TMI Blog2009 (10) TMI 521X X X X Extracts X X X X X X X X Extracts X X X X ..... s a sub-contractor. Then he took note of the amendment made in section 80-IA by the Finance Bill, 2007 by which an Explanation has been introduced with retrospective effect from 1-4-2000. In the opinion of the learned AM even if there was some lack of clarity in the main provision, the new Explanation clarified the position that no deduction could be allowed. That is how this matter is before the instant Larger Bench. Whether it is reference under sub-section (3) or (4) of section 255? - As the reference stood already made by the members of the Division Bench u/s 255(4) when they shortlisted their difference of opinion by formulating the questions, the constitution of Larger Bench by the Hon ble President under such compelling circumstances was only u/s 255(4) and not u/s 255(3). The reference to sub-section (3) by the Hon ble President in this reference appears to be only with a view to nominate a Larger Bench of three members so that there may not be any problem of majority opinion on the applicability or otherwise of Explanation below section 80-IA(13) inserted by the Finance Act, 2007. We, therefore, clarify that for all practical purposes it is a reference to the Lar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etrospective amendment made to a particular provision covering the year in dispute, needs to be given effect to on any matter pending before any authority, notwithstanding the fact that such amendment was carried out after the passing of the assessment order. Therefore, it is not permissible to argue that the Tribunal is incompetent to take cognizance of any provision which comes into existence with retrospective effect, on the issue pending before it. However, it is of paramount importance that before applying such amended provision, aggrieved party must be given an opportunity of hearing. Whether a Bench u/s 255(4) can take note of a provision inserted with retrospective effect having bearing on the issue, coming into existence after the passing of separate orders by the dissenting members but during the pendency of dispute before the Bench under sub-section (4) of section 255? - The very purpose of conducting judicial proceedings by Bench under section 255(4) for hearing on such point or points depicts that the parties are at liberty to advance any legal submission before the Bench on the question before it, even if such submission was not made at the time of hearing befo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act, a useful reference can be made to the General Clauses Act, 1897. It is noted from the material on record that the assessee was given civil construction work to be done strictly according to the plan laid down by the State Government/Statutory Authorities. Such authorities have been referred to as the owner and the assessee as the joint venture for executing the contract. The sphere of work assigned to the assessee is simply to do the specified job of civil construction. It is not involved in the planning and development of the infrastructure facility as a whole. Therefore, the claim of the assessee fails on both the counts, viz., it is neither a developer nor it fits into any of the two categories of the eligible businesses of ( i ) developing, ( ii ) maintaining and operating infrastructure facility on one hand or ( iii ) developing, maintaining and operating any infrastructure facility on the other. When we examine the mandate of clause ( i ) of sub-section (4) of section 80-IA it transpires that the eligible enterprise must fulfil all the conditions set out in sub-clauses ( a ), ( b ) and ( c ) of section 80-IA(4)( i ). Here it is important to notice t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on under section 80-IA, even if it is an enterprise as referred to in sub-section (1). The language of this Explanation makes it crystal clear that the benefit under sub-section (4) cannot be provided to a business referred to in sub-section (4) which is in the nature of works contract awarded by any person including the Central or State Government and executed by the undertaking or enterprise referred to in sub-section (1). From the memorandum explaining the rationale behind the substitution of Explanation it can be easily seen that the Legislature clarified its intention beyond any doubt that the deduction cannot be allowed in relation to an eligible business which is in the nature of works contract. Even if one presumes, for a moment, that all the conditions set out in sub-section (4) clause ( i ) are satisfied, which are actually not fulfilled in the instant case, and the enterprise is covered under sub-section (1), then also deduction cannot be allowed in relation to a business which is in the nature of a works contract. As provision should be strictly construed as regards the applicability to the case of the assessee. It is only when the applicability is found that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... making a brief reference to such facts. 