M/S. S.K. TOTLA INFRA CONSTRUCTION PVT. LTD., Neemuch v. THE CIT, Ujjain

ITA 365/IND/2015 | 2010-2011
Pronouncement Date: 28-09-2016 | Result: Dismissed

Appeal Details

RSA Number 36522714 RSA 2015
Assessee PAN AAHCS7914H
Bench Indore
Appeal Number ITA 365/IND/2015
Duration Of Justice 1 year(s) 4 month(s) 3 day(s)
Appellant M/S. S.K. TOTLA INFRA CONSTRUCTION PVT. LTD., Neemuch
Respondent THE CIT, Ujjain
Appeal Type Income Tax Appeal
Pronouncement Date 28-09-2016
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted DB
Tribunal Order Date 28-09-2016
Date Of Final Hearing 06-09-2016
Next Hearing Date 06-09-2016
Assessment Year 2010-2011
Appeal Filed On 25-05-2015
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH INDORE BEFORE SHRI D.T. GARASIA JUDICIAL MEMBER AND SHRI O.P. MEENA ACCOUNTANT MEMBER S.K.TOTLA INFRA CONSTRUCTION PRIVATE LIMITED NEEMUCH PAN: AAHCS7914H VS. COMMISSIONER OF INCOME- TAX UJJAIN APPELLANT RESPONDENT APPELLANT BY SHRI S.S.DESHPANDE CA RESPONDENT BY SHRI RAJEEV VARSHNEY CIT DR O R D E R PER O.P. MEENA ACCOUTANT MEMEBR. THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER U/S 263 OF THE ACT OF LD. COMMISSIONER OF INCOME-TAX [HEREINAFTER REFERRED TO AS THE CIT] DATED 31.03.2015. 2. THE GROUND OF APPEAL TAKEN BY THE ASSESSEE READS AS UNDER :- I.T.A. NO.365/IND/2015 ASSESSMENT YEAR: 2010-11 DATE OF HEARING 06.09.2016 DATE OF PRONOUNCEMENT 28.09.2016 ITA NO.365/IND/2015 AY :2010-11 S.K.TOTLA INFRA CON STRUCTION P.LTD. NEEMUCH PAGE 2 OF 25 1. THE ORDER PASSED BY THE LD. CIT U/S 263 IS ILLE GAL AND BAD IN LAW AND HENCE BE SET ASIDE. 2. THE LD. CIT HAS ERRED IN PASSING THE ORDER U/S 2 63 ON THE GROUND THAT THE ORDER PASSED BY THE LD. AO IS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF REVEN UE. 2.1 IT WAS PROVED BEFORE THE LD. CIT THAT THE ASSESSEE HAS DEVELOPED THE INFRASTRUCTURAL FACILITI ES ON THE BASIS OF THE AGREEMENT WITH THE GOVERNMENT AND IS NOT MERELY A CONTRACTOR. THE ORDER OF THE LD. CIT I S BASED ON CONJECTURES AND CONTRARY TO THE FACTS. 3. IT WAS PROVED BEFORE THE LD. CIT THAT THE ASSESSMENT WAS FRAMED AFTER DUE SCRUTINY OF THE FACT S AND AS SUCH THE ORDER PASSED IS NOT ERRONEOUS AND PREJUDICIAL AND AS SUCH NO ACTION U/S 263 CAN BE TAKEN. 3. FACTS IN BRIEF ARE THAT THE ASSESSEE IS A COMPANY ENGAGED IN THE CIVIL CONTRACTORS FOR GOVERNMENT DEP ARTMENT M.P.RURAL ROAD DEVELOPMENT AUTHORITY ( MPRRDA). THE ASSESSEE HAS FILED ITS RETURNS OF INCOME ON 12.09.2 011 FOR ASSESSMENT YEAR 2010-11 DECLARING INCOME AT RS. 2 0 6 756/- ITA NO.365/IND/2015 AY :2010-11 S.K.TOTLA INFRA CON STRUCTION P.LTD. NEEMUCH PAGE 3 OF 25 AFTER CLAIMING DEDUCTION OF RS. 47 23 925/-. U/S 8 0IA OF THE INCOME-TAX ACT 1961. THE ASSESSMENT WAS MADE U/S 1 43(3) ON 28.03.2013 AT AN INCOME OF RS. 4 33 660/- BY AL LOWING DEDUCTION U/S 80IA AS CLAIMED BY THE ASSESSES. THE LD. CIT CALLED FOR ASSESSMENT RECORDS AND AFTER EXAMINATION FOUND THAT THE ASSESSEE HAS CLAIMED DEDUCTION U/S 80IA(4) OF THE ACT. THIS DEDUCTION WAS ALLOWED BY THE AO WITHOUT MAK ING PROPER ENQUIRY AND INVESTIGATION. PERUSAL OF RECORD SHOWS THAT THE COMPANY WAS INCORPORATED ON 31.12.2002 HOWEVER IN FORM 10CCB IT HAS BEEN MENTIONED THAT THE DATE OF COMMENCEMENT OF OPERATION ACTIVITY BY THE UNDERTAK ING IS 02.04.2009 AND HAS CLAIMED THE DEDUCTION U/S 80IA. HOWEVER FOR THE YEAR UNDER CONSIDERATION THE ASSESSEE HAS MADE CLAIM U/S 80IA. THE PERUSAL OF THE COPIES OF WORK ORDER FO R PACKAGE NO. 27-15 WERE SUBMITTED DURING THE COURSE OF ASSES SMENT. THE TENDER DOCUMENT OF PACKAGE NO. 27-15 REVEALED T HAT IT WAS WORKS CONTRACT EXECUTED BY THE ASSESSEE. THEREFOR E SUCH CLAIM WAS PRIMA FACIE DISALLOWABLE AS THE CLAIM SHOUL D HAVE BEEN WITH REFERENCE TO THE WORK OF DEVELOPMENT OPERA TION AND MAINTENANCE OF INFRASTRUCTURE FACILITY DONE IN THE INITIAL YEAR. ITA