DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1, GUWAHATI vs. ABCI INFRASTRUCTURES PRIVATE LIMITED, KOLKATA

आयकर अपीलीय अधिकरण गुवाहाटी पीठ, कोलकाता में IN THE INCOME TAX APPELLATE TRIBUNAL GUWAHATI BENCH AT KOLKATA [वर्ुअल कोटु] [Virtual Court] श्री राजपाल यादव, उपाध्यक्ष (कोलकाता क्षेत्र) एवं डॉ. मनीष बोरड, लेखा सदस्य के समक्ष Before SRI RAJPAL YADAV, VICE PRESIDENT (KZ) & DR. MANISH BORAD, ACCOUNTANT MEMBER I.T.A. No.: 43/GTY/2022 Assessment Year: 2014-15 ABCI Infrastructure Private Limited........................Appellant [PAN: AACCM 3317 R] Vs. ACIT, Circle-15(1), Kolkata.………….......................Respondent I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 ACIT, Circle-15(1), Kolkata......................................Appellant Vs. ABCI Infrastructure Private Limited.………….........Respondent [PAN: AACCM 3317 R] I.T.A. Nos.: 37, 38 & 39/GTY/2022 Assessment Years: 2017-18, 2018-19 & 2019-20 DCIT, Circle-1, Kolkata............................................Appellant Vs. ABCI Infrastructure Private Limited.………….........Respondent [PAN: AACCM 3317 R]

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. Appearances by: Sh. S.K. Tulsiyan, Adv., appeared on behalf of the Assessee. Sh. N. T. Sherpa, JCIT, appeared on behalf of the Revenue. Date of concluding the hearing : January 30th, 2023 Date of pronouncing the order : April 5th, 2023 ORDER Per Manish Borad, Accountant Member: The captioned appeals in ITA Nos. 43/GTY/2022 & 2/GTY/2023 are cross appeals for the Assessment Year 2014-15 (in short “AY”) directed against the common order passed u/s 250 of the Income Tax Act, 1961 (in short the “Act”) by ld. Commissioner of Income-tax (Appeals)-Central, North-East Region, Guwahati [in short ld. “CIT(A)”] dated 30.08.2022 and ITA Nos. 37 to 39/GTY/2022 are appeals filed by the Revenue for AYs 2017-18, 2018-19 & 2019-20, respectively are directed against the order of ld. CIT(A) dated 29.09.2021. 2. As the issues raised in these appeals are common and the facts are identical, therefore, as agreed by both the parties, they are heard together and disposed off by way of this common order for the sake of convenience and brevity. 3. First, we take up the cross appeals in ITA No. 43/GTY/2022 and ITA No. 2/GTY/2023 for AY 2014-15. 4. The assessee is in appeal before this Tribunal in ITA No. 43/GTY/2022 raising the following grounds:

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I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. “1. That on the facts and in the circumstances of the cases, the Ld. C.I.T. (A) acted illegally in disallowing and adding back to the total income of the appellant, the cost of material consumed on estimate basis amounting to Rs. 2,15,53,154/- being 0.64% of the Gross receipts of the appellant for the AY 2014-15 of Rs 3,36,76,80,365/- 2. That the Ld. CIT(A) wholly erred in appreciating the fact that the accounts of the appellant have been duly audited by a qualified auditor u/s 44AB of the Act and therefore the disallowance made amounting to Rs. 2,15,53,154/- on estimate basis without specifying the exact bills is totally incorrect and uncalled for. 3. That the Ld. CIT (A) wholly erred in appreciating the fact that the appellant year after year, assessed under section 143(3) of the Act and no such additions (estimated addition) was made in the case of the appellant for any of the preceding or subsequent assessment year. 4. That the appellant craves leaves to amend, alter, modify, add to, abridge and/or rescind any or all of the above grounds in future.” 4. The Revenue is in appeal before this Tribunal in ITA No. 2/GTY/2023 raising the following grounds:

“1. “That on the fact of the case and in law, the Ld. CIT(A) has erred in restricting the disallowance out of the expenses towards cost of material consumed to only @0.64% which works out to Rs. 2,15,53,154/- out of the disallowance made by the AO @ 5% which works out to Rs. 9,58,27,184/-. 2. That on the facts of the case and in law, the Ld. CIT (A) has erred in deleting the addition to the tune of Rs. 84, 89,467/- and Rs. 1, 86, 95,467/- under the head of Vehicle Running Expenses and Repairs & Maintenance respectively by not taking consideration of expenses having some head is appearing more than once in the details of expenses and just to create a sub –head to claim exaggerated expenses as no proper base of claiming these expenditures. 3. That on the facts of the case and in law, the Ld. CIT(A) has erred in deleting the addition to the tune of Rs. 3,23,72,494/- under the head of excess depreciation by not taking consideration of plant and machinery disclosed under the Block 30% without providing any

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I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. documentary evidence, it is found that those are falling under Block of 15%. 4. That on the facts of the case and in law, the Ld. CIT(A) has erred in deleting the addition to the tune of Rs.3,05,471/- under the head of disallowances u/s. 14A read with Rule 8D by not taking into consideration the fact that the assessee is not maintaining any separate books of accounts for accounting expenses incurred in relation to income not includible in its total income and the amount of expenses actually incurred cannot be ascertained from the assessee’s books of accounts satisfactorily. 5. The appellant craves leave to add/modify/alter any or all the grounds during the course of hearing/pendency of appeal.” 5. Brief facts of the case are that the assessee is a private limited company engaged in the business of Civil Construction. The assessee filed its Return of Income for AY 2014-15 u/s 139(1) of the Act on 28.09.2014 declaring an income of Rs. 17,03,97,730/- . Case selected for limited scrutiny through CASS followed by serving of notices u/s 143(2) and 142(1) of the Act. Relevant details were called for by the assessee and in response to the notices, assessee-company submitted audited accounts and copies of relevant documents as called for during the course of assessment proceedings. Assessment was completed vide order u/s 143(3) of the Act dated 30.12.2016 and Income assessed by the ld. AO at Rs. 33,38,89,830/- inter alia making following additions:

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I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. 6. Disallowance u/s 14A Rs. 3,05,471/- 6. Aggrieved the assessee carried the matter in appeal before the ld. First Appellate Authority. Ld. CIT(A) granted part relief by partly sustaining the disallowance of cost of material consumed at Rs. 2,15,53,154/- and deleted the following additions made by the ld. AO: Vehicle running expense: Rs. 84,89,594/- Repair and Maintenance Rs. 1,79,36,625/- Additional depreciation amounting to Rs. 3,23,72,494/- Deduction amounting to Rs. 78,01,892/- Disallowance u/s 14A Rs. 3,05,471/- 7. Being aggrieved, both the assessee and the revenue are now in appeal before the Tribunal. Ld. Counsel for the assessee referred to the detailed written submission and placed reliance on judgment’s mentioned therein and also stated that books of accounts have not been rejected and disallowance has been made merely on estimate basis disregarding the nature of business, operation work carried out at multiple location, voluminous records of bills and vouchers. 8. On the other hand, ld. D/R vehemently argued supporting the order of ld. AO. 9. We have heard rival contentions and perused the records placed before us. Ground no. 1 raised by the assessee as well as Revenue relates to the addition made on estimate basis. Ld. AO in the assessment order had disallowed a sum of Rs. 9,58,27,184/-

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I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. on estimate basis at the rate of 5% of Rs. 1,91,65,43,682/- on account of material consumed. Ld. CIT(A) vide order dated 30.08.2022 partly allowed the ground of the assessee and sustained an addition to the tune of Rs. 2,15,53,154/- (being 0.64% of gross receipts Rs. 3,36,76,80,365/-) and now the Revenue and the assessee have challenged the finding of ld. CIT(A). 10. We note that ld. AO in the assessment order had alleged that the assessee has not furnished the verifiable details of expenses on account of cost of material consumed and, therefore, reasonableness and genuineness of expenses could not be ascertained and on estimate basis part of such expenses to the tune of 5% that amounted to Rs. 9,58,27,184/- was disallowed and added back to the income of the assessee. We observe that ld. AO has neither brought any evidences on record to show that the transactions on account of expenditures are not genuine nor has provided any proper reason for making such allegation in the assessment order. 11. Ld. AO has also not rejected the books of accounts of the assessee. It is a settled principle of law that where ld. AO is not satisfied about the genuineness and correctness of the books of accounts of the assessee, then he has power to reject the books and complete the assessment accordingly. But non-rejection of books of accounts by ld. AO clearly shows that the books of accounts in the case of the assessee as per the opinion of ld. AO are genuine and correct.

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I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. 12. Ld. Counsel for the assessee submitted that the assessee was conducting its business at more than 25 sites and multiple branch offices and the vouchers and bills were kept at different sites and branch offices where the relevant expenses were incurred and the assessee’s books and records are very voluminous in nature and bills and vouchers are more than lakhs in number. The assessee year after year is assessed u/s 143(3) of the Act and such type of additions of disallowing expenses on estimated basis was never made in the case of the assessee for any of the preceding or subsequent assessment year. The books of accounts of the assessee are regularly audited under the provisions of the Companies Act, 2013 and tax audit has also been carried out in accordance with the provisions contained u/s 44AB of the Act. The assessee had submitted all the details such as ledgers, party-wise and site-wise details of the expenses as asked by ld. AO during the course of assessment proceedings. The impugned disallowance is purely on guess work and first ld. AO has to reject the books of accounts and then can compute disallowance on estimate basis. Further, there is no material on record that the assessee had claimed any unreasonable expenses. 13. Further on perusal of the Profit and Loss accounts of the assessee company, we observe that gross receipts of the assessee for AY 2014-15 is Rs. 3,36,76,80,365/- and against the said gross receipts, the assessee claimed "Other expenses" aggregating to Rs. 2,73,21,11,988/- in its Return of Income and the breakup of the said other expenses is as under:

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I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. Large Other Expenses Sl. No. Particulars Amount 1 Cost of materials consumed 1,91,65,43,682.00 2. Contract operation & Execution exp 69,62,07,198.00 3 Work Contract Tax & Other Taxes 7,79,36,144.00 4 Bank Guarantee Commission 1,39,22,307.00 5 Vehicle Running Expenses 84,89,594.00 6 Security Guard Expenses 69,08,928.00 7 Other Misc. Expenses 60,15,615.00 8 Sundry Balance Written Off 33,92,115.00 9 Loan Processing Fees 8,20,778.00 10 Retainership Fees 7,20,000.00 11 Tender Expenses 5,47,266.00 12 Bank Charges 5,25,309.00 13 Interest on TDS 68,275.00 14 Interest on Service Tax 14,355.00 15 Interest on Paid (Others) 390.00 16 Interest on P.Tax 32.00 Total 2,73,21,11,988.00 14. Ld. Counsel for the assessee submitted that the assessee had made due compliances to all the notices and provided the required details. As regards the cost of materials consumed amounting to Rs.1,91,65,43,682/-, the breakup of the same is as under:

Particulars Amount (Rs.) Opening stock 14,33,30,441.40 Less: Purchases (as per tally) 1,73,44,011.87 Less: Discount Received 20,62,941.40 Activity at site 1,91,86,06,623.29 Closing stock 12,59,86,429.53 Total 1,91,65,43,681.89 15. In regard to the above, ld. Counsel for the assessee submitted that the assessee is engaged in the construction business undertaking infrastructure projects on turnkey basis from Govt. Department/Govt. Agencies. The nature of business is quite different from trading concern and manufacturing concern. The cost centres are defined as activities of the projects on the basis of Page 8 of 114

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. BOQ provided by the principles. The materials are issued to such activities from purchase and the activities are debited with the cost of materials. The sub-contractor's bills for providing services for such activities are also debited to respective activities. The closing stock is valued on the basis of inventories maintained. The company has been following this practice consistently. During the course of assessment proceedings, ld. AO stated that the material consumed amounting to Rs. 191,65,43,682/- (sub-head of "other expenses") constituted 70.14% of the "other expenses". Further, the assessee provided the details of sub-head under "Material Consumed" and the same is as under:

Large other Expenses Sl. No. Particulars Amount 1 Road construction and repairing expenses 70,34,65,146.00 2 Tunnelling Work 46,64,31,697.00 3 Sub Contract Expenses 18,25,36,116.00 4 Bridge Expenses 17,69,56,347.00 5 Earthwork Expenses 10,04,03,520.00 6 Fabrication and Erection Expenses 2,66,95,843.00 7 Pile Casting 2,49,85,313.00 8 Retaining Work and Culvert Expenses 1,90,70,003.00 9 Supply of Materials 1,55,95,404.00 10 WBM Expenses 1,54,08,401.00 11 GSB Expenses 1,12,86,445.00 Total 1,74,28,34,235.00 16. The assessee had submitted all the details such as ledgers, party-wise and site-wise details of the expenses as asked by ld. AO during the course of assessment proceedings. Further, it is noted that ld. AO had averred that the assessee had made some payments to Mizo Tribals without deducting any tax at source (TDS) but no addresses were given for verification of the

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I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. genuineness of those payments. In this regard, from a very perusal of the aforesaid observation of ld. AO, it is clear that the assessee has made payments to Tribal workers. Being tribal worker, it is obvious that the income of such tribal people would have been exempt by virtue of the provisions of Section 10(26) of the Act and thus, in the absence of any tax liability of such Tribal People, it would be a fruitless exercise to first deduct TDS on payments to such Tribal People and thereafter requiring these Persons to furnish their Returns of Income to claim refund of the TDS. 17. We also take note that ld. CIT(A) has recorded the following finding in the impugned order partly sustaining the estimated disallowances: “It is yet further noted that the Assessing Officer had also averred that the Appellant had not furnished party-wise details and their addresses (of the parties to whom payments claimed under the expense head “Other Expenses” were made), as a result of which the genuineness and reasonableness of the claim of expense could not be established. In this regard, it is noted from a perusal of the impugned Assessment Order that the AO had himself averred as under: “On 27.12.2016, just before 3 days to limitation of this time-barred assessment, assessee furnished names of some persons without their addresses.” From a perusal of the above observation of the Assessing Officer, it is evident that details of the parties were already placed on records and instead of making an ad-hoc disallowance, the Assessing Officer ought to have referred the names of the specific parties and the corresponding amounts in the impugned Assessment Order. Unfortunately, the same has not been done. In-fact the Assessing Officer had chosen a relatively easier way of making an estimated disallowance without even referring the aggregate of the expense claimed by the Appellant in respect of the parties whose addresses were not furnished. In the factual matrix, it is further noted that the Page 10 of 114

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. Appellant had repetitively stated before the Assessing Officer that the Books of Accounts of the Appellant were voluminous, bulky and were based on various Projects/ Sites/ Activities etc. Even presuming that the Appellant was not complying with the Notices of the Assessing Officer, it is incomprehensible as to why the Assessing Officer did not resort to the provisions of Section 142(2A) of the Act. Thus, it is palpable that the Assessing Officer has not fulfilled his responsibility of identifying the specific instances of the expenses claimed sans proper address of the corresponding parties as well as that of resorting to the other provisions of the Act. In the instant Ground of Appeal, it is evident that the Assessing Officer had neither referred to the past history nor even to the comparative Net Profit Rate of the Appellant nor even has placed on record any comparative case of any other assessee who is geographically situated similar to the Appellant and is engaged in the business akin to that of the Appellant The Assessing Officer, instead of making specific disallowances, merely made an ad-hoc and general disallowance by resorting to estimation without rejection of the Books of Accounts of the Appellant. In the result, the Appellant has been fastened with a disallowance of a magnitude which the Appellant had not faced in any of the earlier assessments completed in the case of the Appellant for any of the earlier assessment years wherein the assessments have been completed under Section 143(3) of the Act, year after year. In the instant case, without rejection of the Books of Accounts, without identification of any specific defects, without placing on record facts of any other comparable case, it is not proper to make an estimated disallowance. It is noted from a perusal of the impugned Assessment Order as well as from the Submissions of the Appellant that the corresponding ledger accounts of all the above expenses were furnished by the Appellant during the course of assessment proceedings. It is further noted that Books of Accounts of the Appellant have been audited by a Chartered Accountant under the Companies Act, 2013 as well as under the provisions of Section 44AB of the Income Tax Act, 1961. It is an admitted fact that the Assessing Officer has not pointed out any specific discrepancies in the audited Books of Accounts of the Appellant and disallowed the above expenses merely on the basis of conjectures and surmises. It is further noted that the above disallowance is more on the basis of suspicion i.e. purported attempt of the Appellant to suppress its profit than on the basis of any tangible evidence or purported deficiency. It Page 11 of 114

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. is noted that the Assessing Officer has not averred that these expenses were not incurred for the purpose of business of the Appellant. Further, these expenses have been disallowed on estimated basis only. The Law is trite that any disallowance which is based on estimate and without pointing out any specific discrepancies or infirmities in the audited Books of Accounts is liable to be deleted.” In support of the aforesaid view laid down by the CIT(A), reliance was placed on several decisions: i. Dhirajlal Girdharilal vs. Commissioner of Income-Tax, Bombay [1954 (10) TMI 8 - Supreme Court; Other Citation: (1954) 26 ITR 736, 1955 AIR 271], ii. Dhakeswari Cotton Mills Limited vs. Commissioner of Income-Tax, West Bengal [1954 (10) TMI 12 - Supreme Court; Other Citation: (1954) 26 ITR 775, 1955 AIR 65, 1955 (1) SCR 941] iii. Omar Salay Mohamed Sait vs. Commissioner of Income-Tax, Madras [1959 (3) TMI 2 - Supreme Court; Other Citation: (1959) 37 ITR 151, 1959 AIR 1238] iv. Umacharan Shaw and Brothers vs. Commissioner of Income-Tax, West Bengal [1959 (5) TMI 11 - Supreme Court; Other Citation: (1959) 37 ITR 271], v. LalchandBhagatAmbica Ram vs. Commissioner of Income-Tax, Bihar and Orissa [1959 (5) TMI 12 - Supreme Court; Other Citation: (1959) 37 ITR 288], vi. New Ambadi Estates (Private) Limited vs. State Of Tamil Nadu [1991 (3) TMI 10 - Madras High Court; Other Citation: (1993) 200 ITR 64], vii. Sayaji Iron and Engg. Co. vs. Commissioner of Income Tax [2001 (7) TMI 70 - Gujarat High Court; Other Citation: (2002) 253 ITR 749, 172 CTR 339, 121 TAXMANN 43, (2002) 108 COMP. CAS. 675 (GUJ.)] and others “In the background of the aforesaid discussion and Judicial Pronouncements cited above, considering the averments of the AO, it is evident that the reasons stated by the Assessing Officer while

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I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. making the impugned disallowance are merely general in nature without any evidence to prove the disallowance. The Appellant has been regularly following the same method of accounting and the Accounts of the Appellant have been duly audited by a qualified Auditor under Section 44AB of the Act. Hence, in my considered opinion, in this situation, no addition can be made without specifying the exact bills or vouchers which, in the opinion of the Ld. AO, were not proper or which were defective. In the presence of audited Books of Accounts, the Ld. Assessing Officer cannot estimate the profits of the Appellant without rejecting the Books of Accounts. For these reasons alone the impugned disallowance warrants deletion.” 18. After going through the finding of ld. CIT(A) and examining the facts of the case we found that the only reason for disallowance is that the reasonableness and genuineness of the expenses could not be ascertained due to non-submission of party wise details and their addresses. Ld. AO has neither rejected books of accounts, nor has recorded any valid reasons for alleging that the expenses are not reasonable and genuine. The books of accounts of the assessee are audited under Companies Act and Income Tax Audit and all books of accounts and all supporting documents are subject to test check. It has been consisted held by Hon’ble Courts that assessment cannot be made simply on the guesswork. Reliance in this regard is placed on the decision of Calcutta High Court in the case of Chevoit Co. Ltd. vs. Commissioner of Income-tax, West Bengal-VI, Calcutta [[2011] 11 taxmann.com 276 (Calcutta)[25-04- 2011]]. 19. We also notice that the ld. Counsel for the assessee during the course of argument has contended that ld. CIT(A) has also not found any defect in the books of accounts of the assessee. In fact,

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I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. on one hand, he himself has held that the disallowance cannot be made on the basis of surmise and suspicion and also held that where no defect is found in books and the books are not rejected then estimated disallowance cannot be made. However, after giving such finding and relying on several case laws he himself has made disallowance on estimate basis which is not permissible as per law. 20. We find force in the submission of ld. Counsel for the assessee. Ld. CIT(A) has not provided any opportunity to offer any explanation in relation of the low profit margin as compared to earlier years. Further, on perusal of comparative data at page 66 of the order of ld. CIT(A), we observe that the profit margin in the case of the assessee is fluctuating year-wise. The said profit margin has increased from 6.10 to 6.37 and then again reduced from 6.37 to 5.54. No such adjustment was made for increase or decrease in the profit margin in earlier years. Further ld. CIT(A), in spite of his own finding that where no defect is found in books of accounts and the same are not rejected by ld. AO, the estimate disallowance cannot be made, has made estimated disallowance of 0.64% of the sales revenue which is again on estimate basis and, therefore, the finding of ld. CIT(A) sustaining estimated disallowance cannot be accepted. We find support from the following decisions: “1. In case of Mysore Fertiliser Co. v. CIT [1966] 59 ITR 268 (Mad.) it was held that the ITO shall make the assessment to the best of his Judgement; it means that he must make it according to the rules of reason and justice, not according to private opinion, but according to law and not humour, and the assessment is to be not arbitrary, vague and fanciful, but legal and regular.

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I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. 2. It was held in case of CIT v. Surjit Singh Mahesh Kumar [1994] 210 ITR 83 (All.) that so long as the Best Judgement has nexus to material on record and the discretion in that behalf has not been exercised arbitrarily or capriciously, it is not open to scrutiny in reference proceedings to give rise to a question of law or to a mixed question of law and fact. 3. In case of CIT v. Eastern Commercial Enterprises [1994] 210 ITR 103 (Cal.) it was held that where the assessee has given a comparative instance of gross profit rate, it is necessary for the department to come to a finding as to the norm of the gross profit on the basis of comparative cases. Therefore, it is the duty of the Assessing Officer to counter the comparative statement cited by the assessee before he can have the option to estimate the gross profit. 4. It was observed by Hon’ble Court in case of Aluminium Industries (P.) Ltd. v. CIT [1995] 80 Taxman 184 (Guwahati) that additions to the profits of the assessee made solely on the ground that it was low without giving a specific finding that the accounts of the assessee were not correct and complete, or that the income could not be properly determined and deduced from the accounting method employed by the assessee, is not justified. The mere fact that there was a less rate of gross profit declared by an assessee as compared to the previous year would not by itself be sufficient to justify the addition. 5. In case of Income-tax Officer v. Oswal Emporium [1989] 30 ITD 241 (Delhi) (TM)/[1989] 35 TTJ 225 (Delhi) (TM)[03-05-1989], the Delhi Tribunal held that addition made on account of profit margin because assessee’s gross profits in relevant assessment year were marginally less as compared to its profits in preceding assessment year or to profits shown by another assessee is not justified. 6. In the case of Ms. Nirmal Rani vs ACIT, [2016] 66 taxmann.com 40 (Chandigarh - Trib.)[26-11-2015], the ITAT Chandigarh Benches held that mere low profit could not justify an addition to profit shown where assessing authority had not found any discrepancy in audited books of account regularly maintained by assessee.” 21. Respectfully following the judgements referred herein above and under the given facts and circumstances of the case and in view of the discussion made herein above, we find that neither ld.

