M/s. R.K.Gupta Contractor & Engineers Pvt. Ltd.,, Bhopal v. The ACIT, Bhopal

ITA 522/IND/2009 | 2006-2007
Pronouncement Date: 28-07-2010 | Result: Allowed

Appeal Details

RSA Number 52222714 RSA 2009
Assessee PAN CEACT2009W
Bench Indore
Appeal Number ITA 522/IND/2009
Duration Of Justice 8 month(s) 15 day(s)
Appellant M/s. R.K.Gupta Contractor & Engineers Pvt. Ltd.,, Bhopal
Respondent The ACIT, Bhopal
Appeal Type Income Tax Appeal
Pronouncement Date 28-07-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted DB
Tribunal Order Date 28-07-2010
Date Of Final Hearing 04-06-2010
Next Hearing Date 04-06-2010
Assessment Year 2006-2007
Appeal Filed On 13-11-2009
Judgment Text
1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH INDORE BEFORE SHRI JOGINDER SINGH JUDICIAL MEMBER AND SHRI B.R. KAUSHIK ACCOUNTANT MEMBER ITA NO.517/IND/2009 A.YS. 2006-07 ASSTT. COMMISSIONER OF INCOME TAX 3(1) BHOPAL APPELLANT VS M/S R.K. GUPTA CONTRACTORS & ENGINEERS PVT. LTD. BHOPAL PAN AACCR-9291-D RESPONDENT ITA NO.522/IND/2009 A.YS. 2006-07 M/S R.K. GUPTA CONTRACTORS & ENGINEERS PVT. LTD. BHOPAL APPELLANT VS ASSTT. COMMISSIONER OF INCOME TAX 3(1) BHOPAL RESPONDENT REVENUE BY : SHRI K.K. SINGH CIT DR ASSESSEE BY : SHRI H.P. VERMA AND SHRI GIRISH AGRAWAL 2 O R D E R PER JOGINDER SINGH JM THESE CROSS-APPEALS ARE BY THE REVENUE AS WELL AS B Y THE ASSESSEE AGAINST THE ORDER OF THE LEARNED CIT(A) DA TED 24 TH JULY 2009. THE REVENUE IN ITS APPEAL HAS RAISED AN ADDITIONAL GROUND (MODIFIED) TO THE EFFECT THAT THAT ON THE FACTS AND IN THE CIRCUM STANCES OF THE CASE THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS ER RED IN ALLOWING DEDUCTION OF RS.98 74 684/- OUT OF TOTAL ADDITION O F RS.1 04 48 674/- MADE BY THE AO U/S 80IA(4) OF THE ACT WHILE IN ACC ORDANCE WITH THE EXPLANATION BELOW SUB-SECTION (13) OF SECTION 80IA DEDUCTION U/S 80IA IS NOT ALLOWABLE TO THE ASSESSEE AS IT HAS EXECUTED ONLY WORK CONTRACTS DURING THE YEAR. 2. DURING HEARING OF THIS APPEAL WE HAVE HEARD SHRI K.K. SINGH LEARNED CIT DR AND SHRI H.P. VERMA ALONG WITH SHRI GIRISH AGRAWAL LD. COUNSEL FOR THE ASSESSEE. AT THE OUTSET MR. K.K. SINGH POINTED OUT THAT THE IMPUGNED ISSUE IS COVERED BY THE DECISION OF TH E TRIBUNAL DATED 2.7.2010 IN THE CASE OF BIORA INFRASTRUCTURE PRIVAT E LIMITED V. ACIT (ITA NO. 373/IND/2009) AND ALSO THE DECISION DATED 7 TH MAY 2010 IN THE CASE OF SCC PROJECTS PRIVATE LIMITED V. ACIT (ITA NO. 12 7/IND/2009). ON THE OTHER HAND THE LD. COUNSEL FOR THE ASSESSEE CONTEN DED THAT ADDITIONAL GROUND CANNOT BE RAISED AT THIS STAGE. AFTER HEARIN G THE RIVAL 3 SUBMISSIONS WE ARE OF THE VIEW THAT THAT SINCE IT IS A PURE QUESTION OF LAW IT CAN BE RAISED AT ANY TIME AND EVEN OTHERWI SE THE TRIBUNAL BEING THE LAST FACT FINDING AUTHORITY NO GRIEVANCE SHOUL D BE CAUSED TO EITHER SIDE. WE THEREFORE ADMIT THE ADDITIONAL GROUND