TaxTMI 
TaxTMI 
2017 (10) TMI 1314
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..... ii. On the facts and circumstances of the case the ld. CIT(A) ought to have upheld the order of the Assessing Officer. 3. The relevant facts as culled out from the materials on record are as under:- Appellant company has filed its return of income on 26/09/2009 after claiming deduction u/s.80IA(iv) of the Act. The AO held that the company has entered into an agreement with GSRDC, which is neither any Central/State Government nor statutory body and denied the deduction claimed. But main Ground before the impugned authority was in respect of disallowance of deduction claimed u/s.80IA(4)(i)(a) of the Act at Rs. 3,76,68,739/-. The claim of deduction u/s.80IA(4) was denied by the AO after holding that the appellant company has not entered in to agreement with the State Government/Statutory body and has entered into an agreement with GSRDC only. 3.2 Thereafter, a notice was given to the assessee and assessee has made detailed submissions which are reproduced as under: "i. The 1st ground of appeal is in respect of disallowance of Rs. 3,76,68,739/- deduction claimed u/s.80IA(4) of the I.T. Act. The facts are as under:- 1. The appellant is a....
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....vernment shall hold 100% of paid up capital aggregating Rs. 5 Crores. This capital may be increased subsequently for which the relevant permissions will be sought by the Corporation. iii. The proposed objects of the Corporation will be restricted to works undertaken, under the jurisdiction of the Roads and Building Department and also as directed by the Government of Gujarat. iv. The Registered Office of the Corporation will be in Gandhinagar and its address will be as under:- Nirman Bhavan, Sector No. 10A, . Gandhinagar-382010 v. The constitution of the Board of Directors of the Corporation will be as under:- a) Hon. Minister (Roads & Buildings): Ex-officio Chairman Chief Secretary : Ex. Office Vice Chairman b) Four experts appointed by The Government: Directors c) Secretary, Road & Building Department: Director d) Special Secretary & Chief Engineer (CP): Director e) An Officer from the Roads & building department in the category of Chief engineer and additional secretary: Managing Director A copy of the Resolution is submitted herewith. 2. Government of Gujarat, R & O.B.....
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....ot be disallowed. (c) In the assessment order the ld. A.O. has observed in Para 6&7as under:- "6. The reply of the assessee is considered and found not acceptable in view of provision of section 80IA of the Act. As discussed above it has been expressly provided under section 80IA(4) of the Act that the profits and gains of an enterprise carrying on business of developing, operating or maintaining any infrastructure facility shall be allowed as deduction, provided that it should have entered Into an agreement for the same with the Central Government or State Government, a local authority or any other statutory body. 7. In the instant case it is seen that the assessee had not entered into any assignment as such with central/state government local authority or a statutory body. The assessee had entered into a concession agreement with GSRDC, a corporation incorporated under the Companies Act. As such the assessee could not fulfill important conditions as provided u/s.80IA(4) that the agreement for developing, operating or maintaining any infrastructure facility should have been entered with central/state government, local authority or a statutory body. Therefore, ....
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....g held on 24-10-2000. A copy of letter dated, 01-01-2001 addressed by Government of Gujarat to GSRDC along with its minutes is compiled in the paper book. A copy of the Concession Agreement upto definitions is also compiled in the paper book. The definition of Government Agency is given on page No. 9 as under:- "Government Agency means, GSRDC, R & BD (GOG) or any State Government or Government Department, Commission, Board, Body, Bureau, Agency, Authority, Instrumentality, or other Judicial or Administrative Body, Central, State or local having jurisdiction over the concessional, the project assets or any portion thereof or the performance of all or any of the services or obligations of the concessional under or pursuant to this agreement." Further "GSRDC" is defined as under:- "GSRDC means Gujarat State Road Development Corporation Ltd." 7. The appellant under the concessional agreement dated 30-10-2011 completed the work of ROB, near Chhayapuri, near GSFC Junction, Vadodara (construction of Chhayapuri ROB in lieu of existing underpass No.6 across Mumbai-Delhi Railway line near GSFC Junction on BOT basis by the end of February, 2003 and therefor....
