TaxTMI 
TaxTMI 
TaxTMI 
2024 (2) TMI 580
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.... not allowing brought forward loss of Rs. 13,65,60,299/- as declared by the appellant in the Revised Computation of Income (filed during assessment proceedings on 01.09.2021) on the ground that brought forward loss for the AY 2017-18 has got converted into profits after additions made for the said assessment year and has also erred in keeping the loss at Rs. 13,65,60,299/- instead of loss of Rs. 14,22,89,453/- for the AY 2017-18 as declared by the appellant in the Revised computation of income for the AY 2017-18 filed during assessment proceedings on 04.09.2021. 3. That on the facts and in law the AO / DRP have erred in disallowing deduction of Rs. 66,14,49,535/-u/s 80IA(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 making an addition of Rs. 19,40,67,731/- on account of deduction of expenses u/s 40(a)(ia) disallowed in earlier years without consideri....
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....ve issues involved in this appeal are squarely covered by the decisions of the Tribunal in the assessee's own case for assessment years 2016-17 and 2017-18 vide ITA No. 705/Del/2021 dated 30.11.2022 and ITA No. 2283/Del/2022 dated 3.11.2023 respectively. 3. In this view of the matter, with the consent of both the parties, the extant appeal is being disposed-off accordingly. 4. 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 2018-19, the assessee filed original return on 27.11.2018 declaring total Loss income at Rs. (-) 3,56,94,313/- and deemed total income of Rs. NIL u/s. 115JC of the Act. Its case was picked up for complete scrutiny through CASS. Hence, notice u/s. 143(2) of the Act was issued on 22.09.2019 which was duly served upon the assessee through ITBA. Thereafter, the assessee filed a revised computation of income of Rs. NIL on 19.8.2021 declaring a total income of Rs. NIL ....
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....bsp; Total assessed income Rs. 49,81,91,872/- 4.3 The claim of deduction under section 80IA(4) was denied and taken as 'NIL'. Accordingly, the final assessment was completed on 29.07.2022 by the AO under section 143(3)/ 92CA/ 144C(13) of the Act. 5. Aggrieved thereby, the assessee is in appeal before the Tribunal. 6. Ground No. 1 is general in nature not requiring adjudication. Ground No. 8 relating to disallowance of Rs. 1,08,85,080/- on account of late deposit of EPF has not been pressed. It is, therefore dismissed as not pressed. 7. Now, we proceed to adjudicate the remaining grounds. 8. Ground No. 2 relates to not allowing brought forwards loss of Rs. 13,65,60,99/- as declared by the assessee in the revised computation of income filed during the assessment proceedings on 1.9.2021. On this issue, Ld. AR submitted that recently the ITAT, Delhi vide its order dated 03.11.2023 in assessee's own case for AY 2017-18 in ITA No. 2283/Del/2022 has decided the appeal by partly allowed the appeal for statistical purposes and AO is yet to get effect to order passed by the Tribunal for AY 2017-18. Hence, he requested the similar directions be issued to the AO in the instant assessmen....
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....projects including one in Afghanistan and has submitted auditor's report in Form 10CCB as required under section 801A(7) of the Act. In para 7.3 the Ld. AO gave details of 9 projects containing therein name of the project, employer, nature of project and the amount of deduction claimed under section 80IA of the Act. According to the Ld. AO two of the contractee companies, namely Power Grid Corporation of India Ltd. and Ircon International Ltd. are neither Central Govt. nor State Govt. nor a Local Authority nor any other statutory body. Therefore basic condition for claiming deduction under section 80IA(4) is not satisfied in respect of their 5 projects viz. Danapur ROB, Subansari, Ganga Bridge Digha, Ganga Bridge Sonpur and Muzaffarpur ROB. In para 7.4 the Ld. AO observed that the assessee JV is the contractor of Mokama-Munger Project by virtue of EPC Agreement entered on 10.12.2010 between M/s. Mokama- Munger Highway Limited (Project Company) and the assessee (EPC Contractor). It is the Project Company which has been awarded the contract by NHAI. The Project Company entered into an agreement with the assessee as EPC contractor for carrying out the contract work awarded by NHAI to ....
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....at there is parity of facts. 8.3 The Ld. AR contended that in para 4.5.3 of directions the Ld. DRP has accepted that the Ld. AO has gone through the details of the contract agreement for each of the 9 projects undertaken by the assessee in the year under consideration during the course of assessment proceedings. There is thus no dispute on facts. 9. The Ld. CIT-DR defended the order of the Ld. AO/DRP. He stated in his written submission that the assessee did not claim deduction under section 80IA in its original return filed on 30.11.2017. Deduction was claimed by filing revised return which is not in accordance with law. 9.1 The Ld. CIT-DR refuted the contention of the Ld. AR that the issue is covered by the decision of the Tribunal for AY 2016-17. The Ld. CIT-DR submitted that deduction for two projects, namely Soanbarsa and SH-83 has been claimed in AY 2017-18 for the first time, hence it cannot be said that even for these two projects the issue is covered by the decision of the Tribunal for AY 2016-17. 9.2 The Ld. CIT-DR reiterated the argument advanced in the preceding year as well by the Revenue that the assessee is a contractor and not a developer. He placed reli....
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....ya Shillong. The Ld. AR contended that the Tribunal in its order for AY 2016-17 noted in para 21 that all the agreements are on record of the Ld. AO and that the grounds for denial of deduction under section 80IA are also same in AY 2016-17. The Tribunal considered all the grounds taken by the Ld. AO/DRP for denial of deduction under section 80IA of the Act and recorded its finding rejecting all of them. Therefore, it cannot be said, as argued by Ld. CIT-DR that the same issue in AY 2017-18 is not covered by the decision of the Tribunal for AY 2016-17. The Ld. AR clarified that both the Ld. AO and Ld. DRP had taken Shillong Project as a lead case for arriving at the conclusion that the assessee is not a developer. However, the Tribunal recorded its findings thereon in its decision in AY 2016-17. 10.2 The Ld. AR further clarified that in AY 2017-18 copies of all the project agreements were filed before the Ld. AO during the course of assessment proceedings including Sonbarsa Project and SH-83 Project which is obvious from the written submission dated 8.3.2021 filed before the Ld. AO in response to notice under section 142(1) of the Act containing justification for claiming deduct....
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....wo projects viz. Sonbarsa and SH-83 for the first time. This is not at all a valid reason. We have perused the reply filed by the assessee in response to Ld. AO's notice under section 142(1) of the Act (copy at pages 581-615 of Paper Book) during assessment proceedings. The assessee submitted that it is engaged in the business of development of infrastructure facility and that it has claimed deduction under section 80IA of the Act and gave justification therefor. For ease of understanding we reproduce the same hereunder:- "1. Point No. 6 (Deduction u/s 80-1A): With regard to deduction claimed u/s 80-IA, we have state that the assessee is engaged in the business of development of Infrastructure Facility and has claimed deduction u/s 80-IA. With regard to the deduction u/s 80-IA, we have to submit as follows: Section 80-IA: (1) Where the gross total income of an assessee includes any profits and gains derived by an undertaking or an enterprise from any business referred to in sub-section (4) (such business being hereinafter referred to as the eligible business), there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the ....
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...., the report of such audit in the prescribed form duly signed and verified by such accountant. (8) --------------------------- (9) --------------------------- (10) ------------------------- (11) -------------------------- (12) -------------------------- (12A) ------------------------ (13) -------------------------- Explanation. For the removal of doubts, it is hereby declared that 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 State Government) and executed by the undertaking or enterprise referred to in sub-section (1). It is submitted that the above provisions of Section 801A provides that deduction as per clause (4) to Section 801A of the Act is available to an enterprise: a> which is developing, operating and maintaining or developing, operating and maintaining any infrastructure facility. b> has entered into an agreement with Central Government, State Government and or local authority or Statutory body on or after 01.04.1995. for developing a new infrastructure facility, c> " infrastructure facility"....
