TMI Blog2017 (10) TMI 1314X X X X Extracts X X X X X X X X Extracts X X X X ..... he Gujarat Government directly was involved in the agreements for the project. Assessee has developed, operated and was to transfer the project in agreement with the constitutional body i.e. an agency as defined under section 2(e) of the Gujarat Infrastructure Development Act, 1999 under the Gujarat Government Act and also in direct and explicit agreement and approval of Gujarat government which has given land and allowed to collect toll fee. Assessee company fulfills the conditions as required under section 80IA(4) including Section 80IA(4)(i)(b) and has developed, operated and was to transfer the infrastructure facility and therefore, is eligible for the deduction claimed under the section. GSRDC is an extended arms of the Gujarat State and is entitle to eligible for deduction. - decided in favour of assessee. - I.T.A. Nos.2296, 2304 & 2305/Ahd/2014 - - - Dated:- 27-10-2017 - SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER And SHRI MAHAVIR PRASAD, JUDICIAL MEMBER Appellant by : Shri K. Madhusudan, Sr.D.R. Respondent by : Shri S. N. Soparkar, A.R. O R D E R PER SHRI MAHAVIR PRASAD, JUDICIAL MEMBER : These three appeals are taken by the department against ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered into agreement with G.S.R.D.C. which is a Corporation incorporated under 'the Companies Act. 3. The appellant filed detailed evidence before the ld.A.O. that G.S.R.D.C. was Government Agency working under the full control and approval of the Government of Gujarat as explained in its letter dated, 26-12-2011 which are as under:- 1. Government of Gujarat passed a Resolution dated 20-02-1999 whereby it was resolved as under: 1. It is felt that the development of road in the Gujarat State could be completed at a faster pace if the dependency on State Finance is reduced. As a solution to this the State Government has decided to let some of the development works be undertaken by private parties with resources being contributed by them and other lenders. To this effect, there is a proposal to establish a Roads Development Corporation to help improve the road infrastructure in the State. The Corporation will undertake works involving Roads, Bridges, Fly-overs, underground roads. After due consideration, the Government has decided to establish the Gujarat State Road Development Corporation Ltd. The objective of the Corporation are as under:- i. Object of the Corporation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the State Government or an authority established by or under any law and includes a local authority A copy of this Act is submitted herewith. 4. GSRDC by its letter dated 26-07-2000 addressed to Shri Ravi Saxena, IAS, CEO, GIDB sought approval for four lining of ROB near Chhayapuri, near GSFC Junction, Vadodara. A copy of this letter is submitted herewith. 5. Government of Gujarat, Roads Building Department, Gandhinagar by its Resolution dated, 01/08/2002 allotted the land for Chhayapuri, near GSFC Junction, Vadodara since agreement was to be entered into through G.S.R.D.C. for construction of ROB on BOT basis. A copy of this Resolution is submitted herewith. 6. The concession agreement entered into by G.S.R.D.C. with Ranjit Projects Pvt. Ltd. was approved by the Government of Gujarat in its meeting held on 24-10-2000. We submit herewith a copy of letter dated, 01/01/2001 addressed by Government of Gujarat to G.S.R.D.C. along with its minutes. We submit herewith copy of gist of the concession agreement entered between G.S.R.D.C. and R.P.P.L. On page 9 of the agreement 'Government Agency' is defined which reads as under:- Government Agency means GSRDC, R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itten as under:- By order and in the name of the Governor of Gujarat. 2. Government of Gujarat, R B Department by its Resolution dated 04- 08-1999 entrusted the work of various projects to Gujarat State Road Development Corporation Ltd. and one of such projects was Chhayapuri ROB, near GSFC Junction, Vadodara. A copy of this Resolution is compiled in the paper book. 3. To implement the Government policy for participation of Private Parties in the development works of road, bridges etc the Government Infrastructure Development Act, 1999 was enacted on 05-10-1999. Concession Agreement, Developer, Government Agency, Infrastructure etc have been defined in section 2 of the Act. Accordingly, Government Agency is defined as under:- Government Agency means, a corporation, or a body own or control by the State Government or an authority established by or under any law and includes a local authority. A copy of this act is complied in the paper book. 4. GSRDC by its letter dated, 26-07-2000 addressed to Shri Ravi Saxena, IAS, GIDB sought approval for four lining of Chhayapuri ROB, near GSFC Junction, Vadodara. A copy of this letter is compiled in the paper book. 5. Gove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d under the Companies Act as 100% owned Company and therefore,, the Agreement entered into by the appellant with the GSRDC is nothing but the agreement with the Government as can be seen from the above documents. 