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TMI Blog2015 (6) TMI 491X X X X Extracts X X X X X X X X Extracts X X X X ..... owing the assessee's claim of deduction under S.80IA of the Act. 4. Briefly, the facts relating to this issue are The assessee, a company, is engaged in the building of infrastructure project. For the assessment year under consideration, the assessee filed its return of income on 30.9.2011 declaring total income of Rs. 12,38,19,239, after claiming deduction of Rs. 6,22,70,007 under S.80IA(4) of the Act. During the assessment proceedings, the Assessing Officer noticed that the deduction claimed by the assessee under S.80IA(4) pertains to profit derived from a road work amounting to Rs. 79,11,060 and profit relating to construction of the bridge amounting to R.5,43,58,947. The Assessing Officer opined that since the road work obtained by the assessee from Executive Engineer RWD Mothihari was given on sub-contract basis to M/s. KCR Infra Project Pvt. Ltd. and M/s. Shaili Paradigam Infrastructure Pvt. Ltd., and the assessee has not involved itself in development, operating, maintenance or financial involvement in respect of the work obtained, it is not eligible to claim deduction under S.80IA(4). As far as the claim of deduction under S.80IA(4) on bridge work is concerned, the Assessi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... project relating to the construction of a barrage across river Kaveri in Mayanur Village, Karur District, Tamil Nadu for a contract amount of Rs. 174,01,80,550. As for this contract, the assessee has given a refundable security deposit of Rs. 3.5 crores. The CIT(A) denied deduction under S.80IA of the Act, for the reason that the assessee has not undertaken the works drawing designs and specifications of the project. The CIT(A) relied on the 'SCHEDULE B - LIST OF DRAWINGS' forming part of the Contract Agreement, a copy of which is filed at pages 113 to 193 of the paper-book. The said Schedule B appears at page 44 of the said contract agreement, appearing at page 161 of the paper-book. It contains Serial Nos.1 to 17 and forms part of the articles of agreement dated 9th February, 2009 (Agreement CR No.90/LS/Floods/2008-2009. We have gone through the said 'SCHEDULE B - LIST OF DRAWINGS' attached to the contract agreement and also plan attached to it. This is the initial plan attached to the contract agreement, on the basis of which the assessee has to execute the project. To execute the work, the assessee has to draw separate designs an drawings. For that purpose, the assessee employe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty expected of the material to be used by the assessee in the execution of the project. It is mentioned in this behalf in the tender documents that the assessee has to procure high yield strength deformed (H.Y.S.D) BARS of Grade Fe415 confirming to I.S.1786-1985 (I.S. Specification for high yield strength deformed steel bars and mixes for cement concrete) and also steel rods as fresh as possible. It is also mentioned in the tender documents that the assessee shall procure cement which shall conform to specifications, having capacity of rapid hardening and low heat cement (IS 269-1989) and portland pozzalana cement I.S. 1489-1991. Further, it is also mentioned in the tender documents that in respect of any machineries made available by the Department to the assessee, hire charges would be recovered for such machineries supplied by the Government. It is also specifically mentioned that whatever such machinery is supplied by the Government, shall be handed over back to the Government in proper and same form. This specific clause clearly indicates that the assessee has got any machinery from the Department free of cost. The assessee having paid hire charges of the usage of the machiner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... years 2005-06 to 2007-08), a copy of which is also furnished before us, the Tribunal, vide para 33 of its order date 16.3.2013, held as follows- "33. The next question is to be answered is whether th assessee is a developer or mere works contractor. The Revenue relied on the amendments brought in by the Finance Act 2007 and 2009 to mention that the activity undertaken by the assessee is akin to works contract and he is not eligible for deduction under section 80IA (4) of the Act. Whether the assessee is a developer or works contractor is purely depends on the nature of the work undertaken by the assessee. Each of the work undertake has to be analyzed and a conclusion has to be drawn about the nature of the work undertaken by the assessee. The agreement entered into with the Government or the Government body may be a mere works contract or for development of infrastructure. It is to be seen from the agreements entered into by the assessee with the Government. We find that the Government handed over the possession of the premises of projects to the assessee for the development of infrastructure facility. It is the assessee's responsibility to do all acts till the possession ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee is a developer and not a works contractor as presumed by the Revenue. The circular issued by the Board, relied on by learned counsel for the assessee, clearly indicate that the assessee is eligible for deduction under section 80IA (4) of the Act. The department is not correct in holding that the assessee is a mere contractor of the work and not a developer 14. As for the decision of the Gujarat High Court in the case of Katira Construction Ltd. V/s. Union of India (352 ITR 513), relied upon by the learned Departmental Representative, it may be noted that this decision relates to constitutional validity of the introduction of Explanation to S.80IA(13), and hence, the said decision has not applicability to the facts of the present case. Similarly, even the decision fo the Karnataka High Court in the case of Yojaka Marine Pvt. Ltd. V/s. Asst. CIT (354 ITR 530) has no application to the facts of the present case, since in that case the project was found to have been designed by th Government itself, as against the facts, as discussed above, which indicate that the assessee has made out its own working designs and drawings. 15. In the light of the above discuss ..... X X X X Extracts X X X X X X X X Extracts X X X X
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