TaxTMI 
TaxTMI 
2026 (4) TMI 1691
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.... - 1.(a) That the order passed u/s 250(6) of the Income Tax Act, 1961 by the Learned Commissioner of Income Tax (Appeals)-3, Gurgaon is against law and facts on the file in as much as the Learned CIT(A) was not justified to uphold the action of Learned Assessing Officer in denying the claim of deduction u/s 80-IA at Rs.76,18,45,477/- made by the appellant while filing return of income u/s 139(1) of the Income Tax Act, 1961. 1.(b) That the Learned CIT(A) was not justified to uphold that the appellant did not fulfil the conditions as enumerated u/s 80-IA of the Act. 1.(c) That the Learned CIT(A) was not justified to deny the claim of deduction u/s 80-IA by upholding the observations of the Learned Assessing Officer that the appellant is a works contractor whereas it had been demonstrated through various documents that the appellant is a developer. 2.(a) That Ld. CIT(A) gravely erred in upholding the action of Ld. Assessing Officer in treating the purchases made from the following parties as bogus and disallowing the same u/s 37- -M/s Devansh Overseas Rs. 4,98,68,463/- -M/s Shree Radhey Traders Rs. 8,51,29,066/- -M/s Aggar....
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....r on account of alleged unexplained receipts in cash from M/s P&R Infra Projects Ltd. placing reliance on statement of 3rd person without affording an opportunity to cross examine. 1.2 The Ld. AR advanced arguments on legal grounds as well as on merits. Reference has been made to various documents and reliance has been placed on various judicial decisions. The copies of the same have been placed on record. The Ld. CIT-DR also advanced arguments supporting the orders of lower authorities. Having heard rival submissions and upon perusal of case records, our adjudication would be as under. As is evident, the issues, on merits, that fall for our consideration is - (i) Denial of Deduction u/s 80-IA; (ii) Addition of Alleged Bogus purchases; (iii) Addition u/s 69A for Rs.2.72 Lacs; (iv) Addition of cash found for Rs.10.02 Lacs & Rs.14.27 Lacs; (v) Addition of Rs.35 Lacs as alleged unexplained receipts. The assessee has also raised legal issues. The facts of all these issues are as under: - Assessment Proceedings Issue No.1 - Denial of deduction u/s 80-IA 2.1 The assessee being resident corporate assessee was subjected to search action u/s 132 on 09-08-2018. The assessee filed....
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....oses of section 80-IA. 34.1 Section 80-IA provides for a ten-year tax benefit to an enterprise or an undertaking engaged in development or operation and maintenance or development, operation and maintenance of infrastructure facilities, providing telecommunication service, generation or generation and distribution of power or development of an Industrial Parks or a Special Economic Zones. 34.2 The tax benefit was introduced for the reason that industrial modernization requires a massive expansion of, and qualitative improvement in, infrastructure (viz., expressways, highways, airports, ports and rapid urban rail transport systems) which was lacking in our country. The purpose of the tax benefit has all along been for encouraging private sector participation by way of investment in development of the infrastructure sector and not for the persons who merely execute the civil construction work or any other works contract. The incentive has all along been intended to benefit developers who undertake entrepreneurial and investment risk and not contractors who only undertake business risk. 34.3 Accordingly, it has been clarified by inserting an explanation that....
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....te any infrastructure facility. The eligibility of deduction cannot be prior to the development and operation of the infrastructure facilities. Unless the assessee really develops and begins to operate infrastructure facility, there is no question of granting any deduction for the reason that the period of deduction cannot commence unless the enterprise develops and begins to operate the infrastructure facility. 2.5 The Ld. AO further observed that, in the present case, the assessee was only a civil contractor who was assigned the job of civil construction such as constructing the roads and bridges, dams, flyovers etc. and it was not the case that the said projects were being developed and operated by the assessee. The assessee's duty ends when the roads / bridges / flyover / dam etc. is constructed according to the specification as given by the Government / various statutory bodies. The infrastructure facility as such will start to operate only after the assessee has done his job and other necessary work in connection with the development of infrastructure facility is completed. Since the assessee is out of sight much prior to actual operation of the infrastructure facility, th....
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....0-IA(13) was inserted by Finance Act, 2007 with retrospective effect from 01-04-2000 which provide that nothing in this section would apply to a person who executes a work contract entered into with the undertaking or enterprise etc. The memorandum explaining the provisions of Finance Bill, 2007 clearly provide that the purpose of tax benefit was to encourage private sector participation and not for the persons who merely execute the civil construction work or any other works contract. In case a person makes the investment and himself executes the development work i.e., carry out the civil construction work, he would be eligible for benefit of Sec.80-IA 2.9 Thereafter, Finance Act, 2009 substituted Explanation below Sec.80-IA with retrospective effect from 01-04-2000 which provideed that nothing contained in the section would apply in relation to a business as referred to in sub-section (4) which was in the nature of works contract awarded by any person and executed by the undertaking or enterprises referred to in sub-section (1). The said amendment clarified that nothing in the nature of works contract would be allowed as deduction u/s 80-IA even if the contract was awarded by ....
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.... was denied to the assessee. 2.11 In AY 2020-21, an assessment has been framed against the assessee u/s 143(3) on 30-09-2022 wherein Ld. AO, taking the same view, denied deduction u/s 80-IA as claimed by the assessee in its return of income as filed on 01-02-2021. 2.12 In AY 2021-22, an assessment has been framed against the assessee u/s 143(3) on 31-12-2022 wherein Ld. AO, taking the same view, denied deduction u/s 80-IA as claimed by the assessee in its return of income as filed on 09-03-2022. 2.13 In AY 2022-23, an assessment has been framed against the assessee u/s 143(3) on 31-03-2024 wherein Ld. AO, taking the same view, denied deduction u/s 80-IA as claimed by the assessee in its return of income as filed on 28-10-2022. 2.14 In AY 2023-24, an assessment has been framed against the assessee u/s 143(3) on 24-03-2025 wherein Ld. AO, taking the same view, denied deduction u/s 80-IA as claimed by the assessee in its return of income as filed on 18-04-2024. 2.15 The Ld. CIT(A), vide common order dated 04-09-2025 has upheld the action of Ld. AO in denying impugned deduction u/s 80-IA to the assessee. Aggrieved as aforesaid, the assessee is in further appeals before u....
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....ad) was recorded u/s 131(1A) wherein he endorsed that the bills which have stamp of construction sites are genuine bills and the bills which do not have receipt stamp are bogus bills. On these facts, Ld. AO concluded that it was established that the assessee had devised a well establish model which was known to all the employees to book alleged bogus purchases. 3.2 During search, purchase invoices of M/s Devansh Overseas from FYs 2014-15 to August, 2018 were also found and it was seen that substantive number of purchase invoices and transport bilties did not contain any receipt from the construction site. Such invoices for this year were quantified at Rs.1,39,46,806/-. Post-search proceedings, summons was issued to Shri Ankur Goel of M/s Devansh Overseas and his statement was recorded u/s 131(1A) wherein he was confronted with the bills having no receipt stamps and also with the statement of Shri Manoj Kumar (Accountant) of the assessee company. He admitted that no material was supplied by them against the said bills. They made genuine as well as bogus sales to the assessee. In case of genuine bills, the bills are sent to construction sites along with the material where the bill....
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....nd was in violation of CBDT Instruction F.No.286/22003-IT(inv) dated 10-03-2003.The assessee furnished site-wise stock summary as well as sales tax returns along with quantity purchased & site-wise utilization of the material. It was argued that the statement of Shri Vikas Goyal was contrary to the conclusions drawn by Ld. AO. No opportunity of cross-examination of Shri Ankur Goel was afforded to the assessee. It was stated that no corroborating evidences was unearthed during the course of search to support the said allegations. It was finally submitted that the assessee had discharged the onus of establishing the purchases to be genuine one. The conclusion of Ld. AO was solely based on statement of third-person without any evidentiary support substantiating the statement as relied upon by Ld. AO. No opportunity of cross-examination of witnesses was granted to the assessee. The statements of Shri Manoj Kumar, Shri Vipan Kumar and Shri Ankur Goel stood retracted subsequently which was evidenced by their respective retraction letters. There was no evidence to suggest cash exchange between the parties. 3.4 However, the retraction of the statements was not accepted by Ld. AO. The st....
