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Income Tax Appellate Tribunal, HYDERABAD BENCHES “B” BENCH: HYDERABAD
Before: SHRI D. MANMOHAN & SHRI RIFAUR RAHMAN
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES “B” BENCH: HYDERABAD BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA. Nos. 1431 to 1433/Hyd/2017 Assessment Years: 2007-08 to 2009-10 ACIT, vs. Somdutt Builders-NCC (JV), Circle-8(1), Hyderabad. Hyderabad. PAN: AAQFS 2933 Q (Appellant) (Respondent) For Assessee: Shri A. Kiran Manohar For Revenue : C. Srinivas Reddy, CIT-DR Date of Hearing : 21.05.2018 Date of Pronouncement : 21.05.2018 ORDER PER D. MANMOHAN, VP:
These appeals by the Revenue are directed against the order passed by CIT (A)-6, Hyderabad and they pertain to Assessment Years 2007-08 to 2009-10. 2. Issue involved in all these appeals being identical, we proceed to dispose of these appeals by a combined order, for the sake of convenience. Following common grounds were urged before us: “1. The Ld. CIT(A) erred both on facts of the case and in law. 2. The Ld. CIT(A) by merely following the decision of Hon’ble ITAT in the case M/s. Sushee Hitech, held that the assessee is entitled for deduction u/s 80IA of the IT Act. 3. The Ld. CIT(A), without referring to the CIT(A) categorical findings of the Assessing Officer, erred in holding that the assessee is entitled for deduction u/s 80IA of the IT Act. 4. The Ld. CIT(A) ought to have appreciated the fact that the assessee is not a developer and is only a works contractor. 5. The Ld. CIT(A) ought to have seen that the assessee did not undertake the operation and maintenance of the facility. 6. The Ld. CIT(A) ought to have seen that the assessee was paid on running bills basis for the construction activity.”
Facts in short are that the assessee firm is engaged in the business of undertaking Civil Contracts. It is a main contractor engaged in execution of two projects awarded by M/s. Gujarat State Highway Projects (GSHP) and National Highways Authority of India (NHAI), Bihar. Assessee claimed deduction u/s 80IA of the Act on the entire business profits on the ground that two infrastructural facilities were developed by the assessee by laying “roads” which falls within the meaning of expression “infrastructure facility” as per the Explanation to sub-clause (4) of the said section. It was also stated that the firm has fulfilled the following conditions i.e., (a) it is owned by a consortium of companies registered in India; (b) it has started operation after 01.04.1995 and (c) it is working in pursuance of agreements with State Governments / Statutory Bodies. It was also stated that the assessee fulfils conditions prescribed therein.
Assessing Officer observed that the assessee has neither developed the facility on BOT nor agreement stipulates the period within which the facility has to be transferred to NHAI because the assessee never owned the enterprise and hence, the question of transfer of the infrastructure facility does not arise. He therefore denied the claim of deduction to the assessee for all the years under consideration.
On an appeal filed by the assessee, Ld. CIT(A) observed that the assessee-Joint Venture is engaged in execution of two projects and it was a consortium of two domestic companies, formed exclusively for development of two road projects i.e., (i) conversion of four lane from existing two lane in NH-2, Bihar State and (ii) strengthening and paving of shoulders of SH-24 in Rajkot region. It was contended that both the infrastructural facilities (road projects) developed by the Joint Venture fall within the definition of ‘infrastructure facility’ as per Explanation to sub-section (4) of section 80IA of the IT Act, 1961. It was also submitted
that the claim for deduction u/s 80IA was made from A.Y. 2004-05 onwards and the same was allowed in all the earlier years. For the AYs 2005-06 and 2006-07, though the Assessing Officer disallowed the claim, which in turn was confirmed by the CIT (A), on an appeal filed before the ITAT Hyderabad Bench, the Tribunal, vide ITA Nos.148 and 481/Hyd/2009, dated 03.02.2017, allowed the deduction claimed u/s 80IA of the Act. It was also submitted that the projects executed during the current years were also the same as in the earlier years and therefore, the assessee is entitled to deduction u/s 80IA of the Act. Ld. CIT(A) gave a finding that the issue involved in the years under consideration is identical to the earlier AYs 2005-06 and 2006-07 wherein the Tribunal has accepted the plea of the assessee. In this regard, CIT (A) observed as under:
“5.1 The issue for the assessment year under consideration is identical to that of A.Y. 2005-06 and 2006-07. The assessee had carried out the same work as in those years for which the Hon’ble ITAT, Hyderabad has held the assessee to be a developer u/s 80IA(4) and has allowed the claim of deduction u/s 80IA of the Act. In view of it, respectfully following the decision of ITAT (supra), in assessee’s own case, the assessee’s claim for deduction u/s 80IA is allowed and the addition of Rs. 5,85,99,111/- is deleted.” Thus, the Revenue is in appeal before us.
We have heard the Learned Departmental Representative as well as the Learned Counsel for the Assessee, Shri A. Kiran Manohar on behalf of Shri S. Rama Rao, and also carefully perused the record. As could be noticed from the grounds of appeal, the only contention of the Revenue is assessee is not a developer and it is only a works contractor and it did not undertake the operation and maintenance of the facility and the assessee was paid on running bills basis for the construction activity. However, the fact remains that identical issue was considered by the ITAT Hyderabad Bench in the assessee’s own case for the earlier years 2005-06 and 2006-07 (cited supra) wherein the Bench considered
the issue elaborately while giving factual finding that the assessee is not merely a contractor but an entity which has taken risk and invested huge funds in the project, which demonstrates, coupled with the clauses in the agreement, that it owns the projects till it is handed over to the Government. In fact the Joint Venture has agreed to undertake all the risks till the project is completed. Under this premise the Hon’ble Tribunal observed that the assessee would fall within the definition of ‘developer’ as enumerated in section 80IA(4) of the Act and therefore Assessing Officer was directed to allow deduction u/s 80IA of the Act. Since the issue raised before us by the Revenue is already answered by the Tribunal in the assessee’s own case, for the earlier years, in the absence of any decision of a superior forum wherein a contrary view is taken, we have to necessarily follow the decision of the ITAT Hyderabad Bench in the assessee’s own case for the earlier years and thus we are of the view that the assessee is eligible to claim deduction u/s 80IA of the Act. Since the view taken by the Ld. CIT(A) is in consonance with the view taken by the Tribunal in the assessee’s own case for the earlier years, we do not find any infirmity to interfere with the orders passed by the Ld. CIT(A) and thus the appeals filed by the Revenue are dismissed. Pronounced accordingly in the open court on 21st May, 2018. Sd/- Sd/- (S. RIFAUR RAHMAN) (D.MANMOHAN) ACCOUNTANT MEMBER VICE PRESIDENT Hyderabad, Dated: 21st May, 2018. OKK, Sr.PS Copy to 1. M/s. Somdatt Builders-NCC (JV), 9th Floor, NCC House, Madhapur, Hyderabad. 2. The Asst. Commissioner of Income Tax, Circle-8(1), Hyderabad. 3. CIT (A)-6, Hyderabad. 4. Pr. CIT-6, Hyderabad. 5. DR, ITAT, Hyderabad. 6. Guard File