Sushee Infra Pvt. Ltd. (Formerly Sushee Hi Tech Constructions Pvt Ltd), Hyderabad v. Dy. CIT, Circle -3(2), Hyderabad

MA 103/HYD/2013 | 2006-2007
Pronouncement Date: 04-07-2013 | Result: Partly Allowed

Appeal Details

RSA Number 10322524 RSA 2013
Assessee PAN AACCS8630H
Bench Hyderabad
Appeal Number MA 103/HYD/2013
Duration Of Justice 4 month(s) 15 day(s)
Appellant Sushee Infra Pvt. Ltd. (Formerly Sushee Hi Tech Constructions Pvt Ltd), Hyderabad
Respondent Dy. CIT, Circle -3(2), Hyderabad
Appeal Type Miscellaneous Application
Pronouncement Date 04-07-2013
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted B
Tribunal Order Date 04-07-2013
Assessment Year 2006-2007
Appeal Filed On 18-02-2013
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B' HYDERABAD BEFORE SHRI CHANDRA POOJARI ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN JUDICIAL MEMB ER MISC. APPLN. NO.102/HYD/2013 (IN ITA NO.269/HYD/2009) : ASSTT. YEAR 2005-06 MISC. APPLN. NO.103/HYD/2013 (IN ITA NO.1165/HYD/2009) : ASSTT. YEAR 2006-07 MISC. APPLN. NO.104/HYD/2013 (IN ITA NO.1171/HYD/2010) : ASSTT. YEAR 2007-08 M/S. SU SHEE INFRA PVT. LTD. (FORMERLY SUSHEE HI TECH CONSTRUCTIONS PVT. LTD.) HYDERABAD ( PAN - AACCS 8630 H ) V/S. DY. COMMISSIONER OF INCOME - TAX CIRCLE 3(2) HYDERABAD (APPLICANT) (RESPONDENT) APPLICANT BY : SHRI S.RAMA RAO RESPONDENT BY : SHRI RAJIV BENJWAL DR DATE OF HEARING 31.05.2013 DATE OF PRONOUNCEMENT 04.07.2013 O R D E R PER CHANDRA POOJARI ACCOUNTANT MEMBER: THESE THREE MISCELLANEOUS APPLICATIONS HAVE BEEN FILED BY THE ASSESSEE SEEKING RECTIFICATION IN THE COMMON OR DER OF THE TRIBUNAL DATED 16.3.2012 IN ITA NOS.269/HYD/2009 1165/HYD/2 009 AND 1171/HYD/2010 ON THE GROUND THAT CERTAIN MISTAKES APPARENT FROM RECORD HAVE CREPT INTO THE SAME. MA NO102-104/HYD/2013 ( IN ITA NO.269/.HYD/2009 & 2 ORS) M/S. SUSHEE INFRA PVT. LTD. HYDERABAD 2 2. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATIN G THE AVERMENTS MADE IN THE PRESENT APPLICATIONS SUBMITTE D THAT THE ASSESSEE CAME ON APPEAL BEFORE THE TRIBUNAL ON THE ISSUE RELATING TO ALLOWABILITY OF DEDUCTION UNDER S.80IA(4) OF THE IN COME-TAX ACT. THE TRIBUNAL AFTER CONSIDERING THE ENTIRE FACTS AND CIR CUMSTANCES OF THE CASE OBSERVED THAT THE ASSESSEE IS A DEVELOPER OF I NFRASTRUCTURE PROJECTS AND IS ENTITLED FOR DEDUCTION UNDER S.80IA (4) OF THE ACT. WHILE GIVING SUCH FINDINGS THE TRIBUNAL CONSIDERED 28 INFRASTRUCTURE PROJECTS CARRIED OUT BY THE ASSESSEE FOR THE ASSESS MENT YEAR 2005-06 AND HELD 21 OF THEM AS PROJECTS ELIGIBLE FOR DEDUCT ION UNDER S.80IA(4). FURTHER LEARNED COUNSEL SUBMITTED THAT THE TRIBUNA L HAS GIVEN A CLEAR FACTUAL FINDING THAT THE DEDUCTION UNDER S.80IA(4) WOULD BE ALLOWABLE PROPORTIONATELY BASED ON THE TOTAL TURNOVER OF THE PROJECTS. THUS FOR ASSESSMENT YEAR 2005-06 SINCE AS AGAINST 28 PROJEC TS 21 ONLY ARE ELIGIBLE FOR DEDUCTION UNDER S.80 IA(4) AND DEDUC TION IS NOT ALLOWABLE ON SEVEN PROJECTS IT WAS HELD THAT ALLOWABLE DEDUC TION SHOULD BE COMPUTED IN PROPORTIONATE MANNER. FOR THE ASSESSMEN T YEAR 2006-07 THE TRIBUNAL NOTED THAT THERE ARE 18 PROJECTS OUT OF WHICH SEVEN ARE ELIGIBLE FOR DEDUCTION AND SIMILARLY FOR ASSESSM ENT YEAR 2007-08 THE TRIBUNAL HELD THAT FIVE OUT OF TWENTY PROJECTS EXEC UTED BY THE ASSESSEE ARE ELIGIBLE FOR DEDUCTION UNDER S.80IA(4). 3. THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED THAT IN SPITE OF THE CLEAR-CUT DIRECTION OF THE TRIBUNAL IN PARA 35 OF ITS ORDER THE ASSESSING OFFICER ISSUED FRESH SHOW-CAUSE NOTIC E TO MAKE FURTHER ENQUIRIES AND PROCEEDED TO PASS A CONSEQUENTIAL ORD ERS THEREAFTER AGAIN DECLINING TO GRANT DEDUCTION UNDER S.80IA(4) OF THE ACT WHICH ACTION OF THE ASSESSING OFFICER AMOUNTS TO HIS SITT ING IN JUDGMENT OVER THE ORDER OF THE TRIBUNAL. MA NO102-104/HYD/2013 ( IN ITA NO.269/.HYD/2009 & 2 ORS) M/S. SUSHEE INFRA PVT. LTD. HYDERABAD 3 4. THE LEARNED DEPARTMENTAL REPRESENTATIVE RELIED ON THE ORDER OF THE TRIBUNAL AND SUBMITTED THAT THE TRIBUN AL HAS REMITTED THE ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER FOR FRESH CONSIDERATION. BEING SO THE ASSESSING OFFICER CORRECTLY PROCEEDED TO ENQUIRE ABOUT EACH PROJECT SO AS TO DETERMINE THE PROJECTS WHICH ARE ENTITLED FOR DEDUCTION UNDER S.80IA(4) OF THE ACT WHILE GIVING EFFECT TO THE ORDER OF THE TRIBUNAL. 5. WE HEARD BOTH THE PARTIES AND PERUSED THE MATER IAL AVAILABLE ON RECORD. FOR THE ASSESSMENT YEARS UND ER APPEAL THE ASSESSEE CAME IN APPEAL BEFORE THE TRIBUNAL CHALLE NGING THE ACTION OF THE REVENUE AUTHORITIES IN DENYING THE DEDUCTION UN DER S.80IA(4) OF THE ACT. THE TRIBUNAL AFTER CONSIDERING THE SUBMISS IONS OF THE LEARNED COUNSEL IN THE LIGHT OF THE GROUNDS RAISED BEFORE T HE TRIBUNAL AND APPRAISING THE VARIOUS DATA FURNISHED BEFORE THE TR IBUNAL IN THE PAPER- BOOK CAME TO THE CONCLUSION THAT THE ASSESSEE IS A DEVELOPER AND IS ENTITLED FOR DEDUCTION UNDER S.80IA(4) OF THE ACT. FOR CLARITY WE REPRODUCE THE RELEVANT PARAGRAPHS OF THE ORDER OF T HE TRIBUNAL- 31. FINDINGS: WE HAVE CONSIDERED THE ELABORATE SUB MISSIONS MADE BY BOTH THE PARTIES AND ALSO PERUSED THE MATER IALS AVAILABLE ON RECORD. WE HAVE ALSO GONE THROUGH ALL THE CASE LAWS CITED BY BOTH THE PARTIES. WE FIND THAT THE PR OVISIONS OF SECTION 80IA (4) OF THE ACT WHEN INTRODUCED AFRESH BY THE FINANCE ACT 1999 THE PROVISIONS UNDER SECTION 80I A (4A) OF THE ACT WERE DELETED FROM THE ACT. THE DEDUCTION AV AILABLE FOR ANY ENTERPRISE EARLIER UNDER SECTION 80IA (4A) ARE ALSO MADE AVAILABLE UNDER SECTION 80IA (4) ITSELF. FURTHER T HE VERY FACT THAT THE LEGISLATURE MENTIONED THE WORDS (I) 'DEVEL OPING' OR (II) 'OPERATING AND MAINTAINING' OR (III) 'DEVELOPI NG OPERATING AND MAINTAINING' CLEARLY INDICATES THAT ANY ENTERPR ISE WHICH CARRIED ON ANY OF THESE THREE ACTIVITIES WOULD BECO ME ELIGIBLE