ITO, Ward - 12(2), Kolkata, Kolkata V. M/s. Simplex Projects Ltd., Kolkata

ITA 194/KOL/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 74987 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 11 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-01-2014
• Appeal Filed By: Department
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 02-02-2011
• Court: TRIBUNAL
• Department Lawyers: A S MONDAL
• Keywords: Retrospective amendment
• Section: 14A; 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH A , KOLKATA [BEFORE HONBLE SRI ABRAHAM P.GEORGE, AM & HONBL E SRI GEORGE MATHAN, JM] ITA NO.194/KOL/2011 ASSESSMENT YEAR : 2007-08 ( APPELLANT ) (RESPONDENT) I.T.O., WARD-12(2), -VS- M/S.SIMPLEX PROJECTS LT D. KOLKATA KOLKATA (PAN AADCS 8598 R) ITA NO.251/KOL/2011 ASSESSMENT YEAR : 2007-08 ( APPELLANT ) (RESPONDENT) M/S.SIMPLEX PROJECTS LTD. -VS- I.T.O., WARD-12(2) , KOLKATA KOLKATA (PAN:AADCS 8598 R) FOR THE DEPARTMENT SHRI A.S.MONDAL, ADDL. SR.DR FOR THE RESPONDENT: SHRI RAVI TULSIYAN, CA DATE OF HEARING : 15.01.2014 DATE OF PRONOUNCEMENT : 17. 01.2014. ORDER PER SHRI GEORGE MATHAN, JM I.T.A.NO.194/KOL/2011 IS AN APPEAL FILED BY THE REV ENUE AND ITA NO.251/KOL/2011 IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. C.I.T.(A)- XII, KOLKATA IN APPEAL NO.830/CIT(A)-XII/WD-12(2)/0 9-10 DATED 26.11.2010 FOR ASSESSMENT YEAR 2009-10.. 2. SHRI AJAY KR.SINGH, LD.,CIT(DR) AND SHRI A.S.MO NDAL, ADDL.SR.DR REPRESENTED ON BEHALF OF THE REVENUE AND SHRI RAVI TULSIYAN, CA REPRESENTED ON BEHALF OF THE ASSESSEE. ITA NO.194/KOL/2011 (BY THE REVENUE) 3. IN THIS APPEAL THE REVENUE HAS RAISED THE FOLLO WING GROUNDS OF APPEAL:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.16,45,220/- BEING THE DELAYED PAYMEN T OF EMPLOYEES CONTRIBUTION TO PF ITA NO S.194&251/KOL/2011 M/S .SIMPLEX PROJECTS LTD. A.YR.2007-08 2 & ESI ON THE GROUND THAT THE CONTRIBUTION WAS MADE BEFORE FILING OF RETURN THOUGH THERE HAS BEEN VIOLATION TO SECTION 2(24)(X) READ WITH SE CTION 36(I)(VA) OF THE I.T.ACT. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE LD. C IT(A) HAS ERRED IN DELETING THE ADDITION OF RS.18,78,032/- ON THE BASIS OF DECISION OF HONBLE ITAT THOUGH THE ADDITION WAS CALCULATED @ .5% OF AVERAGE INVESTMENT AS PER R ULE 8D OF I.T.RULE. 4. IT WAS SUBMITTED BY THE LD. DR THAT IN THE COUR SE OF ASSESSMENT THE AO HAD DISALLOWED PF AND ESI IN RESPECT OF EMPLOYEES CONTR IBUTION DEPOSITED AFTER THE DUE DATE. IT WAS THE SUBMISSION THAT THE LD. CIT(A) HAD DELETED THE DISALLOWANCE. THE LD. DR VEHEMENTLY SUPPORTED THE ORDER OF THE AO. 5. IN REPLY THE LD. AR SUBMITTED THAT THE AMOUNTS H AVE BEEN PAID BEFORE THE DUE DATE OF FILING THE RETURN AND CONSEQUENTLY IN VIEW OF THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF ALOM EXTRUSIONS REPORT ED IN 319 VS 306 THE ORDER OF THE LD. CIT(A) WAS LIABLE TO BE UPHELD. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. AS IT IS NOTICED THAT THE ASSESSEE HAD MADE THE PAYMENTS IN RESPECT OF THE EMPLOYEES CONTR IBUTION TO PF AND ESI BEFORE THE DUE DATE OF FILING THE RETURN AS IS APPARENT FROM T AX AUDIT REPORT WE ARE OF THE VIEW THAT THE ISSUE IS SQUARELY COVERED BY THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF ALOM EXTRUSIONS REFERRED TO SUPRA. CONSEQUE NTLY THE FINDING OF THE LD. CIT(A) ON THIS ISSUE STANDS CONFIRMED. 7. IN RESPECT OF THE SECOND GROUND IN THE REVENUES APPEAL IT IS AGAINST THE ACTION OF THE LD. CIT(A) IN DELETING THE ADDITION MADE BY INVOKING THE PROVISION OF RULE 8D. IT WAS SUBMITTED BY THE LD. DR IN THE COURSE OF ASS ESSMENT THE AO HAD DISALLOWED .5% OF AVERAGE INVESTMENT. IT WAS SUBMITTED THAT THE LD . CIT(A) HAD DIRECTED THAT DISALLOWANCE WAS LIABLE TO BE MADE AT 1% OF THE DIV IDEND INCOME BY FOLLOWING THE DECISION OF THE JURISDICTIONAL TRIBUNAL AS ALSO THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF GODREJ BOYCE MANUFACTURIN G LTD. REPORTED IN 328 ITR 81. 8. THE LD. DR VEHEMENTLY SUPPORTED THE ORDER OF THE AO. ITA NO S.194&251/KOL/2011 M/S .SIMPLEX PROJECTS LTD. A.YR.2007-08 3 9. IN REPLY THE LD. AR SUBMITTED THAT THE ASSESSMEN T YEAR INVOLVED WAS 2007-08 AND THE PROVISION OF SECTION 14A OF THE ACT WAS EFF ECTIVE FROM A.YR. 2008-09. IT WAS THE SUBMISSION THAT THE HONBLE JURISDICTIONAL HIGH COURT HAD ALSO UPHELD THE ORDERS OF THE TRIBUNAL UPHOLDING THE DISALLOWANCE UNDER RU LE 8D AT 1%. IT WAS THE SUBMISSION THAT ORDER OF THE LD. CIT(A) ON THIS ISS UE MAY BE UPHELD. 10. WE HAVE HEARD THE RIVAL SUBMISSIONS. AS IT IS N OTICED THAT THE ISSUE OF DISALLOWANCE UNDER RULE 8D HAS BEEN CONSISTENTLY BE ING HELD BY THE COORDINATE BENCH OF THIS TRIBUNAL AT 1% OF THE DIVIDEND INCOME FOR THE ASSESSMENT YEARS BEFORE A.YR. 2008-09, WE ARE OF THE VIEW THAT THE FINDING OF LD. CIT(A) ON THIS ISSUE IS ON A RIGHT FOOTING AND DOES NOT CALL FOR ANY INTERFERENC E. 11. IN THE RESULT THE APPEAL OF THE REVENUE STANDS DISMISSED. ITA NO.251/KOL/2011 (BY THE ASSESSEE): 12. IN THIS APPEAL THE ASSESSEE HAS RAISED THE FOLL OWING GROUNDS OF APPEAL :- 1. THE ORDERS PASSED BY THE LOWER AUTHORITIES ARE ARBITRARY, ERRONEOUS, WITHOUT PROPER REASONS, INVALID AND BAD IN LAW. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LEARNED A.O. ERRED IN HOLDING THAT THE APPELLANT IS NOT A DEVELOPER FOR THE PUR POSE OF ALLOWANCE OF DEDUCTION U/S 80- IA(4) OF THE INCOME TAX ACT, 1961, ON THE PROFITS D ERIVED FROM THE BUSINESS OF DEVELOPING INFRASTRUCTURE FACILITY AND IN THAT VIEW , IN CONFIRMING THE DISALLOWANCE OF THE CLAIM OF DEDUCTION OF RS.7,44,64,162/- UNDER THAT S ECTION. 