9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2023 (2) TMI 206 - AT - Income TaxDisallowance u/s 80IA - Disallowance of claim by treating the assessee is a work contractor and not a developer by Revenue - whether the assessee is a developer or works contractor as the assessee merely executed the contract for the various sites awarded by the various entities as of the ultimate view of the Revenue and the claim made by the assessee u/s 80IA(4) has, therefore, been rejected? - HELD THAT - As perusal of various clauses of Tender documents and case laws relied upon by both the parties, it reveals that the tender work under consideration are not for a specific work, rather they are for development facility as a whole. The responsibility is fully assigned to the developer for execution and completion of the work. Various stipulations contained in the Tender documents demonstrate various risks undertaken by the assessee for execution of the project work awarded by the competent authority in terms of financial resources, manpower deployment, both technical and administrative expertise, drawing and designing of the project specifications and getting approval from the competent authority, safety and security of project and human resources, compliances of various statutory rules and laws. Therefore, merely because in the agreement for development of infrastructure facility, assessee is referred to as contractor or because if some basic specifications are laid down, it does not detract the assessee from the position of being a developer, nor will deprive the assessee from claiming deduction u/s.80IA(4) - As such, looking to the overall aspects of work undertaken by the assessee we can safely come to the conclusion that the assessee is engaged in development of the infrastructure facility and therefore, a developer, which entails the assessee to claim benefits u/s 80IA(4) - Thus, the issue of claim of deduction u/s 80IA(4) of the Act is allowed in favour of the assessee and against the Revenue. This common ground raised in all the appeals are accordingly disposed of. Additions made in the respective year are deleted Interest income claimed to be eligible for deduction u/s 80IA(4) - particular interest is on the mandatory fixed deposits as security and bank guarantee - HELD THAT - We find that while granting relief on the identical issue of bank interest on bank guarantee in favour of the assessee holding said interest income eligible for deduction u/s 80IA(4). We do not find any reason to deviate from the stand taken by the Co-ordinate Bench which has been finally decided by relying on the judgment passed in the case of CIT vs. Shah Alloys Ltd. 2016 (8) TMI 1191 - GUJARAT HIGH COURT whereby the profits of business of the undertaking includes other incidental incomes derived from the business of the undertaking has been accepted as the business income and holding the income earned from deposits as business income eligible for deduction u/s 80IA - We, therefore, respectfully relying upon the same allow this bank interest on bank guarantee as eligible for deduction under Section 80IA(4) of the Act as claimed by the assessee. The addition is, therefore, deleted. This ground of appeal is, therefore, allowed. Disallowance u/s 40(a)(ia) - TDS not paid in due time is the subject matter before us - HELD THAT - Finance Act, 2010 further rigors of Section 40(a)(ia) of the Act to provide all TDS made during the previous year can be deposited with the Government by the due date of filing of return of income. Further that, the amendment has been made effect from 01.04.2010 and therefore will apply in relation to A.Y. 2010-11 and subsequent year. In that view of the matter, the submission made by the assessee that the TDS since paid before filing of return under Section 139(1) of the Act, the disallowance made by the Revenue is not permissible is found to be acceptable, particularly, in view of the ratio laid down by the Hon ble apex Court 2018 (5) TMI 356 - SUPREME COURT . Therefore, respectfully relying upon the same, we allow this ground of appeal preferred by the assessee by deleting the addition made by the Revenue.
Issues Involved:
1. Disallowance of claim under Section 80IA(4) of the Act by treating the assessee as a work contractor and not a developer by Revenue. 2. Disallowance on interest on FD. 3. Disallowance under Section 40(a)(ia) of the Act. 4. Disallowance under Section 36(1)(va) of the Act. Issue-Wise Detailed Analysis: 1. Disallowance of Claim under Section 80IA(4): The primary contention revolves around whether the assessee qualifies as a "developer" or merely a "work contractor." The assessee, a Private Limited Company, engaged in developing infrastructure facilities, claimed deductions under Section 80IA(4) for various projects. The Assessing Officer (AO) disallowed this claim, asserting that the assessee acted only as a contractor, not a developer, as it did not conceive, plan, design, or finance the infrastructure projects but merely executed them based on specifications provided by the government authorities. The AO's decision was upheld by the Commissioner of Income Tax (Appeals) [CIT(A)], who emphasized the lack of financial risk and investment by the assessee, indicating it was a contractor, not a developer. The Tribunal analyzed the terms and conditions of the tender documents, highlighting the financial involvement, risk factors, and responsibilities undertaken by the assessee, such as arranging finances, procuring materials, deploying manpower, and ensuring compliance with statutory requirements. The Tribunal concluded that the assessee fulfilled the criteria of a developer as per the principles laid down by the Gujarat High Court in Radhe Developers, thereby entitling the assessee to claim deductions under Section 80IA(4). 2. Disallowance on Interest on Fixed Deposits (FD): The assessee claimed interest income on mandatory fixed deposits as security and bank guarantees as eligible for deduction under Section 80IA(4). The Tribunal referred to the judgment in Vijay M. Mistry Cons. P. Ltd. vs. ACIT, which held that interest income earned on fixed deposits for obtaining bank guarantees and security deposits, being necessary for the business, qualifies as business income and is eligible for deduction under Section 80IA(4). Consequently, the Tribunal allowed the assessee's claim for deduction on interest income. 3. Disallowance under Section 40(a)(ia): The AO disallowed certain expenses under Section 40(a)(ia) due to delayed deposit of TDS. The Tribunal referred to the Supreme Court judgment in CIT vs. Calcutta Export Company, which held that if TDS is deposited before the due date of filing the return under Section 139(1), no disallowance is warranted. Since the assessee deposited the TDS before the due date of filing the return, the Tribunal allowed this ground of appeal, deleting the disallowance made by the Revenue. 4. Disallowance under Section 36(1)(va): The assessee did not press this ground of appeal during the hearing for the assessment year 2011-12. Consequently, the Tribunal dismissed this ground as not pressed. Conclusion: The Tribunal allowed the appeals for the assessment years 2005-06, 2006-07, and 2007-08, and partly allowed the appeal for the assessment year 2011-12, granting relief to the assessee on the grounds of disallowance under Sections 80IA(4) and 40(a)(ia), and interest on fixed deposits. The disallowance under Section 36(1)(va) was dismissed as not pressed.
|
