Income Tax Appellate Tribunal - Hyderabad
Dcit,Central Circle - 3, Hyderabad vs M/S. Patel Knr Jv,, Mumbai on 4 April, 2017
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ITA.No.1314/Hyd/2014 M/s. Patel KNR JV,
Jogeshwari (W), Mumbai
IN THE INCOME TAX APPELLATE TRIBUNAL
HYDERABAD BENCHES "A" : HYDERABAD
BEFORE SHRI D. MANMOHAN, VICE PRESIDENT
AND
SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER
ITA.No.1314/Hyd/2014
Assessment Year 2009-2010
DCIT, Central Circle-3 vs. M/s. Patel KNR JV.
Hyderabad. Mumbai - 400 102.
PAN AAAAP1496N
(Appellant) (Respondent)
For Revenue : Shri A. Sitarama Rao
For Assessee : Shri Bhargava Vatsaraj
Date of Hearing : 04.04.2017
Date of Pronouncement : 04.04.2017
ORDER
PER B. RAMAKOTAIAH, A.M.
This appeal by the Revenue is directed against the order passed by CIT(A)-34, Mumbai and it pertains to the A.Y. 2009-2010.
2. Though the appeal pertaining to the earlier years were disposed of in Mumbai jurisdiction, for the year under consideration, the appeal before the Appellate Tribunal was transferred to Hyderabad Benches which was objected to by the assessee. Vide order dated 08.08.2016 the Hon'ble Supreme Court observed that it would be open to the assessee to make a representation against the transfer proceedings from Mumbai to Hyderabad if such representation made before the CIT, Mumbai within two weeks from that date. Learned Counsel for the Assessee placed before us a copy of the record of proceedings in Special Leave Petition (Appeal (c) No.10247/2014 to 2 ITA.No.1314/Hyd/2014 M/s. Patel KNR JV, Jogeshwari (W), Mumbai submit that the issue is now settled and the assessee admits that the appeal can be taken-up at Hyderabad.
3. With regard to the additions made by the A.O but deleted by the CIT(A) the Learned Counsel for the Assessee submitted that all the issues are covered by the decision of the Tribunal in assessee's own case for the earlier year (pages 1 to 6 of the paper book). The Ld. D.R. also admitted that the issues are covered by the decision of ITAT 'C' Bench, Mumbai in assessee's own case for the A.Y. 2008-2009 (ITA.No.5230/Mum/2012 dated 26.09.2014) while briefly explaining the facts of the case it was submitted that the assessee is a Joint Venture between Patel Engineering and KNR Constructions to undertake development and road highways and other allied infrastructure facilities. During the previous year relevant to the assessment year under consideration, the assessee executed road projects at Krishnagiri which were awarded by National Highways Authority of India. Though the assessee earned income for the year under consideration, in the light of deduction claimed under section 80IA(4) of the Act, assessee declared NIL income on the eight road projects in hand. In the scrutiny assessment proceedings the A.O. made certain disallowances and completed the total assessable income of Rs.3.35 crores by making several additions which are taken-up item- wise.
4. A.O noticed that assessee claimed deduction of site preparatory expenses incurred on various infrastructure facilities developed by it. According to the assessee, such claim is allowable as deduction under section 37(1) of the Act. Assessee had also incurred site preparatory expenses of Rs.63,41,989 for NS-32 project on which deduction was not claimed originally and therefore, additional claim 3 ITA.No.1314/Hyd/2014 M/s. Patel KNR JV, Jogeshwari (W), Mumbai was made before the A.O. The A.O. rejected the claim of additional deduction on the ground that assessee is not entitled to claim any further deduction beyond the time limit prescribed under law. As per the provisions of section 139(5) of the Act, the revised return of income should have been filed on or before 31.03.2011. Since assessee failed to do so, claimed deduction only vide letters dated 29.07.2011 and 23.12.2011 the same was not allowed by placing reliance upon the decision of the Apex Court in the case of Goetz (India) Ltd., vs. CIT 284 ITR 323.