RA ISED BY THE REVENUE FOR HEARING. IN VIEW OF THE SUBMISSIONS MADE ABOVE WE ARE REPRODUCING HEREUNDER THE RELEVANT PORTION OF THE ORDER OF THE TRIBUNAL DATED 2.7.2010 (ITA NO. 373/IND/2009) :- THIS APPEAL IS BY THE ASSESSEE AGAINST THE ORDER OF THE LEARNED CIT(A)-II INDORE DATED 19.5.2009 ON THE FOLLOWING GROUND: 1. THAT THE LD. CIT(A) ERRED IN LAW AND FACTS OF TH E CASE IN CONFIRMED THE DISALLOWANCE MADE BY ASSESSING OFFICE R ON ACCOUNT OF DEDUCTION CLAIMED U/S 80IA OF RS.10 29 3 42/- WITHOUT CONSIDERING THE FULL FACTS AND REASONING. THE DISAL LOWANCE MADE AND CONFIRMED BY LD. CIT(A) THEREFORE IS TOTALLY WR ONG AND ILLEGAL ON THE FACTS OF THE CASE. 2. DURING THE HEARING OF THIS APPEAL THE LD. SR. D R SHRI P.K. MITRA POINTED OUT THAT THE IMPUGNED ISSUE IS C OVERED AGAINST THE ASSESSEE BY THE ORDER OF THIS VERY BENC H DATED 7 TH MAY 2010 IN THE CASE OF SCC PROJECTS PRIVATE LTD ( ITA NO.127/IND/2009). THIS FACTUAL MATRIX WAS NOT CONTR OVERTED BY THE LD. COUNSEL FOR THE ASSESSEE. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF LD. REPRESENTATIVES OF BOTH SIDES AND PERUSED THE MATER IAL AVAILABLE ON RECORD. IN VIEW OF THE AFORESAID FACTS AND ASSER TION OF THE LD. RESPECTIVE COUNSEL THE RELEVANT PORTION OF THE AFO RESAID ORDER IS REPRODUCED HEREUNDER: - THIS APPEAL IS BY THE ASSESSEE AGAINST THE ORDER O F THE LEARNED CIT(A)-I INDORE DATED 12.1.2009 ON THE GROUND THA T LD. FIRST APPELLATE AUTHORITY ERRED IN LAW AND ON FACTS IN CO NFIRMING THE DISALLOWANCE MADE U/S 80IA AT RS.60 60 548/- WITHOU T CONSIDERING THE FULL FACTS AND THE LEGAL POSITION. DURING HEARING OF THIS APPEAL WE HAVE HEARD SHRI C.P.RAWKA LD. C OUNSEL FOR THE ASSESSEE AND SHRI K.K. SINGH LEARNED CIT DR. A T THE OUTSET THE LEARNED CIT DR CONTENDED THAT IN VIEW OF THE AM ENDMENT MADE IN THE STATUTE THE ISSUE IS TO BE DECIDED AGA INST THE ASSESSEE THEREFORE THERE IS NO INFIRMITY IN THE S TAND OF THE LEARNED CIT(A). ON THE OTHER HAND THE LD. COUNSEL FOR THE ASSESSEE DID NOT CONTROVERT THE ASSERTION OF THE LE ARNED CIT DR. 4 2. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF LD. REPRESENTATIVES OF BOTH SIDES AND PERUSED THE MATER IAL AVAILABLE ON RECORD. BRIEF FACTS ARE THAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY ENGAGED IN THE ACTIVITY OF CONSTRUCTION AT VARIOUS SITES IN MADHYA PRADESH DECLARED NIL INCOME IN ITS RETUR N FILED ON 13.10.2005 WHICH WAS PROCESSED U/S 143(1) ON 15.6.2 006 AND A REFUND OF RS.21 12 117/- WAS ISSUED ON 28.8.2006. THE CASE WAS SELECTED FOR SCRUTINY THEREFORE STATUTORY NOTICE U/S 143(2) WAS SERVED UPON THE ASSESSEE TO WHICH THE ASSESSEE MADE COMPLIANCE AND ALSO FILED WRITTEN SUBMISSIONS. THE ASSESSEE CL AIMED RELIEF OF RS. 65 24 994/- U/S 80IA OF THE ACT. THE ASSESSMENT WAS COMPLETED ON A TOTAL INCOME OF RS.87 74 994/-. THE ASSESSMENT ORDER WAS CARRIED IN APPEAL BEFORE THE LEARNED