TaxTMI 
TaxTMI 
2011 (7) TMI 302
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.... case and the submissions made by the appellant, in particular on the scope of the retrospective amendment to section 80-IA and on the subject of investments made and risks assumed by the appellant while developing the eligible infrastructure projects; c. The ld AO be directed to accept the claim of the appellant for deduction u/s.80IA as retrospectively amended. 3. Briefly stated, the relevant material facts are like this. The assessee is engaged in the business of manufacture of Hume pipes and execution of civil projects. During the relevant previous year, the assessee had business income earned from execution of projects relevant to development of infrastructure facility such as water supply and sewerage projects - composite, and part of composite, projects. The claim of the assessee was that composite water supply projects mean undertaking water supply projects from source to distribution system, which includes manufacturing, supplying, laying, joining of pipeline and includes construction of pump house, delivery, commissioning of turbine pump sets, installation of booster mains, branch mains and elevator reservoirs etc. With this explanation of activity, it....
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....ction shall apply to a person who executes a work contract, entered into with the undertaking or enterprise, as the case may be." 10. This amendment is of recent vintage. In the 'MEMORANDUM EXPLAINING THE PROVISIONS IN THE FINANCE BILL 2007', its purpose and ambit has been discussed as under:- 'Clarification regarding developer with reference to infrastructure facility, industrial park etc. for the purposes of Section 80IA interalia, provides for a ten year tax benefit to an enterprise or an undertaking engaged in development of infrastructure facilities, industrial parks and special economic zones. The tax benefit was introduced for the reason that industrial modernization requires a massive expansion of and qualitative improvement in infrastructure (viz. expressways, highways, airports, ports and rapid urban rail transport systems) which was lacking in our country. The purpose of the tax benefit has all along been for encouraging private sector participation by way of investment in development of the infrastructure sector and not for the persons who merely execute the civil construction work or any other works contract. Accordin....
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....the intentions of the parties are found out. The fact that in the execution of works contract some materials are used and the property in the goods so used, passes to the other party, the contractor undertaking the work will not necessarily be deemed on that account to sell the materials. Primary difference between a contract of work or service and a contract of sale is that in the former, there is the person performing or rendering service, no property in the thing produced as a whole, notwithstanding that a part or even the whole of the material used by him may have been his property. When the finished product supplied to a particular customer is not commercial commodity in the sense that it cannot be sold in the market to any other person (other than who commissioned the contractor), the transaction is only a works contract. It was held by the SC, in the case of State of Gujarat v. Variety Body Builders AIR 1976 SC 2108 that where the main object of work undertaken by the payee of the price is not the transfer of a chattel qua chattel, the contract is one for labour and work. 12. This has been reaffirmed and reiterated by the Supreme Court, in a recent judgment pronoun....
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....ies." 13. The contracts executed by the appellant, pursuant to which it has claimed a deduction u/s.80IA(4) must therefore, be measured from the above metrics laid down by the Supreme Court in the matter of works contract. I have perused the copies of the agreements with various undertakings which were executed by the appellant for executing the impugned contracts, which are claimed to fall within the domain of section 80IA(4). It is clear from them that the underlying statues of the appellant in each of them is that of a contractor, who has been engaged in a works contract. 14. It is clear from the above that the appellant had executed a works contract in respect of each of the projects for which it has claimed a deduction u/s.80IA(4) of the Act. the appellant has also been unable to establish as to how did it make an investment in the project, part from not being able to prove that it had not executed a works contract as is evident above. In view of the foregoing, I find no merit in the claim of the appellant for a deduction u/s.80IA of the Act and thus reject this ground of appeal." 4. The assessee is not satisfied by stand so taken by the CIT(A) an....
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....ubmits that, as held by larger bench in BT Patil's case (supra), even without the benefit 2009 amendment, assessee is not eligible for deduction u/s. 80IA. In our considered view, however, this aspect of the matter is wholly academic at this stage and it does not really call for any adjudication by us. Once it is an admitted position that in view of the law as it is stand now, the assessee is not entitled to deduction u/s. 80IA, it is wholly academic as to what will be the status of the claim if Explanation inserted below Section 80IA(13) is held to be applicable only with prospective effect and not retrospective effect as has been expressly done by the legislature. We need not address ourselves to such hypothetical arguments. As regards the contentions that certain observations made in BT Patil's case (supra) do not hold good law any longer because of the law laid down by Hon'ble Bombay High Court in ABG Heavy Industries Ltd (supra), it is only elementary that once Their Lordships of High Courts expressed view of any subject contrary views of the courts below ceases to hold good in law but then in the present case, it is not really necessary to address ourselves to thi....
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....nterfere in the matter. 13. Ground No.2 is thus dismissed. 14. In Ground No.3, the assessee has raised the following grievance: "On the facts and in the circumstances of the case and in law, the ld CIT(A) erred in confirming the view of the ld AO that expenditure of Rs. 2,68,475 was capital in nature rejecting the contention of the appellant that it was revenue in nature." 15. During the course of assessment proceedings, the Assessing Officer noted that the assessee has incurred an expenditure of Rs. 64.96 lakhs under the head "repairs" and out of the repairs expenses so claimed, the assessee has spent the amount towards cost of ceramic tiles, civil work, furniture furnished and electric installations which are not deductible as current repairs. The expenditure so incurred, which, according to the Assessing officer, amounted to Rs. 2,98,305 was disallowed though depreciation @10% was granted on the same. The Assessing Officer relied upon the judgment of Hon'ble Delhi High court in the case of Modi Spinning and Weaving Mills co. Ltd vs. CIT(1993) 200 ITR 544 and Hon'ble Supreme Court's judgment in the case of Balimal NavalKishor vs....
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....4, the assessee has raised the following grievance: "On the facts and in the circumstances of the case and in law, the ld CIT(A) erred in confirming disallowance of appellant's claim for bad debts an amount of Rs. 1,66,833/-." 21. During the course of assessment proceedings, the Assessing Officer noticed that the assessee has claimed a deduction of Rs. 1,66,833 as bad debts, which, in fact, represents write off of certain debts which have not been taken into account income of the earlier assessment years. The Assessing Officer was of the view that as Section 36(2)(i) clearly states that in order to eligible for deduction as bad debt, the debt should form part of the income of one of the earlier previous years. Aggrieved, the assessee carried the matter in appeal before the CIT(A) but without any success. 22. The assessee is not satisfied and is in further appeal before us. 23. We have noted that the main contention of learned counsel is that in view of Hon'ble Supreme Court's judgment in the case of Vijay Bank vs CIT, (5 SCC 416), the assessee's claim of bad debt is to be allowed even though the debt has never formed part of i....