TaxTMI 
TaxTMI 
2026 (6) TMI 1044
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....n infrastructure like Sewage Treatment Plants ('STP'), Sewage Pipeline Networks, Water Treatment Plants, Water Supply Pipelines, Sewage Pump House, etc. Return of income for A.Y. 2009-10 filed on 31.10.2019 declaring total income of Rs. 4,28,68,730/-. After the case being selected for scrutiny under CASS valid statutory notices served upon the assessee u/s. 143(2) and 142(1) along with questionnaire attached to notice u/s. 142(1) of the Act. During the course of assessment proceedings, ld. Assessing Officer examined the deduction u/s. 80IA of the Act for an amount of Rs. 4,25,53,730/- claimed by the assessee for developing, operating and maintaining infrastructure facility as prescribed u/s. 80IA(4) of the Act. Ld. Assessing Officer made reference to the Explanation inserted by the Finance Act, 2007 retrospectively from 01.04.2000 in section 80IA(13) of the Act which provides that "for 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...". During the course of assessment proceedings, assessee submitted that the p....
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....ich reads as under:- "Section 80IA, inter alia, provides for a ten-year tax benefit to an enterprise or an undertaking engaged in development of infrastructure facilities, Industrial Parks and Special Economic Zones." 4.5.1. 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 repaid 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. 4.6. Accordingly, it is proposed to clarify that the provisions of section 80IA shall not apply to a person who executes a works contract entered into with the undertaking or enterprise referred to in the said section. This, in a case where a person makes the investment and himself executes the development work, i.e., carries out the civil construction work, he will be eligible for tax benefit under section 8....
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....ty and assessee has to undertake the maintenance of such infrastructure facility for a period of 12 to 14 months and in case of any damages, if any during this period is also to be taken care of by the assessee. Ld.CIT(A) placing reliance on the decision of Coordinate Bench, Pune in the case of Laxmi Civil Engineering (P) Ltd. Vs. ACIT in ITA No.766/PUN/2009 dated 08.06.2011, judgment of Hon'ble Jurisdictional High Court in the case of ABG Industries reported in 322 ITR 323 (Bom.), decision of this Tribunal in the case of B.T. Patil in ITA Nos. 1408 & 1409/PUN/2003 dated 28.02.2013 and also the decision of Coordinate Bench, Hyderabad in the case of GVPR Engineers Ltd. in ITA No.347/Hyd/2008 and others held that the respondent-assessee is eligible for deduction u/s. 80IA(4) of the Act. 4. Aggrieved Revenue is now in appeal before this Tribunal raising the following grounds : "1. The Id. CIT (A) erred in deciding that assessee is developer and not contractor and eligible for deduction u/s. 80IA(4) the Act. 2. The Id. CIT (A) erred in deciding that assessee is eligible for deduction u/s 80IA(4) of the Act, although, assessee itself admitted this fact that it is no....
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....f 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 the provisions of section 80-IA shall not apply to a person who executes a works contract entered into with the undertaking or enterprise referred to in the said section. Thus, in a case where a person makes the investment and himself executes the development work i.e., carries out the civil construction work, he will be eligible for tax benefit under section 80-IA. In contrast to this, a person, who enters into a contract with another person (including Government or an undertaking or enterprise referred to in section 80-IA) for executing works contract, will not be eligible for the tax benefit under section 80-1A. 34.4 Applicability- This amendment will take effect retrospectively fro....
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....ork connected with the development of the project. It is thus found that the assessee company is engaged in the business of execution of Civil Construction contracts related to Sewage Treatment Plants, Water Treatment Plants, elevated Service Reservoir, Master Balance Reservoir, Pump Houses and Pipelining Works of Trunkey basis. These contracts are mainly awarded by the Govt & semi Govt departments, Autonomous bodies etc. It is seen that for the year under consideration, the assessee company has claimed the deduction u/s 80IA(4) of the Income Tax Act, 1961 for developing, operating and maintaining infrastructure facility prescribed u/s 80IA(4). Financial involvement and entrepreneurial risks of the assessee company is also required for becoming eligible for the deduction 80IA(4) of the Act. In this connection, it is clearly evident from the Paper Book -1 & II filed by the assessee company that the funding in each project was through mobilisation advances received from the contractee at the time of commencement of each project. The subsequent funding was again received from the contractee i.e. the Govt at various stages of project. A virtual cash flow for each proj....
