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Facts
The Revenue filed appeals against the order of NFAC which allowed deduction u/s 80IA to the assessee, a civil contractor, for AY 2017-18 and 2018-19. The AO had disallowed the deduction, holding that the assessee acted merely as a contractor and not a developer of infrastructure facilities.
Held
The Tribunal noted that a coordinate bench had dealt with similar issues for earlier assessment years. Based on the earlier decision and the directions given by a coordinate bench, the Tribunal restored the issue to the AO for fresh consideration.
Key Issues
Whether the assessee, engaged in infrastructure projects, qualifies as a developer eligible for deduction under Section 80IA or merely a contractor. The secondary issue pertains to the validity of additional evidence considered by the CIT(A) without following due procedure.
Sections Cited
143(3), 80IA, 801A, 46A, 271(1)(c)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “C” BENCH,
Before: SHRI SANDEEP GOSAIN & SHRI GIRISH AGRAWAL
O R D E R
PER GIRISH AGRAWAL, ACCOUNTANT MEMBER:
This appeal filed by the revenue is against the order of National Faceless Appeal Centre (NFAC), Delhi vide Order No. ITBA/NFAC/S/ 250/2024-25/1067649828(1) and Order No. ITBA/NFAC/S/250/2024 -25/1067644517(1) dated 14.08.2024 passed against assessment order u/s. 143(3) of the Income-tax Act, 1961 (hereinafter referred to as the “Act”), dated 18.09.2021 and 23.12.2019 for AY 2017-18 and 2018-19, respectively.
2. Grounds taken by the revenue are reproduced as under: and 5908/Mum/2025:
“1. "Whether on the facts and in the circumstances of the case and in law the Ld. CIT(A) was justified in allowing claim of deduction u/s 80IA of the Act amounting to Rs.22,25,87,471/- and Rs. 36,46,45,037/-." 2. "Whether on the facts and in the circumstances of the case and in law the Ld. CIT(A) failed to appreciate the fact that the assessee has not fulfilled the conditions laid down for claiming deduction u/s 801A of the Act 3. "Whether on the facts and in the circumstances of the case and in law the Ld. CIT(A) failed to appreciate that the assessee was involved in carrying out work in the nature of rehabilitation whereas there is no reference to the term 'road widening anywhere in work order and has not carried out any work of development of new infrastructure facility or maintaining the same." 4. "Whether on the facts and in the circumstances of the case and in law the Ld. CIT(A) failed to appreciate the fact that the assessee upon completion of the contractual obligations has been paid the agreed contract price as per work completed whereas section 801A stipulates development or maintenance of infrastructure facility." 5. "Whether on the facts and in the circumstances of the case and in law the Ld. CIT(A) failed to appreciate the fact that the relationship between assessee and the government is that of the contractor and the contractee and the assessee has acted as a contractor only on a specific contract allotted by its principals, cost of which has been reimbursed from the principals who are the actual owner/developer?" 6. "Whether on the facts of case and in law, the Ld. CIT(A) was justified to allow the assessee's appeal by considering additional evidences such as Form No.10CCB and copy of the agreement of the enterprises with the Central Government or a State Government or a local authority or a statutory body for carrying on the business of developing or operating and maintaining or developing, operating and maintaining a new infrastructure facility without following the statutory procedure including Rule 46A of the I.T. Rules in this respect." 7. "The Appellant prays that the order of the CIT(A) on the above ground be set aside and that of the DCIT- - (2)(1) Mumbai be restored."”
There is a brief delay of 14 days noted by registry in filing the present appeal for which petition for condonation of delay is placed on record. We have perused the request made for condoning the brief delay of 14 days. In view of the explanations furnished in the said application dated 14.11.2024, we find it appropriate to condone the said delay and take up the matter for adjudication.
Grounds raised by the revenue in both the appeals are identical accept for variation in the quantum of disallowance. Accordingly, both the appeals are taken up together for adjudication by passing this consolidated order. We will take appeal for AY 2017-18 as a lead case to draw facts of the case and give our observations and findings which shall apply mutatis-mutandis to the other appeal for AY 2018-19. In the course of hearing before us, ld. Counsel for the assessee submitted that appeals for the assessee in its own case for AY 2013-14 to 2015-16 had already been heard by the Co-ordinate Bench at Pune on 06.08.2025 and the order is awaited. He pointed out that the issue involved in those appeals are identical to the one raised in the present two appeals. He sought adjournment by submitting that the outcome of the appeals for AY 2013-14 to 2015-16 by the order of Co-ordinate Bench at Pune be applied to the present two appeals.
