DCIT, Circle-3(2), Hyd, Hyderabad V. Sushee Infra Pvt.Ltd.,Hyd, Hyderabad

ITA 911/HYD/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 6159 (ITAT-HYDERABAD)
• Duration Of Justice: 6 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-01-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 18-01-2016
• Assessment Year: 2012-2013
• Appeal Filed On: 03-07-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M SITARAM
• Assessee Lawyers: S RAMA RAO
• Keywords: Retrospective amendment

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SMT. P.MADHAVI DEVI, JUDICIAL MEMBER AND SHRI B.RAMAKOTAIAH, ACCOUNTANT MEMBER ITA NO.910/HYD/2015 : ASSESSMENT YEAR 2011-12 ITA NO.911/HYD/2015 : A SSESSMENT YEAR 2012-13 DY. COMMISSIONER OF INCOME - TAX CIRCLE 3(2), HYDERABAD V/S M/S. SUSHEE INFRA PVT. LTD., HYDERABAD (PAN AACCS 8560 Q) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI M.SITARAM, DR RESPONDENT BY : SHRI S.RAMA RAO DATE OF HEARING 18 .1.201 6 DATE OF PRONOUNCEMENT 22.1.2016 O R D E R PER P.MADHAVI DEVI, JUDICIAL MEMBER : THESE ARE APPEALS FILED BY THE REVENUE FOR THE AS SESSMENT YEARS 2011-12 AND 2012-13. IN THESE APPEALS, REVEN UE IS AGGRIEVED BY THE ORDER OF THE COMMISSIONER OF INCOME-TAX(APPE ALS) IN ALLOWING THE CLAIMS OF THE ASSESSEE UNDER S.80IA(4) OF THE A CT, ON THE GROUND THAT THE ASSESSEE HAS NOT SATISFIED THE CONDITIONS OF BEING A DEVELOPER. ANOTHER GROUND RAISED BY THE REVENUE IN THESE APPEA LS IS THAT THE CIT(A) OUGHT TO HAVE UPHELD THE DISALLOWANCE OF DED UCTION UNDER S.35(2AB) OF THE ACT, IN VIEW OF THE ASSESSEES FAI LURE TO PRODUCE FORM NO.3CL. HOWEVER, AT THE TIME OF HEARING, WE F IND THAT THE GROUND NO.2 IN THESE APPEALS RELATING TO DISALLOWAN CE UNDER S.35(2AB) DOES NOT ARISE OUT OF THE ORDERS OF THE ASSESSING O FFICER OR THE CIT(A). THEREFORE, WE REJECT THIS GROUND AS MISCONCEIVED. 3. AS REGARDS GROUNDS NO.3 AND 4 IN THESE APPEALS , RELATING TO ALLOWABILITY OF ASSESSEES CLAIMS UNDER S.80IA(4), BRIEF FACTS, SIMILAR FOR BOTH THE YEARS, BUT AS TAKEN FROM THE APPEAL FO R ASSESSMENT YEAR 2011-12, ARE THAT THE ASSESSEE COMPANY, WHICH IS E NGAGED IN THE ITA NO.910-911/HYD/2015 M/S. SUSHEE INFRA PVT. LTD., HYDERABAD 2 BUSINESS OF EXECUTION OF CIVIL CONTRACTS FILED ITS RETURN OF INCOME FOR THE RESPECTIVE ASSESSMENT YEARS. A SURVEY ACTION UNDER S.133A WAS CONDUCTED IN THIS CASE ON 14.8.2012 AND THE ASSESSE ES ASSESSMENTS WERE TAKEN UP FOR SCRUTINY. THE ASSESSEE FILED A RE VISED RETURN ON 30.3.2012 FOR ASSESSMENT YEAR 2011-12, INCLUDING TH E ADDITIONAL INCOME ADMITTED AT THE TIME OF SURVEY. DURING THE C OURSE OF ASSESSMENT PROCEEDINGS UNDER S.143(3) OF THE ACT, T HE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS CLAIMED DEDUC TION UNDER S.80IA(4) OF THE ACT. OBSERVING THAT THE ASSESSEE HAS NOT MAINTAINED SEPARATE BOOKS OF ACCOUNT FOR THE PROJECTS TO WHICH PROVISIONS OF S.80IA(4) ARE ATTRACTED, THE ASSESSING OFFICER CALL ED FOR DETAILS. ASSESSEE SUBMITTED THE DETAILS OF THE PROJECTS ELIG IBLE FOR DEDUCTION UNDER S.80IA(4). THE ASSESSING OFFICER OBSERVED THA T THE ASSESSEE HAS NOT ITSELF EXECUTED THE WORKS, AND THE WORK WAS ACT UALLY AWARDED TO A JOINT VENTURE OF WHICH THE ASSESSEE IS A MEMBER. H E THEREFORE, HELD THAT THE ASSESSEE HAS NOT ENTERED INTO ANY AGREEMEN T WITH THE GOVERNMENT FOR DEVELOPMENT OF INFRASTRUCTURE PROJEC T, AND HENCE, IT IS NOT ELIGIBLE FOR DEDUCTION CLAIMED UNDER S.80IA(4) OF THE ACT. 4. AGGRIEVED, THE ASSESSEE PREFERRED APPEALS BEFO RE THE CIT(A), WHO ALLOWED THE CLAIM FOR DEDUCTION UNDER S .80IA(4) BY FOLLOWING THE DECISION OF THE TRIBUNAL IN ASSESSEE S OWN CASE FOR ASSESSMENT YEAR 2008-09. AGGRIEVED, REVENUE HAS PRE FERRED THE PRESENT APPEALS BEFORE US. 5. AT THE TIME OF HEARING, THE LEARNED DEPARTMENTA L REPRESENTATIVE SUPPORTED THE ORDERS OF THE ASSESSIN G OFFICER, WHILE THE LEARNED COUNSEL FOR THE ASSESSEE SUPPORTED THE ORDE RS OF THE CIT(A) AND ALSO RELIED UPON THE ORDERS OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEARS 2005-06 TO 2009-10. LEARN ED COUNSEL FOR THE ASSESSEE SUBMITTED THAT FOR THE ASSESSMENT YEAR 2010-11, THERE ITA NO.910-911/HYD/2015 M/S. SUSHEE INFRA PVT. LTD., HYDERABAD 3 WAS LOSS AND THEREFORE, THERE WAS NO CLAIM UNDER S. 80IA(4). AS REGARDS THE OBJECTION OF THE LEARNED DEPARTMENTAL R EPRESENTATIVE THAT THE ASSESSEE HAS FAILED TO MAINTAIN SEPARATE BOOKS OF ACCOUNT FOR EACH PROJECT IN RESPECT OF WHICH DEDUCTION UNDER S.80I A(4) WAS CLAIMED, LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS SUBSEQUENTLY FILED SEPARATE PROFIT AND LOSS ACCOUNT S FOR ALL THE FIVE PROJECTS BEFORE THE CIT(A), AND A REMAND REPORT WAS CALLED FOR BY THE CIT(A) FROM THE ASSESSING OFFICER, AND IT WAS ONLY SUBSEQUENT TO THE CONSIDERATION OF THE REMAND REPORT OF THE ASSESSING OFFICER THAT THE CIT(A) HAS ALLOWED THE APPEALS OF THE ASSESSEE. 6. HAVING REGARD TO THE RIVAL SUBMISSIONS AND THE M ATERIAL ON RECORD, WE FIND THAT THE ASSESSEE HAS FILED THE DET AILS OF THE RELEVANT PROJECTS BEFORE THE CIT(A), WHO CALLED FOR A REMAN D REPORT ON THE SAME, AND THE REMAND REPORT FILED BY THE ASSESSING OFFICER IN RESPONSE THERETO, IS ALSO PART OF THE RECORD BEFORE US. THEREFORE, THIS OBJECTION OF THE REVENUE AGAINST THE ALLOWANCE OF T HE CLAIMS FOR DEDUCTION UNDER S.80IA(4) IS NOT SUSTAINABLE. AS RE GARDS THE ALLOWABILITY OF CLAIM UNDER S.80IA(4), WE FIND THAT THIS TRIBUNAL FOR THE VERY SAME PROJECTS AWARDED IN ASSESSMENT YEAR 2005- 06, WHICH CONTINUED ALL ALONG, CONSIDERED THE ISSUE AT LENGT H AND ALLOWED THE CLAIM OF DEDUCTION UNDER S.80IA(4). FOR THE SAKE OF CONVENIENCE AND READY REFERENCE, RELEVANT PORTION OF THE ORDER OF T HE TRIBUNAL DATED 4.12.2015 IN ITA NO.1828/HYD/2014 FOR ASSESSMENT YE AR 2009-10, IS EXTRACTED BELOW- 7. WE HAVE CONSIDERED THE ARGUMENTS OF BOTH THE PA RTIES AND PERUSED THE MATERIAL FACTS ON RECORD AS WELL AS THE ORDERS OF REVENUE AUTHORITIES. THE FIRST GROUND OF REVENUE IS GENERAL IN NATURE. THE SECOND AND THIRD GROUNDS ARE COVERED IN FAVOUR OF T HE ASSESSEE BY THE ITA NO.910-911/HYD/2015 M/S. SUSHEE INFRA PVT. LTD., HYDERABAD 4 DECISION OF THE COORDINATE BENCH OF THIS TRIBUNAL W HEREIN THE COORDINATE BENCH ADJUDICATED THE SAME AS UNDER- 31. FINDINGS: WE HAVE CONSIDERED THE