ITO, Wd-33(4), Kolkata, Kolkata V. M/s Simplex Subhash JV, Kolkata

ITA 390/KOL/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 0703 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 9 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-12-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 09-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARINDAM BHATTACH ARJEEADDL
• Keywords: Retrospective amendment; Corroborative evidences
• Section: 142(1); 194C

Judgement Text

1 ITA NO 390/KOL/2016 M/S. SIMPLEX SUBHASH J.V IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH: KOL KATA BEFORE: SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER, AND SHRI DR. ARJUN LAL SAINI, ACCOUNTANT MEMBER I.T.A NO. 390/KOL/2016 A.Y: 2010-11 I.T.O, WARD-33(4), KOLKATA, 10-B, MIDDLETON ROW, 3 RD FLOOR, KOLKATA-700071 APPELLANT REVENUE VS M/S. SIMPLEX SUBHASH J.V. PAN: AABAS9441B 12/1, NELLIE SENGUPTA SARANI KOLKATA-700087 RESPONDENT ASSESSEE FOR THE APPELLANT : SHRI ARINDAM BHATTACHARJEE, A DDL. CIT DR FOR THE RESPONDENT : SHRI RAVI TULSIYAN, FCA DATE OF HEARING : 12-10-2017 DATE OF PRONOUNCEMENT : 13-12-2017 ORDER SHRIS.S.VISWANETHRA RAVI, JM: THIS APPEAL BY THE REVENUE IS AGAINST THE ORDER DT. 29-01-2016 PASSED BY THE CIT-(A)-9, KOLKATA FOR THE ASSESSMENT YEAR 2010-11. 2. AT THE TIME OF HEARING BEFORE US THE LD.AR OF T HE ASSESSEE SUBMITS THAT THE ISSUE IN HAND REGARDING CLAIM OF DEDUCTION U/S. 80IA OF THE ACT IS COVERED BY THE CONSOLIDATED ORDER DT:18-06-2013 OF THE KOLKATA TRIBUNAL, B BENCH, KOLKATA IN ASSESSEES OWN CASE IN ITA NO. 16 84/KOL/2011 AND ITA NO. 1685/KOL/2011 FOR THE A.Y 2007-08. THE LD. AR A LSO SUBMITS THAT THE 2 ITA NO 390/KOL/2016 M/S. SIMPLEX SUBHASH J.V TRIBUNAL FOLLOWED THE SAME FOR THE A.Y 2008-09 IN I TA NO. 443/KOL/2015. AND SUBMITTED THAT THE TRIBUNAL DIRECTED THE ASSES SING OFFICER TO GRANT THE ASSESSEE THE BENEFIT OF DEDUCTION U/S. 80IA OF THE ASSESSEE AS CLAIMED. 4. ON THE OTHER HAND, THE LD.DR SUBMITS THAT THE AP PELLANT REVENUE HAS PREFERRED AN APPEAL BEFORE THE HONBLE HIGH COURT O F CALCUTTA AGAINST SUCH ORDER DT:18-06-2013 PASSED BY THE TRIBUNAL IN ASSES SEES OWN CASE. THE MATTER IS STILL PENDING FOR ADJUDICATION. BUT HE DI D NOT PROVIDE ANY DOCUMENT OR EVIDENCE TO SHOW THAT THE HONBLE HIGH COURT OF CAL CUTTA HAS ADMITTED SUCH APPEAL FILED BY THE REVENUE. 5. TAKING INTO CONSIDERATION THE SUBMISSIONS OF THE LD.AR OF THE ASSESSEE, WE PROCEED TO HEAR THE APPEAL AND DISPOSE OF THE SA ME ON MERITS ON THE BASIS OF MATERIAL AS AVAILABLE ON RECORD. 6. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS AN AOP [JOINT VENTURE] AND IN THE BUSINESS OF CIVIL CONSTRUCTION. THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE A.Y UNDER CONSIDERATION ON 25-09 -2010 DECLARING TOTAL INCOME OF RS.23,26,120/- AND CLAIMED DEDUCTION OF R S. 1,20,00,841/- U/S. 80IA. NOTICES U/S. 143(2) AND 142(1) OF THE ACT WER E ISSUED. IN RESPONSE TO WHICH, THE LD.AR OF THE ASSESSEE APPEARED TIME TO T IME AND FILED VARIOUS DETAILS AND SUPPORTING EVIDENCES IN SUPPORT OF THE RETURN AS FILED. THE AO WAS OF THE VIEW THAT THE ASSESSEE IS AN AOP OR JV ( JO INT VENTURE ) WITH TWO MEMBERS, M/S. SIMPLEX INFRASTRUCTURE LTD AND M/S. S UBHASH PROJECT & MARKETING LTD. THE ASSESSEE-JV RECEIVED AN AMOUNT O F RS. 19,94,15,959/- TOWARDS WORKS CONTRACT RECEIPT AND DERIVED NET PROF IT OF RS.1,44,13,238/- BEFORE TAX. IN THE AUDIT REPORT AS WELL AS IN THE R ETURN OF INCOME THE ASSESSEE JV CLAIMED THE SAME AS DEDUCTION U/S. 80IA OF THE A CT. THE AO FURTHER FOUND THAT THE ASSESSEE IS MERELY EXECUTED CIVIL CONSTRUC TION WORK AND RAISED RA BILLS 3 ITA NO 390/KOL/2016 M/S. SIMPLEX SUBHASH J.V IN ACCORDANCE WITH THE MEASUREMENT. THE AO TREATIN G THE STATUS OF ASSESSEE AS A WORKS CONTRACTOR THE CLAIM OF DEDUCTION (RS. 1,20,00,841/-) U/S. 80IA OF THE ACT WAS DISALLOWED AND ADDED THE SAME TO THE TO TAL INCOME OF THE ASSESSEE. 7. THE ASSESSEE CHALLENGED THE SAME BEFORE THE CIT- A. THE CIT-A AFTER CONSIDERING THE CONSOLIDATED ORDER IN ASSESSEES O WN CASE SUPRA FOR THE A.Y 2008-09 OF THE KOLKATA TRIBUNAL AND HIS EARLIER ORD ER FOR THE A.Y 2009-10 DIRECTED THE AO TO ALLOW DEDUCTION U/S. 80IA OF THE ACT. 8. HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIA L AVAILABLE ON RECORD. WE FIND THAT THE ONLY QUESTION IS TO BE DECIDED BY US FOR ALLOWANCE OF DEDUCTION U/S. 80IA OF THE ACT AS TO WHETHER THE AS SESSEE IS A DEVELOPER OR A WORKS CONTRACTOR. IN THIS REGARD, WE MAY REFER TO T HE CONSOLIDATED ORDER DT:18- 06-2013 OF THE CO-ORDINATE BENCH IN ASSESSEES OWN CASE SUPRA , WHEREIN IT CONSIDERED THE ORDER OF ITAT HYDERABAD IN THE CASE OF M/S. GVPR ENGINEERS LTD VS. ACIT. RELEVANT PORTION OF WHICH IS REPRODUC ED HEREIN BELOW:- THE CO-ORDINATE BENCH ITAT, HYDERABAD B BENCH, HYDERABAD IN THE CASE OF M/S. GVPR ENGINEERS LTD &ORS IN ITA NOS. 347/HYD/2008 & 17 OTHERS DATED 29.02.2012, WHEREIN IN PARAS 26-29, IT HAS BEEN HELD AS UNDER :- 26. WE HAVE CONSIDERED THE ELABORATE SUBMISSIONS MA DE BY BOTH THE PARTIES AND ALSO PERUSED THE MATERIALS AVAILABLE ON RECORD. WE HAVE ALSO GONE THROUGH ALL THE CASE LAWS CITED BY BOTH THE PARTIES. WE FIND THAT THE PROVISI ONS OF SECTION 801A (4) OF THE ACT WHEN INTRODUCED AFRESH BY THE FINANCE ACT, 1999, TH E PROVISIONS UNDER SECTION 801A (4A) OF THE ACT WERE DELETED FROM THE ACT. THE DEDU CTION AVAILABLE FOR ANY ENTERPRISE EARLIER UNDER SECTION 801A (4A) ARE ALSO MADE AVAIL ABLE UNDER SECTION 801A (4) ITSELF. FURTHER, THE VERY FACT THAT