ACIT., CIRCLE-6(1), HYDERABAD vs. PATEL SEW JOINTVENTURE, HYDERABAD

Aggrieved by the assessment order, the assessee preferred an appeal before the Ld. CIT(A). Before the Ld. CIT(A), the assessee submitted that, the assessee is developing infrastructure project and derived profits which is eligible for deduction under Section 80-IA(4) of the Act. Further, the assessee has not claimed deduction in the return of income filed under Section 139(1) of the Act on 30.10.2019, but has made a claim in the revised return filed under Section 139(5) of the Act. The assessee has also filed the relevant audit report in Form No. 10CCB along with the revised return filed under Section 139(5) of the Act. However, the A.O. rejected the deduction claimed under Section 80-IA(4) of the Act, only on the ground that, the assessee has not claimed such deduction in the return of income filed under Section 139(1) of the Act, even though, the return filed under Section 139(5) replaces the original return of income filed under Section 139(1) of the Act, and the provisions of the Act, insofar applicable shall apply to the revised return filed by the assessee, and if the assessee satisfies all the other conditions, then there is no reason to reject the deduction claimed under Section 80-IA(4) of the Income-tax Act, 1961. The Ld. CIT(A), after considering the relevant submissions of the assessee and also taking note of certain judicial precedents, rejected the arguments of the assessee and upheld the addition made by the A.O. towards disallowance of deduction claimed under Section 80-IA(4) of the Act, on the ground that, the assessee is not entitled to claim deduction under Section 80-IA(4) of the 6 & ITA 742/Hyd/2025 & C.O.No.17/Hyd/2025 Patel SEW Joint Venture Act, if such claim is not made in the original return of income filed under Section 139(1) of the Act.

Aggrieved by the order of the Ld. CIT(A), the assessee is now in appeal before the Tribunal.

The learned counsel for the assessee, Shri Mayur Kisnadwala, C.A. submitted that, the Ld. CIT(A) erred in confirming the addition made by the A.O. towards disallowance of deduction claimed under Section 80-IA(4) of the Act, even though, the assessee has satisfied the conditions provided thereon by filing relevant details, including execution of eligible infrastructure projects and also the audit report in Form No. 10CCB obtained from an Accountant certifying the amount eligible for deduction under Section 80-IA(4) of the Act. The learned counsel for the assessee, further referring to the dates and events, submitted that, there is no dispute with regard to the fact that, the assessee has filed the original return of income on 30.10.2019 which is on or before the due date provided under Section 139(1) of the Act, and further has filed the revised return u/s 139(5) of the Act, on 01.07.2020, which is also within the time allowed under the Act.

Ms. U. Mini Chandran, Ld. CIT-DR for the Revenue, on the other hand, supporting the order of the Ld. CIT(A), submitted that, the assessee is not entitled for deduction under Section 80-IA(4) of the Act, because the assessee has not made a claim for deduction in the return of income filed under Section 139(1) of the Act. Further, as per the provisions of Section 80A of the Act, the appellant needs to make a claim for deduction under Section 80- IA of the Act. Unless the assessee makes a claim in its return of income, no deduction can be allowed under Chapter C- Deductions in Respect of Certain Incomes. Further, as per Section 80AC of the Act, in order to claim deduction under Section 80-IA of the Act, the assessee needs to file the return of income on or before the due date provided under Section 139(1) of the Act. In the present case, the assessee has not made a claim of deduction in the return of income filed on or before the due date provided under Section 139(1) of the Act. Therefore, the claim made by the assessee in the revised return filed under Section 139(5) of the Act, is not in accordance with law and the Ld. CIT(A) has rightly rejected the claim of the assessee. In this regard, she relied upon 9 & ITA 742/Hyd/2025 & C.O.No.17/Hyd/2025 Patel SEW Joint Venture the decision of the Hon'ble Supreme Court in the case of Pr. CIT Vs. Wipro Ltd. (2022) 141 taxmann.com 223 (SC).

