ACIT Central-1, Bhopal V. Dilip Buildcon Ltd , Bhopal

ITSSA 162/Ind/2021

AI Insights

The case revolves around the appeal by the Revenue against the order of the Commissioner of Income Tax (Appeals) which allowed the deduction under Section 80IA(4) of the Income Tax Act, 1961 to Dilip Buildcon Ltd for the Assessment Year 2018-19. The primary contention was whether the assessee, engaged in road development projects, qualifies as a 'developer' under the Act, thereby eligible for the said deduction, or merely as a 'contractor'. The Tribunal examined the nature of the contracts, the financial and technical risks undertaken by the assessee, and referenced previous judgments and the decision of the Hon'ble Settlement Commission which supported the assessee's position.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 122481 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 6 month(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 25-05-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 18-04-2023
• Assessment Year: 2018-2019
• Appeal Filed On: 25-11-2021
• Other Referred Cases: Katira Construction Ltd. vs. Union of India, M/s. R. K. Gupta Contractors & Engineers Pvt. Ltd.
• Laws Referred To: Income-Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: IT SS A NO. IND
• Section: 6; 2; 143(3); 142(1); 250; 80IA; 251; 143(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE (CONDUCTED THROUGH VIRTUAL COURT) BEFORE Ms. MADHUMITA ROY, JUDICIAL MEMBER & SHRI BHAGIRATH MAL BIYANI, ACCOUNTANT MEMBER I T( S S) A N o. 1 6 2/ I n d/2 0 2 1 ( A s se ss m e nt Y e a r : 20 18- 19 ) A s s is ta nt C o mm is s io ne r o f I n co me T a x ( C e n t ra l) - 1 , B ho p a l V s. M/ s. D i li p B u il dc o n L t d. Pl ot N o .5 , I n s id e g ovi n d Na r a ya n S in gh G a t e, K o la r R o ad , H u z u r , Bh op a l थायी लेखा सं./जीआइआर सं./P A N / G IR N o . : A A C C D 6 1 2 4 B (Appellant) .. (Respondent) Revenue by : Shri P. K. Mishra, CIT.D.R. Assessee by : Shri Hitesh Chimnani, A.R. Date of Hearing 19.04.2023 Date of Pronouncement 26.05.2023 O R D E R PER Ms. MADHUMITA ROY - JM: The instant appeal filed by the Revenue is directed against the order dated 23.08.2021 passed by the Commissioner of Income Tax (Appeals)-3, Bhopal (M.P.) (hereinafter referred to as ‘Ld. CIT(A)’) arising out of the order dated 16.02.2021 passed by the ACIT, Central Circle-1, Bhopal (hereinafter referred to as ‘Ld. AO’) under Section 143(3) of the Income-Tax Act, 1961 (hereinafter referred to as ‘the Act’) for Assessment Year 2018-19, whereby and whereunder IT(SS)A No. 162/Ind/2021 ACIT vs. Dilip Buildcon Ltd. (A.Y. 2018-19) 2 the deduction claimed by the assessee under Section 80IA(4) of the Act has been granted. 2. The appeal is time barred by 18 days. However, considering the gravity of the matter and the sincere effort made by the assessee in pursuing the matter before the authorities below and before us as well, we condone the delay. 3. The brief facts leading to this case is this that the appellant, a Limited Company, engaged in the business of development of road project across the country, filed its return of income on 24.09.2018 declaring Nil income for the year under consideration. The gross total income shown by the assessee was of Rs.7,21,33,66,330/-. The assessee claimed deduction of Rs.7,00,18,59,019/- under Section 80IA(4) of the Act. The case was selected under CASS for assessment under Section 143(3) of the Act and notice under Section 143(2) of the Act dated 21.09.2019 was served upon the assessee followed by notice under Section 142(1) of the Act alongwith detailed questionnaire to the assessee on 09.01.2020 and 15.09.2020. The Ld. AO was of the opinion that the assessee was a work contractor and does not fulfill the conditions specified under Section 80IA(4) of the Act. Show cause dated 15.09.2019 was issued as to why claim of deduction under Section 80IA(4) of the Act should not be disallowed whereupon reply was filed on 13.10.2020 