M/s Ayyappa Infra Projects Private Limited,(Formerly Ayyappa Constructions), Hyderabad V. Dy.CIT, Circle-1(1), Hyderabad

ITA 1832/HYD/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 69762 (ITAT-HYDERABAD)
• Duration Of Justice: 8 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 17-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R LAXMAN
• Assessee Lawyers: K C DEVADAS
• Keywords: Retrospective amendment

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND S MT.ASHA VIJAYARAGHAVAN , JUDICIAL MEMBE R ITA NO. 734 /HYD/201 0 : ASSESSMENT YEAR 200 8 - 0 9 ITA NO. 1832 /HYD/201 2 : ASSESSMENT YEAR 200 9 - 1 0 M/S.AYYAPPA INFRA PROJECTS P. LTD. (FORMERLY AYYAPPA CONSTRUCTIONS), SECUNDERABAD. (PAN AAFJA 6819 N) V/S DY. COMMISSIONER OF INCOME - TAX CIRCLE 11(1), HYDERABAD (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K.C.DEVADAS RESPONDENT BY : SHRI R.LAXMAN DATE OF HEARING 06.08.2013 DATE OF PRONOUNCEMENT 30.08.2013 O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER: TH E S E TWO APPEAL S FILED BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER S OF THE C IT (APPEALS) VI, HYDERABAD DATED 17.3.2010 FOR THE ASSESSMENT YEAR 2008 - 09 AND CIT(A) II HYDERABAD DATED 22.10.2012 FOR THE ASSESSMENT YEAR 2009 - 10 . SINCE COMMON GROUNDS ARE INVOLVED BOTH THESE APPEALS ARE BEING DISPOSED OF WITH THIS COMMON ORDER F OR THE SAKE OF CONVENIENCE. 2. THE ONLY EFFECTIVE GRIEVANCE OF THE ASSESSEE IN TH E S E APPEAL S RELATES TO DISALLOWANCE OF ITS CLAIM FOR DEDUCTION UNDER S.80IA OF THE ACT, BY THE ASSESSING OFFICER, WHICH HAS BEEN CONFIRMED BY THE CIT(A). 2 ITA NO. 734 /HYD/ 10 & ITA NO.1832/HYD/ 1 2 M/S.AYYAPPA INFRA PROJECTS P. LTD. (FORMERLY AYYAPPA CONSTRUCTIONS), SECU NDERABAD. 3. FACTS OF THE CASE IN BRIEF , WHICH ARE COMMON EXCEPT FOR THE AMOUNTS INVOLVED, AS TAKEN FROM THE APPEAL FOR THE ASSESSMENT YEAR 2008 - 09, ARE THAT THE ASSESSEE WAS DERIVING INCOME FROM THE BUSINESS OF CIVIL CONTRACTS. FOR THE ASSESSMENT YEAR 2008 - 09, THE ASSESSEE H AS FILED COMPANY FILED RETURN OF INCOME DECLARING NIL INCOME. ASSESSMENT WAS COMPLETED BY THE ASSESSING OFFICER D E TERMININ G THE TOTAL IN C OM E AT RS.4,05,69,245, INTER - ALIA REJECTING THE ASSESSEES CLAIM OF R S .2,98,76,544 UN D ER S.80IA OF THE ACT, AND BY ADDING DIFFERENTIAL AMOUNT OF RS .1,06,92,701, ESTIMATING THE IN C OM E O F TH E ASSESSEE AT 10% OF THE GROSS CONTRACT RECEIPTS. 3. ON APPEAL BEFORE THE CIT(A), THE ASSESSEE FIL E D WRITTEN SUBMISSIONS, CONTESTING THE DISALLOWANCE OF THE ASSESSEES CLAIM UNDE R S.80IA OF THE ACT. THE CIT(A) CALLED FOR A REMAND REPORT FROM THE ASSESSING OFFICER ON SUCH WRITTEN SUBMISSIONS OF THE ASSESSEE. HE THEREAFTER FORWARDED THE REMAND REPORT TO THE ASSESSEE FOR HIS COMMENTS. THE ASSESSEE FURNISHED FURTHER ELABORATE WRITT EN SUBMISSIONS IN RELATION TO THE OBSERVATIONS OF THE ASSESSING OFFICER IN THE REMAND REPORT. AFTER ELABORATE CONSIDERATION OF THE COMMENTS OF THE ASSESSING OFFICER IN THE REMAND REPORT AND FURTHER SUBMISSIONS OF THE ASSESSEE THEREON AND IN THE COURSE OF FURTHER APPELLATE PROCEEDINGS BEFORE HIM, THE CIT(A) AFTER ANALYZING THE CONDITIONS TO BE FULFILLED UNDER THE PROVISION OF S.80IA FOR AVAILING THE DEDUCTION IN RESPECT OF AN INFRASTRUCTURE FACILITY, OBSERVED THAT THE ASSESSEE SEEKING DEDUCTION UNDER S.80IA HAS GOT TO BE A DEVELOPER OF INFRASTRUCTURE FACILITY AND REQUIRED TO OPERATE THE DEVELOPED INFRASTRUCTURE FACILITY SO AS TO RECOVER THE COSTS INCURRED BY IT AND RECEIVE THE RETURNS FROM THE INFRASTRUCTURE FACILITY BEFORE TRANSFERRING THE SAME TO THE GOVE RNMENT. THE CIT(A), THEN REFERRED TO THE DECISION OF THE LARGER BENCH OF ITAT, MUMBAI IN THE 3 ITA NO. 734 /HYD/ 10 & ITA NO.1832/HYD/ 1 2 M/S.AYYAPPA INFRA PROJECTS P. LTD. (FORMERLY AYYAPPA CONSTRUCTIONS), SECU NDERABAD. CASE OF B.T. PATIL & SONS BELGAUM CONSTRUCTIONS PVT. LTD. V/S. ACIT (ITA NOS.1408 AND 1409/PN/2003) DATED 26 TH OCTOBER, 2009, EXTRACTING THE RELEVANT PORTION THE REOF IN EXTENSOR IN PARA 4.3 OF THE IMPUGNED ORDER, HELD THAT THE ASSESSEE IS ONLY ENGAGED IN THE CONSTRUCTION WORK OF INFRASTRUCTURE FACILITIES SET UP BY VARIOUS STATE GOVERNMENT AGENCIES AS A CONTRACTOR AND IS NOT FULFILLING THE CONDITIONS LAID DOWN IN S .80IA AND ACCORDINGLY IS NOT ENTITLED TO DEDUCTION UNDER S.80IA OF THE ACT. 4. FOR THE ASSESSMENT YEAR 2009 - 10, THE ASSESSING OFFICER FOLLOWING THE VIEW TAKEN BY HIM FOR THE ASSESSMENT YEAR 2008 - 09 DISALLOWED THE CLAIM OF THE ASSESSEE FOR DEDUCTION UNDER S.80IA, AND THE CIT(A) TOO, FOLLOWING THE VIEW TAKEN BY HIS PREDECESSOR FOR ASSESSMENT YEAR 2008 - 09, CONFIRMED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER. 5 . AGGRIEVED BY THE ORDER OF THE CIT(A), ASSESSEE PREFERRED TH E S E SECOND APPEAL S BEFORE US. 6 . THE LEARNED COUNSEL FOR THE ASSESSEE REITERATING THE CONTENTIONS URGED BEFORE HE LOWER AUTHORITI E S SUBMITTED THAT THE ASSESSEE IS CLEARLY ENTITLED FOR RELIEF UN D E R S.80IA OF THE AC T, AND THE R E VENU E AUTHORITIES ARE NOT JUSTIFIED IN DENYING THE CLAIM OF THE ASSESSEE. 7 . THE LEARNED DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND, STRONGLY SUPPORTED THE ORDERS OF THE REVENUE AUTHORITIES AND PLACED RELIANCE ON THE TRIBUNAL RELIED UPON THE DECISION OF TH E TRIBUNAL IN THE CASE OF OF B.T. PATIL & SONS BELGAUM CONSTRUCTIONS PVT. LTD., BELGAUM V/S. ACIT CIRCLE 2, KOLHAPUR(126 TTJ 577= 1 ITR 730)(TRIB)(MUM). 8 . WE HEARD BOTH SIDES AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND OTHER MATERIAL AVAILAB LE ON RECORD. WE FIND THAT THE ISSUE 4 ITA NO. 734 /HYD/ 10 & ITA NO.1832/HYD/ 1 2 M/S.AYYAPPA INFRA PROJECTS P. LTD. (FORMERLY AYYAPPA CONSTRUCTIONS), SECU NDERABAD. IN QUESTION RELATING TO ALLOWABILITY FOR DEDUCTION UNDER S.80IA OF THE ACT IN THE CASES OF ASSESSEES ENGAGED IN EXECUTING SIMILAR INFRASTRUCTURE PROJECTS IS COVERED BY VARIOUS DECISIONS OF THE TRIBUNAL. RELEVANT PORTI ON OF ONE SUCH DECISION IN THE CASE OF SUSHEE TECH INFRASTRUCTURE LTD. (ITA NO.414/HYD/2012 FOR ASSESSMENT YEAR 2008 - 09, THE TRIBUNAL VIDE ITS ORDER DATED 17.6.2013, HELD AS FOLLOWS - 3. AS FAR AS THE FIRST EFFECTIVE GRIEVANCE OF THE ASSESSEE IN THIS AP PEAL CONCERNING DISALLOWANCE OF DEDUCTION UNDER S.80IA IS CONCERNED, CONTAINED IN GROUND NO.2 ABOVE, WE FIND THAT SIMILAR ISSUE WAS CONSIDERED BY THIS TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2005 - 06 TO 2007 - 08 IN ITA NOS.269/HYD/2009, ITA NO.1165/HYD/2009 AND ITA NO.1171/HYD/2010 RESPECTIVELY VIDE ORDER DATED 16.3.2012. THE TRIBUNAL BY THE SAID ORDER HAS DECIDED THE ISSUE IN THE FOLLOWING MANNER - 31. FINDINGS: WE HAVE CONSIDERED THE ELABORATE SUBMISSIONS MADE BY BOTH THE PARTIES AND ALS O PERUSED THE MATERIALS AVAILABLE ON RECORD. WE HAVE ALSO GONE THROUGH ALL THE CASE LAWS CITED BY BOTH THE PARTIES. WE FIND THAT THE PROVISIONS OF SECTION 80IA (4) OF THE ACT WHEN INTRODUCED AFRESH BY THE FINANCE ACT, 1999, THE PROVISIONS UNDER SECTION 80I A (4A) OF THE ACT WERE DELETED FROM THE ACT. THE DEDUCTION AVAILABLE FOR ANY ENTERPRISE EARLIER UNDER SECTION 80IA (4A) ARE ALSO MADE AVAILABLE UNDER SECTION 80IA (4) ITSELF. FURTHER, THE VERY FACT THAT THE LEGISLATURE MENTIONED THE WORDS (I) 'DEVELOPING' OR (II) 'OPERATING AND MAINTAINING' OR (III) 'DEVELOPING, OPERATING AND MAINTAINING' CLEARLY INDICATES THAT ANY ENTERPRISE WHICH CARRIED ON ANY OF THESE THREE ACTIVITIES WOULD BECOME ELIGIBLE FOR DEDUCTION. THEREFORE, THERE IS NO AMBIGUITY IN THE INCOME - TA X ACT. WE FIND THAT WHERE AN ASSESSEE INCURRED EXPENDITURE FOR PURCHASE OF MATERIALS HIMSELF AND EXECUTES THE DEVELOPMENT WORK I.E., CARRIES OUT THE CIVIL CONSTRUCTION WORK, HE WILL BE ELIGIBLE FOR TAX BENEFIT UNDER SECTION 80 IA OF THE ACT. IN CONTRAST TO THIS, A ASSESSEE, WHO ENTERS INTO A CONTRACT WITH ANOTHER PERSON INCLUDING GOVERNMENT OR AN UNDERTAKING OR ENTERPRISE REFERRED TO IN SECTION 80 IA OF THE ACT, FOR EXECUTING WORKS CONTRACT, WILL NOT BE ELIGIBLE FOR THE TAX BENEFIT UNDER SECTION 80 IA OF TH E ACT. WE FIND THAT THE WORD 'OWNED' IN SUB - CLAUSE (A) OF CLAUSE (1) OF SUB SECTION (4) OF SECTION 80IA OF THE ACT REFER TO THE ENTERPRISE. BY READING OF THE SECTION, IT IS CLEARS THAT THE ENTERPRISES CARRYING ON DEVELOPMENT OF INFRASTRUCTURE DEVELOPMENT SHOULD BE OWNED BY THE COMPANY AND NOT THAT THE INFRASTRUCTURE FACILITY SHOULD BE OWNED BY A COMPANY. THE PROVISIONS ARE MADE APPLICABLE TO THE PERSON TO WHOM SUCH ENTERPRISE BELONGS TO IS EXPLAINED IN SUB - CLAUSE (A). THEREFORE, THE WORD 'OWNERSHIP' IS ATT RIBUTABLE ONLY TO THE ENTERPRISE CARRYING ON THE BUSINESS WHICH WOULD MEAN THAT ONLY COMPANIES ARE ELIGIBLE FOR DEDUCTION UNDER SECTION 80IA (4) AND NOT ANY OTHER PERSON LIKE INDIVIDUAL, HUF, FIRM ETC. 5 ITA NO. 734 /HYD/ 10 & ITA NO.1832/HYD/ 1 2 M/S.AYYAPPA INFRA PROJECTS P. LTD. (FORMERLY AYYAPPA CONSTRUCTIONS), SECU NDERABAD. 32. WE ALSO FIND THAT ACCORDING TO SUB - CLAUSE (A), CL AUSE (I) OF SUB SECTION (4) OF SECTION 80 - IA THE WORD 'IT' DENOTES THE ENTERPRISE CARRYING ON THE BUSINESS. THE WORD 'IT' CANNOT BE RELATED TO THE INFRASTRUCTURE FACILITY, PARTICULARLY IN VIEW OF THE FACT THAT INFRASTRUCTURE FACILITY INCLUDES RAIL SYSTEM, HIGHWAY PROJECT, WATER TREATMENT SYSTEM, IRRIGATION PROJECT, A PORT, AN AIRPORT OR AN INLAND PORT WHICH CANNOT BE OWNED BY ANY ONE. EVEN OTHERWISE, THE WORD 'IT' IS USED TO DENOTE AN ENTERPRISE. THEREFORE, THERE IS NO REQUIREMENT THAT THE ASSESSEE SHOULD H AVE BEEN THE OWNER OF THE INFRASTRUCTURE FACILITY. 