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TMI Blog2019 (3) TMI 470X X X X Extracts X X X X X X X X Extracts X X X X ..... - HELD THAT:- In view of the above discussion, we respectfully follow the proposition of law laid down by the co-ordinate bench of the ITAT in the assessee’s own case [2017 (3) TMI 1050 - ITAT KOLKATA] on the very same issue and uphold the order of the ld. CIT(A) that the assessee is eligible for deduction u/s 80-IA of the Act. As decided in assessee's own case the projects from Serial No. 1 to 2 have been considered as eligible projects for claim of deduction u/s 80-IA(4) by the Tribunal in the earlier Assessment Years. Only in the case of Kolkata Metro Rail Corporation at S. No. 7 and Bangalore Development Authority at S. No. 8, the projects were not considered earlier as to whether they are projects on which the assessee is eligible for deduction u/s 80-IA of the Act. On a query from the Bench, the assessee submitted that the details of the duties and responsibilities of the assessee company as a contractor have been place in the paper book. In our view, this needs to be examined by the Assessing Officer as the Assessing Officer has not considered the same. For the earlier Assessment Years 2011-12 & 2012-13, this Bench of the Tribunal under similar circumstances has restored ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sallowance made by the Assessing Officer, except disallowance on account of bogus purchases/sub-contract expenses. 3. Further aggrieved both the assessee as well as the revenue are in appeal before us. 4. We have heard Shri, S.K. Tulsiyan, the ld. Counsel for the assessee and Shri A.K. Nayak, the ld. CIT D/R on behalf of the revenue. On careful consideration of the facts and circumstances of the case, perusal of the papers on record, orders of the authorities below as well as case law cited, we hold as follows:- 5. We first take up the assessee s appeal in ITA No.1572/Kol/2017; Assessment Year 2011-12. 6. The sole issue that is agitated by the assessee is the disallowance of purchases and disallowances of sub-contract labour expenses on the ground that they are bogus. The Assessing Officer disallowed the purchases made by the assessee company from M/s. Brytex Industries M/s. Nikhil Enterprises on the ground that the same are bogus purchases. He also disallowed labour expenses paid to M/s. Supreme Constructions, M/s. Nova Constructions and M/s. Purnima Constructions. The assessee s case is that it is a professionally managed company and the top management is not involv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... commodation entries to M/s. Soma Enterprises and M/s. Navyuga Engineering, which are third party infrastructure companies, it cannot be stated that similar bogus accommodation entries were given to the assessee. He relied on a number of case-law and prayed that the disallowance be deleted. The ld. D/R, on the other hand, disputed the contentions of the ld. Counsel for the assessee and submitted that the Assessing Officer as well as the ld. CIT(A) have given very detailed reasons as to why the purchases in question and the labour payments in question were treated as bogus. He submitted that the Assessing Officer has not made the disallowance merely on the basis of information sent by the investigation wing. He pointed out that the activities of these persons were flagged by FIU (Financial Intelligence Unit) and during the course of search in M/s. Arya Group, one Shri Promod Kumar Singh, admitted that he has given bogus entries through his proprietary concerns. He submitted that the same was corroborated with the Maharashtra Sales Tax Department, which had declared these parties as hawala operators. He further pointed out that search and seizure operation was conducted by the depa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r banking channels (copy of bank statements are enclosed at pages 1- 04, 11-12, 23-24, 32-36, 44 of the paperbook). Thus there were high value frequent deposits made by the assessee in the accounts of those six parties for providing material and labour regularly at its construction sites. Further it needs to be noted that whether these six parties acted in concert with each other in order to supply materials and labour to the assessee or for any other purpose, is not the assessee s lookout. Aslong as the assessee got delivery of the required materials and labour from the said parties and made their due payments for providing the same, the assessee s obligation towards those parties ended. Thereafter no liability can be fastened on the assessee in consequence to any action of those six parties. It is common knowledge that in any business if a seller/supplier has shortage of a particular material at a particular time then they procure it from other known suppliers/sellers and supply to the buyer. Therefore, the allegation that they acted in concert to supply material and labour to the assessee has no relevance. Further, the fact that the bank accounts of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Corporation, Suraj Tube Corporation, Chanchal Tube Corporation, being declared Hawala by the Maharashtra Sales Tax Department cannot be a basis for declaring the assessee s purchases as bogus since the purchases were not made by the assessee from these four parties. Moreover, though it does not effect or concern the assessee in any way, it would like to submit that the fact that these parties were declared as Hawala Parties is an observation/declaration of a third party, i.e. the Maharashtra Sales Tax Department, which cannot be the sole basis for holding any transactions as bogus. 4 In case of search in one Soma Enterprises and Navyuga Engineering of Hyderabad, both the concerns admitted to taking accommodation entries from the six parties, from whom the assessee purchased labour and materials during the relevant A.Y. In this regard it is submitted that the assessee made payments to the six parties for supply of materials and sub contract of labour provided at its various sites. All the payments for such purchases were backed by relevant documents. The said two parties having admitted to taking accommodation entries f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The assessee while placing orders with the six parties for supply of materials and labour contracts were provided with their respective bank accounts for the purpose of making payment. Thereafter, the assessee was not concerned about how and for what other purpose the six parties were using their bank accounts. Also, even for the sake of argument if it is accepted that the said six parties were providing accommodation entries and hence received payments from several parties, it cannot be said that the deposits received by them from the assessee for labour contract and supply of materials were bogus as the said purchases are backed by relevant documents. Further the fact that the accounts of the six parties were opened from addresses located in Kurla (West), which are in close vicinity to one another cannot be a basis to doubt the purchases made by the assessee. Though, it is not the assessee s lookout as to in which branch of a particular bank, its suppliers and contractors bank accounts rested but still the assessee would like to submit that the bank where the bank accounts of the six parties existed was ICICI Bank, Bandra Kurla Complex, Mumbai and their addresses ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supposed to make payments in return of supply of materials and labour, which it had accomplished successfully. Thereafter, the assessee was under no obligation to keep knowledge/track about the further treatment or movement of those payments made by it. Further, although it does not affect the assessee s purchases in any way but still the assessee would like to mention that the proprietors of the five concerns (out of the six), in their statements given u/s 131 of the Income tax act, 1961 (enclosed at pages 106 to 150 of the paper book) have mentioned that they knew each other and transferred funds to each other sometimes on temporary basis because of mutual relations and also hired labour from each other when required, in return of due payment. They would also take supply of labour from other parties to supply to the assessee or other clients in return of due payment to them. Thus payment by the said parties to each other or other parties can be because of any of the said reasons. It definitely does not imply or prove that the assessee had been transferring funds to the six parties for routing the same through a web of bank accounts and receive the funds back again by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e mentioned places at the same time by one single person which definitely is not feasible. Above all, it is not the assessee s liability as to how cash payment is transferred to labourers working at the project sites by the said suppliers/subcontractors as long as the assessee s requirement of materials/labour at its project site is supplied and the assessee makes due payment in return. Therefore, observation by the Ld. AO on this account cannot be a basis to fasten liability on the assessee of having made bogus purchases. 10 The Ld. AO alleged that the assessee being a company with a turnover exceeding ₹ 5,500 Crore, would have a completely professional system of hiring labour contractors and suppliers of material for quality construction and would not appoint labour contractors who are individuals located only in Mumbai for the purpose of supplying at its various sites, all over the country. In this regard, the assessee would like to submit that it having a professional system of hiring labour contractors and suppliers of material for quality construction does not cease to exist if such suppliers/labour c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unds were transferred by the assessee and that comprising of amounts below ₹ 10,00,000/- and not ₹ 10,00,000/- or above. In this regard, once again the assessee would like to submit that post payment made by it to the labour contractors and material suppliers for supply of labour and material at its construction sites, it was not the assessee s concern or duty to keep a track as to the amount of money withdrawn by the said contractors and suppliers. The said contractors and suppliers having withdrawn amounts below ₹ 10,00,000/- thus, does not concern the assessee in any way since post payment it is their money and when and how such money is to be withdrawn and its further utilization is not the assessee s domain. It is also not clear as to what was the reason of the benchmarking of ₹ 10 lakhs by the Ld. AO since under Income Tax Act, no such benchmarking prevails. 