5. On an appeal filed by the assessee, Ld. CIT(A) observed that there is no dispute in principle with regard to deductibility of site preparatory expenses since the other claim was accepted as revenue in nature. However, the additional claim was disallowed only on the ground that it was not claimed before the due date of filing the return of income under section 139(5) of the Act. The Ld. CIT(A) relied upon the decision of the Hon'ble Bombay High Court in the case of CIT vs. Pritvi Brokers & Shareholders 349 ITR 336 as well as the decision of the ITAT in the case of Franco-Indian Pharmaceuticals (P) Ltd., vs. ITO 3 ITR (Tribu.) 754 to hold that the decision in the case of Goetz (India) P. Ltd., vs. CIT 284 ITR 323 does not impinge on the powers of the Appellate Authorities. Accordingly, the Ld. CIT(A) directed the A.O. to allow deduction of the additional claim of expenditure.
6. Aggrieved, Revenue is in appeal before us by contending that any claim which does not form part of the return of income cannot be considered even by the Appellate Authority.
7. During the course of hearing, Learned Counsel for the Assessee placed reliance upon the decision of ITAT, Mumbai Bench in the case of Franco-Indian Pharmaceuticals (P) Ltd., vs. ITO (supra) to 4 ITA.No.1314/Hyd/2014 M/s. Patel KNR JV, Jogeshwari (W), Mumbai submit that the principle laid down by the Apex Court in the case of Goetze (India) Ltd., vs. CIT (supra) was not to disallow the genuine claim and the Bench further observed that the Appellate Authority has the power to admit the additional ground or claim when all the facts are on record.
8. Ld. D.R. relied upon the order passed by the A.O.
9. We have heard the rival contentions and perused the record. As rightly pointed out by the Learned Counsel for the Assessee, the tax has to be collected in accordance with law and any legal claim which is not properly made by inadvertence or ignorance should not be denied merely because assessee did not make a claim in the return of income. The Income Tax is meant for collection of correct tax and it cannot be treated as a lis between the two parties but a tax adjustment as explained by the Hon'ble Madras High Court in the case Indian Express 140 ITR 705 at 724. At any rate, the Appellate Authority is entitled to admit any additional claim and the CIT(A) having directed the A.O to consider the claim of deduction, in exercise of the powers vested in First Appellate Authority to admit any issue which was not considered by the A.O, we do not find any infirmity in the order of the Ld. CIT(A) and accordingly, we reject ground No.2 of the Revenue.
10. The next issue is with regard to disallowance of claim of TDS. During the course of assessment proceedings, A.O. noticed that certain amount received as advance was accounted for in the next year but the benefit of TDS was claimed in this year. According to the A.O, the income having not been offered for taxation in the year under consideration the tax deducted at source cannot be adjusted in this year. As per the provisions of Section 199 of the Act, the credit for claim of TDS is to be allowed in the year in which the income is offered for 5 ITA.No.1314/Hyd/2014 M/s. Patel KNR JV, Jogeshwari (W), Mumbai taxation. He accordingly did not give credit for the TDS claim of Rs.66,64,499. On an appeal filed by the assessee, the Ld. CIT(A) relied upon the decision of ITAT, Mumbai Bench in the case of Toyo Engineering India Ltd., 5 SOT 616 to hold that the execution of a project is a continuing process and income/loss arising therefrom also generates simultaneously even though such income/loss is finally measured as profit/loss only at the end of the project on account of the fact that assessee followed project completion method for revision of its profits. Ld. CIT(A) further observed that even though the final result is ascertained only upon the completion of the project, an element of income is retained in the yearly working result. Therefore, the provisions of law contained in Section 199 do not stand in the way of claim made by the assessee for credit in respect of TDS made during the relevant previous year. Ld. CIT(A) directed the A.O. to give credit for the remaining TDS by observing in para 4.6 as under :
