TMI Blog2018 (5) TMI 244X X X X Extracts X X X X X X X X Extracts X X X X ..... deducted on payments have already been deposited before filing the return u/s.139(1) the same cannot be disallowed by invoking provisions of section 40(a)(ia) of the Act. From the record, we find that TDS up to February, 2008 have been duly deposited in the Government account on 29.8.2010, which is prior to the last date of filing the return u/s. 139(1). Accordingly, there is no justification on the part of the Assessing Officer to disallow payment u/s. 40(a)(ia) of the Act. The Assessing Officer is directed to delete the disallowance so made. Disallowance of Labour Expenses - Held that:- Nature of assessee’s business and fact that labour payment have been made at site, we restrict the disallowance at ₹ 20,000/- in place of ₹ 2 lakhs made by the Assessing Officer. We direct accordingly. - ITA No.7207/Mum/2012, ITA No.7083/Mum/2013, ITA No.7082/Mum/2013 And ITA No.1420/Mum/2015 - - - Dated:- 26-4-2018 - SHRI R. C. SHARMA, AM For The Assessee : Shri Sanjay Kapadia For The Revenue : Shri T.A. Khan ORDER PER R.C.SHARMA (A.M): These appeals are filed by the assessee against the order of CIT(A)-10/10/2012 for A.Y.2004-05, 2007-08, 2008- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tant case the assessee having entered into an agreement with the Government agencies for development of the infrastructure projects, was obviously a contractor, but that did 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 80-IA(4) itself provides that the assessee should develop the infrastructure facility as per the 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. Therefore, merely because, in the TDS certificate tax at source was deducted u/s. 194C being applicable to a contractor cannot be the reason for treating a genuine developer as a contractor. The same cannot detract the assessee from the position of being a developer; nor should it debar the assessee from claiming deduction under section 80- IA(4). Therefore, the assessee, who is only engaged in developing the infrastructural facility, i.e., road, is entitled to the benefits of the deduction under section 80-IA(4). The provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ucture facility. 11. Sub-clause (c) of section 80-IA(4) is applicable to an enterprise which is engaged in 'operating and maintaining' the infrastructure facility on or after 1-4-1995. It is not applicable to the case of an enterprise, which is engaged in mere 'development' of infrastructure facility and not its 'operation' and 'maintenance'. Therefore, the question of 'operating and maintaining' of infrastructure facility by such an enterprise before or after any cutoff date cannot arise. When the Act provides for deduction under section 80-IA(4), undisputedly for an enterprise, which is only 'developing1 the infrastructure facility, unaccompanied by 'operating and maintaining' thereof by such entity, there cannot be any question of providing a condition for such an enterprise to start operating and maintaining the infrastructure facility on or after 1-4-1995. Since the assessee was only a developer of the infrastructure project and it was not maintaining and operating the infrastructure facility, sub-clause (c) of sub-section (4) of section 80-IA was not applicable. 12. However, from the assessment year 2002-03, deduction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acts of instant case the AO wrongly relied on the order of the Chennai Tribunal by treating the assessee as a contractor and not developer without appreciating that the assessee has entered into an agreement with the Central Government or a State Government or a local authority or any other statutory body for (i) developing or (ii) operating and maintaining or (iii) developing, operating and maintaining a new infrastructure facility; For this purpose, we may place reliance on the order of the jurisdictions! Hon'ble ITAT, Mumbai larger third Member Bench in the case of B.T. Patil Sons Belgaum Construction Pvt. Ltd. (126 TTJ (Mumbai) 577; 35 SOT 177, 32 DTR 1. It is submitted that therein the assessee is engaged in development of infrastructure facility by way of constructing Road. 14. Here it is important to mention that the Legislature inserted the word 'or' between (i) and (ii) with effect from 1-4-2002, which, is applicable to assessment year 2002-03 onwards. So with effect from the assessment year 2002-03, not only the enterprise (i) developing, (ii) operating and maintaining the infrastructure facility shall be entitled to deduction, but also the enterprise whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ext. In order to ascertain the meaning of a word not defined in the Act, a useful reference should be made to the General Clauses Act, 1897. If a particular word is not defined in the relevant statute but has been defined in the General Clauses Act, such definition throws ample light for guidance and adoption in the former enactment. According to section 3 of the General Clauses Act, the definitions given in this Act shall have applicability in all the Central Acts unless a contrary definition is provided of a particular word or expression. Further when these words are neither defined in the Income-tax Act, 1961 nor in the General Clauses Act, the next question is that where from to find the meaning of such words. This has been clearly explained by the Hon'ble jurisdictional