TMI Blog2021 (8) TMI 559X X X X Extracts X X X X X X X X Extracts X X X X ..... laid by the Hon ble Supreme in Court Empire Industries Ltd.[ 1985 (5) TMI 215 - SUPREME COURT] we do not agree with the view of the AO that the assessee s Hot Mixed Plant is not engaged in the activity of manufacturing or production. Since the view of the Ld. CIT(A) is a plausible view, we confirm the same that the assessee is eligible for deduction u/s. 80IB of the Act which does not require any interference from our part. Therefore, ground no. 2 of both the appeals are dismissed. - I.T.A. Nos. 285 & 279/Kol/2020 - - - Dated:- 6-8-2021 - Shri A. T. Varkey, Judicial Member And Dr. M. L. Meena, Accountant Member For the Appellant : Smt. Ranu Biswas, Addl. CIT, Sr. DR For the Respondent : Shri Miraj D. Shah, AR ORDER PER BENCH: Both these appeals preferred by the revenue are against the separate orders of the Ld. CIT(A)-10, Kolkata dated 30.12.2019 for AYs 2003-04 and 2004-05. Since grounds are common and facts are identical except variance in amount, we dispose of both these appeals by a common order for the sake of convenience by taking the ITA No. 285/Kol/2019 as the lead case and the result of which will be followed in the case of ITA No. 279/Kol/2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the company for year ended on 31/03/2003 was ₹ 23,12,94,956/- which included Income of the company's Contract Unit as well as the Hot Mix Plant Unit. Deductions under Chapter VIA was claimed as per below- (a) Deduction of ₹ 82, 51,545/- u/s.80IA of Act for the Contract Unit: During the year the company had undertaken various civil works for the Railways, State Government and other Local Authorities on contract basis. The assessee claimed profit from this unit as deduction under section 80IA of Act. Clause 6 of FORM No.1 OCCB of this unit show detail as per below: '6. Name of the enterprise or undertaking eligible CONTRACT UNIT OF ABCI For deduction under section 80-IA and 80-IB INFRASTRUCTURE PVT. Ltd. Thus, it is clear that deduction under section 80IA of Act is claimed in respect of a Unit which is in contract business. (b) Deduction of ₹ 33,00,170/- u/s.80IB of Act for the Hot Mix Plant Unit: The assessee has shown an income of ₹ 33,00,170/- from the Hot Mix Plant. This plant utilizes Bitumen, Chips, Sands etc. and mixes them: Final mixture is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . CIT(A) who was pleased to allow the claim of the assessee u/s. 80IA of the Act by taking note of the decision of this Tribunal in assessee s own case for AY 2006-07 (ITA No. 990/Kol/2013, AY 2006-07 dated 10.01.2018) wherein the assessee had challenged the reopening of assessment order passed u/s. 143(3) of the Act by the AO. In that case (AY 2006- 07) in the original assessment framed u/s. 143(3) of the Act dated 31.12.2008, the AO had partially allowed as in the present case the claim of deduction u/s. 80IA of the Act (without allowing the claim of interest component included in it). Thereafter, the AO reopened the assessment u/s. 147 of the Act after issuing notice u/s. 148 on 10.09.2010 on the same reasons as stated in the present case that Assessee Company was merely a contractor and, therefore, would not be eligible to claim deduction u/s. 80IA of the Act. However, this Tribunal in that case for AY 2006-07 held that the assessee company was developing the roads and railway lines for the Government and was engaged in development of the infrastructure facility being roads and rail system and therefore deduction u/s 80IA of the Act was allowable. The Tribunal also noted Devel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase for AY 2006-07, wherein the Tribunal has held in respect of this claim as under: 8. . . Moreover, on merits also, we note that in a similar case the Coordinate Bench of this Tribunal in DCIT Vs. Simplex Somdatt Builders JV, ITA No.1684/Kol/2011 for AY 2007-08 order dated 18.06.2013 in similar facts of the case has held that assessee s claim is allowable u/s. 80IA of the act as under: 11. We have considered the rival submissions. Admittedly, a perusal of the agreement entered into between the assessee and the Govt of Andhra Pradesh Irrigation CAD Department shows that the assessee has taken EPC/Turnkey contract of the flood flow canal project from SRSP. The name of the contract has been extracted earlier in this order. The scope of the work is also extracted above. Admittedly, the assessee has taken a turnkey contract from the Irrigation Department, Govt. of Andhra Pradesh. The turnkey contract is in respect of the irrigation project. Irrigation project is an infrastructure facility within the scope of Explanation to section 80IA(4) of the Act. The provisions of section 80IA(4) is to be controlled by the Explanation to section 80IA, which has been substituted by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hatic no. 12. This is because the assessee is doing the activity of development of an infrastructure facility as provided under section 80IA(4). The project is a Turnkey project and it cannot form nor have a character of a works contract. Works contract would be applicable to the repairs and maintenance of an existing project. Works contract cannot be in relation to the development of a new project. One of the arguments raised by the learned Sr.DR that the intention of the substitution of the Explanation after sub clause (13) of section 80IA was to deny, the benefit of deduction u/s. 80IA(4) in respect of works contract, but to provide the deduction to such undertakings, which is doing the business of building, operating and Transfer (BOT) and building owning, operating and transfer BOOT as also PPP contracts does not hold water in so far as an irrigation project can never function under BOT or BOT or PPP . In the circumstances, we are of the view that the assessee s claim is not hit by the substituted Explanation as provided after sub clause(13) of section 80IA.. Here, we may mention that this view finds support from the decision of the co-ordinate of the tribunal, [ITAT, Hyd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same would not fall within the meaning of the word works contract for the purpose of the Act due to the exclusion provided in the meaning of work in section 194C of the Act. The issue raised by the Ld. CIT that the assessee is not doing the development work but is only doing the contract also does not stand to test as the assessee admittedly is developing the roads and railway lines and the bridges thereof. Development encompasses within itself contract work. The agreement between the assessee and the customer being the government is for the development of the infrastructure facility being roads and rail systems and bridges by participating in the tenders. Under these circumstances, we are of th view that the AO was right in law in granting the assessee the benefit of deduction u/s. 801A(4) of the Act. 13. In the circumstances, the Assessing Officer is directed to grant the assessee the benefit of deduction u/s. 80IA of the Act as claimed. 9. From a reading of the aforesaid order which is similar to that of the case of assessee and though in that case, the assessee was executing works contract of the Government, the Tribunal held that it would not fall within the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n (1) of section 80IB of the Act and since its business does not come under sub-section (3) to (11), (11A) and (11B) of section 80IB of the Act the assessee s hot mixing plant business is not entitled to deduction u/s. 80IB of the Act. Aggrieved, the assessee preferred an appeal before the Ld. CIT(A) who was pleased to allow the same by holding as under: 7. Aggrieved, the revenue is in appeals before us. 8. We have heard rival submissions and gone through the facts and circumstances of the case. We note that the AO disallowed the claim of deduction u/s. 80IB of the Act on the ground that assessee did not satisfy the requisite condition laid down in the provision of section 80IB of the Act. We note that in this case while the original assessment order u/s. 143(3) of the Act was framed dated 31.03.2006 wherein the claim of deduction u/s. 80IB of the Act was duly considered and the AO has observed as under: In course of assessment proceedings, a letter dated 08.03.2006 was issued to the assessee company asking to substantiate the claim of deduction u/s. 80IA and 80IB of the I. T. Act. In reply the AR submitted letter dated 16.03.2016 along with supporting documents ..... X X X X Extracts X X X X X X X X Extracts X X X X
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