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Income Tax Appellate Tribunal - Chandigarh

Unipro Techno Infrastructure Private ... vs Pr. Cit-1, Chandigarh on 1 December, 2017

                IN THE INCOME TAX APPELLATE TRIBUNAL
                   DIVISION BENCH 'B', CHANDIGARH

              BEFORE MS. DIVA SINGH, JUDICIAL MEMBER
              AND Dr.B.R.R.KUMAR, ACCOUNTANT MEMBER

                                   ITA No. 867/CHD/2017
                                  Assessment Year : 2012-13
M/s Unipro Techno Infrastructure P.Ltd.,                   Vs      The Pr. CIT-I,
SCO 36, Sector 7-C,                                                Chandigarh.
Chandigarh.
PAN : AABCU1732D

(Appellant)                                                        (Respondent)

                         Appellant by     :     Smt. Sudhir Sehgal
                         Respondent by    :    Shri Ravi Sarangal, CIT-DR
                         Date of hearing :        26.09.2017
                         Date of Pronouncement : 01.12.2017

                                           ORDER

PER DIVA SINGH,JM The present appeal has been filed by the assessee assailing the correctness of the order passed by Pr. CIT-I Chandigarh dated 30.03.2017 pertaining to 2012-13 assessment year on the following grounds :

1. That the jurisdiction u/s 263 by the Pr Commissioner of Income Tax-I for the A/Y 2011-12 has been wrongly assumed as the Assessing Officer after asking for and scrutinizing all the details, making enquiries, proper verification and consideration of the entire material produced by the assessee and has allowed the claim of the assessee after due application of mind.

2. That the orders of The Pr Commissioner of Income Tax-I under Section 263 for the A/Y 2012-13 of the Act is a result of mechanical exercise of power as it is based on whims and fancies of the revising authority as there is no material on record to suggest that the order is erroneous in so far as it is prejudicial to the interest of the revenue.

3. That the order of the Pr Commissioner of Income Tax-I lacks from judicial consistency as the said deduction u/s 80A has been allowed by the subsequent assessing officers for the A/Y 2013-14 after scrutinizing all the details, making enquiries, proper verification and consideration of the entire material on record had allowed the claim of the assessee after due application of mind.

4. That the final issues on which jurisdiction has been assumed u/s 263 does not find mention in the show cause notices which is bad in law.

2. The ld. AR inviting attention to the assessment order dated 20.12.2014 submitted that it has been passed by the AO with due application of mind and after carrying out a full inquiry on the issues ITA 867/CHD/2017 A.Y. 2012-13 Page 2 of 36 which are a subject matter for consideration by the Pr. CIT-I Chandigarh exercising his Revisionary powers.

2.1 In the facts of the present case, it was submitted, that the order was not maintainable. Reliance was placed on the detailed reasons set out in the synopsis running into 13 pages filed on record. Inviting attention to the same, it was submitted that the submissions of the assessee are found addressed therein and the assessee would be heavily relying upon these arguments, facts and submissions. Carrying us through the assessment order and then the arguments advanced before the Pr. CIT in response to the show cause notices issued which submissions have been extracted in the order itself, it was submitted that the said arguments were also heavily relied upon in the present proceedings. These submissions, it was submitted have not been accepted without any specific reason relying only on suspicions.

Referring to the impugned order, it was submitted that this fact is evident from the order itself as after examining all the documents in the Revisionary proceedings, the Pr. CIT Chandigarh has not pointed to any error let alone such an error which can be said to be prejudicial to the interests of the Revenue. It was submitted that after examining all documents, the Pr. CIT proceeded to set aside the order on an issue on which he never called upon the assessee to explain. The said exercise of power, it was submitted was contrary to the judicial precedent. Even on facts, it was submitted the order is not maintainable as had the assessee been asked to explain, the assessment order itself demonstrated the hollowness of the departmental stand. Referring to the assessment order, it was submitted that the record would show that the said issue also had been fully examined by the AO. Queries had been raised, reply had been given and a speaking order thereafter was passed.

2.2 Accordingly, it was submitted that the correctness of the order is assailed primarily on the grounds that firstly the AO before passing of the order dated 20.12.2014 u/s 143(3) made all necessary inquiries and full details were available on record. These very same facts and arguments, it was submitted, had been made before the Pr. CIT Chandigarh and now before the Tribunal. Accordingly, it was ITA 867/CHD/2017 A.Y. 2012-13 Page 3 of 36 submitted, that the order which is sought to be now revised has been passed after due application of mind.

2.3 Referring to the grounds, it was also his submission that the assessee would also want to argue that nothing has been brought on record by the Pr. Chief Commissioner of Income Tax to show that the order passed by the AO was either erroneous or prejudicial to the interests of the Revenue. It was submitted that the AO had considered the contract entered into by the assessee in 2011-12 Assessment Year and considering the facts, assessment order u/s 143(3) dated 20.12.2014 had been passed. Considering the new contracts entered into by the assessee, the AO after scrutinizing all details and after making necessary inquiries, accepted the assessee's submission that the new contracts were also identical and were Infrastructure development and maintenance contracts. Thus, after due enquiry, the view taken in 2011-12 assessment year had been followed. Nothing has been referred to in the impugned order that the view was incorrect.

2.4 It was submitted by the ld. AR that it is an admitted fact that in 2011-12 assessment year, the issue came up before the ITAT wherein considering the similar activity carried out by the assessee but only in respect of one project i.e. Thural Project, the ITAT struck down similar exercise of power by Pr. CIT vide its order dated 06.02.2017 in ITA 361/CHD/2016. The said fact, it was submitted, was in the knowledge of the Pr. CIT who while passing the present order has acknowledged this fact in para 15 page 15 of the present order where he observes as under :

"Therefore, since the said contract under similar facts and circumstances is continuing even in this year to my considered opinion now, it cannot be said that the said contract is 'works contract', not eligible for deduction u/s 80IA of the Act, without bringing on record any further material/evidences. 2.5. It was his submission that once it had been demonstrated relying upon queries made and in the course of the proceedings which were made available to the Pr. CIT also that the other contracts taken by the assessee were also of a similar nature and thus in case the Pr. CIT disagreed, then it was incumbent on the Pr. CIT to show that the said claim on facts was wrong by pointing to some error. At the last stage, to sweepingly refer that basic contracts have not been called forth is a contradictory stand and patently arbitrary. Referring to the record, it ITA 867/CHD/2017 A.Y. 2012-13 Page 4 of 36 was submitted, that in the year under consideration the subject matter of dispute with the Department is the last three contracts referred to in the table extracted by the Pr. CIT in para 6 page 8 of his order. Reference on the said page, it was submitted is to the contracts executed by the assessee in support of the Irrigation & Public Health Department, Thural and Dehra (HP) and Uttrakhand Peyjal Nigam, Pauri & Rudraparyag. It was submitted, that the assessee has argued that the assessee is primarily engaged in the infrastructure development, maintenance and operation of development of infrastructure facilities for which purposes, it had been awarded these specific contracts. Referring to the assessment order, it is submitted that the AO has taken due notice of the non exempt unit i.e. the by- pass Hamirpur site and the remaining four projects i.e. Water Supply Project ,IPH Thural; Water Supply Project Dehra; Water Supply Pauri; and Water Supply Project, Rudraprayag have been noted as exempt units and the ITAT has already considered the contract qua the Water Supply Project IPH Thural wherein identical exercise of the Revisionary Powers u/s 263 by the Pr. CIT in 2011-12 assessment year has been held to be bad in law. In the said year also, the Pr. CIT had held the very similarly worded Contract as a "Works Contract" and had held that exemption has been granted by the AO on erroneous facts without due application of mind and on the basis of inadequate inquiry and without considering the Contract. Even in the said year, the AO was castigated for granting relief without making any enquiry. The ITAT in the order dated 06.02.2012 in ITA 361/CHD/2016 held that it was not a case of inadequate enquiry. Inviting attention to para 4 of the synopsis filed, it was submitted, that the queries raised and details made available to the AO which are also relied upon by the Pr. CIT would show that all aspects and facts have been considered. The replies of the assessee set out in para 4 were heavily relied upon. Reading therefrom, it was submitted, that apart from the other arguments, even otherwise the assumption of jurisdiction was not maintainable as the issue which finds mention in the order was not mentioned in the show cause notice. It was submitted had it been referred, the detailed replies to queries on record would have shown that even in this regard,, the powers u/s 263 have been wrongly invoked by the Pr CIT. Since heavy reliance is placed ITA 867/CHD/2017 A.Y. 2012-13 Page 5 of 36 on these facts and submissions, for ready reference, the submissions are reproduced hereunder :

4. The other ground of appeal i.e. ground No. 4, by way of which, it has been stated that the Pr. CIT cannot assume the jurisdiction on the issue, which does not find mention in the show cause notice. With this background, the following are the facts of the case:-

i. The Assessee Company was awarded contract by Himachal Pradesh Government, Irrigation and Public Health Department, Division Thural and Dehra and also Government of Uttrakhand, Peyjal Nigam Pauri and Rudraparyag as under:

ii. The return of income had been filed and for which, the computation of income is there at pages 1 to 4 of the Paper Book and at page-2, the deduction u/s 80IA had been claimed and the other relevant pages are page 17, wherein, there is audit report on Form No. 10CCB and in Col.9, at Page 17 it has been mentioned that "initial assessment year" when deduction is being claimed is Assessment Year 2011- 2012. read with page 18, wherein the report of "Eligible Business under 80IA" has been given.

iii. Then at Page 22, the deduction has been claimed in Para 30 and the declaration of the "Chartered Account" is there about 80-IA. The balance sheet has been placed from Pages 24 to 31 of the "Paper Book".

iv. The first reply is dated 08.07.2013, placed at Page 39 of the Paper Book, wherein the computation of income. ITR along with audit report for two years i.e. for Assessment Years 2011-2012 a 2012-2013 were filed. v. The first detailed questionnaire is at Pages 34 to 37 of the "Paper Book" and the relevant query is at Serial No. 1 and 17 of the questionnaire at Page 36 of the Paper Book.

vi. Reply to the detailed questionnaire, dated 18.07.2013 is there at Pages 40 to 42 and relevant Para is Para-1, which mentions the type of contract is for "providing lift water supply scheme from Executive Engineer, Irrigation and Public Health, Division, Thural, Distt. Kangra and in other Areas". vii. Then, there is other reply, at Page 43 and relevant Para 1. viii. The next detailed reply, dated 21.11.2014 is placed at pages 44 to 47 of the paper book, wherein the deduction u/s 80IA in respect of same type of contract, which was there in earlier years at Thural (HP) i.e. for providing lift water supply scheme there is mention of new contracts in HP and Uttrakhand From this, it is very clear that, whatever has been mentioned at Serial No.1 with regard to nature of contract of Thural since last year and the same type of contract were taken at other places at Paragpur in HP at Pauri in Uttrakhand and at Rudraparyag (Uttrakhand). Thus, the AO was fully appraised of the fact that there is new contracts were taken during the year as mentioned at Serial No.2, 3 and 4 and full details were given at Serial No.1. ix. Then at page 45, the provisions of 80 IA have been explained as to how the deduction is admissible.

x. Then, at page 46, the nature of contract as taken during the year under consideration from H.P. Irrigation Department and Uttrakhand Peyjal Nigam department has been explained.

xi. Then again vide our reply, dated 10.10.2014 more information was desired by the Assessing Officer and other clarification was given, which is at Serial No.1 at Page 48 to

50.

xii. Then, again same has been reiterated a Page 51 Serial No.1 and at Page 52 Serial No.5. Thereafter, the order u/s 143(3) was passed by the Assessing Officer and in the order at page 56, the reason for selection the case in scrutiny has been mentioned as under:

"The reasons for selection of case in scrutiny are "large deduction claimed under Chapter VIA". Subsequently, questionnaire along with notices U/s 143(2)7142(1) was issued on 11.2.2014/25.9.2014."

