Income Tax Appellate Tribunal - Hyderabad
Dy. Commissioner Of Income Tax, ... vs Ayyappa Infra Projects Private ... on 20 March, 2018
IN THE INCOME TAX APPELLATE TRIBUNAL
HYDERABAD BENCH "B", HYDERABAD
BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER
AND SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER
ITA No.1737/Hyd/2017
Assessment Year: 2013-14
Dy. Commissioner of vs. M/s. Ayyappa Infra
Income Tax, Circle-1(1), Projects Pvt., Ltd.,
Hyderabad. Hyderabad.
PAN- AAGCA8840B
(Appellant) (Respondent)
Revenue by : Shri K.J. Rao
Assessee by : Shri K.C. Devdas
Date of hearing : 20-03-2018
Date of pronouncement : 20-03-2018
ORDER
PER D.S. SUNDER SINGH, A.M:
The assessee is engaged in the business of civil construction, construction of sewerage systems and water treatment plants for the Municipal Corporation of Visakhapatnam, Municipal Corporation of Vijayawada, HMDA and HMWSSB etc.. During the year under consideration the assessee had admitted the turnover of Rs. 62,71,67,189/- and declared the net profit of Rs. 4,49,18,758/- and claimed the deduction of Rs. 3,12,57,959/- u/s 80IA of the IT Act. The A.O taken up the case for scrutiny and issued the notice u/s 143(2) of the IT Act and observed that the assessee has undertaken the following nine projects projects out of which two from HMDA and seven from HMWSSB as under:
2ITA No. 1737yd/2017 M/s Ayyappa Infra Projects Pvt Ltd, Hyd.
S. Projec t Name A ward ed by Order Valu e 8 0IA Tur nover 8 0IA 8 0IA
No E xpenses Prof it
1 4.0 MLD STP H yder ab ad 5 7,4 4,91 0 19 ,08 ,1 7 5 Detail s n ot D etails not
at Noor M e tropo lit an f urn ished f urn ished
D evelo pmen t
Au th or ity
2 M ar u th in ag ar H yder ab ad 7 2,8 4,00 7 80 ,20 ,5 6 3 Detail s n ot D etails not
Sewer ag e M e tropo lit an f urn ished f urn ished
D evelo pmen t
Au th or ity
3 30 M LD STP CGM , H MWSSB 17 ,05 ,9 93 1 ,22 ,20,2 49 D etails no t D etails not
f urn ished f urn ished
4 800 M S, CGM, HM WSS B 1 ,2 3 ,06,1 48 69 ,11 ,3 4 1 Detail s n ot D etails not
A ttapu r f urn ished f urn ished
5 R ajendr an ag a CGM, HM WSS B 2 57 ,81 ,9 0 ,5 83 35 ,06 ,8 8 ,015 Detail s n ot D etails not
r Sewer ag e f urn ished f urn ished
6 Al lab an da CGM, HM WSS B 6 ,0 1 ,55,8 58 2,3 8,00 3 65 Detail s n ot D etails not
in l et and f urn ished f urn ished
ou tle t
7 Bolak pur CGM, HM WSS B 1 ,2 1 ,80,4 87 1,0 2,29 9 Detail s n ot D etails not
Sewer ag e lin e f urn ished f urn ished
8 Fatehn ag ar CGM , H MWSSB 1 0,2 4,92 ,91 2 1,2 0,43 ,823 Detail s n ot D etails not
f urn ished f urn ished
9 Shaik pe t MS CGM, HM WSS B 1 5,2 1,64 ,64 7 85 ,60 ,7 3 1 Detail s n ot D etails not
L ine f urn ished f urn ished
2. The A.O observed that as per Sec. 80IA of the IT Act the assessee is entitled for deduction u/s 80IA only if it undertakes either development work or operation & maintenance work or both in respect of an infrastructure facility and relied upon on the decision of this Tribunal in the case of M/s Sushee Hi-tech Constructions in ITA No.26/Hyd/2009 dated 16/03/2012 and M/s Ramky Infrastructures No.472/Hyd/2009 ITA Dt.17/07/2013 and is of the view that assessee would be entitled to deduction u/s 80IA of the Act only if the following conditions are satisfied:
"a. The project agreement has to be entitled with either a Government Department or a Statutory Body.
b. The scope of the contract should be f or either Development or Operation & Maintenance or both in respect of an inf rastructure f acility.3
ITA No. 1737yd/2017 M/s Ayyappa Infra Projects Pvt Ltd, Hyd.
c. The co tract should be liable for any defects arising in the case of the project for a specif ic.
d. The contractor has to bear all the risks involved with the project.
e. The project work should be carried on by the contractor without hindrance to the normal public activity. The assessee shall f acilitate the people to use the available existing f acility 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.
f. Material is not supplied by the Government. The assessee itself has to incur the expenditure for purchase of materials required to execution of the project.
g. The assessee is responsible for doing all the acts till the inf rastructure f acility is handed over back to the Government.
h. The agreement should not be f or a specific work, it should be for development of f acility as a whole.
i. Thereaf ter, the assessee has to undertake maintenance of the said inf rastructure for a period of 12 to 24 months.
j. The assessee is f ree to raise loans from outsiders from execution of project as there are no provisions in the Sec 80IA restricting the same.