We have heard both parties, perused the material available on record, and had gone through the orders of the authorities below. There is no dispute with regard to the fact that, the assessee is in the business of development of infrastructure projects, derived profit from the eligible business of development of infrastructure projects, and claimed deduction under Section 80-IA(4) of the Act, in the return of income filed under Section 139(5) of the Act, 1961. It is also an admitted fact that, the assessee has furnished the original return of income for the assessment year under consideration on 30.10.2019, which is on or before the due date provided under Section 139(1) of the Act, however, has not made any claim for deduction under Section 80-IA(4) of the Act. The assessee, for the first time, made a claim for deduction under Section 80-IA, in the return of income filed under Section 139(5) of the Act on 01.07.2020. The A.O. passed the order under Section 143(1) of the Act on 29.03.2021 and determined the total income at Rs. 7,88,79,105/- by rejecting the deduction claimed under 10 & ITA 742/Hyd/2025 & C.O.No.17/Hyd/2025 Patel SEW Joint Venture Section 80-IA(4) of the Act. The Ld. CIT(A) upheld the income computed by the A.O. on the ground that, in order to make a claim for deduction under Section 80-IA(4) of the Act, the assessee needs to make a claim for such deduction in the return of income and further furnish such return of income on or before the due date provided under Section 139(1) of the Act.

We have given our thoughtful consideration to the relevant reasons given by the Ld. CIT(A) to uphold the additions made by the A.O. towards disallowance of deduction under Section 80-IA(4) of the Act, in light of the various arguments of the learned counsel for the assessee along with certain judicial precedents, including the decision of the ITAT, Mumbai Bench, in the case of Akry Organics Pvt. Ltd Vs. CPC (supra) and also the decision in the case of ACIT Vs. Rashmi Infrastructure Developers Ltd (supra) and we ourselves do not find merit in the arguments of the learned counsel for the assessee for the simple reason that, as per the provisions of Section 80A of the Act, where the assessee fails to make a claim in the return of income for any deduction under Section 10A or Section 10B or Section 10BA or under any 11 & ITA 742/Hyd/2025 & C.O.No.17/Hyd/2025 Patel SEW Joint Venture provision of this Chapter under the heading ‘C—Deductions in respect of certain incomes’, no deduction shall be allowed to him thereunder. Further, as per Section 80AC of the Act, from the 1st day of April, 2018, any deduction is admissible under any provisions of this Chapter under the heading “C - Deductions in respect of certain incomes”, no such deduction shall be allowed to him unless he furnishes his return of income for such assessment year on or before the due date specified under Section 139(1) of the Act. A conjoint reading of Section 80A read with Section 80AC of the Act, makes it clear that, in order to be eligible for claiming deduction under Section 80-IA of the Income-tax Act, the assessee must satisfy two conditions : (1) he must make a claim for deduction under Section 80-IA(4) in the return of income and, (2) further, the said return of income should be filed on or before the due date provided under Section 139(1) of the Act. Unless the assessee satisfies the above two conditions, the claim made for deduction under Section 80-IA(4) of the Act, cannot be allowed. Further, as per the decision of the Hon'ble Supreme Court in the case of Pr. CIT Vs. Wipro Ltd. (supra), the assessee can file a revised return in a case where there is an omission or a wrong statement, but a revised return of income under Section 139(5) of the Act, cannot be filed to withdraw the claim and subsequently claiming the carry forward of set off of any loss. Filing a revised return u/s 139(5) of the Act, and taking a contrary stand/ and or claiming exemption which was specifically not claimed earlier while filing the original return of income is not permissible. By filing the revised return of income, the assessee cannot be permitted to substitute the original return filed under Section 139(1) of the Act.

