Sec. 80-IA relief can’t be denied just because assessee was referred to as contractor

Case Details: Akash Infra Projects (P.) Ltd. v. ITO - [2022] 141 taxmann.com 516 (Ahmedabad-Trib.)

Judiciary and Counsel Details

• • Waseem Ahmed, Accountant Member & Ms Madhumita Roy, Judicial Member
  • Mehul K. Patel, A.R. for the Appellant.
  • R.R. Makwana, Sr. DR for the Respondent.

Facts of the Case

Assessee-company, engaged in the business of Infrastructure Development, claimed deduction under section 80-IA in respect of income arising out of contract for development of roads.

Assessing Officer disallowed the assessee’s claim under section 80-IA, which was in turn confirmed by First Appellate Authority by treating the assessee-company as a ‘Contractor’ and not a ‘Developer’.

ITAT Held

On further appeal, the Tribunal held that the contractors might not be eligible for the deduction under section 80-IA as they are not developing any infrastructure facility but only providing assistance to the actual developer.

To ascertain whether civil construction work is assigned on a development basis or on a contract basis only, the agreement’s terms and conditions must be considered. Only on the basis of the terms and conditions and the scope, ambit and nature of the contract assigned, it could be ascertained whether it is a “work contract” or a “development contract”.

On examining the tender document, the Tribunal noted that the assessee had been entrusted with the work of development of infrastructure facilities. Merely because assessee was referred to as contractor in the agreement, it did not detract assessee from the position of being a developer, nor will deprive it from claiming deduction under section 80-IA.

List of Cases Reviewed

• • TRG Industries (P.) Ltd. v. Dy. CIT [2013] 35 taxmann.com 253/59 SOT 64 (Asr. – Trib.) (para 24) followed.
  • Katira Construction Ltd. v. Union of India [2013] 31 taxmann.com 250/214 Taxman 599/352 ITR 513 (Guj.) (para 26) distinguished.

List of Cases Referred to

• • Patel Infrastructure (P.) Ltd. v. DCIT [IT Appeal No. 627 (Ahd.) of 2014, dated 30-7-2020] (para 4)
  • Katira Construction Ltd. v. ACIT [2020] 119 taxmann.com 489/185 ITD 173 (Rajkot – Trib.) (para 4)
  • Sugam Construction (P.) Ltd. v. ITO [2013] 30 taxmann.com 331/56 SOT 45 (Ahd. – Trib.) (URO) (para 4)
  • Bhinmal Contractor Property & Land Developers (P.) Ltd. v. Asstt. CIT/Dy. CIT [2018] 93 taxmann.com 296/170 ITD 599 (Mum.) (para 4)
  • Rohan & Rajdeep Infrastructure v. Asstt. CIT [2013] 40 taxmann.com 130/61 SOT 9 (Pune – Trib.) (URO) (para 4)
  • CIT v. ABG Heavy Industries Ltd. [2010] 189 Taxman 54/322 ITR 323 (Bom.) (para 4)
  • Koya & Co. Construction (P.) Ltd. v. Asstt. CIT [2012] 21 taxmann.com 35/51 SOT 203 (Hyd.) (URO) (para 4)
  • GVPR Engineers Ltd. v. Asstt. CIT [2012] 21 taxmann.com 25/51 SOT 207 (Hyd.) (URO) (para 4)
  • B.T. Patil & Sons Belgaum Construction (P.) Ltd. v. Asstt. CIT [2013] 34 taxmann.com 97/59 SOT 61 (Pune – Trib.) (para 4)
  • CIT v. Radhe Developers [2012] 17 taxmann.com 156/204 Taxman 543/341 ITR 403 (Guj.) (para 4)
  • Rajkamal Builders Infrastructure (P.) Ltd. v. DCIT [IT Appeal No. 118 (Ahd.) of 2009, dated 13-5-2022] (para 29).