Civil Contract - laying of posts and drawing wires, Income Tax

[B Tayub]

Whether laying of posts and drawing wires for contracts under BSNL comes can be termed as 'Civil Contract' and taxed under 44AD of I.T. Act 1961?

Posts / Replies

[Rama Krishana]

A bare reading of the clause (b) of explanation of the Section 44AD [before amendment by Finance (No.2) Act, 2009], shows that execution of any works contract would be eligible for the benefit of provisions of section 44AD. In view of that you need to ascertain the nature of contract with BSNL. IF the nature of contract is works contract, you may apply the provisions of section 44AD.

[B Tayub]

For the reply submitted by Mr. Rama Krishna: It is a works contract and there is no doubt about it. My question is whether this is CIVIL contract or not. We are of the opinion that it is not CIVIL construction and we want to be out of 44AD.

[Ravi Chopra]

I think the scope of civil contract is wide enough to cover the works contract for the purpose of section 44AD. I agree with the view that you are eligible for benefit of section 44AD.