M/s. SPIC Jel Engineering Vs ACIT (Madras High Court)
CIT (A) had gone through the agreement and the drawings, which were enclosed as annexures and found that the nature of work carried on by the assessee, as a sub-contractor, for the refinery shut down clearly comes within the scope of foreign project, more specifically, assembly or installation of any machinery or plant outside India i.e. within the definition of the expression ‘foreign project’ as defined under Sub-Section (2)(b)(ii) of Section 80HHB of the Act. Accordingly, the appeal filed by the assessee was allowed.
Bearing in mind the above legal principle, if we examine the nature of work done by the assessee in the foreign country, we fully subscribe to the factual finding recorded by the CIT (A) after going through the terms and conditions of the agreement and the drawings, etc. The Tribunal lost sight of the most important factor pointed out by the assessee before the CIT (A) that the term ‘shut down’ does not denote repairs and maintenance and that it is a technical term, which is peculiar to the industry in question. Therefore, if the Tribunal had to come to a different conclusion, it should have re-appreciated the factual position and then rendered a finding, which it has failed to do so. Rather, the Tribunal sought to adopt a very narrow approach by referring to the dictionary meaning of the words ‘assembly’ and ‘installation’.
It has to be borne in mind that Section 80HHC of the Act is a provision, which grants incentive to the assessee for growth and development and as held by the Hon’ble Supreme Court in several decisions, such provision should be liberally construed, as it will promote economic growth of the country.
