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2015 (6) TMI 491 - ITAT HYDERABAD

2015 (6) TMI 491 - ITAT HYDERABAD - TMI - Deduction under S.80IA - CIT(A) allowed claim - Held that:- The learned CIT(A) after considering the submissions of the assessee and being made aware of the decision of the ITAT in assessee’s own case for the immediately preceding year correctly found that as far as the bridge project is concerned, the Income Tax Appellate Tribunal in assessment years 2009-10 and 2010- 11 has held the assessee as eligible for deduction under S.80IA(4). Accordingly, follo .....

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the view that the conclusion drawn by the learned CIT(A) deserves to be upheld. - Decided against revenue. - ITA No.189/Hyd/2015 - Dated:- 3-6-2015 - Shri P.M.Jagtap and Shri Saktijit Dey, JJ For the Petitioner: Shri H.Phani Raju For the Respondent : Shri S.Rama Rao ORDER Per Saktijit Dey, Judicial Member : This is an appeal by the department against the order dated 29.12.2014 of learned Commissioner of Income-tax(Appeals) III, Hyderabad, pertaining to assessment year 2011-12. 2. The Department .....

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learned CIT(A) in allowing the assessee s claim of deduction under S.80IA of the Act. 4. Briefly, the facts relating to this issue are The assessee, a company, is engaged in the building of infrastructure project. For the assessment year under consideration, the assessee filed its return of income on 30.9.2011 declaring total income of ₹ 12,38,19,239, after claiming deduction of ₹ 6,22,70,007 under S.80IA(4) of the Act. During the assessment proceedings, the Assessing Officer noticed .....

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pment, operating, maintenance or financial involvement in respect of the work obtained, it is not eligible to claim deduction under S.80IA(4). As far as the claim of deduction under S.80IA(4) on bridge work is concerned, the Assessing Officer noted that the assessee is not the owner of the bridge, but only a contractor executing the work on behalf of the Government of Tamil Nadu. The Assessing Officer observed that the assessee has neither made the investment himself nor is the owner of the infr .....

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for the immediately preceding year found that as far as the bridge project is concerned, the Income Tax Appellate Tribunal in assessment years 2009-10 and 2010- 11 has held the assessee as eligible for deduction under S.80IA(4). Accordingly, following the decision of the Tribunal in assessee s own case, she allowed the assessee s claim of deduction under S.80IA on the bridge project. As far as the road work is concerned, the learned CIT(A) also followed the principles laid down by the ITAT in as .....

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illage is a continuing project from the preceding assessment years. When the assessee s claim for deduction under S.80IA(4) was disallowed by the Assessing Officer for assessment years 2009-2010 and 2010-2011, the assessee challenged the same before the appellate authorities. When the dispute ultimately came to the Tribunal, the coordinate bench vide its order dated 25.10.2013 passed in ITA No.1008-1009/Hyd/2013 while allowing assessee s claim of deduction u/s 80IA held as under- 8. We heard bot .....

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works drawing designs and specifications of the project. The CIT(A) relied on the SCHEDULE B - LIST OF DRAWINGS forming part of the Contract Agreement, a copy of which is filed at pages 113 to 193 of the paper-book. The said Schedule B appears at page 44 of the said contract agreement, appearing at page 161 of the paper-book. It contains Serial Nos.1 to 17 and forms part of the articles of agreement dated 9th February, 2009 (Agreement CR No.90/LS/Floods/2008-2009. We have gone through the said S .....

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ng eight years experience in this field. The assessee also employed another twelve site engineers having Diploma in Civil Engineering. The plans and designs given in the documents are general in nature, and they themselves cannot be taken as comprehensive for being executed. They are only a basic drawings and designs, based on which the assessee has to prepare the working plans, drawings and designs, and thereby implement the project. The reasoning given by e CIT(A) in this behalf in the impugne .....

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assessee has taken financial assistance from bank paid huge interest of ₹ 2,87,10,943 for assessment year 2009-10 and of ₹ 9,35,78,373 for assessment year 2010- 11, as seen from the Profit and Loss Account of the assessee for the relevant years ending on 31.3.2009 and 31.3.2010 respectively, copies of which are furnished by the assessee at pages 20 and 65 of the paper-book. Similarly, assessee has invested its own fund of ₹ 5,55,00,000 for assessment year 2009-10 and of ₹ .....

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erial to execute the work. As seen from the tender documents, specifically, the assessee has to procure its own men, material, like cement, steel, binding wires, etc. and machinery. It is more specifically mentioned as to the standards and quality expected of the material to be used by the assessee in the execution of the project. It is mentioned in this behalf in the tender documents that the assessee has to procure high yield strength deformed (H.Y.S.D) BARS of Grade Fe415 confirming to I.S.17 .....

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ment to the assessee, hire charges would be recovered for such machineries supplied by the Government. It is also specifically mentioned that whatever such machinery is supplied by the Government, shall be handed over back to the Government in proper and same form. This specific clause clearly indicates that the assessee has got any machinery from the Department free of cost. The assessee having paid hire charges of the usage of the machinery, it cannot be said that the assessee has not used mac .....

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ot valid and correct. It was clearly mentioned in the agreement that the assessee shall execute and furnish indemnity bond for a period of four years, indemnifying the Government against any loss or expenditure incurred, to repair any defect noticed due to faulty working done by the contractor or substandard material used by the contractor. Further, it is also mentioned in the contract agreement that the assessee shall not claim for any loss due to foreseen circumstances, including suspension of .....

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that the assessee is obliged to employ requisite number of personnel, and execute the project making use of various materials of specified standards and with the use of the machinery of its own and also of the Government, which again were not made available to the assessee free of cost, but for some hire charges indicating thereby that the assessee is user of the machinery of he is either owner or hirer. 13. In the light of the above discussion, the case of the assessee, in our opinion, is clear .....

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question is to be answered is whether th 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 undertake has to be analyzed .....

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to do all acts till the possession of property is handed over to the Government. The first phase is to take over the existing premises of the projects and thereafter developing the same into infrastructure facility. Secondly, the assessee shall facilitate the e 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 facilit .....

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not entrusted h 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 utilizes its funds, its expertise, its employees and takes the responsibility developing the infrastructure facility. The losses suffered either by the Govt. o .....

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alone without hindrance to e regular traffic. Therefore, it is clear that from an undeveloped area, infrastructure is developed and handedover to the Government and as explained by the CBDT videits 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 b .....

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