While hearing a writ petition filed by M/s Kotarki Constructions Pvt Ltd, the Karnataka High Court quashed a re-assessment order passed under section 148 of the Income-tax Act by holding that the same cannot be made for the purpose of denying the deduction which was already allowed in the original assessment.
The assessee, in the present case engaged in the business of construction of roads, buildings, dams, national highways etc. and the assessment for the relevant year was completed by allowing deduction under section 80-IA of the Income Tax Act 1961.
Thereafter, a re-assessment notice under section 148 of the Act was issued by the Assessing Officer (AO) by finding that some of the works contracts were only for improvement and re-lying of the roads which do not fall within the definition of ‘developing, maintaining and operating any infrastructure facility’, therefore, deduction under section 80-IA would not be allowable to the assessee.
Before the authority, the council for the assessee advocate Shankar.A and Annamalai.S submitted the audit report and works contract agreement. As per the audit report, the assessee was engaged in the business of development, operation and maintenance of an infrastructure facility namely developing of roads and he argued that the assessee is eligible to get the deduction as per the said section and challenging the re-assessment order also.
Allowing the petition, Justice Vineeth Kothari observed that “there was no material on record before the assessing authority which indicating any failure on the part of the assessee to truly and fully disclose the relevant material before the original assessing authority while passing the original assessment order under section 143(3) of the Act and the assessing authority rightly allowed the deduction under the aforesaid section to the assessee and there was no jurisdiction to the respondent assessing authority to invoke 147/148 of the act for re-assessment in the present case.”
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