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TMI Blog2024 (5) TMI 213X X X X Extracts X X X X X X X X Extracts X X X X ..... f bridges, roads, Road over bridges , flyovers , water intake well, etc. Thus, it is all the more necessary to analyse as to the role and responsibilities of the assessee in execution of these projects and other parameters as culled out above, in order to arrive at conclusive finding whether the assessee has created a new infrastructure facility as a Developer or have undertaken a contract work to execute work order as a Contractor. We could have decided the issue ourselves as these appeals are old appeal pending for almost 7-10 years, but the material filed before us vide paper books are not sufficient for us to decide the issue . Even evidences such as tender documents, agreements with the Government for executing the work, details of the work executed vis- -vis creation of new infrastructure facility created, PERT chart, financial statements, Men, material and machines deployed by the assessee , the roles and responsibilities performed by the assessee, details of deployment of funds, details of statutory clearances obtained , penal provisions in the agreements etc. were all not provided in the paper book filed by the assessee. The brief summary of the project is submitted which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case the ld. CIT(A) ought to have upheld the order of the Assessing Officer. It is therefore prayed that the order of the learned CIT(Appeals) may be set aside and that of the A.O. be restored to the above extent. 4. The brief facts of the case are that the assessee is engaged in the business of Civil Construction. The assessee filed return of income electronically on 30.09.2009 declaring income of Rs. 35,90,260/- . The assessee has claimed deduction under section 80IA(4) of the Act , to the tune of Rs. 1,87,70,901/-. The case of the assessee was selected by Revenue for framing scrutiny assessment u/s 143(3) read with Section 143(2) of the 1961 Act. The AO has claimed to have issued and served statutory notices to the assessee u/s 143(2) and 142(1) of the 1961 Act. The assessee was asked by the AO to explain as to fulfillment of different conditions for eligibility of the claim of deduction under section 80IA(4) of the Act. The assessee submitted that it has carried out the business as developer for the infrastructure activity as mentioned in Section 80IA(4) of the Act and the assessee has not undertaken work contract as Contractor. The assessee drew attention of the AO to the ter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... undertaking or enterprise referred to in sub-section (1). 4.4 The AO rejected the contentions of the assessee by holding that deduction under section 80IA(4) is not available to a business which is in the nature of work contract. The assessee works as Contractor. It filed tender for the particular work and on acceptance of its tender, particular work order was awarded to it. That particular order is then executed by the assessee on the terms and conditions of the order stipulated by the authority granting such work order. The AO referred to the subject matters of the letters awarding such work contract , and observed that the assessee works as Contractor and execute the work orders awarded on approval of its tender. Few of such letters containing subject matters of the letters, awarding such work contract in favour of the assessee are reproduced by the AO in its assessment order at page no. 7-10. The AO observed that the assessee is merely a Contractor who executes work orders as a Contractor awarded to it by approval of its tender. The AO also referred to provisions of Section 80IA(4)(i) to hold that the deduction under section 80IA(4) is allowable on the profit and gains derived ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 80IA(4). The AO observed that separate project-wise report is required as per sub-clause 2 of Rule 18BBB of the Income-tax Rules, 1962, which reads as under:- A separate report is to be furnished by each undertaking or enterprise of the assessee claiming deduction under section 80-I or 80-IA or 80IB or 80IC and shall be accompanied by the Profit and Loss Account and Balance Sheet of the undertaking or enterprise as if the undertaking or the enterprise were a distinct entity 4.5 The AO also referred to the Memorandum explaining the provisions of Finance Bill, 2007, wherein Hon ble Finance Minister has clarified the Explanation inserted below sub-section 13 of Section 80IA, which is reproduced as under:- The tax benefit was introduced for the reason that the industrial modernization required a massive expansion of, and qualitative improvement in, infrastructure (viz., express ways, highways, airports, ports and rapid urban rail transport system) which was lacking in our country. The purpose of the benefit has all along been for encouraging private sector participation by way of investment in development of the infrastructure sector and not for person who merely execute the civil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arned in the previous year itself and in the impugned year the