AI Drafter 
TaxTMI 
TaxTMI 
2022 (1) TMI 1115
X X X X Extracts X X X X
X X X X Extracts X X X X
....ine irrigation and road projects; as the case may be, containing identical corresponding contract clauses. We thus treat A.Y. 2004-05 as the "lead" year wherein the Revenue's appeal ITA No.1331/Hyd/2017 proposes the following substantive grounds : 1. Whether on the facts and circumstances of the case, and in law, the Ld. CIT(A) erred in its assumption that the assessee is a developer without any basis and without even referring to the terms of the agreement entered into by the assessee and without even adverting the findings of the AO on the issue. 2. Whether on the facts and circumstances of the case, and in the Law, the Ld. CIT(A) erred in a not appreciating that the explanation to section 80IA of the Act excluded business in the nature of works contract which is exactly the case of the assessee. 3. Whether on the facts and circumstances of the case, and in law, the Ld. CIT(A) erred in not appreciating that the development of a new infrastructure facility is a sine qua non for being eligible for claiming deduction u/s 80IA whereas all the works done by the assessee were to only improve already existing facilities. 4. Whether on the facts and ci....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ic adjudication. 5.0 Addition on account of disallowance of claim of deduction u/s 80IA(4) - Rs. 5,67,75,166/- 5.1 While finalizing the order in pursuance to the Hon'ble ITAT direction, AO has disallowed the deduction claimed u/s 80IA(4) on the following Projects by discussing briefly each of the Projects. The AO examined the facts of the case vis-à-vis the conditions stipulated u/s 80IA(4) of I.T. Act with special reference to important factors such as nomenclature used in work order, nature of agreement, This lower appellate discussion partly accepting the assessee's section 80IA deduction relief leaves both the parties aggrieved. The Revenue's case; as per its pleadings, is that this assessee all along has been a contractor only without having undertaken any business or financial risks; as the case may be. It has further placed reliance on this tribunal's recent co-ordinate bench's decision in ITA No.496/Hyd/2018 M/s. NEC NCC MAYTAS - JV Vs. DCIT dated 12.05.2021. 5. Shri B. Santhi Kumar and Shri Mohan Kumar, learned authorized representatives, have not only drawn strong support from the CIT(A)'s action quoting a catena of case law (supra)....
X X X X Extracts X X X X
X X X X Extracts X X X X
....vering "a water supply project, water treatment system, irrigation project, sanitation and sewerage system or solid waste management system" only. Our attention has been invited to the corresponding project's architectural design (supra). The assessee has thereafter pleaded that it has undertaken the business risk not only in the development of the said lift channel forming part of the irrigation project which has turned barren uneven tracks of land to a canal but also it had deployed all of the corresponding plant and machinery, labour force followed by retention money's project thereby satisfying all the conditions of development of infrastructure facility. All these assessee's arguments fail to evoke our concurrence for the reasons given hereunder. 9.1 The assessee's first and foremost plea that we ought to adopt liberal interpretation while considering section 80IA(4) claim in the light of relevant facts in the instant case deserves to reject. Suffice to say, such a course of liberal interpretation is no more available while dealing with the Income Tax Act's provisions as per honourable apex court's recent constitutional bench's decision in Commissione....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ontract for the purpose of providing deduction qua industrial undertaking or enterprise engaged in infrastructure development, etc. 12. There is yet another equally important aspect which requires our apt adjudication at this stage i.e. of the clinching legislative expression in the latter explanation "nothing contained in this section shall apply in relation to a business referred to in sub-section (4) which is in the nature of a works contract awarded by any person (including the central or the state government)". We note that honourable apex court yet another larger bench decision in Kartar Singh Bhadana Vs. Hari Singh Nalwa & Ors Civil Appeal No.6931 of 2000 decided on 27.03.2001 had an occasion to deal with the expression "works" used in section 9-A of the Representation of People Act, 1951. Hon'ble court therein went by the shorter Oxford English Dictionary's meaning that "work means a structure or apparatus of some kind; an architectural or engineering structure, a building edifice. When it was used in the plural, that is, as works, it meant architectural or engineering operations, a fortified building, a defensive structure, fortification or any of the several part....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on. 14. The assessee next made a very strong endeavour to place reliance on a catena of case law (supra) including CIT Vs. ABG Heavy Industries Limited (2010) 322ITR 323 (Bom). We find that neither of these decisions deals with the interplay between the section 80IA(4) Vs. 80IA Explanation involving execution of works contract as is the factual position before us. The said case law distinguished, therefore. 