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TMI Blog2014 (4) TMI 389X X X X Extracts X X X X X X X X Extracts X X X X ..... parameters of eligibility for contracts where as such parameters do not exist in the Act and all the contracts of the assessee are simple works contracts." 3. To dispose of these appeals, we refer to the facts from AY 2003-04 in ITA No. 1627/Hyd/2013. 4. There is only one issue, in the present appeals, relates to the non-allowance of deduction u/s 80IA(4) by the AO. 5. Before the CIT(A), the assessee argued that the ITAT, Hyderabad in assessee's own case in ITA No. 996/Hyd/2003 and others had decided that 19 projects listed on pages 11 to 13 of the appellant order are eligible for deduction u/s 80IA(4). It has also been held by the ITAT that with respect to these projects the assessee is a developer and not only a works contractor with respect to other projects, it was submitted by the assessee that those projects were also similar to the ones in which the ITAT had held the assessee to be a developer. Therefore, it was argued by the assessee that deduction u/s 80IA(4) should be allowed to it especially in view of the binding decisions of the ITAT. 6. On appeal of set aside assessment to the CIT(A) in the second round of litigation, the CIT(A) placed reliance on the decision of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder section 80IA(4) and not any other person like individual, HUF, Firm etc. 45. We also find that according to sub-clause (a), clause (i) of sub section (4) of Section 80-IA the word "it" denotes the enterprise carrying on the business. The word "it" cannot be related to the infrastructure facility, particularly in view of the fact that infrastructure facility includes Rail system, Highway project, Water treatment system, Irrigation project, a Port, an Airport or an Inland port which cannot be owned by any one. Even otherwise, the word "it" is used to denote an enterprise. Therefore, there is no requirement that the assessee should have been the owner of the infrastructure facility. 46. The next question is to be answered is whether the assessee is a developer or mere works contractor. The Revenue relied on the amendments brought in by the Finance Act 2007 and 2009 to mention that the activity undertaken by the assessee is akin to works contract and he is not eligible for deduction under section 80IA (4) of the Act. Whether the assessee is a developer or works contractor is purely depends on the nature of the work undertaken by the assessee. Each of the work undertaken has to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re occurred it shall be the responsibility of the assessee. Further, during this period, the entire infrastructure shall have to be maintained by the assessee alone without hindrance to the regular traffic. Therefore, it is clear that from an un-developed area, infrastructure is developed and handed over to the Government and as explained by the CBDT vide its Circular dated 18-05-2010, such activity is eligible for deduction under section 80IA(4) of the Act. This cannot be considered as a mere works contract but has to be considered as a development of infrastructure facility. Therefore, the assessee is a developer and not a works contractor as presumed by the Revenue. The circular issued by the Board, relied on by learned counsel for the assessee, clearly indicate that the assessee is eligible for deduction under section 80IA(4) of the Act. The department is not correct in holding that the assessee is a mere contractor of the work and not a developer. 47. We also find that as per the provisions of the section 80IA of the Act, a person being a company has to enter into an agreement with the Government. Such an agreement is a contract and for the purpose of the agreement a person m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Finance Act, 2001. Thus, the aforesaid Explanation was inserted, certainly, to deny the tax holiday to the entities who does only mere works contact or sub-contract as distinct from the developer. This is clear from the express intension of the parliament while introducing the Explanation. The explanatory memorandum to Finance Act 2007 states that the purpose of the tax benefit has all along been to encourage investment in development of infrastructure sector and not for the persons who merely execute the civil construction work. It categorically states that the deduction under section 80IA of the Act is available to developers who undertakes entrepreneurial and investment risk and not for the contractors, who undertakes only business risk. We have carefully gone through the various activities carried on by the assessee. An analysis of the works undertaken by the assessee clearly indicates that it carried on the activities of development of infrastructure facility. For clarity we reproduce one of the projected undertaken by the assessee. Nature of work : Widening to four lanes and strengthening of existing two lane carriageway in km. 27.80 to km. 61.00 Jagatpur-Chandikhol Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... into more useful infrastructure facility. In the process, every act required (whether mentioned in the agreement or not) in converting the area into more useful one shall be that of the assessee. The assessee has to undertake the responsibility of maintenance of the existing traffic and there should not be inconvenience to the regular traffic. The developed area after completion of the development of infrastructure is handed over to the Government. After handing over, the assessee shall maintain the nfrastructure for a period of 48 months and any defects are to be rectified. 50. From the above facts it is clear that the assessee is converting the area entrusted to it into more useful and more profitable area and handing over the developed one to the Government/Government Bodies. Therefore, the activity of the assessee is " to develop" an existing two lane road into four lane road thereby making the road more useful and profitable. 51. Without any doubt, the learned counsel for the assessee clearly demonstrated before us that the assessee at present has undertaken huge risks in terms of deployment of technical personnel, plant and machinery, technical know-how, expertise and finan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t clear that where the assessee has carried out the development of infrastructure work in Consortium or jointly with any other agency and not as a subcontractor, then also the assessee is entitled for deduction u/s 80IA of the Act. The same principle is applicable in respect of work allotted by Government Corporation to the assesee. Being so, we are inclined to partly allow the ground relating to claiming of deduction u/s. 80IA.of the Act. 56. In the result, departmental appeals in I.T.A. No. 233/Hyd/01, 969/Hyd/02, 617/Hyd/03 and 1079/Hyd/03 are dismissed. The 57 I.T.A. No. 84/Hyd/2010 & Ors. 6.1 The CIT(A) further extracted the findings of the Tribunal passed in MAs No. 64/Hyd/2013 and others filed by the assessee, vide order dated 04/07/2013, which are as under: "5. We heard both the parties and perused the material available on record. For the assessment years under appeal, the assessee came in appeal before the Tribunal, challenging the action of the Revenue authorities in denying the deduction under S.80IA(4) of the Act. The Tribunal after considering the submissions of the learned counsel in the light of the grounds raised before the Tribunal, and appraising the various d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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