TaxTMI 
TaxTMI 
2023 (9) TMI 325
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...., Palanpur under Section 143(3) of the Act for A.Y. 2008-09. 2. Since, both the appeals relate to the same assessee and the issue on merit are almost identical, these are heard analogously and are being disposed of by a common order for the sake of convenience. ITA No. 1465/Ahd/2011 - A.Y. 2006-07 (Assessee's appeal) 3. The brief facts leading to the case is this that the assessee filed its original return of income on 30.01.2006 declaring NIL income. Further revised return on 19.02.2007 showing NIL income was filed assessment whereof was finalized upon acceptance of the return under Section 143(3) of the Act dated 10.04.2008 by the Ld. AO. Subsequently, re-assessment order under Section 147 of the Act was passed on 31.03.2009 computing NIL income allowing the deduction under Section 80IA(4) of the Act amounting to Rs. 2,43,70,059/-. However, the Ld. PCIT issued a notice dated 01.03.2011 (appearing at Page No.55 of the paper book filed before us) under Section 263 of the Act opining that the work executed by the appellant was a contract work with the National Highway Authority of India and therefore not be eligible for the tax benefit under Section 80IA of the Act. Furthermore, ....
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....not erroneous and prejudicial to the interest of the revenue. We also beg to rely upon the following judgements 1) S.Sundaram Pillai & Others (AIR 1985 (SC) 582) 2) Mysore Minerals Ltd. 239 ITR 775 (SC) 3) Kerala State Industrial Development Corporation Ltd. 259 ITR 51 (SC) 4) Bajaj Tempo Ltd. 106 ITR 188 (SC) 5) Gujarat Industrial Development Corporation and Others 227 ITR 414 (SC) 6) Strawboard Manufacturing Co. Ltd 177 ITR 431 (SC) 7) Decision of Rajkot Bench, Rajkot given in case of M/s. Tarmat Bel (JV) KCL, Rajkot v The ITO Ward-1(4) Rajkot ITA No 1111/RJT/2010 AY 2007-08 dated 23/09/2010. This judgement is delivered after the insertion of explanation 8) Double Dot Finance Ltd v. Asstt. CIT (2010) 35 (11) ITCL 481 (Mum 'D' Trib) 9) Om Metals Infraprojects Ltd. v. CIT (2009) 30 (1) ITCL 240 (JPTrib) 10) Ashoka Buildcon Ltd. v. Asstt. CIT (2010) 325 ITR 574 (Bom) In view of the above facts and in the circumstances of the case, the order passed by AO is neither erroneous nor prejudicial to the interest of revenue and as such notice issued by your honour u/s. 263 may kindly be cancelled." 5. The above reply of the assessee was reproduced by Ld. PCI....
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....ruction of roads, bridges, canals etc. During the year the assessee was engaged in the business activity of construction of infrastructure for Swaroopganj-Pindwara of NH-14 in the state of Rajasthan and Vadodara-Padra-Jambusar Road from the National Highway Authority of India, New Delhi and National Highway Circle, Vadodara respectively. The work was allotted by the Government authorities. The contention of the assessee is that all the construction work of the roads and other facilities were infrastructure projects and the assessee developed the same and therefore the assessee has claimed and entitled the deduction u/s 80IA(4) of the Income tax Act in respect of profit earned from the execution/development of civil work. The assessee also submitted the appellate order of ITAT, Rajkot Bench, Rajkot No. ITA No.153/RJT/2007 and group dt. 20-03-2009 in the case of DCIT Cir.2, Jamnagar V/s. Tacon Infrastructure Pvt. Ltd. of Porbandar. After due discussion with the representative of the assessee, and relying on the decision of jurisdictional ITAT, the deduction u/s 80IA(4) is allowed on the profit earned from the infrastructure work. (3) Disallowances of interest u/s 40A(ia) The ....