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....uestion posed before it was- "What is the interpretative rule to be applied while interpreting a tax exemption provision/notification when there is ambiguity as to its applicability with reference to the entitlement of the assessee or the rate of tax to be applied?" The Hon'ble Constitution Bench took note of its earlier judgment in Tata Iron and Steel Company Ltd. Vs. State of Jharkand (2005) 4 SCC 272 in which it was held that the principle that in the event a provision of fiscal statute is obscure such construction which favours the assessee may be adopted, and held in the Constitution Bench judgment that such principle would have no application to construction of an exemption notification. It went on to hold that in such a case it is for the assessee to show that he comes within the purview of exemption. After considering the issue in detail, the Bench held that exemption notification should be interpreted strictly and: "the burden of proving the applicability would be on the assessee to show that his case comes within the parameters of the exemption clause or exemption notification". It further held that: 'When there is ambiguity in exemption notifica....
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....ther contentions made by ld. Counsel for the respondent-assessee duly forms part of the written submissions placed on record which reads as under : "Submissions: In this connection, it is submitted that as per the provisions of section 80-IA of the Act, a deduction under section 80-IA of the Act is available where the Assessee satisfies any one of the following activities: 8. a. develops or, b. operates and maintains or, c. develops, operates and maintains any infrastructure facility. Therefore, if the Assessee is engaged in any one of the above activities, it would be entitled for the deduction in respect of the profits derived therefrom. What amounts to an infrastructure facility is defined in the Explanation below clause (i) of section 80-IA(4). There is no dispute that the projects undertaken by GECPL fall within the definition as stated in the said Explanation. Further, what is developed or operated / maintained by GECPL amounts to a full-fledged infrastructure facility within the meaning of the said Explanation. GECPL is not merely developing/ operating/maintaining some part of the infrastructure facility but is u....
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....the Performance security deposit (para 1.2 at paper book Vol 2 page no. 201) * Mobilisation advance of 10% was to be paid upon furnishing bank guarantee of equal amount. The same was recoverable within 6 months by deduction from the RA bills. (para 1.3 at paperbook Vol 2-page no. 201) * GECPL was responsible for raising of funds and making available money for carrying out the work. (para 1.4 at paper book Vol 2-page no. 201) * Liquidated damages for delay in work (para 1.6 at paper book Vol 2 page no. 202) * GECPL is exposed to cost overruns due to absence of escalation clause (para 1.15 at paper book Vol 2-page no. 206). * Defects including design defects must be rectified at GECPL's own cost (para 1.36 at paper book Vol 2 page no. 214) Sewage Treatment Plant - Ghansoli Scope of work design, supply, construction, installation, testing, trial run and commissioning of the sewage treatment plant and followed by operation and maintenance of the plant and facilities for 5 years following successful completion of the commissioning and issuance of the taking over certificate for the Works. (para 9 at paper book Vol 2 page....
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....50 lakhs with the tender (Chp II-1.0 at paper book Vol 2 page nos.2105) and further provide security deposit of 5% of contract value (Chp II-1.0/ Sub clause 10.4at paper book Vol 2 page nos. 2105). Liquidated damages for delay in completion of work @ Rs. 1,00,000 per day subject to maximum of 5% of the total contract value. (Chp II- 1.0/ Sub clause 47.1 at paper book Vol 2 page nos.2181) Mobilisation Advance shall carry simple interest of 12% p.a if the progress of work is as per the agreed schedule. In case the progress is not as per the agreed schedule, interest on mobilisation advance shall be levied at 15% p.a.. (Chp II- 1.0/ Sub clause 60.13 at paper book Vol 2 page nos.2190-91) Sewage Pumphouse-Kasba Peth * Scope of work - design, construction, supply, erection, testing, commissioning & start up and performance run followed by 5 years O&M of 160 MLD capacity New Kasba/Manglawar, sewage pumping station (SPS) at Pune on turnkey basis (Vol II A Para 3 paper book Vol 2 page nos. 2280-2287). * GECPL responsible for performance of the system and must rectify defects or replace equipment at its own cost(Vol II A para 5.2-5.3 page nos. 229....
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....umed complete responsibility for development of infrastructure facilities, including design, engineering, procurement, execution and performance of the projects. GECPL is responsible for selecting the execution methodology, deploying machinery and manpower, and ensuring successful completion and performance of the project. GECPL has invested its own funds, furnished earnest money deposits, security deposits and performance guarantees, and is exposed to forfeiture, penalties and damages. GECPL is required to block its own funds at various stages and remains exposed to invocation of guarantees depending on performance. Further, even in the projects where mobilisation advance is received, the same is given against the bank guarantee and security deposits and is adjusted within 6 months from the RA Bills. GEPCL is also exposed to cost overruns, delay penalties, defect rectification, long-term operational obligations and is liable for liquidated damages if it fails to fulfil the obligations laid down in the agreements. 12. Thus, it will be appreciated that GECPL is not merely executing works assigned by Government authorities but is responsible for bringing into existence a ful....
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....risk. The Assessee had undertaken full development responsibility, including design, technology, financing and execution and therefore fell outside the scope of a simple works contractor. Receipt of periodic payments does not convert developer into contractor * The Hon'ble High Court has categorically held that periodicity of payment is not a determinative test to distinguish a developer from a contractor. It was held that periodic payments are merely a part of the contractual arrangement and are not relevant for deciding the nature of activity. The real test is whether the Applicant undertakes development activity and bears financial and execution risks, in which case it qualifies as a Developer. 14. Further reliance is placed on the decision of the Gujarat High Court in the case of Principal Commissioner of Income-tax (Central) vs. Montecarlo Construction Ltd. [2024] 161 taxmann.com 222 (Guj), wherein the Hon'ble Gujarat High Court has held that an Assessee executing Government infrastructure projects is to be regarded as a developer and not a works contractor where it undertakes development responsibility along with financial and execution risk....
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....fils the conditions provided in section 80IA(4) of the Act regarding developing, operating and maintaining infrastructure facility. Before proceeding, we will first take note of the finding of ld.CIT(A) dealing with the said issue and deciding in favour of the respondent-assessee and the same reads as under : "Findings of the Ld. CIT(A) 17. A perusal of the above cases clearly establishes that the facts of the above cases are identical to that of the present case and both the issues i.e. the appellant was merely a contractor and the nature of work came under the ambit of 'work contract', therefore, not eligible for deduction in view to the 'explanation' inserted below sub-sec.(13) on the basis of which appellant was denied deduction u/s 80IA of the Act, were adequately addressed in the cases discussed above. The issue of explanation was brought to notice of the Hon'ble ITAT, Pune by the DR in the case of Mahalaxmi Construction Corporation but the hon'ble ITAT decided the appeal in favour of the assessee on identical facts. Even the hon'ble ITAT Jaipur after discussing the issue of admissibility of claim of deduction u/s 80IA(4)of a pers....
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.... done by it. The material required is to be brought in by the assessed by sticking to the quality and quantity irrespective of the cost of such material. The Government does not provide any material to the assessee. It provides the works in packages and not as a works contract. 20. The assessee utilizes its fund, its expertise, its employees and takes the responsibility of developing the infrastructure facility. The losses suffered either by the Government or the people in the process of such development would be that of the assessee. The assessee hands over the developed infrastructure facility to the Government on completion of the development. Thereafter, the assessee has to undertake maintenance of the said infrastructure for a period of 12 to 24 months. During this period, if any damages are occurred, it shall be the responsibility of the assessee. Further, during this period, the entire infrastructure shall have to be maintained by the assessee alone without hindrance to the regular traffic. Therefore, it is clear that from an undeveloped area, infrastructure is developed and handed over to the Government and as explained by the CBDT vide its Circular dated 18/05/201....
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....re, merely because in the agreement for development of infrastructure facility, the assessee was referred to as contractor or because some basic specifications were laid down, it did not detract the assessee from the position of being a developer; nor would it debar the assessee from claiming deduction under section 80IA(4). 22. As discussed earlier, the Hon'ble jurisdictional High Court viz. the Bombay High Court, in the case of ABG Industries 322 ITR 323(Bom.) held that the assessee need not develop the entire project in order to qualify for a deduction under section 80IA; the Parliament did not legislate a condition impossible of compliance. And the requirements of development, operation and maintenance were not intended to be cumulative in nature. The Hon'ble Pune Bench of the Tribunal in B.T. Patil I.T.A. /1408 & 1409/PN/2003 dated 28th February 2013, by relying on the jurisdictional High Court's decision in ABG (supra) held that the amendment by Finance Act, 2009 is not applicable in case where the assessee executes the work by shouldering Investment & technical risk to complying team of technically & administratively qualified persons and it is liable fo....
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....ts & hit by the explanation section 80IA(13) i.e. those works which are not entitled for deduction u/s 80IA of the Act. The deduction should be granted to the former and denied to the latter. The profit from the contracts which involve design, development, operating & maintenance, financial involvement, and defect correction and liability period is to be computed by assessing officer on pro-rata basis of turnover. 24. Last but not the least the jurisdictional Hon'ble ITAT Pune in the case of B.T. Patil & Sons, Belgaum Constructions (P) Ltd. Vs. ACIT has held that Larger Bench verdict in B.T. Patil Vs. ACIT 32 DTR 1 is not good law. It has held as follows:- "The view of the Larger Bench that the assessee had to be directly engaged in developing, maintaining and operating the facility and that there had to be a complete development of the facility and not just a part of it is contrary to the law laid down in ABG Heavy Industries 322 ITR 323(Bom.). The High Court held the effect of the amendment by the Finance Act of 1999 is that the benefit of s. 80IA(4) is available to any entrepreneur carrying on the business of (i) developing, (il) maintaining & operating, or....
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....he revenue's appeal and upheld my decision of allowing deduction u/s 801A(4) of the I.T. Act to M/s Tapi Prestressed Products Ltd., Jalgaon. 26. In view of the facts, circumstances of the case and taking into consideration the above referred various judicial pronouncements, I am of the considered view that the appellant's case is squarely covered by the decisions of the Jurisdictional hon'ble ITAT Pune in the case of Laxmi Civil Engg. (P) Ltd., Pratibha Construction and Engineering (P) Ltd. and Mahalaxmi Construction Corporation Ltd.; hon'ble Mumbai High Court decision in ABG Heavy Industries Ltd. and also the hon'ble ITAT Jaipur in the case of Om Metal Infra Projects Ltd. and Hon'ble ITAT Hyderabad in the case of GVPR Engineering Ltd. Keeping in view the principles of Judicial precedent, Judicial discipline and also in order to maintain the rule of consistency and uniformity in respect of identical facts, I am of the considered view that the above discussed decisions in regard to claim of deductions u/s 80IA (4) of the Act are squarely applicable to the appellant's case. Respectfully following the above judicial pronouncements, I am of the cons....
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....ssessee. He submitted that the deduction under Section 80-IA (4) was meant to be provided to the developers of infrastructure projects because the Government did not have sufficient resources to meet the finance of the infrastructure projects and for further encouraging the participation of private sector in the development of infrastructure sector. The exemption under Section 80-IA (4) was provided to the persons who develop infrastructure projects by mobilizing their own resources. According to the learned Senior Advocate, the Assessing Officer has rendered clear findings to the said effect in the Assessment Order that the project of Koyna is owned by the Maharashtra Government and the Srisailam Project is owned by the Andhra Pradesh Government. 9. It is submitted that the assessee was paid periodically for the work executed by it and therefore, the claim of the assessee is not sustainable since not only the Government of Maharashtra and the Government of Andhra Pradesh are the real developers in respect of the said two projects but the projects were even financed by the respective State Governments. 10. In the submission of learned counsel, the CIT(A), in parag....
