TMI Blog2018 (12) TMI 285X X X X Extracts X X X X X X X X Extracts X X X X ..... the purchase of shuttering material by the assessee, did not allow claim of the assessee as he held that assessee had not produced the relevant material before the Assessing Officer during the remand proceedings also. However, we feel that one more opportunity should be given to the assessee to produce the purchase bills which has been used for making claim for depreciation. Advance made to NCC-VEE (JV) - Held that:- We find that as per the additional evidence the assessee was bound to pay an amount of 4% to NCC-VEE (JV). The said additional evidence could not be filed before the authorities below. However, we find that the additional evidence goes to the root of the matter and, therefore, we have admitted the same and we remand this issue also back to the file of the Assessing Officer who should readjudicate the above in view of the additional evidence. Addition on account of non confirmation of sundry creditors - AO during remand proceedings again issued notice u/s 133(6) to such creditors and part of the creditors responded and therefore, learned CIT(A) allowed part relief to the assessee - Held that:- CIT(A) has held that during remand proceedings the assessee had not co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and thus the order being vitiated needs to be quashed and the returned income accepted. NOTWITHSTANDING AND WITHOUT PREJUDICE TO GROUND NO. I ABOVE :- II. The Ld. CIT (A)'s grossly erred on facts and in law in conforming the disallowance of depreciation amounting to ₹ 1,42,80,490/- being shuttering material purchased from M/s. Shyam Steel Industries despite the fact that the entire bills and vouchers are available and were also produced before her and payments made through account payee cheques and thus the addition based wholly on notions, conjectures and surmises and without any concrete facts may kindly be ordered to be deleted. III. The Ld. CIT (A)'s further grossly erred on facts and in law in conforming the addition of ₹ 1,18,28,291/- being advance made to M/s. NCC VEE-JV despite the fact that the same is as per the terms contained in the Memorandum of Agreement and duly recorded in the books of accounts and thus the disallowance and its confirmation being against all settled principles of law and natural justice may kindly be ordered to be deleted. IV. The Ld. CIT (A)'s again erred on facts and in law in conforming the dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he appeal of the assessee, Learned A. R. invited our attention to petition for admission of additional ground which was filed vide letter dated 20th August, 2018. Learned A. R. submitted that the ground taken by the assessee is a legal ground which goes to the root of the matter and which could not be taken at the time of filing of the appeal and therefore, it was prayed that the same may be admitted. Explaining the additional grounds of appeal, Learned A. R. submitted that while disallowing the claim of the assessee u/s 80IA, the Assessing Officer and learned CIT(A) have made certain other disallowances and ground of appeal relates to the claim of the assessee that such enhanced income is also subject to deduction u/s VIA of the I.T. Act. Learned D. R. did not object to the admission of additional grounds of appeal and therefore, the same was admitted. Learned A. R. submitted that the assessee was denied certain depreciation on additional items of shuttering material which has increased the income of assessee. It was submitted that since the income of the assessee was entitled to benefit u/s 80IA therefore, the increased income would also be eligible for deduction u/s 80IA of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... but has developed the road from existing 2 lane to 4 lane and while doing so, the assessee company has also made substantial investment by itself and also executed the development works and carried out civil-works on its own by using its own material and expertise and no material consumed in the roads and bridges were provided by the NHAI and UP PWD. This is also noted by CIT(A) that the maintenance of the existing facility during the period of development also was of the assessee company and so also was the risk during this period to maintain the infrastructure and after the completion of development of road and its handing over to the Government, the risk period of the assessee company was of 12 months for maintenance of the road. As per explanation below sub section (4) of section 80IA, infrastructure facility includes a road including toll road, bridge or a rail system. This is not in dispute that the assessee has widened the road and therefore, activity of the assessee falls within the definition of infrastructure. The CIT(A) has also referred to several judicial pronouncements as per which it was held that there is no requirement that the assessee should have been the owner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 80-IA the word it denotes the enterprise carrying on the business. The word it cannot be related to the infrastructure facility, particularly in view of the fact that infrastructure facility includes Rail system, Highway project, Water treatment system, Irrigation project, a Port, an Airport or an Inland port which cannot be owned by any one. Even otherwise, the word it is used to denote an enterprise. Therefore, there is no requirement that the assessee should have been the owner of the infrastructure facility. 23. The next question is to be answered is whether the assessee is a developer or mere works contractor. The Revenue relied on the amendments brought in by the Finance Act 2007 and 2009 to mention that the activity undertaken by the assessee is akin to works contract and he is not eligible for deduction under section 80IA (4) of the Act. Whether the assessee is a developer or works contractor is purely depends on the nature of the work undertaken by the assessee. Each of the work undertaken has to be analyzed and a conclusion has to be drawn about the nature of the work undertaken by the assessee. The agreement entered into with the Government or the Gove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gular traffic. Therefore, it is clear that from an un-developed area, infrastructure is developed and handed over to the Government and as explained by the CBDT vide its 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 indicate that the assessee is eligible for deduction under section 80IA (4) of the Act. The department is not correct in holding that the assessee is a mere contractor of the work and not a developer. 24. We also find that as per the provisions of the section 80IA of the Act, a person being a company has to enter into an agreement with the Government or Government undertakings. Such an agreement is a contract and for the purpose of the agreement a person may be called as a contractor as he entered into a contract. But the word contractor is used to denote a person entering into an agreement for undertaking ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the purpose of the tax benefit has all along been to encourage investment in development of infrastructure sector and not for the persons who merely execute the civil construction work. It categorically states that the deduction under section 80IA of the Act is available to developers who undertakes entrepreneurial and investment risk and not for the contractors, who undertakes only business risk. Without any doubt, the learned counsel for the assessee clearly demonstrated before us that the assessee at present has undertaken huge risks in terms of deployment of technical personnel, plant and machinery, technical knowhow, expertise and financial resources. Further, the order of Tribunal in the case of B.T.Patil cited supra is prior to amendment to sec 80IA(4), after the amendment the section 80IA(4) read as (i) developing or (ii) operating and maintaining or (iii) developing, operating and maintaining any infrastructure facility, prior to amendment the or between three activities was not there, after the amendment or has been inserted w.e.f. 1-4-2002 by Finance Act 2001. Therefore, in our considered view, the assessee should not be denied the deduction under section 80IA of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Further in the case of R.R. Constructions, the Chennai Bench of Tribunal in I.T.A. No. 2061/Mds/2010 for assessment year 2007-08 vide order dated 3.10.2011 held as follows: 28. Being so, we are inclined to partly allow the ground relating to claiming of deduction u/s. 80IA. 14.2 From the above Para of this tribunal order, it comes out that if the contracts involves design, development, operating maintenance, financial involvement and defect correction and liability period, then such contracts cannot be called as simple works contract to deny the deduction under s. 80IA and profit from the contracts which involves design, development, operating maintenance, financial involvement, and defect correction and liability period is to be accepted as development and cannot be said to be contract simplicitor to apply the explanation. In the present case, categorical finding has been given by CIT (A) that the assessee was engaged in development of road and is not a mere contractor as he had deployed his own capital, used his own management and expertise in maintenance and had to bear the risk and defect correction. These findings of CIT (A) could not be controverted by le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 011 whereas the assessee had claimed depreciation @100% on the total purchases. The learned CIT(A), after having observed the purchase of shuttering material by the assessee, did not allow claim of the assessee as he held that assessee had not produced the relevant material before the Assessing Officer during the remand proceedings also. However, we feel that one more opportunity should be given to the assessee to produce the purchase bills which has been used for making claim for depreciation. Therefore, ground No. 2 of the assessee s appeal is allowed for statistical purposes. 9. Now coming to ground No. 3 regarding advance made to NCC-VEE (JV). We find that as per the additional evidence the assessee was bound to pay an amount of 4% to NCC-VEE (JV). The said additional evidence could not be filed before the authorities below. However, we find that the additional evidence goes to the root of the matter and, therefore, we have admitted the same and we remand this issue also back to the file of the Assessing Officer who should readjudicate the above in view of the additional evidence. 10. Now coming to ground No. 4. We find that the assessee had claimed deduction of ₹ 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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