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....the Revenue is not proper. Such finding and / or formation of opinion made by the Ld. PCIT is not sustainable. Furthermore, verification is not a good ground for reopening of assessment under Section 263 of the Act as already held by different forums of law. The Ld. DR relied upon the order passed by the Ld. PCIT. We have perused the entire set of documents and the order passed by the Revenue in three occasions and the evidences adduced by the assessee in different stages of assessment as asked for also appearing in the paper book filed before us. 7. It is evident from the records itself that the Ld. AO upon due application of mind verified the four above issues and allowed the same in respect of status of assessee claimed as joint venture, claim of deduction under Section 80IA(4) of the Act, disallowance of interest expenses under Section 40A(i)(a) of the Act and exemption of receipt of insurance claim under the Act but disallowed Rs. 48,983/- on account of interest paid to Citycorp Finance Ltd. under Section 40(a)(ia) of the Act and added to the total income of the assessee out of interest payment GSHP-9A contract work which clearly establishes due application of mind by the Ld....
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....ise and other party's "sub-contractor". The amendment merely aims at denying deduction to the sub-contractor who executes a works contract with the enterprise; (iii) It is not required that the developer should also "operate and maintain" the infrastructure facilities so as to be eligible for deduction. 10. The CBDT Circular No.: 14(XL-35), dt. 11/4/1955 says that the assessing officer should while, considering the case of an assessee, take a liberal view in granting relief or allowing claim made by the assessee and the same should not be rejected on procedural or technical ground(s). In Shree Sajjan Mills Ltd. v. CIT & Anr. (1985) 585 (SC), it was observed that the mere fact that the tax statute ought to be strictly construed does not preclude the principle of reasonable construction being made to give effect to the intention of the legislature being apparent from the scheme envisaged in the Act. 11. We hope, your honour would be satisfied with this explanation and requested your honour to allow the claim u/s. 80IA as per the return. However, in case your honour require some further information or details, kindly let us know and we will comply with your requirements prom....
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....rastructure facility for which the deduction in question was claimed and allowed by the Ld. AO which has further been found to be erroneous by the Ld. PCIT is concerned, the Ld. AR submitted before us that the same has also been considered in its proper perspective by the Hon'ble Gujarat High Court in the said judgment dated 09.08.2012 which has been duly considered by us. 11. The relevant observation in this regard is as follows: "7.3 It is further stated in the reasons recorded that what was remained to be verified was whether the assessee was owner of the infrastructure facility for which the deduction in question was claimed. Learned advocate for the petitioner rightly submitted that the issue is answered in Liberty India (supra) wherein it is held that in order to eligible for deduction of profits from industrial undertaking under Sections 80I, 80IA, 80IB of the Act itself generation of profits from infrastructural activity that attracts incentives under the said provisions, and not ownership in the business. The relevant observations are as under:" 12. While dealing with the matter, the Hon'ble Jurisdictional High Court pleased to rely upon the judgment passed by the Hon'....
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....e observation and determination made by the Ld. AO in favour of the assessee as the same was made not only in the initial assessment under Section 143(3) of the Act accepting return filed by the assessee, rather in re-assessment proceeding under Section 147 r.w.s. 143(3) of the Act; the same view has been confirmed upon examination of sufficient details provided by the assessee in support of the case made out. 14. There is no iota of doubt that the Ld. AO has made a detailed enquiry in the case of the assessee in the scrutiny proceeding, particularly, in regard to the issue raised by the Ld. PCIT in the order impugned. Upon making the exhaustive enquiry and excessive documents so placed by the assessee before the Ld. AO, the return of income filed by the assessee had been accepted. We would like to mention that though the PCIT sought to justify his point of view in holding the order passed by the Ld. AO erroneous so as to prejudicial to the interest of the Revenue due to lack of enquiry, such finding is totally found to be non-application of mind and a colorable exercise of power. We find that in this case proper and adequate enquiry has been conducted by the Ld. AO. Thus, the ord....
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....ssary audit report in the form of 3CB & 3CD alongwith the P&L account, balance sheet, capital account and all other details were duly furnished before the Ld. AO. It is further contended by the assessee that the activities carried out by the assessee involved development of project, engagement of various agencies, raising all finances and investment from its own funds in the construction of project, undertaken risk cannot to be said to be a contractor and being a developer the assessee is entitled to the claim made under Section 80IA(4) of the Act. In support of such contention made by the assessee following judgments relied upon by the assessee as it appears from the order passed by the Ld. AO: 1. K.P. Varghese v. ITO [1981] 131 ITR 597 (SC). 2. CIT Vs J.H. Golta 156 ITR 323(SC) 3. Mysore Minerals Ltd Vs CIT 239 ITR 775(SC) 4. Kerala State Industrial Development Corpn Ltd Vs CIT 259 ITR 51(SC) 5. Bajaj Tempo Ltd Vs CIT 196 ITR 188(SC) 6. Gujarat Industrial Development Corporation and Others Vs CIT 227 ITR 414(SC) 7. CIT Vs Strawboard Manufacturing Co Ltd 177 ITR 431(SC) 17. However, the Ld. AO was of the view that the assessee is not a developer rather a work contra....
