RPP INFRA PROJECTS LTD.,CHENNAI vs. JCIT, ERODE

Both the appeals of the assessee are directed against the respective orders of the Principal Commissioner of Income Tax-2, Coimbatore, for the assessment years 2010-11 and 2011-12. Since common issue arises for consideration in both the appeals, we heard both the appeals together and disposing of the same by this common order.

Shri S. Sridhar, the Ld.counsel for the assessee, submitted that the only issue arises for consideration in both the appeals is with regard to deduction claimed by the assessee under Section 80- IA of the Income-tax Act, 1961 (in short 'the Act'). According to the Ld. counsel, in fact, the Assessing Officer allowed the claim of the assessee while completing the assessment. The Principal Commissioner in exercise of his power under Section 263 of the Act, directed the Assessing Officer to pass an order after treating the assessee as works contractor and not as a developer. The Ld.counsel made an attempt to demonstrate that the assessee is a developer and not works contractor. The Ld.counsel also submitted that the Assessing Officer has not considered this issue while completing the assessment. The Ld.counsel has also requested the Bench that the matter may be remitted back to the file of the Assessing Officer to consider the issue on merit.

On the contrary, Sh. Pathlavath Peerya, the Ld. Departmental Representative, submitted that the assessee is only a works contractor, therefore, it was not eligible for deduction under Section 80-IA of the Act. Referring to para 7 of the Principal Commissioner’s order, the Ld. D.R. submitted that the Commissioner has directed the Assessing Officer to consider the matter afresh and pass order on merit.

We have considered the rival submissions on either side and perused the relevant material available on record. The Assessing Officer in the impugned assessment order, has allowed the claim of the assessee without any discussion. The proceedings before the Assessing Officer being a judicial proceedings under Section 136 of the Act, he is expected to discuss each and every matter which arises for consideration. The reason for allowing or disallowing of the claim of the assessee has to be reflected in the assessment order. The application of mind has to be reflected in the assessment order. It is not in dispute that the proceeding before the Assessing Officer is a judicial proceeding under Section 136 of the Act. Therefore, the Assessing Officer has to discuss every issue in the assessment order and the application of mind shall be reflected in the assessment order.

The Assessing Officer has to examine all the material facts and bring on record the reasons for allowing or disallowing the claim of the assessee. The reasons recorded in the assessment order would be the live link to the material available on record and the mind of the decision maker. Therefore, this Tribunal is of the considered opinion that the matter needs to be reconsidered by the Assessing Officer. Accordingly, the orders of the lower authorities are set aside and the claim of the assessee under Section 80-IA of the Act is remanded back to the file of the Assessing Officer. The Assessing Officer shall re-examine the matter in the light of the material available on record and thereafter decide the issue in accordance with law without being influenced by any of the observation made by the Principal Commissioner in the impugned order, and shall pass a speaking order accordingly. The assessee is at liberty to furnish any further material.

In the result, both the appeals of the assessee are allowed for statistical purposes.