2023 (2) TMI 206 - AT - Income Tax

Disallowance u/s 80IA - Disallowance of claim by treating the assessee is a work contractor and not a developer by Revenue - whether the assessee is a developer or works contractor as the assessee merely executed the contract for the various sites awarded by the various entities as of the ultimate view of the Revenue and the claim made by the assessee u/s 80IA(4) has, therefore, been rejected? - HELD THAT:- As perusal of various clauses of Tender documents and case laws relied upon by both the parties, it reveals that the tender work under consideration are not for a specific work, rather they are for development facility as a whole. The responsibility is fully assigned to the developer for execution and completion of the work. Various stipulations contained in the Tender documents demonstrate various risks undertaken by the assessee for execution of the project work awarded by the competent authority in terms of financial resources, manpower deployment, both technical and administrative expertise, drawing and designing of the project specifications and getting approval from the competent authority, safety and security of project and human resources, compliances of various statutory rules and laws.

Therefore, merely because in the agreement for development of infrastructure facility, assessee is referred to as contractor or because if some basic specifications are laid down, it does not detract the assessee from the position of being a developer, nor will deprive the assessee from claiming deduction u/s.80IA(4) - As such, looking to the overall aspects of work undertaken by the assessee we can safely come to the conclusion that the assessee is engaged in development of the infrastructure facility and therefore, a developer, which entails the assessee to claim benefits u/s 80IA(4) - Thus, the issue of claim of deduction u/s 80IA(4) of the Act is allowed in favour of the assessee and against the Revenue. This common ground raised in all the appeals are accordingly disposed of. Additions made in the respective year are deleted

Interest income claimed to be eligible for deduction u/s 80IA(4) - particular interest is on the mandatory fixed deposits as security and bank guarantee - HELD THAT:- We find that while granting relief on the identical issue of bank interest on bank guarantee in favour of the assessee holding said interest income eligible for deduction u/s 80IA(4).

We do not find any reason to deviate from the stand taken by the Co-ordinate Bench which has been finally decided by relying on the judgment passed in the case of CIT vs. Shah Alloys Ltd. [2016 (8) TMI 1191 - GUJARAT HIGH COURT] whereby the profits of business of the undertaking includes other incidental incomes derived from the business of the undertaking has been accepted as the business income and holding the income earned from deposits as business income eligible for deduction u/s 80IA - We, therefore, respectfully relying upon the same allow this bank interest on bank guarantee as eligible for deduction under Section 80IA(4) of the Act as claimed by the assessee. The addition is, therefore, deleted. This ground of appeal is, therefore, allowed.

Disallowance u/s 40(a)(ia) - TDS not paid in due time is the subject matter before us - HELD THAT:- Finance Act, 2010 further rigors of Section 40(a)(ia) of the Act to provide all TDS made during the previous year can be deposited with the Government by the due date of filing of return of income. Further that, the amendment has been made effect from 01.04.2010 and therefore will apply in relation to A.Y. 2010-11 and subsequent year. In that view of the matter, the submission made by the assessee that the TDS since paid before filing of return under Section 139(1) of the Act, the disallowance made by the Revenue is not permissible is found to be acceptable, particularly, in view of the ratio laid down by the Hon’ble apex Court [2018 (5) TMI 356 - SUPREME COURT]. Therefore, respectfully relying upon the same, we allow this ground of appeal preferred by the assessee by deleting the addition made by the Revenue.