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....main over its areas of work or the project. The certificate issued by the Chief Engineer only stated that the water from Shivajinagar lake of Koyna Hydraulic Electric Project is utilized for water supply, irrigation etc. Learned counsel submitted that the Tribunal failed to appreciate the observations of the Assessing Officer in it's order that though the Koyna dam was constructed, it does not mean that it was constructed by the assessee. It is just that the facility claimed to have been developed by the assessee was on the last stage of the already developed project. Learned counsel submits that the Tribunal ought to have appreciated that merely handing over a part of the project which the petitioner had developed in terms of the agreement would not amount to a transfer within the meaning of Section 80-IA (4). It is urged that it was always State Government which was in possession of the infrastructure facilities and the land on which the infrastructure project was constructed. 13. Learned counsel for the appellant in support of his submission relied upon the decision of the Hon'ble Supreme Court in Commissioner of Income Tax, Orissa & Ors. Vs. M/s. N. C. Budharaj....
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....r statutory body by the assessee. (4) The assessee had not started operating and maintaining the infrastructures on or after 1st April, 1995. (5) The assessee had not developed any infrastructures as defined under Explanation to Section 80-IA (4) of the Act. (6) The assessee has only developed a part of the infrastructure and not the whole of it. (7) The assessee had merely carried out the works as per specifications laid down by the concerned Government or local authority. 17. Before proceeding any further, it would be apposite to refer to the relevant provisions of the said Act as placed for our consideration by learned Senior Advocates Shri Dada and Shri Pardiwala. Prior to amendment vide Finance Act, 1999, Section 80-IA was substituted vide the Finance Act, 1991, to incentivize the private sector to participate in infrastructure development and key industrial activities, which were traditionally dominated by public sector. Initially, as this provisions stood, it provided deduction for profit and gains derived from any business of an industrial undertaking or cold storage or hotel or from operation of ships. 18. Subsequently,....
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....akings or enterprises engaged in infrastructure development, etc.- (1) Where the gross total income of an assessee includes any profits and gains derived from any business of an industrial undertaking or an enterprise 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 from such profits and gains of an amount equal to hundred per cent of profits and gains derived from such business for the first five assessment years commencing at any time during the periods as specified in sub-section (2) and thereafter, twenty-five per cent of the profits and gains for further five assessment years. (4) This section applies to - (i) any enterprise carrying on the business of (i) developing, (ii) maintaining and operating or (iii) developing, maintaining and operating any infrastructure facility which fulfils all the following conditions, namely - (a) it is owned by a company registered in India or by a consortium of such companies; (b) it has entered into....
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....ains and operates, or develops, maintains and operates an infrastructure facility, subject to satisfaction of all other conditions of the said section. 23. Simultaneously, section 10(23G) was also amended vide Finance Act 1999 to extend the benefit of exemption to the specified entities in respect of investment in enterprises wholly engaged in either (i) developing, (ii) maintaining and operating or (iii) developing, maintaining and operating an infrastructure facility. 24. The Central Board of Direct Taxes ("CBDT") in its Circular No. 779 dated 14th September 1999 (in paragraph 11.2 thereof) also clarified the following in respect of amendment to section 10(23G):- "The Act amends this clause to enhance the scope of the nature of infrastructure activities eligible for exemption under this clause. It provides that enterprises wholly engaged in either (1) developing, (iii) maintaining and operating an infrastructure facility would now be eligible for the exemption. With this amendment, it is made clear that any enterprise engaged in developing, maintaining and operating the infrastructure facility or maintaining and operating the infrastructure facility or ....
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.... the benefit. Clearly, therefore, by virtue of this amendment vide Finance Act 2001, the intention of the legislature was further fortified to the extent that any enterprise which is engaged only in development of an infrastructure facility is also eligible for deduction under section 80-IA of the Act. 29. Thereafter, vide Finance Act 2007 (with retrospective effect from 1 st April 2000), an Explanation to section 80-IA of the Act was inserted to the effect that the deduction under section 80-IA of the Act would not be available to a person who executes a "works contract" entered into with the undertaking or enterprise. The Explanation read as follows: "For the removal of doubts, it is hereby declared that nothing contained in this section shall apply to a person who executes a works contract entered into with the undertaking or enterprise, as the case may be." (See relevant extract of Finance Act 2007 at Sr. No. 34 of COD) 30. In the memorandum explaining the provisions of Finance Bill, 2007, the intent behind introducing the said Explanation has been stated. The memorandum explains that the tax benefit under section 80-IA of the Act was introdu....
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....th the purpose of irrigation and water supply in Konkan region and also with the intent to generate hydro-electricity. The Srisailam Project situated on Krishna river, is a multi-purpose project developed for the purpose of water supply, irrigation and generation of hydro-electric power. 34. Shri Dada submitted that the meaning of term "developer" means a person carrying out the action of development. We therefore find force in the submission of Shri Dada that development by its intrinsic nature means bringing something into existence by way of scientific structural planning, technical expertise and precise execution. As against that, a works contract means a contract executed as per the planning, design and direction of some other person. The primary point of distinction between a developer and a contractor, as rightly submitted by Shri Dada, is essentially to be determined based on the terms of the contract, and by applying two primary factors to the facts of the case, them being (i) whether the financial, operational and other executional risks were borne by the assessee or not, and (ii) whether the planning, development and design has been carried out by the assessee o....
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.... the design, layout and execution methodology were prepared by the Assessee and provided to the Government of Maharashtra. It is stated that for the execution of the said project, the Assessee deployed approximately 25 engineers, 50 supervisory staff, about 250 skilled workers and around 750 unskilled workers and labourers. The Assessee also deployed several assets, including 6 excavators, 2 EOT cranes, crushing plants, pumps, blowers and control laboratory apparatus. The value of the machinery and assets deployed for the project was stated to be approximately Rs. 10 crores, including machinery worth about Rs. 4 crores purchased specifically for executing the project. 37. Further, it is pointed out that the assessee has borne and undertaken all the development risks, geological risks and investment risks. There is no serious dispute on these factual aspects. We therefore find substance in the submission of Shri Dada that the assessee is a developer of the projects and not merely a works contractor. The assessee, as can be seen from the work performed by the assessee as described above, was not involved in merely executing any specific direction given by the authorities. Th....
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.... operates and maintains; or (iii) develops, maintains and operates that infrastructure facility. Therefore, we find favour with the submission of the assessee that the condition of operating and maintaining the infrastructure facility is not necessary in order to be eligible for deduction under Section 80-IA of the Act, and an assessee engaged only in development of infrastructural facility is also eligible for deduction under Section 80-IA of the Act. 40. It is also profitable to note the decision of the Gujarat High Court in PCIT Vs. Montecarlo Construction Ltd., Ahmedabad. The assessee therein was engaged by the State Government bodies for construction and infrastructure projects. The allegation of the Revenue was that the assessee was merely a contractor and not a developer of the infrastructure project. The CIT (A) as well as the ITAT, after perusing the nature and scope of work done by the assessee from designing to executing the project, the risks borne by the assessee, and the terms of agreement of the assessee therein with the government bodies, came to the conclusion that the assessee was a developer of the infrastructure facility and not merely a contractor, and....
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....ent, a five-year tax holiday was originally introduced by Finance Act, 1995 to any enterprise which builds, maintains and operates any infrastructure facility such as roads, highways or expressways or new bridges, airports, ports and rapid rail transport systems on BOT or BOOT or similar other basis, as is explained in Memorandum explaining the provisions of Finance Bill, 1995. The Government, upon realizing that a lot of assessee's could actually have expertise only either in developing the infrastructure project, or only in operating and maintaining an infrastructure project, amended and substituted Section 80-IA of the Act by introducing Finance Act, 1999, granting deduction to enterprises engaged in only developing of infrastructural facility as well. The Government, even in the Memorandum explaining the provisions of Finance Bill, 2007, wherein the Explanation regarding works contractor being non-eligible was introduced, reiterated that the tax benefit under Section 80-IA of the Act was introduced for the reason that industrial modernization requires a massive expansion of, and qualitative improvement in, infrastructure (expressways, highways, airports, ports etc.) which was l....
