Sugam Construction Pvt.Ltd., Ahmedabad V. The Income tax Officer, Ward-8(2), Ahmedabad

ITA 1828/AHD/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 63311 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 6 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-12-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 22-10-2012
• Assessment Year: 2001-2002
• Appeal Filed On: 28-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: DHIREN SHAH C A SHRI D P GUPTA
• Keywords: Unexplained cash credit; Depreciation; Deemed to accrue or arise in india; Retrospective amendment; Corroborative evidences
• Section: 68

Judgement Text

, , , , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD , ! '#, $% $ & BEFORE SHRI MUKUL KR.SHRAWAT, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER APPEAL(S) BY SL. NO(S). ITA NO(S) ASSESSMENT YEAR(S) APPELLANT (S) RESPONDENT(S) 1. 1828/AHD/2010 2001-02 SUGAM CONSTRUCTION PVT.LTD. 4 TH FLOOR, ARUN COMPLEX ASHRAM ROAD AHMEDABAD-380 014 PAN:AACCS 6759H THE INCOME TAX OFFICER WARD-8(2) AHMEDABAD/ ACIT (OSD) CIRCLE-8 2. 1787/AHD/2010 2001-02 REVENUE ASSESSEE 3. 402/AHD/2012 2005-06 ASSESSEE REVENUE 4. 602/AHD/2012 2005-06 REVENUE ASSESSEE 5. 1864/AHD/2010 2006-07 ASSESSEE REVENUE 6. 1788/AHD/2010 2006-07 REVENUE ASSESSEE 7. 403/AHD/2012 2007-08 ASSESSEE REVENUE 8. 404/AHD/2012 2008-09 ASSESSEE REVENUE ASSESSEE(S) BY : SHRI DHIREN SHAH, C.A. REVENUE BY : SHRI D.P.GUPTA, CIT-DR !' ( % / / / / DATE OF HEARING : 31.10.2012 *+, ( % / DATE OF PRONOUNCEMENT : 21.12.12 $- / O R D E R PER SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER : [A] FOR A.Y. 2001-02 CROSS APPEALS (ITA NO.1828/AHD/2010 BY ASSESSEE AND ITA NO.1787/AHD/2010 BY REVENUE) HAV E BEEN FILED, EMANATING FROM THE ORDER OF CIT(A)-XIV, AHMEDABAD D ATED 16.2.2010. ITA NO S .1828,1787/AHD/10, 402,602/AHD/12, 1864,1785/AHD/10, 403 AND 404/AHD/12 SUGAM CONSTRUCTION PVT.LTD. ITO (CROSS-APPEALS) AYS 2001-02, 05-06,06-07,07-08 & 08-09 - 2 - GROUNDS RAISED BY THE ASSESSEE AS WELL AS BY THE RE VENUE ARE AS FOLLOWS:- 2. ASSESSEES GROUND NOS.1 & 2 READ AS UNDER: 1) THE ORDER PASSED BY THE LEARNED C.I.T.(A) IS A GAINST LAW, EQUITY & JUSTICE. 2) THE LEARNED CIT(A) HAS GRIEVOUSLY ERRED IN LAW AND /OR FACTS IN RESTRICTING RELIEF TO THE EXTENT OF RS.10, 35,199/- INSTEAD OF RS.12,40,087/- PRAYED BY THE APPELLANT. REVENUES GROUND NOS.1 & 2 READ AS UNDER: 1) THE LD.COMMISSIONER OF INCOME-TAX-XIV, AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.1035199/- MADE BY THE ASSESSING OFFICER ON ACCOU NT OF UNEXPLAINED CASH CREDIT U/S.68 OF THE ACT. 2) THE LD. COMMISSIONER OF INCOME-TAX(A)-XIV, AHME DABAD HAS ERRED IN LAW AND ON FACTS IN ADMITTING FRESH EV IDENCE IN VIOLATION OF RULE 46A AND NOT ALLOWING THE ASSESSIN G OFFICER AN OPPORTUNITY TO VERIFY & COMMENT UPON THE FRESH EVIDENCES FURNISHED BY THE ASSESSEE. 2.1. IN RESPECT OF THE ISSUE RAISED, FACTS IN BRIEF AS EMERGED FROM THE CORRESPONDING ASSESSMENT ORDER PASSED U/S.143(3) R. W.S. 254 DATED 16.10.2008 WERE THAT IN THE PAST, THE ITAT A BENC H IN ITA NO.3028/AHD/2004 (FOR A.Y. 2001-02) VIDE AN ORDER D ATED 29.07.2005 HAS RESTORED THE ISSUE BACK TO THE FILE OF AO, RELE VANT PARAGRAPHS REPRODUCED BELOW:- 10. APROPOS GROUND NO.3, DURING THE COURSE OF ASSE SSMENT PROCEEDINGS IT WAS FOUND BY THE AO THAT THERE WERE CREDITS ITA NO S .1828,1787/AHD/10, 402,602/AHD/12, 1864,1785/AHD/10, 403 AND 404/AHD/12 SUGAM CONSTRUCTION PVT.LTD. ITO (CROSS-APPEALS) AYS 2001-02, 05-06,06-07,07-08 & 08-09 - 3 - APPEARING IN THE BOOKS OF ACCOUNTS OF ASSESSEE IN T HE NAMES OF FOLLOWING TWO PERSONS:- P.G. SHRINGAPURE RS. 1,90,000/- DIPEN U.PATEL RS.11,27,387/- IN ABSENCE OF ANY EXPLANATION HAVING BEEN OFFERED B Y THE ASSESSEE THE ABOVE MENTIONED AMOUNTS WERE ADDED TO THE INCOM E OF ASSESSEE UNDER THE PROVISIONS OF SECTION 68 OF THE IT ACT. THE LD.CIT(A) HAS DEALT WITH THIS ISSUE IN PARA 4.1 AND 4.2 OF THE IMPUGNED ORDER WHICH IS REPRODUCED BELOW FOR THE SA KE OF CONVENIENCE:- 4.1 THE SECOND GROUND OF APPEAL RELATES TO ADD ITION OF RS.12,40,087/- U/S 68 OF THE ACT. THE ASSESSEE HAD TAKEN LOAN FROM DIPEN PATEL & SHRINGARPURE AMOUNTING TO RS.11,27,387/- AND RS.1,12,700/- RESPECTIVELY AND I N RESPONSE TO QUERY THE ASSESSEE HAS STATED THAT IT H AS SUBMITTED THE CONFIRMATION, BUT ON VERIFICATION, IT WAS NOTICED BY THE AO THAT THE ASSESSEE SUBMITTED ONLY COPY OF A/C OF USHAKANTBHAI PATEL AND NICOLIAN BROS. THE AS SESSEE WAS ASKED TO PRODUCE BOTH THOSE PARTIES TO EXPLAIN DIFFERENCE OF RS.1,12,700/- APPEARING BETWEEN THE CONFIRMATION OF SHRINGARPURE AND THE FIGURES SHOWN IN 3CD REPORT AT RS.1,90,000/- WHICH WAS NOT DONE BY THE A SSESSEE. IN SPITE OF THE FACT THAT THE ASSESSEE HAS BEEN ISS UED SHOW CAUSE NOTICE, IT COULD NOT EXPLAIN THE DIFFERENCE A S STATED ABOVE AND, THEREFORE, IT WAS HELD BY THE AO THAT T HE DEPOSITS FROM THESE TWO PERSONS STAND UNEXPLAINED. 4.2. DURING THE COURSE OF APPELLATE PROCEEDINGS, TH E APPELLANTS COUNSEL HAS NOT BEEN ABLE TO PROVIDE AN Y FRESH EVIDENCE/DOCUMENTS TO PROVE THAT THE DEPOSITS FROM THESE TWO PERSONS ARE GENUINE, EXCEPT FILING ACK.RECEIPT OF SHRI P.G.SHRINGARPURE COPY OF A/C FROM THE BOOKS OF SUGA M CONSTRU.LTD. AND COPY OF A/C DIPEN U.PATEL. IT IS STRANGE TO NOTICE A SPECIAL PHENOMENA IN THE ACCOUNT OF SHRI D IPEN U.PATEL THAT THE APPELLANT IS MAKING ADVANCE PAYMEN T PERTAINING TO DIFFERENT SITES, BUT NO TDS HAS BEEN DEDUCTED. ITA NO S .1828,1787/AHD/10, 402,602/AHD/12, 1864,1785/AHD/10, 403 AND 404/AHD/12 SUGAM CONSTRUCTION PVT.LTD. ITO (CROSS-APPEALS) AYS 2001-02, 05-06,06-07,07-08 & 08-09 - 4 - THE PAYMENT DURING THE WHOLE YEAR COMES TO RS.11,27 ,387/-, BUT NOT A SINGLE PENNY OF TDS HAS BEEN DEDUCTED, WH AT TO TALK OF MAKING PAYMENT TO GOVT. TREASURY. THE APPE LLANT HAS NOT BEEN ABLE TO ESTABLISH THE GENUINENESS OF THE P AYMENT TO THIS PARTY, BECAUSE NORMALLY THE CONTRACTOR MAKES T HE PAYMENT AFTER THE BILLS ARE SUBMITTED BY THE LABOUR CONTRACTOR, HERE, THE PAYMENT IS MADE IN ADVANCE AN D THE BILLS ARE RAISED AFTER A PERIOD OF 7 MONTHS. THIS IS NOT THE PRACTICE IN THIS LINE OF BUSINESS. IN SUCH LIKE CA SES, THE WORK IS FIRST EXECUTED, THEN IT IS MEASURED AND AFTER SA TISFYING THE TECHNICAL ASPECT OF THE WORK EXECUTED, SOME PAYMENT IS RETAINED, WHICH IS DUE TO THE LABOUR CONTRACT AND B ALANCE PAYMENT IS MADE, WITH DUE CARE OF DEDUCTING THE TDS AND MAKING PAYMENT THEREOF. THE WORK ACCOUNT ITSELF AP PEARS TO BE JUST AN ADJUSTMENT AND THE AO IS, THEREFORE, FUL LY JUSTIFIED IN MAKING AN ADDITION OF RS.12,40,087/- UNDER THE PROVISIONS OF SEC.68 AND NO INTERFERENCE WHATSOEVER IS CALLED FOR. 11. IT WAS PLEADED BEFORE US, THAT IT WAS SUBMITTED TO CIT(A) THAT SHRI P.G.SHRINGARPURA IS ASSESSED TO TAX. HIS COPY OF STATEMENT OF TOTAL INCOME AND ACKNOWLEDGEMENT RECEI PT OF RETURN OF INCOME WERE ALSO FILED. SIMILARLY IT WAS CONTEN DED THAT IN RESPECT OF CREDIT OF SHRI DIPEN U.PATEL PERTAINED T O WORK DONE BY HIM FOR ASSESSEE AND THE PAYMENT AMOUNT WAS CREDITE D TO HIS ACCOUNT AND THE PAYMENT WAS MADE AGAINST HIS BILL. COPY OF ACCOUNT OF SHRI DIPEN U.PATEL WAS ALSO PRODUCED. T HUS IT WAS PLEADED THAT LD.AO AS WELL AS THE CIT(A) DID NOT PR OPERLY CONSIDER THE SUBMISSIONS OF THE ASSESSEE. IT WAS PLEADED TH AT ASSESSEE CAN PROPERLY EXPLAIN THESE CREDITS AND, THEREFORE, THE ISSUE MAY BE RESTORED BACK TO THE FILE OF AO FOR RECONSIDERATION . 12. ON THE OTHER HAND, THE LD.DR RELIED ON THE ORD ERS OF AO AND THE CIT(A). 13. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS IN THE LIGHT OF MATERIAL PLACED BEFORE US. KEEPING IN VIE W THE ENTIRETY OF FACTS AND INTEREST OF JUSTICE WE RESTORE THIS ISSUE TO THE FILE OF AO ITA NO S .1828,1787/AHD/10, 402,602/AHD/12, 1864,1785/AHD/10, 403 AND 404/AHD/12 SUGAM CONSTRUCTION PVT.LTD. ITO (CROSS-APPEALS) AYS 2001-02, 05-06,06-07,07-08 & 08-09 - 5 - FOR EXAMINATION AFRESH AS PER PROVISIONS OF LAW. N EEDLESS TO OBSERVE THE AO WILL GIVE REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE TO PLACE ALL MATERIAL AND EVIDENCE ON RECO RD TO JUSTIFY ITS CLAIM. AFTER RECEIVING THE EXPLANATION OF ASSESSEE HE WILL DECIDE THE ISSUE IN ACCORDANCE WITH LAW. THIS GROUND IS A LLOWED FOR STATISTICAL PURPOSES. 2.2. CONSEQUENT THEREUPON, THE AO HAD GRANTED OPPOR TUNITY TO THE ASSESSEE AND ASKED TO FURNISH THE FOLLOWING DETAILS :- (A) TO FILE SUPPORTING EVIDENCE FOR WORK CARRIED O UT BY SHRI DIPEN U.PATEL AT SARDAR PATEL UNIVERSITY. (B) REGARDING TRANSACTIONS WITH SHRI P.G.SHRINGARPU RE ALSO, RELEVANT DOCUMENTS OF TRANSACTIONS. 2.3. THE ALLEGATION OF THE AO WAS THAT IN SPITE OF SEVERAL OPPORTUNITIES THE REQUISITE DETAILS WERE NOT FURNISHED BY THE ASS ESSEE. AS PER AO, THE ASSESSEE HAD FAILED TO PRODUCE CONFIRMATION OF THE PARTIES. THE AO HAS FURTHER OBSERVED THAT NO DOCUMENT WAS FILED TO PROV E THAT THE WORK WAS CARRIED OUT AT SARDAR PATEL UNIVERSITY BY THE SAID PARTIES. THERE WAS NO EVIDENCE THAT ANY LABOUR WORK AT ALL WAS CARRIED OU T BY THOSE PARTIES. SINCE THE ASSESSEE HAD FAILED TO DISCHARGE ITS PRIM ARY ONUS, HENCE AN ADDITION OF RS.12,40,087/- WAS MADE. THE MATTER WA S CARRIED BEFORE LD.CIT(A). THE ASSESSEES CONTENTION WAS THAT DURI NG THE YEAR UNDER CONSIDERATION, TOTAL LABOUR EXPENSES CLAIMED AT RS.75,88,499/- WHICH INCLUDED THE LABOUR CHARGES TO THE SAID TWO PARTIES . IT WAS INFORMED THAT SHRI DIPEN U.PATEL HAD FILED HIS RETURN OF INCOME U /S.44AD AND DISCLOSED THE INCOME @ 8% ON THE TOTAL WORK EXECUTED BY HIM. IN RESPECT OF THE ADDITION IN THE NAME OF SHRI P.G.SHRINGARPURE, IT W AS INFORMED THAT THE AMOUNT REFLECTED WAS SALARY PAYABLE IN THE BOOKS OF ACCOUNT. IT WAS ITA NO S .1828,1787/AHD/10, 402,602/AHD/12, 1864,1785/AHD/10, 403 AND 404/AHD/12 SUGAM CONSTRUCTION PVT.LTD. ITO (CROSS-APPEALS) AYS 2001-02, 05-06,06-07,07-08 & 08-09 - 6 - PLEADED THAT THERE WAS NO NEW DEPOSIT BUT ONLY SALA RY WAS PAYABLE, HENCE NO DISALLOWANCE U/S.68 SHOULD HAVE BEEN MADE. AFTE R CONSIDERING THE RIVAL SUBMISSIONS, LD.CIT(A) HAS OPINED THAT IN THE ABSENCE OF VERIFICATION, THE AO WAS JUSTIFIED IN TAXING THE AM OUNT. THERE WAS AN ARGUMENT OF THE ASSESSEE THAT THE ITAT AHMEDABAD HA S DIRECTED TO ADOPT NET PROFIT @ 8% BUT THAT DIRECTION WAS IN RESPECT OF CERTAIN OTHER DISALLOWANCES WHICH ARE TO BE MADE AS DEEMED INCOME OF THE ASSESSEE. THE NON-COOPERATION OF THE ASSESSEE WAS MALA FIDE I N THE OPINION OF LD.CIT(A). LD.CIT(A) HAS COMMENTED THAT IN FACT IT WAS A CASE OF BOGUS LIABILITY, CLAIMED WITHOUT ANY CREDIBLE EVI DENCE. THE ADDITION IN RESPECT OF SHRI DIPEN U.PATEL WAS CONFIRMED BY L D.CIT(A). IN RESPECT OF THE ADDITION PERTAINING TO PRADEEP G.SHR INGARPURE, IT WAS INFORMED THAT THERE WAS A CLERICAL MISTAKE IN THE T AX AUDIT REPORT AND A CERTIFICATE TO CLARIFY THAT MISTAKE WAS FURNISHED. AS PER LD.CIT(A), IT WAS A SELF-SURVING EVIDENCE, THUS COULD NOT BE TREA TED AS A CREDIBLE EVIDENCE. THE CONCLUSION OF THE LD.CIT(A) WAS THA T THE LIABILITY SHOWN BY THE ASSESSEE IN THE NAME OF SAID TWO PARTIES WAS NO LONGER IN EXISTENCE AND IT WAS A CASE OF A CLAIM OF A BOGUS LIABILITY. THE CONCLUSION DRAWN BY THE LD.CIT(A) IS AS UNDER:- IN CONCLUSION, THE OUTSTANDING LIABILITY SHOWN BY THE APPELLANT IN THE NAME OF SHRI DIPEN U.PATEL AND SHRI PRADEEP G.S HRINGAPURE AMOUNTING TO RS.1,73,728/- AND RS.31,160/-, I.E. IN TOTAL OF RS.2,04,888/- ARE HELD AS LIABILITY NO LONGER EXIST ING OR BOGUS LIABILITY AND DEEMED TO BE THE INCOME OF THE APPELL ANT U/S.41(1) OF THE ACT SINCE THE SAME WERE SHOWN AFTER CLAIMING EX PENSES AND SALARY EXPENSES TO THESE PERSONS. THE A.OS ADDITI ON U/S.68 OF THE ACT IS, THEREFORE, HELD NOT PROPER AND JUSTIFIED, B UT NOW THE ITA NO S .1828,1787/AHD/10, 402,602/AHD/12, 1864,1785/AHD/10, 403 AND 404/AHD/12 SUGAM CONSTRUCTION PVT.LTD. ITO (CROSS-APPEALS) AYS 2001-02, 05-06,06-07,07-08 & 08-09 - 7 - ADDITIONS ARE MADE U/S.41(1) OF THE ACT AS PER LAW CONSIDERING THE FACT AND CIRCUMSTANCES IN THE CASE OF APPELLANT. T HE APP GETS PARTIAL RELIEF TO THE EXTENT OF RS.10,35,199/-. (1 2,40,087 RS.2,04,888). 2.4. THEREFORE, IN VIEW OF THE ABOVE PARA, THE LD.C IT(A) HAS CHANGED THE HEAD UNDER WHICH THE AO HAS TAXED THE IMPUGNED AMOUNT. INSTEAD OF APPLYING THE PROVISIONS OF SECTION 68 OF IT ACT, LD.CIT(A) HAD APPLIED THE PROVISIONS OF SECTION 41(1) AND GRANTED RELIEF OF RS.10,35,199/-. IN RESPECT OF REST OF THE AMOUNT, LD.CIT(A) HAS HELD T HAT THE LIABILITY WAS NO LONGER IN EXISTENCE AND BEING A BOGUS LIABILITY, TH EREFORE NOT TO BE ALLOWED. 3. HAVING HEARD THE SUBMISSIONS OF BOTH THE SIDES, WE HAVE NOTED THAT THE REVENUE DEPARTMENT HAS STRONGLY OBJECTED THE EN TERTAINING OF CERTAIN EVIDENCES BY LD.CIT(A) WITHOUT GRANTING AN OPPORTUN ITY TO THE AO. ONE OF THE GROUNDS OF THE REVENUE, I.E. GROUND NO.2 IS ALSO IN RESPECT OF INFRINGEMENT OF THE PROVISIONS OF RULE 46A OF IT AC T. NOW THE LD.AR HAS INFORMED THAT THE LABOUR CHARGES HAVE ACTUALLY BEEN PAID IN THE SUBSEQUENT YEARS. HE WANTED TO DRAW OUR ATTENTION ON CERTAIN EVIDEN CES TO CORROBORATE THAT THE BALANCE OUTSTANDING AMOUNT HAD ALREADY BEEN PAID AS ON DATE, THEREFORE SHOULD HAVE BEEN ALLOWED. AT THIS STAGE OF SECOND APPEAL, IT IS NOT POSSIBLE FOR US TO EXAMINE THE VE RACITY OF SUCH DOCUMENTS WHICH WERE NOT PLACED BEFORE THE AO. WE THEREFORE CONSIDER IT PROPER AS ALSO JUSTIFIABLE TO AGAIN RESTORE THIS ISSUE BACK TO THE FILE OF THE AO, SO THAT THE REVENUE DEPARTMENT CAN EXAMINE THE CORRECTNESS OF THE CLAIM THAT THE AMOUNT IN QUESTION IN FACT WAS N OT AN AMOUNT AS ITA NO S .1828,1787/AHD/10, 402,602/AHD/12, 1864,1785/AHD/10, 403 AND 404/AHD/12 SUGAM CONSTRUCTION PVT.LTD. ITO (CROSS-APPEALS) AYS 2001-02, 05-06,06-07,07-08 & 08-09 - 8 - QUALIFIED U/S.68 OF IT ACT, BUT THE IMPUGNED AMOUNT S WERE IN THE NATURE OF THE AMOUNTS WHICH ARE QUALIFIED U/S.41(1) OF IT ACT. BY ADOPTING THE RECOURSE OF SETTING ASIDE TO ASSESSMENT STAGE , THE GRIEVANCE OF INFRINGEMENT OF RULE 46A IS ALSO ADDRESSED. AFTER ASCERTAINING THAT THE AMOUNTS IN QUESTION IN FACT WERE THE LIABILITIES TO BE PAID BY THE ASSESSEE AND NOT CASH DEPOSITS OR LOANS, THE AO IS THEN DIRE CTED TO VERIFY THE CORRECTNESS OF THE CLAIM NOW MADE BEFORE US THAT TH OSE LIABILITIES WERE SQUARED UP BY MAKING THE PAYMENT IN THE YEARS TO CO ME. IF IT IS FOUND CORRECT THAT THE LIABILITY HAS BEEN PAID BY THE ASS ESSEE, THEN NATURALLY IN CONSEQUENCE THEREOF THE ASSESSEE SHALL GET THE RELI EF AS PER LAW. SIDE BY SIDE, WE ALSO DIRECT THE ASSESSEE TO FULLY CO-OPERA TE WITH THE INVESTIGATION. RATHER, CONSIDERING THE FACT THAT THE ASSESSEE IS A LREADY IN SECOND ROUND OF APPEAL, WE HEREBY DIRECT THAT THE ASSESSEE SHAL L SUO MOTU APPROACH THE AO WITHIN 20 DAYS ON RECEIPT OF THIS ORDER, WITHOUT WAITING FOR ANY NOTICE WITH ALL DOCUMENTS, SO THAT THE MATTER SHOUL D GET ADDRESSED AT AN EARLY DATE. AFTER RECEIVING THE BASIC INFORMATION, SUCH AS, COPIES OF ACCOUNTS, ACKNOWLEDGEMENTS AND DETAILS OF PAYMENT, THE AO IS AT LIBERTY TO TAKE THE REQUIRED LEGAL ACTION AS PER LAW. WITH THESE DIRECTIONS, THE GROUNDS OF THE ASSESSEE AS ALSO THE REVENUE BOTH AR E ALLOWED BUT FOR STATISTICAL PURPOSES ONLY. AS A RESULT, THE APPEAL OF THE ASSESSEE AS WELL AS REVENUE FOR A.Y. 2001-02 BOTH ARE ALLOWED B UT FOR STATISTICAL PURPOSES. [B] ITA NOS.402/AHD/2012 & 602/AHD/2012 FOR A.Y. 2005-06 (CROSS APPEALS BY ASSESSEE & REVENUE RESPECTIVELY) ITA NO S .1828,1787/AHD/10, 402,602/AHD/12, 1864,1785/AHD/10, 403 AND 404/AHD/12 SUGAM CONSTRUCTION PVT.LTD. ITO (CROSS-APPEALS) AYS 2001-02, 05-06,06-07,07-08 & 08-09 - 9 - 4. FOR A.Y. 2005-06 CROSS APPEALS HAVE BEEN FILED ARISING FROM THE ORDER OF LD.CIT(A)-XIV, AHMEDABAD DATED 30/12/2011. WE SHALL FIRST TAKE UP THE APPEAL OF THE ASSESSEE, HENCE THE GROUN DS RAISED ARE REPRODUCED BELOW:- GROUNDS OF ASSESSEES APPEAL 1) THE ORDER PASSED BY THE LD. CIT(A) IS AGAINST LA W EQUITY AND JUSTICE AND SAME IS WHOLLY ILLEGAL, UNLAWFUL AN D BAD IN LAW. 2) THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN UPHO LDING THE ORDER OF THE LD. A.O. OF RE-OPENING OF THE ASSE SSMENT U/S.148 OF THE ACT. 3) THE LD.CIT(A) HAS ERRED IN LAW AND/OR FACTS UPHOLDI NG THE ORDER OF THE LD.A.O. OF REJECTING OF DEDUCTION U/S. 80-IA OF THE ACT FOR ELIGIBLE PROJECT OF INFRASTRUCTURE EXEC UTED BY THE APPELLANT. 