RAJDEEP INFRASTRUCTURE ,,AHMEDNAGAR vs. DEPUTY COMMISSIONER OF ICOME TAX,, AHMEDNAGAR

The relevant facts as culled out from the material on record are as under :- The assessee is a firm engaged in the business of development, maintenance and operation of an infrastructure facility like foot over bridges and road sineages on BOT basis. The assessee electronically filed its return of income for A.Y. 2012-13 on 25.09.2012 declaring total income at Rs.Nil after claiming deduction of Rs.1,44,25,090/- u/s 80IA(4) of Income-tax Act, 1961 (hereinafter referred to as „the Act‟). The case was taken up for scrutiny and thereafter, assessment was framed u/s 143(3) of the vide order dated 23.03.2015 and the total income was determined at Rs.1,61,22,580/-. Aggrieved by the order of Assessing Officer, assessee carried the matter before Ld.CIT(A), who vide order dated 24.10.2016 (in appeal No.PN/CIT(A)-2/DCIT Cir/AN/68/2015-16/1946) dismissed the appeal of assessee. Aggrieved by the order of Ld.CIT(A), assessee is now in appeal before us and has raised the following grounds : 1] The learned CIT(A) erred in denying the claim of the deduction u/s 80IA(4) made by the assessee to the tune of Rs.1,44,25,090/- on the ground that the assessee was not engaged in development of any infrastructure facility as laid down in section 80IA(4) without appreciating the correct facts of the case. 2] The learned CIT(A) erred in holding that the activity of construction of road signages and foot over bridges did not amount to development of infrastructure facility as stipulated in section 80IA(4) and hence, the deduction u/s 80IA(4) could not be allowed to the assessee for this year. 3] The learned CIT(A) failed to appreciate that the assessee had fulfilled all the conditions laid down for claiming deduction u/s 80IA(4) and hence, the assessee was eligible to claim the said deduction in respect of the profits derived from the activity of construction of road signages and foot over bridges over the roads carried on by the assessee for the year. 4] The learned CIT(A) ought to have appreciated that the activity of construction of foot over bridges and construction of road signages amounted to development of roads and formed an integral and mandatory part of Road and thus, the said activity was in the nature

Before us at the outset, ld. AR submitted that ground Nos.1 to 5 are on a single issue of denial of deduction u/s 80IA(4) of the Act and ground No.6 and its sub-grounds are with respect to disallowance u/s 43B of the Act. We first proceed to decide the first issue of denial of deduction u/s 80IA(4) of the Act.

Before us, the ld. AR reiterated the submissions made before the Assessing Officer and CIT(A) and further submitted that road signages are essential and integral part of foot over bridges and foot over bridges fall under „infrastructure facility‟ as per Explanation to section 80IA(4) of the Act. He further placed reliance on the decision of Kolkata Bench of Tribunal in the case of DCIT Vs. Selvel Media Services Pvt. Ltd. in & 452(Kol) of 2011, wherein it was held that the development of bus shelters, toilet blocks and foot over bridges qualify for deduction as „infrastructure facility‟. He further submitted that against the order of Pune Bench of Tribunal for A.Ys. 2010-11 and 2011-12 the assessee has filed an appeal before the Hon‟ble Bombay High Court, Aurangabad Bench and the Hon‟ble High Court for A.Y. 2010-11 has admitted the appeal by framing substantial question of law. He submitted that for A.Y. 2011-12 the appeal is pending for admission. He therefore, submitted that following the decision of Kolkata Bench of Tribunal, the issue be decided in assessee‟s favour.