33. THE NEXT QUESTION IS TO BE ANSWERED IS WHETHER THE ASSESSEE IS A DEVELOPER OR MERE WORKS CONTRACTOR. THE REVENUE RELIED ON THE AMENDMENTS BROUGHT IN BY THE FINANCE ACT 2007 AND 2009 TO MENTION THAT THE ACTIVITY UNDERTAKEN BY THE ASSESSEE IS AKIN TO WOR KS CONTRACT AND HE IS NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 80IA (4) OF THE ACT. WHETHER THE ASSESSEE IS A DEVELOPER OR WORKS CONTRACTOR IS PURELY DEPENDS ON THE NATURE OF THE WORK UNDERTAKEN BY THE ASSESSEE. EACH OF THE WORK UNDERTAKEN HAS TO BE ANALYZ ED AND A CONCLUSION HAS TO BE DRAWN ABOUT THE NATURE OF THE WORK UNDERTAKEN BY THE ASSESSEE. THE AGREEMENT ENTERED INTO WITH THE GOVERNMENT OR THE GOVERNMENT BODY MAY BE A MERE WORKS CONTRACT OR FOR DEVELOPMENT OF INFRASTRUCTURE. IT IS TO BE SEEN FROM THE AGREEMENTS ENTERED INTO BY THE ASSESSEE WITH THE GOVERNMENT. WE FIND THAT THE GOVERNMENT HANDED OVER THE POSSESSION OF THE PREMISES OF PROJECTS TO THE ASSESSEE FOR THE DEVELOPMENT OF INFRASTRUCTURE FACILITY. IT IS THE ASSESSEE'S RESPONSIBILITY TO DO ALL AC TS TILL THE POSSESSION OF PROPERTY IS HANDED OVER TO THE GOVERNMENT. THE FIRST PHASE IS TO TAKE OVER THE EXISTING PREMISES OF THE PROJECTS AND THEREAFTER DEVELOPING THE SAME INTO INFRASTRUCTURE FACILITY. SECONDLY, THE ASSESSEE SHALL FACILITATE THE PEOPLE T O USE THE AVAILABLE EXISTING FACILITY EVEN WHILE THE PROCESS OF DEVELOPMENT IS IN PROGRESS. ANY LOSS TO THE PUBLIC CAUSED IN THE PROCESS WOULD BE THE RESPONSIBILITY OF THE ASSESSEE. THE ASSESSEE HAS TO DEVELOP THE INFRASTRUCTURE FACILITY. IN THE PROCESS, A LL THE WORKS ARE TO BE EXECUTED BY THE ASSESSEE. IT MAY BE LAYING OF A DRAINAGE SYSTEM; MAY BE CONSTRUCTION OF A PROJECT; PROVISION OF WAY FOR THE CATTLE AND BULLOCK CARTS IN THE VILLAGE; PROVISION FOR TRAFFIC WITHOUT ANY HINDRANCE, THE ASSESSEE'S DUTY IS TO DEVELOP INFRASTRUCTURE WHETHER IT INVOLVES CONSTRUCTION OF A PARTICULAR ITEM AS AGREED TO IN THE AGREEMENT OR NOT. THE AGREEMENT IS NOT FOR A SPECIFIC WORK, IT IS FOR DEVELOPMENT OF FACILITY AS A WHOLE. THE ASSESSEE IS NOT ENTRUSTED WITH ANY SPECIFIC WO RK TO BE DONE BY THE ASSESSEE. THE MATERIAL REQUIRED IS TO BE BROUGHT IN BY THE ASSESSEE BY STICKING TO THE QUALITY AND QUANTITY IRRESPECTIVE OF THE COST OF SUCH MATERIAL. THE GOVERNMENT DOES NOT PROVIDE ANY MATERIAL TO THE ASSESSEE. IT PROVIDES THE WORKS IN PACKAGES AND NOT AS A WORKS CONTRACT. THE ASSESSEE UTILIZES ITS FUNDS, ITS EXPERTISE, ITS EMPLOYEES AND TAKES THE RESPONSIBILITY OF DEVELOPING THE INFRASTRUCTURE FACILITY. THE LOSSES SUFFERED EITHER BY THE GOVT. OR THE PEOPLE IN THE PROCESS OF SUCH DEVE LOPMENT WOULD BE THAT OF THE ASSESSEE. THE ASSESSEE HANDS OVER THE DEVELOPED INFRASTRUCTURE FACILITY TO THE GOVERNMENT ON COMPLETION OF THE DEVELOPMENT. THEREAFTER, THE ASSESSEE HAS TO UNDERTAKE MAINTENANCE OF THE SAID INFRASTRUCTURE FOR A PERIOD OF 12 TO 24 MONTHS. DURING THIS PERIOD, IF ANY DAMAGES ARE OCCURRED IT SHALL BE THE RESPONSIBILITY OF THE ASSESSEE. FURTHER, DURING THIS PERIOD, THE ENTIRE INFRASTRUCTURE SHALL HAVE TO BE MAINTAINED BY THE ASSESSEE ALONE WITHOUT HINDRANCE TO THE REGULAR TRAFFIC. TH EREFORE, IT IS CLEAR THAT FROM AN UN - DEVELOPED AREA, 6 ITA NO. 734 /HYD/ 10 & ITA NO.1832/HYD/ 1 2 M/S.AYYAPPA INFRA PROJECTS P. LTD. (FORMERLY AYYAPPA CONSTRUCTIONS), SECU NDERABAD. INFRASTRUCTURE IS DEVELOPED AND HANDED OVER TO THE GOVERNMENT AND AS EXPLAINED BY THE CBDT VIDE ITS CIRCULAR DATED 18 - 05 - 2010, SUCH ACTIVITY IS ELIGIBLE FOR DEDUCTION UNDER SECTION 80IA (4) OF THE ACT. T HIS CANNOT BE CONSIDERED AS A MERE WORKS CONTRACT BUT HAS TO BE CONSIDERED AS A DEVELOPMENT OF INFRASTRUCTURE FACILITY. THEREFORE, THE ASSESSEE IS A DEVELOPER AND NOT A WORKS CONTRACTOR AS PRESUMED BY THE REVENUE. THE CIRCULAR ISSUED BY THE BOARD, RELIED O N BY LEARNED COUNSEL FOR THE ASSESSEE, CLEARLY INDICATE THAT THE ASSESSEE IS ELIGIBLE FOR DEDUCTION UNDER SECTION 80IA (4) OF THE ACT. THE DEPARTMENT IS NOT CORRECT IN HOLDING THAT THE ASSESSEE IS A MERE CONTRACTOR OF THE WORK AND NOT A DEVELOPER. 34. WE ALSO FIND THAT AS PER THE PROVISIONS OF THE SECTION 80IA OF THE ACT, A PERSON BEING A COMPANY HAS TO ENTER INTO AN AGREEMENT WITH THE GOVERNMENT OR GOVERNMENT UNDERTAKINGS. SUCH AN AGREEMENT IS A CONTRACT AND FOR THE PURPOSE OF THE AGREEMENT A PERSON MAY B E CALLED AS A CONTRACTOR AS HE ENTERED INTO A CONTRACT. BUT THE WORD 'CONTRACTOR' IS USED TO DENOTE A PERSON ENTERING INTO AN AGREEMENT FOR UNDERTAKING THE DEVELOPMENT OF INFRASTRUCTURE FACILITY. EVERY AGREEMENT ENTERED INTO IS A CONTRACT. THE WORD 'CONTRA CTOR' IS USED TO DENOTE THE PERSON WHO ENTERS INTO SUCH CONTRACT. EVEN A PERSON WHO ENTERS INTO A CONTRACT FOR DEVELOPMENT OF INFRASTRUCTURE FACILITY IS A CONTRACTOR. THEREFORE, THE CONTRACTOR AND THE DEVELOPER CANNOT BE VIEWED DIFFERENTLY. EVERY CONTRACTO R MAY NOT BE A DEVELOPER BUT EVERY DEVELOPER DEVELOPING INFRASTRUCTURE FACILITY ON BEHALF OF THE GOVERNMENT IS A CONTRACTOR. 35. WE FIND THAT THE DECISION RELIED ON BY THE LEARNED COUNSEL FOR THE ASSESSEE IN THE CASE OF CIT VS. LAXMI CIVIL ENGINEERING WOR KS [SUPRA] SQUARELY APPLICABLE TO THE ISSUE UNDER DISPUTE WHICH IS IN FAVOUR OF THE ASSESSEE WHEREIN IT WAS HELD THAT MERE DEVELOPMENT OF A INFRASTRUCTURE FACILITY IS AN ELIGIBLE ACTIVITY FOR CLAIMING DEDUCTION UNDER SECTION 80IA OF THE ACT AFTER CONSIDERI NG THE JUDGEMENT OF THE MUMBAI HIGH COURT IN THE CASE OF ABG HEAVY ENGINEERING [SUPRA]. THE CASE OF ABG IS NOT THE PURE DEVELOPER WHEREAS, IN THE PRESENT CASE, THE ASSESSEE IS THE PURE DEVELOPER. WE ALSO FIND THAT SECTION 80IA OF THE ACT, INTENDED TO COVER THE ENTITIES CARRYING OUT DEVELOPING, OPERATING AND MAINTAINING THE INFRASTRUCTURE FACILITY KEEPING IN MIND THE PRESENT BUSINESS MODELS AND INTEND TO GRANT THE INCENTIVES TO SUCH ENTITIES. THE CBDT, ON SEVERAL OCCASIONS, CLARIFIED THAT PURE DEVELOPER SHOU LD ALSO BE ELIGIBLE TO CLAIM DEDUCTION UNDER SECTION 80IA OF THE ACT, WHICH ULTIMATELY CULMINATED INTO AMENDMENT UNDER SECTION 80IA OF THE ACT, IN THE FINANCE ACT 2001, TO GIVE EFFECT TO THE AFORESAID CIRCULARS ISSUED BY THE CBDT. WE ALSO FIND THAT, TO AVO ID MISUSE OF THE AFORESAID AMENDMENT, AN EXPLANATION WAS INSERTED IN SECTION 80IA OF THE ACT, IN THE FINANCE ACT - 2007 AND 2009, TO CLARIFY THAT MERE WORKS CONTRACT WOULD NOT BE ELIGIBLE FOR DEDUCTIONS UNDER SECTION 80IA OF THE ACT. BUT, CERTAINLY, THE EXPL ANATION CANNOT BE READ TO DO AWAY WITH THE ELIGIBILITY OF THE DEVELOPER; OTHERWISE, THE PARLIAMENT WOULD HAVE SIMPLY REVERSED THE AMENDMENT MADE IN THE FINANCE ACT, 2001. THUS, THE AFORESAID EXPLANATION WAS INSERTED, CERTAINLY, TO DENY THE TAX HOLIDAY TO T HE ENTITIES WHO DOES ONLY MERE WORKS CONTACT OR SUB - CONTRACT AS DISTINCT FROM THE DEVELOPER. THIS IS CLEAR FROM THE EXPRESS INTENSION OF THE PARLIAMENT WHILE INTRODUCING THE EXPLANATION. THE EXPLANATORY MEMORANDUM TO FINANCE ACT 2007 STATES THAT THE PURPOS E OF THE TAX BENEFIT HAS ALL ALONG BEEN TO ENCOURAGE 7 ITA NO. 734 /HYD/ 10 & ITA NO.1832/HYD/ 1 2 M/S.AYYAPPA INFRA PROJECTS P. LTD. (FORMERLY AYYAPPA CONSTRUCTIONS), SECU NDERABAD. INVESTMENT IN DEVELOPMENT OF INFRASTRUCTURE SECTOR AND NOT FOR THE PERSONS WHO MERELY EXECUTE THE CIVIL CONSTRUCTION WORK. IT CATEGORICALLY STATES THAT THE DEDUCTION UNDER SECTION 80IA OF THE ACT IS AVAI LABLE TO DEVELOPERS WHO UNDERTAKES ENTREPRENEURIAL AND INVESTMENT RISK AND NOT FOR THE CONTRACTORS, WHO UNDERTAKES ONLY BUSINESS RISK. WITHOUT ANY DOUBT, THE LEARNED COUNSEL FOR THE ASSESSEE CLEARLY DEMONSTRATED BEFORE US THAT THE ASSESSEE AT PRESENT HAS U NDERTAKEN HUGE RISKS IN TERMS OF DEPLOYMENT OF TECHNICAL PERSONNEL, PLANT AND MACHINERY, TECHNICAL KNOW - HOW, EXPERTISE AND FINANCIAL RESOURCES. FURTHER, THE ORDER OF TRIBUNAL IN THE CASE OF B.T.PATIL CITED SUPRA IS PRIOR TO AMENDMENT TO SEC 80IA(4), AFTER THE AMENDMENT THE SECTION 80IA(4) READ AS (I) DEVELOPING OR (II) OPERATING AND MAINTAINING OR (III) DEVELOPING, OPERATING AND MAINTAINING ANY INFRASTRUCTURE FACILITY, PRIOR TO AMENDMENT THE 'OR' BETWEEN THREE ACTIVITIES WAS NOT THERE, AFTER THE AMENDMENT ' OR' HAS BEEN INSERTED W.E.F. 1 - 4 - 2002 BY FINANCE ACT 2001. THEREFORE, IN OUR CONSIDERED VIEW, THE ASSESSEE SHOULD NOT BE DENIED THE DEDUCTION UNDER SECTION 80IA OF THE ACT AS THE CONTRACTS INVOLVES, DEVELOPMENT, OPERATING, MAINTENANCE, FINANCIAL INVOLVEMEN T, AND DEFECT CORRECTION AND LIABILITY PERIOD, THEN SUCH CONTRACTS CANNOT BE CALLED AS SIMPLE WORKS CONTRACT. IN OUR OPINION THE CONTRACTS WHICH CONTAIN ABOVE FEATURES TO BE SEGREGATED AND ON THIS DEDUCTION U/S. 80 - IA HAS TO BE GRANTED AND THE OTHER AGREEM ENTS WHICH ARE PURE WORKS CONTRACTS HIT BY THE EXPLANATION SECTION 80IA(13), THOSE WORK ARE NOT ENTITLE FOR DEDUCTION U/S 80IA OF THE ACT. THE PROFIT FROM SUCH CONTRACTS WHICH INVOLVES DEVELOPMENT, OPERATING, MAINTENANCE, FINANCIAL INVOLVEMENT, AND DEFECT CORRECTION AND LIABILITY PERIOD IS TO BE COMPUTED BY ASSESSING OFFICER ON PRO - RATA BASIS OF TURNOVER. THE ASSESSING OFFICER IS DIRECTED TO EXAMINE AND GRANT DEDUCTION ON ELIGIBLE TURNOVER AS DIRECTED ABOVE. IT IS NEEDLESS TO SAY THAT IN SIMILAR CIRCUMSTANC ES, SIMILAR VIEW HAS BEEN TAKEN BY THE CHENNAI BENCH OF THE TRIBUNAL AND DEDUCTION U/S. 80IA WAS GRANTED IN THE CASE