THE LEGISLATURE MENTION ED THE WORDS (I) DEVELOPING OR (II) OPERATING AND MAINTAINING OR (III) DEVELOPING, O PERATING AND MAINTAINING CLEARLY INDICATES THAT ANY ENTERPRISE WHICH CARRIED ON ANY OF THESE THREE ACTIVITIES WOULD BECOME ELIGIBLE FOR DEDUCTION. THEREFORE, THERE IS NO AMBIGUITY IN THE INCOME-TAX ACT. WE FIND THAT WHERE AN ASSESSEE INCURRED EXPENDITURE FOR PURCHASE OF MATERIALS HIMSELF AND EXECUTES THE DEVELOPMENT WORK I.E., CARRIES OUT THE CIVIL CONSTRUCTION WORK, HE WILL BE ELIGIBLE FOR TAX BENEFIT UNDER SECTION 80 IA OF THE ACT. IN CONTRAST TO THIS, A ASSESSEE, WHO ENTERS INTO A CONTRACT WITH ANOTHER P ERSON INCLUDING GOVERNMENT OR AN UNDERTAKING OR ENTERPRISE REFERRED TO IN SECTION 80 IA OF THE ACT, FOR EXECUTING WORKS CONTRACT, WILL NOT BE ELIGIBLE FOR THE TAX BENEFIT UNDER SECTION 80 IA OF THE ACT. WE FIND THAT THE WORD OWNED IN SUB-CLAUSE (A) OF CLAUSE ( 1) OF SUB SECTION (4) OF SECTION 801A OF THE ACT REFER TO THE ENTERPRISE. BY READING OF THE SECTION, IT IS CLEARS THAT THE ENTERPRISES CARRYING ON DEVELOPMENT OF INFRASTRUCTU RE DEVELOPMENT SHOULD BE OWNED BY THE COMPANY AND NOT THAT THE INFRASTRUCTURE FACI LITY SHOULD BE OWNED BY A COMPANY. THE PROVISIONS ARE MADE APPLICABLE TO THE PERSON TO WHOM SUCH ENTERPRISE BELONGS TO IS EXPLAINED IN SUB-CLAUSE (A). THEREFORE, THE WORD OWNERSHIP IS ATTRIBUTABLE ONLY TO THE ENTERPRISE, CARRYING ON THE BUSINESS WHICH WOUL D MEAN THAT ONLY COMPANIES ARE 4 ITA NO 390/KOL/2016 M/S. SIMPLEX SUBHASH J.V ELIGIBLE FOR DEDUCTION UNDER SECTION 801A (4) AND N OT ANY OTHER PERSON LIKE INDIVIDUAL, HUF, FIRM ETC. 27. WE ALSO FIND THAT ACCORDING TO SUB-CLAUSE (A), CLAUSE (I) OF SUB SECTION (4) OF 80-IA THE WORD IT DENOTES THE ENTERPRISE CARRYING ON TH E BUSINESS. THE WORD IT CANNOT BE RELATED TO THE INFRASTRUCTURE FACILITY, PARTICULARL Y IN VIEW OF THE FACT THAT INFRASTRUCTURE FACILITY INCLUDES RAIL SYSTEM, HIGHWAY PROJECT, WAT ER TREATMENT SYSTEM, IRRIGATION PROJECT, A PORT, AN AIRPORT OR AN INLAND PORT WHICH CANNOT BE OWNED BY ANY ONE. EVEN OTHERWISE, THE WORD IT IS USED TO DENOTE AN ENTER PRISE. THEREFORE, THERE IS NO REQUIREMENT THAT THE ASSESSEE SHOULD HAVE BEEN THE OWNER OF THE INFRASTRUCTURE FACILITY. 28. THE NEXT QUESTION IS TO BE ANSWERED IS WHETHER THE ASSESSEE IS A DEVELOPER OR MERE WORKS CONTRACTOR. THE REVENUE RELIED ON THE AM ENDMENTS BROUGHT IN BY THE FINANCE ACT 2007 AND 2009 TO MENTION THAT THE ACTIV ITY UNDERTAKEN BY THE ASSESSEE IS AKIN TO WORKS CONTRACT AND HE IS NOT ELIGIBLE FOR D EDUCTION UNDER SECTION 801A (4) OF THE ACT. WHETHER THE ASSESSEE IS A DEVELOPER OR WOR KS CONTRACTOR IS 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 ABO UT THE NATURE OF THE WORK UNDERTAKEN BY THE ASSESSEE. THE AGREEMENT ENTERED I NTO WITH THE GOVERNMENT OR THE GOVERNMENT BODY MAY BE A MERE WORKS CONTRACT OR FOR DEVELOPMENT OF INFRASTRUCTURE. IT IS TO BE SEEN FROM THE AGREEMENTS ENTERED INTO B Y THE ASSESSEE WITH THE GOVERNMENT. WE FIND THAT THE GOVERNMENT HANDED OVER THE POSSESSION OF THE PREMISES OF PROJECTS TO THE ASSESSEE FOR THE DEVELO PMENT OF INFRASTRUCTURE FACILITY. IT IS THE ASSESSEES RESPONSIBILITY TO DO ALL ACTS TILL T HE POSSESSION OF PROPERTY IS HANDED OVER TO THE GOVERNMENT. THE FIRST PHASE IS TO TAKE OVER THE EXISTING PREMISES OF THE PROJECTS AND THEREAFTER DEVELOPING THE SAME INTO INFRASTRUCT URE FACILITY. SECONDLY, THE ASSESSEE SHALL FACILITATE THE PEOPLE TO USE THE AVAILABLE EX ISTING FACILITY EVEN WHILE THE PROCESS OF DEVELOPMENT IS IN PROGRESS. ANY LOSS TO THE PUBLIC CAUSED IN THE PROCESS WOULD BE THE RESPONSIBILITY OF THE ASSESSEE. THE ASSESSEE HAS TO DEVELOP THE INFRASTRUCTURE FACILITY. IN THE PROCESS, ALL THE WORKS ARE TO BE EXECUTED BY THE ASSESSEE. IT MAY BE LAYING OF A DRAINAGE SYSTEM; MAY BE CONSTRUCTION OF A PROJECT; PROVISION OF WAY FOR THE CATTLE AND BULLOCK CARTS IN THE VILLAGE; PROVISION FOR TRAFFIC WITHOUT ANY HINDRANCE, THE ASSESSEES DUTY IS TO DEVELOP INFRASTRUCTURE WHETHER IT INVOLV ES CONSTRUCTION OF A PARTICULAR ITEM AS AGREED TO IN THE AGREEMENT OR NOT. THE AGREEMENT IS NOT FOR A SPECIFIC WORK, IT IS FOR DEVELOPMENT OF FACILITY AS A WHOLE. THE ASSESSEE IS NOT ENTRUSTED WITH ANY SPECIFIC WORK TO BE DONE BY THE ASSESSEE. THE MATERIAL REQUI RED IS TO BE BROUGHT IN BY THE ASSESSEE BY STICKING TO THE QUALITY AND QUANTITY IR RESPECTIVE OF THE COST OF SUCH MATERIAL. THE GOVERNMENT DOES NOT PROVIDE ANY MATER IAL TO THE ASSESSEE. IT PROVIDES THE WORKS IN PACKAGES AND NOT AS A WORKS CONTRACT. THE ASSESSEE UTILIZES ITS FUNDS, ITS EXPERTISE, ITS EMPLOYEES AND TAKES THE RESPONSIBILI TY OF DEVELOPING THE INFRASTRUCTURE FACILITY. THE LOSSES SUFFERED EITHER BY THE GOVT. O R THE PEOPLE IN THE PROCESS OF SUCH DEVELOPMENT WOULD BE THAT OF THE ASSESSEE. THE ASSE SSEE HANDS OVER THE DEVELOPED INFRASTRUCTURE FACILITY TO THE GOVERNMENT ON COMPLE TION OF THE DEVELOPMENT. THEREAFTER, THE ASSESSEE HAS TO UNDERTAKE MAINTENAN CE OF THE SAID INFRASTRUCTURE FOR A PERIOD OF 12 TO 24 MONTHS. DURING THIS PERIOD, IF A NY DAMAGES ARE OCCURRED IT SHALL BE THE RESPONSIBILITY OF THE ASSESSEE. FURTHER, DURING THIS PERIOD, THE ENTIRE INFRASTRUCTURE SHALL HAVE TO BE MAINTAINED BY THE ASSESSEE ALONE W ITHOUT HINDRANCE TO THE REGULAR TRAFFIC. THEREFORE, IT IS CLEAR THAT FROM AN UN-DEV ELOPED AREA, INFRASTRUCTURE IS DEVELOPED AND HANDED OVER TO THE GOVERNMENT AND AS EXPLAINED BY THE CBDT VIDE ITS CIRCULAR DATED 18-05-2010, SUCH ACTIVITY IS ELIGIBL E FOR DEDUCTION UNDER SECTION 801A (4) OF THE ACT. THIS CANNOT BE CONSIDERED AS A MERE WORKS CONTRACT BUT HAS TO BE CONSIDERED AS A DEVELOPMENT OF INFRASTRUCTURE FACIL ITY. THEREFORE, THE ASSESSEE IS A DEVELOPER AND NOT A WORKS CONTRACTOR AS PRESUMED BY THE REVENUE. THE CIRCULAR ISSUED BY THE BOARD, RELIED ON BY LEARNED COUNSEL FOR THE ASSESSEE, CLEARLY INDICATE THAT THE ASSESSEE IS ELIGIBLE FOR DEDUCTION UNDER SECTION 80 1A (4) OF THE ACT. THE DEPARTMENT IS NOT CORRECT IN HOLDING THAT THE ASSESSEE IS A MERE CONTRACTOR OF THE WORK AND NOT A DEVELOPER. 29. WE ALSO FIND THAT AS PER THE PROVISIONS OF THE SECTION 801A OF THE ACT, A PERSON BEING A COMPANY HAS TO ENTER INTO AN AGREEMENT WITH THE GOVERNMENT OR GOVERNMENT UNDERTAKINGS. SUCH AN AGREEMENT IS A CONTRACT AND F OR 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 I NTO AN AGREEMENT FOR UNDERTAKING THE DEVELOPMENT OF INFRASTRUCTURE FACILITY. EVERY A GREEMENT ENTERED INTO IS A CONTRACT. 5 ITA NO 390/KOL/2016 M/S. SIMPLEX SUBHASH J.V THE WORD CONTRACTOR IS USED TO DENOTE THE PERSON WHO ENTERS INTO SUCH CONTRACT. EVEN A PERSON WHO ENTERS INTO A CONTRACT FOR DEVELO PMENT OF INFRASTRUCTURE FACILITY IS A CONTRACTOR. THEREFORE, THE CONTRACTOR AND THE DEVEL OPER CANNOT BE VIEWED DIFFERENTLY. EVERY CONTRACTOR MAY NOT BE A DEVELOPER BUT EVERY D EVELOPER DEVELOPING INFRASTRUCTURE FACILITY ON BEHALF OF THE GOVERNMENT IS A CONTRACTO R. 9. THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN ASSESS EES OWN CASE VIDE ORDER DT.18-06-2013 SUPRA , FURTHER CONSIDERED THE ORDER DT. 13-06-2013 OF C UTTACK BENCH IN THE CASE OF ARSS INFRASTRUCTURE PROJECTS L TD VS. ACIT, CIR-2(1), BHUBANESWAR IN ITA NOS. 142,143/CTK/2010 & 483, 484 /CTK/2011 OBSERVED THAT WHERE AN ASSESSEE IS DOING CONTRACT WORK ACCOR DING TO THE REQUIREMENT AND SPECIFICATION OF THE CUSTOMER AND THE SAME HAS BEEN DONE BY USING MATERIALS PURCHASED FROM THIRD PARTIES OTHER THAN T HE CUSTOMERS AND HELD THAT THOUGH THE ASSESSEE IS DOING A WORKS CONTRACT THE S AME WOULD NOT FALL WITHIN THE MEANING OF THE WORD WORKS CONTRACT FOR THE PU RPOSE OF THE ACT DUE TO THE EXCLUSION PROVIDED IN THE MEANING OF WORK IN SECT ION 194C OF THE ACT. RELEVANT FINDINGS ARE REPRODUCED HEREIN BELOW FOR B ETTER UNDERSTANDING:- 11. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. ADMI TTEDLY, A PERUSAL OF THE AGREEMENT ENTERED INTO BETWEEN THE ASSESSEE AND THE GOVT OF ANDHRA PRADESH IRRIGATION & CAD DEPARTMENT SHOWS THAT THE ASSESSE E HAS TAKEN EPC/TURNKEY CONTRACT OF THE FLOOD FLOW CANAL PROJECT FROM SRSP. THE N AME OF THE CONTRACT HAS BEEN EXTRACTED EARLIER IN THIS ORDER. THE SCOPE OF THE W ORK IS ALSO EXTRACTED ABOVE. ADMITTEDLY, THE ASSESSEE HAS TAKEN A TURNKEY CONTRA CT FROM THE IRRIGATION DEPARTMENT, GOVT. OF ANDHRA PRADESH. THE