FOR DEDUCTION. THEREFORE THERE IS NO AMBIGUITY IN THE INCOME- TAX ACT. WE FIND THAT WHERE AN ASSESSEE INCURRED EX PENDITURE MA NO102-104/HYD/2013 ( IN ITA NO.269/.HYD/2009 & 2 ORS) M/S. SUSHEE INFRA PVT. LTD. HYDERABAD 4 FOR PURCHASE OF MATERIALS HIMSELF AND EXECUTES THE DEVELOPMENT WORK I.E. CARRIES OUT THE CIVIL CONSTR UCTION WORK HE WILL BE ELIGIBLE FOR TAX BENEFIT UNDER SECTION 8 0 IA OF THE ACT. IN CONTRAST TO THIS A ASSESSEE WHO ENTERS INTO A CONTRACT WITH ANOTHER PERSON INCLUDING GOVERNMENT OR AN UNDERTAKI NG OR ENTERPRISE REFERRED TO IN SECTION 80 IA OF THE ACT FOR EXECUTING WORKS CONTRACT WILL NOT BE ELIGIBLE FOR THE TAX BE NEFIT UNDER SECTION 80 IA OF THE ACT. WE FIND THAT THE WORD 'OW NED' IN SUB- CLAUSE (A) OF CLAUSE (1) OF SUB SECTION (4) OF SECT ION 80IA OF THE ACT REFER TO THE ENTERPRISE. BY READING OF THE SECTION IT IS CLEARS THAT THE ENTERPRISES CARRYING ON DEVELOPMENT OF INFRASTRUCTURE DEVELOPMENT SHOULD BE OWNED BY THE C OMPANY AND NOT THAT THE INFRASTRUCTURE FACILITY SHOULD BE OWNED BY A COMPANY. THE PROVISIONS ARE MADE APPLICABLE TO THE PERSON TO WHOM SUCH ENTERPRISE BELONGS TO IS EXPLAINED IN SUB -CLAUSE (A). THEREFORE THE WORD 'OWNERSHIP' IS ATTRIBUTABL E ONLY TO THE ENTERPRISE CARRYING ON THE BUSINESS WHICH WOULD MEA N THAT ONLY COMPANIES ARE ELIGIBLE FOR DEDUCTION UNDER SEC TION 80IA (4) AND NOT ANY OTHER PERSON LIKE INDIVIDUAL HUF FIRM ETC. 32. WE ALSO FIND THAT ACCORDING TO SUB-CLAUSE (A) CLAUSE (I) OF SUB SECTION (4) OF SECTION 80-IA THE WORD 'IT' DENO TES THE ENTERPRISE CARRYING ON THE BUSINESS. THE WORD 'IT' CANNOT BE RELATED TO THE INFRASTRUCTURE FACILITY PARTICULARL Y IN VIEW OF THE FACT THAT INFRASTRUCTURE FACILITY INCLUDES RAIL SYS TEM HIGHWAY PROJECT WATER TREATMENT SYSTEM IRRIGATION PROJECT A PORT AN AIRPORT OR AN INLAND PORT WHICH CANNOT BE OWNED BY ANY ONE. EVEN OTHERWISE THE WORD 'IT' IS USED TO DENOTE AN ENTERPRISE. THEREFORE THERE IS NO REQUIREMENT THAT THE ASSESSE E SHOULD HAVE BEEN THE OWNER OF THE INFRASTRUCTURE FACILITY. 33. THE NEXT QUESTION IS TO BE ANSWERED IS WHETHER THE ASSESSEE IS A DEVELOPER OR MERE WORKS CONTRACTOR. T HE REVENUE RELIED ON THE AMENDMENTS BROUGHT IN BY THE FINANCE ACT 2007 AND 2009 TO MENTION THAT THE ACTIVITY UNDERTAKEN BY THE ASSESSEE IS AKIN TO WORKS CONTRACT AND HE IS NOT EL IGIBLE FOR DEDUCTION UNDER SECTION 80IA (4) OF THE ACT. WHETHE R THE ASSESSEE IS A DEVELOPER OR WORKS CONTRACTOR IS PURE LY DEPENDS ON THE NATURE OF THE WORK UNDERTAKEN BY THE ASSESSE E. EACH OF THE WORK UNDERTAKEN HAS TO BE ANALYZED AND A CONCLU SION HAS TO BE DRAWN ABOUT THE NATURE OF THE WORK UNDERTAKEN BY THE ASSESSEE. THE AGREEMENT ENTERED INTO WITH THE GOVER NMENT OR THE GOVERNMENT BODY MAY BE A MERE WORKS CONTRACT OR FOR DEVELOPMENT OF INFRASTRUCTURE. IT IS TO BE SEEN FRO M THE AGREEMENTS ENTERED INTO BY THE ASSESSEE WITH THE GO VERNMENT. WE FIND THAT THE GOVERNMENT HANDED OVER THE POSSESS ION OF THE PREMISES OF PROJECTS TO THE ASSESSEE FOR THE DE VELOPMENT OF INFRASTRUCTURE FACILITY. IT IS THE ASSESSEE'S RESPO NSIBILITY TO DO ALL ACTS TILL THE POSSESSION OF PROPERTY IS HANDED OVER TO THE GOVERNMENT. THE FIRST PHASE IS TO TAKE OVER THE EXI STING PREMISES OF THE PROJECTS AND THEREAFTER DEVELOPING THE SAME INTO INFRASTRUCTURE FACILITY. SECONDLY THE ASSESSE E SHALL MA NO102-104/HYD/2013 ( IN ITA NO.269/.HYD/2009 & 2 ORS) M/S. SUSHEE INFRA PVT. LTD. HYDERABAD 5 FACILITATE THE PEOPLE TO USE THE AVAILABLE EXISTING FACILITY EVEN WHILE THE PROCESS OF DEVELOPMENT IS IN PROGRESS. AN Y LOSS TO THE PUBLIC CAUSED IN THE PROCESS WOULD BE THE RESPONSIB ILITY OF THE ASSESSEE. THE ASSESSEE HAS TO DEVELOP THE INFRASTRU CTURE FACILITY. IN THE PROCESS ALL THE WORKS ARE TO BE E XECUTED BY THE ASSESSEE. IT MAY BE LAYING OF A DRAINAGE SYSTEM; MA Y BE CONSTRUCTION OF A PROJECT; PROVISION OF WAY FOR THE CATTLE AND BULLOCK CARTS IN THE VILLAGE; PROVISION FOR TRAFFIC WITHOUT ANY HINDRANCE THE ASSESSEE'S DUTY IS TO DEVELOP INFRAS TRUCTURE WHETHER IT INVOLVES CONSTRUCTION OF A PARTICULAR IT EM AS AGREED TO IN THE AGREEMENT OR NOT. THE AGREEMENT IS NOT FO R A SPECIFIC WORK IT IS FOR DEVELOPMENT OF FACILITY AS A WHOLE. THE ASSESSEE IS NOT ENTRUSTED WITH ANY SPECIFIC WORK TO BE DONE BY THE ASSESSEE. THE MATERIAL REQUIRED IS TO BE BROUGHT IN BY THE ASSESSEE BY STICKING TO THE QUALITY AND QUANTITY IR RESPECTIVE OF THE COST OF SUCH MATERIAL. THE GOVERNMENT DOES NOT PROVIDE ANY MATERIAL TO THE ASSESSEE. IT PROVIDES THE WORKS IN PACKAGES AND NOT AS A WORKS CONTRACT. THE ASSESSEE UTILIZES ITS FUNDS ITS EXPERTISE ITS EMPLOYEES AND TAKES THE RESPONSIBILI TY OF DEVELOPING THE INFRASTRUCTURE FACILITY. THE LOSSES SUFFERED EITHER BY THE GOVT. OR THE PEOPLE IN THE PROCESS OF SUCH D EVELOPMENT WOULD BE THAT OF THE ASSESSEE. THE ASSESSEE HANDS O VER THE DEVELOPED INFRASTRUCTURE FACILITY TO THE GOVERNMENT ON COMPLETION OF THE DEVELOPMENT. THEREAFTER THE ASSE SSEE HAS TO UNDERTAKE MAINTENANCE OF THE SAID INFRASTRUCTURE FO R A PERIOD OF 12 TO 24 MONTHS. DURING THIS PERIOD IF ANY DAMA GES ARE OCCURRED IT SHALL BE THE RESPONSIBILITY OF THE ASSE SSEE. FURTHER DURING THIS PERIOD THE ENTIRE INFRASTRUCTURE SHALL HAVE TO BE MAINTAINED BY THE ASSESSEE ALONE WITHOUT HINDRANCE TO THE REGULAR TRAFFIC. THEREFORE IT IS CLEAR THAT FROM A N UN-DEVELOPED AREA INFRASTRUCTURE IS DEVELOPED AND HANDED OVER T O THE GOVERNMENT AND AS EXPLAINED BY THE CBDT VIDE ITS CI RCULAR DATED 18-05-2010 SUCH ACTIVITY IS ELIGIBLE FOR DED UCTION UNDER SECTION 80IA (4) OF THE ACT. THIS CANNOT BE CONSIDE RED AS A MERE WORKS CONTRACT BUT HAS TO BE CONSIDERED AS A DEVELOPMENT OF INFRASTRUCTURE FACILITY. THEREFORE THE ASSESSEE IS A DEVELOPER AND NOT A WORKS CONTRACTOR AS PRESUM ED BY THE REVENUE. THE CIRCULAR ISSUED BY THE BOARD RELIED O N BY LEARNED COUNSEL FOR THE ASSESSEE CLEARLY INDICATE THAT THE ASSESSEE IS ELIGIBLE FOR DEDUCTION UNDER SECTION 80IA (4) OF TH E ACT. THE DEPARTMENT IS NOT CORRECT IN HOLDING THAT THE ASSES SEE IS A MERE CONTRACTOR OF THE WORK AND NOT A DEVELOPER. 