3. After having verified the projects, agreements etc., the A.O observed that the projects in respect of the following works, the agreements were entered into by the Joint Ventures (JVs), hence held that the assessee is not eligible for deduction u/s 80IA of the IT Act.
S. Pro jec t Name Or der Valu e 80 IA Tu rn over Ag reemen t en tered
No with
3 3 0 KLD STP 1 7,0 5,99 3 1 ,2 2 ,20,2 49 Ayyap pa Inf r a Pro jec ts
Pvt L td (J V with M/s
GSJ ENV O Ltd, De lh i)
5 R ajendr an ag ar S e we r ag e 25 7 ,81,9 0,58 3 3 5,0 6,88 ,01 5 M /s M EIL -BRC PL -AIIPL
(J V )
6 Al laban d in le t and ou tle t 6 ,01 ,55,8 58 2 ,3 8 ,00,3 65 M /s A iPPL -TA IPL (J V )
9 Shaikpe t MS L in e 1 5 ,21 ,6 4,64 7 8 5,6 0,73 1 Ayyap pa Inf r a Pro jec ts
Pvt L td (J V with M/s
Pr atibh a Indu str ies
L td.)
4
ITA No. 1737yd/2017
M/s Ayyappa Infra Projects Pvt Ltd, Hyd.
4. In respect of the following projects the A.O was of the view that since the projects do not involve any development work, Survey, Planning, design, drawing, estimation etc., the projects do not qualify for deduction u/s 80IA of the Act, except the project in the case of following Sl Nos.1, i.e 4.0 MLD STP at noor Mohammed Kunta.
S. Pro jec t Name Natur e of wor k Order 8 0IA No valu e Tur nover 1 4.0 M LD STP Th is wor k in vo lve s oper ation and 5 7,4 4,91 0 1 9,0 8,17 5 at noor m ain ten an ce of 4 .0 ML D ST P M oh am med Kun ta 2 Maru th in ag ar H ussain s ag ar lake & c atc h ment 7 2,8 4,00 7 8 0,2 0,56 3 Se wer ag e are a im provem en t Pr o jec t lay ing of 8 00 mm dia RCC NP2 pip e l in e f or storm water d isposal to H ussain s ag ar lake an d 4 0 0 mm d ia RCC NP2 p ipe lin e f or se we r ag e f rom Maru th in ag ar to A m ain . Th is is pu rely a job wo rk and n o e lem en t of deve lopmen t, oper at ion an d m ain ten an ce is pr esen t in th is pro jec t 3 80 0M S, M an uf ac tu r ing , su pp ly, la yin g, 1 ,2 3 ,06,1 4 6 9,1 1,34 1 A ttapur jo in ting , te s ting an d 8 comm is s ion ing of 800 mm dia M S R is in g M ain f rom Mugalk a N ala pumping S ta tion to in te l Cham ber a t Attapu r ST P s ite.
Th is is pure ly a job wo rk a nd n o elem en t of developmen t, oper ation an d m ain ten an c e is presen t in th is projec t 4 Balakpur M an uf ac tu r ing , Supply, lowe r in g, 1 ,2 1 ,80,4 8 1 ,0 2 ,299 Se wer ag e L in e lay in g, jo in t in g, tes t in g an d 7 comm is s ion ing of 4 00 /500 /600 mm dia RCC NP4 class pipes f rom Shiv a S a i W in es , G andh in ag ar u pto M usheerabad X Ro ad ( SVS H ydr au l ics) v ia pr ag atoo ls kav ad ig ud a- P ackage- II. This is also pur el y a job wor k an d n o elem en t of developmen t, oper ation an d m ain ten an c e is presen t in th is projec t.
5 Fatehn ag ar H ussain s ag ar L ake & c atchmen t 1 0,2 4,92 ,9 1 ,2 0 ,43,8 23 re ach II are a im provem en t Pr o jec t taken 12 u p by H UD A - M anu f ac tu r in g.
Su pply, lo wr ing , laying , jo in t ing , tes ting an d c omm iss ion ing of 1 400 mm dia RCC NP4 c l as s pip es a t Balan ag ar m ain f rom air por t to F ateh n ag ar to proposed 16 0 0 mm dia R in g m ain a t Neck lace R o ad Re ach II.
Th is is als o pur e ly a job work and n o e lemen t of develop men t, oper ation an d m ain ten an c e is presen t in th is projec t 5 ITA No. 1737yd/2017 M/s Ayyappa Infra Projects Pvt Ltd, Hyd.
5. Accordingly the A.O disallowed the deduction claimed u/s 80IA of the IT Act to the extent of Rs. 3,12,46,179 and allowed the deduction of Rs. 11,780/- on proportionate turnover basis in respect of Project 4.0 MLD STP at Noor Mohammed Kunta.
