TMI Blog2015 (5) TMI 669X X X X Extracts X X X X X X X X Extracts X X X X ..... contemplated by the Explanation of Section 80-IA of the Act. Thus the activities indulged by the assessee are part of its normal activities of advertising and publicity rather than one of infrastructure development. The business activities of the assessee do not involve (a) Development (b) Operating; and (c) Maintenance. For the purpose of its business, the assessee has taken up erection/construction of bus-shelter for its advertisement business. The circular issued by the CBDT makes it clear that the income eligible for deduction has to be arisen from the use of facility, for example, collection of toll from the road users. The said income has to be treated as income derived from the infrastructure facility. In the instant case, the assessee derives income only from the advertisement hoardings erected on the bus-shelters, road medians and the street light poles. Hence, the said income cannot be treated as income derived from the "infrastructure facility. The income earned by the assessee do not fall under Section 80-IA(4). We find that the order passed by the Tribunal is contrary to the intendment of the Act. The benefit under Section 80-IA can be extended only to those asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under Section 80-IA(4) of the Act. 2.1 The Assessing Officer after examining the matter in detail and verifying the clauses of agreement entered into between the assessee and the BBMP was of the view that construction of bus shelters, installation and maintenance of street lights and beautification of the center road medians is for earning income by putting up the advertisement boards on the same which would not amount to infrastructure development. The work carried on by the assessee is in the nature of work contract. The income is derived by displaying advertisement hoardings on the road medians, bus shelters and light poles. Hence, the Assessing Authority by its order dated 31-12-2000 held that the assessee is not eligible to claim deduction under Section 80-IA of the Act and by its order dated 13-12-2010 and disallowed the claim of deduction of income tax. 2.2 Being aggrieved by the order passed by the Assessing Authority, the respondent-assessee preferred an appeal before the First Appellate Authority challenging the denial of deduction on various grounds. The First Appellate Authority on verification of the contentions raised by the respondent-assessee found that thoug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he appellants submitted that the order passed by the Appellate Tribunal is contrary to law. The assessee-company entered into an agreement with the local authorities for the purpose of its business of advertising and taken up the work of construction of bus-shelter, erection of light poles and beautification of the road median only for the purpose of putting up of their advertisement hoardings or to lease the space for advertisement. The income derived from the said advertisement business cannot be treated as income from the infrastructure development. Reading of some of the clauses of agreement makes it very clear that the business of the assessee will not fulfill the conditions prescribed under Section 80-IA(4) of the Act and also explanation thereunder. The agreement for developing, maintaining and operating is only with regard to the infrastructure facility. The infrastructure facility was defined under Section 80-IA(4) of the Act. As per the Explanation to the said Section, infrastructure facility 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 highway project; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IA is inclusive definition. A road includes toll road itself suggests that the definition is inclusive definition and include everything with regard to the road, bridges or railway system. Clause (b) of the aforesaid definition wherein a highway project has been defined to mean a project including housing or other activities being an integral part of highway project. Therefore, it is important to note the words used including' or other activities' which itself bring out the intent of the legislature not to restrict the activities to the few specified field. The infrastructure facility as used in the Explanation to Section 80-IA(4) of the Act is wide enough to cover entire activities of the road. The road without bus shelter is of no use. Further, without the road median, the commuter cannot use the said road safely. Without lighting facility, road cannot be used properly. Due to the heavy traffic, construction of footbridge is very much necessary. Hence, the construction of the busshelter, road median, street lights and construction of the footbridges are the part of infrastructure facility. The intention of the legislature is very clear and wide enough to cover other activ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ited period and the assessee has to pay the ground rent and other local taxes. Further, the assessee was also permitted to install footbridge near ISCKON temple and to erect advertisement hoardings in order to recoup the expenditure for putting up of the said footbridge. As per the terms and conditions imposed by the BBMP, the assessee had put up the bus shelter, beautifies the road median from Diary Circle to Central Silk Board Circle and also put up the street lights in four roads; constructed the footbridge and erected the hoardings for its business. The agreement entered between the assessee and the BBMP, read as under: (i) Whereas BBMP who is the absolute owner of all the footpaths and road within its jurisdiction, has in consultation with the Bangalore City Police and Bangalore Metropolitan Transport Corporation identified a critical need to erect bus shelters. Keeping in view the aesthetic values, beautification of the city in general and commuter benefits and interest particular and for that purpose has formulated a scheme under which even a bus-shelter could be constructed by private parties on the terms and conditions specified therein. The party of the second part has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n relation to the advertisement and or advertisement space allotted in the Bus-Shelter as detailed in clause 6. 6. The Licensee shall- (a) Maintain the bus-shelters floor, roof walls, etc., during the period of this license, in a clean, hygienic and presentable manner. (b) Forthwith replace/repair the Bus Shelter/s or any part thereof upon any damage, loss breakage being noticed or reported or occurring. (c) Construct and at all times maintain the Bus-Shelter/s in accordance with Annexure 'C' (d) Maintain in a clean, hygienic and usable condition the dustbins, spittoons and other equipments, facilities provided by it at the Bus-Shelters. (f) Provide adequate lighting at the Bus-Shelters so as to ensure public safety at all times. (i) Initiate remedial action forthwith in respect of defects, deficiencies brought to its notice by Bangalore Mahanagara Palike or its authorized officials. (m) Not to use the Bus-Shelters or permit their use for any purpose other than as a Bus-Shelters. (r) Ensure that all costs of constmction and maintenance of the Bus-Shelters including costs of raw material, consumables, salaries, expenses, electricity statutory depos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... project. However, the licensee will be permitted to utilize the existing cables if in a usable condition in consultation with the First party. 6. The Licensee shall pay the electricity bills for electricity consumed for advertisement boxes while the Licensor shall pay the electricity bill for electricity consumed for the street lights. 7. The Licensor shall provide a NOC to enable the Licensor to obtain electrical power from BESCOM to illuminate the advertisement boxes. 8. The Licensee shall pay the prescribed road cutting charges to the concerned officer of BMP. The licensee shall restore footpaths to the existing condition after erection of the street poles. 9. The Licensee shall be exclusively entitled to the revenue generated by the display of commercial advertisement of the Kiosks installed in the lamp posts. 10. The completion certificate for the maintenance of street lights will be issued to the Licensee by the concerned Executive Engineer (Electrical) authorized by the Commissioner, Bangalore Mahanagara Palike. 11. On expiry of the contract the Licensee shall handover the lamp poles to Bangalore Mahanagara Palike with all fixtures including lit kiosks, etc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in infrastructure. Our country is very deficient in infrastructure such as expressways, highways, airports, ports and rapid urban rail transport systems. Additional resources are needed to fulfil the requirements of the country within a reasonable time frame. In many countries the BOT (build-operate-transfer) or the BOOT (build-own-operate-transfer) concepts have been utilized for developing new infrastructure. 34.3 Applying commercial principles in the operation of infrastructure facilities can provide both managerial and financial efficiency. In view of this, a ten-year concession including a five-year tax holiday has been allowed for any enterprise which develops, maintains and operates any new infrastructure facility such as roads, highways, expressways, bridges, airports, ports and rail systems or any other public facility of similar nature as may be notified by the Board on BOT or BOOT or similar other basis (where there is an ultimate transfer of the facility to a Government or public authority). The enterprise has to enter into an agreement with the Central or the State Government or a local authority or any other statutory authority for this purpose. The period within ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which this clause applied 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 purpose of this clause, 'infrastructure facility '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, water 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); To avail the benefit under Section 80-IA(4), the assessee has to fulfil the following conditions: (a) the assessee must be running an eligible business of developing, operating and maintaining or operating and maintaining any infrastructure facility as defined by the Section and clarified by the circular; (b) The assessee must have ability to transfer the facility to the Government at a future date in terms of the agre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... venue. 11. Sri. E.I. Sanmathi, learned counsel appearing for the appellants contended that the word income' derived from eligible business referred to in Section 80-IA is the income derived by developing, operating and maintaining a road including toll road, bridge or rail system. However, the assessee has only beautified the existing road and put up the bus shelter as per the permission granted by the BBMP for its advertisement business. The main income derived is not from construction of bus shelters it has developed, but from the advertisement. The work carried on by the assessee do not fall under the definition of infrastructure development. In other words, to claim deduction under Section 80-IA, the assessee has to earn from the activities which amount to infrastructure development which are prescribed specifically in the Explanation to the aforesaid provision. Basically, the assessee is only an advertising company involved in outdoor and media advertising and it has no experience of civil construction. As per the agreement entered into between the assessee and BBMP, the said work was entrusted to the assessee in order's to enhance the aesthetic beauty of the road d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a judgment reported in (1978) 41 STC 408 (THE ASSISTANT COMMISSIONER OF TAXES AND ANOTHER v/s RANGLAL RAMESWAR SARAUGI) while interpreting the sales tax statute held that when the court is construing a statutory enactment, the intention of the legislature should be gathered from the language used by it and it is not permissible for the court to speculate about the legislature intent. If the language of statue is clear and explicit effect must be given to it. The relevant paragraph of the judgment reads as under: 'A statutory enactment must ordinarily be construed according to the plain natural meaning of its language and no words should be added, altered or modified unless it is plainly necessary to do so in order to prevent a provision from being unintelligible, absurd, unreasonable, unworkable or totally irreconcilable with the rest of the statutes. This rule of literal construction is firmly established and it has received judicial recognition in numerous cases. Where there are two expressions which might have used to convey a certain intention, but one of those expressions will convey that intention more clearly than other, it is proper to conclude that, if the legis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be derived from the infrastructure developed by the developer. In the instant case, the BBMP imposed a condition that the assessee shall not collect any money from the user of the bus-shelters as well as the footbridge. There is no income from the development of infrastructure apart from income from the advertisement business. 17. On the other hand, Sri. Nageshwar Rao, learned counsel appearing for the assessee contended that the Explanation clause of Section 80-IA of the Act is that a road including toll road which itself suggests that the definition is inclusive; and not exclusive definition. The word used is including or other activities itself brings out the intention of the legislation to not to restrict the activities to a few specified field. The legislature do not intend to narrow down the meaning of infrastructure facility as used in the Explanation to Section 80-IA(4) of the Act. The legislature has intended to give benefit under Section 80-IA to the activities carried on in relation to road including toll road, bridge or railway system. The road shall not be treated as toll road alone, it may be a road within the city of Municipal Corporation. The intention of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... very purpose of Section 15C was to encourage industrialization. It was for this reason that various High Courts evolved the test of commercial expediency or substantial involvement valued in terms of money etc., to interpret this clause. Adopting a literal construction in such cases would have resulted in defeating the very purpose of Section 15C. Therefore, it becomes necessary to resort to a construction which is reasonable and purposive to make such provision meaningful. This contention of the respondent-assessee cannot be acceptable. The benefit under Section 15C of the Act cannot be compared with the benefit under Section 80-IA(4) of the Act. Under Section 80 IA(4), the Government of India in order to encourage the Private Sectors to participate in the development . of infrastructure has given benefit under the said scheme, the private entrepreneur has to develop, operate and maintain the said infrastructure. The income derived from the said infrastructure is only exempted under Section 80-IA(4) of the Act. The judgment relied upon by the assessee is not applicable to the present case. 20. On careful examination of facts before us, we find that the assessee in the pres ..... X X X X Extracts X X X X X X X X Extracts X X X X
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