3. WITHOUT ANY PREJUDICE TO ABOVE, THE LEARNED A.O. ERRED IN LAW IN APPLYING THE EXPLANATION TO SECTION 80-IA OF THE ACT IN A RETROS PECTIVE MANNER. 4. THE APPELLANT CRAVES LEAVE TO AMEND, ALTER, MODI FY, SUBSTITUTE, ADD TO, ABRIDGE AND/OR RESCIND ANY OR ALL OF THE ABOVE GROUNDS. 13. IT WAS SUBMITTED BY THE LD. AR THAT THE ONLY I SSUE IN THE ASSESSEES APPEAL WAS AGAINST THE ACTION OF THE LD. CIT(A) IN HOLDING THA T THE ASSESSEE WAS NOT A DEVELOPER FOR THE PURPOSE OF ALLOWANCE OF DEDUCTION U/S 80-IA (4)OF THE IT ACT. IT WAS THE SUBMITTED BY THE LD. AR THAT IN THE COURSE OF ASSES SMENT THE AO HAS DISALLOWED THE CLAIM OF DEDUCTION U/S 80-IA(4) OF THE ACT ON THE G ROUND THAT BY THE FINANCE ACT 2007 NEW EXPLANATION HAS BEEN INSERTED TO SUB-SECTION (1 3) OF 80-IA WHEREIN IT WAS EXPLAINED THAT A PERSON WHO ENTERS INTO A CONTRACT WITH ANOTHER PERSON FOR EXECUTING A WORKS CONTRACT WILL NOT BE ELIGIBLE FOR DEDUCTION U /S 80IA OF THE ACT. IT WAS THE ITA NO S.194&251/KOL/2011 M/S .SIMPLEX PROJECTS LTD. A.YR.2007-08 4 SUBMISSION THAT THE ASSESSEE WAS NOT DOING ANY WORK S CONTRACT. IT WAS THE SUBMISSION THAT THE ASSESSEE WAS ALSO CHARGING VAT IN RESPECT OF THE WORKS CARRIED ON AND DONE UNDER VARIOUS PROJECTS. THE LD. AR PLACED BEFORE US THE FOLLOWING CHART SHOWING VARIOUS DEVELOPMENT PROJECTS UNDERTAKEN BY THE ASSE SSEE ALONG WITH MATERIAL FEATURES. PROJECT NAME CONTRACT VALUE SECURITY DEPOSIT VAT DE TAILS FUNDED BY THE ASSESSEE CONSTRUCTION OF ROB, HATIA RS.8,96,46,219/- (PG.2 OF P-II) 5% OF CONTRACT VALUE IN FORM OF BANK GUARANTEE (PAGE 13 & 52 OF P-II) I.E. RS.44,82,311/- SEE VAT RETURN OF JHARKHAND STATE PAGE 279 OF P-III AND DETAILS OF TURNOVER ON PAGE 1 OF P- IV) SEE PROJECT BALANCE SHEET (PAGE 84 OF P- III) AND EXPENDITURE LEDGER ON PAGE 92 OF P-III) CONSTRUCTION OF ROB, DHANBAD RS.20,86,72,517/- (PG.59 OF P-II) 5% OF CONTRACT VALUE IN FORM OF BANK GUARANTEE (PAGE 70 & 902 OF P-II) I.E. RS.1,04,33,625/- SEE VAT RETURN OF JHARKHAND STATE PAGE 279 OF P-III AND DETAILS OF TURNOVER ON PAGE 1 OF P- IV) SEE PROJECT BALANCE SHEET (PAGE 96 OF P- III) AND EXPENDITURE LEDGER ON PAGE 105 OF P-III) CONSTRUCTION OF ROB, PARASNATH RS.12,86,36,110/- (PG.97OF P-II) 5% OF CONTRACT VALUE IN FORM OF BANK GUARANTEE (PAGE 108 & 138 OF P-II) I.E. RS.64,31,806/- SEE VAT RETURN OF JHARKHAND STATE PAGE 279 OF P-III AND DETAILS OF TURNOVER ON PAGE 1 OF P- IV) SEE PROJECT BALANCE SHEET (PAGE 109 OF P- III) AND EXPENDITURE LEDGER ON PAGE 118 OF P-III) CONSTRUCTION OF ROB, DALTONGUNGE RS.8,76,41,576/- (PG.145 OF P-II) 5% OF CONTRACT VALUE IN FORM OF BANK GUARANTEE (PAGE 156 & 186 OF P-II) I.E. RS.43,82,079/- SEE