13 The Ld. AO held that the said six parties knew each other and the high frequencies of cheque movement amongst themselves through their respective bank accounts prove that they were acting in concert to provide accommodation entries to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... activities conducted by it cannot be linked to the purchase of labour and materials made by the assessee from Supreme Construction. Whether and how the proprietor of Supreme Construction paid wages, how and when it employed labourers, how many among them were permanent etc does not have any nexus with the assessee giving sub contract of labour to Supreme Construction and making payment to it for the same. The said activities does not concern the payments made by the assessee for giving sub contract of labour to Supreme Construction in any way. Further, without prejudice to the above, the assessee would like to submit that the Ld. AO has raised a doubt regarding contradiction in Supreme Construction s proprietor s statement regarding payment of labour wages in the F.Y. 2009-10whereas the instant case of the appeal is concerning the A.Y. 2011-12. Hence, the same cannot be linked with the assessee s purchases made in the relevant A.Y. The relevant documents supporting such purchase from Supreme Construction is enclosed at pages 11 to 22 of the paper book. 16. The Ld. AO alleged that there has been contradictions in the statement gi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed from third parties without granting an opportunity to the assessee to cross-examine these parties. The assessee in our view has discharged the burden of proof that lay on it in proving the genuineness of the transactions. The behaviour of the suppliers is not in control of the assessee. When the assessee produces direct evidence, it cannot be rejected based on inferences drawn from some other transactions of the suppliers. These leads should have been taken to the logical conclusion and direct evidence obtained against the assessee. Unlike in other cases, these persons have confirmed the transaction. The evidence produced is not controverted by the revenue. 9. Further on the observations made by the ld. CIT the assessee replied to the same as follows:- Sl.No. observations of the Ld. CIT Reply of the Assessee Company 1. On a perusal of the statements of the five persons following point emerges: Although they got orders from big and established companies, but they were not selected through any tenders. All of them claimed to have started business aroun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were supplied as per its requirements. As regards claiming of expenditure on account of travelling expenses by the said six parties, it is submitted that the assessee is not concerned whether they have claimed travelling expenses as business expenditure or not. It is a part of the assessment proceedings of the six parties and the Ld. A.O. should examine the same in their assessment and the same should not be linked with the assessee s claiming of genuine purchases and labour expenses in its books of accounts. Hence the allegations put forthwith by the Ld. CIT on the basis of the statements of the five parties are baseless and is devoid of any merit. 2. Assessee s contention that Ld. A.O. treated assessee s purchase from six parties as bogus on the basis of information accumulated by him in case of third parties, is not correct. A.O. has applied his mind to the facts gathered, recorded statements of the suppliers, pointed out discrepancies in their statements and has established that these parties were not capable of providing any services/materials. In the process of establishing that the six parties were not involved in any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tarala R Shah in ITA No. 5295/Mum/2013 Reason: The Ld. A.O. has not solely relied on information supplied by Sales Tax Department. It is just one of the circumstantial evidences. A.O. has mentioned discrepancies in statement, searches in other group and confessional statement of one of the entry givers before arriving at the conclusion. i. In the case of the assessee company, the Ld. A.O. has jumped to the conclusion and held that the purchases and labour expenses claimed by the assessee company is bogus based on the information gathered from outside agencies. The Ld. A.O. has not brought on record any concrete material to prove that the contract for the