TMI Blog2013 (2) TMI 71X X X X Extracts X X X X X X X X Extracts X X X X ..... aid by the assessee and not cash deposits or loans, the AO is then directed to verify the correctness of the claim now as that those liabilities were squared up by making the payment in the years to come - in favour of revenue for statistical purposes. Rejection of Deduction u/s.80-IA - project of infrastructure - whether the assessee’s nature of work had fallen under the definition of a “contractor” or a “developer” - Held that:- The total turnover of the assessee was received mainly in respect of development of arch-bridges, made over railway-track or under bridges on Delhi Ghaziabad Section & execution of “RCC Box Bridge” by applying pushing method for passing under main track and executed contract & also provided under-bridge below railway-track. On the basis of this examination it was wrong on the part of the AO to hold that the assessee has merely acted as a contractor as by analyzing the nature of work executed by the assessee, it can be gathered that the assessee had acted as a developer. The assessee has undertaken the responsibility of execution of the work. The assessee has developed its own design and on getting approval applied the technology for completion of infra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ature of civil work executed did not qualify for deduction u/s.80IA(4) - against assessee. Disallowance of expenditure under mutual agreement - allowed only Rs 1 Lac only - Held that:- Revenue Authorities have appreciated the evidence and thereafter arrived at the conclusion that there was no justification for claim of an amount Rs.1 lac due to lack of factual as also legal corroboration. The assessee has not substantiated its claim in respect of an outstanding liability per-say of Rs.1 lac, therefore in the absence of any cogent evidence, the factual finding of the authorities below affirmed and dismiss this ground - against assessee. Disallowance of deduction on account of liquidated damages retained by the appellant’s customer - Held that:- The assessee has furnished the copy of account of MDL in its book & a letter of the Chief Manager (CW) dated 08/06/2005, wherein as per the subject the assessee has executed “Concrete flooring with anchor plate in Alcok Yard in between existing Gantry rail track” and retained liquidated damages provisionally at 6% amounting to Rs.1,73,106/-. Later on, an amount of Rs.41,497/- was refunded. The MDL has deducted Rs.1,31,610/- as per let ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 004 (for A.Y. 2001-02) vide an order dated 29.07.2005 has restored the issue back to the file of AO, relevant paragraphs reproduced below:- 10. Apropos ground No.3, during the course of assessment proceedings it was found by the AO that there were credits appearing in the books of accounts of assessee in the names of following two persons:- P.G. Shringapure Rs. 1,90,000/- Dipen U.Patel Rs.11,27,387/- In absence of any explanation having been offered by the assessee the above mentioned amounts were added to the income of assessee under the provisions of section 68 of the IT Act. The ld.CIT(A) has dealt with this issue in para 4.1 and 4.2 of the impugned order which is reproduced below for the sake of convenience:- 4.1 The second ground of appeal relates to addition of Rs.12,40,087/- u/s 68 of the Act. The assessee had taken loan from Dipen Patel Shringarpure amounting to Rs.11,27,387/- and Rs.1,12,700/- respectively and in response to query the assessee has stated that it has submitted the confirmation, but on verification, it was noticed by the AO that the assessee submitted only copy of a/c of Ushakantbhai Pate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was made against his bill. Copy of account of Shri Dipen U.Patel was also produced. Thus it was pleaded that ld.AO as well as the CIT(A) did not properly consider the submissions of the assessee. It was pleaded that assessee can properly explain these credits and, therefore, the issue may be restored back to the file of AO for reconsideration. 12. On the other hand, the ld.DR relied on the orders of AO and the CIT(A). 13. We have carefully considered the rival submissions in the light of material placed before us. Keeping in view the entirety of facts and interest of justice we restore this issue to the file of AO for examination afresh as per provisions of law. Needless to observe the AO will give reasonable opportunity of hearing to the assessee to place all material and evidence on record to justify its claim. After receiving the explanation of assessee he will decide the issue in accordance with law. This ground is allowed for statistical purposes. 2.2. Consequent thereupon, the AO had granted opportunity to the assessee and asked to furnish the following details:- (a) To file supporting evidence for work carried out by Shri Dipen U.Patel at Sardar Patel U ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lity. The conclusion drawn by the ld.CIT(A) is as under:- In conclusion, the outstanding liability shown by the appellant in the name of Shri Dipen U.Patel and Shri Pradeep G.Shringapure amounting to Rs.1,73,728/- and Rs.31,160/-, i.e. in total of Rs.2,04,888/- are held as liability no longer existing or bogus liability and deemed to be the income of the appellant u/s.41(1) of the Act since the same were shown after claiming expenses and salary expenses to these persons. The A.O s addition u/s.68 of the Act is, therefore, held not proper and justified, but now the additions are made u/s.41(1) of the Act as per law considering the fact and circumstances in the case of appellant. The app gets partial relief to the extent of Rs.10,35,199/-. (12,40,087 - Rs.2,04,888). 2.4. Therefore, in view of the above para, the ld.CIT(A) has changed the head under which the AO has taxed the impugned amount. Instead of applying the provisions of section 68 of IT Act, ld.CIT(A) had applied the provisions of section 41(1) and granted relief of Rs.10,35,199/-. In respect of rest of the amount, ld.CIT(A) has held that the liability was no longer in existence and being a bogus liability, therefo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only. As a result, the appeal of the Assessee as well as Revenue for A.Y. 2001-02 both are allowed but for statistical purposes. [B] ITA Nos.402/Ahd/2012 602/Ahd/2012 for A.Y. 2005-06 (cross appeals - By Assessee Revenue respectively) 4. For A.Y. 2005-06 cross appeals have been filed arising from the order of ld.CIT(A)-XIV, Ahmedabad dated 30/12/2011. We shall first take up the appeal of the Assessee, hence the grounds raised are reproduced below:- Grounds of Assessee s appeal 1) The order passed by the Ld. CIT(A) is against law equity and justice and same is wholly illegal, unlawful and bad in law. 2) The Ld.CIT(A) has erred in law and on facts in upholding the order of the Ld. A.O. of re-opening of the assessment U/s.148 of the Act. 3) The Ld.CIT(A) has erred in law and/or facts upholding the order of the Ld.A.O. of rejecting of deduction U/s.80-IA of the Act for eligible project of infrastructure executed by the appellant. 4.1. Apropos to Ground Nos.1 2, ld.AR Mr. Dhiren Shah has stated that Ground No.1 is general in nature and Ground No.2 is not going to be contested. In the light of the statement of ld.AR made at the Bar these grounds bein ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a developer but merely a contractor . According to AO, the assessee had entered into a work contract agreement with different authorities, such as, AUDA, GWRDC, Enviro Const., and Chennai Const.,etc. A show-cause was issued and the assessee was asked to justify the claim of deduction u/s.80IA and to produce Auditor s Report in Form No.10CCB. In compliance, the assessee has submitted as follows; only relevant portion is reproduced: Assessee is a developer of the Under bridges applying owned design, investments. In the such development of infrastructure projects. Risk, responsibilities and fund for execution of projects are of the assessee itself. As assessee engaged in development of infrastructure hence entitles for deduction u/s.80IA of the Act. .. .. The reading of the provisions of the Act, no where in the said provision, it is required that the infrastructure should be owned by the assessee. Assessee has entered into projects with state central Govt. as required under the Act and hence assessee entitles for deduction u/s.80IA of the Act. Assessee relies on the following decisions in support of its contentions. 4.4. The AO has discussed the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the construction work entered into with AUDA for the construction of under-bridges the assessee has entered into with a contract for the work of manufacturing, testing, supplying, transporting, loading-uploading, at site laying and pushing in Railway limit M.S. casing pipes and providing and laying M.S. carrier pipes as pr tender specification. The work includes all necessary excavation dewatering by deploying necessary no.of pumps as per required refilling trenches after completion of pushing work all necessary temporary work for pushing of pipes. Deploying sufficient manpower, all types of machineries required for pipe pushing in proper line and level as per approval instruction of railway authority. The work also includes the maintenance of railway tract proper position at work site during pushing of pipes still completion of work. The work also includes maintaining all safety norms required