M/S VINOD KUMAR SHUKLA CONST. PVT. LTD.,BHOPAL vs. THE ACIT 3(1), BHOPAL

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ITA 546/IND/2016Status: DisposedITAT Indore11 August 2017AY 2011-128 pages

In favour of the Revenue: the assessee's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that Section 80IA(4) does not apply to businesses that are in the nature of 'works contracts'. Following a previous ruling, the Tribunal found that the assessee was a works contractor and thus not eligible for the deduction.

What were the facts?

The assessee, engaged in construction of bridges and roads, claimed deduction under Section 80IA(4). The CIT(A) confirmed the disallowance of this deduction, holding that the assessee was executing works contracts. The assessee appealed this decision.

What were the issues?

Whether a business engaged in constructing bridges and roads as a works contractor is eligible for deduction under Section 80IA(4) of the Income Tax Act.

Which sections of the Income-tax Act were involved?

Section 80IA(4)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, INDORE BENCHE, INDORE

Before: SHRI CHANDRA MOHAN GARG & SHRI O.P.MEENA

For Appellant: Shri Prakash Jain, CA
For Respondent: Shri Mohd. Javed Sr.DR
Hearing: 26.07.2017Pronounced: 11.8.2017

आदेश / O R D E R

PER CHANDRAMOHAN GARG, J.M:

This appeal is filed by the assessee against the order of Ld.

Commissioner of Income Tax (Appeals)-2, Bhopal [hereinafter

referred to as the CIT(A)] dated 03.02.2016 and pertains to

assessment year 2911-12 as against appeal decided in assessment

order passed u/s 143(3) of the Act dated 14.03.2014 of ACIT, 3(1),

Bhopal [hereinafter referred to as the AO]. Earlier this appeal was

dismissed as ex-parte quasis and subsequently it was recalled by

order dated 24.05.2017 posted in the MA No.24/2017 of the

appellant-assessee.

2.

The following grounds have been raised by the assessee:-

1.

That impugned order passed is bad in law as well as on the facts. It is based on incorrectness interpretation of law and the facts have also been incorrectly construed.

2.1 That on the facts and in the circumstances of the case and in law, the ld. CIT(A) erred in confirming AO’s action for disallowing deduction u/s 80!A(4) amounting to Rs.1,23,33,267/- without

M/s Vinod Kumar Shukla Const. Pvt. Ltd, ITA No.546/Ind/2016 Assessment Year 2011-12 Page 3 of 8

appreciating the fact that during the assessment year in question

assessee has developed and constructed new infrastructure

facilities viz, constructed new bridge and roads.

2.2 That on the facts and in the circumstances of the case and

in law, the ld. CIT(A) failed to appreciate the fact that the

explanation to Section 80IA(4) inserted by Finance Act, 2009, with

effect from 01.04.2000 is not applicable on the appellant company.

3.

That on the facts and in the circumstances of the case and

in law, the ld. CIT(A) erred in upholding the addition of

Rs.2,00,000/- out of disallowance of Rs.3,00,000/- made on

account of business promotion expenses.

3.

The Ld. Assessee’s representative (AR) reiterated that the

asseesee’s written submissions filed before the CIT(A)

which reads as follows;

“The assessee company is engaged in the business of

construction work, by undergoing contract with the State

Government and Central Government Department, specially to

construct Bridges and Roads, by fulfilling all the provisions laid

down in the Act, with reference to Section 80IA(4)(i).

Further, the assessee being a developer of the infrastructure

facilities is fully entitled for exemption under the said Section. As

M/s Vinod Kumar Shukla Const. Pvt. Ltd, ITA No.546/Ind/2016 Assessment Year 2011-12 Page 4 of 8

the assessee fulfill all the conditions required to avail the benefits available under the Act. The claim of u/s 80IA(4) is genuine considering the fact that the assessee is engaged in the development of infrastructure work awarded by the Government”.

4.

Replying to the above the Ld. Departmental

Representative (DR)drew our attention towards page 4.4

of the first appellate order and submitted that as per

written submission of the assessee no appeal has been

filed for Assessment Year 2010-11 i.e. for immediately

preceding year and the issue is covered in favour of the

revenue and against the assessee by the order of the

ITAT, Indore Bench in the case of ACIT V/s M/s. R.K.

Gupta Contractors and Engineers Pvt. Ltd dated

28.7.2010 passed in ITA No.517 & 522/Ind/2009.

5.