4.1. In this respect, direction was given to furnish Form No.36 along with grounds of appeal in respect of appeals for AY 2013-14 to AY 2015- 16 which had been heard by the Co-ordinate Bench at Pune, so as to factually ascertain the submission made by the ld. Counsel. The same were furnished vide letter dated 30.09.2025 and are placed on record. From the perusal of the same, it is noted that the issue raised in these appeals before the Co-ordinate Bench of ITAT Pune for AY 2013-14 to AY 2015-16 are same as, those before us for AY 2017-18 and AY 2018- 19. in assessee’s own case.
4.2. On the next date of hearing after the verification as aforestated, these two appeals were heard and reserved for order, pending the outcome of the result in the appeals for AY 2013-14 to AY 2015-16 by the Co-ordinate Bench of ITAT Pune.
5. In the meanwhile, ld. Counsel vide letter dated 04.12.2025 placed on record, order of the Co-ordinate Bench of ITAT Pune for AY 2013-14 to AY 2015-16 in to 231/PUN/2025, pronounced on 23.10.2025. It is a consolidated order for all the assessment years taken together by which the issues raised by the revenue as regards allowability of deduction u/s. 80-IA have been restored back to the file of ld. AO with certain directions. Before we go into the details of the order of co-ordinate bench (supra), facts of the present case are noted to bring similarity for its applicability.
5.1. Assessee is engaged in the business activities as Civil Contractor and Engineers During the year, it has undertaken various projects at Jharkhand, Chhattisgarh, Telangana, Tamilnadu, Odisha, Karnataka and Maharashtra, which consist of roads and building etc. Return of income was filed on 29.11.2017 reporting total income at Rs. 29,90,89, 060/-. Assessee had claimed deduction of Rs.22,36,40,641/- u/s. 80- IA which was disallowed by the ld. AO. Findings of ld. AO in this respect are based on the following observations: “1. From the details perused it crystal clear that assessee company has not carried out any work of development of new infrastructure facility but merely acted as a contractor. CBDT vide its circular no.4/2010 dated 18.05.2010 has also clarified that simply relaying of an existing road would not be classifiable as a new infrastructure project for the purpose of section 801A(4)(i) of the IT Act, 1961.
2. Assessee paid contract price as per contractual obligations on completion of work and TDS deducted accordingly. Hence relationship between assessee and government is of contractor and contractee.
3. Assessee has acted as a contractor only on a specific contract allotted by its principal, cost of which has been reimbursed from the principal who are the actual owner/developers 4. Assessee's profits are not out of operations of infrastructure project but out of construction of infrastructure facility. 5. Assessee does not fulfil the condition as stipulated in S801A(4)(c) as it nowhere refers income from transfer of developed facility but refers to income from operation and maintenance of such facility. 6. The idea of the project conceived and conceptualized by the government, it has raised funds and then through tendering process found out the person to carry out activities as specified and required by them. Therefore the assessee does not qualify as developer but merely a contractor. 7. AO has invoked Explanation below sub section 13 of Section 801A which has clarified that nothing contained in section shall apply to a person who executes a works contract. The said explanation has been made effective from 1.4.2000. 8. Assessee does not fulfil the conditions laid down u/s 801A(4) read with sub clause (c) of the Act which clearly lays down that mere developer would not be eligible to claim the said deduction. 9. Assessee has failed to discharge its onus for proving that it was eligible for deduction u/s 801A by not furnishing copy of agreement with central government/any other eligible person to the satisfaction of AO. 10. The assessee does not own any infrastructure facility and has not fulfilled statutory conditions laid down u/s 801A(4) of the IT Act, 1961.” 5.2. Assessee went in appeal before ld. CIT(A), who deleted the disallowance so made. Findings of ld. CIT(A) while giving relief to the assesse are based on the following observations: “1. Perusal of S.801A(4) read with relevant sub clauses (a), (b) & (c) it is clear that the said clause (c) relied upon by AO should not be read in isolation. Proviso to the sub section makes it amply clear that section applies to an enterprise which does development, operation and maintenance. Hence restricting the benefit to enterprises engaged only in operating & maintaining infrastructure facility would defeat the purpose of the beneficial provision.
