7. In the facts of the present case we find that the assessee undertook work on contract basis. The assessee took contract work of insitu cement lining for water supply project of the Gujarat Water Supply and Sewerage Board (Gujarat Government Undertaking).
8. Vide Finance Act, 2007 an Explanation was inserted with retrospective effect from 1-4-2000 after sub-section (13) of section 80IA, which reads as under:
“For removal of doubts, it is hereby declared that nothing contained in this section shall apply to a person who executes a works contract entered into with the undertaking or enterprise, at the case may be.”
According to the Attorney’s Pocket Dictionary in relation to a corporation or business the term `undertaking’ denotes its whole enterprise and the word `enterprise connotes all the related activities performed either through unified operation or common control by any person or persons for a common business purpose.
9. The mens legis with reference to developer of infrastructure facility can be gathered from the Memorandum explaining the provisions in the Finance Bill, 2007, reported in 289 ITR St. 292 at page 312, which reads as under:-
“Section 80IA, inter alia, provides for a ten-year tax benefit to an enterprise or an undertaking engaged in development of infrastructure facilities, Industrial Parks and Special Economic Zones.
The tax benefit was introduced for the reason that industrial modernization requires a massive expansion of, and qualitative improvement in infrastructure (viz., expressways, highways, airports, ports and repaid urban rail transport systems) which was lacking in our country. The purpose of the tax benefit has all along been for encouraging private sector participation by way of investment in development of the infrastructure sector and not for the persons who merely execute the civil construction work or any other works contract.
Accordingly, it is proposed to clarify that the provisions of section 80IA shall not apply to a person who executes a works contract entered into with the undertaking or enterprise referred to in the said section. This, in a case where a person makes the investment and himself executes the development work, i.e., carries out the civil construction work, he will be eligible for tax benefit under section 80-IA. In contrast to this, a person who enters into a contract with another person (i.e., undertaking or enterprise referred to in section 80IA) for executing works contract, will not be eligible for tax benefit under section 80IA.
This amendment will take retrospective effect from 1st April, 2000 and will accordingly apply in relation to the assessment year 2000-2001 and subsequent years’.
10. It is made abundantly clear that the prescription of section 80IA shall not apply to a person who executes work contracts entered into with an undertaking or enterprise. Thus, in a case where a person who makes investment and himself executes development works and carries out civil works, will be eligible for tax benefit under section 80IA of the Act. In contrast to this, a person who enters into a contract with another person for executing works contract will not be eligible for the tax benefit under section 80IA of the Act.