Appeal Details
Counselvise Citation
[2022] 105 COUNSELVISE.COM (IT) 2350 (ITAT-AHMEDABAD)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
12 year(s) 2 month(s) 8 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
12-05-2022
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
C
Assessment Year
2006-2007
Appeal Filed On
04-03-2010
Judgement Text
आयकर अपील य अ धकरण, अहमदाबाद यायपीठ । IN THE INCOME TAX APPELLATE TRIBUNAL, “C” BENCH, AHMEDABAD BEFORE SHRI (Dr.) ARJUN LAL SAINI, ACCOUNTANT MEMBER AND Ms. MADHUMITA ROY, JUDICIAL MEMBER Sr.No. ITA No(s). Asstt. Year(s) 1-4 118/Ahd/2009 441/Ahd/2011 442/Ahd/2011 3254/Ahd/2011 : : : : 2002-03 2004-05 2007-08 2008-09 5-9 1385/Ahd/2012 3126/Ahd/2013 2917/Ahd/2016 2334/Ahd/2014 1499/Ahd/2018 : : : : : 2009-10 2010-11 2010-11 2011-12 2011-12 10-11 1281/Ahd/2016 2916/Ahd/2016 : : 2012-13 2013-14 12-13 2201/Ahd/2018 2202/Ahd/2018 : : : 2015-16 2016-17 14 CO No.195/Ahd/2015 IN ITA No.2765/Ahd/2015 : 2008-09 Rajkamal Builders Infrastructure P. Ltd. 54, Park Hill Society, Opp: Karnavati Club Nr. Heaven Park, Ramdevnagar, Ahmedabad PAN : AABCR 0326 A. ...Appellant Versus DCIT, Cir.5/ JCIT(OSD), Cir.3(1)(2) Ahmedabad ...Respondent A N D Sr. No. ITA No(s). Asstt. Year(s) 1 2489/Ahd/2009 : 2005-06 ITA.No.441/Ahd/2011 and 20 Others Rajkamal Builders Infrastructure P.Ltd. 2 2 722/Ahd/2010 : 2006-07 3 1966/Ahd/2012 : 2007-08 4 2765/Ahd/2015 : 2008-09 5-6 199 and 2706/Ahd/2016 : : 2009-10 2010-11 7 595/Ahd/2018 : 2011-12 DCIT, Cir.5 Ahmedabad ...Appellant Versus Rajkamal Builders Infrastructure P.Ltd. 54, Park Hill Society, Opp: Karnavati Club Nr. Heaven Park, Ramdevnagar, Ahmedabad PAN : AABCR 0326 A. ...Respondent Assessee by : Shri M.K. Patel, Advocate Revenue by : Shri A.P. Singh, CIT-DR and Shri V.K. Singh, Sr.DR स ु नवाई क तार ख/Date of Hearing : 20/04/2022 घोषणा क तार ख /Date of Pronouncement: 13/05/2022 आदेश/ O R D E R PER MADHUMITA ROY, JUDICIAL MEMBER: This bunch of appeals filed by the assessee and Revenue are directed against the orders passed by the Ld. CIT(A)-XI, Ahmedabad on different dates. Since issues involved in these appeals are identical and in respect of the same assessee, entire bunch of appeals are heard analogously and are being disposed of by this common order for the sake of convenience. ITA.No.441/Ahd/2011 and 20 Others Rajkamal Builders Infrastructure P.Ltd. 3 2. A perusal of the grounds of appeals, it would indicate that there are certain common grounds, in both the assessee’s appeal and the Revenue’s appeals which are as follows– i) Common ground raised in all the appeals of the assessee is, denial of claim of deduction under section 80IA(4) of the Income Tax Act, 1961 by treating the assessee-company as a ‘Contractor’ and not ‘Developer’ by the Department. However, the Revenue is challenging the action of the ld.CIT(A) in granting deduction under section 80IA(4) of the Act for the Asst.Year 2005-06 and 2006-07. ii) Revenue is also challenging deletion of penalty imposed under section 271(1)(c) of the Act for the Asst.Years 2007-08 to 2010- 11. While, the assessee challenges imposition of penalty under section 271(1)(c) of the Act for the Asst.Year 2010-11. iii) The second main ground in respective appeals is with regard to disallowance of interest income and other income as not eligible for deduction under section 80IA(4) of the Act. iv) Challenge is also made in some of the years that loss of eligible sites are not to be set off against profits of eligible sites for computing deduction under section 80IA(4) of the Act. v) In some of the years, the assessee is also aggrieved by the Revenue in disallowing of interest under section 36(1)(iii) of the Act. vi) There are some other residuary grounds in some of the years, which shall be dealt with accordingly. 3. Since the issues raised in all these appeals revolve around similar set of facts, for the convenience of adjudication, we would like to take up ITA ITA.No.441/Ahd/2011 and 20 Others Rajkamal Builders Infrastructure P.Ltd. 4 No.441/Ahd/2011 for the Asstt.Year 2004-05 and cull out facts, figures therefrom and the relevant orders under challenge. The grounds raised in this appeal read as under: “1. That on facts and in law the learned Commissioner of Income- tax (Appeals) has grievously erred in upholding the assessment order and rejecting the claim of deduction under section 80IA(4) of the Act of Rs.1,95,62,210/-. 2. That on facts and evidence on record it ought to have been held that the appellant has satisfied all the conditions prescribed under section 80IA(4) of the Act and it ought to have been held that the appellant is a developer of infrastructure facilities and entitled to the deductions as claimed for. 3. That on facts and in law the learned CIT (Appeals) has grievously erred in holding that the interest income and other income of Rs.65,58,550/- is not eligible for deduction under section 80IA(4) of the Act. 4. That on facts and evidence on record it ought to have been held that the entire income is derived from business of industrial undertaking and as such entitled for deduction as claimed for. 5. That in the alternate and without prejudice to the above grounds, it ought to have been held that only the net income i.e. gross income less expenditure incurred ought to have been excluded for the purpose of granting of deduction under section 80IA(4) of the Act. 6. That the learned CIT (Appeals) ought to have deleted the interest levied under section 234B and 234C of the Act instead of giving only consequential relief.” 4. In Ground No.1 and 2, the grievance of the assessee is this that the Ld. CIT(A) erred in upholding the order of passed under section 143(3) read with section 263 of the Income Tax Act, 1961 whereby and whereunder the claim of deduction under section 80IA(4) of the Act has been rejected on the ground ITA.No.441/Ahd/2011 and 20 Others Rajkamal Builders Infrastructure P.Ltd. 5 that the assessee is not a developer, but a ‘contractor’ since the assessee has merely executed the contract for the various sites awarded by various entities. 5. Brief facts of the case is this that the assessee is a Private Limited Company, engaged in the business of development, operation and maintenance of infrastructure facilities such as development of roads, bridges, water treatment plants, canals, siphon work (irrigation projects), sewage treatment plant etc. by entering into contract with various Government authorities. Original return of income was filed on 1.11.2004 declaring total income at Rs.78,69,170/-. The return was finalized under section 143(3) of the Act on 30.11.2006 determining total income at Rs.1,86,13,536/-. By doing so, the ld.AO has restricted the deduction under section 80IA/80IB of the Act to Rs.79,00,417/- as against Rs.1,86,44,783/- claimed by the assessee, which in turn stood deleted by the Ld.CIT(A). Subsequently, the Ld. Commissioner of Income Tax noticed that assessment framed by the AO under section 143(3) of the Act was erroneous and prejudicial to the interest of the Revenue on ground that the AO, while passing the order, had not verified facts of the case and relevant materials in respect of entitlement of deduction claimed by the assessee under section 80IA of the Act and did not make through investigation on the following issues: i) Claim of the assessee u/s.80IA of rs.1,07,44,366/-, it comes out from the facts of the case that the assessee did not own the land on which he had constructed building. It was also seen that he was acting as a mere contractor carrying out construction activity and was not making any effort beyond mere construction of flats/houses for some other entity; ii) The assessee had earned substantial interest income from bank deposits and other deposits. It had adjusted/netted interest expenses against the said income. The deduction under section 80IA had then been claimed against the said net interest income; ITA.No.441/Ahd/2011 and 20 Others Rajkamal Builders Infrastructure P.Ltd. 6 iii) Expenses incurred against earning of exempt income had to be identified and disallowed u/s.14A. 6. Pursuant to the 263-order, after hearing the assessee the ld.AO completed assessment under section 143(3) r.w.s. 263 whereby the claim of the assessee among other, under section 80IA/80IB was disallowed, since according to the AO, the assessee merely executed work awarded by the local authorities, AUDA and other state government undertakings, assessee fall under the category of “work contractor” and not as “developer”. This finding was confirmed by the First Appellate Authority. Hence, the instant appeal before us. 7. The Ld. Counsel for the assessee reiterated submissions as were made before the Revenue authorities. He further submitted that the assessee has executed construction and development of infrastructure facilities by entering into agreement with State or Central Government, local authority, statutory body etc. These activities include sewage treatment plant, siphon work, toll road, over bridge etc. He also contended that the assessee has fulfilled all the conditions as mentioned in section 80IA(4)of the Act and in denying the claim of the assessee, the AO wrongly construed that assessee is a ‘contractor’ and not carried out any development activity. He further submitted that for the Asst.Year 2005-06 and 2006-07, the Ld.CIT(A) allowed the similar claim of the assessee. He further submitted that though the expression ‘works contract” has not been defined in the Act but various judicial pronouncements examined the issue and held that the term has wider meaning so as to state that if the activities carried out by the assessee involve development of project, engagement of various agencies, undertaking risk element, raises own finances and invests its own funds in the construction of the project, then the case of the assessee falls within the meaning of expression “developer”. A perusal of the tender documents clearly shows that ITA.No.441/Ahd/2011 and 20 Others Rajkamal Builders Infrastructure P.Ltd. 7 the assessee has to arrange own finances, purchase own plant & machinery and purchase all materials at own cost, deploy of qualified personnel for construction and development of infra projects. The authorities gave only general specifications for the project. However, for the specific drawings & designs recommended by the assessee, the same has to be approved by the competent authority and becomes part of the tender. Further that once the tender is awarded, the assessee has to pay earnest money, security deposits, performance guarantee by placing fixed deposits with banks. The assessee is also liable for liquidated damages/penalty, free maintenance and repair during defect liability period. During the construction of project, the assessee has to make all the arrangements and is liable for procurement of water, electricity, all materials, skilled, semi-skilled staff, labourers, plant & machinery, equipments& tools, and also wellbeing of the staff/labourers. A perusal of the books of accounts reveals that the assessee has arranged own finance to the extent of Rs.28,99,17,693/- and fixed assets shown on plant & machinery worth of Rs.2,07,53,968/-; profit & loss account also demonstrates purchase and consumption of material. He submitted that the assessee is always burdened with financial risk to carry out the project work on own cost with the fixed rate specified in the tender. The payment would be made by the competent authority only after successful completion of the project, project certification etc. and that too after deduction of the retention money. The construction and development of infrastructure projects is highly technical and required special skill, adherence to quality etc. which lasts for two to five years depending on the type and size of the project. Moreso, the assessee is not compensated for increase in prices of materials, cost of labourers, overhead expenses etc. and as a result whereof many times, the assessee has to incur heavy loss too in various projects. These facts clearly demonstrate that the financial and other risk, responsibility, obligations is undertaken by ITA.No.441/Ahd/2011 and 20 Others Rajkamal Builders Infrastructure P.Ltd. 8 the assessee in construction and development of the various infrastructure projects. Hence, as per the ratio of the jurisdictional High Court in the case of Radhe Developers (supra), the assessee is not merely a works contractor, but is engaged in development of project as a whole, and therefore, entitled for claim of deduction under section 80IA(4) of the Act. The Ld. Counsel for the assessee further relied on the following decisions to support his case: “1. Patel Infrastructure (Rajkot ITAT) ITA No.627/Ahd/2014, Dated 30/07/2020 2. Katira Construction Ltd.(Rajkot ITAT) [2020] 119 taxmann.com 489(Rjt) 3. S.Sugam Construction P.Ltd.(And ITAT) (2013) 30 taxmann.com 331 (Ahd) 4. Bhinmal Contractor Property and Land Developers P.Ltd.(Mumbai ITAT) [2018] 93 taxmann.com 296 (Mum) 5. Rohan & Rajdeep Infrastructure (Pune ITAT) [2013] 40 tax.com 136 (Pune) 6. ABG Heavy Industries Ltd.