Thus, the only reason for scrutiny was to verify the deduction U/s 80-IA which has been verified and looked into detail.

Reliance is being placed in the assessment order at page No.2 and page 5 of the order and in Para 3.1 form Line 5 at Page 57, it has been mentioned as under: -

ITA 867/CHD/2017 A.Y. 2012-13 Page 6 of 36 "Further, the assessee company was awarded contract by Himachal Pradesh Government, Irrigation and Public Health Department, Division Thural and Dehra and also Government of Uttarakhand, Peyjal Nigam Pauri and Rudraprayag. The composite project awarded to the assessee in providing Rehabilitation and Source Level Agumentation of various schemes in Changer Area in Tenhil Jaisighpur, Palampur, Khundian and Dehra in District Kangra (HP) Sub head construction of civil work i.e. Percolation Well, Pump House, Compound Walls, retaining breash walls, Wire Crate Works, Roads, Streets Truss Bridge, providing lowering, laying and jointing of pipe lines including supply and fixing of required valves and specials, construction of anchor blocks/thrust blocks and supporting pillars etc for rising main gravity main and supply of lab equipments, inspection vehicle and maintenance van etc supply and installation of pumping machinery including accessories and electromechanical equipments required for stepping down of 11 KVA power supply and post completion operation and maintenance of the whole scheme for 60 months including automation."

xiii. Then again in Para 3.2 of the order at Page 67, the amount of Rs.4,56,56,5277-as claimed deduction u/s 80 IA have been mentioned and allowed at Rs.5,10,61,026/-.

xiv. Then, again at Pages 62 to 66 after discussing the issue of claim of depreciation for "exempt unit" and "non-exempt unit" in respect of various contracts for which 80IA has been claimed for Water Supply project at Thural Division, Dehra Water Project, Pauri Uttrakhand Project and Rudraparyag project, wherein the depreciation have been disallowed to the tune of Rs. 65,72,7447- and, thus, the Assessing Officer was fully conscious of the fact that about the allocation of expenses etc. for exempt unit and non- exempt unit.

(emphasis supplied) 2.6 Relying upon para 5 of the synopsis, it was submitted, all copies of Contract agreements along with Award Letter and schedules accompanied by site plan of development activities of the respective Infrastructure Development Project were produced before the Assessing Officer during the original assessment proceedings. It was submitted that these are undisputed facts and accepted by the Pr. CIT who also while passing the order u/s 263 as per Page 2 and 3 of the order of Pr. CIT takes note that "Contracts" along with Maps and Photographs had been filed, copies of these are at Pages 86 to 110 of the Paper Book and, then from Pages 111 to 114. Copies of certificates issued u/s 197(1) of Income Tax Act by the ACIT, (TDS) Chandigarh directing 0.5% as TDS in respect of the payment to contractor etc. for these four different Contracts entered into by the assessee at Dehra, Thural, Rudraprayag and Pauri. The certificate had been issued after considering the submissions and the specific contracts. The AO in the facts of the present case had the benefit of assessment order for assessment year 2011-12 wherein similar claim had been allowed after due consideration and, thus, he had already considered each and every clause and condition of the composite contract for Thural Project and thus on going through the other contracts, he found that they ITA 867/CHD/2017 A.Y. 2012-13 Page 7 of 36 were also identical composite infrastructure contracts. It was reiterated that in the course of the assessment proceedings, it had been argued before the AO that the remaining three new contracts were also identical to the contract for water supply scheme at Thural (HP) which had been considered in the immediately preceding assessment year and thus, since the three new contracts were also of a similar nature taken at Thural (HP) i.e. Dehra (HP) and the other two projects at Pauri and Rudraprayag at Uttrakhand. Thus, apart from referring to facts of Thural Project which was continuing from the earlier year, similarity of nature of contracts, it was submitted, had been argued before the AO as would be evident from Paper Book pages 44, 46 and 48 of the Paper Book. These submissions based on the specific Agreements have been considered by the AO. The Show Cause Notices issued to the assessee, copy of which is placed at page 68 and 71 dated 21.09.2016 and 14.02.2017 respectively of the Paper Book, it was submitted, would show that the only issue raised by the Pr. CIT is about the contract of the assessee which according to him fell under the definition of "Works Contract" and, thus, not eligible for deduction u/s 80IA and in the 2nd show cause notice, he has mentioned about certain payments made to Sub contractors and has mentioned that proportionate profit on such job work is not allowable u/s 80IA and finally he had raised the issue of proportionate allowability of expenses for "non-exempt income" viz-a-viz "exempt income".

2.7 Inviting attention to Paper Book page 73 to 85, it was submitted, that the assessee had filed copies of contracts along with Maps and Photographs for which purpose, reference was also made to pages 86 to 110 of the Paper Book and, then from Pages 111 to 114 certificates u/s 197(i) of the Income Tax Act directing assessee to deduct TDS @ 0.5% in regard to payments to contractors issued by the ACIT (TDS) Chandigarh. These arguments have been addressed earlier also, however, the same are reiterated to highlight that the directions could have been given only after going through the different Contracts and after considering the detailed submissions, the TDS Wing had been satisfied after going through all these contracts exempt U/s 80-Income Tax Act to direct a lower deduction of TDS.

ITA 867/CHD/2017 A.Y. 2012-13 Page 8 of 36 2.8 It was submitted that argument that these were infrastructure development, maintenance and operation contacts was considered by the Pr. CIT, Chandigarh and he has noticed it in page 2 of his order but still he was proceeding on suspicions and ignored this patent fact. The relevant observation from the impugned order is reproduced hereunder:

'It was forcibly argued and submitted that that the assessee is primarily engaged in the infrastructure development, maintenance and operation of development of infrastructure facilities. It was submitted that the assessee was awarded contracts by Irrigation and Public Health Department (IPH), Thural Division and Dehra Division of HP Government one/Government of Uttrakhand Peyjal Nigam, Pauri and Rudraparyag."

(emphasis supplied) 2.9 The fact that similar argument has been raised before the Pr. CIT and has been ignored by the said authority, it was submitted is further evident from para 3:

"Therefore, it was submitted that he composite projects awarded to the assessee were on built, operate and transfer basis. It was further submitted that copies of all the contracts/agreements along with the award letters and schedules accompanying thereto, including the site plans of the development activity as per the infrastructure development project/contract, were submitted and produced before the AO during the original assessment. He has again produced the same along with latest photographs of the projects developed, which are placed on record. Thirdly, the AR has submitted that for the AY 2012-2013 the assessee filed his return of income claiming deduction U/s 80-IA on the contracts executed for aforesaid infrastructure projects/infrastructure facilities which was accordingly allowed by the AO under scrutiny and after examining the documentary evidences produced before the AO i.e. copies of contracts/agreements, award letters and accompanied documents, audit report in Form 10CCB including books of account etc. It was also submitted that the said assessment year was the third year of its claim of said deduction, 'which was accordingly allowed. He has also submitted that the infrastructure facility developed by the assessee was based on the allotment of a composite contract for infrastructure development. Fourthly, the AR, has also submitted that the aforesaid composite contracts awarded to the assessee were executed by deployment of o w n m a c h i n e r y i n s t a l l e d i n c l u d i n g i t s c o m p o n e n t s , engineers/architects/designers and labor employed by the assessee, designing, execution, financing in the form of capital investment, entrepreneurial risk, performance guarantee etc, is the sole responsibility of the assessee and no role in relation thereto is played by the concerned State Governments."

(emphasis supplied) 2.10 It was further submitted that the Pr. CIT took note of the fact at Page 4, that lower deduction of tax u/s 197 (1) Certificate was issued by the ACIT, TDS, Chandigarh after considering the fact that the contract awarded to the assessee, qualified for deduction u/s 80IA as per copy placed at Pages 111 to 114 of the Paper Book.

ITA 867/CHD/2017 A.Y. 2012-13 Page 9 of 36 2.11 Addressing the impugned order, it was submitted, that after taking note of the submissions, while summing up and setting out the details of the contracts from pages 5 to 8 acknowledges the fact that the ITAT has considered the similar contract of Thural Project and has held that the nature of contract is of "Development of Infrastructure Facility" and was not in the nature of a "works contract". It was submitted that the reply of the assessee has been set out in para 9 wherein the Pr. CIT has referred to the questionnaire issued by the AO in para 10 and thereafter referring to the reply dated 21.11.2014 which has been referred to at pages 1 to 14 of his order, he has set aside the proceedings avoiding the correct and true facts. Reliance was placed on para 7 of the synopsis filed in which the assessee addresses the point for point critical observations of the order of the Pr. CIT by way of a Chart. Same is reproduced hereunder for ready reference :

"7. The Pr. CIT has set aside the proceedings on the following facts:-

S.NO.                                                      Our Reply
           Observation of Pr. CIT
1          The Pr. CIT has stated in Para 13 that,         It is submitted that kindly refer to our reply,
           though, the claim of deduction was raised by    dated 10.10.2014, placed at page 48 and
           the Assessing Officer and replied by the        relevant Para 1, Para 18 and Reply dated

Assessee, but the terms and conditions of the 21.11.2014 at Serial No.1, Page 44 and Page 46, contract executed were not enquired upon or wherein, the same nature of contract as of verified by the Assessing Officer and had "Thural" has been explained for other three accepted the plea of the assessee on face contracts-f taken during the year at value. Himachal Pradesh and Uttrakhand.

It has further been stated that the copy From the above replies, it is quite evident of the contract executed at Thural that the same nature and type of new Division is there in Asstt. Year 2011-12 contracts were there and, thus, the Assessing but not in this assessment year and Officer had fully apprised himself of the said neither fresh copies of contract are filed nature and type of contracts and allowed the by the assessee deduction U/s I 80-IA Further, the Assessing Officer in his assessment order categorically mentions in Para 3.1 about the "composite contract" awarded to the assessee and | how, the Pr. CIT mentions in the order that no such copies of contracts were submitted and produced before the Assessing Officer, during the original assessment proceedings and, thus, the finding of the Pr. CIT that they were accepted at the face value, is not correct observations.

