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TMI Blog2012 (10) TMI 1255X X X X Extracts X X X X X X X X Extracts X X X X ..... r the assessee fulfilled the conditions laid down u/s. 80IA of the Act read with Explanation below section 80IA(13) of the Act. 5. We have heard both the parties and perused the material on record. Admittedly, the same issue came for consideration before this Tribunal in assessee's own case in ITA No. 1292/Hyd/2010 for A.Y. 2007-08. The Tribunal vide order dated 27.8.2012 held as follows: "22. We have heard both the parties and perused the material on record. In our opinion, this issue came for consideration before this Tribunal in the case of M/s. Koya & Co. Construction (P) Ltd. v. ACIT, 51 SOT 203 (Hyd) (URO) wherein the Tribunal held as follows: "24. … We find that the provisions of Section 80IA (4) of the Act when introduced afresh by the Finance Act, 1999, the provisions under section 80IA (4A) of the Act were deleted from the Act. The deduction available for any enterprise earlier under section 80IA (4A) are also made available under Section 80IA (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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ature 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. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agreement is a contract and for the purpose of the agreement a person may be called as a contractor as he entered into a contract. But the word "contractor" is used to denote a person entering into an agreement for 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. 28. We find that the decision relied on by the learned counsel for the assessee in the case of CIT vs. Laxmi civil Engineering works [supra] squarely applicable to the issue under dispute which is in favour of the assessee wherein it was held that mere development of a infrastructure facility is an eligible activity for claiming deduction under section 80IA of the Act after considering the Judgement of the Mumbai High Court in the case of ABG Heavy Engineering [supra]. The case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ements. ii) Design and manufacturing of pipe fittings or specials ii) Transporting, Laying and Joining of pipes conforming with specifications. The activity involves earth work excavation, trench excavation, hard rook blasting, lowering and laying of pipes, fitting of specials, fitting of rubber rings at the joints, testing pipe joints and pipeline. iii) Construction of pump house, providing and fitting of pump sets. Supply and fitting of submersible pumps, centrifugal pumps, turbine pumps, submersible motors, motors for turbines and centrifugal pump sets, transformer, generator, panel boards etc. iv) Design and construction of raw water pumping stations, water treatment plant, treated water pumping station, treated water transmission main, construction of surge tank and pipe connection arrangement, booster stations, internal transmission main and feeder mains, construction of service reservoirs and master reservoirs. v) Mobilisation of labourers, [preparation of plans technical expertise, supervision, co-ordination and control, set up manufacturing facility nearby the project site to manufacture project specific pipes as per the required specifications which requires wel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd., in ITA No. 2287/Mds/06 order dated 27th July, 2007 for the assessment year 2004-05. Later in ITA No. 1179/Mds/08 vide order dated 26th February, 2010 the Tribunal has taken the same view. …" 23. In the case of GVPR Engineers Ltd. v. ACIT, 51 SOT 207 (Hyd) (URO) wherein the Tribunal held that deduction u/s. 80IA is available to developers who undertake entrepreneurial investment risk and not for the contractors, who undertake only business risk. Without any doubt, the assessee clearly demonstrated that the plant and machinery, technical know-how, expertise and financial resources. Therefore, if the contracts involve design, development, operation & maintenance, financial involvement and defect correction and liability period, then such contracts cannot be called as simple works contract, to deny the deduction under section 80IA. The contracts which contain above features to be segregated have to be granted deduction under section 80IA and the other agreements which are pure works contracts hit by the Explanation to section 80IA(13) are not entitled for deduction under section 80IA. The profit from the contracts which involve design, development, operating & maintenan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in a position to express any opinion on the nature of activities carried on by the assessee. The lower authorities had no occasion to examine the nature of activities carried on by the assessee. Being so, in our opinion, it is appropriate to remit the issue back to the file of Assessing Officer for fresh consideration. While doing so, the Assessing Officer has to see whether the assessee carried on contract for sale or contract for work and the applicability of Explanation below section 80IA(13) of the Act. The Assessing Officer is directed to examine the terms of contract including the nature of obligation to be discharged by the assessee while executing the contract. For claiming deduction u/s. 80IA(4) the assessee shall satisfy the two conditions viz., investment in eligible projects and (2) execution of project by itself. If the assessee satisfies the above conditions and the above Explanation if not applicable then only the assessee is entitled for deduction u/s. 80IA(4) of the Act. With this observation, we remit the entire issue back to the file of the Assessing Officer for fresh consideration and to decide in accordance with law." 7. In view of the above order of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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