DCIT Vs Patil Construction And Infrastructure Limited (ITAT Mumbai)
80-IA Claim Can’t Be Allowed Blindly Year After Year: ITAT Mumbai Remands Patil Construction’s Deduction Issue for Fresh Project-wise Verification
The Mumbai ITAT “C” Bench, comprising Shri Sandeep Gosain (JM) & Shri Girish Agrawal (AM), allowed the Revenue’s appeals for AYs 2017-18 & 2018-19 for statistical purposes in the case of Patil Construction and Infrastructure Ltd., and restored the issue of deduction u/s 80-IA to the file of the AO for fresh adjudication.
The Assessee, engaged in civil construction and infrastructure projects across multiple States, had claimed substantial deductions u/s 80-IA, which were disallowed by the AO on the ground that the Assessee was only a contractor and not a developer of new infrastructure facilities, relying inter alia on CBDT Circular No. 4/2010 and the Explanation to section 80-IA(13). The NFAC-CIT(A) allowed the claim substantially, mainly by following earlier orders of the Income-tax Settlement Commission and appellate relief granted in group concerns, without detailed project-wise verification.
The Tribunal noted that identical issues in the Assessee’s own case for AYs 2013-14 to 2015-16 had already been examined by the ITAT Pune, which had set aside the matter to the AO with specific directions. The Pune Bench had held that while deduction u/s 80-IA may be allowable for projects already examined and accepted by the Settlement Commission, new projects undertaken in later years cannot automatically qualify and must be tested independently to determine whether the Assessee acted as a developer or merely as a works contractor.
Following the Pune Bench decision, the Mumbai ITAT held that the CIT(A) erred in granting blanket relief without examining the nature, terms and conditions of each project, especially when the Assessee itself had suo motu withdrawn 80-IA claims in respect of certain projects and when Revenue’s challenge to the Settlement Commission’s order was still pending before the High Court.
Accordingly, the Tribunal restored the matter to the AO with directions to:
