TMI Blog2013 (9) TMI 201X X X X Extracts X X X X X X X X Extracts X X X X ..... f notice u/s. 148 dated 25.2.2011 after a period of more than 4 years is clearly barred by time limit - Decided in favour of assessee. Penalty u/s 271(1)(c) - Disallowance of depreciation on plant and machinery - Held that:- The facts remain that the assessee is having bona-fide belief that it is entitled for depreciation as per the lease agreement and the assets have been duly reflected in the Balance Sheet. The assessee has furnished the entire facts relating to this issue which was not found favourable with the Department. The Revenue authorities rejected the claim of granting of depreciation. It was up to the Revenue authorities to accept or reject the claim of the assessee. Merely because it was rejected, it does not lead to the conclusion that the assessee is liable for penalty - Decided in favour of assessee. Deduction u/s. 80IA - business of manufacturing of pipes for water supply and sewerage scheme and turnkey contractors in infrastructure sector, claimed deduction u/s. 80IA. - CIT allowed the deduction holding that the business of the assessee was that of a developer of infrastructure facility as envisaged in the provisions of section 80IA of the Act. - Held that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TR 996) (SC) for the proposition that opinion of internal audit party on a point of law does not constitute "information" for the purpose of section 147(b) of the IT Act. That part alone of the note of an audit party which mentions the law which escaped the notice of the ITO constitute "information". (b) Suresh C. Parikh vs. ITO (353 ITR 505) (Guj) wherein while allowing the petition, the High Court held that a perusal of the reasons recorded indicated that the sole ground on which assessment was sought to be reopened was that the assessee had been allowed exemption of Rs. 4,15,000 for the purchase of a residential house while computing his income, and that, in support of such purchase he had produced receipts showing deposit of the amount with two different parties. According to the Income-tax Officer, since the receipts filed could not prove the investment made for purchase of flat, and also no evidence like purchase deed, etc., were obtainable on record, this amounted to failure on the part of the assessee to disclose fully and truly all material facts. A perusal of the prescribed return form as existing at the relevant time and the notes thereto indicated that there was no re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resent case original assessment was completed u/s. 143(3) of the Act on 15.12.2006. The re- assessment notice u/s. 148 was issued to the assessee vide notice dated 25.2.2011 and assessment was completed on 21.11.2011. Section 147 of the Act reads as follows: "Income escaping assessment 147. If the Assessing Officer,[has reason to believe] that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or recompute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned (hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year): Provided that where an assessment under sub- section (3) of section 143 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year, unless any income chargeab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowance under this Act has been computed]. Explanation 3: For the purpose of assessment or reassessment under this section, the Assessing Officer may assess or reassess the income in respect of any issue, which has escaped assessment, and such issue comes to his notice subsequently in the course of the proceedings under this section, notwithstanding that the reasons for such issue have not been included in the reasons recorded under sub-section (2) of section 148.] Explanation 4: For the removal of doubts, it is hereby clarified that the provisions of this section, as amended, by the Finance Act, 2012, shall also be applicable for any assessment year beginning on or before the 1st day of April, 2012.]" 6. Section 149 prescribes time limit for issue of notice which reads as follows: "Time limit for notice. [(1) No notice under section 148 shall be issued for the relevant assessment year,- (a) if four years have elapsed from the end of the relevant assessment year, unless the case falls under clause (b); (b) if four years, but not more than six years, have elapsed from the end of the relevant assessment year unless the income chargeable to tax which has escaped assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment for that assessment year. The DR was not able to point out applicability of these provisions to assessee's case. Unless these conditions are fulfilled assessment cannot be held to be valid. Being so, in our opinion, initiation of re-assessment proceedings for the assessment year 2004-05 by means of notice u/s. 148 dated 25.2.2011 after a period of more than 4 years is clearly barred by time limit. Being so, we are not in a position to uphold the reopening of assessment. Accordingly, re-assessment order is quashed. 8. The other grounds in this appeal raised by the assessee on merit are dismissed as infructuous, as we have already adjudicated the appeal on legal issue. 9. In the result assessee's appeal in ITA No. 1425/Hyd/ 2012 is allowed. ITA No. 1426/Hyd/2012 - A.Y. 2008-09 - By assessee and ITA No. 1427/Hyd/2012 - A.Y. 2009-10 - By assessee: 10. The first common ground in these appeals is with regard to disallowance of depreciation on plant and machinery. Brief facts of the issue are that the assessee raised this ground as ground No. 3 before the CIT(A) which reads as follows: "3. The AO has erred in disallowing the depreciation on machinery which was acquired ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad not been raised before the AAC. If such oral contention had been raised before the AAC, then the grievance of the assessee that the AAC had not dealt with this contention orally urged before the AAC at the time of the appeal formed the subject-matter of the appeal before the Tribunal and the Tribunal had the jurisdiction to deal with the question. In the exercise of that jurisdiction it was open to the Tribunal to remand the matter back either to the ITO or to the AAC to ascertain the facts regarding its claim for relief under s. 80J. The record of the Tribunal need not show and is not likely to contain whether in fact this contention was orally urged before the AAC by the assessee. Therefore, the Tribunal should first ascertain for itself whether such a contention had in fact been urged before the AAC. If it comes to the conclusion that it was not urged by the assessee before the AAC, then the grievance that the AAC did not take its contention regarding s. 80J into account cannot form the subject-matter of the appeal before the Tribunal and it is not open to the Tribunal to allow the assessee to raise the same plea before the Tribunal for the first time. The Tribunal has failed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee raised this ground before the CIT(A) as ground No. 2 which is as follows: "The AO has made an addition of Rs. 80.00 lakhs and whereas has failed to bring any material to show that the provisions of section 40A(3) of IT Act, 1961 were applicable and in such a situation the AO is not authorised to resort to any arbitrarily estimated additions but to complete the assessment after computing the income in accordance with the books of account." 19. However, there is no adjudication by the CIT(A) in his order. Being so, we feel it appropriate to remit the issue back to the file of the CIT(A) for adjudication. 20. In the result, ITA No. 1426/Hyd/2012 and ITA No. 1427/Hyd/2012 are partly allowed for statistical purposes. ITA No. 129/Hyd/2013 - A.Y. 2003-04 - By Assessee ITA No. 104/Hyd/2013 - A.Y. 2003-04 - By Revenue CO No. 15/Hyd/2013 - A.Y. 2003-04 - By Assessee ITA No. 130/Hyd/2013 - A.Y. 2004-05 - By Assessee ITA No. 105/Hyd/2013 - A.Y. 2004-05 - By Revenue CO No. 16/Hyd/2013 - A.Y. 2004-05 - By Assessee 21. The above appeals and COs by the assessee as well as by the Revenue are relating to levy of penalty u/s. 271(1)(c) of the Act. In the A.Y. 2003-04, the AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar payment of the lease rentals. It is expected that the lease rentals shall be regularly paid." 26. Further, he submitted that the assessee has been regularly paying the lease rentals and also paid Rs. 10 lakhs as per Lease Agreement. According to the AR, the plant and machinery is owned by the assessee and the same is appearing in the Balance Sheet of the assessee. Accordingly, the assessee is entitled for depreciation. The Tribunal has not considered these facts in the quantum appeal and disallowed the depreciation. Without prejudice to the above argument, he submitted that not granting of depreciation by the Revenue authorities cannot be a reason for levy of penalty u/s. 271(1)(c) of the Act. He relied on the judgement of Supreme Court in the case of CIT v. Reliance Petro Products Pvt. Ltd. (322 ITR 158). 27. On the other hand, the learned DR submitted that the issue pertains to the claim of depreciation which was disallowed by the AO and this disallowance was confirmed by the Tribunal. The assessee claimed depreciation amounting to Rs. 41,15,000 for A.Y. 2003-04 and Rs. 30,86,250 for A.Y. 2004-05 on leased plant and machinery. There is no ambiguity in the law that deprecia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee has not produced any evidence except filing account copy of M/s. IVRCL. The account copy of the IVRCL cannot be taken as proof of payment of expenditure. In some instances, the assessing officer noticed that the amounts debited in the capital accounts also reflected in the ledger account. The department rightly observed that the assessee could not absolve his duty simply by stating that the amount was paid by the IVRCL. Since the assessee company claimed the expenditure, in our considered view, it is the duty of the assessee company to prove the genuineness of the same. In the absence of the supporting evidence, the department rightly not certified the correctness of the expenditure Incurred by the