business was carried entirely in the status of the company. The following facts are material in the case: i) the company had converted from a firm into a company limited by shares by operation of law under Part IX of the Companies Act, 1956 as going concern and continued the partnership business including all its assets, movable and immovable, rights, debts and liabilities in connection therewith; and had so converted before the commencement of the previous year in question. (ii) Many of the agreements were entered into by the appellant after conversion into the company itself. iii) In the cases, where the agreements were signed earlier in the status of firm, the appellant had informed the authorities with whom the agreement was entered of the change in their status and none of them have objected to it and legally all the terms were binding on both the parties as per law itself. In fact, TDS certificates have been issued in the name of company only during the year. (iv) As held by the Rajasthan High Court, in the case of Chetak Enterprises (P.) Ltd reported at 271 ITR 444, the conversion of the firm into company legally ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ronounced in the case of B.T. Patil Sons Belgaum Construction (P.) Ltd. (supra). Vide paragraph No.39, the Respected Bench has clarified that the words developer and contractor have not been defined for the purpose of application of section 801A. According to the Bench, It is a settled legal position that ordinary meaning is required to be given for a word used in the Statute. Rather the Bench has said that a word used in one Statute cannot per se be imported into another. A reference of General Clauses Act, 1897 was made, but it was found that the word contractor or developer had not been defined therein. Then, the Respected Bench has taken the help of Oxford Advanced Learners' Dictionary. As per the said dictionary, the word developer means a person or a company that designs or creates new product. Whereas as per the dictionary meaning, the word contractor is a person or a company that has a contract to do work or provide services or goods to another. As per new shorter Oxford dictionary, the word contractor means a person who enters into a contract or agreement. As per the Bench, a developer is a person who conceives the project. He may execute the entire project himself or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted before us pronounced by ITAT Hyderabad Bench in the case of GVPR Engineers Ltd. (supra), wherein the assessee-company had entered into a contract with the Government to develop an infrastructure facility. The AO's objection was that the assessee had entered into a contract for building for which the entire investments were made by the Government and the assessee was paid on running bill to bill basis . This question was elaborately dealt with by the Respected Coordinate Bench and after due consideration of the work executed by the said concern, it was opined that the words developer and contractor have not been defined in section 80IA of the Act. It was noted that the BOT/BOOT models seek to augment infrastructural assets in addition to Government spending and not simply feed on Government expenditure. As per the Tribunal, the deduction u/s.80IA is available to the former and not to the latter. The term developer has to be seen de hors the contract. The Bench has also opined that word ownership is attributable only to the enterprise carrying on the business which would mean that only companies are eligible for deduction u/s. 80IA(4). 12.3 An another controversy in such type ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Explanation has been inserted to deny the tax holiday to an entity who does only work contract or acted merely as a sub-contractor, apparently being distinct from the developer. Applying this ratio on the present set of facts and circumstances It can be held that the nature of construction executed by this assessee had fallen under the category of developer and not under the category of works-contract . 12.5 Next, an another controversy has also been raised by the Revenue Department that in the agreements in question the term contractor has been referred by the Government. This question has been duly addressed by ITAT Mumbai Bench in the case of Bharat Udyog Ltd. (supra), wherein Patel Engg. Ltd. (supra) was followed and it was opined that the term contractor is not essentially in contradiction to the term developer . By entering into a lawful agreement and thereby becoming a contractor in no way bar an enterprise to execute the work as a developer . It was opined that merely because in the agreement for development of Infrastructure facility an enterprise is referred to as a contractor do not detract an enterprise from the position of being a developer . In number of decisions, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . (i) That in a case of civil contractor, it's duty is only of civil construction. (ii) That after the civil construction is over, he is paid for the job of civil construction as per the bills raised. (iii) That at that point of time, his contract is over and the agreement ends. (iv) That after the completion or at the end of the agreement, a civil contractor hand over the site to the owner. (v) That a civil contractor constructs as per specifications given. (vi)That a contractor does not involve much of his money but raises bill of his civil construction work time-to-time to collect the expenditure incurred. (vii) That a contractor has no domain over the land or the site. (viii) That his access to the site is restricted and limited from commercial angle.