In a significant ruling the Gujarat High Court observed that the deduction under Section 80IA(4) of the Income Tax Act, 1961 is available to a company engaged in developing infrastructure projects like roads, canals.
The respondent assessee which is a Private Limited Company was engaged in business of construction activity and development of infrastructure and other projects i.e. irrigation canals, road construction. The assessing officer however, disallowed the deduction under Section 80IA (4) of the Income Tax Act on the ground that the assessee is not a developer but as works contractor relying upon the explanation after Subsection 13 of Section 80IA of the Income Tax Act.
There are concurrent findings of fact arrived at by the CIT (Appeal) as well as the Tribunal that the assessee has undertaken the development of infrastructure facility and is eligible to claim the deduction under Section 80IA(4) of the Income Tax Act.
Section 80IA of the Income Tax Act provides for deduction from the gross total income of the assessee which includes any profit and gains derived by an undertaking or an enterprise from any business referred to in Subsection 4 of the Act as eligible business by providing deduction of an amount equal to the 100% of the profit and gains derived from such business for 10 consecutive assessment years.
A Division Bench comprising Justices Bhargav D Karia and Niral R Mehta observed that “Interim payment to the tune of estimated contract value in respect of the development work done for each month after retention and other adjustments were to be made, security deposit was to be paid by the assessee, there was a penalty for delay, procurement of the material was the responsibility of the assessee, procurement of land for camp, for shop, labour camp etc. also the employment of qualified engineers, action and compensation in respect of bad work, defect liability of the accidents to persons in relation to Workman Compensation Act, indemnity insurance of the workmen employed.”
“In view of the above concurrent finding of the facts, we are of the opinion that no question of law, much less any substantial question of law arises from the impugned order of the Tribunal. The appeal therefore being devoid of any merit is accordingly dismissed” the Bench noted.
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