Welspun Projects Ltd.(Formerly known as MSK Projects (India) Ltd.), Baroda V. The Dy.CIT, Range-4, Baroda

ITA 225/AHD/2014

• Counselvise Citation: [2018] 122 COUNSELVISE.COM (IT) 5353 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 8 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-10-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 10-08-2017
• Assessment Year: 2006-2007
• Appeal Filed On: 22-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: APARNA M AGRAWAL
• Keywords: Bonafide belief; Retrospective amendment; Tangible material; Difference of opinion; Scheme of amalgamation; Condonation of delay; Change of opinion; Reassessment proceedings
• Section: 143(3); 142(1); 148; 2; 139

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ./ ITA NO. 1864/AHD/2013 / ASSESSMENT YEAR: 2005-06 AND ITA NO.225/AHD/2014 / ASSESSMENT YEAR: 2006-2007 WELSPUN PROJECTS (FORMERLY KNOWN AS MSK PROJECTS (INDIA) LTD. 707-708, STERLING CENTRE R.C.DUTT ROAD, ALKAPURI BARODA 390 005. PAN : AABCM 4107 C VS ITO, WARD-4(1) BARODA. / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI VARTIK CHOKSHI WITH SHRI BIREN SHAH, AR REVENUE BY : SMT.APARNA M. AGRAWAL, DR / DATE OF HEARING : 13/08/2018 /DATE OF PRONOUNCEMENT : 8/10/2018 O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER : PRESENT TWO APPEALS ARE DIRECTED AT THE INSTANCE OF THE ASSESSEE AGAINST OR DERS OF THE LD.CIT(A)- III, BARODA DATED 14.10.20111 AND 7.10.2013 PASSED IN THE ASSTT.YEARS 2005-06 AND 2006-07 RESPECTIVELY. 2. REGISTRY HAS POINTED OUT THAT APPEAL FOR THE ASS TT.YEAR 2005-06 IS TIME BARRED BY 557 DAYS. IN BOTH THE ASSESSMENT YE ARS, ON MERIT, THE ASSESSEE IS CHALLENGING REOPENING OF THE ASSESSMENT BY ISSUANCE OF NOTICE ITA NO.1864/AHD/2013 AND 225.AHD/2014 - 2 - UNDER SECTION 148 AND DISALLOWANCE OF DEDUCTION UND ER SECTION 80IA(4) OF THE INCOME TAX ACT, 1961. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HA S FILED ITS RETURN OF INCOME ON 31.10.2005 AND 31.12.2006. IT HAS CLAIME D DEDUCTION UNDER SECTION 80IA(4) OF RS.3,68,23,111/- AND RS.3,44,02 ,015/- IN THE ASSTT.YEARS 2005-06 AND 2006-07 RESPECTIVELY. THE LD.AO HAS SCRUTINIZED RETURN IN BOTH THE YEARS AND PASSED ORDERS UNDER SE CTION 143(3) ON 31.12.2007 AND 29.12.2010. THEREAFTER, HE REOPENED THE ASSESSMENT BY RECORDING REASONS AND ISSUED NOTICE UNDER SECTION 1 48 ON 15.3.2010 AND 6.7.2010 IN THE ASSTT.YEAR 2005-06 AND 2006-07 RESP ECTIVELY. IN THE SCRUTINY ASSESSMENT ORDERS, HE ALLOWED DEDUCTION UN DER SECTION 80IA(4), BUT IN THE RE-ASSESSMENT ORDER, HE DISALLOWED THE C LAIM ON THE GROUND THAT THE ASSESSEE-COMPANY WAS NOT IN THE BUSINESS O F DEVELOPMENT OF INFRASTRUCTURE PROJECT, RATHER IT HAS WORKED AS A C ONTRACTOR. 4. BEFORE AVERTING TO THE ISSUE OF REOPENING AS WEL L AS DISALLOWANCE OF DEDUCTION UNDER SECTION 80IA(4) ON MERIT, WE WOULD LIKE TO FIRST TO ADDRESS THE ISSUE, WHETHER DELAY IN FILING APPEAL I N THE ASSTT.YEAR 2005- 06 DESERVES TO BE CONDONED OR NOT. IN SUPPORT OF H IS SUBMISSIONS, APPLICATION FOR CONDONATION OF DELAY AND AFFIDAVIT OF DIRECTOR OF ASSESSEE-COMPANY, WELSPOUN PROJECTS LTD. (FORMERLY KNOWN AS MSK PROJECTS (INDIA) LTD. SHRI SANDEEP GARG HAVE BEEN F ILED. IN HIS AFFIDAVIT, THE DEPONENT HAS DEPOSED AS UNDER: I, AM DIRECTOR OF WELSPUN PROJECTS LTD, (FORMERLY KNOWN AS MSK PROJECTS (INDIA) LTD.) WHICH IS ENGAQED IN THE BUSINE SS OF DEVELOPING INFRASTRUCTURE FACILITIES LIKE ROAD, HIGHWAY PROJEC TS, ETC. I HAVE BEEN ITA NO.1864/AHD/2013 AND 225.AHD/2014 - 3 - AUTHORIZED BY THE COMPANY TO MAKE THIS AFFIDAVIT ON BEHALF OF THE COMPANY. 2. I HEREBY STATE THAT WELSPUN PROJECTS LTD. (FORME RLY KNOWN AS MSK PROJECTS (INDIA) LTD.) HAD DURING THE A. Y. 2005-06 (F.Y. 2004-05) HAD UNDERTAKEN DEVELOPMENT OF CONTRACT FOR ITS GROUP CO NCERNS BEING M/S. MSK INFRASTRUCTURE & TOLL BRIDGE PVT. L TD. (FOR HOSANGABAD- HARDA-KHANDWA PROJECT) AND M/S. MSK HIGHWAYS LTD. (F OR RAISEN- RAHATGARH PROJECT). THE TRIPARTITE CONTRACTS WERE 'EXECUTED 'BETWEEN THE COMPANY, THE COMPANY'S GROUP CONCERNS AND THE GOVERNMENT MERELY TO FULFILL THE TENDER REQUIREMENT OF THE CONCERNED AUTHORITIES MAINLY TO MEET WITH THE ELIGIBILITY CRI TERIA. 3. WELSPUN PROJECTS LTD. (FORMERLY KNOWN AS MSK PRO JECTS (INDIA) LTD.) FILED ITS RETURN OF INCOME FOR THE A. Y. 2005- 06 (F.Y. 2004-05) ON 31/10/2005 DECLARING TOTAL INCOME AT 1,64,27,700/- AND ITS REGULAR ASSESSMENT WAS FINALIZED ON 12/06/2009 ASSESSING TO TAL INCOME AT RS. 1,14,01,876/-. 4. THE COMPANY RECEIVED A NOTICE U/S 148 OF THE INC OME TAX ACT, 1961 ('INCOME TAX ACT') DATED 29/12/2010 FOR REASSE SSMENT OF THE COMPANY'S INCOME FOR THE A. Y. 2005-06 (F.Y. 2004-0 5) AND THE ORDER U/S 143(3) R.W.S. 147 WAS FINALIZED ON 29/12/2010 DE TERMINING TOTAL INCOME AT RS. 4!82,24,990/- AND IN THE SAID ORDER T HE A.O. DISALLOWED THE COMPANY'S CLAIM FOR DEDUCTION U/S. 80IA OF RS. 3,68 ,23,111/-. BEING AGGRIEVED OF THE AFORESAID ASSESSMENT ORDER, THE AP PELLANT PREFERRED AN APPEAL BEFORE THE LEARNED CIT(A), HOWEVER, THE LEAR NED CIT(A) VIDE THE APPELLATE ORDER DATED 14/10/2011 CONFIRMED THE AFOR ESAID DISALLOWANCE. 5. I HEREBY STATE THAT THE AMOUNT OF RS. 3,68,23,11 1 /- CLAIMED BY THE COMPANY AS DEDUCTION U/S 80IA OF THE INCOME TAX ACT WAS ALLOWED AS DEDUCTION IN THE ORIGINAL ASSESSMENT, HOWEVER THE L D. A.O. IN RE- ASSESSMENT ORDER HAS DISALLOWED THE COMPANY'S CLAIM OF AFORESAID DEDUCTION WRONGLY ALLEGING THAT THE COMPANY WAS MER ELY A SUB CONTRACTOR AND NOT -A DEVELOPER OF INFRASTRUCTURE P ROJECTS. FURTHERMORE, THE A.O. APPLIED THE RETROSPECTIVE AMENDMENT MADE T O SECTION 80IA OF THE INCOME TAX ACT THROUGH THE FINANCE (NO. 2) OF AC T, 2009 AND WITHDREW THE DEDUCTION CLAIMED U/S 80IA OF THE IN COME TAX ACT. 6. I HEREBY FURTHER STATE THAT THE COMPANY DID NOT FILE AN APPEAL AGAINST CIT(A) ORDER DATED 14/10/2011 MERELY BECAUSE IT WAS UNDER A ITA NO.1864/AHD/2013 AND 225.AHD/2014 - 4 - BONAFIDE BELIEF THAT THE SAID RETROSPECTIVE AMENDME NT WAS SQUARELY APPLICABLE AND THUS DEDUCTION U/S 80-IA WAS NOT AVA ILABLE TO IT. ALSO, THAT THE ASSESSING OFFICER WHILE FINALIZING THE ASSESSME NT HAD ASSURED THE APPELLANT COMPANY THAT NO PENALTY WILL BE LEVIED ON THE APPELLANT BECAUSE OF THE REASON THAT THE ADDITION WAS MADE ON ACCOUNT OF .A RETROSPECTIVE AMENDMENT. EVEN AFTER ASSURING THE APPELLANT FOR NO T LEVYING THE PENALTY, THE LEARNED ASSESSING OFFICER PASSED A PENALTY ORDER U/S 271(1)(C) OF THE INCOME TAX ACT DATED 25.3.2013, ALL EGING THAT THE COMPANY HAD FILED ACCURATE PARTICULARS OF INCOME WH ILE FILING ITS RETURN OF INCOME. BEING AGGRIEVED OF THE IMPUGNED PENALTY ORDER, THE APPELLANT FILED AN APPEAL BEFORE THE CIT(A) ON 24.04.2013., WHEREIN THE CHARTERED ACCOUNTANT FIRM APPOINTED TO DRAFT AND FILE THE APP EAL REFERRED TO VERY RECENT CASE LAWS. DECISION OF JURISDICTIONAL HIGH C OURT IN THE. CASE OF C1T V/S KATIRA CONSTRUCTION REPORTED IN THE MONTH O F MARCH 2013 WHERE IN THE HIGH COURT HAS OBSERVED THAT CLAIM U/S 80IA OF THE ACT IS ALLOWABLE TO ENTITIES WHO UNDERTAKE SUBSTANTIAL FUN CTIONS FOR THE ELIGIBLE PROJECT. HENCE THE UNDERSTANDING GIVEN BY THE ASSES SING OFFICER TO THE APPELLANT COMPANY THAT IT IS NOT ELIGIBLE