DCIT CEN CIR-1, THANE V. BHARAT UDYOG LTD, NAVI MUMBAI

ITA 437/MUM/2009

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 8142 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 8 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-10-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 13-10-2014
• Assessment Year: 2005-2006
• Appeal Filed On: 20-01-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIVEK BATRA
• Assessee Lawyers: B K DOSHI
• Keywords: Retrospective amendment

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL B BE NCH, MUMBAI , !' # # # # , , !' $ BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI VIVEK VARMA, JUDICIAL MEMBER ./I .T.A. NO.437/MUM/2009 ( % % % % / ASSESSMENT YEAR : 2005-06 THE DCIT, CENTRAL CIRCLE-1, THANE PAWAR INDL. ESTATE, EDULJI ROAD, CHARAI, THANE(W)-400 601 / VS. M/S. BHARAT UDYOG LTD., PLOT NO. 69, 2 ND FLOOR, DANA BUNDER ROAD, APMC VASAI, NAVI MUMBAI ./I .T.A. NO.1014/MUM/2010 ( % % % % / ASSESSMENT YEAR : 2006-07 M/S. BHARAT UDYOG LTD., PLOT NO. 69, 2 ND FLOOR, DANA BUNDER ROAD, APMC VASAI, NAVI MUMBAI THE DCIT, CENTRAL CIRCLE-1, THANE PAWAR INDL. ESTATE, EDULJI ROAD, CHARAI, THANE(W)-400 601 '' ./ () ./ PAN/GIR NO. : AAACB 1686L ( '* / APPELLANT ) .. ( +,'* / RESPONDENT ) '* - / REVENUE BY: SHRI VIVEK BATRA +,'* . - / ASSESSEE BY: SHRI B.K. DOSHI . /0 / DATE OF HEARING :13.10.2014 12% . /0 / DATE OF PRONOUNCEMENT :13.10.2014 ITA NOS. 437/M/09 &1014/M/10 2 !3 / O R D E R PER N.K. BILLAIYA, AM: THESE APPEALS BY THE ASSESSEE AND THE REVENUE ARE DIRECTED AGAINST TWO SEPARATE ORDERS OF THE LD. CIT(A)-1, TH ANE PERTAINING TO A.YRS.2005-06 & 2006-07. 2. THE COMMON GRIEVANCES IN BOTH THESE APPEALS ARE THAT: (I) WHETHER THE ASSESSEE IS ENTITLED FOR DEDUCTION U/S. 80IA (II) WHETHER THE ASSESSEE IS HIT BY THE AMENDMENT BROUGH T TO CLAUSE (B) OF SUB-SECTION 4(I) WITH EFFECT FROM 1.4 .2002. 3. IN A.Y. 2005-06, THE ASSESSEE WAS ALLOWED THE DE DUCTION AND HENCE THE REVENUE IS IN APPEAL AND IN A.Y. 2006-07, THE D EDUCTION WAS DENIED AND THEREFORE THE ASSESSEE IS IN APPEAL. 4. THE ASSESSEE IS A CONTRACTOR. ONE OF THE DIVISI ONS OF THE ASSESSEE COMPANY M/S. JAI HIND INFRASTRUCTURE CO., IS AN ENT ERPRISE ENGAGED IN INFRASTRUCTURAL DEVELOPMENT WHICH INCLUDED DEVELOPM ENT OF ROADS WHICH IS AN INFRASTRUCTURE FACILITY WITHIN THE MEANING OF EXPLANATION (A) TO SUB- SEC (4) OF SEC. 80IA. IN SUB-SECTION 4(I) THE QUAL IFYING ACTIVITIES INCLUDE DEVELOPING INDEPENDENTLY AS AGAINST OPERATING AND MAINTAINING AND DEVELOPING, OPERATING AND MAINTAINING. THE ASSES SEES ACTIVITY IS DEVELOPING AND THEREFORE, ELIGIBLE FOR DEDUCTION U/ S. 80IA OF THE ACT. THE ASSESSEE CLAIMED TO BE AN INVESTOR IN THE PROJECT A ND IS, THEREFORE, EQUALLY EXPOSED TO THE NORMAL BUSINESS RISKS. ACCORDING TO THE ASSESSEE, IT DOES NOT MAKE ANY DIFFERENCE WHETHER THE CONTRACTEE IS G OVERNMENT/LOCAL ITA NOS. 437/M/09 &1014/M/10 3 AUTHORITIES. THE CLAIM OF DEDUCTION WAS DENIED BEC AUSE ACCORDING TO THE AO, THE ASSESSEE DOES NOT FULFILL THE ELIGIBILITY C RITERIA MENTIONED U/S. 80IA(4) OF THE ACT. THE AO DREW SUPPORT FROM THE AM ENDMENT BROUGHT TO THE SECTION WITH RETROSPECTIVE EFFECT FROM 1.4.2 000 WHEREBY IT IS STATED THAT NOTHING CONTAINED IN THE SEC. (80IA) SHALL APP LY TO A PERSON WHO EXECUTED A WORK CONTRACT ENTERED INTO WITH THE UNDE RTAKING OR ENTERPRISE AS THE CASE MAY BE. 5. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE STR ONGLY SUBMITTED THAT THIS ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESS EE BY THE TRIBUNAL IN A.YRS. 2003-04 AND 2002-03. IT IS THE SAY OF THE L D. COUNSEL THAT ONCE THE TRIBUNAL HAS ACCEPTED THAT THE ASSESSEE IS A DE VELOPER ON THE SAME SET OF FACTS IN SUBSEQUENT YEARS, THE REVENUE AUTHORITI ES CANNOT TAKE A DIFFERENT STAND. 6. PER CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE SUPPORTED THE FINDINGS OF THE AO. 7. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE AUTH ORITIES BELOW FOR BOTH THE YEARS UNDER CONSIDERATION. WE FIND THAT T HE TRIBUNAL IN ASSESSEES OWN CASE IN A.Y. 2002-03 IN ITA NO. 6137 /M/05 HAD CONSIDERED THE CLAIM OF THE ASSESSEE VIDE GROUND NO . 2 AND MADE THE FOLLOWING OBSERVATION: THEREFORE, MERELY BECAUSE THE PRESENT ASSESSEE WAS PAID BY THE GOVERNMENT, FOR DEVELOPMENT WORK, IT CANNOT BE DENIED DEDUCTION U/S. 80IA(4). A PERSON, WHO ENTERS INTO A CONTRACT WITH ANOTHER PERSON WILL BE A CONTRACTOR NO DOUBT; AND T HE ASSESSEE HAVING ENTERED INTO AN AGREEMENT WITH THE GOVERNMEN T AGENCIES FOR DEVELOPMENT OF THE INFRASTRUCTURE PROJECTS, IS OBVIOUSLY A CONTRACTOR BUT THAT DOES NOT DEROGATE THE ASSESSEE FROM BEING A DEVELOPER AS WELL. THE TERM CONTRACTOR IS NOT ES SENTIALLY ITA NOS. 437/M/09 &1014/M/10 4 CONTRADICTORY TO THE TERM DEVELOPER. ON THE OTHE R HAND, RATHER S. 80IA(4) ITSELF PROVIDES THAT ASSESSEE SHOULD DEV ELOP THE INFRASTRUCTURE FACILITY AS PER AGREEMENT WITH THE C ENTRAL GOVERNMENT, STATE GOVERNMENT OR A LOCAL AUTHORITY. SO, ENTERING INTO A LAWFUL AGREEMENT AND THEREBY BECOMING A CONT RACTOR SHOULD, IN NO WAY, BE A BAR TO THE ONE BEING A DEVELOPER. THEREFORE, MERELY BECAUSE, IN THE AGREEMENT FOR DEVELOPMENT OF INFRASTRUCTURE FACILITY, ASSESSEE IS REFERRED TO AS CONTRACTOR OR BECAUSE SOME BASIC SPECIFICATIONS ARE LAID DOWN, IT DOES NOT DET RACT THE ASSESSEE FROM THE POSITION OF BEING A DEVELOPER; NOR WILL IT DEBAR THE ASSESSEE FROM CLAIMING DEDUCTION U/S. 80IA(4). 