ELABORATE SUB MISSIONS MADE BY BOTH THE PARTIES AND ALSO PERUSED THE MATERIALS AVAILABLE ON RECORD. WE HAVE ALSO GONE THROUGH ALL THE CASE LAWS CITED BY BOTH THE PARTIES. WE FIND THAT THE PROVISIONS OF SECTION 80I A (4) OF THE ACT WHEN INTRODUCED AFRESH BY THE FINANCE ACT, 1999, TH E PROVISIONS UNDER SECTION 80IA (4A) OF THE ACT WERE DELETED FRO M THE ACT. THE DEDUCTION AVAILABLE FOR ANY ENTERPRISE EARLIER UNDE R SECTION 80IA (4A) ARE ALSO MADE AVAILABLE UNDER SECTION 80IA (4) ITSE LF. FURTHER, THE VERY FACT THAT THE LEGISLATURE MENTIONED THE WORDS (I) 'DEVELOPING' OR (II) 'OPERATING AND MAINTAINING' OR (III) 'DEVELOPI NG, OPERATING AND MAINTAINING' CLEARLY INDICATES THAT ANY ENTERPRISE WHICH CARRIED ON ANY OF THESE THREE ACTIVITIES WOULD BECOME ELIGIBLE FOR DEDUCTION. THEREFORE, THERE IS NO AMBIGUITY IN THE INCOME-TAX ACT. WE FIND THAT WHERE AN ASSESSEE INCURRED EXPENDITURE FOR PURCHASE OF MATERIALS HIMSELF AND EXECUTES THE DEVELOPMENT WORK I.E., CAR RIES OUT THE CIVIL CONSTRUCTION WORK, HE WILL BE ELIGIBLE FOR TAX BENE FIT UNDER SECTION 80 IA OF THE ACT. IN CONTRAST TO THIS, A ASSESSEE, WHO ENTERS INTO A CONTRACT WITH ANOTHER PERSON INCLUDING GOVERNMENT O R AN UNDERTAKING OR ENTERPRISE REFERRED TO IN SECTION 80 IA OF THE A CT, FOR EXECUTING WORKS CONTRACT, WILL NOT BE ELIGIBLE FOR THE TAX BE NEFIT UNDER SECTION 80 IA OF THE ACT. WE FIND THAT THE WORD 'OWNED' IN SUB- CLAUSE (A) OF CLAUSE (1) OF SUB SECTION (4) OF SECTION 80IA OF TH E ACT REFER TO THE ENTERPRISE. BY READING OF THE SECTION, IT IS CLEARS THAT THE ENTERPRISES CARRYING ON DEVELOPMENT OF INFRASTRUCTURE DEVELOPME NT SHOULD BE OWNED BY THE COMPANY AND NOT THAT THE INFRASTRUCTUR E FACILITY SHOULD BE OWNED BY A COMPANY. THE PROVISIONS ARE MADE APPL ICABLE TO THE PERSON TO WHOM SUCH ENTERPRISE BELONGS TO IS EXPLAI NED IN SUB-CLAUSE (A). THEREFORE, THE WORD 'OWNERSHIP' IS ATTRIBUTABL E ONLY TO THE ENTERPRISE CARRYING ON THE BUSINESS WHICH WOULD MEA N THAT ONLY COMPANIES ARE ELIGIBLE FOR DEDUCTION UNDER SECTION 80IA (4) AND NOT ANY OTHER PERSON LIKE INDIVIDUAL, HUF, FIRM ETC. 32. WE ALSO FIND THAT ACCORDING TO SUB-CLAUSE (A), CLAUSE (I) OF SUB SECTION (4) OF SECTION 80-IA THE WORD 'IT' DENOTES THE ENTERPRISE CARRYING ON THE BUSINESS. THE WORD 'IT' CANNOT BE R ELATED TO THE INFRASTRUCTURE FACILITY, PARTICULARLY IN VIEW OF TH E FACT THAT INFRASTRUCTURE FACILITY INCLUDES RAIL SYSTEM, HIGHW AY PROJECT, WATER TREATMENT SYSTEM, IRRIGATION PROJECT, A PORT, AN AI RPORT OR AN INLAND PORT WHICH CANNOT BE OWNED BY ANY ONE. EVEN OTHERWI SE, THE WORD 'IT' IS USED TO DENOTE AN ENTERPRISE. THEREFORE, TH ERE IS NO REQUIREMENT THAT THE ASSESSEE SHOULD HAVE BEEN THE OWNER OF THE INFRASTRUCTURE FACILITY. 33. THE NEXT QUESTION IS TO BE ANSWERED IS WHETHER THE ASSESSEE IS A DEVELOPER OR MERE WORKS CONTRACTOR. THE REVENUE REL IED ON THE AMENDMENTS BROUGHT IN BY THE FINANCE ACT 2007 AND 2 009 TO MENTION THAT THE ACTIVITY UNDERTAKEN BY THE ASSESSEE IS AKI N TO WORKS CONTRACT AND HE IS NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 80IA (4) OF THE ACT. WHETHER THE ASSESSEE IS A DEVELOPER OR WORKS CONTRA CTOR IS PURELY DEPENDS ON THE NATURE OF THE WORK UNDERTAKEN BY THE ASSESSEE. EACH ITA NO.910-911/HYD/2015 M/S. SUSHEE INFRA PVT. LTD., HYDERABAD 5 OF THE WORK UNDERTAKEN HAS TO BE ANALYZED AND A CON CLUSION HAS TO BE DRAWN ABOUT THE NATURE OF THE WORK UNDERTAKEN BY TH E ASSESSEE. THE AGREEMENT ENTERED INTO WITH THE GOVERNMENT OR THE G OVERNMENT BODY MAY BE A MERE WORKS CONTRACT OR FOR DEVELOPMENT OF INFRASTRUCTURE. IT IS TO BE SEEN FROM THE AGREEMENTS ENTERED INTO BY T HE ASSESSEE WITH THE GOVERNMENT. WE FIND THAT THE GOVERNMENT HANDED OVER THE POSSESSION OF THE PREMISES OF PROJECTS TO THE ASSES SEE FOR THE DEVELOPMENT OF INFRASTRUCTURE FACILITY. IT IS THE A SSESSEE'S RESPONSIBILITY TO DO ALL ACTS TILL THE POSSESSION O F PROPERTY IS HANDED OVER TO THE GOVERNMENT. THE FIRST PHASE IS TO TAKE OVER THE EXISTING PREMISES OF THE PROJECTS AND THEREAFTER DEVELOPING THE SAME INTO INFRASTRUCTURE FACILITY. SECONDLY, THE ASSESSEE SHA LL FACILITATE THE PEOPLE TO USE THE AVAILABLE EXISTING FACILITY EVEN WHILE THE PROCESS OF DEVELOPMENT IS IN PROGRESS. ANY LOSS TO THE PUBLIC CAUSED IN THE PROCESS WOULD BE THE RESPONSIBILITY OF THE ASSESSEE . THE ASSESSEE HAS TO DEVELOP THE INFRASTRUCTURE FACILITY. IN THE PROC ESS, ALL THE WORKS ARE TO BE EXECUTED BY THE ASSESSEE. IT MAY BE LAYING OF A DRAINAGE SYSTEM; MAY BE CONSTRUCTION OF A PROJECT; PROVISION OF WAY FOR THE CATTLE AND BULLOCK CARTS IN THE VILLAGE; PROVISION FOR TRAFFIC WITHOUT ANY HINDRANCE, THE ASSESSEE'S DUTY IS TO DEVELOP INFRAS TRUCTURE WHETHER IT INVOLVES CONSTRUCTION OF A PARTICULAR ITEM AS AGREE D TO IN THE AGREEMENT OR NOT. THE AGREEMENT IS NOT FOR A SPECIF IC WORK, IT IS FOR DEVELOPMENT OF FACILITY AS A WHOLE. THE ASSESSEE IS NOT ENTRUSTED WITH ANY SPECIFIC WORK TO BE DONE BY THE ASSESSEE. THE M ATERIAL REQUIRED IS TO BE BROUGHT IN BY THE ASSESSEE BY STICKING TO THE QUALITY AND QUANTITY IRRESPECTIVE OF THE COST OF SUCH MATERIAL. THE GOVERNMENT DOES NOT PROVIDE ANY MATERIAL TO THE ASSESSEE. IT P ROVIDES THE WORKS IN PACKAGES AND NOT AS A WORKS CONTRACT. THE ASSESS EE UTILIZES ITS FUNDS, ITS EXPERTISE, ITS EMPLOYEES AND TAKES THE R ESPONSIBILITY OF DEVELOPING THE INFRASTRUCTURE FACILITY. THE LOSSES SUFFERED EITHER BY THE GOVT. OR THE PEOPLE IN THE PROCESS OF SUCH DEVE LOPMENT WOULD BE THAT OF THE ASSESSEE. THE ASSESSEE HANDS OVER THE D EVELOPED INFRASTRUCTURE FACILITY TO THE GOVERNMENT ON COMPLE TION OF THE DEVELOPMENT. THEREAFTER, THE ASSESSEE HAS TO UNDERT AKE MAINTENANCE OF THE SAID INFRASTRUCTURE FOR A PERIOD OF 12 TO 24 MONTHS. DURING THIS PERIOD, IF ANY DAMAGES ARE OCCURRED IT SHALL BE THE RESPONSIBILITY OF THE ASSESSEE. FURTHER, DURING THIS PERIOD, THE ENTI RE INFRASTRUCTURE SHALL HAVE TO BE MAINTAINED BY THE ASSESSEE ALONE W ITHOUT HINDRANCE TO THE REGULAR TRAFFIC. THEREFORE, IT IS CLEAR THAT FROM AN UN-DEVELOPED AREA, INFRASTRUCTURE IS DEVELOPED AND HANDED OVER T O THE GOVERNMENT AND AS EXPLAINED BY THE CBDT VIDE ITS CIRCULAR DATE D 18-05-2010, SUCH ACTIVITY IS ELIGIBLE FOR DEDUCTION UNDER SECTION 80 IA (4) OF THE ACT. THIS CANNOT BE CONSIDERED AS A MERE WORKS CONTRACT BUT HAS TO BE CONSIDERED AS A DEVELOPMENT OF INFRASTRUCTURE FACIL ITY. THEREFORE, THE ASSESSEE IS A DEVELOPER AND NOT A WORKS CONTRACTOR AS PRESUMED BY THE REVENUE. THE CIRCULAR ISSUED BY THE BOARD, RELI ED ON BY LEARNED COUNSEL FOR THE ASSESSEE, CLEARLY INDICATE THAT THE ASSESSEE IS ELIGIBLE FOR DEDUCTION UNDER SECTION 80IA (4) OF THE ACT. TH E DEPARTMENT IS NOT CORRECT IN HOLDING THAT THE ASSESSEE IS A MERE CONT RACTOR OF THE WORK AND NOT A DEVELOPER. 