M/s. Simpplex Projects Ltd., Kolkata V. CIT, Kol-IV, Kolkata, Kolkata

ITA 250/KOL/2012

• Counselvise Citation: 25023514 RSA 2012
• Duration Of Justice: 1 year(s) 10 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-12-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2006-2007
• Appeal Filed On: 14-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAVI JAIN
• Assessee Lawyers: RAVI TULSIYAN
• Keywords: Bonafide belief; Retrospective amendment; Ignorance of law
• Section: 6; 263; 63; 143(3)

Judgement Text

I.T.A. NO.: 250/KOL./2012 ASSESSMENT YEAR : 2006-07 PAGE 1 TO 10 1 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA C BENCH, KOLKATA CORAM : SHRI MAHAVIR SINGH (JUDICIAL MEMBER) AND SHRI ABRAHAM P. GEORGE (ACCOUNTANT MEMBER) I.T.A. NO.: 250/KOL./ 2012 ASSESSMENT YEAR : 2006-2007 M/S. SIMPLEX PROJECTS LTD.,........................ ..........APPELLANT 12/1, NELLIE SENGUPTA SARANI, KOLKATA-700 087 [PAN :AADCS 8598 R] -VS.- COMMISSIONER OF INCOME TAX-IV,..................... ...................RESPONDENT, KOLKATA, P-7, CHOWRINGHEE SQUARE, KOLKATA-700 069 APPEARANCES BY: SHRI RAVI TULSIYAN, A.R FOR THE APPELLANT SHRI RAVI JAIN, CIT, D.R., FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING : DECEMBER 12, 2013 DATE OF PRONOUNCING THE ORDER : DECEMBER 19, 2013 O R D E R PER ABRAHAM P. GEORGE : 1. THROUGH THIS APPEAL, ASSESSEE ASSAILS AN ORDER D ATED 2 ND MARCH, 2011 PASSED BY THE LD. COMMISSIONER OF INCOME TAX-I V, KOLKATA UNDER SECTION 263 OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) FOR THE ASSESSMENT YEAR 2006-07. 2. THE APPEAL HAS BEEN FILED WITH A DELAY OF 288 DA YS. ASSESSEE HAS FILED AN APPLICATION FOR CONDONATION OF THE DELAY. 3. LD. COUNSEL FOR THE ASSESSEE SUPPORTING THE COND ONATION PETITION SUBMITTED THAT THE IMPUGNED ORDER OF LD. CIT WAS RE CEIVED BY SHRI DEEPAK ACHARYA, AN EMPLOYEE OF THE ASSESSEE-COMPANY, WHO W AS LOOKING AFTER THE INCOME-TAX MATTERS. AS PER LD. A.R., THE SAID SHRI DEEPAK ACHARYA WAS I.T.A. NO.: 250/KOL./2012 ASSESSMENT YEAR : 2006-07 PAGE 1 TO 10 2 UNDER BELIEF THAT APPEAL NEED NOT BE FILED, ON AN O RDER PASSED UNDER SECTION 263 OF THE ACT BUT AN APPEAL WAS REQUIRED O NLY ON AN ASSESSMENT DONE BY THE ASSESSING OFFICER PURSUANT TO THE ORDER OF LD. CIT. ACCORDING TO THE LD. AR THE SAID SHRI DEEPAK ACHARYA HAD APPR OACHED HIM IN CONNECTION WITH SOME OTHER TAX MATTERS WHEREUPON HE INCIDENTALLY MENTIONED THE ORDER UNDER SECTION 263 OF THE ACT. L D. AR SUBMITTED THAT ADVICE FOR FILING THE APPEAL WAS GIVEN TO HIM AND A CCORDINGLY THE APPEAL HAS BEEN FILED. AS PER LD. AR THE DELAY WAS SOLELY DUE TO THE MISTAKEN BELIEF HELD BY SHRI DEEPAK ACHARYA THAT THERE WAS N O REQUIREMENT OF FILING AN APPEAL ON AN ORDER PASSED UNDER SECTION 2 63 OF THE ACT. RELYING ON THE DECISIONS OF THE HONBLE APEX COURT IN THE C ASE OF MOTILAL PADAMPAT SUGAR MILLS CO. LTD. VS.