GVPR ENGINEERS LIMITED,HYDERABAD vs. DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 1 (3), HYDERABAD

ITA Nos 695 and 696 of 2020 GVPR Engineers Ltd Hyderabad

आयकर अपील�य अ�धकरण, हैदराबाद पीठ IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘ B‘ Bench, Hyderabad Before Shri R.K. Panda, Accountant Member AND Shri Laliet Kumar, Judicial Member ITA Nos.695 & 696/Hyd/2020 Assessment Years: 2012-13 & 2013-14 GVPR Engineers Ltd Vs. Dy. CIT Hyderabad Central Circle 1(3) PAN:AAACG7614F Hyderabad (Appellant) (Respondent) Assessee by: Shri P. Murali Mohan, CA and Shri M.V. Joshi, CA Revenue by: Shri Y.V.S.T. Sai, CIT(DR) Date of hearing: 29/08/2022 Date of pronouncement: 21/11/2022 ORDER Per R.K. Panda, A.M The above two appeals filed by the assessee are directed against the separate orders dated 7.8.2020 of the learned CIT (A)-11, Hyderabad relating to A.Ys. 2012-13 & 2013-14 respectively. Since identical issues are involved in both the appeals, therefore, both these appeals were heard together and are being disposed of by this common order for the sake of convenience.

ITA Nos 695 and 696 of 2020 GVPR Engineers Ltd Hyderabad

application filed along with the affidavit and after hearing both the sides, the delay in filing of the above two appeals by the assessee is condoned and the appeals are admitted for adjudication. ITA No.695/Hyd/2020 – A.Y 2012-13 3. Facts of the case, in brief, are that the assessee is a company engaged in execution of electrical, civil and infrastructure projects. It filed its return of income on 29.9.2012 declaring total income at Rs. 2,86,10,170/- after claiming deduction of Rs.20,66,95,675/- u/s 80IA of the I.T. Act, 1961. The case was selected for scrutiny and the Assessing Officer completed the assessment u/s 143(3) on 23.3.2015 determining the total income at Rs.24,95,95,580/-. The CIT (A) vide order dated 29.03.2016 gave partial relief wherein he granted deduction u/s 80IA in respect of irrigation projects and rejected the claim of deduction u/s 80IA in respect of electrical projects.. The Assessing Officer passed the consequential order on 19.10.2016 giving effect to orders of CIT (A) determining the total income at Rs.13,89,25,252/-.

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Assessing Officer accordingly vide order dated 30.12.2019 determined the total income of the assessee at Rs.13,89,25,252/-.

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the issue came up before the learned CIT (A) for the A.Ys 2011-12 & 2012-13 wherein the learned CIT (A) also took the same view and decided the issue following the order of his predecessor for the A.Y 2010-11. On further appeal by the assessee, the Tribunal vide order dated 15.12.2019 in ITA No.1017 & 1018/Hyd/2016 allowed the claim of the assessee and the M.A filed by the Revenue is pending for adjudication before the Tribunal. In the light of the above, the CIT (A) held that the assessee is eligible for deduction u/s 80IA in respect of the income from irrigation projects at Rs.11,06,70,328/- as per the original claim and also the enhanced claim of Rs.84,69,740/-. So far as the deduction u/s 80IA with respect to the electrical project is concerned, the learned CIT (A) rejected the claim of the assessee.

ITA Nos 695 and 696 of 2020 GVPR Engineers Ltd Hyderabad

projects. As far as the deduction u/s.801A w.r.t the income from Irrigation projects are concerned the direction of Hon'ble ITAT for A.Y-2004-05 to 2009-10 is as under: "The profit from contracts which involves Design, Development, Operating & Maintenance, Financial involvement and a defect correction and liability period is to be computed by the assessing officer on pro-rata basis of turnover. The AO is directed to examine the records accordingly and grant deduction on eligible turnover as above. " The Hon'ble ITAT has followed and allowed deduction u/s. 80IA in respect of Irrigation projects as above for A. Yrs- 22010-11, 2011-12 & 2012-13 also. 4.4.2 Respectfully following the above orders (supra), the AO is directed to allow deduction u/s.801A in respect of the income from Irrigation projects computing the same as per the directions above and keeping in view the facts and circumstances of the case. The Ground Nos. 2 & 3 are disposed off with above direction. 4.4.3 As far as the deduction u/s. 8OIA w.r. to the Electrical projects is concerned, for the A.Y-2003-04 to 2009-10, there is no discussion specifically about such projects in the orders of AO/CIT(A) or that of the Hon'ble ITAT. However, for the A.Y-2010-11, the Hon'ble’ ITAT has decided the issue as under: “8. We have considered the rival submissions and perused the orders the of revenue authorities as well as the material facts on record provisions of sec 8OIA(4)(iv)(b) read as under: "a)…………… b) Starts transmission or distribution by laying a network of new transmission or distribution lines at a time during the period beginning on the 1st day of April, 199 and ending on the 31at day of March, 2013. Provided the deduction under this section to an (undertaking) under sub-clause (b) shall be allowed only in relation to the profits derived from laying of such network of new lines for transmission or distribution." 8.1 As per the above section, an assessee is eligible to claim deduction u/s. 801A(4)(b) by laying the network of new transmission or distribution lines only in relation to the profits derived from laying of such new network. It gives an impression that it who are in the business of transmission or distribution of power. In the present case, the assessee is not in the business of transmission or distribution of power.

