M/s Sanee Inftrastructure Pvt. Ltd., Bhopal V. The Assistant Commissiner of Income Tax 3(1), Bhopal

ITA 489/IND/2010

• Counselvise Citation: 48922714 RSA 2010
• Duration Of Justice: 1 year(s) 2 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-10-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: misc
• Appeal Filed On: 15-07-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Retrospective amendment
• Section: 133(6); 11

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI R.C. SHARMA, ACCOUNTANT MEMBER ITA NO.489/IND/2010 A.Y. 2006-07 M/S. SANEE INFRASTRUCTURE PVT. LTD., BHOPAL PAN AAGCS 8307 M :: APPELLANT VS ACIT-3(1), BHOPAL :: RESPONDENT APPELLANT BY SHRI ANIL KHABYA RESPONDENT BY SHRI R.A. VERMA DATE OF HEARING 1 3 . 9 .2012 DATE OF PRONOUNCEMENT 1 3 . 9 .2012 O R D E R PER JOGINDER SINGH, JUDICIAL MEMBER THE ASSESSEE IS AGGRIEVED BY THE IMPUGNED ORDER DATED 4.3.2010. THE SUM AND SUBSTANCE OF THE GROUNDS TAKE N 2 BEFORE US IS THAT THE LEARNED CIT(A) HAS ERRED IN CONF IRMING THE DISALLOWANCE OF THE DEDUCTION OF RS. 38,92,809/- U/S 80IA(4) OF THE ACT IN RESPECT OF INFRASTRUCTURE FACIL ITY AND FURTHER ERRED IN DISALLOWANCE THE DEDUCTION U/S 80IA AMOUNTING TO RS.38,92,809/-, ON THE BASIS OF EXPLANATIO N TO SEC. 80IA. 2. DURING HEARING, WE HAVE HEARD SHRI ANIL KHABYA, LD. COUNSEL FOR THE ASSESSEE AND SHRI R.A. VERMA, LD. SR. DR. AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE ASSER TED THAT THE IMPUGNED ISSUE IS COVERED BY THE DECISION OF TH E TRIBUNAL, THAT TOO, IN THE CASE OF THE ASSESSEE ITSELF (ITA NO.12/IND/2011, ORDER DATED 8.6.2012 FOR AY 2007-08) . THIS FACTUAL MATRIX WAS NOT CONTROVERTED BY THE REVENU E. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIAL AVAILABLE ON RECORD. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE COMPANY IS ENGAGED IN THE CONSTRUCTION OF ROADS FOR GOVERNMENT DEPARTMENTS, DECLARED INCOME OF 3 RS.13,07,669/- IN ITS RETURN FILED ON 28.11.2006. T HE ASSESSEE CLAIMED DEDUCTION U/S 80IA(4) AMOUNTING TO RS . 38,92,809/- FOR THE YEAR UNDER CONSIDERATION WITH REG ARD TO VARIOUS PROJECTS UNDERTAKEN BY THE ASSESSEE. THE ASSES SING OFFICER DID NOT ALLOW THE ABOVE CLAIM ON THE GROUND TH AT THE ASSESSEE HAD NOT DEVELOPED NEW INFRASTRUCTURE FACILITY AND THE WORK DONE BY THE ASSESSEE WAS ONLY FOR UPGRADATION/REPAIRING/MAINTENANCE OF OLD AND EXISTING INFRASTRUCTURE FACILITIES. ON INQUIRY BY THE ASSESSING OFFICER U/S 133(6) OF THE ACT, IT WAS INFORMED BY THE EXECU TIVE ENGINEER (B/R) DIVISION-1, CHHINDWARA, THAT THE ASSESSE E HAS NOT CONSTRUCTED ANY NEW ROAD AND HAS DONE ONLY UPGRADATION OF EXISTING SHIVANI KATNI ROAD. IT WAS ALSO INFORMED THAT SIMILAR WAS THE POSITION WITH RESPECT TO OTHER WORK DONE BY THE ASSESSEE FOR OTHER WORKS CLAIMED TO HAVE BEEN UNDERTAKEN BY THE ASSESSEE. ON THE BASIS OF THIS INFORMATION, THE LEARNED ASSESSING OFFICER DISALLOWED 4 DEDUCTION U/S 80IA OF THE ACT CLAIMED BY THE ASSESSEE . FELT AGGRIEVED WITH THE ACTION OF THE ASSESSING OFFICER, T HE ASSESSEE PREFERRED APPEAL BEFORE THE LEARNED CIT(A) WH O, AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, UP HELD THE ORDER OF THE LD. ASSESSING OFFICER AND HELD THAT THE ASSESSEE WAS NOT ENGAGED IN CREATION OF NEW INFRASTRUCTU RE FACILITIES AS MENTIONED U/S 80IA OF THE ACT. HE, THER EFORE, CONFIRMED THE DISALLOWANCE MADE BY THE LEARNED ASSESSIN G OFFICER. BEFORE US, THE CLAIM OF THE ASSESSEE IS THAT THE ASSESSEE DEVELOPED NEW INFRASTRUCTURES FACILITIES, WH EREAS THE REVENUE HAS CONTROVERTED THE SAME. 4. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND THE FAC TS OF THE CASE, WE FIND THAT AN IDENTICAL ISSUE WAS DECIDED BY THIS BENCH OF THE TRIBUNAL VIDE ORDER DATED 8.6.2012. BEFORE COMING TO ANY CONCLUSION, WE ARE REPRODUCING HEREUNDER THE RELEVANT PORTION OF THE TRIBUNAL ORDER (SUPRA):-X 5 THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER OF THE LEARNED CIT(A) DATED 26.10.2009 FOR TH E ASSESSMENT YEAR 2007-08. 2. THE ONLY GRIEVANCE OF THE ASSESSEE RELATES TO DECLINE OF CLAIM OF DEDUCTION U/S 80IA OF THE INCOM E TAX ACT, 1961 IN RESPECT OF INFRASTRUCTURE PROJECTS DEVELOPED BY THE ASSESSEE . 2. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. THE FIRST, IN BRIEF, ARE THAT THE ASSESSEE IS ENGAGED IN THE CONSTRUCTION OF ROADS FOR THE GOVERNMENT DEPARTMENTS. IN THE RETURN OF INCOME, TH E ASSESSEE HAS CLAIMED DEDUCTION U/S 80IA OF THE ACT IN RESPECT OF INFRASTRUCTURE PROJECT UNDERTAKEN BY THE ASSESSEE. AFTER VERIFYING THE DETAILS OF PROJECT UNDERTAKEN, THE ASSESSING OFFICER REACHED TO THE CONCLUSION THAT THE ASSESSEE HAS GIVEN PAYMENTS STEP BY STEP DURING THE CONSTRUCTION PERIOD. THERE IS NO FUND MOBILIZATION BY THE ASSESSEE TO COMPLETE TH E PROJECT. THE ASSESSEE IS RELYING ON GOVERNMENT FUND FOR CONSTRUCTION WORK, HENCE, AS PER THE AO, THE ASSESSEE WAS ONLY EXECUTING A WORKS CONTRACT AND THERE WAS NO MOBILIZATION OF SOURCES OF ITS OWN. AF TER REFERRING TO THE EXPLANATION AS SUBSTITUTED BY THE FINANCE (NO. 2) ACT, 2009 WITH RETROSPECTIVE EFFECT FROM 1.4.2000, THE AO HELD THAT THE ASSESSEE HAS 6 EXECUTED ONLY WORKS CONTRACT AWARDED BY THE STATE GOVERNMENT AND CENTRAL GOVERNMENT, HENCE, NO DEDUCTION UNDER SECTION 80IA(4) COULD BE ALLOWED TO THE ASSESSEE. 4. BY THE IMPUGNED ORDER, THE LEARNED CIT(A) CONFIRMED THE DISALLOWANCE BY OBSERVING AS UNDER :- IN THE APPELLANTS CASE, THE VARIOUS GOVERNMENT DEPARTMENTS HAVE ISSUED THE TENDERS AND THE WORK CONTRACT HAS BEEN AWARDED TO THE PERSON WHO QUOTES THE MINIMUM RATES. SIMILARLY, THE APPELLANT HAD FIL ED THE TENDERS FOR VARIOUS PROJECTS AND WAS AWARDED THE CONTRACT IN RESPECT OF THE PROJECTS MENTIONED IN DE TAIL IN THE ASSESSMENT ORDER ON WHICH DEDUCTION U/S 80IA HAS BEEN CLAIMED FOR THE YEAR UNDER CONSIDERATION. THE AO HAS MADE THE DISALLOWANCE ON THE GROUND THAT THE MO ST OF THE ROADS BUILT BY THE APPELLANT DURING THE YEAR UNDER CONSIDERATION DOES NOT AMOUNT TO CREATION OF NEW INFRASTRUCTURE FACILITIES AS THE APPELLANT HAS SIMP LY EXECUTED THE WORK FOR UPGRADATION/REPAIRING/MAINTENANCE OF OLD ROADS. IN ADDITION TO THE ABOVE, THE PROJECTS ALSO FALLS SQUA RELY UNDER THE EXPRESSION WORKS CONTRACT AWARDED BY VARIOUS GOVERNMENT DEPARTMENTS OF MP AND HENCE FALL S WITHIN THE MISCHIEF OF THE EXPLANATION TO SECTION 8 0IA. IT IS PERTINENT TO NOTE FROM THE SCHEDULE OF PAYMENTS THAT THE APPELLANT IS GIVEN PAYMENT FOR THE WORK DONE ST EP BY STEP DURING