4.1. APROPOS TO GROUND NOS.1 & 2, LD.AR MR. DHIREN SHAH HAS STATED THAT GROUND NO.1 IS GENERAL IN NATURE AND GROUND NO .2 IS NOT GOING TO BE CONTESTED. IN THE LIGHT OF THE STATEMENT OF LD.A R MADE AT THE BAR THESE GROUNDS BEING NOT PRESSED ARE HEREBY DISMISSED. 4.2. APROPOS TO GROUND NO.3, FACTS IN BRIEF AS EMERGED FROM THE CORRESPONDING ASSESSMENT ORDER PASSED U/S.143(3) DA TED 30/12/2010 WERE THAT THE ASSESSEE-COMPANY IS IN THE BUSINESS OF CON STRUCTION. THE ASSESSEE HAD CARRIED OUT THE CONSTRUCTION OF BRIDGE S (OVER-BRIDGE/UNDER- BRIDGE) OF CERTAIN GOVERNMENT ORGANIZATIONS, VIZ. A UDA, AMC, ETC. TOTAL RECEIPTS WERE STATED TO BE RS.6,55,43,956/- A ND THE NET PROFIT WAS ITA NO S .1828,1787/AHD/10, 402,602/AHD/12, 1864,1785/AHD/10, 403 AND 404/AHD/12 SUGAM CONSTRUCTION PVT.LTD. ITO (CROSS-APPEALS) AYS 2001-02, 05-06,06-07,07-08 & 08-09 - 10 - SHOWN AT RS.1,28,641/-. THE ISSUE INVOLVED AS PER THE GROUND IS THAT THE ASSESSEE HAD CLAIMED A DEDUCTION U/S.80-IA OF THE A CT. AS PER ASSESSEE, THE INCOME FROM THE ELIGIBLE BUSINESS OF RS.4,79,50 8/- WAS 100% EXEMPT IN VIEW OF THE PROVISIONS OF SECTION 80-IA O F THE ACT. THE DETAILS OF THE TOTAL RECEIPT OF RS.6,55,43,956/- FR OM VARIOUS PARTIES/ORGANIZATION HAS BEEN FURNISHED BY THE ASSE SSEE AS UNDER:- NO. AUTHORITY FROM WHOM CONTRACT TAKEN CONTRACT AMOUNT/RECEIPTS 1. RCC BOX NEW DELHI GHAZIABAD 6638045 2. W.RLY.ADI/45 1792542 3. PRADEEP PORT ORISSA 79175 4. RCC BOX N.RLY.ALLAHABAD 1149190 5. GWSSB NC/12 1204558 6. RCC BOX W.RLY.ADI/62 3962213 7. RCC BOX VIZAG BR. 313 3069999 8. RCC BOX VIZAG BR. 303 1633847 9. RCC BOX W.RLY. B4.125 3853402 10. AUDA SOLA PIEP (WATER SUPPLY) 1976848 11. AUDA RUB (TRAGED) RCC BOX 23662054 12. ENVIRO CONST.CO. (JUNAGADH) 2739879 13. R.P.SHAH (ANIK DEPOT) 515000 14. BOX L&T JUNAGADH 1532906 15. AUDA TRAGED PIPE PUSHING 4635085 16. RCC BOX N.RLY.GNR DELHI 3082497 17. CHENNAI CONST. 150000 18. GHAI CONST.LTD. (PUNE) 1501500 19. ARB. AWARD BR. 40 ANDHERI 1480077 20. SKANSKA NEW DELHI 400200 21. SALES 474760 22. TRADING A/C. 10179 TOTAL RECEIPTS 6,55,43,956 ITA NO S .1828,1787/AHD/10, 402,602/AHD/12, 1864,1785/AHD/10, 403 AND 404/AHD/12 SUGAM CONSTRUCTION PVT.LTD. ITO (CROSS-APPEALS) AYS 2001-02, 05-06,06-07,07-08 & 08-09 - 11 - 4.3. THE FUNDAMENTAL OBJECTION OF THE AO WAS THAT THE AS SESSEE WAS NOT A DEVELOPER BUT MERELY A CONTRACTOR. ACCORDING TO AO, THE ASSESSEE HAD ENTERED INTO A WORK CONTRACT AGREEMENT WITH DIFFERENT AUTHORITIES, SUCH AS, AUDA, GWRDC, ENVIRO CONST., A ND CHENNAI CONST.,ETC. A SHOW-CAUSE WAS ISSUED AND THE ASS ESSEE WAS ASKED TO JUSTIFY THE CLAIM OF DEDUCTION U/S.80IA AND TO PROD UCE AUDITORS REPORT IN FORM NO.10CCB. IN COMPLIANCE, THE ASSESSEE HAS SUBMITTED AS FOLLOWS; ONLY RELEVANT PORTION IS REPRODUCED: ASSESSEE IS A DEVELOPER OF THE UNDER BRIDGES APPLY ING OWNED DESIGN, INVESTMENTS. IN THE SUCH DEVELOPMENT OF IN FRASTRUCTURE PROJECTS. RISK, RESPONSIBILITIES AND FUND FOR EXEC UTION OF PROJECTS ARE OF THE ASSESSEE ITSELF. AS ASSESSEE ENGAGED I N DEVELOPMENT OF INFRASTRUCTURE HENCE ENTITLES FOR DEDUCTION U/S.80I A OF THE ACT. .. .. THE READING OF THE PROVISIONS OF THE ACT, NO WHERE IN THE SAID PROVISION, IT IS REQUIRED THAT THE INFRASTRUCTURE S HOULD BE OWNED BY THE ASSESSEE. ASSESSEE HAS ENTERED INTO PROJECTS W ITH STATE & CENTRAL GOVT. AS REQUIRED UNDER THE ACT AND HENCE A SSESSEE ENTITLES FOR DEDUCTION U/S.80IA OF THE ACT. ASSESSEE RELIES ON THE FOLLOWING DECISIONS IN SUPPORT OF ITS CONTENTIONS. 4.4. THE AO HAS DISCUSSED THE PROVISIONS OF SECTION 80IA AND IN HIS OPINION, THE ASSESSEE HAD FALLEN UNDER THE FIRST C ATEGORY OF ENTERPRISES CLAIMING DEDUCTION U/S.80-IA. THE FIRST CATEGORY OF ENTERPRISES PERTAINED TO AN ENTERPRISE CARRYING ON THE BUSINESS OF DEVELO PING AN INFRASTRUCTURE FACILITY. BUT THE AO HAS RAISED PRELIMINARY QUEST ION THAT WHETHER THE ASSESSEE HAPPENED TO BE A DEVELOPER OR NOT AND IN THIS REGARD HE HAS DISCUSSED THE DICTIONARY MEANING IN THE FOLLOWING M ANNER:- ITA NO S .1828,1787/AHD/10, 402,602/AHD/12, 1864,1785/AHD/10, 403 AND 404/AHD/12 SUGAM CONSTRUCTION PVT.LTD. ITO (CROSS-APPEALS) AYS 2001-02, 05-06,06-07,07-08 & 08-09 - 12 - 3.4. NOW COMING TO THE POINT WHETHER THE ASSESSEE CAN BE CALLED AS A DEVELOPER WITHIN THE MEANING OF SECTION 80IA (4) OF THE I.T.ACT, THE WORD DEVELOPER AND CONSTRUCTOR HAVE NOT BEEN DEFINED IN SECTION 80IA OR ANYWHERE IN THE ACT. TH ESE WORDS ARE ALSO NOT DEFINED IN GENERAL CLAUSE ACT. THEREFORE, ONE HAS TO GO BY THE DICTIONARY MEANING. ACCORDING TO OXFORD LEARNERS DICTIONARY DEVELOPER IS A PERSON OR A COMPANY THA T DESIGNS OR CREATES NEW PRODUCTS WHEREAS A CONTRACTOR IS A PERS ON OR A COMPANY THAT HAS A CONTRACT TO DO WORK OR PROVIDES SERVICE OR GOODS TO ANOTHER. THE NEW SHORTER OXFORD DICTIONAR Y DEFINES THE WORD CONTRACTOR AS PERSON WHO ENTERS A CONTRACT OR AGREEMENT. NOW, PRECISELY, A PERSON THAT UNDERTAKES WORK BY CO NTRACT ESPECIALLY FOR BUILDING TO A SPECIFIED PLAN, IS A C ONTRACTOR. FROM THE ABOVE, IT IS VERY CLEAR THAT A DEVELOPER IS A P ERSON WHO DESIGNS AND CREATES NEW PRODUCTS . HE IS THE ONE WHO CONCEIVES THE PROJECT. HE MAY EXECUTE THE ENTIRE PROJECT BY HIMS ELF OR SOME PART OF IT TO OTHERS . ON THE CONTRARY, A CONTRACTOR IS A PERSON WHO IS ASSIGNED TO DO A PARTICULAR WORK TO BE COMPLETED ON BEHALF OF THE DEVELOPER. A CONTRACTORS DUTY IS TO TRANSLATE SUCH DESIGN INTO REALITY. THERE MAY BE OVERLAPPING THE WORK OF DEVE LOPER AND CONTRACTOR. A DEVELOPER, WHO ASSIGNS THE JOB TO A PERSON BECOMES CONTRACTOR. 4.5. IN ADDITION TO THE ABOVE OBJECTION, THE AO HA D ALSO RAISED TWO MORE OBJECTIONS, FIRST, THAT THE BENEFIT U/S.80IA WAS TO BE GRANTED TO AN ENTERPRISE WHO HAD NOT ONLY DEVELOPED THE INFRASTRU CTURE BUT ALSO OPERATED THE SAME, IS TO BE ELIGIBLE FOR DEDUCTION. THE SECOND OBJECTION OF THE AO WAS THAT THE AUDITORS REPORT ON FORM NO. 10CCB, ALONG WITH THE COPY OF THE AGREEMENT OF THE ASSESSEE WITH CENT RAL GOVERNMENT/STATE GOVERNMENT/LOCAL AUTHORITY, WAS NOT FURNISHED. TH E AO HAS DISCUSSED A CONTRACT WITH AUDA AND COMMENTED IN THE FOLLOWING MANNER:- (I) CONTRACT WITH AUDA ITA NO S .1828,1787/AHD/10, 402,602/AHD/12, 1864,1785/AHD/10, 403 AND 404/AHD/12 SUGAM CONSTRUCTION PVT.LTD. ITO (CROSS-APPEALS) AYS 2001-02, 05-06,06-07,07-08 & 08-09 - 13 - AS REGARDS THE CONSTRUCTION WORK ENTERED INTO WITH AUDA FOR THE CONSTRUCTION OF UNDER-BRIDGES THE ASSESSEE HAS ENTE RED INTO WITH A CONTRACT FOR THE WORK OF MANUFACTURING, TESTING, SU PPLYING, TRANSPORTING, LOADING-UPLOADING, AT SITE LAYING AND PUSHING IN RAILWAY LIMIT M.S. CASING PIPES AND PROVIDING AND L AYING M.S. CARRIER PIPES AS PR TENDER SPECIFICATION. THE WORK INCLUDES ALL NECESSARY EXCAVATION DEWATERING BY DEPLOYING NECESS ARY NO.OF PUMPS AS PER REQUIRED REFILLING TRENCHES AFTER COMP LETION OF PUSHING WORK ALL NECESSARY TEMPORARY WORK FOR PUSHI NG OF PIPES. DEPLOYING SUFFICIENT MANPOWER, ALL TYPES OF MACHINE RIES REQUIRED FOR PIPE PUSHING IN PROPER LINE AND LEVEL AS PER AP PROVAL & INSTRUCTION OF RAILWAY AUTHORITY. THE WORK ALSO IN CLUDES THE MAINTENANCE OF RAILWAY TRACT PROPER POSITION AT WOR K SITE DURING PUSHING OF PIPES & STILL COMPLETION OF WORK. THE W ORK ALSO INCLUDES MAINTAINING ALL SAFETY NORMS REQUIRED FOR SAFE RAILWAY TRAFFIC AS PER INSTRUCTION OF SITE IN CHARGE AS WEL L AS RAILWAY AUTHORITY. FROM THE ABOVE, IT IS CLEAR THAT THE ASSESSEE NEVER OWNED THE RAILWAY UNDERPASS BUT ONLY CONSTRUCTED THE UNDER PA SS AS PER THE CONTRACT AGREEMENT ENTERED INTO WITH THE PRINCIPAL. IT IS ALSO SEEN THE ASSESSEE NEVER OWNED AND MAINTAINED THE UNDERPA SS SO AS TO ELIGIBLE FOR THE DEDUCTION U/S.80IA OF THE I.T.ACT. THEREFORE, THE ASSESSEES CLAIM FOR DEDUCTION U/S.80IA OF THE I.T. ACT, ON THE PROFIT AROSE ON THIS CONTRACT IS NOT IN ACCORDANCE WITH U/ S.80IA OF THE I.T.ACT, AND THE SAME IS REJECTED. IT IS TO BE MENTIONED HERE THAT THE DECISION QUOTED BY THE ASSESSEE IN THE CASE OF CIT VS. ABG HEAVY INDUSTRIES & BROTHERS REPORTED IN 322 ITR 323 , THE SAME IS NOT APPLICABLE TO THE ASSESSEES CASE. IN THAT CASE THE COMPANY HAS ENTERED INTO AGREEMENT WITH JNPT ON BLOT (BUILT ,OWN, LEASE & TRANSFER). IN THAT CASE THE CONTRACT FOR B UILDING OPERATING LEASING AND TRANSFER. AS STATED ABOVE, T HE ASSESSEE WAS MERELY A CONTRACTOR FOR CONSTRUCTION OF AN UNDERPAS S ONLY. 4.6. SO, THE CONCLUSION OF THE AO FOR REJECTION OF THE CLAIM WAS THAT THE INFRASTRUCTURE WHICH WAS CONSTRUCTED WAS NOT OWNED BY THE ASSESSEE. ITA NO S .1828,1787/AHD/10, 402,602/AHD/12, 1864,1785/AHD/10, 403 AND 404/AHD/12 SUGAM CONSTRUCTION PVT.LTD. ITO (CROSS-APPEALS) AYS 2001-02, 05-06,06-07,07-08 & 08-09 - 14 - THE ASSESSEE HAD NOT OWNED THE RAILWAY UNDER PASS BUT ONLY CONSTRUCTED THE SAME. AN ANOTHER QUESTION HAS ALS O BEEN RAISED BY THE AO THAT THE CONCERNS FOR WHICH CLAIM WAS MADE WERE NOT THE GOVERNMENT UNDERTAKING AND THE PARTIES AT SL.NO.3,12,17,18,19,20 & 21 WERE THE PRIVATE PARTIES. IN THE ASSESSMENT ORDER, THERE WAS A RE FERENCE OF A DECISION OF ITAT MUMBAI PRONOUNCED IN THE CASE OF M/S.B.T. PATIL & SONS, BELGUAM CONSTRUCTION PRIVATE LTD. (ITA NOS.1408 & 1409/PN/2003), WHEREIN THE WORD DEVELOPER AND THE WORD CONTRACTOR HAVE BEEN DELIBERATED UPON. THE AO HAS PLACED RELIANCE ON TH E SAID ORDER OF THE TRIBUNAL. APART FROM THE SAID ORDER, AO HAS ALSO R EFERRED AN EXPLANATION WHICH WAS INSERTED UNDER THE SECTION WHICH PRESCRI BES THAT THE BENEFIT SHALL NOT APPLY TO A PERSON WHO EXECUTE S A WORK CONTRACT. THEREAFTER, THE CONCLUSION DRAWN BY THE AO WAS THAT THE ASSESSEE WAS NOT A DEVELOPER BUT THE INCOME WAS DERIVED AS A WORK CONTRACTOR , HENCE NOT ELIGIBLE FOR DEDUCTION U/S.80IA OF RS.4,7 9,508/- FOR THE YEAR UNDER CONSIDERATION. THIS ACTION OF THE AO WAS CHA LLENGED BEFORE THE LD.CIT(A). 5. IT WAS PLEADED THAT THE ASSESSEE HAD CONSTRUCTED SEVERAL OVER- BRIDGES AS ALSO UNDER-BRIDGES FOR CENTRAL GOVERNMEN T AND STATE GOVERNMENT PROJECTS AND THEREUPON CLAIMED A DEDUCTI ON U/S.80IA OF AN AMOUNT OF RS.4,79,508/- BEING 100% OF THE PROFIT U/ S.80IA. IT WAS EXPLAINED THAT 13 PROJECTS WERE CARRIED OUT AND THE ASSESSEE WAS ASSIGNED THOSE PROJECTS BEING KNOWN FOR DEVELOPMENT OF BRIDG ES AND CANALS. THE ASSESSEE HAS FURNISHED A COPY OF THE WORK ORDER T O EXPLAIN THE NATURE OF ITA NO S .1828,1787/AHD/10, 402,602/AHD/12, 1864,1785/AHD/10, 403 AND 404/AHD/12 SUGAM CONSTRUCTION PVT.LTD. ITO (CROSS-APPEALS) AYS 2001-02, 05-06,06-07,07-08 & 08-09 - 15 - THE WORK EXECUTED. THE ASSESSEE HAS ALSO FURNISHED THE DETAILS IN RESPECT OF APPLICATION OF OWN DESIGN AND ASSESSEES DEPLOYM ENT OF TECHNIQUE. THE EXPLANATION OF THE ASSESSEE WAS THAT ITS OWN FU NDS WERE UTILIZED. FURTHER IN RESPECT OF EXECUTION OF PROJECT THE RIS K AND THE RESPONSIBILITY WAS TAKEN BY THE ASSESSEE. BEFORE LD.CIT(A), THE A PPELLANT HAS REFERRED AN ORDER PASSED U/S.144A OF THE ACT, RELEVANT PORTI ON EXTRACTED BELOW:- EXTRACT OF THE ORDER PASSED U/S 144A OF THE ACT B Y THE ADDITIONAL COMMISSIONER OF I.TAX FOR THE A.Y. 2004- 05 IS AS UNDER. FURTHER CONSIDERING THE ASSESSEES REPLY DATED 14/ 12/06 PLACED BEFORE THE A.O. AS WELL AS A.OS REPORT SUBMITTED A S PER PARA 5 NOTED ABOVE, THE A.O. WAS ASKED TO VISIT THE PROJE CT SITES OF THE ASSESSEE AND SUBMIT HER DETAILED FACTUAL REPORT TO ASCERTAIN THE ASSESSEES SUBMISSION NOTED ABOVE. THE AO VIDE HE R OFFICE LETTER NO.WD.8(2)/SUGAM/06-07 DATED 21/12/2006 HAS SUBMITT ED THAT SHE HAS VISITED TWO PROJECT SITES OF THE ASSESSEE LOCAT ED IN AHMEDABAD VIZ. NIRNAYNAGAR UNDERPASS, NIRNAYNAGAR, AHMEDABAD AND AUDA, RING ROAD, AT VILLAGE TRAGAD, B/H.NIRMA UNIVE RSITY AHMEDABAD ON 21/12/2006. IT IS FURTHER REPORTED TH AT THE FIRST PROJECT IS AT ITS BEGINNING STATE; WHEREAS THE SECO ND PROJECT IS JUST COMPLETED. SHE HAS FURTHER ELABORATED HER REPORT I N THREE SEPARATE PARTS VIZ. NATURE OF BUSINESS, METHOD OF CONSTRUCTI ON & ELIGIBILITY OF SECTION 80IA. THE SAME IS REPRODUCED AS BELOW: 1. NATURE OF THE BUSINESS: THE ASSESSEE IS SPECIA LIZING IN CONSTRUCTION OF ROAD-UNDER BRIDGES I.E. WHEREVER A ROAD IS TO BE CONSTRUCTED BELOW A RAILWAY LINE, THE ASSESSEE IS C ONSTRUCTION THE UNDER BRIDGE BELOW THE RAILWAY LINE. USUALLY WHENE VER IT IS NOT POSSIBLE TO CONSTRUCT AN OVER BRIDGE BECAUSE OF DIF FERENT FACTORS LIKE INSUFFICIENT LENGTH OF APPROACH ROAD AND HIGH RISE BUILDING SITUATED VERY NEAR THE SITE, THE AUTHORITY FINDS IT NECESSARY TO CONSTRUCT AN UNDER PASS. THEREFORE, THIS ACTIVITY OF THE ASSESSEE IS AN INFRASTRUCTURE ACTIVITY WHICH ADDS TO THE INFRAS TRUCTURAL ITA NO S .1828,1787/AHD/10, 402,602/AHD/12, 1864,1785/AHD/10, 403 AND 404/AHD/12 SUGAM CONSTRUCTION PVT.LTD. ITO (CROSS-APPEALS) AYS 2001-02, 05-06,06-07,07-08 & 08-09 - 16 - DEVELOPMENT OF A CITY OR A VILLAGE AS DECIDED BY TH E JURISDICTIONAL DEVELOPMENT AUTHORITY. APART FROM THE ABOVE SITES, THE ASSESSEE HAS CONSTRUCTED SUCH UNDER PASSES INVARIOUS CITIES ALL OVER INDIA. THE LIST OF WHICH HAS BEEN SUBMITTED BY THE ASSESSE E AD PLACED ON FILE. 2. METHOD OF CONSTRUCTION : THE ASSESSEE FIRST O BTAINS A CONTRACT FROM THE INDIAN RAILWAY OR THE STATE GOVT.AND PREPA RES A STRUCTURAL