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However, learned AR has submitted that in the case of Kinfra Exports(supra), on the similar issue, the ITAT, Cochin Bench has allowed deduction u/s. 80IA (4)|iv)/b). On careful reading of the said judgement, we find that the assessee in the said case was already in the business of transmitting and distributing electricity and it had claimed deduction u/s. 80IA(4)(iv)(b) by laying new network of transmission lines. In the case under consideration, it is different as the assessee is not in the line of generation and distribution of power. However, assessee could have claimed deduction u/s. 80IA(4)|(c). As per this section, a unit which undertakes substantial renovation on modernizing of existing network of transmission or distribution lines at any time during the period beginning on the 1t day of April, 2004 and ending 31.03.2013, is eligible to claim the said deduction. However, the meaning of substantial renovation and modernization is explained as increase in the plant and machinery in the network of Transmission and distribution lines by at least 50%, book value of such plant and machinery as on the 1st day of April, 2004. Since the assessee has not submitted any details, like value of the plant and machinery in the books of contractee company as the assessee is not in the business of transmission or distribution of power, it itself cannot claim. As regards the reliance of the learned Counsel for the assessee on the orders of this ITAT in the assessee's own case for the earlier A Ys, we find that though the projects therein included electricity projects as well. ITAT has not brought out the distinction between section 80lA(4)(iv)(b) and therefore, it cannot be said that this issue is covered by those orders. From the above observations and the detailed observations made by the CIT(A), we are inclined to accept the findings of the CIT(A) to come to a conclusion that the assessee is not eligible to claim deduction u/s. 80IA(4)(iv)(b). Accordingly, we uphold the order of the CIT(A) on this issue and dismiss the grounds of appeal of assessee.” 4.4.3.1 Further, for A.Y-2011-12, the Hon'ble ITAT has decided, the issue as under: "Regarding Ground nos. 1 to 4 for the A. Y 2011-12, covering the issues raised in the grounds of both the appeals for both the years. Ld Counsel for the assessee made the following written submissions, and the same are extracted as under "issues involved in these appeals are: Deduction under sec. 80IA(4)(i)(c) in respect of civil works including irrigation projects and 80IA(4)/iv)(b) in respect of Electrical Projects.

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"We find that though the projects therein included electricity projects as well, ITAT has not brought out the distinction between sec.80IA(4)(iv)(b) and therefore it cannot be said that this issue is covered by those orders. From the above observations and the detailed observations made by the CIT(A) to come to conclusion that the assessee is not eligible to claim deduction u/s.801A(4)(iv)(b). Accordingly, we uphold the order of the CIT(A) on this issue and dismiss the ground of appeal of assessee. We submit that the undertaking referred to in undertaking referred to in sec.80IA(4)(iv) and the proviso to sec. 80IA(4)(iv)(b) are different and cannot be the same. The undertaking referred to in confined sec.80IA(4)(iv) can be to the power transmission or distribution undertaking referred undertaking whereas the to the proviso to this section is different. The proviso reads as under: "Provided the deduction under this section to an undertaking under sub- clause (b) shall be allowed only in relation to the profits derived from laying of such network of new lines for transmission or distribution. In case the undertaking involved in transmission and distribution undertakes laying of such network of new liens will be capital and nature and cannot earn profit for such laying of new lines, therefore, there has to be another undertaking. Hence your appellant is eligible for deduction on profits from electrical projects. It is prayed that deduction under ec.8OIA(4)(iv)(b} may be allowed. 4. The department appeal are in respect of deduction allowed by CIT(A) under sec. 80IA(4)(i)(c): The CIT(A) has followed the ITAT order for A. Y-2004-05 to 2009. 10 in 1TA No.347/H/2008 and others, order of CIT(A) as well ITAT order for a.y-2010 11, the relevant paras are: The Hon'ble ITAT in its order in ITA No.347/H/208, at pages 16 to 21 the projects are extracted and the direction of the ITAT is at 44 8th line reads as under: "Therefore in our considered view, the assessee should not be denied the deduction under: sec.8OIA of the Act, if the contracts involves design, development, operating and maintenance, financial involvement and defect correction and liability period then such contracts cannot be called a simple works contracts to deny the deduction u/s.80IA of the Act, in our opinion the contracts which contain above features to be segregated on this deduction u/s.80IA has to be granted and the other agreements which are pure works contracts hit by the explanation sec. 80IA(13), those works are not entitle for deduction u/s.8OIA of the act. The profit