If we read the provisions of Section 80A read with Section 80AC of the Act, along with the decision of the Hon'ble Supreme Court in the case of Pr. CIT Vs. Wipro Ltd. (supra), the claim made by the assessee towards deduction under Section 80-IA(4) of the Act, in the revised return filed under Section 139(5) of the Act, on 01.07.2020 cannot be allowed. Although the assessee has relied upon the decision of the ITAT, Mumbai Bench, in the case of Akry Organics Pvt. Ltd Vs. CPC (supra) and argued that, the Co- ordinate Bench of the Tribunal has considered the decision of the Hon'ble Supreme Court in the case of Pr. CIT Vs. Wipro Ltd. (supra) and distinguished the said decision and allowed the deduction claimed under Section 80-IA(4) of the Act, in the revised return filed under Section 139(5) of the Act, in our considered view, the decision rendered by the Co-ordinate Bench of the Tribunal cannot be followed for the simple reason that, when the highest judicial forum of the country, i.e., the Hon'ble Supreme Court, has rendered a law in respect of making a claim in the revised return filed under Section 139(5) of the Act and, after considering the relevant facts, held that, the revised return cannot replace the original return of income filed under Section 139(1) of the Act, and further, the assessee cannot be permitted to make a claim of deduction or exemption in the return of income filed u/s 139(5) of the Act, in our considered view, the reading of the Hon'ble Supreme Court’s decision by the Co-ordinate Bench of the Tribunal is contrary to the law laid down by the Hon'ble Supreme Court, cannot be followed. Therefore, we reject the case laws relied upon by the learned counsel for the assessee.

In this view of the matter, considering the facts and circumstances of the case and also by following the decision of the 14 & ITA 742/Hyd/2025 & C.O.No.17/Hyd/2025 Patel SEW Joint Venture Hon'ble Supreme Court in the case of Pr. CIT Vs. Wipro Ltd. (supra), we are of the considered view that, the assessee is not entitled to make a claim for deduction under Section 80-IA(4) of the Act, on the basis of the revised return filed under Section 139(5) of the Act on 01.07.2020 when such claim was not made in the original return of income filed under Section 139(1) of the Act on 30.10.2019. Since the assessee has not satisfied the conditions provided under Section 80A read with Section 80AC of the Act, and also as per the provisions of Section 80-IA(7) of the Act, where it is mandatory to file the audit report in Form No. 10CCB along with the return of income filed under Section 139(1) of the Act, the claim of deduction u/s 80-IA(4) of the Act cannot be allowed. The Ld. CIT(A), after considering the relevant facts, has rightly rejected the claim of the assessee. Thus, we uphold the findings of the Ld. CIT(A) and dismiss the appeal filed by the assessee.

In the result, the appeal filed by the assessee is dismissed. ITA 742/Hyd/2025 for A.Y. 2023-24 (Revenue’s Appeal) 13. The grounds raised

The brief facts of the case are that, the assessee is a Joint Venture between M/s. Patel Engineering Ltd. and M/s. SEW Infrastructure Ltd., executing infrastructure project for Narmada Valley Development Authority (NVDA), Government of Madhya Pradesh for execution of Saleemanbad carrier canal (Bargi Right Bank Canal) of Bargi Diversion Project on Turnkey basis, comprising the work of survey planning, geotechnical investigation, designing and development of infrastructure facility. The assessee has filed its return of income for the Assessment Year 2023-24 for the year under consideration on 28.10.2023, declaring a total income of Rs. 23,75,40,020/-. The return of income filed by the assessee has been processed under Section 143(1) of the Act, and intimation dated 14.02.2024 was issued, where the A.O. has not allowed credit for TDS of Rs. 1,03,50,876/- in respect of TDS deducted on mobilization advance on the ground that, the income relatable to the TDS claim of the assessee has not been offered to tax for the year under consideration.

Aggrieved by the said intimation passed under Section 143(1) of the Act, the assessee filed an appeal before the Ld. CIT(A) and challenged denial of credit for TDS of Rs.1,03,50,876/- on the ground that, mobilization advance paid by the principals is not a contract receipt and the TDS deducted on said mobilization advance has to be claimed in the year of deduction of TDS, because, there is no income element in said advance to be offered for the relevant assessment year. The assessee further contended that, the A.O. has wrongly denied credit for TDS, even though, the assessee has rightly claimed TDS as per Form 26AS, where the TDS deducted on mobilization advances has been appeared, and further claimed that, the assessee has filed relevant reconciliation explaining the income offered for the year under consideration, with corresponding TDS claimed in the return of income. The assessee further claimed that, the TDS claimed by the assessee also pertains to TDS deducted on the GST portion of the contract receipt on which there is no income element and, therefore, submitted that, the assessee has furnished relevant reconciliation and the A.O. may be directed to give credit for TDS as claimed in the return of income. The Ld. CIT(A), after considering the submissions of the assessee and also the reconciliation filed by the assessee, directed the A.O. to give credit for TDS as claimed in the return of income.

