DCIT, Circle-12(2), Kolkata, Kolkata V. M/S. Simplex Infrastructures Ltd., Kolkata

ITA 140/KOL/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 1313 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 8 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-10-2017
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2005-2006
• Appeal Filed On: 29-01-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: G MALLIKARJUNA
• Assessee Lawyers: S K TULSIYAN
• Keywords: Retrospective amendment
• Section: 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA C BENCH, KOLKATA [BEFORE SRI N.V. VASUDEVAN, JUDICIAL MEMBER & SRI J . SUDHAKAR REDDY ACCOUNTANT MEMBER] I.T.A. NO. 140/KOL/2015 ASSESSMENT YEAR: 2005-06 & I.T.A. NO. 141/KOL/2015 ASSESSMENT YEAR: 2006-07 DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-12(2), KO LKATA.. APPELLANT P-7, CHOWRINGHEE SQUARE AAYAKAR BHAWAN 6 TH FLOOR KOLKATA- 700 069 [PAN : AAECS 0765 R] M/S. SIMPLEX INFRASTUCTURE LTD .. RESPONDENT 27, SHAKESPEARE SARANI KOLKATA 700 017 APPEARANCES BY: SHRI S.K. TULSIYAN, ADVOCATE, APPEARED ON BEHALF OF THE ASSESSEE. SHRI G. MALLIKARJUNA, CIT, DR, APPEARING ON BEHALF OF THE REVENUE. DATE OF CONCLUDING THE HEARING : SEPTEMBER 1 2, 2017 DATE OF PRONOUNCING THE ORDER : OCTOBER 25, 2017 O R D E R PER J. SUDHAKAR REDDY :- BOTH THESE APPEALS ARE FILED BY THE REVENUE, DIREC TED AGAINST SEPARATE ORDERS OF THE LD. COMMISSIONER OF INCOME TAX (APPEA LS)-XIX, (LD. CIT(A)), PASSED U/S 250 OF THE INCOME TAX ACT, 1961 (THE AC T), DT. 20/10/2014 FOR THE ASSESSMENT YEAR 2005-06 & DT. 21/10/2014 FOR THE A SSESSMENT YEAR 2010-11. 2. THE ASSESSING OFFICER, IN THIS CASE HAS PASSED A N ORDER FOR THE ASSESSMENT YEAR 2005-06, DT. 30/11/2007 AND FOR ASS ESSMENT YEAR 2006-07 DT. 07/12/2007. AS THE ISSUES ARISING IN BOTH THESE APPEALS ARE SIMILAR, FOR THE 2 I.T.A. NO. 140/KOL/2015 ASSESSMENT YEAR: 2005-06 & I.T.A. NO. 141/KOL/2015 ASSESSMENT YEAR: 2006-07 M/S. SIMPLEX INFRASTUCTURE LTD SAKE CONVENIENCE THEY ARE HEARD TOGETHER AND DISPOS ED OFF BY WAY OF THIS COMMON ORDER. 3. THERE IS A DELAY OF 16 DAYS IN FILING OF THE APP EAL BY THE REVENUE, FOR BOTH THESE ASSESSMENT YEARS. AFTER PERUSING THE AFF IDAVIT FILED BY THE REVENUE EXPLAINING THE DELAY, WE CONDONE THE DELAY AND ADMI T THESE APPEAL. 4. FACTS IN BRIEF:- THE ASSESSEE IS A COMPANY AND IS ENGAGED IN THE BU SINESS OF GROUND ENGINEERING, CIVIL & STRUCTURAL WORKS, BUILDING OF POWER PLANTS, CONSTRUCTION OF ROADS AND HIGHWAYS ETC. AND TRADING IN GOODS. FOR T HE ASSESSMENT YEAR 2005- 06, THE ASSESSEE FILED ITS RETURN OF INCOME ON 30/1 0/2005, DECLARING NIL INCOME, WHEREIN A DEDUCTION HAS BEEN CLAIMED U/S 80 -IA OF THE ACT. FOR THE ASSESSMENT YEAR 2006-07, THE ASSESSEE DECLARED TOTA L INCOME OF RS.28,57,87,330/-, AFTER CLAIMING DEDUCTION OF RS.1 2,29,72,673/-. THE ASSESSING OFFICER, FOR THE ASSESSMENT YEAR 2005-06, PARTLY ALLOWED THE CLAIM OF THE ASSESSE FOR DEDUCTION U/S 80-IA OF THE ACT AND FOR ASSESSMENT YEAR 2006- 07, THE ENTIRE CLAIM OF DEDUCTION MADE BY THE ASSES SEE U/S 80-IA OF THE ACT, WAS DISALLOWED. AGGRIEVED, THE REVENUE CARRIED THE MATTER IN APPEAL. 5. THE LD. FIRST APPELLATE AUTHORITY, ALLOWED BOTH THE APPEALS BY STATING THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY FOLLOWING THE ORDER OF HIS PREDECESSOR IN THE ASSESSEES OWN CASE FOR THE ASSE SSMENT YEAR 2010-11, IN APPEAL NO. 850/II/12(2)/09-10, DT. 18/09/2013 AND A PPEAL NO. 173J/XII/R- 3 I.T.A. NO. 140/KOL/2015 ASSESSMENT YEAR: 2005-06 & I.T.A. NO. 141/KOL/2015 ASSESSMENT YEAR: 2006-07 M/S. SIMPLEX INFRASTUCTURE LTD 12/13-14, DT. 21/07/2014, FOR THE ASSESSMENT YEAR 2 007-08 AND 2010-11, RESPECTIVELY. 6. AGGRIEVED THE REVENUE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUNDS:- ASSESSMENT YEAR 2005-06 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND AS PER LAW LD. CIT(A) ERRED IN DELETING THE DISALLOWAN CE OF DEDUCTION OF RS.14,30,22,241/- U/S. 80IA BASED ON T HE APPELLATE ORDER FOR THE A.Y. 2007-08 WHEREAS ON THE SAME ISSU E THE DEPT. HAS FILED APPEAL BEFORE HONBLE HIGH COURT FOR SEVE RAL YEARS. ASSESSMENT YEAR 2006-07 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND AS PER LAW LD. CIT(A) ERRED IN DELETING THE DISALLOWAN CE OF DEDUCTION OF RS.12,29,72,674/- U/S. 80IA BASED ON T HE APPELLATE ORDER FOR THE A.Y. 2007-08 WHEREAS ON THE SAME ISSU E THE DEPT. HAS FILED APPEAL BEFORE HONBLE HIGH COURT FOR SEVE RAL YEARS. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND AS PER LAW LD. CIT(A) ERRED IN DELETING THE DISALLOWAN CE OF RS.6,41,53,757/- MADE AGAINST THE CLAIM OF RETENTIO N MONEY ON FOREIGN PROJECT, WITHOUT TAKING INTO ACCOUNT THE CO NTENTION OF THE A.O. THAT THE ASSESSEE DID NOT FOLLOWING ANY CO NSISTENT POLICY YEAR BY YEAR FOR CLAIMING RELIEF U/S 91. 7. THE LD. DR, SUBMITTED THAT THE ASSESSING OFFICER , FOR THE ASSESSMENT YEAR 2006-07, HAS IN DETAIL SPECIFIED AS TO WHY NO DEDUC TION U/S 80IA(4) OF THE ACT, CAN BE GRANTED ON THE FOLLOWING PROJECTS TAKEN UP B Y THE ASSESSEE. THESE PROJECTS ARE:- 4 I.T.A. NO. 140/KOL/2015 ASSESSMENT YEAR: 2005-06 & I.T.A. NO. 141/KOL/2015 ASSESSMENT YEAR: 2006-07 M/S. SIMPLEX INFRASTUCTURE LTD DEVELOPMENT OF BUS TERMINAL COMPLEX FOR KARNATAKA S TATE TRANSPORT CORPORATION AT BANGALORE. DEVELOPMENT OF LAUNCHPAD FOR GS LV MARK III FACILIT IES OF SATISH DHAWAN SPACE CENTRE SHAR AT SRIHARIKOTA, ANDHRA PRADESH. DEVELOPMENT OF A TURBINE BUILDING, EMERGENCY POWER SUPPLY BUILDING, CABLE AND PIPE TUNNEL ETC. FOR KUNDANKULAM NUCLEAR POWER PROJECT. DEVELOPMENT OF A JETTY AT THE NAVAL BASE AT VISAKHA PATNAM. 8. HE TOOK US THROUGH THE ORDER OF THE ASSESSING OF FICER AS WELL AS THE LD. CIT(A) AND SUBMITTED THAT THE LD. CIT(A) HAS NOT GI VEN ANY REASON, WHATSOEVER FOR REVERSING THE FINDINGS OF THE ASSESSING OFFICER . HE POINTED OUT THAT THE LD. CIT(A), HAS SIMPLY EXTRACTED THE SUBMISSIONS MADE B Y THE ASSESSEE, AND THEREAFTER STATED THAT HE IS ACCEPTING THE SAME. HE ARGUED THAT THIS IS NOT IS SPEAKING ORDER, AND HENCE THE SAME CANNOT BE UPHELD . 8.1. COMING TO EACH OF THESE PROJECTS, HE SUBMITTED THAT A LAUNCHPAD BUILT FOR GS LV MARK III FACILITIES OF SATISH DHAWAN SPACE CE NTRE SHAR AT SRIHARIKOTA, ANDHRA PRADESH, CANNOT BE CONSIDERED AS AN AIRPORT AND THE ASSESSEE WAS TRYING TO EXPAND THE DEFINITION OF THE TERM AIRPOR T BY IMPORTING THE MEANINGS FROM VARIOUS DICTIONARIES AND CLAIMING DEDUCTIONS. HE SUBMITTED THAT LAUNCHPAD CANNOT BE CONSIDERED AS AN AIRPORT. 8.2. ON THE ISSUE OF DEVELOPMENT OF A JETTY AT THE NAVAL BASE AT VISAKHAPATNAM, HE ARGUED THAT THIS IS THE DEFENCE F ACILITY AND CANNOT BE CONSIDERED AS AN INFRASTRUCTURAL FACILITY AS DEFINE D IN THE EXPLANATION TO SUB SECTION 4 OF SECTION 80IA OF THE ACT. 5 I.T.A. NO. 140/KOL/2015 ASSESSMENT YEAR: 2005-06 & I.T.A. NO. 141/KOL/2015 ASSESSMENT YEAR: 2006-07 M/S. SIMPLEX INFRASTUCTURE LTD 8.3. ON THE DEVELOPMENT OF A BUS TERMINAL COMPLEX F OR KARNATAKA STATE TRANSPORT CORPORATION AT BANGALORE, HE SUBMITTED TH AT ONLY IF THE ASSESSEE WAS EXECUTING A HIGHWAY PROJECT, THEN ONLY AS A PART OF THIS PROJECT OF DEVELOPMENT OF THE BUS TERMINAL COMPLEX CAN BE CONSIDERED AS AN INFRASTRUCTURE. HE SUBMITTED THAT AS THE BUS TERMINAL COMPLEX IS A STA NDALONE PROJECT, IT DOES NOT FALL WITHIN THE KEN TO SECTION 80IA(4) OF THE ACT. 8.4. COMING TO THE DEVELOPMENT OF TURBINE BUILDING, HE SUPPORTED THE ORDER OF THE ASSESSING OFFICER. 8.5. THE LD. DR, MADE A SUBMISSION FOR THE ASSESSME NT YEAR 2006-07, THAT BENEFIT UNDER SECTION 80IA(4) OF THE ACT, CAN BE CL AIMED ONLY WHERE THERE IS PUBLIC PRIVATE PARTICIPATION IN DEVELOPMENT OF AN I NFRASTRUCTURAL FACILITY AND THE FUND OF THE PROJECT IS BROUGHT IN BY THE PRIVAT E PARTICIPATION. HE ARGUED THAT IN CASES WHERE NO SUCH FINDING IS BROUGHT IN BY THE PRIVATE PARTY, THEN, THE BENEFIT OF THIS SECTION CANNOT BE CLAIMED. THE ASSESSING OFFICER FOR THE ASSESSMENT YEAR 2006 -07, REJECTED THE CLAIM OF DEDUCTION UNDER SECTION 80IA OF THE ACT, O N THE ABOVE STATED REASON. HE RELIED ON THE ORDER OF THE ASSESSING OFFICER AND SUBMITTED THAT IT IS CLEAR THAT THE ASSESSEE WAS REQUIRED TO MERELY EXECUTE TH E PROJECT AS PER THE DIRECTIONS OF THE DEVELOPER AND IS NOT AT ALL CONCE RNED ABOUT THE FINANCIAL VIABILITY OR FINANCIAL REQUIREMENTS OF THE PROJECT. 