15. Mr. Afzal'slast argument seeks to buttress the point that such a strict interpretation employed in dealing with an instance of development of an infrastructure project would tantamount to closing the deduction chapter altogether and more particularly, when this assessee has borne all risks and responsibilities of the lift irrigation project by paying reduction money and performance guarantee(s) as well. We hold that this last argument also fails to cut any ice since the assessee has merely performed a works contract and its retention money or the so called performance guarantee only gave an assurance to the irrigation development that it had carried out the corresponding construction etc. as per the specified design norms than involving any business risk. W....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d the assessee's cross appeals ITA Nos.1340 to 1342/Hyd/2017 are dismissed in above terms. A copy of this common order be placed in respective case files. Order pronounced in the Open Court on 9th December, 2021. ============= Document 1 S.No. Name of the Project Para No(s). in Asst.Order 1 K.C.Canal Package-15 6.1 to 6.1.4 2 K.C.Canal Package-10 6.2 to 6.2.2 3 K.C.Canal Package-11 6.3 to 6.3.2 4 Sourashtra Branch Canal Works Package-5 6.4 to 6.4.2 5 6.5 to 6.5.2 6 6.6 to 6.6.2 7 6.7 to 6.7.4 8 6.8 to 6.8.3 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 Narmada Main Canal Works Package-3 Sanawada Work Rani Avanti Bai Sagar Works Indira Sagar Project Sri Ram Sagar Project Package-N4-11A Sri Ram Sagar Project Package-N4-12A Sri Ram Sagar Project Package-N4-11C Sri Ram Sagar Project Package-L3-01-A1 Sri Ram Sagar Project Package-L3-01(B2) Sri Ram Sagar Project Package-L1-16A Sri Ram Sagar Project Package-N4-12C Sri Ram Sagar Project Package-N4-12B Srisailam Right Branch Canal Works UG-II Rajasthan Road ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e fact that the Hon'ble ITAT, had remitted the issue only with regards to satisfaction of conditions as per directions mentioned above. The present AO cannot therefore raise an objection now on the grounds that a claim has to be filed only by way of a revised return as upheld by the Hon'ble Supreme Court in the case of Goetze (India) Ltd vs CIT. The Supreme court in various judgments has held that the assessee can raise before the relevant authorities claims other than by claiming the same in a revised return.. It was held that rectification in computation of Document 3 income can be done without filing of revised return of income as upheld in the case of judgment of the Hon'ble Bombay High Court in Income Tax Appeal No. 3908 in the case of CIT Vs. M/s. Pruthvi Brokers & Shareholders Pvt. Ltd., decided on 21-06- 2012. - The learned Commissioner of Income Tax (Appeals) – 12 has also allowed a similar claim of deduction u/s 801A for the Asst. Year 2011-12 vide Order No.0267/2014-15 dated 17-03-2016, which was raised during assessment proceedings. Wherein in page no.48 the Hon'ble Commissioner of Income Tax has held that "since the sa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d partner the entire work was executed by Gayatri Projects Ltd who raised al bill on the Joint Venture who in turn was paid by the National Highway Authority of India. The AO in Para 7.1.2 has held that the road was already in pre-existence and the company has only widened the road and has carried out rehabilitation works and the work carried out are nothing but relaying of the existing road and hence cannot be termed as development of new infrastructure facility. The contention of the AO is incorrect since the description of the work itself "Widening to 4 lanes" suggests that development in inherent to the contract. The Contract entered into by the company is not a concession agreement as in the case of a BOT. Document 4 The contract entered into with the department is one of development sat sing clause u/s 801A (4). ミニ The Company had to develop the 4 lanes from the existing two lanes strengthening the two lanes for providing better enhanced infrastructural facility The work is a part of the golden quadrilateral connecting the cities of Mumbai (financia capital) & Delhi (Indian Capital) of length 1375 kms. The entire de....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e facility and eligible for deduction u/s 80/A(4). Document 5 Further it is submitted that as per the agreement, the possession of the site is handed over to the assessee by the Government. The assessee takes possession and access to the property and thereafter it shall be the responsibility of the assessee to develop the said area into more useful infrastructure facility. In the process, every act required (whether mentioned in the agreement or not) in converting the area into more useful one shall be that of the assessee. The assessee has to undertake the responsibility of maintenance of the existing traffic and there should not be inconvenience to the regular traffic. The developed area after completion of the development of infrastructure is handed over to the Government. After handing over, the assessee shall maintain the infrastructure for a period of 48 months and any defects are to be rectified and it is clear that the assessee is converting the area entrusted to it into more useful and more profitable area and handing over the developed one to the Government. Therefore, the activity of the assessee is "to develop" an existing two....