Indian Kanoon - Search engine for Indian Law

these grounds are overlapping and interconnected, we propose to deal with and dispose off these grounds together.

4. Before we proceed to decide the issues, it is necessary to provide a brief factual backdrop relating to them. The Government of India, for the purpose of widening National Highway no.5, entrusted the National Highway Authority of India to convert the existing road between Vijayawada and Vishakhapatnam section from Kms. 200 to kms. 250 to a 4-lane equal carriage with private sector participation on Build, Operate and Transfer (BOT) basis. Accordingly, NHAI floated a bid for construction of the 4-lane project on BOT basis under annuity scheme. As per the bid requirement, two entities i.e., Gammon India Ltd. (GIL) and Punj Lloyd Ltd., came forward to compete for the bid by forming a consortium and being successful, both Gammon India Ltd. and Punj Lloyd Ltd. incorporated the assessee company as a special purpose vehicle (SPV) to implement the project. Accordingly, NHAI entered into a concession agreement with the assessee on 30th October 2001, for implementing the 4-lane project. Thereafter, the assessee company entered into a Engineering Procurement Contract (EPC) and Operation and Maintenance (O & M) contract with Gammon India Ltd. for construction of the project. On completion of the BOT project on 20 th September 2004, the assessee started its commercial operation. In the return of income filed for the assessment year 2006-07, for the first Rajahmundry Expressway Ltd.

materials on record show that in response to the bid floated by the Central Government / NHAI, Gammon India Ltd. and Punj Lloyd Ltd., formed a consortium to offer the bid and the assessee was not the bidder. Only after the consortium became successful in the bid, the assessee company was created as a SPV and it entered into a concession agreement with the NHAI. After the execution of the concession agreement, the assessee immediately entered into two separate contracts with the GIL i.e., EPC and O & M contracts under which the entire work relating to development, operation and maintenance of the BOT Project was handed over to GIL on purely back-to-back basis. He submitted, all the responsibilities and liabilities under concession agreement as conferred on the assessee company were shifted to GIL under the EPC and O & M contracts. Further, he submitted, the pricing of the EPC contract with the GIL is not transparent as the assessee has deflated the price to increase its profitability. He submitted, except making financial investment, the assessee is not contractually exposed to any risk or liability. The learned Departmental Representative submitted, unless the person claiming deduction under section 80IA of the Act himself carries out any one of the activities as provided under section 80IA(4)(i) of the Act, it will not qualify for deduction. He submitted, in the facts of the present case, admittedly, the assessee has not carried out even a single activity relating to either development or operation or Rajahmundry Expressway Ltd.

Commissioner (Appeals) has tried to make out a case that the assessee is a mere paper company and after getting the work from NHAI has awarded the work to GIL on back-to-back basis without carrying out any work itself. However, facts on record reveal that it is the assessee with whom NHAI has entered into the concession agreement for developing, operating and maintaining the toll Road. A perusal of the concession agreement reveals that the entire responsibility, risk and reward arising out of the BOT Project were with the assessee. Though, assessee was entrusted the job of developing, operating and maintaining the project by the NHAI, however, the concession agreement also provides that the assessee can get the development work done through a contractor by entering into EPC contract. Further, the concession agreement also provided that the assessee can enter into a separate contract for operation and maintenance of the BOT Project. Thus, it is evident, the EPC and O & M contracts entered into by the assessee with GIL are as per the terms of the concession agreement and also with the approval of NHAI. It is also a fact on record that the assessee has financed the entire project by availing loan from financial institutions. Further, as per the concession agreement assessee at its own cost is required to insure the project during the period of implementation. The work of GIL is limited to carrying out the development as well as operation and maintenance of the infrastructure project as per the price fixed under Rajahmundry Expressway Ltd.

the contracts. Thus, the status of GIL is that of a contractor. Whereas, the assessee as per the terms of the concession agreement is the developer of the infrastructure facility. It is relevant to observe, the concession agreement was executed on 30th October 2001. Whereas, the EPC contract was entered into on 13th February 2002. Thus, both these contracts were much prior to assessment year 2006-07, wherein, for the first time assessee claimed deduction under section 80IA of the Act. It is also a fact on record that in the course of assessment proceeding in assessment year 2006-07, the Assessing Officer after examining assessee‟s claim allowed the deduction under section 80IA of the Act. Though, in assessment years 2007-08 and 2008-09 while completing the assessments under section 143(3) of the Act, the Assessing Officer disallowed the deduction under section 80IA of the Act on the ground that it is not a new infrastructure facility, however, both the appellate authorities i.e., learned Commissioner (Appeals) and the Tribunal have allowed assessee‟s claim. The facts and materials on the basis of which assessee‟s claim of deduction under section 80IA of the Act was allowed by the appellate authorities have not changed as the concession agreement and the EPC and O & M contracts have remained same. In fact, in the impugned assessment order, the Assessing Officer has examined the EPC contract, however, he has not raised any doubt regarding assessee‟s status as a developer. Learned Commissioner (Appeals) on Rajahmundry Expressway Ltd.