M/S. SHREE BALAJI ENGICONS PVT. LTD.,BELPAHAR, JHARSUGUDA vs. DCIT, CENTRAL CIRCLE-1(1), SAMBALPUR, SAMBALPUR

(िनधा�रण िनधा�रण िनधा�रण वष� िनधा�रण वष� वष� / A.Yrs : 2011-2012, 2013-2014, 2016-2017 & 2017-2018) वष� DCIT, Central Circle-1(1), Sambalpur M/s Shree Balaji Engicons Limited Vs Belpahar, Jharsuguda-768217 PAN No. : AAGCS 4292 P AND ITA No.142/CTK/2023 ITA No.13/CTK/2023 (िनधा�रण वष� / A.Yrs :2011-2012, 2016-2017, 2017-2018 & 2018-2019) DCIT, Central Circle-1(1), Sambalpur Vs M/s Shree Balaji Engicons Limited Belpahar, Jharsuguda-768217 PAN No. : AAGCS 4292 P AND Cross Objection No.02/CTK/2023 (Arising out of ITA No.13/CTK/2023) (िनधा�रण िनधा�रण िनधा�रण वष� िनधा�रण वष� वष� / Assessment Year : 2018-2019) वष� M/s Shree Balaji Engicons Limited Vs DCIT-1(1), Sambalpur Belpahar, Jharsuguda-768217 PAN No. : AAGCS 4292 P (अपीलाथ� अपीलाथ� /Appellant) (��यथ� ��यथ� / Respondent) अपीलाथ� अपीलाथ� ��यथ� ��यथ� .. राज�व राज�व क� राज�व राज�व क� क� ओर क� ओर ओर सेसेसेसे /Revenue by ओर : Shri Saroj Kumar Dubey, CIT-DR िनधा�रती िनधा�रती क� िनधा�रती िनधा�रती क� क� ओर क� ओर ओर सेसेसेसे /Assessee by ओर : Shri Satyanarayan Agrawal, CA सुनवाई क� तारीख / Date of Hearing : 07/01/2025 घोषणा क� तारीख/Date of Pronouncement : 07/01/2025 आदेश आदेश / O R D E R आदेश आदेश Per Bench : These are the cross appeals filed by the assesee and revenue against the separate orders of ld. CIT(A)-2, Bhubaneswar for the assessment years 2011-2012, 2013-2014, 2016-2017, 2017-2018 & 2018-2019, respectively. The assessee has also filed cross objection 141,89,142,13/CTK/2023 &CO No.02/CTK/2023 arising out of appeal of the revenue in ITA No.13/CTK/2023 (AY: 2018- 2019).

IT(SS)A No.77/CTK/2023 & (AY:2011-2012)

2. The assesee in its appeal for A.Y.2011-2012 in IT(SS)A No.77/CTK/2023, has raised the following grounds :-

1. That on the facts and in the circumstances of the case and in law, the Ld CIT(A) erred in up-holding the additions made in assessment order passed under section 153A of the Act even in absence of any incriminating documents.

2. That on the facts and in the circumstances of the case and in law, the Ld CIT(A) erred in not allowing additional claim of deduction of Rs. 35,80,390/-u/s-80-IA of the Income-tax Act, 1961 as lodged during the course of appellant proceedings in respect of income earned from work done as a member on behalf of its Joint Ventures, M/s Balaji ARSS (JV) and SBEPL- GRIL (JV) even when the appellant was eligible for deduction u/s 80-IA of the Act in respect of profit earned from work undertaken by the appellant as a member of the consortium in respect of the projects undertaken by the joint ventures/consortiums 3. That on the facts and in the circumstances of the case and in law, the Ld CIT(A) erred in maintaining the disallowance of claim of deduction of Rs. 47,15,405/- under section 801AB of the Income Tax Act, 1961 without properly appreciating the facts of the case and submission made before him. 4. The appellant reserves the right to add, alter and modify the grounds of appeal as taken by it.

3. The revenue in its appeal for A.Y.2011-2012 in has raised the following grounds of appeal :-

1. The Ld. CIT(A) erred in law in allowing deduction u/s 801A (4) to the assessee when the assessee doesn't satisfy the requisite conditions to be eligible to get the deduction u/s 801A (4) of the Act.

2. The Ld. CIT(A) ought to appreciate that in the facts and circumstances of the case the meaning of 'works contract' as in Explanation to Section 801A as borrowed from section 194C applies only to labour contract and not to a composite contract of construction of an infrastructure facility.

141,89,142,13/CTK/2023 &CO No.02/CTK/2023

3. The Ld. CIT(A) was not correct in holding that the infrastructure facility executed by the assessee (Contractor) can be considered to be owned by it within the meaning of item (a) of clause (i) of sub section (4) of Section 801A.

4. The Ld. CIT(A) erred in treating the Contract receipts received by assessee- company in lieu of execution of contract work be considered as profit and gains of business for deduction u/s 801A.

5. The deduction u/s 801A as per the condition in item (c) of clause (i) of sub section (4) of Section 801A can be availed only after the infrastructure facility has started (i.e got completion Certificate). However, the assessee being a contractor does not get any compensation after completion of project. In view of above, whether the CIT(A) was justified in holding the eligibility of assessee company for deduction u/s 801A on receipts accrued prior to completion of the project. 6. Any other ground of appeal

that may arise at time of hearing.

4. Brief facts of the case are that the assesee is a private limited company and the return of income for the year under appeal was filed declaring total income of Rs.7,70,37,400/- which includes additional income of Rs.5 crores based on search and seizure operation carried out in the case of the assesee on 24.05.2012. The assessment for the year under appeal was completed u/s.153A/143(3) of the Act dated 30.03.2015 wherein after making various additions/disallowances total income was assessed at Rs.9,90,98,410/-. In first appeal, the ld. CIT(A) allowed part relief to the assesee against which assesee and revenue are in appeal before us.

5. During the course of hearing, the assesee has withdrawn the ground No.1. Thus, the same is dismissed as withdrawn.

6. Ground No.2 is relating to the claim of deduction u/s.80IA(4) of the Act at Rs.35,80,590/- which was firstly claimed by the assesee before the 141,89,142,13/CTK/2023 &CO No.02/CTK/2023 ld. CIT(A). It was the claim of the assesee before the ld. CIT(A) that it has earned profits on the infrastructure facilities developed by it as a constituent of two Joint Ventures (JVs), namely M/s Balaji ARSS (JV) and SBEPL-GRIL (JV). The assesee claimed that since it has exclusively carried out the execution work of developing the infrastructure facility, therefore, it is eligible for the deduction u/s.80IA(4) of the Act on such profits. In support of the same, the necessary audit report along with relevant documents were filed before the ld. CIT(A), who has not allowed such claim of the assesee by holding that the assesee is not the enterprises as defined u/s.80IA(4) of the Act for claiming the deduction.

Against such action of the ld. CIT(A), the assesee is in appeal before us.

3] GROUND NO. 2 [APPELLANT): CHALLENGING THE ACTION OF THE LD CITIA) IN NOT ALLOWING ADDITIONAL CLAIM OF DEDUTION OF RS. 35,80,390/- U/S 80-IA OF THE ACT AS LODGED DURING THE COURSE OF APPELLATE PROCEEDINGS IN RESPECT OF INCOME EARNED FROM WORK DONE AS A MEMBER OF BEHALF OF ITS JOINT VENTURES, M/S BALAJI ARSS (JV) AND SBEPL-GRIL (JV) 3.1) The appellant in this ground of appeal has challenged the action of the Ld CIT(A) in not allowing additional claim of deduction of Rs. 35,80,390/- u/s 80-IA of the Act as lodged during the course of appellate proceedings in respect of income earned from work done as a member on behalf of its Joint Ventures, M/s Balaji ARSS (JV) and SBEPL-GRIL (JV).

141,89,142,13/CTK/2023 &CO No.02/CTK/2023

3.2.1] The appellant entered into two joint ventures for carrying out eligible infrastructural projects as per section 80IA of the Act. Detail of such joint ventures entered into by the appellant is as under:

S. No Name of the Name and shares of the members Profit earned by the JVs appellant from the said project [in Rs.]

1 2,02,535 M/s Balaji 1. M/s Shree Balaji Engicons ARSS (JV) Pvt. Ltd. (Presently known as M/s Shree Balaji Engicons Limited) - 70% 2. M/s ARSS Infrastructure Projects Limited -30%

Nature of work to be undertaken - Construction of ROB at km 530.269 RCC T-beam Girder and other allied works in connection with setting up Alumina smelter plant at Lapanga Station (Deposit work)(Two Packet System) awarded by East Coast Railway Construction Organisation

2 M/s 1 . M/ s Shree Balaji Engicons 33,77,855 SBEPL-GRIL Pvt. Ltd. (Presently known as (JV| M/s Shree Balaji Engicons Limited) - 70% 2. M/s G R Infraprojects Limited - 30% single/ intermediate Nature of work to be undertaken - Widening and strengthening of existing 104/0 and km 117/0 lane with geometric improvement to two lane carriage way from km 89/0 tc to 131/0 of N.H.-200 awarded by Chief Engineer NH, Orissa

Total 35,80,390

3.2.2] Summary of profit as earned by the appellant in respect of work done on behalf of JVs and profit as earned by the JVs is as under: Amount in Rs.

S. Name of the Gross Net profit Amount of Profit Effective net No JVs contract value earned by development work earned by profit earned of JV JV done by the the on project appellant on appellant allocated to behalf of JV JV

1. M/s Balaji 3,95,85,143 9,80,149 51,54,366 2,02,535 11,82,684 ARSS (JV)

2. M/s SBEPL- 13,55,52,489 24,52,354 8,55,00,000 33,77,855 58,30,209 GRIL (JV)

Total 17,51,37,632 34,32,503 9,06,54,366 ^35,80,390 70,12,893 141,89,142,13/CTK/2023 &CO No.02/CTK/2023

3.2.3] Copy of following documentary evidences as filed during the course of appellate proceedings so as to justify that the projects carried on by the JVs were eligible infra structural projects and were therefore eligible for claiming the benefit of deduction u/s 80IA of the Act are also already been annexed along with paper book as filed before the Hon'ble Bench: S. No Brief description of documents Page No. of Paper Book 1 Documents related to M/s Balaii-ARSS |JV|: 1.1 Copv of audited final accounts for the year ended 31st 323-328 March, 201 1 Agreement with East Coast Railway for construction of ROB at km 530.269

1,2 RCC T-beam Girder and other allied works in 329-524 connection with setting up Alumina smelter plant at Lapanga Station (Deposit work) awarded by East Coast Railway Construction Organisation

Joint-Venture (JV)l Agreement entered into by M/s Shree Balau Eneicons

Pvt. Ltd.. the appellant with M/s ARSS Infrastructure Projects Limited for 1.3 formation of JV in the name of M/s Balaji-ARSS (JV) after 525-538 awarding of tender by East Coast Railway

COPY of Memorandum of Understanding entered between M/s Shree Balaji

1.4 Eneicons Pvt. Ltd.. the appellant and M/s ARSS 539-541 Infrastructure Projects Limited

1.5 Copy of supporting invoice raised by the appellant to M/s 542-543 Balaji-ARSS (JV)

COPY of audit report in Form No. 10CCB issued by independent chartered

1.6 accountant in respect of work done by the appellant 544-548 eligible for deduction under section 80-IA of the Act 141,89,142,13/CTK/2023 &CO No.02/CTK/2023

1.7 Copy of Profit and Loss account for the year ended 31st 549 March, 2011 in respect of income earned and expenses incurred by the appellant for work done on behalf of the joint-venture, M/s Balaji-ARSS (JV)

Copy of acknowledgement of income-tax return alone with computation of income of M/s Balaji-ARSS (JV) as filed under section 139 of the Income-Tax

1.8 Act, 1961 for the Assessment Year 2013-14 wherein 550-556 deduction under section 80-IA of the Act was claimed along with copy of audited final accounts of M/s Balaji-ARSS (JV1 for the year ended 31st March 2013 2 Documents related to M/s SBEPL-GRIL (JV): 2.1 Copv of audited final accounts for the year ended 31st 557-562 March, 2011 Agreement with Executive Engineer, N.H Division. Jharsuguda for widening

2.2 and strengthening of existing single/ intermediate 563-743 lane with geometric improvement to two lane carriageway

Joint Bidding Agreement entered into bv M/s Shree Balaji Engicons Pvt.

2.3 Ltd., the appellant with M/s G R Infraproiects Limited 744-748 for formation of JV in the name of M/s SBEPL-GRIL (JV)

Copy of Memorandum of Understanding between M/s Shree Balaji Engicons

2.4 Pvt. Ltd., the appellant and M/s G R Infraprojects 749-752 Limited 141,89,142,13/CTK/2023 &CO No.02/CTK/2023 2.5 Copy of supporting invoice raised by the appellant to 753 M/s SBEPL-GRIL (JVI

•

CODV of audit report in Form No. 10CCB issued by independent chartered

2,6 accountant in respect of work done by the appellant 754-758 eligible for deduction under section 8O-IA of the Act

2.7 Copy of Profit and Loss account for the year ended 759 31st March, 201,1 in respect of income earned and expenses incurred by the appellant for work done on behalf of the joint-venture, M/s SBEPL-GRIL (JVJ

Copv of acknowledgement of income-tax return along with computation of 2.8 income of M/s SBEPL-GRIL (JV) as filed under 760-766 section 139 of the Income-tax Act, 1961 for the Assessment Year 2013-14 wherein deduction under section 80-IA of the Act was claimed alone with audited final accounts of M/s SBEPL- GRIL (JV) for the year ended 31st March 2O13

Copy of Ld CIT(A)’s order dated 31-05-2O23 passed in the case of M/s SBEPL-

2.9 GRIL (JV) for Assessment Year 2013-14 wherein 767-818 claim of deduction under section 80-IA of the Act was allowed to the JV

3.2.4] On perusal of the tables reproduced hereinabove, it shall be quite clear that the projects undertaken by the JVs were eligible infrastructural projects as per section 80IA of the Act.

3.3.1] Before going into the main issue regarding allowability of deduction u/s 80IA of the .members of the JV, it is imperative to understand the status and legal position of "Joint Venture" vis-a-vis Income Tax Act. The Joint Ventures are not be governed by the provisions of the 'Indian Partnership Act, 1932.' It is also a known fact that there is no statute which governs a Joint Venture. Hence, the 141,89,142,13/CTK/2023 &CO No.02/CTK/2023 issue regarding the relationship between the members and also between the members and the Joint Venture has to be decided on the basis of the terms agreement entered between the parties which generally fall in the category of Association of Persons” (AOP) under the Act.

3.3.2 Further, in our country, the implementation of infrastructure projects is taking place on massive scale. In this connection, global tenders Invited. Hence, two or more business enterprises join hands by forming a consortium of Joint Venture in order to get qualified for participating in tender process. Once the project or contract is awarded to the joint venture or the consortium, it is executed by its constituents or the joint ventures in a ratio agreed upon by the parties For all practical purposes, it is the constituents/ members of the joint venture who execute the project awarded to the joint venture

3.4] In the facts of the present case, it is an undisputed fact that the appellant entered into Joint ventures with other parties with the sole purpose of fulfilling the eligibility criteria for obtaining the contract from Government bodies. Further, it is also an uncontroverted fact that constituents of the joint venture Le, appellant and the other party, actually executed the project awarded to the joint venture and that they were solely responsible for the performance of its scope of work and would also bear all technical, commercial and facing risk involved in performing its scope of work

Relevant extract of few of the judicial precedents wherein it is held that the members of the JV are eligible for deduction under section 80-1A of the Act in respect of work executed by them are reproduced hereunder for ready reference of the Hon'ble Bench: 3.5.1] The Hon'ble High Court of Allahabad in the case of CIT v. PNC Construction Co. Ltd reported in [2015] 55 taxmann.com 21 (Allahabad) has approved the findings of the Hon'ble ITAT Agra Bench in the case of PNC Construction Co. Ltd v. DCIT reported in [2013] 37 taxmann.com 361 (Agra Trib.) wherein the Hon'ble ITAT Agra Bench has categorically held that the appellant is eligible for deduction in respect of work executed by it on behalf of JV.