8. THE TRIBUNAL FINALLY CONCLUDED AS UNDER: THEREFORE, AN ASSESSEE WHO IS ONLY ENGAGED IN THE DEVELOPING THE INFRASTRUCTURAL FACILITY IE ROAD AN D NOT ENGAGED IN THE OPERATING AND MAINTAINING THE SAID FACILITY IS ENTITLED TO THE BENEFITS OF THE DEDUCTI ON U/S. 80IA(4). THE PROVISIONS OF SUB-CLAUSE (C) OF CLAUS E (I) OF SEC. 80IA(4) ARE INAPPLICABLE TO THE ASSESSEE, W HO IS ENGAGED IN MERE DEVELOPING OF THE INFRASTRUCTURE FACILITY AS DEFINED IN EXPLANATION TO SAID CLAUSE ( I). CONSIDERING ALL THE FACTS AND CIRCUMSTANCES OF THE ASSESSEES CASE AND IN THE LIGHT OF THE ABOVE DISCU SSED DECISIONS AND INTERPRETATIONS, WE ARE OF THE CONSIDERED OPINION THAT THE ASSESSEE IS ENTITLED TO DEDUCTION U/S. 80IA(4)(I). ACCORDINGLY, GROUND 2 I S DISMISSED. 9. A SIMILAR VIEW WAS TAKEN BY THE TRIBUNAL IN A.Y. 2003-04 IN ITA NO. 675/M/06. WE FIND THAT IN THE PRESENT APPEALS BEFORE US, THE FACTS RELATING TO NATURE OF BUSINESS ARE NOT SHOWN TO BE DIFFERENT THAN THOSE ALREADY EXAMINED BY THE ITAT IN THE AFORESAID APPEA LS DECIDED BY THE TRIBUNAL. THAT BEING THE CASE, EVEN IF THE IMPUGNE D EXPLANATION IS TO BE CONSIDERED FOR THE YEAR UNDER PRESENT APPEAL, WE FI ND THAT THE EXPLANATION CLEARLY REFERS TO THE BUSINESS IN THE NATURE OF WOR K CONTRACT. THIS CLEARLY IMPLIES THAT THE EXPLANATION IS LIMITED IN ITS SCOP E AND AS THE NATURE OF BUSINESS OF THE PRESENT ASSESSEE, BOTH IN VIEW OF T HE FACTS FOR THE YEAR ITA NOS. 437/M/09 &1014/M/10 5 UNDER APPEAL AS ALSO FOR THE VIEW ALREADY TAKEN B Y THE TRIBUNAL IN EARLIER YEARS CITED SUPRA., THE ASSESSEE BEING DEVE LOPER OF INFRASTRUCTURE FACILITY, IN OUR CONSIDERED OPINION, THE DEDUCTION UNDER SUB-SECTION (4) CANNOT BE DENIED ON THE GROUND OF SAID EXPLANATION. CONSIDERING THE FACTS IN TOTALITY, IN THE LIGHT OF THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE, THE ASSESSEE IS ENTITLED TO DEDUCTION U/S . 80IA(4) AS CLAIMED BY IT. 10. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED AND THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 13 TH OCTOBER, 2014 SD/- SD/- (VIVEK VARMA ) (N.K. BILLAIYA) !' / JUDICIAL MEMBER !' / ACCOUNTANT MEMBER MUMBAI; 4! DATED : 13 TH OCTOBER, 2014 . . ./ RJ , SR. PS !3 !3 !3 !3 . .. . +/ +/ +/ +/ 5%/ 5%/ 5%/ 5%/ / COPY OF THE ORDER FORWARDED TO : 1. '* / THE APPELLANT 2. +,'* / THE RESPONDENT. 3. 6 ( ) / THE CIT(A)- 4. 6 / CIT 5. 78 +/ , , / DR, ITAT, MUMBAI 6. 89 : / GUARD FILE. !3 !3 !3 !3 / BY ORDER, ,/ +/ //TRUE COPY// ; ;; ; / < < < < ( ( ( ( (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI