TaxTMI 
TaxTMI 
2022 (2) TMI 1536
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....essee has not entered into an agreement with the Central Government or a State Government or a Local Authority or any other Statutory Body. 2) Whether on the facts and circumstances of the case, and in law, the ld. CIT(A) erred in not appreciating that the assessee herein is not a developer but merely a contractor in respect of the project not directly awarded to it? 3) Whether on the facts and circumstances the case, and in law, the ld. CIT(A) erred in not appreciating that the facts of the case are not in conformity with clarificatory amendment to section 80IA of IT Act (Explanation 2 to Section 80IA vide Finance Act 2007) which was introduced to unambiguously explain that only those enterprises that have entered development agreement with Central or State or Local authorities and invest their own funds to develop such facilities will only be eligible for benefit of deduction. 4) Whether on the facts and circumstances of the case, and in law, the ld. CIT(A) erred in allowing the claim of deduction u/s 80-IA which was made first time in the return filed u/s 153A without appreciating the fact that the provisions of section 153A could not operate to advant....
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....IA(4), firstly because appellant has made such claim for the first time in the Return of Income filed u/s.153A; and secondly, because the appellant did not enter into the contract agreement with the Government or Statutory Body on its own, but through a consortium, namely M/s. Indu-Navayuga- Abhishek Consortium. The assessee is in appeal against the said disallowance. 5.1.1 In the course of the assessment proceedings, the AO looked into the detailed activity of the assessee company and examined the claim of deduction made u/s.80IA(4) of I.T. Act. For the purpose, the AO called for the details of projects/works carried out by the assessee during the year, on which deduction was claimed u/s.80IA(4). The AO examined the agreement copy for the projects undertaken by the assessee, in light of the conditions laid down by the provisions of sec. 80IA(4) and the observations made by various Judicial Authorities, including the decision of Hon'ble ITAT, Hyderabad in the case of M/s. Sushee Hitech Constructions & M/s. Ramky Infrastructure Ltd, etc., wherein, the criteria enumerated for claiming deduction u/s. 80IA(4) of I.T. Act are as under: a) The duty of the developer ....
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....rom Km 285 to (near Padalur) to Km 325 (near Trichi) on NH-45 in the state of Tamilnadu on Build Operate Transfer (BOT) basis (package 6C) to the consortium of M/s Navayuga-Indu-Abhishek vide their letter No.11015/7/2001/Tech/GM(WB-II)/NH-45/BOT/254, dt: February 28, 2006. The consortium have promoted and incorporated Indu-Navayuga Infras Projects Ltd, referred as Project Company as Special Purpose Vehicle (SPV) for implementing the said project. The Project Company entered into an agreement with NHAI for implementation of the said agreement on 30.05.2006. The Project Company has decided to implement the construction part of the project works into two packages namely, EPC Package-A (Road works) and EPC Package-B (Bridge works). As the assessee is having requisite know how and wherewithal to execute the road works, therefore, the same was allotted to the assessee. An agreement referred as EPC Agreement (A) was entered on 27.07.2006 by Project Company i.e. Indu-Navayuga Infra Projects Pvt Ltd and the assessee i.e. Indu Projects Ltd. wherein, the terms and conditions of the execution of the work allotted to the assessee were brought on writing. 2. In respect of irrigation sch....
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....clarified that the decision of the Hon'ble Supreme Court in the case of Sun Engineering Works Pvt Ltd was rendered considering the provisions of section 147 and 148 of the IT Act, wherein, the notice u/s 148 is issued with a belief that the income chargeable to tax has escaped assessment, whereas, notice u/s 153A is issued for computing the total income for the six assessment years, the provisions of the Act applies to this return, as if such return were a return required to be furnished u/s 139 of the IT Act, therefore, it was submitted that the rationale of the Hon'ble Supreme Court in the case of Sun Engineering Works Pvt Ltd is not applicable in respect of returns filed u/s 153A of the IT Act........................ ......................................................... 8. The other fact for disallowing the claim u/s 80IA (4) according to the Assessing Officer is that the assessee did not enter into contract agreement with Government or Statutory body. In this regard it is respectfully submitted that the project company, M/s Indu- Navayuga Infra Projects Ltd, entered into an agreement with NHAI for implementation of the project allotted. The assesse....
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....ot directly. In other words, AO was of the view that only direct contract work undertaken by an entity from specified authorities is eligible for deduction subject to fulfillment of the conditions but not the work executed as the constituent of a Consortium. This resulted in denial of the claim u/s. 80IA(4) to the tune of Rs. 26,79,51,792/-. 5.2.2 The second ground on which the AO disallowed the claim is that the assessee is not eligible for the claim of deduction u/s.80IA, because the claim was made for the first time in the return of income filed in response to notice u/s.153A. Relying on the decision of Hon'ble Supreme Court in the case of CIT Vs. Sun Engineering Pvt. Ltd., 198 ITR 297 and that of Hon'ble Rajasthan High Court in the case of Jai Steel (India) Vs. ACIT (2013) 259 CTR 281 (Raj), the AO rejected the claim of the assessee. 5.2.3 On this issue, in support of its claim, the following submissions were made by the appellant: "6. It is pertinent to mention here that the Hon'ble ITAT 'A' Bench of Hyderabad in the case of M/s KNR Constructions Ltd Vs DCIT, Central Circle-3, in identical facts and circumstances wherein, the said....
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....original return of income." 5.3 I have carefully perused the submissions of the appellant and the conversations of the AO in assessment order. As could be seen from the facts/information brought on record, the assessee company is engaged in infrastructural activity of various kind and during the year under consideration, the work was awarded to JV/Consortia, but executed by assessee company as constituent of the said JV. On profit of the said work, the assessee claimed deduction of Rs. 26,79,51,792/- u/s. 80IA(4). The AO examined these projects as regard to their eligibility for deduction 80IA(4), with reference to the conditions as stipulated in provisions of section 80IA(4) and the observations of judicial decision. Though satisfied with the eligibility of profit of the said projects of Rs. 26,79,51,792/-, the AO denied the benefit of deduction u/s.80IA(4), on the ground that the said amount represents the profit attributable to projects/works awarded to the consortium, where the assessee company is only a constituent and the claim of deduction on such profits is violation of provisions of 80IA(4), as the contracts have been awarded by Govt./Statutory Authorities only to....
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....ome in respect of each assessment year falling within six assessment years in the prescribed form and verified in the prescribed manner and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139. It was held by the Tribunal that it is because of this provision of law stated in section 153A(1)(a) that a statutory presumption is made that a return filed under section 153A is a return required to be filed under section 139(1) of the Act. The Tribunal also took note of the non-obstante clause contained in section 153A and held that said provision over-rides all other provisions stated in the Act in matters of filing of return of income consequent to a search and therefore, the return filed in pursuance of notice issued under section 153A is as good as a return filed under section 139(1). It was also held that where an assessee has filed its return of income as prescribed by law, even if as a consequence of search carried out under section 132 and in consequence of notice issued under section 153A, the assessee is obviously entitled for claiming corresponding deductions provided in law and the dedu....
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.... infrastructure facility as required by sub-clause (a) of clause (i) of sub- section (4) of section 80IA was not eligible to claim deduction under section 80IA. In support of this conclusion, the A.O. relied on the decision of Mumbai Special Bench of ITAT in the case of B.B. Patil & Sons 35 SOT 171. The Ld. CIT(A), however, has not agreed with this stand of the A.O. According to him, the ownership of the infrastructure facility is not the intention of the provision of section 80IA(4)(i)(a) and what is contemplated therein is the ownership of enterprise. As pointed out by the Ld. Counsel for the assessee at the time of hearing before us, this issue now stands covered by the decision of Hon'ble Bombay High Court in the case of CTI' Vs. ABG Heavy Industries Ltd., 322 ITR 323 wherein it was held that after section 80IA was amended by the Finance Act, 2001, the section applies to an enterprise carrying on the "business of "(i) developing" or "(ii) operating and maintaining," or "(iii) developing, operating and maintaining any infrastructure facility which fulfills certain conditions and one of those conditions are that the ownership of the enterprise is by a company registered i....
