THE PR. COMMISSIONER OF INCOME TAX-1 vs. MAHALAXMI INFRA PROJECTS LTD.

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ITXA/2691/2018HC Bombay23 September 2026Bench: HON'BLE SHRI JUSTICE SUMAN SHYAM HON'BLE SHRI JUSTICE GAUTAM A. ANKHAD7 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the questions formulated by the Appellant did not give rise to a substantial question of law warranting interference under Section 260-A. The first question was deemed a reconsideration of factual conclusions already concurrently decided by the CIT(A) and the Tribunal in favour of the Assessee, without the Department demonstrating ignored evidence or erroneous legal tests. The second question was dismissed as the Tribunal's reliance on its own prior order, confirmed by the High Court, was not arbitrary or perverse. The Court noted that Section 260-A does not grant general appellate jurisdiction for re-appreciating evidence. Furthermore, a co-ordinate bench had previously dismissed a similar appeal for the same assessee and subject matter for a different assessment year, finding no substantial question of law. The appeal was accordingly dismissed.

What were the facts?

The assessee, Mahalaxmi Infra Projects Ltd., claimed deduction under Section 80-IA(4) of the Income Tax Act, 1961, for infrastructure works. The Assessing Officer disallowed this, stating the assessee was a contractor, not a developer. The CIT(A) allowed the deduction, a decision affirmed by the ITAT. The Principal Commissioner of Income Tax-1 appealed to the High Court under Section 260-A, challenging the ITAT's order dated January 17, 2018, for Assessment Year 2011-12. The appeal was heard finally with the consent of parties.

What were the issues?

1. Whether the Assessee is entitled to deduction under Section 80-IA(1) as a developer of infrastructure facilities, or merely a works contractor disentitled by the Explanation to Section 80-IA? (Assessee's entitlement to deduction under Section 80-IA(4) as a developer versus contractor). 2. Whether the ITAT's reliance on its own order, which in turn relied on the Bombay High Court's decision in CIT vs. ABG Heavy Industries Ltd., was arbitrary and perverse due to factual differences? Assessee's contentions: Not explicitly recorded, but the ITAT and CIT(A) found in its favour. Revenue's contentions: The Assessee is a works contractor and not a developer of an infrastructure facility. The ITAT's reliance on its prior order was arbitrary and perverse as the facts of the cited case differed from the present one. The questions raised involve substantial questions of law warranting interference under Section 260-A.

Which sections of the Income-tax Act were involved?

Section 80-IA,Section 80-IA(4),Section 80-IA(1),Section 143(3),Section 260-A

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.2691 OF 2018 The Principal Commissioner of Income Tax-1, ] “Aayakar Bhavan”, 31/C-2, E-Ward, ] Tarabai Park, Kolhapur – 416 003. ] .. Appellant Versus Mahalaxmi Infra Projects Ltd., ] 233/3, S-1 (B), Malati Towers, ] Tarabai Park, Kolhapur – 416 001. ] .. Respondent Mr. Arjun Gupta, Advocate for the Appellant. Mr. Rohan Deshpande with Mr. Vihit Shah, Advocates for the Respondent. CORAM : SUMAN SHYAM & GAUTAM A. ANKHAD, JJ. RESERVED ON : 10th September, 2026. PRONOUNCED ON : 23rd September, 2026. JUDGMENT : { Per Gautam Ankhad, J. } 1. The matter is heard finally with the consent of parties. 2. The Department has filed this Appeal under Section 260-A of the Income Tax Act, 1961 (“the Act”) challenging the impugned order dated 17th January, 2018 passed by the Income Tax Appellate Tribunal Bench, “A” Pune. The Appeal pertains to the Assessment Year 2011-12. 1/7 ITXA-2691-2018(1) - JUDGMENT.doc Dixit CNR No : HCBM020190642018 Uploaded on - 23/10/2026 Downloaded on - 27/10/2026 17:48:21

2026:BHC-OS:23050-DB

3.

The Respondent-Assessee is engaged in the business of construction of roads and other infrastructure works. In its return of income for the year under consideration, the Respondent claimed deduction under Section 80-IA(4) of the Act in respect of the infrastructure works undertaken by it. 4. The Assessing Officer passed an assessment order under Section 143(3) of the Act, disallowing the deduction principally on the ground that the Assessee was merely a contractor and could not be regarded as a developer of an “infrastructure facility” within the meaning of Section 80-IA(4) of the Act. According to the Assessing Officer, the Assessee did not satisfy the statutory requirement of developing, operating and maintaining an infrastructure facility. The Commissioner of Income Tax (Appeals), Kolhapur (“CIT(A)”) in its order dated 30th April, 2014, considered the material on record, and did not accept the aforesaid conclusion of the Assessing Officer, thereby allowing the claim of the Assessee. The Tribunal has affirmed the findings of the CIT(A) and dismissed the Department’s Appeal. The Department is, therefore, before us contending that the questions raised by it involve substantial questions of law warranting interference under Section 260-A of the Act. 2/7 ITXA-2691-2018(1) - JUDGMENT.doc Dixit Uploaded on - 23/10/2026 Downloaded on - 27/10/2026 17:48:21

5.

On 23rd July, 2026, the substantial questions of law were reformulated by the Appellant which read as follows:- “A. Whether the Assessee is entitled to the deduction under Section 80-IA(1) of the Act on the basis that it is into the business of developing, operating and maintaining infrastructure facilities or on the other hand is only engaged as a works contractor and is therefore not entitled to the deduction in view of Explanation to Section 80-IA of the Act? B. Whether the reliance placed by the ITAT upon its own order dated 9th December, 2015 which holds that the ratio of the decision of the Hon’ble Bombay High Court in CIT vs. ABG Heavy Industries Ltd. (2010) (322 ITR 323) is applicable hence the deduction under Section 80-IA is allowable is arbitrary and perverse since the facts of that case differ from the present case?” 6. We have heard the learned counsel for the parties and have perused the record. In our view, the questions formulated by the Appellant do not give rise to a substantial question of law warranting exercise of jurisdiction under Section 260-A of the Act. The expression “substantial question of law”, though not defined in the Act, has received a settled meaning through a long line of decisions of the Hon’ble Supreme Court. In Vijay Kumar Talwar v. CIT1, the Hon’ble Supreme Court, while referring to the Constitution Bench judgment in Sir Chunilal V. Mehta & Sons Ltd. v. Century Spg. and Mfg. Co. Ltd., has laid down the test to be applied in determining whether a question of law is substantial. The relevant portion reads thus:- 1

(2011) 1 SCC 673 3/7 ITXA-2691-2018(1) - JUDGMENT.doc Dixit Uploaded on - 23/10/2026 Downloaded on - 27/10/2026 17:48:21

“20. In Sir Chunilal V. Mehta & Sons Ltd. v. Century Spg. and Mfg. Co. Ltd.2, a Constitution Bench of this Court, while explaining the import of the said expression, observed that: “6. … The proper test for determining whether a question of law raised in the case is substantial would, in our opinion, be whether it is of general public importance or whether it directly and substantially affects the rights of the parties and if so whether it is either an open question in the sense that it is not finally settled by this Court or by the Privy Council or by the Federal Court or is not free from difficulty or calls for discussion of alternative views. If the question is settled by the highest court or the general principles to be applied in determining the question are well settled and there is a mere question of applying those principles or that the plea raised is palpably absurd the question would not be a substantial question of law.” 21. Similarly, in Santosh Hazari v. Purushottam Tiwari3, a three-Judge Bench of this Court observed that: “14. A point of law which admits of no two opinions may be a proposition of law but cannot be a substantial question of law. To be ‘substantial’ a question of law must be debatable, not previously settled by law of the land or a binding precedent, and must have a material bearing on the decision of the case, if answered either way, insofar as the rights of the parties before it are concerned. To be a question of law ‘involving in the case’ there must be first a foundation for it laid in the pleadings and the question should emerge from the sustainable findings of fact arrived at by court of facts and it must be necessary to decide that question of law for a just and proper decision of the case. An entirely new point raised for the first time before the High Court is not a question involved in the case unless it goes to the root of 2 AIR 1962 SC 1314 3 (2001) 3 SCC 179 4/7 ITXA-2691-2018(1) - JUDGMENT.doc Dixit Uploaded on - 23/10/2026 Downloaded on - 27/10/2026 17:48:21

