2008 (6) TMI 225 - ITAT BOMBAY-F

Deduction u/s 80-IA - assessee is mere a contractor or developer of infrastructural facility and not engaged in operating and maintaining the infrastructural facility - HELD THAT:- A person, who enters into a contract with another person will be a contractor no doubt; and the assessee having entered into an agreement with the Government agencies for development of the infrastructure projects, is obviously a contractor 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 80-IA(4) itself provides that assessee should develop the infrastructure facility as per agreement with the Central Government, State Government or a local authority. So, entering into a lawful agreement and thereby becoming a contractor should, in no way, be a bar to the one being a developer.

Therefore, merely because, in the agreement for development of infrastructure facility, assessee is referred to as contractor or because some basic specifications are laid down, it does not detract the assessee from the position of being a developer; nor will it debar the assessee from claiming deduction u/s 80-IA(4).

The judgment of Patel Engineering Ltd. [2004 (6) TMI 245 - ITAT BOMBAY-F] is also relevant for Interpretation, which contained adequate discussion on the applicability of sub-clause (c) to a case of an enterprise which is engaged in only developing of a infrastructural facility. This interpretation was taken after considering the Apex Court judgment in the case of K.P. Verghese v. ITO [1981 (9) TMI 1 - SUPREME COURT].

Therefore, an assessee who is only engaged in the developing the infrastructural facility, i.e., road and not engaged in the 'operating and maintaining' the said facility is entitled to the benefits of the deduction u/s 80-IA(4). The provisions of sub-clause (c) of clause (i) of section 80-IA(4) are inapplicable to the assessee, who is engaged in mere developing of the infrastructure facility as defined in Explanation to said clause (i). Considering all the facts and circumstances of the assessee's case and in the light of the above discussed decisions and interpretations, we are of the considered opinion that the assessee is entitled to deduction u/s 80-IA(4)(i). Accordingly, ground 2 is dismissed.

In the result, appeal of the revenue is partly allowed.