Case Law Details
IN THE INCOME TAX APPELLATE TRIBUNAL
PUNE BENCH “A” PUNE
ITA Nos. 766/PN/09, 254/PN/08, 431/PN/07 & 435/PN/07 (A. Y. 2006-07, 2005-06, 2003-04, 2004-05)
Laxmi Civil Engg. .P. Ltd. Vs Addl/ CIT Range-2 Kolhapur
ORDER
Per D. Karunakara Rao, AM:
There are four appeals under consideration and the issue for adjudication is one and the same. At the very outset, the learned counsel for the assessee mentioned that the issue under consideration has to be decided in accordance with the modified ground raised by the assessee. The said modified ground which is common in all appeals read as under:-
“1) On the facts and in the circumstance of the case and in law the Ld. Authorities below were not justified in rejecting the claim of deduction of the appellant Company u/s 80-IA holding that the appellant was a contractor and also holding that all the three conditions embodied in S.80-IA(4)(i) were required to be simultaneously fulfilled when Hon ’ble Bombay High Court in its subsequent judgment pronounced on 15.02.2010 in the case of ABC Heavy Engg. Ltd. (Supra) held that the amended provisions effective from 01.04.2002 the parliament did not intend that such conditions should be simultaneously fulfilled. It is also held that the third condition also was required to be harmoniously construed. Since the Ld. C.I.T. (A) held that the appellate company has fulfilled first two condition and failed to fulfill the third condition for denial of deduction u/s 80-IA of the Act, it was not according to jurisdictional High Court Judgment (supra) and therefore, deduction be allowed to the appellant company”
“22. The submission which was urged on behalf of the Revenue is that Clause (iii) of sub-section (4A) of section 80-IA, one of the conditions imposed was that the enterprise must start operating and maintaining the infrastructure facility on or after 1st April, 1995. The same requirement is embodied in sub-clause (1) of sub-clause (4) of the amended provisions. It was urged that since the assessee was not operating and maintaining the facility, he did not fulfill the condition. The submission is fallacious both in fact and in law.”
That the assessee was maintaining the facility is not in dispute. The facility was commenced after 1st April, 1995. Therefore, the requirement was met in fact. Moreover, as a matter of law, what the condition essentially means is that the infrastructure facility should have been operational after 1st April, 1995. After Section 80 IA was amended by the Finance Act, 2001, the section applies to an enterprise carrying on the business of (i) developing; or (ii) operating and maintaining; or (iii) developing, operating and maintaining any infrastructure facility which fulfills certain conditions. Those conditions are (1) ownership of the enterprises by a company registered in India or by a consortiums; (II) an agreement with the central or State Government, local authority or statutory body; and (iii) The Start of operation and maintenance of the infrastructure facility should commence after 1st April, 1995. The requirement that operation and maintenance of the infrastructure facility should commence after 1st April, 1995 has to be harmoniously construed with the main provision under which deduction is available to an assessee who develops or operates and maintains, or develops, operates and maintains an infrastructure facility”.
A harmonious reading of the provisions in its entirity would lead to the conclusion that the deduction is available to an enterprise which (i) develops; or operates and maintains; or (iii) develops, maintain and operates that infrastructure facility. However, the commencement of the operation and maintenance of the infrastructure facility should be after 1st April, 1995. In the present case the assessee clearly fulfilled this condition”.
Before the amendment that was brought about by parliament by Finance Act, 2001 we have already noted that the consistent line of circulars of the Board postulated the same position. The amendment made by Parliament to S.80-IA (4) of the Act, set the matter beyond any controversy by stipulating that the three conditions for development, operation and maintenance were not intended to be cumulative in nature”.
6. The above judgment of the Hon’ble High Court is delivered in the case of ABG Heavy Engg Ltd (supra), who is a contractor for the JNP Trust and that contractor, assessee is found to be an eligible developer for making claim of deduction u/s section 80IA (4) of the Act. From the above, it is evident that the person who only develops the infrastructure do not have the occasion to operate and maintain the infrastructure. It is further evident that the harmonious reading is necessary and mandatory in view of High Court’s judgment in the case of an enterprise carrying on business or developing which is the case of the assessee, all the conditions referred to clause (i) of section 80IA (4) should refer to the conditions as applicable to the developer. In other words, the developer who is only developing the infrastructure facilities since he does not operate and maintain Infrastructural facilities, cannot be expected to fulfill the condition at sub-clause (c) which is an impossibility and the requirements to fulfill the said condition shall amount to absurdity and therefore uncalled for. Therefore, we find requirement of harmonious reading of sub-clause (c) vis-à-vis of clause (i) of section 80IA (4) of the Act. Thus, the discussion in High Court’s decision in paragraph-22 extracted above, is directly applicable to the facts of the case and eventually is entitled for the deduction under section 80IA (4) of the Act. Accordingly, the modified ground, which is common in all the four appeals is allowed in favor of the assessee.
7. In the result, all four appeals of the assessee are allowed. Order was pronouncement in the Court on 08.6.2011.
Dated: 08.6.2011