34. WE ALSO FIND THAT AS PER THE PROVISIONS OF THE SECTION 80IA OF THE ACT, A PERSON BEING A COMPANY HAS TO ENTER INTO AN AGREEMENT WITH THE GOVERNMENT OR GOVERNMENT UNDERTAKINGS. SUCH AN AGREEMENT IS A CONTRACT AND FOR THE PURPOSE OF THE AGREEMENT A PER SON MAY BE CALLED ITA NO.910-911/HYD/2015 M/S. SUSHEE INFRA PVT. LTD., HYDERABAD 6 AS A CONTRACTOR AS HE ENTERED INTO A CONTRACT. BUT THE WORD 'CONTRACTOR' IS USED TO DENOTE A PERSON ENTERING IN TO AN AGREEMENT FOR UNDERTAKING THE DEVELOPMENT OF INFRASTRUCTURE F ACILITY. EVERY AGREEMENT ENTERED INTO IS A CONTRACT. THE WORD 'CON TRACTOR' IS USED TO DENOTE THE PERSON WHO ENTERS INTO SUCH CONTRACT. EVEN A PERSON WHO ENTERS INTO A CONTRACT FOR DEVELOPMENT OF INFRA STRUCTURE FACILITY IS A CONTRACTOR. THEREFORE, THE CONTRACTOR AND THE DEV ELOPER CANNOT BE VIEWED DIFFERENTLY. EVERY CONTRACTOR MAY NOT BE A D EVELOPER BUT EVERY DEVELOPER DEVELOPING INFRASTRUCTURE FACILITY ON BEH ALF OF THE GOVERNMENT IS A CONTRACTOR. 35. WE FIND THAT THE DECISION RELIED ON BY THE LEAR NED COUNSEL FOR THE ASSESSEE IN THE CASE OF CIT VS. LAXMI CIVIL ENGINEE RING WORKS [SUPRA] SQUARELY APPLICABLE TO THE ISSUE UNDER DISPUTE WHIC H IS IN FAVOUR OF THE ASSESSEE WHEREIN IT WAS HELD THAT MERE DEVELOPM ENT OF A INFRASTRUCTURE FACILITY IS AN ELIGIBLE ACTIVITY FOR CLAIMING DEDUCTION UNDER SECTION 80IA OF THE ACT AFTER CONSIDERING THE JUDGEMENT OF THE MUMBAI HIGH COURT IN THE CASE OF ABG HEAVY ENGINEER ING [SUPRA]. THE CASE OF ABG IS NOT THE PURE DEVELOPER WHEREAS, IN T HE PRESENT CASE, THE ASSESSEE IS THE PURE DEVELOPER. WE ALSO FIND TH AT SECTION 80IA OF THE ACT, INTENDED TO COVER THE ENTITIES CARRYING OU T DEVELOPING, OPERATING AND MAINTAINING THE INFRASTRUCTURE FACILI TY KEEPING IN MIND THE PRESENT BUSINESS MODELS AND INTEND TO GRANT THE INCENTIVES TO SUCH ENTITIES. THE CBDT, ON SEVERAL OCCASIONS, CLAR IFIED THAT PURE DEVELOPER SHOULD ALSO BE ELIGIBLE TO CLAIM DEDUCTIO N UNDER SECTION 80IA OF THE ACT, WHICH ULTIMATELY CULMINATED INTO A MENDMENT UNDER SECTION 80IA OF THE ACT, IN THE FINANCE ACT 2001, T O GIVE EFFECT TO THE AFORESAID CIRCULARS ISSUED BY THE CBDT. WE ALSO FIN D THAT, TO AVOID MISUSE OF THE AFORESAID AMENDMENT, AN EXPLANATION W AS INSERTED IN SECTION 80IA OF THE ACT, IN THE FINANCE ACT-2007 AN D 2009, TO CLARIFY THAT MERE WORKS CONTRACT WOULD NOT BE ELIGIBLE FOR DEDUCTIONS UNDER SECTION 80IA OF THE ACT. BUT, CERTAINLY, THE EXPLAN ATION CANNOT BE READ TO DO AWAY WITH THE ELIGIBILITY OF THE DEVELOPER; O THERWISE, THE PARLIAMENT WOULD HAVE SIMPLY REVERSED THE AMENDMENT MADE IN THE FINANCE ACT, 2001. THUS, THE AFORESAID EXPLANATION WAS INSERTED, CERTAINLY, TO DENY THE TAX HOLIDAY TO THE ENTITIES WHO DOES ONLY MERE WORKS CONTACT OR SUB-CONTRACT AS DISTINCT FROM THE DEVELOPER. THIS IS CLEAR FROM THE EXPRESS INTENSION OF THE PARLIAMENT WHILE INTRODUCING THE EXPLANATION. THE EXPLANATORY MEMORANDUM TO FINA NCE ACT 2007 STATES THAT THE PURPOSE OF THE TAX BENEFIT HAS ALL ALONG BEEN TO ENCOURAGE INVESTMENT IN DEVELOPMENT OF INFRASTRUCTU RE SECTOR AND NOT FOR THE PERSONS WHO MERELY EXECUTE THE CIVIL CONSTR UCTION WORK. IT CATEGORICALLY STATES THAT THE DEDUCTION UNDER SECTI ON 80IA OF THE ACT IS AVAILABLE TO DEVELOPERS WHO UNDERTAKES ENTREPREN EURIAL AND INVESTMENT RISK AND NOT FOR THE CONTRACTORS, WHO UN DERTAKES ONLY BUSINESS RISK. WITHOUT ANY DOUBT, THE LEARNED COUNS EL FOR THE ASSESSEE CLEARLY DEMONSTRATED BEFORE US THAT THE AS SESSEE AT PRESENT HAS UNDERTAKEN HUGE RISKS IN TERMS OF DEPLOYMENT OF TECHNICAL PERSONNEL, PLANT AND MACHINERY, TECHNICAL KNOW-HOW, EXPERTISE AND FINANCIAL RESOURCES. FURTHER, THE ORDER OF TRIBUNAL IN THE CASE OF B.T.PATIL CITED SUPRA IS PRIOR TO AMENDMENT TO SEC 80IA(4), AFTER THE AMENDMENT THE SECTION 80IA(4) READ AS (I) DEVELOPIN G OR (II) OPERATING AND MAINTAINING OR (III) DEVELOPING, OPER ATING AND MAINTAINING ANY INFRASTRUCTURE FACILITY, PRIOR TO A MENDMENT THE 'OR' BETWEEN THREE ACTIVITIES WAS NOT THERE, AFTER THE A MENDMENT 'OR' HAS ITA NO.910-911/HYD/2015 M/S. SUSHEE INFRA PVT. LTD., HYDERABAD 7 BEEN INSERTED W.E.F. 1-4-2002 BY FINANCE ACT 2001. THEREFORE, IN OUR CONSIDERED VIEW, THE ASSESSEE SHOULD NOT BE DENIED THE DEDUCTION UNDER SECTION 80IA OF THE ACT AS THE CONTRACTS INVO LVES, DEVELOPMENT, OPERATING, MAINTENANCE, FINANCIAL INVOLVEMENT, AND DEFECT CORRECTION AND LIABILITY PERIOD, THEN SUCH CONTRACTS CANNOT BE CALLED AS SIMPLE WORKS CONTRACT. IN OUR OPINION THE CONTRACTS WHICH CONTAIN ABOVE FEATURES TO BE SEGREGATED AND ON THIS DEDUCTION U/S . 80-IA HAS TO BE GRANTED AND THE OTHER AGREEMENTS WHICH ARE PURE WOR KS CONTRACTS HIT BY THE EXPLANATION SECTION 80IA(13), THOSE WORK ARE NOT ENTITLE FOR DEDUCTION U/S 80IA OF THE ACT. THE PROFIT FROM SUCH CONTRACTS WHICH INVOLVES DEVELOPMENT, OPERATING, MAINTENANCE, FINAN CIAL INVOLVEMENT, AND DEFECT CORRECTION AND LIABILITY PERIOD IS TO BE COMPUTED BY ASSESSING OFFICER ON PRO-RATA BASIS OF TURNOVER. TH E ASSESSING OFFICER IS DIRECTED TO EXAMINE AND GRANT DEDUCTION ON ELIGI BLE TURNOVER AS DIRECTED ABOVE. IT IS NEEDLESS TO SAY THAT IN SIMIL AR CIRCUMSTANCES, SIMILAR VIEW HAS BEEN TAKEN BY THE CHENNAI BENCH OF THE TRIBUNAL AND DEDUCTION U/S. 80IA WAS GRANTED IN THE CASE OF M/S. CHETTINAD LIGNITE TRANSPORT SERVICES (P) LTD., IN ITA NO. 2287/MDS/06 ORDER DATED 27TH JULY, 2007 FOR THE ASSESSMENT YEAR 2004-05. LATER I N ITA NO. 1179/MDS/08 VIDE ORDER DATED 26TH FEBRUARY, 2010 TH E TRIBUNAL HAS TAKEN THE SAME VIEW BY INTER-ALIA HOLDING AS FOLLOW S: '7. MOREOVER, THE REASONS FOR INTRODUCING THE EXPLA NATION WERE CLARIFIED AS PROVIDING A TAX BENEFIT BECAUSE MODERN ISATION REQUIRES A MASSIVE EXPANSION AND QUALITATIVE IMPROV EMENT IN INFRASTRUCTURES LIKE EXPRESSWAYS, HIGHWAYS, AIRPORT S, PORTS AND RAPID