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TMI Blog2011 (8) TMI 1168X X X X Extracts X X X X X X X X Extracts X X X X ..... fic works with regard to execution of this project by the Corporation in a joint venture. 3.1. The AO observed that by Finance Act, 2007 an explanation was added with retrospective effect making it clear that the provisions of section 80IA(4) will not apply to a person who executes a works contract entered into the undertaking or the enterprise, as the case may be. Further, by Finance Act, 2009 an explanation was added with retrospective effect from 1.4.2000 and, therefore, the same was applicable during the year under consideration i.e. Assessment Year 2007-08. It was made clear that nothing contained in section 80IA(4) shall apply which is in the nature of a works contract awarded by any person (including the Central or State Govt.) and executed by the undertaking or enterprise. As the assessee was awarded a works contract by the State Govt. of Maharashtra which is part of total works of construction, development and operation of irrigation project, the claim of assessee was just not found tenable and accordingly claim of deduction of Rs. 16,89,16,692/- under section 80IA(4) was rejected. 3.2. It was contended before ld. CIT (A) that the project is an irrigation infrastructural ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment Year 2005-06 and 2006-07 in first appeal the appeals were decided in favour of the assessee and which was held up in second appeal also. With this, it was submitted that deduction may be allowed. 4. After taking into consideration the provisions of law amended by Finance Act, 2007 and 2009 and taking into consideration the submissions of the assessee, the ld. CIT (A) found that AO was correct in denying the deduction under section 80IA(4). Accordingly, he upheld the order of AO. While upholding, the following finding have been given by ld. CIT (A) :- " In earlier years the issue was decided in favour of the appellant at both the appellate4 stages. However, Finance Act, 2009 has made change in the law. By Finance Act, 2009 an explanation was added t the end of section 80IA and it was clarified that with reference to sub section 4 in respect of works contract awarded by Central or State Govt. and executed by the undertaking the provisions of sub section 4 will not be applicable. The explanation was added retrospectively w.e.f. 1.4.2000 and, therefore, where ever there is works contract awarded by Central or State Govt. and executed by the undertaking, benefit of deduction un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be performed by the assessee by that contract. It was explained that the assessee has to develop the design of Gates and many other items which the Government of Maharashtra was not having this type of design. Attention of the Bench was drawn on copy of tender published by the Maharashtra Government and copy of agreement. Attention of the Bench was drawn on relevant clauses of the tender form as well as clauses of the agreement entered into between the assessee and Maharashtra Government to develop the design to make it clear that only developer can develop the design and once it is found that a developer has developed the design then as per provisions of section 80IA(4) the deduction has to be allowed. In the present case the assessee has developed the design and, therefore, the assessee is not merely a contractor but is a developer. Accordingly it was submitted that assessee is entitled for deduction. It was further submitted that the Special Bench in the case of B.T. Patil have decided this issue in favour of the department. However, there are so many discrepancies in the order of Special Bench. Relevant discrepancies were explained by the ld. A/R in respect to discrepancies ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on operative para of the order of the Tribunal for earlier year. Further strong reliance was on the order of AO as well as order of ld. CIT (A). It was further stated that the AO has taken into consideration the amended explanation and the reasons for denying the deduction in earlier year. It was further submitted that assessee is purely a contractor and nothing is doing in respect to developing as the gates are manufactured by the assessee as per contract. Even assessee is not investing its own funds as they were funded by Maharashtra Government. In fact, Maharashtra Government has hired the assessee to supply and fit the gates in the dam. Various other parties were also involved, therefore, it cannot be said that assessee has developed the project and, therefore, AO and ld. CIT (A) were justified in denying the deduction claimed by the assessee. It was further submitted that the assessee was allowed work of fitting the gates and to maintain dam for only two years so that the employees of the Maharashtra Government could be trained, therefore, it cannot be said that assessee has developed any design of the gate and is maintaining for long. The case laws relied upon by the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this is on the identical facts and, therefore, the same is applicable. In respect to the argument of ld. CIT D/R that no funds have been invested by the assessee, it was submitted that it was totally incorrect. Assessee has invested its own funds and before granting the contract to the assessee, the Maharashtra Government has asked for bank guarantee which has been given by the assessee. Therefore, this is totally wrong that assessee has not invested its own funds. The assessee after completing the project has raised the bill on the Corporation and thereafter after inspecting the work done by the assessee then only payment was cleared by The Corporation to the assessee. Therefore, this is not a case that Corporation invested its own fund and not the assessee. 