TMI Blog2023 (1) TMI 605X X X X Extracts X X X X X X X X Extracts X X X X ..... etc. to perform the work. The general specifications are given by the respective Authorities. However, the specific drawings designs are recommended by the Contractor which shall be approved by the Competent Authority and shall form part of the accepted Tender.The assessee has appointed Shah Associates, an experienced designer in the field for designing this project. The assessee has to arrange the necessary requirement of Water, Electricity Connection, Cement and other required qualitative materials, labour, supervision, erection, maintenance, insurance, at its own cost. It is evident from Clause 3 of Tender ( Bill of Quantities) The tender clause further stipulates that the Retention money shall be deducted @ 10% from current bills and shall be released 50% on completion of the Works and remaining 50% after the end of the Defect liability period. As to whether the assessee can be termed as developer or a contractor as contended by the Revenue in its written submissions, we find, in fact, it only attempts to give a general meaning of the term contractor and developer . In the cases in hand, we find that in terms of tender documents, audited accounts and facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 999 (12) TMI 5 - GUJARAT HIGH COURT] granting relief to the assessee. Profit on sale of Assets, VAT Refund - Jabalpur Bridge Site, release of Retained Income - Sabarmati Bridge, refund from Sales Tax, Arbitration Claim - Anantpur ROB Kota Site and recovery against stolen Steel at site are found to have direct nexus with the appellant s business and hence, these are eligible income under Section 80IA(4) of the Act as claimed by the appellant. These are also applied mutatis mutandis in the respective appeals filed by the appellant. Penalty u/s 271(1)(c) - We upheld the order passed by the CIT(A) in holding that the penalty is not sustainable as the claim made by the assessee was a bonafide one. Moreso, the appeal preferred by the assessee in the year under consideration has been allowed by us. Therefore, the penalty proceeding automatically becomes infructuous. Thus, the appeal preferred by the Revenue is found to be devoid of any merit and, thus, dismissed - I.T.A. No. 2938/Ahd/2011, 2939/Ahd/2011, 2286/Ahd/2012, 268/Ahd/2015, 269/Ahd/2015, 502/Ahd/2017, 1145/Ahd/2019 & 1468/Ahd/2019 And I.T.A. No. 1481/Ahd/2019 - - - Dated:- 23-12-2022 - Shri Waseem Ahmed, Accountant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1) That on facts, and in law, the learned Assessing Officer has grievously erred in holding that other income of Rs.42,62,716/- is not eligible for deduction u/s.80IA of the Act. These other income as shown the assessee was denied by the Ld. AO without prejudice for computation of deduction under Section 80IA(iv) of the Act. Since, the issue is germane to the claim made out of the assessee s business and facts are already on record, in view of the ratio laid down in the matter of National Thermal Power Co. Ltd. v. CIT, reported in (1998) 229 ITR 383 (SC), we admit this ground of appeal preferred by the appellant. 5. Ground Nos. 1 2 relate to the issue as to whether the assessee is a developer or a contractor as the assessee merely executed the contract for the various sites awarded by the various entities as of the ultimate view of the Revenue and the claim made by the assessee under Section 80IA(4) of the Act has, therefore, been rejected. 6. Since the issues raised in all these appeals revolve around similar set of facts, for the convenience of adjudication, we would like to take up ITA No.2938/Ahd/2011 for the Asstt.Year 2007-08 and cull out facts, figures ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 143(3) of the Act was completed on 23.12.2009 disallowing the claim made under Section 80IA of the Act, which was further confirmed by the First Appellate Authority. Hence, the instant appeal before us. 9. The Ld. Counsel for the assessee reiterated submissions as were made before the Revenue authorities. He further submitted that the assessee has executed construction and development of infrastructure facilities by entering into agreement with State or Central Government, local authority, statutory body etc. These activities include Bridges on river, flyover, Railway Bridge etc. He also contended that the assessee has fulfilled all the conditions as mentioned in section 80IA(4)of the Act and in denying the claim of the assessee, the AO wrongly construed that assessee is a contractor and not carried out any development activity. He further submitted that for the Asst.Year 2002-03 and 2006-07, the Ld.CIT(A) allowed the similar claim of the assessee. It was further contended that though the expression works contract has not been defined in the Act but various judicial pronouncements examined the issue and held that the term has wider meaning so as to state that if the activi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... projects. Hence, as per the ratio of the jurisdictional High Court in the case of Radhe Developers, the assessee is not merely a works contractor, but is engaged in development of project as a whole, and therefore, entitled for claim of deduction under section 80IA(4) of the Act. The Ld. Counsel for the assessee further relied on the following decisions to support his case: 1. Patel Infrastructure (Rajkot ITAT) ITA No.627/Ahd/2014, Dated 30/07/2020 2. Katira Construction Ltd.