THE COMMISSIONER OF INCOME TAX vs. M/S RANJIT PROJECTS PVT LTD

TAXAP/426/2018HC GujaratGJHC24020600201802 May 2018Author: HONOURABLE MR. JUSTICE AKIL KURESHI,HONOURABLE MR. JUSTICE B.N. KARIA10 pages
AI SummaryDismissed

What were the facts?

The Revenue is in appeal against the Income Tax Appellate Tribunal's order dated October 27, 2017. The assessee, Ranjit Projects Pvt Ltd, claimed a deduction of Rs. 4,97,39,025 under Section 80IA(4) of the Income Tax Act for the assessment year 2010-11. The assessee undertook a road development project based on an agreement with Gujarat State Road Development Corporation (GSRDC). The Assessing Officer disallowed the deduction, questioning if the agreement with GSRDC satisfied Section 80IA(4). The CIT(Appeals) and the Tribunal allowed the deduction, holding that GSRDC, being a 100% state-owned and controlled entity, qualified as a government agency for the purpose of the section.

What did the High Court hold?

The High Court held that the Gujarat State Road Development Corporation (GSRDC) was a nodal agency constituted by the State Government for executing road development projects through private participation and qualified as a 'Government agency' as defined in Section 2(e) of the Gujarat Infrastructure Development Act, 1999. The Court noted that the road widening project was cleared by the Government, land was allotted by the Government, the concession agreement executed by GSRDC was approved by the Government, and it was under a Government Resolution that the assessee was permitted to collect toll. The Court reasoned that a rigid interpretation of Section 80IA(4)(b) by the Revenue would deny deductions to assessees involved in genuine infrastructure development projects for the Government, merely because a nodal agency was created for operational details. The legislative intent of granting deductions would be frustrated. Therefore, the Tribunal's decision to delete the disallowance was upheld.

What were the issues?

1. Whether the Appellate Tribunal has erred in law and on facts in deleting the disallowance of deduction made by the Assessing Officer of Rs. 4,97,39,025 under Section 80IA(4) of the Act? Assessee's Contention: The assessee contended that GSRDC, being a corporation incorporated by the Gujarat Government and wholly owned and controlled by it, performed all functions of the State Government. Therefore, the concession agreement executed by GSRDC should be treated as an agreement with the State Government. Revenue's Contention: The Revenue argued that the agreement entered into between the assessee and GSRDC does not fulfill the condition under Section 80IA(4)(b) because GSRDC is neither the Central Government, State Government, local authority, nor any other statutory body as stipulated in the provision.

Which sections of the Income-tax Act were involved?

Section 80IA(4),Section 2(e),Section 4,Section 7,Section 8,Section 9,Section 10

AI-generated summary — verify with the full judgment below

C/TAXAP/426/2018 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/TAX APPEAL NO. 426 of 2018 With R/TAX APPEAL NO. 427 of 2018 With R/TAX APPEAL NO. 433 of 2018

FOR APPROVAL AND SIGNATURE:

HONOURABLE MR.JUSTICE AKIL KURESHI

and HONOURABLE MR.JUSTICE B.N. KARIA

========================================================== 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the Constitution of India or any order made thereunder ? ========================================================== THE COMMISSIONER OF INCOME TAX Versus M/S RANJIT PROJECTS PVT LTD ========================================================== Appearance: MRS MAUNA M BHATT(174) for the PETITIONER(s) No. 1 for the RESPONDENT(s) No. 1 ========================================================== CORAM: HONOURABLE MR.JUSTICE AKIL KURESHI and HONOURABLE MR.JUSTICE B.N. KARIA

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