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The Revenue filed appeals against the order of CIT(A)-19, Mumbai, dated 21/02/2012, for the A.Y. 2008-09 and 2009-10, contesting the disallowance of deduction claimed under Section 80-IA of the IT Act.
At the outset, the learned AR referred to the Tribunal's order in the group concern M/s. Patel Pratibha JV for the A.Y. 2010-11, where the assessee’s claim of deduction under Section 80-IA(4) was allowed. The Tribunal had carefully reviewed the orders of the authorities below and found that the assessee’s claim for deduction under Section 80-IA was allowed by the CIT(A) based on specific observations.
The CIT(A) observed that after the introduction of the Explanation to sub-section (13) of Section 80-IA, with retrospective effect from 01.04.2000, only a work-contractor is barred from claiming deduction under this section. It was undisputed that the appellant was not a sub-contractor and had used its own resources to execute the work. Therefore, the appellant, solely engaged in the development and transfer of infrastructure facilities, was entitled to claim deduction under Section 80-IA.
The CIT(A) relied on various decisions, including M/s Patel Engineering, where it was held that the condition in clause (c) of Section 80-IA(4) applies to enterprises maintaining and operating infrastructure facilities, not merely developing them. Thus, the assessee, being only a developer, was entitled to the deduction.
The CIT(A) also referred to the decision in ACIT v Bharat Udyog Limited, where it was noted that the interpretation of revenue authorities was absurd. The provision intended to give deduction to enterprises engaged in developing, maintaining, or operating infrastructure facilities. The assessee, being a developer, was eligible for deduction even if it did not operate the facility.
Further, the CIT(A) cited the decision of the Pune Bench in M/s Laxmi Civil Engineering Pvt. Ltd v Addl. CIT, which held that a developer who does not operate and maintain infrastructure facilities cannot be expected to fulfill the condition at sub-clause (c) of Section 80-IA(4), as it would be an absurdity.
The CIT(A) also referred to the Bombay High Court decision in CIT v M/s ABG Heavy Engg Ltd, which emphasized that the deduction is available to an enterprise that develops, operates, and maintains infrastructure facilities, and the requirement for operation and maintenance should be harmoniously construed.
The CIT(A) concluded that the assessee’s business was not in the nature of a works contract but involved significant investments and execution of development work. The assessee arranged various equipment, materials, and resources for the projects, which were not provided by the Airport Authority of India. Thus, the assessee was eligible for the deduction under Section 80-IA.
The Tribunal also reviewed the orders of the group concerns of the assessee, where the claim of deduction under Section 80-IA(4) was allowed. The Tribunal noted that the assessee entered into an agreement with the Local Authority, developed the infrastructure facilities using its own resources, and was paid for the development work. The TDS deducted under Section 194-C did not bar the assessee from claiming the deduction, as the assessee was a developer of infrastructural facilities.
The Tribunal observed that the concept of BOT/BOOT was not a requirement for claiming the deduction under Section 80-IA, as the provision was amended to include enterprises developing, operating, or maintaining infrastructure facilities. The Tribunal found that the facts and circumstances in the present case were similar to those discussed in the group concern’s order and upheld the CIT(A)’s findings, allowing the assessee’s claim for deduction under Section 80-IA(4).
In conclusion, the Tribunal dismissed both appeals of the Revenue, affirming the CIT(A)’s order that the assessee was entitled to claim deduction under Section 80-IA for the A.Y. 2008-09 and 2009-10.
Order pronounced in the open court on 31/03/2017.
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