for safe railway traffic as per instruction of site in charge as well as railway authority. From the above, it is clear that the assessee never owned the railway underpass but only constructed the under pass as per the contract agreement entered into with the principal. It is als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of bridges and canals. The assessee has furnished a copy of the work order to explain the nature of the work executed. The assessee has also furnished the details in respect of application of own design and assessee s deployment of technique. The explanation of the assessee was that its own funds were utilized. Further in respect of execution of project the risk and the responsibility was taken by the assessee. Before ld.CIT(A), the appellant has referred an order passed u/s.144A of the Act, relevant portion extracted below:- Extract of the order passed U/S 144A of the Act by the Additional Commissioner of I.Tax for the A.Y. 2004-05 is as under. Further considering the assessee s reply dated 14/12/06 placed before the A.O. as well as A.O s report submitted as per para 5 noted above, the A.O. was asked to visit the project sites of the assessee and submit her detailed factual report to ascertain the assessee s submission noted above. The AO vide her office letter No.Wd.8(2)/Sugam/06-07 dated 21/12/2006 has submitted that she has visited two project sites of the assessee located in Ahmedabad viz. Nirnaynagar Underpass, Nirnaynagar, Ahmedabad and AUDA, Ring Road, at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epeated day after day till the final pushing is completed. And the result is that the under bridge is constructed and the load of the railway line is resting on the concrete RCC bridge without disturbing the railway traffic. After this, the finishing touches of plastering, water proofing is done and whenever required, the retaining walls on the sides of the road leading to the under pass is also constructed. Finally, the whole underpass is ready through which the vehicular traffic is allowed to pass. Throughout the construction of the under bridge, various officials of Railways, AIDA, State Govt.continuously inspect and monitor the project till completion. 3. Eligibility of section 80IA: As I have personally visited the site and seen the projects, it is found that the assess company is constructing the entire under bridge and not only a box. The term box has been used only to describe the technology for constructing the under bridge. As per the Act, a bridge has not been defined but going by the simple oxford meaning a bridge includes over bridges, bridges across rivers, railway bridges ad under bridges. 6. It has also been pleaded that while deciding the appeal of the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in relation to a business referred to in sub-section(4) which is in the nature of work-contract . According to him, one of the important ingredient for entitlement of deduction u/s.80IA is the financial investment and financial risk of an enterprise. He has mentioned Memorandum explaining the provisions of Finance Bill of 2007 and quoted that where a person makes investment and himself executes the development work, carries out the civil construction work, then eligible for tax benefit u/s.80IA. The first condition to be satisfied is that an enterprise should be a developer of the infrastructure facility. To emphasize the meaning of word developer he has also quoted Radhe Developers 23 SOT 420 (Ahd.). He has clarified that although the issue in the said appeal before the ITAT Bench was related to the deduction u/s.80IB(10) of IT Act yet the observations defining the term developer were relevant for the present appeal. After an elaborate discussion of B.T. Patil Sons (supra), ld.CIT(A) has summarized the term developer and according to him, it has following characteristics: In view of the above discussion, we can say that a developer has following characteristic; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also with AUDA and GWSSB. Thereafter, he has concluded (i) that the investment was not made by the appellant,(ii) that the design and planning for development of infrastructure project was not of the appellant,(iii) that there was no financial risk belonged to the assessee, (iv) that there was no mobilization of technical expertise or supervision or control of the assessee. Resultantly, the claim of the assessee were dismissed in the following manner: The claim of the appellant are examined with reference to the terms and conditions of the various contracts taken by it. The contracts have been discussed in the preceding paragraphs. It is apparent from the discussion of all the contracts that - (i) The investment is not made by the