THE PERIOD OF CONSTRUCTION. THERE IS NO MOBILIZATION OF FUND BY THE APPELLANT TO COMPLETE THE PROJECT UNDERTAKEN BY HIM. THUS, IT IS CLEAR THAT THE APPELLANT IS A WORK CONT RACTOR AND RELYING ON THE GOVERNMENT FUND FOR THE EXECUTIO N OF WORK CONTRACT. THEREFORE, THE APPELLANT IS NOT ENTI TLED TO THE DEDUCTION U/S 80-IA. RELIANCE IS PLACED IN THE CASE OF ASSTT. CIT VS. INDORE LININGS (P) LTD (2009) 122 TTJ (CHENNAI) 137 WHEREIN IT IS HELD THAT BENEFIT OF SE CTION 80IA IS AVAILABLE ONLY TO A DEVELOPER AND NOT A CONTRACTOR, THUS, WHERE ASSESSEE TOOK CONTRACT WORK OF 7 INSITU CEMENT LINING FOR WATER SUPPLY PROJECT OF GU JARAT WATER SUPPLY AND SEWERAGE BOARD IT WAS TO BE HELD THAT ASSESSEE WAS DOING ONLY CONTRACT WORK AND AS SUCH BENEFIT OF SECTION 80IA COULD NOT BE EXTENDED TO IT. THIS ISSUE HAS ALSO BEEN DECIDED BY HONBLE INDORE TRIBUNAL IN THE FAVOUR OF THE DEPARTMENT IN THE CAS E OF ACIT 3(1) BHOPAL VS. R.K. GUPTA CONTRACTOR & ENGINEERS PVT. LTD. BHOPAL FOR A.Y. 2006-07 REPORTE D IN ITA NO. 517/IND/2009 WHEREIN IT IS HELD THAT PROVIS IONS OF 80-IA IS NOT APPLICABLE TO BUSINESS REFERRED IN SUBSECTION (4) OF SECTION 80IA MEANING THEREBY THAT THE BENEFIT UNDER THIS SECTION WILL NOT BE GRANTED TO A WORK CONTRACTOR. THE ISSUE HAS ALSO BEEN DECIDED IN THE CASE OF B.T. PATIL & SONS CONSTN. (P) LTD. VS. ASST T. CIPT (2010) 35 SOT 171 (MUM) (LB). 5. AGAINST THE ABOVE ORDER, THE ASSESSEE IS IN FURT HER APPEAL BEFORE US. 6. IT WAS CONTENDED BY THE LEARNED COUNSEL FOR THE ASSESSEE, SHRI ANIL KHABYA, THAT THE ASSESSEE HAS CARRIED OUT DEVELOPMENT WORK OF NEW ROADS AND AWARDED BY GOVERNMENT DEPTT/AGENCIES. COMPLETE DETAIL HAS BEEN FILED ON RECORD. HE FURTHER SUBMITT ED THAT IN SOME CASES, EXISTING OLD ROAD FACILITIES HA VE BEEN CONVERTED INTO INFRASTRUCTURE FACILITY BY WIDE NING THE EXISTING ROADS AND BY CONSTRUCTION OF NEW LANES I.E. THUS CONVERTING EXISTING SINGLE LANE ROAD TO D OUBLE LANE ROADS ETC. CONVERSION OF EXISTING ROADS INTO INFRASTRUCTURE FACILITIES IS ALSO CONSIDERED AS DEVELOPMENT OF INFRASTRUCTURE FACILITY. RELIANCE W AS PLACED ON CIRCULAR 4 OF 2010 DATED 18-05-2010 8 ACCORDING TO WHICH WIDENING OF AN EXISTING ROAD BY CONSTRUCTING ADDITIONAL LANES AS A PART OF A HIGHWA Y PROJECT BY AN UNDERTAKING WOULD BE REGARDED AS A NEW INFRASTRUCTURE FACILITY FOR THE PURPOSE OF SECT ION 80IA(4)(I) OF ACT. THE MOST IMPORTANT ASPECT WAS TH AT THE ENTIRE DEVELOPMENT /CONSTRUCTION WORK HAS BEEN EXECUTED BY THE ASSESSEE. THE ASSESSEE HAS NOT EXECUTED ONLY A PART OF CONSTRUCTION WORK OF INFRASTRUCTURE FACILITY. THE ASSESSEE WAS ALSO UNDE R OBLIGATION TO MAINTAIN THESE NEW ROADS FOR NUMBER O F YEARS AFTER DEVELOPMENT. HE FURTHER SUBMITTED THAT THE ASSESSEE CONTRACTS WITH GOVERNMENT DEPTT/AGENCIES CANNOT BE TERMED AS A WORK CONTRACT SIMPLICITER . THESE CONTRACTS WERE IN THE NATURE OF DEVELOPMENT WORK WITH ATTACHED LEGAL OBLIGATION OF MAINTENANCE. THE APPELLANT HAS UTILIZED SUBSTANTIAL FINANCIAL RESOURCES, BOTH FUND BASED AND NON-FUND BASED (SUCH AS BANK GUARANTEES , PERFORMANCE GUARANTEES), TO EXECUTE THESE PROJECTS. MERELY BECAUSE, THE APPELLANT HAS BEEN PAID FOR DEVELOPMENT AND CONSTRUCTION WORK SUBSEQUENTLY, COULD NOT BE A REASON TO