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2025 Supreme(Online)(ITAT) 2791
INCOME TAX APPELLATE TRIBUNAL (HYDERABAD BENCH)
LALIET KUMAR, J
Joint Venture (JV) – Appellant
Versus
Commissioner of Income Tax (Appeals) – 6, Hyderabad – Respondent
ITA Nos.212 to 214/Hyd/2019
For the Appellants/Petitioners: Shri A. Srinivas, C.A.
For the Respondents: Shri Srinath Sadanala, Sr.DR
A developer qualifying for deduction under section 80IA must assume comprehensive financial and operational responsibilities beyond mere contracting, integrating design and maintenance roles.
Headnote:(A) Income Tax Act, 1961 - Section 80IA - Deduction - Assessee claimed deduction under section 80IA for developing infrastructure projects but was denied by the Assessing Officer due to not executed as a developer on BOT basis. The Tribunal emphasized the need for a broader interpretation of 'developer' roles including financial risks, responsibilities, and functions inherent in infrastructure projects - Deduction allowed. (Paras 26-28)
(B) Distinction between 'developer' and 'contractor' - A developer assumes significant financial and operational risks including design, construction, maintenance, and liability, unlike a simple contractor who executes tasks based on government funding. (Paras 16-20)
(C) Jurisdiction for deduction requirements under section 80IA must be met, including agreements with statutory bodies; however, the nature of contracts and active involvement fulfills eligibility despite the structure of contracts. (Paras 11-15)
Facts of the case:
The assessee, a JV for government irrigation projects, originally claimed deduction under section 80IA for AYs 2006-07, 2007-08, 2008-09, following disallowance by the Authority for revenue and failure to prove development versus contracting tasks.
Findings of Court:
The court found the assessee has engaged comprehensively in infrastructural facilities beyond mere contracting, warranting the deduction under section 80IA.
Issues: The critical issues were whether the assessee acted as a developer qualifying for deductions under section 80IA and the interpretation of roles in developmental contracts.
Ratio Decidendi: The court held that to qualify as a 'developer,' the enterprise must take entrepreneurial risks and have active project management roles beyond simple construction tasks, validating deduction claims under section 80IA.
Result: Appeals allowed.
| Table of Content |
|---|
| 1. identifying the factual background of the case. (Para 1 , 4 , 5) |
| 2. articulating the parties’ arguments regarding eligibility for deduction under section 80ia. (Para 2 , 3 , 6 , 7 , 8 , 9 , 10 , 11) |
| 3. court's analysis on the necessity of direct agreement with the government for claiming deductions. (Para 12 , 13 , 16) |
| 4. establishing criteria for developer status versus contractor status under section 80ia. (Para 14 , 15 , 17) |
| 5. confirmation of the assessment outcomes and entitlements based on prior legal precedents. (Para 22 , 24 , 25 , 28) |
ORDER
PER LALIET KUMAR, J.M :
These appeals filed by the assessee are directed against the separate orders of Commissioner of Income Tax (Appeals) – 6, Hyderabad dated 19.11.2018 for A.Y. 2006-07 20 2008-09. Since facts are identical and issues are common, for the sake of convenience, all the appeals filed by the assessee are being disposed of, by this consolidated order, by taking ITA No.212/Hyd/2019 for A.Y. 2006-07 as lead appeal.
2. The grounds of appeal filed by the assessee in ITA No.212/Hyd/2019 read as under :
“1. The order of the Appellate Commissioner is contrary to law, facts and circumstances of the case.
2. The Appellate Commissioner ought not to have confirmed the disallowance of the deduction u/s.801A of Rs.29,06,918/- made by the A.O.
3. The Appellate Commissioner ought to have seen that the Appellant has developed infrastructure facilities by constructing the infrastructure and was not a works contractor for the government.”
3. Thereafter, assessee has filed additional grounds which read as under :
“1. The Assessing Officer ought not to have assumed jurisdiction u/s 153C of the Income Tax Act, 1961 , without properly recording the reasons for assuming the jurisdiction.
2. The Assessing Officer ought not to have assumed jurisdiction u/s 153C, without properly recording the satisfaction note for such assumption.”
4. Facts of the case, in brief, are that assessee is a Joint Venture (JV), comprised of (i) M/s. SABIR Dam & Water Works Constructions Company, Tehran, Iran ("SABIR" for short), (ii) M/s SEW Constructions Limited, Hyderabad ("SEW" for short) and (iii) M/s. Prasad & Company (Project Works) Limited, Hyderabad ("PRASAD" for short) engaged in the business of ’contract works’ and assessed to tax in the status of an AOP. The assessee AOP filed its original return of income on 31.10.2006 declaring NIL income after claiming deduction of Rs.59,82,198/- u/s 80IA of the Act. Subsequently, a search and seizure operation u/s. 132 of the Act was conducted in the group cases of M/s SEW Constructions Limited and M/s. Prasad & Company (Project Works) Limited on 06.11.2007. Consequent to search action, the AO issued a notice u/s. 153C of the Act to the assessee on 17.10.2008. In response to the same, assessee filed its return of income for the AY 2006-07 on 28.10.2009 declaring nil income after claiming deduction u/s. 80IA of the Act to the extent of Rs. 29,06,918/-. The assessment u/s 143(3) r.w.s. 153C for AY 2006-07 was completed on 31.12.2009, disallowing the assessee’s claim u/s 80IA. The CIT(A) upheld the disallowance on 30.03.2010. On further appeal, the ITA T, vide order dated 19.08.2013 in ITA No. 963/Hyd/2010, remitted the issue to the AO for fresh examination in light of the decision in M/s Ramky Infrastructure Ltd. Accordingly, notice u/s 143(2) r.w.s. 254 was issued on 03.10.2024 requiring the assessee to attend the office on 14.11.2014 and furnished documents and other evidence in support of its return. Assessee furnished its submissions on 23.01.2015. After verification of documents and submissions filed by the assessee, Assessing Officer opined that assessee has not developed any infrastructure facility and hence, not eligible for deduction claimed u/s 80IA of the Act. Accordingly, the Assessing Officer the determined the total income of the assessee at Rs. 29,06,918/- by disallowing the assessee’s claim of deduction u/s.80IA(4) of the Act.
5. Feeling aggr