8. We have heard rival submissions and we have considered them carefully. Though we have noted all the arguments advanced by ld. A/R and ld. CIT D/R, however, we would like to reproduce the written submissions advanced by ld. A/R as well as by ld. CIT D/R here in the order of Tribunal so that no argument of any party could be missed. Brief submission of the assessee 1. De hors Explanation inserted vide Finance Act, 2009 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of ABG Heavy Industries (para 25 of Pg 405 of PB-3). (d) In paras 37 to 43, the Tribunal has held that the assessee in that case is not a developer but merely a contractor. This is factual finding and in the present case the question has to be decided based on the facts of the case. - In earlier years, the assessee has been held to be developer and not merely contractor. - The Tribunal in those years has considered 2007 Explanation and thereafter has held that the assessee is not merely contractor. - The issue is squarely covered in favour of assessee vide the decision of the Rajkot Bench of the Tribunal in the case of M/s. KCL BEL Tarmat Jv. V. ITO for A.Y. 2007-08 in ITA No. 1112/RJT/2010 (Pg. 406 to 416 of PB- 3). This decision has been rendered after considering the Special Bench decision in the case of B.T. Patil. - Further, it has been held by the Hon'ble Bombay High Court (subsequent to Mumbai Special Bench decision) in the case of ABG Heavy Industries that providing crane to port would also amount to activity of developers (para 7, 8, 18 on Pg. 395 to 401 of PB-3). (e) In paras 44 and 45, the Tribunal has held that infrastructure facility shou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it has been held that assessee is not a contractor. 2009 Explanation is very much similar to 2007 Explanation and hence, in substance, there is no change in facts or law from the decision of Tribunal in A.Y. 2003-04 and 2004-05. - In any case, as stated hereinabove, the question as to whether the assessee is a developer or a contractor is purely a question of fact and has to be decided on the basis of facts of each case. In the present case, this issue has already been decided in favour of the assessee by this very Bench of the Tribunal. - Interestingly, in the above referred decision of Bombay High Court, rendered much after the retrospective Explanation of 2009 brought on the statute book, it has been held that a person providing crane to the port authority is a 'developer'. (Para 7, 8 on Pg.395, para 18 on Pg. 400). The law laid down by Bombay High Court by their judgment dated 29.03.2011, much after Finance Act, 2009, has to be considered as the final word as of now. Reliance is placed, in this regard, on the recent Special Bench decision in the case of Tata Communications Ltd. [130 ITD 19 (Mum)(B)](Pg. 425 of PB 3). - Further, it is submitted that the Explanation inse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the I.T. Act 1961 amounting to Rs. 16,89,16,692/-. 1) The facts of this deduction u/s 80IA(4) claimed by the assessee are discussed in para 2.1 of the order of the A.O. at page no. 2. In the return of income filed the assessee claimed a deduction of Rs. 16,89,16,692/- u/s 80 IA(4) in respect of Goshi Khurd Project. The Goshi Khurd Project is an irrigation project promoted by the Govt. of Maharashtra. This irrigation Project is being constructed on river Bannganga in Bhandara district of Maharashtra state. The project envisages construction of earthen dam of 11.35 km. this dam is being constructed for providing irrigation to Bhandara, Nagpur and Chandrapur districts of Maharashtra and also provides drinking water to various places. The construction of the project started in the year 1981 and is proposed to be completed by 2008. The project is being implemented by the Vidharbha Irrigation Development Corporation, Nagpur (a Govt. of Maharashtra undertaking)(hereinafter referred to as VIDC). Different contractors have been awarded specific works with regard to the execution of this project by VIDC. The construction of the earthen dam is being done by M/s Pradhan Construction Co., Pun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deduction u/s 80IA(4) on the income of the Goshi Khurd Project by treating it as infrastructural development project of the assessee company. In this respect it is submitted that this issue of allowability of deduction u/s 80IA(4) was decided by Hon'ble ITAT for A.Ys 2003-04 & 2004-05 vide a common order dated 31.12.2008. The issue was decided for A.Ys 2005-06 & 2006-07 vide a common order of Hon'ble ITAT dated 24.07.2009. On examination of the order of A.Ys 2005-06 & 2006-07, it is seen that it is based on the decision of Hon'ble ITAT for A.Ys 2003-04 and 2004-05 as the decision has been reproduced in para 5 of this order on page 4. For A.Y. 2003-04 and 2004- 05, Hon'ble Tribunal has discussed its decision in para 10. It is seen that Hon'ble Tribunal has given its decision on the