Gujarat High Court
The Principal Commissioner Of Income ... vs Montecarlo Ltd on 30 April, 2024
Author: Bhargav D. Karia
Bench: Bhargav D. Karia
NEUTRAL CITATION
C/TAXAP/431/2024 ORDER DATED: 30/04/2024
undefined
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/TAX APPEAL NO. 431 of 2024
==========================================================
THE PRINCIPAL COMMISSIONER OF INCOME TAX CENTRAL
AHMEDABAD
Versus
MONTECARLO LTD.
==========================================================
Appearance:
MR.VARUN K.PATEL(3802) for the Appellant(s) No. 1
MR TUSHAR HEMANI WITH MR PARIMALSINH PARMAR(7296) for the
Opponent(s) No. 1
==========================================================
CORAM:HONOURABLE MR. JUSTICE BHARGAV D. KARIA
and
HONOURABLE MR. JUSTICE NIRAL R. MEHTA
Date : 30/04/2024
ORAL ORDER
(PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA)
1. This Tax Appeal is filed under Section 260A of the Income Tax Act, 1961 (for short 'the Act') arising out of the order dated 30th November, 2023 passed by the Income Tax Appellate Tribunal in ITA No.310/Ahd/2020 for A.Y. 2017-18, wherein the following question of law is proposed.
(a) Whether in the facts and circumstances of the case and in law, the learned ITAT has Page 1 of 8 Downloaded on : Fri May 03 21:40:09 IST 2024 NEUTRAL CITATION C/TAXAP/431/2024 ORDER DATED: 30/04/2024 undefined erred in deleting the disallowance of Rs.86,52,24,043/- made u/s. 80IA(4) of the Income Tax Act, 1961 by holding that the assessee is not a contractor but a developer of infrastructure facilities and is eligible for deduction u/s. 80IA(4) of the Income Tax Act, 1961?
2. The appellant revenue has proposed the question of law with regard to deleting disallowance made under Section 80IA(4) of the Act on the ground that assessee is not a contractor but developer of the infrastructure facility and is eligible for deduction under Section 80IA(4) of the Act as per the impugned order passed by the Tribunal.
3. Learned advocates for both the sides submitted that the issue with regard to considering the respondent as developer of the infrastructure facility so as to become eligible for deduction under Section 80IA(4) is no more res intigra in view of the order passed by this Court dated 19th December, 2023 in Tax Appeal No.786 of 2023 for the A.Y. 2008-09, whereby the Appeal filed by the revenue is dismissed on the Page 2 of 8 Downloaded on : Fri May 03 21:40:09 IST 2024 NEUTRAL CITATION C/TAXAP/431/2024 ORDER DATED: 30/04/2024 undefined same question of law. It was pointed out that while dismissing the Appeal of the revenue, this Court has taken into consideration the same order passed by the Tribunal which is impugned in this Appeal and on the basis of that, it was observed as under.
"3.9. With regard to the contention raised by the Revenue to the effect that the explanation to below Subsection 13 of Section 80IA of the Act is applicable and in response to such contention, the Tribunal analysed the scope of the explanation to below Subsection 13 of Section 80IA of the Act as under:
"11.6. Subsequently, an Explanation to section 80-IA of the Act was inserted by the Finance Act, 2007 and later on amended by the Finance (No.2) Act, 2009 but the same was made applicable with retrospective effect i.e. 1-4-2000. This explanation denies the benefit of deduction under section 80-IA(4) of the Act to a person who executes a project which is in the nature of works contract. At this juncture, it is pertinent to refer the provisions of the Explanation attached below section 80- IA(13) of the Act as reproduced below:
"For the removal of doubts, it is hereby declared that nothing contained in this section shall apply in relation to a business referred to in sub-section (4) which Page 3 of 8 Downloaded on : Fri May 03 21:40:09 IST 2024 NEUTRAL CITATION C/TAXAP/431/2024 ORDER DATED: 30/04/2024 undefined is in the nature of a works contract awarded by any person (including the Central or State Government) and executed by the undertaking or enterprise referred to in sub- section (1).""
3.10. Thus there are concurrent findings of fact arrived at by the CIT (Appeal) as well as the Tribunal that the assessee has undertaken the development of infrastructure facility and is eligible to claim the deduction under Section 80IA(4) of the Act.
