Unipro Techno Infrastructure Private Limited Chandigarh v. Pr Cit 1 Chandigarh

In The Income Tax Appellate Tribunal Division Bench B Chandigarh Before Ms Diva Singh Judicial Member And Dr B R R Kumar Accountant Member Ita No 867 Chd 20 17 Assessment Year 2012 13 M S Unipro Techno Infrastructure P Ltd Vs The Pr Cit I Sco 36 Sector 7 C Chandigarh Chandigarh Pan Aabcu 1732 D Appellant Respondent Appellant By Smt Sudhir Sehgal Respondent By Shri Ravi Sarangal Cit Dr Date Of Hearing 26 09 2017 Date Of Pronouncement 01 12 2017 Order Per Diva Singh Jm The Present Appeal Has Been Filed By The Assessee Assailin G The Correctness Of The Order Passed By Pr Cit I Chandiga Rh Dated 30 03 2017 Pertaining To 2012 13 Assessment Year On The Following Grounds 1 That The Jurisdiction U S 263 By The Pr Com Missioner Of Income Tax I For The A Y 2011 12 Has Been Wrongly Assumed As The Assessing O Fficer After Asking For And Scrutinizing All The Details Making Enquiries Pro Per Verification And Consideration Of The Entire Material Produced By The Assessee And Has Allowed The Claim Of The Assessee After Due Application Of Mind 2 That The Orders Of The Pr Commissioner Of Income Ta X I Under Section 263 For The A Y 2012 13 Of The Act Is A Res Ult Of Mechanical Exercise Of Power As It Is Based On Whim S And Fancies Of The Revising Authority As There Is No Material O N Record To Suggest That The Order Is Erroneous In So Far As It Is Prejudicial To The Interest Of The Revenue 3 That The Order Of The Pr Commissioner Of Income Tax I Lacks From Judicial Consistency As The Said Deduction U S 80 A Has Been Allowed By The Subsequent Assessing Officers For Th E A Y 2013 14 After Scrutinizing All The Details Making E Nquiries Proper Verification And Consideration Of The Entire Materi Al On Record Had Allowed The Claim Of The Assessee After Due Applica Tion Of Mind 4 That The Final Issues On Which Jurisdiction Has Bee N Assumed U S 263 Does Not Find Mention In The Show Cause Notices Which Is Bad In Law 2 The Ld Ar Inviting Attention To The Assessment Order Dated 20 12 2014 Submitted That It Has Been Passed By The Ao With Due Application Of Mind And After Carrying Out A Full Inquiry On Th E Issues Ita 867 Chd 2017 A Y 2012 13 Page 2 Of 36 Which Are A Subject Matter For Consideration By The Pr Cit I Chandigarh Exercising His Revisionary Powers 2 1 In The Facts Of The Present Case It Was Submitted That The Order Was Not Maintainable Reliance Was Placed On The Detailed R Easons Set Out In The Synopsis Running Into 13 Pages Filed On Record Inviting Attention To The Same It Was Submitted That The Submiss Ions Of The Assessee Are Found Addressed Therein And The Assessee Woul D Be Heavily Relying Upon These Arguments Facts And Submissions Car Rying Us Through The Assessment Order And Then The Arguments Advanced Before The Pr Cit In Response To The Show Cause Notices Issue D Which Submissions Have Been Extracted In The Order Itself It Wa S Submitted That The Said Arguments Were Also Heavily Relied Upon In The Present Proceedings These Submissions It Was Submitted Have Not Been Accepted Without Any Specific Reason Relying Only On Sus Picions Referring To The Impugned Order It Was Submitted That Th Is Fact Is Evident From The Order Itself As After Examining All The Docu Ments In The Revisionary Proceedings The Pr Cit Chandigarh Has Not P Ointed To Any Error Let Alone Such An Error Which Can Be Said To Be P Rejudicial To The Interests Of The Revenue It Was Submitted That After E Xamining All Documents The Pr Cit Proceeded To Set Aside The Orde R On An Issue On Which He Never Called Upon The Assessee To Explain The Said Exercise Of Power It Was Submitted Was Contrary To The Judicial P Recedent Even On Facts It Was Submitted The Order Is Not Maintainable A S Had The Assessee Been Asked To Explain The Assessment Order It Self Demonstrated The Hollowness Of The Departmental Stand R Eferring To The Assessment Order It Was Submitted That The Record Would Show That The Said Issue Also Had Been Fully Examined By The Ao Qu Eries Had Been Raised Reply Had Been Given And A Speaking Order Thereafter Was Passed 2 2 Accordingly It Was Submitted That The Correctness Of The Order Is Assailed Primarily On The Grounds That Firstly The Ao Befo Re Passing Of The Order Dated 20 12 2014 U S 143 3 Made All Necessary Inquiries And Full Details Were Available On Record These Very Same Fact S And Arguments It Was Submitted Had Been Made Before The Pr Cit Chandigarh And Now Before The Tribunal Accordingly It Wa S Ita 867 Chd 2017 A Y 2012 13 Page 3 Of 36 Submitted That The Order Which Is Sought To Be Now Rev Ised Has Been Passed After Due Application Of Mind 2 3 Referring To The Grounds It Was Also His Submission T Hat The Assessee Would Also Want To Argue That Nothing Has Bee N Brought On Record By The Pr Chief Commissioner Of Income Tax To Sh Ow That The Order Passed By The Ao Was Either Erroneous Or Preju Dicial To The Interests Of The Revenue It Was Submitted That The Ao Had Considered The Contract Entered Into By The Assessee In 2011 12 Assessment Year And Considering The Facts Assessment Order U S 143 3 Da Ted 20 12 2014 Had Been Passed Considering The New Contract S Entered Into By The Assessee The Ao After Scrutinizing All Details A Nd After Making Necessary Inquiries Accepted The Assessees Subm Ission That The New Contracts Were Also Identical And Were Infrast Ructure Development And Maintenance Contracts Thus After Due Enquiry The View Taken In 2011 12 Assessment Year Had Been Followed Nothing Has Been Referred To In The Impugned Order That The View Was Incorrect 2 4 It Was Submitted By The Ld Ar That It Is An Admitted Fact That In 2011 12 Assessment Year The Issue Came Up Before The Itat Wherein Considering The Similar Activity Carried Out By The Assesse E But Only In Respect Of One Project I E Thural Project The Itat Stru Ck Down Similar Exercise Of Power By Pr Cit Vide Its Order Dated 06 02 20 17 In Ita 361 Chd 2016 The Said Fact It Was Submitted Was In The Knowledge Of The Pr Cit Who While Passing The Present Order Has A Cknowledged This Fact In Para 15 Page 15 Of The Present Order Where He Observes As Under Therefore Since The Said Contract Under Similar F Acts And Circumstances Is Continuing Even In This Year To My Considered Opini On Now It Cannot Be Said That The Said Contract Is Works Contract Not Eligible For Deduction U S 80 Ia Of The Act Without Bringing On Record Any Further Material Evi Dences 2 5 It Was His Submission That Once It Had Been Demonst Rated Relying Upon Queries Made And In The Course Of The Proceedings Which Were Made Available To The Pr Cit Also That The Other Contra Cts Taken By The Assessee Were Also Of A Similar Nature And Thus In Case T He Pr Cit Disagreed Then It Was Incumbent On The Pr Cit To Show That The Said Claim On Facts Was Wrong By Pointing To Some Error At T He Last Stage To Sweepingly Refer That Basic Contracts Have Not Bee N Called Forth Is A Contradictory Stand And Patently Arbitrary Referring To The Record It Ita 867 Chd 2017 A Y 2012 13 Page 4 Of 36 Was Submitted That In The Year Under Consideration The Subject Matter Of Dispute With The Department Is The Last Three Contra Cts Referred To In The Table Extracted By The Pr Cit In Para 6 Page 8 O F His Order Reference On The Said Page It Was Submitted Is To The Co Ntracts Executed By The Assessee In Support Of The Irrigation Public Health Department Thural And Dehra Hp And Uttrakhand Peyj Al Nigam Pauri Rudraparyag It Was Submitted That The Assesse E Has Argued That The Assessee Is Primarily Engaged In The Infrastruc Ture Development Maintenance And Operation Of Development Of Infrastructure Facilities For Which Purposes It Had Been Awar Ded These Specific Contracts Referring To The Assessment Order It Is Submitted That The Ao Has Taken Due Notice Of The Non Exempt Un It I E The By Pass Hamirpur Site And The Remaining Four Projects I E Wa Ter Supply Project Iph Thural Water Supply Project Dehra Wa Ter Supply Pauri And Water Supply Project Rudraprayag Have Been Note D As Exempt Units And The Itat Has Already Considered The Contrac T Qua The Water Supply Project Iph Thural Wherein Identical Exercise Of T He Revisionary Powers U S 263 By The Pr Cit In 2011 12 Assessment Y Ear Has Been Held To Be Bad In Law In The Said Year Also The Pr Cit Had Held The Very Similarly Worded Contract As A Works Contract A Nd Had Held That Exemption Has Been Granted By The Ao On Erroneous Fac Ts Without Due Application Of Mind And On The Basis Of Inadequate Inquiry A Nd Without Considering The Contract Even In The Said Year The Ao W As Castigated For Granting Relief Without Making Any Enquiry The Itat In The Order Dated 06 02 2012 In Ita 361 Chd 2016 Held That It Was No T A Case Of Inadequate Enquiry Inviting Attention To Para 4 Of The Sy Nopsis Filed It Was Submitted That The Queries Raised And Details Made Av Ailable To The Ao Which Are Also Relied Upon By The Pr Cit Would Show T Hat All Aspects And Facts Have Been Considered The Replies Of The Assessee Set Out In Para 4 Were Heavily Relied Upon Reading Therefro M It Was Submitted That Apart From The Other Arguments Even Ot Herwise The Assumption Of Jurisdiction Was Not Maintainable As The Issue Which Finds Mention In The Order Was Not Mentioned In The Show Cause Notice It Was Submitted Had It Been Referred The Detailed Replie S To Queries On Record Would Have Shown That Even In This Regard The P Owers U S 263 Have Been Wrongly Invoked By The Pr Cit Since Heavy R Eliance Is Placed Ita 867 Chd 2017 A Y 2012 13 Page 5 Of 36 On These Facts And Submissions For Ready Reference Th E Submissions Are Reproduced Hereunder 4 The Other Ground Of Appeal I E Ground No 4 By Way Of Which It Has Been Stated That The Pr Cit Cannot Assume The Jurisdiction On The Issue Which Does Not Find Mention In The Show Cause Notice With This Background The Following Are The Facts Of The Case I The Assessee Company Was Awarded Contract By Hi Machal Pradesh Government Irrigation And Public Health Department Division Thural And Dehra And Also Government Of Uttrakhand Peyjal Nigam Pau Ri And Rudraparyag As Under Ii The Return Of Income Had Been Filed And For Which The Computation Of Income Is There At Pages 1 To 4 Of The Paper Book And At P Age 2 The Deduction U S 80 Ia Had Been Claimed And The Other Relevant Pages Are P Age 17 Wherein There Is Audit Report On Form No 10 Ccb And In Col 9 At Page 17 I T Has Been Mentioned That Initial Assessment Year When Deduction Is Being C Laimed Is Assessment Year 2011 2012 Read With Page 18 Wherein The Report Of Eligible Business Under 80 Ia Has Been Given Iii Then At Page 22 The Deduction Has Been Cla Imed In Para 30 And The Declaration Of The Chartered Account Is There Abo Ut 80 Ia The Balance Sheet Has Been Placed From Pages 24 To 31 Of The Paper Book Iv The First Reply Is Dated 08 07 2013 Placed At Page 39 Of The Paper Book Wherein The Computation Of Income Itr Along With A Udit Report For Two Years I E For Assessment Years 2011 2012 A 2012 2013 Were Fil Ed V The First Detailed Questionnaire Is At Pages 34 To 37 Of The Paper Book And The Relevant Query Is At Serial No 1 And 17 Of The Questionnaire At Page 36 Of The Paper Book Vi Reply To The Detailed Questionnaire Dated 18 07 2013 Is There At Pages 40 To 42 And Relevant Para Is Para 1 Which Mentions The Typ E Of Contract Is For Providing Lift Water Supply Scheme From Executive Engineer Irrigation And Public Health Division Thural Distt Kangra And In Othe R Areas Vii Then There Is Other Reply At Page 43 An D Relevant Para 1 Viii The Next Detailed Reply Dated 21 11 2014 Is Placed At Pages 44 To 47 Of The Paper Book Wherein The Deduction U S 80 Ia In Respect Of Same Type Of Contract Which Was There In Earlier Years At Thural Hp I E For Providing Lift Water Supply Scheme There Is Mention Of New Contracts In Hp And Uttrakh And From This It Is Very Clear That Whatever Has Been Mentioned At Serial No 1 Wi Th Regard To Nature Of Contract Of Thural Since Last Year And The Same Type Of Contrac T Were Taken At Other Places At Paragpur In Hp At Pauri In Uttrakhand And At Rudrap Aryag Uttrakhand Thus The Ao Was Fully Appraised Of The Fact That There Is Ne W Contracts Were Taken During The Year As Mentioned At Serial No 2 3 And 4 And Full Details Were Given At Serial No 1 Ix Then At Page 45 The Provisions Of 80 Ia Ha Ve Been Explained As To How The Deduction Is Admissible X Then At Page 46 The Nature Of Contract As Taken D Uring The Year Under Consideration From H P Irrigation Department And U Ttrakhand Peyjal Nigam Department Has Been Explained Xi Then Again Vide Our Reply Dated 10 10 201 4 More Information Was Desired By The Assessing Officer And Other Clarification Was Given Which Is At Serial No 1 At Page 48 To 50 Xii Then Again Same Has Been Reiterated A Pa Ge 51 Serial No 1 And At Page 52 Serial No 5 Thereafter The Order U S 143 3 Was Passed B Y The Assessing Officer And In The Order At Page 56 The Reason For Selection The Case In Scrutiny Has Been Mentioned As Under The Reasons For Selection Of Case In Scrutiny Are Large Deduction Claimed Under Chapter Via Subsequently Questionnaire Along Wit H Notices U S 143 2 7142 1 Was Issued On 11 2 2014 25 9 2014 Thus The Only Reason For Scrutiny Was To Verify The Deduction U S 80 Ia Which Has Been Verified And Looked Into Detail Reliance Is Being Placed In The Assessment Orde R At Page No 2 And Page 5 Of The Order And In Para 3 1 Form Line 5 At Page 57 It Has Been Men Tioned As Under Ita 867 Chd 2017 A Y 2012 13 Page 6 Of 36 Further The Assessee Company Was Awarded Contract By Himachal Pradesh Government Irrigation And Public Health Department Division Thural And Dehra And Also Government Of Uttarakhand Peyjal Ni Gam Pauri And Rudraprayag The Composite Project Awarded To The Assessee In Pr Oviding Rehabilitation And Source Level Agumentation Of Var Ious Schemes In Changer Area In Tenhil Jaisighpur Palampur Khundian And D Ehra In District Kangra Hp Sub Head Construction Of Civil Work I E Percolation Well Pump House Compound Walls Retaining Breash Walls Wire Crate Works Roads Streets Truss Bridge Providing Lowering Laying An D Jointing Of Pipe Lines Including Supply And Fixing Of Required Valves And Specials Construction Of Anchor Blocks Thrust Blocks And Supporting Pillars Etc For Rising Main Gravity Main And Supply Of Lab Equipments Inspection Vehic Le And Maintenance Van Etc Supply And Installation Of Pumping Machinery Includ Ing Accessories And Electromechanical Equipments Required For Stepping Down Of 11 Kva Power Supply And Post Completion Operation And Maintenanc E Of The Whole Scheme For 60 Months Including Automation Xiii Then Again In Para 3 2 Of The Order At Page 67 The Amount Of Rs 4 56 56 5277 As Claimed Deduction U S 80 Ia Have Been Mentioned And Allowed At Rs 5 10 61 026 Xiv Then Again At Pages 62 To 66 After Discus Sing The Issue Of Claim Of Depreciation For Exempt Unit And Non Exempt Unit In Respect Of V Arious Contracts For Which 80 Ia Has Been Claimed For Water Supply Project At Thural Division Dehra Water Project Pauri Uttrakhand Project And Rudraparyag Project Wherein The Depreciation Have Been Disallowed To The Tune Of Rs 65 72 7447 And Thus The Assessing Officer Was Fully Conscious Of The Fact That About The Allocation Of Expenses Etc For Exempt Unit And Non Exempt Unit Emphasis Supplied 2 6 Relying Upon Para 5 Of The Synopsis It Was Submitted All Copies Of Contract Agreements Along With Award Letter And Schedules Accompanied By Site Plan Of Development Activities Of The Respective Infrastructure Development Project Were P Roduced Before The Assessing Officer During The Original Assessment Pr Oceedings It Was Submitted That These Are Undisputed Facts And Accep Ted By The Pr Cit Who Also While Passing The Order U S 263 As Per Pag E 2 And 3 Of The Order Of Pr Cit Takes Note That Contracts Along W Ith Maps And Photographs Had Been Filed Copies Of These Are At Pages 86 To 110 Of The Paper Book And Then From Pages 111 To 114 Copies Of Certificates Issued U S 197 1 Of Income Tax Act By The Acit Td S Chandigarh Directing 0 5 As Tds In Respect Of The Payment To Contractor Etc For These Four Different Contracts Entered Into By The Assessee At Dehra Thural Rudraprayag And Pauri The Certifica Te Had Been Issued After Considering The Submissions And The S Pecific Contracts The Ao In The Facts Of The Present Case Had The Ben Efit Of Assessment Order For Assessment Year 2011 12 Wherein Similar C Laim Had Been Allowed After Due Consideration And Thus He Had A Lready Considered Each And Every Clause And Condition Of The Composit E Contract For Thural Project And Thus On Going Through The Other Contrac Ts He Found That They Ita 867 Chd 2017 A Y 2012 13 Page 7 Of 36 Were Also Identical Composite Infrastructure Contra Cts It Was Reiterated That In The Course Of The Assessment Proceedings It Had Been Argued Before The Ao That The Remaining Three New Contracts W Ere Also Identical To The Contract For Water Supply Scheme At Th Ural Hp Which Had Been Considered In The Immediately Preceding Assessm Ent Year And Thus Since The Three New Contracts Were Also Of A Similar Nature Taken At Thural Hp I E Dehra Hp And The Other Two Projects At Pauri And Rudraprayag At Uttrakhand Thus Apart From Referring T O Facts Of Thural Project Which Was Continuing From The Earlier Year Similarity Of Nature Of Contracts It Was Submitted Had Been Argued B Efore The Ao As Would Be Evident From Paper Book Pages 44 46 And 48 Of The Paper Book These Submissions Based On The Specific Agreements Have Been Considered By The Ao The Show Cause Notices Issued To The Assessee Copy Of Which Is Placed At Page 68 And 71 Dated 21 09 201 6 And 14 02 2017 Respectively Of The Paper Book It Was Submitte D Would Show That The Only Issue Raised By The Pr Cit Is A Bout The Contract Of The Assessee Which According To Him Fell Under The Definition Of Works Contract And Thus Not Eligible For Deduction U S 80 Ia And In The 2 Nd Show Cause Notice He Has Mentioned About Certain Pa Yments Made To Sub Contractors And Has Mentioned That Proportionat E Profit On Such Job Work Is Not Allowable U S 80 Ia And Finally He Had R Aised The Issue Of Proportionate Allowability Of Expenses For Non Exe Mpt Income Viz A Viz Exempt Income 2 7 Inviting Attention To Paper Book Page 73 To 85 It Was Submitted That The Assessee Had Filed Copies Of Contracts Along Wi Th Maps And Photographs For Which Purpose Reference Was Also Made To Pages 86 To 110 Of The Paper Book And Then From Pages 111 To 1 14 Certificates U S 197 I Of The Income Tax Act Directing Assessee To De Duct Tds 0 5 In Regard To Payments To Contractors Issued By The Aci T Tds Chandigarh These Arguments Have Been Addressed Earlier Also Ho Wever The Same Are Reiterated To Highlight That The Directions Coul D Have Been Given Only After Going Through The Different Contracts And Aft Er Considering The Detailed Submissions The Tds Wing Had Been Satisfie D After Going Through All These Contracts Exempt U S 80 Income Tax Act To Direct A Lower Deduction Of Tds Ita 867 Chd 2017 A Y 2012 13 Page 8 Of 36 2 8 It Was Submitted That Argument That These Were In Frastructure Development Maintenance And Operation Contacts Was Co Nsidered By The Pr Cit Chandigarh And He Has Noticed It In Page 2 Of His Order But Still He Was Proceeding On Suspicions And Ignored This Pat Ent Fact The Relevant Observation From The Impugned Order Is Reproduced Hereu Nder It Was Forcibly Argued And Submitted That That The Assessee Is Primarily Engaged In The Infrastructure Development Maintena Nce And Operation Of Development Of Infrastructure Facilities It Was Submitted That The Assessee Was Awarded Contracts By Irrigation And Public Health D Epartment Iph Thural Division And Dehra Division Of Hp Government One Go Vernment Of Uttrakhand Peyjal Nigam Pauri And Rudraparyag Emphasis Supplied 2 9 The Fact That Similar Argument Has Been Raised Before The Pr Cit And Has Been Ignored By The Said Authority It Was Submit Ted Is Further Evident From Para 3 Therefore It Was Submitted That He Composite Proj Ects Awarded To The Assessee Were On Built Operate And Transfer Basis It Was F Urther Submitted That Copies Of All The Contracts Agreements Along With The Award Lette Rs And Schedules Accompanying Thereto Including The Site Plans Of T He Development Activity As Per The Infrastructure Development Project Contract Were Submitted And Produced Before The Ao During The Original Assessme Nt He Has Again Produced The Same Along With Latest Photographs Of The Proje Cts Developed Which Are Placed On Record Thirdly The Ar Has Submitted That For The Ay 2012 2013 The Assessee Filed His Return Of Income Claiming Deduct Ion U S 80 Ia On The Contracts Executed For Aforesaid Infrastructure Projects Infr Astructure Facilities Which Was Accordingly Allowed By The Ao Under Scrutiny And Af Ter Examining The Documentary Evidences Produced Before The Ao I E Copies Of Con Tracts Agreements Award Letters And Accompanied Documents Audit Report In Form 10 Ccb Including Books Of Account Etc It Was Also Submitted That The Said Assessment Year Was The Third Year Of Its Claim Of Said Deduction Which Was Acc Ordingly Allowed He Has Also Submitted That The Infrastructure Facility Develope D By The Assessee Was Based On The Allotment Of A Composite Contract For Infrastru Cture Development Fourthly The Ar Has Also Submitted That The Aforesaid Compo Site Contracts Awarded To The Assessee Were Executed By Deployment Of Own Machine Ry Installed Including Its Components Engineers Architects Desi Gners And Labor Employed By The Assessee Designing Execution Fin Ancing In The Form Of Capital Investment Entrepreneurial Risk Performance Guara Ntee Etc Is The Sole Responsibility Of The Assessee And No Role In Relat Ion Thereto Is Played By The Concerned State Governments Emphasis Supplied 2 10 It Was Further Submitted That The Pr Cit Took No Te Of The Fact At Page 4 That Lower Deduction Of Tax U S 197 1 Cer Tificate Was Issued By The Acit Tds Chandigarh After Considering The Fact That The Contract Awarded To The Assessee Qualified For Deduction U S 8 0 Ia As Per Copy Placed At Pages 111 To 114 Of The Paper Book Ita 867 Chd 2017 A Y 2012 13 Page 9 Of 36 2 11 Addressing The Impugned Order It Was Submitted Tha T After Taking Note Of The Submissions While Summing Up And Setting Out The Details Of The Contracts From Pages 5 To 8 Acknowledges The Fact That The Itat Has Considered The Similar Contract Of Thural Projec T And Has Held That The Nature Of Contract Is Of Development Of Infrastructure Facility And Was Not In The Nature Of A Works Contract It Was Submitted That The Reply Of The Assessee Has Been Set Out In Para 9 Wherein The Pr Cit Has Referred To The Questionnaire Iss Ued By The Ao In Para 10 And Thereafter Referring To The Reply Dated 21 11 2014 Which Has Been Referred To At Pages 1 To 14 Of His Order He Has Set Aside The Proceedings Avoiding The Correct And True Facts Relianc E Was Placed On Para 7 Of The Synopsis Filed In Which The Assessee Addres Ses The Point For Point Critical Observations Of The Order Of The Pr Cit By Way Of A Chart Same Is Reproduced Hereunder For Ready Reference 7 The Pr Cit Has Set Aside The Proceedings On Th E Following Facts S No 1 Observation Of Pr Cit The Pr Cit Has Stated In Para 13 That Though The Claim Of Deduction Was Raised By The Assessing Officer And Replied By The Assessee But The Terms And Conditions Of The Contract Executed Were Not Enquired Upon Or Verified By The Assessing Officer And Had Accepted The Plea Of The Assessee On Face Value It Has Further Been Stated That The Copy Of The Contract Executed At Thural Division Is There In Asstt Year 2011 12 But Not In This Assessment Year And Neither Fresh Copies Of Contract Are Filed By The Assessee Our Reply It Is Submitted That Kindly Refer To Our Reply Dated 10 10 2014 Placed At Page 48 And Relevant Para 1 Para 18 And Reply Dated 21 11 2014 At Serial No 1 Page 44 And Page 46 Wherein The Same Nature Of Contract As Of Thural Has Been Explained For Other Three Contracts F Taken During The Year At Himachal Pradesh And Uttrakhand From The Above Replies It Is Quite Evident That The Same Nature And Type Of New Contracts Were There And Thus The Assessing Officer Had Fully Apprised Himself Of The Said Nature And Type Of Contracts And Allowed The Deduction U S I 80 Ia Further The Assessing Officer In His Assessment Order Categorically Mentions In Para 3 1 About The Composite Contract Awarded To The Assessee And How The Pr Cit Mentions In The Order That No Such Copies Of Contracts Were Submitted And Produced Before The Assessing Officer During The Original Assessment Proceedings And Thus The Finding Of The Pr Cit That They Were Accepted At The Face Value Is Not Correct Observations 2 The Pr Cit In Paras 14 St 15 After Analyzing The Order Of The Honble Itat Had Accepted The Fact That The Contract For Project At Thural Is Not Works Contract And Hence Has Stated That No Adverse View Can Taken In Respect Of Such Contract But Has From Thee Replies As Submitted Above And Copies Of The Contracts Submitted And Produced Before The Assessing Officer And Going Through The Order Of The Assessing Officer It Is Confirmed The Assessing Officer Had Fully Applied His Mind To The Issue U S 80 Ia And Since The Pr Cit Has Accepted Ita 867 Chd 2017 A Y 2012 13 Page 10 Of 36 Stated That For The Other Contracts As Per Para 16 Of The Order It Is A Case Of Inadequate Of Lack Of Enquiry The Order Of The Honble Itat Chandigarh Bench Chandigarh For Asstt Year 2011 12 And Same Type Of Contracts Were There Of The Uttrakhand And Of Dehra Division Of H P As Stated Above It Is Not A Case Of Non Application Of Mind For Allowing Deduction U S 80 Ia By The Assessing Officer The Finding Of The Pr Cit