TO CLAIM DEDUCTION U/S 80 IA WAS INCORRECT AND MISPLACED IN LIGHT OF THE RETROSPECTI VE AMENDMENT. THE CASE LAWS AS REFERRED ABOVE ARE ENUMERATED HERE UNDER ALONG WITH THE NAME OF ADJUDICATING AUTHORITY AND THE RELEVANT CIT ATION: A. THE GUJARAT HIGH COURT DECISION IN THE CASE OF KATFRA CONSTRUCTION CO. VS. UNION OF INDIA VIDE CITATION 3 52 ITR 513, PRONOUNCED ON 04.03.201 3 AND REPORTED ON 03.05.201 3 IN ITR; B. THE BOMBAY HIGH COURT DECISION IN THE CASE OF B. T.PATIL & CO. BELGAUM CONSTRUCTION PVT. LTD. REPORTED ON 1 1.04.2 013 ON ITAT ONLINE WEBSITE; C. THE HYDERABAD ITAT DECISION OF KMC CONSTRUCTION LTD. VS. ACIT VIDE CITATION 51 SOT 211 (URO) REPORTED ON 1 6.03.20 1 3 IN SOT; D. THE AHMEDABAD ITAT DECISION IN THE CASE OF SUGAM CONSTRUCTION VS. ITO VIDE CITATION 30 TAXMANN.COM 3 31 FOR AY 2001 -02 REPORTED IN FEBRUARY 201 3 ON TAXMANN.COM. THE ADJUDICATING AUTHORITIES CITIED ABOVE HAVE ALLO WED THE BENEFIT U/S 80- IA.TO PERSON WHO UNDERTAKES SUBSTANTIAL FUNCTIONS S UCH AS PLANNING, ITA NO.1864/AHD/2013 AND 225.AHD/2014 - 5 - DESIGNING, CONSTRUCTIONS, ETC. IT HAS BEEN HELD THA T THESE ACTIVITIES CONSTITUTED DEVELOPMENT OF PROJECT AND HENCE ELIGIB LE FOR DEDUCTION U/S 80-IA OF THE ACT. THE COMPANY HAS UNDERTAKEN SUBSTA NTIAL ACTIVITIES IN RESPECT OF THE HOSANGABAD- HARDA-KHANDWA ROAD PROJE CT AND RAISEN- RAHATGARH ROAD PROJECT SO AS TO QUALIFY AS A DEVELO PER OF INFRA FACILITY. THE ACTIVITIES UNDERTAKEN HAVE BEEN DISCUSSED AT LE NGTH IN THE STATEMENT OF FACTS FILED ALONG WITH THE GROUNDS OF APPEAL AND FORM 36. CONSEQUENTLY IN ACCORDANCE WITH THE AUTHORITIES CIT ED ABOVE, IT IS ELIGIBLE TO DEDUCTION U/S 80-IA. THEREFORE THE COMPANY PROCE EDED TO FILE AN APPEAL AGAINST CIT(A) ORDER DATED 14/10/2011 CHALLEN GING THE DECISION OF DISALLOWANCE OF DEDUCTION U/S. 80IA OF THE ACT ALON G WITH A PETITION FOR CONDONING THE DELAY OF 557 DAYS VIDE ITA NO.1864/AH D/2013. 5. THE LD.COUNSEL FOR THE ASSESSEE TOOK US THROUGH THE APPLICATION FOR CONDONATION OF DELAY AS WELL AS AFFIDAVIT OF THE DI RECTOR. HE CONTENDED THAT IT WAS A NEW ISSUE AT THE TIME WHEN THE LD.CIT (A) HAS DECIDED THE APPEAL OF THE ASSESSEE. TO SOME EXTENT THE ASSESSE E WAS NOT INCLINED TO AGITATE THE ISSUE WITH THE DEPARTMENT FURTHER ON AN UNDERSTANDING THAT THE DEPARTMENT WOULD NOT INITIATE PENALTY PROCEEDIN GS. BUT DEPARTMENT HAS INITIATED PENALTY PROCEEDINGS AGAINST THE ASSES SEE. IT IMPOSED PENALTY UNDER SECTION 271(1)(C) OF THE ACT ON 25.3. 2013 ALLEGING THAT THE COMPANY HAD FILED INACCURATE PARTICULARS OF INCOME WHILE FILING ITS RETURN, AND THEREFORE, AGAINST THE ORDER OF THE CIT (A) IT HAS BEEN FORCED TO FILE THE APPEAL, OTHERWISE, IT WOULD BE BURDENED WITH PENALTY AS WELL AS DIRECTORS WOULD BE EXPOSED TO CRIMINAL PROCEEDIN GS. HE FURTHER CONTENDED THAT THE ISSUE ON MERIT REGARDING ADMISSI BILITY OF DEDUCTION UNDER SECTION 80IA(4) IS CONCERNED, THAT HAS BEEN D ECIDED IN FAVOUR OF THE ASSESSEE BY THE ITAT IN THE ASSTT.YEAR 2010-11. HE PLACED ON RECORD COPY OF THE TRIBUNALS ORDER PASSED IN ITA NO.2940/ AHD/2013 AND 2956/AHD/2013. THE TRIBUNAL HAS DECIDED ABOVE CROS S APPEALS VIDE ORDER DATED 28.9.2017. HE FURTHER SUBMITTED THAT IN ASSTT.YEAR 2008-09 ITA NO.1864/AHD/2013 AND 225.AHD/2014 - 6 - THE DEDUCTION UNDER SECTION 80IA(4) HAS BEEN ALLOWE D BY THE COMMISSIONER WHILE EXERCISING REVISIONAL POWER UNDE R SECTION 264 OF THE ACT. HE ALSO EMPHASISED THAT IDENTICAL ISSUE I S OPEN BEFORE THE TRIBUNAL IN THE ASSTT.YEAR 2006-07 WHERE THE APPEAL FILED IS WITHIN LIMITATION. THUS, CONSIDERING THE ABOVE CIRCUMSTAN CES, DELAY IN FILING THE APPEAL BE CONDONED. ON THE OTHER HAND, THE LD. DR CONTENDED THAT THERE IS NO PLAUSIBLE EXPLANATION AT THE END OF THE ASSESSEE FOR FILING APPEAL AFTER EXPIRY OF LIMITATION. THEREFORE, SHE PRAYED THAT DELAY IN FILING APPEAL BE NOT CONDONED AND THE APPEAL BE DIS MISSED BEING TIME BARRED. 6. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND GONE TH ROUGH THE RECORD. SUB-SECTION 5 OF SECTION 253 CONTEMPLATES THAT THE TRIBUNAL MAY ADMIT AN APPEAL OR PERMIT FILING OF MEMORANDUM OF C ROSS-OBJECTIONS AFTER EXPIRY OF RELEVANT PERIOD, IF IT IS SATISFIED THAT THERE WAS A SUFFICIENT CAUSE FOR NOT PRESENTING IT WITHIN THAT PERIOD. TH IS EXPRESSION SUFFICIENT CAUSE EMPLOYED IN THE SECTION HAS ALSO BEEN USED IDENTICALLY IN SUB-SECTION 3 OF SECTION 249 OF INCOME TAX ACT, WHICH PROVIDES POWERS TO THE LD.COMMISSIONER TO CONDONE THE DELAY IN FILING THE APPEAL BEFORE THE COMMISSIONER. SIMILARLY, IT HAS BEEN U SED IN SECTION 5 OF INDIAN LIMITATION ACT, 1963. WHENEVER INTERPRETATI ON AND CONSTRUCTION OF THIS EXPRESSION HAS FALLEN FOR CONSIDERATION BEF ORE HONBLE HIGH COURT AS WELL AS BEFORE THE HONBLE SUPREME COURT, THEN, HONBLE COURT WERE UNANIMOUS IN THEIR CONCLUSION THAT THIS EXPRES SION IS TO BE USED LIBERALLY. WE MAY MAKE REFERENCE TO THE FOLLOWING OBSERVATIONS OF THE HONBLE SUPREME COURT FROM THE DECISION IN THE CASE OF COLLECTOR LAND ACQUISITION VS. MST. KATIJI & OTHERS, 1987 AIR 1353 : ITA NO.1864/AHD/2013 AND 225.AHD/2014 - 7 - 1. ORDINARILY A LITIGANT DOES NOT STAND TO BENEFIT BY LODGING AN APPEAL LATE. 2. REFUSING TO CONDONE DELAY CAN RESULT IN A MERITO RIOUS MATTER BEING THROWN OUT AT THE VERY THRESHOLD AND CAUSE OF JUSTI CE BEING DEFEATED. AS AGAINST THIS WHEN DELAY IS CONDONED THE HIGHEST THA T CAN HAPPEN IS THAT A CAUSE WOULD BE DECIDED ON MERITS AFTER HEARING THE PARTIES. 3. 'EVERY DAY'S DELAY MUST BE EXPLAINED' DOES NOT M EAN THAT A PEDANTIC APPROACH SHOULD BE MADE. WHY NOT EVERY HOUR'S DELAY , EVERY SECOND'S DELAY? THE DOCTRINE MUST BE APPLIED IN A RATIONAL C OMMON SENSE PRAGMATIC MANNER. 4. WHEN SUBSTANTIAL JUSTICE AND TECHNICAL CONSIDERA TIONS ARE PITTED AGAINST EACH OTHER, CAUSE OF SUBSTANTIAL JUSTICE DE SERVES TO BE PREFERRED FOR THE OTHER SIDE CANNOT CLAIM TO HAVE VESTED RIGH T IN INJUSTICE BEING DONE BECAUSE OF A NON-DELIBERATE DELAY. 5. THERE IS NO PRESUMPTION THAT DELAY IS OCCASIONED DELIBERATELY, OR ON ACCOUNT OF CULPABLE NEGLIGENCE, OR ON ACCOUNT OF MA LA FIDES. A LITIGANT DOES NOT STAND TO BENEFIT BY RESORTING TO DELAY. IN FACT HE RUNS A SERIOUS RISK. 6. IT MUST BE GRASPED THAT JUDICIARY IS RESPECTED N OT ON ACCOUNT OF ITS POWER TO LEGALIZE INJUSTICE ON TECHNICAL GROUNDS BU T BECAUSE IT IS CAPABLE OF REMOVING INJUSTICE AND IS EXPECTED TO DO SO. 7. SIMILARLY, WE WOULD LIKE TO MAKE REFERENCE TO AU THORITATIVE PRONOUNCEMENT OF HONBLE SUPREME COURT IN THE CASE OF N.BALAKRISHNAN VS. M. KRISHNAMURTHY (SUPRA). IT READS AS UNDER: RULE OF LIMITATION ARE NOT MEANT TO DESTROY THE RI GHT OF PARTIES. THEY ARE MEANT TO SEE THAT PARTIES DO NOT RESORT TO DILATORY TACTICS, BUT SEEK THEIR REMEDY PROMPTLY. THE OBJECT OF PROVIDING A LEGAL RE MEDY IS TO REPAIR THE DAMAGE CAUSED BY REASON OF LEGAL INJURY. LAW OF LIM ITATION FIXES A LIFE- SPAN FOR SUCH LEGAL REMEDY FOR THE REDRESS OF THE L EGAL INJURY SO SUFFERED. TIME IS PRECIOUS AND THE WASTED TIME WOULD NEVER RE VISIT. DURING EFFLUX OF TIME NEWER CAUSES WOULD SPROUT UP NECESSITATING NEWER PERSONS TO SEEK LEGAL REMEDY BY APPROACHING THE COURTS. SO A L IFE SPAN MUST BE FIXED FOR EACH REMEDY. UNENDING PERIOD FOR LAUNCHING THE REMEDY MAY