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.... channels and there was no evidence of cash exchange to support the allegation of Ld. AO. The confirmed copies of accounts were also furnished. It was brought to the notice that there was no mention of transaction between the assessee and Shri Radhey Trades by Shri Balvir Singh, in his statement, he was only questioned about the genuineness of transactions between M/s Shree Radhey Traders and Shree Balaji Traders. The same could be no reason to conclude or treat the transactions undertaken between the assessee-company and Shree Radhey Traders to be non-genuine. However, all these arguments stood rejected by Ld. AO and the purchases as made by the assessee from this entity were disallowed u/s 37(1). 3.7 During survey on Shri Satish Kumar, books of accounts of M/s Aggarwal Traders were also found. Shri Balvir Singh stated that this concern as well as M/s Mahadev Stone Crusher Co. is operated by Shri Avinash Goyal and these concerns are used to issue bills. It was also seen by Ld. AO that M/s Aggarwal Traders was making purchase from Shree Radhey Traders. Shri Avinash Goyal did not attend the proceedings. Therefore, this concern was also held to be bogus entity. Though the assessee....
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....where been stated that the said transactions pertained to the assessee or were made at the instructions of any of the key management persons. It was pointed out that Shri Suresh Kumar Singla was found to have made investment in some company i.e., M/s Deepshree Properties Pvt. Ltd. on his own accord which is also engaged in the construction business. As per Annexure SKS4, there were some pages suggesting that an agreement to sell was entered into by the said company to develop multi-story society wherein certain persons had made the investment. All these persons were relatives of Shri Suresh Kumar Singla. Therefore, these transactions did not pertain to the assessee-company. However, Ld. AO rejected the same on the ground that Shri Suresh Kumar Singla was an employee of the assessee company and the premises belonged to the assessee-company. The presumption of Sec. 132(4A) would apply and finally, the amount of Rs.2.72 Lacs pertaining to this year was added u/s 69A. Issue No.4: Addition of Cash found for Rs.10,02,060/- 5. During search, cash of Rs.10,02,060/- was found from Flat No.202, C2, Kokil Complex Apartment, Boring Road, Patna. The cash of Rs.10 Lacs was seized. The stat....
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....emently assailed the assessment so made by Ld. AO on various grounds. 8.2 On the issue of deduction u/s 80-IA, it was submitted that there was no requirement in the statute that the infrastructure facility should be owned by the assessee. Reference was made to the Circular No.717 of 14-08-1995 explaining the provisions of Finance Act, 1995 and also Circular No.3/2008 dated 12-03-2008 as well as the decision of Hon'ble Gujarat High Court in the case of CIT vs. Radhey Developers (341 ITR 403) wherein similar deduction was allowed to the assessee. In this decision, it was held that the person who undertakes to develop real estate project by developing and constructing housing project, would be eligible undertaking within the meaning of Sec.80-IB (10). The Pune bench of Tribunal in the case of B.T. Patil and Sons Belgaun Construction Pvt. Ltd. (34 Taxmann.com 97) held that the assessee would be developer even if only a part of infrastructure project work was being executed by it since it had undertaken various investments and technical risks. Similar was the decision of Ahmedabad Tribunal in Akash Infra projects Pvt. Ltd. (141 Taxmann.com 516) which had similar facts. The decision o....
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....not only be developed but also be operated by the assessee so as to make its income qualify for deduction. Further, the eligibility of deduction could not be prior to development and operation of the infrastructural facility. Unless the assessee really develops and begins to operate any infrastructural facility, there is no question of granting any deduction for the reason that the period of deduction could not commence unless the enterprise develops and begins to operate the infrastructural facility. 8.5 In the present case, the assessee acted only as a civil contractor who was assigned the job of civil construction such as constructing the roads and bridges etc. There was no evidence that the said projects were developed and operated by the assessee. The duty of the assessee would end when the road / bridges / flyover etc. is constructed according to the specifications given by the government / statutory bodies. The infrastructure facility as such will begin to operate or start only after the assessee has done his job and other necessary work in connection with the development of infrastructure facility are completed by the assessee. Since the assessee was out of the sight muc....
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....ivities 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 first condition as per sub-clause (a) was that the enterprise should be owned by a company which is registered in India or by a consortium of such companies. No doubt the assessee-entity was a company registered in India however, the requirement was that the facility should be 'owned' by the assessee so as to make him entitle for the deduction. It was amply clear that the concerned authorities and not the assessee owned the infrastructural facility. The assessee was referred to as the contractor to carry out specified work only. It is axiomatic that the doing of the work by the assessee, strictly in accordance with the given specification subject to the terms and conditions of the agreement and the control of the authority, could not put the assessee in the capacity of an owner. Even if the assessee had made some investment in the shape of purchase of raw material or incurring of labour....