- STATE OF UTTAR PRADESH [118 ITR 326] AND COLLECTOR, LAND ACQUISITION VS.- MST. KATIJI [ 167 ITR 471] LD. AR ARGUED THAT THE DELAY WHICH WAS NOT ON ACCOUNT OF A NY NEGLIGENCE ON THE PART OF THE ASSESSEE HAD TO BE CONDONED. ACCORDING TO HIM CONSIDERABLE INJUSTICE WOULD BE CAUSED IF THE DELAY WAS NOT COND ONED. LD. AR POINTED OUT THAT ASSESSEE BY VIRTUE OF INDULGING IN ANY DEL AYING TACTICS, DID NOT CLAIM ANY ADVANTAGE WHATSOEVER. 4. STRONGLY OPPOSING THE CONDONATION PETITION, LD. DR SUBMITTED THAT WHETHER SHRI DEEPAK ACHARYA WAS AUTHORIZED TO TAKE DECISIONS REGARDING APPEALS AND TAX MATTERS WERE NOT BROUGHT ON RECORD. THEREFORE, THE AFFIDAVIT FILED BY SHRI DEEPAK ACHARYA COULD NOT BE TAKEN AT FACE VALUE. ACCORDING TO LD. DR, ASSESSEE WAS A HUGE COMPANY AN D SHOULD HAVE MADE PROPER ARRANGEMENTS FOR FILING APPEALS WITHIN THE T IME PROVIDED UNDER STATUTE AND COULD NOT TAKE A REFUGE ON SUCH FLIMSY REASONS. 5. WE HAVE PERUSED THE AFFIDAVIT OF SHRI DEEPAK ACH ARYA AS WELL AS THE CONTENTIONS OF BOTH THE PARTIES ON THE CONDONATION PETITION. AT THE TIME OF HEARING, SHRI DEEPAK ACHARYA WAS PRESENT. WHEN B ENCH QUESTIONED SHRI DEEPAK ACHARYA AS TO HIS ROLE IN THE ASSESSEE- COMPANY, HE ANSWERED THAT HE WAS REPORTING TO THE VICE-PRESIDENT (FINANC E & ACCOUNTS) AND HE I.T.A. NO.: 250/KOL./2012 ASSESSMENT YEAR : 2006-07 PAGE 1 TO 10 3 WAS WORKING AS MANAGER (FINANCE & ACCOUNTS). HE ALS O SUBMITTED THAT THE DEFAULT WAS ON ACCOUNT OF A MISTAKEN IMPRESSION HE HELD REGARDING REQUIREMENT OF FILING AN APPEAL UNDER SECTION 263 O F THE ACT. IN OUR OPINION, THE REPLY GIVEN BY SHRI DEEPAK ACHARYA DOE S SHOW THAT HE WAS A RESPONSIBLE OFFICER OF THE ASSESEE COMPANY ATTENDIN G TO MATTERS RELATING TO ITS TAX WORK. FOR A MISTAKE COMMITTED BY AN EMPL OYEE, AN ASSESSEE CANNOT BE PUT ON PERIL, ESPECIALLY WHEN THE CONCERN ED EMPLOYEE HAS FILED AN AFFIDAVIT STATING THAT THE MISTAKE HAD HAPPENED ONLY DUE TO HIS DEFAULT. IT IS NOT THE QUESTION OF IGNORANCE OF LAW BUT IT I S THE QUESTION OF PENALISING AN ASSESSEE FOR A MISTAKE COMMITTED BY O NE OF ITS STAFF. WHEN ASSESSEE HAD DELEGATED CERTAIN DUTIES TO ITS EMPLOY EES, IT COULD HOLD A BONAFIDE BELIEF THAT SUCH EMPLOYEES WOULD DISCHARGE THEIR DUTIES AS WERE REQUIRED OF THEM. IN OUR OPINION, THE REASONS CITED BY THE ASSESSEE APPEAR TO BE GENUINE. WE DO NOT FIND ANYTHING TO DOUBT EIT HER THE AFFIDAVIT FILED BY SHRI DEEPAK ACHARYA OR THE REPLIES GIVEN BY HIM ON THE QUESTIONS RAISED. WE ARE OF THE OPINION THAT IN ORDER TO MEET ENDS OF JUSTICE, DELAY HAS TO BE CONDONED. DELAY IS THEREFORE CONDONED AND THE APPEAL IS ADMITTED. 