OF M/S. CHETTINAD LIGNITE TRANSPORT SERVICES (P) LTD., IN ITA NO. 2287/MDS/06 ORDER DATED 27TH JULY, 2007 FOR THE ASSESSMENT YEAR 2004 - 05. LATER IN ITA NO. 1179/MDS/08 VIDE ORDER DATED 26TH FEBRUARY, 2010 THE TRIBUNAL HAS TAKEN THE SAME VIEW BY INTER - ALIA HOLDING AS FOLLOWS: '7. MOREOVER, THE REASONS FOR INTRODUCING THE EXPLANATION WERE CLARIFIED AS PROVIDING A TAX BENEFIT BECAUSE MODERNISAT ION REQUIRES A MASSIVE EXPANSION AND QUALITATIVE IMPROVEMENT IN INFRASTRUCTURES LIKE EXPRESSWAYS, HIGHWAYS, AIRPORTS, PORTS AND RAPID URBAN RAIL TRANSPORT SYSTEMS. FOR THAT PURPOSE, PRIVATE SECTOR PARTICIPATION BY WAY OF INVESTMENT IN DEVELOPMENT OF THE IN FRASTRUCTURE SECTOR AND NOT FOR THE PERSONS WHO MERELY EXECUTE THE CIVIL CONSTRUCTION WORK OR ANY OTHER WORK CONTRACT HAS BEEN ENCOURAGED BY GIVING TAX BENEFITS. THUS THE PROVISIONS OF SECTION 80IA SHALL NOT APPLY TO A PERSON WHO EXECUTES A WORKS CONTRACT ENTERED INTO WITH THE UNDERTAKING OR ENTERPRISE REFERRED TO IN THE SECTION BUT WHERE A PERSON MAKES THE INVESTMENT AND HIMSELF EXECUTES THE DEVELOPMENT WORK, HE CARRIES OUT THE CIVIL CONSTRUCTION WORK, HE WILL BE ELIGIBLE FOR THE TAX BENEFIT UNDER SECTION 80IA.' 36. THE ABOVE ORDER WAS FOLLOWED IN SUBSEQUENT ASSESSMENT YEARS 2007 - 2008 & 2008 - 09 IN ITA NOS. 1312 & 1313/MDS/2011 VIDE ORDER DATED 18.11.2011 IN THE CASE OF THE SAME ASSESSEE. FURTHER, IN SIMILAR 8 ITA NO. 734 /HYD/ 10 & ITA NO.1832/HYD/ 1 2 M/S.AYYAPPA INFRA PROJECTS P. LTD. (FORMERLY AYYAPPA CONSTRUCTIONS), SECU NDERABAD. CIRCUMSTANCES, THIS TRIBUNAL IN THE CASE OF M/S. GVPR ENGINEERS LTD. HYDERABAD IN ITA NO. 347/H/08 & OTHERS VIDE ORDER DATED 29TH FEBRUARY 2012 HAS TAKEN SIMILAR VIEW AND GRANTED DEDUCTION UNDER SECTION 80IA OF THE ACT. 37. FURTHER, WE MAKE IT CLEAR THAT WHERE THE ASSESSEE HAS CARRIED OUT THE DEVELOPMEN T OF INFRASTRUCTURE WORK IN CONSORTIUM AND NOT AS A SUB - CONTRACTOR, THEN ALSO THE ASSESSEE IS ENTITLED FOR DEDUCTION U/S 80IA OF THE ACT. THE SAME IS APPLICABLE IN CASE OF WORK ALLOTTED BY GOVERNMENT CORPORATION/GOVERNMENT BODIES. 38. FURTHER IN THE CASE OF R.R. CONSTRUCTIONS, THE CHENNAI BENCH OF THE TRIBUNAL IN ITS ORDER DATED 3.10.2011 IN I.T.A. NO. 2061/MDS/2010 FOR ASSESSMENT YEAR 2007 - 08 HELD AS FOLLOWS: '3. WE HAVE HEARD RIVAL SUBMISSIONS AND HAVE CAREFULLY PERUSED THE ENTIRE RECORD. THE FIRST ISS UE OF THE APPEAL IS REGARDING CLAIM OF DEDUCTION UNDER SECTION 80IA(4) OF THE ACT. THE CASE OF THE REVENUE IS THAT THE ASSESSEE IS A 'WORKS CONTRACTOR' AND NOT A 'DEVELOPER' AS STIPULATED UNDER SECTION 80IA(4) OF THE ACT. THE SECTION 80IA(4) APPLIES TO ANY ENTERPRISE, WHICH CARRIES ON THE BUSINESS OF (I) DEVELOPING OR (II) OPERATING AND MAINTAINING OR (III) DEVELOPING, OPERATING AND MAINTAINING ANY INFRASTRUCTURE FACILITIES, WHICH FULFIL ALL THE ABOVE CONDITIONS. THERE CANNOT BE ANY QUESTION OF PROVIDING A CONDITION FOR SUCH AN ENTERPRISE TO START OPERATING AND MAINTAINING THE INFRASTRUCTURE FACILITY ON OR AFTER 01.04.1995. FROM THE ASSESSMENT YEAR 2000 - 01, DEDUCTION IS AVAILABLE IF THE ASSESSEE IS CARRYING OUT THE BUSINESS OF ANY ONE OF THE ABOVE MENTIONED THREE TYPES OF ACTIVITIES. WHEN AN ASSESSEE IS ONLY DEVELOPING AN INFRASTRUCTURE FACILITY PROJECT AND IS NOT MAINTAINING NOR OPERATING IT, OBVIOUSLY SUCH AN ASSESSEE WILL BE PAID FOR THE COST INCURRED BY IT; OTHERWISE, HOW WILL THE PERSON, WHO DEVELOPS THE INFRASTRUCTURE FACILITY PROJECT, REALIZE ITS COST? IF THE INFRASTRUCTURE FACILITY, JUST AFTER ITS DEVELOPMENT, IS TRANSFERRED TO THE GOVERNMENT, NATURALLY THE COST WOULD BE PAID BY THE GOVERNMENT. THEREFORE, MERELY BECAUSE THE TRANSFEREE HAD PAID FOR THE DEVELOPMENT OF INFRASTRUCTURE FACILITY CARRIED OUT BY THE ASSESSEE, IT CANNOT BE SAID THAT THE ASSESSEE DID NOT DEVELOP THE INFRASTRUCTURE FACILITY. IF THE INTERPRETATION DONE BY THE ASSESSING OFFICER IS ACCEPTED, NO ENTERPRISE CARRYING ON THE BUSINESS OF ONLY DEVELOPING HE INFRASTRUCTURE FACILITY WOULD BE ENTITLED TO DEDUCTION UNDER SECTION 80IA(4), WHICH IS NOT THE INTENTION OF THE LAW. AN ENTERPRISE, WHO DEVELOP THE INFRASTRUCTURE FACILITY IS NOT PAID BY THE GOVERNMENT, THE ENTIRE COST OF DEVELOPMENT WOU LD BE A LOSS IN THE HANDS OF THE DEVELOPER AS HE IS NOT OPERATING THE INFRASTRUCTURE FACILITY. THE LEGISLATURE HAS PROVIDED THAT THE INCOME OF THE DEVELOPER OF THE INFRASTRUCTURE PROJECT WOULD BE ELIGIBLE FOR DEDUCTION, IT PRESUPPOSES THAT THERE CAN BE INC OME TO DEVELOPER I.E. TO THE PERSON WHO IS CARRYING ON THE ACTIVITY OF ONLY DEVELOPMENT INFRASTRUCTURE FACILITY. OSTENSIBLY, A DEVELOPER WOULD HAVE INCOME ONLY IF HE IS PAID FOR THE DEVELOPMENT OF INFRASTRUCTURE FACILITY, FOR THE SIMPLE REASON THAT HE IS N OT HAVING THE RIGHT/AUTHORIZATION TO OPERATE THE INFRASTRUCTURE FACILITY AND TO 9 ITA NO. 734 /HYD/ 10 & ITA NO.1832/HYD/ 1 2 M/S.AYYAPPA INFRA PROJECTS P. LTD. (FORMERLY AYYAPPA CONSTRUCTIONS), SECU NDERABAD. COLLECT TOLL THERE FROM, HAS NO OTHER SOURCE OF RECOUPMENT OF HIS COST OF DEVELOPMENT. WHILE FILING THE RETURN, THE ASSESSEE HAD MADE CLAIM UNDER SECTION 80IA(4) OF THE ACT. 4 . THE ASSESSEE HAS ALSO PRODUCED ALL SIX AGREEMENTS REGARDING SIX PROJECTS UNDERTAKEN BEFORE THE ASSESSING OFFICER, WHOSE COPIES ARE AVAILABLE BEFORE US ALSO. IT IS A FACT THAT EVEN AFTER TAKING A CONTRACT FROM THE GOVERNMENT, IF THE ASSESSEE DEVELOPS INFR ASTRUCTURE FACILITIES, IT WOULD BE REGARDED AS A 'DEVELOPER' AND NOT AS A 'WORKS CONTRACTOR'. THE ASSESSEE FIRM HAS CARRIED ON ENTIRE CONSTRUCTION/DEVELOPMENT OF THE INFRASTRUCTURE FACILITIES AND SATISFY ALL THE CONDITIONS OF SECTION 80IA(4)(I)(A). IT IS U NDENIABLE FACT THAT THE ASSESSEE HAS TAKEN DEVELOPMENT OF INFRASTRUCTURE FACILITY AGREEMENT FROM THE STATE GOVERNMENT/LOCAL AUTHORITY. A CONTRACTOR WHO DEVELOPS THE INFRASTRUCTURE FACILITY BECOMES A DEVELOPER TO CLAIM EXEMPTION UNDER SECTION 80IA(4). THE H ON'BLE BOMBAY BENCH OF ITAT WHILE DECIDING THE CASE OF PATEL ENGINEERING LTD. VS. DCIT IN ITA NO.1221/MUM/2004 HAS GONE TO THE EXTENT OF HOLDING THAT THE ASSESSEE, A CIVIL CONTRACTOR, HAVING EXECUTED A PART OF CONTRACTS OF IRRIGATION AND WATER SUPPLY ON 'B UILD AND TRANSFER' BASIS AND HANDED OVER THEM TO CONTRACTEE GOVERNMENTS, WAS ELIGIBLE FOR DEDUCTION UNDER SECTION 80IA(4). 5. WE HAVE ALSO TAKEN A SIMILAR VIEW IN ITA NO. 554/MEDS/2010 IN THE CASE OF EAST COAST CONSTRUCTIONS & INDUSTRIES LTD V. DCIT VIDE ORDER DATED 13.09.2011 AND RELEVANT PARAS FROM 9 TO 14 ARE REPRODUCED HEREUNDER: '9. AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE CAN SAFELY SAY THAT THE BENEFIT OF SECTION 80IA IS AVAILABLE ONLY TO A 'DEVELOPER' WHO CARRIES ON BUSINESS OF 'DEVELOPING OF I NFRASTRUCTURE FACILITY'. A PERSON WHO ENTERS INTO CONTRACT WITH ANOTHER PERSON FOR EXECUTING 'WORKS CONTRACTS' IS NOT ELIGIBLE FOR SUCH A BENEFIT. EXPLANATION TO SECTION 80IA WAS INSERTED BY FINANCE ACT, 2007 WITH RETROSPECTIVE EFFECT FROM 1.4.2000 WHICH H AS FURTHER BEEN AMENDED BY FINANCE (NO. 2) ACT, 2009 WITH RETROSPECTIVE EFFECT FROM 1.4.2000. THE AMENDMENT IN THIS EXPLANATION WAS NECESSITATED DUE TO CONTRARY JUDICIAL DECISION ON THIS ISSUE. THUS, WE CAN UNEQUIVOCALLY NOW SAY THAT ANY UNDERTAKING OR ENT ERPRISE WHICH EXECUTES THE INFRASTRUCTURE DEVELOPMENT PROJECT, AS REFERRED TO IN SUB - SECTION(4) AS A WORKS CONTRACT AWARDED BY ANY PERSON INCLUDING THE CENTRAL OR STATE GOVERNMENT, IS NOT ELIGIBLE FOR TAX BENEFIT U/S 80IA(4). HAVING SAID THAT, NOW WE EXAMI NE THE FACTS OF THIS CASE. THE ASSESSEE - COMPANY WAS GIVEN THIS BENEFIT IN ASSESSMENT YEAR 2003 - 04 BY THE DEPARTMENT ON IDENTICAL FACTS AFTER CONSIDERING THE EXPLANATION AND AMENDMENT THERETO. TO TRACE THE HISTORY OF THIS DEDUCTION, WE FIND THAT ORIGINALLY, IN THE PROVISION OF SECTION 80IA, THERE WAS NO MENTION OF ANY DEVELOPMENT OF 'INFRASTRUCTURE FACILITY'. IT IS ONLY WITH EFFECT FROM 1.4.2000, THIS SECTION WAS DIVIDED INTO TWO PORTIONS 80IA AND 80IB. SECTION 80IA(4) PRESCRIBES ABOUT THE DEDUCTION AVAILABL E TO A DEVELOPER WHO DEVELOPS INFRASTRUCTURE FACILITIES. IN VIEW 10 ITA NO. 734 /HYD/ 10 & ITA NO.1832/HYD/ 1 2 M/S.AYYAPPA INFRA PROJECTS P. LTD. (FORMERLY AYYAPPA CONSTRUCTIONS), SECU NDERABAD. OF THE AMENDMENT INSERTED BY THE FINANCE ACT, 2007, WITH RETROSPECTIVE EFFECT FROM 1.4.2000, THE DEDUCTION U/S 80IA IS AVAILABLE TO THOSE ASSESSEES WHO ARE 'INVESTING AND DEVELOPING INFRASTRU CTURE FACILITY' AND NOT TO PERSONS WHO SIMPLY EXECUTES 'WORKS - CONTRACTS'. EXPLANATION IN QUESTION, AS IT STANDS TODAY, READS AS UNDER: 'EXPLANATION - FOR THE REMOVAL OF DOUBTS, IT IS HEREBY DECLARED THAT NOTHING CONTAINED IN THIS SECTION(I.E. 80IA) SHALL APPLY TO A PERSON WHO EXECUTES A WORKS CONTRACT ENTERED INTO WITH THE UNDERTAKING OR ENTERPRISE, AS THE CASE MAY BE.' IN CONTRAST TO THIS, A PERSON WHO ENTERS INTO A CONTRACT WITH ANOTHER PERSON (I.E., UNDERTAKING OR ENTERPRISE REFERRED TO IN SECTION 80 - IA) FOR EXECUTING WORKS CONTRACT, WILL NOT BE ELIGIBLE FOR TAX BENEFIT UNDER SECTION 80 - IA. 10. WE HAVE FOUND THAT THE ASSESSEE - COMPANY IS A WORKS CONTRACTOR, WHO HAS ENTERED INTO AGREEMENT WITH THE LOCAL BODIES TO EXECUTE CERTAIN PART OF THE WORK AWARDE D TO IT THROUGH CONTRACT FOR INFRASTRUCTURE FACILITY. IT IS TRUE THAT WHERE A PERSON WHO MAKES INFRASTRUCTURE AND HIMSELF EXECUTES DEVELOPMENT WORK AND CARRIES OUT CIVIL WORK WILL BE ELIGIBLE FOR TAX BENEFIT U/S 80IA OF