THE INDIAN HUME PIPE CO.LTD, MUMBAI v. DCIT CEN CIR 22, MUMBAI

ITA 2931/MUM/2010 | 2006-2007
Pronouncement Date: 29-07-2011 | Result: Dismissed

Appeal Details

RSA Number 293119914 RSA 2010
Assessee PAN AAACT4063D
Bench Mumbai
Appeal Number ITA 2931/MUM/2010
Duration Of Justice 1 year(s) 3 month(s) 15 day(s)
Appellant THE INDIAN HUME PIPE CO.LTD, MUMBAI
Respondent DCIT CEN CIR 22, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 29-07-2011
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted I
Tribunal Order Date 29-07-2011
Date Of Final Hearing 30-05-2011
Next Hearing Date 30-05-2011
Assessment Year 2006-2007
Appeal Filed On 13-04-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL I BENCH MUMBAI. BEFORE SHRI R.V.EASWAR PRESIDENT AND SHRI PRAMOD KUMAR ACCOUNTANT MEMBER I.T.A NO.2931/ MUM/2010 ASSESSMENT YEAR: 2006-07 THE INDIAN HUME PIPE CO. LTD. .. APPELLANT CONSTRUCTION HOUSE 2 ND FLOOR 5 WALACHAND HIRACHAND MARG BALLARD ESTATE MUMBAI-01. PA NO.AAACT 4063D VS DY. CIT CENT. CIRCLE-22 . RESPONDEN T AAYAKAR BHAVAN M.K. ROAD MUMBAI. APPEARANCES: H.P.MAHAJANI FOR THE APPELLANT SANJEEV DUTT FOR THE RESPONDENT DATE OF HEARING : 30-05-2011 DATE OF PRONOUNCEMENT: 29 -07-2011 O R D E R PER PRAMOD KUMAR: 1. BY WAY OF THIS APPEAL THE ASSESSEE HAS CHALLENG ED CORRECTNESS OF CIT(A)S ORDER DATED 28.1.2010 IN THE MATTER OF ASSESSMENT UNDER SECTION 143(3) OF THE INCOME TAX ACT 1961 FOR THE ASSESSMENT YEAR 2006 -07. 2. IN THE FIRST GROUND OF APPEAL THE ASSESSEE HAS RAISED THE FOLLOWING GRIEVANCE: I .T.A NO.2931/ MUM/2008 ASSESSMENT YEAR: 2006-07 2 1.A. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE CIT(A) ERRED IN CONFIRMING REJECTION OF THE CLAIM OF THE APPELLANT FOR DEDUCTION U/S. 80IA OF THE ACT HOLDING THE APPELLAN T TO BE A WORKS CONTRACTOR AND NOT A DEVELOPER OF ELIGIBLE INFRASTR UCTURE PROJECTS. WITHOUT PREJUDICE TO THE GENERALITY OF THE ABOVE GR OUND THE LD CIT(A0 ERRED IN HOLDING THAT THE DECISION OF THE SPECIAL B ENCH OF THE TRIBUNAL IN THE CASE OF BT PATIL AND SONS WAS APPLICABLE TO THE FACTS OF THE CASE WHEN IN FACT THE ASSESSEE IN THAT CASE WAS ONLY A S UB-CONTRACTOR. 3. VIDE OUR ORDER OF EVEN DATE AND ON THE SAME SET OF FACTS FOR THE ASSESSMENT YEAR 2004-05 IN ITA NO.5172/M/2008 WE HAVE REJECTED THE GRIEVANCE RAISED BY THE ASSESSEE. WHILE DOING SO WE HAVE INTER ALIA OBSERVED AS FOLLOWS: 3.BRIEFLY STATED THE RELEVANT MATERIAL FACTS ARE LIKE THIS. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURE OF HUME PIPE S AND EXECUTION OF CIVIL PROJECTS. DURING THE RELEVANT PREVIOUS YEAR THE A SSESSEE HAD BUSINESS INCOME EARNED FROM EXECUTION OF PROJECTS RELEVANT TO DEVEL OPMENT OF INFRASTRUCTURE FACILITY SUCH AS WATER SUPPLY AND SEWERAGE PROJECTS COMPOSITE AND PART OF COMPOSITE PROJECTS. THE CLAIM OF THE ASSESSEE WAS THAT COMPOSITE WATER SUPPLY PROJECTS MEAN UNDERTAKING WATER SUPPLY PROJECTS FRO M SOURCE TO DISTRIBUTION SYSTEM WHICH INCLUDES MANUFACTURING SUPPLYING LA YING JOINING OF PIPELINE AND INCLUDES CONSTRUCTION OF PUMP HOUSE DELIVERY COMM ISSIONING OF TURBINE PUMP SETS INSTALLATION OF BOOSTER MAINS BRANCH MAINS AND ELEVATOR RESERVOIRS ETC. WITH THIS EXPLANATION OF ACTIVITY IT WAS CONTENDED THAT THE ASSESSEE WAS ENGAGED IN DEVELOPMENT OF INFRASTRUCTURE FACILITY A S DEFINED IN EXPLANATION (C) TO SECTION 80IA(4). THE ASSESSEE ON THESE FACTS AND R ELYING UPON TRIBUNALS DECISION IN THE CASE OF PATEL ENGINEERING LTD (84 T TJ 646) CLAIMED A DEDUCTION OF ` .11 39 42 000 U/S. 80IA OF THE ACT. THE ASSESSING OFFICER HOWEVER DID NOT ACCEPT THE SAID CLAIM. HE WAS OF THE VIEW THAT THE ASSESSEE WAS A CONTRACTOR AND NOT DEVELOPER. RELYING UPON HONBLE SUPREME COURTS JUDGMENT IN THE CASE OF CIT VS. N.C.BUDHIRAJA & CO. (204 ITR 412) THE ASSESSIN G OFFICER CONCLUDED THAT THE ASSESSEE CANNOT BE TERMED AS DEVELOPER OF A PROJECT MERELY BECAUSE ASSESSEE HAS EXECUTED THE PROJECT FOR ACTUAL DEVELOPER OF INFRAS TRUCTURE FACILITY I.E. GOVERNMENT OR SEMI-GOVERNMENT BODY CONCERNED AND TH AT THE ASSESSEE COMPANY CANNOT BE CONSTRUED AS AN ENTERPRISE CARRYIN G ON BUSINESS OF DEVELOPING OPERATING AND MAINTAINING OF ANY INFRAS TRUCTURE FACILITY. AS REGARDS DECISION OF A COORDINATE BENCH IN THE CASE OF PATEL ENGINEERING (SUPRA) THE ASSESSING OFFICER OBSERVED THAT THE DECISION HAS BEE N CHALLENGED BEFORE HONBLE BOMBAY HIGH COURT AND DOES NOT THUS GIVE FINALITY T O THE DISPUTE. THE ASSESSING I .T.A NO.2931/ MUM/2008 ASSESSMENT YEAR: 2006-07 3 OFFICER THUS DECLINED THE DEDUCTION U/S. 80IA AMOU NTING TO ` .11 39 42 000 TO THE ASSESSEE. AGGRIEVED ASSESSEE CARRIED THE MATT ER IN APPEAL BUT WITHOUT ANY SUCCESS. LEARNED CIT(A) UPHELD THE STAND OF THE AS SESSING OFFICER AND INTER ALIA OBSERVED AS FOLLOWS: 9. I HAVE CONSIDERED THE SUBMISSIONS PUT FORTH ON BE HALF OF THE APPELLANT BY THE LEARNED AR. THE FILTERS AND PARAME TERS OF VIEWING THE ELIGIBILITY OF AN ASSESSEE FOR A CLAIM UNDER SECTION 80IA(4) OF THE ACT HAVE BEEN MATERIALLY ALTERED BY VIRTUE OF AN AMENDME NT INSERTED BY WAY OF AN EXPLANATION IN SECTION 80IA BY THE FINAN CE ACT 2007 WITH RETROSPECTIVE EFFECT FROM 1 ST APRIL 2000; A MATTER WHICH HAS BEEN IGNORED BY THE APPELLANT IN ITS DETAILED SUBMISSIONS . THE OMISSION OF THE APPELLANT TO DISCUSS THE ELIGIBILITY OF ITS CLAIM FR OM THE PERSPECTIVES OF THE SAID AMENDMENT IS INDEED CONSPICUOUS BY THE AB SENCE. THE SAID EXPLANATION WHICH HAS AN OVERRIDING IMPACT IN THE MATTER OF THE APPELLANTS ELIGIBILITY OF ITS CLAIM FOR A DEDUCTION U/S.80IA(4) OF THE ACT IS REPRODUCED BELOW:- EXPLANATION-FOR REMOVAL OF