Case Law Details
Agarwal Joint Venture Vs CIT (ITAT Ahmedabad)
ITAT Ahmedabad held that the assessee is engaged in development of the infrastructure facility and therefore, a developer, which confers right of eligibility to the assessee to claim benefits u/s. 80IA(4) of the Income Tax Act. Mere referring assessee as a contractor in the agreement cannot deprive assessee from claiming deduction u/s. 80IA(4).
Facts- The assessee filed its original return of income on 30.01.2006 declaring NIL income. Further revised return on 19.02.2007 showing NIL income was filed assessment whereof was finalized upon acceptance of the return u/s. 143(3) of the Act dated 10.04.2008 by the AO. Subsequently, re-assessment order u/s. 147 of the Act was passed on 31.03.2009 computing NIL income allowing the deduction u/s. 80IA(4) of the Act amounting to Rs.2,43,70,059/-.
However, PCIT issued a notice dated 01.03.2011 u/s. 263 of the Act opining that the work executed by the appellant was a contract work with the National Highway Authority of India and therefore not be eligible for the tax benefit u/s. 80IA of the Act. Furthermore, ownership of the development project etc. are required to be verified. Apart from that whether the AOP was the owner of the infrastructure facility or not, or that the AOP is in operation and maintaining infrastructure facility or that the AOP had secured operation as well as maintenance contract and the assets had been transferred to the AOP for such purpose or not were to be verified as of the opinion of the PCIT.
Conclusion- It reveals that the tender work under consideration are not for a specific work, rather they are for development facility as a whole. The responsibility is fully assigned to the developer for execution and completion of the work. Various stipulations contained in the Tender documents demonstrate various risks undertaken by the assessee for execution of the project work awarded by the competent authority in terms of financial resources, manpower deployment, both technical and administrative expertise, drawing and designing of the project specifications and getting approval from the competent authority, safety and security of project and human resources, compliances of various statutory rules and laws. Therefore, merely because in the agreement for development of infrastructure facility, the assessee is referred to as contractor or just because some basic specifications are laid down, it does not detract the assessee from the position of being a developer, nor will deprive the assessee from claiming deduction u/s. 80IA(4) of the Act.
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