2019 (5) TMI 1328 - HC - Income Tax

Benefit of deduction u/s 80IA - condition laid down in Section 80IA(4) - recognised as transferee or assignee of the principal contractor - HELD THAT - Controversy involved in the present Appeal is covered by the Judgment of this court in the case of the same Assesse reported in M/S. CHETTINAD LIGNITE TRANSPORT SERVICES PRIVATE LIMITED 2019 (4) TMI 683 - MADRAS HIGH COURT wherein this court has has held that the power generating companies are entitled to deduction u/s 80IA of the Act in different sub clauses viz., under Section 80IA(4)(iv) of the Act. Where there is no such Proviso, as is available in clause (i) of Section 80IA(4) of the Act, which deals with deduction to enterprise involved in developing, operating and maintaining the infrastructure facilities. We are, therefore, of the considered opinion that there is no merit in these appeals filed by the Revenue and the questions of law framed above deserve to be answered in favour of the Assessee and against the Revenue

Summary

Issues:
1. Eligibility for deduction under Section 80IA without fulfilling specific conditions.
2. Effect of retrospective amendments on eligibility for deduction.
3. Requirement of transfer of infrastructure facility for deduction under Section 80IA.

Analysis:
1. The main issue in this case was the eligibility of the Assessee for a deduction under Section 80IA of the Income Tax Act, 1961, despite not fulfilling certain conditions. The Tribunal allowed the Appeal for the Assessment Year 2012-2013, stating that the Assessee was entitled to the benefit of deduction under Section 80IA. The primary contention was whether the Assessee, being a Works Contractor, could avail the deduction without having a contract with any Government/Authority as required by Section 80IA(4). The court analyzed the Proviso to Section 80IA(4) and held that the benefit of deduction could extend to a contractor recognized by the concerned authority for developing, operating, or maintaining an infrastructure facility. The court emphasized that direct agreement with the specified authority was not a prerequisite for availing the benefit under Section 80IA.

2. Another issue raised was the impact of retrospective amendments on the Assessee's eligibility for deduction under Section 80IA. The court considered the explanation inserted by the Finance Act 2007 and substituted by the Finance (No.2) Act 2009 with retrospective effect from 1.4.2000. Despite these amendments, the court upheld the Assessee's eligibility for the deduction, emphasizing the recognition of the Assessee as a contractor for the infrastructure facility by the Railways. The court highlighted that the Proviso to Section 80IA(4) did not mandate a direct agreement between the transferee enterprise and the specified authority for availing the deduction.

3. The final issue revolved around the requirement of a transfer of infrastructure facility for claiming a deduction under Section 80IA. The court clarified that the Assessee, recognized as a transferee of the principal contractor, was duly authorized by the Railways to operate and maintain the railway sidings. The court emphasized that the Assessee's recognition as a contractor for the infrastructure facility, even without a direct agreement with the Railways or Central Government, satisfied the conditions for availing the deduction under Section 80IA. By referencing a previous case, the court distinguished the facts and held that the Assessee's situation was different, justifying the entitlement to the deduction. Consequently, the court dismissed the Revenue's appeals and upheld the Assessee's eligibility for the deduction under Section 80IA.