Relevant facts of the case: • A joint venture was created between PNC Construction Co. Limited and Nagarjuna Construction Company in the name of NCC PNC (JV) for execution of infrastructure project awarded by the Government of Madhya Pradesh • Entire amount of work was executed by PNC Construction Co. Limited for and on behalf of NCC PNC (JV).

141,89,142,13/CTK/2023 &CO No.02/CTK/2023 • PNC Construction Co. Limited has claimed deduction of Rs. 80,99,435/- under section 80- IA of the Act in respect of "Sagar Beena Project work executed by it on behalf of JV, NCC- PNC (JV). • The issue in depute is regarding allowbility of deduction Rs. 80,09,435 under section RO-IA of the Act as claimed by M/s PNC Construction Co. Limited in respect of "Sagar Beene Project work executed by it on behalf of JV, NCC-PNC JV Findings as laid down by Hon'ble ITAT Agra, Bench in the case of PNC Construction Co. Ltd DCIT reported in (2013) 37 taxmann.com 361 (Agra Trib) are reproduced hereunder for ready reference of the Hon'ble Bench

(i) ACIT v. JSR Constructions (P.) Ltd. (IT Appeal No.898/Bang/2009 order dated 29.03.2011). (ii) Dy. CIT v. Transstroy (India) Ltd. (IT Appeal No. 325 & 326/Viz/2011 order dated 13.04.2012).

22. The objection of the CIT(A) in allowing deduction under section 801A of the Act in respect of Sagar-Beena Project is that the assessee did not satisfy the conditions laid down under section 80IA(4)(b) of the Act. The objection of the CIT(A) is that there is nothing to suggest on record that the assessee had entered into any agreement with the Central Government or a State Government or a local authority or any other statutory body. He further noted that the assessee has entered into agreement with M/s. Nagarjuna Construction Company Limited, an entity which is not mentioned in section 80IA(4)(b) of the Act. To examine the case of the CITA), we would like to refer the word 'consortium of such companies in section 80IA(a) of the Act. The Section 80IA[4](a) provides that infrastructure facility as approved in (1) is owned by consortium of such companies. The consortium word has not been defined in section 801A/4) of the Act. If we consider the dictionary meaning of 141,89,142,13/CTK/2023 &CO No.02/CTK/2023 that word, according to the New International Webster's Comprehensive Dictionary it is Lichens, (fellowship) Lau Coalition, union, as of incorporated companies. As per SAHNI Advanced Dictionary (Engligh English-Hindi), the meaning of consortium is a combination of financial institutions, capitalists, etc. for carrying into effect some financial operation requiring large resources of capital.

"3. Brief facts of the case are that the assessee company, engaged in the business of civil engineering works and construction of national highways. filed its return of income on 31.10.2005 declaring NIL income and claiming deduction of Rs. 2,25,13,170/- u/s 80IA of the IT Act. The assessee company had also shown a book profit of Rs.3,64,09,495/-u/s 115JB of the Act. During the assessment proceedings u/s 143(3) of the Act, from the profits and loss account 141,89,142,13/CTK/2023 &CO No.02/CTK/2023 filed along with the return of income, the AO observed that the assessee had shown the total contract receipts at Rs. 50,71,06,783/- whereas as per the TDS certificates, the total contract receipts works out to Rs.50,72,62,959/. Thus, there is a difference of Rs. 1,56,176/ between the total contract receipts as per the TDS certificates and as shown in the profit and loss account. He further observed that the assessee has undertaken sub-contract works from M/s ECSB-JSR Constructions (JV) Private Limited and received income of Rs. 26,55,66,961/- (as per the TDS certificates) and has received the remaining balance of Rs.24,16,95,998/- from the other contract works undertaken by the assessee company. He observed that the deduction u/s 801A of the Act would not be available to a person who executes a works contract entered into with an undertaking or enterprise as the case may be. As the assessee has undertaken the sub-contract works with the joint venture of M/s ECSB-JSR Construction Private Limited, he held that the assessee company is net eligible to claim deduction w/s BOLA of the Act. He further observed that the works contract undertaken by the assessee company are not new, but it is the same contract undertaken as in earlier years including sub-contract works from its sister concern. He therefore disallowed the entire claim of deduction of Rs 2,25,13,170/- u/s 80IA of the Act and assessed the same as the business income of the assessee company.

6. After appreciating the above evidence, the CITA) came to the conclusion that the assessee was a member of the consortium that bid for and was awarded the contract in question and it is only thereafter that the JV Company had come into existence and the sub-contract was entered into. Thus, according to him, the assessee has fulfilled the conditions prescribed u/s 80IA of the IT Act and the assessee is eligible for deduction thereunder. As regards the AO's observation that the contract is not new, he observed that the term 'new' is meant to ensure that the deduction is available to entities that are contributing by adding to the country's infrastructure and it cannot be taken to mean that in order to avail the deduction, the assessee need to enter into new agreement every year as infrastructure projects by their very nature, generally have implementation cycles that are longer than a year. Thus, the CIT(A) directed the AO to allow deduction as claimed by the assessee.

3.5.3) The Hon'ble ITAT Visakhapatnam Bench in the case of Transstory (India) Ltd. v. ITO, Ward-2(2), Guntur reported in (2012) 134 ITD 269 (Visakhapatnam) has held that:

“8. Having given a thoughtful consideration to the rival submissions and from a careful perusal of the orders of the authorities below and documents placed on record, we find that undisputedly the joint venture or the consortium was formed only to obtain the contract from the Government bodies. At the time of execution of the joint venture or the consortium, it has been made clear that work/project awarded to the joint venture would be executed by the joint venturers or the constituents. As per mutually agreed terms and conditions between them, it was also agreed that each party shall be responsible for the provisions of without limitation on resources required for the purpose of fulfilment of the scope and also solely responsible for the performance of its scope of work and shall bear all technical, commercial and facing risk involved in performing its scope of work. It was also agreed that none of the party shall assign its rights and obligations to any other party without written consent of other party. From a careful perusal of this joint venture agreement and the consortium agreement, it is evidently clear that the joint venture and the consortium was formed only with an object to bid contract. Once the project or contract is awarded to the joint venture or the consortium, it is to be executed by its constituents or the joint ventures in a ratio agreed upon by the parties. In the instant case in case of a joint venture agreement, the assessee was entitled to execute the 40% of total work awarded by the Andhra Pradesh Government to the joint venture and in case of a consortium it was agreed that the entire work is to be executed by the assessee itself. Therefore for all practical purposes, it was the assessee who executed the work contract or the project awarded to the joint venture. No doubt the joint venture is an independent identity and has filed its return of income and was also assessed to tax but it did not offer any profit or income earned on this project/works awarded to it nor did he claim any exemption/deduction u/s 80IA (4) of the Act. These facts clearly indicates that the joint Venture was only a de jure contractor but in fact the assessee was a de facto contractor.

141,89,142,13/CTK/2023 &CO No.02/CTK/2023 10. There is no dispute with regard to the nature of business or the activities undertaken by the assessees. The dispute is only with regard to the identity of a person to whom this benefit of deduction u/s 80IA (4) can be allowed. We have carefully perused the provisions of section 80IA (4) and we find that the benefit of exemption/ deduction is to be allowed to any enterprise carrying on business of developing or operating and maintaining or developing, operating, maintaining any infrastructure facility subject to fulfilment of certain conditions. One of the condition is that the enterprise should be owned by a company registered in India or by a consortium of such companies or any other body established or constituted under any centre or any state Act. The other condition is that it has entered into an agreement with the Central Government or a State Government or local authorities or any other statutory body for developing, operating and maintaining or developing, operating & maintaining a new infrastructure facility. There is no dispute with regard to the fulfilment of other requisite conditions. The dispute was only raised that the contract was awarded only to the joint venture and not to the assessee and therefore assessee is not entitled for deduction. If we read these provisions of sub-section (4) of section 80IA, we would find that this benefit of deductions is to be given to an enterprise who carry on the aforesaid classified business. The legislature have also used the word consortium of such companies, meaning thereby the legislature was aware about the object of formation of consortium and joint ventures. Generally, the joint ventures or consortiums are formed to obtain a contract from the Government body for its execution by its constituents. If the constituents do not want to execute the work, there was ne need to form a consortium. Therefore, mere formation of consortium for obtaining a contract should not debar the enterprises who in fact carried on the aforesaid classified business from claiming the deduction or exemption u/s 80IA[4]

3.5.4) The decision of the Hon'ble ITAT Visakhapatnam Bench cited supra has also been followed by the Hon'ble ITAT Hyderabad Bench 'B' in the case of DCIT, Central Circle-2,Hyd. vs. Megha Engg. & Infrastructure Ltd. (ITA No. 607, 608, 609 610/H/2016) in Para 9.2 of the order wherein the Coordinate Bench of Tribunal also held that constituents/ members of the joint venture shall be eligible to claim the benefit of deduction u/s 80IA(4) of the Act in respect of eligible infrastructural projects awarded to the joint venture.

3.6) In view of the findings reiterated in the judicial precedents cited supra, it becomes abundantly clear that members of joint venture are eligible to claim the benefit of deduction u/s 80IA(4) of the Act in respect of profit earned by them from work executed as a member of the joint venture in the facts of the present case, the appellant was one of the members of the joint ventures namely M/s Balaji ARSS (JV) and SBEPL GRIL (JV) who carried out the work awarded to joint ventures by the Government bodies. The appellant raised invoices to the joint venture at market price in respect of work executed by it and Incurred various expenses for carrying out the work awarded to the joint venture. The resultant profit earned by the appellant from carrying out these projects on behalf of the joint ventures is being claimed as deduction u/s 80IA(4) of the Act in light of the settled legal position. Moreover, the infrastructural development projects undertaken by the joint venture were identical to the infrastructural development projects undertaken independently by the appellant in respect of which the Jurisdictional Bench of ITAT itself had held that the appellant was eligible for claiming the benefit of deduction u/s 80IA(4) of the Act. Hence, the appellant was also eligible for further deduction of Rs. 35,80,390/- u/s 801A of the Act in respect of income/profit earned from work done as a member on behalf of its joint ventures, M/s Balaji ARSS (JV) and SBEPL-GRIL (JV).

3.7.1) The Ld CIT(A) vide its order dated 29-08-2023 has stated that Hon'ble ITAT Visakhapatnam Bench in the case of Transstory (India) Ltd. v. ITO, Ward-2(2), Guntur reported in (2012) 134 ITD 269 (Visakhapatnam) has given benefits of deduction to the members since the JV has not offered any income or profit on any of the projects awarded to it nor claimed any deduction under section 141,89,142,13/CTK/2023 &CO No.02/CTK/2023 801A of the Act. The Ld CIT(A) has stated that in the present case in hand, both the JV's have shown profit and has claimed deduction u/s 80IA of the Act for Assessment Year 2013-14 and has due to ignorance has claimed under section 80IA of the Act for Assessment Year 2011-12 and therefore, the decision of Hon’ble ITAT Visakhapatnam Bench in the case of Transstory India Ltd vs ITO, Ward-2(2), Guntur is not applicable and has concluded that the members are merely work contractors and net developers and were not eligible for deduction under section 80-IA of the Act in respect of income/profit earned from work done as a member on behalf of its joint ventures, M/s Balaji ARBS (JV) and BBEFL-GRIL (JV).

3.7.2) With due respect, it is being highlighted that the Lat CITIA) has wrongly interpreted the decision of Hon'ble ITAT Visakhapatnam Bench in the case of Transstory India Adv. ITO. Ward-2 Guntur reported in (2012) 134 ITD 269 (Visakhapatnam) in the said case, 100% of the work of consortium was executed by the appellant and therefore, there was no question of claiming deduction under section 80-IA of the Act by the Joint Venture. The Hon'ble ITAT Vishakhapatnam Bench has rightly concluded that as per section 80-IA of the Act, the benefit of deduction under this section is to be given to the enterprise who carried on the Classified business. However, the Hon'ble ITAT Vishakhapatnam Bench in no way has concluded that if the JV's are eligible for deduction under section 80- 1A of the Act, the members of the JV's will be merely termed as contractors and will not be eligible for deduction under section 80-IA of the Act in respect of work performed by them as interpreted by Ld CIT(A) Since, in the said cane, 100% of work of JV was performed by members only, there was no claim of deduction under section 80- 1A of the Act by the JV and therefore, the said issue was not decided by the Hon'ble ITAT Vishakhapatnam Bench. However, the Hon'ble ITAT has rightly decided that since, the members of the JV has carried out the classified business as specified under section 80-IA of the Act, the members will also be eligible for deduction under section 80-IA of the Act in respect of profit earned from work performed on behalf of JVs.

3.7.3) In the present case in hand, there is no dispute that the members of the JV has executed work as a member on behalf of its joint ventures, M/s Balaji ARSS (JV) and SBEPL-GRIL (JV). As per section 80-IA of the Act, the benefit of deduction is to be given to the enterprise who has carried out the respective work. The appellant in respect of work executed by it has raised invoices to the joint venture at market price in respect of work executed by it and incurred various expenses for carrying out the work awarded to the joint venture. The resultant profit earned by the appellant from carrying out these projects on behalf of the joint ventures is being claimed as deduction u/s 80IA(4) of the Act in light of the settled legal position.

3.7.4) Further, the Ld CITIA! in its order has stated that the members are merely work contractors and not developers' and due 141,89,142,13/CTK/2023 &CO No.02/CTK/2023 to the said reason, has not allowed additional claim of deduction of Ra. 35,80,390/- u/s. 80-IA of the Act in respect of the Joint Ventures, M/s Balaji ARSS (JV) and SBEPL-GRIL (JV). Relevant extract of the findings of the Ld CIT(A) vide its order dated 29-08-2023 is also reproduced for ready reference of the Hon'ble Bench.

“6.11 Considering the fact that the members are mere work contractors and not developers, the factual matrix of the judicial precedents cited by the AR are not applicable to the present case. Accordingly, additional claim of deduction of Rs 35,80,390/- u/s 80- IA of the Act in respect of the Joint ventures-M/s Balaji ARSS (JV) and (1) SBEPL-GRIL (JV) is denied.”

3.7.5) In this regard, with due respect, it is again being highlighted that the Ld CITIA) has utterly failed to understand the relationship between the members of the JV and the JV. In a Joint Venture, each member of JV stands in the relation of principal, as well as agent, as to each of the other members with the general scope of the Enterprises. By way of joint venture agreements, the members of the JV have regulated the relationship entered with respect to their joint responsibility that existed in relation to the member. The Joint Venture is formed for execution of specific work by the members of the JV only. Henceforth, the members of the JV cannot be termed as sub-contractors to JV in respect of work executed by them for and behalf of JV.

3.7.6) It is also utterly important to highlight the relevant clauses of Joint Venture Agreement/ Joint Bidding Agreement as formed between the members of the joint ventures, M/s Balaji ARSS (JV) and SBEPL-GRIL (JV) for understanding the relationship between the members of JV and the JV which are reproduced hereunder for ready reference of the Hon'ble Bench:

*Joint Venture Agreement between Shree Balaji Engicons Private Limited, the appellant and ARSS Infrastructure Projects Limited for formation of JVMs Balaji ARSS (JV):

Clause No.3

3. The ‘Parties’ have resolved that the distribution of share, responsibilities, profits, losses and remuneration shall be as under :

a) Lead Partner’s share : 70% Name Shree Balaji Engicons Pvt. Ltd. Responsibilities : i) Financial 100% (Technical, Financial & other obligations) Obligation 100% ii) Other Profits, losses and remunerations:70% b) Joint Venture Partner’s share : 30% Name ARSS Infrastructure Projects Limited Responsibilities : i) Technical 100% 141,89,142,13/CTK/2023 &CO No.02/CTK/2023 (Technical, Financial & other obligations) ii) Execution 30% Profit & losses : 30% On perusal of the above, it is evident that the obligations of the respective members of the JV were duly defined in agreement itself and the actual amount of work for which JV was formed was required to be performed by the members only.