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.... the assessee is not entitled to raise the impugned Section 80-IA deduction claim in its return(s) filed in Section 153A proceedings since the same are initiated to assess only the un- disclosed income in light of Kabul Chawla [380 ITR 573] (Delhi). And that it was very much incumbent on the assessee to raise the impugned deduction claim only in the return earlier filed u/s.139(1) of the Act. Mr.Sai quotes Section 80A(5) r.w.s.80AC that an assessee ought to file a return; and that too, u/s.139(1) of the Act only claiming section 80IA deduction so as to be eligible for the same. He refers EBR Enterprises Vs. Union of India (2019) [107 taxmann.com 220 (Bombay)] that an assessee's failure in ensuring necessary compliance of the foregoing twin mandatory provisions renders its Section 80-IA deduction claim as not allowable. Case law Jai Steel (India) Vs. ACIT (2013) [259 CTR 281] (Rajasthan) and GMR Infrastructure Ltd., Vs. DCIT ITA No.1036 of 2017, dt.06-07-2021 (Karnataka) is also referred that an assessee is not entitled to raise a fresh claim in a return filed in Section 153A proceedings. The Revenue also reiterates hon'ble apex court's detailed discussion in Plastiblend....
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....s to be in light of the foregoing regulation or by the hon'ble President, ITAT as per the relevant facts and circumstances of each and every case which nowhere exist as the assessee itself has not even preferred its petition in above terms. Its impugned adjournment request fails therefore. 6. We next deal Revenue's foregoing legal arguments that the assessee ought to have raised its Section 80-IA claim in Section 139(1) return only. Its case strongly relies upon Section 80-IA r.w.s.80AC of the Act inter alia stipulating that "where the assessee fails to make a claim in his return of income for any deduction ........, no deduction shall be allowed to him thereunder" and that "no such deduction shall be allowed to him unless he furnishes a return of his income for such assessment year on or before the due date specified under sub-section(1) of Section 139" ; respectively. We note that crux of the instant issue lies in non- obstante clauses in Section 153A itself wherein the legislature has made it clear that "Notwithstanding anything contained in Section 139, Section 147, Section 148, Section 149, 151 and Section 153 ............ ". The same sufficiently suggests that o....
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....eeking to apply Explanation to Section 80-IA of the Act, inserted by the legislature vide Finance Act, 2007 with retrospective effect from 01-04-2000 followed by the latter similar Explanation substituting the earlier one by the Finance Act, No.2 of 2009 (with effect from the same date) that the impugned deduction is not eligible to an assessee carrying out works contracts. A perusal of the assessment orders in the lead AY.2009-10 suggests that the assessee had claimed the impugned deduction regarding its agreement with Indu Navyuga Infra Projects Ltd. qua design, engineering, construction, development, finance, operation and maintenance Agreement dt.27-07-2006, Pranahita-Chevella Lift Irrigation Scheme link- VII dt.20-11-2008 and construction of protection wall as well as the high level breach; respectively. We make it clear that the assessee has not placed on record any of the three corresponding agreements before us for the reasons best known to itself despite the fact that these appeals had been filed in the year 2018. The question as to whether such civil construction projects involving roads, irrigation, lift channels and breaches etc. amount to "works contacts" or not stand ....
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....Rs.6.65,60,238/- Rs.2,01,03,559/-. Rs.49,40,186/- Rs.5,85,122/- Rs.3,85,097/- and Rs.13,15,184/-; assessment years, respectively pertaining to execution of the alleged contract works forming part of M/s. Bhima Lift Irrigation Scheme in Mahaboob Nagar District, Telangana State (erstwhile undivided Andhra Pradesh). Learned counsel invited our attention to the tribunal's first round remand order dt.8.3.2013 in assessee's appeal in ITA No.517/Hyd/2010 in A.Y. 2006-07 restoring the instant sole issue back to the Assessing Officer as under : 2. The sole grievance of the assessee in the present appeal is with regard to the disallowance of deduction claimed u/s 80IA (4) of the Act. Briefly the facts of this issue are the assessee is a joint venture formed by three companies viz., Navayuga Engineering Company, Nagrjuna Construction Company and Maytas. The assessee entered into a contract with the Government of Andhra Pradesh Irrigation and CAD Department represented by the Superintending Engineer, Pebbair. The contract is for the execution of the works known as "BLIP-Lift-II at Thirumalayapally & Mothakota (Village) of Kothakota Mandal, Mahaboobnagar District, Andhra Prades....
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....ses upheld that the contractor can be a developer depending upon the terms and conditions of the contract and related work covered by a contract. The learned AR referring to the scope and nature of work and different clauses of contract submitted that the assessee has not executed the work merely as a contractor but has executed it on a turn-key basis. The learned AR submitted that as per the scope and nature of the work, the assessee had taken full responsibility for designing and engineering and execution of civil, electrical and mechanical works including the supply, transportation, storage and installation, testing and commissioning of hydro mechanical and electro mechanical equipment including operation and maintenance of the project for a period of three years from the date of successful commissioning of the project. The learned AR further submitted that the assessee joint venture has made huge financial investments for executing the project and also employed technical personnel for executing the work. The technological risks undertaken in the design and drawing of various types of machinery to the satisfaction of the Government executing the infrastructure related work indee....