purchases and supply of labour entered with the said six parties is ingenuine. The assessee company had produced all the necessary evidences to prove the genuineness of the transactions of the assessee company with the said six parties. The Ld. A.O. as well as the Ld. CIT has not doubted any documents placed on record. Transactions are backed by proper evidence. The conclusion drawn by the Ld. A.O. as well as the Ld. CIT(A) is totally based on surmises and conjectures. There is no direct connection ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atements recorded u/s 131 of the Act during the course of survey proceedings. The Ld. A.O. as well as the Ld. CIT have neither placed any material on record to doubt the genuineness of the transactions nor had given proper opportunity to the assessee to cross examine the statements given by the proprietors of the said six concerns. Under this situation, merely on the basis of surmises and conjectures, the genuineness of the transactions entered into by the assessee company with the said six concerns cannot be doubted. 5. Assessee is a well established and a very reputed company. Keeping in mind its brand name, it is an important issue whom it does business with. Any rational/prudent business man of the stature of assessee would not give business to some person who has no experience. Further business should not be given on reference of inconsequential persons like scrap dealers. These parties did not even have bank account when they were shortlisted for doing work. These persons were not filing any return of income. Any rational/prudent business man of the stature of assessee would not associate with such parties in the normal course of bus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he allegation of the Ld. CIT(A) that assessee company did not produce any evidence regarding contract entered into between SAIL (PSU) and Nova Construction, it is submitted that it is the personal property of the concern (Nova Construction) and not of the assessee company. Assessee company has nothing to do with the said evidence. It is on the part of the Department to extract the said evidence from Nova Construction and not from the assessee as the said document does not belong to the assessee company. Thus on the basis of the above it is submitted that the allegations of the Ld. CIT(A) that the transactions with the said parties is in genuine is completely wrong and baseless. 9.1. The ITAT Mumbai Bench of the Tribunal in the case of Hiralal Chunnilal Jain vs. ITO, ITA No. 4547/Mum/2014, held as follows:- 5. We have heard the rival submissions and perused the material before us. We find that the AO had received information from the investigation wing of STD, Maharashtra that the assessee was one of the beneficiaries of accommodation entries, that Shiv Sagar the supplier of the goods was one of the entities who had admitted to have bogus bills, that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R 422 (Cal) The Hon ble Punjab and Haryana High Court in the following cases has also laid down similar propositions of law:- CIT vs. Faqir Chaman Lal reported in 262 ITR 295 (P H) CIT vs. Ram Narain Goel reported in 224 ITR 180 (P H) 10. In our view, the assessee has discharged the primary burden that is cast on it to prove the genuineness of these transactions. The Assessing Officer as well as the ld. CIT(A), in our opinion, have not come out with irrefutable proof to negate the evidences submitted by the assessee. It is not the case of the revenue that the standard operating procedure laid down by the assessee s head office was violated by the site office nor that the procedure and documentation was not correct . The entire disallowance is made on suspicion and probabilities. These cannot take the place of evidence. Under these circumstances, applying the propositions of law laid down in the above referred caselaw, we uphold the contentions of the assessee and delete the addition made herein. 11. We now take up the revenue s appeal in ITA No. 1764/Kol/2017. 12. Ground No. 1, is against the deletion of the disallowance of deduction claimed u/s 80- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bour. The appellant in the given case was to procure raw material, make arrangements for power, water, plant machinery, obtain statutory clearances etc., and conduct all the other activities needed for construction to bring into existence an infrastructure facility. Further it was exposed to various risks like risk of damage of property, risk of accidents etc. therefore, having regard to the fact, and emerging legal position, in my view, the Assessing Officer was not justified in holding that the appellant company was merely executing works contract and therefore it was not entitled for the tax holiday benefit under section 80-IA(4) of the Act. It my also be noted here that in the case of Patel Engineering Ltd. V. CIT [2004] 84 TTJ (Mum) 646, the Mumbai Bench of the Tribunal has held that the enterprise must carry on the business of (a) developing, or (b) maintaining and operating or (c) developing, maintaining and operating any infrastructure facility. It is not necessary that the entire infrastructure project is to be developed by one enterprise. In another case of CIT v. Bharat Udyog Ld. [2008] 24 SOT 412 (Mum), it has been held that if an assessee is engaged in de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act applies to the enterprise carrying on the business of (i) developing or (ii) operating and maintaining or (iii) developing, operating and maintaining any infrastructure facility which fulfils all the following conditions, namely :- (a) It is owned by a company registered in India or by a consortium of such companies or by an authority or a board or a corporation or any other body established or constituted under any Central or State Act; (b) It has entered into an agreement with the Central Government or a State Government or a local authority or any other statutory body for (i) developing or (ii) operating and maintaining or (iii) developing, operating and maintaining a new infrastructure facility; (c) It has started or starts operating and maintaining the infrastructure facility on or after the 1st day of April, 1995. Provided that where an infrastructure facility is transferred on or after the 1st day of April, 1999 by an enterprise which developed such infrastructure facility (hereafter referred to in this section as the transferor enterprise) to another enterprise (hereafter in this section referred to as the transferee enterprise) for the pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 subsection (1). From a plain reading of the above it is clear that deduction u/s 80-IA does not apply to works contract. Now the relevant question arises before us for adjudication is that what constitutes a works contract. Section 80-IA nowhere defines the term works contract , hence the natural meaning of the word shall apply. As per the Oxford dictionary the term work means application of effort to a purpose or use of energy. Thus going by the dictionary meaning we may say that a works contract is a contract which involves effort or in other words labour of the contractor. Further as per the Black's Law Dictionary, the term work means labour or in other words physical and mental exertion to attain an end esp. as controlled by and for the benefit of the employer. Thus as per Blacks's Law also a works contract is a labour contract under which the contractor merely employs his labour as per the directions of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to therein expressly includes supply of labour to carry out a work. It is a clear indication of the Legislature that the work in the sub-section is not intended to be confined to or restricted to works contract . The issue before the Supreme Court in the aforesaid case was whether the term work used in section 194C needs to be restricted to works contract . The Apex Court laid out that the term work used in section 194C need not be restricted to works contracts (i.e. labour contracts) because the sub- section expressly includes supply of labour to carry out work. In other words, it is implied that works contract means supply of labour to carry out work. Thus from the above we may say that a works contract constitutes a contract under which the contractor is merely employing his efforts or labour. Under such a contract, the contractee provides the material and other requisites (a complete infrastructure) needed to carry out the desired work to the contractor who by applying his labour to the said material turns the material into a desired product. Further, attention is invited to the memorandum explaining the provisions in the Finance Bill, 2007, reported in [2007] 289 I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wered is whether the assessee is a developer or mere works contractor. 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 works contract or for development of infrastructure. It is to be seen from the agreements entered into by the assessee with the Government. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the persons who merely execute the civil construction work. It categorically states that the deduction under section 80IA of the Act is available to developers who undertakes entrepreneurial and investment risk and not for the contractors, who undertakes only business risk. Similarly the Chennai Bench of Tribunal in case of R.R. Constructions, Chennai vs Department Of Income Tax 2013) 35 CCH 0547 Chen Trib (2015) 152 ITD 0625 (Chennai) held that when the assessee makes investment and himself executes development work and carries out civil works he is eligible for tax benefit u/s 80IA of the Act. Accordingly, with the foregoing discussion, we hold that the assessee is entitled to deduction u/s 80IA(4) of the Act, and therefore, we order to delete the addition made in this respect Thus, the memorandum explaining the provisions in the Finance Bill, 2007, further strengthens the contention of the assessee that a works contract is a contract which involves mere labour of the contractor. However, if