Income Tax Appellate Tribunal - Mumbai
Deputy Commissioner Of Income Tax vs Abg Heavy Industries Ltd. on 8 January, 2008
Equivalent citations: (2008)115TTJ(MUM)369
ORDER
Sushma Chowla, J.M.
1. The present appeal was heard by the Bombay Bench of Tribunal on 8th Sept., 2006. The assessee moved a miscellaneous application and vide order dt. 22nd Nov., 2006 the grounds Nos. 1 to 4 had been recalled by the Tribunal to be decided de novo.
2. The only issue to be decided by us is relevant to the ground Nos. 1 to 4 raised by the assessee for both the assessment years i.e., asst. yrs. 1997- 98 and 1998-99, which are as under:
ITA No. 4482/Mum/2000--Asst. yr. 1997-98:On the facts and in the circumstances of the case and in law the learned C1T(A) has erred in:
1. directing the AO to deduct a sum of Rs 9,72,01,578 being deduction under Section 80-IA by holding that the assessee has carried on the business of developing, maintaining and operating any infrastructural facility while calculating the book profits under Section 115JA of the Act;
2. ignoring the statement recorded under Section 132(4) of Shri Saket Agarwal, managing director, wherein he admitted that no operation of infrastructural facility was carried on by the assessee for the purpose of deduction under Section 80-IA of the Act;
3. holding that the business of leasing of assets of the assessee tantamounts to carrying on business of developing, maintaining and operating any infrastructural facility and thereby eligible for the purpose of deduction under Section 80-IA of the Act;
4. failing to appreciate the terms of the tender whereby JNPT was to operate the equipment while the assessee was to maintain them and in holding that the assessee has carried on business of developing, maintaining and operating any infrastructural facility for the purpose of deduction under Section 80-IA.ITA No. 672/Mum/2002--Asst. yr. 1998-99 :
1. On the facts and in the circumstances of the case and in law, the learned CIT(A) has erred in directing the AO to deduct a sum of Rs. 13,15,01,864 being deduction under Section 80-IA by holding that the assessee has carried on the business of developing, maintaining and operating any infrastructural facility while calculating the book profits under Section 115JA of the Act;
2. On the facts and in the circumstances of the case and in law, the learned CIT(A) has erred in ignoring the statement recorded under Section 132(4) of Shri Saket Agarwal, managing director, wherein he admitted that no operation of infrastructural facility was carried on by the assessee for the purpose of deduction under Section 80-IA of the Act;
3. On the facts and in the circumstances of the case and in law, the learned CIT(A) has erred in holding that the business of leasing of assets of the assessee tantamounts to carrying on business of developing, maintaining and operating any infrastructural facility and thereby eligible for the purpose of deduction under Section 80-IA of the Act.
4. On the facts and in the circumstances of the case and in law, the learned CIT(A) has erred in failing to appreciate the terms of the tender whereby JNPT was to operate the equipment while the assessee was to maintain them and in holding that the assessee was carrying on business of developing, maintaining and operating any infrastructural facility for the purpose of deduction under Section 80-IA.
3. The learned Departmental Representative for the Revenue moved an application for adjournment of hearing in the matter, which was refused and we proceeded to decide the matter after hearing the learned Counsel for the assessee and on merit of the case. Since the issue involved in both the said appeals is same, these appeals are decided by this consolidated order for the sake of convenience.