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I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. AO nor ld. CIT(A) had pointed out any specific discrepancy in the audited books of accounts of the assessee nor books of accounts are rejected and disallowance of some portion of cost of material consumed expenses is merely on the basis of conjectures and surmises which cannot be held justified and since ld. D/R has failed to place any contrary material to doubt the book results, therefore, the estimate disallowance made by ld. AO as well as ld. CIT(A) cannot be accepted. Hence, the impugned disallowance made by ld. AO @ 5% of material consumed at Rs. 9,58,27,184/- is deleted. Accordingly, the ground no.1 raised by the assessee is allowed and that of the Revenue is dismissed. Now, we take the remaining grounds of appeal of the revenue for AY 2014-15: 22. Ground no. 2 of the Revenue is on account of addition of Rs. 84, 89,467/- and Rs. 1, 86, 95,467/- under the head of Vehicle Running Expenses and Repairs & Maintenance. Brief facts relating to this issue are that during the course of assessment proceedings, the assessee was required to furnish detailed breakup of the expenses aggregating to Rs. 69,62,07,198/- claimed under the expense head “Contract operation and Execution Expenses”. In response to the same, the assessee furnished detailed breakup of the aforesaid expense accounts. However, ld. AO had averred that the aforesaid expense head was designed by the assessee just to create a sub-head to claim exaggerated expense as there was no proper base of claiming such expenditure when all expenses were already covered under materials consumed. Ld. AO had referred to Page 16 of 114

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. some purported discrepancies being attributable to some expenses which were claimed purportedly by the assessee twice. These details are at Page 101, Para 4 of the impugned Assessment Order of which is reproduced hereunder for reference: “There are discrepancies which are claimed twice or shown differently, as below a. Vehicle running expenses – Rs. 84, 89,594 and Rs. 1, 79, 36,625. b. Machinery repair and maintenance – Rs. 5,71,21,796 and 1,86,95,467 c. Sub- contract expenses Rs. 44,38,17,132 and Rs. 18,25,36,116/- d. Contract Operation and Execution Expenses – Rs. 69, 62, 07,198/- and again claimed under different heads in the name of the projects under ‘Material Consumed’. As these expenses are not found to be reasonable, the assessee was asked to show cause as to why a considerable amount should not be added back to its income as unexplained expenditure.” 23. In this regard, during the course of the assessment proceedings, the assessee had furnished the copies of the corresponding ledger accounts. The assessee had also explained to ld. AO that, owing to multiple sites especially in remote areas of North-Eastern India and owing to lack of competent staff at such sites, there is no uniformity in various accounting heads. The assessee had further explained that owing to the aforesaid reasons, some accounting heads for similar expenses are appearing at more than one place with different name or are appearing as similar transactions under different group of ledgers. It was also stated that the assessee’s project sites are various in numbers and are located at remote areas in North-Eastern India

Page 17 of 114

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. has got factual and credible legs. However, ld. AO was not satisfied and made the alleged disallowance and the same when challenged by the assessee before ld. CIT(A) was deleted and now Revenue is in appeal before this Tribunal. 24. Ld. D/R vehemently argued supporting the order of ld. AO and ld. Counsel for the assessee relied on the finding of ld. CIT(A) and written submissions placed on record. 25. We have heard rival contentions and perused the relevant records placed before us. Ld. AO during the course of assessment proceedings has identified certain heads of expenses which were alleged to have been claimed twice or shown differently. These expenses are as under: a. Vehicle running expenses – Rs. 84,89,594 and Rs. 1,79,36,625. b. Machinery repair and maintenance – Rs. 5,71,21,796 and 1,86,95,467 c. Sub-contract expenses Rs. 44,38,17,132 and Rs. 18,25,36,116/- d. Contract Operation and Execution Expenses – Rs. 69, 62, 07,198/- and again claimed under different heads in the name of the projects under ‘Material Consumed’. 26. Out of the aforesaid expenses, ld. AO disallowed Rs. 84,89,594/- on account of vehicle expenses and Rs. 1,86,95,467/- on account of Machinery repair and maintenance alleging that the said expenses were claimed twice by the assessee.

Page 18 of 114

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. 27. Ld. CIT(A) allowed the claim of the assessee and deleted the addition made by ld. AO on this account with the finding that that ld. AO should have conducted relevant enquiries, made some comparisons with other assessees placed in same situations or other assessees working in similar locations and should have also pointed out specific expenses which, based on such relevant enquiries, were exaggerated but the same was not done by ld. AO. Ld. CIT(A) also held that impugned disallowance has been made by ld. AO merely on suspicion that the assessee had booked “inflated expenses” rather than on any evidence or proof thereof and therefore, on this count alone, the impugned addition cannot be sustained. It is settled that suspicion, however strong, cannot take place of material proof in support of any findings. 28. On perusal of the assessment order we observe that ld. AO has not pointed out any instance of claim of expense twice. Ld. AO has also not given any proper finding in respect of the claim made by the assessee on this account. The assessee has duly furnished ledger copies of the aforesaid expenses before him and also explained with the reason why such expenses were appearing twice in the accounts. However, no such finding is on record which could adduce the claim of the Revenue that any of the transaction in respect of the aforesaid expenses in the books of accounts are recorded twice by the assessee. 29. We also note that ld. AO has not identified or pin pointed even a single transaction or a single instance in any of the corresponding ledger accounts (i.e. pertaining to the Vehicle Page 19 of 114

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. Running & Maintenance Expense of Rs. 84,89,594/- & of Rs. 1,79,36,625/- and pertaining to the Machinery Repair & Maintenance Expense of Rs. 5,71,21,796/- & of Rs. 1,86,95,467/- ) which would prove that the assessee had debited/claimed a particular expense item more than once as alleged. Ld. AO failed to consider the fact that the Books of Accounts of the assessee are duly audited not only under the Companies Act, 2013 but are also subject to tax audit in accordance with provisions of Section 44AB of the Act and there is no contrary observation of the Statutory Auditor (i.e. under The Companies Act, 2013) or of the Tax Auditor (i.e. under the Income Tax Act, 1961) of the assessee in this regard. In fact, without first bringing on record any material to disprove the explanation adduced by the assessee, the observations of ld. AO that “the Assessee had designed the sub-head to claim exaggerated expense”, OR “these expenses are found to be not reasonable” are more in the nature of suspicion, conjectures and surmises. It is also surprising to note that ld. AO had used the expression “exaggerated expenses”. The expression, “exaggerated expense” has not been defined anywhere in the entire Income Tax Act, 1961 and therefore, it would be relevant here to refer to the common meaning of the expression “exaggerate”. As per common parlance, the expression “exaggerated” means “beyond normal proportions or unreasonable or enlarged”. Therefore, in order to observe any particular expense as exaggerated expense, it would be relevant to firstly adduce some material which could point out to as to what is a normal / reasonable expense and secondly, to compare the normal / reasonable expense with the actual expense Page 20 of 114

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. and then arrive at the conclusion. In the instant appeal, ld. AO has not brought on record any material or evidence which could even remotely suggest as to what was the normal / reasonable expense. Further, the assessment order is completely silent as to any comparison of the actual expense incurred by the assessee vis-à- vis any past assessment records or business ratios of the business of the assessee itself or the comparison of the business results of the assessee with that of any other assessee in such similar business having similar factual matrix and operating in the same geographical location in which the assessee had carried out its business during the above assessment year. 30. Further, as contended by ld. Counsel for the assessee, we note that executed contracts/works are in far flung areas which are not geographically scattered but have a tough and hilly terrain and are not adequately connected to the means of transport and required infrastructure and thus, the assessee has to incur comparatively higher expense for same work at a far off contract site than what it might have incurred for same work at a place which is geographically situated. However, there is no observation of the ld. AO that the impugned expenses were not incurred by the assessee for the purpose of its business. In order to disallow expenses, rather than making a bald assertion without any enquiry to assail the so called "exaggerated" expenses of the assessee, ld. AO should have conducted relevant enquiries, made some comparisons with other assessees placed in same situations or other assessees working in similar locations and should have

Page 21 of 114

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. also pointed out specific expenses which, based on such relevant enquiries, were exaggerated. However, no independent third-party enquiries were conducted by ld. AO and no comparisons were made by ld. AO. In the absence of relevant enquiries and relevant comparisons, no part of the expense claimed by the Appellant could have been treated as "exaggerated expense' or "not reasonable expense". 31. Further, since the said appeal is a Revenue appeal and so it is upon the Revenue to bring evidence on record to show that the expenses have been inflated or exaggerated by booking it twice in the books of accounts. The assessee in the paper book filed on 23.01.2023 has duly furnished reply filed before ld. AO at page 684-1142 of the paperbook which comprises of detailed explanation along with the copies of ledger accounts duly furnished before ld. AO. The onus is on the Revenue to establish that the expenses claimed by the assessee has been booked twice in the books of accounts. However, the Revenue has not brought in any evidence before this Tribunal to show that the expenses has been booked twice. Before us, ld. D/R has not identified or pin pointed even a single transaction or a single instance in any of the corresponding ledger accounts (i.e. pertaining to the Vehicle Running & Maintenance Expense of Rs. 84,89,594/- & of Rs. 1,79,36,625/- and pertaining to the Machinery Repair & Maintenance Expense of Rs. 5,71,21,796/- & of Rs. 1,86,95,467/- ) which would prove that the assessee had debited/claimed a particular expense item more than once as alleged. Therefore, we

Page 22 of 114

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. are inclined to hold that the claim of the assessee on account of vehicle running expenses amounting to Rs. 84,89,467/- and Rs. 1,86,95,467/- on account of repairs & maintenance expense deserves to be allowed. We, further hold that none of the expenses as alleged by ld. AO above have been claimed twice by the assessee. Therefore, no infirmity is called for in the finding of ld. CIT(A) and, thus, dismiss ground no. 2 raised by the Revenue for AY 2014-15. 32. Apropos ground no. 3 which is raised by the Revenue on account of deletion of addition of Rs. 3,23,72,494/- made by ld. AO under the head of ‘excess depreciation’ applying 15% rate as against 30% claimed by the assessee. Facts in brief are that the assessee claimed depreciation to the tune of Rs. 17,34,11,345/- in its Profit and Loss Account and out of which depreciation claimed for 30% block is to the tune of Rs. 6,47,44,988/-. Breakup of the same is as under: 2. Vehicles: Rs. 4,79,10,612/- 3. JCB: Rs. 1,40,47,786/- 4. Total Rs. 6,19,58,397/- 33. Complete details of the block of assets, written down value and depreciation claimed on the aforesaid vehicles were placed before ld. AO and the same are placed at pages 740 to 753 of the paperbook filed before us. Ld. AO on an analysis of the plant and machinery disclosed under the Block 30%, came to a conclusion that that the assets stated to be under 30% block are actually eligible for depreciation @ 15%. Ld. AO observed that since these plant and machinery which mostly consists motor vehicles are eligible for depreciation @ 15% as per IT Act, 1961 and therefore, Page 23 of 114

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. claim of 30% is not allowable and thus, he made a disallowance of Rs. 3,23,72,494/-. Ld. AO further, observed that in its return of income, the assessee has not declared the purported claim of “Additional Depreciation”. In reply assessee submitted that, the assessee is engaged in the business of Construction in various places in India particularly in North-Eastern Region and since construction work is normally carried on in hilly terrain, the wear and tear to vehicle in such region is higher. Further, since all these heavy vehicles are not used by the assessee for substantial part of the year and therefore, the assessee gives such vehicle on hire to other contractors carrying civil construction work in nearby places and the assessee earns more income. It was also submitted that some of the heavy vehicles including tippers are exclusively given by the assessee on hire. Tippers used by the assessee are moving vehicles which are used to move earth and therefore, these have to be treated at par with the commercial vehicles such as trucks etc and therefore, such assets are duly entitled for depreciation @ 30%. However, ld. AO observed that since these plant and machinery mostly motor vehicles are eligible for depreciation @ 15% as per IT Act, 1961, claim of 30% is not allowable and thus he made a disallowance of Rs. 3,23,72,494/-. 34. Aggrieved, the assessee preferred appeal before ld. CIT(A) who allowed the claim of the assessee relying on the decision of this Tribunal in assessee’s own case in ITA No. 269/Kol/2018 dated 29.03.2019 following the concept of Principles of Consistency.

Page 24 of 114

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. 35. Aggrieved, the Revenue is now in appeal before us. Ld. D/R has supported the order of ld. AO and ld. Counsel for the assessee has supported the finding of ld. CIT(A) and relied on the finding of this Tribunal in assessee’s own case in ITA No. 269/Kol/2018 dated 29.03.2019. 36. We have heard rival contentions and perused the records placed before us. Revenue’s Ground no. 3 is regarding applicability of depreciation rate @15% as against 30% claimed by the assessee. On perusal of the assessment order, we observe that ld. AO had perhaps perplexed up the assessee’s claim of the depreciation at higher rate (i.e. @ 30%) with the claim of Additional Depreciation (i.e. the depreciation permissible as per Section 32(1)(iia) of the Act). Prima facie in accordance with the provisions contained under Section 32(1)(iia) of the Act, the claim of Additional Depreciation is permissible in the case of an assessee engaged in the business of manufacturing or producing any article or thing. On the other hand, the claim of depreciation at Excess rate is different from the claim of Additional Depreciation. Since, the Assessing Officer had proceeded on a wrong footing, (i.e. by treating the claim of Depreciation at Excess/higher Rate with the claim of Additional Depreciation), for this reason alone, the impugned disallowance is not legally sustainable. 37. It is also noteworthy to adduce to the argument raised by the ld. Counsel for the assessee who brought to our notice that the case of the assessee was selected for Limited Scrutiny and reference made to notice issued u/s 143(2) of the Act dated Page 25 of 114

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. 01.09.2015 placed at page 1 of the paperbook wherein it has been clearly mentioned that the case has been selected under CASS for Limited Scrutiny. However, the issues are not defined in the notice u/s 143(2) of the Act. Thereafter, ld. Counsel for the assessee referred to the notice u/s 142(1) of the Act dated 22.04.2016 wherein ld. AO had issued several questionnaires. It is the submission of the assessee that ld. AO cannot travel beyond the issue as specified in the notice u/s 142(1) of the Act read with notice u/s 143(2) of the Act as the case of the assessee is selected in Limited Scrutiny. 38. Further, whether the issue regarding disallowance of depreciation was part of Limited Scrutiny or not, ld. CIT(A) has directed ld. AO to give a specific finding on this issue at the time of passing the order giving effect to the order of the undersigned in the instant appeal. However, since the said issue stands already adjudicated and decided by this Tribunal in the case of the assessee in order passed in ITA No. 269/Kol/2018 dated 29.03.2019, therefore, whether the said issue was part of limited scrutiny or not becomes irrelevant. Hence, the direction by ld. CIT(A) to give specific finding on this issue with scope of the limited scrutiny was not required in this case. 39. Ld. Counsel for the assessee further, submitted that from AY 2005-06 till AY 2014-15, for each assessment year the assessee’s assessment was completed u/s 143(3) of the Act or u/s 143(3)/147/ or u/s 143(3)/147/263 of the Act wherein the claim of higher rate of depreciation was not permitted to the assessee. Page 26 of 114

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. Accordingly, corresponding excess depreciation (as determined by ld. AO) wherein was disallowed by ld. AO, the appeals filed by the assessee before the ld. First Appellate Authority for all these Assessment Years [i.e. from AY 2005-06 till AY 2012-13, except AY 2008-09 which is pending before the ld. CIT(A)] were allowed by various CIT(A)s vide their separate orders passed at separate point of times. In this regard a chart which shows complete details of year-wise excess depreciation claimed and relief granted by the ld. CIT(A), submitted before us, which is reproduced hereunder:

Summary Chart Showing the Assessment Year wise Disallowance on account of Excess Depreciation and the subsequent Adjudication of this issue by the First Appellate Authorities. Relevan t para Whether of the Date the Date in Assess Section Amount on Designatio Disallow which ment under of which n of the ance of the Order which the Excess the CIT (A) Excess Assess wherei Rema AY Assessme Depreci Order who had Depreci ment n the rks nt Order ation was passed the ation order Excess was disallo passed Appeal was was Depreci passed wed by CIT Order deleted passed ation (A) by the was CIT (A) Disallo wed 2005 30-06- 143(3)/14 16,46,1 30-05- CIT(A)- 3.3 Yes (**) -06 2014 7/263 06 2019 8,Kolkata 2006 30-06- 143(3)/14 13,01,8 24-02- CIT(A)- 3.3 Yes (**) -07 2014 7/263 77 2020 8,Kolkata Allow 2007 30-06- 143(3)/14 33,46,5 20-07- CIT(A)- ed on 3.3 Yes -08 2014 7/263 88 2016 16,Kolkata Merit s 2008 30-03- 143(3)/14 20,24,6 27.07. CIT(A), Allow 4 Guwahati Yes -09 2016 7 80 2022 ed Allow 2009 30-06- 143(3)/26 21,73,2 20-07- CIT(A)- ed on 3.3 Yes -10 2014 3 14 2016 16,Kolkata Merit s Allow 2010 27-12- 143(3)/14 85,17,9 03-11- CIT(A)- ed on 3 Yes -11 2016 7 66 2017 8,Kolkata Merit s

Page 27 of 114

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. Allow 2011 27-12- 143(3)/14 1,44,44 14-03- CIT(A)- ed on 3 Yes -12 2016 7 ,778 2018 5,Kolkata Merit s Relie d on CIT(A 2012 31-03- 84,86,8 27-02- CIT(A)- ) 143(3) 2.2 Yes -13 2015 09 2018 3,Kolkata order s for other AY's 2013 30-03- 60,96,1 143(3) 4 -14 2016 28 2013 18-12- 143(3)/14 71,40,5 3 27.07.2022 CIT(A), Guwahati -14 2017 7 99 40. From a perusal of the above chart, it is evident that the ld. CIT(A)s vide their different orders passed in the case of the assessee for various assessment years have, on the similar issue, allowed the claim of Excess Depreciation and have accordingly, vide their respective Appellate Orders, deleted the disallowance of Excess Depreciation. As against the order of ld. CIT(A), the Department filed an appeal before the Coordinate Kolkata Bench in all the aforesaid years mentioned. As against the same, the Kolkata ITAT granted relief to the assessee by deleting the additions made by ld. AO and year-wise position of the same is as under:

SL.NO Date of Order ITA No. Whether disallowance on account of of ITAT excess depreciation deleted by the Hon’ble Tribunal 2005- 24.12.2019 1991/Kol/2019 Since tax effect in Revenue Appeal is less 06 than Rs. 50 lakhs so appeal was dismissed 2007- 03.08.2018 1787/Kol/2016 Since tax effect in Revenue Appeal is less 08 than Rs. 50 lakhs so appeal was dismissed 2009- 31.08.2018 1788/kol/2016 Since tax effect in Revenue Appeal is less 10 than Rs. 50 lakhs so appeal was dismissed 2010- 29.03.2019 269/Kol/2018 Excess Depreciation deleted 11 2011- 28.08.2019 1333/Kol/2018 Since tax effect in Revenue Appeal is less 12 than Rs. 50 lakhs so appeal was dismissed

Page 28 of 114

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. 2012- 10.01.2020 1084/kol/2018 Excess depreciation deleted. 13 41. Thus, from the aforesaid table, it is seen that in all the aforesaid years the Department filed an appeal before Coordinate Bench, Kolkata against the relief granted by ld. CIT(A) on account of excess depreciation allowed. Except for AYs. 2010-11 and 2012- 13, in all the years appeal was dismissed by the Tribunal as the tax effect of appeal in all the years was below limit. The finding of the Tribunal adjudicating the issue of excess depreciation in the case of the assessee in ITA No. 269/Kol/2018 dated 29.03.2019 (order enclosed at page 1143 to 1151 of the paperbook) is reproduced below:

“i) Ground No. 1: The ld. CIT(A) erred in deleting the disallowance of depreciation of Rs. 85,17,966/-(being the difference of depreciation claimed by assessee @30% and allowance of depreciation by the Assessing Officer @ 15% on the vehicles). 3. Now we shall take issue no. 1 raised by the Revenue which relates to disallowance of depreciation of Rs. 85,17,966/-. 5. The brief facts qua the issue are that the during the assessment proceedings, AO had disallowed Rs.85,17,966/- on account of additional depreciation claimed by the assessee. The AO in his assessment order had stated that the assessee being civil contractor, had to deploy various kinds of plant and machinery which includes several machines like JCB, Excavator etc. and goods transport vehicles like tippers for carrying raw materials etc. to different sites across the country. Assessee also maintained various kinds of motor vehicles to carry workers to the sites and for the use of the officials/directors. In its return of income, the asessee is found to have shown 30% on the WDV of vehicles used for its own business in the relevant year under consideration and thereby claimed depreciation of Rs.l,70,28,233/- @ 30%. The allowable depreciation rate as per assessing officer was @ 15%. It is worthwhile to mention that on verification of 'Schedule DPM' (Depreciation on Plant and Machinery) Page 29 of 114

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. of the return filed by the assessee, wherein it is found that in column of 30% Block of Plant and Machinery that WDV as on 01.04.2009 is declared to be Rs. 3,25,93,616/- with additions for a period of 180 days or more to the tune of Rs.32,78,346/- and deletion of Rs.2,50,000/-. Apart from this, an amount of Rs.4,22,77,628/- is declared as additions to the block for a period less than 180 days. In serial No. 12 and 13 of that Schedule, assessee clearly declared 'Additional depreciation', if any as Nil. Therefore, AO was of the view that that the assessee willfully misled the department by over-claiming depreciation for the plant and machinery for which it is eligible to claim at the rate of 15%, depreciation only. In an exceptional nature of usage, it should mention the claim on the return itself by showing the amount of additional depreciation. The AO noted that in course of the assessment proceedings, the assessee came up with new claim of partial usage to show a part of its motor vehicles for hiring purpose to justify its claim of excess depreciation. 6. In response, the assessee submitted the written reply to the assessing officer as follows: "........ the assessee company is carrying on business of civil construction and manufacturing of construction material. It is doing civil construction in various places in India particularly in North Eastern Region. The company has purchased various light and heavy vehicles for its civil construction work and other official work such as trucks, tippers, tractor, car motor cycle etc. The assessee company has claimed depreciation on such vehicles at 30%. All the heavy vehicles are not used by the assessee company for substantial part of the year and therefore, it gives such vehicles on hire to other contractors carrying construction work in nearby places to earn more income. Some of the heavy vehicles including tippers are exclusively given on hire." However, the Assessing Officer rejected the contention of the assessee and made the addition to the tune of Rs. 85,17,966/- being the difference between 30% and 15% of depreciation rates. 7. Aggrieved by the stand so taken by the Assessing Officer, the assessee carried the matter in appeal before the ld. CIT(A) who has deleted the addition. Page 30 of 114