* Clause No. 5:

JOINT AND SEVERAL RESPONSIBILITY

The parties undertake that they shall be jointly and severally the liable to the E. Co, Railway acting through Chief administrative Officer (Con), E.Co. Railway, Bhubaneswar or his assignees, for satisfactory execution and completion of the Project work in accordance with General and Special conditions of contract. The JV member shall also be liable jointly and severally for the loss, damages that may be caused to the East Coast Railway Administration, acting through Chief Administrative Officer (Con), E. Co. Railway, Bhubaneswar and during the course of execution of the contract or due to non-execution of the contract or part thereof. The parties solemnly affirm and declare that every possible care will be taken fry them for ensuring satisfactory execution and completion of the work awarded under the contract. On perusal of the above, it is evident that the members of the JV were jointly and severally liable in respect of work executed by them. Hence, it is evident that each member of JV stands in the relation of principal, as well as agent, as to each of the other members with the general scope of the Enterprise.

> Joint Bidding Agreement between Shree Balaii Engicons Private Limited, the appellant and G R Infrastructure Limited for formation of JV - SBEPL - GRIL f J.V1 [Page No. 744-748] > Clause No. 3 and 4: The actual distribution of work is as follows :- SBEPL 70% GRIL 30%

It is agreed that both the Partners of JV will participate, contribute and share the profit or loss in the following ratio. SBEPL 70% GRIL 30%

On perusal of the above, it is evident that Shree Balaji Engicons Private Limited, the appellant will perform 70% of the work assigned to JV and G R Infrastructure Limited will perform 30% of the work 141,89,142,13/CTK/2023 &CO No.02/CTK/2023 assigned to the JV. Henceforth, it is evident that the agreement itself mentioned that the actual amount of work will be performed by JV only for which the JV was formed.

> Clause No. 12: ------------------- 12. It is agreed that both the partners will work together for the mutual benefit of the JV and each partner agrees to indemnify and keep indemnified the other against any loss, damages, liabilities, cost expenses, claim suffered, incurred by it as a consequence of any act, omission or default of such member. Both Partners are committed to be jointly and severally liable for due performance, recourse/sanctioned in the event of default or withdrawal of any partner and arrangement for required indemnities.

On perusal of the above, it is evident that the members of the JV were jointly and severally liable in respect of work executed by them. Hence, it is evident that each member of JV stands in the relation of Principal, as well as agent, as to each of the other members with the general scope of the Enterprise.

3.7.7 ) On perusal of the joint venture agreement/joint binding agreements as formed between the members of the joint ventures, M/s. Balaji ARSS (JV) and SBEPL.GRIL (JV), it is evident that the JV was formed for execution of specific work by members of the JV only and the members of the JV were in relation to the principal as well as agent to each other members with the general scope of the enterprise. Henceforth, the members of the JV cannot be termed as sub-contractors to JV in respect of work executed by them.

3.8] Relevant extract of few of the judicial precedents wherein it is held that the members of the JV cannot be termed as sub- contractors to JV in respect of work executed by them are reproduced hereunder for ready reference of the Hon'ble Bench:

3,8.1 The Hon'ble ITAT Jurisdictional Bench Le, Hon'ble ITAT Cuttack Bench in thy held of HCIL Adhikarya-ARSS (JV) v. ITO (TDS) has categorically held that the JV cannot be ter v ITO (TDS) its members as sub-contractors. Relevant extract of findings of the Hon'ble ITAT Cuttack Bench is reproduced hereunder for ready reference of the Hon'ble Bench:

“*7. In our country, the implementation of infrastructure projects is taking place in a massive scale. In this connection, global tenders are invited. Hence two or more business enterprises are joining hands by forming a consortium of Joint Venture in order to get qualified for participating in tender process. They regulate themselves, by entering into an agreement, the methodology to be adopted for executing the contract obtained. Before going into the main issues, we feel that it is imperative to discuss about the status and legal position of "Joint Venture vis-a-vis Income-tax Act The Joint Ventures are not be governed by the provisions of the "Indian 141,89,142,13/CTK/2023 &CO No.02/CTK/2023 Partnership Act, 1932. It is also a known fact that there is no statute which governs a Joint Venture. Hence the issue regarding the relationship between the members and also between the members and the Joint venture has to be decided on the basis of the terms of agreement entered between the parties. Though the Joint Venture Agreements generally fall in the category of "Association of Persons" (AOP) under the Income-tax Act, yet their assessability in the status of "AOP" was not free from doubt and we notice that the authorities have decided this issue on the basis of facts and circumstances of each case.

8.The Hon'ble Supreme Court has made a detailed discussion on the Concept of Joint Venture the case of Faqir Chand Gulati u. Uppal Agencies Private Ltd. (2008) 10 SCC 345. The relevant observations are extracted below:-

17. This Court had occasion to consider the nature of joint venture in New Horizons Ltd v. Union of India (1995 (1) SCC 478). This Court held The expression joint venture is more frequently used in the United States. It connotes a legal entity in the nature of a partnership engaged in the joint undertaking of a particular transaction for mutual profit or an association of persons or companies jointly undertaking some commercial enterprise wherein all contribute assets and share risks. It requires a community of interest in the performance of the subject matter, a right to direct and govern the policy in connection therewith, and duty, which may be altered by agreement, to share both in profit and losses. [Black's LawDictionary, Sixth Edition, p.839].

According to Words and Phrases, Permanent Edition, a joint venture is an association of two or more persons to carry out a single business enterprise for profit [P.117, Vol. 23). "Emphasis supplied)

The following definition of joint venture occurring in American Jurisprudence [2ndEdition, Vol. 46 pages 19, 22 and 23) is relevant

"A joint venture is frequently defined as an association of two or more persons formed to carry out a single business enterprise for profit. More specifically, it is in association of persons with intent, by way of contract, express or implied, to engage in and carry out a single business venture for joint profit, for which purpose such persons combine their property, money, effects, skill, and knowledge, without creating a partnership, a corporation or other business entity, pursuant to an agreement that there shall be a community of interest among the parties as to the purpose of the undertaking, and that each joint venture must stand in the relation of principal, as well as agent, as to each of the other covertures within the general scope of the enterprise.

Joint ventures are, in general, governed by the same rules as partnerships. The relations of the parties to a joint venture and the nature of their association are so similar and closely akin to a 141,89,142,13/CTK/2023 &CO No.02/CTK/2023 partnership that their rights, duties, and liabilities are generally tested by rules which are closely analogous to and substantially the same, if not exactly the same as those which govern partnerships. Since the legal consequences of a joint venture are equivalent to those of a partnership, the courts freely apply partnership law to joint ventures when appropriate In fact, it has been said that the trend in the law has been to blur the distinctions between a partnership and a joint venture, very little law being found applicable to one that does not apply to the other. Thus, the liability for torts of parties to a joint venture agreement is governed by the law applicable to partnerships.

A joint venture is to be distinguished from a relationship of independent contractor, the latter being one who, exercising an independent employment, contracts to do work according to his own methods and without being subject to the control of his employer except as to the result of the work, while a joint venture is a special combination of two or more persons where, in some specific venture, a profit is jointly sought without any actual partnership or corporate designation. (Emphasis supplied)

To the same effect is the definition in Corpus Juris Secundum (Vol. 48A pages 314-315):

"Joint venture, a term used interchangeably and synonymous with joint adventure', or coventure, has been defined as a special combination of two or more persons wherein some specific venture for profit is jointly sought without any actual partnership or corporate designation, or as an association of two or more persons to carry out a single business enterprise for profit or a special combination of persons undertaking jointly some specific adventure for profit, for which purpose they combine their property, money, effects, skill, and knowledge....... Among the acts or conduct which are indicative of a joint venture, no single one of which is controlling in determining whether a joint venture exists, are: (1) joint ownership and control of property; (2) sharing of expenses, profits and losses, and having and exercising some voice in determining division of net ramings. (3) community of control over, and active participation in management and direction of business enterprise, (4) intention of parties, express or implied, and (Sifixing of salaries by joint agreement." (emphasis supplied)

Black's Law Dictionary (7th Edition, page843) defines joint venture thus Joint Venture: A business undertaking by two or more persons engaged in a single defined project. The necessary elements are: (1) an express of implied agreement, (2) a common purpose that the group intends to carry out, (3) shared profits and losses; and (4) each member's equal voice in controlling the project.

9. On a careful reading of the order of the Hon'ble Supreme Court we notice the following essential ingredients for a "Joint Venture", 141,89,142,13/CTK/2023 &CO No.02/CTK/2023 (a) It connotes a legal entity in the nature of a partnership engaged in the joint undertaking of a particular transaction for mutual profit, (or)

(b) it is in association of persons with intent, by way of contract, express or implied, to engage in and carry out a single business venture for joint profit, for which purpose such persons combine their property, money, effects, skill, and knowledge, without creating a partnership. (or)

(c) a special combination of two or more persons wherein some specific venture for profit is jointly sought without any actual partnership or corporate designation, or as an association of two or more persons to carry out a single business enterprise for profit.

(d) that each joint venture must stand in the relation of principal, as well as agent, as to each of the other covertures within the general scope of the enterprise.(e) Among the acts or conduct which are indicative of a joint venture, no single one of which is controlling in determining whether a joint venture exists, are: (1) joint ownership and control of property; (2) sharing of expenses, profits and losses, and having and exercising some voice in determining division of net earnings; (3) community of control over. and active participation in management and direction of business enterprise; (4) intention of parties, express or implied, and (5) fixing of salaries by joint agreement.

12. Thus, on an understanding of the concept of the Joint Venture and the terms of agreement between the members of the present case, we are of the view that in the instant case, the consortium of Joint Venture has been formed only to procure the contract works. By way of the agreement, the parties have only regulated the relationship inter with respect to their joint responsibility that existed in relation to the Principal. viz., M/s Konkan Railway In reality, both the parties have divided the contract works between themselves and they have executed their share of work on their own risks. It is pertinent to note here that the AO has not given any finding on the issues like that each member had authority to interfere with or control the work executed by the other member, that both the members have jointly executed the project and thus produced the income jointly. In our opinion, the finding on the lines stated above is crucial to determine the issue of availability of income in the hands of Joint Venture- AOP. On the contrary, the AO is on record that the each of the & 497/12 & ITA Nos. 140&141/14 members has declared the income derived from their respective share of contract works in their hands. In this kind of situation, we do not find any merit in the presumption made by the AO that the Joint Venture is the Main Contractor and the members are the Sub- contractors. Once this presumption has been found to be wrong, then the question of estimation of income by way of Sub- contract commission does not arise. So also the question of deduction of tax u/s 194C(2) of the Act and the disallowance u/s 141,89,142,13/CTK/2023 &CO No.02/CTK/2023 40(a)(ia) does not arise. In view of the fore going discussions, we do not find any infirmity in the decision reached by the Ld CIT(A).

8. Following this order of the Tribunal, the Hyderabad Bench of the Tribunat has taken similar view in case of M/s Hindustan Ratna JV (supra) by holding that there could not be any sub-contract between JV and its constituents as the JV has been formed only to procure contract works from Government. The relevant observations of the Tribunal are extracted hereunder for the sake of reference:

11. In the result, all the appeals of the assessee are allowed" [Emphasis supplied)

3.8.2] The Hon'ble ITAT Hyderabad Bench 'B' in the case of Hindustan Ratna JV v. ΙΤΟ, Ward - 6/2), Hyderabad reported in 2014/2 in then.com 107 (Hyderabad - Trib.) has held that 15. In the present case, the modus of obtaining the Government contracts, the sequence and frequency of execution of the contracts clearly show that the assessee as a partnership firm secured contracts and given to its partners with a collective responsibilities and liabilities jointly and severally liable towards the owners for the execution of the contracts in accordance with the contract of the business as per clause (g) of the partnership deed. They have demarcated the nature of the contracts into principal contracts and sub-contracts for the purpose of identifying the work handled by the partners and for the purpose of accounting contract receipts and payments.

16. In order to establish a relationship of contractor and sub- contractor, in addition to a formal agreement, it is necessary to show that the parties have acted in such a manner conducive to uphold a contractor-subcontractor relationship when there is a strong case of interlacing of finance and funds, interdependence of responsibilities, interconnection of activities. It is very difficult to come to a conclusion that the assessee were acting in the status of contractors vis-a-vis sub-contractors. A more rational finding would be that the parties were executing the contracts through joint effort, as a group of partners.

17. Defacto speaking, when there is no basis for coming to a conclusion that there existed a relationship of contractor vis-a-vis sub-contractor, it is useful to look into the principle embodies in section 20 of the Indian Contract Act of 1872. This section provides that where both parties to an agreement are under a mistake as to a matter of fact, essentially to the agreement, the agreement is void. In the present case, the question is mainly focussed on the contractual relationship of the assessee and its partners. This principle embodies in the section 20 of the Indian Contract Act has great relevance. It turns out that the formats of the agreement entered into with the partners and the styling of accounts prepared 141,89,142,13/CTK/2023 &CO No.02/CTK/2023 by them are products of mistakes of fact, and therefore, the agreement is not to be relied on to hold that the assessee is acting in the status of contractors vis-a-vis sub contractors. Therefore, it is to be seen that the question of TDS in the present case cannot be considered only on the basis of the agreements entered into between the assessee and its partners.

18. The liability u/s. 194C(2) is cast on the assessees only when they are in fact and in substance acting in the relationship of contractors and sub-contractors. Dehors the agreements and accounts, when it is found that they are acting jointly, for the purpose of their contract business, there cannot be a relationship of contractor and sub- contractor and there may not be an occasion to invoke Section 194C(2). When the said provision relating to deduction of tax at source is not applicable for the assessee for the reasons stated above, violation uls. 40(a)(ia) does not arise. If that is the case, payments made under the nomenclature of "sub- contractors" are not liable to be disallowed

3.8.3] The Hon'ble ITAT Kolkata Bench in the case of Ramky ECI JV v. ITO (TDS) reported in [2024] 158 taxmann.com 167 (Kolkata Trib) has held that:

"7.3 Based on the above detailed discussion, the Co-ordinate Bench arrived at a conclusion that consortium of JV has been formed only to procure the contract works. By way of the agreement, the parties have regulated the relationship entered with respect to their joint responsibility that existed in relation to the member. In reality, both the parties have divided the contract work between themselves and have executed their share of work on their own risk. It was thus concluded that there is no merit in the presumption made by the AO that the JV is the main contractor and the constituents are the sub- contractors. Accordingly, it held that question of deduction of tax at 141,89,142,13/CTK/2023 &CO No.02/CTK/2023 source u/s. 194C(2) does not arise. It was thus concluded that assessee JV was not liable to deduct tax at source and, therefore, it cannot be held to be in default u/s. 201(1) and liable to be charged interest u/s. 201(1A) of the Act." 3.9) in the view of the findings as laid down in the above judicial precedents, it is evident that in a Joint venture agreement, there sub-contract between JV and the constituents and sixce the JV has been formed only to procure contract works from the Government which is executed by the members of the JV only at a specified ratio. Henceforth, in a Joint venture, it cannot the concluded that the JV is a contractor and the members of the JV are sub-contractors in respect of work executed by them in the present case in hand, the appellant was member of Joint Venture, M/s Balaji ARSS (JV) and SREPL-GRIL (JV) which was formed for execution of specific work by members of the JV only and the members of the JV were in relation to the principal as well as agent to each other members with the general scope of the Enterprise. Henceforth, there was not contractual relationship between the members of the JV and the JV.

3:10) Hence, the Ld CIT(A) was not correct in not allowing further deduction of Rs. 35,80,390/- u/s 801A of the Act in respect of income/profit earned from work done as a member on behalf of its joint ventures, M/s Balaji ARSS (JV) and SBEPL-GRIL (JV) by treating the appellant as work contractors in respect of work executed by it on behalf of JV even when the JV's were formed for execution of specific work by the members of the JV only and the members of the JV were jointly and severely liable in respect of work executed to them. Henceforth, the members of the JV cannot be termed as sub-contractors in respect of work executed by them for and behalf of JV only. The appellant has executed work on behalf of the JVs and has undertaken all the risk associated with the said work as highlighted in the agreement also. The appellant raised invoices to the joint venture at market price in respect of work executed by it and incurred various expenses for carrying out the work awarded to the joint venture. Therefore, the resultant profit earned by the appellant from carrying out these projects on behalf of the joint ventures is also eligible for deduction under section 80-IA of the Act.

