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2017 (9) TMI 643 - AT - Income TaxEligibility for the benefits of section 80 IA - assessee is in business of developing infrastructure facility - whether assessee can be said to be carrying on the business of (i) developing or (ii) operating and maintaining or (iii) developing, operating and maintaining any infrastructure facility as envisaged in section 80IA(4)(i)? - Held that:- CIT(A) has misdirected himself in inferring that assessee was merely executing a works contract as a contractor and not as a ‘developer’. At this stage, we may also make a reference to clause 3.7 of the Part – III of contract for supply of DFA unit dealing with Post Warranty Maintenance Contract. The said clause prescribes that assessee was obligated to make a separate offer to IOC for post-warranty maintenance of the system supplied by the assessee. The said clause itself indicates that assessee not only designed, engineered, got it fabricated and supplied the contract as a developer and was also providing warranty; and, in the post-warranty period, a separate offer was to be made. Therefore, factually speaking, we are unable to concur with the lower authorities that assessee was merely a ‘contractor’ and not a ‘developer’ so far as it relates to the water treatment systems supplied to the IOC. In this view of the matter, in our view, assessee qualifies for the benefits of section 80 IA of the Act. Assessee has not claimed the deduction in the earlier years therefore, it is ineligible for the said deduction in the instant year - Held that:- On this aspect, the Ld. Representative for the assessee has pointed out that in the earlier years assessee was supplying the water treatment equipment to concerns, such as Thermax, L&T, etc. and that it was only for the first time in assessment year 2008-09 that it was awarded the tender by IOC. It was, therefore, in this context, the claim has been made in the instant year. The Ld. Representative for the assessee also pointed out that the time period prescribed for the deduction under section 80 IA(4) of the Act is 20 years and in that context it is eligible for the claim of deduction in assessment year 2009-10, since the first year was assessment year 1992-93; inasmuch as, assessee was incorporated on 09/10/1991. In our considered opinion, the aforesaid assertions made out by the assessee clearly belie the observations made by the CIT(A) and on this ground also we find no reason to uphold the stand of the CIT(A). Therefore, in conclusion we set-aside the order of the CIT(A) and direct the Assessing Officer to allow the claim of the assessee for deduction under section 80 IA(4) of the Act. Thus, on this aspect assessee succeeds. Disallowance being interest for delay in making payment due for the credit card facility - addition u/s 37 - Held that:- So far as the use of the credit card is concerned, there is no dispute that the same has been done in the course of assessee’s business. At the time of hearing, the Ld. Representative for the assessee pointed out that interest liability was raised on the assessee by the credit card company which was settled by the assessee in the instant year and, therefore, the interest liability in question crystallized during the year itself. The impugned expenditure could not be treated as a prior period expenditure, rather the said expenditure has clearly crystallized during the year under consideration and, therefore, deserves to be allowed in computing the business income. Thus, assessee succeeds on this aspect also.
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