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2023 (11) TMI 1223
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....4.09.2021 2. That on the facts and in law in the final order of assessment, the AO has erred in computing the Gross Total Income after taking into effect loss of Rs. 13,65,60,299/- as declared by the appellant in the Revised Computation of Income (filed during assessment proceedings on 03.09.2021) instead of loss of Rs. 14,22,89,453/- as declared by the appellant in the Revised Computation of Income (filed during assessment proceedings on 04.09.2021), despite the fact that in the final assessment order Ld. AD has admitted that the assessee has filed revised computation of income at loss of Rs.14,22,89,453/- and Hon'ble DRP has also confirmed the same. 3. That on the facts and in law the AO / DRP have erred in disallowing deduction of Rs. 226,31,98,158/-u/s 801A(4)(i) claimed by the appellant in the return of income. 3.1. That on the facts and in law the AO/DRP have erred in holding that: (a) Contractees, who have allotted work of infrastructural facility to the appellant, are not recognised u/s 80IA(4)(1)(b), and (b) Appellant is merely a contractor and not a "developer". 4. That on the facts and in law the AO has erred in m....
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....f TDS of Rs. 12,40,95,837/- allowable to the assessee according to the income offered for taxation without passing a speaking order in this regard. 11. That on the facts and in law the AO has erred while making an addition of income-tax refund of Rs. 5,83,17,340/-issued to the assessee u/s 143(1) to the total demand of income- tax of Rs. 19,96,00,193/- raised after making above said additions without appreciating the fact that if refunds already issued have been added back, the assessee should be allowed credit of total taxes paid of Rs. 12,40,95,837/-" 3. Briefly stated, the assessee firm is a joint venture (JV) between two infrastructure companies, namely BSCPL Infrastructure Ltd. and C&C Construction Ltd. It is engaged in construction of roads, toll roads, highways and urban infrastructure including water, sanitation and sewage, power/ telecom transmission towers, commercial buildings, etc. For AY 2017-18, the assessee filed original return on 30.11.2017 declaring total income at Rs. NIL and deemed total income of Rs. 33,32,44,673/- under section 115JC of the Act. Its case was picked up for complete scrutiny through CASS. The assessee filed a revised return on 31.03.....
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....e final assessment was completed on 29.07.2022 by the Ld. AO under section 143(3)/ 92CA/ 144C(13) of the Act. 4. Aggrieved thereby, the assessee is in appeal before the Tribunal and all the grounds relate thereto. 5. Ground No. 1 is general in nature not requiring adjudication. Ground No. 5 relating to disallowance of Rs. 57,29,154/- on account of deduction of education cess has not been pressed. It is, therefore dismissed as not pressed. 6. Now, we proceed to adjudicate the remaining grounds. We have heard the Ld. Representative of the parties, considered their respective arguments and perused the records. 7. Ground No. 2 relates to non-consideration by the Ld. AO of the revised computation of income filed during assessment proceedings on 04.09.2021 declaring loss of Rs. 14,22,89,453/-. The Ld. AR submitted that before Ld. DRP a specific grievance was raised in this regard on which the Ld. DRP directed the Ld. AO to make necessary verification and pass a speaking order. This has not been done. The Ld. CIT-DR concedes to this factual position. We, therefore direct the Ld. AO to look into the assessee's grievance and take remedial action as per law after due verification....
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....on of the Tribunal in assessee's own case for AY 2016-17 in ITA No. 705/Del/2021 rendered on 31.11.2022. Our attention was drawn to para 21 to 26 thereof wherein the Tribunal recorded its findings on the points raised by the Ld. AO to negate the assessee's claim which are identical in the year under consideration. He pointed out that in the preceding year also the contractee companies were formed under various Ministries of Govt. of India. The Ld. AR submitted that the allegation of the Ld. AO that the assessee is only an EPC contractor for carrying out work awarded by NHAI to Mokama-Munger Highway Ltd. has also been refuted by the Tribunal in para 23 of its decision (supra). The last allegation levelled by the Ld. AO is that the assesee is not a developer but only a contractor. The Ld. AR stated that it has also not been accepted by the Tribunal by recording a finding in para 25 of its decision (supra) that the assessee is not a simplicitor contractor, rather the assessee is a developer of the project and that the contention of the Ld. AO in this regard is misconceived. 8.2 The Ld. AR further submitted that the details of contracts on which benefit of section 80IA is claimed by....
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....ch is at pages 675679 of Paper Book). Thereafter a revised return was filed on 31.03.2018 (copy of acknowledgement is at pages 621-625 of Paper Book) wherein the claim for deduction under section 80IA was revised to Rs. 226,31,98,158/-. It is also submitted that the original return was filed within the due date prescribed under section 139(1) and even the revised return has been filed within time allowed under section 139(5) of the Act. Both the returns are valid in the eye of law. The Ld. AR drew our attention to para 7 of Ld. AO's order at page 20 wherein the Ld. AO made incorrect observation to the effect that a perusal of the original return of income dated 30.11.2017 shows that the assessee had not claimed deduction under section 80IA of the Act. The Ld. CIT-DR's argument of not claiming deduction under section 80IA in the original return is the result of the above incorrect observation of the Ld. AO. 10.1 The Ld. AR took us to the Ld. AO's order for AY 2016-17 wherein at para 9.2 the Ld. AO states that during the year under consideration the assessee has undertaken 16 projects including one in Afghanistan. However, the assessee has submitted auditor's report in Form 10CCB ....
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....involved in this ground of assessee's appeal. 12. The record speaks for itself. There is ample evidence in the records to demonstrate that for the AY 2017-18 the assessee claimed deduction of Rs. 233,25,03,582/- under section 80IA of the Act in the original return of income filed on 30.11.2017 which claim was revised to Rs. 226,31,98,158/- in the revised return filed on 31.03.2018. There is no inkling in the order of the Ld. AO and / or of the Ld. DRP that the original or revised return so filed by the assessee was not within the prescribed time limit or in any way vitiated. The argument advanced by the Ld. CIT-DR that the assessee did not put in its claim of deduction under section 80IA in the original return with its attendant legal consequences seems to have stemmed from the incorrect appreciation of facts available in the records. Even the Ld. AO in para 7 of his assessment order at page 20 incorrectly observed that perusal of original return dated 30.11.2017 showed that no claim of deduction under section 80IA of the Act was made by the assesee which is contrary to the facts on record. We therefore reject this argument of the Ld. CIT-DR which will have no legal consequences....
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....lfils all the following conditions, namely: (a) it is owned by a company registered in India or by a consortium of such companies or by an authority or a board or a corporation or any other body established or constituted under any Central or State Act; (b) it has entered into an agreement with the Central Government or a State Government or a local authority or any other statutory body for (i) developing or (ii) operating and maintaining or (iii) developing, operating and maintaining a new infrastructure facility; (c) it has started or starts operating and maintaining the infrastructure facility on or after the 1st day of April, 1995: Provided that------------ Explanation. For the purposes of this clause, "infrastructure facility" means- (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) a water supply project, water treatment system, irrigation project, sanitation and sewerage system or solid waste management system; (d) a port, airport, inland waterway, inland port or navigational c....
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....d deduction of Rs.226,31,98,158/- (as per revised return) under section 80IA on the following projects: S. No. Name of the Project Employer Nature of the Project Deduction claimed u/s 80IA (Rs.) 1. Meghalaya Project Office of the Chief Engineers PWD (Roads), Meghalaya, Shillong 2 laining of Nongstoin Shillong section of NH-44 and Nongstoin- Rongjeng-Tura Road, in the state of Meghalaya under Phase 'A' of SARDP-NE-Job No. SARDP-NE- NI-44 & SRMG-PWD-2010-11- 172 142,99,02,902 2. Mokama- Munger NHAI (Through Project Company Mokama- Munger Highway Ltd. Two laining with paved shoulder of Mokama Munger Section of NH-Bo 2.43.46,365 3. Danapur ROB Ircon International Ltd. Construction of Road over Bridge both railway span and adjacent approaches including Reinforced Earth Wall/Retaining Wall between section Phulwarishrif- Danapur on EC Railway, Bihar 72,30,449 4. Subansari Power Grid Corporation of India Ltd. Piling foundation package for lower Subansari Chariyal, Balipara, Bongaigaon, Biswanath Chariyal, Tanla-Kokrajhar, Bararbisa Assam Border 32,44,863 5. Ganga Bridge, Digha Ircon International Lt....
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....is a part of Public Sector Undertakings. The assessee is eligible for deduction u/s 80IA on the contracts awarded by these Corporations. IRCON is under the Ministry of Railways and Bihar State Road Development Corporation Limited is under Bihar State Government. Organisational Structure of Ministry of Railways: We are submitting herewith relevant pages of the Annual Report for the FY 2015-16 of Indian Railways. It explains complete Organisation Structure of Ministry of Railways. Your Honour would observe that Ministry of Railways has four major parts - Zonal Railways (Open Lines), Production Units, Other Units and CPSE/CORP. CPSE/CORP includes IRCON. Your Honour would further observe the purpose of incorporating the above said two companies as detailed below: Ircon International Limited (IRCON) Ircon International Limited (formally known as Indian Railway Construction Company Limited), a Mini Ratna and Schedule 'A' PSU, was incorporated on 28th April, 1976, mainly for the purpose of construction and development of Railway infrastructure in India and abroad with Indian Railways' expertise. The company diversified in other area....