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....the same on its behalf in accordance with the agreement entered with the relevant Central / State Government authorities, provision of section 80-IA shall apply to the transferee enterprise and accordingly, deduction from profit and gains would be available to such transferee enterprise for the unexpired period only. From composite reading of sub-clause (c) and the proviso, it was clear that in order to be eligible for deduction u/s 80-IA, the eligible enterprise which has developed such facility has to operate and maintain the facility as well. In the given facts of the case, it was evident that the appellant had not operated and maintained such facility and did not transfer the same for the operation and maintenance of the said facility on its behalf to another enterprise in accordance with the agreement entered with Central / State Government authorities. The role of the assessee was over as soon as it has finished the construction of civil work as per the terms and conditions of the tendered document. The agreement nowhere provided that the appellant was to operate and maintain the same as well after completing the construction work. Therefore, the condition of sub-clause (c) w....
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....r of the contractors including the EPC contractors. Thus, to sum up, the proviso envisages a situation where say an undertaking or enterprise which undertook development of infrastructure facility under concession agreement obtains rights over the facility and can also transfer such rights to another enterprise for the purpose of operating and maintaining the infrastructure facility. Therefore, such enterprises will be entitled to claim deduction under this clause. However, in the case of contractors including EPC contractors, no such rights to transfer infrastructure facility get vested, therefore, they remain contractors. Therefore, there would be important distinction between the developer and the contractor. The concessionaire or the developer, after entering into concession agreement, makes investment in creation of infrastructure facility along with rights to charge usage fee / toll. These rights are thus transferable and the proviso is clearly talking of such developers. Therefore, in that sense if the infrastructure facility is owned by the undertaking or enterprise and then that enterprise can transfer infrastructure facility to another enterprise i.e., transferee enterpri....
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....ncession period or upon termination of agreement as mentioned in Circular No. 717 as well as in Sec.80-IA(4). In the case of construction agreement, the contractor would not get any vested right over the infrastructural facility and he also do not get concession whereby it gets right to collect appropriate fees / toll to operate / maintain the project and thus, the contract did not enable him to transfer infrastructure facility after expiry of concession period or upon termination of the agreement. 8.13 The Ld. CIT(A), at para 9.1, referred to Explanation below Sec.80IA(13), as inserted by Finance Act 2007 with retrospective effect from 01-04-2000. It was clarified that nothing contained in this section would apply to a person who executes work contract entered into with the undertaking or enterprise, as the case may be. The Finance Act, 2009 substituted this Explanation with retrospective effect from 01-04-2000 to provide that nothing contained in this section would apply in relation to a business as 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 enter....
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....s, a developer may also do the work of a contractor but a mere contractor per se could never be called as a developer. 8.16 Further, in order to be eligible for deduction, the development should be of infrastructure facility as a whole and not a particular part of it. It may be possible that some part of development work is assigned by the developer to some contractor for doing it on his behalf. However, the same would not put the contractor of such work into the shoes of the developer. The activity of construction is a sub-part of the development. The activity of development includes wide area of work to be done relating to the planning, designing, engineering, financing, taking various statutory approvals, carrying out various projections etc. in addition to construction in respect of project. Since the assessee had simply done a part of work of civil construction relating to the infrastructure facility, it is not eligible for deduction. The sphere of work assigned to the assessee was only to carry out job of civil construction of roads, bridges in accordance with the terms of specifications as mentioned in the contract. The assessee was bound to carry out construction work as....
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....The primary issue that fall for our consideration is assessee's claim of deduction u/s 80-IA. From the enumerated facts, it emerges that the assessee is engaged in executing various infrastructural projects for various Government Agencies / Local Authorities. The assessee has claimed impugned deduction in earlier years also wherein impugned deduction stood denied to the assessee on similar lines. The matter for AYs 2013-14 to 2018-19 reached up-to Tribunal vide ITA Nos.140 to 145/Chd/2024 order dated 17-01-2025, a copy of which has been placed on record. Upon perusal of the same, it could be seen that the assessments for all those years stood quashed by Tribunal on legal ground of mechanical approval u/s 153D. Consequently, the issue on merits was not adjudicated by the bench. The assessee, as in earlier years, has continued to claim impugned deduction u/s 80-IA in AYs 2019-20 to 2023-24. 10. From the records and written submissions of Ld. AR before Ld. AO, it emerges that the assessee company was incorporated on 19-01-1996. The assessee company is stated to be engaged in the business of development and maintenance of infrastructural facilities i.e., to develop various types of ....