VAT RETURN OF JHARKHAND STATE PAGE 279 OF P-III AND DETAILS OF TURNOVER ON PAGE 1 OF P- IV) SEE PROJECT BALANCE SHEET (PAGE 122 OF P- III) AND EXPENDITURE LEDGER ON PAGE 131 OF P-III) WATER TREATMENT PLANT, THOUBAL DISTRICT RS.9,84,41,578/- (PG.194 OF P-II) 10% OF THE COST OF THE PROJECT (SEE PAGE 248 OF P-II)I.E. SEE VAT RETURN OF MANIPUR STATE PAGE 231, 234, SEE EXPENDITURE LEDGER ON PAGE 144 OF P-III) ITA NO S.194&251/KOL/2011 M/S .SIMPLEX PROJECTS LTD. A.YR.2007-08 5 RS.61,27,800/- (10% OF RS.6,12,78,000/-) 237 OF P-III) AND DETAILS OF TURNOVER ON PAGE 233,236 & 239) OVERHEAD TANK, KEISHAMPAT RS.1,45,00,000/- (PG.322 OF P-II) 10% OF ESTIMATED COST (PAGE 312 OF P-II)I.E. RS.6.25 LAKHS (10% OF RS.62.53 LAKHS) SEE VAT RETURN OF MANIPUR STATE PAGE 231, 237 OF P-III) AND DETAILS OF TURNOVER ON PAGE 233, 239) SEE EXPENDITURE LEDGER ON PAGE 156 OF P-III) SEWERAGE PLANT, AT LAMPHELPAT RS.20,63,27,950/- (PG.335 OF P-II) 10% OF ESTIMATED COST (PAGE 349 OF P-II) I.E. RS.89.7 LAKHS (I.E. 10% OF RS.897 LAKHS) SEE VAT RETURN OF MANIPUR STATE PAGE 231, 237 OF P-III) AND DETAILS OF TURNOVER ON PAGE 233, 239) SEE EXPENDITURE LEDGER ON PAGE 166 OF P-III) CONSTRUCTION OF ROB, MITHAPUR RS.14,59,50,644/- (PG.397OF P-II) 5% OF CONTRACT VALUE (PAGE 442 OF P-II) I.E. RS.72,97,532/- SEE VAT RETURN OF BIHAR STATE (PAGE 242 OF P-III) DETAILS OF TURNOVER ON PAGE 6 OF P- IV) SEE PROJECT BALANCE SHEET (PAGE 170 OF P- III) AND EXPENDITURE LEDGER ON PAGE 179 OF P-III) CONSTRUCTION OF ROB, KODERMA RS.11,48,70,607/- (PG.554 OF P-II) SECURITY DEPOSIT WAS TO BE RECOVERED BY MAKING DEDUCTION @ 10% FROM RUNNING BILLS (PAGE 538) SEE VAT RETURN OF JHARKHAND STATE PAGE 279 OF P-III AND DETAILS OF TURNOVER ON PAGE 1 OF P- IV) SEE PROJECT BALANCE SHEET (PAGE 182 OF P- III) AND EXPENDITURE LEDGER ON PAGE 191 OF P-III) CONSTRUCTION OF BRIDGE, TARATALA RS.12,81,82,420/- (PG.667OF P-II) RS.25,63,648/- TO COVER 2% OF TOTAL BID AMOUNT (PAGE 587) SECURITY DEPOSIT : 15% OF THE BID AMOUNT, I.E. RS.1,92,27,363/- SEE ASSESSMENT ORDER ON PAGES 3 & 4 OF P-IV, LISTING PROJECTS ASSESSED TO VAT SEE PROJECT BALANCE SHEET (PAGE 195 OF P- III) AND EXPENDITURE LEDGER ON PAGE 204 OF P-III) PROTECTION OF BANK OF RIVER BHAGIRATHI, BURDWAN RS.7,28,46,149/- 5% OF THE COST OF PROJECT SEE ASSESSMENT ORDER ON PAGES 3 & 4 OF P-IV, SEE PROJECT BALANCE SHEET (PAGE 208 OF P- III) AND ITA NO S.194&251/KOL/2011 M/S .SIMPLEX PROJECTS LTD. A.YR.2007-08 6 LISTING PROJECTS ASSESSED TO VAT EXPENDITURE LEDGER ON PAGE 217 OF P-III) CONSTRUCTION OF ROB, BIHAR RAJYA PUL NIRMAN NIGAM LTD. RS.2.32 CRORE 2% OF THE RUNNING BILLS RAISED SEE VAT RETURN OF BIHAR STATE (PAGE 242 OF P-III) AND DETAILS OF TURNOVER ON PAGE 6 OF P- IV) SEE