DESIGN OF THE UNDER BRIDGE TO BE CONSTRU CTED. FOR PREPARING THIS DESIGN, THE ASSESSEE COMPANY HAS APP OINTED ITS OWN CONSULTANT ENGINEERS. THEREAFTER, THE DESIGN IS AP PROVED BY THE RAILWAYS. SINCE THE UNDER PASS IS TO BE CONSTRUCTE D WITHOUT DISTURBING THE RAILWAY TRAFFIC THE ASSESSEE COMPANY IS USING THE BOX PUSHING TECHNIQUE TO CONSTRUCT THE UNDER PASS. THE ASSESSEE FIRST BUILDS THE THRUST BLOCK WHICH IS THE FOUNDATI ON IS CONCRETE, REINFORCING STEEL AND SHUTTERING EQUIPMENT. THEREA FTER, THE ENTIRE UNDER BRIDGE IS CONSTRUCTED ON THE FOUNDATION BY US ING THE SAME MATERIALS WHICH ARE USED FOR THE FOUNDATION. HENCE , THE RCC BOX ACTING AS UNDER BRIDGE IS CAST. AFTER THE TOTAL ST RENGTH OF THE UNDER BRIDGE HAS BEEN ACHIEVED, IT IS THEN PUSHED BELOW T HE RAILWAY TRACK WITH THE HELP OF HYDRAULIC PUMP AND 250 TON CAPACIT Y HYDRAULIC JACKS. AS THIS UNDER PASS IS SLOWLY BEING PUSHED B ELOW THE RAILWAY TRACK, THE EARTH IS BEING EXCAVATED SIMULTANEOUSLY FROM WITHIN THE BOX. AT A STRETCH, 30 CMS. OF PUSHING CAN BE ACHIE VED IN A DAY. THIS PROCESS IS REPEATED DAY AFTER DAY TILL THE FIN AL PUSHING IS COMPLETED. AND THE RESULT IS THAT THE UNDER BRIDGE IS CONSTRUCTED AND THE LOAD OF THE RAILWAY LINE IS RESTING ON THE CONCRETE RCC BRIDGE WITHOUT DISTURBING THE RAILWAY TRAFFIC. AFT ER THIS, THE FINISHING TOUCHES OF PLASTERING, WATER PROOFING IS DONE AND WHENEVER REQUIRED, THE RETAINING WALLS ON THE SIDE S OF THE ROAD LEADING TO THE UNDER PASS IS ALSO CONSTRUCTED. FIN ALLY, THE WHOLE UNDERPASS IS READY THROUGH WHICH THE VEHICULAR TRAF FIC IS ALLOWED TO PASS. THROUGHOUT THE CONSTRUCTION OF THE UNDER BRIDGE, VARIOUS OFFICIALS OF RAILWAYS, AIDA, STATE GOVT.CONTINUOUSL Y INSPECT AND MONITOR THE PROJECT TILL COMPLETION. ITA NO S .1828,1787/AHD/10, 402,602/AHD/12, 1864,1785/AHD/10, 403 AND 404/AHD/12 SUGAM CONSTRUCTION PVT.LTD. ITO (CROSS-APPEALS) AYS 2001-02, 05-06,06-07,07-08 & 08-09 - 17 - 3. ELIGIBILITY OF SECTION 80IA: AS I HAVE PERS ONALLY VISITED THE SITE AND SEEN THE PROJECTS, IT IS FOUND THAT THE AS SESS COMPANY IS CONSTRUCTING THE ENTIRE UNDER BRIDGE AND NOT ONLY A BOX. THE TERM BOX HAS BEEN USED ONLY TO DESCRIBE THE TECHNOLOGY F OR CONSTRUCTING THE UNDER BRIDGE. AS PER THE ACT, A BRIDGE HAS NOT BEEN DEFINED BUT GOING BY THE SIMPLE OXFORD MEANING A BRIDGE INCLUDE S OVER BRIDGES, BRIDGES ACROSS RIVERS, RAILWAY BRIDGES AD UNDER BRIDGES. 6. IT HAS ALSO BEEN PLEADED THAT WHILE DECIDING THE APPEAL OF THE ASSESSEE FOR A.Y. 2006-07, LD.CIT(A) VIDE AN ORDER DATED 18.2.2 010 HAS ALLOWED SOME OF THE PROJECTS AS ELIGIBLE FOR TH E DEDUCTION U/S.80IA. THE ASSESSEE HAS ALSO PLACED RELIANCE ON CIT VS. ABG HEAVY INDUSTRIES LTD. 322 ITR 323(BOM.), AYUSH AJAY CONS TRUCTION LTD. VS. ITO 79 ITD 213(IND)[TRIB], PATEL ENGINEERING LT D. VS. DY.CIT 84 TTJ 646 (MUM.)[TRIB], SHRISTI INFRASTRUCTURE DEV ELOPMENT CORPN. LTD. VS. ITO 33 CORPN.,LTD. SOT 407(DEL.) AN D OM METALS INFRAPROJECTS LTD. VS. CIT 26 DTR 359(JP)[TIRB]. 7. LD.CIT(A) WAS OF THE VIEW THAT THE ASSESSEE HAD WORKED AS A CONTRACTOR AND NOT AS A DEVELOPER OF THE PROJEC TS EXECUTED. HE HAS CITED ONE OF HIS DECIDED CASE OF VIJAY M.MISTRY AND CONSTRUCTION PVT.LTD. FOR A.Y. 2007-08, APPEAL NO.CIT(A) XIV/AC. CIR.8/249/09-10 DATED 21/10/2011. LD.CIT(A) HAS QUOTED THE RELEVAN T PARAGRAPH FROM THE FINANCE ACT, 1995 TO EXPLAIN THE PURPOSE OF THE REBATE GRANTED AS FOLLOWS:- APPLYING COMMERCIAL PRINCIPLES IN THE OPERATION OF INFRASTRUCTURE FACILITIES CAN PROVIDE BOTH MANAGERIAL AND FINANCIA L EFFICIENCY. IN VIEW OF THIS, A TEN YEAR CONCESSION INCLUDING A F IVE YEAR TAX ITA NO S .1828,1787/AHD/10, 402,602/AHD/12, 1864,1785/AHD/10, 403 AND 404/AHD/12 SUGAM CONSTRUCTION PVT.LTD. ITO (CROSS-APPEALS) AYS 2001-02, 05-06,06-07,07-08 & 08-09 - 18 - HOLIDAY HAS BEEN ALLOWED FOR ANY ENTERPRISE WHICH DEVELOPS , MAINTAINS AND OPERATES ANY NEW INFRASTRUCTURE FACIL ITY SUCH AS ROAD, HIGHWAYS, EXPRESSWAYS, BRIDGES , AIRPORTS, PORTS AND RAIL SYSTEMS OR ANY OTHER PUBLIC FACILITY OF SIMILAR NAT URE AS MAY BE NOTIFIED BY THE BOARD TO BOT OR BOOT OR SIMILAR OTH ER BASIS (WHERE THERE IS AN ULTIMATE TRANSFER OF THE FACILIT Y TO A GOVERNMENT OR PUBLIC AUTHORITY). THE ENTERPRISE HAS TO ENTER INTO AN AGREEMENT WITH THE CENTRAL OR STATE GOVERNMENT OR A LOCAL AUT HORITY OR ANY OTHER STATUTORY AUTHORITY FOR THIS PURPOSE. THE PE RIOD WITHIN WHICH THE INFRASTRUCTURE FACILITY HAS TO BE TRANSFERRED N EEDS TO BE STIPULATED IN THE AGREEMENT BETWEEN THE UNDERTAKING AND THE GOVERNMENT CONCERNED. THE ENTERPRISE HAS TO BE OWN ED BY A COMPANY REGISTERED IN INDIA OR A CONSORTIUM OF SUCH COMPANIES. THE TAX HOLIDAY WILL BE IN RESPECT OF INCOME DERIVE D FROM THE USE OF THE INFRASTRUCTURE FACILITIES DEVELOPED BY THEM. 7.1. HE WAS OF THE VIEW THAT THE ASSESSEE IS ENTITL ED FOR DEDUCTION IF SATISFIES THE CONDITIONS MENTIONED IN SECTION 80IA( 4) OF IT ACT WHICH ARE ENUMERATED IN SUB-CLAUSES (A), (B) & (C) OF THE ACT . HE HAS EMPHASIZED THE INSERTION OF EXPLANATION TO SECTION 80IA, WHERE IN IT IS PROVIDED THAT NOTHING CONTAINED IN SECTION 80IA SHALL APPLY IN RE LATION TO A BUSINESS REFERRED TO IN SUB-SECTION(4) WHICH IS IN THE NATUR E OF WORK-CONTRACT. ACCORDING TO HIM, ONE OF THE IMPORTANT INGREDIENT F OR ENTITLEMENT OF DEDUCTION U/S.80IA IS THE FINANCIAL INVESTMENT AND FINANCIAL RISK OF AN ENTERPRISE. HE HAS MENTIONED MEMORANDUM EXPLAINING THE PROVISIONS OF FINANCE BILL OF 2007 AND QUOTED THAT WHERE A PERSON MAKES INVESTMENT AND HIMSELF EXECUTES THE DEVELOPMENT WORK, CARRIES OUT THE CIVIL CONSTRUCTION WORK, THEN ELIGIBLE FOR TAX BENEFIT U/ S.80IA. THE FIRST CONDITION TO BE SATISFIED IS THAT AN ENTERPRISE SHO ULD BE A DEVELOPER OF THE INFRASTRUCTURE FACILITY. TO EMPHASIZE THE MEANING OF WORD DEVELOPER HE HAS ALSO QUOTED RADHE DEVELOPERS 23 SOT 420 (AHD.) . HE HAS ITA NO S .1828,1787/AHD/10, 402,602/AHD/12, 1864,1785/AHD/10, 403 AND 404/AHD/12 SUGAM CONSTRUCTION PVT.LTD. ITO (CROSS-APPEALS) AYS 2001-02, 05-06,06-07,07-08 & 08-09 - 19 - CLARIFIED THAT ALTHOUGH THE ISSUE IN THE SAID APPEA L BEFORE THE ITAT BENCH WAS RELATED TO THE DEDUCTION U/S.80IB(10) OF IT ACT YET THE OBSERVATIONS DEFINING THE TERM DEVELOPER WERE RELEVANT FOR THE PRESENT APPEAL. AFTER AN ELABORATE DISCUSSION OF B.T. PATIL & SONS (SUPRA), LD.CIT(A) HAS SUMMARIZED THE TERM DEVELOPER AND ACCORDING TO HIM, IT HAS FOLLOWING CHARACTERISTICS: IN VIEW OF THE ABOVE DISCUSSION, WE CAN SAY THAT A DEVELOPER HAS FOLLOWING CHARACTERISTIC; (I) HE CONCEIVES THE PROJECT. THAT MEANS THE BASI C STUDY ABOUT FEASIBILITY OF THE PROJECT, ECONOMIC BENEFITS ARISI NG OUT OF THE PROJECT, THE EVALUATION OF THE FUNDS REQUIRED TO CO NSTRUCT THE PROJECT ETC. IS DONE BY HIM. (II) THE FINANCIAL INVESTMENT IN THE PROJECT IS MADE BY HIM. (III) THE FINANCIAL RISK IS BORNE BY HIM. THAT MEANS IN CASE DUE TO SOME REASON THE PROJECT DOES NOT CLICK OR THE EX PECTED FINANCIAL RETURNS ARE NOT RECEIVED THE LOSS OR THE PROFIT IN CASE THE PROJECT WORKS BELONGS TO HIM. (IV) HE MAY OR MAY NOT EXECUTE THE PROJECT HIMSELF. (V) HE HAS THE DOMINANT CONTROL OVER THE WORK THAT IS B EING CARRIED ON AND FOR CHANGING ANY SPECIFICATION OF TH E PROJECT HE NEED NOT TAKE ANYBODYS PERMISSION. HE HAS ALL THE AUTHORITY AND CONTROL ABOUT THE EXECUTION OF THE PR OJECT. THE CONTRACTOR IS A PERSON WHO UNDERTAKES TO PROD UCE A GIVEN RESULT FOR ANY ESTABLISHMENT BY EMPLOYING BUILDING WORKERS. HE EXECUTES THE JOB ASSIGNED TO HIM AS PER THE SPECIFI ED PARAMETERS AND SPECIFICATIONS. AFTER THE COMPLETION OF THE PR OJECT, THE PRINCIPAL CHECKS WHETHER THE JOB HAS BEEN CARRIED O UT AS PER THE DESIRED SPECIFICATIONS AND THEN THE PAYMENT IS MADE TO THE CONTRACTOR IN ACCORDANCE WITH THE TERMS AND CONDITI ONS. ITA NO S .1828,1787/AHD/10, 402,602/AHD/12, 1864,1785/AHD/10, 403 AND 404/AHD/12 SUGAM CONSTRUCTION PVT.LTD. ITO (CROSS-APPEALS) AYS 2001-02, 05-06,06-07,07-08 & 08-09 - 20 - THEREFORE, IT CAN BE SEEN FROM THE ABOVE THAT THERE IS A VAST DIFFERENCE BETWEEN THE CONTRACTOR AND A DEVELOPER. THE MOST IMPORTANT DIFFERENCE IS THAT A DEVELOPER CONCEIVES THE PROJECT WHEREAS THE CONTRACTOR EXECUTES IT. THE OTHER DIFF ERENCE IS THAT OF FINANCIAL RISK. THE DEVELOPER BEARS THE FINANCIAL RISK AND MAKES THE INVESTMENT WHEREAS THE CONTRACTOR DOES NOT MAKE THE INVESTMENT AND TAKE ANY FINANCIAL RISK, HE GETS THE PAYMENT FOR THE WORK DONE BY HIM AND IS NOT CONCERNED ABOUT ANYTHIN G ELSE. THE DEVELOPER CAN MODIFY THE PROJECT AS PER HIS DESIRE WHEREAS THE CONTRACTOR HAS TO STICK TO THE SPECIFICATIONS GIVEN TO HIM. 7.2. LD.CIT(A) HAS ALSO REPRODUCED THE WORK UND ERTAKEN OR EXECUTED BY THE ASSESSEE DURING THE YEAR. IN THE SAID CHART , THERE WAS A DESCRIPTION OF NATURE OF THE WORK UNDERTAKEN BY THE ASSESSEE AN D THE COMMENCEMENT OF THE YEAR OF THE SAID WORK. IT WAS NOT IN DISPU TE THAT THE ASSESSEE HAD UNDERTAKEN THE CONSTRUCTION OF UNDER-BRIDGE OF THE RAILWAYS. ASSESSEE WAS ASKED TO GIVE THE DETAILS OF THE CONTRACT, WHIC H WERE SUBMITTED. ON THAT BASIS, LD.CIT(A) HAS ALSO DISCUSSED FEW OF THE CONTRACTS WITH RAILWAYS AS ALSO WITH AUDA AND GWSSB. THEREAFTER, HE HAS CONCLUDED (I) THAT THE INVESTMENT WAS NOT MADE BY THE APPELLA NT,(II) THAT THE DESIGN AND PLANNING FOR DEVELOPMENT OF INFRASTRUCTURE PROJ ECT WAS NOT OF THE APPELLANT,(III) THAT THERE WAS NO FINANCIAL RISK BE LONGED TO THE ASSESSEE, (IV) THAT THERE WAS NO MOBILIZATION OF TECHNICAL EX PERTISE OR SUPERVISION OR CONTROL OF THE ASSESSEE. RESULTANTLY, THE CLAIM OF THE ASSESSEE WERE DISMISSED IN THE FOLLOWING MANNER: THE CLAIM OF THE APPELLANT ARE EXAMINED WITH REFER ENCE TO THE TERMS AND CONDITIONS OF THE VARIOUS CONTRACTS TAKEN BY IT. THE CONTRACTS HAVE BEEN DISCUSSED IN THE PRECEDING PARA GRAPHS. IT IS APPARENT FROM THE DISCUSSION OF ALL THE CONTRACTS T HAT ITA NO S .1828,1787/AHD/10, 402,602/AHD/12, 1864,1785/AHD/10, 403 AND 404/AHD/12 SUGAM CONSTRUCTION PVT.LTD. ITO (CROSS-APPEALS) AYS 2001-02, 05-06,06-07,07-08 & 08-09 - 21 - (I) THE INVESTMENT IS NOT MADE BY THE APPELLANT. I T IS MADE BY THE GOVERNMENT BODY. THE PROJECT HAS BEEN FULLY FI NANCED BY THE GOVERNMENT AND THE APPELLANT WAS GETTING REG ULAR PAYMENT IN ACCORDANCE WITH THE PROGRESS OF WORK. T HE INVESTMENT IN THE PROJECTS WERE VERY LIMITED AND WA S SIMILAR TO THE INVESTMENT MADE BY ANY CONTRACTOR IN EXECUTI NG THE CONTRACT. FOR CLAIMING THAT THE INVESTMENT IN THE PROJECTS HAS BEEN MADE BY THE APPELLANT, TOTAL FUNDS SHOULD BE INVESTED BY IT OR MAJOR PORTION OF THE INVESTMENT S HOULD BELONG TO THE APPELLANT. IN THE PROJECTS THAT HAVE BEEN EXECUTED BY THE APPELLANT, THE INVESTMENT HAS BEEN MADE BY THE APPELLANT ONLY IN THE INITIAL STAGE THAT TOO HA S BEEN REIMBURSED WHEN THE CONSTRUCTION WORK STARTS. IN S OME OF THE CASE, THE APPELLANT HAS BEEN RECEIVED THE MOBIL IZATION ADVANCE WHICH ENABLED HIM TO START THE PROJECT WITH OUT ANY INITIAL INVESTMENT. (II) THE CLAIM THAT THE DESIGN AND PLANNING FOR DEV ELOPMENT OF INFRASTRUCTURE PROJECT WAS THAT OF THE APPELLANT IS ALSO MISPLACED. THERE IS NO DOUBT THAT THE APPELLANT HA S MADE DESIGN IN CERTAIN PROJECTS BUT THAT IS ONLY THE SMA LL PART OF THE TOTAL WORK OF PLANNING WHICH HAS BEEN DONE BY T HE AUTHORITY. THE PLAN THAT PARTICULAR PROJECT, OR TH E BRIDGE OR SOME OTHER INFRASTRUCTURE FACILITY IS TO BE CREATED WAS NOT MADE BY THE APPELLANT BUT IT WAS MADE BY THE AUTHOR ITY WHICH INVITED THE TENDER FOR CONSTRUCTION. (III) THE CLAIM OF THE APPELLANT THAT FINANCIAL RIS K BELONGS TO THE APPELLANT IS ALSO NOT PROPERLY PLACED. THERE IS NO FINANCIAL RISK THAT IS TAKEN BY THE APPELLANT. THE CONDITION S OF THE CONTRACT CLEARLY SHOW THAT IT WILL GET REGULAR PAYM ENT IN ACCORDANCE WITH THE PROGRESS OF CONSTRUCTION. THE RISK INVOLVED WAS NORMAL RISK WHICH IS THERE FOR ANY CON TRACTOR IN EXECUTING ANY NORMAL CONTRACT. THE APPELLANT HA S NEVER TAKEN THE FINANCIAL RISK WHICH IS EQUAL TO THE COST OF THE PROJECT. THE CONTRACT DOCUMENTS ALSO PROVIDES FOR LIMITED LIABILITY ON THE APPELLANT WHICH WOULD BE RESTRICTE D TO CERTAIN AMOUNT DEPENDING ON THE BREACH OF CONTRACT. FOR ITA NO S .1828,1787/AHD/10, 402,602/AHD/12, 1864,1785/AHD/10, 403 AND 404/AHD/12 SUGAM CONSTRUCTION PVT.LTD. ITO (CROSS-APPEALS) AYS 2001-02, 05-06,06-07,07-08 & 08-09 - 22 - CLAIMING THAT THE FINANCIAL RISK IS THERE THE APPE LLANT WOULD OWN AND DEVELOP THE PROJECT AND THEN TRANSFER IT TO THE CONCERNED AUTHORITY. (IV) THE APPELLANT HA ALSO CLAIMED THAT IT WAS MOBI LIZING AND SYNTHESIZING PEOPLE, PLANTS, TECHNICAL EXPERTISE, S UPERVISION, CO-ORDINATING AND CONTROL, ETC. TO DEVELOP AND CREA TE THE INFRASTRUCTURAL FACILITY. THIS CLAIM IS ALSO WITHO UT FACTUAL SUPPORT. THE APPELLANT HAS NOT DEVELOPED AND CREAT ED THE FACILITY. IT HAS ALSO ONLY EXECUTED THE WORK ASSIG NED TO HIM WHICH WAS PART OF THE INFRASTRUCTURAL FACILITY BEIN G PLANNED BY THE GOVERNMENT AUTHORITY. THE PLAN OF THE PROJE CT WAS NOT MADE BY THE APPELLANT. THE APPELLANT IS EXPERT IN BOX PUSHING TECHNIQUE AND ALL THE PROJECTS HAVE BEEN EX ECUTED BY USING THAT TECHNIQUE. IN MOST OF THE CONTRACTS THE APPELLANT HAS EXECUTED THE PART OF THE WORK WHICH R ELATES TO CREATING OF UNDER PASS BELOW THE RAILWAY LINE. IN SUJLAM SUFLAM SCHEME THE APPELLANT HAS EXECUTED THAT PART OF THE PROJECT WHICH INVOLVES CONSTRUCTION OF BOXES. THER EFORE, THE CLAIM OF THE APPELLANT THAT IT HAS DEVELOPED AND CR EATED THE INFRASTRUCTURE FACILITY IS NOT ACCEPTABLE. THE GROUND OF APPEAL IS, THEREFORE, DISMISSED . 8. FROM THE SIDE OF THE APPELLANT, LD.AR MR.DHINEN SHAH APPEARED. AFTER DESCRIBING THE NATURE OF THE DEVELOPMENT WORK EXECUTED BY THE ASSESSEE, HE HAS EMPHASIZED THAT SOME OF THE PROJEC TS WERE HELD AS ELIGIBLE IN A.Y. 2006-07 BY LD.CIT(A). THE WORK C ARRIED OUT IN THOSE PROJECTS WAS IDENTICAL WITH THE PROJECTS UNDERTAKEN BY THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION AS WELL. THE LD.AR HAS T HEREFORE PLEADED THAT ON THE BASIS OF THE VIEW TAKEN BY THE LD.CIT(A), TH IS APPEAL CAN ALSO BE DECIDED. HE HAS CITED A LATEST DECISION OF HONB LE GUJARAT HIGH COURT DATED 11.01.2012 PRONOUNCED IN THE CASE OF GANESH HOUSING CORPORATION LTD. VS. DY.CIT & ANR. [2012]66 DTR 106 (GUJ.), ITA NO S .1828,1787/AHD/10, 402,602/AHD/12, 1864,1785/AHD/10, 403 AND 404/AHD/12 SUGAM CONSTRUCTION PVT.LTD. ITO (CROSS-APPEALS) AYS 2001-02, 05-06,06-07,07-08 & 08-09 - 23 - WHEREIN ALTHOUGH THE ISSUE WAS REASSESSMENT U/S.148 BUT THE INCOME OF THE PETITIONER WAS WITHIN THE CLAIM OF DEDUCTION U/ S.80IA(4)(III) OF THE ACT. THE AO HAD REOPENED THE ASSESSMENT MAINLY ON THE GROUND THAT THE DEDUCTION U/S.80IA(4)(III) WAS WRONGLY GRANTED. LD .AR HAS PLEADED THAT THE GRANTING OF DEDUCTION U/S.80IA(4) WAS UPHELD AN D THE REOPENING WAS QUASHED. THAT DECISION OF THE HONBLE GUJARAT HIGH COURT WAS CHALLENGED, HOWEVER THE SPECIAL LEAVE PETITION OF T HE REVENUE DEPARTMENT WAS DISMISSED BY THE HONBLE SUPREME COU RT VIDE ORDER DATED 17.09.12. HE HAS PLACED RELIANCE ON FOLLOWI NG DECISIONS: SR. NO. IN THE CASE OF .. REPORTED IN .. 