TaxTMI 
TaxTMI 
TaxTMI 
2020 (12) TMI 851
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.... 2) On the facts and circumstances of the case Ld. CIT(A) has erred by rejecting the submission of appellant that as no new material was brought on record by AO before disallowing the claim of deduction under section 80-IA(4) of Act, it tantamounts to change of opinion, further also rejecting the appellant's submission of the principle of consistency as deduction being allowed for last several years consistently by overlooking the principle of natural justice and tax jurisprudence. 3) On the facts and circumstances of the case Ld. CIT(A) has erred by denying the claim of the appellant as a work contract. I 3. Briefly stated, the facts of the case are that the assessee filed its return of income for the AY 2010-11 on 27.09.2010 declaring gross total income of Rs. 8,79,35,190/- and after claiming deduction of Rs. 8,57,95,998/-, the total income was shown at Rs. 21,39,190/-. During the course of assessment proceedings, it is observed by the Assessing Officer (AO) that the main issue involved is whether the assessee is eligible for claiming deduction u/s 80IA(4) of the Act or not. In response to query raised by the AO to explain the above claim, the assessee filed a reply which i....
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....er this contract. The contractor shall complete mechanical sweeping of main roads by 9.00 a.m. every day. The contractor shall also segregate to collect waste into bio-degradable and non bio-degradable waste and hand over the waste collected to another contractor, appointed by GNIDA for further processing. 3) Ahemedabad Municipal Corporation - The Contractor / appellant has to supply and maintain the hydraulic dumper placer units and matching M.S. containers at about 350 locations, in the city and the Municipal corporation will pay on monthly basis to the contractor, on tones / k.mtr. basis, for disposing of waste from cites to the waste storage depots. The contractor has to lift the container when they are about to fill, carry the same by respective hydraulic unit and empty the same at specified treatment or disposal site and again has to put the container back to its original location. The above contract work reveals that the appellant has to only collect / lift the container filled with the waste and upload to the processing / treatment sites. The work of processing / treatment, has been awarded to another contractor, who, in real sense, is entitled for deduction u/s. 80IA....
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....y operation and maintenance of the system, has to be done by another contractor, by creating necessary infrastructure and installing the required plant and machinery. Accordingly, he shall only be entitled for deduction and not the appellant, who is doing only contract work, for collecting, transferring and transporting of solid waste to the final disposal sites. 8) Navi Mumbai Municipal Corporation (residence)- The Contractor /appellant has to do cleaning, collection and transportation of MSW i.e. waste generated in the residential area. The contractor has to do collection of waste from bins/ containers placed in the societies (Apartment and other community centres) by using refuse compactor/skip loaders, including debris / construction material. The contractor has to regularly lift and transport all above waste including garden waste, to the final disposal site, by deploying the necessary vehicles, specially designed for the work. 9) Navi Mumbai Municipal Corporation (MIDC) The Contractor /appellant has to carry out the work of cleaning, collection and transportation of waste from residential areas, debris / construction sites, lifting of waste bins / containers to the fina....
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....affirmed the disallowance of Rs. 8,57,95,998/- made by the AO. III A 5. Before us, the Ld. counsel for the assessee explains that (i) the deduction u/s 80IA(4) is allowable for a consecutive period of 10 assessment years ; accordingly, when there is no change in the facts, if deduction has been allowed in the initial assessment years, the same cannot be withdrawn in the subsequent years without making the disallowance in the initial years; in the present case, deduction has been allowed for all the earlier assessment years and the AO has now sought to disallow the deduction for the last two years, (ii) deduction has been allowed in some of the earlier assessment years by the AO after carrying out complete scrutiny and passing the assessment order u/s 143(3) of the Act ; in the said order, the AO after considering the issue of claim of deduction u/s 80IA of the Act, held that the assessee is eligible for deduction being engaged in the activity of 'Solid Waste Management'; for AY 2003-04, the AO specifically raised the issue as to whether the assessee is engaged in 'Solid Waste Management' activity or is merely a contractor who has been awarded a contract by the Government ; the A....