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....ese are the special purpose entity incorporated by Centre/State Government. Moreover, it is submitted the provisions of section 80IA incentivise rapid development of infrastructural projects in India. A liberal interpretation has to be accorded to the condition stipulated in section 80-IA(4)(i). Higher courts have repeatedly held that a strict construction of requirements stipulated in section 80-IA(4)(i) will yield manifestly absurd results. In this regard, kind reference of your goodself is invited to the decision of Hon'ble Gujrat High Court in case of CIT vs Ranjit Projects (P) Ltd reported in (2018) 94 taxmann.com 320 (Guj). In this case it has been held by Hon'ble High Court as under: "13. The above statutory provisions and the relevant facts arising in the present case and noted above would leave little doubt in one's mind that GSRDC was a nodal agency constituted by the State Government for the purpose of executing road development projects through private participation and was a Government agency as defined in section 2(e) of the Act of 1999. Significant factors in the present case are that the road widening project was cleared by the....
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....s not legally possible for any enterprise other than Indian Railways to maintain and operate Railway System 1. The Finance Act, 1995 has introduced sub-section (4A) in section 80- IA of the Income-tax Act, 1961 providing for a five-year tax holiday and a deduction of 30 per cent in the subsequent five years within a period of twelve assessment years beginning with the assessment year in which an enterprise (which may be owned by a company or a Consortium of companies) begins operating and maintaining an infrastructure facility on Build-OperateTransfer (BOT) or on Build- Own-Operate-Transfer (BOOT) basis, subject to certain conditions specified in that sub-section. One of the conditions to be fulfilled by the enterprise is that it should develop, maintain and operate a new infrastructure facility which shall be transferred to the Central Government, etc., within the period stipulated in the agreement. The definition of infrastructure as per sub-section (12) of section 80-IA includes a rail system also. 2. The Indian Railways have formulated a Build-Own-Lease-Transfer (BOLT) Scheme, whereunder a private enterprise will provide the necessary and crucial components of....
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....t etc. B> NEW INFRASTRUCTURE FACILITY: The assessee is developing a new infrastructure facility. Your goodself would observe from all the agreements that the assessee has either been engaged for construction of a new infrastructure facility such as Rail Over- Bridge, widening of existing carriageway, improvement/upgradation of roads etc. In this regard, we need to point out that the Central Board of Direct Taxes in its Circular No.4/2010 issued on 18.05.2010 has clarified that the work of widening of an existing road by constructing additional lanes as a part of Highway project would be recorded as a new infrastructure facility for the purpose of Section 80-IA(4)(i) of the Act. The said Circular is reproduced below for the sake of convenience: "CIRCULAR NO.4 OF 2010 DT, 18TH MAY, 2010 Widening of existing road-Definition of a new infrastructure facility- Clarification regarding 18/05/2010 DEDUCTIONS SECTION 80-IA(4) References have been received by the Board as to whether widening of existing roads constitutes creation of new infrastructure facility for the purpose of section 80-IA(4)(i) of the Income-tax Act, 1961. ....
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....e project. Ratio propounded and upheld by Apex Court in case of Ranjit Project's case (supra) is squarely applicable to the present situation. In view of above, it is submitted that since NHAI had awarded the contract to the applicant, it may kindly be held that the above said agreements were not entered into with Indian Companies rather the agreements may kindly be considered as entered into with NHAI and the deduction u/s 80IA of the Act may kindly be allowed to the applicant. D> ASSESSEE IS A DEVELOPER OF AN INFRASTRUCTURE FACILY AND NOT A WORK CONTRACTOR: ASSESSEE IS NOT A WORK CONTRACTOR: From a plain reading of the section, it is clear that deduction u/s 80-IA does not apply to a works contract. It is submitted that Section 80-IA nowhere defines the term "works contract", hence the natural meaning of the word shall apply. As per the Oxford dictionary the term "work" means application of effort to a purpose or use of energy. Thus going by the dictionary meaning we may say that a works contract is a contract which involves effort or in other words labour of the contractor. Further as per the Black's Law Dictionary, the term "....