NO.365/IND/2015 AY :2010-11 S.K.TOTLA INFRA CON STRUCTION P.LTD. NEEMUCH PAGE 4 OF 25 IT WAS ALSO SEEN THAT THE COPY OF TENDERED DOCUMENTS WHICH WAS AVAILABLE ON RECORD DOES NOT GIVE THE SCOPE OF WORK INVOLVED IN THE DEVELOPMENT OPERATION MAINTENANCE OF INFRASTRUCTURE FACILITY. NO OTHER AGREEMENT HAS BEE N PLACED ON RECORD. IT WAS ALSO SEEN THAT THE CONTRACT RECEIPTS INCLUDE AMOUNT RECEIVED FROM P.W.D. ALSO. THE AO HAS FAILED TO EXAMINE WHETHER THE CONTRACT RECEIPT FROM P.W.D. WAS ALSO ELIGIBLE FOR INCLUSION OF CLAIM OF DEDUCTION U/S 80 IA OF THE ACT. ON READING OF TENDERED DOCUMENTS IT APPEARED THAT THE WORK EXECUTED WAS ONLY A CONTRACT FOR RELAYING OF OLD RUR AL ROADS AND THEIR UPGRADATION. THE AO HAS ALSO FAILED TO EX AMINE WHETHER NEW INFRASTRUCTURE FACILITY HAVE BEEN DEVELOP ED. THE ASSESSEE COMPANY WAS EXECUTING ONLY A WORK CONTRACT AWARDED BY STATE GOVERNMENT PAYMENT FOR THE WORK DON E WAS BEING RECEIVED STEP BY STEP THROUGH RUNNING BILLS A ND NO CONSIDERABLE AMOUNT WAS INVESTED BY THE ASSESSEE OF ITS OWN AND ALL THE WORK IS BEING DONE AS PER THE SPECIFICA TION OF THE GOVERNMENT AND THE ASSESSEE COULD NOT EXECUTE ANY WO RK OF ITS OWN. THEREFORE THE ASSESSEES RESPONSIBILITY WAS LIMITED TO THE JOB ASSIGNED TO HIM CLEARLY DOES NOT SATISFY T HE CONDITIONS ITA NO.365/IND/2015 AY :2010-11 S.K.TOTLA INFRA CON STRUCTION P.LTD. NEEMUCH PAGE 5 OF 25 LAID DOWN UNDER SEC 80IA OF THE ACT. THE LD. CIT HAS ALSO NOTICED THAT THE ASSESSEE HAD EXECUTED CONTRACT WITH MPRRDA FOR EXECUTION OF THE WORK OF CONSTRUCTION/UPGRADATIO N OF RURAL ROADS UNDER PMGSY PHASE IX PACKAGE NO. MP-27-15 NEE MUCH AND ROUTINE MAINTENANCE WORK. THUS THE ASSESSEE WAS EXECUTING ONLY A WORK CONTRACT AWARDED BY THE STATE GOVERNMENT AND PAYMENT FOR THE WORK DONE WAS BEING RECEIVED STEP BY STEP THROUGH RUNNING BILLS AND NO CONSIDERABLE AMOUNT WAS INVESTED BY THE ASSESSEE OF ITS OWN AND ALL THE WORK IS BEING DONE AS PER THE SPECIFICA TION OF THE GOVERNMENT AND THE ASSESSEE COULD NOT EXECUTE ANY WO RK OF HIS OWN. ACCORDINGLY THE LD. CIT HAS ISSUED A SHOW CAUSE NOTICE WHICH WAS REPLIED BY THE ASSESSEE. THE LD. CI T HAD DISCUSSED THE REPLY OF THE ASSESSEE. 4. THE LD. CIT OBSERVED THAT THE CLAIM OF THE ASSESSE E THAT NECESSARY DETAILS WERE FILED VIDE PARA 30 OF R EPLY DATED 26.02.2013 BUT THE PARA 30 WAS RELATED TO MEMORAND UM OF ASSOCIATION. THE LD. CIT FURTHER NOTED THAT RELEVAN T AGREEMENT AS ENVISAGED BY THE PROVISIONS OF SECTION 80IA(4) WAS NOT FOUND ENCLOSED WITH FORM NO.10CCB. THEREFORE THE BA SIC ITA NO.365/IND/2015 AY :2010-11 S.K.TOTLA INFRA CON STRUCTION P.LTD. NEEMUCH PAGE 6 OF 25 DOCUMENT OF AGREEMENT WAS NOT FILED HENCE CLAIM AL LOWED U/S 80IA WAS NOT ALLOWED AFTER EXAMINATION OF CLAIM. THE CIT ALSO FOUND THAT COMPLETE DETAILS OF WORKS ORDER FOR PACKAGE NO.27-11 AND PACKAGE NO.27-15 WERE SUBMITTED ALONGWIT H ELIGIBLE TURNOVER SEPARATELY. THE COMPANY FIRST TIM E ENTERED INTO AGREEMENT FOR DEVELOPING MAINTAINING AND OPER ATING OF NEW INFRASTRUCTURAL FACILITY ON 2.04.2009 WHERE AS T HE AO FAILED TO EXAMINE AS TO WHETHER PROVISION OF SECTION 80IA(3) COME INTO PLAY AND WHETHER CLAIM OF DEDUCTION U/S 80 IA(4) HAS TO BE EXAMINED IN THE LIGHT OF ABOVE. THE LD. C IT NOTED THAT AS PER PROVISIONS OF SEC 80IA(4) DEDUCTION IS ALLOWABLE FOR (I) DEVELOPING OR (II) OPERATING AND MAINTAINING OR (III) DEVELOPING OPERATING AND MAINTAINING A NEW INFRAST RUCTURE FACILITY. THE DEDUCTION IS NOT ALLOWABLE IN A CASE WH ERE DEVELOPING AND MAINTAINING HAS ALREADY BEEN TAKEN. THUS ITS OWN ADMISSION WAS NOT ELIGIBLE FOR CLAIM OF DEDUCTION . THE ASSESSEE HAS CLAIMED THAT SECTION DOES NOT REQUIRE THAT NEW INFRASTRUCTURE FACILITIES SHOULD BE DEVELOPED. HOWEV ER THIS CONTENTION OF THE ASSESSEE WAS FOUND TO BE INCORRECT IN THE LIGHT OF PROVISIONS OF SECTION 80IA(4)(I)(B) WHERE IT STATES THAT ITA NO.365/IND/2015 AY :2010-11 S.K.TOTLA INFRA CON STRUCTION P.LTD. NEEMUCH PAGE 7 OF 25 THE AGREEMENTS SHOULD BE DEVELOPING OR OPERATING AN D MAINTAINING OF OR DEVELOPING OPERATING AND MAINTAIN ING A NEW INFRASTRUCTURE FACILITY. THE ASSESSEE RELIED ON BO ARD CIRCULAR NO. 4/2010 DATED 18.05.2010 BUT LD. CIT POINTED OU T THAT THIS IS APPLICABLE IN RESPECT OF HIGHWAY PROJECT WHER EAS ASSESSEE HAS DONE THE WORK OF CONSTRUCTION AND UPGRA DATION OF SELECTED RURAL ROADS. THE ASSESSEE CLAIMED THAT AS PER PACKAGE NO.27-11 AND 27-15 IT HAS EXECUTED WORK FOR 5 YEARS HENCE ACTED AS DEVELOPER FOR MPRRDA. HOWEVER THE L D. CIT HAS ALSO OBSERVED ON THE BASIS OF PAGE 11 OF THE IN STRUCTION TO BUILDERS PARA 2.1 & 2.2 THAT MPRRDA IS THE EMPLOYER AND HAS EMPLOYED THE ASSESSEE AS CONTRACTOR FOR CONSTRUCTIO N AND UPGRADATION OF SELECTION OF RURAL ROAD UNDER PMGSY. THEREFORE THE ROLE OF THE ASSESSEE WAS NOT FOR MAKI NG PLANNING DESIGNING AND DEVELOPING THE ROAD BECAUS E THE RATES ARE ALREADY SELECTED EXISTING WHICH WERE EARMA RKED FOR UPGRADATION CONSTRUCTION. MPRRDA IS THE EMPLOYER FUNDS ARE PROVIDED BY EMPLOYER UNDER VARIOUS SCHEME . THE SHARE CAPITAL OF ASSESSEE WAS ONLY RS. 4 LAKHS AND LOAN OF RS. 148 LAKHS TAKEN. THE LD. CIT HAS ALSO RELIED ON THE DEC ISION IN THE ITA NO.365/IND/2015 AY :2010-11 S.K.TOTLA INFRA CON STRUCTION P.LTD. NEEMUCH PAGE 8 OF 25 CASE OF SANEE INFRASTRUCTURE PRIVATE LIMITED VS. AC IT THE I.T.A.T. INDORE BENCH IN SUPPORT OF HIS CONCLUSIO N WHICH WAS SET ASIDE TO THE FILE OF THE AO TO EXAMINE THE TERM S OF EACH AND EVERY CONTRACTS ENTERED WITH GOVERNMENT TO FIND WHET HER THE ASSESSEE WORKED SIMPLY FOR AS A CONTRACTOR OR DEVEL OPER OF INFRASTRUCTURAL FACILITY. THE LD. CIT FURTHER OBSER VED THAT POINT NO. 45 STATED THAT MOBILIZATION ADVANCE UP TO 50% O F THE CONTRACT PRICE FOR ROUTINE MAINTENANCE WILL BE GIVEN BY THE EMPLOYER AS ALSO EQUIPMENT ADVANCE UP TO 90% OF THE COST OF NEW EQUIPMENT BROUGHT TO THE SITE SUBJECT TO MAXIMUM 10% OF THE CONTRACT PRICE. THE LD. CIT RELIED IN THE CA SE OF B. T. PATILS & SONS(P) LIMITED VS. ACIT (2010) 35 SOT 17 1 (MUM)( S.B.) TO CONTEND THAT DEVELOPER IS A PERSON THAT DE SIGNS AND CREATES NEW PRODUCT AND WHEREAS CONTRACTOR HAS TO DO CONTRACT WORK OR PROVIDE SERVICES OR GOODS TO ANOTHE R. THE LD. CIT HAS ALSO PLACED RELIANCE ON THE DECISION IN THE CASE OF CIT VS. DEEPAK KUMAR GARG 299 ITR 435 (MP) SMT. ZUBI KOCHAR VS. ACIT 112 TTJ 297 ( I.T.A.T. DELHI) AND MALABA R INDUSTRIAL COMPANY LIMITED VS. CIT 243 ITR 3 (S.C.) AND HELD THAT THE ORDER OF THE AO WAS ERRONEOUS AS WELL AS PREJUDICIAL TO THE ITA NO.365/IND/2015 AY :2010-11 S.K.TOTLA INFRA CON STRUCTION P.LTD. NEEMUCH PAGE 9 OF 25 INTERESTS OF THE REVENUE. ACCORDINGLY ASSESSMENT WAS SET- ASIDE WITH THE DIRECTION TO THE AO TO REFRAME THE AS SESSMENT AFTER EXAMINING THE SAID ISSUE AND AFFORDING PROPER OPPORTUNITY TO THE ASSESSEE. 5. AGAINST THIS ORDERS OF THE LD. CIT PASSED U/S 263 THE ASSESSEE IS IN APPEALS BEFORE US. 6. THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE CONTENDED THAT WHILE FRAMING THE ASSESSMENT NECESSA RY DETAILS OF CLAIM U/S 80IA WITH CALCULATION WERE FILE D AND AFTER EXAMINING SAME THE AO HAS ALLOWED THE CLAIM. COMPLE TE DETAILS OF WORK ORDER PACKAGE NO. 27-11 AND 27-15 WER E FILED. THE COPY OF AGREEMENT WAS FILED DURING PROCEEDINGS U /S 263 OF THE ACT. THE ASSESSEE HAS FURNISHED DETAILS OF DEDU CTION CLAIMED UNDER CHAPTER VIA WITH SUPPORTING EVIDENCE. THE ASSESSEE HAS ENTERED INTO AGREEMENT WITH STATE GOVER NMENT WHICH STIPULATES THAT THE COMPANY WILL ALSO AT ITS OWN COST WOULD MAINTAIN THE ROAD FOR THREE YEARS. THE COMPANY IS REGISTERED ON 31.12.2002 AND ENGAGED IN BUSINESS OF INFRASTRUCTURE DEVELOPMENT SINCE ITS INCORPORATION TILL 31.3.2009 AND IT HAS FIRST TIME APPLIED FOR PRIME CONTRACTOR ITA NO.365/IND/2015 AY :2010-11 S.K.TOTLA INFRA CON STRUCTION P.LTD. NEEMUCH PAGE 10 OF 25 GOVT. AND ENTERED INTO AGREEMENT FOR MAINTAINING AN D OPERATING NEW INFRASTRUCTURAL FACILITY FOR 2.4.2009. THE ASSESSEE COMPANY HAS CARRIED OUT THE WORK FOR DEVELO PING AND MAINTAINING THE ROAD WHICH IS ONE OF THE INFRASTRUC TURES FACILITY AND ELIGIBLE FOR DEDUCTION U/S 80IA(4). TH E ASSESSEE IS RESPONSIBLE TO CARRY OUT ALL NECESSARY REPAIRS AND MAINTENANCE RECTIFICATION OF THE WORK FOR THE SAME THE DEPARTMENT WITHHELD 10% OF THE AMOUNT BILLED AND PAS SED AND WHICH IS RELEASED ONLY AFTER FURNISHING BANK GUA RANTEE OF THE EQUAL AMOUNT TO THE DEPARTMENT. THE ASSESSEES P ROFIT HAS GONE UP TO 7.07% AGAINST INVESTMENT OF 10%. THEREFO RE THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE CLAIM ED THAT THE WHOLE TENDER IS FOR THE CONSTRUCTION AND MAINTENANCE OF THE ROAD. IT IS NOT A MERE CONTRACT AS STIPULATED IN SE C 80IA(3). THEREFORE THE PROVISIONS OF SEC 80IA IS FULLY SATI SFIED. THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE ALSO INVI TED OUR ATTENTION TO THE AUDIT REPORT U/S 80IA AND FORM 10C CB AND REPLY TO THE QUESTIONNAIRE FILED DURING THE ASSESSM ENT PROCEEDINGS AND CONTENDED THAT THE ASSESSMENT HAS B EEN MADE AFTER DUE APPLICATION AND EXAMINATION OF APPLI CABILITY OF ITA NO.365/IND/2015 AY :2010-11 S.K.TOTLA INFRA CON STRUCTION P.LTD. NEEMUCH PAGE 11 OF 25 SEC 80IA(4). THEREFORE THE ACTION U/S 263 TAKEN BY THE CIT IS BAD IN LAW AND ORDER DESERVES TO BE SET-ASIDE. FOR T HIS PURPOSE THE LD. AUTHORIZED REPRESENTATIVE OF THE A SSESSEE ALSO PLACED RELIANCE IN THE CASE OF CIT VS. RATLAM COAL ASH COMPANY 171 ITR 141 (MP) CIT VS. A.K. TIMBER 177 ITR 486 ( P&H) CIT VS. GABRIEL INDIA LIMITED 203 ITR 108 (BOM) AND OTHERS AS PER WRITTEN SUBMISSIONS. 7. ON THE OTHER HAND THE LD. CIT DR SUPPORTED THE ORDER OF CIT PASSED U/S 263 AND SUBMITTED THAT WHILE FRAMING THE ASSESSMENT THE AO HAS NOT APPLIED HIS MIND TO THE CLAIM OF DEDUCTION U/S 80IA WHETHER THE CONDITIONS LAID D OWN U/S 80IA(4) OF THE ACT ARE SATISFIED OR NOT. THE AO HAS FAILED TO EXAMINE WHETHER THE ASSESSEE IS A WORKS CONTRACTOR OR DEVELOPING NEW INFRASTRUCTURE FACILITY. THE LD. AUTH ORIZED REPRESENTATIVE OF THE ASSESSEE HAS ALSO RELIED IN T HE CASE OF M/S. SANEE INFRASTRUCTURE PRIVATE LIMITED IN I.T.A. NO. 263/IND/2015 DATED 26.03.2012 (A.Y.2009-10) WHEREI N IT WAS HELD THAT WHERE THE WORK CONTRACT AWARDED BY THE CENTRAL/STATE GOVERNMENT FOR EXECUTING WORKS CONTRAC T WILL NOT BE ELIGIBLE FOR TAX BENEFIT U/S 80IA OF THE ACT . THE LD. CIT ITA NO.365/IND/2015 AY :2010-11 S.K.TOTLA INFRA CON STRUCTION P.LTD. NEEMUCH PAGE 12 OF 25 (DR) HAS ALSO PLACED RELIANCE IN THE CASE OF M/S. S.C.C.PROJECTS PVT.LTD. VS. ADDL. CIT RANGE-3 IND ORE IN I.T.A.NO. 67/IND/2010 (A.Y.06-07) DATED 26.03.2012 IN SUPPORT OF HIS CONTENTION. THE LD. CIT (DR) HAS A LSO BROUGHT TO OUR NOTICE THAT EXPLANATION ADDED BY FINANCE ACT NO.2 OF 2009 FROM 01.04.2000 TO SECTION 80IA(4) DOES NOT AP PLY TO WORKS CONTRACT. THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE HAS FILED A COPY OF CLARIFICATORY NOTES WH EREIN IT WAS PROVIDED THAT SECTION 80IA(4) WOULD APPLY TO THE BUS INESS WHICH IS HANDLING NATURE OF WORKS CONTRACT AWARDED BY ANY OTHER PERSON AND EXECUTED BY AN UNDERTAKING OR ENTE RPRISES. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE PERUSED THE MATERIAL AVAILABLE ON RECORD. WE HAVE G ONE THROUGH ALL THE JUDGEMENTS CITED BY THE PARTIES BEF ORE US. FIRST WE TAKE UP THE LEGAL ISSUE WITH REFERENCE TO TH E JURISDICTION OF INVOKING THE PROVISIONS OF SECTION 263 OF THE ACT BY THE LEARNED CIT. THE SCHEME OF THE IT ACT IS T O LEVY AND COLLECT TAX IN ACCORDANCE WITH THE PROVISIONS OF THE ACT AND THIS TASK IS ENTRUSTED TO THE REVENUE. IF DUE TO E RRONEOUS ITA NO.365/IND/2015 AY :2010-11 S.K.TOTLA INFRA CON STRUCTION P.LTD. NEEMUCH PAGE 13 OF 25 ORDER OF THE ASSESSING OFFICER THE REVENUE IS LOSI NG TAX LAWFULLY PAYABLE BY A PERSON IT WILL CERTAINLY BE PR EJUDICIAL TO THE INTEREST OF THE REVENUE. AS HELD IN THE CASE O F MALABAR INDUSTRIES CO. LTD. VS. CIT ( 243 ITR 83 (SC) TH E COMMISSIONER CAN EXERCISE REVISION JURISDICTIONAL U /S 263 IF HE IS SATISFIED THAT THE ORDER OF THE ASSESSING OFF ICER SOUGHT TO BE REVISED IS (I)ERRONEOUS; AND ALSO (II) PREJUDICI AL TO THE INTERESTS OF THE REVENUE. THE WORD ERRONEOUS HAS NOT BEEN DEFINED IN THE INCOME TAX ACT. IT HAS BEEN HOWEVE R DEFINED AT PAGE 562 IN BLACKS LAW DICTIONARY (SEVENTH EDITION) THUS; ERRONEOUS ADJ. INVOLVING ERROR DEVIATING FROM T HE LAW. THE WORD ERROR HAS BEEN DEFINED AT THE SAME PAGE IN TH E SAME DICTIONARY THUS: ERROR NO. 1 : A PSYCHOLOGICAL ST ATE THAT DOES NOT CONFORM TO OBJECTIVE REALITY; A BRIEF THAT WHAT IS FALSE IS TRUE OR THAT WHAT IS TRUE IS FALSE. AT PAGE 649/65 0 IN P. RAMANATHA AIYERS LAW LEXICON REPRINT 2002 THE WORD ERROR HAS BEEN DEFINED TO MEAN- ERROR. A MISTAKEN JUDGE MENT OR DEVIATION FROM THE TRUTH IN MATTERS OF FACT AND FROM THE LAW IN MATTERS OF JUDGEMENT ERROR IS A FAULT IN JUDGE MENT OR IN THE PROCESS OR PROCEEDING TO JUDGEMENT OR IN THE EX ECUTION ITA NO.365/IND/2015 AY :2010-11 S.K.TOTLA INFRA CON STRUCTION P.LTD. NEEMUCH PAGE 14 OF 25 UPON THE SAME IN A COURT OF RECORD; WHICH IN THE CI VIL LAW IS CALLED A NULLITYIE (TERMES DE LA LEY) SOMETHING I NCORRECTLY DONE THROUGH IGNORANCE OR INADVERTENCE S.99 CPC AN D S.215 CR.PC. ERROR FAULT ERROR RESPECTS THE ACT; FAULT RESPECT THE AGENT AN ERROR MAY LAY IN THE JUDGEMENT OR IN THE CONDUCT BUT A FAULT LIES IN THE WILL OR INTENTION. 9. SECTION 263 OF THE INCOME-TAX ACT SEEKS TO REMOVE T HE PREJUDICE CAUSED TO THE REVENUE BY THE ERRONEOUS OR DER PASSED BY THE ASSESSING OFFICER. IT EMPOWERS THE COMMISSION ER TO INITIATE SUO MOTU PROCEEDINGS EITHER WHERE THE ASSES SING OFFICER TAKES A WRONG DECISION WITHOUT CONSIDERING TH E MATERIALS AVAILABLE ON RECORD OR HE TAKES A DECISIO N WITHOUT MAKING AN ENQUIRY INTO THE MATTERS WHERE SUCH INQUI RY WAS PRIMA FACIE WARRANTED. THE COMMISSIONER WILL BE WELL WI THIN HIS POWERS TO REGARD AN ORDER AS ERRONEOUS ON THE G ROUND THAT IN THE CIRCUMSTANCES OF THE CASE THE ASSESSING OFF ICER SHOULD HAVE MADE FURTHER INQUIRIES BEFORE ACCEPTING THE CL AIM MADE BY THE ASSESSEE IN HIS RETURN. THE REASON IS OBVIOU S. UNLIKE THE CIVIL COURT WHICH IS NEUTRAL IN GIVING A DECISIO N ON THE ITA NO.365/IND/2015 AY :2010-11 S.K.TOTLA INFRA CON STRUCTION P.LTD. NEEMUCH PAGE 15 OF 25 BASIS OF EVIDENCE PRODUCED BEFORE IT THE ROLE OF A N ASSESSING OFFICER UNDER THE INCOME-TAX ACT IS NOT ONLY THAT O F AN ADJUDICATOR BUT ALSO OF AN INVESTIGATOR. HE CANNOT REMAIN PASSIVE IN THE FACE OF A RETURN WHICH IS APPARENTLY IN ORDER BUT CALLS FOR FURTHER ENQUIRY. HE MUST DISCHARGE BO TH THE ROLES EFFECTIVELY. IN OTHER WORDS HE MUST CARRY OUT INVES TIGATION WHERE THE FACTS OF THE CASE SO REQUIRE AND ALSO DECI DE THE MATTER JUDICIOUSLY ON THE BASIS OF MATERIALS COLLEC TED BY HIM AS ALSO THOSE PRODUCED BY THE ASSESSEE BEFORE HIM. THE SCHEME OF ASSESSMENT HAS UNDERGONE RADICAL CHANGES IN RECENT YEARS. IT DESERVES TO BE NOTED THAT THE PRES ENT ASSESSMENT WAS MADE UNDER SECTION 143(3) OF THE INCO ME-TAX ACT. IN OTHER WORDS THE ASSESSING OFFICER WAS STATUT ORILY REQUIRED TO MAKE THE ASSESSMENT UNDER SECTION 143(3 ) AFTER SCRUTINY AND NOT IN A SUMMARY MANNER AS CONTEMPLATE D BY SUB-SECTION (1) OF SECTION 143. BULK OF THE RETURNS FILED BY THE ASSESSEE`S ACROSS THE COUNTRY IS ACCEPTED BY THE DE PARTMENT UNDER SECTION 143(1) WITHOUT ANY SCRUTINY. ONLY A FE W CASES ARE PICKED UP FOR SCRUTINY. THE ASSESSING OFFICER I S THEREFORE REQUIRED TO ACT FAIRLY WHILE ACCEPTING OR REJECTING THE CLAIM OF ITA NO.365/IND/2015 AY :2010-11 S.K.TOTLA INFRA