because same was not agitated before them. The issue being legal, the same may be agitated before us as well. Since the facts regarding this claim of expenditure is not coming from the orders of lower authority so in the interest of justice we restore this issue to the Assessing Officer with a direction to decide the same as per fact and law after providing due opportunity to the assessee.
9. In the result, the Revenue's appeal in ITA.No. 481, 480/PN/2011 and 1085/PN/2007 are allowed as indicated above, while Cross Objections in CO.No. 15/PN/2011 and 16/PN/2011 are dismissed as indicate above, while CO.No. 34/PN/2010 is partly allowed as indicated above.
Pronounced in the open court on this the 27th day of August, 2012.
Sd/- Sd/-
( G.S.PANNU ) ( SHAILENDRA KUMAR YADAV )
ACCOUNTANT MEMBER JUDICIAL MEMBER
gsps
Pune, dated the 27th August, 2012.
Copy of the order is forwarded to:
1. The Assessee
2. The ACIT, Circle-3, Nanded.
3. The CIT(A)-II, Aurangabad.
4. The CIT concerned.
5. The DR "A" Bench, Pune.
6. Guard File.
By Order
//TRUE COPY//
Private Secretary,
Income Tax Appellate Tribunal,
Pune.