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....to be made out of payments made to the contractor. It is a clear indication of the Legislature that the "work" in the sub-section is not intended to be confined to or restricted to "works contract". The Hon'ble Apex Court laid out that the term "work" used in section 194C need not be restricted to "works contracts" (i.e. labour contracts) because the subsection expressly includes supply of labour to carry out work. In other words, it is implied that works contract means supply of labour to carry out work: Thus from the above, it is stated that a works contract constitutes a contract under which the contractor is merely employing his efforts or labour. Under such a contract, the contractee provides the material and other requisites (a complete infrastructure) needed to carry out the desired work to the contractor who by applying his labour to the said material turns the material into a desired product. The memorandum explaining the provisions in the Finance Bill, 2007, reported in (2007) 289 ITR (St.) 292 at page 312 reads as under: "Section 80-LA, inter alia, provides for a ten-year tax benefit to an enterprise or an undertaking engaged in de....
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....not a Work Contractor, rather is a developer of the infrastructure facility. ASSESSEE IS A DEVELOPER OF INFRASTRUCTURE FACILITY: The issue of difference between a developer and a contractor was examined by a number of Hon'ble Courts as under: Rajkot ITAT in case of Katira Constructions Limited reported in 185 ITD 173 (Rajkot) has examined the scope of terms "developer", "contractor" and "work contract" vis a vis section 80IA(4) as under: ".......For this purpose, first of all it is imperative to appreciate the difference between a 'developer' and a 'contractor'. Generally in common parlance a person is referred as 'developer' who undertakes the project to develop and construct on its own responsibility and takes all the risks of the development. These responsibilities and risk can be categorized as under: (a) That in a development contract" responsibility is fully assigned to the developer to do all acts for execution and completion of work right from designing the project till handing over the project to the Government. As such, the agreement is not for a specific work, it is for development of facility as a ....
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....o complete the construction in a specified manner failing which it would be responsible for the consequences of delay/any other fault attributable to it. (k) That a developer shall undertake to maintain safety, security and protection of the environment. (l) That a developer shall provide and maintain at his own cost all lights, guards, fencing, warning signs and watching, when or where necessary. These are few broad sample qualities/parameters of a developer through which the character of a developer can be defined. 13.2 On the other hand, a 'contractor' is a person who undertakes work on a contract basis. He does not assume risks and responsibilities like that of a developer. He merely carries out the work as has been instructed to him by the contractee. Moreover, in case of such work the contractor gets fixed amount of revenue for executing such work and is not entitled to any share of profit from revenue generated by the developer/land owner. 13.3 To summarize, the developer acts as a principal whereas the contractor acts as an agent in performing the functions as required by the developer. The developers, in true sense, are ....
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....the question as to whether the Assessee as per the question as to whether the Assessee is 'developer' or 'contractor' has to be tested in the light of the subsequent decisions rendered on the issue by the Hon'ble Bombay High Court in the case of ABG Heavy Industries (supra) and the order of the Division Bench of ITAT giving effect to the larger bench (third member) decision in the case of B.T. Patil & Sons (supra). According to these decisions what is to be seen is as to whether the assessee has shouldered out Investment & technical risk in respect of the work executed and it is liable for liquidated damages if it failed to fulfill the obligation laid down in the agreement. The liability that was assumed by the assessee under terms of the contract would be obligations involving the development of an infrastructure facility. The assessee has also in its employment technically and administratively qualified team of persons. If the above conditions are satisfied then it would not be correct to say that assessee is merely a contractor and not a developer. Without giving adverse finding on the above tests, the CIT could not conclude that the order of the AO was erron....
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....will start from Completion Certificate date. APPLICATION OF THE ABOVE SAID CONDITIONS TO THE PROJECTS EXCUTED BY THE APPLICANT: It is submitted that applicant has complied with all the above conditions as enumerated in Section 80(IA) of the Act. For ease of ready reference the same has been demonstrated for two of our projects below: Sr. No. 1: MEGHALAYA PROJECT: * FIRST CONDITION - The Project has been awarded by State Government: It is submitted that the project in this case was awarded by The Chief Engineer, P.W.D., Highway, Meghalaya. State Government has awarded the Project. Hence, the applicant has fulfilled first condition that the project was awarded by Central/ State Government/ local authority/ Statutory Body. * SECOND CONDITION The Project should be for development of a new infrastructure facility and infrastructure facility includes road, bridge, railway system etc. Your Honours would observe from the following clauses that the assessee was engaged in the development of a new infrastructure facility which includes road, bridges etc: Project: 2 laining of Nongstoin-Shillong section of NH-44 ....
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....ageway and construction of new roads/ parallel road which establishes development of "New Infrastructure Facility" since as per Board's Circular widening of the existing roads by constructing additional lane would be development of New Infrastructure Facility. * THIRD CONDITION. - The assessee is a developer of New Infrastrucutre Facility. Following clauses of the Contract Agreement would substantiate that the applicant is Developer of a New Infrastructure facility and not a mere contractor as the applicant has undertaken both managerial as well as financial responsibility; it is under an obligation to design the project; it is fully responsible for development or completion of the project; it has undertaken complete risk of the project; it has employed manpower, machinery and has also arranged finances. Responsibilities of the Contractor include following: GENERAL CONDITIONS OF THE CONTRACT Materials: Materials are all supplies, including consumables, used by the contractor for incorporation in the work. Plant: Plant is any integral part of the Works which is to have a mechanical, electrical, electronic or chemical or....
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....letion Date. The estimate is to be provided by the Contractor as soon as reasonable possible. 49 Liquidated Damages 49.1 The Contractor shall pay liquidated damages to the Employer at the rate per day stated in the Contract Data for each day that the Completion Date is later than the Intended Completion Date (for the whole of the works or the milestone as stated in the contract data). The total amount of liquidated damages shall not exceed the amount defined in the Contract Data. The Employer may deduct liquidated damages from payments due to the Contractor. Payment of liquidated damages does not affect the Contractor's liabilities. 52 Securities 52.1 The Performance Security (including additional security for unbalanced bids) shall be provided to the Employer no later than the date specified in the Letter of Acceptance and shall be issued in an amount and form and by a bank or surety acceptable to the Employer and denominated in Indian Rupees. The Performance Security shall be valid until a date 28 days from the date of expiry of Defect Liability Period and the additional security for unbalanced bids shall be valid until a dote 28 days from ....
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....ed after 01.04.1995; iv> The applicant has to execute the whole of the project v> The above said terms and conditions duly establish that total risk of the project is on the applicant; and is responsible for both managerial and financial responsibility; has duly given performance guarantee to the Employer; has bigger role than a Contractor, the applicant has to amend errors which may arise therein; it has to make own arrangement for plant, labour and material and hence, the applicant is a Developer. Hence, it is submitted that the assessee may kindly be allowed deduction u/s 80IA with respect to the above said Project Sr. No. 3: Danapur ROB: A> FIRST CONDITION - The Project has been awarded by the Central Government: It is submitted that the project in this case was awarded by IRCON International Limited (A Government of India Enterprise owned by Ministry of Railways). Kindly see underlined of the Letter of Acceptance and of Tender Documents. Ministry of Railways through IRCON International Limited has awarded this Project. Hence, the applicant has fulfilled first condition that the project was awarded by Central/ State Governme....
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....vernment, Local Authorities etc. In case of any modification in GAD, the contractor shall obtain a corrected copy of GAD's in hard copy to follow at site. (iii) The Contractor will arrange site clearing, required Dismantling, left over utility shifting etc. and submit the proposed land utilisation plans for proposed construction of ROB. The limits of construction shall be cordoned by continuous barricade of approved design and drawing. The steel Frame & plate barricade safety boards duly written with desired LOGO & safety slogans shall be provided continuous blocking for not intercepting the construction activities by flying traffic. Safety bands, Ribbons and other gadgets for Construction site & Workmen shall be maintained as per scheme approved by the engineer. (iv) Based on the approved GAD, design, the contractor will organize surveys and shall prepare detailed layout plans showing approach roads, piers, abutments RE wall & approaches of ROB etc. and execute based on detailed engineering drawings for all items of works. The working drawings shall be prepared on computer in standard CAD format. (v) The contractor shall submit Quantities with calcul....
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....ment's required for proper construction & quality control during execution of entire work such as survey instruments including TOTAL STATION, testing equipment's, laboratory facilities etc. shall be arranged by the contractor.at his own cost. (xii) Wherever required, the contractor has to carry out accurate instrumental survey to establish co-ordinate, layout and proper verification system at site. (xiii) The "work shall be carried out in terms of specifications of latest editions (and up-to- date correction amendment/errata) of IRS (Indian Railways Standards) IRC (Indian Road Congress) and BIS (Beaureu of Indian Standard), RDSO & other relevant international code, whatever/wherever applicable and as directed by the Employer/Client. (xiv) Vertical & Horizontal Clearance shall be maintained for corresponding construction/components of subject ROB, within/outside Railway / Construction limits for maintaining desired safety/construction requirements. (xv) The girder may be of Precast pre-stressed contract (Pre/ Post tensioned), steel or composite or R.C.C/PSC Beams/ Slabs etc. depending upon the designs approved. (xvi) Launching / E....
