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2024 (5) TMI 213
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.... w.r.t. the assessee namely Ajay Engineering Infrastructure Private Limited , which appeal has arisen from the appellate order dated 16.05.2013 passed by the learned Commissioner of Income-tax (Appeals), Ahmedabad (hereinafter called "the CIT(A)") in Appeal No. CIT(A)/GNR/ 318/2011-12 for the assessment year 2009-10 , which in turn has arisen from the assessment order dated 30.12.2011 passed by learned Assessing Officer(hereinafter called "the AO") u/s 143(3) of the Income-tax Act,1961(hereinafter called "the Act"). 3. The Revenue has raised following grounds of appeal in Memo of Appeal filed with Income Tax Appellate Tribunal, Ahmedabad Bench, Ahmedabad in ITA No. 2118/Ahd/2013 for assessment year 2009-10 , which reads as under:- "1. The learned CIT(Appeals) has erred in law and on facts in deleting the disallowance of deduction made by the AO of Rs. 1,76,30,304/- u/s. 80IA(4)(i) of the Act. 2. On the facts and circumstances of the case the ld. CIT(A) ought to have upheld the order of the Assessing Officer. It is therefore prayed that the order of the learned CIT(Appeals) may be set aside and that of the A.O. be restored to the above extent. " 4. T....
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....tted that explanation inserted below Sub-section 13 to Section 80IA cannot restrict the main provision 80IA(4) of the Act. The assessee also submitted before the AO that it has filed the audit report in Form No. 10CCB giving various details in respect of infrastructure activities carried out by the assessee during the year under consideration , for making claim of deduction of Rs. 1,87,70,901/- u/s 80IA(4) of the 1961 Act. The assessee prayed before the AO that the assessee be allowed deduction under section 80IA(4) of the 1961 Act. 4.3 The AO referred to the Explanation inserted below sub-section 13 of Section 80IA , which was substituted by Finance Act, 2009 wef 01.04.2000, which reads as under:- " 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 of State Government) and executed by the undertaking or enterprise referred to in sub-section (1)." 4.4 The AO rejected the contentions of the assessee by holding that deduction under section 80IA(4) is not available t....
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....ved that the first condition of Section 80IA(4) is that the enterprise should be owned by a Company. The AO also observed that the letters awarding works shows that work were assigned to M/s Ajay Engineers , a partnership firm in six cases. The assessee company came into existence only on 27.02.2008 on conversion of said partnership firm into company. The AO also observed that the assessee company has no right to operate or maintain the infrastructure facilities and assessee is merely a contractor and not a developer. The AO observed that the risk assumed by the assessee is only to the extent of business contract risk . The AO observed that the assessee company has taken risk of investment only to the extent of contract risk, while benefit of deduction u/s 80IA(4) is available only to developers who undertake entrepreneurial and investment risks. The AO also observed that the assessee company has not furnished separate project-wise report in Form No. 10CCB in support of eligibility for claiming deduction under section 80IA(4). The AO observed that separate project-wise report is required as per sub-clause 2 of Rule 18BBB of the Income-tax Rules, 1962, which reads as under:- ....
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....pellant, the terms of agreement as per tender documents of various projects and the submissions of the appellant. 5.2.1 One of the objection of the AO raised in earlier year while denying the benefit of section 80IA(4) to the appellant was that the agreements for many of the projects were entered into when the appellant was doing business in the status of a firm. The appellant is a Company, came into existence on conversion of partnership firm into Limited Company under chapter IX of the Companies Act, 1956 with effect from 27-02-2008. Prior to that, the partnership firm in the name and style of 'Ajay Engineers' was carrying on the business of developer/construction etc. The said partnership firm was converted into a Public Limited Company under Chapter IX of the Companies Act under the name and style as 'Ajay Engi. Infrastructure Ltd.' along with its all existing business, assets and liabilities as per the provisions of Companies Act. There is no doubt or dispute that the profits on which the deduction has been claimed during the year have been earned in the previous year itself and in the impugned year the business was carried entirely in the status ....