9. THE LD. COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND, SUPPORTED THE ORDER OF THE LD. FIRST APPELLATE AUTHORITY AND SUBMITTED THAT THE ISSUE IS SQUARELY 6 I.T.A. NO. 140/KOL/2015 ASSESSMENT YEAR: 2005-06 & I.T.A. NO. 141/KOL/2015 ASSESSMENT YEAR: 2006-07 M/S. SIMPLEX INFRASTUCTURE LTD COVERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE R EVENUE BY THE DECISION OF THE B BENCH OF THE KOLKATA TRIBUNAL IN THE ASSESSEES OWN CASE FOR THE EARLIER ASSESSMENT YEAR IN ITA NO. 1840/KOL/2014 FOR THE AS SESSMENT YEAR 2010-11, ORDER DT. 30/06/2017. HE RELIED ON THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. ABG HEAVY INDUSTRIES LIMITED [322 ITR 323]. FOR THE ASSESSMENT YEAR 2005-06. ON THE ISSUE OF WHETHER LAUNCHPAD IS AN AIRPORT OR NOT, HE RELIED O N THE SUBMISSIONS MADE BEFORE THE LD. CIT(A), WHICH IS EXTRACTED AT PAGE 1 3 & 14 OF HIS ORDER. THE SUM AND SUBSTANCE OF THE SUBMISSIONS IS THAT, PORT IS A POINT/PLACE, FROM WHERE THE LANDING AND TAKE OFF TAKES PLACE INTO AIR BY AIRBOR NE VEHICLES FROM THE GROUND. HE SUBMITS THAT BASE OR PLATFORM FROM WHICH A ROCKE T IS LAUNCHED IS ALSO AN AIRPORT. 9.1. ON THE ISSUE OF DEVELOPMENT OF JETTY AT THE NA VAL BASE AT VISAKHAPATNAM, HE RELIED ON THE SUBMISSIONS MADE BEFORE THE LD. CI T(A) AND SUBMITTED THAT THE JETTY IS NOTHING BUT A STRUCTURE WHICH PROJECTS INT O A BODY OF WATER BUILT FROM A SHORE FOR USE BY SHIPS. HENCE, HE SUBMITS THAT THIS WAS PROPERLY CONSIDERED BY THE LD. CIT(A), WHO HAS GRANTED RELIEF APPROPRIATEL Y. 9.2. ON THE DEVELOPMENT OF BUS TERMINAL COMPLEX OF KARNATAKA STATE TRANSPORT CORPORATION AT BANGALORE, HE SUBMITTED TH AT CBDT HAS NOTIFIED THAT EVEN MULTILEVEL COMPUTERISED CAR PARKING IS AN INFR ASTRUCTURAL FACILITY. HE SUBMITTED IT IS AN ERROR ON THE PART OF THE REVENUE TO ARGUE THAT A BUS TERMINAL 7 I.T.A. NO. 140/KOL/2015 ASSESSMENT YEAR: 2005-06 & I.T.A. NO. 141/KOL/2015 ASSESSMENT YEAR: 2006-07 M/S. SIMPLEX INFRASTUCTURE LTD COMPLEX WOULD BE AN INFRASTRUCTURAL FACILITY ONLY I F THE HIGHWAY CONSTRUCTION IS ALSO EXECUTED BY THE ASSESSEE. 9.3. ON THE WORKS UNDERTAKEN FOR KUNDANKULAM NUCLEA R POWER PROJECT, SUBMITTED THAT THE ASSESSEE HAS NOT PRESSED FOR DED UCTION ON THE PROFITS EARNED ON THIS PROJECT. 9.4. FOR THE ASSESSMENT YEAR 2006-07, HE SUBMITTED THAT THE ISSUE IS NO MORE RES INTEGRA , AS THE AO HAS HIMSELF GRANTED DEDUCTION ON VARIO US PROJECTS UNDERTAKEN BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2005-06 AND AS THE JURISDICTIONAL TRIBUNAL FOR THE EARLIER ASSESSMENT YEARS, UPHELD THE CLAIM OF THE ASSESSEE. ON A QUERY FROM THE BENCH, AS TO WHET HER EACH AND EVERY INFRASTRUCTURAL PROJECT HAS BEEN EXAMINED BY THE AS SESSING OFFICER, HE DREW THE ATTENTION OF THE BENCH TO PAGES 2 TO 4 OF THE ASSES SMENT ORDER, AND SUBMITTED THAT THE ASSESSING OFFICER HAS NOT GIVEN ANY FINDIN G AGAINST THE ASSESSEE ON THIS ISSUE. AS REGARDS ASSESSMENT YEAR 2005-06, HE CONTE NDED THAT EACH OF THE PROJECT AND THE NATURE OF WORK WAS EXAMINED BY THE ASSESSING OFFICER AND NO ADVERSE INFERENCE WAS DRAWN THAT THIS IS NOT AN INF RASTRUCTURAL FACILITY. HE REFERRED TO THE GROUNDS OF DISALLOWANCE AND SUBMITT ED THAT THIS IS COVERED IN FAVOUR OF THE ASSESSEE. 10. IN REPLY, THE LD. DR, SUBMITTED THAT THE ISSUE SHOULD BE RESTORED TO THE ASSESSING OFFICER FOR CONSIDERING THE SUBMISSIONS O F BOTH SIDES AND PASSING IS SPEAKING ORDER. 8 I.T.A. NO. 140/KOL/2015 ASSESSMENT YEAR: 2005-06 & I.T.A. NO. 141/KOL/2015 ASSESSMENT YEAR: 2006-07 M/S. SIMPLEX INFRASTUCTURE LTD 11. RIVAL CONTENTIONS HEARD. ON CAREFUL CONSIDERATI ON OF THE PAPERS ON RECORD, CASE LAW CITED AND THE ORDERS OF THE AUTHOR ITIES BELOW, WE HOLD AS FOLLOWS:- 12. FOR THE ASSESSMENT YEAR 2005-06 THE ASSESSEE HA S CLAIMED DEDUCTION U/S 80IA(4) OF THE ACT ON 13 PROJECTS. THE ASSESSIN G OFFICER GRANTED DEDUCTION ON NINE PROJECTS AND IN THE CASE OF FOR OTHER PROJE CTS, WAS OF THE OPINION THAT THESE PROJECTS DO NOT FALL WITHIN THE KEN OF EXPLAN ATION TO SECTION 80IA(4) OF THE ACT. HE HAS GIVEN REASONS FOR COMING TO SUCH CO NCLUSIONS AT PAGES 13 TO 17 OF HIS ORDER. THE CLAIM OF THE ASSESSEE ON THESE IS AS FOLLOWS:- I. DEVELOPMENT OF LAUNCH PAD FOR GSLV MARK III FACI LITIES OF SATISH DHAWAN SPACE CENTRE SHAR AT SRIHARIKOTA 9.3.1 THE ABOVE PROJECTS WERE IN REGARD TO THE DEVE LOPMENT OF LAUNCH PAD FOR GSLV MARK III FACILITIES OF SATISH D HAWAN SPACE CENTRE SHAR AT SRIHARIKOTA, ANDHRA PRADESH. LAUNCH PAD FACILITY FOR GSLV MARK III IS AN AIRPORT AS COVERED IN THE D EFINITION OF 'INFRASTRUCTURE FACILITY' AS COVERED BY EXPLANATION (C) TO SUB- SECTION (4). THE CONTRACTS FOR THE PROJECT WERE ENT ERED INTO WITH THE DEPARTMENT OF SPACE VIDE CONTRACTS DATED 30 TH MAY, 2000 AND 16 TH DECEMBER, 2003 ON ACCOUNT OF WHICH THE ASSESSEE W AS ENTITLED TO RECEIVE AMOUNTS OF RS.5,39,50,000/- AND RS.67,16,00,000/-. THE ASSESSEE STARTED WORK ON THE DEVELOPMENT OF THE PROJECTS FROM THE ASSESSMENT YEARS 2001-02 A ND 2004-05. THEREFORE, THESE PROJECTS SATISFY THE CONDITIONS AS LAID DOWN IN CLAUSE (B) SINCE THE PROJECT HAS BEEN STARTED ON TH E BASIS OF AGREEMENTS WITH DEPARTMENT OF SPACE, GOVERNMENT OF INDIA I.E. 9 I.T.A. NO. 140/KOL/2015 ASSESSMENT YEAR: 2005-06 & I.T.A. NO. 141/KOL/2015 ASSESSMENT YEAR: 2006-07 M/S. SIMPLEX INFRASTUCTURE LTD CENTRAL GOVERNMENT AND SATISFIES CLAUSE (C) SINCE I T COMMENCED IN THE AY 2001-02 AND 2004-05 I.E. AFTER 1 ST APRIL, 1995. 9.3.2 THE A.G. OBSERVED THAT IN FORM 10CCB THE SAID FACILITY WAS TERMED AS 'INDUSTRIAL PARK' WHICH IS NOT IDENTIFIED AS INFRASTRUCTURE FACILITY U/S 80LA, WHEREAS IN THE SU BMISSION MADE, THE SAME WAS TREATED AS AN AIRPORT AND HENCE THE CL AIM REGARDING NATURE OF INFRASTRUCTURE FACILITY WAS CON TRADICTORY. HE FURTHER ALLEGED THAT LAUNCH PAD IS NOT AN AIRPORT. HE, THEREFORE, HELD THAT THE PROFIT FROM THE ABOVE PROJECT IS NOT ALLOWABLE AS DEDUCTION U/S 801A OF THE ACT. 9.3.3 IN THIS RESPECT, ATTENTION IS DRAWN TO THE ME ANING OF THE WORDS 'AIRPORT' AND 'LAUNCH PAD': AIRPORT MEANS A COMPLEX FROM WHERE AIR GOING VEHICL ES TAKE OFF FROM THE GROUND. THE COLLINS ESSENTIAL ENGLISH DICTIONARY DEFINES 'AIRPORT' AS: A LANDING AND TAKING-OFF AREAS FOR CIVIL AIRCRAFT, WITH FACILITIES FOR AIRCRAFT MAINTENANCE AND PASSENGER A RRIVAL AND DEPARTURE AIRPORT HAS ALSO BEEN DEFINED AS AN AIRFIELD EQUIPPED WITH CONTROL TOWER AND HANGARS AS WELL AS ACCOMMODATIONS FOR PASSENGERS AND CARGO. THE AMERICAN HERITAGE DICTIONARY OF THE ENGLISH LAN GUAGE DEFINES LAUNCH PAD AS: I: THE BASE OR PLATFORM FROM WHICH A ROCKET OR SPAC E VEHICLE IS IAUNCHED. II: A FOUNDATION OR STARTING POINT . THE COLLINS ESSENTIAL ENGLISH DICTIONARY DEFINES 'LAUNCH PAD' AS : A PLATFORM FROM WHICH A SPACECRAFT, ROCKET, OR MISS ILE IS LAUNCHED 10 I.T.A. NO. 140/KOL/2015 ASSESSMENT YEAR: 2005-06 & I.T.A. NO. 141/KOL/2015 ASSESSMENT YEAR: 2006-07 M/S. SIMPLEX INFRASTUCTURE LTD 9.3.4 PLEASE NOTE THAT A HELIPORT IS AN AIRPORT FOR HELICOPTERS. SIMILARLY, A LAUNCH PAD IS NOTHING BUT AN AIRPORT F OR SPACE CRAFTS, ROCKET OR MISSILES. IN COMMON PARLANCE, THE WORD AI RPORT MEANS A PLATFORM FROM WHERE AIR-GOING VEHICLE TAKES OFF IN AIR FROM THE GROUND. MERELY, BECAUSE A LAUNCH PAD DOES NOT HAVE PASSENGE R AND CARGO TERMINALS, IT CANNOT BE SAID THAT LAUNCH PAD IS OUT SIDE THE PURVIEW OF THE MEANING OF AIRPORT. THE ESSENCE OF B OTH AIRPORT AND LAUNCH PAD IS SAME VIZ, BOTH ARE A BASE FROM WH ERE AIR GOING VEHICLES TAKE OFF IN THE AIR AND THEY SHOULD BE CON SIDERED IN VIEW OF THE SAME ONLY. A LAUNCH PAD WILL NOT CEASE TO BE AN AIRPORT MERELY BECAUSE IT IS EARMARKED FOR ROCKETS AND MISS ILES AND DOES NOT CONTAIN PASSENGER AND CARGO TERMINALS. A LAUNCH PAD WOULD BE AN AIRPORT NOTWITHSTANDING ITS EXCLUSIVE USE BY SPACE CRAFTS AND ROCKETS AS LONG AS SUCH LAUNCH PAD IS USED AS A PLATFORM FROM WHERE AIR GOING VEHICLES TAKE OFF FROM THE GROUND. ' II. DEVELOPMENT OF A JETTY AT THE NAVAL BASE AT VISHAKAPATNAM 9.4.1 THIS PROJECT WAS IN REGARD TO THE DEVELOPMENT OF A JETTY AT THE NAVAL BASE AT VISHAKAPATNAM. JETTY AT A PORT IS AN INFRASTRUCTURE FACILITY AS COVERED BY EXPLANATION ( C) TO SUB- SECTION (4). THE AGREEMENT FOR DEVELOPMENT OF THE P ROJECT WAS ENTERED ON 16.9.2003 WITH THE NAVY I.E. CENTRAL GOV ERNMENT WHEREBY THE ASSESSEE WAS ENTITLED TO RECEIVE RS. 32 ,01,88,000 FOR THE DEVELOPMENT OF THE PROJECT. THE ASSESSEE STARTE D WORK ON THE DEVELOPMENT OF THE PROJECT FROM A. Y. 2004-05. THER EFORE THE 11 I.T.A. NO. 140/KOL/2015 ASSESSMENT YEAR: 2005-06 & I.T.A. NO. 141/KOL/2015 ASSESSMENT YEAR: 2006-07 M/S. SIMPLEX INFRASTUCTURE LTD PROJECT SATISFIES THE CONDITIONS AS LAID IN CLAUSE (B) SINCE THE PROJECT HAS STARTED ON THE BASIS OF AN AGREEMENT WI TH THE CENTRAL GOVERNMENT AND SATISFIES CLAUSE (C) SINCE IT HAS CO MMENCED IN THE A.Y. 2004-05 I.E. AFTER 1 ST APRIL, 1995. THE SAID FACILITY HAS BEEN TERMED AS 'JETTY ' IN FORM 10CCB. ACCORDING TO THE A.O. AS PER THE EXPLANATION THERE IS NO MENTION OF 'JETTY' AS AN IN FRASTRUCTURE FACILITY. THE SAME CANNOT BE INCLUDED UNDER THE HEA D 'PORT' AS THE JETTY WAS DEVELOPED AT A 'NAVAL BASE' RATHER THAN P ORT. THEREFORE IT DOES NOT QUALIFY AS INFRASTRUCTURE FACILITY AS E NVISAGED IN THE EXPLANATION. 