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TMI Blog2017 (4) TMI 399X X X X Extracts X X X X X X X X Extracts X X X X ..... Decided against revenue - ITA No. 3071/Mum/2012, ITA No. 5497/Mum/2012 - - - Dated:- 31-3-2017 - Shri R. C. Sharma, AM And Shri Sandeep Gosain, JM Revenue by : Shri B. S. Bist Assessee by : Shri Harshavardhana Datar ORDER Per R. C. Sharma ( A. M. ) These are the appeals filed by the Revenue against the order of CIT(A)-19, Mumbai dated 21/02/2012 for the A.Y. 2008-09 and 2009-10 in the matter of order passed u/s.143(3) of the IT Act. 2. Grievance of Revenue in both the years pertains to disallowance of deduction claimed u/s.80-IA of the IT Act. 3. At the outset learned AR placed on record the order of the Tribunal in the group concern M/s. Patel Pratibha JV in IA No.200/Mum/2015 for the A.Y.2010-11, order dated 28/09/2016, wherein assessee s claim of deduction u/s.80-IA((4) was allowed by the Tribunal. 4. We had carefully gone through the orders of the authorities below and found that assessee s claim for deduction u/s.80IA was allowed by the CIT(A) after having the following observation., 4.3 I have carefully considered the facts of the case, arguments of the Assessing Officer and the written submissions of the Authorised Representative of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is accepted, it would obviously understandably Iead to manifestly absurd results. When the Act provides deduction for a person who is only developing 'the Infrastructure facility, unaccompanied by 'operating' thereof by such person, there can be no question of providing a condition for such an enterprise to start operating and maintaining the infrastructure facility on or after 1st April. 1995. In that view of the matter we find substance in the contentions of the learned Authorised Representative of assessee and inescapably we have but to hold that the condition at clause (c) is applicable to an enterprise, which is carrying on the business of maintaining and operating or developing, maintaining and operating an infrastructure facility. As such, viewed as above, we hold that since the assessee is only a developer of the infrastructure project subsection (4) is not applicable to the present assessee. Hence the Assessing Officer's objection that the appellant is not entitled to deduction Under section 80-lA as one of the conditions, as stipulated in Sec.80-IA(4)(c) is not fulfilled, does not hold good after the Introduction of Explanation to subsection (13) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as such, the business activity of the nature of BT (build and transfer) also falls within eligible construction activity, that is, activity eligible for deduction under section 80-IA in as much as mere 'development' as such and unassociated / unaccompanied with 'operate' and 'maintenance' else falls within such business activity as is eligible for deduction under section 80-IA. Therefore, merely because the present assessee was paid by the Government, for development work, it cannot be denied deduction under section 80-IA(4). A person, who enters into a contract with another person will be a contractor no doubt; and the assessee having entered into an agreement with the Government agencies for development of the infrastructure projects, is' obviously a contractor but that does not derogate the assessee from being a developer as well, The term contractor is not essentially contradictory to the term developer (emphasis applied). On the other hand, rather section 80-IA (4) itself provides the assessee should develop the infrastructure facility as per agreement with the Central Government, State Government or a local authority. So, entering into a lawf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y itself was not regarded as being a statutory bar to the entitlement to a deduction under, Section 80lA of the Act. The Court connot be unmindful in the present case of the underlying objects and reasons for a grant of deduction to an enterprise engaged in the development of an infrastructure facility. The provision was intended to give an incentive to investment for infra structural growth in the country. The requirement that the operation and maintenance of the infrastructure facility should commence after 1st April 19.95 has to be harmoniously construed with the main provision under which a deduction is available to an assessee who develops; or operates and maintains; or develops, operates and maintains an infrastructure facility. Unless both the provisions are harmoniously construed, the object and intent underlying the amendment of the provision by the Finance Act of 2001 would be defeated. A harmonious reading of the provision in its entirety would lead to the conclusion that the deduction is available to an enterprise which (i) develops; or ii) operates and maintains; or (iii) develops, maintains and operates that infrastructure facility. In the light of the ratio o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or (iii) develops, maintains and operates that infrastructure facility. In the light of the ratio of the above .decision of Hon. Bombay High Court being the jurisdictional high court, observation of the AO that in absence' of the operation and maintenance, assessee is not eligible for the deduction u/s 80lA is without any merit. 