Case Law Details
AJR Infra and Tolling Limited Vs DCIT (ITAT Mumbai)
The dispute between AJR Infra and Tolling Limited and the Deputy Commissioner of Income Tax (DCIT) reached the Income Tax Appellate Tribunal (ITAT) in Mumbai over the eligibility of AJR Infra to claim deduction under section 80IA of the Income Tax Act. The case revolved around AJR Infra’s contention that it was entitled to the deduction due to its involvement with Special Purpose Vehicles (SPVs) executing infrastructure projects.
AJR Infra, formerly known as M/s Gammon Infrastructure Projects Ltd, provided Project Advisory Services to three SPVs formed for executing projects awarded by the National Highways Authority of India Ltd (NHAI). These SPVs were Mumbai Nasik Expressway Ltd, Kosi Bridge Infrastructure Company Ltd, and Gorakhpur Infrastructure Company Ltd. AJR Infra claimed deduction under section 80IA for fees received from these SPVs.
However, both the Assessing Officer (AO) and the Commissioner of Income Tax (Appeals) [CIT(A)] rejected AJR Infra’s claim. They determined that AJR Infra was merely a works contractor for the SPVs and not eligible for the deduction under section 80IA.
The ITAT Mumbai concurred with the lower authorities’ decisions, emphasizing that the SPVs were distinct legal entities and not owned by AJR Infra. The tribunal noted that SPVs had entered agreements with NHAI and were executing the projects, while AJR Infra provided advisory services. Additionally, the tribunal highlighted an Explanation in section 80IA, stating that deductions were not available for works contracts executed by entities referred to in the section.
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