2 The Pr. CIT -in Paras 14 St 15 after From thee replies as submitted above and analyzing the order of the Hon'ble copies of the contracts, submitted and ITAT had accepted the fact that the produced before the Assessing Officer and contract for project at "Thural" is going through the order of the Assessing not ''works contract" and hence has Officer, it is confirmed the Assessing stated that no adverse view can taken Officer had fully applied his mind to the issue in respect of such contract, but has U/s 80-IA and since the Pr. CIT has accepted ITA 867/CHD/2017 A.Y. 2012-13 Page 10 of 36 stated that for the other contracts as the order of the Hon'ble ITAT, per Para 16 of the order, it is a case of Chandigarh Bench, Chandigarh for Asstt. inadequate of lack of enquiry. Year 2011-12 and, same type of contracts were there of th e "Uttrakha nd" and of "Deh ra" Division of H.P. as stated above, it is not a case of non-application of mind for allowing deduction u/s 80 IA by the Assessing Officer.

The finding of the Pr. CIT in Para 19 and reliance on certain case laws in Para 17 and Para 17 of the Hon'ble ITAT, clearly | are applicable to the assessee, since j how can the Assessing Officer mention in the order in para

3.1 of the order with regard to the nature and type of contract going by the Show Cause Notice of Pr. CIT and this could have been mentioned only when, the AO had analyzed all the contracts and, therefore, the finding of the Pr. CIT in Para 20, while accepting the order of ITAT, is clearly out of context that nature and type of new contracts are not as per record.

As regards the finding of the Pr. CIT about proportionate profit and bifurcation of expenses, it is submitted that the Assessing Officer had considered this issue, while passing the assessment order at Pages 62 to 67 of the "Paper Book" and disallowed the depreciation to the tune of Rs. 65,72,744/- and further, about the finding of the Pr. CIT that bifurcation is without any basis, it is submitted that the bifurcation has been looked into by the Assessing Officer i.e. he has made the disallowance of Rs. 65,72,7447- and, as such, the finding of the Pr. CIT on this issue with regard to bifurcation of expenses is not proper, since the Assessing Officer has already applied his mind to the same and what basis should be justified, has not been mentioned by the Pr.

CIT and, thus, the assessment order cannot be held to be erroneous and prejudicial to the interest of revenue.

2.12 Addressing the last ground i.e. the point on which the assessee has not been issued any Show Cause Notice which is a subject matter for consideration in the present proceedings, it was submitted that he would want to elaborate the arguments by stating that firstly such an action is not permissible under law and secondly even on merits, the conclusion that there was no inquiry on the issue is an incorrect fact. It was argued that in fact, if it is seen from the Show Cause Notice issued as per page 68, the Pr. CIT accepts the fact that all contracts have been examined, however, he has required the assessee to explain why 80IA benefit would be available as these were concluded to be Works Contracts. Thus, it was argued the Show Cause Notice itself shows that all Contracts of Himachal Pradesh and Uttrakhand Government were ITA 867/CHD/2017 A.Y. 2012-13 Page 11 of 36 already available on record and thus the suspicion that they were not considered by the AO on facts itself was without any basis.

2.13 The conclusion that there was an adhoc bifurcation of expenses without any justification was also assailed. For ready reference, the specific objects set out in para 6 to 9 of the synopsis filed is reproduced hereunder for ready reference :

"6. The last ground which is ground No.4, it is submitted that the Pr. CIT has issued the show cause notice, placed at Page 68 that all the contracts fell in the definition of "works contract" and nowhere any doubt has been raised about the nature and type of contracts awarded in respect of three contracts of Dehra, (HP), Pauri and Rudraparyag in Uttrakhand. Thus, when the Pr. CIT having accepted that in respect of Thural Divisional, was "infrastructure contract" and, thus, for that, the assessment is not erroneous and prejudicial to the interest of revenue then the Pr. CIT could not have given any adverse finding about the other three contracts that the same were required to be looked into, without mentioning in any show cause notice that such details were not available and, thus, the finding of the Pr. CIT on this issue is clearly out of context since nothing having been mentioned in the show notice. Reliance is being placed on the following judgments for the proposition that when nothing has been mentioned in the show cause notice about an issue, the Pr. CIT cannot set-aside the assessment:

7. The reliance by the Pr. CIT on various judgments at page 18, 19 & 20 are only on the issue, that where the Assessing Officer had not applied his mind to the issue, then, it could be case of making "no enquiry" and then it could he held that the assessment is erroneous and prejudicial to the interest of revenue. But whereas, the facts as given by the assessee, clearly demonstrates that the Assessing Officer has fully applied his mind and considered each and every aspect and, thus, the order of Pr. CIT deserves to be quashed.

Reliance is being placed on the following Judgments:

Narain Singia V/s Pr. Commissioner of income Tax 1 1-15 ITA N0.427/CHD/2015, ITAT, Chandigarh Bench, Chandigarh Universal Woollen Mills V/s Commissioner of Income Tax 2 16-32 ITA No.616/CHD/2015, ITAT, Chandigarh Bench, Chandigarh Ved Parkash Contractor V/s Commissioner of Income Tax 3 33-53 ITA No.573/CHD/2015, ITAT, Chandigarh Bench, Chandigarh Kumar Enterprises V/s Deputy Commissioner of Income Tax 4 54-67 ITA No.525/CHD/2014, ITAT, Chandigarh Bench, Chandigarh Venus Woollen Mills V/s Commissioner of Income Tax 5 68-70 36 ITR (Trib) CHD-TRIB Gupta Spinning Mills V/s Commissioner of Income Tax 6 71-87 ITA N0.3398/DEL/2010, ITAT, Delhi Bench at New Delhi Small Wonder Industries V/s Commissioner of Income Tax 7 88-89 ITA No.2464/MUM/2013, ITAT, Mumbai Bench, Mumbai 8 Commissioner of Income Tax V/s Smt R.G Umaranee 100-104 262 ITR 507 MAD-HC 9 Commissioner of Income Tax V/s Centimeters Electricals P. Ltd 105-107 317 ITR 249 DEL-HC 10 Colorcraft Builders V/s Income Tax Officer 108-109 105 ITD 599 MUM-TRIB 11 Commissioner of Income Tax V/s G K Kabra Co-op Industrial Estate 112-114 211 ITR 336 AP-HC 12 Peerless General Finance & Investment Co. Ltd. V/s ACIT 115-118 5 SOT 17 KOL-TRIB ITA 867/CHD/2017 A.Y. 2012-13 Page 12 of 36

8. The Pr. CIT in the show cause notice has mentioned at Page 68 that all the contracts are "works contract" meaning thereby that he has accepted the fact that the terms and conditions of the contract were available on "record" and were borne out from the replies and enquiries conducted by the Assessing Officer and in this background, the finding of the Pr. CIT that there is nothing on record in respect of "three new contracts" that whether they were works contract or otherwise, is itself contradictory and, thus, the order of the Pr. CIT deserves to be quashed.

9. At page 18 and para 22 of the orders of Principal CIT u/s 263, it is mentioned that the assessee has bifurcated expenses under various heads between eligible income and non-eligible income on ad-hoc basis without any basis or justification. The said contention of the Ld Pr. CIT is absolutely wrong because of the following reasons:-

i) That the nature of work and installation of equipment in the case of exempted projects and non exempted project is all together different and expenses to the income ratio can never be in the same proportion.

ii) That the assessee has been maintaining separate heads project-wise for exempted and non exempt income and expenses on the basis of cost centers maintained in the accounting software since its inception and the assessee has been producing all the books of accounts to the assessing officer for verification on different dates for such verification.

iii) As per normal practice bifurcated trading and profit and loss account for the exempted and non exempted projects are prepared and produced before the assessing officer at the time of assessment proceedings and these was duly verified by the assessing officer.

iv) The non exempt projects are in continuation from the contracts awarded in assessment year 2011-12 i.e. last year and the issue regarding comparatively higher expenses in case of non-exempted units as compared to the exempted projects has been decided in favour of the assessee by the Hon'ble ITAT Bench while passing orders against reopening of assessment u/s 263 for the Asstt. Year 2011-12. The concerned issue has been dealt at page 158-159 of the paper book and at pages 32-33 of the order of the Hon'ble ITAT against reopening of assessment u/s 263 for assessment year 2011-12.

Thus, it is prayed that the order of Pr. CIT may be quashed and oblige. 2.14 On the basis of these arguments, facts and submissions and relying upon the Paper Book filed, it was submitted that the copy of the order-sheet placed at pages 32 to 33 and the copies of the queries raised in the course of the assessment proceedings u/s 143(3) at pages 34 to 38 when read alongwith the replies filed by the assessee in respect of queries raised in the course of the assessment proceedings u/s 143(3) at pages 39 to 55 are considered, it was submitted, it would show that all the necessary queries have been made.

2.15 Specific attention was invited to Paper Book page No. 40-44 which is a letter dated 18.07.2014 addressed to the AO explaining the Contracts awarded to the assessee by the respective State Governments. For ready reference, relevant extract from the same is reproduced hereunder :

"1. The assessee company was awarded contract by Himachal Pardesh Government, Irrigation and Public Health Department, Division Thural & Dehra & also Government of Uttarkhand, Peyjal Nigam Pauri & Rudraparyag as under :

1. Providing Rehabilitation and Source Level Agumentation of various schemes in Changer area in Tenhil Jaisinghpur, Palampur, Khundian and Dera in District Kangra (HP) Sub Head:- Construction of Civil Work i.e. Percolation Well, Pump ITA 867/CHD/2017 A.Y. 2012-13 Page 13 of 36 House, Dtaff Quarters, Laboratory Building, Inspection Hut Storage Tanks, Compound Walls, retaining/breast walls, Wire Crate Works, roads, street truss bridge, providing, lowering, laying and jointing of pipe lines including supply and fixing of required valves and specials, construction of anchor blocks/thrust blocks and supporting pillars •etc for rising main, gravity main and supply of lab equipments, inspection vehicle and maintenance van etc. supply and installation of pumping machinery including accessories and electromechanical equipments required for stepping down of 11 KVA power supply and post .completion operation and maintenance of the whole scheme for 60 months including automation.

2. Executive Engineer JPH Division _. Dehra, Distt 'Kangra (H. P.) Providing WSS to NC/PC Habitation under Jaswan and Pragpur in Tehsil Dehra and Jaswan in Distt Kangra (HP).

3. Executive -Engineer, Construction Division, Uttarakhand Peyjal Nigam, Pauri( UK) Name of Work:- Pauri Nanghat Water Supply 'Scheme in Pauri Uttrakhand.

4. Executive Engineer, Construction Division, Uttarakhand Peyjal Nigam, Rudarpryag ( UK) -Name of Work: -Construction, maintenance & handing over to maintenance body of TALLANAGPUR GROUP OF VILLAGES PUMPING V/ATER SUPPLY SCHEME Rudarparyag.

2.16 Reliance was placed on the following paras of Paper Book page 45 and 46 of the Book. The specific provision of the Act was addressed for the benefit of the AO highlighted several relevant facts, a portion of the relevant para is reproduced hereunder :

"The assessee was awarded contract for development and maintenance of the infrastructure scheme for lift water supply on BOT basis by the Himachal Pradesh Irrigation and Public Health Department and Uttrakhand Peyjal Nigam departments of State Government.