3.3 But learned Assessing Officer was not satisfied with the explanation given by the assessee and held as under: In the instant case it is seen that the assessee had not entered into any assignment as such with central/state govt. local authority or a statutory body. The assessee had entered into a concession agreement with GSRDC, a corporation incorporated under the companies Act. As such the assessee could not fulfill important conditions as provided u/s.80IA(4) that the agreement for developing, operating or maintaining any infrastructure facility should have been entered with central/state govt. local authority or a statutory body. Therefore it is held that deduction claimed u/s.80IA(4) of the Act is in violation of the provision of that section. Accordingly, the deduction claimed u/s.80IA(4) of the I.T. Act disallowed and added back to the total income of the assessee and made an addition of ₹ 3,76,68,739/-. 4. Against the said order assessee prefer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble against M/s. Bharat Petroleum as it was neither a statutory corporation and nor a Government department. The Court examined whether it was a State within the meaning of Article 12 of the Constitution of India. The Hon ble Supreme Court laid down certain tests in this context and the relevant portion of the Head notes of judgment is as under: 2. Some of the tests laid down by this Court for deciding whether a body is State within the meaning of Article 12 are: (i) If the entire share capital of the corporation is held by Government, it would go a way towards indicating that the corporation is an instrumentality or agency of the Government. (ii) A finding of State financial supports plus an unusual degree of control over the management and policies might lead, one to characterize an operation as State action. (iii) The existence of deep and pervasive State control may afford an indication that the Corporation is a State agency or instrumentality. (iv) Whether the corporation enjoys monopoly status which is State conferred or State protected is a relevant factor. (v) If the functions of the corporation are important public functions and related to governmental ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te control. In this context, it emerges that the Board of Directors of SSNNL are appointed by the Gujarat Government and it consists of the Government employees of the rank of Secretary/Additional Secretaries. The next test is whether the corporation enjoys monopoly status which is otherwise conferred on a State. The objects to be pursued by the SSNNL, the powers conferred on it, as revealed by the Memorandum of Association clearly suggest that SSNNL is in the activity of executing, operating and maintaining the Sardar Sarovar project comprising of a dam across river Narmada, a canal system the Sardar Sarovar power houses at the foot of the said dam, etc.. All these aspect clearly show that SSNNL is involved in carrying out State monopoly functions, like operation of Airports, Ports, Railways, etc.. The next test is whether functions performed are important public functions related to governmental functions. In the case of SSNNL, it is quite obvious that apart from executing operating and maintaining the Sardar Sarovar project it is also involved promoting schemes in the State of Gujarat for flood control in the Narmada river, irrigation and water supply schemes for utilization of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is fully applicable to this case. Therefore, it is alternatively urged that IRCTC for all legal and practical purposes being a Govt. no TDS is deductible by assessee from any payment made to it including the impugned license fee. On this count also there is no question of disallowance u/s.40(a)(ia), consequently the entire disallowance deserves to be deleted. 9. Learned AR cited an order of ITAT Bench (Pune) [2016] 69 taxmann.com 78 (Pune-Trib), in the case of Kirloskar Brothers Ltd. vs. DCIT. In this case, it was also contended by the Revenue is that the assessee does not fulfil the condition prescribed in sub-clause (b) of clause (i) to sub-section (4) of section 80IA of the Act. In terms of the said objection, the Revenue contends that assessee has entered into a works contract agreement with SSNNL which is not an entity specified in sub-clause (b) of section 80IA(4)(i) of the Act. According to the Revenue, SSNNL is not a Central Government or State Government or a local authority or any other statutory body, so as to be considered as an entity specified in sub-clause(b) of section 80IA(4)(i) of the Act. As per the Revenue, SSNNL is a company registered under the Companies ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n agreement with GSRDC but the Gujarat Government directly was involved in the agreements for the project. 11. In our considered opinion, assessee has developed, operated and was to transfer the project in agreement with the constitutional body i.e. an agency as defined under section 2(e) of the Gujarat Infrastructure Development Act, 1999 under the Gujarat Government Act and also in direct and explicit agreement and approval of Gujarat government which has given land and allowed to collect toll fee. Assessee company fulfills the conditions as required under section 80IA(4) including Section 80IA(4)(i)(b) and has developed, operated and was to transfer the infrastructure facility and therefore, is eligible for the deduction claimed under the section. 12. With the above observation, we are of the considered opinion that GSRDC is an extended arms of the Gujarat State and is entitle to eligible for deduction. Therefore, we dismiss all three appeals in ITA Nos. 2296, 2304 2305/Ahd/2014 for Asst. Years 2009-10, 2010-11 2011-12 respectively. 13. In the result, all the three appeals are dismissed. This Order pronounced in Open Court on 27/10/2017 - - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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