4. The facts enumerated in the order of the Tribunal dt. 8th Sept., 2006 are as under:
3. The assessee, a public limited company, has reported, in its annual accounts, its operational income from three sources. Its main source of operational income is charter hire of plant and machinery. Other two comparatively much smaller sources of operational income are (i) erection/construction contract receipts; and (ii) service charges including crane mobilisation charges. Return of income for the year under consideration was filed on 28th Nov., 1997 declaring loss of Rs. 9,71,24,731. However, book profit of Rs. 1,94,00,996 was declared under Section 115JA. In the computation of income for the purpose of determining book profit under Section 115JA, the assessee reduced Rs. 9,72,01,758 from the net profit to arrive at the book profit on the ground that the aforesaid amount represented profits derived from the business of developing, maintaining and operating infrastructure facility as defined under Section 80-IA(12) of the IT Act. According to the assessee, all the conditions for availing the deduction under Section 80-IA stood satisfied and therefore book profits were required to be reduced by the profit derived from the aforesaid industrial undertaking in terms of the provisions of Clause. (vi) of the Explanation to Section 115JA. Therefore, the short issue before us is wheth6r the assessee is engaged in the business of developing, maintaining and operating infrastructure facility under Section 80-IA(12) of the IT Act ?
4. The assessee has entered into two contracts with Jawaharlal Nehru Port Trust ("JNPT" in short), a statutory body constituted under the Major Port Trusts Act, 1963. First contract, which is for Stream-1 of the container terminal, is contained in letter bearing Ref. No. JNP/SM(CT)/CHE/AUG 94/2114 dt. 2nd/3rd Sept., 1994 issued by the JNPT for 'supply, installation, testing, commissioning and maintenance of 1 No. Rail Mounted Gantry Crane on lease for a period of 10 years at the container terminal of Jawaharlal Nehru Port Trust' on the terms and conditions mentioned therein. A copy of the said letter has been placed at pp. 6-21 of the paper book submitted by the assessee. Lease charges have been quantified at pp. 2 and 3 of the said letter for each item under two options, namely, Option 'A detailing lease charges inclusive of operation and maintenance; and, Option 'B' detailing lease charges inclusive of maintenance only (operation to be carried out by JNPT. JNPT has reserved the right to exercise the option to request the assessee to carry out both operation and maintenance of the cranes during the lease period or to carry out maintenance only while the operation is done by JNPT at the lease rates specified in the said letter. The actual option required by JNPT at the lease rates specified in the said letter. The actual option required by JNPT was required to be intimated within 90 days prior to the arrival of equipments in port. Supply, installation, testing and commissioning of all the five equipments were required to be completed on or before 16th June, 1995. The said letter also contained terms and conditions regarding certification by an inspection agency, performance guarantee, minimum availability of equipments in terms of number of days per annum, liquidated damages, power supply for the equipments, time frame for payment of lease charges to the assessee, retention of equipment of expiry of insurance, insurance of equipment during lease period, workmen's employer, labour laws, transfer of contract, termination of contract, force majeure, etc. The role of the assessee, as per the said letter, is that of a contractor while the role of the JNPT is that of an employer. Second contract, which is in respect of second stream of the container terminal, is contained in letter bearing Ref. No. JNP/SM(CT)/CHE/AUG/S. stream/95/2415 dt. 16th Oct., 1995 issued by the JNPT for supply, installation, testing, commissioning, operation and maintenance of 1 No. Rail Mounted Gantry Crane on lease for a period of 10 years on terms and conditions mentioned therein which are broadly similar to those in the first contract.
5. Another factor worth mentioning about annual lease charges is that JNPT had, during the course of finalisation of tenders, noticed that the assessee had quoted one price for both the alternatives, namely, Option 'A' and Option 'B' whereas the tenderers were required to quote separately for lease/hire of equipments inclusive of both the operation and maintenance (Option 'A') as also for maintenance alone but exclusive of operation (Option 'B'). Therefore, JNPT, vide its letter dt. 24th Nov., 1993, called upon the assessee to indicate the reduction in the offer for lease charges with only maintenance being carried out by the assessee. In reply, the assessee, vide its letters dt. 24th Nov., 1983 and 25th Nov., 1993 agreed to a reduction of Rs. 40 lakhs from the total hire charges of Rs. 16.35 crores for the first year with 8 per cent escalation for the consecutive years as per tender. The assessee has been paid @ Rs. 15.95 crores (i.e., Rs. 16.35 crores - Rs. 40 lakhs) in the first year. In other words, the assessee has been paid for Option 'B', i.e. maintenance only and not for maintenance and operation.
