TMI Blog2017 (10) TMI 779X X X X Extracts X X X X X X X X Extracts X X X X ..... not operate as to depriving the developer of the benefit of the deduction even after the facility is transferred for the purpose of maintenance and operation but would split the profit element into one derived from the development of the infrastructure and that derived from the activity of maintenance and operation thereof. The assessee having transferred the facility for the limited purpose of maintenance and operation to RTIL, would receive a fixed payment of ₹ 328 lakhs per annum irrespective of the toll collection by RTIL. This profit element therefore would be relatable to the infrastructure development activity of the assessee and would qualify for deduction under Section 80IA of the Act. The RTIL would have a claim or deduct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction u/s 80IA(4) of the I.T. Act even though the assessee transferred rights of operation and maintenance of infrastructure facility to M/s Rameshwarma Toll Pvt. Ltd (RTPL) with effect from 18/11/2001 on lump sum payment of ₹ 328 lakhs p.a., and therefore the deduction u/s 80IA(4) would be available to such transferee enterprise (RTPL) for the unexpired period (with effect from 18/11/2001) as per proviso to section 80IA(4)(i) of the I.T. Act read with circular no. 779 dated 14/09/1999? ( 3) Whether on the facts and circumstances of the case, the I.T.A.T erred in directing the A.O. to allow deduction u/s 80IA(4) of the I.T. Act even though the deduction u/s 80IA(4) of the I.T. Act for the year under consideration has been claim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nefit of the lease to any third party nor shall create any mortgage in favour of any financial institution or individual. (ii) After completion of the construction work, the assessee assigned the task of maintenance and toll collection of the road for a period of one year to one RTIL under an agreement dated 10.11.201. In lieu thereof, RTIL would pay a lumpsum sum of ₹ 328 lakhs to the assessee irrespective of actual toll collection. The period of agreement was later on extended by mutual consent between the assessee and RTIL. (iii) It appears that RTIL claimed deduction on its profits arising out of toll collection activity under the provisions of sub-section (4) of Section 80IA of the Act which was allowed by the Income Tax Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the eligible business, subject to the provisions of this section there shall, in accordance with and subject to the provisions of this section, be 100% deduction of the profits and gains derived from such business for consecutive ten assessment years while computing the total income of the assessee. Sub-section (4) of Section 80IA in turn lays down the conditions upon fulfillment of which the said section would apply. Essentially, the deduction is allowed to any enterprise carrying on any business of developing, or operating and maintaining, or developing, operating and maintaining any infrastructure facility fulfilling the conditions specified therein. Since it is not in dispute that the assessee fulfills these conditions, we may not tak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the unexpired period during which the transferor enterprise would be entitled to the deduction, had the transfer not taken place. 6. The proviso to sub-section (4) thus makes an enabling provision providing a deeming fiction whereby upon transfer of any infrastructure facility for the purpose of operating and maintaining, the transferee could claim the deduction for the remainder of the period. The crucial words here are the transfer of infrastructure for the purpose of operating and maintaining and thus the transferee who would now step in the shoes of the transferor for the limited purpose of operation and maintenance, could claim deduction on the profit element arising out of such activity. We may recall, under sub-section (4) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e development activity of the assessee and would qualify for deduction under Section 80IA of the Act. The RTIL would have a claim or deduction on its profit arising out of maintenance and operation of infrastructure facility which apparently would exclude the pay out of ₹ 328 lakhs to the assessee. Learned counsel for the Revenue submitted that this last element is, however, not clearly emerging from the record. Firstly, no such case is made out by the Revenue before the Tribunal. Secondly, if at all, the RTIL has claimed deduction on an amount larger than what it was entitled to, it would be a claim which should be disallowed in the hands of the RTIL and not in the hands of the present assessee. 8. For such reasons, tax appeal is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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