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2024 Supreme(Online)(ITAT) 2456
INCOME TAX APPELLATE TRIBUNAL (AHMEDABAD BENCH)
Shri Ramit Kochar, ACJ, Ms. Madhumita Roy, J
Revenue – Appellant
Versus
Ajay Protech Private Limited – Respondent
ITA No.2118/Ahd/2013 | ITA No.2302/Ahd/2014 | ITA No.2303/Ahd/2014 | ITA No.1231/Ahd/2016 | ITA No.1621/Ahd/2017 | ITA No.1650/Ahd/2017
For the Appellants/Petitioners: Sh. S.N. Soparkar
For the Respondents: Mr. Chetram Meena
The distinction between a developer and contractor under Section 80IA(4) is essential for tax deductions, with developers undertaking significant risks that contractors do not.
Headnote:(A) Income Tax Act, 1961 - Section 80IA(4) - Deduction claims by Civil Construction Companies - Assessee's applications for deductions under Section 80IA(4) were denied by the Assessing Officer, stating they functioned merely as contractors. The CIT(A) overturned the AO’s decision, allowing deductions, reasoning that infrastructure projects were being developed, not merely executed as contracts. The court distinguished between roles of contractors and developers, emphasizing the necessity for in-depth project analysis for tax qualification. Appeals by the Revenue contesting the CIT(A)'s rulings were permitted for statistical scrutiny. (Paras 7.1, 7.5, 24)
(B) Developer vs. Contractor - The terms 'developer' and 'contractor' are elaborated upon, drawing a clear line between responsibilities in project execution. The judgement emphasizes that mere execution lacks the entrepreneurial risks required for developer classification. (Paras 13.1, 13.2)
(C) Procedural Compliance - The necessity of adherence to documentation and statutory requirements under Income Tax Rules is outlined as crucial for claim eligibility. (Paras 7.2, 7.3)
ORDER
ITA No. 1650/Ahd/2017 Ajay Protech Private Limited AY:2014-15
PER BENCH:
These five appeals bearing ITA Nos. 2118/Ahd/2013, 2302/Ahd/2014, 2303/Ahd/2014 ,1231/Ahd/2016 & 1621/Ahd/2017 for assessment years : 2009- 10, 2010-11, 2011-12 , 2013-14 and 2014-15 respectively are filed by the Revenue before Income Tax Appellate Tribunal, Ahmedabad Bench, Ahmedabad , wherein Respondent is Ajay Engineering Infrastructure Private Limited, and appeal in ITA no. 1650/Ahd/2017 is filed by Revenue for assessment year 2014-15 wherein the Respondent is Ajay Protech Private Limited .
2. First, we shall take up appeal of Revenue in ITA no. 2118/Ahd/2013 for assessment year 2009-10 w.r.t. the assessee namely Ajay Engineering Infrastructe Private Limited , which appeal has arisen from the appellate order dated 16.05.2013 passed by the learned Commissioner of Income-tax (Appeals), Ahmedabad (hereinafter called “the CIT(A)”) in Appeal No. CIT(A)/GNR/ 318/2011-12 for the assessment year 2009-10 , which in turn has arisen from the assessment order dated 30.12.2011 passed by learned Assessing Officer(hereinafter called “the AO”) u/s 143(3) of the Income-tax Act,1961(hereinafter called “the Act”). 3. The Revenue has raised following grounds of appeal in Memo of Appeal filed with Income Tax Appellate Tribunal, Ahmedabad Bench, Ahmedabad in ITA No. 2118/Ahd/2013 for assessment year 2009-10 , which reads as under:-
“1. The learned CIT(Appeals) has erred in law and on facts in deleting the disallowance of deduction made by the AO of Rs. 1,76,30,304/- u/s. 80IA(4)(i) of the Act.
2. On the facts and circumstances of the case the ld. CIT(A) ought to have upheld the order of the Assessing Officer.
It is therefore prayed that the order of the learned CIT(Appeals) may be set aside and that of the A.O. be restored to the above extent. ”
ITA No. 1650/Ahd/2017 Ajay Protech Private Limited AY:2014-15
4. The brief facts of the case are that the assessee is engaged in the business of Civil Construction. The assessee filed return of income electronically on 30.09.2009 declaring income of Rs. 35,90,260/- . The assessee has claimed deduction under Section 80IA (4) of the Act , to the tune of Rs. 1,87,70,901/-. The case of the assessee was selected by Revenue for framing scrutiny assessment u/s 143(3) read with Section 143 (2) of the 1961 Act. The AO has claimed to have issued and served statutory notices to the assessee u/s 143(2) and 142(1) of the 1961 Act. The assessee was asked by the AO to explain as to fulfillment of different conditions for eligibility of the claim of deduction under Section 80IA (4) of the Act. The assessee submitted that it has carried out the business as developer for the infrastructure activity as mentioned in Section 80IA (4) of the Act and the assessee has not undertaken work contract as Contractor. The assessee drew attention of the AO to the terms and conditions of the agreement entered into by the assessee with the various Central / State Government authorities wherein various aspects of technical skill, human resources, financial resources, risk factors, designing various technical projects, introduction of additional finance, high managerial efficiencies etc., is utilized in carrying out the development activities in the form of various projects such as roads, bridges, Water Pipeline Resources etc. The assessee drew attention of the AO to the provisions of Section 80IA (4) of the Act. The assessee also drew attention of the AO to the CBDT Circular No. 717 dt. 14.08.1995 reported in 215 ITR (ST) 70, 91, which reads as under:-
"Five Year tax holiday for infrastructure development."
34.2: Industrial modernizing requires the massive explanation of and quantitative improvement in infrastructure. Our country is very deficient in infrastructure such as express ways, highways, Air ports and Ports and rapid urban rural Transport system. Additional resources are noted to fulfill the requirements of the country within a reasonable time frame.
