Income Tax Appellate Tribunal - Hyderabad
Unitech-Ncc (Jv), Hyderabad vs Assessee on 18 April, 2013
IN THE INCOME TAX APPELLATE TRIBUNAL
HYDERABAD BENCH 'A', HYDERABAD
BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER and
SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER
I.T.A. No. 1333/Hyd/2011 - A.Y. 2006-07
I.T.A. No. 744/Hyd/2006 - A.Y. 2003-04
I.T.A. No. 1447/Hyd/2010 - A.Y. 2005-06
M/s. Unitech-NCC (JV) v. The Deputy CIT
Hyderabad Circle-6(1)
PAN: AAATU0669D Hyderabad
Appellant Respondent
I.T.A. No. 563/Hyd/2006
Assessment year 2002-03
The Deputy CIT v. M/s. Unitech-NCC (JV)
Circle-6(1) Hyderabad
Hyderabad PAN: AAATU0669D
Appellant Respondent
Assessee by: Sri S. Rama Rao
Revenue by: Sri Y.V.S.T. Sai
Date of hearing: 18.04.2013
Date of pronouncement: 29.04.2013
ORDER
PER CHANDRA POOJARI, AM:
ITA No. 1333/Hyd/2011, ITA No. 744/Hyd/2006 and
ITA No. 1447/Hyd/2010 are assessee's appeals and ITA No.
563/Hyd/2006 is Department's appeal directed against different orders of the CIT(A)-IV, Hyderabad for the above assessment years. As the issue in all these appeals is common, all these appeals are clubbed together, heard together and are being disposed of by this common order for the sake of convenience.
2. The issue with regard to granting of deduction u/s. 80IA of the Income-tax Act, 1961 in respect of infrastructure 2 ITA. No. 1333/Hyd/2011 & Ors. M/s. Unitech-NCC (JV) ======================== facility being Highway Project under an agreement with National Highways Authority of India (NHAI).
3. Brief facts of the issue are that The assessee is a registered firm comprising of two partners, M/s. Unitech Limited and M/s. Nagarjuna Construction Co. In the computation of income filed along with the return, the assessee had claimed deduction u/ s. 80IA(4) in respect of its entire business profits. It was claimed that such a claim had been allowed by the CIT(A), Guntur in the assessee's case for the A.Y. 2002-03 by placing reliance on the decision of the Hon'ble Mumbai ITAT in the case of Patel Engineering (84 TTJ
446). Justifying the claim so made, the assessee had been contending in the earlier years also that deduction under sec. 80IA is available to an enterprise carrying on the business of
(i) developing, or (ii) operating and maintaining, or (iii) developing, operating and maintaining, any infrastructure facility. It was submitted that since the assessee is developing infrastructure facility, being Roads, by entering into an agreement with NHAI, it is eligible for such deduction.
4. However, on an examination of the provisions of sec. 80IA in this regard, the Assessing Officer noted that the assessee did not own the infrastructure facility in the instant case, as it is owned by the NHAI. He opined that the condition prescribed under subsection (4)(i)(c) of this section had not been satisfied, in so far as the assessee has never been the owner of the infrastructure facility, and in such a condition, it could never start, or would not have started, to operate and maintain the infrastructure facilities at any point of time. She opined that the argument of the assessee that profits from development are deductible without recourse to operating and maintaining, is a wrong interpretation of sec.
3 ITA. No. 1333/Hyd/2011 & Ors.M/s. Unitech-NCC (JV) ======================== 80IA(4)(i), as elaborated in the departmental circular No. 717 dated 14.8.1995.
5. The Assessing Officer opined that the assessee had not developed the facility on BOT or BOOT or similar other basis. The Assessing officer further opined that the firm was developing the infrastructure facility only in the capacity of a mere contractor. Whereas the explanation to sec. 80IA, introduced by the Finance Act, 2007, with retrospective effect from 1.4.2000, shows that the provisions do not apply to a person, who undertakes to execute a works contract entered into with the undertaking or the enterprise, as the case may be. She noted that in view of the said explanation, the decision of the Tribunal Mumbai Bench in the case of Patel Engineering (supra) had no relevance. Accordingly, the claim of exemption under sec. 80IA was disallowed.