(ix)That on the basis of the project he cannot raise the funds from the private financial Institutions. (x) That a contractor is not responsible for the development of the project but his responsibility is limited to the job-assigned to him. (xi) That a contractor's duties and responsibilities can only be examined on the basis of the terms and conditions of the contract agreement. 13.2. Now we shall examine about a develop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 80-IA is available to an enterprise which (1) develops; or (ii) operates and maintains; or (iii) develops, maintains and operates that infrastructure facility inasmuch as subsequent amendment to section 80-IA(4) has made it clear that three conditions of development, operation and maintenance were not intended to be cumulative in nature -- Assessee was awarded a contract for leasing of container handling cranes at Jawaharlal Nehru Port Trust ('JNPT') in terms of policy of Government of India to encourage private sector participation in development of infrastructure Under contract, assessee was responsible for supplying, installation, testing, commissioning and maintenance of cranes - Contract envisaged two different options, first being one under which assessee would carry out operation and maintenance of equipment, while second consisted of an option to JNPT to carry out operations and only maintenance was to be carried out by assessee- Assessee assumed responsibility of making equipment available for operation for a minimum number of days as stipulated in contract and would become liable to pay liquidated damages for non-availability of equipment after commissioni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... project; (c) a water supply project, water treatment system, irrigation project, sanitation and sewerage system or solid waste management system; (d) a port, airport, inland waterway, Inland port or navigational channel in the sea The remaining 9 projects include: 1. Bridges, Railway Bridges, Flyover Bridges and ROB. 2. Road/culvert Work 3. Intake well, Water Supply The agreements have been undertaken with Indian Railways, Government of India, AUDA, with different departments of Government of Gujarat, Surat Municipal Corporation, etc. The works of bridges, canals, pipelines for water works, projects for new roads would fall under the definition of infrastructure facility as defined under the Act. To examine and decide whether the appellant could be said to be a contractor or acted as a developer; the terms and conditions and scope of various projects undertaken were examined carefully and are being representatively and briefly discussed hereafter. One of the projects was undertaken in an agreement with the Western Railway, Government of India and was of Providing 2X6.00X3.30 M RCC box by pushing for Dharangadhra Canal Crossing.. The scope of work included: (a)Procurement/Fabricatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of the work and connected to the nearest GTS bench mark according to which, whole work shall be carried out. The maintenance of all these BM till completion shall be the responsibility of the contractor. The appellant was to be solely responsible for the true and proper setting out of the alignments and for the provision of all necessary instruments, at any time during the execution of the work. In case of any error regarding location, levels, dimensions, or alignment of any part of the work, it on being required to rectify such errors at his own expense. Maintenance of the said infrastructure for a period of 62 month (during the period of development 50 months and defect liability of 12 months) was also the responsibility of the appellant. Some of the other works are of the nature of road and water supply projects and would be infrastructure facility covered the definition. As discussed hereinabove, it is concluded that an enterprise which is either developing or operating or maintaining the infrastructure facility is required to be owned by a company or a consortium of companies duly registered In India for purpose of section 80-IA and the Act do not prescribe that the infrast ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jarat High Court in the case of The PCIT v. MonteCarlo Construction Ltd. in R/Tax No. 786 of 2023, dated 19.12.2023, and submitted that the issue is covered by the aforesaid judgment and order of Hon ble Gujarat High Court , and the assessee is entitled for deduction under section 80IA. The ld. Sr. DR Mr. Chetram Meena on the other hand submitted that the assessee is a Contractor who is doing work contract. The ld. Sr. DR relied upon the assessment order passed by the AO. 7. We have considered