Gemini Vinimay (P) Ltd., Kolkata V. I.T.O.,Ward-2(3), Kolkata

ITA 807/KOL/2019

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 2656 (ITAT-KOLKATA)
• Duration Of Justice: 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-06-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2014-2015
• Appeal Filed On: 16-04-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Assessment record; Set aside
• Section: 80IB; 80IA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH A, KOLKATA BEFORE SH. P.M.JAGTAP, VICE PRESIDENT & SH.S.S.VISWANETHRA RAVI, JUDICIAL MEMBER ITA NO.807 TO 810/KOL/2018 (ASSESSMENT YEAR-2005-06, 2006-07, 2008-09 & 2009-10) ORDER PER S.S. VISWANETHRA RAVI, JUDICIAL MEMBER ALL THESE FOUR APPEALS FILED BY THE ASSESSEE AGAINST THE ORDER DATED 21.02.2018 OF CIT(A)-5, KOLKATA FOR AYS 2005-06, 2006-07, 2008- 09 & 2009-10 RESPECTIVELY. 2. THE LD.AR SUBMITS THAT THE ASSESSEE RAISED SOLE ISSUE IN ALL THESE APPEALS FOR AYS 2005-06, 2006-07, 2008-09 & 2009-10 QUESTIONING THE ACTION OF CIT(A) IN CONFIRMING THE DENIAL OF DEDUCTION U/S 80IA(4) OF THE ACT BY THE AO. 3. FURTHER, HE SUBMITS THE ISSUE RAISED IN ALL THE ABOVE APPEALS ARE SIMILAR BASED ON SAME IDENTICAL FACTS AND PRAYED TO TAKE UP THE ISSUES WEST BENGAL HOUSING INFRASTRUCTURE DEVELOPMENT CORPORATION, HIDCO BHAWAN, 35-1111, MAJOR ARTERIAL ROAD, NEW TOWN, KOLKATA-700156. PAN-AAACW4115F VS DCIT, CIRCLE-14(2), AAYAKAR BHAWAN, POORVA, 110, SHANTI PALLY, KOLKATA- 700107. (APPELLANT) (RESPONDENT) APPELLANT BY SH. SAURABH BAGARIA, ADV. & SH. B.R.DUTTA, FCA RESPONDENT BY SH.C.J.SINGH, JCIT, SR.DR & SH. A.K. NAYAK, CIT DR DATE OF HEARING 20 .0 3 .2019 DATE OF PRONOUNCEMENT 17.06.2019 ITA NO.807 TO 810/KOL/2018 (ASSESSMENT YEAR-2005-06, 2006-07, 2008-09 & 2009-10) PAGE | 2 RAISED IN AYS 2005-06, 2006-07, 2008-09 & 2009-10 INITIALLY. WE FIND THE ISSUES RAISED IN ALL THE ABOVE APPEALS FOR AYS 2005-06, 2006-07, 2008-09 & 2009-10 ARE SIMILAR AND THEREFORE, WE PROCEED TO TAKE UP THE FACTS AND CIRCUMSTANCES IN ITA NO.807/KOL/2018 AS LEAD CASE. 4. FIRST WE SHALL TAKE UP ITA NO.807/KOL/2018. ITA NO.807/KOL/2018 (ASSESSMENT YEAR-2005-06) 5. THE FACTS IN BRIEF RELATING TO THE ISSUE ON HAND EMANATING FROM THE RECORD ARE THAT THE ASSESSEE IS A COMPANY FORMED BY THE STATE OF WEST BENGAL AND THE GOVERNMENT OF WEST BENGAL OWNS THE ENTIRE SHARE CAPITAL. THE GOVERNMENT OF WEST BENGAL VIDE ITS ORDER DATED 14.09.2019 HAD APPOINTED WEST BENGAL HOUSING INFRASTRUCTURE DEVELOPMENT CORPORATION LTD. IN SHORT WBHIDCO AS THE PLANNING AUTHORITY UNDER THE WEST BENGAL TOWN & COUNTRY (PLANNING & DEVELOPMENT) ACT, 1979 IN RESPECT OF THE PLANNING AREA WHICH WAS NOTIFIED VIDE NOTIFICATION DATED 27.08.1999. AS PER THE ABOVE REFERRED NOTIFICATION THE AREA UNDER RAJARHAT POLICE STATION SITUATED IN THE DISTRICT NORTH 24 PARGANAS IS THE PLANNING AREA. THE LD.AR SUBMITS THAT THE WBHIDCO HAS BEEN ENGAGED IN DEVELOPING, OPERATING AND MAINTENANCE OF NEW INFRASTRUCTURE ACTIVITIES LIKE DEVELOPMENT OF ROADS, DRAINAGE, CONSTRUCTION OF ROADS AND HOUSING FOR ECONOMICALLY WEAKER SECTIONS (IN SHORT EWS) WHOSE LAND HAD BEEN ACQUIRED BY THE GOVERNMENT FOR THE DEVELOPMENT OF INFRASTRUCTURE FACILITIES BY THE ASSESSEE AND OTHER ACTIVITIES BEING CONSTRUCTION OF FLYOVERS, WATER TREATMENT PLANT, INCLUDING SEWER & WATER SANITATION AND SEWERAGE SYSTEM, SOLID WATER SYSTEM ETC. IN THE ENTIRE NEW TOWN IN RAJARHAAT AREA. ALL THE ABOVE-MENTIONED ACTIVITIES WERE CARRIED OUT BY THE ITA NO.807 TO 810/KOL/2018 (ASSESSMENT YEAR-2005-06, 2006-07, 2008-09 & 2009-10) PAGE | 3 ASSESSEE IN ACCORDANCE WITH THE NOTIFICATION AND ORDER ISSUED BY THE GOVERNMENT OF WEST BENGAL. 6. AS SUBMITTED BY THE LD.AR, IN THE FIRST INSTANCE, THE CO-ORDINATE BENCH OF KOLKATA TRIBUNAL VIDE ITS ORDER DATED 02.12.2015 DIRECTED THE AO TO EXAMINE THE ISSUE OF CLAIM OF ALLOWABILITY OF DEDUCTION U/S 80IA AS UNDER:- 'INFRASTRUCTURE FACILITY HAS BEEN DEFINED UNDER EXPLANATION TO SECTION 80IA(4)(I) OF THE ACT AND THE SAME INCLUDES HOUSING OR OTHER ACTIVITIES: BUT THAT SHOULD BE INTEGRAL PART OF THE HIGHWAY PROJECT. THE DEDUCTION HAS BEEN CLAIMED BY THE ASSESSEE PRESUMABLY IN RESPECT OF PROJECT DEVELOPED AT NEW TOWN, RAJARHAT, KOLKATA. WHETHER IT FORMS PART OF HIGHWAY PROJECT OR NOT IS NOT CLEAR. APART FROM THE ABOVE THE A/R HARPED ON THE POINT THAT THERE WAS A NOTIFICATION BY THE STATE GOVT. EMPOWERING THE ASSESSEE TO DEVELOP OR OPERATE AND MAINTAIN INFRASTRUCTURE FACILITY WHICH CAN BE EQUATED TO AGREEMENT BETWEEN THE ASSESSEE AND THE STATE GOVT. FURTHER OBSERVATION OF THE ITAT IS THAT THE CONDITION FOR GRANT OF DEDUCTION U/S.80IA(4)(I) OF THE ACT IS THAT THE ASSESSEE SHOULD START OPERATING AND MAINTAIN THE INFRASTRUCTURE