further by 27.10.2020 by the assessee enclosing the entire details in support of the case made out by the assessee. The contention made by the assessee was not found to be acceptable and therefore, the deduction claimed by the assessee under Section 80IA(4) of the Act has been rejected by the Ld. AO, particularly, relying upon the judgment passed in the matter of Katira Construction Ltd. vs. Union of India, reported in 31 IT(SS)A No. 162/Ind/2021 ACIT vs. Dilip Buildcon Ltd. (A.Y. 2018-19) 3 Taxman.com 250 by the Hon’ble Gujarat High Court and the judgment passed in the matter of M/s. R. K. Gupta Contractors & Engineers Pvt. Ltd. by the Ld. Tribunal, Indore Bench in ITA No. 517/Ind/2009 for A.Y. 2006-07. However, in appeal, the order has been reversed by the First Appellate Authority and the addition claimed by the assessee under Section 80IA(4) of the Act to the tune of Rs.7,00,18,59,019/- has been deleted. Hence, the instant appeal filed by the Revenue before us. 4. At the time of hearing of the instant appeal, the Ld. DR relied upon the order passed by the Ld. AO inter alia submitting that the assessee is engaged in the business of civil contractor which is supported by audit report filed by it. Time-to-time payments were made based on bills evaluated by Engineer only after satisfaction that work is being executed as per the contract. Deduction under Section 80IA of the Act is available only in respect of profit and gains from industrial undertakings or enterprises engaged in infrastructural development etc. whereas the assessee is merely executing a work contract awarded by the State and Central Government as the main contention of the Ld. DR. Furthermore, there is no mobilization of fund by assessee, rather it is totally depending on the Government/contract fund. The assessee is receiving mobilization advance and yearwise works contract receipt. Apart from that the assessee does not have any choice to build infrastructure facility and the work contract which is awarded by the Central or State Government. The specification provided by the department has to be followed by the assessee without any change. IT(SS)A No. 162/Ind/2021 ACIT vs. Dilip Buildcon Ltd. (A.Y. 2018-19) 4 5. It was further argued by the Ld. DR that the assessee does not invest its own on the contrary, the same is received from the Government in the form of mobilization advance and therefore fails to comply with the statutory provision in claiming deduction under Section 80IA(4) of the Act. In that view of the matter, the relief granted by the Ld. CIT(A) is liable to be quashed. 6. On the other hand, the crux of the contention made by the Ld. AR is this that the issue in regard to the claim made under Section 80IA(4) of the Act is duly covered by the judgment passed by the Co-ordinate Bench in assessee’s own case for A.Ys. 2014-15 to 2017-18 in ITA Nos. 782, 816/Ind/2018, 819, 820, 881 & 882/Ind/2019, 197 & 290/Ind/2020, a photo copy of the said judgment has been duly filed before us by the Ld. AR. 7. We have heard the rival submissions made by the respective parties and we have also perused the relevant materials available on record. 8. So far as the financial risk undertaken by the assessee is concerned which has been negated by the Ld. AO and further reiterated by the Ld. DR, the Ld. AR drew our attention at Page Nos. 18, Clause 55 whereof speaks about consideration of Article 19.5.5 which clearly defined that any stage payments made to the appellant shall not be deemed to be final and it shall be recoverable, meaning thereby, the entire financial risk is taken by the appellant. The contents of Clause 19.5.5 is reproduced hereinbelow for ready reference: “19.5.5 Payment by the Authority shall not be deemed to indicate the Authority’s acceptance, approval, consent or satisfaction with the work done.” IT(SS)A No. 162/Ind/2021 ACIT vs. Dilip Buildcon Ltd. (A.Y. 2018-19) 5 9. Upon careful reading of the order passed by the Ld. CIT(A), Ld. AO and the documents