In Para 19 And Reliance On Certain Case Laws In Para 17 And Para 17 Of The Honble Itat Clearly Are Applicable To The Assessee Since J How Can The Assessing Officer Mention In The Order In Para 3 1 Of The Order With Regard To The Nature And Type Of Contract Going By The Show Cause Notice Of Pr Cit And This Could Have Been Mentioned Only When The Ao Had Analyzed All The Contracts And Therefore The Finding Of The Pr Cit In Para 20 While Accepting The Order Of Itat Is Clearly Out Of Context That Nature And Type Of New Contracts Are Not As Per Record As Regards The Finding Of The Pr Cit About Proportionate Profit And Bifurcation Of Expenses It Is Submitted That The Assessing Officer Had Considered This Issue While Passing The Assessment Order At Pages 62 To 67 Of The Paper Book And Disallowed The Depreciation To The Tune Of Rs 65 72 744 And Further About The Finding Of The Pr Cit That Bifurcation Is Without Any Basis It Is Submitted That The Bifurcation Has Been Looked Into By The Assessing Officer I E He Has Made The Disallowance Of Rs 65 72 7447 And As Such The Finding Of The Pr Cit On This Issue With Regard To Bifurcation Of Expenses Is Not Proper Since The Assessing Officer Has Already Applied His Mind To The Same And What Basis Should Be Justified Has Not Been Mentioned By The Pr Cit And Thus The Assessment Order Cannot Be Held To Be Erroneous And Prejudicial To The Interest Of Revenue 2 12 Addressing The Last Ground I E The Point On Whic H The Assessee Has Not Been Issued Any Show Cause Notice Which Is A Su Bject Matter For Consideration In The Present Proceedings It Was Subm Itted That He Would Want To Elaborate The Arguments By Stating That Firstly Such An Action Is Not Permissible Under Law And Secondly Even On Merits The Conclusion That There Was No Inquiry On The Issue Is An In Correct Fact It Was Argued That In Fact If It Is Seen From The Show Cause Notice Issued As Per Page 68 The Pr Cit Accepts The Fact That All Co Ntracts Have Been Examined However He Has Required The Assessee To Expla In Why 80 Ia Benefit Would Be Available As These Were Concluded To Be W Orks Contracts Thus It Was Argued The Show Cause Notice I Tself Shows That All Contracts Of Himachal Pradesh And Uttrakhand Govern Ment Were Ita 867 Chd 2017 A Y 2012 13 Page 11 Of 36 Already Available On Record And Thus The Suspicion That T Hey Were Not Considered By The Ao On Facts Itself Was Without Any Basis 2 13 The Conclusion That There Was An Adhoc Bifurcat Ion Of Expenses Without Any Justification Was Also Assailed For Ready Refer Ence The Specific Objects Set Out In Para 6 To 9 Of The Synopsis File D Is Reproduced Hereunder For Ready Reference 6 The Last Ground Which Is Ground No 4 It Is Su Bmitted That The Pr Cit Has Issued The Show Cause Notice Placed At Page 68 That All T He Contracts Fell In The Definition Of Works Contract And Nowhere Any Doubt Has Been Rai Sed About The Nature And Type Of Contracts Awarded In Respect Of Three Contracts Of Dehra Hp Pauri And Rudraparyag In Uttrakhand Thus When The Pr Cit H Aving Accepted That In Respect Of Thural Divisional Was Infrastructure Contract An D Thus For That The Assessment Is Not Erroneous And Prejudicial To The Interest Of Re Venue Then The Pr Cit Could Not Have Given Any Adverse Finding About The Other Thre E Contracts That The Same Were Required To Be Looked Into Without Mentioning In A Ny Show Cause Notice That Such Details Were Not Available And Thus The Finding O F The Pr Cit On This Issue Is Clearly Out Of Context Since Nothing Having Been Mentioned In T He Show Notice Reliance Is Being Placed On The Following Judgments For The Propositi On That When Nothing Has Been Mentioned In The Show Cause Notice About An Issue The Pr Cit Cannot Set Aside The Assessment 7 The Reliance By The Pr Cit On Various Judgments At Page 18 19 20 Are Only On The Issue That Where The Assessing Officer Had Not Applied His Mind To The Issue Then It Could Be Case Of Making No Enquiry And Then It Could He Held That The Assessment Is Erroneous And Prejudicial To The Interest Of Rev Enue But Whereas The Facts As Given By The Assessee Clearly Demonstrates That The Assessi Ng Officer Has Fully Applied His Mind And Considered Each And Every Aspect And Thus The Ord Er Of Pr Cit Deserves To Be Quashed Reliance Is Being Placed On The Following Judgments 1 Narain Singia V S Pr Commissioner Of Income Tax Ita N 0 427 Chd 2015 Itat Chandigarh Bench Chandi Garh 1 15 2 Universal Woollen Mills V S Commissioner Of Income Tax Ita No 616 Chd 2015 Itat Chandigarh Bench Chandi Garh 16 32 3 Ved Parkash Contractor V S Commissioner Of Income T Ax Ita No 573 Chd 2015 Itat Chandigarh Bench Chandi Garh 33 53 4 Kumar Enterprises V S Deputy Commissioner Of Income Tax Ita No 525 Chd 2014 Itat Chandigarh Bench Chandi Garh 54 67 5 Venus Woollen Mills V S Commissioner Of Income Tax 36 Itr Trib Chd Trib 68 70 6 Gupta Spinning Mills V S Commissioner Of Income Tax Ita N 0 3398 Del 2010 Itat Delhi Bench At New Delh I 71 87 7 Small Wonder Industries V S Commissioner Of Income Tax Ita No 2464 Mum 2013 Itat Mumbai Bench Mumbai 88 89 8 Commissioner Of Income Tax V S Smt R G Umaranee 262 Itr 507 Mad Hc 100 104 9 Commissioner Of Income Tax V S Centimeters Electric Als P Ltd 317 Itr 249 Del Hc 105 107 10 Colorcraft Builders V S Income Tax Officer 105 Itd 599 Mum Trib 108 109 11 Commissioner Of Income Tax V S G K Kabra Co Op Indu Strial Estate 211 Itr 336 Ap Hc 112 114 12 Peerless General Finance Investment Co Ltd V S Acit 5 Sot 17 Kol Trib 115 118 Ita 867 Chd 2017 A Y 2012 13 Page 12 Of 36 8 The Pr Cit In The Show Cause Notice Has Mentioned At Page 68 That All The Contracts Are Works Contract Meaning Thereby That He Has Ac Cepted The Fact That The Terms And Conditions Of The Contract Were Avail Able On Record And Were Borne Out From The Replies And Enquiries Conducted By The Assessing Officer And In This Background The Finding Of The Pr Cit That There I S Nothing On Record In Respect Of Three New Contracts That Whether They Were Works Contract Or Otherwise Is Itself Contradictory And Thus The Order Of The Pr Cit D Eserves To Be Quashed 9 At Page 18 And Para 22 Of The Orders Of Principal C It U S 263 It Is Mentioned That The Assessee Has Bifurcated Expenses Under Var Ious Heads Between Eligible Income And Non Eligible Income On Ad Hoc Basis With Out Any Basis Or Justification The Said Contention Of The Ld Pr Cit Is Absolutely Wro Ng Because Of The Following Reasons I That The Nature Of Work And Installation O F Equipment In The Case Of Exempted Projects And Non Exempted Project Is All Together D Ifferent And Expenses To The Income Ratio Can Never Be In The Same Proportion Ii That The Assessee Has Been Maintaining Separate Heads Project Wise For Exempted And Non Exempt Income And Expenses On The Basis Of Cost Centers Maintained In The Accounting Software Since Its Inception And The Ass Essee Has Been Producing All The Books Of Accounts To The Assessing Officer For Veri Fication On Different Dates For Such Verification Iii As Per Normal Practice Bifurcated Trading And Profit And Loss Account For The Exempted And Non Exempted Projects Are Prepared And Produced Before The Assessing Officer At The Time Of Assessment Proceed Ings And These Was Duly Verified By The Assessing Officer Iv The Non Exempt Projects Are In Continuation Fro M The Contracts Awarded In Assessment Year 2011 12 I E Last Year And The Issu E Regarding Comparatively Higher Expenses In Case Of Non Exempted Units As Compared To The Exempted Projects Has Been Decided In Favour Of The Assessee By The Honble It At Bench While Passing Orders Against Reopening Of Assessment U S 263 For The Asstt Year 2011 12 The Concerned Issue Has Been Dealt At Page 158 159 Of The Paper Book And At Pages 32 33 Of The Order Of The Honble Itat Against Reopening Of Assessment U S 26 3 For Assessment Year 2011 12 Thus It Is Prayed That The Order Of Pr Cit May Be Quashed And Oblige 2 14 On The Basis Of These Arguments Facts And Submissio Ns And Relying Upon The Paper Book Filed It Was Submitted That T He Copy Of The Order Sheet Placed At Pages 32 To 33 And The Copies O F The Queries Raised In The Course Of The Assessment Proceedings U S 143 3 At Pages 34 To 38 When Read Alongwith The Replies Filed By The Assessee In Resp Ect Of Queries Raised In The Course Of The Assessment Proce Edings U S 143 3 At Pages 39 To 55 Are Considered It Was Submitte D It Would Show That All The Necessary Queries Have Been Made 2 15 Specific Attention Was Invited To Paper Book Page No 40 44 Which Is A Letter Dated 18 07 2014 Addressed To The Ao E Xplaining The Contracts Awarded To The Assessee By The Respective State Governments For Ready Reference Relevant Extract Fro M The Same Is Reproduced Hereunder 1 The Assessee Company Was Awarded Contract By Hi Machal Pardesh Government Irrigation And Public Health Department Division T Hural Dehra Also Government Of Uttarkhand Peyjal Nigam Pauri Rudr Aparyag As Under 1 Providing Rehabilitation And Source Level Agumen Tation Of Various Schemes In Changer Area In Tenhil Jaisinghpur Palampur Khund Ian And Dera In District Kangra Hp Sub Head Construction Of Civil Work I E Percolation Well Pump Ita 867 Chd 2017 A Y 2012 13 Page 13 Of 36 House Dtaff Quarters Laboratory Building Inspect Ion Hut Storage Tanks Compound Walls Retaining Breast Walls Wire Crate Works Roads Street Truss Bridge Providing Lowering Laying And Jointing Of Pipe Li Nes Including Supply And Fixing Of Required Valves And Specials Construction Of Ancho R Blocks Thrust Blocks And Supporting Pillars Etc For Rising Main Gravity Ma In And Supply Of Lab Equipments Inspection Vehicle And Maintenance Van Etc Supply And Installation Of Pumping Machinery Including Accessories And Electromechanic Al Equipments Required For Stepping Down Of 11 Kva Power Supply And Post Comp Letion Operation And Maintenance Of The Whole Scheme For 60 Months Including Automat Ion 2 Executive Engineer Jph Division Dehra Distt Kangra H P Providing Wss To Nc Pc Habitation Under Jaswan And Pragpur In Tehsil Dehra And Jaswan In Distt Kangra Hp 3 Executive Engineer Construction Division Utta Rakhand Peyjal Nigam Pauri Uk Name Of Work Pauri Nanghat Water Suppl Y Scheme In Pauri Uttrakhand 4 Executive Engineer Construction Division Uttar Akhand Peyjal Nigam Rudarpryag Uk Name Of Work Construction Main Tenance Handing Over To Maintenance Body Of Tallanagpur Group Of Villages P Umping V Ater Supply Scheme Rudarparyag 2 16 Reliance Was Placed On The Following Paras Of Paper Bo Ok Page 45 And 46 Of The Book The Specific Provision Of The Act Was Addressed For The Benefit Of The Ao Highlighted Several Relevant Facts A P Ortion Of The Relevant Para Is Reproduced Hereunder The Assessee Was Awarded Contract For Development And Maintenance Of The Infrastructure Scheme For Lift Water Supply On Bot Basis By The Himachal Pradesh Irrigation And Public Health Department And Uttrakh And Peyjal Nigam Departments Of State Government The Contract Involves Successful Development Of The Composite Project For Developing Infrastructure For Water Supply And Its Successful Commissioning And Successfully Operating The Project For A Period Of Five Years With All Sorts Of Entrepreneurial Risks As The Failure Of Any Compone Nt Will Affect The Operation Of The Entire Project It Is Altogether Different From The Risks Involve D In The Service Provided And Work Done Contracts Where The Risk Is Limited To P Rovide Service Or Work And Remove The Defects During Defect Liability Period The Performance Guarantee Involved In The Composit E Development Project Is To Successfully Develop The Whole Water Supply Project Successfully Commission It And To Successfully Run The Project For A Period Of Five Y Ears Whereas In The Case Of Work Contracts The Performance Guarantee Is Limited To T He Work Done By The Contractor Lone Emphasis Supplied 2 17 Referring To Another Reply Of The Assessee On Recor D At Paper Book Page 48 Which Was Brought To The Notice Of The Ao Atte Ntion Was Invited To Para 1 I Of The Said Reply Same Is Reproduced Hereunder The Firm Unipro Techno Infrastructure Private Limit Ed Is A Private Limited Company The Company Had Undertaken Contract For Providing Lift Water Supply Scheme From Executive Engineer Irrigation Public Health Division Thur Al Distt Kangra Hp On Account Of Providing Rehabilitation And Source Level Augmentat Ion Of Various Schemes In Changer Area In Tehsil Jaisinghpur Palampur Khundian And Dehra In Distt Kangra Hp Executive Engineer Iph Division Dehra Distt Kangra H P Providing Wss To Nc Pc Habitation Under Jaswan And Pragpur In Tehsil Dehra And Jaswan In Distt Kangra Hp Executive Engineer Construction Division Uttarakhand Peyjal Nigam Rudarpryag Uk Name Of Work Construction Ita 867 Chd 2017 A Y 2012 13 Page 14 Of 36 Maintenance Handing Over To Maintenance Body Of T All An Agpur Group Of Villages Pumping Water Supply Scheme