URBAN RAIL TRANSPORT SYSTEMS. FOR THAT PURPOS E, PRIVATE SECTOR PARTICIPATION BY WAY OF INVESTMENT IN DEVELO PMENT OF THE INFRASTRUCTURE SECTOR AND NOT FOR THE PERSONS WHO M ERELY EXECUTE THE CIVIL CONSTRUCTION WORK OR ANY OTHER WO RK CONTRACT HAS BEEN ENCOURAGED BY GIVING TAX BENEFITS. THUS TH E PROVISIONS OF SECTION 80IA SHALL NOT APPLY TO A PER SON WHO EXECUTES A WORKS CONTRACT ENTERED INTO WITH THE UND ERTAKING OR ENTERPRISE REFERRED TO IN THE SECTION BUT WHERE A P ERSON MAKES THE INVESTMENT AND HIMSELF EXECUTES THE DEVELOPMENT WORK, HE CARRIES OUT THE CIVIL CONSTRUCTION WORK, HE WILL BE ELIGIBLE FOR THE TAX BENEFIT UNDER SECTION 80IA.' 36. THE ABOVE ORDER WAS FOLLOWED IN SUBSEQUENT ASSE SSMENT YEARS 2007-2008 & 2008-09 IN ITA NOS. 1312 & 1313/MDS/201 1 VIDE ORDER DATED 18.11.2011 IN THE CASE OF THE SAME ASSESSEE. FURTHER, IN SIMILAR CIRCUMSTANCES, THIS TRIBUNAL IN THE CASE OF M/S. GV PR ENGINEERS LTD. HYDERABAD IN ITA NO. 347/H/08 & OTHERS VIDE ORDER D ATED 29TH FEBRUARY 2012 HAS TAKEN SIMILAR VIEW AND GRANTED DE DUCTION UNDER SECTION 80IA OF THE ACT. 37. FURTHER, WE MAKE IT CLEAR THAT WHERE THE ASSESS EE HAS CARRIED OUT THE DEVELOPMENT OF INFRASTRUCTURE WORK IN CONSORTIU M AND NOT AS A SUB-CONTRACTOR, THEN ALSO THE ASSESSEE IS ENTITLED FOR DEDUCTION U/S 80IA OF THE ACT. THE SAME IS APPLICABLE IN CASE OF WORK ALLOTTED BY GOVERNMENT CORPORATION/GOVERNMENT BODIES. ITA NO.910-911/HYD/2015 M/S. SUSHEE INFRA PVT. LTD., HYDERABAD 8 38. FURTHER IN THE CASE OF R.R. CONSTRUCTIONS, THE CHENNAI BENCH OF THE TRIBUNAL IN ITS ORDER DATED 3.10.2011 IN I.T.A. NO. 2061/MDS/2010 FOR ASSESSMENT YEAR 2007-08 HELD AS FOLLOWS: '3. WE HAVE HEARD RIVAL SUBMISSIONS AND HAVE CAREFU LLY PERUSED THE ENTIRE RECORD. THE FIRST ISSUE OF THE APPEAL IS REGARDING CLAIM OF DEDUCTION UNDER SECTION 80IA(4) OF THE ACT . THE CASE OF THE REVENUE IS THAT THE ASSESSEE IS A 'WORKS CON TRACTOR' AND NOT A 'DEVELOPER' AS STIPULATED UNDER SECTION 80IA( 4) OF THE ACT. THE SECTION 80IA(4) APPLIES TO ANY ENTERPRISE, WHIC H CARRIES ON THE BUSINESS OF (I) DEVELOPING OR (II) OPERATING AN D MAINTAINING OR (III) DEVELOPING, OPERATING AND MAINTAINING ANY INFRASTRUCTURE FACILITIES, WHICH FULFIL ALL THE ABO VE CONDITIONS. THERE CANNOT BE ANY QUESTION OF PROVIDING A CONDITI ON FOR SUCH AN ENTERPRISE TO START OPERATING AND MAINTAINING TH E INFRASTRUCTURE FACILITY ON OR AFTER 01.04.1995. FRO M THE ASSESSMENT YEAR 2000-01, DEDUCTION IS AVAILABLE IF THE ASSESSEE IS CARRYING OUT THE BUSINESS OF ANY ONE OF THE ABOV E MENTIONED THREE TYPES OF ACTIVITIES. WHEN AN ASSESSEE IS ONLY DEVELOPING AN INFRASTRUCTURE FACILITY PROJECT AND IS NOT MAINT AINING NOR OPERATING IT, OBVIOUSLY SUCH AN ASSESSEE WILL BE PA ID FOR THE COST INCURRED BY IT; OTHERWISE, HOW WILL THE PERSON , WHO DEVELOPS THE INFRASTRUCTURE FACILITY PROJECT, REALI ZE ITS COST? IF THE INFRASTRUCTURE FACILITY, JUST AFTER ITS DEVELOP MENT, IS TRANSFERRED TO THE GOVERNMENT, NATURALLY THE COST W OULD BE PAID BY THE GOVERNMENT. THEREFORE, MERELY BECAUSE THE TR ANSFEREE HAD PAID FOR THE DEVELOPMENT OF INFRASTRUCTURE FACI LITY CARRIED OUT BY THE ASSESSEE, IT CANNOT BE SAID THAT THE ASS ESSEE DID NOT DEVELOP THE INFRASTRUCTURE FACILITY. IF THE INTERPR ETATION DONE BY THE ASSESSING OFFICER IS ACCEPTED, NO ENTERPRISE CA RRYING ON THE BUSINESS OF ONLY DEVELOPING HE INFRASTRUCTURE FACIL ITY WOULD BE ENTITLED TO DEDUCTION UNDER SECTION 80IA(4), WHICH IS NOT THE INTENTION OF THE LAW. AN ENTERPRISE, WHO DEVELOP TH E INFRASTRUCTURE FACILITY IS NOT PAID BY THE GOVERNME NT, THE ENTIRE COST OF DEVELOPMENT WOULD BE A LOSS IN THE HANDS OF THE DEVELOPER AS HE IS NOT OPERATING THE INFRASTRUCTURE FACILITY. THE LEGISLATURE HAS PROVIDED THAT THE INCOME OF THE DEV ELOPER OF THE INFRASTRUCTURE PROJECT WOULD BE ELIGIBLE FOR DEDUCT ION, IT PRESUPPOSES THAT THERE CAN BE INCOME TO DEVELOPER I .E. TO THE PERSON WHO IS CARRYING ON THE ACTIVITY OF ONLY DEVE LOPMENT INFRASTRUCTURE FACILITY. OSTENSIBLY, A DEVELOPER WO ULD HAVE INCOME ONLY IF HE IS PAID FOR THE DEVELOPMENT OF IN FRASTRUCTURE FACILITY, FOR THE SIMPLE REASON THAT HE IS NOT HAVI NG THE RIGHT/AUTHORIZATION TO OPERATE THE INFRASTRUCTURE F ACILITY AND TO COLLECT TOLL THERE FROM, HAS NO OTHER SOURCE OF REC OUPMENT OF HIS COST OF DEVELOPMENT. WHILE FILING THE RETURN, THE A SSESSEE HAD MADE CLAIM UNDER SECTION 80IA(4) OF THE ACT. 4. THE ASSESSEE HAS ALSO PRODUCED ALL SIX AGREEMENT S REGARDING SIX PROJECTS UNDERTAKEN BEFORE THE ASSESSING OFFICE R, WHOSE COPIES ARE AVAILABLE BEFORE US ALSO. IT IS A FACT T HAT EVEN AFTER TAKING A CONTRACT FROM THE GOVERNMENT, IF THE ASSES SEE DEVELOPS INFRASTRUCTURE FACILITIES, IT WOULD BE REG ARDED AS A 'DEVELOPER' AND NOT AS A 'WORKS CONTRACTOR'. THE AS SESSEE FIRM HAS CARRIED ON ENTIRE CONSTRUCTION/DEVELOPMENT OF T HE ITA NO.910-911/HYD/2015 M/S. SUSHEE INFRA PVT. LTD., HYDERABAD 9 INFRASTRUCTURE FACILITIES AND SATISFY ALL THE CONDI TIONS OF SECTION 80IA(4)(I)(A). IT IS UNDENIABLE FACT THAT THE ASSES SEE HAS TAKEN DEVELOPMENT OF INFRASTRUCTURE FACILITY AGREEMENT FR OM THE STATE GOVERNMENT/LOCAL AUTHORITY. A CONTRACTOR WHO DEVELO PS THE INFRASTRUCTURE FACILITY BECOMES A DEVELOPER TO CLAI M EXEMPTION UNDER SECTION 80IA(4). THE HON'BLE BOMBAY BENCH OF ITAT WHILE DECIDING THE CASE OF PATEL ENGINEERING LTD. V S. DCIT IN ITA NO.1221/MUM/2004 HAS GONE TO THE EXTENT OF HOLD ING THAT THE ASSESSEE, A CIVIL CONTRACTOR, HAVING EXECUTED A PART OF CONTRACTS OF IRRIGATION AND WATER SUPPLY ON 'BUILD AND TRANSFER' BASIS AND HANDED OVER THEM TO CONTRACTEE GOVERNMENT S, WAS ELIGIBLE FOR DEDUCTION UNDER SECTION 80IA(4). 5. WE HAVE ALSO TAKEN A SIMILAR VIEW IN ITA NO. 554/MEDS/2010 IN THE CASE OF EAST COAST CONSTRUCTIO NS & INDUSTRIES LTD V. DCIT VIDE ORDER DATED 13.09.2011 AND RELEVANT PARAS FROM 9 TO 14 ARE REPRODUCED HEREUNDE R: '9. AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE CAN SAFELY SAY THAT THE BENEFIT OF SECTION 80IA IS AVAILABLE O NLY TO A 'DEVELOPER' WHO CARRIES ON BUSINESS OF 'DEVELOPING OF INFRASTRUCTURE FACILITY'. A PERSON WHO ENTERS INTO CONTRACT WITH ANOTHER PERSON FOR EXECUTING 'WORKS CONTRACTS' IS NOT ELIGIBLE FOR SUCH A BENEFIT. EXPLANATION TO SEC TION 80IA WAS INSERTED BY FINANCE ACT, 2007 WITH RETROSPECTIVE EFFECT FROM 1.4.2000 WHICH HAS FURTHE R BEEN AMENDED BY FINANCE (NO. 2) ACT, 2009 WITH RETROSPECTIVE EFFECT FROM 1.4.2000. THE AMENDMENT I N THIS EXPLANATION WAS NECESSITATED DUE TO CONTRARY JUDICIAL DECISION ON THIS ISSUE. THUS, WE CAN UNEQUIVOCALLY NOW SAY THAT ANY UNDERTAKING OR ENTERPRISE WHICH EXECUTES THE INFRASTRUCTURE DEVELOPMENT PROJECT, AS REFERRED TO IN SUB-SECTION( 4) AS A WORKS CONTRACT AWARDED BY ANY PERSON INCLUDING TH E CENTRAL OR STATE GOVERNMENT, IS NOT ELIGIBLE FOR TA X BENEFIT U/S 80IA(4). HAVING SAID THAT, NOW WE EXAMI NE THE FACTS OF THIS CASE. THE ASSESSEE-COMPANY WAS GI VEN THIS BENEFIT IN ASSESSMENT YEAR 2003-04 BY THE DEPARTMENT ON IDENTICAL FACTS AFTER CONSIDERING THE EXPLANATION AND AMENDMENT THERETO. TO TRACE THE HIS TORY OF THIS DEDUCTION, WE FIND THAT ORIGINALLY, IN THE PROVISION OF SECTION 80IA, THERE WAS NO MENTION OF ANY DEVELOPMENT OF 'INFRASTRUCTURE FACILITY'. IT IS ONL Y WITH EFFECT FROM 1.4.2000, THIS SECTION WAS DIVIDED INTO TWO PORTIONS 80IA AND 80IB. SECTION 80IA(4) PRESCRIBES ABOUT THE DEDUCTION AVAILABLE TO A DEVELOPER WHO DEVELOPS INFRASTRUCTURE FACILITIES. IN VIEW OF THE AMENDMENT INSERTED BY THE FINANCE ACT, 2007, WITH RETROSPECTIVE EFFECT FROM 1.4.2000, THE DEDUCTION U /S 80IA IS AVAILABLE TO THOSE ASSESSEES WHO ARE 'INVES TING AND DEVELOPING INFRASTRUCTURE FACILITY' AND NOT TO PERSONS WHO SIMPLY EXECUTES 'WORKS- CONTRACTS'. EXPLANATION IN QUESTION, AS IT STANDS TODAY, READS AS UNDER: ITA NO.910-911/HYD/2015 M/S. SUSHEE INFRA PVT. LTD., HYDERABAD 10 'EXPLANATION - FOR THE REMOVAL OF DOUBTS, IT IS HEREBY DECLARED THAT NOTHING CONTAINED IN THIS SECTION(I.E. 80IA) SHALL APPLY TO A PERSON WHO EXECUTES A WORKS CONTRACT ENTERED INTO WITH THE UNDERTAKING OR ENTERPRISE, AS THE CASE MAY BE.' IN CONTRAST TO THIS, A PERSON WHO ENTERS INTO A CONTRACT WITH ANOTHER PERSON (I.E., UNDERTAKING OR ENTERPRISE REFERRED TO IN SECTION 80-IA) FOR EXECUTING WORKS CONTRACT, WILL NOT BE ELIGIBLE FOR TAX BENEFIT UNDER SECTION 80- IA. 10. WE HAVE FOUND THAT THE ASSESSEE-COMPANY IS A WO RKS CONTRACTOR, WHO HAS ENTERED INTO AGREEMENT WITH THE LOCAL BODIES TO EXECUTE CERTAIN PART OF THE WORK AW ARDED TO IT THROUGH CONTRACT FOR INFRASTRUCTURE FACILITY. IT IS TRUE THAT WHERE A PERSON WHO MAKES INFRASTRUCTURE AND HIMSELF EXECUTES DEVELOPMENT WORK AND CARRIES OUT C IVIL WORK WILL BE ELIGIBLE FOR TAX BENEFIT U/S 80IA OF T HE ACT. IN CONTRAST TO THIS, A PERSON WHO ENTERS INTO A CON TRACT WITH ANOTHER PERSON FOR EXECUTING WORKS CONTRACT, W ILL NOT BE ELIGIBLE FOR TAX BENEFIT U/S 80IA. IT WAS CL ARIFIED BY THE CIRCULAR NO. 3 OF 2008 DATED 12.3.2008 THAT THE PROVISIONS OF SECTION 80IA SHALL NOT APPLY TO A PER SON WHO EXECUTES ONLY WORK CONTRACTS AND ONLY THOSE WHO MAKE THE DEVELOPMENT WORK WILL BE ELIGIBLE FOR TAX BENEFIT U/S 80IA OF THE ACT. BE THAT AS IT MAY, WHE N WE APPLY THIS PROVISION IN ITS LETTERS AND SPIRIT, WE FIND THAT THIS ASSESSEE IS VERILY ELIGIBLE FOR DEDUCTION U/S 80IA, AS THE ASSESSEE-COMPANY FULFILS ALL THE RELEVANT CONDI TIONS. THE FACTS OF THIS CASE GO TO PROVE THAT THE ASSESSE E IS A 'DEVELOPER' OF INFRASTRUCTURE FACILITIES. THE REASO NS FOR OUR ABOVE CONCLUSION ARE GIVEN IN THE FOLLOWING PAR AS. FIRSTLY, THE ASSESSEE-COMPANY NOT ONLY DESIGNS BUT ALSO CREATES NEW PRODUCTS. THE ASSESSEE HAD UNDERTAKEN F OUR PROJECTS DURING THE RELEVANT YEAR AND EXECUTED, CONSTRUCTED, DELIVERED AND MAINTAINED BY IT. AS PER THE DEFINITION OF ADVANCED LAW LEXICON [PLACED AT PAGE 533 OF THE PAPER BOOK] 'DEVELOPER' MEANS - A PERSON ENGAGED IN DEVELOPMENT OR OPERATION OR MAINTENANCE OF SPECIAL ECONOMIC ZONE, AND ALSO INCLUDES ANY PERSON AUTHORIZED FOR SUCH PURPOSE BY ANY SUCH DEVELOPER. THE 'WORKS CONTRACT' MEANS AN AGREEMENT IN WRITING FOR THE EXECUTION OF ANY WORK RELATING TO CONSTRUCTION, REP AIR, OR MAINTENANCE OF ANY BUILDING OR SUPERSTRUCTURE, DAM, WEIR, CANAL, RESERVOIR, TANK, LAKE, ROAD, WELL, BRI DGE, CULVERT, FACTORY, WORKSHOP, POWERHOUSE, TRANSFORMER S OR SUCH OTHER WORKS OF THE STATE GOVERNMENT OR PUBLIC UNDERTAKINGS AS THE STATE GOVERNMENT MAY BE BY NOTIFICATION, SPECIFY IN THIS BEHALF AT ANY OF ITS STAGES ENTERED INTO BY THE STATE GOVERNMENT OR BY AN OFFIC IAL OF THE STATE GOVERNMENT OR PUBLIC UNDERTAKING AND INCL UDES AN AGREEMENT FOR THE SUPPLY OF GOODS OR MATERIAL AN D ALL OTHER MATTERS RELATING TO EXECUTION OF ANY OF THE S AID WORKS. THE CASE OF ACIT VS INDWELL LIANINGS PVT. LT D ITA NO.910-911/HYD/2015 M/S. SUSHEE INFRA PVT. LTD., HYDERABAD 11 (SUPRA), ON WHICH THE ASSESSING OFFICER HAS PLACED RELIANCE IS ALSO RELEVANT AND WE EXTRACT CERTAIN RE LEVANT PORTION OF THIS DECISION FOR READY REFERENCE: VIDE FINANCE ACT, 2007, AN EXPLANATION WAS INSERTED WITH RETROSPECTIVE EFFECT FROM APRIL, 2000 AFTER SUB-SEC TION (13) OF SECTION 80- IA, WHICH READS AS UNDER : 'FOR THE REMOVAL OF DOUBTS, IT IS HEREBY DECLARED THAT NOTHING CONTAINED IN THIS SECTION SHALL APPLY TO A PERSON WHO EXECUTES A WORKS CONTRACT ENTERED INTO WITH THE UNDERTAKING OR ENTERPRISE, AS THE CASE MAY BE.' ACCORDING TO ATTORNEY'S POCKET DICTIONARY, IN RELAT ION TO A CORPORATION OR BUSINESS, THE TERM 'UNDERTAKING' DEN OTES ITS WHOLE ENTERPRISE AND THE WORD 'ENTERPRISE' CONN OTES ALL THE RELATED ACTIVITIES PERFORMED EITHER THROUGH UNIFIED OPERATION OR COMMON CONTROL BY ANY PERSON OR PERSON S FOR A COMMON BUSINESS PURPOSE. THE MENS LEGIS WITH REFERENCE TO DEVELOPER OF INFRASTRUCTURE FACILITY CAN BE GATHERED FROM THE MEMORANDUM EXPLAINING THE PROVISIONS IN THE FINANCE BILL, 2007, REPORTED IN [2007] 289 ITR (ST.) 292 AT PAGE 312, WHICH READS AS UNDER : 'SECTION 80-IA, 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 PASSIVE 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 SECTOR 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. ACCORDINGLY, IT IS PROPOSED TO CLARIFY THAT THE PRO VISIONS OF SECTION 80-IA SHALL NOT APPLY TO A PERSON WHO EX ECUTES A WORKS CONTRACT ENTERED INTO WITH THE UNDERTAKING OR ENTERPRISE REFERRED TO IN THE SAID SECTION. THUS, I N A CASE WHERE A PERSON MAKES THE INVESTMENT AND HIMSELF EXECUTES THE DEVELOPMENT WORK, I.E., CARRIES OUT TH E CIVIL CONSTRUCTION WORK, HE WILL BE ELIGIBLE FOR TAX BENE FIT UNDER SECTION 80- LA. IN