TaxTMI 
TaxTMI 
TaxTMI 
2013 (11) TMI 1768
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.... Ahmedabad has also erred in not considering the contention of the appellant that in respect of interest income, the same has to be net off against the interest payment and in that case, there is net debit of interest of ₹ 2,19,764/- 3. The appellant prays to allow deduction u/s 80IA(4) of the Income Tax Act, 1961 as claimed by the appellant." 2. For A.Y. 2002-03, Revenue has raised the grounds as under: "The ld. CIT(A) erred in law and on the facts of the case in holding that the assessee is eligible for deduction u/s. 80IA(4)." 2.1 Since the grounds of both the sides are connected with each other, therefore, hereby decided by this common order. 3. Facts in brief as emerged from the corresponding assessment order passed u/s.143(3) r.w.s. 147 for AYs 2002-03 dated 30.11.2006 were that the assessee-company is engaged in the business of construction. For AY 2002-03 assessee has claimed a deduction u/s.80IA of ₹ 39,94,336/-. In support assessee has furnished form 10CCB along with the return of income. The basis of deduction u/s.80IA, as per assessee, is that an enterprise is required to carry on the business of (i) developing or (ii) operating and maintaining or (ii....
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....s a developer because for providing infrastructure facilities the assessee has not used its own funds. The assessee has raised bills for the work carried out and received the payment from those authorities. As per AO, the assessee had neither operating nor maintaining those infrastructure facilities. The assessee had only executed the "work contract" and there was no operation or maintenance on the part of the assessee. As per AO, section 80IA provides deduction from the profits and gains of an Enterprise carrying on the business of "developing or operating" and "maintaining or developing", operating and maintaining any infrastructure facility. In his opinion, the assessee has not fulfilled all the conditions specified u/s.80IA(4) of IT Act. By placing reliance on the following decisions, the claim of deduction was disallowed. i) Commissioner of income-tax vs. N.C.Budharaja & Company 204 ITR 412 (SC). ii) CIT Vs. Magaska International (India) Pvt.Ltd. 254 ITR 283 (Del). iii) CIT vs. Geotech Foundation & Constructions 241 ITR 90. iv) Badshah Construction Co. (Pvt.) Ltd. vs. CIT 223 ITR 512 (MP). 3.4 The matter was carried before the first appellate authority. It was reitera....
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....ssee. The assessee has merely acted as a civil contractor because the running bills were raised and in turn the Government authorities have made the payment. It was purely an agreement of a contractor, hence it was not allowable. Ld. DR has placed reliance on B.T.Patil & Sons Belgaum Construction Pvt.Ltd. vs. Asst.CIT 126 TTJ 577 (T.M.)[Mum.]. 4. On the other hand, from the side of the Assessee, ld.AR Mr. M.G. Patel argued that the infrastructure facilities are provided by the assessee, therefore entitled for claim of deduction u/s.80IA(4). As per ld.AR the matter is covered by CIT vs. ABG Heavy Industries Ltd. 322 ITR 323 (Bom.). The ld.AR has also placed reliance on following orders of the Tribunal:- Sl.No(s) In the case of….. In ITA No(s)….. 1. Laxmi Civil Engg.P.Ltd. ITAT "A" Bench Pune in ITA Nos.766/PN/09, 254/PN/08, 431/PN/07 & 435/PN/07 for AYs 2006-07, 2005-06, 2003-04 & 2004-05 order dated 8.6.2011 2. M/s.Om Metals Infraprojects Ltd. vs. The CIT ITAT "A" Bench Jaipur in ITA Nos.722 & 732/JP/2008 for AYs 2003-04 & 2004-05 order dated 31/12/2008 3. Om Metals Infraprojects Ltd. vs. AddlCIT ITAT "A" Bench Jaipur in ITA no.911/JP/2010 for A.Y. 2007-0....
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.... section 80IA should not be in the nature of "works contract" awarded by any State or Central Government. In this connection, the main allegation of the AO was that the nature of work and the nature of clauses of agreement have indicated that the work assigned to this assessee was nothing but "works contract". Nevertheless, this controversy can be settled by carefully perusing the CBDT Circular No.717 dated 14.08.1995 reported as 215 ITR (Statute) 70, 91, duly considered by Hon'ble Bombay High Court in the case of ABG Heavy Industries Ltd. 322 ITR 323 (Bom.), for ready reference relevant paragraphs reproduced below:- "Five-year tax holiday for infrastructure development: 34.1… 34.2. Industrial modernization requires a massive expansion of, and qualitative improvement in infrastructure. Our country is very deficient in infrastructure such as expressways, highways, airports, ports and rapid urban rail transport systems. Additional resources are needed to fulfil the requirements of the country within a reasonable time frame. In many countries the BOT (build operate transfer) or the BOOT (build own operate transfer) concepts have been utilized for developing new infrastruc....
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....ng" on stand alone basis thus also qualify for 80IA(4) deduction. At this stage, we may like to describe the term "developer". A developer is a person who undertakes the responsibility to develop a project. A developer is therefore not a civil contractor simplicitor. If we apply the commercial aspect, then a developer has to execute both managerial as well as financial responsibility. The role of a developer, according to us, is larger than that of a contractor. When a person is acting as a developer, then he is under obligation to design the project, it is an another aspect that such design has to be approved by the owner of the project, i.e. the Government in the present case. He has not only to execute the construction work in the capacity of a contractor but also he is assigned with the duty to develop, maintain and operate such project. To ascertain whether a civil construction work is assigned on development basis or contract basis can only be decided on the basis of the terms and conditions of the agreement. Only on the basis of the terms and conditions it can be ascertained about the nature of the contract assigned that whether it is a "work contract" or a "development cont....
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....reason that the period of deduction cannot commence unless the enterprise develops and beings to operate the infrastructure facility. 6.6. There is a distinction between "developer" and a "contractor". In a case of civil contractor, its duty is only of civil construction. After the civil construction is over, he is paid for the job of civil construction as per the bills raised. At that point of time, his contract is over and the agreement ends. After the completion and at the end of the agreement, a civil contractor handed over the site to the owner. A civil contractor constructs as per the specifications given. A contractor do not involve much of his own money but raises bill of his civil work of his civil construction work time-to-time to collect the expenditure incurred. A contractor has no domain over the land or the site. His access to the site is restricted and limited from commercial angle. On the basis of the project he cannot raise the funds from the private financial institutions. Therefore, "a contractor" is not responsible for the development of the project but his responsibility is limited to the job-assigned to him. His duties and responsibilities can only be examine....
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....he enterprise. Due to these reasons, we deem it proper to restore this issue back to the file of the AO to decide de novo in the light of the discussions/directions made hereinabove. Resultantly, Ground No.1 for AY 2002-03 raised by the Revenue are hereby allowed for statistical purposes. 7. As far as the appeal of the assessee is concerned, all the three grounds revolved around the issue of claim of deduction u/s.80IA of IT Act. The question is whether the interest income and the miscellaneous receipts have nexus or attributable to the project of the assessee are yet to be decided in the light of the directions given hereinabove. The assessee, is therefore, required to establish that the interest income and the miscellaneous receipts are derived by such undertaking engaged in infrastructure development. Due to this reason, all the grounds raised by the assessee are also restored back to the file of the AO for readjudication as per law. C. ITA No.950/Ahd/2010 (Revenue's Appeal) 8. This is an appeal filed by the Revenue against the order of learned CIT(A), dated 25.11.2009 and the only issue is that the learned CIT(A) has erred in deleting the penalty levied u/s. 271(1)(c) of ....