ACIT Cir- IV, Pune V. M/s Parwani Builders Pvt Ltd, Pune

ITA 374/PUN/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 79921 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 3 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-06-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 25-02-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 24-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUNITA BILLA
• Assessee Lawyers: V S RAWAT
• Keywords: Retrospective amendment
• Section: 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV , JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO S . 374 & 1846 /PN/201 2 (ASSESSMENT YEAR S 2008 - 09 & 2009 - 10 ) ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE 4, PUNE .. APPELLANT VS. M/S. PARWANI BUILDERS P. LTD., SHOP NO. 211 / 212, 2 ND FLOOR, CITY POINT, 17 BOAT CLUB ROAD, PUNE 411001 .. RESPONDENT PAN NO. AACCP9869P A SSESSEE BY : SHRI V.S. RAWAT RE VENUE BY : MS. SUNITA BILLA DATE OF HEARING : 11 - 06 - 201 4 DATE OF PRONOUNCEMENT : 18 - 06 - 201 4 ORDER PER R.K. PANDA, AM : TH E ABOVE TWO APPEALS FILED BY THE REVENUE ARE DIRECTED AGAINST THE SEPARATE ORDER S DATED 22 - 11 - 2011 AND 29 - 05 - 2012 OF THE CIT(A) - II, PUNE RELATING TO ASSESSMENT YEAR S 2008 - 09 AND 2009 - 10 RESPECTIVELY . SINCE COMMON ISSUES ARE INVOLVED IN BOTH THESE APPEALS, THEREFORE, THESE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. ITA NO. 374 /PN/201 2 (A.Y. 2008 - 09) : 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASS ESSEE IS A PVT. LIMITED COMPANY ENGAGED IN THE BUSINESS OF CONSTRUCTION. FOR THE IMPUGNED ASSESSMENT YEAR , THE ASSESSEE COMPANY FILED ITS RETURN OF INCOME ON 2 29 - 09 - 2008 DECLARING TOTAL IN COME AT RS. 31,36,300/ - AFTER CLAIMING DEDUCTION OF RS.54,19,928/ - U /S. 80IA(4) OF THE INCOME - TAX ACT. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER ASKED THE ASSESSEE TO JUSTIFY ITS CLAIM OF THE DEDUCTION OF RS.54,19,928/ - U/S. 80IA(4) OF THE I.T. ACT. IT WAS EXPLAINED THAT THE ASSESSEE COMPANY HAS UNDERTAKEN DEVELOPMENT OF FOLLOWING INFRASTRUCTURE FACILITIES UNDER IRRIGATION PROJECTS . PROJECT AGREEMENT WITH GOSIK HURD DAM WORK GOSIKHURD RIGHT BANK CANAL, WAHI, DISTRICT BHANDARA, MAHARASHTRA WARNA CANAL WARNA CANAL, DIVISION NO. 1, ISLAMPUR, MAHARASHTRA CHHOTI DAM WATER RESOURCES DIVISION, KHARGONE, MADHYA PRADESH WADI - SHEWADI PROJECT DHULE MEDIUM PROJECT, DIVISION NO. 2, DHULE, MAHARASHTRA RALAVATI WATER RESOURCES DIVISION, BA RWANI, MADHYA PRADESH BADEWADI WARNA CANAL, DIVISION NO. 1, ISLAMPUR, MAHARASHTRA EARTHEN DAM - JHIRLINGA WATER RESOUECES DIVISION, CHHINDWADA, MADHYA PRADESH 2.1 IT WAS EXPLAINED THAT THE COMPANY HAS ENTERED INTO AGREEMENT WITH AUTHORITIES OF GOVT. OF MAHARASHTRA AND GOVT. OF MADHYA PRADESH. IT HAS CONSTRUCTED TUNNELS AND STRUCTURES TO PROVIDE WATER SUPPLY AND THUS, A NEW FACILITY HAS BEEN DEVELOPED. RE FERRING TO VARIOUS DECISIONS, IT WAS EXPLAINED T HAT THE ASSESSEE FULFILS ALL THE CONDITIONS PRESCRIBED U/S. 80IA(4) OF THE I.T. ACT AND THEREFORE, IT IS ELIGIBLE FOR DEDUCTION. HOWEVER, THE ASSESSING OFFICER WAS NOT 3 SATISFIED WITH THE EXPLANATION GIVEN BY THE ASSESSEE. HE OBSERVED THAT THE ASSESSEE COMPANY , DURING THE YEAR , HAS CARRIED OUT INFRASTRUCTURE CONTRACTS AMOUNTING TO RS.11,17,22,282/ - FOR THE VARIOUS CONCERNS. IT HAS CARRIED OUT THE WORKS UNDER WORKS CONTRACT WITH VARIOUS GOVT. DEPTT. AND THEREFORE, THE ASSESSEE WAS ONLY A CONTRACTOR OR A SUB - CONTRACTOR EXECUTING THE WORKS CONTRACTS AWARDED BY THE GOVT. AGENCIES/STATUTORY AGENCIES WHO WERE THE PERSONS ACTUALLY DEVELOPING THE INFRASTRUCTURE PROJECTS. THE ASSESSEE WA S ONLY CARRYING OUT THE WORKS CONTRACT AWARDED BY THESE CONCERNS AND BY NO WAY COULD BE CONSIDERED TO BE THE DEVELOPER OF INFRASTRUCTURE PROJECT S . REJECTING THE EXPLANATION GIVEN BY THE ASSESSEE AND RELYING ON THE DECISION OF THE MUMBAI BENCH OF THE TRIBU NAL IN THE CASE OF M/S. B.T. PATIL & SONS BELGAUM CO. PVT. LTD. VS. ACIT, CIRCLE - 2, KOLHAPUR VIDE ITA NOS. 1408 & 1404/PN/2003 , THE A.O. REJECTED THE CLAIM OF DEDUCTION U/S. 80IA(4) OF THE I.T. ACT . W HILE DOING SO T HE ASSESSING OFFICER ALSO RELIED ON THE RETROSPECTIVE AMENDMENT IN SEC. 80IA OF THE I.T. AC T AFTER THE INSERTION OF EXPLANATION WHICH WAS HELD ONLY TO CLARIFY THAT THE DEDUCTION CANNOT BE ALLOWED IN RELATION TO THE BUSINESS IN THE NATURE OF WORKS CONTRACT. HE, ACCORDINGLY, DISALLOWED THE CLAIM OF DEDUCTION U/S. 80IA(4) AMOUNTING TO RS.54,19,928/ - AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. 3. BEFORE THE CIT(A) THE ASSESSEE REITERATED THE SAME ARGUMENT AS MADE BEFORE THE ASSESSING OFFICER. IT WAS SUBMITTED THAT THE ASSESSEE COMPAN Y FULFILS ALL THE CONDITIONS LAID DOWN U/S. 80IA(4) OF THE ACT . AS REGARDS THE CONTENTION OF THE ASSESSING OFFICER THAT THE ASSESSEE IS A CONTRACTOR AND NOT A DEVELOPER S INCE HE HAS ENTERED INTO AGREEMENT S 4 WITH THE GOVT. AUTHORITY ETC. FOR CARRYING OUT TH E WORK IT WAS SUBMITTED THAT AS PER THE PROVISIONS OF SEC. 80IA(4) THERE MUST BE AN AGREEMENT WITH THE CENTRAL GOVT. OR A STATE GOVT. ETC. FOR THE DEVELOPMENT OF INFRASTRUCTURE FACILITY. IT WAS SUBMITTED THAT IF THE CONTENTION OF THE ASSESSING OFFICER IS ACCEPTED THEN NOT A SINGLE PARTY WILL BE ELIGIBLE FOR THE DEDUCTION UNDER THIS SECTION . IT WAS ARGUED THAT THE ASSESSING OFFICER HAS NOT DISPUTED ABOUT THE BU SINESS ACTIVIT IES CARRIED ON BY THE ASSESSEE NOR THE DEVELOPMENT OF THE INFRASTRUCTURE FACILITIES. THE ONLY OBJECT OF THE ASSESSING OFFICER IS THAT THE ASSESSEE IS A CONTRACTOR AND THEREFORE, NOT ELIGIBLE FOR DEDUCTION U/S. 80IA(4). IT WAS SUBMITTED THAT THE ASSESSEE IS A DEVELOPER OF NEW PROJECTS AND DEVELOPED THE PROJECT AS PER THE AGREEMENTS ENTERED INTO BY IT WITH VARIOUS GOVT. AUTHORITIES. 