TMI Blog2012 (7) TMI 729X X X X Extracts X X X X X X X X Extracts X X X X ..... r the amended law of deduction u/s 80IA(4) w.e.f. assessment year 2002-03. The relevant assessment year under consideration is also assessment year 2002-03 for which amended provisions of law is applicable - in favour of assessee. - IT APPEAL NO. 12 (IND.) OF 2011 - - - Dated:- 8-6-2012 - JOGINDER SINGH, R.C. SHARMA, JJ. Anil Khabya for the Appellant. Keshav Saxena for the Respondent. ORDER R.C. Sharma, Accountant Member This is an appeal by the assessee against the order of the learned CIT(A) dated 26.10.2009 for the assessment year 2007-08. 2. The only grievance of the assessee relates to decline of claim of deduction u/s 80IA of the Income Tax Act, 1961 in respect of Infrastructure Projects developed by the assessee. 3. Rival contentions have been heard and record perused. The first, in brief, are that the assessee is engaged in the construction of roads for the Government departments. In the return of income, the assessee has claimed deduction u/s 80IA of the Act in respect of infrastructure project undertaken by the assessee. After verifying the details of project undertaken, the AO reached to the conclusion that the assessee has given payment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Gujarat Water Supply and Sewerage Board it was to be held that assessee was doing only contract work and as such benefit of section 80IA could not be extended to it. This issue has also been decided by Hon'ble Indore Tribunal in the favour of the department in the case of ACIT 3(1) Bhopal v. R.K. Gupta Contractor Engineers Pvt. Ltd. Bhopal for A.Y. 2006-07 reported in ITA No. 517/Ind/2009 wherein it is held that provisions of 80-IA is not applicable to business referred in subsection (4) of section 80IA meaning thereby that the benefit under this section will not be granted to a "work contractor". The issue has also been decided in the case of B.T. Patil Sons Constn. (P) Ltd. v. Asstt. CIT [2010] 35 SOT 171 (Mum) (LB)." 5. Against the above order, the assessee is in further appeal before us. 6. It was contended by the learned counsel for the assessee, Shri Anil Khabya, that the assessee has carried out development work of new roads and awarded by Government Deptt/Agencies. Complete detail has been filed on record. He further submitted that in some cases, existing old road facilities have been converted into infrastructure facility by widening the existing roads ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re facility. The A.O. denied the benefit on the ground that the assessee which was only a contractor constructing an infrastructure facility like road on behalf of the developer for a sum of profit and was not having stake in financial viability of the project. Allowing the deduction u/s 80IA(4)(i), the Hon'ble Tribunal held that an assessee who is only engaged in the developing the infrastructural facility i.e., road and not engaged in the 'operating and maintaining' the said facility is entitled to the benefits of the deduction under section 80-IA(4).- Patel Engg. Ltd. v. Dy. CIT [2005] 94 ITD 411 (Mum.) 646" Mr. Khabya further contended that ]the Explanation inserted by Finance (No. 2) Act, 2009 which has been inserted below sub-clause (13) of Section 80IA applies only in relation to a business referred to in sub-section (4) which is in the nature of work contract awarded by any person including the Central or State Government. The business of the appellant is not in the nature of work contract simpliciter. The appellant is undertaking execution of entire infrastructure facility along with obligation of maintenance for number of years. The appellant is not engaged in business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e by the assessee is not owned by it, it does not satisfy sub-cl. (a) of s. 80IA(4)(i)" 8. The ld. CIT DR further contended that the assessee is not the owner of infrastructure facility and, therefore, did not satisfy the condition of ownership as per sub-clause (a) of Section 80IA(4)(i). For this purpose, our attention was also invited to the, decision of the B.T. Patil Sons Belgaum Construction (P.) Ltd. ( supra ), according to which infrastructure facility should be owned by the company so as to be entitled for deduction under this section. As per ld. CIT DR, the assessee is a mere contractor whose tender has been accepted by competent authorities for carrying out the specific jobs, the property in respect of which vested with such Government or Local Authority. He further submitted that the decision relied by the ld. Authorized Representative in the case of Bharat Udyog Ltd. ( supra ) was passed on 30th June, 2008, and was based on the decision of Patel Engg. Ltd., ( supra ) which was over ruled by the decision of Special Bench in the case of B.D. Patil Sons Belgaum Construction (P.) Ltd. ( supra ). 9. We have considered the rival submissions and have gone ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fter in this section referred to as the transferor enterprises) to another enterprise (hereafter in this section referred to as the transferee enterprise) for the purpose of operating and maintaining the infrastructure facility on its behalf in accordance with the agreement with the Central Government. State Government, local authority or statutory body, the provisions of this section shall apply to the transferee enterprise as if it were the enterprise to which this clause applies and the deduction from profits and gains would be available to such transferee enterprise for the unexpired period during which the transferor enterprise would have been entitled to the deduction, if the transfer had not taken place. Explanation :- For the purposes of this clause, "infrastructure" means - ( a ) A road including toll road, a bridge or a rail system ( b ) A highway project including housing or other activities being an integral part of the highway project. ( c ) A water supply project, treatment system, irrigation project, sanitation and sewerage system or solid waste management system; ( d ) A port, airport, inland waterway, inland port or navigational channel in the sea. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Now coming to the main objection of the ld. CIT DR to the effect that the assessee was a Contactor and not developer in view of the fact that the assessee was paid by the Government in respect of the work undertaken by it and assessee has not invested his own funds for completing the Project nor assessee has recovered the same through operating the facility thereafter. As per our considered view, after amendment by the Finance Act, 2002 for claim of deduction u/s 80IA(4) infrastructure facility is only required to be developed and there is no condition that assessee should also operate the same. Thus, after amendment, when the assessee is not required to operate the facility, the payment for development of such infrastructure is required to be made by the Government only. However, as per pre-amended law when the assessee was not only required to develop but also required to operate and maintain the infrastructure facility, there was collection of revenue through toll tax by which assessee could have recovered not only its cost part but also profit thereon. After amendment, when assessee undertakes to develop the infrastructure facility only, it is the Government who will make pay ..... X X X X Extracts X X X X X X X X Extracts X X X X
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