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from the contracts which involves design, development, operating and maintenance, financial involvement and defect correction and liability period is to be computed by assessing officer on The assessing officer is directed to examine the pro-rata basis of turnover records accordingly and grant deduction on eligible turnover as directed above....” For the a.y-2010-11 the CIT(A) as well as the ITAT have allowed deduction under sec. 80IA(4((i)(c) the relevant paras are: CITA) order pages 6, para 6.2 reads as under: "The issue in the earlier order before the Hon'ble Tribunal was whether the appellant is a work contractor or not. The tribunal had given a finding that the appellant is not a mere work contractor and is therefore entitled for deduction u/s.80IA. Thus, once an appellant is eligible for the deduction under sec.80IA, then, this claim is to be allowed in terms of the order of the Hon'ble ITAT in appellant's own case for earlier years. The finding can therefore be applied to the first three projects namely the claim of deduction u/s.80IA(4)(i)(c). Accordingly, the claim of the deduction u/s.80IA(4)(i)(c) to the tune of Rs. 5, 15,54,567/- is therefore, allowed.

And ITAT order at page-1 1 para-10. 1 reads as under: "The revenue has filed an appeal u/s.260A of the Act challenging the above order of ITAT before the Hon'ble High Court. In the said order, it was held that these contracts are not in the nature of works contracts and thereby explanation to the provisions of sec. 80IA(3) are not attracted. Hence, just to maintain consistency with the stand of the revenue and to keep the issue alive, AO has disallowed the deduction u/s.8OIA(4)i)(c ). Apart from that there is no merit in such disallowance. However, the ld CIT(A) has allowed assessee's claim u/s.80IA(4)(i}(c ) relying on the order of the coordinate bench of this tribunal (supra), hence, we are inclined to uphold the order of CIT[A), in this regard as the order of the CIT(A) is in line with the order of ITAT. In view of the above, the department appeals may be dismissed." 6.1 Further, relying on the decision of Hon'ble ITAT vide its order dt.29.02.2012 in ITA No.347/Hyd/2008 and others, Ld counsel for the assessee submitted that all these issues have to be remanded to the file of CIT(A) for passing an order in compliance with the said order of the Tribunal Referring to above note, Ld Counsel for the assessee

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submitted that the assessee is entitled to deduction u/s.80IA(4) of the Act in respect of both the types of the projects. The said order of the Tribunal helps the assessee if an effect is given and the said decision is honoured by the AO. Further, referring to the allowability of deduction u/s. 80IA(4)/i(c ) of the act, Ld Counsel for the assessee submitted that the ITAT already taken a view in this regard and consequently, the appeals, of the revenue are dismissed. 7. After hearing both sides and also considering the decision of the Coordinate bench of the Tribunal in assessee's own case cited supra, we are of the opinion that the direction's should be given to the CIT(A) to go by the said order of the Tribunal. AO shall grant an opportunity of being heard. Accordingly, ground nos. 1 to 4 are allowed for statistical purposes. The department has filed Miscellaneous Application before the Hon'ble ITAT as the decision given in order by Hon'ble ITAT itself for A.Y 2010-11, where specific issue was before the Hon'ble ITAT, was not allowed, to rectify the mistake. 4.4.3.2. Keeping in view the above, respectfully following the ITAT, order for A.Y 2010-11, on the issue, the ground Nos.4 & 5 are decided against the assessee. It is held that the appellant is not eligible for deduction u/s 80IA in respect of profits from Electrical contracts”. 11. Aggrieved with such order of the learned CIT (A) the assessee is in appeal before the Tribunal by raising the following grounds of appeal: “1. The CIT (A) erred in law and facts of the case in not allowing deduction under section 80IA (4)(iv)(b) of the Income Tax Act, 1961. 2. Your Appellant submits that setting up of new transmission or distribution lines is also development of infrastructure and is eligible for deduction under section 801A of the Income Tax Act, 1961. 3. Your Appellant submits that setting up of new transmission or distribution lines on turnkey basis is not mere works contract, therefore the Explanation to sub-section 13 of section 801A are not applicable and is eligible for deduction under section 80IA(4)(iv)(b) of the Income Tax Act, 1961. 4. The CIT[A) and the Assessing Officer ignored the provision to section 80IA(4)(iv)(b), by virtue of which the profit derived from laying of such network of new lines for transmission or distribution and not profit derived from transmission or Page 11 of 29