basis of decision of Hon'ble Mumbai Bench of ITAT in the case of Patel Engineering Co. Ltd. vs. ACIT 94 ITD 411 and has extensively reproduced this decision in its order on page 17 to 22. Thus, it can been seen that these two decisions of Hon'ble ITAT, Jaipur are based on the decision of the Hon'ble Mumbai Tribunal in the case of Patel Engineering Co. Ltd. (supra). However, now this very decision of Patel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment Corporation, Nagpur (a Govt. of Maharashtra Undertaking) (hereinafter referred to as VIDC) to execute specific work of erection of radial gates. The assignment of the work is on contract basis, therefore, assessee is a contractor and deduction is not allowable. Whereas, assessee's case is that assessee is a developer and Tribunal in case of assessee itself while deciding the appeals for assessment; years 2003-04 to 06-07 has held that the assessee is a developer and once assessee has been found as a developer then in the year under consideration a different view cannot be taken. It is the case of the assessee also that even explanation added to section 80IA(4) has been considered by the Tribunal while disposing the appeals for assessment years 2003-04 and 04-05 also and there is no material difference in the amended explanation by Finance Act, 2009 as words Central or State Govt. has been added, otherwise, the language is the same. 9.1. Before proceeding further, we would like to mention here the explanation added by Finance Act, 2007 and amended by Finance Act, 2009. Finance Act, 2007 : Explanation : " For the removal of doubts, it is hereby declared that nothing contained ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT was not satisfied as the decision of Patel Engineering Co. was before the Explanation added to section 80IA(4) by the Finance Act, 2007. Accordingly the order of the AO was set aside and the AO was directed to re-compute the income accordingly. Assessee preferred appeal before the Tribunal against the order under section 263 passed by ld. CIT. Detailed written submissions were filed. The amended provisions of section 80IA(4) by Finance Act, 2007 with retrospective effect from 1.4.2000 were explained. Attention of the Bench was drawn on the clauses of agreement as well as the design developed by the assessee and accordingly it was submitted that the assessee is not merely a contractor but it is a developer. Reliance was placed again on the decision of Patel Engineering Co. Ltd. by which definition of 'developer' and 'contractor' was discussed and thereafter the issue was decided by the Mumbai Bench of the Tribunal in favour of assessee. Reliance was placed on various cases mentioned in the order of the Tribunal at pages 4 & 5. In para 5 of the order of the Tribunal, the Tribunal has discussed the work done by the assessee in respect to development of the design in the Goshi Khu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that the issue as to whether the contractors associated with the infrastructure project were eligible for the deduction or not had become debatable and in order to put such debates to rest, by the Finance Act, 2007, an Explanation was added with retrospective effect from 1.4.2000 and, therefore, the same has to be read into the above provisions during assessment years 2003-04 and 2004-05. 14. Regarding the decision of Mumbai Bench of the Tribunal in case of Patel Engineering Co. Ltd., it was submitted that after the amended provisions of law the decision of Hon'ble Bombay High Court does not hold good. Thereafter the Tribunal after discussing the argument of both the sides and taking into consideration the amended provisions of section 80IA(4) and also taking into consideration the decision of the Tribunal in case of Patel Engineering Co. Ltd (supra) held that assessee is a developer and therefore entitled to deduction under section 80IA(4). The following findings have been given by the Tribunal recorded in paras 10 & 11 at pages 12 to 24 :- " 10. After considering the above submissions the issue emerges for our adjudication is as to whether the assessment order was erroneous ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2007. 11. The ld. CIT also disagreed with the assessee that decision of Mumbai Bench of the Tribunal in the case of Patel Engineering Co. Ltd. vs. ACIT (supra) covers the issue. He observed that the citation is misplaced as this decision relates to assessment year 2000-01, wherein the provisions of section 80IA(4) were different. The ld. CIT noted further that this decision has not been accepted by the department as appeal has been preferred by the department before the Hon'ble Mumbai High Court, which is pending. There is no dispute that under the provisions of section 263 the ld. CIT has been empowered with supervisory jurisdiction and it is not an arbitrary or unchartered power for invoking these provisions under section 263 of the Act. For application of provisions u/s 263, two conditions are required to be fulfilled. Firstly, the order of the AO sought to be revised is erroneous and secondly, such order is prejudicial to the interest of revenue. "Erroneous assessment" refers to an assessment that deviates from the law, or, one, which has been passed by the AO without making any enquiry, or, in undue haste. An order cannot be termed as "erroneous" unless it is not in accordan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r " was introduced in between like (i) developing or (ii) operating and maintaining or (iii) developing, operating and maintaining any infrastructure facility. In assessment years 2003-04 to 06-07 there was no change in the said provision. In the assessment year 2006- 07 in clause (a) to that section i.e. one of the other conditions required to be fulfilled for claiming the deduction the wordings " it is owned by a company registered in India or by consortium of such companies" were extended by adding wordings " ....... Or by an authority or a board or a corporation or any other body established or constituted under any Central or State Act ". By the Finance Act, 2007, an Explanation was introduced at the bottom of the section 80IA with retrospective effect from 1.4.2000. Vide this Explanation meant for removal of doubt, it has been declared that nothing contained in this section shall apply to a person who, executes a works contract entered into with the undertaking or enterprises, as the case may be. Referring this Explanation, the submission of the ld. D/R remained that assessee is not the developer of infrastructure project and actually M/s. Vidharbha Irrigation Development Cor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces, and bring to a more advanced or effective stage etc. For a ready reference, we are reproducing here under para 47 of the said decision in the case of Patel Engineering Co. Ltd. :- " There has also been the contention of the Revenue that the assessee is a contactor, executing civil contract and so it cannot be the developer as such. However, we are unable to agree with this contention of the Revenue. A person, who enters into a contract with another person will be a contractor no doubt; and the assessee having entered into an agreement with the Government of Maharashtra and also with APSEB for development of the infrastructure projects, is obviously a contractor but that does not derogate the assessee from being a developer as well. The term "contractor" is not essentially contradictory to the term "developer". On the other hand, rather section 80IA(4) itself provides that assessee should develop the infrastructure facility as per agreement with the Central Government, State Government or a local authority. So, entering into a lawful agreement and thereby becoming a contractor should, in no way, be a bar to the one being a developer. The assessee, presently under consideratio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nance Act, 2007 is not eligible to claim deduction. 11.1. So far as the contention of the ld. D/R is concerned regarding that the assessee is not the developer of irrigation project since under section 80IA(4) "developer" who do not "operate and maintain" the infrastructure facilities are not eligible for the deduction, we do not agree with. Since in our view the word "OR" has been inserted in section 80IA(4)(i) as any enterprise carrying on the business of (i) developing, or (ii) operating and maintaining or (iii) developing, operating and maintaining any infrastructure facility has been introduced by the legislature from assessment year 2002-03 only to remove the ambiguity. Hence the insertion of word "OR" was clarificatory in nature. This amended provisions of section were very much in operation in the assessment years 2003-04 and 2004-05 under consideration. The plea of the ld. CIT that as per the provisions of section 80IA(4), for the relevant previous year, the enterprise carrying on business of developing the infrastructure facility was eligible for deduction only on the profit earned from "operating and maintaining" the infrastructure facility and that the enterprise was n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to provide water supply by connecting the river Krishna to the power house. The assessee has also constructed underground specialized structures such as surge chamber, draft tube tunnels, tail race tunnel which takes the water back to the river for use for irrigation, etc. Similarly, for Koyna Project, the assessee constructed inlet tunnel for water supply upto the point of power house. The above construction work would, in our considered opinion, amount to development, as a new facility has been developed. In fact, we may note that the Revenue authorities too have not denied the factum of development having taken place; however, the contention of the Revenue has been that the developer is not the assessee but the Government of Maharashtra in respect of Koyna Project and PSEB in respect of the Srisailam project, because, the investments have been made by them. 45. In the circumstances, as per the contentions raised before us orally as also in writing by the two rival representatives, the moot question that poses itself for our consideration is as to whether the assessee can be said to be developer when the amount has been paid to the assessee for the development work carried ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vernment, the entire cost of development would be a loss in the hands of the developer as he is not operating the infrastructure facility. When the Legislature has provided that the income of the developer of the infrastructure project would be eligible for deduction, it presupposes that there can be income to developer, i.e., to the person who is carrying on the activity of only developing infrastructure facility. Obvious as it is, a developer would have income only if he is paid for development of infrastructure facility, for the simple reason that he is not having the right/authorization to operate the infrastructure facility and to collect toll therefrom, has no other source of recoupment of his cost of development. Considered as such, we note that the business activity of the nature of "BT" (build and transfer) also falls within eligible construction activity that is activity eligible for deduction under section 80-IA inasmuch as mere "development" as such and unassociated/unaccompanied with 'operate' and 'maintenance' also falls within such business activity as is eligible for deduction under section 80IA. In the case of such a construction activity, which does not involve th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orical finding on the issue after discussing the same in detail as evident from contents of pages 12 to 18 of the assessment order. In our view, he has also rightly followed the decision of the Tribunal on an identical issue under the similar facts and circumstances in the case of Patel Engineering Co. Ltd. vs. ACIT (supra) relied upon by the ACIT before him in support of their submissions. The assessment order, therefore, cannot be held as erroneous merely because the ld. CIT nurturing a different view on the issue. Hence the said assessment orders on the issue, which is not erroneous even if it is prejudicial to the interest of revenue cannot be made a subject matter of revision under section 263 of the Act. There is also no substance in the contention of the ld. D/R that the assessment orders on the issue have only been set aside by the ld. CIT vide the impugned order and the assessee will be at liberty to avail the opportunity to present its case on the issue before the AO in a fresh assessment so directed by the ld. CIT, because it cannot be a acceptable reason for justification of invocation of provisions of section 263 of the Act. The requirement, as discussed above, for inv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion of the Tribunal in case of Patel Engineering Co. Ltd. was taken into consideration by the Bench for the purpose of drawing inference that whether assessee is a 'contractor' or a 'developer'. On the facts of the case involved in case of Patel Engineering Co. Ltd. as compared to the facts of the case in hand, the Tribunal drew a conclusion that facts are similar and, therefore, the assessee is a developer. The Explanation added to section 80IA do not bar the deduction in case of a developer as it bars the deduction in the case of contractor only. The Tribunal has given a categorical finding that assessee is a Developer. 14.2. Once in a particular year an assessee has been declared as a Developer then on the same set of facts the assessee cannot be held as a Contractor in a subsequent year. Therefore, the contention of ld. A/R that once assessee has been held as a Developer then in next year or the year under consideration it cannot be held as a Contractor, is acceptable. 14.3. We have seen the Explanation added to section 80IA by Finance Act, 2007 and amended by Finance Act 2009 and found that there is no material difference in the language of Explanation added by Finance Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also been provided in the detailed Tender Notice which starts from internal page 39. Clause 2.6 is about Performance Security. By this clause successful Bidder shall have to furnish a performance security, equivalent to 10% of the contract amount as specified. Thereafter, in sub-clause (a) of clause 2.6 it has been provided that the Bank Guarantee or Irrevocable Letter of Credit issued by a Nationalized/Scheduled Bank located in State of Maharashtra has to be provided. At internal page 67 the payment schedule has been prescribed in para 3.9.3 and a specific payment has been given @ 2% on account of design development and 4.5% is for operation and maintenance for subsequent three years after 1st year of reservoir filling and it is also proposed that this payment shall be released on quarterly basis. At page 128 to 269 of Paper Book-II the detailed technical specification has been placed. These detailed technical specifications are after accepting the tender by the Maharashtra Government. Clause 11.1.0 at internal pages 135 (page 261) of Paper Book-II read as under :- " 11.1.0. RESPONSIBILITY FOR DESIGN The drawings show general arrangement data for the equipment called for. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rred for deduction under section 80IA(4). Therefore, in our view the assessee is entitled for deduction under section 80IA(4) as assessee is a Developer. 