Income Tax Appellate Tribunal - Hyderabad
G.J. Multiclave (India) Private ... vs Ito, Ward-2(2), Hyderabad, Hyderabad on 21 June, 2017
IN THE INCOME TAX APPELLATE TRIBUNAL 'B' (SMC) BENCH : HYDERABAD [BEFORE SMT ASHA VIJAYARAGHAVAN, JUDICAL MEMBER] आयकर अपील सं./I.T.A. Nos. 448 & 1540/Hyd/2016 िनधारण वष /Assessment yeara : 2010-2011 & 2012-2013 M/s. G J Multiclave (India) Private Ltd, Vs. The Deputy Commissioner of No.7-1-47/1A, Dharam Karam Road, Income Tax, Amerpet, Circle 2(3) Hyderabad 500 016. Hyderabad.
[PAN AABCG 0954H]
(अपीलाथ /Appellant) ( थ /Respondent)
अपीलाथ की ओर से / Appellant by : Shri. Pratapkaran Paul, C.A.
थ की ओर से /Respondent by : Shri. K.J. Rao. DR
सुनवाई की तारीख/Date of Hearing : 11-05-2017
घोषणा की तारीख /Date of Pronouncement : 21-06-2017
आदे श / O R D E R
These are appeals filed by the assessee arising out of the orders passed by the CIT(A)-1, Hyderabad, dated 31.12.2015 and 28.07.2016 respectively confirming the orders of the AO in relation to assessment years 2010-2011 and 2012-2013.
2. First I take up ITA No.448/Hyd/2016 for the assessment year 2010-2011 for brevity. Brief facts of the facts are that the assessee is a Private Limited incorporated under the companies act,1956 and is carrying on the business of Handling and Treatment and disposal of the Bio-Medical Waste (Hazardous Waste). The Assessee had filed :- 2 -: ITA Nos.448 & 1540/Hyd/2016 its return of income for the Asst. Year 2010-11, through electronic filing on 13.10.2010 declaring a total income of Rs.198,20,703/- before claiming deduction u/s 80-IA of the Income Tax Act, 1961 (in short ''the Act'') and NIL income after claiming deduction u/s 80-lA Act under normal provisions and MAT income of Rs.1,84,42,117/-, and the return was processed u/s 143(1) of Income Tax Act, 1961. The assessee's case was selected for scrutiny under CASS, and notice u/s 143(2) of the Act was issued and served on the assesse by the then the assessing officer as there was a change in incumbent officer and he had issued notice u/s 143(2) of the Act. Subsequently the Assessing Officer passed an order u/s.143(3) of the Act, by assessing an income of Rs.25,68,140/- under the head income from business, thus making an addition of Rs.25,68,140/- alleqedlv that while computing the deduction u/s 80-1A, the Assessing Officer had not allowed the deduction for Kerala Unit situated at Palakkad.
3. The assessee during the assessment proceedings submitted that the Assessing officer ignored the explanation of the Assessee and, passed the order by stating that approval issued by the Kerala State Pollution Control Board is not in assesse's name. Deduction u/s 80-lA of the Act is applicable to an enterprise who has entered into an agreement with the :- 3 -: ITA Nos.448 & 1540/Hyd/2016 central/state government, local authority or any other statutory body for developing infrastructure facility which includes soiled waste management system. The assessee had entered into an agreement with The Indian Medical Associate (lMA) Kerala State Branch a Society Registration Act, 12 of 1955 as No. T.1119/10, having its headquarters at Anayara Thiruvananthapuram- (IMAGE), the main objective of the association is the association of practitioners of modern medicine registered under societies act on the larger interest of public health has set up and operates composite Bio- Medical waste management system to dispose the waste generated by affiliated hospitals in the state of Kerala and has organized a scheme known as IMAGE (IMA Goes Eco Friendly) as per the standards late down my ministry of environment and forests, Government of India vide environment (Protection) act,1986 (29 of 1986) and the Bio- Medical waste (Management & Handling.) Rules 1998 and as amended to date for this purpose. The agreement ,with the assessee is comes under the category of "any other Statutory body''.
4. However, the ld. Assessing Officer while computing deduction u/s. 80IA of the Act did not allow deduction u/s. 80IA of the Act for Kerala unit situated at Pallakad.