9.4.2. IN THIS RESPECT, ATTENTION IS DRAWN TO THE M EANINGS OF 'JETTY' AND 'PORT': JETTY MEANS 1. A STRUCTURE, SUCH AS A PIER, THAT PROJECT INTO A BO DY OF WATER TO INFLUENCE THE CURRENT OR TIDE OR TO PROTEC T A HARBOUR OR SHORELINE FROM STORMS OR EROSION. 2. A WHARF. COLLINS ESSENTIAL DICTIONARY DEFINES JETTY AS 1. A LANDING PIER OR DOCK 2. A STRUCTURE BUILT FROM A SHORE OUT INTO THE WATER T O PROTECT A HARBOUR AS PER THESAURUS, JETTY MEANS A PROTECTIVE STRUCTURE OF STONE OR CONCRETE; EXTEND S FROM SHORE INTO THE WATER TO PREVENT A BEACH FROM WASHING AWAY KERNERMN ENGLISH LEARNERS DICTIONARY DEFINES JETTY AS A SMALL PIER FOR USE AS A LANDING-PLACE 1. A PORT IS A. A PLACE ON A WATERWAY WITH FACILITIES FOR LOADING A ND UNLOADING SHIPS. 12 I.T.A. NO. 140/KOL/2015 ASSESSMENT YEAR: 2005-06 & I.T.A. NO. 141/KOL/2015 ASSESSMENT YEAR: 2006-07 M/S. SIMPLEX INFRASTUCTURE LTD B. THE WATERFRONT DISTRICT OF A CITY. 2. A PLACE ALONG A COAST THAT GIVES SHIPS AND BOATS PR OTECTION FROM STORMS AND ROUGH WATER A HARBOUR. 9.4.3 FROM THE ABOVE DEFINITIONS, IT IS SEEN THAT A PORT IS A HARBOUR AND A JETTY IS A STRUCTURE THAT PROJECTS INTO A BODY OF W ATER TO PROTECT A HARBOR OR SHORELINE FROM STORMS OR EROSION. THUS, IT CANNOT B E DENIED THAT A JETTY IS A PART OF PORT. 9.4.4 IT IS NOT THE CASE OF THE A.O. THAT THE JETTY IS NOT A PORT. THE CONTENTION OF THE AO. IS THAT THE JETTY CANNOT BE INCLUDED UND ER THE HEAD 'PORT' AS IT WAS DEVELOPED AT A 'NAVAL BASE' RATHER THAN A PORT. A BARE PERUSAL OF THE DEFINITION OF INFRASTRUCTURE FACILITY AS ENVISAGED IN SECTION 801A(4) WOULD SHOW THAT THE WORD 'PORT' IS INCLUDED THEREIN WITHO UT ANY FURTHER CONDITIONS IN REGARD TO ITS LOCATION. IN THIS RESPE CT PLEASE NOTE THAT A 'PORT' IS AN INFRASTRUCTURE FACILITY IRRESPECTIVE OF ITS L OCATION. THE LOCATION OF THE JETTY AT A NAVAL BASE WOULD NOT DISENTITLE THE SAME FROM BEING A PORT WHICH IN ITSELF IS AN INFRASTRUCTURE FACILITY NOTWI THSTANDING ITS LOCATION. HENCE, THE DENIAL OF DEDUCTION U/S 80IA IN RESPECT OF THE SAID DEVELOPMENT PROJECT BY THE A.O. ON THE PLEA THAT JETTY IS LOCAT ED AT A NAVAL BASE IS NOT JUSTIFIED. III. DEVELOPMENT OF BUS TERMINAL COMPLEX FOR KARNAT AKA STATE TRANSPORT COPORATION 9.5.1 THE PROJECT WAS IN REGARD TO THE DEVELOPMENT OF MODERN SATELLITE BUS TERMINAL COMPLEX FOR KARNATAKA STATE TRANSPORT CORP ORATION AT BANGALORE. THE SAID FACILITY HAS BEEN TERMED AS ROAD BUS TERMINUS ; IN FORM 10CCB. 9.5.2 ACCORDING TO THE A.O., IN THE SAID INFRASTRUC TURE FACILITY CANNOT BE INCLUDED UNDER THE HEAD ROAD AS BUS TERMINAL IS NOT A ROAD OR ITS EXTENSION. SIMILARLY, IT ALSO CANNOT BE INCLUDED UNDER THE HEAD HIGHWAY PRO JECT NOR DOES IT FORM THE INTEGRAL PART OF ANY HIGHWAY PROJECT WHICH THE ASSE SSEE HAS DEVELOPED. IN THIS 13 I.T.A. NO. 140/KOL/2015 ASSESSMENT YEAR: 2005-06 & I.T.A. NO. 141/KOL/2015 ASSESSMENT YEAR: 2006-07 M/S. SIMPLEX INFRASTUCTURE LTD RESPECT, THE A.O. HAS ALSO REFERRED TO CIRCULAR NO 7/2002 DATED 26.8.2002 WHEREIN THE DEFINITION AS GIVEN IN THE EXPLANATION INTRODUC ED W.E.F 1.4.2002 EXCLUDES ANY OTHER PUBLIC FACILITY OF A SIMILAR NATURE AS MAY BE NOTIFIED BY THE' BOARD IN THIS BEHALF IN THE OFFICIAL GAZETTE. THE A.O. FURTHER ST ATED THAT THE SAID FACILITY WOULD HAVE BEEN COVERED UNDER THE DEFINITION OF INFRASTRU CTURE FACILITY BEFORE THE AMENDMENT AS PER OLD EXPLANATION TO SECTION 80IA(4) . HOWEVER, AS PER AMENDED DEFINITION, THE ASSESSEE'S PROJECT DOES NOT LIE IN ANY OF THE CATEGORIES. 9.5.3 IN THIS RESPECT THE ASSESSEE WANTS TO SUBMIT AS UNDER: THE MODERN SATELLITE BUS TERMINAL COMPLEX FOR KARNA TAKA STATE TRANSPORT CORPORATION HAS BEEN CONSTRUCTED AT MYSORE CHROME T ANNING COMPANY LAND, MYSORE ROAD, BYATARANAPURA, BANGALORE. THE BANGALOR E-MYSORE HIGHWAY IS KNOWN AS MYSORE ROAD IN THE CITY AREA OF BANGALORE. THE SATELLITE BUS TERMINAL OF THE KARNATAKA STATE R OAD TRANSPORT CORPORATION (KSRTC) ON MYSORE ROAD IT IS THE FIRST OF THE FOUR SATELLITE TERMINALS PLANNED IN THE CITY'S PERIPHERAL AREAS. IT WILL ALSO REDUCE TH E LOAD ON THE KEMPE GOWDA BUS STATION BY HANDLING ABOUT 2,250 LONG- DISTANCE AND CITY BUS SERVICES. THE BANGALORE METROPOLITAN TRANSPORT CORPORATION (BMTC) BUSES WILL HAVE SPACE FOR OPERATING ITS SERVICES FROM WITHIN THE TERMINAL. BY STOPPING MANY INTER-STATE BUSES SUCH AS THOSE 99 IN9 TOWARDS KERALA AT MYSORE ROAD, TRAFFIC CONGESTION WILL ALSO BE REDUCE D WITHIN THE CITY. FOR SOUTH- BOUND PASSENGERS TO PLACES SUCH AS MYSORE, MADIKERI AND KERALA, IT WILL BECOME EASY BECAUSE SHUTTLE BUS SERVICES ARE ALSO TO BE OP ERATED FROM THE SUBURBS. THE PROJECT IS NO DOUBT A PART OF A HIGHWAY PROJECT AND FALLS WITHIN THE PURVIEW OF CLAUSE (B) OF THE EXPLANATION TO SUB-SECTION (4) OF SECTION 80LA OF THE ACT. THE CONTENTION OF THE ASSESSING OFFICER THAT IT CANNOT BE INCLUDED UNDER THE HEAD 'HIGHWAY PROJECT' NOR DOES IT FORM THE INTEGRAL PAR T OF ANY HIGHWAY PROJECT WHICH THE ASSESSEE HAS DEVELOPED, THUS CANNOT BE ACCEPTED , 9.5.4 FURTHER, THE A.O. HAS ALSO STATED THAT THE SA ID INFRASTRUCTURE FACILITY CANNOT BE INCLUDED UNDER THE HEAD 'ROAD' AS BUS TERMINAL I S NOT A ROAD OR ITS EXTENSION. 14 I.T.A. NO. 140/KOL/2015 ASSESSMENT YEAR: 2005-06 & I.T.A. NO. 141/KOL/2015 ASSESSMENT YEAR: 2006-07 M/S. SIMPLEX INFRASTUCTURE LTD IN THIS RESPECT ATTENTION IS DRAWN TO THE NOTIFICAT ION DATED 13.7.2000 ISSUED BY THE GOVERNMENT OF INDIA, MINISTRY OF FINANCE, DEPAR TMENT OF REVENUE, CENTRAL BOARD OF DIRECT TAXES WHEREIN THE FOLLOWING WAS STA TED: 'IN EXERCISE OF THE POWERS CONFERRED BY THE EXPLANA TION C (I) OF SECTION 10(23G) AND EXPLANATION (A) TO SUB-SECTION 4(I) OF SECTION 80IA OF THE INCOME, TAX ACT, 1961, THE CENTRAL BOARD OF DIRECT TAXES HEREBY NOTI FIES MULTILEVEL COMPUTERIZED CAR PARKING AS INFRASTRUCTURE FACILITY.' THE ABOVE NOTIFICATION HAS CONSIDERED MULTILEVEL CO MPUTERIZED CAR PARKING AS INFRASTRUCTURE FACILITY FOR THE PURPOSE OF EXPLANAT ION (A) TO SUB-SECTION 4(I) OF SECTION 80LA OF THE INCOME TAX ACT, 1961 CAR PARKIN G IS A SAFE AND SHELTERED AREA EARMARKED FOR PARKING OF VEHICLES. SIMILARLY, A BUS TERMINAL IS A STATION FOR BUSES WHERE BUSES HALT. IT IS A PROTECTED AREA WHERE BUSE S ARRIVE, HALT AND DEPART. IT IS AKIN TO A CAR PARKING AND THEREFORE, CONTRADICTORY VIEW CANNOT BE TAKEN IN ASCERTAINING WHETHER BUS TERMINAL IS AN INFRASTRUCT URE FACILITY OR NOT FOR THE PURPOSE OF EXPLANATION (A) TO SUB-SECTION 4(I) OF S ECTION 80IA. THE AO'S CONTENTIONS THAT A BUS TERMINAL IS NOT A ROAD OR IT S EXTENSION CANNOT BE ACCEPTED IN THE LIGHT OF THE ABOVE NOTIFICATION. COPY OF THE SAID NOTIFICATION IS ENCLOSED HEREWITH FOR READY REFERENCE AND RECORDS. 12.1. AS THE LD. CIT(A), HAS NOT PASSED A SPEAKING ORDER, WE ARE OF THE CONSIDERED OPINION THAT THE ISSUE SHOULD BE RESTORE D TO THE FILE OF THE ASSESSING OFFICER TO CONSIDER THESE SUBMISSIONS OF THE ASSESS EE ON THE ABOVE ISSUE AND DE NOVO, ADJUDICATE THE MATTER. 13. IN VIEW OF THE ABOVE DISCUSSION, WE RESTORE THI S ISSUE OF THE CLAIM OF DEDUCTION OF THE ASSESSEE, U/S 80IA OF THE ACT, ON THE ABOVE 3 PROJECTS, TO THE FILE OF THE ASSESSING OFFICER, FOR FRESH ADJUDICATI ON, IN ACCORDANCE WITH LAW. THE 15 I.T.A. NO. 140/KOL/2015 ASSESSMENT YEAR: 2005-06 & I.T.A. NO. 141/KOL/2015 ASSESSMENT YEAR: 2006-07 M/S. SIMPLEX INFRASTUCTURE LTD A.O. SHALL CONSIDER ALL THE SUBMISSIONS OF THE ASSE SSEE AND PASS A SPEAKING ORDER. 13.1. THE ARGUMENT OF THE LD. DR, THAT DEDUCTION U/ S 80IA(4) OF THE ACT IS AVAILABLE ONLY IN PPP MODELS, WHERE THE PRIVATE PAR TIES BRING IN FUNDS FOR BUILDING OF INFRASTRUCTURAL FACILITY AND NOT OTHERW ISE, IS NOT A GROUND ON WHICH THE ASSESSING OFFICER HAS MADE THE DISALLOWANCE IN HIS ORDER. THIS IS NOT A GROUND OF APPEAL IN THE APPEAL ALSO. IN FACT, THE A SSESSING OFFICER HAS ALLOWED THE CLAIM OF DEDUCTION U/S 80IA(4) OF THE ACT, MADE THE ASSESSEE ON 9 PROJECTS. EVEN OTHERWISE, THE ISSUE IS ADJUDICATED IN FAVOUR OF THE ASSESSEE BY THE CO- ORDINATE BENCH OF THE TRIBUNAL IN THE ASSESSEES OW N CASE FOR ASSESSMENT YEAR 2010-11. HENCE WE DISMISS THIS ARGUMENT OF THE LD. D/R AS DEVOID OF MERIT. 14. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED FOR STATISTICAL PURPOSES. 15. NOW WE DEAL WITH THE APPEAL OF THE REVENUE FOR THE ASSESSMENT YEAR 2006-07. 16. GROUND NO. 1, IS AGAINST THE DELETION OF THE DI SALLOWANCE MADE BY THE ASSESSING OFFICER ON A CLAIM OF DEDUCTION U/S 80IA OF THE ACT. THE ASSESSING OFFICER IN HIS ORDER, WAS OF THE VIEW THAT THE ASSE SSEE IS A CONTRACTOR AND NOT A DEVELOPER. AT PARAGRAPH 1.46 AND 1.47, HE HELD AS F OLLOWS- 16 I.T.A. NO. 140/KOL/2015 ASSESSMENT YEAR: 2005-06 & I.T.A. NO. 141/KOL/2015 ASSESSMENT YEAR: 2006-07 M/S. SIMPLEX INFRASTUCTURE LTD 17. THE LD. CIT(A), FOLLOWED THE DECISION OF HIS PR EDECESSOR IN THE ASSESSEES OWN CASE FOR THE EARLIER ASSESSMENT YEAR AND GRANTE D RELIEF. THE ORDER OF THE LD. CIT(A), FOR THE EARLIER ASSESSMENT YEAR 2007-08 & 2 010-11 (SUPRA) HAS BEEN UPHELD BY THE KOLKATA B BENCH OF THE TRIBUNAL IN ITA NO. 1840/KOL/2014 FOR THE ASSESSMENT YEAR 2010-11, ORDER DT. 30/06/2017. THE TRIBUNAL IN TURN FOLLOWED ON THE DECISION OF THE ASSESSEES OWN CASE IN ITA NO. 2168/KOL/2013, ORDER DT. 08/02/2017. THE ITAT AT PARA 8 & 9 OF TH IS ORDER HELD AS FOLLOWS:- 17 I.T.A. NO. 140/KOL/2015 ASSESSMENT YEAR: 2005-06 & I.T.A. NO. 141/KOL/2015 ASSESSMENT YEAR: 2006-07 M/S. SIMPLEX INFRASTUCTURE LTD '6. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED TH E MATERIALS AVAILABLE ON RECORD. FROM THE FOREGOING DISCUSSION WE FIND TH AT THE PROVISIONS OF SECTION 80-IA OF THE ACT APPLIES TO THE ENTERPRISE CARRYING ON T HE BUSINESS OF (I) DEVELOPING OR (II) OPERATING AND MAINTAINING OR (III) DEVELOPING, OPERATING AND MAINTAINING ANY INFRASTRUCTURE FACILI TY WHICH FULFILS ALL THE FOLLOWING CONDITIONS, NAMELY :- (A) IT IS OWNED BY A COMPANY REGISTERED IN INDIA OR BY A CONSORTIUM OF SUCH COMPANIES OR BY AN AUTHORITY OR A BOARD OR A C ORPORATION OR ANY OTHER BODY ESTABLISHED OR CONSTITUTED UNDER ANY CEN TRAL OR STATE ACT ; (B) IT HAS ENTERED INTO AN AGREEMENT WITH THE CENTR AL GOVERNMENT OR A STATE GOVERNMENT OR A LOCAL AUTHORITY OR ANY OTHER STATUTORY BODY FOR (I) DEVELOPING OR (II) OPERATING AND MAINTAINING OR (II I) DEVELOPING, OPERATING AND MAINTAINING A NEW INFRASTRUCTURE FACI LITY; (C) IT HAS STARTED OR STARTS OPERATING AND MAINTAIN ING THE INFRASTRUCTURE FACILITY ON OR AFTER THE 1ST DAY OF APRIL, 1995. PR OVIDED THAT WHERE AN INFRASTRUCTURE FACILITY IS TRANSFERRED ON OR AFTER THE 1ST DAY OF APRIL, 1999 BY AN ENTERPRISE WHICH DEVELOPED SUCH INFRASTRUCTUR E FACILITY (HEREAFTER REFERRED TO IN THIS SECTION AS THE TRANSFEROR ENTER PRISE) TO ANOTHER ENTERPRISE (HEREAFTER IN THIS SECTION REFERRED TO A S THE TRANSFEREE ENTERPRISE) FOR THE PURPOSE OF OPERATING AND MAINTA INING THE INFRASTRUCTURE FACILITY ON ITS BEHALF IN ACCORDANCE WITH THE AGREEMENT WITH THE CENTRAL GOVERNMENT, STATE GOVERNMENT, LOCA L AUTHORITY OR STATUTORY BODY, THE PROVISIONS OF THIS SECTION SHAL L APPLY TO THE TRANSFEREE ENTERPRISE AS IF IT WERE THE ENTERPRISE TO WHICH TH IS CLAUSE APPLIES AND THE DEDUCTION FROM PROFITS AND GAINS WOULD BE AVAILABLE TO SUCH TRANSFEREE ENTERPRISE FOR THE UNEXPIRED PERIOD DURING WHICH TH E TRANSFEROR ENTERPRISE WOULD HAVE BEEN ENTITLED TO THE DEDUCTIO N, IF THE TRANSFER HAD NOT TAKEN PLACE. 6.1 FROM THE ABOVE IT IS CLEAR IN ORDER TO AVAIL DE DUCTION U/S 80-IA ALL THE FOLLOWING CONDITIONS SHOULD BE SATISFIED: (I) THE ASSESSEE IS A COMPANY OR A CONSORTIUM OF CO MPANIES; 18 I.T.A. NO. 140/KOL/2015 ASSESSMENT YEAR: 2005-06 & I.T.A. NO. 141/KOL/2015 ASSESSMENT YEAR: 2006-07 M/S. SIMPLEX INFRASTUCTURE LTD (II) THERE EXISTS AN AGREEMENT WITH THE CENTRAL GOV ERNMENT, STATE GOVERNMENT, LOCAL AUTHORITY OR ANY OTHER STATUTORY BODY AND (III) PURSUANT TO THE AGREEMENT SPECIFIED IN POINT (II) THE COMPANY ENGAGES ITSELF IN ANY OF THE FOLLOWING ACTIVITIES: (A) DEVELOPMENT OF INFRASTRUCT URE FACILITY (B) OPERATION AND MAINTENANCE OF INFRASTRUCTURE FACILITY (C) DEVELOPMENT, OPERATION AND MAINTENANCE OF INFRASTRUCTURE FACILITY 6.2 NOW THE ASSESSEE IN THE GIVEN CASE IS A COMPANY WHICH, PURSUANT TO AGREEMENTS WITH VARIOUS GOVERNMENT BODI ES, ENGAGED ITSELF IN THE DEVELOPMENT OF INFRASTRUCTURE FACILITY AS DE FINED IN THE EXPLANATION TO SUB SECTION 4 OF SECTION 80-IA . THESE SET OF FACTS HAVE NOT BEEN DISPUTED BY THE AO. THE LD. AO DISALLOWED THE CLAIM ON THE G ROUND THAT THE ASSESSEE HAS CHALLENGED THE PROVISIONS OF EXPLANATI ON TO SECTION 80IA OF THE ACT TO THE HON'BLE HIGH COURT AND THE COURT HAS RESTRAINED TO ENFORCE THE DEMAND THAT MAY BE RAISED IN PURSUANCE TO THE E XPLANATION TO SECTION 80IA OF THE ACT. THERE IS NO DIRECTION TO KEEP THE ASSE SSMENT PROCEEDINGS UNDER ABEYANCE. THE AO TREATED THE ASSESSEE AS A ME RE WORKS CONTRACTOR CONDUCTING MERE CIVIL CONSTRUCTION AND HENCE AS PER THE EXPLANATION TO SECTION 80- IA(13), THE DEDUCTION IS NOT AVAILABLE TO HIM. HOWEVER ON EXAMINATION OF THE RECORDS WE FIND THAT THE ASSESSE E HAS WITHDRAWN THE APPEAL FILED BEFORE THE HON'BLE HIGH COURT. AT THIS JUNCTURE ATTENTION IN THIS REGARD IS FIRSTL Y INVITED TO THE PROVISIONS OF THE EXPLANATION OF SECTION 80-IA OF THE ACT AS PRODUCED BELOW: 'FOR THE REMOVAL OF DOUBTS, IT IS HEREBY DECLARED THAT NOTHI NG CONTAINED IN THIS SECTION SHALL APPLY IN RELATION TO A BUSINESS REFER RED TO IN SUB-SECTION (4) WHICH IS IN THE NATURE OF A WORKS CONTRACT AWARDED BY ANY PERSON (INCLUDING THE CENTRAL OR STATE GOVERNMENT) AND EXE CUTED BY THE UNDERTAKING OR ENTERPRISE REFERRED TO IN SUB-SECTIO N (1). ' FROM A PLAIN READING OF THE ABOVE IT IS CLEAR THAT DEDUCTION U/S 80-IA DOES NOT APPLY TO WORKS CONTRACT. NOW THE RELEVANT QUEST ION ARISES BEFORE US FOR ADJUDICATION IS THAT WHAT CONSTITUTES A WORKS C ONTRACT. SECTION 80-IA 19 I.T.A. NO. 140/KOL/2015 ASSESSMENT YEAR: 2005-06 & I.T.A. NO. 141/KOL/2015 ASSESSMENT YEAR: 2006-07 M/S. SIMPLEX INFRASTUCTURE LTD NOWHERE DEFINES THE TERM 'WORKS CONTRACT', HENCE TH E NATURAL MEANING OF THE WORD SHALL APPLY. AS PER THE OXFORD DICTIONARY THE TERM 'WORK' MEANS APPLICATION OF EFFORT TO A PURPOSE OR USE OF ENERGY . THUS GOING BY THE DICTIONARY MEANING WE MAY SAY THAT A WORKS CONTRACT IS A CONTRACT WHICH INVOLVES EFFORT OR IN OTHER WORDS LABOUR OF THE CON TRACTOR. FURTHER AS PER THE BLACK'S LAW DICTIONARY, THE TERM 'WORK' MEANS L ABOUR OR IN OTHER WORDS PHYSICAL AND MENTAL EXERTION TO ATTAIN AN END ESP. AS CONTROLLED BY AND FOR THE BENEFIT OF THE EMPLOYER. THUS AS PER BL ACKS'S LAW ALSO A WORKS CONTRACT IS A LABOUR CONTRACT UNDER WHICH THE CONTR ACTOR MERELY EMPLOYS HIS LABOUR AS PER THE DIRECTIONS OF THE CONTRACTEE. FURTHER, ATTENTION IS INVITED TO RELEVANT EXTRACTS OF SECTION 194C OF THE IT ACT: '(IV) 'WORK' SHALL INCLUDE- (A) ADVERTISING; (B) BROADCASTING AND TELECASTING INCLUDING PRODUCTI ON OF PROGRAMMES FOR SUCH BROADCASTING OR TELECASTING; (C) CARRIAGE OF GOODS OR PASSENGERS BY ANY MODE OF TRANSPORT OTHER THAN BY RAILWAYS; (D) CATERING; (E) MANUFACTURING OR SUPPLYING A PRODUCT ACCORDING TO THE REQUIREMENT OR SPECIFICATION OF A CUSTOMER BY USING MATERIAL PU RCHASED FROM SUCH CUSTOMER, BUT DOES NOT INCLUDE MANUFACTURING OR SUP PLYING A PRODUCT ACCORDING TO THE REQUIREMENT OR SPECIFICATION OF A CUSTOMER BY USING MATERIAL PURCHASED FROM A PERSON, OTHER THAN SUCH C USTOMER.' THUS AS PER SECTION 194C ALSO, 'WORKS CONTRACT' DOES NOT INCLUDE A CONTRACT WHEREIN THE CONTRACTOR IN ADDITION TO EMPL OYING LABOUR, PROCURES MATERIAL FROM A THIRD PARTY. THUS, CONTRAC TS INVOLVING MERE LABOUR OF THE CONTRACTOR ARE INCLUDED IN THE PURVIE W OF 'WORKS CONTRACT'. FURTHER, ATTENTION IS INVITED TO THE JUDGMENT OF TH E SUPREME COURT IN CASE OF ASSOCIATED CEMENT CO. LTD. VS. CIT [201 ITR 435], WHEREIN THE HON'BLE COURT WHILE INTERPRETING THE TERM 'WORK' U/S 194C H ELD THAT 'WORDS `ANY WORK' IN SUB-S. (1) OF S. 194C MEANS ANY WORK INCLUDING SUPPLY OF LABOUR TO CARRY OUT WORK AND IS NOT INTENDED TO BE CONFINE D TO OR RESTRICTED TO 20 I.T.A. NO. 140/KOL/2015 ASSESSMENT YEAR: 2005-06 & I.T.A. NO. 141/KOL/2015 ASSESSMENT YEAR: 2006-07 M/S. SIMPLEX INFRASTUCTURE LTD WORKS CONTRACT, THEREFORE, A PERSON WHO CREDITS TO THE ACCOUNT OF OR PAYS TO A CONTRACTOR ANY SUM PAYABLE ON BEHALF OF ORGANI ZATIONS SPECIFIED IN S. 194C(1) FOR CARRYING OUT ANY WORK (INCLUDING SUPPLY OF LAB OUR FOR CARRYING OUT ANY WORK) IS LIABLE TO DEDUCT INCOME-T AX AS REQUIRED UNDER THAT SUB-SECTION. THE WORDS IN THE SUB-SECTIONS (1) OF 194C `ON INCOME COMPRISED THEREIN' APPEARING IMMEDIATELY AFTER THE WORDS `DEDUCT AN AMOUNT EQUAL TO TWO PER CENT OF SUCH SUM AS INCOME- TAX' FROM THEIR PURPORT, CANNOT BE UNDERSTOOD AS THE PERCENTAGE AMO UNT DEDUCTIBLE FROM THE INCOME OF THE CONTRACTOR OUT OF THE SUM CREDITE D TO HIS ACCOUNT OR PAID TO HIM IN PURSUANCE OF THE CONTRACT, BUT DEDUC TION IS TO BE MADE OUT OF PAYMENTS MADE TO THE CONTRACTOR.' 