TMI Blog2013 (11) TMI 197X X X X Extracts X X X X X X X X Extracts X X X X ..... ly in the name of assessee company or in the name of the joint venture enterprise - The fact that the assessee had 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 on their own right are contractors and not just sub contractors as normally understood - The assessee was the contractor vis-a-vis the portion allotted to them and not only subcontractors, i.e. a direct party to the main agreement - The assessee had entered into a main agreement, in their own right, can claim the benefit of section 80IA - assessee was otherwise fulfilling all the conditions they were entitled to deduction under the provisions of section 80IA. 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 and the State Government through which the State Government had recognised that the assessee had stepped into the shoes of assessee and notified authorising the assessee to collect the toll tax for a particular period - Since the assessee company had rectified all act and dee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not entitled to deduction u/s.80IA(4) of the Act. The said matter was referred back to the Division Bench of the Tribunal to give effect in conformity with the opinion of the Third Member as per the provisions of section 255(4) of the Act. 2. The said appeals were pending 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4) of the Act can consider the judgment of the Hon'ble High Court in the case of ABG Heavy Industries. In light of the clear directions given by the Hon'ble Bombay High Court in the appeals filed by the assessee for the impugned assessment years inter alia directed the Tribunal to consider 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 cum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ort but was only the supplier of cranes at the loading and unloading terminal at the said JNPT port. Thus assessee was not required to execute the entire project as observed by the Third Member. Another significant word used here is "owned", which indicates that the infrastructure facility should 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... available to Power House. In fact the assessee and PEC had proposed a joint venture to the relevant authorities for the Execution of the said project. As the project was being financed by World Bank the relevant authorities forwarded the proposal to World Bank. World Bank however did not accept 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 Atto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of the aforesaid bridge was not borne by the assessee but by "A", the main tenderer." The revenue had rejected the claim of the assessee for the simple reason that the assessee had never entered into any contract with the State Government and the assessee-company was nothing but a colourable 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 construct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o see the substance and not the Form Essentially, though it was a Joint Venture, it was converted into assessee's venture. The Other Venturer withdrew and the entire work was executed by the assessee though in the name of Joint Venture. The Joint Venture is nothing but the venture of the assessee 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, wile 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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