TaxTMI 
TaxTMI 
2018 (5) TMI 244
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....ed assessee's claim on the plea that assessee is a contractor and not a developer. 5. By the impugned order, CIT(A) confirmed the action of the AO against which assessee is in further appeal before us. 6. We have considered rival contentions and carefully gone through the orders of the authorities below. We had also deliberated on the judicial pronouncements referred by lower authorities in their respective orders as well as cited by learned AR and DR during the course of hearing before us. From the record, we found that assessee is in the business of construction / development of infrastructure facilities. It undertakes project of roads from State and Central Government and also provided necessary and crucial components of the railway system. The assessee being a developer within the meaning of section 80!A(4) of the Act, claimed deduction u/s.80IA(4). However, the AO disallowed the claim by stating that the assessee is not a developer but a contractor. For doing so he has stated the reasons and also relied on a citation of Chennai ITAT decision in the case of the ACIT vs M/s. Indwel Lianings (P) Ltd. 7. On perusal of the aforesaid decision, we observe that the facts of t....
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....d operating, As per the amended provisions merely on entering into an agreement with Government for development of infrastructure facility would be eligible for deduction under section 80-1 A(4). 9. From the above, it is crystal dear that the enterprise engaged in developing or operating and maintaining or developing, operating and maintaining such infrastructure facility are entitled to a tax holiday. Earlier to the above substitution there was no word 'or' between the word developing, (ii) maintaining and operating or (Hi) developing, maintaining and operating. Merely on entering into an agreement with Government for either development or O & M or developing O & M would be eligible for deduction under section 80-IA of the Act In this connection we observe that in the decision of Jurisdictional Hon'ble Mumbai IT AT in the case of ACIT vs. Bharat Udyog Limited (118 ITD 336) wherein before amendment of Section 801A(4) it was held that to avail benefit assesses was to carry out all these activities. 10. The amendment in section 80-IA was brought by the Finance Act, 1995, with effect from 1-4-1996. By virtue of this amendment, the deduction under section 80-IA was pr....
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....ure facility is not paid by the Government, the entire cost of development would be a loss in the hands of the developer as he is not operating the infrastructure facility. When the Legislature has provided that the income of the developer of the infrastructure project would be eligible for deduction, it presupposes that there can be income to developer, i.e., to the person who is carrying on the activity of only developing infrastructure facility. Obvious, as it is, a developer would have income only if he is paid for development of infrastructural facility, for the simple reason that he is not having the right/authorization to operate the infrastructure facility and to collect toll there from and has no other source of recoupment of his cost of development. Therefore, the business activity of the nature of build and transfer also falls within eligible construction activity, that is, activity eligible for deduction under section 80-IA inasmuch as mere 'development' as such and un-associated/un-accompanied with 'operate' and 'maintenance' also falls within such business activity and is eligible for deduction under section 80-IA. Therefore, merely because the....
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....tion and maintenance shall be on behalf of the transferee enterprise itself the "works contract" has not been defined in the context of section 8o-IA and, hence, in the absence of assignment of any : definition by the statute, its meaning should be understood in the common parlance. Accordingly a developer is a person who develops the facility and such person may or may not be a contractor. On the other hand, a contractor is stated to be a legal term whose rights and duties vis-a-vis contract are determined by way of legal document called the contract. For example if a contract to construct a highway from Mumbai to Delhi is given to a person he is contractor as well as developer. As against that a person who has been given a contract for painting or beautification is merely a contractor but not a developer. Accordingly while developing a project, a developer has to make technological inputs, entrepreneurial inputs, etc. Besides, there is financial involvement in terms of deployment of man and machine as well as bank guarantees. The developer undertakes the risk and reward of the project and is accountable to the authorities for the development work carried out by them. Therefore th....
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....to do work or provides services or goods to another. The New Shorter Oxford Dictionary defines the word "contractor" as : person who enters into a contract or agreement. Now chiefly spec, a person or firm that undertakes work by contract, esp. for building to specified plans". In the light of the meaning ascribed to these words by the dictionaries, it may be observed that the developer is a person who designs and creates new products. He is the one who conceives the project. He may execute the entire project himself or assign some parts of it to others. On the contrary, the contractor is the one who is assigned a particular job to be accomplished on the behalf of the developer. His duty is to translate such design into reality. There may, in certain circumstances, be overlapping in the work of developer and contractor, but the line of demarcation between the two is thick and unbreachable. When the person acting as developer, who designs the project, also executes the construction work, he works in the capacity of contractor too. But when he assigns the job of construction to someone else, he remains the developer simpliciter, whereas the person to whom the job of construction is as....
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.... 80-IA would show a progressive liberalisation of the legislative scheme, in the interests of aiding the growth of infrastructure. The administrative circulars issued by the Central Board of Direct Taxes in implementation of section 80-IA similarly liberalised the scheme, consistent with the Act." 20. The expression "development" has not been artificially defined for the purposes of section 80-IA of the Act and must, therefore, receive its ordinary and natural meaning. An assessee does not have to develop the entire port in order to qualify for a deduction under section 80-IA. Parliament did not legislate a condition impossible of compliance, A port is defined to be an infrastructure facility and the circular of the Board clarified that a structure for loading, unloading, storage, etc., at a port would qualify for deduction under section 80 IA. Parliament amended the provision of section 80 IA of the Act so as to clarify that in order to avail of a deduction,the assessee (i) develop, (ii) operate and maintain or (ii) develop, operate and maintain the facility. The condition as regards development, operation and maintenance of an infrastructure facility was contemporaneously cons....
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.... facility should be after April 1,1995. 21. The assessee, in terms of the policy of the Government of India to encourage private sector participation in the development of infrastructure, bid for and was awarded a contract for. In pursuance of the contract, the assessee deployed rail mounted quay side cranes, rail mounted gantry cranes and rubber tired gantry cranes at the container handling terminal of the JNPT. JNPT had a dedicated container handling terminal. According to the assessee, the only activities of the terminal consisted of loading, unloading and storage of containers. Under contracts dated September 2, 1994 and October 16, 1995, JNPT accepted the bid submitted by the assessee for supply, installation, testing, commissioning and maintenance of the cranes. By the terms of the agreement, JNPT agreed to pay lease charges in a total sum of Rs. 215.50 crores over a period of ten years. The contract envisaged two options. Under the first option, operation and maintenance was to be carried out by the assessee. Under the second option only maintenance was to be carried out by the assessee. Under the contracts, JNPT reserved the right to exercise the option to request the as....
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....u/s. 40(a)(ia) of the Act. 27. Rival contentions have been heard and record perused. From the record, we find that during the year under consideration, the assessee has made various payments to contractors and transporters. By invoking provisions of section 40(a)(ia) of the Act, AO disallowed the same. By impugned order, the learned CIT(A) confirmed the order of the Assessing Officer, against which, the assessee is in further appeal before us. 28. We have considered the rival contentions and carefully gone through the orders of the authorities below and found from record that during the year, the assessee has made payment of Rs. 51,04,857/- to sub-contractors and Rs. 11,10,363/- to the transporters. We find that the assessee has duly deducted tax at source during the year relevant to previous year and also deposited the amount of TDS in Government Treasury before last date of filing the return of income u/s. 139(1) of the Act. Since, TDS deducted on payments have already been deposited before filing the return u/s.139(1) of the Act, the same cannot be disallowed by invoking provisions of section 40(a)(ia) of the Act. From the record, we find that TDS up to February, 2008 have....