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2024 (6) TMI 691 - HC - Income TaxDisallowance u/s. 80IA(4) - Whether assessee is a contractor or a developer of infrastructure facilities - HELD THAT - The issue with regard to considering the respondent as developer of the infrastructure facility so as to become eligible for deduction under Section 80IA(4) is no more res intigra in view of the order passed by this Court in MONTECARLO CONSTRUCTION LTD. 2024 (1) TMI 383 - GUJARAT HIGH COURT whereby the Appeal filed by the revenue is dismissed on the same question of law. It was pointed out that while dismissing the Appeal of the revenue, this Court has taken into consideration the same order passed by the Tribunal which is impugned in this Appeal and on the basis of that, it was observed that nterim payment to the tune of estimated contract value in respect of the development work done for each month after retention and other adjustments were to be made, security deposit was to be paid by the assessee, there was a penalty for delay, procurement of the material was the responsibility of the assessee, procurement of land for camp, for shop, labour camp etc. also the employment of qualified engineers, action and compensation in respect of bad work, defect liability of the accidents to persons in relation to Workman Compensation Act, indemnity insurance of the workmen employed. CIT (Appeal) and the Tribunal considering such aspects of the tendered agreement, concurrently held that the assessee has entered into a development of infrastructure facility agreement and not the works contract. ITAT has not erred in deleting the disallowance made u/s. 80IA(4) by holding that the assessee is not a contractor but a developer of infrastructure facilities and is eligible for deduction u/s. 80IA(4) - Decided in favour of assessee.
Issues involved:
The judgment involves the interpretation of Section 80IA(4) of the Income Tax Act, 1961 regarding the eligibility for deduction for an assessee who is considered a developer of infrastructure facilities rather than a contractor. Issue 1: Disallowance under Section 80IA(4) of the Act The Tax Appeal was filed under Section 260A of the Income Tax Act, challenging the deletion of disallowance made under Section 80IA(4) of the Act. The question of law was whether the assessee, deemed a developer of infrastructure facilities, is eligible for deduction under Section 80IA(4) of the Act. The Tribunal and CIT (Appeal) found that the assessee was indeed a developer and eligible for the deduction. The judgment emphasized the conditions under Section 80IA(4) for an enterprise developing, operating, and maintaining infrastructure facilities. The Explanation below Subsection 13 of Section 80IA was analyzed to clarify the non-allowability of deduction for works contract projects. The judgment highlighted the importance of being a developer of infrastructure facilities to claim the deduction under Section 80IA(4) post the insertion of the explanation. Issue 2: Capacity as a Developer of Infrastructure Facilities The judgment detailed the factual findings regarding the assessee's role as a developer rather than a contractor in various road and canal projects. The terms of the agreements with entities like Madhya Pradesh Road Development Corporation Limited were examined to determine the nature of the work undertaken by the assessee. The CIT (Appeal) and the Tribunal analyzed aspects such as investment, payments, responsibilities, and liabilities to conclude that the assessee was engaged in the development of infrastructure facilities, not works contracts. The judgment emphasized the need for the assessee to establish its capacity as a developer to claim the deduction under Section 80IA(4) of the Act. Conclusion: Based on the concurrent findings of fact by the CIT (Appeal) and the Tribunal, the Tax Appeal was dismissed by the Court as no question of law arose from the impugned order. The judgment reiterated the importance of being recognized as a developer of infrastructure facilities to qualify for the deduction under Section 80IA(4) of the Income Tax Act, 1961.
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