This alert summarizes a recent ruling of the Larger Bench (LB) of the Mumbai Income Tax Appellate Tribunal (ITAT) [2009-TIOL-692-ITAT-MUM-LB] in the case of M/s B.T. Patil & Sons Belgaum Construction Pvt. Ltd.(Taxpayer) Vs. ACIT. Due to contradictory views expressed by the two-member bench of the ITAT, an LB was constituted to examine the issue of whether the Taxpayer, who is engaged in executing construction contracts for and on behalf of the Government/statutory bodies, is eligible for tax holiday under the Indian Tax Law (ITL).
The LB held that the Taxpayer was a mere contractor/executor of the construction activity on behalf of the Government/statutory bodies and not a developer of infrastructure facility. The LB concluded that the Taxpayer did not satisfy the eligibility conditions, as stipulated under the relevant provisions of the ITL, for claiming tax holiday with respect to the construction activity undertaken by it and, was therefore, not eligible for tax holiday. The LB also concluded that a taxpayer who does not undertake development of the entire facility but develops only part of it, would not be entitled to tax holiday benefits.
Background
The ITL provides for tax holiday benefits in respect of any profits and gains derived from any business of an industrial undertaking or enterprise engaged in developing and operating infrastructure facility.