1. CIT VS. ABG HEAVY INDUSTRIES LTD. 322 ITR 323 ( BOM.) 2. CIT VS. ABG HEAVY INDUSTRIES LTD. [SLP (CIVIL) NO.32861 OF 2010] 336 ITR (STATUTES) 15. 3. CIT VS. RADHE DEVELOPERS (2012)341 ITR 403 (GUJ.) 4. GVPR ENGINEERS LTD. VS. ACIT 21 TAXMANN.COM 25 (HYD.) (2012) 5. SANEE INFRASTRUCTURE (P) LTD. VS. ACIT (2012)23 TAXMANN.COM 345 (INDORE) 6. M/S.NAGARJUNA CONSTRUCTION COMPANY LTD. VS. ACIT ITA NO.141/HYD/2007 7. KOYA & CO. CONSTRUCTION (P) LTD. VS. ACIT (2012) 21 TAXMANN.COM 35 (HYD.) 8. ACIT VS. BHARAT UDYOG LTD. (2009) 118 ITD 336 (MUM.) 9. SHRISTI INFRASTRUCTURE DEV.CORPN.LTD. VS. ITO (2009 33 SOT 407 (DEL.) 10. OM METALS INFRAPROJECTS LTD. VS. CIT (2009) 26 DTR (JP) ITA NO S .1828,1787/AHD/10, 402,602/AHD/12, 1864,1785/AHD/10, 403 AND 404/AHD/12 SUGAM CONSTRUCTION PVT.LTD. ITO (CROSS-APPEALS) AYS 2001-02, 05-06,06-07,07-08 & 08-09 - 24 - (TRIB.) 359 11. LAXMI CIVIL ENGG. (P) LTD. VS. ADDL.CIT ITA NO.766/PN/09 12. M/S.TARMAT BEL (JV) VS. ITO ITA NO.111/RJT/2010 9. FROM THE SIDE OF THE REVENUE, LD.CIT DR MR D.P.G UPTA APPEARED AND MAIN PLANK OF HIS ARGUMENT WAS THAT CONSIDERING THE NATURE OF WORK EXECUTED BY THE ASSESSEE, IT WAS CLEAR THAT THE ASS ESSEE HAD ACTED ONLY AS A CONTRACTOR AND NOT AS A DEVELOPER. HE HAS PLEADED THAT THERE WAS NO FINANCIAL RISK OF THE ASSESSEE, SINCE THE ASSESS EE HAS FURNISHED THE WORK BILL TIME TO TIME AND RECEIVED THE PAYMENT F ROM THE GOVERNMENT. THE GOVERNMENT HAS GRANTED HIM A SMALL WORK TO BE E XECUTED. IT WAS A PART OF A LARGE PROJECT AND NOT A PROJECT AS SUCH. THE ASSESSEE HAS NOT DEVELOPED AN INFRASTRUCTURE PROJECT AS A WHOLE. HE HAS PLEADED THAT THE ASSESSEE HAS NOT CONCEPTUALIZED THE PROJECT. THE P ROJECT WAS PLANNED BY THE GOVERNMENT. THE ASSESSEE WAS ASKED TO COMPLETE ONLY A PART OF THE PROJECT THAT TOO ON CONTRACT BASIS. NEITHER THERE WAS RISK NOR THERE WAS REWARD FOR THE ASSESSEE. THE ASSESSEE HAS SIMP LY TENDERED THE BILLS OF THE WORK EXECUTED AND RECEIVED THE PAYMENT. HE HAS DRAWN OUR ATTENTION ON NOTES ON ACCOUNTS AND INFORMED THAT AS PER THE REVENUE RECOGNITION THE INCOME WAS ACCOUNTED ON THE BASI S OF THE BILLS CERTIFIED BY THE GOVERNMENT DEPARTMENT. THE ESCAL ATION CLAIMED AND ARBITRATION AWARD WAS ACCOUNTED ON THE BASIS OF THE RECEIPT. HE HAS PLEADED THAT ON ACCOUNT OF ESCALATION IN THE PRICE, THE ASSESSEE HAS ACCORDINGLY CLAIMED AS PER THE BILLS, THEREFORE THE RE WAS NO RISK OF THE ASSESSEE. PLACING RELIANCE ON THE ORDERS OF THE A UTHORITIES BELOW, HE HAS ITA NO S .1828,1787/AHD/10, 402,602/AHD/12, 1864,1785/AHD/10, 403 AND 404/AHD/12 SUGAM CONSTRUCTION PVT.LTD. ITO (CROSS-APPEALS) AYS 2001-02, 05-06,06-07,07-08 & 08-09 - 25 - CONTESTED THAT THE CLAIM OF DEDUCTION WAS RIGHTLY R EJECTED, HENCE DESERVES TO BE CONFIRMED. LD.DR HAS DRAWN OUR ATTENTION ON THE DETAILS OF PAYMENT MADE BY AHMEDABAD URBAN DEVELOPMENT AUTHORI TY AND INFORMED THAT THE TOTAL TENDER AMOUNT WAS AT RS.6,4 2,49,057/- AGAINST THAT AMOUNT OF WORK DONE UPTO THE FINAL BILL WAS FOUND T O BE RS.10,85,28,873/- AND THERE WAS AN ESCALATION OF RS .3,06,54,690/-. ACCORDING TO LD.DR, THE ENTIRE TENDER AMOUNT WAS CO VERED BY THE BILLS AND ON TOP OF IT, THERE WAS PAYMENT FOR ESCALATION OF COST OF PROJECT. THEREFORE, THERE WAS NO ELEMENT OF RISK INVOLVED AN D THE ASSESSEE HAS ALSO NOT MADE ANY INVESTMENT OUT OF ITS OWN FUNDS. ONE OF THE ARGUMENT OF LD.DR IS THAT THE EACH WORK IS VERY SMALL IN COM PARISON TO THE TOTAL VOLUME OF THE INFRASTRUCTURAL WORK AND THAT SMALL W ORK ASSIGNED TO THIS ASSESSEE HAS ALSO BEEN IDENTIFIED ALONG WITH THE VA LUE OF THE WORK. AS PER LD.DR, ONE OF THE WORK GIVEN TO THE ASSESSEE WA S EARTHWORK. HE HAS ALSO MENTIONED THAT PAINTING WORK HAS ALSO BEEN GIVEN TO THE ASSESSEE. ONE OF THE ARGUMENT OF LD.DR WAS THAT TH E TERM CONTRACTOR HAS BEEN USED IN ALL THE AGREEMENTS. THIS TERM ITS ELF HAS REMOVED ALL DOUBTS THAT THE ASSESSEE HAS ENTERED INTO AN AGREEM ENT WITH ALL THE CONCERNED GOVERNMENT AUTHORITY AS A CONTRACTOR. THOSE AUTHORITIES HAVE ALSO TREATED THIS ASSESSEE AS A CONTRACTOR A ND NOT AS A DEVELOPER. BECAUSE OF THIS REASON, THE ASSESSEE WAS REQUIRED T O DEPOSIT A SECURITY DEPOSIT OF THE TENDER AMOUNT, AS IT WAS PREVAILING IN THE CASE OF A CONTRACTORS AGREEMENT, MR. GUPTA C I T CONCLUDED . 10. BOTH THE SIDES WERE HEARD AT LENGTH. THE ASSES SEE IS STATED TO BE IN CONSTRUCTION BUSINESS. AS PER THE SUBMISSIONS OF T HE ASSESSEE, PLACED IN ITA NO S .1828,1787/AHD/10, 402,602/AHD/12, 1864,1785/AHD/10, 403 AND 404/AHD/12 SUGAM CONSTRUCTION PVT.LTD. ITO (CROSS-APPEALS) AYS 2001-02, 05-06,06-07,07-08 & 08-09 - 26 - WRITING BEFORE THE LOWER AUTHORITIES, WE HAVE NOTED THAT THE ASSESSEE HAS CLAIMED THAT THE CONSTRUCTION OF RAIL BRIDGES AND ROAD BRIDGES WAS PRIMARILY CARRIED OUT BY THE ASSESSEE. IN THIS REG ARD, OUR ATTENTION HAS BEEN DRAWN ON THE NATURE OF THE SAID CONSTRUCTION. ABOUT THE NATURE OF THE WORK CARRIED-OUT IT WAS EXPLAINED THAT THE RCC BOX BRIDGE WAS CONSTRUCTED BY PRE-CAST RCC BOX BY APPLYING PUSHING TECHNIQUE. FURTHER IT IS EXPLAINED THAT JACKED BOX TUNNELING IS A NON-INTRUSIVE METHOD FOR CONSTRUCTIN G A NEW UNDER-BRIDGE, CULVERT OR SUBWAY BENEATH EXISTING SURFACE INFRASTR UCTURE, FOR EXAMPLE RAILWAYS AND HIGHWAYS. LD. AR HAS INFORMED THAT TH E ASSESSEE CONSTRUCTION COMPANY HAS DEVELOPED AN EXPERTISE AND BY THIS METHOD THERE WAS NO DISTURBANCE IN THE TRAFFIC AND NO INCO NVENIENCE IS CAUSED WHICH OTHERWISE WAS EARLIER EXPERIENCED WHILE APPLY ING TRADITIONAL CONSTRUCTION METHOD. FURTHER, SAFE RUNNING OF TRA INS HAVE ALSO BEEN ACHIEVED BY THIS METHOD. AS PER THE CONTENTS OF T HE PAPER-BOOK, THERE IS A DESCRIPTION OF BOX PUSHING TECHNIQUE, QUOTE R.C. C. BOX IS PUSHED THROUGH THE EMBANKMENT WITH THE HELP OF HYDRAULIC J ACKS TO CREATE A PASSAGE. EXECUTION OF THIS WORK IS SIMILAR TO THE CONSTRUCTION OF WELL FOUNDATION. WELLS WILL BE SUNK INTO THE GROUND EIT HER BY SELF-SINKING OR WITH THE HELP OF KENTLEDGES. IN CASE OF BOX PUSH BRIDGE, PRECISE BOX SEGMENTS WILL BE PUSHED IN HORIZONTAL DIRECTION WIT H THE HELP OF HYDRAULIC JACK BY TAKING REACTION FROM THRUST BED. UNQUOTE. THE ASSESSEE HAS ALSO FURNISHED CERTAIN PHOTOGRAPHS TO DEMONSTRATE THE NATURE OF WORK EXECUTED. ITA NO S .1828,1787/AHD/10, 402,602/AHD/12, 1864,1785/AHD/10, 403 AND 404/AHD/12 SUGAM CONSTRUCTION PVT.LTD. ITO (CROSS-APPEALS) AYS 2001-02, 05-06,06-07,07-08 & 08-09 - 27 - 11. THE NEXT CONTENTION OF THE ASSESSEE IS THAT THE ACTIVITY CARRIED ON WAS WITHIN THE DEFINITION OF INFRASTRUCTURE FACILITY AS DEFINED IN EXPLANATION TO SECTION 80IA(4) MEANS A ROAD INCLU DING TOLL ROAD, A BRIDGE OR A RAIL SYSTEM . IN SUPPORT ASSESSEE HAS PLACED ON RECOR D THE DEFINITION OF BRIDGE MEANS A BUILDING OF STONE OR WOOD ERECTED ACROSS A RIVER OR CANAL, FOR THE COMMON EASE AND BENEFIT OF TRAVELLER S. A BRIDGE IS A STRUCTURE OF WOOD, IRON, BRICK, OR STONE, ORDINARIL Y ERECTED OVER A RIVER, CREEK, POND, OR LAKE; OR OVER A RAVINE, RAILROAD, C ANAL, OR OTHER OBSTRUCTION IN A HIGHWAY, SO AS TO MAKE A CONTINUOUS ROADWAY, A ND AFFORD TO TRAVELLERS A CONVENIENT PASSAGEWAY FROM ONE BANK TO THE OTHER. WHILE A BRIDGE IS A PART OF THE HIGHWAY WHICH PASSES OVER I T, NO DEFINITE RULE CAN BE LAID DOWN AS TO WHERE ONE TERMINATES AND THE OTH ER BEGINS. A ROAD CULVERT IS REGARDED AS A BRIDGE STRUCTURE, EVEN IN ENGINEERING TERMINOLOGY. STANDARD SPECIFICATIONS AND CODE OF P RACTICE PAGE 2, DEFINES BRIDGES AS FOLLOWS. THE TERM BRIDGES A S USED IN THIS CODE WILL MEAN ALL TYPES OF STRUCTURES, SUCH AS CULVERTS, CAU SE-WAYS AND VIADUCTS UNLESS IT IS REPUGNANT TO THE CONTEXT. 11.1. BY THIS DEFINITION, THE APPELLANT HAS TRIED T O DEMONSTRATE THAT A BRIDGE CAN BE AN UNDER-BRIDGE OR AN OVER-BRIDGE . EVEN CULVERT IS ALSO A TYPE OF A BRIDGE STRUCTURE. THI S TECHNICAL ASPECT APPEARS TO BE CORRECT, RATHER THERE SHOULD NOT BE A NY DISPUTE ABOUT THIS FACT THAT THE ASSESSEE HAD UNDERTAKEN THE CONSTRUCT ION OF UNDER/OVER BRIDGES AND BOTH MUST FALL WITHIN THE DEFINITION OF INFRASTURCTURE FACILITIES AS PRESCRIBED IN THE STATUTE. WE HEREBY HOLD ACCORDINGLY. ITA NO S .1828,1787/AHD/10, 402,602/AHD/12, 1864,1785/AHD/10, 403 AND 404/AHD/12 SUGAM CONSTRUCTION PVT.LTD. ITO (CROSS-APPEALS) AYS 2001-02, 05-06,06-07,07-08 & 08-09 - 28 - 11.2. NEXT, THE ASSESSEE HAS ALSO BROUGHT ON RECORD THE AGREEMENTS EXECUTED WITH SEVERAL AUTHORITIES. PHOTOCOPIES OF THE AGREEMENT HAS ALSO BEEN PLACED ON RECORD IN RESPECT OF FOLLOWING AUTHO RITIES. A AGREEMENT WITH NORTHERN RAILWAY B AGREEMENT WITH AUDA C AGREEMENT WITH EAST-COST RAILWAY D AGREEMENT WITH CENTRAL RAILWAY E AGREEMENT WITH WESTERN RAILWAY AHMEDABAD F AGREEMENT WITH WESTERN RAILWAY MUMBAI G AGREEMENT WITH G.W.R.D.C. H AGREEMENT WITH IRRIGATION DEPT. I AGREEMENT WITH G.W.S.S.B 11.3. TO EXAMINE WHETHER THE WORK ASSIGNED TO THIS ASSESSEE WAS IN THE CAPACITY OF A CONTRACTOR OR THE ASSESSEE HAS EXE CUTED THE WORK AS A DEVELOPER, WE HAVE PERUSED THE TERMS OF SOME OF THE AGREEMENTS. OUR ATTENTION HAS BEEN DRAWN ON AN AGREEMENT WITH NORTHERN RAILWAY, WHEREIN THE SCOPE OF THE WORK HAS BEEN DEFINED AS F OLLOWS:- 2. SCOPE OF WORK: 2.1. PROCUREMENT/FABRICATION OF NECESSARY PLANT AND EQUIPMENT LIKE, JACKING JIGS, SUMPS AND ANY OTHER PLANTS EQUI PMENT REQUIRED FOR EXECUTION OF THIS WORK. 2.2. DESIGNING OF BOX SECTION AS PER APPROVED PROFI T SKETCH GENERAL ARRANGEMENT PLAN NO.NRHQE (P) PLAN NO. P- ITA NO S .1828,1787/AHD/10, 402,602/AHD/12, 1864,1785/AHD/10, 403 AND 404/AHD/12 SUGAM CONSTRUCTION PVT.LTD. ITO (CROSS-APPEALS) AYS 2001-02, 05-06,06-07,07-08 & 08-09 - 29 - 1770-SB/1998/R-3. THE DESIGN WILL BE BASED ON MODI FIED BROAD GAUGE RAILWAY LOADING-1987. THE DESIGN SHALL BE FROM REPUTED CONSULTANT TO BE APPROVED BY RAILWAY A ND THE SAME BE GOT PROOF CHECKED FROM RITES/TECHNICAL INST ITUTION SUCH AS INDIAN INSTITUTE OF TECHNOLOGY/ROORKEE. CO NTRACTOR HAS TO MAKE HIS DESIGNER AVAILABLE FOR ANY CLARIFIC ATIONS FOR CHECKING OF THE DESIGN/DRAWINGS BY THE NORTHERN RAI LWAY. THE FINAL APPROVAL OF DESIGN AND DRAWINGS SHALL BE GIVEN BY THE RAILWAY. IN THE AREA OF EXISTING ARCH, TWIN BO X OF 2 X 8.50 MTR X 5.75 MTR. WILL HAVE TO BE DESIGNED AND CONSTRUCTED IN LIEU OF INDIVIDUAL BOXES NO.2 & 3. BOX NO.1 & 4 WI LL BE DESIGNED AS SINGLE BOXES EACH OF SIZE 8.50 MTR. X 5.75 MTR. ONE EACH ON EITHER SIDE OF THE EXISTING ARCH. 2.3. THE CONTRACTOR HAS TO SUBMIT DETAIL ARRANGEMEN T ALONGWITH DESIGN CALCULATIONS FOR SUPPORTING OF ARCH DURING P USHING OF BOX AND SAME IS TO BE GOT CLEARED FROM RAILWAY BEFO RE COMMENCEMENT OF WORK. HOWEVER, THE DISMANTLING OF ARCH FOR PUSHING THE BO X SHALL BE DONE UNDER RUNNING TRAFFIC CONDITION. THE CONTR ACTOR SHALL ENSURE THE STABILITY OF THE EXISTING ARCH DUR ING PUSHING THE BOX. FOR ANY DAMAGE DONE TO THE ARCH SUCH AS FORMATION OF THE CRACKS ETC. DUE TO PUSHING OR DUE TO ANY OTHER REASONS THE CONTRACTOR SHALL ARRANGE TO REPAI R THE SAME WITH SATISFACTION OF ENGINEER AT SITE I.E. GRO UTING OF THE CRACKS/RECTIFICATION AS REQUIRED AT HIS OWN COST. THE RATES QUOTED AGAINST N.S.ITEM NO.1 (A) & (B) SHALL BE DEE MED TO HAVE INCLUDED THE COST OF THIS ELEMENT OF WORK AND NOTHING EXTRA WILL BE PAID ON THIS ACCOUNT. 2.4. DURING PUSHING PROCESS OF RCC BOX, THE TEMPORA RY SUPPORTING OF THE BUTTRESES OF THE EXISTING ARCH SH ALL BE ARRANGED BY THE CONTRACTOR IF REQUIRED AS PER SITE REQUIREMENT FOR SAFETY CONSIDERATION AND NOTHING EX TRA SHALL BE PAYABLE ON THIS ACCOUNT. THE RATE QUOTED AGAINS T N.S.ITEM NO.1(A) & (B) SHALL BE DEEMED TO HAVE BEEN INCLUDED IN THE ELEMENT OF WORK. ITA NO S .1828,1787/AHD/10, 402,602/AHD/12, 1864,1785/AHD/10, 403 AND 404/AHD/12 SUGAM CONSTRUCTION PVT.LTD. ITO (CROSS-APPEALS) AYS 2001-02, 05-06,06-07,07-08 & 08-09 - 30 - 11.4. IN THE LIGHT OF THE ABOVE DESCRIPTION, AN A RGUMENT HAS BEEN RAISED THAT THE DESIGN OF THE CONSTRUCTION-WORK WAS DEVELOPED BY T HE ASSESSEE. THE SAID DESIGN WAS REQUIRED TO BE APPROVED BY T HE ENGINEERS OF THE RAILWAY DEPARTMENT. THEREFORE, IT WAS NOT M ERELY A CONTRACT TO EXECUTE A SIMPLE JOB OF CONSTRUCTION BUT IT WAS A C ONTRACT FOR CONSTRUCTION OF A SPECIALIZED JOB WORK. NOT ONLY THIS, TERMS O F THE AGREEMENT HAVE ALSO DEMONSTRATED THAT THE ASSESSEE HAS TO BEAR THE COST OF DAMAGES OR ANY LOSS INCURRED DURING THE EXECUTION OF THE CONST RUCTION. HAD IT BEEN A CASE OF A CONTRACTOR SIMPLICITOR THEN THE DAMAGES OUGHT TO HAVE BEEN BORNE BY THE OWNER. SINCE THE CONTRACT WAS AWARDE D TO THE ASSESSEE WITH A PRE-CONDITION THAT DAMAGES, IF ANY CAUSED, IS TO BE REPAIRED BY THE ASSESSEE, THEREFORE, THE ASSESSEE HAS NOT ACTED AS A CONTRACTOR BUT AS A DEVELOPER . 11.5. ONE OF THE SPECIAL CONDITION AS PER THE STA NDARD SPECIFICATION WAS THAT THE DESIGN WAS TO BE PREPARED BY THE ASSESSEE AND THE ASSESSEE SHALL BE FULLY RESPONSIBLE FOR SAFE FUNCTIONING OF THE THRUST BED. ONE OF THE SPECIFICATION WAS STATED TO BE LIKE THIS VIZ. Q UOTE,EARTHWORK IN EXCAVATION FOR THRUST BED, RETURN WALL, CURTAIN WAL L, DROP WALL FLOORING AND BOX PUSHING INCLUDING DISPOSAL OF THE EXCAVATED EARTH IN THE NEAR BY AVAILABLE RLY.LAND WITHIN A MAXIMUM LEAD OF 10 KMS AND THE REMAINING SURPLUS EARTH OUTSIDE THE RLY.LAND AS DIRECTED BY T HE ENGINEER AT CONTRACTORS OWN COST. UNQUOTE. SO THESE CLAUSES H AVE AFFIXED CERTAIN LIABILITIES AS ALSO RESPONSIBILITIES ON THE ASSESSE E WHICH WERE APPARENTLY MORE THAN THE RESPONSIBILITY GENERALLY BEEN FIXED O N A CONTRACTOR. ITA NO S .1828,1787/AHD/10, 402,602/AHD/12, 1864,1785/AHD/10, 403 AND 404/AHD/12 SUGAM CONSTRUCTION PVT.LTD. ITO (CROSS-APPEALS) AYS 2001-02, 05-06,06-07,07-08 & 08-09 - 31 - 11.6. THE CONSTRUCTION MATERIAL WHICH IS USED BY THE ASSESSEE WAS ALSO THE PROPERTY OF THE ASSESSEE AND IN THIS REGARD ONE OF THE CLAUSE WAS STATED TO BE AS UNDER:- PRE-CASTING AND CURING OF RCC BOX UNITS INCLUDING FIXING OF FRONT END FRAME/CUTTING SHIELD, WITH ALL FABRICATED ENABL ING WORK REMAINING THE PROPERTY OF CONTRACTOR, AFTER COMPLET ION OF THE WORK. HAD IT BEEN THE WORK EXECUTED AS A CONTRACTOR THEN THE CONSTRUCTION MATERIAL OUGHT TO BE THE PROPERTY OF T HE OWNER BUT THE CLAUSES HAVE SAID OTHERWISE, THUS BUTTRESS THE ARGU MENTS OF THE ASSESSEE. 