appellant. It is made by the government body. The project has been fully financed by the government and the appellant was getting regular payment in accordance with the progress of work. The investment in the projects were very limited and was similar to the investment made by any contractor in executing the contract. For claiming that the investment in the projects has been made by the appellant, total funds should be invested by it or major ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the work which relates to creating of under pass below the railway line. In Sujlam Suflam Scheme the appellant has executed that part of the project which involves construction of boxes. Therefore, the claim of the appellant that it has developed and created the infrastructure facility is not acceptable. The ground of appeal is, therefore, dismissed. 8. From the side of the appellant, ld.AR Mr.Dhinen Shah appeared. After describing the nature of the development work executed by the assessee, he has emphasized that some of the projects were held as eligible in A.Y. 2006-07 by ld.CIT(A). The work carried out in those projects was identical with the projects undertaken by the assessee for the year under consideration as well. The ld.AR has therefore pleaded that on the basis of the view taken by the ld.CIT(A), this appeal can also be decided. He has cited a latest decision of Hon ble Gujarat High Court dated 11.01.2012 pronounced in the case of Ganesh Housing Corporation Ltd. vs. Dy.CIT Anr. [2012]66 DTR 106 (Guj.), wherein although the issue was reassessment u/s.148 but the income of the petitioner was within the claim of deduction u/s.80IA(4)(iii) of the Act. The AO h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the income was accounted on the basis of the bills certified by the Government Department. The escalation claimed and arbitration award was accounted on the basis of the receipt. He has pleaded that on account of escalation in the price, the assessee has accordingly claimed as per the bills, therefore there was no risk of the assessee. Placing reliance on the orders of the authorities below, he has contested that the claim of deduction was rightly rejected, hence deserves to be confirmed. Ld.DR has drawn our attention on the details of payment made by Ahmedabad Urban Development Authority and informed that the total tender amount was at Rs.6,42,49,057/- against that amount of work done upto the final bill was found to be Rs.10,85,28,873/- and there was an escalation of Rs.3,06,54,690/-. According to ld.DR, the entire tender amount was covered by the bills and on top of it, there was payment for escalation of cost of project. Therefore, there was no element of risk involved and the assessee has also not made any investment out of its own funds. One of the argument of ld.DR is that the each work is very small in comparison to the total volume of the infrastructural work and that s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Unquote. The assessee has also furnished certain photographs to demonstrate the nature of work executed. 11. The next contention of the assessee is that the activity carried on was within the definition of infrastructure facility as defined in Explanation to section 80IA(4) means a road including toll road, a bridge or a rail system . In support assessee has placed on record the definition of bridge means A building of stone or wood erected across a river or canal, for the common ease and benefit of travellers. A bridge is a structure of wood, iron, brick, or stone, ordinarily erected over a river, creek, pond, or lake; or over a ravine, railroad, canal, or other obstruction in a highway, so as to make a continuous roadway, and afford to travellers a convenient passageway from one bank to the other. While a bridge is a part of the highway which passes over it, no definite rule can be laid down as to where one terminates and the other begins. A road culvert is regarded as a bridge structure, even in Engineering Terminology. Standard Specifications and Code of Practice page 2, defines bridges as follows. The term bridges as used in this code will mean all types of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... will have to be designed and constructed in lieu of individual boxes No.2 3. Box No.1 4 will be designed as single boxes each of size 8.50 Mtr. x 5.75 Mtr. one each on either side of the existing Arch. 2.3. The contractor has to submit detail arrangement alongwith design calculations for supporting of arch during pushing of box and same is to be got cleared from Railway before commencement of work. However, the dismantling of Arch for pushing the Box shall be done under running traffic condition. The contractor shall ensure the stability of the existing arch during pushing the box. For any damage done to the Arch such as formation of the cracks etc. due to pushing or due to any other reasons the contractor shall arrange to repair the same with satisfaction of Engineer at site i.e. grouting of the cracks/rectification as required at his own cost. The rates quoted against N.S.Item No.1 (a) (b) shall be deemed to have included the cost of this element of work and nothing extra will be paid on this account. 