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....SH-83 Bihar State Road Development Corporation Ltd. Two laning of Baghi-Bardiha- Barbigha Road (SH-83) from 0.000 to 37.646 km. 8,90,99,286 Total 226,31,98,158 The assessee complies with all the conditions to claim deduction u/s 80IA as enumerated above. The same has been explained as below: A> AWARD OF WORK BY CENTRAL GOVERNMENT. STATE GOVERNMENT AND OR LOCAL AUTHORITY OR STATUTORY BODY: Your goodself would observe from the above said details of all the projects that projects have either been awarded by State Government (Shillong Project), Statutory Body or by the corporations including PSUS/PSES established by Centre or State Governments. The assessee has entered into contracts in the case of Mokama-Munger Project (at Sr. No.-2) and Sonbarsa Project (at Sr. No.-8) with separate companies. These two projects were awarded by NHAI to the assessee company. As a pre-condition of NHAI, these separate companies were incorporated. NHAI has entered into a contract with these companies and in turn these companies have entered into a contract with the assessee for developing the infrastructure facilities. Award of Contracts by PSUS/PSES; It is....
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....IL as detailed below: Power Grid Corporation of India Limited (PGCIL) Power Grid Corporation of India Limited (POWERGRID) was incorporated on October 23, 1989 & has been the notified Central Transmission Utility since 1998. The Corporation is responsible for integrated development of inter-state transmission system in the country for evacuation of power from central sector projects, system strengthening scheme etc., and for implementation of transmission projects assigned to it. Power System Operation Corporation Limited (POSOCO), a full owned subsidiary of POWERGRID, is responsible for Grid management through Regional & National Load Despatch Centre. Your Honours would observe that the above said companies (PSUs & PSES) are incorporated by Central/ State Governments as Special Purpose Vehicle to undertake specific jobs of respective Ministries. Purposes of incorporating these PSUS/PSES are the specific purposes. These are incorporated for better management, control and progress and to undertake diverse activities with maximum control and maximum output. Particular Ministry and its Officers cannot look after whole of operations in India as India is a vast country. All jobs....
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....for and on behalf of the Government or local authorities would be denied the deduction merely on the ground that the State Government had created a nodal agency for working out the finer details and nitty- gritty of such infrastructure development. The purpose of creating such nodal agencies as well as the legislative intent of granting deduction to the assessee engaged in developing, maintaining or operating any infrastructure projects for Central or State Government authorities would frustrate." It is relevant to note that above decision of Hon'ble Gujrat High Court has also been upheld by the Hon'ble Apex Court vide order dated 05th March 2019 in 263 Taxman 3(SC). Similar findings have also been given by Hon'ble Madras High Court in following cases: * CTT vs Chettinad Lignite Transport Services (P) Limited reported in 107 TAXMANN.COM 362 (Mad), and Board's Circular No.: 733 Further, we would also like to draw Your Honour's kind attention to Circular No.: 733 dated 3rd January, 1996 of CBDT. In the said Circular, Hon'ble CBDT had stated that projects awarded by Indian Railways under BOLT (Build-Own-Leased-Transfer) in addition to the projects aw....
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....ilway under BOLT System other than BOT & BOOT Systems. This clearly shows the intent of the legislature that projects awarded by PSUs / PSES duly qualify for deduction u/s 80-IA as these PSUs & PSES are incorporated by Central/ State Governments for carrying out the projects of the Government. Central/ State Governments or Statutory Bodies do not award any contract directly in India. They award the contracts through these Corporations only. Legal matrix: We are also enclosing herewith following further case laws, where the contracts were awarded by PSU/PSE and the deduction u/s 80IA of the Act was allowed: 1. ITAT Ahmedabad in the case of Welspun Projects Vs. ITO (ITA No. 1864/Ahd/2013 & 225/Ahd/2014) for name of employers - M. P. Rajya Setu Nirman Nigam Limited. 2. ITAT Mumbai in the case of ACIT Vs. Patel Engineering Ltd. (ITA No. 6605/Mum/2013) for name of employers National Hydroelectric Power Corporation Limited for Teesta Lower Dam Project. (Only relevant 2 pages of the above said case law are attached as the file size with full judgement is of 52 MB which cannot be uploaded.) Hence, it is submitted that the assessee company duly qualifies for deduction u/s ....
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....nal lanes of a highway shall be considered to be new infrastructure facility for the purpose of Section 801A(4)(1) of the Act. From all the agreement, it can be deduced that the assessee has actually carried out the work of widening/ improvement/ upgradation of roads and construction of new infrastructure facility. Hence, it is submitted that the assessee is engaged in eligible infrastructure projects as per Section 80IA(4)(i) of the Act. C> PROJECTS AWARDED BY INDIAN COMPANIES: With respect to Mokama-Munger Project (Sr. No.-2) and Sonbarsa Project (Sr. No. 8), it is submitted that NHAI has awarded the above said projects to the consortium of BSCPL Infrastructure Ltd. and C&C Constructions Ltd. (i.e. BSC C&C JV, the applicant) vide LOA dated 19.05.2010 and 05.07.2010 respectively. Copies of the same are attached herewith for your kind perusal. The above said company - Mokama Munger Highway Ltd. and North Bihar Highway Ltd. was incorporated as a pre- condition of NHAI as specified in the said LOA. Kindly see the highlighted portion of above LOA. After incorporation of the above said company, the concession agreement was made with NHAI and the applicant had entered int....
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....l from a third party. Thus, contracts involving mere labour of the contractor are included in the purview of "works contract". Hon'ble Supreme Court in case of Associated Cement Co. Ltd. vs. CIT reported in 201 TTR 435 while interpreting the term 'work' u/s 194C of the Act had held that words any work in section 194C(1) of the Act means any work including supply of labour to carry out work and is not intended to be confined to or restricted to works contract, therefore, a person who credits to the account of or pays to a contractor any sum payable on behalf of organizations specified in section 194C(1) of the Act for carrying out any work (including supply of labour for carrying out any work) is liable to deduct income-tax as required under that sub- section. The words in the sub-section (1) of 194C of the Act on income comprised therein' appearing immediately after the words 'deduct an amount equal to two per cent of such sum as income-tax' from their purport, cannot be understood as the percentage amount deductible from the income of the contractor out of the sum credited to his account or paid to him in pursuance of the contract, but deduction is to be....
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....eligible for tax benefit under section 80-IA. This amendment will take retrospective effect from 1st April 2000 and will accordingly apply in relation to the assessment year 2000-01 and subsequent years. The Explanatory Memorandum clearly lays out that purpose of extending tax. benefit u/s 80-IA was to encourage investments from the private sector and hence work contracts, i.e. contracts involving merely labour (or mere execution of construction without making investments) are outside the purview of the provisions of section 80-1A. Thus, the term "works contract" used in Explanation to section 80- IA(13) means a contract of developing infrastructure by merely employing labour and making no investments. Whereas the assessee, for all of the above said projects, has assumed complete responsibility of the project, provided complete material for the project, employed its own labour and Plant & Machinery, provided performance guarantee to the Employer and has undertaken complete entrepreneurial & investment risk. These all the aspects have been explained as below in detail. Hence, it is submitted that the assessee is not a Work Contractor, rather is a developer of the infrast....
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....ge finances either by private placement or from financial institutions for the proper development of the project at its own risk. Thus the developers is the one who undertakes entrepreneurial and investment risk besides the business risk. (f) That a developer is required to bring the qualitative material. The Government does not provide any material to the assessee. (g) That a developer is required to bring plant and machineries to be utilized in the project. (h) Any loss caused to the public or the Government in the process of developing the project would be the responsibility of the developer. The Government shall not take any responsibility for any such kind of loss except where it is responsible. (i) That a developer stands as guarantor for the project developed by it and in the event of any defect it, he shall provide the remedy for the same.. (j) That a developer shall be exposed to the penalty if it contravenes the any of the clause appearing in the contract awarded by the Government. Thus, the developer is responsible to complete the construction in a specified manner failing which it would be responsible for the consequences of delay/any other fault attribut....
