SMC INFRASTRUCTURE P. LTD, THANE V. ACIT CIR 3, MUMBAI

ITA 7884/MUM/2010

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 8206 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 11 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 25-09-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 15-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K C PATNAIK; ASGHAR ZAIN V P
• Assessee Lawyers: NEELKANT KHANDELW AL

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL H , BENCH MUMBAI , BEFORE : SHRI R.C.SHARMA , A M & SHRI SANJAY GARG, J M ITA NO. 4188 / MUM/20 06 ( ASSESSMENT YEAR :200 1 - 02 ) ACIT, CEN CIR - 3, THANE PAWAR INDUSTRIAL ESTATE, EDULJI ROAD, CHARAI, THANE - 400 601 VS. M/S SMC INFRASTRUCTURE PVT. LTD., 1 ST FLOOR, KONARK TOWER, OPP. SAI BABA TEMPLE, GHANTALI DEVI ROA D, THANE (WEST). PAN/GIR NO. : A A CCS 3437 L ( APPELLANT ) .. ( RESPONDENT ) AND ITA NO. 678 / MUM/20 10 ( ASSESSMENT YEAR :200 6 - 0 7 ) M/S SMC INFRASTRUCTURE PVT. LTD., 1 ST FLOOR , KONARK TOWER, OPP. SAI BABA TEMPLE, GHANTALI DEVI ROAD, THANE (WEST). VS. D CIT, CIR - 3, VARDAAN, MIDC, WAGLE INDUSTRIAL ESTATE , THANE . PAN/GIR NO. : A ACCS 3437 L ( APPELLANT ) .. ( RESPONDENT ) AND ITA NO. 7884/ MUM/20 10 ( ASSESSMENT YEAR :2007 - 08 ) M/S SMC INFRASTRUCTURE PVT. LTD., 1 ST FLOOR, KONARK TOWER, OPP. SAI BABA TEMPLE, GHANTALI DEVI ROAD, THANE (WEST). VS. ACIT, CIR - 3, PAWAR COMPOUND , THANE - 400 601 PAN/GIR NO. : A ACCS 3437 L ( APPELLANT ) .. ( RESPONDENT ) AND ITA NO. 679 / MUM/20 10 ( ASSESSMENT YEAR :200 6 - 0 7 ) NCC SMC JV , 101, KONARK TOWERS, GHANTALI DEVI ROAD, THANE VS. D CIT, CIR - 3, VA RDAAN, MIDC, WAGLE INDUSTRIAL ESTATE, THANE PAN/GIR NO. : A ACCS 3437 L ( APPELLANT ) .. ( RESPONDENT ) ITA NO. 4188.06, 678,7884&679/10 2 /REVENUE BY : SHRI K.C.PATNAIK, & SHRI ASGHAR ZAIN VP /ASSES SEE BY : SHRI NEELKANT KHANDELWAL DATE OF HEARING : 25 TH SEPT , 201 4 DATE OF PRONOUNCEMENT : 31 ST OCT , 201 4 O R D E R PER R.C.SHARMA ( A .M.) : TH ESE ARE THE APPEALS FILED BY REVENUE AND A SSESSEE AGAINST THE ORDER OF CIT(A ) , MUMBAI FOR THE ASSESSMENT YEAR 2001 - 02, 2006 - 07 , 2007 - 08 , RESPECTIVELY, IN THE MATTER OF ORDER PASSED U/S. 143 ( 3 ) OF TH E I.T. OF THE I.T.ACT. 2 . THE REVENUE IN ITS APPEAL I.E. ITA NO. 4188/MUM/2006 (AY2001 - 02) HAS RAISED THE FOLLOWING GROUNDS : - I. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL), HAS ERRED IN HOLDING THAT THE ASSESSEE IS A DEVELOPER OF INFRASTRUCTURE FACILITIES AND ELIGIBLE FOR CLAIMING DEDU CTION U/ S. 80IA(4) OF THE I T ACT, 1961 IN RESPECT OF INCOME DERIVED BY THE ASSESSEE FROM UNDERTAKING CONTRACT WORK. II. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL), OUGHT TO HAVE APPRECIATED THE FACT THAT TH E ASSESSEE IS NOT A DEVELOPER OF NEW INFRASTRUCTURAL FACILITY BUT MERELY A CONTRACTOR, WHO HAS NO FINANCIAL STAKE IN THE PROJECT AND IS PAID PERIODICALLY FOR THE WORK EXECUT ED BY IT AS PER THE TERMS AND CONDITIONS MENTIONED IN THE TENDER DOCUMENT. III. T HE LD. CLT(A) OUGHT TO HAVE APPRECIATED THE FACT THAT THE DEDUCTION U/S. 80IA (4) WAS MEANT TO B E PROVIDED TO THE DEVELOPER OF INFRA STRUCTURAL PROJECT WHO CAN DEVELOP SUCH PROJECTS BY MOBILIZING ITS OWN RE SOURCES/FUNDS. THE LD CIT HAS OVERLOOKED THE ABOVE INTENTION OF THE STATUTE AND HAS ALLOWED THE DEDUCTION U/S. 80IA( 4) TO A CONTRACTOR WHO HAD NO FINANCIAL STAKE AND INSTEAD GOT PERIODICAL PAYMENTS FOR THE WORK DONE BY IT ON CONTRACT BASIS GRANTED TO HIM BY THE LOCAL AUTHORITY WHICH IS THE REAL DEVELOPER/ OWNER OF THE PROJECT. IV. THE LD. CIT(A) HAD E RRED I N RELYING UPON TH E DECISIONS OF THE ITA T, MUMBAI IN THE CASE OF M/ S. PATEL ENGINEERING LTD., AND OCEANS SPARKLE LTD WITHOUT DISTINGUISHING THE FACTS OF THE CASE OF THE ASSESSEE TO THAT OF THE ASSESSEE' S IN THE AFORESAID CASES. ITA NO. 4188.06, 678,7884&679/10 3 V. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE ABOVE GROUNDS BE DISMISSED AND THE ORDER O F THE ASSESSING OFFICER BE RESTORED. 3 . THE ASSESSEE IN ITS RESPECTIVE APPEALS HAS RAISED FOLLOWING GROUNDS : - IN ITA NO. 678 /MUM/20 10 (AY 2006 - 07) , THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS : - 1) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED C IT(A) ERRED IN DISALLOWING APPELLANT COMPANYS CLAIM FOR DEDUCTION OF RS. 2,91,93,349/ - U/S.80IA; IN ITA NO. 78 84 /MUM/20 10 (AY 200 7 - 0 8 ) , THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS : - ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED C.I.T.(A) ERRED IN : - 1. CONFIRMING THE DISALLOWANCE O F DEDUCTION OF RS.2,08,23,530 U/ S 80LA OF THE INCOM E TAX ACT, 1961; 2. NOT ACCEPTING THE APPELLANT COMPANY'S CONTENTION THAT THE RATIO OF THE CASE OF MIS P.O. PATIL & SONS (BELGAUM) DECIDED BY THE HON'BLE SPECIAL BENCH IS NOT APPLICABLE TO THE APPELLANT COMPANY; 3. UPHOLDING THE A.O.'S CONTENTION THAT THE APPELLANT COMPANY IS A 'WORKS CONTRACTOR' AND THEREFORE NOT ELIGIBLE FOR DEDUCTION ULS 80LA AS AMENDED. IN ITA NO. 679 /MUM/20 10 (AY 2006 - 07) , THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS : - 1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND I N LAW THE LEARNED CIT(A) ERRED IN DISALLOWING APPELLANT C OMPANY'S CLAIM FOR DEDUCTION OF RS. 11,92,74,450 U/S 80LA 4 . RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. THE ONLY COMMON GRIEVANCE OF THE ASSESSEE IN ALL THESE APPEALS IS IN RESPECT OF CL AIM OF DEDUCTION U/S 80IA(4) OF THE ACT. FACTS IN BRIEF ARE THAT THE ASSESSEE IS ENGAGED IN DEVELOPMENT OF INFRASTRUCTURE FACILITIES. ITS CLAIM ITA NO. 4188.06, 678,7884&679/10 4 FOR DEDUCTION U/S 80IA(4) OF THE INCOME TAX ACT, 1961 WAS DECLINED BY THE A.O. THE LD. CIT(A) ALLOWED THE ASS ESSEES CLAIM IN A.Y. 2001 - 02. IN A.Y. 2006 - 07 & 2007 - 08 ASSESSEES CLAIM U/S 80IA(4) WAS DECLINED BY THE LD. CIT(A) AND ASSESSEE IN FURTHER APPEAL BEFORE US. IN THE CASE OF ITA NO. 4188/MUM /2006 FOR A.Y. 2001 - 02 WHEREIN THE REVENUE WAS IN APPEAL BEFORE THE TRIBUNAL BY FOLLOWING THE ORDER OF THE SPECIAL BENCH OF ITAT IN THE CASE OF B.T. PATEL & SONS BENGAUM CONSTRUCTION P. LTD. VS. ACIT , 36 SOT 171 REVERSED THE ORDER OF LD. CIT(A). THEREAFTER, THE ASSESSEE FILED MISC. APPLICATION NO. 105/MUM/2014 WHERE IN THE ORDER OF THE TRIBUNAL DATED 27 - 8 - 2010 WAS RECALLED AFTER HAVING FOLLOWING OBSERVATION : - WE HAVE CONSIDERED RIVAL CONTENTIONS AND FOUND THAT THE TRIBUNAL HAS DISMISSED THE ASSESSEE'S APPEAL VIDE ORDER DATED 27 - 8 - 2010 BY RELYING ON THE DECISION O F LARGER THIRD MEMBER BENCH IN THE CASE OF B.T. PATIL & SONS BELGAUM CONSTRUCTION PRIVATE LTD. (SUPRA). THIS DECISION WAS SUBSEQUENTLY RECALLED AND WAS FINALLY DECIDED IN FAVOUR OF THE ASSESSEE BY RELYING ON THE DECISION OF HON'BLE JURISDICTIONAL HIGH CO URT IN THE CASE OF CIT VS. ABG HEAVY INDUSTRIES LTD., 322 ITR 323. THUS, AN APPARENT MISTAKE HAS BEEN CREPT IN THE ORDER OF TRIBUNAL DATED 27 - 10 - 2010,WHICH IS AMENABLE TO RECTIFICATION U/S.254(2) OF I.T. ACT, 1961. UNDER EXACTLY SIMILAR CIRCUMSTANCE TRIBUN AL HAD RECALLED ITS ORDER IN ITA NO.4842/MUM/2006 VIDE ORDER DATED 11 - 4 - 2010, PASSED IN MA NO.472/MUM/2013. RESPECTFULLY FOLLOWING THE DECISION OF THE TRIBUNAL IN MA NO.472/MUM/2013, DATED 11 - 4 - 2014, WE RECALL THE ORDER PASSED BY THE TRIBUNAL AND DIRECT TH E REGISTRY TO FIX THE APPEAL FOR HEARING ON MERITS. REGISTRY IS ALSO DIRECTED TO ISSUE FRESH NOTICE TO BOTH THE PARTIES. 