6.3 WE SEE NO REASON TO CURTAIL OR TO CUT DOWN THE MEANING OF THE PLAIN WORDS USED IN THE SECTION. ''ANY WORK' MEANS ANY WO RK AND NOT A 'WORKS CONTRACT'', WHICH HAS A SPECIAL CONNOTATION IN THE TAX LAW. INDEED IN THE SUB- SECTION THE 'WORK' REFERRED TO THEREIN EXPRESS LY INCLUDES SUPPLY OF LABOUR TO CARRY OUT A WORK. IT IS A CLEAR INDICATIO N OF THE LEGISLATURE THAT THE 'WORK' IN THE SUB-SECTION IS NOT INTENDED TO BE CONFINED TO OR RESTRICTED TO 'WORKS CONTRACT'. THE ISSUE BEFORE TH E SUPREME COURT IN THE AFORESAID CASE WAS WHETHER THE TERM 'WORK' USED IN SECTION 194C NEEDS TO BE RESTRICTED TO 'WORKS CONTRACT'. THE APEX COURT L AID OUT THAT THE TERM 'WORK' USED IN SECTION 194C NEED NOT BE RESTRICTED TO 'WORKS CONTRACTS' (I.E. LABOUR CONTRACTS) BECAUSE THE SUB- SECTION EX PRESSLY INCLUDES SUPPLY OF LABOUR TO CARRY OUT WORK. IN OTHER WORDS, IT IS IMPLIED THAT WORKS CONTRACT MEANS SUPPLY OF LABOUR TO CARRY OUT WORK. THUS FROM THE ABOVE WE MAY SAY THAT A WORKS CONTRACT CONSTITUTES A CONT RACT UNDER WHICH THE CONTRACTOR IS MERELY EMPLOYING HIS EFFORTS OR LABOU R. UNDER SUCH A CONTRACT, THE CONTRACTEE PROVIDES THE MATERIAL AND OTHER REQUISITES (A COMPLETE INFRASTRUCTURE) NEEDED TO CARRY OUT THE DE SIRED WORK TO THE CONTRACTOR WHO BY APPLYING HIS LABOUR TO THE SAID M ATERIAL TURNS THE MATERIAL INTO A DESIRED PRODUCT. FURTHER, ATTENTION IS INVITED TO THE MEMORANDUM EXPLAINING THE PROVISIONS IN THE FINANCE BILL, 2007, REPORTED IN [2007] 289 ITR (ST.) 292 AT PAGE 312, W HICH READS AS UNDER: 21 I.T.A. NO. 140/KOL/2015 ASSESSMENT YEAR: 2005-06 & I.T.A. NO. 141/KOL/2015 ASSESSMENT YEAR: 2006-07 M/S. SIMPLEX INFRASTUCTURE LTD ' SECTION 80-LA , INTER ALIA, PROVIDES FOR A TEN-YEAR TAX BENEFIT T O AN ENTERPRISE OR AN UNDERTAKING ENGAGED IN DEVELOPMENT OF INFRASTRUCTURE FACILITIES, INDUSTRIAL PARKS AND SPECIAL ECONOMIC Z ONES. THE TAX BENEFIT WAS INTRODUCED FOR THE REASON THAT INDUSTRIAL MODERNIZA TION REQUIRES A PASSIVE EXPANSION OF, AND QUALITATIVE IMPROVEMENT I N, INFRASTRUCTURE (VIZ., EXPRESSWAYS, HIGHWAYS, AIRPORTS, PORTS AND RAPID UR BAN RAIL TRANSPORT SYSTEMS) WHICH WAS LACKING IN OUR COUNTRY. THE PURP OSE OF THE TAX BENEFIT HAS ALL ALONG BEEN {OR ENCOURAGING PRIVATE SECTOR P ARTICIPATION BY WAY OF INVESTMENT IN DEVELOPMENT OF THE INFRASTRUCTURE SEC TOR AND NOT {OR THE PERSONS WHO MERELY EXECUTE THE CIVIL CONSTRUCTION W ORK OR ANY OTHER WORKS CONTRACT.' ACCORDINGLY, IT IS PROPOSED TO CLARIFY THAT THE PRO VISIONS OF SECTION 80- IA SHALL NOT APPLY TO A PERSON WHO EXECUTES A WORKS CO NTRACT ENTERED INTO WITH THE UNDERTAKING OR ENTERPRISE REFERRED TO IN T HE SAID SECTION. THUS, IN A CASE WHERE A PERSON MAKES THE INVESTMENT AND HIMS ELF EXECUTES THE DEVELOPMENT WORK, I.E., CARRIES OUT THE CIVIL CONST RUCTION WORK HE WILL BE ELIGIBLE FOR TAX BENEFIT UNDER SECTION 80- IA OF TH E ACT. IN CONTRAST TO THIS, A PERSON WHO ENTERS INTO A CONTRACT WITH ANOTHER PERS ON (I.E., UNDERTAKING OR ENTERPRISE REFERRED TO IN SECTION 80-IA ) FOR EXECUTING WORKS CONTRACT, WILL NOT BE ELIGIBLE FOR TAX BENEFIT UNDER SECTION 80- IA. THIS AMENDMENT WILL TAKE RETROSPECTIVE EFFECT FROM 1ST APRIL 2000 AND WILL ACCORDINGLY APPLY IN RELATION TO THE ASSESSMENT YEAR 2000-01 AN D SUBSEQUENT YEARS. THE EXPLANATORY MEMORANDUM CLEARLY LAYS OUT THAT PU RPOSE OF EXTENDING TAX BENEFIT U/S 80-IA WAS TO ENCOURAGE INVESTMENTS FROM THE PRIVATE SECTOR AND HENCE WORK CONTRACTS, I.E. CONTRACTS INV OLVING MERELY LABOUR (OR MERE EXECUTION OF CONSTRUCTION WITHOUT MAKING I NVESTMENTS) ARE OUTSIDE THE PURVIEW OF THE PROVISIONS OF SECTION 80-1A . THUS, THE TERM 'WORKS CONTRACT' USED IN EXPLANATION TO SECTION 80-IA(L3) MEANS A CONTRACT OF DEVELOPING INFRASTRUCTURE BY MERELY EMP LOYING LABOUR AND MAKING NO INVESTMENTS. WE ALSO FIND SUPPORT FROM TH E FOLLOWING JUDGMENTS: 22 I.T.A. NO. 140/KOL/2015 ASSESSMENT YEAR: 2005-06 & I.T.A. NO. 141/KOL/2015 ASSESSMENT YEAR: 2006-07 M/S. SIMPLEX INFRASTUCTURE LTD THE HYDERABAD BENCH OF TRIBUNAL IN CASE OF M/S. GVP R ENGINEERS LTD. VS. ACIT (2012) 32 CCH 0296 HYDTRIB (2012) 51 SOT 0207 (HYD) (URO). THE RELEVANT EXTRACT OF THE ORDER IS REPRODUCED AS UNDE R : 'THE NEXT QUESTION TO BE ANSWERED IS WHETHER THE AS SESSEE IS A DEVELOPER OR MERE WORKS CONTRACTOR. WHETHER THE ASSESSEE IS A DEVELOPER OR WORKS CONTRACTOR IS PURELY DEPENDS ON THE NATURE OF THE W ORK UNDERTAKEN BY THE ASSESSEE. EACH OF THE WORK UNDERTAKEN HAS TO BE ANA LYZED AND A CONCLUSION HAS TO BE DRAWN ABOUT THE NATURE OF THE WORK UNDERTAKEN BY THE ASSESSEE. THE AGREEMENT ENTERED INTO WITH THE G OVERNMENT OR THE GOVERNMENT BODY MAY BE A MERE WORKS CONTRACT OR FOR DEVELOPMENT OF INFRASTRUCTURE. IT IS TO BE SEEN FROM THE AGREEMENT S ENTERED INTO BY THE ASSESSEE WITH THE GOVERNMENT. THE GOVERNMENT HANDED OVER THE POSSESSION OF THE PREMISES OF PROJECTS TO THE ASSES SEE FOR THE DEVELOPMENT OF INFRASTRUCTURE FACILITY. IT IS THE ASSESSEE'S RE SPONSIBILITY TO DO ALL ACTS TILL THE POSSESSION OF PROPERTY IS HANDED OVER TO THE GO VERNMENT. THE FIRST PHASE IS TO TAKE OVER THE EXISTING PREMISES OF THE PROJECTS AND THEREAFTER DEVELOPING THE SAME INTO INFRASTRUCTURE FACILITY. S ECONDLY, THE ASSESSEE SHALL FACILITATE THE PEOPLE TO USE THE AVAILABLE EX ISTING FACILITY EVEN WHILE THE PROCESS OF DEVELOPMENT IS IN PROGRESS. ANY LOSS TO THE PUBLIC CAUSED IN THE PROCESS WOULD BE THE RESPONSIBILITY OF THE ASSE SSEE. THE ASSESSEE HAS TO DEVELOP THE INFRASTRUCTURE FACILITY. IN THE PROCESS , ALL THE WORKS ARE TO BE EXECUTED BY THE ASSESSEE. IT MAY BE LAYING OF A DRA INAGE SYSTEM; MAY BE CONSTRUCTION OF A PROJECT; PROVISION OF WAY FOR THE CATTLE AND BULLOCK CARTS IN THE VILLAGE; PROVISION FOR TRAFFIC WITHOUT ANY H INDRANCE, THE ASSESSEE'S DUTY IS TO DEVELOP INFRASTRUCTURE WHETHER IT INVOLV ES CONSTRUCTION OF A PARTICULAR ITEM AS AGREED TO IN THE AGREEMENT OR NO T. THE AGREEMENT IS NOT FOR A SPECIFIC WORK, IT IS FOR DEVELOPMENT OF F ACILITY AS A WHOLE. THE ASSESSEE IS NOT ENTRUSTED WITH ANY SPECIFIC WORK TO BE DONE BY THE ASSESSEE. THE MATERIAL REQUIRED IS TO BE BROUGHT IN BY THE ASSESSEE BY STICKING TO THE QUALITY AND QUANTITY IRRESPECTIVE O F THE COST OF SUCH MATERIAL. THE GOVERNMENT DOES NOT PROVIDE ANY MATER IAL TO THE ASSESSEE. IT PROVIDES THE WORKS IN PACKAGES AND NOT AS A WORK S CONTRACT. THE 23 I.T.A. NO. 140/KOL/2015 ASSESSMENT YEAR: 2005-06 & I.T.A. NO. 141/KOL/2015 ASSESSMENT YEAR: 2006-07 M/S. SIMPLEX INFRASTUCTURE LTD ASSESSEE UTILIZES ITS FUNDS, ITS EXPERTISE, ITS EMP LOYEES AND TAKES THE RESPONSIBILITY OF DEVELOPING THE INFRASTRUCTURE FAC ILITY. THE LOSSES SUFFERED EITHER BY THE GOVT. OR THE PEOPLE IN THE PROCESS OF SUCH DEVELOPMENT WOULD BE THAT OF THE ASSESSEE. THE ASSESSEE HANDS OVER TH E DEVELOPED INFRASTRUCTURE FACILITY TO THE GOVERNMENT ON COMPLE TION OF THE DEVELOPMENT. THEREAFTER, THE ASSESSEE HAS TO UNDERT AKE MAINTENANCE OF THE SAID INFRASTRUCTURE FOR A PERIOD OF 12 TO 24 MO NTHS. DURING THIS PERIOD, IF ANY DAMAGES ARE OCCURRED IT SHALL BE THE RESPONS IBILITY OF THE ASSESSEE. FURTHER, DURING THIS PERIOD, THE ENTIRE INFRASTRUCT URE SHALL HAVE TO BE MAINTAINED BY THE ASSESSEE ALONE WITHOUT HINDRANCE TO THE REGULAR TRAFFIC. THEREFORE, IT IS CLEAR THAT FROM AN UN-DEVELOPED AR EA, INFRASTRUCTURE IS DEVELOPED AND HANDED OVER TO THE GOVERNMENT AND AS EXPLAINED BY THE CBDT VIDE ITS CIRCULAR DATED 18- 05-2010, SUCH ACTI VITY IS ELIGIBLE FOR DEDUCTION UNDER SECTION 80IA (4) OF THE ACT. THIS CANNOT BE CONSIDERED AS A MERE WORKS CONTRACT BUT HAS TO BE CONSIDERED AS A DEVELOPMENT OF INFRASTRUCTURE FACILITY. THEREFORE, THE ASSESSEE IS A DEVELOPER AND NOT A WORKS CONTRACTOR AS PRESUMED BY THE REVENUE. THE DE PARTMENT IS NOT CORRECT IN HOLDING THAT THE ASSESSEE IS A MERE CONT RACTOR OF THE WORK AND NOT A DEVELOPER.' 6.4 IT WAS ALSO OBSERVED THAT 'THE EXPLANATORY MEMO RANDUM TO FINANCE ACT 2007 STATES THAT THE PURPOSE OF THE TAX BENEFIT HA S ALL ALONG BEEN TO ENCOURAGE INVESTMENT IN DEVELOPMENT OF INFRASTRUCTU RE SECTOR AND NOT FOR THE PERSONS WHO MERELY EXECUTE THE CIVIL CONSTRUCTI ON WORK. IT CATEGORICALLY STATES THAT THE DEDUCTION UNDER SECTION 80IA OF THE ACT IS AVAILABLE TO DEVELOPERS WHO UNDERTAKES ENTREPRENEUR IAL AND INVESTMENT RISK AND NOT FOR THE CONTRACTORS, WHO UNDERTAKES ON LY BUSINESS RISK. SIMILARLY THE CHENNAI BENCH OF TRIBUNAL IN CASE OF R.R. CONSTRUCTIONS, CHENNAI VS DEPARTMENT OF INCOME TAX 2013) 35 CCH 0547 CHEN TRIB (2015) 152 ITD 0625 (CHENNAI) HELD THAT 'WHEN THE A SSESSEE MAKES INVESTMENT AND HIMSELF EXECUTES DEVELOPMENT WORK AN D CARRIES OUT CIVIL WORKS HE IS ELIGIBLE FOR TAX BENEFIT U/S 80IA OF TH E ACT. ACCORDINGLY, WITH THE FOREGOING DISCUSSION, WE HOLD THAT THE ASSESSEE IS ENTITLED TO DEDUCTION 24 I.T.A. NO. 140/KOL/2015 ASSESSMENT YEAR: 2005-06 & I.T.A. NO. 141/KOL/2015 ASSESSMENT YEAR: 2006-07 M/S. SIMPLEX INFRASTUCTURE LTD U/S 80IA(4) OF THE ACT, AND THEREFORE, WE ORDER TO DELETE THE ADDITION MADE IN THIS RESPECT' THUS, THE MEMORANDUM EXPLAINING THE PROVISIONS IN T HE FINANCE BILL, 2007, FURTHER STRENGTHENS THE CONTENTION OF THE ASS ESSEE THAT A WORKS CONTRACT IS A CONTRACT WHICH INVOLVES MERE LABOUR O F THE CONTRACTOR. HOWEVER, IF UNDER A CONTRACT, THE CONTRACTOR EMPLOY S HIS CAPITAL AND ENTERPRISE IN ADDITION TO LABOUR, THEN THE SAID CON TRACT DOES NOT CONSTITUTE A WORKS CONTRACT UNDER THE EXPLANATION TO SECTION 80-IA(L3) AND THE CONTRACTOR SHALL BE ELIGIBLE FOR DEDUCTION U/S 80-I A. NOW COMING TO THE FACTS OF THE CASE, IT IS SUBMITTED THAT THE ASSESSE E WAS NOT MERE WORKS CONTRACTOR, WHO HAD MERELY EMPLOYED ITS LABOUR UNDE R THE PROJECTS FROM THE VARIOUS GOVERNMENT AUTHORITIES. THE ASSESSEE WA S A DEVELOPER. IN ADDITION TO EMPLOYING LABOUR IT MADE INVESTMENTS, I T DEVELOPED AN ENTERPRISE/INFRASTRUCTURE TO SUPPORT THE WORK UNDER THE VARIOUS PROJECTS. IN ADDITION TO LABOUR, IT DEPLOYED ITS MACHINERY, M ATERIALS AND DID ALL THE THINGS NECESSARY (I.E. PROVIDED AN ENTERPRISE) TO S UPPORT THE CONSTRUCTION WORK UNDERTAKEN UNDER THE VARIOUS PROJECTS. THE ASS ESSEE WAS PROVIDED WITH THE SITE ALONE AND BY PUTTING ITS OWN INPUTS ( NOT LABOUR ALONE) HE CONVERTED THE SITE INTO AN INFRASTRUCTURAL FACILITY . 