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TMI Blog2021 (8) TMI 559X X X X Extracts X X X X X X X X Extracts X X X X ..... during assessment. 2. That on the facts and circumstances of the case and on law, the Ld. CIT(A) has erred in granting relief to the assessee on account of claim of deduction under section 80IB of the Act of R.s33,00,170/- disallowed by the AO during assessment. 3. The appellant craves leave to make any addition, alteration, modification etc. of the grounds either before the appellate proceedings or in the course of appellate proceedings." 3. Relevant facts in respect of ground no. 1 as noted by the AO are as under: "The assessee filed its return of income on 28th November, 2003 declaring total income of Rs. 14,22,150/- after claiming deductions of Rs. 82,51,545/- and Rs. 33,00,170/- respectively under section 80IA and 80IB of the Income Tax Act, 1961. The return was assessed u/s 143(3) of the Income Tax Act, 1961 on 31.03.2006. Deductions of Rs. 82,51,545/- and Rs. 33,00,170/- were allowed respectively u/s 80IA and 80IB of Income Tax Act, 1961. Subsequently, notice u/s 148 of the Income Tax Act, 1961 was issued on 18.03.2009. Notices u/s 143(2) and 142(1) of the Income Tax Act, 1961 were also issued after the assessee stated, vide letter dated 22.04.2009, that the return fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the assessee along with the return of Income, the company was engaged in the business of "Civil Construction and manufacturing of Construction Materials". As per explanation below section 80IA(13) of the Act, which is inserted by Finance Act, 2009 w.e.f. 01.04.2000, a contractor is entitled for the benefit of deduction under section 80IA of Act. The assessee, being a contractor, is not entitled for claim of deduction under section 80IA of Act. Moreover, deduction under section 80IA of Act is available only if the assessee satisfies the requisite conditions laid down in section 80IA of Act. Non-submission of any required details establish that the assessee failed to show that it satisfied with conditions mentioned in section 80IA of Act. For above reasons, no deduction under section 80IA of Act is allowed. (ii) As per the provisions of the Act, where the gross total income for the year includes profits and gains derived by an undertaking or an enterprise carrying on business of - (i) developing, or (ii) operative & maintaining, or (iii) developing, operative and maintaining any infrastructure facility, the assessee shall be entitled to claim deduction u/s. 80IA of an amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e view that the assessee's claim for deduction u/s. 80IA of the Act is allowable" and, therefore, the Tribunal upheld the contention of assessee. Taking note of the decision of this Tribunal in assessee's own case for AY 2006-07, the Ld. CIT(A) allowed the deduction claimed by the assessee u/s. 80IA of the Act. This order of the Ld. CIT(A) is now being challenged before us. 5. We have heard rival submissions and gone through the facts and circumstances of the case. We note that assessee is a corporate body engaged mainly in the business of infrastructure development and also having a small scale industry (hot mix plant) in the North Eastern Region of India. However, according to the AO, the assessee company is engaged in the business of constructing roads, highways, bridges and railway tracks etc. on contract with various State Govt., Railways, BRTF etc. According to assessee, since the assessee company was in the business of infrastructural development and having a small scale industry in the North Eastern Region it is eligible to claim deductions u/s. 80IA and 80IB of the Act for its business of infrastructure, development and manufacturing respectively and accordingly while fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her the substituted Explanation after sub- clause (13) changed the nature of the meaning of 'infrastructure facility' provided in the Explanation to section 80IA(4). Admittedly, the Explanation to section 80IA(4) gives the meaning the term 'infrastructure facility'. The substituted explanation after sub clause (13) brings in the nature of work as a works contract. The provisions of section 194C, which deals with TDS in respect of payment to contractors for carrying out any work in the Explanation thereto as explained the term 'work' to be an inclusive definition, but has provided an exclusion to be 'does not include manufacturing or supplying of a product. according to requirement or specification of the customer by using materials purchased from a person, other than such customer'. Thus, with this in mind, a perusal of the turnkey contract agreement entered into by the assessee with the Irrigation Department, Govt of A.P clearly shows that the construction of all the structures of the whole canal system is to be as per approved design, drawings, specifications of the department etc. The survey is to be done as per investigation and designing criteria of the Irrigation Department. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e merits of the deduction u/s. 801A(4) of the Act. A perusal of the provisions of section 801A(4) of the Act shows that in the explanation 'infrastructure facility' has been specified to mean a road including a toll road, a bridge or a rail system. Admittedly, the assessee is doing the business of development of railway tracks and bridges thereof as also roads. If, we are to accept the contention of the Ld. CIT that the provisions of section 801A(4) of the Act after the substitution of the explanation to section 8OIA of the Act was introduced was only for the purpose of giving the benefit to BOT contracts then, the explanation to section 801A(4) of the Act becomes otiose. This is as explanation to section 801A(4) of the Act specifically provides for the road to include a toll road, a bridge or a rail system. BOT contract in respect of the railway system can never exist. Further, a perusal of the provisions of section 801A of the Act shows that the term 'works contract' is not defined in the said section. However, the terms 'works' and 'contract' is defined in the provisions of section 194C of the Act. If a particular word or term is not defined in the specific section then, one cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt between the assessee and the customer being the Government is for the development of the infrastructure facility being roads and rail system by participating in the tenders. Under these circumstances and for the reasons given by the coordinate bench in similar facts in Simplex Somdatt Builders (supra), we are of the view that the assessee's claim for deduction u/s. 80IA of the Act is allowable and, therefore, the main reason found by the AO to deny the claim does not exist..." 6. Thus, it is noted that the Ld. CIT(A) after taking note of the Tribunal's decision in assessee's own case and the ratio laid by the Tribunal in Simplex Somdutt Builders (supra) has allowed the claim of the assessee u/s. 80IA of the Act which we find to be as a plausible view and, therefore, we confirm it and Revenue's ground of appeal is dismissed. 7. Coming to the second ground of appeal of the revenue which is against the action of Ld. CIT(A) in granting relief to the assessee on account of claim of deduction u/s. 80IB of the Act of Rs. 33,00,170/- (for AY 2003-04), we note that the facts as noted by the AO are that in the original assessment framed u/s. 143(3) of the Act dated 31.03.2006 he had all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee has satisfied all the conditions stipulated in the Act and has filed all the statutorily required documents before the AO while claiming the deduction and the AO while framing the original assessment being satisfied has allowed the same. The Ld. CIT(A) has given the following finding of fact that (i) the assessee has established that the activity relied on by it falls under the definition of manufacture and (ii) its plant was located in the remote area of North East and (iii) the eligible unit was not formed by splitting up of any business. This factual finding of the Ld. CIT(A) has not been assailed/challenged by the Department in the grounds of appeal as reproduced (supra), therefore, this finding of facts made by the Ld. CIT(A) crystallizes and becomes final. Since the assessee's eligible units satisfies all the conditions as stipulated for claiming deduction u/s. 80IB of the Act as held by the Ld. CIT(A), we are inclined to confirm the order of the Ld. CIT(A) and moreover we note that the main fault pointed out by the AO in denying section 80IB deduction was that the assessee in its Hot Mixed Plant is not engaged neither in manufacturing or production. We note that the a ..... 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