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..... The said Circular issued by the Board vide Circular No 4/2010 /F.No. 178/14/2010-ITA II dated 18.05.2010 is reproduced as under: "Reference have been received by the Board as to whether widening of existing roads consider creation of new Infrastructure facility for the purpose of section 80IA(4)(i) of the Income-tax Act, 1961. Section 80IA(4)) provides for a deduction to an undertaking engaged in developing, or operating and maintaining, or developing, operating and maintaining any infrastructure facility subject to satisfaction of the conditions laid down in the section. The Explanation to sub-section 80IA(4)(i) states that for the purpose of this clause, infrastructure facility means inter alia:- "(a) A road including toll road, a bridge or a rail system; (b) A highway project including housing or other activities being an integral part of the highway project," (c) The issue has been examined by the Board. It has been decided that widening of an existing road by constructing additional lanes as a part of a highway project by an undertaking would be regarded as a new infrastructure facility for the purpose of section 801A(4)(i). However, simply relaying of an existing ....
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....es not in any way create an artificial fiction about the nature of business of the undertaking but it only states that no deduction shall be admissible in the case where an assessee carries on business in the nature of a works contract. This clearly means that if the nature of business is not just a works contract but something more, the assessee cannot be hit by the rigours of the Explanation. As far as the assessee and its facts on record of Revenue are concerned, the nature of business carried on by it, albeit under a contract with the State Govt. or local authority, is not just of a works contract but it also has many shades, colors, hues and trappings of developing of new infrastructure facility and for this reason itself, the deduction cannot be denied to the assessee this year notwithstanding the insertion of the explanation. (x) The learned Assessing Officer is in error in relying upon the withdrawal of claim under section 80IA(4) of the Act for the A.Y. 2009- 10. The fact is that the appellant has cautiously undertaken this exercise and also clearly stated in the Special Civil Application before the Hon'ble Gujarat High Court that if the appellant succeeds, it shall ....
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....learly show that the assessee was not merely a works contractor but was also a developer. (xii) Merely because the assessee has acted under a Govt contract, it cannot be denied deduction nor can it be held that it has acted only as a works contractor. This is more so because one of the fundamental pre- conditions of Sec. 80-1A(4) is that the infrastructure facility must have been developed or developed, operated and maintained by entering into a contract with the Govt. therefore, contract with the Govt is a sine qua non for becoming eligible for the deduction. Therefore, contracting by itself cannot make the assessee a works contractor. In our country, all lands and infrastructure other than those privately owned belongs to the State and hence one can develop infrastructure facility only under a government mandate which is given in the form of a contract. Once there is a contract for a new facility, there are bound to be obligations under the contract which include obligations of, inter alia, observing the specifications of the infrastructure facility, Hence, although there may be such pre-decided specifications in the contract, the execution thereof for building and creating the....
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.... of consistency also lay down that if deduction has been granted in earlier years after due opilotion mind, the same should not be disturbed ordinarily. For this proposition the assessee placed reliance on several decisions of High Courts in Tribunals reported at 104 TTJ 881 (Del), 289 ITR 318 (Del), 243 1 492 (Del), 311 ITR 436 (P&H). The assessee also draw your attenti to the decision of the Apex Court in the case of Radhasoami Satsang CIT. 193 ITR 321 (SC) wherein the Hon'ble Court has stated that in absence of any material change in circumstances of the case, a differ view then that taken in earlier years, could not be taken. The assessee claiming relief u/s 801A (4) since many years and claim is accepted the department as all the condition laid down by the IT Act have L fulfilled. Till date, majority assessments were finalized u/s 143 (3) of t T Act and assessee's claim u/s 801A (4) accepted. (xvi) The decision of the Mumbai Bench in the case of BT, Patil & (supra) cited and relied upon by the department does not operate ag the appellant in the present case because the facts of that case show the assessee therein was employed as a sub-contractor by an contractor to c....
