M/s PNC Construction Co. Ltd., Agra V. D.C.I.T.-4(1), Agra

ITA 145/AGR/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 0235 (ITAT-AGRA)
• Duration Of Justice: 10 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-02-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 11-02-2013
• Assessment Year: 2005-2006
• Appeal Filed On: 12-04-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Rule of consistency; Wrong claim; Capital expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO.145/AGR/2012 ASSESSMENT YEAR: 2005-06 M/S. PNC CONSTRUCTION CO. LTD., VS. DY. COMMISSION ER OF INCOME D-51, KAMLA NAGAR, TAX 4(1), AGRA. AGRA. (PAN: AACCP 0377 Q). (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI DEEPENDRA MOHAN, C.A. RESPONDENT BY : SHRI WASEEM ARSHAD, SR. D.R. DATE OF HEARING : 11.02.2013 DATE OF PRONOUNCEMENT OF ORDER : 15.02.2013 ORDER PER A.L. GEHLOT, ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 12.01.2012 PASSED BY THE LD. CIT(A)-II, AGRA FOR THE ASSESSMEN T YEAR 2005-06. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL :- 1. THAT THE LD. CIT (APPEAL) HAS ERRED IN PASSING THE EX-PARTE ORDER WITHOUT AFFORDING ADEQUATE OPPORTUNITY TO THE APPELLANT, AS DUE COMPLIANCE WAS MADE. ITA NO.145/AGR/2012 A.Y. 2005-06 2 2. THAT THE LEARNED ASSESSING AUTHORITIES BELOW ERR ED IN LAW AND ON FACTS IN MAKING A DISALLOWANCE OF RS.5,00,000/- OUT OF SIGN BOARD EXPENSES OF RS.61,64,601/-. 3. THAT THE LEARNED ASSESSING AUTHORITIES BELOW ERR ED IN LAW AND ON FACTS IN MAKING A DISALLOWANCE OF RS.5,00,000/- OUT OF TEMPORARY BUILDING STRUCTURE CLAIMED AT RS.1,02,11,975/-. 4. THAT THE LEARNED ASSESSING AUTHORITIES BELOW ERR ED IN LAW AND ON FACTS IN MAKING A DISALLOWANCE OF RS.10,00,000/- OUR OF REPAIR & MACHINERY EXPENSES CLAIMED AT RS.1,89,46,155/-. 5. THAT THE LEARNED CIT(APPEALS) HAS ERRED IN LAW A ND ON FACTS IN ENHANCING THE ASSESSMENT BY DISALLOWING DEDUCTION C LAIMED U/S 80IA(4) FOR AN AMOUNT OF RS.1,60,49,232/- WHICH WAS ALLOWED BY THE LEARNED ASSESSING OFFICER DURING THE COURSE OF ASSE SSMENT PROCEEDINGS. 6. THAT THE LD. C.I.T. (APPEAL) HAS ERRED IN LAW AN D ON FACTS IN NOT BRINGING ANY ADVERSE MATERIAL ON RECORD TO SUPPORT THAT THE ASSESSEE WAS NOT ELIGIBLE FOR DEDUCTION U/S 80I A(4) NOR THE APPELLANT HAS BEEN AFFORDED AN OPPORTUNITY TO EXAMINE ANY SUCH ADVERSE MATERIAL. 7. THAT THE ORDER PASSED BY THE AUTHORITIES BELOW I S BAD IN LAW AND AGAINST THE FACTS OF THE CASE. 8. THAT ANY OTHER RELIEF OR RELIEFS DEEMED FIT IN T HE FACTS AND CIRCUMSTANCE OF THE CASE MAY BE GRANTED. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR VARY T HE GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEARING. 3. THE ASSESSEE HAS ALSO RAISED AN ADDITIONAL GROUN D WHICH READS AS UNDER :- THAT THE LEARNED AUTHORITIES BELOW ERRED IN LAW AN D ON FACTS IN MAKING AN AD-HOC DISALLOWANCE OF RS.5,00,000/- OUT OF PAINT EXPENSES CLAIMED AT RS.2,16,78,425/-. ITA NO.145/AGR/2012 A.Y. 2005-06 3 4. AFTER HEARING THE LD. REPRESENTATIVES OF THE PAR TIES, WE NOTICE THAT THE ISSUE RELATING TO ADDITIONAL GROUND ARISES OUT OF ORDER O F CIT(A). HOWEVER, INADVERTENTLY THIS ISSUE HAS BEEN LEFT TO INCORPORA TE IN THE GROUNDS OF APPEAL IN FORM NO.36 WHILE FILING THE APPEAL BEFORE THE I.T.A .T. THE LD. DEPARTMENTAL REPRESENTATIVE DID NOT OBJECT FOR ADMISSION OF THE ADDITIONAL GROUND OF APPEAL. IN THE INTEREST OF JUSTICE AND FOR THE REASONS STATED ABOVE, WE ADMIT THE ADDITIONAL GROUND. 5. THE ASSESSEE IS A LIMITED COMPANY ENGAGED IN THE BUSINESS OF INFRA- STRUCTURE DEVELOPMENT CONTRACTS. CONSIDERING THE N ATURE OF THE GROUNDS OF APPEAL AND FOR THE SAKE OF CONVENIENCE, WE WOULD LIKE TO F IRST TAKE UP GROUNDS NO.5 & 6 OF THE APPEAL. 6. GROUND NOS.5 & 6 PERTAIN TO DISALLOWANCE CLAIMED UNDER SECTION 80IA(4) OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) AM OUNTING TO RS.1,60,49,232/-. 7. THE BRIEF FACTS OF THE ISSUE ARE THAT DURING THE YEAR THE ASSESSEE CLAIMED DEDUCTION UNDER SECTION 80IA(4) OF THE ACT. THE AS SESSEE CLAIMED SUCH DEDUCTION UNDER SECTION 80IA(4) OF THE ACT ON TWO PROJECTS OF WHICH DETAILS ARE NOTED BY THE A.O. IN HIS ORDER WHICH ARE AS UNDER :- ITA NO.145/AGR/2012 A.Y. 2005-06 4 PANIPAT JALANDHAR PROJECT 2,41,48,668 SAGAR BEENA PROJECT (-) 80,99,435 1,60,49,232 8. THE A.O. ASKED THE ASSESSEE TO JUSTIFY THE CLAIM IN RESPECT OF TWO PROJECTS I.E. PANIPAT JALANDHAR PROJECT AND SAGAR BEENA PROJ ECT. AFTER CONSIDERING THE ASSESSEES SUBMISSION, THE A.O. ALLOWED THE CLAIM O F THE ASSESSEE. THE A.O. ACCEPTED THE ASSESSEES CLAIM AFTER CONSIDERING THE FOLLOWING SUBMISSION MADE BY THE ASSESSEE BEFORE HIM. 9. THE ASSESSEE MADE THE FOLLOWING SUBMISSIONS IN THIS REGARD. THE ASSESSEE COMPANY IS INCORPORATED WITH THE REGI STRAR OF COMPANIES IN INDIA. THE ASSESSEE COMPANY, WHICH IS A LIMITED COMPANY REGISTERED WITH THE REGISTRAR OF COMPANIES IN INDIA HAS ENTERED INTO AN AGREEMENT WITH THE NATIONAL HIGHWAY AUTHORITY OF INDIA BY MEANS OF CONTRACT AGREEMENT ENTERED INTO W ITH AGREEMENT NO.NHAI/GM/CM/STMC/2003-2004. THE AGREEMENT WAS SI GNED BY DEPUTY GENERAL MANAGER ON BEHALF OF NATIONAL HIGHWA Y AUTHORITY OF INDIA (MINISTRY OF ROAD TRANSPORT AND HIGHWAYS) -1 VIDE LETTER DATED 9.6.2003 BEARING NO.NHAI/CM/DGM/TMC-IV/2003/1996. THE CONTENTS OF WORK INCLUDE TOLL OPERATIONS, OPERATING AND MAINTAINING THE ROAD. THE ABOVE NATURE OF WORK IS COVERED BY PROVISIONS O F SECTION 80IA(4)(I) WHICH READS AS UNDER :- ANY ENTERPRISE CARRYING ON THE BUSINESS (OF (I) DE VELOPING OR (II) OPERATING AND MAINTAINING OR (III) OPERATING AND MAINTAINING ANY INFRASTRUCTURE FACILITY WHICH FULFILLS ALL THE FOLL OWING CONDITIONS. SINCE THE ASSESSEE COMPANYS CASE IS COVERED BY THE SECTION AS AFORESAID THAT IS OPERATING AND MAINTAINING THE C ONDITION AS LAID DOWN IN THE AFORESAID SECTION IS FULFILLED. ITA NO.145/AGR/2012 A.Y. 2005-06 5 2. NOW COMING TO THE CONDITIONS ANNEXED WITH THE AF ORESAID SECTION ARE: (A) IT IS OWNED BY A COMPANY REGISTERED IN INDIA OR BY A CONSORTIUM OF SUCH COMPANIES SINCE THE ENTERPRISE CARRYING ON THE BUSINESS IS REGISTERED IN INDIA THE CONDITION IS LAID DOWN IN (A) IS FULFILLED (B) IT HAS ENTERED INTO AN AGREEMENT WITH THE CENTRAL GOVERNMENT OR A SATE GOVERNMENT OR A LOCAL AUTHORITY OR ANY OTHER STATUTORY BODY FOR (I) DEVELOPING OR (II) OPERATING AND MAINTAINING OR (III) DEVELOPING, OPERATING AND MAINTAINING A NEW INFRASTRUCTURE FACILITY; THE ASSESSEE COMPANY, WHICH IS A LIMITED COMPANY REGISTERED WITH THE REGISTRAR OF COMPANIES IN INDIA HAS ENTERED INTO AN AGREEMENT WITH THE NATIONAL HIGHWAY AUTHORITY OF INDIA BY MANS OF CONTRACT AGREEMENT ENTERED INTO WITH AGREEMENT NO. NHAI/GM/CM/STMC/2003- 2004. THE AGREEMENT WAS SIGNED BY DEPUTY GENERAL MANAGER ON BEHALF OF NATIONAL HIGHWAY AUTHORITY OF INDIA (MINISTRY OF ROAD TRANSPORT AND HIGHWAYS) -1 VIDE LETTER DATED 9.6.2003 BEARING NO. NHAI/CM/DGM/TMC- IV/2003/1996. THE CONTENTS OF WORK INCLUDE TOLL OPERATIONS, OPERATING AND MAINTAINING THE ROAD. THUS THE CONDITION AS LAID DOWN IN SECTION 80IA(4)(I)(B) IS ALSO FULFILLED. (C) IT HAS STARTED OR STARTS OPERATING AND MAINTAINING THE INFRASTRUCTURE FACILITY ON OR AFTER 1 ST DAY OF APRIL, 1995; PROVIDED THAT WHERE AN INFRASTRUCTURE FACILITY IS TRANSFERRED ON OR AFTER THE IT IS TO SUBMIT THAT THE ASSESSEE COMPANY IS ENGAGED IN OPERATING AND MAINTAINING INFRASTRUCTURE FACILITY AS PER AGREEMENT ENTERED INTO WITH NHAI WHICH IS STATUTORY BODY OF GENERAL GOVERNMENT FOR DEVELOPING, OPERATING AND ITA NO.145/AGR/2012 A.Y. 2005-06 6 1 ST DAY OF APRIL, 1999 BY AN ENTERPRISE WHICH DEVELOPED SUCH INFRASTRUCTURE FACILITY (HEREINAFTER REFERRED TO IN THIS SECTION AS THE TRANSFEROR ENTERPRISE) TO ANOTHER ENTERPRISE (HEREINAFTER IN THIS SECTION REFERRED TO AS THE TRANSFEREE ENTERPRISE) FOR THE PURPOSE OF OPERATING AND MAINTAINING THE INFRASTRUCTURE FACILITY ON ITS BEHALF IN ACCORDANCE WITH THE AGREEMENT WITH THE CENTRAL GOVERNMENT, STATE GOVERNMENT, LOCAL AUTHORITY OR STATUTORY BODY, THE PROVISIONS OF THIS SECTION SHALL APPLY TO THE TRANSFEREE ENTERPRISE AS IF IT WERE THE ENTERPRISE TO WHICH THIS CLAUSE APPLIES AND THE DEDUCTION FROM PROFITS AND GAINS WOULD BE AVAILABLE TO SUCH TRANSFEREE ENTERPRISE FOR THE UNEXPIRED PERIOD DURING WHICH THE TRANSFEROR ENTERPRISE WOULD HAVE BEEN ENTITLED TO THE DEDUCTION, IF THE TRANSFER HAD NOT TAKEN PLACE. EXPLANATION FOR THE PURPOSE OF THIS CLAUSE, INFRASTRUCTURE FACILITY A MEANS (A) A ROAD INCLUDING TOLL ROAD , A BRIDGE OR A RAIL SYSTEM; (B) A HIGHWAY PROJECT MAINTAINING A NEW INFRASTRUCTURE FACILITY, THE ASSESSEE COMPANY FULFILLS THE CONDITION AS LAID DOWN UNDER SECTION 80IA(4)(I)(C). THE ASSESSEE COMPANY HAS BEEN SANCTIONED A TENDER FOR THE IMPROVEMENT AND MAINTENANCE OF PANIPAT-JALANDHAR SECTION NH-1 FROM KM. 96 TO 372.800 INCLUDING TOLL OPERATION. A CONTRACT AGREEMENT WAS ENTERED INTO BETWEEN NHAI & ASSESSEE COMPANY M/S PNC ITA NO.145/AGR/2012 A.Y. 2005-06 7 INCLUDING HOUSING OR OTHER ACTIVITIES BEING AN INTEGRAL PART OF THE HIGHWAY PROJECT; CONSTRUCTION CO. LTD. VIDE AGREEMENT NO. NHAI/GM/CM/STMC/2003/04 THE DATE OF AGREEMENT WAS 13.06.2003. IT IS ALSO SUBMITTED THAT THE CONTROL AND MANAGEMEN T OF THE CONTRACT UNDERTAKING BY THE ASSESSEE COMPANY IS ENJ OYED BY THE ASSESSEE COMPANY EXCLUSIVELY AND NO OUTSIDE AGENCY IS INVOLVED IN IT. THE OPERATION AND MAINTENANCE ACTIVITIES ARE CARRIE D OUT BY THE ASSESSEE COMPANY AND NONE OF THE AGENCY IS ALLOWED TO MAKE ANY CLAM ABOUT THE ENCROACHMENT OF THE ROAD AND ITS SIT ES. THUS THE ASSESSEES COMPANY HAS FULFILLED THE REQUI REMENTS AS CONTAINED IN THE PROVISIONS OF SECTION 80IA(4)(I)(A )(B) & (C) READ WITH EXPLANATION ATTACHED THERETO, IT IS ELIGIBLE FOR DE DUCTION U/S 80IA OF THE I.T. ACT. 9. THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A) AGAINST THE ADHOC ADDITIONS MADE BY THE A.O. IN RESPECT OF DISALLOWANCE OF VARI OUS EXPENSES. THE CIT(A) WITHDRAWN THE CLAIM OF THE ASSESSEE UNDER SECTION 8 0IA(4) OF THE ACT AS UNDER:- (CIT(A) PAGE NOS.11 & 12) IN THE LIGHT OF THESE PROVISIONS, IT IS TO BE SEEN AS TO WHETHER THE APPELLANT IS ELIGIBLE FOR DEDUCTION U/S. 80IA(4 ). AS REGARDS THE PANIPAT JALANDHAR PROJECT, AS PER THE AGREEMENT, IT WAS A CONTRACT FOR SHORT-TERM IMPROVEMENT AND ROUTINE MAINTENANCE OF PANIPAT JALANDHAR SECTION NH-1 FROM KM. 96 TO KM. 372. SO, IT CANNOT BE SAID THAT THE ASSESSEE WAS (I) DEVELOPING OR (II) O PERATING AND MAINTAINING OR (III) DEVELOPING, OPERATING AND MAIN TAINING THE PANIPAT JALANDHAR SECTION OF NH-1. IT WAS A CONT RACT ONLY FOR SHORT-TEM IMPROVEMENT AND ROUTINE MAINTENANCE. IT CANNOT BE SAID THAT THE ASSESSEE WAS DEVELOPING OR OPERATING AND M AINTAINING OR DEVELOPING, OPERATING AND MAINTAINING THE HIGHWAY. THE ASSESSEE DID NOT BUILD OR DEVELOP THE HIGHWAY, IT WAS ALREADY EX ISTING. THE ITA NO.145/AGR/2012 A.Y. 2005-06 8 ASSESSEE ONLY DID ROUTINE MAINTENANCE BUT DID NOT O PERATE IT. THUS, THE CONDITIONS AS STIPULATED IN SECTION 80IA(4) ARE NOT SATISFIED IN CASE OF PANIPAT JALANDHAR PROJECT. AS REGARDS SAGAR BEENA PROJECT NOTHING IS FORTHCOMING FORM THE ASSESSMENT ORDER AS TO WHICH KIND OF PROJECT IT WAS AND AS TO HOW DID IT QUALIFY FOR DED UCTION U/S. 80IA(4). EVEN DURING THE APPELLATE PROCEEDINGS, INSPITE OF H AVING BEEN GIVEN AMPLE OPPORTUNITIES NOTHING HAS BEEN STATED BY THE APPELLANT AS TO HOW IT WAS JUSTIFIED IN CLAIMING THE DEDUCTION U/S 80IA(4) RELATING TO PROFITS DERIVED FROM THIS PROJECT. APART FROM PRE- REQUISITE AS MENTIONED IN SECTION 80IA(4)(I)(A) THE APPELLANT HA S ALSO NOT MET THE CONDITION AS MENTIONED 80IA(4)(B) AS THERE IS NOTHI NG TO SUGGEST ON RECORD THAT THE ASSESSEE HAD ENTERED INTO ANY AGREE MENT WITH THE CENTRAL GOVERNMENT OR A STATE GOVERNMENT OR A LOCAL AUTHORITY OR ANY OTHER STATUTORY BODY. BECAUSE, AS PER THE DETA ILS AVAILABLE ON RECORD, THE ASSESSEE HAD ONLY ENTERED INTO AGREEMEN T WITH M/S. NAGARJUN CONSTRUCTION CO. LTD., AN ENTITY WHICH IS NOT MENTIONED IN SECTION 80IA(4)(B). AGREEMENT ENTERED INTO BY THE APPELLANT WITH M/S. NAGARJUN CONSTRUCTION CO. LTD. WAS NOT FILED BY THE APPELLANT INSPITE OF HAVING BEEN SPECIFICALLY ASKED TO DO SO. IN VIE W OF THE FOREGOING, I AM OF THE OPINION THAT THE A.O. WAS NO RIGHT IN ALL OWING THE DEDUCTION U/S. 80IA(4) OF RS.1,60,49,233/-. ACCORDINGLY, THE A.O. IS DIRECTED TO ENHANCE THE ASSESSED INCOME OF THE ASSESSEE BY RS.1 ,60,49,233/-. THIS IS BEING DONE BY VIRTUE OF POWERS VESTED IN TH E UNDERSIGNED U/S.251 OF THE ACT. 10. THE LD. AUTHORISED REPRESENTATIVE SUBMITTED THA T THE A.O. ALLOWED DEDUCTION UNDER SECTION 80IA(4) OF THE ACT AFTER EX AMINING IN DEPARTMENT. THE A.O. CONSIDERED THE RELEVANT PROVISIONS AND AGREEME NTS. THE CIT(A) WITHDREW THE DEDUCTION WITHOUT POINTING OUT ANY ERROR IN THE ORDER OF THE A.O. THE LD. AUTHORISED REPRESENTATIVE REFERRED PAGE NOS.55, 18- 23, 56, 58, 97 & 98 OF THE PAPER BOOK AND SUBMITTED THESE DOCUMENTS BEFORE THE A.O. THE A.O. HAS EXAMINED THESE DOCUMENTS INCLUDING THE CONTRACT AGR EEMENTS, DETAILS OF WORK CARRIED OUT BY THE ASSESSEE AND DETAILS OF EXPENDIT URES. THE LD. AUTHORISED ITA NO.145/AGR/2012 A.Y. 2005-06 9 REPRESENTATIVE SUBMITTED THAT IN SUBSEQUENT A.Y. 20 06-07 THE A.O. HAS ALLOWED CLAIM UNDER SECTION 80IA(4) OF THE ACT AND AGAINST THAT ORDER OF THE A.O. NEITHER APPEAL NOR ANY OTHER PROCEEDINGS ARE PENDING. THE LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT THE ASSESSEE SATISFIED THE CONDITION OF SUB-CLAUSE (A) OF CLAUSE(I) OF SUB-SECTION(4) OF SECTION 80IA OF THE ACT. THE LD. AUTHORISED REPRESENTATIVE WITH REFERENCE TO RELEVANT SECTION 80IA(4)(I)(A) SUBMITT ED THAT THERE IS NO DISPUTE REGARDING THE FACT THAT M/S. PNC CONSTRUCTION CO. L TD. I.E. THE ASSESSEE IS A COMPANY REGISTERED IN INDIA. THE ASSESSEE WAS CARR YING ON DEVELOPMENT/OPERATION AND MAINTENANCE OF INFRASTRUCTURE. THE LD. AUTHORI SED REPRESENTATIVE IN SUPPORT OF HIS CONTENTION RELIED UPON AN ORDER OF I.T.A.T. MU MBAI BENCH IN THE CASE OF PATEL ENGINEERING LIMITED VS. DY. CIT, 94 ITD 411 (MUMB.) 11. THE LD. AUTHORISED REPRESENTATIVE REFERRING THE ASSESSMENT ORDER PAGE NOS. 4 & 6 SUBMITTED THAT PANIPAT JALANDHAR PROJECT AGRE EMENTS BETWEEN M/S. NHAI AND M/S. PNC CONSTRUCTION CO. LTD. WAS FOR OPERATIN G AND MAINTAINING THE TOLL ROAD. HE HAS ALSO REFERRED PAGE NOS.11, 12, 15, 18 , 21, 24, 25, 41, 50, 54 & 55 OF THE PAPER BOOK WHERE DETAILS OF EQUIPMENT AND PERSO NNEL REQUIRED FOR THE WORK CARRIED OUT BY THE ASSESSEE COMPANY HAVE BEEN GIVEN . THE LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT THESE DOCUMENTS ARE I N SUPPORT OF THE FACT THAT THE WORK CARRIED OUT BY THE ASSESSEE IN RESPECT OF PANI PAT JALANDHAR PROJECT WAS A CONTRACT OF MAINTENANCE AND OPERATION. ITA NO.145/AGR/2012 A.Y. 2005-06 10 12. THE LD. AUTHORISED REPRESENTATIVE SUBMITTED THA T THE THREE CONDITIONS I.E. DEVELOPMENT, OPERATION AND MAINTENANCE WERE NOT INT ENDED TO BE CUMULATIVE IN NATURE. THEREFORE, IF THE ASSESSEE CARRIED OUT ANY ONE OF THE ACTIVITY, THE ASSESSEE IS ELIGIBLE TO DEDUCTION UNDER SECTION 80IA(4) OF THE ACT. THE LD. AUTHORISED REPRESENTATIVE IN SUPPORT OF HIS CONTENTION RELIED UPON A JUDGEMENT OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. ABG HEAVY INDUSTRIES, 322 ITR 323 (BOMB.). 13. IN RESPECT OF SAGAR BEENA PROJECT, THE LD. AUTH ORISED REPRESENTATIVE SUBMITTED THAT IT IS AN INFRASTRUCTURE PROJECT AWAR DED BY THE GOVERNMENT OF MADHYA PRADESH ENTERED BETWEEN NCC-PNC (JV). THE L D. AUTHORISED REPRESENTATIVE SUBMITTED THAT AS PER TERMS OF TENDE R, ONLY CONSORTIUMS CAN ENTER INTO CONTRACT, THEREFORE, A JOINT VENTURE WAS CREAT ED BETWEEN PNC CONSTRUCTION CO. LTD. (ASSESSEE) AND NAGARJUNA CONSTRUCTION COMPANY (NCC) AND, THEREFORE, A SUPPLEMENTARY AGREEMENT WAS ENTERED THROUGH WHICH E NTIRE WORK WAS CARRIED OUT BY PNC CONSTRUCTION COMPANY, THE ASSESSEE. THE LD. AUTHORISED REPRESENTATIVE REFERRED VARIOUS PAGES OF PAPER BOOK I.E. 97, 98, 6 1 & 100, PAGE NO.6 OF ASSESSMENT ORDER AND SUBMITTED THAT M/S. PNC CONSTR UCTION CO. LTD., THE ASSESSEE, WAS SOLELY RESPONSIBLE FOR EXECUTION OF T HE WORK AND LIABLE TO M.P. GOVERNMENT. THE LD. AUTHORISED REPRESENTATIVE SUBM ITTED THAT IN SUCH ITA NO.145/AGR/2012 A.Y. 2005-06 11 CIRCUMSTANCES, CLAIM UNDER SECTION 80IA(4) IS ALLOW ABLE. THE LD. AUTHORISED REPRESENTATIVE IN SUPPORT OF HIS CONTENTION RELIED UPON FOLLOWING DECISIONS:- I) ACIT VS. M/S. JSR CONSTRUCTIONS (P) LTD., ITA NO .898/BANG/2009 ORDER DATED 29.03.2011. II) DCIT VS. M/S. TRANSSTROY (INDIA) LIMITED, ITA N O.325 & 326/VIZ/2011 ORDER DATED 13.04.2012. 14. THE LD. AUTHORISED REPRESENTATIVE SUBMITTED THA T AFTER AMENDMENT IN SECTION 80IA(4) IT IS APPLICABLE EVEN ENGAGED IN ONLY DEVEL OPING INFRASTRUCTURE FACILITY. THE LD. AUTHORISED REPRESENTATIVE IN SUPPORT OF HIS CONTENTION RELIED UPON THE JUDGEMENT OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. ABG HEAVY INDUSTRIES LIMITED (SUPRA) AND AN ORDER OF I.T.A.T . IN THE CASE OF ACIT VS. BHARAT UDYOG LIMITED, 118 ITD 336 (MUM). 15. THE LD. DEPARTMENTAL REPRESENTATIVE, ON THE OTH ER HAND, RELIED UPON THE ORDER OF CIT(A) AND SUBMITTED THAT THE CONDITION SP ECIFIED IN SECTION 80IA(4)(I)(A) HAS NOT BEEN SATISFIED IN THE CASE OF THE ASSESSEE. THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT CONTRACT WORK FOR PAN IPAT JALANDHAR PROJECT WAS A CONTRACT ONLY FOR ROUTINE MAINTENANCE. THE ASSESSE E DID NOT BUILD UP THE HIGHWAY. THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE AGREEMENT ENTERED INTO BY THE ASSESSEE WITH NAGARJUNA CONSTRUCTION CO. LTD. W AS NOT FILED BY THE ASSESSEE. ITA NO.145/AGR/2012 A.Y. 2005-06 12 THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE DECISIONS RELIED UPON BY THE LD. AUTHORISED REPRESENTATIVE IS DISTINGUISHABL E ON FACTS. THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE CIT(A) HAS RIGHTL Y WITHDRAWN THE CLAIM UNDER SECTION 80IA(4) OF THE ACT AS THE A.O. WAS NOT CORR ECT IN ALLOWING THE CLAIM. THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE CIT(A) DECIDED THE ISSUE AFTER GIVING PROPER OPPORTUNITY OF HEARING TO THE ASSESSE E. THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ORDER OF THE CIT( A) MAY BE CONFIRMED. 16. WE HAVE HEARD THE LD. REPRESENTATIVES OF THE PA RTIES, PERUSED RECORDS AND GONE THROUGH THE DECISIONS CITED. THE ISSUE UNDER CONSIDERATION RELATES TO SECTION 80IA(4) OF THE ACT. THE RELEVANT PROVISIONS, CIRCU LARS, JUDGEMENTS ARE AS UNDER:- RELEVANT PROVISIONS 80IA '(4) THIS SECTION APPLIES TO (I )ANY ENTERPRISE CARRYING ON THE BUSINESS OF (I ) DEVELOPING (II) MAINTAINING AND OPERATING OR (III) DEVELOPING, MAINTAINING AND OPERATING ANY INFRASTRUCTURE FACILITY WHICH FULFILS ALL THE FOLLO WING CONDITIONS, NAMELY: (A )IT IS OWNED BY A COMPANY REGISTERED IN INDIA OR BY A CONSORTIUM OF SUCH COMPANIES; (B)IT HAS ENTERED INTO AN AGREEMENT WITH THE CENTRA L GOVERNMENT OR STATE GOVERNMENT OR A LOCAL AUTHORITY OR ANY OTHER STATUT ORY BODY FOR (I) DEVELOPING (II) MAINTAINING AND OPERATING OR (III) DEVELOPING, MAINTAINING AND OPERATING A NEW INFRASTRUCTURE FACI LITY SUBJECT TO THE CONDITION THAT SUCH INFRASTRUCTURE FACILITY SHALL B E TRANSFERRED TO THE CENTRAL GOVERNMENT, STATE GOVERNMENT, LOCAL AUTHORI TY OR SUCH OTHER STATUTORY BODY, AS THE CASE MAY BE, WITHIN THE PERI OD STIPULATED IN THE AGREEMENT; ITA NO.145/AGR/2012 A.Y. 2005-06 13 (C )IT HAS STARTED OR STARTS OPERATING AND MAINTAIN ING THE INFRASTRUCTURE FACILITY ON OR AFTER 1ST DAY OF APRIL, 1995: PROVIDED THAT WHERE AN INFRASTRUCTURE FACILITY IS TRANSFERRE D ON OR AFTER THE 1ST DAY OF APRIL, 1999 BY AN ENTERPRISE WHICH DEVEL OPED SUCH INFRASTRUCTURE FACILITY (HEREAFTER REFERRED TO IN T HIS SECTION AS THE TRANSFEROR ENTERPRISE) TO ANOTHER ENTERPRISE (HEREA FTER IN THIS SECTION REFERRED TO AS THE TRANSFEREE ENTERPRISE) FOR THE P URPOSE OF OPERATING AND MAINTAINING THE INFRASTRUCTURE FACILITY ON ITS BEHALF IN ACCORDANCE WITH THE AGREEMENT WITH THE CENTRAL GOVERNMENT, STA TE GOVERNMENT, LOCAL AUTHORITY OR STATUTORY BODY, THE PROVISIONS O F THIS SECTION SHALL APPLY TO THE TRANSFEREE ENTERPRISE AS IF IT WERE TH E ENTERPRISE TO WHICH THIS CLAUSE APPLIES AND THE DEDUCTION FROM PROFITS AND GAINS WOULD BE AVAILABLE TO SUCH TRANSFEREE ENTERPRISE FOR THE UNE XPIRED PERIOD DURING WHICH THE TRANSFEROR ENTERPRISE WOULD HAVE BEEN ENT ITLED TO THE DEDUCTION, IF THE TRANSFER HAD NOT TAKEN PLACE. EXPLANATION.FOR THE PURPOSES OF THIS CLAUSE, 'INFR ASTRUCTURE FACILITY' MEANS, (A )A ROAD, BRIDGE, AIRPORT, PORT, INLAND WATERWAYS AND INLAND PORT, RAIL SYSTEM OR ANY OTHER PUBLIC FACILITY OF A SIMIL AR NATURE AS MAY BE NOTIFIED BY THE BOARD IN THIS BEHALF IN THE OFFI CIAL GAZETTE; (B)A HIGHWAY PROJECT INCLUDING HOUSING OR OTHER ACT IVITIES BEING AN INTEGRAL PART OF THE HIGHWAY PROJECT; AND (C )A WATER SUPPLY PROJECT, IRRIGATION PROJECT, SAN ITATION AND SEWERAGE SYSTEM.' RELEVANT CIRCULARS THAT THE SCOPE AND EFFECT OF THE AMENDMENT, WHICH B ROUGHT ABOUT THE INTRODUCTION OF SUB-SECTION (4A) HAS BEEN EXPLAINED IN THE DEPARTMENT'S CIRCULAR NO.717 DATED 14 TH AUGUST, 1995 AS UNDER:- FINANCE ACT, 1995 34.2 INDUSTRIAL MODERNISATION REQUIRES A MASSIVE EX PANSION OF, AND QUALITATIVE IMPROVEMENT IS INFRASTRUCTURE. OUR COUN TRY IS VERY DEFICIENT IN INFRASTRUCTURE SUCH AS EXPRESSWAYS, HIGHWAYS, AIRPO RTS, PORTS AND RAPID URBAN RAIL TRANSPORT SYSTEMS. ADDITIONAL RESOURCES ARE NEEDED TO FULFIL THE REQUIREMENTS OF THE COUNTRY WITHIN A REASONABLE TIM E FRAME. IN MANY COUNTRIES THE BOT (BUILD-OPERATE-TRANSFER) OR THE B OOT (BUILD-OWN- ITA NO.145/AGR/2012 