Rudarparyag Executive Engineer Construction Division Uttarakhand Peyjal Nigam Pauri Uk Name Of Work Pauri Nanghat Water Supply Scheme In Pauri Uttrakhand C Omplete Construction Of The Projects Including Operation Maintenance Of The Whole Scheme 2 18 Para 18 Of The Said Detailed Reply At Page 49 Was A Lso Referred To Reliance Was Also Placed On The Reply Copy Placed At Pag Es 51 To 55 Addressed To The Ao Were Also Referred To It Was Sub Mitted That Considering These The Ao Passed The Aforesaid Order 2 19 Referring To Page 68 Which Is A Copy Of One Of The Show Cause Notices Issued By The Pr Cit It Was Highlighted That Comp Lete Records Were Already Available On Record Of The Ao And The Contr Acts Had Been Seen By The Pr Cit Who Considering These Had Come To An Incorrect Conclusion That It Was Only A Case Of Sale Of Goods For Th E Purpose Of Construction Erection And Thus Was A Case Of Works Con Tract For Which Purposes Profits Were Held To Be Ineligible For Deduction U S 80 Ia The Conclusion On Facts Was Incorrect In View Thereof Was Pass Ed On A Different Reasoning 2 20 Referring To Page 64 Which Is Infact The Copy Of The Assessment Order Which Has Been Set Aside By The Pr Cit It Has B Een Argued That In Para 6 2 Of The Same Would Show That The Ao Carried O Ut A Detailed Re Calculation For The Purpose Of Depreciation Taking Due Note Of The Fact That There Were Exempt Projects And Also Non Exempt Ed Projects This Fact Is Also Again Noted At Page 12 Of His Order Thus Aft Er Carrying Out A Detailed Exercise Working Of The Assets Put To Use At The Different Projects Was Carried Out By The Ao Only After Looking Through The Details Made Available As Per Contracts And Thus It Was Submitte D It Cannot Be The Case Of The Department That The Claim Of The Assess Ee Has Been Allowed Without Any Inquiry 2 21 Referring To Page 71 Which Is The Second Show Cause Notice Of The Pr Cit It Was Submitted That Suspicion That On The Issues Raised In Paras I And Ii Thereof Were Not Examined Are Without Any B Asis Referring To The Ao It Was Submitted That The Ao Has Ta Ken Due Notice Of Exempted And Non Exempted Units And The Pr Cit Ha S Arbitrarily Arrived At The Conclusion That It Was Without Any Inquiry It Was Argued That Whereas The Fact Is That It Was Enquired Into And R E Calculated And This Fact Is Coming Out From The Assessment Order Itself An D No Infirmity Ita 867 Chd 2017 A Y 2012 13 Page 15 Of 36 Has Been Pointed Out Therein By The Pr Cit It Was Su Bmitted That On The Thural Project The Pr Cit Does Not Take Any Adv Erse View On Account Of The Order Of The Itat Already Available On Rec Ord However On The Remaining Three Projects Ignoring The Fact That T Hese After Examining Were Considered To Be Identical The Pr Cit With Out Demonstrating That These Were Different And Thus Withou T Any Justification Has Arbitrarily Arrived At The Conclusion That It Was Without Any Inquiry 2 22 The Ld Ar Inviting Attention To The Order Dated 06 02 2017 In Ita 361 Chd 2016 In The Case Of The Assessee Pertaining To 2011 12 Assessment Year Submitted That The Following Facts Had B Een Considered By The Pr Cit Which Are Identical Except That Hereunder They Refer To Only One Contract For Ready Reference Para 4 And 5 O F The Same Are Reproduced Hereunder 4 Thereafter On Examining The Assessment Record T He Learned Pr Cit Found That The Assessing Officer Had Not Examined C Ertain Issues Vis Vis Claim Of Deduction Under Section 80 Ia Of The Ac T Made By The Assessee The Learned Pr Cit Noticed That The Ass Essee Company Had Been Awarded A Contract Which Was In The Nature Of Works Contract And In View Of Explanation To Subsection 13 To Se Ction 80 Ia Which Excludes Business In The Nature Of Works Contract From Claiming Benefit Of Deduction Under Section 80 Ia 4 Deducti On Under Section 80 Ia Was Not Allowable On The Profits Derived From This Project Further The Learned Pr Cit Noticed That The Assess Ee Had Undertaken A Project Of Water Supply And Had Debited A Payment O F Rs 2 92 48 936 In The Trading Account Relating To The Project On A Ccount Of Job Work Done By Sub Contract As Per The Learned Pr Cit T He Assessee Was Not Eligible For Deduction Under Section 80 Ia On The Pr Oportionate Profits Earned On Job Work Executed By Sub Contract The L Earned Pr Cit Also Noticed That In Respect Of Two Projects Relating To Water Supply And Hamirpur Bye Pass The Expenses Incurred On Freight And Carriage Fuel And Wages And Salary Were Not In Proportion To The Receipts From The Same And The Same Had Not Been Examined By The Asse Ssing Officer W R T The Provisions Of Section 80 Ia 8 80 Ia 10 O F The Act The Learned Pr Cit Found That The Assessing Officer Ha D Not Examined The Above Issue During The Assessment Proceedings Acco Rdingly Proceedings Under Section 263 Of The Act Were Initi Ated And Show Cause Notice Issued To The Assessee Which Mentioned The D Iscrepancies Noted In The Assessment Order Passed As Follows I The Assessee Company Was Awarded Contract By Him Achal Pradesh Government Irrigation And Public Health Department Division Thural Distt Kangra It Is Se En That The Assessee Company Has Claimed Deduction U S 80 Ia Of I T Act 1961 On The Profits Of The Said Contract The Project Is A Pparently Covered Under The Definition Of Work Contract Accordingl Y As Per The Explanation To Sub Section 13 Of Section 80 Ia Dedu Ction U S 80 Ia Of I T Act 1961 Is Not Allowable On The Profits Deri Ved From These Projects Allowance Of Deduction U S 80 Ia Has Thus Resulted In Loss Of Revenue Ita 867 Chd 2017 A Y 2012 13 Page 16 Of 36 Ii Deduction U S 80 Ia Has Been Claimed On Profits Derived From The Project Of Water Supply It Is Seen That In Tra Ding Account A Payment Of Rs 2 92 48 936 Has Been Made For Job Work Done By Sub Contractors Proportionate Profits Earned On T He Job Work Executed By A Sub Contractors Is Not Eligible For D Eduction U S 80 Ia This Issue Has Not Been Examined By The Ao During T He Course Of Assessment Proceedings And Has Resulted In Loss Of Revenue Iii It Further Seen That The Receipts From The Wat Er Supply Project And Hamirpur Bye Pass Project Are In The Ra Tion Of 2 8 1 Whereas The Expenses Incurred On Freight Carria Ge Fuel And Wages Salary Are Comparatively Higher In Case Of Hamirpur Bye Pass Project The Comparative Details Have Not Been Examined By The Ao Viz A Viz The Provisions Of Sect Ions 80 Ia 8 80 Ia 10 Of L T Act 1961 5 During The Course Of Proceedings Before The Lear Ned Pr Cit The Assessee Filed Detailed Replies Statin G That The Issue Of Eligibility Of The Assessee To Claim Dedu Ction Of Its Profits Under Section 80 Ia Had Been Examined By The Assessing Officer During Assessment Proceedings A Nd After Due Verification Had Allowed The Same To The Assess Ee And Therefore The Present Proceeding Under Section 263 Only Tantamounted To Review Due To Change Of Opinion F Urther The Assessee Submitted That Even On Merits The Asse Ssee Was Entitled To Deduction Under Section 80 Ia Since The Contract Awarded To It Was Not In The Nature Of Works Contra Ct But Was A Composite Contract On Build Operate And Tran Sfer Basis With All The Attendant Risks Relating To Inve Stment Entrepreneurship Performance Guarantee Etc Lying O N The Assessee Itself Further The Assessee Submitted Tha T In The Case Of Kaveri Infrastructure Pvt Limited Unipro T Echno Infrastructure Similar Contract Was Held As Infrast Ructural Contract In The Assessment Year 2008 09 By Another Assessing Officer And Also The Assessee Had Been Gr Anted Certificates For Deduction Of Tax At Lower Rate In View Of The Fact That The Contract Awarded To It Qualified For Deduction Under Section 80 Ia Of The Act The Assessee Furthe R Argued That The Proceedings Had Been Initiated On Receipt Of Audit Objection The Gist Of The Submissions Made By The Assessee Before The Learned Pr Cit Are Reproduced In Para 3 1 Of His Order After Considering Which Learned Pr Cit Held That All The Above Three Issues Highlighted By Him Had N Ot Been Examined By The Assessing Officer During Assessment Proceedings And Therefore The Order Had Been Passed Without Making Enquiries Or Verification Which Were Necessary For The Grant Of Deduction Under Section 80 Ia 4 Of The Act He Therefore Held That The Order Passed By The Assessing Officer Was Erroneous Insofar As Prejudic Ial To The Interest Of The Revenue And Accordingly Set Asi De The Same With A Direction To The Assessing Officer Pass An Order Afresh In Accordance With Law The Relevant Finding S Of The Learned Pr Cit At Para 3 1 To 4 Of His Order Are As Under 3 1 In Reply To The Issue At Sr No 1 Of The Show Caus E The Assessee Has Filed A Detailed Reply Wherein It Has Been Stated That I The Composite Project Entrusted Awarded To T He Assessee Was On Built Operate And Transfer Basis Ita 867 Chd 2017 A Y 2012 13 Page 17 Of 36 Ii For The Execution Of Contract The Machinery Install Ed Including Its Components Engineers Labour Employ Ed Designing Execution Financing In The Form Of Capi Tal Investment Entrepreneurship Risk Performance Guarantee Etc I S The Responsibility Of The Assessee Iii A Certificate For Deduction Of Tax At Lower Rate Wa S Issued To The Assessee By The Cit Tds In View Of The Fact Th At The Contract Awarded To The Assessee Qualifiers For Deduction U S 80 Ia Of The Act Iv Deduction U S 80 Ia Was Allowed By The Ao On The Gro Und That The Contract Was For Infrastructure Developmen T And Not A Civil Contract V Similar Contract In The Case Of M S Kavery Infrast Ructure Pvt Ltd Unipro Techno Infrastructure Was Held As Infra Structural Contract In The A Y 2008 09 By Another Assessing O Fficer Vi The Proceedings U S 263 Have Been Initiated After Receipt Of Objection From Revenue Audit Party Witho Ut Bestowing Conscious Attention To The Factual Position The Assessee Has Further Stated That The P Roceedings Initiated U S 263 Deserve To Be Dropped In View Of The Follow Ing I The Proceedings Have Been Initiated On The Opinion Of Audit Which Are Not Permitted As Per Various Judicial Decisions Ii The Deduction Was Allowed By The Ao After Verificat Ion Which Cannot Be Reviewed Due To Change In Opinion Cit Central Vs Nahar Exports Ltd Iii In The Proposal Of The Assessing Officer It Ha S Nowhere Been Recorded That Deduction Was Granted Because Of Lack Of Inquiring Verification Or As A Result Of Non Applic Ators Of Mind Iv The Notice Has Been Issued In Mechanical Exerci Se Of Power And Non Application Of Mind In Support Of Which Fiv E Arguments Have Been Given V The Deduction Has Been Allowed By The Ao On A T Rue And Correct Interpretation Of The Provision Of The Act Vi Power U S 263 Cannot Be Exercised By Assessing Different Interpretation On The Same Set Of Facts 3 1 1 The Submissions Made By The Assessee Have Bee N Considered The Explanation To Subsection 13 Of Se Ction 80 Ia Has Been Substituted By Finance Act 2009 The Explanati On Is Exclusionary In Nature Which States That Nothing Co Ntained In The Section Will Apply In Relation To A Business Referr Ed To In Sub Section 4 Which Is In The Nature Of Works Contract Awarde D By Any Person Including The Central Or State Government Thus T O Be Eligible For Deduction U S 80 Ia 4 The Business Should Not Be O F The Nature Of Works Contract It Is Seen From The Records Of The Assessment Proceedings That This Aspect Has Never Been Examine D During The Course Of Assessment And No Verifications Were Made By The Ao 3 1 2 As Per The Provision Of Section 263 Of T He I T Act The Pr Commissioner May Call For And Examine The Record Of Any Proceedings Under This Act And If Considers That An Y Order Passed Ita 867 Chd 2017 A Y 2012 13 Page 18 Of 36 Therein By The Assessing Officer Is Erroneous In So Far As It Is Prejudicial To The Interest Of Revenue He May Aft Er Giving The Assessee An Opportunity Of Being Heard And After Ma King Or Cause To Be Made Such Inquiry As He Deems Necessary Pass Su Ch Order Thereon As The Circumstances Of The Case Justify I N This Context It Is Worthwhile To Mention That Section 263 Does N Ot Prescribe Any Procedural Condition For Invoking The Said Provisio N The Records May Be Examined For Different Reasons Including Any Objection Raised By The Audit For Invoking The Provision Of S Ection 263 In The Case Of Cit Central Vs Nahar Exports Ltd 20 08 173 Taxman 3 P H The Honble Jurisdictional High Cou Rt Had Relied On The Decision Of Honble Apex Court In Cit Vs Max India Ltd 295 Itr 282 Sc Wherein It Was Held Th At At The Relevant Time Two Views Were Possible On The Word Profits In The Provision To Section 8 Hhc 3 In The Present Case It Is Not A Question Of Having A View Different Than The One He Ld By The Ao In The Present Case The Applicability Of Explanatio N To Sub Section 13 Of Section 80 Ia Was Not Examined Which P Rohibits Deduction U S 80 Ia 4 J In The Case Of Work Contract Thus Whether The Profits Derived By The Assessee Fell Un Der The Preview