placed by the assessee before us, it appears that the assessee awarded with 21 projects on different value of contract and a very meagre amount has been received as advance from the Government by the assessee at the time of execution of contract. The following details whereof is reflecting at Page Nos. 15 & 16 of the order passed by the Ld. CIT(A): SR. No. PROJECT AWARDED BY PROJECT NAME VALUE OF CONTRACT (RS. IN CR.) AMOUNT OF ADVANCE RECEIVED FROM THE GOVERNMENT AT THE TIME OF EXECUTION OF CONTRACT (AMOUNT IN RS.) 1 INDORE DEVELOPMENT AUTHORITY IDA INDORE 43.73 4.70 2 MINISTRY OF ROAD TRANSPORT & HIGHWAYS KATHIPUDI KAKINDA BYPASS SECTION 251.10 25.11 3 NATIONAL HIGHWAYS A UTHORITY OF INDIA MAHULIA BAHARAGORA 674.10 67.41 4 MINISTRY OF ROAD TRANSPORT & HIGHWA YS PRATAPGARH PUDI 269.26 26.93 J NATIONAL HIGHWAYS A UTHORITY OF INDIA KARULI DHOLPUR 261.00 19.67 6 NATIONAL HIGHWAYS AUTHORITY OF INDIA VIJAYWADA MACHLIPATNAM 740. 70 71.55 7 Superintending Engineer (R&B), Hyderabad Kalyan to Nirmal 146. 70 14.54 8 MINISTRY OF ROAD TRANSPORT & HIGHWAYS JARWAL BAHRAICH 261.00 26.10 IT(SS)A No. 162/Ind/2021 ACIT vs. Dilip Buildcon Ltd. (A.Y. 2018-19) 6 9 NATIONAL HIGHWAYS A UTHORITY OF INDIA TIRUMAYAM MANMADHURAI 252.00 25.20 10 MINISTRY OF ROAD TRANSPORT & HIGHWAYS MARKAPUR YO VAGGAMPALLE 253.80 25.38 11 MPRDC REWA SIDHI 260.01 26.01 12 MINISTRY OF ROAD TRANSPORT & HIGHWA YS AMRITSAR TARAN TARAN 558.00 55.80 13 MINISTRY OF ROAD TRANSPORT & HIGHWAYS SHAHKOT MOGA NH - 71 (NEW NH-52) 346.50 34.65 14 NATIONAL HIGHWAYS AUTHORITY OF INDIA GHAGHRA BRIDGE TO VARANSI SEC OF NH- 233 674.34 67.44 15 KARNATAKA ROAD DEVELOPMENT CORPORATION LIMITED HASSAN RAMAMA THAPURA 276.93 33.06 16 KARNATAKA ROAD DEVELOPMENT CORPORATION LIMITED HIREKERUR RANIBENNUE 219.94 43.50 17 KARNATAKA ROAD DEVELOPMENT CORPORA TION LIMITED MUNDARGI HADAGALI 205.13 23.57 18 NATIONAL HIGHWAYS A UTHORITY OF INDIA CHICHRA KHAMGPUR (WE) 613.08 61.31 19 MINISTRY OF ROAD TRANSPORTS HIGHWAYS EEPPURPALEM TO ONGOLE SECTION 350.01 35.01 20 MINISTRY OF ROAD TRANSPORT & HIGHWAYS RAYACHOTY TO KADAPA SECTION 198.00 19.80 21 MINISTRY OF ROAD TRANSPORT & HIGHWAYS PANJM-MANGALORE SECTION IN GO A STATE (PACKAGE-HI) 417.60 41.64 TOTAL 7272.93 748.38 IT(SS)A No. 162/Ind/2021 ACIT vs. Dilip Buildcon Ltd. (A.Y. 2018-19) 7 10. The contention made by the assessee in this regard has also been duly taken care of, by the Ld. CIT(A) in the following manner: “It is thought necessary to consider and analyse the scope of work performed by the appellant and amount of risk and reward involved therein. At the outset, it need to be clearly understood that the road construction projects undertaken during the year by the appellant were not plain and simple 'work contract' for some assigned job/work but relating to execution of a complete road construction project starting from scratch i.e. planning to completing the project by doing survey, designing, planning, mobilization of resources (men, machinery and material) arranging funds, executing the project and taking responsibility about performance and liquidated damage. It is seen that as against the total project cost, assessee received a very meager amount of 10.28% as mobilization advance from the owner of project and has to invest its own funds and borrowed funds. Assessee performed the entire responsibility of financial closure. Assessee has incurred huge amount as interest expenditure of Rs.169.37 cr which shows that it has to deploy huge borrowed funds which is not a salient feature akin to a ‘contractor’. Besides this, appellant has also assumed performance guarantee by placing security deposit of certain percentage of contract value and providing retention money. As far as risk assumed by the assessee is concerned, the assessee has to assume all kind of risk to property, human life, personal injury/death etc. during the execution of contract. Besides this, assessee was not provided any material, manpower or equipment and assessee on its own has to arrange