THE ACT. IN CONTRAST TO THIS, A PERS ON WHO ENTERS INTO A CONTRACT WITH ANOTHER PERSON FOR EXECUTING WORKS CONTRACT, WILL NOT BE ELIGIBLE FOR TAX BENEFIT U/S 80IA. IT WAS CLARIFIED BY THE CIRCULAR NO. 3 OF 2008 DATED 12.3.2008 THAT THE PROVISIONS OF SECTION 80IA SHALL NOT APPLY TO A PERSON WH O EXECUTES ONLY WORK CONTRACTS AND ONLY THOSE WHO MAKE THE DEVELOPMENT WORK WILL BE ELIGIBLE FOR TAX BENEFIT U/S 80IA OF THE ACT. BE THAT AS IT MAY, WHEN WE APPLY THIS PROVISION IN ITS LETTERS AND SPIRIT, WE FIND THAT THIS ASSESSEE IS VERILY ELIGIBLE FOR D EDUCTION U/S 80IA, AS THE ASSESSEE - COMPANY FULFILS ALL THE RELEVANT CONDITIONS. THE FACTS OF THIS CASE GO TO PROVE THAT THE ASSESSEE IS A 'DEVELOPER' OF INFRASTRUCTURE FACILITIES. THE REASONS FOR OUR ABOVE CONCLUSION ARE GIVEN IN THE FOLLOWING PARAS. FIRST LY, THE ASSESSEE - COMPANY NOT ONLY DESIGNS BUT ALSO CREATES NEW PRODUCTS. THE ASSESSEE HAD UNDERTAKEN FOUR PROJECTS DURING THE RELEVANT YEAR AND EXECUTED, CONSTRUCTED, DELIVERED AND MAINTAINED BY IT. AS PER THE DEFINITION OF ADVANCED LAW LEXICON [PLACED AT PAGE 533 OF THE PAPER BOOK] 'DEVELOPER' MEANS - A PERSON ENGAGED IN DEVELOPMENT OR OPERATION OR MAINTENANCE OF SPECIAL ECONOMIC ZONE, AND ALSO INCLUDES ANY PERSON AUTHORIZED FOR SUCH PURPOSE BY ANY SUCH DEVELOPER. THE 'WORKS CONTRACT' MEANS AN AGREEMENT IN WRITING FOR THE EXECUTION OF ANY WORK RELATING TO CONSTRUCTION, REPAIR, OR MAINTENANCE OF ANY BUILDING OR SUPERSTRUCTURE, DAM, WEIR, CANAL, RESERVOIR, TANK, LAKE, ROAD, WELL, BRIDGE, CULVERT, FACTORY, WORKSHOP, POWERHOUSE, TRANSFORMERS OR SUCH OTHER WORKS OF THE STATE GOVERNMENT OR PUBLIC UNDERTAKINGS AS THE STATE 11 ITA NO. 734 /HYD/ 10 & ITA NO.1832/HYD/ 1 2 M/S.AYYAPPA INFRA PROJECTS P. LTD. (FORMERLY AYYAPPA CONSTRUCTIONS), SECU NDERABAD. GOVERNMENT MAY BE BY NOTIFICATION, SPECIFY IN THIS BEHALF AT ANY OF ITS STAGES ENTERED INTO BY THE STATE GOVERNMENT OR BY AN OFFICIAL OF THE STATE GOVERNMENT OR PUBLIC UNDERTAKING AND INCLUDES AN AGREEMENT FOR THE SUPPLY OF GOODS OR MATERIAL AND ALL OTHER MATTERS RELATING TO EXECUTION OF ANY OF THE SAID WORKS. THE CASE OF ACIT VS INDWELL LIANINGS PVT. LTD (SUPRA), ON WHICH THE ASSESSING OFFICER HAS PLACED RELIANCE IS ALSO RELEVANT AND WE EXTRACT C ERTAIN RELEVANT PORTION OF THIS DECISION FOR READY REFERENCE: VIDE FINANCE ACT, 2007, AN EXPLANATION WAS INSERTED WITH RETROSPECTIVE EFFECT FROM APRIL, 2000 AFTER SUB - SECTION (13) OF SECTION 80 - IA, WHICH READS AS UNDER : 'FOR THE REMOVAL OF DOUBTS, IT I S HEREBY DECLARED THAT NOTHING CONTAINED IN THIS SECTION SHALL APPLY TO A PERSON WHO EXECUTES A WORKS CONTRACT ENTERED INTO WITH THE UNDERTAKING OR ENTERPRISE, AS THE CASE MAY BE.' ACCORDING TO ATTORNEY'S POCKET DICTIONARY, IN RELATION TO A CORPORATION OR BUSINESS, THE TERM 'UNDERTAKING' DENOTES ITS WHOLE ENTERPRISE AND THE WORD 'ENTERPRISE' CONNOTES ALL THE RELATED ACTIVITIES PERFORMED EITHER THROUGH UNIFIED OPERATION OR COMMON CONTROL BY ANY PERSON OR PERSONS FOR A COMMON BUSINESS PURPOSE. THE MENS LEGI S WITH REFERENCE TO DEVELOPER OF INFRASTRUCTURE FACILITY CAN BE GATHERED FROM THE MEMORANDUM EXPLAINING THE PROVISIONS IN THE FINANCE BILL, 2007, REPORTED IN [2007] 289 ITR (ST.) 292 AT PAGE 312, WHICH READS AS UNDER : 'SECTION 80 - IA, INTER ALIA, PROVIDES FOR A TEN - YEAR TAX BENEFIT TO AN ENTERPRISE OR AN UNDERTAKING ENGAGED IN DEVELOPMENT OF INFRASTRUCTURE FACILITIES, INDUSTRIAL PARKS AND SPECIAL ECONOMIC ZONES. THE TAX BENEFIT WAS INTRODUCED FOR THE REASON THAT INDUSTRIAL MODERNIZATION REQUIRES A PASSIVE EXPANSION OF, AND QUALITATIVE IMPROVEMENT IN, INFRASTRUCTURE (VIZ., EXPRESSWAYS, HIGHWAYS, AIRPORTS, PORTS AND RAPID URBAN RAIL TRANSPORT SYSTEMS) WHICH WAS LACKING IN OUR COUNTRY. THE PURPOSE OF THE TAX BENEFIT HAS ALL ALONG BEEN FOR ENCOURAGING PRIVATE SECTOR PARTICIPATION BY WAY OF INVESTMENT IN DEVELOPMENT OF THE INFRASTRUCTURE SECTOR AND NOT FOR THE PERSONS WHO MERELY EXECUTE THE CIVIL CONSTRUCTION WORK OR ANY OTHER WORKS CONTRACT. ACCORDINGLY, IT IS PROPOSED TO CLARIFY THAT THE PROVISIONS OF SECTION 80 - IA SHALL NOT APPLY TO A PERSON WHO EXECUTES A WORKS CONTRACT ENTERED INTO WITH THE UNDERTAKING OR ENTERPRISE REFERRED TO IN THE SAID SECTION. THUS, IN A CASE WHERE A PERSON MAKES THE INVESTMENT AND HIMSELF EXECUTES 12 ITA NO. 734 /HYD/ 10 & ITA NO.1832/HYD/ 1 2 M/S.AYYAPPA INFRA PROJECTS P. LTD. (FORMERLY AYYAPPA CONSTRUCTIONS), SECU NDERABAD. THE DEVELOPMENT WORK, I.E., CARRIES OUT THE CIVIL CONSTRUCTION WORK, HE WILL BE ELIGIBLE FOR TAX BENEFIT UNDER SECTION 80 - LA. IN CONTRAST TO THIS, A PERSON WHO ENTERS INTO A CONTRACT WITH ANOTHER PERSON (I.E., UNDERTAKING O R ENTERPRISE REFERRED TO IN SECTION 80 - IA) FOR EXECUTING WORKS CONTRACT, WILL NOT BE ELIGIBLE FOR TAX BENEFIT UNDER SECTION 80 - IA. THIS AMENDMENT WILL TAKE RETROSPECTIVE EFFECT FROM APRIL I, 2000 AND WILL ACCORDINGLY APPLY IN RELATION TO THE ASSESSMENT Y EAR 2000 - 01 AND SUBSEQUENT YEARS.' IT IS MADE ABUNDANTLY CLEAR THAT THE PRESCRIPTION OF SECTION 80 - IA SHALL NOT APPLY TO A PERSON WHO EXECUTES WORK CONTRACTS ENTERED INTO WITH AN UNDERTAKING OR ENTERPRISE. THUS, IN A CASE WHERE A PERSON WHO MAKES INVESTM ENT AND HIMSELF EXECUTES DEVELOPMENT WORKS AND CARRIES OUT CIVIL WORKS, WILL BE ELIGIBLE FOR TAX BENEFIT UNDER SECTION 80 - IA OF THE ACT. IN CONTRAST TO THIS, A PERSON WHO ENTERS INTO A CONTRACT WITH ANOTHER PERSON FOR EXECUTING WORKS CONTRACT WILL NOT BE ELIGIBLE FOR THE TAX BENEFIT UNDER SECTION 80 - IA OF THE ACT. IN THE PRESENT CASE, WE FIND THAT THE ASSESSEE WAS DOING ONLY CONTRACT WORKS OF IN SITU CEMENT LINING FOR WATER SUPPLY PROJECT OF THE GUJARAT WATER SUPPLY AND SEWERAGE BOARD. AS SUCH, THE BENEFI T OF SECTION 80 - IA CANNOT BE EXTENDED TO THE ASSESSEE. THE DECISIONS RELIED UPON BY THE ASSESSEE WERE RENDERED PRIOR TO THE AMENDMENT AND AS SUCH NOT RELEVANT FOR DECIDING THIS ISSUE. WE, THEREFORE, RESTORE THE ORDER OF THE ASSESSING OFFICER AND REVERSE TH E ORDER OF THE COMMISSIONER OF INCOME - TAX (APPEALS). ' 11. TO FURTHER ELABORATE THE DISCUSSION ON THIS ISSUE, PARAS 5 & 6 OF THE DECISION OF ITAT PUNE BENCH RENDERED IN THE CASE OF LAXMI CIVIL ENGG. P. LTD VS ADDL. CIT,ORDER DATED 8.6.2011 ARE BEING EXTRACTED HEREIN BELOW: 5. WE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE. THE CONTENTIOUS ISSUES BEFORE US ARE (I) WHETHER THE CONTRACTOR IS SYNONYMOUS WITH THE DEVELOPER WITHIN THE MEANING OF SECTION 80IA (4)(I ) OF THE ACT; (II) WHETHER THE CONDITION PLACED IN CLAUSE (C) IS APPLICABLE TO THE CASE OF A DEVELOPER, WHO IS NOT CARRYING ON BUSINESS OF OPERATING AND MAINTAINING THE INFRASTRUCTURAL FACILITIES. IN OUR OPINION, THE ANSWER TO THESE QUESTION ARE PROVIDED B Y THE JUDGMENT OF THE BOMBAY HIGH COURT IN THE CASE OF ABG HEAVY ENGG LTD (SUPRA). IN THIS REGARD, WE PERUSED THE ABOVE CITED PARA - 22 OF THE SAID JUDGMENT AND FOR THE SAKE OF COMPLETENESS, THE SAID PARAGRAPH IS REPRODUCED AS UNDER: - '22. THE SUBMISSION WH ICH WAS URGED ON BEHALF OF THE REVENUE IS THAT CLAUSE (III) OF SUB - SECTION (4A) OF SECTION 80 - LA, ONE OF THE CONDITIONS IMPOSED WAS THAT THE ENTERPRISE MUST START OPERATING AND MAINTAINING THE INFRASTRUCTURE FACILITY ON OR AFTER 1ST APRIL, 1995. 13 ITA NO. 734 /HYD/ 10 & ITA NO.1832/HYD/ 1 2 M/S.AYYAPPA INFRA PROJECTS P. LTD. (FORMERLY AYYAPPA CONSTRUCTIONS), SECU NDERABAD. THE SAME R EQUIREMENT IS EMBODIED IN SUB CLAUSE (1) OF SUB - CLAUSE (4) OF THE AMENDED PROVISIONS. IT WAS URGED THAT SINCE THE ASSESSEE WAS NOT OPERATING AND MAINTAINING THE FACILITY, HE DID NOT FULFIL THE CONDITION. THE SUBMISSION IS FALLACIOUS BOTH IN FACT AND IN LAW . ' THAT THE ASSESSEE WAS MAINTAINING THE FACILITY IS NOT IN DISPUTE. THE FACILITY WAS COMMENCED AFTER 1ST APRIL, 1995. THEREFORE, THE REQUIREMENT WAS MET IN FACT. MOREOVER, AS A MATTER OF LAW, WHAT THE CONDITION ESSENTIALLY MEANS IS THAT THE INFRASTRUCTU RE FACILITY SHOULD HAVE BEEN OPERATIONAL AFTER 1ST APRIL, 1995. AFTER SECTION 80IA WAS AMENDED BY THE FINANCE ACT, 2001, THE SECTION APPLIES TO AN ENTERPRISE CARRYING ON THE BUSINESS OF (I) DEVELOPING; OR (II) OPERATING AND MAINTAINING; OR (III) DEVELOPING , OPERATING AND MAINTAINING ANY INFRASTRUCTURE FACILITY' WHICH FULFILS CERTAIN CONDITIONS. THOSE CONDITIONS ARE (I) OWNERSHIP OF THE ENTERPRISES BY A COMPANY REGISTERED IN INDIA OR BY A CONSORTIUMS; (II) AN AGREEMENT WITH THE CENTRAL OR STATE GOVERNMENT, L OCAL AUTHORITY OR STATUTORY BODY; AND (III) THE START OF OPERATION AND MAINTENANCE OF THE INFRASTRUCTURE FACILITY SHOULD COMMENCE AFTER 1ST APRIL, 1995. THE REQUIREMENT THAT OPERATION AND MAINTENANCE OF THE INFRASTRUCTURE FACILITY SHOULD COMMENCE AFTER 1ST APRIL, 1995 HAS TO BE HARMONIOUSLY CONSTRUED WITH THE MAIN PROVISION UNDER WHICH DEDUCTION IS AVAILABLE TO AN ASSESSEE WHO DEVELOPS OR OPERATES AND MAINTAINS, OR DEVELOPS, OPERATES AND MAINTAINS AN INFRASTRUCTURE FACILITY'. A HARMONIOUS READING OF THE PR OVISIONS IN ITS ENTIRETY WOULD LEAD TO THE CONCLUSION THAT THE DEDUCTION IS AVAILABLE TO AN ENTERPRISE WHICH (I) DEVELOPS, OR OPERATES AND MAINTAINS; OR (III) DEVELOPS, MAINTAIN AND OPERATES THAT INFRASTRUCTURE FACILITY. HOWEVER, THE COMMENCEMENT OF THE OP ERATION AND MAINTENANCE: OF THE INFRASTRUCTURE FACILITY SHOULD BE AFTER 1' APRIL, 1995. IN THE PRESENT CASE THE ASSESSEE CLEARLY FULFILLED THIS CONDITION '. BEFORE THE AMENDMENT