COMM ISSIONER OF INCOME TAX (APPEALS) WHO ALLOWED THE RELIEF ON DISA LLOWANCE OF EXPENSES BUT REJECTED THE CLAIM OF THE ASSESSEE ON THE ISSUE OF CLAIMED RELIEF U/S 80IA. THE RELEVANT FINDING AS D ETAILED IN PARA 2.1.2 OF THE IMPUGNED ORDER ARE REPRODUCED HEREUNDE R :- 2.1.2 I HAVE EXAMINED THE ENTIRE ISSUE. THE DEDUCT ION U/S 80IA IS NO LONGER MEANT FOR CONTRACTORS BE IT THE WORK FOR UPGRADATION OR NEW CONSTRUCTION WORK. THE PROVISIO N IS TO PROVIDE INCENTIVES WHO ARE DEVELOPING MAINTAINING AND OPERATING NEW INFRASTRUCTURAL FACILITIES (INCLUDING ROADS) SUCH AS THE WORK TAKEN BY ANY ENTERPRISE UNDER BOT (BUILT OPERATE & TRANSFER) SCHEME. IN THAT CASE THE FUND IS NOT PRO VIDED BY THE GOVERNMENT OR ITS AGENCIES. RATHER THE REQUIRED FU NDS ARE MET BY THE ENTERPRISE ITSELF AND IN THAT SITUATION THE ENTERPRISE IS AUTHORISED TO CHARGE TOLL TAX WHILE MAINTAINING A ND OPERATING SUCH ROADS UPTO CERTAIN PERIOD (AS PER THE AGREEMEN T WITH THE GOVERNMENT) TO RECOVER ITS COST. THE INCOME EARNED THEREAT IS SUBJECT TO DEDUCTION U/S 80IA FOR SPECIFIED NUMBER OF YEARS. THE OWNERSHIP OVER SUCH PROJECTS ARE THEREAFTER TRANSFE RRED TO THE GOVERNMENT AFTER THE SAID PERIOD. IN ORDER TO MAKE THIS POINT CLEAR IT IS ESSENTIAL TO REPRODUCE THE PROVISIONS OF SECTION 80- IA. BEFORE COMING TO ANY CONCLUSION WE ARE REPRODUCING HEREUNDER SECTION 80-IA(4) OF THE ACT :- 80-IA. 33 [(1) WHERE THE GROSS TOTAL INCOME OF AN ASSESSEE INCLUDES ANY PROFITS AND GAINS DERIVED BY AN UNDERT AKING OR AN ENTERPRISE FROM ANY BUSINESS REFERRED TO IN SUB-SEC TION (4) (SUCH BUSINESS BEING HEREINAFTER REFERRED TO AS THE ELIGI BLE BUSINESS) THERE SHALL IN ACCORDANCE WITH AND SUBJECT TO THE PROVISIONS OF THIS SECTION BE ALLOWED IN COMPUTING THE TOTAL IN COME OF THE ASSESSEE A DEDUCTION OF AN AMOUNT EQUAL TO HUNDRED PER CENT OF THE PROFITS AND GAINS DERIVED FROM SUCH BUSINESS FO R TEN CONSECUTIVE ASSESSMENT YEARS.] 5 XXX XXX XXX (4)] WHICH FULFILS ALL THE FOLLOWING CONDITIONS N AMELY : (I) IT IS NOT FORMED BY SPLITTING UP OR THE RECONS TRUCTION OF A BUSINESS ALREADY IN EXISTENCE : PROVIDED THAT THIS CONDITION SHALL NOT APPLY IN RESPECT OF AN 44 [UNDERTAKING] WHICH IS FORMED AS A RESULT OF THE RE - ESTABLISHMENT RECONSTRUCTION OR REVIVAL BY THE ASS ESSEE OF THE BUSINESS OF ANY SUCH 44 [UNDERTAKING] AS IS REFERRED TO IN SECTION 33B IN THE CIRCUMSTANCES AND WITHIN THE PERIOD SPECIF IED IN THAT SECTION; (II) IT IS NOT FORMED BY THE TRANSFER TO A NEW BUSI NESS OF MACHINERY OR PLANT PREVIOUSLY USED FOR ANY PURPOSE: 45 [ PROVIDED THAT NOTHING CONTAINED IN THIS SUB-SECTION SHALL A PPLY IN THE CASE OF TRANSFER EITHER IN WHOLE OR IN PART OF MACHINERY OR PLANT PREVIOUSLY USED BY A STATE ELECTRICITY BOARD REFERRED TO IN CLAUSE (7) OF SECTION 2 OF THE ELECTRICITY ACT 2003 (36 OF 2003) WHETHER OR NOT SUCH TRANSFER IS IN PURSUANCE OF THE SPLITTING