11.7. IT WAS CLARIFIED THAT THE INFRASTRUCTURE AS A WHOLE, I.E. THE BRIDGES ARE NATURALLY THE PROPERTY OF THE GOVERNMENT DEPART MENT. BUT THE APPELLANT WAS FURTHER GIVEN THE RESPONSIBILITY OF M AINTENANCE OF THE WORK EXECUTED AND ONE OF THE CONDITION WAS STATED TO BE THAT THE MAINTENANCE PERIOD OF THE WORK SHOULD BE SIX MONTHS. LD. AR HA S THEREFORE PLEADED THAT IN THE CASE OF A CONTRACTOR SIMPLICITOR THERE WOULD BE NO SUCH CLAUSE OF MAINTENANCE. 11.8. THE ASSESSEE HAS ALSO CONSTRUCTED AN UND ER PASS AND THE CONTRACT WAS AWARDED BY AHMEDABAD URBAN DEVELOPMENT AUTHORITY. NAME OF THE WORK WAS STATED TO BE CONSTRUCTION OF UNDERPASSES BY R.C.C. BOX JACKING/PUSHING TECHNIQUE AT CHAINAGE 56 4014.59 AND CHAINAGE 55167.81 BETWEEN STATIONS GANDHINAGAR-AHME DABAD AND ITA NO S .1828,1787/AHD/10, 402,602/AHD/12, 1864,1785/AHD/10, 403 AND 404/AHD/12 SUGAM CONSTRUCTION PVT.LTD. ITO (CROSS-APPEALS) AYS 2001-02, 05-06,06-07,07-08 & 08-09 - 32 - KHODIYAR-AHMEDABAD. IN THIS REGARD, THE SCOPE OF THE WORK WAS AS UNDER:- 2. SCOPE OF WORK: THE SCOPE OF WORK TO BE PERFORMED BY THE CONTRACTOR IS DESCRIBED BROADLY AS UNDER: A. DEMARCATING THE SITE, PROVIDING AND MAINTAINING THE DIVERSION FOR EXISTING ROAD TRAFFIC TO MOVE IN SMOOTH AND SAF E MANNER. B. DISMANTLING THE ROAD CRUST IN THE APPROACH PORTION AND EXCAVATING TO DEPTH AND LENGTH AS REQUIRED FOR PREP ARING CASTING BED AND BOX PUSHING OPERATIONS. C. SHIFTING THE UTILITY AND SERVICE LINES LIKELY TO IN TERFERE WITH THE PROJECT WORK. D. PREPARING DETAIL DESIGNS AND WORKING DRAWINGS OF RC C BOX AS PER GAD ALIGNMENT AND OTHER RELATED ITEMS, RETAI NING WALLS AND ALL OTHER ITEMS AS MAY BE REQUIRED AND GETTING THE APPROVAL FROM RAILWAY AUTHORITIES FOR WORK IN RAILW AY LIMIT AD FOR STRUCTURAL ITEMS IN AUDA LIMIT FROM AUDA. E. PREPARING AND PROVIDING CASTING BED AS APPROVED BY RAILWAYS. F. PROVIDING BY LAYING AND CASTING RCC BOX IN SEGMENTS AS APPROVED BY RAILWAYS. G. PROVIDING REQUIRED EQUIPMENT, MAKING ARRANGEMENTS A ND PUSHING THE RCC BOX BY BOX PUSHING TECHNIQUE UNDER FULL SUPERVISION AND DIRECTIONS OF RAILWAY ENGINEERS UND ER RUNNING TRAIN CONDITIONS. 11.9. IN RESPECT OF THIS CONTRACT, OUR ATTENTIO N HAS BEEN DRAWN ON ONE OF THE CONDITION IN RESPECT OF THE DESIGNING OF THE JOB AND LD.AR HAS ITA NO S .1828,1787/AHD/10, 402,602/AHD/12, 1864,1785/AHD/10, 403 AND 404/AHD/12 SUGAM CONSTRUCTION PVT.LTD. ITO (CROSS-APPEALS) AYS 2001-02, 05-06,06-07,07-08 & 08-09 - 33 - EXPLAINED THAT THE DESIGN WAS REQUIRED TO BE DEVELO PED BY THE ASSESSEE AND FOR THAT PURPOSE A DESIGN CONSULTANT WAS EMPLOYED . RELEVANT CLAUSE OF THE SAID AGREEMENT WAS AS UNDER:- 2.14. THE CONTRACTOR SHALL EMPLOY A DESIGN CONSUL TANT WHO HAS ADEQUATE EXPERIENCE OF DESIGN AND PLANNING OF C ASTING BED, THRUST BEDS AND RCC BOX PUSHING TECHNIQUE. THE CON TRACTOR SHALL ALSO ENGAGE A SENIOR ENGINEER, WHO IS WELL EXPERIEN CED IN RCC BOX PUSHING JOBS IN RUNNING RAILWAY CONDITIONS AS S ITE ENGINEER IN CHARGE OF WORK, FOR WHICH THE CONCURRENCE OF AIDA S HALL BE OBTAINED. ANY CHANGE OF THE SITE ENGINEER AS HAS B EEN PROPOSED IN PQ DOCUMENTS AND ALSO DURING THE PROGRESS OF WOR K SHALL BE DONE ONLY AFTER OBTAINING THE CONCURRENCE OR INSTRU CTIONS OF AUDA. 11.10. THE ASSESSEE WAS MADE RESPONSIBLE FOR ANY ERROR IN THE EXECUTION OF THE WORK. IT WAS THE RESPONSIBILITY O F THE CONTRACTOR I.E. THE ASSESSEE, FOR DAMAGE-FREE EXECUTION OF THE WORK. O THERWISE, GENERALLY A CONTRACTOR IS NOT HELD RESPONSIBLE OR NOT REQUIRE D TO REPAIR THE DAMAGES AT HIS OWN COST. ONE OF THE CLAUSES WITH SOUTH-EASTERN RAILWAY WAS THAT THE CONTRACTOR WAS REQUIRED TO SUBMIT ITS OWN DRAWI NGS ALONG WITH HIS TENDER. THE STRUCTURAL DESIGN INCLUDING METHOD OF CONSTR UCTION AS PROPOSED BY CONTRACTOR WAS TO BE SUBMITTED BY TH E CONTRACTOR. THEREFORE ON THE BASIS OF THESE CLAUSES IT IS DEMON STRATED THAT THERE WERE CERTAIN SPECIAL TERMS AND CONDITIONS, DISTINGUISHABLE FROM THE WORKS- CONTRACT, UNDER WHICH THIS ASSESSEE HAD EXECUTED THE ASSINED CONSTRUCTION. ITA NO S .1828,1787/AHD/10, 402,602/AHD/12, 1864,1785/AHD/10, 403 AND 404/AHD/12 SUGAM CONSTRUCTION PVT.LTD. ITO (CROSS-APPEALS) AYS 2001-02, 05-06,06-07,07-08 & 08-09 - 34 - 11.11. NEXT, OUR ATTENTION HAS ALSO BEEN DR AWN ON SUJALAM SUFALAM YOJNA. AS PER THE TENDER NOTICE, GOVERNMENT OF G UJARAT HAS AN AIM TO TRANSFER SURPLUS WATER OF RIVERS IN CENTRAL AND SOU TH GUJARAT TO WATER SCARCE AREA OF NORTH GUJARAT, KACHCH AND SAURASHTRA . FOR THAT PURPOSES, SEALED TENDERS FOR CONSTRUCTING AND INSERTION OF RC C BOX ACROSS RAILWAY LINES AND OTHER WORKS ON APPROACHES OF THE PROJECT OF PROPOSED SUJALAM SUFALAM SPREADING CANAL (IN SHORT SSSC) ARE PUBLICL Y INVITED FROM THE CONTRACTORS HAVING EXPERIENCE AND WHO HAVE SATISFAC TORILY COMPLETED AT LEAST TWO WORKS OF RCC BOX CONSTRUCTION OF MINIMUM SIZE 3.00 MT. X 3.00MTR. AND PUSHING BELOW RAILWAY TRACKS USING DRA G SHEETS. THE ASSESSEE WAS THEREAFTER ASSIGNED THE TENDER OF INSE RTION OF PRE-CAST RCC BOX UNDER METER-GAUGE RAILWAY LINE. THE SAID SANC TIONING OF TENDER IN ASSESSEES FAVOUR HAVE THUS DEMONSTRATED THAT THE C ONSTRUCTION-WORK IN QUESTION WAS VERY MUCH TECHNICAL IN NATURE WHICH WA S ASSIGNED TO THE ASSESSEE ONLY ON THE BASIS OF ITS PAST EXPERIENCE AND EXPERTISE DEVELOPED TO EXECUTE EFFICIENTLY. 12. WITH THIS FACTUAL BACKGROUND, WE HAVE EXAMINED FEW CASE LAWS TO ASCERTAIN WHETHER THE ASSESSEES NATURE OF WORK HAD FALLEN UNDER THE DEFINITION OF A CONTRACTOR OR A DEVELOPER. IN THIS REGARD, WE HAVE PERUSED AN ORDER OF TRIBUNAL PRONOUNCED IN THE CASE OF B.T. PATIL & SONS, BELGAUM REPORTED AT 126 TTJ 577 (MUM.)[TM]. VIDE PARAGRAPH NO.39, THE RESPECTED BENCH HAS CLARIFIED THAT THE WORDS DEVELOPER AND CONTRACTOR HAVE NOT BEEN DEFINED FOR THE PURPOSE OF APPLICATION OF SECTION 80IA. ACCORDING TO THE BEN CH, IT IS A SETTLED LEGAL POSITION THAT ORDINARY MEANING IS REQUIRED TO BE GI VEN FOR A WORD USED IN ITA NO S .1828,1787/AHD/10, 402,602/AHD/12, 1864,1785/AHD/10, 403 AND 404/AHD/12 SUGAM CONSTRUCTION PVT.LTD. ITO (CROSS-APPEALS) AYS 2001-02, 05-06,06-07,07-08 & 08-09 - 35 - THE STATUTE. RATHER THE BENCH HAS SAID THAT A WOR D USED IN ONE STATUTE CANNOT PER SE BE IMPORTED INTO ANOTHER. A REFERENCE OF GENERAL CLAUSES ACT, 1897 WAS MADE, BUT IT WAS FOUND THAT THE WORD CONTRACTOR OR DEVELOPER HAD NOT BEEN DEFINED THEREIN. THEN, THE RESPECTED BENCH HAS TAKEN THE HELP OF OXFORD ADVANCED LEARNERS DICTION ARY. AS PER THE SAID DICTIONARY, THE WORD DEVELOPER MEANS A PERSON OR A COMPANY THAT DESIGNS OR CREATES NEW PRODUCT. WHEREAS AS PER THE DICTIONARY MEANING, THE WORD CONTRACTOR IS A PERSON OR A COMPANY THAT HAS A CONTRACT TO D O WORK OR PROVIDE SERVICES OR GOODS TO ANOTHER. AS PER NEW SHORTER OXFORD DICTIONARY, THE WORD CONTRACTOR MEANS A PERSON WHO ENTERS INTO A CONTRACT OR AGREEM ENT. AS PER THE BENCH, A DEVELOPER IS A PERSON WHO CONCEIVES THE PR OJECT. HE MAY EXECUTE THE ENTIRE PROJECT HIMSELF OR ASSIGN SOME P ART OF IT TO OTHERS. AS PER RESPECTED BENCH, ON THE CONTRARY, A CONTRACTOR IS THE ONE WHO IS ASSIGNED A PARTICULAR JOB TO BE ACCOMPLISHED ON BEH ALF OF THE DEVELOPER. THE DUTY OF A CONTRACTOR IS TO TRANSLATE SUCH DESIG N INTO REALITY. THE ROLE OF A DEVELOPER IS MUCH LARGER THAN THAT OF THE CONT RACTOR. AS PER BENCH, IT IS NO DOUBT THAT IN CERTAIN CIRCUMSTANCES A DEV ELOPER MAY ALSO DO THE WORK OF A CONTRACTOR BUT A MERE CONTRACTOR PER SE CAN NEVER BE CALLED AS A DEVELOPER, WHO UNDERTAKES TO DO WORK ACCORDING TO T HE PRE-DECIDED PLAN. THESE FINDINGS HAVE INDEED HELPED US IN DECIDING TH E ISSUE IN HAND. 12.1. THIS TECHNICAL TERM, I.E. DEVELOPER WAS ALSO UNDER QUESTION IN THE CASE OF RADHE DEVELOPERS 341 ITR 403 (GUJ.), WHEREIN VIDE AN ORDER DATED 13.12.2011, THE HONBLE COURT H AS QUOTED AS UNDER: ITA NO S .1828,1787/AHD/10, 402,602/AHD/12, 1864,1785/AHD/10, 403 AND 404/AHD/12 SUGAM CONSTRUCTION PVT.LTD. ITO (CROSS-APPEALS) AYS 2001-02, 05-06,06-07,07-08 & 08-09 - 36 - SECONDLY, TERM DEVELOPER HAS BEEN UNDERSTOOD IN COMMON PARLANCE AS WELL AS IN LEGAL SENSE CARRYING A MUCH WIDER CONNOTATION. THE TRIBUNAL ITSELF IN THE IMPUGNED O RDER HAS TRACED DIFFERENT MEANINGS OF THE TERM DEVELOPER EXPLAINE D IN DIFFERENT DICTIONARIES, WHICH READ AS UNDER: 1. THE WEBSTERS ENCYCLOPEDIA UNABRIDGED OF THE E NGLISH LANGUAGE GIVES THE FOLLOWING MEANING OF THE TERM DE VELOPER AS : 1. ONE WHO OR THAT WHICH DEVELOPS; 2. A PERSON WHO INVESTS IN AND DEVELOPS THE URBAN OR SUBURBAN POTENTIALITIES OF REAL ESTATE. B. OXFORD ADVANCED LEARNERS DICTIONARY OF CURRENT ENGLISH, FOURTH INDIAN EDITION, GIVES MEANING OF THE TERM D EVELOPER AS PERSONS OR COMPANY THAT DEVELOPS LAND. C. RANDOM HOUSE DICTIONARY OF THE ENGLISH LANGUAGE , THE FOLLOWING CAN BE FOUND. DEVELOP A. TO BRING OUT THE CAPABILITIES OR POSSIBILITIES OF; BRING TO A MORE ADVANCED OR EFFECTIVE STATE. B. TO CAUSE TO GROW OR EXPAND. DEVELOPER A. THE ACT OR PROCESS OF DEVELOPING; PROGRESS. B. SYNONYM : EXPANSION, ELABORATION, GROWTH, EVOLU TION, UNFOLDING, MATURING, MATURATION. D. WEBSTER DICTIONARY, THE FOLLOWING DEFINITIONS EMERGE: A. TO REALIZE THE POTENTIAL OF ; B. TO AID IN THE GROWTH OF STRENGTH, DEVELOP THE BICEPS, C. TO BRING INTO BEING: MAKE ACTIVE (DEVELOP A BU SINESS) D. TO CONVERT (A TRACT OF LAND) FOR SPECIFIC PURP OSE, AS BY BUILDING EXTENSIVELY. ITA NO S .1828,1787/AHD/10, 402,602/AHD/12, 1864,1785/AHD/10, 403 AND 404/AHD/12 SUGAM CONSTRUCTION PVT.LTD. ITO (CROSS-APPEALS) AYS 2001-02, 05-06,06-07,07-08 & 08-09 - 37 - E. LAW LEXICON DICTIONARY : THE FOLLOWING DEFINITIONS COULD BE SEEN. DEVELOPMENT A. TO ACT, PROCESS OR RESULT OF DEVELOPMENT OR GROWING OR CAUSING TO GROW; THE STATE OF BEING DEVELOPED. B. HAPPENING. 12.2. THERE IS AN ANOTHER DECISION WHICH HAS BEEN C ITED BEFORE US PRONOUNCED BY ITAT HYDERABAD BENCH IN THE CASE OF G.V.P.R. ENGINEERS LTD. 21 TAXAMNN.COM 25, WHEREIN THE ASSESSEE-COMPANY HAD ENTERED INTO A CONTRACT WITH THE GOVERNMENT TO DEVELOP AN INFRASTRUCTURE FACILITY. THE AOS OBJECTION WAS TH AT THE ASSESSEE HAD ENTERED INTO A CONTRACT FOR BUILDING FOR WHICH THE ENTIRE INVESTMENTS WERE MADE BY THE GOVERNMENT AND THE ASSESSEE WAS PAID O N RUNNING BILL TO BILL BASIS. THIS QUESTION WAS ELABORATELY DEALT W ITH BY THE RESPECTED CO-ORDINATE BENCH AND AFTER DUE CONSIDERATION OF TH E WORK EXECUTED BY THE SAID CONCERN, IT WAS OPINED THAT THE WORDS DEVELOPER AND CONTRACTOR HAVE NOT BEEN DEFINED IN SECTION 80IA OF THE ACT . IT WAS NOTED THAT THE BOT/BOOT MODELS SEEK TO AUGMENT INFR ASTRUCTURAL ASSETS IN ADDITION TO GOVERNMENT SPENDING AND NOT SIMPLY F EED ON GOVERNMENT EXPENDITURE. AS PER THE TRIBUNAL, THE DEDUCTION U/ S.80IA IS AVAILABLE TO THE FORMER AND NOT TO THE LATTER. THE TERM DEVE LOPER HAS TO BE SEEN DE HORS THE CONTRACT. THE BENCH HAS ALSO OPINED THAT WOR D OWNERSHIP IS ATTRIBUTABLE ONLY TO THE ENTERPRISE CARRYING ON THE BUSINESS WHICH WOULD MEAN THAT ONLY COMPANIES ARE ELIGIBLE FOR DEDUCTION U/S.80IA(4). 12.3. AN ANOTHER CONTROVERSY IN SUCH TYPE OF CASES IS IN RESPECT OF THE TERM OWNERSHIP PRESCRIBED AS PER THE LANGUAGE OF THE SECTION. THE ITA NO S .1828,1787/AHD/10, 402,602/AHD/12, 1864,1785/AHD/10, 403 AND 404/AHD/12 SUGAM CONSTRUCTION PVT.LTD. ITO (CROSS-APPEALS) AYS 2001-02, 05-06,06-07,07-08 & 08-09 - 38 - SECTION 80IA(4) PRESCRIBES THAT IT APPLIES TO ANY ENTERPRISE CARRYING ON THE BUSINESS OF DEVELOPING, OPERATING AND MAINTAINI NG ANY INFRASTRUCTURE FACILITY WHICH FULFILS THE CONDITIONS, NAMELY, IT IS OWNED BY COMPANY REGISTERED IN INDIA OR BY A CONSORTIUM OF SUCH COMP ANIES AND THAT IT HAS ENTERED INTO AN AGREEMENT WITH THE CENTRAL GOVERNME NT OR STATE GOVERNMENT AND THAT IT HAS STARTED OPERATING AND MA INTAINING THE INFRASTRUCTURE FACILITY ON OR AFTER 1995. THE TER M IT IS OWNED HAS BEEN DEFINED BY THE REVENUE DEPARTMENT AS IF THE INFRAST RUCTURE FACILITY IS TO BE OWNED BY THE ENTERPRISE CLAIMING 80IA(4) DEDUCTI ON. BUT THE VIEW EXPRESSED BY THE HONBLE COURTS IS ENTIRELY DIFFERE NT. IN ONE OF THE DECISION PRONOUNCED BY ITAT HYDERABAD BENCH IN THE CASE OF KOYA & COMPANY 21 TAXAMNN.COM 35 (HYD.), IT IS HELD THAT THE WORD OWNED IS ATTRIBUTABLE TO THE ENTERPRISE CARRYING ON THE B USINESS. FURTHER, THE WORD IT DENOTES THE ENTERPRISE CARRYING ON THE BUSINES S. THE WORD IT DO NOT RELATE TO THE INFRASTRUCTURE FACILITY . THE INFRASTRUCTURE FACILITY, SUCH AS, RAIL SYSTEM, HIGH-WAY PROJECTS, IRRIGATION PROJECT, PORT, AIR-PORT, ETC. CANNOT BE OWNED BY AN ENTERPRISE OTH ER THAN THE GOVERNMENT. 12.4. AN ANOTHER REASON FOR NOT GRANTING THE DEDUCT ION U/S.80IA(4) BY THE REVENUE DEPARTMENT WAS GENERALLY BECAUSE OF THE REASON OF INSERTION OF EXPLANATION BY FINANCE ACT (NO.2), 2009 WITH RETROSPECTIVE EFFECT FROM 1.4.2000 WHICH SAYS THAT FOR THE REMOVAL OF DO UBTS, IT IS HEREBY DECLARED THAT NOTHING CONTAINED IN THIS SECTION SHA LL APPLY IN RELATION TO A BUSINESS REFERRED TO IN SUB-SECTION(4) WHICH IS IN THE NATURE OF A WORK CONTRACT AWARDED BY CENTRAL OR STATE GOVERNMENT AND EXECUTED BY AN ITA NO S .1828,1787/AHD/10, 402,602/AHD/12, 1864,1785/AHD/10, 403 AND 404/AHD/12 SUGAM CONSTRUCTION PVT.LTD. ITO (CROSS-APPEALS) AYS 2001-02, 05-06,06-07,07-08 & 08-09 - 39 - UNDERTAKING OR AN ENTERPRISE. DUE TO THIS EXPLANATION, REVENUE HAS TAKEN A STAND THAT THE ELIGIBILITY IS TO BE GRANTED ONLY TO A DEVELOPER AND IF THE NATURE OF ACTIVITY IS A WORKS CONTRACT, TH EN THE DEDUCTION IS NOT BE GRANTED. HOWEVER, IN THE CASE OF KOYA & COMPANY 21 TAXMANN.COM 35(HYD.) , THIS ISSUE WAS DEALT WITH ELABORATELY, WHEREIN IT WAS HELD THAT PURE DEVELOPMENT IS ELIGIBLE FOR CLAIM OF DEDUCTION . IT WAS CLARIFIED THAT TO AVOID MISUSE OF THE PROVISIONS, THE SAID EXPLANA TION WAS INSERTED IN SECTION 80IA, SO THAT MERE WORKS CONTRACT WOULD N OT BE ELIGIBLE FOR DEDUCTION U/S.80IA. CERTAINLY THE SAID EXPLANATION HAS BEEN INSERTED TO DENY THE TAX HOLIDAY TO AN ENTITY WHO DOES ONLY WO RK CONTRACT OR ACTED MERELY AS A SUB-CONTRACTOR, APPARENTLY BEING DISTIN CT FROM THE DEVELOPER. APPLYING THIS RATIO ON THE PRESENT SET OF FACTS AND CIRCUMSTANCES IT CAN BE HELD THAT THE NATURE OF CONSTRUCTION EXECUTED BY T HIS ASSESSEE HAD FALLEN UNDER THE CATEGORY OF DEVELOPER AND NOT UNDER TH E CATEGORY OF WORKS-CONTRACT. 