5 . SIMILARLY, THE ORDER PASSED BY THE TRIBUNAL IN ITA NO. 679/MUM/2010 DATED 27 - 10 - 2010 WAS ALSO RECALLED BY THE TRIBUNAL VIDE IT S ORDER IN MA NO. 103/MUM/2014 DATED 8 - 8 - 2014. THE TRIBUNAL ORDER IN ITA NO. 678 & 679/MUM/2010 DATED 27 - 10 - 2010 WAS ALSO RECALLED BY THE TRIBUNAL VIDE ORDER DATED 8 - 8 - 2014 IN MA NO. 102/MUM/2014. ITA NO. 4188.06, 678,7884&679/10 5 6 . FURTHER, WE FOUND THAT AFTER RECALLING THE ORDER ON THIS ISSUE, THE TRIBUNAL HAS DECIDED SIMILAR ISSUE IN FAVOUR OF THE ASSESSEE IN ITA NO. 4842/MUM/2006, ITA NO. 514/MUM/2009, ITA NO. 7885/MUM/2010 & ITA NO. 283/MUM/2011 ORDER DATED 20 - 6 - 2014. 7 . WE HAVE CONSIDERED THE RIVAL CONTENTION, CAREFULLY GONE TH ROUGH THE ORDERS OF AUTHORITIES BELOW AS WELL AS THE ORDER OF THE TRIBUNAL DATED 20 TH JUNE, 2014 (SUPRA). FACTS IN BRIEF ARE THAT THE ASSESSEE IS ENGAGED IN DEVELOPMENT OF INFRASTRUCTURE FACILITIES. A JOINT VENTURE AGREEMENT WAS ALSO ENTERED WITH NCC - SMC (JV). SIMILAR NATURE OF ACTIVITIES WAS ALSO CARRIED ON BY THE NCC - SMC (JV) COMPANY. THE ASSESSEE WAS AWARDED CONTRACTS ONE BY HYDERABAD METROPOLITAN WATER SUPPLY & SEWERAGE BOARD FOR AUGMENTATION OF DRINKING WATER SUPPLY TO HYDERABAD CITY & OTHER BY VISA KHAPATNAM MUNICIPAL CORPORATION FOR GODAVARI WATER SUPPLY PROJECT. ITS CLAIM FOR DEDUCTION U/S 80IA(4) WAS DECLINED BY THE LOWER AUTHORITIES ON THE PLEA THAT THE CONTRACT AWARDED TO THE ASSESSEE, IT CONTRIBUTED ONLY PART OF THE WHOLE KRISHNA WATER SUPPLY P ROJECT AND THEREFORE THE WORK OF THE ASSESSEE WAS NOT REGARDING ENTIRE WATER SUPPLY PROJECT. IT WAS ALSO OBSERVED BY THE A.O. THAT CONTRACT FOR LAYING PIPE LINE FOR THE PROJECT FOR A SPECIFIED LENGTH. INSTALLATION AND COMMISSIONING OF PIPE LINES ALONE DOES NOT CONSTITUTE WHOLE WATER SUPPLY PROJECT. ACCORDINGLY THE A.O. HELD THAT ASSESSEE IS ONLY A CONTRACTOR WHO WAS AWARDED A CONTRACT TO SET UP ONLY A PART OF THE WHOLE KRISHNA DRINKING WATER SUPPLY PROJECT AND THE ASSESSEE DID NOT HAVE EITHER CONTROL OR DO MAIN OVER FACILITY BEING DEVELOPED AND NO RISK WAS BORNE BY THE ITA NO. 4188.06, 678,7884&679/10 6 ASSESSEE AS FAR AS THE WORK EXECUTED BY THEM IS CONCERNED. THE TRIBUNAL VIDE ITS ORDER DATED 25 TH JUNE, 2014 FOR A.YS 2004 - 05, 2005 - 06 AND 2007 - 08 AFTER FOLLOWING THE DECISION OF HONBLE BOMB AY HIGH COURT IN THE CASE OF CIT VS. ABG HEAVY INDUSTRIES LTD., 189 TAXMANN 54 HELD THAT THE ASSESSEE WAS ENTITLED FOR CLAIM OF DEDUCTION U/S 80IA(4) OF THE ACT. THE PRECISE OBSERVATION OF THE TRIBUNAL WAS UNDER: - 10. WE HAVE HEARD BOTH THE PARTIES AN D THEIR CONTENTIONS HAVE CAREFULLY BEEN CONSIDERED. WE HAVE CAREFULLY GONE THROUGH THE ASSESSMENT ORDER FOR A.Y 2004 - 05 WHICH IS THE BASE YEAR FOR WHICH THE ASSESSEE IS CLAIMING THAT IT IS ENTITLED TO GET DEDUCTION UNDER SECTION 80 IA(4). THE FIRST A ND FOREMOST OBJECTION OF THE AO IS THAT ASSESSEE, WHILE EXECUTING THE PROJECT, HAD ACTED IN THE CAPACITY OF A CONTRACTOR, THEREFORE, THE DEDUCTION CANNOT BE ALLOWED TO THE ASSESSEE AS PRE - REQUISITE OF THE SECTION TO ENABLE THE ASSESSEE TO CLAIM DEDUCTION IS THAT HE SHOULD BE A DEVELOPER. 10.1 THE SECOND CONTENTION OF AO IS THAT ASSESSEE HAS ONLY BUILT SOME PART OF THE PROJECT AND IT HAS NEITHER OPERATED OR MAINTAINED THE INFRASTRUCTURE PROJECT WHICH IS ALSO A CONDITION PRECEDENT TO GRANT DEDUCTION UND ER SECTION 80 IA(4). THE AO HAS REJECTED THE CONTENTION OF THE ASSESSEE THAT ITS CASE IS SQUARELY COVERED BY DECISION OF ITAT IN THE CASE OF PATEL ENGINEERING LTD. (SUPRA). AS AGAINST SUCH CASE OF THE AO LD. CIT(A) HAS FOLLOWED MAINLY THE DECISION OF IT AT IN THE CASE OF PATEL ENGINEERING LTD. (SUPRA) AND HAS ALLOWED RELIEF TO THE