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TaxTMI 
TaxTMI 
TaxTMI 
2013 (6) TMI 813
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....tion of the learned Commissioner of Income-tax (Appeals) in confirming the disallowance of the claim of deduction u/s. 80IA(4) of the I.T Act. 4. The grounds of appeals raised in both the cases are identical except for the figure of deduction. 5. Common Grounds of both the appeals are as under :- 1. The orders passed by the lower authorities to the extent to which they are against the appellant are arbitrary, erroneous, invalid and bad in law. 2. On the facts and in the circumstances of the case, the learned CIT(A) erred in sustaining the disallowance of the claim of deduction of Rs. 69,53,162/- & Rs. 2,87,52,828/- u/s 80-IA of the Income-tax Act, 1961, on the alleged ground that the appellant was merely a contractor and not a developer. 3. On the facts and in the circumstances of the case, both the lower authorities erred in not appreciating that actually the appellant was engaged in the business of development of infrastructural facility. 4. On the facts and in the circumstances of the case, both the lower authorities erred in rejecting the claim of the appellant towards allowance of deduction u/s 80-IA of the Act on the basis of assessme....
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....rrigation project. Thus, the assessee was entitled to the benefit of deduction u/s. 80IA(4) of the Act. It was the further submission that the issue of whether the assessee is to be held to be a developer or mere works contractor in such agreements have been decided by the co-ordinate bench ITAT, Hyderabad 'B' Bench, Hyderabad in the case of M/s. GVPR Engineers Ltd & Ors in ITA Nos. 347/Hyd/2008 & 17 Others dated 29.02.2012, wherein in paras 26-29, it has been held as under:- 26. We have considered the elaborate submissions made by both the parties and also perused the materials available on record. We have also gone through all the case laws cited by both the parties. We find that the provisions of Section 801A (4) of the Act when introduced afresh by the Finance Act, 1999, the provisions under section 801A (4A) of the Act were deleted from the Act. The deduction available for any enterprise earlier under section 801A (4A) are also made available under Section 801A (4) itself. Further, the very fact that the legislature mentioned the words (i) "developing" or (ii) "operating and maintaining" or (iii) "developing, operating and maintaining" clearly indicates that any enter....
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....ends on the nature of the work undertaken by the assessee. Each of the work undertaken has to be analyzed and a conclusion has to be drawn about the nature of the work undertaken by the assessee. The agreement entered into with the Government or the Government body may be a mere works contract or for development of infrastructure. It is to be seen from the agreements entered into by the assessee with the Government. We find that the Government handed over the possession of the premises of projects to the assessee for the development of infrastructure facility. It is the assessee's responsibility to do all acts till the possession of property is handed over to the Government. The first phase is to take over the existing premises of the projects and thereafter developing the same into infrastructure facility. Secondly, the assessee shall facilitate the people to use the available existing facility even while the process of development is in progress. Any loss to the public caused in the process would be the responsibility of the assessee. The assessee has to develop the infrastructure facility. In the process, all the works are to be executed by the assessee. It may be laying of a dr....
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....dertakings. Such an agreement is a contract and for the purpose of the agreement a person may be called as a contractor as he entered into a contract. But the word "contractor" is used .to denote a person entering into an agreement for undertaking the development of infrastructure facility. Every agreement entered into is a contract. The word "contractor" is used to denote the person who enters into such contract. Even a person who enters into a contract for development of infrastructure facility is a contractor. Therefore, the contractor and the developer cannot be viewed differently. Every contractor may not be a developer but every developer developing infrastructure facility on behalf of the Government is a contractor. 8. It was the submission that the Explanation to section 80IA found after sub-section (13), which has been substituted by the Finance (No.2) Act, 2009 with retrospective effect from 1-4-2000 would not effect the assessee's claim of deduction u/s. 80IA(4) in so far as the assessee was not undertaking works contract, but was doing the development of an irrigation project. For this purpose, the learned Authorised representative for the assessee drew our attention....
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.... 24 months from the date of completion certificate. * Beautification of dam sites and canal structure sites. The scope of the work given above is only indicative and detailed scope has been described separately. Bids not covering the entire scope will be treated as incomplete and hence will he rejected." 9. It was the further submission that as per article 107 of the agreement the assessee was to make its own arrangements for procurements, supply and use of construction materials, which should confirm to the specifications indicated in the tender. It was the submission that as the assessee has undertaken the development of the irrigation project, the assessee was entitled to the benefit of deduction u/s. 80IA(4) as claimed 10. In reply, the learned Sr.DR submitted that the assessee has not undertaken any irrigation project. It was the submission that the contract itself clearly showed that it was works contract. It was the further submission that the assessee having undertaken works contract from the Govt. of Andhra Pradesh, the Explanation to section 80IA, which has been substituted by the Finance (No.2) Act 2009 after 80IA(13) was applicable and t....
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....s, specifications of the department etc. The survey is to be done as per investigation and designing criteria of the Irrigation Department. This is also as per article 11.1 of the agreement. The assessee is to procure the materials independently and those materials are to confirm to the specifications provided. The assessee is also to make its arrangements for storage of the materials. This is as per article 107 of the agreement. Thus, admittedly the work done by the assessee falls in the exclusion provided to the meaning of the work given in the Explanation to section 194C of the Act. Once it falls outside the meaning of term 'work' for the purpose of section 194C, the question that arises is can it be said that the assessee is doing the work contract as provided in the substituted Explanation in section 80IA after sub clause (13)?, The answer would be emphatic no. 12. This is because the assessee is doing the activity of development of an infrastructure facility as provided under section 80IA(4). The project is a Turnkey project and it cannot form nor have a character of a works contract. Works contract would be applicable to the repairs and maintenance of an existing project.....