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....V/s. CIT in ITA Nos. 722 complete shape. The learned AR relying upon a decision of Income-tax Appellate Tribunal, Hyderabad Bench in case of M/s Sushee Hi-tech Constructions Pvt. Ltd V/s. DCIT (ITA Nos. 269 and 1165/Hyd/2009 and ITA No. 1171/Hyd/2010 dated 16th March, 2012 submitted that the assessee is not required to be the owner of the infrastructure facility for availing deduction u/s 80IA (4) of the Act. Relying upon the same decision, it was further submitted that the assessee has to fulfill any one of three conditions i.e., (i) developing (ii) operating and maintaining or (iii) developing, operating and maintaining any infrastructure facility could be entitled to claim deduction 80IA(4). The learned AR vehemently contented that the assessee in fact is involved in all stages of development like designing, execution of all civil works like canal manufacture, testing at manufacture works etc. It is entitled to claim deduction u/s"80IA (4) of the Act. The learned AR also relied upon the following decisions in support of his contentions :- i) Income-tax Appellate Tribunal, Hyderabad Bench "B" in the case of GVPR Engineers Limited V/s. ACIT and vice versa in ITA Nos. 347/....
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....see is not entitled to avail exemption u/s 80IA (4) as it has not undertaken all the three activities and it is not the owner of the infrastructure facility. For coming to such conclusion the CIT (A) has also relied upon the decision of Income-tax Appellate Tribunal, Mumbai Special Bench in the case of M/s. B.T. Patil and Sons (supra). The co-ordinate Bench of the Tribunal in the case of Sushee Hi Tech Constructions (supra) after taking into account the decision - of the Income-tax Appellate Tribunal, Special Bench in the case of B.T. Patil (supra) and also taking into consideration the subsequent amendment to section 80IA(4) held that an enterprise which undertakes any one of the three activities viz., developing or (ii) operating and maintaining or (iii) developing, operating and maintaining a new infrastructure facility would become eligible for deduction u/s 80IA(4) of the Act. 8. The co-ordinate bench in the said decision further held that for availing deduction u/s 80IA (4) of the Act the assessee need not be the owner of the infrastructure facility. The only requirement under clause (1) (a) of section 80IA (4) is that the enterprise which is executing the work shoul....
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....tracts hit by the explanation section 80IA (13), those work are not entitled for deduction u/s 80IA of the Act. The profit from such contracts which involves development, operating, maintenance, financial involvement, and defect correction and liability period is to be computed by assessing officer on pro-rata basis of turnover. The Assessing Officer is directed to examine and grant deduction on eligible turnover as directed above." As would appear from the aforesaid observations made by the co-ordinate bench, an assessee is entitled for deduction u/s 80IA (4) of the Act if it develops the infrastructure facility. However, the assessee has to show that it has actually carried on development of the infrastructure facility cumulatively with all the activities of design, development, engineering,. Construction, maintenance, financial involvement, defect correction and such other ancillary and incidental work connected with the development of the project. The assessee has to establish by producing evidence on record that it has developed the project and has not executed the work merely as a contractor. Since these aspects have not been looked into properly, we are inclined to ....
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.... claim deduction u/s 80IA(4) of the Act". Accordingly, fresh notice u/s 143(2) dt. 02.08.2013 was issued along with show cause letter. In response, assessee submitted the details called for, vide letter filed by it on 14.02.2014. 3. Arguments made by assessee are summarized as under : a. The scope of work in connection with the infrastructural facility includes 'design and execution'. Title of tender document shows that it. is for design and development. Design of all civil works, design of all electro-mechanical works have to be drawn by assessee. b. Contract is an EPC contract on turn-key basis. c. Assessee is liable for all risk factors. d. Assessee is eligible for deduction as per CBDT Circular dt. 18.05.2010. 4. Assessee's contentions are considered and discussed below. 5. During the year under consideration, the company has carried out excution of contract work of Lift II - stage 1 and 2 pumping stations of Bhima Lift Irrigation scheme at Thirumalayapally & Kothakota village of Kothakota mandal, Mahaboobnagar district, Andhra Pradesh. The work was allotted by the Project administrator & Superintending ....
