The Hyderabad Bench of Income Tax Appellate Tribunal (ITAT) held that the agreement was not entered between the assessee and the Government / Statutory Government and there was a violation laid down by the statute and therefore, the assessee is not entitled to claim deduction
The assessee company M/s. HES Infra Private Limited is in the business of undertaking contracts for Civil Works and infrastructure projects. The return of income was filed admitting a total income of Rs.9,08,12,280 arrived after claiming deduction for Rs.19,31,63,096 under Section 80IA(4) of Income Tax Act, 1961.
While finalizing the assessment order, the Assessing Officer (AO) partially disallowed the deduction, to the extent of Rs.2,47,52,506 on the premise that the assessee is not eligible for deduction under Section 80IA(4) of the Income Tax Act, on the profits derived from the projects/works executed as a of constituent of AOP/Joint Ventures.
Aggrieved with the order of Assessing Officer, assessee filed an appeal before the Commissioner of Income Tax (Appeals) [CIT(A)] who allowed the appeal of assessee.
Revenue filed an appeal before the Tribunal aggrieved with the order of CIT (A).
The Departmental Representative (DR) Ms. TH Vijaya Lakshmi, submitted that as per Section 80IA(4) of the Income Tax Act, the assessee is not entitled to claim deduction as contract has not been awarded to the assessee by the central government as mentioned by the AO in the assessment order.
It was submitted by the DR that as the contract has not been awarded by the central government to the assessee therefore one of the conditions for claiming deduction as provided under Section 80IA(4) of the Income Tax Act has not been fulfilled by assessee, therefore, the assessee is not entitled to claim the said deduction.
The Authorised representative of the assessee (AR) A. Srinivas, for the assessee submitted that the Tribunal in the case of M/s.Transtroy (India) Ltd. Vs. ITO has decided the issue in favour of the assessee and further submitted that the co-ordinate Bench of the Tribunal in the case of DCIT Vs. M/s. KNR Constructions Limited , relying upon M/s. Transtroy (India) Ltd case had also granted similar relief to the assessee.
The Bench noted that Section 80IA(4) of the Income Tax Act is abundantly clear that for the purpose of claiming deduction, it is essential for the assessee to prove that the agreement has been entered by the assessee with the government / statutory body.
It was observed that in the present case, the agreement was not entered between the assessee with the government body and the agreement was entered into by the Joint Venture company namely, HESMEIL-ZVS, whereas the deduction was claimed by assessee which happens to be one of its constituent member.
The Bench comprising of Rama Kanta Panda, Vice President and Laliet Kumar, Judicial Member held that the statue is unambiguous and clear which only provides that the enterprise in whose favour the work has been allotted or agreement has been entered shall alone be entitled to claim deduction under Section 80IA(4) of the Income Tax Act.
It is clear that in case a person seeking the deduction under the provisions of the Act, then onus is on the assessee to prove strictly that assessee fulfills all the parameters laid down by the statute for claiming the deduction. In the present case, admittedly, the agreement was not entered between the assessee and the Government / Statutory Government and there was a violation laid down by the statute and therefore, the assessee is not entitled to claim deduction.
The Bench stated that the co-ordinate Bench of the Tribunal has not had the benefit of applying the decision of the Supreme Court in case of Commissioner of Customs (Import) Vs. M/s. Dilip Kumar and Company, which was later on followed in many cases. Therefore, the decision of the coordinate Bench of the Tribunal in the case of DCIT Vs. M/s. KNR Constructions Limited is not binding on this Bench.
Hence, the appeal of the Revenue was allowed.
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