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TMI Blog2021 (9) TMI 101X X X X Extracts X X X X X X X X Extracts X X X X ..... s contract except the allegation that there was no agreement between the assessee and the Government of Gujarat, Road Building Department. As such, in the absence of agreement between the assessee and the Government of Gujarat, Road Building Department, the Principal CIT assumed that the assessee was acting as the works contractor. However, the finding of the learned Principal CIT is not correct in the light of the above discussion. Whether the assessee is acting as a works contractor or a developer as provided under explanation to section 80IA(4) of the Act is the debatable issue - once the AO has taken a view that the assessee is eligible for deduction 80IA(4) of the Act, the view taken by the AO is one of the possible view. Thus on this reason as well the order of the AO cannot be termed as erroneous insofar prejudicial to the interest of revenue - order passed by the learned Principal CIT is not sustainable and liable to be quashed - Decided in favour of assessee. - ITA No. 219/Rjt/2016 - - - Dated:- 31-8-2021 - SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND Ms MADHUMITA ROY, JUDICIAL MEMBER Assessee by : Shri M.J. Ranpura, A.R Assessee by : Shri Om Prakash Sin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. (AIPL) and M/s Narnarayan Infrastructure Pvt. Ltd. (NIPL) which came into existence vide agreement dated 7th March 2009. The joint-venture /partnership firm was formed for applying the E-tender invited by the Government of Gujarat Road Building Department vide notice dated 12th February 2009 for the construction of bridge. M/s AIPL was the lead partner and the tender was accordingly applied. Finally the tender was accepted and project was awarded vide letter dated 12th June 2009 in the name of M/s AIPL being the lead partner. 4.1 Subsequent to the allotment of the project, both AIPL and NIPL in order to give more legal validity to joint venture and for the purpose of accounting, both of them formed a partnership firm dated 4th November 2009 but the same was effective from 12th June 2009. 4.2 During the year the assessee earned a profit of ₹ 60,91,542/- from the said project which was claimed as deduction u/s section 80IA(4) by it being a developer of Infrastructure facility in the return of income filed for the year under consideration. The claim of the assessee was accepted by the AO in assessment framed under section 143(3) of the Act vide order dated 16th Septem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the possible view after applying his mind and therefore his finding cannot be termed as erroneous insofar prejudicial to the interest of revenue. 4.7 However, the learned Principal CIT disagreed with the contention of the assessee by holding that there was no agreement between the assessee and the Government of Gujarat. As such the project was awarded to AIPL. Subsequently, AIPL has entered into an agreement with NIPL to create the partnership firm for execution of the work. Therefore, the assessee being a partnership firm has only executed the work in the capacity of works contractor which was actually allotted to AIPL. Accordingly the learned PCIT concluded that the assessee is not eligible for deduction under section 80IA(4) of the Act being acting in the capacity of works contractor. Thus the learned PCIT set aside the finding of the AO and directed to make fresh assessment after giving a reasonable opportunity of being heard to the assessee as per the provisions of law. 5. Being aggrieved by the order of the learned Principal CIT, the assessee is in appeal before us. 6. The learned AR before us filed a paper book running from pages 1 to 157 and contended that the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... insofar prejudicial to the interest of revenue on the ground that the assessee is acting as a works contractor and not the developer. The view of the learned PCIT was based on the fact that there was no agreement between the assessee and the Government of Gujarat which is one of the prerequisite for claiming the deduction under section 80IA(4) of the Act. 8.1 Admittedly, the project was awarded by the Government of Gujarat office of Executive Engineer, Valsad (Road and Building Department) in the name of M/s AIPL vide letter dated 12th June 2009. The copy of the said letter is placed on pages 69 to 70 of the paper book and translated copy at pages 28 to 29 in the synopsis of argument. However, we note that there was change in the contract subsequently. There was the clarification issued by the above mentioned office vide letter dated 27th August 2009 that the contract awarded in the name of M/s AIPL shall be considered in the name of the assessee. The copy of the said clarification letter is placed on pages 71 to 72 of the paper book and translated copy at pages 32 to 33 in the synopsis of argument which reads as under: With reference to above mentioned subject the tender f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the assessee is acting as a works contractor or a developer as provided under explanation to section 80IA(4) of the Act is the debatable issue. Thus, once the AO has taken a view that the assessee is eligible for deduction 80IA(4) of the Act, the view taken by the AO is one of the possible view. Thus on this reason as well the order of the AO cannot be termed as erroneous insofar prejudicial to the interest of revenue. 8.6 We have perused the notice issued by the AO under section 142(1) of the Act raising the queries to the assessee on the allowability of the deduction under section 80IA(4) of the Act. The copy of the notice is placed on pages 136 to 138 and 142 to 143 of the paper book and the relevant question reads as under: 19. On verification of the statement of income, it is noticed that you have claim deduction u/s.80IA of the I.T Act. The deduction u/s.80IA is available to the assessee who undertakes the work of developing or operating and maintaining or developing, operating maintaining any infrastructure which fulfills the conditions mentioned in the Sub-section (4) of Section 80IA. Further, the meaning of the infrastructure facilities for the XXXXXXXXXXX ..... X X X X Extracts X X X X X X X X Extracts X X X X
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