Document Fragment View

Matching Fragments

19. The assessee in the present case claimed to be engaged in the activity of infrastructure development and construction of road and irrigation project. The assessee in the year under consideration claimed deduction of Rs. 8,22,39,101/- under section 80IA(4) of the Act being 100% of the profit derived from the Industrial Unit engaged in the activity of infrastructure development. The assessee during the assessment proceedings submitted that it met all the conditions prescribed under section 80-IA(4) of the Act i.e. it is an enterprise carrying on business of development of infrastructure facility, construction of road and irrigation project, the enterprise owned by an Indian company, has entered into an agreement with State Government/Statutory body for development of new infrastructure and handed over the projects to such authority after development. The assessee also submitted that it has maintained separate books of accounts for the undertaking carrying out the work of infrastructure development which have been duly audited by the independent chartered accountant.

ITA no.939/AHD/2011 (with eight others) A.Y. 2008-09 19.2 It was also submitted that if an enterprise is only carrying out the work of development of infrastructure facility, will obviously receive payment from the Government/local authority/statutory body with which it entered into agreement for development. Otherwise, the entire cost of development of new infrastructure facility will become loss as the developer is not in operation and maintenance of such facility after its being developed. Therefore, only source of income for developer who is not into the operation of such facility is the amount received from the authority with whom agreement to develop was entered with. Further, entering into agreement with Government/local authority/statutory body for development of infrastructure facility is pre-condition to claim deduction under section 80IA(4) of the Act. As per the provisions of Indian Contract Act 1872, any person entered into agreement with another person to do or refrain from doing something for a consideration is a contractor. Therefore, assessee entered into agreement with Government/local authority for developing infrastructure is a contractor and accordingly referred as contractor in the said agreement. But that does not degrade it from being developer of infrastructure facility. The fact that TDS under section 194C of the Act, as applicable to a contractor, deducted on account of payment made by the said authority for carrying out the work of development of infrastructure facility will not change its status as developer. The assessee in this regard placed its reliance on several judicial pronouncements.

27.3 Hence, the legislature inserted sub-section 4A to section 80-IA of the Act w.e.f. 1st April 1996 for providing the deduction to the enterprises or undertakings engaged in the business of development and operating & maintaining of infrastructure facility.

ITA no.939/AHD/2011 (with eight others) A.Y. 2008-09 27.4 Further, w.e.f. 1st April 2000 the subsection-4A was re-numbered as sub- section- 4 of section 80IA of the Act. Subsequently, the major changes were brought in the Finance Act 2001 w.e.f. 1st April 2002, where the requirement for developing and operating & maintaining of infrastructure facility simultaneously was done away. Now the deduction under section 80-IA(4)(i) is also available to assessee who is engaged only in development of infrastructure facility or only engaged in operation & maintenance of infrastructure facility or engaged in both developing, operating and maintaining any infrastructure facility. The amended provision of section 80-IA(4)(i) of the Act reads as under:

29.11 The co-joint reading of the above facts reveals that there was no issue with respect to the fact whether the assessee has not taken the project of infrastructure facility, rather it was admitted by the revenue that the assessee has undertaken the projects for the development of infrastructure facility. Accordingly, we are of the view that the ITAT cannot expand the scope of the dispute which was not arising from the order of the authorities below. In holding so, we draw support and guidance from the judgement of Hon'ble High Court of Allahabad in the case of S.P. Kochhar Vs ITO reported in 145 ITR 255 wherein it was held as detailed under: