ACIT, AMRAVATI CIRCLE, AMRAVATI, AMRAVATI vs. BHARAT RAIL AUTOMATIONS PRIVATE LIMITED, AMRAVATI

PER KHETTRA MOHAN ROY, AM:

This appeal by the Revenue is directed against the order of Ld. Commissioner of Income Tax (Appeals)/NFAC, Delhi, dated 09/09/2023 passed under section 250 of the Income Tax Act, 1961 (for short, “Act”) which is arising out of assessment order passed u/s. 143(3) dated 15.12.2017 by the DCIT, Amravati Circle, Amravati for the Assessment Year 2015-16.

ITA No. 356/NAG/20243 (Bharat Rail Automations Pvt. Ltd.) 2. Brief facts of the case are that assessee is a private limited company, filed its e-return of income for AY 2015-16 on 30.09.2015 declaring income of Rs. 18,82,520/. The case of the assessee was taken up for a scrutiny through CASS. During the course of assessment proceedings, Ld. Assessing Officer (“AO”) made disallowance of Rs.2,17,21,362/- claimed as deduction u/s 801A(4) of the Act. On verification of contract/agreements entered into by the assessee with various railway authorities, the Ld. AO noticed that the assessee executes signaling work and the nature of work executed by the assessee was of a "works contract" and not of a developer who designs and creates a new project or (1) develop, or (ii) operate and maintain, or (iii) develop, operate and maintain a new infrastructure facility. Therefore, as per the Ld. AO, the assessee was not entitled for a deduction u/s 801A(4)(b) of the Act. Similar issue had arisen in the assessee's own case for A.Ys. 2007-08, 2009-10 & 2010-11 wherein the Hon'ble Bombay High Court had passed order in favour of the assessee in ITA Nos. 40/2016, 54/2016 and 55/2016 respectively and upheld the order of this Coordinate Bench. However, in view 2

ITA No. 356/NAG/20243 (Bharat Rail Automations Pvt. Ltd.) of the directions issued by the Joint Commissioner of Income Tax u/s 144A and the fact that the order of the Hon'ble High Court was not received officially in the office of the Pr. CIT-1, Nagpur and scrutiny of the order was still pending and decision of the department as to whether SLP is required to be filed was yet to be taken, the Ld. AO disallowed deduction u/s 801A(4) of the Act of Rs.2,17,21,362/-.

ITA No. 356/NAG/20243 (Bharat Rail Automations Pvt. Ltd.) attention at para 3 of assessment order where details of contract agreement with Railway Authorities, nature of work have been mentioned which indicate that nature of work executed by assessee is in the nature of work contract and not a developer. He further submitted that deduction u/s 80IA ought not to have been allowed by Ld. CIT(A). Therefore, prayed that that grounds of appeal may be allowed.

ITA No. 356/NAG/20243 (Bharat Rail Automations Pvt. Ltd.) and Ld. CIT(A) has rightly followed the decisions in earlier years and deleted the disallowance made by the Ld. AO u/s 80IA of the Act. He explained that in earlier year’s, assessee has been held to be developer and eligible for deduction u/s 80IA of the Act. Therefore, he prayed for dismissal of the appeal filed by the Revenue since he demonstrated that the contract is one and same which is executed for over a period of years.

We have heard both the parties and perused the material 6. placed before us. We observe that in the return of income, assessee claimed deduction u/s 80IA at Rs.2,17,21,362/-, which was disallowed by the Ld. AO. The only reason for not granting disallowance by the Ld.AO is that the activity of assessee is in the nature of works contract and not of a developer who designed project. The very self-same issue and reasoning were considered by this tribunal in assessee’s own case for A.Ys. 2007-08, 2009-10 & 2010-11. The Co-ordinate bench in its order dated 18/12/2015 has directed to allow the claim of assessee u/s 80IA as assessee is developer of Rail

ITA No. 356/NAG/20243 (Bharat Rail Automations Pvt. Ltd.) System being infrastructure facility. The relevant findings as recorded in the order of tribunal at para 12 is as under: “12. In the light of the above discussed and the view taken by the Hon’ble Bombay High Court, we are of the considered opinion that in a situation when the assessee has developed as well as design of the railway signaling system and thereupon procured the material as per the specification of the RDSO / DOT hence the basic conditions have been satisfied. After the completion of fabrication the duty of the assessee was to erect as well as install the system at several designated places as per the agreements signed with various railway authorities. Finally after installation the commissioning has also been done by the assessee so as to execute the complete condition of the contract. As explained before us the terms of the contract was to ‘Built and Transfer’ the said infrastructure facility to the Railway department. Therefore, it can be held that the assessee has completed the requirement as prescribed u/s 80IA(4) of I.T. Act. There was not only a risk but also a reward involved in the said infrastructure facility which were built and transferred by the assessee involving technical persons and substantial finance raised from bank guarantee etc. The project was completed and handed over to the Railway Department along with the designing of the project as is evident from several contracts which are placed on record. We, therefore, hold that the learned CIT(Appeals) has taken a correct view that the assessee is entitled for the claim of deduction u/s 80IA(4) of I.T. Act.”

Ld.CIT(A) has followed the order of this tribunal, which 7. was upheld by the Hon’ble Bombay High Court in its judgement dated 06/04/2017. The order passed by the Jurisdictional High Court is a binding judicial precedent. Contracts referred to in assessment order are provided in the 6

ITA No. 356/NAG/20243 (Bharat Rail Automations Pvt. Ltd.) paper book. We found that contract at Sr.No.1 at pages 99/100 of paper book which indicates scope of work to include making of drawings to be submitted. It is indicative of activity performed as developer. At Sr.No.2 of tabulation in the assessment order nature of work itself notes as complete design and drawing of signalling system. Considering the conspectus of facts and circumstance, we are of the considered opinion that assessee does not merely execute work contract as is being considered for disallowance of deduction claimed u/s 80IA of the Act. Respectfully rely upon the decision of this Tribunal and that of Hon’ble Bombay High Court in assessee’s own case, we hold that CIT(A) has correctly directed to grant deduction u/s 80IA of the Act. Ld. DR did not bring to our notice that any appeal against the order of Hon'ble Bombay High Court in the case of assessee or the same has been overturned. Judicial consistency requires that once deduction has been granted for earlier assessment years, by no means under identical facts it can be denied subsequently. In view of above, we find no infirmity in the order passed by the Ld.

ITA No. 356/NAG/20243 (Bharat Rail Automations Pvt. Ltd.) CIT(A). This grounds of appeal raised by the Revenue are dismissed.

Order pronounced on 02.04.2026 under Rule 34 of Income Tax (Appellate Tribunal) rules 1963

sd/- sd/- PAWAN SINGH KHETTRA MOHAN ROY JUDICIAL MEMBER ACCOUNTANT MEMBER

Nagpur: Dated: 02/04/2026

vr/-

Copy to:

Senior Private Secretary ITAT, Nagpur