under a contract, the contractor employs his capital and enterprise in addition to labour, then the said contract does not constitute a works contract under the Explanati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bench, the contention of the AO is not valid. Further, merely because the assessee was receiving payments from the Government in progress of work it cannot be said that the projects were financed by Government. In this regard it is pointed out that under sub-section 4 of section 80-IA, deduction is available to a developer, i.e. if, an assessee, merely develops the infrastructure facility without operating and maintaining the same, it is entitled to deduction. The Bombay High court in case of Commissioner of Income-tax v. ABG Heavy Industries Limited [322 ITR 323] observed that Parliament amended the provisions of section 80-lA of the Act so as to clarify that in order to avail of a deduction, the assessee could (i) develop ; or (ii) operate and maintain ; or (iii) develop, operate and maintain the facility. The condition as regards development, operation and maintenance of an infrastructure facility was contemporaneously construed by the authorities at all material times, to cover within its purview the development of an infrastructure facility under a scheme by which an enterprise would build, own, lease and eventually transfer the facility. This was perhaps a practic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4) has become available to any enterprise carrying on the business of (i) developing, or (ii) maintaining and operating, or (iii) developing, maintaining and operating any infrastructure facility. Sub-cl. (c) of cl. (i) of s. 80- IA(4) is obviously applicable to an enterprise which is engaged in 'operating and maintaining' the infrastructure facility on or after 1st April, 1995. It is not applicable to the case of an enterprise which is engaged in mere 'development' of infrastructure facility and not its 'operation' and 'maintenance'. Therefore, the question of 'operating and maintaining' of infrastructure facility by such enterprise before or after any cut off date cannot arise. However, if the contention of the Departmental Representative is accepted, it would obviously/understandably lead to manifestly absurd results. When the Act provides for deduction undisputedly for an enterprise who is only 'developing' the infrastructure facility, unaccompanied by 'operating and maintaining' thereof by such person, there cannot be any question of providing a condition for such an enterprise to start operating and maintaining the infra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evelopment' as such and unassociated/ unaccompanied with 'operate' and 'maintenance' also falls within such business activity as is eligible for deduction under s. 80-IA. Therefore, merely because the present assessee was paid by the Government for development work, it cannot be denied deduction under s. 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 . On the other hand, rather s. 80- IA(4) itself provides that assessee should develop the infrastructure facility as per agreement with the Central Government, State Government or a local authority. So, entering into a lawful agreement and thereby becoming a contractor should, in no way, be a bar to the one being a developer. Therefore, merely because in the agreement for development of infrastructure facility, assessee is referred to as contractor or because some basic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (4), which is not the intention of the law. An enterprise, which develops the infrastructure facility is not paid by the Government, the entire cost of development would be a loss in the hands of the developer as he is not operating the infrastructure facility. The legislature has provided that the income of the developer of the infrastructure project would be eligible for deduction. It presupposes that there can be income to developer i.e. to the person who is carrying on the activity of only development infrastructure facility. Ostensibly, a developer would have income only if he is paid for the development of infrastructure facility, for the simple reason that he is not having the right/authorization to operate the infrastructure facility and to collect toll there from, has no other source of recoupment of his cost of development. The Indore Bench of the Tribunal in case of Sanee Infrastructure Pvt. Ltd. vs. ACIT [138 ITD 433] held that As per our considered view, after amendment by the Finance Act, 2002 for claim of deduction u/s 80IA(4) infrastructure facility is only required to be developed and there is no condition that assessee should also operate the same. Thus, af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igation to design the project, it is another aspect that such design has to be approved by the owner of the project, i. e. the Government in the present case. (f) That he has not only to execute the construction work in the capacity of a contractor but also he is assigned with the duty to