DENY THE ASSESSEE THE BENEFIT OF DEDUCTIO N U/S 80IA(4). THE CIT(A) HAS RELIED UPON 3 TRIBUNAL DECISIONS CITED AT PAGE 6 PARA 2 OF HIS ORDER. ALL THOSE CASES HAVE NO RELEVANCE WITH THE FACTS OF APPELLANT 9 CASES AND THE SAME WERE DECIDED ON THE BASIS OF SPECIAL FACTS OF THOSE PARTICULAR CASES. IN ALL THO SE CASES, THE APPELLANTS WERE ENGAGED IN PERFORMANCE OF PART OF CONTRACT AND NOT THE ENTIRE DEVELOPMEN T WORK. THE CASE OF ASSTT CIT VS. INDORE LINING (P) LIMITED WAS NOT RELATED TO ROAD CONSTRUCTION. IN THE CASE O F APPELLANT, THE APPELLANT HAS CONSTRUCTED THE ENTIRE NEW ROADS. THE APPELLANT WAS ALSO UNDER LEGAL OBLIGATION TO MAINTAIN THESE NEW ROADS FOR NUMBER O F YEARS. THUS THE RATIO DECIDED IN THOSE CASES CANNOT BE APPLIED TO THE FACTS OF APPELLANT CASE. AS PER T HE LEARNED COUNSEL FOR THE ASSESSEE, THE CASE OF THE APPELLANT IS COVERED BY THE DECISION OF HONBLE MUMBAI BENCH IN THE CASE OF ACIT VS. BHARAT UDYOG LTD 313 ITR (AT) 168(MUMBAI). IN THAT CASE, THE APPELLANT WAS A CONTRACTOR OF INFRASTRUCTURE FACILI TY. THE A.O. DENIED THE BENEFIT ON THE GROUND THAT THE ASSESSEE WHICH WAS ONLY A CONTRACTOR CONSTRUCTING A N INFRASTRUCTURE FACILITY LIKE ROAD ON BEHALF OF THE DEVELOPER FOR A SUM OF PROFIT AND WAS NOT HAVING STAKE IN FINANCIAL VIABILITY OF THE PROJECT. ALLOWI NG THE DEDUCTION U/S 80IA(4)(I), THE HONBLE TRIBUNAL HELD THAT AN ASSESSEE WHO IS ONLY ENGAGED IN THE DEVELOPING THE INFRASTRUCTURAL FACILITY I.E., ROAD AND NOT 10 ENGAGED IN THE OPERATING AND MAINTAINING THE SAID FACILITY IS ENTITLED TO THE BENEFITS OF THE DEDUCTI ON UNDER SECTION 80-IA(4).PATEL ENGINEERING LTD. VS. DY. CIT (2004) 84 TTJ (MUMBAI) 646 MR. KHABYA FURTHER CONTENDED THAT ]THE EXPLANATION INSERTED BY FINANCE (NO.2) ACT, 2009 WHICH HAS BEEN INSERTED BELOW SUB-CLAUSE (13) OF SECTION 80IA APPLIES ONLY IN RELATION TO A BUSINESS REFERRED TO IN SUB-SECTION ( 4) WHICH IS IN THE NATURE OF WORK CONTRACT AWARDED BY ANY PERSON INCLUDING THE CENTRAL OR STATE GOVERNMENT. THE BUSINESS OF THE APPELLANT IS NOT IN THE NATURE OF WORK CONTRACT SIMPLICITER. THE APPELL ANT IS UNDERTAKING EXECUTION OF ENTIRE INFRASTRUCTURE F ACILITY ALONG WITH OBLIGATION OF MAINTENANCE FOR NUMBER OF YEARS. THE APPELLANT IS NOT ENGAGED IN BUSINESS OF EXECUTION OF ONLY PART OF CIVIL WORK SO AS TO BE DESCRIBED AS WORK CONTRACTOR. THE EXPLANATION REL IED BY THE A.O. DOES NOT DISENTITLE THE APPELLANT FROM SUBSTANTIVE BENEFIT CONFERRED BY SECTION 80IA(4)(I) OF THE ACT. 7. ON THE OTHER HAND, THE LEARNED CIT DR, SHRI KESHAV SAXENA, SUBMITTED THAT THE ASSESSEE WAS MERELY A CONTRACTOR AND NO INFRA-STRUCTURE FACILITI ES HAVE BEEN DEVELOPED BY HIM ON HIS OWN LAND. AS PER THE LEARNED CIT DR FOR CLAIMING DEDUCTION U/S 11 80IA(4)OF THE ACT, THE INFRA-STRUCTURE PROJECT SHOU LD BE OWNED BY THE ASSESSEE. HE FURTHER RELIED ON THE OBSERVATIONS MADE IN THE CASE OF V.D. PATIL & SONS; 126 TTJ 577 WHEREIN IT WAS HELD THAT THE ASSESSEE SHOULD BE INVOLVED IN PLANNING AND DEVELOPMENT OF INFRA-STRUCTURE FACILITIES AS A WHOLE. THE ASSESSEE SHOULD CARRY OUT THE CONSTRUCTION WORK AS PER THE REQUIREMENTS OF STATE GOVERNMENT AND CANNOT DEVIATE EVEN AN INCH FROM THE PLAN ASSIGNED TO IT. OUR ATTENTION WAS ALSO