Reliance placed on the decision of ITSC in appellant's own case and other group concerns on same issue for A.Y. 2010-11 to A.Y. 2012-13.
3. Further reliance is placed on decision of Ld. CIT(A) NFAC, Delhi in case of M/s. MBPCL group concern of the appellant for A.Y. 2018-19.
4. M/s MBPCL is an associate company in Patil Group and a joint venture of the appellant company. Facts relating to its case where relief has been given by the CIT(A) are identical to the one in appellant's case.
5. Assessee has filed all the relevant documents including Form 10CCB, Work orders and Agreements.
6. Claim made by the assessee is in respect of genuine projects and contracts. No claim has been made with respect to projects which are prima facie works contracts. Claim made by assessee with respect to eligibility, quantum etc. examined in detail at appellate stage. 7. However, claim of Rs. 6,24,68,295/ made by assessee with respect to NH222 Nasaratpur to Barasgaon project and Rs. 8,10,37,736/ on NH 361C Digras Dharwa Karanja totalling to Rs. 14,35,06,031/- not admissible as the development operation and maintenance of the said projects commenced after 1st April, 2017. No agreement or contract existed as on 31.03.2017.Hence to this extent disallowance sustained in light of the proviso to S.801A(4). 8. Suo motu withdrawal of claim by assessee with respect to Bijapur project to the tune of Rs. 25,93,039/-. 9. Based on submissions made in respect of other projects, documents submitted and perused claim of the appellant is allowed. 10. No mention of remand report sought by CIT(A) in case of Form 10CCB and/or other additional documents, agreements submitted during appellate proceedings.” 5.3. Aggrieved by the relief so granted by the ld. CIT(A), revenue has come up before the Tribunal. With this backdrop of factual position and the observations of the authorities below, we perused the order of the Co-ordinate Bench of ITAT Pune (Supra) and found that it bears resemblance with the present case before us. Para 2 to 10 of this order contains facts of the case and the observations and findings of ld. AO while making the disallowance and the same are extracted below: “2. Facts of the case, in brief, are that the assessee is a Private Limited Company and engaged in the business as Civil Contractor. It filed its return of income on 30.11.2013 declaring total income of Rs.8,32,52,939/-. The case was taken up for scrutiny under CASS. Accordingly statutory notices u/s 143(2) and 142(1) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') were issued and served on the assessee in response to which the assessee filed various details from time to time.
3. During the course of assessment proceedings the Assessing Officer noted that the assessee company in its return filed has claimed deduction u/s 80-IA of the Act amounting to Rs.5,60,11,420/-. He, therefore, asked the assessee to furnish complete Profit & Loss Account, all its schedules, balance sheet, computation of income and tax audit report copy etc. From the audited financials furnished by the assessee the Assessing Officer noted that the assessee has not filed tax audit report in form No.3CD but has filed a copy of the statutory audit report only. He noted that the copy of the working of deduction u/s 80-IA and copies of the agreements with the various Govt. departments / Principals have not been furnished. He, therefore, asked the assessee to furnish Form No.10CCB along with the audit report to substantiate its claim of deduction u/s 80-IA and to show that all the necessary conditions mentioned in section 80-IA are met. He also asked the assessee to provide the details of the date on which the deduction was first claimed. He also informed the assessee that the claim of deduction shall be disallowed in case of failure to produce the requisite documents/explanations.
4. The assessee in response to the above filed certain documents which include copy of Form No.10CCB and chart showing working of computation of profit derived from eligible business u/s 80-IA of the Act. The assessee also submitted copies of ledger account and extracts of some bills in support of income received.
However, the Assessing Officer was not satisfied with the submissions made by the assessee. He noted that the assessee has not given (i) the copy of agreement of enterprise with the Central Government or a State Government or a local authority or any other statutory body for carrying on the business of developing or operating and maintaining or developing, operating and maintaining a new infrastructure facility and (ii) evidence of having filed Form 10CCB and copy of the agreement of the enterprise with the Central Government or a State Government or a local authority or any other statutory body for carrying on the business of developing or operating and maintaining or developing, operating and maintaining a new infrastructure facility.
He, therefore, was of the opinion that from the documents which are available on record, it is not clear as to whether the assessee has undertaken any business of developing or operating and maintaining or developing, operating and maintaining the new infrastructure facility. According to him the payments appear as contract payments and the assessee has brought nothing on record to justify its claim that it is carrying on the business of developing or operating and maintaining or developing, operating and maintaining the new infrastructure facility. The Assessing Officer was of the opinion that the assessee is a contractor and has executed the work contracts awarded by the clients/Govt. agencies involved in construction of infrastructure related projects. Merely by executing the works contracts relating to infrastructure projects, the assessee cannot be considered as an enterprise carrying on business of developing, operating and maintaining of any new infrastructure facility within the meaning of section 80-IA of the Act. He further noted that in most of the cases, the copies submitted do not contain details of the nature of work. He referred to the bill of the Commissioner, City Corporation, Gulbarga where it has been mentioned as under: "Name of Work Improvement of Road from Gulbarga Railway Station one way to join Ring road Via SVP Circle, Goa Hotel, Lalgeri Cross & Shahabazarcross to Ring Road in Gulbarga City" Further, in the bill of Contract Receipt Bidar, Karnataka it is also clearly mentioned as: Name of Work "Work services for Resurfacing of Runway & Taxi Tracks, Renovating Rigid Dispersal and Associated works at 406 AFS Bidar"
7. He, therefore, was of the opinion that the assessee has not carried out any work of development of new Infrastructure facility in these cases. He further noted in other cases also that it could not be verified for want of documents from the assessee's end.
8. The Assessing Officer referred to CBDT's Circular No.4/2010 dated 18.05.2010 according to which simply relaying of an existing road could not be classifiable as a new infrastructure facility for the purpose of section 80-1A(4)(1) of the Act. The Assessing Officer relying on various decisions held that the assessee is not eligible for deduction u/s 80-IA of the Act for the following reasons:
"i) Upon completion of the contractual obligations, the assessee is being paid the agreed contract price as per work completed. The mere fact that TDS was deducted shows that the relationship between the assessee, purportedly the developer and the government is that of contractor and contractee. ii) The assessee company has acted as a contractor only on a specific contract allotted by its principals, cost of which has been reimbursed from the principals who is the actual owner/developer. iii) The assessee's profits are not out of operation of the infrastructure facility but out of construction of the infrastructure facility, for which it has received payment from the government/principals. iv) Even if for the sake of argument, one accepts the assessee's stand that it is the developer of the project, even then it would not be covered by section 80-1A because nowhere does the section refer to income from transfer of a developed facility, but refers constantly to income from operation and maintenance of such facility. v) Section 80-IA(2) talks of deduction specified in sub section (1), which can be claimed for any ten consecutive assessment years beginning from the year in which the undertaking or enterprise develops and begins to operate the infrastructure facility. It is from the operation of the infrastructure facility that income is exempt. In order words it is the income earned from the operation of infrastructure facility, and not construction of the infrastructure facilities that is eligible for deduction u/s 80-IA of the Income Tax Act, 1961. vi) The developer is the person who conceives the project. It is not necessary for the developer to execute the project. A contractor on the other hand is the person who constructs the project and while part of the work may be subcontracted out, the contractor remains the contractor and does not become the "developer". The idea for the projects has originated from the government. They have conceived the idea, put it together, raised the funds and then found the person to carry out the activity, according to the specific terms and conditions and through the procedure of calling for tenders from such persons that qualify. The assessee is therefore not a developer by any stretch of terminology. It is not developing the infrastructure project, but is merely constructing or building in for someone else as per the guidelines and specification provided."
Finally the Assessing Officer rejcted the claim of deduction u/s. 80- IA(5) by observing as under: "The assessee has failed to discharge its onus for proving that it was eligible for deduction u/s 80-IA by not furnishing copy of agreement executed by the assessee with Government or any other person/agency to the satisfaction of the undersigned. The assessee does not own any infrastructure facilities of its own which is a prime condition for allowance of deduction u/s 80-IA (4) of the Act. The assessee has not fulfilled the prime conditions laid down for claiming deduction u/s 80-14 (4) of the IT Act, 1961 therefore, the assessee is not eligible for deduction claimed u/s 80- IA (4) of Rs.5,60,11,420/-. In view of above facts & circumstances of case and mandate of statute, the undersigned has no other alternative left except to disallow the deduction claimed by the assessee u/s. 80-1A(4) at Rs.5,60,11,420/- The findings are also supported by the statutory auditor of the assessee company which states in his report under note 34 that that "The provision for taxation is made on the basis of taxable income for the current accounting year in accordance with the provisions of the IT Act 1961. The company has claimed deduction u/s 80-IA of the IT Act 1961 for its projects executed for infrastructure development of roads which is conflicting to the provisions of the Act". It is evident that the assessee does not fulfill the conditions laid down for qualifying for deduction u/s 80-IA of the IT Act and that the assessee has wrongly claimed such deduction in its return of income. Also, it is imperative to mention here that department has already filed a writ before H'ble Bombay High Court (Bench at Aurangabad) against allowance of deduction u/s 801A to the assessee by Settlement Commission for various assessment years till AY 2012- 13. Accordingly, after considering all the above aspects and to maintain consistency in the view of the department, the deduction claimed by the assessee u/s. 80-1A of the Act at Rs.5,60,11,420/- is hereby disallowed and added to the total income of the assessee as taxable income. Penalty proceedings u/s 271(1)(c) is hereby initiated separately on this issue."
Similar disallowance was made by the Assessing Officer for assessment year 2014-15 at Rs.6,71,03,897/- and for assessment year 2015-16 at Rs.7,02,87,260/-.”
5.4. Ld. CIT(A) had allowed the claim of deduction u/s. 80-IA. Arguments made before the ld. CIT(A) and his observations and findings are contained in para 11 to 13 which are also extracted below for ready reference: “11. Before the Ld. CIT(A) it was argued that the assessee has filed certain documents which include Form 10CCB and chart showing working of computation of profit derived from eligible business u/s 801A. The assessee had also submitted copies of ledger account and extracts of some bills in support of income received. It was argued that the basic required information in Form No.10CCB and the chart showing working of computation of profit derived from eligible business u/s 801A were duly furnished. It was submitted that as per the details furnished there is quantification of deduction u/s 801A of Rs.5,60,11,420/-. It was further submitted that the assessee has not claimed any deduction u/s 801A of the Act in respect of the following works: 1. Baner SWD work order no. 10237 2. Sancheti Work oder no. 709 3. Sangamwadi Yerwada work order no.833 4. Vitthalwadi work order no. 10293 5. Wadgapn BK. Works order no. 10239 6. Wadgapn Sheri works order no. 10238 12. It was submitted that a detailed note in respect of claim u/s 801A was filed before the Income Tax Settlement Commission which was duly accepted after considering the legal position in this respect. It was argued that once the benefit of section 801A is given in the initial year then it would continue for the subsequent years and it cannot be withdrawn intermittently without there being any change in the facts of the case. The assessee also submitted that in the e-filing portal Form No.3CEB, 10CCB, 3CA and 29B have been filed online in time. Relying on various decisions it was submitted that the assessee is eligible for the claim of deduction u/s 801A of the Act.
Based on the arguments advanced by the assessee the Ld. CIT(A) allowed the claim of deduction u/s 801A by observing as under:
"8.4.1. The findings of the AO and the submission of the appellant has been considered. The orders passed by NFAC for AYs 2017- 18, 2018-19 and 2020-21 has been perused. It is seen that the issue is a repetitive one and has been arising year after year. It is also seen that the issue was first decided by the Settlement Commission in their order dated 19.03.2015 for AY 2012-13 in which the ITSC discussed the entire issue of difference between Contractor and Developer and after taking into account the decision of ITAT, Hyderabad in the case of Koya Construction Ltd Vs ACIT (2012) as well as decision of Bombay High Court in the case of CIT VS Glenmark Pharmaceuticals (324 ITR 199), the appellant was held as eligible for deduction U/s 801A. The AO has also mentioned this fact in the assessment order and has stated that the disallowance is being done in this year also as all these orders have been subjected to further appeal and hence to maintain judicial consistency. 8.4.2 Further the appellant has listed out the ineligible project and withdrawn 801A claim amounting to Rs.49,45,270/- on these projects. Similar disallowance has been sustained by the CIT(A) in order for AY 2017-18 also. 8.4.3 Following the earlier orders passed on this issue by the Settlement Commission and the NFAC, I hold that the appellant is eligible for claim of deduction U/s 801A on the projects that are eligible. Accordingly, the 801A claim of the appellant is restricted to Rs.5,10,66,149/- and the addition of Rs.49,45,270/-is confirmed. This ground of appeal is partly allowed."
6. Ld. DR contested on two broader grounds in respect of disallowance of deduction claimed u/s.80-IA, namely: A. Projects undertaken by the assessee do not fall under the category of “new infrastructure facilities” as required u/s. 80-IA(4). B. Assessee in respect of the impugned projects acted as a contractor and not a developer.
6.1. Ld. DR had further, argued that ld. AO simply relied on the order of Income Tax Settlement Commission for AY 2012-13. He thus, submitted that nature of projects executed differ from year to year and, therefore, eligibility for deduction u/s. 80-IA(4) should be examined qua the nature of project and not qua the identity or status of assessee as a developer. Ld. Counsel for the assessee placed reliance on the order of ld. CIT(A) and referred to various judicial precedents discussed in the said order. He submitted that assessee had given bank guarantee, taken huge financial risk of maintenance, mobilised the equipment, arranged working capital and had also undertaken risk after completion of the project and thus, justified the relief granted by ld. CIT(A).
The Co-ordinate Bench gave its concluding observations and findings on the grounds raised
by the revenue and found it proper to restore the issue to the file of ld. AO giving direction to considered the allowability of deduction u/s. 80-IA in the manner directed by it. Relevant paragraph in this respect are extracted below for ready reference: “27. We have heard the rival arguments made by both the sides, perused the orders of the Assessing Officer and the Ld. CIT(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find the Assessing Officer in the instant case rejected the claim of deduction u/s 801A(4) on the ground that the assessee has not given complete details of the work undertaken by the assessee. Further, the assessee has acted only as a contractor on specific contracts allotted to it by its principals cost of which has been reimbursed from the principals who are the actual owners/developers. The assessee has not fulfilled the conditions prescribed under the provisions of section 801A(4) and the statutory auditors of the assessee company in their audit report have also qualified for such claim. Further, the Revenue has not accepted the order of the Settlement Commission allowing the claim of deduction u/s 80IA for various assessment years till 2012-13 and filed appeals before the Hon'ble High Court which are pending before the Hon'ble High Court.
28. We find the Ld. CIT(A) allowed the claim of deduction u/s 801A of the Act following the order of the Settlement Commission, the reasons of which have already been reproduced in the preceding paragraphs. It is the submission of the Ld. DR that the Assessing Officer in the assessment order has categorically mentioned that the other projects for which deduction u/s 80IA has been claimed by the assessee could not be verified for want of documents. It is his submission that the order of the Ld. CIT(A) is a non-speaking one and displays blatant non-application of mind and he has not discussed the nature of projects executed in various years which are different from the projects for which the Settlement Commission has allowed the claim of deduction u/s 801A. Further the assessee before the Ld. CIT(A) has suo motO withdrawn the claim of deduction u/s 801A in some of the projects. Under these circumstances, without verifying the complete details the L.d. CIT(A) should not have allowed the claim of deduction u/s 801A to the assessee.
We find some force in the above arguments of the Ld. DR. A perusal of the order of the Ld. CIT(A) shows that he has allowed the claim of deduction u/s 801A by following the order of the Settlement Commission for assessment year 2012-13. However, it is a fact that the assessee, apart from continuing the various projects which were eligible for deduction u/s 801A in assessment year 2012-13 as per the order of the Settlement Commission has also undertaken certain new projects during the impugned assessment year as well as in subsequent years. It is also an admitted fact that after claiming the deduction u/s 80IA(4) the assessee suo motu before the Ld. CIT(A) has withdrawn its claim of deduction to the extent of Rs.49,45,270/- for assessment year 2013-14, Rs.35,97,996/- for assessment year 2014-15 and Rs.41,94,902/- for assessment year 2015-16. Since the assessee has claimed the deduction u/s 80IA(4) on the eligible profits before the Assessing Officer and has suo motu withdrawn partially its claim of deduction u/s 801A(4) before the Ld. CIT(A) and since the auditors have also given some comments regarding the eligibility of the assessee for such claim of deduction u/s 801A(4), therefore, the Ld. CIT(A) should have been a little bit vigilant before allowing the claim of deduction u/s 801A(4) on all the projects after due verification of the new projects that have been undertaken by the assessee during this year and subsequent years and not merely by relying on the decision of the Settlement Commission. No doubt, at the time of hearing before the Settlement Commission as stated in the order, after considering the details furnished by both the sides, the Settlement Commission have allowed the claim of deduction u/s 801A in respect of eligible