UP OR RECONSTRUCTION OR REORGANISATION OF THE BOARD UNDER PART XIII OF THAT ACT.] EXPLANATION 1.FOR THE PURPOSES OF CLAUSE (II) ANY MACHINERY OR PLANT WHICH WAS USED OUTSIDE INDIA BY ANY PERSON OTHER THAN THE ASSESSEE SHALL NOT BE REGARDED AS MACHINERY OR PLANT PREVIOUSLY USED FOR ANY PURPOSE IF THE FOLLOWING C ONDITIONS ARE FULFILLED NAMELY : (A) SUCH MACHINERY OR PLANT WAS NOT AT ANY TIME PREVIOUS TO THE DATE OF THE INSTALLATION BY THE ASS ESSEE USED IN INDIA; (B) SUCH MACHINERY OR PLANT IS IMPORTED INTO INDIA FROM ANY COUNTRY OUTSIDE INDIA; AND (C) NO DEDUCTION ON ACCOUNT OF DEPRECIATION IN RESPECT OF SUCH MACHINERY OR PLANT HAS BEEN ALLOWED OR IS ALLOWABLE UNDER THE PROVISIONS OF THIS ACT IN COMPU TING THE TOTAL INCOME OF ANY PERSON FOR ANY PERIOD PRIOR TO THE DA TE OF THE INSTALLATION OF MACHINERY OR PLANT BY THE ASSESSEE. EXPLANATION 2.WHERE IN THE CASE OF AN 46 [UNDERTAKING] ANY MACHINERY OR PLANT OR ANY PART THEREOF PREVIOUSLY U SED FOR ANY PURPOSE IS TRANSFERRED TO A NEW BUSINESS AND THE TO TAL VALUE OF THE MACHINERY OR PLANT OR PART SO TRANSFERRED DOES NOT EXCEED TWENTY PER CENT OF THE TOTAL VALUE OF THE MACHINERY OR PLANT USED IN THE BUSINESS THEN FOR THE PURPOSES OF CLAUSE ( II) OF THIS SUB- SECTION THE CONDITION SPECIFIED THEREIN SHALL BE D EEMED TO HAVE BEEN COMPLIED WITH. 6 (4) THIS SECTION APPLIES TO (I) ANY ENTERPRISE CARRYING ON THE BUSINESS 47 [OF (I) DEVELOPING OR (II) OPERATING AND MAINTAINING OR (II I) DEVELOPING OPERATING AND MAINTAINING] ANY INFRASTRUCTURE FACIL ITY WHICH FULFILS ALL THE FOLLOWING CONDITIONS NAMELY : (A) IT IS OWNED BY A COMPANY REGISTERED IN INDIA O R BY A CONSORTIUM OF SUCH COMPANIES 48 [OR BY AN AUTHORITY OR A BOARD OR A CORPORA-TION OR ANY OTHER BODY ESTABLISHED OR CONSTITUTED UNDER ANY CENTRAL OR STATE ACT;] 49 [(B) IT HAS ENTERED INTO AN AGREEMENT WITH THE CENT RAL GOVERNMENT OR A STATE GOVERNMENT OR A LOCAL AUTHORI TY OR ANY OTHER STATUTORY BODY FOR (I) DEVELOPING OR (II) OPE RATING AND MAINTAINING OR (III) DEVELOPING OPERATING AND MAIN TAINING A NEW INFRASTRUCTURE FACILITY;] (C) IT HAS STARTED OR STARTS OPERATING AND MAINTAI NING THE INFRASTRUCTURE FACILITY ON OR AFTER THE 1ST DAY OF APRIL 1995: PROVIDED THAT WHERE AN INFRASTRUCTURE FACILITY IS TRANSFERRE D ON OR AFTER THE 1ST DAY OF APRIL 1999 BY AN ENTERPRIS E WHICH DEVELOPED SUCH INFRASTRUCTURE FACILITY (HEREAFTER R EFERRED TO IN THIS SECTION AS THE TRANSFEROR ENTERPRISE) TO ANOTH ER ENTERPRISE (HEREAFTER IN THIS SECTION REFERRED TO AS THE TRANS FEREE ENTERPRISE) FOR THE PURPOSE OF OPERATING AND MAINTAINING THE IN FRASTRUCTURE FACILITY ON ITS BEHALF IN ACCORDANCE WITH THE AGREE MENT WITH THE CENTRAL GOVERNMENT STATE GOVERNMENT LOCAL AUTHORI TY OR STATUTORY BODY THE PROVISIONS OF THIS SECTION SHAL L APPLY TO THE TRANSFEREE ENTERPRISE AS IF IT WERE THE ENTERPRISE TO WHICH THIS CLAUSE