THAT WAS BROUGHT ABOUT BY PARLIAMENT BY FINANCE ACT, 2001 WE HAVE ALREADY NOT ED THAT THE CONSISTENT LINE OF CIRCULARS OF THE BOARD POSTULATED THE SAME POSITION. THE AMENDMENT MADE BY PARLIAMENT TO S. 80 - IA(4) OF THE ACT, SET THE MATTER BEYOND ANY CONTROVERSY BY STIPULATING THAT THE THREE CONDITIONS FOR DEVELOPMENT, OPERATION AND MA INTENANCE WERE NOT INTENDED TO BE CUMULATIVE IN NATURE 6. THE ABOVE JUDGMENT OF THE HON'BLE HIGH COURT IS DELIVERED IN THE CASE OF ABG HEAVY ENGG LTD (SUPRA), WHO IS A CONTRACTOR FOR THE INP TRUST AND THAT CONTACTOR, ASSESSEE IS FOUND TO BE AN ELIGIBLE D EVELOPER FOR MAKING CLAIM OF DEDUCTION U/S SECTION 80IA (4) OF THE ACT. FROM THE ABOVE, IT IS EVIDENT THAT THE PERSON WHO ONLY DEVELOPS THE INFRASTRUCTURE DO NOT HAVE THE OCCASION TO OPERATE AND MAINTAIN THE INFRASTRUCTURE. IT IS FURTHER EVIDENT THAT THE H ARMONIOUS READING IS NECESSARY AND MANDATORY IN VIEW OF HIGH COURT'S JUDGMENT IN THE CASE OF AN ENTERPRISE CARRYING ON BUSINESS OR DEVELOPING WHICH IS THE CASE OF THE ASSESSEE, ALL THE CONDITIONS REFERRED TO CLAUSE (I) OF SECTION 80IA (4) SHOULD REFER TO 14 ITA NO. 734 /HYD/ 10 & ITA NO.1832/HYD/ 1 2 M/S.AYYAPPA INFRA PROJECTS P. LTD. (FORMERLY AYYAPPA CONSTRUCTIONS), SECU NDERABAD. T HE CONDITIONS AS APPLICABLE TO THE DEVELOPER. IN OTHER WORDS, THE DEVELOPER WHO IS ONLY DEVELOPING THE INFRASTRUCTURE FACILITIES SINCE HE DOES NOT OPERATE AND MAINTAIN INFRASTRUCTURAL FACILITIES, CANNOT BE EXPECTED TO FULFIL THE CONDITION AT SUB CLAUSE (C) WHICH IS AN IMPOSSIBILITY AND THE REQUIREMENTS TO FULFIL THE SAID CONDITION SHALL AMOUNT TO ABSURDITY AND THEREFORE UNCALLED FOR. THEREFORE, WE FIND REQUIREMENT OF HARMONIOUS READING OF SUB - CLAUSE (C) VIS - - VIS OF CLAUSE (I) OF SECTION 80IA (4) OF THE ACT . THUS, THE DISCUSSION IN HIGH COURT'S DECISION IN PARAGRAPH - 22 EXTRACTED ABOVE, IS DIRECTLY APPLICABLE TO THE FACTS OF THE CASE AND EVENTUALLY IS ENTITLED FOR THE DEDUCTION UNDER SECTION 80IA (4) OF THE ACT. ACCORDINGLY, THE MODIFIED GROUND, WHICH IS COMM ON IN ALL THE FOUR APPEALS IS ALLOWED IN FAVOUR OF THE ASSESSEE. ' 12. LET US REMIND OURSELVES THAT THE HON'BLE SUPREME COURT IN THE CASE OF BAJAJ TEMPO LTD VS CIT, 196 ITR 188, HAS ORDAINED THAT TAXING STATUTE GRANTING INCENTIVES FOR PROMOTING GROWTH AND DEVELOPMENT SHOULD BE LIBERALLY CONSTRUED. 13. NOW, THE QUESTION ARISES AS TO WHETHER THE TERM 'CONTRACTOR' IS NOT ESSENTIALLY CONTRADICTORY TO THE TERM 'DEVELOPER'. IN FACT, IN EVERY DEVELOPMENT THE TERM 'DEVELOPER' WILL DEFINITELY BE A 'WORKS CONTRACTO R' BUT EVERY WORKS CONTRACTOR MAY NOT BE A 'DEVELOPER'. A 'DEVELOPER' IS A SPECIFIC KIND OF WORKS CONTRACTOR TO BE ELIGIBLE FOR DEDUCTION U/S 80IA(4) WHO FULFILS ALL THE CONDITIONS NAMELY, IF THE ASSESSEE DEVELOPS THE INFRASTRUCTURE FACILITY IF IT OPERATES THE INFRASTRUCTURE FACILITY AND IF IT MAINTAINS THE INFRASTRUCTURE FACILITY OR TO PUT IT IN SIMPLER TERMS, THE HARMONIOUS READING OF THE PROVISIONS IN ITS ENTIRETY WOULD LEAD TO THE CONCLUSION THAT THIS DEDUCTION IS AVAILABLE TO AN ENTERPRISE WHO - DEVELO PS OR OPERATES AND ALSO MAINTAINS; OR DEVELOPS, MAINTAINS AND OPERATES THAT INFRASTRUCTURE FACILITY. THE PROVISION FOR GIVING THE IMPUGNED INCENTIVES HAS BEEN EXAMINED, RE - EXAMINED, MODIFIED AND AMENDED AFTER GIVING CONSCIOUS AND DELIBERATE DISCUSSIONS BY THE CONCERNED LAW MAKERS. TO OUR GREAT CHAGRIN EVEN AFTER THIS CONSCIOUS EXERCISE AN ENTITY WHO EXECUTES THE WORKS CONTRACT ENTERED INTO BETWEEN LOCAL AUTHORITY/CENTRAL OR STATE GOVERNMENT AND MAKES A DEVELOPMENT OF AN INFRASTRUCTURE HAS NOT BEEN EXCLUDED FROM THE SCOPE OF THIS PROVISION. AND RIGHTLY SO, BECAUSE WHAT INFRASTRUCTURE IS REQUIRED IN PUBLIC DOMAIN IS THE OUTLOOK/DUTY OF A LOCAL AUTHORITY OR OF A CENTRAL/STATE GOVERNMENT. WHEN A CERTAIN INFRASTRUCTURE IS NEEDED, THE CONCERNED AUTHORITIES HAVE A BROADER PICTURE IN THEIR MIND AIMING AT ACQUIRING CERTAIN FACILITY FOR WHICH INFRASTRUCTURE DEVELOPMENT IS REQUIRED. SO, TO SAY, WHEN ANY ASSESSEE/ENTERPRISE AGREES UNDER A CONTRACT TO DEVELOP SUCH AN INFRASTRUCTURE FACILITY, IT CANNOT STRAIGHT AWAY BE DUB BED AS NOT THE BRAINCHILD OF THAT ENTERPRISE, BUT ONLY OF THE AUTHORITY IN QUESTION. THEREFORE, AGAIN THIS PROVISION IN SO FAR AS THE CONDITIONS REQUIRED TO BE FULFILLED TO BE ELIGIBLE FOR THIS INCENTIVE HAD TO BE PROVIDED BY THE JURIDICAL FORUMS DEALING W ITH THIS ISSUE. AFTER IN - DEPTH DELIBERATIONS, DISCUSSIONS AND EXAMINATION OF THESE PROVISIONS, FINALLY, IT HAS BEEN RESOLVED THAT IF AN ENTERPRISE EVEN AFTER ENTERING INTO A CONTRACT WITH A LOCAL AUTHORITY OR THE GOVERNMENTS, MAY BE CENTRAL 15 ITA NO. 734 /HYD/ 10 & ITA NO.1832/HYD/ 1 2 M/S.AYYAPPA INFRA PROJECTS P. LTD. (FORMERLY AYYAPPA CONSTRUCTIONS), SECU NDERABAD. OR STATE, IN CA SE IT CONSTRUCTS THE INFRASTRUCTURE FACILITY, OPERATES IT AND ALSO MAINTAINS THE SAME, IT WOULD BE ELIGIBLE FOR THIS DEDUCTION. 14. NOW, LET US EXAMINE THE FACTS OF THE GIVEN CASE. IT IS AN UNDENIABLE FACT THAT THE ASSESSEE IS ENGAGED IN THE CIVIL CONSTRU CTION WORK LIKE CONSTRUCTION OF FLYOVER, BRIDGE UNDERPASS, SEWERAGE, WATER SUPPLY ETC. FOR VARIOUS LOCAL BODIES, RAILWAYS, CENTRAL/STATE GOVERNMENTS. IN FACT, AS PER THE TERMS OF AGREEMENT, EVEN THE INITIAL PROPOSALS FORMULATED BY THE DEPARTMENT WHICH ARE STATED TO BE TENTATIVE, THE ASSESSEE HAS THE LIBERTY TO MAKE DIFFERENT PROPOSALS WITHOUT DETRIMENTAL TO THE GENERAL FEATURES OF THE DEPARTMENTAL PROPOSAL, LIKE ROAD LEVEL/BOTTOM OF DECK LEVEL, MFL, SILL LEVEL, LINEAR WATER WAY, WIDTH OF THE BRIDGE ETC. RIG HT FROM THE DRAWINGS TO THE WORK OF CONSTRUCTION HAS BEEN DONE BY THIS ASSESSEE AND HAS BORNE THE COST ITSELF. THE COMPANY HAS CONSTRUCTED, DELIVERED AND MAINTAINED AND SECURITY IS ALSO MAINTAINED THEREAFTER. SO, THIS IS A CASE OF TRANSFER OF PROPERTY IN C HATTEL AND NOT A CONTRACT OF SERVICE. A 'DEVELOPER' AS PER THE ADVANCED LAW LEXICON MEANS 'A PERSON ENGAGED IN DEVELOPMENT OR OPERATION OR MAINTENANCE OF SPECIAL ECONOMIC ZONE, AND ALSO INCLUDES ANY PERSON AUTHORIZED FOR SUCH PURPOSE BY ANY SUCH DEVELOPER' . IN THE CASE OF ACIT VS BHARAT UDYOG LTD, 'F' BENCH OF ITAT MUMBAI, HAS CONCLUDED THAT ANY ASSESSEE WHO IS ENGAGED IN DEVELOPING THE INFRASTRUCTURE FACILITY AND ALSO OPERATING AND MAINTAINING THE SAME, IS ENTITLED TO THE BENEFIT OF DEDUCTION U/S 80IA(4). A COPY OF THIS DECISION IS ENCLOSED AT PAGE 139 OF THE PAPER BOOK. IN THE CASE OF PATEL ENGINEERING LTD VS DY. CIT, 84 TTJ (MUMBAI) 646 [COPY ENCLOSED AT PAGE NO. 145 OF THE PAPER BOOK], IT HAS BEEN HELD THAT A PERSON, WHO ENTERS INTO A CONTRACT WITH ANOTH ER PERSON WILL BE TREATED AS A 'CONTRACTOR' UNDOUBTEDLY; AND THAT ASSESSEE HAVING ENTERED INTO AN AGREEMENT WITH THE GOVERNMENT OF MAHARASHTRA AND ALSO WITH APSEB FOR DEVELOPMENT OF THE INFRASTRUCTURE PROJECTS, IS OBVIOUSLY A CONTRACTOR BUT DOES NOT DEROGA TE THE ASSESSEE FROM BEING A 'DEVELOPER' AS WELL. THE TERM 'CONTRACTOR' IS NOT NECESSARILY CONTRADICTORY TO THE TERM 'DEVELOPER'. ON THE OTHER HAND, RATHER SECTION 80IA(4) ITSELF PROVIDES THAT ASSESSEE SHOULD DEVELOP THE INFRASTRUCTURE FACILITY AS PER THE AGREEMENT WITH THE CENTRAL GOVERNMENT, STATE GOVERNMENT OR A LOCAL AUTHORITY. SO, ENTERING INTO A LAWFUL AGREEMENT AND THEREBY BECOMING A CONTRACTOR SHOULD IN NO WAY BE A BAR TO THE ONE BEING A 'DEVELOPER'. THE ASSESSEE HAS DEVELOPED INFRASTRUCTURE FACILIT Y AS PER THE AGREEMENT WITH MAHARASHTRA GOVERNMENT/APSEB, THEREFORE, MERELY BECAUSE IN THE AGREEMENT FOR DEVELOPMENT OF INFRASTRUCTURE FACILITY THE ASSESSEE IS REFERRED TO AS A CONTRACTOR OR BECAUSE SOME BASIC SPECIFICATIONS ARE LAID DOWN, IT DOES NOT DETR ACT THE ASSESSEE FROM THE POSITION OF BEING A 'DEVELOPER'; NOR WILL IT DEBAR THE ASSESSEE FROM CLAIMING DEDUCTION U/S 80IA(4). THE FACTS OF THE PRESENT CASE ARE EXACTLY IDENTICAL TO THE FACTS OF THAT CASE RENDERED BY ITAT MUMBAI BENCH IN WHICH UNDER IDENTI CAL FACTS AND CIRCUMSTANCES, THE ASSESSEE HAS BEEN HELD TO BE ELIGIBLE FOR DEDUCTION U/S 80IA(4). SECTION 80IA(4)(I)(B) REQUIRES DEVELOPMENT OF INFRASTRUCTURE FACILITY AND TRANSFER THEREOF AS PER AGREEMENT AND IT CANNOT BE DISPUTED IN 16 ITA NO. 734 /HYD/ 10 & ITA NO.1832/HYD/ 1 2 M/S.AYYAPPA INFRA PROJECTS P. LTD. (FORMERLY AYYAPPA CONSTRUCTIONS), SECU NDERABAD. VIEW OF THE MATERIAL ON RECORD THAT THE ASSESSEE HAS TRANSFERRED THE INFRASTRUCTURE FACILITY DEVELOPED BY IT BY HANDING OVER THE POSSESSION THEREOF TO THE CONCERNED AUTHORITY AS REQUIRED BY THE AGREEMENT. THE HANDING OVER OF THE POSSESSION OF DEVELOPED INFRASTRUCTURE FACILITY/ PROJECT IS THE TRANSFER OF THE INFRASTRUCTURE FACILITY/PROJECT BY THE ASSESSEE TO THE AUTHORITY. THE HANDING OVER OF THE INFRASTRUCTURE FACILITY/PROJECT BY THE DEVELOPER TO THE GOVERNMENT OR AUTHORITY TAKES PLACE AFTER RECOUPMENT OF THE DEVELOPER'S COSTS W HETHER IT BE 'BT' OR 'BOT' OR 'BOOT' BECAUSE IN 'BOT' AND 'BOOT' THIS RECOUPMENT IS BY WAY OF COLLECTION OF TOLL THERE FROM WHEREAS IN 'BT' IT IS BY WAY OF PERIODICAL PAYMENT BY THE GOVERNMENT/AUTHORITY. THE LAND INVOLVED IN INFRASTRUCTURE FACILITY/PROJECT ALWAYS BELONGS TO THE GOVERNMENT/LOCAL AUTHORITY ETC., WHETHER IT BE THE CASE OF 'BOT' OR 'BOOT' AND IT IS HANDED OVER BY THE GOVERNMENT/AUTHORITY TO THE DEVELOPER FOR DEVELOPMENT OF INFRASTRUCTURE FACILITY/PROJECT. THE SAME HAS BEEN THE POSITION IN THE G IVEN CASE AS WELL. SO, DEDUCTION U/S 