EXPENDITURE LEDGER ON PAGE 228 OF P-III) IT WAS THE FURTHER SUBMISSION THAT THE ASSESSEE HAS ALSO FILED ITS VAT RETURNS IN RESPECT OF DEVELOPMENT PROJECTS UNDERTAKEN BY IT. IT WAS TH E FURTHER SUBMISSION THAT THE PROJECTS UNDERTAKEN BY THE ASSESSEE WAS ASSESSABLE UNDER WEST BENGAL VAT. THE LD. AR ALSO PLACED BEFORE US A COPY OF VAT ASSESSMENT O RDERS FOR THE YEAR ENDED 2007 AND ALSO IN RESPECT OF PROJECTS ASSESSABLE UNDER BI HAR VAT PROVISION. IT WAS THE FURTHER SUBMISSION THAT THE ISSUE WAS SQUARELY COVE RED BY THE DECISION OF THE COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF AS SESSEES SISTER CONCERN IN THE CASE OF SIMPLEX SOM-DUTT BUILDERS J.V. AND SIMPLEX SUBHA SH J.V. IN ITA NO.1684/KOL/2011 AND 1685/KOL/2011 DATED 18.06.2013 WHEREIN THE COORDINATE BENCH OF THIS TRIBU8NAL HAS HELD AS UNDER AT PARAS 11 TO 13 :- 11. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS . ADMITTEDLY, A PERUSAL OF THE AGREEMENT ENTERED INTO BETWEEN THE ASSESSEE AND THE GOVT OF ANDHRA PRADESH IRRIGATION & CAD DEPARTMENT SHOWS THAT THE ASSESSE E HAS TAKEN EPC/TURNKEY CONTRACT OF THE FLOOD FLOW CANAL PROJECT FROM SRSP. THE N AME OF THE CONTRACT HAS BEEN EXTRACTED EARLIER IN THIS ORDER. THE SCOPE OF THE W ORK IS ALSO EXTRACTED ABOVE. ADMITTEDLY, THE ASSESSEE HAS TAKEN A TURNKEY CONTRA CT FROM THE IRRIGATION DEPARTMENT, GOVT. OF ANDHRA PRADESH. THE TURNKEY CONTRACT IS IN RESPECT OF THE IRRIGATION PROJECT. IRRIGATION PROJECT IS AN INFRASTRUCTURE FACILITY WITHIN THE SCOPE OF EXPLANATION TO SECTION 80IA(4) OF THE ACT. THE PROVISIONS OF SECT ION 80IA(4) IS TO BE CONTROLLED BY THE EXPLANATION TO SECTION 80IA, WHICH HAS BEEN SUBSTIT UTED BY THE FINANCE (NO.2) ACT, 2009 WITH RETROSPECTIVE EFFECT FROM 1-4-2-2000. THI S EXPLANATION IS FOUND AFTER SUB- SECTION (13) OF SECTION 80IA. THE SAID EXPLANATIO N ATTEMPTS TO CONTROL THE PROVISIONS OF SUB-SECTION 4. MORE SO, IT SAYS THAT NOTHING CO NTAINED IN SECTION 80IA WOULD APPLY IN RELATION TO THE BUSINESS REFERRED TO SUB-SECTION ( 4), WHICH IS IN THE NATURE OF WORKS CONTRACT. A WORKS CONTRACT IS NOT DEFINED IN SECTIO N 80IA. NOW, WHAT WOULD COME INTO CONSIDERATION IS WHETHER THE SUBSTITUTED EXPLANATI ON AFTER SUB- CLAUSE (13) CHANGED THE NATURE OF THE MEANING OF INFRASTRUCTURE FACI LITY PROVIDED IN THE EXPLANATION TO SECTION 80IA(4). ADMITTEDLY, THE EXPLANATION TO SEC TION 80IA(4) GIVES THE MEANING THE ITA NO S.194&251/KOL/2011 M/S .SIMPLEX PROJECTS LTD. A.YR.2007-08 7 TERM INFRASTRUCTURE FACILITY. THE SUBSTITUTED EX PLANATION AFTER SUB CLAUSE (13) BRINGS IN THE NATURE OF WORK AS A WORKS CONTRACT. THE PROVIS IONS OF SECTION 194C, WHICH DEALS WITH TDS IN RESPECT OF PAYMENT TO CONTRACTORS FOR CARRYING OUT ANY WORK IN THE EXPLANATION THERETO AS EXPLAINED THE TERM WORK TO BE AN INCLUSIVE DEFINITION, BUT HAS PROVIDED AN EXCLUSION TO BE DOES NOT INCLUDE MANU FACTURING OR SUPPLYING OF A PRODUCT. ACCORDING TO REQUIREMENT OR SPECIFICATION OF THE CUSTOMER BY USING MATERIALS PURCHASED FROM A PERSON, OTHER THAN SUCH CUSTOMER. THUS, WITH THIS IN MIND, A PERUSAL OF THE TURNKEY CONTRACT AGREEMENT ENTERED INTO BY T HE ASSESSEE WITH THE IRRIGATION DEPARTMENT, GOVT OF A.P CLEARLY SHOWS THAT THE CONS TRUCTION OF ALL THE STRUCTURES OF THE WHOLE CANAL SYSTEM IS TO BE AS PER APPROVED DESI GN, DRAWINGS, SPECIFICATIONS OF THE DEPARTMENT ETC. THE SURVEY IS TO BE DONE AS PER INVESTIGATION AND DESIGNING CRITERIA OF THE IRRIGATION DEPARTMENT. THIS IS ALSO AS PER ART ICLE 11.1 OF THE AGREEMENT. THE ASSESSEE IS TO PROCURE THE MATERIALS INDEPENDENTLY AND THOSE MATERIALS ARE TO CONFIRM TO THE SPECIFICATIONS PROVIDED. THE ASSESSEE IS ALSO TO MAKE ITS ARRANGEMENTS FOR STORAGE OF THE MATERIALS. THIS IS AS PER ARTICLE 107 OF THE AGREEMENT. THUS, ADMITTEDLY THE WORK DONE BY THE ASSESSEE FALLS IN THE EXCLUSION PROVIDED TO THE MEANING OF THE WORK GIVEN IN THE EXPLANATION TO SECTION 194C OF THE ACT . ONCE IT FALLS OUTSIDE THE MEANING OF TERM WORK FOR THE PURPOSE OF SECTION 194C, THE QU ESTION THAT ARISES IS CAN IT BE SAID THAT THE ASSESSEE IS DOING THE WORK CONTRACT AS PR OVIDED IN THE SUBSTITUTED EXPLANATION IN SECTION 80IA AFTER SUB CLAUSE (13)?, THE ANSWER WOULD BE EMPHATIC NO. 12. THIS IS BECAUSE THE ASSESSEE IS DOING THE ACTIVITY OF DEVELOPMENT OF AN INFRASTRUCTURE FACILITY AS PROVIDED UNDER SECTION 80IA(4). THE PROJECT IS A TURNKEY PROJECT AND IT CANNOT FORM NOR HAVE A CHARACTER OF A WORKS CONTRACT. WORKS CONTRACT WOULD BE APPLICABLE TO THE REPAIRS AND MAINTENANCE OF AN EXISTING PROJECT. WORKS CONTRACT CANNOT BE IN RELATION TO THE DEVELOPMENT OF A NEW PROJECT. ONE OF THE ARGUMENTS RAISED BY THE LEARNED SR.DR THAT THE INT ENTION OF THE SUBSTITUTION OF THE EXPLANATION AFTER SUB CLAUSE (13) OF SECTION 80IA W AS TO DENY, THE BENEFIT OF DEDUCTION U/S. 80IA(4) IN RESPECT OF WORKS CONTRACT, BUT TO PROVIDE THE DEDUCTION TO SUCH UNDERTAKINGS, WHICH IS DOING THE BUSINESS OF BUILDI NG, OPERATING AND TRANSFER (BOT) AND BUILDING OWNING, OPERATING AND TRANSFER BOOT AS ALSO PPP CONTRACTS DOES NOT HOLD WATER IN SO FAR AS AN IRRIGATION PROJECT CAN NEVER FUNCTION UNDER BOT OR BOOT OR PPP . IN THE CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE ASSESSEES CLAIM IS NOT HIT BY THE SUBSTITUTED EXPLANATION AS PROVIDED AFTER SUB CLAUSE(13) OF SECTION 80IA.. HERE, WE MAY MENTION THAT THIS VIEW FINDS SUPPORT FROM THE DECISION OF THE CO- ORDINATE OF THE TRIBUNAL, [ITAT, HYDERABAD BENCH, HYDERABAD IN THE CASE OF GVPR ENGINEERS LTD & ORS (REFER TO SUPRA). WE MAY MENTI ON HERE THAT OUR VIEW ALSO FINDS SUPPORT FROM THE DECISION OF THE CO-ORDINATE BENC H OF THIS TRIBUNAL, ITAT CUTTACK BENCH, CUTTACK IN THE CASE OF ARSS INFRASTRUCTURE PROJECTS LTD VS. ACIT, CIRCLE-2 (1), BHUBANESWAR IN ITA NOS. 142, 143/CTK/2010 & 483,48 4/CTK/2011 DATED 13-06-2013, WHEREIN ONE OF US WAS A PARTY AND IN WHICH CASE IT HAS BEEN HELD AS UNDER :- 10. NOW COMING TO THE MERITS OF THE DEDUCTION U/S. 801A(4) OF THE ACT. A PERUSAL OF THE PROVISIONS OF SECTION 801A(4) OF THE ACT SHOWS THAT IN THE EXPLANATION INFRASTRUCTURE FACILITY HAS BEEN SPECIFIED TO MEAN A ROAD INCLUDI NG A TOLL ROAD, A BRIDGE OR A RAIL SYSTEM. ADMITTEDLY, THE ASSESSEE IS DOING THE BUSIN ESS OF DEVELOPMENT OF RAILWAY TRACKS AND BRIDGES THEREOF AS ALSO ROADS. IF, WE ARE TO AC CEPT THE CONTENTION OF THE LD. CIT THAT THE PROVISIONS OF SECTION 801A(4) OF THE ACT AFTER THE SUBSTITUTION OF THE EXPLANATION TO SECTION 8OIA OF THE ACT WAS INTRODUCED WAS ONLY FOR THE PURPOSE OF GIVING THE BENEFIT TO BUT CONTRACTS THEN, THE EXPLANATION TO SECTION 801A (4) OF THE ACT BECOMES OTIOSE. THIS ITA NO S.194&251/KOL/2011 M/S .SIMPLEX PROJECTS LTD. A.YR.2007-08 8 IS AS EXPLANATION TO SECTION 801A(4) OF THE ACT SPE CIFICALLY PROVIDES FOR THE ROAD TO INCLUDE A TOLL ROAD, A BRIDGE OR A RAIL SYSTEM. BUT CONTRACT IN RESPECT OF THE RAILWAY SYSTEM CAN NEVER EXIST. FURTHER, A PERUSAL OF THE P ROVISIONS OF SECTION 801A OF THE ACT SHOWS THAT THE TERM WORKS CONTRACT IS NOT DEFINED IN THE SAID SECTION. HOWEVER, THE TERMS WORKS AND CONTRACT IS DEFINED IN THE PROV ISIONS OF SECTION 194C OF THE ACT. IF A PARTICULAR WORD OR TERM IS NOT DEFINED IN THE SPECI FIC SECTION THEN, ONE COULD GO TO OTHER SECTIONS IN THE SAID ACT WHERE THE DEFINITION WOULD BE AVAILABLE TO DRAW A MEANING TO THE SAID TERMS. IN THE PROVISIONS OF SECTION 194C O F THE ACT, WORK HAS BEEN GIVEN AN INCLUSIVE DEFINITION BUT IN THE SUBSEQUENT PORTION IT HAS EXCLUDED THE MANUFACTURING OR SUPPLYING A PRODUCT ACCORDING TO REQUIREMENT OR SPE CIFICATION OF A CUSTOMER BY USING MATERIAL PURCHASED FROM A PERSON OTHER THAN SUCH CU STOMER. AS HAS BEEN SPECIFIED BY THE LD. AR, THE ASSESSEE IS DOING CONTRACT WORK BUT THAT WORK IS ACCORDING TO THE REQUIREMENT AND SPECIFICATION OF THE CUSTOMER AND T HE SAME HAS BEEN DONE BY USING MATERIALS PURCHASE FROM THIRD PARTIES OTHER THAN TH E CUSTOMERS. THUS, THOUGH THE ASSESSEE IS DOING A WORKS CONTRACT THE SAME WOULD N OT FALL WITHIN THE MEANING OF THE WORD WORKS CONTRACT FOR THE PURPOSE OF THE ACT DU E TO THE EXCLUSION PROVIDED IN THE MEANING OF WORK IN SECTION 194C OF THE ACT. THE I SSUE RAISED BY THE LD. CIT THAT THE ASSESSEE IS NOT DOING THE DEVELOPMENT WORK BUT IS O NLY DOING THE CONTRACT