APPLIES AND THE DEDUCTION FROM PROFITS AND G AINS WOULD BE AVAILABLE TO SUCH TRANSFEREE ENTERPRISE FOR THE UNE XPIRED PERIOD DURING WHICH THE TRANSFEROR ENTERPRISE WOULD HAVE B EEN ENTITLED TO THE DEDUCTION IF THE TRANSFER HAD NOT TAKEN PLA CE. 50 [EXPLANATION.FOR THE PURPOSES OF THIS CLAUSE INFRASTRUCTURE FACILITY MEANS (A) A ROAD INCLUDING TOLL ROAD A BRIDGE OR A RAIL SYSTEM; (B) A HIGHWAY PROJECT INCLUDING HOUSING OR OTHER A CTIVITIES BEING AN INTEGRAL PART OF THE HIGHWAY PROJECT; (C) A WATER SUPPLY PROJECT WATER TREATMENT SYSTEM IRRIGATION PROJECT SANITATION AND SEWERAGE SYSTEM OR SOLID WA STE MANAGEMENT SYSTEM; (D) A PORT 51 AIRPORT INLAND WATERWAY 52 [ INLAND PORT OR NAVIGATIONAL CHANNEL IN THE SEA];] 53 [(II) ANY UNDERTAKING WHICH HAS STARTED OR STARTS PROVIDING TELECOMMUNICATION SERVICES WHETHER BASIC OR CELLULAR INCLUDING RADIO PAGING DOMESTIC SATELLITE SERVICE NETWORK OF TRUNKING BROADBAND NETWORK AND INTERNET SERVICES O N OR AFTER 7 THE 1ST DAY OF APRIL 1995 BUT ON OR BEFORE THE 31 ST DAY OF MARCH 54 [2005].] EXPLANATION.FOR THE PURPOSES OF THIS CLAUSE DOMESTIC SATELLITE MEANS A SATELLITE OWNED AND OP ERATED BY AN INDIAN COMPANY FOR PROVIDING TELECOMMUNICATION SERV ICE; (III) ANY UNDERTAKING WHICH DEVELOPS DEVELOPS AND OPERATES OR MAINTAINS AND OPERATES AN INDUSTRIAL PA RK 55 [OR SPECIAL ECONOMIC ZONE] NOTIFIED 56 BY THE CENTRAL GOVERNMENT IN ACCORDANCE WITH THE SCHEME FRAMED 56 AND NOTIFIED 57 BY THAT GOVERNMENT FOR THE PERIOD BEGINNING ON THE 1ST DAY OF APRIL 1997 AND ENDING ON THE 31ST DAY OF MARCH 58 [2006] : 59 [ PROVIDED THAT IN A CASE WHERE AN UNDERTAKING DEVELOPS AN INDUSTRIAL PARK ON OR AFTER THE 1ST DAY OF APRIL 1999 OR A SPECIAL ECONOMIC ZONE ON OR AFTER THE 1ST DAY OF APRIL 2001 AND TRANSFERS THE OPERATION AND MAINTENANCE OF SUCH INDUSTRIAL PARK OR SUCH SPECIAL ECONOMIC ZONE AS THE CASE MAY BE TO ANOTHER UNDERTAKING (HEREAFTER IN THIS SECTION REFE RRED TO AS THE TRANSFEREE UNDERTAKING) THE DEDUCTION UNDER SUB-SE CTION (1) SHALL BE ALLOWED TO SUCH TRANSFEREE UNDERTAKING FOR THE REMAINING PERIOD IN THE TEN CONSECUTIVE ASSESSMENT YEARS AS IF THE OPERATION AND MAINTENANCE WERE NOT SO TRANSFERR ED TO THE TRANSFEREE UNDERTAKING : 60 [ PROVIDED FURTHER THAT IN THE CASE OF ANY UNDERTAKING WHICH DEVE-LOPS DEVELOPS AND OPERATES OR MAINTAINS AND OPERATES AN INDUSTRIAL PARK THE PROVISIONS OF THIS CLAUSE SHALL HAVE EFFECT AS IF FOR THE FIGURES LETTERS AND WORD S 31ST DAY OF MARCH 2006 THE FIGURES LETTERS AND WORDS 31ST DAY OF MARCH 60A [ 2011 ] HAD BEEN SUBSTITUTED;] (IV) AN 61 [UNDERTAKING] WHICH (A) IS SET UP IN ANY PART OF INDIA FOR THE GENERAT ION OR GENERATION AND DISTRIBUTION OF POWER IF IT BEGINS T O GENERATE POWER AT ANY TIME DURING THE PERIOD BEGINNING ON TH E 1ST DAY OF APRIL 1993 AND ENDING ON THE 31ST DAY OF MARCH 62 [ 2011 ] ; (B) STARTS TRANSMISSION OR