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.... complying with regulations and stipulations of local bodies and other statutory departments etc. The contractor shall at all times permit inspection of the sanitary arrangements made by the contractor by the Engineer's representative or any authority of local bodies and shall be bound by their decisions. 6.0 SUPPLY OF MATERIALS BY ENGINEER 6.1 Contractor shall make his own arrangements at his cost for all materials required for execution, completion and maintenance of all items of work included in his scope of work to the complete satisfaction of the Engineer. Engineer shall not supply any materials nor shall assist for procurement of any materials required for execution; completion and maintenance of works. 6.2 CEMENT The Contractor shall procure cement from the reputed cement manufacturer: only and in accordance with the specifications of the contract with the prior approval of the Engine.er. The Contractor shall submit the proof of procurement of cement from the agency approved by the Engineer. The Contractor shall also submit the test certificates regarding the quality of the materials. Instead of Ordinary Portland C....
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.... work included in his scope of work to the complete satisfaction of the Engineer, IRCON shall neither supply any Plant and Machinery nor assist for procurement of any Plant and Machinery required for execution, completion and maintenance of works. 7.2 It will be mandatory on the part of the contractor to deploy concrete batching plant of suitable capacity for production of all grades of concrete above M15 grade. Depending upon the requirement, placing of the concrete shall either be done with a concrete pump, concrete transit mixtures or crane and bucket system as per the site condition. 7.3 The contractor shall arrange and operate at his own cost all necessary tools, plants, machineries and equipments necessary for successful and timely completion of work. 7.4 If in the opinion of the Engineer, equipment / plant brought by the contractor are not suitable for the work concerned, the engineer shall have the right to order the contractor to replace them by the suitable plant/ equipments. In the interest of public convenience, the engineer may interest on the specific way of execution of the work. 8.0 LABORATORY 8.1 Contractor shall h....
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....If any time Employer finds the safety arrangements inadequate or unsafe the contractor shall take immediate corrective action at his cost as directed by Engineers representative at site. Any direction in the matter shall in no way absolve the contractor of his sale responsibility to adopt safe working methods. The contractor is responsible for providing skilled personnel and adequate expert supervision so as to ensure complete safety. GENERAL CONDITIONS OF CONTRACT 8.0 PERFORMANCE SECURITY & RETENTION MONEY 8.1 For contracts valuing upto Rs. 1.00 Crore, performance security shall be required to be submitted by the Contractor. 8.2 Performance Security for Contracts valuing more than Rs. 1.00 Crore: i) The successful bidder shall submit a performance Guarantee in the form of irrevocable bank guarantee in the Performa annexed as Annexure-II from' any scheduled bank" for an amount of 5% (Five percent) of the contract value. The value of PG to be submitted by the contractor will not be change for variation upto 25% (either increase or decrease). In case during the course of execution, value of contract increases by More than 25% of the or....
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....gements, at his own cost, Plant, Machinery and Equipment required for execution and completion of all works to the entire satisfaction of the Engineer. This shall also include all other associated equipment, tools/tackles spare parts, POL, consumables, stores, manpower as required for the execution of works.] 36.0 PLANT AND MATERIALS OF THE CONTRACTOR 36.1 Contractor's plant/materials at site to be exclusive to the work All constructional, plant and materials brought on the site by the Contractor be deemed to be exclusively intended for the execution of the work or part of the work and the Contractor shall not remove the same without the permission of the Engineer till completion of work or part of work. 39.0 ENGAGEMENT OF LABOUR The Contractor shall make his own arrangements for the engagement of all labour, except as provided otherwise in the contract. D> FOURTH CONDITION: Above responsibilities and duties alongwith other Clauses of the Agreement duly substantiate that the assessee is not a simplicitor contractor rather the assessee is a developer of the project who has taken complete responsibility and risk for the said ROB Danapu....
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....ked for. The same are attached herewith for your kind perusal. Some of the work-sites are in Tally System. The assessee is in the process of extracting ledger accounts from the Tally System. We require a further 15 days time to submit the same. It is further submitted that the accounts of t audited accounts and the assessee is under t inception. Its books of accounts have never been rejected by the earlier the assessee are duly Assessing Officers. The assessee intends to submit complete details, but is Scrutiny assessment since helpless due to non-working of Central Computer System. In such a scenario, we would request your goodself to kindly exempt the assessee from submissions of the ledger accounts maintained in ERP Package. It is prayed accordingly. 3. Virtual Hearing: Your good self has allowed Virtual Hearing of the case. We would like to avail the said opportunity of being heard virtually. However, we would request your good self to kindly give us some time to submit the pending details of expenses and we would request for Virtual Hearing after filing all the details." 14. It may be seen that a detailed explanation to prove tha....