The contract involves successful development of the -composite project for developing infrastructure for water supply and its successful commissioning and successfully operating the project for a period of five years with all sorts of entrepreneurial risks as the failure of any-component will affect the operation of the entire project. It is altogether different from the risks involved in the service provided -and work done contracts, where the risk is limited to provide -service or work and remove the defects during defect liability period.

The performance -guarantee involved in the composite development project is to successfully develop the whole water supply project, successfully commission it and to - successfully run the project for a period of five years, whereas in the case of work contracts the performance guarantee is limited to the work done by the -contractor lone.

(emphasis supplied) 2.17 Referring to another reply of the assessee on record at Paper Book page 48 which was brought to the notice of the AO, attention was invited to para 1(i) of the said reply. Same is reproduced hereunder :

The firm Unipro Techno Infrastructure Private Limited is a private limited company. The Company had undertaken contract for providing lift water supply scheme from Executive Engineer, Irrigation & Public Health, Division Thural, Distt. Kangra (HP) on account of providing rehabilitation and source level augmentation of various-schemes in changer area in Tehsil Jaisinghpur, Palampur, Khundian and Dehra in Distt Kangra HP, Executive Engineer, IPH Division, Dehra, Distt Kangra (H.P.) Providing WSS to NC/PC Habitation under Jaswan and Pragpur in Tehsil Dehra and Jaswan in Distt Kangra (HP), Executive Engineer, Construction Division, Uttarakhand Peyjal Nigam, Rudarpryag ( UK) Name of Work:-Construction, ITA 867/CHD/2017 A.Y. 2012-13 Page 14 of 36 maintenance & handing over to maintenance body of TALL AN AGPUR-GROUP OF VILLAGES PUMPING WATER SUPPLY SCHEME , Rudarparyag, Executive Engineer, Construction Division, Uttarakhand Peyjal Nigam, & Pauri( UK) Name of Work:- Pauri Nanghat Water 'Supply Scheme in Pauri Uttrakhand, Complete construction of the projects ^including operation & Maintenance of the whole scheme.

2.18 Para 18 of the said detailed reply at page 49 was also referred to.

Reliance was also placed on the reply, copy placed at pages 51 to 55 addressed to the AO were also referred to. It was submitted that considering these, the AO passed the aforesaid order.

2.19 Referring to page 68, which is a copy of one of the Show Cause Notices issued by the Pr. CIT, it was highlighted that complete records were already available on record of the AO and the contracts had been seen by the Pr. CIT who considering these, had come to an incorrect conclusion that it was only a case of sale of goods for the purpose of construction/erection and thus was a case of Works Contract for which purposes profits were held to be ineligible for deduction u/s 80IA. The conclusion on facts was incorrect in view thereof was passed on a different reasoning.

2.20 Referring to page 64 which is infact the copy of the assessment order which has been set aside by the Pr. CIT, it has been argued that in para 6.2 of the same would show that the AO carried out a detailed re-calculation for the purpose of depreciation taking due note of the fact that there were exempt projects and also non-exempted projects. This fact is also again noted at page 12 of his order. Thus, after carrying out a detailed exercise working of the assets put to use at the different projects was carried out by the AO only after looking through the details made available as per contracts and thus it was submitted it cannot be the case of the Department that the claim of the assessee has been allowed without any inquiry.

2.21 Referring to page 71 which is the second, Show Cause Notice of the Pr. CIT it was submitted that suspicion that on the issues raised in paras (i) and (ii)thereof were not examined are without any basis. Referring to the AO, it was submitted that the AO has taken due notice of exempted and non-exempted units and the Pr. CIT has arbitrarily arrived at the conclusion that it was without any inquiry. It was argued that whereas the fact is that it was enquired into and re-calculated and this fact is coming out from the assessment order itself and no infirmity ITA 867/CHD/2017 A.Y. 2012-13 Page 15 of 36 has been pointed out therein by the Pr. CIT. It was submitted that on the Thural Project, the Pr. CIT does not take any adverse view on account of the order of the ITAT already available on record, however, on the remaining three projects, ignoring the fact that these after examining were considered to be identical, the Pr. CIT without demonstrating that these were different and thus without any justification has arbitrarily arrived at the conclusion that it was without any inquiry.

2.22 The ld. AR inviting attention to the order dated 06.02.2017 in ITA 361/CHD/2016 in the case of the assessee pertaining to 2011-12 assessment year submitted that the following facts had been considered by the Pr. CIT which are identical except that hereunder they refer to only one contract. For ready reference para 4 and 5 of the same are reproduced hereunder :

4. Thereafter on examining the assessment record the learned Pr.CIT found that the Assessing Officer had not examined certain issues vis-à-

vis claim of deduction under section 80IA of the Act made by the assessee. The learned Pr. CIT noticed that the assessee company had been awarded a contract which was in the nature of "works contract"

and in view of Explanation to subsection (13) to section 80IA, which excludes business in the nature of "works contract" from claiming benefit of deduction under section 80I A(4), deduction under section 80IA, was not allowable on the profits derived from this project. Further the learned Pr. CIT noticed that the assessee had undertaken a project of water suppl y and had debited a payment of Rs.2,92,48,936/- in the trading account relating to the project on account of job work done by sub-contract. As per the learned Pr. CIT the assessee was not eligible for deduction under section 80IA on the proportionate profits earned on job work executed by sub-contract . The learned Pr. CI T also noticed that in respect of two projects relating to water supply and Hamirpur bye pass, the expenses incurred on freight and carriage, fuel and wages and salary were not in proportion to the receipts from the same and the same had not been examined by the Assessing Officer w.r.t the provisions of section 80IA(8)/80IA (10) of the Act. The learned Pr. CIT found that the Assessing Officer had not examined the above issue during the assessment proceedings. Accordingly, proceedings under section 263 of the Act were initiated and show cause notice issued to the assessee which mentioned the discrepancies noted in the assessment order passed as follows:

i) The assessee company was awarded contract by Himachal Pradesh Government, Irrigation and Public Health Department Division Thural, Distt. Kangra. It is seen that the assessee company has claimed deduction u/s 80IA of I.T Act, 1961 on the profits of the said contract. The project is apparently covered under the definition of "Work Contract". Accordingly as per the explanation to sub-section 13 of Section 80IA, deduction u/s 80IA of I.T. Act, 1961 is not allowable on the profits derived from these projects. Allowance of deduction u/s 80IA has thus resulted in loss of Revenue.

ITA 867/CHD/2017 A.Y. 2012-13 Page 16 of 36

ii) Deduction u/s 80IA has been claimed on profits derived from the project of Water Supply. It is seen that in Trading Account, a payment of Rs.2,92,48,936/- has been made for "Job Work Done by Sub-Contractors". Proportionate profits earned on the job work executed by a sub-contractors is not eligible for deduction u/s 80IA. This issue has not been examined by the AO during the course of assessment proceedings and has resulted in loss of Revenue.

iii) It further seen that the receipts from the Water Supply Project and Hamirpur Bye Pass Project are in the ration of 2.8 :

1 whereas the expenses incurred on Freight & Carriage, Fuel and Wages & Salary are comparatively higher in case of Hamirpur Bye Pass Project. The comparative details have not been examined by the AO viz-a-viz the provisions of sections 80IA(8)/80IA(10) of l.T. Act, 1961."

5. During the course of proceedings before the learned Pr.CIT the assessee fi led detailed replies, stating that the issue of eligibility of the assessee to claim deduction of its profits under section 80IA had been examined by the Assessing Officer during assessment proceedings and after due verification had allowed the same to the assessee and therefore the present proceeding under section 263 only tantamounted to review due to change of opinion. Further the assessee submitted that even on merits the assessee was entitled to deduction under section 80IA si nce the contract awarded to it was not in the nature of works contract but was a composite contract on build, operate and transfer basis with all the attendant risks relating to investment, entrepreneurship performance guarantee etc. lying on the assessee itself. Further the assessee submitted that in the case of Kaveri Infrastructure Pvt. Limited/Unipro Techno Infrastructure similar contract was held as infrastructural contract in the assessment year 2008 -09 by another assessing officer and also the assessee had been granted certificates for deduction of tax at lower rate in view of the fact that the contract awarded to it qualified for deduction under section 80 IA of the Act. The assessee further argued that the proceedings had been initiated on receipt of audit objection. The gist of the submissions made by the assessee before the learned Pr. CIT are reproduced in para 3.1 of his order, after considering which learned Pr. CIT held that all the above three issues highlighted by hi m had not been examined by the Assessing Officer during assessment proceedings and therefore the order had been passed without making enquiries or verification which were necessary for the grant of deduction under section 80IA(4) of the Act. He therefore held that the order passed by the Assessing Officer was erroneous insofar as prejudicial to the interest of the revenue and accordingly set aside the same with a direction to the Assessing Officer pass an order afresh in accordance with law. The relevant findings of the learned Pr. CIT at para 3.1 to 4 of his order are as under:

"3.1 In reply to the issue at Sr. No. 1 of the show cause, the assessee has filed a detailed reply wherein it has been stated that:

i) The composite project entrusted/awarded to the assessee was on built, operate and transfer basis.

ITA 867/CHD/2017 A.Y. 2012-13 Page 17 of 36

ii) For the execution of contract the machinery installed including its components, engineers & labour employed, designing, execution, financing in the form of capital investment, entrepreneurship risk, performance guarantee etc. is the responsibility of the assessee.

iii) A certificate for deduction of tax at lower rate was issued to the assessee by the CIT(TDS) in view of the fact that the contract awarded to the assessee qualifiers for deduction u/s 80IA of the Act.

iv) Deduction u/s 80IA was allowed by the AO on the ground that the contract was for infrastructure development and not a civil contract.

v) Similar contract in the case of M/s Kavery Infrastructure Pvt. Ltd./Unipro Techno Infrastructure was held as infrastructural contract in the A.Y. 2008-09 by another Assessing Officer.

vi) The proceedings u/s 263 have been initiated after receipt of objection from Revenue audit party without bestowing conscious attention to the factual position.

The assessee has further stated, that the proceedings initiated u/s 263 deserve to be dropped in view of the following:-

i) The proceedings have been initiated on the opinion of Audit which are not permitted as per various judicial decisions.

ii) The deduction was allowed by the AO after verification which cannot be reviewed due to change in opinion.

[CIT(Central) Vs Nahar Exports Ltd.]

iii)In the proposal of the Assessing Officer, it has nowhere been recorded that deducti on was granted because of lack of inquiring/verification or as a result of non applicators of mind.

iv) The notice has been issued in mechanical exercise of power and non application of mind in support of which five arguments have been given.

v) The deduction has been allowed by the AO on a true and correct interpretation of the provision of the Act.

vi) Power u/s 263 cannot be exercised by assessing different interpretation on the same set of facts.