CON STRUCTION P.LTD. NEEMUCH PAGE 16 OF 25 THE ASSESSEE IN CASES OF SCRUTINY ASSESSMENTS. HE S HOULD BE FAIR NOT ONLY TO THE ASSESSEE BUT ALSO TO THE PUBLI C EXCHEQUER. THE ASSESSING OFFICER HAS GOT TO PROTECT ON ONE HA ND THE INTEREST OF THE ASSESSEE IN THE SENSE THAT HE IS NO T SUBJECTED TO ANY AMOUNT OF TAX IN EXCESS OF WHAT IS LEGITIMATELY DUE FROM HIM AND ON THE OTHER HAND HE HAS A DUTY TO PROTEC T THE INTERESTS OF THE REVENUE AND TO SEE THAT NO ONE DOD GED THE REVENUE AND ESCAPED WITHOUT PAYING THE LEGITIMATE TA X. THE ASSESSING OFFICER IS NOT EXPECTED TO PUT BLINKERS O N HIS EYES AND MECHANICALLY ACCEPT WHAT THE ASSESSEE CLAIMS BEF ORE HIM. IT IS HIS DUTY TO ASCERTAIN THE TRUTH OF THE FACTS STATED AND THE GENUINENESS OF THE CLAIMS MADE IN THE RETURN WHEN TH E CIRCUMSTANCES OF THE CASE ARE SUCH AS TO PROVOKE IN QUIRY. ARBITRARINESS IN EITHER ACCEPTING OR REJECTING THE CLAIM HAS NO PLACE. THE ORDER PASSED BY THE ASSESSING OFFICER BE COMES ERRONEOUS BECAUSE AN ENQUIRY HAS NOT BEEN MADE OR GENUINENESS OF THE CLAIM HAS NOT BEEN EXAMINED WHERE THE INQUIRIES OUGHT TO HAVE BEEN MADE AND THE GENUINENE SS OF THE CLAIM OUGHT TO HAVE BEEN EXAMINED AND NOT BECAUSE T HERE IS ANYTHING WRONG WITH HIS ORDER IF ALL THE FACTS STATED OR CLAIM ITA NO.365/IND/2015 AY :2010-11 S.K.TOTLA INFRA CON STRUCTION P.LTD. NEEMUCH PAGE 17 OF 25 MADE THEREIN ARE ASSUMED TO BE CORRECT. THE COMMISS IONER MAY CONSIDER AN ORDER OF THE ASSESSING OFFICER TO B E ERRONEOUS NOT ONLY WHEN IT CONTAINS SOME APPARENT ERROR OF REA SONING OR OF LAW OR OF FACT ON THE FACE OF IT BUT ALSO WHEN IT IS A STEREO- TYPED ORDER WHICH SIMPLY ACCEPTS WHAT THE ASSESSEE HA S STATED IN HIS RETURN AND FAILS TO MAKE ENQUIRIES OR EXAMINE THE GENUINENESS OF THE CLAIM WHICH ARE CALLED FOR IN THE CIRCUMSTANCES OF THE CASE. IN TAKING THE AFORESAID VIEW WE ARE SUPPORTED BY THE DECISIONS OF THE HON'BLE SUPREME C OURT IN RAMPYARI DEVI SARAOGI V. CIT (67 ITR 84) (SC) SM T. TARA DEVI AGGARWAL V. CIT (88 ITR 323) (SC) AND MALABAR INDUSTRIAL CO. LTD'S CASE ( 243 ITR 83) (SC). 10. IN ORDER TO ASCERTAIN WHETHER AN ORDER SOUGHT TO BE REVISED UNDER SECTION 263 IS ERRONEOUS IT SHOULD B E SEEN WHETHER IT SUFFERS FROM ANY OF THE AFORESAID FORMS O F ERROR. IN OUR VIEW AN ORDER SOUGHT TO BE REVISED UNDER SECTIO N 263 WOULD BE ERRONEOUS AND FALL IN THE AFORESAID CATEGOR Y OF 'ERRORS' IF IT IS INTER ALIA BASED ON AN INCORREC T ASSUMPTION OF FACTS OR AN INCORRECT APPLICATION OF LAW OR NON-APPL ICATION OF ITA NO.365/IND/2015 AY :2010-11 S.K.TOTLA INFRA CON STRUCTION P.LTD. NEEMUCH PAGE 18 OF 25 MIND TO SOMETHING WHICH WAS OBVIOUS AND REQUIRED APPLICATION OF MIND OR BASED ON OR INSUFFICIENT MAT ERIALS SO AS TO AFFECT THE MERITS OF THE CASE AND THEREBY CAUSE PREJUDICE TO THE INTEREST OF THE REVENUE. 11. THE VIEW TAKEN BY THE ASSESSING OFFICER THEREFORE NEED NOT ONLY BE A POSSIBLE VIEW OF THE MATTER BUT A LSO A VIEW WHICH IS NOT UNSUSTAINABLE IN LAW. A VIEW WHICH IS CL EARLY UNSUSTAINABLE IN LAW IN OUR HUMBLE UNDERSTANDING WI LL INCLUDE A VIEW WHICH IS CONTRARY TO THE LAW LAID DOWN B Y HONBLE SUPREME COURT. THEREFORE THE VIEW TAKEN BY THE ASSESSING OFFICER EVEN THOUGH IT MAY BE A POSSIBLE VIEW OF THE MATTER AT THE POINT OF TIME WHEN THE ASSESSMENT ORDE R WAS PASSED CANNOT BE SAID TO BE A VIEW WHICH COMMISSIONE R CANNOT DISTURB IN THE REVISION PROCEEDINGS. 