DCIT Vs Gulermak TPL Joint Venture (ITAT Mumbai)
No deduction u/s 80IA in absence of agreement with Central Government/ State Government / Local Authority/Statutory Authority
Conclusion: Assessee-contractors were involved only in the execution of infrastructure projects which did not qualify for deduction under Section 80IA. The deduction was available to entities involved in developing, operating, and maintaining the infrastructure. Assessee did not fulfil the condition that the agreement had to be with Central Government/ State Government / Local Authority/Statutory Authority as LMRCL, did not fit in any of them.
Held: Assessee was an un-incorporated association formed between the companies M/s. Tata project Ltd. (TPL) and Gulermak Agir Sanayi Insaat Ve Taahhut Sirketi (Fulermak). Assessee had been awarded a contract with Lucknow Metro Rail Corporation Ltd. (LMRCL), for the purpose of design and construction of tunnel from start of underground ramp (near Charbagh metro station) including three underground metro stations with architectural finisheds, erection & maintenance, tunnel ventilation system, environment control system etc. on North-South Corridor of Lucknow MRTS (Mass Rapid Transit System) Phase 1 A project at Lucknow, Uttar Pradesh, India. Assessee entered into a contract agreement with LMRCL. During the course of scrutiny assessment proceedings, assessee was asked to justify that its business was an eligible business in terms of Section 80IA against which deduction had been claimed. Assessee was specifically asked to justify its claim as the agreement had to be with (a) Central Government (b) State Government (c) Local Authority or (d) Statutory Authority and LMRCL did not fit in any of the four categories. Assessee filed detailed reply justifying its claim of deduction u/s 80IA which did not find any favour with the AO who denied the claim of the deduction which was confirmed by CIT (A). It was held that assessee did not fulfil the condition that the agreement had to be with Central Government/ State Government / Local Authority/Statutory Authority as LMRCL, did not fit in any of them. It could be seen from the record that LMRCL was incorporated on 25/11/2013 under the Companies’ Act, 1956 as a special purpose vehicle between the Central and State Government with equity share of 50:50, therefore, it could not be regarded as Central Government or State Government, nor did it fall under the definition of local authority statutory. Assessee was not involved in developing, operating, and maintaining the infrastructure facility, and the agreement was not with the Central Government, State Government, Local Authority, or Statutory Authority. It was trite law that for claiming deduction u/s 80IA(4), all conditions had to be fulfilled cumulatively. Therefore, the claim of deduction u/s 80IA was not allowable.