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....grade separated U-turn based multi sectional interchange at Bailey Road, Patna (In between Lalit Bhawan & Vidyut Bhawan) with multiple underpasses, Flyover, elevated section using U girders & extra dosed cable stayed structures with State of art, Pavement finished road appurtenance, pedestrian crossing, Software controlled solar lighting, Landscaping, and integrated drainage system etc. Yes 39,28,42,150 49,56,536 Bailey Road 5. Sr. Project Engineer, Bihar Rajya Pul Nirman Nigam ltd., Works Divn No.2, Patna C/o three lane 1506 mtr long H.L.RCC bridge at Bangra ghat over river Gandak connecting Sh-74 and Sh-90 of Muzaffarpur Saran District along with 2225 Meters Long Guide Bund and 18.5 km long approach road Yes 68,64,28,833 2,23,99,094 Bangra Ghat 6. Superintending Engineer, Construction Circle, Pb. PWD B&R Branch, Amritsar Construction of Approaches to Road over Bridge (excluding Railway portion) on lever Crossing no. A044/T3 on Jalandhar - Amritsar railway line at Beas (distt. Amritsar) Yes 1,19,19,607 2,80,49,585 Beas Punjab 7. Executive Engineer, Bhadrak (R&B) Division, Bhadrak Construction of H.L. Bridge over ....
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.... 39,78,091 Elevated Road, Amritsar 14. Goa State Infrastructure Dev. Corp. Ltd. Panaji, Goa Construction of Bridge at Gaundali including approaches Yes - 74,92,046 Goa 15. Executive Engineer, HUDA, Divn. No. II, Gurgaon Design & C/o approaches to 4 lane road over Bridge (ROB) on Delhi -Rewari Railway line between crossing Np.29-30 at Junction of Sector - 10 and 37 D in Gurgaon Haryana and all other works contingent thereto Yes - 26,77,121 Gurgaon 16. C.E., N.H. PWD, Pb. Patiala Construction of Four Lanes with paved side shoulder of Harike Bypass of NH-15 from existing km 158.350 to km 166.925 of Nh-15 in the State of Punjab under NHDP-IV" on Engineering Procurement and Construction Yes 6,76,00,870 98,51,297 Karike Pattan 17. The Chief Engineer, HP, PWD, Zone Hamirpur Construction of High-Level Bride Over Swan River between Village Rampur & Haroli in District Una (HP) (SH: C/O Pre-stressed Concrete Bride 19spans on 40.70 m each total span 773.30, span bridge except both sides approaches).in Tehsil & Distt. Una H.P Yes 75,36,633 3,13,861 Haroli 18. SE, NH Circle No.2, PW Roads Di....
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....te Power Development Corporation Limited, Srinagar Kashmir "Investigation, Design & C/o 178m long Steel Bridge for Class 50R loading as per IRC6:2000, over River Chenab, at CH: 2700m Right Bank Portal Road (Sindhu Village), of External Access Road to Sawalkote Hydroelectric Project with approaches, including approach road of length 300m approximately leading to Diversion Tunnel (Tulsien Nallah) Yes 19,92,59,576 4,66,71,493 Ramban 26. Executive Engineer, Central Works Division No.1, PWD B&R, Amritsar C/o Four land Railway Over Bridge near Verka Level Crossing (Excluding Railway spans) Under Bus Rapid Transit System (BRTS) in District Amritsar (Corridor No.7) Yes 33,77,590 16,43,151 Rob Verka 27. Chief Project Manager, Varanasi, Project Implementation Unit, RVNL, Varanasi (UP) Construction of Roadbed, viaduct, Major & Minor Bridges, RUBs, ROBs, Track Linking (Excluding Supply if Rails and Main Line Sleepers) and General Electrical Works at both the approaches of Rail cum Road Bridge at Ghazipur (18.8km) in connection with Construction of New BG line from Mau to Tarighat in Varanasi Division of N.E. Railway and Danapur Division of E.C....
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....power of all kind, arranging bank guarantee to cover the technical risks, insurance, execution of work at site, trial quality control / assurance, contractual assurances, timely execution of the project and hold liability for non-fulfillment of obligations. During the course of assessment proceedings, voluminous documents were filed by the assessee to establish the said claim. 11. In furtherance of its claim, the assessee had submitted copy of the agreement with M/s Bihar Rajya Pul Nirman Ltd who is one of largest customer of the assessee. It was pointed out that the terms of the agreement would show that the assessee was responsible to undertake survey, investigation, design, engineering, procurement, construction, and maintenance of the Bridge Project and shall remedy any / all loss or damage to the Bridge Project from the appointed date until the end of the construction period at the assessee's cost. As per Article-9 of the agreement, the assessee was responsible to engage personnel / manpower for the purpose of execution of the project etc. The Article 12 of the agreement specifically provided that all risks relating to the project shall be borne by the appellant alone. The ....
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....tarts to operate any infrastructural facility. The eligibility of deduction could not be prior to the development and operation of the infrastructural facility. In other words, the assessee should not only develop the infrastructure facility but it should also operate the same. The assessee was not engaged in development, operation & maintenance of projects but it merely acted as a contractor only. The ownership of various projects as undertaken by the assessee was not with the assessee and assessee merely contributed to the attainment of the object of developing the infrastructural facility which would be akin to a contractor. Since the assessee has merely done a part of work of civil construction relating to infrastructural facility and the assessee entered into works contacts and therefore, he would not eligible for deduction u/s 80-IA read with Explanation to Sec.80-IA(4). It was also observed that the assessee merely acted as a civil contractor who was assigned the job of civil contractor. The said projects were not developed and operated by the assessee. The infrastructural facility would start to operate only when the assessee had finished its activities. The assessee was no....
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....ch 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 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 or develops a special economic zone referred to in clause (iii) of sub-section (4)or generates power or commences transmission or distribution of power or undertakes substantial renovation and modernisation of the existing transmission or distribution lines Provided that where the assessee develops or operates and maintains or develops, operates and maintains any infrastructure facility referred to in clause (a) or clause (b) or clause (c) of the Explanation to claus....
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....; (d) a port, airport, inland waterway, inland port or navigational channel in the sea; .............. (5) Notwithstanding anything contained in any other provision of this Act, the profits and gains of an eligible business to which the provisions of sub-section (1) apply shall, for the purposes of determining the quantum of deduction under that sub-section for the assessment year immediately succeeding the initial assessment year or any subsequent assessment year, be computed as if such eligible business were the only source of income of the assessee during the previous year relevant to the initial assessment year and to every subsequent assessment year up to and including the assessment year for which the determination is to be made. .............. 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). A bare perusal of the aforesaid ....
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....l 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 sold waste management system; (iv) a port, airport, inland waterways, inland port or navigational channel in the sea. The Explanation to Sec.80-IA(13) clarifies 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). 15. On a bare reading of sub-section (4) of Section 80-IA, it could be seen that such provisions apply to any enterprises carrying on the business of (i) developing or (ii) operating and maintaining or (iii) developing, operating and maintaining any infrastructure facility. Upon perusal of the same, it could be seen that the only mandate is that the assessee must engage in one of the three activities i.e., developing or operating and maintaining or developing, operating and maintaining any infrastructure facility....
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....DT (clarifying the amendments of Finance Act, 1995) at the time of insertion of Section 80-IA of the Act in the statute. This Circular clearly highlights the need for growth of infrastructural facility in the country as the underlying intent for granting tax holiday. The para 34.2 of the said circular provides that the objective of introduction of these provisions stem from the fact that Industrial modernization requires a massive expansion of and qualitative improvement in infrastructure. Since the country is very deficient in infrastructure such as expressways, highways, airports, ports and rapid urban rail transport systems, additional resources are needed to fulfill the requirements of the country within a reasonable time frame. In many countries, the BOT (build-operate-transfer) or the BOOT (build-own-operate-transfer) concepts have been utilized for developing new infrastructure. Applying commercial principles in the operation of infrastructure facilities can provide both managerial and financial efficiency. In view of this, a ten-year concession including a five-year tax holiday has been allowed for any enterprise which develops, maintains and operates any new infrastructure....
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.... or operating and maintaining or developing, operating and maintaining any eligible infrastructure facility. The other conditions are that the facility should be owned by a company registered in India or by a consortium of such companies and it must enter into an agreement with the specified authority and such agreement should be for developing or operating and maintaining or developing, operating and maintaining a new infrastructure facility and not as a contractor. 17. This is undisputed fact that the assessee is engaged in construction of infrastructural facilities viz. bridges, roads, highways etc. and the income of the assessee include profits and gains derived from such activity. There are three primary conditions to lay claim on the impugned deduction viz. (a) there must be an "enterprise" carrying on eligible business; (b) such an "enterprise" should be owned by a "company" or "consortium of such companies"; (c) income of such enterprise from the eligible business must form part of gross total income of the assessee. The use of the words "consortium of such companies" by the legislature indicates that the legislature was aware of the object of formation of consortium for....