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distribution lines, therefore your Appellant is eligible for deduction under section 80IA(4)(iv)(b) explanation in respect of profit derived from laying of such network of new lines for transmission or distribution. 5. The CIT(A) ought to have followed the ITAT Rs order for AY 2011-12 & 2012-13 dated 5-12-19, allowed the deduction under section 801A(4)(iv)(b) in respect of electrical project. 6. The CIT(A) ought not have brushed aside the decision of ITAT for AY 2011-12 & 2012- 13 dt. 5-12-19, on the ground that a Miscellaneous Application has been filed by the Department, may have allowed the deduction u/s 80IA(4) in respect of electrical projects also. 7. Your appellant submits that a direction may be given to the Assessing Officer to consider all the disallowance as part of the gross total income while computing the deduction u/s 80IA(4) of the Income Tax Act, 1961.”

11.1 The assessee has also raised the following additional grounds: “8. The Hon. ITAT is requested to kindly admit the grounds which are taken for the first time before them, as per the ratio laid down by the Hon'ble Supreme Court of India in the case of National Thermal Power Corporation Limited vs. CIT [1998] 229 ITR 383 (SC). 9. The CIT(A) erred in not allowing the bank guarantee commission amounting to Rs. 62,89,732/- which was incurred in the due course of advancement of the objects of the business activities. 10. The CIT(A) erred in not allowing the other expenses amounting to Rs. 80,00,000/- which were incurred exclusively in the regular course of operations of business. 11. The CIT(A) ought to have appreciated that the any expenditure not falling under the specific head but incurred for the purpose of business need to be allowed as per the provisions of section 37 of the Act. 12. The Ld. CIT(A) ought to have appreciated that every assessee who qualified for deduction u/s 80-IA of the Act, is eligible for the deduction not only from the Business Income admitted in the return of income but also from the business income which has been enhanced on account of additions made in the assessment by the Assessing Officer. 13. The Learned CIT(A) ought to have appreciated the fact that any addition made to the income of the assessee would enhance the claim of deduction u/s 801A of the Act. Page 12 of 29

ITA Nos 695 and 696 of 2020 GVPR Engineers Ltd Hyderabad

ITA Nos 695 and 696 of 2020 GVPR Engineers Ltd Hyderabad

Therefore, it is an established position of the law that after the decision of the Tribunal, the order of the CIT (A) order for 2012- 13 got merged with the order passed by the Tribunal. Thus, as on the date of passing the assessment order u/s 143(3) r.w.s. 153A for the A.Y 2012-13, i.e. 31.12.2019, the order of the Tribunal for the A.Y 2011-12 and 2012-13 dated 5.12.2019 was available before the Assessing Officer which should have been considered by the Assessing Officer in absence of any appeal filed by the Revenue. However, the Assessing Officer without considering the order of the Tribunal in assessee’s own case for the A.Ys 2011-12 & 2012-13 has erroneously taken into consideration the consequential order passed in consequent to the order of the CIT (A) which clearly stands merged with the order of the Tribunal. Therefore, such order passed by the Assessing Officer without considering the order of the Tribunal for the A.Ys 2011-12 & 2012-13 is not valid and not as per law. The assessee also relied on the following decisions: i) Hon'ble A.P. High Court in the case of Dy CIT Circle-1, vs. Mr.A.T. Rayudu in ITA No.313 to 319 of 2014. ii) Hon'ble A.P. High Court in the case of CIT (Central) vs. M/s. Hyderabad House (P) Ltd (ITA No.266 of 2013) iii). Hon'ble Delhi High Court in the case of CIT (Central)III vs. Kabul Chawla (61 Taxmann.com 412) iv) ITAT Mumbai Special Bench in the case of All Cargo Global Logistics Ltd (2012) 23 Taxmann.com 103 (Mum.) (SB). v) ITAT Hyderabad in the case of Indukuri Sundari Vs. DCIT (ITA No. 645 &646/Hyd/2017) vi) ITAT Hyderabad in the case of M/s. Olectra Greentech Ltd vs. ACIT in ITA No.466/HYD/2021 vii) ITAT Hyderabad in the case of Lam Paul Sashikumar vs. ACIT in ITAT No.33/HYD/2022

