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2018 (11) TMI 998 - AT - Income TaxClaim of deduction u/s 80IA - whether assessee is not developing the infrastructure with its own funds but is developing with the funds provided by the Govt. - Tribunal has been consistently holding that the assessee is eligible for deduction u/s 80IA - Held that - Since this is the 5th year of the assessee s claim of deduction u/s 80IA and the AO has followed the order of his predecessors in the assessee own case in the earlier A.Ys and the ITAT has decided the issue in favour of the assessee in the earlier A.Ys which have been followed by the CIT (A) for the relevant A.Y, no reason to interfere with the order of the CIT (A). - decided against revenue
Issues Involved:
1. Erroneous order of CIT(A). 2. Eligibility for deduction under Section 80IA of the IT Act. 3. Classification as a developer versus a works contractor. 4. Applicability of Explanation to Section 80IA(13). 5. Relevance of ITAT Pune decision in the case of M/s B T Patel & Sons. Detailed Analysis: 1. Erroneous Order of CIT(A): The Revenue contended that the CIT(A)'s order was erroneous both on facts and in law. The CIT(A) had allowed the Assessee's claim for deduction under Section 80IA of the IT Act, which the Revenue challenged. 2. Eligibility for Deduction under Section 80IA: The Assessee, a civil contractor, filed its return of income for the A.Y 2014-15, claiming a deduction of ?2,86,17,035 under Section 80IA of the IT Act. The AO disallowed this deduction, arguing that the Assessee was merely executing works contracts and not developing infrastructure facilities as required under Section 80IA. The CIT(A), however, allowed the deduction based on precedents from earlier assessment years, which were upheld by the ITAT. 3. Classification as a Developer versus a Works Contractor: The Revenue argued that the Assessee executed only works contracts as per the specifications of contractee departments and did not qualify as a developer of infrastructure facilities. The AO observed that the Assessee did not develop the infrastructure with its own funds but with funds provided by the government. The ITAT, however, found that the Assessee was responsible for the development of infrastructure facilities, including taking over existing premises, developing them, and maintaining them for a specified period. This indicated that the Assessee was a developer and not merely a works contractor. 4. Applicability of Explanation to Section 80IA(13): The Revenue cited the Explanation to Section 80IA(13), which was substituted by the Finance (No.2) Act, 2009, with retrospective effect from 01.04.2000. This explanation clarifies that any undertaking executing works contracts as a contractor does not qualify for deduction under Section 80IA. The ITAT, however, held that the Assessee's activities went beyond mere execution of works contracts and involved significant development responsibilities, making the Assessee eligible for the deduction. 5. Relevance of ITAT Pune Decision in the Case of M/s B T Patel & Sons: The Revenue argued that the decision of the ITAT, Pune in the case of M/s B T Patel & Sons was not applicable to the Assessee's case. However, the ITAT found that similar issues had been considered in the Assessee's own case for earlier assessment years, and the Tribunal had consistently held that the Assessee was eligible for deduction under Section 80IA. The ITAT also referred to various judicial precedents, including the decision of the Hon'ble Bombay High Court in the case of ABG Heavy Industries Ltd., which supported the Assessee's eligibility for the deduction. Conclusion: The ITAT dismissed the Revenue's appeal, upholding the CIT(A)'s order allowing the Assessee's claim for deduction under Section 80IA. The Tribunal reiterated that the Assessee was a developer of infrastructure facilities and not merely a works contractor, thus qualifying for the deduction. The ITAT's decision was based on consistent findings in the Assessee's favor in earlier assessment years and relevant judicial precedents. The appeal was dismissed, and the CIT(A)'s order was affirmed.
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