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TMI Blog2017 (9) TMI 643X X X X Extracts X X X X X X X X Extracts X X X X ..... red in stating that the deduction u/s 80IA(4) may be claimed by the assessee for any ten consecutive assessment years out of fifteen years beginning from the year in which enterprise develops and begin to operate any infrastructural facility. Whereas such deduction is allowed for any ten consecutive assessment years out of twenty years in case of "Water Treatment System" as per proviso to section 80IA (2) r.w. Explanation to section 80IA(4). 4) The learned CIT(A) had erred in stating that the appellant carried out work in the nature of "contractor" and not in the nature of "developer". 5) The Learned Commissioner of Income Tax (Appeals) has erred in not appreciating all the facts that were filed before him as well as before the assessing officer. 6) The Learned Commissioner of Income Tax (Appeals) has erred in ignoring various judicial pronouncements which also support the stand taken by the assessee. 7) The Learned Commissioner of Income Tax (Appeals) has erred in not allowing proper & sufficient opportunity of being heard. 8) Each of the above grounds be considered as separate from the other grounds. 9) The appellant prays that: i) Deduction of claim of inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er found fault with assessee's claim for deduction under section 80 IA of the Act, primarily on the ground that activities carried out by the assessee did not fall for consideration under section 80 IA of the Act. Notably, section 80 IA(4)(i) of the Act, which is relevant for the present purpose, prescribes that the benefits of section 80 IA are available to any enterprise which is carrying on the business of (i) developing or (ii) operating and maintaining or (iii) developing, operating and maintaining any infrastructure facility. Furthermore, Assessing Officer also referred to the Explanation below section 80 IA(13) of the Act, which prescribes that nothing contained in section 80 IA shall apply in relation to a business referred to in sub-section (4), which is in the nature of a works contract. 3.1 The Assessing Officer was of the view that in the process of installation of water treatment plant by IOC, the assessee's role was limited only to the extent of designing of the system and supervision/installation of the system. According to Assessing Officer the water treatment plant supplied to IOC was merely designed by the assessee company as per the requirement of M/s. Indian Oi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... requirement Electrical requirement Instrument requirement Piping requirement Unit layout Criteria Special requirement Painting and protection Structure and Support Equipment Piping Inspection and Testing Commissioning Preparation of Checklist before start up Mechanical completion Pre- Commissioning Acceptance test and performance grantee Operability test Acceptance test Commissioning Reliability run Performance guarantee test Training 3 Technical aspects provided by appellant e.g proposed layout of the unit, designs for the proposed facility, specification of equipment's, piping materials, pumps etc required, data sheet for cabling, etc as a part of bidding process 179-180 4 Minutes of Meeting between IOCL and K-PACK dt. 15-16-17 July 2008 - Item - All Civil foundation design, drawings shall be provided by K- PACK, Item - O & M [ Operation and Maintenance] Manual to be provided by K- PACK in advance before Commissioning 238-239 5 Minutes of Meeting between IOCL and K-PACK dt.2.6-June 2008 -" All Pipes have to Pre-fabricated at K-PACK workshop, Only minor fabrication and Modification work to be done at Site 241-241 6 Minutes of Me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce on the judgment of the Hon'ble Bombay High Court in the case of CIT vs. ABG Heavy Industries Ltd.,322 ITR 323(Bom) for the proposition that carrying on of all the activities of developing, operating and maintenance of an infrastructure facility was not a must, and that even if the assessee was carrying on the business of only developing the infrastructure facility, it would be enough for the claim of deduction under section 80 IA(4) of the Act. In this context, reliance was also placed on the decision of Pune Tribunal in the case of Laxmi Civil Engineering Pvt. Ltd.vs.ACIT, ITA No.766/PN/09. 6. On the other hand, Ld. Departmental Representative has reiterated the stand of the Assessing Officer and pointed out that mere designing of the water treatment system would not entitle the assessee to be treated as a 'developer' for the purposes of section 80 IA(4) of the Act, and that assessee acted only as a 'contractor'. 7. We have carefully considered the rival submissions. The crux of the controversy in this appeal revolves around the issue as to whether assessee can be said to be carrying on the business of (i) developing or (ii) operating and maintaining or (iii) developing, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to touch upon the scope of work undertaken by the assessee in terms of the Tender agreement with IOC to examine whether assessee acted as a 'developer' or not. Notably, two contracts were awarded by IOC to the assessee for setting-up of infrastructure projects for DAF Units/Oil Skimmers (water treatment system). At pages 263 to 264 of the Paper Book are the relevant pages of the contract for the Digboi site, which clearly envisages assessee's scope of work as design, engineering, supply, transportation, supervision, installation, commissioning, guaranteeing and training of IOC's maintenance and operating personnel for the DAF system. Similarly for the Guwahati project, the relevant extract of the contract is at pages 413 to 414 of the Paper Book, which also elucidates assesssee's scope of work as Design, Supply, Installation and Commissioning of Oil Skimmer. 7.1 The Assessing Officer refused to accept the status of the assessee as developer on the ground that it was not doing the manufacturing activity, and it got the water treatment systems fabricated from other parties. In this context, it is undeniable that the responsibility of fabrication of the water treatment system was of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as outside the scope of work of the assessee. In our considered opinion, the relevant clauses clearly bring out that even the scope of work to be undertaken by IOC were to be undertaken as per drawing/specifications provided by the assessee. Therefore, in our view, the CIT(A) has also misdirected himself in inferring that assessee was merely executing a works contract as a contractor and not as a 'developer'. At this stage, we may also make a reference to clause 3.7 of the Part - III of contract for supply of DFA unit, which is contained in page 343 of the Paper Book dealing with Post Warranty Maintenance Contract. The said clause prescribes that assessee was obligated to make a separate offer to IOC for post-warranty maintenance of the system supplied by the assessee. The said clause itself indicates that assessee not only designed, engineered, got it fabricated and supplied the contract as a developer and was also providing warranty; and, in the post-warranty period, a separate offer was to be made. Therefore, factually speaking, we are unable to concur with the lower authorities that assessee was merely a 'contractor' and not a 'developer' so far as it relates to the water treat ..... 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