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....o includes use of Refuse Compactors, Hook, Container/Dumper Place/Side Loader as well as use of Hydraulic vehicle of a compact body having capacity of 1 to 1.5 ton. b. The contractors agree and undertake to collect wet and dry municipal sold water through door to door collection from the above mentioned area of the Municipal Corporation and the same to be transferred from the premises where it is collected at the site of Land fill site as may be specified by Municipal Corporation. Similarly, it is stated that the scope of work, as per Agreement dated 04.10.2005 between the assessee and Bhiwandi Nizampur Municipal Corporation is provided as under : a. Door to door collection, transfer and transportation of solid waste of four categories viz. Biodegradable. Recyclable, Debris and Sill at source from the streets and public places within the area of Bhiwandi-Nizampur City covering all Kilometers roads and lanes in the entire area of the Corporation on Build / Own, Operate, Maintain and Transfer of immovable infrastructure basis, and b. Setting up compost plant for the Organic waste for the organic was collected from slaughterhouse, cow dung's, vegetable and fish market and s....
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....id waste management system. In this regard, reliance is placed by him on the decision of the Hon'ble Bombay High Court in the case of ABG Heavy Industries Ltd. 322 ITR 323 wherein it is held that to be eligible for deduction, the assessee need not develop the entire infrastructure and even if the assessee is developing part of the infrastructure, the assessee would be eligible for deduction u/s 80IA of the Act. Finally, the Ld. counsel explains that as because the contract has been awarded by respective municipal authorities does not make the assessee ineligible for claim of deduction u/s 80IA of the Act, as whole work of 'Solid Waste Management' is carried out by the assessee and not the Municipal Authorities; further, section 80IA(4)(i)(b) of the Act requires the assessee to enter into an agreement with the Government for carrying out such an activity and, therefore, the assessee fulfils all the conditions of section 80IA of the Act to be eligible for deduction under the said section. B 6. On the other hand, the Ld. Departmental Representative (DR) submits that deduction u/s 80IA was allowed in scrutiny assessment for the first time in AY 2003-04 ; AO erroneously accepted that....
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....ncludes one or more of the following options: a. Waste collection and transportation b. Resource recovery through sorting and recycling i.e. recovery of materials (such as paper, glass, metals) etc. through separation. c. Resource recovery through waste processing i.e. recovery of materials (such as compost) or recovery of energy through biological, thermal or other processes. d. Waste transformation (without recovery of resources) i.e. reduction of volume, toxicity or other physical/ chemical properties of waste to make it suitable for final disposal." Thus it is stated by him that the assessee is involved only in one activity, namely, waste collection and transportation and no evidence has been produced regarding resource recovery, waste transformation etc. which are post disposal activities; the assessee was not maintaining any infrastructure facility towards resource recovery and waste transformation; therefore, the action of the AO and Ld. CIT(A) in denying deduction u/s 80IA is in order. Finally, the Ld. DR relies on the decision in Hindustan Lever Ltd. v. JCIT 104 taxmann.com 215 (Calcutta) and Covanta Samalpatti Operating Ltd. v. ACIT 93 taxmann.com 38 (Madras). ....
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....deduction u/s 80IA of the Act. In the present case, it is argued that the issue is as to whether the assessee is engaged in the activity of solid waste management or not and hence the above decision has not application whatsoever to the present case. IV A 8. We have heard the rival submissions and perused the relevant materials on record. The reasons for our decisions are given below. To appreciate the rival contentions, it is pertinent to refer to the agreements. The assessee entered into an 'Agreement for Garbage Collection and Transportation' dated 25.06.2007 with Navi Mumbai Municipal Corporation, Belapur Bhavan, CBD Belapur, Navi Mumbai. The scope of work delineated therein is reproduced below: "1. The Municipal Corporation has appointed the M/s Antony Waste Handling Cell. Pvt. Ltd., as the Contractor to collect dry and wet garbage from within the Municipal Area of the Municipal Corporation (excluding TTC MIDC area) and transporting the same up to Land Fill Site as specified by Municipal Corporation from time to time. The contract work includes collection of wet and dry garbage from individual household as well as cooperative housing society through primary collection ....