6. Before us also, the learned AR relied on the order of the Tribunal Pune Bench in the case of B.T. Patil & Sona Belgaum Constructions Pvt. Ltd. vs. ACIT, in ITA No. 1408 & 1409/PN/2003 dated 28.2.2013 stating that the issue need not be set aside and the issue be adjudicated u/s. 80IA of the Act relying on this order wherein the assessee is the contractor vis-a-vis the portion allotted to them and not only subcontractors, i.e., a direct party to the main agreement. The assessee has entered into a main agreement, in their own right, can claim the benefit of section 80IA. As the assessee being directly under contract to the concern for the work done and are also directly dealing with the Government on whose behalf the assessee are doing the work, they can be considered as main contractors along with PEC and are not simply subcontractors vis-a-vis the work undertaken by them. As such the assessee is otherwise fulfilling all the conditions 4 ITA. No. 1333/Hyd/2011 & Ors. M/s. Unitech-NCC (JV) ======================== they are entitled to deduction under the provisions of section 80IA. In addition to this, the AR relied on various orders of this Tribunal which we have discussed elsewhere in this order.
7. The DR relied on the judgement of Gujarat High Court in the case of Katira Constructions Ltd. vs. Union of India reported in 2013-TIOL-HC-AHM-IT. Especially, he drew our attention to paragraphs 31, 32, 33, 34 and 35 which read as under:
31. From the inception, thus the concept of development of infrastructure through private participation was clearly discernible. Principal purpose was to infuse private investment in such projects to speed up infrastructure development which required massive expansion. Even after bifurcation of section 80IA into section 80IA and section 80IB, with effect from 1.4.2000, this fundamental concept was not discarded. Sub-
section (4) which formed part of the recast section 80lA did not carry any material changes from the earlier provisions of subsection (4A) of section 80IA which existed prior to 1.4.2000.
32. It is true that with effect from 1.4.2002 some significant changes were made in the said provisions. We have already noticed three of these changes which are material for our purpose. Such changes were (i) that sub-section (4) of section 80IA now required the enterprise to carry on the business of developing or operating and main- taining or developing, operating and maintaining any infrastructure facility. This was in contrast to the previous requirement of all three conditions being cumulatively satisfied; (ii) that the explanation of the term 'infrastructure facility' was changed to besides others, a road including toll road instead of hitherto existing expression 'road' and (iii) that the requirement of transferring the infrastructural facilities developed by the enterprise to the Central or the State Government or the local authority within the time stipulated in the agreement was done away with.
5 ITA. No. 1333/Hyd/2011 & Ors.M/s. Unitech-NCC (JV) ========================
33. To our mind, these changes, however, would not alter the situation vis-a-vis the impugned amendment. These legislative changes did enlarge the scope of the deduction and in a sense, made it available to certain assessees who would not have been, but for the changes eligible for such deduction. Nevertheless, the basic requirement of the enterprise carrying on the business of developing or operating and maintaining or developing, operating and maintaining infra- structure facility was not done away with. In other words, in our understanding, even the amended section 80IA(4) with effect from 1.4.2002 could be construed as not including execution of works contract as one of the eligible activities for claiming deduction. We may, once again fall back on the explanatory memorandum explaining such legislative amendments. It was explained that investment in infrastructure has to compete with the investment in other sectors and must therefore be attractive. There is, therefore, in particular a need to encourage investment in the area of surface transport, water supply, water treatment system, irrigation project, sanitation and sewerage system or solid waste management systems. The bill therefore, proposed to relax the existing system to provide for a ten year tax holiday. Significantly, it was stated that keeping in view the capital intensive nature, the higher allowances of depreciation in the initial years in such enterprise and the need for improved cash flows, it is further proposed that for an infrastructure facility in the nature of a road including a toll road, bridge, rail system, highway project, water supply project, sanitation, sewerage and solid waste management system in place of two-tier tax holiday, a ten year tax holiday may be availed consecutively out of twenty years beginning from the year in which the undertaking begins operating the infrastructure facility. In the case of other infrastructure, namely, for airport, port, inland port and inland waterways, it is also proposed to relax the existing two tier fiscal incentive. The Bill proposed an identical ten year tax holiday that may be availed in a block of fifteen years. It is also proposed to do away with the mandatory requirement that such infrastructure facility shall be transferred to the 6 ITA. No. 1333/Hyd/2011 & Ors. M/s. Unitech-NCC (JV) ======================== Central Government, State Government, local authority or any other statutory authority.
