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Facts
The assessee claimed deduction under Section 80IA for its bio-medical and municipal solid waste management facility. The Assessing Officer disallowed the deduction on the grounds that the assessee failed to provide an "agreement" with the government or local authority, which is a prerequisite for the deduction.
Held
The Tribunal admitted the assessee's claim under Section 158A(1) as the identical question of law was pending before the High Court. The appeals were restored to the Assessing Officer to apply the High Court's decision once it becomes final.
Key Issues
Whether the consent orders from the Pollution Control Board constitute an "agreement" for the purpose of Section 80IA deduction. Whether the appeal should be decided based on a pending High Court decision on identical issues for prior assessment years.
Sections Cited
143(3), 80LA(4), 80IA, 80IA(4), 234B, 143(2), 158A(1), 260A, 158A(3)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, Hyderabad ‘ A ‘ Bench, Hyderabad
प्रनत रवीश सूद, जे.एम./PER RAVISH SOOD, J.M. The captioned appeals filed by the assessee company are directed against the respective orders passed by the Commissioner of Income-Tax (Appeals), National Faceless Appeal Center (NFAC), Delhi, dated 28.08.2024 and 30.08.2024, which in turn arises from the respective orders passed by the Assessing Officer u/s 143(3) of the Income Tax Act, 1961 (in short “the Act”) dated15.12.2019 and 16.03.2021 for A.Y. 2017-18 and A.Y. 2018-19, respectively. As common issues are involved in the present appeals, therefore, the same are being taken up and disposed of vide this consolidated order.
We shall first deal with the appeal filed by the assessee company for A.Y. 2017-18 in wherein the impugned order has been assailed on the following grounds:
“1. The impugned order passed by the Hon'ble Commissioner of Income Tax (Appeals) (CIT(A)') under section (u/s) 250 of the Income-Tax Act, 1961 ('the Act') dated 28-08-2024 is contrary to law and facts of the case. 2 The Hon'ble CIT(A) has erred in confirming the order of the Ld.AO with respect to disallowance of deduction claimed by the Appellant under section 80LA(4) of the Act in respect of Bio Medical Waste Management in respect of the unit at Salem.
The Hon'ble CIT(A) ought to have appreciated that the Appellant has satisfied all the conditions prescribed in section 801A(4) of the Act and therefore, was entitled for the deduction under the said section. The Hon'ble CIT(A) has also erred in taking a very narrow view of the requirement of having an agreement under the provisions of section 801A(4)(1)(b) of the Act, which is against the spirit of the provisions.
4. The Hon'ble CIT(A) ought to have appreciated that the Appellant has obtained all the approvals required for carrying out the solid waste management facility at Salem unit and therefore, was entitled for deduction under section 80-1A of the Act.
5. The Hon'ble CIT(A) erred in not directing the Ld. AO in appreciating the fact that the interest chargeable u/s 234B of the Act is consequential Act.
The Appellant craves, to consider each of the above grounds of appeal
without prejudice to each other and craves to add, alter, delete or modify all or any of the above grounds of appeal at or before the time of hearing of the Appeal.”
3. Succinctly stated, the assessee company which is engaged in the business of bio-medical and municipal solid waste management had e-filed its return of income for A.Y. 2017-18 on 11.09.2017, declaring an income of Rs. Nil. Subsequently, the case of the assessee company was selected for scrutiny assessment u/s 143(2) of the Act.
During the course of assessment proceedings, the Assessing Officer observed that the assessee company had for the subject year raised a claim for deduction under Section 80IA of the Act of Rs.2,15,16,308/-. On perusal of the details, it was observed by the Assessing Officer that the assessee company operated one of its bio-medical and municipal solid waste management facilities at Salem in the State of Tamil Nadu, against the profits of which it had during the subject year raised a claim for deduction u/s 80IA of the Act. The Assessing Officer after perusing the essential conditions that were required to be satisfied by the enterprises complete copy of an “agreement” of its enterprise with the Central Government or State Government or local authority for carrying on the business of developing, operating and maintaining the infrastructure facility. Accordingly, the Assessing Officer vide “Show Cause Notice” (SCN) dated 09.12.2019 called upon the assessee company to furnish the required documentary evidence to substantiate its claim for deduction u/s 80IA of the Act. In reply, the assessee company to support its claim for deduction u/s 80IA(4) of the Act, furnished the consent orders from Tamil Nadu Pollution Control Board, as under:
(i) Consent Order dated 18/04/2016 for Renewal of consent for the operation of the plant and discharge of sewage and trade effluent under Section 25 of Water (Prevention and Control of Pollution Act), 1974. [renewal of consent valid upto 30/06/2016] (ii) Consent Order dated 18/04/2016 for Renewal of consent for the operation of the plant and discharge of emissions under Section 21 of the Air (Prevention and Control of Pollution Act), 1981 [renewal of consent valid upto 30/06/2016) (iii) (ii) Consent Order dated 07/09/2016 for Renewal of consent for the operation of the plant and discharge of emissions under Section 21 of the Air (Prevention and Control of Pollution Act), 1981 (renewal of consent valid upto 30/06/2017] (iv) Consent Order dated 07/09/2016 for Renewal of consent for the operation of the plant and discharge of sewage and trade effluent under Section 25 of Water (Prevention and Control of Pollution Act), 1974. [renewal of consent valid upto 30/06/2017]