rival contentions and perused the material on record. We have observed that the assessee is a Company , and has filed its return of income with Revenue declaring income of Rs. 35,90,260/- . The assessee has claimed deduction of Rs. 1,87,70,901/- u/s 80IA(4) of the 1961 Act. The case of the assessee was selected by Revenue for framing scrutiny assessment u/s 143(3) read with Section 143(2) of the 1961 Act. The AO has observed that the assessee is engaged in the business of Civil Construction. The assessee claimed that it is a Developer engaged in the development of infrastructure activities being development of roads , bridges , water pipeline resources etc. with State or Central Government, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prise, and the assessee is only supposed to carry out the work for which it is paid contract receipts. Ownership over the projects/enterprise is never with the assessee company. Thus, the AO observed that contract receipts are not eligible for deduction under section 80IA(4) because the income should be derived from the enterprise/ undertaking developing, operating and maintaining of the infrastructure facilities. The AO observed that the first condition of Section 80IA(4) is that the enterprise should be owned by a Company. The AO also observed that the letters awarding works shows that work were assigned to M/s Ajay Engineers , a partnership firm in six cases. The assessee company came into existence only on 27.02.2008 on conversion of said partnership firm into company. The AO also observed that the assessee company has no right to operate or maintain the infrastructure facilities and assessee is merely a contractor and not a developer. The AO observed that the risk assumed by the assessee is only to the extent of business contract risk . The AO observed that the assessee company has taken risk of investment only to the extent of contract risk, while benefit of deduction u/s 80I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d assessment year, on the grounds that the assessee is a Developer and not a Contractor . The appeallate order passed by ld. CIT(A) is reproduced hereunder: 5.2 I have carefully gone through the facts of the case, the observations and objections of the AO which have been summarized in para 5 of this order, the various orders of the judicial authorities including those relied upon by the appellant, the terms of agreement as per tender documents of various projects and the submissions of the appellant. 5.2.1 One of the objection of the AO raised in earlier year while denying the benefit of section 80IA(4) to the appellant was that the agreements for many of the projects were entered into when the appellant was doing business in the status of a firm. The appellant is a Company, came into existence on conversion of partnership firm into Limited Company under chapter IX of the Companies Act, 1956 with effect from 27-02-2008. Prior to that, the partnership firm in the name and style of 'Ajay Engineers' was carrying on the business of developer/construction etc. The said partnership firm was converted into a Public Limited Company under Chapter IX of the Companies Act under the na ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee is a contractor and not owner of the projects and the appellant was 'not owner of the projects . The AO has held that the company is neither developing or operating or maintaining the projects and the risk of the appellant is not of the nature of entrepreneurial and investment and is limited to the extent of contract undertaken. He has also relied on the explanation below section 801A(13) with retrospective effect from 1/4/2000 which clarifies that any person executing the work contract who undertakes a work contract with the undertaking or enterprise is not eligible for the deduction. Before I proceed with individual projects and their terms; I would like to quote the criteria and guidelines as decided by various courts. The Hon'ble jurisdictional ITAT, Ahmedabad in the case of Sugam Construction Pvt. Ltd. vs. ITO (30 taxmann.com 331) in its recent judgment, after discussing the provisions of law and various judgements, has discussed the various aspects like what is contract/contractor; concept of developer, requirement of ownership etc., after discussing the law and the various decisions. I would like to reproduce some of the very relevant observations made b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal itself In the impugned order has traced different meanings of the term developer explained in different dictionaries, which read as under: 1. The Webster's Encyclopedia unabridged of the English language gives the following meaning of the term developer as: 1. One who or that which develops; 2. A person who invests in and develops the urban or suburban potentialities of real estate. b. Oxford Advanced Learners Dictionary of Current English, Fourth Indian Edition, gives meaning of the term 'developer' as persons or company that develops land. C. Random House Dictionary of the English Language, the following can be found Develop c. To bring out the capabilities or possibilities of; bring to a more advanced or