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

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,

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 No.884/Hyd/2025 & 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 No.884/Hyd/2025 & ITA 742/Hyd/2025 & C.O.No.17/Hyd/2025 Patel SEW Joint Venture

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 ITA No.884/Hyd/2025 & 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

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.

In this view of the matter, considering the facts and circumstances of the case and also by following the decision of the 14 ITA No.884/Hyd/2025 & ITA 742/Hyd/2025 & C.O.No.17/Hyd/2025 Patel SEW Joint Venture

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

The grounds raised by the Revenue read as under : “1. The CIT(A) erred in law in not granting opportunity to the Assessing Officer under Rule 46A to examine the additional evidence submitted by 15 ITA No.884/Hyd/2025 & ITA 742/Hyd/2025 & C.O.No.17/Hyd/2025 Patel SEW Joint Venture the assessee with regards to the reconciliation of receipts in Form 26AS vis-à-vis the receipts/incomes offered in the return of income.

The CIT(A) erred in law in granting credit for TDS on mobilization advances without considering the provisions of Rule 37BA(3) r.w. Sec. 199 of the I.T. Act which stipulates the credit for taxes deducted shall be given for the assessment year for which such income is assessable.

Any other ground that may be urged at the time of hearing.”

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

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,

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

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 No.884/Hyd/2025 & ITA 742/Hyd/2025 & C.O.No.17/Hyd/2025 492/Mum/2017 and ITA No. 2757 of 2017 dt.27.04.2017. 19. 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

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 No.884/Hyd/2025 & 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

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.

निर्धाररती/The Assessee : Patel SEW Joint Venture, Plot No.76, H.No.8-2- 293/82/A/76, Road No.9A, Jubilee Hills, Khairatabad, Banjara Hills, Hyderabad – 500034, Telangana. 2. रधजस्व/ The Revenue : The DCIT/ACIT, Circle 6(1), Hyderabad. 3. The Principal Commissioner of Income Tax, Hyderabad. 4. नवभधगीयप्रनतनिनर्, आयकर अपीलीय अनर्करण, हैदरधबधद / DR, ITAT, Hyderabad 5. गधर्ाफ़धईल / Guard file