assessee company. The decision relied on by the learned, counsel are all distinguishable on facts of the instant case. As most of the payments are made by the cash and as most of the expenditure was not properly supported by vouchers, the lower authorities are rightly disallowed the expenditure amounting to Rs. 50 lakhs on ad-hoc basis and added the same to the income returned. In view of the above, we do not see any infirmity in the orders of the lower authorities and the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce of depreciation on plant and machinery the penalty was levied by placing reliance on the order of the Tribunal in ITA No. 843/Hyd/2008 dated 21.1.2011 for A.Y. 2004-05 wherein the Tribunal confirmed disallowance of depreciation as cited above. 32. For levying penalty u/s. 271(1)(c) of the Act, there has to be concealment of particulars of income of by assessee or furnishing of inaccurate particulars of its income. In the present case, it is not the case of concealment of income and also it cannot be said that the assessee has furnished inaccurate particulars of income. The assessee claimed depreciation on plant and machinery taken on lease from M/s. IVRCL. It is on the basis of lease agreement entered by the assessee on 30th March, 2001 with M/s. IVRCL. It is in consonance with the agreement. However, the Tribunal not agreed with the contention of the assessee's counsel in its appeal in quantum addition. The facts remain that the assessee is having bona-fide belief that it is entitled for depreciation as per the lease agreement and the assets have been duly reflected in the Balance Sheet. The assessee has furnished the entire facts relating to this issue which was not found fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing given in the assessment order is a good finding, the same is not conclusive in penalty proceedings. What is required to be seen is whether the addition has been passed on the material from which definite inference can be drawn that the assessee had concealed the income or furnished inaccurate particulars of income. In this case addition is made purely on estimate/ad-hoc basis without any basis and without any material to support that the assessee had income more than that declared by the assessee in its return of income. In respect of such estimated addition or disallowance, imposition of penalty will not be justified. Being so, we are inclined to confirm the deletion of penalty by the CIT(A). This ground in Revenue appeal is dismissed. 35. The assessee's appeals in ITA No. 129/Hyd/2013 and ITA No. 130/Hyd/2013 are allowed. Revenue appeals in ITA Nos. 104 and 105/Hyd/2013 are dismissed. The COs by the assessee in CO Nos. 15 and 16/Hyd/2013 are dismissed. Revenue Appeals Assessee's Cos ITA No. 1483/Hyd/2012 - CO No. 153/Hyd/2012 ITA No. 1484/Hyd/2012 - CO No. 154/Hyd/2012 ITA No. 1485/Hyd/2012 - CO No. 155/Hyd/2012 ITA No. 1486/Hyd/2012 - CO No. 156/Hyd/2012 ITA No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t when introduced afresh by the Finance Act, 1999, the provisions under section 80IA (4A) of the Act were deleted from the Act. The deduction available for any enterprise earlier under section 80IA (4A) are also made available under Section 80IA (4) itself. Further, the very fact that the legislature mentioned the words (i) "developing" or (ii) "operating and maintaining" or (iii) "developing, operating and maintaining" clearly indicates that any enterprise which carried on any of these three activities would become eligible for deduction. Therefore, there is no ambiguity in the Income-Tax Act. We find that where an assessee incurred expenditure for purchase of materials himself and executes the development work i.e., carries out the civil construction work, he will be eligible for tax benefit under section 80 IA of the Act. In contrast to this, a assessee, who enters into a contract with another person including Government or an undertaking or enterprise referred to in Section 80 IA of the Act, for executing works contract, will not be eligible for the tax benefit under section 80 IA of the Act. We find that the word "owned" in sub- clause (a) of clause (1) of sub section (4) of S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cts and thereafter developing the same into infrastructure facility. Secondly, the assessee shall facilitate the people to use the available existing facility even while the process of development is in progress. Any loss to the public caused in the process would be the responsibility of the assessee. The assessee has to develop the infrastructure facility. In the process, all the works are to be executed by the assessee. It may be laying of a drainage system; may be construction of a project; provision of way for the cattle and bullock carts in the village; provision for traffic without any hindrance, the assessee's duty is to develop infrastructure whether it involves construction of a particular item as agreed to in the agreement or not. The agreement is not for a specific work, it is for development of facility as a whole. The