LEAD TO UNENDING UNCERTAINTY AND CONSEQUENTIAL ANARCHY. LAW OF LIMITATION IS THUS FOUNDED ON PUBLIC POLICY. IT IS ENSHRINED IN T HE MAXIM INTEREST ITA NO.1864/AHD/2013 AND 225.AHD/2014 - 8 - REIPUBLICAE UP SIT FINIS LITIUM (IT IS FOR THE GENE RAL WELFARE THAT A PERIOD BE PUTT TO LITIGATION). RULES OF LIMITATION ARE NOT MEANT TO DESTROY THE RIGHT OF THE PARTIES. THEY ARE MEANT TO SEE THAT PARTIES DO NOT RESORT TO DILATORY TACTICS BUT SEEK THEIR REMEDY PROMPTLY. THE IDEA IS THAT EVERY LEGAL REMEDY MUST BE KEPT ALIVE FOR A LEGISLATIVELY FIXED PERIOD OF TIME. A COURT KNOWS THAT REFUSAL TO CONDONE DELAY WOULD R ESULT FORECLOSING A SUITOR FROM PUTTING FORTH HIS CAUSE. THERE IS NO PR ESUMPTION THAT DELAY IN APPROACHING THE COURT IS ALWAYS DELIBERATE. THIS CO URT HAS HELD THAT THE WORDS 'SUFFICIENT CAUSE' UNDER SECTION 5 OF THE LIM ITATION ACT SHOULD RECEIVE A LIBERAL CONSTRUCTION SO AS TO ADVANCE SUB STANTIAL JUSTICE VIDE SHAKUNTALA DEVI LAIN VS. KUNTAL KUMARI [AIR 1969 SC 575] AND STATE OF WEST BENGAL VS. THE ADMINISTRATOR, HOWRAH MUNICIPAL ITY [AIR 1972 SC 749]. IT MUST BE REMEMBERED THAT IN EVERY CASE OF D ELAY THERE CAN BE SOME LAPSE ON THE PART OF THE LITIGANT CONCERNED. T HAT ALONE IS NOT ENOUGH TO TURN DOWN HIS PLEA AND TO SHUT THE DOOR AGAINST HIM. IF THE EXPLANATION DOES NOT SMACK OF MALA FIDES OR IT IS NOT PUT FORTH AS PART OF A DILATORY STRATEGY THE COURT MUST SHOW UTMOST CONSIDERATION T O THE SUITOR. BUT WHEN THERE IS REASONABLE GROUND TO THINK THAT THE DELAY WAS OCCASIONED BY THE PARTY DELIBERATELY TO GAIN TIME THEN THE COURT SHOU LD LEAN AGAINST ACCEPTANCE OF THE EXPLANATION. WHILE CONDONING DELA Y THE COULD SHOULD NOT FORGET THE OPPOSITE PARTY ALTOGETHER. IT MUST B E BORNE IN MIND THAT HE IS A LOOSER AND HE TOO WOULD HAVE INCURRED QUIET A LARGE LITIGATION EXPENSES. IT WOULD BE A SALUTARY GUIDELINE THAT WHE N COURTS CONDONE THE DELAY DUE TO LACHES ON THE PART OF THE APPLICANT TH E COURT SHALL COMPENSATE THE OPPOSITE PARTY FOR HIS LOSS. WE DO NOT DEEM IT NECESSARY TO RE-CITE OR RECAPITUL ATE THE PROPOSITION LAID DOWN IN OTHER DECISIONS. IT IS SUFFICE TO SAY THAT THE HONBLE COURTS ARE UNANIMOUS IN THEIR APPROACH TO PROPOUND THAT WH ENEVER THE REASONS ASSIGNED BY AN APPLICANT FOR EXPLAINING THE DELAY, THEN SUCH REASONS ARE TO BE CONSTRUED WITH A JUSTICE ORIENTED APPROACH. 8. IN THE LIGHT OF THE ABOVE, LET US EXAMINE THE FA CTS OF THE PRESENT CASE. NOW DOUBT, WHEN THE LD.CIT(A) HAS UPHELD DIS ALLOWANCE OF DEDUCTION UNDER SECTION 80IA(4) OF THE ACT IN 2011, THE ASSESSEE DID NOT FILE APPEAL PRESUMABLY UNDER THE IMPRESSION THAT TH IS DEDUCTION IS NOT ADMISSIBLE TO IT, AND THE DEPARTMENT WILL NOT INITI ATE PENALTY ITA NO.1864/AHD/2013 AND 225.AHD/2014 - 9 - PROCEEDINGS. HOWEVER, SUBSEQUENTLY DEPARTMENT HAS INITIATED PENALTY PROCEEDINGS AND IMPOSED PENALTY FOR FURNISHING INAC CURATE PARTICULARS OF INCOME. THIS STEP AT THE END OF THE DEPARTMENT COULD EXPOSE THE ASSESSEE UNDER FURTHER FINANCIAL LIABILITY AS WELL AS CRIMINAL PROCEEDINGS. IN BETWEEN, THERE HAS BEEN A LOT OF DEVELOPMENT ABO UT INTERPRETATION AND CONSTRUCTION OF SECTION 80IA(4) AT THE END OF T HE HONBLE HIGH COURTS. THE LD.CIT(A) HAS ALSO DECIDED THIS ISSUE AGAINST THE ASSESSEE IN THE ASSTT.YEAR 2006-07. CUMULATIVE SETTINGS OF ALL THESE FACTORS WOULD GOAD THE ASSESSEE TO CHALLENGE ORDER OF THE LD.CIT( A) IN THE ASSTT.YEAR 2005-06 ALSO. TAKING INTO CONSIDERATION ALL THESE FACTS AND CIRCUMSTANCES, WE ARE OF THE VIEW THAT THOUGH SOME MISCONCEPTION AND MISCONSTRUCTION OF FACTS CREPT IN THE MIND OF DECIS ION MAKING OFFICER OF THE COMPANY, WHETHER TO FILE APPEAL OR NOT, WHEN TH E CIT(A) HAS DECIDED THIS APPEAL, BUT SUBSEQUENT DEVELOPMENT PUT THE ASSESSEE AGAINST THE WALL, LEAVING NO OTHER WAY EXCEPT TO FI LE APPEAL, BECAUSE THAT WOULD UNNECESSARY BRING IT UNDER THE BURDEN OF PENA LTY AS WELL AS COULD EXPOSE IT WITH CRIMINAL PROCEEDINGS. NO CHOICE HAS BEEN LEFT TO THE ASSESSEE. SOME NEGLIGENCE MAY BE ATTRIBUTABLE TO T HE ASSESSEE FOR NOT FILING APPEAL IN TIME, BUT IT WAS NOT ADOPTED AS A STRATEGY, BECAUSE, THE ASSESSEE WOULD NOT GET ANYTHING BY MAKING THE APPEA L TIME BARRED. THEREAFTER, AFTER LOOKING INTO FACTS AND CIRCUMSTAN CES AND THE EXPLANATION GIVEN BY THE ASSESSEE, WE ALLOW THE APP LICATION OF THE ASSESSEE AND CONDONE THE DELAY IN FILING HE APPEAL. 9. NOW WE PROCEED TO DECIDE BOTH THE APPEALS ON MER IT. IN GROUND NO.1, THE ASSESSEE IS CHALLENGING VALIDITY OF RE-AS SESSMENT ORDERS PASSED UNDER SECTION 147 OF THE ACT. THE ASSESSEE HAS FIL ED STATEMENT FACTS IN ITA NO.1864/AHD/2013 AND 225.AHD/2014 - 10 - THE ASSTT.YEAR 2005-06, WHICH IS RUNNING INTO 35 PA GES. IN THE STATEMENT IT HAS HIGHLIGHTED ITS ACTIVITY AND HOW IT IS ENTIT LED FOR THE DEDUCTION UNDER SECTION 80IA(4) OF THE ACT. FOR APPRECIATING THE ISSUE, WHETHER REOPENING IS JUSTIFIED OR NOT, IT IS IMPERATIVE UPO N US TO TAKE NOTE OF THE FACTS AND CIRCUMSTANCES SUBMITTED IN THIS STATEMENT OF FACTS. RELEVANT PART OF THE STATEMENT OF FACTS READ AS UNDER: 1. WITH REGARD TO GROUND NO.1 OF THE APPEAL, IT IS RESPECTFULLY SUBMITTED THAT THE REASSESSMENT PROCEEDINGS INITIATED U/S.147 BY ISSUE OF NOTICE U/S.148 ARE BAD IN LAW FOR THE REASON THAT THE ORIGINAL ASSESSMENT WAS MADE U/S.143(3) AND THERE WAS PROPER APPLICATION OF MIND ON THE PART OF THE ASSESSING OFFICER WHILE FRAMING THE ASSESSMENT AND ALLOWING DEDUCTION U/S.80-IA(4) OF THE I.T. ACT. NO NEW MATERIAL HAS BEEN BROUGHT ON RECORD BY THE ASSESSING OFFICER TO JUSTIFY INITIATION OF REASSESSMENT PROCEEDINGS. FUR THER DETAILED SUBMISSIONS WOULD BE MADE ON THIS ISSUE, IN DUE COURSE, BEFORE THE HON'BLE TRIBUNAL. 2.1 WITH REGARD TO GROUND NO.2 PERTAINING TO DISALL OWANCE OF DEDUCTION OF RS.3,68,23,101 U/S.80-IA(4) OF THE I.T. ACT, THE RE LEVANT FACTS ARE THAT THE ASSESSMENT WAS ORIGINALLY MADE ON 31 ST DECEMBER, 2007 U/S.143(3) OF THE I.T. ACT. AT PARA-2 OF THIS ASSESSMENT ORDER THE ASSESSI NG OFFICER HAS STATED THAT THE APPELLANT-COMPANY IS ENGAGED IN THE BUSINESS OF DEVELOPMENT OF INFRASTRUCTURE PROJECTS AND THAT DURING THE CURRENT YEAR THE SUBSIDIARY COMPANIES OF THE APPELLANT-COMPANY VIZ. (1) MSK HIG HWAYS LTD.; (2) MSK INFRASTRUCTURE AND TOLL BRIDGE PVT. LTD. AND (3) AL FA ENGICON PVT. LTD., HAVE BEEN AMALGAMATED WITH THE APPELLANT-COMPANY WITH EF FECT FROM 1 ST JANUARY, 2005, AS APPROVED BY THE HON'BLE HIGH COURT OF GUJA RAT ON 2 ND NOVEMBER, 2006. THE ASSESSING OFFICER AFTER CONSIDERING ALL T HE RELEVANT FACTS, ALLOWED THE DEDUCTION BY ACCEPTING THE REVISED COMPUTATION OF TOTAL INCOME AND HE MADE CERTAIN OTHER DISALLOWANCES. 