80IA(4) IS ALSO AVAILABLE TO THIS ASSESSEE WHICH HAS UNDERTAKEN WORK OF A MERE 'DEVELOPER'. RATHER, THE STATUTORY PROVISION AS CONTAINED IN SECTION 80IA WHICH PROVIDES FOR DEDUCTION OF INFRASTRUCTURE FACILITY NO WAY PRO VIDES THAT ENTIRE INFRASTRUCTURE FACILITY PROJECT HAS TO BE DEVELOPED BY ONE ENTERPRISE. THUS, AS PER SECTION 80IA THE ASSESSEE SHOULD DEVELOP THE INFRASTRUCTURE FACILITY AS PER THE AGREEMENT WITH THE CENTRAL/STATE GOVERNMENT/LOCAL AUTHORITY. ENTERING INTO A LAWFUL AGREEMENT AND THEREBY BECOMING SHOULD, IN NO WAY BE A BAR TO THE ONE BEING A 'DEVELOPER'. IN THIS REGARD, AS WE HAVE ALREADY STATED, THE DECISION OF ACIT VS BHARAT UDYOG LTD, 118 ITD 336 AND PATEL ENGINEERING LTD VS DY. CIT, 84 TTJ 646, ARE RELEV ANT. AS PER CIRCULAR NO. 4/2010[F.NO. 178/14/2010 - ITA - I] DATED 18.5.2010, WIDENING OF EXISTING ROADS CONSTITUTES CREATION OF NEW INFRASTRUCTURE FACILITY FOR THE PURPOSE OF SECTION 80IA(4)(I) . THE ASSESSEE IS NOT REQUIRED TO DEVELOP THE ENTIRE ROAD IN ORDE R TO QUALIFY FOR DEDUCTION U/S 80IA AS HAS BEEN HELD BY THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS ABG HEAVY INDUSTRIES LTD, 322 ITR 323. THE NEWLY INSERTED EXPLANATION 2 TO SECTION 80IA VIDE FINANCE ACT, 2007, DOES NOT APPLY TO A WORKS CONTRACT E NTERED INTO BY THE GOVERNMENT AND THE ENTERPRISE. IT APPLIES TO A WORK CONTRACT ENTERED INTO BETWEEN THE ENTERPRISE AND OTHER PARTY 'THE SUB - CONTRACTOR'. THE AMENDMENT AIMS AT DENYING DEDUCTION TO THE SUB CONTRACTOR WHO EXECUTES A WORK CONTRACT WITH THE EN TERPRISE AS HELD BY THE ITAT, JAIPUR 'A' BENCH IN THE CASE OF OM METAL INFRA PROJECTS LTD VS CIT - I, JAIPUR, IN I.T.A. NO. 722 & 723/JP/2008 DATED 31.12.2008. THE RELIANCE BY THE LD. CIT(A) ON THE DECISION OF ITAT, CHENNAI BENCH IN THE CASE OF ACIT VS INDWE LL LIANINGS PVT. LTD, 313 ITR(AT) 118, HAS BEEN ENLARGED IN ITS FINDING BY THE ITAT, MUMBAI 'F' BENCH IN ITS DECISION RENDERED IN THE CASE OF ACIT VS BHARAT UDYOG LTD , BY HOLDING THAT SUCH A DEDUCTION IS ONLY TO BE DENIED TO A SUB - CONTRACTOR AND NOT A MIN I CONTRACTOR. SIMILAR VIEW HAS BEEN TAKEN BY THE ITAT CHENNAI BENCH IN THE CASE OF ACIT VS SMT. C. RAJINI (SUPRA) IN WHICH BOTH OF US CONSTITUTED THE BENCH. IN THIS DECISION THE DEFINITION AND DIFFERENCE BETWEEN WORKS CONTRACTOR AND A DEVELOPER HAS BEEN EX AMINED IN DETAIL. THE MAIN THRUST OF THE DECISION IS THAT A DEVELOPER NEED NOT BE THE OWNER OF THE LAND ON WHICH DEVELOPMENT IS MADE. ALTHOUGH THAT DECISION 17 ITA NO. 734 /HYD/ 10 & ITA NO.1832/HYD/ 1 2 M/S.AYYAPPA INFRA PROJECTS P. LTD. (FORMERLY AYYAPPA CONSTRUCTIONS), SECU NDERABAD. WAS RENDERED IN THE CONTEXT OF A DEVELOPER OF BUILDINGS AND THE DEDUCTION WAS IN RESPECT OF 80IB(10 ), BUT THE DEFINITION OF 'DEVELOPER' GIVEN IN THAT CASE IS ALSO RELEVANT FOR THIS PURPOSE. MOREOVER, WE ARE IN AGREEMENT THAT IN INCENTIVE PROVISIONS, THE CONSTRUCTION SHOULD BE LIBERALLY GIVEN AS HELD BY THE HON'BLE SUPREME COURT RENDERED IN THE CASE OF B AJAJ TEMPO LTD VS CIT, 196 ITR 188. THUS, WHEN THE ASSESSEE MAKES INVESTMENT AND HIMSELF EXECUTES DEVELOPMENT WORK AND CARRIES OUT CIVIL WORKS, HE IS ELIGIBLE FOR TAX BENEFIT U/S 80IA OF THE ACT. ACCORDINGLY, WITH THE FOREGOING DISCUSSION, WE HOLD THAT THE ASSESSEE IS ENTITLED TO DEDUCTION U/S 80IA(4) OF THE ACT, AND THEREFORE, WE ORDER TO DELETE THE ADDITION MADE IN THIS RESPECT.' 6. THEREFORE, BY FOLLOWING THE ABOVE ARGUMENTS AND REASONING, WE CONFIRM THE FINDINGS OF THE LD. CIT(A) AND DO NOT FIND ANY VA LID MERIT IN THE REVENUE'S APPEAL. ACCORDINGLY, THE APPEAL STANDS DISMISSED. 39. IN VIEW OF THE ABOVE DISCUSSION, WE ARE INCLINED TO PARTLY ALLOW THE GROUND RELATING TO CLAIMING OF DEDUCTION U/S. 80IA.OF THE ACT IN ALL THESE APPEALS. 9. AS FOR THE DECISION OF THE TRIBUNAL RELIED UPON BY THE LEARNED DEPARTMENTAL REPRESENTATIVE IN THE CASE OF B.T. PATIL & SONS BELGAUM CONSTRUCTIONS PVT. LTD., BELGAUM V/S. ACIT CIRCLE 2, KOLHAPUR (126 TTJ 577= 1 ITR 730)(TRIB)(MUM.) HAS BEEN OVERRULED BY T HE DIVISION BENCH IN ITA NO.1408 & 1409/PN/2003 FOR ASSESSMENT YEARS 2000 - 01 AND 2001 - 02, WHEREBY DEDUCTION UNDER S.80IA(2) OF THE ACT HAVE BEEN ALLOWED BY THE TRIBUNAL, COMPLYING WITH THE FOLLOWING DIRECTIONS OF HONBLE BOMBAY HIGH COURT IN ITXA NO.1307 OF 2011 2000 - 01 AND FOR 1640 OF 2011 FOR ASSESSMENT YEAR 2001 - 02 - 1. SINCE THE TRIBUNAL HAS RECALLED THE IMPUGNED ORDER DATED 23.03.2011, THE APPELLANT IS WITHDRAWING ITS APPEAL. 2. FURTHER, WHILE CONSIDERING THE MATTER AFRESH, THE TRIBUNAL WILL TAKE I NTO CONSIDERATION ALL DECISIONS INCLUDING THE DECISION OF THIS COURT IN TH E MATTER OF CIT V/S. ABG HEAVY INDUSTRIES LTD. REPORTED IN 322 ITR PAGE 323. ALL CONTENTIONS ARE KEPT OPEN. 3. THE APPEAL IS DISMISSED IN ABOVE TERMS. 18 ITA NO. 734 /HYD/ 10 & ITA NO.1832/HYD/ 1 2 M/S.AYYAPPA INFRA PROJECTS P. LTD. (FORMERLY AYYAPPA CONSTRUCTIONS), SECU NDERABAD. ADMITTEDLY, IN THE CASE OF BT PATIL & SONS BELGAUM CONSTRUCTIONS LTD. (SUPRA) DECIDED BY THE DIVISION BENCH WHILE GIVING EFFECT TO THE THIRD MEMBER DECISION, IT WAS HELD AS FOLLOWS (FOR THE SAKE OF CLARITY FULL ORDER HAS BEEN EXTRACTED): BACKGROUND OF THE CASE IS THAT THE ASSESSING OFFICER PASSED AN ASSESSMENT ORDER DISALLOWING THE ASSESSEES CLAIM FOR DEDUCTION U/S.80IA(4) OF THE ACT. THE CIT(A) CONFIRMED THE ORDER OF THE ASSESSING OFFICER. MATTER WAS CARRIED BEFORE THE ITAT. HOWEVER, WHILE PASSING THE ORDER, THE JUDICIAL MEMBER AND THE ACCOUNTANT MEMBER DIFFERED. WHILE THE JUDICIAL MEMBER ACCEPTED THE CLAIM OF THE ASSESSEE, THE ACCOUNTANT MEMBER DID NOT AGREE. ACCORDINGLY, UNDER PROVISIONS OF SECTION 255(4) OF THE ACT THE MATTER WAS REFERRED TO THE THIRD MEMBER. THE ISSUE IN QUESTION PERTAINS TO A.Y. 2000 - 01 AND 2001 - 02 THE APPEALS WERE HEARD BY THE THIRD MEMBER. HOWEVER, WHILE GIVING ITS OPINION AS PER THE PROVISIONS OF SECTION 255(4) OF THE ACT THE THIRD MEMBER WAS OF THE OPINION THAT THE SAID MATTER OUGHT TO BE HEARD BY THE LARGER BENCH OF THIRD MEMBER I.E. A BENCH COMPRISING OF THREE MEMBERS U/S. 255(4) OF THE ACT. THE MATTER WAS HEARD AT LENGTH BY THE LARGER BENCH OF THE THIRD MEMBER AND THEY AGREED WITH THE ACCOUNTANT MEMBER. THEY WERE OF THE OPINION THAT THE ASSESSEE IS NOT ENTITLED TO DEDUCTION U/S.80IA(4) OF THE ACT. THE SAID MATTER WAS REFERRED BACK TO THE DIVISION BENCH OF THE TRIBUNAL TO GIVE EFFECT IN CONFORMITY WITH THE OPINION OF THE THIRD MEMBER AS PER THE PROVISIONS OF SECTION 255(4) OF THE ACT. 2. THE SAID APPEALS WERE PENDING BEFORE THE DIVISION BENCH OF THE TRIBUNAL TO GIVE EFFECT TO THE OPINION OF THE THIRD MEMBER AS PER THE PROVISIONS OF SECTION 255(4) OF THE ACT. HOWEVER, THE MATTER WAS DISMISSED IN LIMINE BECAUSE OF NON - APPEARANCE ON BEHALF OF THE ASSE SSEE. THE ASSESSEE MOVED A MISCELLANEOUS APPLICATION BEFORE THE TRIBUNAL TO RECALL THE SAID ORDER. WHILE THE SAID MISCELLANEOUS APPLICATION WAS PENDING BEFORE THE TRIBUNAL, BY WAY OF ABUNDANT PRECAUTION THE ASSESSEE FILED APPEALS BEFORE THE HON'BLE BOMBAY HIGH COURT BEING APPEAL NUMBER ITXA 1307 OF 2011 FOR A.Y. 2000 - 01 AND 1640 OF 2011 FOR A.Y. 2001 02 RAISING VARIOUS CONTENTION REGARDING THE ALLOWANCE OF DEDUCTION U/S. 80IA(4) OF THE ACT. 3. WHILE THE SAID APPEAL WAS SUB JUDICE BEFORE THE HON'BLE BOMBAY HIGH COURT THE TRIBUNAL RECALLED ITS ORDER DISMISSING THE APPEALS OF THE ASSESSEE IN LIMINE AND GAVE A FRESH DATE OF HEARING TO THE ASSESSEE. 4. WHILE THE SAID APPEALS ARE PENDING BEFORE THE HON'BLE TRIBUNAL TO GIVE EFFECT TO THE OPINION OF THE THIRD MEM BER AS PER THE PROVISIONS OF SECTION 255(4) OF THE ACT, THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF ABG HEAVY INDUSTRIES LTD., PASSED AN ORDER GRANTING DEDUCTION TO THE SAID ASSESSEE U/S. 80IA(4) OF 19 ITA NO. 734 /HYD/ 10 & ITA NO.1832/HYD/ 1 2 M/S.AYYAPPA INFRA PROJECTS P. LTD. (FORMERLY AYYAPPA CONSTRUCTIONS), SECU NDERABAD. THE ACT. THE SAID JURISDICTIONAL ORDER IS CONTRARY TO TH E OPINION GIVEN BY THE THIRD MEMBER OF THE TRIBUNAL. MEANWHILE THE APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE TRIBUNAL DISMISSING THE APPEALS OF THE ASSESSEE IN LIMINE, BEFORE THE HON'BLE BOMBAY HIGH COURT CAME UP FOR HEARING ON 24/01/2013. IN T HE COURSE OF HEARING BEFORE THE HON'BLE BOMBAY HIGH COURT THE COUNSEL OF THE ASSESSEE BROUGHT TO THE NOTICE OF THE HON'BLE HIGH COURT THE FACT THAT THE TRIBUNAL IN THE MISCELLANEOUS APPLICATION FILED BY THE ASSESSEE HAD RECALLED ITS ORDER AND THE SAID MATT ER WAS NOW FIXED FOR HEARING ON 15/02/2013. AS SUCH THE ASSESSEE REQUESTED TO WITHDRAW THE SAID APPEAL. THE ASSESSEE ALSO DREW ATTENTION OF THE HON'BLE HIGH COURT TO THE DECISION OF ABG HEAVY INDUSTRIES AND REQUESTED THE HON'BLE BOMBAY HIGH COURT TO DIRECT THE TRIBUNAL TO CONSIDER THE ABG HEAVY INDUSTRIES DECISION ON THE ISSUE WHILE GIVING EFFECT TO THE OPINION OF THE THIRD MEMBER AS PER THE PROVISIONS OF SECTION 255(4) OF THE ACT. 5. THE HON'BLE BOMBAY HIGH COURT PERMITTED THE COUNSEL OF THE ASSESSEE TO W ITHDRAW THE SAID APPEALS. WHILE PASSING THE ORDER THE HON'BLE HIGH COURT HAS KEPT ALL THE CONTENTIONS OPEN AND FURTHER DIRECTED THE TRIBUNAL TO CONSIDER THE DECISION OF THE ABG HEAVY INDUSTRIES AND OTHER DECISIONS WHILE PASSING THEIR ORDER GIVING EFFECT TO THE OPINION OF THE THIRD MEMBER AS PER THE PROVISIONS OF SECTION 255(4) OF THE ACT. THE RELEVANT PORTION OF THE SAID ORDER OF HONBLE JURISDICTIONAL HIGH COURT IN ITXA NO.1307 OF 2011 FOR A.Y. 2000 - 01 AND 1640 OF 2011 FOR A.Y. 2001 - 02 IS AS UNDER: 1. SINCE THE TRIBUNAL HAS RECALLED THE IMPUGNED ORDER DATED 23.03.2011, THE APPELLANT IS WITHDRAWING ITS APPEAL. 