A.Y. 2005-06 14 OPERATE-TRANSFER) CONCEPTS HAVE BEEN UTILISED FOR D EVELOPING NEW INFRASTRUCTURE. FINANCE ACT, 1995 34.3 APPLYING COMMERCIAL PRINCIPLES IN THE OPERATIO N OF INFRASTRUCTURE FACILITIES CAN PROVIDE BOTH MANAGERIAL AND FINANCIA L EFFICIENCY. IN VIEW OF THIS, A TEN-YEAR CONCESSION INCLUDING A FIVE-YEAR T AX HOLIDAY HAS BEEN ALLOWED FOR ANY ENTERPRISE WHICH DEVELOPS, MAINTAIN S AND OPERATES ANY NEW INFRASTRUCTURE FACILITY SUCH AS ROADS, HIGHWAYS, EX PRESSWAYS, BRIDGES, AIRPORTS, PORTS AND RAIL SYSTEMS OR ANY OTHER PUBLI C FACILITY OF SIMILAR NATURE AS MAY BE NOTIFIED BY THE BOARD ON BOT OR BOOT OR S IMILAR OTHER BASIS (WHERE THERE IS AN ULTIMATE TRANSFER OF THE FACILIT Y TO A GOVERNMENT OR PUBLIC AUTHORITY). THE ENTERPRISE HAS TO ENTER INTO AN AGR EEMENT WITH THE CENTRAL OR STATE GOVERNMENT OR A LOCAL AUTHORITY OR ANY OTHER STATUTORY AUTHORITY FOR THIS PURPOSE. THE PERIOD WITHIN WHICH THE INFRASTRU CTURE FACILITY HAS TO BE TRANSFERRED NEEDS TO BE STIPULATED IN THE AGREEMENT BETWEEN THE UNDERTAKING AND THE GOVERNMENT CONCERNED. THE ENTERPRISE HAS TO BE OWNED BY A COMPANY REGISTERED IN INDIA OR A CONSORTIUM OF SUCH COMPANIES. THE TAX HOLIDAY WILL BE IN RESPECT OF INCOME DERIVED FROM T HE USE OF THE INFRASTRUCTURE FACILITIES DEVELOPED BY THEM. SOME RELEVANT JUDGMENTS ARE AS UNDER:- COMMISSIONER OF INCOME-TAX, CENTRAL-II V. ABG HEAVY INDUSTRIES LTD322 ITR 323 (BOMB) THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE W AS AWARDED A CONTRACT FOR LEASING OF CONTAINER HANDLIN G CRANES AT THE JAWAHARLAL NEHRU PORT TRUST (JNPT) IN TERMS OF THE POLICY OF THE GOVERNMENT OF INDIA TO ENCOURAGE PRIVATE SECTOR PARTICIPATION IN THE DE VELOPMENT OF INFRASTRUCTURE. UNDER THE CONTRACT, THE ASSESSEE WA S RESPONSIBLE FOR SUPPLYING INSTALLATION, TESTING, COMMISSIONING AND MAINTENANC E OF THE CRANES. IN TERMS OF THE AGREEMENT, THE JNPT AGREED TO PAY CERTAIN LE ASE CHARGES OVER A PERIOD OF TEN YEARS. THE CONTRACT ENVISAGED TWO OPTIONS. U NDER THE FIRST OPTION, OPERATION AND MAINTENANCE WAS TO BE CARRIED OUT BY THE ASSESSEE AND UNDER THE SECOND OPTION, ONLY MAINTENANCE WAS TO BE CARRI ED OUT BY IT. IN THE EVENT, THE ASSESSEE WAS NOT TO CARRY OUT OPERATION OF THE CRANES, THE LEASE CHARGES WERE TO BE REDUCED BY CERTAIN AMOUNT. THE ASSESSEE ASSUMED THE RESPONSIBILITY OF MAKING THE EQUIPMENTS AVAILABLE F OR OPERATION FOR A MINIMUM NUMBER OF DAYS AS STIPULATED IN THE CONTRAC T AND BECAME LIABLE TO PAY LIQUIDATED DAMAGES FOR NON-AVAILABILITY OF THE EQUIPMENTS AFTER THEIR COMMISSIONING. AFTER THE EXPIRY OF THE LEASE PERIOD OF TEN YEARS, THE ASSESSEE ITA NO.145/AGR/2012 A.Y. 2005-06 15 WAS LIABLE TO HAND OVER THE EQUIPMENTS TO THE JNPT FREE OF COST. UNDER THE CONTRACT, THE ASSESSEE FURNISHED AN INDEMNITY TO TH E JNPT TOWARDS DAMAGES THAT MIGHT HAVE BEEN SUSTAINED BY THE EQUIPMENTS OR TO ANY PROPERTY OF THE PORT TRUST OR TO THE LIVES, PERSONS OR PROPERTIES O F OTHERS. THE ASSESSEE CLAIMED THE BENEFIT OF DEDUCTION UNDER SECTION 80-I A. THE ASSESSING OFFICER REJECTED THE CLAIM HOLDING THAT THE ASSESSEE WAS ME RELY ENGAGED IN THE BUSINESS OF SUPPLYING, INSTALLING, TESTING, COMMISS IONING AND MAINTAINING CRANES AT THE PORT AND WAS NOT IN THE BUSINESS OF D EVELOPING, MAINTAINING AND OPERATING A PORT AND, CONSEQUENTLY, IT COULD NOT BE HELD TO BE IN THE BUSINESS OF DEVELOPING AN INFRASTRUCTURAL FACILITY. ON APPEA L, THE COMMISSIONER (APPEALS) ALLOWED THE DEDUCTION UNDER SECTION 80-IA TO THE ASSESSEE. THE TRIBUNAL CONFIRMED THE ORDER OF THE COMMISSIONER (A PPEALS). ON APPEAL TO THE HIGH COURT, THE REVENUE CONTENDED THAT ( I ) SECTION 80-IA REQUIRES THE ASSESSEE TO DEVELOP, OPERATE AND MAINTAIN AN INFRAS TRUCTURAL FACILITY IN ORDER TO QUALIFY FOR A DEDUCTION AND IN THE INSTANT CASE THE ASSESSEE WAS NOT A DEVELOPER OF THE FACILITY BUT HAD ONLY SUPPLIED AND INSTALLED THE CONTAINER HANDLING CRANES AT THE JNPT; ( II ) THE ASSESSEE WAS NOT OPERATING THE EQUIPMENT AND WAS, THEREFORE, NOT ELIGIBLE FOR A DE DUCTION UNDER SECTION 80- IA; AND ( III ) EQUIPMENT WHICH HAD BEEN INSTALLED WAS NOT A STRU CTURE FOR LOADING AND UNLOADING AT A PORT. THE COURT HELD AS UNDER:- 21. WHILE DEALING WITH THIS SUBMISSION, WE NOTE TH AT NEITHER IN THE MEMO OF APPEAL NOR IN THE SUBMISSIONS BEFORE US HAS ANY EFFORT BEEN MADE TO SUGGEST ON THE PART OF THE REVENUE THAT THE CIRCULARS OF THE BOARD ARE NOT BINDING ON THE REVENUE. NOR FOR THAT MATTER WAS IT THE SUBMISSION OF THE REVENUE THAT THE CIRCULARS ISSUED BY THE BOARD FROM TIME TO TIME WERE IN VIOLATION OF OR CONTRARY TO LE GAL PROVISIONS. PLAINLY, RIGHT FROM 1996 CBDT WAS SEIZED WITH THE Q UESTION, AS TO WHETHER INFRASTRUCTURE FACILITIES DEVELOPED UNDER A BOLT PROJECT WOULD QUALIFY FOR EXEMPTION UNDER SECTION 80-IA OF THE ACT. THE FIRST CIRCULAR IN THAT REGARD THAT WAS ISSUED ON 23-1-199 6 SPECIFICALLY DEALT WITH WHETHER SECTION 80-IA(4A) OF THE ACT WOULD BE APPLICABLE TO A BOLT SCHEME INVOLVING AN INFRASTRUCTURE FACILITY FO R THE INDIAN RAILWAYS. THE CIRCULAR CLARIFIED THAT AN INFRASTRUC TURE FACILITY SET UP ON A BOLT BASIS FOR RAILWAYS WOULD QUALIFY FOR A DE DUCTION. THAT WAS FOLLOWED BY THE TWO CIRCULARS OF THE BOARD DATE D 23-6-2000 AND 16-12-2005. THE FIRST OF THOSE CIRCULARS RECOGNIZES THAT STRUCTURES FOR STORAGE, LOADING AND UNLOADING ETC., AT A PORT BUIL T UNDER A BOT AND BOLT SCHEME WOULD QUALIFY FOR A DEDUCTION. NOW, THE RE IS NO QUESTION OF AN ENTERPRISE OPERATING A FACILITY IN A BOLT SCHEME ITA NO.145/AGR/2012 A.Y. 2005-06 16 BECAUSE SUCH A SCHEME CONTEMPLATES THAT THE ENTERPR ISE WOULD BUILD, OWN, LEASE AND EVENTUALLY TRANSFER THE FACILITY TO THE AUTHORITY FOR WHOM THE FACILITY IS CONSTRUCTED. THE SUBSEQUENT CI RCULAR DATED 16-12- 2005 ONCE AGAIN CLARIFIED THE POSITION OF CBDT THAT STRUCTURES WHICH HAVE BEEN BUILT INTER ALIA UNDER A BOLT SCHEME UP T O ASSESSMENT YEAR 2001-02 WOULD QUALIFY FOR A DEDUCTION UNDER SE CTION 80-IA OF THE ACT. IN FACT FROM ASSESSMENT YEAR 2002-03, THE PROC ESS WAS FURTHER LIBERALIZED, CONSISTENT WITH THE BASIC PURPOSE AND OBJECT OF GRANTING THE CONCESSION. IN THIS BACKGROUND, PARTICULARLY IN THE CONTEXT OF THE OBJECTIVE SOUGHT TO BE ACHIEVED AND IN THE ABSENCE OF ANY CHALLENGE ON THE PART OF THE REVENUE ON THE APPLICABILITY OF THE BINDING CIRCULARS OF CBDT, WE ARE OF THE VIEW THAT THE CONDITION AS R EGARDS DEVELOPMENT, OPERATION AND MAINTENANCE OF AN INFRAS TRUCTURE FACILITY WAS CONTEMPORANEOUSLY CONSTRUED BY THE AUTHORITIES AT ALL MATERIAL TIMES, TO COVER WITHIN ITS PURVIEW THE DEVELOPMENT OF AN INFRASTRUCTURE FACILITY UNDER A SCHEME BY WHICH AN ENTERPRISE WOUL D BUILD, OWN, LEASE AND EVENTUALLY TRANSFER THE FACILITY. THIS WA S PERHAPS A PRACTICAL REALISATION OF THE FACT A DEVELOPER MAY NOT POSSESS THE WHEREWITHAL, EXPERTISE OR RESOURCES TO OPERATE A FACILITY, ONCE CONSTRUCTED. PARLIAMENT EVENTUALLY STEPPED IN TO CLARIFY THAT IT WAS NOT INVARIABLY NECESSARY FOR A DEVELOPER TO OPERATE AND MAINTAIN T HE FACILITY. PARLIAMENT WHEN IT AMENDED THE LAW WAS OBVIOUSLY AW ARE OF THE ADMINISTRATIVE PRACTICE RESULTING IN THE CIRCULARS OF CBDT. THE FACT THAT IN SUCH A SCHEME, AN ENTERPRISE WOULD NOT OPER ATE THE FACILITY ITSELF WAS NOT REGARDED AS BEING A STATUTORY BAR TO THE ENTITLEMENT TO A DEDUCTION UNDER SECTION 80-IA OF THE ACT. THE COURT CANNOT BE UNMINDFUL IN THE PRESENT CASE OF THE UNDERLYING OBJ ECTS AND REASONS FOR A GRANT OF DEDUCTION TO AN ENTERPRISE ENGAGED I N THE DEVELOPMENT OF AN INFRASTRUCTURE FACILITY. THE PROVISION WAS IN TENDED TO GIVE AN INCENTIVE TO INVESTMENT FOR INFRASTRUCTURAL GROWTH IN THE COUNTRY. IN BAJAJ TEMPO V. CIT [1992] 196 ITR 1881 THE SUPREME COURT EMPHASIZED THAT A PROVISION IN A TAXING STATUTE GRA NTING INCENTIVES FOR PROMOTING GROWTH AND DEVELOPMENT SHOULD BE CONSTRUE D LIBERALLY. IN THE PRESENT CASE, THE ADMINISTRATIVE CIRCULARS ISSU ED BY THE CBDT PROCEEDED ON THAT BASIS BY ADOPTING A LIBERAL VIEW OF THE SCOPE AND AMBIT OF THE PROVISIONS OF SECTION 80-IA OF THE ACT . PARLIAMENTARY INTERVENTION ENDORSED THE ADMINISTRATIVE PRACTICE. A PROVISION INSERTED BY THE LEGISLATURE TO SUPPLY AN OBVIOUS OM ISSION AND TO MAKE A SECTION WORKABLE HAS IN CERTAIN CIRCUMSTANCES BEE N REGARDED AS RETROSPECTIVE PARTICULARLY WHEN IT WAS INTENDED TO REMEDY UNINTENDED CONSEQUENCES. ALLIED MOTORS (P.) LTD. V. CIT [1997] 224 ITR 677 2 ITA NO.145/AGR/2012 A.Y. 2005-06 17 (SC) AND CIT V. ALOM EXTRUSIONS LTD. [2009] 319 ITR 306 3 (SC). THE TRIBUNAL HAVING ONLY FOLLOWED THESE PROVISIONS, WE DO NOT FIND ANY JUST REASON TO INTERFERE IN OUR APPELLATE JURISDICT ION. 22. ANOTHER SUBMISSION WHICH WAS URGED ON BEHALF OF THE REVENUE IS THAT UNDER CLAUSE (III) OF SUB-SECTION (4A) OF SECT ION 80-IA, ONE OF THE CONDITIONS IMPOSED WAS THAT THE ENTERPRISE MUST STA RT OPERATING AND MAINTAINING THE INFRASTRUCTURE FACILITY ON OR AFTER 1-4-1995. THE SAME REQUIREMENT IS EMBODIED IN SUB-CLAUSE (C) OF CLAUSE (I) OF SUB-SECTION (4) OF THE AMENDED PROVISIONS OF SECTION 80-IA. ON THIS BASIS, IT WAS URGED THAT SINCE THE ASSESSEE WAS NOT OPERATING AND MAINTAINING THE FACILITY, HE DID NOT FULFIL THE CONDITION. THIS SUB MISSION IS FALLACIOUS BOTH IN FACT AND IN LAW. AS A MATTER OF FACT, THE T RIBUNAL HAS ENTERED A FINDING THAT THE ASSESSEE WAS OPERATING THE FACILIT Y AND THIS FINDING HAS BEEN CONFIRMED EARLIER IN THIS JUDGMENT. THAT T HE ASSESSEE WAS MAINTAINING THE FACILITY IS NOT IN DISPUTE. THE FAC ILITY 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 OPERATIONA L 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 BU SINESS OF (I) DEVELOPING; OR (II) OPERATING AND MAINTAINING; OR ( III) DEVELOPING, OPERATING AND MAINTAINING ANY INFRASTRUCTURE FACILI TY WHICH FULFILS CERTAIN CONDITIONS. THOSE CONDITIONS ARE : (I) OWNE RSHIP 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; AND (III) THE START OF OPERATION AND MAINTENANCE OF THE INFRASTRUCTURE FACILITY ON OR AFTER 1-4-1995. T HE REQUIREMENT THAT THE OPERATION AND MAINTENANCE OF THE INFRASTRUCTURE FACILITY SHOULD COMMENCE AFTER 1-4-1995 HAS TO BE HARMONIOUSLY CONS TRUED WITH THE MAIN PROVISION UNDER WHICH A DEDUCTION IS AVAILABLE TO AN ASSESSEE WHO DEVELOPS; OR OPERATES AND MAINTAINS; OR DEVELOP S, OPERATES AND MAINTAINS AN INFRASTRUCTURE FACILITY. UNLESS BOTH T HE PROVISIONS ARE HARMONIOUSLY CONSTRUED, THE OBJECT AND INTENT UNDER LYING THE AMENDMENT OF THE PROVISION BY THE FINANCE ACT OF 20 01 WOULD BE DEFEATED. A HARMONIOUS READING OF THE PROVISION IN ITS ENTIRETY WOULD LEAD TO THE CONCLUSION THAT THE DEDUCTION IS AVAILA BLE TO AN ENTERPRISE WHICH (I) DEVELOPS; OR (II) OPERATES AND MAINTAINS; OR (III) DEVELOPS, MAINTAINS AND OPERATES THAT INFRASTRUCTURE FACILITY . HOWEVER, THE COMMENCEMENT OF THE OPERATION AND MAINTENANCE OF TH E INFRASTRUCTURE ITA NO.145/AGR/2012 A.Y. 2005-06 18 FACILITY SHOULD BE AFTER 1-4-1995. IN THE PRESENT C ASE, THE ASSESSEE CLEARLY FULFILLED THIS CONDITION. 