DY. COMMISSIONER OF INCOME TAX, CIRCLE-3(1), HYDERABAD vs. SAI PAVANI CONSTRUCTIONS INDIA PRIVATE LIMITED, HYDERABAD

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ITA 355/HYD/2018Status: DisposedITAT Hyderabad23 December 2019AY 2012-134 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal found the nature of the assessee's work unclear and remitted the matter back to the AO for a de novo consideration. The AO is to pass a speaking order detailing the nature and scope of the contractual work before deciding the eligibility for deduction.

What were the facts?

The assessee, a construction company, claimed deduction under Section 80IA for executing government contracts. The Assessing Officer (AO) denied this deduction, viewing the assessee as a mere work contractor, not a developer. The Commissioner (Appeals) allowed the deduction, considering the assessee a developer.

What were the issues?

Whether the assessee's activities in executing government contracts qualify it as a 'developer' for the purpose of claiming deduction under Section 80IA.

Which sections of the Income-tax Act were involved?

Section 80IA

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, HYDERABAD BENCH “B”, HYDERABAD

Before: SMT. P. MADHAVI DEVI & SHRI A. MOHAN ALANKAMONY

For Respondent: Smt. Esther N. Hangal
Hearing: 16/12/2019Pronounced: 23/12/2019

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH “B”, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ITA Nos.354 to 356/Hyd/2018 Assessment Years: 2010-11, 2012-13 & 2013-14 Dy. Commissioner of Vs. Sai Pavani Constructions Income Tax, India Private Limited, Circle-3(1), Hyderabad. Hyderabad. PAN: AAKCS 5978 G (Appellant) (Respondent)

C.O. Nos. 17 to 19/Hyd/2018 (In ITA Nos.354 to 356/Hyd/2018) Assessment Year: 2010-11, 2012-13 & 2013-14 Sai Pavani Constructions Vs. Dy. Commissioner of India Private Limited, Income Tax, Hyderabad. Circle-3(1), PAN: AAKCS 5978 G Hyderabad. Cross Objector Appellant in appeal Assessee by: None Revenue by: Smt. Esther N. Hangal Date of hearing: 16/12/2019 Date of pronouncement: 23/12/2019 ORDER PER A. MOHAN ALANKAMONY, AM.:

The above captioned appeals are filed by the Revenue and the Cross Objections are filed by the assessee against the orders of the Ld.

CIT(A)-3, Hyderabad in appeal Nos. 0322, 0043 and 0108/DCIT- 3(1)/Hyd/CIT(A)-3/2016-17, all dated 19/12/2017 passed U/s. 143(3) r.w.s 147 & U/s. 250(6) of the Act for the AYs 2010-11, 2012-13 and 2013-14.

2.

The concise ground raised by the Revenue in all its three appeals are that the Ld. CIT (A) has erred in deleting the addition made by the Ld. AO by granting deduction U/s. 80IA of the Act. The assessee has also raised certain grounds in its cross objection and the concise ground is that the assessee supports the order of the Ld. CIT (A).

3.

The brief facts of the case are that the assessee is a Private Limited company engaged in the business of construction filed its return of income for all the three years claiming deduction U/s. 80IA of the Act. Thereafter, during the course of scrutiny assessment proceedings, the Ld. AO observed on perusing the contract agreement that the assessee is merely a work contractor executing Government contracts and receiving contractual payments from Executive Engineers of Guntur, Kadapa and Nellore. The Ld. AO further observed that the assessee cannot be held as a Developer considering the nature and scope of the contractual obligation. On appeal, the Ld. CIT (A) on examining the job performed by the assessee held that, it could be considered that the assessee is a developer and accordingly granted the benefit of deduction U/s. 80IA of the Act.

4.

Ld. AR vehemently argued in support of the order of the Ld. AO.

5.

At the time of hearing before us, neither the assessee nor the Learned Counsel of the assessee appeared to pursue its appeals. Further, on perusing the order of the Ld. AO as well as the Ld. CIT (A) it is not clear as to what is the nature of work executed by the assessee though it appears that it is mere Government contract which are executed against which payments are received on account of running bills and therefore the assessee cannot be construed as a Developer. Further, the assessee had sought adjournment on the earlier occasion and on this date of hearing none appeared. Considering the above facts and circumstances of the case, we are of the considered view that the matter has to be remitted back to the file of the ld. AO in order to pass speaking order describing the nature and scope of contractual work performed by the assessee and thereafter decide the matter in accordance with law and merit. Accordingly, we hereby remit the matter back to the file of Ld. AO for de novo consideration.

6.

Since all the Cross Objections of the assessee are in support of the order of the Ld. CIT (A), they have become infructuous as all the appeals of the Revenue are remitted back to the file of Ld. AO for fresh consideration.

7.

In the result, all the three Revenue’s appeals are allowed for statistical purposes and the Cross Objections of the assessee are dismissed.

Pronounced in the open Court on 23rd December, 2019.

Sd/- Sd/- (P. MADHAVI DEVI) (A. MOHAN ALANKAMONY) JUDICIAL MEMBER ACCOUNTANT MEMBER Hyderabad, Dated: 23rd December, 2019 OKK Copy to:- 1) Sai Pavani Constructions India Private Limited, H.No.3-6-12, Plot No.P3, Flat No.401, Vaishnavi Residency, Kukatpally, Hyderabad. 2) Dy. Commissioner of Income Tax, Circle-3(1), Room No.714, 7th Floor, Signature Towers, Opp. Botanical Garden, Kondapur, Hyderabad. 3) The CIT (A)-3, Signature Towers, Kondapur, Hyderabad-084. 4) Pr. Commissioner of Income Tax-3, Hyderabad. 5) The DR, ITAT, Hyderabad 6) Guard File

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