Document Fragment View

Matching Fragments

-5-

2009-10 after examining the claim extensively with the relevant agreements and documents. The assessee also placed reliance on the CBDT Circular No. 4 of 2010 dated 18.05.2010 wherein, it had been clarified that widening of existing roads by constructing additional lane as part of highway project by an undertaking would be regarded as new infrastructure facilities for the purpose of section 80IA(4) of the Act. The assessee has developed in terms of agreement with the state Government. The work executed has resulted into development of infrastructure project. The assessee possesses huge plants and equipment that were deployed for the development of project in addition to possessing technical management/ human resources as a condition for grant of development project. The copy of bidding documents for procurement of the contract are enclosed in pages 78 to 190 of the paper book Vol-1. The copy of various certificates issued by the concerned Government departments are enclosed in pages 51 to 77 of the paper book Vol-1 clearly stating that the assessee has executed infrastructure development work with all the technical specifications thereon. Apart from this, the assessee had enclosed the complete evidences with regard to construction/ up gradation of rural roads under PMGSY in Dindori District, Shahdol District, Umaria District. Pursuant to widening of two lanes in NH 59A (Indore-Betul Road), widening to two lanes in NH78 under NH Dn. Shahdol, widening to two lanes at NH-78 under NHDn. Shahdol and widening to two lanes at NH-78 pursuant to agreement entered into MPRRDA and PWD. The letter of IT(SS) A Nos.5 to 10/JAB/2018 TirupatiBuildconPvt Ltd.

(iii) Pursuant to the agreement specified in point (ii) the company engages itself in any of the following activities.
(a) Development of infrastructure facility
(b) Operation and maintenance of infrastructure facility
(c) Development, operation and maintenance of infrastructure facility 6.2 Now the assessee in the given case is a company which, pursuant to agreements with various Government bodies, engaged itself in the development of infrastructure facility as defined in the Explanation to sub section 4 of section 80-IA These set of facts have not been disputed by the AO. The Ld. AO disallowed the claim on the ground that the assessee has challenged the provisions of explanation to section 801A of the Act to the Hon'ble High Court and the Court has restrained to enforce the demand that may be raised in pursuance to the explanation to section 801A of the Act. There is no direction to keep the assessment proceedings under abeyance. The AO treated the assessee as a mere works contractor conducting mere civil construction and hence as per the explanation to section 80-IA(13), the deduction is not available to him. However on examination of the records we find that the assessee has withdrawn the appeal filed before the Hon'ble High Court.
- 28 -
be paid by the Government. Therefore, merely because the transferee had paid for the development of infrastructure facility carried out by the assessee, it cannot be said that the assessee did not develop the infrastructure facility. If the interpretation done by the Assessing Officer is accepted, no enterprise carrying on the business of only developing he infrastructure facility would be entitled to deduction under section 801A(4), which is not the intention of the law. An enterprise, which develops the infrastructure facility is not paid by the Government, the entire cost of development would be a loss in the hands of the developer as he is not operating the infrastructure facility. The legislature has provided that the income of the developer of the infrastructure project would be eligible for deduction. It presupposes that there can be income to developer ie. to the person who is carrying on the activity of only development infrastructure facility. Ostensibly, a developer would have income only if he is paid for the development of infrastructure facility, for the simple reason that he is not having the right/authorization to operate the infrastructure facility and to collect toll there from, has no other source of recoupment of his cost of development.

- 33 -

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 801A 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 would mean that only companies are eligible for deduction under section 801A (4) and not any other person like individual, HUF, Firm etc.