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Income Tax Appellate Tribunal, MUMBAI BENCH “E”, MUMBAI
Before: SHRI RAJESH KUMAR & SHRI PAVAN KUMAR GADALE
Per Rajesh Kumar, Accountant Member:
The present appeal has been preferred by the assessee against the order dated 06.03.2018 of the Commissioner of Income Tax (Appeals) [hereinafter referred to as the CIT(A)] relevant to assessment year 2013-14.
The assessee has raised only one ground of appeal which is reproduced as under: “The Ld. CIT(A) erred confirming the disallowance made by the AO of the deduction claimed by your appellant u/s 80IA of Rs.84,14,990/- of the Act”
At the outset, the Ld. Counsel of the assessee brought to the notice of the Bench the delay of 427 days in filing the appeal. The Ld. A.R. submitted that the order of Ld. CIT(A) was
2 ITA No.5592/M/2019 M/s. Thakur Infra Projects Pvt. Ltd. received on 28.04.2018 and thereafter immediately scanned and sent to the consulting chartered accountant of the assessee Mr. Amit Dhavale on his email and thereafter the assessee was bonafide impression that necessary action has been taken by the chartered accountant of the assessee. The ld AR submitted that unfortunately the email of the chartered accountant was not functional and therefore he was not aware of the order of Ld. CIT(A) sent to him. It is only when the assessee enquired about the status of the appeal it came to know that no appeal has been filed before the Tribunal against the order of Ld. CIT(A) within 60 days and hence this delay in filing the appeal. The Ld. A.R. submitted that the substantial justice is pitted against the technicalities then former must prevail over the latter. The Ld. A.R. relied on the decision of Hon’ble Apex Court in the case of Collector, Land Acquisition vs. Mst. Katiji & ors. 167 ITR 471 and prayed that the delay may kindly be condoned.
The Ld. D.R., on the other hand, strongly opposed the arguments of the Ld. A.R. that there is no reasonable cause for condoning the delay as assessee has completely failed to discharge the burden cast upon to explain the delay of each and every day and therefore submitted that the appeal may not be admitted.
After hearing the rival contentions of both the parties and perusing the material on record and the decision of Hon’ble Apex Court in the case of Collector, Land Acquisition vs. Mst. Katiji & ors (supra), we find that the Hon’ble Apex Court has held that when substantial justice and technical considerations are pitted against each other, cause of substantial justice deserves to be
3 ITA No.5592/M/2019 M/s. Thakur Infra Projects Pvt. Ltd. preferred as the other side cannot claim to have vested right in injustice being done because of a non-deliberate delay. In this case also the delay appears to be non deliberate and not because of any failure on the part of assessee as assessee is not benefitted in any way by late filing of appeal. Accordingly, we are inclined to condone the delay in filing the appeal.
At the outset, the Ld. Counsel of the assessee submitted that the issue is squarely covered by the decision of co-ordinate Bench in assessee’s own case in ITA No.742 & 743/M/2018 A.Y. 2011-12 & 2012-13 order dated 18.01.2021 wherein the identical issue has been decided in favour of the assessee. The Ld. A.R. prayed that since the facts in the present appeal are similar and the present appeal may also be allowed following the said decision of the co-ordinate Bench of the Tribunal.
The Ld. A.R., on the other hand, relied on the order of Ld. CIT(A) and AO.