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.... to a substantial amount of risk by virtue of engaging his establishment in the infrastructure projects. In addition, the assessee was exposed to risk of non-completion of work within time, any damage caused to the works, site etc. increase in prices of materials, labour etc. beyond what the Government had agreed to compensate as per the agreement. 6.16 From the facts stated above, it is clear that the assessee was a developer and not a mere works contractor. Thus, it is clearly outside the purview of the Explanation to section 80-IA(13) of the Act." Kind reference is also invited to the decision of another Kolkatta ITAT decision in case of BMW Industries Ltd reported in 162 ITD 650(Kol) where in again it is held as under: "21. The CIT has also observed that the Assessee was only a contractor and not a developer because he was carrying out work as per the contracts awarded by the Executive Engineer. As rightly pointed out by the learned counsel for the Assessee, 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 ....
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....he drawings provided by the department. * Accordingly, the Contractor submits the Tender and the work will be awarded to the lowest bidder. * The lowest bidder will receive the LOI (Letter of Intent) from the Department and the bidder will send the confirmation. * The Department and the bidder will execute the Contract Agreement and the bidder would give performance bank guarantee within the stipulated time mentioned in the Agreement. * As per the agreement terms the bidder will get mobilisation advance on submission of bank guarantee. * The bidder will start the work and submit the monthly work bill and the department will release the amount after verification of the work done and deduct the statutory deduction. * Independent Engineer/Authority Engineer will issue the Completion Certificate after successful completion of the Work and Defects Liability Period 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 demonstra....
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....rstructure; wearing coat, hand railings, expansion joint, approach slabs, drainage spouts/down take pipes, arrangement for fixing light posts, water mains, utilities etc; provision of suitably designed protective works; providing wing/return walls; provision of road markings, road signs etc; all aspects of quality assurance; clearing the site and handling over the works on completion; rectification of the defects during the Defects Liability Period and submission of "As-built" drawings and other related documents; and other items of work as may be required to be carried out for completing the works in accordance with the drawings and the provisions of the contract and to Insure safety. The above said detailed project description duly includes widening of the existing carriageway 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....
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....e stated in the Contract Data the Contractor shall submit to the Engineer for approval a Programme showing the general methods, arrangements, order, and timing for all the activities in the Works along with monthly cash flow forecast. 32 Early Warning 32.1 The Contractor is to warn the Engineer at the earliest opportunity of specific likely future events or circumstances that -may adversely affect the quality of the work, increase the Contract Price or delay the execution of works. The Engineer may require the Contractor to provide an estimate of the expected effect of the future event or circumstance on the Contract Price and Completion 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 ....
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....ed out as per the existing provisions of the road i.e. WBM/BUSG/PC/SC as may be applicable as per the director of the Engineer-in-charge. Your Honours would observe from the above said details that the Shillong Project duly complies with the conditions laid down for claiming deduction u/s 80IA as follows: i> The Project has been awarded by the State Government of Meghalaya; li> The Project is for development of "New Infrastructure facility" as the project is for widening of the existing carriageway; iii> The Project was awarded 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 ....
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....cement of construction activities, the traffic bypass arrangement/diversion to be constructed & maintained during the entire construction period. Time to time, the diversion plan, should be prepared & submitted to Employer. Planning & executing the construction of all activities relevant to completion of ROB duly complying with all requirements of IRC, BIS, RDSO and MOST specification as applicable & as directed by Employer & desired by Railways, State Government, 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 ....
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....cifications. For the period for execution of ROB, the contractor has to follow the quality Assurance, Safety, Health & Environment Manual of IRCON. The Engineers to be deployed by the Contractor shall work under the direction of the Engineer-in-charge. They shall be bound the carry out all duties related with the work assigned by the Engineer-in-charge or his representative. All' facilities & equipment'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 Cleara....
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....n arrangement at his own cost. The contractor shall make all necessary adequate arrangements for preservation of the hygiene of his staff as per regulations of the local bodies. The contractor shall be responsible for all arrangements with respect to such labour camps, including water, power, sewerage, hygiene as will as 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 cont....