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....y other statutory authority, by which the enterprise which develops such facility, has to transfer such facility to the Government or public authority after the stipulated period. In other words, the required condition for availing of this benefit is that transfer under BOT (Build, Own, Transfer) or BOOT (Build, Own, Operate and Transfer) schemes has to be met. 47.2 Investments in infrastructure have to compete with investment in other sectors to be attractive. There is, in particular, a need to encourage investment in the area of surface transport, water supply, water treatment system, irrigation project, sanitation and sewerage system or solid waste management systems. With this in view, section 80-IA has been amended to relax the existing two-tier benefit to provide a ten year tax holiday. Keeping in view, their capital intensive nature, the higher allowances of depreciation in the initial years to such enterprises and the need for improved cash flows, an infrastructure facility in the nature of a road (including a toll road), bridge, rail system, highway project, water supply project, sanitation, sewerage and solid waste management system shall be allowed a ten year ta....
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....the purposes of section 80-IA. 1.Section 80-IA provides for a ten-year tax benefit to an enterprise or an undertaking engaged in development or operation and maintenance or development, operation and maintenance of infrastructure facilities, providing telecommunication service, generation or generation and distribution of power or development of an Industrial Parks or a Special Economic Zones. 2.The tax benefit was introduced for the reason that industrial modernization requires a massive expansion of, and qualitative improvement in, infrastructure (viz., expressways, highways, airports, ports and rapid urban rail transport systems) which was lacking in our country. The purpose of the tax benefit has all along been for encouraging private sector participation by way of investment in development of the infrastructure sector and not for the persons who merely execute the civil construction work or any other works contract. The incentive has all along been intended to benefit developers who undertake entrepreneurial and investment risk and not contractors who only undertake business risk. 3.Accordingly, it has been clarified by inserting an explanation that ....
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.... in ABG Heavy Industries Ltd. (supra) as well as in the light of directions of the court in the case of that very assessee, held that the law interpreted by the Third member is no longer a good law and therefore, the same could not be applied. Finally, Ld. AO was directed to allow deduction u/s 80-IA(4). Though Ld. CIT(A) has observed that the decision in the case of ABG Heavy Industries Ltd. (supra) was on different facts, however, the facts remain that the bench has opined that the said decision would be applicable and finally allowed the deduction to the assessee. Nothing has been shown to us that this decision has subsequently been reversed by any higher judicial forum. Therefore, the adjudication by Third Member, as referred to by Ld. CIT(A), could not be accepted and the view of the co-ordinate bench is to be followed. 21. Proceeding further, we find that, considering various judicial decisions, identical issue has been adjudicated by Ahmedabad Tribunal in the case of Akash Infra projects Pvt. Ltd. (141 Taxmann.com 516; 22-06-2022). The findings of the bench were as under: - 24. The primary condition is that the enterprise must carry on the work of "developing" an....
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....ilities, which clearly make the case of the assessee within the scope and ambit of section 80-IA(4) of the Act so as to claim the impugned deduction. 26. We have considered the judgements relied upon by the Ld. AR passed by different judicial forums including the judgement passed in the matter of Patel infrastructure and Katira construction (supra) passed by the Rajkot Bench and Katira construction passed by the Hon'ble jurisdictional High Court wherein the constitutional validity of insertion of explanation below sub-section (13) of section 80-IA of the Act was challenged. The Ld. Representative appearing for the Revenue vehemently argued on this point that the jurisdictional High Court in the said matter already decided the issue against the assessee. Fact remains that the jurisdictional High Court in that particular matter dealt with the constitutional validity of the insertion of explanation as mentioned hereinabove and decided the same in favour of the revenue to this effect that such explanation brought with retrospective effect from 1-4-2000 by the Finance Act No. 2 of 2009 was very well within the competence of Parliament. As such there was no issue whether the....
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....As per the said decision, the assessee do not have to develop the entire infrastructure facility to qualify for deduction u/s.80-IA(4) and if only a part of the infrastructure facility is developed, the assessee would be eligible for deduction. The three requirements of Sec.80-IA(4) viz. development, operation and maintenance are not cumulative. Thus, an enterprise which only develops facility would also be entitled to the benefit of section 80-IA(4). Merely because the assessee is referred to as a contractor in the agreement, it would not debar it from claiming deduction. This decision clearly supports the case of the assessee. 22. In the case of Katira Construction Ltd. (119 Taxmann.com 489) as adjudicated by Rajkot Tribunal, the bench held that the assessee would be eligible for such benefit even if it was engaged only in developing the infrastructure facilities. If the contention of the AO is believed to be true that the deduction would be available to the assessee only after infrastructure started or starts operating, then the assessee who only develop the infrastructure facility will not be entitled for the deduction u/s 80-IA (4) since he would never operate and maintain ....