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....f development by the assesses within the ambit of infrastructure facility, which aspect can also noted from the accounts of the assessee and it must be held that the assessees is being developers and are entitled to deduction us 80-14(4) of the Act In the case of Gujarat Industrieal Development Corporation and Others 227 ITR 414 has considered the meaning of Developer and has held that the word "Development should be understood in its wider sense and that development, means the realization of potentiality of land or territory by building or mining In this contest therefore, based on facts on record and after examining the nature of businen, it must be held that the aneneer is developers and not mere contractors carrying out works contract only Your honour can find that in the present case, the facts relating to nature of trainees are not shown to be different than those already examined by the department earlier. That being the case, even if the impugned Explanation is to be considered for the year under present appeal, your honour will find that the explanation clearly refers to the business in the nature of works contract. This clearly implies that the explanation is limited in i....
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....n the Govt. and the assessee, that does not make the assessee a contractor for the purpose of works contract only. Any person carrying on business may be required carry some work the other in course of pursuing its overall business objectives. But does not that such a person does not cannot carry out something more than such work only. our case, we although entered into a contract with Govt, the contract part the primary condition Sec. 80-1A(4) further the nature work carried shows that the appellant not only directly (and indirectly) carried out as the but employed various resources of own machineries, technical knowledge. Technical and other manpower, materials etc, and funded the same out own and borrowings. appellant required furnish guarantees including maintenance of infrastructure facilities. All factors combined clearly go showe that appellant also assumed considerable risk the capacity businessman and the such as undertaken, although wonder a contract mandated by Section, would require skills planning of work, employing technical know-how execute the work face the consequences of attendant risks. Further, the risks upon the assessee and upon Govt, these elements are genera....
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.... the assessee had executed construction and development of infrastructure facilities by entering into agreement with State / Central Government, local authority, statutory body etc. These activities include flyover, Roadways etc. He also contended that the assessee has fulfilled all the conditions as mentioned in section 80IA(4)of the Act and in denying the claim of the assessee, the AO wrongly construed that assessee is a 'contractor' and not carried out any development activity. He further submitted that for the Asst.Year 2007-08 the similar claim of the assessee was ultimately allowed. It was further contended that though the expression 'works contract" has not been defined in the Act but various judicial pronouncements examined the issue and held that the term has wider meaning so as to state that if the activities carried out by the assessee involve development of project, engagement of various agencies, undertaking risk element, raises own finances and invests its own funds in the construction of the project, then the case of the assessee falls within the meaning of expression "developer". A perusal of the tender documents clearly shows that the assessee has to arrange own fi....
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....the following decisions to support his case: "1. Vijay M. Mistry Construction Pvt. Ltd. in ITA Nos. 2938/Ahd/2011 & Ors. 2. Patel Infrastructure (Rajkot ITAT) ITA No.627/Ahd/2014, Dated 30/07/2020 3. Katira Construction Ltd.(Rajkot ITAT) [2020] 119 taxmann.com 489(Rjt) 4. S.Sugam Construction P.Ltd.(And ITAT) (2013) 30 taxmann.com 331 (Ahd) 5. Bhinmal Contractor Property and Land Developers P.Ltd.(Mumbai ITAT) [2018] 93 taxmann.com 296 (Mum) 6. Rohan & Rajdeep Infrastructure (Pune ITAT) [2013] 40 tax.com 136 (Pune) 7. ABG Heavy Industries Ltd.(BOM HC) [2010] 189 taxman.com 54 (Bom) 8. Koya& Co. Construction P.Ltd. [2012] 21 taxmann.com 35 (Hyd.ITAT) 9 . GVPR Engineers Ltd. [2012] 21 taxmann.com 25 (Hyd ITAT) 10. B.T. Patil & Sons Belgaum Construction P.Ltd. [2013] 34 taxmann.com 97 (Pune ITAT)" 21. It also appears that the assessee filed further submission before the First Appellate Authority with following certain details: i. Consolidated contract account, P&L account and balance sheet for the year 2008-09 establishing the fact that members have made substantial investment amounting to Rs. 10,89,18,709/- in carrying out the business of development of infrast....