34. Clearly, thus, post 1.4.2002 also, the involvement of the enterprise in developing infrastructure facility when the claim was covered under such expression was essential. In the same context, we must understand the expression "developing or operating and maintaining or developing, operating and maintaining". Keeping in mind the new areas where such private participation would be required and therefore had to be encouraged and keeping in mind that such areas, such as, surface transport, water supply, water treatment system, irrigation project, etc. would necessarily be highly investment intensive, the Legislature provided for a tax break of 10 consecutive years out of a total of 20 years period and also proposed to do away with the requirement of such infrastructure facility being transferred to the Central or the State Government or the local authority.
35. In 2007, the explanation below sub-section (13) of section 80IA came to be added which clarified that nothing contained in the said section shall apply toa person who executes. a works contract entered into with the undertaking or enterprise, as the case may be. In clear terms, this explanation targeted the second level works contractor who might have been employed by the enterprise developing the infra-structure facility. However, this was not found to be sufficient explanation clearing doubts with respect to the exclusion of the enterprise engaged in execution of a works contract. It was, therefore, that the impugned explanation came to be introduced substituting the existing explanation below sub- section (13) to section 80IA. The explanatory memorandum recorded that profit linked deductions were prone to considerable misuse. With a view to preventing such misuse of the tax holiday under section 80IA, it was proposed to amend the explanation to the said section to clarify that nothing contained in the section shall apply in relation to a business which is in the nature of a works contract executed by an undertaking.
7 ITA. No. 1333/Hyd/2011 & Ors.M/s. Unitech-NCC (JV) ========================
8. After hearing both the parties we are of the opinion that the allowability of deduction u/s. 80IA is subject matter of appeal before this Tribunal in various cases and the Tribunal given a finding in these cases. The same issue came for consideration before this Tribunal in the case of Maytas-NCC (JV) in ITA No. 1292/Hyd/2010 for A.Y. 2007-08. The Tribunal vide order dated 27.8.2012 held as follows:
"22. We have heard both the parties and perused the material on record. In our opinion, this issue came for consideration before this Tribunal in the case of M/s. Koya & Co. Construction (P) Ltd. v. ACIT, 51 SOT 203 (Hyd) (URO) wherein the Tribunal held as follows:
"24. ... We find that the provisions of Section 80IA (4) of the Act when introduced afresh by the Finance Act, 1999, the provisions under section 80IA (4A) of the Act were deleted from the Act. The deduction available for any enterprise earlier under section 80IA (4A) are also made available under Section 80IA (4) itself. Further, the very fact that the legislature mentioned the words (i) "developing" or (ii) "operating and maintaining" or (iii) "developing, 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., carries out the civil construction work, he will be eligible for tax benefit under section 80 IA of the Act.
In contrast to this, a assessee, who enters into a contract with another person including Government or an undertaking or enterprise referred to in Section 80 IA of the Act, for executing works contract, will not be eligible for the tax benefit 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 the Act refer to the enterprise. By reading of the section, it is clears that the enterprises carrying on development of infrastructure development should be owned by the company and not that the infrastructure facility should be owned by a company. The provisions are made applicable to the person to whom such enterprise belongs to is explained in sub-clause (a). Therefore, the word "ownership" is attributable only to the enterprise carrying on the business which 8 ITA. No. 1333/Hyd/2011 & Ors. M/s. Unitech-NCC (JV) ======================== would mean that only companies are eligible for deduction under section 80IA (4) and not any other person like individual, HUF, Firm etc.
25. 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 related to the infrastructure facility, particularly in view of the fact that infrastructure facility includes Rail system, Highway project, Water treatment system, Irrigation project, a Port, an Airport or an Inland port which cannot be owned by any one. Even otherwise, the word "it" is used to denote an enterprise. Therefore, there is no requirement that the assessee should have been the owner of the infrastructure facility.