:- 4 -: ITA Nos.448 & 1540/Hyd/2016
5. Aggrieved, assessee filed an appeal before ld. Commissioner of Income Tax (Appeals). As per ld. Commissioner of Income Tax (Appeals), the ld. Assessing Officer observed that the assessee company has set up common treatment and disposal facility for handing Bio-medical/hazardous Wastes generated from various health care establishments. The company is handling projects at three location/sites viz., Thenmelpakkam Village, Cl7engalpattu Taluk, Kancheepuram district, Tamil Nadu, Edupa//y Village, Mahaboobnagar district, Andhra Pradesh, and Manthuruthy, Kanjikode, Pallakad district, Kera/a. During the course of assessment proceedings, the deduction claimed by the assessee-company u/s.80 lA of 1. T. Act, has been verified. Vide order sheet noting dated 11.12.2012 the, assessee company was asked to produce copies of agreement entered into with Central/State Government or a local authority or any other statutory body for developing, maintaining and operating a new infrastructure facility for allowing the claim of deduction u/s.80IA of the Act. In response, the assessee company filed copies of approvals issued by the Pollution Control Board of Andhra Pradesh, Tamilnadu and Kerala Governnment(s). On perusal of the same, it is observed that with regard to Tamilnadu and Andhra Pradesh site(s), the, company has been accorded approval by the Tamilnadu/ Andhra Pradesh Pollution Control Board to operate a facility for collection, :- 5 -: ITA Nos.448 & 1540/Hyd/2016 reception, storage, transport and disposal of biomedical waste. With - regard to the Kerala site, the assessee company has filed an approval issued by the Pollution Control Board of Kerala, which is not in the name of the assessee company. Accordingly, the assessee company vide order sheet noting dated 8.01.2013 was informed by ld. Assessing Officer that since the approval issued by the Kerala State Pollution Control Boards not in its name, the assessee is not eligible for claim u/s.80IA on the profits derived from Kerala Unit. The ld. Assessing Officer further held that the assessee has no explanation to offer in this regard. The ld. Assessing Officer concluded that Section 80lA is applicable to an enterprise who has entered into an agreement with the Central/State Government, Local Authority or any other statutory body for developing infrastructure facility which includes solid waste management system. In this case, the assessee has not entered into an agreement does not have approval from Kerala State Pollution Control to operate a facility for collection, reception, storage, transport and disposal of biomedical waste. In view of the above, the exemption claimed u/s. 80IA of the Income Tax Act, 1961, is not allowed In respect of profits derived from Kerala Unit to the tune of Rs.24,00,133/-.
6. On the other hand, ld. Authorised Representative submitted before ld. Commissioner of Income Tax (Appeals) as under:-
:- 6 -: ITA Nos.448 & 1540/Hyd/2016 The Assessing officer erred in disallowing the deduction U/s 80-IA of the Act for the Assessment Year 2010-11 for the Kerala Palkkad Unit. Under Section 80-IA of the Income Tax Act,1961, Deductions in respect of profits and gains from industrial undertakings or enterprises engaged in infrastructure developments, etc., Where the gross total income of an assessee includes any profits and gains derived by an undertaking or an enterprises from any business referred to in sub- section (4) (such business, being hereinafter referred to as the eligible business), there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction of an amount equal to hundred per cent of profits and gains derived from such business for ten consecutive assessment years. Under section 80-lA of the income tax act,1961, sub-section (3) applies to [an undertaking referred to in [clause(ii) or] clause(iv) of sub-section (4)] which fulfils all the following conditions, namely, it is not formed by splitting up, or the reconstruction, of a business already in existence, provided that this condition shall not apply in respect of an undertaking which is formed as a result of the re-establishment, reconstruction or revival by the assessee of the business of any such undertaking as is referred to in section 33B, in the circumstances and within the period specified in that section. It is not formed by the transfer to a new business of machinery or plant previously used for any purpose; Under section 80- lA of the Income Tax act,1961, sub-section (4) applies to any enterprises carrying on the business [of (i) developing or (ii) operating and maintaining or (iii) developing, operating and maintaining] any infrastructure facility which fulfils all the following conditions, namely: a). it is owned by a company registered in India or by a consortium of such companies [or by an authority or a board or a corporation or any other body established or constituted under any Central or State Act b). it has entered Into an agreement with the central government or a state government or a local :- 7 -: ITA Nos.448 & 1540/Hyd/2016 authority or any other statutory body for (i) developing or (ii) operating and maintaining or (iii) developing, operating and maintaining a new infrastructure facility; c). it has started or starts operating and maintaining the infrastructure facility on or after the 1st day of April,1995: [Explanation- for the purposes of this clause, "infrastructure facility" means: (a). a road including toll road, a bridge or a rail system; (b). a highway project including housing or other activities being an integral part of the highway project; (c). a water supply project, water treatment system, irrigation project, water treatment system, irrigation project, sanitation and sewerage system or solid waste management system;] The assesse made an agreement on 1st November,200B with The Indian Medical Associate (IMA) Kerala State Branch a Society registration act, 12 of 1955 as No. T.1119/10 having its headquarters at Anayara Thiruvananthapuram (IMAGE) The main objective of the association is the association of practitioners of modern medicine registered under societies act on the larger interest of public health has set up and operates composite Bio- Medical waste management system to dispose the waste generated by affiliated hospitals in the state of Kerala and has organized a scheme known as IMAGE (IMA) Goes Eco Friendly) as per the standards laid down by ministry of environment and forests, government of India vide environment (Protection) Act,1986 (29 of 1986) and the BIO-Medical waste (Management & Handling) Rules 1998 and as amended to date for this purpose. The agreement with the assessee is comes under the category of "any other statutory body". The company has been accorded approval by the Tamilnadu and Andhra Pradesh Kerala Pollution Control Board to operate a facility for collection, reception, storage, transport and disposal of the Bio- Medical Waste. The company had got approval for Kerala unit through IMAGE. IMAGE has opted the Assessee to continue to operate and maintain its Bio- Medical Waste Common Treatment Facilities situated at PALAKKAD. The IMAGE was formed with an object to obtain a Contract from Kerala State Pollution :- 8 -: ITA Nos.448 & 1540/Hyd/2016 Control Board, but in tee: the work was executed by the assessee, therefore deduction had to be allowed to those enterprise, which was engaged in business of developing, maintaining and operating any infrastructure facility. Therefore the assessee was eligible for deduction on profit earned from the aforesaid activity. The IMAGE had not claim any deduction u/s 80-IA of the act. The Deduction u/s. 80IA of the Act was to be allowed to those enterprise which were carrying on the business of developing, maintaining and operating any infrastructure facility. Therefore, in all practical purpose, the contract was awarded to the assessee through IMAGE. As per the provisions of section 80- IA( 4), the benefit of deduction under this section is to be given only to the enterprise which carried on the classified business. Therefore, in the light of this legal proposition. The ld. Counsel for assessee argued that the assessee is entitled for the deductions u/s 80-IA(4) on the profit earned from the execution of the work and that on the facts and Circumstances of the case ,the learned assessing officer was not justified in disallowing the deduction u/s 80- lA of the Income Tax Act 1961,for the Kerala Palkkad Unit. The ld. Counsel pleaded that the Assessing Officer ignored the explanation of the appellant and passed the order without any basis by disallowing the deduction.
7. The ld. Commissioner of Income Tax (Appeals) on perusal of the observations of the ld. Assessing Officer and contention of ld. Authorised Representative stated that assessee has not fulfilled the conditions laid down for claiming deduction u/s.80IA(4), as the assessee has not entered into an agreement and does not have approval from Kerala Pollution Control Board to operate a facility for collection, reception, storage, transport and disposal of the Bio-Medical :- 9 -: ITA Nos.448 & 1540/Hyd/2016 Waste. Section 80lA is applicable to an enterprise which has entered into an agreement with the Central or State Government, local authority or any other statutory body for developing infrastructure facility which includes solid waste management system. In the absence of such approval, the deduction claimed u/s.80IA IS not allowed in respect of profit of ₹24,00,133/- derived from the Kerala unit. Hence, the ld. Commissioner of Income Tax (Appeals) dismissed the grounds of the assessee.
