2008 (1) TMI 650 - AT - Income Tax

2004 (6) TMI 245 - AT

2008 (12) TMI 744 - AT

Issues Involved:
1. Deduction under section 80-IA for developing, maintaining, and operating infrastructure facilities.
2. Consideration of the statement recorded under section 132(4) of the Managing Director.
3. Classification of leasing of assets as developing, maintaining, and operating infrastructure facilities.
4. Terms of the tender and the role of the assessee in operating the equipment.

Detailed Analysis:

Issue 1: Deduction under section 80-IA for developing, maintaining, and operating infrastructure facilities

The primary issue revolves around whether the assessee is entitled to deductions under section 80-IA for the assessment years 1997-98 and 1998-99. The assessee, a public limited company, claimed deductions by asserting that it was involved in developing, maintaining, and operating infrastructure facilities at the Jawaharlal Nehru Port Trust (JNPT). The Tribunal noted that the assessee had entered into contracts with JNPT for the supply, installation, testing, commissioning, and maintenance of cranes under the BOLT scheme, where the cranes would be transferred to JNPT after ten years. The Tribunal found that the assessee fulfilled the conditions under section 80-IA(4A), which include the enterprise being owned by a company registered in India, entering into an agreement with a statutory body, and starting operations on or after 1-4-1995. The Tribunal concluded that the assessee's operations fell within the extended definition of 'Port' as provided by CBDT Circular No. 793, thus entitling the assessee to the deduction under section 80-IA.

Issue 2: Consideration of the statement recorded under section 132(4) of the Managing Director

The Tribunal addressed the issue of the statement recorded under section 132(4) of the Managing Director, wherein he admitted that the assessee was not operating the infrastructure facility. This statement was later retracted by the assessee. The Tribunal noted that the Assessing Officer had initially relied on this statement but failed to consider its subsequent withdrawal. The Tribunal emphasized that there could not be any estoppel against law and that the retraction of the statement should be taken into account.

Issue 3: Classification of leasing of assets as developing, maintaining, and operating infrastructure facilities

The Tribunal examined whether the business of leasing assets, specifically cranes, could be classified as developing, maintaining, and operating infrastructure facilities. The Tribunal referred to the definition of 'infrastructure facility' under section 80-IA(12)(ca) and the clarification provided by CBDT Circular No. 793, which includes structures at ports for storage, loading, and unloading as part of the port infrastructure. The Tribunal found that the assessee's activities of supplying, installing, testing, commissioning, and maintaining cranes at JNPT constituted developing, maintaining, and operating infrastructure facilities, thus qualifying for the deduction under section 80-IA.

Issue 4: Terms of the tender and the role of the assessee in operating the equipment

The Tribunal analyzed the terms of the tender and the role of the assessee in operating the equipment. The contracts with JNPT included provisions for the supply, installation, testing, commissioning, and maintenance of cranes, with JNPT having the option to request the assessee to carry out both operation and maintenance or maintenance only. The Tribunal noted that the assessee was responsible for the overall operation and maintenance of the cranes, with JNPT providing operators at a cost reimbursed by the assessee. The Tribunal concluded that the extent of operation and control required by the provisions of the Act was fulfilled by the assessee, making it eligible for the deduction under section 80-IA.

Conclusion:

The Tribunal held that the assessee was entitled to the deduction under section 80-IA for both assessment years 1997-98 and 1998-99. The Tribunal directed the Assessing Officer to allow the claim of the assessee while calculating the book profits under section 115JA of the Act. The appeals filed by the revenue were dismissed, affirming the assessee's eligibility for the deductions claimed.

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