TaxTMI 
TaxTMI 
2025 (7) TMI 2047
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.... "(a) Whether on the facts and in the circumstances of the case and in law, the learned ITAT has erred in upholding decision of CIT(A) in deleting the disallowance of Rs. 153,66,29,467/- made u/s. 80IA(4) of the Income Tax Act, 1961 by holding that the assessee is not a contractor but a developer of infrastructure facilities and is eligible for deduction u/s. 80IA(4) of the I.T. Act? (b) Whether on the facts and in the circumstances of the case and in law, the learned ITAT has erred in not appreciating that the deduction under Section 801A(4) can be claimed by an entity that does not have a direct agreement with the Central Government, State Government, or a local authority for developing, operating, maintaining infrastructure facilities? (c) Whether on the facts and in the circumstances of the case and in law, the learned ITAT has erred in interpreting the amended provisions of Section 80IA(13) inserted by the Finance Act (No. 2) of 2009, which restricts the benefits of deduction to entities involved in the actual development of infrastructure facilities, and not to works contractors? (d) Whether on the facts and in the circumstances of the case and i....
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....reby 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)."" 3.10. Thus there are concurrent findings of fact arrived at by the CIT (Appeal) as well as the Tribunal that the assessee has undertaken the development of infrastructure facility and is eligible to claim the deduction under Section 80IA(4) of the Act. 3.11. Section 80IA of the Act provides for deduction from the gross total income of the assessee which includes any profit and gains derived by an undertaking or an enterprise from any business referred to in Subsection 4 of the Act as eligible business by providing deduction of an amount equal to the 100% of the profit and gains derived from such business for 10 consecutive assessment years. Sub-section 4 of Section 80IA of the Act reads as under:- "(4) This section applies to- (i) any enterprise carrying on the business of (I) developing or (ii) operating and maintaining or ....
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....developing operating and maintaining" any infrastructure facilities which fulfills the condition prescribed therein. In the facts of the case as held by the CIT (Appeals) as well as the Tribunal on giving a factual finding to the effect that the assessee has undertaken a work of development of infrastructure facilities by execution of the contract awarded to it as per the terms of the contract as enumerated by the CIT (Appeal) as under:- "To examine whether the project assigned to this Appellant was in the capacity of a "Contractor" or the Appellant has executed the work as a "Developer" with respect to the ROAD PROJECTS, I have perused the terms of some of the agreements. My attention has been drawn on agreements with "Madhya Pradesh Road Development Corporation Limited", from which the Appellant have been awarded two Road Projects, wherein the scope of the work has been defined as follows:- Sr.No. Name of Road Approx. Length in Km. Scope of Bid/ Development Work 1 Package-1: Chindwara-Amarwara-Narsingpur" Road Project: SH 47 103.3 Rehabilitation, Widening, Upgradation & Strengthening 2 Package-14: "Lakhnadon-Mandla-Dindori" Road Project: SH ....
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.... concerned, grievance of the revenue is that the Tribunal has committed an error in holding that expenditure incurred by the assessee company in Singhara Project is neither capital expenditure nor any prohibited expenditure, as prescribed under Section 37 of the Act and, therefore, considering the same, it could not have been allowed as revenue expenditure by the Tribunal. 7. Facts emerging from the record are that Singhara Project was awarded by NHAI for the four laning of Singhara to Binjhal Section, from 311 km to 414 kms, in the State of Odisha, vide letter of allotment dated 29.03.2017 in favor of the assessee. 8. During the assessment proceedings as well as appellate proceedings, the assessee claimed that though the letter of allotment was awarded in 2017, appointed date of the project was 28.9.2018. It was also explained by the assessee that the contract was allotted to the assessee after detailed verification of financial bid and after making comparison with other competitive bidders, and subsequently, the Letter of Award was given to the assessee, being the highest bidder company. 9. It was also contended by the assessee that the appointed date is only after 80% o....
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....utral following the ratio of Supreme Court Judgment in the case of Excel Industries, as the assessee is a company and assessed to tax at the same rate for all the previous and subsequent assessment years. Therefore the addition of Rs. 37,28,56,145/- made by the AO is rightly deleted by Ld CIT[A], which does not require any interference. Thus the Ground No.3 raised by the Revenue is devoid of merits and hereby dismissed." 12. In view of the concurrent findings of fact arrived at by the CIT (Appeals) and the Tribunal that the business of the assessee had already commenced in earlier years, and during the year under consideration, the assessee company carried out development work related to one of the project awarded by the NHAI and other authority, the expenditure claimed by the assessee under Section 37 of the Act was rightly allowed by the CIT (Appeals) and the Tribunal. 13. The Tribunal has rightly come to the conclusion that, if the income is not recognized during the year under consideration, it would not mean that the expenditure incurred by the assessee can be denied, as allowable expenditure has to be seen from commercial expediency of incurring such expenditure, and if....
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....ance, that Joint Venture entity is formed as a special purpose vehicle to get that Government contract, and such joint venture was formed for the aforeasid reasons, and subsequently, a supplementary agreement was made, which allowed the assessee to carry out the entire project. 17. The CIT (Appeals) considering such facts allowed such deductions by deleting the addition. 18. The Tribunal upheld the decision of CIT (Appeals) of deletion of such addition, by observing as under:- "15. We have given our thoughtful consideration and perused the materials available on record and case laws filed by the assessee. It is undisputed fact that the MCL-BEL Gorakhpur JV has not made any claim of deduction u/s. 35AD of the Act and the Supplementary Agreement entered between the parties is also not disputed by the Ld AO, which allowed the assessee to carry out the entire project. The JV and Consortium were established solely for the purpose of acquiring the contract from the Government body and the JV did not actually carried out the any work awarded to it. In essence the Joint Venture and Consortium were merely nominal pass through entity and did not execute the contract by itself ....
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....arning profit or otherwise, to file a return of income. He, however, found that the assessee had complied with all such requirements and was of the opinion that it is not necessary that in all facts and circumstances, such association of persons should show positive income. The Commissioner (Appeals) further found that the assessee duly maintains books of accounts, gets its books audited and files return of income to discharge its statutory liability. It has also complied with the other provisions of deduction of TDS from subcontract transaction and paid the tax to the exchequer and that the Assessing Officer to this extent could not draw any adverse finding. The Commissioner (Appeals) was further of the view that in the absence of any defect in the books of the members of the association of persons or even in the books of the assessee, the Assessing Officer was not justified in rejecting the same under section 145(3) of the Act. He has further noted that in fact the assessee's JV partner M/s. Backbone Project Limited and M/s. Backbone Construction Private Limited offered the income from the same work carried out by it in pursuance of award of main tender to the appellant and t....
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....e has been offered to tax by the members of the joint venture. The Tribunal has found as a matter of fact that the assessee had complied with all the conditions as specified by the CBDT and was of the considered view that no addition could be made in the hands of the assessee in the given facts and circumstances on the ground that income was offered to tax by its members and not by the joint venture Considering the totality of the facts, the Tribunal was of the view that there could not be any addition in the hands of the assessee for the income in question. 12. From the facts noted hereinabove, it emerges that both, the Commissioner (Appeals) as well as the Tribunal, have found that the members of the joint venture have duly shown the income in their returns of income and have paid the tax thereon. The joint venture and the members of the joint venture are being taxed at the maximum marginal rate, and hence, no loss has been caused to the revenue. Moreover, the Tribunal as a matter of fact has found that the requirements of CBDT circular referred to hereinabove are duly satisfied in the case of the assessee and hence, once the amount has been offered to tax by its members....