6.5 FURTHER, ITAT (HYDERABAD) IN CASE OF SIVA SWATH I CONSTRUCTIONS PVT. LTD. VS DCIT, CIRCLE-3(2) IN ITA NO.1008-09/HYD/201 3 FOR AYS 2009-10 & 2010-11 DATED 25.10.2013 HELD THAT 'THE NEXT REASON GIVEN BY THE CIT(A) IS WITH REGARD TO NON- FINANCIAL PARTICIPATION BY T HE ASSESSEE, AS THE ASSESSEE HAS GOT MOBILIZATION ADVANCE. THE MOBILIZA TION ADVANCE HAS NOT BEEN GIVEN FREELY. IT HAS BEEN GIVEN ONLY AFTER THE ASSESSEE FURNISHED A BANK GUARANTEE, AND THE BANK GUARANTEE HAS BEEN GIV EN BY THE BANK ONLY AFTER GETTING ENOUGH SECURITY FROM THE ASSESSEE, TO PROTECT ITSELF FROM ANY RISK ON ACCOUNT OF ANY DEFAULT ON THE PART OF THE A SSESSEE. THE ASSESSEE HAS TAKEN FINANCIAL ASSISTANCE FROM BANK AND PAID HUGE INTEREST OF RS. 2,87,10,943.00 FOR ASSESSMENT YEAR 2009-10 AND OF R S. 9,35,78,373.00 FOR ASSESSMENT YEAR 2010-11, AS SEEN FROM THE PROFIT AN D LOSS ACCOUNT OF THE ASSESSEE FOR THE RELEVANT YEARS ENDING ON 31.3.2009 AND 31.3.2010 25 I.T.A. NO. 140/KOL/2015 ASSESSMENT YEAR: 2005-06 & I.T.A. NO. 141/KOL/2015 ASSESSMENT YEAR: 2006-07 M/S. SIMPLEX INFRASTUCTURE LTD RESPECTIVELY, COPIES OF WHICH ARE FURNISHED BY THE ASSESSEE AT PAGES 20 AND 65 OF THE PAPER-BOOK. SIMILARLY, ASSESSEE HAS INVES TED ITS OWN FUND OF RS.5,55,00,000.00 FOR ASSESSMENT YEAR 2009-10 AND O F RS. 7,86,75,710.00 FOR THE ASSESSMENT YEAR 2010-11, AS SEEN FROM THE B ALANCE SHEET OF THE ASSESSEE AS ON 31.3.2009 AND 31.3.2010 RESPECTIVELY , COPIES OF WHICH ARE FURNISHED BY THE ASSESSEE AT PAGES 21 AND 66 OF THE PAPER-BOOK. IN THIS VIEW OF THE MATTER, THE REASON GIVEN BY THE CIT(A) ON THIS ASPECT FOR DENYING DEDUCTION TO THE ASSESSEE UNDER S.80-IA IS ALSO NOT VALID. THUS IN LIGHT OF THE AFORESAID DECISION OF THE TRIB UNAL HYDERABAD BENCH, THE CONTENTION OF THE AO IS NOT VALID. FURTHER, MER ELY BECAUSE THE ASSESSEE WAS RECEIVING PAYMENTS FROM THE GOVERNMENT IN PROGR ESS OF WORK IT CANNOT BE SAID THAT THE PROJECTS WERE FINANCED BY G OVERNMENT. IN THIS REGARD IT IS POINTED OUT THAT UNDER SUB- SECTION 4 OF SECTION 80-IA , DEDUCTION IS AVAILABLE TO A DEVELOPER, I.E. IF, AN ASSESSEE, MERELY DEVELOPS THE INFRASTRUCTURE FACILITY WITHOUT OPERATING AND M AINTAINING THE SAME, IT IS ENTITLED TO DEDUCTION. THE BOMBAY HIGH COURT IN CASE OF COMMISSIONER OF INCOME-TAX V. ABG HEAVY INDUSTRIES LIMITED [322 ITR 323] OBSERVED THAT 'PARLIAMENT AMENDED THE PROVISIONS OF SECTION 80-LA OF THE ACT SO AS TO CLARIFY THAT IN ORDER TO AVAIL OF A DEDUCTION, T HE ASSESSEE COULD (I) DEVELOP ; OR (II) OPERATE AND MAINTAIN ; OR (III) D EVELOP, OPERATE AND MAINTAIN THE FACILITY. THE CONDITION AS REGARDS DEV ELOPMENT, OPERATION AND MAINTENANCE OF AN INFRASTRUCTURE FACILITY WAS C ONTEMPORANEOUSLY CONSTRUED BY THE AUTHORITIES AT ALL MATERIAL TIMES, TO COVER WITHIN ITS PURVIEW THE DEVELOPMENT OF AN INFRASTRUCTURE FACILI TY UNDER A SCHEME BY WHICH AN ENTERPRISE WOULD BUILD, OWN, LEASE AND EVE NTUALLY TRANSFER THE FACILITY. ' 'THIS WAS PERHAPS A PRACTICAL REALISATION OF THE FA CT A DEVELOPER MAY NOT POSSESS THE WHEREWITHAL, EXPERTISE OR RESOURCES TO OPERATE A FACILITY, ONCE CONSTRUCTED PARLIAMENT EVENTUALLY STEPPED IN TO CLA RIFY THAT IT WAS NOT INVARIABLY NECESSARY FOR A DEVELOPER TO OPERATE AND MAINTAIN THE FACILITY. PARLIAMENT WHEN IT AMENDED THE LAW WAS OBVIOUSLY AW ARE OF THE ADMINISTRATIVE PRACTICE RESULTING IN THE CIRCULARS OF THE CENTRAL BOARD OF 26 I.T.A. NO. 140/KOL/2015 ASSESSMENT YEAR: 2005-06 & I.T.A. NO. 141/KOL/2015 ASSESSMENT YEAR: 2006-07 M/S. SIMPLEX INFRASTUCTURE LTD DIRECT TAXES. THE FACT THAT IN SUCH A SCHEME. AN EN TERPRISE WOULD NOT OPERATE THE FACILITY ITSELF WAS NOT REGARDED AS BEI NG A STATUTORY BAR TO THE ENTITLEMENT TO A DEDUCTION UNDER SECTION 80-IA OF THE ACT. ' 6.6 FROM THE ABOVE IT IS CLEAR THAT EVEN IF AN ASSE SSEE IS MERELY DEVELOPING THE INFRASTRUCTURAL FACILITY (WITHOUT OPERATING AND MAINTAINING THE SAME), IT IS ENTITLED TO DEDUCTION U/S 80-1A. FURTH ER, CONDITION (B) LAID OUT IN SUB- SECTION 4 OF SECTION 80-IA MANDATES THE EXISTENCE OF AN AGREEMENT WITH THE GOVERNMENT. MOREOVER, IF SECTION 80-IA GRANTS DEDUCTION ON PROFITS FROM THE ACTIVITY OF DEVELOPMENT CARRIED OU T IN PURSUANCE OF AN AGREEMENT WITH THE GOVERNMENT IT PRESUPPOSES THAT A SSESSEE WILL EARN SOME PROFITS FROM MERE DEVELOPMENT (WITHOUT OPERATI NG AND MAINTAINING) OF THE INFRASTRUCTURE FACILITY. NOW THE RELEVANT QUESTION THAT ARISES HERE IS THAT HOW WOULD AN ASSESSEE ENGAGED IN MERE DEVELOPMENTAL ACTIVITY (AND NO OPER ATION) PURSUANT TO AN AGREEMENT WITH THE GOVERNMENT EARN PROFITS ? THE OBVIOUS ANSWER IS THAT THE ASSESSEE WILL RECOVER ITS COST OF DEVELOPM ENT FROM THE GOVERNMENT OTHERWISE THE ENTIRE COST OF DEVELOPMENT WILL BE A LOSS IN ITS HANDS. THUS, IF DEDUCTION U/S 80-IA IS DENIED ON TH E GROUND THAT THE ASSESSEE HAD RECEIVED PAYMENTS FROM GOVERNMENT, THE N AN ASSESSEE WHO IS ONLY A 'DEVELOPER' (AND NOT AN OPERATOR) WILL NE VER BE ENTITLED TO DEDUCTION U/S 80-IA, WHICH IS CLEARLY NOT THE INTEN TION OF LEGISLATURE AS DISCUSSED BY THE BOMBAY HIGH COURT IN CASE OF ABG H EAVY INDUSTRIES LTD. THUS, MERELY BECAUSE THE ASSESSEE WAS PAID BY THE G OVERNMENT FOR DEVELOPMENT WORK IT CANNOT BE DENIED DEDUCTION UNDE R SECTION 80-IA(4) . THE CONTENTION OF THE ASSESSEE FINDS STRENGTH FROM THE FOLLOWING JUDGMENTS: THE ITAT (MUMBAI) IN CASE OF ACIT V. BHARAT UDYOG L TD. (2009) 123 TTJ 0689 : (2009) 23 DTR 0433 : (2009) 118 ITD 0336 : ( 2008) 24 SOT 0412 'AFTER THE AMENDMENT EFFECTED BY FINANCE ACT , 1999 W.E.F. 1ST APRIL, 2000, THE DEDUCTION UNDER S. 80-IA(4) HAS BECOME AVAILABLE TO ANY ENTERPRISE CARRYING ON THE BUSINESS OF (I) DEVELOPING, OR (II) MAINTAINING AND 27 I.T.A. NO. 140/KOL/2015 ASSESSMENT YEAR: 2005-06 & I.T.A. NO. 141/KOL/2015 ASSESSMENT YEAR: 2006-07 M/S. SIMPLEX INFRASTUCTURE LTD OPERATING, OR (III) DEVELOPING, MAINTAINING AND OPE RATING ANY INFRASTRUCTURE FACILITY. SUB-CL. (C) OF CL. (I) OF S. 80-IA(4) IS OBVIOUSLY APPLICABLE TO AN ENTERPRISE WHICH IS ENGAGED IN 'OP ERATING AND MAINTAINING' THE INFRASTRUCTURE FACILITY ON OR AFTE R 1ST APRIL, 1995. IT IS NOT APPLICABLE TO THE CASE OF AN ENTERPRISE WHICH IS EN GAGED IN MERE 'DEVELOPMENT' OF INFRASTRUCTURE FACILITY AND NOT IT S 'OPERATION' AND 'MAINTENANCE'. THEREFORE, THE QUESTION OF 'OPERATIN G AND MAINTAINING' OF INFRASTRUCTURE FACILITY BY SUCH ENTERPRISE BEFORE O R AFTER ANY CUT OFF DATE CANNOT ARISE. HOWEVER, IF THE CONTENTION OF THE DEP ARTMENTAL REPRESENTATIVE IS ACCEPTED, IT WOULD OBVIOUSLY/UNDE RSTANDABLY LEAD TO MANIFESTLY ABSURD RESULTS. WHEN THE ACT PROVIDES FOR DEDUCTION UNDISPUTEDLY FOR AN ENTERPRISE WHO IS ONLY 'DEVELOP ING' THE INFRASTRUCTURE FACILITY, UNACCOMPANIED BY 'OPERATING AND MAINTAINI NG' THEREOF BY SUCH PERSON, THERE CANNOT BE ANY QUESTION OF PROVIDING A CONDITION FOR SUCH AN ENTERPRISE TO START OPERATING AND MAINTAINING THE I NFRASTRUCTURE FACILITY ON OR AFTER 1ST APRIL, 1995. SINCE THE ASSESSEE IS ONLY A DEVELOPER OF THE INFRASTRUCTURE PROJECT AND IT IS NOT MAINTAINING AN D OPERATING THE INFRASTRUCTURE FACILITY, SUB-CL. (C) OF CL. (I) OF SUB-S. (4) OF S. 80-IA IS NOT APPLICABLE. THE INTERPRETATION OF REVENUE IS ABSURD ALSO IN VIEW OF THE RATIONALE OF THE PROVISIONS OF S. 80-IA(4)(I) . FROM THE ASST. YR. 2000-01, DEDUCTION IS AVAILABLE IF THE ASSESSEE CARRIES ON T HE BUSINESS OF ANY ONE OF THE THREE TYPES OF ACTIVITIES. WHEN AN ASSESSEE IS ONLY DEVELOPING AN INFRASTRUCTURE FACILITY PROJECT AND IS NOT MAINTAIN ING NOR OPERATING IT, OBVIOUSLY SUCH AN ASSESSEE WILL BE PAID FOR THE COS T INCURRED BY IT; OTHERWISE, HOW WILL THE PERSON WHO DEVELOPS THE INF RASTRUCTURE FACILITY PROJECT, REALISE ITS COST ? IF THE INFRASTRUCTURE F ACILITY, JUST AFTER ITS DEVELOPMENT, IS TRANSFERRED TO THE GOVERNMENT, NATU RALLY THE COST WOULD BE PAID BY THE GOVERNMENT. THEREFORE, MERELY BECAUS E THE TRANSFEREE HAS PAID FOR THE DEVELOPMENT OF INFRASTRUCTURE FACILITY CARRIED OUT BY THE ASSESSEE, IT CANNOT BE SAID THAT THE ASSESSEE DID N OT DEVELOP THE INFRASTRUCTURE FACILITY. IF THE INTERPRETATION CANV ASSED BY THE REVENUE AUTHORITIES IS ACCEPTED, NO ENTERPRISE, CARRYING ON THE BUSINESS OF ONLY 28 I.T.A. NO. 140/KOL/2015 ASSESSMENT