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. Aggrieved, the Revenue is in appeal before us. 8. Before us, the ld. DR has primarily reiterated the stand taken by the Assessing Officer which we have already noted in our earlier para and the same is not being repeated for the sake of brevity. On the other hand, the ld. Counsel for the assessee defended the order passed by the ld. CIT(A). 9. We have heard both the parties and perused the material available on record. We note that only the point of dispute is that whether the assessee is entitled to depreciation at higher rate of 30% for tippers against the normal rate of depreciation @ 15%. It is not disputed, that tippers are vehicles and are registered under the Motor Vehicle Act,1988. The Assessing Officer had disallowed depreciation claimed @ 30% and restricted depreciation to 15% and disallowed Rs. 85,17,966/- as excess depreciation. The main reason given by the Assessing Officer in his assessment order u/s 143(3) of the Act, was that the explanation given by the assessee that his vehicles were deployed in difficult areas particularly in the North Eastern Region and therefore, entitled higher depreciation, is an afterthought, which is offered only after the discovery of excess depreciation by the department. Secondly, the claim of the assessee that some vehicles were given on hire cannot be accepted, as no specific income has been declared from hiring purchases. 10. We note that the assessee as per assessment records have been claiming depreciation @ 30% on vehicles used in their business on the grounds of them been deployed in difficult areas including North East. The assessee had made the same claim in assessment year 2009-10, which was disallowed by the A.O. The CIT(A)-16, Kolkata had deleted the addition and allowed depreciation at higher rate in A.Y.2009-10. Thus, clearly shows that the assessee in past assessment orders, have also been claimed depreciation at higher rate. The contention of the A.O., that explanation given is an afterthought, which is offered only after discovery of excess depreciation by the department, is not correct, and not supported by the facts. Regarding hire charges, the Counsel for the assessee has submitted before us that the Assessing Officer had not asked for details of hire charges received against the tippers given on hire. Such details could have been provided if asked for. The Counsel of the assessee also submitted that the vehicles were given on hiring to person against whom the assessee received

Page 31 of 114

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. services in the form of goods, labour supply etc. The hiring charges receivable are adjusted against payments to be made to these persons. These facts have been submitted to the A.O. This method of accounting has been followed by the Assessing Officer in previous year and no doubt were raised by the A.O. even in scrutiny assessments. Therefore, a method followed by the Assessing Officer in previous year should not be changed unless there is a change in facts and law. We note that it is a well settled legal position that factual matters which permeate through more than one assessment year, if the Revenue has accepted a particular's view or proposition in the past, it is not open for the Revenue to take a entirely contrary or different stand in a later year on the same issue, involving identical facts unless and until a cogent case is made out by the Assessing Officer on the basis of change in facts. For that we rely on the order of the Hon'ble Supreme Court in Radhasoami Satsang vs. CIT 193 ITR 321 (SC), wherein it was held as follows: "We are aware of the fact that, strictly speaking, res judicata does not apply to income `tax proceedings. Again, each assessment year being a unit, what is decided in one year may not apply in the following year but where a fundamental aspect permeating through the different assessment years has been found as a fact one way or the other and parties have allowed that position to be sustained by not challenging the order, it would not be at all appropriate to allow the position to be changed in a subsequent year. On these reasoning, in the absence of any material change justifying the Revenue to take a different view of the matter - and, if there was no change, it was in support of the assessee - we do not think the question should have been reopened and contrary to what had been decided by the Commissioner of lncome-tax in the earlier proceedings, a different and contradictory stand should have been taken." We are of the view that the above cited precedents on principle of consistency are squarely applicable to the assessee under consideration. 11. We note that the A.O. could not bring any material on record, to dispute the assessee's claim, that the vehicles and other equipments were deployed in difficult areas and therefore, entitle to higher rate of depreciation. The A.O's contention, that the explanation given by the assessee, is an afterthought, and that no hiring charges have been

Page 32 of 114

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. received, is not supported by facts. The tippers used by theassessee in its business are registered under the Motor Vehicles Act, 1988. They met the functional test as the basis for grant of 30% depreciation, and also on the ground that the higher depreciation is on account of rigorous and hard use of commercial vehicles, in comparison to the stationery and permanently installed machinery. These views, find support in the decision of the Punjab & Haryana High Court in the case of CIT vs. Rakesh Jain [2013] 350 ITR 230 (P&H). Therefore, taking into account the submission of the Counsel and relevant assessment records, the addition of Rs. 85,17,966/-, made by AO, on account of additional depreciation claim on higher rate, should be deleted. That being so, we decline to interfere with the order of Id. CIT (A) in deleting the aforesaid addition. His order on this addition is, therefore, upheld and the grounds of appeal of the Revenue is dismissed.” Furthermore, on this issue, the Departmental Appeal filed in the case of the Assessee before the Hon’ble Jurisdictional ITAT Kolkata Bench for the Assessment Year 2012-13 was dismissed by the Hon’ble ITAT vide their order dated 10/01/2020 passed in ITA 1084/Kol/2018. In the aforesaid order, the Hon’ble ITAT has held/averred, as follows: “This Revenue's appeal for assessment year 2012-13 arises against the Commissioner of Income Tax (Appeals)-3, Kolkata's order dated 27.02.2018 passed in case No.140/CIT(A)-3/R.-8/15-16/Kol involving proceedings u/s 143(3)) of the Income Tax Act, 1961; in short 'the Act'. Heard both the parties. Case file(s) perused. 2. For the reasons stated Revenue's petition 21.05.2017 seeking condonation of thirteen days' delay and assessee's no objection thereto, we condone the impugned delay attributable to various procedural formalities and compilation of records. The case is now taken up for adjudication on merits. 3. The Revenue's first substantive grievance reads that the CIT(A) has erred in law and on facts in deleting depreciation disallowance of ₹84,86,809/- made by the Assessing Officer in assessment order dated 31.03.2015. The assessee's depreciation claim was on its commercial depreciation @ 30% on hire and other vehicles which stood Page 33 of 114

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. restricted to 15% only during the course of assessment. The CIT(A)'s detailed discussion deleting the impugned depreciation disallowance reads as under:- "Ground No.3 is regarding disallowance of depreciation at the rate of 30% to the extent of Rs.8486809/- claimed by the assessee. The basic facts are that the assessee is carrying on the business of civil construction in the North Eastern region. The assessee is using vehicles like Tippers, Tractor etc. For construction work. The assessee has been using the tippers both for own work and for hire. On such vehicles the company has charged depreciation at the rate of 30%. However the Assessing Officer has allowed depreciation at the rate of 15% only. it has been argued that the issue is covered by the orders of my predecessors in AY 2007-08 and AY 2010-11. In the AY 2007- 08 in appeal No.754/CIT(A)-16/Kol/2014-15/C- 15(1)/Kol order dated 20/07/2016 it has been held as under:- 'I have gone through the submissions of the AR I find that the AO is not justified in not allowing excess depreciation, while the AR has made the case that the tipprs are used for the transportation of goods, although the hire charges are received directly. Reliance has been made by the AR on the decision of Bombay High Court in the case of CIT vs. S.C. Thakur 322 ITR 463. This case of Bombay High Court is identical to the case of the assessee. Reliance has been made on the CBDT's Circular No. 609 dt. 29/07/1991. This circular talks about the higher depreciation on motor lorries used in the assessee's business of transportation of goods on hire. The AR has made out the case that the decisions cited and CBDT's circular help the cases of the assessee in charging higher depreciation. I concur with the submission of the AR. Hence, the addition worth Rs.33,46,588/;- is deleted, and the ground of the assessee is allowed.' Similarly in AY 2010-11 in appeal No.319/CIT(A)-5/WWd-15(1)/16- 17 dated 03/11/2017 it has been held as under: 'The contention of the assessee that the explanation given by the assessee is an afterthought is not support by facts. The assessee as per assessment records have been claiming depreciation @ 30% on vehicles used in their business on the grounds of them been deployed Page 34 of 114

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. in difficult areas including North East. The assessee had made the same claim in assessment year 2009-10 which was disallowed by the AO. The CIT(A)-16, Kolkata had deleted the addition and allowed depreciation at higher rat. This clearly show that the assessee in past assessment orders, have also been claimed depreciation at higher rate. The that explanation given is an afterthought, which is offered only after discovery of express depreciation by the department, is not correct, and not supported by the facts. Secondly, regarding hire charges, the A/R of the assessee has submitted that the AO had not asked for details of hire charges received against the tippers given on hire. Such details could have been provided if asked for. The A/R of the assessee also submitted that the vehicles were given on hiring to person against whom the assessee received services in the form of goods, labour supply etc. The hiring charges receivable are adjusted against payments to be made to these persons. These facts have been submitted to the AO. This method of accounting has been followed by the AO in previous year and no doubt were raised by the AO even in scrutiny assessment. In this connection reference may be made to the decision of the Apex Court in CIT vs. Excel Industries 358 ITR 295, where the court reiterated that the principal of consistency should be followed. The AO could not bring any material on record, to dispute the assessee's claim, that the vehicles and other equipments were deployed in difficult areas and therefore, entitle tougher rate of depreciation. The Assessing Officer's contention, that the explanation given by the A/R of the assessee, is an afterthought, and that no hiring charges have been received, is not supported by facts. The tippers used by the assessee in its business are registered under the Motor Vehicles Act, 1988. They met the functional test as the basis for grant of 30% depreciation, and also on the ground that the higher depreciation is on account of rigorous and hard use of commercial vehicles, in comparison to the stationery and permanently installed machinery. These views find support in the decision of the Punjab and Haryana High Court in the case of CIT vs. Rakesh Jain (2013) 350 ITR 230.

Page 35 of 114

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. After a careful consideration of the submission of the assessee and relevant assessment records, the addition of Rs.85,17,966/- on account of additional depreciation claim on higher rate is allowed. This ground of appeal is succeeds, and therefore, allowed.' It is therefore seen that the issue has already been decided in favour of the assessee by my predecessors and additional depreciation claim in this case has been allowed. Accordingly the claim of the assessee company for depreciation of Rs.8486809/- in the impugned year is hereby allowed." 5. Suffice to say, learned departmental representative fails to dispute that this first issue between the parties is no more res integra since the assessee has already succeeded in assessment years 2007-08 and 2010-11 (supra). The Revenue had also filed ITA No.269/Kol/2018 in assessment year 2010-11 challenging correctness of the CIT(A)'s identical findings. Learned co-ordinate bench's order has rejected the same as under:- "3. Now we shall take issue no. 1 raised by the Revenue which relates to disallowance of depreciation of Rs.85,17,966/-. 5. The brief facts qua the issue are that the during the assessment proceedings, AO had disallowed Rs.85,17,966/- on account of additional depreciation claimed by the assessee. The AO in his assessment order had stated that the assessee being a civil contractor, had to deploy various kinds of plant and machinery which includes several machines like JCB, Excavator etc. and goods transport vehicles like tippers for carrying raw materials etc. to different sites across the country. Assessee also maintained various kinds of motor vehicles to carry workers to the sites and for the use of the officials/directors. In its return of income, the assessee is found to have shown 30% on the WDV of vehicles used for its own business in the relevant year under consideration and thereby claimed depreciation of Rs.1,70,28,233/- @ 30%. The allowable depreciation rate as per assessing officer was @ 15%. It is worthwhile to mention that on verification of 'Schedule DPM' (Depreciation on Plant and Machinery) of the return filed by the assessee, wherein it is found that in column of 30% Block of Plant and Machinery that WDV as on 01.04.2009 is declared to be Rs.3,25,93,616/- with additions for a period of 180 days or more to the tune of Rs.32,78,346/- and deletion Page 36 of 114

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. of Rs.2,50,000/-. Apart from this, an amount of Rs.4,22,77,628/ is declared as additions to the block for a period less than 180 days. In serial No. 12 and 13 of that Schedule, assessee clearly declared 'Additional depreciation', if any as Nil. Therefore, AO was of the view that that the assessee willfully misled the department by over- claiming depreciation for the plant and machinery for which it is eligible to claim at the rate of 15%, depreciation only. In an exceptional nature of usage, it should mention the claim on the return itself by showing the amount of additional depreciation. The AO noted that in course of the assessment proceedings, the assessee came up with new claim of partial usage to show a part of its motor vehicles for hiring purpose to justify its claim of excess depreciation. 6. In response, the assessee submitted the written reply to the assessing officer as follows: "........ the assessee company is carrying on business of civil construction and manufacturing of construction material. It is doing civil construction in various places in India particularly in North Eastern Region. The company has purchased various light and heavy vehicles for its civil construction work and other official work such as trucks, tippers, tractor, car motor cycle etc. The assessee company has claimed depreciation on such vehicles at 30%. All the heavy vehicles are not used by the assessee company for substantial part of the year and therefore, it gives such vehicles on hire to other contractors carrying construction work in nearby places to earn more income. Some of the heavy vehicles including tippers are exclusively given on hire." However, the Assessing Officer rejected the contention of the assessee and made the addition to the tune of Rs. 85,17,966/- being the difference between 30% and 15% of depreciation rates. 7. Aggrieved by the stand so taken by the Assessing Officer, the assessee carried the matter in appeal before the ld. CIT(A) who has deleted the addition. Aggrieved, the Revenue is in appeal before us. 8. Before us, the ld. DR has primarily reiterated the stand taken by the Assessing Officer which we have already noted in our earlier para and the same is not being repeated for the sake of brevity. On the Page 37 of 114

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. other hand, the ld. Counsel for the assessee defended the order passed by the ld. CIT(A). 9. We have heard both the parties and perused the material available on record. We note that only the point of dispute is that whether the assessee is entitled to depreciation at higher rate of 30% for tippers against the normal rate of depreciation @ 15%. It is not disputed, that tippers are vehicles and are registered under the Motor Vehicle Act, 1988. The Assessing Officer had disallowed depreciation claimed @ 30% and restricted depreciation to 15% and disallowed Rs. 85,17,966/- as excess depreciation. The main reason given by the Assessing Officer in his assessment order u/s 143(3) of the Act, was that the explanation given by the assessee that his vehicles were deployed in difficult areas particularly in the North Eastern Region and therefore, entitled higher depreciation, is an afterthought, which is offered only after the discovery of excess depreciation by the department. Secondly, the claim of the assessee that some vehicles were given on hire cannot be accepted, as no specific income has been declared from hiring purchases. 10. We note that the assessee as per assessment records have been claiming depreciation @ 30% on vehicles used in their business on the grounds of them been deployed in areas including North East. The assessee had made the same claim in assessment year 2009- 10, which was disallowed by the A.O. The CIT(A)-16, Kolkata had deleted the addition and allowed depreciation at higher rate in A.Y.2009-10. Thus, clearly shows that the assessee in past assessment orders, have also been claimed depreciation at higher rate. The contention of the A.O., that explanation given is an afterthought, which is offered only after discovery of excess depreciation by the department, is not correct, and not supported by the facts. Regarding hire charges, the Counsel for the assessee has submitted before us that the Assessing Officer had not asked for details of hire charges received against the tippers given on hire. Such details could have been provided if asked for. The Counsel of the assessee also submitted that the vehicles were given on hiring to person against whom the assessee received services in the form of goods, labour supply etc. The hiring charges receivable are adjusted against payments to be made to these persons. These facts have been submitted to the A.O. This method of accounting has been followed by the Assessing Officer in previous year and no doubt were raised by the A.O. even in scrutiny Page 38 of 114

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. assessments. Therefore, a method followed by the Assessing Officer in previous year should not be changed unless there is a change in facts and law. We note that it is a well settled legal position that factual matters which permeate through more than one assessment year, if the Revenue has accepted a particular's view or proposition in the past, it is not open for the Revenue to take a entirely contrary or different stand in a later year on the same issue, involving identical facts unless and until a cogent case is made out by the Assessing Officer on the basis of change in facts. For that we rely on the order of the Hon'ble Supreme Court in Radhasoami Satsang vs. CIT 193 ITR 321 (SC), wherein it was held as follows: "We are aware of the fact that, strictly speaking, res judicata does not apply to income tax proceedings. Again, each assessment year being a unit, what is decided in one year may not apply in the following year but where a fundamental aspect permeating through the different assessment years has been found as a fact one way or the other and parties have allowed that position to be sustained by not challenging the order, it would not be at all appropriate to allow the position to be changed in a subsequent year. On these reasoning, in the absence of any material change justifying the Revenue to take a different view of the matter - and, if there was no change, it was in support of the assessee - we do not think the question should have been reopened and contrary to what had been decided by the Commissioner of Income-tax in the earlier proceedings, a different and contradictory stand should have been taken." We are of the view that the above cited precedents on principle of consistency are squarely applicable to the assessee under consideration. 11. We note that the A.O. could not bring any material on record, to dispute the assessee's claim, that the vehicles and other equipments were deployed in difficult areas and therefore, entitle to higher rate of depreciation. The A.O's contention, that the explanation given by the assessee, is an afterthought, and that no hiring charges have been received, is not supported by facts. The tippers used by the assessee in its business are registered under the Motor Vehicles Act, 1988. They met the functional test as the basis for grant of 30% depreciation, and also on the ground that the higher depreciation is on account of rigorous and hard use of commercial vehicles, in comparison to the

Page 39 of 114

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. stationery and permanently installed machinery. These views, find support in the decision of the Punjab & Haryana High Court in the case of CIT vs. Rakesh Jain [2013] 350 ITR 230 (P&J). Therefore, taking into account the submission of the Counsel and relevant assessment records, the addition of Rs.85,17,966/-, made by AO, on account of additional depreciation claim on higher rate, should be deleted. That being so, we decline to interfere with the order of Id. CIT(A) in deleting the aforesaid addition. His order on this addition is, therefore, upheld and the grounds of appeal of the Revenue is dismissed.” 42. We find that ld. CIT(A) has correctly appreciated the facts of the case of the assessee and stated that “Therefore, for above reasons, being bound by decision of Hon’ble ITAT Kolkata, in view of the Principles of Consistency (per supra), in the absence of any adverse material on record and considering the fact that the reasons based on which the impugned disallowance was made are incorrect and legally unsustainable, the disallowance of Rs. 3,23,72,494/- which is impugned in the instant Ground of Appeal, is being, hereby, deleted. The instant Ground of Appeal is, accordingly, allowed.” 43. Thus, since the issue of excess depreciation is squarely covered against the Revenue by the decision of Coordinate Kolkata Bench extracted (supra), and since ld. D/R failed to put forth any binding precedence in its favour, we fail to find any infirmity in the finding of ld. CIT(A) deleting the disallowance of excess depreciation of Rs. 3,23,72,494/-. Accordingly, Ground No. 3 raised by the Revenue is dismissed. 44. Ground no. 4 raised by the Revenue is on account of disallowance of Rs. 3,05,471/- u/s 14A of the Act r.w.r 8D of the Income Tax Rules, 1962. Ld. Counsel for the assessee submitted Page 40 of 114

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. that the assessee during the year had earned dividend of Rs. 11,600/-. The assessee has suo moto disallowed a sum of Rs. 11,600/- u/s 14A of the Act. Ld. AO applied the provisions of Section 14A of the Act read with rule 8D of the Income Tax Rules, 1962 and computed the expenditure relatable to the aforesaid tax- exempt dividend income at Rs. 3,05,471/-. 45. Being aggrieved by the above order of ld. AO, the assessee filed appeal before ld. CIT(A). Ld. CIT(A), relying upon the decision of the decisions of the Hon’ble Delhi High Court in the case of Joint Investment Private Limited [CIT 372 ITR 694], the Hon’ble Delhi High Court in the case of PCIT vs. Caraf Builders & Construction (P) Ltd. [(2019)(101 taxmann.com167)], the Hon’ble Madras High Court in the case of Marg Ltd. vs. CIT ([2020] 120 taxmann.com 84 (Madras)), the Hon’ble Karnataka High Court in the case of Pragathi Krishna Gramin Bank vs. Jt CIT. [2018] 95 taxmann.com 41 256 Taxman 349 (Kar.)] etc., held that the disallowance u/s 14A of the Act read with Rule 8D of the Income Tax Rules, 1962 cannot exceed the exempt income i.e. Rs. 11,600/-. He accordingly restricted the disallowance to the extent of exempt income earned by the assessee. 46. Aggrieved, the Revenue is now in appeal before this Tribunal. Ld. D/R relied on the finding of ld. AO and ld. Counsel for the assessee supported the finding of ld. CIT(A). 47. We have heard rival contentions and perused the records placed before us. Disallowance u/s.14A of the Act is in dispute

Page 41 of 114

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. before us. We find that the exempt income earned by the assessee during the year is Rs. 11600/- and the same is suo moto disallowed by the assessee. We also find that this issue is no more res-integra as the Hon’ble Delhi High Court in the case of PCIT Vs. Era Infrastructure (India) Ltd. (ITA 204/2022) judgment dated 20.07.2022, has held that the amendment made in Section 14A of the Act by Finance Act, 2022, will be applicable prospectively and also held that disallowance u/s 14A of the Act should not exceed the exempt income earned by the assessee during the year. Since the assessee has earned exempt income of Rs.11,600/- during the year therefore, we deem it fit to restrict the disallowance to Rs. 11,600/-. We therefore, under the given facts and circumstances of the case, find no inconsistency in the finding of ld. CIT(A) duly supported by judicial pronouncements referred above and appearing in the impugned order consistently holding that disallowance u/s 14A of the Act cannot exceed the exempt income earned by the assessee and the same holds good prior to amendment made in Section 14A of the Act by Finance Act 2022. Thus, no infirmity is called for in the finding of ld. CIT(A). Accordingly, Revenue’s ground no.4 is dismissed. 48. Ground no. 5 raised by the Revenue is general in nature. 49. In the result, the appeal filed by the assessee for Assessment Year 2014-15 in ITA No. 43/GTY/2022 is allowed and appeal filed by the Revenue for Assessment Year 2014-15 in ITA No. 02/GTY/2022 is dismissed.

Page 42 of 114

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. 50. Now, we take up the appeals of the Revenue in ITA Nos. 37 to 39/GTY/2022 for the Assessment Years 2017-18, 2018-19 & 2019-20.