3. The assessee is a civil contractor and during the previous years relevant to the assessment years under consideration, it was engaged in the construction of various projects of Government of Maharashtra, Government of Karnataka and various local authorities. It furnished its returns declaring total income of Rs. 10,41,09,480 for assessment year 2000-01 on 30-11-2000 and Rs. 2,59,55,460 on 29-10-2000 after claiming deduction under section 80-IA to the tune of Rs. 9,55,57,028 and Rs. 7,94,48,125 in relation to assessment years 2000-01 and 2001-02 respectively. These amounts were computed after showing the net profit from the business of infrastructure project claimed to have been carried on by the assessee during the relevant years. The project-wise claim of deduction has been reproduced in the assessment orders as well as the order proposed by the learned Judicial Member. To sum up, the assessee claimed deduction in respect of five and seven projects in the years in question respectively. It was claimed that the assessee s gross total income included profit and gains derived from business referred to in sub-section (4) of section 80- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ply of water from Koyna river to power station. Further this work was executed by the assessee as a sub-contractor even though the tripartite agreement was made between the assessee, M/s. Patel Engineering Company and Government of Maharashtra. This agreement was also dated October 1992, that is the period anterior to 1-4-1995, being the date from which the deduction under section 80-IA was available. One project, i.e., Jihe Kathapur Lift Irrigation Project was again found to be a joint venture between the assessee-company and two other non-corporate entities. That was also found to be hit by the pro-visions of section 80-IA(4)( i )( a ) of the Act. The learned CIT(A) came to hold that the assessee could not be called as a Developer in the sense of section 80-IA because no agreement was signed by it with the Central Government or State Government or local authorities for development of projects under BOT or BOOT scheme. The assessee was held to be a mere Contractor for executing the projects of various Government authorities. Since in the opinion of the learned CIT(A) the benefit under section 80-IA was available to those enterprises who were engaged in the business of developin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eference to the Third Member under section 255(4) of the Act. 6. The Hon ble President fixed the case for hearing at Pune Bench on 12-3-2008 acting himself as the Third Member. It was argued before him that the learned Accountant Member had referred to Explanation below section 80-IA(13) which was inserted by the Finance Act, 2007 with retrospective effect from 1-4-2000. It was claimed that the learned Accountant Member unilaterally took Finance Bill, 2007 into consideration and decided the matter against the assessee. This fact was not disputed even by the learned Departmental Representative. Under these circumstances, the Hon ble President, in his capacity of the Third Member in this case, observed that the entire case was decided by the learned Accountant Member on a point not raised by the parties during the course of hearing. He further noted that if the matter was decided by him after hearing the arguments on the applicability of the Explanation it would amount to decision for the first time and the view so expressed by him might be viewed as solitary expression of opinion on the issue, which would create complications rather than resolving them. Vide para 9 of his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Dynavision Ltd. ( supra ) to contend that the intervener cannot be allowed on the point of difference under section 255(4). 8. We have heard the preliminary objections raised on behalf of the parties before us. Ahead of delving upon to decide the questions referred to us for decision on merits, it is imperative to deal with the preliminary objection taken before us so as to dispel any doubt about the nature of the constitution of this Larger Bench and the sub-section under which it is constituted. It will be imperative to go through the relevant provisions in this regard, which are as under : 255(3) The President or any other member of the Appellate Tribunal . . ., and the President may, for the disposal of any particular case, constitute a Special Bench consisting of three or more members, one of whom shall necessarily be a Judicial Member and one an Accountant Member. 255(4) If the members of a Bench differ in opinion on any point, the point shall be decided according to the opinion of the majority, if there is a majority, but if the members are equally divided, they shall state the point or points on which they differ, and the case shall be referred by the Presid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sue because of its vital implications or they feel themselves unable to agree with the view expressed by another Bench on similar point, they can request the President for the constitution of a Special Bench on such issue. Besides that there may be certain other circumstances also in which the President can constitute Special Bench under section 255(3) consisting of three or more members for the disposal of any particular case. As against this, sub-section (4) applies only where a Division Bench has heard the matter and there is difference in the opinion on any point or points between the members. It is only under these circumstances that they state the point or points on which they differ and thereafter the President of the Tribunal appoints one or more of the other members so that there may be opinion of the majority of the members. One noteworthy difference between sub-sections (3) and (4) of section 255 is that whereas one or more members are appointed under sub-section (4) only when there is difference between the members who heard the appeal and had stated the point or points of difference, the Special Bench under sub-section (3) is always constituted in the absence of differ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it was held that section 9(1)( vii ), would apply. Recently the Hon ble Supreme Court in the case of Britannia Industries Ltd. v. CIT [2005] 278 ITR 546 has held that the expenditure towards rent, repairs, maintenance of guest house used in connection with the business is to be disallowed under section 37(4) because this is a special provision overriding the general provision. It, therefore, follows that if a specific provision is made then that matter is excluded from the general provision. From the above discussion it can be seen that a specific provision is made under sub-section (4) to appoint one or more members (may be three or more) for dealing with a situation in which the members, who heard the appeal have passed the dissenting orders. On the other hand, sub-section (3) contains a general provision for appointing three or more members for disposal of any particular case. It boils down that no Special Bench can be constituted under sub-section (3) of section 255 in a particular case where dissenting orders have already been passed by the members constituting the Division Bench. 12. Adverting to the facts of the instant case it is observed that the hearing by the Di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 255(4) 13. When the learned A.R. raised preliminary objection to make clear, before hearing the case on merits, as to whether it was reference under sub-section (3) or sub-section (4) of section 255, the Bench, after considering the arguments from both sides on this issue, pronounced in the open Court that it is a reference under section 255(4) and the matter may be argued accordingly. To this, the learned Departmental Representative raised objection in allowing the interveners to participate in the proceedings. 14. There is no dispute on the fact that the proceedings under section 255(4) are confined to the point or points on which the members of the Division Bench differ. One or more of the other members appointed under sub-section (4) are supposed to confine himself/themselves only to the facts of the case before the Bench. When the point of difference is restricted only to the evaluation and examination of the factual position prevailing in that case and no substantial question of law is involved, it is not permissible to allow any intervener to jump in the proceedings. Because of the very nature of such proceedings under sub-section (4) confined to the fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rred two Special Bench orders of the Tribunal, it is vivid that the importance of Third Member order under section 255(4) cannot be undermined. The Division Benches are bound to follow the same unless there is a contrary decision given by the Special Bench under section 255(3) of the Act. Under such circumstances, we fail to see any reason as to why the interveners be not allowed to participate in the proceedings under section 255(4) provided their arguments are confined to the substantial legal question posed before the Bench under section 255(4). It is further so for the reason that such an order passed under section 255(4) will have bearing on their respective cases if the issue involved is identical. However, it is pertinent to mention that such privilege given to the interveners is not unbridled. The interveners cannot be granted permission to enlarge the controversy before the Bench. The intervention can be allowed only to that aspect of the legal issue which is before the Bench in the proceedings under section 255(4). No other aspect even of the same legal issue which is subjudice before the Bench, can be allowed to be argued. As the decision of the Bench under section 255 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat assessment year . When we consider the language of section 4, which is charging section, it turns out that the same, inter alia, refers to the rate or rates of income-tax which shall be charged for the assessment year in accordance with and subject to the provisions of this Act in respect of the total income of the previous year of every person. Though section 4 is a charging section, but the rates of tax are provided by the relevant Finance Act. Thus, section 4 is a medium for giving effect to the provisions of the Finance Act. It is in this context that section 294 is relevant. Ex consequenti the net effect of section 294, read with section 4 on the one hand and the relevant Finance Bill/Act on the other hand is that if the Finance Bill providing rates of tax has been enacted, then the rates as per the Finance Act as on the 1st day of April in the assessment year shall be applicable, but if the relevant provisions in the Finance Bill have not been enacted then the rates so proposed or those already applicable, whichever are more beneficial to the assessee, shall be applicable. 18. When this position was put across to the learned A.R., he candidly accepted of not stri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oubtful of application to the facts of a case and the Assessing Officer rejects the claim of the assessee on the basis of his interpretation of such provision, the learned CIT(A) will be fully entitled to decide the issue in conformity with the clarification if issued by the Board or some amendment made to the Act, subsequent to the passing of the assessment order, which concerns with the dispute. In the same manner when issue is taken up by the either side before the Tribunal and in the meantime some amendment is carried out to the relevant provision with retrospective effect covering the period under consideration, the Tribunal will be duty bound to abide by such retrospective amendment. 