INVITED TO FOLLOWING OBSERVATION S IN THE ORDER WHICH READ AS UNDER :- ANOTHER SIGNIFICANT WORD USED HERE IS OWNED WHICH INDICATES THAT THE INFRASTRUCTURE FACILITY SHOULD B E OWNED BY A COMPANY SO AS TO BE ENTITLED TO DEDUCTION UNDER T HIS SECTION. FROM THE COPIES OF AGREEMENT ENTERED INTO BY THE ASSESSEE WITH THE STATE GOVERNMENT/STATUTORY AUTHO RITIES, IT IS AMPLY CLEAR THAT ONLY THE CONCERNED AUTHORITY , AND NOT THE ASSESSEE, HAS BEEN DESCRIBED AS OWNER IN UNAMBIGUOUS WORDS. IN THESE AGREEMENTS THE ASSESSEE HAS BEEN REFERRED TO AS A JOINT VENTURE FOR CARRYIN G OUT THE SPECIFIED WORK ONLY. IT IS AXIOMATIC THAT THE DOING OF WORK ASSIGNED TO ASSESSEE, RELIGIOUSLY IN ACCORDANCE WIT H THE GIVEN SPECIFICATIONS SUBJECT TO THE TERMS AND CONDI TIONS OF THE AGREEMENT AND CONTROL OF THE AUTHORITY, CANNOT PUT IT IN THE CAPACITY OF OWNER. EVEN IF THE ASSESSEE HAD TO MAKE SOME INVESTMENT, FOR THE TIME BEING, IN THE SHAPE O F PURCHASE OF SOME RAW MATERIAL OR INCURRING OF LABOU R ETC., WHICH IS RECOUPED FROM TIME TO TIME BY FURNISHING B ILLS, THE ASSESSEE CANNOT CLAIM ITSELF AS OWNER OF THE WORK D ONE BY IT. THE ASSESSEE IS A MERE CONTRACTOR WHOSE TENDER HAS BEEN ACCEPTED BY THE COMPETENT AUTHORITIES FOR CARR YING OUT THE SPECIFIED JOB, THE PROPERTY IN RESPECT OF W HICH VESTS 12 WITH SUCH GOVERNMENT OR LOCAL AUTHORITY. IT IS, THE REFORE, CLEAR THAT SINCE THE WORK DONE BY THE ASSESSEE IS N OT OWNED BY IT, IT DOES NOT SATISFY SUB-CL. (A) OF S. 80IA(4)(I) 8. THE LD. CIT DR FURTHER CONTENDED THAT THE ASSESSEE IS NOT THE OWNER OF INFRASTRUCTURE FACILIT Y AND, THEREFORE, DID NOT SATISFY THE CONDITION OF OWNERSHIP AS PER SUB CLAUSE (A) OF SECTION 80IA(4)( I). FOR THIS PURPOSE, OUR ATTENTION WAS ALSO INVITED T O THE, DECISION OF THE P.D. PATIL & SONS (SUPRA), ACCORDING TO WHICH INFRASTRUCTURE FACILITY SHOULD B E OWNED BY THE COMPANY SO AS TO BE ENTITLED FOR DEDUCTION UNDER THIS SECTION. AS PER LD. CIT DR, TH E ASSESSEE IS A MERE CONTRACTOR WHOSE TENDER HAS BEEN ACCEPTED BY COMPETENT AUTHORITIES FOR CARRYING OUT THE SPECIFIC JOBS, THE PROPERTY IN RESPECT OF W HICH VESTED WITH SUCH GOVERNMENT OR LOCAL AUTHORITY. HE FURTHER SUBMITTED THAT THE DECISION RELIED BY THE L D. AUTHORIZED REPRESENTATIVE IN THE CASE OF BHARAT UDYOG LIMITED WAS PASSED ON 30 TH JUNE, 2008, AND WAS BASED ON THE DECISION OF PATEL ENGG. LIMITED, 9 4 LTD/411, WHICH WAS OVER RULED BY THE DECISION OF SPECIAL BENCH IN THE CASE OF B.D. PATIL & SONS, (SUPRA) VIDE ORDER DATED 26.10.2009. 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAVE GONE THROUGH THE ORDERS OF THE AUTHORITIES BEL OW 13 AND ALSO DELIBERATED ON THE CASE LAWS CITED BY LD. CIT DR AND LD. AUTHORIZED REPRESENTATIVE IN THE CONTEXT OF FACTUAL MATRIX OF THE CASE. FROM THE RECORD, WE FOUND THAT THE ASSESSEE HAS CLAIMED DEDUCTION U/S 80IA(4) IN RESPECT OF VARIOUS CONTRACTS AWARDED BY THE GOVERNMENT FOR DEVELOPMENT OF INFRASTRUCTURE FACILITIES OF NEW ROADS AND WIDENING OF EXISTING RO ADS AND CONSTRUCTION OF NEW LANES I.E. CONVERTING EXIST ING SINGLE LANE TO DOUBLE LANE ROADS. RELEVANT PROVISIO NS OF THE LAW FOR CLAIM OF EXEMPTION U/S 80IA(4), WHIC H WAS AMENDED BY THE FINANCE ACT, 2002 AND APPLICABLE W.E.F. 