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TMI Blog2024 (10) TMI 1273X X X X Extracts X X X X X X X X Extracts X X X X ..... ied the claim u/s 80IA of the Act by observing that the assessee is a works contractor. However, the assessee succeeded before the first appellate authority as ld. CIT (A) has held that the assessee is a developer and has rightly claimed the deduction u/s 80IA of the Act. We for the purpose of adjudication taken up the facts of ITA No. 297/PAT/2023, for A.Y. 2018-19 and our decision shall apply mutatis mutandis to all the remaining instant appeals of Revenue in ITA No. 294, 297 to 298/Pat/2023. 4. Revenue has raised following grounds of appeal for A.Y. 2018-19:- "1. That on the facts and in the circumstances of the case and in law, the Ld. CIT(A)-3, Patna erred in deleting addition of Rs. 4,47,04,930/- holding that the assessee is eligible to claim deduction u/s 80IA as it is a developer and not a contractor. 2. That on the facts and in the circumstances of the case and in law, Ld. CIT(A)-3, Patna failed to appreciate that within the meaning of section 80IA of the Income-tax Act, the Bihar Rajya Jal Parishad was a developing agency (developer) who awarded contract work and not the assessee who just executed the contract work awarded by the Bihar Rajya Jal Parishad. 3. That o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 153A of the Act. The ld. AO was not satisfied with this claim and denied the same and completed the assessment. 6. Aggrieved assessee preferred appeal before the ld. CIT (A) and submitted that in compliance to the return filed u/s 153A of the Act, assessee has submitted tax audit report u/s 44AB of the Act and also furnished audit report on form 10CCB for by claiming deduction u/s 80IA of the Act and has fulfilled all the conditions required to claim the said deduction. It also placed the facts before the ld. CIT (A) that the assessee is engaged in the business of designing, constructing, testing, commissioning and operating and maintenance of water works for five years for Bihar Rajya Jal Parisad and thus, is engaged in developing, operating and maintaining new infrastructure facility and the said works has been carried out under the agreement with the unit of Bihar Government. It was claimed that the assessee is a developer and not a work contractor considering the terms and conditions of the agreement between the assessee and the Bihar Rajya Jal Parishad. The ld. CIT (A) after considering the facts of the case found that the assessee is eligible for the deduction u/s 80IA of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting the assessee as a developer and not a works contractor. We observe that the assessee did not claim the deduction u/s 80IA of the Act in his regular income filed prior to due date prescribed u/s 139(1) of the Act. Subsequently, assessee made the claim in the return filed in compliance to notice issued u/s 153A of the Act after being subjected to search operation u/s 132 of the Act. We note that the ld. AO in the course of assessment proceedings had not issued any specific show cause notices to the assessee prior to declining the claim made in the return for deduction u/s 80IA of the Act. Though the assessee had furnished audit report on form no.10CCB, in respect of its claim of fulfilling of the conditions requires for claiming deduction u/s 80IA of the Act but the ld. AO declined the claim merely on account of two reasons. Firstly, that the assessee itself has not claimed the deduction in its regular return filed u/s 139 (1) of the Act on 31st October, 2018, and secondly, not claiming of the deduction proves that the assessee is works contractor and not a developer. 10. We notice that the ld. CIT (A) after taking note of the factual aspect of the case namely the audit report ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d were not provided by Bihar Rajya Jal Parisad. The appellant is not a mere contractor but also a developer and hence is eligible to get deduction under section 80IA. During the assessment proceedings, it was observed that the appellant has claimed the deduction of Rs. 44704929/- u/s 80IA in its return filed in response to the notice u/s 153A. The claim of the appellant was disallowed by the AO. The reasons for disallowance by the AO are discussed hereinafter. The appellant is a contractor and not developer which is accepted by the appellant in its ITR wherein the business of the appellant has been declared as civil contractor. Further, the books of accounts of the undertaking should be audited u/s 44AB and such audit report should be duly furnished in prescribed form 32 for the relevant assessment year in which the deduction has been claimed. The AO has also referred to the provisions of the section 80IA and has recorded his finding that the provisions of this section do not apply to the business referred in sub-section (4) which is in the nature of a works contract awarded by any person (including central or state