4. AS REGARDS THE DECISION IN THE CASE OF M/S. B.T. PATIL & SONS BELGAUM CO. PVT. LTD. (SUPRA) RELIED ON BY THE A.O. I T WAS SUBMITTED THAT THE SAME IS NO MORE A GOOD LAW SINCE IT HAS BEEN OVERRULED BY THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF CIT VS. ABG HEAVY INDUSTRIES LTD. 322 ITR 323. 5. BASED ON ARGUMENT ADVANCED BY THE ASSESSEE THE CI T(A) ALLOWED THE CLAIM OF THE ASSESSEE BY OBSERVING AS UNDER: 3.2 I HAVE CONSIDERED THE SUBMISSIONS MADE BY THE APPELLANT AND PERUSED THE MATERIAL ON RECORD. THE APPELLANT HAS RAISED 3 GROUNDS OF APPEAL. IN GROUND NO. 1 THE APPELLANT HAS CONTESTED THE DI SALLOWANCE MADE BY THE A.O. OF THE CLAIM OF DEDUCTION U/S. 80IA(4) OF THE I.T. ACT OF RS. 54,19,928/ - . DURING THE ASSESSMENT PROCEEDINGS THE A.O. HELD THAT THE ASSESSEE WAS A CONTRACTOR OR SUB - CONTRACTOR EXECUTING THE WORKS CONTRACT AWARDED BY THE GOVERNME NT AGENCIES / STATUTORY AGENCIES AND THAT THE ASSESSEE IS NOT A DEVELOPER OF THE INFRASTRUCTURE FACILITIES BUT THE GOVT. AGENCIES AND THE PERSONS ACTUALLY DEVELOPING THE INFRASTRUCTURE PROJECT. THE A.O. ALSO RELIED ON THE RETROSPECTIVE AMENDMENT OF SECTION 80IA(4) WHEREBY AN EXPLANATION HAS BEEN INSERTED WHICH CLARIFIES THAT THE 5 DEDUCTION CANNOT BE ALLOWED IN RELATION TO THE BUSINESS IN THE NATURE OF WORKS CONTRACT. THE A,O, PLACED RELIANCE ON THE THIRD MEMBER DECISION OF MUMBAI ITAT IN THE CASE OF B.T. PAT S! & SONS BELGAUM CO. PVT. LTD. VS ACIT, KO L HAPUR. 3.3 THE APPELLANT HAS CONTENDED THAT DURING THE YEAR UNDER CONSIDERATION WORK HAS BEEN CARRIED OUT FOR THE GOVERNMENT DEPARTMENTS. A DETAILED LIST OF THE PROJECTS EXECUTED HAS BEEN GIVEN AS ALSO A COPY OF THE AGREEMENT DATED 20.09.2003 WITH THE EXECUTIVE ENGI NEER, WATER RESOURCES DIVISION, BARWANI (M.P) FOR THE CONSTRUCTION OF GIVING A FIRM PROJECT, RALAVATI. THE APPELLANT THUS STATES THAT AS THE APPELLANT CARRIED OUT THE WORK IN THE IRRIGATION DEPTT. WHICH ARE IN THE NATURE OF INFRASTRUCTURAL FACILITIES CLAIM OF DEDUCTION U/S. 80IA(4) HAS BEEN MADE AS THE CONDITION LAID DOWN IN THE SAID SECTION ARE CLEARLY FULFILLED. THE APPELLANT CONTENDED THAT REGARDING THE TREATMENT GIVEN BY THE A.O. IN TREATING HIM AS A CONTRACTOR OR SUB - CONTRACTOR AND NOT A DEVELOPER SINC E THE APPELLANT HAD ENTERED INTO AN AGREEMENT WITH THE GOVT. AUTHORITIES FOR CARRYING OUT WORK AND, THEREFORE, HELD BY THE A.O. AS A CONTRACTOR AND NOT A DEVELOPER, THE APPELLANT HAS FURTHER STATED THAT THE BASIC CONDITION OF THE SECTION 80IA(4) IS THAT TH ERE MUST BE AN AGREEMENT WITH THE CENTRAL GOVT. OR STATE GOVT. ETC. FOR THE DEVELOPMENT OF INFRASTRUCTURE FACILITY AND, THEREFORE, IT HAS BEEN CONTENDED THAT IF THE CONTENTION OF THE A.O. IS TO BE ACCEPTED THEN NOT A SINGLE ASSESSEE WILL BE ELIGIBLE FOR TH E DEDUCTION AND, THEREFORE, THE SECTION ITSELF BECOMES REDUNDANT. THE APPELLANT IS A DEVELOPER OF NEW PROJECT AND THE SAID PROJECTS ARE BEING DEVELOPED AS PER THE AGREEMENTS ENTERED WITH THE GOVT. AUTHORITIES. SO FAR THE INTRODUCTION OF EXPLANATION BY THE FINANCE ACT, 2007 W.E.F. 01.04.2000 APPLIES TO PERSONS WHO EXECUTE A WORK CONTRACT ENTERED INTO WITH THE UNDERTAKING OR ENTERPRISE AFTER 01.04.2000, HOWEVER, IN THE CASE OF THE APPELLANT THERE IS NO CONTRACT OR SUB - CONTRACT BUT AN AGREEMENT WITH THE GOVT. AGENCIES FOR DEVELOPMENT OF INFRASTRUCTURAL FACILITIES THUS, ALL THE CONDITIONS STIPULATED AS PER SECTION 80IA(4) ARE DULY FULFILLED AND, THEREFORE, THE APPELLANT IS ELIGIBLE FOR THE DEDUCTION U/S 801(4) OF THE I.T. ACT. 3.4 THE APPELLANT HAS PLACED RELIA NCE ON THE PUNE ITAT DECISION IN THE CASE OF LAXMI CIVIL ENGINEERING PVT. LTD. VS ACIT, ITA NO. 431/PN/07, 435/PJN/07, 254/PN/08 AND 766/PN/09 DATED 08.06.2011, WHEREIN THE PUNE ITAT RELYING ON THE HON'BLE BOMBAY HIGH COURT DECISION OF CIT VS ABG HEAVY IND USTRIES LTD., 322 ITR 323 (BOM). THE APPELLANT HAS CLAIMED THE DEDUCTION OF RS. 54,19,928/ - AND HAS SUBMITTED FORM NO. 10CCB CERTIFIED BY THE CHARTERED ACCOUNTANT. THE APPELLANT HAS COMPLETED FOLLOWING WORKS CLAIMED BY ASSESSEE AS INFRASTRUCTURAL WORKS ELI GIBLE FOR SECTION 80IA DEDUCTION. SR. NO. NAME OF SITE GOVT. DEPT. PLACE TYPE 1. GOSIKHURD VIDARBHA IRRIGATION DEVELOPMENT CORP. MAHARASHTRA IRRIGATION 2. CHHOTI DON KHARGORIE M.P. WATER RESOURCES DEPT. MADHYA PRADESH IRRIGATION 6 3. WADI - SHEWADI - DHULE TAPI IRRIGATION DEVELOPMENT CORP. MAHARASHTRA IRRIGATION 4. RALAVATI - BARWANI M.P. WATER RESOURCES DEPT. MADHYA PRADESH IRRIGATION 5 BADEWADI - ISLAMPUR MAHARASHTRA KRISHNA VALLEY DEVELOPMENT CORPORATION MAHARASHTRA IRRIGATION 6. TILLARI - GOA GOA TIILARI IRRIGATION DEVELOPMENT CORP. GOA IRRIGATION 7 