“1) On the facts and in the circumstances of the case the Ld. CIT(A) has erred in accepting the claim of deduction u/s 80IA which had not been made in the original return of income that was furnished u/s 139 but which claim has been made in the return for assessment of search case furnished consequent to notice u/s 153A, thus thereby arriving at paradoxical result that being a search case the assessee had derived more benefit which was not claimed in the original return furnished u/s 139. 2) The Ld. CIT(A) erred in procedural law when the assessee did not furnish requisite audit report and particulars for the claim for deduction u/s 80IA within the specified time. 3) The Ld. CIT(A) also erred in that the assessee never furnished revised return to the original return so as to claim for the deduction u/s 80IA. 4) The appellant craves to add, alter, amend any further ground” 52. Facts in brief are that the assessee herein is a private limited company engaged in the business of civil construction and development of infrastructure projects such as roads, rails, bridges, tunnels, ports, harbours, runways etc. In the Original Returns of Income u/s 139(1) of the Act for the impugned assessment years were earlier filed by the Assessee without claiming any deduction u/s 80IA of the Act as per the following details: Page 43 of 114

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. AYs. Date of filing Amount disclosed in Return (Rs.) return 2017- 31.10.2017 21,63,53,010/- 18 2018- 31.10.2018 29,14,82,150/- 19 2019- 31.10.2019 61,80,49,170/- (post search which took place 20 on 20.09.2019) 53. Subsequently, a search and seizure operation u/s 132(1) of the Act was conducted at the registered office of the assessee at Knowledge Hub, DN 23, 2nd floor, Sector V, Salt Lake, Kolkata - 700 091, at its Corporate Office at Club Road, Silchar - 788 001 as well as at various branch offices of the assessee at Guwahati, Delhi Aizawl etc. on 20.09.2019. The search and seizure operation was finally concluded on 18.11.2019. Statedly, during the course of the search, no unaccounted cash, jewellery or any unaccounted/undisclosed asset was found or seized by the Search Team from the assessee. Prior to the search, the assessee was regularly assessed to income-tax at Kolkata. Consequent to the search and seizure operation, the assessee’s case was centralized with ACIT/DCIT, Central-Circle-1, Guwahati vide order dated 23.12.2000 of the Ld. PCIT u/s 127 of the Act and accordingly, the jurisdiction over the case of the assessee was transferred from Kolkata to Guwahati. Pursuant to the search & seizure operations, the following notices were issued to the assessee:

“(i) Notices u/s 153A dated 04.02.2021 for A.Ys 2014-15 to 2019-20 (i.e., six A.Ys preceding the A.Y relevant to the P.Y in which the search was conducted). (ii) Notice u/s 143(2) dated 28.06.2021 for A.Y. 2020-21 (i.e., the A.Y relevant to the P.Y in which the search was conducted).”

Page 44 of 114

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. 54. The years covered in the impugned appeals before us are A.Ys. 2017-18, 2018-19 and 2019-20. Thus, we shall be restricting our discussions to the said years only. Notices issued u/s 153A dated 04.02.2021 for A.Ys. 2017-18, 2018-19 and 2019-20 were authenticated (i.e., digitally signed) by the ld. AO on 05.02.2021 and were required to be complied with by the assessee within 10 days of service of such notices. Accordingly, the time for furnishing the Returns of Income in compliance to Notice u/s 153A of the Act in respect of the impugned years was to expire on 15.02.2021. In response to the Notices issued u/s 153A of the Act, the assessee filed its Returns of Income u/s 153A of the Act for the years under appeal on 13.02.2021 i.e., well within the time allowed under the Notices issued u/s 153A of the Act and claimed deduction u/s.80IA of the Act for the first time and the detail of the same is mentioned below:

AY As per the Return filed under Section 139(1) / 153A of the Income Tax Act, 1961 Gross Total Deduction Whether any Returned Section Date of filing Income Claimed under Deduction Total Income under the Return of Chapter VI-A claimed under which the Income Section 80IA Return of of the Act? income was filed 2017- 25,98,02,835 4,34,49,829 Yes 21,63,53,010 153A 13/02/2021 18 2018- 35,57,91,069 35,44,33,862 Yes 13,57,210 153A 13/02/2021 19 2019- 1,03,35,25,768 33,92,20,310 Yes 69,43,05,460 153A 13/02/2021 20 55. While making fresh claims for deduction u/s 80IA(4) of the Act in the Returns of Income filed in compliance to notices issued u/s 153A of the Act in respect of the impugned A.Ys, the assessee filed the corresponding forms (being Report of Audit of the Eligible

Page 45 of 114

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. Undertaking from an Accountant) in Form 10CCB [as required u/s 80IA(7)] electronically on 12.02.2021 i.e., within the time permitted as per Notices issued u/s 153A of the Act (i.e., before 15.02.2021). In course of the search assessment proceedings, ld. AO raised various issues regarding the fresh claim of deduction made by the assessee u/s 80IA(4)(i) of the Act in the Returns of Income filed in compliance to Notices issued u/s 153A of the Act and finally passed the impugned Assessment Orders dated 29.09.2021 u/s 153A/143(3) of the Act disallowing the assessee’s claim u/s 80IA(4)(i) of the Act. [as per the details in Table 3 (supra)] for each of the impugned assessment years. The reasons cited in the Assessment Orders u/s 153A/143(3) of the Act for disallowing the assessee’s claim of deduction u/s 80IA(4)(i) of the Act can be broadly categorized as under:

“That, having not claimed the deduction in the Original Income Tax Return filed u/s 139(1) of the Actor by way of a Revised Return, the Assessee was not entitled to claim the deduction u/s 80IA(4)(i) of the Actin in the Returns filed by the Assessee in compliance to the Notice issued u/s 153A of the Act. That, the Audit Reports in Form-10CCB [as referred to u/s 80IA(7) of the Act] were not furnished by the Assessee within the time limit as referred to u/s 139(1) of the Act and, therefore, in the absence of the Audit Report (Form-10CCB) being filed by the Assessee within the time limit as referred to u/s 139(1), the Assessee could not claim the deduction u/s 80IA(4)(i) of the Act. That, for the purposes of Section 80IA, the Assessee was a "Works Contractor" and NOT a "Developer of Infrastructure". 56. Being aggrieved, the assessee assailed the above Assessment Orders u/s 153A/143(3) of the Act for the impugned assessment

Page 46 of 114

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. years in appeal before ld. CIT(A) challenging the disallowance of assessee’s claim of deduction u/s 80IA(4) of the Act in respect of the above years.

“(i) Firstly, a Return of Income furnished in compliance with a notice issued u/s 153A of the Income Tax Act, 1961 substitutes the Original / Earlier Return of Income furnished (prior to the Date of the Search) u/s 139(1) of the Act. (ii) Secondly, since a Return of Income furnished in compliance with a notice issued u/s 153A of the Act substitutes the Original / Earlier Return of Income furnished (prior to the date of the Search) u/s 139(1) of the Act, the Audit Reports in Form-10CCB (as referred under Section 80IA(7) of the Act) were furnished by the Assessee within the time limit as provided by the A.O in the Notices issued by him u/s 153A of the Act. Thus, it was contended that there was no delay in filing of the Audit Reports in Form 10CCB. (iii) Thirdly, the Assessee was not merely a “Works Contractor” but a “Developer of Infrastructural Facilities” and the Assessee had developed Infrastructure like Roads, Railway Bridges, Railway Tunnels etc. The Assessee also placed reliance on the Orders of Hon’ble ITAT Kolkata passed in the case of the Assessee for the AY 2003-04 to AY 2006-07 as well as on the other Orders passed by the Hon’ble ITAT Kolkata and the Hon’ble Courts and other Hon’ble Benches of the ITAT. The Assessee also referred to the Contract Agreements filed by the Assessee before the A.O and stated that merely because TDS was being deducted in respect of the Contract Revenue received by the Assessee, the Assessee could not be treated

Page 47 of 114

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. as a “Works Contractor”. Detailed explanations in this regard were filed by the Assessee along with supporting case laws on the subject.” 58. Ld. CIT(A), after considering the submissions filed by both the sides, the various provisions of the Income-tax Act, 1961 and the relevant case-laws on the impugned subject, passed an elaborate Order u/s 250 of the Act dated 27.07.2022 running into 1017 pages allowing the deduction claimed u/s.80IA of the Act and the crux of his finding is summarized as under:

“(i) That, in respect of an assessment year whose proceedings had abated, a Return of Income filed in compliance to the Notice issued u/s 153A of the Act, substitutes the prior/earlier original Return of Income filed u/s 139(1) of the Act and, hence, the Returns of Income filed by the Assessee, in compliance to the Notice issued u/s Section 153A of the Act for the AY 2017-18, AY 2018-19 and AY 2019-20, shall be treated as the Returns of Income filed u/s 139(1). (ii) That, the Audit Reports in Form-10CCB [as referred u/s Section 80-IA(7) of the Act] which were furnished by the Assessee within the time limit as given in the Notice u/s 153A of the Act, on an harmonious interpretation and reading together of various provisions of Law for the purposes of the special provisions of Section 153A of the Act, shall be treated as having been filed within the time limit as referred to u/s Section 139(1) of the Act. In view of Paras (i) & (ii) supra, even though, not having claimed the deduction in the Original Income Tax Return filed u/s 139(1) of the Act or by way of a Revised Return, the Assessee was still entitled to claim the deduction u/s 80IA(4)(i) of the Act in the Returns filed by the Assessee in compliance to the Notice issued u/s 153A of the Act. (iii) That, for the purposes of Section 80IA, the Assessee shall be treated as a “Developer of Infrastructure Facilities” and not a “Works Contractor” as concluded by the A.O.” 59. Based on the above reasoning, ld. CIT(A) deleted the disallowances made by ld. AO in respect of deductions claimed by

Page 48 of 114

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. the assessee u/s 80IA(4) of the Act for the impugned AYs 2017-18, 2018-19 and 2019-20, except for two undertakings which pertained to AY 2019-20 [in respect of which development had not started/commenced on or before 01.04.2017 in view of the second proviso appended to section 80 IA(4)(i) of the Act] in the manner as follows: TABLE 4 AYs. Aggregate amount Aggregate Aggregate amount Aggregate amount of deduction as amount of of deduction not of deduction claimed by the deduction permissible to the permissible to the Assessee u/s disallowed by Assessee u/s 80IA Assessee u/s 80IA 80IA the Ld. AO as per order of as per order of the (Rs.) (Rs.) CIT(A) CIT(A) (Rs.) (Rs.) 2017- 4,34,49,829 4,34,49,829 - 4,34,49,829 18 2018- 35,43,62,432 35,43,62,432 - 35,43,62,432 19 2019- 33,71,04,495 33,71,04,495 12,78,15,656 (two 20,92,88,839 20 projects commenced after 04.04.2017, therefore no deduction allowed) 60. The above Order dated 27.07.2022 passed by ld. CIT(A) u/s 250 of the Act in respect of AYs 2017-18, 2018-19 and 2019-20 constitutes the subject matter of the impugned appeals filed by the Department before us. On a perusal of the grounds of appeal urged by the Department (reproduced in earlier part of this Order), it is seen that the Department has challenged the impugned order of ld. CIT(A) only qua his findings on following two issues:

“(i) That the Ld. CIT(A) erred in accepting the fresh claims of deduction u/s 80IA(4) made in Returns of Income furnished by the Assessee in response to Notice u/s 153A although such claim had not been made in original Return of Income furnished u/s 139 – resulting in paradoxical situation whereby being a search case, the Assessee had derived more benefit which was not claimed in the original return u/s Page 49 of 114

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. 139 – more so, given that the Assessee never furnished revised return to the original return so as to claim deduction u/s 80 IA of the Act [Ground Nos. 1 & 3 of the Department’s Appeal] (ii) That the Ld. CIT(A) erred in procedural law in not holding that the Assessee did not furnish the requisite Audit Report and particulars of claim for deduction u/s 80IA within the specified time limit [Ground No. 2 of the Department’s Appeal]” 61. The finding of ld. CIT(A) to the effect that for the purposes of Section 80IA of the Act, the assessee shall be treated as a “Developer of Infrastructure Facilities” and not a “Works Contractor” has not been contested/challenged by the Department in the appeals before us and has thus reached finality. Since the said issue does not constitute subject matter of appeals before us, the same is not required to be adjudicated by us.

Page 50 of 114

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. 63. Barring the above, the Department has impliedly accepted the assessee’s compliance with all the other conditions specified u/s 80IA(4) of the Act vis-à-vis the assessee’s claim for deduction u/s 80IA(4) of the Act in respect of the impugned infrastructural facilities for the impugned AYs 2017-18, 2018-19 and 2019-20. The assessee has not filed any appeal before us to the extent the impugned additions/disallowances of Rs. 12,78,15,656/- in respect of deduction claimed u/s 80IA of the Act vis-à-vis two infrastructural projects for AY 2019-20 that have been sustained by the ld. CIT(A) in view of the applicability of second proviso appended to section 80IA(4)(i) of the Act to these projects. Hence, ld. CIT(A)’s findings on the above are left undisturbed. In the above backdrop, the grounds of appeal urged by the Department are decided.

“1) On the facts and in the circumstances of the case the Ld. CIT(A) has erred in accepting the claim of deduction u/s 80IA which had not been made in the original return of income that was furnished u/s 139 but which claim has been made in the return for assessment of search case furnished consequent to notice u/s 153A, thus thereby arriving at paradoxical result that being a search case the assessee had derived more benefit which was not claimed in the original return furnished u/s 139.

Page 51 of 114

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. 3) The Ld. CIT(A) also erred in that the assessee never furnished revised return to the original return so as to claim for the deduction u/s 80IA.” 66. As stated above, in the instant case, the dispute in the impugned appeal revolves around the fresh claims of deductions made by the assessee u/s 80IA(4)(i) of the Act in its Returns of Income filed pursuant to notices issued u/s 153A of the Act for AYs 2017-18, 2018-19 & 2019-20 although the said claims were not made in the original returns filed by the assessee u/s 139 of the Act for the said years. The factual matrix and the chronology of events leading to the impugned additions have already been alluded to by us earlier in this order.

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. no such deductions had been claimed) and reassessments pending on the date of search shall abate.

“(i) That, returns e-filed u/s 153A of the Act were in consequence of action taken u/s 132 of the Act and thus, couldn’t be advantageous to the Assessee since the object of the legislation was to assess undisclosed income. If new claims of deduction or exemption were allowed to searched persons, then the same would be discriminatory to the other regular assessees who had lost a right as such to claim the deduction by efflux of time. (ii) That fresh claim of deduction u/s 80-IA in return u/s 153A, almost one and a half years after the search was conducted on the Assessee was an after thought and mischief on the part of the Assessee to take wrongful advantage of opportunity to e-file return u/s 153A. (iii) That, if the Assessee was allowed to claim an allowance, deduction etc. u/s 153A not claimed earlier in the original return, then it would mean that even in cases where the appeal arising out of the completed assessment had been decided by the CIT(A), ITAT and the High Court, on a notice issued u/s 153A, the A.O. would have the power to undo what had been concluded up to the High Court. (iv) That, the decisions of the Hon’ble Kolkata ITAT in the Assessee’s own case for AYs 2005-06 and 2006-07 were based on significantly different facts inasmuch as in those cases, the Assessee had claimed deduction u/s 80-IA in the original return of income whereas, in the present case for the impugned years, the Assessee had not claimed deduction u/s 80-IA in its original return of income.

Page 53 of 114

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. (v) That, for the A.Y. 2017-18, the Assessee e-filed the original return of income on 31.10.2017. The ITAT order in respect of A.Ys 2005-06 and 2006-07 were passed during December 2017 and January 2018. Thus, assuming that the Assessee was entitled to any such deduction, it still had time to e-file a revised return of income for A.Y. 2017-18 claiming such deduction, which was not done. (vi) That, notice u/s 143(2) of the Act for selecting the case of the Assessee in scrutiny for A.Y. 2017-18 was issued on 24.09.2018 whereas the search was conducted in the case of the Assessee only on 20.09.2019, which was almost one year after the notice u/s 143(2) was issued and served on the Assessee. During one year of pending scrutiny assessment proceedings before it was abated, no claim regarding deduction u/s 80-IA was made by the Assessee in any submission before the A.O. The original assessment was to get time barred on 31.12.2019. The Form 10CCB in the case of the Assessee was issued by the auditor on 12.02.2021. Thus, the Assessee could not claim that it had planned to claim any deduction u/s 80-IA before the A.O during the original assessment proceedings. Thus, the claim of the Assessee that the pending assessment proceedings for A.Y. 2017-18 was abated, provided no valid ground to the Assessee to claim in return u/s 153A a deduction which was not claimed in the original return of income.” 69. The aforesaid assessment order(s) u/s 153A/143(3) of the Act for the impugned assessment years were challenged in appeal before ld. CIT(A). Apropos the impugned grounds challenging the disallowance of fresh claims of deduction u/s 80IA of the Act in returns filed u/s 153A of the Act, ld. CIT(A), after considering the submissions filed by both the sides, the various provisions of the Income-tax Act, 1961 and the relevant case-laws on the impugned subject vide his order u/s 250 of the Act dated 27.07.2022 finally held that even though the impugned claim of deduction u/s 80IA of the Act had not been made in the Original Income Tax Return filed u/s 139(1) of the Act or by way of a Revised Return, the

Page 54 of 114

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. assessee was still entitled to claim the deduction u/s 80IA(4)(i) of the Act in the Returns filed by the assessee u/s 153A of the Act in respect of the impugned assessment years.

“Assessment in case of search or requisition. 153A. [(1)] Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, in the case of a person where a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A after the 31st day of May, 2003, the Assessing Officer shall— (a) issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year falling within six assessment years [and for the relevant assessment year or years] referred to in clause (b), in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139; (b) assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made [and for the relevant assessment year or years] : Provided that the Assessing Officer shall assess or reassess the total income in respect of each assessment year falling within such six assessment years and for the relevant assessment year or years] : Provided further that assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years [and for the relevant assessment year or years] referred to in this [sub-section] pending on the date of initiation of the search under

Page 55 of 114

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. section 132 or making of requisition under section 132A, as the case may be, shall abate. Provided also that the Central Government may by rules made by it and published in the Official Gazette (except in cases where any assessment or reassessment has abated under the second proviso) specify the class or classes of cases in which the Assessing Officer shall not be required to issue notice for assessing or reassessing the total income for six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition is made and for the relevant assessment year or years. [Provided also that no notice for assessment or reassessment shall be issued by the Assessing Officer for the relevant assessment year or years unless— (a) the Assessing Officer has in his possession books of account or other documents or evidence which reveal that the income, represented in the form of asset, which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more in the relevant assessment year or in aggregate in the relevant assessment years; (b) the income referred to in clause (a) or part thereof has escaped assessment for such year or years; and (c) the search under section 132 is initiated or requisition under section 132A is made on or after the 1st day of April, 2017. Explanation 1.— For the purposes of this sub-section, the expression "relevant assessment year" shall mean an assessment year preceding the assessment year relevant to the previous year in which search is conducted or requisition is made which falls beyond six assessment years but not later than ten assessment years from the end of the assessment year relevant to the previous year in which search is conducted or requisition is made. Explanation 2.—For the purposes of the fourth proviso, "asset" shall include immovable property being land or building or both, shares and securities, loans and advances, deposits in bank account.

Page 56 of 114

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. (2) If any proceedings initiated or any order of assessment or reassessment made under sub-section (1) has been annulled in appeal or any other legal proceedings, then, notwithstanding anything contained in sub-section (1) or section 153, the assessment or reassessment relating to any assessment year which has abated under the second proviso to sub-section (1), shall stand revived with effect from the date of receipt of the order of such annulment by the Principal Commissioner or Commissioner. Provided that such revival shall cease to have effect if such order of annulment is set aside. Explanation- For removal of doubts, it is hereby declared that – (i) save as otherwise provided in this section, section 153B and section 153C, all other provisions of this Act shall apply to the assessment made under this section; (ii) in an assessment or reassessment made in respect of an assessment year under this section, the tax shall be chargeable at the rate or rates as applicable to such assessment year.” 71. Firstly, analysing the provisions of Section 153A of the Act, ld. CIT(A) in his appellate order for the impugned years has observed (at pages 168 to 172 and pages 219 to 222 of his order) as under:

(i) That, in case of a search or requisition, in terms of section 153A of the Act, the A.O is compulsorily required to issue notices u/s 153A and the searched person is compulsorily required to file Returns of income afresh u/s 153A (and not u/s 139(1) or any other section) for each of the prescribed assessment years [i.e., six A.Ys immediately preceding the A.Y relevant to the P.Y. in which such search is conducted or requisition is made and for the relevant A.Y(s) defined under Explanation 1 to section 153A(2)] (ii) That, the assessment or reassessment, if any, related to any of the prescribed assessment years, which is pending on the date of search or requisition and which is done on the basis of any earlier Return filed u/s 139(1) stands statutorily abated.

Page 57 of 114

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. (iii) That, after filing of the Return u/s 153A, the earlier Return filed u/s 139(1) of the Act does not remain in existence, and thus cannot be used for the purpose of making the assessment or reassessment u/s 153A. (iv) That, the Return filed u/s 153A is the only Return which is filed by the Assessee u/s 153A and which contains the details of the heads of income of the Assessee (including the additional income disclosed) by the Assessee after the search. (v) That, the assessment or reassessment for each of the prescribed A.Ys is to be compulsorily made afresh by the A.O. u/s 153A of the Act only on the basis of the Return filed u/s 153A and not on the basis of Return filed u/s 139(1) or any other section. (vi) That, the Return filed u/s 153A is not an addendum or an Annexure of the earlier Return filed u/s 139(1) and the proceedings u/s 153A are not an extension of the earlier proceedings which has either abated or remains unabated. (vii) That, for one assessment, for the purpose of making an assessment, there can only be one return. After the search or requisition, for the purpose of making assessment or reassessment u/s 153A, details filed in both Returns [i.e., u/s 153A and u/s 139(1)] cannot be used by the A.O at his whims and fancies i.e., he cannot choose Return filed u/s 153A for the purpose of collecting taxes on additional income disclosed during the search and cannot rely on earlier Return u/s 139(1) for denying the benefit of deduction. The A.O cannot approbate and reprobate simultaneously. (viii) That, while completing assessment u/s 153A, ALL provisions (including provisions of Chapter VI-A etc.) of the Act, “so far as may be”, are applicable to the proceedings u/s 153A of the Act. The words “so far as may be” has been used to restrict the applicability of those provisions which are inconsistent with the provisions of section 153A. Meaning thereby that all other provisions of the Act (to the extent not inconsistent with the provisions of section 153A) will apply to a Return filed u/s 153A. (ix) That, unlike the erstwhile provisions of section 158BC which contained a clear embargo on filing the revised return, current provisions of section 153Ado not contain any specific restriction. Page 58 of 114

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. Rather, the current provisions are drafted in a way so as to align with the provisions contained in section 139 provided, they are not inconsistent with the provisions of section 153A. Thus, in the absence of specific restriction u/s 153A, it will be wrong to hold that the Assessee will be barred from filing even a revised return assuming he satisfies the conditions for filing such revised returns. (x) That, from a perusal of the Explanation to Section 153A, the expression “save as otherwise provided in this Section, Section 153B and Section 153C, all other provisions of this Act shall apply to the assessment made under this section” it is evident that absence of any specific exceptions stipulated in the aforesaid sections, the provisions of all other sections of the Act will mutatis-mutandis apply to the assessment framed u/s 153A. Thus, the A.O is required to permit the legally tenable allowance, deductions, relief, rebates etc. which have been claimed in return filed u/s 153A of the Act. (xi) That, as per the Second Proviso to section 153A(1), any proceedings for assessment or reassessment of an assessee which are pending on the date of initiation of search or making a requisition will abate. Once those proceedings abate, the A.O is required to pass assessment orders for each of those years determining the total income of the assessee which will include both the income declared in the returns, if any, furnished by the Assessee as well as the undisclosed income, if any, unearthed during the search or requisition and declared by the assessee in Returns of Income filed u/s 153A of the Act. (xii) That, since the “abatement” of proceedings means termination of the proceedings, the proceedings will have to be re-started. Section 153A talks about three things, viz. (a) First, about abatement of pending proceedings which were initiated on the basis of the Return filed u/s 139 (b) Second, about filing of fresh Return of income u/s 153A of the Act, and (c) Third, about assessment to be made on the basis of such fresh Return of Income u/s 153A.