Of Explanation To Section 13 Was An Essential Condition For The Applicability Of Section 80 Ia 4 J Of The Act The Assessee Has Further Relied On The Decision In Nara In Singla Vs Principal Commissioner Of Income Tax Central Ludh Iana 62 Taxmann Com 2015 255 Chandigarh Trib The Fa Cts Of Which Are Not Applicable To The Case Of The Assessee On Contrary To The Claim Of The Assessee The Honble Tribunal In The Said Case Has Held That In Case Of Lack Of Inquiry Cause Of Action U S 263 Of The Act Was Open The Case Of The Assessee Preci Sely Falls Under These Observations As No Inquiry Has Been Mad E On The Applicability Of Explanation To Sub Section 13 Of S Ection 80 Ia In The Case Of The Assessee Further The Facts Of Issu Ance Of Certificate For Tax Deduction At Lower Rates Or All Owing Deduction In Some Other Case By Any Other Ao Are No T Relevant Here Accordingly The Order Passed By The Assessing Officer Is Erroneous In So Far As It Is Prejudicial To The Interest Of Revenue On This Issue 3 2 Regarding The Issue At Sr No 2 Of The Show Cause Notice The Assessee Has Admitted That During The Execution Of The Contract Services Of Subcontractors Were Hired The Assessee Has Further Claimed That The Issue Has Been Conside Red By The Assessing Officer At The Time Of Assessment Proceed Ings Though Not Discussed In The Assessment Order And Th At Section 80 Ia Does Not Expressly Debar The Assessee From Cla Iming Deductions U S 80 Ia 3 2 1 The Provisions Of Section 80 Ia 4 Are Applicable To Any Enterprise Carrying On Business Of Developing Or Op Erating And Maintaining Or Developing Operating And Maintainin G Any Infrastructural Facility The Deductions Are Thus C Learly Not Applicable For The Contract Which Is Not Carried Ou T By The Assessee This Aspect Has Not Been Subjected To Ver Ification During The Assessment Proceedings No Such Details Were Called For By The Ao Or Submitted By The Assessee Accordingly Even On This Issue The Order Passed By The Ao Is Erroneous So Far As It Is Prejudicial To The Intere St Of Revenue 3 3 Regarding The Issue Mentioned At Sr No 3 Of T He Show Cause The Assessee Has Claimed That The Same Was Du Ly Examined By The Assessing Officer It Has Further Been Claim Ed That The Ita 867 Chd 2017 A Y 2012 13 Page 19 Of 36 Provisions Of Section 801 A 8 Are Not Applicable T Here Is Nothing On Record Either In The Questionnaire Or In The Noting Sheet Entries To Suggest That Verification Was Made By The Ao During The Assessment Proceedings With Relation Of Applicability Of Provi Sion Of Section 801 A 8 80 Ia 10 Of The Act Hence The Order Passe D By The Ao Is Erroneous So Far As It Is Prejudicial To The Intere St Of Revenue On This Issue Also 3 4 Further Reference Is Also Made Here To The Newly Inserted Explanation 2 Of Section 263 Which Was Ins Erted W E F 01 06 2015 And Reads As Under For The Purpose Of This Section It Is Hereby Decl Ared That An Order Passed By The Assessing Officer Shall Be Deemed To Be Erroneous In So Far As It Is Prejudicial To The Interest Of The Rev Enue If In The Opinion The Principal Commissioner Or Commissioner A The Order Is Passed Without Making Inquiries Or Verification Which Should Have Been Made B The Order Is Passed Allowing Any Relief Without Inquiring In To The Claim C The Order Has Not Been Made In Accordance With Any Order Direction Or Instruction Issued By The Board Under Section 119 Or D The Order Has Not Been Passed In Accordance Wit H Any Decision Which Is Prejudicial To The Assessee Rendered By The Jurisdictional High Court Or Supreme Court In The C Ase Of The Assessee Or Any Other Person Hence Legal Provisions Court Decisions As Cited By The Assessee With Respect To Limitation Validity Of Invoking Pro Visions Of Section 263 Are Not Applicable In This Case In View Of The Above It Is Evident That The Issues Mentioned In Show Cause Notice As Detailed Above Have Not Been Examined Verified At The Time Of Assessment Proceed Ings It Is Therefore Held That The Said Assessment Order Is Er Roneous In So Far As Prejudicial To The Interest Of Revenue For The R Easons Discussed Above In View Of The Provisions Of Section 263 Int Er Alia Including Explanation 2 A Inserted W E F 01 06 2015 Accor Dingly The Assessment Order U S 143 3 Dated 26 12 2013 For Assessment Year 2011 12 Is Cancelled With A Directi On To The Assessing Officer To Pass An Order Afresh In Accord Ance With Law Keeping In View The Above Observations And Afte R Allowing Opportunity Of Being Heard To The Assessee 2 23 Inviting Attention To Para 9 Of The Said Order It Was Submitted That The Order U S 263 Of The Pr Cit And The Assessm Ent Order Which Is Sought To Be Set Aside Both Proceed On Similar Facts An D Circumstances And The Arguments Have Been Considered Wherein The Ar Guments On Behalf Of The Assessee That It Could Not Be A Works Cont Ract And It Was Infact An Infrastructural Contract Have All Been Considered Referring To Another Similar Contract In The Case Of M S Kaveri Infrast Ructure Pvt Ltd Unipro Techno Infrastructure For 2008 09 And 2011 12 Ita 867 Chd 2017 A Y 2012 13 Page 20 Of 36 Assessment Year By Another Ao And Considering The Rep Lies Of The Assessee As Set Out In Para 9 To 11 And The Argument S Advanced On Behalf Of The Revenue As Per Para 12 The Itat Considere D And Held Vide Paras 13 To 25 That 263 Was Not Maintainable The Case Of The Revenue That The Ao Had Not Examined The Claim U S 80 Ia 4 Vis Vis Explanation 3 It Was Submitted Was Found To Be Not Mainta Inable In View Of Specific Queries And Considering The Agreement Ente Red Into It Had Been Accepted That It Was Not Merely A Works Con Tract As Held By Pr Cit But A Contract Awarded On A Turn Key Basis Wh Ich Includes Post Operation Consideration And Maintenance Of The Same For A Specified Period It Was Submitted By The Ld Ar That The Itat Ha D Also Not Accepted The Arguments Of The Revenue That It Was A C Ase Of Inadequate Inquiry The Contract Was Held To Be On A Build Operate Transfer Basis I E Bot The Itat It Was Submitted Had Taken N Ote Of The Fact That Not A Single Document Clause Or Otherwise Had Been Cited By The Pr Cit To Lend Credence To A Contrary View 2 24 The Second Issue It Was Submitted Has Also Be En Examined By The Itat Vide Paras 26 To 29 Similarly On The Third Issue On Which Revisionary Powers Were Exercised In The Said Order Addr Essed In Paras 30 To 32 In The Said Case Also It Had Not Met With Appro Val Of The Pr Cit The Said Decision Has Not Been Upheld By The Itat That The Receipts From The Two Projects In The Ratio Of 2 8 1 We Re All Facts Which Had Been Examined Nothing Apart From Suspicion Had Been Pointed By The Revenue In Support Of The Conclusion Of Pr Cit In Th E Earlier Year Also 2 25 Reiterating The Submissions It Was Submitted That Qu A Ground No 4 Order Is Assailed As The Show Cause Notice Available On Record Does Not Make A Mention Of The Said Issues The Fact That The Ao Has Enquired Into The Issue At Length And A Speaking Order Has Been Pass Ed Are Arguments On Merit But First The Preliminary Objection Of The Assessee Remains As In The Facts Of The Present Procee Dings The Pr Cit Has Not Show Caused The Assessee On The Issue And Re Lying Upon The Decision In Cit Vs Smt R G Umaranee 262 Itr 507 Mad Cit Vs Contimeters Electricals P Ltd 317 Itr 249 Del Colocraft Build Ers V Ito 105 Itd 599 Mum And Peerless General Finance Inv Estment Co Ltd V Acit 5 Sot 17 Kol Tribunal The Order Was State D To Be Bad In Ita 867 Chd 2017 A Y 2012 13 Page 21 Of 36 Law It Was Reiterated That The Order Was Passed After Due Application Of Mind After Making Requisite Inquiries 3 The Ld Cit Dr Inviting Attention To The Impugned Orde R Submitted That Two Show Cause Notices Have Been Issued To The Assessee And Apart From One Of The Projects I E The Thu Ral Project Out Of The Four Projects Three Were New Projects For Which Co Ntracts Had Been Entered Into By The Assessee With H P Government Dehra Project And Uttrakhand Government Rudraprayag And Pauri Project The Order Of The Itat It Was Submitted Is Available Wherein Considering The Contract In The Case Of Thural Project Himachal Pradesh It Has Been Held That It Is Not A Works Contract However Merely B Ecause Considering The Contract Of The Thural Project The Ita T Has Held That The Ao Has Duly Applied His Mind Which Fact Has Been Acce Pted By The Pr Cit In The Present Proceedings Also This Fact Cannot Lead To The Conclusion That In The Next Year Also The Ao Has Conside Red The Remaining Three Contracts The Present Case It Was Subm Itted Is A Fit Case For Exercising The Revisionary Powers Of Pr Cit U S 263 As The Ao Without Even Caring To Call For The Contracts Agreements Carelessly Accepted The Claim That Agreements Contracts Are Ident Ical Since The Order Has Been Set Aside It Was Submitted By The Ld Dr There Is No Prejudice Caused To The Assessee As The Assessee Is Fr Ee To Raise All The Arguments It Deems Fit It Was His Submission That The Ex Ercise Of Power By The Pr Cit Is Very Much Within The Powers Of The Said Authority The Ao In The Facts Of The Present Without Eve N Caring To Call For The New Agreements Contracts Entered Into By The Assessee Goes On To Accept That The Remaining Contracts Are Also Identica L It Was His Prayer That Let The Documents For The Remaining Three P Rojects Be Considered By The Ao As By Relying Upon Stereo Type Q Ueries It Cannot Be Said That The Issue Qua 80 Ia Deduction For The Remai Ning Three Projects Has Also Been Fully Considered By The Ao The O Rder Passed By The Ao It Was Submitted Clearly Shows Non Application Of M Ind By The Ao Arguments Of The Assessee That All Replies Have Been Given It Was Submitted Is Merely A Case Of Application Of Mind By The As Sessee And Not A Case Of Application Of Mind By The Ao It Was Submitt Ed That It Is A Fit Case For Invoking 263 Proceedings The Assessee It Was Submitted Has Created Evidences By Giving All Information On The File T He Ao Is Silent On How Many Units Are Started In The Year It Wa S Submitted That Ita 867 Chd 2017 A Y 2012 13 Page 22 Of 36 No Doubt The Assessee Can Be Said To Have Given Full Info Rmation However The Ao It Cannot Be Said Has Acted On It The Ao Should Have Looked Into The Contracts And Appropriate Order Sheet Entries Should Have Been Made And Pertinent Queries Should Have Been Raised As Only Then Can It Be Said To Be A Case Of Adequate And Full Enq Uiry By The Ao It Was Also His Submission That If Change Of Opinion Is To B E Considered Then The Opinion Of The Pr Cit Should Have Greater Rele Vance As Opposed To The Ao Accordingly It Was His Prayer That The Order Deserves To Be Upheld 4 We Have Heard The Rival Submissions And Perused The Material Available On Record The Relevant Documents In The Paper Book To Which Our Attention Was Invited And The Judgements Of The Different Cour Ts And Tribunals Referred To By The Parties For Our Consideration Have All Been Considered Even If Specific Reference Thereto Is Not Made In The Order 4 1 The Assessee In The Facts Of The Present Proceedings Has Prayed For Quashing The Impugned Order On The Grounds That Th E Original Assessment Order Was Passed By The Assessing Officer Aft Er Scrutinizing All Details And After Making Full And Proper Enquiries On The Issues And Thus Necessarily After Considering The Three New Contra Cts Entered Into By The Assessee In The Year Under Consideration Accor Dingly The Exercise Of The Revisionary Powers By The Pr Cit Is Stat Ed To Be Based On Whims And Fancies 4 2 The Challenge Is Also Posed On The Ground That The Is Sues On The Basis Of Which The Jurisdiction Has Been Assumed Does Not Find Any Mention In The Two Show Cause Notices Issued By The Pr Cit Chandigarh 4 3 These Arguments Have Been Elaborated By Referring T O Various Documents In The Paper Book On The Basis Of Which It Is S Tated It Has Been Shown That Sufficient Enquiries Have Been Made And O Nly After Due Application Of Mind The Ao Has Passed The Order U S 143 3 4 4 It Has Been Argued That The Three New Contracts Considering Which The Assessment Order Dated 20 12 2014 Is Directed To Be Set Aside By The Pr Cit Chandigarh Infact Are Identical Infrastr Ucture Development Contracts As Have Been Considered By The Ao In The Immediately Preceding Assessment Year The Identical Com Posite Ita 867 Chd 2017 A Y 2012 13 Page 23 Of 36 Infrastructure Contract On A Bot Basis Has Been Cons Idered By The Pr Cit In The Case Of The Assessee Itself In The Immediately Preceding Assessment Year I E 201112 Assessment Year Wherein T He Itat Vide Its Order Dated 06 02 2017 In Ita 361 Chd 2016 Considering T He Specific Contract Which Had Been Entered Into By The Assessee In The Said Year Pertaining To The Thural Project Found That The Contra Ct Was An Infrastructure Contract On Build Operate Transfer Mode A Nd It Was A Turnkey Project On Which The Assessee Was Also Require D To Provide Maintenance Etc For A Specific