(Rajkot ITAT) [2020] 119 taxmann.com 489(Rjt) 3. S.Sugam Construction P.Ltd.(And ITAT) (2013) 30 taxmann.com 331 (Ahd) 4. Bhinmal Contractor Property and Land Developers P.Ltd.(Mumbai ITAT) [2018] 93 taxmann.com 296 (Mum) 5. Rohan Rajdeep Infrastructure (Pune ITAT) [2013] 40 tax.com 136 (Pune) 6. ABG Heavy Industries Ltd.(BOM HC) [2010] 189 taxman.com 54 (Bom) 7. Koya Co. Construction P.Ltd. [2012] 21 taxmann.com 35 (Hyd.ITAT) 8 . GVPR Engineers Ltd. [2012] 21 taxmann.com 25 (Hyd ITAT) 9. B.T. Patil Sons Belgaum Construction P.Ltd. [2013] 34 taxmann.com 97 (Pune ITAT) 10. Radhe Developers Vs.CIT, 341 ITR 403 (Guj) 10. On the other hand, the Ld. DR supp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and (c). As per the language of this clause, primarily it should be an enterprise carrying on the business of (i) developing, or (ii) maintaining and operating or (Hi) developing, maintaining and operating any infrastructure facility. So the enterprise should carry on the business of(i) or (ii) or (Hi) and fulfill all the conditions enshrined in sub-clauses (a) to (c) of this clause. The benefit of this section is available to an enterprise carrying on the business of(i) developing or (ii) maintaining and operating or (in) developing, maintaining and operating any infrastructure facility. According to us there is a word or between (i) and (ii) which clearly suggests that the benefit of deduction is available even to a developer who does not maintain and operate the infrastructure facility. We submitted that our case is covered in (i) preceded by the word 'or' which is sufficient compliance since the developer simplicter of the infrastructure facility is also eligible for deduction. We further explained that the work done by us is of developing the infrastructure facility as without the construction, the functioning of the infrastructure facility is impossible. We further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tes new products. He is the one who conceives the project. He may execute the entire project himself or assign some parts of it to others. On the contrary the contractor is the one who is assigned a particular job to be accomplished on the behalf of the developer. His duty is to translate such design into reality. There may, in certain circumstances, be overlapping in the work of developer and contractor, but the line of demarcation between the two is thick and unbreachable. When the per son acting as developer, who designs the project, also executes the construction work, he works in the capacity of contractor too. But when he assigns the job of construction to someone else, he remains the developer simpliciter, whereas the person to whom the job of construction is assigned, becomes the contractor. The role of developer is much larger than that of the contractor. It is no doubt true that in certain circumstances a developer may also do the work of a contractor but a mere contractor per se can never be called as a developer, who undertakes to do work according to the pre- decided plan. Further our contention and arguments are on reasoning that Circular No. 733 dt. 30.01.1996 c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee: In view of the above discussion, we can say that a developer has Allowing characteristic; (i) He conceives the project. That means the basic study about feasibility of the project, economic benefits arising out of the project, the evaluation of the funds required to construct the project etc. is done by him. (ii) The financial investment in the project is made by him. (iii) The financial risk is borne by him. That means in case due to some reason the project does not click or the expected financial returns are not received the loss or the profit in case the project works belongs to him. (iv) He may or may not execute the project himself. ' (v) He has the dominant control over the work that is being carried on and for changing any specification of the project he need not take anybody's permission. He has all the authority and control about the execution of the project. The 'contractor' is a person who undertakes to produce a given result for any establishment by employing building workers. He executes the job assigned to him as per the specified parameters and specifications. After the completion of the project, the princi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t as the appellant did receive the payments from UIT from time to time according to the completion of the work. The payment conditions were clearly defined in the contract agreement. It was provided that the appellant would be paid money at various stages and in accordance with the progress of construction. Therefore, there was no financial risk involved as the appellant was getting the payment for the construction done by him from time to time. There was no risk of loosing the investment. The appellant was not the developer. He did not conceive the project. The project was conceived by UIT Kota who gave the specification of the project to the appellant. The appellant in turn executed the project as per the specifications. The appellant did not make investment in the project. Further claim of the appellant that it maintained the project for 3 years after completion also does not make him a developer of the project as the maintenance of the project was a part of the guarantee for quality of construction and was valid till the end of defect liability period. Therefore, from above analysis it is clear that this project does not make the appellant entitle for deduction u/s. 8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lant. (iii) Construction of Railway Bridge of Span 18 x 30.5 metre with pile foundation and PSC Girder across river Narmada between Gwarighat and Burgi Stations in connection with gauge conversion between Gondia - Jabalpur. The project was executed for railways and involved construction of railway bridge. The design and drawings for the construction were issued by the railways. The appellant has claimed that it has used highly technical equipment such as hydraulic rig and other technical works were also undertaken by him which included design of supporting process etc. The project was supervised by qualified engineer of the appellant and was also financed by it. The appellant has, therefore, claimed that it was not mere contractor but a developer. The claim of the appellant is not acceptable as it is clear from the details given by him that the railway provided all the specification and drawing. The project was not conceived by him. It was not a project which was developed by the appellant. In fact it was a project for gauge conversion of existing railway line and a bridge was to be constructed on river Narmada for the purpose. The claim of the appellant it used hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inancial risk involved in constructing the project except the risk that is there for any contractor in executing any contract. The appellant received the payment from time to time as per the progress of construction of bridge. It was provided in the contract that the appellant would be paid money at various stages and in accordance with the progress of construction. There is no doubt that the construction involved highly technical skills and manpower but the fact remains that it was a contract for construction of bridge as per specifications given by the contractee. Since the contract for construction of bridge, the contractor should have the requisite technical skills. The claim of the appellant that it maintained the bridge for 1 year after the completion is also not material as any contractor who executes some contract has to give this kind of guarantee for the quality of the contract executed by him. Therefore, from above analysis it is clear that this project does not make the appellant entitle for deduction u/s. 80IA as the appellant has worked merely as a contractor and not as a developer. The appellant did not conceive, did not develop the project and did not make inv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , from above analysis it is clear that this project does not make the appellant entitle for deduction u/s. 80IA as the appellant has worked merely as a contractor and not as a developer, The project was not conceived, financed and developed by the appellant. The developer and investor in this case is Indian Railways. (vi) Construction of Road over Bridge at Railway Culvert No. 436 near Dindoli, Udhna at Surat. The project was executed for Surat Municipal Corporation (SMC). It involved construction of two lane bridge across railway track. The drawings and design were issued by SMC. The officials of SMC and railway officials (for railway portion) supervised the work. The appellant has submitted that certain part of the project were designed by the appellant by taking the services of an expert. The project was supervised by qualified engineer of the appellant. The project was financed with their own resources. It was maintained by the appellant for one year after the construction for the purpose of making good the defects, if any, developed during the period at its own cost. The appellant also gave performance bank guarantee from the start of the project till the end of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... person who makes the investment and himself executes the development works i.e. carries out the civil construction work. The explanatory notes clearly show the intention of the legislature in bringing the explanation in the Act. Therefore, the legal and factual position for the present year is different from earlier years. The appellant has also relied on the recent decision of ITAT, Rajkot Bench in the case of Tarmat Bel (JV), Rajkot vs. ITO in ITA No. 1111/RJT/2010. I have carefully perused the judgment and after analysing each contract undertaken by the appellant during the year it is noted that the facts of the case are different to the present cose and the judgment is respectfully distinguished. Reliance is further placed on the decision of larger bench of ITAT, Mumbai in the case of B.T. Patil Sons, Belgaum Construction Pvt. Ltd. vs. ACIT. In that case, the Hon'bie Bench has discussed the similar issue related to the government contract which were in the nature of infrastructure projects. The Hon'bie Bench after discussing the difference between the developer and a contractor and the applicability of section 80IA(4) has laid down certain principles which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only providing assistance to the actual developers. 