Unipro Techno Infrastructure Private ... vs Pr. Cit-1, Chandigarh on 29 January, 2020

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Income Tax Appellate Tribunal - Chandigarh

Unipro Techno Infrastructure Private ... vs Pr. Cit-1, Chandigarh on 29 January, 2020

आयकर अपील य अ धकरण,च डीगढ़ यायपीठ, "बी " च डीगढ़
IN THE INCOME TAX APPELLATE TRIBUNAL
DIVISION BENCH, 'B', CHANDIGARH

ी एन. के. सैनी, उपा य एवं ी संजय गग , या यक सद य
BEFORE SHRI N.K. SAINI, VICE PRE SIDENT &
SHRI SANJAY GARG, JUDICIAL ME MBER

आयकरअपीलसं./ITA No. 749/C H D / 2 0 1 8
नधा रणवष / Assessment Year : 2013-14

M/s Unipro Techno Vs. The Pr. Commissioner of
Infrastructure Private Ltd., बनाम Income Tax-1,
SCO 36,Sector 7-C Aaykar Bhawan, Plot No.17,
Chandigarh Sector 17-E, Chandigarh

थायीले खासं . / PAN NO: AABCU1732D
अपीलाथ$/ Appellant &'यथ$/ Respondent

नधा (रतीक*ओरसे/Assessee by : Sh. Sudhir Sehgal, Advocate
& Shri A.K.Sood, CA

राज वक*ओरसे/ Revenue by : Sh. Krishan Kumar, CIT DR

सन
ु वाईक*तार.ख/Date of Hearing : 19.12. 2019
उदघोषणाक*तार.ख/Date of Pronouncement : 29.01.2020

आदे श/ Order

Per Sanjay Garg, Judicial Member:

The present appeal has been preferred by the assessee against the order dated 31.03.2018 of the Principal Commissioner of Income Tax-1, Chandigarh [hereinafter referred to as 'PCIT'] agitating the action of the Ld. PCIT in passing the impugned order u/s 263 of the I.T. Act exercising his revision jurisdiction.

2. In this appeal, the assessee has raised following grounds of appeal:-

ITA No. 749-Chd-2018- Unipro Techno Infrastructure Private Ltd, Chandigarh 2 That the orders of the Pr. Commissioner of Income Tax - I assuming jurisdiction u/s 263 of the Act are contrary to law and facts of the appellant's case.

1. That the worthy Pr Commissioner of Income Tax-I, Chandigarh is not justified in holding that the Assessment Order passed u/s 143(3) dated 30-07-2015 is erroneous and prejudicial to the interest of revenue within the meaning of section 263 as the terms and conditions and nature of projects undertaken by the assessee during the year under consideration including five new projects have not been analized and the Assessing Officer has failed to conduct necessary verification/call for documents required to ascertain the nature of the projects.

2. That The Pr. Commissioner of Income Tax-I has erred in assuming that the Assessing Officer has failed to study the allowability of deduction u/s 80IA in respect of proportionate profits earned on job work done by the sub-contractors.

3. That the order of the learned Pr. Commissioner of income tax is not justified in directing the Assessing Officer to call for the basis/justification of bifurcation of the expenses claimed by the assessee under various heads between the eligible income unit.

4. That the order of the Pr Commissioner of Income Tax-I lacks from judicial consistency as the orders for reopening of the previous two assessments u/s 263 of the Ld. Pr CIT for the Asstt.

Years 2011-12 and 2012-13 on the same grounds have been quashed by Hon'ble ITAT vide its orders dated 06.02.2017 and 01.12.2017 respectively.

5. 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.

6. Any other ground that may be taken up before the appeal is finally heard and disposed of.

ITA No. 749-Chd-2018- Unipro Techno Infrastructure Private Ltd, Chandigarh 3

3. The brief facts relating to the issue are that the assessment order u/s 143(3) of the Income Tax Act, 1961 (in short 'the Act') was passed by DCIT, Circle-1(1), Chandigarh (in short AO) for the A.Y. 2013-14 on 30.07.2015 at an assessed income of Rs. 89,67,398/- after allowing the deduction u/s 80IA of the Act amounting to Rs.4,53,46,915/-.

Thereafter, a proposal, u/s 263 of the Act was received by the Ld. PCIT from the AO, submitting that as per the definition of 'Works Contract' defined in the 'Finance Act 2012' and section 65B of the 'Service Tax Act', the contracts executed by the assessee with the Himachal Pradesh Government's Irrigation and Public Health Department, Division Thural, Dehra, Sarkaghat, Chamba, & and also with the Govt, of Uttrakhand, Peyjal Migam Pauri, Rudraprayag, Muni ki Reti and Chamba were in the nature of 'Works Contract' as per the Explanation to sub clause (13) of sub section (4) to section 80IA of the Income Tax Act. It was further submitted that as per the nature of the contracts executed, the assessee had to supply items such as pipes, valves etc. which transactions were in the nature of transfer of property in goods for the execution of the contract. That the assessee was bound by the exact specification, design and directions given by the government departments and, therefore, the contract allotted to the assessee was covered under the definition of Works Contract' and, therefore, the assessee was not entitled to deduction u/s 80IA(4) of the Act, as was claimed and wrongly allowed.

ITA No. 749-Chd-2018- Unipro Techno Infrastructure Private Ltd, Chandigarh 4

4. 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 was issued to the assessee which mentioned the discrepancies noted in the assessment order as under:-

"... i) 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 there from are not eligible for claiming deduction u / s 80IA of the said section...."

( b ) Further vide letter dated 14.02.2017, the assessee was asked to file its submission on the following issues as well:

(i) It is seen that in the Trading Account, a payment of Rs.

12,37,15,841/- 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.

(ii) It further seen that the ratios of receipts from exempted and non exempted units is 5.58:1 whereas the freight & carriage, wages and repair &, maintenances in the ratio 3.53:1, 5.08:1, 0.91:1. The abnormally high expenses claimed for nonexempt income viz-a-viz the exempt income have not been inquired and investigated..."

5. The Ld. PCIT considering the reply and explanation of the assessee to the above show cause notice framed the following three issues for adjudication:-

ITA No. 749-Chd-2018- Unipro Techno Infrastructure Private Ltd, Chandigarh 5

i) Non-examination of eligibility of deduction u/s 80IA w.r.t content of contracts and on account of the nature contracts. (Issue No. 1)

ii) Ineligibility of deduction claimed u/s 80IA on the job work done by subcontractors. (Issue No. 2)

iii) Apportionment of expenses being debited to the Non-Exempt Unit vis-a-vis the Exempt Units- which was not enquired into by the Assessing Officer thereby affecting the inter-se profitability worked out for the Exempt and Non-exempt Units.(Issue No.3) The Ld. PCIT thereafter proceeded to decide each of the issue.

6. So far as the issue No.1, i.e. regarding the non-examination by the Assessing Officer of the eligibility of deduction u/s 80IA of the Act w.r.t. the nature of the contracts, the Ld. PCIT has given in the impugned order the factual and legal background relating to this issue as under:-

"ISSUE NO. 1

Background:

(a) This issue had been the subject matter of Pr.CIT orders u/s 263 in the immediately two preceding years. In the A.Y. 2011-12 the Pr.CIT had held the order passed by the AO as erroneous in so far as it was prejudicial to the Interest of Revenue by holding that the AO had not examined certain issues vis-a vis the claim for deduction u/s 80IA of the Act made by the assessee. The Pr.CIT held the nature of the contract to be a "works contracts" in view of explanation to sub-section (13) of Section 80IA which excludes business in the nature of works contract from claiming benefit of deduction u/s 80IA (4). However, the facts in that year were, that the assessee company had claimed this deduction only w.r.t one project i.e. the one awarded to it by the ITA No. 749-Chd-2018-

Unipro Techno Infrastructure Private Ltd, Chandigarh 6 Irrigation and Public Health Department Thural, Distt Kangra. The Hon'ble ITAT in its order no.

361/Chd/2016 for A.Y 2011-12 decided the issue by stating that against revenue, the preceding year i.e. A.Y. 2010-11 was the first year of claim of deduction u/s 80IA w.r.t this project and the same having been allowed u/s 143(3) of the Act, could not in the succeeding be disturbed now on the same parameters with the same set of facts. Therefore, the revisionary powers of the Pr. CIT could not have been exercised on this issue in A.Y. 2011-12. This order was not accepted but on account of low tax effect, no appeal was filed.

(b) In the A.Y. 2012-13, too the Pr.CIT passed a revisionary order u/s 263 and set aside the order u/s 143(3) on various grounds. The facts w.r.t the claim for deduction u/s 80IA, were different in A.Y. 2012- 13, in that the assessee had claimed this deduction with respect to income of four contracts i.e. (i) IPH Thural, (ii) IPH Dehra, (iii) Uttarakhand Peyjal Nigam, Construction Division, Rudraprayag and (iv) Uttarakhand Peyjal Nigam, Construction Division, Pouri, Uttarakhand. The Ld. Pr.CIT in order no.

Pr.CIT-l/Chd/Judl/263/2016-17/6453 dated 30.03.2017 followed the order of the Hon'ble, ITAT of A.Y. 2011-12 with regard to the Thural (HP) Project but as regards the other three contracts, he held it to be a case of inadequate enquiry on the part of the AO who had allowed the deduction on these three projects without any enquiry, discussion or application of mind and, therefore, the order was revised u/s 263 as being erroneous so far as it is prejudicial to the Interest of Revenue. The Hon'ble ITAT thereafter, vide its order no. 867/CHD/2017 for A.Y. 2012-13 dated 01.12.2017 decided against Revenue, by observing that though the requisite agreements were available before the AO and before the Pr.CIT, no effort was made to distinguish the contract entered into with the Himachal Pradesh Govt, with respect to the Thural project and the other three new contracts entered into this year. Therefore, no error was made out to conclude the order of the AO was erroneous on this account. This order is under challenge. However, the observations ITA No. 749-Chd-2018- Unipro Techno Infrastructure Private Ltd, Chandigarh 7 of the Hon'ble ITAT have been kept in mind while evaluating the issue in this order."

7. The Ld. PCIT further observed that so far as the order of the Tribunal dated 6.2.2017 for assessment year 2011-12 was concerned, the assessee company had claimed deduction u/s 80IA with respect to only one project i.e. 'Thural Project'. She further observed that so far as assessment year 2012-13 was concerned, there was only one contract in that year. However, for the year under consideration, 05 new contracts have been added. That though proceeding sheet did show that all the agreements were called for by the Assessing Officer and duly filed by the assessee, however, it did not appear that all these contracts had been looked into by the Assessing Officer to get the nature of the contracts.

That the Assessing Officer had made discussion only relating to one contract i.e. 'Thural Contract' which was continuing from earlier years.

The Ld. PCIT further observed that the alleged contracts for developing of 'Lift Water Supply Scheme' was to be completed / developed within a period of one to three years and thereafter operation and maintenance was to be carried out by the appellant for another one to five years. She further observed that the 'Thural Project' was in its fourth year, which meant that the Lift Water Supply Scheme had already been developed in the first three years and in the fourth year only operation and maintenance was to be carried out. She further referred to the provisions ITA No. 749-Chd-2018- Unipro Techno Infrastructure Private Ltd, Chandigarh 8 of sub section (4) to section 80IA, which for the sake of ready reference are reproduced as under:-

"...(4) This section applied to: -

(i) any enterprise carrying on the business of (i) developing or

(ii) operating and maintaining or (iii) developing, operating and maintaining any infrastructure facility which fulfills 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 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:...."

She, therefore, observed that it was clear from the above provision that deduction u/s 80IA was allowable to an enterprise which was carrying on the business of:

           (i)     developing or

           (ii)    operating and maintaining or

(iii) developing, operating and maintaining any infrastructure facility She further observed that ITAT had decided the issue in the assessment year 2011-12 by considering the nature of 'Thural Project' only. She further observed that for the assessment year 2012-13, the then Ld. ITA No. 749-Chd-2018- Unipro Techno Infrastructure Private Ltd, Chandigarh 9 PCIT in his order passed u/s 263 of the Act had accepted the findings given by the ITAT in relation to the appeal of the assessee for assessment year 2011-12 with respect of 'Thural Project' only but had not done so with reference to other three new projects in that order and in his opinion the nature of those three contracts needed to be verified.

However, the ITAT decided the issue in favour of the assessee vide order dated 1.12.2017 in the appeal of the assessee for assessment year 2012-13 by holding that the PCIT could not have done so without brining on record any differentiation between the project at Thural and other three projects. The Ld. PCIT, thereafter, proceeded to hold that the assessee could not draw any help from the earlier decisions on the ground that in the year under consideration, the facts of the 'Thural Contract' were entirely different from other contracts. She observed that the relevant assessment year under consideration, being the 4 t h year of Thural Contract', it was an operation and maintenance contract. That so far relevant assessment year i.e. 2013-14 was concerned, the fact whether the 'Thural Project' was a Development project or a 'works contract' had lost significance, as the assessee in the 4 t h year had to operate and maintain the project. That so far as the other eight projects were concerned, the same were in the development stage. She, therefore, observed that the facts of the 'Thural Project' of the year under consideration were different from other contracts and, hence, findings arrived by the Tribunal for assessment year 2011-12 vide order dated ITA No. 749-Chd-2018- Unipro Techno Infrastructure Private Ltd, Chandigarh 10 6.2.2017 and vide order dated 1.12.2017 in relation to the appeal of the assessee for assessment year 2012-13, quashing the order passed u/s 263 of the Act by the Ld. PCIT, were not applicable for the year under consideration. She also observed that so far as the reliance of the assessee on the order of the Tribunal in the case of sister concern 'M/s Kaveri Infrastructure (P) Ltd., Chandigarh vs ACIT' for the assessment year 2012-13 in ITA No. 14/Chd/2017 dated 22.3.2017 was concerned, the facts of the same are also not applicable to the year under consideration as in the said case also, in the relevant assessment year 2012-13, the sister concern of the assessee had not carried out any activity of development of infrastructure facility but also carried out only maintenance and infrastructure project, where the assessee was a developer or a 'works contract' had not been there for adjudication. She further observed that the 08 contracts undertaken by the assessee in the assessment year 2013-14 except the 'Thural Contract' were in the first and the second year of functioning and, hence, the same were at the development stage, therefore, the question which the Assessing Officer was required to examine is as to whether the said contract in relation to the 8 t h project were 'Infrastructure Development contract' or 'work contract. The Ld. PCIT, as mentioned above, held that the order of the ITAT passed on similar issue in relation to the appeal against the order of the PCIT passed u/s 263 of the Act were not applicable in the assessment year under consideration. She, thereafter proceeded to ITA No. 749-Chd-2018- Unipro Techno Infrastructure Private Ltd, Chandigarh 11 discuss as to whether the contracts awarded to the assessee were 'Development project' or 'works contract'.

8. During the course of proceedings before the learned PCIT the assessee filed detailed replies, stating that the issue of eligibility of the assessee to claim deduction of its profits under section 80IA had been duly examined by the Assessing Officer during ass ess ment 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 since 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. 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 and the observation of the PCIT in respect of the submissions of the assessee had been discussed in para 7 of the impugned order.

ITA No. 749-Chd-2018- Unipro Techno Infrastructure Private Ltd, Chandigarh 12

9. The Ld. PCIT, thereafter, concluded that the Assessing Officer had not carried out any independent enquiries to find out the terms and conditions of the new as well as other contract excluded, significantly five of these contracts were absolutely new. That due to incomplete summary findings of the Assessing Officer and thereby allowing deduction u/s 80IA of the Act, with regard to eight projects of tehe assessee makes the assessment order fit for revision u/s 263 of the Act being erroneous so far as it was prejudicial to the interest of Revenue.

Similarly, the Ld. PCIT proceeded to discuss issues No. 2 and 3 also and held that u/s 80IA(4) of the Act, deduction cannot be allowed in respect of the sub contracts awarded by the assessee to the third parties. That the Assessing Officer did not examine the allowability of deduction of sub contracts, hence, the order passed by the Assessing Officer is erroneous and pre-judicial to the interest of Revenue. The Ld. PCIT further in respect of issue No.3 observed that the expenditure claimed for the Hamirpur bye-pass being the non-exempt unit, were not proportionate to the other none projects which were eligible for deduction u/s 80IA. That the Assessing Officer had accepted the bifurcation given by the assessee without raising any query or seeking any explanation or justification in this respect from the assessee. She, therefore, held that the order of the Assessing Officer was erroneous and prejudicial to the interest of Revenue on this issue also.

ITA No. 749-Chd-2018- Unipro Techno Infrastructure Private Ltd, Chandigarh 13

10. Being aggrieved by the said order, the assessee has come in appeal before us.

11. We have heard the rival contentions and have also gone through the record. So far as the issue No.1, as to whether the projects carried out by the assessee and the contracts thereto would fall under the definition of development contract eligible for deduction u/s 80IA(4) of the Act or the same would be 'works contracts' and, therefore, would be hit by the exclusion provisions of the above exclusion to sub section (13) of section 80IA of the Act is concerned, the Ld. PCIT has given his finding in para 7 onwards in the impugned order, relevant part of which, for the sake of convenience and ready reference, is reproduced as under:-

"7. Evaluation of Records and Replies I have gone through the records and replies to questionnaires which are Annexed to this order for convenience of reference. After considering these, the main contentions of the assessee are discussed below:

(i) One of the main contentions of the assessee was that the AO had examined in detail its claim and the deduction was allowed after verification. Therefore, it could not be now reviewed as it would be amount to a change of opinion.

In this regard, it is stated that the assessment records as well as the assessment order do not bear out the contention of the assessee that all records were examined. There is only an order sheet entry calling for copy of all agreements. These 'agreements' are the award letters which have been placed on the assessment records alongwith the Form No. 10CCB and other documents called. Nothing more was called for or ITA No. 749-Chd-2018- Unipro Techno Infrastructure Private Ltd, Chandigarh 14 supplied. In the present case the applicability of Explanation to sub section 13 of section 80IA was not examined which prohibits deduction u/s 80IA(4) in the case of work contract. Thus, whether the profits derived by the assessee fell under the purview of Explanation sub-section 13 was an essential condition for the applicability of section IA(4) of the Act and should necessarily have been examined by the A.O. There s repeated reference in the award letters to the technical bids but no evidence Technical bids being called or inspected is on record. The assessment record d order dated 30.07.2015, shows that the AO has only listed the contracts by name and given no finding on them. Infact, in para 3.1 the AO has highlighted the phrase "Construction of Civil Work" with reference to a project. There is no comment in the order regarding the nature of the contracts and allowability of the same in this para. Later, in para 3.2 of the order a specific finding has been given for IPH Thural and its eligibility on account of it being its fourth year. There is no other comment on any other project or its eligibility. The fact that there are five new contracts in this year and nothing is mentioned about them in the order clearly indicates that no enquiry was done with reference to the nature of work and eligibility of the contracts w.r.t the huge claim of 80IA. In view of these facts it is clear that this is a case of not making enquiries or verifications which should have been made.

Reference is 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 of the Principal Commissioner of 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 into 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...."

The above provision is clearly attracted to the facts of this case as the A.O did not carry out the inquiry w.r.t the nature of the contract which he was ITA No. 749-Chd-2018- Unipro Techno Infrastructure Private Ltd, Chandigarh 15 bound to do so in terms of the exclusionary nature of Explanation to s.s 13 of 80IA.

(ii) Further, the reliance of the assessee on the Pr.CITs order u/s 263 for A.Y. 2012-13 also does not help of the case of the assessee. In those proceedings the Ld. Pr.CIT had accepted the finding given by the Hon'ble ITAT in A.Y. 2011-12 w.r.t the Thural project but had not done so with reference to other three new projects as in his opinion the nature of those contracts needed to be verified. Thereafter, the Hon'ble ITAT decided the issue in favour of the assessee in its order dated 01.12.2018 by holding that the Pr.CIT could not have done so without bringing on record any differentiation between the project at Thural and the other three projects.

However, the assessee cannot draw any help from this decision on the grounds that in this year the facts of the Thural contract in this year are entirely different from the other contracts. Being the fourth year of this contract, it was only an operation and maintenance contract now. In such a situation, the significance of the assessee being a developer or a works contractor looses significance w.r.t 80IA. This is also the argument espoused by the assessee in para E of its reply dated 05.02.2018. The reasoning behind this is that provision of section 80IA(4)(i)(b) makes the deduction available to a person who enters into agreement with the Central Government or State Government for either

i) Developing or

ii) Operating and Maintaining or

iii) Developing, Operating and Maintaining a new Infrastructure facility.

Therefore, if the assessee is not a developer, yet it is operating and maintaining an infrastructure facility, as was claimed to being done by the Thural project, it woVild still be eligible for the deduction u/s 80IA. However, this could not be the case with reference to the other contracts. Being pre-operating and maintaining stage, the nature of the contract as to whether it is a development or a works contract would become critical. The purpose of award of the contract would have to be analyzed in view of explanation to 80IA(13) which reads as under:

"...[Explanation. - For the removal of doubts, it is hereby declared that nothing contained in this section shall apply in relation to a business referred to in sub-section(4) which is in the nature of a works contract awarded by any personfincluding the Central or State Government) and executed by the undertaking or enterprise referred to in sub-section(l)]..."

ITA No. 749-Chd-2018- Unipro Techno Infrastructure Private Ltd, Chandigarh 16 Thus, the five new contracts awarded in this year and the four awarded in the immediately preceding year were distinguishable from the Thural project and being new were required to have been examined in detail by the A.O so as to test them on the grounds of not being "work contracts". The AO failed to do that, even though it was incumbent on him. Most respectfully, it is stated that the Honhle ITAT too had observed in its order for A.Y. 2012-13 that the 80IA deduction on the three new projects apart from the Thural project, could not be denied without demonstrating how these were different from that project. The analysis made above shows that the facts of the Thural project are different in this year from the others, as it is only doing the activity of operating and maintaining a facility unlike the others.

(iii) As regards, the reliance of the assessee on the order of the Hon Tale ITA T in the case of its sister concern M/s Kaveri Infrastructure Pvt. Ltd. Chandigarh for the A.Y. 2012-13 ITA No. 14/CHD/2017 dated 22.03.2017, the same is also misplaced. On going through this order in para 9, Pg. 36/37 it has been stated clearly as under:

"...The assessee explained that entire income of the assessee is only from operation and maintenance of infrastructure facilities. It was also explained that during the year the assessee has not carried out any activity of development of infrastructure facility but has carried out only operation and maintenance of infrastructure project as defined u/s 80IA of the Act...."

Thus, even in that case the sister concern, was eligible by virtue of performing the function of operation and maintenance of an infrastructure facility and there was no real requirement to go into the question of whether or not the assessee was a developer or a works contractor for an infrastructure facility.

All the eight contracts undertaken by assessee Unipro Infrastructure Pvt. Ltd. in the A.Y. 2013-14 (apart from the Thural contract) were in the first and the second year of functioning as the assessee has made a categorically statement to the effect that the Lift Water Supply construction and development is completed within 1-3 years. Thereafter, operation and maintenance is carried out. The sister concerns contract, being of Operation and Maintenance only, no strength can be drawn from this order except for the Thural project in this year which is doing similar work this year.

(iv) The assessee also sought to place reliance on the examination of its claim by other officers i.e. when issuing lower deduction rate TDS ITA No. 749-Chd-2018- Unipro Techno Infrastructure Private Ltd, Chandigarh 17 certificates. No strength can be drawn from this, as these are only in the nature of prima facie and provisional proceedings for a different purpose and cannot be equated with assessment proceedings where a claim is examined in detail before attaining finality. Thus, it is apparent that the examination of nature of these projects which should have been done in view of the explanation in section 80IA(13) was not carried out at any other stage or proceeding as should have been done.

(v) A further, argument taken was that the assessee is a developer as its designs the projects itself and also bears the risk for the entire project and its execution and financial risks. However, after going through the award letters and technical bids which were duly confronted, it appears that the assessee is involved in just a part of the project for a limited period of 3-5 years. The land in question belongs to the Government. The contractor it is seen can only function within the strict frame work issued by the Government, who is apparently the actual developer who outsources part of the work of its infrastructure development project. There is no actual freedom or space for the assessee contractor to go beyond the frame work laid down. Infact, the preface to the technical bid reads as under:

".....The departmental drawings for all the components appended in Volume TV are based on the preliminary drawings evolved by the department. As such structural as well as architectural design and drawings based on the site conditions are to be submitted by the tenderer/firm without any extra cost subject to final approval of the department.