assessee is not entrusted with any specific work to be done by the assessee. The material required is to be brought in by the assessee by sticking to the quality and quantity irrespective of the cost of such material. The Government does not provide any material to the assessee. It provides the works in packages and not as a works contract. The assessee u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecision relied on by the learned counsel for the assessee in the case of CIT vs. Laxmi Civil Engineering works [supra] squarely applicable to the issue under dispute which is in favour of the assessee wherein it was held that mere development of a infrastructure facility is an eligible activity for claiming deduction under section 80IA of the Act after considering the Judgement of the Mumbai High Court in the case of ABG Heavy Engineering [supra]. The case of ABG is not the pure developer whereas, in the present case, the assessee is the pure developer. We also find that Section 80IA of the Act, intended to cover the entities carrying out developing, operating and maintaining the infrastructure facility keeping in mind the present business models and intend to grant the incentives to such entities. The CBDT, on several occasions, clarified that pure developer should also be eligible to claim deduction under section 80IA of the Act, which ultimately culminated into Amendment under section 80IA of the Act, in the Finance Act 2001, to give effect to the aforesaid circulars issued by the CBDT. We also find that, to avoid misuse of the aforesaid amendment, an Explanation was inserted in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tracts which involves development, operating, maintenance, financial involvement, and defect correction and liability period is to be computed by assessing officer on pro- rata basis of turnover. The assessing officer is directed to examine and grant deduction on eligible turnover as directed above. It is needless to say that in similar circumstances, similar view has been taken by the Chennai Bench of the Tribunal and deduction u/s. 80IA was granted in the case of M/s. Chettinad Lignite Transport Services (P) Ltd., in ITA No. 2287/Mds/06 order dated 27th July, 2007 for the assessment year 2004-05. Later in ITA No. 1179/Mds/08 vide order dated 26th February, 2010 the Tribunal has taken the same view by inter-alia holding as follows: "7. Moreover, the reasons for introducing the Explanation were clarified as providing a tax benefit because modernisation requires a massive expansion and qualitative improvement in infrastructures like expressways, highways, airports, ports and rapid urban rail transport systems. For that purpose, private sector participation by way of investment in development of the infrastructure sector and not for the persons who merely execute the civil construc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paid for the cost incurred by it; otherwise, how will the person, who develops the infrastructure facility project, realize its cost? If the infrastructure facility, just after its development, is transferred to the Government, naturally the cost would be paid by the Government. Therefore, merely because the transferee had paid for the development of infrastructure facility carried out by the assessee, it cannot be said that the assessee did not develop the infrastructure facility. If the interpretation done by the Assessing Officer is accepted, no enterprise carrying on the business of only developing he infrastructure facility would be entitled to deduction under section 80IA(4), which is not the intention of the law. An enterprise, who develop the infrastructure facility is not paid by the Government, the entire cost of development would be a loss in the hands of the developer as he is not operating the infrastructure facility. The legislature has provided that the income of the developer of the infrastructure project would be eligible for deduction, it presupposes that there can be income to developer i.e. to the person who is carrying on the activity of only development infra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issue. Thus, we can unequivocally now say that any undertaking or enterprise which executes the infrastructure development project, as referred to in sub-section(4) as a works contract awarded by any person including the Central or State Government, is not eligible for tax benefit u/s 80IA(4). Having said that, now we examine the facts of this case. The assessee- company was given this benefit in assessment year 2003-04 by the Department on identical facts after considering the Explanation and amendment thereto. To trace the history of this deduction, we find that originally, in the provision of section 80IA, there was no mention of any development of 'infrastructure facility'. It is only with effect from 1.4.2000, this section was divided into two portions 80IA and 80IB. Section 80IA(4) prescribes about the deduction available to a developer who develops infrastructure facilities. In view of the amendment inserted by the Finance Act, 