17. We have also considered the submissions made by the Ld. DR. The Ld. DR has relied upon the history and legislative intent of insertion and different amendment of the provision of Section 80IA(iv) of the Act. 1.4 As regards the question of eligible business , from a plain reading of the subsection, it emerges that for the purposes of admissibility of claim of deduction of profits u/s 80IA, the eligible business has to be one of the following: - business of developing or - business of operating and maintaining or - business of developing, operating and maintaining 1.5 Before going into the issue on and, we need to analyse the provision of section 80 IA(4) of the Act.The section was first introduced by the Finance Act 1991 for providing deduction to industrial undertaking. The purpose of providing such deduction was modernisation and expansion of industrial undertaking. 1.6 However the provisions of this section was amended by Finance Act, 1995 for the reason that the legislature realised that the modernisation of industrial undertaking requires development of infrastructure facility. This fact c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scheme of things is to acknowledge the undisputed fact that when contracts are awarded by way of tendering process to the lowest bidder, as is the case with the assessee, the element of profit is already embedded in the bid so quoted. This being the case, there is no question of allowing deduction on such contractual profits. What is eligible under the scheme is the profits derived by the actual developer of the facility (within the meaning of Section 80IA) and not a person or entity that merely executes the works contract even if it undertakes the construction of the facility, which in common parlance may be understood as development. 1.9 Thus, the essential requirement to be eligible for deduction under the Section 80IA(4) is that the assessee should have undertaken the work of development as an investment augmenting partner and should have derived profits from the use of the infrastructure facility so developed and not from the activity of construction per se. As would be elaborated subsequently in this submission, the assessee has merely participated as a contractor simplicitor rather than by way of investment. 2.1 It is clear that the Government envisaged nation-wid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uded as under: 20. .the circular issued by the CBDT makes it clear that the income eligible for deduction has to be arisen from the use of facility , for example, collection of toll from road users. The said income has to be treated as income derived from the infrastructure facility .. 2.5 As would be seen later, in the present case, the assessee did not make any initial investment since the project is funded by the contractee. Moreover, even the profits claimed for deduction are not the profits derived from use or commercial exploitation of the project/facility. 2.6 It is once again submitted that the claim of the assessee has to stand the test of eligibility on two counts first, the business has to be eligible business and second, the profits have to be eligible profits. These two conditions have to be fulfilled together for the admissibility of the claim u/s 80IA(4)(i). 2.7 An inquiry into the nature and scope of eligible business invariably necessitates an instructive reference to the Explanatory Notes to the Finance Act, 2001, the relevant part of which is reproduced hereinunder: 47. Tax holiday for infrastructure rationalised 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the use of such infrastructure facility. 3.2 The explanatory memorandum is categorical in carving out a clear exclusion for businesses of works contract, even if by way of ordinary parlance, such enterprises may also perceive their business as that of development. The legislature has, thus, made a conscious distinction between a business of development as envisaged by the Section 80IA and a business of construction/works contract that might have some semblance of development in the ordinary parlance. 3.3 It, therefore, cannot be over-emphasised that for an enterprise to be eligible for admissibility of deduction u/s 80IA, a non-negotiable precondition is participation in the project as a developer assuming investment risk and entrepreneurial risk. In other words, investment risk is the litmus test for discerning the eligibility of a developer as envisaged in the scheme of Section 80IA vis- -vis a developer understood in common parlance. The clarificatory amendment of 2009 3.4 The amendment of 2007 intended to plug the possibility of misuse by assesses who entered into a mere works contract with the undertaking or enterprise. However, the misuse of the deducti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by them. Therefore, simultaneously amendment have been made in sub clause (b) of clause (i) of section 80IA(4) and the transferee Enterprise were allowed to claim the deduction for unexpired period during which the transferor Enterprise would have been entitled to claim the deduction. Therefore, the infrastructure facility has to be developed on BOT, BOOT or BOLT or similar arrangement where the investee Enterprise bears the financial and investment risks. The nature of contracts entered by the assessee company does not reflect that it has brought investment and bear the financial and investment risk. It only bears the contractual risks which is true for any construction contracts. The above legislative intent has been clarified many times by Parliament as per clarificatory amendments made in 2007 and 2009. Against this backdrop of the legislative scheme of Section 80IA(4), the facts of the case are now proposed to be examined in the ensuring passages . 4.1 The assessee is a private limited company engaged in the work of construction of infrastructure projects in the nature of roads, bridges, water treatment plants, canals, siphon work (irrigation proj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tructure Pvt. Ltd. Vs. DCIT, ITA No.627/Ahd/2014, Asst.Year 2010-11. We, therefore proceed to analyse the facts of the present case to find out whether the appellant acted as a Developer or Works Contractor . 19. We have carefully considered the different clauses prescribed in the tender notice in respect of the project of construction of Bridge with Approaches Across Damanganga River connecting Nani-Daman Moti- Daman, U.T. of Daman from National Highway Division, Bharuch-A.Y. 2007-08. 19.1 It appears from Page Nos. 156 to 337 of Paper Book-II that the Contractor must have necessary experience, facilities, ability, financial resources, specified turnover, specific experience in construction of Bridges, Qualified Key personnel, plant machinery equipments etc. to perform the work. 19.2 The general specifications are given by the respective Authorities. However, the specific drawings designs are recommended by the Contractor which shall be approved by the Competent Authority and shall form part of the accepted Tender. The same is evident from Page No. 229 of Paper Book-II. clause 18 to 18.5 of tender. 19.3 The assessee has appointed Shah Associates, an experience ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I that Security Deposits are to be valid for 28 days from the date of expiry of the Defect Liability Period. 19.12 The tender clause further stipulates that the Retention money shall be deducted @ 10% from current bills and shall be released 50% on completion of the Works and remaining 50% after the end of the Defect liability period. The same is found at Clause 48 of the Tender at Page No. 233 of Paper Book- II filed before us. Clause 48 reads as follows: 48. Retention 48.1. The Employer shall retain from each payment dec to the Contractor the proportion stated in the Contract Data until Completion of the whole of the Works. 48.2. On Completion of the whole of the Works half (he total amount retained is repaid to (he Contractor and half when the Defects Liability Period has passed and the Engineer has certified that all Defects notified by the Engineer to the Contractor before the end of this period have been corrected. 48.3. On completion of the whole works, the contractor may substitute retention money with an on demand Bank guarantee. 49. Liquidated Damages 49.1 The Contractor shall pay liquidated damages to the Employer at the rate per day st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es any terms of contract, it shall be liable to penalty in terms of lien of Government over the plant, machinery, equipments, etc., forfeiture of security deposit etc. 20. Name the different projects entrusted on the appellant : Sr. No. Particulars of Infrastructure facility developed 2007-08 i. Construction of elevated road including approach roads connecting the existing road on Dadabari side and the road going Garh Palace bypassing Kishorepura Gate on Chambal river reservoir near the barrage at Kota. 1739200 ii Construction of bridge with approaches across river Damanganga connecting Nani - Daman and Moti - Daman in UT of Daman. 75608421 iii. Construction of Railway Bridge of Span 18 x 30.5 metre with pile foundation and PSC Girder across river Narmada between Gwarighat and Bur gi Stations in connection with gauge conversion between Gondia - Jabalpur. 176540701 iv Construction of 4 lane bridge acro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve owned the land would be of no consequence. 35. With respect to the question whether the assessee had acquired the ownership of the land for the purposes of the Income Tax Act and, in particular, Section 80IB(10) of the Act and to examine the effect of Explanation to Section 80IB(10) introduced with retrospective effect from 1.4.2001, since several aspects overlap, it would be convenient to discuss the same together. 36. We have noted at some length, the relevant terms and conditions of the development agreements between the assessees and the land owners in case of Radhe Developers. We also noted the terms of the agreement of sale entered into between the parties. Such conditions would immediately reveal that the owner of the land had received part of sale consideration. In lieu thereof he had granted development permission to the assessee. He had also parted with the possession of the land. The development of the land was to be done entirely by the assessee by constructing residential units thereon as per the plans approved by the local authority. It was specified that the assessee would bring in technical knowledge and skill required for execution of such project. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the land in question. The assessee agreed to pay off the land owner first before appropriating any part of the sale consideration of the housing units for his benefit. In short, assessee took the full risk of executing the housing project and thereby making profit or loss as the case may be. The assessee invested its own funds in the cost of construction and engagement of several agencies. 22. The provisions of section 80IA(4) of the Act provides that deduction would be available to any enterprise which carries on the business of (i) developing or (ii) operating and maintaining or (iii) developing, operating and maintaining any infrastructure facility which fulfills the conditions prescribed therein. 23. As per the Explanation, even a road and bridge is an infrastructure facility for the purposes of section 80-IA(4). The primary condition is that the enterprise must carry on the work of developing an infrastructure facility. As mentioned above, Explanation under sub-section (13) of section 80- IA clarifies that this section will not apply to any business which is in the nature of a works contract . In other words, the essence of this section is that, the benef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... view of the activities undertaken by the assessee as discussed above clearly demonstrates that the assessee-company has undertaken substantial activities in respect of various projects awarded by various statutory bodies, which makes the assessee to qualify as a developer of Infra facility and to make claim necessary benefits under section 80IA(4) of the Act. 26. So far as case law relied on by the Revenue on the decision of ITAT, Hyderabad Bench in the case of M/s. NEC NCC Maytas-JV in ITA No.496/Hyd/2018 is concerned, the same is distinguishable on facts. In that case the assessee has not executed entire project but only a part of the project was undertaken, whereas in the instant case, the assessee has executed the entire project. In that case, the assessee has not established entrepreneurial risk or financial involvement of assessee before the lower authorities and the assessee was only a JV with no assets and no wherewithal to execute the projects. Payments were released on multiple occasions from time to time i.e. fixed sum on monthly basis and also received advance payment against supply of goods at site. While in the case of present assessee, entire project has been exec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity was commenced after 1-4-1995. Therefore, the requirement was met in fact. Moreover, as a matter of law, what the condition essentially means is that the infrastructure facility should have been operational after 1-4-1995. After section 80-IA was amended by the Finance Act of 2001, the section applies to an enterprise carrying on the business of (i) developing; or (ii) operating and maintaining; or (iii) developing, operating and maintaining any infrastructure facility which fulfils certain conditions. Those conditions are : (i) Ownership of the enterprise by a Company registered in India or by a consortium; (ii) An agreement with the Central or State Government, local authority or statutory body; (iii) The start of operation and maintenance of the infrastructure facility on or after 1-4-1995. The requirement that the operation and maintenance of the infrastructure facility should commence after 1-4-1995 has to be harmoniously construed with the main provision under which a deduction is available to an assessee who develops; or operates and maintains; or develops, operates and maintains an infrastructure facility. Unless both the provisions are harmoniously construed, the object ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e facility/project and was not required to maintain or operate, it was entitled to cost, plus the margin of income or profit; not to expect this treatment would render one who develops an infrastructure facility project, unable to realise its cost. If the infrastructure facility is, after its development, transferred to the Government, naturally the cost would be paid by the Government. Therefore, the mere circumstance that the Indian Railways or DDA paid for development of a housing project carried out by the assessee, did not mean that the assessee did not develop the residential complex. If the revenue's interpretation is accepted, no enterprise, carrying on the business of only developing the infrastructure facility, would be entitled to deduction under section 80-IB (10). The conclusions of the ITAT in this context were rendered after a detailed analysis of the facts and the contracts entered into by the assessee with IRWO and DDA. The narrow ground on which the AO concluded that the projects were owned by IRWO or DDA and that the assessee was only a works contracts, was unwarranted. We, therefore, do not have any doubt in regard to the admissibility of the claim ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 80IB(4) of the Act taking into consideration the overall aspect of works undertaken by the assessee therein. We are inspired by the ratio laid down by the Co-ordinate Bench in the said judgment Rajkamal Builders Infrastructure Pvt. Ltd. (supra) in holding the assesse eligible under the identical facts and circumstances of the case. 31. In the light of the above discussion and perusal of various clauses of Tender documents and case laws relied upon by both the parties, it reveals that the tender work under