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TMI Blog2025 (2) TMI 285X X X X Extracts X X X X X X X X Extracts X X X X ..... e Companies' Act, 1956 as a special purpose vehicle between the Central and State Government with equity share of 50:50, therefore, in our understanding of the law it cannot be regarded as Central Government or State Government, nor does it fall under the definition of local authority statutory authority. It is trite law that for claiming deduction u/s 80IA(4) of the Act, all conditions have to be fulfilled cumulatively. No merit in the claim of deduction u/s 80IA and the lower authorities have not faulted anywhere by denying the same. Ground raised by the assessee dismissed. Disallowance of legal and professional fees (fees for technical services) paid to Gulemark TPL JV - sole reason for the disallowance is that Gulemark TPL JV, has not rendered the services, therefore, the claim was disallowed u/s 37 of the Act - HELD THAT:- The fees for technical services as claimed by the assessee has been incurred for the purpose of business and, therefore, eligible for deduction under section 37 of the Act. Moreover, the AO has never treated the said claim as capital expenditure and has accepted the same as revenue expenditure, therefore, we do not find any reason to interfere with the fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Government (c) Local Authority or (d) Statutory Authority and LMRCL does not fit in any of the four categories. 6. The assessee filed detailed reply justifying its claim of deduction u/s 80IA of the Act which did not find any favour with the AO who denied the claim of deduction. The denial was confirmed by the ld. First Appellate Authority. 7. A perusal of the contract agreement shows that LMRCL has agreed to hire the contractor which is the assessee. On perusal of the above related documents we find that the metro rail, as per the contract is conceived by LMRCL who undertook the groundwork of taking necessary approvals/sanctions from the State government/local authorities and floated the tender which was successfully awarded to the assessee. The assessee was allowed mobilization advance which was 5% of the original contract value payable in two equal instalments or as mentioned in the special conditions of contract, the first instalment shall be paid after mobilisation has started and next instalment shall be paid after satisfactory utilisation of the earlier instalment. The assessee was also allowed plant and machinery advance at 5% of original contract value or as specified ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... project is completed it has to be handed over to LMRCL. Thereafter the assessee had no role to play. The business pertains to LMRCL, the ownership vests with LMRCL and it is LMRCL which is carrying on the business of developing operating and maintaining of infrastructural facility i.e., underground Metrorail. 10. In the case of Commissioner of Income-tax, Central-II v. ABG Heavy Industries Ltd. [2010] 322 ITR 323 (Bombay), the Hon'ble Jurisdictional High Court was seized with the fact that the assessee was responsible for supplying, installation, testing, commissioning and maintenance of cranes for the period of 10 years after which the cranes would rest with JNPT, free of cost. On such facts the Hon'ble High Court, upheld the claim of deduction which facts are absent in the case in hand. It is true that a beneficial provision requires liberal interpretation but it is equally true that the interpretation should not be so liberal as to defeat the very purpose of the Act. 10.1. The Hon'ble Supreme Court in the case of Commissioner of Customs (Import), Mumbai vs. M/s. Dilip Kumar and Company & Ors. [Civil Appeal No. 3327 of 2007] which has been relied upon by the AO, has held as und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claiming deduction u/s 80IA(4) of the Act, all conditions have to be fulfilled cumulatively. 12. Considering the peculiar facts of the case in hand from all possible angles we do not find any merit in the claim of deduction u/s 80IA of the Act and the lower authorities have not faulted anywhere by denying the same. Since we have dismissed the claim of the assessee u/s 80IA of the Act, at the very threshold treating the assessee as a contractor, we do not find it necessary to address the issues taken by the AO for denying the impugned claim. Accordingly both the appeals by the assessee are dismissed. 13. Coming to the appeals of the revenue, there is a delay and the delay is condoned. 14. The common grievance in both the appeals by the revenue relate to the deletion of the addition made by the AO on account of disallowance of legal and professional fees (fees for technical services) paid to Gulemark TPL JV. The sole reason for the disallowance is that Gulemark TPL JV, has not rendered the services, therefore, the claim was disallowed u/s 37 of the Act. 15. On perusal of the facts on record we find that the assessee entered into an agreement dated 29/01/2016, which was termed as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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