Aggrieved by the order of the Ld. CIT(A), the Revenue is now in appeal before the Tribunal.

The learned CIT-DR for the Revenue, Ms. U. Mini Chandran, submitted that, the Ld. CIT(A) erred in law in not granting an opportunity to the A.O. to verify the additional evidence filed by the assessee, including the reconciliation submitted before the Ld. CIT(A) to explain the discrepancy or mismatch between the income returned and the TDS claimed in the return of income, contrary to Rule 46A of the Income-tax Rules, 1962. She further submitted that, the Ld. CIT(A) erred in granting credit for TDS on mobilization advance without considering the provisions of Section 199 read with Rule 37BA(3) of the Income-tax Rules, 1962. Therefore, she submitted that, the matter may be remanded back to the file of the A.O. to verify the reconciliation and allow credit for TDS as claimed in the return of income filed for the relevant assessment year.

The learned counsel for the assessee, Shri Mayur Kisnadwala, C.A. on the other hand, submitted that, the Ld. CIT(A) has rightly allowed the claim for credit for TDS on the basis of the reconciliation submitted by the assessee, where the assessee has reconciled the income returned with the corresponding TDS claimed in the return of income filed for the relevant assessment year. Further, the assessee has claimed TDS of Rs. 1,03,50,876/-, which pertains to TDS deducted on mobilization advance paid by the principals, which is nothing but a loan and not a contract receipt, and on which there is no element of income to be offered for the year under consideration. Since there is no income element in the advances paid by the principals which can be considered for the year under consideration, the assessee has rightly claimed the credit for TDS as per Form No. 26AS, where the TDS deducted on total payments was reflected. The Ld. CIT(A), after considering the relevant facts, has rightly directed the A.O. to allow credit as 19 & ITA 742/Hyd/2025 & C.O.No.17/Hyd/2025 Patel SEW Joint Venture claimed in the return of income. In this regard, he relied upon certain judicial precedents, including the decision of ITAT, Mumbai in the case of Patel Engineering Ltd Vs. DCIT in and of 2017 dt.27.04.2017.

We have heard both parties, perused the material available on record, and had gone through the orders of the authorities below. The provisions of Section 199 deal with credit for tax deducted at source and, as per the said provisions, any deduction made in accordance with the provisions of this Chapter and paid to the Central Government shall be treated as a payment of tax on behalf of the person from whose income the deduction was made, and as per sub-section (3), the credit in respect of tax deducted or tax paid in terms of the provisions of this Chapter shall be allowable as per the rules made thereunder. Rule 37BA(3) of the Income-tax Rules, 1962 deals with credit for taxes deducted at source and as per the said Rules, TDS relatable to income pertaining to the relevant assessment year alone can be given credit. In other words, credit for tax deducted at source and paid to the Central Government shall be given for the assessment year for which such income is assessable. The assessee claims and admits that TDS of Rs. 1,03,50,876/- denied by the A.O. pertains to TDS deducted on mobilization advance on which there is no element of income to be offered for the year under consideration. The assessee has argued that, mobilization advance is nothing but a loan given by the principals to support the contractor, but it is not a contract receipt and further, on such advance, there is no element of income and thus, the question of offering income for the year in which TDS is deducted does not arise and consequently the entire amount of TDS deducted on said mobilization advance should be allowed as per Form No. 26AS, for which the assessee has relied upon certain judicial precedents, including the decision in the case of Patel Engineering Ltd. Vs. DCIT (supra). In our considered view, the arguments of the learned counsel for the assessee that, the mobilization advance is only a loan given by the principals to support the contractor is fallacious and cannot be accepted for the simple reason that, mobilization advance is an advance payment of contract value by the principals for procurement of necessary equipment or materials for carrying out the work, and the same has been 21 & ITA 742/Hyd/2025 & C.O.No.17/Hyd/2025 Patel SEW Joint Venture deducted either at lump sum or in instalments in the running bills submitted by the assessee in the same financial year or in subsequent financial years. Further, the mobilization advances paid by the principals also in the nature of contract receipts, which embedded the income portion of the assessee, which needs to be offered to tax for the year in which such income has been adjusted against the bills. Therefore, the arguments of the learned counsel for the assessee that it is a loan and not a contract receipt cannot be accepted, in light of certain judicial precedents, including the decision of ITAT, Mumbai in the case of Patel Engineering Ltd. Vs. DCIT (supra). To this extent, we are in full agreement with the A.O.