for material, manpower, equipment, machinery etc. Above all, the assessee has to take the entire financial risk while performing the contract in respect of road project and any loss due to lesser revenue earning has to be borne by it. As far as technical risk is concerned, after receipt work order, assessee has to conduct a detailed survey and afterwards has to submit design/drawings of all structures, culverts, pavements and bridges etc. After checking done by approved engineers, these drawings/designs are submitted to competent authority for approval. For this purpose, appellant has to employ certain numbers of personnel's having desired qualification and experience and had to spent an amount of Ms. 11.80 crores on technical staff. In support of its claim, that appellant has taken/assumed various risks and performed work as 'developer' not as mere 'contractor' it has refereed to certain clause of "concession agreement" pertaining to Kathipudi Kakinda Bypass Section Project as representative clause have been discussed earlier in this order, so not repeated once again.” 11. In that view of the matter, the plea taken by the Ld. DR that the assessee does not invest its own and the same is received from the Government from time-to-time in form of mobilization advance is not sufficient enough to strengthen the case made out by the Revenue. The details of data borne out of records speaks otherwise as indicated hereinabove by the Ld. CIT(A) itself. We further find that on the basis of the facts made available IT(SS)A No. 162/Ind/2021 ACIT vs. Dilip Buildcon Ltd. (A.Y. 2018-19) 8 before the authorities below, particularly, the First Appellate Authority, the following observation has been made in regard to the various risks undertaken and work performed by the assessee qua the agreement entered into by the assessee and the Government in regard to different projects awarded. “4.1.18 ANALYSIS OF EPC AGREEMENT UNDERATKEN BY APPELLANT: Having considered the various risks: under taken and work performed by the appellant, now, let me analyze as to. what type of activities as incorporated in the agreement entered into by the appellant with the Government Authorities. For this purpose, the agreement entered into for Kathipudi Kakinda Bypasss Section project is analyzed as representative project to testify whether appellant worked as 'developer' or as mere 'work-contractor' :- (i) It is evident that M/s Dilip Buildcon Ltd, the assessee submitted the Technical and Financial Bid for the said project for an unconditional price bid of Rs. 251 crores as Annuity amount payable in terms of clause 25 of the concession agreement. MINISTRY OF ROAD TRANSPORT & HIGHWAYS in pursuant to the bid awarded work to the appellant. (ii) At the foremost, it is necessary to consider the Article 3 of the concession agreement at page no 17 of the agreement, it has been clearly defined that the appellant is required to construct the road on its own finance and designing the same is the responsibility of the appellant. The said article is reproduced hereunder for ready reference:- " The Contractor shall, at its own cost and expenses, in addition to and not in derogation of its obligations elsewhere set out in this agreement: (a) Make, or cause to be made, necessary applications the relevant government instrumentalities with such particulars and details as may be required for obtaining applicable permits set forth in Schedule-F and obtain and keep in force and effect such applicable permits in conformity with the applicable laws; (b) Procure as required, the appropriate proprietary rights licences, agreements and permissions for materials method, process and systems used or incorporated into the project Highway; (c) Make reasonable efforts to maintain harmony and good industrial relations amount the personnel employed by it or its contractors in connection with the performance of its obligations under this agreement; IT(SS)A No. 162/Ind/2021 ACIT vs. Dilip Buildcon Ltd. (A.Y. 2018-19) 9 (d) Ensure and procure that its sub-contractors comply with all applicable permits and applicable laws in the performance by them of any of the concessionaire obligations under this agreement; (e) Not do or omit to do any act, deed or thing which may in any manner be volative of any of the provisions of this agreement; (f) Support, cooperate with and facilitate the Authority in the implementation and operation of the project in accordance with the provisions of this agreement; (g) Ensure that the contractor and its Sub-contractor comply with the safety and welfare measures for labour in accordance with the applicable laws and Good Industry Practice (h) Keep, on the site, a copy of this agreement, publications named in this agreement, the drawings, documents relating to the project, and change of scope orders and other communication given under this agreement The Authority's Engineer and its authorized personnel shall have the right of access to all these documents at all reasonable times; (i) Cooperate with other contractors employed by the Authority and personnel of any public authority; and (j) Not interfere unnecessarily or improperly with the convenience of the public, or the access to and use and occupation of all roads and footpaths, irrespective of whether they are public or in the possession of the Authority or of others (iii) With respect to the performance security, the same has been included in Article 7 at page 29 of the agreement. The said article L reproduced hereunder for ready reference :- "The Concessionaire shall, for the performance of its obligation hereunder during the Construction period, provide to the Authority, within 10 (ten) days of the date of this Agreement, an irrevocable and unconditional guarantee from a Bank in the form set forth in Schedule G (for "performance security") for an amount equal to 7.5%(seven half percent) of the Contract price." (iv) Further, the appellant shall also be required to obtain insurance at its own cost which is prescribed in Article 20 of the agreement entered at page no. 84. The said article is reproduced hereunder for ready reference :- "Insurance for Works and Maintenance The Contractor shall effect and maintain at its own cost the insurances specified in Schedule-P and as per the requirements under the Applicable Laws." IT(SS)A No. 162/Ind/2021 ACIT vs. Dilip Buildcon Ltd. (A.Y. 2018-19) 10 (v) Further, the appellant shall also be liable to damage for any imperfection in its work in future which is prescribed in Article 17 of the agreement entered at page no. 65. The said article is reproduced hereunder for ready reference :- "Defects Liability Period The Contractor shall be responsible for all the Defects and deficiencies, except usual wear and tear in the Project Highway or any Section thereof, till the expiry of a period of 2 (two) years commencing from the date of Provisional Certificate (the "Defects Liability Period")." (vi) With respect the technical aspects, in Schedule-1 at pages 212 of the agreement, it has been described what all needs to be designed by the appellant. The relevant article is reproduced hereunder:- "Drawings In compliance of the obligations set forth in Clause 10.2 of this Agreement, the Contractor shall furnish to the Authority's Engineer, free of cost, all Drawings listed in Annex-1 of this Schedule-I." On a cursory look, the above articles in concession agreement clearly show that the appellant duly qualifies to be a developer and is eligible for deduction u/s 80IA(4) of the Act.” 12. The details of project and the amount of deduction claimed by the assessee is further appearing at Page Nos. 59 to 60 of the order passed by the Ld. CIT(A) which is reproduced hereinbelow: S.R No. Project Awarded By Project Name Amount of Deduction 1 INDORE DEVELOPMENT AUTHORITY IDA INDORE 54,327 2. MINISTRY OF ROAD TRANSPORT & HIGHWAYS KATHIPUDI KAKINDA BYPASS SECTION 31,53,L6,162 3 NATIONAL HIGHWAYS AUTHORITY OF INDIA MAHULIA BAHARAGORA 