Page 59 of 114

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. (xiii) That, no other section in the Act talks about abatement of the proceedings. Thus, once section 153A is invoked, then all other proceedings and the basis of those proceedings are extinguished. The entire process of the Return of Income and Assessment is initiated de- novo and completed afresh after section 153A is invoked for the purpose of assessment or re-assessment. (xiv) That, however, in case where the assessment or reassessment proceedings have already been completed and assessment orders have been passed determining the total income, such orders will subsist at the time when a search is conducted or a requisition is made since there is no question of any abatement since no proceedings are pending. In this case, the A.O will assess or reassess the income strictly based on incriminating material found during the course of search or requisition. (xv) That, however, the total income for such AYs (i.e., where the Assessments were pending i.e. where the Assessments had abated) will have to be computed by the A.O as a fresh exercise. Thus, in abated Assessments, the A.O retains the Original Jurisdiction as well as the Jurisdiction conferred on him u/s 153A. In order words, in case of abated assessments, the jurisdiction to make the original assessment and the assessment u/s 153A merges into one.” 72. Ld. CIT(A), has thereafter gone on to demonstrate that the pending assessments for the impugned AYs 2017-18, 2018-19 & 2019-20 had abated in terms of Section 153A of the Act in the manner as follows: TABLE-5 AY Date of filing Section Date on which Whether on the Section of the If, the the Original under the Time limit Date of search Notice by assessment ITR which the as per the any virtue of which was pending, Original Proviso to assessment assessment the Date off was ITR Section 143(2) was pending? was pending issuance of filed expired (Yes/No) Notice u/s 143(2)/148 2017- 31/10/2017 139(1) 30/09/2018 Yes 143(2) 24/09/2018 18

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I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. 2018- 31/10/2018 139(1) 30/09/2019 Yes(##) Not Applicable Not Applicable 19 2019- 31/10/2019 139(1) 30/09/2020 Yes(**) Not Applicable Not Applicable 20 2020- 15/02/2021 139(1) Yes (**) Not Applicable Not Applicable 21

(##) The assessment was pending since the time limit for service of Notice under Section 143(2) of the Act had not expired (the same would have expired on 30/09/2019). However, a Notice under Section 143(2) of the Act in respect of the AY 2018-19 was issued in the case of the Appellant on 22/09/2019. (**) Since the ITR was filed only after the Date of the Search Thus, in the case of the Appellant, as on the date of the Search (i.e. on 20.09.2019), the time limit to issue a Notice under Section 143(2) of the Act for and in respect of AY 2014-15 to AY 2016-17 had already expired and the assessments for these years could be said to have been completed (unabated) in the case of the Appellant in respect of these assessment years (i.e. AY 2014-15 to AY 2016-17). Further, in the case of the Appellant, as on the date of the Search (i.e. on 20.09.2019), the assessment proceedings for AY 2017-18 (initiated vide Notice dated 24/09/2018, issued to the Appellant under Section 143(2) of the Income Tax Act, 1961) were pending. Yet Further, in the case of the Appellant, as on the date of the Search (i.e. on 20.09.2019), the assessment proceedings for A Y2018-19 & AY2019-20 were pending since either the time limit for issuance to a Notice under Section 143(2) of the Income Tax Act, 1961 had not expired OR the time limit to furnish a Return of Income was still available. Lastly, since on the date of Search (i.e. on 20.09.2019), the Appellant could not have furnished any Income Tax Act, 1961 in respect of the Assessment Year 2020-21 (relevant to the financial year 2019-20 during which the Search was conducted) since the relevant Financial Year had not expired and therefore the assessment proceedings for the aforesaid Assessment Year (i.e. AY 2020-21) were the

Page 61 of 114

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. Original/Regular Assessment Proceedings and could be said to pending. 74. Ld. CIT(A) (at pages 223 to 233 of his Order) has also taken note of the fact that the ld. AO, vide letter no. 88 dated 07.07.2022 had admitted that the original/regular assessment proceedings initiated u/s 143(3) of the Act for AYs 2017-18 & 2018-19 had abated and further for AY 2019-20, since the Income-tax Returns had not been furnished till the date of search (since the ‘due date’ as referred to in section 139(1) of the Act had not expired), therefore, the assessment proceedings for AY 2019-20 were also pending (i.e., were abated assessment). Based on the above, ld. CIT(A) has concluded that on the date of assuming jurisdiction u/s 153A of the Act, the prior pending assessments on the basis of original returns filed u/s 139 of the Act for AYs 2017-18, 2018-19 and 2019-20 got abated.

“(i) Kirit Dahyabhai Patel vs. ACIT [Tax Appeal No. 1181 of 2010, Tax Appeal No. 1182 to 1185 of 2010, judgment dated 03/12/2014 – Gujarat High Court (ii) PCIT vs. Neeraj Jindal [Income Tax Appeal No. 463 of 2016, judgment dated 09/02/2017; 79 Taxmann.com 96] – Delhi High Court

Page 62 of 114

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. (iii) Shrikant Mohta vs. CIT [ITAT No.19 & 20 of 2015, GA No.246 & 247 of 2015, judgment dated 25/06/2018] – Calcutta High Court” 76. Further, ld. CIT(A) has relied upon the following case laws wherein after a detailed analysis of the relevant provisions of the Act, it has been unanimously held that the assessee is entitled to make a fresh claim of deduction, exemption, claim of expenses etc. in its Return of Income filed in response to notice u/s 153A of the Act which was not made in the Return of Income originally filed u/s 139 of the Act:

“(i) CIT vs. B.G. Shirke Construction Technology Ltd. [395 ITR 371; Income Tax Appeal No. 1392, 1531 of 2014, judgment dated 0/03/2017] – Bombay High Court (ii) Pr. CIT vs. JSW Steel Limited [422 ITR 071; ITA No. 1934 of 2017, judgment dated 05/02/2020] – Bombay High Court (iii) ACIT vs. Shantinath Detergents Pvt. Ltd. [2020 (3) TMI 964 - IT(SS) A No.27 to 32/Kol/2019, order dated 20/03/2020] – ITAT Kolkata (iv) Universal Medicare Pvt. Ltd vs. DCIT [2018 (12) TMI 406 - ITA Nos. 2967 to 2971/Mum/2016, order dated 05/12/2018]– ITAT Mumbai (v) Narendra Vegetable Products Pvt. Ltd. vs. ACIT [2015 (7) TMI 1298 - ITA 118/Nag/2013, 119/Nag/2013, 120/Nag/2013, 121/Nag/2013, 122/Nag/2013, 123/Nag/2013, 124/Nag/2013, order dated 30/07/2015]– ITAT Nagpur (vi) Bhanuben Kantibhai Savalia vs. DCIT [2019 (12) TMI 250 - IT (SS) Appeal Nos. 76 To 84 & 887 To 889 (Ahd.) Of 2015, order dated 17/09/2019] - ITAT Ahmedabad (vii) Shree Yamuna Pulses vs. ACIT [2013 (2) TMI 344 - IT(SS)A No.233, 234, 235, 236, 237, 238 and 239/Ahd/2010, order dated 07/08/2012]- ITAT Ahmedabad

Page 63 of 114

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. (viii) ACIT vs. Splendor Landbase Limited [2018 (6) TMI 444 - I.T.A. No.2461/DEL/2016 And C.O. NO. 215/DEL/2016, order dated 06/06/2018] - ITAT DELHI (ix) A. Srinivas Rama Raju vs. DCIT [2016 (10) TMI 174 - TA.No.975/Hyd/2015, order dated 19/08/2016] - ITAT Hyderabad” 77. Next, ld. CIT(A) has placed reliance on the following judgments which are directly relevant to the issue at hand, wherein the Hon’ble Courts have opined and held that fresh claim of deduction u/s 80IA of the Act can be made in Returns of Income filed in response to notice u/s 153A of the Act although the same was not made in the original Return of Income filed u/s 139 of the Act:

“(i) PCIT vs. Vijay Infrastructure Limited [2017 (7) TMI 956 - Income Tax Appeal No. 29 of 2016, judgment dated 12/07/2017] - Allahabad High Court - SLP filed by the Department against the aforesaid Judgment of the Hon’ble Allahabad High Court was dismissed by the Hon’ble Supreme Court of India [SLP (Civil) Diary No. 10863 of 2018, order Dated 13/04/2018] (ii) DCIT vs. MBL Infrastructure Limited [2020 (1) TMI 457 - ITAT KOLKATA; IT(SS) No.77/Kol/2016 & C.O No.22/Kol/2019 & IT(SS) No.78/Kol/2016 & IT(SS) No.46/Kol/ 2016, order dated 23/12/2019]– Kolkata ITAT (iii) DCIT vs. Megha Engineering & Infrastructure Ltd. [607/Hyd/ 2016 (AY 201011), 608/Hyd/ 2016 (AY 2011-12), 609/Hyd/ 2016 (AY 2012-13), 610/Hyd/ 2016 (AY 2013-14), 1375/Hyd/ 2016 (AY 2014-15) & 1540/Hyd/ 2016 (AY 2015-16) – ITAT Hyderabad” 78. Ld. CIT(A) has also dealt with and distinguished two seemingly adverse judgements rendered in the following cases, wherein in context of non-pending/completed assessments (i.e., unabated assessments)(and hence not applicable vis-à-vis abated

Page 64 of 114

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. assessments as in the instant case) the Hon’ble Courts had opined that it was not open to the assessee to claim and be allowed such deduction or allowance of expenditure which it had not claimed in the original assessment proceedings which stood completed:

“(i) Jai Steel (India) vs. ACIT (and other connected matters) [(2013) 259 CTR (Raj) 281; ITA No. 53/2011, judgment dated 24/05/2013] – Rajasthan HC (ii) GMR Infrastructure Limited vs. DCIT 2021 (7) TMI 527; I.T.A. NO.1036 OF 2017 dated 06/07/2021] – Karnataka High Court” 79. In light of the aforesaid judgments, ld. CIT(A) has gone on to conclude as under:

“1. That, a Return of Income filed in compliance with the Notice issued under Section 153A of the Act substitutes the Original Return filed under Section 139(1) of the Act. 2. That, an Assessee cannot make any Fresh/ New / Revised claim in its Income Tax Return filed in compliance with the Notice issued under Section 153A of the Act, vis-à-vis those Assessment Years for which at the time of initiation of Search, assessments were completed (i.e., unabated Assessment Years) 3. That, in respect of the Assessment Years whose assessments were pending / had abated, upon filing Returns of Income in compliance with the Notices issued under Section 153A of the Act, the aforesaid Returns filed in compliance with the Notices issued under Section 153A of the Act NOT ONLY substitute the Original/Earlier Income Tax Returns (filed prior to Search or even afterwards) under Section 139(1) of the Income Tax Act, 1961, BUT, the Original Returns (filed, as aforesaid) become non-est (i.e. a nullity). 4. That, in respect of the Assessment Years whose assessment were pending / had abated, since the Returns of Income filed in compliance with the Notices issued under Section 153A of the Act substitute the Original/Earlier Income Tax Returns (filed prior to Search or even afterwards) under Section 139(1) of the Income Tax Act, 1961, an

Page 65 of 114

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. assessee was entitled to make Fresh/ New/ Revised Claim in the aforesaid Returns (i.e. under Section 153A), notwithstanding that the aforesaid claims were not made by the assessee in earlier income tax returns filed prior to /after the Search.” 80. Ld. CIT(A) has also opined (at page 367 of his order) that even if the assessee, at the time of filing the Returns of Income u/s 139(1) of the Act was under a mistaken belief that he was not entitled to the said deductions under Section 80IA of the Act and, subsequently, on a re-think or on legal advice came to believe that he was actually entitled to the said deductions, the deductions permissible to the assessee would depend on the provisions of Law and not on the view which the assessee might have taken of his rights to be entitled to such deductions. Similarly, looking from the stand point of ld. AO, the deductions permissible to the assessee would again depend on the provisions of Law and not on the view or the interpretation which ld. AO might have taken of the rights of the assessee to avail of such deductions. Ld. CIT(A) has relied upon the following judgments in support of the proposition that claim of any deduction depends on the provisions of law and not on the view which the Assessee or ld. AO might take:

“(i) Commissioner of Income-Tax vs. C. Parakh & Co. (India) Ltd. [on 2 March, 1956; Equivalent citations: AIR 1958 SC 775, 1956 29 ITR 661 SC] – Supreme Court of India (ii) Pope The King Match Factory vs. Commissioner of Income-Tax, Madras [1962 (3) TMI 81 - Madras High Court (iii) Commissioner of Income-Tax, West Bengal II vs. Royal Boot House [1969 (6) TMI 37, [1970] 25 STC 243 (Cal), [1970] 75 ITR 507] - Calcutta High Court

Page 66 of 114

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. (iv) Kedarnath Jute Mfg. Co. Ltd vs Commissioner of Income Tax [On 17 August, 1971; 1971 AIR 2145; 1972 SCR (1) 277] – Supreme Court of India (v) Tuticorin Alkali Chemicals & Fertilizers Ltd. vs. Commissioner of Income-Tax [1997 (7) TMI 4 - Supreme Court; Other Citation: [1997] 227 ITR 172 (SC) – Supreme Court of India (vi) United Commercial Bank vs. Commissioner of Income-Tax [1999 (9) TMI 4 Supreme Court; Other Citation: [1999] 240 ITR 355 (SC) – Supreme Court of India (vii) Taparia Tools Limited vs. Joint Commissioner of Income Tax [2015 (3) TMI 853 - [2015] 372 ITR 605 (SC) - Supreme Court of India (viii) Pt. Sheonath Prasad Sharma vs. CIT [(1967) 66 ITR 647 (All)] – Allahabad High Court (at page 926 of CIT(A) Order) (ix) S.R. Koshti vs. CIT [276 ITR 165] – Gujarat High Court (at page 928 of the CIT(A) Order) (x) CIT (Central) vs. Devi Films Private Limited [1981 (11) TMI 10 - [1983] 143 ITR 386 - Madras High Court (at page 928 of the CIT(A) Order) (xi) Mayank Poddar (HUF) vs. WTO [262 ITR 633] - Calcutta High Court (at page 929 of the CIT(A) Order)” 81. Ld. CIT(A) has further referred to (at page 921 of his order) the well settled proposition that ld. CIT(A) and the Hon’ble ITAT have power to allow deduction/exemption to an assessee to which he was entitled even though claim was not made by such an assessee in his Original Income Tax Return. In other words, the assessee, if entitled to a particular claim, which he missed in his Income Tax Return, may make the said claim during the Appellate Proceedings. He has placed reliance on the following judgments in this regard:

Page 67 of 114

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. “(i) Himachal Gramin Bank vs. DCIT [(2009) 176 Taxman 433(HP)] - Himachal Pradesh High Court (ii) V. Lakshmi Reddy vs. ITO [(2011) 196 Taxman 78 (Mad)] - Madras High Court (iii) CIT vs. Jai Parbolic Springs Ltd. [(2008) 306 ITR 42 (Del.)] -Delhi High Court (iv) CIT vs. Ramco International [221 CTR 491 (P&H)] -Punjab and Haryana High Court (v) CIT vs. Bharat Aluminium Ltd. [303 ITR 256 (Del.)] -Delhi High Court (vi) CIT vs. Jindal Saw Pipes Ltd. [(2010) 328 ITR 338 (Delhi)]- Delhi High Court (vii) Pruthvi Brokers & Shareholders Pvt. Ltd. [[(2012) 349 ITR 336 (Bom.); ITA No.3908 of 2010 decided on 21/06/2012] – Bombay High Court (referred to at page 927 of the CIT(A)’s Order) (viii) Giridharlal Parasmal v. State of Mysore [(1967) 20 STC 64 (Mys)] – Mysore High Court (at page 928 of the CIT(A)’s order)” 82. Referring to Article 265 of the Constitution of India which provides that "no tax shall be levied or collected except by the authority of law", ld. CIT(A) (at page 925 of his order) has averred that in terms of Article 265 of the Constitution, tax can be levied only if it is authorized by law. The taxing authority cannot collect or retain a tax that is not authorized. Any retention of tax collected, which is not otherwise payable, will be illegal and unconstitutional. He has relied upon the following case laws in support of the above proposition: “(i) CIT vs. Shelly Products and another [261 ITR 367] – Supreme Court of India

Page 68 of 114

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. (ii) CIT vs. Bharat General Reinsurance Co. Ltd. 81 ITR 303 (Del) - Delhi High Court (iii) Balmukund Acharya vs. DCIT [310 ITR 310] – Bombay High Court (iv) Nirmala L. Mehta vs. CIT [(2004) 269 ITR 001] – Bombay High Court” 83. Finally, based on the ratio laid down in the above referred judgments, ld. CIT(A) has held that the observation of the ld. AO that the assessee having not claimed the deduction in its original Income Tax Return filed u/s 139(1) of the Act, or by way of a Revised Return, cannot claim the deduction u/s 80IA(4)(i) of the Act in the Returns filed in compliance to the Notice issued u/s 153A of the Act is devoid of legal legs. Accordingly, since the assessment proceedings for the impugned AYs 2017-18, 2018-19 & 2019-20 had abated pursuant to the search action by virtue of operation of section 153A of the Act, the assessee was duly entitled to make a fresh/revised/new claim of deduction u/s 80IA(4) of the Act in its Returns of Income filed in compliance with notices issued u/s 153A of the Act although the said claim was not made in the original returns filed u/s 139 of the Act. With these observations, the impugned ground has been allowed by the ld. CIT(A) in favour of the assessee. 84. In the course of hearing before us, ld. Counsel for the assessee supported the order of the ld. CIT(A) vis-à-vis the deletion of disallowance of fresh claim of deduction u/s 80IA of the Act made in returns filed u/s 153A of the Act. He also filed a detailed written submission to support his assertions. Since the arguments made by ld. Counsel for the assessee apropos the impugned Page 69 of 114

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. grounds are similar to and in alignment with those advanced by ld. CIT(A) while allowing the claim of the assessee and the same have already been elaborately discussed by us (supra), the same are not reiterated here to avoid repetition. 85. Per contra, ld. D/R vehemently challenged the order of ld. CIT(A) in deleting the disallowance of fresh claim of deductions u/s 80IA(4) of the Act made by the assessee in its Returns filed in response to Notices issued u/s 153A of the Act. He also filed a written submission dated 25.01.2023 reiterating the reasons advanced by ld. AO while making the impugned disallowance in the impugned assessment orders u/s 153A of the Act qua the years under appeal. Vide his written submissions, apropos the impugned grounds of appeal, ld. D/R has further stated as follows: “(i) That the Ld. CIT(A) has failed to appreciate that the A.O hasno power to entertain a claimmade by the Assessee otherwise than by filing a revised return – the Ld. DR has placed reliance on the judgment of the Hon’ble Supreme Court in Goetze (India) Ltd.Vs. CIT (2006) 284 ITR 323 (ii) That, since the Assessee had not filed the return of income within the due date prescribed/s 139(1) of the Act, the right course of action for the Assessee would be to file condonation of delay u/s 119(2)(b) & (c) of the Act with the Appropriate Authority for filing of return of income, which was not done. (iii) That the Hon’ble Jodhpur ITAT in the case of Suncity Alloys (P) Ltd. Vs. ACIT [2009] 124 TTJ 124 had held that the assessments or reassessments made pursuance to notice u/s 153A of the act were not de-novo assessments and therefore no new claim of deduction or allowance could be made by the assessee. (iv) That, in the case of Charchit Agarwal Vs. ACIT [2009] 34 SOT 348 (Del), the Hon’ble ITAT, Delhi Bench had held that since the search

Page 70 of 114

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. proceedings u/s 153A were for the benefit of the Revenue, the assessee was not permitted to value the closing stock for concluded years in a different manner adopted in earlier years and claim lower income. (v) That, in the case of K.P. Varghese Vs. ITO [1981] 131 ITR 597/7Taxman 13, the Hon’ble Supreme Court held that “it is well settled recognized rule of construction that a statutory provision must be so construed, if possible that absurdity and mischief may be avoided.” Hence, if an assessee is allowed to claim an allowance, deduction etc. u/s 153A not claimed earlier, then it would mean that even in cases where the appeal arising out of the completed assessment has been decided by the CIT(A), ITAT and the High Court, on a notice issued u/s 153A, the A.O will have power to undo what has been concluded upto the High Court. Any interpretation which leads to such conclusion has to be repelled/avoided as held by the Hon’ble Supreme Court in K.P Varghese (supra).” 86. We have heard rival contentions and perused the records placed before us and the relevant provisions of the Income-tax Act, 1961 and the case laws relied upon by both the sides. Reiterating the relevant facts in brief, in the instant case a search and seizure operation u/s 132(1) of the Act was conducted in the case of the assessee company on 20.09.2019. Pursuant to the said search, Notices u/s 153A of the Act were issued inter alia for the impugned AYs 2017-18, 2018-19 & 2019-20 on 04.02.2021 [authenticated (i.e., digitally signed) by ld. AO on 05.02.2021], requiring the assessee to furnish its Returns of Income for the said years within 10 days of service of such notices i.e., on or before 15.02.2021. In response to the Notices issued u/s 153A of the Act, the assessee furnished its Returns of Income on 13.02.2021 i.e., well within the time permitted under the Notices u/s 153A of the Act. Vide the said Returns of Income filed in response to Notices u/s 153A of the

Page 71 of 114

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. Act, the assessee claimed deductions u/s 80IA(4)(i) of the Act as per the details compiled in Tables supra. The original Returns of Income u/s 139(1) of the Act for the impugned assessment years were earlier filed by the assessee without claiming any deduction u/s 80IA of the Act. While making fresh claims for deduction u/s 80IA(4) of the Act in the Returns of Income filed in compliance to notices issued u/s 153A of the Act in respect of the impugned assessment years, the assessee filed the corresponding forms (being Report of Audit of the Eligible Undertaking from an Accountant) in Form 10CCB [as required u/s 80IA(7)] electronically on 12.02.2021 i.e., within the time permitted as per Notices issued u/s 153A of the Act (i.e., before 15.02.2021) [this aspect has been dealt with later on in this Order while deciding Ground No. 2]. The details of assessment year-wise Form 10CCB e-filed and the corresponding amount of deduction claimed by the assessee in respect of the corresponding eligible undertakings are tabulated at page 153 of ld. CIT(A)’s order. 87. Admittedly, as on the date of search i.e., 20.09.2019, the assessments for the impugned AYs 2017-18, 2018-19 & 2019-20 were pending on account of the following reasons: “(i) A.Y. 2017-18 – Assessment proceedings initiated vide Notice u/s 143(2) dated 24.09.2018 (i.e., issued prior to the date of search) were pending. (ii) A.Y. 2018-19 – The original return of income had been filed on 31.10.2018 and the time limit for issuance of Notice u/s 143(2) (available up to 30.09.2019) had not expired as on the date of search. Notice u/s 143(2) qua the original Return of Income filed u/s 139(1)

Page 72 of 114

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. on 31.10.2018 was issued after the date of search i.e., on 22.09.2019. Thus, assessment proceedings were pending. (iii) A.Y. 2019-20–As on the date of search, the time limit to furnish the original Return of Income was still available. The original Return of Income was filed after the date of search i.e., on 31.10.2019. Thus, the assessment proceedings were pending.” 88. The above facts are compiled in Table 5 (supra). Further, the fact that the assessments for the impugned AYs 2017-18 and 2018-19 were pending as on the date of search and were thus dropped by ld. AO after being abated due to the search operation on 20.09.2019 has also been admitted by ld. AO, vide letter no. 88 dated 07.07.2022 reproduced by ld. CIT(A) at page 228 of his order. The same is also evident from the Note-Sheet Entries for the said years, reproduced by ld. CIT(A) at 229-232 of his order stating that the above assessment years were selected for scrutiny assessment vide Notice u/s 143(2) of the Act dated 24.09.2018 and 22.09.2019 and the case had abated. Further, for AY 2019-20, the original Income-tax Return had not been filed as on the date of search as the ‘due date’ referred to u/s 139(1) of the Act had not expired. Thus, the proceedings for AY 2019-20 were also pending (i.e., were abated assessments). The above position has thus not been disputed by the Department. 89. Pursuant to the search and seizure operation in the case of the assessee, by virtue of operation of the second proviso to section 153A(1) of the Act, the pending assessments before ld. AO consequent to the original returns filed u/s 139(1) of the Act in respect of the impugned AYs 2017-18, 2018-19 & 2019-20 had

Page 73 of 114

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. abated. As per the provisions of Section 153A(1)(a) of the Act, the assessee was required to furnish fresh Returns of income for each of the impugned years in regard to which the Notices u/s 153A of the Act had been issued. As a result of abatement of pending assessment proceedings, only one fresh Assessment Order could be passed for each of the impugned assessment years on the basis of fresh Return of Income filed u/s 153A of the Act [and not on the basis of the original Returns filed earlier u/s 139(1) of the Act] by virtue of the provisions of section 153A(1)(b) of the Act and the first proviso thereto. 90. Even though the word “abate” has not been defined under the Income-tax Act, 1961, the said expression has been judicially explained vis-à-vis section 153A of the Act by the Hon’ble Courts in the several judgments, few of which are extracted hereunder: “(i) Pr. CIT vs. JSW Steel Limited [422 ITR 071; ITA No. 1934 of 2017, judgment dated 05/02/2020], it was held/averred, as follows, by the Hon’ble Bombay High Court: “8.3. The second proviso says that any assessment or re-assessment proceedings falling within the said period of six assessment years pending on the date of initiation of search under Section 132 or making of requisition under Section 132-A shall abate. The third proviso mentions that the Central Government may frame rules to specify such class or classes of cases in which the assessing officer shall not be required to issue notice for assessing or re-assessing the total income for the said six assessment years. 8.4. Reverting back to the second proviso what is to be noticed is that as per this proviso, any assessment or re-assessment in respect of any assessment year falling within the said period of six assessment years is pending on the date of initiation of search or making of requisition, those assessment or re-assessment proceedings shall

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I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. abate. In other words, pending assessment or re-assessment proceedings on the date of initiation of search or making of requisition shall abate. 8.5. That brings us to the crucial expression, which is ‘abate’. The ordinary dictionary meaning of the word ‘abate’, as per Concise Oxford English Dictionary, Indian Edition, is to reduce or remove (a nuisance). Derivative of abate is abatement. In Black’s Law Dictionary, Eighth Edition, ‘abatement’ has been defined to mean an act of eliminating or nullifying; the suspension or defeat of a pending action for a reason unrelated to the merits of the claim. In Supreme Court on Words and Phrases (19502008), “abating” has been defined to mean “an extinguishment of the very right of action itself”; to “abate”, as applied to an action, is to cease, terminate, or come to an end prematurely.” (ii) CIT (Central), Kanpur vs. Smt. Shaila Agarwal [2011 (11) TMI 213 –The Hon’ble Allahabad High Court has observed as under: “…………………11. The second proviso of Section 153A reads as under: "Provided further that assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years referred to in this section pending on the date of initiation of the search under section 132 or making of requisition under section 132A, as the case may be, shall abate." 12. A plain reading of Section 153A would show that where notice under this Section is issued as result of any search under Section 132, assessment or reassessment if any relating to any assessment year falling within the period of six assessment years referred to under Section 153, pending on the date of initiation of search under Section 132 or requisition under Section 132A shall abate. The words, pending on the date of initiation of search under Section 132, or making of requisition under Section 132A, as the case may be, has to be assigned simple and plain meaning. Where the assessment or re- assessment is finalised, there are no pending proceedings to be abated, and restored to the file of the assessing officer. To abate means to diminish or to take away. The word 'abatement' has been defined in the Concise Law Dictionary (P. Ramanatha Aiyer) as follows:

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I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. "Abatement. "Abatement" means, in respect of any chargeable accounting period, ending on or before the 31st day of March, 1947 a sum which bears to a sum equal to: (a) in the case of a company, not being a company deemed for the purposesof Section 9 to be a firm, six per cent of the capital of the company on the first day of the said period computed in accordance with Schedule II, or one lakh of rupees, whichever is greater, or (b) in the case of a firm having(i) nor more than two working partners, one lakh of rupees, or (ii) three working partners, one and a half of rupees, or (iii) four or more working partners, two lakh of rupees, or (c) in the case of a Hindu undivided family, two lakhs of rupees, or (d) in any other case, one lakh of rupees, The same proportion as the said period bears to the period of one year and, in respect of any chargeable accounting period beginning after the 31st day of March, 1947, such sum as may be fixed by the annual Finance Act. [Business Profits Tax Act (21 of 1947), S.2 (1)] Removal or destruction, (as) of a nuisance; failure; premature end, suspension or diminution, (as) of an action or of a legacy. The action of abating; being abated. [O.XXII, R.1, CPC (5 of 1908)]; decrease [S.12 (3) (b) (i), Specific Relief Act (47 of 1963)]. Of An Action Or Suit: In civil law an abatement of a suit is a complete termination of it. Abatement of a matter or cause is caused by the same becoming defective on account of the death of the parties materially interested. (Ency. of the Laws of England) A suspension or termination of proceedings for want of proper parties or due to some technical defect. The abatement of the main action abates proceedings ancillary or collateral to it. In Criminal Law: Abatement of proceedings connotes their termination without any decision on merits and without the assent of the prosecutor. (Ency. of the Laws of England) In Revenue Law: Abatement is a deduction from or refunding of duties on goods damaged during importation or in store." Page 76 of 114

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. 13. The word 'abatement' is referrable to something, which is pending alive, or is subject to deduction. The abatement refers to suspension or termination of the proceedings either of the main action, or the proceedings ancillary or collateral to it. The word is commonly used in the legislations, which provide for abatement of action/ suit; abatement of legacies; abatement of nuisance; and all actions for such nature, which have the pendency or continuance. The proceedings, which have already terminated are not liable for abatement unless statute expressly provides for such consequence thereof. 14. The word 'pending' occurring in the second proviso to Section 153A of the Act, is also significant. It is qualified by the words 'on the date of initiation of the search', and makes it abundantly clear that only such assessment or reassessment proceedings are liable to abate …………..….” 91. Viewed in the aforesaid light, the expression “abatement” of proceedings means termination of proceedings. Thus, with the abatement of the pending assessment proceedings for the impugned AYs 2017-18, 2018-19 & 2019-20 pursuant to the search action, the assessment proceedings were re-started/ re- initiated de-novo on the basis of fresh Returns of Income filed u/s 153A of the Act. In other words, the Returns of Income filed u/s 153A for the impugned assessment years were the subject of assessment for the Revenue for the first time in the case of abated assessment proceedings of the said years. Consequent to the notice issued u/s 153A of the Act, the earlier Returns of Income filed u/s 139 of the Act for the impugned years for the purpose of assessment which were pending on the date of search, were to be treated as non-est (i.e., a nullity) in law [see para 11 of the

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I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. judgment of the Hon’ble Bombay High Court in CIT vs. B.G. Shirke Construction Technology Ltd. (395 ITR 371)] 92. Upon a conspectus of section 153A(1)(a) of the Act, it is seen that it provides that “the provisions of this Act” [i.e., the provisions of Income-tax Act, 1961, which impliedly includes the deduction under Chapter VI-A], “shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139 of the Act” thus, implying that all other provisions of the Act (to the extent not inconsistent with the provisions of section 153A of the Act) shall apply to a Return filed in compliance with the Notice issued u/s 153A of the Act. The Explanation to section 153A(2) of the Act further, lays down that “save as otherwise provided in this Section, Section 153B of the Act and section 153C of the Act, all other provisions of this Act shall apply to assessment made under this section.” This, to our mind, clearly implies that for the purpose of making an assessment u/s 153A of the Act, ld. AO is mandatorily required to allow the legally tenable deductions, allowances, claims of expenses etc. which have been claimed by the Assessee in the Returns of Income filed u/s 153A of the Act. 93. The Hon’ble Courts and various benches of the Tribunal, in a plethora of cases have uniformly held that Return of Income filed in response to notice u/s 153A of the Act is to be considered as Return filed u/s 139 of the Act and for all other provisions of the Act, the Return u/s 153A of the Act will be treated as the original Return u/s 139 of the Act. Once ld. AO accepts the return filed u/s 153A of the Act, the original return under Section 139 of the Act Page 78 of 114

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. abates and becomes non-est. The relevant observations of the Hon’ble Courts in few such cases are reproduced hereunder for facility:

“(i) Kirit Dahyabhai Patel vs. ACIT [Tax Appeal No. 1181 of 2010, Tax Appeal No. 1182 to 1185 of 2010, judgment dated 03/12/2014 – The Hon’ble Gujarat High Court held as under: “13. Considering the facts and circumstances of the case and also considering the decisions relied upon by learned senior advocate for the appellant, we are of the considered opinion that the view taken by the Tribunal is erroneous. The CIT(A) rightly held that it is not relevant whether any return of income was filed by the assessee prior to the date of search and whether any income was undisclosed in that return of income. In view of specific provision of Section 153A of the I.T. Act, the return of income filed in response to notice under Section 153(a) of the I.T. Act is to be considered as return filed under Section 139 of the Act, as the Assessing Officer has made assessment on the said return and therefore, the return is to be considered for the purpose of penalty under Section 271(1)(c) of the I.T. Act and the penalty is to be levied on the income assessed over and above the income returned under Section 153A, if any.” (ii) Shrikant Mohta vs. CIT [ITAT No.19 & 20 of 2015, GA No.246 & 247 of 2015, judgment dated 25/06/2018] – The Hon’ble Calcutta High Court held as under: “The non obstante clause at the beginning of Section 153A (1) of the Act suspends, for the purpose and to the extent as indicated in such provision, the operation of several other provisions of the Act, including Section 139 and even Section 147 in course of any reassessment. In other words, when a search is initiated under Section 132 of the Act, the assessee is not required to file the assessee's return till such time that the assessee receives a notice under Section 153A(1)(a) thereof. Once such notice is received the liability fastens on the assessee to file the return within the reasonable time specified in the relevant notice. To boot, the second proviso to Section 153A(1) of the Act, insofar as it is material for the present purpose, mandates that any "assessment or reassessment ... relating to ... the relevant assessment year or Page 79 of 114

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. years ... pending on the date of initiation of the search under Section 132. ... shall abate". It goes without saying that since the search operations in this case were initiated on September 2, 2004, it was no longer necessary for this assessee to file his regular return by October 31, 2004 notwithstanding the mandate of Section 139(1) of the Act. The obligation to file the return remained suspended, in view of the clear opening words of Section 153A(1) of the Act, till such time that a notice was issued to him under clause (a) of such sub-section. If such is the meaning of Section 153A(1) of the Act, the operation of Section 139(3) of the Act qua the time available for filing a return in order to avail of the benefit of carrying forward any loss stands extended till a return is called for under Section 153A(1)(a) of the Act and such return is filed, provided the return is filed within the time indicated in the relevant notice under Section 153A(1)(a) of the Act. There can be no dispute to such being the effect of Section 153A(1)(a) of the Act….. The second question is answered thus: When search operations are conducted under Section 132 of the Act, the obligation of the assessee to file any return remains suspended till such time that a notice is issued for such purpose under Section 153A(1)(a) of the Act. If the return is filed by the assessee within the reasonable time permitted by such notice under Section 153A(1)(a) of the Act, such return would then be deemed to have been filed within the time permitted under Section 139 (1) of the Act for the benefit under Section 139(3) of the Act to be availed of by the assessee.” 94. This brings us to the conclusion that the provisions of the Act which would otherwise be applicable in case of a return filed in the regular course u/s 139(1) of the Act (including deductions under Chapter VI-A) would continue to apply in case of return filed u/s 153A of the Act even though the same may not have been claimed by the assessee in its original return of income u/s 139(1) of the Act.

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I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. 95. Ld. CIT(A) has referred to a catena of judgments in support of the proposition that the assessee is entitled to make a fresh claim of deduction, exemption, claim of expenses etc. in its Return of Income filed in response to notice u/s 153A of the Act which were not made in the Return of Income originally filed u/s 139 of the Act. The same have been enlisted by us earlier in this order. Upon going through the case laws on the subject cited by ld. CIT(A), we find that these sufficiently address the issue at hand and unanimously uphold the above proposition of law. We would like to quote few judgments rendered in support of the aforesaid proposition including those which directly deal with the allowability of fresh claim of deduction u/s 80IA of the Act in Returns of Income filed in response to notice u/s 153A of the Act despite the same not being made in the original Return of Income filed u/s 139 of the Act: “(i) PCIT vs. Vijay Infrastructure Limited [2017 (7) TMI 956- ITA No. 29 of 2016, judgment dated 12/07/2017] – The Hon’ble Allahabad High Court held as under: “3. It was admitted on the following substantial questions of law: "(i) Whether the Income Tax appellate Tribunal was justified in allowing the deduction u/s 80IA to the assessee on the basis of return filed after the issue of notice u/s 153A of the Act. "(ii) Whether the Income Tax Appellate Tribunal was justified under the facts and circumstances of the case in confirming the order of CIT (A) who has travelled beyond the statutory provision of Chapter VIA, u/s 80A(5) of the Income Tax Act, 1961 which clearly provides that if assessee fails to make a claim in his return of income of any deduction; no deduction shall be allowed to him thereunder".

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I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. 4. Tribunal has justified deduction under Section 80IA on the basis of return filed under Section 153A by observing that for the assessment year 2009-10 and onwards, the time for filing revised return has not expired and, therefore, claim for deduction under Section 80IA if not made earlier could have been made in the revised return. Once it could have been claimed in revised return under Section 139 (1), the same could have also been claimed under Section 153 (A). 5. Sri Manish Misra, learned counsel for appellant contended that return under Section 153 (A) is not a revised return but it is a original return. If that be so, then in our view, deduction under Section 80IA, if otherwise admissible, always could have been claimed and we are not shown any authority otherwise to take a different view. Therefore, in both way, deduction under Section 80IA, if otherwise admissible, could have been claimed by Assesses. Hence, we answer both the aforesaid questions in favour of Assesses and against Revenue affirming the view taken by Tribunal. …………………………………. In the result, appeal is dismissed.” The SLP filed by the Department against the aforesaid Judgment of the Hon’ble Allahabad High Court was dismissed by the Hon’ble Supreme Court of India [SLP (Civil) Diary No. 10863 of 2018, order Dated 13/04/2018] (ii) DCIT vs. MBL Infrastructure Limited [2020 (1) TMI 457 - ITAT KOLKATA; IT(SS) No.77/Kol/2016 & C.O No.22/Kol/2019 & IT(SS) No.78/Kol/2016 & IT(SS) No.46/Kol/2016, order dated 23/12/2019]–The Kolkata ITAT has held as under: “17. We notice from a perusal of the case file in former assessment year 2010-11 that assessee had filed its original return u/s 139(1) of the Act on 13.10.10. The department carried out a search in question in its office and other business premises on 28-29/10/2010. The Assessing Officer issued section 153A notice dated 20.07.2011 for assessment years 2005-06 to 2010-11 asking for return of income within 15 days of service thereof. This notice stood served on the very day itself. 18. The assessee filed its post-search return on 30.09.11 reiterating the earlier income (supra). It had admittedly not claimed the impugned section 80IA deduction in either of these two returns. The assessee rather chose to file revised return/computation dated 15.03.2013 Page 82 of 114

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. claiming section 80IA deduction for the first time inter alia pleading therein that the very claim stood accepted in assessment year 2005- 06 to 2006-07 in search assessment frames u/s 153A, section 80IA explanation had not been taken into account therein, some of its projects had not been considered as eligible for this relief due to amendment introduced vide Finance Act No.2 of 2009 with retrospective effect from 01.04.2000 and that it had finally considered itself as eligible for the deduction in question as per various judicial pronouncements at that point of time. 19. The Assessing Officer’s assessment order dated 22.03.13 declined assessee’s section 80IA deduction claim on multiple grounds. He observed that this relief could not be allowed in absence of a revised return as per Goetze (India) Ltd. Vs. CIT [2006] 284 ITR 323 (SC). That the assessee had also filed a revised return on the same day which was not valid since submitted beyond a period of one year from end of the relevant assessment year. The Assessing Officer went on to quote date of section 153A notice i.e., on 20.07.2011 asking for return within 15 days of service. He observed that assessee’s return; which was required to be filed on or before 11.08.11 inclusive of 15 working days; came on 30.09.2011 only. He held that the said return was also a belated one u/s 139(1) which could not be revised. And that section 234A(1) interest provision was also indicative that section 139(1) and section 153 return are identically meted. Case law (1996) 86 TAXMAN 122(SC) Jagdish Chandra Sinha vs. CIT that only a return u/s 139(1) and (2) could be revised u/s 139(5) and not that submitted u/s 139(4) of the Act was also quoted. The Assessing Officer thus ruled that the assessee’s twin recourse(s) adopted in filing both revised return as well as computation suggested sheer confusion on its part as well. ……. 24. Mr. Tulsiyan strongly supported the CIT(A)’s action deleting the impugned deduction disallowance. He starts with admitted facts regarding the assessee having filed section 139(1) return on time followed by search, section 153A notice, its service date, time limitation of 15 days post-search return, revised computation (supra). His case is that the Assessing Officer has himself accepted the assessee’s post-search return as a valid one and therefore, the same

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I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. cannot be allowed to be held as an invalid one as per Revenue’s stand…… 26. We have given our thoughtful consideration to the above rival contentions. We reiterate that the assessee’s regular return u/s 139(1) of the Act came on 13.10.10 followed by department’s search action dated 28/29.10.10 and issuance of section 153A notice dated 20.07.11 seeking return within 15 days which stood served on the very day. The assessee furnished his section 153A return on 30.09.11. We find no substance in either of the Revenue’s technical as well as legal arguments. It emerges first of all that the impugned section 80IA deduction claim on merits, is already covered by the tribunal common order (supra) in assessment years 2005-06 to 2009- 10 dated 01.05.2019 that it is a developer having undertaken business risk in similar infrastructural projects. Revenue’s pleadings in the instant appeal nowhere pinpointed any distinction in law and on facts in all these assessment years. It is further noted that the assessee has been deployed its fixed assets and also paid retention money to the payers concerned. All this sufficiently indicates that the assessee’s payers nowhere undertook any risk in the corresponding projects. 28. Coming to technical aspect involved in the instant lis regarding the filing of belated revised return, we find that hon’ble apex court’s judgment in NTPC (supra) settled the law long back that if the assessee is a legally entitled for a deduction claim which is not taxable and the corresponding claim can also be allowed to be raised for the first time even in section 254 proceedings. It has also come on record that the assessee had very well explained the reasons of having not raised the impugned scheme due to the corresponding legislative amendments in section 80IA followed by CBDT’s explanatory memorandums. This tribunal in (2012) 22 taxmann.com 2(Hyderabad) ITO vs. S. Venkataiah also holds that an assessee’s legally allowable claim which could not be raised owing to circumstances beyond its control and pressed later on by way of belated return, could not be declined on account of mere technicality. 29. Coming to the statutory aspect viewed from various legislative developments right from “block” to “search assessments” applicable up to 31.05.03 and w.e.f. 01.06.03 onwards; respectively, we find that the same sufficiently answer the Revenue’s arguments. The

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I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. former scheme of block assessment in section 158BCA(i) and (ii) read with 2nd proviso thereto made it clear that a person; who had furnished a return under this clause, would not be entitled to file a revised return. The legislature has nowhere employed such a restrictive expression in the new scheme of search assessment in section 153A to section 153C applicable w.e.f. 01.06.03. More particularly u/s 153A(1)(a) reads that “the provisions of this Act shall so far as the case may be applied accordingly as if such return was furnished u/s 139” meaning that a return filed u/s 153A is treated as that filed u/s 139 of the Act only. Same analogy therefore applies to a revised return covered under the said general scheme of the Act only. We therefore hold that the Revenue’s emphasis seeking to delete assessee’s return itself as an invalid one does not deserve to be accepted.” (iii) Pr. CIT vs. JSW Steel Limited [422 ITR 071; ITA No. 1934 of 2017, judgment dated 05/02/2020] – The Hon’ble Bombay High Court has held as under: “2. The assessee is a widely held public limited company engaged in various activities including production of sponge iron, galvanized sheets and cold-rolled coils through its steel plants located at Dolve and Kalmeshwar in Maharashtra. The assessee filed original return of income on 30.09.2008 for Assessment Year 2008-09 declaring loss at ₹ 104,17,70,752/- under the provisions of Section 139(1) of the said Act. The assessee’s case was selected for scrutiny under Section 143(2) of the said Act on 03.09.2009. 3. During pendency of the assessment proceedings, a search was conducted under Section 132 of the said Act on the ISPAT Group of companies on 30.11.2010. 3.1. Following the search, notice under Section 153A of the Act was issued. In response, assessee filed return of income declaring total loss at ₹ 419,48,90,102/- on 29.03.2012. In this return of income assessee made a new claim for treating gain on pre-payment of deferred VAT/sales tax on Net Present Value (NPV) basis for an amount of ₹ 318,10,93,993/- as “capital receipt”. 4. This new/fresh claim of assessee was disallowed by the Assessing Officer (hereinafter referred to as “AO) while finalising assessment under Section 143(3) read with Section 153A of the said Act vide the

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I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. order dated 25.03.2013 by considering the same as “revenue receipt” instead of “capital receipt”. The reasoning given by the AO was that the assessee had availed of sales tax deferral scheme and the State Government had permitted premature re-payment of deferred sales tax liability at the NPV basis. Therefore, according to the AO, assessee treated this as capital receipt even though the same was credited to the assessee’s profit and loss account being difference between the deferred sales tax and its NPV. 5. However, the primary question that arose before the AO was whether the claim which was not made in the earlier original return of income filed under Section 139(1) of the said Act, could be filed and considered in the subsequent return filed by the assessee in pursuance to notice under Section 153A of the said Act (which was consequent to search action conducted under Section 132 of the said Act). AO held that the assessee could not raise a new claim in the return filed under Section 153A which was not raised in the original return of income filed under Section 139(1). Thereafter, the claim was disallowed and was treated as “revenue receipt” 5.1. By order dated 15.04.2013, the first appellate authority i.e. the Commissioner of Income Tax (Appeals) (hereinafter referred to as “CIT(A)”) upheld the order passed by the A.O. In further appeal, the I.T.A.T., however, by the impugned order dated 28.09.2016, allowed the assessee’s appeal and set aside both the orders passed by the A.O. and C.I.T.(A). 5.2. Hence the appeal by the revenue. …….. 6.1. Mr. A.R.Malhotra drew our attention to the proposed question of law in the present appeal which reads thus : “Whether on the facts and in the circumstances of the case and in Law, the Hon’ble Tribunal was justified in holding that in the return of Income filed u/s. 153 A of the I.T. Act, 1961 or even during the course of assessment proceedings undertaken u/s. 153A of the I.T. Act, 1961 the assessee can lodge new claims, deduction or exemption or relief which remained to be claimed in regular return of income?” ……..