2.2 SUBSEQUENT TO THE COMPLETION OF THE ORIGINAL AS SESSMENT, AS MENTIONED ABOVE, REASSESSMENT PROCEEDINGS WERE INITIATED BY ISSUE OF NOTICE U/S.148 OF THE I.T. ACT ON 15.3.2010. THE REASSESSMENT ORDER WHICH IS S UBJECT MATTER OF THE PRESENT APPELLATE PROCEEDINGS WAS PASSED ON 29.12.2 010. WHILE RE-COMPUTING THE TOTAL INCOME IN THIS REASSESSMENT ORDER THE ASS ESSING OFFICER DISALLOWED THE CLAIM FOR DEDUCTION U/S.80-IA(4). THE ASSESSING OFFICER HAS RECORDED HIS FINDING AT PAGES 8 TO 10 OF HIS ORDER. HE HAS MENTI ONED THAT DURING THE PREVIOUS YEAR RELEVANT TO THIS ASSESSMENT YEAR THE APPELLANT-COMPANY WAS ONLY A CIVIL CONTRACTOR. HE HAS MENTIONED THAT THE APPEL LANT-COMPANY WORKED ONLY AS A SUB-CONTRACTOR FOR MSK INFRASTRUCTURE AND TOLL BRIDGE PVT. LTD. AND MSK HIGHWAYS LTD. WHICH ARE TWO DIFFERENT COMPANIES, I NDEPENDENTLY ASSESSED TO INCOME-TAX. HE HAS FURTHER STATED THAT THESE TWO C OMPANIES WERE ENGAGED IN CONSTRUCTION OF HOSHANGABAD-HARDA-KHANDWA ROAD AND RAISEN-RAHATGARH ROAD IN THE STATE OF MADHYA PRADESH. HE HAS STATED THAT THESE TWO COMPANIES GOT THEIR WORK DONE THROUGH THE APPELLANT-COMPANY A ND THE APPELLANT- COMPANY HAS SHOWN CONTRACTUAL RECEIPT OF RS.28,90,8 6,936 FROM MSK ITA NO.1864/AHD/2013 AND 225.AHD/2014 - 11 - INFRASTRUCTURE AND TOLL BRIDGE PVT. LTD. AND CONTRA CTUAL RECEIPT OF RS.33,72,99,030 FROM MSK HIGHWAYS LTD. FOR EXECUTIO N OF THE AFORESAID CONTRACT WORKS AND ON THESE PAYMENTS THE TWO COMPAN IES ALSO DEDUCTED TDS. FROM THESE FACTS THE ASSESSING OFFICER ASSUMED THAT THE APPELLANT- COMPANY WAS ENGAGED IN EXECUTING ONLY WORKS CONTRAC TS DURING THIS YEAR AND THAT THE EXPLANATION INSERTED UNDER SUB-SECTION (13 ) OF SECTION 80-IA BY THE FINANCE (NO.2) ACT, 2009 WITH RETROSPECTIVE EFFECT FROM 1.4.2000 WAS APPLICABLE TO THE CASE OF THE ASSESSEE. THIS EXPLAN ATION READS AS UNDER: EXPLANATION. FOR THE REMOVAL OF DOUBTS, IT IS HEREBY DECLARED THAT NOTHING CONTAINED IN THIS SECTION SHA LL APPLY IN RELATION TO A BUSINESS REFERRED TO IN SUB-SECTION ( 4) WHICH IS IN THE NATURE OF A WORKS CONTRACT AWARDED BY ANY PERSO N (INCLUDING THE CENTRAL OR STATE GOVERNMENT) AND EXE CUTED BY THE UNDERTAKING OR ENTERPRISE REFERRED TO IN SUB-SE CTION (1). 2.3 THE ASSESSING OFFICER AT PAGE-9 OF HIS ORDER CO NCLUDED THAT IN VIEW OF THE ABOVE EXPLANATION, THE APPELLANT-COMPANY IS NOT ENT ITLED TO CLAIM ANY DEDUCTION U/S.80-IA FOR THE PRESENT ASSESSMENT YEAR AND ACCORDINGLY HE DISALLOWED THE CLAIM. 2.4 AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER THE APPELLANT-COMPANY FILED APPEAL BEFORE THE LEARNED CIT(A) AND HE CONFIRMED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER. HENCE THIS APPEAL BEFORE TH IS HON'BLE TRIBUNAL. 2.5 BEFORE COMING TO THE LEGAL POSITION ON THIS ISS UE, IT MAY BE APPROPRIATE, AT THE OUTSET, TO SET OUT BRIEFLY ALL THE RELEVANT FACTS H AVING BEARING ON THE ISSUE OF ADMISSIBILITY OF DEDUCTION U/S.80-IA(4) OF THE I.T . ACT. THERE IS NO DISPUTE ABOUT THE FACT THAT THE APPELLANT-COMPANY (KNOWN AS MSK PROJECTS (INDIA) LTD. AT THE RELEVANT TIME) WAS ENGAGED IN THE ACT IVITY OF DEVELOPMENT OF INFRASTRUCTURE PROJECTS ELIGIBLE FOR DEDUCTION U/S. 80-IA(4) OF THE I.T. ACT. AS MENTIONED ABOVE, DEDUCTION WAS GRANTED BY THE ASSES SING OFFICER ORIGINALLY IN THE ASSESSMENT MADE U/S.143(3) OF THE I.T. ACT A FTER DETAILED SCRUTINY. ALL RELEVANT MATERIAL/DOCUMENTS WERE AVAILABLE BEFORE T HE ASSESSING OFFICER WHO MADE THE ORIGINAL ASSESSMENT. THE RELEVANT FACTS MA Y BE STATED BELOW IN CHRONOLOGICAL ORDER FOR KIND CONSIDERATION OF THIS HON'BLE TRIBUNAL: (1) M.P. RAJYA SETU NIRMAN NIGAM LTD. (MPRSNN FOR S HORT), AS AUTHORIZED BY THE GOVERNMENT OF M.P., INVITED TENDE RS FROM QUALIFIED COMPANIES FOR DEVELOPING, STRENGTHENING, RE-CONSTRU CTING, WIDENING, REHABILITATION, OPERATION AND MAINTENANCE OF THE FO LLOWING TOLL ROAD SECTIONS: (A) RAISEN-RAHATGARH ROAD PROJECT (B) HOSHANGABAD-HARDA-KHANDWA ROAD PROJECT ITA NO.1864/AHD/2013 AND 225.AHD/2014 - 12 - (2) SINCE THE APPELLANT-COMPANY WAS FULLY QUALIFIED AND WELL-EQUIPPED TO UNDERTAKE THE DEVELOPMENT, COMPLETION AND OPERATION /MAINTENANCE OF THE ABOVE PROJECTS, IT PARTICIPATED IN THE TENDER P ROCESS. (3) AFTER UNDERGOING THE RIGOROUS PROCESSES, MPRS NN VIDE ITS LETTER DATED 11.3.2002 ADDRESSED TO THE APPELLANT-COMPANY, CONVEYED ACCEPTANCE OF APPELLANT-COMPANYS TENDER IN RESPECT OF RAISEN- RAHATGARH ROAD PROJECT AND SIMILARLY VIDE ITS LET TER DATED 28.3.2002, MPRSNN ALSO CONVEYED ACCEPTANCE OF THE TENDER SUBM ITTED BY THE APPELLANT-COMPANY IN RESPECT OF THE HOSHANGABAD-HA RDA-KHANDWA ROAD PROJECT. (4) AFTER THE AFORESAID COMMUNICATIONS FROM MPRSNN, ALL REMAINING FORMALITIES WERE COMPLETED BY THE APPELLANT-COMPANY AND ON ACCOUNT OF SOME TECHNICAL DIFFICULTIES, THE APPELLANT-COM PANY FLOATED TWO FULLY OWNED SUBSIDIARY COMPANIES AS SPECIAL PURPOS E VEHICLE (SPV) COMPANIES FOR THE PURPOSE OF GETTING THE AFORESAID WORKS AWARDED TO THEM BY MPRSNN UNDER TRIPARTITE AGREEMENTS OF WHIC H THE APPELLANT- COMPANY IS ONE OF THE PARTIES. THIS ARRANGEMENT FO R AWARDING THE WORKS WAS DULY APPROVED BY MPRSNN WHO AWARDED THE W ORKS UNDER THE TRIPARTITE AGREEMENTS. TO GIVE EFFECT AND PRACT ICAL SHAPE TO THIS ARRANGEMENT THE FOLLOWING TRIPARTITE AGREEMENTS WER E EXECUTED: (A) AGREEMENT DATED 7 TH MAY, 2003 BETWEEN MPRSNN, MSK PROJECTS (INDIA) LTD. (I.E. APPELLANT-COMPANY) AND MSK HIGHWAYS LTD. IN RESPECT OF THE DEVELOPMENT WORKS O F RAISEN- RAHATGARH ROAD PROJECT. (B) AGREEMENT DATED 20 TH MAY, 2002 BETWEEN MPRSNN, MSK PROJECTS (INDIA) LTD. (I.E. APPELLANT-COMPANY) AND MSK INFRASTRUCTURE AND TOLL BRIDGE PVT. LTD. IN RESPE CT OF HOSHANGABAD-HARDA-KHANDWA ROAD PROJECT. (5) IN FORM NO.10CCB AUTHENTICATED BY THE AUDITORS U/S.80-IA(7) OF THE I.T. ACT, AGAINST COLUMN NO.8, A NOTE WAS GIVEN TO THE EFFECT THAT THE APPELLANT-COMPANY HAS UNDERTAKEN THE CONSTRUCTION O F INFRASTRUCTURE PROJECTS BEING DEVELOPMENT ETC. OF THE ABOVE MENTI ONED SECTIONS OF ROADS AND THAT FOR THIS PURPOSE SPVS WERE CREATED VIZ. MSK INFRASTRUCTURE AND TOLL BRIDGE PVT. LTD. AND MSK H IGHWAYS LTD. (6) AFTER EXECUTION OF THE TRIPARTITE AGREEMENTS RE FERRED TO ABOVE, THE ENTIRE WORK RELATED TO BOTH THE INFRASTRUCTURE PROJ ECTS WERE TAKEN OVER BY THE APPELLANT-COMPANY UNDER THE FOLLOWING BIPART ITE AGREEMENTS: (A) AGREEMENT DATED 28 TH MARCH, 2002 BETWEEN THE APPELLANT-COMPANY AND MSK INFRASTRUCTURE AND TOLL BRIDGE PVT. LTD. IN RESPECT OF HOSHANGABAD-HARDA-KHANDWA ROAD PROJECT. (B) AGREEMENT DATED 21 ST MAY, 2003 BETWEEN THE APPELLANT-COMPANY AND MSK HIGHWAYS LTD. IN RESPECT OF RAISEN-RAHATGARH RO AD PROJECT. ITA NO.1864/AHD/2013 AND 225.AHD/2014 - 13 - IT IS VERY IMPORTANT TO NOTE THAT THE ENTIRE DEVEL OPMENT ACTIVITY WAS TAKEN OVER BY THE APPELLANT-COMPANY. FURTHER, THE DEVELOPMENT WORKS FOR THE TWO PROJECTS WERE TAKEN OVER AT THE SAME COST AT WHICH THESE PROJECTS WERE AWARDED TO TWO SUBSIDIARY COMPANIES BY MPRSNN. THE COST OF HOSHANGABAD-HARDA-KHANDWA ROAD PROJECT WAS RS.81.00 CRORES AND THE COST OF RAISEN-RAHATGARH ROAD PROJECT WAS RS.57.73 CRORE S. (7) IT IS NOTABLE THAT THE ENTIRE WORK RELATING TO THE TWO PROJECTS WAS HANDED OVER TO THE APPELLANT-COMPANY BY THE TWO SUB SIDIARY COMPANIES WHICH INCLUDED DETAILED DESIGNING, ENGIN EERING, CONSTRUCTION, OPERATION AND MAINTENANCE FOR ALL PRA CTICAL PURPOSES THE APPELLANT-COMPANY STEPPED INTO THE SHOES OF THE TWO SUBSIDIARY COMPANIES TO WHOM THE WORKS WERE DIRECTLY AWARDED B Y MPRSNN UNDER THE TRIPARTITE AGREEMENTS REFERRED TO ABOVE. THE EXECUTION OF THESE WORKS ALSO INVOLVED COMPLETE FINANCING AND PR OCUREMENT AS ALSO OPERATING AND MAINTAINING ON BOT (BUILD, OPERATE AN D TRANSFER) BASIS. (8) ALL THE TERMS AND CONDITIONS OF THE TRIPARTITE AGREEMENTS WERE REPEATED IN THE BIPARTITE AGREEMENTS