23. IN THE VIEW WHICH WE HAVE TAKEN, ALL THE ASSESS MENT YEARS IN QUESTION TO WHICH THIS BATCH OF APPEALS RELATES WOU LD BE GOVERNED BY THE SAME PRINCIPLE. THE SUBSEQUENT AMENDMENT OF SEC TION 80-IA(4A) OF THE ACT TO CLARIFY THAT THE PROVISION WOULD APPL Y TO AN ENTERPRISE ENGAGED IN (I) DEVELOPING; OR (II) OPERATING AND MA INTAINING; OR (III) DEVELOPING, OPERATING AND MAINTAINING AN INFRASTRUC TURE FACILITY WAS REFLECTIVE OF A POSITION WHICH WAS ALWAYS CONSTRUED TO HOLD THE FIELD. BEFORE THE AMENDMENT THAT WAS BROUGHT ABOUT BY PARL IAMENT BY THE FINANCE ACT OF 2001, WE HAVE ALREADY NOTED THAT THE CONSISTENT LINE OF CIRCULARS OF THE BOARD POSTULATED THE SAME POSITION . THE AMENDMENT MADE BY PARLIAMENT TO SECTION 80-IA(4) OF THE ACT S ET THE MATTER BEYOND ANY CONTROVERSY BY STIPULATING THAT THE THRE E CONDITIONS FOR DEVELOPMENT, OPERATION AND MAINTENANCE WERE NOT INT ENDED TO BE CUMULATIVE IN NATURE PATEL ENGG. LTD. VS. DEPUTY COMMISSIONER OF INCOME-TAX, [2005] 94 ITD 411 (MUM.). THE BRIEF FACTS OF THIS CASE WERE THAT DURING THE R ELEVANT ASSESSMENT YEAR, THE ASSESSEE WAS ENGAGED IN THE BU SINESS ACTIVITY OF CONSTRUCTION OF TWO PROJECTS, ALLOTTED BY TWO STATE GOVERNMENTS. THE ASSESSEE CLAIMED THAT THE ABOVE TWO PROJECTS OF CON STRUCTION OF SPECIALISED STRUCTURES AND TUNNELS WERE 'INFRASTRUCTURE PROJECT S' AND IT 'DEVELOPED' THE SAME AND, THEREFORE, IT WAS ENTITLED TO DEDUCTION U NDER SECTION 80-IA(4). THE ASSESSING OFFICER REJECTED THE ASSESSEE'S CLAIM. ON APPEAL, THE COMMISSIONER (APPEALS) AGREED WITH THE ASSESSING OF FICER. THE ITAT HELD AS UNDER:- 44. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AS AL SO THE RELEVANT MATERIAL ON RECORD. FROM THE PERUSAL OF RECORD, WE FIND THAT IN THE SRISAILAM PROJECT, THE ASSESSEE-COMPANY HAS CONSTRU CTED AN UNDERGROUND TUNNEL TO PROVIDE WATER SUPPLY BY CONNE CTING THE RIVER KRISHNA TO THE POWER HOUSE. THE ASSESSEE HAS ALSO C ONSTRUCTED UNDERGROUND SPECIALISED STRUCTURES SUCH AS SURGE CH AMBER, DRAFT TUBE TUNNELS, TAIL RACE TUNNEL WHICH TAKES THE WATER BAC K TO THE RIVER FOR USE FOR IRRIGATION, ETC. SIMILARLY, FOR KOYNA PROJECT, THE ASSESSEE CONSTRUCTED INLET TUNNEL FOR WATER SUPPLY UP TO THE POINT OF POWER HOUSE. THE ABOVE CONSTRUCTION WORK WOULD, IN OUR CO NSIDERED OPINION, ITA NO.145/AGR/2012 A.Y. 2005-06 19 AMOUNT TO DEVELOPMENT, AS A NEW FACILITY HAS BEEN D EVELOPED. IN FACT, WE MAY NOTE THAT THE REVENUE AUTHORITIES TOO HAVE N OT DENIED THE FACTUM OF DEVELOPMENT HAVING TAKEN PLACE; HOWEVER, THE CONTENTION OF THE REVENUE HAS BEEN THAT THE DEVELOPER IS NOT THE ASSESSEE BUT THE GOVERNMENT OF MAHARASHTRA IN RESPECT OF KOYNA PROJE CT AND APSEB IN RESPECT OF THE SRISAILAM PROJECT, BECAUSE, THE I NVESTMENTS HAVE BEEN MADE BY THEM. 45. IN THE CIRCUMSTANCES, AS PER THE CONTENTIONS RA ISED BEFORE US ORALLY AS ALSO IN WRITING BY THE TWO RIVAL REPRESEN TATIVES, THE MOOT QUESTION THAT POSES ITSELF FOR OUR CONSIDERATION IS AS TO WHETHER THE ASSESSEE CAN BE SAID TO BE DEVELOPER WHEN THE AMOUN T HAS BEEN PAID TO THE ASSESSEE FOR THE DEVELOPMENT WORK CARRIED OU T BY THE ASSESSEE. IN ORDER TO PROPERLY APPRECIATE THIS QUESTION, IT W OULD BE RELEVANT, AND NO LESS BENEFICIAL, TO REFER TO THE LEGISLATIVE HISTORY OF SECTION 80- IA. AS WE HAVE NOTED EARLIER, THE AMENDMENT IN SECT ION 80-IA WAS BROUGHT ABOUT BY FINANCE ACT, 1995 W.E.F. 1ST APRIL , 1996. BY VIRTUE OF THIS AMENDMENT, EXEMPTION UNDER SECTION 80-IA WAS P ROVIDED TO ANY ENTERPRISE CARRYING ON THE BUSINESS OF DEVELOPING, MAINTAINING AND OPERATING ANY INFRASTRUCTURE FACILITY. THUS TO BE E LIGIBLE FOR THIS DEDUCTION, AN ASSESSEE WAS REQUIRED TO CARRY OUT AL L THE THREE ACTIVITIES, I.E., (I ) TO DEVELOP, (II) TO MAINTAIN , AND (III) TO OPERATE. AFTER THE MODIFICATION EFFECTED BY FINANCE ACT, 199 9, W.E.F. 1ST APRIL, 2000, DEDUCTION UNDER SECTION 80-IA(4) HAS BECOME A VAILABLE TO ANY ENTERPRISE CARRYING ON THE BUSINESS OF (I) DEVELOPI NG, OR ( II) MAINTAINING AND OPERATING, OR (III) DEVELOPING, MAI NTAINING AND OPERATING ANY INFRASTRUCTURE FACILITY. THEREFORE, F ROM ASSESSMENT YEAR 2000-01, DEDUCTION IS AVAILABLE IF THE ASSESSEE CAR RIES ON THE BUSINESS OF ANY ONE OF THE ABOVEMENTIONED THREE TYPES OF ACT IVITIES, AND ACCORDINGLY ALSO WHEN THE ASSESSEE IS CARRYING ON T HE ACTIVITY OF ONLY DEVELOPING. WHEN AN ASSESSEE IS ONLY DEVELOPING AN INFRASTRUCTURE FACILITY/PROJECT AND IS NOT MAINTAINING NOR OPERATI NG IT, OBVIOUSLY, SUCH AN ASSESSEE WILL BE PAID FOR THE COST INCURRED BY IT; OTHERWISE, HOW WILL THE PERSON, WHO DEVELOPS THE INFRASTRUCTUR E FACILITY PROJECT, REALISE ITS COST? IF THE INFRASTRUCTURE FACILITY IS , JUST AFTER ITS DEVELOPMENT, TRANSFERRED TO THE GOVERNMENT, NATURAL LY THE COST WOULD BE PAID BY THE GOVERNMENT. THEREFORE, MERELY BECAUS E THE MAHARASHTRA GOVERNMENT OR APSEB HAS PAID FOR THE DE VELOPMENT OF INFRASTRUCTURE FACILITY CARRIED OUT BY THE ASSESEE, IT CANNOT BE SAID THAT THE ASSESEE DID NOT DEVELOP THE INFRASTRUCTURE FACI LITY. IF THE ITA NO.145/AGR/2012 A.Y. 2005-06 20 INTERPRETATION CANVASSED BY THE REVENUE AUTHORITIES IS ACCEPTED, NO ENTERPRISE, CARRYING ON THE BUSINESS OF ONLY DEVELO PING THE INFRASTRUCTURE FACILITY, WOULD BE ENTITLED TO DEDUC TION UNDER SECTION 80-IA(4). 46. WE HAVE NOTICED ABOVE THAT THE AMENDMENT BROUGH T IN BY THE FINANCE ACT, 1999 WAS WITH THE SOLE INTENTION/PURPO SE OF PROVIDING DEDUCTION UNDER SECTION 80-IA TO THE PERSON, WHO ON LY DEVELOPS OR WHO ONLY MAINTAINS AND OPERATES AN INFRASTRUCTURE F ACILITY. IF A PERSON WHO ONLY DEVELOPS THE INFRASTRUCTURE FACILITY IS NO T PAID BY THE GOVERNMENT, THE ENTIRE COST OF DEVELOPMENT WOULD BE A LOSS IN THE HANDS OF THE DEVELOPER AS HE IS NOT OPERATING THE I NFRASTRUCTURE FACILITY. WHEN THE LEGISLATURE HAS PROVIDED THAT TH E INCOME OF THE DEVELOPER OF THE INFRASTRUCTURE PROJECT WOULD BE EL IGIBLE FOR DEDUCTION, IT PRESUPPOSES THAT THERE CAN BE INCOME TO DEVELOPER, I.E., TO THE PERSON WHO IS CARRYING ON THE ACTIVITY OF ON LY DEVELOPING INFRASTRUCTURE FACILITY. OBVIOUS AS IT IS, A DEVELO PER WOULD HAVE INCOME ONLY IF HE IS PAID FOR DEVELOPMENT OF INFRAS TRUCTURE FACILITY, FOR THE SIMPLE REASON THAT HE IS NOT HAVING THE RIGHT/A UTHORISATION TO OPERATE THE INFRASTRUCTURE FACILITY AND TO COLLECT TOLL THEREFROM, HAS NO OTHER SOURCE OF RECOUPMENT OF HIS COST OF DEVELOPME NT. CONSIDERED AS SUCH, WE NOTE THAT THE BUSINESS ACTIVITY OF THE NAT URE OF 'BT' (BUILD AND TRANSFER) ALSO FALLS WITHIN ELIGIBLE CONSTRUCTI ON ACTIVITY THAT IS ACTIVITY ELIGIBLE FOR DEDUCTION UNDER SECTION 80-IA INASMUCH AS MERE 'DEVELOPMENT' AS SUCH AND UNASSOCIATED/UNACCOMPANIE D WITH 'OPERATE' AND 'MAINTENANCE' ALSO FALLS WITHIN SUCH BUSINESS ACTIVITY AS IS ELIGIBLE FOR DEDUCTION UNDER SECTION 80-IA. IN T HE CASE OF SUCH A CONSTRUCTION ACTIVITY, WHICH DOES NOT INVOLVE THE ' OPERATE' ASPECT, THE QUESTION OF AN ASSESSEE ENGAGED IN SUCH ACTIVITY (O F 'BT' CARRYING ON ONLY 'DEVELOPMENT') TO RECOVER HIS COSTS OF CONSTRU CTION OF HIS OWN FROM THE INFRASTRUCTURE PROJECT/FACILITY ITSELF DOE S NOT ARISE, AND SO FOR THE RECOUPMENT OF THE COSTS, THE SAME HAVE TO BE PA ID WHETHER THROUGH RUNNING BILLS OR OTHERWISE; AND CONSIDERING THE LAR GENESS/HUGENESS OF THE TOTAL FINANCIAL INVESTMENT INVOLVED, SOME ADVAN CE IF PAID AT SOME POINT OF TIME, WILL NOT, IN OUR VIEW, CHANGE THE BA SIC NATURE/FEATURE OF THE ASSESSEE'S BUSINESS ACTIVITY. THEREFORE, MERELY BECAUSE THE PRESENT ASSESSEE WAS PAID BY THE GOVERNMENT, FOR DEVELOPMEN T WORK, IT CANNOT BE DENIED DEDUCTION UNDER SECTION 80-IA(4) O F THE ACT. THE ILLUSTRATION OF THE ARTIST, GIVEN BY THE ASSESSEE'S COUNSEL DURING THE COURSE OF HIS ARGUMENTS, IS APTLY ILLUSTRATIVE AND BEFITTING. IF AN ARTIST ITA NO.145/AGR/2012 A.Y. 2005-06 21 IS ASKED TO PAINT A BEAUTIFUL PICTURE AND FOR SUCH PAINTING, PAYMENT IS MADE BY ANOTHER PERSON, THE CREATOR OF THE PAINTING WILL BE THE ARTIST AND NOT THE PERSON WHO PAID FOR IT. WE HAVE ALSO NO TED THAT THE NATIONAL WATER POLICY DOCUMENT FURNISHED BY THE ASS ESSEE, ON P. 225 OF ITS PAPER BOOK-1, INDICATES THE PURPOSE OF PRIVA TE SECTOR PARTICIPATION. IT STATES THAT PRIVATE SECTOR PARTIC IPATION MAY HELP IN INTRODUCING INNOVATIVE IDEAS, GENERATING FINANCIAL RESOURCES AND INTRODUCING CORPORATE MANAGEMENT AND IMPROVING SERV ICE EFFICIENCY AND ACCOUNTA-BILITY TO USERS. IT IS REVEALED FROM R ECORD AND HAS ALSO NOT BEEN DISPUTED BY THE REVENUE THAT BOTH THE PROJ ECTS EXECUTED BY THE ASSESSEE WERE HIGHLY TECHNICAL AND SPECIALISED, AS ALSO EXTREMELY TRICKY AND DID INVOLVE HUGE RISKS AS WELL. IT IS AL SO REVEALED FROM RECORD THAT FOR EXECUTING SUCH PROJECTS, THE ASSESS EE HAS DEPLOYED PEOPLE, PLANT AND MACHINERY, TECHNICAL EXPERTISE, K NOW-HOW AND THE FINANCIAL RESOURCES AS HAS ALSO BEEN THE SPECIFIC C ONTENTION OF THE LEARNED AUTHORISED REPRESENTATIVE OF ASSESSEE AS NO TED BY US ABOVE. 47. THERE HAS ALSO BEEN THE CONTENTION OF THE REVEN UE THAT THE ASSESSEE IS A CONTRACTOR, EXECUTING CIVIL CONTRACT AND SO IT CANNOT BE THE DEVELOPER AS SUCH. HOWEVER, WE ARE UNABLE TO AG REE WITH THIS CONTENTION OF THE REVENUE. A PERSON, WHO ENTERS INT O A CONTRACT WITH ANOTHER PERSON WILL BE A CONTRACTOR NO DOUBT; AND T HE ASSESSEE HAVING ENTERED INTO AN AGREEMENT WITH THE GOVERNMENT OF MA HARASHTRA AND ALSO WITH APSEB FOR DEVELOPMENT OF THE INFRASTRUCTU RE PROJECTS, IS OBVIOUSLY A CONTRACTOR BUT THAT DOES NOT DEROGATE T HE 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 SHOU LD DEVELOP THE INFRASTRUCTURE FACILITY AS PER AGREEMENT WITH THE C ENTRAL 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. THE ASSESSEE, PRE SENTLY UNDER CONSIDERATION BEFORE US, HAS DEVELOPED INFRASTRUCTU RE FACILITY AS PER AGREEMENT WITH MAHARASHTRA STATE GOVERNMENT/APSEB. 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 T HE ASSESSEE FROM THE POSITION OF BEING A DEVELOPER, NOR WILL IT DEBAR TH E ASSESSEE FROM CLAIMING DEDUCTION UNDER SECTION 80-IA(4). DISCUSSE D/CONSIDERED AS ABOVE, WE HOLD THAT THE ASSESSEE HAVING CARRIED OUT THE WORK OF ITA NO.145/AGR/2012 A.Y. 2005-06 22 CONSTRUCTING THE ABOVEMENTIONED TWO PROJECTS, NAMEL Y SRISAILAM PROJECT AND KOYANA PROJECT, AS DETAILED ABOVE, IS A PPROPRIATELY A DEVELOPER OF THE SAID TWO INFRASTRUCTURE FACILITIES , AND IN TURN IS ENTITLED, AND ENTITLED JUSTIFIABLY, TO CLAIM DEDUCT ION UNDER SECTION 80- IA(4). 