ALSO DOES NOT STAND TO TEST AS THE ASSESSEE ADMITTEDLY IS DEVELOP ING THE ROADS AND RAILWAY LINES AND THE BRIDGES THEREOF. DEVELOPMENT ENCOMPASSES WITHIN ITSELF CONTRACT WORK. THE AGREEMENT BETWEEN THE ASSESSEE AND THE CUSTOMER BEI NG THE GOVERNMENT IS FOR THE DEVELOPMENT OF THE INFRASTRUCTURE FACILITY BEING RO ADS AND RAIL SYSTEMS AND BRIDGES BY PARTICIPATING IN THE TENDERS. UNDER THESE CIRCUMSTA NCES, WE ARE OF TH VIEW THAT THE AO WAS RIGHT IN LAW IN GRANTING THE ASSESSEE THE BENEF IT OF DEDUCTION U/S. 801A(4) OF THE ACT. 13. IN THE CIRCUMSTANCES, THE ASSESSING OFFIC ER IS DIRECTED TO GRANT THE ASSESSEE THE BENEFIT OF DEDUCTION U/S. 80IA OF THE ACT AS CLAIM ED. IT WAS THE SUBMISSION THAT IN THE CIRCUMSTANCES THE AO MAY BE DIRECTED TO GRANT THE ASSESSEE BENEFIT OF DEDUCTION U/S 80-IA OF THE ACT. IT WAS THE SUBMISSION THAT THE LD. CIT(A) HAD WITHOUT CONSIDERING THE EXPLANATION OF T HE ASSESSEE HELD THE ISSUE AGAINST THE ASSESSEE. 14. IN REPLY THE LD. DR SUPPORTED THE ORDER OF THE AO AND THE LD. CIT(A). IT WAS SUBMITTED BY THE LD. DR THAT THE EXPLANATION TO SEC TION 80-IA(13) OF THE ACT INTRODUCED BY THE FINANCE ACT, 2007 WAS LIABLE TO B E APPLIED AND THE ASSESSEE WAS NOT ENTITLED TO DEDUCTION U/S 80-IA(4) OF THE ACT. 15. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. AS IT IS NOTICED THAT THE ISSUE IS SQUARELY COVERED BY THE DECISION OF THE COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF ASSESSEES SISTER CONCERN REFERRED TO SUPRA AS A LSO ON ACCOUNT OF THE FACT THAT IT IS ITA NO S.194&251/KOL/2011 M/S .SIMPLEX PROJECTS LTD. A.YR.2007-08 9 NOTICED THAT ASSESSEE HAS BEEN PAYING VAT ON THE TU RN OVER IN RESPECT OF VARIOUS PROJECTS. THE PROJECTS WHICH HAVE BEEN UNDERTAKEN B Y THE ASSESSEE IN WEST BENGAL AND BIHAR ARE ALSO SUCH PROJECTS WHICH ARE ASSESSABLE U NDER THE RELEVANT STATES VAT LAWS IN THE CIRCUMSTANCES WE ARE OF THE VIEW THAT THE AS SESSEE IS ENTITLED TO THE BENEFIT OF DEDUCTION U;/S 80IA(4) AS CLAIMED. IN THE CIRCUMSTA NCES THE AO IS DIRECTED TO GRANT THE ASSESSEE BENEFIT OF DEDUCTION U/S 80IA OF THE ACT A S CLAIMED. 16. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALL OWED. 17. IN THE RESULT THE APPEAL OF THE REVENUE IS DISM ISSED AND THE APPEAL OF THE ASSESSEE IS ALLOWED. . ORDER PRONOUNCED IN THE COURT ON 17.01.2014. SD/- SD/- [ABRAHAM P.GEORGE] [ GEORGE MATHAN ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATE: 17.01.2014. R.G.(.P.S.) COPY OF THE ORDER FORWARDED TO: 1. M/S.SIMPLEX PROJECTS LTD.,12, NELLIE SENGUPTA SARAN I,KOLKATA-87. 2 I.T.O., WARD-12(2), KOLKATA 3 . CIT(A)-XII, KOLKATA 4. CIT - KOLKATA. 5. CIT(A)DR, KOLKATA BENCHES, KOLKATA TRUE COPY, BY ORDER, DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES