A Contractor is eligible for deduction u/s 80-IA(4) for only operating the infrastructure facility


Laxmi Civil Engineering Pvt Ltd vs. ACIT -ITAT Pune


(i) whether the word contractor is synonymous with developer within the meaning of s. 80-IA(4)(i) and

(ii) whether the condition in clause (c) is applicable to a developer who is not carrying on the business of operating and maintaining the infrastructural facilities

Relying on the judgement of the Larger Bench in B. T. Patil & Sons 126 TTJ 577 (Mum), the assessee™s claim for deduction u/s 80-IA(4) was denied by the Tribunal on the ground that the assessee was only a contractor and had not complied with all the conditions specified in sub-clauses (a), (b) & (c) of clause (i) of s. 80-IA(4). The order was recalled pursuant to the assessee™s MA claiming that the judgement of the Bombay High Court in ABG Heavy Industries Ltd 322 ITR 323 covered the issue in its favour. The issues were decided afresh and it was held that

The above issues are covered by the judgement in ABG Heavy Industries 322 ITR 323 (Bom). wherein it was held that the department™s contention that since the assessee was not operating and maintaining the facility, he was not eligible for s. 80-IA(4) deduction was wrong because a harmonious reading of s. 80-IA(4) led to the conclusion that the deduction was available to an assessee who (i) develops or (ii) operates and maintains or (iii) develops, operates and maintains the infrastructure facility. The 2001 amendment made it clear that the three conditions of development, operation and maintenance were not intended to be cumulative in nature. A developer who is only developing the infrastructure facility cannot be expected to fulfill the condition in sub-clause (c) which is an impossibility and requiring it to be fulfilled will be an absurdity. The result is that even a contractor whomerely develops but does not operate or maintain the infrastructure facility is eligible for s. 80-IA(4) deduction


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