20. At this stage it will be useful to refer to the order passed by the Special Bench of the Tribunal in the case of Aquarius Travels (P.) Ltd. v. ITO [2008] 111 ITD 53 (Delhi). Facts of that case are that the assessee earned, inter alia, some exempt income. The Assessing Officer disallowed interest to the tune of Rs. 12,94,978. The assessee remained unsuccessful before the first appellate authority. In the meantime section 14A was introduced with retrospective effect. It was claimed o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hon ble jurisdictional High Court in the case of CIT v. May Baker (India) (P.) Ltd. [1991] 192 ITR 239 (Bom.). The facts of that case indicate that the payment of Gratuity Act, 1972 came into force sometime in October, 1972. As per that, the assessee became liable to pay gratuity to its employees. Provision was made for Rs. 8,65,000 bifurcating it into two parts, viz., a sum of Rs. 3,31,000 as gratuity liability of the previous year and the remaining sum of Rs. 5,34,000 as liability of the past years. The ITO allowed assessee s claim to the extent of Rs. 3.31 lakhs and disallowed the claim for the balance amount of Rs. 5.34 lakhs. The Tribunal allowed deduction of the entire amount. Section 40A(7) was introduced by the Finance Act, 1975 with retrospective effect from 1-4-1973. The order of assessment, the appellate order of the Appellate Assistant Commissioner and the order of the Tribunal were passed before the insertion of sub-section (7) to section 40A. As a result of that, the new amendment could not be considered by any of the authorities. The Hon ble High Court held that the entire liability accrued during the previous year. The Tribunal was directed to pass such orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Division Bench, finality is attached to all the issues on which there is no difference between the members. However, the point on which the two members differ, obviously remains open for adjudication by the Third Member. During the continuation of proceedings under section 255(4) or after the passing of such order but before giving effect to the order so passed with a majority view, no party is entitled to re-agitate any of the issues decided by the Division Bench in concurrence or rake up an additional ground on any other fresh issue. For all practical purposes, the proceedings are closed, insofar as the Tribunal is concerned when the hearing is concluded by the Division Bench save and except the point or points on which there arose a difference of opinion. The Jodhpur Bench of the Tribunal in Rameshwar Soni v. Asstt. CIT (Inv.) [2005] 97 ITD 127 , (to which one of us is party), considered a situation in which the Third Member passed the order and when the matter came up before the Division Bench for giving effect to the majority view, the assessee raised an additional ground of appeal. After hearing the parties at length it was held that there was difference in the scope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on Bench. It has been held so in Subhash Gupta v. Dy. CIT [2003] 85 ITD 167 (Jp.) (TM); Dy. CIT v. B.P. Agarwalla Sons Ltd. [2003] 86 ITD 219 (Kol.) (TM) and Ms. Aishwarya K. Rai v. Dy. CIT [2007] 104 ITD 166 (Mum.) (TM). However it is relevant to mention that the bar is imposed on furnishing of additional evidence in these proceedings. Such prohibition does not extend to making additional legal submissions having bearing on the point of difference which is open before the Third Member. There is a basic difference between evidence and submission . The Law Lexicon by P. Ramanatha Aiyar gives the meaning of Evidence as the means from which an inference may logically be drawn as to the existence of facts. The meaning of Evidence has further been explained here as : all the legal means, exclusive of mere argument , which tend to prove or disprove any matter of fact the truth of which is submitted to judicial investigation . Another meaning given is : any matter of fact which is furnished to a legal Tribunal. . . . otherwise than by reasoning or a reference to what is noticed without proof. . . . as the basis of inference in ascertaining some other matter of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es of adjudicating the question on which difference of opinion arose. It, therefore, turns out that if a party relies on some retrospective amendment on the issue, which advents after the passing of orders by the members of the Division Bench, the same cannot be ignored by the Bench in the proceedings under section 255(4) provided the other party is given opportunity of hearing on such amendment. It is unrealistic to argue that the later amendment in the statutory provision or development of law on the question which is pending in dispute relating to the year, should be ignored. Not following such amendment would give absurd results and the order so passed will be rendered erroneous. The same is true for applying the judgment of the Hon ble Supreme Court or the Hon ble jurisdictional High Court coming into place after the passing of orders by the dissenting members. Brushing aside such amendment in the statutory provision or the pronouncement of law by the Hon ble Supreme Court or the Hon ble jurisdictional High Court, which is available at the time of passing order under section 255(4), would make the order cryptic. It is trite law that even rectification of the order is permissib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned Judicial Member in respect of the allowability of deduction under this section on other projects. He further referred to para 8 of the order passed by the Hon ble President, who initially acted as Third Member in this case and stated that it has been admitted that the controversy was centered only on one project and it was nobody s case that the assessee is not entitled to deduction in respect of the other projects. It was, therefore, requested that the question so proposed be modified by this Bench so as to substitute the word project with the word projects and resultantly this Bench should render its decision only on the Koyna Hydro Electric Power Project. The sum and substance of the learned A.R. s submission was that the learned Judicial Member had allowed deduction under section 80-IA on all the projects undertaken by the assessee whereas the learned Accountant Member disentitled the assessee to deduction only in respect of Koyna Hydro Electric Power Project and hence this Bench should decide the granting or otherwise of deduction only on the Koyna Hydro Electric Power Project as there was concurrence between the Members of the Division Bench as regards the allowabilit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , which was neither intended nor actually allowed by the ld. Accountant Member. Again his reference to para 8 of the order passed by the Hon ble President dated 14-3-2008, with an attempt to bring home the point that it was nobody s case that the new Explanation has any application to other projects except one, is devoid of any merit. It is apparent from the order passed by the Hon ble President that he simply recorded the argument of the learned A.R. in that para and the same is not his finding, which is amply demonstrated by the use of the sentence : in other words, it was, therefore, argued that there is no decision on four cases by the learned Accountant Member . When the Hon ble President has referred the matter to a Larger Bench without expressing his opinion on the questions referred to him under section 255(4), it is wrong to infer any decision having been rendered by the Hon ble President on any of the projects. 29. Both the sides, in their preliminary objection, have relied on the judgment of the Hon ble Madras High Court in the case of Dynavision Ltd. ( supra ). The facts of that case reveal that there was difference between the Judicial Member and Accountant M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ench on the admissibility or otherwise of the entire amount of deduction as claimed in respect of all the projects and also the effect of Explanation as inserted by the Finance Act, 2007 below sub-section (13) of section 80-IA and further as substituted by the Finance Act, 2009, then he made submissions in this regard, which have been taken into consideration. 31. Now we proceed to answer this question on merits. From the above-noted facts it is seen that the dispute centers around the allowability or otherwise of deduction under section 80-IA in respect of the projects in both the years under consideration. In order to appreciate the rival contentions it is sine qua non to have a quick look at the history of section 80-IA, insofar as it is relevant for our purpose. It was introduced by the Finance (No. 2) Act, 1991 with a view to encourage private sector participation and to attract capital funds on infrastructure development. Later on, this section was amended by the successive Finance Acts. Major changes were brought by Finance Act, 1995 by which for the first time a five-year tax holiday was provided for all infrastructure facilities. Circular No. 717, dated 14-8-1995 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deduction from such profits and gains of an amount equal to hundred per cent of profits and gains derived from such business for the first five assessment years commencing at any time during the periods as specified in sub-section (2) and thereafter, twenty-five per cent of the profits and gains for further five assessment years : Provided that where the assessee is a company, the provisions of this sub-section shall have effect as it for the words twenty-five per cent , the words thirty per cent had been substituted. (2) The deduction specified in sub-section (1) may, at the option of the assessee, be claimed by him for any ten consecutive assessment years out of fifteen years beginning from the year in which the undertaking or the enterprise develops and begins to operate any infrastructure facility or starts providing telecommunication service or develops an industrial park or generates power or commences transmission or distribution of power : Provided that where the assessee begins operating and maintaining any infrastructure facility referred to in clause ( b ) of Explanation to clause ( i ) of sub-section (4), the provisions of this sub-section shall have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roject; and ( c ) a water supply project, irrigation project, sanitation and sewerage system; The following clause ( c ) was substituted for the existing clause ( c ) of Explanation to clause ( i ) of sub-section (4) of section 80-IA by the Finance Act, 2000, with effect from 1-4-2001 : ( c ) a water supply project, water treatment system, irrigation project, sanitation and sewerage system or solid waste management system; ( ii ). . . [undertaking of telecommunication] ( iii ). . . [undertaking of industrial park] ( iv ). . . [undertaking of generation and distribution of power] (5) Notwithstanding anything contained in any other provision of this Act, the profits and gains of an eligible business to which the provisions of sub-section (1) apply shall, for the purposes of determining the quantum of deduction under that sub-section for the assessment year immediately succeeding the initial assessment year or any subsequent assessment year, be computed as if such eligible business were the only source of income of the assessee during the previous year relevant to the initial assessment year and to every subsequent assessment year up to and including the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re it can be noticed that the eligibility of deduction cannot be prior to the development and operation of the infrastructure facility. Unless the assessee really develops and begins to operate infrastructure facility there is no question of granting any deduction for the reason that the period of deduction cannot commence unless the enterprise develops and begins to operate the infrastructure facility. Adverting to the facts of the instant case, we find that the assessee is only a civil contractor who has been assigned the job of civil construction such as constructing the tunnel, etc. Its duty ends when the tunnel, etc., is constructed according to the specifications given by the Government/Statutory Bodies. The infrastructure facility as such will begin to operate only after the assessee has done his job and the other necessary works in connection with the development of infrastructure facility are completed. Since the assessee is out of the sight much prior to the actual operation of the infrastructure facility, the mandate prescribed by sub-section (2) is failing in this case. Sub-section (3) which concerns with the conditions to be satisfied by an industrial undertaking for g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gn of coma is used between ( i ) and ( ii ) and not the word or as suggested by the learned A.R. It shows that the benefit of deduction in these years is available not to the developer of the infrastructure facility until he maintains and operates it as well. The same condition can be found in sub-section (2) also as discussed above. In view of the fact that coma has been used between ( i ) and ( ii ) and the word or has been used only between ( ii ) and ( iii ) of sub-section (4)( i ), it shows that there are two types of eligible assessees for deduction under this section in the years under consideration. First are those who develop the infrastructure facility and after sometime transfer it to someone else [on or after 1-4-1999 as per proviso below sub-clause ( c ) to sub-section (4)( i )] to operate on their behalf in accordance with the agreement with the Central/State Government or local/statutory authority. Second category comprises of those who develop the infrastructure facility and also themselves operate and maintain the same. The use of punctuation sign coma between clauses ( i ) and ( ii ) cannot be substituted with the word or as used between ( ii ) and ( iii ) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ranting benefit. The difference in the situation between assessment year 2002-03 onwards and prior two years is that whereas the operation and maintenance of the infrastructure facility on behalf of the enterprise developing is necessary in the former period, but in the later period, the operation and maintenance shall be on behalf of the transferee enterprise itself. Since in the years in question, the transfer of the enterprise for operation and maintenance has necessarily to be on behalf on the enterprise developing the infrastructure facility, and for the time being assuming without admitting the contention of the ld. AR that the assessee is developer of infrastructure facility, it does not satisfy the other condition of its transfer for operating and maintaining on its behalf for the obvious reason that there is no transfer at all of any infrastructure facility from the assessee, much less for operating and maintaining on its behalf. 37. Be that as it may it remains to be examined as to whether the assessee can be called as developer within the meaning of section 80-IA(4). The learned counsel submitted that the work done by the assessee made it a developer entitled to d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the work will not necessarily be deemed, on that account, to sell the material. It was, therefore, argued that the developer is a person who brings in additional resources by way of investment and technical expertise for developing the infrastructure facilities. Since the assessee had simply done a part of work of civil construction relating to the infrastructure facility, he stated that it is not eligible for deduction. 39. We find it as an undisputed position that the words developer and contractor have not been defined in or for the purposes of section 80-IA. The primary question which arises is that how to find out the meaning of a word or an expression which is not defined in the Act. It is a settled legal position that ordinarily the meaning or definition of a word used in one statute cannot per se be imported into another as has been held by the Hon ble Supreme Court in the case of Union of India v. R.C. Jain [1981] 2 SCC 308. Therefore, the meaning of the words developer and contractor , as put forth before us by the rival parties from other legislations, be they State or Central enactments, cannot be automatically applied in the present context. In orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reement. Now chiefly spec. a person or firm that undertakes work by contract, esp. for building to specified plans . In the light of the meaning ascribed to these words by the dictionaries, it is observed that the developer is a person who designs and creates new products. He is the one who conceives the project. He may execute the entire project himself or assign some parts of it to others. On the contrary, the contractor is the one who is assigned a particular job to be accomplished on the behalf of the developer. His duty is to translate such design into reality. There may, in certain circumstances, be overlapping in the work of developer and contractor, but the line of demarcation between the two is thick and unbreachable. When the person acting as developer, who designs the project, also executes the construction work, he works in the capacity of contractor too. But when he assigns the job of construction to someone else, he remains the developer simpliciter, whereas the person to whom the job of construction is assigned, becomes the contractor. The role of developer is much larger than that of the contractor. It is no doubt true that in certain circumstances, a developer ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ches at Ch. 1/500 to 22/500 at Tal; Madha District Solapur, which was approved. For this unit the assessee along with one M/s. Swapnali Construction entered into agreement with the Owner , viz., Maharashtra Krishna Valley Development Corporation for executing the above stated work. In this joint venture agreement also Maharashtra Krishna Valley Development Corporation has been referred to as the Owner and the assessee as a Contractor. Copy of the MoU for joint venture agreement in respect of the third agreement, that is, Jihe Kathapur Lift Irrigation Project is available at pages 72 onwards of the paper book. As per this agreement also Maharashtra Krishna Valley Development Corporation has been referred to as the owner whereas the assessee has been described as Joint venture for execution of the works referred to in this contract. Thus it is noted from the material on record that the assessee was given civil construction work to be done strictly according to the plan laid down by the State Government/Statutory Authorities. Such authorities have been referred to as the owner and the assessee as the joint venture for executing the contract. The sphere of work assigned to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igiously in accordance with the given specifications subject to the terms and conditions of the agreement and control of the authority, cannot put it in the capacity of owner. Even if the assessee had to make some investment, for the time being, in the shape of purchase of some raw material or incurring of labour, etc., which is recouped from time to time by furnishing bills, the assessee cannot claim itself as owner of the work done by it. The assessee is a mere contractor whose tender has been accepted by the competent authorities for carrying out the specified job, the property in respect of which vests with such Government or Local Authority. It is, therefore, clear that since the work done by the assessee is not owned by it, it does not satisfy sub-clause ( a ) of section 80-IA(4)( i ). 46. Now we proceed to sub-clause ( b ) as per which it has entered into an agreement with the Government or Local Authority for ( i ) developing, ( ii ) maintaining and operating and ( iii ) developing, maintaining and operating new infrastructure facility subject to the condition that such infrastructure facility shall be transferred to the Government, Local Authority or such other author ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the transferor enterprise would have been entitled to the deduction if the transfer had not taken place. In the hitherto section 80-IA, sub-section (4A) considered the cases for allowing the deduction in respect of enterprise carrying on the business of developing, maintaining and operating any infrastructure facility only. In the new section, there is sub-section (4)( i ) and sub-clause ( b ) by which the enterprises developing, maintaining and operating infrastructure facility have been divided into two clauses, i.e., ( i ) developing, ( ii ) maintaining and operating and ( iii ) developing, maintaining and operating. The above-referred proviso has also been simultaneously added to sub-clause ( c ) so as to prescribe the treatment to be given when there is transfer of enterprise by the transferor to the transferee for operating and maintaining of enterprise on its behalf. This point has been discussed at length above while considering clause ( i ) of sub-section (4). It is, therefore, lucid that in the years in question, the deduction is available to the one who, in fact, operates the enterprise whether as an owner in his own capacity or for and on behalf of the developer. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection and the same be allowed to the extent of their income derived from such supply of labour. Going further even the supplier of machinery to the Government for the setting up of the infrastructure facility will also claim that he is also an enterprise eligible for the benefit under section 80-IA. Going still further even the sub-contractor of the contractor shall also stand included in the beneficiaries of the deduction, which is obviously not the intention of the Legislature as borne out from the clear language of section itself and clarified with the help of various Circulars such as Circular No. 717, dated 14-8-1995, No. 14 of 2001, Nos. 3 of 2006 and 2008. It is, therefore, clear that the intention of the Legislature is not to provide deduction under this section to anyone except the person or authority which is directly engaged in developing, maintaining and operating the infrastructure facility. In order to be eligible for the benefit of this deduction it should be a complete development of the infrastructure facility and not a part of it. In the present case, the infrastructure facilities in respect of which the assessee is claiming deduction, are being set up by the Sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estment in development of the infrastructure sector and not for the persons who merely execute the civil construction work or any other works contract. Accordingly, it is proposed to clarify that the provisions of section 80-IA shall not apply to a person who executes a works contract entered into with the undertaking or enterprise referred to in the said section. Thus, in a case where a person makes the investment and himself executes the development work i.e., carries out the civil construction work, he will be eligible for tax benefit under section 80-IA. In contrast to this, a person who enters into a contract with another person [i.e., undertaking or enterprise referred to in section 80-IA] for executing works contract, will not be eligible for the tax benefit under section 80-IA. This amendment will take retrospective effect from 1-4-2000 and will, accordingly, apply in relation to the assessment year 2000-01 and subsequent years. [Emphasis supplied] 55. Thereafter the Finance Act, 2009 substituted Explanation below section 80-IA(13) with retrospective effect from 1-4-2000 as under : For the removal of doubts, it is hereby declared that nothing cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n interpreting a provision, a construction which would defeat its purpose should be eschewed. He further referred to another judgment of the Hon ble Supreme Court in the case of Collector of Central Excise v. Dai Ichi Karkaria Ltd. 1999 (112) ELT 353 to contend that where two interpretations to the subject were possible then the one favourable to the taxpayer should be adopted. 57. We have considered the rival submissions and perused the relevant material on record. The Explanation as inserted by the Finance Act, 2007 with retrospective effect from 1-4-2000 made it clear that the benefit of section 80-IA shall not be extended to a person who executes a works contract entered into with the eligible enterprise. It has been clarified that the provisions of section 80-IA shall not apply to a person who executes a works contract entered into with the undertaking or enterprise referred to in the said section. Though the intention was to clarify that the benefit of deduction is not to be allowed to a civil contractor, but it was interpreted by some quarters as applying only to the sub-contractor and not to the contractor. With a view to clarify the position beyond any doubt, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rds or expressions used in it. The language of a provision is the best vehicle to convey its intention. If the language is unambiguous and admits of no doubt, then it is not open to keep aside the text of section and import some other words into the language of a provision which are not there, in the garb of discovering the intention of the Legislature. Employment of such an interpretative process is wholly impermissible. When the words are clear in a provision and convey proper meaning, no liberal interpretation can be allowed to give an unintended benefit as has been laid down by the Hon ble Supreme Court in the case of A.M. Moosa v. CIT [2007] 294 ITR 1 1 . Recently the Hon ble Supreme court in the case of Union of India v. Dharmendra Textile Processors [2008] 306 ITR 277 2 has held that the Court cannot read anything into a statutory provision or a stipulated condition which is plain and ambiguous. The intention of the Legislature is primarily to be discovered from the language used which means that attention should be paid to what has been said as also to what has not been said. It was further observed that the question is not what may be supposed and has been inten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sfy the applicability condition itself as the profits from works contract awarded to it are excluded from the ambit of the deduction under this provision. 59. Without the aid of Explanation to this section, we have concluded above that the conditions set out in sub-section (4) clause ( i ) are not satisfied and, hence, the assessee cannot claim deduction under this section. The insertion and substitution of the Explanation is only to clarify that the deduction cannot be allowed in relation to a business in the nature of works contract under any circumstance. In other words, the view emerging from the careful circumspection of sub-section (4) has been endorsed by the Explanation and that too with retrospective effect from 1-4-2000 thereby covering both the years under consideration. We, therefore, answer question No. 1 in negative by holding that the assessee is not entitled to deduction under the provisions of section 80-IA(4) in respect of the projects undertaken. 60. We want to make it clear that all the cases relied on by both the sides have been duly taken into consideration while deciding the matter. The reference to some of the cases in the order is avoided ei ..... X X X X Extracts X X X X X X X X Extracts X X X X
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