2013 (12) TMI 299 - AT - Income Tax

Deduction u/s 80IA The assessee is a partnership firm carrying on the business of civil constructions, contractors, engineers and builders Held that - The deduction u/s 80IA is applicable to the assessee is owned by a company registered in India or by a consortium of such companies or by an authority or a board or a corporation or any other body established or constituted under any Central or State Act A partnership firm is not a creation of statute but it is a body of individuals regulated by the statute namely Partnership Act - The assessee fails to satisfy the applicability clause of the provision as envisaged under section 80IA(4)(i) - In the interest of the justice To avail deduction u/s 80IA all the necessary conditions have to be satisfied first Decided against assessee.

Summary

Issues:
Claim of deduction under section 80IA of the Income Tax Act, 1961 for a partnership firm engaged in civil constructions and infrastructure development.

Detailed Analysis:

Issue 1: Claim of Deduction under Section 80IA
The assessee, a partnership firm engaged in civil constructions and infrastructure development, filed a return for the assessment year 2008-09, claiming a deduction under section 80IA of the Income Tax Act, 1961. The Assessing Officer disallowed the claim, stating that the assessee, being a contractor, did not qualify as a developer eligible for the deduction. The Commissioner of Income Tax (Appeals) upheld this decision, considering various case laws and legislative provisions. The Tribunal examined the statutory provisions of section 80IA, emphasizing that the claimant must satisfy all conditions listed in sub-section (4) to be eligible for the deduction. The Tribunal noted that the firm, as a partnership entity, did not meet the criteria specified in the legislation. Despite the firm's argument that it satisfied the definition of 'body' under the Law Lexicon, the Tribunal ruled that the partnership firm did not qualify as an enterprise eligible for the deduction under section 80IA(4)(i) of the Act.

Issue 2: Interpretation of Statutory Provisions
The Tribunal analyzed the legislative intent behind section 80IA, highlighting the requirement for the claimant to derive profits from specific businesses outlined in sub-section (4). The Tribunal emphasized the importance of fulfilling all conditions in sub-section (4)(1)(a), (b), or (c) to qualify for the deduction. It clarified that the provision did not allow for a blanket deduction and that each criterion had to be met sequentially. The Tribunal applied the principle of ejusdem generis to interpret the statutory language, concluding that the partnership firm's status did not align with the entities specified in the legislation. Despite the firm's reliance on the definition of 'body' from the Law Lexicon, the Tribunal held that the firm's structure did not meet the statutory requirements for claiming the deduction under section 80IA(4)(i) of the Act.

Conclusion
The Tribunal dismissed the assessee's appeal, ruling that the partnership firm failed to satisfy the conditions outlined in section 80IA(4)(i) of the Income Tax Act, 1961. The Tribunal emphasized the need for strict compliance with the statutory provisions to qualify for deductions under the Act. The decision was pronounced on January 15, 2013, in Chennai, affirming the disallowance of the claim for deduction under section 80IA for the partnership firm engaged in civil constructions and infrastructure development.