consideration are not for a specific work, rather they are for development facility as a whole. The responsibility is fully assigned to the developer for execution and completion of the work. Various stipulations contained in the Tender documents demonstrate various risks undertaken by the assessee for execution of the project work awarded by the competent authority in terms of financial resources, manpower deployment, both technical and administrative expertise, drawing and designing of the project specifications and getting approval from the competent authority, safety and security of project and human resources, compliances of various statutory rules and laws. Therefor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d/2019 Ors. While granting relief to the assessee, the Co-ordinate bench has been pleased to observe as follows: 46. Before us, the counsel for the assessee reiterated submissions as were made before the lower authorities. The counsel further submitted that the interest income is earned only on fixed deposits for obtaining bank guarantee and security deposit to be placed mandatorily as per the tender when work was awarded. Hence, such interest income is business income and eligible for deduction under section 80IA(4) of the Act. In support of his contentions, the counsel relied upon the following decisions: i) AVM Cine Products Vs. DCIT, (2021) 123 taxamnn.com 41 (Mad); ii) CIT Vs. Alloys Ltd. (2017) 84 taxmann.com 256 (Guj) iii) Empire Pumps P. Ltd. Vs. ACIT, (2015) 54 taxmann.com 317 (Guj) 47. For countering the above submissions of the assessee, the DR supported orders of the Revenue authorities, which was based on the decision of Hon ble Supreme Court in the case of Pandian Chemicals Ltd. 48. We have considered submissions of both the parties; perused relevant orders and case laws cited by the parties. We have already hold the assessee a develope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red by the assessee for A.Ys. 2008-09 2009-10. 37. So far as sale of scrap of business items to the tune of Rs.26,24,658/- is concerned, the same is also found to be covered by Hon ble Jurisdictional High Court in the case of DCIT vs. Harjivandas Juthabhai Saveri Anr., reported in (2002) 258 ITR 785 (Guj). While granting relief to the assessee, Hon ble Court has been pleased to observe as follows: (5) Whether the Appellate Tribunal is right in law and on facts in allowing the deduction under Section 80-I of the Act on the following items of income treating it as income of industrial undertakings : Rs. (i) Job work receipt of : 1,67,000 (ii) Sale of empty soda ash bardana of : 41,93,709 (iii) Sale of empty barrels of : 4,38,542 (iv) Sale of plastic waste of : 12,83,785. So far as question No. 1 is concerned, the same is covered by the decision of this court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee was not engaged in industrial activities, there was no question of empty barrels or bardans. Instead of manufacturing if the assessee was doing trading activities, i.e., dealing in raw material, and if the assessee had sold the material on retail basis and earned amount by sale of bardans, then obviously this section will not apply. In view of the aforesaid observation, we allow this component to be taking into consideration for deduction under Section 80IA of the Act treating it as income. 38. The other component being profit on sale of Assets, VAT Refund - Jabalpur Bridge Site, release of Retained Income - Sabarmati Bridge, refund from Sales Tax, Arbitration Claim - Anantpur ROB Kota Site and recovery against stolen Steel at site are found to have direct nexus with the appellant s business and hence, these are eligible income under Section 80IA(4) of the Act as claimed by the appellant. These are also applied mutatis mutandis in the respective appeals filed by the appellant. 39. Item Nos. 9 to 13 are not pressed. Thus, the same are dismissed as not pressed. 40. The Ld. Counsel appearing for the assessee has not pressed the ground of deduction for repair exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by audit reports under Section 80 IA(7) in Form No. 10 CCB and none of the particulars or figures are found to be untrue or wrong. The disallowance is made only due to a bona fide difference of opinion between the assessee and the Department as to whether the assessee is a developer or contractor . It further appears that relying on the decision passed in the matter of Reliance Petro Products Pvt. Ltd., reported in 322 ITR 158 (SC) the penalty was deleted by the Ld. CIT(A) which according to us is without any ambiguity so as to warrant interference. We, thus, find all the appeals preferred by the revenue as above as devoid of any merit and therefore, dismissed. Having heard the Learned Counsel appearing for the parties and having regard to the facts and circumstances of the case, we do not find any reason to deviate from the stand taken by the Co-ordinate Bench as reproduced hereinabove. Thus, respectfully relying upon the same, we upheld the order passed by the Ld. CIT(A) in holding that the penalty is not sustainable as the claim made by the assessee was a bonafide one. Moreso, the appeal preferred by the assessee in the year under consideration has been allowed by us. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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