TaxTMI 
TaxTMI 
2019 (6) TMI 921
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....eals for AYs 2005-06, 2006-07, 2008-09 & 2009-10 are similar and therefore, we proceed to take up the facts and circumstances in ITA No.807/Kol/2018 as lead case. 4. First we shall take up ITA No.807/Kol/2018. ITA No.807/KOL/2018 (ASSESSMENT YEAR-2005-06) 5. The facts in brief relating to the issue on hand emanating from the record are that the assessee is a company formed by the State of West Bengal and the Government of West Bengal owns the entire share capital. The Government of West Bengal vide its order dated 14.09.2019 had appointed West Bengal Housing Infrastructure Development Corporation Ltd. in short "WBHIDCO" as the planning authority under the West Bengal Town & Country (Planning & Development) Act, 1979 in respect of the planning area which was notified vide notification dated 27.08.1999. As per the above referred notification the area under Rajarhat Police Station situated in the District North 24 Parganas is the planning area. The Ld.AR submits that the WBHIDCO has been engaged in developing, operating and maintenance of new infrastructure activities like development of roads, drainage, construction of roads and housing for economically weaker sections (i....
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....inate Bench of Kolkata Tribunal, the assessee filed written submissions dated 14.03.2017 and filed supporting documents regarding its claim u/s 80IA of the Act before the AO which is reproduced herein below for ready-reference:- "Hearing opportunity was given to the assessee. Accordingly, Mr. Srijit Chakraborty, FCA and Mr. Sanjay Bhattacharya, FCA authorized representatives appeared in response and submitted written submission dated 14.03.2017 with the enclosures. In its enclosure the assessee submitted the following as supporting documents regarding Its claim of deduction u/s 80IA: 1) GOVERNMENT OF WEST BENGAL, PEPARTMENT OF HOUSING, NOTIFICATION dated 19.04.1999 which is approval for formation of a Govt. Company under the nomenclature of West Bengal Housing Infrastructure Development Corporation Limited 2) GOVERNMENT OF WEST BENGAL. DEPARTMENT OF HOUSING, NOTIFICATION dated 26.08.1999 - This is a notification wherein the area included under the assessee company on 01.09.1999. 3) GOVERNMENT OF WEST BENGAL, DEPARTMENT OF HOUSING, NOTIFICATION dated 27.08.1999 - 23 - This is a notification where the Governor declared the area to be a Planning Are....
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....so explained that the land shall be used by the assessee for the purpose of development of New Town amongst other allotment of plots to individual/cooperative/West Bengal Housing Board/Joint companies and other entrepreneurs etc. for residential/business/commercial/other purposes as well as overall infrastructural development relating thereto. 11. The AO further, opined the claim of the assessee and intentions of Government through its notification are in contrast. The main activities of the assessee is to take over the lands from the Land & Land Reforms Department and to sell the land and housing after development of the land including road, drainage, electricity etc. The primary object of the assessee is to use the land for commercial purposes. The assessee extends infrastructure facility to upgrade the area fit for dwelling purpose which attracts customers. The AO further held that the assessee is getting higher price on development of area by selling plots of land and flats. The relevant portion of the finding of AO is reproduced herein below:- "Even a small promoter who builds 7-8 flats in a standalone building has to incur some expenditure for improving its adjoin....
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.... 4.7. "The A.O. in his assessment order had clearly held that the appellant was not entitled to deduction under section 801A (4) and held "But from the above details of P&L Account it is clearly seen that, basically the assessee is engaged in the activities of sale of land and flats in the relevant period and all its receipt are from the sale of land and from other income. The assessee has no income from the activities of infrastructure development as claimed by the assessee. The assessee therefore had no income from the eligible business to claim deduction u/s 80IA. Though the infrastructural facilities involved a large part of it's expenses there is no revenue collected by the assessee from the operation of infrastructure facilities. Once there is no income or revenue from infrastructural facilities there can't be any profit or gain from the eligible infrastructure business as defined in section 801A(4)."The findings of the A.O. was not controverted by the AIR of the appellant who however argued that the infrastructure constructed by the appellant enhanced the value of the land and therefore was eligible to Section 801A (4) deductions. Even if a liberal view i....