contracts only. The relevant observations of the Settlement Commission at paras 36 and 36.1 read as under: 36. DECISION We have carefully considered the submissions made by the CIT(DR) and the learned AR of the applicants on the above issue. We have also taken note of the various decisions relied upon by both the parties in respect of the allowability or otherwise of the deduction under Section 801A of the Act. The statutory provisions, the circulars issued by the CBDT and the legal issues arising from the various judicial pronouncements have also been examined with reference to the factual aspects of the contracts carried out by the applicants, in respect of which the deduction under Section 801A has been claimed. We are of the considered opinion that the applicants have satisfactorily established the admissibility of the above deduction on the facts of the cases. We would also like to observe that the department's reliance upon the decision of the Hon'ble Supreme Court in the case of Sun Engineering is apparently misplaced, as the above judgement was rendered in the context of Section 147/148 of the Act and it cannot be applied to the provisions contained under Section 153A of the Act, as reproduced hereunder:- "1534. [(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 1324 after the 31" 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 referred to in clause (b), in the prescribed form and verified in the prescribed manner and setting forth such other particulars as maybe 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:" 36.1 It is very clear from a bare reading of the above provisions that the return of income filed in response to the notice issued u/s 153A is required to be treated as a return filed u/s 139 of the Act. It is altogether a fresh return, requiring assessment or reassessment of the total income, as the case may be. The assessee is entitled to make a fresh claim in the said return, which might not have been claimed in the original return filed u/s 139 of the Act. Similarly, the A.O. is also entitled to re-examine the issues and make a reassessment in respect of such return. However, the assessee is required to comply with the necessary conditions, wherever laid down, in support of its claim. In the present cases, there has been no such failure on the part of the applicants. Further, the assessee is also entitled to make an enhanced claim for such deduction, in respect of the undisclosed income shown in the return filed u/s 153A and/or the additional income offered/computed in respect of the settlement application filed. It has been submitted by the learned AR that the applicants have made claim for deduction u/s 80IA of the Act in respect of the eligible contracts only. Further, it has been clarified that the above claim has not been made in respect of the works contract, which are prima-facie not eligible for the same. Under the circumstances, we hold that the applicants are entitled to claim deduction u/s 801A of the Act for the years under settlement, wherever applicable. Accordingly, the above issue gets settled.
It is also an admitted fact that the Department has not accepted the order of the Settlement Commission and has gone on appeal before the Hon'ble High Court Under these circumstances, we are of the considered opinion which is pending Under that while the assessee is entitled for deduction u/s 801A in respect of the projects which were subject matter of application before the Settlement Commission, however, the same cannot be blindly applied to the other projects without considering the nature and terms and conditions of each contract. The new contracts undertaken during the year may or may not be eligible for deduction u/s 801A(4). Under these circumstances, we deem it proper to restore the issue to the file of the Assessing Officer with a direction to consider the allowability of deduction u/s 801A in the following manner: (a) Verify and allow the claim of deduction u/s 80IA(4) in respect of the projects which were the subject matter of application before the Settlement Commission till assessment year 2012-13 which were still continuing in the above 3 years i.e. assessment years 2013-14, 2014-15 & 2015-16; (b) Disallow the claim of deduction u/s 80IA(4) in respect of the projects for which the assessee has suo moto withdrawn the claim before the Ld. CIT(A). (c) So far as the other projects / contracts are concerned i.e. not covered by clause (a) & (b) above, the Assessing Officer shall verify the nature, terms and conditions of each contract separately and in case the terms and conditions are similar to the projects mentioned at clause (a) above, then allow the claim of deduction u/s 801A(4).”
7.1. Thus, considering factual matrix in the present case and the grounds raised by the revenue, the present appeal is squarely covered by the decision of Co-ordinate Bench of ITAT Pune in assessee’s own case (supra). Accordingly, grounds raised by the revenue are allowed for the statistical purposes. Since, identical issues are involved in the appeal for AY 2018-19, our above stated observations and findings apply mutatis-mutandis.
In the result, both the appeals of the revenue are allowed for statistical purposes.
Order pronounced in the open court on 29.12.2025.