3.1.1 The submissions made by the assessee have been considered. The explanation to subsection 13 of section 80IA has been substituted by Finance Act 2009. The explanation is exclusionary in nature which states that nothing contained in the section will apply in relation to a business referred to in sub section (4) which is in the nature of works contract awarded by any person (including the central or state Government). Thus to be eligible for deduction u/s 80IA(4), the business should not be of the nature of works contract. It is seen from the records of the assessment proceedings that this aspect has never been examined during the course of assessment and no verifications were made by the AO.

3.1.2 As per the provision of section 263 of the I.T. Act, the Pr. Commissioner may call for and examine the record of any proceedings under this Act and if considers that any order passed ITA 867/CHD/2017 A.Y. 2012-13 Page 18 of 36 therein by the Assessing Officer is erroneous in so far as it is prejudicial to the interest of Revenue, he may, after giving the assessee an opportunity of being heard and after making or cause to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify. In this context, it is worthwhile to mention that section 263 does not prescribe any procedural condition for invoking the said provision. The records may be examined for different reasons including any objection raised by the Audit for invoking the provision of section 263. In the case of CIT (Central) Vs Nahar Exports Ltd. (2008] 173 Taxman 3 (P&H), the Hon'ble jurisdictional High Court, had relied on the decision of Hon'ble Apex Court in CIT Vs Max India Ltd [295 ITR 282 (SC)] wherein it was held that at the relevant time two views were possible on the word 'profits' in the provision to section 8HHC (3). In the present case, it is not a question of having a view different than the one held by the AO. In the present case the applicability of Explanation to sub section 13 of section 80IA was not examined which prohibits deduction u/s 80IA(4J in the case of work contract. Thus whether the profits derived by the assessee fell under the preview of Explanation to section 13 was an essential condition for the applicability of section 80IA(4j of the Act. The assessee has further relied on the decision in Narain Singla Vs. Principal Commissioner of Income Tax(Central), Ludhiana (62 taxmann.com [2015] 255 (Chandigarh - Trib.), the facts of which are not applicable to the case of the assessee. On Contrary to the claim of the assessee, the Hon'ble Tribunal in the said case has held that in case of lack of inquiry, cause of action u/s 263 of the Act was open. The case of the assessee precisely falls under these observations as no inquiry has been made on the applicability of Explanation to sub section 13 of section 80IA in the case of the assessee. Further the facts of issuance of certificate for tax deduction at lower rates or allowing deduction in some other case by any other AO are not relevant here. Accordingly, the order passed by the assessing officer is erroneous in so far as it is prejudicial to the interest of Revenue on this issue.

3.2 Regarding the issue at Sr. No. 2 of the show cause notice, the assessee has admitted that during the execution of the contract, services of subcontractors were hired. The assessee has further claimed that the issue has been considered by the assessing officer at the time of assessment proceedings though not discussed in the assessment order and that section 80IA does not expressly debar the assessee from claiming deductions u/s 80IA.

3.2.1 The provisions of section 80IA(4) are applicable to any enterprise carrying on business of developing or operating and maintaining or developing, operating and maintaining any infrastructural facility. The deductions are thus clearly not applicable for the contract which is not carried out by the assessee. This aspect has not been subjected to verification during the assessment proceedings. No such details were called for by the AO or submitted by the assessee.

Accordingly, even on this issue the order passed by the AO is erroneous so far as it is prejudicial to the interest of Revenue.

3.3 Regarding the issue mentioned at Sr. No. 3 of the show cause the assessee has claimed that the same was duly examined by the Assessing Officer. It has further been claimed that the ITA 867/CHD/2017 A.Y. 2012-13 Page 19 of 36 provisions of section 801A(8) are not applicable. There is nothing on record either in the questionnaire or in the noting sheet entries to suggest that verification was made by the AO during the assessment proceedings with relation of applicability of provision of section 801A(8)/80IA(10) of the Act. Hence, the order passed by the AO is erroneous so far as it is prejudicial to the interest of Revenue on this issue also.

3.4 Further, reference is also made here to the newly inserted explanation 2 of Section 263 which was inserted w.e.f. 01.06.2015 and reads as under:-

"For the purpose of this section, it is hereby declared that an order passed by the Assessing Officer shall be deemed to be erroneous in so far as it is prejudicial to the interest of the revenue, if in the opinion the Principal Commissioner or Commissioner, -

(a) The order is passed without making inquiries or verification which should have been made;

(b) The order is passed allowing any relief without inquiring in to the claim;

(c) The order has not been made in accordance with' any order, direction or instruction issued by the Board under section 119;

or

(d) The order has not been passed in accordance with any decision which is prejudicial to the assessee, rendered by the jurisdictional High Court or Supreme Court in the case of the assessee or any other person."

Hence, legal provisions/Court decisions as cited by the assessee with respect to limitation/validity of invoking provisions of Section 263 are not applicable in this case.

In view of the above, it is evident that the issues mentioned in show cause notice as detailed above have not been examined/verified at the time of assessment proceedings. It is therefore held that the said assessment order is erroneous in so far as prejudicial to the interest of revenue for the reasons discussed above in view of the provisions of section 263, inter-alia, including Explanation 2 (a) inserted w.e.f. 01.06.2015, Accordingly, the assessment order u/s 143(3)dated 26.12.2013 for assessment year 2011-12 is cancelled with a direction to the Assessing Officer to pass an order afresh in accordance with law keeping in view the above observations and after allowing opportunity of being heard to the assessee." 2.23 Inviting attention to para 9 of the said order, it was submitted, that the order u/s 263 of the Pr. CIT and the assessment order which is sought to be set aside both proceed on similar facts and circumstances and the arguments have been considered wherein the arguments on behalf of the assessee that it could not be a works contract and it was infact an infrastructural contract have all been considered. Referring to another similar contract in the case of M/s Kaveri Infrastructure Pvt. Ltd./Unipro Techno Infrastructure for 2008-09 and 2011-12 ITA 867/CHD/2017 A.Y. 2012-13 Page 20 of 36 assessment year by another AO and considering the replies of the assessee as set out in para 9 to 11 and the arguments advanced on behalf of the Revenue as per para 12, the ITAT considered and held vide paras 13 to 25 that 263 was not maintainable. The case of the Revenue that the AO had not examined the claim u/s 80IA(4) vis-à-vis Explanation-3 it was submitted, was found to be not maintainable in view of specific queries and considering the Agreement, entered into it had been accepted that it was not merely a Works Contract as held by Pr. CIT but a contract awarded on a turn key basis which includes post operation consideration and maintenance of the same for a specified period. It was submitted by the ld. AR that the ITAT had also not accepted the arguments of the Revenue that it was a case of inadequate inquiry. The contract was held to be on a "Build Operate Transfer Basis" i.e. 'BOT'. The ITAT, it was submitted, had taken note of the fact that not a single document, clause or otherwise had been cited by the Pr. CIT to lend credence to a contrary view.

2.24 The second issue, it was submitted, has also been examined by the ITAT vide paras 26 to 29. Similarly on the third issue, on which Revisionary Powers were exercised in the said order addressed in paras 30 to 32 in the said case also, it had not met with approval of the Pr. CIT. The said decision has not been upheld by the ITAT that the receipts from the two projects in the ratio of 2.8=1 were all facts which had been examined. Nothing apart from suspicion had been pointed by the Revenue in support of the conclusion of Pr. CIT in the earlier year also.

2.25 Reiterating the submissions, it was submitted that qua ground No. 4, order is assailed as the Show Cause Notice available on record does not make a mention of the said issues. The fact that the AO has enquired into the issue at length and a speaking order has been passed, are arguments on merit but first the preliminary objection of the assessee remains as in the facts of the present proceedings, the Pr. CIT has not show caused the assessee on the issue and relying upon the decision in CIT Vs Smt. R.G.Umaranee 262 ITR 507 (Mad), CIT Vs Contimeters Electricals P.Ltd. 317 ITR 249 (Del), Colocraft Builders V ITO 105 ITD 599 (Mum) and Peerless General Finance & Investment Co. Ltd. V ACIT 5 SOT 17 (Kol-Tribunal), the order was stated to be bad in ITA 867/CHD/2017 A.Y. 2012-13 Page 21 of 36 law. It was reiterated that the order was passed after due application of mind after making requisite inquiries.

3. The ld. CIT-DR inviting attention to the impugned order submitted that two show cause notices have been issued to the assessee and apart from one of the projects i.e. the Thural Project out of the four projects, three were new Projects for which Contracts had been entered into by the assessee with H.P. Government (Dehra Project) and Uttrakhand Government (Rudraprayag and Pauri Project). The order of the ITAT, it was submitted, is available wherein considering the contract in the case of Thural Project (Himachal Pradesh), it has been held that it is not a Works Contract. However, merely because considering the Contract of the Thural Project, the ITAT has held that the AO has duly applied his mind, which fact has been accepted by the Pr. CIT in the present proceedings also. This fact cannot lead to the conclusion that in the next year also, the AO has considered the remaining three Contracts. The present case, it was submitted, is a fit case for exercising the Revisionary Powers of Pr. CIT u/s 263 as the AO without even caring to call for the Contracts/Agreements carelessly accepted the claim that agreements/contracts are identical. Since the order has been set aside, it was submitted by the ld. DR, there is no prejudice caused to the assessee as the assessee is free to raise all the arguments it deems fit. It was his submission that the exercise of power by the Pr. CIT is very much within the powers of the said authority. The AO in the facts of the present without even caring to call for the new agreements/contracts entered into by the assessee goes on to accept that the remaining contracts are also identical. It was his prayer that let the documents for the remaining three projects be considered by the AO as by relying upon stereo type queries, it cannot be said that the issue qua 80IA deduction for the remaining three projects has also been fully considered by the AO. The order, passed by the AO, it was submitted, clearly shows non-application of mind by the AO. Arguments of the assessee that all replies have been given, it was submitted, is merely a case of application of mind by the assessee and not a case of application of mind by the AO. It was submitted that it is a fit case for invoking 263 proceedings. The assessee, it was submitted, has created evidences by giving all information on the file. The AO is silent on how many units are started in the year. It was submitted that ITA 867/CHD/2017 A.Y. 2012-13 Page 22 of 36 no doubt the assessee can be said to have given full information, however, the AO, it cannot be said has acted on it. The AO should have looked into the contracts and appropriate order-sheet entries should have been made and pertinent queries should have been raised as only then can it be said to be a case of adequate and full enquiry by the AO. It was also his submission that if change of opinion is to be considered, then the opinion of the Pr. CIT should have greater relevance as opposed to the AO. Accordingly, it was his prayer that the order deserves to be upheld.

4. We have heard the rival submissions and perused the material available on record the relevant documents in the paper book to which our attention was invited and the judgements of the different courts and Tribunals referred to by the parties for our consideration have all been considered even if specific reference thereto is not made in the order.

4.1 The assessee in the facts of the present proceedings has prayed for quashing the impugned order on the grounds that the original assessment order was passed by the Assessing Officer after scrutinizing all details and after making full and proper enquiries on the issues and thus, necessarily after considering the three new Contracts entered into by the assessee in the year under consideration. Accordingly, the exercise of the Revisionary powers by the Pr. CIT is stated to be based on whims and fancies.

