TMI Blog2019 (6) TMI 921X X X X Extracts X X X X X X X X Extracts X X X X ..... g, operating and maintaining any infrastructural facilities. It is also clear that the assessee did not earn any income as laid down in sub-section (4) of section 80IA. Therefore, the surplus income is eligible for deduction u/s 80IA(4) - No infirmity in the finding of CIT(A) in its impugned order that the assessee had no income from eligible business to claim deduction u/s 80IA The assessee failed to substantiate its claim before the two lower authorities. It is noted from the record that the Co-ordinate Bench of this Tribunal vide its order dated 02.12.2015 remanded the matter to the file of AO to examine all the requirements for allowing the aforesaid deduction with a direction to the assessee to provide all the details to substantiate its claim for the deduction u/s 80IA(4)(i). As rightly pointed out by the Ld.DR that there were no such details provided by the assessee before the AO in claiming the said project in New Town is an integral part of highway project. Therefore, in our opinion, the assessee is not entitled to claim deduction u/s 80IA - Decided against assessee. - ITA No.807 to 810/KOL/2018 - - - Dated:- 17-6-2019 - Sh. P.M. Jagtap, Vice President And Sh. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of flyovers, water treatment plant, including sewer water sanitation and sewerage system, solid water system etc. in the entire New Town in Rajarhaat Area. All the above-mentioned activities were carried out by the assessee in accordance with the notification and order issued by the Government of West Bengal. 6. As submitted by the Ld.AR, in the first instance, the Co-ordinate Bench of Kolkata Tribunal vide its order dated 02.12.2015 directed the AO to examine the issue of claim of allowability of deduction u/s 80IA as under:- Infrastructure facility has been defined under explanation to section 80IA(4)(i) of the Act and the same includes housing or other activities: But that should be integral part of the highway project. The deduction has been claimed by the assessee presumably in respect of project developed at New Town, Rajarhat, Kolkata. Whether it forms part of highway project or not is not clear. Apart from the above the A/R harped on the point that there was a notification by the State Govt. empowering the assessee to develop or operate and maintain infrastructure facility which can be equated to agreement between the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... schedule thereof. 4) GOVERNMENT OF WEST BENGAL, DEPARTMENT OF HOUSING, NOTIFICATION dated 14.09.1999 - In this notification, the assessee company was declared as the Planning Authority in respect of the Planning Area declared under Notification as mentioned in Sl.No. 3 above. 5) GOVERNMENT OF WEST BENGAL, DEPARTMENT OF HOUSING,NOTIFICATION Dated 12.06.2002 - By the Notification, the assessee was transferred lands acquired by L L.R. DEPARTMENT with terms and conditions. 6) Deed of agreement dated 25.02.2009 between Housing Department, Government of West Bengal and the assessee company. 8. It is noted from the record and submissions of assessee, it was contended that the assessee had always being involved in development, operation and maintenance of infrastructure facilities and its income earned almost entirely from such business activities i.e. development, operation and maintenance of infrastructure facilities and contended that it is entitled for 100% deduction u/s 80IA(4) of the Act. 9. The AO, on an examination of Profit Loss A/c found the assessee earned receipts under sale of flats and sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing area for gardening, drainage, electrification etc., but that is not sufficient for such promoter to claim deduction u/s 801A. The provision of section 80IA is made for allowing deduction to the assessee from the profit earned with the activities of improving infrastructure development after fulfilment of certain criteria. Here in the case of the assessee the development of infrastructure facility is only to sale the plot of land and housing complexes and does not qualify for the eligible business activity for the purpose of section 801A and hence the claim of the assessee for deduction under section 80IA is hereby disallowed. 12. A perusal of the above finding by the AO, it is noted that the assessee could not fulfil certain criteria. We note that it is in the business of development of infrastructure facility only to sale plots of land and housing complexes which is not qualifying criteria in terms of eligible business activity to claim deduction u/s 80IA of the Act and denied the claim of allowance u/s 80IA of the Act. 13. As aggrieved before the AO, the assessee challenged the order of AO before the CIT(A) in the first appellate proceedings. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 801A (4) deductions. Even if a liberal view is taken it can at most be held that at most the enhancement of land value was attributable to the infrastructure projects. However, Section 80 IA relates only to income, derived by an undertaking or an enterprise, from the infrastructure facility and not attributable to it. 4.8. Section 80lA clearly states that only those undertakings or enterprises who derived any profit and gain from any business refer to in sub-section (4) shall be eligible for deduction under this section. The word derived is narrow in definition and does not cover any other ancillary activities. As discussed, only the profits derived from the enterprise carrying on business of developing, operating and maintaining or developing, operating and maintaining any infrastructure facility are eligible for deduction. As held by the Apex Court in the case of Cambay Electric Supply Industrial Co. Ltd. vs. CIT (113 ITR 84) In this connection it may be pointed out that whenever the Legislature wanted to give a restricted meaning in the manner suggested by the learned Solicitor General it has used the expression derived from . This vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 80-lA, inter alia, provides for a ten year tax benefit to an enterprise or an undertaking engaged in development of infrastructure facilities, industrial parks and special economic zones. The tax benefit was introduced for the reason that industrial modernization requires a massive expansion of, and qualitative improvement in infrastructure (viz., expressways, highways, airports, ports and rapid urban rail transport systems) which was lacking in our country. The purpose of the tax benefit has all along been for encouraging private section participation by way of investment in development of the infrastructure sector and not for the persons who merely execute the civil construction work or any other works contract. The spirit behind the introduction of Section BmA was to encourage private investment in infrastructure projects. The claim of deduction under section 80lA by the appellant, was not only technically not tenable, but was also against the spirit of the section 80IA of the Income tax Act 1961. 