2015 (12) TMI 616 - AT - Income Tax

Denial of deduction u/s.80IA(4) - whether Government or Statutory body is the developer of infrastructure facility and here appellant is not entitled to deduction under the section? - Held that - As decided in CIT vs. ABG Heavy Industries Ltd & Ors (2010 (2) TMI 108 - BOMBAY HIGH COURT ) that even in the case before the Hon ble High Court, the assessee acted as a contractor for Government agency, was held eligible for the purposes of claim of deduction u/s 80IA( 4) of the Income Tax Act. As per the said decision assessee who only develops infrastructural facility (even as a contractor) but does not have an occasion to operate and maintain is also eligible for claim of deduction u/s 80IA( 4) of the Act. The Hon ble High Court has been pleased to observe that qua such a person the condition stated in subsection (c) of sec.80IA( 4)(i) has to be read harmoniously with the main provision under which deduction is available to an assessee, who develops; or operates and maintain; or develops, maintains and operates an infrastructural facility. In other words a developer who only develops (i.e., constructs) an infrastructural facility is not envisaged to operate and maintain such facility, cannot be accepted to fulfil the condition in clause (c) of sec. 80IA( 4) since it would be an impossibility. Therefore, in view of the construction placed by the Hon ble Bombay High Court on the requirements of clause (c) of sec. 80IA( 4)(i) requiring it to be harmoniously read with the main sec. 80IA( 4), we do not find substance in the objection raised by the Revenue. - Decided in favour of assessee

Summary

Issues:
Appeal against CIT(A) orders upholding denial of deduction u/s.80IA(4) for Assessment Years 2004-05 and 2005-06.

Analysis:
1. The appeals were filed against CIT(A) orders denying deduction u/s.80IA(4) for both assessment years. The AO disallowed the deduction, which was upheld by CIT(A) and the Tribunal in previous instances.

2. The Hon'ble Bombay High Court, in separate orders for A.Y. 2004-05 and 2005-06, remanded the matter to the Tribunal for fresh adjudication. The Court focused on the interpretation of section 80IA(4) regarding the eligibility of the assessee for the deduction.

3. The Tribunal, after reconsideration, referred to a previous decision by the High Court in a similar case, emphasizing that the deduction is available to an enterprise that develops, operates, or maintains an infrastructure facility. The Tribunal cited relevant case law to support the interpretation of the law.

4. Relying on the decision of the Hon'ble Bombay High Court in CIT vs. ABG Heavy Industries Ltd & Ors, the Tribunal allowed the deduction for both assessment years. The Tribunal found that the assessee, even acting as a contractor for a government agency, was eligible for the deduction under section 80IA(4).

5. The Tribunal concluded that the assessee met the conditions for claiming the deduction under section 80IA(4) and allowed the appeals. The grounds raised by the assessee for both assessment years were accepted, and the deduction amounts were allowed.

6. In the final decision pronounced on 25-08-2015, both appeals filed by the assessee were allowed, overturning the previous denials of deduction u/s.80IA(4) for Assessment Years 2004-05 and 2005-06.