6. The Department carried out a search operation under Section 132 of the IT Act at the premises of various entities of the group of the assessee on 3rd Aug., 1998. During the course of search, the issue regarding fulfillment of conditions under Section 80-IA was also raised. In the course of search, Shri Saket Agarwal. managing director of the assessee company admitted in his statement that the assessee was not operating the cranes at JNPT and further that the conditions under Section 80-IA of the IT Act were not satisfied. He also staled that the certification of return of income was inadvertently done. He further assured in his statement that he would withdraw the claim for the said deduction for the relevant assessment years. By his letter dt. 10th Aug., 1999 submitted to the Investigation Wing of the IT Department, Mumbai, he confirmed that benefits of deduction on the amount of profit derived from infrastructure facility were not available to the assessee and he therefore offered to withdraw the claim of deduction in this regard. On the basis of legal advice subsequently received, the assessee retracted from the aforesaid statement on the ground that there could not be any estoppel against law.
5. During the course of hearing, the AO made enquiries from JNFr whether the cranes supplied and installed by the assessee at the port were operated by the assessee or by the JNPT. The AO at p. 18 of the assessment order reproduced the reply submitted by JNPT vide letter dt. 3rd Aug., 1999, in which JNPT confirmed that the operations were being carried out by JNPT and the assessee was maintaining the equipments and the payments were being made to the assessee as per Option 'B' of the work orders. The AO rejected the claim of the assessee under Section 80-IA of the Act observing that the said cranes do not constitute port and also for the reason that the said cranes were not being operated by the assessee. According to the AO, the assessee was only providing the said cranes to JNPT on lease basis. On appeal, CIT(A) held that the assessee had entered into an agreement with JNPT under the BOLT Scheme i.e., Build, Own, Lease and Transfer in respect of the said cranes supplied to the JNPT. Relying on the Circular No. 793, dt. 23rd June, 2000 (2000) 161 CTR (St) 21, issued by the CBDT, in which it has been clarified that structures at ports for storage, loading and unloading etc. will be included in the definition of port for the purpose of Section 10(23) and Section 80-IA of the IT Act, provided such structures have been built under BOT or BOLT Scheme and at the expiry of the lease agreement such equipment would be transferred to the port authorities. The CIT(A) thus held that supply, commissioning and operation of cranes/equipment by the assessee were done under the BOLT Scheme and the AO was directed to allow the deduction under Section 80-IA of the Act. Revenue is aggrieved and hence the present appeal.
6. The learned Authorised Representative for the assessee submitted that the assessee had entered into a contract with JNPT to set up cranes at the port, which were valued at Rs. 120 crores. The learned Authorised Representative further submitted that the assessee entered into two different contracts dt. 2nd Sept., 1994 and 16th Oct., 1995 for the supply, installation, commissioning and maintenance of the said cranes The learned Authorised Representative stated that the assessee claimed deduction under Section 80-IA of the IT Act against lease charges received from JNPT. The learned Authorised Representative drew our attention to the definition of infrastructure facility' defined in Section 80-IA(12)(ca)(i) of the Act and further .stressed that the claim of the assessee was that it is a port and the deduction is claimed as per the provisions of Sub-section (4A) of Section 80-IA of the Act, wherein Sub-clause. (ii) specifies that the operation should start on or after 1st April, 1995.