CONTRAST TO THIS, A PERSON WHO ENTERS INTO A CONTRACT WITH ANOTHER PERSON (I.E., ITA NO.910-911/HYD/2015 M/S. SUSHEE INFRA PVT. LTD., HYDERABAD 12 UNDERTAKING OR ENTERPRISE REFERRED TO IN SECTION 80 -IA) FOR EXECUTING WORKS CONTRACT, WILL NOT BE ELIGIBLE FOR TAX BENEFIT UNDER SECTION 80- IA. THIS AMENDMENT WILL TAKE RETROSPECTIVE EFFECT FROM APRIL I, 2000 AND WILL ACCORDINGLY APPLY IN RELATION TO T HE ASSESSMENT YEAR 2000-01 AND SUBSEQUENT YEARS.' IT IS MADE ABUNDANTLY CLEAR THAT THE PRESCRIPTION O F SECTION 80- IA SHALL NOT APPLY TO A PERSON WHO EXEC UTES WORK CONTRACTS ENTERED INTO WITH AN UNDERTAKING OR ENTERPRISE. THUS, IN A CASE WHERE A PERSON WHO MAKE S INVESTMENT AND HIMSELF EXECUTES DEVELOPMENT WORKS A ND CARRIES OUT CIVIL WORKS, WILL BE ELIGIBLE FOR TAX B ENEFIT UNDER SECTION 80- IA OF THE ACT. IN CONTRAST TO THI S, A PERSON WHO ENTERS INTO A CONTRACT WITH ANOTHER PERS ON FOR EXECUTING WORKS CONTRACT WILL NOT BE ELIGIBLE F OR THE TAX BENEFIT UNDER SECTION 80-IA OF THE ACT. IN THE PRESENT CASE, WE FIND THAT THE ASSESSEE WAS DOING ONLY CONTRACT WORKS OF IN SITU CEMENT LINING FOR WA TER SUPPLY PROJECT OF THE GUJARAT WATER SUPPLY AND SEWE RAGE BOARD. AS SUCH, THE BENEFIT OF SECTION 80-IA CANNOT BE EXTENDED TO THE ASSESSEE. THE DECISIONS RELIED UPON BY THE ASSESSEE WERE RENDERED PRIOR TO THE AMENDMENT A ND AS SUCH NOT RELEVANT FOR DECIDING THIS ISSUE. WE, THEREFORE, RESTORE THE ORDER OF THE ASSESSING OFFIC ER AND REVERSE THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS). ' 11. TO FURTHER ELABORATE THE DISCUSSION ON THIS ISS UE, PARAS 5 & 6 OF THE DECISION OF ITAT PUNE BENCH REND ERED IN THE CASE OF LAXMI CIVIL ENGG. P. LTD VS ADDL. CI T,ORDER DATED 8.6.2011 ARE BEING EXTRACTED HEREIN BELOW: 5. WE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE. THE CONTENTIOUS ISSUES BEFORE US ARE (I) W HETHER THE CONTRACTOR IS SYNONYMOUS WITH THE DEVELOPER WITHIN THE MEANING OF SECTION 80IA (4)(I) OF THE ACT; (II) WHE THER THE CONDITION PLACED IN CLAUSE (C) IS APPLICABLE TO THE CASE OF A DEVELOPER, WHO IS NOT CARRYING ON BUSINESS OF OPERA TING AND MAINTAINING THE INFRASTRUCTURAL FACILITIES. IN OUR OPINION, THE ANSWER TO THESE QUESTION ARE PROVIDED BY THE JUDGME NT OF THE BOMBAY HIGH COURT IN THE CASE OF ABG HEAVY ENGG LTD (SUPRA). IN THIS REGARD, WE PERUSED THE ABOVE CITED PARA-22 OF THE SAID JUDGMENT AND FOR THE SAKE OF COMPLETENESS, THE SAID PARAGRAPH IS REPRODUCED AS UNDER:- '22. THE SUBMISSION WHICH WAS URGED ON BEHALF OF THE REVENUE IS THAT CLAUSE (III) OF SUB-SECTION (4A ) OF SECTION 80-LA, ONE OF THE CONDITIONS IMPOSED WAS THAT THE ENTERPRISE MUST START OPERATING AND MAINTAINING THE INFRASTRUCTURE FACILITY ON OR AFTER 1ST APRIL, 1995. THE SAME REQUIREMENT IS EMBODIED IN SUB CLAUSE (1) OF SUB-CLAUSE (4) OF THE AMENDED ITA NO.910-911/HYD/2015 M/S. SUSHEE INFRA PVT. LTD., HYDERABAD 13 PROVISIONS. IT WAS URGED THAT SINCE THE ASSESSEE WAS NOT OPERATING AND MAINTAINING THE FACILITY, HE DID NOT FULFIL THE CONDITION. THE SUBMISSION IS FALLACIOUS BOTH IN FACT AND IN LAW. ' THAT THE ASSESSEE WAS MAINTAINING THE FACILITY IS N OT IN DISPUTE. THE FACILITY WAS COMMENCED AFTER 1ST APRIL, 1995. T HEREFORE, THE REQUIREMENT WAS MET IN FACT. MOREOVER, AS A MAT TER OF LAW, WHAT THE CONDITION ESSENTIALLY MEANS IS THAT THE IN FRASTRUCTURE FACILITY SHOULD HAVE BEEN OPERATIONAL AFTER 1ST APR IL, 1995. AFTER SECTION 80IA WAS AMENDED BY THE FINANCE ACT, 2001, THE SECTION APPLIES TO AN ENTERPRISE CARRYING ON THE BU SINESS OF (I) DEVELOPING; OR (II) OPERATING AND MAINTAINING; OR ( III) DEVELOPING, OPERATING AND MAINTAINING ANY INFRASTRU CTURE FACILITY' WHICH FULFILS CERTAIN CONDITIONS. THOSE C ONDITIONS ARE (I) OWNERSHIP OF THE ENTERPRISES BY A COMPANY REGIS TERED IN INDIA OR BY A CONSORTIUMS; (II) AN AGREEMENT WITH T HE CENTRAL OR STATE GOVERNMENT, LOCAL AUTHORITY OR STATUTORY B ODY; AND (III) THE START OF OPERATION AND MAINTENANCE OF THE INFRASTRUCTURE FACILITY SHOULD COMMENCE AFTER 1ST A PRIL, 1995. THE REQUIREMENT THAT OPERATION AND MAINTENANCE OF T HE INFRASTRUCTURE FACILITY SHOULD COMMENCE AFTER 1ST A PRIL, 1995 HAS TO BE HARMONIOUSLY CONSTRUED WITH THE MAIN PROV ISION UNDER WHICH DEDUCTION IS AVAILABLE TO AN ASSESSEE W HO DEVELOPS OR OPERATES AND MAINTAINS, OR DEVELOPS, OP ERATES AND MAINTAINS AN INFRASTRUCTURE FACILITY'. A HARMONIOUS READING OF THE PROVISIONS IN ITS ENTIR ETY WOULD LEAD TO THE CONCLUSION THAT THE DEDUCTION IS AVAILA BLE TO AN ENTERPRISE WHICH (I) DEVELOPS, OR OPERATES AND MAIN TAINS; OR (III) DEVELOPS, MAINTAIN AND OPERATES THAT INFRASTR UCTURE FACILITY. HOWEVER, THE COMMENCEMENT OF THE OPERATIO N AND MAINTENANCE: OF THE INFRASTRUCTURE FACILITY SHOULD BE AFTER 1' APRIL, 1995. IN THE PRESENT CASE THE ASSESSEE CLEAR LY FULFILLED THIS CONDITION '. BEFORE THE AMENDMENT THAT WAS BROUGHT ABOUT BY PARL IAMENT BY FINANCE ACT, 2001 WE HAVE ALREADY NOTED THAT THE CONSISTENT LINE OF CIRCULARS OF THE BOARD POSTULATED THE SAME POSITION. THE AMENDMENT MADE BY PARLIAMENT TO S. 80-IA(4) OF THE ACT, SET THE MATTER BEYOND ANY CONTROVERSY BY STIPULATING TH AT THE THREE CONDITIONS FOR DEVELOPMENT, OPERATION AND MAINTENAN CE WERE NOT INTENDED TO BE CUMULATIVE IN NATURE 6. THE ABOVE JUDGMENT OF THE HON'BLE HIGH COURT IS DELIVERED IN THE CASE OF ABG HEAVY ENGG LTD (SUPRA), WHO IS A CO NTRACTOR FOR THE INP TRUST AND THAT CONTACTOR, ASSESSEE IS FOUND TO BE AN ELIGIBLE DEVELOPER FOR MAKING CLAIM OF DEDUCTION U/ S SECTION 80IA (4) OF THE ACT. FROM THE ABOVE, IT IS EVIDENT THAT THE PERSON WHO ONLY DEVELOPS THE INFRASTRUCTURE DO NOT HAVE THE OCCASION TO OPERATE AND MAINTAIN THE INFRASTRUCTURE . IT IS FURTHER EVIDENT THAT THE HARMONIOUS READING IS NECE SSARY AND MANDATORY IN VIEW OF HIGH COURT'S JUDGMENT IN THE C ASE OF AN ENTERPRISE CARRYING ON BUSINESS OR DEVELOPING WHICH IS THE CASE OF THE ASSESSEE, ALL THE CONDITIONS REFERRED TO CLA USE (I) OF ITA NO.910-911/HYD/2015 M/S. SUSHEE INFRA PVT. LTD., HYDERABAD 14 SECTION 80IA (4) SHOULD REFER TO THE CONDITIONS AS APPLICABLE TO THE DEVELOPER. IN OTHER WORDS, THE DEVELOPER WHO IS ONLY DEVELOPING THE INFRASTRUCTURE FACILITIES SINCE HE D OES NOT OPERATE AND MAINTAIN INFRASTRUCTURAL FACILITIES, CA NNOT BE EXPECTED TO FULFIL THE CONDITION AT SUB CLAUSE (C) WHICH IS AN IMPOSSIBILITY AND THE REQUIREMENTS TO FULFIL THE SA ID CONDITION SHALL AMOUNT TO ABSURDITY AND THEREFORE UNCALLED FO R. THEREFORE, WE FIND REQUIREMENT OF HARMONIOUS READING OF SUB-CL AUSE (C) VIS--VIS OF CLAUSE (I) OF SECTION 80IA (4) OF THE ACT. THUS, THE DISCUSSION IN HIGH COURT'S DECISION IN PARAGRAPH-22 EXTRACTED ABOVE, IS DIRECTLY APPLICABLE TO THE FACTS OF THE C ASE AND EVENTUALLY IS ENTITLED FOR THE DEDUCTION UNDER SECT ION 80IA (4) OF THE ACT. ACCORDINGLY, THE MODIFIED GROUND, WHICH IS COMMON IN ALL THE FOUR APPEALS IS ALLOWED IN FAVOUR OF THE ASSESSEE. ' 12. LET US REMIND OURSELVES THAT THE HON'BLE SUPREM E COURT IN THE CASE OF BAJAJ TEMPO LTD VS CIT, 196 ITR 188, HA S ORDAINED THAT TAXING STATUTE GRANTING INCENTIVES FOR PROMOTI NG GROWTH AND DEVELOPMENT SHOULD BE LIBERALLY CONSTRUED. 