TMI Blog2011 (7) TMI 302X X X X Extracts X X X X X X X X Extracts X X X X ..... immaterial - Decided against the assessee. Repairs and maintenance expenditure - expenses are clearly in the nature of current repairs inasmuch as even though some replacements are needed but replacements are of the consumable which have limited span of life - The claim of the assessee deserves to be allowed as in the nature of current repairs - find support from the judgment of Hon'ble Bombay High Court in the case of Commissioner of Income-tax v. Hede Consultancy Pvt. Ltd.[2002 (6) TMI 19 - BOMBAY High Court], wherein, it has been held that "since the assets created by spending the said amounts did not belong to the assessee but the assessee got the business advantage of using modern business premises at a low rent, thus saving considerable revenue expenditure for a considerably long period, the expenditure should be looked upon as revenue expenditure" - Decided in favour of assessee. Bad debts - Amounts which have been disallowed as bad debt represents the amounts written off in respect of certain deposits, etc. - This claim, is not permissible as bad debt for the elementary reason, as rightly noted by the authorities below, that the related amount has not been included as in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... system, which includes manufacturing, supplying, laying, joining of pipeline and includes construction of pump house, delivery, commissioning of turbine pump sets, installation of booster mains, branch mains and elevator reservoirs etc. With this explanation of activity, it was contended that the assessee was engaged in development of infrastructure facility as defined in explanation (c) to Section 80IA(4). The assessee, on these facts and relying upon Tribunal's decision in the case of Patel Engineering Ltd (84 TTJ 646), claimed a deduction of ₹ 11,39,42,000 u/s. 80IA of the Act. The Assessing Officer, however, did not accept the said claim. He was of the view that the assessee was a contractor and not developer. Relying upon Hon'ble Supreme Court's judgment in the case of CIT vs. N.C.Budhiraja and Co. (204 ITR 412), the Assessing officer concluded that the assessee cannot be termed as developer of a project merely because assessee has executed the project for actual developer of infrastructure facility, i.e. Government or Semigovernment body concerned, and that the assessee company cannot be construed as an enterprise carrying on business of developing, operati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he purpose of the tax benefit has all along been for encouraging private sector participation by way of investment 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 carries out 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 1st April, 2000 and will accordingly apply in relation to the assessment year 2000-2001 and subsequent years. 11. It is clear fro the above amendment that an assessee can claim a deduction under section 80IA(4) only if, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 76 SC 2108 that where the main object of work undertaken by the payee of the price is not the transfer of a chattel qua chattel, the contract is one for labour and work. 12. This has been reaffirmed and reiterated by the Supreme Court, in a recent judgment pronounced in the case of State of Andhra Pradesh v. Kone Elevators (India) Ltd., 3 SCC 389 (2005), where it was stated as under:- it can be treated as well settled that there is no standard formula by which oe can distinguish a contract for sale from a work contract . The question is largely one of fact depending upon the terms of the contract including the nature of the obligations to be discharged there under and the surrounding circumstances. If the intention to transfer for a price a chattel in which the transferee had no previous property, then the contract is a contract for sale. Ultimately, the true effect of an accretion made pursuant to a contract has to be judged not by artificial rules but from the intention of the parties to the contract. In a contract of sale , the main object is the transfer of property and delivery of possession of the property, whereas the main object in a contract for wor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecuted a works contract as is evident above. In view of the foregoing, I find no merit in the claim of the appellant for a deduction u/s.80IA of the Act and thus reject this ground of appeal. 4. The assessee is not satisfied by stand so taken by the CIT(A) and is in further appeal before us. 5. We have heard the rival contentions, perused the material on record and duly considered factual matrix of the case as also the applicable legal position. 6. We find that there is no dispute about the fact that as the law stands now in the light of retrospective insertion of Explanation below to Section 80IA(13), the assessee is not eligible for deduction u/s. 80IA(4). This Explanation, introduced by Finance Act, 2009 with retrospective effect from 1st April, 2000, provides that (f)or the removal of doubts, it is hereby declared that nothing contained in this Section (i.e. 80-IA) shall apply in relation to a business referred to in sub-section(4) which is in the nature of works contract awarded by any person (including Central or State Government) and executed by the undertaking or enterprise referred to in subsection (1) . Such being the legal position, and the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stries Ltd (supra), it is only elementary that once Their Lordships of High Courts expressed view of any subject contrary views of the courts below ceases to hold good in law but then in the present case, it is not really necessary to address ourselves to this aspect of the matter because that aspect of the matter is, at present, wholly academic. We, therefore, see no need to adjudicate upon the arguments which deal with certain hypothetical situation and not the present legal situation. This aspect of the matter is wholly academic and infructuous. 8. Ground No.1 is thus dismissed. 9. In Ground No.2, the assessee has raised the following grievance: On the facts and in the circumstances of the case and in law, the ld CIT(A) erred in confirming the action of the ld AO in not allowing deduction of ₹ 4,73,084 as claimed by the appellant in respect of bonus paid to employees. 10. So far as this grievance of the assessee is concerned, only a few facts to be taken note of. During the course of assessment proceedings, it was noticed that the assessee has added back a sum of ₹ 1,55,41,164 as unpaid bonus. However, during the assessment proceedings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on the same. The Assessing Officer relied upon the judgment of Hon'ble Delhi High court in the case of Modi Spinning and Weaving Mills co. Ltd vs. CIT(1993) 200 ITR 544 and Hon'ble Supreme Court's judgment in the case of Balimal NavalKishor vs CIT[224 ITR 414). Aggrieved by the stand so taken by the Assessing Officer, the assessee carried the matter in appeal but without any success. The CIT(A) held that the expenses in question were incurred of renovated lobby and board room is long lasting and enduring in nature. She, however, restricted the disallowance to ₹ 2,38,648 as against ₹ 2,68,475 made by the Assessing Officer. 16. The assessee is not satisfied and is in further appeal before us. 17. We have heard the rival contentions, perused the material on record and duly considered factual matrix of the case as also the applicable legal position. 18. We find that the copies of the related bills are placed before us at pages 109 to 112 of the compilation of papers and that a perusal of these papers show that expenses have been incurred mainly on repairs and maintenance such as repairing of chairs, changing upholstery, replacing castors a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the main contention of learned counsel is that in view of Hon'ble Supreme Court's judgment in the case of Vijay Bank vs CIT, (5 SCC 416), the assessee's claim of bad debt is to be allowed even though the debt has never formed part of income of the earlier assessment years. The views so expressed by Their Lordships are in the context of banking institution and, therefore, this decision is not applicable on the facts of the present case. As is clearly discernable from the material on record, the amounts which have been disallowed as bad debt represents the amounts written off in respect of certain deposits, etc. This claim, in our humble understanding, is not permissible as bad debt for the elementary reason, as rightly noted by the authorities below, that the related amount has not been included as income in any one of the earlier previous years. To that extent, the stand of the authorities below is quite justified and does not call for any interference. However, none of the authorities below have examined whether the amounts so written off qualify for deduction as a business loss. In the interest of justice, we, therefore, deem it fit and proper to remit the matter to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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