DISTRIBUTION BY LAYING A NETWORK OF NEW TRANSMISSION OR DISTRIBUTION LINES AT ANY TIME DURING THE PERIOD BEGINNING ON THE 1ST DAY OF APRIL 1999 AND ENDING ON THE 31ST DAY OF MARCH 62 [ 2011 ] : PROVIDED THAT THE DEDUCTION UNDER THIS SECTION TO AN 63 [UNDERTAKING] UNDER SUB-CLAUSE (B) SHALL BE ALLOWED ONLY IN RELATION TO THE PROFITS DERIVED FROM LAYING OF SUCH NETWORK OF NEW LINES FOR TRANSMISSION OR DISTRIBUTION; 64 [(C) UNDERTAKES SUBSTANTIAL RENOVATION AND MODERNIS ATION OF THE EXISTING NETWORK OF TRANSMISSION OR DISTRIBUTIO N LINES AT ANY TIME DURING THE PERIOD BEGINNING ON THE 1ST DAY OF APRIL 2004 AND ENDING ON THE 31ST DAY OF MARCH 65 [ 2011 ] . 8 EXPLANATION.FOR THE PURPOSES OF THIS SUB-CLAUSE SUBSTANTIAL RENOVATION AND MODERNISATION MEANS AN INCREASE IN THE PLANT AND MACHINERY IN THE NETWORK OF TRANSM ISSION OR DISTRIBUTION LINES BY AT LEAST FIFTY PER CENT OF TH E BOOK VALUE OF SUCH PLANT AND MACHINERY AS ON THE 1ST DAY OF APRIL 2004;] 66 [(V) AN UNDERTAKING OWNED BY AN INDIAN COMPANY AND SET UP FOR RECONSTRUCTION OR REVIVAL OF A POWER GENERATING PLANT IF (A) SUCH INDIAN COMPANY IS FORMED BEFORE THE 30TH DAY OF NOVEMBER 2005 WITH MAJORITY EQUITY PARTICIPATION B Y PUBLIC SECTOR COMPANIES FOR THE PURPOSES OF ENFORCING THE SECURITY INTEREST OF THE LENDERS TO THE COMPANY OWNING THE P OWER GENERATING PLANT AND SUCH INDIAN COMPANY IS NOTIFIE D 67 BEFORE THE 31ST DAY OF DECEMBER 2005 BY THE CENTRAL GOVER NMENT FOR THE PURPOSES OF THIS CLAUSE; (B) SUCH UNDERTAKING BEGINS TO GENERATE OR TRANSMI T OR DISTRIBUTE POWER BEFORE THE 31ST DAY OF MARCH 68 [ 2011 ] ;] 69 [ 69A [ (VI) ANY UNDERTAKING CARRYING ON THE BUSINESS OF LAYING AND OPERATING A CROSS-COUNTRY NA TURAL GAS DISTRIBUTION NETWORK INCLUDING PIPELINES AND STORA GE FACILITIES BEING AN INTEGRAL PART OF SUCH NETWORK WHICH FULFI LS THE FOLLOWING CONDITIONS NAMELY: (A) IT IS OWNED BY A COMPANY REGISTERED IN INDIA O R BY A CONSORTIUM OF SUCH COMPANIES OR BY AN AUTHORITY OR A BOARD OR A CORPORATION ESTABLISHED OR CONSTITUTED UNDER ANY CE NTRAL OR STATE ACT; (B) IT HAS BEEN APPROVED BY THE PETROLEUM AND NATU RAL GAS REGULATORY BOARD ESTABLISHED UNDER SUB-SECTION (1) OF SECTION 3 OF THE PETROLEUM AND NATURAL GAS REGULATORY BOARD A CT 2006 (19 OF 2006) AND NOTIFIED BY THE CENTRAL GOVERNMENT IN THE OFFICIAL GAZETTE; (C) ONE-THIRD OF ITS TOTAL PIPELINE CAPACITY IS AV AILABLE FOR USE ON COMMON CARRIER BASIS BY ANY PERSON OTHER THAN TH E ASSESSEE OR AN ASSOCIATED PERSON; (D) IT HAS STARTED OR STARTS OPERATING ON OR AFTER THE 1ST DAY OF APRIL 2007; AND (E) ANY OTHER CONDITION WHICH MAY BE PRESCRIBED. EXPLANATION.FOR THE PURPOSES OF THIS CLAUSE AN ASSOCIATED PERSON IN RELATION TO THE ASSESSEE MEA NS A PERSON (I) WHO PARTICIPATES DIRECTLY OR INDIRECTLY OR THR OUGH ONE OR MORE INTERMEDIARIES IN THE MANAGEMENT OR CONTROL OR CAPITAL OF THE ASSESSEE; (II) WHO