12.5. NEXT, AN ANOTHER CONTROVERSY HAS ALSO BEEN R AISED BY THE REVENUE DEPARTMENT THAT IN THE AGREEMENTS IN QUESTION THE T ERM CONTRACTOR HAS BEEN REFERRED BY THE GOVERNMENT. THIS QUESTION HAS BEEN DULY ADDRESSED BY ITAT MUMBAI BENCH IN THE CASE OF ACIT VS. BHARAT UDYOG LTD., WHEREIN PATEL ENGINEERING LTD. 84 TTJ 646 (MUM.) WAS FOLLOWED AND IT WAS OPINED THAT THE TERM CONTRACTOR IS NOT ESSENTIALLY IN CONTRADICTION TO THE TERM DEVELOPER . BY ENTERING INTO A LAWFUL AGREEMENT AND THEREBY BECOMING A CONTRACTOR IN NO WAY BAR AN ENTERPRISE TO EXECUTE THE WORK AS A DEVELOPER . IT WAS OPINED THAT MERELY BECAUSE IN THE AGREEMENT FOR DEVELOPMENT OF INFRASTRUCTURE ITA NO S .1828,1787/AHD/10, 402,602/AHD/12, 1864,1785/AHD/10, 403 AND 404/AHD/12 SUGAM CONSTRUCTION PVT.LTD. ITO (CROSS-APPEALS) AYS 2001-02, 05-06,06-07,07-08 & 08-09 - 40 - FACILITY AN ENTERPRISE IS REFERRED TO AS A CONTRACT OR DO NOT DETRACT AN ENTERPRISE FROM THE POSITION OF BEING A DEVELOPER . IN NUMBER OF DECISIONS, THE COORDINATE BENCHES HAVE CITED ITAT P UNE BENCH DECISION PRONOUNCED IN THE CASE OF LAXMI CIVIL ENGINEERING PVT.LTD . (ITA NOS.766/PN/09, 254/PN/08, 431/PN/07 & 435/PN/07 AYS 2006-07, 2005-06, 2003-04, 2004-05) ORDER DATED 08/06/2011 ), WHEREIN IT IS MENTIONED AS UNDER:- 2. TRACING THE BACKGROUND OF THE CASE, LEARNED CO UNSEL FOR THE ASSESSEE MENTIONED THAT IN THE FIRST ROUND, THE APP EALS WERE DECIDED RELYING ON THE DECISION OF THE THIRD MEMBER IN THE CASE OF B.T.PATIL & SONS 126 TTJ 577 VIDE ORDER DATED 18.02 .2010. SUBSEQUENTLY, THE SAID ORDER OF THE TRIBUNAL WAS RE CALLED IN VIEW OF THE BINDING JURISDICTIONAL HIGH COURTS JUDGMENT PRONOUNCED ON 15.02.2010 IN THE CASE IF ABG HEAVY ENGG.LTD. REPOR TED IN 37 DTR (BOM) 233. 13. IN THE BACKGROUND OF THE ABOVE DISCUSSION, IT C AN BE SUMMARIZED THAT AN ENTERPRISE HAS TO ENTER INTO AN AGREEMENT W ITH THE CENTRAL OR STATE GOVERNMENT OR A LOCAL AUTHORITY OR ANY STATUTORY AU THORITY. THAT UNDISPUTEDLY THE INFRASTRUCTURE FACILITY BELONGED T O THE GOVERNMENT, THEREFORE THE INFRASTRUCTURE FACILITY IS OWNED BY T HE GOVERNMENT. BUT THE ENTERPRISE WHICH IS DEVELOPING OR CONSTRUCTING THE INFRASTRUCTURE FACILITY IS TO BE OWNED BY A COMPANY REGISTERED IN INDIA. T HE ACT ALSO SAYS THAT AN ENTERPRISE WHICH IS CONSTRUCTING OR DEVELOPING T HE INFRASTRUCTURE FACILITY CAN BE A CONSORTIUM OF SUCH COMPANIES. SUCH AN ARRANGEMENT IS ELIGIBLE FOR THE CLAIM OF DEDUCTION. FEW CIRCULARS HAVE BEEN ISSUED BY CBDT THROUGH WHICH IT HAS ALSO BEEN CLARIFIED, AS D ISCUSSED IN THE ITA NO S .1828,1787/AHD/10, 402,602/AHD/12, 1864,1785/AHD/10, 403 AND 404/AHD/12 SUGAM CONSTRUCTION PVT.LTD. ITO (CROSS-APPEALS) AYS 2001-02, 05-06,06-07,07-08 & 08-09 - 41 - FOREGOING CASE-LAWS, THAT THE BENEFIT OF THE IMPUGN ED DEDUCTION IS AVAILABLE TO AN ENTERPRISE WHICH EITHER DEVELOPS OR MAINTAINS OR OPERATED OR EXECUTED THE COMBINATION OF THESE THREE, INTER ALIA AS A BUILD, OPERATE AND TRANSFER (BOT), OR, BUILD, OWN, OPERATE AND TRA NSFER (BOOT), OR, BUILD, OWN, LEASE AND TRANSFER (BOLD) BASIS OR SIMI LAR OTHER BASIS WHERE ULTIMATELY THE INFRASTRUCTURE FACILITY SO CON STRUCTED IS ULTIMATELY TRANSFERRED TO GOVERNMENT OR PUBLIC AUTHORITY, THEN SUCH AN ENTERPRISE IS WITHIN THE AMBITS OF QUALIFICATION OF DEDUCTION. THE EXPLANATORY MEMORANDUM TO THE FINANCE ACT, 2007, AS QUOTED BEFORE US, STATES THAT THE PURPOSE OF THE TAX BENEFIT HAS ALL ALONG BEEN T O ENCOURAGE INVESTMENT IN DEVELOPMENT OF INFRASTRUCTURE SECTOR AND NOT FOR THE PERSONS WHO MERELY EXECUTE THE CIVIL CONSTRUCTION WORK. 12.6. IN THE LIGHT OF THE ABOVE DISCUSSION AND THE VIEW EXPRESSED BY THE HONBLE COURTS, A CONCLUSION CAN BE DRAWN THAT THER E IS A DISTINCTION BETWEEN DEVELOPER AND A CONTRACTOR . (I) THAT IN A CASE OF CIVIL CONTRACTOR, ITS DUTY IS ONLY OF CIVIL CONSTRUCTION. (II) THAT AFTER THE CIVIL CONSTRUCTION IS OVER, HE IS PAID FOR THE JOB OF CIV IL CONSTRUCTION AS PER THE BILLS RAISED. (III) THAT AT THAT POINT OF TIME, HIS CONTRACT IS OVER AND THE AGREEMENT ENDS. (IV) THAT AFTER THE COMPLETION OR AT THE END OF THE AGREEMENT, A CIVIL CONTRACTOR HAND OVER THE SITE TO THE OWNER. (V) THAT A CIVIL CONTRACTOR CONSTRUCTS AS PER THE SPECIFICATIO NS GIVEN. (VI) THAT A CONTRACTOR DOES NOT INVOLVE MUCH OF HIS OWN MONEY B UT RAISES BILL OF HIS CIVIL CONSTRUCTION WORK TIME-TO-TIME TO COLLECT THE EXPENDITURE INCURRED. (VII) THAT A CONTRACTOR HAS NO DOMAIN OVER THE LAND OR THE SITE. (VIII) THAT HIS ACCESS TO THE SITE IS RESTRICTED AND LIMITED FR OM COMMERCIAL ANGLE. ITA NO S .1828,1787/AHD/10, 402,602/AHD/12, 1864,1785/AHD/10, 403 AND 404/AHD/12 SUGAM CONSTRUCTION PVT.LTD. ITO (CROSS-APPEALS) AYS 2001-02, 05-06,06-07,07-08 & 08-09 - 42 - (IX) THAT ON THE BASIS OF THE PROJECT HE CANNOT RAI SE THE FUNDS FROM THE PRIVATE FINANCIAL INSTITUTIONS. (X) THAT A CONTRACTOR IS NOT RESPONSIBLE FOR THE DEVELOPMENT OF THE PROJECT BUT HIS RESPONSI BILITY IS LIMITED TO THE JOB-ASSIGNED TO HIM. (XI) THAT A CONTRACTORS D UTIES AND RESPONSIBILITIES CAN ONLY BE EXAMINED ON THE BASIS OF THE TERMS AND CONDITIONS OF THE CONTRACT AGREEMENT. 12.7. NOW WE SHALL EXAMINE ABOUT A DEVELOPER. FROM THE ABOVE READING WE HAVE ALSO GATHERED (A) THAT A DEVELOPER IS A PERSON WHO UNDERTAKES THE RESPONSIBILITY TO DEVELOP A PROJECT. (B) THAT A DEVELOPER IS THEREFORE NOT A CIVIL CONTRACTOR SIMPLICITOR. (C) THAT IF WE APPLY THE COMMERCIAL ASPECT, THEN A DEVELOPER HAS TO EXECUTE BOTH MANAGERIAL AS WELL AS FINANCIAL RESPONSIBILITY. (D) THAT THE ROLE OF A DEVELOPER, ACCORDING TO US, IS LARGER THAN THAT OF A CONTRACTO R. (E) THAT WHEN A PERSON IS ACTING AS A DEVELOPER, THEN HE IS UNDER OBLIGATI ON TO DESIGN THE PROJECT, IT IS AN ANOTHER ASPECT THAT SUCH DESIGN HAS TO BE APPROVED BY THE OWNER OF THE PROJECT, I.E. THE GOVERNMENT IN THE PRESENT CASE. (F) THAT HE HAS NOT ONLY TO EXECUTE THE CONSTRUCTION WORK IN THE CAPACI TY OF A CONTRACTOR BUT ALSO HE IS ASSIGNED WITH THE DUTY TO DEVELOP, MAINT AIN AND OPERATE SUCH PROJECT. (G) THAT TO ASCERTAIN WHETHER A CIVIL CON STRUCTION WORK IS ASSIGNED ON DEVELOPMENT BASIS OR CONTRACT BASIS CAN ONLY BE DECIDED ON THE BASIS OF THE TERMS AND CONDITIONS OF THE AGREEM ENT. ONLY ON THE BASIS OF THE TERMS AND CONDITIONS IT CAN BE ASCERTAINED A BOUT 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 ITA NO S .1828,1787/AHD/10, 402,602/AHD/12, 1864,1785/AHD/10, 403 AND 404/AHD/12 SUGAM CONSTRUCTION PVT.LTD. ITO (CROSS-APPEALS) AYS 2001-02, 05-06,06-07,07-08 & 08-09 - 43 - COMPLETION OF WORK. (I) THAT ALTHOUGH THE OWNERSH IP 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. (J) THAT A DEVELOPER IS NOT EXPECTED TO RAISE BILLS AT EVERY STEP OF CONSTRUCTION BUT HE IS EXPECTED TO CH ARGE THE COST OF CONSTRUCTION PLUS MARK-UP OF HIS PROFIT FROM THE AS SIGNEE OF THE CONTRACT. (K) THAT A DEVELOPER IS THEREFORE EXPECTED TO AR RANGE FINANCES AND ALSO TO UNDERTAKE RISK. (L) THAT IN CONTRAST TO THE RIGH TS OF A CONTACTOR A DEVELOPER IS AUTHORIZED TO RAISE FUNDS EITHER B Y PRIVATE PLACEMENT OR BY FINANCIAL INSTITUTIONS ON THE BASIS OF THE PROJE CT. THESE ARE FEW BROAD QUALITIES OF A DEVELOPER THROUGH WHICH THE CHARACTE R OF A DEVELOPER CAN BE DEFINED. 14. FINDING : NEXT, WE HAVE TO EXAMINE THE DETAILS/ BIFURCATION OF THE TOTAL REVENUE RECEIPTS. THE TOTAL TURNOVER O F THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION WAS UNDISPUTEDLY SHOWN AT RS.6,55,43,956/-. THIS AMOUNT WAS RECEIVED, AS LISTED AND REPRODUCED ABOVE, MAINLY IN RESPECT OF DEVELOPMENT OF ARCH-BRIDGES, MADE OVER R AILWAY-TRACK OR UNDER BRIDGES. ON DELHI GHAZIABAD SECTION WORK EXE CUTED AT RS.66,38,045/-. THE ASSESSEE HAS ALSO EXECUTED THE RCC BOX BRIDGE BY APPLYING PUSHING METHOD FOR PASSING UNDER MAIN TRACK ON DELHI GAZIABAD SECTION AND EXECUTED CONTRACT FOR RS.30,82 ,497/-. THE ASSESSEE HAS ALSO PROVIDED UNDER-BRIDGE BELOW RAILWAY-TRACK AT TRAGAD AND EXECUTED FOR RS.2,36,62,044/-. CERTAIN OTHER INFRA STRUCTURE PROJECT, SUCH AS, CONSTRUCTION OF WATER-WAY OF 48 METERS LONG WAS MADE BETWEEN SIMLIGUDA AND KARAKAVALASA AND EXECUTED FOR RS.30,6 9,999/-. THE ITA NO S .1828,1787/AHD/10, 402,602/AHD/12, 1864,1785/AHD/10, 403 AND 404/AHD/12 SUGAM CONSTRUCTION PVT.LTD. ITO (CROSS-APPEALS) AYS 2001-02, 05-06,06-07,07-08 & 08-09 - 44 - ASSESSEE HAS ALSO CONSTRUCTED RAILWAY UNDER-BRIDGE FOR A CONTRACT OF RS.39,62,213/-. IT HAS ALSO BEEN STATED THAT BY AP PLYING JACKING METHOD RCC BOX WERE PROVIDED THROUGH RAILWAY EMBANKMENT FO R PROVIDING DISTRIBUTORY CHANNEL PROJECTING FOR NARMADA PROJECT . THE ASSESSEE HAS ALSO DESIGNED AND CONSTRUCTED NEW BOX CULVERT BET WEEN JONATHPUR- AHURA ROAD STATION. SUCH DETAILS ARE AVAILABLE IN THE COMPILATION. ON THE BASIS OF THIS EXAMINATION WE, THEREFORE, GIVE A FINDING THAT IT WAS WRONG ON THE PART OF THE AO TO HOLD THAT TH E ASSESSEE HAS MERELY ACTED AS A CONTRACTOR . BY ANALYZING THE NATURE OF WORK EXECUTED BY THE ASSESSEE, IT CAN BE GATHERED THAT THE ASSESSEE HAD ACTED AS A DEVELOPER. THE ASSESSEE HAS UNDERTAKEN THE RESPONSIBILITY OF EXECUTION OF THE WORK. THE ASSESSEE HAS DEVELOPED ITS OWN DESIGN AND ON GETTING APPROVAL APPLIED THE TECHNOLOGY FOR COMP LETION OF INFRASTRUCTURE FACILITY. TERMS AND CONDITIONS OF THE AGREEMENT EXECUTED WITH CERTAIN GOVERNMENT DEPARTMENTS HAVE ALSO ESTAB LISHED THAT THE RISK IN EXECUTION OF WORK HAS ALSO BEEN UNDERTAKEN BY TH E ASSESSEE. RATHER, THE ASSESSEE WAS HELD RESPONSIBLE FOR ANY DAMAGE OR LOSS TO THE PROPERTY. WE HAVE ALSO NOTED THAT THE REVENUE DEPARTMENT HAS WRONGLY INTERPRETED THE WORD OWNED IN SECTION 80IA(4)(I)( A) OF THE IT ACT. AS DISCUSSED HEREINABOVE, WE HEREBY CONCLUDE THAT AN ENTERPRISE WHICH IS EITHER DEVELOPING OR OPERATING OR MAINTAINING THE I NFRASTRUCTURE FACILITY IS REQUIRED TO BE OWNED BY A COMPANY OR A CONSORTIUM OF COMPANIES DULY REGISTERED IN INDIA. THE ACT DO NOT PRESCRIBE THAT THE INFRASTRUCTURE FACILITY IS TO BE OWNED BY SUCH AN ENTERPRISE. THE INFRASTRUCTURE FACILITY IS ALWAYS THE PROPERTY OF THE GOVERNMENT AND AN ENTERPRISE IS BOUND BY THE AGREEMENT TO TRANSFER THE SAME AFTER THE SET TLED PERIOD. THE ITA NO S .1828,1787/AHD/10, 402,602/AHD/12, 1864,1785/AHD/10, 403 AND 404/AHD/12 SUGAM CONSTRUCTION PVT.LTD. ITO (CROSS-APPEALS) AYS 2001-02, 05-06,06-07,07-08 & 08-09 - 45 - ASSESSEES EXECUTION OF WORK FALL WITHIN FIRST CATE GORY, I.E. DEVELOPING OF INFRASTRUCTURE FACILITY. IT WAS INCORRECT ON THE P ART OF THE AO TO HOLD THAT THE ASSESSEE BEING FALLEN WITHIN THE FIRST CATEGORY NOT ENTITLED FOR THE DEDUCTION. THE DECISIONS OF ABG HEAVY INDUSTRIES( SUPRA), KOYA & COMPANY (SUPRA), AND RADHE DEVELOPERS (SUPRA) AND BHARAT UDYOG LTD. 118 ITD 336(MUM.) THUS SUPPORT THE STAND TAKEN BY T HE ASSESSEE. THE ASSESSEE HAS EXECUTED THE CONSTRUCTION OF INFRASTRU CTURE FACILITY IN RESPECT OF THE GOVERNMENT PROJECTS, AS IS EVIDENT FROM THE LIST OF THE AGREEMENTS PLACED ON RECORD, HENCE IT WAS A FACTUAL ERROR ON T HE PART OF THE AO TO SAY THAT THE ASSESSEE HAD ENTERED IN SOME CONTRACT WITH FEW PRIVATE PARTIES. WE THEREFORE HOLD THAT THE ASSESSEE IS ELIGIBLE FOR THE DEDUCTION U/S.80IA AS CLAIMED OF RS.4,79,508/-. THE GROUND RAISED IN THIS REGARD FOR THE YEAR UNDER CONSIDERATION IS HEREBY ALLOWED. 15. REVENUE HAS RAISED THE FOLLOWING GROUND (A.Y. 2005- 06):- 1) THE LD. COMMISSIONER OF INCOME-TAX (APPEALS)-X IV, AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE DISALLOWANCE OF RS.66,14,143/- MADE BY THE ASSESSIN G OFFICER ON ACCOUNT OF FREIGHT AND WAREHOUSE CHARGES U/S.40(A)(IA) OF THE ACT. 15.1. ON VERIFICATION OF DETAILS, IT WAS NOTED BY T HE AO THAT THE ASSESSEE HAS PAID LABOUR CHARGES OF RS.1,31,08,065/-. THE ASSESSEE HAS ALSO PAID FREIGHT CHARGES OF RS.16,91,327/-. THE ASSESSEE HA S FURNISHED THE DETAILS OF THE TAX DEDUCTED ON SUCH PAYMENTS. IT WAS NOTED BY THE AO THAT IN RESPECT OF PAYMENT OF LABOUR CHARGES AND FREIGHT CH ARGES UPTO THE MONTH OF FEBRUARY-2005, THE ASSESSEE HAD DEDUCTED THE TAX IN THE MONTH OF ITA NO S .1828,1787/AHD/10, 402,602/AHD/12, 1864,1785/AHD/10, 403 AND 404/AHD/12 SUGAM CONSTRUCTION PVT.LTD. ITO (CROSS-APPEALS) AYS 2001-02, 05-06,06-07,07-08 & 08-09 - 46 - MARCH-2005, HOWEVER THE SAME WAS PAID IN THE MONTH OF MAY-2005. AS PER AO, THE ASSESSEE HAD MADE LATE PAYMENT. ACCORD ING TO HIM, AS PER THE FIRST PROVISO TO SECTION 40(A)(IA) IT IS PROVID ED THAT WHERE IN RESPECT OF ANY SUCH SUM TAX HAS BEEN DEDUCTED, THEN SUCH SUM S HALL BE ALLOWED AS A DEDUCTION IN COMPUTING THE INCOME OF THE PREVIOUS Y EAR IN WHICH SUCH TAX HAS BEEN PAID. ACCORDING TO HIM, A PLAIN READ ING OF THIS PROVISO, IT IS CLEAR THAT IF THE TDS HAS BEEN DEDUCTED DURING THE LAST MONTH OF THE PREVIOUS YEAR BUT PAID AFTER THE SAID DUE DATE, THE N THE DEDUCTION IS NOT ALLOWABLE. THE AO HAS MADE OUT A LIST OF ALLEGED LATE PAYMENT AND BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) A TOTA L DISALLOWANCE OF RS.66,14,143/- WAS MADE. THE MATTER WAS CARRIED BE FORE THE FIRST APPELLATE AUTHORITY. 16. BEFORE LD.CIT(A), IT WAS PLEADED THAT THE ASSES SEE HAD DEDUCTED THE TAX AND PAID TO THE CENTRAL GOVERNMENT BEFORE T HE DUE DATE OF FILING OF THE RETURN. IN SUPPORT, CASE LAWS CITED WERE B APU SAHIB NANA SAHIB DHUMAL VS. ACIT 132 TTJ 6 (MUM.) AND H.S. MOHINDRA TRADERS 132 TTJ 701 (DEL.). AFTER HEARING THE SUBMISSION AND THE CONNECTED CASE LAWS, IT WAS NOTED THAT THERE WAS A DECISION OF THE SPECIAL BENCH IN THE CASE OF BHARTI SHIPYARD VS. DCIT REPORTED IN 132 ITD 53 (MU M.) , WHEREIN IT WAS HELD THAT THE AMENDMENT WAS PROSPECT IVE, I.E. FROM 1.4.2010 AND NOT RETROSPECTIVE FROM 1.4.2005. THE REAFTER, LD.CIT(A) HAS CONCLUDED AS UNDER:- HOWEVER, AFTER GOING THROUGH THE FACTS, IT IS SEEN THAT THE APPELLANT HAD BEEN MAKING CERTAIN PAYMENTS TO THE V ARIOUS CONTRACTORS AND HE HAS RAISED A FINAL BILL AT THE E ND OF THE YEAR AND DEDUCTED TAX ON THE FINAL AMOUNT. THE TAX DEDUCTED IN THE MONTH ITA NO S .1828,1787/AHD/10, 402,602/AHD/12, 1864,1785/AHD/10, 403 AND 404/AHD/12 SUGAM CONSTRUCTION PVT.LTD. ITO (CROSS-APPEALS) AYS 2001-02, 05-06,06-07,07-08 & 08-09 - 47 - OF MARCH HAS BEEN PAID BY HIM ON 31/03/2005 WHICH I S BEFORE DUE DATE OF FILING OF RETURN AS PER THE PROVISIONS OF S ECTION 139(1) OF THE ACT. I AM INCLINED TO ACCEPT THE SUBMISSION MA DE BY THE APPELLANT THAT IT HAS DEDUCTED THE TAX IN THE MONTH OF MARCH AND MADE THE PAYMENT BEFORE DUE DATE AND, THEREFORE, TH ERE WAS NO VIOLATION OF THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. IT IS NOT THE CLAIM OF THE AO THAT THE TAX HAS NOT BEEN DEDUC TED AT ALL, BUT HE HAS HELD THAT THE APPELLANT DID NOT DEDUCT ANY T AX UPTO THE MONTH OF FEBRUARY AND DEDUCTED TAX ONLY IN THE MONT H OF MARCH. HE HAS NOT HELD THAT THERE WAS A SHORT DEDUCTION OF TAX OR ADEQUATE HAS NOT BEEN DEDUCTED ON THE TOTAL PAYMENT S DURING THE YEAR. THE DISALLOWANCE U/S.40(A)(IA) SHALL BE AS P ER THE CONDITIONS PROVIDED UNDER THIS SECTION ITSELF. THE PROVISO TO SECTION 40(A)(IA) MAKES IT FURTHER CLEAR THAT EVEN IN THE CASE WHERE THE TAX HAS BEEN DEDUCTIBLE AS PER THE PROVISIONS OF CHAPTER XVII, B UT DEDUCTED IN SUBSEQUENT YEAR OR DEDUCTED DURING LAST MONTH OF PR EVIOUS YEAR BUT PAID AFTER DUE DATE UNDER SECTION 139(1) OF THE ACT OR DEDUCTED DURING OTHER MONTH OF THE PREVIOUS YEAR EXCEPT LAST MONTH BUT PAID AFTER THE END OF THE SAID PREVIOUS YEAR THEN THE SA ID SUM SHALL NOT BE ALLOWED AS DEDUCTION IN COMPUTING THE INCOME OF THE PREVIOUS YEAR BUT ALLOWED IN THE PREVIOUS YEAR IN WHICH THE SAID TAX HAS BEEN PAID. THE DEDUCTION IS DISALLOWED ONLY IN CAS E WHEN EITHER NO TAX WAS DEDUCTED OR IT WAS NOT PAID AFTER DEDUCT ION BUT WHEN THE TAX IS DEDUCTED MAY BE BELATEDLY AND DEPOSITED BELATEDLY THEN THE DEDUCTION IS ALLOWABLE IN THE PREVIOUS YEAR IN WHICH IT WAS SO DEPOSITED. THE PROVISIONS OF CHAPTER XVII ARE RELE VANT ONLY FOR ASCERTAINING THE DEDUCTIBILITY OF THE TAX AT SOURCE AND NOT FOR THE ACTUAL DEDUCTION IN PAYMENT FOR ATTRACTING THE PROV ISIONS OF SECTION 40(A)(IA) OF THE ACT. IN THE PRESENT CASE, THE TAX HAS BEEN DEDUCTED IN THE LAST MONTH OF THE PREVIOUS YEAR I.E . MARCH, 2005 AND DEPOSITED ON 31/05/2005, THE CASE OF THE APPELL ANT IS COVERED IN THE MAIN PROVISIONS OF THE LAW AND THE AMENDMENT WHICH WAS MADE BY FINANCE ACT, 2008 WITH RETROSPECTIVE EFFECT FROM 01/04/2005. RELIANCE IS PLACED ON THE DECISION OF HON'BLE GUJARAT HIGH COURT IN TAX APPEAL NO.706/2010 DATED 18/07/20 11 IN THE CASE OF CIT VS. J.K.CONSTRUCTION CO. AND ALSO ON TH E DECISIONS IN THE CASE OF BAPU SAHEB NANA SAHEB RUMAL [132 ITJ 69 4][MUM.] ITA NO S .1828,1787/AHD/10, 402,602/AHD/12, 1864,1785/AHD/10, 403 AND 404/AHD/12 SUGAM CONSTRUCTION PVT.LTD. ITO (CROSS-APPEALS) AYS 2001-02, 05-06,06-07,07-08 & 08-09 - 48 - & H.S. MOHINDRA TRADERS [132 TTJ 701] [DEL.]