2010 (10) TMI 1206 - AT - Income Tax

Summary

Issues involved:
The judgment deals with the disallowance of the appellant company's claim for deduction u/s.80IA.

Details of the judgment:

Issue 1: Disallowance of deduction u/s.80IA
- The Assessing Officer (AO) disallowed the deduction u/s.80IA claimed by the assessee, considering them merely a contractor not eligible for the deduction.
- The AO also noted that certain income like bank interest and miscellaneous income was not excluded from the profits for the deduction.
- The CIT[A] upheld the disallowance after considering the arguments presented by the appellant.
- The retrospective amendment made in sec.80IA by the Finance Act, 2007 was cited, clarifying that the deduction does not apply to a person executing a works contract.
- The insertion of the Explanation below section 80IA(13) was explained to exclude works contracts from the purview of the deduction.
- The Tribunal relied on the decision in the case of B. T. Patil & Sons Belgaum Construction (P) Ltd. vs. ACIT, where it was held that the assessee, being a contractor, was not entitled to the deduction u/s.80IA.
- The Tribunal dismissed both appeals based on the above findings.

This judgment clarifies the eligibility criteria for deduction u/s.80IA, emphasizing the distinction between contractors and developers in infrastructure projects. The retrospective amendment and the Explanation inserted play a crucial role in determining the applicability of the deduction, ensuring that only entities directly engaged in developing, maintaining, and operating infrastructure facilities qualify for the benefit.