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....Corporations with which it had entered into agreements are public sector undertakings of State/Central Governments, therefore, fulfills the basic condition u/s 80IA(4) of the Act. The assessee also explained the various clauses of the agreements entered with various entities to prove that assessee is a developer and not merely a contractor. The basic objection of the AO in denying the claim u/s 80IA was that the enterprise with which the assessee entered into agreement for developing the projects are not statutory bodies. However, the submissions and evidences placed on record suggest that these Companies/Entities were formed under various Ministries of Government of India and, therefore, the contention of the AO that the basic condition of provisions of Section 80IA(4) of the Act was not fulfilled by the assessee is not correct. 22. The second contention of the AO is that the assessee has entered into EPC agreement with Mokama-Munger Highway Ltd. which in turn had obtained a contract from NHAI and, therefore, the assessee is only an EPC contractor for carrying out work awarded by NHAI to Mokama-Munger Highway Ltd. and, therefore, the basic condition of sub-section (4) of ....
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....amage to physical property and of personal injury and death which arise during and in consequence of the performance of the Contract other than the excepted risks are the responsibility of the Contractor. 13 Insurance 13.1 The Contractor shall provide in the joint names of the Employer and the Contractor, insurance cover from the Start Date to the end of the Defect Liability Period in the amounts and deductibles stated in the Contract Data for the following events which are due to the Contractor's Risks: (a) loss of or damage to the Works, Plant and Materials; (b) loss of or damage to Equipment; (c) loss of or damage of property (except the Works, Plant, Materials and Equipments) in connection with the Contract; and (d) personal injury or death. 21 Possession of the Site 21.1 The Employer shall give possession of all parts of the Site to the Contractor. If possession of apart is not given by the date stated in the Contract Data the Employer is deemed to have delayed the start of the relevant activities and this will be Compensation Event. 27 Programme 27.1 Within the time stated in t....
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....ff and labour, local or other, and for their payment, housing, feeding and transport. 2 COMPLIANCE WITH LABOUR REGULATIONS: During the continuance of the contract, the Contractor and his sub-contractors shall abide at all times by all existing labour enactments and rules made there under, regulations, notifications and bye laws of the State or Central Government or local authority and any other labour law. ADDITIONAL SPECIAL CONDITION 1 From the date of taking over of site by contractor till the completion of the whole work. the entire responsibility for maintenance of the road portion including the portions where the work is not vet started (in addition to the maintenance of the already executed works) shall lie with the contractor. In case the contractor fails to carry out the maintenance works, he will be notified by the Executive Engineer to execute the same. If the contractor still then fails to carry out the same within 7 days from the date of receiving instruction etc. from the Executive Engineer in writing, the Executive Engineer will be done the work and the cost thereof will be recovered from the contractor's next bill for the works. Th....
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....le. It was in the backdrop of the said factual finding that the assessee's claim of deduction under section 80IA was negatived. None of these two decisions (supra) relied upon by the Ld. CIT-DR assist him being distinguishable on facts. On the face of the clear cut finding of the Tribunal that the assessee is a developer of the Projects and not only a contractor, the contention of the Ld. CIT-DR is rejected being devoid of merit. 18. Following the decision (supra) of the Tribunal and for the reasons set out above we decide Ground No. 3 in favour of the assessee holding that the assessee is eligible to claim the impugned deduction under section 80IA of the Act. 19. Ground No. 4 relates to disallowance of Rs. 38,34,16,688/- on account of deduction of expenses under section 40(a)(ia) disallowed in earlier years. The Ld. AO has not discussed this issue in draft assessment order. According to him, the assessee has claimed the impugned deduction in revised computation vide letter dated 04.09.2021. However the Ld. DRP directed the Ld. AO to verify the claim but the Ld. AO added it back to the income of the assessee for want of supporting evidence. 19.1 The Ld. AR submitted that b....