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....involved in the agreements for the project. This is clear from: (a) The approval for the project i.e., four lining of Chhayapuri ROB, near GSFC Junction, Vadodara was sought from the Gujarat Industrial Development Board by the GSRDC. (b) Government of Gujarat, Roads & Building Department, Gandhinagar by its Resolution dated. 01/08/2002 allotted the land for construction of ROB on BOT basis. (c) The Concession Agreement was entered into by GSRDS with the appellant which was approved by the Government of Gujarat in its meeting held on 24/10/2000. (d) Government of Gujarat, R&B Department issued an order No. Toll/102001-(29)-part-1 Pvt. Cell dated. 07/03/2003 permitting the appellant to collect Toll fee as indicated therein. In view of the above, it is held that the appellant has developed, operated and was to transfer the project in agreement with the constitutional body i.e. an agency as defined under section 2(e) of the Gujarat Infrastructure Development Act, 1999 under the Gujarat Government Act and also in direct and explicit agreement and approval of Gujarat government which has given land and allowed to collect toll fee. In view o....
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.... body answers the test of State if comes within the definition of Article (viii) Whether the legal person is a corporation created by a statute, as distinguished from under a statue is not an important criterion although it may be an indicium. 18. As per the Hon'ble Supreme Court, if the aforesaid tests are fulfilled by an entity, it would qualify to be understood as an instrumentality of State. As per the Hon'ble Supreme Court, the aforesaid tests provide an aid to determine whether a body is a State within meaning of Article 12 of the Constitution of India, Emphasizing the import of the aforesaid tests, the Hon'ble Supreme Court noted that true test is not how the legal entity in Question was created but why it was created. The Hon'ble Supreme Court also observed that all the tests may not be applicable or satisfied in a given case, but one will have to arrive at a conclusion based on the cumulative effect of the said tests. 19. The claim of the assessee before us is that SSNNL complies with all the tests laid down by the Hon'ble Supreme Court in the case of Som Prakash Rekhi (supra) First test is whether the share capital of the corporation....
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....es as well as the asset of Sardar Sarovar project were transferred enbloc by the Government of Gujarat to SSNNL. The next test is as to whether the chemistry of the concerned body answers the test of a State. In our view, the said test is also fulfilled in the face of the fact that the incorporation of SSNNL, its ownership, management, control as well as the powers have a unmistakable stamp of a Government. 20. In view of the aforesaid discussion, in our view, the tests laid down by the Hon'ble Supreme Court in the case of Som Prakash Rekhi (supra) are fulfilled in the present case and it would be appropriate to deduce that SSNNL is an instrumentality or an agency of the state. Therefore, SSNNL is to be understood as an entity akin to those specified in sub-clause (b) of clause (i) to sub-section (4) of section 80IA of the Act. Therefore, the objection of the Revenue that SSNNL was a company incorporated under the provisions of the Companies Act, 1956 and is therefore outside the purview of section 80IA(4)(i) of the Act is unfounded. In-fact, the Hon'ble Supreme Court in the case of Som Prakash Rekhi (supra) specifically observed that merely because an entity is create....
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....he purview of the entities specified in sub-clause (b) of clause (i) of section 80IA(4) of the Act. In this matter, the learned counsel for the assessee has vehemently reiterated the position of the assessee taken before the lower authorities to the effect that the contract with SSNNL fulfills the condition prescribed in section 80IA(4)(i)(b) of the Act. The arguments of the assessee were two-fold. Firstly, it has referred to the judgements of the Hon'ble Supreme Court in the case of (i) Som Prakash Rekhi vs. Union of India & AIR 1981 SC 212; and, (ii) Pradeep Kumar Biswas & Ors. vs. Indian Institute of Chemical [Appeal (Civil No.992 of 2002, dated 06/04/2002], In this judgements, it is canvassed that an entity, like SSNNL, is liable to be considered as an instrumentality or an agency of the Government, and thus, it qualifies to an entity specified in section 80IA(4)(i) of the Act. Secondly, it is sought to be made out that having regard to the background and peculiar features of SSNNL, the said concern is executing Governmental functions and is not engaged in any commercial activities. All kinds of infrastructure facilities referred in section 80IA(4)(i) of the Act, like Rai....