2008 (6) TMI 281

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.... rival submissions in the light of the material placed before us and the precedents relied upon. The assessee is engaged in undertaking contract works for in situ lining for water supply project and anti-corrosive lining. For the relevant assessment year, the assessee filed return admitting a total income of Rs. 64,81,590. It was processed under Section 143(1) of the Act. Subsequently, it was noticed that the claim for deduction under Section 80IA was not maintainable, as the assessee was only doing contract work of in situ cement lining for water supply project carried out by Gujarat Water Supply and Sewerage Board. It was not developing by itself any infrastructure facility. Ex consequent] notice under Section 148 was issued and the deduc....

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....ing or enterprise must derive its income from carrying on the business of developing any infrastructure facility. 7. In the facts of the present case, we find that the assessee undertook work on contract basis. The assessee took contract work of in situ cement lining for water supply project of the Gujarat Water Supply and Sewerage Board (Gujarat Government undertaking). 8. Vide Finance Act, 2007, an Explanation was inserted with retrospective effect from 1st April, 2000 after Sub-section (13) of Section 80IA, which reads as under: For removal of doubts, it is hereby declared that nothing contained in this section shall apply to a person who executes a works contract entered into with the undertaking or enterprise, as the case may be. ....

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.... enterprise referred to in the said section. This, in a case where a person makes the investment and himself executes the development work, i.e., carries out the civil construction work, he will be eligible for tax benefit under Section 80IA. In contrast to this, a person who enters into a contract with another person (i.e., undertaking or enterprise referred to in Section 80IA) for executing works contract, will not be eligible for tax benefit under Section 80IA. This amendment will take retrospective effect from 1st April, 2000 and will accordingly apply in relation to the asst. yr. 2000-2001 and subsequent years. 10. It is made abundantly clear that the prescription of Section 80IA shall not apply to a person who executes work contrac....