TaxTMI 
TaxTMI 
TaxTMI 
2017 (11) TMI 2041
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....claimed deduction u/s 80IA of the Act to the tune of Rs 68,90,60,412/- being profit from infrastructure development in respect of 18 construction projects. The assessee furnished the copies of agreements entered into with different authorities for construction or development works in the assessment proceedings for verification by the ld AO. It was explained that the assessee is engaged in the business of developing infrastructure facilities like construction of roads, bridges, railway system etc pursuant to agreements entered with Central Government, State Government or local authorities viz Kolkata Municipal Corporation , Central Public Works Department (CPWD) and others. The company has invested substantial amount sourced from its own fund and from overdrafts with banks and deployed its own machinery and manpower to execute such projects. On completion of such projects, they are handed over to the authorities concerned. It was explained that the above activities of business fall within the definition of infrastructural facility as specified in Explanation attached to Section 80IA of the Act. The ld AO however observed that assessee has only carried out the entire projects only in....
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....nd circumstances of the case and in law, the Ld. CITCA) has erred in ignoring the fact that basic purpose for allowance of deduction u/s. 80IA for development of infrastructural facility, as required by legislature, did not get solved in performance of such type of work as performed by the assessee as the merely work contract, in no way, can come under the eligible business' for the purpose of deduction u/s. 80IA of the Act. 5. In the facts and circumstances of the case and in law, the Ld. CITCA) has erred by ignoring the fact that the basic intent of the legislature is absent in the work done by the assessee during the relevant previous year for claiming deduction u/s. 80IA of the Act in assessee's case and at best, the work of the assessee can be regarded as 'work contract'. 6. In the facts and circumstances of the case and in law, the Ld. CITCA) has erred by overlooking the fact that by performing the allotted work by the local authority, source of earning of income instead of income from development, operation and maintenance of infrastructure facility. 7. In the facts and circumstances of the case and in law, the Ld. CIT(A) has erred by overlooking whe....
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.... assessee being a developer and claim of deduction u/s 80IA cannot be disturbed in section 153A proceedings. He placed reliance in this regard on the Co-ordinate Bench of this Tribunal in the case of ACIT vs Kanchan Oil Industries Ltd in ITA No. 725/Ko//2011 , ITA Nos. 1390,1391 & 1553/Kol/2010 dated 9.12.2015. 14.1. We find lot of force in the arguments of the Id AR that all the agreements / contracts were filed before the lower authorities and the Id CITA had gone into the relevant clauses of the agreements/ contracts, analysed the same in his elaborate order and then arrived at a conclusion that the assessee is only a developer and not merely a works contractor and accordingly eligible for deduction u/s 80IA of the Act. We also find that the Co-ordinate Bench of Chennai Tribunal in the case of ACIT vs R.R. Constructions in ITA No. 2061/Mds/2010 dated 3.10.2011 had an occasion to consider similar issue wherein it was held as under :- "The assessee has also produced all six agreements regarding six projects undertaken before the AO, whose copies are available before us also. It is a fact that even after taking a contract from Government, if the assessee develops infrastructu....
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....nd that, in any case, the revenue had conceded to the fact that there was absolutely no incriminating materials found during the course of search which would enable the ld AO to take a different stand with regard to the status of the assessee (whether a developer or contractor). Admittedly, the assessment framed in the impugned appeal is pursuant to search conducted u/s 132 of the Act wherein no incriminating materials were found, which fact is not disputed before us. Moreover, it is not in dispute that the claim of deduction u/s 80IA of the Act has been accepted by the. revenue in section 143(3) proceedings and there is no reason to disturb the same in section 153A proceedings without there being any incriminating materials to the contrary. In this regard, we find that the issue is squarely covered by the co-ordinate bench decision of this tribunal in the case of Kanchan Oil Industries Ltd supra. 14.5. With regard to the additional ground raised by the assessee, in view of our aforesaid findings, we do not deem it fit to go into the additional ground raised by the assessee as the same would only be superfluous in nature. 15. In view of our aforesaid findings and respectfully....
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....his issue is that the assessee company being a developer of infrastructural facilities raises running bills before completion of the project as per agreed terms and conditions. The authorities generally release 90% of the bill amount immediately but retain 10% of each and every bill till the verification as to satisfactory performance of the whole project is complete. Normally, completion of the project and verification takes considerable time resulting in delay in payment of retention money being 10% of the bill amount and the developer company has no right to receive the same. It was the earlier practice of the appellant company to credit its profit and loss account with the entire amount of bill raised on principles and to show the retention money receivable under a separate head in the Balance Sheet. The legal position regarding year of assessability of Retention money as clarified in several judicial decisions came to the knowledge of the assessee recently. Therefore, the assessee filed revised return to reduce its business profit to the extent of Rs. 10,60,18,958/- as Retention money since AO's observations read as follows: "Some of the Principals retained part of the contr....
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....he whole bill value is credited to the profit and loss account of the assessee irrespective of the fact whether such bill amount is received by it during the previous year or not. It may happen that the some of the Contractees/ Principals do not pay the whole amount as claimed by the contractor and pay an amount lesser than that claimed by the contractor after making some deduction on account of some shortfall, improper work or other contingencies. Similarly, when the contractee retains some amount from the bill value it is assumed that the amount withheld which is receivable by the assessee will be received by the assessee except in a situation when the contractee finds some fault with the work. But the taxation of the amount retained cannot be withheld for the contingency that the contractee will find some fault with the work and the assessee will not get back the amount. The treatment of the retention money on anticipation of a contingency defies the very basis of accounting. In the present case, there was no change in the business model or modus operandi of the business carried on by the assessee for more than a decade. This method of accounting was being regularly followed by ....