TMI Blog2008 (6) TMI 225X X X X Extracts X X X X X X X X Extracts X X X X ..... ne being a developer. Therefore, merely because, in the agreement for development of infrastructure facility, assessee is referred to as contractor or because some basic specifications are laid down, it does not detract the assessee from the position of being a developer; nor will it debar the assessee from claiming deduction u/s 80-IA(4). The judgment of Patel Engineering Ltd. [ 2004 (6) TMI 245 - ITAT BOMBAY-F] is also relevant for Interpretation, which contained adequate discussion on the applicability of sub-clause (c) to a case of an enterprise which is engaged in only developing of a infrastructural facility. This interpretation was taken after considering the Apex Court judgment in the case of K.P. Verghese v. ITO [ 1981 (9) TMI 1 - SUPREME COURT] . Therefore, an assessee who is only engaged in the developing the infrastructural facility, i.e., road and not engaged in the 'operating and maintaining' the said facility is entitled to the benefits of the deduction u/s 80-IA(4). The provisions of sub-clause (c) of clause (i) of section 80-IA(4) are inapplicable to the assessee, who is engaged in mere developing of the infrastructure facility as defined in Expla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of infrastructural facility and not engaged in operating and maintaining the infrastructural facility. 3. Briefly stated, the facts are that the assessee has a division namely, Jai Hind Infrastructure Co., which is engaged in the development of Roads, as defined in clause (i) of sub-section (4) of section 80-IA. During the assessment proceedings, Assessing Officer found that the assessee is only a contractor and found that the deduction under section 80-IA is not available either to the contractor, who constructs an infrastructural facility like roads or to the developer, who develops such facilities. He observed that the contractor constructs the project on behalf of the developer for a sum of profit and he has not stake in the financial viability of the project. He further held that deduction under section 80-IA is available to a person, who is engaged in not only developing the infrastructural facility but also maintaining and operating the said infrastructural facility. He relied on sub-clause (c) of clause (i) of sub-section (4) of section 80-IA in this regard, which is a condition to be fulfilled for the purpose of availing the deduction. Accordingly, the Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Co-ordinate Bench in the case of Patel Engineering Ltd. (supra). Further, the AR argued that the said decision pertaining to the pre-amended period is in favour of the assessee and the same is relevant even more for the post amended too. 6. We have heard the rival submissions perused the orders of lower authorities. We observe that this is the case where assessee took the contract for developing the road from the State Government with an agreement that it would be transferred after building the same for the purpose of operating and maintenance. We also find that assessee received contract amount and sub-contracted the same to the directors and their relatives. The assessee's case is that he is eligible for deduction on the profits earned on developing the roads and though not engaged in operating and maintaining the said roads and the conditions in sub-clause (c) do not apply to assessee's case. Whereas, the Assessing Officer's case is otherwise and the condition provisions of sub-clause (c) of clause (i) of section 80-IA(4) are applicable to the enterprise engaged in developing and contracting the infrastructure facility too. 7. We find that is need to analyse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... usly applicable to an enterprise which is engaged in 'operating and maintaining' the infrastructure facility on or after 1-4-1995. It is not applicable to the case of an enterprise, which has engaged in mere 'development' of infrastructure facility and not its 'operation' and 'maintenance'. Therefore, the question of 'operating and maintaining' of infrastructure facility by such enterprise before or after any cut off date cannot arise. However, if the contention of the Departmental Representative is accepted, it would obviously/ understandably lead to manifestly absurd results. When the Act provides for deduction undisputedly for an enterprise, who is only 'developing' the infrastructure facility, unaccompanied by 'operating and maintaining' thereof by such person, there cannot be any question of providing a condition for such an enterprise to start operating and maintaining the infrastructure facility on or after 1-4-1995. Since the assessee is only a developer of the infrastructure project and it is not maintaining and operating the infrastructure facility, sub-clause (c) of sub-section (4) of section 80-IA is not applicable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore, merely because the present assessee was paid by the Government, for development work, it cannot be denied deduction under section 80-IA(4). A person, who enters into a contract with another person will be a contractor no doubt; and the assessee having entered into an agreement with the Government agencies for development of the infrastructure projects, is obviously a contractor but that does not derogate the assessee from being a developer as well. The term contractor is not essentially contradictory to the term developer . On the other hand, rather section 80-IA(4) itself provides that assessee should develop the infrastructure facility as per agreement with the Central Government, State Government or a local authority. So, entering into a lawful agreement and thereby becoming a contractor should, in no way, be a bar to the one being a developer. Therefore, merely because, in the agreement for development of infrastructure facility, assessee is referred to as contractor or because some basic specifications are laid down, it does not detract the assessee from the position of being a developer; nor will it debar the assessee from claiming deduction under section 80-IA(4). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ads It has started or starts operating and maintaining the infrastructure facility on or after 1-4-1995 is obviously applicable to an enterprise which is 'maintaining and operating' the infrastructure facility; it cannot apply to the case of an enterprise, which has undertaken merely 'development' of infrastructure facility, and not its 'maintenance' of infrastructure facility by such enterprise before or after any cut-off date cannot arise. However, if the contention of the learned CIT, Departmental Representative is accepted, it would obviously/understandably lead to manifestly absurd results. When that Act provides deduction for a person who is only 'developing' the infrastructure facility, unaccompanied by 'operating' thereof by such person, there can be no question of providing a condition for such an enterprise to start operating and maintaining the infrastructure facility on or after 1-4-1995. In that view of the matter, we find substance in the contentions of learned Authorised Representative of assessee and inescapably we have but to hold that the condition at clause (c) is applicable to an enterprise, which is carrying on the busi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty are entitled to deduction and (ii) The condition of transferring the developed infrastructure mandatorily to the Governmental agencies is done away with. (i) use of 'it fulfils all the conditions' used in clause (i) and absence of 'wherever applicable' or 'as the case may be' in sub-clause (c) has led to the creation of the dispute, which are certainly curable by understanding the intention of the law and authority given by the Apex Court in the case of the K.P. Verghese. 12. The above interpretation was taken after considering the Apex Court judgment in the case of K.P. Verghese v. ITO [1981] 131 ITR 597 and the relevant paras are as follows : A strictly literal reading of a statutory provision ignores several vital considerations which must always be borne in mind while interpreting such provision. The task of interpretation of a statutory enactment is not a mechanical task. It is more than a mere reading of mathematical formulae because few words possess the precision of mathematical symbols. It an attempt to discover the intent of the Legislature from the language used by it and it must always be remembered that language is at best an imperfec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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