We have heard the rival submissions and perused the material on record. The issue in the present grounds is with respect to denial of claim of deduction u/s 80IA(4) of the Act. We find that the Co-ordinate Bench of Tribunal vide order dated 16.10.2017 in on identical issue for A.Y. 2011-12 has upheld the order of Assessing Officer by observing as under:- “5. We have examined the documents on record and perused the order of Co-ordinate Bench of the Tribunal in assessee’s own case for assessment year 2010-11. We find that Assessing Officer rejected assessee’s claim of deduction u/s. 80IA(4) of the Act in respect of structure of foot over bridges and installation of road signages in assessment year 2010-11, as well. The assessee carried the matter in appeal before Commissioner of Income Tax( Appeals). The First Appellate Authority granted relief to the assessee against which the Revenue was in appeal before Tribunal. The Tribunal decided the issue in favour of Revenue by following the order of Co-ordinate Bench in the case of assessee’s sister concern titled, Rajdeep Publicity Pvt. Ltd Vs. DCIT/ACIT in ITA No. 1782 &1783/PN/2007 and 1414/PN/2008 for the assessment years 2003-04 to 2005-06 decided on 04.06.2010. The relevant extract of the findings of the Tribunal in assessee’s case for assessment year 2010-11 are as under : “7. We find that the issue raised in the present appeal i.e. whether the erection of foot over bridges and installation of road signage fall within the definition of infrastructure facility as envisaged u/s. 80IA(4) of the Act has been considered by the Tribunal in the case of assessee’s group concern M/s. Rajdeep Publicity Pvt. Ltd. The relevant extract of the order of Tribunal in the said case is reproduced here-in-under: “2. In A.Y. 2003-04, the assessee has raised various contentions with regard to its claim u/s. 80IA(4) of the Act and same was rejected by the A.O and it was upheld by the CIT(A). The assessee's stand is that the Pune Municipal Corporation in its tender documents in clause 2.1.1. says that "Project of Pune Road Traffic Signages and Foot Over Bridges through private participation has been evolved to develop the City Infrastructure facilities with no excess financial burden on Corporation". In this regard, it was found by revenue authorities that for claim of .deduction under 80 IA of Income Tax Act, Profit and Gain should be derived from developing infrastructural facilities as defined in Income Tax Act 1961. The fact that tender document of PMC trades the project of road traffic signals and foot over bridge as helpful to develop infrastructural facilities is of no relevance in this regard. This issue has got to be decided with reference to provision of law as contained in Income Tax Act as rightly held by the CIT(A). As regards submission of assessee that Section 80IA(4) uses the term 'development of infrastructural facility and not construction. The term development has wider connotation than construction. From the language of relevant sub-section 80IA, it could be seen there cannot be any development of infrastructural facility without constructing the infrastructure as defined in Explanation to Sub-section (4) of Section 80IA.

As regards the submission of assessee that Section 80IA uses the word 'developing' as against Sec 80 IB(10) which uses the term the development and construction and therefore, for claim of deduction u/s. 80IA(4), there may be development of infrastructure without its construction. It was rightly found misplaced to the facts in the case of the assessee. As per the provisions of Sub Section (1) to Section 80 IA, where gross total income of assessee include any profit and gain derived by an undertaking or an enterprise from any business referred to Subsection (4), and deduction of an amount equal to 100% of profit and gain derived by the assessee shall be available for 10 consecutive years. According to the provision of Section 80IA (4), it apply to any enterprise carrying on business of (i) developing or (ii) operating or maintaining of, (iii) developing, operating and maintaining any infrastructural facilities. The Explanation to Section 80IA (4) exhaustively defines infrastructural facility in its clause (a) as road including toll road, bridge or a rail system. The assessee has constructed two foot over bridges and road signals. Most of the income of the assessee is on account of putting road signals. It does not fit into development of infrastructural facilities as defined in Explanation to Section 80IA(4). So, there cannot be any development of any road without its construction. Adding additional facility cannot be said that an infrastructural facility in the nature of road as defined in Explanation to Section 80IA(4).

In view of the above, we hold that the assessee did not develop any infrastructural facility in the nature of road as defined in Explanation to sub-section (4) to 80 IA of Income Tax and therefore, the action of the A.O denying the deduction to assessee under 80 IA need no interference from our side. We uphold the same. Similar issue arose in A.Y. 2004-05 and 2005-06. Facts being similar and following the same reasonings, the rejection of claim u/s. 80IA(4) need no interference from our side.

In the instant case, the assessee has constructed three foot over bridges and has installed road signage for the Indore Municipal Corporation. The major part of income during the year was received on account of execution of work of road signage. Thus, the facts in the present case are identical to the one adjudicated by the Co-ordinate Bench in the group concern of the assessee. Respectfully following the same, we hold that the activities carried on by the assessee do not fall within the ambit of “infrastructure facility” defined in Explanation to section 80IA(4). Thus, the assessee is not eligible to claim deduction u/s. 80IA(4).”

A perusal of the above findings show that the issue in the present appeal is identical to the one already adjudicated by Co-ordinate Bench of the Tribunal in assessee’s own case for assessment year 2010-11. The assessee has not placed on record any material to show any distinguishing features in assessment year under appeal. Therefore, we find no reason to take a different view. Following the order of Co-ordinate Bench, we hold that the assessee is not eligible for claiming deduction u/s. 80IA(4) in respect of construction of foot-over bridges and installation of road signages as they do not fall within the ambit of “infrastructure facility” within the meaning of Section 80IA (4) of the Act. Accordingly, appeal of the assessee is dismissed being devoid of any merit.”

Before us, no distinguishing facts in the facts of the present case and that of earlier year have been pointed out by the ld. AR nor has he placed any material on record to demonstrate that the decision of Co-ordinate Bench of Tribunal in assessee‟s own case for A.Y. 2011-12 (supra) has been set aside / overruled / stayed by Higher Judicial Forum. We therefore, following the decision of Co-ordinate Bench of Tribunal in assessee‟s own case (supra) and for similar reasons hold that the assessee is not eligible for deduction claimed u/s 80IA(4) of the Act. In view of the aforesaid, the ground Nos.1 to 5 raised by the assessee are dismissed.

The second issue is with respect to disallowance u/s 43B of the Act. During the course of assessment proceedings the Assessing Officer on perusing the Balance Sheet noticed that under the head „Current Liabilities‟ an amount of Rs.16,97,494/- was shown towards advertisement tax payable to M.P. State Government. The Assessing Officer also noticed that the aforesaid amount was not paid till the date of audit. The Assessing Officer further noted that the assessee had submitted that he has not debited the advertisement tax in its Profit and Loss Account and has not claimed it as deduction. He further noted that the assessee had submitted that out of the amount of Rs.31,35,982/- that was collected from its customers, an amount of Rs.14,38,798/- was paid to the Government and the balance amount of Rs.16,97,494/- was remained unpaid as stay was granted by Hon‟ble Madhya Pradesh High Court. The Assessing Officer noted that the stay was granted by the Hon‟ble High Court on 12.09.2014 and it was not before the date of filing the return of income. He was of the view that an amount of Rs.16,97,494/- was due and payable as the matter stood before filing of the writ petition and therefore, provisions of section 43B of the Act were squarely applicable. He was further of the view that advertisement tax was part of gross receipts and its non deposit before the date of filing of return of income attracts provisions of section 43B of the Act. He accordingly, disallowed the claim of deduction of Rs.16,97,494/- u/s 43B of the Act.

Aggrieved by the order of Assessing Officer, the assessee carried the matter before the CIT(A), who upheld the order of Assessing Officer.

Aggrieved by the order of CIT(A), the assessee is now in appeal before us.

Before us, the ld. AR reiterated the submissions made before the Assessing Officer and CIT(A) and further submitted that the assessee did not debit the advertisement tax to its Profit and Loss Account and the amount is only reflected in its Balance Sheet. He submitted that since the amount has not been debited to its Profit and Loss Account and has not been claimed as deduction, provisions of section 43B of the Act are not applicable to it and in support of his aforesaid contention, he relied on the decision of Hon‟ble Delhi High Court in the case of CIT Vs. Noble and Hewitt (I) (P) Ltd. decided on 10.09.2007. He also placed on record a copy of the aforesaid decision, which is placed at pages 164 and 165 of Paper Book. He therefore, submitted that if the assessee has not claimed the deduction on account of advertisement tax, provisions of section 43B of the Act are not applicable.

The ld. DR on the other hand supported the orders of Assessing Officer and CIT(A).

We have heard the rival submissions and perused the material on record. The issue in the present grounds is with respect to disallowance u/s 43B of the Act in respect of advertisement tax which remained unpaid.

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