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.... Ld. DR has relied upon the history and legislative intent of insertion and different amendment of the provision of Section 80IA(iv) of the Act in the following manner: i. As regards the question of eligible business, from a plain reading of the subsection, it emerges that for the purposes of admissibility of claim of deduction of profits u/s 80IA, the eligible business has to be one of the following: - business of developing or - business of operating and maintaining or - business of developing, operating and maintaining ii. Before going into the issue on and, we need to analyse the provision of section 80 IA(4) of the Act. The section was first introduced by the Finance Act 1991 for providing deduction to industrial undertaking. The purpose of providing such deduction was modernisation and expansion of industrial undertaking. iii. However the provisions of this section was amended by Finance Act, 1995 for the reason that the legislature realised that the modernisation of industrial undertaking requires development of infrastructure facility. This fact can be verified from the memorandum (Circular No. 717, dated 14-8-1995) explaining the amendment in the section as rep....
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....ment augmenting partner and should have derived profits from the use of the infrastructure facility so developed and not from the activity of construction per se. As would be elaborated subsequently in this submission, the assessee has merely participated as a contractor simplicitor rather than by way of investment. vi. It is clear that the Government envisaged nation-wide infrastructure development through the participation of the private sector. The investment required for these projects were huge and the gestation period of these projects were also quite high. The Government with a view to encourage the private participation in these developmental projects offered various business, models like BOOT, BOLT & BOT. BOOT means Build Own Operate & Transfer Under this scheme the private participant will get an opportunity to own and operate the facility for some time and during this period the developer can commercially exploit the facility so developed. After the specified period the facility would be transferred to the Government. BOLT means Build Own Lease & Transfer The Private participant will lease the facility to the Government and the Government will pay the lease cha....
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.... along been for encouraging private sector participation by way of investment in development of the infrastructure sector and not for the persons who merely execute the civil construction work or any other works contract..." x. The legislature, thus, always directed the benefit of the deduction only to those assessee who are in the business of development of infrastructure facility by way of investment and only to such profits as derived from the use of such infrastructure facility. The explanatory memorandum is categorical in carving out a clear exclusion for businesses of works contract, even if by way of ordinary parlance, such enterprises may also perceive their business as that of development. The legislature has, thus, made a conscious distinction between a business of development as envisaged by the Section 80IA and a business of construction/works contract that might have some semblance of development in the ordinary parlance. It, therefore, cannot be overemphasised that for an enterprise to be eligible for admissibility of deduction u/s 80IA, a non-negotiable precondition is participation in the project as a developer assuming investment risk and entrepreneurial risk. In....
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.... made in 2001 but the condition that it has to be built from the fund of the assessee as per BOT or BOOT or similar arrangement has not been relaxed. Only the Enterprise which has built the infrastructure project on BOT or BOOT or similar arrangement has been provided on exit route by way of this amendment and it is not necessary for them to operate and maintain the infrastructure facility developed by them. Therefore, simultaneously amendment have been made in sub clause (b) of clause (i) of section 80IA(4) and the transferee Enterprise were allowed to claim the deduction for unexpired period during which the transferor Enterprise would have been entitled to claim the deduction. Therefore, the infrastructure facility has to be developed on BOT, BOOT or BOLT or similar arrangement where the investee Enterprise bears the financial and investment risks. The nature of contracts entered by the assessee company does not reflect that it has brought investment and bear the financial and investment risk. It only bears the contractual risks which is true for any construction contracts. The above legislative intent has been clarified many times by Parliament as per clarificatory amendm....
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....ars from Section VIII: Schedule B, Schedule C, and Section IX of Tender documents appearing at Page Nos. 84 to 99 of PB-II filed before us. iii. DRAWINGS & SPECIFICATIONS The general specifications are given by the respective Authorities. However, the specific drawings & designs are recommended by the Contractor which shall be approved by the Competent Authority and shall form part of the accepted Tender, which is appearing from clause 6.1 & 7.2 of tender documents at Page Nos. 118 & 119 of PB-II filed before us. iv. MATERIALS: The Contractor shall, with due care and diligence, design (to the extent provided by the Contractor), execute and complete the Works and remedy any defects therein in accordance with the provisions of the contract The contractor shall provide all superintendence, labour, materials, plant, contractor's equipments and all other things, whether of a temporary or permanent nature at its own cost. The same is appearing from Clause 8.1 of Tender documents at Page 119 of PB-II filed before us. Site 1: Audited Accounts P&L account- Page 25 of PB-I. Total ContractExpenses incurred during the year are of Rs. 62,85,43,029/- and creditors for goods are of ....
