Deduction u/s 80IA claimed in return filed after issue of notice u/s 153A allowable. SC dismisses SLP of ITD

Deduction u/s 80IA claimed in return filed after issue of notice u/s 153A allowable. Supreme Court dismisses SLP of ITD. Company was held developer not contractor

ABCAUS Case Law Citation:
ABCAUS 2415 (2018) 07 SC

In 2016 the Income Tax Department (Revenue) had filed an appeal before the Hon’ble High Court against the order of the Income Tax appellate Tribunal (ITAT) in allowing the deduction u/s 80IA to the assessee on the basis of return filed after the issue of notice u/s 153A of the Act. 

In the said case the Tribunal had justified deduction under Section 80IA on the basis of return filed under Section 153A by observing that the time for filing revised return had not expired and, therefore, claim for deduction under Section 80IA if not made earlier could have been made in the revised return. Once it could have been claimed in revised return under Section 139 (1), the same could have also been claimed under Section 153 (A).

The Hon’ble High Court observed that as contended by the Revenue, if the return filed under Section 153 (A) is not a revised return but an original return, even then deduction under Section 80IA, if otherwise admissible, always could have been claimed. Therefore, in both way, deduction under Section 80IA , if otherwise admissible, could have been claimed by Assesses. Hence, the Hon’ble High Court affirmed the view taken by Tribunal.  

On the question of law that assesses was not ”Developer’ but ”Contractor’, the Hon’ble High Court observed that as held by CIT(A) the CBDT had issued a circular clarifying that  the widening of an existing road in an infrastructure facility by an enterprise which entitles it for deduction u/s 80IA (4)(i).   The company had widened the road from 2 lane to 4 lane in case of agreement with NHAI and that the same time constructed bridges, culverts, drainage, junctions, footpaths, traffic, signals etc which showed that assessee company was a developer and not a mere contractor. Similarly, agreement with UP PWD assessee had increased the road length and widened it, the works consisted of the up gradation of the existing road, including the provision of an asphaltic overlay, GSB and WMM with DBM and BC and the widening of carriageway as shoulders (hard and soft). The work also included the widening of existing culverts and minor bridges alongwith the new construction of culverts and bridges. 

Thus the CIT(A) held that the company was not a mere work contractor but has developed the road from existing 2 lane to 4 lane and while doing so the appellant company had also made substantial investment by himself and also executed the development works and carried out civil-works on his own by using his own material and expertise. No material consumed in the construction of roads and bridges was provided by the NHAI and UP PWD. This fact was duly referred to in the copies of agreement as well as in the payment advices, where in no amount was deducted by the agencies on account of material. The maintenance of the existing facility during the period of development also was of the appellant company and so also was the risk during the period to maintain the infrastructure and after the completion of development of road and its handing over to the Government, the risk period of the appellant company was of 12 months for maintenance of the road. Further the appellant company had not subcontracted his work. In the case Statutory Report in form 10CCB under Rule 18 BBB as prescribed by the CBDT was also filed along with the return. Wherein the Auditors had duly certified that the assessee was a developer of road and had maintained separate books of accounts wherein all details have been recorded and nothing adverse was noted by the Assessing Officer.

The Hon’ble High Court observed that the Tribunal had confirmed findings of fact recorded by CIT (A) holding that assesses was a ”Developer’ and not a ”Contractor’ and the adcerse findings recorded by AO had been reversed by CIT (A). Considering that a finding of fact was concurrently recorded by CIT (A) and Tribunal, which had not been shown perverse on contrary to record, the High Court had dismissed the appeal

Aggrieved by the judgment of the Hon’ble High Court the Revenue filed a Special Leave Petition (SLP) before the Hon’ble Supreme Court which was however dismissed.

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