7. The learned Authorised Representative further stressed that the question for determination is what the assessee is doing is covered under the definition of 'infrastructure facility' and whether the assessee should be operating the infrastructure facility which according to the Department the assessee is not operating. The learned Authorised Representative further pointed out that the functions at the port were three-fold i.e., (a) unloading cargo, (b) loading cargo and (c) storage of the cargo. The equipment supplied by the assessee to the JNPT was for the purpose of the abovesaid three functions of the port. Our attention was drawn to the detailed diagram submitted during the course of hearing outlining the steps of operations at JNPT Port and it was brought to our notice that the said cranes/equipments supplied by the assessee load, unload and store material at port. The learned Authorised Representative stressed that this was the essence of work carried out by the assessee at the port. Our attention was drawn to the Circular No. 793 dt. 23rd June, 2000 issued by CBDT, which is placed at p. 66 of the paper book, which defines 'definition of port' as 'infrastructure facility' for the purpose of Sections 10(23G) and 80-IA of the IT Act. The learned Authorised Representative further stated that the AO in his order relating to asst. yr. 1998-99 at para 16 had accepted that the operation carried out by the assessee is an 'infrastructure facility' but the AO denied the exemption claimed under Section 80-IA of the Act as according to him the assessee was not operating the said 'infrastructure facility'. The learned Authorised Representative placing reliance on the Circular No. 793, dt. 23rd June, 2000 issued by CBDT pointed out that the Board had clarified the status of structures at port for storage, loading and unloading etc. and it has been so provided in the said circular that such structures would fall under the definition of 'port' for the purpose of Sections 10(23) and 80-IA of the Act, subject to the fulfillment of two conditions i.e., (a) a certificate has been issued by the port authorities and (b) that the structures have been built under the BOT or BOLT Schemes and there is an agreement for the transfer of the said equipment to the authorities at the end of the term of agreement. The learned Authorised Representative further pointed out that another Circular No. 10, dt. 16th Dec, 2005 (2005) 199 CTR (St) 97 was issued by the CBDT wherein it has been provided that w.e.f. asst. yr. 2002-03 only one condition is to be fulfilled by the person claiming a deduction under Section 80-IA of the Act. The learned Authorised Representative further clarified that as the claim of the assessee was in the pre-asst. yr. 2002-03 period it had to fulfill two conditions.
8. The learned Authorised Representative for the assessee brought to our notice that the certificate issued by JNPT dt. 30th May, 2004, which clarified that (a) the cranes were an integral part of the port and (b) the said cranes/equipments were issued under the BOLT Scheme. For the meaning of term of 'BOLT, our attention was drawn to Circular No. 733 issued by CBDT. The learned Authorised Representative clarified that the period of ten years has expired as on the date and the said cranes have been transferred to JNPT in compliance to the terms of BOLT Scheme. The learned Authorised Representative further submitted that the term 'infrastructure facility' is a broader term than 'infrastructure' and the cranes being 'facility' the meaning is broader. It was claimed by the learned Authorised Representative that the assessee has to fulfill both the conditions for the grant of deduction under Section 80-IA of the Act i.e., (a) as per the circular, it is not necessary to operate the said cranes and (b) in any case, the assessee is actually operating. Our attention was further drawn to the pp. 33 and 34 of the paper book by the learned Authorised Representative wherein it has been queried by the assessee as to what shall be the terms of payment, in case the JNPT provides the operations and in reply the JNPT has requisitioned for Rs. 40 lakhs for providing the operators. The learned Authorised Representative thus drew the conclusion that JNPT is providing the operators whose services are being paid by the assessee and thus the ultimate operation is with the assessee. The learned Authorised Representative going through the agreement entered into between the parties pointed out that the terms of the agreement are entered into between the parties i.e., the assessee and JNPT were for maintaining/operation of the equipment. Our attention was drawn to the list of employees employed by the assessee which included the operating staff and our attention was drawn to the letter issued by JNPT wherein it confirms that we are providing the operators. The learned Authorised Representative concluded by stating that the AO though accepted the claim of the assessee that it was port which in turn was leased on BOLT basis and the same was transferred to JNPT after the term of lease was ended, but denied that the deduction, though all the conditions provided under Section 80-IA of the Act were fulfilled entitling the assessee to the claim the said deduction.
9. The learned Authorised Representative further clarified that the adjudication of the issue was relevant for the purpose of determining the income under Section 115JA of the Act. Reliance was placed on the decision of Patel Engineering Ltd. v. Dy. CYT (2004) 84 TTJ (Mumbai) 646.