VAIJAPUR' NANDUR MADHYAMESHWAR CANAL DIVISION MAHARASHTRA IRRIGATION 8. WARNA NAGAR WARNA CANAL DIVISION MAHARASHTRA IRRIGATION 9. CHHINDWARA M.P. WATER RESOURCES DEPT. MADHYA PRADESH IRRIGATION 3.5 THE APPELLANT HAS CARRIED OUT INFRASTRUCTURE CONTRACTS AMOUNTING TO RS.11,17,22,282 / - DURING THE YEAR UNDER CONSIDERATION. THE A.O. HAS ALSO NOTED THAT THE APPELLANT HAD CARRIED OUT THE WORKS UNDER 'WORKS CONTRACT WITH VARIOUS GOVERNMENT DEPARTMENTS SUCH AS M.P. WATER RESOURCES DEPT., VIDARBHA IRRIGATION DEV. COOP., MKVDC ETC. AN D, THEREFORE, THE A.O. HAS INFERRED THAT WORKS FOR WHICH THE DEDUCTION HAS BEEN CLAIMED U/S 80IA(4) HAS BEEN CARRIED OUT FOR THE GOVT. AGENCIES ONLY. THE A.O. HAS SPECIFICALLY COME TO THE CONCLUSION THAT EITHER THE ASSESSEE WAS A CONTRACTOR OR A SUB - CONTRA CTOR EXECUTING THE WORKS CONTRACT AWARDED BY THE GOVT. AGENCIES AND, THEREFORE, IT WAS HELD THAT THE GOVT./STATUTORY AGENCIES W E RE THE PERSONS ACTUALLY DEVELOPING THE INFRASTRUCTURE PROJECT. THE APPELLANT WAS ONLY CARRYING OUT THE WORKS CONTRACT AWARDED BY THEM AND THEN THE APPELLANT IN NO WAY COULD BE CONSIDERED TO BE DEVELOPER OF INFRASTRUCTURE PROJECT. IT IS ALSO BROUGHT ON RECORD THAT THE APPELLANT WAS PERIODICALLY AND REGULARLY PAID FOR CARRYING OUT THE WORKS CONTRACT WHICH IS EVIDENT FROM THE CERTIFIC ATES FILED ALONG WITH THE RETURN OF INCOME INDICATING THE DEDUCTION OF TAXES AT SOURCE U/S 194C, WHICH IS APPLICABLE TO WORKS CONTRACT. HOWEVER, THE A.O. HAS NOT DISPUTED ABOUT THE BUSINESS ACTIVITIES CARRIED ON BY THE ASSESSEE NOR THE DEVELOPMENT OF INFR ASTRUCTURAL FACILITIES. THE A.O. HAS COME TO THE CONCLUSION THAT THE APPELLANT IS A CONTRACTOR AND, THEREFORE, NOT ELIGIBLE FOR DEDUCTION U/S 80IA(4). IN OTHER WORDS, THE A.O. WAS OF THE VIEW THAT THE ASSESSEE BEING A CONTRACTOR CANNOT BE A DEVELOPER AND W HEN HE IS NOT A DEVELOPER THEN THE CONDITIONS SPECIFIED IN SUB - CAUSE (A), (B) AND (C) OF THE SAID CLAUSE (I) OF THE SECTION HAS NOT BEEN COMPLIED. 3.6 SECTION 80IA, INTER ALIA , GIVES DEDUCTION FOR DEVELOPMENT AND OPERATION OF INFRASTRUCTURE FACILITY . TH E INFRASTRUCTURE FACILITY FOR WHICH THE DEDUCTION IS GIVEN SHOULD STRICTLY CONFORM TO THE STATUTORY REQUIREMENTS. 7 SECTION 801 A READS AS FOLLOWS: 80 IA (1) - WHERE THE GROSS TOTAL INCOME OF AN ASSESSEE INCLUDES ANY PROFITS AND GAINS DERIVED BY AN UNDERTAKING OR AN ENTERPRISE FROM ANY BUSINESS REFERRED TO IN SUBSECTION (4) (SUCH BUSINESS BEING HERE IN AFTER REFERRED TO AS THE ELIGIBLE BUSINESS), THERE SHALL, IN ACCORDANCE WITH AND SUBJECT TO THE PROVISIONS OF THIS SECTION, BE ALLOWED, IN COMPUTING T HE TOTAL INCOME OF THE ASSESSEE, A DEDUCTION OF AN AMOUNT EQUAL TO 100% OF THE PROFITS AND GAINS DERIVED FROM SUCH BUSINESS FOR 10 CONSECUTIVE ASSESSMENT YEAR. SUBSECTION (4) OF SECTION 80 IA READS AS FOLLOWS - THIS SECTION APPLIES TO (I) ANY ENTERPRISE CAR RYING ON THE BUSINESS OF (I) DEVELOPING OR (II) OPERATING AND MAINTAINING OR (HI) DEVELOPING, OPERATING AND MAINTAINING ANY INFRASTRUCTURAL FACILITY WHICH FULFILLS 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 STALE ACT; B. IT HAS ENTERED INTO AN AGREEMENT WITH CENTRAL GOVERNMENT OR STATE GOVERNMENT OR A LOCAL AUTHORI TY OR ANY OTHER STATUTORY BODY FOR (I) DEVELOPING OR (II) OPERATING AND MAINTAINING OR (HI) DEVELOPING, OPERATING AND MAINTAINING A NEW INFRASTRUCTURAL FACILITY; C. IT HAS STARTED OR STARTS OPERATING AND MAINTAINING THE INFRASTRUCTURAL FACILITY ON OR AFTER 1 ST DAY OF APRIL 1995. THUS, THE ASSESSEE WHO WILL SATISFY THE AFORESAID CONDITIONS SUCH AS THE BOOKS OF ACCOUNT SHOULD BE AUDITED AND REPORT THEREOF SHOULD BE SUBMITTED ALONG WITH THE RETURN ETC. ARE ELIGIBLE FOR DEDUCTION UNDER THE SAID SECTION OF THE ACT. IN THE CASE OF THE A PPELLANT THE CONDITION AS SET OUT IN THE REQUISITE SECTION HAS BEEN FULFILLED AS THE APPELLANT COMPANY IS REGISTERED UNDER THE COMPANIES ACT AS PER THE CERTIFICATE OF INCORPORATION DATED 21.04.2003 BEARING NUMBER U45203 PN 2003 PTCO 17885. THEY HAVE ALSO E NTERED INTO AN AGREEMENT WITH THE GOVERNMENT AUTHORITIES OR LOCAL BODIES FOR THE DEVELOPMENT OF INFRASTRUCTURAL FACILITIES FOR IRRIGATION AND THE ACTIVITIES OF THE APPELLANT COMPANY HAVE STARTED AFTER 2003 AND, THEREFORE, THE CONDITIONS MENTIONED IN THE SE CTION 80IA ARE FULFILLED. THE APPELLANT'S BUSINESS IS DEVELOPMENT OF INFRASTRUCTURAL FACILITIES WHICH IS ELIGIBLE BUSINESS FOR DEDUCTION U/S 80IA(4). 3.7 SO FAR AS THE CONTENTION OF THE A.O. THAT THE APPELLANT IS A CONTRACTOR AND NOT A DEVELOPER SINCE HE H AS ENTERED INTO AN AGREEMENT WITH GOVT. AUTHORITIES ETC. FOR CARRYING OUT THE WORK AND, THEREFORE, THE APPELLANT IS A CONTRACTOR AND NOT A DEVELOPER, THE APPELLANT'S SUBMISSION APPEARS REASONABLE WHEN IT HAS BEEN STATED THAT ONE OF THE BASIC CONDITION OF S ECTION 80IA(4) IS THAT THERE MUST BE AN AGREEMENT WITH THE CENTRAL GOVT. 8 OR A STATE GOVT. ETC. FOR THE DEVELOPMENT OF INFRASTRUCTURE FACILITY, AND IF THE CONTENTION RAISED BY THE A.O. IS ACCEPTED THEN NOT A SINGLE PERSON WILL BE ELIGIBLE FOR DEDUCTION UNDE R THIS SECTION. THE A.O. HAS ALSO RELIED ON THE DECISION OF MUMBAI TRIBUNAL IN THE CASE OF B.T. PATIL & SONS BELGAUM CONST. P. LTD. VS ACIT (2010) 1 ITR (TRIB) 703 (MUM)(LB). THE DECISION HAS TO BE TREATED AS LAID PRIOR TO A.Y. 2002 - 03, SO THAT THE DECISIO N MAY NOT BE BLINDLY APPLIED TO CASES OF CONTRACTS GOVERNED BY THE AMENDED LAW. THE LAW AFTER AMENDMENT W.E.F. 1 ST APRIL, 2002, JUSTIFIED RELIEF FOR MERE DEVELOPMENT AS LONG AS THE CONTRACT RELATED TO INFRASTRUCTURE AND HAD BEEN MADE IN PURSUANCE OF AGREEM ENT WITH CENTRAL OR STATE GOVT. OR LOCAL OR STATUTORY BODIES. EXPLANATION BEFORE SECTION 80IA(3) BY ITSELF SHOULD NOT MAKE A DIFFERENCE UNLESS ASSESSEE EXECUTES THE WORK AS A SUB - CONTRACT. THE APPLICATION OF THIS DECISION TO THE AMENDED LAW WOULD, THEREFOR E, REQUIRE CARE TO BE TAKEN AS TO THE DIFFERENCE BETWEEN THE LAW BEFORE AND LAW AFTER AMENDMENT. THIS ISSUE HAS BEEN THE SUBJECT MATTER OF VARIOUS JUDICIAL DECISIONS. THE APPELLANT HAS PLACED RELIANCE ON THE PUNE ITAT DECISION IN THE CASE OF LAXMI CIVIL E NGINEERING PVT. LTD. ITA NOS. 766/PN/07; 254/PN/08; 431/PN/07 AND 435/PN/07 DATED 08.06.2011 FOR A.YRS. 2003 - 04 TO 2006 - 07; WHEREIN THE FACTS OF THE CASE ARE THAT THE CLAIM OF THE ASSESSEE FOR DEDUCTION U/S 80IA(4) WAS DERIVED BECAUSE THE ASSESSEE WAS HELD TO BE A CONTRACTOR AND THE ASSESSEE FAILED TO COMPLY WITH ALL THE CONDITIONS SPECIFIED IN SUB - CLAUSES (A), (B) AND (C) OF CLAUSE (I) OF SECTION 80IA OF THE IT. ACT, 1961. THE PUNE ITAT RELYING ON THE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE O F ABG HEAVY ENGR. LTD. (2010) 322 ITR 323 HELD AS UNDER: 5. WE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE. THE CONTENTIONS ISSUES BEFORE US ARE (I) WHETHER THE CONTRACTOR IS SYNONYMOUS WITH THE DEVELOPER WITHIN THE MEANING OF SECTION 80/ A(4)(I) OF THE ACT; (II) WHETHER THE CONDITION PLACED IN CLAUSE (C) IS APPLICABLE TO THE CASE OF A DEVELOPER, WHO IS NOT CARRYING ON BUSINESS OF OPERATING AND MAINTAINING THE INFRASTRUCTURAL FACILITIES. IN OUR OPINION, THE ANSWER TO THESE QUESTION ARE PROV IDED BY THE JUDGMENT OF THE BOMBAY HIGH COURT IN THE CASE OF ABG HEAVY ENGG LTD (SUPRA). IN THIS REGARD, WE PERUSED THE ABOVE CITED PARA - 22 OF THE SAID JUDGMENT AND FOR THE SAKE OF COMPLETENESS, THE SAID PARAGRAPH IS REPRODUCED AS UNDER: - '22. THE SUBMIS SION WHICH WAS URGED ON BEHALF OF THE REVENUE IS THAT CLAUSE (III) OF SUB - SECTION (4A) OF SECTION 80 - IA, ONE OF THE CONDITIONS IMPOSED WAS THAT THE ENTERPRISE MUST START OPERATING AND MAINTAINING THE INFRASTRUCTURE FACILITY ON OR AFTER 1 ST APRIL, 1995. THE SAME REQUIREMENT IS EMBODIED IN SUB - CLAUSE (1) OF SUB - CLAUSE (4) OF THE AMENDED PROVISIONS. IT WAS URGED THAT SINCE THE ASSESSEE WAS NOT OPERATING AND MAINTAINING THE FACILITY, HE DID NOT FULFILL THE CONDITION. THE SUBMISSION IS FALLACIOUS BOTH IN FACT AN D IN LAW.' THAT THE ASSESSEE WAS MAINTAINING THE FACILITY IS NOT IN DISPUTE. THE FACILITY WAS COMMENCED AFTER 1 ST APRIL, 1995. THEREFORE, THE REQUIREMENT WAS MET IN FACT. MOREOVER, AS A MATTER OF LAW, WHAT THE CONDITION ESSENTIALLY MEANS IS THAT THE INFRAS TRUCTURE FACILITY 9 SHOULD HAVE BEEN OPERATIONAL AFTER 1 ST APRIL, 1995. AFTER SECTION 80IA WAS AMENDED BY THE FINANCE ACT, 2001, THE SECTION APPLIES TO AN ENTERPRISE CARRYING ON THE BUSINESS OF (I) DEVELOPING; OR (II) OPERATING AND MAINTAINING; OR (III) DEVE LOPING, OPERATING AND MAINTAINING ANY INFRASTRUCTURE FACILITY WHICH FULFILLS CERTAIN CONDITIONS. THOSE CONDITIONS ARE (1) OWNERSHIP OF THE ENTERPRISES BY A COMPANY REGISTERED IN INDIA OR BY A CONSORTIUMS: (II) AN AGREEMENT WITH THE CENTRAL OR STATE GOVERNM ENT, LOCAL AUTHORITY OR STATUTORY BODY; AND (III) THE START .OF OPERATION AND MAINTENANCE OF THE INFRASTRUCTURE FACILITY SHOULD COMMENCE AFTER I' APRIL, 1995, THE REQUIREMENT THAT OPERATION AND MAINTENANCE OF THE INFRASTRUCTURE FACILITY SHOULD COMMENCE AFT ER I' APRIL, 1995 HAS TO BE HARMONIOUSLY CONSTRUED WITH THE MAIN PROVISION UNDER WHICH DEDUCTION IS AVAILABLE TO AN ASSESSEE WHO DEVELOPS OR OPERATES AND MAINTAINS, OR DEVELOPS, OPERATES AND 1110*104MY AN INFRASTRUCTURE FACILITY' A HARMONIOUS READING OF TH E PROVISIONS IN ITS ENTIRITY WOULD LEAD TO THE CONCLUSION THAT THE DEDUCTION IS AVAILABLE TO AN ENTERPRISE WHICH (I) DEVELOPS; OR OPERATES AND MAINTAINS; OR (III) DEVELOPS, MAINTAIN AND OPERATES THAT INFRASTRUCTURE FACILITY. HOWEVER, THE COMMENCEMENT OF TH E OPERATION AND MAINTENANCE OF THE INFRASTRUCTURE FACILITY SHOULD BE AFTER I' APRIL, 1995: IN THE PRESENT CASE THE ASSESSEE CLEARLY FULFILLED THIS CONDITION'. BEFORE THE AMENDMENT THAT WAS BROUGHT ABOUT BY PARLIAMENT BY FINANCE ACT, 2001 WE HAVE ALREADY NOTED THAT THE CONSISTENT LINE OF CIRCULARS OF THE BOARD POSTULATED THE SAME POSITION. THE AMENDMENT MADE BY PARLIAMENT TO S. 80 - IA(4) OF THE ACT, SET THE MATTER BEYOND ANY CONTROVERSY BY STIPULATING THAT THE THREE CONDITIONS FOR DEVELOPMENT, OPERATION AND MAINTENANCE WERE NOT INTENDED TO BE CUMULATIVE IN NATURE 6. THE ABOVE JUDGMENT OF THE HON'BLE HIGH COURT IS DELIVERED IN THE CASE OF ABG HEAVY ENGG LTD (SUPRA), WHO IS A CONTRACTOR FOR THE AND THAT CONTACTOR, ASSESSEE IS FOUND TO BE AN ELIGIBLE DE VELOPER FOR MAKING CLAIM OF DEDUCTION U/S SECTION 80IA (4) OF THE ACT. FROM THE ABOVE, IT IS EVIDENT THAT THE PERSON WHO ONLY DEVELOPS THE INFRASTRUCTURE DO NOT HAVE THE