TURNKEY CONTRACT IS IN RESPECT OF THE IRRIGATION PROJECT. IRRIGATION PROJECT IS AN INFRASTRUCTURE FACILITY W ITHIN THE SCOPE OF EXPLANATION TO SECTION 80IA(4) OF THE ACT. THE PROVISIONS OF SECTION 80IA (4) IS TO BE CONTROLLED BY THE EXPLANATION TO SECTION 80IA, WHICH HAS BEEN SUBSTIT UTED BY THE FINANCE (NO.2) ACT, 2009 WITH RETROSPECTIVE EFFECT FROM 1-4-2-2000. THI S EXPLANATION IS FOUND AFTER SUB- SECTION (13) OF SECTION 80IA. THE SAID EXPLANATIO N ATTEMPTS TO CONTROL THE PROVISIONS OF SUB-SECTION 4. MORE SO, IT SAYS THAT NOTHING CO NTAINED IN SECTION 80IA WOULD APPLY IN RELATION TO THE BUSINESS REFERRED TO SUB-SECTIO N (4), WHICH IS IN THE NATURE OF WORKS CONTRACT. A WORKS CONTRACT IS NOT DEFINED IN SECTIO N 80IA. NOW, WHAT WOULD COME INTO CONSIDERATION IS WHETHER THE SUBSTITUTED EXPLANATI ON AFTER SUB- CLAUSE (13) CHANGED THE NATURE OF THE MEANING OF INFRASTRUCTURE FACI LITY PROVIDED IN THE EXPLANATION TO SECTION 80IA(4). ADMITTEDLY, THE EXPLANATION TO SEC TION 80IA(4) GIVES THE MEANING THE TERM INFRASTRUCTURE FACILITY. THE SUBSTITUTED EX PLANATION AFTER SUB CLAUSE (13) BRINGS IN THE NATURE OF WORK AS A WORKS CONTRACT. THE PRO VISIONS OF SECTION 194C, WHICH DEALS WITH TDS IN RESPECT OF PAYMENT TO CONTRACTORS FOR CARRYING OUT ANY WORK IN THE EXPLANATION THERETO AS EXPLAINED THE TERM WORK T O BE AN INCLUSIVE DEFINITION, BUT HAS PROVIDED AN EXCLUSION TO BE DOES NOT INCLUDE MANU FACTURING OR SUPPLYING OF A PRODUCT. ACCORDING TO REQUIREMENT OR SPECIFICATION OF THE CUSTOMER BY USING MATERIALS PURCHASED FROM A PERSON, OTHER THAN SUCH CUSTOMER. THUS, WITH THIS IN MIND, A PERUSAL OF THE TURNKEY CONTRACT AGREEMENT ENTERED INTO BY T HE ASSESSEE WITH THE IRRIGATION DEPARTMENT, GOVT OF A.P CLEARLY SHOWS THAT THE CONS TRUCTION OF ALL THE STRUCTURES OF THE WHOLE CANAL SYSTEM IS TO BE AS PER APPROVED DESI GN, DRAWINGS, SPECIFICATIONS OF THE DEPARTMENT ETC. THE SURVEY IS TO BE DONE AS PER INVESTIGATION AND DESIGNING CRITERIA OF THE IRRIGATION DEPARTMENT. THIS IS ALSO AS PER ARTICLE 11.1 OF THE AGREEMENT. THE ASSESSEE IS TO PROCURE THE MATERIALS INDEPENDENTLY AND THOSE MATERIALS ARE TO CONFIRM TO THE SPECIFICATIONS PROVIDED. THE ASSESSEE IS A LSO TO MAKE ITS ARRANGEMENTS FOR 6 ITA NO 390/KOL/2016 M/S. SIMPLEX SUBHASH J.V STORAGE OF THE MATERIALS. THIS IS AS PER ARTICL E 107 OF THE AGREEMENT. THUS, ADMITTEDLY THE WORK DONE BY THE ASSESSEE FALLS IN THE EXCLUSION PROVIDED TO THE MEANING OF THE WORK GIVEN IN THE EXPLANATION TO SEC TION 194C OF THE ACT. ONCE IT FALLS OUTSIDE THE MEANING OF TERM WORK FOR THE PURPOSE OF SECTION 194C, THE QUESTION THAT ARISES IS CAN IT BE SAID THAT THE ASSESSEE IS DOING THE WORK CONTRACT AS PROVIDED IN THE SUBSTITUTED EXPLANATION IN SECTION 80IA AFTER SUB CLAUSE (13)?, THE ANSWER WOULD BE EMPHATIC NO. 12. THIS IS BECAUSE THE ASSESSEE IS DOING THE ACTIV ITY OF DEVELOPMENT OF AN INFRASTRUCTURE FACILITY AS PROVIDED UNDER SECTION 80IA(4). THE PROJECT IS A TURNKEY PROJECT AND IT CANNOT FORM NOR HAVE A CHARACTER OF A WORKS CONTRACT. WORKS CONTRACT WOULD BE APPLICABLE TO THE REPAIRS AND MAINTENANCE OF AN EXISTING PROJECT. WORKS CONTRACT CANNOT BE IN RELATION TO THE DEVELOPMENT OF A NEW PROJECT. ONE OF THE ARGUMENTS RAISED BY THE LEARNED SR.DR THAT THE INT ENTION OF THE SUBSTITUTION OF THE EXPLANATION AFTER SUB CLAUSE (13) OF SECTION 80IA W AS TO DENY, THE BENEFIT OF DEDUCTION U/S. 80IA(4) IN RESPECT OF WORKS CONTRACT, BUT TO PROVIDE THE DEDUCTION TO SUCH UNDERTAKINGS, WHICH IS DOING THE BUSINESS OF BUILDI NG, OPERATING AND TRANSFER (BOT) AND BUILDING OWNING, OPERATING AND TRANSFER BOOT AS ALSO PPP CONTRACTS DOES NOT HOLD WATER IN SO FAR AS AN IRRIGATION PROJECT CAN NEVER FUNCTION UNDER BOT OR BOOT OR PPP . IN THE CIRCUMSTANCES, WE ARE OF THE VIEW THA T THE ASSESSEES CLAIM IS NOT HIT BY THE SUBSTITUTED EXPLANATION AS PROVIDED AFTER SU B CLAUSE(13) OF SECTION 80IA.. HERE, WE MAY MENTION THAT THIS VIEW FINDS SUPPORT FROM THE DECISION OF THE CO-ORDINATE OF THE TRIBUNAL, [ITAT, HYDERABAD BENCH, HYDERABAD IN THE CASE OF GVPR ENGINEERS LTD &ORS (REFER TO SUPRA). WE MAY MENTION HERE THAT O UR VIEW ALSO FINDS SUPPORT FROM THE DECISION OF THE CO-ORDINATE BENCH OF THIS TRIBUNAL , ITAT CUTTACK BENCH, CUTTACK IN THE CASE OF ARSS INFRASTRUCTURE PROJECTS LTD VS. ACIT , CIRCLE-2 (1), BHUBANESWAR IN ITA NOS. 142, 143/CTK/2010 & 483,484/CTK/2011 DATED 13- 06-2013, WHEREIN ONE OF US WAS A PARTY AND IN WHICH CASE IT HAS BEEN HELD AS UNDER :- 10. NOW COMING TO THE MERITS OF THE DEDUCTION U/S. 801A(4) OF THE ACT. A PERUSAL OF THE PROVISIONS OF SECTION 801A(4) OF THE ACT SHOWS THAT IN THE EXPLANATION INFRASTRUCTURE FACILITY HAS BEEN SPECIFIED TO MEA N A ROAD INCLUDING A TOLL ROAD, A BRIDGE OR A RAIL SYSTEM. ADMITTEDLY, THE ASSESSEE IS DOING THE BUSINESS OF DEVELOPMENT OF RAILWAY TRACKS AND BRIDGES THEREOF AS ALSO ROADS. I F, WE ARE TO ACCEPT THE CONTENTION OF THE LD. CIT THAT THE PROVISIONS OF SECTION 801A(4) OF THE ACT AFTER THE SUBSTITUTION OF THE EXPLANATION TO SECTION 8OIA OF THE ACT WAS INTR ODUCED WAS ONLY FOR THE PURPOSE OF GIVING THE BENEFIT TO BUT CONTRACTS THEN, THE EXPLA NATION TO SECTION 801A(4) OF THE ACT BECOMES OTIOSE. THIS IS AS EXPLANATION TO SECTION 8 01A(4) OF THE ACT SPECIFICALLY PROVIDES FOR THE ROAD TO INCLUDE A TOLL ROAD, A BRI DGE OR A RAIL SYSTEM. BUT CONTRACT IN RESPECT OF THE RAILWAY SYSTEM CAN NEVER EXIST. FURT HER, A PERUSAL OF THE PROVISIONS OF SECTION 801A OF THE ACT SHOWS THAT THE TERM WORKS CONTRACT IS NOT DEFINED IN THE SAID