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Facts
The assessee claimed deduction under Section 80IA for its bio-medical and municipal solid waste management facility in Salem for A.Y. 2017-18 and 2018-19. The Assessing Officer and CIT(A) disallowed the claim, holding that the consent orders from the Pollution Control Board did not constitute an 'agreement' with the government or local authority, a prerequisite for the deduction. The assessee filed a declaration under Section 158A(1), stating that an identical question of law for A.Y. 2013-14 and 2014-15 is pending adjudication before the Hon'ble High Court.
Held
The Tribunal admitted the assessee's claim under Section 158A(3) as both parties acknowledged the identical question of law pending before the High Court for earlier assessment years. The appeal for A.Y. 2017-18 was restored to the Assessing Officer with directions to apply the final decision of the High Court once it is pronounced. The appeal for A.Y. 2018-19 was disposed of mutatis mutandis, applying the same directions.
Key Issues
1. Whether consent orders from the Pollution Control Board fulfill the 'agreement' condition for claiming deduction under Section 80IA of the Income Tax Act, 1961. 2. Whether to admit and remand a case under Section 158A where an identical question of law is pending before a higher court for previous assessment years.
Sections Cited
Section 143(3) of the Income Tax Act, 1961, Section 80IA of the Income Tax Act, 1961, Section 80IA(4) of the Income Tax Act, 1961, Section 80IA(4)(1)(b) of the Income Tax Act, 1961, Section 234B of the Income Tax Act, 1961, Section 250 of the Income Tax Act, 1961, Section 158A(1) of the Income Tax Act, 1961, Section 158A(3) of the Income Tax Act, 1961, Section 260A of the Income Tax Act, 1961, Section 261 of the Income Tax Act, 1961, Section 25 of Water (Prevention and Control of Pollution) Act, 1974, Section 21 of the Air (Prevention and Control of Pollution) Act, 1981
AI-generated summary — verify with the full judgment below
2 ITA No.1117 and 1118/Hyd/2024 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 I.T.A. No.1117/Hyd/2024 wherein the impugned order has been assailed on the following grounds:
"
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.
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.
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 to the above grounds and the differential interest charged u/s 234B of the Act would be nullified post allowance of deduction u/s 80IA of the 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.”
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 801A of the Act. The Assessing Officer after perusing the essential conditions that were required to be satisfied by the enterprises carrying on the business of infrastructure facility to claim deduction u/s 80IA of the Act, observed, that the same, inter alia, required furnishing of an audit report by the assessee along with a 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/-.
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 ITA Nos.774 and 775/Hyd/2020 for A.Y 2013-14 and 2014-15, had comprehensively answered the issue involved in the present appeal against the assessee company. Accordingly, the CIT(A) followed the view taken by the juri ictional 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