4.2 The challenge is also posed on the ground that the issues on the basis of which the jurisdiction has been assumed does not find any mention in the two show cause notices issued by the Pr CIT, Chandigarh.

4.3 These arguments have been elaborated by referring to various documents in the paper book on the basis of which it is stated it has been shown that sufficient enquiries have been made and only after due application of mind the AO has passed the order u/s 143(3).

4.4 It has been argued that the three new contracts considering which the assessment order dated 20.12.2014 is directed to be set aside by the Pr. CIT, Chandigarh infact are identical Infrastructure Development contracts as have been considered by the AO in the immediately preceding assessment year. The identical composite ITA 867/CHD/2017 A.Y. 2012-13 Page 23 of 36 Infrastructure Contract on a BOT basis has been considered by the Pr. CIT in the case of the assessee itself in the immediately preceding assessment year i.e. 2011-12 assessment year wherein the ITAT vide its order dated 06.02.2017 in ITA 361/CHD/2016 considering the specific contract which had been entered into by the assessee in the said year pertaining to the Thural Project found that the contract was an infrastructure contract on Build Operate Transfer mode and it was a turnkey project on which the assessee was also required to provide maintenance etc. for a specific period as is the condition in the three new Contracts which are subject matter for consideration in the present proceedings. These speaking observations of the ITAT and detailed order passed by the ITAT has been relied upon. Attention has also been invited to near similar arguments advanced on behalf of the assessee in response to identical allegations made by the Pr. CIT in that year also wherein the allegations of inadequate enquiry; lack of enquiry etc. by the AO in that year have all been advanced and considered by the ITAT.

4.5 On the other hand the departmental stand as has been discussed in greater detail in the earlier part of this order has been that the Pr. CIT, Chandigarh in the facts of the present case has taken note of the findings of the ITAT in respect of the contract pertaining to Thural project and considering the order of the ITAT has not included the same while setting aside the assessment order passed in the year under consideration. Pr. CIT, it has been argued has set aside the order to the extent it pertains to the remaining three new Contracts. The decision has been arrived at on the basis of facts as the AO is held to have allowed the claim of deduction qua Dehra, Pauri and Rudraprayag Projects without caring to enquire into the issues at all. The Assessing Officer is held to have accepted the claim of the assessee that the three new Projects entered into are identical to the Thural Project and has passed the order blindly accepting the assessee's claim without even caring to call for the copy of the new contract/Agreements entered into by the assessee. The said order, it has been claimed, has been set aside by the Pr. CIT, Chandigarh exercising his power as the order passed by the Assessing Officer consequently, is without proper enquiry and also without adequate enquiry and thus, the order is erroneous and prejudicial to the interests of the Revenue. It has been urged that for ITA 867/CHD/2017 A.Y. 2012-13 Page 24 of 36 addressing these specific shortcomings, the said power has been vested by the Statute in the Pr. CIT.

4.6 The counter arguments on behalf of the assessee has also been that not only all the documents are available on record but the various documents in the Paper Book referred to before the Pr. CIT also demonstrate that adequate enquiries have been made by the AO during the assessment proceedings.

4.7 It has also been urged that the requisite contracts are available on record and the show cause notice issued by the Pr. CIT proceeds after looking into these very contracts and agreements. Thus the argument that the contracts and agreements have not been looked into by the AO, it has been argued, is a matter of suspicion of the Pr. CIT and not a matter of fact and has been arbitrarily and wrongly included in passing at the fag end of his order and is contrary to his own two Show Cause notices issued by him.

4.8 It has also been canvassed that nothing has been brought on record to show that the present agreements in respect of the other three new Composite Infrastructure Development Contracts with the Himachal Pradesh Government for Water Lifting etc. in Dehra; with Uttrakhand Government the Peyjal Schemes of Pauri and Rudraprayag were different from the Thural Project as opposed to the consistent claim of the assessee that they were also composite Infrastructure BOT Contracts identically worded. The said conclusion of the AO, it has been urged, has been arrived at on consideration of the Contracts and after due enquiries by the Assessing Officer. On behalf of the assessee the specific queries raised by the AO and replies thereto made by the assessee before the AO, the discussion in the assessment order by the Assessing Officer qua the exempt and non-exempt projects for the purposes of working out the depreciation to be allowed, it has been submitted evidently demonstrates that all the new agreements were also looked into minutely by the AO and the claim of depreciation as put forth by the assessee is considered and varied by the Assessing Officer . These are facts emanating from the assessment order itself which all go to demonstrate that it is not only a case of adequate queries having been raised in the courses of the hearing but even demonstrates the full ITA 867/CHD/2017 A.Y. 2012-13 Page 25 of 36 application of mind by the Assessing Officer before the passing of the assessment order.

4.9 The arguments have also been advanced that even after looking at the three specific new agreements which the Pr. CIT Chandigarh is suspicious that these have been blindly accepted by the Assessing Officer as these were different from the composite Infrastructural BOT Contract with Thural Project, then the Pr. CIT has brought nothing on record to show that the suspicion was well founded. It has been urged that this suspicion was not supported by the Pr. CIT by pointing to any error let alone an error which was prejudicial to the interests of the Revenue as he has merely set aside the order holding that it is a case of inadequate enquiry which claim on the basis of facts alone it has been argued is not maintainable.

4.10 Before we specifically address the arguments of the respective parties, we deem it appropriate to refer to certain relevant documents on record. The fist of which being Paper Book page 68 which is the copy of the first Show Cause Notice issued by the Pr. CIT, Chandigarh to the assessee dated 21/09/2016:

F.No: Pr. CIT-I/Chd/Judl./263/2016-17/2936 Dated: 21.09.2016 To, Sub. Proceedings u/s 263 of the Income Tax Act, 1961 for the A.Y. 2012-13 - Regarding-

****** * Your attention is invited to the assessment order passed u/s 143(3) of I.T. Act, 1961 dated 20.12.2014 in your case passed by the DCIT, Circle 1(1), Chandigarh for the A.Y. 2012-13.

After examining the record in your case it is seen that the company was awarded by Himachal Pradesh Government and Uttrakhand Government. Deduction u/s 80IA of the Income tax Act has been claimed on the profits from these projects.

3. From the agreement, it is seen that the 'company was involved in sale of goods for purpose of construction/erection etc to the state Government and thus falls in definition of Work Contracts. Accordingly, the profits earned therefrom are not eligible for claiming deduction u/s 80IA of the said section.

4. In view of the above, order framed in your case on 24.02.2015 is erroneous and prejudicial to the interest of Revenue. You are therefore requested to show cause as to why the aforesaid order of assessment may not be revised under the provisions of Section 263 of Income Tax Act, 1961.

5. Your case stands fixed for hearing on 30.09.2016 at 03:30 PM. In case of failure on your part to comply with this notice, it would be presumed that you have nothing to say in this regard and order u/s 263 would be passed on merits on the basis of the facts as are presently available on record.

Yours faithfully, Sd/-

(Sunita Puri) Pr. Commissioner of Income Tax-1, Chandigarh."

ITA 867/CHD/2017 A.Y. 2012-13 Page 26 of 36 4.11 A perusal of paragraph 2 of the above shows that all facts admittedly were available before the Pr. CIT Chandigarh and the arguments of the Ld. CIT-DR that the Assessing Officer did not even care to call for the new contracts let alone examine them, is not borne out from the record. The show cause notice issued itself addresses the issue. It has been issued to the assessee admittedly after examining the record which necessarily also includes the three new Agreements. The Pr. CIT admittedly did not issue the notice stating that the claims of the assessee have been allowed without calling for the specific Agreements which are now required by him to be placed on record. The Pr. CIT has looked at the records, seen the Agreements/Contracts and noticed that the company was awarded a new contract in Dehra Project by Himachal Pradesh Government and in Pauri and Rudraprayag by Uttrakhand Government, specific contracts for projects on which deduction under section 80 IA has been claimed. Had it been a case of the Pr. CIT-I that even the contracts/agreements qua the specific projects were not available on record, then necessarily the Pr.CIT Chandigarh would have had to call for the Agreements which is not so in the facts of the present case. Accordingly, the departmental claim based on the arguments of the ld. CIT-DR that even the Contracts were not available on record and assessee's claim has been allowed without even caring to look into the agreements/contracts is rejected as the facts on record are to the contrary.

4.12 A perusal of para-3 of the above Show Cause Notice further brings out the fact that on considering the Agreements/Contracts the Pr.CIT, Chandigarh concludes that the contracts involve the activity of sale goods for the purposes of construction/erection etc. and hence falls in the definition of "Works Contract. When the said show cause notice issued is considered with the body of the order passed it is seen that no such allegation has been raised for setting aside the order. No specific clause or condition of the agreement has been referred to by the Pr. CIT to support the suspicion. On the contrary repeatedly the assessee before the Assessing Officer during the assessment proceedings and before the Pr. CIT, Chandigarh during the Revisionary Proceedings and before the ITAT has consistently argued that the Projects awarded are on a turnkey basis and includes after initially setting up and making ITA 867/CHD/2017 A.Y. 2012-13 Page 27 of 36 functional post-completion operation and maintenance of the same for a specific period and thus was in fact an Infrastructure Development Project on a BOT basis. It is further seen that the Pr. CIT in the immediate preceding assessment year also considering the Agreement with the State of Himachal Pradesh in respect of Thural Project had held it to be a case of "Works Project" involving sale of goods to the Government for construction/erection of the Project and the ITAT in very categoric terms had held that it could not be said to be a case of Works Contract and on considering the order passed by the AO held it to be neither erroneous nor prejudicial to the interests of the Revenue. The relevant finding of the Co-ordinate Bench is reproduced hereunder :

"19. We may add that it cannot also be a case of inadequate enquiry. All explanations and evidences were placed before the Assessing Officer to explain the nature of the contract and demonstrate that it was not merely a "Works Contract". We fail to understand what further inquiry was required to be made in the case to settle the issue of the nature of contract or for that matter how the present inquiry was not adequate to arrive at the correct conclusion. Moreover we find that even the learned Pr. CIT has not spelt out the same in his order. Even before us the Ld. DR has failed to show how the inquiry made was inadequate and what further investigation was required in the matter or why on the basis of explanation and evidences filed by the assessee the correct nature of the contract could not be deduced. In such circumstances, we hold, it cannot be said that there was any error in the order of the Assessing Officer so as to cause prejudice to the Revenue."