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....ste (Management and Handling) Rules 2000 invited tenders from competent contractors in prescribed form." 8.2 Similarly, the assessee entered into an agreement dated 08.08.2003 with Ulhasnagar Municipal Corporation for "Transportation of solid waste processing and final disposal site" for a period of 10 years. The preamble to "Instructions to Bidder" states that : "The Ulhasnagar Municipal Corporation therefore, intends to revamp entirely its collection, transfer, and transportation system of solid waste. The prime approach in the tender aims at providing the services in an integrated manner for all types of wastes -garbage recyclable , debris and construction waste, silt, green waste, carcass etc. The prime goal of Ulhasnagar Municipal Corporation in taking the steps forward and introducing state of art system and technology for the services are: * Ensure health and hygiene for the entire population in Ulhasnagar, citizens, visitors, workers in solid waste management. * Improve productivity, man, material and equipments (adapted proven efficient system and equipments) * Promote economic operations of the services. * Promote and protect quality and substantiality of the....
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....n and Transfer of only immovable infrastructure and facilities created by the successful bidder for carrying out the work under this tender/contract for a period of 10 years." 8.6 In the agreement dated 05.09.2005 entered between the assessee and Kalyan Dombivali Mahanagar Palika, the project scope stipulates the following: "2.1 Project Scope 2.1.1 The Project shall include the following: a) Primary Collection: Lifting of Sweeping of MSW from the all Roads, By lanes and the interior Road, slums, residential area, commercial area, door to door collection of MSW in the Tender Area, providing community, collection/placer bins as required in residential as well as commercial areas and transportation of the same to the collection points, if any. b) Secondary Collection: Collection and transportation of the MSW from the Collection Points to the Disposal Area and unloading of the same." 8.7 In the agreement dated 31.08.2006 entered between the assessee and Greater Noida Industrial Development Authority, we find similar nature of work. 8.8 In the work order dated 11.05.2006 given to the assessee by CIDCO of Maharashtra Ltd., the work specifications are stipulated as under : "C....
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....ned street committee members, ward councilors and concerned public health staffs. The report of it has to be submitted along with every month bill for payment. (b) The IEC activities should promote the ecological management of solid waste in compliance with the philosophy of Reduce, Reuse, Recycle, Recover and safe disposal. (c) The ultimate effect of IEC activities should protect public health, the environment and natural resources (Water, land, air) as per MSW Rules 2000 with the aim of making the town ; "garbage - free". (d) The IEC activities conducted by you should promote the awareness about waste management principles among citizens and other stake holders. (e) IEC activities should be insisted to your staff also to ensure minimizing the multiple and manual handling of waste." 8.11 In the agreement dated 11.05.2009 entered between the assessee and Delhi Cantonment Board, the nature of work was hiring of Conservancy Vehicles (4 refuse compactors) for transportation of solid waste from Delhi Cantonment Area. B 9. A perusal of the Manual on 'Municipal Solid Waste Management' by Central Public Health & Engineering Organization clearly indicates that an effective waste....
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....or the consecutive period of 10 years. Functional elements of a 'Municipal Solid Waste Management System' as drawn in the 'Manual on Solid Waste Management' by Central Public Health & Engineering Organization is enclosed herewith as Annexure - 1. In M.O.H. Uduman and Ors. v. M.O.H. Aslum, AIR 1991 SC 1020, the Hon'ble Supreme Court has held that : "It is settled canon of construction that a contract of partnership must be read as a whole and the intention of the parties must be gathered from the language used in the contract by adopting harmonious construction of all the clauses contained therein. The cardinal principle is to ascertain the intention of the parties to the contract through the words they have used, which are key to open the mind of the makers. It is seldom that any technical or pedantic rule of construction can be brought to bear on their construction. The guiding rule really is to ascertain the natural and ordinary sensible meaning to the language through which the parties have expressed themselves, unless the meaning leads to absurdity." C 12. In ABG Heavy Industries Ltd. (supra), relied on by the Ld. counsel, the assessee was a company registered in India, w....