1.4.2002 I.E. ASSESSMENT YEAR 200 2- 03 READS AS UNDER : DEDUCTION IN RESPECT OF PROFITS AND GAINS FROM IND USTRIAL UNDERTAKINGS OR ENTERPRISES ENGAGED IN INFRASTRUCTU RE DEVELOPMENT, ETC. 80-IA. (1) WHERE THE GROSS TOTAL INCOME OF AN ASSESSEE INCLUDES ANY PROFITS AND GAIN S DERIVED BY AN UNDERTAKING OR AN ENTERPRISE FROM ANY BUSINESS REFERRED TO IN SUB-SECTION (4) (SUCH BUSI NESS BEING HEREINAFTER REFERRED TO AS THE ELIGIBLE BUSIN ESS), THERE SHALL, IN ACCORDANCE WITH AND SUBJECT TO THE PROVISIONS OF THIS SECTION, BE ALLOWED IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE, A DEDUCTION OF AN AMO UNT EQUAL TO HUNDRED PER CENT OF THE PROFITS AND GAINS DERIVED FROM SUCH BUSINESS FOR TEN CONSECUTIVE ASSESSMENT YEARS. (4) THIS SECTION APPLIES TO (I) ANY ENTERPRISE CARRYING ON THE BUSINESS OF (I) DEVELOPING OR (II) OPERATING AND MAINTAINING OR (II I) DEVELOPING, OPERATING AND MAINTAINING ANY INFRASTRU CTURE FACILITY WHICH FULFILS ALL THE FOLLOWING CONDITIONS , NAMELY :- 14 (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 ESTABLISHE D OR CONSITITUTEDN UNDER ANY CENTRAL OR STATE ACT; (B) IT HAS ENTERED INTO AN AGREEMENT WITH THE CENTR AL GOVERNMENT OR A STATE GOVERNMENT OR A LOCAL AUTHORI TY6 OR ANY OTHER STATUTORY BODY FOR (I) DEVELOPING OR ( II) OPERATING AND MAINTAINING OR (III) DEVELOPING, OPER ATING AND MAINTAINING A NEW INFRASTRUCTURE FACILITY; (C) IT HAS STARTED OR STARTS OPERATING AND MAINTAIN ING THE INFRASTRUCTURE FACILITY ON OR AFTER THE IST DAY OF APRIL, 1995 : PROVIDED THAT WHERE AN INFRASTRUCTURE FACILITY IS TRANSFERRED ON OR AFTER THE IST DAY OF APRIL, 1999 BY AN ENTERPRISE WHICH DEVELOPED SUCH INFRASTRUCTURE FACI LITY (HEREAFTER IN THIS SECTION REFERRED TO AS THE TRANS FEROR ENTERPRISES) TO ANOTHER ENTERPRISE (HEREAFTER IN TH IS SECTION REFERRED TO AS THE TRANSFEREE ENTERPRISE) F OR THE PURPOSE OF OPERATING AND MAINTAINING THE INFRASTRUC TURE 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 SHAL L APPLY TO THE TRANSFEREE ENTERPRISE AS IF IT WERE THE ENTE RPRISE TO WHICH THIS CLAUSE APPLIES AND THE DEDUCTION FROM PR OFITS AND GAINS WOULD BE AVAILABLE TO SUCH TRANSFEREE ENTERPRISE FOR THE UNEXPIRED PERIOD DURING WHICH TH E TRANSFEROR ENTERPRISE WOULD HAVE BEEN ENTITLED TO THE DEDUCTION, IF THE TRANSFE R HAD NOT TAKEN PLACE. EXPLANATION :- FOR THE PURPOSES OF THIS CLAUSE, INFRASTRUCTURE MEANS (A) A ROAD INCLUDING TOLL ROAD, A BRIDGE OR A RAIL SYSTEM (B) A HIGHWAY PROJECT INCLUDING HOUSING OR OTHER ACTIVITIES BEING AN INTEGRAL PART OF THE HIGHWAY PR OJECT. (C) A WATER SUPPLY PROJECT, TREATMENT SYSTEM, IRRIG ATION PROJECT, SANITATION AND SEWERAGE SYSTEM OR SOLID WA STE MANAGEMENT SYSTEM; (D) A PORT, AIRPORT, INLAND WATERWAY, INLAND PORT O R NAVIGATIONAL CHANNEL IN THE SEA. 15 10. IT IS VERY CLEAR FROM THE AMENDED PROVISIONS OF THE LAW THAT INFRASTRUCTURE FACILITY, AFTER AMENDMENT I S REQUIRED TO BE :- (I) DEVELOPED OR (II) MAINTAINED AND OPERATED OR (III)DEVELOPED, MAINTAINED AND OPERATED. WHEREAS AS PER THE EARLIER LAW,THE INFRASTRUCTURE FACILITY WAS REQUIRED TO BE (I) DEVELOPED, (II) MAINTAINED AND OPERATED OR (III)DEVELOPED, MAINTAINED AND OPERATED THUS, AS PER THE AMENDED LAW, DEVELOPMENT OF INFRASTRUCTURE FACILITY IS SUFFICIENT FOR CLAIM OF DEDUCTION U/S 80IA(4) W.E.F. ASSESSMENT YEAR 2002-03. THE RELEVANT ASSESSMENT YEAR UNDER CONSIDERATION IS ALS O ASSESSMENT YEAR 2002-03 FOR WHICH AMENDED PROVISIONS OF LAW IS APPLICABLE. 