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....rtook entrepreneurial risks involved in the execution of the project. The assessee had undertaken the responsibility for execution of the projects from beginning till the final stage. It was not just involved in raising the structure but also involved in project design, lay-out plan, structural design etc. The assessee was required to provide various types of guarantees in respect of the project and also responsible for rectifying defects and trial runs. The assessee was responsible for procuring/ purchasing material and arranging manpower and it was responsible for risks associated thereto. The fact that the assessee received payment against running bills or how these entries are reflected in Form 26AS is not much of relevance while considering the claim of the assessee u/s 80-IA. The emphasis laid down by lower authorities on the fact that the designs were not prepared by the assessee overlook the overall responsibility of the assessee under various projects. The relevant articles of the agreement clearly stipulate and substantiate that the assessee was responsible to undertake survey, investigation, design, engineering, procurement, construction, and maintenance of various proje....
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....has ever been provided to the assessee which run contrary to the decision of Hon'ble Apex Court in the case of Andaman Timber Industries vs. CCE (281 CTR 0241). The denial of such an opportunity of cross-examination is in clear violation of principle laid down by Hon'ble Apex Court in the case of Andaman Timber Industries vs. CCE (281 CTR 0241) holding that not allowing assessee to cross-examine witnesses by adjudicating authority though statements of those witnesses were made as basis of impugned order, amount to serious flaw which make impugned order nullity as it amounts to violation of principles of natural justice. In the present case, we find that such an opportunity of cross-examination has never been provided by Ld. AO to the assessee which would make the impugned addition nullity. If the statement of deponent is ignored, nothing would be left with Ld. AO to support its allegation. The statement taken from the employees of the assessee runs contrary to each other. As against this, the assessee filed ample documentary evidences in the shape of purchase invoices, transport receipts, weigh bridge slips, border crossing slips, ledgers, bank statements etc. to substantiate the p....
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....ssee furnished ample documents as in the case of M/s Devansh Overseas to discharge its onus. Similar are the facts for M/s Aggarwal Traders and M/s Mahadev Stone Crusher Co. Therefore, in the absence of any corroborative evidence to disbelieve such purchases, the addition for these three suppliers could not be sustained. We order so. 27. The addition of M/s Gaurav Steel has been made on the basis of two register as found from Patna premises. The same were marked as PD1-01 and PD1-02. Shri Niraj Prasad (Office assistant), in recorded statement, stated that as per instructions of Shri Suresh Kumar Singla, cash entries were made by him either in loose sheets or in registers. PD1-01 was one such register which contain entries pertaining to cash receipts and cash expenses. The register PD1-02, had cash received on left side whereas right side contain cash expenses incurred by him. He stated that said cash was received by him from M/s Gaurav Steel, Rinku Ji and one Sh. Awadh Bihari Dubey whose identity was not known to him. The said cash was received on verbal instructions of Shri Suresh Kumar Singla (Area Manager, Bihar). On the basis of these facts, Ld. AO concluded that these entri....
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....ed on record copy of imprest account in the name of Shri N.K. Chaudhary on Page Nos.1134 to 1148 of the paper-book. The same substantiate the explanation of the assessee. The assessee has well demonstrated that the said cash was part of imprest account only. Since the source of cash stood explained, the addition made by Ld. AO stands deleted. 30. The last addition, on merits, is the addition of Rs.35 Lacs which is wholly based on survey statement u/s 133A on third-party M/s P&R Infraprojects Ltd. Shri Inder Mal Jain (AVP) merely stated that around Rs.30 Lacs to Rs.35 Lacs was returned back in cash to the assessee after receipt of RTGS / Banker's Cheque. This addition is bereft of any corroborating evidences and the addition is based solely on a third-party statement which has not been even confronted to the assessee. Even the statement is a vague statement. No such addition could be made, in this manner. Therefore, we delete the same. 31. Ground Nos. 1(a), (b) & (c) is with respect to claim of deduction u/s 80-IA which stand allowed. In Ground Nos. 2(a) & (b), the assessee has assailed quantum addition of alleged bogus purchases. These grounds stand allowed which render alter....