TaxTMI 
TaxTMI 
2024 (11) TMI 91
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....arned ITAT has deleted the addition of Rs. 6,86,60,491/ - made on account of disallowance of deduction claimed u/s. 80IA (4) of the Income Tax Act, 1961, despite the fact that assessee worked as a contractor and not as a developer?" 3.1. The brief facts of the case are that the respondent-assessee is a Joint Venture Undertaking constituted by two companies namely M/s. Nagarjuna Construction Company Limited and M/s. M.S. Khurana Engineering Limited under the name and style of NCC-KSKEL. The respondent-assessee submitted a bid for works relating to construction of New Domestic Arrival Block at Ahmedabad to the Airports Authority of India, New Delhi which was awarded to the respondent vide work order dated 08.05.2006. 3.2. For the year under consideration, the Assessing Officer disallowed the deduction claimed by the assessee under Section 80-IA (4) of the Act on the ground that the assessee was not eligible in view of the explanation inserted in the Act by Finance Act, 2009 with retrospective effect from 01.04.2000 and the assessee is not the owner of the property as a developer. 3.3. The CIT (Appeals) allowed the appeal of the assessee holding that the assessee is a develop....
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....ated works. iv) Internal / External electrification, v) Air conditioning system, vi) Fire Protection System, vii) CCTV surveillance System, viii) Flight Information Display System ix) and Public Address System The Scope of work itself shows that it was not just simple construction but actually developing a full-fledged airport an infrastructure facility prescribed in the section. Thus the appellant undertook not just civil construction of the New Domestic Arrival Block of Ahmedabad Airport but developed a full-fledged airport with all facilities like AC, Flight Information Display System, Full Electrification etc. 2 All conditions of section 80IA (4) stand fulfilled by the appellant : The appellant is not found violating any of the conditions stipulated in section 801A (4) from clause (a) to clause (c). Please refer to the narration in para 8, 9, 13 and 14 above. 3 Contract agreement cannot be interpreted as a simple Works Contract: The appellant did enter into a Contract Agreement with the Airports Authority of India, but it had to and whenever there is an Agreement there have to be ....
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....es ought to be interpreted, more so in order to advance the objective of the statute rather than to restrict the same, more so when what is "work contract is also not spelt out or defined in the retrospectively inserted Explanation in the year 2009." Thus the appellant undertook obligations which amounted to 'developing' the 'infrastructure facility'. The Contract Agreement despite the strict clauses of monitoring, approval and control by the AAI cannot just be interpreted as a simple Works contract. True supervision, control, approval at each step is of the AAI but it has to be because it is the statutory body that is actually developing and would be running the airport. Entering into the contract with authority is by itself a precondition of the section. The appellant had to obey the specifications set by the Principal that is the AAI. Though the contract may look like a works order but the nature of activity undertaken by the appellant extends to something in the nature of developing the infrastructure facility. The nature of the obligations performed by the appellant partake the nature of 'developing'. The AAI had to get erected a fully functional airp....
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....enance of Container Handling equipment namely, the cranes in question. JNPT has a dedicated Container Handling Terminal. The case of the assessee is that the only activity at the Terminal consists of the loading, unloading and storage of containers. Under the contract, the assessee was obligated to provide the equipment in question in an operable condition. The contract envisaged two different options; the first being one under which the assessee would carry out operation and maintenance of the equipment while the second consisted of an option to JNPT to carry out operations. The terms of the contract however made it clear that it was the obligation of the assessee to make the equipment available for operation for a stipulated minimum number of days during the year and made the assessee liable to liquidated damages in the event that this was not possible. JNPT by its letter dated 27th March 2000 clarified that the difference between the two options that had been given to the assessee consisted of a payment of Rs. 40,00,000 which was to be retained by JNPT in the event that the operators were provided by the Port for operating the cranes. At the same time, JNPT clarified that it was....
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....rs is the work undertaken or done by the appellant. And the appellant did hand over a fully developed New Domestic Arrival Block of the airport at Ahmedabad." 3.6. The Tribunal, considering the above analysis carried out by the CIT (Appeals) held as under : "16. In the instant facts we have to firstly see whether the assessee is engaged in "development" for any "new infrastructural facility" or is engaged only in carrying out repair works or other incidental works, not amounting to development of a new infrastructural facility. In order to be eligible for claim of deduction under Section 80-IA (4) of the Act and to qualify as a "developer" ", the assessee should be engaged in "development" of a new infrastructural facility and mere "repairs and maintenance" or "upkeep" от "revamp" work of existing facility and other incidental works would not qualify for deduction under Section 80-IA (4) of the Act, being primarily in the nature of "works contract" only. Once the essential threshold of assessee being engaged in "development" of a "new infrastructural facility" is satisfied, as a subsequent step, we need to analyze whether the "other conditions" for qualifyin....
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....n to provide all materials for the project at it's own expenses (other than those which are supplied by AAI) (refer Pages 131 and 06 of Paper Book). The assessee has also undertaken to indemnify AAl employees against action for claim or proceedings relating to infringement or use of any patent or design etc. (refer Pages 132 of Paper Book). Accordingly, looking into the facts of the instant case, it is observed that the assessee has undertaken to bring into existence a new infrastructure facility being new domestic arrival block at Sardar Vallabhbhai Patel International Airport, Ahmedabad and further the assessee is also undertaken various financial and entrepreneurial risks required to be borne by a "Developer" of a project viz. providing bank guarantee to AAI, procurement of certain materials by the assessee at it's own cost during the construction phase, preparation of various architectural designs relating to the project for approval of AAI etc. which all support the fact that the assessee is in the instant facts is a "developer" within the meaning of Section 80-IA of the Act and is eligible for claim of deduction under Section 80-IA (4) of the Act. We observe that Ld. ....