HOLDS DIRECTLY OR INDIRECTLY SHARES CAR RYING NOT LESS THAN TWENTY-SIX PER CENT OF THE VOTING POWER IN THE ASSESSEE; 9 (III) WHO APPOINTS MORE THAN HALF OF THE BOARD OF DIRECTORS OR MEMBERS OF THE GOVERNING BOARD OR ONE OR MORE EXEC UTIVE DIRECTORS OR EXECUTIVE MEMBERS OF THE GOVERNING BOA RD OF THE ASSESSEE; OR (IV) WHO GUARANTEES NOT LESS THAN TEN PER CENT OF THE TOTAL BORROWINGS OF THE ASSESSEE. ] ] EXPLANATION.FOR THE REMOVAL OF DOUBTS IT IS HEREB Y DECLARED THAT NOTHING CONTAINED IN THIS SECTION SHALL APPLY IN RELATION TO A BUSINESS REFERRED TO IN SUB-SECTION (4) WHICH IS IN THE NATURE OF A WORKS CONTRACT AWARDED BY ANY PERSON ( INCLUDING THE CENTRAL OR STATE GOVERNMENT) AND EXECUTED BY TH E UNDERTAKING OR ENTERPRISE REFERRED TO IN SUB-SECTIO N (1).] IF THE AFORESAID PROVISION OF LAW IS ANALYSED IT C AN BE SAID THAT THE AFORESAID EXPLANATION (BOLD PORTION) WAS SUBSTI TUTED BY THE FINANCE ACT (NO. 2) ACT 2009 WITH RETROSPECTIVE EF FECT FROM 1.4.2000 AND PRIOR TO ITS SUBSTITUTION EXPLANATION AS INSERTED BY THE FINANCE ACT 2007 WITH RETROSPECTIVE EFFECT FR OM 1.4.2000 WAS AS UNDER :- EXPLANATION FOR THE REMOVAL OF DOUBTS IT IS HERE BY DECLARED THAT NOTHING CONTAINED IN THIS SECTION SHALL APPLY TO A PERSON WHO EXECUTES A WORKS CONTRACT ENTERED INTO WITH THE UND ERTAKING OR ENTERPRISE AS THE CASE MAY BE IN THE LIGHT OF THE AFORESAID EXPLANATION SUBSTITUT ED BY FINANCE ACT 2009 WITH RETROSPECTIVE EFFECT FROM 1.4.2000 A ND THE ASSESSMENT YEAR BEFORE US BEING 2005-06 SUB-SECTIO N (4) HAS BEEN SPECIFICALLY EXPLAINED THAT IT SHALL NOT APPLY IN RELATION TO A BUSINESS REFERRED IN THAT SUB-SECTION WHICH IS IN T HE NATURE OF WORKS CONTRACT AWARDED BY ANY PERSON (INCLUDING THE CENTRAL OR STATE GOVERNMENT) AND EXECUTED BY THE UNDERTAKING O R ENTERPRISE REFERRED TO IN SUB-SECTION (1). IN SUB- SECTION (1) TO SECTION 80IA THE WORD ANY BUSINESS HAS BEEN MENTI ONED BUT IN VIEW OF INSERTION OF EXPLANATION IN RESPECT TO SUB- SECTION (4) THERE IS NO INFIRMITY IN THE STAND OF THE LEARNED C OMMISSIONER OF INCOME TAX (APPEALS) THEREFORE THE IMPUGNED AMOUN T WAS RIGHTLY DISALLOWED. FINALLY THE APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT IN THE PRESENCE OF L EARNED REPRESENTATIVES FROM BOTH THE SIDES AT THE CONCLUSI ON OF THE HEARING ON 7 TH MAY 2010. 4. IN THE AFORESAID ORDER THE TRIBUNAL ON IDENTIC AL FACTS HAS DELIBERATED UPON THE ISSUE U/S 80IA(4) OF THE A CT. IF THE EXPLANATION INSERTED BY THE FINANCE (2) ACT 2009 W ITH RETROSPECTIVE EFFECT FROM 1.4.2000 IS ANALYSED IT SPECIFICALLY SAYS THAT IT SHALL NOT APPLY IN RELATION TO A BUSINESS R EFERRED IN SUB- SECTION WHICH IS IN THE NATURE OF WORK CONTRACTS AW ARDED BY ANY 10 PERSON INCLUDING CENTER OR STATE GOVT. IN VIEW OF T HIS FACT WE FIND NO INFIRMITY IN THE STAND OF THE LD. CIT(A). E VEN OTHERWISE IN VIEW OF THE AFORESAID DECISION