26. The next question is to be answered is whether the assessee is a developer or mere works contractor. The Revenue relied on the amendments brought in by the Finance Act 2007 and 2009 to mention that the activity undertaken by the assessee is akin 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 contractor is purely depends on the nature of the work undertaken by the assessee. Each of the work undertaken has to be analyzed and a conclusion has to be drawn about the nature of the work undertaken by the assessee. The agreement entered into with the Government or the Government body may be a mere works contract or for development of infrastructure. It is to be seen from the agreements entered into by the assessee with the Government. We find that the Government handed over the possession of the premises of projects to the assessee for the development of infrastructure facility. It is the assessee's responsibility to do all acts till the possession of 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 shall 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 process, 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 infrastructure whether it involves construction of a 9 ITA. No. 1333/Hyd/2011 & Ors. M/s. Unitech-NCC (JV) ======================== particular item as agreed to in the agreement or not. The agreement is not for a specific 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 material 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 provides the works in packages and not as a works contract. The assessee utilizes its funds, its expertise, its employees and takes the responsibility of developing the infrastructure facility. The losses suffered either by the Govt. or the people in the process of such development would be that of the assessee. The assessee hands over the developed infrastructure facility to the Government on completion of the development. Thereafter, the assessee has to undertake 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 entire infrastructure shall have to be maintained by the assessee alone without hindrance to the regular traffic. Therefore, it is clear that from an un-developed area, infrastructure is developed and handed over to the Government and as explained by the CBDT vide its Circular dated 18-05-2010, such activity is eligible for deduction under section 80IA (4) of the Act. This cannot be considered as a mere works contract but has to be considered as a development of infrastructure facility. Therefore, the assessee is a developer and not a works contractor as presumed by the Revenue. The circular issued by the Board, relied on by learned counsel for the assessee, clearly indicate that the assessee is eligible for deduction under section 80IA (4) of the Act. The department is not correct in holding that the assessee is a mere contractor of the work and not a developer.
27. 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 person may be called as a contractor as he entered into a contract. But the word "contractor" is used to denote a person entering into an agreement for undertaking the development of infrastructure facility. Every agreement entered into is a contract. The word "contractor" is used to denote the person who enters into such contract. Even a person who enters into a contract for development of infrastructure facility is a contractor. Therefore, the 10 ITA. No. 1333/Hyd/2011 & Ors. M/s. Unitech-NCC (JV) ======================== contractor and the developer cannot be viewed differently. Every contractor may not be a developer but every developer developing infrastructure facility on behalf of the Government is a contractor.
28. We find that the decision relied on by the learned counsel for the assessee in the case of CIT vs. Laxmi civil Engineering works [supra] squarely applicable to the issue under dispute which is in favour of the assessee wherein it was held that mere development 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 Engineering [supra]. The case of ABG is not the pure developer whereas, in the present case, the assessee is the pure developer. We also find that Section 80IA of the Act, intended to cover the entities carrying out developing, operating and maintaining the infrastructure facility keeping in mind the present business models and intend to grant the incentives to such entities. The CBDT, on several occasions, clarified that pure developer should also be eligible to claim deduction under section 80IA of the Act, which ultimately culminated into Amendment under section 80IA of the Act, in the Finance Act 2001, to give effect to the aforesaid circulars issued by the CBDT. We also find that, to avoid misuse of the aforesaid amendment, an Explanation was inserted in Section 80IA of the Act, in the Finance Act-2007 and 2009, to clarify that mere works contract would not be eligible for deductions under section 80IA of the Act. But, certainly, the Explanation cannot be read to do away with the eligibility of the developer; otherwise, 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 Finance Act 2007 states that the purpose of the tax benefit has all along been to encourage investment in development of infrastructure sector and not for the persons who merely execute the civil construction work. It categorically states that the deduction under section 80IA of the Act is available to developers who undertakes entrepreneurial and investment risk and not for the contractors, who undertakes only business risk. Without any doubt, the learned counsel for the assessee clearly demonstrated before us that the assessee at present has undertaken huge risks in terms of deployment of technical personnel, plant and 11 ITA. No. 1333/Hyd/2011 & Ors. M/s. Unitech-NCC (JV) ======================== machinery, technical know-how, expertise and financial resources.
