ITD CEMENTATION INDIA LTD,MUMBAI vs. DCIT CC-5(1), MUMBAI

ITA No. 1401/Mum/2023, is filed by ITD Cementation India Ltd., ( Assessee / Appellant) against the appellate order passed by The Commissioner of Income-tax (Appeals)-53, Mumbai, [the learned CIT (A)] for A.Y. 2018-19 dated 2nd March, 2023, wherein the appeal filed by the assessee against the assessment order passed by the National e-assessment Centre [ the Ld AO] dated 23rd April, 2021, under Section 143(3) read with section 144B of the Income-tax Act, 1961 (the Act), was partly allowed. Therefore, the assessee is aggrieved and is in appeal before us.

Brief fact of the case shows that assessee is a company engaged in the business of civil construction, mining and specialized engineering in construction activities. It undertakes construction of dams, bridges, port, airport and heavy constructions. The assessee obtains contracts including Government contract through tenders and further carries out projects throughout India. Assessee filed its return of income on 4th December 2018 05. at ₹ nil, as per normal provision of the Act and book profit under Section 115JB of the Act was computed at ₹113,18,95,000/-. The return of income was picked up for scrutiny. Assessee has claimed deduction under Section 80 IA of the Act of Rs 28892 lakhs. .

The learned Assessing Officer, on scrutiny, passed assessment order on 23rd April, 2021, wherein

On this ground, assessee also made a prayer for admission of the additional evidence under Rule 29 of the ITAT Rules. In the application, assessee submitted that assessee has claimed deduction of ₹28,982/- lacs in respect of 16 projects on account of contracts entered with Government and non-Government parties. The learned Assessing Officer has disallowed the entire deduction claimed. The learned CIT (A) has deleted the disallowance to the extent of ₹11,47,19,144/- in respect of contract entered into with certain government entities. It was further stated that the partial disallowance confirmed by the learned CIT (A) is with respect to certain non- government contracts on the ground that assessee has failed to provide a documentary evidences. Now it is the claim of the assessee that contracts entered into with non- Government entities are originally awarded to them by the Government. It was also pointed out that on 26th October, 2021, there was a survey on the premises of the assessee resulting into several reassessments and ongoing transfer pricing proceedings with which assessee was fully occupied. The assessee has given brief of several notices issued in such proceedings. It was stated that during this period ld CIT (A) has called for several details vide order sheet entry dated 10th January 2023, which was submitted by the assessee on 15th February 2023, along with several

The learned Authorized Representative also referred to paragraph no.7.3.1 of the order of the learned CIT (A), wherein non-submission of such detail was mentioned. He submitted that because of this reason also amongst others the deduction was denied. He submits that though the scope of work of various contracts were made available to the learned CIT (A), but in absence of these contracts, as assessee has failed to produce , deduction under Section 80IA of the Act is denied . His argument is that assessee was prevented because of sufficient cause for not producing these details and therefore, it should be admitted.

The learned Departmental Representative vehemently contested that these additional evidences should not be admitted at this stage and even otherwise these additional evidences are irrelevant for the reason that :-

According to Rule 29 of ITAT Rules, the parties to the appeal are not entitled to produce additional evidences either orally or in documents. However, the Tribunal can allow the parties to do so for any other substantial cause or the revenue authorities having provided inadequate opportunity to the assessee. In this case, we find that sufficient opportunities were provided to the assessee. But in this case, the disallowance of deduction claimed by the assessee is also confirmed for one of the reason of non- production of the evidences which assessee was prevented because of its non-availability or delay in its retrieval coupled with ongoing several reassessment and transfer pricing assessments pursuant to survey. Therefore, for these reasons, we allow the additional evidences to be adduced by the assessee.

It is also the argument of the learned Departmental Representative that whether the additional evidences submitted by the assessee are relevant to decide the issue

As we have admitted the additional evidences, without going into the merits of the additional evidences, we restore the issue before the learned CIT (A) to examine these evidences and decide the issue of allowability of claim of deduction under Section 80IA of the Act with respect to the additional evidences. This is also so for the reason that the disallowance is confirmed for one of the reasons being non-production of the contracts. The learned CIT (A) may examine additional evidences, look at their relevance in claim of deduction of the assessee and decide the issue whether the assessee fulfils conditions under Section 80IA (4) of the Act or not. Accordingly, the ground no.1 and 2 to the extent indicated above are allowed.

Ground no.3 is with respect to the disallowance of ₹1,97,740/- under Section 36(1)(va) of the Act in respect of delay in depositing employee’s contribution beyond the due dates prescribed under the respective Act. This ground is already decided by the learned CIT (A) against the assessee relying on the decision of the Hon'ble

Ground no.4 is with respect to the dividend distribution tax paid by the company at the rate of 20.36% under Section 115O of the Act, claim assessee that it should have been levied at the rate of 15% in terms of Article 10 of Double Taxation Avoidance Agreement between India and Thailand. As The learned Authorized Representative fairly admitted that this issue is decided against the assessee by the Special Bench in case of Total Oil Limited where it is held that dividend distribution tax is an additional tax charged on the distributed profits of the company and not on the shareholder. The learned Departmental Representative also agreed with the same.

We are of the view that decision of Total oil Limited [SB] has held that shareholders have nothing to do with the levy of DDT on distributed profits of the company. List of shareholders, their beneficial interest in the dividend and residential status of the shareholder as per DTAA are not produced before us. It has also not been established before us that even otherwise the claim is in time or not and further whether the sources country [India] has to cede its right of taxation or not. Therefore, all these issues remain unexamined at all stages.

In view of the decision of the Special Bench in ITA No.6997/Mum/2019, ground no.4 of the appeal is dismissed.