the matter. It will, therefore, depend on the facts and circumstance of each case whether a question of law is a substantial one and involved in the case, or not; the paramount overall consideration being the need for striking a judicious balance between the indispensable obligation to do justice at all stages and impelling necessity of avoiding prolongation in the life of any lis.” 22. In Hero Vinoth v. Seshammal4, this Court has observed that: “(iii)The general rule is that the High Court will not interfere with the concurrent findings of the courts below. But it is not an absolute rule. Some of the well-recognised exceptions are where (i) the courts below have ignored material evidence or acted on no evidence; (ii) the courts have drawn wrong inferences from proved facts by applying the law erroneously; or (iii) the courts have wrongly cast the burden of proof. When we refer to ‘decision based on no evidence’, it not only refers to cases where there is a total dearth of evidence, but also refers to any case, where the evidence, taken as a whole, is not reasonably capable of supporting the finding.” 7. Tested on the aforesaid principles, the present Appeal does not satisfy the threshold contemplated by Section 260-A. The first question essentially seeks reconsideration of the factual conclusion as to whether the Assessee's activities qualify it as a developer of an infrastructure facility for the purposes of Section 80-IA(4). That issue has already been examined by the CIT(A) and the Tribunal on the basis of the material before them, and both authorities have concurrently held in favour of the 4 (2006) 5 SCC 545 5/7 ITXA-2691-2018(1) - JUDGMENT.doc Dixit Uploaded on - 23/10/2026 Downloaded on - 27/10/2026 17:48:21

Assessee. The Department has not demonstrated that these findings are unsupported by evidence, that any material evidence has been ignored, or that the authorities below have applied an erroneous legal test. As regards the second question, the Tribunal has relied upon its own earlier order dated 9th December, 2015, which has been confirmed by this Court. This is specifically recorded in paragraph 13 of the impugned order. We are unable to accept the submission that the Tribunal's order is either arbitrary or perverse merely because it relied upon its earlier decision. Section 260-A does not confer a general appellate jurisdiction upon the High Court to re-appreciate evidence or substitute its own view for the view concurrently taken by the authorities below on questions of fact. 8. There is an additional circumstance which fortifies our conclusion. Mr. Deshpande, the learned counsel appearing for the Respondent, has placed before us a copy of the order dated 24th April, 2026 passed by a Co-ordinate Bench of this Court in Income Tax Appeal no. 2997 of 2018 (Principal Commissioner of Income Tax-1 v. Mahalaxmi Infra Projects Limited) . The said Appeal concerned the same Assessee and the same subject matter, albeit for a different assessment year. The Co-ordinate Bench considered the identical findings contained in paragraphs 13 to 16 of the impugned order and dismissed the Department's Appeal, holding that no substantial question of law arose for consideration. In these 6/7 ITXA-2691-2018(1) - JUDGMENT.doc Dixit Uploaded on - 23/10/2026 Downloaded on - 27/10/2026 17:48:21

circumstances, the Appeal cannot be converted into a third round of factual scrutiny. The Appeal is, accordingly, dismissed. 9. We are also constrained to record that we have noticed in a number of matters that the Department mechanically drafts questions of law, by projecting those as substantial questions of law without even considering the law and the restrictive scope of appeal under Section 260A of the Act. We have also noticed that on numerous occasions, legal objection and/or purported grounds of challenge to the orders of the Tribunal have been projected as questions on substantial questions of law, based on which, a large number of Income Tax Appeals have been filed under Section 260A of the Act in a most mechanical manner. These appeals are pending since past several years, without any effective order passed therein, thereby unnecessarily burdening this Court thus resulting in unwarranted delays in disposing of matters involving various legal issues. The Appellant is therefore, cautioned that if Appeals are filed henceforth without formulating proper substantial question(s) of law or without examining the statutory provisions, consequential orders shall be passed. 10. A copy of this order be sent to the Principal Chief Commissioner of IT Department. [ GAUTAM A. ANKHAD, J. ] [ SUMAN SHYAM, J. ] 7/7 ITXA-2691-2018(1) - JUDGMENT.doc Dixit SNEHA ABHAY DIXIT Digitally signed by SNEHA ABHAY DIXIT Date: 2026.10.23 18:11:13 +0530 Uploaded on - 23/10/2026 Downloaded on - 27/10/2026 17:48:21 Powered by TCPDF (www.tcpdf.org)

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