ASSESSEE. WE HAVE TO EXAMINE THAT WHETHER OR NOT ASSESSEE IS ENTITLED TO GET DEDUCTION UNDER SECTION 80 IA(4) IN THE LIGHT OF AFOREMENTIONED OBJECTION OF THE AO AND PLEA OF TH E ASSESSEE. IT IS THE CASE OF THE ASSESSEE THAT AO HAS COMMITTED AN ERROR IN HOLDING THAT ASSESSEE HAS ACTED AS A CONTRACTOR IN PLACE OF THE CLAIM OF THE ASSESSEE THAT IT HAS WORKED AS A DEVELOPER OF THE INFRASTRUCTURE PROJECT. FOR RAISING SUCH CONTENTI ON THE ASSESSEE HAS PLACED RELIANCE NOT ONLY ON THE DECISION IN THE CASE OF PATEL ENGINEERING LTD. (SUPRA) BUT ALSO ON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF ABG HEAVY INDUSTRIES LTD. (SUPRA). IT MAY BE MENTIONED HERE THAT AO HAS PASSED THE IMPUGNED ASSESSMENT ORDER FOR A.Y 2004 - 05 ON 31/3/2006 WHEN THE BENEFIT OF DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT V/S ABG HEAVY INDUSTRIES LTD. WAS NOT AVAILABLE. THE ASSESSEE IN THAT CASE DID NOT DEVELOP, OPERATE OR MAINTAIN THE ENTIRE PORT BUT ONLY PART OF THE FUNCTION OF THE PORT WAS DEVELOPED AND MAINTAINED BY THE ASSESSEE. LD. AO IN THAT CASE WAS OF THE VIEW THAT THE ASSESSEE MERELY ENGAGED IN THE BUSINESS OF SUPPLYING, INSTALLING, TESTING, COMMISSIONING AND MAINTAINING CRANES AT THE PORT AND WAS NOT IN THE BUSINESS OF DEVELOPING , MAINTAINING AND OPERATING OF PORT. THIS CONTENTION OF THE ASSESSEE IS ALSO RECORDED IN PARA - 7 OF THE DECISION WHICH HAS ALREADY BEEN REPRODUCED IN THE ABOVE PART OF THIS ORDER. (PARA - 7). ITA NO. 4188.06, 678,7884&679/10 7 1 0.2 WHILE ADJUDICATING THE AFOREMENTIONED CONTENTION OF THE REVENUE , THEIR LORDSHIPS IN PARA - 16 HAVE OBSERVED THAT SUCH SUBMISSION CANNOT BE ACCEPTED. THE EXPRESSION DEVELOPMENT HAS NOT BEEN ARTIFICIALLY DEFINED FOR THE PURPOSE OF SECTION 80 IA(4) OF T HE ACT MUST, THEREFORE, RECEIVED ITS ORDINARY AND NATURAL MEANING. UNDER THE TERMS OF THE CONTRACT BETWEEN THE ASSESSEE AND JNPT THE ASSESSEE UNDERTOOK AN OBLIGATION TO SUPPLY, INSTALLING, TESTING, COMMISSIONING AND MAINTENANCE OF CONTAINER HANDLING EQUI PMENTS NAMELY THE CRANES IN QUESTION. THEIR LORDSHIPS IN PARA - 17 HAVE OBSERVED THAT THE OBLIGATIONS WHICH HAVE BEEN ASSUMED BY THE ASSESSEE UNDER THE TERMS OF THE CONTRACT ARE OBLIGATIONS INVOLVING THE DEVELOPMENT OF AN INFRASTRUCTURE FACILITY. SECTION 80 IA(4) OF THE ACT ESSENTIALLY CONTEMPLATED A DEDUCTION IN A SITUATION WHERE AN ENTERPRISE CARRIED ON A BUSINESS OF DEVELOPING, MAINTAINING AND OPERATING INFRASTRUCTURE FACILITY. A PORT WAS DEFINED TO INCLUDE WITHIN THE PURVIEW OF THE EXPRESSION INFRA STRUCTURE FACILITY. THE OBLIGATIONS, WHICH THE ASSESSEE ASSUMED UNDER THE TERMS OF THE CONTRACT WERE NOT MERELY FOR SUPPLY AND INSTALLATION OF THE CRANES BUT INVOLVED A CONTINUOUS OBLIGATION FROM THE SUPPLY OF THE CRANES TO THE INSTALLATION, TESTING, COM MISSIONING, OPERATION AND MAINTENANCE OF CRANES FOR A TERM OF 10 YEARS, AFTER WHICH THE CRANES WERE TO VEST IN JNPT FREE OF COST. THE ASSESSEE DID NOT HAVE TO DEVELOP THE ENTIRE PORT IN ORDER TO QUALIFY FOR DEDUCTION UNDER SECTION 80 IA(4). PARLIAMENT DID NOT LEGISLATE A CONDITION IMPOSSIBLE OF COMPLIANCE. 10.3 IF THE FACTS OF THE PRESENT CASE ARE TO BE EXAMINED IN THE LIGHT OF AFOREMENTIONED DECISION OF HONBLE BOMBAY HIGH COURT, THEN IT CAN BE SAID THAT FOR CLAIMING DEDUCTION UNDER SECTION 80 IA(4), IT IS NOT NECESSARY FOR THE ASSESSEE TO DEVELOP THE ENTIRE PROJECT IN ORDER TO QUALIFY FOR A DEDUCTION UNDER SECTION 80 IA(4). IF THE PROVISIONS ARE SO CONSTRUED THEN IT WILL BE A CONDITION IMPOSSIBLE OF COMPLIANCE BECAUSE OF THE MAGNITUDE OF THE ENTIRE PROJECT. FOR QUALIFYING DEDUCTION UNDER SECTION 80 IA(4) WHAT WOULD BE NECESSARY WILL BE THAT THE WORK CARRIED ON BY THE ASSESSEE MUST BE AN INTEGRAL PART OF THE PROJECT AND IF IT IS SO, THEN IT CANNOT BE SAID THAT ASSESSEE IS NOT ELIGIBLE FO R DEDUCTION UNDER SECTION 80 IA(4) FOR THE REASON THAT THE ASSESSEE ON ITS OWN DID NOT DEVELOP AN INFRASTRUCTURE PROJECT. THEREFORE, OBSERVATIONS OF THE AO THAT ASSESSEE DID NOT DEVELOP AN INFRASTRUCTURE PROJECT AND ONLY PART OF THE WORK WAS CARRIED OUT CANNOT DISENTITLE THE ASSESSEE TO CLAIM THE DEDUCTION. 