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I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. 6.5. He, however, fairly referred to the following two cases delivered by this Hon’ble Court, viz; CIT Vs Continental Warehousing Corporation (Nhava Sheva) Ltd. (2015) 374 ITR 645 (Bom) and DCIT Vs Eversmile Construction Co. Pvt. Ltd. 65 DTR 39 in support of the proposition that the assessee was entitled to make a fresh claim in the return filed in pursuance to initiation of proceedings under Section 153A of the Act which were referred to by the Tribunal in the impugned order. This stand of Mr. Malhotra is appreciated. ….. 8. At the outset, we may advert to Section 153-A of the Act. It deals with assessment in case of search or requisition. Sub-section (1) is relevant. It says that notwithstanding anything contained in Sections 139, 147, 148, 149, 151 and 153, in the case of a person where a search is initiated under Section 132 or books of account, etc. are requisitioned under Section 132-A, after 31.05.2003, the assessing officer shall - (a) issue notice to such person for furnishing return of income in respect of each assessment year falling within six assessment years, within such time as may be specified and upon such return of income being filed, the provisions of the Act shall apply as if such return were a return required to be furnished under Section 139; and (b) assess or re-assess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made. 8.1. In other words, Section 153-A(1) provides that where a person is subjected to a search under Section 132 or his books of accounts, etc. are requisitioned under Section 132-A after 31.05.2003, the assessing officer is mandated to issue notice to such person to furnish return of income in respect of each assessment year falling within six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition is made. Such returns of income shall be treated to be returns of income furnished under Section 139. Once returns are furnished, income is to be assessed or re-assessed for the six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made. Thus, once Section 153-A(1) is invoked, assessment for 6 assessment years immediately preceding the

Page 87 of 114

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. assessment year in which search is conducted or requisition is made becomes open to assessment or reassessment. Two aspects are crucial here. One is use of the expression “notwithstanding” in sub- section (1); and secondly, that returns of income filed pursuant to notice under Section 153-A (1)(a) would be construed to be returns under Section 139. The use of non obstante clause in sub-section (1) of Section 153-A i.e., use of the expression “notwithstanding” is indicative of the legislative intent that provisions of Section 153-A(1) would have overriding effect over the provisions contained in Sections 139, 147, 148, 149, 151 and 153. 8.2. Having noticed the above, we may also refer to the second and the third proviso to Section 153-A(1). For the sake of convenience, the second and third proviso to Section 153A(1) of the said Act which is relevant is reproduced below and reads thus : Provided further that assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years referred to in this [sub-section] pending on the date of initiation of the search under section 132 or making of requisition under section 132A, as the case may be, shall abate: [Provided also that the Central Government may by rules made by it and published in the Official Gazette (except in cases where any assessment or reassessment has abated under the second proviso), specify the class or classes of cases in which the Assessing Officer shall not be required to issue notice for assessing or reassessing the total income for six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition is made. 8.3. The second proviso says that any assessment or re-assessment proceedings falling within the said period of six assessment years pending on the date of initiation of search under Section 132 or making of requisition under Section 132-A shall abate. The third proviso mentions that the Central Government may frame rules to specify such class or classes of cases in which the assessing officer shall not be required to issue notice for assessing or re-assessing the total income for the said six assessment years. 8.4. Reverting back to the second proviso what is to be noticed is that as per this proviso, any assessment or re-assessment in respect of

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I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. any assessment year falling within the said period of six assessment years is pending on the date of initiation of search or making of requisition, those assessment or re-assessment proceedings shall abate. In other words, pending assessment or re-assessment proceedings on the date of initiation of search or making of requisition shall abate. 8.5. That brings us to the crucial expression, which is ‘abate’. The ordinary dictionary meaning of the word ‘abate’, as per Concise Oxford English Dictionary, Indian Edition, is to reduce or remove (a nuisance). Derivative of abate is abatement. In Black’s Law Dictionary, Eighth Edition, ‘abatement’ has been defined to mean an act of eliminating or nullifying; the suspension or defeat of a pending action for a reason unrelated to the merits of the claim. In Supreme Court on Words and Phrases (19502008), “abating” has been defined to mean “an extinguishment of the very right of action itself”; to “abate”, as applied to an action, is to cease, terminate, or come to an end prematurely. 9. Therefore, from a critical analysis of the provisions contained in Section 153A(1) of the Act more particularly the key expressions as referred to above, it is evident that assessments or reassessments pending on the date of initiation of search would stand abated. Return of income filed by the person concerned for the six assessment years in terms of Section 153-A(1)(a) would be construed to be a return of income under Section 139 of the Act. ….. 12. In this perspective we are called upon to decide the question projected by the revenue as substantial question of law arising from the order of the Tribunal. We have considered the grounds of appeal and the orders passed by the AO, CIT(A) and the Tribunal with the assistance of learned counsel for the Appellant. From a reading of the above it is clear that Section 153A of the said Act, provides for the procedure for assessment in search cases. As alluded to hereinabove, the said section starts with a non-obstante clause stating that it is, “notwithstanding anything contained in section 147, 148 and 149………..” Further sub Section(a) of Section 153A(1) provides for issuance of notice to the persons searched under Section 132 of the Act to furnish a return of income. However, the second proviso to Section 153 A of the said act makes it clear that assessment relating Page 89 of 114

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. to any assessment year filed within a period of the six assessment years pending on the date of search under Section 132 of the Act shall abate. Thus if on the date of initiation of search under Section 132, any assessment proceeding relating to any assessment year falling within the period of the said six assessment years is pending, the same shall stand abated and the Assessing Authority cannot proceed with such pending assessment after initiation of search under section 132 of the said Act. 13. In the present case, search was conducted on the assessee on 30.11.2010. At that point of time assessment in the case of assessee for the assessment year 2008-09 was pending scrutiny since notice under Section 143(2) of the Act was issued and assessment was not completed. Therefore, in view of the second proviso to Section 153A of the said Act, once assessment got abated, it meant that it was open for both the parties, i.e. the assessee as well as revenue to make claims for allowance or to make disallowance, as the case may be, etc. That apart, assessee could lodge a new claim for deduction etc. which remained to be claimed in his earlier/ regular return of income. This is so because assessment was never made in the case of the assessee in such a situation. It is fortified that once the assessment gets abated, the original return which had been filed looses its originality and the subsequent return filed under Section 153A of the said Act (which is in consequence to the search action under Section 132) takes the place of the original return. In such a case, the return of income filed under Section 153A(1) of the said Act, would be construed to be one filed under Section 139(1) of the Act and the provisions of the said Act shall apply to the same accordingly. If that be the position, all legitimate claims would be open to the assessee to raise in the return of income filed under Section 153A(1). ……. 16. From the above we conclude that in view of the second proviso to Section 153A(1) of the said Act, once assessment gets abated, it is open for the assessee to lodge a new claim in a proceeding under Section 153A(1) which was not claimed in his regular return of income, because assessment was never made/finalised in the case of the assessee in such a situation.”

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I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. 96. Respectfully following the above judgments, we hold that pursuant to the search & seizure operation conducted in the case of the Assessee on 20.09.2019, since the pending assessment proceedings for the impugned AYs 2017-18, 2018-19 & 2019-20 had got abated by virtue of application of the second proviso to section 153A(1) of the Act, it was open for the Assessee to make a legitimate claim of deduction u/s 80IA(4) of the Act which had remained unclaimed in the earlier Returns filed for the impugned years (AY 2017-18 & AY 2018-19) u/s 139(1) of the Act and for AY 2019-20 for which no return was filed due to initiation of search before the due date of filing return for AY 2019-20. This was because the assessment was never made in the case of the Assessee in respect of the impugned assessment years. As uniformly opined in the above cited cases, once assessment gets abated, the original return which had been filed u/s 139 of the Act becomes non-est and loses its originality and subsequent fresh returns filed u/s 153A of the Act takes place of the original return and forms the sole basis from framing the de-novo assessments re-started/ re-initiated u/s 153A of the Act. On a perusal of section 153A(1)(a) of the Act read with the Explanation appended to section 153A(2) of the Act, it is seen that all other provisions of the Income-Tax Act, 1961 (which includes deductions under Chapter VI-A) to the extent not inconsistent with sections 153A, 153B and 153C of the Act shall equally apply to the Returns filed in compliance to notices issued u/s 153A of the Act and the subsequent assessments framed u/s 153A of the Act on the basis of such Returns filed u/s 153A of the Act. In the instant case, since Page 91 of 114

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. the Returns of Income filed u/s 153A(1) of the Act for the impugned assessment years substituted the original Returns filed u/s 139(1) of the Act, the said Returns u/s 153A(1) of the Act would be construed as the one filed u/s 139(1) of the Act and as specifically laid down u/s 153A(1)(a) of the Act, all the provisions of the Act [including Chapter VI-A and the impugned deduction u/s 80IA(4) of the Act] would apply to such Returns u/s 153A of the Act and the assessments u/s 153A of the Act framed pursuant thereto. We are, thus, of the considered view that the assessee in the instant case was entitled to all legitimate claims of deduction, including its claim u/s 80IA(4) of the Act, in its Returns filed pursuant to Notices issued u/s 153A for the impugned A.Ys although the same were not claimed in its original Returns u/s 139 of the Act. 97. Reverting to the various counter-arguments/assertions made by ld. D/R vide his written submissions dated 25.01.2023, it is stated that insofar as the reliance placed by ld. D/R on the judgment rendered by the Hon’ble Supreme Court in the case of Goetze India Ltd. Vs. CIT (2006) 284 ITR 323 is concerned, we find that the said judgment was rendered on completely incongruent set of facts i.e., in the context of deciding whether an assessee could amend a return filed by him for making a claim for deduction by way of a letter before ld. AO other than by filing a revised return in the course of normal assessment proceedings (and not proceedings u/s 153A of the Act pursuant to a search action). On the said question, the Hon’ble Apex Court ordained that ld. AO had no power to entertain a claim for deduction not made in the return

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I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. of income otherwise than by filing a revised return. The aforesaid judgment is clearly inapplicable to the disparate set of facts in the present case wherein pursuant to the search and seizure operations u/s 132(1), the original returns of income for the impugned assessment years [wherein no claim of deduction had been made u/s 80IA(4) of the Act] had become non-est (i.e., rendered to a nullity) and the fresh returns filed u/s 153A of the Act [wherein deductions had been claimed afresh u/s 80IA(4) of the Act] had substituted and taken place of the original returns filed u/s 139(1) of the Act. Thus, unlike the factual matrix in the case of Goetze India Ltd. (supra), the present case does not involve any request made by the assessee for allowing fresh claims of deductions not claimed in the original return filed u/s 139(1) of the Act via a letter before ld. AO, but claims of legally tenable deductions in Returns filed u/s 153A of the Act, which substituted the original Returns filed earlier u/s 139(1) of the Act after such Returns u/s 139(1) of the Act and the pending assessment proceedings pursuant thereto had abated/ terminated and rendered to a nullity/ had become non-est in view of the second proviso to 153A(1) of the Act. Thus, as distinguished from the judgment rendered in context of the dissimilar factual backdrop in case of Goetz India Ltd. (supra), in our considered view, by virtue of the operation of section 153A(1)(a) of the Act, the assessee, in the instant case is entitled to claim all legally tenable deductions in Returns filed afresh u/s 153A of the Act as if such Returns were Returns furnished u/s 139 of the Act.

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I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. 98. Next, the contention of ld. D/R to the effect that since the Returns wherein the impugned deductions u/s 80IA(4) of the Act had been claimed were not filed within the time allowed u/s 139(1) of the Act, the right course of action would be to file condonation of delay u/s 119(2)(b) and (c) of the Act - also to our mind does not hold much substance. It is a fact on record that the Returns u/s 153A of the Act were duly filed within the time permitted in the Notices issued u/s 153A of the Act and since the said Returns u/s 153A of the Act substituted the original Returns filed u/s 139(1) of the Act, the same would be deemed to have been filed within the time permitted u/s 139(1) of the Act. We derive support to our aforesaid line of reasoning from the judgment rendered by the Hon’ble Kolkata High Court in the case of Shrikant Mohta vs. CIT [ITAT No.19 & 20 of 2015, GA No.246 & 247 of 2015, judgment dated 25/06/2018] wherein the Hon’ble High Court held as under: “The second question is answered thus: When search operations are conducted under Section 132 of the Act, the obligation of the assessee to file any return remains suspended till such time that a notice is issued for such purpose under Section 153A(1)(a) of the Act. If the return is filed by the assessee within the reasonable time permitted by such notice under Section 153A(1)(a) of the Act, such return would then be deemed to have been filed within the time permitted under Section 139 (1) of the Act for the benefit under Section 139(3) of the Act to be availed of by the assessee.” 99. Thus, the Returns u/s 153A of the Act wherein the impugned deductions u/s 80IA(4) of the Act have been claimed [and which substitute the original returns u/s 139(1) of the Act] are not

Page 94 of 114

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. delayed and hence the question of filing any condonation of delay does not arise. 100. Next, ld. D/R’s reliance on the judgment of the Hon’ble Jodhpur Bench of the ITAT in the case of Suncity Alloys (P) Ltd. Vs. ACIT [2009] 124 TTJ 124 to the effect that assessments or reassessments made pursuant to notice u/s 153A of the Act are not de-novo assessments and therefore no new claim of deduction or allowance can be made by the assessee is also misplaced. The judgment in the said case was rendered in context of completed assessment proceedings i.e., unabated assessment years which are not covered under the second proviso to Section 153A(1) of the Act. In case of completed/unabated assessment proceedings i.e., where assessment or reassessment proceedings have already been completed and assessment orders have been passed determining the assessee’s total income prior to the date of search, such orders shall subsist since there is no question of any abatement since no proceedings are pending. In such a case, ld. AO will assess or reassess the income of the assessee strictly based on incriminating material found during the course of search or requisition i.e., compute the undisclosed income based on incriminating material and simply aggregate it with the income already assessed in case of completed assessment. It was in this context that the Hon’ble Jodhpur Bench held that assessments or reassessments pursuant to notice u/s 153A of the Act in case of unabated assessment proceedings were not de-novo assessments. The said proposition, however, does not apply to abated proceedings in respect of

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I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. pending assessment where the original assessment initiated on the basis of the original return filed u/s 139 of the Act terminates/abates and the entire assessment is re-initiated/re- started afresh on a de-novo basis on the basis of Return filed u/s 153A of the Act. Even in the context of completed/unabated assessment proceedings, it may be noted that a contrary view was taken by the Hon’ble Hyderabad ITAT in the case of DCIT vs. Megha Engineering & Infrastructure Ltd. [607/Hyd/ 2016 (AY 2010-11), 608/Hyd/ 2016 (AY 2011-12), 609/Hyd/ 2016 (AY 2012-13), 610/Hyd/ 2016 (AY 2013-14), 1375/Hyd/ 2016 (AY 2014-15) & 1540/Hyd/ 2016 (AY 2015-16), wherein even in context of completed/unabated assessments, the Hon’ble Tribunal opined that the assessee was entitled to claim deductions u/s 80-IA(4) of the Act on eligible projects afresh in Return filed u/s 153A of the Act although the same had not been claimed in the original Return filed u/s 139 of the Act and the original assessments had been completed on the said basis. In the face of contradictory views taken by the co-ordinate benches of the Tribunal in the above two cases, we are inclined to follow the view which favours the Assessee in consonance with the judgment rendered by the Hon’ble Apex Court in the case of CIT vs. Vegetable Products Ltd. (88 ITR 192), wherein the Hon’ble Court held that when two interpretations are possible, one in favour of the assessee must be adopted. 101. Further, the reliance placed by ld. D/R on the judgment rendered by the Hon’ble Delhi ITAT in the case of Charchit Agarwal vs. ACIT [2—9] 34 SOT 348 (Del) also does not lend much credence

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I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. to the Revenue’s case. The said judgment was rendered in the context of specific and distinct set of facts and circumstances of that case vis-à-vis valuation of closing stock, wherein the very basis of valuation claimed in Returns filed u/s 153A of the Act was under challenge. The said facts are missing in the present case, making the ratio inapplicable to the present case. Further, insofar as the observation of the Delhi Bench in the above case to the effect that - fresh claims cannot be made u/s 153A of the Act which have the result of lowering income returned earlier considering that search proceedings are for the benefit of the Revenue - is concerned, it is seen that other benches of this Tribunal have taken a divergent view in this regard. To cite a few such judgments: “(i) Srinivas Rama Raju vs. DCIT [2016 (10) TMI 174 - ITAT Hyderabad; TA.No.975/Hyd/2015, order dated 19/08/2016]: The Hon’ble ITAT Hyderabad held as under: “11. We have carefully considered the rival submissions and perused the record. As could be noticed from the grounds of appeal and the arguments advanced by the Learned Counsel for the assessee, the main contention is not with regard to abatement of proceedings under section 153A of the Act. The limited issue is with regard to claim of deduction in response to notice issued under section 153A of the Act even if such claim was not made in the original return. In fact, the Ld. CIT(A) has not disputed that evidence is already on record but refused the claim of deduction on the limited ground that provisions of section 153A are meant for the benefit of the Revenue and not for the assessee. As we have pointed out in the preceding paragraphs, the ITAT Chennai Bench, Pune Bench and the Bombay Bench have considered identical issue in detail and observed that once return of income is filed under section 153A of the Act, it has to be considered as a return of income filed under section 139 of the Act and all other provisions would apply as though it is a return of income filed under section 139 which includes reconsideration of any deduction permissible under the law. It is also not in dispute that the assessee Page 97 of 114

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. has placed all the facts on record even in the original return but did not claim set off of the expenditure and while declaring additional income, in response to the notice issued under section 153A of the Act, though he stuck to the income declared, set off was claimed as per law which should not be denied, overlooking the fact that the return of income filed under section 153A of the Act should be deemed to be the return filed under section 139 of the Act; irrespective of the question as to whether it is for the benefit of the assessee or department, the assessee is entitled to claim deduction of interest expenditure, particularly when the facts are already on record. The same opinion was echoed by all the Benches of the ITAT and thus the ratio of the decision of the Hon’ble Supreme Court, which was in this context of Section 147 of the Act, should not be imported into the proceedings under section 153A of the Act, more particularly when the claim of the assessee is not a fresh claim un-connected to the income declared but the claim was linked with the income declared. Having regard to the circumstances of the case, we are of the view that the Assessing Officer as well as the Ld. CIT(A) were not justified in disallowing the claim of deduction of ₹ 24,57,965. We direct the Assessing Officer to allow the claim of deduction and recompute the income accordingly.” (ii) ACIT vs. VN Devadoss (2013) 57 SOT 67 (Chennai) (URO), ITAT: The Chennai Bench addressed the issue as to whether a search under section 132 is conducted for the benefit of the assessee or department. It also took note of the fact that returns are not voluntarily filed by the assessee within the due date prescribed under section 139(1) but they are filed after the search operation was conducted but before the issuance of notice under section 153A of the Act. In para28 of its order, the Bench has observed as under: “28. Next we have to examine the decision of the Commissioner of Income tax(Appeals) rendered on the alternate ground raised by the assessees before him. The alternate ground was whether the returns filed in response to notices issued under section 153A can be taken as returns filed within the time limit stipulated under section 139(1). The Commissioner of Income-tax (Appeals) has decided in favour of the assessees holding that the returns filed under section 153A are to be treated as returns filed under section 139(1) within the time allowed under the statute.”

