2015 (7) TMI 1359 - AT - Income Tax

Deduction u/s 80IA - as per revenue scope of work undertaken by the assessee was both rehabilitation and strengthening of the existing two lane highway apart from widening thereof to four lanes deduction u/s 80IA would not be available on the project income as per clarificatory circular of CBDT No. 4/2010 - HELD THAT - In the light of clarificatory circular issued by CBDT and respectfully following the decision of ITAT Pune Bench in the case of Rohan Rajdeep Infrastructure 2013 (4) TMI 758 - ITAT PUNE and order of the ITAT Mumbai 2015 (6) TMI 1206 - ITAT MUMBAI in assessee s own case for subsequent assessment year 2008-09 we are inclined to hold that section 80IA of the Act mainly speaks about development of infrastructure facility and whether widening of roads would also fall under the ambit of development of infrastructure facility has been further clarified by the CBDT by circular no. 4/2010 which is obviously biding on the revenue authorities. On logical analysis of the operative part of CIT(A) from para 4.1 to 4.3 of the impugned order. We note that the CIT(A) after properly considering circular no. 4/2010 of CBDT and relevant provision of section 80IA(4)(i) of the Act. Rightly drawn a conclusion that the project of development and widening road under taken by the assessee qualifies the definition of new infrastructure facility for the purpose of claiming deduction u/s 80IA(4)(i) and the CIT(A) was correct and quite justified in deleting the addition made by the AO in this regard. - Decided against revenue.

Summary

Issues:
1. Deletion of addition of depreciation under section 80IA(4)(i) of the Income Tax Act, 1961.
2. Eligibility of deduction under section 80IA for rehabilitation, strengthening, and widening of a highway project.

Analysis:

Issue 1: Deletion of addition of depreciation under section 80IA(4)(i)
The Department appealed against the CIT(A)'s order deleting the addition of depreciation under section 80IA(4)(i) of the Income Tax Act, 1961. The Department argued that the scope of work included rehabilitation, strengthening, and widening of a highway, making the deduction under section 80IA unavailable as per CBDT Circular No. 4/2010. However, the assessee contended that road widening constituted a substantial improvement of existing infrastructure, qualifying for the deduction. The ITAT 'D' Bench, Mumbai, and ITAT Pune had previously ruled in favor of the assessee in similar cases. The ITAT Delhi upheld the CIT(A)'s decision, stating that road widening fell under the definition of new infrastructure facility for section 80IA(4)(i) deduction, as clarified by CBDT Circular No. 4/2010. The ITAT found no reason to interfere with the CIT(A)'s order and dismissed the Department's appeal.

Issue 2: Eligibility of deduction under section 80IA for rehabilitation, strengthening, and widening of a highway project
The Department contended that the project's scope, including rehabilitation, strengthening, and widening of a highway, did not qualify for deduction under section 80IA. The Department argued that only new infrastructure facilities were eligible under section 80IA(4). In contrast, the assessee relied on the CBDT Circular and previous ITAT decisions to support the claim that widening roads constituted development of infrastructure facility, making it eligible for the deduction. The ITAT held that the CBDT Circular clarified that widening roads fell under the development of infrastructure facility, making it eligible for section 80IA deduction. The ITAT referred to the decisions of ITAT Pune and ITAT Mumbai in similar cases to support its conclusion. Consequently, the ITAT dismissed the Department's appeal, upholding the CIT(A)'s decision to grant the deduction under section 80IA for the rehabilitation, strengthening, and widening of the highway project.

In conclusion, the ITAT Delhi upheld the CIT(A)'s decision to allow the deduction under section 80IA for the rehabilitation, strengthening, and widening of the highway project, citing the CBDT Circular and previous ITAT rulings. The Department's appeal was dismissed, and the ITAT affirmed the eligibility of the assessee for the deduction under section 80IA(4)(i) of the Income Tax Act, 1961.