On careful consideration of facts and circumstances of

the case and rival submission we are of the view that

ITAT, Indore Bench has adjudicated the issue in the case

of ACIT V/s M/s. R.K. Gupta Contractors and Engineers

Pvt. Ltd (supra) wherein the tribunal has held as follows;

M/s Vinod Kumar Shukla Const. Pvt. Ltd, ITA No.546/Ind/2016 Assessment Year 2011-12 Page 5 of 8

3.

“we have heard the rival submissions of the parties and have

gone through the material available on the file. A clarificatory

Explanation below sub-section (13) of Section 80IA of the Act was

inserted with retrospective effect from 1.4.2000 by the Finance Act,

2009, as per which nothing contained in this section shall apply in

relation to a business referred to in sub-section (4) which is in the

nature of a “works contract” awarded by any person including the

Central or State Government and executed by the Undertaking or

enterprise referred to in sub-section (1). The assessment year

involved in the present appeal being 2006-07, therefore, this

Explanation is clearly applicable to the facts of the present appeal.

It has been specifically provided that the provisio0ns u/s 80IA of the

Act shall not apply to a business referred to in sub-section (4) of

Section 80IA of the Act, which is of the nature of “works contracts”.

In sub-section (1), the word “any business” has been mentioned.

Identical issue has been deliberated upon and decided by the

Tribunal in the aforesaid case, the relevant portion whereof has

been reproduced above. We, therefore, hold that since no deduction

is allowable to the assessee u/s 80IA of the Act, the Ld. CIT(A) was

not justified in granting the same. The order of Ld. CIT(A) on this

issue is, therefore, set-aside and the appeal of the Revenue is

allowed.

M/s Vinod Kumar Shukla Const. Pvt. Ltd, ITA No.546/Ind/2016 Assessment Year 2011-12 Page 6 of 8

4.

As far as the appeal of the assessee (ITA No.522/Ind/2009) is concerned, since while deciding the appeal of the Revenue, we have held that no deduction u/s 80IA of the Act is allowable to the assessee, there is no question of bifurcation of income/receipts for the purpose of deduction u/s 80IA of the Act, therefore, the decision of the Ld. CIT(A) in that regard cannot be sustained because the assessee is not at all eligible for deduction u/s 80IA of the Act. Accordingly, the appeal of the assessee is also dismissed.

Finally, the appeal of the Revenue is allowed whereas the appeal of the assessee is dismissed.”

6.

In view of the above, at the very outset we may point out that

as per mandate and the settled legal position the provisions of

Section 80IA of the Act does not apply to the business

referred to in sub section (4) of Section 80IA of the Act which

is of the nature of “works contract” and in sub-section (1), the

words “any business” has been mentioned. The Ld. AR could

not controvert the fact that the facts and circumstances of the

present case are identical to the facts of the case of M/s. R.K.

Gupta Contractors and Engineers Pvt. Ltd (supra) and thus

we hold that no deduction is allowable to the assessee u/s

80IA of the Act as the appellant is only executing the works

M/s Vinod Kumar Shukla Const. Pvt. Ltd, ITA No.546/Ind/2016 Assessment Year 2011-12 Page 7 of 8

contract awarded by the State/Central Governments and he

is only a “works contractor”. Consequently, following the

decision of Tribunal in the case of ACIT v/s R.K. Gupta

Contractors and Engineers Pvt. Ltd (supra) we hold that the

conclusion drawn at 4.4 of the order of the CIT(A) is correct

and sustainable, thus we have no reason to interfere with the

same. It is also relevant to mention that while dismissing the

claim of the assessee the CIT(A) rightly noted that no appeal

has been filed by the assessee for Assessment Year 2010-11

i.e. immediately preceding year, therefore the conclusion

drawn by the first appellate authority also gets strong support

from this fact.

7.

In the result the appeal of the assessee being devoid of merits is dismissed.

Order was pronounced in the open court on 11.08.2017.

Sd/- Sd/-

(O.P. MEENA) (CHANDRA MOHAN GARG) लेखा सद�य/ACCOUNTANT MEMBER �या�यक सद�य / JUDICIAL MEMBER Indore; �दनांक Dated : 11/08/2017

Dev/

M/s Vinod Kumar Shukla Const. Pvt. Ltd, ITA No.546/Ind/2016 Assessment Year 2011-12 Page 8 of 8

Copy to: Assessee/AO/Pr. CIT/ CIT (A)/ITAT (DR)/Guard file. By order

Assistant Registrar, Indore

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