4.8 It is observed from the perusal of the assessment order that Ld. AO has laid a lot emphasis on explanation inserted to the section 80lA by Finance Act (No.2) 2009 which has been made operational retrospectively with effect from 1st April 2000, which is as under:- For the removal of doubts, it is hereby declared that nothing contained in this section shall apply in relation to a business referred to in sub-section (4) which is in the nature of a works contract awarded by any person (including the Central or State Government) and executed by the undertaking or enterprise referred to in sub-section (1) Ld. Assessing Officer has even held that as per the amendment under the Finance Act 2009, it is clear that any contract awarded by the Central or State Government does not qualify for the deduction under section 80lA. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e effect of explanation Hon. Gujarat High Court in matter of CIT v Radhe Developers 204 TAXMANN 543 (ITA 546 of 2008) has held as under: Para 24 The submission that the contract is not a contract of sale bscause, specifications are provided to the manufacturer by the purchaser cannot be accepted. That has not been the understanding of the law at any point of time The fact that the purchaser provides specifications to the manufacturer has never been construed even by the Revenue to be a circumstance which should lead to the inference that the contract is not a contract of sale. Firstly, the circulars issued by the Central Board of Direct Taxes right since 29 May, 1972 consistently took the position that furnishing of specifications to the manufacturer of goods by the purchaser would not detract from a contract being regarded as a contract for sale so long as the property in the goods passes upon delivery The consideration which was regarded by the Revenue as having relevance was whether the material was supplied to the contractor by the Government, or, as the case may be, by a specified person. Where the material is provided by the purchaser and the work of fabrication or manu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the infrastructure development project is not the work contract as meant in the explanation to section 80lA and on this account assessee is eligible for the deduction uls 80lA. 4.11 During the course of appeal proceedings, It was pointed out that the transfer in question was not as understood In terms of capital gains provisions but in general parlance i.e. after the facility was developed the same was to be given back to the Government authority, etc which was as per the terms of the agreement. Thus the development was as per the agreement with the government and if the agreement contained giving back the facility the question of transfer did not arise and hence, even this observation was not in consonance with the provisions of section 80lA of the Act. 4.12 I have carefully considered the facts of the case, arguments of the Assessing Officer and the written submissions of the Authorised Representative of the appellant. It Is the requirement as per section 80IA (4)(i)(b) that the infrastructure facility developed by the enterprise should oe transferred to the Govt. within the period stipulated In the agreement. It is the AO's case that in BOOT and BOT there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erely a contractor, (b) The concept of BOT I BOOT was absent, and. (c) Conditions specified u/s. 80-IA (2) and 80-IA (4) (i)(c) were not satisfied, (d) Assessee does not fit in the category of persons for whom benefit of this provision was introduced. (e) The assessee is engaged in business of work contract within the meaning of the explanation to section 80lA cannot be upheld. The AO has in the assessment order, without any further Elaboration, merely stated that the facts in the case of M/s. Patel Engg. Ltd. (supra) are not identical with this case and some argument has been raised in this order which have not been considered by Hon. ITAT while deciding the Case of Patel Engg. On the contrary, however, as has been examined above, not only are the facts exactly similar, but the very same issues as raised by the departmental OR in the case of M/s. Patel Engg. Ltd. have been raised by the AO. 4.15 On the basis of the detailed discussion as above, it is held that the appellant is entitled to claim deduction u/s.80-IA. Therefore Ground Nos.2 and 3 are allowed. 5. We had also carefully gone through the orders of the Tribunal in case of group concerns ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Mumbai ITAT in the case of ACIT v. M/s Pratibha Industries Limited 141 ITO 151) and ACIT vs Bharat Udyog Limited 24 SOT 412 and decision of Jaipur ITAT in matter of Om Metal Infraprojects Limited ITA 722/JP/200S and decision of the Rajkot ITAT in the case of M/s Tarmat Bel JV ITA 1111/RJT/2010 and decision of Pune bench of ITAT in matter of Mahalaxmi Construction Corporation Limited v. ACIT ITA. 433/PN/2007 and decision of Pune bench of ITAT in matter of Pratibha Construction Engineering Pvt Ltd. vs. ACIT ITA 27S/PN/10 and decision of Pune bench of ITAT in matter of Laxmi Civil Engg Pvt. Ltd. vs Add!. CIT ITA 766/PN/2009 and decision of Chennai Bench of ITAT in matter of ACIT v. RR Construction ITA No. 2061/MOS/2010 and decision of Hyderabad Bench of ITAT in matter of GVPR Engineers v. ACIT ITA No. 1473/HYD/2011 and decision of Hyderabad Bench of ITAT in matter of KMC Constructions Ltd. v. ACIT ITA No. 84/HYD/2010 and decision of Hyderabad Bench of ITAT in matter of Koya and Company Construction Pvt Ltd. vs. ACIT ITA 221/HYD/2009. 11. The issue is also squarely covered by the decision of Hon ble Bombay High Court in matter of ABG Heavy Industries Limited ITA 2121 of 2009 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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