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....et the long gestation period and a certain amount of risk associated with such capital intensive projects. For this purpose, the concepts of BOT(Build - Operate - Transfer), BOOT (Build - Own - Operate - Transfer) and BOLT (Build - Own - Lease - Transfer) have been adopted from the United Nations Industrial Development Organization (UNIDO), which is primarily concerned with the development of infrastructure facility in the third world countries for boosting their economic development. As a part of the incentive package, a concession in the form of deduction in income tax was envisaged. 7.3 It is important to appreciate the transformation that is intended to infrastructure development scenario in India as an offshoot of 80IA deduction. Previously, public infrastructure facilities were developed by the 'Public Works Departments (PWD)' or specially designated bodies carved out for this purpose. In turn, the PWD used to sub-contract the works to private participants. To that extent, private participation was in existence even before this deduction. The difference that this deduction sought to bring is that the private sector was given impetus not to relegate itself to ....
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.... a Contractor who is awarded a work to be executed for a certain price, as per the specifications and designs mandated by the Employer. The assessee is required to merely 'execute' the work, within the stipulated period, subject to the specifications. " The Oxford Dictionary gives the meaning for the word 'execute' as to carry out a work or an order. The work carried out by the assessee clearly falls under this meaning. In view of the above, the assessee is to be treated as merely a works contractor. The specifications are generated by the government authority and the assessee is required to merely execute the work as a contractor. It is to be noted this is akin to the works previously granted by the PWD, but not in the form of a comprehensive BOT or BOOT model. d. Nature of risks borne : Risk can be explained as exposure to the possibility of loss, injury, or other adverse or unwelcome circumstance; a chance or situation involving such a possibility. Entrepreneur is besotted with plethora of risks in the business environment. In general parlance, business risks can be classified by the influence of two major risks: inter....
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.... risk can be viewed from the Basel II framework on operational risks, which lists factors such as internal frauds, external frauds, employee practices, damage to business assets, business disruptions and system failures, execution, delivery and process management. These are risks endemic to any /business in general and do not warrant specific support from the government in the form a tax holiday. iii. Market risk : Market risk encompasses the milieu of buyers and sellers interacting to buy and sell goods and services, changes in supply and demand, competitive structures, marketing research for target market study, market segmentation and product positioning, buying behaviour, selling and distribution management, retail and wholesale logistics, advertisement, brand management, media relations etc. These issues per se do not make a case for tax holiday because they are borne by all businessmen and not those in infrastructure field alone. But it is interesting to note that instead of bearing such risks, the assessee in his line of business, enjoys an advantage, because it is not being bothered by any of these issues as the assessee is only concerned with a singular customer, ....
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.... completion of the contract work. After the completion of project, the entire human resource establishment just winds up except for maintaining a lean structure of office personnel for secretarial and accounting works. In this regard, the assessee's human resource management endeavor is less than in conventional businesses and does not form a ground for seeking tax holiday. e. Infrastructure facility should begin to operate : As per Sec 80IA(2), " .. the deduction can be claimed by an assessee for any ten consecutive assessment years out of fifteen years beginning from the year in which the undertaking or enterprise develops and begins to operate any infrastructure facility ... " The conjunctive word 'and' used between 'develops' and 'begins to operate' shows the legislative intent that the 'operations' are an integral component of the whole, which cannot be delinked. It can be seen from above that the deduction can be claimed by an enterprise which develops and begins to operate any infrastructural facility. It is clear therefore that the deduction is inextricably connected to the commencement of operations of the infr....
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....awarded to different contractors. Table PKG No. Description Awarded Bid Amount Rs. in Crs. 13 Excavation of High level right main canal. distributary system including construction of CM & CD works from Sangambanda BR to feed ayacut of 18400 Acres. M/s. R.M.M. & BRC (JV) 57.97 14 Excavation of High level left main canal, distributary system including construction of CM & CD works etc. to feed an ayacut of 35,800 Ac. Under Sangambanda BR M/s. VPR- Cromandal (JV) 68.94 15 Investigation, design, estimation and excavation of canal distributary system including construction of CM & CD works from Yenukunta BR, Waddewata (V), Kottakota (M), Mahabubnagar (D) to feed about 14,000 Acres upto Rangasamudram BR. M/s. Prathibha-Ch MR (JV) 51.270 16 Excavation of canal distributary system - including constrction of CM & CD works from Ranga Samudram to feed an ayacut of 21,000 Acres M/s. RNS-GSR & CO (JV) 70.800 17 Investigation, design, estimation and execution for converting the existing Rangasamudram tank, near Sri Rangapuram (V) Pebbair (M), Mahabubnagar distric....