4.13 The specific issue addressed in para-3 of the above show cause notice has been addressed by the ITAT in para 20 to 25 and it would be appropriate to reproduce the same also at this point of time

20. Moreover, we find that after going through the replies filed by the assessee the Assessing Officer discussed the same in his assessment order and recorded his satisfaction regarding the assessee's claim for such deduction stating that the activity undertaken by the assessee clarifies for deduction under section 80IA of the Act. The Assessing Officer further added that this was the second year of claim of deduction since the assessee company had been awarded the same project by the same Government. Thus, we find that the Assessing Officer after having applied his mind to the explanations and evidences filed by the assessee arrived at a logical and reasonable conclusion that the assessee was eligible to claim deduction under section 80IA of the Act as its activity qualified for the said claim. We find that the view taken by the Assessing Officer is a plausible view since as demonstrated before us, the assessee had been granted a certificate of lower deduction of tax for assessment years 2010-11 to 2013-14 after considering the eligibility of the claim of the assessee to deduction under section 80IA of the Act. The assessee has also demonstrated before us that in the preceding and succeeding assessment years, identical claim on account of very same project had been allowed ITA 867/CHD/2017 A.Y. 2012-13 Page 28 of 36 to it by the Assessing Officer and also that for identical project another Assessing Officer had granted deduction under section 80IA of the Act to a sister concern of the assessee M/s Kaveri Infrastructures Pvt. Ltd. in collateral proceedings before the DCIT, for the assessment years 2008-09 to 2011-12, that too after exercising powers under section 133(6) and receiving clarification from the Executive Engineer, IPH, on perusal of which the Assessing Officer found that the contract was on Built Operate Transfer (BOT) basis and not in the nature of works contract and that the project was on turnkey basis in which the assessee was involved in operation and management also. The AO in that case also noted that such arrangements were typical for infrastructure development projects of the Government and cannot be seen as mere works contract. All these facts have not been rebutted by the Ld. DR before us. Therefore, without any doubt it can be said the view taken by the Assessing Officer with regard to the claim of the assessee under section 80IA of the Act was a plausible view.

21. Interestingly, we find ,that all the explanations and evidences which were filed before the AO by the assessee to support its claim of deduction u/s 80IA was also filed before the learned Pr. CIT and despite so there is not a whisper in the entire order as to how the view of the AO that it was an infrastructure project and not works contract, is incorrect. The learned Pr. CIT has not referred to a single document, clause or otherwise of the agreement to lend credence to his view. The entire thrust of the learned Pr. CIT in exercising revisionary powers is that adequate enquiry vis-à-vis claim of deduction under section 80IA of the Act was not carried out, which as we have stated above, the Ld. counsel for the assessee has demonstrated is incorrect. Adequate enquiries were carried out, adequate replies were filed by the assessee and the Assessing Officer after having applied his mind to the explanations and evidences filed by the assessee had arrived at a plausible conclusion that the assessee was unable to deduction under section 80IA of the Act. We are, therefore, in complete agreement with the Ld. counsel of the assessee that the issue was examined and verified during assessment proceedings and the Assessing Officer had arrived at a plausible conclusion that on the basis of the verification carried out by it that the assessee was eligible to claim deduction under section 80IA of the Act and therefore there was no error in the order of the Assessing Officer so as to cause prejudice to the Revenue. The action of the learned Pr. CIT in exercising his revisionary powers on this ground is set aside.

22. Besides the above argument Ld. Counsel for the assessee also argued before us that the issue of eligibility of claim of deduction under section 80IA of the Act having been examined in the 1st year of claim of the assessee i.e. AY 2010-11, the same could not have been disturbed in the succeeding years. In support of its contention the Ld. Counsel relied upon the decision of the Punjab and Haryana High Court in the case of CIT versus Micro Instrument Company in ITA. No. 958/2008 dated 2.9.2016 more specifically at para 12 of its order had stated as follows:

"12. However, while undertaking this exercise, the Assessing Officer is not entitled to reopen an issue that had been decided in respect of a previous assessment year. In other words, an Assessing Officer is not entitled to question the validity of the grant of a deduction under Section 80-IB in a previous assessment year on any ground. The Assessing Officer would not be entitled to say that a ITA 867/CHD/2017 A.Y. 2012-13 Page 29 of 36 particular condition was not fulfilled in an earlier assessment year if the assessee had been granted the deduction in that year. The Assessing Officer, therefore, cannot deny a deduction in the assessment year in question before him on the ground that the assessee had failed to fulfill a condition precedent to the grant of a deduction in another assessment year. That would amount to an Assessing Officer reopening an assessment in respect of another assessment year without following the provisions of the Act."

23. Ld.DR, on the other, hand relying upon para 11 of the order stated that certain issues could have been disturbed in the succeeding years also. Ld.DR stated that merely because the assessee had been allowed claim in the 1st year did not mean that the same for all purposes could not be disturbed in the succeeding years at all.

24. We have gone through the order of the jurisdictional High Court relied upon by both the parties and find merit in the contention of the Ld. counsel for the assessee. There is no dispute about the fact that in the preceding assessment year i.e. AY 2010- 11, which was the 1st year of claim of deduction under section 80IA, the assessee was allowed the same under section 143 (3) of the Act. This means that for all purposes the claim of the assessee having been examined in the light of the parameters of eligibility laid down under section 80IA, it could not be said that in the succeeding year those very same parameters had changed on the same set of facts. The Assessing Officer, after considering all the documents placed before it, had in the preceding year concluded that the assessee was carrying out an infrastructure related project which was not in the nature of works contract as defined under section 80IA, read with Explanation-13 and thus the assessee was eligible to claim deduction under section 80IA of the Act. In the impugned case, which is the succeeding year, on the very same set of facts the findings of the preceding year on the fact that the assessee was carrying out eligible infrastructure project and not works contract, cannot now be disturbed, which is exactly what has been stated by the High Court in the order passed in the case of Micro Instrument Company (supra). Following the same also we hold that the learned Pr. CIT could not have exercised his revisionary powers since the claim of the assessee had been decided in the preceding year itself and without disturbing the same it could not have been dislodged in the impugned year.

25. In view of the above we set aside the order of the learned Pr. CIT on this count.

4.14 It is deemed appropriate to also refer to the second show cause notice dated 14.02.17 issued to the assessee by the Pr. CIT to address the arguments of the respective parties before the Bench. The same is reproduced hereunder for ready reference :

F.No: Pr. CIT-I/Chd/Judl./263/2016-17/5519 Dated: 14.02.2017 To, M/s Unipro Techno Infrastructure Pvt. Ltd., SCO 36, Sector- 7C, Chandigarh ITA 867/CHD/2017 A.Y. 2012-13 Page 30 of 36 Sir, Sub: Proceedings u/s 263 of the Income Tax Act, 1961 for the A.Y. 2012-13 - Regarding-

******* In continuation to the show cause notice issued vide letter No. 2936 dated 21.09.2016 in your case. From the perusal of assessment record the following discrepancies have also been noticed.

i) It is seen that in the Trading Account, a payment of Rs.8,55,16.150/-has been made for "Job work done by sub- contractors", proportionate profits earned on the job work executed by a sub-contractors is not, eligible for deduction u/s GOIA. This issue has not been examined by the AO during the course of assessment proceedings and has resulted in loss of Revenue.

ii) It further seen that the ratios of receipts from exempted and non exempted units is 9.69:1 whereas the freight 8s carriage, fuel, wages and repair 85 maintenances in the ratio 4.63:1, 1.17:1 7.38:1, 1.62:1. Similarly salary expenses and EPF expenses are in the ratio 1.61. The abnormally high expenses claimed for non exempt income viz-a-viz the exempt income have not been inquired and investigated.

2. In view of the above, order framed in your case on 24.02.2015 is erroneous and prejudicial to the interest of Revenue. You are, therefore, requested to show cause as to why the aforesaid order of assessment may not be revised under the provisions of Section 263 of Income Tax Act, 1961.

3. Your case stands fixed for hearing on 28,02.2017 at 03.00 PM. In case of failure on your part to comply with this notice, it would be presumed that you have nothing to say in this regard and order u/s 263 would be passed on merits on the basis of the facts as are presently available on record.

Yours faithfully, Sd/-

(Pritam Singh) Pr. Commissioner of Income Tax-1, Chandigarh."

4.15 A perusal of the issue addressed in para-(i) of the same reproduced above shows that the said allegation has also been addressed by the coordinate bench in the aforesaid order in the immediately preceding assessment year considering the identical Project i.e. Thural Project in paragraphs 26 to 29 of its order. For ready reference the same is reproduced hereunder :

26. The 2nd issue raised by the learned Pr. CIT is that the assessee has claimed 80IA on profits derived from the project of water supply and from the perusal of the trading account it is seen that a payment of Rs.2,92,48,936/-had been made for job work done by subcontractors. As per the learned Pr. CIT proportionate profits earned on the job work executed by a subcontractor was not eligible for deduction under section 80IA and since this issue had not been examined by the Assessing Officer during the course of assessment proceedings it had resulted in loss of revenue causing prejudice to the revenue.

27 Before us Ld. counsel of the assessee reiterated the contentions made in relation to the previous issue that the examination of the claim of the assessee for deduction under section ITA 867/CHD/2017 A.Y. 2012-13 Page 31 of 36 80IA had been done in detail by the Assessing Officer and after examining the same the Assessing Officer had allowed the claim.

The Ld. counsel for the assessee stated that it cannot now be said that the claim of the assessee had not been duly examined by the Assessing Officer during assessment proceedings. The Ld. counsel of the assessee further stated that the job work done by subcontractors was not a separate contract but sub contract of the main project awarded to it and the assessee as per the provisions of section 80IA was entitled to claim deduction of the entire profits earned by it on the project executed on infrastructure development. The fact that it had sub-contracted a part of the work did not affect its claim of deduction of the entire profits and the sub contract work could not be treated as separate for the purpose of claiming deduction under section 80IA of the Act.

28. Ld.DR, on the other hand, relied upon the order of the learned Pr. CIT and stated that the profits earned on the sub contract work were not eligible for deduction under section 80IA of the Act and the same having not been examined by the Assessing Officer an error had crept in the order of the Assessing Officer causing prejudice to the revenue by allowing the assessee claim of deduction of profits under section 80IA on the same. 29 Having heard the rival contentions, we find merit in the contentions made by the Ld. counsel for the assessee. It is not disputed that the assessee had been awarded a contract for infrastructure development. The assessee has stated that a part of the work was subcontracted for ease in execution in the entire project. This fact has not been rebutted by the learned Pr. CIT. Therefore, it remains that the profit earned by the assessee as a whole was on account of the project of development of infrastructure and the assessee was entitled to claim deduction under section 80IA of the same. Even otherwise we find that the assessee's claim for deduction under section 80IA was duly examined by the Assessing Officer during assessment proceedings and allowed by him also. As stated above the assessee's claim had been allowed both in the preceding year and in the succeeding year also. On a query raised by the Bench whether the assessee had been subcontracting work in the preceding and succeeding years also, the Ld. counsel of the assessee stated at the bar that the assessee had been subcontracting work in all years also. From the aforesaid it is evident that the assessee's claim for deduction under section 80IA was examined in all respects by the Assessing Officer during the course of assessment proceedings and duly allowed. Moreover the fact that the assessee had been allowed deduction on the same pattern in the preceding and succeeding years lends credence to the allowance of the claim by the Assessing Officer in the impugned year also. Further we find that the learned Pr. CIT has no basis at all for stating that the profit earned on account of job work got done by subcontractors was a separate contract which was not eligible for deduction under section 80IA of the Act. What can be gathered from the findings of the learned Pr. CIT is that the assessee is eligible for deduction under section 80IA only on account of work/contract/project executed by it. We find that this understanding of the provisions of section 80IA is incorrect and has no judicial precedents at all and on account of the same we hold that there is no error in the order of the Assessing Officer on this count also and set aside the same for this reason.