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viii) Hon'ble Delhi High Court in the case of ACIT vs. Varun Beverages Ltd in ITA No.3833/Del/2015. 14. He submitted that the CIT (A) while deciding the issue with regard to the electrical projects has not considered the decision of the Coordinate Bench of the Tribunal in assessee’s own case for the A.Ys 2004-05 to 2009-10 where the Tribunal has held as under: “"Therefore, in our considered. view, the assessee should not be denied the deduction under section 801A of the Act if the contract's involves design, development, operating &maintenance, financial involvement, and defect correction and liability period, then such contracts cannot be called as simple works contract to deny the deduction u/s 801A of Act. In our opinion the contracts which contain above features to be segregated on this deduction u/s 80-IA has to be granted and the other agreements which are pure works contracts hit by the explanation section 801A (13), those work are not entitle for deduction u/s 801A of the Act. profit from the contracts which involves design, development, operating & maintenance, financial involvement, and defect correction and liability period is to be computed by assessing officer on pro-rata basis of turnover. The assessing officer is directed to examine the records accordingly and grant deduction on eligible turnover as directed above."

14.1 He submitted that with respect to A.Ys 2004-05 to 2007-08, the Pr.CIT Hyderabad had initiated proceedings u/s 263 by issuing show cause notice dated 25.07.2014 for each assessment years separately. However, such proceedings were dropped vide his order dated 30.03.2015.

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vide order dated 29.12.2012. He submitted that in the present case the CIT (A) while passing the order under consideration has relied on the order of the Tribunal passed for the A.Y 2010-11 instead of considering the decision of the Coordinate Bench for the A.Y 2011-12 & 2012-13. He submitted that the reasons for not following the decision of the A.Y 2011-12 and 2012-13 was that the Revenue has filed Miscellaneous Application before the Tribunal. He submitted that the Tribunal in the meantime dismissed the M.A filed by the Revenue and therefore, the order of the CIT (A) to this extent is wrong. The learned Counsel for the assessee drew the attention of the Bench to the following sequences of events: S.No Particulars Date 1 CIT (A) order passed u/s 143(3) 7.8.2020 r.w.s. 153A for the A.Y 2012-13 2 ITAT order in the own case of the 5.12.2019 assessee for the A.Y 2011-12 & 2012-13 3 M.A filed by the Department against 27.7.2020 the ITAT order dated 5.12.2019 4 ITAT order passed for disposal of 15.02.2021 M.A filed

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electrical projects. With respect to A.Y 2012-13, the Tribunal has allowed deduction claimed u/s 80IA in respect of both irrigation and electrical projects after considering that the projects taken up by the assessee are eligible for deduction u/s 80IA. He submitted that based on the nature of terms & conditions of the agreement entered into by the assessee with the other party to contract, the assessee was treated as a developer and the profits earned was allowed u/s 80IA of the Act. He submitted that when deduction u/s 80IA has been granted in previous years considering the claim based on the nature of terms and conditions of the agreement and treating the assessee as a developer of the facility, the same cannot be denied in subsequent year unless the assessee changed the original terms and conditions or the Assessing Officer has brought new material of fact to prove that there is change in the terms & conditions of the agreement. Thus, the projects on which deductions were allowed u/s 80IA for the A.Ys 2004-05 to 2009-10 and 2011-12 & 2012-13, the same cannot be denied for the year under consideration.

(b) Decision of Hon'ble High Court of Bombay in the case of M/s. Simple Food Products Pvt. Ltd., vs CIT-II having citation [2017] 84 taxmann.com 239 (Bombay) Page 17 of 29

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21 He accordingly submitted that the grounds raised by the assessee should be allowed.