2.4. During pushing process of RCC Box, the temporary supporting of the buttreses of the existing arch shall be arranged by the contractor if required as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he arguments of the assessee. 11.7. It was clarified that the infrastructure as a whole, i.e. the bridges are naturally the property of the Government Department. But the appellant was further given the responsibility of maintenance of the work executed and one of the condition was stated to be that the maintenance period of the work should be six months. Ld. AR has therefore pleaded that in the case of a contractor simplicitor there would be no such clause of maintenance. 11.8. The assessee has also constructed an under pass and the contract was awarded by Ahmedabad Urban Development Authority. Name of the work was stated to be Construction of Underpasses by R.C.C. Box Jacking/Pushing Technique at Chainage 564014.59 and Chainage 55167.81 between stations Gandhinagar-Ahmedabad and Khodiyar-Ahmedabad. In this regard, the scope of the work was as under:- 2. Scope of Work: The Scope of Work to be performed by the contractor is described Broadly as Under: A. Demarcating the site, Providing and Maintaining the Diversion for existing Road Traffic to move in smooth and safe manner. B. Dismantling the Road Crust in the Approach portion and excavating to dep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om the workscontract , under which this assessee had executed the assined construction. 11.11. Next, our attention has also been drawn on Sujalam Sufalam Yojna . As per the tender notice, Government of Gujarat has an aim to transfer surplus water of rivers in Central and South Gujarat to Water scarce area of North Gujarat, Kachch and Saurashtra. For that purposes, Sealed tenders for constructing and insertion of RCC Box across Railway lines and other works on approaches of the project of proposed Sujalam Sufalam Spreading Canal (in short SSSC) are publicly invited from the contractors having experience and who have satisfactorily completed at least two works of RCC Box construction of minimum size 3.00 mt. x 3.00mtr. and pushing below railway tracks using drag sheets. The assessee was thereafter assigned the tender of insertion of Pre-cast RCC Box under meter-gauge Railway Line. The said sanctioning of tender in assessee s favour have thus demonstrated that the construction-work in question was very much technical in nature which was assigned to the assessee only on the basis of it s past experience and expertise developed to execute efficiently. 12. With this factual backg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the impugned order has traced different meanings of the term developer explained in different dictionaries, which read as under: 1. The Webster s Encyclopedia unabridged of the English language gives the following meaning of the term developer as : 1. One who or that which develops; 2. A person who invests in and develops the urban or suburban potentialities of real estate. b. Oxford Advanced Learners Dictionary of Current English, Fourth Indian Edition, gives meaning of the term developer as persons or company that develops land. c. Random House Dictionary of the English Language, the following can be found. Develop a. To bring out the capabilities or possibilities of; bring to a more advanced or effective state. b. To cause to grow or expand. Developer a. The act or process of developing; progress. b. Synonym : Expansion, elaboration, growth, evolution, unfolding, maturing, maturation. d. Webster Dictionary, the following definitions emerge: a. To realize the potential of ; b. To aid in the growth of strength, develop the biceps, c. To bring into being: make active (develop a bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pronounced by ITAT Hyderabad Bench in the case of Koya Company 21 Taxamnn.com 35 (Hyd.), it is held that the word owned is attributable to the enterprise carrying on the business. Further, the word it denotes the enterprise carrying on the business. The word it do not relate to the infrastructure facility . The infrastructure facility, such as, rail system, high-way projects, irrigation project, port, air-port, etc. cannot be owned by an enterprise other than the Government. 