DOUBTS IT IS HEREBY DEC LARED THAT NOTHING CONTAINED IN THIS SECTION SHALL APPLY TO A PERSON W HO EXECUTES A WORK CONTRACT ENTERED INTO WITH THE UNDERTAKING OR ENTE RPRISE AS THE CASE MAY BE. 10. THIS AMENDMENT IS OF RECENT VINTAGE. IN THE ME MORANDUM EXPLAINING THE PROVISIONS IN THE FINANCE BILL 2007 ITS PURPOSE AND AMBIT HAS BEEN DISCUSSED AS UNDER:- CLARIFICATION REGARDING DEVELOPER WITH REFERENCE T O INFRASTRUCTURE FACILITY INDUSTRIAL PARK ETC. FOR THE PURPOSES OF SECTION 80IA INTERALIA PROVIDES FOR A TEN YEAR TAX BENEFIT TO AN ENTERPRISE OR AN UNDERTAKING ENGAGED IN DEVELOPMENT OF INFRASTRUCTURE FACILITIES INDUSTRIAL PARKS AND SPECIAL ECONOMIC ZONES. THE TAX BENEFIT WAS INTRODUCED FOR THE REASON THAT INDUSTRIAL MODERNIZATION REQUIRES A MASSIVE EXPANSION OF AND Q UALITATIVE IMPROVEMENT IN INFRASTRUCTURE (VIZ. EXPRESSWAYS HI GHWAYS AIRPORTS PORTS AND RAPID URBAN RAIL TRANSPORT SYSTEMS) WHICH WAS LACKING IN OUR COUNTRY. THE PURPOSE OF THE TAX BENEFIT HAS ALL ALON G BEEN FOR ENCOURAGING PRIVATE SECTOR PARTICIPATION BY WAY OF INVESTMENT IN DEVELOPMENT OF THE INFRASTRUCTURE SECTOR AND NOT FO R THE PERSONS WHO MERELY EXECUTE THE CIVIL CONSTRUCTION WORK OR ANY O THER WORKS CONTRACT. ACCORDINGLY IT IS PROPOSED TO CLARIFY THAT THE PROV ISIONS OF SECTION 80-IA SHALL NOT APPLY TO A PERSON WHO EXECUTES A WORKS CO NTRACT ENTERED INTO WITH THE UNDERTAKING OR ENTERPRISE REFERRED TO IN T HE SAID SECTION. THUS IN A CASE WHERE A PERSON MAKES THE INVESTMENT AND H IMSELF CARRIES OUT THE DEVELOPMENT WORK I.E. CARRIES OUT THE CIVIL CON STRUCTION WORK HE WILL BE ELIGIBLE FOR TAX BENEFIT UNDER SECTION 80-IA. IN C ONTRAST TO THIS A PERSON WHO ENTERS INTO A CONTRACT WITH ANOTHER PERS ON [I.E. UNDERTAKING OR ENTERPRISE REFERRED TO IN SECTION 80-IA] FOR EXE CUTING WORKS CONTRACT WILL NOT BE ELIGIBLE FOR THE TAX BENEFIT UNDER SECTION 80-IA. I .T.A NO.2931/ MUM/2008 ASSESSMENT YEAR: 2006-07 4 THIS AMENDMENT WILL TAKE RETROSPECTIVE EFFECT FROM 1 ST APRIL 2000 AND WILL ACCORDINGLY APPLY IN RELATION TO THE ASSESSMEN T YEAR 2000-2001 AND SUBSEQUENT YEARS. 11. IT IS CLEAR FRO THE ABOVE AMENDMENT THAT AN ASSE SSEE CAN CLAIM A DEDUCTION UNDER SECTION 80IA(4) ONLY IF IT MAKES T HE INVESTMENT IN THE ELIGIBLE PROJECT AND ITSELF EXECUTES THE DEVELOPMENT WORK. AN ASSESSEE WILL BE DENIED A DEDUCTION U/S.80IA(4) IF IT ENTERS INTO A CONTRACT WITH ANOTHER PERSON FOR EXECUTING A WORKS CONTRACT. WHI LE THOSE WHO PARTICIPATE IN AN ELIGIBLE PROJECT AS PER THE IMPUGN ED SECTION BY WAY OF INVESTMENT ARE ENTITLED TO SEEK A DEDUCTION U/S.80I A(4) ON THE OTHER HAND THOSE ASSESSES WHO MERELY EXECUTE A CIVIL CONS TRUCTION WORK OR OTHER WORKS CONTRACT ARE NOT ENTITLED TO CLAIM SUCH A DEDUCTION. IT IS PERTINENT HERE TO DISCUSS THE MEANING OF A WORKS CO