13. NOW, THE QUESTION ARISES AS TO WHETHER THE TERM 'CONTRACTOR' IS NOT ESSENTIALLY CONTRADICTORY TO TH E TERM 'DEVELOPER'. IN FACT, IN EVERY DEVELOPMENT THE TERM 'DEVELOPER' WILL DEFINITELY BE A 'WORKS CONTRACTOR' BUT EVERY W ORKS CONTRACTOR MAY NOT BE A 'DEVELOPER'. A 'DEVELOPER' IS A SPECIFIC KIND OF WORKS CONTRACTOR TO BE ELIGIBLE FOR DEDUCTI ON U/S 80IA(4) WHO FULFILS ALL THE CONDITIONS NAMELY, IF T HE ASSESSEE DEVELOPS THE INFRASTRUCTURE FACILITY IF IT OPERATES THE INFRASTRUCTURE FACILITY AND IF IT MAINTAINS THE INF RASTRUCTURE FACILITY OR TO PUT IT IN SIMPLER TERMS, THE HARMONI OUS READING OF THE PROVISIONS IN ITS ENTIRETY WOULD LEAD TO THE CO NCLUSION THAT THIS DEDUCTION IS AVAILABLE TO AN ENTERPRISE WHO - DEVELOPS OR OPERATES AND ALSO MAINTAINS; OR DEVELOPS, MAINTAINS AND OPERATES THAT INFRASTRUCTURE FACILITY. THE PROVISIO N FOR GIVING THE IMPUGNED INCENTIVES HAS BEEN EXAMINED, RE-EXAMI NED, MODIFIED AND AMENDED AFTER GIVING CONSCIOUS AND DEL IBERATE DISCUSSIONS BY THE CONCERNED LAW MAKERS. TO OUR GRE AT CHAGRIN EVEN AFTER THIS CONSCIOUS EXERCISE AN ENTITY WHO EX ECUTES THE WORKS CONTRACT ENTERED INTO BETWEEN LOCAL AUTHORITY /CENTRAL OR STATE GOVERNMENT AND MAKES A DEVELOPMENT OF AN INFRASTRUCTURE HAS NOT BEEN EXCLUDED FROM THE SCOPE OF THIS PROVISION. AND RIGHTLY SO, BECAUSE WHAT INFRASTRUCT URE IS REQUIRED IN PUBLIC DOMAIN IS THE OUTLOOK/DUTY OF A LOCAL AUTHORITY OR OF A CENTRAL/STATE GOVERNMENT. WHEN A CERTAIN INFRASTRUCTURE IS NEEDED, THE CONCERNED AUTHORITIES HAVE A BROADER PICTURE IN THEIR MIND AIMING AT ACQUIRING C ERTAIN FACILITY FOR WHICH INFRASTRUCTURE DEVELOPMENT IS REQUIRED. S O, TO SAY, WHEN ANY ASSESSEE/ENTERPRISE AGREES UNDER A CONTRAC T TO DEVELOP SUCH AN INFRASTRUCTURE FACILITY, IT CANNOT STRAIGHT AWAY BE DUBBED AS NOT THE BRAINCHILD OF THAT ENTERPRISE, BUT ONLY OF THE AUTHORITY IN QUESTION. THEREFORE, AGAIN THIS PR OVISION IN SO FAR AS THE CONDITIONS REQUIRED TO BE FULFILLED TO B E ELIGIBLE FOR THIS INCENTIVE HAD TO BE PROVIDED BY THE JURIDICAL FORUMS DEALING WITH THIS ISSUE. AFTER IN-DEPTH DELIBERATIONS, DISC USSIONS AND EXAMINATION OF THESE PROVISIONS, FINALLY, IT HAS BE EN RESOLVED ITA NO.910-911/HYD/2015 M/S. SUSHEE INFRA PVT. LTD., HYDERABAD 15 THAT IF AN ENTERPRISE EVEN AFTER ENTERING INTO A CO NTRACT WITH A LOCAL AUTHORITY OR THE GOVERNMENTS, MAY BE CENTRAL OR STATE, IN CASE IT CONSTRUCTS THE INFRASTRUCTURE FACILITY, OPE RATES IT AND ALSO MAINTAINS THE SAME, IT WOULD BE ELIGIBLE FOR T HIS DEDUCTION. 14. NOW, LET US EXAMINE THE FACTS OF THE GIVEN CASE . IT IS AN UNDENIABLE FACT THAT THE ASSESSEE IS ENGAGED IN THE CIVIL CONSTRUCTION WORK LIKE CONSTRUCTION OF FLYOVER, BRI DGE UNDERPASS, SEWERAGE, WATER SUPPLY ETC. FOR VARIOUS LOCAL BODIES, RAILWAYS, CENTRAL/STATE GOVERNMENTS. IN FAC T, AS PER THE TERMS OF AGREEMENT, EVEN THE INITIAL PROPOSALS FORMULATED BY THE DEPARTMENT WHICH ARE STATED TO BE TENTATIVE, THE ASSESSEE HAS THE LIBERTY TO MAKE DIFFERENT PROPOSAL S WITHOUT DETRIMENTAL TO THE GENERAL FEATURES OF THE DEPARTME NTAL PROPOSAL, LIKE ROAD LEVEL/BOTTOM OF DECK LEVEL, MFL , SILL LEVEL, LINEAR WATER WAY, WIDTH OF THE BRIDGE ETC. RIGHT FR OM THE DRAWINGS TO THE WORK OF CONSTRUCTION HAS BEEN DONE BY THIS ASSESSEE AND HAS BORNE THE COST ITSELF. THE COMPANY HAS CONSTRUCTED, DELIVERED AND MAINTAINED AND SECURITY IS ALSO MAINTAINED THEREAFTER. SO, THIS IS A CASE OF TRANSF ER OF PROPERTY IN CHATTEL AND NOT A CONTRACT OF SERVICE. A 'DEVELO PER' AS PER THE ADVANCED LAW LEXICON MEANS 'A PERSON ENGAGED IN DEVELOPMENT OR OPERATION OR MAINTENANCE OF SPECIAL ECONOMIC ZONE, AND ALSO INCLUDES ANY PERSON AUTHORIZED FOR S UCH PURPOSE BY ANY SUCH DEVELOPER'. IN THE CASE OF ACIT VS BHAR AT UDYOG LTD, 'F' BENCH OF ITAT MUMBAI, HAS CONCLUDED THAT A NY ASSESSEE WHO IS ENGAGED IN DEVELOPING THE INFRASTRUCTURE FAC ILITY AND ALSO OPERATING AND MAINTAINING THE SAME, IS ENTITLE D TO THE BENEFIT OF DEDUCTION U/S 80IA(4). A COPY OF THIS DE CISION IS ENCLOSED AT PAGE 139 OF THE PAPER BOOK. IN THE CASE OF PATEL ENGINEERING LTD VS DY. CIT, 84 TTJ (MUMBAI) 646 [CO PY ENCLOSED AT PAGE NO. 145 OF THE PAPER BOOK], IT HAS BEEN HELD THAT A PERSON, WHO ENTERS INTO A CONTRACT WITH ANOT HER PERSON WILL BE TREATED AS A 'CONTRACTOR' UNDOUBTEDLY; AND THAT ASSESSEE HAVING ENTERED INTO AN AGREEMENT WITH THE GOVERNMEN T OF MAHARASHTRA AND ALSO WITH APSEB FOR DEVELOPMENT OF THE INFRASTRUCTURE PROJECTS, IS OBVIOUSLY A CONTRACTOR BUT DOES NOT DEROGATE THE ASSESSEE FROM BEING A 'DEVELOPER' AS W ELL. THE TERM 'CONTRACTOR' IS NOT NECESSARILY CONTRADICTORY TO THE TERM 'DEVELOPER'. ON THE OTHER HAND, RATHER SECTION 80IA (4) ITSELF PROVIDES THAT ASSESSEE SHOULD DEVELOP THE INFRASTRU CTURE FACILITY AS PER THE AGREEMENT WITH THE CENTRAL GOVE RNMENT, STATE GOVERNMENT OR A LOCAL AUTHORITY. SO, ENTERING INTO A LAWFUL AGREEMENT AND THEREBY BECOMING A CONTRACTOR SHOULD IN NO WAY BE A BAR TO THE ONE BEING A 'DEVELOPER'. THE ASSESSEE HAS DEVELOPED INFRASTRUCTURE FACILITY AS PER THE AG REEMENT WITH MAHARASHTRA GOVERNMENT/APSEB, THEREFORE, MERELY BEC AUSE IN THE AGREEMENT FOR DEVELOPMENT OF INFRASTRUCTURE FAC ILITY THE ASSESSEE IS REFERRED TO AS A CONTRACTOR OR BECAUSE SOME BASIC SPECIFICATIONS ARE LAID DOWN, IT DOES NOT DETRACT T HE ASSESSEE FROM THE POSITION OF BEING A 'DEVELOPER'; NOR WILL IT DEBAR THE ASSESSEE FROM CLAIMING DEDUCTION U/S 80IA(4). THE