12.4. An another reason for not granting the deduction u/s.80IA(4) by the Revenue Department was generally because of the reason of insertion of Explanation by Finance Act (No.2), 2009 with retrospective effect from 1.4.2000 which says that for the removal of doubts, it is hereby declared that nothing contained in this section shall apply in relation to a business referred to in sub-section(4) which is in the nature of a work contract awarded by Central or State Government and executed by an Undertaking or an Enterprise. Due to this Explanation, Revenue has taken a stand that the eligibility is to be granted only to a developer and if the nature of activity is a works contract , then the deduc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd of the above discussion, it can be summarized that an enterprise has to enter into an agreement with the Central or State Government or a Local Authority or any Statutory Authority. That undisputedly the infrastructure facility belonged to the Government, therefore the infrastructure facility is owned by the Government. But the enterprise which is developing or constructing the infrastructure facility is to be owned by a Company registered in India. The Act also says that an enterprise which is constructing or developing the infrastructure facility can be a consortium of such companies. Such an arrangement is eligible for the claim of deduction. Few Circulars have been issued by CBDT through which it has also been clarified, as discussed in the foregoing case-laws, that the benefit of the impugned deduction is available to an enterprise which either develops or maintains or operated or executed the combination of these three, inter alia as a Build, Operate and Transfer (BOT), or, Build, Own, Operate and Transfer (BOOT), or, Build, Own, Lease and Transfer (BOLD) basis or similar other basis where ultimately the infrastructure facility so constructed is ultimately transferred to G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ernment in the present case. (f) That he has not only to execute the construction work in the capacity of a contractor but also he is assigned with the duty to develop, maintain and operate such project. (g) That to ascertain whether a civil construction work is assigned on development basis or contract basis can only be decided on the basis of the terms and conditions of the agreement. Only on the basis of the terms and conditions it can be ascertained about the nature of the contract assigned that whether it is a work contract or a development contract . (h) That in a development contract responsibility is fully assigned to the developer for execution and completion of work. (i) That although the ownership of the site or the ownership over the land remains with the owner but during the period of development agreement the developer exercise complete domain over the land or the project. (j) That a developer is not expected to raise bills at every step of construction but he is expected to charge the cost of construction plus mark-up of his profit from the assignee of the contract. (k) That a developer is therefore expected to arrange finances and also to undertake risk. (l) Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d owned in section 80IA(4)(i)(a) of the IT Act. As discussed hereinabove, we hereby conclude that an enterprise which is either developing or operating or maintaining the infrastructure facility is required to be owned by a company or a consortium of companies duly registered in India. The act do not prescribe that the infrastructure facility is to be owned by such an enterprise. The infrastructure facility is always the property of the Government and an enterprise is bound by the agreement to transfer the same after the settled period. The assessee s execution of work fall within first category, i.e. developing of infrastructure facility. It was incorrect on the part of the AO to hold that the assessee being fallen within the first category not entitled for the deduction. The decisions of ABG Heavy Industries(supra), Koya Company (supra), and Radhe Developers (supra) and Bharat Udyog Ltd. 118 ITD 336(Mum.) thus support the stand taken by the assessee. The assessee has executed the construction of infrastructure facility in respect of the Government Projects, as is evident from the list of the agreements placed on record, hence it was a factual error on the part of the AO to sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reafter, ld.CIT(A) has concluded as under:- However, after going through the facts, it is seen that the appellant had been making certain payments to the various contractors and he has raised a final bill at the end of the year and deducted tax on the final amount. The tax deducted in the month of March has been paid