Technical parameters specified in the data sheets are based on sample designs evolved by the department as such tenderer/firm shall submit structural and architectural design and drawings based on the site conditions keeping in view the functionality and good aesthetic appearance without any extra cost subject to final approval of the department...."

From the above, it is clear that even the final structural as well as architectural drawings, (not just the sample and preliminary ones) are subject to final approvals and were based on drawings evolved by the Government agency.

Further, even letters filed with reference to the newer contracts indicate this. Two samples of extracts confronted to assessee are reproduced below:

ITA No. 749-Chd-2018- Unipro Techno Infrastructure Private Ltd, Chandigarh 18 "....(i)Letter dated 03.10.2012 of the Executive Engineer, IPH Division, Sarkaghat, pertaining to the project of Providing LWSS Baira Bhadrota Suranga and Hatli area in Tehsil Sarkaghat Distt. Mandi:

"The Technical specification given in the original tender document subsequent common parameters minutes of negotiation held in the office of Engineer in Chief, IPH Department, Shimla on 12.07.2012 and minutes of pre-bid meeting on 19.04.2012 duly singed by you, shall be part and parcel of agreement and strictly adhered to ..........

..........

The work will be carried out in accordance with the latest specification and to the entire satisfaction of the Engineer-in- Charge.

A copy of revised schedule of quantity is also enclosed herewith which shall be part and parcel of the contract agreement.

You are requested to submit the detail design/drawing of the work to this office for obtaining approval within one month from issue of this letter in 5 fair copies for' drawing and 5 copies of fair design for final approval from the competent Authority....."

Similar letter in the Chamba project reads as under:

"....(i) Letter dated 03.10.2012 of the Executive Engineer, IPH Division, Chamba, pertaining to the augmentation of all drought affected area in GP Uteep, Luddu Baat and Belly from Ghroshan Nallah in Distt. Chamba:

"The Technical specification given in the original tender document subsequent common parameters minutes of negotiation held in the office of chief Engineer (NZ), IPH Department, Dharamsala on 01.10.2012 and minutes of pre-bid meeting on 19.04.2012 duly singed by you, shall be part and parcel of agreement and strictly adhered to...."

ITA No. 749-Chd-2018- Unipro Techno Infrastructure Private Ltd, Chandigarh 19

(vi) Thus, a combined reading of the preface to the bid, the award letters and the technical bids, makes it clear, that the assessee contractor could not go beyond the strict frame work laid down. Therefore, the argument put forth by the assessee in support of his claim of not being a works contractor, in that it does the designing of the project fails. However, it should be stated that, designing is very common in most of the civil contractor business like buildings, roads etc. Besides, the Government Departments, in its technical bids, have clearly mentioned the scope and the detailed specifications which should be followed by the contractor. The contractor can design only within the framework issued by the Department concerned and there is no actual freedom or space for the contractor to go beyond the framework given by the contractee, i.e. the Himachal Pradesh Irrigation cum public Health Department/ Government of Uttrakhand Peyjal Nigam, Pauri & Rudraparyag, PHED, Jaipur, Rajasthan etc.

(vii) Further, the claim of the assessee that the contract was a BOT i.e. Build, Operate and Transfer and therefore, was a development contract is also not borne out from the award letters. In a BOT, the total cost of building and operating the reject is to be borne by the assessee and it is intended for the project as a whole d not merely for construction activity. But in this case the capital investment at the assessee has made is like that of any other civil contractor. The purpose of 80IA was to encourage the private investment. However, it appears that the assesssee is merely a contractor who receives payment as and when the bills are raised, even before the complete construction is over. Even the guarantees given in the award letters are 'performance gurantees' not extending to the entire project but to the performance of work approved and assigned by the Government agency. Therefore, the risk of the assessee is limited to the work allotted and not to the entire contract.

(viii) The Build, Operate and Transfer (BOT) which the assessee is referring to is different from the BOT which is eligible under the section. The CBDT, vide its circular no 10/2005, has clarified (though in the context of the port developers) that what BOT and BOLT (Build- Own-Lease-Transfer) schemes are eligible for deduction under section 80IA as per the circular, the BOT/BOLT scheme refers to a case where the company or consortium of companies builds the infrastructure using its own investment and later operates it for a specific period of ITA No. 749-Chd-2018- Unipro Techno Infrastructure Private Ltd, Chandigarh 20 time in order to realize its expenses along with the profit margin from the service users. However, in the case of the assessee, the amount is realized by the assessee by issuing running bills during the course of the construction and not by operating the lift water supply scheme. Besides, the assessee receives separate payment from the HP Government for the maintenance of the lift water scheme. The capital investment that the assessee is talking about is the same as that made by any other contractor. This does not serve the intent of the legislation, which is to encourage private investment. The assessee is merely a contractor who receives payment as and when the bills are raised, even before the complete construction is over.

It is, therefore, crystal clear from the above, that the assessee was bound by the exact specifications, design & directions given by the governments concerned. The above documents show that the assessee had to adhere the specifications mentioned in the "contract". Thus, it can reasonably be concluded that the nature of work carried out by the assessee was actually in the nature of a Work Contract'. The work allotted to the assessee company being covered under the definition of Work Contract'. Therefore, by not examining the nature of the contracts, in my considered opinion, it is a case of inadequate or lack of inquiry on the part of the A.O resulting into non-application of mind before allowing such a huge deduction u/s 80IA of the Act. The Explanation 2 of section 263, clauses (a) and (b) are also clearly attracted.

8. Reliance is also placed in this regard in the ruling in the case of ACIT vs. Pratibha Industries Ltd. in ITA Nos. 2197 to 2199/Mum/2008 dated 19.12.2012 in para-77, it is held as under:-

"The next question is to be answered is whether the assessee is a developer or mere works contractor. The Revenue relied on the amendments brought in by the Finance Act 2007 and 2009 to mention that the activity undertaken by the assessee is akin to works contract and he is not eligible for deduction under section 80L\(4) of the Act. Whether the assessee is a developer or works contractor is purely depends on the nature of the work undertaken by the assessee. Each of the work undertaken has to be analyzed and a conclusion has to be drawn about the nature of the work undertaken by the assessee.

ITA No. 749-Chd-2018- Unipro Techno Infrastructure Private Ltd, Chandigarh 21 The agreement entered into with the Government or the Government body may be a mere works contract or for development of infrastructure. It is to be seen the agreements entered into by the assessee with the Government."

8.1 Similarly in the case of Koya & co. Construction Pvt. Ltd vs. ACIT reported in 21 taxman.com 35(Hyd.) in para 23, the ITAT has again held in this regard as under:-

" The next question is to be answered is whether the assessee is a developer or mere works contractor. The Revenue relied on the amendments brought in by the Finance Act 2007 and 2009 to mention that the activity undertaken by the assessee is akin to works contract and he is not eligible for deduction under section 80IA(4) of the Act. Whether the assessee is a developer or works contractor is purely depends on the nature of the work undertaken by the assessee. Bach of the work undertaken has to be analyzed and a conclusion has to be drawn about the nature of the work undertaken by the assessee. The agreement entered into with the Government or the Government body may be a mere works contract or for development of infrastructure. It is to be seen from the agreements entered into by the assessee with the Government."

9. From the above cases relied on, it is evident that before allowing the deduction, the AO has to satisfy himself of the eligibility of the assessee to the deduction claimed viz.-a-viz. the facts of the case and the provisions of the Act. The same can be done only after due analysis of the terms and conditions of the each contract executed by the assessee, as held above. The AO has not carried out any independent inquires to find out the terms and conditions of the new as well as other contracts executed, significantly five of these contracts were absolutely new. Therefore, the incomplete summary findings of the AO to allow deduction u/s 80IA, with regard to eight of the projects without any inquiry, discussion or application of mind under the given facts and circumstances makes the assessment order fit for revision u/s 263 of the Act, being erroneous so far as it is prejudicial to the interest of Revenue."

