TMI Blog2021 (5) TMI 1008X X X X Extracts X X X X X X X X Extracts X X X X ..... apex court's recent constitutional bench's decision in Commissioner of Customs (Import) Vs. Dilip Kumar and Co. [ 2018 (7) TMI 1826 - SUPREME COURT] settling the law that a fiscal statute as well as an exemption clause incorporated therein ought to be construed in stricter parlance only. Their lordships make it clear that benefit of doubt in case of taxing provision goes to the tax payer and vice versa in an instance of an exemption provision. The assessee's first argument is rejected therefore. We find force in Revenue's instant argument as the Finance Act, 2009 substitutes the earlier explanation that the same would not cover a works contract for the purpose of providing deduction qua industrial undertaking or enterprise engaged in infrastructure development, etc. Stages I II of the Bhima Lift Irrigation project undertaken by the assessee containing all the civil works like canal approach to the tunnel, tunnel, surge pool pump house, delivery mains manufacturing, testing, inspection, packing, supply, erection and commissioning of electro mechanical and hydro mechanical equipment indeed formed an architectural as well as engineering structure and there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aim of section 80IA of the Act deduction (supra). We are afraid that such a liberal interpretation would amount to going against the stricter interpretation principle in view of honourable apex court decision Raghunath Rai Baraza Vs. PNB [ 2006 (12) TMI 479 - SUPREME COURT] . We accordingly conclude both the learned lower authorities have rightly disallowed assessee's 80IA deduction claim involving varying sum(s) (supra) in their respective orders. - Decided against assessee. - ITA NOS. 496/HYD/2018, 1129/HYD/2018, 1130/HYD/2018, 1131/HYD/2018, 1132/HYD/2018, 430/HYD/2016, 431/HYD/2016, 432/HYD/2016, 2137/HYD/2017 - - - Dated:- 12-5-2021 - S.S. GODARA, MEMBER (J) AND LAXMI PRASAD SAHU, MEMBER (A) For the Appellant : Mohd. Afzarl, A.R. For the Respondent : Yvst Sai, CIT-D.R. ORDER S.S. Godara, Member (J) 1. The instant batch of nine cases pertains to a single assessee M/s. NEE-NPC-Mytas-JV. All these nine appeals arise against the Commissioner of Income Tax (Appeals)-12, Hyderabad's order dt. 16.08.2017 in case No. 0149/2016-17 for Assessment Year 2006-07; the CIT(Appeals)-9, Hyderabad's common order dt. 31.12.2015 passed in case Nos. 0273/A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duction claim despite the fact that it has developed the impugned infrastructure facilities. He has further filed a detailed written synopsis summarizing assessee's arguments as under: 1. The assessee herein is a Joint Venture Maytas NCC JV. The Joint Venture is a Consortium of Maytas Infra Ltd. (Presently known as IL FS ECC Limited) and Nagarjuna Construction Company Limited (Presently known as NCC LIMITED) and engaged in development of irrigation projects which are defined as infrastructure facilities. During the financial year 2005-06, the assessee undertook 6 different infrastructure facilities being irrigation projects. The details of the projects eligible for deduction u/s. 80IA are mentioned at page 18 of the paper book. 2. The assessee submits that it is a consortium of companies. It enters into agreements with State Government; the State Government allotted the work of development of irrigation projects and the income thereon is eligible for deduction u/s. 801A (4) of the I.T. Act. Accordingly, the assessee filed the return of income admitting NIL income. 3. The assessment was originally completed u/s. 143(3) of the I.T. Act on 18.11.2008 denying the deduct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder of the CIT (A)-4, Hyderabad and held that the works executed by the assessee are not simple works contracts but they are the development of infrastructure facility. The learned CIT (A) also extracted the relevant portion of the order of the CIT (A)-4, Hyderabad. 10. Against the said decision, the Department is in appeal before the Hon'ble Income Tax Appellate Tribunal. 4. Mr. Afzal also took pains to place on record the assessee's twin sheets containing architectural design of stages I and II of Bhima Lift Irrigation Project containing design and execution of all civil works like canal approach to the tunnel, tunnel, surge pool pump house, delivery mains, etc. His case in light of the assessee's stand adopted throughout and in view of the detailed voluminous Paper Books comprising of agreement clauses to this effect is that it is in fact the assessee who has developed the relevant infrastructure facility defined in section 80IA(4) Explanation (c) of the Act and therefore, we ought to adopt liberal construction only so as to reverse the learned lower authorities' action making the impugned disallowance. He has also filed a case law paper book running in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IA(4) of the Income Tax Act. The Hon'ble Bench has also directed examination of the issue that the assessee developed the project and not executed the work merely as a contractor. 