WHICH MEANS THAT ALL RE SPONSIBILITIES WERE TAKEN OVER BY THE APPELLANT-COMPANY FOR SATISFACTOR Y EXECUTION OF THE WORKS AND FURTHER OPERATING AND MAINTAINING THESE W ORKS ON BOT BASIS. (9) TO GET A COMPREHENSIVE VIEW OF THE RESPONSIBILI TIES CAST UPON THE APPELLANT-COMPANY, A REFERENCE MAY BE MADE TO ONLY SOME OF THE STIPULATIONS OF THE BIPARTITE AGREEMENTS. SINCE BOT H THE BIPARTITE AGREEMENTS ARE, MUTATIS MUTANDIS, ON SIMILAR LINES, FOR THE SAKE OF BREVITY, A REFERENCE IS MADE HERE ONLY TO BIPARTITE AGREEMENT ENTERED BY THE APPELLANT-COMPANY WITH MSK HIGHWAYS LTD. AS UND ER: (A) AT PAGE-6 OF THE AGREEMENT, CONSTRUCTION DEFEC TS LIABILITY PERIOD IS DEFINED AS A PERIOD OF 12 MONTHS COMMENC ING FROM THE DATE STATED IN THE TAKING OVER CERTIFICATE AND ENDING UPON THE ISSUANCE OF MAINTENANCE CERTIFICATE. (B) AT PAGE-7, INDEPENDENT CONSULTANT MEANS THE I NDEPENDENT ENGINEER APPOINTED IN ACCORDANCE WITH THE CONCESSIO N AGREEMENT (I.E. TRIPARTITE AGREEMENT). ON THE SAME PAGE THE TERM LIABILITY INCLUDES ALL CLAIMS DAMAGES, EXPEN SES, FINES AND PENALTIES. (C) AT PAGE-8, MSK PROJECTS (INDIA) LTD. (I.E. THE APPELLANT- COMPANY) IS DEFINED AS OPERATOR FOR OPERATION A ND MAINTENANCE OF WORKS. (D) AT PAGES 16 & 17, GENERAL OBLIGATIONS OF THE APPELLANT- COMPANY ARE DEFINED, SOME OF WHICH ARE AS UNDER: ITA NO.1864/AHD/2013 AND 225.AHD/2014 - 14 - (I) TO DESIGN AND ENGINEER THE WORKS WITH ALL SKILL , CARE AND DILIGENCE, USING THE BEST DESIGN AND ENGINEERING PR INCIPLES AND PRACTICE. (II) TO CARRY OUT THE WORKS SO THAT THE FACILITY MA Y BE FULLY, EFFICIENTLY, ECONOMICALLY AND SAFELY USED, OPERATED AND MAINTAINED. (III) TO OPERATE AND MAINTAINING THE EXISTING ROADS . (IV) TO MAINTAIN THE FACILITY DURING THE CONSTRUCTI ON DEFECTS LIABILITY PERIOD. (E) AT PAGE-24, IT IS THE APPELLANTS LIABILITY TO PROVIDE ALL EQUIPMENTS NECESSARY FOR THE WORKS AND TO BRING SUC H EQUIPMENTS TO THE PROJECT SITES. (F) AT PAGE-25, IT IS THE OBLIGATION OF THE APPELLA NT-COMPANY TO TAKE AND ENSURE ALL SAFETY PRECAUTIONS. (G) AT PAGE-27, THE APPELLANT-COMPANY IS MADE RESPO NSIBLE FOR DESIGNING OF THE WORKS, VERIFYING THE CORRECTNES S OF ALL INFORMATION RECEIVED AND TO CARRY ON REMEDIAL WOR KS NECESSARY TO CORRECT ANY ERROR IN THE WORKS. (H) AT PAGE-30, THE APPELLANT-COMPANY IS RESPONSIBL E FOR MAKING ARRANGEMENTS AND ENGAGING ALL PERSONNEL AND FOR THE IR PAYMENT, HOUSING, FEEDING AND TRANSPORT. (I) AT PAGE-31, THE APPELLANT-COMPANY IS RESPONSIBL E FOR THE HEALTH AND SAFETY OF ALL PERSONNEL AND STAFF MEMBERS. (J) AT PAGE-39, IT IS STIPULATED THAT THE APPELLANT SHALL BE SOLELY RESPONSIBLE FOR CARRYING OUT AND COMPLETING THE MAI NTENANCE WORK DURING THE CONSTRUCTION DEFECTS LIABILITY PERI OD AND MAINTAIN TECHNICAL REQUIREMENTS AND PERFORMANCE STA NDARDS. (K) AT PAGE-48, THE APPELLANT-COMPANY IS TO BEAR AL L RISKS OR LOSSES OR DAMAGES TO THE WORK OR ANY PART THEREOF TILL THE DATE OF ISSUE OF MAINTENANCE CERTIFICATE. (L) AT PAGE-51, IT IS THE RESPONSIBILITY OF THE APP ELLANT-COMPANY TO GET THE WORKS INSURED. (M) AT PAGE-61 OF THE AGREEMENT, SPECIAL CONDITIONS OF CONTRACT HAVE BEEN SPECIFIED. IN THESE SPECIAL CONDITIONS, A LL THE CONDITIONS OF THE TRIPARTITE AGREEMENTS AS INCORPOR ATED IN SCHEDULES J TO N THERETO HAVE BEEN STIPULATED. ITA NO.1864/AHD/2013 AND 225.AHD/2014 - 15 - FROM THE ABOVE STIPULATIONS CONTAINED IN THE TRIPA RTITE AND BIPARTITE AGREEMENTS, IT IS APPARENT THAT THE TWO SUBSIDIARY COMPANIES ARE ONLY INTERMEDIARY VEHICLES AND THE ENTIRE RESPONSIBILIT Y OF DEVELOPING, MAINTAINING, OPERATING AND THE ULTIMATE TRANSFER IS ON THE APPELLANT- COMPANY WITH ALL RISKS AND REWARDS. (10) A VERY IMPORTANT FEATURE TO BE NOTED IS THAT D URING THE COURSE OF ALL THE AFORESAID ARRANGEMENTS OF ENTERING INTO TRIPARTITE AND BIPARTITE AGREEMENTS, IT WAS CONTEMPLATED THAT THE TWO SUBSID IARY COMPANIES WOULD MERGE AND AMALGAMATE WITH THE APPELLANT-COMPA NY WITH EFFECT FROM 1 ST JANUARY, 2005 I.E. WELL BEFORE THE CLOSE OF THE AC COUNTING YEAR RELEVANT TO THE ASSESSMENT YEAR 2005-06 WHICH IS TH E SUBJECT MATTER OF THIS APPEAL. (11) MSK INFRASTRUCTURE AND TOLL BRIDGE PVT. LTD. A DDRESSED A LETTER DATED 18.11.2004 TO MPRSNN SEEKING APPROVAL OF AMALGAMA TION OF MSK INFRASTRUCTURE AND TOLL BRIDGE PVT. LTD. AND MSK PROJECTS (INDIA) LTD. SIMILARLY, MSK HIGHWAYS LTD. AS PER LETTER DA TED 26.11.2004 SOUGHT APPROVAL OF AMALGAMATION FROM MPRSNN. (12) FURTHER, VIDE LETTER DATED 10.1.2005 OF MSK IN FRASTRUCTURE AND TOLL BRIDGE PVT. LTD. ADDRESSED TO MPRSNN, THE MOTIVE O F THE AMALGAMATION WAS EXPLAINED AND CERTAIN VERY IMPORTA NT AVERMENTS WERE MADE, SOME OF WHICH MERIT NARRATION HEREUNDER: (A) ORIGINAL BID WAS MADE BY MSK PROJECTS (INDIA) L TD. AND THE WORK WAS AWARDED TO THEM. (B) EVEN THOUGH SEPARATE COMPANIES WERE FORMED FOR IMPLEMENTATION OF THE PROJECTS, THE ORIGINAL BIDDER IS RESPONSIBLE FOR ALL LIABILITIES ARISING OUT OF THE DEVELOPMENT OF THE WORKS DURING THE EXECUTION PERIOD AS ALSO DURIN G THE COURSE OF OPERATING, MAINTAINING AND RUNNING THE PROJECT. (C) THE EXECUTION, PROCUREMENT AND CONSTRUCTION (EP C) OF CONTRACT ARE IN FAVOUR OF THE ORIGINAL BIDDER OF BO TH THE PROJECTS. (D) THE FINANCE HAS BEEN PROVIDED BY THE BIDDER COM PANY AND SIMILARLY TECHNICAL EXPERTISE, MACHINERY FOR ERECTI ON OF THE PROJECT IS ALSO PROVIDED BY THE BIDDER COMPANY. (E) AMALGAMATION OF BOTH THE SPV COMPANIES WILL RES ULT INTO LARGE EQUITY BASE AND ENHANCE THE NET WORTH OF THE COMPAN Y AND WILL MAKE IT ELIGIBLE FOR TENDERING LARGER PROJECTS. (13) MADHYA PRADESH ROAD DEVELOPMENT CORPORATION LT D. WHICH IS A GOVERNMENT OF MADHYA PRADESH UNDERTAKING, VIDE ITS SEPARATE LETTERS DATED 6 TH APRIL, 2005 ADDRESSED TO MSK INFRASTRUCTURE AND TO LL BRIDGE PVT. LTD. AND MSK HIGHWAYS LTD. GRANTED THE PERMIS SION FOR THE AFORESAID AMALGAMATION ON THE CONDITION THAT ALL THE LIABILITIES AND ITA NO.1864/AHD/2013 AND 225.AHD/2014 - 16 - OBLIGATIONS ARISING OUT OF THE CONCESSION AGREEMEN T (I.E. TRIPARTITE AGREEMENT) WILL BE HONOURED BY MSK PROJECTS (INDIA ) LTD. (14) AS ALREADY MENTIONED ABOVE, THE AMALGAMATION W AS AUTHENTICATED BY THE ORDER OF THE GUJARAT HIGH COURT WITH EFFECT FRO M THE APPOINTED DATE OF 1 ST JANUARY, 2005. THIS MEANS THAT DURING THE PREVIOUS YEAR RELEVANT TO THE A.Y. 2005-06, THE AMALGAMATION BECAME EFFECT IVE AND BOTH THE SPV SUBSIDIARY COMPANIES MERGED AND AMALGAMATED WIT H THE APPELLANT-COMPANY AND THE APPELLANT-COMPANY LEGALLY TOOK OVER THE ENTIRE WORK OF BOTH THE PROJECTS INVOLVING COMPLETE DEVELOPMENT, MAINTENANCE, OPERATION AND ULTIMATE TRANSFER TO THE STATUTORY BODY OF THE GOVERNMENT OF MADHYA PRADESH. 