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.... It is incapable of becoming operational without reference to the rest of the project, of which it is only a part. It has no independent existence capable of commencement of operations by itself, or to qualify as larger infrastructural facility. Therefore, the work being executed by the assessee cannot be termed as 'infrastructural facility'. i. Classification in Form 10 CCB : The assessee claimed in Column 14 of Auditor Report in Form no. 10CCB that with respect to the infrastructure facility, the enterprise is engaged in development, operation and maintenance. The terms "develop, operate and maintain" have a particular connotation. An enterprise is said to operate and maintain a particular facility only if it runs the facility for an extended period of time subsequent to building it. Petty maintenance work during the period of building a facility is incidental to any contract work and does not qualify as operation and maintenance for the purpose of Section 80IA. It is necessary to own the particular facility for a substantial period of time, then operate and maintain that facility subsequently and finally transfer back the asset. This part of operation a....
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....on 80IA interalia, 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. 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. Accordingly it is proposed to clarify 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 carries out 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 c....
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....the individual parties of the Joint Venture for execution of the 'work' shall be distributed as under, including price escalation, additional items, claims etc : Navayuga : 50 % NCC : 25 % Maytas : 25 % b. The JV shall retain 4 % of the gross value of the IPCs(less TDS) which shall be apportioned to the members in the ratios mentioned in the main agreement. 9.2 Following observations are drawn from the above facts: a. The entire work (100 %) has been awarded by JV to the three parties on back to back basis. b. There is no component of any part of work undertaken by JV on its own, at all. c. JV has a risk free rate of 4 % margin on the work bills. d. In various appellate orders passed by the jurisdictional Tribunal, it was held that main parameters that assessee would require to have undertaken, to qualify for the deduction would be activities of design, development, operation, maintenance, financial involvement, defect correction. In the case of Maytas NCC for the AY 2006-07, the ITAT categorically stated in para no. 7 of its order dt. 31.12.2012 in ITA No. 1040/Hyd/2009 that "in the event that....
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....t on 18.11.2008 denying the deduction claimed u/s 80IA of the Act. The learned Commissioner of Income Tax (Appeals) vide order dated 15.06.2009 dismissed the appeal filed. On further appeal filed before the Hon'ble Income Tax Appellate Tribunal, the Hon'ble ITAT vide order in ITA No.1040/Hyd/2009 dated 31.10.2012 set aside the issue to the filed of the Assessing Officer. The directions are at para 7, page 9 of the order of the Hon'ble ITAT. 4. The Assessing Officer completed the reassessment u/s 143(3) rws 2S4 of the I.T. Act on 26.03.2014 and rejected the claim for deduction u/s 80IA of the Act. The Assessing Officer in the assessment order mentioned that - a) the entire project is not executed by the assessee and only part of the project was undertaken; b) the infrastructure facility was not operated by the assessee and the assessee did not commence the operating and maintenance and, therefore, failed to justify the crucial condition. c) The Assessing Officer is of the view that the infrastructure facility should be owned for a substantial period with a condition that the assessee should be eligible to operate and maintain. ....
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....ies' action making the impugned disallowance. He has also filed a case law paper book running into 93 pages to be precise containing the following judicial precedents : 1. [2005] 94 lTD 411 (Mumbai) Hon'ble IT AT Mumbai Bench "F" in the case of Patel Engg Ltd Vs Dy Commissioner of Income-Tax . 2. Hon'ble ITAT Mumbai Bench-F order in the case of ACIT Vs Bharat Udyog Ltd. 3. [2010] 322 ITR 323 (Bombay) Hon'ble High Court of Bombay in the case of 10 -15 CIT, Central-II Vs ABG Heavy Industries Ltd. 4. Hon'ble ITAT Hyderabad Bench-"A" in the case of Koya & Co Constructions 16-22 (P.) Ltd Vs ACIT. 5. Hon'ble ITAT Ahmedabad Bench-D in the case of Sugam Constructions Pvt Ltd Vs ITO. 6. Hon'ble ITAT Pune Bench-B in the case of B. T. Patil & Sons Belgaum Constructions (P.) Ltd Vs ACIT. 7. Hon'ble ITAT Mumbai Bench-C in the case of ACIT Vs Pratibha Industries Ltd. 8. [2016] 76 Taxmann.com 105 ( Jammu & Kashmir) Hon'ble High Court of Jammu & Kashmir in the case of CIT Vs TRG Industries Pvt Ltd . 9. [2019] 107 Taxmann 362 (Madras) Hon'ble High Court of Madras CIT Vs Chettinad....
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....ther the assessee has actually carried on development of the infrastructure facility cumulatively with all the activities of design, development, engineering, construction, maintenance, financial involvement, defect correction and such other ancillary and incidental work connected with the development of the project. The Hon'ble ITAT specifically mentioned that financial involvement of the assessee is also required for becoming eligible for claiming the said deduction vi] s 80IA. In this connection, it is clearly evident from the Paper Book (Vol.II-Pt-I) filed by the assessee that the assessee was paid mobilisation advance and monthly lump sum payments which are adjusted periodically against work done. It is further submitted that even for supply of electro mechanical and other equipment, payments are made on receipts of goods(70%) and installation (20%). These details are available at Clauses 3.15.1 to 3.15.6 (at pages 1-73 to 1-78) of the contract agreement of the assessee with the Government with respect to Bheema Lift Irrigation Project. From the detailed reading of the above said clauses, it is seen that the assessee is not the developer but the Government is the developer....
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....f the corresponding plant and machinery, labour force followed by retention money's project thereby satisfying all the conditions of development of infrastructure facility. All these assessee's arguments fail to evoke our concurrence for the reasons given hereunder. 9.1 The assessee's first and foremost plea that we ought to adopt liberal interpretation while considering section 80IA(4) claim in the light of relevant facts in the instant case deserves to reject. Suffice to say, such a course of liberal interpretation is no more available while dealing with the Income Tax Act's provisions as per honourable apex court's recent constitutional bench's decision in Commissioner of Customs (Import) Vs. Dilip Kumar and Co. (2018) 9 SCC 1 settling the law that a fiscal statute as well as an exemption clause incorporated therein ought to be construed in stricter parlance only. Their lordships make it clear that benefit of doubt in case of taxing provision goes to the tax payer and vice versa in an instance of an exemption provision. The assessee's first argument is rejected therefore. 10. We next examine the merits of the assessee's ....
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....y any person (including the central or the state government)". We note that honourable apex court yet another larger bench decision in Kartar Singh Bhadana Vs. Hari Singh Nalwa & Ors Civil Appeal No.6931 of 2000 decided on 27.03.2001 had an occasion to deal with the expression "works" used in section 9-A of the Representation of People Act, 1951. Hon'ble court therein went by the shorter Oxford English Dictionary's meaning that "work means a structure or apparatus of some kind; an architectural or engineering structure, a building edifice. When it was used in the plural, that is, as works, it meant architectural or engineering operations, a fortified building, a defensive structure, fortification or any of the several parts of such structures". Their lordships also took note of honourable jurisdictional high court's judgment in B. Laxmikantha Rao Vs. D Chinna Mallaiah AIR 1979 AP 132 whilst adopting the dictionary meaning of "work" in foregoing terms. We further quote Raghunath Rai Baraza Vs. PNB (2007) 135 Company cases 163 (SC) that it is the cardinal rule of interpretation that words used by the legislature are to be understood in their natural, ordinary or popular s....
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....rgument seeks to buttress the point that such a strict interpretation employed in dealing with an instance of development of an infrastructure project would tantamount to closing the deduction chapter altogether and more particularly, when this assessee has borne all risks and responsibilities of the lift irrigation project by paying reduction money and performance guarantee(s) as well. We hold that this last argument also fails to cut any ice since the assessee has merely performed a works contract and its retention money or the so called performance guarantee only gave an assurance to the irrigation development that it had carried out the corresponding construction etc. as per the specified design norms than involving any business risk. We accordingly hold the view of our independent appreciation of facts as well as assessment findings that the assessee is a contractor having executed works contract only. 16. We also deem it appropriate to quote Adam Smith's 'The Wealth of Nations' (published in 1776 and called as the founding work on modern economics) that " It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, bu....