TaxTMI 
TaxTMI 
2012 (7) TMI 729
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....struction period. There is no fund mobilization by the assessee to complete the project. The assessee is relying on Government fund for construction work, hence, as per the AO, the assessee was only executing a works contract and there was no mobilization of sources of its own. After referring to the Explanation as substituted by the Finance (No. 2) Act, 2009 with retrospective effect from 1.4.2000, the AO held that the assessee has executed only works contract awarded by the State Government and Central Government, hence, no deduction under section 80IA(4) could be allowed to the assessee. 4. By the impugned order, the learned CIT(A) confirmed the disallowance by observing as under :- "In the appellant's case, the various government departments have issued the tenders and the work contract has been awarded to the person who quotes the minimum rates. Similarly, the appellant had filed the tenders for various projects and was awarded the contract in respect of the projects mentioned in detail in the assessment order on which deduction u/s 80IA has been claimed for the year under consideration. The AO has made the disallowance on the ground that the most of the roads built by t....
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....s converting existing single lane road to double lane roads etc. Conversion of existing roads into infrastructure facilities is also considered as 'development of infrastructure facility. Reliance was placed on Circular 4 of 2010 dated 18-05-2010 according to which widening of an existing road by constructing additional lanes as a part of a highway project by an undertaking would be regarded as a new infrastructure facility for the purpose of section 80IA(4)(i) of Act. The most important aspect was that the entire development/construction work has been executed by the assessee. The assessee has not executed only a part of construction work of infrastructure facility. The assessee was also under obligation to maintain these new roads for number of years after development. He further submitted that the assessee contracts with Government Deptt/Agencies cannot be termed as a "work contract simpliciter" These contracts were in the nature of "development" work with attached legal obligation of maintenance. The appellant has utilized substantial financial resources, both fund based and non-fund based (such as bank guarantees , performance guarantees), to execute these projects. Merely bec....
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....escribed as "work contractor". The Explanation relied by the A.O. does not disentitle the appellant from substantive benefit conferred by Section 80IA(4)(i) of the Act. 7. On the other hand, the learned CIT DR, Shri Keshav Saxena, submitted that the assessee was merely a contractor and no infra-structure facilities have been developed by him on his own land. As per the learned CIT DR for claiming deduction u/s 80IA(4) of the Act, the infra-structure project should be owned by the assessee. He further relied on the observations made in the case of B.T. Patil & Sons Belgaum Construction (P.) Ltd. v. Asstt. CIT [2009] 126 TTJ 577/[2010] 35 SOT 171 (Mum.) (LB) wherein it was held that the assessee should be involved in planning and development of infra-structure facilities as a whole. The assessee should carry out the construction work as per the requirements of State Government and cannot deviate even an inch from the plan assigned to it. Our attention was also invited to following observations in the order which read as under :- "Another significant word used here is "owned" which indicates that the infrastructure facility should be owned by a company so as to be entitled to de....
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....laws cited by ld. CIT DR and ld. Authorized Representative in the context of factual matrix of the case. From the record, we found that the assessee has claimed deduction u/s 80IA(4) In respect of various contracts awarded by the Government for development of infrastructure facilities of new roads and widening of existing roads and construction of new lanes i.e. converting existing single lane to double lane roads. Relevant provisions of the law for claim of exemption u/s 80IA(4), which was amended by the Finance Act, 2002 and applicable w.e.f. 1.4.2002 i.e. assessment year 2002-03 reads as under : "Deduction in respect of profits and gains from industrial undertakings or enterprises engaged in infrastructure development, etc. 80-IA. (1) Where the gross total income of an assessee includes any profits and gains derived by an undertaking or an enterprise from any business referred to in sub-section (4) (such business being hereinafter referred to as the eligible business), there shall, in accordance with and subject to the provisions of this section, be allowed in computing the total income of the assessee, a deduction of an amount equal to hundred per cent of the profits and ....
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....lear from the amended provisions of the law that infrastructure facility, after amendment is required to be :- (i) developed or (ii) maintained and operated or (iii) developed, maintained and operated. Whereas as per the earlier law, the infrastructure facility was required to be - (i) developed, (ii) maintained and operated or (iii) developed, maintained and operated Thus, as per the amended law, development of infrastructure facility is sufficient for claim of deduction u/s 80IA(4) w.e.f. assessment year 2002-03. The relevant assessment year under consideration is also assessment year 2002-03 for which amended provisions of law is applicable. 11. Main reason for Assessing Officer's action for denial of the deduction was that the assessee was merely a contractor and not Developer of infrastructure facility as a whole. The Assessing Officer also observed that at some instances, the assessee has only undertaken upgradation including construction of bridge and culvert, improvement and widening of new B. T. etc, which as per Assessing Officer did not amount to development of new infrastructure. In this respect, the ld. Aut....
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....ayment to assessee in respect of infrastructure facility developed by it in terms of agreement so entered with Government. Thus, we do not find any infringement of conditions for claim of deduction u/s 80IA(4) when the Government has made payment to the assessee in respect of the project of infrastructure development undertaken by it in terms of respective agreement entered into with Government. It is pertinent to mention here that for claim of deduction, the infrastructure project should be completely developed by the assessee and not part of it. Even when the assessee undertakes development of only part of infrastructure facility, it shall not be entitled for claim of deduction. In the instant case, it appears that the Assessing Officer has not minutely examined the terms of the agreement executed with Government Department. It is also pertinent to mention here that the proposition advanced by ld. CIT DR with reference to the decision of the Special Bench in the case of B.T. Patil & Sons Belgaum Construction (P.) Ltd. (supra) was with respect to the assessment years 2000-01 and 2001-02, which was before the amendment brought in by the Finance Act 2002,therefore, the assessee's el....