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....s, perused the orders of the authorities below. The TPO observed that as per the balance sheet assessee had given advance of Rs.8,14,37,921/- to BSE C&C JV Nepal Pvt. Ltd. which is an Associate Enterprise and required the assessee to show cause why it should not be treated as a separate transaction and ALP of interest chargeable be determined. Assessee submitted that it had charged no interest on such advance receivables as the AE Company is being established by JV Partners in the 50:50 ratio by BSE PL & C&C to provide working capital requirement for crusher unit which was set up in Nepal to provide aggregate as product from boulders as the cost of production in Nepal is quite lower than in India. Therefore, since both the JV Partners are the shareholders in BSE and C&C JV Nepal are the shareholders in such company in equal proportion charging any interest from its own pocket do not have any commercial expediency and, therefore, there is no transaction of any interest which require any benchmarking. However, the TPO in view of the Explanation 1 to Section 92B introduced by the Finance Act, 2012 w.e.f. AY 2012-13 and also relying on the decision of the Delhi High Court in the case o....
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....n Nepal which has turned credit balance to a debit balance. We are also enclosing year-wise detail of Credit and Debit Balances of M/s BSC C&C Nepal Pvt Limited (Site-wise) for your kind perusal. This is an additional evidence for which separate request has been made for its admission as these documents could not be submitted before AO due to paucity of time. From details submitted your goodself will appreciate that the account balance of M/s BSC C&C Nepal Pvt Limited got converted from a debit to credit in FY 2011-12. Thereafter in FYs 2012-13 to 2015-16 the account remained as debit due of Rs 8.14 crores. In assessments for these years it has never been the case of tax department that the debit balance is either "money advanced" or "sum receivable". The fact that amount shown as debit was not "money advanced" or "sum receivable" is further cemented by the fact that the Debit Balance was subsequently also written off in FY 2017-18. f) Further, it is submitted that applicant is a joint venture between two companies - BSCPL Infrastructure Ltd. and C&C Construction Ltd. having 50% equal share in the profits & loss of the applicant. The foreign AE - BSC C&C ....
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....nal transaction', i.e., any other transaction having a bearing on the proof its, incomes, losses or assets of such enterprises, does not apply to a continuing debit balance, on the given facts of the case, for the elementary reason that there is nothing on record to show that as a result of not realizing the debts from associated enterprises, there has been any impact on profits, incomes, losses or assets of the assessee. In view of these discussions, in our considered view, a continuing debit balance per se, in the account of the associated enterprises, does not amount to an international transaction under section 92B in respect of which ALP adjustments can be made. The factum of payment has to be considered vis- a-vis terms of payment set out in the transaction arrangement, and not in isolation with the commercial terms on which transaction in respect of which payment is, according to the revenue authorities, delayed. In any event, even when an ALP is made in respect excessive credit period allowed under the CUP method, stated by the TPO, the comparable has to be dues recoverable from a debtor and not a borrower. It appears that the TPO has adopted interest at the rate of 2.1....
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....ess activities in Nepal which has turned into credit balance to a debit balance and the assessee furnished year wise details of credit and debit balances of BSC C&C Nepal Pvt. Ltd. as additional evidences. It was also contended that the account balances of BSC C&C Nepal Pvt. Ltd. got converted from a debit to credit in FY 2011-12. Thereafter, in financial years 2012-13 to 2015-16 the account remained as debit due of Rs.8.14 crores. It was contended that in the assessments for these years it has never been the case of the Department that the debit balance is either "money advanced" or "sum receivable". It was also stated that the amount shown as debit was not money advanced or sum receivable and was subsequently written off in 2017-18 to prove the contention that it is neither money advanced nor sum receivable. 33. At this stage the observations of the Hon'ble Delhi High Court in the case of PCIT Vs. Kusum Healthcare (P) Ltd. (398 ITR 66) are very much relevant and they are as follows: "10. The court is unable to agree with the above submissions. The inclusion in the Explanation to section 92B of the Act of the expression "receivables" does not mean that dehors the....
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....18,84,08,295/- on account of retention money retained by the employer. The Ld. AO has discussed this issue in para 5 of his order. He found that in its revised return/computation the assessee claimed the impugned deduction. On being asked for justification the assessee submitted that while claiming the impugned deduction the assessee has also offered for taxation a sum of Rs. 7,23,59,198/- released by the employer of the assessee for which project completion certificate was received during the year. Clause 48 of the contract agreement with PWD, Govt. of Meghalaya dealing with the receipt and payment of retention money was brought to the notice of the Ld. AO to demonstrate that retention money becomes due to the assessee only on expiry/completion of Defect Liability Period ("DLP") i.e. typically one year after completion of the construction. Further such retention money is released to the assessee only if no defect arises in the construction during the DLP. It was thus submitted that retention money does not accrue to the assessee on completion of construction but is contingent upon satisfactory completion of the DLP. In support, numbers of decisions were cited. The explanation was ....