by him on 31/03/2005 which is before due date of filing of return as per the provisions of section 139(1) of the Act. I am inclined to accept the submission made by the appellant that it has deducted the tax in the month of March and made the payment before due date and, therefore, there was no violation of the provisions of section 40(a)(ia) of the Act. It is not the claim of the AO that the tax has not been deducted at all, but he has held that the appellant did not deduct any tax upto the month of February and deducted tax only in the month of March. He has not held that there was a short deduction of tax or adequate has not been deducted on the total payments during the year. The disallowance u/s.40(a)(ia) shall be as per the conditions provided under this section itself. The proviso to section 40(a)(ia) makes it further clear that even in the case where the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. After ascertaining this fact that there was no amount remained payable at the end of the accounting period, we have perused the order of the Respected Special Bench pronounced in the case of Merilyn Shipping Transports (supra), wherein the conclusion was drawn as under:- The provisions of section 40(a)(ia) of the Act are applicable only to the amounts of expenditure which are payable as on the date 31st March of every year and it cannot be invoked to disallow which had been actually paid during the previous year, without deduction of TDS. 5.1. Further, an another fact has also been ascertained by us that although the amounts were paid to the sub-contractors during the entire financial year under consideration on different dates but finally the entire payment of TDS to the Government Exchequer was paid on 31.5.2005, admittedly before the due date of filing of the return. On this aspect, we have found that the Hon ble Jurisdictional High Court in a latest decision dated 18/07/2011 in Tax Appeal No.706 of 2010 in the case of CIT vs. J.K. Construction Co. has held as under:- From the record, it emerges that for payment to contractor, the assessee had m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. In the present case, on the basis of the undisputed fact that the TDS was deposited within the said prescribed date, therefore we hereby dismiss this ground of the Revenue. [C] Assessee s appeal; ITA No.1864/Ahd/2010 for A.Y. 2006-07 18. Ground Nos.1 2 of the assessee is in respect of the claim of deduction u/s.80IA. The main grievance of the assessee is that ld.CIT(A) has restricted the claim of deduction u/s.80IA in respect of sum of the contracts but not in respect of all the contracts. The assessee had claimed deduction of Rs.28,17,450/-. 18.1. The main controversy has already been dealt with by us in the foregoing paragraphs while deciding the appeals for A.Y. 2005-06. Facts in brief for A.Y. 2006-07 as emerged from the corresponding assessment order passed u/s.143(3) dated 17.12.2008 were that the assessee had claimed the deduction u/s.80IA of Rs.28,17,450/-. Undisputedly for the year under consideration, the assessee had undertaken the construction/development of certain infrastructure projects of State Government and Central Government. The work executed for the year under consideration was listed as under:- Sl. Details of work Ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arried before the first appellate authority. 20. Ld.CIT(A) has discussed the issue at length and also examined the work executed of each contract. He has also examined the dictionary meaning of the words bridge and culvert . The case law of Patel Engineering Ltd. 94 ITD 411 has also been discussed. In respect of the contracts at Sl.Nos.1, 2, 3, 8 12 the disallowance u/s.80IA was upheld. In respect of projects mentioned 4,5,6 7, it was held by the ld.CIT(A) that the contract work executed by the assessee was part of the irrigation and water project. The projects involved an under-way below the railway lines for S.S.S.Y. canal work. Such activity in his opinion was within the meaning of infrastructure facility , hence eligible for deduction under section 80IA. In respect of the Project at Sl.Nos.9 10, ld.CIT(A) has held that the pushing of RCC Box was in the nature of repair and fabrication of an existing bridge, hence not eligible for deduction u/s.80IA. In respect of the contract work at Sl.No.11 of Mazgaon Dock Ltd., ld.CIT(A) has noticed that the civil work was in respect of Concrete flooring with anchor plate in Alock yard in between existing Gantry rail track . Acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be disqualified so the assessee shall not be entitled in respect of the profit earned on the said execution of work. Resultantly, the ground raised by the assessee is partly allowed. 