After hearing the rival contentions of both the parties and perusing the material on record and the decision of the co- ordinate Bench of the Tribunal in ITA No.742 & 743/M/2018 (supra), we find that the issue is squarely covered in favour of the assessee. The operative part is as under: “7. We have heard the rival submissions of both the parties and perused the material on record. We find that in this case the assessee was awarded a project by CIDCO to construct a parking lot called truck terminal having facilities on BOT basis. Under the terms of award, the assessee was responsible for repair, maintenance and operation of the said terminal. The assessee used to collect fee from the truck owners from the trucks and also pay yearly fee to CIDCO. According to the AO the assessee is not eligible for deduction under section 80IA of the Act on the ground that the truck terminal is not an infrastructure facility which was affirmed by Ld. CIT(A) in the appellate order. According to the revenue authorities the truck parking terminal is an independent contract with CIDCO which has nothing to do highways. So the issue before us is whether the truck terminal is an integral part of highways
4 ITA No.5592/M/2019 M/s. Thakur Infra Projects Pvt. Ltd. or not. We note that Finance Act, 2001 has modified the definition of infrastructure facility which means a highway project including housing or other activities being an integral part of the highway project. It is clear from the amended definition that any infrastructure which is part of the high way falls within the definition of infrastructure. After perusing the facts on record carefully and also examining the terms and conditions of award of contract to the assessee to construct, build or operate the said terminal on BOT basis, we find that this is an integral part of highway though the highway was existing already and it was only a stand alone project awarded to the assessee later on. We have also noticed that the said terminal was having various facilities as stated hereinabove. The case of the assessee finds support from the decision of Dy. Commissioner of Income Tax Vs. Vintage Advertising Pvt. Ltd. (2015) 60 taxmann.com 162 (Kolkata- Tribunal) wherein it has been held that assessee is entitled for deduction under section 80IA of the Act on bus shelter and foot over bridge. The operative part is reproduced as under:
“9. We have heard both counsel and carefully perused the records. The learned Departmental representative submitted that the assessee is not at all eligible for deduction under section 80-IA of the Act on bus shelters and foot overbridges. The learned Departmental representative submitted that as in this case it is not the case that the assessee has gained any profit or gain from the said business upon which deduction under section 80-IA of the Act is being claimed. The learned Departmental representative submitted that it is not the case that any toll/fee is being charged for the use of foot overbridges or bus shelter for which deduction under section 80- IA of the Act is being claimed. The learned Departmental representative submitted that the assessee is earning income by way of advertising on the foot overbridges and bus shelters which is the subject matter of the assessee's claim of deduction under section 80-IA of the Act. The learned Departmental representative submitted that the income on account of advertisement cannot said to be an income derived by an undertaking from the business of infrastructure development. Hence he submitted that the assessee cannot be allowed deduction under section 80-IA of the Act. The learned Departmental representative made elaborate submissions with respect to meaning of phrase "derived from". He also referred to several case law including the decision of the hon'ble apex court in the case of Liberty India v. CIT [2009] 317 ITR 218/183 Taxman 349 (SC). Referring to the ratio emanating from the aforesaid apex court's decision the learned Departmental representative submitted that the profit of the assessee from the advertising business would certainly be profits and gains of the business in terms of section 28 of the Act, the same would not amount to profits or gains derived from the industrial undertaking. The learned Departmental representative further referred to the hon'ble Calcutta High Court's decision in the case of Mukherjee Estate (P.) Ltd. v. CIT [2000] 244 ITR 1/113 Taxman 313 for the proposition that income mainly publicity charges by putting up hoarding/displaying advertisement from a building cannot be treated as income from property but income from other sources. The learned Departmental representative further submitted that the above proves that the assessee's income does not include any profit which is derived from
5 ITA No.5592/M/2019 M/s. Thakur Infra Projects Pvt. Ltd. developing or (ii) operating and maintaining or (iii) developing, operating and maintaining foot overbridge and bus shelter. The learned Departmental representative further submitted that the hon'ble Karnataka High Court in the case of CIT v. Skyline Advertising (P.) Ltd. [2014] 225 Taxman 220 (Mag.)/45 taxmann.com 532 , has held that the benefit under section 80-IA of the Act can be extended only to those assessees who have developed infrastructure facility as defined under section 80-IA(4) of the Act. The hon'ble High Court discussed the fact of the case that the assessee has not developed road or a toll road, bridge, highway or a rail system. However, it had developed the existing road median, erected bus shelters and light poles for its advertisement business, which, in any case cannot be treated as infrastructure development. Accordingly, the hon'ble High Court decided the question of law in favour of the Revenue and against the assessee. In view of the above the learned Departmental representative prayed that the assessee cannot be allowed any deduction under section 80-IA of the Act.
We have heard both counsel and carefully perused the records. The learned Departmental representative submitted that the assessee is not at all eligible for deduction under section 80-IA of the Act on bus shelters and foot overbridges. The learned Departmental representative submitted that as in this case it is not the case that the assessee has gained any profit or gain from the said business upon which deduction under section 80-IA of the Act is being claimed. The learned Departmental representative submitted that it is not the case that any toll/fee is being charged for the use of foot overbridges or bus shelter for which deduction under section 80- IA of the Act is being claimed. The learned Departmental representative submitted that the assessee is earning income by way of advertising on the foot overbridges and bus shelters which is the subject matter of the assessee's claim of deduction under section 80-IA of the Act. The learned Departmental representative submitted that the income on account of advertisement cannot said to be an income derived by an undertaking from the business of infrastructure development. Hence he submitted that the assessee cannot be allowed deduction under section 80-IA of the Act. The learned Departmental representative made elaborate submissions with respect to meaning of phrase "derived from". He also referred to several case law including the decision of the hon'ble apex court in the case of Liberty India v. CIT [2009] 317 ITR 218/183 Taxman 349 (SC). Referring to the ratio emanating from the aforesaid apex court's decision the learned Departmental representative submitted that the profit of the assessee from the advertising business would certainly be profits and gains of the business in terms of section 28 of the Act, the same would not amount to profits or gains derived from the industrial undertaking. The learned Departmental representative further referred to the hon'ble Calcutta High Court's decision in the case of Mukherjee Estate (P.) Ltd. v. CIT [2000] 244 ITR 1/113 Taxman 313 for the proposition that income mainly publicity charges by putting up hoarding/displaying advertisement from a building cannot be treated as income from property but income from other sources. The learned Departmental representative further submitted that the above proves that the assessee's income does not include any profit which is derived from
6 ITA No.5592/M/2019 M/s. Thakur Infra Projects Pvt. Ltd. developing or (ii) operating and maintaining or (iii) developing, operating and maintaining foot overbridge and bus shelter. The learned Departmental representative further submitted that the hon'ble Karnataka High Court in the case of CIT v. Skyline Advertising (P.) Ltd. [2014] 225 Taxman 220 (Mag.)/45 taxmann.com 532 , has held that the benefit under section 80-IA of the Act can be extended only to those assessees who have developed infrastructure facility as defined under section 80-IA(4) of the Act. The hon'ble High Court discussed the fact of the case that the assessee has not developed road or a toll road, bridge, highway or a rail system. However, it had developed the existing road median, erected bus shelters and light poles for its advertisement business, which, in any case cannot be treated as infrastructure development. Accordingly, the hon'ble High Court decided the question of law in favour of the Revenue and against the assessee. In view of the above the learned Departmental representative prayed that the assessee cannot be allowed any deduction under section 80-IA of the Act.
Learned counsel for the assessee, on the other hand, submitted that the issue is squarely covered in favour of the assessee by the Tribunal's decision as mentioned above. In the said order the Tribunal had held as under : "After hearing both sides, we find that the assessee has claimed deduction under section 80-IA on bus shelters treating the same as integral part of highway and development infrastructure. For the purpose of highway system the building of the bus shelters are functional necessity and these are inextricably connected with the infrastructure required for highway. Without bus shelters the smooth movement of the vehicles and the operation of the vehicles through the highway shall not be of desired level. Thus the bus shelters are functionally necessary part and parcel of the highway infrastructure. By holding so we find that the learned Commissioner of Income-tax (Appeals) has rightly allowed the appeal of the assessee on this issue. We uphold the same and dismiss this ground of appeal taken by the Department."
Learned counsel further submitted that the abovesaid order of the Tribunal had been appealed against by the Department in the hon'ble High Court and the hon'ble Calcutta High Court has not yet reversed the decision of the Income-tax Appellate Tribunal. Hence he submitted that the Tribunal's orders should be sustained. Learned counsel further submitted that the issue involved is covered in favour of the assessee by the decision of the Tribunal in the case of Dy. CIT v. Selvel Advertising (P.) Ltd. [2015] 58 taxmann.com 196 (Kol.) wherein the identical issue has been decided in favour of the assessee. In that case it was also pointed out that the hon'ble Calcutta High Court had passed an order confirming the order of the Income-tax Appellate Tribunal in quashing a revision order passed by the learned Commissioner of Income-tax under section 263 of the Act whereby allowance of section 80-IA of the Act on bus shelters and foot overbridges was disallowed. 12. Learned counsel for the assessee further submitted that section 80-IA of the Act provides for deduction on account of profits and gains derived by an industrial undertaking from any business referred to therein. Learned
7 ITA No.5592/M/2019 M/s. Thakur Infra Projects Pvt. Ltd. counsel further submitted that the hon'ble apex court in the case of Liberty India (supra ) dealt with the question whether the profit from the Duty Entitlement Pass Book Scheme (DEPB) and the Duty Drawback Scheme could be said to be profit derived from the business of an industrial undertaking eligible for deduction under section 80-IB of the Income-tax Act. Hence he submitted that this case law does not support the case of the Department. He further submitted that the very agreements under which the assessee has developed, operated and maintained the infrastructure facility at its own cost provided for revenue generation by the assessee by the display of commercial advertisement on the infrastructure facility developed by it. Learned counsel further submitted that the assessee was also not to charge any amount from the public users of the infrastructure facility developed by it. That the assessee was however permitted to use the infrastructure facility developed by it to raise revenue by display of commercial advertisements on it. That the provision in the agreements relating to generation of revenue in the manner aforesaid is inextricably and directly connected with the development, operation and maintenance of the infrastructure facility provided for in the agreements. Learned counsel further submitted that the assessee did not merely develop the infrastructure facility but the assessee also operated and maintained the infrastructure facility which activity are also covered by section 80-IA of the Act. In this regard learned counsel further referred to the decision of the hon'ble Calcutta High Court in the case of CIT v. Cement Mfg. Co. Ltd. [ITAT No. 130 of 2014, dated 15-1-2015]. In this case the hon'ble Calcutta High Court has upheld the Income-tax Appellate Tribunal's decision holding that the assessee was entitled to deduction under section 80-IC of the Act by treating the transport and interest subsidy as part of the business profit. Accordingly, learned counsel for the assessee submitted that the assessee's claim of deduction under section 80-IA of the Act cannot be disallowed.
