DCIT, CIRCLE - 8(2), KOLKATA, KOLKATA vs. M/S. SPML INFRA LIMITED, KOLKATA

order

: July 10th, 2020 ORDER

Per J. Sudhakar Reddy, AM:

1. “That on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of Rs.97,76,407/- under Rule 8D(2)(ii)” 2. “Whether on the facts and in the circumstances of the case and in laws, the Ld. CIT(A) erred in law as well as on facts in allowing the deduction u/s 80-IA of the IT Act. Whereas the assessee company is simply a contractor who merely executed work contract on the basis of quoted tender funded by the Govemment/Semi-govemment organization and hence not entitled to the deduction u/s 80-IA within the scope of Explanation below sub-section 13 to 80- IA of the Act” 3. “That on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in directing to allow the payment for employees contribution to PF/ESI of Rs. 1,75,70,461/- which were paid before due date of filing or return whereas section 36(i)(va) clearly state that the payment will be allowed on payment on or before the due date” 4. “Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in laws as well as in facts that disallowance u/s 14A cannot be made for the purpose of computing Book profit u/s 115JB of the IT Act, 1961”

5. That the appellant reserves the right to amend, alter or add to any groundfs) of appeal before or at the time of hearing of the appeal.”

Assessment Year: 2014-15 M/s. SPML Infra Limited. 2. Rival contentions heard. On a careful consideration of the facts and circumstances of the case, perusal of the papers on record and case laws cited, we hold as follows.

“The Hon'ble ITAT in for Asst. Yr. 2006-07 & 2009-10 has allowed the claim of the appellant for deduction u/s. 80-IA(4). The salient points with regard to allowability of deduction us. 80-1A which emerges from the above order is as follows: i. In a case where a person makes the investment and himself executes the development work i.e. carries out the civil construction work he will be eligible for tax benefit u/s. 80-IA of the Act. ii. "Works contract" used in Explanation to section 80-1A(13) means a contract of developing infrastructure by merely employing labour and making no investments. iii. However, if under a contract, the contractor employs his capital and enterprise in addition to labour, then the said contract does not constitute a works contract under the Explanation to section 80-IA( 13) and the contractor shall be eligible for deduction U/S 80-IA. iv. Even if an assessee is merely developing the infrastructural facility (without operating and maintaining the same), it is entitled to deduction u/s 80-IA. v. Merely because the transferee had paid for the development of infrastructure facility carried out by the assessee, it cannot be said that the assessee did not develop the infrastructure facility. If the interpretation done by the Assessing Officer is accepted, no enterprise carrying on the business of only developing he infrastructure facility would be entitled to deduction under section 80-IA (4). vi. As regards the observation of the AO that the assessee is executing the contract of civil construction at the predetermined rate, and hence it is a works contract the Hon'ble I IA I has observed that "the assessee was responsible for overall development of the infrastructure facility It was merely provided with the site 'which it had to develop into an infrastructural facility by deploying his resources i.e. material, plant A machinery, labour, supervisors etc. It was responsible for any damage/loss caused to any property or life in course of execution of the works. It was even responsible for remedying of the defects in the works at its cost ". vii. The assessee vide the agreements has clearly demonstrated the various risks undertaken by it. The assessee was to furnish a security deposit to the Employer and indemnity the employer of any losses/damage caused to am property/life in course of execution of works, further, it was Assessment Year: 2014-15 M/s. SPML Infra Limited. responsible for the correct ion of defects arising in the works at it cost. Thus, it cannot he said that the assessee had not undertaken any risk. viii. The assessee was not a works contractor simplicitor and was a developer and hence Explanation to section 80- IA(13) does not apply to the assessee. On perusal of the above order it seen that the Hon'ble ITAT in the case of the assessee has discussed as to what are the ingredients for allowing deduction u/s 80-IA. It has been held that the appellant is not a mere works contractor. In this case it is observed that the appellant has been carrying out similar projects with similar functional responsibilities. Respectfully following the above findings of the Hon'ble ITAT I am of the considered opinion that the assessee is a developer, and not merely a works contractor and is eligible for deduction u/s. 80- IA. Accordingly, the claim for deduction u/s. 80-IA(4) is hereby allowed.”