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Case Law Details

Case Name : Assistant Commissioner of Income-tax (CC)-45 Vs Pratibha Industries Ltd. (ITAT Mumbai)
Appeal Number : IT Appeal Nos. 2197 to 2199, 2200 to 2202 (MUM.) of 2008
Date of Judgement/Order : 19/12/2012
Related Assessment Year : 2000-01 to 2002-03, 2003-04 to 2004-05, 2005-06

Section 80-IA(4 talks about any enterprise. When we trace the heading of the section, it reads, “Deductions in respect of profits and gains from industrial undertakings or enterprises engaged in infrastructure development, etc.”. This heading itself clarifies that if an industrial undertaking is in the business of infrastructure development, that industrial undertaking qualifies to claim the deduction under section 80IA.

Sub-sections (1) to (3) to section 80IA, through operation of law is available to industrial undertaking, but there is a slight departure in sub-section (4) of section 80IA, which is the impugned section before us. It has to be noticed that it is available to any enterprise, which means, it can be made available to an assessee, which itself may not even be an industrial undertaking, which in literal meaning, envisages, that even an enterprise, who secures an infrastructure development and gets it developed through its vendors, even then, the deduction shall be available to it (though Proviso to clause (iii), may allow the deduction to be transferred to another undertaking). Looking from the legislative point only, we find that the assessee is in a much better foundation, because, not only it secured the development project from the Government agency, but it itself was developing the same. The case of the assessee is similar to the case of GVPR Engineers Ltd. (supra), wherein who can be called as a contractor in development projects, has been explained, as reproduced in earlier paras. We also found the distinction has been drawn by the legislature itself, because in the impugned section, the words have been used “any enterprise”, but when we see section 80IAB, the legislature uses the words, “…………….an assessee, being a developer, ….”. Therefore, tracing the difference, within the legislation itself, proves the fact, that the legislature is inclined to allow the deduction to an enterprise, who is in the business of infrastructure development, irrespective of itself being a developer.

We find that, the AO accepts that the assessee is an infrastructure developer. But we look into the main objection of the AO that being a developer by itself is not enough to avail the deduction, but the assessee should have maintained, operated and handed it back to the government. We must observe here that the AO erred in interpreting the relevant clause (i), because after each qualification, the legislature has used the word “or”, which does not join the qualifications but separates one qualification from the other. Besides this, the AO erred once again to not to read sub clause (b), which reads as, “it has entered into an agreement….”. Here, “it” would mean, “any enterprise”, as per clause (i)  to section 80IA(4).

Section 153A assessment is mandatory even if no incriminating material is found.

Three possible circumstances emerge on the date of initiation of search u/s 132(1): (a) proceedings are pending; (b) proceedings are not pending but some incriminating material is found in the course of search, indicating undisclosed income and/or assets and (c) proceedings are not pending and no incriminating material has been found. Circumstance (a) is answered by the Act itself, that is, since the proceedings are still pending, all those pending proceedings are abated and the AO gets a free hand to make the assessment. Circumstance (b) has been answered in Anil Bhatia to hold that while there is no question of any abatement since no proceedings are pending, the AO is entitled to reopen the assessment (without having to comply with the strict conditions of s. 147, 148 and 151) and bring the undisclosed income to tax. Also, in All Cargo Global Logistics Ltd 137 ITD 287 (Mum)(SB) it was held that in the case of a non-abated assessment, an assessment u/s 153A has to be made on the basis of incriminating material. Circumstance (c) has been kept open and left unanswered. Circumstance (c) has to be answered to say that even where there is/are no pending proceedings and no incriminating material has to be found, the AO is still required to pass an order u/s 153A though the assessed income will have to be the same as the originally assessed income as there was no incriminating material. Accordingly, the assessee’s argument that when there is no incriminating material or assets, then there is no jurisdiction to proceed u/s 153A is not acceptable. S. 153A contains a non-obstante clause and is triggered automatically whenever a search is undertaken. The fact that no incriminating material was found has no bearing on the applicability of s. 153A;

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June 2024