The Assessing Officer, observed that the assessee company except for placing on record the aforementioned consent orders (supra), had failed to file any other documentary evidence in support of its claim for deduction u/s 80IA of the Act. Further, the Assessing Officer observed that the orders obtained by the assessee company from Tamil Nadu Pollution Control Board were as per the Water (Prevention and Control of Pollution) Act, 1974 and Air (Prevention and Control of Pollution) Act, 1981, which were indispensably required to be obtained for conducting its business. The Assessing Officer held a firm conviction that the aforesaid permissions obtained by the assessee company did not tantamount to an “agreement” entered for the purpose of development of infrastructure u/s 80IA of the Act. Accordingly, the Assessing Officer, held a firm conviction that the primary condition that was required to be fulfilled for claiming deduction u/s 80IA(4) of the Act i.e., the enterprise has entered into an “agreement” with Central/State Government or a local authority or any other statutory body for, viz. (i) developing; or (ii) operating and maintaining; or (iii) developing, operating and maintaining a new infrastructure facility, had not been fulfilled by the assessee company in respect of its bio-waste and medical management at Salem. The Assessing Officer backed by his aforesaid deliberations was of the view that the assessee company was not eligible to claim deduction u/s 80IA of the profits which it had earned from its unit as the pre-conditions laid down in the said statutory provision remained unfulfilled. Also, the Assessing Officer to fortify his aforesaid conviction had drawn support from the fact that a similar deduction u/s 80IA of the Act that was claimed by the assessee company in A.Y. 2013-14 and A.Y. 2014-15 was declined by his predecessor on similar lines. Accordingly, the Assessing Officer based on his aforesaid observations declined the claim of the assessee company for deduction u/s 80IA of the Act of Rs.2,15,16,308/-
6. Aggrieved, the assessee company carried the matter in appeal before the CIT(A) but without success. The CIT(A) observed that the ITAT, Hyderabad while disposing of the assessee’s appeals in and 775/Hyd/2020 for A.Y 2013-14 and 2014-15, had against the assessee company. Accordingly, the CIT(A) followed the view taken by the jurisdictional Tribunal and dismissed the appeal.
The assessee company being aggrieved with the order of the CIT(A) has carried the matter in appeal before us.
We have heard the learned Authorized Representatives of both the parties, perused the orders of the lower authorities and the material available on record.
Shri S.P. Chidambaram, the learned Authorized Representative (for short “AR") for the assessee company, at the threshold of hearing of the appeal, has placed on our record the declaration filed by the assessee company u/s 158A(1) of the Act, dated 20.01.2025 in “Form no.8”. The ld. AR submitted that as the question of law arising in the present appeal of the assessee company for the subject year i.e., A.Y. 2017-18 is pending adjudication in its appeals filed u/s 260A before the Hon’ble High Court for the State of Telangana for the preceding years i.e., A.Y. 2013-14 and A.Y. 2014-15, therefore, the assessee company has filed the present declaration u/s 158A(1) of the Act. The Ld. A.R. submitted that the before the Tribunal, viz. Re Sustainability Healthcare Solutions Limited (formerly known as Ramky Energy and Environment Limited) in Hon'ble Jurisdictional High Court in its appeals filed u/s 260A of the Act for the A.Y. 2013-14 and A.Y. 2014-15. Carrying his contention further, the ld.AR submitted that as per the declaration filed by the assessee company u/s 158A(1) of the Act, if the Tribunal agrees to apply to the present case i.e., the final decision on the question of law in the cases pending before the Hon'ble High Court for A.Y. 2013-14 and A.Y. 2014-15, then it shall not raise the said question of law in appeal before any appellate authority or in appeal before the Hon'ble High Court under Section 260A of the Act or in appeal before the Hon'ble Supreme Court under Section 261 of the Act.
As the assessee company has filed before us an application u/s 158A(1) of the Act, therefore, the Ld.DR was on 21.01.2025 directed to obtain a report from the Assessing Officer.
The Ld. D.R in pursuance to the directions of the Tribunal had placed on our record the report of the Assessing Officer i.e., DCIT, Circle 3(1), Hyderabad, dated 20.02.2025 wherein it is, inter alia, admitted by him that the assessee company had raised an identical question of law before the Hon'ble High Court in its appeals for A.Y. 2013-14 and A.Y.2014-15, which is the crux of the grounds of present appeals for A.Y. 2017-18 and A.Y. 2018-19 filed before the Tribunal.
As both the assessee company and the Assessing Officer had admitted that an identical question of law involved in the present appeal, viz. A.Y 2017-18 is pending adjudication before the Hon'ble Jurisdictional High Court in the assessee’s appeals for A.Y 2013-14 and A.Y. 2014-15, therefore, as per clause (i) of sub-section (3) to Section 158A of the Act, we admit the said claim of the assessee company.
In view of the above facts, we restore the appeal for A.Y. 2017-18, viz., Assessing Officer by admitting the claim of the assessee company in terms of Section 158A(3) of the Act and direct the Assessing Officer to apply assessee company for A.Y. 2013-14 and A.Y. 2014-15 which is pending before the Hon'ble High Court of Telangana as soon as it becomes final.
Resultantly, the appeal filed by the assessee company is disposed of in terms of our aforesaid observations.
ITA No.1118/Hyd/2024 for A.Y. 2018-19
As the facts and the issue involved in the present appeal of the assessee company remain the same as were there before us in its appeal for A.Y. 2017-18 in , therefore, the order therein passed shall apply mutatis mutandis for disposing of the present appeal i.e. for A.Y. 2018- 19.
In the result, both the captioned appeals are allowed for statistical purposes.