34. WE ALSO FIND THAT AS PER THE PROVISIONS OF THE SECTION 80IA OF THE ACT A PERSON BEING A COMPANY HAS TO ENTER I NTO AN AGREEMENT WITH THE GOVERNMENT OR GOVERNMENT UNDERTA KINGS. SUCH AN AGREEMENT IS A CONTRACT AND FOR THE PURPOSE OF THE AGREEMENT A PERSON MAY BE CALLED AS A CONTRACTOR AS HE ENTERED INTO A CONTRACT. BUT THE WORD 'CONTRACTOR' IS USED TO DENOTE A PERSON ENTERING INTO AN AGREEMENT FOR UNDE RTAKING THE DEVELOPMENT OF INFRASTRUCTURE FACILITY. EVERY A GREEMENT ENTERED INTO IS A CONTRACT. THE WORD 'CONTRACTOR' I S USED TO MA NO102-104/HYD/2013 ( IN ITA NO.269/.HYD/2009 & 2 ORS) M/S. SUSHEE INFRA PVT. LTD. HYDERABAD 6 DENOTE THE PERSON WHO ENTERS INTO SUCH CONTRACT. EV EN A PERSON WHO ENTERS INTO A CONTRACT FOR DEVELOPMENT OF INFRA STRUCTURE FACILITY IS A CONTRACTOR. THEREFORE THE CONTRACTOR AND THE DEVELOPER CANNOT BE VIEWED DIFFERENTLY. EVERY CONTR ACTOR MAY NOT BE A DEVELOPER BUT EVERY DEVELOPER DEVELOPING INFRASTRUCTURE FACILITY ON BEHALF OF THE GOVERNMENT IS A CONTRACTOR. 35. WE FIND THAT THE DECISION RELIED ON BY THE LEAR NED COUNSEL FOR THE ASSESSEE IN THE CASE OF CIT VS. LAXMI CIVIL ENGINEERING WORKS [SUPRA] SQUARELY APPLICABLE TO THE ISSUE UNDE R DISPUTE WHICH IS IN FAVOUR OF THE ASSESSEE WHEREIN IT WAS H ELD THAT MERE DEVELOPMENT OF A INFRASTRUCTURE FACILITY IS AN ELIGIBLE ACTIVITY FOR CLAIMING DEDUCTION UNDER SECTION 80IA OF THE ACT AFTER CONSIDERING THE JUDGEMENT OF THE MUMBAI HIGH COURT IN THE CASE OF ABG HEAVY ENGINEERING [SUPRA]. THE CASE OF ABG IS NOT THE PURE DEVELOPER WHEREAS IN THE PRESENT CASE THE ASSESSEE IS THE PURE DEVELOPER. WE ALSO FIND THAT S ECTION 80IA OF THE ACT INTENDED TO COVER THE ENTITIES CARRYING OUT DEVELOPING OPERATING AND MAINTAINING THE INFRASTRU CTURE FACILITY KEEPING IN MIND THE PRESENT BUSINESS MODEL S AND INTEND TO GRANT THE INCENTIVES TO SUCH ENTITIES. THE CBDT ON SEVERAL OCCASIONS CLARIFIED THAT PURE DEVELOPER SHOULD ALS O BE ELIGIBLE TO CLAIM DEDUCTION UNDER SECTION 80IA OF THE ACT W HICH ULTIMATELY CULMINATED INTO AMENDMENT UNDER SECTION 80IA OF THE ACT IN THE FINANCE ACT 2001 TO GIVE EFFECT TO THE AFORESAID CIRCULARS ISSUED BY THE CBDT. WE ALSO FIND THAT TO AVOID MISUSE OF THE AFORESAID AMENDMENT AN EXPLANATION WAS INSE RTED IN SECTION 80IA OF THE ACT IN THE FINANCE ACT-2007 AN D 2009 TO CLARIFY THAT MERE WORKS CONTRACT WOULD NOT BE ELIGI BLE FOR DEDUCTIONS UNDER SECTION 80IA OF THE ACT. BUT CERT AINLY THE EXPLANATION CANNOT BE READ TO DO AWAY WITH THE ELIG IBILITY OF THE DEVELOPER; OTHERWISE THE PARLIAMENT WOULD HAVE SIMPLY REVERSED THE AMENDMENT MADE IN THE FINANCE ACT 200 1. THUS THE AFORESAID EXPLANATION WAS INSERTED CERTAINLY TO DENY THE TAX HOLIDAY TO THE ENTITIES WHO DOES ONLY MERE WORK S CONTACT OR SUB-CONTRACT AS DISTINCT FROM THE DEVELOPER. THIS I S CLEAR FROM THE EXPRESS INTENSION OF THE PARLIAMENT WHILE INTRO DUCING THE EXPLANATION. THE EXPLANATORY MEMORANDUM TO FINANCE ACT 2007 STATES THAT THE PURPOSE OF THE TAX BENEFIT HAS ALL ALONG BEEN TO ENCOURAGE INVESTMENT IN DEVELOPMENT OF INFR ASTRUCTURE SECTOR AND NOT FOR THE PERSONS WHO MERELY EXECUTE T HE CIVIL CONSTRUCTION WORK. IT CATEGORICALLY STATES THAT THE DEDUCTION UNDER SECTION 80IA OF THE ACT IS AVAILABLE TO DEVEL OPERS WHO UNDERTAKES ENTREPRENEURIAL AND INVESTMENT RISK AND NOT FOR THE CONTRACTORS WHO UNDERTAKES ONLY BUSINESS RISK. WIT HOUT ANY DOUBT THE LEARNED COUNSEL FOR THE ASSESSEE CLEARLY DEMONSTRATED BEFORE US THAT THE ASSESSEE AT PRESENT HAS UNDERTAKEN HUGE RISKS IN TERMS OF DEPLOYMENT OF TEC HNICAL PERSONNEL PLANT AND MACHINERY TECHNICAL KNOW-HOW EXPERTISE AND FINANCIAL RESOURCES. FURTHER THE ORDER OF TRIB UNAL IN THE CASE OF B.T.PATIL CITED SUPRA IS PRIOR TO AMENDMENT TO SEC MA NO102-104/HYD/2013 ( IN ITA NO.269/.HYD/2009 & 2 ORS) M/S. SUSHEE INFRA PVT. LTD. HYDERABAD 7 80IA(4) AFTER THE AMENDMENT THE SECTION 80IA(4) RE AD AS (I) DEVELOPING OR (II) OPERATING AND MAINTAINING OR (II I) DEVELOPING OPERATING AND MAINTAINING ANY INFRASTRUCTURE FACILI TY PRIOR TO AMENDMENT THE 'OR' BETWEEN THREE ACTIVITIES WAS NOT THERE AFTER THE AMENDMENT 'OR' HAS BEEN INSERTED W.E.F. 1 -4-2002 BY FINANCE ACT 2001. THEREFORE IN OUR CONSIDERED VIEW THE ASSESSEE SHOULD NOT BE DENIED THE DEDUCTION UNDER S ECTION 80IA OF THE ACT AS THE CONTRACTS INVOLVES DEVELOPM ENT OPERATING MAINTENANCE FINANCIAL INVOLVEMENT AND DEFECT CORRECTION AND LIABILITY PERIOD THEN SUCH CONTRACT S CANNOT BE CALLED AS SIMPLE WORKS CONTRACT. IN OUR OPINION THE CONTRACTS WHICH CONTAIN ABOVE FEATURES TO BE SEGREGATED AND O N THIS DEDUCTION U/S. 80-IA HAS TO BE GRANTED AND THE OTHE R AGREEMENTS WHICH ARE PURE WORKS CONTRACTS HIT BY TH E EXPLANATION SECTION 80IA(13) THOSE WORK ARE NOT EN TITLE FOR DEDUCTION U/S 80IA OF THE ACT. THE PROFIT FROM SUCH CONTRACTS WHICH INVOLVES DEVELOPMENT OPERATING MAINTENANCE FINANCIAL INVOLVEMENT AND DEFECT CORRECTION AND LIABILITY PE RIOD IS TO BE COMPUTED BY ASSESSING OFFICER ON PRO-RATA BASIS OF TURNOVER. THE ASSESSING OFFICER IS DIRECTED TO EXAMINE AND GR ANT DEDUCTION ON ELIGIBLE TURNOVER AS DIRECTED ABOVE. I T IS NEEDLESS TO SAY THAT IN SIMILAR CIRCUMSTANCES SIMILAR VIEW HAS BEEN TAKEN BY THE CHENNAI BENCH OF THE TRIBUNAL AND DEDU CTION U/S. 80IA WAS GRANTED IN THE CASE OF M/S. CHETTINAD LIGN ITE TRANSPORT SERVICES (P) LTD. IN ITA NO. 2287/MDS/06 ORDER DATED 27TH JULY 2007 FOR THE ASSESSMENT YEAR 2004- 05. LATER IN ITA NO. 1179/MDS/08 VIDE ORDER DATED 26TH FEBRUA RY 2010 THE TRIBUNAL HAS TAKEN THE SAME VIEW BY INTER-ALIA HOLDING AS FOLLOWS: '7. MOREOVER THE REASONS FOR INTRODUCING THE EXPLANATION