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....D MACHINERY 7.1 The Contractor shall make his own arrangements at his cost for all Plant and Machinery required for execution, completion and maintenance of all of 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 publi....
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....s, equipment and labour. 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 origina....
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.... 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 Danapur Project. Your Honours would observe from the above said details that the ROB Danapur Proje....
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....me 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 goodself has allowed Virtual Hearing of the case. We would like to avail the said opportunity of being heard virtually. However, we would request your goodself 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 that the assessee fulfils all requisite conditions to claim deduction under section 80IA of the Act was given. For ease of ready reference as to how the conditions were complied with, two projects namely Meghalaya Project and Danapur ROB were taken up. At page....
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....ious 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 Section 80IA is not fulfilled. 23. On perusal of the Letter of Authority (LOA) dated 19.05.2010 which is placed at page 733 of the PB it is observed that the NHAI accepted the assessee JV as a successful builder for developing two Layning with paved shoulders of Mo....
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....tractor, 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 the Contract Data the Contractor shall submit to the Engineer for approval a Programme showing the general methods, arrangements, order, and timing for all the activities in the Works along with monthly cash flow forecast. 32 Early Warning 32.1 The Contractor is to warn the Engineer at the earliest opportunity of specific likely future events or circumstances tha....
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....ITION 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. The maintenance Road as required in the place of work is to be carried out as per the existing provisions of the road i.e. WBM/BUSG/PC/SC as may be applicable as per the director of the Engineer-in-charge. D> FOURTH CONDITION; Above responsibilities and duties duly substantiate that the assessee is not a simplicitor contractor rather the assessee is developer of the project." 25. The above clauses of the agreement clearly shows that the assessee is liable fo....
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....e 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." 9.1 Following the aforesaid precedent, 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. Accordingly, the Ground No. 3 & 3.1 are allowed as above. 10. As regards the Ground No. 4 relating to addition of Rs. 19,40,67,731/- on account of deduction of expenses u/s. 40(a)(ia) is concerned, it was the say of the Ld. Representative that on this issue there is a computational error in the impugned final assessment order. He submitted that from the facts noted from AO's draft assessment order and in the original return of income, the assessee had inadvertently claimed deduction u/s. 40(a)(i) of Rs. 38,52,22,400/-. However, the actual amount allowable as deduction to the assessee u/s. 40(a)(i) was Rs. 19,11,54,669/-. The difference of Rs. 19,40,67,731/- was thus suo moto disallowed in the revised computation of income filed by the assessee during the course of assessment. It was further canvassed ....
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....fer pricing adjustment of Rs. 41,22,712/- on account of interest receivable on advance given to M/s. BSC C&C JV Nepal Pvt. Ltd. The Ld. TPO discussed this issue in para 4.1 of his order dated 29.01.2021 passed under section 92CA(3) of the Act. The Ld. TPO found from balance sheet that the assessee had advance receivable of Rs. 8,15,79,744/- to BSC C&C JV Nepal Ltd. which is an Associated Enterprise (AE). He show caused the assessee why ALP of interest on advance given to the said AE be not determined at SBI PLR rates applicable to FY 2016-17. The assessee filed detailed explanation reproduced by the Ld. TPO in para 4.2 of his order. The submissions of the assessee were not acceptable to the Ld. TPO who determined ALP of the interest given to BSC C&C Nepal Pvt. Ltd. at Rs. 1,14,41,802/- and required the Ld. AO to make adjustment thereof. The assessee objected the said adjustment before the Ld. DRP who followed the directions given by it in AY 2016- 17 the issue being identical. Paras 4.2.2 & 4.2.3 of Ld. DRP's directions dated 31.05.2022 under section 144C(5) of the Act refer. 22. Before us the Ld. AR submitted that similar issue came up for consideration before the Tribunal in A....
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....anies - BSCPL Infrastructure Ltd. and C&C Construction Ltd. Both the JV Partners are having 50% share in the assessee JV. b) Both the JV partners had established a company in Nepal during the year 2007 - BSC C&C JV Nepal Pvt. Ltd. having equal share of 50% in the capital of the company. c) The Nepal company was established to supply Aggregate to the applicant for its Bihar Projects as it was very cost effective to make aggregate and Nepal and transport it to the construction units in Bihar. d) Due to terrorism in Nepal, production activities in Nepal was closed down and its all the assets consisting mainly of Crusher Unit were transferred to the construction sites in Bihar. We are enclosing herewith copies of ledger accounts of our construction sites in Bihar, where the assets/LCs issued by JV Partners were transferred. 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. Your Honours would observe from the above said ledger accounts that earlier there was a credit balance. After transfer of LCs issued by JV Partners, the amount due to Nepal Unit was conve....
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....o realise the assets of the Nepal Company. g) Hence, charging any interest from its own pocket does not have any commercial expediency. In support kind reference of your goodself is invited to the decision of Hon'ble ITAT in case of Nimbus Communications Ltd reported in 16 ITR (Trib) 477 (Mum) wherein it was held as under: "5. A continuing debit balance, in our humble understanding, is not an international transaction per se, but is a result of the international transaction. In plain words, a continuing debit balance only reflects that the payment, even though due, has not been made by the debtor. It is not, however, necessary that a payment is to be made as soon as it becomes due. Many factors, including terms of payment and normal business practices, influence the fact of payment in respect of a commercial I transaction. Unlike a loan or borrowing, it is not an independent transaction which can be viewed on standalone basis. What can be examined on the touchstone of arm's length principles is the commercial transaction itself, as a result of which the debit balance has come into existence, and the terms and conditions, including terms of payment, on which the said comme....
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....ance in the ambit of 'international transaction', 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." h) Further, without prejudice to the above, it is submitted that interest, if any, chargeable on the advance given, should be at LIBOR since it is an international transaction. The foreign AE, if it has to pay, would pay at the applicable LIBOR rate. In view of above submissions, it is submitted that the debit balance of Nepal company in the books of the applicant is not an advanced given rather it is a net-off balance on account of transfer of LCs issued by JV Partners which ultimately is to be debited to the Partners of the applicant since they have incorporated the Nepal Company in equal ratio and hence, no adjustment on account of interest on the debit balance of Nepal Company should be made to the returned income of the applicant." 32. As could be seen from the above, the assessee contended before the DRP that the ledger accounts in earlier years showed credit balance and after transfer of LCs issued by JV Partners the amount due to Nepal Unit was converted t....
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.... every item of "receivables" appearing in accounts of entity which may have dealings with foreign AE would not automatically be characterized as an International Transaction. It is also observed that there has to be a proper enquiry by the TPO by analyzing the statistics for a period of time to discern a pattern which would indicate that vis-à- vis the "receivables" for the supplies made to an AE, the arrangement reflects an International Transaction intended to benefit the AE in some way. 35. On perusal of the TPO's order, we find that no such exercise has been carried out by the TPO in benchmarking the interest on "receivables". Further, we observed from the order of the DRP none of the submissions or additional evidences were considered nor is there any finding by the DRP though the assessee has produced additional evidences before the DRP and made its submissions which were not made before the Assessing Officer." 24. Since the parties agree that the issue is covered by the decision (supra) of the Tribunal, respectfully following the same we send the matter back to the Ld. AO/TPO for deciding the issue afresh keeping in view the evidence submitted by the assessee as....
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....piry/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 not acceptable to the Ld. AO who recorded the finding that the moment the payment becomes due to the assessee it has to be accounted for as income whether it has been received or not and disallowed the assessee's claim of deduction resulting in the impugned addition to its income. 26. Before us the Ld. AR submitted that for the year under consideration the assessee had claimed that a sum of Rs. 18,84,08,295/- on account of retention money retained by the employer is not chargeable to tax. However, the assessee had offered for tax a sum of Rs. 7,23,59,198/- released by the employer of the assessee for which project completion certificate was received by the assessee during the year. He referred to certain decisions in support of....