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2023 (9) TMI 325 - AT - Income TaxRevision u/s 263 - Reassessment proceedings concluded - main contention of the assessee, therefore, is this that the status of the assessee claiming as joint venture, the claim of deduction u/s 80IA(4), the disallowance of interest expenditure u/s 40(a)(ia) and exemption of receipt of insurance claim under the Act had been duly verified by the AO in the re-assessment proceeding itself which is clearly evident from the order passed by the Ld. AO u/s 143(3) r.w.s. 147 - HELD THAT:- As evident from the records itself that the Ld. AO upon due application of mind verified the four above issues and allowed the same in respect of status of assessee claimed as joint venture, claim of deduction u/s 80IA(4), disallowance of interest expenses under Section 40A(i)(a) of the Act and exemption of receipt of insurance claim under the Act but disallowed on account of interest paid to Citycorp Finance Ltd. u/s 40(a)(ia) of the Act and added to the total income of the assessee out of interest payment GSHP-9A contract work which clearly establishes due application of mind by the Ld. AO. Moreso, the issues in question, as raised by the Ld. PCIT has already been explained by the assessee. The assessee further clarified that the assessee made substantial investment for developing the infrastructure facility with supporting financial documents. It was further mentioned that the entire investments were made by the appellant and no subsidy and/or assistance from any other prescribed authority was received; the explanation rendered by the assessee. There is no iota of doubt that the AO has made a detailed enquiry in the case of the assessee in the scrutiny proceeding, particularly, in regard to the issue raised by the Ld. PCIT in the order impugned. Upon making the exhaustive enquiry and excessive documents so placed by the assessee before the Ld. AO, the return of income filed by the assessee had been accepted. We would like to mention that though the PCIT sought to justify his point of view in holding the order passed by the Ld. AO erroneous so as to prejudicial to the interest of the Revenue due to lack of enquiry, such finding is totally found to be non-application of mind and a colorable exercise of power. We find that in this case proper and adequate enquiry has been conducted by the Ld. AO. Thus, the order passed by the Ld. PCIT quashing the order passed by the Ld. AO holding it erroneous and prejudicial to the interest of the Revenue due to lack of adequate enquiry is not sustainable in the eye of law - Decided in favour of assessee. Deduction u/s 80IA(4) - Disallowance of claim as no development of the infrastructure facility carried away - assessee company engaged in the civil construction work mainly laying roads, dams, bridges, a developer of infrastructural facility upon making investment of its own capital as well as borrowed funds in the form of plant and machinery, structures at sites, working capital, human resources, technical expertise etc. entrusted by the State Government/Central Government on various projects - HELD THAT:- As dealt with relevant clauses of the tender documents stipulating various conditions viz. financial involvements, risks, obligations and responsibilities of the assessee in developing, operating and maintaining of infrastructure facilities, which clearly makes out the case of the assessee within the scope and ambit of section 80IA(4) of the Act so as to claim the impugned deduction. The terms and conditions of tender documents / agreements / work order and comprehensive view of the activities undertaken by the assessee as discussed above clearly demonstrates that the assessee-company has undertaken substantial activities in respect of various projects awarded by various statutory bodies, which makes the assessee to qualify as a developer of Infra facility and to make claim necessary benefits under section 80IA(4) of the Act. If the contention of the Revenue is encouraged then possibly none of the developers will be entitled to the claim made under Section 80IA(4) of the Act. Our this view has been strengthened by the observation and the ratio laid down by the Hon’ble Delhi High Court in the case of CIT vs. VRM India Ltd [2015 (3) TMI 941 - DELHI HIGH COURT] - No doubt in regard to the admissibility of the claim made by the assessee and to entertain the same by giving relief to that effect. 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, the assessee is referred to as contractor or just because 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) of the Act. 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 confers right of eligibility to the assessee to claim benefits under section 80IA(4) of the Act. Decided in favour of assessee.
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