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Gayatri Projects Ltd. Following the decision of Transstroy (India) Ltd. the learned Commissioner of Income Tax (Appeals) has allowed the appeal in respect of Road Works executed by Document 6 Company for the Asst. Year 2011-12..2012-13 and 2013-14 by stating as under in para 13.3.5 of the order for the Asst. Year 2012-13. "13.3.5 Apart from application of the order of ITAT, Visakhapatnam in case of Transtroy (India) Ltd, (supra), whose decision is very much binding on the AO, the decision of ITAT, Agra, in the case of PNC Constructions Co. Ltd Vs DCIT reported in 144 ITD 577 is also applicable to the facts of the case, where the assessee was constituent in JV and project agreements were between the State Government and JV/Consortia and the deduction claimed by assessee as constituent of JV/Consortia, was held to be allowable. It is also relevant to refer to the citation of judicial decision where the Hon'ble Allahabad High Court has upheld the order of ITAT Agra, in case of PNC Constructions Co. ltd (supra). The relevant portion of the decision runs as under: "The statutory provision under section-80LA(4) states that where the total in....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ent etc. The said section is meant for allowing deduction in respect of profits and gains from industrial undertakings or enterprises engaged in infrastructure development. The assessee claimed deduction as it is engaged in development of infrastructure and as it satisfied all the conditions mentioned therein. The provisions of Section 801A(4)(i) as introduced by the by the Finance Act, 1999 and as amended from time to time are applicable to the assessee. From a reading of the section, it is clear that the deduction is allowable to: a) any company incorporated; b) which entered into agreement with Government; or any government body; and undertakes development of infrastructure facility. The purpose for which the said section was amended with effect from the assessment year 2000-01, can be traced to a brochure issued by the Government of India, Ministry of Roads, Transport and High Ways in August, 2001 to bring in the development of infrastructure facility in the country While providing benefits, the government specifically specified certain grants only to BOT Schemes. For the other schemes all the other benefits are made availab....
X X X X Extracts X X X X
X X X X Extracts X X X X
....(4) introduced in 2009 adding that those enterprises undertaking simple works contracts by entering into agreements with the enterprises or with government or government organizations are not eligible. The explanation has to be read in the context of the application of the main provisions of Section 801A(4) of the Act. From a reading of Section 801A (4)(i) of the Act, it is clear that the deduction is available for any company which enters into agreement with any government or government body. It is clear that the deduction is available not for any person but for those companies entering into agreement with the government or other Government bodies/corporations. It is also made clear that the deduction is available for the corporate bodies entering into agreement with the government organizations. Therefore, the main provision makes it clear that the deduction is available to companies entering into agreement with government bodies or Government. Therefore, it is not correct to read the explanation to mean that the government body is eligible for deduction under section 801A of the Act and the company entering into agreement with such go....
X X X X Extracts X X X X
X X X X Extracts X X X X
....i)(c) are fulfilled as under. (i)(a) (ii) (b) (iii)(c) The Enterprise is a company It has entered into a contract for developing It has started the infrastructural facility on or after the 1st day of April, 1995. Since the Company has satisfied all the conditions in the Section the Assessing officer is not correct in disallowing the claim. Nomenclature used in work order The AO has disallowed the claim on the grounds that the company is a contractor and nor developer as per the terms of the contract Agreement. It was held in various judicial judgments that the term "contractor" is not essentially contradictory to the term "developer". It was held that a person who has undertaken the contract for development is not only a contractor but is also a "developer" eligible for deduction under section 80IA(4) of the Act. We would like to bring to your notice that the assessee entered into agreement for development of infrastructure facility and therefore, it is a contractor. It is unfair on part of the Assessing officer to make a distinction between the words "Contractor and Developer". Nature of Work is “Execution but no....