2.6 IN THE BACKDROP OF THE FACTUAL POSITION EXPLAIN ED ABOVE, THE MOOT QUESTION TO BE CONSIDERED IS AS TO WHETHER THE APPELLANT-COMPA NY IS ELIGIBLE FOR DEDUCTION U/S.80-IA(4) OF THE I.T. ACT. THE RELEVA NT PROVISIONS OF SUB-SECTION (4) READ AS UNDER: (4) THIS SECTION APPLIES TO ( I ) ANY ENTERPRISE CARRYING ON THE BUSINESS OF ( I ) DEVELOPING OR ( II ) OPERATING AND MAINTAINING OR ( III ) DEVELOPING, OPERATING AND MAINTAINING]ANY INFRASTRUCTURE FACILI TY WHICH FULFILS ALL THE FOLLOWING CONDITIONS, NAMELY : ( A ) IT IS OWNED BY A COMPANY REGISTERED IN INDIA OR BY A CONSORTIUM OF SUCH COMPANIES OR BY AN AUTHORITY OR A BOARD OR A CORPORATION OR ANY OTHER BODY ESTABLISHED OR CONSTITUTED UNDER ANY CENTRAL OR STATE ACT; ( B ) IT HAS ENTERED INTO AN AGREEMENT WITH THE CENTR AL GOVERNMENT OR A STATE GOVERNMENT OR A LOCAL AUTHORITY OR ANY OTHER STATUTORY BODY FOR ( I )DEVELOPING OR ( II )OPERATING AND MAINTAINING OR ( III ) DEVELOPING, OPERATING AND MAINTAINING A NEW INFRASTRUCTURE FACILITY; ( C ) IT HAS STARTED OR STARTS OPERATING AND MAINTAIN ING THE INFRASTRUCTURE FACILITY ON OR AFTER THE 1ST DAY OF APRIL, 1995: PROVIDED THAT WHERE AN INFRASTRUCTURE FACILITY IS TRANSFERRE D ON OR AFTER THE 1ST DAY OF APRIL, 1999 BY AN ENTERPRIS E WHICH DEVELOPED SUCH INFRASTRUCTURE FACILITY (HEREAFTER R EFERRED TO IN THIS SECTION AS THE TRANSFEROR ENTERPRISE) TO ANOTH ER ENTERPRISE (HEREAFTER IN THIS SECTION REFERRED TO AS THE TRANS FEREE ENTERPRISE) FOR THE PURPOSE OF OPERATING AND MAINTAINING THE IN FRASTRUCTURE FACILITY ON ITS BEHALF IN ACCORDANCE WITH THE AGREE MENT WITH THE CENTRAL GOVERNMENT, STATE GOVERNMENT, LOCAL AUTHORI TY OR STATUTORY BODY, THE PROVISIONS OF THIS SECTION SHAL L APPLY TO THE ITA NO.1864/AHD/2013 AND 225.AHD/2014 - 17 - TRANSFEREE ENTERPRISE AS IF IT WERE THE ENTERPRISE TO WHICH THIS CLAUSE APPLIES AND THE DEDUCTION FROM PROFITS AND G AINS WOULD BE AVAILABLE TO SUCH TRANSFEREE ENTERPRISE FOR THE UNEXPIRED PERIOD DURING WHICH THE TRANSFEROR ENTERPRISE WOULD HAVE BEEN ENTITLED TO THE DEDUCTION, IF THE TRANSFER HAD NOT TAKEN PLACE. EXPLANATION .FOR THE PURPOSES OF THIS CLAUSE, 'INFRASTRUCTURE FACILITY' MEANS ( A ) A ROAD INCLUDING TOLL ROAD, A BRIDGE OR A RAIL SYSTEM; ( B ) A HIGHWAY PROJECT INCLUDING HOUSING OR OTHER AC TIVITIES BEING AN INTEGRAL PART OF THE HIGHWAY PROJECT; ( C ) A WATER SUPPLY PROJECT, WATER TREATMENT SYSTEM, IRRIGATION PROJECT, SANITATION AND SEWERAGE SYSTEM OR SOLID WASTE MANAGEMENT SYSTEM; ( D ) A PORT, AIRPORT, INLAND WATERWAY, INLAND PORT O R NAVIGATIONAL CHANNEL IN THE SEA. 2.7 THE AFORESAID PROVISIONS LAY DOWN THAT DEDUCTIO N WOULD BE AVAILABLE TO ANY ENTERPRISE WHICH CARRIES ON THE BUSINESS OF (I) D EVELOPING OR (II) OPERATING AND MAINTAINING OR (III) DEVELOPING, OPERATING AND MAINTAINING ANY INFRASTRUCTURE FACILITY WHICH FULFILLS THE CONDITIO NS PRESCRIBED THEREIN. AS PER THE EXPLANATION, A ROAD INCLUDING TOLL-ROAD IS AN I NFRASTRUCTURE FACILITY FOR THE PURPOSES OF SECTION 80-IA(4). THE PRIMARY CONDITION IS THAT THE ENTERPRISE MUST CARRY ON THE WORK OF DEVELOPING AN INFRASTRUCTURE FACILITY. AS MENTIONED ABOVE, EXPLANATION UNDER SUB-SECTION (13) OF SECTIO N 80-IA CLARIFIES THAT THIS SECTION WILL NOT APPLY TO ANY BUSINESS WHICH IS IN THE NATURE OF A WORKS CONTRACT. TO SUM UP THE LEGAL POSITION, THE BENEFI T OF SECTION 80-IA(4) WOULD BE AVAILABLE TO A DEVELOPER AND NOT TO A CONTRACTOR SIMPLICITOR. IN THE PRESENT CASE THE LOWER AUTHORITIES HAVE DENIED THE BENEFIT OF SECTION 80-IA(4) TO THE APPELLANT-COMPANY ON THE ASSUMPTION THAT THE APPELL ANT-COMPANY IS ENGAGED IN EXECUTING MERELY A WORKS CONTRACT AND IT IS NOT CARRYING ON THE BUSINESS OF DEVELOPING AN INFRASTRUCTURE FACILITY. THE FACTS S TATED ABOVE CLEARLY ESTABLISH THAT THE ENTIRE WORK FORM A TO Z HAS BEEN EXECUT ED BY THE APPELLANT- COMPANY FOR DEVELOPING THE TWO ROAD PROJECTS IN RES PECT OF THE TENDERS SUBMITTED BY THE APPELLANT-COMPANY WERE ACCEPTED B Y THE STATUTORY BODY, BUT MUTUAL CONSENT UNDER TRIPARTITE AGREEMENTS TWO SU BSIDIARY COMPANIES WERE ALSO INVOLVED FOR SOME TECHNICAL REASONS, WITH THE INTENTION THAT THESE TWO SUBSIDIARY COMPANIES WOULD BE AMALGAMATED WITH THE APPELLANT-COMPANY, AS AGREED TO BY THE STATUTORY BODY OF THE GOVERNMENT O F MADHYA PRADESH. AS ALREADY MENTIONED ABOVE, THE AMALGAMATION BECAME EF FECTIVE FROM 1 ST JANUARY, 2005 WHICH IS BEFORE CLOSE OF THE ACCOUNTI NG YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER APPEAL. IN THESE CIRCUMSTANCE S, WHEN THE APPELLANT- COMPANY HAS ENTIRELY AND EXCLUSIVELY CARRIED OUT TH E DEVELOPMENT WORK FOR THE ROAD PROJECTS, THERE IS HARDLY ANY BASIS FOR AS SUMING THAT IT IS MERELY A CONTRACTOR EXECUTING A WORKS CONTRACT. THE DIFFERE NCE BETWEEN A DEVELOPER AND A CONTRACTOR HAS TO BE PROPERLY ANALYZED AND UNDERSTOOD. THIS PARTICULAR QUESTION CAME UP FOR ADJUDICATION BEFORE THE HON'BL E ITAT, AMRITSAR BENCH ITA NO.1864/AHD/2013 AND 225.AHD/2014 - 18 - AND DECIDED VIDE ORDER DATED 19 TH MARCH, 2013 IN THE CASE OF M/S. TRG INDUSTRIES P. LTD. IN ITA NOS. 433 ETC./ASR/2009. IN THE CASE OF M/S. TRG INDUSTRIES P. LTD. SIMILAR FACTS WERE INVOLVED AND THE HON'BLE TRIBUNAL HAS CONSIDERED VARIOUS DECIDED CASES AS UNDER: (1) CIT VS. ABG HEAVY INDUSTRIES LTD., 322 ITR 323 (BO M.) (2) PATEL ENGINEERING LTD. VS. DCIT, 84 TTJ 646 (MUM.) (3) DCIT VS. INTERCONTINENTAL CONSULTANTS & TECHNOCRAT S (P) LTD, 22 SOT 259 (DEL.) (4) ACIT VS. BHARAT UDYOG LTD., 123 TTJ 689 (MUM.) (5) KOYA & CO. CONSTRUCTION P. LTD. VS. ACIT, 51 SOT 2 03 (HYD.) (6) OM METAL INFRA PROJECTS LTD. VS. CIT, 26 DTR 359 ( JAIPUR) (7) AYUSH AJAY CONSTRUCTION LTD. VS. ITO, 79 ITD 213 (INDORE) (8) CHETAK ENTERPRISES P. LTD. VS. ACIT, 95 ITD 1 (JOD HPUR) (9) OCEAN SPARKLE LTD. VS. DCIT, 99 TTJ 582 (HYD.) 2.8 VARIOUS RELEVANT ISSUES HAVE BEEN CONSIDERED BY THE HON'BLE TRIBUNAL IN THE LIGHT OF THE FINDINGS IN THE ABOVE CASES AND THE HO N'BLE TRIBUNAL HAS LAID DOWN THE FOLLOWING PARAMETERS: (I) THE ASSESSEE DOES NOT HAVE TO DEVELOP THE ENTIR E INFRASTRUCTURE FACILITY TO QUALIFY FOR DEDUCTION U/S.80-IA(4) AND IF ONLY A PART OF THE INFRASTRUCTURE FACILITY IS DEVELOPED, THE ASSESSEE WOULD BE ELIGIBLE FOR DEDUCTION. (II) THE THREE REQUIREMENTS OF SECTION 80-IA(4) VIZ . DEVELOPMENT, OPERATION AND MAINTENANCE ARE NOT CUMULATIVE. THUS, AN ENTERPRISE WHICH ONLY DEVELOPS FACILITY WOULD ALSO BE ENTITLED TO THE BENEFIT OF SECTION 80-IA(4). (III) MERELY BECAUSE THE ASSESSEE IS REFERRED TO AS A CONTRACTOR IN THE AGREEMENT, IT WOULD NOT DEBAR IT FROM CLAIMING DEDU CTION. (IV) DIRECT AGREEMENT BETWEEN THE TRANSFEREE-ASSESS EE AND THE SPECIFIED AUTHORITY IS NOT A MANDATORY REQUIREMENT U/S.80-IA( 4) OF THE I.T. ACT. 2.9. SIMILAR ISSUE HAS ALSO COME UP BEFORE THE HON' BLE ITAT, AHMEDABAD IN THE CASE OF SUGAM CONSTRUCTION P. LTD. AND HAS BEEN ADJ UDICATED VIDE ORDER DATED 21 ST DECEMBER, 2012 IN ITA NO.1828/AHD/2010. IN THIS OR DER THE HON'BLE TRIBUNAL HAS CONSIDERED IN GREAT DETAIL THE ATTRIBU TES OF A DEVELOPER IN CONTRADISTINCTION TO THE ATTRIBUTES OF A CONTRACTO R. THE HON'BLE TRIBUNAL HAS ALSO CONSIDERED VARIOUS CASES WHICH WERE REFERRED T O BY THE HON'BLE ITAT, AMRITSAR IN THE CASE OF M/S. TRG INDUSTRIES (SUPRA) . THE HON'BLE TRIBUNAL AHMEDABAD HAS FURTHER CONSIDERED THE FOLLOWING TWO RELEVANT JUDGEMENTS: (I) CIT VS. RADHE DEVELOPERS, 341 ITR 403 (GUJ.) (II) GVPR ENGINEERS LTD. VS. ACIT, 21 TAXMANN.COM 25 (HY D.) ITA NO.1864/AHD/2013 AND 225.AHD/2014 - 19 - 2.10 THE HON'BLE TRIBUNAL HAS SUCCINCTLY BROUGHT OU T THE DIFFERENCE BETWEEN A DEVELOPER AND A CONTRACTOR AT PARA-13 OF THE OR DER WHICH IS REPRODUCED BELOW FOR READY REFERENCE: 13. IN THE BACKGROUND OF THE ABOVE DISCUSSION, IT CAN BE SUMMARIZED THAT AN