3.11) The appellant in the above paras has duly cited following judicial precedents wherein it is categorically held that the assessee is eligible for deduction under section 80-IA of the Act in respect of work executed by it on behalf of JV:  CIT u. Pic Construction Co. Ltd reported in (2015) 55 taxmann.com 21 (Allahabad)

 ACIT v. M/s JSR Constructions (P) Ltd. (ΠA No. 898/Bang/2009 141,89,142,13/CTK/2023 &CO No.02/CTK/2023  Transstory (India) Ltd. v. ITO, Ward-2(2), Guntur reported in [2012] 134 ITD 269 (Visakhapatnam)

 DCIT, Central Circle-2, Hyd. vs. Megha Engg. & Infrastructure Ltd. (ITA No. 607, 608, 609 & 610/H/2016/ 3.12) In view of the above discussion, the Hon’ble Bench is kindly requested to allow the further deduction of Rs. 35,80,390/- u/s 801A of the Act in respect of income/ profit earned from work done as a member on behalf of its joint ventures, M/s Balaji ARSS (JV) and SBEPL-GRIL (JV) and oblige.

8. In view of the above submissions, ld. AR vehemently argued that the assesee is eligible for deduction u/s.80IA(4) of the Act on the works executed by it for and on behalf of the joint venture as lead constituent.

9. On the other hand, ld. CIT-DR vehemently supported the order of the ld. CIT(A) in not allowing the additional claim to the assesee of deduction u/s.80IA(4) of the Act on the profit earned from the works executed by it as one of the lead partner to the joint venture. Ld. CIT-DR submitted that in Section 80IA(4) of the Act, there is express provision for allowability of deduction that it is available only to the enterprises which had entered into the agreement with the State Government/Central Government/local authority and since in the instant case no such agreement is executed between the assesee and any such authority, and the project was awarded by such Government authority to the joint venture only and, therefore, the assesee is not eligible for deduction u/s.80IA(4) of the Act on the execution of work in such project. He further submit that the assesee simply worked as a sub-contractor executing the work contract, thus, as per the explanation to Section 80IA(13) of the Act, it is not eligible for deduction u/s.80IA(4) of the Act. He further submitted 141,89,142,13/CTK/2023 &CO No.02/CTK/2023 that the assesee is not a developer and also submitted that as per the scope of work given in the tender document in Chapter III available in page no.397 of the paper book, the work is to be executed by the contractor i.e. joint venture firm and not by the constituent, therefore, he prayed for confirming the order of the ld. CIT(A) in not allowing the deduction to the assesee. The extract of the page 397 of paper book is as below :-

141,89,142,13/CTK/2023 &CO No.02/CTK/2023 10. We have considered the rival submissions and perused the material available on record. During the year under appeal, the assesee was a constituent of two separate joint ventures and a sum was received on account of work done by the assesee on behalf of the joint venture for respective JVs on which profits of Rs.35,80,390/- was earned and claimed as deduction u/s.80IA(4) of the Act. The respective joint venture have also earned certain profits on such works. The necessary details of the scope of work and receipts of the joint venture firm’s and of the assesee is tabulated at page 885 of the paper book which is reproduced hereunder :-

11. The ld. CIT(A) while dismissing the claim made by the assesee has observed in para 6.6 to 6.11 as under :-

141,89,142,13/CTK/2023 &CO No.02/CTK/2023 6.6 As seen above, the appellant during the course of appellate proceedings further claimed deduction under section 801A (4) of the Act in respect of work executed as member for and on behalf of Joint ventures. The appellant claimed that entire work of Joint ventures were executed by its members. The sales invoices were raised to the Joint Ventures by the appellant on the basis of work executed by it and in turn final bills were raised by the joint ventures to the respective client i.e. the govt. Agencies. In the books of Joint ventures, net profit was shown being difference in the amount of final bill raised by the Joint ventures after reducing the cost of bills received from respective members and in the book of members profit was calculated in respect of work executed as member of that joint ventures. On the amount of profit as earned by the respective members in respect of work executed for Joint ventures. Audit Reports in Form 10CCB stipulated u/s 801A (7) of the Act was also filed by the appellant during appellate proceedings. The appellant also relied on the decision of Vizag Bench of ITAT in the case of Transstory (India) Ltd Vs ITO (134 ITD 269).

6.7 It is seen that the assessee has incorporated two Joint Ventures - (i) M/s Balaji- ARSS (JV) and (ii) M/s SBEPL-GRIL (JV) and executed the work given to the said Joint Ventures. In the submissions made by the appellant it is evident that the said JVs filed their Income Tax Return and claimed deduction u/s 80- IA of the Act from AY 2013-14 onward.

The relevant extracts of the submission is given below:

S. Brief description of documents No 1 Documents related to M/s Balaji-ARSS (JV) 1.1 Copy of audited final accounts for the year ended 31 March, 2011 1.2 Agreement with East Coast Railway for construction of ROB at km 330.269 RCC T-beum Ginder and other allied works in connection with setting up Alumina smelter plant at Lapanga Station (Deposit work) (Two Packet System) awarded by East Coast Railway Construction Organisation 1.3 Joint-Venture (JV) Agreement entered into by the appellant with M/s ARSS Infrastructure Projects Limited for formation of JV in the name of M/s Balaji-ARSS (JV) after awarding of tender by East Coast Railway 1.4 Copy of supporting invoices raised by the appellant to M/s Balaji- ARSS (JV) 1.5 Copy of supporting invoices raised by the appellant to M//s Balaji- ARSS (JV) 1.6 Copy of Profit and Loss account for the year ended 31 March, 2011 in respect of income carned and expenses incurred by the appellant for work done on behalf of the joint-venture. M/s Balaji ARSS (JV) 1.7 Copy of acknowledgement of income-tax return along with computation of income of M/s Balaji ARSS (JV) as filed u/s. 139 of the Income-Tax Act, 1961 for the Assessment Year 2013-14 wherein deduction u/s 80-1A of the Act was claimed

2 Documents related to M/s SBEPL-GRIL (JV):

141,89,142,13/CTK/2023 &CO No.02/CTK/2023 2.1 Copy of audited final accounts for the year ended 31 March 2011 2.2 Agreement with Executive Engineer, N.H Division, Jharsuguda for widening and strengthening of existing single/intermediate lane with geometric improvement to two lane carria

2.3 Joint Bidding Agreement entered into by the appellant with M/s GR Infra projects Limited for formation of IV in the name of M/s SBEPL- GRIL (JV)

2.4 Copy of supporting invoices raised by the appellant to M/s SBEPL- GRIL (JV)

2.5 Copy of audit report in Form No. 10CCBissued by independent chartered accountant in respect of work done by the appellant eligible for deduction u/s 80-1A of the Act

2.6 Copy of Profit and Loss account for the year ended 31 March, 2011 in respect of income earned and expenses incurred by the appellant for work done on behalf of the joint-venture, M/s SBEPL- GRIL (JV)

2.7 Copy of acknowledgement of income-tax return along with computation of income of M//s SBEPL GRIL (JV) as filed u/s 139 of the Income-Tax Act, 1961 for the Assessment Year 2013-14 wherein deduction w/s 80-1A of the Act was claimed

6.8 The appellant relied on the judgement of Hon'ble ITAT, Vizag Bench in the case of Transstory (India) Ltd Vs ITO (134 ITD 269) in support of its claim. The relevant portion of the said judgement is given below:

"8. Having given a thoughtful consideration to the rival submissions and from a careful perusal of the orders of the authorities below and documents placed on record, we find that undisputedly the joint venture or the consortium was formed only to obtain the contract from the Government bodies. At the time of execution of the joint venture or the consortium, it has been made clear that work/project awarded to the joint venture would be executed by the joint ventures or the constituents. As per mutually agreed terms and conditions between them, it was also agreed that each party shall be responsible for the provisions of without limitation on resources required for the purpose of fulfilment of the scope and also solely responsible for the performance of its scope of work and shall hear all technical. Commercial and facing risk involved in performing its scope of work. It was also agreed that none of the party shall assign its rights and obligations to any other party without written consent of other party. From a careful perusal of this joint venture agreement and the consortium agreement, it is evidently clear that the joint venture and the consortium was formed only with an object to bid 141,89,142,13/CTK/2023 &CO No.02/CTK/2023 contract. Once the project or contract is awarded to the joint venture or the consortium, it is to be executed by its constituents or the joint ventures in a ratio agreed upon by the parties. In the instant case in case of a joint venture agreement, the assessee was entitled to execute the 40% of total work awarded by the Andhra Pradesh Government to the joint venture and in case of a consortium it was agreed that the entire work is to be executed by the assessee itself. Therefore for all practical purposes, it was the assessee who executed the work contract or the project awarded to the joint venture, No doubt the joint venture is an independent identity and has filed its return of income and was also assessed to tax but it did not offer any profit or income earned on this project/works awarded to it nor did he claim any exemption/deduction u/s 801A (4) of the Act. These facts clearly indicate that the joint Venture was only a de jure contractor but in fact the assessee was a de facto contractor.

From the aforesaid submissions made by the AR, it is apparent that the works were awarded to both the JVs and they claimed deduction u/s 801A from the AY 2013-14 onward. In this context, it is pertinent to refer the submission made by the AR which is reproduced below for the sake of clarity;

Para 5-The Documents related Balaji-ARSS JV (PAN- AABAB1071G) for AY 2011-12, AY 2012-13 and Y 2013-14 are submitted herein which shows that the JV assessee had not claimed deduction u/s 801A in its ITR for its AY 2011-12 & 2012- 13 out of ignorance but having known its eligibility for deduction u/s 801A, it started claiming the same from assessment year 2013-14 onwards. The claim of the assessee u/s 801A was allowed in the intimation u/s 143(1). A copy of such order is attached herein for your ready verification.

Para 6 - Likewise, The Documents related SBEPL-GRIL JV (PAN AAFAS2639R) for AY 2011-12, AY 2012-13 and Y 2013-14 are submitted herein which shows that the JV assessee had not claimed deduction u/s 801A in its ITR for its AY 2011-12 & 2012- 13 out of ignorance but having known its eligibility for deduction u/s 8014, it started claiming the same from assessment year 2013- 14 onwards. The claim of the assessee u/s 801A was allowed by your good office in the order dated 31-05-2023. A copy of such order is attached herein for your ready verification. It may also be noted such claim u/s 801A by the SBEPL-GRIL JV was allowed by the jurisdictional ITAT in Appeal before [ITA 195/CTK/2019] for AY 2014-15. A copy of such order is already in your good office's records.

6.9 As per the AR, due to ignorance the profit relating to JVs were not claimed during the AY 2011-12 and 2012-13 even if the said JVs were entitled to deduction u/s 801A of the Act. Further, jurisdictional ITAT in Appeal No. ITA 195/CTK/2019 decreed that the said JVs were entitled to deduction u/s 801A being the 141,89,142,13/CTK/2023 &CO No.02/CTK/2023 "developer of an infrastructure facility in their individual capacity. Hence, it is apparent that the JVs were the "developer" and work executed by the members were mere work contractors. As the JVs were unable to claim deduction u/s 801A due to ignorance for the impugned assessment year, AR harps on the points that the profit attributable to the portion of the work executed by the members that were executed/sub-contracted by JVs are entitled to get Deduction U/s 801A of the Act. Considering the submission of AR and Order of the Jurisdictional ITAT. JVs are entitled to deduction u/s 801A being the "developer" and members are not entitled to deduction u/s 801A in the guile of being a "developer". 6.10 As seen in earlier para, the Judgements of the Hon'ble ITAT, Vizag has given the benefit of deduction to the members since the JV has not offered any income or profit on any of the projects awarded to it nor claimed any deduction u/s 801A of the Act. In the present case both JVs have shown profit and claimed deduction u/s 801A from AY 2013-14 but due to ignorance has not claimed deduction v/s 801A for the AY 2011-12 & 2012-13. However, they have claimed deduction from AY 2013-14 onward. Hence, the factual matrix in the case of Transstory (India) Ltd are not applicable to the assessee as the assessee has claimed deduction u/s 801A from AY 2013-14 and due to ignorance they have not claimed in the Ay 2011-12 & 2012-13 which they are otherwise entitled to.

6.11 Considering the fact that the members are mere work contractors and not "developers", the factual matrix of the judicial precedent cited by the AR are not applicable to the present case. Accordingly, additional claim of deduction of Rs. 35,80,390/- u/s 80-1A of the Act in respect of the Joint ventures - (i) M/s Balaji- ARSS (JV) and (ii) M/s Balaji-ARSS (JV) is denied.

Deductions in respect of profits and gains from industrial undertakings or enterprises engaged in infrastructure development, etc. 80-IA. (1) ****** (2) ******** (3) ******** (4) This section applies to—

(i) any enterprise carrying on the business of (i) developing or (ii) operating and maintaining or (iii) developing, operating and maintaining any infrastructure facility which fulfils all the following conditions, namely :— 141,89,142,13/CTK/2023 &CO No.02/CTK/2023 (a) it is owned by a company registered in India or by a consortium of such companies or by an authority or a board or a corporation or any other body established or constituted under any Central or State Act; (b) it has entered into an agreement with the Central Government or a State Government or a local authority or any other statutory body for (i) developing or (ii) operating and maintaining or (iii) developing, operating and maintaining a new infrastructure facility; (c) it has started or starts operating and maintaining the infrastructure facility on or after the 1st day of April, 1995: Provided that where an infrastructure facility is transferred on or after the 1st day of April, 1999 by an enterprise which developed such infrastructure facility (hereafter referred to in this section as the transferor enterprise) to another enterprise (hereafter in this section referred to as the transferee enterprise) for the purpose of operating and maintaining the infrastructure facility on its behalf in accordance with the agreement with the Central Government, State Government, local authority or statutory body, the provisions of this section shall apply to the transferee enterprise as if it were the enterprise to which this clause applies and the deduction from profits and gains would be available to such transferee enterprise for the unexpired period during which the transferor enterprise would have been entitled to the deduction, if the transfer had not taken place. 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 activities being an integral part of the highway project; (c) a water supply project, water treatment system, irrigation project, sanitation and sewerage system or solid waste management system; (d) a port, airport, inland waterway, inland port or navigational channel in the sea; (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 on or after the 1st day of April, 1995, but on or before the 31st day of March, 2005. Explanation.—For the purposes of this clause, "domestic satellite" means a satellite owned and operated by an Indian company for providing telecommunication service; (iii) any undertaking which develops, develops and operates or maintains and operates an industrial park or special economic zone notified by the Central Government in accordance with the scheme framed and notified79 by that Government for the period 141,89,142,13/CTK/2023 &CO No.02/CTK/2023 beginning on the 1st day of April, 1997 and ending on the 31st day of March, 2006 : 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 referred to as the transferee undertaking), the deduction under sub-section (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 transferred to the transferee undertaking: Provided further that in the case of any undertaking which develops, 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 words "31st day of March, 2006", the figures, letters and words "31st day of March, 2011" had been substituted; (iv) an undertaking which,— (a) is set up in any part of India for the generation or generation and distribution of power if it begins to generate power at any time during the period beginning on the 1st day of April, 1993 and ending on the 31st day of March, 80[2017]; (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, 80[2017]: Provided that the deduction under this section to an 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; (c) undertakes substantial renovation and modernisation of the existing network of transmission or distribution lines at any time during the period beginning on the 1st day of April, 2004 and ending on the 31st day of March, 80[2017]. Explanation.—For the purposes of this sub-clause, "substantial renovation and modernisation" means an increase in the plant and machinery in the network of transmission or distribution lines by at least fifty per cent of the book value of such plant and machinery as on the 1st day of April, 2004; (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 by public sector companies for the purposes of enforcing the security interest of the lenders to the company owning the power generating plant 141,89,142,13/CTK/2023 &CO No.02/CTK/2023 and such Indian company is notified before the 31st day of December, 2005 by the Central Government for the purposes of this clause; (b) such undertaking begins to generate or transmit or distribute power before the 31st day of March, 2011; (vi) [***] 13. In the present case, to our understanding the “enterprises” as referred to in Section 80IA(4)(i) of the Act are two joint ventures namely M/s Balaji ARSS-JV and M/s SBNEPL-GRIL JV. These joint ventures are incorporated in terms of joint venture agreements executed between the parties known as constituent of joint ventures and the said joint ventures are separate legal entity having their own PAN number and assessed as AOP. The Joint Ventures has entered into an agreement with the respective authorities i.e. East Coast Railways and the Chief Engineer, NH, Odisha for development of infrastructure facility. Both the joint ventures have started after first day of April, 1995. Thus, these joint ventures are the “enterprises” as referred to in Section 80IA(4) of the Act for claiming deduction. It is also relevant to state here that the respective joint ventures have also claimed deduction u/s.80IA(4) of the Act on the profits earned from these projects and has been allowed to them for which the necessary documents in the shape of return of income and appellate orders in the case of SBEPL-GRIL-JV were also placed by the assesee in the paper book. The deduction u/s.80IA(4) could be claimed for ten consecutive assessment years during a period of 15 years and it appears that these joint ventures have started claiming deduction from A.Y.2013- 2014 and not from the year under appeal. Thus, it is clear that the deduction u/s.80IA(4) of the Act was claimed by the joint ventures, who 141,89,142,13/CTK/2023 &CO No.02/CTK/2023 have been entered into the agreement with the respective authorities and worked as developer.

