TaxTMI 
TaxTMI 
TaxTMI 
2026 (3) TMI 328
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....Delhi (hereinafter referred to as the Assessing Officer) in making a disallowance of deduction of Rs 7,16,84,974 claimed by the appellants under section 80- IA(4)(i) of the Act on the ground that the appellants have not developed an infrastructure facility and hence, are not eligible for the said deduction. The appellants contend that on the facts and in the circumstances of the case and in law, the CIT(A) erred in upholding the action of the Assessing Officer inasmuch as he has not correctly appreciated the facts of the case in its entirety and hence, the said disallowance is bad in law and ought to be deleted. The appellants crave leave to add to, alter and/or amend the aforestated ground of appeal." 3. Brief Facts of the Case are that the assessee filed its return of income, which was selected for scrutiny assessment. In the return, the assessee claimed, for the first time, a deduction under section 80IA(4)(i) of the Act amounting to Rs. 7,16,84,974/- in respect of the development and maintenance of an infrastructure facility. During the course of assessment proceedings, the Ld. AO called upon the assessee to furnish details in support of the aforesaid claim....
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....ajasthan. The assessee-company is incorporated in India under the Companies Act, 2013 and is a subsidiary of M/s. SMC Infrastructure Pvt. Ltd. It was argued that the entire factual matrix had been duly explained during the assessment proceedings. The Ld. AR further submitted that the Ld. AO, in the impugned assessment order (at pages 5 to 7), has provided a tabular comparison of the work executed by the assessee vis-à-vis the statutory conditions prescribed under section 80IA(4)(i). The relevant extract, as reproduced in the assessment order, is as under: Sr. No. Conditions Prescribed by the Act Note on satisfaction of the condition by the company 1 It is owned by company registered in India or by a consortium of such companies or by an authority or a board or a corporation or any other body established or constituted under S any Central or State Act [Section E 80-IA(4)(i)(a)] M/s Efficient Illumination Private Limited is a Private Limited Company registered in India and incorporated under the Companies Act, 2013. It is a subsidiary company of M/s SMC Infrastructures Private Limited (also registered in India). It is a Special Purpose Vehicle formed specific....
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.... in the sea. The Company is engaged in the Project of Development of Energy Efficient Public LED Street Lights for the Roads and Highways of the City of Jaipur, Rajasthan and Maintenance of the same. The project includes improvements to Road Infrastructures by way designing, financing, implementing, commissioning & operation and maintenance of approximately 70,000 energy efficient public lights along with monitoring system and relevant automation technologies like voltage dimming, on off switching etc on the highways and the roads of Jaipur City. Thus, the activity undertaken by the Company forms an integral part of highway/road project 5 Explanation to Section 80-IA states "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 Government or State Government) and executed by the undertaking or enterprise referred to in sub-section (1). As per the agreements entered by the Company, it can be noticed that: (a) The Company is required to Design, Finance, Implement and Commission th....
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....ut of total 70,000 nos in first phase and to replace remaining street light with execution of the project work as per Energy Performance Contract. As per EPC, the project is developing an energy efficient Public Lighting System in Jaipur City on a public private partnership basis. It is no where developing, operating and maintaining a new infrastructure facility since for the purpose of this section "infrastructure facility" means a road including toll road, a bridge or a rail system. Merely installing new energy efficient pubic lights on already existing road does not tantamount to developing, operating and maintaining a new infrastructure facility. As per Circular No. 4/2010 [F.No. 178/14/2010-ITA-I] dated 18.5.2010, widening of existing roads constitutes creation of new infrastructure facility for the purpose of section 80IA(4)(i) which itself implies that any work related to roads in its literal sense would qualify for infrastructure. 2 [Provided further that nothing contained in this section shall apply to any enterprise which starts the development or operation and maintenance of the infrastructure facility on or after the 1st day of April 2017] The company has state....
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....public, whether a thoroughfare or not, and includes on either side - (a) the drain or gutters and the land up to the defined boundary, notwithstanding the projection over such land of any verandah or other super-structure; (b) every space, notwithstanding that it may be private property or partly or wholly obstructed by any gate, post, chain or other barrier, if it is used by any person, whether or not occupying any abutting property, as a means of access to or from any public place or thoroughfare; It may please be noted that the above definition is an inclusive definition. Sub-clause (b) of the above definition covers every space used by any person under the purview of street. Since, the current project under discussion carried out by the Company involves development of energy efficient public lighting system for the roads of city of Jaipur meant for public use, the same should logically be construed as part of road infrastructure." 7. The Ld.DR vehemently argued that the activities undertaken by the assessee during the impugned assessment year do not fall within the ambit of section 80IA(4)(i) of the Act. It was contended that the statutory provisio....
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....menced prior to 01.04.2017, and thus the condition under section 80IA(4)(i)(c) stands satisfied. The core controversy revolves around whether the activities undertaken by the assessee namely, design, financing, implementation, commissioning, operation and maintenance of approximately 70,000 energy-efficient public LED street lights along with monitoring and automation systems- constitute development of an "infrastructure facility" within the meaning of the Explanation to section 80IA(4)(i). The Explanation defines "infrastructure facility" to include a road (including toll road) and a highway project including other activities being an integral part of the highway project. The term "road" has not been defined under the Income-tax Act. In such circumstances, a purposive and contextual interpretation is warranted. The assessee has rightly drawn support from the definition under the Rajasthan Municipalities Act, 2009, which adopts an inclusive and expansive meaning of "street," encompassing not only the road surface but also ancillary and appurtenant components forming part of public access infrastructure. The material on record demonstrates that the project undertaken by the assessee....