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....n completion of the Works and remaining 50% after the end of the Defect liability period. The same is appearing at Clause 60.3 of Tender documents from page 143 of PB-II filed before us. x. LIQUIDATED DAMAGES/PENALTY If the contractor fails to complete contract by the stipulated date, he shall pay penalty of 1/2000th of the contract price per day from the date of delaying said work up to the date of completion and handing over to contract upto maximum of 10% of contract price. The same is appearing at Appendix to Bid, clause 7 & 8 and Clause 47.1 of Tender documents from Page 104 & 133 of PB-II filed before us. xi. DEFECT LIABILITY PERIOD 365 days free maintenance and guarantee period from the certified date of completion of work - The same is appearing from Appendix to Bid, clause 9 & clause 49.1 of Tender documents at Page 104 & Page 134 of PB-11 filed before us. xii. TERMS OF ADVANCE PAYMENT/ MOBILIZATION ADVANCE Advance payment/ mobilisation advance will be given, which will be interest bearing up to 5% of the contract price at commencement of work, and payment of additional interest bearing advance up to 5% of the contract price after the contractor has achieved a ....
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....rom the records available before us, we find that the terms and condition of the tender documents in respect of both the projects are identical. We have considered the further case of the assessee that the claim of the assessee under Section 80IA(4) of the Act for A.Y. 2006-07 was allowed by and under assessment made under Section 143(3) of the Act for on 10.04.2008 which was further confirmed by and under the order passed by the Ld. AO on 31.03.2009 under Section 143(3) r.w.s. 147 of the Act. The same relief was also granted to the assessee for A.Y. 2007-08 on 13.04.2009 by the Ld. AO by and under assessment made under Section 143(3) of the Act. Relevant to mention that all the orders passed in assessee's own case as mentioned hereinabove have been perused by us as been duly furnished by the appellant before us. 31. As to whether the assessee can be termed as "developer" or a "contractor" as contended by the Revenue in its submissions, we find, in fact, it only attempts to give a general meaning of the term "contractor" and "developer". In the cases in hand, we find that in terms of tender documents, audited accounts and facts on record suggest that the assessee has fully underta....
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....the Architects and Engineers. Additionally, assessee was also authorized to appoint any other Architect or Engineer, legal adviser and other professionals. He would appoint Subcontractor or labour contractor for execution of the work. The assessee was authorized to admit the persons willing to join the scheme. The assessee was authorised to receive the contributions and other deposits and also raise demands from the members for dues and execute such demands through legal procedure. In case, for some reason, the member already admitted is deleted, the assessee would have the full right to include new member in place of outgoing member. He had to make necessary financial arrangements for which purpose he could raise funds from the financial institutions, banks etc. The land owners agreed to give necessary signatures, agreements, and even power of attorney to facilitate the work of the developer. In short, the assessee had undertaken the entire task of development, construction and sale of the housing units to be located on the land belonging to the original land owners. It was also agreed between the parties that the assessee would be entitled to use the full FSI as per the existing ....
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....e to a developer and not to a contractor simplicitor. In the present case the Ld. AO had denied the benefit of section 80-IA(4) to the appellant-company on the assumption that the appellant-company is engaged in executing merely a work contract and it is not carrying on the business of developing an infrastructure facility. But we find that the assessee has undertaken entirely and exclusively the projects awarded by the Government authorities, as it is evident from the records as explained and already narrated hereinabove and therefore, there is hardly any basis for assuming that it is merely a contractor executing a works contract. The difference between a "developer" and a "contractor" has to be properly analyzed and understood. This issue has come up before the Hon'ble ITAT, Amritsar Bench in the case of M/s. TRG Industries P. Ltd. in ITA Nos. 433 etc./Asr/2009. The Tribunal after relying various case laws has laid down the following parameters when to treat an assessee as a developer or contractor: (i) The assessee does not have to develop the entire infrastructure facility to qualify for deduction u/s. 80-IA(4) and if only a part of the infrastructure facility is develop....