8. Now before me, ld. Authorised Representative submitted that the the Commissioner of Income Tax (Appeals) erred in denying the deduction u/s. 80-IA of the Income Tax Act 1961 as claimed by the assessee by upholding the decision of Assessing Officer in this particular issue. The Commissioner of Income Tax (Appeals) failed to appreciate the fact that the assessee has satisfied all the conditions stipulated in sub-section (4) of section 80-IA and is eligible to claim the deduction u/s.80-IA. The Commissioner of Income Tax (Appeals) ought to have appreciated the fact that the assessee company had got approval from Kerala pollution control board to operate facility for collection, reception, storage, transport and disposal of the biomedical waste through IMAGE, a scheme organized by Indian Medical Associate with which the assessee has entered into agreement vide agreement dated 01-11-2008. The Commissioner of Income Tax :- 10 -: ITA Nos.448 & 1540/Hyd/2016 (Appeals) has not understood the significance of word 'or' in section 80-IA(4)(i) from which the intent of legislature would be evident that the deduction is available la any enterprise carrying on business of (i) developing or (ii) operating and maintaining or(iii) developing, operating and maintaining any infrastructure facility. The Commissioner of Income Tax (Appeals) failed to appreciate the fact that the enterprise which is developing or constructing the infrastructure facility is to be owned by a company registered in India or consortium of such companies. The Commissioner of Income Tax (Appeals) ought to have appreciated the fact that the scheme IMAGE was formed only with an object to obtain a contract from Kerala state pollution control board but the actual work was executed by assessee and therefore the assessee company automatically becomes eligible for claiming deduction under section 80 IA. The Commissioner of Income Tax (Appeals) failed to appreciate the fact that the IMAGE did not claim any deduction under section 80IA. The Commissioner of Income Tax (Appeals) has not considered the submission made by the assessee with respect to Palakkad Kerala unit and mechanically denied deduction under section 801A. Ld. Counsel for the assessee filed a paper book before me, and contended that the additional evidence filed in the paper book could explain the assessee's case and thus eligible for deduction u/s. 80-IA of the Act. Papers 1 to 62 of the :- 11 -: ITA Nos.448 & 1540/Hyd/2016 paper book contain the following the documents are illustrated hereunder:-
Sl.No Particulars Page No's
1 Copy of Consent to operate, issued by Kerala 1-6
State Pollution Control Board on 10/03/2016 under File No.PCB/HO/PLKD/ICO/62/08 to IMAGE 2 Copy of Authorisation issued by Kerala State 7-14 Pollution Control Board under File No.PCB/HO/PLKD/15396/2009 to IMAGE 3 Copy of Agreement between The Indian Medical 15-21 Association (IMA) and G.] Multiclave (India) Pvt.Ltd entered into on 20th April, 2003 4 Copy of Agreement between The Indian 22-27 Medical Association (IMA) and G.j Multiclave (India) Pvt.Ltd entered into on 1st November, 2008 5 Copy of Agreement between The Indian 28-32 Medical Association (IMA) and G.j Multiclave (India) Pvt.Ltd entered into on 1st November, 2012 6 List of Vehicles used for Bio Medical Waste 33-53 Collection and Copies of Certificates of Registration of Vehicles used for operation 7 Copy of PAN Card of IMAGE 54 8 Details about IMAGE & List of office bearers of 55-58 IMAGE 9 Paper Presentation on Bio Medical Waste 59-62 Management in Kerala published in Clean India journal Further, assessee also filed the case laws on similar issues which are as under:-
:- 12 -: ITA Nos.448 & 1540/Hyd/2016
Sl.No Particulars Page Nos.
1 Hyderabad Menzies Air Cargo P. Ltd vs. 1-9
DCIT, in ITA No.421, 422 &
423/Hyd/2015
2 Ocean Sparkle Ltd vs. DCIT (2006) 99 10-30
TTJ Hyd 582
3 DCIT vs. Sushee Infra Private Limited in 31-46
ITA No.1828/Hyd/2014
4 Ramky Infrastructure Ltd vs. DCIT in 47-65
ITA No.472/Hyd/2009
5 ACIT vs. R.R. Constructions in 66-76
ITANo.2061/Mds/2010
and prayed for allowing the appeal.
9. Per contra, ld. Departmental Representative strongly
supported the orders of the ld. Assessing Officer and ld. Commissioner of Income Tax (Appeals).
10. I have perused the orders and heard the rival contentions. In my opinion it is appropriate to remit the entire issue back to the file of the ld. Assessing Officer to examine the issue afresh after considering the contract documents as a whole and all other evidence :- 13 -: ITA Nos.448 & 1540/Hyd/2016 that may be submitted by the assessee to demonstrate the facts that actual work was executed by the assessee and IMAGE did not claim any deduction u/s. 80IA of the Act. I set aside the order of the ld. Commissioner of Income Tax (Appeals) and direct the ld. Assessing Officer to decide the issue afresh after considering the ratio laid down in the list of cases at para 6 herein above. Needless to mention that ld. Assessing Officer shall afford reasonable opportunity of being heard to the assessee. The appeal of the assessee is allowed for statistical purpose.
11. Identical issue is also involved in ITA No.1540/Hyd/2016 for the assessment year 2012-2013 is also allowed for statistical purpose.
12. In the result, the appeals of the assessee are allowed for statistical purpose.
Order pronounced on 21st day of June, 2017, at Hyderabad.
Sd/-
(ASHA VIJAYARAGHAVAN) ाियक सद /JUDICIAL MEMBER Hyderabad िदनां क/Dated: 21st June, 2017 KV आदे श की ितिलिप अ !े िषत/Copy to:
1. अ पीलाथ /Appellant 3. आयकर आयु" (अ पील)/CIT(A) 5. िवभागीय ितिनिध/DR
2. थ /Respondent 4. आयकर आयु"/CIT 6. गाड फाईल/GF