Period As Is The Condition In The Three New Contracts Which Are Subject Matter For Consideratio N In The Present Proceedings These Speaking Observations Of The Itat And Detailed Order Passed By The Itat Has Been Relied Upon Attentio N Has Also Been Invited To Near Similar Arguments Advanced On Behalf Of The Assessee In Response To Identical Allegations Made By The Pr Cit In Th At Year Also Wherein The Allegations Of Inadequate Enquiry Lack Of Enquir Y Etc By The Ao In That Year Have All Been Advanced And Considered By The I Tat 4 5 On The Other Hand The Departmental Stand As Ha S Been Discussed In Greater Detail In The Earlier Part Of This Order Has Bee N That The Pr Cit Chandigarh In The Facts Of The Present Case Has Tak En Note Of The Findings Of The Itat In Respect Of The Contract Pertaining To Thural Project And Considering The Order Of The Itat Has Not Included The Same While Setting Aside The Assessment Order Passed In The Y Ear Under Consideration Pr Cit It Has Been Argued Has Set Aside T He Order To The Extent It Pertains To The Remaining Three New Contracts The Decision Has Been Arrived At On The Basis Of Facts As The Ao Is H Eld To Have Allowed The Claim Of Deduction Qua Dehra Pauri And Rudrapr Ayag Projects Without Caring To Enquire Into The Issues At All The Assessing Officer Is Held To Have Accepted The Claim Of The Assessee That The Three New Projects Entered Into Are Identical To The Thural P Roject And Has Passed The Order Blindly Accepting The Assessees Claim Without Even Caring To Call For The Copy Of The New Contract Agreemen Ts Entered Into By The Assessee The Said Order It Has Been Claimed Has Been Set Aside By The Pr Cit Chandigarh Exercising His Power As The O Rder Passed By The Assessing Officer Consequently Is Without Proper Enqu Iry And Also Without Adequate Enquiry And Thus The Order Is Errone Ous And Prejudicial To The Interests Of The Revenue It Has Been Urged That For Ita 867 Chd 2017 A Y 2012 13 Page 24 Of 36 Addressing These Specific Shortcomings The Said Power Has Been Vested By The Statute In The Pr Cit 4 6 The Counter Arguments On Behalf Of The Assessee Ha S Also Been That Not Only All The Documents Are Available On Recor D But The Various Documents In The Paper Book Referred To Before The Pr Cit Also Demonstrate That Adequate Enquiries Have Been Made By The Ao During The Assessment Proceedings 4 7 It Has Also Been Urged That The Requisite Contract S Are Available On Record And The Show Cause Notice Issued By The Pr Cit Proceeds After Looking Into These Very Contracts And Agreements Thus The Argument That The Contracts And Agreements Have Not Been Looked Into By The Ao It Has Been Argued Is A Matter Of Suspicion Of The Pr Cit And Not A Matter Of Fact And Has Been Arbitrarily And W Rongly Included In Passing At The Fag End Of His Order And Is Contrary To His Own Two Show Cause Notices Issued By Him 4 8 It Has Also Been Canvassed That Nothing Has Been Brought On Record To Show That The Present Agreements In Respec T Of The Other Three New Composite Infrastructure Development Contracts With The Himachal Pradesh Government For Water Lifting Etc In Dehr A With Uttrakhand Government The Peyjal Schemes Of Pauri And Rudraprayag Were Different From The Thural Project As Opposed To Th E Consistent Claim Of The Assessee That They Were Also Composite Infra Structure Bot Contracts Identically Worded The Said Conclusion Of The Ao It Has Been Urged Has Been Arrived At On Consideration Of The Contracts And After Due Enquiries By The Assessing Officer On Behalf Of Th E Assessee The Specific Queries Raised By The Ao And Replies Thereto Made By The Assessee Before The Ao The Discussion In The Assessmen T Order By The Assessing Officer Qua The Exempt And Non Exempt Project S For The Purposes Of Working Out The Depreciation To Be Allowed It Has Been Submitted Evidently Demonstrates That All The New Agreement S Were Also Looked Into Minutely By The Ao And The Claim Of Depreciat Ion As Put Forth By The Assessee Is Considered And Varied By The A Ssessing Officer These Are Facts Emanating From The Assessment Order Its Elf Which All Go To Demonstrate That It Is Not Only A Case Of Adequate Queries Having Been Raised In The Courses Of The Hearing But Even Demo Nstrates The Full Ita 867 Chd 2017 A Y 2012 13 Page 25 Of 36 Application Of Mind By The Assessing Officer Before The Pass Ing Of The Assessment Order 4 9 The Arguments Have Also Been Advanced That Eve N After Looking At The Three Specific New Agreements Which The Pr Cit Cha Ndigarh Is Suspicious That These Have Been Blindly Accepted By The Assessing Officer As These Were Different From The Composite Infrastru Ctural Bot Contract With Thural Project Then The Pr Cit Has Brou Ght Nothing On Record To Show That The Suspicion Was Well Founded It Has Been Urged That This Suspicion Was Not Supported By The Pr Cit By Pointing To Any Error Let Alone An Error Which Was Prejudicial To The Inte Rests Of The Revenue As He Has Merely Set Aside The Order Holding T Hat It Is A Case Of Inadequate Enquiry Which Claim On The Basis Of Facts Alone It Has Been Argued Is Not Maintainable 4 10 Before We Specifically Address The Arguments Of The Respective Parties We Deem It Appropriate To Refer To Certain Releva Nt Documents On Record The Fist Of Which Being Paper Book Page 68 Wh Ich Is The Copy Of The First Show Cause Notice Issued By The Pr Cit Chan Digarh To The Assessee Dated 21 09 2016 F No Pr Cit I Chd Judl 263 2016 17 2936 Dat Ed 21 09 2016 To Sub Proceedings U S 263 Of The Income Tax Act 1961 For The A Y 2012 13 Regarding Your Attention Is Invited To The Assessment Order P Assed U S 143 3 Of I T Act 1961 Dated 20 12 2014 In Your Case Passed By The Dcit C Ircle 1 1 Chandigarh For The A Y 2012 13 After Examining The Record In Your Case It Is Seen That The Company Was Awarded By Himachal Pradesh Government And Uttrakha Nd Government Deduction U S 80 Ia Of The Income Tax Act Has Been Claimed On The Profits From These Projects 3 From The Agreement It Is Seen That The Company Wa S Involved In Sale Of Goods For Purpose Of Construction Erection Etc To The Sta Te Government And Thus Falls In Definition Of Work Contracts Accordingly The Prof Its Earned Therefrom Are Not Eligible For Claiming Deduction U S 80 Ia Of The Said Section 4 In View Of The Above Order Framed In Your Case On 24 02 2015 Is Erroneous And Prejudicial To The Interest Of Revenue You Are Th Erefore Requested To Show Cause As To Why The Aforesaid Order Of Assessment May Not Be Re Vised Under The Provisions Of Section 263 Of Income Tax Act 1961 5 Your Case Stands Fixed For Hearing On 30 09 2016 At 03 30 Pm In Case Of Failure On Your Part To Comply With This Notice It Would Be Presumed That You Have Nothing To Say In This Regard And Order U S 263 Wou Ld Be Passed On Merits On The Basis Of The Facts As Are Presently Available On Re Cord Yours Faithfully Sd Sunita Puri Pr Commissioner Of Income Tax 1 Chandigarh Ita 867 Chd 2017 A Y 2012 13 Page 26 Of 36 4 11 A Perusal Of Paragraph 2 Of The Above Shows That A Ll Facts Admittedly Were Available Before The Pr Cit Chandigarh An D The Arguments Of The Ld Cit Dr That The Assessing Officer Did Not Even Care To Call For The New Contracts Let Alone Examine The M Is Not Borne Out From The Record The Show Cause Notice Issued Itself Addresses The Issue It Has Been Issued To The Assessee Admittedly A Fter Examining The Record Which Necessarily Also Includes The Three New Agreements The Pr Cit Admittedly Did Not Issue The Notice Stating That The Claims Of The Assessee Have Been Allowed Without Calling For The Spe Cific Agreements Which Are Now Required By Him To Be Placed O N Record The Pr Cit Has Looked At The Records Seen The Agreements Contracts And Noticed That The Company Was Awarded A New Contract In Dehra Project By Himachal Pradesh Government And In Pauri And Rudrapr Ayag By Uttrakhand Government Specific Contracts For Projects O N Which Deduction Under Section 80 Ia Has Been Claimed Had It Be En A Case Of The Pr Cit I That Even The Contracts Agreements Qua The Specific Projects Were Not Available On Record Then Necessarily The Pr Cit Chandigarh Would Have Had To Call For The Agreements Wh Ich Is Not So In The Facts Of The Present Case Accordingly The Depar Tmental Claim Based On The Arguments Of The Ld Cit Dr That Even Th E Contracts Were Not Available On Record And Assessees Claim Has Been Allo Wed Without Even Caring To Look Into The Agreements Contracts Is Re Jected As The Facts On Record Are To The Contrary 4 12 A Perusal Of Para 3 Of The Above Show Cause Notice Further Brings Out The Fact That On Considering The Agreements Contracts The Pr Cit Chandigarh Concludes That The Contracts Involve The Activity Of Sale Goods For The Purposes Of Construction Erection Etc And Hence Falls In The Definition Of Works Contract When The Said Show Ca Use Notice Issued Is Considered With The Body Of The Order Passed It Is Seen That No Such Allegation Has Been Raised For Setting Aside The Ord Er No Specific Clause Or Condition Of The Agreement Has Been Referred T O By The Pr Cit To Support The Suspicion On The Contrary Repeatedly T He Assessee Before The Assessing Officer During The Assessment Procee Dings And Before The Pr Cit Chandigarh During The Revisionary Proc Eedings And Before The Itat Has Consistently Argued That The Proj Ects Awarded Are On A Turnkey Basis And Includes After Initially Setting Up And Making Ita 867 Chd 2017 A Y 2012 13 Page 27 Of 36 Functional Post Completion Operation And Maintenance Of The Same Fo R A Specific Period And Thus Was In Fact An Infrastructure Dev Elopment Project On A Bot Basis It Is Further Seen That The Pr Cit In The Immediate Preceding Assessment Year Also Considering The Agreement With The State Of Himachal Pradesh In Respect Of Thural Pr Oject Had Held It To Be A Case Of Works Project Involving Sale Of G Oods To The Government For Construction Erection Of The Project And The Itat In Very Categoric Terms Had Held That It Could Not Be Said To Be A Case Of Works Contract And On Considering The Order Passed By The Ao Held It To Be Neither Erroneous Nor Prejudicial To The Interests Of The Revenue The Relevant Finding Of The Co Ordinate Bench Is Reproduced Hereun Der 19 We May Add That It Cannot Also Be A Case Of In Adequate Enquiry All Explanations And Evidences Were Place D Before The Assessing Officer To Explain The Nature Of The Cont Ract And Demonstrate That It Was Not Merely A Works Contrac T We Fail To Understand What Further Inquiry Was Required To Be Made In The Case To Settle The Issue Of The Nature Of Contr Act Or For That Matter How The Present Inquiry Was Not Adequate To Arrive At The Correct Conclusion Moreover We Find That Even The Learned Pr Cit Has Not Spelt Out The Same In His Order Even Before Us The Ld Dr Has Failed To Show How The Inquiry Made Was Inadequate And What Further Investigation Was Required In The Matter Or Why On The Basis Of Explanation And Evidences Filed By The Assessee The Correct Nature Of The Contract Could Not Be Ded Uced In Such Circumstances We Hold It Cannot Be Said That Ther E Was Any Error In The Order Of The Assessing Officer So As T O Cause Prejudice To The Revenue 4 13 The Specific Issue Addressed In Para 3 Of The Abov E Show Cause Notice Has Been Addressed By The Itat In Para 20 To 25 And It Would Be Appropriate To Reproduce The Same Also At This Point Of Time 20 Moreover We Find That After Going Through The Replies Filed By The Assessee The Assessing Officer Discussed The Same In His Assessment Order And Recorded His Satisfaction Rega Rding The Assessees Claim For Such Deduction Stating That Th E Activity Undertaken By The Assessee Clarifies For Deduction Under Section 80 Ia Of The Act The Assessing Officer Further Add Ed That This Was The Second Year Of Claim Of Deduction Since The Ass Essee Company Had Been Awarded The Same Project By The Same Gover Nment Thus We Find That The Assessing Officer After Having App Lied His Mind To The Explanations And Evidences Filed By The Assesse E Arrived At A Logical And Reasonable Conclusion That The Assessee Was Eligible To Claim Deduction Under Section 80 Ia Of The Act As It S Activity Qualified For The Said Claim We Find That The Vie W Taken By The Assessing Officer Is A Plausible View Since As Demo Nstrated Before Us The Assessee Had Been Granted A Certificate Of Lower Deduction Of Tax For Assessment Years 2010 11 To 2013 14 Afte R Considering The Eligibility Of The Claim Of The Assessee To Ded Uction Under Section 80 Ia Of The Act The Assessee Has Also Dem Onstrated Before Us That In The Preceding And Succeeding Asse Ssment Years Identical Claim On Account Of Very Same Project Had Been Allowed Ita 867 Chd 2017 A Y 2012 13 Page 28 Of 36 To It By The Assessing Officer And Also That For Id Entical Project Another Assessing Officer Had Granted Deduction Und Er Section 80 Ia Of The Act To