High Court in the case of Abdulgafar A. Nadiadwala v. Asstt. CIT [2004] 267 ITR 4881 (Bom), wherein the Hon'ble High Court was looking into the meaning of the words /goods' and 'merchandise', which are not defined under section 80HHC in the context of Income-tax Act, 1961. The Hon'ble High Court held that ; it is well-settled that in the absence of there being anything contrary to the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been defined exhaustively by referring to a road project, airport, port, etc., a highway project, a water supply project and irrigation project, etc. Therefore, the use of word developing in juxtaposition to infrastructure facility indicates that what is eligible for deduction under this sub-section is the profits and gains derived from the development of infrastructure facility and not something de hors it. So in order to be eligible for deduction the development should be that of the infrastructure facility as a whole and not a particular part of it, it may be possible that some part of development work is assigned by the developer to some contractor for doing it on his behalf. That will not put the doer of such work into the shoes of a developer. 19. Further, reliance is placed on the judgment of Bombay High Court in the case of ABG Heavy Industries Limited 322ITR 323 (Bom) wherein held that: Section 80-IA of the Income-tax Act, 1961, was introduced to provide an impetus to the growth of infrastructure in the nation. A sound infrastructure is a sine qua non for economic development. Absence of infrastructure poses significant barriers to growth and development. A mode ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that a provision in a taxing statute granting incentives for promoting growth and development should be construed liberally. In the present case, the administrative circulars issued Central Board of Direct Taxes proceeded on that basis by adopting a liberal view of the scope and ambit of the provisions of section 80-IA of the Act. Parliamentary intervention endorsed the administrative practice. After section 80-IA was amended by the Finance Act of 2001, the section applies to an enterprise carrying on the business of (i) developing; or (ii) operating; maintaining; or (iii) developing, operating and maintaining any infrastructure facility which fulfils certain conditions. Those conditions are ownership of the enterprise by a company registered in India or by a consortium (it) an agreement with the Central or State Government, local authority of statutory body; and (Hi) the start of operation and maintenance of infrastructure facility on or after April 1, 1995. The requirement that the operation and maintenance of the infrastructure facility should commence after April 1, 1995 has to be harmoniously construed with the main provision under which a deduction is available to an assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gations which had been assumed by the assessee under the terms of the contract were obligations involving the development of an infrastructure facility. Section 80-IA of the Act essentially contemplated a deduction in a situation where an enterprise carried on the business of developing, maintaining and operating an infrastructure facility. A port was defined to be included within the purview of the expression infrastructure facility . The obligations which the assessee assumed under the terms of the contract were not merely for on a BOT basis. On the fulfillment of the ten years, there was a vesting in the JNPT free of The finding that the assessee had developed the infrastructure facility and was engaged in operating the Road is entitled to the special deduction under Section 80 IA. 23. The distinction between developer and contractor is no longer relevant in the context of changed law explained by the Mumbai High Court in the case of ABG Heavy Industries (supra) and followed within its jurisdiction by the Pune Bench of the ITAT in the case of Laxmi Civil Engg. (supra.) Reliance can also be placed on the following decision of Hon'ble ITAT in the case of Nagarjuna Construc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted an amount of ₹ 98,14,571/- to the P L account under the head Labour Expenses . The AO, therefore, asked the assessee to justify its claim of expenses. On going through the details, the AO noticed that some of the expenses are incurred in cash. The muster roll of the labourers is not properly maintained and also there is no site-wise muster roll. Accordingly, an adhoc disallowance of ₹ 2 lakhs was made, which was confirmed by the learned CIT(A). Assessee is in further appeal before us. 30. We have considered the rival submissions, carefully gone through the record and found that all these expenses are revenue in nature and have been incurred during normal course of assessee s business of constructing roads etc. Relevant details of expenditure so incurred were submitted before the lower authorities along with name of laborers. Small amount of cash was paid at site to the labourers, which cannot be made a reason for disallowance because labourers are small and uneducated persons, were not having any bank accounts. Moreover the books of accounts are audited and neither the AO nor the Auditor has found any discrepancy in the books of accounts. 31. During the cou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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