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TMI Blog2013 (6) TMI 813X X X X Extracts X X X X X X X X Extracts X X X X ..... Saini (Accountant Member) And George Mathan (Judicial Member) For the Appellant : S. K. Tulsiyan For the Respondent : Ajay Kr. Singh, K. N. Jana ORDER ITA No. 1684/Kol/2011 is an appeal filed by the M/s. Simplex Som Datt Builders J.V against the order of the learned Commissioner of Income-tax (Appeals), XX, Kolkata in appeal no. 419/CIT(A)-XX/Wd-33(4)/09-10/Kol dated 25-08-2011 and ITA No. 1685/Kol/2011 is an appeal filed by M/s. Simplex Subhas J.V against the order of the learned Commissioner of Income-tax (Appeals), XX,, Kolkata in appeal no. 418/CIT(A)- XX/Wd-33(4)/09-10/Kol dated 25-08-2011 for the assessment year 2007-08. 2. Shri S.K Tulsiyan, Advocate, learned .Authorised Representative represented on behalf of the assessee and S/Shri Ajay Kr. Singh, learned. CIT/Sr.DR and K.N. Jana, learned JCIT/Sr.DR represented on behalf of the revenue. 3. In both the appeals the only issue is against the action of the learned Commissioner of Income-tax (Appeals) in confirming the disallowance of the claim of deduction u/s. 80IA(4) of the I.T Act. 4. The grounds of appeals raised in both the cases are identical except for the figure of deduction. 5. Common ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing only contract work. It was the submission that as per the provisions of section 80IA(4) the assessee is to doing the development of infrastructure facility . It was the submission that infrastructure facility was explained in the Explanation to section 80IA(4). It was the submission that the said Explanation clearly provided for water, civil project, water treatment system, irrigation project, sanitation and sewerage . The learned Authorised Representative for the assessee further submitted that the assessee had entered into an agreement, more specifically EPC/Turnkey Contract with the Govt. of Andhra Pradesh Irrigation CAD Department for the earth work excavation, forming embankment and construction of CM CD works including Investigation, Designing and Estimation of SRSP-Flood Flow Canal from km 70.000 to km 86.000 in Rampur (V). It was the submission that the assessee has undertaken the development of irrigation project. Thus, the assessee was entitled to the benefit of deduction u/s. 80IA(4) of the Act. It was the further submission that the issue of whether the assessee is to be held to be a developer or mere works contractor in such agreements have been decided b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... denotes the enterprise carrying on the business. The word it cannot be related to the infrastructure facility, particularly in view of the fact that infrastructure facility includes Rail system, Highway project, Water treatment system, Irrigation project, a Port, an Airport or an Inland port which cannot be owned by any one. Even otherwise, the word it is used to denote an enterprise. Therefore, there is no requirement that the assessee should have been the owner of the infrastructure facility. 28. The next question is to be answered is whether the 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 801A (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 undertaken 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 w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar that from an un-developed area, infrastructure is developed and handed over to the Government and as explained by the CBDT vide its Circular dated 18-05-2010, such activity is eligible for deduction under section 801A (4) of the Act. This cannot be considered as a mere works contract but has to be considered as a development of infrastructure facility. Therefore, the 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 801A (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. 29. We also find that as per the provisions of the section 801A of the Act, a person being a company has to enter into an agreement with the Government or Government undertakings. Such an agreement is a contract and for the purpose of the agreement a person may be called as a contractor as he entered into a contract. But the word contractor is used .to denote a person entering into an agreement for undertaking the development of infrastructure fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es if any such as wells, trees, houses, etc., submitting to the department, pursuing the same with LAO and getting approval/award from competent authority. . Construction and of Dam/Barrage and appurtenant works, whole canal unlined/lined as per approved design-drawings, specifications of the department, relevant l.S. Codes, CWC Manuals, Circulars issued from time to time. Construction of all structures of whole canal systems as per approved design, drawings, specifications of the department, relevant l.S. Codes. I RC Publications,CWC Manuals, Circulars issued by department from time to time. Formation of inspection path/service road and plantation of shade trees along the banks of earth dams/canals - Commissioning and trial of the constructed Dam! barrage and appurtenant works, canal system-maintenance during the defect liability period of 24 months from the date of completion certificate. Beautification of dam sites and canal structure sites. The scope of the work given above is only indicative and detailed scope has been described separately. Bids not covering the entire scope will be treated as incomplete and hence will he rejected. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n to section 80IA(4) gives the meaning the term infrastructure facility . The substituted explanation after sub clause (13) brings in the nature of work as a works contract. The provisions of section 194C, which deals with TDS in respect of payment to contractors for carrying out any work in the Explanation thereto as explained the term work to be an inclusive definition, but has provided an exclusion to be does not include manufacturing or supplying of a product. according to requirement or specification of the customer by using materials purchased from a person, other than such customer . Thus, with this in mind, a perusal of the turnkey contract agreement entered into by the assessee with the Irrigation Department, Govt of A.P clearly shows that the construction of all the structures of the whole canal system is to be as per approved design, drawings, specifications of the department etc. The survey is to be done as per investigation and designing criteria of the Irrigation Department. This is also as per article 11.1 of the agreement. The assessee is to procure the materials independently and those materials are to confirm to the specifications provided. The assessee is als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ean a road including a toll road, a bridge or a rail system. Admittedly, the assessee is doing the business of development of railway tracks and bridges thereof as also roads. If, we are to accept the contention of the Ld. CIT that the provisions of section 801A(4) of the Act after the substitution of the explanation to section 8OIA of the Act was introduced was only for the purpose of giving the benefit to BUT contracts then, the explanation to section 801A(4) of the Act becomes otiose. This is as explanation to section 801A(4) of the Act specifically provides for the road to include a toll road, a bridge or a rail system. BUT contract in respect of the railway system can never exist. Further, a perusal of the provisions of section 801A of the Act shows that the term works contract is not defined in the said section. However, the terms works and contract is defined in the provisions of section 194C of the Act. If a particular word or term is not defined in the specific section then, one could go to other sections in the said Act where the definition would be available to draw a meaning to the said terms. In the provisions of section 194C of the Act, work has been given an in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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