2. It is submitted that neither before AO nor before the CIT(A), the assessee could establish that it has developed the project both in terms of entrepreneurial risk and financial involvement. Firstly, the assessee is a mere JV with no assets and no wherewithal to execute the project. As can be clearly seen from the JV Agreement, the work was distributed among the partners of JV who executed the work and are separately filing returns and are separately being assessed. When the assessee has not executed any work of the project and when the directions of the Hon'ble ITAT vide its order dated 8.3.2013 have been duly followed by the AO, there is no ground for the assessee to raise the issue again in the second round of litigation. 3. Secondly, the Hon'ble ITAT directed that it should be examined that whether the assessee has actually carried on development of the infrastructure facility cumulatively with all the activities of design, development, engineering, construction, maintenance, finan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filed by assessee may kindly be dismissed. 6. Mr. Afzal has strongly reiterated the assessee's stand claiming itself as developer of the lift irrigation project in question. 7. We have heard the foregoing rival submissions qua the instant issue of section 80IA deduction. The assessee has admittedly claimed the same taking itself as the developer by court that a corresponding commercial project firm of infrastructural facility as per section 80IA(4) Expln.(c) covering a water supply project, water treatment system, irrigation project, sanitation and sewerage system or solid waste management system only. Our attention has been invited to the corresponding project's architectural design (supra). The assessee has thereafter pleaded that it has undertaken the business risk not only in the development of the said lift channel forming part of the irrigation project which has turned barren uneven tracks of land to a canal but also it had deployed all of the corresponding plant and machinery, labour force followed by retention money's project thereby satisfying all the conditions of development of infrastructure facility. All these assessee's arguments fail to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned CIT-DR further sought to pin point the fact that the latter explanation inserted vide Finance Act, 2009 w.e.f. 1.4.2000 has rather covered a work contract as not entitled for the impugned deduction despite the fact that the concerned assessee satisfied all other conditions in sub-section (4) of section 80IA of the Act. We find force in Revenue's instant argument as the Finance Act, 2009 substitutes the earlier explanation that the same would not cover a works contract for the purpose of providing deduction qua industrial undertaking or enterprise engaged in infrastructure development, etc. 11. There is yet another equally important aspect which requires our apt adjudication at this stage i.e. of the clinching legislative expression in the latter explanation 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 the state government) . We note that honourable apex court yet another larger bench decision in Kartar Singh Bhadana Vs. Hari Singh Nalwa Ors. Civil Appeal No. 6931 of 2000 decided on 27.03.2001 had an occasion to deal with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e work executed is more than or equal to the fixed lump sum monthly instalment as indicated in the agreement. The said agreement stipulated advance payments to the assessee qua supply of goods at the site. All these facts sufficiently indicate that the assessee, assuming that not accepting that it is the developer u/s. 80IA(4) of the Act, executed a works contract only under Explanation to section 80IA of the Act and therefore, not entitled for the impugned deduction. 13. The assessee next made a very strong endeavour to place reliance on a catena of case law (supra) including CIT Vs. ABG Heavy Industries Limited (2010) 322ITR 323 (Bom). We find that neither of these decisions deals with the interplay between the section 80IA(4) Vs. 80IA Explanation involving execution of works contract as is the factual position before us. The said case law distinguished, therefore. 14. Mr. Afzal's last argument seeks to buttress the point that such a strict interpretation employed in dealing with an instance of development of an infrastructure project would tantamount to closing the deduction chapter altogether and more particularly, when this assessee has borne all risks and responsib ..... X X X X Extracts X X X X X X X X Extracts X X X X
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