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TMI Blog2017 (6) TMI 385X X X X Extracts X X X X X X X X Extracts X X X X ..... ible for making the payments of labours and for supply of various items related to the said project. See CIT Vs. ABG Heavy Industries Limited [2010 (2) TMI 108 - BOMBAY HIGH COURT ] On perusal of the terms and conditions in the agreement, it is clear that the assessee was not a works contractor and was a developer and hence Explanation to section 80IA(13) does not apply. - Decided in favour of assessee. - I.T.A. Nos. 693 & 694/Kol/2016 - - - Dated:- 21-4-2017 - Shri S. S. Viswanethra Ravi, Judicial Member And Shri Dr. Arjun Lal Saini, Accountant Member Shri Prabal Choudhury, JCIT, ld. Sr. DR for the revenue Shri Ravi Tulsiyan, FCA, ld.AR for the assessee ORDER Shri S.S. Viswanethra Ravi , JM These two appeals by the Revenue are against the separate orders dt: 29-01-2016 passed by the Commissioner of Income Tax-(Appeals), 9, Kolkata for the assessment years 2011-12 and 2012-13 respectively. 2. The only issue in this appeal of revenue is to be decided as to whether the CIT-A justified in allowing the claim of deduction of ₹ 43,85,379/- (A.Y 2011-12) ₹ 47,79,138/- (A.Y 2012-13) u/s. 80IA of the Act in the facts and circumstances of the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of infrastructure facility. The AO was of the view that the assessee JV ( Joint Venture ) received contractual amount of ₹ 15,04,45,674/- for the work done and derived net profit of ₹ 43,85,379/-. In the audit report as well as in the return of income the assessee JV claimed the same as deduction u/s. 80IA(4) of the Act. The AO further found that the assessee raised RA bills in accordance with the measurement and held that it is a work contract within the meaning of Explanation to section 80IA, which was substituted by the Finance Act 2009 and came into force w.e.f 1-4-2000 retrospectively. However, the AO considering the status of assessee as a works contractor the claim of deduction u/s. 80IA of the Act was disallowed and added the same to the total income of the assessee. 7. The assessee challenged the same before the CIT-A. The CIT-A after considering the submissions of assessee held that the assessee was not a works contractor as treated by the AO. The CIT-A was of the view that the assessee was a developer and as such Explanation to section 80IA(13) of the Act does not apply to the assessee. Therefore, the following the earlier order of the Kolkata Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of which is reproduced herein below:- the co-ordinate bench ITAT, Hyderabad B Bench, Hyderabad in the case of M/s. GVPR Engineers Ltd Ors in ITA Nos. 347/Hyd/2008 17 Others dated 29.02.2012, wherein in paras 26-29, it has been held as under:- 26. We have considered the elaborate submissions made by both the parties and also perused the materials available on record. We have also gone through all the case laws cited by both the parties. We find that the provisions of Section 801A (4) of the Act when introduced afresh by the Finance Act, 1999, the provisions under section 801A (4A) of the Act were deleted from the Act. The deduction available for any enterprise earlier under section 801A (4A) are also made available under Section 801A (4) itself. Further, the very fact that the legislature mentioned the words (i) developing or (ii) operating and maintaining or (iii) developing, operating and maintaining clearly indicates that any enterprise which carried on any of these three activities would become eligible for deduction. Therefore, there is no ambiguity in the income-Tax Act. We find that where an assessee incurred expenditure for purchase of materials hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 of property is handed over to the Government. The first phase is to take over the existing premises of the projects and thereafter developing the same into infrastructure facility. Secondly, the assessee shall facilitate the people to use the available existing facility even while the process of development is in progress. Any loss to the public caused in the process would be the responsibility of the assessee. The assessee has to develop the infrastructure facility. In the process, all the works are to be executed by the assessee. It may be laying of a drainage system; may be construction of a project; provision of way for the cattle and bullock carts in the village; provision for traffic without any hindrance, the assessee s duty is to develop infrastructure whether it involves con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... undertaking the development of infrastructure facility. Every agreement entered into is a contract. The word contractor is used to denote the person who enters into such contract. Even a person who enters into a contract for development of infrastructure facility is a contractor. Therefore, the contractor and the developer cannot be viewed differently. Every contractor may not be a developer but every developer developing infrastructure facility on behalf of the Government is a contractor. 9. The Co-ordinate Bench of this Tribunal in assessee s own case vide order dt.18-06-2013 supra considered the order in the case of ARSS Infrastructure Projects Ltd Vs. ACIT, Cir-2(1), Bhubaneswar in ITA Nos. 142,143/CTK/2010 483, 484/CTK/2011 dt. 13-06-2013 observed that when an assessee is doing contract work according to the requirement and specification of the customer and the same has been done by using materials purchased from third parties other than the customers and held that though the assessee is doing a works contract the same would not fall within the meaning of the word works contract for the purpose of the Act due to the exclusion provided in the meaning of work in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 also to make its arrangements for storage of the materials. This is as per article 107 of the agreement. Thus, admittedly the work done by the assessee falls in the exclusion provided to the meaning of the work given in the Explanation to section 194C of the Act. Once it falls outside the meaning of term work for the purpose of section 194C, the question that arises is can it be said that the assessee is doing the work contract as provided in the substituted Explanation in section 80IA after sub clause (13)?, The answer would be emphatic no. 12. This is because the assessee is doing the activity of development of an infrastructure facility as provided under section 80IA(4). The project is a Turnkey project and it cannot form nor have a character of a works contract. Works contract would be app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efined 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 inclusive definition but in the subsequent portion it has excluded the manufacturing or supplying a product according to requirement or specification of a customer by using material purchased from a person other than such customer. As has been specified by the Ld. AR, the assessee is doing contract work but that work is according to the requirement and specification of the customer and the same has been done by using materials purchase from third parties other than the customers. Thus, though the assessee is doing a works contract the same would not fall within the meaning of the word works contract for the purpose of the Act due to the exclusion provided in the meaning of work in section 194C of the Act. The issue raised by the Ld. CIT that the assessee is not doing the development work but ..... X X X X Extracts X X X X X X X X Extracts X X X X
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