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....ered opinion, the argument of the Revenue that the project belongs to the Government and, therefore, the assessee is not a developer, also leads to an absurd result, because no public project, especially like roads, expressways, dams, etc. could belong to a private participant and are bound to be a part of the Government's initiative. This contention of the Revenue does not appeal to us because the Section itself mandates that the deduction is available to an assessee only if it has entered into an agreement with the Central Government or a State Government or a local authority or any other statutory body for (i) developing or (ii) operating and maintaining or (iii) developing, operating and maintaining a new infrastructure. 48. The Hon'ble Supreme Court in CIT Vs. J. H. Gotla has held that the provisions of the Act should be read rationally in order to make the same workable. 49. This Court in Narang Overseas (P.) Ltd. Vs. ITAT has held that if a strict and literal construction of the statute leads to an absurd result, i.e., a result not intended to be subserved by the object of the legislation ascertained from the scheme of the legislation, and, if anoth....
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....contract is a works contract or a contract of sale. This Court, in the context of TDS applicability on works contract under Section 194C, drew reference from Section 5 of the Sale of Goods At, 1930. This Court observed that the distinction between contract of sale and works contract is elucidated by the Sale of Goods Act, 1930, where under Section 5(1) thereof, the contract may provide for immediate delivery of the goods or immediate payment of the price or postponement of delivery or payment of the price by installments. The decision of this Court in CIT Vs. Glenmark Pharmaceuticals Ltd. (supra) was also relied upon by the Gujarat High Court in CIT Vs. Radhe Developers while determining whether the assessee executing the projects was works contractor or was a developer for the purpose of deduction under Section 80-IB (10) of the Act. Therefore, the mere fact that the assessee was receiving periodic payments as and when a particular stage of the project was completed, does not make the assessee a works contractor. The periodic payments are merely a part of the agreement between the assessee and the Government. The person who would bid for a project by incorporating the finance cost....
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....t held that an assessee need not develop the entire infrastructure facility to qualify for deduction under section 80-IA. It was recognized that even where the assessee undertakes specific components of an infrastructure facility, such as installation, commissioning, operation, and maintenance of port equipment, it would still qualify as a developer eligible for the deduction. 57. Let us deal with the submission of learned counsel for the Revenue that there is no transfer of infrastructure by the developer to the respective State Governments to satisfy the requirement of Section 80-IA. The Revenue contended that since the land on which the infrastructure facility has been developed always belonged to the Government and the assessee has already been paid for construction work, there is no question of transfer of infrastructure facility by assessee. In our opinion, the term "transfer" has to be understood in the factual context of the present case. There is no dispute that the land was handed over to the assessee for carrying out the development work. After completion of the development activity, the same was handed back to the State Government. This would constitute a trans....
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....of 10% of the contract value with Original Equipment Manufacturer Security which is liable to forfeiture upon non-performance. Mobilization advance of 10% is to be paid upon furnishing Bank Guarantee of equal amount. Assessee M/s. Gharpure Engineering & Construction Pvt. Ltd. (in short ' GECPL') is responsible for raising of funds and making available money for carrying out the work and is also exposed to cost overruns due to absence of escalation clause. 10.1 Similarly, in the case of Sewage Treatment Plant, Ghansoli, apart from the detailed nature of work as referred above Interest Free deposit, in this project assessee did not receive any mobilization advance and has also to provide Indemnity Bond for five years for satisfactory performance of the entire project. 10.2 In the case of Sewage Treatment Plant, Mundhwa, mobilization advance of 5% funds have been raised by GECPL, liquidated damages for failing to comply with the approved time schedule is also to be borne by the assessee. Long term defect liability of 60 months has to be rectified at GECPL's own cost. 10.3 Similar type of terms and conditions are also there for Sewage Treatment Plant, Nehrul and Sewage Treatme....