ENTERPRISE HAS TO ENTER INTO AN AGREEMENT W ITH THE CENTRAL OR STATE GOVERNMENT OR A LOCAL AUTHORITY OR ANY STATUT ORY AUTHORITY. THAT UNDISPUTEDLY THE INFRASTRUCTURE FACILITY BELON GED TO THE GOVERNMENT, THEREFORE THE INFRASTRUCTURE FACILITY I S OWNED BY THE GOVERNMENT. BUT THE ENTERPRISE WHICH IS DEVELOPING OR CONSTRUCTING THE INFRASTRUCTURE FACILITY IS TO BE OWNED BY A COMPANY REGISTERED IN INDIA. THE ACT ALSO SAYS THAT AN ENTERPRISE WHICH IS CONST RUCTING OR DEVELOPING THE INFRASTRUCTURE FACILITY CAN BE A CON SORTIUM OF SUCH COMPANIES. SUCH AN ARRANGEMENT IS ELIGIBLE FOR THE CLAIM OF DEDUCTION. FEW CIRCULARS HAVE BEEN ISSUED BY CBDT THROUGH WHIC H IT HAS ALSO BEEN CLARIFIED, AS DISCUSSED IN THE FOREGOING CASE- LAWS, THAT THE BENEFIT OF THE IMPUGNED DEDUCTION IS AVAILABLE TO AN ENTERP RISE WHICH EITHER DEVELOPS OR MAINTAINS OR OPERATED OR EXECUTED THE C OMBINATION OF THESE THREE, INTER ALIA AS A BUILD, OPERATE AND TRANSFER (BOT), OR, BUILD, OWN, OPERATE AND TRANSFER (BOOT), OR, BUILD, OWN, L EASE AND TRANSFER (BOLD) BASIS OR SIMILAR OTHER BASIS WHERE ULTIMATELY THE INFRASTRUCTURE FACILITY SO CONSTRUCTED IS ULTIMATEL Y TRANSFERRED TO GOVERNMENT OR PUBLIC AUTHORITY, THEN SUCH AN ENTERP RISE IS WITHIN THE AMBITS OF QUALIFICATION OF DEDUCTION. THE EXPLANATO RY MEMORANDUM TO THE FINANCE ACT, 2007, AS QUOTED BEFORE US, STATES THAT THE PURPOSE OF THE TAX BENEFIT HAS ALL ALONG BEEN TO ENCOURAGE INV ESTMENT IN DEVELOPMENT OF INFRASTRUCTURE SECTOR AND NOT FOR TH E PERSONS WHO MERELY EXECUTE THE CIVIL CONSTRUCTION WORK. 12.6. IN THE LIGHT OF THE ABOVE DISCUSSION AND THE VIEW EXPRESSED BY THE HONBLE COURTS, A CONCLUSION CAN BE DRAWN THAT THER E IS A DISTINCTION BETWEEN DEVELOPER AND A CONTRACTOR. (I) THAT IN A CASE OF CIVIL CONTRACTOR, ITS DUTY IS ONLY OF CIVIL CONSTRUCTION . (II) THAT AFTER THE CIVIL CONSTRUCTION IS OVER, HE IS PAID FOR THE JOB OF CIV IL CONSTRUCTION AS PER THE BILLS RAISED. (III) THAT AT THAT POINT OF TIME, HIS CONTRACT IS OVER AND THE AGREEMENT ENDS. (IV) THAT AFTER THE COMPLETION OR AT THE END OF THE AGREEMENT, A CIVIL CONTRACTOR HAND OVER THE SITE TO THE OWNER. (V) THAT A CIVIL CONTRACTOR CONSTRUCTS AS PER THE SPECIFICATIO NS GIVEN. (VI) THAT A CONTRACTOR DOES NOT INVOLVE MUCH OF HIS OWN MONEY B UT RAISES BILL OF HIS CIVIL CONSTRUCTION WORK TIME-TO-TIME TO COLLECT THE EXPENDITURE INCURRED. (VII) THAT A CONTRACTOR HAS NO DOMAIN OVE R THE LAND OR THE SITE. (VIII) THAT HIS ACCESS TO THE SITE IS RESTRICTED AN D LIMITED FROM COMMERCIAL ANGLE. (IX) THAT ON THE BASIS OF THE PRO JECT HE CANNOT RAISE THE FUNDS FROM THE PRIVATE FINANCIAL INSTITUTIONS. (X) THAT A CONTRACTOR IS NOT RESPONSIBLE FOR THE DEVELOPMENT OF THE PROJE CT BUT HIS RESPONSIBILITY IS LIMITED TO THE JOB-ASSIGNED TO HI M. (XI) THAT A CONTRACTORS DUTIES AND RESPONSIBILITIES CAN ONLY BE EXAMINED ON THE BASIS OF THE TERMS AND CONDITIONS OF THE CONTRACT A GREEMENT. 12.7. NOW WE SHALL EXAMINE ABOUT A DEVELOPER. FR OM THE ABOVE READING WE HAVE ALSO GATHERED (A) THAT A DEVELOPER IS A PERSON WHO UNDERTAKES THE RESPONSIBILITY TO ITA NO.1864/AHD/2013 AND 225.AHD/2014 - 20 - DEVELOP A PROJECT. (B) THAT A DEVELOPER IS THEREFOR E NOT A CIVIL CONTRACTOR SIMPLICITOR. (C) THAT IF WE APPLY THE COMMERCIAL ASPECT, THEN A DEVELOPER HAS TO EXECUTE BOTH MANAGERIAL AS WELL AS FINANCIAL RESPONSIBILITY. (D) THAT THE ROLE OF A DEVELOPER, ACCORDING TO US, IS LARGER THAN THAT OF A CONTRACTO R. (E) THAT WHEN A PERSON IS ACTING AS A DEVELOPER, THEN HE IS UNDER OBLIGATION TO DESIGN THE PROJECT, IT IS AN ANOTHER ASPECT THAT SUCH DESIGN HAS TO BE APPROVED BY THE OWNER OF THE PROJECT, I.E. THE GOVERNMENT IN THE PRESENT CASE. (F) THAT HE HAS NOT ONLY TO EX ECUTE THE CONSTRUCTION WORK IN THE CAPACITY OF A CONTRACTOR BUT ALSO HE IS ASSIGNED WI TH THE DUTY TO DEVELOP, MAINTAIN AND OPERATE SUCH PROJECT. (G) THAT TO ASCERTAIN WHETHER A CIVIL CONSTRUCTION WORK IS ASSIGNED ON DEVELOPMENT BASIS OR CONTRACT BASIS CAN ONLY BE DECIDED ON THE BASIS OF THE TERMS AND CONDITIONS OF THE AGREEMENT. ONLY ON THE BASIS OF THE TERMS AND CONDITIONS IT CAN BE ASCERTAINED ABOUT THE NATURE O F THE CONTRACT ASSIGNED THAT WHETHER IT IS A WORK CONTRACT OR A DEVELOPMENT CONTRACT . (H) THAT IN A DEVELOPMENT CONTRACT RESPONSIBILITY IS FULLY ASSIGNED TO THE D EVELOPER FOR EXECUTION AND COMPLETION OF WORK. (I) THAT ALTHOUGH THE OWNERSHIP OF THE SITE OR THE OWNERSHIP OVER THE LAND REMAINS WITH THE OWNER BUT DURING THE PERI OD OF DEVELOPMENT AGREEMENT THE DEVELOPER EXERCISE COMPLETE DOMAIN OVER THE LAND OR THE PROJECT. (J) THAT A DEVELOPER IS NOT EXPECTED TO RAISE BILLS AT EVERY STEP OF CON STRUCTION BUT HE IS EXPECTED TO CHARGE THE COST OF CONSTRUCTION PLUS MARK-UP OF HIS PROFIT FROM THE ASSIGNEE OF THE CONTRACT. (K) THAT A DEVELOPER IS THEREFORE EXPECTED TO ARRAN GE FINANCES AND ALSO TO UNDERTAKE RISK. (L) THAT IN CONTRAST TO THE RIGHTS OF A CON TACTOR A DEVELOPER IS AUTHORIZED TO RAISE FUNDS EITHER BY PRIVATE PLACEMENT OR BY FINAN CIAL INSTITUTIONS ON THE BASIS OF THE PROJECT. THESE ARE FEW BROAD QUALITIES OF A DEVELOP ER THROUGH WHICH THE CHARACTER OF A DEVELOPER CAN BE DEFINED. 10. ON THE OTHER HAND, THE STAND OF THE AO WHILE RE OPENING OF THE ASSESSMENT IS THAT THE ASSESSEE FAILED TO FULFILL M ANDATORY CONDITION AS PRESCRIBED UNDER SECTION 80IA OF THE ACT. IT HAS W ORKED AS CONTRACTOR OR SUB-CONTRACTOR FOR M/S.MSK INFRASTRUCTURE & TOLL BR IDGE PVT.LTD. AND MSK HIGHWAY LTD. THE AO THEREAFTER TREATED THE ASS ESSEE AS CONTRACTOR AND DISALLOWED THE CLAIM. 11. WITH THE ASSISTANCE OF LD.REPRESENTATIVES, WE H AVE GONE THROUGH THE RECORD CAREFULLY. THE ISSUE IN THE FIRST GROUN D OF APPEAL BEFORE US IS, WHETHER REOPENING IS JUSTIFIED OR NOT. IT IS PERTI NENT TO MENTION THAT IN THE ORIGINAL ROUND ASSESSMENT WAS FRAMED UNDER SECT ION 143(3) IN BOTH THE YEARS. THE LD.AO HAS ALLOWED THE DEDUCTION TO THE ASSESSEE. THE AO HAS NOT BROUGHT ANY NEW INFORMATION ON RECORD WH ICH CAN SUGGEST THAT THIS CLAIM WAS NOT ADMISSIBLE TO THE ASSESSEE. HE JUST RE- ITA NO.1864/AHD/2013 AND 225.AHD/2014 - 21 - APPRECIATED THIS FROM THE FACTS ALREADY ON THE RECO RD AND ISSUED NOTICE UNDER SECTION 148 OF THE ACT. THE ASSUMPTION OF FA CTS WHILE REOPENING OF THE ASSESSMENT WAS ALSO ERRONEOUS AT THE END OF THE AO AS HIGHLIGHTED BY THE ASSESSEE IN THE STAMEN FACTS. T WO COMPANIES VIZ. M/S.MSK INFRASTRUCTURE & TOLL BRIDGE PVT.LTD. AND M SK HIGHWAY LTD. ARE ITSELF HUNDRED PERCENT OWNED SUBSIDIARIES WHICH WERE FLOATED AS A SPECIAL PURPOSE VEHICLE FOR GETTING THE AFORESAID W ORK. THERE ARE TRI- PARTE AND BYE-PARTY AGREEMENTS BETWEEN THESE THREE COMPANIES AS WELL AS STATE OF MADHYA PRADESH FROM WHOM IT HAS TAKEN R AISEN RAHATGARH ROAD PROJECT. SUBSEQUENTLY, BOTH THESE SUBSIDIARIE S HAVE BEEN AMALGAMATED WITH ASSESSEE-COMPANY ON THE APPOINTED DATE I.E. 1.1.2005. IT MEANS THAT DURING THE PREVIOUS YEAR RELEVANT TO THE ASSTT.YEAR 2005- 06, THE AMALGAMATION BECAME EFFECTIVE AND BOTH SUBS IDIARIES AMALGAMATED WITH THE ASSESSEE-COMPANY. THE ASSESSE E HAS PROVIDED ALL THESE FACTS TO THE NOTICE OF THE REVENUE AUTHORITIE S, BUT THEY HAVE NOT MADE ANY DISCUSSION ON THESE ISSUES. IT SIMPLY ISS UED A NOTICE THAT