4.16 A perusal of the same shows that seemingly after having raised the issue the Pr. CIT, Chandigarh did not make the same the basis for setting aside the order.

ITA 867/CHD/2017 A.Y. 2012-13 Page 32 of 36 4.17 The next issue addressed by the Pr. CIT, Chandigarh in the second show cause notice is the ratio of receipts from exempted and non-exempt units. A perusal of the aforesaid order of the ITAT throws light on this aspect also and it would be seen that this issue also had been considered by the ITAT in Paras 30 to para-32 of the order. For ready reference these also reproduced hereunder :

30. The 3rd reason given by the learned Pr. CIT for exercising revisionary powers under section 263 is that while the receipts from the water supply project and Hamirpur bypass project in the ratio of 2.8:1, the expenses incurred on freight and carriage, fuel and wages and salary are comparatively higher in case of Hamirpur bypass project and the comparative details have not been examined by the Assessing Officer vis-a-vis the provisions of section 80IA(8)/80IA(10) of the Income Tax Act, 1961 causing error in the order of the Assessing Officer and prejudice to that extent.

31. The Ld. counsel of the assessee reiterated his arguments made on account of point No.1 raised by the learned Pr. CIT while Ld. DR relied upon the order of the learned Pr. CIT in this regard.

32. Having heard the arguments of both the parties as also the issue raised by the learned Pr. CIT we find from a bare perusal of the same that it is not evident as to what is the error that has occurred in the order. In fact the learned Pr. CIT is merely presuming that an error may have occurred in the order. While the learned Pr. CIT has pointed out that the receipts from the two projects is in the ratio of 2.8:1, it is not specified the ratio in which the expenses have been bifurcated between the two projects to highlight the error which has occurred in the order. Further it is also not clear from the order of the learned Pr. CIT as to how the provisions of section 80IA(8)/80IA(10) of the Income Tax Act, 1961 are attracted in the impugned issue. The provisions of section 80IA(8)/80IA(10) are attracted only between transactions that take place between an eligible and non-eligible entity.

learned Pr. CIT has not pointed out as to which among the two projects are eligible and which is not eligible. Having not pointed out the same we fail to understand how the learned Pr. CIT came to the conclusion that an error had occurred in the order vis-a-vis the applicability of the provisions of section 80IA(8)/80IA (10) of the Act and so we find that the learned Pr. CIT has failed to point any error in the order of the Assessing Officer in this regard. Further as stated above the issue had been examined during assessment proceedings as held above by us and therefore there was no error in the order of the Assessing Officer. We therefore set aside the order of the learned Pr. CIT on this count also.

4.18 Accordingly we find that infact there is nothing on record except the suspicion of the Department that the assessing officer has not carried out adequate enquiries. We have gone through the record and seen that the issues have been enquired into replies have been placed on record nothing has been brought by the Department to show that the view taken by the assessing officer was incorrect on facts. The ITA 867/CHD/2017 A.Y. 2012-13 Page 33 of 36 requisite agreements alongwith site plan Schedule etc. attached thereto were all available before the AO and before the Pr. CIT alongwith photographs etc. No effort to distinguish the Contract entered into with Himachal Pradesh Govt. in respect of Thural Project with the subsequent contracts entered into by the assessee with Himachal Pradesh Government in respect of Dehra Project or with the Uttrakhand Govt. in respect of Pauri and Rudraprayag Projects have been referred to in his order by the Pr. CIT or in his arguments by the ld. CIT-DR. Mere argument that the three Projects were different without any supporting fact cannot be given a judicial approval. Suspicion may be said to be sufficient for the purposes of issuance of Show Cause Notice but thereafter, the suspicion has to be backed by hard facts.

4.19 On giving our consideration to the issues remaining at hand, we find that ultimately on the issue on which the order was passed setting aside the order admittedly was not the subject matter of the two show cause notices issued by the Pr. CIT Chandigarh and thus notwithstanding the settled legal position thereon even otherwise we find that in the facts of the present case on a reading of the assessment order itself it is demonstrated that the Assessing Officer has enquired into the said issue also. It is seen that the AO while passing the order proceeded to look into the claim of depreciation for the exempted and non-exempt units and thus the suspicion of the Pr. CIT, Chandigarh that the facts for considering the bifurcation of expenses between the exempted income and non-exempt income have not been looked into is without any justification and in the peculiar facts of the present case based entirely on suspicions.

4.20 Accordingly in view of the detailed reasons given herein above, we find that there was no basis for the principal CIT-A to conclude that it is a case of inadequate enquiries. We find from the record that the assessing officer has inquired into the issues the assessee has demonstrated the correctness of the claim having been allowed the revenue having failed to point out as to what is the error in the specific contracts considered by the Pr. CIT, Chandigarh namely the contract entered into with the Himachal Pradesh government in regard to the Dehra Project and the two specific contracts entered into with the Uttrakhand Government of Pauri and Rudraprayag Project. Accordingly ITA 867/CHD/2017 A.Y. 2012-13 Page 34 of 36 we have no hesitation in quashing the order passed by the Pr.CIT, Chandigarh on all these counts and allow the appeal of the assessee.

5. At this stage, it would not be out of context to quote from the decision of the Gauhati High Court in the case of Bongaigaon Refinery and Petrochemical 287 ITR 120 (Gau) where the Court at page 131 para 17 and 18 held as under:

"17. Entertainment of a view different from the one adopted by the Assessing Officer, if plausible would not clothe the Commissioner with the power to interfere therewith under the said provision of the Act. Differently put, an error within the jurisdiction of the Assessing Officer on an evaluation of the materials available would not be exposed to interference in exercise of suomotu revisional powers under section 263 of the Act. The provision though permits the Commissioner to initiate an enquiry as he may deem necessary does not authorise a roving probe into the facts with the disposition to pick out errors to sustain the eventual interference. This assumes great significance in the context of the statutory frame work of the Act outlining the jurisdictional contours of different authorities to adjudicate the issues as legislatively stipulated. The Commissioner in exercise of his revisional powers cannot arrogate to himself a status to surrogate the other authorities and supplant their roles under the Act.

18. The jurisdiction exercisable under section 263 of the Act being supervisory in nature, permitting suo motu review of any assessment already made, the statutorily enjoined sanctions circumscribing the same have to be rigorously construed. The legislative intendment of conditioning the plenitude of the power conferred is manifest in the two preconditions lodged in the section. To sustain the delicate balance between this supervisory and other remedial jurisdictions, as designed by the lawmakers, a constricted connotation and purport of the enabling prerequisites for the exercise of the revisional powers is an imperative necessity.

5.1 Thus, no doubt the power to set aside has been vested with the Pr. CIT. However, the power has to be exercised judiciously and fairly. The Revisionary order cannot be silent in the face of the challenge of the assessee that the Contracts are identical composite Infrastructure Development Contracts on BOT basis i.e. were trunkey projects where after initially setting up, the assessee was tasked with making it functional post completion operation and maintenance of the same for a specific period. The Contracts were available with the Pr. CIT and the stated claim of the assessee if it was found to have been incorrect, should have been demonstrated in the order itself. Even in the course of the arguments, ld. CIT-DR could not bring any fact to our notice in support of the order passed. The power vested by the Statute comes with onerous responsibilities which cannot be allowed to be shirked. The assessee in the facts of the present case is able to demonstrate that full facts were available on record on which enquiries have been made ITA 867/CHD/2017 A.Y. 2012-13 Page 35 of 36 and the assessment order itself shows that the calculations carried out even though for the purposes of depreciation by the AO qua the exempted units and non-exempt units demonstrate that facts have been seen. In the face of these facts and arguments, the Pr. CIT should have referred to some error in the order passed after considering the new three contracts and the earlier continuing contract of Thural Project which is not so in the facts of the present case. Nor has the ld. CIT-DR pointed out to any such error. Accordingly, the arguments of the Ld. CIT-DR that no prejudice is caused to the assessee if the matter is restored to the assessing officer as the assessee would still be at liberty to reargue the entire case cannot be countenanced. Unless and until the Revenue demonstrates that the order has been passed without due and adequate enquiry or an error which is prejudicial to the interests of the Revenue is pointed out only then the order passed can be upheld. Merely because the assessee would have an opportunity available before the Assessing Officer once again cannot be said to be a justifiable reason for setting aside an assessment order. If the said argument is accepted, then each and every assessment order can be set aside as opportunity to the assessee is any way granted by the Rule of Law.

5.2 Before parting, we may also refer to the decision of the Allahabad High Court in the case of CIT Vs Goyal Private Family Specific Trust (1988) 171 ITR 698, 701-702 (All). A perusal of the said decision would show that the Court has held in unambiguous terms that merely because the orders of the Assessing Officer are brief and cryptic, the said fact by itself cannot be a ground for branding the assessment orders as erroneous and prejudicial to the interests of the Revenue. The Court was careful to observe that writing a detailed order no doubt may be a legal requirement, but the order not fulfilling this requirement, cannot be said to be erroneous and prejudicial to the interests of the Revenue. The Court in unambiguous terms has fastened the responsibility for exercising the Revisionary Power on the Commissioner to necessarily point out as to what error was committed by the Assessing Officer in having reached the conclusion which was sought to be set aside. The said effort was found to be missing in the facts of the said case as in the facts of the present case also. In the facts of the present case, the Pr. CIT having failed to point out any error, let alone an error which is prejudicial to the interests of the Revenue as the necessary exercise for ITA 867/CHD/2017 A.Y. 2012-13 Page 36 of 36 addressing the error has not been done in the order nor has the ld. CIT-

DR been able to demonstrate that there were clauses and conditions in the Contracts entered into with Executive Engineer, IPH Dehra (HP), Executive Engineer, Uttrakhand Peyjal Nigal, Construction Division, Rudraprayag and Executive Engineer, Uttrakhand Peyjal Nigam, Construction Division, Pauri vis-à-vis the contract entered into with Executive Engineer, IPH Thural (HP) on the basis of which they could not be said to be Composite Infrastructure Development Contracts on a BOT basis with added responsibilities towards its maintenance for specific period. The order passed, accordingly for the detailed reasons given herein above is held to be arbitrary and the order is quashed. Accordingly, the grounds raised are allowed.

6. In the result, appeal of the assessee is allowed.

Order pronounced in the Open Court on 1st December,2017.

       Sd/-                                               Sd/-


  (Dr.B.R.KUMAR)                                  (DIVA SINGH)
ACCOUNTANT MEMBER                               JUDICIAL MEMBER
'Poonam'
Copy to:
   1.    The Appellant
   2.    The Respondent
   3.    The CIT
   4.    The CIT(A)
   5.    The DR


                                            Asstt. Registrar
                                            ITAT/CHD