2007, with retrospective effect from 1.4.2000, the deduction u/s 80IA is available to those assessees who are 'investing and developing infrastructure facility' and not to persons who simply executes 'works- contracts'. Explanation in question, as it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, workshop, powerhouse, transformers or such other works of the State Government or public undertakings as the State Government may be by notification, specify in this behalf at any of its stages entered into by the State Government or by an official of the State Government or public undertaking and includes an agreement for the supply of goods or material and all other matters relating to execution of any of the said works. The case of ACIT vs Indwell Lianings Pvt. Ltd (supra), on which the Assessing Officer has placed reliance is also relevant and we extract certain relevant portion of this decision for ready reference: Vide Finance Act, 2007, an Explanation was inserted with retrospective effect from April, 2000 after sub-section (13) of section 80- IA, which reads as under : "For the removal of doubts, it is hereby declared that nothing contained in this section shall apply to a person who executes a works contract entered into with the undertaking or enterprise, as the case may be." According to Attorney's Pocket Dictionary, in relation to a corporation or business, the term "undertaking" denotes its whole enterprise and the word "enterprise" connotes all the related ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x benefit under section 80-IA of the Act. In the present case, we find that the assessee was doing only contract works of in situ cement lining for water supply project of the Gujarat Water Supply and Sewerage Board. As such, the benefit of section 80-IA cannot be extended to the assessee. The decisions relied upon by the assessee were rendered prior to the amendment and as such not relevant for deciding this issue. We, therefore, restore the order of the Assessing Officer and reverse the order of the Commissioner of Income-tax (Appeals)" 11. To further elaborate the discussion on this issue, paras 5 6 of the decision of ITAT Pune Bench rendered in the case of Laxmi Civil Engg. P. Ltd vs Addl. CIT, order dated 8.6.2011 are being extracted herein below: 5. We heard both the parties and perused the orders of the revenue. The contentious issues before us are (i) whether the contractor is synonymous with the developer within the meaning of section 80IA (4)(i) of the Act; (ii) whether the condition placed in clause (c) is applicable to the case of a developer, who is not carrying on business of operating and maintaining the infrastructural facilities. In our opinion, the answer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d be after 1" April, 1995. In the present case the assessee clearly fulfilled this condition ". Before the amendment that was brought about by parliament by Finance Act, 2001 we have already noted that the consistent line of circulars of the Board postulated the same position. The amendment made by Parliament to S. 80-IA(4) of the Act, set the matter beyond any controversy by stipulating that the three conditions for development, operation and maintenance were not intended to be cumulative in nature 6. The above judgment of the Hon'ble High Court is delivered in the case of ABG Heavy Engg Ltd (supra), who is a contractor for the INP Trust and that contactor, assessee is found to be an eligible developer for making claim of deduction u/s section 80IA (4) of the Act. From the above, it is evident that the person who only develops the infrastructure do not have the occasion to operate and maintain the infrastructure. It is further evident that the harmonious reading is necessary and mandatory in view of High Court's judgment in the case of an enterprise carrying on business or developing which is the case of the assessee, all the conditions referred to clause (i) of section 80IA ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure is required in public domain is the outlook/duty of a local authority or of a Central/State government. When a certain infrastructure is needed, the concerned authorities have a broader picture in their mind aiming at acquiring certain facility for which infrastructure development is required. So, to say, when any assessee/enterprise agrees under a contract to develop such an infrastructure facility, it cannot straight away be dubbed as not the brainchild of that enterprise, but only of the authority in question. Therefore, again this provision in so far as the conditions required to be fulfilled to be eligible for this incentive had to be provided by the juridical forums dealing with this issue. After in-depth deliberations, discussions and examination of these provisions, finally, it has been resolved that if an enterprise even after entering into a contract with a local authority or the Governments, may be Central or State, in case it constructs the infrastructure facility, operates it and also maintains the same, it would be eligible for this deduction. 