WERE CLARIFIED AS PROVIDING A TAX BENEF IT BECAUSE MODERNISATION REQUIRES A MASSIVE EXPANSION AND QUALITATIVE IMPROVEMENT IN INFRASTRUCTURES LIKE EXPRESSWAYS HIGHWAYS AIRPORTS PORTS AND RAPID UR BAN RAIL TRANSPORT SYSTEMS. FOR THAT PURPOSE PRIVATE S ECTOR PARTICIPATION BY WAY OF INVESTMENT IN DEVELOPMENT O F THE INFRASTRUCTURE SECTOR AND NOT FOR THE PERSONS WHO M ERELY EXECUTE THE CIVIL CONSTRUCTION WORK OR ANY OTHER WO RK CONTRACT HAS BEEN ENCOURAGED BY GIVING TAX BENEFITS . THUS THE PROVISIONS OF SECTION 80IA SHALL NOT APPLY TO A PERSON WHO EXECUTES A WORKS CONTRACT ENTERED INTO W ITH THE UNDERTAKING OR ENTERPRISE REFERRED TO IN THE SE CTION BUT WHERE A PERSON MAKES THE INVESTMENT AND HIMSELF EXECUTES THE DEVELOPMENT WORK HE CARRIES OUT THE C IVIL CONSTRUCTION WORK HE WILL BE ELIGIBLE FOR THE TAX BENEFIT UNDER SECTION 80IA.' 36. THE ABOVE ORDER WAS FOLLOWED IN SUBSEQUENT ASSE SSMENT YEARS 2007-2008 & 2008-09 IN ITA NOS. 1312 & 1313/MDS/2011 VIDE ORDER DATED 18.11.2011 IN THE CA SE OF THE SAME ASSESSEE. FURTHER IN SIMILAR CIRCUMSTANCES T HIS TRIBUNAL MA NO102-104/HYD/2013 ( IN ITA NO.269/.HYD/2009 & 2 ORS) M/S. SUSHEE INFRA PVT. LTD. HYDERABAD 8 IN THE CASE OF M/S. GVPR ENGINEERS LTD. HYDERABAD I N ITA NO. 347/H/08 & OTHERS VIDE ORDER DATED 29TH FEBRUARY 20 12 HAS TAKEN SIMILAR VIEW AND GRANTED DEDUCTION UNDER SECT ION 80IA OF THE ACT. 37. FURTHER WE MAKE IT CLEAR THAT WHERE THE ASSESS EE HAS CARRIED OUT THE DEVELOPMENT OF INFRASTRUCTURE WORK IN CONSORTIUM AND NOT AS A SUB-CONTRACTOR THEN ALSO T HE ASSESSEE IS ENTITLED FOR DEDUCTION U/S 80IA OF THE ACT. THE SAME IS APPLICABLE IN CASE OF WORK ALLOTTED BY GOVERNMENT CORPORATION/GOVERNMENT BODIES. 6. ONCE THE TRIBUNAL HAS SET ASIDE THE ORDERS IMP UGNED IN THE APPEALS BEFORE IT ON THE ABOVE ISSUE AND RESTORED T HE MATTER TO THE FILE OF THE ASSESSING OFFICER WITH THE ABOVE FINDINGS T HE DUTY OF ASSESSING OFFICER IS TO PASS ORDERS GIVING EFFECT TO THE ORDE R OF THE TRIBUNAL. THE FINDINGS OF THE TRIBUNAL EXTRACTED ABOVE ARE UNAM BIGUOUS CLEAR AND CATEGORICAL IN AS MUCH AS IT HAS SPECIFICALLY DIREC TED THAT THE ASSESSEE SHOULD NOT BE DENIED DEDUCTION UNDER S.80IA OF THE ACT AS THE CONTRACTS INVOLVES DEVELOPMENT OPERATING MAINTEN ANCE FINANCIAL INVOLVEMENT AND DEFECT CORRECTION AND LIABILITY PE RIOD THEN SUCH CONTRACTS CANNOT BE CALLED AS SIMPLE WORKS CONTRACT . IN OUR OPINION THE CONTRACTS WHICH CONTAIN THE ABOVE FEATURES TO B E SEGREGATED AND ON THIS DEDUCTION U/S. 80IA HAS TO BE GRANTED AND T HE OTHER AGREEMENTS WHICH ARE PURE WORKS CONTRACTS HIT BY TH E EXPLANATION SECTION 80IA(13) THOSE WORK ARE NOT ENTITLED FOR D EDUCTION U/S. 80IA OF THE ACT. 7. ACCORDING TO THE LEARNED AUTHORISED REPRESENTAT IVE THE ASSESSING OFFICER HAS NOT PROPERLY UNDERSTOOD THE O RDER OF THE TRIBUNAL AND THE SAME HAS BEEN TOO WIDELY INTERPRETED AND TH ERE APPEARS TO BE MISCONCEPTIONS ABOUT THE NATURE THEREOF AND THE BIN DING EFFECT OF THE ORDER OF THE TRIBUNAL. IN THIS REGARD IT MAY BE A PPROPRIATE TO POINT MA NO102-104/HYD/2013 ( IN ITA NO.269/.HYD/2009 & 2 ORS) M/S. SUSHEE INFRA PVT. LTD. HYDERABAD 9 OUT THE WELL SETTLED LEGAL POSITION THAT AN ASSESSI NG OFFICER IS BOUND TO FOLLOW THE ORDER OF THE TRIBUNAL. 8. IT IS NECESSARY TO FIRST DECIDE THE LAST SUBM ISSION OF LEARNED COUNSEL THAT THIS TRIBUNAL WHILE INTERPRET ING OF AN ALL-INDIA STATUTE LIKE THE INCOME-TAX ACT IS BOUND TO FOLLOW THE DECISION OF ANY OTHER HIGH COURT AND TO DECIDE ACCORDINGLY EVEN IF ITS OWN VIEW IS CONTRARY THERETO IN VIEW OF THE PRACTICE FOLLOWED BY THIS COURT IN SUCH MATTERS. BECAUSE IF WE ARE TO ACCEPT THIS SUBMISSI ON IT WILL BE AN EXERCISE IN FUTILITY TO EXAMINE THE REAL CONTROVERS Y BEFORE US WITH A VIEW TO DECIDE THE ISSUE. 9. AT THE OUTSET IT MAY BE APPROPRIATE TO POINT OUT THE WELL SETTLED LEGAL POSITION THAT WHAT IS BINDING ON THE COURTS IS THE RATIO OF A DECISION. THERE IS A CLEAR DISTINCTION BETWEEN ON T HE COURTS IS THE RATIO OF THE DECISION OBITER DICTA AND OBSERVATIONS FROM THE POINT OF VIEW OF PRECEDENT VALUE OR THEIR BINDING EFFECT. IT WILL BE NECESSARY IN THIS CASE TO EXPLAIN THIS DISTINCTION. BUT BEFORE WE DO SO W E MAY DISCUSS THE PRINCIPLE OF BINDING PRECEDENT. THIS WILL TAKE US T O THE QUESTION WHOSE DECISION BINDS WHOM. 10. FOR DECIDING WHOSE DECISION IS BINDING ON WH OM IT IS NECESSARY TO KNOW THE HIERARCHY OF THE COURTS. IN I NDIA THE SUPREME COURT IS THE HIGHEST COURT OF THE COUNTRY. THAT BEI NG SO SO FAR AS THE DECISIONS OF THE SUPREME COURT ARE CONCERNED IT HA S BEEN STATED IN ARTICLE 141 OF THE CONSTITUTION ITSELF THAT : 'THE LAW DECLARED BY THE SUPREME COURT SHALL BE BIND ING ON ALL COURTS WITHIN THE TERRITORY OF INDIA.' MA NO102-104/HYD/2013 ( IN ITA NO.269/.HYD/2009 & 2 ORS) M/S. SUSHEE INFRA PVT. LTD. HYDERABAD 10 11. IN THAT VIEW OF THE MATTER ALL COURTS IN IN DIA ARE BOUND TO FOLLOW THE DECISIONS OF THE SUPREME COURT. 12. THOUGH THERE IS NO PROVISION LIKE ARTICLE 14 1 WHICH SPECIFICALLY LAYS DOWNS THE BINDING NATURE OF THE D ECISIONS OF THE HIGH COURTS IT IS A WELL ACCEPTED LEGAL POSITION THAT A SINGLE JUDGE OF A HIGH COURT IS ORDINARILY BOUND TO ACCEPT AS CORRECT JUDG MENTS OF COURTS OF CO-ORDINATE JURISDICTION AND OF THE DIVISION BENCHE S AND OF THE FULL BENCHES OF HIS COURT AND OF THE SUPREME COURT. EQUA LLY WELL SETTLED IS THE POSITION THAT WHEN A DIVISION BENCH OF THE HIGH COURT GIVES A DECISION ON A QUESTION OF LAW IT SHOULD GENERALLY BE FOLLOWED BY A CO- ORDINATE BENCH IN THE SUBSEQUENT CASE WANTS THE EAR LIER DECISION TO BE RECONSIDERED IT SHOULD REFER THE QUESTION AT ISSUE TO A LARGER BENCH. 