FACILITY. AS RIGHTLY CONTENDED BY THE LD. DR, THE CIT(A) IN DECIDING THE APPEAL FOR A. Y. 2008-09 HAS NOT CONSIDERED ANY OF THE AFORESAID REQUIREMENTS FOR ALLOWING DEDUCTION U/S.80IA(4)(I) OF THE ACT. IN THE IMPUGNED ORDER, THE CIT(A) HAS ONLY REFUSED DEDUCTION THAT THE CONDITIONS MENTIONED U/S80IA(4)(B)(I) OF THE ACT HAS NOT BEEN SATISFIED. IN THE GIVEN CIRCUMSTANCES, WE ARE OF THE VIEW THAT IT IS JUST AN APPROPRIATE TO SET ASIDE THE ORDER OF CIT(A) AND REMAND THE QUESTION OF ALLOWING DEDUCTION U/S.80IA(4)(I) OF THE ACT TO THE AO FOR FRESH CONSIDERATION. THE AO WILL EXAMINE ALL THE REQUIREMENTS FOR ALLOWING THE AFORESAID DEDUCTION. THE ASSESSEE WILL PROVIDE ALL THE DETAILS TO SUBSTANTIATE ITS CLAIM FOR THE AFORESAID DEDUCTION FOR STATISTICAL PURPOSE. 7. IN THE GIVING EFFECT PROCEEDINGS IN PURSUANCE OF THE DIRECTIONS ABOVE OF CO-ORDINATE BENCH OF KOLKATA TRIBUNAL, THE ASSESSEE FILED WRITTEN SUBMISSIONS DATED 14.03.2017 AND FILED SUPPORTING DOCUMENTS REGARDING ITS CLAIM U/S 80IA OF THE ACT BEFORE THE AO WHICH IS REPRODUCED HEREIN BELOW FOR READY-REFERENCE:- HEARING OPPORTUNITY WAS GIVEN TO THE ASSESSEE. ACCORDINGLY, MR. SRIJIT CHAKRABORTY, FCA AND MR. SANJAY BHATTACHARYA, FCA AUTHORIZED REPRESENTATIVES APPEARED IN RESPONSE AND SUBMITTED WRITTEN SUBMISSION DATED 14.03.2017 WITH THE ENCLOSURES. IN ITS ITA NO.807 TO 810/KOL/2018 (ASSESSMENT YEAR-2005-06, 2006-07, 2008-09 & 2009-10) PAGE | 4 ENCLOSURE THE ASSESSEE SUBMITTED THE FOLLOWING AS SUPPORTING DOCUMENTS REGARDING ITS CLAIM OF DEDUCTION U/S 80IA: 1) GOVERNMENT OF WEST BENGAL, PEPARTMENT OF HOUSING, NOTIFICATION DATED 19.04.1999 WHICH IS APPROVAL FOR FORMATION OF A GOVT. COMPANY UNDER THE NOMENCLATURE OF WEST BENGAL HOUSING INFRASTRUCTURE DEVELOPMENT CORPORATION LIMITED 2) GOVERNMENT OF WEST BENGAL. DEPARTMENT OF HOUSING, NOTIFICATION DATED 26.08.1999 - THIS IS A NOTIFICATION WHEREIN THE AREA INCLUDED UNDER THE ASSESSEE COMPANY ON 01.09.1999. 3) GOVERNMENT OF WEST BENGAL, DEPARTMENT OF HOUSING, NOTIFICATION DATED 27.08.1999 - 23 - THIS IS A NOTIFICATION WHERE THE GOVERNOR DECLARED THE AREA TO BE A PLANNING AREA FOR THE PURPOSE OF THE SAID ACT AND TO DEFINE THE LIMITS OF THE SAID AREA SHOWING SCHEDULE THEREOF. 4) GOVERNMENT OF WEST BENGAL, DEPARTMENT OF HOUSING, NOTIFICATION DATED 14.09.1999 - IN THIS NOTIFICATION, THE ASSESSEE COMPANY WAS DECLARED AS THE PLANNING AUTHORITY IN RESPECT OF THE PLANNING AREA DECLARED UNDER NOTIFICATION AS MENTIONED IN SL.NO. 3 ABOVE. 5) GOVERNMENT OF WEST BENGAL, DEPARTMENT OF HOUSING,NOTIFICATION DATED 12.06.2002 - BY THE NOTIFICATION, THE ASSESSEE WAS TRANSFERRED LANDS ACQUIRED BY L & L.R. DEPARTMENT WITH TERMS AND CONDITIONS. 6) DEED OF AGREEMENT DATED 25.02.2009 BETWEEN HOUSING DEPARTMENT, GOVERNMENT OF WEST BENGAL AND THE ASSESSEE COMPANY. 8. IT IS NOTED FROM THE RECORD AND SUBMISSIONS OF ASSESSEE, IT WAS CONTENDED THAT THE ASSESSEE HAD ALWAYS BEING INVOLVED IN DEVELOPMENT, OPERATION AND MAINTENANCE OF INFRASTRUCTURE FACILITIES AND ITS INCOME EARNED ALMOST ENTIRELY FROM SUCH BUSINESS ACTIVITIES I.E. DEVELOPMENT, OPERATION AND MAINTENANCE OF INFRASTRUCTURE FACILITIES AND CONTENDED THAT IT IS ENTITLED FOR 100% DEDUCTION U/S 80IA(4) OF THE ACT. 9. THE AO, ON AN EXAMINATION OF PROFIT & LOSS A/C FOUND THE ASSESSEE EARNED RECEIPTS UNDER SALE OF FLATS AND SALE OF LAND AND OTHER INCOME TO THE EXTENT OF RS.45,10,36,135/- FOR AY 2005-06 AND OPINED THAT THE ASSESSEE BASICALLY ENGAGED IN THE ACTIVITIES OF SALE OF LAND AND FLATS IN THE RELEVANT PERIOD AND ALL ITS RECEIPTS ARE FROM THE SALE OF LAND ITA NO.807 TO 810/KOL/2018 (ASSESSMENT YEAR-2005-06, 2006-07, 2008-09 & 2009-10) PAGE | 5 AND FROM OTHER INCOME. THE ASSESSEE HAS NO INCOME FROM THE ACTIVITIES OF INFRASTRUCTURE AND DEVELOPMENT AND, THEREFORE, HAD NO INCOME FROM THE ELIGIBLE BUSINESS TO CLAIM DEDUCTION U/S 80IA OF THE ACT. HE HELD WHEN THERE IS NO REVENUE COLLECTED BY THE ASSESSEE FROM THE OPERATION OF INFRASTRUCTURE FACILITIES, THERE CANNOT BE ANY PROFIT OR GAIN FROM THE ELIGIBLE INFRASTRUCTURE BUSINESS AS DEFINED U/S 80IA(4) OF THE ACT. 10. THE ASSESSEE FURTHER CONTENDED THAT IT IS ENGAGED NEW INFRASTRUCTURE ACTIVITIES LIKE DEVELOPMENT OF LAND, DRAINAGE, CONSTRUCTION OF ROADS AND HOUSING FOR ECONOMICALLY WEAKER SECTION, SUPPLY OF WATER SANITATION AND SEWERAGE SYSTEM AND SOLID WASTAGE SYSTEM IN NEW TOWN AREA. FOR THE SAID PURPOSE, LAND REFORMS DEVELOPMENT ACQUIRED LAND FROM TIME TO TIME ON BEHALF OF THE ASSESSEE AND THE LAND SO ACQUIRED WAS TRANSFERRED TO THE ASSESSEE COMPANY TO ENABLE TO CARRY ON ITS BUSINESS ACTIVITIES. IT WAS ALSO EXPLAINED THAT THE LAND SHALL BE USED BY THE ASSESSEE FOR THE PURPOSE OF DEVELOPMENT OF NEW TOWN AMONGST OTHER ALLOTMENT OF PLOTS TO INDIVIDUAL/COOPERATIVE/WEST BENGAL HOUSING BOARD/JOINT COMPANIES AND OTHER ENTREPRENEURS ETC. FOR RESIDENTIAL/BUSINESS/COMMERCIAL/OTHER PURPOSES AS WELL AS OVERALL INFRASTRUCTURAL DEVELOPMENT RELATING THERETO. 