14. Now, let us examine the facts of the given case. It is an undeniable fact that the assessee is engaged in the civil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e agreement for development of infrastructure facility the assessee is referred to as a contractor or because some basic specifications are laid down, it does not detract the assessee from the position of being a 'developer'; nor will it debar the assessee from claiming deduction u/s 80IA(4). The facts of the present case are exactly identical to the facts of that case rendered by ITAT Mumbai Bench in which under identical facts and circumstances, the assessee has been held to be eligible for deduction u/s 80IA(4). Section 80IA(4)(i)(b) requires development of infrastructure facility and transfer thereof as per agreement and it cannot be disputed in view of the material on record that the assessee has transferred the infrastructure facility developed by it by handing over the possession thereof to the concerned authority as required by the agreement. The handing over of the possession of developed infrastructure facility/project is the transfer of the infrastructure facility/project by the assessee to the authority. The handing over of the infrastructure facility/project by the developer to the Government or authority takes place after recoupment of the developer's costs whether it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts decision rendered in the case of ACIT vs Bharat Udyog Ltd , by holding that such a deduction is only to be denied to a sub-contractor and not a mini contractor. Similar view has been taken by the ITAT Chennai Bench in the case of ACIT vs Smt. C. Rajini (supra) in which both of us constituted the Bench. In this decision the definition and difference between works contractor and a developer has been examined in detail. The main thrust of the decision is that a developer need not be the owner of the land on which development is made. Although that decision was rendered in the context of a developer of buildings and the deduction was in respect of 80IB(10), but the definition of 'developer' given in that case is also relevant for this purpose. Moreover, we are in agreement that in incentive provisions, the construction should be liberally given as held by the Hon'ble Supreme Court rendered in the case of Bajaj Tempo Ltd vs CIT, 196 ITR 188. Thus, when the assessee makes investment and himself executes development work and carries out civil works, he is eligible for tax benefit u/s 80IA of the Act. Accordingly, with the foregoing discussion, we hold that the assessee is entitled to d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng before the Division Bench of the Tribunal to give effect to the opinion of the Third Member as per the provisions of section 255(4) of the Act. However, the matter was dismissed in limine because of non-appearance on behalf of the assessee. The assessee moved a Miscellaneous Application before the Tribunal to recall the said order. While the said Miscellaneous Application was pending before the Tribunal, by way of abundant precaution the assessee filed appeals before the Hon'ble Bombay High Court being appeal number ITXA 1307 of 2011 for A.Y. 2000-01 and 1640 of 2011 for A.Y. 2001-02 raising various contention regarding the allowance of deduction u/s. 80IA(4) of the Act. 3. While the said appeal was sub judice before the Hon'ble Bombay High Court the Tribunal recalled its order dismissing the appeals of the assessee in limine and gave a fresh date of hearing to the assessee. 4. While the said appeals are pending before the Hon'ble Tribunal to give effect to the opinion of the Third Member as per the provisions of section 255(4) of the Act, the Hon'ble Bombay High Court in the case of ABG Heavy Industries Ltd., passed an order granting deduction to the said assessee u/s. 80IA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der the said decision of ABG Heavy Industries and all other decisions, we can consider the said judgments of ABG Heavy Industries and also the other judgments for allowing the deduction u/s. 80IA(4) of the Act while giving effect to the opinion of the Third Member as per the provisions of section 255(4) of the Act. Following the directions of the Hon'ble Bombay High Court being the Jurisdictional High Court, the Tribunal is bound to follow the directions and we do accordingly. 