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37. In Cross Objection, the assessee has taken a ground against denial of deduction u/s.801A(4) in respect of NHPC project. The AO declined the deduction in respect of profit from NHPC on the plea that NHPC is a Government of India Enterprise but that does not make it a Government of India or State.

38. Ld. AR placed reliance on the decisions of the Hon'ble Apex Court in Som Prakash Rekhi v. UOl &Anr. 19131, AIR 212 and Pradeep Kumar Biswas &Ors. v. Indian Institute of Chemical which have been referred to in the decision of the Honbie Pune Tribunal, in the context of section 801A(4), in Kirloskar Brothers Limited v. DCIT ITA 657/PN/2010 (CLPB 112 para 17).

32. In view of the aforesaid discussion, we therefore hold that assessee is eligible for the claim of deduction u/s 801A of the Act amounting to Rs.40,02, 10,981/- in respect of the profits derived from development of infrastructure facility for SSNNL. The order of the CIT(A) is set-aside and the Assessing Officer is directed to allow the deduction."

40. From the record we found that the Memorandum of Association (MA) of NHPC brings out the purpose of formation of NHPC. We found that Articles of Association (AA) of NHPC so submitted show that the appointment of Chairman of the company, its vice chairman, board of directors, managers, etc. CO No.37/Mum/2017 (A.Y.2005-06) M/s Patel Engineering Ltd.

are by the President of India and its operations are managed subject to compliance of conditions stipulated in Department of Public Enterprises circulars. We also found that entire share capital of NHPC is owned by the President of India and is a Schedule "A" enterprise and is top ten companies in terms of investment. On incorporation, NHPC took over the execution of various projects from Central Hydroelectric Projects Control Board, a government authority. Resources are earmarked for NHPC in the budgetary allocations of the India budget, more particularly for Teesta Lower Dam project also. NHPC has signed a MOU whereby the commitments I assistance to be received by NHPC from the Government are enumerated. In the Ministry of Power, Government of India work allocation is made for NHPC, including in respect of Jammu & Kashmir; co-ordination, forwarding of returns to Prime Minister's office, Ministry of Home Affairs and other Departments, concerning power issues of J & K. in sum and substance, the objects to be pursued are ordinarily performed by Government Thus, assessee's contract with NHPC fulfills the condition prescribed in section 801A(4)(i)(b) of the Act as it performs functions akin to state.

41. Applying the text laid down by the Hon'ble Supreme Court in the case of Som Prakash Rekhi (supra) as well as the proposition of law laid down by the coordinate bench in the case of Kirloskar Brothers Ltd. (supra) to the facts of the instant case, we do not find any reason to disallow assessee's claim for deduction uls.801A(4) in respect of project awarded by NHPC. We found that assessee's contracts with NHPC fulfills all the conditions prescribed u/s,801A(4)(1)(b) of the Act as it performs functions akin to estate. Accordingly, the AO is directed to allow deduction u/s.801A(4) in respect of project awarded by NHPC."