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2015 (6) TMI 491

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..... 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 has raised four grounds. Ground no.1 and 4 being general in nature, do not require any specific adjudication. At the outset, the Learned Departmental Representative submitted that the ground No.3 has been inadvertently raised, as the issue raised therein has actually been decided in favour of the Department by learned CIT(A). Accordingly, he expressed his intention not to press that ground. Ground No.3 is therefore, dismissed. 3. In ground No.2, the Department has challenged the decision of the 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 .....

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..... submissions of the parties and also perused the material on record. Learned counsel for both the parties agreed before us that the issue raised by the Department is squarely covered by the decision of the Tribunal in assessee s own case for assessment years 2009-10 and 2010-11. It is evident from the facts on record that the bridge work on Cauvery River at Mayanur Village 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 both sides and perused the orders of the lower authorities and other material available on record. The assessee has undertaken the project relating to the construction of a barrage across river Kaveri in Mayanur Village, Karur District, Tamil Nadu for a contract amount of ₹ 174,01,80,550. As for this contract, the assessee .....

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..... 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 ₹ 7,86,75,710 for the assessment year 2010-11, as seen from the Balance Sheet of the assessee as on 31.3.2009 and 31.3.2010 respectively, copies of which are furnished by the assessee at pages 21 and 66 of the paper-book. In this view of the matter, the reason given by the CIT(A) on this aspect for denying deduction to the assessee under S.80IA is also not valid. 10. The CIT(A), while rejecting the assessee s claim for the deduction under S.80IA, observed that the Government has supplied the material 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 pr .....

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..... g the risks to be undertaken by the assessee, discussed above, it cannot be said that the assessee has not undertaken any risk. 12. Reading the contract document as a whole makes it clear 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 clearly covered by the consistent view taken by the Tribunal in similar cases, including those referred to by the CIT(A), in the impugned order and the assessee is entitled for deduction under S.80IA of the Act. In one such decision of the Tribunal in the case of Sushee Tech Infrastructure Ltd. (ITA No.269/Hyd/2009 and two others for assessment years 2005-06 to 2007-08), a copy of which is also furnished before us, the Tribunal, vide para 33 of its order date 16.3.2013, held as follows- 33. The next que .....

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..... responsibility developing the infrastructure facility. The losses suffered either by the Govt. or the people in the process of such development would be that of the assessee. The assessee hands over the developed infrastructure facility to th Government on completion of the development. Thereafter, the assessee has to undertake maintenance of the said infrastructure for a period of 12 to 24 months. During this period, if any damages are 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 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 by the Revenue. The circular issued by the Board, relied on by learned counsel for the assessee, clearly .....

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