10.4. THE NATURE OF WORKS CARRIED OUT BY THE ASSESSEE REGARDING THE PROJECT HAVE BEEN STATED IN PARA - 4 OF THE ASSESSMENT ORDER FOR A.Y.2004 - 05. IT INTER - ALIA INCLUDE MANUFACTURING , SUPPLYING , LOWERING, LAYING, JOINTING, TESTING AND COMMISSIONING OF 2200 MM DIAMETER MS PUMPING MAIN WITH CEMENT MORTAR. IN - LINING & OUT - COATING FROM CLEAR WATER RESERVOIR AT GODAKONDALA TO MBR AT GUNGAL AND SIMILAR ACTIVITIES WERE CARRIED OUT IN RESPECT OF OTHER PLACES WHICH HAVE BEEN SPECIFIED BY THE AO. THE ACTIVITY OF THE ASSESSEE IS NOT LIMITED ONLY TO CONSTRUCTION OF THE PROJECT BUT AS PER THE TENDER THE ASSESSEE HAD TO SUBMIT BANK GUARANTEE FOR COMPLETION OF THE CONTRACT AND AS PER CLAUSE - 88 OF THE CONTRACT THE ASSESSEE IS ALSO LIABLE FOR LIQUIDATED DAMAGES AND THE MAXIMUM AMOUNT FOR PENALTY HAS BEEN PRESCRIBED WHICH IS NOT TO EXCEED 5% OF THE CONTRACT VALUE. THERE IS ALSO DESCRIPTION OF DEFECT ITA NO. 4188.06, 678,7884&679/10 8 LIABILITY PERIOD IN CLAUSE - 89 WHICH IS T HE LIABILITY OF THE ASSESSEE UNDER THE CONTRACT FOR 24 MONTHS FROM THE DATE OF SUCCESSFUL COMPLETION OF THE WORK AND TAKEN OVER BY VISAKHAPATNAM MUNICIPAL CORPORATION. KEEPING IN VIEW THE ENTIRETY OF FACTS AND AFOREMENTIONED DECISION OF HONBLE BOMBA Y HIGH COURT, IT CANNOT BE SAID THAT ASSESSEE DID NOT ACT IN THE CAPACITY OF DEVELOPER AND IT HAS ALREADY BEEN MENTIONED THAT TO BE ENTITLED TO CLAIM DEDUCTION UNDER SECTION 80 IA(4) IT IS NOT NECESSARY THAT ENTIRE INFRASTRUCTURE PROJECT SHOULD BE DEVELOP ED BY THE ASSESSEE. 10.5 NOW THE NEXT QUESTION WILL BE THAT WHETHER TO CLAIM DEDUCTION UNDER SECTION 80 IA(4) IT IS NECESSARY FOR AN ASSESSEE NOT ONLY TO DEVELOP THE PROJECT BUT ALSO TO OPERATE AND MAINTAIN THE INFRASTRUCTURE FACILITY. THIS ISSUE IS ALSO NO MORE RES - INTEGRA AND IS COVERED BY THE AFOREMENTIONED DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. ABG HEAVY INDUSTRIES LTD. (SUPRA). IN THAT CASE IT WAS THE CONTENTION OF THE REVENUE THAT FOR ASSESSMENT YEAR 1997 - 98 AND 1998 - 99, IT WAS NECESSARY FOR THE ASSESSEE TO CUMULATIVELY FULFILL THE REQUIREMENT OF DEVELOPING, OPERATING AND MAINTAINING INFRASTRUCTURE FACILITY. IT WAS PLEADED BY THE REVENUE THAT, EVEN IF IT BE HELD TO HAVE DEVELOPED THE FACILITY IT CANNOT BE REG ARDED AS OPERATING THE FACILITY. THEIR LORDSHIPS HAVE REFERRED TO SUCH CONTENTION OF REVENUE IN PARA - 19 OF THE DECISION AND THEY OBSERVED THAT IT IS NOT POSSIBLE TO ACCEPT SUCH SUBMISSIONS. THEIR LORDSHIPS HAVE OBSERVED THAT IT HAS ALREADY BEEN NOTED THAT ASSESSEE HAD AS A MATTER OF FACT DEVELOPED THE FACILITY. THEIR LORDSHIPS AFTER CONSIDERING THE PROVISIONS AND VARIOUS CIRCULARS OF CBDT AND ALSO THE JUDICIAL PRONOUNCEMENTS HAVE CONCLUDED IN PARA - 22 OF THE DECISION THAT AFTER SECTION 80IA WAS AMEND ED BY FINANCE ACT, 2001, THE SECTION APPLIES TO AN ENTERPRISE CARRYING ON THE BUSINESS OF (I) DEVELOPING; OR (II) OPERATING AND MAINTAINING; OR (III) DEVELOPING, OPERATING AND MAINTAINING ANY INFRASTRUCTURE FACILITY WHICH FULFILLS CERTAIN CONDITIONS. FOR THE SAKE OF COMPLETENESS PARA - 22 & 23 OF THE DECISION IS REPRODUCED BELOW: 22. ANOTHER SUBMISSION WHICH WAS URGED ON BEHALF OF THE REVENUE IS THAT UNDER CLAUSE (III) OF SUB - SECTION (4A) OF SECTION 80 - IA, ONE OF THE CONDITIONS IMPOSED WAS THAT THE ENTERPR ISE MUST START OPERATING AND MAINTAINING THE INFRASTRUCTURE FACILITY ON OR AFTER 1 - 4 - 1995. THE SAME REQUIREMENT IS EMBODIED IN SUB - CLAUSE (C) OF CLAUSE (I) OF SUB - SECTION (4) OF THE AMENDED PROVISIONS OF SECTION 80 - IA. ON THIS BASIS, IT WAS URGED THAT S INCE THE ASSESSEE WAS NOT OPERATING AND MAINTAINING THE FACILITY, HE DID NOT FULFILL THE CONDITION. THIS SUBMISSION IS FALLACIOUS BOTH IN FACT AND IN LAW. AS A MATTER OF FACT, THE TRIBUNAL HAS ENTERED A FINDING THAT THE ASSESSEE WAS OPERATING THE FACILITY AND THIS FINDING HAS BEEN CONFIRMED EARLIER IN THIS JUDGMENT. THAT THE ASSESSEE WAS MAINTAINING THE FACILITY IS NOT IN DISPUTE. THE FACILITY WAS COMMENCED AFTER 1 - 4 - 1995. THEREFORE, THE REQUIREMENT WAS MET IN FACT. MOREOVER, AS A MATTER OF LAW, WHAT THE C ONDITION ESSENTIALLY MEANS IS THAT THE INFRASTRUCTURE FACILITY SHOULD HAVE BEEN OPERATIONAL AFTER 1 - 4 - 199.. AFTER SECTION 80 - IA WAS AMENDED BY THE FINANCE ACT OF 2001, THE SECTION APPLIES TO AN ENTERPRISE CARRYING ON THE BUSINESS OF (I) DEVELOPING; O R(II)OPERATING AND MAINTAINING, OR (III) DEVELOPING, OPERATING AND MAINTAINING ANY INFRASTRUCTURE FACILITY WHICH FULFILS CERTAIN ITA NO. 4188.06, 678,7884&679/10 9 CONDITIONS. THOSE CONDITIONS ARE (I) OWNERSHIP OF THE ENTERPRISE BY A COMPANY REGISTERED IN INDIA OR BY A CONSORTIUM; (II) AN A GREEMENT WITH THE CENTRAL OR STATE GOVERNMENT, LOCAL AUTHORITY OR STATUTORY BODY; AND (III) THE START OF OPERATION AND MAINTENANCE OF THE INFRASTRUCTURE FACILITY ON OR AFTER 1 - 4 - 1995. THE REQUIREMENT THAT THE OPERATION AND MAINTENANCE OF THE INFRASTRUCTU RE FACILITY SHOULD COMMENCE AFTER 1 - 4 - 1995 HAS TO BE HARMONIOUSLY CONSTRUED WITH THE MAIN PROVISION UNDER WHICH A DEDUCTION IS AVAILABLE TO AN ASSESSEE WHO DEVELOPS; OR OPERATES AND MAINTAINS; OR DEVELOPS, OPERATES AND MAINTAINS AN INFRASTRUCTURE FACILITY. UNLESS BOTH THE PROVISIONS ARE HARMONIOUSLY CONSTRUED, THE OBJECT AND INTENT UNDERLYING THE AMENDMENT OF THE PROVISION BY THE FINANCE ACT OF 2001 WOULD BE DEFEATED. A HARMONIOUS READING OF THE PROVISION IN ITS ENTIRETY WOULD LEAD TO THE CONCLUSION THAT THE DEDUCTION IS AVAILABLE TO AN ENTERPRISE WHICH (I) DEVELOPS; OR (II) OPERATES AND MAINTAINS; OR (III) DEVELOPS, MAINTAINS AND OPERATES THAT INFRASTRUCTURE FACILITY. HOWEVER, THE COMMENCEMENT OF THE OPERATION AND MAINTENANCE OF THE INFRASTRUCTURE FAC ILITY SHOULD BE AFTER 1 - 4 - 1995. IN THE PRESENT CASE, THE ASSESSEE CLEARLY FULFILLED THIS CONDITION ( EMPHASIS OURS). 23. IN THE VIEW WHICH WE HAVE TAKEN, ALL THE ASSESSMENT YEARS IN QUESTION TO WHICH THIS BATCH OF APPEALS RELATES WOULD BE GOVERNED, BY T HE SAME PRINCIPLE. THE SUBSEQUENT AMENDMENT OF SECTION 80 - IA(4A) OF THE ACT TO CLARIFY THAT THE PROVISION WOULD APPLY TO AN ENTERPRISE ENGAGED IN (I) DEVELOPING; OR (II) OPERATING AND MAINTAINING; OR (III) DEVELOPING, OPERATING AND MAINTAINING AN INFRASTRU CTURE FACILITY WAS REFLECTIVE OF A POSITION WHICH WAS ALWAYS CONSTRUED TO HOLD THE FIELD. BEFORE THE AMENDMENT THAT WAS BROUGHT ABOUT BY PARLIAMENT BY THE FINANCE ACT OF 2001, WE HAVE ALREADY NOTED THAT THE CONSISTENT LINE OF CIRCULARS OF THE BOARD POSTUL ATED THE SAME POSITION. THE AMENDMENT MADE BY PARLIAMENT TO SECTION 80 - IA(4) OF THE ACT SET THE MATTER BEYOND ANY CONTROVERSY BY STIPULATING THAT THE THREE CONDITIONS FOR DEVELOPMENT, OPERATION AND MAINTENANCE WERE NOT INTENDED TO BE CUMULATIVE IN NATURE. 10.6 ACCORDING TO AFOREMENTIONED OBSERVATIONS OF THEIR LORDSHIPS, PRE OR POST AMENDMENT THE REQUIREMENT OF SECTION 80 IA(4) IS THAT DEDUCTION WILL BE AVAILABLE AN ENTERPRISE ENGAGED IN (I) DEVELOPING; OR (II) OPERATING AND MAINTAINING OR (II I) DEVELOPING, OPERATING AND MAINTAINING THE INFRASTRUCTURE FACILITY AND SUCH POSITION WAS TO BE ALWAYS CONSTRUE TO HOLD THE FIELD. THEREFORE, ONLY DEVELOPMENT OF INFRASTRUCTURE PROJECT IS SUFFICIENT TO MAKE ENTITLE AN ENTERPRISE TO BE ELIGIBLE FOR DEDU CTION UNDER SECTION 80 IA(4). 10.7 IT MAY ALSO BE POINTED OUT THAT THE APPEAL FILED BY THE REVENUE FOR A.Y 2004 - 05 WAS EARLIER ALLOWED BY THE TRIBUNAL ON THE BASIS OF LARGER BENCH DECISION IN THE CASE OF M/S. B.T.PATEL & SONS BELGAUM CONSTRUCTION PVT. L TD.(SUPRA) AND IT WAS BROUGHT TO OUR NOTICE ITA NO. 4188.06, 678,7884&679/10 10 THAT IN VIEW OF THE SUBSEQUENT DECISION OF HONBLE BOMBAY HIGH COURT, LARGER BENCH DECISION WAS NOT FOLLOWED BY THE TRIBUNAL AND THE MATTER WAS DECIDED BY THE TRIBUNAL VIDE ITS ORDER DATED 28/2/2013 IN THE CASE O F B.T.PATEL & SONS BELGAUN CONSTRUCTION PVT. LTD.(SUPRA), A COPY OF THIS DECISION WAS PLACED ON OUR RECORD. THE DIRECTIONS OF HONBLE BOMBAY HIGH COURT IN PURSUANCE TO WHICH SUCH ORDER WAS PASSED ARE ALSO DESCRIBED IN THE ORDER IN PARA - 5 AND THE RELEVA NT PARA - 5 IS REPRODUCED BELOW: 5. THE HONBLE BOMBAY HIGH COURT PERMITTED THE COUNSEL OF THE ASSESSEE TO WITH WITHDRAW THE SAID APPEALS. WHILE PASSING THE ORDER THE HONBLE COURT HAS KEPT ALL THE CONTENTIONS OPEN AND FURTHER DIRECTED THE TRIBUNAL TO CONSIDER THE DECISION OF THE ABG HEAVY INDUSTRIES AND OTHER DECISIONS WHILE PASSING THEIR ORDER GIVING EFFECT TO THE OPINION OF THE THIRD MEMBER AS PER THE PROVISIONS OF SECTION 255(4) OF THE ACT. THE RELEVANT PORTION OF THE SAID ORDER OF HONBLE JURISD ICTIONAL HIGH COURT IN ITA NO.1307 OF 2011 FOR A.Y.2000 - 01 AND 1640 OF 2011 FOR A.Y 2001 - 02 IS AS UNDER: 1. SINCE THE TRIBUNAL HAS RECALLED THE IMPUGNED ORDER DATED 23.03.2011, THE APPELLANT IS WITHDRAWING ITS APPEAL. 2. FURTHER, WHILE CONSIDERING TH E MATTER AFRESH, THE TRIBUNAL WILL TAKE INTO CONSIDERATION ALL DECISIONS INCLUDING THE DECISION OF THIS COURT IN THE MATTER OF CIT V. ABG HEAVY INDUSTRIES LTD. REPORTED IN 322 ITR 323. ALL CONTENTIONS ARE KEPT OPEN. 3. THE APPEAL IS DISMISSED OF IN A BOVE TERMS. 10.8 IN THE ORDER THE TRIBUNAL AFTER CONSIDERING THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. ABG HEAVY INDUSTRIES LTD. (SUPRA) HAS DECIDED THE ISSUE IN FAVOUR OF ASSESSEE. WHILE DECIDING THE PRESENT APPEAL VIDE ORDER DATED 9/2/2010 IT WAS FOUND BY THE TRIBUNAL THAT BOTH SIDES WERE IN AGREEMENT THAT THE FACTS AND CIRCUMSTANCES ARE MUTATIS - MUTANTIS SIMILAR TO THOSE CONSIDERED BY THE LARGER BENCH OF THE TRIBUNAL IN THE CASE OF B.T.PATEL & SONS BELGAUN CONSTR UCTION PVT. LTD.(SUPRA). THE SAID ORDER OF THE TRIBUNAL WAS RECALLED ONLY FOR THE REASON THAT THE LARGER BENCH DECISION IN THE CASE OF M/S. B.T.PATEL & SONS BELGAUM CONSTRUCTION PVT. LTD.(SUPRA) WAS NO MORE GOOD LAW IN VIEW OF SUBSEQUENT DECISION OF HON BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. ABG HEAVY INDUSTRIES (SUPRA). THE ORDER IN THE CASE OF PRESENT ASSESSEE WAS NOT RECALLED FOR THE REASON THAT THERE IS ANY DIFFERENCE IN THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE AND THE DECISION IN THE C ASE OF B.T.PATEL & SONS BELGAUN CONSTRUCTION PVT. LTD.(SUPRA). NOW THE DECISION OF LARGER BENCH IS NO MORE GOOD LAW AND THE DIVISION BENCH OF THE TRIBUNAL IN THE CASE OF B.T.PATEL & SONS BELGAUN CONSTRUCTION PVT. LTD.(SUPRA) HAS DECIDED THIS ISSUE IN FAVO UR OF THE ASSESSEE FOLLOWING THE DECISION OF HONBLE BOMBAY ITA NO. 4188.06, 678,7884&679/10 11 HIGH COURT IN THE CASE OF ABG HEAVY INDUSTRIES LTD. (SUPRA). PARA - 4 OF THE SAID ORDER IS REPRODUCED BELOW: 14. IN THIS BACKGROUND, THE ASSESSEE COULD CERTAINLY CLAIM THE DEDUCTIONS UNDER T HE PROVISION OF SECTION 80 IA. ONE HAS TO SEE THE SUBSTANCE AND NOT THE FORM ESSENTIALLY, THOUGH IT WAS A JOINT VENTURE, IT WAS CONVERTED INTO ASSESSEES VENTURE. THE OTHER VENTURER WITHDRAW AND THE ENTIRE WORK WAS EXECUTED BY THE ASSESSEE THOUGH IN THE NAME OF JOINT VENTURE. THE JOINT VENTURE IS NOTHING BUT THE VENTURE OF THE ASSESSEE COMPANY AND THE OTHER PERSON NOT BEING A PARTY AFTER DRAWING THE QUESTION OF JOINT VENTURE DOES NOT ARISE. THE VENTURE WAS FULLY CARRIED OUT BY THE ASSESSEE COMPANY. TAKING THE SUBSTANCE OF THE TRANSACTION, THE ASSESSEE ARE ENTITLED TO ALL THE PROFITS IN RESPECT OF THE CONTRACT EXECUTED BY THEM, HENCE THE ASSESSEE WOULD CERTAINLY BE ENTITLED TO DEDUCTION UNDER THE PROVISIONS OF 80IA AS THEY HAVE FULFILLED ALL THE OT HER CONDITIONS. THIS VIEW GET FROM DECISION IN THE CASE OF ITAT, INDORE BENCH, IN CASE OF AYUSH AJAY CONSTRUCTIONS LTD. (SUPRA). THUS, WHILE GIVING EFFECT TO THE OPINION OF THIRD MEMBER U/S.255(4) OF THE ACT, WE TAKE VIEW IN CONFORMITY WITH ORDER OF JUR ISDICTIONAL HIGH COURT IN CASE OF ABG HEAVY INDUSTRIES LTD. (SUPRA) AVAILABLE AT THIS TIME THOUGH CONTRARY TO THE OPINION EXPRESSED BY THE THIRD MEMBER. SO IN VIEW OF ABOVE DISCUSSION, FOLLOWING THE RATION OF JURISDICTIONAL HIGH COURT IN THE CASE OF ABG INDUSTRIES LTD. (SUPRA), THE ASSESSING OFFICER IS DIRECT TO ALLOW DEDUCTION U/S. 80 IA OF THE ACT TO THE ASSESSEE WITH REGARD TO THE PROJECTS IN QUESTION FOR BOTH THE YEARS. THIS MATTER IS DISPOSED OFF ACCORDINGLY. THEREFORE, ALSO THE ISSUE I S COVERED IN FAVOUR OF THE ASSESSEE BY THE AFOREMENTIONED DECISION OF CO - ORDINATE BENCH. 10.9 IN VIEW OF ABOVE DISCUSSION, WE HOLD THAT ASSESSEE IS ENTITLED FOR DEDUCTION UNDER SECTION 80 IA(4) AND DEPARTMENTAL APPEAL FOR A.Y 2004 - 05 AND 2005 - 06 ARE DI SMISSED. 11. SO FAR AS IT RELATE TO APPEALS OF THE ASSESSEES FOR A.Y 2007 - 08, IT HAS ALREADY BEEN MENTIONED THAT FOLLOWING THE AFOREMENTIONED DECISION OF LARGER BENCH IN THE CASE OF B.T.PATEL & SONS BELGAUN CONSTRUCTION PVT. LTD. (SUPRA), LD. CIT(A) H AS HELD THAT ASSESSEE IS NOT ENTITLED TO GET DEDUCTION UNDER SECTION 80 IA(4). IT HAS ALREADY BEEN POINTED OUT THAT THE LARGER BENCH DECISION IN THE CASE OF B.T.PATEL & SONS BELGAUN CONSTRUCTION PVT. LTD. (SUPRA) IS NO MORE A GOOD LAW AND IN THE CASE OF THAT ASSESSEE ITSELF, DIVISION BENCH HAS HELD THAT ASSESSEE IS ENTITLED FOR DEDUCTION UNDER SECTION 80 IA(4) OF THE ACT. WE HAVE ALREADY HELD THAT ASSESSEE IS ENTITLED FOR DEDUCTION UNDER SECTION 80 IA(4) IN RESPECT OF A.Y. 2004 - 05 AND 2005 - 06. THAT DECI SION WILL BE ITA NO. 4188.06, 678,7884&679/10 12 APPLICABLE FOR A.Y 2007 - 08 IN CASE OF BOTH THE ASSESEES. THEREFORE, THESE APPEALS OF THE ASSESSEES ARE ALSO ALLOWED. 8 . WE HAVE CAREFULLY GONE THROUGH THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE/ASSOCIATED CONCERNS CASE AS REPRODUCED ABOVE AND FOUND THAT EXACTLY SIMILAR ISSUE WAS DECIDED BY THE TRIBUNAL. THE FACTS AND CIRCUMSTANCES IN THE APPEALS DISPOSED BY THIS ORDER ARE EXACTLY SAME. RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL, WE DIRECT THE A.O. TO ALLOW THE CLAIM FOR DEDUCT ION U/S 80IA(4) OF THE ACT. 9 . IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED WHEREAS APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 31/10 / 201 4 . 31/10 / 2014 SD/ - SD / - ( ) ( SANJAY GARG ) ( ) ( R.C.SHARMA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBA I ; DATED 31/10 /2014 /PKM , PS /RAVI KUMAR, SR.PS. COPY OF THE ORDER FORWARDED TO : / BY ORDER, ( ASSTT. REGISTRAR) / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / THE CIT(A) , MUMBAI. 4. / CIT 5. / DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//