Learned counsel for the assessee, on the other hand, submitted that the issue is squarely covered in favour of the assessee by the Tribunal's decision as mentioned above. In the said order the Tribunal had held as under :
"After hearing both sides, we find that the assessee has claimed deduction under section 80-IA on bus shelters treating the same as integral part of highway and development infrastructure. For the purpose of highway system the building of the bus shelters are functional necessity and these are inextricably connected with the infrastructure required for highway. Without bus shelters the smooth movement of the vehicles and the operation of the vehicles through the highway shall not be of desired level. Thus the bus shelters are functionally necessary part and parcel of the highway infrastructure. By holding so we find that the learned Commissioner of Income-tax (Appeals) has rightly allowed the appeal of the
assessee on this issue. We uphold the same and dismiss this ground of appeal taken by the Department."
8 ITA No.5592/M/2019 M/s. Thakur Infra Projects Pvt. Ltd. 11. Learned counsel further submitted that the abovesaid order of the Tribunal had been appealed against by the Department in the hon'ble High Court and the hon'ble Calcutta High Court has not yet reversed the decision of the Income-tax Appellate Tribunal. Hence he submitted that the Tribunal's orders should be sustained. Learned counsel further submitted that the issue involved is covered in favour of the assessee by the decision of the Tribunal in the case of Dy. CIT v. Selvel Advertising (P.) Ltd. [2015] 58 taxmann.com 196 (Kol.) wherein the identical issue has been decided in favour of the assessee. In that case it was also pointed out that the hon'ble Calcutta High Court had passed an order confirming the order of the Income-tax Appellate Tribunal in quashing a revision order passed by the learned Commissioner of Income-tax under section 263 of the Act whereby allowance of section 80-IA of the Act on bus shelters and foot overbridges was disallowed.
Learned counsel for the assessee further submitted that section 80-IA of the Act provides for deduction on account of profits and gains derived by an industrial undertaking from any business referred to therein. Learned counsel further submitted that the hon'ble apex court in the case of Liberty India (supra ) dealt with the question whether the profit from the Duty Entitlement Pass Book Scheme (DEPB) and the Duty Drawback Scheme could be said to be profit derived from the business of an industrial undertaking eligible for deduction under section 80-IB of the Income-tax Act. Hence he submitted that this case law does not support the case of the Department. He further submitted that the very agreements under which the assessee has developed, operated and maintained the infrastructure facility at its own cost provided for revenue generation by the assessee by the display of commercial advertisement on the infrastructure facility developed by it. Learned counsel further submitted that the assessee was also not to charge any amount from the public users of the infrastructure facility developed by it. That the assessee was however permitted to use the infrastructure facility developed by it to raise revenue by display of commercial advertisements on it. That the provision in the agreements relating to generation of revenue in the manner aforesaid is inextricably and directly connected with the development, operation and maintenance of the infrastructure facility provided for in the agreements. Learned counsel further submitted that the assessee did not merely develop the infrastructure facility but the assessee also operated and maintained the infrastructure facility which activity are also covered by section 80-IA of the Act. In this regard learned counsel further referred to the decision of the hon'ble Calcutta High Court in the case of CIT v. Cement Mfg. Co. Ltd. [ITAT No. 130 of 2014, dated 15-1-2015]. In this case the hon'ble Calcutta High Court has upheld the Income-tax Appellate Tribunal's decision holding that the assessee was entitled to deduction under section 80-IC of the Act by treating the transport and interest subsidy as part of the business profit. Accordingly, learned counsel for the assessee submitted that the assessee's claim of deduction under section 80-IA of the Act cannot be disallowed.
