PCIT Vs Montecarlo Limited (Gujarat High Court)
The Revenue filed a tax appeal under Section 260A of the Income-tax Act, 1961 challenging the order of the Income Tax Appellate Tribunal dated 30 November 2023 for Assessment Year 2017–18. The proposed question of law was whether the Tribunal had erred in deleting a disallowance of ₹86.52 crore made under Section 80IA(4) by holding that the assessee was a developer of infrastructure facilities and not merely a contractor, thereby being eligible for deduction under the said provision.
Read SC Judgment: SC Dismisses Tax Appeal as Developer Status Under Section 80IA Already Settled
Both parties submitted that the issue was no longer res integra, as an identical question had already been decided by the same Court in Tax Appeal No. 786 of 2023 for Assessment Year 2008–09, decided on 19 December 2023. In that case, the Court had dismissed the Revenue’s appeal after examining the very same Tribunal order that was impugned in the present appeal.
The Court noted that, in the earlier decision, it had considered the scope of Section 80IA(4) and the Explanation inserted below Section 80IA(13) by the Finance Act, 2007 and amended by the Finance (No.2) Act, 2009 with retrospective effect from 1 April 2000. The Explanation clarifies that deduction under Section 80IA(4) is not available where the business is in the nature of a works contract awarded by any person, including the Government. The Court observed that the Explanation bars deduction only for enterprises executing works contracts and does not apply to entities acting as developers of infrastructure facilities.