effective state. b. To cause to grow or expand. Developer a. The act or process of developing; progress. b. Synonym: Expansion, elaboration, growth, evolution, unfolding, maturing, maturation. d. Webster Dictionary, the following definitions emerge: a. To realize the potential of; b. To aid in the growth of strength, develop the biceps, c. To bring into being: make active (develop a business) d. To convert (a tract of land) for specific purpose, as by build ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is attributable to the enterprise carrying on the business. Further, the word It denotes the enterprise carrying on the business. The word it do not relate to the Infrastructure facility . The Infrastructure facility, such as, rail system, high-way projects, Irrigation project, port, air-port, etc. cannot be owned by an enterprise other than the Government. 12.4 An another reason for not granting the deduction u/s.80IA(4) by the Revenue Department was generally because of the reason of Insertion of Explanation by Finance Act (No.2), 2009 with retrospective effect from 1.4.2000 which says that for the removal of doubts, it is hereby declared that nothing contained in this section shall apply in relation to a business referred to in sub-section(4) which is in the nature of a work contract awarded by Central or State Government and executed by an Undertaking or an Enterprise. Due to this Explanation, Revenue has taken a stand that the eligibility is to be granted only to a developer and If the nature of activity is a works contract , then the deduction is not be granted. However, In the case of Koya Co. Construction (P.) Ltd. (supra), this issue was dealt with elaborately, wherein it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lity is owned by the Government. But the enterprise which is developing or constructing the infrastructure facility is to be owned by a Company registered in India. The Act also says that an enterprise which is constructing or developing the infrastructure facility can be a consortium of such companies. Such an arrangement is eligible for the claim of deduction. Few Circulars have been issued by CBDT through which it has also been clarified, as discussed in the foregoing case-laws, that the benefit of the impugned deduction is available to an enterprise which either develops or maintains or operated or executed the combination of these three, inter alia as a Build, Operate and Transfer (BOT), or, Build, Own, Operate and Transfer (BOOT), or, Build, Own, Lease and Transfer (BOLT) basis or similar other basis where ultimately the infrastructure facility so constructed is ultimately transferred to Government or Public Authority, then such an enterprise is within the ambits of qualification of deduction. The explanatory memorandum to the Finance Act, 2007, as quoted before us, states that the purpose of the tax benefit has all along been to encourage investment in development of infrast ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asis 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. (j) 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 the assignee of the contract. (k) That a developer is therefore expected to arrange finances and also to undertake risk. (l) That in contrast to the rights of a contactor a developer is authorized to raise funds either by private placement or by financial Institutions on the basis of the project. These are few broad qualities of a developer through which the character of a developer can be defined. The judgment of Hon ble Mumbai High ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d whether they qualify on other grounds like being an eligible infrastructure project or not. The appellant had executed 12 projects during the year; out of which with respect to two i.e., (1) approach ramp for Sola ROB (II) construction of subway at Sonini Chali; it had itself not claimed deduction under section 80IA(4) as it has not entered into the agreement with the government agency directly etc. As per the list of projects claimed eligible for deduction, as per submissions reproduced earlier in the order; there were 10 projects in total undertaken by the appellant during the year. Out of these, only 9 have been claimed to have yielded profits. The other project according to the claim of the appellant have yielded loss. The loss has been reduced from the eligible profits claimed. Therefore, I would not go into the merits of loss case as the appellant has not disputed it and there is no loss to revenue as far as these projects are concerned. The appellant also submitted brief details of all the projects undertaken including nature and scope of work and also the name of authority with which the agreement was reached, period for which it was to bear liability of maintenance and a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. (f) Maintenance of track during and after Box pushing work until the track is handed over to open line. g) The appellant was to submit the detailed design mix for M-20, M-25, M-30, M-35 and M-45 for the approval of Railway. Maintenance of the said infrastructure for a period of 61 month (during the period of development 49 months