ITA No. 749-Chd-2018- Unipro Techno Infrastructure Private Ltd, Chandigarh 22

12. A perusal of the above discussion and findings of the Ld. PCIT reveal that the Ld. PCIT, though, fully aware of the fact that the issue under consideration has been duly examined and adjudicated by the Tribunal in favour of the assessee in respect of the identical contract, not only, in assessee's appeal against order of the PCIT passed u/s 263 of the Act relevant to assessment year 2011-12 vide its order dated 6.2.2017 (supra), but also, in the appeal of the assessee against the order of the PCIT u/s 263 of the Act for assessment year 2012-13 vide order dated 1.12.2017. However, the Ld. PCIT has proceeded to distinguish and differentiate the project undertaken by the assessee in the assessment year 2011-12 i.e.'Thural Project' from the other projects on vague and baseless grounds. She has observed that for the assessment year under consideration, the 'Thural Project' had reached to its fourth year of commencement and that the project was already developed / completed in the first three years and further that in the fourth year, the assessee had been carrying the activity of only operation and maintenance of the said project and therefore, was eligible for deduction u/s 80IA (4) of the Act in respect of the said project for the said year. That, since the other projects were not completed in the year consideration and hence the assessee was not carrying on the activity of operation and maintenance of the said other projects, hence was not eligible for deduction u/s 80IA(4).

ITA No. 749-Chd-2018- Unipro Techno Infrastructure Private Ltd, Chandigarh 23

13. Before proceeding further it is pertinent to mention here that as per provisions of section 80IA(4), deduction has been allowed to an assessee who has entered into an agreement either with the Central or a State Government or a Local Body or any statutory body for -

      (i)     Developing or

      (ii)    Operating and maintaining or

      (iii)   Developing,    Operating       and       maintaining           a      new
              Infrastructure facility.

The assessee, admittedly, had entered into nine agreements up to the year under consideration for developing / providing Lift Irrigation schemes/ Lift Water Supply Scheme with various State Authorities such as Irrigation and Public Health Deptt, of Himachal Pradesh Govt. and that of Govt. of Uttrakhand. The contracts were composite contracts requiring the assessee not only to develop facility but also to operate and maintain the facilities for specific number of years i.e. firstly, the development of project which would take 1 to 3 years and then to operate and maintain projects for one to five years. So far as the 'Thural Project' is concerned, the question as to whether the project developed by the assessee was an Infrastructure development project / contract awarded by the Government, came into consideration before this Tribunal in the appeal of the assessee for assessment year 2011-12 and the Tribunal after considering the facts and circumstances of the case held that the 'Thural Project' was developed by the assessee as per the ITA No. 749-Chd-2018- Unipro Techno Infrastructure Private Ltd, Chandigarh 24 composite contract awarded by the Government and would be eligible for deduction u/s 80IA(4) of the Income-tax Act. Then in the next year relevant to AY 2012-13, the assessee was awarded three more contracts of similar nature. The Ld. PCIT citing similar reasons as were given in her order for AY 2011-12, exercised her jurisdiction u/s 263 of the Act and held that the Assessing Officer had not properly examined the issue as to whether the contracts entered into by the assessee in respect of the three new projects were Infrastructure Development contracts allowable for deduction u/s 80IA or the same were simple works contracts specifically excluded from the applicability under the provisions of section 80IA as per explanation to sub section (13)of section 80IA of the Act. The Tribunal discussed the matter in detail and vide order dated 6.2.2017 in ITA No.361/Chd/2016 for assessment year 2011-12 & also vide subsequent order dated 1.12.2017 (ITA No. 867/Chd/2017) for assessment year 2012-13 and held that the Ld. PCIT had failed to differentiate the nature of the other three projects from the 'Thural Project'. After detailed discussion, the appeals of the assessee were allowed and the order of the Ld. PCIT u/s 263 of the Act was quashed.

From the above facts, it comes out that the nature of the contracts and development activities of the assessee have been examined by the Tribunal and after extensive discussion, it has been held that the contract of the development of the said project was an infrastructure development contract and, hence, eligible for deduction u/s 80IA(4)of ITA No. 749-Chd-2018- Unipro Techno Infrastructure Private Ltd, Chandigarh 25 the Act. In the year under consideration, as per the Ld. PCIT, the assessee has been awarded five new contracts, however, the PCIT has not pointed out or discussed as to how the nature of theese five new development projects undertaken during the year was different from the nature / facts of the 'Thural Project' as carried out by the assessee in the assessment year 2011-12 when it was in its development stage. She had not discussed as to why findings of this Tribunal for assessment year 2011-12, which was in relation to the nature of the 'Thural Project' when it was in development stage, would not be applicable to the new projects undertaken. However, she has taken an entirely inappropriate and illogical plea that this year 'Thural Project' is entered into the fourth year and, thus, the activity carried out by the assessee for the year under consideration in respect of the 'Thural Project' is only operation and maintenance, therefore, the facts of the 'Thural Project' for the year under consideration are different from other projects. It is pertinent to mention here that the nature of the 'Thural Project' and the activity carried out by the assessee for the assessment year under consideration, when the 'Thural Project' is reached in its fourth year was not under consideration or adjudication by the Tribunal in respect of the appeal of the assessee for assessment year 2011-12 and even in the appeal for assessment year 2012-13, since, the 'Thural Project' in those years was in its developmental stage, hence, the Tribunal considering the nature of the contract held that it was an Infrastructure ITA No. 749-Chd-2018- Unipro Techno Infrastructure Private Ltd, Chandigarh 26 development project. Since the Ld. PCIT has not brought any differentiating or distinguishing fact about the development activity carried in the 'Thural Project' as compared to the other eight projects undertaken by the assessee, hence, under the circumstances, the findings arrived at by the Tribunal in respect of 'Thural Project' are squarely applicable to the other projects also. It is also pertinent to mention here that the nature of the other three projects which were started in the year 2012-13 has also came for consideration in the appeal of the assessee against the order passed u/s 263 of the PCIT and it has been specifically held that the Ld. PCIT had failed to point out any difference between the 'Thural Project' and the other three projects carried out by the assessee in the said year.

However, again vide impugned order, the Ld. PCIT though, fully aware of the earlier findings of the Tribunal, yet, proceeded to pass the impugned order u/s 263 of the Act without brining any distinguishing fasts regarding the nature of the new contract when compared to the earlier four contracts carried out by the assessee. Moreover, the Ld. PCIT has held that the assessee is eligible for deduction in respect of the 'Thural Project' for the year under consideration being the fourth year of the project and that the assessee has to only operate and maintain the said infrastructure facility namely 'Thural Project. By saying so, the Ld. PCIT herself has impliedly admitted that the 'Thural ITA No. 749-Chd-2018- Unipro Techno Infrastructure Private Ltd, Chandigarh 27 Project' is an Infrastructure Development Project and as per the provisions of section 80IA(4) of the Act, the deduction has been allowed for developing or Operating and maintaining or for Developing, Operating and maintaining a new project facility.

14. So far as the observation made by the Ld. PCIT that the Development activity carried out by the assessee, whether, would fall in the definition of the 'works contract,' the said issue has been thoroughly discussed by the Tribunal in order dated 6.2.2017 in ITA No.361/Chd/2016 for assessment year 2011-12 & dated 1.12.2017, ITA No. 867/Chd/2017)for assessment year 2012-13, the relevant findings of the Tribunal given in order dated 6.2.2017 for assessment year 2011-12 (supra) in this respect, are reproduced as under:-

"8. We have heard the rival contentions, perused the order of the learned Pr. CIT and the documents placed before us.

9. On perusal of the order of the learned Pr.CIT we find that the first reason for invoking revisionary powers under section 263 was that the Assessing Officer had not examined the claim of the assessee of deduction under section 80IA of the Act vis-a-vis the applicability of the Explanation to sub-section(13) of section 80IA of the Act. The learned Pr. CIT has held that as per the aforesaid explanation to the section work contracts are not eligible for deduction under section 80IA(4) and apparently the project undertaken by the assessee is covered under the definition of "works contract". Moreover the Assessing Officer has not examined this aspect during the course of assessment and no verifications were made by the Assessing Officer, therefore, as per the learned Pr. CIT, the assessee has been wrongly allowed deduction of its profits under section 80IA(4) of the Act causing prejudice to the revenue.

