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TMI Blog2022 (11) TMI 226X X X X Extracts X X X X X X X X Extracts X X X X ..... iven by the CIT(A) as discussed and reproduced above. We also note the fact that the claim of deduction u/s. 80IA(4) of the Act by the assessee is for the eighth consecutive year and for the past seven preceding years, the claim of the assessee has been consistently allowed. From the tabulation given, we note that in the present case, deduction has been allowed for all the earlier assessment years and the Ld. AO has now sought to disallow the deduction for the eighth year which otherwise is allowable for consecutive period of ten assessment years. In the instant case before us, as there is no change in the facts and the applicable law, if the deduction has been allowed in the initial assessment years, the same cannot be withdrawn in the subsequent years without making disallowance in the initial assessment years. While confirming the allowance of deduction granted by the Ld. CIT(A), we also place reliance on the decision of the Hon ble jurisdictional High Court of Bombay in the case of ABG Heavy Industries Ltd.[ 2010 (2) TMI 108 - BOMBAY HIGH COURT] In respect of the addition confirmed by the Ld. CIT(A) and agitated by the assessee before us, we do not find any merit in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jects. For the year under consideration, assessee claimed a deduction of Rs.3,37,35,560/- u/s. 80IA of the Act and reported a total income of Rs.4,02,18,620/- in its return filed for the year. Ld. AO completed the assessment u/s. 143(3) of the Act by assessing the total income at Rs.7,39,54,180/-, wherein a disallowance u/s. 80IA of the Act amounting to Rs.3,13,38,250/- and an addition of income from other sources amounting to Rs.23,97,310/- was made. 4.2. In the course of assessment, assessee had submitted audit report in Form 10CCB for its claim of deduction u/s. 80IA of the Act and placed all the relevant details and documents on record to support its claim. It also submitted the activity wise profit and loss account and stated that assessee is in the 8th year of claim out of total 10 years with initial assessment year as AY 2007-08. The activity wise profit and loss account placed on record at page 23 of the paper book is reproduced as under: 4.3. Assessee submitted that the said deduction u/s. 80IA of the Act was allowed to it for all the preceding seven years. Aggrieved by the addition/disallowance, assessee went in appeal before the Ld. CIT(A). Before him, it was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers into a contract with another person would be a contractor no doubt, and the assessee having entered into an agreement with the Government agencies for development of infrastructure projects was obviously a contractor, but that did not derogate the assessee from being a developer as well. The term contractor is not essentially contradictory to the term developer . It was further stated that section 80IA(4) of the Act itself provides that assessee should develop the infrastructure facility as per the agreement with Central Government, State Government or local authority and, therefore, entering into a lawful agreement and thereby becoming a contractor should in no way, be a bar to the one being a developer. It was also furnished that contractors/consultants were paid by the assessee from time to time out of its own funds which were raised by it by way of share capital contributed by the Government, loans from financial institutions and banks. 4.7. It was also pointed out that Ld. AO was totally wrong in considering the loans taken by the assessee from M/s. EDC Ltd. as an agency of the Government. The correct fact in this respect is that M/s. EDC Ltd. is a financial institut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4.3. On perusal of the aforesaid decision, it is found that the facts of the case law cited by the AO are totally different from that of appellant s case and the AO has wrongly applied the said decision to impugned appellant. As the appellant had constructed new roads and bridges for Govt. of Goa thereby acted as developer and not as a Contractor. In support of the same, appellant has submitted copy of Tender Agreement before the AO as well as during appellate proceedings and I have also carefully gone through the terms and conditions of Tender Agreement. As per my considered view, a person, who enters into a contract with another person, would be a contractor no doubt however in the instant case the appellant having entered into an agreement with the Government agencies for development of the infrastructure projects, was obviously a contractor, but that did not derogate the appellant from being a developer as well. The term 'contractor' is not essentially contradictory to the term 'developer'. On the other hand, rather section 80-IA(4) itself provides that the assessee should develop the infrastructure facility as per the agreement with the Central Government, Sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t by the Finance Act, 1999 w.e.f. 01.04.2000 by noting that from AY 2002-03 deduction u/s. 80IA(4) of the Act is available to the assessee if it carries on business of any one of the three types of activities listed above in para 4.4 of this order. After discussing the three types of activities and the nature of developmental work carried on by the assessee, Ld. CIT(A) observed that merely because the assessee was paid by the Government for the development work, it could not be denied the deduction u/s. 80IA(4) of the Act. Further, on the aspect of treating the assessee as a contractor, Ld. CIT(A) after perusal of the material placed on record, found that all the contracts of the site which were handed over by the government bodies to the assessee for development of infrastructure facility and on completion of the same, were handed back to the concerned government department. He also observed that in few cases, after operation for certain period, the entire site with the infrastructure facility developed by it were handed over to the Government. Thus, by distinguishing the decision of Co-ordinate Bench of ITAT, Ahmedabad referred by the Ld. AO, Ld. CIT(A) placed reliance on the ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5,11,127 Empanelment of consultants 1,75,032 PES Licence fees 94,088 EMD forfeit 36,860 3,62,428 2362428 + 34883 = 23,97,310/- 5.2. On examination of the said details, it is found that the income earned which is rightly categorized as other income by the appellant is not directly emanating from development of eligible infrastructural projects. The AR of the appellant argued that the activities like sale of tender documents, processing fees, empanelment of consultants etc are relating to the infrastructural projects. However, as per the provisions of section 80lA of the Act, to qualify for deduction, the profits and gains have to be derived from eligible business alone which is development and maintenance of infrastructural facilities. None of the above sources of income are from the said eligible business though they may be distantly related to the said business. Moreover, the source of the income is not emanating from development of eligible infrastructural projects. Therefore, I agree wit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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