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2017 (1) TMI 1830 - AT - Income TaxDeduction u/s. 80IA - Assessee company a developer OR contractor - As argued assessee company has not made an agreement with Central or State Government, local authorities or any other statutory body for the purpose of developing infrastructure facility as required under the law and relied on the CBDT circular no. 717 issued in August, 1995, and came to a conclusion that due to financial, managerial hardship of the Government by applying commercial principles in operation of infrastructure facilities for massive expansion and qualitative improvement in infrastructure of the company - HELD THAT:- AO main contention that the assessee is only the contractor and not a developer but the person who develops the infrastructure facilities pursuant to contract with the State Government shall be considered as developer. We found the co-ordinate bench decision of East Coast Constructions [2011 (9) TMI 1091 - ITAT CHENNAI] and BT Patil [2013 (11) TMI 197 - ITAT PUNE] and Om Metal Infra Projects (2008 (12) TMI 744 - ITAT JAIPUR) and ABG Heavy Industries Ltd. [2010 (2) TMI 108 - BOMBAY HIGH COURT] has considered similar activities performed by the assessee company is developing infrastructure i.e., conceptualization of designs, Level of investment should be considered to be called as developer. We found that the assessee company undertakes the entire responsibility from concept to Commissioning of developing the entire facility. Based on customer specifications, conceives the designs and technical plans, chooses the technology required for treatment of the effluents and executes the project through a skilled team of more than 250 - 300 engineers. The work performed includes the basic design of the plant, detailed engineering, procurement of equipment and components, delivery of supplies at site, civil construction of the structure, installation of equipment at site, interfacing through piping and cables, testing and commissioning and subsequent O&M. Thus assessee has demonstrated the investments of the company in project from the assessment year 200-03 to 2007-08 consisting of Receivables, margin money with the bank, and Bank guarantees for performance guarantee. These financial aspects prove that the assessee company has funded finances in infrastructure and execution of projects. We are of the opinion that the assessee has complied the conditions u/s. 80IA(4) of the Act and demonstrated the funding of the projects with financial statements. Decided in favour of assessee. Forex exchange loss - Whether foreign currency is held as a capital asset or as fixed capital such profit or loss would be of capital nature? - HELD THAT:- We find the loss due to forex exchange difference as on the date of balance sheet is expenditure falls u/s. 37(1) of the Act. The outstanding liability relating to the import of raw material based on closing rate of foreign exchange and if any difference by loss or gain arising on conversion liability should be routed through profit and loss account. Hence, we do not find any infirmity in the order of the CIT(A) and upheld the same and dismiss the ground of the Revenue. In the result, the Revenue appeal is dismissed.
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