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2023 (1) TMI 605 - ITAT AHMEDABADDeduction u/s 80IA - Denial of claim by treating the assessee as a ‘work contractor’ and not ‘developer’ by the Revenue - whether the assessee is a developer or a contractor as the assessee merely executed the contract for the various sites awarded by the various entities as of the ultimate view of the Revenue? - HELD THAT:- We have carefully considered the different clauses prescribed in the tender notice in respect of the project of construction of Bridge with Approaches Across Damanganga River connecting Nani-Daman & Moti- Daman, U.T. of Daman from National Highway Division, Bharuch-A.Y. 2007-08. It appears that the Contractor must have necessary experience, facilities, ability, financial resources, specified turnover, specific experience in construction of Bridges, Qualified Key personnel, plant & machinery & equipments etc. to perform the work. The general specifications are given by the respective Authorities. However, the specific drawings & designs are recommended by the Contractor which shall be approved by the Competent Authority and shall form part of the accepted Tender.The assessee has appointed Shah Associates, an experienced designer in the field for designing this project. The assessee has to arrange the necessary requirement of Water, Electricity Connection, Cement and other required qualitative materials, labour, supervision, erection, maintenance, insurance, at its own cost. It is evident from Clause 3 of Tender ( Bill of Quantities) The tender clause further stipulates that the Retention money shall be deducted @ 10% from current bills and shall be released 50% on completion of the Works and remaining 50% after the end of the Defect liability period. As to whether the assessee can be termed as “developer” or a “contractor” as contended by the Revenue in its written submissions, we find, in fact, it only attempts to give a general meaning of the term “contractor” and “developer”. In the cases in hand, we find that in terms of tender documents, audited accounts and facts on record suggest that the assessee has fully undertaken the work of development of various infrastructure projects as a whole by undertaking the risk & responsibility, arranged own finances, materials, personnel, labour, machinery, other equipments etc. and thereby fulfilled the test of being a “developer” as per the principles laid down by Hon’ble Gujarat High Court in the case of Radhe Developers, [2011 (12) TMI 248 - GUJARAT HIGH COURT] The tender work under consideration are not for a specific work, rather they are for development facility as a whole. The responsibility is fully assigned to the developer for execution and completion of the work. Various stipulations contained in the Tender documents demonstrate various risks undertaken by the assessee for execution of the project work awarded by the competent authority in terms of financial resources, manpower deployment, both technical and administrative expertise, drawing and designing of the project specifications and getting approval from the competent authority, safety and security of project and human resources, compliances of various statutory rules and laws. Therefore, merely because in the agreement for development of infrastructure facility, assessee is referred to as contractor or because if some basic specifications are laid down, it does not detract the assessee from the position of being a developer, nor will deprive the assessee from claiming deduction u/s.80IA(4) - As such, looking to the overall aspects of work undertaken by the assessee we can safely come to the conclusion that the assessee is engaged in development of the infrastructure facility and therefore, a developer, which entails the assessee to claim benefits under section 80IA(4) - the issue of claim of deduction under section 80IA(4) of the Act is allowed in favour of the assessee and against the Revenue. Denial of claim of the assessee u/s 80IA including the claim in respect of other income - bank interest on bank guarantee - HELD THAT:- This issue covered in favour of the assessee by the judgment passed in case of Rajkamal Builders Infrastructure P. Ltd.[2022 (5) TMI 773 - ITAT AHMEDABAD] allow this bank interest on bank guarantee for the deduction made under Section 80IA. Sale of scrap of business items - This issue is found to be covered in the case of DCIT vs. Harjivandas Juthabhai Saveri & Anr.[1999 (12) TMI 5 - GUJARAT HIGH COURT] granting relief to the assessee. Profit on sale of Assets, VAT Refund - Jabalpur Bridge Site, release of Retained Income - Sabarmati Bridge, refund from Sales Tax, Arbitration Claim - Anantpur ROB Kota Site and recovery against stolen Steel at site are found to have direct nexus with the appellant’s business and hence, these are eligible income under Section 80IA(4) of the Act as claimed by the appellant. These are also applied mutatis mutandis in the respective appeals filed by the appellant. Penalty u/s 271(1)(c) - We upheld the order passed by the CIT(A) in holding that the penalty is not sustainable as the claim made by the assessee was a bonafide one. Moreso, the appeal preferred by the assessee in the year under consideration has been allowed by us. Therefore, the penalty proceeding automatically becomes infructuous. Thus, the appeal preferred by the Revenue is found to be devoid of any merit and, thus, dismissed
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