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....uctions claimed u/s 80lA also. The appellant had not earned any income from developing, operating and maintaining or developing, operating and maintaining any infrastructure facility. The main source of income as discussed above was income from sale of land, sale of flats and other income. The development of infrastructure by the appellant was an ancillary activity, which enhanced the cost of the land but no income was directly derived from these infrastructure activities. 4.9 On perusal of the balance sheet it also emerges that most of the works for development of infrastructure was given to the Government Department like West Bengal PWD, West Bengal Development Corporation, Hooghly River Bridge Commissioner and various Municipalities and Panchayats. The Legislature had introduced the section to encourage to private participation in infrastructure projects. This can be gathered from the Memorandum Explaining the Provisions in the Finance Bill, 2007, reported in [2007] 2008 CTR (St) 198: [2007] 289 ITR (St) 292 at p. 312, which reads as under: "Sec. 80-lA, inter alia, provides for a ten year tax benefit to an enterprise or an undertaking engaged in develo....
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...."infrastructural facilities" as mentioned in explanation to section 80IA(4)(i) of the Act. He submits that the word 'infrastructure' is not defined in the Income Tax Act and referred to various dictionary meanings the word 'infrastructure'. He argued that infrastructure is needed for operation of a society or enterprise and the same serve a country, city or other areas including service and facilities necessary for its economy to function. The development of infrastructure and the country, city or other areas which intends to serve to go in hand. The underlying framework of a system especially public service as highways, schools, bridges, sewers and water system needed to support commerce as well as economy and residential development. The assessee was established for development of infrastructure in the areas which is still going on. The development of such infrastructure requires funds. The assessee is arranging funds on the sale of land in the area in which it is mandated to develop infrastructure. The assessee is meeting its funds and finance requirements for development of infrastructure from the sale of land in the area. A liberal view has been taken because the object of the....
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....ct 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 gains derived from such business for ten consecutive assessment years.] (2) The deduction specified in sub-section (1) may, at the option of the assessee, be claimed by him for any ten consecutive assessment years out of fifteen years beginning from the year in which the undertaking or the enterprise develops and begins to operate any infrastructure facility or starts providing telecommunication service or develops an industrial park [or develops [***] a special economic zone referred to in clause (iii) of sub-section (4)] or generates power or commences transmission or distribution of power 30a [or undertakes substantial renovation and modernisation of the existing transmission or distribution lines] : 31 [Provided that where the assessee develops or operates and maintains or develops, operates and maintains any infrastructure facility referred to in clause (a) or clause (b) or clause (c) of the Explanation to clause (i) of subsection (4), the provisions of this sub-section shall have effect as if f....
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....ter supply project, water treatment system, irrigation project, sanitation and sewerage system or solid waste management system; (d) a port^38 , airport, inland waterway or inland port;] [( ii) any undertaking which has started or starts providing telecommunication services, whether basic or cellular, including radio paging, domestic satellite service, network of trunking, broadband network and internet services on or after the 1st day of April, 1995, but on or before the 31st day of March, ^40 [ ^40a [2004]].] Explanation.-For the purposes of this clause, "domestic satellite" means a satellite owned and operated by an Indian company for providing telecommunication service; (iii ) any undertaking which develops, develops and operates or maintains and operates an industrial park ^41[or special economic zone] notified ^42 by the Central Government in accordance with the scheme framed ^42 and notified ^43 by that Government for the period beginning on the 1st day of April, 1997 and ending on the 31st day of March, ^44[2006] : ^45 [Provided that in a case where an undertaking develops an industrial park on or after the 1st day of April, 1999....
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.... income should be derived by any undertaking or an enterprise from such business as referred in sub-section (4) of section 80IA of the Act. 20. In the present case as discussed by the AO in its order passed u/s 254/143(3) of the Act, it is noted that the assessee derived most of the income from sales of flats, sale of land and other income to the extent of Rs. 45,10,36,135/- and further it is noted from his observations that the assessee engaged in the activities of sale of land and flats in the relevant period and all receipts from sale of land and from other income. Admittedly this is not the relevant qualification to claim deduction u/s 80IA of the Act, more particularly this is not the business referred in sub-section (4) of section 80IA of the Act. We note that the assessee has no income from the activities of infrastructure development as contemplated in sub-section (4) which is pre-requisite qualification u/s 80IA of the Act. Therefore, in our opinion, the submission vide dated 14.03.2017 that the assessee being involved in development, operation and maintenance of infrastructural facilities and its income was earned almost entirely from such business activities i.e. deve....