The Income Tax Appellate Tribunal (ITAT), Kolkata Bench allowed the deduction under section 80IA to a developer paid by Government.
The assessee company, M/s Simplex Infrastructures Ltd. has claimed deduction under section 80IA(4) of the Act for the profit from development of infrastructure projects amounting to Rs. 27,31,67,167/-.
According to AO since the assessee has been executing the business of civil construction in the nature of works contract awarded by the State Government / Central Government, the assessee is not entitled to claim deduction under section 80IA of Rs.27,31,67,167/- which is in respect under-takings which earns profit on developing from infrastructure facility.
The coram consists of J.S. Reddy and A. T. Varkey noted that in a development contract, responsibility is fully assigned to the developer for execution and completion of work. It is evident that the assessee, vide the agreements, has clearly demonstrated the various risks undertaken by it. In all the agreements, relevant portions of which are reproduced supra, the assessee has undertaken huge risks in terms of deployment of technical personnel, plant and machinery, technical knowhow, expertise and financial resources.
Therefore, the ITAT held that undoubtedly entering into lawful agreements and thereby becoming a contractor should, in no way, be a bar to the one being a developer since the role of a developer is larger than that of a contractor. The assessee, who is engaged in developing the infrastructural facility, is rightfully entitled to the benefits of deduction under section 80IA(4) of the Act.
“We note that the assessee was even assessed VAT on the aforesaid projects. [VAT Returns are found enclosed at pages 792 to 798 and VAT Audit Report is enclosed is found placed at pages 799 to 802 of the paper book]. Further we note that in the earlier assessment years, the assessee’s claim for deduction u/s 80IA(4) of the Act has been allowed,” the ITAT said.
The assessee company, M/s Simplex Infrastructures Ltd. has claimed deduction under section 80IA(4) of the Act for the profit from development of infrastructure projects amounting to Rs. 27,31,67,167/-.
According to AO since the assessee has been executing the business of civil construction in the nature of works contract awarded by the State Government / Central Government, the assessee is not entitled to claim deduction under section 80IA of Rs.27,31,67,167/- which is in respect under-takings which earns profit on developing from infrastructure facility.
The coram consists of J.S. Reddy and A. T. Varkey noted that in a development contract, responsibility is fully assigned to the developer for execution and completion of work. It is evident that the assessee, vide the agreements, has clearly demonstrated the various risks undertaken by it. In all the agreements, relevant portions of which are reproduced supra, the assessee has undertaken huge risks in terms of deployment of technical personnel, plant and machinery, technical knowhow, expertise and financial resources.
Therefore, the ITAT held that undoubtedly entering into lawful agreements and thereby becoming a contractor should, in no way, be a bar to the one being a developer since the role of a developer is larger than that of a contractor. The assessee, who is engaged in developing the infrastructural facility, is rightfully entitled to the benefits of deduction under section 80IA(4) of the Act.
“We note that the assessee was even assessed VAT on the aforesaid projects. [VAT Returns are found enclosed at pages 792 to 798 and VAT Audit Report is enclosed is found placed at pages 799 to 802 of the paper book]. Further we note that in the earlier assessment years, the assessee’s claim for deduction u/s 80IA(4) of the Act has been allowed,” the ITAT said.
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