L & T CHENNAI - TADA TOLLWAY LIMITED ,CHENNAI vs. ITO CORPORATE WARD 4(4) , CHENNAI

The Ld. AR, at the outset, submitted that the matter of deduction u/s 80IA was subject matter of revenue’s appeal and assessee’s cross- objections vide ITA No.1790/Chny/2019 & Co No.137/Chny/2017 order dated 29.03.2019. The Ld. CIT(A) allowed deduction u/s 80IA. However, the Tribunal held that the assessee did not derive any profits from the activities of developing or operating and maintaining any infrastructural facilities and therefore, the assessee was not entitled for deduction u/s 80IA(4) in respect of toll fees collected during the period. Accordingly, the adjudication of Ld. CIT(A) was reversed and the revenue’s ground was allowed. The Ld. CIT(A) was directed to considered alternative submissions as raised by the assessee.

The Ld. AR further submitted that Tribunal’s order was challenged by the assessee before Hon’ble High Court of Madras vide TCA No.654 of 2019 and CMP No.28430 of 2019 dated 02.02.2021. The Hon’ble Court, vide paras 18 & 19, reversed the stand of Tribunal as under: - 18. In our considered view, this was never the case of the revenue at any point o time i.e., before the Assessing Officer or before the CIT(A) or before the Tribunal. That apart, we also find that the scope of the Concession Agreement as set out in Article 12 of the Concession Agreement would be very relevant, more particularly, Clause 12.2, which mandates that the assessee shall maintain, at its own cost, the existing lanes of the project. Therefore, to state that the existing four lanes would not fall within any one of the clauses under Sub-section 4 of 80IA is factually incorrect, as the assessee develops the fifth and sixth lane and would also operate and maintain the same and so far as the existing lanes, namely 1 to 4, in terms of the Concession Agreement, the assessee has to operate and maintain the same, so that the traffic worthiness and safety are at no time materially inferior as compared to its existing condition prior to the execution of the agreement. Therefore, we are of the view that the finding rendered by the Tribunal is utterly perverse and calls for interference.

For all the above reasons, which we have assigned, the assessee is entitled to succeed. In the result, the Tax Case Appeal is allowed and substantial question of law are answered in favor of the assessee. No costs. Consequently, connected miscellaneous application is closed.