TMI Blog2016 (9) TMI 1573X X X X Extracts X X X X X X X X Extracts X X X X ..... Ramalingam Sudhakar And Mr. B.S.Walia, JJ. For the Appellant/petitioner (s): Mr.K.D.S. Kotwal, Advocate. For the respondent(s): Mr.Subash Dutt, Advocate with Mr. Suraj S. Wazir, Advocate. JUDGMENT 1. The four appeals have been filed by the Revenue raising the following substantial questions of law which reads as follows: ITA No.35/2013 (i) Whether on facts and circumstances of the case, the ITAT Amritsar was justified in treating the assessee company as a developer within the meaning of section 80-IA(4) of the Income Tax Act, 1961 when in fact the assessee had merely executed a work contract for IRCON International Ltd. for construction of some part of the Railway bridge and works contract under section 80-IA(4) of the Income Tax Act, 1961 were clearly ineligible for deductions. (ii) Whether the ITAT did not err in law when it placed reliance on the judgments which were not applicable to the case of the assessee. (iii) Whether the ITAT did not err in interpreting the provisions of the Income Tax Act 1961 when it held that there was no bar for a contractor to be a developer for purposes of benefits of section 80-IA(4) of the Income Tax Act, 1961. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 80-IA(4) of the Income Tax Act, 1961 were clearly ineligible for deductions. (ii) Whether the ITAT did not err in law when it placed reliance on the judgments which were not applicable to the case of the assessee. (iii) Whether the ITAT did not err in interpreting the provisions of the Income Tax Act 1961 when it held that there was no bar for a contractor to be a developer for purposes of benefits of section 80-IA(4) of the Income Tax Act, 1961. 2. The factual background that led to present appeal is as follows:- 3. The respondent assessee is a Company engaged in development of infrastructure like Airport, railway bridges etc. The petitioner during the four relevant years, participated in Tenders floated by the Government, Public Sector Undertaking or Government agency for construction of bridges and for developing or improving Airport facility. 4. Being the successful tenderer, the respondent- assessee executed the work and in relation to the profits and gains that was derived from those contracts, the assessee claimed deduction in terms of Section 80-IA (4) of the Income Tax Act. The assessing officer in respect of each assessment year accepted the plea for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the requirement is that the execution of the contract should be such that the condition contained in Section 80-IA (4) should be complied cumulatively. Merely by executing the contract, assessee only is developing a part of Airport or constructing a bridge. The Assessee, therefore, would not be entitled to benefit of Section 80-IA (4)(i)(c) as he does not comply with the conditions in its totality. 8. The Commissioner appeals concurred with such finding holding that compliance should be cumulative and cannot be part compliance. The Tribunal however did not accept such a contention on behalf of the department and accepted the assessee plea by holding that the provisions of Section 80-IA (4)(i)(c) and amended Section 80-IA (4)(i)(b) with effect from 01.04.2002, the explanation to Section 80-IA (4)(i)(c) with effect from 01.04.2002 in terms of the Finance Act, 2002 makes it clear that Section 80-IA (4)(i)(c) contemplates development of infrastructure facility in respect of road, bridge, rail system and Airport as well. The deduction is allowable if the enterprise carries on the business of (i) developing or (ii) operating and maintaining or (iii) developing, operating and mai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laim of deduction to be allowed. The aforesaid Circular reads as follows: CIRCULAR NO.4 OF 2010, DT. 18TH MAY, 2010 18/05/2010 Widening of existing road--Definition of a new infrastructure facility--Clarification regarding DEDUCTIONS SECTION 80-IA(4) References have been received by the Board as to whether widening of existing roads constitutes creation of new infrastructure facility for the purpose of Section 80-IA(4)(i) of the Income Tax Act, 1961, Section 80-IA(4)(i) provides for a deduction to an undertaking engaged in developing, or operating and maintaining, or developing, operating and maintaining any infrastructure facility subject to satisfaction of the conditions laid down in the section. The Explanation to sub-Section 80-IA(4)(i) states that for the purpose of this clause, infrastructure facility means inter alia:- (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; The issue has been examined by the Board. It has been decided that widening of an existing road by constructing additional lanes as a part of a highway project by an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 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, airport, inland waterway, inland port or navigational channel in the sea. 13. The first and the foremost requirement is that the assessee developer should come within the ambit of Section 80-IA (4)(i)(a)(b) which the assessee satisfies. There is no dispute since there is a valid contract as required. The next requirement for the benefit to be extended under the said provision is that the enterprise should provide an infrastructure facility in relation to establishing a road, a bridge or a rail system or Airport. There is no specific intendment as to the nature of work to be undertaken as is evident from the explanation. Therefore, the word contained therein has wide amplitude. The Assessing officer was not correct in prescribing certain limits and describing the nature of work. In other words, the assessing a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his fortifies our concern. The department is not entitled to take inconsistent stand in respect of each assessment year on the same set of facts. This principle has been well explained by the Supreme Court in the case of M/s Radhasoami Satsang, Saomi Bagh, Agra vs. Commissioner of Income Tax, (1992) 1 Supreme Court Cases 659. 13. One of the contentions which the learned senior counsel for the assessee-appellant raised at the hearing was that in the absence of any change in the circumstances, the Revenue should have felt bound by the previous decisions and no attempt should have been made to reopen the question. He relied upon some authorities in support of his stand. A full Bench of the Madras High Court considered this question in T.M.M Sankaralinga Nadar Bros. Ors, v. Commissioner of Income-Tax, Madras, 4 ITC 226. After dealing with the con- cession the Full Bench expressed the following opinion: The principle to be deducted from these two cases is that where the question relating to assessment does not vary with the income every year but depends on the nature of the property or any other question on which the rights of the parties to be taxed are based, e.g., whether ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be sustained by not challenging the order, it would not be at all appropriate to allow the position to be changed in a subsequent year. 17. On these reasonings in the absence of any material change justifying the Revenue to take a different view of the matter- and if there was not change it was in support of the assessee- we do not think the question should have been reopened and contrary to what had been decided by the Com- missioner of Income-Tax in the earlier proceedings, a dif- ferent and contradictory stand should have been taken. We are, therefore, of the view that these appeals should be allowed and the question should be answered in the affirma- tive, namely, that the Tribunal was justified in holding that the income derived by the Radhasoami Satsang was enti- tled to exemption under Sections. 11 and 12 of the Income Tax Act of 1961. 17. As to the power of the taxing authority to re-write the terms of the agreement arrived between the parties at arm's length, the Supreme Court in the case of Mangalore Ganesh Beedi Works vs. Commissioner of Income Tax, Mysore, (2016) 2 Supreme Court Cases 556, disapproved such an endeavour as impermissible. It approved the view of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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