Tribunal upholds developer's deduction under Section 80IA, rejects revenue's accounting challenge.

The tribunal dismissed the revenue's appeal, affirming the assessee's eligibility for deduction under Section 80IA as a "developer." The tribunal found the assessee's accounting method appropriate for claiming the deduction, rejecting the revenue's argument for maintaining separate project-wise books of account. The appeal of the revenue was dismissed entirely.

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Issues Involved:
1. Rejection of depreciation on building.
2. Rejection of deduction under Section 80IA of the Income-tax Act.
3. Determination of whether the assessee is a "developer" or a "contractor."
4. Requirement to maintain separate books of account for Section 80IA claim.

Detailed Analysis:

1. Rejection of Depreciation on Building:
The judgment does not provide specific details on this issue, focusing primarily on the Section 80IA deduction. Therefore, no detailed analysis is available for the rejection of depreciation on the building.

2. Rejection of Deduction under Section 80IA:
The Assessing Officer (AO) rejected the deduction under Section 80IA on three grounds:
- The assessee did not "begin to operate" the infrastructure facility during the FY 2008-09.
- The assessee was considered a "contractor" rather than a "developer."
- The assessee did not maintain separate books of account for the 80IA claim project.

The CIT(A) allowed the appeal based on previous tribunal decisions in favor of the assessee for similar findings in earlier assessment years (AYs).

3. Determination of Whether the Assessee is a "Developer" or a "Contractor":
The tribunal analyzed whether the assessee is a "developer" or a "contractor" based on the nature of the work undertaken. The tribunal concluded that:
- The assessee incurred expenditure for materials and executed the development work, making it eligible for tax benefits under Section 80IA.
- The term "owned" refers to the enterprise carrying on the development of infrastructure, not the infrastructure facility itself.
- The agreement with the government for developing infrastructure involved significant responsibilities and risks, including maintenance and liability periods, which classify the assessee as a "developer" rather than a mere "contractor."
- The tribunal cited various case laws and circulars, including the CBDT Circular dated 18-05-2010, which supports the eligibility of a "developer" for deduction under Section 80IA.

4. Requirement to Maintain Separate Books of Account for Section 80IA Claim:
The AO argued that the assessee should maintain separate books of account for the 80IA claim project. However, the tribunal found that:
- The assessee maintained books on a contract basis, recognizing revenue from long-term construction contracts using the percentage of completion method as per Accounting Standard (AS) - 7.
- The method adopted by the assessee is appropriate and follows the accounting standards approved by the ICAI.
- The tribunal dismissed the AO's reasoning, stating that it is impractical to present books of account on a project-wise and year-wise basis for numerous ongoing projects.

Conclusion:
The tribunal dismissed the revenue's appeal, concluding that:
- The assessee is eligible for deduction under Section 80IA as a "developer."
- The method of accounting and maintenance of books by the assessee is appropriate for claiming the deduction.
- The appeal of the revenue is dismissed in its entirety.

Pronouncement:
The judgment was pronounced in the open court on 4th December 2015.

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