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considered the various decisions cited before us by both sides. We find the assessee in the instant case is engaged in execution of electrical, civil and infrastructure projects as mentioned in the body of the assessment order. Original return of income was filed on 29.09.2012 declaring total income of Rs.2,86,10,170/- after claiming deduction u/s 80IA at Rs.20,66,95,675/-. The Assessing Officer completed the assessment u/s 143(3) determining the total income at Rs.24,95,95,580/-. The CIT (A) passed the order on 29.3.2016 giving part relief i.e. allowed deduction u/s 80IA(4)(iv)(c) in respect of irrigation projects only and the Assessing Officer passed consequential order giving effect to the order of the CIT (A) dated 19.10.2016 determining the total income at Rs.13,89,25,252/-. We find a search and seizure operation u/s 132 of the I. T. Act was conducted on 2.11.2017 and the assessee in response to notice u/s 153A filed the return declaring income of Rs.2,63,98,078/- by claiming deduction u/s 80IA at Rs.22,25,14,356/- which included enhanced claim of Rs.1,58,18,681/- for both irrigation and electrical projects. We find the Assessing Officer completed the assessment u/s 143(3) r.w.s. 153A on 30.12.2019 at Rs.13,89,25,252/- which is the income determined by the Assessing Officer after the order passed by the CIT (A) on 19.10.2016. In the assessment order, the Assessing Officer allowed the claim of deduction u/s 80IA(4) in respect of the irrigation project.

ITA Nos 695 and 696 of 2020 GVPR Engineers Ltd Hyderabad

A.Y 2004-05 to 2009-10 has allowed the claim of deduction u/s 80IA in respect of both the irrigation and electrical projects. Further, the learned CIT (A) while denying the deduction u/s 80IA in respect of electrical projects for the impugned A.Y has not followed the decision of the Tribunal in assessee’s own case for the A.Y 2011-12 & 2012-13 on the ground that the Revenue has filed M.A. which is still pending. It is the submission of the learned Counsel for the assessee that since subsequent to the order of the CIT (A) the Tribunal has dismissed the MA filed by the Revenue, therefore, the order of the CIT (A) has to be set aside on this issue and the grounds raised by the assessee should be allowed.

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the claim of deduction u/s 80IA(4) in respect of the electrical project by observing as under:

ITA Nos 695 and 696 of 2020 GVPR Engineers Ltd Hyderabad

admissible. Accordingly, the disallowance made to this extent is therefore upheld. and ITAT order at page 9 & 10 para 8.1 towards end gave a finding: "we find that though the projects therein included electricity projects as well, ITAT has not brought out the distinction between section 80IA(4)(iv)(b) and therefore, it cannot be said that this issue is covered by those orders. From the above observations and the detailed observations made by the CIT(A) to come to a conclusion that the assessee is not eligible to claim deduction u/s 80IA(4)(iv)(b). Accordingly, we uphold the order of the CIT(A) on this issue and dismiss the ground of appeal of assessee." We submit that the undertaking referred to in section 80IA(4)(iv) and undertaking referred to in the proviso to section 80IA(4)(iv)(b) are different and cannot be the same. The Undertaking referred to in section 80IA(4)(iv) can be confined to the power transmission or distribution undertaking whereas the undertaking referred to the proviso to this section is different. The proviso reads as under: "Provided the deduction under this section to an undertaking under sub- clause (b) shall be allowed only in relation to the profits derived from laying of such 'network of new lines for transmission or distribution." In case the undertaking involved in transmission and distribution undertakes laying of the such network of new lines will be capital and nature and cannot earn profit for such laying of new lines, therefore, there has to be another undertaking. Hence your appellant is eligible for deduction on profits from electrical projects. It is prayed that deduction under section 80IA(4)(iv)(b) may be allowed. 2. The Department appeal are in respect of deduction allowed by CIT(A) under section 80IA(4)(i)(c) - The CIT(A) has followed the ITAT order for AY 2004-05 to 2009-10, in ITA NO 347/H/2008 & others, Order of the CIT(A) as well ITAT order for AY 2010-11, the relevant para are: The Hon'ble ITAT in its order in ITA No 347/Hyd/2008, at pages 16 to 21 the projects are extracted and the direction of the ITAT is at 44 8th line reads as under: "Therefore, in our considered view, the assessee should not be denied the deduction under section 811A of the Act if the contracts involves design, development, operating & maintenance, financial involvement and defect correction and liability period then such contracts cannot be called a simple works contracts to deny the deduction u/s 80IA of Act. in our opinion the contracts which contain above features to be segregated on this deduction u/s 80IA has to be granted and the other agreements which are pure works contracts hit by the explanation section 80IA(13), those works are not entitle for deduction u/s 80IA of the Act. The Profit from the contracts which involves design, development, operating &

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maintenance, financial involvement and defect correction and liability period is to be computed by assessing Officer on pro-rata basis of turnover. The assessing officer is directed to examine the records accordingly and grant deduction on eligible turnover as directed above. ................" For the Assessment year 2010-11 the CIT(A) as well as the ITAT have allowed deduction under section 80lA (4) (1) (c) the relevant para are: CIT(A) Order pages 6 para 6.2 reads as under: "The issue in the earlier order before the Hon'ble Tribunal was whether the appellant is a work contractor or not. The tribunal had given a finding that the appellant is not a mere work contractor and is therefore intitled for deduction u/s 80IA. Thus, once an appellant is eligible for the deduction under section 80IA, then, this claim is to be allowed in terms of the order of the Hon'ble ITA T in appellant's own case for earlier years. This finding can therefore be applied to the first three projects namely the claim of deduction u/s 80IA (4)(1)(c). Accordingly, the claim of the deduction u/s 80IA(4)(i)(c) to the tune of Rs. 5,15,54,567/- is therefore allowed." and ITAT order at page 11 para 10.1 reads as under: "The revenue has filed an appeal u/s 260A of the Act challenging the above order of ITAT before the Hon'ble High Court. In the said order, it was held that these contracts are not in the nature of works contracts and thereby Explanation to the provisions of section 80IA(13) are not attracted. Hence, just to maintain consistency with the stand of the revenue and to keep the issue alive, AO has disallowed the deduction u/s 80IA(4)(i)(c). Apart from that there is no merit in such disallowance. However, the Id. CIT(A) has allowed assessee's claim u/s 80IA(4)(i)(c) relying on the order of the coordinate bench of this tribunal (supra), hence, we are inclined to uphold the order of CIT (A). in this regard as the order of the CIT(A) is in line with the order of ITAT." in view of the above, the Department appeals may be dismissed". 6.1. Further, relying on the decision of Hon'ble ITAT vide its order dt.29- 02-2012 in ITA No.347/Hyd/2008 and others, Ld.Counsel for the assessee submitted that all these issues have to be remanded to the file of CIT(A) for passing an order in compliance with the said order of the Tribunal. Referring to above note, Ld.Counsel for the assessee submitted that the assessee is entitled to deduction u/s.80IA(4) of the Act in respect of both the types of the Projects. The said order of the Tribunal helps the assessee if an effect is given and the said decision is honoured by the AO. Further, referring to the allowability of deduction u/s.80IA(4)(i)(c) of the Act, Ld.Counsel for the assessee submitted that the ITAT already taken a view in this regard and consequently, the appeals of the Revenue are dismissed. 7. After hearing both the sides and also considering the decision of the Coordinate Bench of the Tribunal in assessee’s own case cited supra, we are of the opinion that the directions should be given to the CIT (A) to go by the said order of the Tribunal. Assessing Officer shall grant an Page 23 of 29

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opportunity of being heard. Accordingly, Ground Nos. 1 to 4 are allowed for statistical purposes” 26. We find the M.A filed by the Revenue was dismissed by the Tribunal vide order dated 15.02.2021. It is also an admitted fact that the Assessing Officer thereafter has given effect to the orders of the Tribunal by allowing claim of deduction u/s 80IA(4) in respect of electrical projects. Therefore, denying claim u/s 80IA in respect of electrical project, in our opinion, by the learned CIT (A) is not justified especially when the Tribunal in assessee’s own case has already restored the issue to the file of the Assessing Officer with certain directions to allow deduction u/s 80IA with respect to electrical projects. Therefore, considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore the issue to the file of the Assessing Officer with a direction to verify the record and if the assessee is continuing the same project, then to pass appropriate order in light of the directions of the Tribunal for the A.Y 2011-12 & 2012-13 and allow deduction u/s 80IA(4) in respect of the electrical projects. Needless to say, the Assessing Officer shall give due opportunity of being heard to the assessee. Thus, the first issue raised by the assessee in the grounds of appeal is allowed for statistical purposes.

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deduction u/s 80IA. Since the learned CIT (A) had rejected the claim of deduction u/s 80IA(4) in respect of electrical project and since we have already allowed such claim in the preceding paragraph, therefore, we do not find any reason why the assessee should not be allowed benefit u/s 80IA(4)(iv)(b) in respect of the enhanced claim of deduction due to disallowance/addition of certain expenditure. We are of the considered opinion that the disallowance/addition made by the Assessing Officer are to be considered as part of the gross total income for computation of deduction u/s 80IA in view of the circular issued by the CBDT and various judicial pronouncements. We therefore, direct the Assessing Officer to allow claim of deduction u/s 80IA(4) in respect of the enhanced claim of Rs.73,48,894/- in respect of the electrical projects. The grounds raised by the assessee on this issue are accordingly allowed.