NTRACT FOR THIS PURPOSE. A WORKS CONTRACT HAS NOT BEEN DEFINED IN SE CTION 80IA OF THE ACT. A WORKS CONTRACT IS A CONTRACT FOR LABOUR WORK OR SERVICE AND NOT FOR SALE OF GOODS THOUGH GOODS ARE USED IN EXECUTI NG THE CONTRACT FOR LABOUR WORK OR SERVICE E.G. WHEN A CONTRACTOR CONST RUCTS A BUILDING THE DEVELOPER PAYS FOR THE CAST WHICH INCLUDES THE COS T OF BUILDING MATERIAL LABOUR AND OTHER SERVICES OFFERED BY THE CONTRACTOR. THE SUPREME COURT WHILE LAYING DOWN THE JUDICIAL RATIO IN THE CASE OF HAL LTD. V. STATE OF ORISSA 55 STC 327 OBSERVED THAT IN A CONTRACT FOR WORK THE PERSON PRODUCING HAS NO PROPERTY IN THE THING PRODUCED A S A WHOLE EVEN IF PART OR EVEN WHOLE OF MATERIAL USED BY HIM MAY HAVE BEEN HIS PROPERTY EARLIER. THE APEX COURT FURTHER STATED IN THE CASE OF STATE OF TAMILNADU V. ANANDAM VISHWANATHAN (1989) 1 SCC 613 THAT THE N ATURE OF CONTRACT CAN BE FOUND ONLY WHEN THE INTENTIONS OF THE PARTIES ARE FOUND OUT. THE FACT THAT IN THE EXECUTION OF WORKS CONTRACT SOME M ATERIALS ARE USED AND THE PROPERTY IN THE GOODS SO USED PASSES TO THE O THER PARTY THE CONTRACTOR UNDERTAKING THE WORK WILL NOT NECESSARIL Y BE DEEMED ON THAT ACCOUNT TO SELL THE MATERIALS. PRIMARY DIFFERENCE BE TWEEN A CONTRACT OF WORK OR SERVICE AND A CONTRACT OF SALE IS THAT IN T HE FORMER THERE IS THE PERSON PERFORMING OR RENDERING SERVICE NO PROPERTY IN THE THING PRODUCED AS A WHOLE NOTWITHSTANDING THAT A PART OR EVEN THE WHOLE OF THE MATERIAL USED BY HIM MAY HAVE BEEN HIS PROPERTY. WHEN THE FINISHED PRODUCT SUPPLIED TO A PARTICULAR CUSTOMER IS NOT CO MMERCIAL COMMODITY IN THE SENSE THAT IT CANNOT BE SOLD IN THE MARKET TO ANY OTHER PERSON (OTHER THAN WHO COMMISSIONED THE CONTRACTOR) THE T RANSACTION IS ONLY A WORKS CONTRACT. IT WAS HELD BY THE SC IN THE CASE OF STATE OF GUJARAT V. VARIETY BODY BUILDERS AIR 1976 SC 2108 THAT WHERE T HE MAIN OBJECT OF WORK UNDERTAKEN BY THE PAYEE OF THE PRICE IS NOT TH E TRANSFER OF A CHATTEL QUA CHATTEL THE CONTRACT IS ONE FOR LABOUR AND WORK . 12. THIS HAS BEEN REAFFIRMED AND REITERATED BY THE S UPREME COURT IN A RECENT JUDGMENT PRONOUNCED IN THE CASE OF STATE O F ANDHRA PRADESH V. I .T.A NO.2931/ MUM/2008 ASSESSMENT YEAR: 2006-07 5 KONE ELEVATORS (INDIA) LTD. 3 SCC 389 (2005) WHER E IT WAS STATED AS UNDER :- IT CAN BE TREATED AS WELL SETTLED THAT THERE IS NO STANDARD FORMULA BY WHICH OE CAN DISTINGUISH A CONTRACT FOR SALE FROM A WORK CONTRACT. THE QUESTION IS LARGELY ONE OF FACT DEPENDING UPON THE TERMS OF THE CONTRACT INCLUDING THE NATURE OF THE OBLIGATIONS TO BE DISCHARGED THERE UNDER AND THE SURROUNDING CIRCUMSTANCES. IF THE INT ENTION TO TRANSFER FOR A PRICE A CHATTEL IN WHICH THE TRANSFEREE HAD N O PREVIOUS PROPERTY THEN THE CONTRACT IS A CONTRACT FOR SALE. ULTIMATEL Y THE TRUE