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....: "22. Another submission which was urged on behalf of the revenue is that under clause (iii) of sub-section (4A) of section 80-IA, one of the conditions imposed was that the enterprise must start operating and maintaining the infrastructure facility on or after 1-4-1995. The same requirement is embodied in sub-clause (c) of clause (i) of subsection (4) of the amended provisions of section 80-IA. On this basis, it was urged that since the assessee was not operating and maintaining the facility, he did not fulfil the condition. This submission is fallacious both in fact and in law. As a matter of fact, the Tribunal has entered a finding that the assessee was operating the facility and this finding has been confirmed earlier in this judgment. That the assessee was maintaining the facility is not in dispute. The facility was commenced after 1-4-1995. Therefore, the requirement was met in fact. Moreover, as a matter of law, what the condition essentially means is that the infrastructure facility should have been operational after 1-4-1995. After section 80-IA was amended by the Finance Act of 2001, the section applies to an enterprise carrying on the business of (i) developing; or (i....
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...., there is no financial risk involved as the assessee was getting the payment for the construction done by him from time to time as one of the major remarks and/submissions made by the Ld. DR while making argument. We have carefully considered this particular aspect of the matter. If the contention of the Revenue is encouraged then possibly none of the developers will be entitled to the claim made under Section 80IA(4) of the Act. Our this view has been strengthened by the observation and the ratio laid down by the Hon'ble Delhi High Court in the case of CIT vs. VRM India Ltd., reported in [2015] 57 taxmann.com 325 (Delhi). While dealing with this particular aspect of the matter the Hon'ble Court has been pleased to observe as follows: "15. Since the assessee developed an infrastructure facility/project and was not required to maintain or operate, it was entitled to cost, plus the margin of income or profit; not to expect this treatment would render one who develops an infrastructure facility project, unable to realise its cost. If the infrastructure facility is, after its development, transferred to the Government, naturally the cost would be paid by the Government. Therefore, ....
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....ld that appellant is a contractor (and not a developer) and relying on the 3 member decision in the case of M/s. B.T.Patil & Sons Belgam Construction Pvt.Ltd. Vs. ACIT reported at 126 TTJ 577, AO held that appellant is not entitled to deduction u/s. 801A(4). 3.4 The contentions of the learned AR in brief are that the appellant is a developer of infrastructural facility; it made investment of its own as well as borrowed funds in the form of Plant & Machinery, structures at sites, working capital, human resources, technical expertise etc.; it has technical knowledge of developing and laying roads, dams, bridges etc; it cannot be held that appellant acted as only works contractor, the issue involved in the case relied on by the AO was whether sub-contractor was eligible for deduction u/s. 801A(4); the facts of the appellant's case are different in the sense that it is not sub-contractor but the main contractor, the decision of the Rajkot Tribunal in the case of Tarmat Bel (JV)KCL, Rajkot in ITA No.1111/Rjt/2010 dated 23-9-2010 supports appellant's case; in the 3 preceding years deduction u's.801A(4) was allowed to the appellant in the orders passed u/s. 143(3); Pune Tri....
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.... We find that on the identical facts and circumstances of the case, the assessee was found to be eligible for claiming deduction under Section 80IB(4) of the Act taking into consideration the overall aspect of works undertaken by the assessee therein. We are inspired by the ratio laid down by the Co-ordinate Bench in the said judgment Vijay M. Mistry (supra) holding the assessee eligible under the identical facts and circumstances of the case. 41. In the light of the above discussion and perusal of various clauses of Tender documents and case laws relied upon by both the parties, it reveals that the tender work under consideration are not for a specific work, rather they are for development facility as a whole. The responsibility is fully assigned to the developer for execution and completion of the work. Various stipulations contained in the Tender documents demonstrate various risks undertaken by the assessee for execution of the project work awarded by the competent authority in terms of financial resources, manpower deployment, both technical and administrative expertise, drawing and designing of the project specifications and getting approval from the competent authority, saf....