YEAR: 2005-06 & I.T.A. NO. 141/KOL/2015 ASSESSMENT YEAR: 2006-07 M/S. SIMPLEX INFRASTUCTURE LTD DEVELOPING THE INFRASTRUCTURE FACILITY, WOULD BE EN TITLED TO DEDUCTION UNDER S. 80-IA(4) , WHICH IS NOT THE INTENTION OF THE LAW. IF A PERSO N WHO ONLY DEVELOPS THE INFRASTRUCTURE FACILITY IS NOT PA ID BY THE GOVERNMENT, THE ENTIRE COST OF DEVELOPMENT WOULD BE A LOSS IN T HE HANDS OF THE DEVELOPER AS HE IS NOT OPERATING THE INFRASTRUCTURE FACILITY. WHEN THE LEGISLATURE HAS PROVIDED THAT THE INCOME OF THE DEV ELOPER OF THE INFRASTRUCTURE PROJECT WOULD BE ELIGIBLE FOR DEDUCT ION, IT PRESUPPOSES THAT THERE CAN BE INCOME TO DEVELOPER, I.E., TO THE PERS ON WHO IS CARRYING ON THE ACTIVITY OF ONLY DEVELOPING INFRASTRUCTURE FACILITY . OBVIOUS AS IT IS, A DEVELOPER WOULD HAVE INCOME ONLY IF HE IS PAID FOR DEVELOPMENT OF INFRASTRUCTURE FACILITY, FOR THE SIMPLE REASON THAT HE IS NOT HAVING THE RIGHT/AUTHORISATION TO OPERATE THE INFRASTRUCTURE F ACILITY AND TO COLLECT TOLL THEREFROM, AND HAS NO OTHER SOURCE OF RECOUPME NT OF HIS COST OF DEVELOPMENT. CONSIDERED AS SUCH, THE BUSINESS ACTIV ITY OF THE NATURE OF BUILD AND TRANSFER ALSO FALLS WITHIN ELIGIBLE CONST RUCTION ACTIVITY, THAT IS, ACTIVITY ELIGIBLE FOR DEDUCTION UNDER S. 80-IA INASMUCH AS MERE 'DEVELOPMENT' AS SUCH AND UNASSOCIATED/ UNACCOMPANI ED WITH 'OPERATE' AND 'MAINTENANCE' ALSO FALLS WITHIN SUCH BUSINESS A CTIVITY AS IS ELIGIBLE FOR DEDUCTION UNDER S. 80-IA . THEREFORE, MERELY BECAUSE THE PRESENT ASSESSEE WAS PAID BY THE GOVERNMENT FOR DEVELOPMENT WORK, IT CANNOT BE DENIED DEDUCTION UNDER S. 80-IA(4) . A PERSON WHO ENTERS INTO A CONTRACT WITH ANOTHER PERSON WILL BE A CONTRACTOR NO DOUBT; AND T HE ASSESSEE HAVING ENTERED INTO AN AGREEMENT WITH THE GOVERNMENT AGENC IES FOR DEVELOPMENT OF THE INFRASTRUCTURE PROJECTS, IS OBVI OUSLY A CONTRACTOR BUT THAT DOES NOT DEROGATE THE ASSESSEE FROM BEING A DE VELOPER AS WELL. THE TERM 'CONTRACTOR' IS NOT ESSENTIALLY CONTRADICTORY TO THE TERM 'DEVELOPER'. ON THE OTHER HAND, RATHER S. 80- IA(4) ITSELF PROVI DES THAT ASSESSEE SHOULD DEVELOP THE INFRASTRUCTURE FACILITY AS PER AGREEMEN T 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, M ERELY BECAUSE IN THE AGREEMENT FOR DEVELOPMENT OF INFRASTRUCTURE FACILIT Y, ASSESSEE IS REFERRED 29 I.T.A. NO. 140/KOL/2015 ASSESSMENT YEAR: 2005-06 & I.T.A. NO. 141/KOL/2015 ASSESSMENT YEAR: 2006-07 M/S. SIMPLEX INFRASTUCTURE LTD TO AS CONTRACTOR OR BECAUSE SOME BASIC SPECIFICATIO NS 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 S. 80-IA(4) . THEREFORE, AN ASSESSEE WHO IS ONLY ENGAGED IN THE D EVELOPING THE INFRASTRUCTURAL FACILITY I.E., ROAD AND NOT ENGAGED IN THE 'OPERATING AND MAINTAINING' THE SAID FACILITY IS ENTITLED TO THE B ENEFITS OF THE DEDUCTION UNDER S. 80-IA(4) .-- PATEL ENGINEERING LTD. VS. DY. CIT (2004) 84 TTJ (MUMBAI) 646 FOLLOWED. PROVISIONS OF SUB-CL. (C) OF CL. (I) OF S. 80-IA(4) ARE INAPPLICABLE TO THE ASSESSEE WHICH IS ENGAGED IN ME RE DEVELOPING OF THE INFRASTRUCTURE FACILITY AND, THEREFORE, AN ASSESSEE WHO IS ONLY ENGAGED IN DEVELOPING THE INFRASTRUCTURE FACILITY AND NOT IN ' OPERATING AND MAINTAINING' THE SAID FACILITY IS ENTITLED TO THE B ENEFIT OF DEDUCTION UNDER S. 80-IA(4) ; MERELY BECAUSE ASSESSEE IS REFERRED TO AS 'CONTRA CTOR' IN THE AGREEMENT FOR DEVELOPMENT OF INFRASTRUCTURE FACILIT Y OR SOME BASIC SPECIFICATIONS ARE LAID DOWN, WOULD NOT DEBAR THE A SSESSEE FROM CLAIMING DEDUCTION UNDER S. 80-IA(4) .' IF A PERSON WHO ONLY DEVELOPS THE INFRASTRUCTURE FA CILITY WAS NOT PAID BY THE GOVERNMENT, THE ENTIRE COST OF DEVELOPMENT WOUL D BE A LOSS IN THE HANDS OF THE DEVELOPER AS HE WAS NOT OPERATING THE INFRASTRUCTURE FACILITY. MERELY BECAUSE THE ASSESSEE WAS PAID BY THE GOVERNM ENT FOR DEVELOPMENT WORK IT COULD NOT BE DENIED DEDUCTION UNDER SECTION 80-IA(4) . THE CHENNAI BENCH OF TRIBUNAL IN CASE OF R.R. CONSTRUCTIONS, CHENNAI VS. DEPARTMENT OF INCOME TAX HELD THAT 'WHEN AN ASSESSEE IS ONLY DEVELOPING AN INFRASTRUCTURE FACILITY PROJECT AND IS NOT MAINT AINING NOR OPERATING IT, OBVIOUSLY SUCH AN ASSESSEE WILL BE PAID FOR THE COS T INCURRED BY IT; OTHERWISE, HOW WILL THE PERSON, WHO DEVELOPS THE IN FRASTRUCTURE FACILITY PROJECT, REALIZE ITS COST? IF THE INFRASTRUCTURE FA CILITY, JUST AFTER ITS DEVELOPMENT, IS TRANSFERRED TO THE GOVERNMENT, NATU RALLY THE COST WOULD BE PAID BY THE GOVERNMENT. THEREFORE, MERELY BECAUS E THE TRANSFEREE HAD PAID FOR THE DEVELOPMENT OF INFRASTRUCTURE FACILITY CARRIED OUT BY THE ASSESSEE, IT CANNOT BE SAID THAT THE ASSESSEE DID N OT DEVELOP THE INFRASTRUCTURE FACILITY. IF THE INTERPRETATION DONE BY THE ASSESSING OFFICER 30 I.T.A. NO. 140/KOL/2015 ASSESSMENT YEAR: 2005-06 & I.T.A. NO. 141/KOL/2015 ASSESSMENT YEAR: 2006-07 M/S. SIMPLEX INFRASTUCTURE LTD IS ACCEPTED, NO ENTERPRISE CARRYING ON THE BUSINESS OF ONLY DEVELOPING HE INFRASTRUCTURE FACILITY WOULD BE ENTITLED TO DEDUCT ION UNDER SECTION 80IA(4) , WHICH IS NOT THE INTENTION OF THE LAW. AN ENTERPR ISE, WHICH DEVELOPS THE INFRASTRUCTURE FACILITY IS NOT PAID BY THE GOVERNMENT, THE ENTIRE COST OF DEVELOPMENT WOULD BE A LOSS IN THE H ANDS OF THE DEVELOPER AS HE IS NOT OPERATING THE INFRASTRUCTURE FACILITY. THE LEGISLATURE HAS PROVIDED THAT THE INCOME OF THE DEVELOPER OF THE IN FRASTRUCTURE PROJECT WOULD BE ELIGIBLE FOR DEDUCTION. IT PRESUPPOSES THA T THERE CAN BE INCOME TO DEVELOPER I.E. TO THE PERSON WHO IS CARRYING ON THE ACTIVITY OF ONLY DEVELOPMENT INFRASTRUCTURE FACILITY. OSTENSIBLY, A DEVELOPER WOULD HAVE INCOME ONLY IF HE IS PAID FOR THE DEVELOPMENT OF IN FRASTRUCTURE FACILITY, FOR THE SIMPLE REASON THAT HE IS NOT HAVING THE RIGHT/A UTHORIZATION TO OPERATE THE INFRASTRUCTURE FACILITY AND TO COLLECT TOLL THE RE FROM, HAS NO OTHER SOURCE OF RECOUPMENT OF HIS COST OF DEVELOPMENT. THE INDORE BENCH OF THE TRIBUNAL IN CASE OF SANEE INFRASTRUCTURE PVT. LTD. VS. ACIT [138 ITD 433] HELD THAT 'AS PER OUR CONSIDERED VIE W, AFTER AMENDMENT BY THE FINANCE ACT , 2002 FOR CLAIM OF DEDUCTION U/S 80IA(4) INFRASTRUCTURE FACILITY IS ONLY REQUIRED TO BE DEVE LOPED AND THERE IS NO CONDITION THAT ASSESSEE SHOULD ALSO OPERATE THE SAM E. THUS, AFTER AMENDMENT, WHEN THE ASSESSEE IS NOT REQUIRED TO OPE RATE THE FACILITY, THE PAYMENT FOR DEVELOPMENT OF SUCH INFRASTRUCTURE IS R EQUIRED TO BE MADE BY THE GOVERNMENT ONLY. 'AFTER AMENDMENT, WHEN ASSESSE E UNDERTAKES TO DEVELOP THE INFRASTRUCTURE FACILITY ONLY, IT IS THE GOVERNMENT WHO WILL MAKE PAYMENT TO ASSESSEE IN RESPECT OF INFRASTRUCTU RE FACILITY DEVELOPED BY IT IN TERMS OF AGREEMENT SO ENTERED WITH GOVERNM ENT. THUS, WE DO NOT FIND ANY INFRINGEMENT OF CONDITIONS {OR CLAIM OF DE DUCTION' 6.7 THUS FROM THE ABOVE, IT IS CLEAR THAT THE FACT THAT THE ASSESSEE HAD RECEIVED PAYMENTS FROM THE GOVERNMENT IN PROGRESS O F ITS WORK HAS NO BEARING ON ELIGIBILITY OF DEDUCTION U/S 80- IA. FUR THER, THE REVENUE IN ALL THE GROUNDS HAS CONTENDED THAT THE CONTRACTS ENTERE D INTO BY THE ASSESSEE WERE MERELY 'CONSTRUCTION CONTRACTS' SINCE THE ASSE SSEE IS NOT EXPOSED TO ANY ENTREPRENEURIAL AND INVESTMENT RISK. IN THIS RE GARD, THE AO HAS 31 I.T.A. NO. 140/KOL/2015 ASSESSMENT YEAR: 2005-06 & I.T.A. NO. 141/KOL/2015 ASSESSMENT YEAR: 2006-07 M/S. SIMPLEX INFRASTUCTURE LTD OBSERVED THAT THE ASSESSEE IS EXECUTING THE CONTRAC T AGAINST PREDETERMINED REVENUE W.R.T THE ABOVE, IT IS SUBMIT TED THAT UNDER THE IMPUGNED CONTRACTS, THE ASSESSEE WAS MERELY CARRYIN G OUT THE CIVIL CONSTRUCTION WORK. IT WAS RESPONSIBLE FOR OVERALL D EVELOPMENT OF THE INFRASTRUCTURE FACILITY. IT WAS MERELY PROVIDED WIT H THE SITE WHICH IT HAD TO DEVELOP INTO AN INFRASTRUCTURAL FACILITY BY DEPLOYI NG HIS RESOURCES I.E. MATERIAL, PLANT & MACHINERY, LABOUR, SUPERVISORS ET C. IT WAS RESPONSIBLE FOR ANY DAMAGE/LOSS CAUSED TO ANY PROPERTY OR LIFE IN COURSE OF EXECUTION OF THE WORKS. IT WAS EVEN RESPONSIBLE FOR REMEDYING OF THE DEFECTS IN THE WORKS AT ITS COST. IT WAS ALSO REQUIRED TO OPERATE AND MAINTAIN THE INFRASTRUCTURE FACILITY. HENCE, IT CANNOT BE SAID T HAT THE CONTRACT WITH THE GOVERNMENT WAS TO CARRY OUT MERE CIVIL CONSTRUCTION . ATTENTION IN THIS REGARD IS INVITED TO THE FOLLOWING: (I) THE ITAT (AHMEDABAD) IN CASE OF SUGAM CONSTRUCTION (P) LTD. VS. ITO [56 SOT 45] HELD THAT 'IT IS ALSO GATHERED (A) THAT A DEVELOPER IS A PERSON WHO UNDERTAKES THE RESPONSIBILITY TO DEVELOP A PROJ ECT. (B) THAT A DEVELOPER IS THEREFORE NOT A CIVIL CONTRACTOR SIMPL ICITOR. (C) THAT IF WE APPLY THE COMMERCIAL ASPECT, THEN A DEVELOPER HAS T O EXECUTE BOTH MANAGERIAL AS WELL AS FINANCIAL RESPONSIBILITY. (D) THAT THE ROLE OF A DEVELOPER, ACCORDING TO US, IS LARGER THAN THAT OF A CONTRACTOR. (E) THAT WHEN A PERSON IS ACTING AS A DEVELOPER, THEN HE IS UNDER OBLIGATION TO DESIGN THE PROJECT, IT IS ANOTHER ASPECT THAT SUCH