2022 (3) TMI 1073 - AT - Income Tax

Eligible for deduction u/s 80IA(4) - AO held that the assessee is merely a contractor and not the developer since the funds are given by the Government - HELD THAT - The assessee was required to bring finance, technical expertise and materials and adhere to the quality requirements irrespective of cost. That further, for completion of the project the assessee also had to use its own funds, expertise and employees for developing the infrastructure facilities. The facts and circumstances are absolutely identical and similar in both the assessment years before us which were also there in assessee's own case for A.Y. 2005-06 to 2011-12 and even the ld. D.R conceded on the issue. The term contractor as used in reference to sec. 80IA(4) is a person entering into a contract with a Government entity and doing the work as per the specific directions of the Government entity and the funds etc. are all given by the Government entity and the contractor is supposed to work as per the directions of the Government entity as imbibed in the terms of the contract and nothing more than that, meaning thereby there is no independent application of mind and therefore the contractor is also not supposed to poses expertise in the matters of the project. Everything is guided by the Government entity. Whereas in the case of a developer, he enters into a contract and disposes of the project work by using his own acumen, expertise, employees and even has to adhere to quality standards as enshrined in the contract that he enters into. So for a developer it is a work in a much more broader sense of the term, its independent visualisation along with finance as utilised for completion of the project which is not the case in case of the contractor. That on examination of the facts and circumstances, and the various judicial pronouncements, we are of the considered view that this issue has been consistently held in favour of the assessee. That when the facts and circumstances are identical following the rules of consistency and on the same parity of reasoning, we hold that there is no need to interfere with the findings of the ld. CIT(A) which is upheld and the relief provided to the assessee is hereby sustained. Appeal of revenue dismissed.

Summary

Issues:
Whether the assessee is eligible for deduction u/s 80IA(4) of the Income-tax Act, 1961 for the Assessment Years 2012-13 and 2013-14.

Analysis:
The appeals by the Revenue questioned the eligibility of the assessee for deduction u/s 80IA(4) of the Income-tax Act, 1961. The Revenue argued that the assessee, engaged in infrastructure development, was a contractor and not a developer, thus not entitled to the deduction. However, the Tribunal found that the assessee had undertaken risks, deployed resources, and demonstrated expertise, making the projects more than simple works contracts. The Tribunal referenced past decisions in favor of the assessee, emphasizing the independent application of mind and expertise by developers compared to contractors who work under government directions.

In previous years, the Revenue's disallowance was overturned by the Tribunal following the Hon'ble Jurisdictional High Court judgment. The Tribunal and CIT(A) consistently ruled in favor of the assessee, highlighting the assessee's financial involvement, technical expertise, and responsibilities in project development. The Tribunal noted that the issue had been repeatedly decided in favor of the assessee, with no new evidence presented by the Revenue to challenge the previous decisions.

The CIT(A) allowed the deduction u/s 80IA(4) for both assessment years, acknowledging the Tribunal's past decisions in the assessee's favor. The Tribunal, after careful analysis of the facts and legal provisions, upheld the CIT(A)'s decision, emphasizing the distinction between contractors and developers in infrastructure projects. The Tribunal concluded that the issue had been consistently decided in favor of the assessee, maintaining the relief provided by the CIT(A) for the assessee.

Both appeals by the Revenue were dismissed based on the consistent rulings in the assessee's favor. The Tribunal applied its decision for one assessment year to the other, finding the facts and issues identical. The Tribunal upheld the CIT(A)'s decision, sustaining the relief granted to the assessee.

In conclusion, the Tribunal dismissed the appeals by the Revenue, affirming the eligibility of the assessee for deduction u/s 80IA(4) based on past decisions and the distinct roles of developers and contractors in infrastructure projects.