TaxTMI 
TaxTMI 
2017 (12) TMI 659
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....hering to the explanation to Section 80IA (introduced by the Finance Act, 2007). 4) The depart craves leave to add, alter or amend an ground of grounds before or at the time of hearing." Shri Saurabh Kumar, Departmental Representative appeared on behalf of Revenue and Shri Ravi Tulsiyan, Authorized Representative appeared on behalf of assessee. 2. The inter-related issue raised by Revenue in this appeal is that Ld. CIT(A) erred in allowing deduction u/s. 80IA of the Act for Rs.82,56,250/-. 3. Briefly stated facts are that assessee is an AOP which is representing by its Members namely, M/s Simplex Infrastructure Ltd. and M/s Somdatt Builders Pvt. Ltd.. The assessee engaged in the business of contractual work and claiming deduction u/s. 80IA of the Act. The assessee was awarded a contract for the construction of road by Public Works Department, National Highway Project in the state of Assam. The assessee in respect of said project claimed deduction u/s 80IA(4) of the Act for Rs.82,86,250/- only. However, the deduction claimed by the assessee was denied by Assessing Officer on the ground that it is merely acting as a works contractor and therefore it is not eligible for....
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.... (x) Defect Liability period: Page 50, para 30.1 (xi) Equipment: The assessee was also required to provide Equipments required for the execution of the \Narks. 3.26 The above conditions clearly exhibit that it is not a case where the assessee was provided with the establishment and materials required to execute the work, which happens in case of works contract where the contractor gets the material and other requisites from the client and all he has to do is employ labour. The assessee in the given case was to procure raw material, make arrangements for power, water, plant machinery etc., and conduct all the other activities needed for construction. 3.27Hence in the light of the above discussion, the assessee is entitled to deduction u/s 80-lA of the Act. Accordingly the Ld. CIT(A) after considering the submissions of assessee deleted the addition made by AO by observing as under:- "4. Conclusion: From the perusal of the terms and conditions in the agreement, it is clear that the assessee was not a works contractor and was a developer and hence Explanation to section 80-I(13) does not apply to the assessee. It is seen that a simi....
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....act that the legislature mentioned the words (i) "developing" or (ii) "operating and maintaining" or (iii) "developing, operating and maintaining" clearly indicates that any enterprise which carried on any of these three activities would become eligible for deduction. Therefore, there is no ambiguity in the income-Tax Act. We find that where an assessee incurred expenditure for purchase of materials himself and executes the development work i.e., carries out the civil construction work, he will be eligible for tax benefit under section 80 IA of the Act. In contrast to this, a assessee, who enters into a contract with another person including Government or an undertaking or enterprise referred to in Section 80 IA of the Act, for executing works contract, will not be eligible for the tax benefit under section 80 IA of the Act. We find that the word "owned" in sub-clause (a) of clause (1) of sub section (4) of Section 801A of the Act refer to the enterprise. By reading of the section, it is clears that the enterprises carrying on development of infrastructure development should be owned by the company and not that the infrastructure facility should be owned by a company. The provision....
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....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 drainage system; may be construction of a project; provision of way for the cattle and bullock carts in the village; provision for traffic without any hindrance, the assessee's duty is to develop infrastructure whether it involves construction of a particular item as agreed to in the agreement or not. The agreement is not for a specific work, it is for development of facility as a whole. The assessee is not entrusted with any specific work to be done by the assessee. The material required is to be brought in by the assessee by sticking to the quality and quantity irrespective of the cost of such material. The Government does not provide any material to the assessee. It provides the works in packages and not as a works contract. The assessee utilizes its funds, its expertise, its employees and takes the responsibility of developing the infrastructure facility. The losses suffered either by the Govt. or the people in the process of such development would be that of the assessee. The assessee hands over the dev....
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....where an assessee is doing contract work according to the requirement and specification of the customer and the same has been done by using materials purchased from third parties other than the customers and held that though the assessee is doing a works contract the same would not fall within the meaning of the word 'works contract' for the purpose of the Act due to the exclusion provided in the meaning of 'work' in section 194C of the Act. Relevant findings are reproduced herein below for better understanding:- 11. We have considered the rival submissions. Admittedly, a perusal of the agreement entered into between the assessee and the Govt of Andhra Pradesh Irrigation & CAD Department shows that the assessee has taken EPC/Turnkey contract of the flood flow canal project from SRSP. The name of the contract has been extracted earlier in this order. The scope of the work is also extracted above. Admittedly, the assessee has taken a turnkey contract from the Irrigation Department, Govt. of Andhra Pradesh. The turnkey contract is in respect of the irrigation project. Irrigation project is an infrastructure facility within the scope of Explanation to section 80IA(4) of the Ac....
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.... 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. Works contract cannot be in relation to the development of a new project. One of the arguments raised by the learned Sr.DR that the intention of the substitution of the Explanation after sub clause (13) of section 80IA was to deny, the benefit of deduction u/s. 80IA(4) in respect of works contract, but to provide the deduction to such undertakings, which is doing the business of building, operating and Transfer (BOT) and building owning, operating and transfer BOOT as also PPP contracts does not hold water in so far as an irrigation project can never function under BOT or BOOT or PPP . In the circumstances, we are of the view that the assessee's claim is not hit by the substituted Explanation as provided after sub clause(13) of....