EFFECT OF AN ACCRETION MADE PURSUANT TO A CONTRACT HAS TO BE JUDG ED NOT BY ARTIFICIAL RULES BUT FROM THE INTENTION OF THE PARTIES TO THE C ONTRACT. IN A CONTRACT OF SALE THE MAIN OBJECT IS THE TRANSFER OF PROPER TY AND DELIVERY OF POSSESSION OF THE PROPERTY WHEREAS THE MAIN OBJECT IN A CONTRACT FOR WORK IS NOT THE TRANSFER OF THE PROPERTY BUT IT IS ONE FOR WORK AND LABOUR. ANOTHER TEST OFTEN TO BE APPLIED IS: WHEN AND HOW THE PROPERTY OF THE DEALER IN SUCH A TRANSACTION PASSES TO THE C USTOMER IS IT BY TRANSFER AT THE TIME OF DELIVERY OF THE FINISHED AR TICLE AS A CHATTEL OR BY ACCESSION DURING THE PROCESSION OF WORK ON FUSION T O THE MOVABLE PROPERTY OF THE CUSTOMER? IF IT IS THE FORMER IT I S A SALE IF IT IS THE LATTER IT IS A WORKS CONTRACTS. THEREFORE IN JU DGING WHETHER THE CONTRACT IS FOR A SALE OR FOR WORK AND LABOUR T HE ESSENCE OF THE CONTRACT OR THE REALITY OF THE TRANSACTION AS A WHO LE HAS TO BE TAKEN INTO CONSIDERATION. THE PREDOMINANT OBJECT OF THE CONTRA CT THE CIRCUMSTANCES OF THE CASE AND THE CUSTOM OF THE TRA DE PROVIDE A GUIDE IN DECIDING WHETHER TRANSACTION IS A SALE OR A WORK CONTRACT. ESSENTIALLY THE QUESTION IS OF INTERPRETATION OF T HE CONTRACT. IT IS SETTLED LAW THAT THE SUBSTANCE AND NOT THE FORM OF THE CONTRACT IS MATERIAL IN DETERMINING THE NATURE OF TRANSACTION. NO DEFINITE RULE CAN BE FORMULATED TO DETERMINE THE QUESTION AS TO WHETHE R A PARTICULAR GIVEN CONTRACT IS A CONTRACT FOR SALE OF GOODS OR I S A WORKS CONTRACTS. ULTIMATELY THE TERMS OF A GIVEN CONTRACT WOULD BE D ETERMINATIVE OF THE NATURE OF THE TRANSACTION WHETHER IT IS A SALE O F A WORK CONTRACT. THEREFORE THIS QUESTION HAS TO BE ASCERTAINED ON FA CTS OF EACH CASE ON PROPER CONSTRUCTION OF TERMS AND CONDITIONS OF THE CONTRACT BETWEEN THE PARTIES. 13. THE CONTRACTS EXECUTED BY THE APPELLANT PURSUA NT TO WHICH IT HAS CLAIMED A DEDUCTION U/S.80IA(4) MUST THEREFORE BE MEASURED FROM THE ABOVE METRICS LAID DOWN BY THE SUPREME COURT IN THE MATTER OF WORKS CONTRACT. I HAVE PERUSED THE COPIES OF THE AG REEMENTS WITH VARIOUS UNDERTAKINGS WHICH WERE EXECUTED BY THE APP ELLANT FOR EXECUTING THE IMPUGNED CONTRACTS WHICH ARE CLAIMED TO FALL WITHIN THE DOMAIN OF SECTION 80IA(4). IT IS CLEAR FROM THEM TH AT THE UNDERLYING STATUES OF THE APPELLANT IN EACH OF THEM IS THAT OF A CONTRACTOR WHO HAS BEEN ENGAGED IN A WORKS CONTRACT. I .T.A NO.2931/ MUM/2008 ASSESSMENT YEAR: 2006-07 6 14. IT IS CLEAR FROM THE ABOVE THAT THE APPELLANT H AD EXECUTED A WORKS CONTRACT IN RESPECT OF EACH OF THE PROJECTS F OR WHICH IT HAS CLAIMED A DEDUCTION U/S.80IA(4) OF THE ACT. THE APPELLANT H AS ALSO BEEN UNABLE TO ESTABLISH AS TO HOW DID IT MAKE AN INVESTMENT IN THE PROJECT PART FROM NOT BEING ABLE TO PROVE THAT IT HAD NOT EXECUTED A WO RKS CONTRACT AS IS EVIDENT ABOVE. IN VIEW OF THE FOREGOING I FIND NO M ERIT IN THE CLAIM OF THE APPELLANT FOR A DEDUCTION U/S.80IA OF THE ACT AND T HUS REJECT THIS GROUND OF APPEAL. 