SINCE THE ASSESSEE CARRIED OUT THE WORK CONTRACTS ALLOTTED BY GOVT. AUTHORITY M.P. RUR AL ROAD DEVELOPMENT AUTHORITY FOR CONSTRUCTION OF ROAD THE REFORE IT WILL NOT BE ELIGIBLE FOR THE TAX BENEFIT U/S 80IA OF THE ACT. IN VIEW OF THESE FACTS THERE IS NO MERIT IN THE APPEAL OF THE ASSESSEE THEREFORE DISMISSED. FINALLY APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT IN THE PRESENCE OF LEARNED REPRE SENTATIVES OF BOTH SIDES AT THE CONCLUSION OF HEARI NG ON 2.7.2010. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTI ES AND HAVE GONE THROUGH THE MATERIAL AVAILABLE ON THE FILE. A CLARIFICATORY EXPLANATION BELOW SUB-SECTION (13) OF SECTION 80IA OF THE ACT WAS INSERTED WITH RETROSPECTIVE EFFECT FROM 1.4.2000 BY THE FINANCE ACT 2009 AS PER WHICH NOTHING CONTAINED IN THIS SECTION SHAL L APPLY IN RELATION TO A BUSINESS REFERRED TO IN SUB-SECTION (4) WHICH IS IN THE NATURE OF A WORKS CONTRACT AWARDED BY ANY PERSON INCLUDING THE CENTR AL OR STATE GOVERNMENT AND EXECUTED BY THE UNDERTAKING OR ENTER PRISE REFERRED TO IN SUB-SECTION (1). THE ASSESSMENT YEAR INVOLVED IN THE PRESENT APPEAL BEING 2006-07 THEREFORE THIS EXPLANATION IS CLEAR LY APPLICABLE TO THE FACTS OF THE PRESENT APPEAL. IT HAS BEEN SPECIFICA LLY PROVIDED THAT THE PROVISIONS U/S 80IA OF THE ACT SHALL NOT APPLY TO A BUSINESS REFERRED TO IN SUB-SECTION (4) OF SECTION 80IA OF THE ACT WHICH I S OF THE NATURE OF WORKS CONTRACTS. IN SUB-SECTION (1) THE WORD ANY BUSINESS HAS BEEN MENTIONED. IDENTICAL ISSUE HAS BEEN DELIBERATED UP ON AND DECIDED BY 11 THE TRIBUNAL IN THE AFORESAID CASE THE RELEVANT PO RTION WHEREOF HAS BEEN REPRODUCED ABOVE. WE THEREFORE HOLD THAT SINCE NO DEDUCTION IS ALLOWABLE TO THE ASSESSEE U/S 80IA OF THE ACT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) WAS NOT JUSTIFIED IN GRANTI NG THE SAME. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) ON THIS ISSUE IS THEREFORE SET ASIDE AND THE APPEAL OF AP PEAL OF THE REVENUE IS ALLOWED. 4. AS FAR AS THE APPEAL OF THE ASSESSEE (ITA NO. 52 2/IND/2009) IS CONCERNED SINCE WHILE DECIDING THE APPEAL OF TH E REVENUE WE HAVE HELD THAT NO DEDUCTION U/S 80-IA OF THE ACT IS ALLO WABLE TO THE ASSESSEE THERE IS NO QUESTION OF BIFURCATION OF INCOME/RECEI PTS FOR THE PURPOSE OF DEDUCTION U/S 80IA OF THE ACT THEREFORE THE DECIS ION OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IN THAT REGARD CANNOT BE SUSTAINED BECAUSE THE ASSESSEE IS NOT AT ALL ELIGIB LE FOR DEDUCTION U/S 80IA OF THE ACT. ACCORDINGLY THE APPEAL OF THE ASS ESSEE IS ALSO DISMISSED. FINALLY THE APPEAL OF THE REVENUE IS ALLOWED WHERE AS THE APPEAL OF THE ASSESSEE IS DISMISSED. 12 ORDER PRONOUNCED IN OPEN COURT ON 28 TH JULY 2010. SD SD (B.R. KAUSHIK) (JOGINDER SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER 28 TH JULY 2010 COPY TO: APPELLANT RESPONDENT CIT CIT(A) DR G UARD FILE *DN/