3.11. Section 80IA of the Act provides for deduction from the gross total income of the assessee which includes any profit and gains derived by an undertaking or an enterprise from any business referred to in Subsection 4 of the Act as eligible business by providing deduction of an amount equal to the 100% of the profit and gains derived from such business for 10 consecutive assessment years. Subsection 4 of Section 80IA of the Act reads as under:-
"(4) This section applies to--
(i) any enterprise carrying on the business of (i) developing or (ii) operating and maintaining or (iii) developing, operating and maintaining any infrastructure facility which fulfils all the following conditions, namely :--
(a) it is owned by a company registered in India or by a consortium of such companies or by an authority or a board or a corporation or any other body Page 4 of 8 Downloaded on : Fri May 03 21:40:09 IST 2024 NEUTRAL CITATION C/TAXAP/431/2024 ORDER DATED: 30/04/2024 undefined established or constituted under any Central or State Act;
(b) it has entered into an agreement with the Central Government or a State Government or a local authority or any other statutory body for (i) developing or (ii) operating and maintaining or (iii) developing, operating and maintaining a new infrastructure facility;
(c) it has started or starts operating and maintaining the infrastructure facility on or after the 1st day of April, 1995:"
3.12. Explanation below Subsection 13 of Section 80IA of the Act was introduced by the Finance (No.2) of the Act, 2009 with effect from 01.04.2000, reads as under:
"[Explanation. For the removal of doubts, it is hereby declared that nothing contained in this section shall apply in relation to a business referred to in sub-section (4) which is in the nature of a works contract awarded by any person (including the Central or State Government) and executed by the undertaking or enterprise referred to in sub-section (1).]"
Both the explanations basically emphasizes on the non allowability of deduction u/s 801A(4) to an enterprise merely executing "works contract"
awarded by what so ever person including the Central or State Government.Page 5 of 8 Downloaded on : Fri May 03 21:40:09 IST 2024
NEUTRAL CITATION C/TAXAP/431/2024 ORDER DATED: 30/04/2024 undefined Accordingly any person who executes the Infrastructure l'acility related work in capacity of a "Developer" shall only be allowed deduction u/s 801A(4) of the Act.
Therefore, for claiming the deduction u/ s 801A(4) after the insertion of above explanation, the Assessee has to pass the test of "being Developer of infrastructure facilities", accordingly the Assessee was asked to prove & establish its capacity of "Developer of infrastructure facilities", accordingly the Assessee has made a detailed submission narrating the following facts & points to prove & establish its capacity as a "Developer of infrastructure facilities"
3.13. Sub-clause 1 of Sub-section 4 of Section 80IA of the Act provides that Section 80IA applies to any enterprise carrying on the business of "(1)developing, or (2)operating and maintaining or (3) developing operating and maintaining" any infrastructure facilities which fulfills the condition prescribed therein. In the facts of the case as held by the CIT (Appeals) as well as the Tribunal on giving a factual finding to the effect that the assessee has undertaken a work of development of infrastructure facilities by execution of the contract awarded to it as per the terms of the contract as enumerated by the CIT (Appeal) as under:-
"To examine whether the project assigned to this Appellant was in the capacity of a "Contractor" or the Appellant has executed the work as a "Developer" with Page 6 of 8 Downloaded on : Fri May 03 21:40:09 IST 2024 NEUTRAL CITATION C/TAXAP/431/2024 ORDER DATED: 30/04/2024 undefined respect to the ROAD PROJECTS, I have perused the terms of some of the agreements. My attention has been drawn on agreements with "Madhya Pradesh Road Development Corporation Limited", from which the Appellant have been awarded two Road Projects, wherein the scope of the work has been defined as follows:-
Sr. Name of Road Approx. Scope of Bid/ No. Length Development in Km. Work 1 Package-1: Chindwara- 103.3 Rehabilitation Amarwara-Narsingpur" Road , Widening, Project: SH 47 Upgradation & Strengthening 2 Package-14: "Lakhnadon- 149.8 Mandla-Dindori" Road Project: SH 11 & 40 18 The Appellant has drawn my attention to the relevant clauses of the Tender Documents in support of its contention of being "Developer of the Infrastructure Facilities"
3.14. The CIT (Appeal) has further examined as to whether the project assigned to the assessee was in capacity of a contractor or the same was executed as a developer with respect to the canal projects, agreements were entered into by the assessee was analysed and tendered documents containing the terms and conditions of the project were taken into consideration with respect to the following aspects as to the entire investment in the project was to be made by the assessee. Interim payment to the tune of estimated contract value in respect of the development work done for each month after retention and other adjustments were to be made, security Page 7 of 8 Downloaded on : Fri May 03 21:40:09 IST 2024 NEUTRAL CITATION C/TAXAP/431/2024 ORDER DATED: 30/04/2024 undefined deposit was to be paid by the assessee, there was a penalty for delay, procurement of the material was the responsibility of the assessee, procurement of land for camp, for shop, labour camp etc. also the employment of qualified engineers, action and compensation in respect of bad work, defect liability of the accidents to persons in relation to Workman Compensation Act, indemnity insurance of the workmen employed. The CIT (Appeal) and the Tribunal considering such aspects of the tendered agreement, concurrently held that the assessee has entered into a development of infrastructure facility agreement and not the works contract."
4. Considering the above concurrent finding of facts, this Court dismissed the Tax Appeal No.786 of 2023 and therefore, this Tax Appeal is also dismissed as no question of law can be said to have arisen out of the impugned order passed by the Tribunal.
(BHARGAV D. KARIA, J) (NIRAL R. MEHTA,J) ANUP Page 8 of 8 Downloaded on : Fri May 03 21:40:09 IST 2024