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I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. 102. Further, the proposition that fresh claims of deductions can be made in returns filed u/s 153A of the Act even though such deductions were not claimed in the original returns has been decided in favour of the assessee in a plethora of judgments by the Hon’ble High Courts and various benches of this Tribunal across the country (cited earlier) and hence is no longer res integra. 103. Next, the observation of ld. D/R that if an assessee is allowed to claim an allowance or deduction u/s 153A of the Act not claimed earlier, it would mean that even in cases where the appeal arising out of completed assessment has been decided in cases by ld. CIT(A), ITAT and the High Courts, on a notice issued u/s 153A of the Act, ld. AO would have power to undo what has been concluded does not hold good for the pending/abated assessment proceedings for the impugned years under consideration. Since the proceedings for the impugned years were pending i.e., not concluded as on the date of search, there is no question of any concluded assessment orders for the impugned years or issues arising therefrom which have been decided by the appellate authorities or the Hon’ble High Court and are sought to be undone by filing of Returns u/s 153A of the Act. As stated earlier, in the case of pending assessment proceedings, the original assessment initiated (and not concluded) on the basis of the original return filed u/s 139 of the Act terminates/abates and the entire assessment is re-initiated/re-started afresh on a de-novo basis on the basis of Return filed u/s 153A of the Act wherein all legally tenable deductions are allowable. As held by the Hon’ble Bombay

Page 99 of 114

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. High Court in Pr. CIT vs. JSW Steel Limited [422 ITR 071; ITA No. 1934 of 2017, judgment dated 05/02/2020] - “in view of the second proviso to Section 153A(1) of the said Act, once assessment gets abated, it is open for the assessee to lodge a new claim in a proceeding under Section 153A(1) of the Act which was not claimed in his regular return of income, because assessment was never made/finalised in the case of the assessee in such a situation.” [at para 16 of the order] 104. In light of the aforesaid discussions, we have no hesitation in holding that the Assessee in the instant case was very well within its rights to claim deductions u/s 80IA(4) of the Act in its Returns filed in compliance to Notices issued u/s 153A of the Act in respect of pending/abated assessment proceedings for the impugned AYs 2017-18, 2018-19 & 2019-20 although such deductions were not made in the original Returns filed u/s 139(1) of the Act (prior to search) and such claims were also not raised vide revised Returns of Income filed u/s 139(5) of the Act. 105. In view of the above, Ground Nos. 1 & 3 of the Department’s Appeal are dismissed. 106. Ground no. 2 of the departmental appeal challenges the deletion of disallowance of deductions claimed by the assessee u/s 80IA of the Act in returns filed pursuant to notice issued u/s 153A of the Act on the ground that the assessee did not furnish audit report and particulars for claim of deduction u/s 80IA of the Act within the specified time.

Page 100 of 114

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. 107. The relevant ground reads as under: “2. The Ld. CIT(A) erred in procedural law when the assessee did not furnish requisite audit report and particulars for the claim for deduction u/s 80IA within the specified time.” 108. In the instant case, as stated above, in response to Notices issued u/s 153A of the Act dated 04.02.2021 (authenticated by ld. AO on 05.02.2021) for the impugned AYs 2017-18, 2018-19 and 2019-20, the Assessee had filed its Returns of Income u/s 153A of the Act on 13.02.2021 i.e., within the time limit of 10 days permitted in the Notices issued u/s 153A of the Act. Further, prior to e-filing of the aforesaid Returns of Income, the assessee had electronically furnished the Report of Audit (as required u/s 80IA(7) of the Act) in Form 10CCB in support of its claim of deduction u/s 80IA(4)(i) of the Act in respect of the impugned years (as per details set out in the Table at page 383 of ld. CIT(A)’s order) on 12.02.2021. Thus, the corresponding Reports of Audit (in Form 10CCB) for claiming deduction u/s 80IA(4)(i) of the Act in respect of the impugned assessment years were electronically furnished by the assessee before the expiration of the time permitted to the Assessee to furnish Income Tax Returns in compliance with Notice u/s 153A of the Act. 109. Since the issue at hand pertains to Section 80IA(7) of the Act, the corresponding provisions (insofar as relevant for the impugned assessment years) are reproduced hereunder for reference: “(7) The deduction under sub-section (1) from profits and gains derived from an undertaking shall not be admissible unless the accounts of the undertaking for the previous year relevant to the Page 101 of 114

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. assessment year for which the deduction is claimed have been audited by an accountant, as defined in the Explanation below subsection (2) of section 288, and the assessee furnishes, along with his return of income, the report of such audit in the prescribed form duly signed and verified by such accountant.” 110. Further, the provisions of Section 80AC of the Act, which provides that “Deduction not to be allowed unless Return is furnished” are also being reproduced hereunder for reference: “80AC. Where in computing the total income of an assessee of any previous year relevant to the assessment year commencing on or after–– (i) the 1st day of April, 2006 but before the 1st day of April, 2018, any deduction is admissible under section 80-IA or section 80-IAB or section 80-IB or section 80-IC or section 80-ID or section 80-IE; (ii) the 1st day of April, 2018, any deduction is admissible under any provision of this Chapter under the heading “C.-Deductions in respect of certain incomes”, no such deduction shall be allowed to him unless he furnishes a return of his income for such assessment year on or before the due date specified under sub-section (1) of section 139.]” 111. Apropos the above ground of appeal, ld. AO in the impugned assessment orders u/s 153A of the Act for AYs 2017-18, 2018-19 & 2019-20 has averred that since deductions u/s 80IA(4)(i) of the Act for the impugned years were not claimed by the assessee in its original Returns of income filed u/s 139(1) of the Act and the Forms 10CCB for the impugned years were not filed within the due date of furnishing the returns of income u/s 139(1) of the Act, the said Forms 10CCB filed on 12.02.2021 were not only much beyond the due date but also generated 18 months after the date of search operation conducted in the case of the assessee on 20.09.2021.

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I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. Thus, as per ld. AO, the assessee’s claim of deduction u/s 80IA(4) of the Act was not allowable as the Assessee had failed to furnish the requisite audit report in Form 10CCB within the time specified u/s 80IA(7) of the Act. 112. On appeal, ld. CIT(A) vide his impugned appellate order u/s 250 of the Act has held that the Returns of Income filed in compliance with Notices issued u/s 153A of the Act substitutes the original Income Tax Returns [filed u/s 139(1) of the Act] and further since these Returns of Income (u/s 153A of the Act) are treated as Income Tax Returns filed u/s 139(1) of the Act, these Returns of Income are to be taken / treated as having been furnished within the time limit as per Section 139(1) of the Act and hence the corresponding Form 10CCBs filed by the assessee [for the aforesaid Assessment Years (i.e. AY 2017-18, AY 2018-19 & AY 2019-20)] are also to be taken as furnished within the time limit as per Section 139(1) of the Act. Further, since these Form- 10CCBs, as aforesaid, are to be taken /treated as having been furnished within the time limit as per Section 139(1) of the Act, the assessee’s claim for Deduction under Section 80IA(4)(i) of the Act cannot be rejected on the ground that the corresponding Forms (i.e. Form 10CCBs) were filed belatedly. 113. In course of the hearing before us, ld. D/R reiterated the reasoning advanced by ld. AO. in the impugned assessment orders while disallowing the claim of the assessee u/s 80IA(4) of the Act [i.e., the purported failure on the part of the assessee to file the requisite audit report within the time specified u/s 80IA(7) of the Page 103 of 114

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. Act] whereas ld. Counsel for the assessee vehemently argued on similar lines as done by ld. CIT(A) in the impugned appellate order. 114. We have heard both the sides and perused the orders of the lower authorities. We have already discussed earlier in details in this order that a Return of Income filed in response to Notice u/s 153A substitutes the original Return of Income filed u/s 139 of the Act. Thus, where the Return u/s 153A of the Act is filed within the time permitted u/s 153A of the Act, the same is to be taken as filed within the time limit as per section 139(1) of the Act. Thus, where the Audit Report in Form 10CCB is furnished on or before the time allowed for filing Return of Income in the Notice issued u/s 153A of the Act, the said Form 10CCB is to be taken as filed on or before the time permitted u/s 139(1) of the Act and thus within the time allowed u/s 80IA(7) r.w.s 80AC of the Act. For holding so, we draw support from judgment rendered by the Hon’ble Calcutta High Court in Shrikant Mohta vs. CIT [ITAT No.19 & 20 of 2015, GA No.246 & 247 of 2015, judgment dated 25.06.2018] wherein the Hon’ble High Court held as under: “The second question is answered thus: When search operations are conducted under Section 132 of the Act, the obligation of the assessee to file any return remains suspended till such time that a notice is issued for such purpose under Section 153A(1)(a) of the Act. If the return is filed by the assessee within the reasonable time permitted by such notice under Section 153A(1)(a) of the Act, such return would then be deemed to have been filed within the time permitted under Section 139 (1) of the Act for the benefit under Section 139(3) of the Act to be availed of by the assessee.”

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I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. 115. With the above observations, Ground no. 2 of the Department’s appeal is dismissed. 116. Before concluding, it will be pertinent to mention that ld. D/R, vide his written submission dated 25.01.2023 has also tried to agitate certain issues which have neither been urged in the original Grounds of Appeal filed by the Department nor challenged vide any additional/supplementary Grounds of Appeal raised before us. In a nutshell, ld. D/R has culled out details of two projects awarded by IRCON International Ltd. to the assessee viz. (i) Construction of Tunnel T-5 (between Km 11 + 604 to Km 13+697 approx) on Sivok Rangpo Rail Link Project (details compiled at page 518 of the CIT(A)’s Order) and (ii) Construction of Tunnel T74-R balance work at North Portal from Km 130/950 to Km 133/910 (Approx) on Katra-Banihal Section of Udhampur – Srinagar- Baramulla New BG Railway Line Project (Package t-74R-B(N)] (details compiled at page 495 of ld. CIT(A)’s order. Ld. D/R has relied upon Circular No. 717 dated 14.08.1995 and the provisions of section 80IA(4)(i)(c) of the Act to aver that the deduction u/s 80IA(4) of the Act should be in respect of income derived from the use of infrastructural facility whereas the above projects were still in the initial stages of construction i.e., not completed. He has thereafter gone on to allege that the Assessee was merely a ‘works contractor’ as opposed to a ‘developer’ and hence not eligible for deduction u/s 80IA(4) of the Act. 117. In regard to the above, we firstly note that the Appeals filed by the Department before us merely challenge the order of ld. Page 105 of 114

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. CIT(A) on two grounds viz. (a) allowing fresh claims of deductions u/s 80IA(4) of the Act made in Returns filed u/s 153A of the Act despite the fact that the said claims were not made in the original Returns filed u/s 139(1) of the Act and (b) allowing deductions u/s 80IA(4) of the Act despite the fact that the requisite Audit Reports in Form 10CCB were purportedly filed belatedly. We have already rendered our decision on the above two grounds. The grounds of appeal filed by the Department nowhere impinge upon the nature of projects undertaken by the assessee during the impugned assessment years and/or the question as to whether the assessee was a ‘developer’ of infrastructural facility or a ‘works contractor’ simpliciter. Further, no additional grounds of appeal have been filed before us in this regard for us to adjudicate on such additional arguments (unconnected with the grounds of appeal) made in the written submissions filed by ld. D/R. Nonetheless, in the interest of completeness and transparency, we shall briefly touch upon the sustainability/validity of the arguments advanced by ld. D/R on the above issues. 118. Firstly, on a perusal of records, it is seen that no deduction has been claimed by the assessee in respect of project specified under sl. no. (i) (supra) for the years under the present appeal. The deduction with respect of the above project has been claimed in AY 2020-21, which has not been challenged in appeal before us. Therefore, the assertion of ld. D/R in respect to the said project is of no avail. Further, in respect of project specified under sl. no. (ii) (supra), deductions have been claimed by the assessee for AYs

Page 106 of 114

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. 2018-19 to 2020-21, which includes the impugned AYs 2018-19 & 2019-20. In this regard, it is a fact on record that the assessee has claimed deduction as a ‘developer’ of infrastructural project as opposed to an enterprise engaged in the ‘operation and maintenance’ of infrastructural facility. Thus, the profits claimed as deduction by the assessee u/s 80IA(4)(i) of the Act is in respect of profits derived from the ‘development’ of infrastructural facility (which is unconnected to the completion or the commencement or stage of operation of the facility) and not from its operation and maintenance. Thus, ld. D/R’s assertion that the impugned project was at its nascent stage becomes irrelevant vis-à-vis the Assessee’s claim of deduction u/s 80IA(4)(i) of the Act. 119. Next, the contention of ld. D/R that deduction u/s 80IA(4) of the Act is allowable only where the assessee starts operating and maintaining the infrastructural facility in terms of section 80IA(4)(i)(c) of the Act is also contrary to the views taken by the Hon’ble Courts and Tribunals in a catena of judgments wherein the Hon’ble Courts and various benches of the ITAT have uniformly opined that in order to avail a deduction, the assessee could either (i) develop; or (ii) operate and maintain or (iii) develop, operate and maintain the facility. Per the ratio of judgments rendered in the above cases, the requirement of developing, maintaining and operating an infrastructure facility was never regarded to be cumulative, even prior to the amendment to section 80IA of the Act by Finance Act, 2001. We derive support from the judgment rendered by the Hon’ble Bombay High Court in the case of CIT vs.

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I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. ABG Heavy Industries Limited [322 ITR 323 (Bom), Judgment dated 15.02.2010] wherein the Hon’ble Bombay High Court opined and held as under:

“24 ………………Moreover, as a matter of law, what the condition essentially means is that the infrastructure facility should have been operational after April 1, 1995. After section 80-IA was amended by the Finance Act of 2001, the section applies to an enterprise carrying on the business of (i) developing; or (ii) operating and maintaining; or (iii) developing, operating and maintaining any infrastructure facility which fulfils certain conditions. Those conditions are: (i) ownership of the enterprise by a company registered in India or by a consortium; (ii) an agreement with the Central or State Government, local authority or statutory body and (iii) the start of operation and maintenance of the infrastructure facility on or after April 1, 1995. The requirement that the operation and maintenance of the infrastructure facility should commence after April 1, 1995 has to be harmoniously construed with the main provision under which a deduction is available to an assessee who develops or operates and maintains; or develops, operates and maintains an infrastructure facility. Unless both the provisions are harmoniously construed, the object and intent underlying the amendment of the provision by the Finance Act of 2001 would be defeated. A harmonious reading of the provision in its entirety would lead to the conclusion that the deduction is available to an enterprise which (i) develops; or (ii) operates and maintains; or (iii) develops, maintains and operates that infrastructure facility. However, the commencement of the operation and maintenance of the infrastructure facility should be after April 1, 1995. In the present case, the assessee clearly fulfilled this condition. 25. In the view which we have taken, all the assessment years in question to which this batch of appeals relates would be governed by the same principle. The subsequent amendment of section 80-IA(4A) of the Act to clarify that the provision would apply to an enterprise engaged in (i) developing; or (ii) operating and maintaining; or (iii) developing operating and maintaining an infrastructure facility was reflective of a position which was always construed to hold the field. Before the amendment that was brought about by Parliament by the Finance Act Page 108 of 114

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. of 2001, we have already noted that the consistent line of circulars of the Board postulated the same position. The amendment made by Parliament to section 80-IA(4) of the Act set the matter beyond any controversy by stipulating that the three conditions for development, operation and maintenance were not intended to be cumulative in nature. 26. In view of the aforesaid observations, the question of law shall accordingly stand answered in favour of the assessee and against the Revenue.” 120. Thus, the assessee is entitled to deduction u/s 80IA(4) of the Act only in respect of development of infrastructural facility irrespective of whether it operates and maintains such facility. Similar judgments have been rendered in a plethora of other cases which have been cited by ld. CIT(A) in the impugned appellate order. However, for the sake of brevity and more so, since the impugned issue has not been impinged upon in the grounds of appeal filed by the Department, we are not delving into it any further. 121. Further, apropos ld. D/R’s contention that the assessee is a ‘works contractor’ and not a ‘developer’ of infrastructural facilities, we find that the Kolkata Bench of the Tribunal has in the past allowed similar claims u/s 80IA(4)(i) of the Act of the assessee for AYs 2003-04 & 2004-05 [vide ITAT order dt. 06.08.2021 in ITA Nos. 285 & 279/Kol/2020], A.Y 2005-06 [vide ITAT order dt. 20.12.2017 in ITA No. 989/Kol/2013] and for A.Y. 2006-07 [vide ITAT order dt. 10.01.2018 in ITA No. 990/Kol/2013]. Thus, the fact that the assessee is a ‘developer’ of infrastructural projects and is eligible for deduction u/s 80IA(4) of the Act in respect of

Page 109 of 114

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. infrastructural facilities developed by it is no longer res integra and has been decided in assessee’s favour in its own case in the past. The department is not entitled to take inconsistent stand in respect of each assessment year on the same set of facts. This principle has been well explained by the Supreme Court in the case of M/s Radhasoami Satsang, Saomi Bagh, Agra vs. Commissioner of Income Tax, (1992) 1 Supreme Court Cases 659 held as under: "13. One of the contentions which the learned senior counsel for the assessee appellant raised at the hearing was that in the absence of any change in the circumstances, the Revenue should have felt bound by the previous decisions and no attempt should have been made to reopen the question. He relied upon some authorities in support of his stand. A full Bench of the Madras High Court considered this question in T.M.M Sankaralinga Nadar & Bros. & Ors, v. Commissioner of Income-Tax, Madras, 4 ITC 226. After dealing with the con- cession the Full Bench expressed the following opinion: "The principle to be deducted from these two cases is that where the question relating to assessment does not vary with the income every year but depends on the nature of the property or any other question on which the rights of the parties to be taxed are based, e.g., whether a certain property is trust property or not, it has nothing to do with the fluctuations in the income; such questions if decided by a Court on a reference made to it would be res judicata in that the same question cannot be subsequently agitated." 15. This Court in Parashuram Pottery Works Co. Ltd. v. Income-Tax Officer, Circle 1, Ward A, Rajkot, (1977)106 ITR 110 stated: "At the same time, we have to bear in mind that the policy of law is that there must be a point of finality in all legal proceedings, that stale issues should not be reactivated beyond a particular stage and that lapse of time must induce repose in and set at rest judicial and quasi- judicial controversies as it must in other spheres of human activity." Assessments are certainly quasi-judicial and these observations equally apply.

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I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. 16. We are aware of the fact that strictly speaking res judicata does not apply to income-tax proceedings. Again, each assessment year being a unit, what is decided in one year may not apply in the following year but where a fundamental aspect permeating through the different assessment years has been found as a fact one way or the other and parties have allowed that position to be sustained by not challenging the order, it would not be at all appropriate to allow the position to be changed in a subsequent year. 17. On these reasonings in the absence of any material change justifying the Revenue to take a different view of the matter- and if there was not change it was in support of the assessee- we do not think the question should have been reopened and contrary to what had been decided by the Commissioner of Income-Tax in the earlier proceedings, a different and contradictory stand should have been taken. We are, therefore, of the view that these appeals should be allowed and the question should be answered in the affirmative, namely, that the Tribunal was justified in holding that the income derived by the Radhasoami Satsang was entitled to exemption under Sections. 11 and 12 of the Income Tax Act of 1961.” 122. The compliance with the remaining conditions viz. (i) ownership of the enterprise by a company registered in India or by a consortium; (ii) an agreement with the Central or State Government, local authority or statutory body and (iii) the start of operation and maintenance of the infrastructure facility on or after April 1, 1995 [but before 01.04.2017 as per the second proviso to Section 80IA(4) of the Act has nowhere been doubted/disputed by the Department. The only differentiating factor vis-à-vis the past assessment years as carved out by ld. AO which in his opinion renders the judgments of the ITAT for AYs 2005-06 & 2006-07 (supra) inapplicable to impugned AYs 2017-18, 2018-19 & 2019- 20 i.e., the fact that in AYs 2005-06 & 2006-07, the assessee had claimed deduction u/s 80-IA of the Act in the original return of

Page 111 of 114

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. income whereas, in the impugned AYs 2017-18 to 2019-20, the Assessee has claimed deductions afresh u/s 153A of the Act also does not serve as a deterrent as already held by us while deciding Ground No. 1 (supra). At this juncture, it will also not be out of place to note that no appeal has been preferred by the Department against the deletion of disallowance of similar deduction claimed by the assessee u/s 80IA(4)(i) of the Act qua A.Y. 2020-21 (i.e., the assessment year relevant to the P.Y. in which the search was conducted) vide the common order dated 27.07.2022 passed by ld. CIT(A) for AYs 2017-18 to 2020-21 (i.e., the impugned appellate order]. This is impliedly so since the claim of deduction u/s 80IA(4) of the Act in respect of AY 2020-21 was made for the first time vide Return filed by the assessee u/s 139(1) of the Act on 15.02.2021, since being the search year, the assessee was not required to file its Return u/s 153A of the Act for the said year. Thus, the question of making any fresh claim of deduction u/s 80IA(4) of the Act in return filed u/s 153A of the Act or any belated filing of Form 10CCB does not arise qua AY 2020-21. This also fortifies the fact that apart from the challenge on the two issues urged in the present appeal before us, the Department is in consonance with the assessee’s compliance with the requisite conditions u/s 80IA(4) of the Act. Thus, the re-agitation of an accepted factual and legal position vis-à-vis the assessee’s eligibility of claim of deduction u/s 80IA(4) of the Act as a ‘developer’ of infrastructural facilities at this stage via ld. D/R’s submissions without raising any specific ground of appeal before us in this regard does not make sense. Even otherwise, ld. CIT(A) has passed a very detailed Page 112 of 114

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. order wherein he has analyzed the terms and conditions of the various contracts undertaken by the assessee during the years under consideration to conclude that the nature of works executed by the assessee falls within the ambit of ‘development’ of infrastructural facility within the meaning of section 80IA(4) of the Act and the said issue is no longer res-integra considering the orders passed by the Kolkata Bench of the Tribunal in the Assessee’s own case in the past (supra). Thus, all the grounds of appeal raised by the Revenue for AY 2017-18, AY 2018-19 & AY 2019-20 are dismissed. 123. In the result, the appeal of the assessee for Assessment Year 2014-15 in ITA No. 43/GTY/2022, is allowed and appeal of the Revenue for Assessment Year 2014-15 in ITA No. 2/GTY/2022 and for Assessment Years 2017-18, 2018-19 & 2019-20 in ITA Nos. 37 to 39/GTY/22 are dismissed. Kolkata, the 5th April, 2023 Sd/- Sd/- [Rajpal Yadav] [Manish Borad] Vice President Accountant Member Dated: 05.04.2023 Bidhan (P.S.)

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I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. Copy of the order forwarded to: 1. ABCI Infrastructure Private Limited, 6th Floor, Vasundhara, 2/7, Sarat Bose Road, Bhowanipore, Kolkata- 700 020. 2. ACIT, Circle-15(1), Kolkata 3. DCIT, Circle-1, Kolkata. 4. CIT(A)- Central, North-East Region, Guwahati. 5. CIT- 6. CIT(DR), Guwahati Bench, Guwahati. //True copy // By order Assistant Registrar ITAT, Kolkata Benches Kolkata

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