5. After careful consideration of the facts of the case, the submission of the AIR, and the relevant assessment records including binding judgements ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eting its funds and finance requirements for development of infrastructure from the sale of land in the area. A liberal view has been taken because the object of the assessee is to develop of infrastructure facilities. The government company can not be equated with private company. The business of government company should not be narrowly considered and submitted the term derived by an undertaking or an enterprise how any business referred to sub-section (4) of section 80IA would have wider implications. The assessee placed reliance on the decision of Hon ble Supreme Court in the case of Meghalaya Steels reported in 383 ITR 217(SC), Merinoply and Chemicals Ltd. reported in 209 ITR 508 and in the case of Cement Manufacturing Co.Ltd. reported in 6 ITR OL 350. 16. In reply, the Ld. DR submits that the assessee did not submit previous order in appeal and referred to page 44 in respect of whether it is a part of highways project or not. The onus is on the assessee to provide details in support of its contentions and to substantiate its claim 80IA of the Act. The sub-section (4) of section 80IA of the Act is meant for only highway project and sub-section (10) of section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rates and maintains or develops, operates and maintains any infrastructure facility referred to in clause (a) or clause (b) or clause (c) of the Explanation to clause (i) of subsection (4), the provisions of this sub-section shall have effect as if for the words fifteen years , the words twenty years had been substituted.] 32 [(2A)....] (3) :- (i ) : Provided ; (ii ) . The following proviso shall be inserted to sub-section (3) of section 80- IA by the Finance (No. 2) Act, 2004, w.e.f. 1-4-2005 : Provided . Explanation 1.-:- (a ) ; (b ) ; and (c . Explanation 2.-. (4) This section applies to- (i ) any enterprise carrying on the business 35 [of (i) developing or ( ii) operating and maintaining or (iii) developing, operating and maintaining] any infrastructure facility which fulfils all the following conditions, namely :- (a) it is owned by a company registered in India or by a consortium of such companies; [( b) it has en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ii ) any undertaking which develops, develops and operates or maintains and operates an industrial park 41 [or special economic zone] notified 42 by the Central Government in accordance with the scheme framed 42 and notified 43 by that Government for the period beginning on the 1st day of April, 1997 and ending on the 31st day of March, 44 [2006] : 45 [Provided that in a case where an undertaking develops an industrial park on or after the 1st day of April, 1999 or a special economic zone on or after the 1st day of April, 2001 and transfers the operation and maintenance of such industrial park or such special economic zone, as the case may be, to another undertaking (hereafter in this section referred to as the transferee undertaking), the deduction under sub-section (1) shall be allowed to such transferee undertaking for the remaining period in the ten consecutive assessment years as if the operation and maintenance were not so transferred to the transferee undertaking;] (iv ) an 46[undertaking] which,- (a) is set up in any part of India for the generation or generation and distribution of power if it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not the relevant qualification to claim deduction u/s 80IA of the Act, more particularly this is not the business referred in sub-section (4) of section 80IA of the Act. We note that the assessee has no income from the activities of infrastructure development as contemplated in sub-section (4) which is pre-requisite qualification u/s 80IA of the Act. Therefore, in our opinion, the submission vide dated 14.03.2017 that the assessee being involved in development, operation and maintenance of infrastructural facilities and its income was earned almost entirely from such business activities i.e. development, operation and maintenance of infrastructural facilities is contrary to record i.e. P L A/c. Therefore, as rightly found by the AO that the assessee is not eligible to claim deduction u/s 80IA(4) of the Act as confirmed by the CIT(A) in his impugned order. 21. Further, on perusal of the balance sheet of the assessee, the CIT(A) found that the balance sheet does not reflect any income earned from other developing, operating and maintaining or developing, operating and maintaining any infrastructural facilities. It is also clear that the assessee did not earn any in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rapid urban rail transport system. We find the purpose of tax benefit as all along been for providing participation by way of investment in development of infrastructure. We also agree with the finding of CIT(A) that the spirit behind the section 80IA was to encourage to provide investment in infrastructure project and the claim made by the assessee in our opinion is against the spirit of section 80IA of the Act. Thus, we find no infirmity in the order of CIT(A) and it is justified. Therefore, the only issue raised in this appeal filed by the assessee for AY 2005-06 is dismissed. ITA Nos.808, 809 810/Kol/2018 [AYs 2006-07, 2008-09 2009-10] 25. As discussed above, we find the issues raised in all the three appeals above are similar on identical facts with that of issue raised in ITA No.807/Kol/2018 for AY 2005-06 wherein we dismissed the said issue in the afore-mentioned paragraphs holding that the assessee is not entitled to claim deduction u/s 80IA(4)(i) of the Act. Therefore, the view taken by us in the said issue is equally applicable to the issues raised in these three appeals. Thus, only issue raised in these three appea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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