9 ITA No.5592/M/2019 M/s. Thakur Infra Projects Pvt. Ltd. 13. We have carefully considered the submissions and perused the records. We find that the issue on merits as to whether the assessee is entitled to deduction under section 80-IA of the Act for construction of foot over- bridge as well as bus shelter is covered in favour of the assessee by the decision of the Tribunal and the hon'ble Calcutta High Court as referred to in the submissions of learned counsel for the assessee. The Tribunal in the assessee's own case as well as in the case of Selvel Advertising (P.) Ltd. (supra ) has held that bus shelters and foot overbridges should be considered as part of the infrastructure facility for claiming deduction under section 80-IA of the Act. This issue was also supported by the decision of the hon'ble Calcutta High Court in the case of Selvel Advertising (P.) Ltd. (supra ) wherein the hon'ble High Court has upheld the Income-tax Appellate Tribunal's decision quashing the revision order passed by the learned Commissioner of Income-tax under section 263 of the Act wherein bus shelters and foot overbridges were not to be considered as part of the infrastructure facility for claiming deduction under section 80-IA of the Act.
As regards the issue raised by the learned Departmental representative that the income which is the subject matter of claim of deduction under section 80-IA of the Act was not derived from the business of advertising of bus shelters and foot overbridges, we find that this is altogether a new issue which is not even the case of the Assessing Officer. The Assessing Officer has made the disallowance only on the ground that construction of bus shelter and foot overbridge cannot be treated as development of infrastructure facility. Hence they do not qualify for deduction under section 80-IA of the Act. This aspect of the Assessing Officer's disallowance has been duly overruled by the learned Commissioner of Income-tax (Appeals) as well as the Income-tax Appellate Tribunal. The same also draws support from the hon'ble Calcutta High Court decision in the case of Selvel Advertising (P.) Ltd. (supra ). In these cases it has been held that development of foot overbridges and bus shelters do qualify for deduction under section 80-IA of the Act on account of infrastructure development. When the Assessing Officer has not raised any issue as to whether the income of the assessee can be considered to be income derived from the industrial undertaking and the same was also not the subject-matter of consideration before the learned Commissioner of Income-tax (Appeals) nor any such ground has been raised before the Income-tax Appellate Tribunal, in our considered opinion the learned Departmental representative cannot now enlarge the scope of the Revenue's appeal before us.
In this regard we also draw support from the hon'ble Madhya Pradesh High Court exposition in the case of Kamal Kishore & Co. v. CIT [1998] 232 ITR 668 for the following proposition (headnote) : "Section 253 of the Income-tax Act, 1961, permits appeals to the Appellate Tribunal. Under sub-section (2) of this section, the Commissioner may, if he objects to any order, direct the Assessing Officer to appeal to the Appellate Tribunal against the order. It is thus clear that there has to be an appeal and there has to be a specific objection. Under Order 41, rule 2, of the Code of Civil
10 ITA No.5592/M/2019 M/s. Thakur Infra Projects Pvt. Ltd. Procedure also it is clear that the appellant shall not except by leave of the court, urge or be heard in support of any ground of objection not set forth in the memorandum of appeal."
On the basis of the above ratio the hon'ble High Court had held that admittedly the ground of status was not taken by the Department in terms of section 253(2) of the Act. No leave was obtained to urge the ground in regard to the status as regards the liability to tax. The Tribunal erred in law in setting aside the findings given by the Appellate Assistant Commissioner that the assessee was a separate entity and the assessment made in the case of the assessee should be treated as substantive.
Thus from the above we hold that the issue which was not the basis of disallowance by the Assessing Officer and the same was not the subject- matter of consideration by the learned Commissioner of Income-tax (Appeals) and the same was also not the subject-matter of the ground of appeal taken before the Incometax Appellate Tribunal the issue now being raised by the learned Departmental representative need not be adjudicated by us. Hence on the issue as to whether foot overbridges and bus shelters qualify for deduction of section 80-IA of the Act we hold that the learned Commissioner of Income-tax (Appeals) is correct in holding the assessee's entitlement for deduction under section 80-IA of the Act. Accordingly, this ground of appeal raised by the Revenue stands dismissed.”
Since the issue in the current year is also identical i.e. disallowance of claim of deduction under section 80IA in respect of parking slot which was constructed under agreement with CIDCO. Accordingly, we are inclined to set aside the order of Ld. CIT(A) and direct the AO to allow the deduction under section 80IA in respect of the parking facility.
In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 14.09.2021.
Sd/- Sd/- (Pavan Kumar Gadale) (Rajesh Kumar) JUDICIAL MEMBER ACCOUNTANT MEMBER
Mumbai, Dated: 14.09.2021. * Kishore, Sr. P.S.
11 ITA No.5592/M/2019 M/s. Thakur Infra Projects Pvt. Ltd. Copy to: The Appellant The Respondent The CIT, Concerned, Mumbai The CIT (A) Concerned, Mumbai The DR Concerned Bench //True Copy// [ By Order
Dy/Asstt. Registrar, ITAT, Mumbai.