29. As per submission of the assessee's counsel broadly the technical nature of the work undertaken by the assessee is as follows:
i) Designing and Manufacturing of pipes: The assessee specially designed and manufactured Pre-stressed concrete pipes and it has been done in accordance with specific requirements.
ii) Design and manufacturing of pipe fittings or specials
ii) Transporting, Laying and Joining of pipes conforming with specifications. The activity involves earth work excavation, trench excavation, hard rook blasting, lowering and laying of pipes, fitting of specials, fitting of rubber rings at the joints, testing pipe joints and pipeline.
iii) Construction of pump house, providing and fitting of pump sets. Supply and fitting of submersible pumps, centrifugal pumps, turbine pumps, submersible motors, motors for turbines and centrifugal pump sets, transformer, generator, panel boards etc.
iv) Design and construction of raw water pumping stations, water treatment plant, treated water pumping station, treated water transmission main, construction of surge tank and pipe connection arrangement, booster stations, internal transmission main and feeder mains, construction of service reservoirs and master reservoirs.
v) Mobilisation of labourers, [preparation of plans technical expertise, supervision, co-ordination and control, set up manufacturing facility nearby the project site to manufacture project specific pipes as per the required specifications which requires well equipped machines, employment of skilled labour and technical experts, equipment to transport heavy pipes to laying sites, equipment to lift and lowering of pipes at the excavated sites, provide qualified and experience engineer for each project site etc to bring in to existence an infrastructure facility. Manufacturing of pipes to sites, excavation under various conditions of soil and rock, lowering and laying of pipes, jointing and testing of pipe joint and pipe line as a whole, 12 ITA. No. 1333/Hyd/2011 & Ors. M/s. Unitech-NCC (JV) ======================== construction of pump houses, storage tank/collection well, treatment plants, distribution plants etc and all these together develop in to a new infrastructure water supply facility.
30. 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) developing or (ii) operating and maintaining or (iii) developing, operating and maintaining any infrastructure facility, prior to amendment the "or" between three activities was not there, after the amendment "or" has been inserted w.e.f. 1-4-2002 by Finance Act 2001.
31. Accordingly, the assessee is entitled for deduction under section 80IA of the Act on the projects which involve above activities. Therefore, in our considered view, the assessee should not be denied the deduction under section 80IA of the Act if the contracts involves development, operating, maintenance, financial involvement, and defect correction and liability period, then such contracts cannot be called as simple works contract to deny the deduction u/s 80IA of Act. In our opinion the contracts which contain above features to be segregated on this deduction u/s. 80-IA has to be granted and the other agreements which are pure works contracts hit by the explanation section 80IA(13), those work are not entitle for deduction u/s 80IA of the Act. The profit from the contracts which involves development, operating, maintenance, financial involvement, and defect correction and liability period is to be computed by assessing officer on pro-rata basis of turnover. The assessing officer is directed to examine the records accordingly and grant deduction on eligible turnover as directed above. It is needless to say that 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 in ITA No. 1179/Mds/08 vide order dated 26th February, 2010 the Tribunal has taken the same view. ..."
23. In the case of GVPR Engineers Ltd. v. ACIT, 51 SOT 207 (Hyd) (URO) wherein the Tribunal held that deduction u/s. 80IA is available to developers who undertake entrepreneurial investment risk and not for the contractors, who undertake only business risk. Without any doubt, the assessee clearly demonstrated that the plant and machinery, technical know-how, 13 ITA. No. 1333/Hyd/2011 & Ors. M/s. Unitech-NCC (JV) ======================== expertise and financial resources. Therefore, if the contracts involve design, development, operation & maintenance, financial involvement and defect correction and liability period, then such contracts cannot be called as simple works contract, to deny the deduction under section 80IA. The contracts which contain above features to be segregated have to be granted deduction under section 80IA and the other agreements which are pure works contracts hit by the Explanation to section 80IA(13) are not entitled for deduction under section 80IA. The profit from the contracts which involve design, development, operating & maintenance, financial involvement and defect correction and liability period is to be computed by the Assessing Officer on pro rata basis of turnover. The Assessing Officer is directed to examine the records, accordingly, and grant deduction on eligible turnover.