12. IN VIEW OF THE FOREGOING IT CAN SAFELY BE SAID THAT AN ORDER PASSED BY THE ASSESSING OFFICER BECOMES ERRON EOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE UNDER S ECTION 263 IN THE FOLLOWING CASES: ITA NO.365/IND/2015 AY :2010-11 S.K.TOTLA INFRA CON STRUCTION P.LTD. NEEMUCH PAGE 19 OF 25 1. THE ORDER SOUGHT TO BE REVISED CONTAINS ERROR OF REASONING OR OF LAW OR OF FACT ON THE FACE OF IT. 2. THE ORDER SOUGHT TO BE REVISED PROCEEDS ON INCORRECT ASSUMPTION OF FACTS OR INCORRECT APPLICATION OF LAW. IN THE SAME CATEGORY FALL ORDERS PASSED WITHOUT APPLYING THE PRINCIPLES OF NATURAL JUSTICE OR WITHOUT APPLICATION OF MIND. 3. THE ORDER PASSED BY THE ASSESSING OFFICER IS A STEREOTYPE ORDER WHICH SIMPLY ACCEPTS WHAT THE ASSESSEE HAS STATED IN HIS RETURN OR WHERE HE FAILS TO MAKE THE REQUISITE ENQUIRIES OR EXAMINE THE GENUINENESS OF THE CLAIM WHICH IS CALLED FOR IN THE CIRCUMSTANCES OF THE CASE. 13. WE SHALL NOW TURN TO THE FACTS OF THE CASE TO SEE WHETHER THE CASE BEFORE US IS COVERED BY THE AFORESA ID PRINCIPLES. PERUSAL OF THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER DOES NOT SHOW ANY APPLICATION OF M IND ON HIS ITA NO.365/IND/2015 AY :2010-11 S.K.TOTLA INFRA CON STRUCTION P.LTD. NEEMUCH PAGE 20 OF 25 PART. HE SIMPLY ACCEPTED THE INCOME DECLARED BY THE ASSESSEE. HIS ASSESSMENT ORDER DOES NOT WHISPER ANY SINGLE WORD REGARDING CLAIM OF DEDUCTION U/S 80IA. THIS IS A CA SE WHERE THE ASSESSING OFFICER MECHANICALLY ACCEPTED WHAT THE ASSESSEE WANTED HIM TO ACCEPT WITHOUT ANY APPLICATION OF MIND OR ENQUIRY. THE EVIDENCE AVAILABLE ON RECORD IS NOT E NOUGH TO HOLD THAT THE CLAIM MADE BY THE ASSESSEE WAS OBJECT IVELY EXAMINED OR CONSIDERED BY THE ASSESSING OFFICER. I T IS BECAUSE OF SUCH NON-CONSIDERATION OF THE ISSUES ON THE PART OF THE ASSESSING OFFICER THAT THE CLAIM BY THE ASSESSEE ST OOD AUTOMATICALLY ACCEPTED WITHOUT ANY SCRUTINY. THE ASS ESSMENT ORDER PLACED BEFORE US IS CLEARLY ERRONEOUS AS IT W AS PASSED WITHOUT PROPER EXAMINATION OR ENQUIRY OR VERIFICATIO N OR OBJECTIVE CONSIDERATION OF THE CLAIM MADE BY THE AS SESSEE. THE ASSESSING OFFICER HAS COMPLETELY OMITTED THE ISSUE IN QUESTION FROM CONSIDERATION AND MADE THE ASSESSMENT IN AN AR BITRARY MANNER. HIS ORDER IS A COMPLETELY NON-SPEAKING ORDE R. IN OUR VIEW IT WAS A FIT CASE FOR THE LEARNED COMMISSIONER TO EXERCISE HIS REVISIONAL JURISDICTION UNDER SECTION 263 WHICH HE RIGHTLY EXERCISED BY SET-ASIDING CANCELLING THE ASSESSMENT ORDER AND ITA NO.365/IND/2015 AY :2010-11 S.K.TOTLA INFRA CON STRUCTION P.LTD. NEEMUCH PAGE 21 OF 25 DIRECTING THE ASSESSING OFFICER TO PASS A FRESH ORD ER IN THE LIGHT OF OBSERVATIONS MADE AND AFTER ASCERTAINING F ACTS AND AFFORDING PROPER OPPORTUNITY OF BEING HEARD AND LAC KS DECISION AS PER LAW. 14. REVERTING TO THE FACTS OF THE CASE WE FIND FROM TH E ASSESSMENT ORDER THAT THE AO HAS SIMPLY DISCUSSED T HE DISALLOWANCES OUT OF MATERIAL EXPENSES MOBILE INSTR UMENTS PURCHASE EXPENSES OFFICE EXPENSES AND PURCHASE OF TILES FOR MAKING DISALLOWANCE. NO REFERENCE TO THE CLAIM OF DE DUCTION U/S 80IA OF THE INCOME-TAX ACT 1961 WAS MADE. NO O THER ASPECTS HAVE BEEN EXAMINED WITH REGARD TO NATURE OF CONTRACT WORK PERFORMED BY THE ASSESSEE AND HOW CONDITIONS LAI D DOWN U/S 80IA(4) OF THE INCOME-TAX ACT 1961 ARE SATISF IED. WE ALSO FIND THAT THE AO HAS FAILED TO EXAMINE WHETHER THE C ONTRACT RECEIPTS FROM P.W.D. WERE ALSO ELIGIBLE FOR INCLUSIO N IN THE CLAIM OF DEDUCTION U/S 80IA OF THE ACT. THE PERUSAL OF THE AGREEMENT DATED 06.10.2008 THAT MPRRDA REVEALS THAT IT WAS A WORK ORDER BEARING NO.507 EXECUTED BY THE ASSESSEE . THEREFORE SUCH CLAIM OF THE ASSESSEE WAS PRIMA FACI E ITA NO.365/IND/2015 AY :2010-11 S.K.TOTLA INFRA CON STRUCTION P.LTD. NEEMUCH PAGE 22 OF 25 INADMISSIBLE AS THE CLAIM SHOULD HAVE BEEN WITH REFE RENCE TO THE WORK OF DEVELOPMENT OPERATION AND MAINTENANCE O F INFRASTRUCTURE FACILITY. THUS THE AO HAS FAILED TO CAUSE NECESSARY ENQUIRY AND INVESTIGATION AS REQUIRED TO ALLOW THE CLAIM OF DEDUCTION U/S 80IA. THEREFORE THE ORDER P ASSED BY THE AO BECOMES ERRONEOUS AS WELL AS PREJUDICIAL TO T HE INTERESTS OF REVENUE. THEREFORE WE ARE OF THE CONSI DERED OPINION THAT THE LD. COMMISSIONER HAS RIGHTLY INVOK ED THE PROVISIONS OF SECTION 263 OF THE ACT ON THIS ISSUE. THEREFORE THE ORDER SO PASSED WAS WITHOUT APPLICATION OF MIND O R INVESTIGATION. HENCE THE ORDER IS ERRONEOUS INASMU CH AS PREJUDICIAL TO THE INTERESTS OF REVENUE. WE ALSO NO TE THAT THE LD. COMMISSIONER HAS OBSERVED ON THE BASIS OF INSTR UCTIONS TO BUILDERS AT PARA 2.1 & 2.2 THAT MPRRDA IS THE EMPLO YER AND IT HAS GOT EMPLOYEES WHEREAS THE ASSESSEE IS A CONTRAC TOR FOR CONSTRUCTION AND UPGRADATION ON THE SELECTED RURAL ROAD UNDER PMGSY. THE LD. CIT HAS ALSO RELIED ON THE CASE OF C IT VS. DEEPAK KUMAR GARG (2008) 299 ITR 435 (MP) WHEREIN IT WAS OBSERVED THAT WHERE THE AO HAS DONE ONLY A SEMBLANC E ENQUIRY AND THAT TOO IN A VERY SLIPSHOD MANNER AND AO HAD ITA NO.365/IND/2015 AY :2010-11 S.K.TOTLA INFRA CON STRUCTION P.LTD. NEEMUCH PAGE 23 OF 25 ACCEPTED VERSION OF THE ASSESSEE WITHOUT PROPER ENQ UIRY AS A RESULT OF WHICH SUBSTANTIAL AMOUNT OF TAXABLE INCOME WAS NOT BROUGHT TO TAX THE LD. COMMISSIONER RIGHTLY HELD A SSESSMENT ORDER AS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF REVENUE. SINCE THE FACTS OF THE PRESENT CASE ARE SIMILAR TH EREFORE THE ABOVE CASE LAW IS SQUARELY APPLICABLE TO THE FACTS O F THIS CASE. WE ALSO FIND THAT THE LD. CIT HAS ALSO PLACED RELIA NCE ON VARIOUS CASE LAWS AS DISCUSSED IN THE AFORESAID PARA S THEREFORE RESPECTFULLY FOLLOWING THE SAME WE ARE O F THE OPINION THAT THE ORDER PASSED BY THE AO WAS ERRONEO US AS WELL AS PREJUDICIAL TO THE INTERESTS OF REVENUE. THEREFO RE THE LD. CIT HAS RIGHTLY ASSUMED THE JURISDICTION U/S 263 OF THE ACT. OUR FINDINGS THAT THE ASSESSEE WAS NOT ENTITLED TO DEDUC TION U/S 80IA OF THE ACT ARE SO SUPPORTED BY THE DECISION O F THE COORDINATED BENCH IN THE CASE OF M/S. SANEE INFRAST RUCTURES PRIVATE LIMITED IN I.T.A.NO. 263/IND/2015 DATED 26. 03.2012 WHEREIN IT WAS HELD THAT WHERE THE WORKS CONTRACT ARE AWARDED BY THE CENTRAL/STATE GOVERNMENT FOR EXECUTI NG WORKS CONTRACT WILL NOT BE ELIGIBLE FOR TAX BENEFI T U/S 80IA OF THE INCOME-TAX ACT 1961. THIS VIEW IS ALSO SUPPORTE D BY THE ITA NO.365/IND/2015 AY :2010-11 S.K.TOTLA INFRA CON STRUCTION P.LTD. NEEMUCH PAGE 24 OF 25 DECISION IN THE CASE OF M/S. S.C.C. PROJECTS PVT.LT D. VS. ADDL. CIT (SUPRA). 15. WE ALSO FIND SUPPORT FROM THE DECISION OF HON'BLE GUJARAT HIGH COURT IN THE CASE OF KATARIA CONSTRUCT ION LIMITED VS. UNION OF INDIA 31 TAXMANN.COM 250 WHEREIN SCOP E OF EXPLANATION SUBSTITUTED BY THE FINANCE ACT 2009 WI TH RETROSPECTIVE EFFECT FROM 01.04.2000 WAS DISCUSSED WHEREIN IT WAS HELD THAT WHERE A PERSON WHO ENTERS INTO A CONTRAC T WITH ANOTHER PERSON I.E. WITH SOME ENTERPRISES REFERRED T O IN SECTION 80IA FOR EXECUTING WORKS CONTRACT WILL NOT BE ELIGIBLE FOR THE TAX BENEFIT U/S 80IA OF THE ACT. THEREFORE IN THE PRESENT CASE THE ASSESSEE WAS NOT ELIGIBLE FOR DED UCTION U/S 80IA OF THE ACT. HENCE THE DEDUCTION ALLOWED BY TH E AO RENDERS THE ORDER AS ERRONEOUS AND PREJUDICIAL TO T HE INTERESTS OF REVENUE. 16. IN THE LIGHT OF ABOVE DISCUSSION WE FIND THAT THE RELEVANT PART OF THE AO IN NOT EXAMINING THE MATTER CAREFULLY WOULD RENDER HIS ORDER AS ERRONEOUS AS WELL AS PREJUD ICIAL TO THE INTERESTS OF REVENUE. THEREFORE IN VIEW OF FORE GOING PARAS OF THIS ORDER WE FIND THAT THE ASSESSMENT ORDER PAS SED BY THE ITA NO.365/IND/2015 AY :2010-11 S.K.TOTLA INFRA CON STRUCTION P.LTD. NEEMUCH PAGE 25 OF 25 AO LACKS JUDICIAL STRENGTH TO STAND. THEREFORE WE ARE OF THE CONSIDERED OPINION THAT THE LD. COMMISSIONER OF INC OME TAX HAS CORRECTLY EXERCISED HIS REVISIONAL JURISDICTION AL U/S 263 OF THE INCOME-TAX ACT 1961. THEREFORE ALL THE GROUND S OF THE ASSESSEE FOR BOTH THE ASSESSMENT YEARS UNDER CONSID ERATION ARE REJECTED. 17. IN THE RESULT THE APPEALS OF THE ASSESSEE ARE DISMISSED. THE ORDER HAS BEEN PRONOUNCED IN OPEN COURT ON THE 28 TH SEPTEMBER 2016. SD/- (D.T.GARASIA) JUDICIAL MEMBER SD/- (O.P.MEENA) ACCOUNTANT MEMBER DATED : 28 TH SEPTEMBER 2016. CPU*