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2019 (4) TMI 1238 - HC - Income TaxDeduction u/s 80 IA - Assessee is termed as contractor he had developed, operated and maintained infrastructural facility - HELD THAT - These appeals are admitted for consideration on following re framed substantial questions of law (a) Whether, the respondent / assessee fulfills the requirement stipulated in Section 80 IA(4) of the Income Tax Act, 1961 once the conclusion reached is that it is contractor and not developer as stated in the sub section? (b) Whether, in the facts and circumstances of the case the Income Tax Appellate Tribunal was right in holding that even if the Assessee is termed as contractor he had developed, operated and maintained infrastructural facility and hence entitled to the deductions within the meaning of sub section? Depreciation @80% on civil construction, electrical and other non integral installations - Revenue argues that the expenditure in such activities cannot be seen as a part of installation of windmill and, therefore, the depreciation prescribed for the same would not be available to the assessee - HELD THAT - Similar question had come up for consideration in THE COMMISSIONER OF INCOME TAX III, PUNE VERSUS COOPER FOUNDARY PVT. LTD. 2011 (6) TMI 837 - BOMBAY HIGH COURT Tribunal has recorded finding of fact that windmill was erected in the desert area of Rajasthan which required special foundation of reinforced cement concrete and that the said reinforced cement concrete formed integral part of the windmill. Case of Commissioner of Income Tax Vs. Herdilla Chemicals Ltd. 1983 (6) TMI 1 - BOMBAY HIGH COURT followed in allowing the claim of the assessee. In our opinion, the finding recorded by the Tribunal that RCC foundation forms integral part of the windmill is a finding of fact and no question of law arises from the same
Issues:
1. Interpretation of Section 80-IA(4) of the Income Tax Act, 1961 regarding contractor vs. developer status. 2. Entitlement to deductions under Section 80-IA(4) based on development, operation, and maintenance of infrastructural facility. 3. Allowance of higher rate of depreciation on civil construction, electrical, and other installations for windmill erection. Issue 1: Interpretation of Section 80-IA(4) - Contractor vs. Developer Status The primary issue in this case revolves around whether the respondent/assessee fulfills the requirements stipulated in Section 80-IA(4) of the Income Tax Act, 1961, once it is determined that the assessee is a contractor and not a developer as mentioned in the subsection. The question of law raised is whether the respondent can claim benefits under Section 80-IA(4) despite being classified as a contractor. Issue 2: Entitlement to Deductions under Section 80-IA(4) The second issue concerns the Income Tax Appellate Tribunal's decision to allow the assessee deductions under Section 80-IA(4) based on the development, operation, and maintenance of the infrastructural facility. The Tribunal held that even if the assessee is labeled as a contractor, they had developed, operated, and maintained the infrastructural facility, making them eligible for the deductions as per the subsection. Issue 3: Allowance of Higher Rate of Depreciation for Windmill Erection The third issue pertains to the Revenue's objection regarding the assessee claiming a higher rate of depreciation on civil construction, electrical, and other installations for erecting and installing windmills. The Revenue argued that the expenditure on such activities should not be considered part of the windmill installation, thus disqualifying the assessee from availing the prescribed depreciation rates. However, the Court cited a previous judgment where it was established that certain components like reinforced cement concrete formed an integral part of the windmill, making the claim valid. In conclusion, the Court dismissed the Revenue's additional questions related to the higher rate of depreciation, as they had already been addressed in a previous judgment. The judgment focused on the interpretation of Section 80-IA(4) in determining the eligibility of the assessee for deductions and clarified the significance of specific components in the context of windmill erection for depreciation purposes.
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