F ACTS OF THE PRESENT CASE ARE EXACTLY IDENTICAL TO THE FACTS OF THAT CASE RENDERED BY ITAT MUMBAI BENCH IN WHICH UNDER IDENTI CAL FACTS AND CIRCUMSTANCES, THE ASSESSEE HAS BEEN HELD TO BE ELIGIBLE ITA NO.910-911/HYD/2015 M/S. SUSHEE INFRA PVT. LTD., HYDERABAD 16 FOR DEDUCTION U/S 80IA(4). SECTION 80IA(4)(I)(B) RE QUIRES DEVELOPMENT OF INFRASTRUCTURE FACILITY AND TRANSFER THEREOF AS PER AGREEMENT AND IT CANNOT BE DISPUTED IN VIEW OF THE MATERIAL ON RECORD THAT THE ASSESSEE HAS TRANSFERRED THE INF RASTRUCTURE FACILITY DEVELOPED BY IT BY HANDING OVER THE POSSES SION THEREOF TO THE CONCERNED AUTHORITY AS REQUIRED BY THE AGREE MENT. THE HANDING OVER OF THE POSSESSION OF DEVELOPED INFRAST RUCTURE FACILITY/PROJECT IS THE TRANSFER OF THE INFRASTRUCT URE FACILITY/PROJECT BY THE ASSESSEE TO THE AUTHORITY. THE HANDING OVER OF THE INFRASTRUCTURE FACILITY/PROJECT BY THE DEVELOPER TO THE GOVERNMENT OR AUTHORITY TAKES PLACE AFTER RECOU PMENT OF THE DEVELOPER'S COSTS WHETHER IT BE 'BT' OR 'BOT' O R 'BOOT' BECAUSE IN 'BOT' AND 'BOOT' THIS RECOUPMENT IS BY W AY OF COLLECTION OF TOLL THERE FROM WHEREAS IN 'BT' IT IS BY WAY OF PERIODICAL PAYMENT BY THE GOVERNMENT/AUTHORITY. THE LAND INVOLVED IN INFRASTRUCTURE FACILITY/PROJECT ALWAYS BELONGS TO THE GOVERNMENT/LOCAL AUTHORITY ETC., WHETHER IT BE THE CASE OF 'BOT' OR 'BOOT' AND IT IS HANDED OVER BY THE GOVERNMENT/AUTHORITY TO THE DEVELOPER FOR DEVELOPME NT OF INFRASTRUCTURE FACILITY/PROJECT. THE SAME HAS BEEN THE POSITION IN THE GIVEN CASE AS WELL. SO, DEDUCTION U/S 80IA(4 ) IS ALSO AVAILABLE TO THIS ASSESSEE WHICH HAS UNDERTAKEN WOR K OF A MERE 'DEVELOPER'. RATHER, THE STATUTORY PROVISION AS CON TAINED IN SECTION 80IA WHICH PROVIDES FOR DEDUCTION OF INFRAS TRUCTURE FACILITY NO WAY PROVIDES THAT ENTIRE INFRASTRUCTURE FACILITY PROJECT HAS TO BE DEVELOPED BY ONE ENTERPRISE. THUS , AS PER SECTION 80IA THE ASSESSEE SHOULD DEVELOP THE INFRAS TRUCTURE FACILITY AS PER THE AGREEMENT WITH THE CENTRAL/STAT E GOVERNMENT/LOCAL AUTHORITY. ENTERING INTO A LAWFUL AGREEMENT AND THEREBY BECOMING SHOULD, IN NO WAY BE A BAR TO THE ONE BEING A 'DEVELOPER'. IN THIS REGARD, AS WE HAVE ALR EADY STATED, THE DECISION OF ACIT VS BHARAT UDYOG LTD, 118 ITD 3 36 AND PATEL ENGINEERING LTD VS DY. CIT, 84 TTJ 646, ARE R ELEVANT. AS PER CIRCULAR NO. 4/2010[F.NO. 178/14/2010-ITA-I] DA TED 18.5.2010, WIDENING OF EXISTING ROADS CONSTITUTES C REATION OF NEW INFRASTRUCTURE FACILITY FOR THE PURPOSE OF SECT ION 80IA(4)(I) . THE ASSESSEE IS NOT REQUIRED TO DEVELOP THE ENTIR E ROAD IN ORDER TO QUALIFY FOR DEDUCTION U/S 80IA AS HAS BEEN HELD BY THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS ABG HEAVY INDUSTRIES LTD, 322 ITR 323. THE NEWLY INSERTED EXP LANATION 2 TO SECTION 80IA VIDE FINANCE ACT, 2007, DOES NOT AP PLY TO A WORKS CONTRACT ENTERED INTO BY THE GOVERNMENT AND T HE ENTERPRISE. IT APPLIES TO A WORK CONTRACT ENTERED I NTO BETWEEN THE ENTERPRISE AND OTHER PARTY 'THE SUB-CONTRACTOR' . THE AMENDMENT AIMS AT DENYING DEDUCTION TO THE SUB CONT RACTOR WHO EXECUTES A WORK CONTRACT WITH THE ENTERPRISE AS HELD BY THE ITAT, JAIPUR 'A' BENCH IN THE CASE OF OM METAL INFRA PROJECTS LTD VS CIT-I, JAIPUR, IN I.T.A. NO. 722 & 723/JP/2008 DATED 31.12.2008. THE RELIANCE BY THE LD. CIT(A) ON THE DECISION OF ITAT, CHENNAI BENCH IN THE CASE OF ACIT VS INDWELL LIANINGS PVT. LTD, 313 ITR(AT) 118, HAS BEEN ENLARG ED IN ITS FINDING BY THE ITAT, MUMBAI 'F' BENCH IN ITS DECISI ON RENDERED IN THE CASE OF ACIT VS BHARAT UDYOG LTD , BY HOLDIN G THAT SUCH A DEDUCTION IS ONLY TO BE DENIED TO A SUB-CONTRACTOR AND NOT A MINI CONTRACTOR. SIMILAR VIEW HAS BEEN TAKEN BY THE ITAT ITA NO.910-911/HYD/2015 M/S. SUSHEE INFRA PVT. LTD., HYDERABAD 17 CHENNAI BENCH IN THE CASE OF ACIT VS SMT. C. RAJINI (SUPRA) IN WHICH BOTH OF US CONSTITUTED THE BENCH. IN THIS DEC ISION THE DEFINITION AND DIFFERENCE BETWEEN WORKS CONTRACTOR AND A DEVELOPER HAS BEEN EXAMINED IN DETAIL. THE MAIN THR UST OF THE DECISION IS THAT A DEVELOPER NEED NOT BE THE OWNER OF THE LAND ON WHICH DEVELOPMENT IS MADE. ALTHOUGH THAT DECISIO N WAS RENDERED IN THE CONTEXT OF A DEVELOPER OF BUILDINGS AND THE DEDUCTION WAS IN RESPECT OF 80IB(10), BUT THE DEFIN ITION OF 'DEVELOPER' GIVEN IN THAT CASE IS ALSO RELEVANT FOR THIS PURPOSE. MOREOVER, WE ARE IN AGREEMENT THAT IN INCENTIVE PRO VISIONS, THE CONSTRUCTION SHOULD BE LIBERALLY GIVEN AS HELD BY T HE HON'BLE SUPREME COURT RENDERED IN THE CASE OF BAJAJ TEMPO L TD VS CIT, 196 ITR 188. THUS, WHEN THE ASSESSEE MAKES INVESTME NT AND HIMSELF EXECUTES DEVELOPMENT WORK AND CARRIES OUT C IVIL WORKS, HE IS ELIGIBLE FOR TAX BENEFIT U/S 80IA OF THE ACT. ACCORDINGLY, WITH THE FOREGOING DISCUSSION, WE HOLD THAT THE ASS ESSEE IS ENTITLED TO DEDUCTION U/S 80IA(4) OF THE ACT, AND T HEREFORE, WE ORDER TO DELETE THE ADDITION MADE IN THIS RESPECT.' 6. THEREFORE, BY FOLLOWING THE ABOVE ARGUMENTS AND REASONING, WE CONFIRM THE FINDINGS OF THE LD. CIT(A) AND DO NO T FIND ANY VALID MERIT IN THE REVENUE'S APPEAL. ACCORDINGLY, T HE APPEAL STANDS DISMISSED. 39. IN VIEW OF THE ABOVE DISCUSSION, WE ARE INCLINE D TO PARTLY ALLOW THE GROUND RELATING TO CLAIMING OF DEDUCTION U/S. 8 0IA.OF THE ACT IN ALL THESE APPEALS. FOLLOWING THE ABOVE FINDINGS OF THE COORDINATE BENC H, WE DISMISS THE GROUNDS OF REVENUE. RESPECTFULLY FOLLOWING THE CONSISTENT VIEW TAKEN BY THE COORDINATE BENCHES OF THE TRIBUNAL ON THIS ISSUE IN ASSESSEES OWN CASE FOR EARLIER YEARS, WE DO NOT SEE ANY REASON TO INTERFERE WITH T HE ORDERS OF THE CIT(A). WE ACCORDINGLY UPHOLD THE SAME AND DISMISS THE APPEALS OF THE REVENUE. 7. IN THE RESULT, REVENUES APPEALS FOR BOTH THE A SSESSMENT YEARS ARE DISMISSED. ORDER PRONOUNCED IN THE COURT ON 22 ND JANUARY, 2016 SD/- SD/- ( B.RAMAKOTAIAH ) (P.MADHAVI DEVI) ACCOUNTANT MEMBER. JUDICIAL MEMBER DT/- 22 ND JANUARY, 2016 ITA NO.910-911/HYD/2015 M/S. SUSHEE INFRA PVT. LTD., HYDERABAD 18 COPY FORWARDED TO: 1. M/S. SUSHEE INFRA PVT. LTD. PLOT NO.246/A, MLA COLONY, ROAD NO.12, BANJARA HILLS, HYDERABAD 2. DY. COMMISSIONER OF INCOME-TAX CIRCLE 3(2), HYD ERABAD 3. 4. COMMISSIONER OF INCOME - TAX(APPEALS) 3 , HYDERABAD COMMISSIONER OF INCOME-TAX 3, HYDERABAD 5. DEPARTMENTAL REPRESENTATIVE ITAT, HYDERABAD B.V.S.