A Sister Concern Of The Assessee M S Kaveri Infrastructures Pvt Ltd In Collateral Proceedings Before The Dcit For The Assessment Years 2008 09 To 2011 12 That Too After Exercising Powers Under Section 133 6 And Receivin G Clarification From The Executive Engineer Iph On Perusal Of Whi Ch The Assessing Officer Found That The Contract Was On Bu Ilt Operate Transfer Bot Basis And Not In The Nature Of Works Contract And That The Project Was On Turnkey Basis In Which The Assessee Was Involved In Operation And Management Also The Ao I N That Case Also Noted That Such Arrangements Were Typical For Infrastructure Development Projects Of The Government And Cannot B E Seen As Mere Works Contract All These Facts Have Not Been Rebutted By The Ld Dr Before Us Therefore Without Any Doubt It Can Be Said The View Taken By The Assessing Officer With Regard To The Claim Of The Assessee Under Section 80 Ia Of The Act Was A Plausi Ble View 21 Interestingly We Find That All The Explanatio Ns And Evidences Which Were Filed Before The Ao By The Ass Essee To Support Its Claim Of Deduction U S 80 Ia Was Also Fi Led Before The Learned Pr Cit And Despite So There Is Not A Whisp Er In The Entire Order As To How The View Of The Ao That It Was An Infrastructure Project And Not Works Contract Is Incorrect The Learned Pr Cit Has Not Referred To A Single Document Clause Or Ot Herwise Of The Agreement To Lend Credence To His View The Entire Thrust Of The Learned Pr Cit In Exercising Revisionary Powers Is That Adequate Enquiry Vis Vis Claim Of Deduction Under Section 80 Ia Of The Act Was Not Carried Out Which As We Have Stated Above The Ld Counsel For The Assessee Has Demonstrated Is Incorr Ect Adequate Enquiries Were Carried Out Adequate Replies Were F Iled By The Assessee And The Assessing Officer After Having App Lied His Mind To The Explanations And Evidences Filed By The Assesse E Had Arrived At A Plausible Conclusion That The Assessee Was Unable To Deduction Under Section 80 Ia Of The Act We Are Therefore In Complete Agreement With The Ld Counsel Of The Assessee That The Issue Was Examined And Verified During Assessment Proceedings And The Assessing Officer Had Arrived At A Plausible Conclu Sion That On The Basis Of The Verification Carried Out By It That T He Assessee Was Eligible To Claim Deduction Under Section 80 Ia Of T He Act And Therefore There Was No Error In The Order Of The As Sessing Officer So As To Cause Prejudice To The Revenue The Action Of The Learned Pr Cit In Exercising His Revisionary Powers On Thi S Ground Is Set Aside 22 Besides The Above Argument Ld Counsel For The Assessee Also Argued Before Us That The Issue Of Eligibility Of Claim Of Deduction Under Section 80 Ia Of The Act Having Been Examined In The 1 St Year Of Claim Of The Assessee I E Ay 2010 11 The Same Could Not Have Been Disturbed In The Succeeding Yea Rs In Support Of Its Contention The Ld Counsel Relied Upon The D Ecision Of The Punjab And Haryana High Court In The Case Of Cit Ve Rsus Micro Instrument Company In Ita No 958 2008 Dated 2 9 2 016 More Specifically At Para 12 Of Its Order Had Stated As Follows 12 However While Undertaking This Exercise The Assessing Officer Is Not Entitled To Reopen An Issu E That Had Been Decided In Respect Of A Previous Assessmen T Year In Other Words An Assessing Officer Is Not Entitle D To Question The Validity Of The Grant Of A Deduction U Nder Section 80 Ib In A Previous Assessment Year On Any Ground The Assessing Officer Would Not Be Entitled To Say That A Ita 867 Chd 2017 A Y 2012 13 Page 29 Of 36 Particular Condition Was Not Fulfilled In An Earlie R Assessment Year If The Assessee Had Been Granted Th E Deduction In That Year The Assessing Officer Ther Efore Cannot Deny A Deduction In The Assessment Year In Q Uestion Before Him On The Ground That The Assessee Had Fail Ed To Fulfill A Condition Precedent To The Grant Of A Ded Uction In Another Assessment Year That Would Amount To An Assessing Officer Reopening An Assessment In Respec T Of Another Assessment Year Without Following The Provi Sions Of The Act 23 Ld Dr On The Other Hand Relying Upon Para 11 Of The Order Stated That Certain Issues Could Have Been Disturbe D In The Succeeding Years Also Ld Dr Stated That Merely Be Cause The Assessee Had Been Allowed Claim In The 1 St Year Did Not Mean That The Same For All Purposes Could Not Be Disturbed In The Succeeding Years At All 24 We Have Gone Through The Order Of The Jurisdict Ional High Court Relied Upon By Both The Parties And Find Meri T In The Contention Of The Ld Counsel For The Assessee The Re Is No Dispute About The Fact That In The Preceding Assessment Yea R I E Ay 2010 11 Which Was The 1 St Year Of Claim Of Deduction Under Section 80 Ia The Assessee Was Allowed The Same Under Sect Ion 143 3 Of The Act This Means That For All Purposes The Claim Of The Assessee Having Been Examined In The Light Of The Parameters Of Eligibility Laid Down Under Section 80 Ia It Could Not Be Said That In The Succeeding Year Those Very Same Parameters Had Chan Ged On The Same Set Of Facts The Assessing Officer After Con Sidering All The Documents Placed Before It Had In The Preceding Ye Ar Concluded That The Assessee Was Carrying Out An Infrastructur E Related Project Which Was Not In The Nature Of Works Contra Ct As Defined Under Section 80 Ia Read With Explanation 13 And Th Us The Assessee Was Eligible To Claim Deduction Under Sect Ion 80 Ia Of The Act In The Impugned Case Which Is The Succeeding Year On The Very Same Set Of Facts The Findings Of The Precedi Ng Year On The Fact That The Assessee Was Carrying Out Eligible In Frastructure Project And Not Works Contract Cannot Now Be Dist Urbed Which Is Exactly What Has Been Stated By The High Court In T He Order Passed In The Case Of Micro Instrument Company Supra F Ollowing The Same Also We Hold That The Learned Pr Cit Could No T Have Exercised His Revisionary Powers Since The Claim Of The Assessee Had Been Decided In The Preceding Year Itself And W Ithout Disturbing The Same It Could Not Have Been Dislodge D In The Impugned Year 25 In View Of The Above We Set Aside The Order Of The Learned Pr Cit On This Count 4 14 It Is Deemed Appropriate To Also Refer To The Secon D Show Cause Notice Dated 14 02 17 Issued To The Assessee By The Pr Cit To Address The Arguments Of The Respective Parties Before The Benc H The Same Is Reproduced Hereunder For Ready Reference F No Pr Cit I Chd Judl 263 2016 17 5519 Dated 14 02 2017 To M S Unipro Techno Infrastructure Pvt Ltd Sco 36 Sector 7 C Chandigarh Ita 867 Chd 2017 A Y 2012 13 Page 30 Of 36 Sir Sub Proceedings U S 263 Of The Income Tax Act 1961 For The A Y 2012 13 Regarding In Continuation To The Show Cause Notice Issued Vid E Letter No 2936 Dated 21 09 2016 In Your Case From The Perusal Of Assessment Record The Following Discrepancies Have Also Been Noticed I It Is Seen That In The Trading Account A Payme Nt Of Rs 8 55 16 150 Has Been Made For Job Work Done By Sub Contractors Proportionate Profits Earned On The J Ob Work Executed By A Sub Contractors Is Not Eligible For Deduction U S Goia This Issue Has Not Been Examined By The Ao Du Ring The Course Of Assessment Proceedings And Has Resulted I N Loss Of Revenue Ii It Further Seen That The Ratios Of Receipts Fro M Exempted And Non Exempted Units Is 9 69 1 Whereas The Freigh T 8 S Carriage Fuel Wages And Repair 85 Maintenances In The Ratio 4 63 1 1 17 1 7 38 1 1 62 1 Similarly Salary Exp Enses And Epf Expenses Are In The Ratio 1 61 The Abnormally High Expenses Claimed For Non Exempt Income Viz A Viz Th E Exempt Income Have Not Been Inquired And Investigated 2 In View Of The Above Order Framed In Your Case On 24 02 2015 Is Erroneous And Prejudicial To The Interest Of Revenu E You Are Therefore Requested To Show Cause As To Why The Aforesaid Ord Er Of Assessment May Not Be Revised Under The Provisions Of Section 263 Of I Ncome Tax Act 1961 3 Your Case Stands Fixed For Hearing On 28 02 2017 At 03 00 Pm In Case Of Failure On Your Part To Comply With This No Tice It Would Be Presumed That You Have Nothing To Say In This Regar D And Order U S 263 Would Be Passed On Merits On The Basis Of The Facts As Are Presently Available On Record Yours Faithfully Sd Pritam Singh Pr Commissioner Of Income Tax 1 Chandigarh 4 15 A Perusal Of The Issue Addressed In Para I Of The Sam E Reproduced Above Shows That The Said Allegation Has Also Been Addressed By The Coordinate Bench In The Aforesaid Ord Er In The Immediately Preceding Assessment Year Considering The Identica L Project I E Thural Project In Paragraphs 26 To 29 Of Its Order Fo R Ready Reference The Same Is Reproduced Hereunder 26 The 2 Nd Issue Raised By The Learned Pr Cit Is That The Assessee Has Claimed 80 Ia On Profits Derived From T He Project Of Water Supply And From The Perusal Of The Trading Ac Count It Is Seen That A Payment Of Rs 2 92 48 936 Had Been Made For Job Work Done By Subcontractors As Per The Learned Pr Cit Propo Rtionate Profits Earned On The Job Work Executed By A Subcontractor Was Not Eligible For Deduction Under Section 80 Ia And Since This Iss Ue Had Not Been Examined By The Assessing Officer During The Course Of Assessment Proceedings It Had Resulted In Loss Of Revenue Caus Ing Prejudice To The Revenue 27 Before Us Ld Counsel Of The Assessee Reiterate D The Contentions Made In Relation To The Previous Issue That The Examination Of The Claim Of The Assessee For Deduct Ion Under Section Ita 867 Chd 2017 A Y 2012 13 Page 31 Of 36 80 Ia Had Been Done In Detail By The Assessing Offi Cer And After Examining The Same The Assessing Officer Had Allowe D The Claim The Ld Counsel For The Assessee Stated That It Can Not Now Be Said That The Claim Of The Assessee Had Not Been Duly Ex Amined By The Assessing Officer During Assessment Proceedings Th E Ld Counsel Of The Assessee Further Stated That The Job Work Done By Subcontractors Was Not A Separate Contract But Sub Contract Of The Main Project Awarded To It And The Assessee As Per The Provision S Of Section 80 Ia Was Entitled To Claim Deduction Of The Entire Profi Ts Earned By It On The Project Executed On Infrastructure Development The Fact That It Had Sub Contracted A Part Of The Work Did Not Affec T Its Claim Of Deduction Of The Entire Profits And The Sub Contrac T Work Could Not Be Treated As Separate For The Purpose Of Claiming Deduction Under Section 80 Ia Of The Act 28 Ld Dr On The Other Hand Relied Upon The Order Of The Learned Pr Cit And Stated That The Profits Earned On The Sub Contract Work Were Not Eligible For Deduction Under Section 80 Ia Of The Act And The Same Having Not Been Examined By Th E Assessing Officer An Error Had Crept In The Order Of The Ass Essing Officer Causing Prejudice To The Revenue By Allowing The As Sessee Claim Of Deduction Of Profits Under Section 80 Ia On The Same 29 Having Heard The Rival Contentions We Find Mer It In The Contentions Made By The Ld Counsel For The Assesse E It Is Not Disputed That The Assessee Had Been Awarded A Contr Act For Infrastructure Development The Assessee Has Stated That A Part Of The Work Was Subcontracted For Ease In Execution I N The Entire Project This Fact Has Not Been Rebutted By The Lea Rned Pr Cit Therefore It Remains That The Profit Earned By The Assessee As A Whole Was On Account Of The Project Of Development Of Infrastructure And The Assessee Was Entitled To Claim Deduction Un Der Section 80 Ia Of The Same Even Otherwise We Find That The Assess Ees Claim For Deduction Under Section 80 Ia Was Duly Examined By T He Assessing Officer During Assessment Proceedings And Allowed B Y Him Also As Stated Above The Assessees Claim Had Been Allowed Both In The Preceding Year And In The Succeeding Year Also On A Query Raised By The Bench Whether The Assessee Had Been Subcontr Acting Work In The Preceding And Succeeding Years Also The Ld Co Unsel Of The Assessee Stated At The Bar That The Assessee Had B Een Subcontracting Work In All Years Also From The Aforesaid It Is Ev Ident That The Assessees Claim For Deduction Under Section 80 Ia W As Examined In All Respects By The Assessing Officer During The Co Urse Of Assessment Proceedings And Duly Allowed Moreover The Fact Th At The Assessee Had Been Allowed Deduction On The Same Pattern In T He Preceding And Succeeding Years Lends Credence To The Allowanc E Of The Claim By The Assessing Officer In The Impugned Year Also Further We Find That The Learned Pr Cit Has No Basis At All For St Ating That The Profit Earned On Account Of Job Work Got Done By Su Bcontractors Was A Separate Contract Which Was Not Eligible For Dedu Ction Under Section 80 Ia Of The Act What Can Be Gathered From The Findings Of The Learned Pr Cit Is That The Assessee Is Eligibl E For Deduction Under Section 80 Ia Only On Account Of Work Contract Project Executed By It We Find That This Understanding Of The Provisions Of Section 80 Ia Is Incorrect And Has No Judicial Prece Dents At All And On Account Of The Same We Hold That There Is No Err Or In The Order Of The Assessing Officer On This Count Also And Set As Ide The Same For This Reason 4 16 A Perusal Of The Same Shows That Seemingly After Having Raised The Issue The Pr Cit Chandigarh Did Not Make The Sam E The Basis For Setting Aside The Order Ita 867 Chd 2017 A Y 2012 13 Page 32 Of 36 4 17 The Next Issue Addressed By The Pr Cit Chandigar H In The Second Show Cause Notice Is The Ratio Of Receipts From Ex Empted And Non Exempt Units A Perusal Of The Aforesaid Order Of The Itat Throws Light On This Aspect Also And It Would Be Seen That This Is Sue Also Had Been Considered By The Itat In Paras 30 To Para 32 Of The Order For Ready Reference These Also Reproduced Hereunder 30 The 3 Rd Reason Given By The Learned Pr Cit For Exercising Revisionary Powers Under Section 263 Is That While The Receipts From The Water Supply Project And Hamirpur Bypass P Roject In The Ratio Of 2 8 1 The Expenses Incurred On Freight An D Carriage Fuel And Wages And Salary Are Comparatively Higher In Ca Se Of Hamirpur Bypass Project And The Comparative Details Have Not Been Examined By The Assessing Officer Vis A Vis Th E Provisions Of Section 80 Ia 8 80 Ia 10 Of The Income Tax Act 1961 Causing Error In The Order Of The Assessing Officer And Pre Judice To That Extent 31 The Ld Counsel Of The Assessee Reiterated Hi S Arguments Made On Account Of Point No 1 Raised By The Learned Pr Cit While Ld Dr Relied Upon The Order Of The Learned P R Cit In This Regard 32 Having Heard The Arguments Of Both The Partie S As Also The Issue Raised By The Learned Pr Cit We Find From A Bare Perusal Of The Same That It Is Not Evident As To What Is Th E Error That Has Occurred In The Order In Fact The Learned Pr Cit Is Merely Presuming That An Error May Have Occurred In The Or Der While The Learned Pr Cit Has Pointed Out That The Receip Ts From The Two Projects Is In The Ratio Of 2 8 1 It Is Not Specif Ied The Ratio In Which The Expenses Have Been Bifurcated Between The Two Projects To Highlight The Error Which Has Occurred In The Or Der Further It Is Also Not Clear From The Order Of The Learned Pr Cit As To How The Provisions Of Section 80 Ia 8 80 Ia 10 Of The I Ncome Tax Act 1961 Are Attracted In The Impugned Issue The Provi Sions Of Section 80 Ia 8 80 Ia 10 Are Attracted Only Betwee N Transactions That Take Place Between An Eligible And Non Eligibl E Entity Learned Pr Cit Has Not Pointed Out As To Which Amo Ng The Two Projects Are Eligible And Which Is Not Eligible Ha Ving Not Pointed Out The Same We Fail To Understand How The Learned Pr Cit Came To The Conclusion That An Error Had Occurr Ed In The Order Vis A Vis The Applicability Of The Provisions Of Section 80 Ia 8 80 Ia 10 Of The Act And So We Find That Th E Learned Pr Cit Has Failed To Point Any Error In The Order Of T He Assessing Officer In This Regard Further As Stated Above T He Issue Had Been Examined During Assessment Proceedings As Held Above By Us And Therefore There Was No Error In The Order Of The Assessing Officer We Therefore Set Aside The Order Of The L Earned Pr Cit On This Count Also 4 18 Accordingly We Find That Infact There Is Nothing On Re Cord Except The Suspicion Of The Department That The Assessing Officer Has Not Carried Out Adequate Enquiries We Have Gone Through Th E Record And Seen That The Issues Have Been Enquired Into Replies Hav E Been Placed On Record Nothing Has Been Brought By The Department To Show That The View Taken By The Assessing Officer Was Incorrect On Facts The Ita 867 Chd 2017 A Y 2012 13 Page 33 Of 36 Requisite Agreements Alongwith Site Plan Schedule Etc Atta Ched Thereto Were All Available Before The Ao And Before The Pr Cit Alon Gwith Photographs Etc No Effort To Distinguish The Contract En Tered Into With Himachal Pradesh Govt In Respect Of Thural Project With T He Subsequent Contracts Entered Into By The Assessee Wit H Himachal Pradesh Government In Respect Of Dehra Project Or Wit H The Uttrakhand Govt In Respect Of Pauri And Rudraprayag Projects Ha Ve Been Referred To In His Order By The Pr Cit Or In His Arguments By Th E Ld Cit Dr Mere Argument That The Three Projects Were Different W Ithout Any Supporting Fact Cannot Be Given A Judicial Approval Suspic Ion May Be Said To Be Sufficient For The Purposes Of Issuance Of Show Cause Notice But Thereafter The Suspicion Has To Be Backed By Hard Facts 4 19 On Giving Our Consideration To The Issues Remaining At Hand We Find That Ultimately On The Issue On Which The Order Was Passed Setting Aside The Order Admittedly Was Not The Subject Matter Of The Two Show Cause Notices Issued By The Pr Cit Chandigarh And Thu S Notwithstanding The Settled Legal Position Thereon Even O Therwise We Find That In The Facts Of The Present Case On A Reading O F The Assessment Order Itself It Is Demonstrated That The Assessing Officer H As Enquired Into The Said Issue Also It Is Seen That The Ao While Pas Sing The Order Proceeded To Look Into The Claim Of Depreciation For The Ex Empted And Non Exempt Units And Thus The Suspicion Of The Pr Cit Chandigarh That The Facts For Considering The Bifurcation Of Expenses Between The Exempted Income And Non Exempt Income Have Not Been Lo Oked Into Is Without Any Justification And In The Peculiar Facts Of The Pr Esent Case Based Entirely On Suspicions 4 20 Accordingly In View Of The Detailed Reasons Given Here In Above We Find That There Was No Basis For The Principal Cit A To Conclude Tha T It Is A Case Of Inadequate Enquiries We Find From The Record Th At The Assessing Officer Has Inquired Into The Issues The Assessee Has Demonstrated The Correctness Of The Claim Having Been Allowed The Revenue Having Failed To Point Out As To What Is The Erro R In The Specific Contracts Considered By The Pr Cit Chandigarh Namely The Contract Entered Into With The Himachal Pradesh Government In Reg Ard To The Dehra Project And The Two Specific Contracts Entered In To With The Uttrakhand Government Of Pauri And Rudraprayag Projec T Accordingly Ita 867 Chd 2017 A Y 2012 13 Page 34 Of 36 We Have No Hesitation In Quashing The Order Passed By T He Pr Cit Chandigarh On All These Counts And Allow The Appeal Of The Assessee 5 At This Stage It Would Not Be Out Of Context To Quot E From The Decision Of The Gauhati High Court In The Case Of Bongaigao N Refinery And Petrochemical 287 Itr 120 Gau Where The Court At Page 131 Para 17 And 18 Held As Under 17 Entertainment Of A View Different From The One Adopted By The Assessing Officer If Plausible Would Not Clothe The Commissioner With The Power To Interfere Therewith Under The Said Provision Of The Act Differently Pu T An Error Within The Jurisdiction Of The Assessing Officer On An Evaluation Of The Mater Ials Available Would Not Be Exposed To Interference In Exercise Of Suomotu Revisional P Owers Under Section 263 Of The Act The Provision Though Permits The Commissioner To In Itiate An Enquiry As He May Deem Necessary Does Not Authorise A Roving Probe Into Th E Facts With The Disposition To Pick Out Errors To Sustain The Eventual Interferenc E This Assumes Great Significance In The Context Of The Statutory Frame Work Of The A Ct Outlining The Jurisdictional Contours Of Different Authorities To Adjudicate The Issues As Legislatively Stipulated The Commissioner In Exercise Of His Revisional Powers C Annot Arrogate To Himself A Status To Surrogate The Other Authorities And Supplant The Ir Roles Under The Act 18 The Jurisdiction Exercisable Under Section 263 Of The Act Being Supervisory In Nature Permitting Suo Motu Review Of Any Assessmen T Already Made The Statutorily Enjoined Sanctions Circumscribing The Same Have To Be Rigorously Construed The Legislative Intendment Of Conditioning The Plenitud E Of The Power Conferred Is Manifest In The Two Preconditions Lodged In The Sec Tion To Sustain The Delicate Balance Between This Supervisory And Other Remedial Jurisdictions As Designed By The Lawmakers A Constricted Connotation And Purport Of The Enabling Prerequisites For The Exercise Of The Revisional Powers Is An Imperat Ive Necessity 5 1 Thus No Doubt The Power To Set Aside Has Been Ves Ted With The Pr Cit However The Power Has To Be Exercised Judiciou Sly And Fairly The Revisionary Order Cannot Be Silent In The Face Of Th E Challenge Of The Assessee That The Contracts Are Identical Composite Inf Rastructure Development Contracts On Bot Basis I E Were Trunkey Pro Jects Where After Initially Setting Up The Assessee Was Tasked With Ma King It Functional Post Completion Operation And Maintenance Of The Same For A Specific Period The Contracts Were Available With The Pr C It And The Stated Claim Of The Assessee If It Was Found To Have Been Incorrect Should Have Been Demonstrated In The Order Itself Even In The Course Of The Arguments Ld Cit Dr Could Not Bring Any Fact To O Ur Notice In Support Of The Order Passed The Power Vested By The Statute Comes With Onerous Responsibilities Which Cannot Be Allowed To Be Shirked The Assessee In The Facts Of The Present Case Is Able To Demonstrate That Full Facts Were Available On Record On Which Enquiries Have Been Made Ita 867 Chd 2017 A Y 2012 13 Page 35 Of 36 And The Assessment Order Itself Shows That The Calculatio Ns Carried Out Even Though For The Purposes Of Depreciation By The Ao Qua The Exempted Units And Non Exempt Units Demonstrate That Facts Ha Ve Been Seen In The Face Of These Facts And Arguments The Pr Cit Should Have Referred To Some Error In The Order Passed After Consid Ering The New Three Contracts And The Earlier Continuing Contract Of T Hural Project Which Is Not So In The Facts Of The Present Case Nor Ha S The Ld Cit Dr Pointed Out To Any Such Error Accordingly The Arguments O F The Ld Cit Dr That No Prejudice Is Caused To The Assessee If T He Matter Is Restored To The Assessing Officer As The Assessee Would Still Be At Liberty To Reargue The Entire Case Cannot Be Countenanced Un Less And Until The Revenue Demonstrates That The Order Has Been Pa Ssed Without Due And Adequate Enquiry Or An Error Which Is Prejudicial To The Interests Of The Revenue Is Pointed Out Only Then The Order Passed Can Be Upheld Merely Because The Assessee Would Have An Opportunity Available Before The Assessing Officer Once Again Cannot Be Said To Be A J Ustifiable Reason For Setting Aside An Assessment Order If The Said Argument Is Accepted Then Each And Every Assessment Order Can B E Set Aside As Opportunity To The Assessee Is Any Way Granted By The Rule Of Law 5 2 Before Parting We May Also Refer To The Decision Of The Allahabad High Court In The Case Of Cit Vs Goyal Private Family Spe Cific Trust 1988 171 Itr 698 701 702 All A Perusal Of The Said Decis Ion Would Show That The Court Has Held In Unambiguous Terms T Hat Merely Because The Orders Of The Assessing Officer Are Brief And C Ryptic The Said Fact By Itself Cannot Be A Ground For Branding The Assessme Nt Orders As Erroneous And Prejudicial To The Interests Of The Revenue Th E Court Was Careful To Observe That Writing A Detailed Order No Doubt May Be A Legal Requirement But The Order Not Fulfilling This Requirement Cann Ot Be Said To Be Erroneous And Prejudicial To The Interests Of The Revenue Th E Court In Unambiguous Terms Has Fastened The Responsibility For Exercisin G The Revisionary Power On The Commissioner To Necessarily Point Out As To Wha T Error Was Committed By The Assessing Officer In Having Reached The Conc Lusion Which Was Sought To Be Set Aside The Said Effort Was Found To Be M Issing In The Facts Of The Said Case As In The Facts Of The Present Case Also In The Facts Of The Present Case The Pr Cit Having Failed To Point Out Any Er Ror Let Alone An Error Which Is Prejudicial To The Interests Of The Revenue As T He Necessary Exercise For Ita 867 Chd 2017 A Y 2012 13 Page 36 Of 36 Addressing The Error Has Not Been Done In The Order Nor Has The Ld Cit Dr Been Able To Demonstrate That There Were Clauses A Nd Conditions In The Contracts Entered Into With Executive Engineer Iph Dehra Hp Executive Engineer Uttrakhand Peyjal Nigal Construction Division Rudraprayag And Executive Engineer Uttrakhand Peyjal N Igam Construction Division Pauri Vis Vis The Contract Entered Into With Executive Engineer Iph Thural Hp On The Basis Of Which T Hey Could Not Be Said To Be Composite Infrastructure Development Contracts On A Bot Basis With Added Responsibilities Towards Its Maintenanc E For Specific Period The Order Passed Accordingly For The Deta Iled Reasons Given Herein Above Is Held To Be Arbitrary And The Order Is Quashed Accordingly The Grounds Raised Are Allowed 6 In The Result Appeal Of The Assessee Is Allowed Order Pronounced In The Open Court On 1 St December 2017 Sd Sd Dr B R Kumar Diva Singh Accountant Member Judicial Member Poonam Copy To 1 The Appellant 2 The Respondent 3 The Cit 4 The Cit A 5 The Dr Asstt Registrar Itat Chd