41,74,65,707 IT(SS)A No. 162/Ind/2021 ACIT vs. Dilip Buildcon Ltd. (A.Y. 2018-19) 11 4 MINISTRY OF ROAD TRANSPORT & HIGHWAYS PRATAPGARH PUDI 11,128 5 NATIONAL HIGHWAYS AUTHORITY OF INDIA KARULI DHOLPUR 5,71,71,363 6 NATIONAL HIGHWAYS AUTHORITY OF INDIA VIJAYWADA MACHLIPATNAM 74,18,15,556 7 NATIONAL HIGHWAYS AUTHORITY OF INDIA Kalyan to Nirmal 23,357 8 MINISTRY OF ROAD TRANSPORT & HIGHWAYS JARWAL BAHRAICH 2,42,24,700 9 NATIONAL HIGHWAYS AUTHORITY OF INDIA TIRUMAYAM MANMADHURAI 4,17,78,411 10 MINISTRY OF ROAD TRANSPORT & HIGHWAYS MARKAPUR YO VAGGAMPALLE 36,71,45 11 MPRDC REWA SIDHI l,24,23,676 12 MINISTRY OF ROAD TRANSPORT & FIIGHWAYS AMRITSAR TARAN TARAN 24,65,06,926 13 MINISTRY OF ROAD TRANSPORT & HIGHWAYS SHAHKOT MOGA Nil - 71 (NEW NH -52) 51, 26,00,495 14 NATIONAL HIGHWAYS AUTHORITY OF INDIA GHAGHRA BRIDGE TO VARANSI SEC OF NH-233 IT(SS)A No. 162/Ind/2021 ACIT vs. Dilip Buildcon Ltd. (A.Y. 2018-19) 12 15 KARNATAKA ROAD DEVELOPMENT CORPORATION LIMITED HASSAN RAMAMATHAPURA 72,61,47,854 16 KARNATAKA ROAD DEVELOPMENT CORPORATION LIMITED HIREKERUR RANIBENNUE 53,29,86,188 17 KARNATAKA ROAD DEVELOPMENT CORPORATION LIMITED MUNDARGI HADAGALI 5,89,20,932 18 NATIONAL HIGHWAYS AUTHORITY OF INDIA CHICHRA KHARAGPUR (WB) 92,05,85,095 19 MINISTRY OF ROAD TRANSPORT & HIGHWAYS EEPPURPALEM TO ONGOLE SECTION 1,22,74,881 20 MINISTRY OF ROAD TRANSPORT & HIGHWAYS RAYACHOTY TO KADAPA SECTION 22,51,05,870 21 MINISTRY OF ROAD TRANSPORT & HIGHWAYS PANJIM-MANGALORE SECTION IN GOA STATE (PACKAGE-III) 10,72,76.363 ' Total 7,00,18,59,019 13. It further appears from the above chart that the assessee as a developer assumes sincere financial and technical risks and undertakes liability of liquidated damages. Having regard to the agreement entered into by the assessee and the Government not for a specific work but for development of infrastructure facility as a whole and considering the manner and method adopted by the assessee in completion of the work awarded to the assessee by IT(SS)A No. 162/Ind/2021 ACIT vs. Dilip Buildcon Ltd. (A.Y. 2018-19) 13 the statutorily authority in different projects. The Ld. CIT(A) came to the finding in a summarized manner which is further reproduced hereinbelow: “(a) The assessee is an enterprise owned by a company registered in India. Hence, conditions stipulated in sec 80IA(4)(i)(a) is fulfilled. (b) The assessee has entered into agreement with state road development authority, Municipal Corporation, State Government, NHAI and undertaking under control/ownership of state/central govt. So, condition mandated in sec 80IA (4)(i)(b) is also fulfilled. (c) The assessee has started operating and maintaining infrastructure facility on or after 1st day of April 1995. Condition stipulated in sec 80IA(4)(i)(c) is also fulfilled. (d) Assessee engaged in road development work (including construct ion, upgradation and widening) which is covered within meaning of "infrastructure facility" defined under Explanation to sec 80IA(4) of the Act. (e) The appellant has carried out all the activities related to development of road by itself and not through any other entity or sub-contractor. (f) Agreement entered into by appellant are not for a 'specific work' but for development of infrastructure facility as a whole. (g) In the project executed by the appellant govt/statutory body handed over the possession of sites/premises of projects to the assessee for development of infrastructure facility. Possession is handed over back the developed facility to the govt/owner on completion of the development. (h) The contract executed by appellant involves .all the works viz design, survey, development, operating/maintenance, financial involvement, correction and liability period, deployment of funds, men, material on its own and assumes various kinds of risk-financial, entrepreneurial risk etc. (i) The work awarded by state govt/state public undertakings/municipal corporations by inviting tenders through request for proposal (RFP) inviting bids from developers. After