ITA 696/Hyd/2020 – A.Y 2013-14 29. Facts of the case, in brief, are that the assessee company engaged in execution of electrical, civil and infrastructure projects, filed its original return of income on 30.09.2013 declaring total income of Rs.3,89,26,930/-. The Assessing Officer completed the assessment u/s 143(3) on 24.3.2016 assessing the total income at Rs.28,14,92,165/-. The CIT (A) vide order dated 30.06.2017 gave part relief to the assessee. A search and seizure operation u/s 132 of the I.T. Act was conducted on 2.11.2017. In response to notice u/s 153A dated 6.3.2018 the assessee filed its return of income on 3.4.2018 declaring total income at Rs.3,27,43,730/-. The Assessing Officer Page 25 of 29

ITA Nos 695 and 696 of 2020 GVPR Engineers Ltd Hyderabad

completed the assessment u/s 143(3) r.w.s. 153A on 30.12.2019 determining the total income at Rs.17,37,50,695/- by observing as under: “4.1 On perusal of return of income filed in response to notice u/s 153A it is noticed that Assessee Company has claimed additional deduction u/s 801A on the additions made in the original assessment U/s. 143 (3) dated 24.03.2016 which is not allowable. As per the Form 10CCB certified by the Auditor and filed by the assessee at the time of filing the original return of income, the eligible deduction U/s.80IA(4)(i)(c) is Rs.10,77,41,470/ and the eligible deduction. U/s. 80IA(4)(iv)(b) is Rs.12,44,76,019/-. The Assessee now cannot claim deduction more than what has been reported in form 10CCB. Further the Assessee is not eligible for deduction u/s. U/s.801IA(4)(i)(c) since the Assessee is not a developer and is not operating and maintaining the infrastructure facility and also not eligible for deduction u/s. 80IA(4)(iv) (b), since it is not a power transmission or distribution undertaking, as discussed elaborately in the assessment order u/s 143(3) dated 24.03.2016. Hence the additional deduction u/s 80IA on the additions made in the original assessment U/s. 143(3) dated 24.03.2016 is not allowable. 4.2 The case was subjected to Scrutiny under CASS and assessment was completed u/s 143(3) dated 24.03.2016 assessing the total income as Rs.28,14,92,165/-. The learned CIT (A) vide his order dated 30.06.2017 gave partial relief. An order giving effect to the learned CIT (A) was passed on 22.10.2018 arriving at the total income of Rs.17,37,50,700/-. Since no other additions are made in this order, the computation of tax is done on the assessed income arrived vide order giving effect to the learned CIT (A) passed on 22.10.2018 i.e. Rs.17,37,50,700/-“.

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Officer are to be considered as part of gross total income for computation of deduction u/s 80IA is concerned, the learned CIT (A) directed the Assessing Officer that the computation of deduction be done by taking the disallowance/addition as part of gross total income.

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ITA Nos 695 and 696 of 2020 GVPR Engineers Ltd Hyderabad

No.695/Hyd/2020 for A.Y 2012-13. We have already decided the issue and restored the issue of deduction u/s 80IA(4)(iv)(b) in respect of electrical projects including the enhanced claim of deduction to the file of the Assessing Officer with certain directions. Following similar reasoning, we restore the issue of deduction u/s 80IA(4)(iv)(b) in respect of the electrical project including the additional claim to the file of the Assessing Officer for adjudication of the issue in the light of our direction in ITA 695/Hyd/2020. The grounds raised by the assessee on the issue of deduction u/s 80IA(4)(iv)(b) in respect of electrical projects are accordingly allowed for statistical purposes.

Order pronounced in the Open Court on 21st November, 2022.

Sd/- Sd/- (LALIET KUMAR) (R.K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER

Hyderabad, dated 21st November, 2022. Vinodan/sps Copy to: S.No Addresses 1 GVP Engineers Ltd C/o M. Anandam & Co. C.As, Flat No.7A Surya Towers, SP Road, Hyderabad 500003 2 Dy.CIT, Central Circle 1(3), 7th Floor, Aayakar Bhavan, Basheerbagh, Hyderabad 500004 3 CIT (A)-11 ,Hyderabad 4 Pr. CIT-Central, Hyderabad 5 DR, ITAT Hyderabad Benches 6 Guard File By Order

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