13. IT IS EQUALLY WELL SETTLED THAT THE DECISION OF ONE HIGH COURT IS NOT A BINDING PRECEDENT ON ANOTHER HIGH COURT. T HE SUPREME COURT IN VALLIAMA CHAMPAKA PILLAI V. SIVATHANU PILLAI(AIR 1979 1937) DEALING WITH THE CONTROVERSY WHETHER A DECISION OF THE ERSTWHILE TRAVANCORE HIGH COURT CAN BE MADE A BINDING PRECEDE NT ON THE MADRAS HIGH COURT ON THE BASIS OF THE PRINCIPLE OF STARE DECISIS CLEARLY HELD THAT SUCH A DECISION CAN AT BEST HAVE PERSUASI VE EFFECT AND NOT THE FORCE OF BINDING PRECEDENT ON THE MADRAS HIGH C OURT. REFERRING TO THE STATES REORGANISATION ACT IT WAS OBSERVED THAT THERE WAS NOTHING IN THE SAID ACT OR ANY OTHER LAW WHICH EXALTS THE R ATIO OF THOSE DECISIONS TO THE STATUS OF A BINDING LAW NOR COULD THE RATIO DECIDENDI OF THOSE DECISIONS BE PERPETUATED BY INVOKING THE DOCT RINE OF STARE DECISIS. THE DOCTRINE OF STARE DECISIS CANNOT BE ST RETCHED THAT FAR AS TO MAKE THE DECISION OF ONE HIGH COURT A BINDING PRECE DENT FOR THE OTHER. THIS DOCTRINE IS APPLICABLE ONLY TO DIFFERENT BENCH ES OF THE SAME HIGH COURT. MA NO102-104/HYD/2013 ( IN ITA NO.269/.HYD/2009 & 2 ORS) M/S. SUSHEE INFRA PVT. LTD. HYDERABAD 11 14. IT IS ALSO WELL-SETTLED THAT THOUGH THERE IS NO SPECIFIC PROVISION MAKING THE LAW DECLARED BY THE HIGH COURT BINDING ON SUBORDINATE COURTS IT IS IMPLICIT IN THE POWER OF SUPERVISION CONFERRED ON A SUPERIOR TRIBUNAL THAT THE TRIBUNALS SUBJECT T O ITS SUPERVISION WOULD CONFIRM TO THE LAW LAID DOWN BY IT. IT IS IN THAT VIEW OF THE MATTER THAT THE SUPREME COURT IN EAST INDIA COMMERC IAL CO. LTD. V. COLLECTOR OF CUSTOMS (AIR 1962(SC) 1893 (AT P.1905) : 'WE THEREFORE HOLD THAT THE LAW DECLARED BY THE H IGHEST COURT IN THE STATE IS BINDING ON AUTHORITIES OR TRIBUNALS UNDER ITS SUPERINTENDENCE AND THEY CANNOT IGNORE IT.......' 15. THIS POSITION HAS BEEN VERY APTLY SUMMED UP B Y THE SUPREME COURT IN MAHADEOLAL KANODIA V. ADMINISTRATO R GENERAL OF WEST BENGAL(AIR 1960 SC 936) (AT P.941) : 'JUDICIAL DECORUM NO LESS THAN LEGAL PROPRIETY FORM S THE BASIS OF JUDICIAL PROCEDURE. IF ONE THING IS MORE NECESSARY IN LAW THAN ANY OTHER THING IT IS THE QUALITY OF CERTAINTY. THAT Q UALITY WOULD TOTALLY DISAPPEAR IF JUDGES OF CO-ORDINATE JURISDICTION IN A HIGH COURT START OVERRULING ONE ANOTHER'S DECISIONS. IF ONE DIVISION BENCH OF A HIGH COURT IS UNABLE TO DISTINGUISH A PREVIOUS DECISION OF ANOTHER DIVISION BENCH AND HOLDING THE VIEW THAT THE EARLIER DECISI ON IS WRONG ITSELF GIVES EFFECT TO THAT VIEW THE RESULT WOULD BE UTTE R CONFUSION. THE POSITION WOULD BE EQUALLY BAD WHERE A JUDGE SITTING SINGLY IN THE HIGH COURT IS OF OPINION THAT THE PREVIOUS DECISION OF A NOTHER SINGLE JUDGE ON A QUESTION OF LAW IS WRONG AND GIVES EFFECT TO T HAT VIEW INSTEAD OF REFERRING THE MATTER TO A LARGER BENCH.' 16. THE ABOVE DECISION WAS FOLLOWED BY THE SUPRE ME COURT IN BARADAKANTA MISHRA V. BHIMSEN DIXIT (AIR 1972 SC 24 66) WHEREIN THE LEGAL POSITION WAS REITERATED IN THE FOLLOWING WORDS (AT PAGE 2469): 'IT WOULD BE ANOMALOUS TO SUGGEST THAT A TRIBUNAL O VER WHICH THE HIGH COURT HAS SUPERINTENDENCE CAN IGNORE THE LAW D ECLARED BY THAT COURT AND START PROCEEDINGS IN DIRECT VIOLATION OF IT. IF A TRIBUNAL CAN DO SO ALL THE SUBORDINATE COURTS CAN EQUALLY DO SO FOR THERE IS NO SPECIFIC PROVISION JUST LIKE IN THE CASE OF SUPREM E COURT MAKING THE LAW DECLARED BY THE HIGH COURT BINDING ON SUBORDINA TE COURTS. IT IS IMPLICIT IN THE POWER OF SUPERVISION CONFERRED ON A SUPERIOR TRIBUNAL THAT ALL THE TRIBUNAL SUBJECT TO ITS SUPERVISION SH OULD CONFORM TO THE MA NO102-104/HYD/2013 ( IN ITA NO.269/.HYD/2009 & 2 ORS) M/S. SUSHEE INFRA PVT. LTD. HYDERABAD 12 LAW LAID DOWN BY IT. SUCH OBEDIENCE WOULD ALSO BE C ONDUCIVE TO THEIR SMOOTH WORKING; OTHERWISE THERE WOULD BE CONFUSION IN THE ADMINISTRATION OF LAW AND RESPECT FOR LAW WOULD IRR ETRIEVABLY SUFFER. 17. HAVING DECIDED WHOSE DECISION BINDS WHOM WE MAY NEXT EXAMINE WHAT IS BINDING. IT IS WELL SETTLED THAT IT IS ONLY THE RATIO DECIDENDI THAT HAS A PRECEDENT VALUE. AS OBSERVED B Y THE SUPREME COURT IN S. P. GUPTA V. PRESIDENT OF INDIA (AIR 198 2 SC 149) (AT P.231) : 'IT IS ELEMENTARY THAT WHAT IS BINDING ON THE COURT IN A SUBSEQUENT CASE IS NOT THE CONCLUSION ARRIVED AT IN A PREVIOUS DECISION BUT THE RATIO OF THAT DECISION FOR IT IS THE RATIO WHICH BINDS AS A PRECEDENT AND NOT THE CONCLUSION.' A CASE IS ONLY A N AUTHORITY FOR WHAT IT ACTUALLY DECIDES AND NOT WHAT MAY COME TO FOLLOW LOGICALLY FROM IT. JUDGMENTS OF COURTS ARE NOT TO BE CONSTRUED AS STAT UTES (SEE AMAR NATH OM PARKASH V. STATE OF PUNJAB (1985) 1 SCC 345 ). WHILE FOLLOWING PRECEDENTS THE COURT SHOULD KEEP IN MIND THE FOLLOWING OBSERVATIONS IN MUMBAI KAMGAR SABHA V. ABDULBHAI FA IZULLABHAI (AIR 1976 SC 1455 ) (AT P.1467-68) : 'IT IS TRITE GOING BY ANGLOPHONIC PRINCIPLES THAT A RULING OF A SUPERIOR COURT IS BINDING LAW. IT IS NOT OF SCRIPTU RAL SANCTITY BUT IS OF RATIO-WISE LUMINOSITY WITHIN THE EDIFICE OF F ACTS WHERE THE JUDICIAL LAMP PLAYS THE LEGAL FLAME. BEYOND THOSE W ALLS AND DE HORS THE MILIEU WE CANNOT IMPART ETERNAL VERNAL VAL UE TO THE DECISION EXALTING THE DOCTRINE OF PRECEDENTS INTO A PRISON- HOUSE OF BIGOTRY REGARDLESS OF VARYING CIRCUMSTANC ES AND MYRIAD DEVELOPMENTS. REALISM DICTATES THAT A JUDGME NT HAS TO BE READ SUBJECT TO THE FACTS DIRECTLY PRESENTED FO R CONSIDERATION AND NOT AFFECTING THOSE MATTERS WHICH MAY LURK IN THE RECORD. WHATEVER BE THE POSITION OF A SUBORD INATE COURT'S CASUAL OBSERVATIONS GENERALISATIONS AND SUBSILENTI O DETERMINATIONS MUST BE JUDICIOUSLY READ BY COURTS O F CO- ORDINATE JURISDICTION.' 18. DECISION ON A POINT NOT NECESSARY FOR THE PU RPOSE OF THE DECISION OR WHICH DOES NOT FALL TO BE DETERMINED IN THAT DECISION BECOMES AN OBITER DICTUM. SO ALSO OPINIONS ON QUES TIONS WHICH ARE MA NO102-104/HYD/2013 ( IN ITA NO.269/.HYD/2009 & 2 ORS) M/S. SUSHEE INFRA PVT. LTD. HYDERABAD 13 NOT NECESSARY FOR DETERMINING OR RESOLVING THE ACTU AL CONTROVERSY ARISING IN THE CASE PARTAKE OF THE CHARACTER OF OBI TER. OBITER OBSERVATIONS AS SAID BY BHAGWATI J. (AS HIS LORDSH IP THEN WAS) IN ADDL. DISTRICT MAGISTRATE JABALPUR V. SHIVAKANT SH UKLA(AIR 1976 SC 1207) WOULD UNDOUBTEDLY BE ENTITLED TO GREAT WEIG HT BUT 'AN OBITER CANNOT TAKE THE PLACE OF THE RATIO. JUDGES ARE NOT ORACLES.' SUCH OBSERVATIONS DO NOT HAVE ANY BINDING EFFECT AND THE Y CANNOT BE REGARDED AS CONCLUSIVE. AS OBSERVED BY THE PRIVY CO UNCIL IN BAKER V. THE QUEEN [1975] 3 ALL ER 55 (AT PAGE 64) THE COUR T'S AUTHORITATIVE OPINION MUST BE DISTINGUISHED FROM PROPOSITIONS ASS UMED BY THE COURT TO BE CORRECT FOR THE PURPOSE OF DISPOSING OF THE P ARTICULAR CASE. THIS POSITION HAS BEEN MADE FURTHER CLEAR BY THE SUPREME COURT IN A RECENT DECISION IN CIT V. SUN ENGINEERING WORKS P. LTD. [1 992] 198 ITR 297 AT PAGE 320 WHERE IT WAS OBSERVED : 'IT IS NEITHER DESIRABLE NOR PERMISSIBLE TO PICK OU T A WORD OR A SENTENCE FROM THE JUDGMENT OF THIS COURT DIVORCED FROM THE CONTEXT OF THE QUESTION UNDER CONSIDERATION AND TRE AT IT TO BE THE COMPLETE 'LAW' DECLARED BY THIS COURT. THE JUDG MENT MUST BE READ AS A WHOLE AND THE OBSERVATIONS FROM THE JU DGMENT HAVE TO BE CONSIDERED IN THE LIGHT OF THE QUESTIONS WHICH WERE BEFORE THIS COURT. A DECISION OF THIS COURT TAKES I TS COLOUR FROM THE QUESTION INVOLVED IN THE CASE IN WHICH IT IS RE NDERED AND WHILE APPLYING THE DECISION TO A LATER CASE THE CO URTS MUST CAREFULLY TRY TO ASCERTAIN THE TRUE PRINCIPLE LAID DOWN BY THE DECISION OF THIS COURT AND NOT TO PICK OUT WORDS OR SENTENCES FROM THE JUDGMENT DIVORCED FROM THE CONTEXT OF THE QUESTIONS UNDER CONSIDERATION BY THIS COURT TO SUPPORT THEIR REASONING.' 19. IN THE ABOVE DECISION THE SUPREME COURT AL SO QUOTED WITH APPROVAL THE FOLLOWING NOTE OF CAUTION GIVEN BY IT EARLIER IN ( AIR 1971 SC 530) (AT 578) : 'IT IS NOT PROPER TO REGARD A WORD A CLAUSE OR A S ENTENCE OCCURRING IN A JUDGMENT OF THE SUPREME COURT DIVOR CED FROM ITS CONTEXT AS CONTAINING A FULL EXPOSITION OF THE LAW ON A QUESTION WHEN THE QUESTION DID NOT EVEN FALL TO BE ANSWERED IN THAT JUDGMENT.' MA NO102-104/HYD/2013 ( IN ITA NO.269/.HYD/2009 & 2 ORS) M/S. SUSHEE INFRA PVT. LTD. HYDERABAD 14 IT IS THUS CLEAR THAT IT IS ONLY THE RATIO DECIDEND I OF A CASE WHICH CAN BE BINDING - NOT OBITER DICTUM. OBITER AT BEST MAY HAVE SOME PERSUASIVE EFFICACY. 20. FROM THE FOREGOING DISCUSSION THE FOLLOWING PROPOSITIONS EMERGE: (A) THE LAW DECLARED BY THE SUPREME COURT BEING BIN DING ON ALL COURTS IN INDIA THE DECISIONS OF THE SUPREME COURT ARE BINDING ON ALL COURTS EXCEPT HOWEVER THE SUPREME COURT I TSELF WHICH IS FREE TO REVIEW THE SAME AND DEPART FROM ITS EARLIER OPINION IF THE SITUATION SO WARRANTS. WHAT IS BINDING IS OF COURS E THE RATIO OF THE DECISION AND NOT EVERY EXPRESSION FOUND THEREIN . (B) THE DECISIONS OF THE HIGH COURT ARE BINDING ON THE SUBORDINATE COURTS AND AUTHORITIES OR TRIBUNALS UND ER ITS SUPERINTENDENCE THROUGHOUT THE TERRITORIES IN RELAT ION TO WHICH IT EXERCISES JURISDICTION. IT DOES NOT EXTEND BEYOND I TS TERRITORIAL JURISDICTION. (C) THE POSITION IN REGARD TO THE BINDING NATURE OF THE DECISIONS OF A HIGH COURT ON DIFFERENT BENCHES OF THE SAME CO URT MAY BE SUMMED UP AS FOLLOWS : (I) A SINGLE JUDGE OF A HIGH COURT IS BOUND BY THE DECISION OF ANOTHER SINGLE JUDGE OR A DIVISION BENCH OF THE SAM E HIGH COURT. IT WOULD BE JUDICIAL IMPROPRIETY TO IGNORE THAT DEC ISION. JUDICIAL COMITY DEMANDS THAT A BINDING DECISION TO WHICH HIS ATTENTION HAD BEEN DRAWN SHOULD NEITHER BE IGNORED NOR OVERLO OKED. IF HE DOES NOT FIND HIMSELF IN AGREEMENT WITH THE SAME T HE PROPER PROCEDURE IS TO REFER THE BINDING DECISION AND DIRE CT THE PAPERS MA NO102-104/HYD/2013 ( IN ITA NO.269/.HYD/2009 & 2 ORS) M/S. SUSHEE INFRA PVT. LTD. HYDERABAD 15 TO BE PLACED BEFORE THE CHIEF JUSTICE TO ENABLE HIM TO CONSTITUTE A LARGER BENCH TO EXAMINE THE QUESTION (SEE FOOD CO RPORATION OF INDIA V. YADAV ENGINEER AND CONTRACTOR(AIR 1982 SC 1302). (II) A DIVISION BENCH OF A HIGH COURT SHOULD FOLLOW THE DECISION OF ANOTHER DIVISION BENCH OF EQUAL STRENGTH OR A FULL BENCH OF THE SAME HIGH COURT. IF ONE DIVISION BENCH DIFFERS FROM ANOTHER DIVISION BENCH OF THE SAME HIGH COURT IT SHOULD RE FER THE CASE TO A LARGER BENCH. (III) WHERE THERE ARE CONFLICTING DECISIONS OF COUR TS OF CO-ORDINATE JURISDICTION THE LATER DECISION IS TO BE PREFERRED IT REACHED AFTER FULL CONSIDERATION OF THE EARLIER DECISIONS. (D) THE DECISION OF ONE HIGH COURT IS NEITHER BINDI NG PRECEDENT FOR ANOTHER HIGH COURT NOR FOR COURTS OR TRIBUNALS OUTSIDE ITS OWN TERRITORIAL JURISDICTION. IT IS WELL SETTLED THAT T HE DECISION OF A HIGH COURT WILL HAVE THE FORCE OF BINDING PRECEDENT ONLY IN THE STATE OR TERRITORIES ON WHICH THE COURT HAS JURISDICTION. IN OTHER STATES OR OUTSIDE THE TERRITORIAL JURISDICTION OF THAT HIG H COURT IT MAY AT BEST HAVE ONLY PERSUASIVE EFFECT. BY NO AMOUNT OF STRETCHING OF THE DOCTRINE OF STARE DECISIS CAN JUDGMENTS OF ONE HIGH COURT BE GIVEN THE STATUS OF A BINDING PRECEDENT SO FAR AS O THER HIGH COURTS OR TRIBUNAL WITHIN THEIR TERRITORIAL JURISDI CTION ARE CONCERNED. ANY SUCH ATTEMPT WILL GO COUNTER TO THE VERY DOCTRINE OF STARE DECISIS AND ALSO THE VARIOUS DECISIONS OF THE SUPREME COURT WHICH HAVE INTERPRETED THE SCOPE AND AMBIT TH EREOF. THE FACT THAT THERE IS ONLY ONE DECISION OF ANY ONE HIG H COURT ON A PARTICULAR POINT OR THAT A NUMBER OF DIFFERENT HIGH COURTS HAVE TAKEN IDENTICAL VIEWS IN THAT REGARD IS NOT AT ALL RELEVANT FOR THAT MA NO102-104/HYD/2013 ( IN ITA NO.269/.HYD/2009 & 2 ORS) M/S. SUSHEE INFRA PVT. LTD. HYDERABAD 16 PURPOSE. WHATEVER MAY BE THE CONCLUSION THE DECISI ONS CANNOT HAVE THE FORCE OF BINDING PRECEDENT ON OTHER HIGH C OURTS OR ON ANY SUBORDINATE COURTS OR TRIBUNALS WITHIN THEIR JU RISDICTION. THAT STATUS IS RESERVED ONLY FOR THE DECISIONS OF THE SU PREME COURT WHICH ARE BINDING ON ALL COURTS IN THE COUNTRY BY V IRTUE OF ARTICLE 141 OF THE CONSTITUTION. 