11. MAIN REASON FOR ASSESSING OFFICER'S ACTION FOR DENIAL OF THE DEDUCTION WAS THAT THE ASSESSEE WAS MERELY A CONTRACTOR AND NOT DEVELOPER OF INFRASTRUCTURE FACILITY AS A WHOLE. THE ASSESSING OFFICER ALSO OBSERVED THAT AT SOME INSTANCES, THE ASSESSEE HAS ONLY UNDERTAKEN UPGRADATION INCLUDING CONSTRUCTION OF BRIDGE AND CULVERT, IMPROVEMENT AND WIDENING OF NEW B. T. ETC, WHICH AS PER ASSESSING 16 OFFICER DID NOT AMOUNT TO DEVELOPMENT OF NEW INFRASTRUCTURE. IN THIS RESPECT, THE LD. AUTHORIZED REPRESENTATIVE PLACED ON RECORD CBDT CIRCULAR NO.4 OF 2010 DATED 18.5.2010, ACCORDING TO WHICH WIDENIN G OF AN EXISTING ROAD BY CONSTRUCTING ADDITIONAL LANE AS PART OF A HIGH WAY APPROACH WOULD BE REGARDED AS NEW INFRASTRUCTURE FACILITY FOR THE PURPOSE OF SECT ION 80IA(4)(I) OF THE INCOME-TAX ACT, 1961. NOW WE ANALYZE VARIOUS CONDITIONS WHICH ARE REQUIRED TO BE FULFILLED FOR CLAIM OF DEDUCTION U/S 80IA(4) AS NAR RATED ABOVE. CONDITIONS STIPULATED IN SUB CLAUSE (A) OF S UB SECTION (4)(I) WITH REGARD TO THE ENTERPRISE BEING OWNED BY THE COMPANY REGISTERED IN INDIA IS DULY FULFILLED. SINCE THE ASSESSEE IS A COMPANY REGISTER ED IN INDIA, THEREFORE, THIS CONDITION IS DULY FULFILL ED BY THE ASSESSEE. CONDITION STIPULATED IN SUB CLAUSE (B) REQUIRING THAT THE ASSESSEE COMPANY TO ENTER INTO AGREEMENT WITH THE CENTRAL OR STATE GOVERNMENT FOR DEVELOPMENT OF NEW INFRASTRUCTURE FACILITY IS ALSO FULFILLED IN THIS CASE. HOWEVER, CONDITION STIPULAT ED UNDER SUB CLAUSE (C), WHICH REQUIRED THAT THE ASSESSEE HAS STARTED OPERATING AND MAINTAINING INFRASTRUCTURE FACILITY ON OR AFTER 1 ST DAY OF APR IL, 1995, DOES NOT APPEAR TO BE FULFILLED AND REQUIRE A RELOO K IN THE MATTER BY THE ASSESSING OFFICER. 17 12. NOW COMING TO THE MAIN OBJECTION OF THE LD. CIT DR TO THE EFFECT THAT THE ASSESSEE WAS A CONTACTOR AND NOT DEVELOPER IN VIEW OF THE FACT THAT THE ASSESSEE WAS PAID BY THE GOVERNMENT IN RESPECT OF THE WORK UNDERTAKEN BY IT AND ASSESSEE HAS NOT INVESTED HIS OWN FUNDS FOR COMPLETING THE PROJECT N OR ASSESSEE HAS RECOVERED THE SAME THROUGH OPERATING THE FACILITY THEREAFTER. AS PER OUR CONSIDERED VIEW , AFTER AMENDMENT BY THE FINANCE ACT, 2002 FOR CLAIM OF DEDUCTION U/S 80IA(4) INFRASTRUCTURE FACILITY IS ONLY REQUIRED TO BE DEVELOPED AND THERE IS NO CONDITION THAT ASSESSEE SHOULD ALSO OPERATE THE SAME. THUS, AFTER AMENDMENT, WHEN THE ASSESSEE IS NOT REQUIRED TO OPERATE THE FACILITY, THE PAYMENT FOR DEVELOPMEN T OF SUCH INFRASTRUCTURE IS REQUIRED TO BE MADE BY THE GOVERNMENT ONLY. HOWEVER, AS PER PRE-AMENDED LAW WHEN THE ASSESSEE WAS NOT ONLY REQUIRED TO DEVELOP BUT ALSO REQUIRED TO OPERATE AND MAINTAIN THE INFRASTRUCTURE FACILITY, THERE WAS COLLECTION OF RE VENUE THROUGH TOLL TAX BY WHICH ASSESSEE COULD HAVE RECOVERED NOT ONLY ITS COST PART BUT ALSO PROFIT TH EREON. AFTER AMENDMENT, WHEN ASSESSEE UNDERTAKES TO DEVELOP THE INFRASTRUCTURE FACILITY ONLY, IT IS THE GOVERNMENT WHO WILL MAKE PAYMENT TO ASSESSEE IN RESPECT