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TMI Blog2012 (12) TMI 330X X X X Extracts X X X X X X X X Extracts X X X X ..... Champakara and Udyogamandal Canals in Kerala and protection of Tapi river bank under the authority of Surat Municipal Corporation, Gujarat. The Assessing Officer after examining the agreements for these works, undertaken by the assessee came to the conclusion that the agreement represented only a works contract granted to the assessee for refrurbishment of a portion of the protection wall of the canals and the river bank respectively and that the work orders issued by IWAI and Surat Municipal Corporation carried out by the assessee did not have any element of developing, operating and maintaining any infrastructural facility as claimed by the assessee and therefore disallowed the assessee's claim for deduction under section 80IA of the Act in the orders of assessment. 2.2 The assessee carried the matter in appeal before the CIT(A). The CIT(A) after considering the arguments put forward by the assessee, the details of the contract works on record, the judicial decisions cited and relied on by the assessee, etc and after detailed discussion thereon held that the assessee company is a mere contractor executing civil works for an infrastructure Enterprise, viz. IWAI and Surat Municipa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ls in National Waterway No.3 in Kerala in pursuance of an agreement with the IWAI, a division of the Ministry of Shipping and Transport, Govt. of India. ii) protection work of the Tapi Riverbanks under the authority of the Surat Municipal Corporation, Gujarat. The learned counsel for the assessee submitted that the assessee had satisfied all the requirements for being granted deduction under section 80IA of the Act and the learned CIT(A) ought to have allowed the deduction claimed. It was submitted that the assessee was operating and maintaining the said infrastructural facilities at (i) and (ii) (supra) during the relevant period and contended that the learned CIT(A)'s view that the work carried out by the assessee was merely a works contract was erroneous. It was contended by the learned CIT(A) that the assessee's work was that of a water supply project which falls in the category of infrastructural facility in accordance with the provisions of section 80IA(4)(i) and Explanation (c) thereto. It was contended by the learned counsel for the assessee that it was not necessary for the entire infrastructure to be developed by the assessee and the fact that the assessee was involved ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y a works contract and not the creation or development of any new infrastructure as claimed and had therefore rightly disallowed the assessee's claim for deduction. 80IA of the Act following the decision of the Special Bench of the Bombay Tribunal in the case of B.T.Patil & sons, Belgaum Construction Pvt. Ltd. Vs. ACIT in ITA Nos.1408 & 1409/PN/2003 Dt.26.10.2009. The learned Departmental Representative submitted that the issue was also squarely covered in favour of Revenue by the decision of the ITAT, Chennai in the case of ACIT Vs. Indwel Leasings P. Ltd. (2009) 313 ITR (AT) 118. The learned Departmental Representative submitted that the facts of this cited case was identical to that of the assessee and wherein the Tribunal had while dismissing the claim for deduction under section 80IA held that it was a condition precedent that the benefit of the deduction was available only to the developer of the infrastructure facility and it could not be extended to a person who enters into a contract for executing works contracts. The learned Departmental Representative submitted in view of the facts cited and the judicial decisions relied on (supra) the order of the learned CIT(A) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... airs and maintenance thereof rather than development of an infrastructure facility namely, inland waterways which has been done by IWAI. We are of the considered view that the assessee executed works contracts on behalf of the concerned Government bodies and there is certainly no element of developing or operating and maintaining or developing, operating and maintaining of any infrastructure facility as envisaged in clause ( c ) to the Explanation to sub-section(4) of section 80IA of the Act. 5.2 The Explanation to section 80IA inserted by Finance Act, 2007, with retrospective effect from 1.4.2000 reads as under : " For removal of doubts, it is hereby declared that nothing contained in this section shall apply to a person who executes a work contract entered into with the undertaking or enterprise as the case may be." The Explanation (supra) inserted in the Act is clarificatory in nature and clearly spells out the legislative intent that the benefit of deduction under section 80IA of the Act was not to be granted or extended to work contractors as in the instant case of the assessee. 5.3 The assessee has placed reliance on the following judicial decisions in support of the prop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nstant case was only involved in works contracts given to it by the developers for refurbishing/repairing the protection walls of the canals and riverbanks and not in the development of any infrastructure facility as claimed. Thus, we find that the facts of the cited case being different and distinguishable from that of the instant case, the same would not come to the aid of the assessee. 5.4 The learned CIT(A) in his order after detailed examination of the assessee's claim at paras 3 to 20 thereof held that the assessee was not entitled to be allowed deduction under section 80IA of the Act in the facts and circumstances of the case as also discussed in paras 4.1 to 5.3 above. In doing so, he has followed and applied the decision of the Special Bench of the Hon'ble ITAT, Mumbai in the case of M/s. B.T. Patil & Sons, Belgaum Construction Pvt Ltd. Vs. ACIT in ITA Nos.1408 & 1409/PN/2003 dt.26.10.2009 . In this case, the Special Bench of the Tribunal held that the insertion and substitution of the Explanation to section 80IA of the Act with retrospective effect from 1.4.2000 was only in order to clarify that the deduction. 80IA of the Act would not be allowed in relation to a busines ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ally identical to that of the present case. We, therefore, respectfully following the ratio laid down in these two decisions hold that the assessee is a mere contractor executing civil works contracts for an infrastructure undertaking/enterprise and is therefore not eligible to be allowed deduction under section 80IA of the Act. The learned CIT(A)'s order on this issue is upheld and consequently the grounds of appeal raised by the assessee are dismissed. 6. Contract Receipts (for Assessment Year 2006-07) 6.1 In the grounds raised at S.No.6 for Assessment Year 2006-07, the assessee has challenged the learned CIT(A)'s action in confirming the Assessing Officer's addition of a sum of Rs.40,582 being the amount of shortfall in the contract receipts declared by the assessee in its final accounts vis-à-vis the corresponding amounts of contract receipts from Indian Oil Corporation, Mangalore Chemicals & Fertilisers and The Indian Navy on the ground that the same was explained and adequate opportunity was not afforded to it to reconcile the said differences. 6.2 The learned counsel for the assessee reiterated the claims raised in the grounds of appeal. Per contra, the learned Dep ..... X X X X Extracts X X X X X X X X Extracts X X X X
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