6. LD. COUNSEL FOR THE ASSESSEE STRONGLY ASSAILING THE ORDER OF LD. CIT SUBMITTED THAT DURING THE COURSE OF ORIGINAL ASSESS MENT ASSESSING OFFICER HAD MADE DETAILED VERIFICATION ON REPLIES GIVEN BY THE ASSESSEE FOR ITS CLAIM FOR DEDUCTION UNDER SECTION 80IA(4) OF THE AC T. RELYING ON THE ORIGINAL ASSESSMENT ORDER DATED 31.12.2008 PASSED U NDER SECTION 143(3) OF THE ACT, LD. AR SUBMITTED THAT ASSESSEE HAD CLAI MED DEDUCTION FOR ROAD PROJECTS, METRO RAILWAY PROJECTS AND WATER TREATMEN T PLANTS. ASSESSING OFFICER HAD ADJUDICATED ON SUCH CLAIM AFTER VERIFYI NG THE DETAILS AND AFTER CONSIDERING THE EXPLANATION TO SECTION 80IA OF THE ACT INTRODUCED BY FINANCE ACT, 2007 WITH RETROSPECTIVE EFFECT FROM 1 ST APRIL, 2000. THEREAFTER HE HAD COME TO A CONCLUSION THAT FOR TWO OF THE EIGHT PROJECTS ON WHICH SUCH CLAIM WAS PREFERRED BY THE ASSESSEE, A DEDUCTION COULD NOT BE GIVEN. THE CLAIM FOR DEDUCTION WAS SCALED DOWN B Y RS.1,84,03,187/- IN I.T.A. NO.: 250/KOL./2012 ASSESSMENT YEAR : 2006-07 PAGE 1 TO 10 4 RESPECT OF THESE PROJECTS. AS PER LD AR, THE REVISI ON ATTEMPTED UNDER SECTION 263 OF THE ACT, WAS ONLY FOR A REASON THAT EXPLANATION TO SECTION 80IA OF THE ACT WAS SUBSTITUTED BY FINANCE (NO. 2) ACT, 2009 WITH RETROSPECTIVE EFFECT FROM 01.04.2000 AND WHEN THE A SSESSING OFFICER HAD PASSED THE ASSESSMENT ORDER, THE SAID SUBSTITUTED E XPLANATION WAS NOT AVAILABLE TO HIM. AS PER LD. AR, IN VIEW OF THE DEC ISION OF HONBLE APEX COURT IN THE CASE OF CIT VS.- MAX INDIA LTD. [295 ITR 282], A LAWFUL VIEW TAKEN BY THE ASSESSING OFFICER COULD NOT BE SUBSTIT UTED BY THE CIT WITH ANOTHER VIEW. ACCORDING TO HIM, WHEN THE ASSESSING OFFICER PASSED THE ASSESSMENT ORDER HE HAD CONSIDERED THE LAW AS IT ST OOD AT THAT POINT OF TIME. EVEN IF THE SUBSTITUTED EXPLANATION WAS CONSI DERED, STILL THE ASSESSEE WAS ELIGIBLE FOR THE DEDUCTION CLAIMED UND ER SECTION 80IA(4) OF THE ACT. RELYING ON THE DECISION OF HONBLE JAIPUR BENCH OF THIS TRIBUNAL IN THE CASE OF OM METAL INFRAPROJECTS LTD. VS.- CI T [26 DTR (JP)(TRIB.) 359] LD. AR SUBMITTED THAT THE EXPLANATION TO SECTI ON 80IA DID NOT APPLY TO A WORK CONTRACT ENTERED INTO BY THE GOVERNMENT W ITH AN ENTERPRISE BUT ONLY ON A CONTRACTS ENTERED BY AN ENTERPRISE WITH A NOTHER PARTY. RELIANCE WAS ALSO PLACED ON THE DECISION OF HONBLE HYDERABA D BENCH OF THIS TRIBUNAL IN THE CASE OF GVPR ENGINEERS LTD. VS.- A CIT (2012) 51 SOT (HYD.) (URO), WHICH ACCORDING TO HIM HAD ALREADY CO NSIDERED THE EFFECT OF THE SUBSTITUTED EXPLANATION. HENCE, FOR THE WORK OF THE NATURE DONE BY THE ASSESSEE WAS ELIGIBLE FOR DEDUCTION UNDER SECTI ON 80IA(4) OF THE ACT.. THEREFORE, ACCORDING TO HIM, EVEN IF THE EXPLANATIO N WAS CONSIDERED, THE VIEW TAKEN BY THE ASSESSING OFFICER WAS LEGITIMATE. THE LD. CIT WAS ONLY SUBSTITUTING HIS OWN VIEW AND FOR DOING THIS TAKING REFUGE OF SUBSTITUTED EXPLANATION UNDER SECTION 80IA. 7. PER CONTRA LD. DR STRONGLY SUPPORTING THE ORDER OF LD. CIT SUBMITTED THAT THE ASSESSEE WAS ONLY A CONTRACTOR. ACCORDING TO HIM, EXPLANATION TO SECTION 80IA AS SUBSTITUTED BY FINANCE (NO.2) ACT, 2009 WITH RETROSPECTIVE EFFECT FROM 1.4.2000. SUCH EXPLANATIO N CLEARLY STATED THAT DEDUCTION UNDER SUB-SECTION (4) THEREOF WAS NOT AVA ILABLE FOR A WORKS I.T.A. NO.: 250/KOL./2012 ASSESSMENT YEAR : 2006-07 PAGE 1 TO 10 5 CONTRACT EXECUTED BY A PARTY ON A CONTRACT WITH THE CENTRAL OR STATE GOVERNMENT. WORKS AWARDED TO THE ASSESSEE WERE EITH ER BY CENTRAL GOVERNMENT OR STATE GOVERNMENT OR ITS AGENCIES. ASS ESSING OFFICER DID NOT HAVE THE BENEFIT OF THE SUBSTITUTED EXPLANATION WHEN HE WAS PASSING THE ORDER. WHEN THE SUBSTITUTED EXPLANATION WAS HAV ING RETROSPECTIVE EFFECT, LD. CIT WAS WELL WITHIN HIS POWERS FOR INVO KING THE REVISIONARY JURISDICTION UNDER SECTION 263 OF THE ACT. THEREFOR E, ACCORDING TO HIM, THE ORDER OF LD. CIT DID NOT SUFFER FROM ANY INFIRMITY. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. FOR INVOKING SECTION 263 OF TH E ACT, TWO CONDITIONS ARE REQUIRED TO BE SATISFIED. FIRST ONE IS ITS THA T THERE SHOULD BE AN ERROR IN THE ORDER OF ASSESSING OFFICER; AND SECOND IS TH AT SUCH ERROR SHOULD BE PREJUDICIAL TO THE INTEREST OF THE REVENUE. LOOKING AT THE FIRST ASPECT, THE PERTINENT PART OF THE ASSESSMENT ORDER DATED 31.12. 2008, PASSED UNDER SECTION 143(3) OF THE ACT, IS REPRODUCED HEREUNDER :- CLAIM OF DEDUCTION U/S. 80IA OF THE ACT : THE ASSE SSEE COMPANY HAD SHOWN TO HAVE DERIVED INCOME FROM FOLLOWING EIG HT PROJECTS AGAINST WHICH THE ASSESSEE COMPANY HAD CLA IMED DEDUCTIONS U/S. 80IA OF THE ACT : (I) PROJECT OF ROAD OVER BRIDGE FOR SOUTH EASTERN RAILW AY AT BANKURA, (II) PROJECT OF ROAD OVER BRIDGE FOR GAMUDA (SAKTIGARH); (III) PROJECT OF ROAD OVER BRIDGE FOR KONKAN RAILWAY PARASNATH; (IV) PROJECT FOR FILING AND SUBSTRUCTURE WORKS OF METRO RAILWAY, DUM DUM, KOLKATA, (V) PROJECT OF ROAD OVER BRIDGE FOR INDIAN RAILWAY CORPORATION, IRCON, PATNA, (VI) PROJECT OF ROAD OVER BRIDGE FOR EAST CENTRAL RAILWA Y, KODARMA, JHARKHAND, (VII) PROJECT FOR WATER TREATMENT PLANT, IMPHAL, (VIII) PROJECT FOR ROAD OVER BRIDGE FOR INDIAN RAILWAY CORPORATION. ON PERUSAL OF THE DETAILS PRODUCED IN RESPECT OF TH E ABOVE PROJECTS, IT IS DETECTED THAT SUBSEQUENT TO THE INS ERTION OF EXPLANATION BY THE FINANCE ACT, 2007, WITH RETROS PECTIVE EFFECT FROM 1.4.2000, WHICH SPECIFIES THE NON-APPLI CABILITY OF I.T.A. NO.: 250/KOL./2012 ASSESSMENT YEAR : 2006-07 PAGE 1 TO 10 6 SEC. 80IA FOR THE PERSONS WHO EXECUTES A WORKS CONT RACT WITH ANY UNDERTAKING OR ENTERPRISES. ACCORDING TO THE ABOVE EXPLANATION, TWO PROJECTS, VIZ. OVER BRIDGE FOR GAMUDA (SAKTIGARH) PROJECT AN OVER BRIDGE FOR INDIAN RAILWAY CORPORATION, IRCON, PATNA ARE CO MING UNDER THE WORKS CONTRACT AS PER THE PRODUCED DOCU MENTS IN THIS REGARD AND THEREFORE, THE CLAIM OF DEDUCTION U /S. 80IA IN THESE TWO PROJECTS ARE NOT APPLICABLE. THEREFORE, THE ASSESSEE TOO VIDE THEIR WRITTEN SUBM ISSION DATED 31.12.2008 HAD ACCEPTED THE ABOVE REFERRED FACT AND THEREFORE, NET INCOME OF RS.1,84,03,187/- SHOWN TO HAVE BEEN D ERIVED FROM THOSE TWO PROJECTS ARE NOT ALLOWED FOR DEDUCTI ON U/S. 80IA OF THE ACT. IT IS CLEAR FROM THE ABOVE THAT ASSESSING OFFICER H AD MADE A VERIFICATION OF THE CLAIM OF THE ASSESSEE UNDER SECTION 80IA OF THE ACT AND THEREAFTER REACHED A CONCLUSION THAT FOR TWO OF THE PROJECTS, IT WAS NOT ELIGIBLE FOR SUCH A DEDUCTION. SUCH DECISION WAS ARRIVED AT BY T HE ASSESSING OFFICER AFTER CONSIDERING THE EXPLANATION TO SECTION 80IA A S ORIGINALLY INTRODUCED BY FINANCE (NO.2) ACT, 2007 WITH RETROSPECTIVE EFFE CT FROM 01.04.2000. NO DOUBT AT THE TIME WHEN THE ASSESSING OFFICER COMPLE TED THE ASSESSMENT, THE SUBSTITUTED EXPLANATION TO SECTION 80IA WAS NOT AVAILABLE. THE SUBSTITUTION OF THE EXPLANATION WAS BROUGHT IN BY F INANCE (NO. 2) ACT, 2009 WITH RETROSPECTIVE EFFECT, THAT TOO, FROM 01.0 4.2000. THE PROJECTS UNDERTAKEN BY THE ASSESSEE WERE ALL WITH CENTRAL GO VERNMENT OR STATE GOVERNMENT AND THIS HAS NOT BEEN DISPUTED BY THE LD . CIT. LD. CITS ONLY QUALM IS THAT THE SUBSTITUTED EXPLANATION WOULD DIS ENTITLE IT FROM ENJOYING THE DEDUCTION UNDER SECTION 80IA(4) OF THE ACT, SINCE THE WORKS CONTRACT AWARDED TO IT WERE BY CENTRAL GOVERNMENT O R STATE GOVERNMENT. THE EFFECT OF SUBSTITUTION OF THE EXPLANATION BY FI NANCE (NO. 2) ACT, 2009 WITH RETROSPECTIVE EFFECT FROM 1 ST APRIL, 2000 WAS ONE OF THE ISSUES CONSIDERED BY THE HONBLE HYDERABAD BENCH OF THIS T RIBUNAL IN THE CASE OF GVPR ENGINEERS LTD. VS.- ACIT (SUPRA). IT WAS HELD BY THE COORDINATE BENCH AS UNDER :- THE NEXT QUESTION TO BE ANSWERED IS WHETHER THE ASSESSEE IS A DEVELOPER OR MERE WORKS CONTRACTOR. T HE REVENUE RELIED ON THE AMENDMENTS BROUGHT IN BY THE I.T.A. NO.: 250/KOL./2012 ASSESSMENT YEAR : 2006-07 PAGE 1 TO 10 7 FINANCE ACT, 2007 AND 2009 TO MENTION THAT THE ACTI VITY UNDERTAKEN BY THE ASSESSEE IS AKIN TO WORKS CONTRAC T AND IS NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 80IA(4) . WHETHER THE ASSESSEE IS A DEVELOPER OR WORKS CONTRA CTOR PURELY DEPENDS ON THE NATURE OF THE WORK UNDERTAKEN BY THE ASSESSEE. EACH OF THE WORK UNDERTAKEN HAS TO BE ANALYZED 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 CONTRACTOR FOR DEVELOPMENT OF INFRASTRUCTURE. IT IS TO BE SEEN FRO M THE AGREEMENTS ENTERED INTO BY THE ASSESSEE WITH THE GOVERNMENT. THE GOVERNMENT HANDED OVER THE POSSESSI ON OF THE PREMISES OF PROJECTS TO THE ASSESSEE FOR THE DEVELOPMENT OF INFRASTRUCTURE FACILITY. IT IS THE A SSESSEES RESPONSIBILITY TO DO ALL ACTS TILL THE POSSESSION O F PROPERTY IS HANDED OVER TO THE GOVERNMENT. THE FIRS T PHASE IS TO TAKE OVER THE EXISTING PREMISES OF THE PROJECTS AND THEREAFTER DEVELOPING THE SAME INTO INFRASTRUCT URE FACILITY. SECONDLY, THE ASSESSEE SHALL FACILITATE T HE PROPER TO USE THE AVAILABLE EXISTING FACILITY EVEN WHILE T HE PROCESS OF DEVELOPMENT IS IN PROGRESS. ANY LOSS TO THE PUBLIC CAUSED IN THE PROCESS WOULD BE THE RESPONSIB ILITY OF THE ASSESSEE. THE ASSESSEE HAS TO DEVELOP THE INFRASTRUCTURE FACILITY. IN THE PROCESS, ALL THE WO RKS 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 CATTLE AND BULLOCK CARTS IN TH E VILLAGE; PROVISION FOR TRAFFIC WITHOUT ANY HINDRANC E, THE ASSESSEES DUTY IS TO DEVELOP INFRASTRUCTURE WHETHE R IT INVOLVES CONSTRUCTION OF A PARTICULAR ITEM AS AGREE D TO IN THE AGREEMENT OR NOT. THE AGREEMENT IS NOT FOR A SP ECIFIC WORK, IT IS FOR DEVELOPMENT OF FACILITY AS A WHOLE. THE ASSESSEE IS NOT ENTRUSTED WITH ANY SPECIFIC WORK TO BE DONE BY THE ASSESSEE. THE MATERIAL REQUIRED IS TO B E BROUGHT IN BY THE ASSESSEE BY STICKING TO THE QUALI TY 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, IT S EXPERTISE, ITS EMPLOYEES AND TAKES THE RESPONSIBILI TY OF DEVELOPING THE INFRASTRUCTURE FACILITY. THE LOSSES SUFFERED EITHER BY THE GOVERNMENT OR THE PEOPLE IN THE PROCE SS OF SUCH DEVELOPMENT WOULD BE THAT OF THE ASSESSEE. THE ASSESSEE HANDS OVER THE DEVELOPED INFRASTRUCTURE FA CILITY TO THE GOVERNMENT ON COMPLETION OF THE DEVELOPMENT. THEREAFTER THE ASSESSEE HAS TO UNDERTAKE MAINTENANC E OF THE SAID INFRASTRUCTURE FOR A PERIOD OF 12 TO 24 MO NTHS. I.T.A. NO.: 250/KOL./2012 ASSESSMENT YEAR : 2006-07 PAGE 1 TO 10 8 DURING THIS PERIOD, IF ANY DAMAGES ARE OCCURRED, IT SHALL BE THE RESPONSIBILITY OF THE ASSESSEE. FURTHER, DUR ING THIS PERIOD, THE ENTIRE INFRASTRUCTURE SHALL HAVE TO BE MAINTAINED BY THE ASSESSEE ALONE WITHOUT HINDRANCE TO THE REGULAR TRAFFIC. THEREFORE, IT IS CLEAR THAT FR OM AN UNDERDEVELOPED AREA, INFRASTRUCTURE IS DEVELOPED AN D HANDED OVER TO THE GOVERNMENT AND AS EXPLAINED BY T HE CBDT VIDE ITS CIRCULAR DATED 18.05.2010, SUCH ACTIV ITY IS ELIGIBLE FOR DEDUCTION UNDER SECTION 80IA(4). THIS CANNOT BE CONSIDERED AS A MERE WORKS CONTRACT BUT HAS TO B E CONSIDERED AS A DEVELOPMENT INFRASTRUCTURE FACILITY . THEREFORE, THE ASSESSEE IS A DEVELOPER AND NOT A WO RKS CONTRACTOR AS PRESUMED BY THE REVENUE. THE CIRCULAR ISSUED BY THE BOARD CLEARLY INDICATE THAT THE ASSES SEE IS ELIGIBLE FOR DEDUCTION UNDER SECTION 80IA(4). THE DEPARTMENT IS NOT CORRECT IN HOLDING THAT THE ASSES SEE IS A MERE CONTRACTOR OF THE WORK AND NOT A DEVELOPER. AS PER THE PROVISIONS OF SECTION 80IA, 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 BE 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 FACIL ITY. EVERY AGREEMENT ENTERED INTO IS A CONTRACT. THE WOR D CONTRACTOR IS USED TO DENOTE THE PERSON WHO ENTER S INTO SUCH CONTRACT. EVERY A PERSON WHO ENTERS INTO A CON TRACT FOR DEVELOPMENT OF INFRASTRUCTURE FACILITY IS A CON TRACTOR. THEREFORE, THE CONTRACTOR AND THE DEVELOPER CANNOT BE VIEWED DIFFERENTLY. EVERY CONTRACTOR MAY NOT A DEVE LOPER BUT EVERY DEVELOPER DEVELOPING INFRASTRUCTURE FACIL ITY ON BEHALF OF THE GOVERNMENT IS A CONTRACTOR. SECTION 80IA INTENDS 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, CLAR IFIED THAT PURE DEVELOPER SHOULD ALSO BE ELIGIBLE TO CLAI M DEDUCTION UNDER SECTION 80IA WHICH ULTIMATELY CULMINATED INTO AMENDMENT UNDER SECTION 80IA IN THE FINANCE ACT, 2001, TO GIVE EFFECT TO THE AFORESAID CIRCULARS ISSUED BY THE CBDT. TO AVOID MISUSE OF TH E AFORESAID AMENDMENT, AN EXPLANATION WAS INSERTED IN SECTION 80IA, IN THE FINANCE ACT, 2007 TO 2009, TO CLARIFY THAT MERE WORKS CONTRACT WOULD NOT BE ELIGIBLE FOR DEDUCTIONS UNDER SECTION 80IA, BUT, CERTAINLY, THE EXPLANATION CANNOT BE READ TO DO AWAY WITH THE I.T.A. NO.: 250/KOL./2012 ASSESSMENT YEAR : 2006-07 PAGE 1 TO 10 9 ELIGIBILITY OF THE DEVELOPER; OTHERWISE, THE PARLIA MENT WOULD HAVE SIMPLY REVERSED THE AMENDMENT MADE IN TH E FINANCE ACT, 2001. THUS, THE AFORESAID EXPLANATION WAS INSERTED, CERTAINLY, TO DENY THE TAX HOLIDAY TO THE ENTITIES WHO DO MERE WORKS CONTRACT OR SUB-CONTRACT AS DISTI NCT FROM THE DEVELOPER. THIS IS CLEAR FROM THE EXPRESS INTENTION OF THE PARLIAMENT WHILE INTRODUCING THE EXPLANATION. THE EXPLANATORY MEMORANDUM TO FINANCE ACT, 2007 STATES THAT THE PURPOSE OF THE TAX BENEFI T HAS ALL ALONG BEEN TO ENCOURAGE INVESTMENT IN DEVELOPME NT OF INFRASTRUCTURE SECTOR AND NOT FOR THE PERSONS WH O MERELY EXECUTE THE CIVIL CONSTRUCTION WORK. IT CATEGORICALLY STATES THAT THE DEDUCTION UNDER SECTI ON 80IA IS AVAILABLE TO DEVELOPERS WHO UNDERTAKES ENTREPRENEURIAL AND INVESTMENT RISK AND NOT TO THE CONTRACTORS, WHO UNDERTAKE ONLY BUSINESS RISK. WITH OUT ANY DOUBT, THE ASSESSEE CLEARLY DEMONSTRATED THAT I T HAS UNDERTAKEN HUGE RISKS IN TERMS OF DEVELOPMENT OF TECHNICAL PERSONNEL, PLANT AND MACHINERY, TECHNICAL KNOW-HOW, EXPERTISE AND FINANCIAL RESOURCES. AFTER THE AMENDMENT SECTION 80IA(4) IS READ AS (I) DEVELOPING OR (II) OPERATING AND MAINTAINING OR (III) DEVELOPING, OPERATING AND MAINTAINING ANY INFRASTRUCTURE FACILI TY. WHILE PRIOR TO AMENDMENT THE OR BETWEEN THE ACTIV ITIES WAS NOT THERE, AFTER THE AMENDMENT OR HAS BEEN INSERTED WITH EFFECT FROM 1.4.2002 BY FINANCE ACT, 2001. THEREFORE, IF THE CONTRACTS INVOLVE DESIGN, DEVELOP MENT, OPERATING AND MAINTENANCE, FINANCIAL INVOLVEMENT, A ND DEFECT CORRECTION AND LIABILITY PERIOD, THEN SUCH CONTRACTS CANNOT BE CALLED AS SIMPLE WORKS CONTRACT TO DENY THE DEDUCTION UNDER SECTION 80IA. THE CONTRACT S WHICH CONTAIN ABOVE FEATURES TO BE SEGREGATED, THIS DEDUCTION UNDER SECTION 80IA HAVE TO BE GRANTED AND THE OTHER AGREEMENTS WHICH ARE PURE WORKS CONTRACTS HIT BY THE EXPLANATION TO SECTION 80IA(13), THOSE WORK ARE NOT ENTITLED FOR DEDUCTION UNDER SECTION 80IA. THE PROF IT FROM THE CONTRACTS WHICH INVOLVE DESIGN, DEVELOPMEN T, OPERATING AND MAINTENANCE, FINANCIAL INVOLVEMENT, A ND DEFECT CORRECT AN LIABILITY PERIOD IS TO BE COMPUTE D BY THE ASSESSING OFFICER ON PRO RATA BASIS OF TURNOVER. TH E ASSESSING OFFICER IS DIRECTED TO EXAMINE THE RECORD S ACCORDINGLY AND GRANT DEDUCTION ON ELIGIBLE TURNOVE R AS DIRECTED ABOVE. THE SAME VIEW WAS AGAIN TAKEN BY HONBLE HYDERABAD BENCH OF THIS TRIBUNAL IN THE CASE OF KMC CONSTRUCTIONS LTD. VS. - ACIT (2012) 51 SOT I.T.A. NO.: 250/KOL./2012 ASSESSMENT YEAR : 2006-07 PAGE 1 TO 10 10 214 (HYD.) (URO). THERE IS NO CASE FOR THE REVENUE THAT THE CONTRACT WORKS DONE BY THE ASSESSEE DID NOT INVOLVE ANY DESI GN OR DEVELOPMENT OR FINANCIAL INVOLVEMENT OR DEFECT CORRECTION LIABILIT IES. IT IS THEREFORE NOT POSSIBLE FOR US TO SAY THAT THERE WAS ANY ERROR IN THE ORDER OF THE ASSESSING OFFICER WHEREIN HE ALLOWED THE DEDUCTION UNDER SECTION 80IA(4) OF THE ACT AFTER SCALING IT DOWN SUBSTANTIA LLY. THE ACTION TAKEN BY THE ASSESSING OFFICER WAS A POSSIBLE LAWFUL VIEW. T HERE BEING NO ERROR IN THE ORDER OF THE ASSESSING OFFICER, LD. CIT WAS ONL Y ENDEAVOURING TO SUBSTITUTE HIS VIEW WITH THE LAWFUL VIEW TAKEN BY T HE ASSESSING OFFICER. IN ANY CASE, HONBLE APEX COURT IN THE CASE OF MAX IND IA LIMITED (SUPRA) HAS HELD THAT WHEN TWO VIEWS ARE POSSIBLE AND ASSESSING OFFICER HAS TAKEN ONE VIEW WITH WHICH THE COMMISSIONER DOES NOT AGREE , IT CANNOT BE TREATED AN ERRONEOUS ORDER PREJUDICIAL TO THE INTER EST OF REVENUE. WE THEREFORE HAVE NO HESITATION TO QUASH THE ORDER UND ER SECTION 263 OF THE ACT PASSED BY THE LD. CIT. 9. IN THE RESULT, APPEAL FILED BY ASSESSEE IS ALLOW ED. ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH DAY OF DECEMBER, 2013. SD/- SD/- MAHAVIR SINGH ABRAHAM P. GEORGE (JUDICIAL MEMBER) (ACC OUNTANT MEMBER) KOLKATA, THE 19 TH DAY OF DECEMBER, 2013 COPIES TO : (1) THE APPELLANT (2) THE RESPONDENT (3) CIT (4) THE DEPARTMENTAL REPRESENTATIVE (5) GUARD FILE BY ORDER ETC ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.