clearing technical bid, financial bid is submitted being successful. The appellant was issued Letter of Intents (LOI) in its name which is accepted by it and contract is awarded (LOA). Due to conditionality of frame work of Govt of India, assessee has to form a fully owned SPV for better execution of projects wherein owners, SPV and assessee jointly signed "concession agreement" on EPC/DBFOT basis. (j) All the Letter of Awards (LOA) are in the name of assessee and accepted by appellant, this constitutes a binding agreement between the appellant an state govt/statutory body. IT(SS)A No. 162/Ind/2021 ACIT vs. Dilip Buildcon Ltd. (A.Y. 2018-19) 14 (k) Appellant has executed total 21 projects in AY 2018-19 relating to road development, out of which 18 were executed on EPC basis and in 3 projects SPV (100% owned by DBL), were involved which was due to government directives. With regard to these contracts, back to back agreements is entered with SPY wherein entire work of road development is entrusted to the appellant. Hence, SPV is nothing but a pass through entity. (1) Appellant has assumed financial risk by giving performance guarantee, placing security deposit, obtaining bank guarantee etc. before commencement of project the appellant has to furnish 'performance security which is liable to be forfeited if the appellant does not perform to the expectation of the contract. (m) Appellant has to bear all the risk related to loss/damage to physical property, personal loss/injury to human and liquidated damages. Appellant has to bear expenses on insurance obtain to mitigate the risk. (n) Appellant is also responsible for damage and need to compensate the owner for imperfections for definite period of time as 'defect liability’ Tinder which it shall have to rectify and repair all defects at its own cost. (o) Appellant has to take 'technical risk' by making survey, drawings and designs for all type of structures and then after obtaining approval from owner execute the projects. For technical purpose, appellant is required to recruit minimum number of personnel's having requisite qualification and experience. (p) Appellant has to procure material, employ requisite staff, deploy requisite machinery and equipment for execution of work and invest funds. (q) Considering terms and conditions entered into and work performed by the assessee it can safely be concluded that assessee executed all the projects as 'developer' and not as "work contractor". (r) Except challenging that the assessee worked as "works contractor", ld AO has not raised any doubts about fulfilling of any other mandatory conditions. By this it can be inferred that assessee has fulfilled all other mandatory conditions. By this it can be inferred that assessee has fulfilled all other mandatory conditions. (s) The AO has not disputed the quantification of eligible profit from the enterprise on which appellant has claimed deduction u/s 80IA(4) of the Act, Nevertheless, Auditor in his report filed under 10CCB has certified the eligible amount for deduction at Rs. 7,00,18,59,019A in AY 2018-19. (t) During appellate proceedings, appellant has certified that none of the SPY has claimed deduction u/s 80IA(4) of the Act, so no question of any duplicity of claim being allowed.” IT(SS)A No. 162/Ind/2021 ACIT vs. Dilip Buildcon Ltd. (A.Y. 2018-19) 15 14. It is relevant to mention that the assessee went to the Hon’ble Settlement Commission for A.Y. 2013-14 wherein the Commission has also held that the work performed by the assessee in respect of which SPVs are performed also qualifies for the deduction under Section 80IA of the Act as the same falls under PPP model of the Government. It is further to be noted that the objection as discussed above taken by the Revenue was also raised before the Settlement Commission in the Rule 9 report filed by the Revenue and only upon considering such objection, deduction has been allowed by the Hon’ble Settlement Commission. What we further found