21. IN THE LIGHT OF THE FOREGOING DISCUSSION THE DECISION OF THE TRIBUNAL IS BINDING ON THE ASSESSING OFFICER AND HE CANNOT PICK UP A WORD OR SENTENCE FROM THE ORDER OF THE TRIBUNAL DE HORS THE CONTEXT OF THE QUESTION UNDER CONSIDERATION AND CONSTRUE IT TO BE COMPLETE LAW DECLARED BY THE TRIBUNAL. A JUDGMENT MUST BE READ AS A WHOLE. BEING SO THE ASSESSING OFFICER CANNOT SIT IN JUDGMENT O VER THE ORDER OF THE TRIBUNAL AND HE IS REQUIRED TO GIVE JUST EFFECT TO THE ORDER OF THE TRIBUNAL. IF HE HAS ANY GRIEVANCE HE IS AT LIBER TY TO APPEAL AGAINST THAT ORDER OF THE TRIBUNAL BEFORE HIGHER FORUM. 22. IT IS NEEDLESS TO SAY THAT THE INCOME-TAX AUTH ORITIES ARE REQUIRED TO EXERCISE THEIR POWERS IN ACCORDANCE WIT H LAW AS PER THE POWER GIVEN TO THEM IN SPECIFIC SECTIONS. IF THE P OWERS CONFERRED ON A PARTICULAR AUTHORITY ARE EXERCISED BY ANOTHER AUTHO RITY WITHOUT MANDATE OF LAW IT WOULD CREATE CHAOS IN THE ADMINI STRATION OF LAW AND HIERARCHY OF ADMINISTRATION WOULD MEAN NOTHING. JU DGMENT OF A HIGHER FORUM CANNOT BE SUBSTITUTED BY THE DECISIONS OF THE LOWER AUTHORITIES. JUDICIAL DISCIPLINE REQUIRES THAT THERE CANNOT BE A NY AMOUNT OF DISREGARD TO THE SUPERIOR AUTHORITY IN THE HIERARCH Y BY THE ASSESSING OFFICER. WHEN ONCE THE TRIBUNAL DECIDES AN ISSUE IN ONE WAY THE ONLY COURSE AVAILABLE TO THE ASSESSING OFFICER IS TO FOL LOW THE ORDER OF THE TRIBUNAL IN TRUE SPIRITS AND IT IS NOT PERMISSIBLE FOR THE ASSESSING MA NO102-104/HYD/2013 ( IN ITA NO.269/.HYD/2009 & 2 ORS) M/S. SUSHEE INFRA PVT. LTD. HYDERABAD 17 OFFICER TO TAKE A DIFFERENT VIEW OR TO SIT IN JUDG MENT OVER THE ORDER OF THE TRIBUNAL BY INTERPRETING THE SAME IN THE MANNER HE WANTED. 23. IN THE CASE OF WINTER MISRA DIAMOND TOOLS LTD. V/S. COLLECTOR OF CENTRAL EXCISE (1996) 83 ELT 670 TRI D EL CONSIDERING THE ROLE OF A SUBORDINATE AUTHORITY WHILE IMPLEMENTING THE ORDERS OF THE SUPERIOR APPELLATE/JUDICIAL AUTHORITIES FOLLOWING THE DECISION OF THE APEX COURT IN THE CASE OF UNION OF INDIA V/S. KAMAL AKSHI FINANCE CORPORATION LTD. (1991) 55 ELT 433(SC) IT WAS HELD AS FOLLOWS- 45. AT THE SAME TIME THE APPELLANTS ARE CORRECT I N POINTING OUT THAT ONCE THE ASSISTANT COLLECTOR HAS PASSED AN ORDER AND IT IS CONFIRMED BY THE COLLECTOR (APPEALS) AND NO APPE AL IS FILED AGAINST THE ORDER OF THE COLLECTOR (APPEALS) THE O RDER ATTAINS FINALITY. THEREFORE THE DEPARTMENT WAS BOUND TO FO LLOW THE ASSISTANT COLLECTOR'S ORDER OF 17/4/1989 AS CONFIRM ED BY THE COLLECTOR (APPEALS)' ORDER DATED 28-8-1991 AND FINA LISE ALL THE PENDING MATTERS IN THE LIGHT OF THESE ORDERS. THESE WILL INCLUDE CASES IN WHICH THE ASSESSMENT WAS MADE PROVISIONAL AS WELL AS THOSE IN WHICH CASES DEMAND/SHOW CAUSE NOTICES HAD BEEN ISSUED BUT NOT DISPOSED OF TILL THEN AS ALL THE SUB ORDINATE AUTHORITIES WERE BOUND BY THE ORDERS OF THE SUPERIO R APPELLATE/JUDICIAL AUTHORITIES IN VIEW OF THE HON'B LE SUPREME COURT'S DECISION IN THE CASE OF UNION OF INDIA V. K AMLAKSHI FINANCE CORPORATION LTD. REPORTED IN 1991 (55) E.L. T. 433 (S.C.). HOWEVER WE NEED NOT LABOUR THIS POINT ANY FURTHER IN VIEW OF OUR FINDINGS ON MERITS RECORDED ABOVE. 24. IT IS TRITE THAT WHEN A STATUTE REQUIRES AN A CT TO BE DONE IN A SPECIFIC MANNER IT HAS TO BE DONE IN THAT MANNER ONLY. THE ASSESSING OFFICER COULD NOT EXPECT IT BEING DONE IN SOME OTHER MANNER. IT IS ALSO TRITE PRINCIPLE OF LAW THAT I F A PARTICULAR AUTHORITY HAS BEEN DESIGNATED TO DO PARTICULAR ACT JUST IT I S THAT AUTHORITY ALONE WOULD COULD APPLY HIS/HER INDEPENDENT MIND TO DISCH ARGE HIS DUTIES AND FURTHER A LOWER AUTHORITY CANNOT SIT IN JUDGME NT OVER THE DECISION OF A SUPERIOR FORUM. BEING SO IN OUR OPINION WH EN THE TRIBUNAL ON EARLIER OCCASION IN ITS ORDER CITED SUPRA HAS GIVE N DIRECTION TO MA NO102-104/HYD/2013 ( IN ITA NO.269/.HYD/2009 & 2 ORS) M/S. SUSHEE INFRA PVT. LTD. HYDERABAD 18 SEGREGATE PROJECTS INTO TWO CLASSES AS ANALYSED BY IT THE DUTY OF THE ASSESSING OFFICER IS JUST LIMITED TO SEGREGATE CONT RACTS INTO TWO CATEGORIES AND TO ALLOW DEDUCTION ON THE PROJECTS W HICH ARE NOT IN THE NATURE OF WORKS CONTRACTS. IT HAS ALSO GIVEN A CATE GORICAL FINDING THAT AS THE CONTRACTS INVOLVE DEVELOPMENT OPERATING MA INTENANCE FINANCIAL INVOLVEMENT AND DEFECTION CORRECTION AND LIABILITY PERIOD SUCH CONTRACTS SHOULD BE TREATED AS ELIGIBLE FOR DEDUCTI ON UNDER S.80IA(4). 25. IT IS NEEDLESS TO MENTION HERE THAT THE TRIBUN AL HAS NOT REJECTED THE CLAIM OF THE ASSESSEE UNDER S.80IA AND ON THE OTHER HAND IT WAS HELD THAT THE ASSESSEE IS ENTITLED FOR DEDUCTION UNDER S.80IA OF THE ACT IN RESPECT OF PROJECTS LISTED IN PAGES 16 TO 20 OF ITS ORDER AS THE ASSESSEE HAS CARRIED ON INFRASTRUCTUR E PROJECTS AND IT IS FOR THE PURPOSE OF CONSIDERING OTHER PROJECTS IF A NY AND TO QUANTIFY THE DEDUCTION THE ISSUE WAS REMITTED BACK TO THE F ILE OF THE ASSESSING OFFICER. IF THE ASSESSING OFFICER FAILS TO PROPERL Y UNDERSTAND OR APPRECIATE THE DIRECTIONS OF THE TRIBUNAL ALL THAT CAN BE DONE AT THIS STAGE IS TO MENTION THAT THE ASSESSEE HAS LIBERTY T O EXPLORE AND PURSUE THE REMEDIES AVAILABLE UNDER LAW AS THE ASSESSING OFFICER IS DUTY BOUND TO PASS THE CONSEQUENTIAL ORDERS IN CONFORMIT Y WITH THE ORDER OF THE TRIBUNAL CITED (SUPRA) AND HE HAS NO DISCRETION OR CHOICE TO OVERLOOK THE ORDER OF THE TRIBUNAL. FOR THIS WE P LACE RELIANCE ON THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CA SE OF STATE OF ANDHRA PRADESH V/S. CTO AND ANOTHER (169 ITR 564) WHEREIN IT HAS BEEN HELD AS FOLLOWS- THE TRIBUNALS FUNCTIONING WITHIN THE JURISDICTION OF A PARTICULAR HIGH COURT IN RESPECT OF WHOM THE HIGH C OURT HAS THE POWER OF SUPERINTENDENCE UNDER ARTICLE 227 ARE BOU ND TO FOLLOW THE DECISIONS OF THE HIGH COURT UNLESS ON A N APPEAL TO THE SUPREME COURT THE OPERATION OF THE JUDGMENT IS SUSPENDED. IT IS NOT PERMISSIBLE FOR THE AUTHORITI ES AND THE TRIBUNALS TO IGNORE THE DECISIONS OF THE HIGH COUR T OR TO REFUSE TO FOLLOW THE DECISIONS OF THE HIGH COURT ON THE PR ETEXT THAT AN MA NO102-104/HYD/2013 ( IN ITA NO.269/.HYD/2009 & 2 ORS) M/S. SUSHEE INFRA PVT. LTD. HYDERABAD 19 APPEAL HAS BEEN FILED IN THE SUPREME COURT WHICH IS PENDING OR THAT STEPS ARE BEING TAKEN TO FILE AN APPEAL. I F ANY AUTHORITY OR THE TRIBUNAL REFUSES TO FOLLOW ANY DECISION OF T HE HIGH COURT ON THE ABOVE GROUNDS IT WOULD BE CLEARLY GUILTY OF COMMITTING CONTEMPT OF THE HIGH COURT AND IS LIABLE TO BE PROC EEDED AGAINST. AT THIS JUNCTURE IT IS PERTINENT TO MENTION THE OB SERVATIONS OF THE HIGH COURT BY PLACING RELIANCE ON THE JUDGMENT OF THE B OMBAY HIGH COURT IN THE CASE OF SUBRAMANIAN ITO V/S SIEMENS INDIA LT D. (156 ITR 11) WHICH ARE AS FOLLOWS- REFERENCE MAY ALSO BE INVITED TO THE DECISION OF T HE BOMBAY HIGH COURT IN SUBRAMANIAN ITO V. SIEMENS INDIA LTD . [1985] 156 ITR 11. THE QUESTION THAT AROSE FOR CONSIDERAT ION IN THIS CASE IS WHETHER THE INCOME-TAX OFFICER IS BOUND BY THE DECISION OF A SINGLE JUDGE OR A DIVISION BENCH OF THE COURT WITHIN WHOSE JURISDICTION HE IS OPERATING EVEN IF AN APPEAL HAS BEEN PREFERRED AGAINST SUCH DECISION AND IS PENDING. THE FOLLOWING OBSERVATIONS OF THE BOMBAY HIGH COURT MAY BE EXTRAC TED : 'SO FAR AS THE LEGAL POSITION IS CONCERNED THE ITO WOULD BE BOUND BY A DECISION OF THE SUPREME COURT AS ALSO BY A DECISION OF THE HIGH COURT OF THE STATE WITHIN WHOS E JURISDICTION HE IS (FUNCTIONING) IRRESPECTIVE OF T HE PENDENCY OF ANY APPEAL OR SPECIAL LEAVE APPLICATION AGAINST THAT JUDGMENT. HE WOULD EQUALLY BE BOUND BY A DECISION OF ANOTHER HIGH COURT ON THE POINT BECAUS E NOT TO FOLLOW THAT DECISION WOULD BE TO CAUSE GRAVE PRE JUDICE TO THE ASSESSEE. WHERE THERE IS A CONFLICT BETWEEN DIFFERENT HIGH COURTS HE MUST FOLLOW THE DECISION OF THE HIGH COURT WITHIN WHOSE JURISDICTION HE IS (FUNCTIO NING) BUT IF THE CONFLICT IS BETWEEN DECISIONS OF OTHER H IGH COURTS HE MUST TAKE THE VIEW WHICH IS IN FAVOUR OF THE ASSESSEE AND NOT AGAINST HIM. SIMILARLY IF THE INCOME- TAX APPELLATE TRIBUNAL HAS DECIDED A POINT IN FAVOUR OF THE ASSESSEE HE CANNOT IGNORE THAT DECISION AND TAKE A CONTRARY VIEW BECAUSE THAT WOULD EQUALLY PREJUDICE THE ASSESSEE. ' (EMPHASIS SUPPLIED) 26. IT IS HOWEVER PERTINENT TO EMPHASISE AND MEN TION HERE THAT HAVING DECIDED THE APPEALS OF THE ASSESSEE VI Z. ITA NOS.269 & 1165/HYD/2009 AND 1175/HYD/2010 BEFORE IT WITH IT S COMMON ORDER MA NO102-104/HYD/2013 ( IN ITA NO.269/.HYD/2009 & 2 ORS) M/S. SUSHEE INFRA PVT. LTD. HYDERABAD 20 DATED 16.3.2012 THE TRIBUNAL IS CEASED OF ITS JURI SDICTION OVER THOSE APPEALS EXCEPT TO THE LIMITED EXTENT OF RECTIFYING ANY MISTAKE THEREIN IN TERMS OF PROVISIONS OF S.254(2) OF THE ACT. IN THESE ELABORATE MISCELLANEOUS APPLICATIONS OR THE WRITTEN SUBMISSIO NS FURNISHED BEFORE US IN SUPPORT THEREOF THE ASSESSEE HAS NOT POINTED OUT ANY MISTAKE IN THE ORDER OF THIS TRIBUNAL DATED 16.3.2 012 WHICH WARRANTS RECTIFICATION IN TERMS S.254(2) OF THE ACT. ALL TH AT THE ASSESSEE SPEAKS OF IS ABOUT THE GRIEVANCE THAT IT HAS SUFFERED ON A CCOUNT OF THE CONSEQUENTIAL ORDERS PASSED BY THE ASSESSING OFFICE R FOR THE YEARS UNDER CONSIDERATION WHILE GIVING EFFECT TO THE ORD ER OF THIS TRIBUNAL DATED 16.3.2012. THOSE CONSEQUENTIAL ORDERS PASSED BY THE ASSESSING OFFICER CONSTITUTE INDEPENDENT PROCEEDINGS AND NOT PART OF THE PROCEEDINGS WHICH LED TO THE PASSING OF THE ORDER O F THE TRIBUNAL DATED 16.3.2012 ON THE SECOND APPEALS OF THE ASSESSEE AN D THEY IF THE ASSESSEE IS AGGRIEVED MAY GIVE RISE TO FIRST APPE LLATE PROCEEDINGS THERE AGAINST OR FURTHER APPELLATE PROCEEDINGS BY T HE ASSESSEE. HOWEVER THE GRIEVANCE OF THE ASSESSEE ON ACCOUNT O F ALLEGED MISTAKES IN SUCH CONSEQUENTIAL ORDERS EITHER ON ACCOUNT OF INTERPRETATIONAL DIFFERENCES OR EVEN ON ACCOUNT OF DISRESPECT/DISREG ARD TO THE DIRECTIONS OF THE TRIBUNAL SHALL NOT VEST ANY POWER OR JURISD ICTION BACK WITH THE TRIBUNAL TO OVERSEE THE CORRECTNESS OF THE CORRECT NESS OF THE CONSEQUENTIAL ORDERS PASSED MUCH LESS TO GIVE DIR ECTIONS TO REVISE OR RECTIFY THE SAME EVEN IF THERE IS ANY MISTAKE IN T HE SAME. IF THE CONSEQUENTIAL ORDERS PASSED BY THE ASSESSING OFFICE R ARE DE HORS THE DIRECTIONS OF THE TRIBUNAL OR IF THERE IS ANY GRIE VANCE TO THE ASSESSEE ON ACCOUNT OF SUCH CONSEQUENTIAL ORDERS AS ALREADY NOTED ABOVE THE REMEDY FOR THE ASSESSEE LIES ELSEWHERE VIZ. IN THE FRESH PROCEEDINGS COMMENCING WITH SUCH CONSEQUENTIAL ORDERS AND NOT I N THE MA NO102-104/HYD/2013 ( IN ITA NO.269/.HYD/2009 & 2 ORS) M/S. SUSHEE INFRA PVT. LTD. HYDERABAD 21 PROCEEDINGS THAT CULMINATED WITH THE ORDER OF THIS TRIBUNAL DATED 16.3.20120. 27. IN THE ABSENCE OF ANY SPECIFIC MISTAKE WHICH W ARRANTS ANY RECTIFICATION WITHIN THE SCOPE OF THE PROVISIONS OF S.254(2) OF THE ACT IN THE ORDER OF THE TRIBUNAL DATED 16.3.2012 WE DO NOT FIND REASON TO RECTIFY OUR EARLIER ORDER AND ACCORDINGLY THE MISC ELLANEOUS APPLICATIONS OF THE ASSESSEE ARE DISPOSED OF WITH THE OBSERVATI ONS AS ABOVE. 28. IN THE RESULT ALL THE THREE MISCELLANEOUS APP LICATIONS OF THE ASSESSEE ARE DISPOSED OF AS ABOVE. ORDER PRONOUNCED IN THE COURT ON 04.07.2013 SD/- SD/- ( ASHA VIJAYARAGHAVAN) (CHANDRA POOJARI) JUDICIAL MEMBER ACCOUNTANT MEMBER DT/- 4 TH JULY 2013 COPY FORWARDED TO: 1. M/S. SUSHEE INFRA PVT. LTD. (FORMERLY SUSHEE HI TEC H CONSTRUCTIONS PVT. LTD.) PLOT NO. 246/A MLA COLON Y ROAD NO. 12 BANJARA HILLS HYDERABAD-500 034. 2. ASST. COMMISSIONER OF INCOME - TAX 3(2) HYDERABAD 3. COMMISSIONER OF INCOME-TAX(APPEALS) IV HYDERABAD 4. COMMISSIONER OF INCOME - TAX III HYDERABAD 5. DEPARTMENTAL REPRESENTATIVE ITAT HYDERABAD. B.V.S.