Commissioner Of Income Tax v. M/S Chettinadu Lignite

IN THE HIGH COURT OF JUDICATURE AT MADRAS

DATED: 2.4.2019

CORAM

THE HON'BLE DR.JUSTICE VINEET KOTHARI AND THE HON'BLE MR.JUSTICE C.V.KARTHIKEYAN Tax Case Appeal Nos.318 of 2013 and 1138 of 2015 Commissioner of Income Tax, Coimbatore.

...Appellant in both Appeals Vs.

M/s.Chettinad Lignite Transport Services Private Limited, 43, Race Course Road, Coimbatore - 641 018.

PAN: AABCC7357G

...Respondent in both appeals

Tax Case Appeals filed under Section 260A of the Income Tax Act, 1961 against the orders of the Income Tax Appellate Tribunal, Madras 'B' Bench, Chennai, dated 21.11.2012 made in ITA No.1767/Mds/2012 and 22.5.2015 made in ITA No.313/Mds/2015, against the order dated 20.07.2012 made in I.T.A.No.207/11-12 by the Commissioner of Income Tax (Appeals)-I, Coimbatore and the order dated 14.11.2014, made in I.T.A.No.386/13-14 by the Commissioner of Income Tax (Appeals)-I, Coimbatore respectively against the Assessment order dated 28.12.2011 by the Additional Commissioner of Income Tax Range-I, Coimbatore and assessment order dated 29.11.2013 by the Assistant Commissioner of Income Tax, Company Circle-i(i) Coimbatore against PAN No.AABCC7357G for the Assessment Year 2009-2010 and 2011-12 respectively. For Appellant : M/s.T.R.Senthilkumar Sr.

Standing Counsel For Respondent : Mr.R.Vijayaraghavan for M/s.Subbaraya Aiyar Padmanabhan COMMON JUDGMENT (Delivered by DR.VINEET KOTHARI,J.)

questions of law arising from the orders of the learned Tribunal dated 21.11.2012 and 22.5.2015 respectively, whereby the learned Tribunal allowed the appeals for the Assessment Years 2010-2011 and 2011-2012 and held that the Assessee is entitled to the benefit of deduction under Section 80IA of the Act:- "

i) Whether under the facts and circumstances of the case, the Income Tax Appellate Tribunal was right in holding that the assessee is eligible for deduction under Section 80 IA, when the assessee is only a subcontractor? ii) Whether under the facts and circumstances of the case, the Income Tax Appellate Tribunal was right in holding that the assessee is eligible for deduction under Section 80IA, without examining the effect of explanation inserted at the end of the Section by Finance Act 2007 with retrospective effect from 1.4.2000 which was also substituted by Finance (No.2) Act, 2009 with retrospective effect from 1.4.2000?

iii) Whether under the facts and circumstances of the case, the Income Tax Appellate Tribunal was right in holding that the assessee is eligible for deduction under Section 80IA, though the assessee did not fulfil the condition laid down in Section 80 IA

(4) of having a contract with any Government/authority referred to in that section?

iv) Whether under the facts and circumstances of the case, the Income Tax Appellate Tribunal was right in holding that the assessee is eligible for deduction under Section 80IA, the assessee did not satisfy proviso to Section 80IA(4) inasmuch as there is no transfer of infrastructure facility?"

2. Learned counsels appearing for the parties brought to our notice that the controversy involved in the present Appeals is covered by the Judgment of this court dated 6.3.2019 in the case of the same Assessee in T.C.A.Nos.741, 1266 of 2009 and 162 of 2015 wherein this court has has held as under:- " 8. From a reading of the aforesaid Provisos to Section 80IA(4), it is clear that the Legislature intended to extend the said benefit under Section 80IA of the Act to an enterprise involved in (i) developing or; (ii) operating and maintaining or; (iii) developing, operating and maintaining any infrastructure facility. The term "infrastructure

facility" has been defined in the Explanation and the same includes a toll road, a bridge or a rail system, a highway project, etc. These are, obviously, big infrastructure facilities for which the enterprise in question should enter into a contract with the Central Government or State Government or Local Authority.