OCCASION TO OPERATE AND MAINTAIN THE INFRASTRUCTURE, IT IS FURTHER EVIDENT THAT THE HA RMONIOUS READING IS NECESSARY AND MANDATORY IN VIEW OF HIGH COURT'S JUDGMENT IN THE CASE OF AN ENTERPRISE CARRYING ON BUSINESS OR DEVELOPING WHICH IS THE CASE OF THE ASSESSEE, ALL THE CONDITIONS REFERRED TO CLAUSE (I) OF SECTION 80IA (4) SHOULD REFER TO TH E CONDITIONS AS APPLICABLE TO THE DEVELOPER. IN OTHER WORDS, THE DEVELOPER WHO IS ONLY DEVELOPING THE INFRASTRUCTURE FACILITIES SINCE LIE DOES NOT OPERATE AND MAINTAIN INFRASTRUCTURAL FACILITIES, CANNOT BE EXPECTED TO FULFILL THE CONDITION AT SUB - CLAUSE (C ) WHICH IS AN IMPOSSIBILITY AND THE REQUIREMENTS TO FULFILL THE SAID CONDITION SHALL AMOUNT TO ABSURDITY AND THEREFORE UNCALLED FOR. THEREFORE, WE FIND REQUIREMENT OF HARMONIOUS READING OF SUB - CLAUSE (C) VIS - A - VIS OF CLAUSE (I) OF SECTION 801A (4) OF THE A CT. THUS, THE DISCUSSION IN 10 HIGH COURT'S DECISION IN PARAGRAPH - 22 EXTRACTED ABOVE, IS DIRECTLY APPLICABLE TO THE FACTS OF THE CASE AND EVENTUALLY IS ENTITLED FOR THE DEDUCTION UNDER SECTION 801A (4) OF THE ACT. ACCORDINGLY, THE MODIFIED GROUND, WHICH IS CO MMON IN ALL THE FOUR APPEALS IS ALLOWED IN FAVOUR OF THE ASSESSEE.' 3.8 SIMILAR VIEW HAS ALSO BEEN TAKEN BY THE ITAT JAIPUR IN THE CASE OF OM METALS INFRAPROJECTS LTD. VS CIT, ITA NO. 722/723/JP/2008 DATED 31.12.2008, WHICH IN TURN RELIED ON PATEL ENGINEER ING LTD. VS DCIT (2005) 14 ITR 411 (MUM), AS UNDER: 'THERE HAS ALSO BEEN THE CONTENTION OF THE REVENUE THAT THE ASSESSEE IS A CONTRACTOR, EXECUTING CIVIL CONTRACT AND SO IT CANNOT BE THE DEVELOPER AS SUCH. HOWEVER, WE ARE UNABLE TO AGREE WITH THIS CONTENTI ON OF THE REVENUE. A PERSON, WHO. ENTERS INTO A CONTRACT WITH ANOTHER PERSON WILL BE A CONTRACTOR NO DOUBT; AND THE ASSESSEE HAVING ENTERED INTO AN AGREEMENT WITH THE GOVERNMENT OF MAHARASHTRA AND ALSO WITH APSES FOR DEVELOPMENT OF THE INFRASTRUCTURE, PROJ ECTS, IS OBVIOUSLY A CONTRACTOR BUT THAT DOES NOT DEROGATE THE ASSESSEE FROM BEING A DEVELOPER AS WELL. THE TERM 'CONTRACTOR' IS NOT ESSENTIALLY CONTRADICTORY TO THE TERM 'DEVELOPER'. ON THE OTHER HAND, RATHER SECTION 801 A(4) ITSELF PROVIDES THAT ASSESSEE SHOULD DEVELOP THE INFRASTRUCTURE FACILITY AS PER AGREEMENT WITH THE CENTRAL GOVERNMENT, STATE GOVERNMENT OR A LOCAL AUTHORITY. SO, ENTERING INTO A LAWFUL AGREEMENT AND THEREBY BECOMING A CONTRACTOR SHOULD, IN NO WAY, BE A BAR TO THE ONE BEING A DEVELOPER . THE ASSESSEE, PRESENTLY UNDER CONSIDERATION BEFORE US, HAS DEVELOPED INFRASTRUCTURE FACILITY 'AS PER AGREEMENT WITH MAHARASHTRA STATE GOVERNMENT/APSED. THEREFORE, MERELY BECAUSE, IN, THE AGREEMENT FOR DEVELOPMENT OF INFRASTRUCTURE WITTY, ASSESSEE IS, REF ERRED TO AS OR BECAUSE SOME BASIC SPECIFICATIONS ARE LAID DOWN, IT DOES NOT DETRACT THE ASSESSEE FROM THE POSITION OF BEING A DEVELOPER, NOR WILL IT DEBAR THE ASSESSEE FROM CLAIMING DEDUCTION UNDER SECTION 801A(4). DISCUSSED/CONSIDERED AS ABOVE, WE BOLD TH AT THE ASSESSEE HAVING CARRIED OUT THE WORK, OF CONSTRUCTING THE ABOVE MENTIONED TWO PROJECTS, NAMELY SRISAILAM PROJECT AND KOYANA PROJECT, AS DETAILED ABOVE, IS APPROPRIATELY A DEVELOPER OF THE SAID TWO INFRASTRUCTURE FACILITIES, AND IN TURN IS ENTITLED, AND ENTITLED JUSTIFIABLY, TO CLAIM DEDUCTION UNDER SECTION 801 A(4).' THIS ACTION ITSELF CONSIDERS DEVELOPMENT OF WATER SUPPLY AND IRRIGATION PROJECT AS INFRASTRUCTURE FACILITY. THE WORK WHICH THE ASSESSEE HAS PERFORMED, IN OUR VIEW, IS UNDOUBTEDLY WORK FO R WHICH CONTRACT WAS ENTERED INTO, IN THE PRESENT CASE THE ASSESSEE HAS MANUFACTURED AND INSTALLED DAM GATES, RADICAL GATES, STOP LOCK AS PER THE SPECIFICATIONS AGREED UPON IN THE CONTRACT INVOLVING HUGE AMOUNT. THE ASSESSEE HAD ESTABLISHED WORKSHOP FOR MA NUFACTURING OF GATE PANELS, HYDRAULIC GIRDERS, CHECKERED PLATES, DRAIN HOIST AND EMBEDDED PARTS ETC. AFTER MANUFACTURING THESE ITEMS BY THE ASSESSEE THESE WERE ASSEMBLED AND INSTALLED AT DAM SITE. FOR MANUFACTURING OF THESE ARTICLES, THERE A REQUIREMENT OF WELL EQUIPPED MECHANIZED WORK SHOP AND EMPLOYMENT OF EXPERTS. THE TERM 'CONTRACTOR' IS NOT ESSENTIALLY CONTRADICTORY TO THE TERM 'DEVELOPER'. ON THE CONTRARY, THE, SAID SECTION ITSELF PROVIDES THAT THE ASSESSEE SHOULD DEVELOP THE INFRASTRUCTURE FACILITY A S PER THE 11 AGREEMENT WITH THE GOVERNMENT, ONE OF THE OTHER CONDITIONS IN THE SECTION IS THAT THE ENTERPRISE SHOULD ENTER INTO AN AGREEMENT WITH THE CENTRAL GOVERNMENT OR 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. THUS THERE HAS TO BE AN AGREEMENT BETWEEN THE ENTERPRISE DEVELOPER AND THE GOVERNMENT. WE THUS FIND SUBSTANCE IN THE CONTENTION OF THE ID. A/R TH AT ASSESSEE IS A DEVELOPER AND IS NOT A SUB - CONTRACTORS. IN THE CASE OF ACIT VS. BHARAT UDYOG LTD. (2009) 313 ITR (AT) 168 (MUM), THE TRIBUNAL FOLLOWS THE DECISION IN THE CASE OF PATEL ENGINEERING LTD. VS CIT (2005) 94 ITR 411 (MUM), ACCEPTS THE CLAIM OF THE ASSESSEE AND UPHELD THE ORDER OF THE FIRST APPELLATE AUTHORITY AND POINT OUT THAT A CONTRA CTOR CAN BE A DEVELOPER. 3.9 THE A.O. HAS ALSO REFERRED TO THE INSERTION OF EXPLANATION VIDE THE RETROSPECTIVE AMENDMENT IN SECTION 80IA OF THE IT. ACT. EXPLANATION TO SUB SECTION (13) OF SECTION 80IA DECLARES FOR REMOVAL OF DOUBTS THAT 'NOTHING CONTAINED IN THE SECTION SHALL APPLY TO A PERSON WHO EXERTS A WORK CONTRACT ENTERED WITH THE UNDERTAKING OR ENTERPRISE AS THE CASE MAY BE.' THIS EXPLANATION WAS INSERTED BY THE FINA NCE ACT, 2007 WITH RETROSPECTIVE EFFECT FROM 01.04.2000. BUT, THIS COULD HAVE MADE NO DIFFERENCE BECAUSE IT IS PATENT IN THE FACT OF THE CASE THAT THE ASSESSEE WAS A DEVELOPER BEING A PRINCIPAL PARTY EXECUTING THE WORK IN PURSUANCE OF AN AGREEMENT WITH THE GOVT. SINCE THE EXPLANATION REFERS TO THE CONTRACT ENTERED INTO WITH THE UNDERTAKING OR ENTERPRISE AND NOT WITH THE GOVT., IT DENIES RELIEF ONLY TO SUB - CONTRACTORS AND NOT THE PRINCIPAL CONTRACTOR UNDERTAKING DEVELOPMENT WORK. 3.10 IN VIEW OF THE ABOVE FA CTS AND THE RATIO OF THE JUDICIAL DECISIONS CITED ABOVE, THE DISALLOWANCE MADE BY THE A.O. IS LIABLE TO BE DELETED AND GROUND NO. 1 OF APPEAL RAISED BY THE APPELLANT IS ALLOWED. 6 . AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE REVENUE IS IN APPEAL BEFORE US WITH THE FOLLOWING GROUNDS : 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) IS CONTRARY TO LAW AND TO THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) GROSSLY ERRED IN ALLOWING THE DEDUCTION OF RS. 54,19,928/ - U/S 80IA(4) OF THE INCOME - TAX ACT, 1961 INSTEAD OF CONFIRMING THE DISALLOWANCE MADE IN THE ASSESSMENT ON THIS ISSUE. 3. THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) GROSSLY ERRED IN HOLDING THAT THE ASSESSEE WAS A DEVELOPER WITHIN TH E MEANING OF SUB - SEC. (4) OF SEC. 80 IA OF THE INCOME - TAX ACT, 1961 AND NOT A CONTRACTOR, AS HAD BEEN HELD BY THE ASSESSING OFFICER, WITHOUT APPRECIATING THAT THE ASSESSEE HAD MERELY CARRIED OUT WORKS CONTRACTS AWARDED TO IT BY CONTRACTING AUTHORITIES. 12 4. THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) GROSSLY ERRED IN FAILING TO APPRECIATE THAT AS PER THE AGREEMENTS, THE ASSESSEE WAS UNDER THE DIRECT CONTROL AND SUPERVISION OF THE CONTRACTING AUTHORITY AND THAT IT HAD NO FREEDOM WHATSOEVER TO DEVELOP, DE SIGN OR MODIFY THE WORK PLAN. ON THE CONTRARY, THE ASSESSEE WAS BOUND TO ACCEPT ANY MODIFICATIONS AS WOULD BE ISSUED BY THE ENGINEER - IN - CHARGE OF THE CONTRACTING AUTHORITY. 5. THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) GROSSLY ERRED IN FAILING TO AP PRECIATE THAT IN THE AGREEMENTS ENTERED INTO BY THE ASSESSEE WITH VARIOUS AUTHORITIES, THE ASSESSEE HAS BEEN CATEGORICALLY TERMED AS A 'CONTRACTOR WHO HAS ENTERED INTO A CONTRACT AND WOULD EXECUTE THE WORK IN ACCORDANCE WITH THE CONTRACT' AND NOT AS A 'DEV ELOPER'. 6. THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) GROSSLY ERRED IN FAILING TO APPRECIATE THAT THE EXPLANATION TO SUB - SEC. 13 OF SEC. 80 IA HAS MADE IT AMPLY CLEAR THAT THE DEDUCTION ADMISSIBLE U/S 80 IA(4) WOULD NOT BE APPLICABLE TO A BUSINESS WHICH IS IN THE NATURE OF WORKS CONTRACT AWARDED BY ANY PERSON INCLUDING THE CENTRAL OR STATE GOVERNMENT AND EXECUTED BY THE UNDERTAKING OR ENTERPRISES REFERRED TO IN SUB - SEC. (1) AND, IN THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE, THE ASSESSEE WAS CERT AINLY A CONTRACTOR AND NOT A DEVELOPER. 7. THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) GROSSLY ERRED IN NOT APPRECIATING THE CONCEPT OF 'DEVELOPING' AND IN EQUATING THE SAME WITH 'CONTRACTING'; AND ALSO ERRED IN HOLDING THAT EXPLANATION TO SUB - SEC. 13 OF SEC. 80 IA WOULD APPLY TO A SUB - CONTRACTOR AND NOT TO A CONTRACTOR. 8. THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) GROSSLY ERRED IN NOT APPRECIATING THAT THE CONTRACTEE AGENCIES HAD DEDUCTED TAX AT SOURCES U/S 194C FROM THE PAYMENTS MADE TO TH E ASSESSEE WHICH SUBSTANTIATES THE CONTRACTOR - CONTRACTEE RELATIONSHIP BETWEEN THE ASSESSEE AND THE DEVELOPING AGENCIES. 9. FOR THESE AND SUCH OTHER GROUNDS AS MAY BE URGED AT THE TIME OF THE HEARING, THE ORDER OF THE LEARNED CIT (APPEALS) MAY BE VACATED A ND THAT OF THE ASSESSING OFFICER BE RESTORED. 10. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEND ANY OR ALL THE GROUNDS OF APPEAL. 7. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT( A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECISIONS RELIED ON BY BOTH THE SIDES . WE FIND THAT THE A.O. IN THE INSTANT CASE HAS DENIED THE BENEFIT OF DEDUCTION U/S. 80IA(4) ON THE GROUND THAT THE ASSESSEE W AS A CONTRACTOR OR SUB - CONTRACTOR EXECUTING THE WORKS CONTRACT AWARDED BY THE GOVT. 13 AGENCIES/STATUTORY AGENCIES AND THAT THE ASSESSEE IS NOT A DEVELOPER OF THE INFRASTRUCTURE FACILITIES. IT IS ONLY THE GOVT. AGENCIES OR THE STATUTORY AGENCIES WHO WERE ACTUALLY DEVELOPING THE INFRASTRUCTURE PROJECTS. RELYING ON THE RETROSPECTIVE AMENDMENT IN SEC. 80IA OF THE I.T. ACT WHICH CLARIFIES THAT THE DEDUCTION CANNOT BE ALLOWED IN RELATION TO THE BUSINESS IN THE NATURE OF WORKS CONTRACT , T HE A.O. DI SALLOWE D THE CLAIM U/S. 80IA(4) . W HILE DOING SO HE ALSO RELIED ON THE DECISION OF THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF M/S. B.T. PATIL & SONS BELGAUM CO. PVT. LTD. (SUPRA). WE FIND THAT THE CIT(A) RELYING ON THE DECISION OF THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF ABG HEAVY INDUSTRIES LTD. (SUPRA) ALLOWED THE CLAIM OF DEDUCTION MADE BY THE ASSESSEE. WE FIND THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF M/S. PRATIBHA CONSTRUCTION & ENGINEERING (I) P. LTD. VS. ACIT VIDE ITA NO. 118/PN/2008 AND OTHER C ONNECTED APPEALS FOR A.Y S . 