6. Aggrieved by the order of the A.O the assessee went on appeal before the CIT(A) and the Ld. CIT(A) allowed the appeal of the assessee following the order of this Tribunal in the assessee's own case for the A.Ys 2008-09 and 2009-2010.
7. Aggrieved by the order of the CIT(A) the Revenue has filed the appeal before the Tribunal and raised the following grounds of appeal:
1. The order of the Ld. CIT(A) is erroneous on facts as well as in law.
2. The Ld. CIT(A) erred on facts and in law in allowing the benefit of deduction of Rs.3, 12,46,179/- claimed by the assessee u Is 801A of the IT Act, 1961.
3. The Ld. ClT(A) ought to have appreciated that the assessee has executed only works contract as per the specifications of contractee departments and not a developer of infrastructure facility as envisaged u Is 801A of Act.
4. The Ld. CIT(A) ought to have considered that in view of the Explanation to Sec.80!A(13) as substituted by the Finance (No.2) Act, 2009 with retrospective effect from 01.04.2000, any undertaking or enterprise who executes works contract as a contractor does not qualify for deduction u/s 80IA of the IT Act.
5. The Ld. CIT(A) ought to have further appreciated that the decision of the lTAT, Pune in the case of M/s B T Patel & Sons referred in the first appellate order is not applicable to the case of the assessee. as the assessee has executed only works contract during the year and therefore, the profits derived from such works contract are not eligible for deduction u/s 80IA.6
ITA No. 1737yd/2017 M/s Ayyappa Infra Projects Pvt Ltd, Hyd.
6. The appellant craves leave to add, substitute, amend, alter any of the grounds of appeal as stated above.
7. For these and other grounds of appeal that may be urged at the time of the hearing of appeal, it is prayed that addition made by the Assessing Officer on account of disallowance of deduction claimed by the assessee u/s 80IA be restored.
8. On identical facts in the assesee's own case for the A.Ys 2008-09, 2009-10 and 2012-13 the Hon'ble Coordinate Bench of this Tribunal allowed the appeal of the assessee. For sake of clarity and convenience we extract the relevant part of the order of the ITAT 'B' Bench Hyderabad in assessee's own case in ITA No. 1578/HYD/2016 dated 14.03.2017.
"5. It may be noticed that identical issue, in the assessee's own case for the assessment years 2008-09 and 2009-10, came up before ITAT wherein deduction u/s 80IA of the Act was allowed. Even the CIT(A) allowed the claim of deduction u/s 80IA, for the assessment years 2010-11 and 2011-12.
7. On an appeal f iled by the assessee, the Ld. CIT(A) ref erred to the order passed by ITAT from AYs 2008-09 to 2011- 12 and observed that even in the assessment year 2010-11, the ITAT, Hyderabad Benches allowed the claim of the assessee (ITA No. 1521/Hyd/2014 dated 24-08-2016 and ITA No. 1688/Hyd/2013 dated 01-04-2014) wherein the Bench observed that though it was joint venture but it was essentially a venture of the assessee company which was carried out by the assessee f ully. It was f urther observed that one has to see the substance and not the form essentially.
7.1 In the instant case the assessee is a contractor vis-a-vis the portion of work allotted to them and theref ore it can claim benef it of deduction u/s 80IA of the Act. The view taken by the ITAT for the assessment years 2008-09 and 2009-10 was followed by the Tribunal in the later years also. Under these circumstances Ld. CIT(A) accepted the contention of the assessee and directed the A.O to allow the claim of deduction u/s 80IA of the Act.
.7
ITA No. 1737yd/2017 M/s Ayyappa Infra Projects Pvt Ltd, Hyd.
9. We have caref ully considered the rival submissions and perused the record. Since the view taken by the Ld. CIT(A) is in consonance with the view taken by the ITAT in the assessee's own case f or the earlier years, we do not f ind any inf irmity in the order passed by the Ld. CIT(A). We theref ore, aff irm the order of the Ld. CIT(A) and dismiss the appeal f iled by the Revenue, as pronounced in the open court on 14 th March, 2017."
9. Since the facts are identical, respectfully following the view taken by the Tribunal we uphold the order of the Ld. CIT(A), and accordingly dismiss the Revenue appeal.
10. In the result the appeal filed by the Revenue is dismissed.
Pronounced in the open Court on 20th March, 2018 Sd/- Sd/-
(P. MADHAVI DEVI) (D.S. SUNDER SINGH)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Hyderabad, Dated: 20 th March , 2018.
KRK 1 M/s Ayyappa Infra Projects Pvt Ltd., H. No. 6-3-907/1, Flat No. 201, T.L. Kapadia Lane, Somajiguda, Hyderabad. 2 Dy. CIT, Circle-1(1), Hyderabad.
3 CIT(A)-1, Hyderabad.
4 The Pr. CIT-1, Hyderabad.
5 The DR, ITAT Hyderabad 6 Guard File