develop, maintain and operate such project. (g) That to ascertain whether a civil construction work is assigned on development basis or contract basis can only be decided on the basis of the terms and conditions of the agreement. Only on the basis of the terms and conditions it can be ascertained about the nature of the contract assigned that whether it is a work contract or a development contract . (h) That in a development contract responsibility is fully assigned to the developer for execution and completion of work. (i) That although the ownership of the site or the ownership over the land remains with the owner but during the period of development agreement the developer exercise complete domain over the land or the project. That a developer is not expected to raise bills at every step of construction but he is expected to charge the cost of construction plus mark-up of his profit from th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aulty working done by the contractor or substandard material used by the contractor. Further, it is also mentioned in the contract agreement that the assessee shall not claim for any loss due to foreseen circumstances, including suspension of work due to cause. It is also provided that in the event of accident to people employed by the assessee resulting in compensation to be paid as per the Workmen's Compensation Act the same shall be paid by the contractor, viz. the assessee only. In view of the various specific clauses in the agreement fastening the risks to be undertaken by the assessee, discussed above, it cannot be said that the assessee has not undertaken any risk. 6.8 From the above, it is clear that the contention of the AO that the assessee had not undertaken any entrepreneurial and investment risk is an incorrect interpretation of the facts. Lastly, with regard to the project O M, Bangalore (on which a deduction of ₹ 35,16,9411- was claimed), it is submitted that it is an operation and maintenance project, to which Explanation to section 80-IA(13) does not apply. Explanation to section 80- IA(13) merely distinguishes between a developer and works contract ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment Year 2011-12, that the assessee claimed deduction of ₹ 54,73,47,509/- u/s 80-IA of the Act, in respect of the following projects:- Sl.No. Name of the projects Contract Number Deduction Claimed (Rs) Remarks 1. Public Works Department, New Delhi 2401 and 2407 8,14,00,294 Already allowed by Hon ble ITAT, Kolkata 2010-11 2. Delhi Metro Rail Corporation 2418 2,83,51,702 Already allowed by Hon ble ITAT, Kolkata in A.Y. 2010-11 3. Kolkata Municipal Corporation 2067-68 1,05,01,342 Already allowed by Hon ble ITAT, Kolkata in A.Y. 2010-11 4. Hyderabad Metropolitan Water Supply and Sewerage Board 2303 4,88,12,831 Already allowed by Hon ble ITAT, Kolkata 2010-11 5. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccepted the contention of the assessee and granted deduction u/s 80- IA (4) of the Act, except a small portion of ₹ 11,93,413/-. Consistent with the view of the Tribunal in the earlier Assessment Years, we set aside the issue of grand of deduction u/s 80-IA(4) of the Act, to the Assessing Officer, on the following projects:- 1) Kolkata Municipal Corporation 2) Bangalore Development Authority As regards deduction claimed on all other six projects at S. No. 1 to 6 in the table above, we uphold the order of the ld. CIT(A). 13. In the result, Ground No. 1 of the revenue is allowed in part. 14. Ground No. 2, is on the disallowance made u/s 14A of the Act. 14.1. The ld. CIT(A) applied the decision of the Hon ble ITAT Kolkata in the case of REI Agro Ltd. vs. DCIT, CC-XXVII; ITA No. 1331/Kol/2011; which was upheld by the Hon ble Jurisdictional High Court and directed the Assessing Officer to restrict the disallowance u/s 14A of the Act, to ₹ 55,565/-. As the ld. CIT(A) has applied the decision of the Jurisdictional Tribunal, which was later upheld by the Hon ble High Court we find no infirmity in the same. Ground No. 2 of the revenue is dismissed. 14.2. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ipal Corp 2339 1,53,70,937 Already allowed by Hon ble ITAT, Kolkata in A.Y. 2010-11 3. Bangalore Development Authority 2463 99,79,770 New Project started in A.Y. 2011-12. Agreement enclosed at pages 80-140 with the paperbook of A.Y. 2011-12 4. Kolkata Municipal Corporation 2578 25,84,151 New Project [agreement enclosed at pages 1-97 of the paperbook] Total 13,06,52,598 21.1. As regards National Highway Authority of India and Indore Municipal Corporation, the deduction, in our view has been rightly allowed by the ld. CIT(A) as it has followed the order of the Tribunal in the assessee s own case on the very same issue for the earlier Assessment Years. Consistent with the view taken based on the same issue for the Assessment Year 2011-12, we uphold the order of the ld. CIT(A) to the extent of these two projects. 22. Coming to the claim of the deduction u/s 80 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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