2. FURTHER, WHILE CONSIDERING THE MATTER AFRESH, THE TRIBUNAL WILL TAKE INTO CONSIDERATION ALL DECISIONS INCLUDING THE DECISION OF THIS COURT IN THE MATTER OF CIT V. ABG HEAVY INDUSTRIES LTD. REPORTED IN 322 ITR PAGE 323. ALL CONTENTIONS ARE KEPT OPEN. 3. THE APPEAL IS DISMISSED OF IN ABOVE TERMS. 6. THE ISSUE BEFORE US IS WHETHER THE TRIBUNAL WHILE COMPLYING WITH THE PROVISIONS OF SECTION 255( 4) OF THE ACT CAN CONSIDER THE JUDGMENT OF THE HON'BLE HIGH COURT IN THE CASE OF ABG HEAVY INDUSTRIES. IN LIGHT OF THE CLEAR DIRECTIONS GIVEN BY THE HON'BLE BOMBAY HIGH COURT IN THE APPEALS FILED BY THE ASSESSEE FOR THE IMPUGNED ASSESSMENT YEARS INTER ALIA DIRECTED THE TRIBUNAL TO CONSIDER THE SAID DECISION OF ABG HEAVY INDUSTRIES AND ALL OTHER DECISIONS, WE CAN CONSIDER THE SAID JUDGMENTS OF ABG HEAVY INDUSTRIES AND ALSO THE OTHER JUDGMENTS FOR ALLOWING THE DEDUCTION U/S. 80IA(4) OF THE ACT WHILE GIVING EF FECT TO THE OPINION OF THE THIRD MEMBER AS PER THE PROVISIONS OF SECTION 255(4) OF THE ACT. FOLLOWING THE DIRECTIONS OF THE HON'BLE BOMBAY HIGH COURT BEING THE JURISDICTIONAL HIGH COURT, THE TRIBUNAL IS BOUND TO FOLLOW THE DIRECTIONS AND WE DO ACCORDINGLY. 20 ITA NO. 734 /HYD/ 10 & ITA NO.1832/HYD/ 1 2 M/S.AYYAPPA INFRA PROJECTS P. LTD. (FORMERLY AYYAPPA CONSTRUCTIONS), SECU NDERABAD. 7. STAND OF ASSESSEE BEFORE US IS THAT ISSUE AT HAND IS COVERED BY THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF ABG HEAVY INDUSTRIES LTD. & OTHERS (SUPRA). IN VIEW OF THE AMENDMENT TO SECTION 80IA(4A) BY FINANCE ACT, 1999 EFFECTIVE FROM 01.04.2000 TO AVAIL THE DEDUCTION UNDER SUCH SECTION FOR THE A.YS. 2000 - 01 & 2001 - 02, ASSESSEE SHOULD CARRY ON ALL THREE ACTIVITIES I.E. DEVELOPING, MAINTAINING & OPERATING CUMULATIVELY. BY DEVELOPING THE INFRASTRUCTURE FACILITY AND TRANSFERRING IT TO ANOT HER PERSON FOR MAINTAINING AND OPERATING, THE BENEFIT CAN BE AVAILED ONLY FROM THE A.Y. 2002 - 03. IN VIEW OF THE AMENDMENT TO SECTION BY FINANCE ACT, 2001 WHERE IN 'OR' IS INSERTED BETWEEN DEVELOPING AND MAINTAINING & OPERATING I.E. DEVELOPING OR MAINTAININ G & OPERATING. IN CASE OF ABG HEAVY INDUSTRIES LTD. & OTHERS (SUPRA), THE HON'BLE BOMBAY HIGH COURT HAS OBSERVED AS UNDER: 'WITH EFFECT FROM 1ST APRIL, 2000, BY THE FINANCE ACT OF 1999, CERTAIN CHANGES WERE BROUGHT ABOUT. SECTION 80 - IA & 80 - IR WERE SUBSTI TUTED FOR SECTION 80 - IA. SUB - SECTION (4) OF SECTION 80 - IA OF THE ACT PROVIDED THAT THE SECTION SHALL APPLY TO ANY ENTERPRISE CARRYING ON THE BUSINESS OF (I) DEVELOPING, (II) MAINTAINING & OPERATING , OR (III) DEVELOPING, MAINTAINING AND OPERATING AN INFRAST RUCTURE FACILITY WHICH FULFILS CERTAIN CONDITIONS. BY THE FINANCE ACT OF 2001, THE WORD 'OR' CAME TO BE INTRODUCED AFTER THE WORD DEVELOPING, TO CLARIFY IN EFFECT THAT THE AGREEMENT BETWEEN THE ENTERPRISE AND THE AUTHORITY OF THE CENTRAL OR THE STATE GOVT. OR, AS THE CASE MAY BE, A LOCAL AUTHORITY OR A STATUTORY BODY MAY PROVIDE FOR (I) DEVELOPING, OR (II) MAINTAINING & OPERATING, OR (III). DEVELOPING, MAINTAINING & OPERATING A NEW INFRASTRUCTURE FACILITY. IT WAS FURTHER HELD THAT THE REQUIREMENT OF OPERATI ON & MAINTENANCE OF INFRASTRUCTURE FACILITY SHOULD COMMENCE AFTER 1ST APRIL, 1995 HAS TO BE HARMONIOUSLY CONSTRUED WITH THE MAIN PROVISION UNDER WHICH THE DEDUCTION IS AVAILABLE. THUS, JURISDICTIONAL HIGH COURT HELD THAT THE AMENDMENT OF FINANCE ACT 2001 O F INSERTING 'OR' BETWEEN 'DEVELOPING' AND 'MAINTAINING & OPERATING' IS CLARIFICATORY IN NATURE TO CURE THE AMBIGUITY OF THE AMENDMENT OF FINANCE ACT, 1999 AND THEREFORE SUCH AMENDMENT WILL BE APPLICABLE RETROSPECTIVELY FROM THE A.Y. 2000 - 01 & ONWARDS. IN O RDER TO BE ELIGIBLE FOR DEDUCTION THE ASSESSEE SHOULD DEVELOP THE INFRASTRUCTURE FACILITY AS A WHOLE AND NOT IN A PARTICULAR PART OF IT. WE FIND THAT HON'BLE BOMBAY HIGH COURT IN THE CASE OF ABG HEAVY INDUSTRIES HAS OBSERVED AS UNDER: THE ASSESSEE DID NO T HAVE TO DEVELOP THE ENTIRE PROJECT IN ORDER TO QUALIFY FOR A DEDUCTION UNDER S. 80 - IA. THE PARLIAMENT DID NOT LEGISLATE A CONDITION IMPOSSIBLE OF COMPLIANCE.' 8. IN THE CASE OF ABG HEAVY INDUSTRIES (SUPRA), THE ASSESSEE THEREIN HAD NOT DEVELOPED THE ENT IRE PORT BUT WAS ONLY THE 21 ITA NO. 734 /HYD/ 10 & ITA NO.1832/HYD/ 1 2 M/S.AYYAPPA INFRA PROJECTS P. LTD. (FORMERLY AYYAPPA CONSTRUCTIONS), SECU NDERABAD. SUPPLIER OF CRANES AT THE LOADING AND UNLOADING TERMINAL AT THE SAID JNPT PORT. THUS ASSESSEE WAS NOT REQUIRED TO EXECUTE THE ENTIRE PROJECT AS OBSERVED BY THE THIRD MEMBER. ANOTHER SIGNIFICANT WORD USED HERE IS 'OWNED', WHICH IND ICATES THAT THE INFRASTRUCTURE FACILITY SHOULD BE OWNED BY A COMPANY SO AS TO BE ENTITLED TO DEDUCTION UNDER THIS SECTION. THE WORK DONE BY THE ASSESSEE IS NOT OWNED BY IT, IT DOES NOT SATISFY SUB CLAUSE (A) OF SECTION 80IA(4)(I). THE INFRASTRUCTURE FACIL ITY SHOULD BE OWNED BY THE ASSESSEE IS NOT CORRECT INTERPRETATION. IT IS EVIDENT FROM SECTION ITSELF AS CLARIFIED BY THE JURISDICTIONAL HIGH COURT IN ABG HEAVY INDUSTRIES (SUPRA) INTER ALIA HELD THAT THE ASSESSEE HAS SHOULDERED OUT INVESTMENT & TECHNICAL R ISK IN RESPECT OF THE WORK EXECUTED AND IT IS LIABLE FOR LIQUIDATED DAMAGES IF FAILED TO FULFILL THE OBLIGATION LAID DOWN IN THE AGREEMENT. THE LIABILITY WHICH HAS BEEN ASSUMED BY THE ASSESSEE UNDER TERMS OF THE CONTRACT ARE OBLIGATIONS INVOLVING THE DEVEL OPMENT OF AN INFRASTRUCTURE FACILITY. THE ASSESSEE HAS ALSO IN ITS EMPLOYMENT TECHNICALLY AND ADMINISTRATIVELY QUALIFIED TEAM OF PERSONS AND THEREFORE IT IS NOT CORRECT TO SAY THAT ASSESSEE IS MERELY A CONTRACTOR & NOT A DEVELOPER. THE ASSESSEE IS ELIGIBLE FOR BENEFIT U/S 80 - 1 A EVEN IF PART OF THE INFRASTRUCTURAL PROJECT WORK IS EXECUTED. 9. IT WAS FOUND BY THE ERSTWHILE JUDICIAL MEMBER THAT ASSESSEE FULFILLED THE CONDITIONS OF BEING A DEVELOPER AS SUBSEQUENTLY INTERPRETED BY THE HON'BLE BOMBAY HIGH COURT . WITH REGARD TO CLARIFICATORY AMENDMENT TO SUB - SECTION (13) OF SECTION 80IA BY FINANCE ACT 2007 & 2009 WHEREBY THE ASSESSEE IS NOT HELD ELIGIBLE FOR DEDUCTION U/S 80IA(4A). IN THIS REGARD, WE FIND THAT THE AMENDMENT OF 2007 DEBARS THE SUB - CONTRACTOR FROM AVAILING BENEFITS U/S. 80IA(4A) . THE AMENDMENT OF 2009 IS NOT APPLICABLE IN THE CASE WHERE THE ASSESSEE EXECUTES THE WORK BY SHOULDERING INVESTMENT & TECHNICAL RISK BY EMPLOYING TEAM OF TECHNICALLY & ADMINISTRATIVELY QUALIFIED PERSONS AND IT IS LIABLE FOR LIQUIDATED DAMAGES IF FAILED TO FULFILL THE OBLIGATION LAID DOWN IN THE AGREEMENT AND ALSO SECURING BY BANK GUARANTEE. AS THE ASSESSEE HAS FULFILLED THE SAID CONDITIONS IS EVIDENT AS DISCUSSED ABOVE. PRACTICALLY, THE OPINION OF THE THIRD MEMBER OF THE HON 'BLE TRIBUNAL HAS BEEN OVERRULED BY THE HON'BLE BOMBAY HIGH COURT THAT EVEN A CONTRACTOR IS A DEVELOPER AND FURTHER INTERPRETATION OF THE AMENDMENTS BY FINANCE ACT 2009 AND THE CONDITIONS TO BE FULFILLED BY AN ASSESSEE TO BE TERMED AS DEVELOPER FOR THE PUR POSE OF SECTION 80IA HAS BEEN FOLLOWED BY VARIOUS TRIBUNALS. 10. IN VIEW OF THE ABOVE, WE FIND THAT LAW AS INTERPRETED BY THE THIRD MEMBER OF THE HON'BLE TRIBUNAL IS NO LONGER GOOD LAW. MORE SPECIFICALLY IN LIGHT OF THE OBSERVATIONS MADE BY THE HON'BLE BO MBAY HIGH COURT IN THE CASE OF ABG HEAVY INDUSTRIES LIMITED AND WHILE GIVING THE EFFECT AS PER PROVISIONS 255(4) OF THE ACT THE HON'BLE TRIBUNAL WAS CLEARLY DIRECTED TO CONSIDER THE SAID DECISIONS AND ALLOW THE DEDUCTION U/S. 80IA OF THE ACT FOR ALL THE PR OJECTS UNDERTAKEN BY THE ASSESSEE. 22 ITA NO. 734 /HYD/ 10 & ITA NO.1832/HYD/ 1 2 M/S.AYYAPPA INFRA PROJECTS P. LTD. (FORMERLY AYYAPPA CONSTRUCTIONS), SECU NDERABAD. 11. THE ASSESSEE COMPANY HAS BEEN INCLUDED AS A SUB CONTRACTOR FOR THE ALL THE OTHER PROJECTS EITHER THE CONTRACTS ARE DIRECTLY IN THE NAME OF ASSESSEE COMPANY OR IN THE NAME OF THE JOINT VENTURE ENTERPRISE. THE ASSESSEE HAS UNDERTAKEN THE WORK ON BACK TO BACK AGREEMENT CONCEPT UNDER SUB CONTRACT FROM PATEL ENGINEERING COMPANY LIMITED (HEREINAFTER REFERRED TO AS PEC) VIDE SUB - CONTRACT AGREEMENT DATED 15.10.1992 FOR CONSTRUCTION OF TUNNEL WHICH SUPPLIES THE WATER FORM RIVE R KOYNA AND MAKES IT AVAILABLE TO POWER HOUSE. IN FACT THE ASSESSEE AND PEC HAD PROPOSED A JOINT VENTURE TO THE RELEVANT AUTHORITIES FOR THE EXECUTION OF THE SAID PROJECT. AS THE PROJECT WAS BEING FINANCED BY WORLD BANK THE RELEVANT AUTHORITIES FORWARDED T HE PROPOSAL TO WORLD BANK. WORLD BANK HOWEVER DID NOT ACCEPT THE PROPOSAL BUT THEY SUGGESTED THAT M/S. PATEL ENGINEERING COMPANY LTD., MAY EMPLOY THE ASSESSEE COMPANY AS SUB CONTRACTOR. IT WAS AT THE SUGGESTION OF WORLD BANK THAT THE ASSESSEE COMPANIES NAM E WAS INCLUDED AS A SUB CONTRACTOR INSTEAD OF FORMING OF A JOINT VENTURE. THE PROJECT AUTHORITIES INCLUDING WORLD BANK HAVE APPROVED AND CERTIFIED THE ASSESSEE AS SUB - CONTRACTOR FOR THE ABOVE SAID WORK AFTER THOROUGH SCRUTINY AND DETAIL DESCRIPTION OF THE WORK TO BE UNDERTAKEN BY THE ASSESSEE COMPANY. THE ASSESSEE COMPANY NAME IS INCLUDED IN MAIN CONTRACT AGREEMENT ENTERED INTO BETWEEN THE EMPLOYER AND PEC AS SUB CONTRACTOR FOR KOYNA PROJECT WORKS BY PROJECT AUTHORITIES. IN FACT THE GOVERNMENT OF MAHARASHTR A HAS ENTERED IN TRIPARTITE AGREEMENT WITH THE ASSESSEE COMPANY AND PEC. WORKS COMPLETION CERTIFICATE HAS BEEN ISSUED IN FAVOUR OF THE ASSESSEE COMPANY FOR THE EXECUTION OF THE WORK. POWER OF ATTORNEY IS GIVEN BY PRIME CONTRACTOR TO SUB CONTRACTOR AND ACCE PTED AND EXCEEDED BY PROJECT AUTHORITIES. 12. THE FACT THAT THE ASSESSEE HAS A TRIPARTITE AGREEMENT WITH THE RELEVANT AUTHORITIES MAKES THE ASSESSEE A PARTY TO THE MAIN CONTRACT WORK ITSELF AND WHICH CLEARLY SHOWS THAT THE ASSESSEE ON THEIR OWN RIGHT ARE CONTRACTORS AND NOT JUST SUB CONTRACTORS AS NORMALLY UNDERSTOOD. THE ASSESSEE IS THE CONTRACTOR VIS - A - VIS THE PORTION ALLOTTED TO THEM AND NOT ONLY SUBCONTRACTORS, I.E. A DIRECT PARTY TO THE MAIN AGREEMENT. THE ASSESSEE HAS ENTERED INTO A MAIN AGREEMENT, IN THEIR OWN RIGHT, CAN CLAIM THE BENEFIT OF SECTION 80IA. AS THE ASSESSEE BEING DIRECTLY UNDER CONTRACT TO THE CONCERN FOR THE WORK DONE AND ARE ALSO DIRECTLY DEALING WITH THE GOVERNMENT ON WHOSE BEHALF THE ASSESSEE ARE DOING THE WORK, THEY CAN BE CONSIDERED AS MAIN CONTRACTORS ALONGWITH PEC AND A RE NOT SIMPLY SUB CONTRACTORS VIS - A - VIS THE WORK UNDERTAKEN BY THEM. AS SUCH THE ASSESSEE IS OTHERWISE FULFILLING ALL THE CONDITIONS THEY ARE ENTITLED TO DEDUCTION UNDER THE PROVISIONS OF SECTION 80IA. SIMILAR VIEW HAS BEEN TAKEN BY ITAT INDORE IN THE CASE OF AYUSH AJAY CONSTRUCTION LTD. VS ITO 79 ITD 213, WHEREIN THE ENTIRE PROJECT WAS ASSIGNED BY THE PARTY GETTING THE TENDER TO ANOTHER COMPANY. IN SUCH CIRCUMSTANCES THE ITAT INDORE, HAS HELD AS UNDER: 'IT IS A SETTLED POSITION OF LAW THAT THAT WHILE CONS TRUING THE TAX PROVISIONS BESIDES DETERMINING THE INTENTION OF THE LEGISLATURE FOR ITS INTRODUCTION TO THE STATUTE, THE 23 ITA NO. 734 /HYD/ 10 & ITA NO.1832/HYD/ 1 2 M/S.AYYAPPA INFRA PROJECTS P. LTD. (FORMERLY AYYAPPA CONSTRUCTIONS), SECU NDERABAD. EXPRESSION USED THEREIN SHOULD ORDINARILY BE UNDERSTOOD IN A SENSE IN WHICH THEY BEST HARMONISE WITH THE OBJECT OF THE STATUTE AND WHICH EFFECTUATE THE OBJECT OF THE LEGISLATION. THE PROVISIONS OR PROMOTING ECONOMIC GROWTH SHOULD BE INTERPRETED LIBERALLY AND THE RESTRICTION ON IT TOO HAS TO BE CONSTRUED SO AS TO ADVANCE THE OBJECTIVE OF THE PROVISIONS AND NOT TO FRUSTRATE IT. IF THE FACT S OF THE CASE WERE PUT WITHIN THE ABOVE PARAMETER, THE ASSESSEE, THOUGH IT NOT ENTERED INTO AN AGREEMENT WITH THE STATE GOVERNMENT AT THE INITIAL STAGE, HAD OBTAINED THE TENDER/CONTRACT BY VIRTUE OF A VALID ASSIGNMENT, WHICH WAS DULY RECOGNISED BY THE STAT E GOVERNMENT. THEREFORE, IT SHOULD BE DEEMED TO HAVE ENTERED INTO AN AGREEMENT WITH THE STATE GOVERNMENT FOR CONSTRUCTION OF THE SAID BRIDGE ON BOT BASIS. IT WAS NOT THE CASE OF THE REVENUE THAT THE ENTIRE EXPENDITURE INCURRED IN THE CONSTRUCTION OF THE A FORESAID BRIDGE WAS NOT BORNE BY THE ASSESSEE BUT BY 'A ', THE MAIN TENDERER. ' THE REVENUE HAD REJECTED THE CLAIM OF THE ASSESSEE FOR THE SIMPLE REASON THAT THE ASSESSEE HAD NEVER ENTERED INTO ANY CONTRACT WITH THE STATE GOVERNMENT AND THE ASSESSEE - COMP ANY WAS NOTHING BUT A COLOURABLE DEVICE TO EVADE TAX. IT IS A SETTLED POSITION OF LAW THAT THE COMPANY IS A JURISTIC ENTITY AND IT SHOULD BE CONSIDERED INDEPENDENT FROM THE SHAREHOLDERS OR THE DIRECTORS. THE ACTION OF THE ASSIGNING AND THE WORK OF CONSTRUC TION UNDERTAKEN BY THE ASSESSEE WAS RECOGNISED BY THE STATE GOVERNMENT AND A TRIPARTITE AGREEMENT WAS EXECUTED BETWEEN THE ASSESSEE A AND THE STATE GOVERNMENT THROUGH WHICH THE STATE GOVERNMENT HAD RECOGNISED THAT THE ASSESSEE HAD STEPPED INTO THE SHOES OF A AND NOTIFIED AUTHORISING THE ASSESSEE TO COLLECT THE TOLL TAX FOR A PARTICULAR PERIOD. SINCE THE ASSESSEE COMPANY HAD RECTIFIED ALL ACT AND DEEDS OF ITS PROMOTER U ' AND OWNED ALL THE ASSETS AND LIABILITIES OF ITS PROMOTER THROUGH AN AGREEMENT OF A SSIGNMENT EXECUTED BETWEEN THE ASSESSEE AND A AFTER OBTAINING APPROVAL FROM THE STATE GOVERNMENT, THE ASSESSEE SHOULD BE DEEMED TO HAVE UNDERTAKEN THE CONSTRUCTION WORK SINCE 1 - 4 - 1995. SINCE THE GOVERNMENT HAD PROVIDED THIS DEDUCTION IN ORDER TO ENCOURAG E ECONOMIC GROWTH OF THE COUNTRY, THE PLENITUDE OF EXEMPTION SHOULD NOT BE WHITTLED DOWN, BY LAYING STRESS ON AMBIGUITY HERE AND THERE. IF IT WAS PROVED THAT, THE ASSESSEE - COMPANY HAD OBTAINED THE STATUS OF A TENDERER BY VIRTUE OF A VALID ASSIGNMENT, IT SH OULD NOT BE DENIED THE BENEFIT OF DEDUCTION PROVIDED BY THE CENTRAL GOVERNMENT THROUGH INTRODUCTION OF SUB - SECTION (4A) OF SECTION 80 IA. THE ACTION OF 'A' AND THE ASSESSEE COULD ONLY BE TERMED AS A VALID TAX PLANNING WHICH WAS PERMISSIBLE UNDER THE LAW. T HEREFORE, THE ASSESSEE HAD FULFILLED THE REQUIREMENTS PROVIDED IN SECTION 80IA (4A)(II) FOR CLAIMING DEDUCTION, AND, THEREFORE, THE ASSESSING OFFICER SHOULD HAVE ALLOWED THE DEDUCTION CLAIMED BY THE ASSESSEE COMPANY. 24 ITA NO. 734 /HYD/ 10 & ITA NO.1832/HYD/ 1 2 M/S.AYYAPPA INFRA PROJECTS P. LTD. (FORMERLY AYYAPPA CONSTRUCTIONS), SECU NDERABAD. 13. IT WAS FURTHER CLARIFIED ON BEHAL F OF THE ASSESSEE THAT WITH REGARDS TO BHIMA SINA LINK TUNNEL PROJECT, THE ORIGINAL AGREEMENT IS BETWEEN THE OWNER AND JOINT VENTURE FROM CONSISTING OF THE ASSESSEE COMPANY AND M/S.SWAPNALI CONSTRUCTIONS WHICH WAS FORMED TO SHARE THE WORK IN 60% & 40%. M/S .SWAPNALI CONSTRUCTIONS EXPRESSED THEIR INABILITY TO UNDERTAKE THE WORK AND HAD TRANSFERRED THEIR SHARE OF 40% OF WORK TO THE ASSESSEE COMPANY ON BACK TO BACK AGREEMENT BASIS FOR A CONSIDERATION VIDE AGREEMENT DATED 28/04/97. THUS THE ASSESSEE COMPANY HAD EXECUTED 100% OF THE WORK. IT IS FURTHER STATED THAT THE ASSESSEE COMPANY WERE ISSUING R.A. BILLS FOR 100% OF THE WORK DONE TO JOINT VENTURE FIRM AND JOINT VENTURE FIRM IN TURN ISSUED R.A. BILLS TO THE OWNERS. JOINT VENTURE FIRM HAD NOT EXECUTED ANY PORTIO N OF WORK UNDER THE PROJECT. THE JOINT VENTURE FIRM HAS FILED ITS RETURN OF INCOME WITH NIL PROFIT OR LOSS. IN FACT THE WORK COMPLETION CERTIFICATE ISSUED BY PROJECT AUTHORITIES IS IN FAVOUR OF THE ASSESSEE COMPANY ONLY AND NOT IN FAVOUR OF JOINT VENTURE, ALSO THE WHOLE AMOUNT OF INITIAL SECURITY DEPOSIT, THE BANK GUARANTEES WERE GIVEN BY THE ASSESSEE COMPANY ONLY IN THE NAME OF THE ASSESSEE AND NOT BY THE JOINT VENTURE, AS THE JOINT VENTURE PARTNER IS IN NO WAY CONNECTED WITH THE EXECUTION OF THE WORK AND TO THAT EFFECT IT HAD ALREADY SUBMITTED NECESSARY INSTRUMENT LIKE 'ASSIGNMENT DEED, 'POWER OF ATTORNEY', UNDERTAKING WITH BANKERS ETC. 14. IN THIS BACKGROUND, THE ASSESSEE COULD CERTAINLY CLAIM THE DEDUCTIONS UNDER THE PROVISION OF SECTION 80IA. ONE HAS TO SEE THE SUBSTANCE AND NOT THE FORM ESSENTIALLY, THOUGH IT WAS A JOINT VENTURE, IT WAS CONVERTED INTO ASSESSEE'S VENTURE. THE OTHER VENTURER WITHDREW AND THE ENTIRE WORK WAS EXECUTED BY THE ASSESSEE THOUGH IN THE NAME OF JOINT VENTURE. THE JOINT VENTURE IS NOTHING BUT THE VENTURE OF THE ASSESSEE COMPANY AND THE OTHER PERSON NOT BEING A PARTY AFTER WITHDRAWING THE QUESTION OF JOINT VENTURE DOES NOT ARISE. THE VENTURE WAS FULLY CARRIED OUT BY THE ASSESSEE AND IT WAS ENTIRELY EXECUTED BY THE ASSESSEE COMPANY. TAKING THE SUBSTANCE OF THE TRANSACTION, THE ASSESSEE ARE ENTITLED TO ALL THE PROFITS IN RESPECT OF THE CONTRACT EXECUTED BY THEM, HENCE THE ASSESSEE WOULD CERTAINLY BE ENTITLED TO DEDUCTION UNDER THE PROVISIONS OF 80IA AS THEY HAVE FULFILLED ALL THE OTHER CONDITIONS. THIS VIEW GET STRENGTH FROM DECISION IN THE CASE OF ITAT, INDORE BENCH, IN CASE OF AYUSH AJAY CONSTRUCTIONS LTD. (SUPRA). THUS, WHILE GIVING EFFECT TO THE OPINION OF THIRD MEMBER U/S.255(4) OF THE ACT, WE TAKE VIEW IN CONFORMITY WITH ORDER OF JURISDICTIONAL HIGH COURT IN CASE OF ABG HEAVY INDUSTRIES LTD. (SUPRA) AVAILABLE AT THIS TIME THOUGH CONTRARY TO THE OPINION EXPRESSED BY TH E THIRD MEMBER. SO IN VIEW OF ABOVE DISCUSSION, FOLLOWING THE RATIO OF JURISDICTIONAL HIGH COURT IN CASE OF ABG HEAVY INDUSTRIES LTD. (SUPRA), THE ASSESSING OFFICER IS DIRECTED TO ALLOW DEDUCTION U/S.80IA(4) OF THE ACT TO THE ASSESSEE WITH REGARD TO THE P ROJECTS IN QUESTION FOR BOTH THE YEARS. THE MATTER IS DISPOSED OFF ACCORDINGLY. 25 ITA NO. 734 /HYD/ 10 & ITA NO.1832/HYD/ 1 2 M/S.AYYAPPA INFRA PROJECTS P. LTD. (FORMERLY AYYAPPA CONSTRUCTIONS), SECU NDERABAD. 10. IN VIEW OF THE ABOVE POSITION, THE THIRD MEMBER DECISION OF THE TRIBUNAL IN THE CASE OF B.T. PATIL & SONS BELGAUM CONSTRUCTIONS PVT. LTD. (SUPRA), RELIED UPON BY THE L EARNED DEPARTMENTAL REPRESENTATIVE, IS NO LONGER A GOOD LAW, AND AS SUCH, WE ARE NOT INCLINED TO FOLLOW THE SAME. 1 1 . IN THE LIGHT OF THE ABOVE DISCUSSION, MODIFYING THE ORDER S OF THE C OMMISSIONERS (A PPEAL ) FOR BOTH THE YEARS UNDER APPEAL , WE DIRECT THE ASSESSING OFFICER TO ALLOW THE CLAIM S OF THE ASSESSEE WITH REGARD TO DEDUCTION UNDER S.80IA OF THE ACT IN RESPECT OF EXECUTION OF CIVIL CONTRACTS ON OWN ACCOUNT . 1 2 . IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE COURT ON 30.08.2013 . SD/ - SD/ - ( ASHA VIJAYARAGHAVAN) JUDICIAL MEMBER. (CHANDRA POOJARI) ACCOUNTANT MEMBER. DT/ - 30 TH AUGUST, 201 3 COPY FORWARDE D TO: 1. M/ S.AYYAPPA INFRA PROJECTS P. LTD. (FORMERLY AYYAPPA CONSTRUCTIONS), FLAT NO.306, OM SAI NILAYAM, STREET NO.8, HABSIGUDA, SECUNDERABAD. 2. DY. COMMISSIONER OF INCOME - TAX CIRCLE 11 ( 1 ), HYDERABAD 3. 4. 5. COMMISSIONER OF INCOME - TAX(APPEALS) V I HYDERABAD COMMISSIONER OF INCOME - TAX V HYDERABAD THE DEPARTMENTAL REPRESENTATIVE, ITAT HYDERABAD B.V.S.