and defect liability period of 12 months) was also the responsibility of the appellant. Some other projects are also in the nature of bridges including flyovers and ROB in lieu of level crossing etc. For e.g. one is Construction of approach bridges for ROB in Lieu of level crossing no. 2 on Ahmedabad - Delhi B.G Railway Line at Gota in Ahmedabad (Item 3 of appellant's letter reproduced earlier) for which agreement was entered into with Ahmedabad Municipal Corporation. As per agreement, the appellant was required to provide his own equipment (vide Page No. 70 of bid document); including 1 Pilling Equipment 2. Slurry Preparation and Testing Equipment 3. Concreting Equipment 4. Lifting Devices 5. Choice of rotary, percussion, grabbing equipment, and equipment for direct or reverse mud circulation, etc, shall be made to suit the soil conditions, vibrati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 89 Taxman 54 (Bom.), KMC Construction Ltd 51 SOT 214 (Hyd), Koya Co. Construction (P.) Ltd. v. Asstt. CIT [2012] 51 SOT 203/21 taxmann.com 35 (Hyd.) (URO) and Radhe Developers v. Union of India [2008] 23 SOT 420 (Ahd.) and Asstt. CIT v. Bharat Udyog Ltd. [2009] 118 ITD 336 (Mum.) thus support the stand taken by the assessee. The assessee has executed the construction of infrastructure facility in respect of the government projects, as is evident from the list of the agreements placed on record. Therefore, it is held that the assessee is eligible for the deduction under section 80-IA on the 9 projects less loss of 10th project (with qualification of not considering merits of loss project; as discussed earlier in the order). The grounds are decided accordingly. 7.4 Before proceedings further it will be profitable to reproduce the relevant extract of provisions of Section 80IA of the 1961 Act as were prevalent at the relevant times, which is reproduced hereunder:-. [Deductions in respect of profits and gains from industrial undertakings or enterprises engaged in infrastructure development, etc. 32 80-IA. 33 [(1) Where the gross total income of an assessee includes any profits and gain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not apply in respect of an 44 [undertaking] which is formed as a result of the re-establishment, reconstruction or revival by the assessee of the business of any such 44[undertaking]as is referred to in section 33B, in the circumstances and within the period specified in that section; (ii) it is not formed by the transfer to a new business of machinery or plant previously used for any purpose: 45 [ Provided that nothing contained in this sub-section shall apply in the case of transfer, either in whole or in part, of machinery or plant previously used by a State Electricity Board referred to in clause (7) of section 2 of the Electricity Act, 2003 (36 of 2003), whether or not such transfer is in pursuance of the splitting up or reconstruction or reorganisation of the Board under Part XIII of that Act.] Explanation 1. For the purposes of clause (ii), any machinery or plant which was used outside India by any person other than the assessee shall not be regarded as machinery or plant previously used for any purpose, if the following conditions are fulfilled, namely : (a) such machinery or plant was not, at any time previous to the date of the installation by the assessee, used in India ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would be available to such transferee enterprise for the unexpired period during which the transferor enterprise would have been entitled to the deduction, if the transfer had not taken place. 50 [Explanation. For the purposes of this clause, infrastructure facility means (a) a road including toll road, a bridge or a rail system; (b) a highway project including housing or other activities being an integral part of the highway project; (c) a water supply project, water treatment system, irrigation project, sanitation and sewerage system or solid waste management system; (d) a port 51 , airport, inland waterway 52 [, inland port or navigational channel in the sea];] 53 [(ii) any undertaking which has started or starts providing telecommunication services, whether basic or cellular, including radio paging, domestic satellite service, network of trunking, broadband network and internet services on or after the 1st day of April, 1995, but on or before the 31st day of March, 54 [2005].] Explanation. For the purposes of this clause, domestic satellite means a satellite owned and operated by an Indian company for providing telecommunication service; (iii) any undertaking which develops, d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ansmission or distribution lines by at least fifty per cent of the book value of such plant and machinery as on the 1st day of April, 2004;] 66 [(v) an undertaking owned by an Indian company and set up for reconstruction or revival of a power generating plant, if (a) such Indian company is formed before the 30th day of November, 2005 with majority equity participation by public sector companies for the purposes of enforcing the security interest of the lenders to the company owning the power generating plant and such Indian company is notified 67 before the 31st day of December, 2005 by the Central Government for the purposes of this clause; (b) such undertaking begins to generate or transmit or distribute power before the 31st day of March, 68 [2011];] 69 [ 69a [(vi) any undertaking carrying on the business of laying and operating a cross-country natural gas distribution network, including pipelines and storage facilities being an integral part of such network, which fulfils 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 established or constituted under any Centr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt; and the amount remaining unutilised shall be chargeable to tax as income of the year in which such transfer to reserve account took place. (7) 71 [The deduction] under sub-section (1) from profits and gains derived from an 72 [undertaking] shall not be admissible unless the accounts of the 72 [undertaking] for the previous year relevant to the assessment year for which the deduction is claimed have been audited by an accountant, as defined in the Explanation below sub-section (2) of section 288, and the assessee furnishes, along with his return of income, the report of such audit in the prescribed form 73 duly signed and verified by such accountant. (8) Where any goods 74 [or services]held for the purposes of the eligible business are transferred to any other business carried on by the assessee, or where any goods 74 [or services] held for the purposes of any other business carried on by the assessee are transferred to the eligible business and, in either case, the consideration, if any, for such transfer as recorded in the accounts of the eligible business does not correspond to the market value of such goods 74 [or services] as on the date of the transfer, then, for the purpo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion or demerger (a) no deduction shall be admissible under this section to the amalgamating or the demerged company for the previous year in which the amalgamation or the demerger takes place; and (b) the provisions of this section shall, as far as may be, apply to the amalgamated or the resulting company as they would have applied to the amalgamating or the demerged company if the amalgamation or demerger had not taken place. 77 [(12A) Nothing contained in sub-section (12) shall apply to any enterprise or undertaking which is transferred in a scheme of amalgamation or demerger on or after the 1st day of April, 2007.] 78 [(13) Nothing contained in this section shall apply to any Special Economic Zones notified on or after the 1st day of April, 2005 in accordance with the scheme referred to in sub-clause (iii) of clause (c) of sub-section (4).] 79 [Explanation. For the removal of doubts, it is hereby declared that nothing contained 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot defined in the 1961 Act. The word contractor refers to a person who executes contract/work order for others without taking any future risks and responsibilities of the work undertaken except normal business risk of completing the work contract successfully as directed by Contractee, while developer undertakes the project to develop and construct at its own responsibility and takes all the risks and responsibilities associated with the project awarded to it . In this execution of work order, the Contractor is a given a work order by Contractee along with the designs and specification and his job is to be simply execute the wok order. The role and responsibility of the Contractor ends with the finishing of work order to the satisfaction of the Contractee. The Contractee provides all the designs and other instructions to the Contractor for executing the Contract. The financial investments are done by Contractee as well major manpower , machines and material are provided by the Contractee. Say for example contact for painting of walls. Thus, Contractor act as an agent for the Contractee . While developer is broader than contractor, wherein developer is given contract for developing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e provisions for claim of deduction /exemption are to be strictly construed and any ambiguity is to be decided in favour of Revenue. Reference is drawn to the judgment and order of Constitutional Bench of Hon ble Supreme Court in the case of Commissioner of Customs(Imports) v. Dilip Kumar Company, reported in (2018) 95 taxmann.com 327(SC). The ld. Sr. Advocate has heavily relied on the judgment and order of Hon ble Gujarat High Court in the case of Montecarlo Construction Limited (supra) . In this judgment and order , the Hon ble Gujarat High Court has dismissed the appeal filed by Revenue on the grounds that there are concurrent finding of the facts by ld. CIT(A) as well ITAT, therefore, no question of law, much less any substantial question of law arises from the order of the ITAT, and the finding of facts having been elaborately discussed by ITAT and ld. CIT(A) while deciding the issue in favour of the tax-payer which finding of facts were not disturbed by Hon ble High Court. We have observed that in the order passed by ITAT in Montecarlo Constructions(supra), the ITAT has discussed the parameters distinguishing between Contractor as well Developer by analysing the specific work ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... observed that the assessee total receipts are to the tune of Rs. 26.60 crores which is not substantial keeping in view the claim of the assessee having been involved in execution of new infrastructure facilities by way of bridges, roads, Road over bridges , flyovers , water intake well, etc. . Thus, It is all the more necessary to analyse as to the role and responsibilities of the assessee in execution of these projects and other parameters as culled out above, in order to arrive at conclusive finding whether the assessee has created a new infrastructure facility as a Developer or have undertaken a contract work to execute work order as a Contractor. We could have decided the issue ourselves as these appeals are old appeal pending for almost 7-10 years, but the material filed before us vide paper books are not sufficient for us to decide the issue . Even evidences such as tender documents, agreements with the Government for executing the work, details of the work executed vis- -vis creation of new infrastructure facility created, PERT chart, financial statements, Men, material and machines deployed by the assessee , the roles and responsibilities performed by the assessee, details ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T(A) . Similar issue arose in assessment year 2009-10 in Revenue s appeal in ITA No. 2118/Ahd/2011, and even grounds of appeal are similar. Both the parties have agreed before us that our decision in Revenue s appeal for assessment year 2009-10 shall be applicable for assessment year 2010-11, as facts and issues in appeal are similar. Our decision in ITA No. 2118/Ahd/2013 for assessment year 2009-10 as adjudicated above in preceding para of this order shall apply mutatis mutandis to the appeal of the Revenue for assessment year 2010-11 in ITA No. 2302/Ahd/2014 on this issue. Thus , this issue is restored back to the file of the ld. CIT(A) for fresh adjudication with similar observations as were made by us as in ITA no. 2118/Ahd/2013 for assessment year 2009-10. The appeal of the Revenue is allowed for statistical purposes. We order accordingly. 11. In the result appeal of the Revenue in ITA no. 2302/Ahd/2014 for assessment year 2010-11 is allowed for statistical purposes. We order accordingly. ITA No.2303/Ahd/2014-Revenue Appeal A.Y.2011-12-Ajay Engineering Infrastructure Private Limited 12. The Revenue has raised following grounds of appeal in Memo of Appeal filed with Income Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer is required to be upheld. ii.) On the facts and circumstances of the case, the Ld. Commissioner of Income- Tax(appeals) ought to have upheld the order of the Assessing Officer. iii.)It is therefore prayed that the order of the learned Commissioner of Income- Tax(Appeals) may be set aside and that of the Assessing Officer be restored. 16. The issue raised by Revenue in its appeal filed with ITAT in ITA No. 1231/Ahd/2016 is concerning the claim of deduction under section 80IA(4) of the Act which was denied by the AO but later allowed by the ld. CIT(A) . Similar issue arose in assessment year 2009-10 in Revenue s appeal in ITA No. 2118/Ahd/2011, and even grounds of appeal are similar. Both the parties have agreed before us that our decision in Revenue s appeal for assessment year 2009-10 shall be applicable for assessment year 2013-14, as facts and issues in appeal are similar. Our decision in ITA No. 2118/Ahd/2013 for assessment year 2009-10 as adjudicated above in preceding para of this order shall apply mutatis mutandis to the appeal of the Revenue for assessment year 2013-14 in ITA No. 1231/Ahd/2016 on this issue. Thus , this issue is restored back to the file of the ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 650/Ahd/2017-Revenue Appeal A.Y.2014-15-Ajay Protech Private Limited 21. The Revenue has raised following grounds of appeal in Memo of Appeal filed with Income Tax Appellate Tribunal, Ahmedabad Bench, Ahmedabad in ITA No. 1650/Ahd/2017 for assessment year 2014-15 , which reads as under:- i.) On the facts and circumstances of the case , the Ld. CIT(A) has erred in law and on facts by allowing deduction of Rs. 2,10,78,457/- u/s 80IA(4)(i) of the I.T. Act, 1961 which was disallowed by the Assessing Officer after full and proper justification of the facts , therefore the order of the Assessing Officer is required to be upheld. ii.)It is therefore prayed that the order of Ld. CIT(A) may be set aside and that of the Assessing Officer be restored to the above extent. 22. The issue raised by Revenue in its appeal filed with ITAT in ITA No. 1650/Ahd/2016 for assessment year 2014-15 in the case of the assessee Ajay Protech Private Limited is concerning the claim of deduction under section 80IA(4) of the Act which was denied by the AO but later allowed by the ld. CIT(A) . Similar issue arose in assessment year 2009-10 in Revenue s appeal in ITA No. 2118/Ahd/2011 in the case of the assessee Aj ..... X X X X Extracts X X X X X X X X Extracts X X X X
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