10. The question for our determination is whether the assessee, who has entered into an agreement with JNPT for the supply, installation, testing, commissioning and maintenance of the cranes on lease for a period of ten years at the container terminal of JNPT, is an infrastructure facility operated by the assessee entitled for the claim of deduction under Section 80-IA of the Act?
11. Section 80-IA(l) of the Act provides as under:
Where the gross total income of an assessee includes any profits and gains derived from any business of an industrial undertaking or a hotel or operation of a ship or developing, maintaining and operating any infrastructure facility or scientific and industrial research and development or providing telecommunication services whether basic or cellular or operating an industrial park or commercial production of mineral oil in the North Eastern Region, such business being hereinafter referred to as the eligible business to which this section applies, there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction from such profits and gains of an amount equal to the percentage specified in Sub-section (5) and for such number of assessment years as is specified in Sub-section (6).
12. The provisions of the Act provide that where an assessee is developing, operating and maintaining any infrastructure facility in addition to other facilities enumerated in Sub-section (1) of Section 80-IA of the Act, such income derived from any business of an industrial undertaking shall be entitled to a deduction from its profits computed as per the Act. Sub-section (2) of Section 80-IA provides the conditions which have to be fulfilled to * be entitled to the claim of the deduction under Section 80-IA of the Act. The assessee herein admittedly fulfils the conditions contained in Sub-Section (2) of Section 80-IA of the Act. Sub-Section (3) of Section 80-IA of the Act provides the fulfillment of conditions by any ship; Sub-Section (4) provides the conditions of fulfillment of business of any hotel and Sub-Section (4A) prescribes the conditions to be fulfilled by an infrastructure facility.
13. Sub-Section (4A) of Section 80-IA of the Act provides as under:
This section applies to any enterprise carrying on the business of developing, maintaining and operating any infrastructure facility which fulfils all the following conditions, namely:
(i) the enterprise is owned by a company registered in India or by a consortium of such companies;
(ii) the enterprise has entered into an agreement with the Central Government, or a State Government, or a local authority or any other statutory body for developing, maintaining and operating a new infrastructure facility subject to the conditions that such infrastructure facility shall be transferred to the Central Government, State Government, local authority or such other statutory body, as the case may be, within a period stipulated in the agreement;
(iii) the enterprise starts operating and maintaining the infrastructure facility on or after the 1st day of April 1995.
14. Sub-Section (4A) of the Act (of Section 80-IA) provides that any enterprise carrying on the business of development, maintenance and operation of any infrastructure facility availing benefit of deduction under Section 80-IA of the Act has to fulfill the following conditions:
(i) the enterprise is owned by a company registered in India;
(ii) the enterprise entered into an agreement with Central/State Governments or local authority or any statutory authority for developing, maintenance and operation of a new infrastructure facility, subject to the condition that such facility shall be transferred to the Government or authority or body on the expiry of period stipulated in the agreement;
(iii) the enterprise starts operation and maintenance of the infrastructure facility on or after 1st day of April, 1996.
15. Sub-Section (5) of Section 80-IA of the Act provides the manner of computation of deduction available to the person claiming the same and Sub-Section (6) refers to the period of assessment years in which the assessee shall be entitled to such deductions.
16. The term 'infrastructure facility' is defined under Section 80-IA(12)(ca) of the IT Act, which is as under:
(i) a road, highway, bridge, airport, port, rail system or any other public facility of a similar nature as may be notified by the Board in this behalf in the Official Gazette;
(ii) a water supply project, irrigation project, sanitation and sewerage system.
17. Applying the definition of 'infrastructure facility' to the facts of the present case, we find that 'port' and the facilities provided at port are covered by the definition of infrastructure facility. Reading the section in harmony, it transpires that the assessee before us, in order to be entitled to the claim of deduction under Section 80-IA of the Act has to fulfill the following conditions:
(a) whether it is an infrastructure facility falling within the definition provided in Section 80-IA(12)(ca);
(b) whether the operations have started on or after 1st day of April, 1995;
(c) whether the assessee has entered into an agreement with Central/ State Government, local authority for the development, maintenance and operation of any new infrastructure facility.