48. NOW WE PROCEED TO CONSIDER THE SECOND ISSUE, WH ICH IS WHETHER THE INFRASTRUCTURE FACILITY OR THE ENTERPRISE DEVEL OPING THE INFRASTRUCTURE FACILITY, IS TO BE OWNED BY THE COMP ANY REGISTERED IN INDIA? THE LEARNED CIT/DEPARTMENTAL REPRESENTATIVE CONTENDED THAT THE INFRASTRUCTURE FACILITY SHOULD BE OWNED BY THE COMPANY REGISTERED IN INDIA. GROUND NO. 1 OF THE REVENUE'S CROSS-OBJEC TION IS ALSO TO THIS EFFECT. HE CONTENDED THAT IN THIS CASE, BOTH THE IN FRASTRUCTURE FACILITIES WERE NOT OWNED BY THE ASSESSEE-COMPANY, BUT BY THE GOVERNMENT OF MAHARASHTRA/APSEB; THEREFORE, THE ASSESSEE IS NOT E NTITLED TO DEDUCTION UNDER SECTION 80-IA(4). THE LEARNED COUNS EL FOR ASSESSEE, ON THE OTHER HAND, CONTENDED THAT THE REQUIREMENT I S THAT THE ENTERPRISE DEVELOPING THE INFRASTRUCTURE FACILITY S HOULD BE OWNED BY AN INDIAN COMPANY. 49. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AS ALS O THE RELEVANT MATERIAL ON RECORD. HOWEVER, WE FIND SUBSTANCE IN T HE CONTENTIONS OF THE LEARNED AUTHORISED REPRESENTATIVE OF ASSESSEE. IN OUR CONSIDERED OPINION, IT SHOULD HARDLY TAKE ANY TIME FOR ONE TO UNDERSTAND THAT THE WORD 'IT' IN SUB-CLAUSES (A), (B ) AND (C) OF CLAUS E (I) OF SUB-SECTION (4) OF SECTION 80-IA HAS BEEN USED TO DENOTE 'ENTERPRIS E'. A PLAIN READING OF THE SAID CLAUSE (I) MAKES IT CLEAR, WITHOUT ANY AMBIGUITY, THAT IT IS 'ANY ENTERPRISE' THAT SHOULD FULFIL THE CONDITION O F CARRYING ON THE PARTICULAR TYPE OF BUSINESS NARRATED/SPECIFIED IN T HE MAIN PART OF CLAUSE (I); AND SO ALSO IT IS 'ANY ENTERPRISE' THAT HAS TO FULFIL THE OTHER CONDITIONS SPECIFIED FURTHER IN SUB-CLAUSES (A), (B ) AND (C) OF CLAUSE (I) OF SUB-SECTION (4) OF SECTION 80-IA. THE WORD ' IT' IN THE SAID SUB- CLAUSES (A), (B) AND (C ) QUALIFIES THE WORD 'ENTER PRISE' USED IN THE MAIN PART OF CLAUSE (I) OF SUB-SECTION (4). 50. BESIDES, IF WE WERE TO COMPARE SUB-SECTION (4A) OF SECTION 80-IA, WHICH STANDS REPLACED BY SUB-SECTION (4) OF SECTION 80-IA BY THE FINANCE ACT, 1999, WE FIND THAT IN CLAUSES (I), (II ) AND (III ) OF THE EARLIER SUB-SECTION (4A), THE WORD 'ENTERPRISE' WAS USED, BUT IN THE ITA NO.145/AGR/2012 A.Y. 2005-06 23 REPLACED (NEW) SUB-SECTION (4) IN THE CORRESPONDING SUB-CLAUSES (A), (B) AND (C ) THE WORD 'ENTERPRISE' HAS BEEN REPLACE D BY THE WORD 'IT'. OBVIOUS AS IT IS, READING IN THE ABOVE CONTEXT, IT IS AMPLY CLEAR THAT IN SUB-SECTION (4), AS AMENDED BY THE FINANCE ACT, 199 9, THE WORD 'IT' NEEDS APPROPRIATELY BE INTERPRETED TO MEAN 'ENTERPR ISE'. MOREOVER, IF THE INTERPRETATION CANVASSED BY THE ASSESSING OFFIC ER, THAT THE WORD 'IT' REPRESENTS THE 'INFRASTRUCTURE FACILITY', IS A CCEPTED, IT WILL LEAD TO AN ABSURD RESULT, BECAUSE, SUB-CLAUSE (B) OF CLAUSE (I) OF SUB-SECTION (4) PROVIDES THAT : 'IT HAS ENTERED INTO AND AGREEM ENT WITH CENTRAL GOVERNMENT.......' AND THUS 'IT' AS USED IN SUB-CLA USE (B) HAS TO BE SOMEONE WHO/WHICH HAS ENTERED INTO AN AGREEMENT WIT H THE GOVERNMENT, ETC. OBVIOUSLY, THE INFRASTRUCTURE FACI LITY CANNOT BE SUCH AN ENTRANT AS IT CANNOT ENTER INTO AN AGREEMENT WIT H THE CENTRAL GOVERNMENT OR WITH ANYBODY ELSE. UNDERSTANDABLY, IT IS ONLY THE 'ENTERPRISE', WHICH CAN ENTER INTO AN AGREEMENT WIT H THE CENTRAL GOVERNMENT OR STATE GOVERNMENT OR ANY OTHER PERSON. AS SUCH, VIEWED AS ABOVE ALSO, THE WORD 'IT' DENOTES 'THE EN TERPRISE' AND NOT 'THE INFRASTRUCTURE FACILITY'. 51. ACCORDINGLY, THE CONCLUSION DRAWN BY LEARNED CI T(A) ON THIS COUNT, THAT IS ON THE COUNT AS TO WHAT IS REQUIRED TO BE OWNED IN SUB- CLAUSE (A) OF CLAUSE (I) OF SUB-SECTION (4) OF SECT ION 80-IA, WHETHER 'INFRASTRUCTURE FACILITY' OR 'THE ENTERPRISE' IS FO UND TO HAVE RIGHTLY BEEN DRAWN AND QUITE JUSTIFIED, AND THE SAME NEED NOT BE INTERFERED WITH. 52. AS SEEN ABOVE, WE HAVE HELD THAT 'THE ENTERPRIS E' SHOULD BE OWNED BY A COMPANY REGISTERED IN INDIA. IN THE INSTANT CA SE, THE ASSESSEE IS A COMPANY REGISTERED IN INDIA, WHICH OWNS THE ENTERPR ISE AND WHICH DEVELOPED THE INFRASTRUCTURE FACILITY. WE, THEREFOR E, HOLD THAT THE SECOND CONDITION FOR ELIGIBILITY OF DEDUCTION UNDER SECTION 80-IA(4) IS ALSO FULFILLED BY THE ASSESSEE AND GROUND NO. 1 OF THE REVENUE'S CROSS- OBJECTION HAVING NO MERIT FAILS. 53. WE NOW PROCEED TO CONSIDER THE NEXT CONDITION O F HAVING ENTERED INTO AN AGREEMENT WITH CENTRAL GOVERNMENT OR STATE GOVERNMENT OR A LOCAL AUTHORITY OR ANY OTHER STATUTORY BODY FOR DEV ELOPING AN INFRASTRUCTURE FACILITY, AS CONTAINED IN SUB-CLAUSE (B) OF CLAUSE (I) OF SUB-SECTION (4) OF SECTION 80-IA. IT IS NOT IN DISP UTE, THAT THE ASSESSEE HAS ENTERED INTO AN AGREEMENT WITH GOVERNMENT OF MA HARASHTRA FOR ITA NO.145/AGR/2012 A.Y. 2005-06 24 DEVELOPING KOYNA PROJECT AND WITH APSEB FOR DEVELOP ING SRISAILAM PROJECT. APSEB IS A STATUTORY BODY. THUS, IN RESPEC T OF BOTH THE PROJECTS, THE ASSESSEE IS FOUND TO HAVE FULFILLED T HE CONDITION CONTAINED IN SUB-CLAUSE (B) OF CLAUSE (I) OF SUB-SECTION (4) AS WELL. 54. THERE IS YET ANOTHER CONDITION REQUIRED TO BE F ULFILLED FOR CLAIMING DEDUCTION UNDER SECTION 80-IA WHICH IS SUCH INFRAST RUCTURE FACILITY SHOULD BE TRANSFERRED TO CENTRAL GOVERNMENT OR STAT E GOVERNMENT OR THE LOCAL AUTHORITY OR ANY OTHER STATUTORY BODY WIT HIN THE STIPULATED TIME. IT WAS VEHEMENTLY CONTENDED BY THE LEARNED CI T/DEPARTMENTAL REPRESENTATIVE, THAT IN THIS CASE THERE WAS NO QUES TION OF TRANSFER OF THE INFRASTRUCTURE FACILITY, BECAUSE, WHATEVER CONS TRUCTION OR DEVELOPMENT WORK WAS BEING DONE BY THE ASSESSEE ALW AYS BELONGED TO MAHARASHTRA GOVERNMENT/APSEB, AS THE PAYMENT FOR TH E CONSTRUCTION WORK WAS BEING GIVEN TO THE ASSESSEE P ERIODICALLY. TO STRENGTHEN ITS PLEA, THE REVENUE HAS FILED ITS CROS S-OBJECTION AND HAS CONTENDED THIS ASPECT, IN A WAY, IN ITS GROUND NO. 2 RAISED THEREIN .. 59. WE HAVE CONSIDERED THE RIVAL CONTENTIONS, AS AL SO THE RELEVANT MATERIAL ON RECORD REFERRED TO BY THE PARTIES. WE M AY NOTE THAT AS PER SECTION 80-IA(4)(I)(B ), THE INFRASTRUCTURE FACILIT Y DEVELOPED BY THE ENTERPRISE SHOULD BE TRANSFERRED TO GOVERNMENT WITH IN THE PERIOD STIPULATED IN THE AGREEMENT. IT HAD BEEN THE CONTEN TION OF THE LEARNED CIT/DEPARTMENTAL REPRESENTATIVE THAT SINCE THE LAND ON WHICH INFRASTRUCTURE FACILITY HAS BEEN DEVELOPED ALWAYS B ELONGED TO THE GOVERNMENT AND ASSESSEE HAS ALREADY BEEN PAID FOR C ONSTRUCTION WORK, THERE IS NO QUESTION OF 'TRANSFER' OF INFRAST RUCTURE FACILITY BY THE ASSESSEE. HOWEVER, WE ARE UNABLE TO AGREE WITH THIS CONTENTION OF THE LEARNED CIT/DEPARTMENTAL REPRESENTATIVE. AT THE TIM E OF HEARING BEFORE US IT WAS POINTED OUT BY THE LEARNED COUNSEL FOR ASSESSEE THAT LAND WAS HANDED OVER TO THE ASSESSEE FOR CARRYING O UT DEVELOPMENT WORK. IN THIS REFERENCE, HE REFERRED TO CLAUSE 12 O F AGREEMENT WITH APSEB (I.E., P. 8 OF ASSESSEE'S PAPER BOOK 2), AND CLAUSE 42 OF AGREEMENT WITH GOVERNMENT OF MAHARASHTRA (I.E., P. 32 OF THE ASSESSEE'S PAPER BOOK 2). HE ALSO STATED THAT AFTER COMPLETION OF DEVELOPMENT OF INFRASTRUCTURE FACILITY, THE SAME WA S TRANSFERRED BY HANDING OVER POSSESSION THEREOF. IN SUPPORT OF THIS , HE REFERRED TO P. 11 OF ASSESSEE'S PAPER BOOK 1 FOR HANDING OVER OF P OSSESSION OF INFRASTRUCTURE FACILITY. WE FIND THAT SECTION 80-IA (4)(I)( B) REQUIRES ITA NO.145/AGR/2012 A.Y. 2005-06 25 DEVELOPMENT OF INFRASTRUCTURE FACILITY AND TRANSFER THEREOF AS PER AGREEMENT AND IT CANNOT BE DISPUTED IN VIEW OF THE MATERIAL ON RECORD THAT THE ASSESSEE HAS TRANSFERRED THE INFRASTRUCTUR E FACILITY DEVELOPED BY IT, BY HANDING OVER POSSESSION THEREOF TO THE GO VERNMENT OF MAHARASHTRA/APSEB, AS REQUIRED BY THE AGREEMENT. TH E VERY HANDING OVER OF THE POSSESSION OF THE DEVELOPED INFRASTRUCT URE FACILITY/PROJECT IS THE TRANSFER OF INFRASTRUCTURE FACILITY/PROJECT BY ASSESSEE TO THE GOVERNMENT/AUTHORITY. THE HANDING OVER OF INFRASTRU CTURE FACILITY/PROJECT BY DEVELOPER TO GOVERNMENT/LOCAL A UTHORITY/STATUTORY BODY TAKES PLACE AFTER RECOUPMENT OF DEVELOPER'S CO STS WHETHER IT IS 'BT' OR 'BOT' OR 'BOOT' AND IN BOT AND BOOT THIS RE COUPMENT IS BY WAY OF COLLECTION OF TOLL THEREFROM WHEREAS IN 'BT' IT IS BY WAY OF PERIODICAL PAYMENT BY THE GOVERNMENT/LOCAL AUTHORIT Y/STATUTORY BODY. SINCE IN 'BT' (THE CASE OF AN ASSESSEE BEING A MERE DEVELOPER) THE DEVELOPER NOT BEING REQUIRED/AUTHORISED TO 'OPERATE ' HAS NO OPTION OF RECOUPMENT OF ITS COSTS BY COLLECTION OF TOLLS FROM INFRASTRUCTURE. THE LAND INVOLVED IN INFRASTRUCTURE FACILITY/PROJECT AL WAYS BELONGS TO THE GOVERNMENT/LOCAL AUTHORITY/STATUTORY BODY, WHETHER IT BE THE CASE OF BOT OR BOOT OR BT, AND IT IS HANDED OVER BY THE GOV ERNMENT/LOCAL AUTHORITY/STATUTORY BODY TO THE DEVELOPER FOR DEVEL OPMENT OF INFRASTRUCTURE FACILITY/PROJECT. THE SAME HAS BEEN THE POSITION IN THE INSTANT CASE AS WELL. UNDISPUTEDLY/UNDISPUTABLY, TH E DEDUCTION UNDER SECTION 80-IA IS ALSO AVAILABLE TO AN ASSESSEE, WHO UNDERTAKES MERELY 'DEVELOPMENT' OF INFRASTRUCTURE FACILITY WITHOUT 'O PERATING' ASPECT OF THE SAME. ACCORDINGLY, IN A CASE OF 'BT', THAT IS, A CASE OF A MERE 'DEVELOPER' THE RECOUPMENT OF HIS COSTS HAS TO BE B Y GOVERNMENT/LOCAL AUTHORITY/STATUTORY BODY WHETHER IT BE BY PERIODICA L PAYMENT OR BY LUMP SUM PAYMENT, AND WHETHER THE PAYMENT IS MADE W HILE DEVELOPMENT WORK IS IN PROGRESS OR WHEN THE SAME HA S BEEN COMPLETED. IN THAT VIEW OF THE MATTER, THE QUESTION OF COMPARING THE RIGHTS, TITLE, OR INTEREST OF AN ASSESSEE (A DEVELO PER) IN INFRASTRUCTURE IN THE CASE OF 'BT' WITH THOSE OF A DEVELOPER IN TH E CASE OF 'BOT' OR 'BOOT' IS, IN OUR CONSIDERED OPINION, OF NO RELEVAN T BEARING ON THE ISSUE, INASMUCH AS A DEVELOPER SEEMS TO HAVE ALMOST SAME RIGHTS, TITLE OR INTEREST (EXCEPT REGARDING MODE OF PAYMENT OR CO LLECTION OF TOLLS) IN INFRASTRUCTURE FACILITY WHETHER IT BE THE CASE O F 'BT' OR THAT OF 'BOT' OR 'BOOT', IN VIEW OF THE DISCUSSIONS MADE BY US AB OVE. ACCORDINGLY, IN THE INSTANT CASE AS THE ACTIVITY OF THESE TWO PR OJECTS OF INFRASTRUCTURE FACILITY UNDERTAKEN BY THE PRESENT A SSESSEE WAS OF THE KIND OF 'BT' (BUILD AND TRANSFER) BEING MERELY OF ' DEVELOPMENT' AND DID NOT INVOLVE 'OPERATE' ASPECT IN RESPECT OF THE SAME, THE ITA NO.145/AGR/2012 A.Y. 2005-06 26 INFRASTRUCTURE FACILITY DEVELOPED BY ASSESSEE HAD T O BE TRANSFERRED AND HANDED OVER TO THE GOVERNMENT OF MAHARASHTRA/APSEB ON ITS COMPLETION ONLY AND WITHOUT OPERATING IT, THAT IS W ITHOUT RESORTING TO THE COLLECTION OF TOLL THEREFROM FOR RECOUPMENT OF ITS COSTS. ACCORDINGLY, IN OUR OPINION, THE ASSESSEE HAS DULY COMPLIED WITH THIS CONDITION AS WELL. WE, THEREFORE, HOLD THAT GROUND NO. 2 OF REVENUE'S CROSS OBJECTION HAS NO MERIT AND THE SAME ACCORDING LY FAILS. .. 68. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AS ALS O THE RELEVANT MATERIAL ON RECORD. WE MAY NOTE THAT THE STATUTORY PROVISION AS CONTAINED IN SECTION 80-IA PROVIDES FOR 'DEVELOPMEN T OF INFRASTRUCTURE FACILITY'. IT NOWHERE PROVIDES THAT ENTIRE INFRASTR UCTURE PROJECT IS TO BE DEVELOPED BY ONE ENTERPRISE. IT IS REVEALED FROM RE CORD THAT BOTH THE PROJECTS WERE MULTI-PURPOSE PROJECTS FOR WATER SUPP LY, IRRIGATION AND POWER GENERATION. THE ASSESSEE HAS DEVELOPED SUCH P ART OF THE PROJECT, AS WAS FOR SUPPLY OF WATER FROM RIVER/LAKE TO TURBINE. THEREFORE, THE ASSESSEE HAS DEVELOPED 'INFRASTRUCTU RE FACILITY' FOR SUPPLY OF WATER AND FOR IRRIGATION. MERELY BECAUSE DEVELOPMENT WORK DONE BY ASSESSEE IS A POINT TO POINT MILESTONE OF A MULTI-PURPOSE PROJECT, IT WOULD NOT DEBAR THE ASSESSEE FROM CLAIM ING DEDUCTION UNDER SECTION 80-IA(4), SO LONG AS THE NATURE OF DE VELOPMENT MADE BY ASSESSEE FALLS WITHIN THE AMBIT OF 'INFRASTRUCTURE FACILITY' AND SINCE WE HAVE FOUND IT ESTABLISHED ABOVE THAT DEVELOPMENT WO RK CARRIED OUT BY ASSESSEE WAS FOR DEVELOPMENT OF INFRASTRUCTURE FACI LITY, THE ASSESSEE CANNOT JUSTIFIABLY BE DENIED OF THE DEDUCTION UNDER SECTION 80-IA, MERELY BECAUSE THE ASSESSEE HAS NOT DEVELOPED THE E NTIRE PROJECT. WE HOLD ACCORDINGLY. 69. THERE HAS, HOWEVER, ALSO BEEN AN ALTERNATIVE AR GUMENT CANVASSED BY THE LEARNED CIT/DEPARTMENTAL REPRESENTATIVE THAT THE PROVISIONS OF SECTION 80-IA(1) STATE THAT WHERE THE GROSS TOTAL I NCOME OF AN ASSESSEE INCLUDES ANY PROFITS AND GAINS 'DERIVED FROM' ANY B USINESS OF AN ENTERPRISE ENGAGED IN THE DEVELOPMENT OF AN INFRAST RUCTURE FACILITY, THE ASSESSEE SHALL BE ENTITLED TO DEDUCTION ON THE PROFITS AND GAINS 'DERIVED FROM' SUCH BUSINESS. HE HAS RAISED THIS CO NTENTION ON THE FOOTING THAT THE FACTS OF THE ASSESSEE'S CASE REVEA L THAT THE ASSESSEE IS NOT A DEVELOPER BUT IS A MERE CONTRACTOR AND IS DER IVING INCOME FROM CIVIL CONTRACT WORK, AND THAT THE ASSESSEE IS NOT D ERIVING ANY PROFITS ITA NO.145/AGR/2012 A.Y. 2005-06 27 AND GAINS FROM THE DEVELOPMENT OF AN INFRASTRUCTURE FACILITY. HIS CONTENTION, ACCORDINGLY, HAS BEEN THAT THE CLAIM OF THE ASSESSEE FALLS/FAILS AT THE VERY THRESHOLD LEVEL AND SO NO D EDUCTION IS AVAILABLE TO THE ASSESSEE UNDER THE PROVISIONS OF SECTION 80- IA. AS AGAINST THIS, THE LEARNED AUTHORISED REPRESENTATIVE OF ASSESSEE, REITERATING HIS ARGUMENTS ON THE POINT OF ASSESSEE BEING A DEVELOPE R AS ALREADY MADE BY HIM AND DISCUSSED BY US ABOVE, HAS CONTENDED THA T THE ASSESSEE IS A DEVELOPER AND THE ASSESSEE'S INCOME FROM THE CONS TRUCTION ACTIVITY OF THESE TWO PROJECTS IS ASSESSEE'S INCOME DERIVED FROM THE ELIGIBLE BUSINESS. 70. WE HAVE CONSIDERED THE RIVAL CONTENTIONS. WE HA VE, HOWEVER, ALREADY DEALT WITH THIS CONTENTION OF THE LEARNED C IT/DEPARTMENTAL REPRESENTATIVE ABOVE AND HAVE HELD THAT THE ASSESSE E IS A DEVELOPER OF AN INFRASTRUCTURE FACILITY AND SO THE ASSESSEE'S IN COME FROM ITS BUSINESS OF CONSTRUCTION ACTIVITY OF THE TWO PROJEC TS IS THE INCOME DERIVED FROM ELIGIBLE BUSINESS, THAT IS THE BUSINES S ELIGIBLE FOR DEDUCTION UNDER SECTION 80-IA. ACCORDINGLY, THE ASS ESSEE IS ENTITLED FOR DEDUCTION UNDER SECTION 80-IA. THE CONTENTION O F THE LEARNED CIT/DEPARTMENTAL REPRESENTATIVE ON THIS COUNT, THER EFORE FAILS. 71. IN VIEW OF OUR ABOVE DISCUSSION, WE HOLD THE AS SESSEE TO HAVE FULFILLED ALL THE REQUISITE CONDITIONS PRESCRIBED U NDER SUB-SECTION (4) OF SECTION 80-IA FOR BEING ELIGIBLE FOR DEDUCTION U NDER SECTION 80-IA. WE, THEREFORE, DELETE THIS DISALLOWANCE OF ASSESSEE 'S CLAIM FOR DEDUCTION OF RS. 18,47,09,510 UNDER SECTION 80-IA A ND DIRECT THE ASSESSING OFFICER TO ALLOW THE SAME. AS SUCH GROUND NO. 1 IN ASSESSEE'S APPEAL STANDS ALLOWED AND THE REVENUE'S CROSS-OBJECTION STANDS REJECTED. WE ORDER ACCORDINGLY. 17. IN THE LIGHT OF ABOVE BACK GROUND OF DISCUSSION S, IF WE CONSIDER THE FACTS OF THE CASE UNDER CONSIDERATION, WE NOTICE THAT THE A. O. HAS ALLOWED THE CLAIM UNDER SECTION 80IA(4) OF THE ACT. BUT THE CIT(A) EXERCIS ED HIS POWER UNDER SECTION 251 OF THE ACT AND WITHDRAWN THE CLAIM UNDER SECTION 80 IA(4) OF THE ACT. THE ASSESSEE CLAIMED DEDUCTION UNDER SECTION 80IA(4) IN RESPECT OF TWO PROJECTS (1) PANIPET- ITA NO.145/AGR/2012 A.Y. 2005-06 28 JALANDHAR PROJECT AND (2) SAGAR-BEENA PROJECT. THE CIT(A) WITHDREW THE CLAIM UNDER SECTION 80IA(4) IN RESPECT OF PANIPAT-JALANDHAR PROJECT ON THE GROUND THAT IT WAS A CONTRACT ONLY FOR SHORT TERM IMPROVEM ENTS AND ROUTINE MAINTENANCE. THEREFORE, IT CANNOT BE SAID THAT THE ASSESSEE WAS DEVELOPING OR OPERATING AND MAINTAINING OR DEVELOPING, OPERATING AND MAINTAININ G. THE ASSESSEE ONLY DID ROUTINE MAINTENANCE AND DID NOT OPERATE IT. THE DE DUCTION IN RESPECT OF SAGAR- BEENA PROJECT, THE GROUND THAT THE ASSESSEE HAD ONLY ENTERED INTO AGREEMENT WITH M/S. NAGARJUN CONSTRUCTION CO. LTD. AND NOT WITH TH E GOVERNMENT AS REQUIRED IN THE SECTION. LET US SEE THE EXACT NATURE OF WORK CARRIED OUT BY THE ASSESSEE. THE WORK-WISE EXAMINATIONS OF NATURE OF WORK ARE AS UND ER:- PANIPAT-JALANDHAR PROJECT. 18. THE ASSESSEE FILED RELEVANT ABSTRACT OF CONTRAC T AGREEMENT BETWEEN NHAI AND THE ASSESSEE FOR PANIPAT-JALANDHAR PROJECT WHIC H HAVE BEEN PLACED AT PAGE NOS.1 TO 55 OF THE ASSESSEES PAPER BOOK. ON PERUS AL OF CLAUSES RELATED TO SCOPE OF WORK, WE NOTICE THAT CLAUSES 4.1 & 4.2 RELATED TO S COPE OF WORK WHICH ARE REPRODUCED AS BELOW :- 4.1 GENERAL - ROAD MAINTENANCE THIS INCLUDES EMERGENCY; ROUTINE, PERIODIC (WHENEVER REQUIRED) AND DISASTER MAINTENANCE BROAD LY ROUTINE MAINTENANCE WILL INCLUDE MAINTENANCE OF SHOULDERS A ND SLOPES, ITA NO.145/AGR/2012 A.Y. 2005-06 29 SIDE DRAINS, CD WORKS, CARRIAGEWAY AND CRUST AND HO RTICULTURE MAINTENANCE INCLUDING REQUISITE PLANTING OF TREES, PLANTS, SHRUBS AND OTHER SUITABLE VEGETATION IN THE MEDIAN AND RIGHT OF WAY ALSO. - ROAD PROPERTY MANAGEMENT IDENTIFICATION OF ENCROACHMENT AND RIBBON DEVELOPMENT, LAND ACQUISITION AS DESIRED BY NHAI, ENFORCEMENT OF REGULATIONS, LIAISONING WITH THE REL EVANT AUTHORITIES FOR ABOVE AND MAINTENANCE OF ROAD SIGNS AND ROAD FURNITURES. - INCIDENT MANAGEMENT ROAD PATROLS AND SURVEILLANCE, FIRST AID, BASIC AUTOMOBILE ASSISTANCE, TOW AWAY CRANES, WIRELESS/MOBILE FACILITY AND ROAD SAFETY WORKS. - ENGINEERING IMPROVEMENTS PROVIDING CRASH BARRIERS, MANAGEMENT OF ACCESS. - INSPECTIONS 4.2 ROAD MAINTENANCE THE CONTRACTOR SHALL BE REQUIRED TO PERFORM ALL ROU TINE ROAD MAINTENANCE ACTIVITIES ALONG WITH THE PROJECT ROADS . THE CONTRACTOR SHALL BE REQUIRED TO SUBMIT MAINTENA NCE REPORT FOR EACH COMPONENT OF THE WORKS. THE CONTRACTOR SHALL BE REQUIRED TO UTILIZE MECHANI ZED EQUIPMENT AND METHODS TO PERFORM THESE OBLIGATIONS. ALL MAINTENANCE ACTIVITIES SHALL BE CARRIED OUT IN ACCORDANCE WITH MINISTRY OF SURFACE TRANSPORT (MOST/MORT&H) SPECIFI CATIONS AND RELEVANT IRC CODES. THE REQUISITE QUALITY CONTROL TESTS AS PER SPECIFICATIONS AND CODES ARE TO BE CARRIED OUT BY T HE CONTRACTOR AT HIS COST AS PER DIRECTION OF THE ENGINEER. ROUTINE ROAD MAINTENANCE MEANS THE PLANNED ONGOING WORKS AND ACTIVITIES REQUIRED TO ENSURE PUBLIC SAFETY, REPAIR SMALL DEFECTS AND TO MAINTAIN THE ROAD IN THE REQUIRED CONDITION. AD HO C MAINTENANCE MEANS THE CARRYING OUT OF UNSCHEDULED MAINTENANCE O CCASIONED BY IRREGULAR EVENTS SUCH AS ACCIDENTS, NATURAL FAILURE S, ABNORMAL WEATHER ITA NO.145/AGR/2012 A.Y. 2005-06 30 AND THE LIKE, AS MENTIONED IN TECHNICAL SPECIFICATI ON AND PERFORMANCE STANDARDS. THE ROUTINE AND AD HOC ROAD MAINTENANCE SHALL INCLU DE, AMONGST OTHERS, ACTIVITIES SUCH AS : - REPAIRING LOCAL POTHOLES - CRACK SEALING - ASPHALT TREATMENT - ROAD SIGN MAINTENANCE - ROAD MARKINGS - GUARD RAIL AND SUPPLEMENTARY ROAD FURNITURE REPAI RS - MAINTENANCE OF RIGID PAVEMENTS - REPAIR OF FENCES - REPAIRS OF ACCIDENT DAMAGED ASSETS - MAINTENANCE OF CULVERTS, DRAINS AND CHANNELS - CLEARING OF LITTER AND DEBRIS - PERIODIC MAINTENANCE OF FLEXIBLE PAVEMENT - HORTICULTURAL MAINTENANCE 19. CLAUSE 4.3 IS REPRODUCED AS UNDER :- 4.3 ROAD PROPERTY MAINTENANCE THE CONTRACTOR SHALL ENSURE THE MAXIMUM AVAILABILIT Y AND EFFICIENT UTILIZATION OF THE ASSETS FOR THE NHAI. THIS SHALL ALSO INCLUDE THE PROTECTION OF THE RIGHT OF WAY FROM ENCROACHMENTS A ND OTHER UNAUTHORIZED ACTIVITIES. FOR THIS PURPOSE, THE CONTRACTOR SHALL DRAW UP A CO MPREHENSIVE ASSET REGISTER DETAILING THE CONDITION OF THE ENTIRE EXIS TING ROAD AND BUILDING ASSETS. THIS ASSET REGISTER SHALL BE MAIN TAINED AND CONTINUALLY UPDATED AFTER ANY ADDITIONS TO THE INFR ASTRUCTURE AND AFTER EACH OF THE REQUIRED INSPECTIONS. 20. TO EXAMINE THE NATURE OF WORK ONE HAS TO CONSID ER THE NATURE OF EXPENDITURES INCURRED BY THE ASSESSEE IN RESPECT OF PANIPAT-JALANDHAR PROJECT. FOR ITA NO.145/AGR/2012 A.Y. 2005-06 31 THE PURPOSE OF READY REFERENCE, THE DETAILS OF RELE VANT EXPENSES INCURRED BY THE ASSESSEE ARE REPRODUCED FROM PAGE NO.55 OF THE ASSE SSEES PAPER BOOK AS UNDER:- S.NO. DESCRIPTION TOTAL (RS.) 1. BILL NO.7.1 GENERAL ITEMS 15,24,500/- 2. BILL NO.7.2 ROAD MAINTENANCE 22,67,06,000/- 3. BILL NO.7.3 ROAD PROPERTY MANAGEMENT 2,63,38,000/- 4. BILL NO.7.4 INCIDENT MANAGEMENT 1,41,13,000/- 5. BILL NO.7.5 ENGINEERING IMPROVEMENTS 4,38,41,0 00/- 6. BILL NO.7.6 TOLL OPERATIONS 5,29,20,000/- TOTAL 36,54,42,500/- 21. THE EXPRESSION DEVELOPING, OPERATING AND DEVEL OPING HAVE NOT BEEN DEFINED FOR THE PURPOSE OF SECTION 80IA OF THE ACT AND, THEREFORE, ITS ORDINARY AND NATURAL MEANING IS TO BE SEEN. THE CONDITION AS RE GARDS DEVELOPMENT, OPERATION AND MAINTENANCE OF AN INFRASTRUCTURE FACILITY WAS C ONTEMPORANEOUSLY CONSTRUED BY THE AUTHORITIES AT ALL MATERIAL TIMES, TO COVER WI THIN ITS PURVIEW THE DEVELOPMENT OF AN INFRASTRUCTURE FACILITY UNDER A SCHEME ROAD M ANAGEMENT, PLANNING AND ACTIVITIES REQUIRED TO ENSURE PUBLIC SAFETY REPAIR AND MAINTAIN THE ROAD IN THE REQUIRED CONDITION. AFTER CONSIDERING NATURE OF WO RKS CARRIED OUT BY THE ASSESSEE, THE DETAILS OF EXPENDITURES INCURRED BY THE ASSESSE E AND IN THE LIGHT OF AMENDMENTS IN SECTION 80IA, READING OF ENTIRE SECTION TOGETHER ITS HARMONIOUSLY CONSTRUED IN VIEW OF THE JUDGEMENT OF THE APEX COURT IN THE CASE OF BAJAJ TEMPO VS. CIT (1992) 196 ITR 188 (SC) WHEREIN THE APEX COURT EMPH ASIZED THAT A PROVISION IN A ITA NO.145/AGR/2012 A.Y. 2005-06 32 TAXIING STATUTE GRANTING INCENTIVES FOR PROMOTING G ROWTH AND DEVELOPMENT SHOULD BE CONSTRUED LIBERALLY, WE FIND THAT THE CASE OF TH E ASSESSEE COVERS BY THE CONDITIONS LAID DOWN IN SECTION 80IA(4)(I), (I) DEV ELOPING OR (II) OPERATING AND MAINTAINING OR (III) DEVELOPING, OPERATING AND MAIN TAINING. THEREFORE, THE CLAIM OF DEDUCTION UNDER SECTION 80IA(4) OF THE ACT IS ALLOW ABLE IN RESPECT OF PANIPAT- JALANDHAR PROJECT. SAGAR-BEENA PROJECT. 