government). The tax benefit was provided for encouraging priv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y to the context, the language of a statute should be interpreted according to the plain dictionary meaning of the terms used therein'. Similar view has been expressed by the Hon'ble Supreme Court in the case of CWT v. Officer-In-Charge (Court of Wards) (1976) 105 ITR 133 in which it was held that the ordinary dictionary meaning of a word cannot be disregarded. Accordingly, the appellant has submitted that the meaning of contractor and developers are not defined in the Income Tax Act, 1961 and in General Clauses Act. Thus, the meaning of contractor and developer has been borrowed from the Oxford Advanced Learners Dictionary which says that the developer is a person or the company that designs and creates new products whereas the contractor is a person or a company that has a contract to do work or provide services or good to another. In short, the developer is a person or the company who conceives the project, plans the execution of the project and complete the project. He may complete the project by himself or contract some part of the project to the others whereas the contractor is someone who works by contract, especially executing specified plans. His job is to simply t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the assessee was not a mere contractor but also a developer and hence eligible to get deduction under section 80IA. It is also seen that ITAT Mumbai Bench, in the case of Patel Engineering Company Ltd. v. ACIT (2004) 4 SOT 1 (Mum.), has on almost similar facts and circumstances held that the assessee therein was the developer of the infrastructure project and eligible for deduction under section 80IA. Paragraph 47 of the said order is being reproduced herein for a ready reference:- There has also been the contention of the Revenue that the assessee is a contractor, executing civil contract and so it cannot be developer as such. However, we are unable to agree with this contention of the Revenue. A person, who enters into a contract with another person will be a contactor no doubt; and the assessee having entered into an agreement with the Government of Maharashtra and also with APSEB for development of the infrastructure projects, is obviously a contactor 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 section 80IA(4) itself provides that assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of Hon'ble ITAT Mumbai Bench, in the case of Patel Engineering Company Ltd. v. ACIT (2004) 4 SOT 1 (Mum.). However, the appellant has submitted that the execution of work for construction of Drinking Water Supply Scheme involved designing, execution and maintenance for 5 years. Thus, the work so executed falls under the category of development and not contract. The appellant has also submitted the copy of the agreement entered into by the appellant with the Executive Engineer, P.H. Division, Patna West, Patna and the appellant to support its claim. The reliance is placed on the decision of ITAT Jaipur Bench in the case of Om Metals Infraprojects Limited v. CIT in ITA Nos. 722 and 723/JP/2008. I have considered the assessment order and found that the AO has misunderstood the difference between the meaning of words contractor and developer. To arrive at any conclusion, there must be a clear distinction between the meaning of the words contractor and developer. For the meaning of words contract and developer, the first reference should be made to the Income Tax Act, 1961. However, the words Contractor and Developer have not been defined under the Income Tax Act. Further, the refere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tself. Nothing has been supplied by the principal i.e. Bihar Rajya Jal Parishad. Thus, the appellant fulfilled all the criteria to qualify as developer. The AO has also given the finding that the claim of 80IA was not made in its original return filed u/s 139(1). The same was claimed in the return filed u/s 153A of the Act. I have carefully considered the provisions of section 153A and find that section 153A starts with the expression "notwithstanding" which indicates the intention of introduction the section in the Act. The use of non-obstante clause indicates that the provisions of section 153A would have the overriding effect over the provisions contained under sections 139,147,158,149,151 and 153. Therefore, the return filed u/s 153A would be construed to be returns under section 139. The view also gets support from the judgement of Hon'ble Gujrat High Court in the case of Kirit Dahyabhai Patel v. ACIT (2015) 280 CTR (Guj) 2016. Therefore, the claim of the appellant for deduction u/s 80IA cannot be rejected mere on the grounds that the same were not claimed in the return filed u/s 139. The appellant can may make or modify a claim at any time before the completion of assessment. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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