11. THE AO FURTHER, OPINED THE CLAIM OF THE ASSESSEE AND INTENTIONS OF GOVERNMENT THROUGH ITS NOTIFICATION ARE IN CONTRAST. THE MAIN ACTIVITIES OF THE ASSESSEE IS TO TAKE OVER THE LANDS FROM THE LAND & LAND REFORMS DEPARTMENT AND TO SELL THE LAND AND HOUSING AFTER DEVELOPMENT OF THE LAND INCLUDING ROAD, DRAINAGE, ELECTRICITY ETC. THE PRIMARY OBJECT OF THE ASSESSEE IS TO USE THE LAND FOR COMMERCIAL PURPOSES. THE ASSESSEE EXTENDS INFRASTRUCTURE FACILITY TO UPGRADE THE AREA FIT FOR DWELLING PURPOSE WHICH ATTRACTS CUSTOMERS. THE AO FURTHER ITA NO.807 TO 810/KOL/2018 (ASSESSMENT YEAR-2005-06, 2006-07, 2008-09 & 2009-10) PAGE | 6 HELD THAT THE ASSESSEE IS GETTING HIGHER PRICE ON DEVELOPMENT OF AREA BY SELLING PLOTS OF LAND AND FLATS. THE RELEVANT PORTION OF THE FINDING OF AO IS REPRODUCED HEREIN BELOW:- EVEN A SMALL PROMOTER WHO BUILDS 7-8 FLATS IN A STANDALONE BUILDING HAS TO INCUR SOME EXPENDITURE FOR IMPROVING ITS ADJOINING AREA FOR GARDENING, DRAINAGE, ELECTRIFICATION ETC., BUT THAT IS NOT SUFFICIENT FOR SUCH PROMOTER TO CLAIM DEDUCTION U/S 801A. THE PROVISION OF SECTION 80IA IS MADE FOR ALLOWING DEDUCTION TO THE ASSESSEE FROM THE PROFIT EARNED WITH THE ACTIVITIES OF IMPROVING INFRASTRUCTURE DEVELOPMENT AFTER FULFILMENT OF CERTAIN CRITERIA. HERE IN THE CASE OF THE ASSESSEE THE DEVELOPMENT OF INFRASTRUCTURE FACILITY IS ONLY TO SALE THE PLOT OF LAND AND HOUSING COMPLEXES AND DOES NOT QUALIFY FOR THE ELIGIBLE BUSINESS ACTIVITY FOR THE PURPOSE OF SECTION 801A AND HENCE THE CLAIM OF THE ASSESSEE FOR DEDUCTION UNDER SECTION 80IA IS HEREBY DISALLOWED.' 12. A PERUSAL OF THE ABOVE FINDING BY THE AO, IT IS NOTED THAT THE ASSESSEE COULD NOT FULFIL CERTAIN CRITERIA. WE NOTE THAT IT IS IN THE BUSINESS OF DEVELOPMENT OF INFRASTRUCTURE FACILITY ONLY TO SALE PLOTS OF LAND AND HOUSING COMPLEXES WHICH IS NOT QUALIFYING CRITERIA IN TERMS OF ELIGIBLE BUSINESS ACTIVITY TO CLAIM DEDUCTION U/S 80IA OF THE ACT AND DENIED THE CLAIM OF ALLOWANCE U/S 80IA OF THE ACT. 13. AS AGGRIEVED BEFORE THE AO, THE ASSESSEE CHALLENGED THE ORDER OF AO BEFORE THE CIT(A) IN THE FIRST APPELLATE PROCEEDINGS. IT IS NOTED FROM THE RECORD THAT THE ASSESSEE REITERATED THE SIMILAR SUBMISSIONS AS MADE BEFORE THE AO. CONSIDERING THE SAME, ALONG WITH THE ASSESSMENT ORDER, THE CIT(A) OBSERVED THAT SECTION 80IA PROVIDES TEN (10) YEARS TAX BENEFIT TO AN ENTREPRENEUR OR UNDERTAKING ENGAGED IN DEVELOPMENT OF INFRASTRUCTURE FACILITIES, INDUSTRIAL PARK AND SPECIAL ECONOMIC ZONE. THE TAX BENEFIT WAS INTRODUCED FOR THE REASONS THAT THE INDUSTRIAL MODERNIZATION REQUIRES A MASSIVE EXPANSION OF QUALITATIVE IMPROVEMENT IN INFRASTRUCTURE I.E. EXPRESSWAY, HIGHWAYS, AIRPORTS AND RAPID URBAN RAIL AS TRANSPORT SYSTEMS WHICH WAS LACKING IN OUR COUNTRY. FURTHER, HE HELD THE PURPOSE OF TAX BENEFIT HAS ALL ALONG BEEN FOR ENCOURAGING PRIVATE PARTICIPATION BY WAY OF INVESTMENT IN DEVELOPMENT OF THE ITA NO.807 TO 810/KOL/2018 (ASSESSMENT YEAR-2005-06, 2006-07, 2008-09 & 2009-10) PAGE | 7 INFRASTRUCTURE SECTOR AND NOT FOR THE PERSONS WHO MERELY EXECUTE THE CIVIL CONSTRUCTION WORK OR ANY OTHER WORKS CONTRACT. THE SPIRIT BEHIND THE INTRODUCTION OF SECTION 80IA WAS TO ENCOURAGE PRIVATE INVESTMENT IN INFRASTRUCTURE PROJECTS. THE CLAIM OF DEDUCTION U/S 80IA BY THE ASSESSEE WAS NOT ONLY TECHNICALLY TENABLE, BUT WAS ALSO AGAINST THE SPIRIT OF THE SECTION 80IA OF THE ACT AND CONFIRMED THE ORDER OF AO BY RECORDING REASONS AS UNDER:- 4.7. THE A.O. IN HIS ASSESSMENT ORDER HAD CLEARLY HELD THAT THE APPELLANT WAS NOT ENTITLED TO DEDUCTION UNDER SECTION 801A (4) AND HELD 'BUT FROM THE ABOVE DETAILS OF P&L ACCOUNT IT IS CLEARLY SEEN THAT, BASICALLY THE ASSESSEE IS ENGAGED IN THE ACTIVITIES OF SALE OF LAND AND FLATS IN THE RELEVANT PERIOD AND ALL ITS RECEIPT ARE FROM THE SALE OF LAND AND FROM OTHER INCOME. THE ASSESSEE HAS NO INCOME FROM THE ACTIVITIES OF INFRASTRUCTURE DEVELOPMENT AS CLAIMED BY THE ASSESSEE. THE ASSESSEE THEREFORE HAD NO INCOME FROM THE ELIGIBLE BUSINESS TO CLAIM DEDUCTION U/S 80IA. THOUGH THE INFRASTRUCTURAL FACILITIES INVOLVED A LARGE PART OF IT'S EXPENSES THERE IS NO REVENUE COLLECTED BY THE ASSESSEE FROM THE OPERATION OF INFRASTRUCTURE FACILITIES. ONCE THERE IS NO INCOME OR REVENUE FROM INFRASTRUCTURAL FACILITIES THERE CAN'T BE ANY PROFIT OR GAIN FROM THE ELIGIBLE INFRASTRUCTURE BUSINESS AS DEFINED IN SECTION 801A(4).'THE FINDINGS OF THE A.O. WAS NOT CONTROVERTED BY THE AIR OF THE APPELLANT WHO HOWEVER ARGUED THAT THE INFRASTRUCTURE CONSTRUCTED