22. THE OBJECTION OF THE CIT(A) IN ALLOWING DEDUCTI ON UNDER SECTION 80IA OF THE ACT IN RESPECT OF SAGAR-BEENA PROJECT IS THAT THE A SSESSEE DID NOT SATISFY THE CONDITIONS LAID DOWN UNDER SECTION 80IA(4)(B) OF TH E ACT. THE OBJECTION OF THE CIT(A) IS THAT THERE IS NOTHING TO SUGGEST ON RECOR D THAT THE ASSESSEE HAD ENTERED INTO ANY AGREEMENT WITH THE CENTRAL GOVERNMENT OR A STATE GOVERNMENT OR A LOCAL AUTHORITY OR ANY OTHER STATUTORY BODY. HE FURTHER NOTED THAT THE ASSESSEE HAS ENTERED INTO AGREEMENT WITH M/S. NAGARJUNA CONSTRUC TION COMPANY LIMITED, AN ENTITY WHICH IS NOT MENTIONED IN SECTION 80IA(4)(B) OF THE ACT. TO EXAMINE THE CASE OF THE CIT(A), WE WOULD LIKE TO REFER THE WORD CONSORTIUM OF SUCH COMPANIES IN SECTION 80IA)(I)(A) OF THE ACT. THE SECTION 80IA(4)(I)(A) PROVIDES THAT INFRASTRUCTURE FACILITY AS APPROVED IN (I) IS OWNED BY CONSORTIUM OF SUCH COMPANIES. THE CONSORTIUM WORD HAS NOT BEEN DEFINE D IN SECTION 80IA(4) OF THE ITA NO.145/AGR/2012 A.Y. 2005-06 33 ACT. IF WE CONSIDER THE DICTIONARY MEANING OF THAT WORD, ACCORDING TO THE NEW INTERNATIONAL WEBSTERS COMPREHENSIVE DICTIONARY I T IS LICHENS, (FELLOWSHIP) LAW COALITION, UNION, AS OF INCORPORATED COMPANIES . AS PER SAHNI ADVANCED DICTIONARY (ENGLIGH-ENGLISH-HINDI), THE MEANING OF CONSORTIUM IS A COMBINATION OF FINANCIAL INSTITUTIONS, CAPITALISTS, ETC. FOR CA RRYING INTO EFFECT SOME FINANCIAL OPERATION REQUIRING LARGE RESOURCES OF CAPITAL 23. IN THIS REGARD, WE NOTICE THAT I.T.A.T., BANGAL ORE BENCH IN THE CASE OF ACIT VS. JSR CONSTRUCTIONS (P) LTD, ITA NO.898/BANG/2009 , ORDER DATED 29.03.2011 WHILE EXAMINING ALLOWABILITY OF DEDUCTION UNDER SEC TION 80IA IN CASE OF SUB- CONTRACTOR HELD AS UNDER :- HAVING HEARD BOTH THE PARTIES AND HAVING CONSIDERE D THE RIVAL CONTENTIONS, WE FIND THAT THE DEDUCTION U/S 80IA IS AVAILABLE IN RESPECT OF PROFIT AND GAINS FROM THE INDUSTRIAL UNDERTAKING OR ENTERPRISES ENGAGED IN INFRASTRUCTURE DEVELOPMENT ETC. THE ONL Y REASON FOR THE DISALLOWANCE BY THE AO IS THAT THE ASSESSEE HAS UND ERTAKEN THE SUB- CONTRACT WORKS AND HAS ALSO NOT UNDERTAKEN THE NEW CONTRACTS DURING THE RELEVANT ASST. YEAR. WE FIND THAT THE ASSESSEE HAS FILED SUFFICIENT EVIDENCE BEFORE THE CIT(A) TO PROVE HIS CASE THAT I T IS PARTY TO THE CONSORTIUM, WHICH WAS ENGAGED IN THE BUSINESS OF C IVIL CONSTRUCTION AND WAS ALSO AWARDED THE CONTRACT BY THE NHAI. IT WAS ALSO PROVED THAT THE ASSESSEE HAS INVESTED THE ENTIRE CAPITAL F OR COMPLETION OF THE CONTRACT AND SO IT WAS ENTITLED TO RECEIVE THE ENTI RE CONTRACT RECEIPTS. IN SUCH A CASE, WE ARE SATISFIED THAT THE ASSESSEE HAS ITSELF CARRIED ON THE WORKS CONTRACT AND WAS NOT A SUB-CONTRACTOR CAR RYING ON THE WORKS CONTRACT. FURTHER, AS RIGHTLY HELD BY THE CI T(A) EVERY YEAR THE ASSESSEE CANNOT BE EXPECTED TO ENTER INTO A NEW CO NTRACT FOR THE REASON THAT THE INFRASTRUCTURE PROJECT ARE BY THE V ERY NATURE CARRIED ON OVER A PERIOD OF TIME AND CANNOT BE COMPLETED WI THIN A YEAR. THE MAIN AIM OF ALLOWING THE DEDUCTION U/S 80IA IS FOR IMPROVING THE ITA NO.145/AGR/2012 A.Y. 2005-06 34 INFRASTRUCTURE FACILITIES IN THE COUNTRY. IN VIEW OF THE SAME, WE ARE OF THE OPINION THAT THE CIT(A) HAS PROPERLY APPRECIATE D THE EVIDENCE BEFORE ALLOWING THE CLAIM OF THE ASSESSEE AND THERE IS NO REASON TO INTERFERE WITH THE SAME. 24. THE I.T.A.T., VISAKHAPATNAM BENCH IN THE CASE O F DCIT VS. M/S. TRANSSTROY (INDIA) LIMITED, ITA NO.325 & 326/VIZ/2011, ORDER D ATED 13.04.2012 WHILE EXAMINING ALLOWABILITY OF CLAIM UNDER SECTION 80IA( 4) IN CASE OF JOINT VENTURE FOLLOWED THE ORDER OF I.T.A.T. IN EARLIER YEAR IN ASSESSEES OWN CASE. THE RELEVANT OBSERVATION ARE REPRODUCED AS BELOW :- WE HAVE CAREFULLY EXAMINED THE ORDER OF THE CIT(A) AND THE ORDER OF THE TRIBUNAL IN THE ASSESSEES OWN CASE FO R THE ASSESSMENT YEAR 2006-07. ON CAREFUL PERUSAL OF THIS ORDER OF THE TRIBUNAL, WE FIND THAT TRIBUNAL HAS EXAMINED THE ISSUE IN DETAIL IN THE LIGHT OF LEGAL PROVISIONS AND VARIOUS JUDICIAL PRONOUNCEMENTS AND FINALLY CONCLUDED THAT FOR ALL PRACTICAL PURPOSES, THE CONTRACT WAS A WARDED TO THE CONSTITUENTS OF THE JOINT VENTURE THROUGH JOINT VEN TURE AND THE WORK WAS EXECUTED BY THEM. THEREFORE, THE BENEFIT OF DE DUCTION UNDER THIS SECTION IS TO BE GIVEN ONLY TO THE ENTERPRISES WHO CARRIED ON THE CLASSIFIED BUSINESS. THE RELEVANT PORTION OF THE O RDER OF THE TRIBUNAL IS EXTRACTED HEREUNDER FOR THE SAKE OF REFERENCE TURNING TO THE FACTS OF THE CASE, WE FIND THAT JOI NT VENTURE AND THE CONSORTIUM WAS FORMED ONLY TO OBTAIN THE CONTRA CT FORM THE GOVERNMENT BODY AND THEY IN FACT DID NOT EXECUTE TH E WORK AWARDED TO IT. IN A JOINT VENTURE AGREEMENT OR A CONSORTIU M AGREEMENT, IT WAS AGREED THAT THE AWARDED WORK HAD TO BE EXECUTED BY THE JOINT VENTURES OR PARTIES TO THE AGREEMENT IN AN AGREED MANNER. T HE WORK WAS AWARDED BY THE ANDHRA PRADESH GOVERNMENT AND THE KS HIP, A BODY OF THE STATE GOVERNMENT OF KARNATAKA TO THE JV AND CONSORTIUM BUT THE WORK WAS EXECUTED BY THE ASSESSEE AND THE OTHER CONSTITUENTS. IN CASE OF JOINT VENTURE AGREEMENT, 40% WORKS WERE EXE CUTED BY THE ASSESSEE AND IN CASE OF CONSORTIUM, THE 100% WORK W AS EXECUTED BY THE ASSESSEE. WHATEVER BILLS WERE RAISED BY THE AS SESSEE FOR THE WORK EXECUTED ON JV AND CONSORTIUM, THE JOINT VENTURE AN D CONSORTIUM IN ITA NO.145/AGR/2012 A.Y. 2005-06 35 TURN RAISED THE FURTHER BILL OF THE SAME AMOUNT TO THE GOVERNMENT. WHATEVER PAYMENT WAS RECEIVED BY THE JOINT VENTURE, IT WAS ACCORDINGLY TRANSFERRED TO THEIR CONSTITUENTS. THER EFORE, THE JOINT VENTURE OR THE CONSORTIUM WAS ONLY A PAPER ENTITY A ND HAS NOT EXECUTED IN CONTRACT ITSELF. THEY HAVE ALSO NOT OF FERED ANY INCOME OUT OF THE WORK EXECUTED BY ITS CONSTITUENTS, NOR DID T HEY CLAIM ANY DEDUCTIONS U/S 80IA(4). THEREFORE, IN ALL PRACTICA L PURPOSES, THE CONTRACT WAS AWARDED TO THE CONSTITUENTS OF THE JOI NT VENTURES THROUGH JOINT VENTURE AND THE WORK WAS EXECUTED BY THEM. A S PER PROVISIONS OF SECTION 80IA(4), THE BENEFIT OF DEDUCTION UNDER THI S SECTION IS TO BE GIVEN ONLY TO THE ENTERPRISE WHO CARRIED ON THE CLA SSIFIED BUSINESS. THEREFORE, IN THE LIGHT OF THIS LEGAL PROPOSITION, WE ARE OF THE VIEW THAT THE ASSESSEE IS ENTITLED FOR THE DEDUCTIONS U/S 80I A(4) ON THE PROFIT EARNED FROM THE EXECUTION OF THE WORK AWARDED TO JV AND CONSORTIUM. WE ACCORDINGLY SET ASIDE THE ORDER OF THE CIT(A) AN D DIRECT THE A.O. TO ALLOW THE DEDUCTIONS. 25. WITH THIS BACK GROUND OF DISCUSSIONS, IF WE CON SIDER THE FACTS OF THE CASE UNDER CONSIDERATION, WE FIND THAT THE INFRASTRUCTUR E PROJECT WAS AWARDED BY THE GOVERNMENT OF MADHYA PRADESH, A COPY OF THE AGREEME NT HAS BEEN PLACED IN ASSESSEES PAPER BOOK AT PAGE NO.56. THIS AGREEMEN T WAS IN BETWEEN THE GOVERNMENT OF MADHYA PRADESH AND NCC-PNC (JOINT VEN TURE), AGRA. A SUPPLEMENTARY AGREEMENT OF NAGARJUNA CONSTRUCTION C OMPANY LIMITED DATED 10.08.2004 BETWEEN M/S. NAGARJUNA CONSTRUCTION COMP ANY LIMITED AND M/S. PNC CONSTRUCTION COMPANY LIMITED, THE ASSESSEE, WHE REIN IT IS STATED THAT BOTH THE PARTIES HAVE FORMED A JOINT VENTURE CALLED THE NCC-PNC JV BY VIRTUE OF AGREEMENT DATED 08.04.2004, WITH THE SOLE PURPOSE T O SUBMIT A JOINT BID FOR SAGAR- BEENA ROAD PROJECT. M/S. PNC CONSTRUCTION CO. LIMI TED WAS OFFERED FOR THE ENTIRE WORKS OF JOINT VENTURE AND SHALL BE LIABLE F OR ALL TAXES INCLUDING INCOME TAX ITA NO.145/AGR/2012 A.Y. 2005-06 36 SOLELY LIABLE TO GOVERNMENT OF MADHYA PRADESH. THE AGREEMENT WITH GOVERNMENT OF MADHYA PRADESH AND NCC-PNC JOINT VENTURE ACCEPTE D THE CONCEPT OF JOINT VENTURE VIDE CLAUSE NO.27.1 WHICH IS AT PAGE NO.95 OF ASSESSEES PAPER BOOK. ON PERUSAL OF AGREEMENTS AND SUPPLEMENTARY AGREEMENT, WE NOTICE THAT THE CIT(A) FAILED TO CONSIDER THE RELEVANT PROVISION OF SECTIO N 80IA(4)(I)(A) WHICH PROVIDES THAT THE PRESCRIBED INFRASTRUCTURE PROJECT IN SECTI ON 80IA(4)(I) IS OWNED BY COMPANY REGISTERED IN INDIA OR BY A CONSORTIUM OF S UCH COMPANIES. THE CIT(A) HAS CONSIDERED ONLY CLAUSE 80IA(4)(I)(B) OF THE ACT WITHOUT CONSIDERING SECTION 80IA(4)(I)(A) OF THE ACT. IF WE READ BOTH THE CLAU SES OF SUB-SECTION (4)(I)(A) AND (B), WE FIND THAT THE PROJECT AGREEMENT WAS WITH TH E MADHYA PRADESH GOVERNMENT AND IT WAS OWNED BY CONSORTIUM OF COMPANIES REGISTE RED IN INDIA I.E. NCC-PNC. THUS, IN THE LIGHT OF ABOVE DISCUSSIONS AND IN VIEW OF THE DECISIONS OF THE I.T.A.T. IN THE CASE OF ACIT VS. JSR CONSTRUCTIONS (P) LTD, ITA NO.898/BANG/2009, ORDER DATED 29.03.2011 AND DCIT VS. M/S. TRANSSTROY (IND IA) LIMITED, ITA NO.325 & 326/VIZ/2011, ORDER DATED 13.04.2012, WE FIND THAT THE ASSESSEE HAS SATISFIED THE CONDITIONS LAID DOWN IN SECTION 80IA(4)(I)(A)(B) OF THE ACT. WE ARE, THEREFORE, OF THE VIEW THAT THE ASSESSEE IS ENTITLED FOR DEDUCTIO N UNDER SECTION 80IA(4) OF THE ACT IN RESPECT OF SAGAR-BEENA PROJECT. 26. APART FROM THE ABOVE OBJECTIONS, ONE MORE COMMO N OBJECTION OF THE CIT(A) WHICH HAS ALSO BEEN ARGUED BY THE LD. DEPARTMENT RE PRESENTATIVE IS THAT INSPITE OF ITA NO.145/AGR/2012 A.Y. 2005-06 37 SUFFICIENT OPPORTUNITY OF HEARING THE ASSESSEE HAS FAILED TO PRODUCE COPIES OF AGREEMENT ENTERED INTO BY THE ASSESSEE WITH M/S. NA GARJUNA CONSTRUCTION COMPANY LIMITED. IN THIS REGARD, IT IS RELEVANT TO STATE THAT THE A.O. HAS ALLOWED THE CLAIM OF THE ASSESSEE AFTER EXAMINING ALL THESE AGREEMENTS AND OTHER RECORDS PRODUCED BY THE ASSESSEE. IT IS RELEVANT TO NOTE T HAT WHEN THE CIT(A) WAS NOT HAVING COPIES OF AGREEMENT OF THE PARTIES, HOW HE H AS COME TO THE CONCLUSION THAT THE A.O. HAS WRONGLY ALLOWED THE CLAIM OF THE ASSES SEE UNDER SECTION 80IA(4) OF THE ACT IS HIGHLY OBJECTIONABLE. IT APPEARS THAT T HE FINDING OF CIT(A) IN WITHDRAWING THE CLAIM UNDER SECTION 80IA(4) WAS ON THE BASIS OF PRESUMPTIONS AND SURMISES AND NOT BASED ON FACTS PARTICULARLY UNDER THE CIRCUMSTANCES WHEN THE ASSESSEE HAS DISCHARGED BURDEN IN THIS REGARD BY FU RNISHING COMPLETE DETAILS BEFORE THE A.O. AND THE A.O. AFTER EXAMINING THOSE DETAILS ALLOWED THE CLAIM OF THE ASSESSEE. 