from the order passed by the Ld. CIT(A) is this that the modus operandi of the projects for A.Y. 2013-14 is similar to that of the projects work performed by the assessee in the year under consideration i.e. A.Y. 2018-19 in respect of which SPVs were performed. It was further pointed out by the Ld. CIT(A) that though the projects on the basis of which Hon’ble Commission allowed the claim of deduction under Section 80IA of the Act of the assessee are different as compared to the claim made by the assessee for the year under consideration, the methodology and heart of these projects are same i.e. RFQ, RFP, bidding, allotment, LOA and formation of SPV which are common in all the projects taken under BOT model by the assessee. The decision of the Hon’ble Settlement Commission is having persuasive value having regard to the decision made in assessee’s own case as held in the case of Dr. Attukal Radhakrishnan vs. ACIT (2010) 235 CTR (Kar) 384 has been duly taken care of by the Ld. CIT(A). The judgment passed by the Hon’ble Apex Court in the case of Radhaswami Satsang vs. CIT (1992) 193 ITR 32 (SC) were also being applied by the Ld. CIT(A) in holding that the decision of Hon’ble Settlement Commission will be equally applicable to the year under consideration. IT(SS)A No. 162/Ind/2021 ACIT vs. Dilip Buildcon Ltd. (A.Y. 2018-19) 16 15. We have further taken care of the judgment passed in the matter of assessee’s own case for A.Ys. 2014-15 to 2017-18 passed by the Co-ordinate Bench arising out of the order passed by the Ld. CIT(A) in respect of those assessment years. A copy whereof has been duly submitted before us. Considering the case made out by the Revenue and the assesse, as well, the Co-ordinate Bench has been pleased to uphold the finding of the Ld. CIT(A) holding that the assessee is a developer eligible for deduction under Section 80IA(4) of the Act. The order of Settlement Commission and judicial precedents and the facts of the case and particularly the judgment passed by the Hon’ble Jurisdictional High Court in assessee’s own case in W.P. No. 6721/2017 dated 10.07.2019 whereby and whereunder the order dated 28.09.2016 for A.Y. 2007-08 to 2013-14 passed by the Income Tax Settlement Commission has been confirmed were duly taken care of. Upon discussing the details of modus operandi of the assessee company, projects undertaken, financial and technical risk involved thereby holding that the profit derived in assessee’s business of providing infrastructure facilities as deemed concessionaire and infrastructure developer qualifies for deduction under Section 80IA(4) of the Act. 16. Revenue’s appeals in respect of A.Y. 2014-15 to 2017-18 challenging the decision by the Ld. CIT(A) in granting claim under Section 80IA(4) of the Act holding the assessee’s work in the capacity of a developer were dismissed by the Co-ordinate Bench. Thus, having regard to the facts and circumstances of the case, as discussed above, and respectfully relying upon order passed by the Co-ordinate Bench, we do not find any reason to interfere with the order passed by the Ld. CIT(A) on the identical facts and circumstances of the case, IT(SS)A No. 162/Ind/2021 ACIT vs. Dilip Buildcon Ltd. (A.Y. 2018-19) 17 in holding that the assessee, an infrastructure developer, qualifies for deduction under Section 80IA(4) of the Act. The appeal preferred by the Revenue is, therefore, found to be devoid of any merit and, thus, dismissed. 17. In the result, appeal filed by the Revenue is dismissed. This Order pronounced on 26/05/2023 Sd/- Sd/- (BHAGIRATH MAL BIYANI) (MADHUMITA ROY) ACCOUNTANT MEMBER JUDICIAL MEMBER Indore; Dated 26/05/2023 S. K. Sinha, Sr. PS True Copy आदेश क त ल प अ े षत/Copy of the Order forwarded to : 1. अपीलाथ / The Appellant 2. यथ / The Respondent. 3. संबं धत आयकर आय ु त / Concerned CIT 4. आयकर आय ु त(अपील) / The CIT(A)- 5. वभागीय $त$न ध, आयकर अपील'य अ धकरण, अहमदाबाद / DR, ITAT, Indore 6. गाड फाईल / Guard file. आदेशान ु सार/ BY ORDER, (Sr.PS) ITAT, Indore