16. The ld. CIT D/R has relied on the decision of Special Bench in the case of B.T. Patil & Sons and on the decision of Jaipur Bench of the Tribunal in the case of M/s. Shiva Construction Pvt. Ltd. decided in ITA No. 676/JP/2009 dated 11.6.2010 by which the deduction under section 80IA(4) was denied following the decision of Special Bench in case of B.T. Patil & Sons (supra). This decision of Special Bench in the case of B.T. Patil & Sons has been over ruled now by the Hon'ble Bombay High Court in the case of ABG Heavy Industries Ltd. (ABG), 322 ITR 323. Therefore, the decision of B.T. Patil & Sons and the decision of the Jaipur Bench of the Tribunal in the case of M/s. Shiva Construction Pvt. Ltd. does not hold good now. 16.1. The ld. D/R has stated that the fact before the Hon'ble Bombay High Court and the facts before the Special Bench were different. However, we have gone through the order of Special Bench in case of B.T. Patil & Sons and the Hon'ble Bombay High Court in case of ABG. We find that the issue before the Hon'ble ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terprise engaged in (i) developing ; or (ii) operating and maintaining ; or (iii) developing, operating and maintaining an infrastructure facility was reflective of a position which was always construed to hold the field. Before the amendment that was brought about by Parliament by the Finance Act of 2001, we have already noted that the consistent line of circulars of the Board postulated the same position. The amendment made by Parliament to section 80-IA(4) of the Act set the matter beyond any controversy by stipulating that the three conditions for development, operation and maintenance were not intended to be cumulative in nature." From the above observation of Hon'ble High Court, it is clearly and amply proved that if out of three conditions one is satisfied even then the assessee is entitled for deduction. Supposing an enterprise is a developer and not doing the work of operation and maintenance even then enterprise is entitled for deduction under section 80 IA(4). Therefore, it is incorrect to say that the decision of B.T. Patil & Sons has not been over ruled by the Hon'ble Bombay High Court. The same issue was before the Special Bench. The issue was in respect to deductio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ration and maintenance of the same. From this fact it is proved beyond doubt that assessee is a developer and operating and maintaining the specified gates designed by the assessee. 17.3. The ld. D/R has also taken a ground that assessee has not invested its own funds as they were taken from the VIDC. We have discussed various clauses of detailed Tender Notice and thereafter schedule of contract and found that on allotting the contract to the assessee, the assessee has to give a security of 10% equal to the cost of contract before starting the work on the contract awarded to the assessee. Thereafter the assessee has invested its own money in developing the design of Gates and manufacturing the Gates after approval of the Engineer-in-Charge of the VIDC and thereafter erecting the Gates for approval of performance of Gates and then has raised its bill for making the payment. After getting satisfied, then only payment is to be approved and made. Therefore, this is not a case of financing the project by the Corporation or reimbursement of expenses by the Corporation. It is the investment of the assessee only and, therefore, the argument of ld. D/R does not have weight on this point al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he decision of Hon'ble Supreme Court are placed in the Paper Book at pages 406 to 423. 17.3. In case of Gujarat Industrial Development Corporation and Ors, 227 ITR 414 (SC), the Hon'ble Supreme Court has observed that the word "development" in section 10(20A) of the I.T. Act should be understood in its wide sense. There is no warrant to exclude all development programmes relating to any industry from the purview of the word " development " in the said clause. There is no indication in the Act that development envisaged therein should be confirmed to non-industrial activities. Development of a place can be accelerated through varieties of schemes and establishment of industries is one of the modes of developing an area. 17.4. It has been further observed that one of the reasons for incorporating a specific provision for exemption from income-tax such as section 10(20A) is to protect public bodies created under law for achieving the purpose of developing urban or rural areas for public good. When the object is such, an interpretation which would preserve it should be accepted even if the provision is capable of more than one interpretation. Thereafter, the Hon'ble Apex Court by rev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... following the decision of Hon'ble Bombay High Court in the case of M/s. ABG (supra). The decision of Special Bench in case of B.T. Patil & Sons was cited before the Pune Bench and it was held that the decision of Special Bench has been reversed by the Hon'ble Bombay High Court in the case of M/s. ABG and, therefore, the assessee is entitled for deduction under section 80IA(4). In this case also the department disallowed deduction under section 80IA(4) by holding that assessee is a contractor and failed to comply with all the conditions specified in sub clause of section 80 IA(4). Thereafter matter reached to the Tribunal and the Tribunal taking into consideration the decision of Special Bench in case of B.T. Patil & Sons and the decision of Hon'ble Bombay High Court in case of M/s. ABG held that the assessee is a developer and entitled for deduction under section 80IA(4). This decision was rendered on 8.6.2011 which is after the Explanation added by finance Act, 2007 and amended by Finance Act, 2009. 19. We have also considered the Board Circular also and found that the Board circular also does not say that the enterprises who are developer are not eligible for deduction under se ..... X X X X Extracts X X X X X X X X Extracts X X X X
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