18. In the facts of the present case, the assessee is a company registered in India, which has started its operations after 1st day of April, 1995. The assessee has entered into an agreement with a local authority i.e., JNPT for the development, maintenance and operation of infrastructure facility being a port.
19. The definition of 'port' for the purpose of Section 80-IA of the Act has been enlarged by the Circular No. 793 issued by the CBDT dt. 23rd June, 2000, which provides as under:
1. The Board has received various representations seeking clarification whether structures at ports for storage, loading and unloading etc. will fall under the definition of 'port' for the purposes of Sections 10(23G) and 80-IA of the IT Act, 1961.
2. The Board has considered the matter and it has been decided that such structures will be included in the definition of 'port' for the purposes of Sections 10(23G) and 80-IA of the IT Act, 1961, if the following conditions are fulfilled:
(a) the concerned port authority has issued a certificate that the said structures form part of the port, and
(b) such structures have been built under BOT or BOLT Schemes and there is an agreement that the same would be transferred to the said authority on the expiry of the time stipulated in the agreement.
20. In order to specify the conditions of being held as 'port', the assessee has to fulfil the following conditions; i.e.,
(a) the concerned port authority had issued a certificate that the structures form part of the port, and
(b) such structures have been build under the BOT and BOLT Scheme and there is an agreement that the said structures shall be transferred to the authority on the expiry of the terms stipulated in the agreement.
21. In the facts of the present case, JNPT has issued a certificate dt. 31st May, 2004 confirming that it has entered into an agreement dt. 2nd Sept., 1994 and another agreement dt. 16th Oct., 1995 with M/s ABG Heavy Industries i.e., the assessee herein for the supply, installation, test, commissioning and maintenance of container holding equipment i.e., 1 No. Rail Mounted Quay Crane, 3 Nos. Rubber Tyred Gantry Cranes and 1 No. Rail Mounted Gantry Crane on lease for a period of ten years. The certificate further specified that the agreement with the assessee was under the BOLT Scheme and on the expiry of ten years contract period in accordance with the terms of the agreement, the said cranes would be transferred to JNPT. The BOLT Scheme has been clarified by Circular No. 733 dt. 3rd Jan., 1996 (1996) 130 CTR (St) 24, which provided that one of the conditions to be fulfilled by the enterprises is that it should develop, maintain and operate a new infrastructure facility, which shall be transferred to the Central Government/State Government/local authority within the period stipulated in the agreement.
22. Taking into consideration the definition of 'infrastructure facility' provided under Section 80-IA of the Act and the conditions to be fulfilled under Sub-section (4A) of Section 80-1A of the Act, we find that the assessee is an 'infrastructure facility' and the operations carried out by the assessee fall within the extended definition of 'port' as provided by the CBDT Circular No. 793. The assessee entered into an agreement with JNPT for the supply, installation, testing, commissioning and maintenance of the cranes under the BOLT Scheme, wherein it has been agreed upon by the parties that on the expiry of term of agreement i.e. period of ten years, the said cranes would be transferred to JNPT at no extra cost.
23. In the certificate dt. 31st May, 2004, JNPT has admitted that the said cranes after commissioning and installation form an integral part of the port and the contracts are under BOLT Scheme, under which the cranes would be transferred to the JNPT at no cost on the expiry of ten years contract period. The Clause (ii) of the agreement dt. 2nd Sept., 1994 provides that the equipment would be operational round the clock and the staff shall be deployed by the assessee round the clock for the maintenance of the equipment. In the indemnity Clause being No. (xiii), it has been provided that in case of any damages occur to the existing structures 'due to assessee's operation, the same shall be made good . by the assessee at its risk and cost'. The insurance for maintenance and operation is to be provided by the assessee. Clause (xxix) of the agreement stipulates the assessee to comply with all the provisions of labour laws, with regard to the employees deployed for erection, testing,-commissioning, operation and maintenance of the equipment.
