Assessee's foot over bridges and road signage not infrastructure for tax deduction

The Tribunal held that the assessee's construction of foot over bridges and installation of road signage did not qualify as "infrastructure facility" under section 80IA(4) of the Income Tax Act. The Tribunal found that while these additions enhanced road usability, they were not integral to road construction. Consequently, the assessee was deemed ineligible for deduction under section 80IA(4), and the Revenue's appeal was allowed, setting aside the Commissioner of Income Tax (Appeals) order.

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Issues Involved:

1. Whether the erection of foot over bridges and installation of road signage can be construed as "infrastructure facility" within the meaning of Explanation to section 80IA(4) of the Income Tax Act, 1961.

Issue-wise Detailed Analysis:

1. Definition of Infrastructure Facility under Section 80IA(4):

The core issue in the appeal is whether the construction of foot over bridges and installation of road signage by the assessee qualifies as "infrastructure facility" under section 80IA(4) of the Income Tax Act, 1961. The assessee argued that both foot over bridges and road signage fall under the definition of infrastructure facility as they are integral parts of roads and bridges. The Commissioner of Income Tax (Appeals) accepted this contention, stating that road signage is an integral part of the road and that the term "bridge" in section 80IA(4) does not differentiate between types of bridges, including foot over bridges.

2. Revenue's Argument and Tribunal's Previous Decision:

The Revenue, represented by Shri Rajesh Damor, contended that a similar issue was decided by the Tribunal in the case of the assessee's sister concern, Rajdeep Publicity Pvt. Ltd. vs. Dy. CIT/ACIT, where the Tribunal ruled in favor of the Revenue. The Tribunal in that case held that the erection of road signage and foot over bridges does not amount to the development of infrastructure facilities as defined in section 80IA(4). The Tribunal emphasized that road signage and foot over bridges, while making the use of roads more convenient, do not constitute an integral part of the road itself.

3. Assessee's Submission:

The assessee, represented by Shri Ajit Athawde, argued that the term "developing" used in section 80IA(4) has a broader connotation than "constructing" and includes necessary components of infrastructure facilities. The assessee highlighted that road signage is a mandatory part of roads as per technical specifications by the Ministry of Surface Transport and that foot over bridges are included in the term "bridge" as per CBDT Circular No. 10 dated 24-01-2005. The assessee also argued that the legislative intent behind section 80IA(4) was to provide incentives for developing infrastructure facilities, not just constructing new ones.

4. Tribunal's Analysis and Conclusion:

The Tribunal, after considering the submissions and reviewing the previous decision in the case of Rajdeep Publicity Pvt. Ltd., held that the activities carried out by the assessee do not fall within the definition of "infrastructure facility" under section 80IA(4). The Tribunal reiterated that the addition of road signage and foot over bridges does not equate to the development of infrastructure facilities as envisaged by the statute. The Tribunal emphasized that the road signage and foot over bridges, although enhancing the usability of roads, are not integral to the construction of the road itself.

5. Final Judgment:

The Tribunal concluded that the assessee is not eligible to claim deduction under section 80IA(4) for the activities of erecting foot over bridges and installing road signage. Consequently, the appeal of the Revenue was allowed, and the order of the Commissioner of Income Tax (Appeals) was set aside.

Order Pronouncement:

The order was pronounced on Wednesday, the 14th day of October, 2015.

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