DESIGN HAS TO BE APPROVED BY THE OWNER OF THE PROJECT, I. E. THE GOV ERNMENT IN THE PRESENT CASE. (F) THAT HE HAS NOT ONLY TO EXECUTE THE CONST RUCTION WORK IN THE CAPACITY OF A CONTRACTOR BUT ALSO HE IS ASSIGNED WI TH THE DUTY TO DEVELOP, MAINTAIN AND OPERATE SUCH PROJECT. (G) THAT TO ASCE RTAIN WHETHER A CIVIL CONSTRUCTION WORK IS ASSIGNED ON DEVELOPMENT BASIS OR CONTRACT BASIS CAN ONLY BE DECIDED ON THE BASIS OF THE TERMS AND CONDI TIONS OF THE AGREEMENT. ONLY ON THE BASIS OF THE TERMS AND CONDITIONS IT CA N BE ASCERTAINED ABOUT THE NATURE OF THE CONTRACT ASSIGNED THAT WHETHER IT IS A 'WORK CONTRACT' OR A 'DEVELOPMENT CONTRACT'. (H) THAT IN A DEVELOPMENT CONTRACT' RESPONSIBILITY IS FULLY ASSIGNED TO THE DEVELOPER F OR EXECUTION AND 32 I.T.A. NO. 140/KOL/2015 ASSESSMENT YEAR: 2005-06 & I.T.A. NO. 141/KOL/2015 ASSESSMENT YEAR: 2006-07 M/S. SIMPLEX INFRASTUCTURE LTD COMPLETION OF WORK. (I) THAT ALTHOUGH THE OWNERSHIP OF THE SITE OR THE OWNERSHIP OVER THE LAND REMAINS WITH THE OWNER BUT DURING THE PERIOD OF DEVELOPMENT AGREEMENT THE DEVELOPER EXERCISE COMPLE TE DOMAIN OVER THE LAND OR THE PROJECT. THAT A DEVELOPER IS NOT EXPECT ED TO RAISE BILLS AT EVERY STEP OF CONSTRUCTION BUT HE IS EXPECTED TO CHARGE T HE COST OF CONSTRUCTION PLUS MARK-UP OF HIS PROFIT FROM THE ASSIGNEE OF THE CONTRACT. (K) THAT A DEVELOPER IS THEREFORE EXPECTED TO ARRANGE FINANCES AND ALSO TO UNDERTAKE RISK. (I) THAT IN CONTRAST TO THE RIGHTS OF A 'CONT RACTOR' A 'DEVELOPER' IS AUTHORIZED TO RAISE FUNDS EITHER BY PRIVATE PLACEME NT OR BY FINANCIAL INSTITUTIONS ON THE BASIS OF THE PROJECT. THESE ARE FEW BROAD QUALITIES OF A DEVELOPER THROUGH WHICH THE CHARACTER OF A DEVELOPE R CAN BE DEFINED. ' (II) ITAT(HYDERABAD) IN CASE OF KOYA AND CO. CONSTRUCTION (P) LTD. VS ACIT [51 SOT 203] HELD THAT 'THE EXPLANATORY MEMORANDUM TO FINANCE ACT 2007 STATES THAT THE PURPOSE OF THE TAX BENEFIT HA S ALL LONG BEEN TO ENCOURAGE INVESTMENT IN DEVELOPMENT OF INFRASTRUCTU RE SECTOR AND NOT FOR THE PERSONS WHO MERELY EXECUTE THE CIVIL CONSTRUCTI ON WORK. IT CATEGORICALLY STATES THAT THE DEDUCTION UNDER SECTION 80IA OF THE ACT IS AVAILABLE TO DEVELOPERS WHO UNDERTAKES ENTREPRENEUR IAL AND INVESTMENT RISK AND NOT FOR THE CONTRACTORS, WHO UNDERTAKES ON LY BUSINESS RISK. WITHOUT ANY DOUBT, THE LEARNED COUNSEL FOR THE ASSE SSEE CLEARLY DEMONSTRATED BEFORE THE COURT THAT THE ASSESSEE AT PRESENT HAS UNDERTAKEN HUGE RISKS IN TERMS OF DEPLOYMENT OF TEC HNICAL PERSONNEL, PLANT AND MACHINERY, TECHNICAL KNOWHOW, EXPERTISE A ND FINANCIAL RESOURCES.' THUS, THE FACT THAT THE ASSESSEE DEPLOYS ITS RESOUR CES (MATERIAL, MACHINERY, LABOUR ETC.) IN THE CONSTRUCTION WORK CL EARLY EXHIBITS THE RISKS UNDERTAKEN BY THE ASSESSEE. FURTHER, THE ASSESSEE V IDE THE AGREEMENTS HAS CLEARLY DEMONSTRATED THE VARIOUS RISKS UNDERTAKEN B Y IT. THE ASSESSEE WAS TO FURNISH A SECURITY DEPOSIT TO THE EMPLOYER AND I NDEMNIFY THE EMPLOYER OF ANY LOSSES/DAMAGE CAUSED TO ANY PROPERTY/LIFE IN COURSE OF EXECUTION OF WORKS. FURTHER, IT WAS RESPONSIBLE FOR THE CORRE CTION OF DEFECTS ARISING IN THE WORKS AT IT COST. THUS, IT CANNOT BE SAID TH AT THE ASSESSEE HAD NOT 33 I.T.A. NO. 140/KOL/2015 ASSESSMENT YEAR: 2005-06 & I.T.A. NO. 141/KOL/2015 ASSESSMENT YEAR: 2006-07 M/S. SIMPLEX INFRASTUCTURE LTD UNDERTAKEN ANY RISK. THE ITAT (HYDERABAD] IN CASE O F SIVA SWATHI CONSTRUCTION (P) LTD. (SUPRA) HELD THAT 'FURTHER RE ASON GIVEN BY THE LD. CIT(A) FOR DENYING DEDUCTION UNDER S.80IA TO THE AS SESSEE IS THAT THE ASSESSEE HAS NOT UNDERTAKEN ANY RISKS. THE OBSERVAT IONS OF THE LD. CIT(A) IN THIS BEHALF ARE ALSO NOT VALID AND CORRECT. IT W AS CLEARLY MENTIONED IN THE AGREEMENT THAT THE ASSESSEE SHALL EXECUTE AND F URNISH INDEMNITY BOND FOR A PERIOD OF FOUR YEARS, INDEMNIFYING THE GOVERN MENT AGAINST ANY LOSS OR EXPENDITURE INCURRED, TO REPAIR ANY DEFECT NOTIC ED DUE TO FAULTY WORKING DONE BY THE CONTRACTOR OR SUBSTANDARD MATER IAL USED BY THE CONTRACTOR. FURTHER, IT IS ALSO MENTIONED IN THE CO NTRACT AGREEMENT THAT THE ASSESSEE SHALL NOT CLAIM FOR ANY LOSS DUE TO FO RESEEN CIRCUMSTANCES, INCLUDING SUSPENSION OF WORK DUE TO CAUSE. IT IS AL SO PROVIDED THAT IN THE EVENT OF ACCIDENT TO PEOPLE EMPLOYED BY THE ASSESSE E RESULTING IN COMPENSATION TO BE PAID AS PER THE WORKMEN'S COMPENSATION ACT THE SAME SHALL BE PAID BY THE CONTRACTOR, VIZ. THE ASSE SSEE ONLY. IN VIEW OF THE VARIOUS SPECIFIC CLAUSES IN THE AGREEMENT FASTENING THE RISKS TO BE UNDERTAKEN BY THE ASSESSEE, DISCUSSED ABOVE, IT CAN NOT BE SAID THAT THE ASSESSEE HAS NOT UNDERTAKEN ANY RISK. 6.8 FROM THE ABOVE, IT IS CLEAR THAT THE CONTENTION OF THE AO THAT THE ASSESSEE HAD NOT UNDERTAKEN ANY ENTREPRENEURIAL AND INVESTMENT RISK IS AN INCORRECT INTERPRETATION OF THE FACTS. LASTLY, W ITH REGARD TO THE PROJECT O&M, BANGALORE (ON WHICH A DEDUCTION OF RS. 35,16,9 41/- WAS CLAIMED), IT IS SUBMITTED THAT IT IS AN OPERATION AND MAINTENANC E PROJECT, TO WHICH EXPLANATION TO SECTION 80-IA(13) DOES NOT APPLY. EXPLANATION TO SECTION 80- IA(13) MERELY DISTINGUISHES BETWEEN A DEVELOPER AND WORKS CONTRACTOR. IT CLARIFIES THAT A WORKS CONTRACTOR SH ALL NOT BE INCLUDED IN THE CATEGORY OF 'DEVELOPER' U/S 80-1A. THUS, THE EXPLAN ATION CLEARLY DOES NOT APPLY TO O&M PROJECTS. HENCE, DEDUCTION OF RS. 35,1 6,941/- CLAIMED FOR THE AFORESAID PROJECT U/S 80-IA CANNOT BE DENIED BY INVOKING THE EXPLANATION TO SECTION 80- 1A . 7. FROM THE PERUSAL OF THE TERMS AND CONDITIONS IN THE AGREEMENT, IT IS CLEAR THAT THE ASSESSEE WAS NOT A WORKS CONTRACTOR SIMPLICITOR AND WAS A 34 I.T.A. NO. 140/KOL/2015 ASSESSMENT YEAR: 2005-06 & I.T.A. NO. 141/KOL/2015 ASSESSMENT YEAR: 2006-07 M/S. SIMPLEX INFRASTUCTURE LTD DEVELOPER AND HENCE EXPLANATION TO SECTION 80- IA(1 3) DOES NOT APPLY TO THE ASSESSEE. FURTHER, IN ADDITION TO DEVELOPING TH E INFRASTRUCTURE FACILITY, THE ASSESSEE WAS EVEN OPERATING AND MAINTAINING THE SAME. THUS, CLEARLY THE ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S 80-1A. I N OUR CONSIDERED VIEW DO NOT FIND ANY REASON TO UPHOLD THE ORDER OF LD. CIT( A). HENCE THIS GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED. 18. RESPECTFULLY FOLLOWING THE SAME, WE UPHOLD THE ORDER OF THE LD. CIT(A), ON THIS ISSUE. 18.1. WE FIND THAT THE ASSESSING OFFICER, IN THIS C ASE HAS PASSED AN ORDER FOR THE IMPUGNED ASSESSMENT YEAR, SEVEN DAYS AFTER PASS ING THE ASSESSMENT ORDER FOR THE ASSESSMENT YEAR 2005-06. THE ASSESSING OFFI CER HAD ALLOWED THE CLAIM FOR DEDUCTION OF THE ASSESSEE ON 9 PROJECTS IN THAT YEAR. A SIMILAR DISALLOWANCE WAS NOT MADE FOR THE ASSESSMENT YEAR 2005-06. NO FA ULT WAS FOUND BY THE ASSESSING OFFICER ON ANY OF THE PROJECTS WHILE NOTI NG DOWN THE DETAILS OF EACH OF THE SEVEN PROJECTS UNDERTAKEN BY THE ASSESSEE DU RING THE YEAR. NO ADVERSE INFERENCE HAS BEEN DRAWN ON ANY OF THESE SEVEN PROJ ECTS THAT THEY DO NOT QUALIFY TO BE INFRASTRUCTURAL FACILITIES IN TERMS O F SECTION 80 IA(4) OF THE ACT. UNDER THESE CIRCUMSTANCES, WE ARE OF THE CONSIDERED OPINION THAT THE SUBMISSIONS OF THE LD. DR, THAT THE ISSUE SHOULD BE RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR EXAMINING THE ELIGIBILITY OF EACH PROJECT IS DEVOID OF MERIT. HENCE WE REJECT THE SAME 19. IN THE RESULT, GROUND NO. 1 OF THE REVENUE IS D ISMISSED. 35 I.T.A. NO. 140/KOL/2015 ASSESSMENT YEAR: 2005-06 & I.T.A. NO. 141/KOL/2015 ASSESSMENT YEAR: 2006-07 M/S. SIMPLEX INFRASTUCTURE LTD 20. GROUND NO. 2, IS AGAINST THE DELETION OF A DISA LLOWANCE BY THE LD. CIT(A) OF CLAIM OF RETENTION MONEY ON FOREIGN PROJECT. 20.1. THE LD. CIT(A), RELIED UPON THE DECISION OF T HE JURISDICTIONAL HIGH COURT IN THE ASSESSEES OWN CASE AND HELD THAT THE RIGHT TO RECEIVE RETENTION MONEY HAS NOT ACCRUED DURING THE ASSESSMENT YEAR AND HENC E, THE SAME IS NOT INCOME, SUBJECT TO TAX, DURING THE YEAR. 21. WE FIND NO INFIRMITY IN THIS FINDING. HENCE, WE UPHOLD THIS FINDING OF THE LD. CIT(A) AND DISMISS THIS GROUND OF THE REVENUE. 22. IN THE RESULT, APPEAL FOR THE ASSESSMENT YEAR 2005- 06, IS ALLOWED FOR STATISTICAL PURPOSES. APPEAL FOR THE ASSESSMENT YEAR 2006-07 IS DISMISSE D. KOLKATA, THE 25 TH DAY OF OCTOBER, 2017. SD/- SD/- [N.V. VASUDEVAN] [ J. SUDHAKAR REDDY ] JUDICIAL MEMBER ACCOUNTANT MEMB ER DATED : 25.10.2017 {SC SPS} 36 I.T.A. NO. 140/KOL/2015 ASSESSMENT YEAR: 2005-06 & I.T.A. NO. 141/KOL/2015 ASSESSMENT YEAR: 2006-07 M/S. SIMPLEX INFRASTUCTURE LTD COPY OF THE ORDER FORWARDED TO: 1. M/S. SIMPLEX INFRASTUCTURE LTD 27, SHAKESPEARE SARANI KOLKATA 700 017 2. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-12(2), K OLKATA P-7,CHOWRINGHEESQUARE AAYAKAR BHAWAN 6 TH FLOOR KOLKATA- 700 069 3. CIT(A)- 4. CIT- , 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER SENIOR PRIVATE SECRETARY HEAD OF OFFICE/ D.D.O. ITAT, KOLKATA BENCHES