TMI Blog2016 (11) TMI 1693X X X X Extracts X X X X X X X X Extracts X X X X ..... ) - Decided in favour of assessee. - ITA No. 1259/Ahd/2011 - - - Dated:- 16-11-2016 - SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI S.S. GODARA, JUDICIAL MEMBER For The Assessee : Shri Rashesh Shah, AR For The Revenue : Shri Jayant Javeri, Sr DR ORDER PER N.K. BILLAIYA, ACCOUNTANT MEMBER: With this appeal the assessee has challenged the correctness of the order of the CIT(A)-I, Surat dated 01.04.2011 pertaining to AY 2008-09. 2. The sole grievance of the assessee is that the CIT(A) erred in confirming the action of AO in disallowing deduction u/s 80IA(4) of the Act amounting to ₹ 8,52,50,413/-. 3. The assessee-company is engaged in the business of development of various infrastructure facilities relating to water and sewage treatment and its operation and maintenance. During the year, the assessee has claimed deduction of ₹ 8,52,50,413/- u/s 80IA(4) of the Act in respect of profit from infrastructure development and their operation and maintenance activities. 4. The AO asked the assessee to justify its claim of deduction. The assessee filed a detailed reply justifying its claim of deduction and in support of its claim, filed copy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9;ble ITAT, Ahmedabad relied upon by the appellant in its own case for A.Ys. 2003-04 2004-05 is distinguishable because as stated above the explanation inserted by the Finance Act, 2009 w.e.f 1.4.2000 has not been considered by the Hon'ble ITAT and also because in the case of B.T. Patil Sons (supra) a larger bench of the Hon'ble ITAT has reversed the decision of Patel Engineering and has clearly defined that a developer is one who designs and conceives new projects whereas the contractor merely executes the same. We find that the appellant's case for claiming deduction u/s.80IA to the tune of ₹ 8,52,50,413/- fails because of the following reasons among others (as discussed above ): i. The appellant does not own the facility. ii. The appellant is not a developer within the meaning of Sec.80IA(4). iii. The appellant is also hit by the provisions of Sec.80IA(2). iv. The appellant is engaged only in works contract and is thus hit by newly inserted explanation by finance Act, 2009 which denies benefit to persons engaged in works contract. v. The appellant has not brought private capital in the development of infrastructure facili ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee and the assessee was required to have a Insurance Policy to cover all third party risks. What we have noted that otherwise the assessee qualifies u/s.80IA(4) because as per the definition prescribed in Explanation to Section 80IA(4) a Sewerage System is within the definition of Infrastructure facility . Now, hereinbelow we shall deal, as also consider, the point-wise objection of the Revenue Department and examine whether those objections have rightly been raised in the case of the assessee. (a) The objection of the Revenue Department is that the assessee has been termed as contractor as per the terms of the agreement with SMC. This very objection has been dealt with by ITAT D Bench Ahmedabad in the case of En-vision Enviro Engineers Pvt.Ltd. vs. DCIT (in ITA No.2902/Ahd/08 others for AY 2005-06) order dated 30/04/2012, wherein we have opined, quote We have examined both the agreements. Undisputedly, the assessee has been referred as a Contractor in the agreement dated 15/07/2004. However, it was not so in the agreement dated 14/11/2002 executed with Surat Municipal Corporation. Be that as it was, merely mentioning the assessee as Contractor the exact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ration and En-Vision Enviro Engineers Pvt.Ltd. For the removal and disposal of refuse, rubbish and garbage of various hospitals, clinics, nursing homes in Surat, it was required by the Municipal Corporation to handle and manage the same, hence, invited Boot Tender. The assessee has offered and on a token rent of Re.1/- per square meter per annum, the said agreement was entered into for seven years. The assessee is to make the construction on the land as per the approved plans. The assessee has to install necessary equipment and machinery. One of the clauses is very clear that En-Vision shall bear all the expenses for putting up the said plan . The assessee is entitled to charge for treatment of waste per kg. as fixed by Municipal Corporation from time to time. One of the clauses, thus is clear that the rate shall be as per the quotations agreed upon. On termination of agreement, the project is to be taken over. At this juncture, ld.AR has also mentioned the change in the Statute through which one of the condition of transfer of the infrastructure back to the Government has been waived of. unquote. The totality of the facts and circumstances of the case as also the material place ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Joint Venture. The Joint Venture is nothing but the venture of the assessee company and the other person not being a party after withdrawing the question of Joint Venture does not arise. The Venture was fully carried out by the assessee and it was entirely executed by the assessee company. Taking the substance of the transaction, the assessee are entitled to all the profits in respect of the contract executed by them, hence the assessee would certainly be entitled to deduction under the provisions of 80IA as they have fulfilled all the other conditions. This view get strength from decision in the case of ITAT, Indore Bench, in case of Ayush Ajay Constructions Ltd. (supra). Thus, while giving effect to the opinion of Third Member u/s.255(4) of the Act, we take view in conformity with order of jurisdictional High Court in case of ABG Heavy Industries ltd. (supra) available at this time though contrary to the opinion expressed by the Third Member. So in view of above discussion, following the ratio of jurisdictional High Court in case of ABG Heavy Industries Ltd. (supra), the Assessing Officer is directed to allow deduction u/s.80IA(4) of the Act to the assessee with regard to the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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