22. Ground No.3 (concise ground) reads as under:- 3. That the learned CIT(A) has erred in law and on facts while upholding the disallowance of deduction of Rs.1,00,000/- which has been paid by the appellant as per Court Settlement. 22.1. It was noted by the AO that an expenditure of Rs.2 lacs was claimed. In this regard, it was informed that one Shri Rajesh Bharadwaj had filed a suit which was settled by mutual understanding subject to payment of Rs.2 lacs. As per the said understanding, the assessee had paid Rs.1 lac through demand draft dated 9.1.2006. The AO s allegation was that the mutual agreement was only for a sum of Rs.1 lac and there was no reference of commitment of payment of Rs.2 lacs. Resultantly, the balance amount was disallowed. When the matter was carried before the ld.CIT(A), the claim of the assessee was disallowed after assigning following reason: 3.3. I have considered the facts of the case and the submissions of the appellant. The A.O. after verifying the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eceipt of Rs.39,21,481 . The appellant has not filed any other evidence to support its contention. It is, therefore, the A.O. is justified in disallowing claim of Rs.1 lac. The ground of appeal in this regard is rejected. 23. We have heard both the sides. We have noted that the Revenue Authorities have appreciated the evidence and thereafter arrived at the conclusion that there was no justification for claim of an amount Rs.1 lac due to lack of factual as also legal corroboration. The assessee has not substantiated its claim in respect of an outstanding liability per-say of Rs.1 lac, therefore in the absence of any cogent evidence, we hereby affirm the factual finding of the authorities below and dismiss this ground. 24. Ground No.4 reads as under:- 4. That the Learned CIT(A) has erred in law and on facts while upholding the disallowance of deduction of Rs.1,73,107/- on account of liquidated damages retained by the appellant s customer. 24.1. An amount of Rs.1,73,107/- was claimed as liquidated damages levied by Mazgaon Dock Ltd. On verification of the letter, it was noted that the MDL had deducted the said sum as provisional liquidated damages at 6%. It was furthe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Supreme Court in the case of Rotork Controls India Pvt.Ltd.(supra), the incurrence of the liability is admissible for the year under consideration, however, the adjustment due to cession of liability is to be made in A.Y. 2008-09, the year it was accounted for. This ground is, therefore, allowed. 26. Ground No.5 reads as under:- 5. That the learned CIT(A) has erred in law and on facts while upholding the disallowance of deduction of Rs.1,91,409/- on account of depreciation on motor cars on the ground that the cars in question were in the name of the directors of the appellant company. 26.1. It was noted by the AO that there are two cars registered in the name of Director Shri Dipen Patel. The claim of depreciation of Rs.1,91,409/- was disallowed. When the matter was carried before the ld.CIT(A), the action of the AO was confirmed mainly on the ground that since the asset was not owned by the assessee-company, therefore not entitled for depreciation. 26.2. Now, before us an order of ITAT Ahmedabad in the case of ITO vs. Electro Ferro Alloys Ltd. 13 ITR 594(Trib.)[Ahd] has been cited, wherein the Tribunal has decided the issue in assessee s favour. Likewise, the Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der:- 1) The order passed by the Ld.CIT(A) is against law equity and justice and same is wholly illegal, unlawful and bad in law. 2) The Ld. CIT(A) has erred in law and/or facts upholding the order of the Ld.A.O. of rejecting of deduction U/s.80IA of the Act for eligible projects of infrastructure executed by the appellant. 3) The Ld.CIT(A) has erred in law and/or facts upholding the order of the Ld.A.O. of making disallowance of U/s.40(a)(ia) of the Act. 29.1. Apropos to Ground No.2, ld.CIT(A) has noted the nature of work which was granted by the assessee by various Government Departments. In all 14 such projects were undertaken by the assessee. Those projects were in the nature of railway under-bridge, construction of road, construction of Sujalam Sufalam Spreading Canal, construction of Arch bridge on Delhi-Ghaziabad Section, construction of under-bridge road at Ahmedabad section, Vadodara Section, construction of water way, etc. From the side of the Revenue, it was not alleged that any particular project was not in respect of Development of infrastructure facility. It was also not an allegation of the Revenue that for the year under consideration the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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