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....ity operated by the assessee entitled for the claim of deduction under section 80-IA. The term 'infrastructure facility' is defined under section 80-IA(12)(ca). Applying the definition of 'infrastructure facility' as defined under section 80-IA(12)(ca) to the facts of the instant case it was found that 'port' and the facilities provided at port were covered by the definition of infrastructure facility. Reading the section 80-IA in harmony, it transpired that the assessee in order to be entitled to the claim deduction under section 80-1A had to fulfil the following conditions: (a ) whether it was an infrastructure facility falling within the definition provided in section 80-1A(12)(ca); (b)whether the operations had started on or after 1-4-1995; (c)whether the assessee had entered into an agreement with Central / State Govt., local authority for the development, maintenance and operation of any new infrastructure facility; In the facts of the instant case, the assessee was a company registered in India, which had started its operations after 1-4-1995. The assessee had entered into an agreement with a local authority, i.e., the port in question for the development, maintenanc....
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....it had been agreed upon by the parties that on the expiry of term of agreement, i.e., period of ten years, the said cranes would be transferred to the port at no extra cost. In the Certificate dated 31-5-2004, the port had admitted that the said cranes after its erection and installation, formed an integral part of the port and the contracts were under BOLT Scheme, under which the cranes would be transferred to the port at no cost on the expiry of ten years contract period. One of the clause of the Agreement dated 2-9-1994 provided that the equipment would be operational round the clock and the staff shall be deployed by the assessee round the clock for the maintenance of the equipment. In the indemnity clause, it had been provided that in case any damage occurs to the existing structures due to assessee's operation, the same would be made good by the assessee at its risk and cost. The Insurance for maintenance and operation was to be provided by the assessee. One of the clause (xxix) of the agreement stipulated the assessee to comply with all the provisions of labour laws, with regard to the employees deployed for erection, testing, commissioning, operation and maintenance of th....
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....facility for part of the project and is entitled the claim of deduction under section 80-IA(4) of the Act, so long as the nature of development falls within the ambit of 'infrastructure facility'. [Emphasis, by underlining, supplied by us] On appeal by the Revenue, the Hon'ble Bombay High Court held: "15. At this stage, it would be necessary to note that on 31st May 2004, JNPT issued a certificate confirming the award of contracts to the assessee on 2nd September 1994 and 16th October 1995 for supply, installation, testing, commissioning and maintenance of Container Handling equipment on lease for a period of ten years for loading and unloading of containers at the Port and that the cranes that were to be supplied by the assessee form an integral part of the Port. JNPT clarified that the contracts have been executed under the BOLT Scheme and in accordance with its directions, the cranes would be transferred to the Port Trust at no cost on the expiry of a period of ten years of the commencement of the contract. 16. Now, it is in the background of the evolution of the law that the controversy in the present case would have to be considered. The contention of the Revenue is tha....
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....g, maintaining and operating an infrastructure facility. A Port was defined to be included within the purview of the expression infrastructure facility. The obligations which the assessee assumed under the terms of the contract were not merely for supply and installation of the cranes, but involved a continuous obligation right from the supply of the cranes to the installation, testing, commissioning, operation and maintenance of the cranes for a term of ten years after which the cranes were to vest in JNPT free of cost. An assessee did not have to develop the entire port in order to qualify for a deduction under Section 80IA. 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 80IA. The condition of a certificate from the Port Authority was fulfilled and JNPT certified that the facility provided by the assessee was an integral part of the port. The assessee developed the facility on a BOLT basis under the contract with JNPT. On the fulfillment of the lease of ten years, th....
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.... of Environment and Forests (MoEF), Government of India (Gol), has formulated the Solid Waste (Management and Handling) Rules 2000, which makes it mandatory for every Municipal Authority to implement a scientific solid waste management system in conformity with the above rules wherein the Municipal Solid Waste is duly collected, processed to recover all biodegradable components and the inert process remnants to be disposed in an Engineered Sanitary Land Fill. B. Amritsar Municipal Corporation is responsible for providing municipal and civic services, which includes the collection, transportation and disposal of Municipal Solid Waste generated in the city. AMC is required to undertake the MSW management as per the MSW Rules 2000." The fact that the contract has been awarded by respective Municipal Authorities does not make the assessee ineligible for claim of deduction u/s 80IA of the Act, as substantial work of 'Solid Waste Management' is carried out by the assessee and not the Municipal Authorities. Further section 80IA(4)(i)(b) of the Act requires the assessee to enter into an agreement with the Government for carrying out such an activity and, therefore, the assessee fulfils ....