SECTION. HOWEVER, THE TERMS WORKS AND CONTRACT IS DEFINED IN THE PROVISIONS OF SECTION 194C OF THE ACT. IF A PARTICULAR WORD OR TE RM IS NOT DEFINED IN THE SPECIFIC SECTION THEN, ONE COULD GO TO OTHER SECTIONS IN THE SAID ACT WHERE THE DEFINITION WOULD BE AVAILABLE TO DRAW A MEANING TO THE SAID TERMS. I N THE PROVISIONS OF SECTION 194C OF THE ACT, WORK HAS BEEN GIVEN AN INCLUSIVE DEFINITIO N BUT IN THE SUBSEQUENT PORTION IT HAS EXCLUDED THE MANUFACTURING OR SUPPLYING A PRODU CT ACCORDING TO REQUIREMENT OR SPECIFICATION OF A CUSTOMER BY USING MATERIAL PURCH ASED FROM A PERSON OTHER THAN SUCH CUSTOMER. AS HAS BEEN SPECIFIED BY THE LD. AR, THE ASSESSEE IS DOING CONTRACT WORK BUT THAT WORK IS ACCORDING TO THE REQUIREMENT AND SPECI FICATION OF THE CUSTOMER AND THE SAME HAS BEEN DONE BY USING MATERIALS PURCHASE FROM THIRD PARTIES OTHER THAN THE CUSTOMERS. THUS, THOUGH THE ASSESSEE IS DOING A WOR KS CONTRACT THE SAME WOULD NOT FALL WITHIN THE MEANING OF THE WORD WORKS CONTRACT FOR THE PURPOSE OF THE ACT DUE TO THE EXCLUSION PROVIDED IN THE MEANING OF WORK IN SECTION 194C OF THE ACT. THE ISSUE RAISED BY THE LD. CIT THAT THE ASSESSEE IS NOT DOIN G THE DEVELOPMENT WORK BUT IS ONLY DOING THE CONTRACT ALSO DOES NOT STAND TO TEST AS T HE ASSESSEE ADMITTEDLY IS DEVELOPING THE ROADS AND RAILWAY LINES AND THE BRIDGES THEREO F. DEVELOPMENT ENCOMPASSES WITHIN ITSELF CONTRACT WORK. THE AGREEMENT BETWEEN THE ASS ESSEE AND THE CUSTOMER BEING THE GOVERNMENT IS FOR THE DEVELOPMENT OF THE INFRASTRUC TURE FACILITY BEING ROADS AND RAIL SYSTEMS AND BRIDGES BY PARTICIPATING IN THE TENDERS . UNDER THESE CIRCUMSTANCES, WE ARE OF TH VIEW THAT THE AO WAS RIGHT IN LAW IN GRAN TING THE ASSESSEE THE BENEFIT OF DEDUCTION U/S. 801A(4) OF THE ACT. 7 ITA NO 390/KOL/2016 M/S. SIMPLEX SUBHASH J.V 10. IN VIEW OF THE ABOVE JUDICIAL PRECEDENTS IN ASS ESSEES OWN CASE, WE ARE OF THE VIEW THAT THE CIT-A WAS JUSTIFIED IN ALLOWIN G THE DEDUCTION U/S. 80IA OF THE ACT AS CLAIMED BY IT. WE UPHOLD THE IMPUGNED OR DER OF THE CIT-A. ACCORDINGLY, THE GROUNDS RAISED BY THE REVENUE ON T HIS ISSUE ARE DISMISSED. 11. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 13-1 2-2017 SD/- SD/- ARJUN LAL SAINI S.S. VISWANETHRA RAVI ACCOUNTANT MEMBER JUDICIAL MEMBER DATE: 13-12-2 017 **PP/SPS COPIES OF THE ORDER FORWARDED TO: (1) THE APPELLANT/DEPARTMENT: I.T.O, WARD-33(4), KOLKATA, 10-B, MIDDLETON ROW, 3 RD FLOOR,KOLKATA-700071. (2) THE RESPONDENT/ASSESSEE: M/S. SIMPLEX SUBHASH JV, PAN: AABAS9441B,12/1, NELLIE SENGUPTA SARANI, KOLKATA-70 0087. (3) COMMISSIONER OF INCOME-TAX (APPEALS)-, KOLKATA (4) COMMISSIONER OF INCOME TAX, KOLKATA (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE TRUE COPY BY ORDER SR.PS/H.O.O ITAT, KOLKATA