9. In the case of KMC Construction Ltd. v. ACIT, 51 SOT 214 (Hyd) (URO) wherein the Tribunal has taken the same view.
10. In the case of Sushee Hi-Tech Constructions Pvt. Ltd. vs. DCIT, in ITA Nos. 269 & 1165/Hyd/2009 and ITA No. 1171/Hyd/2010 dated 16th March, 2012 wherein the Tribunal held as follows:
" ... The assessee should not be denied the deduction under section 80IA of the Act as the contracts involves, 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 works 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, financial involvement, and defect correction and liability period is to be computed by assessing officer on pro-rata basis of turnover. The assessing officer is directed to examine and grant deduction on eligible turnover as directed above."
26. In view of the above orders of the Tribunal on similar issue relating to deduction u/s. section 80-IA(4), 14 ITA. No. 1333/Hyd/2011 & Ors. M/s. Unitech-NCC (JV) ======================== we are inclined to remit the issue back to the file of the Assessing Officer to decide the issue in the light of the above order."
11. Further the same issue came for consideration in the case of Bhooratnam Construction Co. Pvt. Ltd. in ITA Nos. 270 & 271/Hyd/ 2011. The Tribunal vide order dated 7.9.2012 held as follows:
"8. We have heard both the parties and perused the material on record. In our opinion, as seen from the facts of the case, the assessee has not produced copies of tender/contract executed by it before the lower authorities. Before us the assessee filed certain copies of tenders suggesting nature of activity carried on by the assessee and argued that the issue is already decided by this Tribunal in favour of the assessee by various decisions cited supra. However, at this stage we are not in a position to express any opinion on the nature of activities carried on by the assessee. The lower authorities had no occasion to examine the nature of activities carried on by the assessee. Being so, in our opinion, it is appropriate to remit the issue back to the file of Assessing Officer for fresh consideration. While doing so, the Assessing Officer has to see whether the assessee carried on contract for sale or contract for work and the applicability of Explanation below section 80IA(13) of the Act. The Assessing Officer is directed to examine the terms of contract including the nature of obligation to be discharged by the assessee while executing the contract. For claiming deduction u/s. 80IA(4) the assessee shall satisfy the two conditions viz., investment in eligible projects and (2) execution of project by itself. If the assessee satisfies the above conditions and the above Explanation if not applicable then only the assessee is entitled for deduction u/s. 80IA(4) of the Act. With this observation, we remit the entire issue back to the file of the Assessing Officer for fresh consideration and to decide in accordance with law."
12. In view of the above order of the Tribunal, we are inclined to remit the issue back to the file of the Assessing Officer with a direction to examine the issue afresh and to see whether the assessee carried on the development of infrastructure facilities cumulatively with the activities of design, development, operation, maintenance, financial involvement, defect correction of the contract executed by the assessee itself. In the event, the assessee itself carried on the development of infrastructure facilities/contract along with design, development, operation, maintenance, financial 15 ITA. No. 1333/Hyd/2011 & Ors. M/s. Unitech-NCC (JV) ======================== involvement, defect correction of the contract during the warranty period, then such contract to be considered as a development of infrastructure facility executed by the assessee and thereby eligible for deduction u/s. 80IA of the Act.
13. In the result, all the above appeals are allowed for statistical purposes.
Order pronounced in the open court on 29th April, 2013.
Sd/- Sd/-
(ASHA VIJAYARAGHAVAN) (CHANDRA POOJARI)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Hyderabad, dated 29th April, 2013
tprao
Copy forwarded to:
1. M/s. Unitech-NCC (JV), co/ Sri Samuel Nagadesi, 408, Sri Ramakrishna Towers, Besides Image Hospitals, Ameerpet, Hyderabad-500 073.
2. The Deputy CIT, Circle-6(1), Budha Bhavan, Kings Way, Secunderabad.
3. The CIT(A)-IV, Hyderabad.
4. The CIT-III, Hyderabad.
5. The DR - A Bench, ITAT, Hyderabad