7. Stand of assessee before us is that issue at hand is covered by the decision of the Hon'ble Bombay High Court in the case of ABG Heavy Industries Ltd. others (supra). In view of the amendment to section 80IA(4A) by Finance Act, 1999 effective from 01.04.2000 to avail the deduction under such section for the A.Ys. 2000-01 2001-02, assessee should carry on all three activities i.e. developing, maintaining operating cumulatively. By developing the infrastructure facility and transferring it to another person for maintaining and operating, the benefit can be availed only from the A.Y. 2002-03. In view of the amendment to section by Finance Act, 2001 where in 'or' is inserted between developing and main ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld be owned by a company so as to be entitled to deduction under this section. The work done by the assessee is not owned by it, it does not satisfy sub clause (a) of section 80IA(4)(i). The infrastructure facility should be owned by the assessee is not correct interpretation. It is evident from section itself as clarified by the jurisdictional High Court in ABG Heavy Industries (supra) inter alia held that the assessee has shouldered out Investment technical risk in respect of the work executed and it is liable for liquidated damages if failed to fulfill the obligation laid down in the agreement. The liability which has been assumed by the assessee under terms of the contract are obligations involving the development of an infrastructure facility. The assessee has also in its employment technically and administratively qualified team of persons and therefore it is not correct to say that assessee is merely a contractor not a developer. The assessee is eligible for benefit u/s 80-1 A even if part of the Infrastructural Project work is executed. 9. It was found by the erstwhile Judicial Member that assessee fulfilled the conditions of being a developer as subsequently interpre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pt the proposal but they suggested that M/s. Patel Engineering Company Ltd., may employ the assessee company as sub contractor. It was at the suggestion of World Bank that the assessee companies name was included as a sub contractor instead of forming of a joint venture. The project authorities including World Bank have approved and certified the assessee as sub-contractor for the above said work after thorough scrutiny and detail description of the work to be undertaken by the assessee company. The assessee company name is included in Main contract Agreement entered into between the employer and PEC as sub contractor for Koyna Project Works by Project Authorities. In fact the Government of Maharashtra has entered in Tripartite Agreement with the assessee company and PEC. Works completion certificate has been issued in favour of the assessee company for the execution of the Work. Power of Attorney is given by Prime Contractor to Sub Contractor and accepted and exceeded by Project Authorities. 12. The fact that the assessee has a tripartite agreement with the relevant authorities makes the assessee a party to the main contract work itself and which clearly shows that the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le device to evade tax. It is a settled position of law that the company is a juristic entity and it should be considered independent from the shareholders or the directors. The action of the assigning and the work of construction undertaken by the assessee was recognised by the State Government and a tripartite agreement was executed between the assessee 'A' and the State Government through which the State Government had recognised that the assessee had stepped into the shoes of 'A' and notified authorising the assessee to collect the toll tax for a particular period. Since the assessee company had rectified all act and deeds of its promoter 'U'' and owned all the assets and liabilities of its promoter through an agreement of assignment executed between the assessee and 'A' after obtaining approval from the State Government, the assessee should be deemed to have undertaken the construction work since 1-4- 1995. Since the Government had provided this deduction in order to encourage economic growth of the country, the plenitude of exemption should not be whittled down, by laying stress on ambiguity here and there. If it was proved that, the assessee-company had obtained the status o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company and the other person not being a party after withdrawing the question of Joint Venture does not arise. The Venture was fully carried out by the assessee and it was entirely executed by the assessee company. Taking the substance of the transaction, the assessee are entitled to all the profits in respect of the contract executed by them, hence the assessee would certainly be entitled to deduction under the provisions of 80IA as they have fulfilled all the other conditions. This view get strength from decision in the case of ITAT, Indore Bench, in case of Ayush Ajay Constructions Ltd. (supra). Thus, while giving effect to the opinion of Third Member u/s.255(4) of the Act, we take view in conformity with order of jurisdictional High Court in case of ABG Heavy Industries Ltd. (supra) available at this time though contrary to the opinion expressed by the Third Member. So in view of above discussion, following the ratio of jurisdictional High Court in case of ABG Heavy Industries Ltd. (supra), the Assessing Officer is directed to allow deduction u/s.80IA(4) of the Act to the assessee with regard to the projects in question for both the years. The matter is disposed off accordingly ..... X X X X Extracts X X X X X X X X Extracts X X X X
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