However, the Proviso intends to extend the benefit of the said deduction under Section 80IA of the Act even to a transferee or a contractor who is approved and recognised by the concerned authority and undertakes the work of the said development of infrastructure facility or only operating or maintaining the same. The Proviso to sub-section

(4) stipulates that subject to the fulfillment of conditions, the transferee will be entitled to the said benefit, as if the transfer in question had not taken place. It has been found by the Assessing Authority himself, in the present case, that the present Assessee M/s.Chettinad Lignite Transport Services Private Limited under an Agreement dated 16.04.2002, captioned as Lignite Transport System with M/s.ST-CMS Electric Company Private Limited, had undertaken the work of developing the said railway sidings and was operating and maintaining the same. The only ground on which, the Assessing Authority denied the said benefit was that the Assessee himself did not enter into any such contract with the Railways or with the Central Government.

9. The learned Tribunal, however, in our opinion, rightly applied the Proviso to Section 80IA(4) of the Act and held that since the Assessee was recognised as contractor for these railway sidings, which undoubtedly fell under the definition of "infrastructure facility", it was entitled to the said benefit under Section 80IA of the Act. The grounds on which the Assessing Authority denied the said benefit to the Asessee ignoring the effect of Provisos to Section 80IA(4), therefore, could not be sustained. The learned Tribunal, in our opinion, has rightly held that the Proviso does not require that there should be a direct agreement between the transferee enterprise and the specified authority for availing the benefit under Section 80IA of the Act. There is no dispute before us that the Assessee was duly recognised as transferee or assignee of the principal contractor M/s.ST-CMS Company Private Limited and was duly so recognised by the Railways

to operate and maintain the said railway sidings at Vadalur and Uthangalmangalam Railway Stations. The findings of fact with regard to the said position recorded by the learned Tribunal are, therefore, unassailable and that clearly attracted the first Proviso to Section 80IA(4) of the Act.

10. The learned counsel for the Revenue relied upon a decision of this Court in the case of M/s.Covanta Samalpatti Operating Private Limited, Chennai-20 v. The Assistant Commissioner of Income Tax, Company Circle I (3), Chennai-34, reported in (2018) 93 Taxmann 38. In the said case, the claim of the Assessee company, which was engaged in power generation, for deduction under Section 80IA of the Act was denied by the Revenue on the ground that the Assessee Undertaking had not been set up for generation and distribution of power and that the Assessee was only a contractor for the maintenance work of power plant, which was owned by Samalpatti Power Corporation Private Limited (SPCL). On these facts, the Court held that the Assessee was not entitled to deduction under Section 80IA of the Act.

We do not find any parity of facts of the said case with the facts available before us. The power generating companies are entitled to deduction under Section 80IA of the Act in different sub clauses viz., under Section 80IA(4) (iv) of the Act. Where there is no such Proviso, as is available in clause (i) of Section 80IA(4) of the Act, which deals with deduction to enterprise involved in developing, operating and maintaining the infrastructure facilities.

Obviously, if the Assessee is getting only fees for the maintenance of certain power generating plant, as was the case before the Co-ordinate Bench of this Court in Covanta case (supra), he may not be entitled to such deduction, but the fact situation before us is entirely different and, therefore, we do not find any support from the said case cited by the learned counsel for the Revenue.

11. We are, therefore, of the considered opinion that there is no merit in these appeals filed by the Revenue and the questions of law framed above deserve to be answered in favour of the Asessee and against the Revenue. We hereby do so. The appeals preferred by the Revenue deserve to be dismissed and accordingly, the same are dismissed. No costs."

3. The present Appeals deserve to be disposed of in the same terms. Accordingly, they are dismissed. No order as to costs.

Sd/- Assistant Registrar(CS VI) //True Copy// Sub Assistant Registrar ssk.

To

1. The Income Tax Appellate Tribunal, Madras "B" Bench, Chennai.

2. The Commissioner of Income Tax(Appeals)-I, Coimbatore.

3. The Assistant Commissioner of Income-tax, Company Circle-1(I), Coimbatore.

4. The Additional Commissioner of Income Tax, Range-I, Coimbatore.

Copy To: The Section Officer, V.R.Section, High Court, Madras.

+1 cc to M/s.T.R.Senthil Kumar, Advocate, Sr.No. 32362 +1 cc to M/s.Subbaraya Aiyar padmanabhan, Sr.No.32369 T.C.(A) Nos.318/2013 & 1138/2015 GJ-II(CO) CSL/28.05.2019