IT HAS WRONGLY CLAIMED THE DEDUCTION AND THEREAFTER DISALL OWED IT. AT THIS STAGE, WE WOULD LIKE TO MAKE REFERENCE TO THE FINDI NG OF THE AO IN THE ASSTT.YEAR 2006-07 WHICH HAS NOT SPECIFIED ANYTHING . THE FINDING RECORDED READS AS UNDER: THE ASSESSEE WAS SUPPOSED TO FILE THE RETURN WITHI N 30 DAYS FROM THE RECEIPT OF THE NOTICE U/S 148 DATED 06.07.2010,THE ASSESSEE DID NOT FILE THE RETURN WITHIN 30 DAYS, HENCE, A NOTICE U/S 142(1) R. W.S 129 OF THE ACT FOR A.Y. 2006-07 AS ISSUED ON 18.07.2011 &\VAS SERVED U PON THE ASSESSEE ON 19.07.2011, THE ASSESSEE, VIDE ITS LETTER DATED 28.07.2011 SUBM ITTED ON 29.07.2011 REQUESTED TO CONSIDER THE RETURN FILED U/S 139 AS I F FILED IN RESPONSE TO THE NOTICE U/S 148 OF THE ACT. ITA NO.1864/AHD/2013 AND 225.AHD/2014 - 22 - 3. A NOTICE U/S 143(2) WAS ISSUED ON 19.09.201 1 AND WAS ACKNOWLEDGED BY THE ASSESSEE ON 19.09.2011. THE ASSESSEE COMPANY HAD FILED A LETTER ON 01.08.20 11 OF WHICH, SOME RELEVANT EXCERPTS ARE NARRATED AS UNDER: '' THE ASSESSEE HAD SUBMITTED FULL DETAILS & EXPLAN ATION ON 12TH AUGUST 2010 WHICH THE LD OFFICER IGNORED IN ITS ORDER OF R E-OPENING OF ASSESSMENT U/S 147 DTD 08.10.2010. THE ASSESSEE HAS COMPLIED WITH ALL THE MANDATORY CONDITIONS AS LAID DOWN U/S 80IA(4) OF THE ACT IN TERMS OF FOLLOWING: A) IT HAS ENTERED INTO AN AGREEMENT WITH CENTRAL G OVT OR THE STATE GOVT AS THE CASE MAY BE FOR CARRYING OUT ITS BUSINE SS AS LAID DOWN IN SEC 80IA(4)(I)(B) OF THE ACT. B} THE COMPANY HAS STARTED OPERATING OR MAINTAINING THE INFRASTRUCTURE FACILIT Y AFTER 1985 IN ACCORDANCE WITH CONDITIONS MENTIONED IN SEC 80IA(4)( I)(C} OF THE ACT. C) THE COMPANY HAS DERIVED INCOME FROM ELIGIBLE BUS INESS AND CLAIMED DEDUCTION FOR THE ELIGIBLE BUSINESS CARRIED OUT BY IT. 4. THE REPLY OF THE ASSESSEE HAS BEEN PERUSED . IN SCHEDULE OF THE CONSOLIDATED P & L A/C FOR THE YEAR ENDED 31.03.200 6, THE ASSESSEE HAS SHOWED INCOME FROM CIVIL CONTRACTS OF R.38,68,54,41 1. AN EXPLANATION BELOW SECTION 8OIA HAS BEEN INSERTED BY FINANCE(NO.2) ACT, 2009 W.R.E.F 01.04.2000 THAT 'NOTHING CONTAINE D IN THIS SECTION 8OIA SHALL APPLY IN RELATION TO BUSINESS REFERRED TO IN SUB-SECTION (4) WHICH IS IN THE NATURE OF A WORKS CONTRACT AWARDED BY ANY PE RSON INCLUDING THE CENTRAL OR STATE GOVERNMENT AND EXECUTED BY THE UND ERTAKING OR ENTERPRISE REFERRED TO IN SUB SECTION 1 OF SECTION 80IA.' THE ASSESSEE HAS EARNED THE INCOME FROM CONTRACTS B Y EXECUTING THE WORK, IT WAS NOT ELIGIBLE FOR THE DEDUCTION U/S 80IA(4) OF THE ACT. 12. AT THE TIME OF HEARING, THE LD.COUNSEL FOR THE ASSESSEE MADE REFERENCE TO THE DECISION OF HONBLE GUJARAT HIGH C OURT IN THE CASES OF CLASSIC NETWORK LTD. VS. DCIT, (2014) 45 TAXMANN.CO M 234 (GUJ), PARIXIT INDUSTRIES P.LTD. VS. ACIT, 352 ITR 349 (GUJ) AND S ADBHAV ENGINEERING ITA NO.1864/AHD/2013 AND 225.AHD/2014 - 23 - LTD. VS. DCIT, (2014) 223 TAXMANN 229 (GUJ) (MAG). IN ALL THESE JUDGMENTS, THE AO HAS EARLIER GRANTED DEDUCTION UND ER SECTION 80IA, THEREAFTER REOPENED THE ASSESSMENT BY RE-APPRECIATI NG THE SAME MATERIAL. THE HONBLE COURT HAS HELD THAT RE-OPENI NG IS BEING MADE ON ACCOUNT OF CHANGE OF OPINION AND IT IS NOT JUSTIFIA BLE. IN THE PRESENT CASE, THE LD.AO HAS RE-APPRECIATED THE MATERIAL. EARLIER , THE AO CONSIDERED THE ASSESSEE AS ENGAGED IN THE BUSINESS OF DEVELOPM ENT OF INFRASTRUCTURE PROJECT, BUT LATER ON THE BASIS OF SAME MATERIAL HE CONSTRUED THE ASSESSEE AS A CONTRACTOR. TO OUR MIND, IT IS A JUST HIS CHA NGE OF OPINION, AND THERE IS NO TANGIBLE MATERIAL IN POSSESSION OF THE AO TO REOPEN THE ASSESSMENT. THEREFORE, WE ALLOW FIRST GROUND OF APPEAL IN BOTH THE YEARS, AND QUASH RE-ASSESSMENT ORDERS IN BOTH THE YEARS. 13. SO FAR AS THE ISSUE ON MERIT IS CONCERNED, WE F IND THAT IDENTICAL ISSUE HAS BEEN DECIDED BY THE TRIBUNAL IN THE ASSTT .YEAR 2010-11 AS WELL AS BY THE CIT WHILE EXERCISING REVISIONAL JURISDICT ION UNDER SECTION 264 IN THE ASSTT.YEAR 2008-09. THE FINDING OF THE TRIB UNAL IN ITA NO.2940/AHD/2013 AND 2956/AHD/2013 IN THE ASSTT.YEA R 2010-11 READS AS UNDER: 8. THE REVENUE'S THIRD SUBSTANTIVE GROUND CHALLENG ES CORRECTNESS OF THE CIT(A)'S ACTION TREATING THE ASSESSEE AS AN INFRASTR UCTURE DEVELOPER AND NOT A WORKS CONTRACTOR QUA ITS BOT ROAD PROJECTS IN MADHYA PRADESH (SUPRA). THE ASSESSEE'S FOURTH SUBSTANTIVE GROUND CO NNECTED TO THE INSTANT ISSUE PLEADS THAT THE SAID ALLOCATION OF EX PENSES HAS BEEN WRONGLY MADE IN ITS CASE. WE THEREFORE TAKE UP BOTH THESE G ROUNDS TOGETHER FOR ADJUDICATION. 9. WE ADVERT TO REVENUE'S GRIEVANCE FIRST THAT THE ASSESSEE'S BOT ROAD PROJECT CANNOT BE TREATED AS AN INSTANCE OF INFRAST RUCTURE DEVELOPMENT RENDERING PROFITS DERIVED THEREFROM IN THE FORM OF TOLL COLLECTION AS ELIGIBLE FOR THE IMPUGNED SECTION 80IA DEDUCTION. W E NOTICE THAT THE VERY ITA NO.1864/AHD/2013 AND 225.AHD/2014 - 24 - ISSUE PERTAINING TO THE SAID TWO PROJECTS HAD ARISE N IN ASSESSMENT YEAR 2008-09 AS WELL. THE ASSESSEE FILED SECTION 264REVI SION. THE CIT-II, BARODA IN HIS ORDER DATED 28.12.2011 UPHELD ITS CAS E TREATING THE ABOVE TWO PROJECTS TO BE ELIGIBLE FOR THE IMPUGNED DEDUCT ION. THE SAME HAS ATTAINED FINALITY AS ON DATE. THE CIT(A)'S ORDER UND ER CHALLENGE IN PARA 10.3 PAGE 58 TAKES DUE NOTE THEREOF IN ACCEPTING AS SESSEE'S ARGUMENTS. WE THEREFORE ADOPT CONSISTENCY TO AFFIRM THE CIT(A)' S FINDINGS UNDER CHALLENGE IN REVENUE'S THIRD SUBSTANTIVE GROUND. IT S APPEAL ITA NO.2940/AHD/2013 THEREFORE FAILS. 14. APART FROM THE ABOVE, WE TAKEN ALL THE SUBMISSI ONS OF THE ASSESSEE WHILE TAKING COGNIZANCE OF THE STATEMENT OF FACTS E XTRACTED (SUPRA) VIS-- VIS FINDING RECORDED BY THE AO. BASICALLY, THE AO CONSTRUED THE ASSESSEE AS A CONTRACTOR OR SUB-CONTRACTOR FOR TWO COMPANIES VIZ. S.MSK INFRASTRUCTURE & TOLL BRIDGE PVT.LTD. AND MSK HIGHW AY LTD. IT IS ALSO PERTINENT TO OBSERVE THAT THE AO FAILED TO TAKE OF THE FACTS THAT THESE TWO COMPANIES ARE WHOLLY OWNED SUBSIDIARIES OF THE ASSE SSEE. THE ASSESSEE HAS APPLIED IN RESPONSE TO THE TENDERS INVITED BY M .P. RAJYA SETU NIRMAN NIGAM LTD. (MPRSNN FOR SHORT). IT WAS FUL LY QUALIFIED AND WELL EQUIPPED TO UNDERTAKE DEVELOPMENT AND COMPLETI ON OF CONTRACT WORK. HOWEVER, ACCORDING TO THE ASSESSEE ON ACCOUN T OF CERTAIN TECHNICALITIES, IT HAS TO FLOAT TWO SUBSIDIARIES AS SPECIAL PURPOSE VEHICLE. LATER ON THESE SUBSIDIARIES AMALGAMATED WITH THE AS SESSEE COMPANY DURING THE ACCOUNTING PERIOD RELEVANT TO ASSTT.YEAR 2005-06. THE SCHEME OF AMALGAMATION WAS APPROVED BY THE HONBLE GUJARAT HIGH COURT AND GIVEN EFFECT FROM THE APPOINTED DATE I.E. 1.1.2005. THESE FACTS HAVE TOTALLY BEEN IGNORED WHILE FRAMING THE ASSESSM ENT ORDER. THUS, CONSIDERING THE ORDER OF THE ITAT IN THE ASSTT.YEAR 2010-11 AND ORDER OF THE COMMISSIONER PASSED UNDER SECTION 264 IN THE AS STT.YEAR 2008-09, ITA NO.1864/AHD/2013 AND 225.AHD/2014 - 25 - AND DETAILS SUBMITTED IN THESE YEARS, WE ARE OF THE VIEW THAT THE ASSESSEE IS ENTITLED FOR DEDUCTION UNDER SECTION 80IA(4) OF THE ACT. WE ALLOW SECOND GROUND OF APPEAL. 15. IN THE RESULT, BOTH APPEALS OF THE ASSESSEE ARE ALLOWED. PRONOUNCED IN THE OPEN COURT ON 8 TH OCTOBER, 2018. SD/- (WASEEM AHMED) ACCOUNTANT MEMBER SD/- (RAJPAL YADAV) JUDICIAL MEMBER