X X X X Extracts X X X X
X X X X Extracts X X X X
....der the company still has to plan the machinery, the labor and the material components which inherently carry an element of risk in each of them. The second dimension of operational risk as described by the department is, which are internal to any organization whether a contract under BOT/BOOT or otherwise. Hence we wish to submit that risk is pervasive in any type of contract and the department is not correct in saying that contracts under which the company is claiming deductions under section 801A are risk free. Market Risks The Department has disallowed the appeal on the grounds that there is no market risk in the contract. The company would like to clarify that the any tendering and bidding process is a marketing risk in itself. How the company positions the tender and takes calculated risk is a risk in itself. Finance risk It is an established fact that any venture / contract is associated with financial risk. In the event the bid or the tender is wrongly estimated the financial risk comes into play. In the event that any unforeseen contingency arises the financial risk of the same has to be borne by the contractor. He is p....
X X X X Extracts X X X X
X X X X Extracts X X X X
....facility on or after first of April, 1995 would apply only to the second type of enterprise who undertakes the work of "maintaining and operation". It would not apply to a person who is engaged in developing infrastructure facility as the word "developed" is not used in the said sub clause. It is held clearly that such a provision i.e. clause (c) would apply only to such enterprises engaged in maintaining and operating the infrastructure. There is significance for clause-(c) in so far as the enterprises carrying on business of developing and maintaining and operating infrastructure facility are concerned. To be eligible for deduction under sub- section (4A), any enterprise has to commence its operation on or after 01-01- 1995.. As submitted that sub section (4A) was removed with effect from the assessment year 2000-01 by the Finance Act, 1999. A new sub section 4 was introduced by the said Finance Act. Sub section (4) extended deduction to sup enterprises which develop infrastructure or which maintain and operate infrastructure facility or which develops. or which develops. maintains and operates infrastructure facility. It is clar....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed in planning, designing, financing and coordinating and all other ancillary and incidental activities of developing the infrastructure facilities as per the contract. In the case of M/s. Sushee Hitech Construction Pvt. Ltd. ITA 414/Hyd 2012 dt. 17/06/2013, Tribunal held as under: "Therefore, in our considered view, the assessee should not be denied the deduction under section 801A of the Act as the contracts involves development, operating, maintenance, financial involvement and defect correction and liability period, then such contracts cannot be called as simple works contract. In our opinion the contracts which contain above features to be segregated and on this deduction u/s. 80-IA has to be granted and the other agreements which are pure works contracts hit by the Explanation section 80IA(13), those work are not entitle for deduction u/s. 80IA of the Document 13 Act The profit from such contracts which involves development, operating maintenance. financial involvement and defect correction and liability period is to be computed by Assessing Officer on pro-rata basis of turnover. In the case of M/s. KMC Construction Ltd.. vs. ACI....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ould not be available in case of execution of works contract. Even 'Without the aid of the Explanation, it was possible to contend that such expression did not include an enterprise executing a works contract. There would certainly be a demarcation between developing the facility and execution of works contract awarded by an agency engaged in developing such facility. With effect from April 1, 2002, some significant changes were made in the provisions. Such changes were (i) that sub-section (4) of section 80-IA now required the enterprise to carry on the business of developing or operating and maintaining or developing, operating and maintaining any infrastructure facility in contrast to the previous requirement of all three conditions being cumulatively satisfied; (ii) that the Explanation of the term infrastructure facility was changed to besides others, a road including toll road instead of the hitherto existing expression road; and (iii) that the requirement of transferring the infrastructural facilities developed by the enterprise to Document 14 the Central or the State Government or the local authority within the time stipulated in ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....these three activities would become eligible for deduction. Therefore, there is no ambiguity in the Income-Tax Act. We find that where an assessee incurred expenditure for purchase of materials himself and executes the development work i.e., carries out the civil construction work, he will be eligible for tax benefit under section 80 IA of the Act. In contrast to this, a assessee, who enters into a contract with another person including Government or an undertaking or enterprise referred to in Section 80 IA of the Act, for executing works contract, will not be eligible for the tax benefit under section 80 IA of the Act. We find that the word "owned" in sub-clause (a) of clause (1) of sub section (4) of Section 801A of the Act refer to the enterprise. By reading of the section, it is clears that the enterprises carrying on development of infrastructure development should be owned by the company and not that the infrastructure facility should be owned by a company. The provisions are made applicable to the person to whom such enterprise belongs to is explained in sub-clause (a). Therefore, the word "ownership" is attributable only to the enterpr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he process, all the works are to be executed by the assessee. It may be laying of a drainage system; may be construction of a project; provision of way for the cattle and bullock carts in the village; provision for traffic without any hindrance, the assessee's duty is to develop infrastructure whether it involves construction of a particular item as agreed to in the agreement or not. The agreement is not for a specific work, it is for development of facility as a whole. The assessee is not entrusted with any specific work to be done by the assessee. The material required is to be brought in by the assessee by sticking to the quality and quantity irrespective of the cost of such material. The Government does not provide any material to the assessee. It provides the works in packages and not as a works contract. The assessee utilizes its funds, its expertise, its employees and takes the responsibility of developing the infrastructure facility. The losses suffered either by the Govt. or the people in the process of such development would be that of the assessee. The assessee hands over the developed infrastructure facility to the Government on ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nt of a infrastructure facility is an eligible activity for claiming deduction under section 80IA of the Act after considering the Judgement of the Mumbai High Court in the case of ABG Heavy Engineering [supra]. The case of ABG is not the pure developer whereas, in the present case, the assessee is the pure developer. We also find that Section 80IA of the Act, intended to cover the entities carrying out developing, operating and maintaining the infrastructure facility keeping in mind the present business models and intend to grant the incentives to such entities. The CBDT, on several occasions, clarified that pure developer should also be eligible to claim deduction under section 80IA of the Act, which ultimately culminated into Amendment under section 801A of the Act, in the Finance Act 2001, to give effect to the aforesaid circulars issued by the CBDT. We also find that, to avoid misuse of the aforesaid amendment, an Explanation was inserted in Section 80IA of the Act, in the Finance Act-2007 and 2009, to clarify that mere works contract would not be eligible for deductions under section 801A of the Act. But, certainly, the Explanation ca....
X X X X Extracts X X X X
X X X X Extracts X X X X
....igible developer for making claim of deduction u/s section 801A (4) of the Act., it is evident that the person who only develops the infrastructure do not have the occasion to operate and maintain the infrastructure. It is further evident that the harmonious reading is necessary and mandatory in view of High Court's judgment in the case of an enterprise carrying on business or developing which is the case of the assessee, all the conditions referred to clause (i) of section 80IA (4) should refer to the conditions as applicable to the developer. In other words, the developer who is only developing the infrastructure facilities since he does not operate and maintain Infrastructural facilities, cannot be expected to fulfill the condition at sub clause (c) which is an impossibility and the requirements to fulfill the said condition shall amount to absurdity and therefore uncalled for. Therefore, we find requirement of harmonious reading of sub-clause (c) vis-Ã -vis of clause (i) of section 801A (4) of the Act. Thus, the discussion in High Court's decision is directly applicable to the facts of the case and eventually is entitled for the deductio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....juridical forums dealing with this issue. After in-depth deliberations, discussions and examination of these provisions, finally, it has been resolved that if an enterprise even after entering into a contract with a local authority or the Governments, may be Central or State, in case it constructs the infrastructure facility, operates it and also maintains the same, it would be eligible for this deduction. In fact, as per the terms of agreement, even the initial proposals formulated by the Department which are stated to be tentative, the assessee has the liberty to make different proposals without - Document 18 detrimental to the general features of the Departmental proposal, like Road level/bottom of deck level, MFL, Sill level, Linear water way, width of the bridge etc. Right from the drawings to the work of construction has been done by this assessee and has borne the cost itself. The company has constructed, delivered and maintained and security is also maintained thereafter. So, this is a case of transfer of property in chattel and not a contract of service. A 'developer' as per the Advanced Law Lexicon means "a person engaged in develo....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... facility/project is the transfer of the infrastructure facility/project by the assessee to the authority. The handing over of the infrastructure facility/project by the developer to the Government or authority takes place after recoupment of the developer's costs whether it be "BT' or 'BOT' or 'BOOT' because in 'BOT' and 'BOOT' this recoupment is by way of collection of toll there from whereas in 'BT' it is by way of periodical payment by the Government/Authority. The land involved in infrastructure facility/project always belongs to the Government/Local authority etc., whether it be the case of ‘BOT' or 'BOOT' and it is handed over by the Government/Authority to the developer for development of infrastructure facility/Project. The same has been the position in the given case as well. So, deduction u/s 801A(4) is also available to this assessee which has undertaken work of a mere 'developer'. Rather, the statutory provision as contained in section 801A which provides for deduction of infrastructure facility no way provides that entire infrastructure facility project has to be developed by one enterprise. Thus, as per section 801A the a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ent that in incentive provisions, the construction should be liberally given as held by the Hon'ble Supreme Court rendered in the case of Bajaj Tempo Ltd vs CIT, 196 ITR 188. Thus, when the assessee makes investment and himself executes development work and carries out civil works, he is eligible for tax benefit u/s 80IA of the Act. Accordingly, with the foregoing discussion, we hold that the assessee is entitled to deduction u/s 801A(4) of the Act, and therefore, we order to delete the addition made in this respect. Accordingly, the appeal stands dismissed. Further, we make it clear that where the assessee has carried out the development of infrastructure work in Consortium or jointly with any other agency and not as a sub-contractor, then also the assessee is entitled for deduction u/s 80IA of the Act. The same principle is applicable in respect of work allotted by Government Corporation to the assessee. Being so, we are inclined to partly allow the ground relating to claiming of deduction u/s. 801A of the Act. The facts of the case and the decisions of the Jurisdiction Tribunal i.e., ITAT, Hyderabad, all in favour of the Company and henc....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the CBDT Circular No.4 of 2010 dated 18.5.2010 which states that widening of an existing road by constructing additional lane as part of a high way approach would be regarded as new infrastructure facility for the purpose of Section 80IA(4)(i) of the Income-tax Act, 1961. Further, modernization of irrigations would also be regarded as new infrastructure facility for the purpose of Section 80IA(4)(i) of the Act. In course of the appeal proceedings, the agreements, letters of acceptance and other relevant documents in respect of all the projects executed by the assessee have been carefully examined vis-Ã -vis the submissions of the assessee. The specific findings are discussed in the subsequent paras. Document 22 5.6 It is important to reproduce here the provisions of Section 80-IA(4) of the Act, which reads as under: "(4) This section applies to (i) Any enterprise carrying on the business of (i) developing or (ii) operating and maintaining or (iii) developing, operating and maintaining any infrastructure facility which fulfils all the following conditions, namely:- (a) It is owned by a company registered in India or by a ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lopment of new infrastructure facility is also fulfilled in almost all the Projects except a few Projects, which will be discussed in the ensuing Paras. The condition stipulated under sub-clause (c), which required that the assessee has started operating and maintaining infrastructure facility on or after 1st day of April, 1995, is also fulfilled. 5.7 Further, in the instant case, the nature of work carried out shows that the appellant not only directly carried out work as per the contract but it employed various resources of its own by way of machineries, technical knowledge, technical and other manpower, materials etc. and also funded the same out of its own capital and borrowings. The appellant was required to furnish guarantees including free maintenance of the infrastructure facilities. All these factors combined clearly go to show that the appellant also assumed considerable risk in the capacity of a businessman and that such tasks as undertaken. Document 24 although under a contract as mandated by the Section, would require skills of planning of work, employing technical know-how to execute the work and to face the consequ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Main Canal Works Package-3 6 Sanawada Work Work awarded by Govt. of AP Work awarded to Gayatri Projects Ltd Govt. of AP Gayatri Projects Ltd Govt. of AP Gayatri Projects Ltd Sourashtra Branch Canal Govt. of Gayatri Projects Ltd Gujarat Govt. of Gayatri Projects Ltd Gujarath Govt. of Gayatri Projects Ltd 7 8 00 Rani Avanti Bai Sagar Works Indira Sagar Project Gujarath Govt. of MP Gayatri Projects Ltd 9 Sri Ram Sagar Project Package-N4-11A Govt. of Gujarat Govt. of AP Gayatri Projects Ltd Gayatri Projects Ltd 10 Sri Ram Sagar Project Package-N4-12A Govt. of AP Gayatri Projects Ltd 11 Sri Ram Sagar Project Package-N4-11C Govt. of AP Gayatri Projects Ltd 12 Sri Ram Sagar Project Package-L3-01-A1 Govt. of AP Gayatri Projects Ltd 13 Sri Ram Sagar Project Package-L3-01(B2) Govt. of AP Gayatri Projects Ltd 14 Sri Ram Sagar Project Govt. of AP Gayatri Projects Ltd Document 26 Package-L1-16A 15 Sri Ram Sagar Project Package-N4-12C Govt. of AP Gayatri Projects Ltd 16 Sri Ram Sagar....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... were entered into with the constituent members of Joint Venture. S.No. Name of the Project 1 2 UG-II Rajasthan Road Works NH-4 Road Works 34 5 6 7 8 Agreement entered by Government with Gayatri-Ranjit JV Simplex-Gayatri Consortium Chilakaluripet-Vijayawada Road Pk-1 Chilakaluripet-Vijayawada Road Pk-2 Chilakaluripet-Vijayawada Road Pk-3 Tallada-Devarapalli Road-APSH-7 Warangal-Khammam Road-APSH-8 Ongole to Chilakaluripet Road-AP13 IJM-Gayatri JV IJM-Gayatri JV IJM-Gayatri JV IJM-Gayatri JV IJM-Gayatri JV IJM-Gayatri JV Document 28 As could be seen from the facts/information brought on record, the assessee company is engaged in infrastructural activity of various kind, as enumerated in this order, and among the works executed during the year. some were awarded to JVs/Consortia but executed by assessee compan. as constituent of the said JV, as such. The profits related to the above projects under reference are also claimed for deduction u/s.80IA(4). In this regard, the assessee-company submitted that the profits so earned by assessee company through JVs/Consortia neither for....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ures/Consortia. In this regard the AO disregarded the submissions of the assessee, that the profits so earned by assessee company through JVs/Consortia were neither formed part of total income of JVs nor any deductions u/s.80IA(4) were claimed by JVs, on such incomes. The reliance of the assessee on the decision of ITAT, Visakhapatnam in case of M/s. Transstroy India Ltd Vs ITO (supra), as regard to allowance of deduction u/s.80IA(4) on the profits of JVs and assessability to tax, was not accepted by the AO, on the ground that the decision of Hon'ble ITAT was not accepted by the department. 13.3.2 The appellant's objection on this issue is strengthened by the fact that the AO has not disputed the eligibility of profits for deduction u/s.80IA(4), as claimed by the assessee and the issue on assessability of incomes of JV or it's constituent, is already settled by Judicial decisions. The further objection of the appellant to the decision of the AO for not allowing deduction u/s.80IA(4), on the ground that decision of ITAT was not accepted by department, is not based on any legal basis. The AO did not distinguish or dispute the fact....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he Hon'ble Apex Court held that "when an order is passed by a higher Authority the lower Authority is bound thereby, keeping in view of the principles of judicial discipline" This view was also endorsed by the Hon'ble Apex Court in the case of Bhopal Sugar Industries Ltd Vs ITO (AIR 1961 SC 182). (iii) Aggarwal Warehousing & Leasing Ltd Vs CIT (257 ITR 235 (MP): Where in the Hon'ble High Court has held that "needless to say, that the orders passed by the Tribunal are binding on all the revenue Authorities functioning under the jurisdiction of the Tribunal." 13.3.4 All the above decisions unanimously hold the view that order of ITAT are bound on the Revenue Authorities under it's jurisdiction and in this case, the decision of the ITAT, Vishakapatnam, is held to be binding on the AO under reference, unless the said order is stayed or suspended by a Superior Court or a different view is taken by the another Tribunal in the said jurisdiction. In this case, it was not the case of the AO to show that the decision of ITAT, Vishakapatnam, in the case of Transtroy India Ltd (supra), as relied by the assessee, is not binding on him. Docu....