24. In the agreement dt. 16th Oct., 1995, similar Clauses are provided though the agreement is for operation and maintenance to be carried on by the assessee.
25. The assessee has also filed the list of personnel deployed at JNPT for overall operation and maintenance of the infrastructure facilities during the asst. yr. 1997-98 at pp. 36 to 40 of the paper book. The perusal of the said list provides that the assessee had employed the senior manager (operations), manager (operations), Asstt. manager (operations) and five Dy. manager (operations), in addition to the Asstt. engineers employed by the assessee and officer (technical) and operators-cum-technicians with checker-cum-helper and trainees. During the course of assessment proceedings, in reply to a query raised by the AO, the assessee had submitted the copy of letter issued by JNPT dt. 27th March, 2000, wherein JNPT clarified that the assessee was having overall responsibility for ensuing round the clock operations as per the contract conditions. In the said letter JNPT had also confirmed that a consideration of Rs. 40 lakhs per annum, comprises of salary, wages and other emoluments of the operators provided by JNPT as indicated by the assessee. The said letter also provided that assessee is having the overall responsibility for ensuring round the clock operations. The copy of the covering letter of the assessee and letter of JNPT dt. 27th March, 2000 are placed at pp. 47 and 48 of the paper book.
26. In the facts and circumstances of the case before us, after the supply, installation, commissioning and maintenance of the container, the operations are being carried out by the assessee at a cost to the assessee i.e., the payment of Rs. 40 lakhs per annum to JNPT for providing the operators which in turn signifies that the operations are being carried on by the assessee as long as the supervision and control is at its risk. The list of employees provided by the assessee clearly points out that, the control and operations are under the supervision of the assessee though operators are provided by the JNPT at a cost. The provisions of the Act do not talk of the extent of operation and control required. In these circumstances, it is fair and reasonable to hold that the assessee is entitled to the relief in the light of the Circular No. 793 issued by the CBDT, which is binding on the Departmental authorities. Accordingly, we hold that the assessee is a 'infrastructure facility' entitled to the claim of deduction under Sub-Section (4A) of Section 80-IA of the IT Act.
27. The issue in the present appeal raised by the Revenue is for the purpose of determining the book profits under Section 115JA of the Act. The ground No. 1 raised by the Revenue is against the computation of deduction under Section 80-IA of the Act while calculating the book profits under Section 115JAof the Act.
28. The Revenue had in ground No. 2 raised the issue that the managing director had in his statement recorded under Section 132(4) of the Act admitted that operation of 'infrastructure facility' was not carried on by the assessee; but the AO has failed to consider the fact that the said statement was withdrawn at a later date.
29. The Mumbai Bench of Tribunal in Patel Engineering Ltd. v. Dy. CIT (supra) had held that the statutory provision as contained in Section 80-IA provides for 'development of infrastructure facility, but it nowhere provides that the entire infrastructure project is to be developed by one enterprise' It has been further held in the facts of that case that the assessee had developed the infrastructure facility for part of the project and is entitled to claim of deduction under Section 80-IA(4) of the Act, so long as the nature of development falls within the ambit of 'infrastructure facility'.
30. The assessee before us is providing part of the development of infrastructure facility at the port and is eligible for the deduction claimed under Section 80-IA of the IT Act. The said deduction under Section 80-IA of the Act is to be considered while calculating the book profits under Section 115JA of the Act.
31. We, accordingly, direct the AO to allow the claim of the assessee for both the years under consideration i.e., asst. yrs. 1997-98 and 1998-99. Thus, the grounds of appeal raised by the Revenue are dismissed.
32. In the result, the ground Nos. 1 to 4 in both the appeals filed by the Revenue being ITA No. 4482/Mum/2002 relating to asst. yr. 1997-98 and ITA No. 672/Mum/2004 relating to asst. yr. 1998-99 are dismissed.