Having said so, let us come back to the order of the Ld. CIT(A). The Ld. CIT(A) has allowed relief to the assessee and directed the A.O. to give credit for TDS as claimed in the return of income in one-line finding by stating that the assessee has furnished the reconciliation and explained the mismatch between the income returned in the return of income and the corresponding TDS claimed, however, the Ld. CIT(A) has not provided an opportunity to the A.O. to verify the reconciliation submitted by the assessee. To this extent, there is a violation of Rule 46A of the I.T. Rules, 1962, as claimed by the Revenue.

Be that as it may. But the fact remains that the assessee on one side claims that, mobilization advance is loan on which there is no element of income which needs to be offered to tax for the year under consideration and, on the other hand, claims that, it has reconciled the income with corresponding TDS. There is a contradiction in the arguments of the assessee. First of all, there is no clarity as to when the mobilization advance has been adjusted against the bills. If at all the mobilization advance is adjusted for the year under consideration, then the income embedded on said advance needs to be offered to tax for the year under consideration. To this extent, the facts need to be verified. Although the learned counsel for the assessee claims that the assessee has furnished reconciliation, but there is no finding by the Ld. CIT(A) as to how the assessee is able to reconcile the income with corresponding TDS with reference to TDS deducted on mobilization advances. Since the Ld. CIT(A) has allowed the 23 & ITA 742/Hyd/2025 & C.O.No.17/Hyd/2025 Patel SEW Joint Venture relief with a one-line finding without allowing the A.O. to verify the reconciliation filed by the assessee and further, the arguments advanced by the assessee are also contradictory to the provisions of Section 199 read with Rule 37BA of the Income-tax Rules, 1962, in our considered view, the issue needs to be set aside to the file of the A.O. for verification. Thus, we set aside the order of the Ld. CIT(A) and restore the issue back to the file of the A.O.. The A.O. is directed to verify the reconciliation submitted by the assessee in the light of the credit for TDS claimed in the return of income filed for the year under consideration and allow the credit for TDS as per law.

In the result, the appeal filed by the Revenue is allowed for statistical purposes.

The solitary ground raised by the assessee reads as under :

Coming to the cross-objection filed by the assessee, the assessee has raised a ground in the cross-objection and argued that, the order passed by the A.O. under Section 143(1) of the Act, is bad in law and that, the adjustment made by the A.O. towards denial of credit for TDS is not in accordance with the provisions of Section 143(1)(a) of the Act. We find that, as per the provisions of Section 143(1)(a) of the Act, the total income or loss shall be computed after making certain adjustments, including adjustments towards any arithmetical error in the return of income and an incorrect claim, and if such incorrect claim is apparent from any information in the return. Since the TDS credit claimed by the assessee in respect of mobilization advance is an incorrect claim and the same is also apparent from information in the return of income, in our considered view, the adjustment made by the A.O. towards denial of credit for TDS is in accordance with the provisions of Section 143(1)(a) of the Act. Thus, the argument of the learned counsel for the assessee, in the light of certain judicial pronouncements, including the decision of Mumbai Bench of the Tribunal in the case of Kalpesh Synthetics (P.) Ltd. Vs. DCIT, reported in (2022) 195 ITD 142 (Mum), fails and is accordingly rejected.

In the result, the cross-objection filed by the assessee is dismissed.

To sum up, the appeal and the Cross-Objection filed by the assessee are dismissed, whereas the appeal filed by the Revenue is allowed for statistical purposes.