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....o the extent of contract undertaken. He has also relied on the explanation below section 801A(13) with retrospective effect from 1/4/2000 which clarifies that any person executing the work contract who undertakes a work contract with the undertaking or enterprise is not eligible for the deduction. Before I proceed with individual projects and their terms; I would like to quote the criteria and guidelines as decided by various courts. The Hon'ble jurisdictional ITAT, Ahmedabad in the case of Sugam Construction Pvt. Ltd. vs. ITO (30 taxmann.com 331) in its recent judgment, after discussing the provisions of law and various judgements, has discussed the various aspects like what is contract/contractor; concept of developer, requirement of ownership etc., after discussing the law and the various decisions. I would like to reproduce some of the very relevant observations made by the Hon'ble Tribunal. "12. With this factual background, we have examined few case laws to ascertain whether the assessee's nature of work had fallen under the definition of a "contractor" or a "developer". In this regard, we have perused an order of Tribunal pronounced in the case ....
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....meaning of the term developer as: 1. One who or that which develops; 2. A person who invests in and develops the urban or suburban potentialities of real estate. b. Oxford Advanced Learners Dictionary of Current English, Fourth Indian Edition, gives meaning of the term 'developer' as persons or company that develops land. C. Random House Dictionary of the English Language, the following can be found Develop a. To bring out the capabilities or possibilities of; bring to a more advanced or effective state. b. To cause to grow or expand. Developer a. The act or process of developing; progress. b. Synonym: Expansion, elaboration, growth, evolution, unfolding, maturing, maturation. d. Webster Dictionary, the following definitions emerge: a. To realize the potential of; b. To aid in the growth of strength, develop the biceps, c. To bring into being: make active (develop a business) d. To convert (a tract of land) for specific purpose, as by building extensively. e. Law lexicon Dictionary: The following definitions could be seen. Development ....
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.... business. Further, the word "It" denotes the enterprise carrying on the business. The word "it" do not relate to the "Infrastructure facility". The Infrastructure facility, such as, rail system, high-way projects, Irrigation project, port, air-port, etc. cannot be owned by an enterprise other than the Government. 12.4 An another reason for not granting the deduction u/s.80IA(4) by the Revenue Department was generally because of the reason of Insertion of Explanation by Finance Act (No.2), 2009 with retrospective effect from 1.4.2000 which says that 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 work contract awarded by Central or State Government and executed by an Undertaking or an Enterprise. Due to this Explanation, Revenue has taken a stand that the eligibility is to be granted only to a "developer" and If the nature of activity is a "works contract", then the deduction is not be granted. However, In the case of Koya & Co. Construction (P.) Ltd. (supra), this issue was dealt with elaborately, wherein it was held that pure development....
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....infrastructure facility is owned by the Government. But the enterprise which is developing or constructing the infrastructure facility is to be owned by a Company registered in India. The Act also says that an enterprise which is constructing or developing the infrastructure facility can be a consortium of such companies. Such an arrangement is eligible for the claim of deduction. Few Circulars have been issued by CBDT through which it has also been clarified, as discussed in the foregoing case-laws, that the benefit of the impugned deduction is available to an enterprise which either develops or maintains or operated or executed the combination of these three, inter alia as a Build, Operate and Transfer (BOT), or, Build, Own, Operate and Transfer (BOOT), or, Build, Own, Lease and Transfer (BOLT) basis or similar other basis where ultimately the infrastructure facility so constructed is ultimately transferred to Government or Public Authority, then such an enterprise is within the ambits of qualification of deduction. The explanatory memorandum to the Finance Act, 2007, as quoted before us, states that the purpose of the tax benefit has all along been to encourage investment in dev....
