2018 (4) TMI 184 - AT - Income Tax

Deduction u/s.80IA(4) - whether the assessee was only a contractor as the said work was awarded? - Held that - We hold that the assessee having executed development of dam, was entitled to the claim of deduction under section 80IA(4) of the Act. See ACIT, Circle-1, Kolhapur Versus Mahalaxmi Infraprojects Ltd. 2018 (1) TMI 1103 - ITAT PUNE . - Decided in favour of assessee.

Summary

Issues Involved:
1. Appeal by Revenue against CIT(A) order related to assessment year 2005-06.
2. Grounds raised by Revenue against deduction u/s.80IA(4) of Income-tax Act, 1961.
3. Cross Objections filed by assessee against reopening of assessment and deduction claim.
4. Claim of deduction under section 80IA(4) - developer vs. contractor status.
5. Interpretation of Explanation to sub-section (13) of section 80IA.
6. Application of deduction under section 80IA(4) to works contracts.
7. Tribunal's decision on claim of deduction under section 80IA(4) in similar cases.

Analysis:

1. The appeal by the Revenue challenged the CIT(A) order related to assessment year 2005-06. The Revenue raised several grounds against the allowance of deduction u/s.80IA(4) of the Income-tax Act, arguing that the assessee was a contractor, not a developer, and thus not eligible for the claimed deduction.

2. The Cross Objections filed by the assessee contested the reopening of assessment under section 148 by the Assessing Officer. The objections also supported the claim of deduction under section 80IA(4) of the Act, emphasizing the assessee's status as a developer involved in infrastructure projects.

3. The main issue revolved around determining whether the assessee qualified as a developer or a contractor for the purpose of claiming deduction under section 80IA(4) of the Act. The CIT(A) considered the nature of the business operations and relied on precedents to support the assessee's entitlement to the deduction.

4. The interpretation of the Explanation to sub-section (13) of section 80IA was crucial in deciding the eligibility for the deduction. The CIT(A) clarified that the Explanation excluded sub-contractors, not principal contractors like the assessee, from the deduction, based on the contractual arrangements with the Government.

5. The Tribunal's decision in similar cases, such as ACIT Vs. Mahalaxmi Infraprojects Ltd., provided a precedent for allowing the deduction under section 80IA(4) for infrastructural projects executed by the assessee. The Tribunal emphasized the fulfillment of conditions for executing infra projects to support the deduction claim.

6. Ultimately, the Tribunal upheld the claim of deduction under section 80IA(4) for the assessee, considering the development of a dam as qualifying for the deduction. The Cross Objections filed by the assessee were dismissed as not pressed, and the appeal of the Revenue, along with the Cross Objections, was dismissed by the Tribunal in its order dated March 28, 2018.