27. FURTHER, IT IS ALSO RELEVANT TO STATE HERE THAT IN A.Y. 2006-07, THE A.O. ALLOWED THE ASSESSEES CLAIM ON BOTH THE PROJECTS U NDER SECTION 80IA(4) OF THE ACT. THE SUBMISSIONS OF THE ASSESSEE WAS THAT THE ORDER OF THE A.O. FOR A.Y. 2006-07 BECAME FINAL AS AGAINST THAT ORDER OF THE A.O., NEI THER APPEAL NOR ANY OTHER PROCEEDINGS ARE INITIATED. ON THIS SUBMISSION OF T HE LD. AUTHORISED REPRESENTATIVE, AN OPPORTUNITY WAS PROVIDED TO THE LD. DEPARTMENTAL REPRESENTATIVE TO VERIFY THE STAND OF THE DEPARTMENT, THE CASE WAS ADJOURNED FRO M 02.01.2013 TO 17.01.2013. ITA NO.145/AGR/2012 A.Y. 2005-06 38 AT THE TIME OF HEARING, THE LD. DEPARTMENTAL REPRES ENTATIVE FAILED TO CONTROVERT THE SUBMISSION OF THE LD. AUTHORISED REPRESENTATIVE AND STATED THAT NO COMMENTS ARE OFFERED BY THE LD. CIT, AGRA ON THIS CASE. THE ASS ESSMENT ORDER FOR A.Y. 2006-07 BECAME FINAL WHERE THE A.O. HIMSELF HAS ALLOWED THE CLAIM OF THE ASSESSEE UNDER SECTION 80IA(4) OF THE ACT. IN THIS REGARD, WE WOU LD LIKE TO REFER ONE OF THE ELEMENTARY PRINCIPLES OF THE JUDICIAL ADMINISTRATIO N WHICH IS NOTED FROM A JUDGEMENT OF HONBLE MADHYA PRADESH HIGH COURT IN T HE CASE OF ARIHANT BUILDERS, DEVELOPERS & INVESTORS (P) LTD. VS. ITAT & ORS. (20 05) 277 ITR 239 (MP) (PAGE NO.243) THAT THERE SHOULD BE CONSISTENCY SO THAT LI TIGANTS ARE AWARE WHERE THEY STAND. IF THE COURTS AND TRIBUNALS ARE ALLOWED TO T AKE THE VIEW LIKE THE ONE IN PRESENT CASE, IT WOULD LEAD TO ANARCHY AND TOTAL CH AOS WHICH WOULD BE AGAINST JUDICIAL PROPRIETY AND DISCIPLINE. WE MAY ALSO REF ER THE FOLLOWING JUDGEMENTS IN THIS REGARD:- I) CIT VS. GOODLAS NEROLAC PAINTS LTD., 188 ITR 1(BOM. ): (PAGE 5 ) THIS, HOWEVER, DOES NOT MEAN THAT SUBSEQUENT BENCH OF THE TRIBUNAL SHOULD COME TO A CONCLUSION TOTALLY CONTRADICTORY TO THE CONCLUSION REACHED BY THE EARL IER BENCHOF THE TRIBUNAL IN THE SAME CASE FOR AN EARLIE R YEAR ON A SIMILAR SET OF FACTS. SUCH A THING MAY NOT BE IN THE LARGER PUBLIC INTEREST AS IT IS LIKELY TO SHAKE THE CONFIDENCE OF THE PUBLIC IN THE SYSTEM. II) SAYAJI IRON & ENGG. CO. VS. CIT [2002] 253 ITR 749 (GUJ.):[PAGE 753] 9.4: IN RELATION TO THE AFORESAID APPROACH OF THE CIT(A) AND THE TRIBUNAL WE CANNOT DO BETTER THAN REITERATE WHAT MADRAS HIGH COURT HAS STATED IN THE CASE OF CIT VS. L.G. ITA NO.145/AGR/2012 A.Y. 2005-06 39 RAMAMURTHI & ORS. 1977 CTR (MAD) 416: (1977) 110 ITR 453 (MAD): : NO TRIBUNAL OF FACT HAS ANY RIGHT OR JURISDICTION TO COME TO A CONCLUSION ENTIRELY CONTR ARY TO THE ONE REACHED BY ANOTHER BENCH OF THE SAME TRIBUN AL ON THE SAME FACTS. IF A BENCH OF A TRIBUNAL ON TH E IDENTICAL FACTS IS ALLOWED TO COME TO A CONCLUSION DIRECTLY OPPOSED TO THE CONCLUSION REACHED BY ANOTHER BENCH OF THE TRIBUNAL ON AN EARLIER OCCASION, THAT WILL BE DESTRUCTIVE OF THE INSTITUTIONAL INTEGRITY ITSELF. III) RADHASOAMI SATSAND VS. CIT [1992] 193 ITR 321 (SC): ( PAGE 329) ASSESSMENTS ARE CERTAINLY QUASI-JUDICIAL AND THESE OBSERVATIONS EQUALLY APPLY. WE ARE AWARE OF THE FACT THAT, STRICTLY SPEAKING, RES JUDICATA DOES NOT APPLY TO IT PROCEEDINGS. AGAIN, E ACH ASSESSMENT YEAR BEING A UNIT, WHAT IS DECIDED IN ON E YEAR MAY NOT APPLY IN THE FOLLOWING YEAR BUT WHERE A FUNDAMENTAL ASPECT PERMEATING THROUGH THE DIFFERENT ASSESSMENT YEARS HAS BEEN FOUND AS A FACT ONE WAY OR THE OTHER AND PARTIES HAVE ALLOWED THAT POSITION TO BE SUSTAINED BY NOT CHALLENGING THE ORDER, IT WOULD NO T BE AT ALL APPROPRIATE TO ALLOW THE POSITION TO BE CHANGED IN A SUBSEQUENT YEAR. 28. IN THE LIGHT OF ABOVE JUDICIAL PRINCIPLE, THE R EVENUE SHOULD FOLLOW THE PRINCIPLE OF CONSISTENCY IN ALLOWING CLAIM OF THE A SSESSEE AS FACTS ARE IDENTICAL TO A.Y. 2006-2007. 29. AS REGARDS THE CONTENTION OF THE LD. DEPARTMENT AL REPRESENTATIVE THAT THE MATTER MAY BE SENT BACK TO THE FILE OF CIT(A), WE W OULD REFER ONE JUDGMENT OF HONBLE GUJARAT HIGH COURT IN THE CASE OF RAJESH BABUBHAI DAMANIA VS. CIT, 251 ITR 541 (GUJ) WHEREIN IT WAS HELD THAT THERE WA S NO QUESTION OF GIVING ONE ITA NO.145/AGR/2012 A.Y. 2005-06 40 MORE INNINGS TO THE ASSESSING OFFICER. THE APPEAL S ARE NOT TO BE DECIDED FOR GIVING ONE MORE INNINGS, TO THE LOWER AUTHORITIES . IN THE APPELLATE JURISDICTION, THE APPELLATE COURT HAS TO CONSIDER WHETHER THERE I S JUSTIFICATION FOR UPSETTING THE ORDER AGAINST WHICH THE APPEAL IS FILED. WE, THERE FORE, REJECT THE CONTENTION OF THE LD. DEPARTMENTAL REPRESENTATIVE FOR SENDING BACK TH E MATTER TO THE FILE OF THE CIT(A). 30. IN THE LIGHT OF ABOVE DISCUSSIONS, WE FIND THAT THE CIT(A) HAS WRONGLY WITHDRAWN THE CLAIM OF THE ASSESSEE UNDER SECTION 8 0IA(4) OF THE ACT. THEREFORE, WE SET ASIDE THE ORDER OF THE CIT(A) AND RESTORE TH AT OF THE A.O. AND GRANT DEDUCTION UNDER SECTION 80IA(4) AS CLAIMED BY THE A SSESSEE. THIS GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED. 31. NOW TAKE UP REMAINING GROUNDS OF APPEAL AS UNDE R:- 32. GROUNDS NO.1, 7 & 8 ARE GENERAL IN NATURE, REQU IRE NO INDEPENDENT FINDING. 33. THE BRIEF FACTS OF GROUND NO.2 ARE THAT DURING THE ASSESSMENT PROCEEDINGS, THE A.O. NOTICED THAT THE ASSESSEE HAS CLAIMED RS.6 1,64,601/- ON ACCOUNT OF SIGNBOARD EXPENSES. THE ASSESSEE HAS FAILED TO PRO DUCE ALL THE RELEVANT BILLS. IN ABSENCE OF BILLS, THE A.O. NOTICED THAT THESE EXPEN SES COULD NOT BE VERIFIED. ITA NO.145/AGR/2012 A.Y. 2005-06 41 HOWEVER, THE A.O. ADMITTED THAT IN THE LINE OF WORK OF ASSESSEES COMPANY CERTAIN AMOUNT OF SIGNAGE ARE A MANDATORY REQUIREMENT, BUT IN ABSENCE OF COMPLETE VOUCHER AND DETAILS, THE A.O. DISALLOWED RS.5,00,00 0/- TO COVER LEAKAGE OF REVENUE. THE CIT(A) HAS CONFIRMED THE ACTION OF TH E A.O. 34. WE HAVE HEARD THE LD. REPRESENTATIVES OF THE PA RTIES AND RECORDS PERUSED. WE NOTICE THAT VARIOUS SIGNBOARDS WERE INSTALLED AN D PLACED AT VARIOUS LOCATIONS/SITES OF THE ASSESSEE COMPANY. THIS WAS SATED TO BE A BUSINESS REQUIREMENT OF THE ASSESSEE COMPANY. THE A.O. MADE ADHOC ADDITION WITHOUT POINTING OUT ANY SPECIFIC EXPENSES WHICH WERE INCUR RED FOR NON-BUSINESS PURPOSES. EXPENSES INCURRED FOR THE PURPOSE OF BUSINESS ARE A LLOWABLE UNDER SECTION 37 OF THE ACT. THE SAID SECTION PROVIDES THAT THE EXPENDITUR E IN QUESTION SHOULD NOT BE IN THE NATURE DESCRIBED UNDER SPECIFIC PROVISIONS OF THE A CT. THE EXPENDITURE SHOULD NOT BE OF THE NATURE OF CAPITAL EXPENDITURE. IT SHOULD NOT BE A PERSONAL EXPENDITURE. THE EXPENDITURE LAID OUT OR EXPENDED WHOLLY AND EXC LUSIVELY FOR THE PURPOSES OF THE BUSINESS OR PROFESSION IS ALLOWABLE EXPENSES. WE NOTICE THAT IT IS NOT THE CASE OF THE A.O. THAT EXPENDITURES WERE EXPENDED WHOLLY AND EXCLUSIVELY OTHER THAN FOR THE PURPOSES OF BUSINESS. THE OBJECTION OF THE A.O . IS ONLY THAT THE ASSESSEE HAS FAILED TO FURNISH THE RELEVANT VOUCHERS. MERELY FA ILURE TO FILE THE RELEVANT VOUCHERS AS REQUIRED BY THE A.O. CANNOT BE THE BASIS FOR MAK ING DISALLOWANCE UNLESS IT IS FOUND THAT THE EXPENDITURES WERE NOT INCURRED WHOLL Y AND EXCLUSIVELY FOR THE ITA NO.145/AGR/2012 A.Y. 2005-06 42 PURPOSES OF BUSINESS. IN THE CASE UNDER CONSIDERAT ION, THE ASSESSEE HAS DISCHARGED THE BURDEN AS THE EXPENDITURES WERE ACCOUNTED FOR I N THE BOOKS OF ACCOUNT REGULARLY MAINTAINED BY THE ASSESSEE ON DAY-TO-DAY BASIS. THE A.O. HAS FAILED TO POINT OUT THAT THE EXPENDITURE WAS NOT INCURRED WHO LLY AND EXCLUSIVELY FOR THE PURPOSES OF BUSINESS. RATHER THE A.O. ADMITTED THA T THE EXPENDITURE HAS BEEN INCURRED FOR THE PURPOSES OF BUSINESS AND HE MADE T HE DISALLOWANCE ON ADHOC BASIS. SUCH DISALLOWANCE CANNOT BE SUSTAINED PARTICULARLY UNDER THE FACTS AND CIRCUMSTANCES WHERE THE ASSESSEE HAS DISCHARGED THE BURDEN IN THIS REGARD THAT THE DAY-TO-DAY EXPENDITURES INCURRED WERE RECORDED IN T HE BOOKS OF ACCOUNT REGULARLY MAINTAINED WHICH IS SUBJECT TO AUDIT. THE A.O. DID NOT POINT OUT ANY SPECIFIC EXPENDITURE WHICH WAS INCURRED OTHER THAN FOR THE P URPOSES OF BUSINESS. IN THE LIGHT OF ABOVE DISCUSSION AND IN THE LIGHT OF I.T.A .T. AGRA BENCH ORDER IN ITA NO. 49/AGRA/2012 DATED 20.07.2012, WE DELETE THE ADDITI ON OF RS.5,00,000/-. 35. THE BRIEF FACTS OF GROUND NO.3 ARE THAT DURING THE ASSESSMENT PROCEEDINGS THE A.O. NOTICED THAT THE ASSESSEE CLAIMED TEMPORAR Y BUILDING STRUCTURE EXPENDITURE OF RS.1,02,11,975/-. THE A.O. ACCEPTED THE FACT THAT THE ASSESSEE HAS TO INCUR SUCH EXPENSES IN THIS LINE OF BUSINESS. T HE A.O. MADE ADHOC ADDITION OF RS.5,00,000/- TO COVER THE POSSIBLE LOSS OF REVENUE ON ACCOUNT OF WRONG CLAIM OF THE ASSESSEE. THE CIT(A) CONFIRMED THE SAID ADDITI ON. ITA NO.145/AGR/2012 A.Y. 2005-06 43 36. WE HAVE HEARD THE LD. REPRESENTATIVES OF THE PA RTIES AND RECORDS PERUSED. THE ADMITTED FACTS OF THE CASE ARE THAT THE EXPENDI TURE INCURRED WAS WHOLLY AND EXCLUSIVELY FOR THE PURPOSES OF BUSINESS. THIS FAC T HAS NOT BEEN DISPUTED BY THE A.O. THE A.O. MADE THE DISALLOWANCE WITHOUT POINTI NG OUT ANY SPECIFIC EXPENDITURE WHICH WAS INCURRED OTHER THAN FOR THE P URPOSES OF BUSINESS. IN THE LIGHT OF THE DETAILED DISCUSSION MADE WHILE DECIDIN G GROUND NO.2 IN PARAGRAPH NOS.33 & 34 OF THIS ORDER, FOLLOWING THE SAID DISCU SSION, WE DELETE THE ADHOC ADDITION OF RS.5,00,000/- 37. BRIEF FACTS IN RESPECT OF GROUND NO.4 ARE THAT DURING THE ASSESSMENT PROCEEDINGS, THE A.O. NOTICED THAT THE ASSESSEE HAS CLAIMED REPAIRS & MACHINERY EXPENSES OF RS.1,89,46,155/-. THE A.O. MADE ADHOC ADDITION OF RS.10,00,000/- TO COVER THE POSSIBLE LEAKAGE. THE DISALLOWANCE MADE BY THE A.O. HAS BEEN CONFIRMED BY THE CIT(A). 38. WE HAVE HEARD THE LD. REPRESENTATIVES OF THE PA RTIES AND RECORDS PERUSED. THERE IS NO DISPUTE THAT THE EXPENSES WERE INCURRED FOR THE PURPOSES OF BUSINESS. THE A.O. ADMITTED THAT SUCH EXPENSES ARE NECESSARY FOR CARRYING OUT THE BUSINESS OF THE ASSESSEE. HOWEVER, HE MADE THE ADDITION ON PRESUMPTION BASIS. IN THE LIGHT OF DETAILED DISCUSSION MADE ABOVE WHILE DECIDING GR OUND NO.2 IN PARAGRAPH NOS.33 ITA NO.145/AGR/2012 A.Y. 2005-06 44 & 34 OF THIS ORDER, FOLLOWING THE SAID DISCUSSION, WE DELETE THE ADDITION OF RS.10,00,000/- AS THE EXPENDITURES WERE INCURRED FO R THE PURPOSES OF BUSINESS. 39. NOW WE WOULD LIKE TO DEAL WITH THE ADDITIONAL GROUND RAISED BY THE ASSESSEE. THE BRIEF FACTS OF ADDITIONAL GROUND ARE THAT THE ASSESSEE HAS CLAIMED EXPENSES OF RS.2,16,78,425/- UNDER THE HEAD PAINT. THE A.O. DISALLOWED RS.5,00,000/- TO COVER THE POSSIBLE LOSS OF REVENUE . HOWEVER, THE A.O. ADMITTED THAT IN THE LINE OF WORK OF THE ASSESSEE PAINT FOR ROAD MARKING IS USED IN SUBSTANTIAL QUANTITIES. THEREFORE, THE EXPENSES WERE NECESSARY FOR THE PURPOSES OF BUSINESS. THE CIT(A) CONFIRMED THE ADDITION ON THE GROUND THA T THE ASSESSEE HAS FAILED TO LINK HE UTILIZATION OF PAINT WITH THE PROJECT. 40. WE HAVE HEARD THE LD. REPRESENTATIVES OF THE PA RTIES AND RECORDS PERUSED. THERE IS NO DISPUTE ON THE FACT THAT THE EXPENDITUR ES WERE INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSES OF BUSINESS. THE A.O. HIMSELF ADMITTED THAT SUCH EXPENDITURES ARE NECESSARY FOR THE PURPOSES OF BUSI NESS. IN THE LIGHT OF DETAILED DISCUSSION MADE WHILE DECIDING GROUND NO.2 IN PARAG RAPH NOS.33 & 34 OF THIS ORDER, FOLLOWING THE SAID DISCUSSION, WE DELETE THE ADDITION OF RS.5,00,000/- AS THE EXPENDITURES WERE INCURRED FOR THE PURPOSE OF BUSIN ESS. ITA NO.145/AGR/2012 A.Y. 2005-06 45 41. IT IS RELEVANT TO STATE THAT THE A.O. WHILE COM PUTING THE TOTAL INCOME AT PAGE 9 OF HIS ORDER, TOTAL OF DISALLOWANCES OF EXPENSES HAS TAKEN AT RS.30,00,000/- WHEREAS IN THE BODY OF ORDER HE DID NOT MAKE ANY DI SCUSSIONS REGARDING RS.5,00,000/-. THEREFORE, IT APPEARS THAT THERE IS SOME APPARENT MISTAKE WHICH IS REQUIRED TO BE TAKEN INTO CONSIDERATION BY THE A.O. WHILE GIVING EFFECT TO THIS ORDER. 42. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. (ORDER PRONOUNCED IN THE OPEN COURT) SD/- SD/- (BHAVNESH SAINI) (A.L. GEHLOT) JUDICIAL MEMBER ACCOUNTANT MEMBER PBN/* COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT (APPEALS) CONCERNED 4. CIT CONCERNED 5. D.R., ITAT, AGRA BENCH, AGRA 6. GUARD FILE. BY ORDER SR. PRIVATE SECRETARY INCOME-TAX APPELLATE TRIBUNAL, AGRA TRUE COPY