. THER EFORE, NO DISALLOWANCE U/S.40(A)(IA) CAN BE MADE ON THESE FAC TS OF THE CASE. 17. HAVING HEARD THE SUBMISSIONS OF BOTH THE SIDES, WE ARE OF THE CONSIDERED VIEW THAT THERE WAS NO FALLACY IN THE VI EW TAKEN BY LD.CIT(A). NOW THIS ISSUE IS VERY WELL SETTLED. IN ONE OF THE CASE, THE RESPECTED COORDINATE BENCH D ITAT AHMEDABAD IN THE CASE OF SANJAYBHAI A.SARVAIYA VS. JT.CIT BEARING ITA NO.4006/AHD/2008 (A.Y. 2005-06) ORDER DATED 13/07/2012 HELD AS UNDER:- 5. HAVING HEARD THE SUBMISSIONS OF BOTH THE SIDES, WE ARE OF THE VIEW THAT THE FIRST QUESTION WHETHER THE AMOUNT REMAINED PAYABLE AT THE END OF THE YEAR IS FIRST TO BE ASCERTAINED AND IN THIS REG ARD AFTER PERUSING THE RECORDS AND THE ACCOUNTS OF THE ASSESSEE AS ALSO CO NSIDERING THE SUBMISSIONS OF THE ASSESSEE, THERE IS NO DISPUTE TH AT THERE WAS NO AMOUNT PAYABLE AT THE END OF THE YEAR. AFTER ASCERTAINING THIS FACT THAT THERE WAS NO AMOUNT REMAINED PAYABLE AT THE END OF THE ACCOUN TING PERIOD, WE HAVE PERUSED THE ORDER OF THE RESPECTED SPECIAL BEN CH PRONOUNCED IN THE CASE OF MERILYN SHIPPING & TRANSPORTS (SUPRA), WHE REIN THE CONCLUSION WAS DRAWN AS UNDER:- THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT ARE APPLICABLE ONLY TO THE AMOUNTS OF EXPENDITURE WHICH ARE PAYABLE AS ON THE DATE 31 ST MARCH OF EVERY YEAR AND IT CANNOT BE INVOKED TO DISALLOW WHICH HAD BEEN ACTUALLY PAID DURING THE PREVIOUS YEAR, WITHOUT DED UCTION OF TDS. 5.1. FURTHER, AN ANOTHER FACT HAS ALSO BEEN ASCERTA INED BY US THAT ALTHOUGH THE AMOUNTS WERE PAID TO THE SUB-CONTRACTO RS DURING THE ENTIRE FINANCIAL YEAR UNDER CONSIDERATION ON DIFFERENT DAT ES BUT FINALLY THE ENTIRE PAYMENT OF TDS TO THE GOVERNMENT EXCHEQUER W AS PAID ON 31.5.2005, ADMITTEDLY BEFORE THE DUE DATE OF FILING OF THE RETURN. ON THIS ASPECT, WE HAVE FOUND THAT THE HONBLE JURISDICTIONAL HIGH COURT IN A LATEST DECISION DATED 18/07/2011 IN TAX APPEAL NO.7 06 OF 2010 IN THE CASE OF CIT VS. J.K. CONSTRUCTION CO. HAS HELD AS UNDER:- ITA NO S .1828,1787/AHD/10, 402,602/AHD/12, 1864,1785/AHD/10, 403 AND 404/AHD/12 SUGAM CONSTRUCTION PVT.LTD. ITO (CROSS-APPEALS) AYS 2001-02, 05-06,06-07,07-08 & 08-09 - 49 - FROM THE RECORD, IT EMERGES THAT FOR PAYMENT TO CO NTRACTOR, THE ASSESSEE HAD MADE DEDUCTION AS REQUIRED UNDER LAW F ROM TIME TO TIME AND IN PARTICULAR LATEST BY 31.3.2005. THIS IS CLE AR FROM CHART SUPPLIED BY THE ASSESSEE BEFORE CIT (APPEALS) WHICH WOULD ES TABLISH THAT DEDUCTION IN CASE SEVERAL CONTRACTORS WERE MADE ON 31.3.2005. ALL SUCH AMOUNTS WERE DEPOSITED WITH THE GOVERNMENT ON OR AROUND 28.5.2005. IN BACKGROUND OF ABOVE UNDISPUTED FAC TS, TRIBUNAL WAS OF THE OPINION THAT BY VIRTUE OF AMENDED PROVISIONS OF SECTION 40 (A)(IA) OF THE INCOME TAX ACT, 1961, ASSESSEE HAS NOT BREACHED THE REQUIREMENT OF DEDUCTION AND DEPOSITING OF TDS. SECTION 40(A)(IA) OF THE ACT AS AMENDED WITH EFFECT FROM 1.4.2005 READ AS UNDER: (IA) ANY INTEREST, COMMISSION, OR BROKERAGE, (RENT, ROYALTY) FEES FOR PROFESSIONAL SERVICES OR FEES FOR TECHNICAL SER VICES PAYABLE TO A RESIDENT, OR AMOUNTS PAYABLE TO A CONTRACTOR OR S UB-CONTRACTOR, BEING RESIDENT, FOR CARRYING OUT ANY WORK (INCLUDIN G SUPPLY OF LABOUR FOR CARRYING OUT ANY WORK), ON WHICH TAX IS DEDUCTIBLE AT SOURCE UNDER CHAPTER XVII-B AND SUCH TAX HAS NOT BE EN DEDUCTED OR, AFTER DEDUCTION, HAS NOT BEEN PAID ON OR BEFORE THE DUE DATE SPECIFIED IN SUB-SECTION (1) OF SECTION 13 9. PLAINLY SPEAKING, ASSESSEE HAD TO MAKE DEDUCTION BE FORE 31 ST MARCH OF THE YEAR IN QUESTION AND AS LONG AS SUCH AMOUNTS WERE DEPOSITED BEFORE LAST DATE OF FILING OF THE RETURN, REQUIREME NTS OF LAW WOULD BE FULFILLED. IT WAS ON THIS BASIS THAT TRIBUNAL WAS OF THE OPI NION THAT THE ASSESSEE COMMITTED NO WRONG AND WAS THEREFORE, ENTI TLED TO SEEK DEDUCTION OF RS.32,94,149/- FROM THE INCOME WHICH A MOUNT THE ASSESSEE HAD DEDUCTED FROM PAYMENTS OF CONTRACTORS AND HAD A LSO DEPOSITED WITH REVENUE BEFORE THE LAST DATE OF FILING OF THE RETUR N. WE DO NOT FIND ANY ILLEGALITY IN ORDER OF TRIBUNAL. TAX APPEAL IS THE REFORE, DISMISSED. 6. UNDER THE TOTALITY OF THE FACTS AND CIRCUMSTANCE S OF THE CASE AND FOLLOWING THE VIEW TAKEN BY THE HONBLE COURTS, WE FIND NO REASON FOR DISALLOWANCE OF THE ENTIRE AMOUNT, THEREFORE DIRECT THE AO TO DELETE THE SAME. ITA NO S .1828,1787/AHD/10, 402,602/AHD/12, 1864,1785/AHD/10, 403 AND 404/AHD/12 SUGAM CONSTRUCTION PVT.LTD. ITO (CROSS-APPEALS) AYS 2001-02, 05-06,06-07,07-08 & 08-09 - 50 - 17.1. NOW THE HONBLE JURISDICTIONAL HIGH COURT AS CITED SUPRA HAS TAKEN A VIEW WHICH IS NOW BEEN CONSISTENTLY FOLLOWE D BY US, THEREFORE UNDER A SITUATION WHEN THE TDS AMOUNT IS DULY DEPOS ITED IN THE GOVERNMENT EXCHEQUER BEFORE THE DUE DATE OF FILING OF RETURN, THEN THE PROVISIONS OF SECTION 40(A)(IA) ARE NOT TO BE INVOK ED FOR THE PURPOSE OF DISALLOWANCE OF EXPENSE. IN THE PRESENT CASE, ON T HE BASIS OF THE UNDISPUTED FACT THAT THE TDS WAS DEPOSITED WITHIN T HE SAID PRESCRIBED DATE, THEREFORE WE HEREBY DISMISS THIS GROUND OF TH E REVENUE. [C] ASSESSEES APPEAL; ITA NO.1864/AHD/2010 FOR A.Y. 2 006-07 18. GROUND NOS.1 & 2 OF THE ASSESSEE IS IN RESPECT OF THE CLAIM OF DEDUCTION U/S.80IA. THE MAIN GRIEVANCE OF THE ASSE SSEE IS THAT LD.CIT(A) HAS RESTRICTED THE CLAIM OF DEDUCTION U/S.80IA IN R ESPECT OF SUM OF THE CONTRACTS BUT NOT IN RESPECT OF ALL THE CONTRACTS. THE ASSESSEE HAD CLAIMED DEDUCTION OF RS.28,17,450/-. 18.1. THE MAIN CONTROVERSY HAS ALREADY BEEN DEALT W ITH BY US IN THE FOREGOING PARAGRAPHS WHILE DECIDING THE APPEALS FOR A.Y. 2005-06. FACTS IN BRIEF FOR A.Y. 2006-07 AS EMERGED FROM THE CORRE SPONDING ASSESSMENT ORDER PASSED U/S.143(3) DATED 17.12.2008 WERE THAT THE ASSESSEE HAD CLAIMED THE DEDUCTION U/S.80IA OF RS.28,17,450/-. UNDISPUTEDLY FOR THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD UNDERTAK EN THE CONSTRUCTION/DEVELOPMENT OF CERTAIN INFRASTRUCTURE PROJECTS OF STATE ITA NO S .1828,1787/AHD/10, 402,602/AHD/12, 1864,1785/AHD/10, 403 AND 404/AHD/12 SUGAM CONSTRUCTION PVT.LTD. ITO (CROSS-APPEALS) AYS 2001-02, 05-06,06-07,07-08 & 08-09 - 51 - GOVERNMENT AND CENTRAL GOVERNMENT. THE WORK EXECU TED FOR THE YEAR UNDER CONSIDERATION WAS LISTED AS UNDER:- SL. DETAILS OF WORK ADDRESS OF AUTHORITY AMOUNT ACCRUED DURING THE YEAR 1. TENDER NO.DYCE(C&S) ADI- 45, PROVIDING BRANCH CANNEL CROSSING BY BOX PUSHING AND JACKING METHOD THROUGH RAILWAY EMBANKMENT WESTERN RAILWAY, BARODA RS.3.27 LACS 2. PROVIDING AND LAYING 1700 MM RCC BOX PUSH THROUGH METHOD BELOW RAILWAY TRACK NR.TRAGAD AUDA RS.70.07 LACS 3. CONSTRUCTION OF ROAD UNDER BRIDGE AT TRAGAD BELOW AHMEDABAD- DELHI MAIN M.G.LINE AND AHMEDABAD GANDHINAGAR BG LINE AUDA RS.237.99 LACS 4. CONSTRUCTION OF UNDER BRIDGE UNDER BG RAILWAY LINE AT UNJHA CAST IN SITU RCC BOX AND CANNEL WORK EXECUTIVE ENGINEER (GWR DIVISION) AHMEDABAD RS.65.80 LACS 5. CONSTRUCTION OF UNDER BRIDGE UNDER METER GUAGE RAILWAY LINE AT GOZARIA CAST IN SITU RCC BOX AND CANNEL WORK -DO- RS.54.43 LACS 6 PROVIDING AND LAYING OF RCC BOX PUSH THROUGH METHOD BELOW GWSSB NC6 RS.5.76 LACS ITA NO S .1828,1787/AHD/10, 402,602/AHD/12, 1864,1785/AHD/10, 403 AND 404/AHD/12 SUGAM CONSTRUCTION PVT.LTD. ITO (CROSS-APPEALS) AYS 2001-02, 05-06,06-07,07-08 & 08-09 - 52 - RAILWAY TRACK BETWEEN MALIA AND WADHARVA 7. PROVIDING AND LAYING OF RCC BOX PUSH THROUGH METHOD BELOW RAILWAY TRACK BETWEEN MALIA AND INDIRANAGAR GWSSB NC9 RS.11.25 LACS 8. CONSTRUCTION OF ARCH BY PROVIDING 04 RCC BOX BY BOX PUSHING TECHNIC UNDER RAILWAY TRACK AT DELHI NORTHERN RAILWAY RS.2.36 LACS 9. CONSTRUCTION OF BRIDGE BY PROVIDING 04 RCC BOX BY BOX PUSHING TECHNIC UNDER RAILWAY TRACK AT VIRAR-SURAT SECTION WESTERN RAILWAY RS.50.08 LACS 10. CONSTRUCTION OF BRIDGE BY PROVIDING 1 RCC BOX BY BOX PUSHING TECHNIC UNDER RAILWAY TRACK BETWEEN KALWAY ROAD AND PALGHAR STATION WESTERN RAILWAY RS.26.80 LACS 11. CIVIL WORK AT MDL MAZGAON DOCK LTD. RS.28.85 LACS 12. CONSTRUCTION OF WATER WAY WITH RCC BOX BY BOX PUSHING METHOD AT SIMILIGUDA EASTERN COST RAILWAY RS.14.44 LACS 19. THE AO HAS DISCUSSED THE CIVIL WORK CARRIED BY THE ASSESSEE. HE HAS ARRIVED AT THE CONCLUSION THAT THE ASSESSEE HAD NOT CONSTRUCTED ANY BRIDGE BUT ONLY CARRIED OUT A CIVIL WORK ON CONTRAC T BASIS WHICH WAS NOT IN THE NATURE OF DEVELOPMENT OF INFRASTRUCTURE FACI LITY. THE CLAIM OF THE ITA NO S .1828,1787/AHD/10, 402,602/AHD/12, 1864,1785/AHD/10, 403 AND 404/AHD/12 SUGAM CONSTRUCTION PVT.LTD. ITO (CROSS-APPEALS) AYS 2001-02, 05-06,06-07,07-08 & 08-09 - 53 - ASSESSEE WAS DISALLOWED. BEING AGGRIEVED THE MATTE R WAS CARRIED BEFORE THE FIRST APPELLATE AUTHORITY. 20. LD.CIT(A) HAS DISCUSSED THE ISSUE AT LENGTH AND ALSO EXAMINED THE WORK EXECUTED OF EACH CONTRACT. HE HAS ALSO EXAMIN ED THE DICTIONARY MEANING OF THE WORDS BRIDGE AND CULVERT. THE CASE LAW OF PATEL ENGINEERING LTD. 94 ITD 411 H AS ALSO BEEN DISCUSSED. IN RESPECT OF THE CONTRACTS AT SL.NOS.1, 2, 3, 8 & 12 THE DISALLOWANC E U/S.80IA WAS UPHELD. IN RESPECT OF PROJECTS MENTIONED 4,5,6 & 7, IT WAS HELD BY THE LD.CIT(A) THAT THE CONTRACT WORK EXECUTED BY THE ASSESSEE WAS PART OF THE IRRIGATION AND WATER PROJECT. THE PROJECTS INVOLVED AN UNDER -WAY BELOW THE RAILWAY LINES FOR S.S.S.Y. CANAL WORK. SUCH ACTIVI TY IN HIS OPINION WAS WITHIN THE MEANING OF INFRASTRUCTURE FACILITY, HE NCE ELIGIBLE FOR DEDUCTION UNDER SECTION 80IA. IN RESPECT OF THE PR OJECT AT SL.NOS.9 & 10, LD.CIT(A) HAS HELD THAT THE PUSHING OF RCC BOX WAS IN THE NATURE OF REPAIR AND FABRICATION OF AN EXISTING BRIDGE, HENCE NOT ELIGIBLE FOR DEDUCTION U/S.80IA. IN RESPECT OF THE CONTRACT WOR K AT SL.NO.11 OF MAZGAON DOCK LTD., LD.CIT(A) HAS NOTICED THAT THE CIVIL WORK WAS IN RESPECT OF CONCRETE FLOORING WITH ANCHOR PLATE IN ALOCK YARD IN BETWEEN EXISTING GANTRY RAIL TRACK. ACCORDING TO HIM, IT WAS NOTHING BUT A REPAIR WORK OF ALREADY EXISTING ROAD AND RAIL TRACK. BECAUSE OF THE PART- RELIEF, NOW BOTH THE SIDES ARE BEFORE US. 21. HAVING HEARD THE SUBMISSIONS OF BOTH THE SIDES, WE ARE OF THE CONSIDERED VIEW THAT THE NATURE OF WORK EXECUTED BY THE ASSESSEE, AS LISTED AT SL.NOS.1 TO 10 AND 12, HAS ALREADY BEEN DISCUSSED SUPRA AT ITA NO S .1828,1787/AHD/10, 402,602/AHD/12, 1864,1785/AHD/10, 403 AND 404/AHD/12 SUGAM CONSTRUCTION PVT.LTD. ITO (CROSS-APPEALS) AYS 2001-02, 05-06,06-07,07-08 & 08-09 - 54 - LENGTH WHILE DECIDING THE APPEAL FOR A.Y.2005-06. WE HAVE EXAMINED THE CONTRACT AGREEMENT EXECUTED BETWEEN THE ASSESSE E AND THE GOVERNMENT AGENCIES. WE HAVE ALSO EXAMINED THAT T HE ASSESSEE HAS APPLIED THE TECHNOLOGY FOR WHICH HE WAS AWARDED THE CONTRACT. ALTHOUGH THE BILLS OF THE WORK EXECUTED WERE RAISE D BY THE ASSESSEE, BUT THERE WAS AN ELEMENT OF RISK DUE TO THE REASON THAT THE ASSESSEE WAS MADE RESPONSIBLE FOR ANY DAMAGES OR LOSS IN EXECUTION OF THE WORK. AFTER CONSIDERING THE NATURE OF THE WORK AND OTHER ALLIE D FACTORS, WE HAVE TAKEN A CONSCIENTIOUS VIEW IN RESPECT OF THOSE PROJ ECTS THAT THE ASSESSEE IS ENTITLED FOR THE DEDUCTION U/S.80IA(4) OF THE AC T. IN THE LIKE MANNER, FOR THE YEAR UNDER CONSIDERATION AS WELL, WE HEREBY HOLD THAT THE ASSESSEE IS ENTITLED FOR THESE PROJECTS FOR THE CLAIM OF DED UCTION U/S.80IA. 21.1. HOWEVER, IN RESPECT OF THE CIVIL WORK EXECUTE D AT MAZGAON DOCK LTD. (IN SHORT MDL), THE NATURE OF WORK WAS FOUND T O BE A REPAIR WORK. THE ASSESSEE HAS NOT DEMONSTRATED THAT THERE WAS DE VELOPMENT OF ANY INFRASTRUCTURE FACILITY. FACTS AS CULLED OUT FROM THE RECORDS ARE EXAMINED. THE ASSESSEE HAD CARRIED OUT THE CIVIL WO RK LIKE EXCAVATION, CONCRETE FLOORING AND ALSO PROVIDED STEEL ENFORCEME NT BAR FOR RCC FLOORING, ETC. THE ASSESSEE HAS INFORMED THAT THE NATURE OF WORK WAS PRECISELY, CONCRETE FLOORING WITH ANCHOR PLATE ALC OCK YARD BETWEEN EXISTING GANTRY RAIL TRACK AT MAZGAON DOCK LTD., MU MBAI. SINCE THE BASIC CONDITION IS THAT FOR THE PURPOSE OF CLAIM OF DEDUCTION U/S.80IA(4) AN ENTERPRISE SHOULD DEVELOP AN INFRASTRUCTURE FACI LITY AS DEFINED IN EXPLANATION AND THE WORK EXECUTED WITH MAZGAON DOCK LTD. WAS NOT WITHIN THE SAID DEFINITION, THEREFORE THE NATURE OF CIVIL WORK EXECUTED DID ITA NO S .1828,1787/AHD/10, 402,602/AHD/12, 1864,1785/AHD/10, 403 AND 404/AHD/12 SUGAM CONSTRUCTION PVT.LTD. ITO (CROSS-APPEALS) AYS 2001-02, 05-06,06-07,07-08 & 08-09 - 55 - NOT QUALIFY FOR DEDUCTION U/S.80IA(4). WE HAVE BE EN INFORMED THAT THE PAYMENT IN RESPECT OF EXCAVATION AND CONCRETE FLOOR ING RECEIVED FROM MDL MUMBAI WAS RS.28,85,115/-. THE CORRESPONDING N ET PROFIT AS PER THE BOOKS OF ACCOUNTS OF THE ASSESSEE, WHICH WAS CL AIMED AS DEDUCTION U/S.80IA(4), IS HEREBY DIRECTED TO BE DISQUALIFIED SO THE ASSESSEE SHALL NOT BE ENTITLED IN RESPECT OF THE PROFIT EARNED ON THE SAID EXECUTION OF WORK. RESULTANTLY, THE GROUND RAISED BY THE ASSESS EE IS PARTLY ALLOWED. 22. GROUND NO.3 (CONCISE GROUND) READS AS UNDER:- 3. THAT THE LEARNED CIT(A) HAS ERRED IN LAW AND O N FACTS WHILE UPHOLDING THE DISALLOWANCE OF DEDUCTION OF RS.1,00,000/ - WHICH HAS BEEN PAID BY THE APPELLANT AS PER COURT SETTLEMENT . 