4. THE ASSESSEE IS NOT SATISFIED BY STAND SO TAKEN BY THE CIT(A) AND IS IN FURTHER APPEAL BEFORE US. 5. WE HAVE HEARD THE RIVAL CONTENTIONS PERUSED TH E MATERIAL ON RECORD AND DULY CONSIDERED FACTUAL MATRIX OF THE CASE AS ALSO THE APPLICABLE LEGAL POSITION. 6. WE FIND THAT THERE IS NO DISPUTE ABOUT THE FACT T HAT AS THE LAW STANDS NOW IN THE LIGHT OF RETROSPECTIVE INSERTION OF EXPLANAT ION BELOW TO SECTION 80IA(13) THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION U/S. 80IA (4). THIS EXPLANATION INTRODUCED BY FINANCE ACT 2009 WITH RETROSPECTIVE EFFECT FROM 1 ST APRIL 2000 PROVIDES THAT (F)OR THE REMOVAL OF DOUBTS IT IS H EREBY DECLARED THAT NOTHING CONTAINED IN THIS SECTION (I.E. 80-IA) SHALL APPLY IN RELATION TO A BUSINESS REFERRED TO IN SUB-SECTION(4) WHICH IS IN THE NATURE OF WORK S CONTRACT AWARDED BY ANY PERSON (INCLUDING CENTRAL OR STATE GOVERNMENT) AND EXECUTED BY THE UNDERTAKING OR ENTERPRISE REFERRED TO IN SUB-SECTION (1). SUCH BEING THE LEGAL POSITION AND THE ASSESSEE HAVING MERELY EXECUTED THE WORKS CONTRACT FOR INFRASTRUCTURE DEVELOPMENT AS AWARDED TO HIM WE ARE OF THE CONSID ERED VIEW THAT AUTHORITIES BELOW RIGHTLY DECLINED THE DEDUCTION U/S. 80IA TO TH E ASSESSEE. WE APPROVE THE CONCLUSIONS ARRIVED AT BY THE CIT(A) AND DECLINE TO INTERFERE IN THE MATTER. 7. WE MAY MENTION THAT WHILE LEARNED COUNSEL DOES N OT DISPUTE THAT ISSUE STANDS CONCLUDED AGAINST THE ASSESSEE BY EXPLANATIO N INSERTED BY FINANCE ACT 2009 HE SUBMITS THAT THE DECISION OF A LARGER BENCH OF THIS TRIBUNAL . IN THE CASE OF BT PATIL & SONS BELGAUN CONSTRUCTIONS PVT LTD. VS A CIT [35 SOT 171] WHICH HOLDS THAT EVEN WITHOUT THE BENEFIT OF THE AFORESAID AMEN DMENT IS NO LONGER GOOD IN LAW IN THE LIGHT OF HONBLE BOMBAY HIGH COURTS JUDG MENT IN THE CASE OF CIT VS. ABG HEAVY INDUSTRIES LTD [322 ITR 323]. HE TAKES U S THROUGH THE OBSERVATIONS MADE BY HONBLE BOMBAY HIGH COURT WHICH ACCORDING T O HIM IMPLIEDLY OVERRULE TO THE STAND TAKEN BY LARGER BENCH IN BT PATILS CAS E (SUPRA). LEARNED COUNSEL FURTHER SUBMITS THAT THIS ASPECT OF THE MATTER IS VE RY IMPORTANT SINCE RETROSPECTIVELY OF AMENDMENT BY FINANCE ACT 2009 I S UNDER CHALLENGE BEFORE HONBLE BOMBAY HIGH COURT IN THE CASE OF PATEL ENGIN EERING (SUPRA) AND IN CASE CHALLENGE TO RETROSPECTIVELY IS UPHELD THE ASSESSE ES CLAIM TO DEDUCTION WILL HAVE I .T.A NO.2931/ MUM/2008 ASSESSMENT YEAR: 2006-07 7 TO BE UPHELD TOO. LEARNED DEPARTMENTAL REPRESENTATI VE ON THE OTHER HAND OPPOSE THESE CONTENTIONS AND SUBMITS THAT AS HELD B Y LARGER BENCH IN BT PATILS CASE (SUPRA) EVEN WITHOUT THE BENEFIT 2009 AMENDMEN T ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION U/S. 80IA. IN OUR CONSIDERED VIEW H OWEVER THIS ASPECT OF THE MATTER IS WHOLLY ACADEMIC AT THIS STAGE AND IT DOES NOT REALLY CALL FOR ANY ADJUDICATION BY US. ONCE IT IS AN ADMITTED POSIT ION THAT IN VIEW OF THE LAW AS IT IS STAND NOW THE ASSESSEE IS NOT ENTITLED TO DEDUCTIO N U/S. 80IA IT IS WHOLLY ACADEMIC AS TO WHAT WILL BE THE STATUS OF THE CLAIM IF EXPLAN ATION INSERTED BELOW SECTION 80IA(13) IS HELD TO BE APPLICABLE ONLY WITH PROSPECTI VE EFFECT AND NOT RETROSPECTIVE EFFECT AS HAS BEEN EXPRESSLY DONE BY T HE LEGISLATURE. WE NEED NOT ADDRESS OURSELVES TO SUCH HYPOTHETICAL ARGUMENTS. AS REGARDS THE CONTENTIONS THAT CERTAIN OBSERVATIONS MADE IN BT PATILS CASE ( SUPRA) DO NOT HOLD GOOD LAW ANY LONGER BECAUSE OF THE LAW LAID DOWN BY HONBLE BO MBAY HIGH COURT IN ABG HEAVY INDUSTRIES LTD (SUPRA) IT IS ONLY ELEMENTARY THAT ONCE THEIR LORDSHIPS OF HIGH COURTS EXPRESSED VIEW OF ANY SUBJECT CONTRARY VIEWS OF THE COURTS BELOW CEASES TO HOLD GOOD IN LAW BUT THEN IN THE PRESENT C ASE IT IS NOT REALLY NECESSARY TO ADDRESS OURSELVES TO THIS ASPECT OF THE MATTER BECAU SE THAT ASPECT OF THE MATTER IS AT PRESENT WHOLLY ACADEMIC. WE THEREFORE SEE NO NEED TO ADJUDICATE UPON THE ARGUMENTS WHICH DEAL WITH CERTAIN HYPOTHETICAL SITU ATION AND NOT THE PRESENT LEGAL SITUATION. THIS ASPECT OF THE MATTER IS WHOL LY ACADEMIC AND INFRUCTUOUS. 8. GROUND NO.1 IS THUS DISMISSED. 4. WE SEE NO REASONS TO TAKE ANY OTHER VIEW OF THE MATTER THAN THE VIEW SO TAKEN BY US IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEA R 2004-05. FOLLOWING THE VIEW SO TAKEN US WE REJECT THE GRIEVANCE RAISED BY THE ASS ESSEE AND DECLINE IN THE MATTER. 5. GROUND NO.1 IS THUS DISMISSED. 6. IN GROUND NO.2 THE ASSESSEE HAS RAISED THE FOLL OWING GRIEVANCE: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD CIT(A) ERRED IN CONFIRMING REJECTION OF THE CLAIM O F THE APPELLANT FOR DEDUCTION AS BUSINESS EXPENDITURE OF COMMISSION OF ` .1 97 113. 7. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS INCURRED AN AMOUNT OF ` .1 97 113 AS COMMISSION FOR PROCURING AN ORDER FROM THE PUBLIC HEALTH ENGINEERING DEPARTM ENT AJMER RGION AJMER. THE ASSESSING OFFICER DECLINED THE CLAIM OF THE ASSESSE E FOLLOWING THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEARS 2002-03 AND 2003-04. THE I .T.A NO.2931/ MUM/2008 ASSESSMENT YEAR: 2006-07 8 STAND OF THE ASSESSING OFFICER WAS CONFIRMED BY THE CIT(A). AGGRIEVED ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE US. 8. LEARNED REPRESENTATIVES FAIRLY ACCEPTS THAT THIS ISSUE IS COVERED AGAINST THE ASSESSEE BY THE DECISION OF THE COORDINATE BENCHES OF THIS TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEARS 2002-03 AND 2003-04. IN VIEW OF THIS WE UPHOLD THE DECISION OF THE CIT(A) AND DECLINE TO INTERFERE IN THE MATTER. 9. GROUND NO.2 IS THUS DISMISSED. 10. IN GROUND NO.3 THE ASSESSEE HAS RAISED THE FOL LOWING GRIEVANCE: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD CIT(A) ERRED IN DIRECTING THE AO TO REFER TO THE DI STRICT VALUATION OFFICER THE ISSUE OF DETERMINING THE MARKET VALUE O F PROPERTY SOLD INSTEAD OF ACCEPTING THE CONTENTION OF THE APPELLAN T IN THE MATTER OF ADDITION OF ` .12 03 500 MADE BY THE AO U/S. 50COF THE ACT. 11. THE RELEVANT MATERIAL FACTS SO FAR AS NECESSAR Y FOR ADJUDICATION ON THE ABOVE GRIEVANCE ARE AS FOLLOWS. DURING THE COURSE OF ASS ESSMENT PROCEEDINGS THE ASSESSING OFFICER NOTICED THAT WHILE THE ASSESSEE H AS SOLD A PIECE OF LAND FOR STATED CONSIDERATION OF ` .10 LAKHS THE VALUATION ADOPTED BY THE REGISTERING AUTHORITY IS ` .22 03 500. ACCORDINGLY APPLYING SECTION 50C ASS ESSING OFFICER ADOPTED ` .22 03 500 AS SALES CONSIDERATION FOR THE PURPOSE O F COMPUTING CAPITAL GAINS. AGGRIEVED ASSESSEE CARRIED THE MATTER IN APPEAL B EFORE THE CIT(A) AND CONTENDED THAT THE VALUATION ADOPTED BY SUB-REGISTRAR WAS WRO NG INASMUCH TOOK INTO ACCOUNT FSI ENTITLEMENT AT 2.5 WHILE THE ACTUAL ENTITLEMEN T IS 1.33 ONLY. LEARNED CIT(A) DIRECTED THE ASSESSING OFFICER TO CALL FOR A DVO RE PORT ON THE MATTER AND DECIDE THE ISSUE AFRESH INTER ALIA IN THE LIGHT OF DVO REPORT ON VALUATION OF LAND SO LD. THE ASSESSEE IS NOT SATISFIED BY THE STAND SO TAKEN BY THE CIT(A) AND IS IN APPEAL BEFORE US. 12. HAVING HEARD THE RIVAL CONTENTIONS AND HAVING P ERUSED THE AMTERIAL ON RECORD WE SEE NO REASONS TO INTERFERE IN THE MATTE R. AS LEARNED CIT(A) HAS RIGHTLY NOTED WHEN AN ASSESSEE DISPUTES VALUATION ADOPTED B Y THE REGISTERING AUTHORITY THE I .T.A NO.2931/ MUM/2008 ASSESSMENT YEAR: 2006-07 9 RIGHT COURSE OF ACTION FOR THE ASSESSING OFFICER IS TO MAKE A REFERENCE TO THE DVO FOR VALUATION OF PROPERTY TRANSFERRED. THE ASSESSEE HA D PRAYED FOR THE SAME AT ASSESSMENT STAGE. IT IS OPEN TO THE ASSESSING OFFI CER TO MAKE SUCH SUBMISSION AS MAY BE APPROPRIATE AT THE STAGE OF VALUATION BY THE DVO. THIS IS WHAT THE COORDINATE BENCHES HAVE HELD IN SEVERAL CASES. WE THEREFORE APPROVE THE CONCLUSIONS ARRIVED AT BY THE CIT(A) AND DECLINE TO INTERFERE IN THE MATTE . 13. GROUND NO.3 IS ALSO DISMISSED. 14. IN THE RESULT APPEAL FILED BY THE ASSESSEE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 29 TH JULY 2011 SD/- (R.V.EASWAR) PRESIDENT SD/- (PRAMOD KUMAR) ACCOUNTANT MEMBER MUMBAI DATED 29 TH JULY 2011 PARIDA COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER OF INCOME TAX (APPEALS) 39 MUMBAI 4. COMMISSIONER OF INCOME TAX C-II MUMBAI 5. DEPARTMENTAL REPRESENTATIVE BENCH I MUMBAI //TRUE COPY// BY ORDER ASSTT. REGISTRAR ITAT MUMBAI