BY THE APPELLANT ENHANCED THE VALUE OF THE LAND AND THEREFORE WAS ELIGIBLE TO SECTION 801A (4) DEDUCTIONS. EVEN IF A LIBERAL VIEW IS TAKEN IT CAN AT MOST BE HELD THAT AT MOST THE ENHANCEMENT OF LAND VALUE WAS ATTRIBUTABLE TO THE INFRASTRUCTURE PROJECTS. HOWEVER, SECTION 80 IA RELATES ONLY TO INCOME, DERIVED' BY AN UNDERTAKING OR AN ENTERPRISE, FROM THE INFRASTRUCTURE FACILITY AND NOT ATTRIBUTABLE TO IT. 4.8. SECTION 80LA CLEARLY STATES THAT ONLY THOSE UNDERTAKINGS OR ENTERPRISES WHO DERIVED ANY PROFIT AND GAIN FROM ANY BUSINESS REFER TO IN SUB-SECTION (4) SHALL BE ELIGIBLE FOR DEDUCTION UNDER THIS SECTION. THE WORD DERIVED IS NARROW IN DEFINITION AND DOES NOT COVER ANY OTHER ANCILLARY ACTIVITIES. AS DISCUSSED, ONLY THE PROFITS DERIVED FROM THE ENTERPRISE CARRYING ON BUSINESS OF DEVELOPING, OPERATING AND MAINTAINING OR DEVELOPING, OPERATING AND MAINTAINING ANY INFRASTRUCTURE FACILITY ARE ELIGIBLE FOR DEDUCTION. AS HELD BY THE APEX COURT IN THE CASE OF CAMBAY ELECTRIC SUPPLY INDUSTRIAL CO. LTD. VS. CIT (113 ITR 84) 'IN THIS CONNECTION IT MAY BE POINTED OUT THAT WHENEVER THE LEGISLATURE WANTED TO GIVE A RESTRICTED MEANING IN THE MANNER SUGGESTED BY THE LEARNED SOLICITOR GENERAL IT HAS USED THE EXPRESSION 'DERIVED FROM'. THIS VIEW WAS REITERATED BY THE APEX COURT IN THE CASE OF CIT V. STERLING FOODS [1999] 237 ITR 579/104 TAXMAN 204 WHERE IT RULED 'FOR THAT PURPOSE, IT RELIED UPON THE DECISION OF THIS COURT IN CAMBAY ELECTRIC SUPPLY INDUSTRIAL CO. LTD. VS. CIT (113 ITR 84). IT WAS THERE HELD THAT THE EXPRESSION 'ATTRIBUTABLE TO' WAS WIDER IN ITA NO.807 TO 810/KOL/2018 (ASSESSMENT YEAR-2005-06, 2006-07, 2008-09 & 2009-10) PAGE | 8 IMPORT THAN THE EXPRESSION 'DERIVED FROM'. THE EXPRESSION OF WIDER IMPORT, NAMELY, ATTRIBUTABLE TO WAS USED WHEN THE LEGISLATURE INTENDED TO COVER RECEIPTS FROM SOURCES OTHER THAN THE ACTUAL CONDUCT OF THE BUSINESS. THE DIVISION BENCH OF THE HIGH COURT OBSERVED THAT TO OBTAIN THE BENEFIT OF SECTION 80HH THE ASSESSEE HAD TO ESTABLISH THAT THE PROFITS AND GAINS WERE DERIVED FROM ITS INDUSTRIAL UNDERTAKING AND IT WAS JUST NOT SUFFICIENT THAT A COMMERCIAL CONNECTION WAS ESTABLISHED BETWEEN THE PROFITS EARNED AND THE INDUSTRIAL UNDERTAKING. THE INDUSTRIAL UNDERTAKING ITSELF HAD TO BE THE SOURCE OF THE PROFIT. THE BUSINESS OF THE INDUSTRIAL UNDERTAKING HAD DIRECTLY TO YIELD THAT PROFIT. THE INDUSTRIAL UNDERTAKING HAD THE DIRECT SOURCE OF THE PROFIT AND NOT A MEANS TO EARN ANY OTHER PROFIT.' THOUGH THE APEX COURT HAD DEFINES THE TERM DERIVED FROM' IN THE CONTEXT OF SECTION 80HH OF THE ACT, THE DEFINITION IS RELEVANT TO DEDUCTIONS CLAIMED U/S 80LA ALSO. THE APPELLANT HAD NOT EARNED ANY INCOME FROM DEVELOPING, OPERATING AND MAINTAINING OR DEVELOPING, OPERATING AND MAINTAINING ANY INFRASTRUCTURE FACILITY. THE MAIN SOURCE OF INCOME AS DISCUSSED ABOVE WAS INCOME FROM SALE OF LAND, SALE OF FLATS AND OTHER INCOME. THE DEVELOPMENT OF INFRASTRUCTURE BY THE APPELLANT WAS AN ANCILLARY ACTIVITY, WHICH ENHANCED THE COST OF THE LAND BUT NO INCOME WAS DIRECTLY DERIVED FROM THESE INFRASTRUCTURE ACTIVITIES. 4.9 ON PERUSAL OF THE BALANCE SHEET IT ALSO EMERGES THAT MOST OF THE WORKS FOR DEVELOPMENT OF INFRASTRUCTURE WAS GIVEN TO THE GOVERNMENT DEPARTMENT LIKE WEST BENGAL PWD, WEST BENGAL DEVELOPMENT CORPORATION, HOOGHLY RIVER BRIDGE COMMISSIONER AND VARIOUS MUNICIPALITIES AND PANCHAYATS. THE LEGISLATURE HAD INTRODUCED THE SECTION TO ENCOURAGE TO PRIVATE PARTICIPATION IN INFRASTRUCTURE PROJECTS. THIS CAN BE GATHERED FROM THE MEMORANDUM EXPLAINING THE PROVISIONS IN THE FINANCE BILL, 2007, REPORTED IN [2007] 2008 CTR (ST) 198: [2007] 289 ITR (ST) 292 AT P. 312, WHICH READS AS UNDER: 'SEC. 80-LA, INTER ALIA, PROVIDES FOR A TEN YEAR TAX BENEFIT TO AN ENTERPRISE OR AN UNDERTAKING ENGAGED IN DEVELOPMENT OF INFRASTRUCTURE FACILITIES, INDUSTRIAL PARKS AND SPECIAL ECONOMIC ZONES. THE TAX BENEFIT WAS INTRODUCED FOR THE REASON THAT INDUSTRIAL MODERNIZATION REQUIRES A MASSIVE EXPANSION OF, AND QUALITATIVE IMPROVEMENT IN INFRASTRUCTURE (VIZ., EXPRESSWAYS, HIGHWAYS, AIRPORTS, PORTS AND RAPID URBAN RAIL TRANSPORT SYSTEMS) WHICH WAS LACKING IN OUR COUNTRY. THE PURPOSE OF THE TAX BENEFIT HAS ALL ALONG BEEN FOR ENCOURAGING PRIVATE SECTION PARTICIPATION BY WAY OF INVESTMENT IN DEVELOPMENT OF THE INFRASTRUCTURE SECTOR AND NOT FOR THE PERSONS WHO MERELY EXECUTE THE CIVIL CONSTRUCTION WORK OR ANY OTHER WORKS CONTRACT.' THE SPIRIT BEHIND THE INTRODUCTION OF SECTION BMA WAS TO ENCOURAGE PRIVATE INVESTMENT IN INFRASTRUCTURE PROJECTS. THE CLAIM OF DEDUCTION UNDER SECTION 80LA BY THE APPELLANT, WAS NOT ONLY TECHNICALLY NOT TENABLE, BUT WAS ALSO AGAINST THE SPIRIT OF THE SECTION 80IA OF THE INCOME TAX ACT 1961. 5. AFTER CAREFUL CONSIDERATION OF THE FACTS OF THE CASE, THE SUBMISSION OF THE AIR, AND THE RELEVANT ASSESSMENT RECORDS INCLUDING BINDING ITA NO.807 TO 810/KOL/2018 (ASSESSMENT YEAR-2005-06, 2006-07, 2008-09 & 2009-10) PAGE | 9 JUDGEMENTS OF APEX COURT, THE CLAIM OF DEDUCTION OF RS.3,76,060/- U/S 80IA OF THE ACT IS CONFIRMED. THIS GROUND OF APPEAL FAILS AND IS THEREFORE DISMISSED. THE A.O. IS DIRECTED ACCORDINGLY. 14. BEFORE US, IN THE SECOND APPELLATE PROCEEDINGS, THE LD.AR SUBMITS THAT ALL THE EXPENSES INCURRED TOWARDS DEVELOPMENT ACTIVITIES AND COME UNDER THE CONNOTATION THE DEFINITION OF BUSINESS. HE REFERRED TO AGREEMENT WHICH IS AT PAGE NO.1 OF PAPER BOOK AND PARTICULARLY AT PAGE NO.72 AND SUBMITTED THAT WHOLE INFRASTRUCTURE DEVELOPMENT IS UNDER THE AGES OF THE ASSESSEE. THE SAID AGREEMENT WOULD COVER ALL THE DEVELOPMENT ACTIVITIES OF ASSESSEE SINCE 14.09.1999 AND IT IS THE RESPONSIBILITY OF THE ASSESSEE TO CONSTRUCT HOUSES FOR THOSE DISPLACED PERSONS WHO HAVE BEEN QUALIFIED BY THE ASSESSEE. THE NATURE OF THE BUSINESS CARRIED ON BY THE ASSESSEE SHOULD BE CONSIDERED AS DEVELOPMENT, OPERATION AND MAINTENANCE OF INFRASTRUCTURE FACILITIES. FURTHER, HE BROUGHT TO OUR ATTENTION TO THE ANNUAL REPORT FOR AY 2011- 12 WHEREIN HE SUBMITTED THAT THE DIRECTORS REPORT DATED 22.102.2011 MENTIONED THE ACTIVITIES IN RESPECT OF STATUS OF ROADS, BRIDGES, STATUS OF FLYOVERS, STATUS OF PHE WORKS AND ARGUED THAT THE ASSESSEE IS ENTIRELY ENGAGED IN INFRASTRUCTURAL DEVELOPMENT. 15. FURTHER, HE BROUGHT TO OUR NOTICE THAT THE DEFINITION OF INFRASTRUCTURAL FACILITIES AS MENTIONED IN EXPLANATION TO SECTION 80IA(4)(I) OF THE ACT. HE SUBMITS THAT THE WORD INFRASTRUCTURE IS NOT DEFINED IN THE INCOME TAX ACT AND REFERRED TO VARIOUS DICTIONARY MEANINGS THE WORD INFRASTRUCTURE. HE ARGUED THAT INFRASTRUCTURE IS NEEDED FOR OPERATION OF A SOCIETY OR ENTERPRISE AND THE SAME SERVE A COUNTRY, CITY OR OTHER AREAS INCLUDING SERVICE AND FACILITIES NECESSARY FOR ITS ECONOMY TO FUNCTION. THE DEVELOPMENT OF INFRASTRUCTURE AND THE COUNTRY, CITY OR OTHER AREAS WHICH INTENDS TO SERVE TO GO IN HAND. THE UNDERLYING FRAMEWORK OF A SYSTEM ESPECIALLY PUBLIC SERVICE AS ITA NO.807 TO 810/KOL/2018 (ASSESSMENT YEAR-2005-06, 2006-07, 2008-09 & 2009-10) PAGE | 10 HIGHWAYS, SCHOOLS, BRIDGES, SEWERS AND WATER SYSTEM NEEDED TO SUPPORT COMMERCE AS WELL AS ECONOMY AND RESIDENTIAL DEVELOPMENT. THE ASSESSEE WAS ESTABLISHED FOR DEVELOPMENT OF INFRASTRUCTURE IN THE AREAS WHICH IS STILL GOING ON. THE DEVELOPMENT OF SUCH INFRASTRUCTURE REQUIRES FUNDS. THE ASSESSEE IS ARRANGING FUNDS ON THE SALE OF LAND IN THE AREA IN WHICH IT IS MANDATED TO DEVELOP INFRASTRUCTURE. THE ASSESSEE IS MEETING ITS FUNDS AND FINANCE REQUIREMENTS FOR DEVELOPMENT OF INFRASTRUCTURE FROM THE SALE OF LAND IN THE AREA. A LIBERAL VIEW HAS BEEN TAKEN BECAUSE THE OBJECT OF THE ASSESSEE IS TO DEVELOP OF INFRASTRUCTURE FACILITIES. THE GOVERNMENT COMPANY CAN NOT BE EQUATED WITH PRIVATE COMPANY. THE BUSINESS OF GOVERNMENT COMPANY SHOULD NOT BE NARROWLY CONSIDERED AND SUBMITTED THE TERM DERIVED BY AN UNDERTAKING OR AN ENTERPRISE HOW ANY BUSINESS REFERRED TO SUB-SECTION (4) OF SECTION 80IA WOULD HAVE WIDER IMPLICATIONS. THE ASSESSEE PLACED RELIANCE ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF MEGHALAYA STEELS REPORTED IN 383 ITR 217(SC), MERINOPLY AND CHEMICALS LTD. REPORTED IN 209 ITR 508 AND IN THE CASE OF CEMENT MANUFACTURING CO.LTD. REPORTED IN 6 ITR OL 350 . 16. IN REPLY, THE LD. DR SUBMITS THAT THE ASSESSEE DID NOT SUBMIT PREVIOUS ORDER IN APPEAL AND REFERRED TO PAGE 44 IN RESPECT OF WHETHER IT IS A PART OF HIGHWAYS PROJECT OR NOT. THE ONUS IS ON THE ASSESSEE TO PROVIDE DETAILS IN SUPPORT OF ITS CONTENTIONS AND TO SUBSTANTIATE ITS CLAIM 80IA OF THE ACT. THE SUB-SECTION (4) OF SECTION 80IA OF THE ACT IS MEANT FOR ONLY HIGHWAY PROJECT AND SUB-SECTION (10) OF SECTION 80IB IS FOR HOUSING PROJECT. IN ORDER TO CLAIM DEDUCTION U/S 80IA(4) OF THE ACT, THE HOUSING PROJECT SHOULD BE PART OF THE ROAD I.E. NATIONAL HIGHWAY. IT IS ONLY A NEW TOWN PROJECT WHICH IS A TOWNSHIP AND THE MANDATE OF THE ASSESSEE IS TO DEVELOP A TOWNSHIP PROJECT. THE ASSESSEE DOES NOT DESERVE TO GET DEDUCTION U/S 80IA(4) AS NO CONDITION CONTEMPLATED UNDER SUB-SECTION (4) IS FULFILLED. ITA NO.807 TO 810/KOL/2018 (ASSESSMENT YEAR-2005-06, 2006-07, 2008-09 & 2009-10) PAGE | 11 17. IN COUNTER-CLAIM, THE LD.AR REFERRED TO CLAUSE (5) & (6) OF AGREEMENT AT PAGE 6 AND BALANCE SHEET AND REITERATED THE SUBMISSIONS AS MADE BEFORE US WHICH ARE REFLECTED HEREIN ABOVE. 18. HEARD BOTH PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD INCLUDING THE CASE LAWS AS RELIED ON BY THE LD.AR. WE FIND THE ISSUE IS REVOLVING AROUND THE PROVISION U/S 80IA OF THE ACT AND IT IS RELEVANT TO, IN OUR OPINION TO REPRODUCE THE PROVISION U/S 80IA OF THE ACT FOR BETTER UNDERSTANDING AS UNDER:- SECTION - 80IA, INCOME-TAX ACT, 1961 [ DEDUCTIONS IN RESPECT OF PROFITS AND GAINS FROM INDUSTRIAL UNDERTAKINGS OR ENTERPRISES ENGAGED IN INFRASTRUCTURE DEVELOPMENT, ETC. 80-IA. [(1) WHERE THE GROSS TOTAL INCOME OF AN ASSESSEE INCLUDES ANY PROFITS AND GAINS DERIVED BY AN UNDERTAKING OR AN ENTERPRISE FROM ANY BUSINESS REFERRED TO IN SUB-SECTION (4) (SUCH BUSINESS BEING HEREINAFTER REFERRED TO AS THE ELIGIBLE BUSINESS), THERE SHALL, IN ACCORDANCE WITH AND SUBJECT TO THE PROVISIONS OF THIS SECTION, BE ALLOWED, IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE, A DEDUCTION OF AN AMOUNT EQUAL TO HUNDRED PER CENT OF THE PROFITS AND GAINS DERIVED FROM SUCH BUSINESS FOR TEN CONSECUTIVE ASSESSMENT YEARS.] (2) THE DEDUCTION SPECIFIED IN SUB-SECTION (1) MAY, AT THE OPTION OF THE ASSESSEE, BE CLAIMED BY HIM FOR ANY TEN CONSECUTIVE ASSESSMENT YEARS OUT OF FIFTEEN YEARS BEGINNING FROM THE YEAR IN WHICH THE UNDERTAKING OR THE ENTERPRISE DEVELOPS AND BEGINS TO OPERATE ANY INFRASTRUCTURE FACILITY OR STARTS PROVIDING TELECOMMUNICATION SERVICE OR DEVELOPS AN INDUSTRIAL PARK [OR DEVELOPS [***] A SPECIAL ECONOMIC ZONE REFERRED TO IN CLAUSE (III) OF SUB-SECTION (4)] OR GENERATES POWER OR COMMENCES TRANSMISSION OR DISTRIBUTION OF POWER 30A [ OR UNDERTAKES SUBSTANTIAL RENOVATION AND MODERNISATION OF THE EXISTING TRANSMISSION OR DISTRIBUTION LINES ] : 31 [ PROVIDED THAT WHERE THE ASSESSEE DEVELOPS OR OPERATES AND MAINTAINS OR DEVELOPS, OPERATES AND MAINTAINS ANY INFRASTRUCTURE FACILITY REFERRED TO IN CLAUSE (A) OR CLAUSE (B) OR CLAUSE (C) OF THE EXPLANATION TO CLAUSE (I) OF SUB- SECTION (4), THE PROVISIONS OF THIS SUB-SECTION SHALL HAVE EFFECT AS IF FOR THE WORDS 'FIFTEEN YEARS', THE WORDS 'TWENTY YEARS' HAD BEEN SUBSTITUTED.] 32 [(2A)....] (3) : (I ) : PROVIDED ; ITA NO.807 TO 810/KOL/2018 (ASSESSMENT YEAR-2005-06, 2006-07, 2008-09 & 2009-10) PAGE | 12 (II ) . THE FOLLOWING PROVISO SHALL BE INSERTED TO SUB-SECTION (3) OF SECTION 80- IA BY THE FINANCE (NO. 2) ACT, 2004 , W.E.F. 1-4-2005 : PROVIDED . EXPLANATION 1.: (A ) ; (B ) ; AND (C . EXPLANATION 2.. (4) THIS SECTION APPLIES TO (I ) ANY ENTERPRISE CARRYING ON THE BUSINESS 35 [OF (I) DEVELOPING OR ( II) OPERATING AND MAINTAINING OR (III) DEVELOPING, OPERATING AND MAINTAINING] ANY INFRASTRUCTURE FACILITY WHICH FULFILS ALL THE FOLLOWING CONDITIONS, NAMELY : (A) IT IS OWNED BY A COMPANY REGISTERED IN INDIA OR BY A CONSORTIUM OF SUCH COMPANIES; [( B) IT HAS ENTERED INTO AN AGREEMENT WITH THE CENTRAL GOVERNMENT OR A STATE GOVERNMENT OR A LOCAL AUTHORITY OR ANY OTHER STATUTORY BODY FOR (I) DEVELOPING OR (II) OPERATING AND MAINTAINING OR (III) DEVELOPING, OPERATING AND MAINTAINING A NEW INFRASTRUCTURE FACILITY;] (C) IT HAS STARTED OR STARTS OPERATING AND MAINTAINING THE INFRASTRUCTURE FACILITY ON OR AFTER THE 1ST DAY OF APRIL, 1995: PROVIDED THAT WHERE AN INFRASTRUCTURE FACILITY IS TRANSFERRED ON OR AFTER THE 1ST DAY OF APRIL, 1999 BY AN ENTERPRISE WHICH DEVELOPED SUCH INFRASTRUCTURE FACILITY (HEREAFTER REFERRED TO IN THIS SECTION AS THE TRANSFEROR ENTERPRISE) TO ANOTHER ENTERPRISE (HEREAFTER IN THIS SECTION REFERRED TO AS THE TRANSFEREE ENTER- PRISE) FOR THE PURPOSE OF OPERATING AND MAINTAINING THE INFRASTRUCTURE FACILITY ON ITS BEHALF IN ACCORDANCE WITH THE AGREEMENT WITH THE CENTRAL GOVERNMENT, STATE GOVERNMENT, LOCAL AUTHORITY OR STATUTORY BODY, THE PROVISIONS OF THIS SECTION SHALL APPLY TO THE TRANSFEREE ENTERPRISE AS IF IT WERE THE ENTERPRISE TO WHICH THIS CLAUSE APPLIES AND THE DEDUCTION FROM PROFITS AND GAINS WOULD BE AVAILABLE TO SUCH TRANSFEREE ENTERPRISE FOR THE UNEXPIRED PERIOD DURING WHICH THE TRANSFEROR ENTERPRISE WOULD HAVE BEEN ENTITLED TO THE DEDUCTION, IF THE TRANSFER HAD NOT TAKEN PLACE. 37 [EXPLANATION.FOR THE PURPOSES OF THIS CLAUSE, 'INFRASTRUCTURE FACILITY' MEANS (A) A ROAD INCLUDING TOLL ROAD, A BRIDGE OR A RAIL SYSTEM; (B) A HIGHWAY PROJECT INCLUDING HOUSING OR OTHER ACTIVITIES BEING AN INTEGRAL PART OF THE HIGHWAY PROJECT; ITA NO.807 TO 810/KOL/2018 (ASSESSMENT YEAR-2005-06, 2006-07, 2008-09 & 2009-10) PAGE | 13 (C) A WATER SUPPLY PROJECT, WATER TREATMENT SYSTEM, IRRIGATION PROJECT, SANITATION AND SEWERAGE SYSTEM OR SOLID WASTE MANAGEMENT SYSTEM; (D) A PORT 38 , AIRPORT, INLAND WATERWAY OR INLAND PORT;] [( II) ANY UNDERTAKING WHICH HAS STARTED OR STARTS PROVIDING TELECOMMUNICATION SERVICES, WHETHER BASIC OR CELLULAR, INCLUDING RADIO PAGING, DOMESTIC SATELLITE SERVICE, NETWORK OF TRUNKING, BROADBAND NETWORK AND INTERNET SERVICES ON OR AFTER THE 1ST DAY OF APRIL, 1995, BUT ON OR BEFORE THE 31ST DAY OF MARCH, 40 [ 40A [ 2004 ] ].] EXPLANATION.FOR THE PURPOSES OF THIS CLAUSE, 'DOMESTIC SATELLITE' MEANS A SATELLITE OWNED AND OPERATED BY AN INDIAN COMPANY FOR PROVIDING TELECOMMUNICATION SERVICE; (III ) ANY UNDERTAKING WHICH DEVELOPS, DEVELOPS AND OPERATES OR MAINTAINS AND OPERATES AN INDUSTRIAL PARK 41 [OR SPECIAL ECONOMIC ZONE] NOTIFIED 42 BY THE CENTRAL GOVERNMENT IN ACCORDANCE WITH THE SCHEME FRAMED 42 AND NOTIFIED 43 BY THAT GOVERNMENT FOR THE PERIOD BEGINNING ON THE 1ST DAY OF APRIL, 1997 AND ENDING ON THE 31ST DAY OF MARCH, 44 [2006] : 45 [ PROVIDED THAT IN A CASE WHERE AN UNDERTAKING DEVELOPS AN INDUSTRIAL PARK ON OR AFTER THE 1ST DAY OF APRIL, 1999 OR A SPECIAL ECONOMIC ZONE ON OR AFTER THE 1ST DAY OF APRIL, 2001 AND TRANSFERS THE OPERATION AND MAINTENANCE OF SUCH INDUSTRIAL PARK OR SUCH SPECIAL ECONOMIC ZONE, AS THE CASE MAY BE, TO ANOTHER UNDERTAKING (HEREAFTER IN THIS SECTION REFERRED TO AS THE TRANSFEREE UNDERTAKING), THE DEDUCTION UNDER SUB-SECTION (1) SHALL BE ALLOWED TO SUCH TRANSFEREE UNDERTAKING FOR THE REMAINING PERIOD IN THE TEN CONSECUTIVE ASSESSMENT YEARS AS IF THE OPERATION AND MAINTENANCE WERE NOT SO TRANSFERRED TO THE TRANSFEREE UNDERTAKING;] (IV ) AN 46 [UNDERTAKING] WHICH, (A) IS SET UP IN ANY PART OF INDIA FOR THE GENERATION OR GENERATION AND DISTRIBUTION OF POWER IF IT BEGINS TO GENERATE POWER AT ANY TIME DURING THE PERIOD BEGINNING ON THE 1ST DAY OF APRIL, 1993 AND ENDING ON THE 31ST DAY OF MARCH, 47 [2006]; (B) STARTS TRANSMISSION OR DISTRIBUTION BY LAYING A NETWORK OF NEW TRANSMISSION OR DISTRIBUTION LINES AT ANY TIME DURING THE PERIOD BEGINNING ON THE 1ST DAY OF APRIL, 1999 AND ENDING ON THE 31ST DAY OF MARCH, 47 [2006] : PROVIDED THAT THE DEDUCTION UNDER THIS SECTION TO AN 48 [UNDERTAKING] UNDER SUB-CLAUSE (B) SHALL BE ALLOWED ONLY IN RELATION TO THE PROFITS DERIVED FROM LAYING OF SUCH NETWORK OF NEW LINES FOR TRANSMISSION OR DISTRIBUTION. THE FOLLOWING SUB-CLAUSE (C) SHALL BE INSERTED AFTER SUB-CLAUSE (B) OF CLAUSE (IV) OF SUB-SECTION (4) OF SECTION 80-IA BY THE FINANCE (NO. 2) ACT, 2004 , W.E.F. 1-4-2005 : (C ) UNDERTAKES SUBSTANTIAL RENOVATION AND MODERNISATION OF THE EXISTING NETWORK OF TRANSMISSION OR DISTRIBUTION LINES AT ANY TIME DURING THE PERIOD BEGINNING ON THE 1ST DAY OF APRIL, 2004 AND ENDING ON THE 31ST DAY OF MARCH, 2006. EXPLANATION. FOR THE PURPOSES OF THIS SUB-CLAUSE, 'SUBSTANTIAL RENOVATION AND MODERNISATION' MEANS AN INCREASE IN THE PLANT AND MACHINERY IN THE ITA NO.807 TO 810/KOL/2018 (ASSESSMENT YEAR-2005-06, 2006-07, 2008-09 & 2009-10) PAGE | 14 NETWORK OF TRANSMISSION OR DISTRIBUTION LINES BY AT LEAST FIFTY PER CENT OF THE BOOK VALUE OF SUCH PLANT AND MACHINERY AS ON THE 1ST DAY OF APRIL, 2004. 19. THE SUB-SECTION (1) OF SECTION 80IA EXPLAINS THAT A DEDUCTION OF AN AMOUNT EQUAL TO 100% OF PROFITS AND GAINS DERIVED BY AN UNDERTAKING OR AN ENTERPRISE FROM ANY BUSINESS AS REFERRED TO IN SUB- SECTION (4) OF SECTION 80IA OF THE ACT. SO, THEREFORE, IN ORDER TO CLAIM A DEDUCTION U/S 80IA, THE ASSESSEE SHALL QUALIFY FOR ANY BUSINESS AS REFERRED TO IN SUB-SECTION (4) AND SAID GROSS TOTAL INCOME SHOULD BE DERIVED BY ANY UNDERTAKING OR AN ENTERPRISE FROM SUCH BUSINESS AS REFERRED IN SUB-SECTION (4) OF SECTION 80IA OF THE ACT. 20. IN THE PRESENT CASE AS DISCUSSED BY THE AO IN ITS ORDER PASSED U/S 254/143(3) OF THE ACT, IT IS NOTED THAT THE ASSESSEE DERIVED MOST OF THE INCOME FROM SALES OF FLATS, SALE OF LAND AND OTHER INCOME TO THE EXTENT OF RS.45,10,36,135/- AND FURTHER IT IS NOTED FROM HIS OBSERVATIONS THAT THE ASSESSEE ENGAGED IN THE ACTIVITIES OF SALE OF LAND AND FLATS IN THE RELEVANT PERIOD AND ALL RECEIPTS FROM SALE OF LAND AND FROM OTHER INCOME. ADMITTEDLY THIS IS NOT THE RELEVANT QUALIFICATION TO CLAIM DEDUCTION U/S 80IA OF THE ACT, MORE PARTICULARLY THIS IS NOT THE BUSINESS REFERRED IN SUB-SECTION (4) OF SECTION 80IA OF THE ACT. WE NOTE THAT THE ASSESSEE HAS NO INCOME FROM THE ACTIVITIES OF INFRASTRUCTURE DEVELOPMENT AS CONTEMPLATED IN SUB-SECTION (4) WHICH IS PRE-REQUISITE QUALIFICATION U/S 80IA OF THE ACT. THEREFORE, IN OUR OPINION, THE SUBMISSION VIDE DATED 14.03.2017 THAT THE ASSESSEE BEING INVOLVED IN DEVELOPMENT, OPERATION AND MAINTENANCE OF INFRASTRUCTURAL FACILITIES AND ITS INCOME WAS EARNED ALMOST ENTIRELY FROM SUCH BUSINESS ACTIVITIES I.E. DEVELOPMENT, OPERATION AND MAINTENANCE OF INFRASTRUCTURAL FACILITIES IS CONTRARY TO RECORD I.E. P&L A/C. THEREFORE, AS RIGHTLY FOUND BY THE AO THAT THE ASSESSEE IS NOT ELIGIBLE TO CLAIM DEDUCTION U/S 80IA(4) OF THE ACT AS CONFIRMED BY THE CIT(A) IN HIS IMPUGNED ORDER. ITA NO.807 TO 810/KOL/2018 (ASSESSMENT YEAR-2005-06, 2006-07, 2008-09 & 2009-10) PAGE | 15 21. FURTHER, ON PERUSAL OF THE BALANCE SHEET OF THE ASSESSEE, THE CIT(A) FOUND THAT THE BALANCE SHEET DOES NOT REFLECT ANY INCOME EARNED FROM OTHER DEVELOPING, OPERATING AND MAINTAINING OR DEVELOPING, OPERATING AND MAINTAINING ANY INFRASTRUCTURAL FACILITIES. IT IS ALSO CLEAR THAT THE ASSESSEE DID NOT EARN ANY INCOME AS LAID DOWN IN SUB-SECTION (4) OF SECTION 80IA OF THE ACT. THEREFORE, THE SURPLUS INCOME IS ELIGIBLE FOR DEDUCTION U/S 80IA(4) OF THE ACT. FURTHER, WE FIND NO INFIRMITY IN THE FINDING OF CIT(A) IN ITS IMPUGNED ORDER THAT THE ASSESSEE HAD NO INCOME FROM ELIGIBLE BUSINESS TO CLAIM DEDUCTION U/S 80IA OF THE ACT. 22. AS POINTED OUT BY THE LD.AR, THE DEFINITION OF INFRASTRUCTURE FACILITY IS FOUND UNDER EXPLANATION TO SECTION 80IA(4)(I) OF THE ACT. WE NOTE THAT UNDER EXPLANATION (B) TO CLAUSE INFRASTRUCTURE FACILITY MEANS A HIGHWAY PROJECT INCLUDING HOUSING OR OTHER ACTIVITIES BEING AN INTEGRAL PART OF THE HIGHWAY PROJECT. BUT IN OUR OPINION, THE HOUSING OR OTHER ACTIVITIES SHOULD BE INTEGRAL PART OF HIGHWAY PROJECT IN ORDER TO CLAIM DEDUCTION U/S 80IA(4) OF THE ACT. THUS, IN OUR OPINION THE DEFINITION OF HOUSING OR OTHER ACTIVITIES SHOULD NOT BE READ ISOLATED FROM AN INTEGRAL PART OF THE HIGHWAY PROJECT. 23. AS DISCUSSED ABOVE, THE CLAIM ALL ALONG BY THE ASSESSEE IN RESPECT OF PROJECT DEVELOPED AT NEW TOWN, KOLKATA. ADMITTEDLY THE SAID PROJECT IS NOT AN INTEGRAL PART OF ANY HIGHWAY PROJECT IN TERMS OF (B) OF EXPLANATION APPENDED TO CLAUSE (I) OF SUB SECTION (4) OF SECTION 80IA OF THE ACT. NO SUCH MATERIAL EVIDENCE BROUGHT BEFORE US TO SUBSTANTIATE THE CLAIM OF ASSESSEE THAT THE NEW TOWN PROJECT IN AN INTEGRAL PART OF HIGHWAY PROJECT. AS DISCUSSED IN THE AFORE-MENTIONED PARAGRAPHS, THE ASSESSEE FAILED TO SUBSTANTIATE ITS CLAIM BEFORE THE TWO LOWER AUTHORITIES. IT IS NOTED FROM THE RECORD THAT THE CO-ORDINATE BENCH OF THIS TRIBUNAL VIDE ITS ORDER DATED 02.12.2015 REMANDED THE MATTER TO ITA NO.807 TO 810/KOL/2018 (ASSESSMENT YEAR-2005-06, 2006-07, 2008-09 & 2009-10) PAGE | 16 THE FILE OF AO TO EXAMINE ALL THE REQUIREMENTS FOR ALLOWING THE AFORESAID DEDUCTION WITH A DIRECTION TO THE ASSESSEE TO PROVIDE ALL THE DETAILS TO SUBSTANTIATE ITS CLAIM FOR THE DEDUCTION U/S 80IA(4)(I) OF THE ACT. AS RIGHTLY POINTED OUT BY THE LD.DR THAT THERE WERE NO SUCH DETAILS PROVIDED BY THE ASSESSEE BEFORE THE AO IN CLAIMING THE SAID PROJECT IN NEW TOWN IS AN INTEGRAL PART OF HIGHWAY PROJECT. THEREFORE, IN OUR OPINION, THE ASSESSEE IS NOT ENTITLED TO CLAIM DEDUCTION U/S 80IA OF THE ACT. 24. WE AGREE WITH THE FINDING OF CIT(A) REGARDING THE BENEFIT U/S 80IA WHICH WAS INTRODUCED FOR THE REASON THAT INDUSTRIAL MODERNIZATION REQUIRE A MASSIVE EXPANSION AND QUALITATIVE IMPROVEMENT IN INFRASTRUCTURE I.E. EXPRESSWAY, HIGHWAYS, THE RAPID URBAN RAIL TRANSPORT SYSTEM. WE FIND THE PURPOSE OF TAX BENEFIT AS ALL ALONG BEEN FOR PROVIDING PARTICIPATION BY WAY OF INVESTMENT IN DEVELOPMENT OF INFRASTRUCTURE. WE ALSO AGREE WITH THE FINDING OF CIT(A) THAT THE SPIRIT BEHIND THE SECTION 80IA WAS TO ENCOURAGE TO PROVIDE INVESTMENT IN INFRASTRUCTURE PROJECT AND THE CLAIM MADE BY THE ASSESSEE IN OUR OPINION IS AGAINST THE SPIRIT OF SECTION 80IA OF THE ACT. THUS, WE FIND NO INFIRMITY IN THE ORDER OF CIT(A) AND IT IS JUSTIFIED. THEREFORE, THE ONLY ISSUE RAISED IN THIS APPEAL FILED BY THE ASSESSEE FOR AY 2005-06 IS DISMISSED. ITA NOS.808, 809 & 810/KOL/2018 [AYS 2006-07, 2008-09 & 2009-10] 25. AS DISCUSSED ABOVE, WE FIND THE ISSUES RAISED IN ALL THE THREE APPEALS ABOVE ARE SIMILAR ON IDENTICAL FACTS WITH THAT OF ISSUE RAISED IN ITA NO.807/KOL/2018 FOR AY 2005-06 WHEREIN WE DISMISSED THE SAID ISSUE IN THE AFORE-MENTIONED PARAGRAPHS HOLDING THAT THE ASSESSEE IS NOT ENTITLED TO CLAIM DEDUCTION U/S 80IA(4)(I) OF THE ACT. THEREFORE, THE VIEW TAKEN BY US IN THE SAID ISSUE IS EQUALLY APPLICABLE TO THE ISSUES ITA NO.807 TO 810/KOL/2018 (ASSESSMENT YEAR-2005-06, 2006-07, 2008-09 & 2009-10) PAGE | 17 RAISED IN THESE THREE APPEALS. THUS, ONLY ISSUE RAISED IN THESE THREE APPEALS ARE DISMISSED. 26. IN THE RESULT, ALL FOUR APPEALS I.E. ITA NOS. 807, 808, 809 & 810/KOL/2018 FOR AY 2005-06, 2006-07, 2008-09 AND 2009-10 FILED BY THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 17.06.2019. SD/- SD/- (P.M.JAGTAP) (S.S.VISWANETHRA RAVI) VICE PRESIDENT JUDICIAL MEMBER DATE:- 17 .06.2019 *AMIT KUMAR* COPY FORWARDED TO: 1. APPELLANT- WEST BENGAL HOUSING INFRASTRUCTURE DEVELOPMENT CORPORATION, HIDCO BHAWAN, 35-1111, MAJOR ARTERIAL ROAD, NEW TOWN, KOLKATA-700156. 2. RESPONDENT- DCIT, CIRCLE-14(2), AAYAKAR BHAWAN, POORVA, 110, SHANTI PALLY, KOLKATA-700107. 3. CIT-KOLKATA 4. CIT(APPEALS)-KOLKATA 5. DR: ITAT -KOLKATA BENCHES BY ORDER AR/H.O.O ITAT, KOLKATA