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

903-2997-2018-ITXA=.doc IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIRCUIT BENCH AT KOLHAPUR CIVIL APPELLATE JURISDICTION INCOME TAX APPEAL NO. 2997 OF 2018 The Principal Commisisoner of Income Tax-1 … Appellant Versus Mahalaxmi Infra Projects Ltd. … Respondent …………. Ms. Smita Thakur (through VC), Advocate for the Appellant. None for the Respondent. …………. CORAM : SHREE CHANDRASHEKHAR, CJ & MADHAV J. JAMDAR, J. DATE : 24th APRIL, 2026. P. C. : The only argument raised on behalf of the Revenue is that the Commissioner of Income Tax (Appeals) [CIT(A)] as well as the Income Tax Appellate Tribunal [Tribunal] did not advert to the definition of ‘infrastructure facility’ as indicated under explanation-I(2) of Section 80IA(4), which read as under:- “Explanation- For the purposes of this clause, “infrastructure facility” means (a) a road including toll road, a bridge or a rail system; (b) a highway project including housing or other activities being an integral part of the highway project; (c) a water supply project, water treatment system, irrigation project, sanitation and sewerage system or solid waste management system; (d) a port, airport, inland waterway [inland port or navigational channel in the sea];” Uday S. Jagtap 1 of

5 UDAY SHIVAJI JAGTAP Digitally signed by UDAY SHIVAJI JAGTAP Date: 2026.04.24 19:34:24 +0530

903-2997-2018-ITXA=.doc 2. There is no dispute that the Assessee Company is engaged in the business of construction of road etc. However, the issue which was required to be decided by the Assessing Officer was whether the contract in respect to which the Assessee Company was seeking exemption under section 80(1)A(4) falls under the category of ‘infrastructure facility’. Quite evidently, this issue shall be decided on facts. Two authorities have held against the Revenue and came to a conclusion that the respondent-assessee was dealing with infrastructure projects. 3. The Tribunal also discussed this issue raised on behalf of the Revenue, in para 13, 14, 15 and 16 which read as under:- “13. We have heard the rival contentions and perused the record. In the facts of the present case, the assessee was engaged in the business of executing contracts of civil work. In the return of income filed for the year under consideration, the assessee had claimed deduction under section 801A(4) of the Act. The assessee had furnished the return of income on 31.10.2007 declaring total income of Rs.1.26 crores after claiming the aforesaid deduction at Rs.7.89 crores. Search and seizure operations were carried out on 23.09.2009. In 153A proceedings, the assessee was held to be not eligible for claiming deduction under section 801A(4) of the Act on the return of income filed by it. Further, during the course of search, certain additional income was offered by the assessee on account of certain expenses, on which the assessee claimed deduction under section 801A(4) of the Act. The Assessing Officer denied deduction under section 801A(4) of the Act on basic profits of business and also deduction on additional income. The case of assessee travelled upto the Tribunal and in ITA Nos.2571 to 2577/PN/2012, relating to assessment years 2004-05 to 2010-11 and Cross Appeals in ITA Nos.50 to 56/PN/2013, the first issue which was raised before the Tribunal was the claim of deduction under section 801A(4) of the Act on account of infraprojects carried on by the assessee. The Tribunal deliberated upon the issue and noted the factual aspects and also the grounds on which the said deduction was not allowed to the assessee that the assessee was a contractor. The Tribunal vide paras 127 to 129 at pages 72 to 75 of the order dated 09.12.2015 held the assessee to be entitled to claim the deduction under section 801A(4) of the Act considering the fact that irrigation project of assessee was an infra project. It also noted the decision in favour of assessee by the Uday S. Jagtap 2 of

903-2997-2018-ITXA=.doc Tribunal in assessee's own case for assessment year 2003-04 Vide ITA No.433/PN/2007, order dated 06.02.2012. The relevant findings of the said order of Tribunal are reproduced under para 128 of the order of Tribunal. Hence, in 153A proceedings, after search on the premises of assessee, the first ssue which was adjudicated by the Tribunal for the years, which are in appeal before us was that the assessee fulfils the conditions of executing infra project and hence, was entitled to claim deduction under section 801A(4) of the Act. 14. After search proceedings, survey action under section 133A of the Act was conducted on the business premises of assessee, during the course of which, purchases made by the assessee from financial year 2005-06 onwards were verified. The assessee was unable to produce the documents in support of said purchases i.e. purchase orders, delivery challans, goods received, etc. and consequently, the Director of assessee company offered the said purchases as assessee's additional income However, with a rider that during the course of search in the year 2009 the assessee had already declared certain additional income and hence, while estimating the amount of non-genuine purchases, the set off of disclosure already made should be given. In respect of certain purchases, the assessee furnished complete information but in respect of certain purchases, information could not be furnished. The Assessing Officer in such circumstances took up the case for reopening by recording reasons for reopening under section 147 of the Act and issuing notice under section 148 of the Act. The case of assessee was taken up for scrutiny and in the order passed under section 143(3) r.w.s. 147 of the Act, the Assessing Officer made two additions i.e. on account of purchases of Rs.48,78,977/- from M/s. Manvir Metal Pvt. Ltd. being non- genuine and the balance addition was made on account of other purchases, for which no proof could be furnished by the assessee, hence, the additional income. It may be pointed out herein itself that the CIT(A) has deleted additions in respect of purchases made from M/s. Manvir Metal Pvt. Ltd., against which the Revenue is not in appeal. The issue which has been raised by the Revenue is against the claim of deduction under section 801A(4) of the Act perse to the undertaking and claim of deduction under section 801A(4) of the Act on additional income offered by the assessee. 15. Coming to the second issue raised by the Revenue. It may be pointed out that this is not first proceedings which have been taken place against the assessee. The first was 153A proceedings initiated pursuant to search on the premises of assessee in 2009. The assessment in that case was completed vide order passed under section 143(3) r.w.s. 153A(b) of the Act, dated 27.12.2011. In the said assessment order, the Assessing Officer denied deduction under section 801A(4) of the Act holding that the assessee was just a contractor and hence, not entitled to the said Uday S. Jagtap 3 of

903-2997-2018-ITXA=.doc benefit. The matter travelled upto the Tribunal and the Tribunal vide order dated 09.12.2015 has categorically held that the assessee was engaged in executing infra projects and hence, was entitled to deduction under section 801A(4) of the Act. The said decision of the Tribunal has not been overturned by the Hon'ble High Court till now and hence, stands. In such scenario, where the Assessing Officer for the same assessment year initiated proceedings under section 147 of the Act consequent to survey proceedings taken against the assessee on 04.01.2003, the Assessing Officer is precluded from taking the claim of deduction under section 801A(4) of the Act. The CIT(A) has allowed the claim of assessee and there is no merit in the grounds of appeal No.2 and 3 raised by the Revenue in this regard. The assessee was held to be eligible to claim the aforesaid deduction by an order passed by the Tribunal against the order of Assessing Officer passed under section 143(3) r.w.s. 153A(b) of the Act. Hence, we find no merit in the grounds of appeal No.2 and 3 raised by the Revenue. 16. Now, coming to the first issue raised by the Revenue i.e. against the order of GIT(A) in allowing deduction under section 801A(4) of the Act on additional incorne offered by the assessee. It may be pointed out herein itself that during the course of search also, certain additional income was offered by the assessee, on which it claimed the aforesaid deduction under section 801A(4) of the Act. The Tribunal vide paras 132 to 136 at pages 80 to 85 had considered the second issue of allowability of deduction under section 801A(4) of the Act on the additional income declared during the course of search. The said additional income was offered on account of certain non-genuine expenditure being debited in the books of account. The Tribunal in turn, relied on the ratio laid down by the Hon'ble Bombay High Court in the case of Gem Plus Jewellery India Ltd. 333 ITR 175 (Bom) and in the case of CIT Vs. Sheth Developers (P) Ltd. in ITA No.3724/2010, vide order dated 27.07.2012 and also other decisions of Pune Bench of Tribunal. The Tribunal held the assessee to be eligible to claim the said deduction on the additional income offered.” 4. The Hon’ble Supreme Court in the case of Sir Chunilal V. Mehta and Sons Ltd. v. Century Spinning and Manufacturing Co. Ltd. reported in 1962 SCC OnLine SC 57 has expounded the expression ‘substantial question of law’ in paragraph 6 and read as under :- “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 if directly and substantially affects the rights of the parties and if so whether Uday S. Jagtap 4 of

903-2997-2018-ITXA=.doc 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.” 5. In view thereof, there is no difficulty in holding that no substantial questioin of law arises in this case. 6. Income Tax Appeal No. 2997 of 2018 is dismissed. [ MADHAV J. JAMDAR, J.] [ CHIEF JUSTICE ] Uday S. Jagtap 5 of