THE COMMISSIONER OF INCOME TAX-II, NASHIK vs. P C SHAH DEVELOPERS PVT. LTD

ORDER : ( PER R. M. BORDE, J. ) 1 Heard learned Counsel for respective parties. 2 This   is   an   appeal   by   the   Revenue   challenging   the decision   rendered   by   Income   Tax   Appellate   Tribunal,   Pune, dismissing the appeal presented by the Revenue, by an order dated 17.11.2011,   thereby   confirming   the   order   passed   by   the Commissioner of Income Tax (Appeals), dated 14.03.2006. 3 According to the Revenue, since the original firm M/s P.C.Shah   &   Company,   being   not   eligible   for   deduction   under Section   80IA(4)   of   the   Income   Tax   Act,   hence,   the   successor

{2} ita2312.odt Company i.e. M/s P.C.Shah Developers Private Limited, is also not eligible for deduction under the aforesaid provisions of the Income Tax Act. 4 The   assessee   Company   has   been   incorporated   on 11.11.1999. The Company has taken over “BOT” project of M/s P.C.Shah & Company with effect from date of incorporation.  The firm was awarded work in respect of construction of bridge on Surat­Hyderabad­Dhule­Nagpur   Road.     The   contract   has   been converted to “BOT” agreement on 12.05.1999. It is not a matter of dispute   that   the   construction   work   of   the   bridge   has   been completed   on   30.09.1999. As   per   the   terms   of   agreement, construction work of the bridge has been completed on BOT basis by the firm and was authorised to collect toll from 01.10.1999. The firm accordingly started collection of toll from the given date.  The project   has   been   transferred   since   11.11.1999   to   the   assessee Company and accordingly the Company has started collecting the toll. 5 The   assessee   Company   claimed   deduction   under Section 80IA(4) of the Income Tax Act, which, according to the Revenue,   cannot   be   allowed.     The   Assessing   Officer   passed assessment   order   on   31.03.2004   thereby   directing   addition   of amount of Rs.40,88,524/­ and Rs.11,88,610/­ for the purposes of computation of income. 6 Being aggrieved by the order passed by the Assessment Officer,   Respondent­Company   preferred   an   appeal,   which   was allowed by the Commissioner of Income Tax (Appeals) vide order

{3} ita2312.odt dated 14.03.2006. The Revenue, being aggrieved by the decision of the appellate authority, preferred an appeal, which was heard and disposed of by the Income Tax Appellate Tribunal, Pune, which came to be dismissed by an order dated 17.11.2011. 7 The   Commissioner   of   Income   Tax   as   well   as   the Tribunal   concurrently   held   that   there   is   no   reason   to   doubt genuineness about conversion of the firm into Company and the same was allowed with the approval of P.W.D.  It is, thus, recorded that there is no substance in the contention of Revenue that since the assessee firm was not eligible for deduction under Section 80IA (4) of the Act, the assessee Company cannot be held entitled for the same since there is no dispute that the enterprise is entitled to claim deduction, under the said provision, even for maintenance and operation of the project.  The Tribunal, while recording finding, has   taken   into   consideration   the   decision   of   Commissioner   of Income Tax (Appeals), wherein a finding has been recorded that the issue of transfer has been discussed by the learned CIT (Appeals) in case of the Company for the assessment years 2000­2001 and 2001­2002 and it has been categorically held that the transfer was valid.     The   provision   of   transfer   of   the   project   was   duly incorporated in the original contract awarded by P.W.D. with the permission   of   the   Chief   Engineer.     The   Chief   Engineer,   P.W.D. allowed   change   of   name   of   the   contractor   in   the   record   of Government   from   M/s   P.C.Shah   &   Company   to   M/s   P.C.Shah Developers Pvt.Ltd. and allowed the Company to collect the toll and maintain the bridge with effect from 11.11.1999. The transfer was effected at the cost price i.e. cost  incurred on the construction of the   bridge   as   reduced   by   the   toll   collected   by   the   firm   before

{4} ita2312.odt transfer.  In this view of the matter, it was held that the transfer is a   valid   transfer.     The   very   basis   for   allowing   the   relief   to   the assessee is the first appellate order for the assessment years 2000­ 2001 and 2001­2002 in the case of the Company holding that the operation and maintenance of the bridge from the date of transfer i.e. 11.11.1999 belonged to the Company. 8 On   consideration   of   the   reasons   recorded   by   the Tribunal, we do not find any reason to doubt the finding recorded by the Tribunal in respect of genuineness of transfer of the firm into Company.  As such, there is no substance in the contention of Revenue that since  the assessee was not  eligible  for  deduction under Section 80IA(4) of the Act, the assessee Company cannot be held to be entitled for the same, since there is no dispute that the enterprise is entitled for deduction under the said provision even for   maintenance   and   operation   of   the   bridge.     The   assessee Company   was   operating   and   maintaining   the   bridge   after   the project was transferred to it from the firm.   No other issue has been raised in the appeal. 9 For the reasons recorded above, we do not find any ground to entertain the appeal.  The appeal is devoid of substance.

Hence stands dismissed.

A.M. BADAR R.M.BORDE JUDGE

JUDGE adb/ita2312