While considering a bunch of appeals filed by the assessee, the Ahmedabad bench of Income Tax Appellant Tribunal, comprising Ms Annapurna Gupta, Accountant Member and Shri Mahavir Prasad, Judicial Member has held that the business of infrastructure development comes under the definition of developer and allowed the deduction claimed u/s 80IA (4) of Income Tax Act,1961.
The appellant is engaged in the business of Infrastructure Development and filed its return of income declaring a total income of Rs. 5,18,334/- which was processed under Section 143(1)(a) of the Act followed by a scrutiny proceeding. The assessee claimed deduction under Section 80IA(4)(i) of the Act of Rs. 48,19,950/- arising out of engagement in the development of roads for the year under consideration. The AO found the claim of the assessee as not allowable and the assessment was completed with the addition of Rs. 48,19,650/- which was confirmed by the First Appellate Authority.
The appellant contended that he had executed construction and development work of roads by entering into agreements with State Local Authorities and with other statutory authorities and has fulfilled all the conditions as mentioned under the provisions of Section 80IA (4). He further submitted that the expression ‘works contract” has defined as if the activities carried out involve the development of the project, engagement of various agencies, undertaking risk elements, raising own finances and investing its own funds in the construction of the project, then the case of the assessee falls within the meaning of expression “developer”.
It was observed that the tender documents clearly show that the assessee has to arrange their own finances, purchase their own plant & machinery and purchase all materials at their own cost, and deploy qualified personnel for construction and development of infra projects. The assessee claimed depreciation on plant and machinery as it has been used for the development of infrastructure facility projects.
The Tribunal viewed that the tender work under consideration is for the development facility as a whole and the work undertaken by the assessee is the development of the infrastructure facility and is considered as a developer, which entails the assessee to claim benefits under Section 80IA(4) of the Act. Since the assessee has already been granted relief by us under Section 80IA(4) and as the concurred the status of a developer and was entitled to the consequential claim of depreciation on plant and machinery to the tune of Rs. 31,78,286/-.
All the appeals filed by the assessee were allowed. The assessee was represented by Shri Mehul K. Patel and the revenue was represented by Shri R. R. Makwana.
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