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....s assigned on development basis or contract basis can only be decided on the basis of the terms and conditions of the agreement. Only on the basis of the terms and conditions it can be ascertained about the nature of the contract assigned that whether it is a "work contract" or a "development contract". (h) That in a "development contract" responsibility is fully assigned to the developer for execution and completion of work. (i) That although the ownership of the site or the ownership over the land remains with the owner but during the period of development agreement the developer exercise complete domain over the land or the project. (j) That a developer is not expected to raise bills at every step of construction but he is expected to charge the cost of construction plus mark-up of his profit from the assignee of the contract. (k) That a developer is therefore expected to arrange finances and also to undertake risk. (l) That in contrast to the rights of a "contactor" a "developer" is authorized to raise funds either by private placement or by financial Institutions on the basis of the project. These are few broad qualities of a developer through which the character of a develope....
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....laimed and whether these could be said to be development contract as against works contract and whether they qualify on other grounds like being an eligible infrastructure project or not. The appellant had executed 12 projects during the year; out of which with respect to two i.e., (1) approach ramp for Sola ROB (II) construction of subway at Sonini Chali; it had itself not claimed deduction under section 80IA(4) as it has not entered into the agreement with the government agency directly etc. As per the list of projects claimed eligible for deduction, as per submissions reproduced earlier in the order; there were 10 projects in total undertaken by the appellant during the year. Out of these, only 9 have been claimed to have yielded profits. The other project according to the claim of the appellant have yielded loss. The loss has been reduced from the eligible profits claimed. Therefore, I would not go into the merits of loss case as the appellant has not disputed it and there is no loss to revenue as far as these projects are concerned. The appellant also submitted brief details of all the projects undertaken including nature and scope of work and also t....
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.... at his cost. (e) While coming out of the bank, Box has tendency to disturb the existing bank resulting in slipping of slopes or caving in the bank, the appellant was required to protect the bank for safe passage of traffic at his own cost. (f) Maintenance of track during and after Box pushing work until the track is handed over to open line. g) The appellant was to submit the detailed design mix for M-20, M-25, M-30, M-35 and M-45 for the approval of Railway. Maintenance of the said infrastructure for a period of 61 month (during the period of development 49 months and defect liability period of 12 months) was also the responsibility of the appellant. Some other projects are also in the nature of bridges including flyovers and ROB in lieu of level crossing etc. For e.g. one is Construction of approach bridges for ROB in Lieu of level crossing no. 2 on Ahmedabad - Delhi B.G Railway Line at Gota in Ahmedabad (Item 3 of appellant's letter reproduced earlier) for which agreement was entered into with Ahmedabad Municipal Corporation. As per agreement, the appellant was required to provide his own equipment (vide Page No. 70 of bid document); including 1 Pilling Equipment 2. Slurry ....
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....ds. The company has constructed, delivered and maintained and security is also maintained thereafter. So, this is a case of transfer of property in chattel and not a contract of service. The decisions of CIT v ABG Heavy Industries Ltd. [2010] 322 ITR 323/189 Taxman 54 (Bom.), KMC Construction Ltd 51 SOT 214 (Hyd), Koya & Co. Construction (P.) Ltd. v. Asstt. CIT [2012] 51 SOT 203/21 taxmann.com 35 (Hyd.) (URO) and Radhe Developers v. Union of India [2008] 23 SOT 420 (Ahd.) and Asstt. CIT v. Bharat Udyog Ltd. [2009] 118 ITD 336 (Mum.) thus support the stand taken by the assessee. The assessee has executed the construction of infrastructure facility in respect of the government projects, as is evident from the list of the agreements placed on record. Therefore, it is held that the assessee is eligible for the deduction under section 80-IA on the 9 projects less loss of 10th project (with qualification of not considering merits of loss project; as discussed earlier in the order). The grounds are decided accordingly." 6. Aggrieved by the appellate order passed by ld. CIT(A), the Revenue has filed an appeal with the Tribunal. At the outset, ld. Senior Advocate, Sh. S.N. Sopar....
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....rder is then executed by the assessee on the terms and conditions of the order stipulated by the authority granting such work order. The AO referred to the subject matters of the letters awarding such work contract , and observed that the assessee works as Contractor and execute the work orders awarded on approval of its tender. Few of such letters containing subject matters of the letters, awarding such work contract in favour of the assessee are reproduced by the AO in its assessment order at page no. 7-10. The AO observed that the assessee is merely a Contractor who executes work orders as a Contractor awarded to it by approval of its tender. The AO also referred to provisions of Section 80IA(4)(i) to hold that the deduction under section 80IA(4) is allowable on the profit and gains derived from the enterprises which should be (i) developing or (ii) operating and maintaining or (iii) developing, operating and maintaining any infrastructure facility. The assessee has entered into contract agreements as a 'Contractor' and earned income as 'Contract receipts' which income is not entitled for deduction under section 80IA(4)(i) of the Act. The assessee has not entered into any agreem....
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....e Sheet of the undertaking or enterprise as if the undertaking or the enterprise were a distinct entity" 7.2 The AO also referred to the Memorandum explaining the provisions of Finance Bill, 2007, wherein Hon'ble Finance Minister has clarified the Explanation inserted below sub-section 13 of Section 80IA, which is reproduced as under:- "The tax benefit was introduced for the reason that the industrial modernization required a massive expansion of, and qualitative improvement in, infrastructure (viz., express ways, highways, airports, ports and rapid urban rail transport system) which was lacking in our country. The purpose of the benefit has all along been for encouraging private sector participation by way of investment in development of the infrastructure sector and not for person who merely execute the civil construction work or any other works contract." 7.3 The AO observed that in the present case, assessee is a contractor and has stated its business as 'Civil Construction' in the audit report. Thus, the AO held that the assessee is only a 'Work Contractor' and entered into agreement by way of tender to complete the well planned and designed work which s....
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....56 as going concern and continued the partnership business including all its assets, movable and immovable, rights, debts and liabilities in connection therewith; and had so converted before the commencement of the previous year in question. (ii) Many of the agreements were entered into by the appellant after conversion into the company itself. (iii) In the cases, where the agreements were signed earlier in the status of firm, the appellant had informed the authorities with whom the agreement was entered of the change in their status and none of them have objected to it and legally all the terms were binding on both the parties as per law itself. In fact, TDS certificates have been issued in the name of company only during the year. (iv) As held by the Rajasthan High Court, in the case of Chetak Enterprises (P.) Ltd reported at 271 ITR 444, the conversion of the firm into company legally with all the liabilities and assets and business as a going concern before commencement of the previous year, would make it eligible for 80IA(4) as also the fact that proviso to section 80IA(4)(c) would also be applicable even if it is considered as a transferee enterpris....
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....on of section 801A. According to the Bench, It is a settled legal position that ordinary meaning is required to be given for a word used in the Statute. Rather the Bench has said that a word used in one Statute cannot per se be imported into another. A reference of General Clauses Act, 1897 was made, but it was found that the word "contractor" or "developer" had not been defined therein. Then, the Respected Bench has taken the help of Oxford Advanced Learners' Dictionary. As per the said dictionary, the word "developer" means a person or a company that designs or creates new product. Whereas as per the dictionary meaning, the word "contractor" is a person or a company that has a contract to do work or provide services or goods to another. As per new shorter Oxford dictionary, the word "contractor" means a person who enters into a contract or agreement. As per the Bench, a developer is a person who conceives the project. He may execute the entire project himself or assign some part of it to others. As per Respected Bench, on the contrary, a contractor is the one who is assigned a particular job to be accomplished on behalf of the developer. The duty of a contractor is to transla....
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.... us pronounced by ITAT Hyderabad Bench in the case of GVPR Engineers Ltd. (supra), wherein the assessee-company had entered into a contract with the Government to develop an infrastructure facility. The AO's objection was that the assessee had entered into a contract for building for which the entire investments were made by the Government and the assessee was paid "on running bill to bill basis". This question was elaborately dealt with by the Respected Coordinate Bench and after due consideration of the work executed by the said concern, it was opined that the words "developer" and "contractor" have not been defined in section 80IA of the Act. It was noted that the BOT/BOOT models seek to augment infrastructural assets in addition to Government spending and not simply feed on Government expenditure. As per the Tribunal, the deduction u/s.80IA is available to the former and not to the latter. The term "developer" has to be seen de hors the contract. The Bench has also opined that word "ownership" is attributable only to the enterprise carrying on the business which would mean that only companies are eligible for deduction u/s. 80IA(4). 12.3 An another controversy in s....
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....eduction u/s.80IA. Certainly the said Explanation has been inserted to deny the tax holiday to an entity who does only "work contract" or acted merely as a sub-contractor, apparently being distinct from the developer. Applying this ratio on the present set of facts and circumstances It can be held that the nature of construction executed by this assessee had fallen under the category of "developer" and not under the category of " "works-contract". 12.5 Next, an another controversy has also been raised by the Revenue Department that in the agreements in question the term "contractor" has been referred by the Government. This question has been duly addressed by ITAT Mumbai Bench in the case of Bharat Udyog Ltd. (supra), wherein Patel Engg. Ltd. (supra) was followed and it was opined that the term "contractor" is not essentially in contradiction to the term "developer". By entering into a lawful agreement and thereby becoming a "contractor" in no way bar an enterprise to execute the work as a "developer". It was opined that merely because in the agreement for development of Infrastructure facility an enterprise is referred to as a contractor do not detract an enterprise from ....
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....rts, a conclusion can be drawn that there is a distinction between "developer" and a "contractor". (i) That in a case of civil contractor, it's duty is only of civil construction. (ii) That after the civil construction is over, he is paid for the job of civil construction as per the bills raised. (iii) That at that point of time, his contract is over and the agreement ends. (iv) That after the completion or at the end of the agreement, a civil contractor hand over the site to the owner. (v) That a civil contractor constructs as per specifications given. (vi)That a contractor does not involve much of his money but raises bill of his civil construction work time-totime to collect the expenditure incurred. (vii) That a contractor has no domain over the land or the site. (viii) That his access to the site is restricted and limited from commercial angle.(ix)That on the basis of the project he cannot raise the funds from the private financial Institutions. (x) That "a contractor" is not responsible for the development of the project but his responsibility is limited to the job- assigned to him. (xi) That a "contractor's" duties and responsibilities can only be examined on the bas....
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....s/guidelines in this regard and the gist is as under:- 'Profits and gains from infrastructure undertakings - Deduction under section 80-IA is available to an enterprise which (1) develops; or (ii) operates and maintains; or (iii) develops, aintains and operates that infrastructure facility inasmuch as subsequent amendment to section 80-IA(4) has made it clear that three conditions of development, operation and maintenance were not intended to be cumulative in nature -- Assessee was awarded a contract for leasing of container handling cranes at Jawaharlal Nehru Port Trust ('JNPT') in terms of policy of Government of India to encourage private sector participation in development of infrastructure Under contract, assessee was responsible for supplying, installation, testing, commissioning and maintenance of cranes - Contract envisaged two different options, first being one under which assessee would carry out operation and maintenance of equipment, while second consisted of an option to JNPT to carry out operations and only maintenance was to be carried out by assessee- Assessee assumed responsibility of making equipment available for operation for a minimum numbe....
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....xplanation means- (b) 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 channel in the sea The remaining 9 projects include: 1. Bridges, Railway Bridges, Flyover Bridges and ROB. 2. Road/culvert Work 3. Intake well, Water Supply The agreements have been undertaken with Indian Railways, Government of India, AUDA, with different departments of Government of Gujarat, Surat Municipal Corporation, etc. The works of bridges, canals, pipelines for water works, projects for new roads would fall under the definition of infrastructure facility as defined under the Act. To examine and decide whether the appellant could be said to be a contractor or acted as a developer; the terms and conditions and scope of various projects undertaken were examined carefully and are being representative....
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....nditions, vibrating and noise produced during construction should not have any damaging effect on the people and existing structure. Besides, Standard Pucca RCC bench marks of required numbers were to be established by contractor on both the ends on each bank sides before commencement of the work and connected to the nearest GTS bench mark according to which, whole work shall be carried out. The maintenance of all these BM till completion shall be the responsibility of the contractor. The appellant was to be solely responsible for the true and proper setting out of the alignments and for the provision of all necessary instruments, at any time during the execution of the work. In case of any error regarding location, levels, dimensions, or alignment of any part of the work, it on being required to rectify such errors at his own expense. Maintenance of the said infrastructure for a period of 62 month (during the period of development 50 months and defect liability of 12 months) was also the responsibility of the appellant. Some of the other works are of the nature of road and water supply projects and would be infrastructure facility covered the definition. As discu....
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.... 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 total income of the assessee, a deduction of an amount equal to hundred per cent of the profits and gains derived from such business for ten consecutive assessment years.] (2) The deduction specified in sub-section (1) may, at the option of the assessee, be claimed by him for any ten consecutive assessment years out of fifteen years beginning from the year in which the undertaking or the enterprise develops and begins to operate any infrastructure facility or starts providing telecommunication service or develops an industrial park ^34[or develops ^35[***] a special economic zone referred to in clause (iii) of sub-section (4)] or generates power or commences transmission or distribution of power ^36[or undertakes substantial renovation and modernisation of the existing transmission or distribution lines ^37[^37a[or lays and begins to ope....
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....ions are fulfilled, namely :- (a) such machinery or plant was not, at any time previous to the date of the installation by the assessee, used in India; (b) such machinery or plant is imported into India from any country outside India; and (c) no deduction on account of depreciation in respect of such machinery or plant has been allowed or is allowable under the provisions of this Act in computing the total income of any person for any period prior to the date of the installation of machinery or plant by the assessee. Explanation 2.-Where in the case of an ^46[undertaking], any machinery or plant or any part thereof previously used for any purpose is transferred to a new business and the total value of the machinery or plant or part so transferred does not exceed twenty per cent of the total value of the machinery or plant used in the business, then, for the purposes of clause (ii) of this sub-section, the condition specified therein shall be deemed to have been complied with. (4) This section applies to- (i) any enterprise carrying on the business ^47[of (i) developing or (ii) operating and maintaining or (iii) developing, opera....
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....es on or after the 1st day of April, 1995, but on or before the 31st day of March, ^54[2005].] Explanation.-For the purposes of this clause, "domestic satellite" means a satellite owned and operated by an Indian company for providing telecommunication service; (iii) any undertaking which develops, develops and operates or maintains and operates an industrial park ^55[or special economic zone]notified^56 by the Central Government in accordance with the scheme framed56 and notified^57 by that Government for the period beginning on the 1st day of April, 1997 and ending on the 31st day of March, ^58[2006]: ^59[Provided that in a case where an undertaking develops an industrial park on or after the 1st day of April, 1999 or a special economic zone on or after the 1st day of April, 2001 and transfers the operation and maintenance of such industrial park or such special economic zone, as the case may be, to another undertaking (hereafter in this section referred to as the transferee undertaking), the deduction under sub-section (1) shall be allowed to such transferee undertaking for the remaining period in the ten consecutive assessment years as if the operation....
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....69a[(vi) any undertaking carrying on the business of laying and operating a cross-country natural gas distribution network, including pipelines and storage facilities being an integral part of such network, which fulfils 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 established or constituted under any Central or State Act; (b) it has been approved by the Petroleum and Natural Gas Regulatory Board established under sub-section (1) of section 3 of the Petroleum and Natural Gas Regulatory Board Act, 2006 (19 of 2006) and notified by the Central Government in the Official Gazette; (c) one-third of its total pipeline capacity is available for use on common carrier basis by any person other than the assessee or an associated person; (d) it has started or starts operating on or after the 1st day of April, 2007; and (e) any other condition which may be prescribed. Explanation.-For the purposes of this clause, an "associated person" in relation to the assessee means a person- (i) who participates directly or....
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.... accountant. (8) Where any goods ^74[or services]held for the purposes of the eligible business are transferred to any other business carried on by the assessee, or where any goods ^74[or services] held for the purposes of any other business carried on by the assessee are transferred to the eligible business and, in either case, the consideration, if any, for such transfer as recorded in the accounts of the eligible business does not correspond to the market value of such goods ^74[or services] as on the date of the transfer, then, for the purposes of the deduction under this section, the profits and gains of such eligible business shall be computed as if the transfer, in either case, had been made at the market value of such goods ^74[or services] as on that date : Provided that where, in the opinion of the Assessing Officer, the computation of the profits and gains of the eligible business in the manner hereinbefore specified presents exceptional difficulties, the Assessing Officer may compute such profits and gains on such reasonable basis as he may deem fit. ^75[Explanation.-For the purposes of this sub-section, "market value", in relation to any good....
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....e of amalgamation or demerger on or after the 1st day of April, 2007.] ^78[(13) Nothing contained in this section shall apply to any Special Economic Zones notified on or after the 1st day of April, 2005 in accordance with the scheme referred to in sub-clause (iii) of clause (c) of sub-section (4).] ^79[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).] 7.5 Thus, as could be seen that so far as infrastructure facilities is concerned , Section 80IA(4) , inter-alia, provides that deduction shall be allowed where the total income of an assesses includes any profits and gains derived by an undertaking or an enterprise from any eligible business , at such rates as specified in the section where the assessee develops or operates and maintains or develops , operate and maintain any infrastructure facility. The enterprise carrying on the business of (i) developing or ....
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....rk order by Contractee along with the designs and specification and his job is to be simply execute the wok order. The role and responsibility of the Contractor ends with the finishing of work order to the satisfaction of the Contractee. The Contractee provides all the designs and other instructions to the Contractor for executing the Contract. The financial investments are done by Contractee as well major manpower , machines and material are provided by the Contractee. Say for example contact for painting of walls. Thus, Contractor act as an agent for the Contractee . While developer is broader than contractor, wherein developer is given contract for developing new infrastructure facility , wherein the Developer will act as principal. The Developer will actively participate in designing the new infrastructure facility , deploying its own financial stake/investment in development , deploying of its own men , material and machine to develop the facility/project. The developer will take charge of the existing premises/land and then complete the development as per the terms of the Contract. The developer will use its expertise and experience to develop infrastructure facility includin....
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.... the Hon'ble Gujarat High Court has dismissed the appeal filed by Revenue on the grounds that there are concurrent finding of the facts by ld. CIT(A) as well ITAT, therefore, no question of law, much less any substantial question of law arises from the order of the ITAT, and the finding of facts having been elaborately discussed by ITAT and ld. CIT(A) while deciding the issue in favour of the tax-payer which finding of facts were not disturbed by Hon'ble High Court. We have observed that in the order passed by ITAT in Montecarlo Constructions(supra), the ITAT has discussed the parameters distinguishing between Contractor as well Developer by analysing the specific work under taken by the tax-payer. While in the instant case before us, we have observed that the AO denied the deduction u/s 80IA(4) by holding assessee to be contractor and hit by newly inserted explanation below Section 80IA(13) . The AO has also denied the claim of the assessee for deduction u/s 80IA(4) on other grounds as mentioned in assessment order . The ld. CIT(A) did not discuss elaborately about the eligibility or otherwise of the assessee to the deduction u/s 80IA(4) vis-à-vis specific work orders execu....
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....he assessee has created a new infrastructure facility as a Developer or have undertaken a contract work to execute work order as a Contractor. We could have decided the issue ourselves as these appeals are old appeal pending for almost 7-10 years, but the material filed before us vide paper books are not sufficient for us to decide the issue . Even evidences such as tender documents, agreements with the Government for executing the work, details of the work executed vis-à-vis creation of new infrastructure facility created, PERT chart, financial statements, Men, material and machines deployed by the assessee , the roles and responsibilities performed by the assessee, details of deployment of funds, details of statutory clearances obtained , penal provisions in the agreements etc. were all not provided in the paper book filed by the assessee.The brief summary of the project is submitted which is not sufficient to adjudicate this issue. Each and every project requires detailed and indepth analysis on several parameters as culled out above, before holding whether the assessee is a developer or contractor. Thus, keeping in view facts and circumstances of the case, it would be fi....
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....ply mutatis mutandis to the appeal of the Revenue for assessment year 2010-11 in ITA No. 2302/Ahd/2014 on this issue. Thus , this issue is restored back to the file of the ld. CIT(A) for fresh adjudication with similar observations as were made by us as in ITA no. 2118/Ahd/2013 for assessment year 2009-10. The appeal of the Revenue is allowed for statistical purposes. We order accordingly. 11. In the result appeal of the Revenue in ITA no. 2302/Ahd/2014 for assessment year 2010-11 is allowed for statistical purposes. We order accordingly. ITA No.2303/Ahd/2014-Revenue Appeal A.Y.2011-12-Ajay Engineering Infrastructure Private Limited 12. The Revenue has raised following grounds of appeal in Memo of Appeal filed with Income Tax Appellate Tribunal, Ahmedabad Bench, Ahmedabad in ITA No. 2303/Ahd/2014 for assessment year 2011-12 , which reads as under:- "1. The learned CIT(Appeals) has erred in law and on facts in deleting the disallowance made by the AO u/s 80IA(4) amounting to Rs. 2,04,98,905/-. 2. On the facts and circumstances of the case the Ld. CIT(A) ought to have upheld the order of the Assessing Officer. It is therefore prayed that the ord....
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....ue in its appeal filed with ITAT in ITA No. 1231/Ahd/2016 is concerning the claim of deduction under section 80IA(4) of the Act which was denied by the AO but later allowed by the ld. CIT(A) . Similar issue arose in assessment year 2009-10 in Revenue's appeal in ITA No. 2118/Ahd/2011, and even grounds of appeal are similar. Both the parties have agreed before us that our decision in Revenue's appeal for assessment year 2009-10 shall be applicable for assessment year 2013-14, as facts and issues in appeal are similar. Our decision in ITA No. 2118/Ahd/2013 for assessment year 2009-10 as adjudicated above in preceding para of this order shall apply mutatis mutandis to the appeal of the Revenue for assessment year 2013-14 in ITA No. 1231/Ahd/2016 on this issue. Thus , this issue is restored back to the file of the ld. CIT(A) for fresh adjudication with similar observations as were made by us as in ITA no. 2118/Ahd/2013 for assessment year 2009-10. The appeal of the Revenue is allowed for statistical purposes. We order accordingly. 17. In the result appeal of the Revenue in ITA no. 1231/Ahd/2016 for assessment year 2013-14 is allowed for statistical purposes. We order accordingly. ....
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.... and circumstances of the case , the Ld. CIT(A) has erred in law and on facts by allowing deduction of Rs. 2,10,78,457/- u/s 80IA(4)(i) of the I.T. Act, 1961 which was disallowed by the Assessing Officer after full and proper justification of the facts , therefore the order of the Assessing Officer is required to be upheld. ii.)It is therefore prayed that the order of Ld. CIT(A) may be set aside and that of the Assessing Officer be restored to the above extent. 22. The issue raised by Revenue in its appeal filed with ITAT in ITA No. 1650/Ahd/2016 for assessment year 2014-15 in the case of the assessee Ajay Protech Private Limited is concerning the claim of deduction under section 80IA(4) of the Act which was denied by the AO but later allowed by the ld. CIT(A) . Similar issue arose in assessment year 2009-10 in Revenue's appeal in ITA No. 2118/Ahd/2011 in the case of the assessee Ajay Engineering Infrastructure Private Limited, and even grounds of appeal are similar. Both the parties have agreed before us that our decision in Revenue's appeal for assessment year 2009-10 in the case of the assessee namely Ajay Engineering Infrastructure Private Limited shall be applicabl....