22.1. IT WAS NOTED BY THE AO THAT AN EXPENDITU RE OF RS.2 LACS WAS CLAIMED. IN THIS REGARD, IT WAS INFORMED THAT ONE SHRI RAJESH BHARADWAJ HAD FILED A SUIT WHICH WAS SETTLED BY MUTUAL UNDERS TANDING SUBJECT TO PAYMENT OF RS.2 LACS. AS PER THE SAID UNDERSTANDIN G, THE ASSESSEE HAD PAID RS.1 LAC THROUGH DEMAND DRAFT DATED 9.1.2006. THE AOS ALLEGATION WAS THAT THE MUTUAL AGREEMENT WAS ONLY FOR A SUM OF RS.1 LAC AND THERE WAS NO REFERENCE OF COMMITMENT OF PAYMENT OF RS.2 L ACS. RESULTANTLY, THE BALANCE AMOUNT WAS DISALLOWED. WHEN THE MATTER WAS CARRIED BEFORE THE LD.CIT(A), THE CLAIM OF THE ASSESSEE WAS DISALL OWED AFTER ASSIGNING FOLLOWING REASON: 3.3. I HAVE CONSIDERED THE FACTS OF THE CASE AND T HE SUBMISSIONS OF THE APPELLANT. THE A.O. AFTER VERIFYING THE COP Y OF UNDERSTANDING HELD THAT IT HAS COMMITMENT TO PAY RS .1 LAC ONLY AND THEREFORE, REMAINING RS.1 LAC IS NOT ALLOWABLE AS EXPENDITURE. DURING THE COURSE OF APPELLATE PROCEEDINGS, THE APP ELLANT CLAIMED THAT RS.1 LAC WAS ALREADY PAID TO SHRI RAJENDRA BHA RDWAJ, PROP. ITA NO S .1828,1787/AHD/10, 402,602/AHD/12, 1864,1785/AHD/10, 403 AND 404/AHD/12 SUGAM CONSTRUCTION PVT.LTD. ITO (CROSS-APPEALS) AYS 2001-02, 05-06,06-07,07-08 & 08-09 - 56 - OF BHARDWAJ & SONS AS ADVANCE AND THE BALANCE RS.1 LAC AS SETTLED HENCE CLAIM OF RS.2 LAC. THE APPELLANT FIL ED A COPY OF LEDGER A/C. OF BHARAT CO-OP.BANK LTD. BARODA IN THE BOOKS OF APPELLANT SHOWING THAT RS.1 LAC WAS PAID BY THE APP ELLANT ON 7-11- 95 VIDE VOUCHER NO.391/1 IN THE ACCOUNT CODE PS077 TO SHRI BHARADWAJ AS ADVANCE. THIS EVIDENCE WAS FILED TO JU STIFY THE CLAIM OF RS.2 LAC I.E. RS.1 LAC ALREADY PAID ADVANCE AND RS.1 LAC AS PER M.O.U. VIDE DD NO.562797 DT: 9-1-06 OF STATE BANK O F SAURASHTRA. I AM NOT INCLINED TO ACCEPT THE CONTEN TION OF APPELLANT SINCE OTHER EVIDENCES DO NOT REFLECT THIS. THE APP ELLANT IN ITS WRITTEN SUBMISSION FILED A COPY OF PETITION FILED B Y SHRI RAJENDRA SINGH GYANSINGH BHARDWAJ BEFORE THE HON'BLE NADIAD CIVIL COURT NO.12/2001 WHICH SHOWS THAT SHRI RAJENDRA SINGH GYA N SINGH CARRIED OUT WORK AS PER THE DETAILS AND INSTRUCTION S OF THE APPELLANT FOR WHICH APPELLANT HAD ALREADY RECEIVED THE PAYMENT FROM M/S.NBCC BUT AN AMOUNT OF RS.10 LAC IS OUTSTAN DING TO HIM FROM APPELLANT AS FOLLOWS:- TOTAL VALUE OF WORK CARRIED OUT RS.46,69,158.76 LESS:ADVANCES AND PART BILL RECD. RS.39,21,481.00 BALANCE OUTSTANDING: RS. 7,47,677.76 ADD:RATE DIFFERENCE RS. 1,34,355.00 LOSS @ 12% ON A/C.OF RATE DIFF. RS., 1,17,967.24 TOTAL OUTSTANDING: RS.10,00,000.00 THIS STATUS IS SHOWN AS ON 15-2-01. IN ANOTHER EVI DENCE DT: 9-1- 200 BEING NOTICE TO APPELLANT FROM SHRI RAMESH M.JA RAIYA, ADVOCATE, THE DETAIL OF TRANSACTION IS EXPLAINED SH OWING ONCE AGAIN TOTAL OUTSTANDING OF RS.9,71,754/-. THE AGRE EMENT DT: 16-1- 06 ONLY TALKS ABOUT RS.1 LAC PAID BY APPELLANT VIDE DD DT: 9-1-06. IT IS, THEREFORE, THERE IS NO REFERENCE OF EARLIER RS.1 LAC ADVANCE AS CLAIMED BY APPELLANT. FURTHER, AS DISCUSSED ABOVE THE RECIPIENT (SHRI RAJENDRA BHARDWAJ) GIVEN THE WORKING OF OUTST ANDING OF A MUCH LATER DATE, I.E. FEB.2001 AND JAN.2000 AND, TH EREFORE, RS.1 LAC ADVANCE GIVEN ON 7-1-95 CANNOT BE PRESUMED AS O UTSTANDING AND NOT CONSIDERED IN COMPUTATION UNDER THE HEAD A DVANCE AND PART BILL RECEIPT OF RS.39,21,481. THE APPELLANT HAS NOT FILED ANY OTHER EVIDENCE TO SUPPORT ITS CONTENTION. IT IS, T HEREFORE, THE A.O. ITA NO S .1828,1787/AHD/10, 402,602/AHD/12, 1864,1785/AHD/10, 403 AND 404/AHD/12 SUGAM CONSTRUCTION PVT.LTD. ITO (CROSS-APPEALS) AYS 2001-02, 05-06,06-07,07-08 & 08-09 - 57 - IS JUSTIFIED IN DISALLOWING CLAIM OF RS.1 LAC. THE GROUND OF APPEAL IN THIS REGARD IS REJECTED. 23. WE HAVE HEARD BOTH THE SIDES. WE HAVE NOTED TH AT THE REVENUE AUTHORITIES HAVE APPRECIATED THE EVIDENCE AND THERE AFTER ARRIVED AT THE CONCLUSION THAT THERE WAS NO JUSTIFICATION FOR CLAI M OF AN AMOUNT RS.1 LAC DUE TO LACK OF FACTUAL AS ALSO LEGAL CORROBORAT ION. THE ASSESSEE HAS NOT SUBSTANTIATED ITS CLAIM IN RESPECT OF AN OUTSTA NDING LIABILITY PER-SAY OF RS.1 LAC, THEREFORE IN THE ABSENCE OF ANY COGEN T EVIDENCE, WE HEREBY AFFIRM THE FACTUAL FINDING OF THE AUTHORITIES BELOW AND DISMISS THIS GROUND. 24. GROUND NO.4 READS AS UNDER:- 4. THAT THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS WHILE UPHOLDING THE DISALLOWANCE OF DEDUCTION OF RS.1,73,107/- ON ACCOUNT OF LIQUIDATED DAMAGE S RETAINED BY THE APPELLANTS CUSTOMER. 24.1. AN AMOUNT OF RS.1,73,107/- WAS CLAIMED AS LIQ UIDATED DAMAGES LEVIED BY MAZGAON DOCK LTD. ON VERIFICATION OF THE LETTER, IT WAS NOTED THAT THE MDL HAD DEDUCTED THE SAID SUM AS PROVISIO NAL LIQUIDATED DAMAGES AT 6%. IT WAS FURTHER NOTED THAT IN A.Y. 2008-09, MDL HAD DEDUCTED RS.1,31,610/- AS LIQUIDATED DAMAGES, AND P AID THE REMAINING AMOUNT OF RS.41,497/-. THE AO HAS THEREFORE HELD THAT THE CLAIM WAS CRYSTALLIZED ONLY IN THE YEAR OF 2008-09 THEREFORE THE ENTIRE AMOUNT WAS DISALLOWED IN THE YEAR UNDER CONSIDERATION. WHEN T HE MATTER WAS CARRIED BEFORE THE FIRST APPELLATE AUTHORITY, THE ASSESSEE HAS CITED A DECISION OF ITA NO S .1828,1787/AHD/10, 402,602/AHD/12, 1864,1785/AHD/10, 403 AND 404/AHD/12 SUGAM CONSTRUCTION PVT.LTD. ITO (CROSS-APPEALS) AYS 2001-02, 05-06,06-07,07-08 & 08-09 - 58 - ROTORK CONTROLS INDIA PVT.LTD. 314 ITR 62 (SC). HOWEVER, LD.CIT(A) WAS NOT CONVINCED AND HELD AS UNDER:- 4.3. I HAVE CONSIDERED THE FACTS OF THE CASE AND T HE SUBMISSIONS AS ADVANCED BY THE APPELLANT. I AM NOT INCLINED TO ACCEPT THE CONTENTION OF THE APPELLANT. WITH DUE REGARDS TO H ONBLE SUPREME COURT, THE RATIO OF CASE AS RELIED ON BY THE APPELL ANT IS NOT APPLICABLE IN ITS CASE. THE APPELLANT WAS ASKED TO FILE COMPLETE DETAILS IN RESPECT OF SUCH DEDUCTION BY THE MAZAGAO N DOCK LTD. AND CORRESPONDENCE WITH THEM TO EVIDENCE WHY OUT OF RS.1,73,107/- THEY REFUNDED RS.41,497/-. IN THE A BSENCE OF SUCH DETAILS, IT IS NOT POSSIBLE TO ASCERTAIN THE NATURE OF THIS TRANSACTION AND THEREFORE, THE CLAIM OF THE APPELLANT. THE ONU S TO CLAIM ANY EXPENDITURE IS ON APPELLANT AS PER SETTLED PROPOSIT ION. THEREFORE, THE A.O. IS JUSTIFIED IN HOLDING THE SAME AS CONTIN GENT LIABILITY AND REJECTING THE CLAIM OF EXPENDITURE. THE GROUND OF APPEAL IS THEREFORE, REJECTED. 25. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE MA TERIAL PLACED BEFORE US. THE ASSESSEE HAS FURNISHED THE COPY O F ACCOUNT OF MDL IN ITS BOOK. THE ASSESSEE HAS ALSO FURNISHED A LETTER OF THE CHIEF MANAGER (CW) DATED 08/06/2005, WHEREIN AS PER THE SUBJECT T HE ASSESSEE HAS EXECUTED CONCRETE FLOORING WITH ANCHOR PLATE IN AL COK YARD IN BETWEEN EXISTING GANTRY RAIL TRACK AND RETAINED LIQUIDATED DAMAGES PROVISIONALLY AT 6% AMOUNTING TO RS.1,73,106/-. LATER ON, AN AMO UNT OF RS.41,497/- WAS REFUNDED. THE MDL HAS DEDUCTED RS.1,31,610/- AS PER LETTER DATED 10.10.2008 AS LIQUIDATED DAMAGES. WE ARE OF THE VI EW THAT IN TERMS OF THE PROVISIONS OF SECTION 41(1), THE ASSESSEE IS UN DER OBLIGATION TO ACCOUNT FOR THE IMPUGNED CLAIM IN ASST.YEAR 2008- 09. AS PER THIS SECTION, WHERE AN ALLOWANCE HAS BEEN MADE WHICH CEA SED TO EXIST THE BENEFIT OF WHICH HAD ALREADY BEEN MADE, THEN THE SA ME IS TO BE TREATED AS ITA NO S .1828,1787/AHD/10, 402,602/AHD/12, 1864,1785/AHD/10, 403 AND 404/AHD/12 SUGAM CONSTRUCTION PVT.LTD. ITO (CROSS-APPEALS) AYS 2001-02, 05-06,06-07,07-08 & 08-09 - 59 - GAIN OF THE SAID AMOUNT WHICH WAS CLAIMED EARLIER. THE CORRECT POSITION OF LAW THUS IS THAT IN TERMS OF THE LAW PRONOUNCED BY THE HONBLE SUPREME COURT IN THE CASE OF ROTORK CONTROLS INDIA PVT.LTD.(SUPRA), THE INCURRENCE OF THE LIABILITY IS ADMISSIBLE FOR THE Y EAR UNDER CONSIDERATION, HOWEVER, THE ADJUSTMENT DUE TO CESSION OF LIABILITY IS TO BE MADE IN A.Y. 2008-09, THE YEAR IT WAS ACCOUNTED FOR. THIS GROU ND IS, THEREFORE, ALLOWED. 26. GROUND NO.5 READS AS UNDER:- 5. THAT THE LEARNED CIT(A) HAS ERRED IN LAW AND O N FACTS WHILE UPHOLDING THE DISALLOWANCE OF DEDUCTION OF RS.1,91,409/- ON ACCOUNT OF DEPRECIATION ON MOTOR CARS ON THE GROUND THAT THE CARS IN QUESTION WERE IN THE NAME OF THE DIRECTORS OF TH E APPELLANT COMPANY. 26.1. IT WAS NOTED BY THE AO THAT THERE ARE TWO CARS REGISTERED IN THE NAME OF DIRECTOR SHRI DIPEN PATEL. THE CLAIM OF DE PRECIATION OF RS.1,91,409/- WAS DISALLOWED. WHEN THE MATTER WAS CARRIED BEFORE THE LD.CIT(A), THE ACTION OF THE AO WAS CONFIRMED MAINL Y ON THE GROUND THAT SINCE THE ASSET WAS NOT OWNED BY THE ASSESSEE-COMPA NY, THEREFORE NOT ENTITLED FOR DEPRECIATION. 26.2. NOW, BEFORE US AN ORDER OF ITAT AHMEDABAD IN THE CASE OF ITO VS. ELECTRO FERRO ALLOYS LTD. 13 ITR 594(TRIB.)[AH D] HAS BEEN CITED, WHEREIN THE TRIBUNAL HAS DECIDED THE ISSUE IN ASSES SEES FAVOUR. LIKEWISE, THE HONBLE GUJARAT HIGH COURT IN THE CAS E OF CIT VS. ARAVALI FINLEASE LTD. [2012]341 ITR 282 (GUJ.) WAS HELD THA T ALTHOUGH THE ITA NO S .1828,1787/AHD/10, 402,602/AHD/12, 1864,1785/AHD/10, 403 AND 404/AHD/12 SUGAM CONSTRUCTION PVT.LTD. ITO (CROSS-APPEALS) AYS 2001-02, 05-06,06-07,07-08 & 08-09 - 60 - VEHICLE WAS REGISTERED IN THE NAMES OF THE DIRECTOR S BUT IT WAS ASSET OF THE ASSESSEE, HENCE TRIBUNAL WAS RIGHT IN ALLOWING THE DEPRECIATION ON THE SAID VEHICLE. 26.3. REST OF THE GROUNDS ARE GENERAL IN NATURE NOT CONTESTED BEFORE US, HENCE NO ADJUDICATION IS REQUIRED. ( D ) REVENUES APPEAL, ITA NO.1788/AHD/2010 FO R A.Y. 2006-07: 27. THE REVENUE HAS ALSO CHALLENGED THE PART RELIEF GRANTED BY LD.CIT(A) IN RESPECT OF CLAIM OF DEDUCTION U/S.80IA . 27.1. WHILE DECIDING THE ASSESSEES APPEAL HEREINAB OVE FOR A.Y. 2006- 07, WE HAVE HELD THAT BARRING CIVIL WORK IN RESPECT OF MDL MUMBAI, THE ASSESSEE IS ENTITLED FOR CLAIM OF DEDUCTION U/S.80I A(4) IN RESPECT OF ALL THE INFRASTRUCTURE WORK EXECUTED DURING THE YEAR UNDER CONSIDERATION. IN THE RESULT, WE HEREBY HOLD THAT THE REVENUES GROUND IS ALSO PARTLY ALLOWED. (E) ASSESSEES APPEAL, ITA NO.403/AHD/2012 FOR A.Y. 2007-08: 28. THE ASSESSEE HAS RAISED THE ONLY GROUND IN RESP ECT OF REJECTION OF CLAIM OF DEDUCTION U/S.80IA. 28.1. WE HAVE PERUSED THE IMPUGNED ASSESSMENT ORDER AND THEREUPON NOTED THAT THE AO HAS MENTIONED 12 PROJECTS WHICH W ERE EXECUTED DURING THE YEAR. THE AO HAS NOT PIN-POINTED ANY PARTICULA R PROJECT FOR DISCARDING THE CLAIM BUT TAKEN AN OVERALL VIEW THAT ALL THE PROJECTS DID NOT QUALIFY FOR THE CLAIM OF DEDUCTION. ON THE OTHER H AND, WE HAVE NOTED , AS CULLED OUT FROM THE RECORDS, THAT THE PROJECTS ARE LIKE CONSTRUCTION OF ROAD, ITA NO S .1828,1787/AHD/10, 402,602/AHD/12, 1864,1785/AHD/10, 403 AND 404/AHD/12 SUGAM CONSTRUCTION PVT.LTD. ITO (CROSS-APPEALS) AYS 2001-02, 05-06,06-07,07-08 & 08-09 - 61 - UNDER-BRIDGE, AUDA AUTHORITY AHMEDABAD, CONSTRUCTIO N OF UNDER- BRIDGE GWR DIVISION AHMEDABAD, CONSTRUCTION OF BRID GE WESTERN RAILWAY DADAR MUMBAI, CONSTRUCTION OF WATER-WAY EAS T-COST RAILWAY VISAKHAPATANAM, CONSTRUCTION OF BRIDGE, WATER SUPPL Y PROJECT AHMEDABAD, CONSTRUCTION OF RCC BOX OF VARIOUS AUTHO RITIES OF RAILWAY MUMBAI, SPREADING OF CANAL OF SSSY PROJECT, ETC. S INCE THE REVENUE DEPARTMENT HAS NOT REFERRED ANY PARTICULAR PROJECT FOR THIS QUALIFICATION, HOWEVER ON THE OTHER HAND, WE HAVE EXAMINED THESE P ROJECTS HEREINABOVE, THEREFORE ON THE SAME LINES WE HEREBY HOLD THAT THE ASSESSEE IS ENTITLED FOR CLAIM OF DEDUCTION U/S.80IA IN RES PECT OF THESE PROJECTS FOR THE YEAR UNDER CONSIDERATION AS WELL. RESULTANTL Y, ASSESSEES GROUND AND APPEAL IS ALLOWED. [F] ASSESSEES APPEAL, ITA NO.404/AHD/2012 FOR A.Y . 2008-09 29. GROUNDS RAISED READ AS UNDER:- 1) THE ORDER PASSED BY THE LD.CIT(A) IS AGAINST LA W EQUITY AND JUSTICE AND SAME IS WHOLLY ILLEGAL, UNLAWFUL AND BA D IN LAW. 2) THE LD. CIT(A) HAS ERRED IN LAW AND/OR FACTS UPH OLDING THE ORDER OF THE LD.A.O. OF REJECTING OF DEDUCTION U/S.80IA OF THE ACT FOR ELIGIBLE PROJECTS OF INFRASTRUCTURE EXE CUTED BY THE APPELLANT. 3) THE LD.CIT(A) HAS ERRED IN LAW AND/OR FACTS UPHOLDI NG THE ORDER OF THE LD.A.O. OF MAKING DISALLOWANCE OF U/S. 40(A)(IA) OF THE ACT. ITA NO S .1828,1787/AHD/10, 402,602/AHD/12, 1864,1785/AHD/10, 403 AND 404/AHD/12 SUGAM CONSTRUCTION PVT.LTD. ITO (CROSS-APPEALS) AYS 2001-02, 05-06,06-07,07-08 & 08-09 - 62 - 29.1. APROPOS TO GROUND NO.2, LD.CIT(A) HAS NOTE D THE NATURE OF WORK WHICH WAS GRANTED BY THE ASSESSEE BY VARIOUS GOVERN MENT DEPARTMENTS. IN ALL 14 SUCH PROJECTS WERE UNDERTAKEN BY THE ASSE SSEE. THOSE PROJECTS WERE IN THE NATURE OF RAILWAY UNDER-BRIDGE, CONSTRU CTION OF ROAD, CONSTRUCTION OF SUJALAM SUFALAM SPREADING CANAL, C ONSTRUCTION OF ARCH BRIDGE ON DELHI-GHAZIABAD SECTION, CONSTRUCTION OF UNDER-BRIDGE ROAD AT AHMEDABAD SECTION, VADODARA SECTION, CONSTRUCTION O F WATER WAY, ETC. FROM THE SIDE OF THE REVENUE, IT WAS NOT ALLEGED TH AT ANY PARTICULAR PROJECT WAS NOT IN RESPECT OF DEVELOPMENT OF INFRAS TRUCTURE FACILITY. IT WAS ALSO NOT AN ALLEGATION OF THE REVENUE THAT FOR THE YEAR UNDER CONSIDERATION THE ASSESSEE HAS ENTERED INTO AN AGRE EMENT WITH A PRIVATE PARTY INSTEAD OF THE GOVERNMENT DEPARTMENTS. IN TH E ABSENCE OF ANY SUCH SPECIFIC ALLEGATION, WE ARE OF THE CONSCIENTIO US VIEW, IN THE LIGHT OF THE FOREGOING DISCUSSION, THAT FOR THE YEAR UNDER C ONSIDERATION THE PROJECTS IN QUESTION DO QUALIFY FOR THE CLAIM OF DE DUCTION U/S.80IA(4). RESULTANTLY, THE VIEW TAKEN BY THE REVENUE AUTHORIT IES IS HEREBY REVERSED AND THIS GROUND IS ALLOWED. 30. APROPOS TO GROUND NO.3, THE SAME IS NOT PRESSED BY LD.AR, HENCE DISMISSED BEING NOT PRESSED. 31. REST OF THE GROUNDS ARE GENERAL IN NATURE NOT C ONTESTED BEFORE US, HENCE NO ADJUDICATION IS REQUIRED. ASSESSEES A PPEAL FOR A.Y.2008-09 IS PARTLY ALLOWED. ITA NO S .1828,1787/AHD/10, 402,602/AHD/12, 1864,1785/AHD/10, 403 AND 404/AHD/12 SUGAM CONSTRUCTION PVT.LTD. ITO (CROSS-APPEALS) AYS 2001-02, 05-06,06-07,07-08 & 08-09 - 63 - 32. WE SUMMARIZE THE RESULT AS UNDER:- (1) ASSESSEES APPEAL, ITA NO.1828/AHD/2010 FOR A. Y.2001-02 IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES . (2) REVENUES APPEAL, ITA NO.1787/AHD/2010 FOR A.Y . 2001-02 IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES . (3) ASSESSEES APPEAL, ITA NO.402/AHD/2012 FOR A.Y.2005-06 IS PARTLY ALLOWED . (4) REVENUES APPEAL, ITA NO.602/AHD/2012 FOR A. Y. 2005-06 IS DISMISSED . (5) ASSESSEES APPEAL, ITA NO.1864/AHD/2010 FOR A. Y.2006-07 IS PARTLY ALLOWED . (6) REVENUES APPEAL, ITA NO.1788/AHD/2010 FOR A.Y . 2006-07 IS PARTLY ALLOWED . (7) ASSESSEES APPEAL, ITA NO.403/AHD/2012 FOR A. Y. 2007-08 IS ALLOWED . (8) ASSESSEES APPEAL, ITA NO.404/AHD/2012 FOR A. Y. 2008-09 IS PARTLY ALLOWED . SD/- SD/- ( ! '# ) ( ) $% ( ANIL CHATURVEDI ) ( MUKU L KR. SHRAWAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 21/ 12 /2012 ...!, .!../ T.C. NAIR, SR. PS $- ( 01 2$1, $- ( 01 2$1, $- ( 01 2$1, $- ( 01 2$1,/ COPY OF THE ORDER FORWARDED TO : 1. 34 / THE APPELLANT 2. 0534 / THE RESPONDENT. 3. 6 / CONCERNED CIT 4. 6() / THE CIT(A)-XIV, AHMEDABAD 5. 19: 0! , , / DR, ITAT, AHMEDABAD 6. : ;' / GUARD FILE. $-! $-! $-! $-! / BY ORDER, 51 0 //TRUE COPY// < <<