2003 - 04 TO 2006 - 07 ORDER DATED 27 - 09 - 2011 WHILE DECIDING AN IDENTICAL ISSUE HAS OBSERVED AS UNDER: 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS, PERUSED THE ORDERS OF THE AUTHORITIES BELOW AS ALSO THE AUTHORITIES CITED AT BAR. THE CRUX OF THE CONTROVERSY REVOLVES AROUND SECTION 80IA(4)(I) WHICH READS AS UNDER: 801A(4)(I): ANY ENTERPRISE CARRYING ON THE BUSINESS OF (I) DEVELOPING OR (II) OPERATING AND MAINTAINING OR (III) DEVELOPING, OPERATING AND MAINTAINING ANY INFRASTRUCTURE FACILITY 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 CENTRAL GOVERNMENT OR A STATE GOVERNMENT OR A LOCAL AUTHORITY OR ANY OTHER STATUTORY BODY FOR (I) DEVELOPING OR 9II) OPERATING AND MAINTAINING OR (III) DEVELOPING, OPERATING AND MAINTAINI NG NEW INFRASTRUCTURE FACILITY; (C) IT HAS STARTED OR STARTS OPERATING AND MAINTAINING THE INFRASTRUCTURE FACILITY ON OR AFTER THE 1 ST DAY OF APRIL, 1995: PROVIDED THAT WHERE AN INFRASTRUCTURE FACILITY IS TRANSFERRED ON OR AFTER THE 1 ST DAY OF APRIL, 1999 BY A N ENTERPRISE WHICH DEVELOPED SUCH INFRASTRUCTURE FACILITY (HEREAFTER REFERRED TO IN THIS SECTION AS THE 14 TRANSFEROR ENTERPRISE) TO ANOTHER ENTERPRISE (HEREAFTER IN THIS SECTION REFERRED TO AS THE TRANSFEREE ENTERPRISE) FOR THE PURPOSE OF OPERATING AND MAINT AINING THE INFRASTRUCTURE FACILITY ON ITS BEHALF IN ACCORDANCE WITH THE AGREEMENT WITH THE CENTRAL GOVERNMENT, STATE GOVERNMENT, LOCAL AUTHORITY OR STATUTORY BODY, THE PROVISIONS OF THIS SECTION SHALL APPLY TO THE TRANSFEREE ENTERPRISE AS IF IT WERE THE E NTERPRISE TO WHICH THIS CLAUSE APPLIES AND THE DEDUCTION FROM PROFITS AND GAINS 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. THE CLAIM OF THE REVENUE IS THAT THE ASSESSEE HAS ACTED ONLY AS A CONTRACTOR WHO HAS BEEN AWARDED A WORK BY A GOVERNMENT AGENCY AND, THEREFORE, IT CANNOT BE SEEN AS CARRYING ON THE BUSINESS OF DEVELOPING AS ENVISAGED UNDER SECTION 80IA(4) OF THE ACT. IN SUPPORT, THE CLAIM OF THE REVENUE IS THAT THE ASSESSEE IS NEITHER OPERATING AND MAINTAINING INFRASTRUCTURE FACILITY AND NOR HAS THE RIGHT TO UNDERTAKE THE OPERATION AND MAINTENANCE AND, THEREFORE, IT DOES NOT QUALIFY FOR THE DEDUCTION. THE ARGUMENT IS FURT HER SUPPORTED BY SUB - CLAUSE (C) OF SECTION 80IA(4)(I) WHICH ENVISAGES THAT THE ASSESSEE IS TO START OPERATING AND MAINTAINING THE INFRASTRUCTURE FACILITY ON OR AFTER 1.4.1995. 7. TO OUR MIND, THE CONTROVERSY RAISED BY THE REVENUE HAS BEEN SQUARELY ADDRESS ED BY THE JUDGMENT OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF ABG HEAVY ENGG. LTD. (SUPRA) AND THE FOLLOWING PORTION OF THE JUDGMENT IS WORTHY OF NOTICE: 22 THE SUBMISSION WHICH WAS URGED ON BEHALF OF THE REVENUE IS THAT UNDER CLAUSE (III) OF SUB - SE CTION (4) OF SECTION 80IA, ONE OF THE CONDITIONS IMPOSED WAS THAT THE ENTERPRISE MUST START OPERATING AND MAINTAINING THE INFRASTRUCTURE FACILITY ON OR AFTER 1 ST APRIL, 1995. THE SAME REQUIREMENT IS EMBODIED IN SUB - CLAUSE (1)OF SUB - CLAUSE (4) OF THE AMENDE D PROVISIONS. IT WAS URGED THAT SINCE THE ASSESSEE WAS NOT OPERATING AND MAINTAINING THE FACILITY, HE DID NOT FULFILL THE CONDITION. THE SUBMISSION IS FALLACIOUS BOTH IN FACT AND IN LAW. THAT THE ASSESSEE WAS MAINTAINING THE FACILITY IS NOT IN DISPUTE. THE FACILITY WAS COMMENCED AFTER 1 ST APRIL, 1995. THEREFORE, THE REQUIREMENT WAS MET IN FACT. MOREOVER, AS A MATTER OF LAW, WHAT THE CONDITION ESSENTIALLY MEANS IS THAT THE INFRASTRUCTURE FACILITY SHOULD HAVE BEEN OPERATIONAL AFTER 1 ST APRIL, 1995. AFTER S ECTION 80 - IA WAS AMENDED BY THE FINANCE ACT, 2001, THE SECTION APPLIES TO AN ENTERPRISE CARRYING ON THE BUSINESS OF (1) DEVELOPING; OR (II) OPERATING AND MAINTAINING; OR (III) DEVELOPING, OPERATING AND MAINTAINING ANY INFRASTRUCTURE FACILITY WHICH FULFILLS CERTAIN CONDITIONS. THOSE CONDITIONS ARE (1) OWNERSHIP OF THE ENTERPRISES BY A COMPANY REGISTERED IN INDIA OR BY A CONSORTIUMS; (II) AN AGREEMENT WITH THE CENTRAL OR STATE GOVERNMENT, LOCAL AUTHORITY OR STATUTORY BODY; AND (III) THE START OF OPERATION AND MAINTENANCE OF THE INFRASTRUCTURE FACILITY SHOULD COMMENCE AFTER 1 ST APRIL, 1995. THE REQUIREMENT THAT OPERATION AND MAINTENANCE OF THE INFRASTRUCTURE FACILITY SHOULD COMMENCE AFTER 1 ST APRIL, 1995 HAS TO 15 BE HARMONIOUSLY CONSTRUED WITH THE MAIN PROVISION UNDER WHICH DEDUCTION IS AVAILABLE TO AN ASSESSEE WHO DEVELOPS OR OPERATES AND MAINTAINS, OR DEVELOPS, OPERATES AND MAINTAINS AN INFRASTRUCTURE FACILITY. A HARMONIOUS READING OF THE PROVISIONS IN ITS ENTIRETY WOULD LEAD TO THE CONCLUSION THAT THE DEDUCTI ON IS AVAILABLE TO AN ENTERPRISE WHICH (I) DEVELOPS; OR OPERATES AND MAINTAINS; OR (III) DEVELOPS, MAINTAINS AND OPERATES THAT INFRASTRUCTURE FACILITY. HOWEVER, THE COMMENCEMENT OF THE OPERATION AND MAINTENANCE OF THE INFRASTRUCTURE FACILITY SHOULD BE AFTE R 1 ST APRIL, 1995. IN THE PRESENT CASE THE ASSESSEE CLEARLY FULFILLED THIS CONDITION. BEFORE THE AMENDMENT THAT WAS BROUGHT ABOUT BY PARLIAMENT BY FINANCE ACT, 2001 WE HAVE ALREADY NOTED THAT THE CONSISTENT LINE OF CIRCULAR OF THE BOARD POSTULATED THE SA ME POSITION. THE AMENDMENT MADE BY PARLIAMENT TO S. 80IA(4) OF THE ACT, SET THE MATTER BEYOND ANY CONTROVERSY BY STIPULATING THAT THE THREE CONDITIONS FOR DEVELOPMENT, OPERATION AND MAINTENANCE WERE NOT INTENDED TO BE CUMULATIVE IN NATURE. (UNDERLINED FOR EMPHASIS BY US) 8. NOTABLY, EVEN IN THE CASE BEFORE THE HIGH COURT, THE ASSESSEE ACTED AS A CONTRACTOR FOR GOVERNMENT AGENCY AND WAS HELD ELIGIBLE FOR THE PURPOSES OF CLAIM OF DEDUCTION UNDER SECTION 80IA(4) OF THE ACT. AS PER THE LEGAL POSITION OPINED B Y THE HONBLE HIGH COURT, IT IS EVIDENT THAT AN ASSESSEE WHO ONLY DEVELOPS INFRASTRUCTURE FACILITY (EVEN AS A CONTRACTOR) BUT DOES NOT HAVE AN OCCASION TO OPERATE AND MAINTAIN IS ALSO ELIGIBLE FOR CLAIM OF DEDUCTION UNDER SECTION 80IA(4) OF THE ACT AND THE HONBLE HIGH COURT HAS EXPLAINED THAT QUA SUCH A PERSON THE CONDITION STATED IN SUB - CLAUSE (C) OF SECTION 80IA(4)(I) HAS TO BE READ HARMONIOUSLY WITH THE MAIN PROVISION UNDER WHICH DEDUCTION IS AVAILABLE TO AN ASSESSEE, WHO DEVELOPS; OR OPERATES AND MAINT AINS; OR DEVELOPS, MAINTAINS AND OPERATES AN INFRASTRUCTURE FACILITY. IN OTHER WORDS, AS OPINED BY THE HONBLE HIGH COURT, A DEVELOPER WHO ONLY DEVELOPS (I.E. CONSTRUCTS) AN INFRASTRUCTURE FACILITY AND IS NOT ENVISAGED TO OPERATE AND MAINTAIN SUCH FACILITY , CANNOT BE EXPECTED TO FULFIL THE CONDITION IN CLAUSE (C) OF SECTION 80IA(4) SINCE IT WOULD BE AN IMPOSSIBILITY. THEREFORE, IN VIEW OF THE CONSTRUCTION PLACED BY THE HONBLE BOMBAY HIGH COURT ON THE REQUIREMENTS OF CLAUSE (C) OF SECTION 80IA(4)(I), REQUIR ING IT TO BE HARMONIOUSLY READ WITH THE MAIN CLAUSE OF SECTION 80IA(4)(I), WE FIND THAT THE OBJECTION RAISED BY THE REVENUE IN THE PRESENT CASE IS DEVOID OF MERITS. THE REASONING ENUNCIATED BY THE HONBLE BOMBAY HIGH COURT AS EXTRACTED ABOVE FULLY ANSWERS THE CONTROVERSY RAISED BY THE REVENUE IN THE PRESENT CASE AND, THEREFORE, WE FIND THAT THE ASSESSEE HAS TO SUCCEED IN THIS APPEAL IN THE PRESENT CASE. ACCORDINGLY, THE GROUND OF APPEAL RAISED BEFORE US AND WHICH IS COMMON IN ALL THE YEARS IS ADJUDICATED IN FAVOUR OF THE ASSESSEE. 9. RESULTANTLY, THE CAPTIONED APPEALS OF THE ASSESSEE ARE ALLOWED. 8. RES PECTFULLY FOLLOWING THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF ABG HEAVY INDUSTRIES LTD. (SUPRA) WHICH HAS 16 BEEN FOLLOWED BY THE CO - ORDINATE BENCH OF TRIBUNAL IN THE CASE OF M/S. PRATIBHA CONSTRUCTION & ENGINEERING (I) P. LTD. (SUPRA) WE FIND NO INFIRMITY IN THE ORDER OF THE CIT(A) ALLOWING THE CLAIM OF DEDUCTION/S. 80IA(4)(I) MADE BY THE ASSESSEE. 9. SO FAR AS THE DECISION OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF YOJAKA MARINE (P) LTD. VS. ACIT REPORTED IN 35 TAXMANN.COM 408 (KARNATAKA) RELIED ON BY THE LD. DEPARTMENTAL REPRESENTATIVE IS CONCERNED THE SAME IN OUR OPINION IS NOT APPLICABLE TO THE FACTS OF THE INSTANT CASE IN VIEW OF THE DECISION OF THE JURISDICTIONAL HIGH COURT CITED ( SUPRA ) WHICH IS BINDING ON US. IN THIS VIEW OF THE MATTER WE UPH O LD THE ORDER OF THE CIT(A) AND THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. ITA NO. 1846 /PN/2012 (A.Y. 200 9 - 10) : 10. GROUNDS RAISED BY THE REVENUE ARE AS UNDER: 1. WHETHER ON FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN ALLOWING THE DEDUCTION OF RS. 52,15,048/ - U/S.80IA(4)? 2. WHETHER ON FACTS AND CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) HAS ERRED IN FAILING TO APPRECIATE THAT THE EXPLANATION TO SUB - SECTION 13 OF SECTION 80IA HAS MADE IT AMPLY CLEAR THAT THE DEDUCTION ADMISSIBLE U/S.801(4) WOULD NOT BE APPLICABLE TO A BUSINESS WHICH IS IN THE NATURE OF WORKS CONTRACT AWARDED BY ANY PERSONS INCLUDING THE CENTRAL OR STATE GOVERNMENT AND EXECUTED BY THE UNDERTAKING OR ENTERPRISES REFERRED TO IN SUB - SECTION (1) AND, IN THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE, THE ASSESSEE WAS ENTIRELY A CONTRACTOR AND NOT A DEVELOPER. 3. WHETHER ON FACTS AND CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) HAS ERRED IN NOT APPRECIATING THAT THE CONTRACTEE AGENCIES HAD DEDUCTED TAX AT SOURCE U/S.194C FROM THE PAYMENTS MADE TO THE ASSESSEE WHICH SUBSTANTIATES THE CONTRACTOR - C ONTRACTEE RELATIONSHIP BETWEEN THE ASSESSEE AND THE DEVELOPING AGENCIES. 4. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEND ANY OR ALL THE GROUNDS OF APPEAL. 17 11. AFTER HEARING BOTH THE SIDES, WE FIND THE GROUNDS RAISED BY THE REVENUE IN THE ABOVE APPEAL ARE IDENTICAL TO GROUND S RAISED BY THE REVENUE IN ITA NO. 374/PN/2012 . W E HAVE ALREADY DECIDE D THE ISSUE AND THE GROUNDS RAISED BY THE REVENUE HAVE BEEN DISMISSED. FOLLOWING THE SAME RATIO THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 12. I N THE RESULT, BOTH THE APPEALS FILED BY THE REVENUE ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON 18 - 06 - 2014 SD/ - SD/ - ( SHAILENDRA KUMAR YADAV ) (R.K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE, DATED : 18 TH JUNE, 2014 RK COPY OF THE ORDER IS FORWARDED TO : 1. THE ASSESSEE 2. THE DEPARTMENT 3. THE CIT(A) - II, PUNE 4. THE CIT - II, PUNE 5 . D.R. A BENCH, PUNE 6 . GUARD FILE //TRUE COPY// BY ORDER PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, PUNE