"4.6. The profits on contracts entered into by the assessee- company had been accurately and finally recognized on completion of the assignment and offered for taxation accordingly. It did not mean that income from a project was earned only at the completion of the project. Income was earned by the assessee-company simultaneously with the progress in the project execution in the contemporaneous manner. That is why the assessee-company was accounting the investments and expenditure in work-in-progress account and being carried forward from assessment year to assessment year till the completion of the project. The assessee-JV was credit in the value of work-in-progress on the credit side of its Profit & Loss Account. The work-in-progress reflected in the accounts of the appellant company was impregnated with the cost and expenditure of the project plus the amount of income earned out of the project till such date. The income was therefore earned from year to year even though the income was finally accurately recognized as profits only on the completion of the project and, thereafter, offered for assessment."6
ITA.No.1314/Hyd/2014 M/s. Patel KNR JV, Jogeshwari (W), Mumbai
11. Aggrieved, Revenue is in appeal before us. Vide ground No.3, Revenue contends that though assessee has not offered corresponding income to tax in this year, assessee cannot claim credit to the TDS since it violates the provisions of Section 199 of the Act. During the course of hearing, Learned Counsel for the Assessee placed before us copy of the order of the ITAT for the A.Y. 2008-09 (supra) wherein the Bench placed reliance upon the decision of the ITAT, Mumbai bench in the case of Toyo Engineering Ltd, (supra), to hold that it cannot be possible at all times to co-relate a specific amount of TDS with a specific amount of income earned in a particular year - nexus between the TDS and income is notional or conceptual are not specific or immediate and thus tax deducted during the financial year had to be given credit for in that A.Y. even though income was offered to tax in the subsequent year by following the project completion method. Facts being identical for the year under consideration, we do not find any infirmity in the order passed by the Ld. CIT(A) and therefore, we, reject ground No.3 of the Revenue.
12. The last ground No.4 is with regard to claim of deduction under section 80IA(4) of the Act by considering the assessee as 'Developer'. The A.O. treated the assessee as a 'Works Contractor' and not a 'Developer' and by giving detailed reasons thereon he disallowed claim of deduction under section 80IA(4) of the Act since deduction cannot be allowed the assessee who executes a 'Works Contract'.
13. On an appeal filed by the assessee, Ld. CIT(A) observed that the benefit of deduction is available to any enterprise carrying on the business of developing, maintaining and operating any infrastructure facilities. In the instant case, it was further observed that though the original intention was to permit deduction to an enterprise carrying on 7 ITA.No.1314/Hyd/2014 M/s. Patel KNR JV, Jogeshwari (W), Mumbai business of BOT basis (Built, Operate and Transfer) but it was diluted subsequently and to meet the intention of the Parliament is to allow deduction to any enterprise developing the infrastructure though it need not necessarily maintain and operate facility in order to claim deduction. Further aggrieved, Revenue is in appeal before us.
14. We have heard the Ld. D.R. as well as the Learned Counsel for the Assessee in this regard. It is not in dispute that this issue also stands covered by the decision of the ITAT, Mumbai Bench in assessee's own case for the A.Y. 2008-09 (supra), wherein the Bench observed that provisions of Section 80IA(4) are progressively liberalised whereby even a Developer is eligible for deduction and further observed that the assessee would fall within the meaning of the expression "Developer" and in this context referred to the nature of the work of the assessee. Facts being same even in this year, the view expressed by the Ld. CIT(A), being in consonance with the view taken by the ITAT in assessee's own case for the earlier year, we are of the view that the ground urged by the Revenue has no merit. Accordingly, ground No.4 is dismissed.
15. In the result, appeal filed by the Revenue is dismissed.
Order pronounced in the open Court on 04.04.2017.
Sd/- Sd/-
(D. MANMOHAN) (B. RAMAKOTAIAH)
VICE PRESIDENT ACCOUNTANT MEMBER
Hyderabad, Dated 04th April, 2017
VBP/-
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ITA.No.1314/Hyd/2014 M/s. Patel KNR JV,
Jogeshwari (W), Mumbai
Copy to
1. DCIT, Central Circle-3, 8th Floor, Aayakar Bhavan, Basheerbagh, Hyderabad.
2. M/s. Patel KNR JV, Patel Estate, Jogeshwari (W), Mumbai - 400 102.
3. CIT(A)-34, Mumbai
4. CCIT-XIII, Mumbai
5. D.R. ITAT "A" Bench, Hyderabad.
6. Guard File