(BOM HC) [2010] 189 taxman.com 54 (Bom) 7. Koya& Co. Construction P.Ltd. [2012] 21 taxmann.com 35 (Hyd.ITAT) 8 . GVPR Engineers Ltd. [2012] 21 taxmann.com 25 (Hyd ITAT) 9. B.T. Patil & Sons Belgaum Construction P.Ltd. [2013] 34 taxmann.com 97 (Pune ITAT)” 10. Radhe Developers Vs.CIT, 341 ITR 403 (Guj) 8. On the other hand, the Ld. DR supported the orders of the Revenue authorities. He has also filed a detailed written submissions dated 27.4.2022, which we will analyse the appropriate stage. ITA.No.441/Ahd/2011 and 20 Others Rajkamal Builders Infrastructure P.Ltd. 9 9. We have heard the rival submissions made by the respective parties; we have also perused the relevant materials including the orders passed by the authorities below. It appears from the record that the Ld. AO has denied deduction claimed under section 80IA(4) of the Act by holding that the assessee has acted as work-contract in the project awarded by the statutory bodies. The Ld.CIT(A) while upholding finding of the AO on this issue, also taken into consideration the submissions of the assessee as made before us. 10. It was further noted by the ld.CIT(A) that the similar claim raised by the assessee for the Asst.Year 2003-04 was allowed by his predecessor and granted deduction under section 80IA(4) of the Act. Further that it appears from the impugned order under challenge that in view of Explanation inserted after section 80IA(13) by Finance (No.2) Act, 2009 with effect from 1.4.2000, the Ld. CIT(A) deviated from the stand taken by his predecessor and confirmed order passed by the Ld. AO by holding that the assessee is a “work-contractor” and not a “developer”. For this conclusion, he has considered decision of ITAT, Mumbai Bench in the case of B.T. Patil& Sons Belgaum Construction P. Ltd. Vs. ACIT, 126 TTJ 577 and Patel Engineering Ltd. Vs. DCIT, 84 TTJ 646 and further decision of ITAT, Rajkot Bench in the case of Tarmat Bel (JV) KCL, Rajkot, ITA No.1111/RJT/2010 as relied upon by the assessee. However, the Ld.CIT(A) came to a finding that the judgment passed in the case of B.T. Patel& Sons (supra) was not applicable to the case of the assessee. Further that, decision of Rajkot Bench relied upon by the assessee was decided on different set of facts. We find the following was submitted by the assessee before the Ld. CIT(A): "EXPLANATION REGARDING DEDUCTION U/S. 801A AFTER CONSIDERING EXPLANATION INCORPORATED BY FINANCE BILL 2009 W.R.F. A. 01 ITA.No.441/Ahd/2011 and 20 Others Rajkamal Builders Infrastructure P.Ltd. 10 Sir, the Provisions relating to deduction for developing, maintaining and operating a new infrastructure facilities were introduced w.e.f. A.Y. 1996- 97 by introducing Sub-section (4A) in Section 80-IA. At that time one of the statutory conditions was that the enterprise must have entered an agreement with Government authority for developing, maintaining and operating the new infrastructure facilities which shall be transferred to Government authority after a stipulated period as mentioned in the agreement. In the explanatory statement of Budget of 1995-96, it is specifically mentioned that infrastructure projects on BOOT(Built Own Operate Transfer) OR BOT (Built Operate Transfer) are eligible for deduction U/s. 80IA. Copy of relevant pages of Budget 1995-96 is enclosed herewith (ANNEXURE-1). The Provision of section 80IA(4) were modified by the Finance Act, 1999 w.e.f. A.Y.2000-01. As per the modifications, the enterprise carrying on the business of (i) developing, (ii) maintaining and operating or developing, (iii) maintaining and operating any infrastructure facility were eligible for deduction. Hence enterprise which was either developing or maintaining and operating were also became eligible for deduction U/s. 80IA w.e.f. A.Y.2000-01. However the condition for transferring the infrastructure facilities to the Government authority was not modified, i.e. projects under BOT/BOOT were only eligible for deduction U/s. 80IA. The Provision of section 80IA(4) were further implied by Finance Act 2001 w.e.f. A.Y.2002-03. As per the modifications, the enterprise carrying on the business of (i) developing or (ii) operating and maintaining or (iii) developing, operating and maintaining any infrastructure facility were eligible for deduction. Moreover the condition for transferring the infrastructure facilities to Government Authority was done away. Hence infrastructure projects for which agreement for development and/or maintenance/operation have been entered with Government Authorities were also became eligible w.e.f A.Y.2002-03. So the concept of BOT/BOOT was done away. Hence the appellant was eligible for deduction U/s. 80IA for developing various projects w.e.f A.Y.2002-03. Copy of relevant pages of budget speech, explanatory statement and memorandum regarding delegated legislation of 2001-02 is enclosed herewith (ANNEXURE-2). The explanation was introduced to clarify the provisions of Section 80IA so that a person who executes a work contracts entered into with the undertaking orenterprise referred to the said section were not eligible for deduction w.r.e.f. A.Y.2000-01. In memorandum explaining the provision in the finance bill 2307, the following words is used. "Thus in a case where a person makes the investment and himself executes the development work i.e. carries out the civil construction Work, he will be eligible for tax benefit U/s. 80IA." In contrast to this. " a person who enters into a contract with another person (i.e. undertaking or enterprise referred to in section 80IA for executing works contract, will not be eligible for the ITA.No.441/Ahd/2011 and 20 Others Rajkamal Builders Infrastructure P.Ltd. 11 tax benefit U/s. 80IA". Copy of relevant pages of finance bill 2007 is enclosed (ANNEXURE-3). The said explanation is again modified by Finance Bill 2009 w.r.e.f.A.Y.2000-01 so that the person who carries out works contract is not eligible for deduction U/s. 80IA. Copy of explanatory statement is enclosed herewith (ANNEXURE-4). Hence as per the modified provisions, enterprise carrying out works contract is not eligible for deduction U/s. 80IA (4). However the term works contract is no defined in the Act. Works contract may be defined as work executed by contractor for which whole or major materials is supplied by the contractee. The works contract has a specified connotation in the tax law. The Hon'ble Patan High Court in case of Ramesh Chandra Chaturvedi vs. CIT (PATNA) 121 IT 116 (1980) has defined the term works contract as under: "Works contract in which contractor undertakes to supply only the labour. The contractor is not at all concerned with the materials used in the contract. He just puts the materials in form in which he is asked to do and charges only for labour' Copy of judgment is enclosed (ANNEXURE-5). Since the appellant has developed the infrastructure facilities appellant is eligible for deduction U/s. 80IA(4) even after considering the explanation incorporated by Finance Act, 2009." In the case of Ramesh Chandra Chaturvedi (Supra), while dealing with different forms of contract, it was held in para 7 that in works contract the contractor undertakes to supply only the labour. The contractor is not at all concerned with the material used in the contract. He just puts materials in the form in which he is asked to and charges only for labour. 2.1.5. Over and above, during the course of appeal proceedings, the A. has also filed further written submission. The same are reproduced hereunder. Judgment of Mumbai Tribunal in case of M/s. B. T. Patil & Sons Belgaum Construction (P) Ltd Vs. ACIT reported in 126 TTJ 577: Sir the Hon'able Mumbai Tribunal in above referred case has held that the company is not eligible for deduction U/s. 80 IA for A.Y. 2000-01 and A. Y. 2001-02. As discuss in detailed on page no. 30 to 36 of our submission dated 10th July, 2010, up to A. Y. 2001-02 the deduction U/s. 80IA is available to assess ee company who develops infrastructure facility on BOOT/EOT basis only. The projects carried out by the company (B. T. Patil .....) were not on BOOT or BOT basis. Hence, the Mumbai Tribunal has held that the assessee is not eligible for deduction U/s. 80IA. ITA.No.441/Ahd/2011 and 20 Others Rajkamal Builders Infrastructure P.Ltd. 12 Sir, due to modification in Section 80 IA, w.e.f. A. Y. 2002-03, development of infrastructure facility other than BOOT and BOT were also became eligible for deduction U/s. 80IA. Sir the appellant company has started claiming deduction U/s. 80IA w.e. f. A. Y. 2002-03 and appellate authorities has granted deduction U/s. 80 IA for all the years. Since the provisions for deduction U/s. 80IA for A. Y. 2000-01 and 2001-02 are different for A. Y. 2002-03 and subsequent years, the case of B. T. Patil is not applicable to the appellant company. The Judgment of ITAT. Raikot Bench in case of Tarmat Bel (JV) KCL. Rajkot Vs. ITO (ITA No. 1111/RJT/2010) for A. Y. 2007-08 : Sir, the ITAT Rajkot Bench in above referred case has held that the assessee is eligible for deduction U/s. 80IA even after considering the judgment of B. T. Patil and after considering the retrospective amendment in explanation. The major grounds for allowing deduction U/s. 80IA to the assessee is as under: a) the assessee in previous years has been allowed deduction U/s. 80IA after examining the nature of business; b) the assessee has entered into agreement for development of infrastructure facility with the Govt. authorities and has developed infrastructure facilities; c) the explanation clearly refers to the business in the nature of works contract and the explanation is limited in the scope the deduction U/s. 80IA cannot be denied; d) any provision granting rebate or benefit to the assessee should be liberally construed generally in favour of assessee; e) the appellant in this case has directly entered agreements with the Govt. authorities and it employed various resources of its own by way of machineries, technical knowledge, technical and other manpower, materials, finance etc.; From the above it is clear that the appellant is entitled for deduction U/s. 80IA. Copy of order of the Rajkot Tribunal is enclosed herewith. In the light of the facts and above legal position, it is prayed that the disallowance of Rs. 1,30,03,660/- U/s. 80IA and disallowance of Rs. 65,58,550/- may kindly be deleted.” 11. After considering the above submissions and the materials made available to the First Appellate Authority, the following finding was made by the Ld. CIT(A) while rejecting the claim of the assessee: “2.2. I have given my careful consideration to the provisions of section 80IA(4), the facts of the case, the A.O's finds and the written submission of ITA.No.441/Ahd/2011 and 20 Others Rajkamal Builders Infrastructure P.Ltd. 13 the appellant. It is seen that in the earlier years, appellant was held by this office to be 'developer' and eligible for deduction u/s. 80IA(4) by placing reliance on the decision of Patil Engineering Ltd vs. DCIT 84 TTJ 666 (Mumbai). However as on the date of passing of the said orders, the benefit of the Third Member decision cited at 126 TTJ 577 discussed below was not available. In this decision, the Mumbai Tribunal elaborately discussed the newly inserted Explanation below 80-IA(13) (by the Finance (No.2) Act, 2009 w.e.f. 01-04-2010) and overruled the decision cited at 84 TTJ 666 (supra). In the said case of B.T.Patil& Sons Belgaum Construction (P) Ltd vs. ACIT (TM) - 126 TTJ 577 it is held as under :- " Intention of the legislature is not to provide deduction under s. 80- IA(4) to anyone except the person or authority which is directly engaged in developing, maintaining and operating the infrastructure facility infrastructure facilities in respect of which the assessee is claiming deduction, are being set up by the State Government(s) or local/statutory authorities and the assesses is simply engaged in some construction work, thereby contributing partly in the attainment of the object of developing the infrastructure facility; under such circumstances it does not qualify for deduction within the framework of sub-s.(4)(i) itself; position has further been clarified by substitution of Explanation below s. 80IA with retrospective effect. Given the fact of appellant executing contracts awarded by State Government undertakings, local authorities like AUDA and in the light of the above decision, appellant cannot be said to be eligible for deduction u/s. 80IA(4). In view of the above-mentioned categorical finding of the Third Member of Mumbai Tribunal, the contentions of the appellants are not tenable. In the decision of Rajkot bench relied on by the appellant, the issue was decided on different facts. The said decision cannot overrule the Mumbai Tribunal's decision. 2.2.1. Therefore, A.O's action in disallowing deduction u/s.80IA(4) is upheld. These grounds of appeal are dismissed.” 12. At this juncture, therefore, deliberation is required on the main issue as to whether the assessee is entitled to the deduction claimed under section 80IA(4) of the Act even after the Explanation inserted after sub-section 13 of section 80IA of the Act by the Finance (No.2) Act 2009 w.e.f. 1-4-2000. The Explanation reads as follows: Explanation.—For the removal of doubts, it is hereby declared that nothing contained in this section shall apply in relation to a business ITA.No.441/Ahd/2011 and 20 Others Rajkamal Builders Infrastructure P.Ltd. 14 referred to in sub-section (4) which is in the nature of a works contract awarded by any person (including the Central or State Government) and executed by the undertaking or enterprise referred to in sub- section (1). 13. The above explanation has denied the benefit of deduction under section 80IA(4) of the Act to a person who executes a project which is in the nature of works contract. In that view of the matter, the first and foremost condition imposed upon an assessee is to establish that he worked not as ‘work contractor’, but as a ‘developer’. 14. On the other hand, a 'contractor' is a person who undertakes work on a contract basis. He does not assume risks and responsibilities like that of a developer. He merely carries out the work as has been instructed to him by the principal. Moreover, in case of such work the contractor gets fixed amount of revenue for executing such work and is not entitled to any share of profit from revenue generated by the developer/land owner. In other words, the developer acts as a principal whereas the contractor acts as an agent in performing the functions as required by the developer. The developers, in true sense, are the persons who are carrying out the business of developing or operating and maintaining or developing, operating and maintaining the infrastructure facility whereas the contractors are those persons who merely execute part of these functions on behalf of developer and do not own any risks and responsibilities of the work. In such cases, the contractors may not be eligible for the deduction under section 80-IA of the Act as they are not developing any infrastructure facility but only providing assistance to the actual developer. 15. In view of the above, in order to ascertain whether a civil construction work is assigned on development basis or contract basis only the terms and conditions of the agreement needs to be considered. Only on the basis of the ITA.No.441/Ahd/2011 and 20 Others Rajkamal Builders Infrastructure P.Ltd. 15 terms and conditions and the scope, ambit and nature of the contract assigned it could be ascertained whether it is a "work contract" or a "development contract”. The right and obligations of the assessee in the projects implemented by the assessee on behalf of the Government entities is also required to be examined. Our this approach has also been strengthened by the observation made by the Rajkot Bench in the matter of Patel Infrastructure Pvt. Ltd. Vs. DCIT, ITA No.627/Ahd/2014, Asst.Year 2010-11. We, therefore proceed to analyse the facts of the present case to find out whether the assessee is acting as a “Developer or “Contractor”. 16. We firstly proceed to deal with the financial involvement, risk factors and the liability involved in the project undertaken by the assessee for construction and development of infrastructure projects. For this purpose, we first take up the project viz. “Sewage Treatment Plant at Vasna, Ahmedabad undertaken by the assessee, which was awarded by the Ahmedabad Municipal Corporation for the year under consideration. 17. It is an admitted fact that the assessee-company is registered as category “AA” contractor with Government of Gujarat for construction and development of infrastructure projects. The assessee has submitted tender documents bearing contract No.483/AMC/NRCP in respect of “Sabarmati River Action Plan” under the National River Conservation Directorate, Ministry of Environment & Forests, which was awarded to the assessee by the AMC. It can be seen from pages 28 to 33 of the said Tender brochure filed before us that in order to participate in the contract bid, there are certain criterion to be fulfilled. According to which, the bidding-party can only be eligible if they have necessary experience, facilities, ability, financial ITA.No.441/Ahd/2011 and 20 Others Rajkamal Builders Infrastructure P.Ltd. 16 resources, specified turnover, specific experience in construction and maintenance of sewage treatment plant, necessary personnel and plant & machinery etc. to perform the said work assigned and prescribed in the Tender Notice. 18. Clause-1 at page no.29 of the said Tender notice clearly speaks about general specification to be given by the respective authorities. However, the specific drawings & designs are recommended by the Contractor which shall be approved by the Competent Authority and shall form part of the accepted tender. Page No.95 & 96 of the Tender notice, further clarifies that the assessee has to arrange necessary requirement for water, electricity connection, cement and other required qualitative materials at its own cost. It is pertinent to mention that page No.16 of the paper book filed by the assessee contained profit & loss account, which reflected total material consumed during the year under consideration was of Rs.14,82,47,213/- and creditors for goods are of Rs.2,10,12,846/- as per the Balance Sheet annexed at page No.15 of the paper book. Apart from that Clause-15, page No.111 clearly specified that various materials and mix are also got to be tested by the assessee at its own cost from time to time at Government approved laboratories. 19. It is also a fact that assessee has to arrange own finance by raising adequate capital, reserves & surplus, secured & unsecured loans, which as per the Balance Sheet is of Rs.28,99,17,693/- raised by the assessee for the year under consideration. The assessee has to use and invest heavily in purchasing own plant & machinery equipments etc. in order to qualify for bid for tender and carry out the development of various projects. In this respect, the gross block of assets to the tune of Rs.2,07,53,968/- is reflected at page No.19 in the Schedule annexed to the paper book. The assessee has to employ own team of experience and qualified Project Manager, Construction Engineers and ITA.No.441/Ahd/2011 and 20 Others Rajkamal Builders Infrastructure P.Ltd. 17 arrange for skilled, semi-skilled and unskilled workers as stipulated in clause 1.4 of the tender (page No.30). 20. So far as financial aspect is concerned, it appears from the tender documents that for construction, commissioning and trial run of 126 MLD capacity sewage treatment plant at Vasna, Ahmedabad including operation and maintenance for 36 months, the estimated cost was Rs.292,594,995/-, and one percent of which being Rs.29,25,949/- was to be deposited as earnest money by the assessee in accordance with Memorandum of Working. The assessee was to deposit security deposit at the rate of 5% of the contract value, which shall be released 12 months after satisfactory completion of construction, trial runs, commissioning and start-up period; in fact which put together would take 36 months for the assessee to get earnest money back. This aspect is stipulated in Clause (iv)(v) of the Tender notice appearing at page No.42. Apart from that, if at the completion of 50% time limit, progress is not maintained proportionally, the contractor shall have to produce additional security deposit of the same amount i.e. another 5% of the total tender amount to assure the completion of the work- in-balance time limit. As per clause (v) provided at page No.43 of the tender documents, the retention money has been specified to be deducted at 10% from the current bills and shall be released over a period of three to five years in the following stages: At the end of First year of proper Operation & Maintenance period which starts after completion of Construction, Trial Runs, Commissioning, Start-up period i.e. (18+6+12 months from the award of work). 20% of total Retention Money. At the end of Second year of proper Operation & Maintenance 30% of total Retention Money. ITA.No.441/Ahd/2011 and 20 Others Rajkamal Builders Infrastructure P.Ltd. 18 period which starts after completion of Construction, Trial Runs, Commissioning, Start-up period i.e. (18+6+12 months from the award of work). At the end of Third year of proper Operation & Maintenance period which starts after completion of Construction, Trial Runs, Commissioning, Start-up period i.e. (18+6+12 months from the award of work). 50% of total Retention Money. 21. Apart from that, Performance Guarantee should be paid at 5% of the contract value in addition to the security deposit before signing the contract, as per Clause-(vi) of the memorandum. It was further specified in the Memorandum that in the event the Contractor fails to complete work by stipulated completion date, a penalty at the rate of 0.5% of the contract value per week or part thereof for delay in completion and handing over to the Department, shall be paid by the assessee-company. The same term is stipulated at Annexure-V of section B2 of the Tender Notice. One year free maintenance and guarantee period from the certified date of completion of work has been provided. This stipulation contained in clause 17A, page No.51 and 98 of the Tender documents. 22. So far as safety measures are concerned, the terms also stipulated that the assessee has to arrange for labours and also responsible for safety of all the concerned. In this regard the assessee has to take Workmen Compensation Insurance and also liable to pay compensation as per clause 36, page No.57. The assessee is directed to employ only such labourer who shall produce a valid certificate of having been vaccinated against small- pox/cholera within a period of last three years. For that, the Contractor shall ITA.No.441/Ahd/2011 and 20 Others Rajkamal Builders Infrastructure P.Ltd. 19 be responsible for and shall pay expenses for providing medical aid to any workmen who may suffer a bodily injury as a result of an accident. 23. As per Clause 37A [page no.58 of Tender document (“TD”for short)]the contractor shall provide all necessary personal safety equipment and first aid apparatus available for the use of the person employed on the site and shall maintain them in the same condition suitable for immediate use at any time and shall comply with certain regulations stipulated under the same Clause. Sufficient numbers of huts on suitable plot of land for the use of the labourers as per the specification provided in the TD has to be built by the contractor i.e. the assessee herein. The assessee has to provide drinking water, proper sanitation, drainage, rest rooms etc. as stipulated in different clauses of the TD. In fact, it is a like a colony on a temporary basis to be set up by the assessee and to provide other facilities as mentioned hereinabove as per the terms conditions stipulated in the contract. In the event of default, the contract will be cancelled by forfeiture of security deposits and penalty to be imposed thereon. Apart from that, the assessee shall have to provide and ensure the safety of site equipments, meaning thereby, construction of shed for storing material at work site having double locking arrangement. Further, the contractor has also to provide suitable scaffolds and working platforms, gangways, stair-ways and shall comply with all types of safety measures as envisaged in Clauses 21 and 21A of page No.52 of TD. In terms of Clause- 22 of the TD, the contractor shall not set fire to any standing general trees, bush, wood or grass without written permission and shall have to take necessary measure to prevent fire spreading or otherwise damaging surrounding property. The Contractor will be liable for any damage done in or outside work area. This stipulation contained in Clause-23 Page No.55 of the TD. ITA.No.441/Ahd/2011 and 20 Others Rajkamal Builders Infrastructure P.Ltd. 20 24. The contractor is to provide, erect and maintain barricade including signs and comma, markings, flats, lights and flagment as specified under Clause-20.4 of the TD. Thus, it appears that in order to fulfill the criteria for successful bidder in the tender awarded for developing, operating and maintaining infrastructure facilities, the Contractor needs to take all necessary measures for safety of traffic during construction. Needless to mention that in the event the assessee defaults in working or violates any contractual obligation, it shall be liable to penalty in terms of lien of Government over the plant, machinery and equipments and forfeiture of security deposits etc. These stipulations are provided in Clause-3, page No.30 of the TD. 25. The case made out by the assessee in support of claim under section 80IA(4) of the Act is mainly on the basis of TD i.e. contract/agreement between the assessee and the statutory bodies. Further that upon going through the entire documents, we find that in respect of each project, the assessee was issued work-order. The details mentioned therein further support the case of the assessee that the assessee is working as “developer” of infrastructure project awarded by the statutory bodies. We will be dealing with the same at the appropriate level. 26. The Ld. DR submitted written submission dated 27.4.2022 in support of the case made out by the Revenue for rejecting the claim of the assessee under section 80IA(4) of the Act. The said written submissions read as under: “2. The above cases came up for hearing on 20/4/2022. As directed by Hon'ble bench, I am filling the written Submission (Two sets) in the above appeal for kind consideration while adjudicating the case. The same may kindly be taken on record. 3. The assessee is a pvt. Ltd. Company engaged in carrying out various contract work for Govt. and local bodies and claimed deduction u/s. 80IA(4) for the A.Y.s in question. ITA.No.441/Ahd/2011 and 20 Others Rajkamal Builders Infrastructure P.Ltd. 21 4. A perusal of the above section, shows that deduction u/s. 80IA for are indeed available to an assessee whose gross total income includes profits and gains derived by an undertaking for businesses referred in sub section (4) of section 80IA. It is also evident that development of an airport is included as a business activity in the explanation to sub section (4). It is however seen that the explanation placed at the bottom of section 80IA introduced by Finance Act, 2009 with retrospective effects w.e.f. 1-4-2000 provides that provisions of section 80IA(4) shall not apply to a business which is in the nature of works contract awarded by any person including Central or state Government and executed by the undertaking or enterprise referred to in sub-section(l). It is pertinent to note that the said explanation which was originally introduced by Finance Act, 2007 read as "for the removal of doubts, it is hereby declared that noting contained in this section shall apply to a person who executes a work contract entered into with the undertaking or enterprise as the case may be...." By the Finance Act, 2009 the said explanation was amended conveying that "for the removal of doubts, it is hereby declared that noting contained in this section shall apply in relation to a business referred to in sub sec (4) which is in the nature of a works contract awarded by any person including Central or State Government and executed by the undertaking or enterprise referred in sub section (!)....". Thus, as far as legal stipulations are concerned, it is crystal clear that the deduction u/s. 80IA(4) is not available to a person who executes a contract which has been awarded by a Central or State Government. 5. Hence the main issue in dispute therefore emerges is as to whether the appellant, by virtue of facts of the present case is a 'contractor' or not? and whether the appellants claim of being a 'developer' is correct. Incidentally, the word contractor and developer have hot been defined in the act. As far as etymological meaning of the word 'contractor' is concerned. Webster's new world college dictionary defines a contractor as a person who works on an "as needed" basis for a stipulated amount of money. Again, a developer is defined as a person, who develops some new article or thing by utilizing his resources either himself or through a contractor. The contractor would be a person who works on the terms and conditions settled with his principle or the person who has awarded him the contract whereas the developer would be the person who is overall owner or protagonist of the work at hand. 6. That the appellant is merely a contractor in this case is abundantly established by several facts which are deeply ingrained in the factual matrix of this case. To begin with Ahmedabad Municipal Corporation (AMC) has taken up Sabarmati River Cleaning Project and invited tender for following works: ITA.No.441/Ahd/2011 and 20 Others Rajkamal Builders Infrastructure P.Ltd. 22 • Interception and diversion of untreated sewage flowing through storm water drains into river Sabarmati. • Construction of Sewage Treatment Plants • Improvement and refurbishment of sewage pumping stations and sewage treatment plants 7. The assessee had successfully awarded the tender by the AMC and had to execute the work as per term and condition of the tender document. 8. The said document clearly stipulates that the appellant was a successful bidder to the said tender and was being awarded the contract to complete the job on the detailed terms and conditions prescribed therein. It is pertinent to note that the para 2.14 of the additional instruction to the tenderer clearly mention that conditions of contract and specification shall be rigidly enforced and no relaxation on the grounds of customs prevailing shall be allowed. Further, para 2.17 stipulates that the tenderer shall be considered to have visited the site of work, fully acquainted himself with the local situation regarding materials, labour, and other factors pertaining to work and studied the plans and estimates before submitting the tender. Further, para B of clause 2.20 clearly mentioned that the contractor shall furnish to the City Engineer, every week during the progress of the work classified weekly returns of the machinery deployed on the site of work during the week. The report of the machinery deployed shall be given in the prescribed forms, failing to which no claim shall be entertained in future regarding the machinery deployed at side. The clause 2.21 of the instruction also binds the assessee (contractor) to submit a weekly medical report of contractor's labour and increase or decrease of labour. The rate of the project was pre decided by the AMC and under no circumstances assessee / contractor be entitled to claim enhanced rate for any item of the contract. In this regard, clause 12, clause 12A, clause 13, clause 14, clause 15 and clause 18 of terms and conditions of contract may kindly be referred which clearly stipulates that, Clause 12; Stores supplied by Municipal Corporation, clause 13; works to be executed in accordance with specifications, drawings, order etc., clause 14; Alterations in specifications and designs not to invalidate contracts, which gives power to Engineer in chief to make any alteration or additions to the original specifications drawings, design and instructions, clause 15: No claim to any payment or compensation for alteration in or restriction of work, clause 18; Works to be open to inspection and supervision of Engineer - in-charge or his subordinate and contractor or responsible agent to be present. Annexure - IV of the term and condition even prescribed the rate of different materials and supply used by the contractor. 9. The above conditions go on to establish that the relationship between the appellant and AMC was that of a contractor and a contractee. The project ITA.No.441/Ahd/2011 and 20 Others Rajkamal Builders Infrastructure P.Ltd. 23 was conceptualized by the AMC with drawings, specifications, materials to be used and contractor / assessee has completed the project under strict monitoring inspections and supervisions of AMC. The argument of the appellant that he is a developer are ill founded in as much as to begin with as discussed above the role of any actual developer was being performed by AMC and not by the appellant. Arguing that the appellant is a developer and not a contract who merely performs civil construction work, it has been argued that since the appellant was responsible for development of the entire Sabarmati River Cleaning Project the appellant has entered the shoes of a 'developer'. The appellant has thus tried to make a distinction between a mere contractor doing civil construction work with a contractor who is interested with a wide and varied gamut of responsibilities. The distinction itself has been found to be flawed. A contractor would be a person who agrees to undertake all the different activities at an agreed rate. In the instant case, the AMC had issued a composite contract to the appellant with the directive of completing Sabarmati River Cleaning Project as per pre decided terms and conditions and under strict supervisions and monitoring as mentioned above. 10. A detailed examination for the voluminous contract awarded by AMC indicates that every bit of work was pre-decided by them with clear stipulation that no deviation shall be made by the contractor being the appellant without prior consent or approval of AMC. The argument of the appellant that its activities under the impugned contract cannot be said to be limited to execution of simpliciter of contractual work because it encompasses work of highly technical and independent nature carried out utilizing its own technical skills. The argument again is flawed since contract was awarded by AMC to appellant only after being satisfied of the technical skills of the appellant. The issue is that the contract was awarded to the appellant only after understanding estimating and appreciating capabilities of the appellant to perform these tasks satisfactorily. Merely because appellant has performed these tasks does not means that the appellant looses the basic character of being just a contractor. The arguments that the appellant is a developer since it was required to arrange for its insurance to protect its risks etc, has liaison with local bodies for getting certain approvals, has provided specialized supervised manpower, prepared drawings and executed them, provided for testing and measuring equipments, prepared CPM / PERT charts, engaged merchandised system of construction etc. etc. have been found to be irrelevant and best a ploy to deviate from the main issue since all these activities were either part of the terms / conditions of the contract, which appellant had agreed with AMC at their time of accepting their tender invitation or were undertaken by the appellant like use of mechanized construction equipments, deployment of highly skilled manpower etc. suomoto so as to improve its own productivity / profitability. The same would not put place him under the domain of a ITA.No.441/Ahd/2011 and 20 Others Rajkamal Builders Infrastructure P.Ltd. 24 developer which is always equated with the owner or controller of the project. 11. For A.Y. 2005-06 the assessee has carried out the contract work of various projects as under: (i) Mahi Weir Scheme across Mahi River. (ii) Palanpur - Widening of over-bridge (iii) Sabarmati River Bridge Work at Kamod. (iv) Re-surfacing of road in western AUDA area. (v) Water Treatment Plants (Kutch). (vi) VatamanPipali Road (vii)Vasna Sewerage Treatment Plant (viii) Ambaji Mata Site Development. During the course of hearing, the assessee has submitted details of above mentioned works as under: (i) Mahi Weir Scheme across Mahi River. The contract work for construction of Weir Diaphragm Walls Training Walls of Mahi Weir Scheme across Mahi River, Nr. Village. Sindhrol, Taluka: Vadodara was taken from the Irrigation Project Division No. 6, Vadodara for Rs. 19.76 crores, which was required to be completed within 36 months. The assessee has simply furnished a copy of work order dated 5.3.2004 for starting of work. The assessee has not furnished any further details. The assessee has claimed deduction u/s. 80-IA(4) of Rs.80,19,970/-. The work order to be executed as per approved terms / conditions. The work has to be completed within stipulated time allowed. The assessee has not been allowed to add excess quantity without prior approval of the competent authority (contractee). The work has to be carried out under the strict supervision, instructions and guidelines of Dy. Executive Engineer. Nowhere the agreement speaks about the development of infrastructure facilities by the assessee company. The work carried out by the assessee was of extension nature to the project / site. Therefore, the work carried out does not come within the purview of provisions of Section 80-IA (4) of the Act and explanation given there under as discussed in above paras. (ii) Palanpur - Widening of over-bridge: The assessee has furnished a copy of work order dated 6.9.2004 in support of the work. On verification of description of work, it is seen ITA.No.441/Ahd/2011 and 20 Others Rajkamal Builders Infrastructure P.Ltd. 25 that the contract work carried out was widening of railway over- bridge on Palanpur-Deesa road. The assessee has not furnished any further details. The assessee has claimed deduction u/s. 80-IA of Rs.4,97,988/-. The description of the work clearly shows the fact that the contract work was meant for widening of over-bridge of the existing railway over-bridge. Thus, it was not a new infrastructure facility, but the work was of the expansion nature to existing facility, and therefore, the same is not covered under the purview of new infrastructure facility. (iii) Sabarmati River Bridge Work at Kamod: This work was taken from Ahmedabad Urban Development Authority for construction of bridge across Sabarmati River at Kamod at section between Sanathal - Aslali of Ring Road around Ahmedabad in AUDA for Rs.8,25,00,000/-. The time-limit for completion of work was 15 months. The assessee has furnished a copy of work order dated 18.2.2003. The assessee has merely acted as a contractor to carry out construction work of the bridge as per the specification, estimation and project of the Ahmedabad Urban Development Authority and the same cannot be considered as to have developed assessee's project as a developer. The assessee company has to execute the contract with specifications and as per time schedule as discussed in above paras. Completed items executed have to be considered for payments. In this regard, decision of Engineer in- charge shall be final. Thus the assessee is not a developer but it has acted as an executor of contractee. (iv) Re-surfacing of road in western AUDA area: This work was undertaken from Ahmedabad Urban Development Authority (AUDA) for construction of roads with excavation, embankment, rolling, watering, granular, surface dressing and strengthening and re-surfacing of roads in western AUDA area. The total contract cost was Rs.11,88,35,176/-. The assessee has furnished a copy of work order dated 5.12.2003 and also copy of agreement of joint venture between Vijay M. Mistry Construction Pvt. Ltd. and Rajkamal Builders Infrastructure Pvt. Ltd. dated 28.7.2003 and supplementary agreement dated 25.11.2003. On verification of the work order, it is seen that the contract work included strengthening and re-surfacing of roads in western AUDA area. The work has been carried out on the roads pertaining to AUDA authority. It cannot be considered as new infrastructure project or facilities and, therefore, the assessee's claim of developer in respect of this work is not ITA.No.441/Ahd/2011 and 20 Others Rajkamal Builders Infrastructure P.Ltd. 26 satisfied. The assessee company has acted simply as a contractor with specific conditions and terms. (v) Water Treatment Plants (Kutch) This work was undertaken from Gujarat Water Supply and Sewerage Board, Gandhinagar by the assessee in joint venture consortium with M/s. Aquafill Polymers Co, Pvt. Ltd., Ahmedabad. The assessee has furnished a copy of work order dated 16.01.2004 for construction of water treatment plants with commissioning and training. The contract amount was Rs.13.01 crores. The assessee has furnished copy of an agreement entered into between the assessee and Aquafill Polymers Co. Pvt. Ltd., Ahmedabad for the above work. This work contract was executed and performed strictly as per works specification, terms and conditions of the contract under direct supervision of Executive Engineer, ERR Division, Bhuj and Gandhidham. The work was to be executed with terms / conditions approved as well as within stipulated time allowed. This work is a part of "Earthquake Rehabilitation and Reconstruction Programme". It is not a development of new infrastructure facility by the assessee company. (vi) VatamanPipali Road The assessee has furnished copy of work order dated 22.3.2004 for construction of major bridges in connection with strengthening of SH- 6, Vataman-Pipali (km. 69/600 to Km.694) and paving of shoulders. The estimated contract price was of Rs. 15.29 crores. For carrying out this work, the owner has issued a "Letter of Intend", enabling the assessee company to start the work. The work order was issued with detailed scope of work, terms and conditions, technical specifications and procedure etc. The assessee was just engaged for execution of work of the honour as per their terms / conditions / times etc. In addition to the above, the work carried out was for strengthening and paving of shoulders on State Highway No.6, already in existence. (vii) Vasna Sewerage Treatment Plant: The assessee has furnished copy of work order dated 13.2.2002 for construction, commissioning and trial run of 126 MLD capacity Sewerage Treatment Plant including operation and maintenance at Vasna, Ahmedabad. This work was assigned by the Ahmedabad Municipal Corporation for contract cost of Rs.28.36 crores to Aquafill Polymers Co. Pvt. Ltd. and the assessee in joint venture. The assessee has furnished a copy of contract agreement entered into with the contractee and a copy of joint venture agreement between Aquafill ITA.No.441/Ahd/2011 and 20 Others Rajkamal Builders Infrastructure P.Ltd. 27 Polymers Co. Pvt. Ltd. and the assessee. The prime condition was to provide infrastructure facility by the enterprise. In the instant case, the agreement was made prior to 1.4.2002 and the scheme applicable to the enterprise, who build, operate and transfer. Thus, the assessee does not satisfy this condition. Over and above, the assessee company had not entered into agreement with Ahmedabad Municipal Corporation for development of the above project but had obtained the work order for execution of contract as per terms and condition of the Ahmedabad Municipal Corporation. The assessee was allotted the work for execution and completion thereof as well as the remedying of any defects therein. The terms / conditions are specified by AMC. Also working, drawing are to be supplied by the AMC. The contractor covenant with the Commissioner (AMC) to supply, construct, deliver, erect, commission and maintain the works in conformity in all aspects with the provisions of the contract. The assessee company is merely acting as an agency and executing the work awarded to it with specific conditions. Therefore, the assessee's this work does not become eligible for deduction u/s. 80-IA of the Act. (viii) Ambaji Mata Site Development: This work was undertaken by the assessee from Ambaji Mata Trust for which the assessee claims that the Trust is controlled by the Government of Gujarat. The assessee has not furnished any further details of the work. The assessee has claimed deduction of Rs.4,83,746/- u/s. 80IA in respect of new college complex. It has been pointed out by the assessee that no deduction has been claimed in respect of construction of college building but in respect of work relating to site development and amenities etc., the assessee has entered into an agreement with a Trust. But, it has not entered into any agreement with the Central Government or State Government or a local authority or any other statutory body. Therefore, it is not entitled for deduction u/s. 80IA(4) of the I. T. Act, 1961 in respect of the works relating to site development and amenities etc. The contract with a Trust, which is being administered by the trustees appointed by the Government of Gujarat, cannot be said to be contract with Government. In absence of any evidence and satisfaction of the above conditions, the assessee cannot, strictly speaking, fulfilling the requirements of section 80IA (4) / 80IB (10) of the Act. Also, construction of college complex is not covered under the definition of development of infrastructure facility within the meaning of Section 80-IA of the Act. Therefore, the assessee is not entitled for deduction under section 80-IA/80IB of the I. T. Act, 1961 in respect of this work and accordingly disallowed. ITA.No.441/Ahd/2011 and 20 Others Rajkamal Builders Infrastructure P.Ltd. 28 12. Thus, from the evidences available on records conclusively indicate that as far as factual matrix of the cases are concerned, the appellant is a mere contractor w r t work assigned by AMC and other authorities as discussed in above paras and cannot be treated as a developer by any stretch of imagination. Now since the provisions of section80IA supra, clearly prohibit that the deduction would not be available to a contractor, no benefit claimed u/s.80IA by the appellant would be legally admissible” 27. We now propose to deal with the submissions made by the Revenue before us. 28. In paragraph-4 of the submission, the Revenue is trying to explain in view of the retrospective amendment made by insertion of Explanation after sub-section (13) of section 80IA(4) by Finance Act 2007 and Finance Act 2009 this provision shall not apply to a business which is in the nature of work contract awarded to any person. However, this particular Explanation has duly been taken care of by the Rajkot Bench while passing order in favour of the assessee in the case of Patel Infrastructure Pvt. Ltd. Vs. DCIT, ITA No.627/Ahd/2014 order dated 30.7.2020 and also Katira Construction Ltd., reported in (2020) 119 taxamnn.com 489 (ITAT-Rjt). Relevant paragraph extracted from the judgment passed n the matter of Patel Infrastructure (Supra) is reproduced hereinbelow: “10.17 It is also pertinent to note that the Hon'ble Gujarat High Court in the case of Katira Construction Ltd. Vs. Union Bank of India reported in 31 taxmann.com 250 has decided the issue of the applicability of the explanation attached below section 80-IA (13) whether such explanation was applicable retrospectively in the case on hand. The assessee challenged the vires of Explanation inserted below sub-section (13) of section 80-IA of the Income-tax Act, 1961 by Finance (No. 2) Act of 2009 with retrospective effect from 1-4-2000. By adding the impugned Explanation, the Legislature provided that nothing contained in the section shall apply in relation to a business referred to in sub-section (4) which is in the nature of a works contract awarded by any person and executed by an undertaking or enterprise. The central question is, whether in the present case, the ITA.No.441/Ahd/2011 and 20 Others Rajkamal Builders Infrastructure P.Ltd. 29 explanation below sub-section (13) to section 80-IA introduced by the Finance Act No.2 of 2009 with effect from 1.4.2000 transgresses the legislative competence of the Parliament. The Hon'ble court decided the issue in favour of the revenue that such explanation brought with retrospective effect from 01-04-2000 by the Finance Act No. 2 of 2009 was very well within the competence of the Parliament. As such, there was no issue whether the assessee is acting as a developer or works contractor. Therefore, in our considered view no reference can be made to such judgment for deciding the issue on hand whether the assessee is acting as a developer or the works contractor.” 29. The Revenue has also dealt with this issue, as to whether the assessee can be termed as “developer” or a “contractor” as submitted in para-5 of the written submissions. In fact, it only attempts to give a general meaning of the term “contractor” and “developer”. In the cases in hand, we find that in terms of tender documents, audited accounts and facts on record suggest that the assessee has fully undertaken the work of development of various infrastructure projects as a whole by undertaking the risk & responsibility, arranged own finances, materials, personnel, labour, machinery, other equipments etc. and thereby fulfilled the test of being a “developer” as per the principles laid down by Hon’ble Gujarat High Court in the case of Radhe Developers, 341 ITR 403 (Guj). It is imperative upon us to take note of the relevant portion of the above judgments for better understanding of the issue on hand. “34. We have reproduced relevant terms of development agreements in both the sets of cases. It can be seen from the terms and conditions that the assessee had taken full responsibilities for execution of the development projects. Under the agreements, the assessee had full authority to develop the land as per his discretion. The assessee could engage professional help for designing and architectural work. Assessee would enroll members and collect charges. Profit or loss which may result from execution of the project belonged entirely to the assessee. It can thus be seen that the assessee had developed the housing project. The fact that the assessee may not have owned the land would be of no consequence. 35. With respect to the question whether the assessee had acquired the ownership of the land for the purposes of the Income Tax Act and, in particular, Section 80IB(10) of the Act and to examine the effect of Explanation to Section 80IB(10) introduced with retrospective effect from 1.4.2001, since several aspects overlap, it would be convenient to discuss the same together. ITA.No.441/Ahd/2011 and 20 Others Rajkamal Builders Infrastructure P.Ltd. 30 36. We have noted at some length, the relevant terms and conditions of the development agreements between the assessees and the land owners in case of Radhe Developers. We also noted the terms of the agreement of sale entered into between the parties. Such conditions would immediately reveal that the owner of the land had received part of sale consideration. In lieu thereof he had granted development permission to the assessee. He had also parted with the possession of the land. The development of the land was to be done entirely by the assessee by constructing residential units thereon as per the plans approved by the local authority. It was specified that the assessee would bring in technical knowledge and skill required for execution of such project. The assessee had to pay the fees to the Architects and Engineers. Additionally, assessee was also authorized to appoint any other Architect or Engineer, legal adviser and other professionals. He would appoint Sub-contractor or labour contractor for execution of the work. The assessee was authorized to admit the persons willing to join the scheme. The assessee was authorised to receive the contributions and other deposits and also raise demands from the members for dues and execute such demands through legal procedure. In case, for some reason, the member already admitted is deleted, the assessee would have the full right to include new member in place of outgoing member. He had to make necessary financial arrangements for which purpose he could raise funds from the financial institutions, banks etc. The land owners agreed to give necessary signatures, agreements, and even power of attorney to facilitate the work of the developer. In short, the assessee had undertaken the entire task of development, construction and sale of the housing units to be located on the land belonging to the original land owners. It was also agreed between the parties that the assessee would be entitled to use the full FSI as per the existing rules and regulations. However, in future, rules be amended and additional FSI be available, the assessee would have the full right to use the same also. The sale proceeds of the units allotted by the assessee in favour of the members enrolled would be appropriated towards the land price. Eventually after paying off the land owner and the erstwhile proposed purchasers, the surplus amount would remain with the assessee. Such terms and conditions under which the assessee undertook the development project and took over the possession of the land from the original owner, leaves little doubt in our mind that the assessee had total and complete control over the land in question. The assessee could put the land to use as agreed between the parties. The assessee had full authority and also responsibility to develop the housing project by not only putting up the construction but by carrying out various other activities including enrolling members, accepting members, carrying out modifications engaging professional agencies and so on. Most significantly, the risk element was entirely that of the assessee. The land owner agreed to accept only a fixed price for the land in question. The assessee agreed to pay off the land owner first before appropriating any part of the sale consideration of the housing units for his benefit. In short, assessee took the full risk of executing the housing project and thereby making profit or loss as the case may be. The assessee invested its own funds in the cost of construction and engagement of several agencies. 30. Paragraph-6 and 7 of the said submissions, speak about the tender awarded to the assessee for development of entire projects by the AMC for construction, commissioning and trial run of 26 MLD Capacity Sewage Treatment Plant including operation and maintenance of 36 months at Vasna, Ahmedabad as a part of Sabarmati River Action Plan under National River ITA.No.441/Ahd/2011 and 20 Others Rajkamal Builders Infrastructure P.Ltd. 31 Consideration Directorate, Ministry of Environment& forests, Government of India which in fact goes root of the matter in confirming the position of the assessee as a “developer” and not “contractor” as it has fulfilled all the criterion to achieve the status of a ‘Developer’. 31. In paragraph-8 points have been raised by the Revenue in regard to submission of weekly project report to the engineers, working to be done as per the approval of engineer, no alteration without approval, work to be kept open for inspection and supervision of engineer. In our considered opinion, these are only administrative terms for monitoring and supervision of the project undertaken by the assessee and not at all relevant to decide, whether the assessee is a “developer” or “contractor”. We have further noted the arguments advanced by the DR in respect of clauses-12, 12A, 13, 14, 15 and 18 of the TD. at page No.48 therein, the terms stipulated in TD. In fact the clause 12 states conditions to be fulfilled if the specification of work provides for use of any special description of materials to be supplied from Municipal Corporation. Page17 of the TD being part of Annexure-IV as referred by the Revenue only states the rate of cement and material if supplied by the AMC. However, from the record it appears that the assessee has arranged the necessary requirement of water, electricity connection, cement and other required qualitative materials at its own cost as per pages 95 & 96 of the tender. It is further supported by the audited accounts profit & loss account reflected at page No.16 of the PB filed before the Tribunal showing total materials consumed during the year is of Rs.14,82,47,213/- and creditors for goods are of Rs.2,10,12,846/- as per the Balance Sheet at page No.15 of the PB. It is relevant to mention that nowhere in the documents filed before us suggests that the assessee has procured any project material from the government authorities; neither Revenue has been able to point out any such document in support of their stand. ITA.No.441/Ahd/2011 and 20 Others Rajkamal Builders Infrastructure P.Ltd. 32 32. On the contrary, it has been admitted by the Revenue that the rate of project is fixed and under no circumstances, the assessee is entitled to claim enhanced rate for any item of contract, which rather proves that under no circumstances the assessee will be compensated for price escalation in respect of material, labour, which may be caused due to inflation and for these precise reason the assessee has suffered huge loss in the development of main projects as reflected in the materials placed before us. A look at these figures would carry the aspect of the financial risk involved in the various projects undertaken by the assessee. They are summarized as under: Asst.Year Loss (Rs.) 2007-08 Rs.67,23,899/- 2008-09 Rs.15,39,384/- 2009-10 Rs.1,17,92,975/- 2010-11 Rs.46,52,408/- 2011-12 Rs.72,22,871/- 2012-13 Rs.2,88,61,452/- 2013-14 Rs.1,73,32,746/- 2015-16 Rs.4,13,23,482/- 2016-17 Rs.49,21,274/- Total Rs.12,43,70,991/- 33. In para-9 and 10, the Department has reiterated their arguments that the assessee has acted as a ‘contractor’ since the work was done under the supervision and monitored by Engineers of AMC. It was further stated by the Revenue that possessing of skilled manpower, preparing drawings & designs, providing equipments are not relevant, which only improves the profitability of the assessee. In our considered opinion, only in order to negate the claim of the assessee the issue of the supervision and monitoring by engineers has sought to be raised by Revenue which is found to be irrelevant for consideration of the main issue involved in the matter. The contentions made by the Revenue in the submissions, if read with the terms of TD filed in each ITA.No.441/Ahd/2011 and 20 Others Rajkamal Builders Infrastructure P.Ltd. 33 case along with audited accounts would demonstrate, that the assessee has fully undertaken work for development of various infrastructure projects as a whole, by owning risk and responsibilities, raising own finance for the project, getting men, material and project equipments, drawing specifications for the approval of competent authorities. Therefore, the work executed by the assessee is not work-contracts simplicitor, rather they are for the development of infrastructure facility which justify the assessee’s claim to treat it as a ‘developer’ and not ‘contractor’ as per the principles laid down by the Hon’ble jurisdictional High Court in the case of Radhe Developers (supra). 34. So far as the contentions of the Revenue in respect of contract works of various projects performed by the assessee for the F.Y. 2005-06 no supporting documents have been furnished, nor the work undertaken by the assessee falls within benevolent provision of Section 80IA(4) of the Act are concerned, we find that in most of the cases, it was alleged that the assessee has not supplied any documents which could justify its work done as a developer qua claimed by the assessee for deduction under Section 80IA(4) of the Act. In fact, we find that the assessee has filed relevant materials/documents in order to prove that the assessee was engaged in developing infrastructure projects, and therefore, being a ‘developer’ it is entitled for the impugned deduction under section 80IA(4) of the Act. The case-wise following tender documents/materials alongwith work orders were furnished by the assessee before the authorities below: Asst.Year Particulars of Tender documents and title of projects 2002-03 1. Construction of Canal Earth Work and Canal Syphon across River Umai from Sardar Sarovar Narmada Nigam Ltd. 2. Construction work of Wadhwan Bhagavo Canal Syphon ITA.No.441/Ahd/2011 and 20 Others Rajkamal Builders Infrastructure P.Ltd. 34 from SSNNL 2004-05 3. Construction and commissioning & Trial Run of 126 Mild Capacity Sewage Treatment Plant, Vasna including operation and maintenance for 36 months from AMC. 2006-07 4. Construction work of Dakshini Fly over bridge awarded by AMC. 5. Siddhur Flyover bridge from Govt of Gujarat, Road & Building Department, Patan. 6. Construction of Approaches of ROB from GSRDCL 2007-08 7. Construction of Six Lane Flyover Bridge from AUDA 2008-09 8. Construction of Six Lane Flyover Bridge, Memnagar from AUDA 9. Construction of Four Lane Flyover Bridge at Shivranjani junction from AUDA 10. Designing, constructing, testing & commissioning sewage treatment plant at Kapurai from Vadodara Municipal Corporation. 11. Construction of high legal bridge across river Tapi from Surat Municipal Corporation. 2009-10 12. Six Lining with footpath of existing 4 lane flyover, Nr. Adalaj, Gandhinagar from Govt of Gjarat, R&B, Gandhinagar. 13. Designing, construction, testing & commissioning of sewage treatment plant at Atladara, from Vadodara Municipal Corporation. 2010-11 14. Survey planning, designing & construction of new high level bridge, Bhavnagar from R&B Division, Bhavnagar. 15. Construction of Four Lane Flyover Bridge at CTM cross roads, Ahmedabad from AMC. 16. Construction flyover bridge at Delhi Gate, Surat from SMC. 17. Construction of flyover bridge at Thakkar-Bapunagar junction, Ahmedabad from AMC. 2011-12 18. Construction of bridge & road, Akota, Vadodara from VMC. 19. Operating & Maintenance of Mechanical, Electrical, Civil & Instrumentation equipments of sewage treatment plant at Gajarawadi, Vadodara for five years from VMC. 35. In view of the above detailed paper books containing the above tender documents comprising agreement clauses (relevant clauses have already dealt ITA.No.441/Ahd/2011 and 20 Others Rajkamal Builders Infrastructure P.Ltd. 35 with by us hereinabove) and the contents whereof would definitely suggest that the assessee has been entrusted with the work of development infrastructure facilities, and therefore being a ’developer’, the assessee would be entitled for deduction under section 80IA(4) of the Act. Relevant to mention that perusal of all tender documents mentioned hereinabove reveals that the terms and conditions mentioned therein are almost same except the figures and name of the project. 36. In para-11 of the written submissions, the Revenue has disputed that various work undertaken and executed by the assessee as a contractor and not as a developer. The assessee-company is merely acting as an agency and executing the work awarded to it with specific conditions. The project-wise contentions was raised by the Ld. DR in his written submissions, which we have already extracted hereinabove. In response thereto, we would like to analyse different projects undertaken by the assessee for the Asst.Year 2005- 06 which is summarized in tabular form as under: Sr. No. Particulars of Projects Documents available Type of work 1. Mahi Weir Scheme across Mahi River Page No.53 of the PB Construction of Weir Diaphragm Walls, Training Walls of Mahi River scheme across Mahi River for irrigation projects. 2. Palanpur – Widening of Overbridge Page no.9 of PB dated 23.1.2019 Widening of railway overbridge on Palanpur- Deesa road. It is to be noted that ‘widening of roads’ falls under the category of ‘new infrastructure facility’ for claiming deduction under section 80IA(4) of the Act, ITA.No.441/Ahd/2011 and 20 Others Rajkamal Builders Infrastructure P.Ltd. 36 as per the CBDT Circular No.4 of 2010 dated 18.5.2010. This issue has been considered by the ITAT Pune in the case of Rohan & Rajdeep Infrastructure (2013) 40 taxmann.com 136 (Pune) 3 Sabarmai River Bridge work a Kamod Page no.79 & 80 of PB Constuction of new ridge across Sabarmati River a Kamod. 4 Construction of in Western AUDA area Page No.101 of PB Construction of roads with excavation, embankment, rolling, waering, granular sub-base, wet-mix, macadam, surface dressing, bituminous macadam and mix seal surface etc. complete and strengthening and resurfacing of roads. As per the decision of the ITAT, Pune Bench in the case of Rohan & Rajdeep Infrastructure (supra) strengthening and improvement of existing roads are also considered as new infrastructure facility eligible for deduction under section 80IA of the Act. 5. Water Treatment Plants (Kutch) Page No.110 of PB Construction of New Water Treatment Plant with Commissioning and Training in Kutch. 6. VatamanPipali Road Page No.126 of PB Construction of major bridges in connection with strengthening of State Highway-6, Wataman- pipri& paving of shoulders. This was a new ITA.No.441/Ahd/2011 and 20 Others Rajkamal Builders Infrastructure P.Ltd. 37 bridge constructed in connection with the overall strengthening of the Highway project. 7. Vasna Sewerage Treatment Plant Work order dated 13.2.2002. According to the department, work is dated 13.22002, hence prior to 1.4.2002 the assessee must build, operate and transfer. The DR’s view is not correct in law in view of the amendment made by Finance Act, 2001 to 80IA(4) by which the deduction is available to any enterprise carring on the bsiness of i) developing, or ii) operating and maintaining or iii) developing, operating and maintaining any infrastructure facility. Therefore, deduction is available to either of the three businesses as the conditions are mutually exclusive and not cumulative in nature. For this proposition, the decision of the Hon’ble High Court of Bombay in the case of CIT Vs. ABG Heavy Industries Ld. (2010) 189 Taxman 54 (bom). In other words, this project undertaken by the assessee viz. construction, commissioning and trial run of 126 MLD capacity sewage treatment plant including operation and ITA.No.441/Ahd/2011 and 20 Others Rajkamal Builders Infrastructure P.Ltd. 38 maintenance for 36 months at Vasna, Ahmedabad. 8. Ambaji Mata Site Development Page No.91 of PB The contention of the Revenue that agreement was entered into with the Trust and not with the Government. It is not true, because this Trust is 100% governed by the Govt. of Gujarat, and it is a local authority/ statutory as envisaged in section 80IA(4) of the Act. Project includes site development and construction of roads. 37. The terms and conditions of tender documents / agreements / work order and comprehensive view of the activities undertaken by the assessee clearly demonstrates that the assessee-company has undertaken substantial activities in respect of various projects awarded by various statutory bodies, which makes the assessee to qualify as a developer of Infra facility and to make claim necessary benefits under section 80IA(4) of the Act. 38. The provisions of section 80IA(4) of the Act provides that deduction would be available to any enterprise which carries on the business of – (i) developing or (ii) operating and maintaining or (iii) developing, operating and maintaining any infrastructure facility which fulfills the conditions prescribed therein. 39. As per the Explanation, even a road including toll-road is an infrastructure facility for the purposes of section 80-IA(4). The primary condition is that the enterprise must carry on the work of "developing" an ITA.No.441/Ahd/2011 and 20 Others Rajkamal Builders Infrastructure P.Ltd. 39 infrastructure facility. As mentioned above, Explanation under sub-section (13) of section 80-IA clarifies that this section will not apply to any business which is in the nature of a "works contract". In other words, the essence of this section is that, the benefit of section 80-IA(4) would be available to a developer and not to a contractor simplicitor. In the present case the lower authorities have denied the benefit of section 80-IA(4) to the appellant- company on the assumption that the appellant-company is engaged in executing merely a work contract and it is not carrying on the business of developing an infrastructure facility. The assessee has undertaken entirely and exclusively the projects awarded by the local government authorities, as it is evident from the records as explained and already narrated hereinabove and therefore, there is hardly any basis for assuming that it is merely a contractor executing a works contract. The difference between a "developer" and a "contractor" has to be properly analyzed and understood. This issue has come up before the Hon'ble ITAT, Amritsar Bench in the case of M/s. TRG Industries P. Ltd. in ITA Nos. 433 etc./Asr/2009. The Tribunal after relying various case laws has laid down the following parameters when to treat an assessee as a developer or contractor. (i) The assessee does not have to develop the entire infrastructure facility to qualify for deduction u/s.80-IA(4) and if only a part of the infrastructure facility is developed, the assessee would be eligible for deduction. (ii) The three requirements of section 80-IA(4) viz. development, operation and maintenance are not cumulative. Thus, an enterprise which only develops facility would also be entitled to the benefit of section 80-IA(4). (iii) Merely because the assessee is referred to as a contractor in the agreement, it would not debar it from claiming deduction. ITA.No.441/Ahd/2011 and 20 Others Rajkamal Builders Infrastructure P.Ltd. 40 (iv) Direct agreement between the transferee-assessee and the specified authority is not a mandatory requirement u/s.80-IA(4) of the I.T. Act. Needless to mention that the assessee qualified all the criterion fixed by the Amritsar Bench 40. We have already dealt with relevant clauses of the tender documents stipulating various conditions viz. financial involvements, risks, obligations and responsibilities of the assessee in developing, operating and maintaining of infrastructure facilities, which clearly make the case of the assessee within the scope and ambit of section 80IA(4) of the Act so as to claim the impugned deduction. 41. So far as case law relied on by the Revenue on the decision of ITAT, Hyderabad Bench in the case of M/s.NEC NCC Maytas-JV in ITA No.496/Hyd/2018 is concerned, the same is distinguishable on facts. In that case assessee has not executed entire project but only a part of the project was undertaken, whereas in the instant case, the assessee has executed entire project. In that case, the assessee has not established entrepreneurial risk or financial involvement of assessee before the lower authorities and the assessee was only a JV withno assets and no wherewithal to execute the projects. Payments were released on multiple occasions from time to time i.e. fixed sum on monthly basis and also received advance payment against supply of goods at site. While in the case of present assessee, entire project has been executed by the assessee; there are risks, responsibilities and obligations till the project completion; payment would be released only after completion of the project, that too, after due certification from the competent authority of the local authority. Ten percent of mobilization advance could be received only after furnishing bank guarantees in the form of fixed deposits. ITA.No.441/Ahd/2011 and 20 Others Rajkamal Builders Infrastructure P.Ltd. 41 In the present case, the assessee itself had to procure materials for the projects and make payments. It has also to deploy men and machineries. Therefore, both the cases, i.e. case of the assessee before this Tribunal and the assessee before the ITAT, Hyderabad (referred above) are clearly distinguishable on all respects. 42. Before parting with the matter we would like to mention that we have considered the judgements relied upon by the Ld. AR passed by different judicial forums including the judgement passed in the matter of Patel infrastructure and Katira construction (supra) passed by the Rajkot Bench and Katira construction passed by the Hon’ble jurisdictional High Court wherein the constitutional validity of insertion of explanation below sub Section 13 of Section 80 IA of the Act was challenged. The Ld. Representative appearing for the Revenue vehemently argued on this point that the jurisdictional High Court in the said matter already decided the issue against the assessee. Fact remains that the jurisdictional High Court in that particular matter dealt with the constitutional validity of the insertion of explanation as mentioned hereinabove and decided the same in favour of the revenue to this effect that such explanation brought with retrospective effect from 01.04.2000 by the Finance Act No. 2 of 2009 was very well within the competence of Parliament. As such there was no issue whether the assessee is acting as a developer or contractor was raised before the Hon’ble Jurisdictional High Court neither the said has been decided in the said judgement. 43. In the light of the above discussion and perusal of various clauses of Tender documents and case laws relied upon by both the parties, it reveals that the tender work under consideration are not for a specific work, rather they are for development facility as a whole. The responsibility is fully assigned to the developer for execution and completion of the work. Various ITA.No.441/Ahd/2011 and 20 Others Rajkamal Builders Infrastructure P.Ltd. 42 stipulations contained in the Tender documents demonstrate various risks undertaken by the assessee for execution of the project work awarded by the competent authority in terms of financial resources, manpower deployment, both technical and administrative expertise, drawing and designing of the project specifications and getting approval from the competent authority, safety and security of project and human resources, compliances of various statutory rules and laws. Therefore, merely because in the agreement for development of infrastructure facility, assessee is referred to as contractor or because if some basic specifications are laid down, it does not detract the assessee from the position of being a developer, nor will deprive the assessee from claiming deduction u/s.80IA(4) of the Act. As such, looking to the overall aspects of work undertaken by the assessee we can safely come to the conclusion that the assessee is engaged in development of the infrastructure facility and therefore, a developer, which entails the assessee to claim benefits under section 80IA(4) of the Act. Thus, the issue of claim of deduction under section 80IA(4) of the Act is allowed in favour of the assesee and against the Revenue. This common ground raised in all the appeals are accordingly disposed of. 44. Second common issue raised in the appeals of the assessee viz. appeals for the Asst. Years 2004-05, 2005-06, 2007-08 to 2010-11 and 2012-13 to 2016-17 is that denial of claim of deduction under section 80IA of the Act on interest and other income. For adjudication of this issue, we take fact from the Asstt.Year 2004-05 which are common in all these years except quantum. 45. During the course of assessment proceedings, the AO noticed that the assessee in the profit & loss account has debited net interest expenses. As per the details furnished, it was found that the assessee has earned interest income from FD and investment in Sardar Sarovar Narmada Nigam and interest from ITA.No.441/Ahd/2011 and 20 Others Rajkamal Builders Infrastructure P.Ltd. 43 AEC to the tune of Rs.56,96,723/-, whereas interest expenses on bank OD and interest paid to depositors was to the tune of Rs.1,08,38,755/-, and therefore, there was net interest expenses of Rs56,96,723/-. It is also noticed by the AO the assessee has received some other income in the form of dividend, misc. income, service charges. According to the AO, the net profit shown by the assessee inclusive of interest income earned by the assessee from the bank deposits and bonds, and claimed the same as deduction under section 80IA/80IB of the Act. The AO was of view that interest income could not be considered as income derived from industrial undertaking and therefore interest receipt were not eligible for the deduction, as sought for. He further opined that since the assessee has claimed deduction under section 80IA(4) of the Act of Rs.1,95,62,210/- on several projects, this amount included interest income also. In response to the show cause notice, it was explained by the assessee that the assessee has made different fixed deposits with different bank as security deposits with the Government Authorities in respect of the project contract, and for giving bank guarantees. For getting bank guarantee the assessee has to keep certain amount fixed deposits as margin money. These fixed deposits were made out of borrowed funds for giving security deposits to the Government. Therefore, claim of deduction under section 80IA was fully allowable. However, the AO did not accept this explanation of the assessee. He was of the view that since the assessee has huge surplus funds, the same was parked with the bank and earned interest income, which was not part of the income earned from any industrial activities but receipts from the investment of surplus fund with bank. The AO accordingly disallowed interest income and other income to the tune of Rs.65,58,550/-. In appeal preferred by the assessee, the CIT(A) confirmed the action of the AO. Hence, assessee is before the Tribunal. ITA.No.441/Ahd/2011 and 20 Others Rajkamal Builders Infrastructure P.Ltd. 44 46. Before us, the counsel for the assessee reiterated submissions as were made before the lower authorities. The counsel further submitted that the interest income is earned only on fixed deposits for obtaining bank guarantee and security deposit to be placed mandatorily as per the tender when work was awarded. Hence, such interest income is business income and eligible for deduction under section 80IA(4) of the Act. In support of his contentions, the counsel relied upon the following decisions: i) AVM Cine Products Vs. DCIT, (2021) 123 taxamnn.com 41 (Mad); ii) CIT Vs. Alloys Ltd. (2017) 84 taxmann.com 256 (Guj) iii) Empire Pumps P. Ltd. Vs. ACIT, (2015) 54 taxmann.com 317 (Guj) 47. For countering the above submissions of the assessee, the DR supported orders of the Revenue authorities, which was based on the decision of Hon’ble Supreme Court in the case of Pandian Chemicals Ltd. 48. We have considered submissions of both the parties; perused relevant orders and case laws cited by the parties. We have already hold the assessee a developer and eligible for deduction under section 80IA(4) of the Act. We further note that the amount of Rs 8,61,827 has been received by the assessee as other income which appears from the records is nothing but the claim approved and received by the assessee for the assessment year 2004-05 in respect of the infrastructure project undertaken by the assessee. We find that before the lower authorities the assessee has explained regarding interest income earned by it from the fixed deposits, security deposits, margin-money and from the bond, with the banks and other institutions, as per the terms and conditions of the contract agreement with the Government authorities. Furnishing of fixed deposits for bank guarantees, security deposits etc. are the pre-condition for awarding the project work by the competent authority, and ITA.No.441/Ahd/2011 and 20 Others Rajkamal Builders Infrastructure P.Ltd. 45 therefore, these are necessity of regular course of business and has direct nexus with the activities. Jurisdictional High Court in the case of Empire Pumps P. Ltd (supra) held that interest income having direct nexus with its business, was to be considered as income ‘derived from’ business. Thus, deduction under section 80I of the Act was allowed on such income. Yet in another decision by jurisdictional High Court in the case of CIT Vs. Shah Alloys Ltd. (supra) has held that interest received on margin money placed for business purpose cannot be treated as income from other sources and is, therefore, eligible for deduction under section 80IA of the Act. Further, various higher judicial authorities have held that profits of the business of the undertaking include other incidental incomes derived from the business of the undertaking. This being the position of law, we have no hesitation in accepting the claim of the assessee that the income earned from the deposits is business income is eligible for deduction under section 80IA of the Act. Accordingly, this common ground raised in the appeals under consideration is allowed in favour of the assessee and against the Revenue. 49. As aforesaid, since the above issue is also identical to the assessee’s appeals for Asst.Year 2004-05, 2005-06, 2007-08to 2010-11 and 2012-13to 2016-17, in the absence of any changed circumstances, our finding and decision in the Asst.Year 2004-05 will apply mutatis mutandis in the instant appeals also. 50. Now we deal with third common issue viz. the Revenue authorities are erred in setting off loss of four infrastructure facilities from the profits of other infrastructure facilities despite having legal provisions that deduction should be allowed on standalone basis. This common issue is raised for the Asst.Year 2007-08 to 2013-14 and 2015-16 & 2016-17. ITA.No.441/Ahd/2011 and 20 Others Rajkamal Builders Infrastructure P.Ltd. 46 51. In Assessment Year 2007-08 the Ld AO disallowed the entire claim of deduction under 80 IA of the Act to the tune of Rs. 67, 23, 899 due to the reason that the appellant has not considered and setting off loss from 8 projects while calculating deduction under chapter VIA of the Act. 52. We have heard the respective submissions made by the parties; we have also perused the relevant materials available on record. It appears that while rejecting the claim of the assessee the Ld. AO observed as follows: “3.1 On perusal of above chart, it is seen that the assessee has earned profit in 16 sites aggregating to Rs.3,47,48,215/- which has been claimed as deduction u/s.80IA. however, this claim has been made without considering and setting off loss from 8 sites aggregating Rs.67,23,899/-. As per the provisions of Section 80A(2) r.w. section 80B(5) as well as the ratio of decision laid down by Hon'ble Supreme Court in the case of Synco Industries Ltd. Vs. Assessing Officer (IT) & Another, (2008) 299 ITR 444 (SC), in order to claim the deduction under Chapter-VI-A, first of all the gross total income is to be worked out and this has to be worked out after setting-off loss in one unit /division against profit of another unit and thereafter the gross total income is to be worked out for working of deduction u/s.80-IA of the Act. In the case of the assessee, this exercise has not been done. Therefore, the loss of Rs.67,23,899/- in 8 sites, as mentioned above, is first of all to be set-off against the profits of 16 sites, in order to arrive, at eligible amount of deduction U/S.80-IA. The assessee has claimed 80-IA deduction on profits of various sites, per se, but not set-off the losses. Hence, to the extent of Rs.67,23,899/- of 8 sites, deduction U/S.80-IA is not allowed. Disallowance on this core works out to Rs.67,23,899/-. Penalty proceedings u/s.271(1)(c) of the Act are initiated separately for furnishing inaccurate particulars of income.” 53. However, the case of the assessee is this that the deduction was to be calculated on standalone unit basis. In fact as per section 80 IA(5) the quantum of deduction is to be computed as if the eligible business is the only source of income and therefore, the deduction is to be computed unit wise without considering or set off of loss of other eligible units. On this aspect the Ld. AR relied upon the judgement passed by the jurisdictional High Court in the case of PCIT versus Nirma Ltd, passed in ITA No. 360 of 2016. ITA.No.441/Ahd/2011 and 20 Others Rajkamal Builders Infrastructure P.Ltd. 47 54. We have carefully considered the said judgement passed by the Hon’ble jurisdictional High Court. While dealing with this particular aspect of the matter the Hon’ble Court was pleased to observed as follows: “5. In the case of Commissioner of Income tax(Central) Madras vs. Canara Workshops P.Ltd. Reported in 161 ITR 320, in the context of deductions provided under section 80E of the Act, the Supreme Court held that the merit earned by one industry not to be lost or diminished for loss by some other industry when assessee was carrying on two priority industries. It was held that loss in one industry is not to be set off against profits from the other and the deduction would be on the whole profits from the profit making industry. It was held that in the application of section 80E, profits and gains earned by one priority industry cannot be reduced by loss suffered by another industry owned by the assessee. Each industry must be considered on its own working, while adjudging its claim to the deduction under section 80E. 6. In this context, Allahabad High Court in the case of Commissioner of Income-Tax and another vs. Modi Xerox Ltd. (supra) found that the assessee was a multi-unit company carrying on three different activities and had three separate units for such activities. Two of these units were profit making units and the third was a loss making unit. Qua the profit making unit, the assessee had claimed deduction under section 80HH and 80I of the Act. With this background, it was held and observed as under: "37. We have considered the facts and circumstances of the present case and the law laid down by the apex court and the decision of the Delhi High Court referred hereinabove. It is not the case of the assessing authority that the gross income of the company was nil. From a perusal of the income disclosed to all the three units it appears that the gross income was not nil and therefore, the assessee was eligible to claim the deduction under sections 80HH and 80-I of the Act. After becoming eligible to claim the deduction, the question for consideration is that whether deduction is eligible to the income derived to each industrial undertaking independently or on a consideration of losses suffered by the service unit. Sections 80HH and 80-I of the Act contemplate the deduction from the income derived by the undertaking. The Commissioner of Income-tax (Appeals) has rightly held that income of the undertaking shall be calculated on a consideration of an unabsorbed business losses, etc. in respect of each individual unit and thereafter on the profit derived by the unit the deduction is to be allowed. This view of the Commissioner of Income-tax (Appeals) confirmed by the Tribunal is ITA.No.441/Ahd/2011 and 20 Others Rajkamal Builders Infrastructure P.Ltd. 48 in accordance to provisions of the Act as well as in consonance with the law laid down by the apex court and the Delhi High Court. The apex court in the case of SyncoIndustries Ltd. vs. Assessing Officer (Income-tax)(2008) ITR 444(SC) has held that the non obstante clause appearing in section 80-I(6) of the Act is applicable only to the quantum of deduction, whereas the gross total income under section 80B(5) which is also referred to in section 80-I(1) of the Act is required to be computed in the manner provided under the Act which pre- supposes that the gross total income shall be arrived at after adjusting the losses of the other division against the profits derived from an industrial undertaking. The apex court further held that under section 80-I(6) of the Act for the purposes of calculating the deduction, the loss sustained in one of the units, cannot be taken into account because sub-section (6) of the Act contemplates that only the profits shall be taken into account as if it was the only source of income. Therefore, from the decision of the apex court, two principles of law emerge one for the purposes of computation of gross total income the losses of other units are to be taken into account but for the purposes of calculating the deduction of industrial undertaking, the loss sustained in another unit cannot be taken into account and only the profit shall be taken into account as if it was the only source of income of that unit. In this view of the matter, we are of the view that there is no error in the order of the Tribunal." 7. We respectfully agree with the view expressed by Allahabad High Court. This view is not in conflict with the decision of the Supreme Court in the case of Synco Industries Ltd. (supra). In such case, it was found that the assessee had two industrial units namely, one in oil and another in chemicals. The assessee was making profits in chemical unit but incurring losses in oil unit. In this background, it was held that while computing gross total income, income should include both profit in chemical unit and loss in oil unit. If the result thereafter is nil, the assessee cannot get benefit of special deductions under section 80HH and 80I etc. In the context of computation of deduction under section 80I, the Supreme Court observed that while computing quantum of deduction under section 80I(6), the Assessing Officer, no doubt, has to treat the profits derived from an industrial unit as the only source of income in order to arrive at a deductions under chapter VI. It was further observed that section 80I(6)deals with actual computation of deduction whereas section 80I deals with treatment to be given to such deductions in order to arrive at total income of the assessee and therefore, while interpreting section 80I(1) as also the gross total income, one has to read expression "gross total income" as defined under section 80B(5). It was therefore,concluded that the loss from oil division was required to be adjusted before determining gross total income ITA.No.441/Ahd/2011 and 20 Others Rajkamal Builders Infrastructure P.Ltd. 49 and as gross total income was nil, the assessee was not entitled to claim deduction under sections 80I(6) which includes section 80I also. 8. This judgment nowhere provides that while computing the deduction under section 80HH or 80I or any other similar provision, loss of another unit is first to be set off. It only provides and in fact, reinforces that such deduction has to be computed as if the unit was an isolated industry. However, thereafter while computing gross total income, even the loss has to be accounted for and only if the income is positive, can the assessee claim deduction for its profit making eligible industry. This is how even this Court in the judgment in the case of Synco Industries (supra) had used or viewed or situation as can be seen from the following portion of the judgment referring the judgment in the case of Canara Workshop (supra). "The Hon'ble Supreme Court has further held that the object of section 80E was properly served only by confining the application of the provisions of that section to the profits and gains of a "single industry". In the present case, under section 80I(6), profit of Badi unit are required to be treated as if that was the only source of income. That the losses from the Daman unit are required to be ignored. Therefore, while calculating quantum of deduction, profit of the Badi unit alone are required to be taken. To that there is no difficulty. However, after calculating the deduction on the basis that the profits from the Baddi unit was the only source of income, one has to give effect to the computed deduction in order to arrive at the total income of the company and while giving effect, one has to consider the provisions of section 80IA and 80IB of the Act. In other words, while considering the gross total income of the assessee, deduction under section 80IA and 80IB of the Act are required to be allowed after adjusting loss worked out in other units." 9. We therefore, do not find any error in the view expressed by the Tribunal following the decision of the Allahabad High Court. Tax Appeal is therefore, dismissed.” 55. We have further considered the judgement passed by the Mumbai Bench in the case of Punit construction company, reported in 92 taxmann.com 28(Mum. Tri) wherein it has been specifically decided that in terms of provisions of sub Section 5 of Section 80 IA, deduction has to be given unit wise without considering profit or loss of other eligible units. In that view of the matter respectfully relying upon the same we allow this ground of appeal preferred by the assessee with the direction upon the AO to grant relief to the ITA.No.441/Ahd/2011 and 20 Others Rajkamal Builders Infrastructure P.Ltd. 50 assessee only on the profitmaking unit without setting off loss suffered by other eligible units. Thus, this ground of appeal preferred by the assessee is allowed. 56. As aforesaid, since the above issue is also identical to the assessee’s appeals for Asst.Year 2008-09 to 2013-14, 2015-16 and 2017-18, in the absence of any changed circumstances, our finding and decision in the Asst.Year 2007-08 will apply mutatis mutandis in the instant appeals also. 57. Fourth common ground is with regard to disallowance of interest under section 36(1)(iii) of the Act. This was raised in assessee’s appeals in the following assessment years: Asstt. Year Amount of disallowance of interest under section 36(1)(iii) of the Act. 2007-08 Rs.1,82,250/- 2010-11 Rs.3,60,000/- 2011-12 Rs.11,82,868/- 2012-13 Rs.3,60,000/- 2013-14 Rs.8,52,822/- 58. For adjudication this issue, we take facts stated in ITA No.442/Ahd/2011 for the Asst.Year 2007-08 where confirmation of disallowance of interest of Rs.1,82,250/- is under challenge before us by the assessee. 59. Heard both the parties and perused the relevant materials available on records. ITA.No.441/Ahd/2011 and 20 Others Rajkamal Builders Infrastructure P.Ltd. 51 60. During the course of assessment proceedings, upon verification of details of loans and advance from the records made available to the AO, it was found that the assessee has made interest free advance to M/s. Prutha Jewellers of Rs.5.00 lakhs and to M/s. Ruturaj Jewellers of Rs.16.5 lakhs. The AO treated the same as case of diversion of interest bearing funds to make free interest bearing loans and advances. Adopting rate of interest at 9%, the AO made double addition of Rs.1,82,250/- i.e. Rs.33,750/- plus Rs.1,48,500/-, which stood confirmed by the CIT(A). Hence, the instant appeal before the Tribunal. 61. Upon perusal of the profit & loss account for the year under consideration appearing at page 29 of the paper book filed before us, where balance sheet of the assessee company has been annexed it appears that the assessee company is having total reserves and surplus fund to the tune of Rs.19,97,60,729/-. 62. However, we are of the view that Revenue has not established any nexus between the interest bearing funds and free advances so allegedly made by the assessee nor it has been proved that the assessee has diverted the funds for non-business purpose so as to deny interest expenditure. The impugned disallowance is merely on some assumption that it is diversion of interest bearing funds without any basis or justification. The Hon’ble Apex Court in the case of CIT v. Reliance Industries Ltd., 410 ITR 466 held that where interest free funds available with the assessee were sufficient to meet its investment and it could be presumed that the investments were made from the interest free funds available with assessee, therefore, there is no reason to deny the claim of the assessee. Hence, we delete the impugned disallowance of interest expenditure and this ground of appeal of the assessee is, thus, allowed. ITA.No.441/Ahd/2011 and 20 Others Rajkamal Builders Infrastructure P.Ltd. 52 63. As aforesaid, since the above issue is also identical to the assessee’s appeals for Asst.Year 2010-11 to 2013-14, in the absence of any changed circumstances, our finding and decision in the Asst.Year 2007-08 will apply mutatis mutandis in the instant appeals also. 64. Now we take up other ground viz. the Revenue authorities are erred in making addition by disallowing the assessee’s claim of bad debts. This ground raised in A.Y.2010-11 and 2011-12. 65. During the course of assessment proceedings, upon perusal of the details of bad debts written off, as submitted by the assessee, it was found by the AO that an amount of Rs.16,50,000/- was given as advance to M/s.Ruturaj Traders has been written off. A show cause notice was issued directing the assessee to explain as to why the said amount should not be disallowed as an expenditure considering the same as in the nature of loan and advances and not in the nature of trade liability. Further that, during the assessment year 2009-10, disallowance under section 36(1)(iii) of the Act was made on the same amount in the case of the assessee, wherein the same was treated by the assessee as “loans and advances”. The AO was of the view that the same was never in the form of debit as envisaged under section 36(1)(vii) of the Act and the same cannot be considered as bad debts, as cannot be debited as bad debts in the profit & loss account and the same was wrongly done.Hence, the AO made the addition which was confirmed by the CIT(A). 66. However, while arguing against the impugned addition on account of bad debts, the Ld. counsel for the assessee before us contended that the issue has been decided by Hon’ble jurisdictional High Court in the case of Abdul Razak & Co., reported in 136 ITR 825 (Guj). While allowing the claim of the assessee, it was held by the Hon’ble High Court that if the loan was directly ITA.No.441/Ahd/2011 and 20 Others Rajkamal Builders Infrastructure P.Ltd. 53 from the business of the assessee, it is allowable as bad debts and consequently, a trading loss under Section 28(i) of the Act. However, every loss is not so deductible unless it is incurred in carrying out the operation of the business. In that matter, the loss being bad debts is allowable as trade loss under Section 28 of the Act and therefore, the same was allowed in favour of the assessee. 67. In fact, during the assessment year 2010-11 the assessee has advanced an amount of Rs.25,00,000/- to M/s Ruturaj traders for purchase of goods. However, the goods were not supplied and assessee could recover only Rs.8,50,000/-and the balance amount remaining outstanding of Rs.16,50,000/- is written off under Section 28 of the Act. During the Assessment Year 2011- 12 the assessee advanced a staff loan of Rs.1,85,490/-to one Jayash B Patel who was the site supervisor. However, as he left the job the amount could not be recovered and was written off as business loss under Section 28 of the Act. 68. On this aspect apart from considering the judgment passed by the Hon’ble Jurisdictional High Court we have carefully considered the records produced before us by the assessee. Upon consideration of the same the loss is found to be incurred during the course of conducting business by the assessee and therefore, the same can be allowed as business/trading loss under section 28 of the Act. With this observation we allow this ground of appeal raised by the assessee in both the appeals with the direction upon the Ld. AO to grant relief accordingly. 69. Deduction under section 80 GGB of the Act has been denied by the revenue to the tune of Rs.10,00,000 which has been contributed by the assessee to one political party by account payee cheque during A.Y. 2008-09. ITA.No.441/Ahd/2011 and 20 Others Rajkamal Builders Infrastructure P.Ltd. 54 69. We have heard the parties; perused the relevant materials available on record. 70. The same was claimed as deduction under chapter VI-A at hundred percent under section 80 GGB in the return filed by the assessee appearing at page 1 of the paper book filed before us and the returned income was shown at Rs.54, 24,610. However the Ld AO on page 16 of his order has started the computation of income by taking the figure at Rs.64,24,614/- and disallowed the above claim. During the assessment by and under the reply dated 16.07.2010 the assessee had drawn the attention of the Ld AO to the annexed donation receipt. The same is further filed before us. In view of the provision of law under section 80 GGB we, therefore, allow this deduction of Rs.10,00,000 as claimed by the assessee. This ground of appeal preferred by the assessee is, therefore, allowed. 71. The other common ground raised by the assessee is in respect of disallowance of employees contribution made under section 36(i)(va) of the Act. The is identical issue is also raised in ITA No. 1281/Ahd/2016, ITA No. 2201/Ahd/2018 and ITA No. 2202/Ahd/2018 in AYs 2012-13, 2015-16 and 2016-17 respectively. 72. We have heard the respective submissions made by the parties; we have also perused the relevant materials available on record. It appears from the records that that the Ld.AO has disallowed the impugned amount and added to the total income of the assessee as per provisions of section 2(24)(x) r.w.s. 36(1)(vi) of the Act in view of the judgement passed by the Hon’ble Jurisdictional High Court in the case of CIT vs. GSRTC, reported in 265 CTR 64 whereby and whereunder the ratio as laid down to this effect that when the employer has not credited the sum received by it as employees contribution to ITA.No.441/Ahd/2011 and 20 Others Rajkamal Builders Infrastructure P.Ltd. 55 the employees account in relevant fund on or before due date as prescribed in the explanation to Section 36(1)(va), the assessee shall not be entitled to deduction of such amount though he deposits the said sum before filing of Return. We would like to mention that with all his fairness the Ld. Counsel appearing for the assessee conceded before us that the judgement goes against the claim of the assessee. In that view of the matter we dismiss this ground of appeal preferred by the assessee. 73. Now we take penalty appeals filed by the assessee and the Revenue against imposition of penalty under section 271(1)(c) of the Income Tax Act, 1961. i) ITA No. 1966/A/2012 for AY 2007-08 ii) ITA No. 2765 /A/2015 for AY 2008-09 iii) ITA No. 199/A/2016 for AY 2009-10 iv) ITA No. 2706/A/2016 for AY 2010-11 74. In all the above appeals preferred by the Revenue penalty was levied under Section 271(1)(c) of the Act in respect of disallowance of claim of deduction under Section 80IA (4) of the Act which was in turn deleted by the Ld. CIT(A). Hence, the instant appeal before us. 75. We have heard the rival submissions made by the respective parties; we have also perused the relevant materials available on record. 76. Since we have already decided the quantum appeals preferred by the assessee granting relief of the claim of deduction under 80IA(4) of the Act, the penalty arising out of the said quantum proceeding automatically become infructuous. ITA.No.441/Ahd/2011 and 20 Others Rajkamal Builders Infrastructure P.Ltd. 56 77. However, we would like to note that the Ld. CITA has deleted the penalty on the ground that the assesses’s claim is a bona fide one, all the particulars were fully disclosed in the return itself, supported by audit reports under Section 80 IA(7) in Form No. 10 CCB and none of the particulars or figures are found to be untrue or wrong. The disallowance is made only due to a bona fide difference of opinion between the assessee and the Department as to whether the assessee is a ‘developer’ or ‘contractor’. It further appears that relying on the decision passed in the matter of Reliance Petro Products Pvt. Ltd., reported in 322 ITR 158 (SC) the penalty was deleted by the Ld. CIT(A) which according to us is without any ambiguity so as to warrant interference. We, thus, find all the appeals preferred by the revenue as above as devoid of any merit and therefore, dismissed. 78. CO No. 195/A/2015 for AY 2008-09 is not pressed by the assessee due to smallness of amount. Hence, the same is dismissed as not pressed. 79. ITA No. 118/Ahd/2009 for A.Y. 2002-03 is not pressed by the assessee due to smallness of amount. Hence the same is dismissed as not pressed. 80. Assessee’s appeal is against the imposition of penalty under Sections 271(1)(c) of the Act. i) ITA No. 2917/A/2016 for AY 2010-11 81. The instant appeal has been preferred by the assessee against the confirmation of penalty under Section 271(1)(c) of the Act in respect of addition of interest of Rs.3,60,000,/-under Section 36(i) (iii) of the Act and disallowance of claim of Rs.16,50,000/-on account of trading loss under Section 28 of the Act. ITA.No.441/Ahd/2011 and 20 Others Rajkamal Builders Infrastructure P.Ltd. 57 82. We have heard the rival submissions made by the respective parties, we have also perused the relevant materials available on record. 83. As we have already deleted the above two additions made by the authorities below, penalty arising out of the said two additions become infructuous and the penalty proceeding deserves to be quashed. 84. However, it appears from the records particularly the order passed by the authorities below that the interest addition is only a notional addition and the claim of trading loss was made bona fide in respect of trade advance for purchase of goods which could not be recovered. It is only a case of disallowance of a bona fide claim and none of the particulars or figures are found to be untrue or wrong. The disallowance is made only due to a bona fides difference of opinion between the assessee and the Department. In fact the same ought to have been deleted relying on the ratio laid down in the decision taken by the Hon’ble Court in the case of Reliance Petro products private Ltd, supra. 85. We, therefore, with the above observation delete the penalty imposed by the authorities below. In the result this ground of appeal preferred by the assessee is allowed. 86. In view of our adjudication of the appeals as above, summary of our decision is as follows: Assessee’s appeals: i) ITA No.118/Ahd/2009 is dismissed as not pressed; ii) ITA No.441/Ahd/2011 is allowed; iii) ITA No.442/Ahd/2011 is allowed; iv) ITA No.3254/Ahd/2011 is allowed; ITA.No.441/Ahd/2011 and 20 Others Rajkamal Builders Infrastructure P.Ltd. 58 v) ITA No.1385/Ahd/2012 is allowed; vi) ITA No.3126/Ahd/2013 is allowed; i) ITA No.2917/Ahd/2016 is allowed; ii) ITA No.2334/Ahd/2014 is allowed; iii) ITA No.1499/Ahd/2018 is allowed; iv) ITA No.2916/Ahd/2016 is allowed; v) ITA No.1281/Ahd/2016 is partly allowed; vi) ITA No.2201/Ahd/2018 is partly allowed; vii) ITA No.2202/Ahd/2018 is partly allowed; viii) CO No.195/Ahd/2015 in ITA No.2765/Ahd/2015 is dismissed as not pressed; Revenue’s appeals: i) ITA No.2489/Ahd/2009 is dismissed; ii) ITA No.722/Ahd/2010 is dismissed; iii) ITA No.199/Ahd/2012 is dismissed; iv) ITA No.2765/Ahd/2015 is dismissed; v) ITA No.199/ahd/2016 is dismissed; vi) ITA No.2706/Ahd/2016 is dismissed; vii) ITA No.595/Ahd/2018 is dismissed Order pronounced in the Court on 13 th May, 2022 at Ahmedabad. Sd/- Sd/- (DR. ARJUN LAL SAINI) ACCOUNTANT MEMBER (MADHUMITA ROY) JUDICIAL MEMBER Ahmedabad; Dated 13/05/2022 TRUE COPY आदेश क %&त'ल(प अ)े(षत/Copy of the Order forwarded to : 1. अपीलाथ / The Appellant 2. यथ / The Respondent. 3. संबं धत आयकर आय ु त / Concerned CIT ITA.No.441/Ahd/2011 and 20 Others Rajkamal Builders Infrastructure P.Ltd. 59 4. आयकर आय ु त(अपील) / The CIT(A) 5. वभागीय त न ध, आयकर अपील य अ धकरण / DR, ITAT, 6. गाड# फाईल / Guard file. आदेशान ु सार/BY ORDER, उप/सहायक पंजीकार ( Dy./Asstt.Registrar) आयकर अपील य अ धकरण, अहमदाबाद / ITAT, Ahmedabad 1. Date of dictation- 4, 5,10/5/2022 /through dragon software 2. Date on which the typed draft is placed before the Dictating Member 3. Date on which the approved draft comes to the Sr.P.S./P.S. - 4. Date on which the fair order is placed before the Dictating Member for Pronouncement .................... 5. Date on which the file goes to the Bench Clerk .. : 13.05.2022 6. Date on which the file goes to the Head Clerk.................................. 7. The date on which the file goes to the Assistant Registrar for signature on the order.......................... Date of Despatch of the Order..................
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