OF INFRASTRUCTURE FACILITY DEVELOPED BY IT IN 18 TERMS OF AGREEMENT SO ENTERED WITH GOVERNMENT. THUS, WE DO NOT FIND ANY INFRINGEMENT OF CONDITIONS FOR CLAIM OF DEDUCTION U/S 80IA(4) WHEN THE GOVERNMENT HAS MADE PAYMENT TO THE ASSESSEE IN RESPECT OF THE PROJECT OF INFRASTRUCTURE DEVELOPMEN T UNDERTAKEN BY IT IN TERMS OF RESPECTIVE AGREEMENT ENTERED INTO WITH GOVERNMENT. IT IS PERTINENT TO MENTION HERE THAT FOR CLAIM OF DEDUCTION, THE INFRASTRUCTURE PROJECT SHOULD BE COMPLETELY DEVELOP ED BY THE ASSESSEE AND NOT PART OF IT. EVEN WHEN THE ASSESSEE UNDERTAKES DEVELOPMENT OF ONLY PART OF INFRASTRUCTURE FACILITY, IT SHALL NOT BE ENTITLED F OR CLAIM OF DEDUCTION. IN THE INSTANT CASE, IT APPEARS THAT THE ASSESSING OFFICER HAS NOT MINUTELY EXAMINED THE TERMS OF THE AGREEMENT EXECUTED WITH GOVERNMENT DEPARTMENT. IT IS ALSO PERTINENT TO MENTION HERE TH AT THE PROPOSITION ADVANCED BY LD. CIT DR WITH REFERENCE TO THE DECISION OF THE SPECIAL BENCH IN T HE CASE OF V. D.PATIL (SUPRA) WAS WITH RESPECT TO THE ASSESSMENT YEAR 2000-01 AND 2001-02, WHICH WAS BEFORE THE AMENDMENT BROUGHT IN BY THE FINANCE ACT 2002,THEREFORE, THE ASSESSEE'S ELIGIBILITY FOR CLAI M OF DEDUCTION IS REQUIRED TO BE EXAMINED WITH REFERENCE TO THE AMENDED PROVISIONS OF LAW W.E.F. 1.4.2002. 19 13. IN VIEW OF THE ABOVE DISCUSSION AND IN THE INTE REST OF JUSTICE, WE RESTORE THIS APPEAL BACK TO THE FILE OF ASSESSING OFFICER WITH A DIRECTION TO EXAMINE THE TERMS AND CONDITIONS OF EACH AND EVERY CONTRACT ENTERED BY THE ASSESSEE WITH THE GOVERNMENT TO FIND OUT WHETHER THE ASSESSEE HAS WORKED SIMPLICITOR AS A CONTRACTOR OR AS A DEVELOPER OF INFRASTRUCTURE FACI LITY AS A WHOLE. MINUTE EXAMINATION OF TERMS AND CONDITIONS OF EACH CONTRACT IS REQUIRED TO BE UNDERTAKEN, EVEN THOUGH THE ASSESSEE HAS PLACED ON RECORD SOME OF THE LETTERS OF THE GOVERNMENT DEPARTMENT, WHICH HAS ALLOTTED THE DEVELOPMENT WORK TO THE ASSESSEE, WHICH, PRIMA FACIE, GIVES IMPRESSI ON THAT THE ASSESSEE WAS GIVEN WORK OF DEVELOPMENT OF INFRASTRUCTURE FACILITY. HOWEVER, AS PER OUR CONSID ERED VIEW, THESE LETTERS OF THE DEPARTMENT ARE REQUIRED TO BE READ ALONGWITH THE DETAILED TERMS AND CONDITIONS OF THE MAIN AGREEMENT /CONTRACT ENTERED BY THE ASSESSEE WITH THESE DEPARTMENTS WHILE ALLOTMENT OF WORK. 14. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED IN PART FOR STATISTICAL PURPOSES. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 8 TH JUNE, 2012. 20 3.1 HOWEVER, KEEPING IN VIEW THE AFORESAID ORDER OF T HE TRIBUNAL DATED 8.6.2012 AND THE OBSERVATIONS MADE THEREIN, IDENTICALLY, WE REMAND THIS APPEAL TO THE FIL E OF THE LD. ASSESSING OFFICER TO EXAMINE THE CLAIM OF THE ASSE SSEE IN THE LIGHT OF THE AFORESAID ORDER AFRESH AND DECIDE ACCORDINGLY AS PER LAW AFTER PROVIDING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD. FINALLY, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTIC AL PURPOSES ONLY. ORDER WAS PRONOUNCED IN THE PRESENCE OF LEARNED REPRESENTATIVES OF BOTH SIDES AT THE CONCLUSION OF TH E HEARING ON 13.9.2012. SD SD (R.C.SHARMA) (JOGINDER S INGH) ACCOUNTANT MEMBER JUDICIAL MEMBE R DATED: 13 TH SEPTEMBER, 2012 COPY TO: APPELLANT, RESPONDENT, CIT, CIT(A), DR, GU ARD FILE !VYS!