ITA No. 749-Chd-2018- Unipro Techno Infrastructure Private Ltd, Chandigarh 28 Before us Ld. counse l for the assessee made arguments challenging the jurisdiction of the Pr.CIT to invoke revisionary powers on this aspect as also on the merits of the claim of deduction under section 80IA(4). Challenging the assumption of jurisdiction of the learned Pr. CIT, the Ld. counsel of the assessee stated that this issue had been examined during assessment proceedings and the Assessing Officer, after due application of mind, had allowed the asse ssee 's clai m of deduction under section 80 IA(4). The Ld. counsel for the assessee stated that review of the order was only on account of change of opinion and could not be exercised under section 263 of the Act. In support of its contention that the issue had been examined by the AO during assessment proceedings the Ld. counsel for the assessee drew our attention to the following:

a) The return of income for the impugned year accompanied by Audit Report under section 80 IA in form No. 10 CCB on the basis of which deduction under section 80 IA was claimed by the assessee placed at paper book page No. 1 to 26

b) The questionnaire received from the Assessing Officer and the relevant queries raised at serial No. 5,6,7 and 11 of the same relating to the claim of the assessee under section 80 IA placed at paper book page No. 29 to 35. The relevant queries raised in the questionnaire are as follows:

"5. As per information filed by you, it has seen that you had undertaken contract for providing lift water supply scheme from Executive Engineer, IPH and claimed this income as exempt u/s 80IA and got sub-contract from NKG Infra in which income is taxable. Please provide the complete details in this regard alongwith copy of contract with them. Please also provide details how you are eligible for exemption u/s 801A when you are conducting activities under contract.

6. You have also claim exemption amounting to Rs.52,35,708/-

u/s 10(2A) and Rs.12, 11, 810/- u/s 80IA. Please provide the complete details in this regard alongwith documentary evidence.

7. As per audit report col. No. 26, the auditor has shown deduction under chapter VI-A at 'Nil' on the other hand in the computation you have claimed under chapter Vl-A at Rs. 12,11,810/-. Please explain this.

11. Please state the date on which the company came into existence.

As per Form No. 10CCB annexed with audit report at Para 8 the auditor has mentioned commencement of operation/activity as ITA No. 749-Chd-2018- Unipro Techno Infrastructure Private Ltd, Chandigarh 29 13.04.2010. And at para 9 the initial assessment year from when deduction u/s 80 -1A is for the A.Y. 2011-12. On the other hand, under the detail of fixed assert as on 31.03.2011, you have shown WDV of the fixed asset as on 01.04.2010 at Rs.1,81,58,128/-. Please furnish details of how WDV comes to exist on 01.04.2010 when your date of commencement of operation started on 13.04.2010 and show cause why depreciation claimed by you should not be disallowed as it seems that you are furnishing inaccurate particulars. Please also furnish whether you have claimed such exemption u/s 80-lA in the previous year also or not?

12. Further at para 12 of Form No.10CCB, you have shown sales tax registration No. in which it has ascertained that you were got registered with sales tax on 09.07.2009. Please state whether you have got sale tax No. before the company came into existence."

c) The reply filed by the assessee in response to the query raised dated 13.08.13 placed at paper book page No. 36 to 40. The relevant reply of the assessee in the same pointed out to us by the Ld. counsel for the assessee is as follows:

"5. The assessee company was awarded contract by Himachal Pardesh Government, Irrigation and Public Health Department, Division Thural as under;

"providing Rehabilitation and Source Level Agumentation of various schemes in Changer area in Tenhil Jaisinghpur, Palampw, Khwidian and Dera in District Kangra (HP) Sub Head:- Construction of Civil Work i.e. Percolation Well, Pump 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 11KVA power supply and post completion operation and maintenance of the whole scheme for 60 months including automation."

The composite project awarded to the assessee in 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 Complete construction of the project including ITA No. 749-Chd-2018- Unipro Techno Infrastructure Private Ltd, Chandigarh 30 operation & Maintenance of the whole scheme is covered under section 80IA. The copy of contract with Executive Engineer HP IPH Divn. Thural for Lift water supply scheme is enclosed herewith.

A copy of agreement as sub contractor of NKG Infrastructure Ltd is also enclosed herewith."

d) Reply dated 29.08.2013 for the purpose of claim of deduction under section 80IA placed at paper book page 41 number. The relevant portion of the reply is as follows:

"Please refer to the Assessment proceedings in the case of Unipro Techno Infrastructure Private Limited, SCO 36, Sector 7, Chandigarh for the A/Y 2011-12 PAN AACFU1025F. The information/documents asked for is as under;

2. The partnership firm of Unipro Techno Infrastructure was converted into private limited company with effect from 13.04.2010 with all its assets and liabilities with the same sales tax registration number. The deduction u/s 8Q1A was first claimed in the A/Y 2010-11. The-year under reference is the second year for claiming deduction u/s 801A.

e) The order passed by the Assessing Officer dealing with the issue of 80IA at paras 3 to 4.2 of the order as follows placed at paper book page Nos. 44 to 52 :

" 3. The case of the assessee selected under CASS with the reasons that "AO to examine the reasons & genuineness for high claim of refund out of TDS". When confronted, the assessee vide its reply dated 13.08.2013, has submitted that in the year 2011-12 a refund of Rs.10,47,850/- was claimed as a part of the income of the company amounting to Rs. 12,11,810/- was exempt u/s 80IA and TDS was deducted on the total receipt of the company, the excess amount of TDS deducted was claimed as refund.

4. The assessee-Commissioner came into existence w.e.f. 13.04.2010 after conversion from partnership firm, namely M/s Unipro Techno Infrastructure to M/s Unipro Techno Infrastructure Private Ltd. with all its assets and liabilities with Sale Tax Registration number and also carried forwarded the same WDV of the firm as on the last date of 13.04.2013.

4.1 The assessee company is a partner in the firm Kaveri Infrastructure Private Ltd. JV Unipro Techno Infrastructure in which it is holding 95% share. Copy of the partnership deed is placed on record. The asessee has earned a profit of Rs.52,35,708/- as partner on account of 95% share of profit from the firm and claimed ITA No. 749-Chd-2018- Unipro Techno Infrastructure Private Ltd, Chandigarh 31 exempt u/s 10(2A) of the IT Act, 1961. Farther, the assessee company was awarded contract by Himachal Pardesh Government, Irrigation and Public Health Department, Division Thural. The composite project awarded to the assessee in 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 complete construction of the project of the project including operation & Maintenance of the whole scheme.

4.2 The activity undertaken by the company for IPH Thural qualifies exemption u/s 80!A of the IT. Act 1961, and the income is 100% exempt for 10 years. It may he mentioned here that this the 2nd year for claiming exemption u/s (i.e. lst year in the hand of Unipro Techno infrastructure for the F.Y. 09-10 and 2 nd year in the hand of Unipro Techno Infrastructure Private Limited w.e.f. 13.04.2010, i.e. for the F.Y. 2010-11) since the company has awarded the same project by the same Govt. This year, the assessee has claimed an amount of Rs.12,11,810/- as deduction u/s 80IA. The assessee vide its reply, which is placed on record, has himself admitted that the year under reference is the second year for claiming deduction u/s 801A.

10. Relying upon the above documents Ld. counsel for the assessee stated that relevant queries relating to eligibility of the claim of assessee of deduction under section 80IA was raised by the Assessing Officer during assessment proceedings, due reply was filed by the assessee after considering which and after applying his mind to which the assessing officer passed a detailed reply allowing deduction under section 80IA to the assessee. Thereafter Ld. counsel for the assessee drew our attention to the fact that the view taken by the Assessing Officer in allowing the claim of the assessee under section 80IA was correct since it was adequately proved before him that the contract awarded to the assessee was a composite contract awarded on build, operate and transfer basis for the execution of which the machinery installed including its components, engineers and labour employed, designing, execution, financing in the form of capital investment, enterprise risk, performance guarantee etc was the responsibility of the assessee. The Ld. counsel for the assessee pointed out that the contract in any case could not be said to be a "works contract" for the purpose of Explanation to sub-section (13) to section 80IA(4) and the Assessing Officer on the basis of documents produced before it had rightly arrived at the conclusion that the assessee was eligible to claim deduction under section 80IA of the Act. In support of its contention ITA No. 749-Chd-2018- Unipro Techno Infrastructure Private Ltd, Chandigarh 32 that the view taken by the Ld. counsel for the assessee was a correct and plausible view Ld. counsel for the assessee drew our attention to the fact that on an application filed by the assessee to the CIT (TDS) for issuing a certificate for deduction of tax at lower rate on account of the deduction claimed by the assessee under section 80IA of the Act, the asse ssee was awarded a certificate for asse ssment years 2010-11 to 2013-14 placed at PB-126 to 134 after considering all the necessary and relevant documents proving that the assessee was eligible to claim deduction under the same. Ld. counsel for the assessee pointed out the fact that the assessee had been awarded a certificate for deduction of tax at lower rate on account of its eligibility to claim deduction under section 80IA of the Act proved that the view taken by the Assessing Officer on the basis of documents before it was correct. Ld. counsel for the assessee further drew our attention to the fact that a similar contract in the case of M/s Kaveri Infrastructure Private Limited/Unipro Techno Infrastructure was held as infrastructural contract for the assessment year 2008-09 to A.Y 2011-12 by another Assessing Officer. Ld.Counsel for the assessee drew our attention to the relevant order sheet entry in the case of M/s Kaveri Infrastructure Private Limited, JV Unipro Techno Infrastructure placed at PB-70 and 71, which reads as under :

04.08.2015 The reply to the notices issued under Section 133(6) of the Act by respondent no. 2 to the Irrigation Department, H.P. Government was received on 03.08.2015 from the Executive Engineer (I&PH) Division, H.P. Government, by the said respondent no. 2, in pursuance of which the case of the petitioner was fixed for 04.08.2015. The Assessing Officer i.e. respondent no: 2, passed the following order in favour of the petitioner which rendered the very initiation of reassessment proceedings for the assessment year in question including ' the subsequent year as illegal and totally without jurisdiction:-

"Present: Sh. A.K. Sood, CA. The Id. Counsel again submits that proceedings u/s 148 need to be dropped as there was no non disclosure by the assessee. He has again been told that the case is being proceeded with on merit as the matter is one of interpretation of the Statute. The clarification received from the Executive Engineer, l&PH, Division Barsar, Distt. Hamirpur vide letter dt. 1/8/2016 in response to query u/s 133(6) is on record. Perusal of the same shows that the ITA No. 749-Chd-2018- Unipro Techno Infrastructure Private Ltd, Chandigarh 33 assessee was awarded the complete project contract on BOT basis and no other agency was involved in the same. The Id. Counsel has also cited CBDT Circular No. 10/2005 dt. 16.12.2005 which though specific to ports interprets Section 80IA as being applicable to projects/ structures built under BOT basis. Perusal of clarification received from i H.P. Govt. Deptt. and the language of the contract agreement shows that the activity of the assessee is not in the nature of works contract for the purposes of 80IA. It appears that the assessee has implemented an Infrastructure Project for the Govt. on a turnkey basis and has also been engaged in its operation and mgt. Such arrangement is typical to Infrastructure Development Project of the Govt. and cannot be seen as mere works contract. Case adjourned to 17.08.2015. Insp. to place copy of file notings on all files of connected relevant assessment years in the case."

11. The Ld. counsel of the assessee also drew our attention to the fact that in the preceding year i.e. assessment year 2010-11 as also in the succeeding year i.e A.Y 2012-13 & 2013-14, the assessee had been allowed its claim of deduction under section 80IA in the order passed under section 143 (3) of the Act. The Ld. counsel for the assessee, therefore, stated that the claim of the assessee for deduction under section 80IA having been duly examined in the course of regular assessment proceedings and the Assessing Officer having allowed the claim which was consistent with the view taken by the CIT (TDS) while granting certificate of lower deduction of tax, the Assessing Officer in the preceding and succeeding years, as also with the view taken by the Assessing Officer in the case of another assessee undertaking identical work, it cannot be said that any error had crept in the order of the Assessing Officer causing prejudice to the revenue and therefore the action of the learned Pr. CIT in assuming jurisdiction under section 263 for reviewing the order of the Assessing Officer on this count was bad in law and needed to be quashed.

12. Ld.DR, on the other hand, we find, relied upon the order of the learned Pr. CIT and stated that the aspect of application of Explanation to sub-section (13) of section 80IA, to the contract awarded to the assessee was not examined by the Assessing Officer which being crucial to the claim of deduction under section 80IA, an error had crept into the order of the Assessing Officer and since apparently the project undertaken by the assessee was ITA No. 749-Chd-2018- Unipro Techno Infrastructure Private Ltd, Chandigarh 34 covered under the definition of "works contract" the assessee had been wrongly granted deduction under section 80IA causing loss to the revenue and thus the action of the learned Pr. CIT was justified on this account.

13. We have heard the contentions of both the parties and perused the order of the learned Pr. CIT as also the docume nts placed and re ferred to be fore us.

14. The only reason for exercising revisionary powers under section 263 in the present case is that the Assessing Officer had not examined the claim of the assessee to deduction under section 80IA(4) vis-a-vis Explanation 13 to the said section which excludes profits earned from works contracts from deduction under section 80IA(4) of the Act.

15. On this account we are unable to agree with the learned Pr. CIT. It is amply clear from the pleadings and documents placed before us by the Ld.Counsel for the assessee that the said issue was raised during assessment proceedings, due inquiries were made and after proper application of mind the Assessing Officer allowed the claim of the assessee.

16. We find that the assessee had filed return of income claiming deduction under section 80IA amounting to Rs.12,11,810/-. Certificate in Form No.10CCB, certifying the assessee's claim of deduction under section 80IA of the same amount was also filed giving all details of he undertaking claiming the said deduction. Further, during the assessment proceedings, the assessee was specifically asked to provide complete details of the contract undertaken for providing lift water site scheme from Executive Engineer, IPH, the income from which was claimed exempt under section 80IA of the Act. The assessee was also specifically asked to prove his eligibility for such claim when the activities were being undertaken under contract. Thus specific and pointed queries vis-a-vis eligibility of claim of deduction u/s 80IA were raised and the assessee was specifically asked to justify its claim in the light of undertaking the work under contract meaning thereby that it was a "works contract".

17. In reply to the same, the assessee furnished complete detail of the work undertaken stating that it had undertaken contract for providing lift water supply scheme from the Executive Engineer, Irrigation & Public Health Division, Thural, Distt. Kangra on account of providing rehabilitation and Source Level Agumentation of various ITA No. 749-Chd-2018- Unipro Techno Infrastructure Private Ltd, Chandigarh 35 schemes in different Tehsils of District Kangra. The assessee, we find, had also stated that the complete construction of the project alongwith operation and maintenance of the whole sc heme was to be undertaken by it. Complete detail of the construction work to be undertaken was also given and it was reiterated that the post- completion operation and maintenance of the whole scheme for 16 months including automation was the responsibility of the assessee under the scheme. The assessee had clarified that it was a composite project awarded to it and thus was covered under section 80IA of the Act. Thus, the assessee had clarified that it was not merely works contract awarded to it but a project awarded to it was on a turnkey basis which included post-completion operation and maintenance of the same also for a specified period. Copy of the contract was also placed before the Assessing Officer. The assessee had also clarified that the impugned deduction under section 80IA was first claimed by it in assessment year 2010-11 and the year under reference was the second year for claiming the said deduction.

18. It is amply clear from the above that necessary enquiries regarding the assessee's claim for deduction under section 80IA of the Act vis-à-vis the lift water site scheme contract received from the Executive Engineer, IPH, District Kangra were made during the assessment proceedings by the Assessing Officer. Further all necessary explanations regarding the claim of deduction alongwith evidences were placed by the assessee to prove its claim of deduction under section 80IA of the Act. Therefore, for all purposes, it can be said that the claim of the assessee had been duly verified during the assessment proceedings. Clearly the contention of the learned Pr. CIT that no enquiries were made is incorrect.

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 ITA No. 749-Chd-2018- Unipro Techno Infrastructure Private Ltd, Chandigarh 36 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.

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 take n 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 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 ITA No. 749-Chd-2018- Unipro Techno Infrastructure Private Ltd, Chandigarh 37 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 particular condition was not fulfilled in an earlier assessment year if the assessee had been granted the deduction in ITA No. 749-Chd-2018- Unipro Techno Infrastructure Private Ltd, Chandigarh 38 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 Asse ssing 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."

ITA No. 749-Chd-2018- Unipro Techno Infrastructure Private Ltd, Chandigarh 39

15. Further, the aforesaid issue was again and considered by the Tribunal for assessment year 2012-13 also. The Tribunal vide order dated 1.12.2017 has again decided the issue in favour of the assessee.

The relevant findings of the Tribunal are reproduced as under:-

"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 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 ITA No. 749-Chd-2018- Unipro Techno Infrastructure Private Ltd, Chandigarh 40 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 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 ITA No. 749-Chd-2018- Unipro Techno Infrastructure Private Ltd, Chandigarh 41 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 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 ITA No. 749-Chd-2018- Unipro Techno Infrastructure Private Ltd, Chandigarh 42 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 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.

16. The Ld. PCIT vide impugned order has tried to distinguish between the 'works contract' and a 'Development contract' by holding that since the development of the projects in question was to be carried ITA No. 749-Chd-2018- Unipro Techno Infrastructure Private Ltd, Chandigarh 43 out by the assessee as per the specifications / designs approved by the Government, hence, it would fall within the definition of 'works contract' and not 'Infrastructure Development contract'.

17. We have gone through the discussion made by the Ld. PCIT on this issue and also considered the arguments of the Ld. DR on this point.

The observation of the Ld. PCIT that only if the project is to be developed by the assessee as per the specifications and designs approved by the Government that would fall in a definition of simple works contract and not a 'Infrastructure Development Contract' as provided u/s 80IA(4) of the Act, in our view, would disentitle each and every assessee who would carry out infrastructure development project in a contracts with a Union Government or State Government or Local Authority. Such / stated projects are to be carried out as per the term of the Government. However, what distinguishes and work contract from Infrastructure Development Contract' as per section 11A of the Act is that whether the contract has been granted for a specific work or it is a development of a facility as a whole and whether day to day control on the project and its manner of development is of the Government authorities or of the contractor. The Coordinate Lucknow Bench of the Tribunal in the case of 'M/s Vijay Infrastructure Limited, Lucknow vs ACIT', ITA No. 254/LKO/2015 & Others, order dated 30.10.2015 observed that if the assessee's duty is to develop infrastructure whether ITA No. 749-Chd-2018- Unipro Techno Infrastructure Private Ltd, Chandigarh 44 it involves construction of a particular item as agreed to in the agreement or not and that the agreement is not for a specific work, it is for development of facility as a whole, the material required is to be brought in by the assessee by sticking to the quality and quantity irrespective of the cost of such material. The assessee utilizes its funds, its expertise, its employees and takes the responsibility of developing the infrastructure facility, the losses suffered in the process of such development would be that of the assessee. The assessee hands over the developed infrastructure facility to the Government on completion of the development and if the assessee has to undertake maintenance of said infrastructure for a particular period and during the said period, if any damages are occurred, it shall be the responsibility of the assessee , then such a contract would fall within the purview and scope of Infrastructure Development contract.

Even on the identical issue in relation to the development of the irrigation project, the ITAT Koltka Bench of the Tribunal in the case of 'DCIT Kolkata vs M/s Simplex Projects Ltd, Kolkata' ITA No. 169/Kol/2016 order dated 8.11.2017 has observed that irrigation project is as infrastructure facility within the scope of section 80IA(4) of the Act. The Tribunal further relied upon the decision in the own case of the aforesaid assessee i.e. Simplex - Subhash JV and M/s Somdatt Builders JV vide ITA No. 1684/Kol/2011 and 1685/Kol/2011 dated ITA No. 749-Chd-2018- Unipro Techno Infrastructure Private Ltd, Chandigarh 45 8.6.2013, wherein, it has been observed that if the project is a turnkey project involving the activity of development of infrastructure facility, it will be an activity as provided u/s 80IA(4) of the Act. The Tribunal considered that a perusal of the turnkey contract agreement entered into by the assessee with the irrigation department clearly showed that the construction of all the structure of whole of the canal system was to be as per the approved design, drawings of the Department etc. Survey is to be done as per the investigation and drawing criteria of the Irrigation Department. The assessee has to procure the material independently and those materials are to be conformed to the specifications provided. The assessee has also to make arrangement for storage of the materials. The Tribunal held that such work carried out by the assessee would fall in the exclusion provided to the meaning of the 'work' given in the explanation to section 194C of the Act and it would also be out of the scope of 'explanation to sub section (13) of section 80IA'. The Koltaka Bench of the Tribunal in the case of 'Adhunik Infrasture (P) Ltd vs JCIT' has also held that deduction u/s 80IA(4) cannot be denied to an assessee merely because the assessee has been paid by the Government for development work.

18. After considering the observations and objections made by the Ld. PCIT and in the light of the proposition laid down in the case laws, as discussed above, , we find that neither the Ld. PCIT could even point ITA No. 749-Chd-2018- Unipro Techno Infrastructure Private Ltd, Chandigarh 46 out how the fact and nature of the projects carried out during the year under consideration were different from the projects earlier taken by the assessee which have already been held to be eligible for deduction u/s 80IA(4) of the Act being Infrastructure Facility Development Project, nor the Ld. PCIT could point out from the clauses of the agreement that they would not fall within the definition of infrastructure development project as provided u/s 80IA(4) of the Act. In our view, the Ld. PCIT has exercised her jurisdiction u/s 263 of the Act totaling bye- passing and in contradiction of the findings given by the Tribunal in the own cases of the assessee for earlier assessment years i.e. 2011-12 and 2012- 13 vide orders dated 6.2.2017 & 1.12.2017(supra). Further, it is found that all the material was put before the Assessing Officer including the copies of the contracts. The Assessing Officer has duly taken note of the nature of contract entered into by the assessee and held that the same were infrastructure facilities development contracts and eligible for deduction u/s 80IA of the Act. Hence, it cannot be said that the order passed by the Assessing Officer was erroneous or prejudicial to the interest of Revenue on this issue.

19. So far as the issue No.2 is concerned, we find that the same has also been adjudicated by the Tribunal in the earlier assessment years 2011-12 and 2012-13 also. The relevant findings of the Tribunal passed ITA No. 749-Chd-2018- Unipro Techno Infrastructure Private Ltd, Chandigarh 47 vide order dated 6.2.2017 in the year 2011-12, in similar facts and circumstances, is reproduced as under:-

"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 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 b y t h e A s s e s s in g O f f i c e r d u r i n g a s s e s s m e n t 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 ITA No. 749-Chd-2018- Unipro Techno Infrastructure Private Ltd, Chandigarh 48 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 ITA No. 749-Chd-2018- Unipro Techno Infrastructure Private Ltd, Chandigarh 49 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.

20. Similarly, the third issue has also already been examined by the Tribunal vide order dated 6.2.2017 in the appeal for assessment year 2011-12. The relevant findings of the Tribunal are reproduced as under;-

"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 ITA No. 749-Chd-2018- Unipro Techno Infrastructure Private Ltd, Chandigarh 50 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 ITA No. 749-Chd-2018- Unipro Techno Infrastructure Private Ltd, Chandigarh 51 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 or der of the Assessing Officer. We therefore set aside the order of the learned Pr. CIT on this count also."

21. In view of the above decision of the Coordinate Bench of Tribunal vide order dated 1.12.2017 for assessment year 2012-13 wherein, the Tribunal has decided the identical issues in favour of the assessee quashing the order of the PCIT passed u/s 263 of the Act, and since the Ld. PCIT could not bring any distinction between the facts and nature of this case as compared to the facts of the cases of the assessee for assessment year 2011-12 and 2012-13, the exercise of the jurisdiction u/s 263 of the Act by the Ld. PCIT is, therefore, not justified.

In view of the above discussion, the order of the Ld. PCIT passed u/s 263 is not sustainable in the eyes of law and the same is accordingly quashed.

The appeal of the assessee is hereby allowed.

Order pronounced in the Open Court on 29.01.2020.

         Sd/-                                                      Sd/-
(एन. के. सैनी / N.K. SAINI)                          (संजय गग! / SANJAY GARG)
उपा#य$ /Vice President                                या%यकसद&य/ Judicial Member
Dated : 29.01.2020
"आर.के."

आदे शक*& त3ल4पअ5े4षत/ Copy of the order forwarded to :

ITA No. 749-Chd-2018- Unipro Techno Infrastructure Private Ltd, Chandigarh 52

1. अपीलाथ$/ The Appellant

2. &'यथ$/ The Respondent

3. आयकरआयु6त/ CIT

4. आयकरआयु6त (अपील)/ The CIT(A)

5. 4वभागीय& त न8ध, आयकरअपील.यआ8धकरण, च:डीगढ़/ DR, ITAT, CHANDIGARH

6. गाड फाईल/ Guard File आदे शानस ु ार/ By order, सहायकपंजीकार/ Assistant Registrar

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Income Tax Appellate Tribunal - Chandigarh

Unipro Techno Infrastructure Private ... vs Pr. Cit-1, Chandigarh on 29 January, 2020