141,89,142,13/CTK/2023 &CO No.02/CTK/2023 16. From the perusal of the clause 4, it is clear that as per the joint venture agreement, both the constituents of M/s Balaji ARSS-JV had defined their scope of responsibility as well as scope of the work to be executed and also clearly defined their share in the profit/loss. Therefore, they simply at the most could be treated as the partners to the joint venture which is a separate legal entity. None of the constituent has undertaken the responsibility to execute 100% execution and as per the chart reproduced in para 10 above, they have share gross receipt in almost 55% - 45% ratio for this year. The bills against the execution of work were separately raised by the assesee to M/s Balaji ARSS-JV, which is evident from the copies of the invoices available in the paper. M/s Balaji-ARSS (JV) and SBEPL-GRIL (JV) have raised the bills to their respective principals against the works executed by them and had received the amounts which were in turn paid to the parties who have executed the work. In such manner these constituents parties are only the sub-contractors and cannot be treated as the “enterprises” for claiming deduction u/s.80IA(4) of the Act. From perusal of the work order given by the East Coast Railway to M/s Balaji ARSS (JV) and the Chief Engineering, NH, Odisha to M/s SBEPL-GRILL(JV), it is clear that the works have been awarded to the respective joint ventures wherein they have been termed as the “contractors” by the respective authorities. The relevant copy of the work orders are as under:-

141,89,142,13/CTK/2023 &CO No.02/CTK/2023 141,89,142,13/CTK/2023 &CO No.02/CTK/2023 141,89,142,13/CTK/2023 &CO No.02/CTK/2023 141,89,142,13/CTK/2023 &CO No.02/CTK/2023 141,89,142,13/CTK/2023 &CO No.02/CTK/2023 141,89,142,13/CTK/2023 &CO No.02/CTK/2023

17. It is also observed that the awardee i.e. the principals have retained the certain amounts towards the performance guarantee which in no way 141,89,142,13/CTK/2023 &CO No.02/CTK/2023 could be treated as risk and responsibility shared by the assesee as a constituent of the joint venture. Since the amounts of such securities were held by the principal in the name of the joint venture only and was repayable to the assesee only on the completion of performance guarantee which in no way could be treated as sharing the risk and responsibilities. Since both the JV’s could only be termed as “developer”, therefore, the joint venture firms are eligible for deduction u/s.80IA(4) of the Act and was rightly claimed and allowed which is not in dispute before us.

Thereafter even knowing the fact that both the JV’s has claimed deduction u/s 80IA(4) on the profits from the said project, assessee has made a fresh claim of deduction u/s 80IA(4) of the Act before ld.CIT(A) during the course of appellate proceedings by way of additional ground of appeal and also filed the necessary audit reports required for claiming such deduction. All these clearly established that the conclusion reached by the coordinate bench of Hyderabad Tribunal in the case Megha Engg. (supra) is based on facts which are entirely different from the facts of the case of the assessee thus the ratio laid down by the coordinate bench in the case of Megha Engg.(Supra) is not applicable to the case in hand.

141,89,142,13/CTK/2023 &CO No.02/CTK/2023 22. The assesee has also placed reliance on the decision of the Hon’ble Supreme Court in the case of Faqir Chand Gulati Vs. Uppal Agencies Pvt. Ltd. reported in (2008) 10 SCC 345 (SC), wherein the Hon’ble Supreme Court has discussed the concept of joint venture.

Accordingly to ld. AR the joint venture was formed only to procure the contract work and the parties have requested with respect to their joint responsibility that existed in relation to the principal and, therefore, once the parties have taken the responsibility towards principal they stepped into the shoe of the joint venture which was formed to procure the contract work. Once the contractor entered into the shoe of the joint venture it should be allowed deduction u/s.80IA(4) of the Act. Looking to the facts of the present case, we find that though both the joint ventures are formed for a specific purpose of participating the tender as per MOU, however, later both the constituents have entered into a separate agreement titled as “Joint Venture Agreement” and performed the work as per the terms and conditions of such agreement. It is also a matter of fact both the joint ventures have claimed deduction u/s.80IA(4) of the Act for the work executed, therefore, the constituent of such joint venture cannot be held as stepped into the shoe of the joint venture for claiming deduction u/s.80IA of the Act.

23. One more aspect is that to claim the deduction u/s 80IA(4) assessee should kept separate books of accounts of each eligible project.

In the present case the assessee has not made any claim of deduction on the projects related to JV’s in the return of income filed and after the 141,89,142,13/CTK/2023 &CO No.02/CTK/2023 expiry of few years, claim was made before the CIT(A) through additional ground of appeal and filed the relevant reports. Here it is relevant to note that in the audit repot u/s 44AB filed alongwith the return of income nowhere it was observed by the auditors that separate books of account were maintained for all the eligible projects related to JV’s thus it is not sure whether there were separate books of accounts available to deduce the true and correct profits eligible for deduction u/s 80-IA on these projects. Assessee also failed to file the Balance Sheets of these projects and only P&L accounts were filed alongwith the report in Form 10CCAC required to claim deduction u/s 80IA. Thus assessee has also failed to comply full conditions for claiming deduction u/s 80IA of the Act.

141,89,142,13/CTK/2023 &CO No.02/CTK/2023 25. It is also a matter of fact that assesee was not able to demonstrate whether the other constituent of joint ventures had claimed deduction u/s.80IA(4) of the Act on the income on their part of the receipts. On specific query by the bench, the ld. AR stated that he was not aware. On the contrary, it is an undisputed fact that both the principals i.e. Joint Ventures, who have been awarded the project form the respective authorities i.e. East Coast Railway and the Chief Engineer, NH, Odisha, had claimed deduction u/s.80IA of the Act on the income earned by the execution of such projects.

26. Recently the coordinate bench of the Tribunal ITAT Mumbai in the case of AJR Infra and Tolling Limited, passed in along with other connected appeals, dated 31.01.2024 has held that the deduction u/s.80IA(4) of the Act is available to the Special Purpose Vehicles (SPV), who had entered into the agreement with NHAI and also raising invoices upon the NHAI. Hence, in the eyes of law, it is the SPVs which are actually executing the work of development and operation of infrastructure facility. In the instant case also it is the respective joint entities, who had entered into agreement with their principals and developed the infrastructure facilities by awarding the sub-contract to its constituent. Therefore, in terms of Section 80IA(4) of the Act the enterprises which is eligible for deduction is the “joint venture firm” and not any of the constituent as has been claimed by the assesee.

29. The entire discussion lead to following facts :-

(i) assesee is one of the constituent of two separate Joint Venture Entities and partly executed the projects awarded to such JV entities. ii) JV entities had claimed deduction u/s.80IA of the Act on such project and allowed to them. Wherever the claim was not allowed to the JVs, such claim was agitated in appeals and it was submitted that though the works were executed through constituents, however, since no work was carried out by the third party i.e. other than the constituents therefore, the JVs are entitled for deduction u/s.80IA of the Act and accordingly those JVs were succeeded in appellate forums and allowed the deduction u/s.80IA of the Act.

141,89,142,13/CTK/2023 &CO No.02/CTK/2023 iii) the deduction u/s.80IA of the Act could be allowed to the enterprises who developed the infrastructure facility which in the present case are two JV Entities. iv) The deduction u/s.80IA on one single project cannot be allowed to two entities i.e. first in the hands of the JV who had been awarded the project by the authorities wherein the JV has entered into the agreement and had signed the same and later executed it. Secondly, by the constituents of the JV who now claimed that it had carried out major part of the execution, therefore, is also entitled deduction u/s.80IA of the Act on the same project. In our understanding deduction u/s.80IA of the Act cannot be allowed to two entities by treating them as enterprises and developer at the same time.

Deductions in respect of profits and gains by an undertaking or enterprise engaged in development of Special Economic Zone.

80-IAB. (1) Where the gross total income of an assessee, being a Developer, includes any profits and gains derived by an 141,89,142,13/CTK/2023 &CO No.02/CTK/2023 undertaking or an enterprise from any business of developing a Special Economic Zone, notified on or after the 1st day of April, 2005 under the Special Economic Zones Act, 2005, there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction of an amount equal to one hundred per cent of the profits and gains derived from such business for ten consecutive assessment years:

Provided that the provisions of this section shall not apply to an assessee, being a developer, where the development of Special Economic Zone begins on or after the 1st day of April, 2017. (2) The deduction specified in sub-section (1) may, at the option of the assessee, be claimed by him for any ten consecutive assessment years out of fifteen years beginning from the year in which a Special Economic Zone has been notified by the Central Government :

Provided that where in computing the total income of any undertaking, being a Developer for any assessment year, its profits and gains had not been included by application of the provisions of sub-section (13) of section 80-IA, the undertaking being the Developer shall be entitled to deduction referred to in this section only for the unexpired period of ten consecutive assessment years and thereafter it shall be eligible for deduction from income as provided in sub-section (1) or sub-section (2), as the case may be :

Provided further that in a case where an undertaking, being a Developer who develops a Special Economic Zone on or after the 1st day of April, 2005 and transfers the operation and maintenance of such Special Economic Zone to another Developer (hereafter in this section referred to as the transferee Developer), the deduction under sub-section (1) shall be allowed to such transferee Developer for the remaining period in the ten consecutive assessment years as if the operation and maintenance were not so transferred to the transferee Developer.

(3) The provisions of sub-section (5) and sub-sections (7) to (12) of section 80-IA shall apply to the Special Economic Zones for the purpose of allowing deductions under sub-section (1).

Explanation.—For the purposes of this section, "Developer" and "Special Economic Zone" shall have the same meanings respectively as assigned to them in clauses (g) and (za) of section 2 of the Special Economic Zones Act, 2005.

37. Thus, the appeal of the assesee in IT(SS)A No.77/CTK/2023 for A.Y.2011-2012 is dismissed.

ITA No.296/CTK/2023 (AY : 2013-2014)

1. That on the facts and in the circumstances of the case and in law, the Ld CIT(A) erred in not entertaining/ adjudicating the additional claim of Rs. 42,60,511/- as lodged during the course of appellant proceedings even when the appellant was eligible for deduction u/s 80-IA of the Act in respect of profit earned from work undertaken by the appellant as a member of the 141,89,142,13/CTK/2023 &CO No.02/CTK/2023 consortium in respect of the projects undertaken by the joint ventures/ consortiums.

2. That on the facts and in the circumstances of the case and in law, the Ld CIT(A) erred in maintaining the disallowance of claim of deduction under section 801AB of the Income Tax Act, 1961 of Rs. 18,61,270/- without properly appreciating the facts of the case and submission made before him 3. The appellant reserves the right to add, alter and modify the grounds of appeal as taken by it

43. Ground No.1 is in relation to the disallowance u/s.80IA of the Act on the works executed by it for and on behalf of Joint Venture. During the course of hearing, the ld. AR of the assesee has placed reliance on the submission filed in A.Y.2011-2012 and further submit that the facts in the year under appeal are identical with the facts of A.Y.2011-2012. On the other hand, ld. CIT-DR also accepted this fact and placed reliance on the arguments made in A.Y.2011-2012. This issue has been discussed elaborately in assessee’s appeal for A.Y.2011-2012 in IT(SS)A No.77/CTK/2023, wherein while deciding ground of appeal No.2, we are of the view that the assesee is not entitled deduction u/s.80IA of the Act on the work executed by it for and on behalf of the joint venture firm Since the facts are identical, therefore, by following the said order, this ground of appeal of the assesee is dismissed.

44. Ground No.2 is in relation to the disallowance of deduction u/s.80IAB of the Act. This issue has already been decided by us in assessee’s appeal for A.Y.2011-2012 in IT(SS)A No.77/CTK/2023, wherein while deciding ground of appeal No.3, we are of the view that the assesee is not entitled for deduction u/s.80IAB of the Act as it is not the 141,89,142,13/CTK/2023 &CO No.02/CTK/2023 developer for the purpose of establishing the Special Economic Zone (SEZ), therefore, following the observations made therein, Ground No.2 in this appeal is hereby dismissed.

45. Thus, the appeal of the assesee is dismissed. (AY : 2016-2017)

46. These are the cross appeals filed by the assesee and revenue against the order of the ld. CIT(A)-2, Bhubaneswar for the assessment year 2016-2017.

47. First, we shall take the appeal of the assesee in wherein the assesee has the raised the following grounds :-

1. That on the facts and in the circumstances of the case and in law, the Ld CIT(A) erred in confirming the addition of Rs.4,25,543/- out of total addition of Rs. 31,87,692/ made to the total income of the appellant under section 14A of the Income- tax Act, 1961 read with Rule 8D of the Income-tax Rules, 1962 without properly appreciating the facts of the case and submissions filed before him.

2. That on the facts and in the circumstances of the case and in law, the Ld CIT(A) erred in confirming the addition of Rs.4,25,543/- out of total addition of Rs.31,87,692/ made to the total income of the appellant under section 14A of the Income- tax Act, 1961 read with Rule 8D of the Income-tax Rules, 1962 even when the said addition was made without issuance of show-cause notice during the course of assessment proceedings.

3. That on the facts and in the circumstances of the case and in law, the Ld CIT(A) erred in confirming the addition of Rs.4,25,543/- out of total addition of Rs.31,87,692/- made to the total income of the appellant under section 14A of the Income- tax Act, 1961 read with Rule 8D of the Income-tax Rules, 1962 even when the case of the appellant was selected for verification of other issues 4. That on the facts and in the circumstances of the case and in law, the Ld CIT(A) erred in not allowing additional claim of Rs. 3,13,68,851/- as lodged during the course of appellant 141,89,142,13/CTK/2023 &CO No.02/CTK/2023 proceedings even when it was eligible for deduction u/s 80-IA of the Act in respect of profit earned from work undertaken by the appellant as a member of the consortium in respect of the projects undertaken by the joint ventures/ consortiums.

4. That on the facts and in the circumstances of the case and in law, the appellant is also eligible for deduction of Rs.3,13,68,851/- under section 80-IA of the Income-tax Act, 1961 in respect of profit earned from work undertaken by the appellant as a member of the consortium in respect of the projects undertaken by the joint ventures/ consortiums.

5. The appellant reserves the right to add, alter and modify the grounds of appeal as taken by it.

48. The grounds of appeal raised by the revenue in its appeal i.e. in are as under :-

1. The CIT(A) erred in law in allowing deduction u/s 801A(4) to the assessee when the assessee doesn't satisfy the requisite conditions to be eligible to get the deduction/s 801A(4) of the Act.

2. The CIT(A) ought to appreciate that in the facts and circumstances of the case the meaning of 'works contract' as in Explanation to Section 801A as borrowed from section 194C applies only to labour contract and not a composite contract of construction of an infrastructure facility.

3. The CIT(A) was not correct in holding that the infrastructure facility executed by the assessee (Contractor) can be considered to be owned by it within the meaning of item (a) of clause (i) of sub section (4) of Section 801A.

4. The CIT(A) erred in treating the Contract receipts received by assessee-company in lieu of execution of contract work be considered as profit and gains of business of deduction u/s 801A.

5. The deduction u/s 801A as per the condition in item (c) of clause (i) of sub section (4) of Section 801A can be availed only after the infrastructure facility has started (i.e got completion Certificate). However, the assessee being a contractor does not get any compensation after completion of project. In view of above, whether the CIT(A) was justified in holding the eligibility of assessee company for deduction u/s 801A on receipts accrued prior to completion of the project.

6. Any other ground of appeal that may arise at the time of hearing.

141,89,142,13/CTK/2023 &CO No.02/CTK/2023

In this regard both the assesee and revenue relied upon the arguments made in the appeal for A.Y.2011-2012 and also agreed that there were no difference in the facts for the year under appeal to the appeal decided by 141,89,142,13/CTK/2023 &CO No.02/CTK/2023 us for A.Y.2011-2012. Thus, following the reasoning given in the said appeal of the assesee for A.Y.2011-2012, this ground of appeal i.e. ground No.4 is also dismissed. filed by the assesee is dismissed.

ITA No.141/CTK/2023(AY : 2016-2017)

He further placed a written submission on record, which reproduced as under :-

2. Apart from the para of the aforesaid judgment of the Hon'ble Supreme Court quoted and relied upon by the Learned CIT(A), the undersigned would like to reproduce the relevant para of the aforesaid judgment in support of the contention that the adherence of the pre-requisite conditions of filing of return of income in prescribed form and within the prescribed time limit is mandatory conditions for claiming exemption u/s 10(46) of the Income Tax Act.

In view of the above discussion and for the reasons stated above, we are of the opinion that the High Court has committed a grave error in observing and holding that the requirement of furnishing a declaration under Section 10B (8) of the IT Act is mandatory, but the time limit within which the declaration is to be filed is not mandatory but is directory. The same is erroneous and contrary to the unambiguous language contained in Section 10B (8) of the IT Act. We hold that for claiming the benefit under Section 10B (8) of the IT Act, the twin conditions of furnishing a declaration before the assessing officer and that too before the due date of filing the original return of income under section 139(1) are to be satisfied and both are mandatorily to be complied with."

48. "One of the rules of interpretation of a tax statue is that if a deduction or exemption is available on compliance with certain conditions, the conditions are to be strictly complied with. This rule is in line with the general principle that taxing statues are to be construed strictly"

7. In para 49 of the Checkmate Judgment the Hon'ble Supreme Court has reiterated the aforesaid conclusion by affirming its own judgment in the case of the State of Jharkhand Vs M/S Ambay Cements (2005) 1 SCC 368. The quoted part of the judgment of M/S Ambay Cement(supra) is reproduced as under:

141,89,142,13/CTK/2023 &CO No.02/CTK/2023

Section 80IA(4) of the Act states that deduction is available to the developer carrying on the business of (i) developing or (ii) operating and maintaining or (iii) developing, operating and maintaining any infrastructure facility which fulfills all the conditions prescribed thereunder, as the assesee company is developing infrastructure facilities wherein the works have been awarded by the respective authorities and the nature of work clearly in the nature of developing the infrastructure facilities, therefore, it should be allowed the deduction u/s.80IA(4) of the Act on the works executed by it. He further made a detailed submission in this regard, which reads as under :-

141,89,142,13/CTK/2023 &CO No.02/CTK/2023 A.7) The contentions of the appellant apropos the grounds of appeals taken before the Hon'ble Bench are dealt with in the subsequent paragraphs of this submission.

1] GROUND NOS. 1 TO 4 (DEPARTMENT - CHALLENGING THE ACTION OF THE LD CITIAI IN DELETING THE ADDITION OF RS. 1,52,72,905/- MADE BY THE LD AO TO THE TOTAL INCOME OF THE APPELLANT ON ACCOUNT OF DISALLOWANCE OF CLAIM OF DEDUCTION U/S 801A(4) OF THE ACT.

1.1] The Department in these grounds of appeal has challenged the action of the Ld CIT(A) in deleting the addition of Rs. 1,52,72,905/ made by the Ld AO to the total income of the appellant on account of disallowance of claim of deduction u/s B01A(4) of the Act.

1.2.1] At the outset, it is pertinent to mention that issue in dispute in the present appeal is regarding the allowability of deduction u/s 801A(4) of the Act. In this respect, we would like to bring this fact to the kind notice of the Hon'ble Bench that identical issue arose for consideration before the Hon'ble Jurisdictional Bench of ITAT Le. Hon'ble ITAT Cuttack Bench in the case of the appellant itself for the Assessment Year 2014-15 wherein the Hon'ble Bench of ITAT duly examined the said issue at length and reached to a conclusion that the appellant was eligible to claim the benefit of deduction under sub- section (4) of section 80-IA of the Act since it was a developer-cum-contractor and not merely a contractor who undertook work contracts only. Moreover, there was no adverse inference regarding non-compliance of any of the conditions specified in sub-section (4) of section 80-IA of the Act even during the said proceedings for the Assessment Year 2014-15.

1.2.2) The relevant extract from the order passed by the Hon'ble Jurisdictional Bench of ITAT in the case of the appellant itself for the Assessment Year 2014-15 is reproduced hereunder for ready reference of the Hon'ble Bench.

*42. On careful consideration of above rival submissions and thoughtful perusal of the material placed on record and case laws cited by both the parties, first of all, we may point out that the Explanation below Section 801A(13) of the Act was inserted by the Finance Act, 2007 and subsequently it was again amended by way of inserting some words and specifying that the provisions of Section 801A shall not apply in relation to a business referred to sub-section (4) which is in the nature of work contract awarded by any person including the central government or state Government and executed by the undertaking or enterprises was referred in sub-section (1) and this amendment was made applicable with retrospective effect i.e. 01.04.2000, this explanation restricts the benefit of deduction u/s.80IA(4) of the Act to a person who executes a project, which is in the nature of works contract. For proper understanding of said 141,89,142,13/CTK/2023 &CO No.02/CTK/2023 Explanation, it is required to consider the difference between a developer-cum-contractor and work contractor. In a common meaning a person is referred as developer-cum- contractor who undertakes a project to develop and conduct on own responsibility and takes all the risk including investment risk, financial risk, entrepreneur risk and all kinds of business risk.

45. In view of foregoing discussion, we are of the considered view that the ld. AR has successfully demonstrated by way of all relevant details and documents that the assessee at present, has undertaken huge risk in terms of deployment of technical persons, plant and machinery, technical knowhow, expertise managerial and financial resources which qualifies the assessee as developer- cum-contractor and the assessee is not merely a contractor who undertakes work contracts only. The financial statements, balance sheet and profit and loss account, clearly demonstrate that the assessee has used its own machinery and equipment of more than Rs.42 crores and has purchased and consumed materials of more than Rs.102 crores, purchased from various vendors relevant financial period, which was not provided by the contractee, these factual positien has not been controverted by the Id. Pr.CIT in any manner, therefore, we safety presume that the assessee is not merely a contractor discharging works contract but it is a developer-cum-contractor, thus, rider created by the Explanation below Section ROIA(13) of the Act, which clearly provides that the entity doing work contract will not be eligible for benefit of deduction but the assessee cannot be put in the basket of work contracter and keeping in view wider scope of his work and various business risks such as entrepreneur, finance and other risks, the assessee has qualified a position of developer cum contractor, thus, proviso below section BOIA(13) of the Act does not create any bar in the allowability of deduction u/s.80IA[4] of the Act to the assesee

47.6 The above noted factual matrix, placed before the bench by way of relevant documentary evidence, copies of the contract development agreements and other legal propositions and citations on the issue pertaining to present assessee M/s Balaji Engicon Pvt. Ltd. (ITA No.195/CTK/2019) have not been controverted by the Id. CIT DR Therefore, we hold that the AO was right in allowing the claim of assessee u/s 801A(4) of the Act after due examination and verification of the relevant materials, documents, copies of the contract and evidence etc., thus, on merits the assessment order cannot be alleged as erroneous and prejudicial to the interest of revenue.

141,89,142,13/CTK/2023 &CO No.02/CTK/2023 Emphasis Supplied)

1.2.3) On perusal of the relevant extract from the order passed by the Hon'ble Jurisdictional Bench of ITAT in the case of the appellant only for Assessment Year 2014-15, as reproduced hereinabove, it shall be quite manifest that the Hon'ble ITAT in the case of the appellant itself and that too under identical facts and circumstances, categorically reached to a conclusion that the appellant was not merely a contractor but it was a developer-cum- contractor since the appellant not only took business risk but also undertook entrepreneurial risk, financial risk and investment risk associated with these projects and therefore, the appellant was eligible to claim the benefit of deduction u/s 801A of the Act.

1.2.4) In the present case in hand, the Lad CITIA) vide its order dated 29-08-2023 passed in the case of the appellant for Assessment Year 2011-12 has deleted the addition of Ra 1,52,72,905/- made to the total income of the appellant on account of disallowance of deduction claimed u/s 80-1A of the Act by relying on the decision of Hon ble Jurisdictional Bench of ITAT in the case of the appellant only for Assessment Year 2014-15. Relevant extract of Ld CITIA)'s order dated 29-08-2023 is reproduced hereunder for ready reference of the Hon ble Bench:

"5.9.3 On this issue the Hon'ble TAT, Cuttack in its order IT A No. 195/CTK/2019, dtd 23.12.2021 decreed that the appellant was a developer-cum-contractor assuming risks and responsibilities akin to a developer, the work executed was not in the nature of works contract but the same was for development of infrastructure in nature, the TDS was rightly deducted under section 194C of the Act as a contractor, the contract was for development of Infrastructure facility and therefore, the appellant company was eligible to claim the benefit of deduction u/s 80-1A(4) of the IT. Act, 1961. As per the Hon'ble ITAT, Explanation inserted below section 80-LA (13) of the I.T. Act, 1961 denying the benefit of deduction to a works contractor shall not be applicable in the case of the appellant

In view of factual matrix Hon'ble ITAT, Cuttack's above discussion I am of the considered opinion that the appellant is a developer-cum- contractor and is eligible to claim the benefits of deduction u/s.801A (4) of the Income Tax Act, 1961." [Emphasis supplied]

1.2.5) In view of the above discussion, it is quite manifest that the present case of the appellant for the Assessment Year 2011-12 is squarely covered by the decision of the Hon'ble Jurisdictional Bench of ITAT in the case of the appellant itself for the Assessment Year 2014-15 wherein the Hon'ble Jurisdictional Bench of ITAT has categorically held that the appellant was not merely a contractor but 141,89,142,13/CTK/2023 &CO No.02/CTK/2023 it was a developer- cum-contractor since the appellant not only took business risk but also undertook entrepreneurial risk, financial risk and investment risk associated with these projects and therefore, the appellant was eligible to claim the benefit of deduction u/s 801A of the Act.

1.2.6. Henceforth, the Ld CITIA) was correct in deleting the addition of Rs 1.52,72.905/-made to the total income of the appellant on account of disallowance of deduction claimed u/s 80- 1A a of the Act and therefore, the Hon'ble Bench is thereby kindly requested to affirm the findings of Ld CIT(A)

1.3.1) However, for the sake of brevity, the claim of deduction u/s 80-1A of the Act is again being discussed hereunder on merits of the case. The gist of the observations of the Ld. AD as discussed in the assessment order while disallowing the claim of deduction u/s 80-1A of the Act in under (a) The documents in the form of agreement with various authorities are nothing but works contract as the assessee periodically receives money for execution of such contracts TDS were deducted by the principals u/s 194C of the Act which presupposes that such were works contract only. An explanation below sub-section [13] of section 80-LA of the Act was added in 2007 which was later substituted with a view to prevent the misuse of tax holiday u/s 80-1A of the Act and to clarify that nothing contained in the section shall apply in relation to business which is in the nature of works contract executed by an undertaking The assessee, being a works contractor, is therefore covered under explanation to section 801A (13) of the Act and shall not be eligible for deduction u/s 80-1A of the Act. 1.4 The corresponding explanation/ justification of the appellant with respect to the various observations of the Ld. AO as discussed in the assessment order are as under:

1.4.1 The moot question which arises for consideration is whether the appellant is a "developer as envisaged under section 80-IA of the Act or is it merely a contractor engaged in works contract" as observed by the Ld. AO.

1.4.2] At the outset, it would be relevant to go through the provisions of section 80-IA of the Act, so far as it is relevant to the issue in hand which is reproduced hereunder:

"Deductions in respect of profits and gains from industrial undertakings or development, etc. enterprises engaged in infrastructure 141,89,142,13/CTK/2023 &CO No.02/CTK/2023

80-IA. (1) Where the gross total income of an assessee includes any profits and gains derived by an undertaking or an enterprise from any business referred to in sub-section (4) (such business being hereinafter referred to as the eligible business), there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction of an amount equal to hundred per cent of the profits and gains derived from such business for ten consecutive assessment years.

(4) This section applies to-

(i) any enterprise carrying on the business of (1) developing or (i) operating and maintaining or (ii) developing, operating and maintaining any infrastructure facility which fulfils all the following conditions, namely-

(a) it is owned by a company registered in India or by a consortium of such companies or by an authority or a board or a corporation or any other body established or constituted under any Central or State Act;

(b) it has entered into an agreement with the Central Government or a State Government or a local authority or any other statutory body for (i) developing or (ii) operating and maintaining or (iii) developing, operating and maintaining a new infrastructure facility;

(c) it has started or starts operating and maintaining the infrastructure facility on or after the 1st day of April, 1995:

Provided that where an infrastructure facility is transferred on or after the 1st day of April, 1999 by an enterprise which developed such infrastructure facility (hereafter referred to in this section as the transferor enterprise) to another enterprise (hereafter in this section referred to as the transferee enterprise) for the purpose of operating and maintaining the infrastructure facility on its behalf in accordance with the agreement with the Central Government, State 141,89,142,13/CTK/2023 &CO No.02/CTK/2023 Government, local authority or statutory body, the provisions of this section shall apply to the transferee enterprise as if it were the enterprise to which this clause applies and the deduction from profits and gains would be available to such transferee enterprise for the unexpired period during which the transferor enterprises would have been entitled to the deduction, if the transfer had not taken place.

Provided further that nothing contained in this section shall apply to any enterprise which starts the development or operation and maintenance of the infrastructure facility on or after the 1st day of April, 2017.

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 activities being an integral part of the highway project,

(c) a water supply project, water treatment system, irrigation project ,sanitation and sewerage system or solid waste management system,

(d) a port, airport, inland waterway, inland port or navigational channel in the sea; ......

13) Nothing contained in this section shall apply to any Special Economic Zones notified on or after the 1st day of April, 2005 in accordance with the scheme referred to in sub- clause (m) of clause (c) of sub-section (4).

Explanation. For the removal of doubts, it is hereby 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 the undertaking or enterprise referred to in sub-section (1).

1.4.3) On perusal of the order passed by the Ld. AO, it becomes crystal clear that there was no adverse finding of 141,89,142,13/CTK/2023 &CO No.02/CTK/2023 the Ld. AO regarding the non-compliance of any of the conditions specified in sub-section (4) of section 80-IA of the Act. The sole grievance of the Ld. AΟ while disallowing the claim of deduction u/s 80-1A of the Act was with reference to the Explanation inserted below sub-section (13) of section 80-IA of the Act wherein a business which is in the nature of works contract is debarred from claiming any benefit under the said section Hence, the entire discussion in the subsequent paragraphs shall be confined to whether the appellant "developer entitling it to claim the benefit of deduction u/s 80-1A of the Act or a "contractor engaged in works contract thereby getting debarred from claiming the benefit under this section by virtue of the Explanation inserted below sub-section (13) of section 80-IA of the Act

1.4.4 At this juncture, it becomes significantly important to understand the legislative intent behind insertion of the said Explanation below section 80-1A/13) of the Act in order to understand the need and true spirit behind introducing the said Explanation

1.4.5] In 2007, an explanation was inserted with retrospective effect from April 1, 2000, which read as follows:

"Explanation-For the removal of doubts, it is hereby declared that nothing contained in this section shall apply to person who executes a works contract entered into with the undertaking or enterprise, as the case may be.”

1.4.6) The relevant extract from the Memorandum explaining the provisions in the Finance Bill 2007 dealing with the issue in hand, read as under:

"Clarification regarding developer with reference to infrastructure facility, industrial park, etc. for the purposes of section 80-IA

Section 80-IA, inter alia, provides for a ten-year tax benefit to an enterprise or an undertaking engaged in development of infrastructure facilities, Industrial Parks and Special Economic Zones.

The tax benefit was introduced for the reason that industrial modernization requires a massive expansion of, and qualitative improvement in, infrastructure (viz., expressways, 141,89,142,13/CTK/2023 &CO No.02/CTK/2023 highways, airports, ports and rapid urban rail transport systems) which was lacking in our country. The purpose of the tax benefit has all along been for encouraging private sector participation www of investment in development of the infrastructure sector and not for the persons who merely execute the civil construction work or any other works contract. Accordingly, it is proposed to clarify that the provisions of section 30-JA shall not apply to a person who executes a works contract entered into with the undertaking or enterprise referred to in the said section. Thus, in a case where a person makes the Investment and himself executes the development work Le, carries out the civil construction work. he will be eligible for tax benefit under section 80-1A. In contrast te this, a person who enters into a contract with another person (i.e. undertaking or enterprise referred to in section 80-1A) for executing works contract, will not be eligible for the tax benefit under section SO-IA This amendment will take retrospective effect from 1st April, 2000 and will, accordingly, apply in relation to the assessment year 2000-01 and subsequent years. (Clause 22) Emphasis Supplied 1.4.7 The Explanatory Memorandum clearly laid out that purpose of extending tax benefit u/s 80-IA of the Act was to encourage investments from the private sector and hence work contracts, i.e. contracts involving merely labour (or mere execution of construction without making investments) were kept outside the purview of the provisions of section 80-IA of the Act. The Explanatory Memorandum clearly stated that the deduction u/s 801A of the Act would be available to developers who undertake entrepreneurial and investment risk and not for the contractors, who undertakes only business risk.

1.4.8) A new Explanation was thereafter inserted by the Finance (No. 2) Bill of 2009 with retrospective effect from April 1, 2000 substituting the explanation inserted earlier and it read as under:

“Explanation For the removal of doubts, it is hereby 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 141,89,142,13/CTK/2023 &CO No.02/CTK/2023 Government) and executed by the undertaking or enterprise referred to in sub-section (1)."

Emphasis Supplied)

1.4.9) The relevant extract from the Memorandum explaining the provisions in the Finance (No 2) Bill of 2009 dealing with the issue in hand, read as under "Further, with a view to preventing the misuse of the tax holiday under section 80-IA of the Income-tax Act, it is proposed to amend the Explanation to the said section to clarify that nothing contained in the said section shall apply in relation to a business referred to in sub section (4) of the said section which is in the nature of a works contract awarded by any person (including the Central or State Government and executed by an undertaking or enterprise referred to in sub-section (1) thereof."

Emphasis Supplied

1.4.10) On a conjoint reading of the Explanatory Memorandum to the Finance Bill 2007 and Finance (No. 2) Bill of 2009, it appears that section 80-IA of the Act was an instrument of legislative policy conceived with a view to provide an impetus to private sector participation in the infrastructural projects. Consistent with the legislative object of encouraging private sector participation in the development of infrastructure, section 80-IA was enacted. The purpose of the tax benefit had all along been for encouraging private sector participation by way of investment in development of the infrastructure sector.

1.4.11 The Explanation was inserted subsequently with retrospective effect to prevent the misuse of tax holiday u/s 80-IA of the Act in respect of persons engaged solely in work contracts, i.e. contracts involving merely labour (or mere execution of construction without making investments) and to restrict the benefit of tax holidays only in respect of those cases where the person made investment and himself executed the development work i.e., carried out the civil construction work.

141,89,142,13/CTK/2023 &CO No.02/CTK/2023 1.4.12) Hence, after insertion of the said. Explanation below section 80-1A113) of the Act. understanding of the term works contract assumed significant importance to adjudge the allowability of deduction u/s 80-1A of the Act. The term 'works contract has not been defined u/s 80-IA of the Act. Hence, the natural meaning of the word shall apply. As per the Oxford Dictionary, the term work means application of effort to a purpose or use of energy. Thus, going by the dictionary meaning, 'works contract' means a contract which involves effort or in other words labour of the contractor. Further, as per the Black's Law Dictionary, the term work means labour or in other words physical and mental exertion to attain an end especially as controlled by and for the benefit of the employer. Thus, as per Black's Law also, a 'works contract' is a labour contract under which the contractor merely employs his labour as per the directions of the contractee

1.4.13) On perusal of these definitions, it can be safely concluded that a works contract constitutes a contract under which the contractor is merely employing his efforts or labour. Under such a contract, the contractee provides the material and other requisites ja complete infrastructure) needed to carry out the desired work to the contractor who by applying his labour to the said material turns the material into a desired product

1.4.14 The Hon'ble Bombay High Court in the case of CIT v. Glenmark Pharmaceuticals Ltd. reported in [2010] 324 ITR 199/191 Taxman 455 has held that in 'works contract', the contractor would be provided materials and all other requirements in the process of manufacture and production. The contractor merely carries the work with the materials supplied by the contractee and knowledge supplied by the contractee.

1.4.15] At this juncture, it is also imperative to appreciate the difference between a "developer" and a "contractor". These terms have neither been defined in the Act nor in the General Clauses Act and therefore, we need to go through the dictionary meaning of these words. As per Oxford Advanced Learner's Dictionary, 'developer is a person or company that designs and creates new products, whereas "contractor" is a person or a company that has a contract to do work or provides services or goods to another. The New 141,89,142,13/CTK/2023 &CO No.02/CTK/2023 Shorter Oxford Dictionary defines the word contractor as person who enters into a contract or agreement. Now chiefly spec. a person or firm that undertakes work by contract, esp. for building to specified plans".

1.4.16) In the light of the meaning ascribed to these words by the dictionaries, it is observed that the developer in a person who creates new products. He may execute the entire project himself or assign some parts of it to others On the contrary, the contractor in the one who is assigned a particular job to be accomplished on the behalf of the developer. There may, in certain circumstances, be overlapping in the work of developer and contractor, but the line of demarcation between the two is thick and unbreachable. When the person acting as developer also executes the construction work, he works in the capacity of contractor too. But when he assigns the job of construction to someone else. he remains the developer simpliciter, whereas the person to whom the job of construction is assigned, becomes the contractor. The role of developer is much larger than that of the contractor. It is no doubt true that in certain circumstances, a developer may also do the work of a contractor but a mere contractor per se can never be called as a developer, who undertakes to do work according to the pre-decided plan.

1.4.17 It is an undisputed fact that the word "contractor is used to denote a person entering into an agreement for undertaking the development of infrastructure facility. Every agreement entered into is a contract. The word "contractor" is used to denote the person who enters into such contract. Even a person who enters into a contract for development of infrastructure facility is a contractor Therefore, a contractor and a developer cannot be viewed differently. Every contractor may not be a developer but every developer developing infrastructure facility on behalf of the Government is a contractor

1.4.18) However, it is pertinent to note that the Ld AO utterly failed to appreciate the thick and unbreachable line of demarcation between the terms, 'contractor' and 'developer' as discussed supra. Rather, the Ld. AO observed in the assessment order passed u/s 143(3) of the Act that the appellant was not a "developer but merely a "works 141,89,142,13/CTK/2023 &CO No.02/CTK/2023 contractor". In light of the contentions discussed supra, the findings of the Ld. AO do not hold water for the below mentioned reasons:

Every person who enters into an agreement with Central Government and State Government Departments, local authorities, other corporate etc. for development of an infrastructural facility envisaged in section 80-IA of the Act would necessarily be a contractor since the word "contractor" is used to denote the person who enters into any contract which also takes within its purview the contracts for development of infrastructural facility.

Once it is established that a person is a contractor, the next question which arises for consideration is whether that person is a developer cum contractor or a mere contractor engaged in works contract

Hence, the observations of the Ld. AO in the under passed u/s 1433) of the Act treating the appellant as merely works contractor were ill founded and perverse since every contractor may not be a developer but every developer developing infrastructure facility on behalf of the Government is necessarily a contracter . Accordingly, the contractors performing the work in the nature of a developer-cum- contractor and assuming risks and responsibilities shall be eligible for deduction under section 80- IA of the Act in respect of the eligible infrastructural facilities as in the present case of the appellant.

There have also been a few landmark judicial precedents which have elaborately discussed and laid down broad guidelines/ parameters to ascertain whether the contract entered into by an assessee for development of infrastructural facility would be in the capacity of a *contractor-cum-developer" or "contractor engaged in works contract".

Relevant extracts from these judicial precedents are reproduced hereunder for the ready reference of Your Hon'our

1.5.1] The Hon'ble ITAT Rajkot Bench in the case of Katira Construction Ltd. v. ACIT reported in [2020] 119 taxmann.com 489 (Rajkot Trib.) vide order dated 30.07.2020 141,89,142,13/CTK/2023 &CO No.02/CTK/2023 differentiated between a 'developer' and a 'contractor' and held that contractors performing work in nature of a developer-cum-contractor and assuming risks and responsibilities shall be eligible for deduction under section 80-IA in respect of eligible infrastructural facilities by observing as under:

"13. The next controversy arises whether the assessee is acting as a developer or a work contractor in the projects of road development as per explanation 13 attached below section 80-IA (13) of the Act. At this juncture, it is pertinent to refer the provisions of the Explanation attached below section 80-LA of the Act as reproduced below:

"For the removal of doubts, it is hereby 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 the undertaking or enterprise referred to in sub-section (1).

13.1 The aforesaid Explanation to section 80-1A was inserted by the Finance Act, 2007 and later on amended by the Finance (No.2) Act, 2009 but the same was made applicable with retrospective effect ie. 1-4-2000 Thus explanation restricts the benefit of deduction under section 80-IA(4) of the Act to a person who executes a project which is in the nature of works contract. For this purpose, first of all it is imperative to appreciate the difference between a 'developer and a contractor Generally in common parlance a person is referred as 'developer who undertakes the project to develop and construct on its own responsibility and takes all the risks of the development These responsibilities and risk can be categorized as under.

(a) That in a development contract responsibility is fully assigned to the developer to do all acts for execution and completion of work right from designing the project till handing over the project to the Government. As such, the agreement is not for a specific work, it is for development of facility as a whole. Indeed the ownership of the site or the ownership over the land remains with the 141,89,142,13/CTK/2023 &CO No.02/CTK/2023 Government/owner but during the period of development agreement the developer exercise complete realm over the land or the project However, in some case there can be a situation that the developer has to take the approval of the design from the Government/contractee but that will not change the status of the developer as works contractor.

(b) That the first phase for the developers is to take over the existing premises of the projects and thereafter developing the same into infrastructure facility. Secondly, the assessee shall facilitate the people to use the available existing facility even while the process of development is in progress.

(c) That a developer has to execute managerial responsibility by engaging the requisite qualified/skilled/semi-skilled staff and the labourers including the other supporting staff. As the developer under takes the complete responsibility of the manpower to be used in developing the infrastructure facility.

(d) The assessee has to utilize its expertise, experience including its technical knowhow in the development of the project

(e) That a developer has to execute financial responsibility. A developer is therefore expected to arrange finances either by private placement or from financial institutions for the proper development of the project at its own risk. Thus the developers is the one who undertakes entrepreneurial and investment risk besides the business risk.

(f) That a developer is required to bring the qualitative material. The Government does not provide any material to the assessee.

(g) That a developer is required to bring plant and machineries to be utilized in the project.

(h) Any loss caused to the public or the Government in the process of developing the project would be the responsibility of the developer. The Government shall 141,89,142,13/CTK/2023 &CO No.02/CTK/2023 not take any responsibility for any such kind of loss except where it is responsible.

(i) That a developer stands as guarantor for the project developed by it and in the event of any defect it, he shall provide the remedy for the same.

(j) That a developer shall be exposed to the penalty if it contravenes the any of the clause appearing in the contract awarded by the Government. Thus, the developer is responsible to complete the construction in a specified manner failing which it would be responsible for the consequences of delay/any other fault attributable to it.

(k) That a developer shall undertake to maintain safety, security and protection of the environment

(l) That a developer shall provide and maintain at his own cost all lights, guards, fencing, warning signs and watching, when or where necessary.

These are few broad sample qualities/parameters of a developer through which the character of a developer can be defined.

13.2 On the other hand, a contractor is a person who undertakes work on a contract basis. He does not assume risks and responsibilities like that of a developer. He merely carries out the work as has been instructed to him by the contractee Moreover, in case of such work the contractor gets fixed amount of revenue for executing such work and is not entitled to any share of profit from revenue generated by the developer/land owner,

13.3 To summarize, the developer acts as a principal whereas the contractor acts as an agent in performing the functions as required by the developer. The developers, in true sense, are the persons who are carrying out the business of developing or operating and maintaining or developing, operating and maintaining the infrastructure facility the infrastructure facility whereas the contractors are those persons who merely execute part of these functions on behalf of developer and do not own any risks and responsibilities of the work. In such cases, the contractors 141,89,142,13/CTK/2023 &CO No.02/CTK/2023 may not be eligible for the deduction under section 80-IA of the Act, as they are not developing any infrastructure facility but only providing assistance to the actual developer.

13.6 On the detailed analysis of the above project, we find that the assessee meets the criteria laid down for the developer as discussed above. Thus, the fact that the assessee deploys its resources (material, machinery, labour etc.) in the construction work clearly exhibits the risks undertaken by the assessee. Further, the assessee in the tender documents as discussed above has clearly demonstrated the various risks undertaken by it. The assessee was to furnish a security deposit to the Government and indemnify at the same time of any losses/damage caused to any property/life in course of execution of works. Further, the assessee was responsible for the correction of defects arising in the works at its own cost. For that purpose the Government retained the money payable to the assessee as a measure to ensure the quality of the work and to make liable the assessee in the event of the defect, if any. Thus, it cannot be said that the assessee had not undertaken one risk. Thus on perusal of the terms and conditions in the agreement, it is clear that the assessee was not a works contractor simplicitor but a developer and hence Explanation to section 80-1A(13) does not apply to the assessee.

13.11 Further, it may be worthwhile to mention that judiciary has time and again held that beneficial provision, as in the instant case, should be given liberal interpretation so as to benefit the assessee. The cardinal rule for interpretation of any provision relating to exemption, allowance, deduction, rebate or relief is that they should be interpreted liberally and broadly so as to advance the object sought to be achieved and not frustrate it. Thus, even on this count, it can be said that the contractors performing function of a developer shall be given benefit of deduction under section 80- IA(4) of the Act

13.14 In view of the above discussion, it may be concluded that even after the amendment by the Finance Act, 2007 and the Finance Act, 2009, the contractors performing the work in the nature of a developer-cum contractor and assuming risks and responsibilities shall be eligible for deduction under 141,89,142,13/CTK/2023 &CO No.02/CTK/2023 section 80-IA in respect of the eligible infrastructural facilities Hence the ground of appeal of the assessee is allowed."

(Emphasis Supplied) 1.5.2] The Hon'ble ITAT Kolkata Bench 'A' in the case of ACIT, Circle-12(2), Kolkata Vs. M/s Simplex Infrastructures Ltd. reported in [TS-163-ITAT-2021(Kol)] vide order dated 10.03.2021 has categorically held as under:

*7. From the aforesaid activities undertaken by the assessee we note that the contractor assessee's activities involves substantial risk. It is noted that like any other entrepreneur' who employs his material, plant, machinery, labour etc. in a project and undertakes risk, the assessee was also exposed to substantial amount of risk by virtue of engaging his establishment in the infrastructure projects. In addition, the assessee was exposed to further risk of non completion of work within time, or of any damage caused to the works site, etc., or increase in prices of materials, labour etc. beyond what the Government had agreed to compensate as per the agreements. Thus, we are of the opinion that it is not a case where the assessee is a works contract simpliciter, where the Government authority has provided the assessee with the entire set up le. plant & machinery, materials and the infrastructure needed to support construction; and all that the assessee had to employ was labour to carry out construction. Instead in this case the assessee had provided an entire enterprise which was needed to convert the site (given by the Government) into an infrastructural facility.

9. In the instant case, as will be evident from the perusal of the agreements, as enclosed in the Paper book and relevant portions of which are discussed as above, all the agreements under consideration are not for a specific work, they are for development of facility as a whole. Therefore, merely because in the agreement for development of infrastructure facility, assessee is referred to as contractor or because some basic specifications are laid down, it does not detract the assessee from the position of being a developer, nor will it debar the assessee from claiming deduction u/s.801A(4) of the Act 141,89,142,13/CTK/2023 &CO No.02/CTK/2023 10. It is 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. Hence, 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. As such it follows from the above that the assessee, who is engaged in developing the infrastructural facility, is rightfully entitled to the benefits of deduction u/s.801A(4) of the Act. 1.5.3) The Hon'ble ITAT Pune Bench' in the case of B.T. Patil & Sons Belgaum Constructions (P.) Ltd. v. ACIT, Circle- 2, Kolhapur reported in [2013] 59 SOT 61 (Pune - Trib.) (URO) held that:

[Emphasis Supplied) 1.5.4) The Hon'ble ITAT Hyderabad Bench 'B' in the case of GVPR Engineers Ltd. v. ACIT, Circle-2(3), Hyderabad reported in [2012] 51 SOT 207 (Hyderabad) (URO) held that:

"28. The next question is to be answered is whether the assessee is a developer or mere works contractor. The Revenue relied on the amendments brought in by the Finance Act 2007 and 2009 to mention that the activity undertaken by the assessee is akin to works contract and he is not eligible for deduction under section 801A(4)of the Act. Whether the assessee is a developer or works contractor is purely depends on the nature of the work undertaken has to be analyzed and a conclusion has to be drawn about the nature of the work undertaken by the assessee. The agreement entered into with the Government or the Government body may be a mere works contract or for development of infrastructure. It is to be seen from the agreements entered into by the assessee with the Government. We find that the Government handed over the possession of the premises of projects to the assessee for the development of infrastructure facility. It is the assessee's responsibility to do all acts till the possession of property is handed over to the Government. The first phase is to take over the existing premises of the projects and thereafter developing the same into infrastructure facility Secondly, the assessee shall facilitate the people to use the available existing facility even while the process of development is in progress. Any loss to the public caused in the process would be the responsibility of the assessee. The assessee has to develop the infrastructure facility. In the process, all the works are to be executed by the assessee. It may be laying of a drainage system; may be construction of a project; provision of way for the cattle and bullock 141,89,142,13/CTK/2023 &CO No.02/CTK/2023 carts in the village; provision for traffic without any hindrance, the assessee's duty is to develop infrastructure whether it involves construction of a particular item as agreed to in the agreement or not. The agreement is not for a specific work, it is for development of facility as a whole. The assessee is not entrusted with any specific work to be done by the assessee. The material required is to be brought in by the assessee by sticking to the quality and quantity irrespective of the cost of such material. The Government does not provide any material to the assessee. It provides the Works in packages and not as a works contract. The assessee utilizes its funds, its expertise, its employees and takes the responsibility of developing the infrastructure facility. The losses suffered either by the Govt. or the people in the process of such development would be that of the assessee. The assessee hands over the developed infrastructure facility to the Government on completion of the development. Thereafter, the assessee has to undertake maintenance of the said infrastructure for a period of 12 to 24 months. During this period, if any damages are occurred it shall be the responsibility of the assessee. Further, during this period, the entire infrastructure shall have to be maintained by the assessee alone without hindrance to the regular traffic. Therefore, it is clear that from an un- developed area, infrastructure is developed and handed over to the Government and as explained by the CBDT vide its Circular dated 18-05- 2010, such activity is eligible for deduction under section 801A(4) of the Act. This cannot be considered as a mere works contract but has to be considered as a development of infrastructure facility: Therefore, the assessee is a developer and not a works contractor as presumed by the Revenue. The circular issued by the Board, relied on by learned counsel for the assessee, clearly indicate that the assessee is eligible for deduction under section 801A(4) of the Act. The department is not correct in holding that the assessee is a mere contractor of the work and not a developer.

1.5.5] The Hon'ble ITAT Kolkata Bench in the case of DCIT ve SPML Infra Ltd reported in TS-6009-ITAT-2016(Kolkata)- held that: 8.5. .......If a person who only develops the infrastructure facility was not paid by the Government, the entire cost of development would be a loss in the hands of the developer as he was not operating the infrastructure facility, Merely because the assessee was paid by the Government for development work it could not be denied deduction under section 80-1A(4) The Chennai Bench of Tribunal in case of R.R. Constructions, Chennai vs Department of Income tax held that "When an assessee is only developing an infrastructure facility project and is not maintaining nor operating it, obviously such an assessee will be paid for the cost incurred by it; otherwise, how will the person, who develops the infrastructure facility project, realize its cost? If the infrastructure facility, just after its development, is transferred to the Government, naturally the cost would be paid by the Government. Therefore, 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 801A(4), which is not the intention of the law. An 141,89,142,13/CTK/2023 &CO No.02/CTK/2023 enterprise, which develops the infrastructure facility is not paid by the Government, the entire cost of development would be a loss in the hands of the developer as he is not operating the infrastructure facility. The legislature has provided that the income of the developer of the infrastructure project would be eligible for deduction. It presupposes that there can be income to developer i.e to the person who is carrying on the activity of only development infrastructure facility. Ostensibly, a developer would have income only if he is paid for the development of infrastructure facility, for the simple reason that he is not having the right/authorization to operate the infrastructure facility and to collect toll there from, has no other source recoupment of his cost of development. The Indore Bench of the Tribunal in case of Sanee Infrastructure Pvt. Ltd vs ACIT (138 ITD 433) held that "As per our considered view, after amendment by the Finance Act, 2002 for claim of deduction u/s 801A(4) infrastructure facility is only required to be developed and there is no condition that assessee should also operate the same Thus, after amendment, when the assessee is not required to operate the facility, the payment for development of such infrastructure is required to be made by the Government only After amendment, when assessee undertakes to develop the infrastructure facility only, it is the Government who will make payment to assessee in respect of infrastructure facility developed by it in terms of agreement so entered with Government Thus, we do not find any infringement of conditions for claim of deduction" 8.6 Thus from the above, it is clear that the fact that the assessee had received payments from the Government in progress of its work has no bearing on eligibility of deduction u/s 80- IA Further, the Revenue in all the grounds has contended that the contracts entered into by the assessee were merely construction contracts' since the assessee is not exposed to any entrepreneurial and investment risk. In this regard, the AO has observed that the assessee is executing the contract against predetermined revenue w.r.t the above, it is submitted that under the impugned contracts, the assessee was merely carrying out the civil construction work. It 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 & 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. It was also required to operate and maintain the infrastructure facility. Hence, it cannot be said that the contract with the Government was to carry out mere civil construction, Attention in this regard is invited to the following:

141,89,142,13/CTK/2023 &CO No.02/CTK/2023 (i) The ITAT (Ahmedabad) in case of Sugam Construction (P) Ltd. us. ITO 156 SOT 45] held that it is also gathered (a) That a developer is a person who undertakes the responsibility to develop a project (b) That a developer is therefore not a civil contractor simplicitor (c) That if we apply the commercial aspect, then a developer has to execute both managerial as well as financial responsibility (d) That the role of a developer, according to us, is larger than that of a contractor (e) That when a person is acting as a developer, then he is under obligation to design the project, it is another aspect that such design has to be approved by the owner of the project, ie. the Government in the present case (1) That he has not only to execute the construction work in the capacity of a contractor but also he is assigned with the duty to develop, maintain and operate such project. (g) That to ascertain whether a civil construction work is assigned on development basis or contract basis can only be decided on the basis of the terms and conditions of the agreement. Only on the basis of the terms and conditions it can be ascertained about the nature of the contract assigned that whether it is a "work contract or a "development contract. (h) That in a development contract responsibility is fully assigned to the developer for execution and completion of work. (1) That although the ownership of the site or the ownership over the land remains with the owner but during the period of development agreement the developer exercise complete domain over the land or the project. That a developer is not expected to raise bills at every step of construction but he is expected to charge the cost of construction plus mark-up of his profit from the assignee of the contract. (k) That a developer is therefore expected to arrange finances and also to undertake risk (1) That in contrast to the rights of a "contractor" a "developer" is authorized to raise funds either by private placement or by financial institutions on the basis of the project. These are few broad qualities of a developer through which the character of a developer can be defined." (i) ITAT Hyderabad) in case of Keys and Co, Construction (P) Ltd ACIT [51 SOT 203] held that The explanatory memorandum to Finance Act 2007 states that the purpose of the tax benefit has all long been to encourage investment in development of infrastructure sector and not for the persons who merely execute the civil construction work. It categorically states that the deduction under section B01A of the Act is available to developers who undertakes entrepreneurial and investment risk and not for the contractors, who undertakes only business risk. Without any doubt, the learned counsel for the assessee clearly demonstrated before the court that the assessee at present has undertaken huge risks in terms of deployment of technical personnel, plant and machinery, technical knowhow, expertise and financial resources.”

141,89,142,13/CTK/2023 &CO No.02/CTK/2023 Thus the fact that the assessee deploys its resources (material, machinery, labour etc.) in the construction work clearly exhibits the risks undertaken by the assessee. Further, 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 indemnify the employer of any losses/damage caused to any property/life in course of execution of works. Further, it was responsible for the correction of defects arising in the works at it cost. Thus, it cannot be said that the assessee had not undertaken any risk.

The ITAT (Hyderabad) in case of Siva Swathi Construction (P) Ltd. (supra) held that "Further reason given by the Id. CIT(A) for denying deduction under S.801A to the assessee is that the assessee has not undertaken any risks. The observations of the Id. CIT(A) in this behalf are also not valid and correct. It was clearly mentioned in the agreement that the assessee shall execute and furnish indemnity bond for a period of four years, indemnifying the Government against any loss or expenditure incurred, to repair any defect noticed due to faulty working done by the contractor or substandard material used by the contractor. Further, it is also mentioned in the contract agreement that the assessee shall not claim for any loss due to foreseen circumstances, including suspension of work due to course. It is also provided that in the event of accident to people employed by the assessee resulting in compensation to be paid as per the Workmen's Compensation Act the same shall be paid by the contractor, viz the assessee only. In view of the various specific clauses in the agreement fastening the risks to be undertaken by the assessee, discussed above, it cannot be said that the assessee has not undertaken any risk.

8.7 From the above, it is clear that the contention of the AO that the assessee had not undertaken any entrepreneurial and investment risk is an incorrect interpretation of the facts. Lastly, with regard to the project O&M, Bangalore (on which a deduction of Rs. 35, 16,9411- was claimed), it is submitted that it is an operation and maintenance project, to which Explanation to section 80-IA(13) does not apply. Explanation to section 80- IA(13) merely distinguishes between a developer and works contractor. It clarifies that a works contractor shall not be included in the category of 'developer u/s 80-1A. Thus, the Explanation clearly does not apply to O&M projects. Hence, deduction of Rs. 35,16,9411- claimed for the aforesaid project u/s 80-IA cannot be denied by invoking the explanation to section 80-IA.

141,89,142,13/CTK/2023 &CO No.02/CTK/2023 1.5.6] The Hon'ble ITAT Kolkata Bench 'D' in the case of ACIT, Circle- 33, Kolkata v. He Hun Simples JV reported in [2018] 92 taxmann.com 106 (Kolkata - Trib.) held that :

6.15 We find that like any other entrepreneur who emplous his material, plant, machinery, labour etc in a project and undertakes risk, the assessee was also exposed to a substantial amount of risk by virtue of engaging his establishment in the infrastructure projects. In addition, the assessee was exposed to risk of non completion of work within time, any damage caused to the work site etc, increase in prices of materials, labour etc. beyond what the Government had agreed to compensate as per the agreement. 6.16 From the facts stated above, it is clear that the assesse was a developer and not a mere works contractor. Thus, it is clearly outside the purview of the Explanation to section 80-IA(13) of the Act 6.17 To substantiate the above attention is invited to the terms and conditions of agreement entered into between the assessee and National Highway Authority of India, some of which have been listed below:

(i) General obligations The assessee shall, with due care and diligence, design, execute and complete the work and remedy any defects therein in accordance with the provision of the contract. The assessee shall provide all superintendence, labour, material, plant, require in for such design, execution, completion and remedying of any defects (page 12, para 8.1) (ii) Material, Plant and workmanship:Page -21, para 36.1

(iii) Equipment, Temporary works and materials Page 31, para 54.1 (iv) Labour: The assessee was to make its own arrangement for the engagement of all staff and labour and for their payment, housing and feeding. (page 21, para 34.1)

(v) Superintendence: The assessee was to provide all the necessary superintendence required during the execution of the Works. Page 14, para 15.1

(vii) Safety, security and protection of environment. The assessee was responsible for safety of all person on the site Provide and maintain at his own cost all lights, guards, fencing, warning signs, etc. Take all reasonable steps to protect the environment. (Page 15, para 19.1)

(viii) (Defect Liability Period. Even after the completion of works the responsibility of the assessee did not end, it was correct defects arising therein at its own cost (page 28, para 49.3) The said period was 12 (Twelve months and extension of defect liability period-24 months (page 46)

141,89,142,13/CTK/2023 &CO No.02/CTK/2023 (ix) Performance Security: The performance security will be in the form of an unconditional and irrevocable Bank Guarantee in the amount 10 (ten) percent of contract price (page 45). Further, such performance Security was to be valid till successful completion of works and remedying of defects therein. (page 13, para 10.2) (x) Retention Money: 10 (ten) percent of Interim payment certificate subject to 5 percent of total contract price. Upon issue of taking over certificate one half of retention money would be paid whereas the other half would be paid on expiration of the Defects Liability period. (Page 35, para 60.3)

(x) The assessee was to indemnify the Employer against all losses and claims in respect of death or injury to any person or damage to any property (other than works) which may arise in course of execution of works (page 17, para 22.1) The Employer would not be liable for any damage or compensation payable to any workman or other person in employment of the assessee. (para 24.1) (xi) Liquidated Damages: The assessee was liable to liquidated damages as specified at page 45, if there was delay in completion of works (page 24, para 47.1)

6.18 The above conditions clearly exhibit that it is not a case where the assessee was provided with the establishment and materials required to execute the work, which happens in case of works contract where the contractor gets the material and other contains from the client and all he has to do is employ labour. The assessee in the present case was to procure raw material, make arrangements for power, water, plant machinery etc. And conduct all the other activities needed for construction 6.19. Now the aforesaid agreement with the NHAI was produced before the Ld CITIA) who after perusal of the same allowed the assessee's appeal

6.20. We find that the agreement in the wistant case is similar to that before the tribunal in the case of SPMl. infra Ltd. (supra). In the instant case too, the assessee was not merely providing labour but was providing complete infrastructure required to support the development of Infrastructure facility it deployed its various resources like material, manpower, machinery etc. In addition it exposed itself to various risks 6.21 In view of the aforesaid findings in the facts and circumstances of the case and respectfully following the various judicial precedents relied upon including that of co-ordinate bench of this tribunal in SPML Infra Ltd. (supra), we hold that the assessee is a developer and not a mere works contractor and accordingly is eligible for deduction u/s 801A of the Act, which has been rightly held by the lid CITA Accordingly, we do not find any infirmity in the order of the Id CITA. Accordingly, the grounds raised by the revenue are dismissed" `Emphasis Supplied 141,89,142,13/CTK/2023 &CO No.02/CTK/2023 1.5.7] The Hon'ble Gujarat High Court in the case of CIT v. Radhe Developers reported in [2012] 341 ITR 403 (Gujarat) has dealt with the scope of 'works contractor' in the context of section 80-IB of the Act and has held that:

"36. We have noted at some length, the relevant terms and conditions of the development agreements between the assessees and the land owners in case of Radhe Developers. We also noted the terms of the agreement of sale entered into between the parties. Such conditions would immediately reveal that the owner of the land had received part of sale consideration. In lieu thereof he had granted development permission to the assessee. He had also parted with the possession of the land. The development of the land was to be done entirely by the assessee by constructing residential units thereon as per the plans approved by the local authority. It was specified that the assessee would bring in technical knowledge and skill required for execution of such project. The assessee had to pay the fees to the Architects and Engineers. Additionally, assessee was also authorized to appoint any other Architect or Engineer, legal adviser and other professionals. He would appoint Sub-contractor or labour contractor for execution of the work. The assessee was authorized to admit the persons willing to join the scheme. The assessee was authorised to receive the contributions and other deposits and also raise demands from the members for dues and execute such demands through legal procedure. In case, for some reason, the member already admitted is deleted, the assessee would have the full right to include new member in place of outgoing member. He had to make necessary financial arrangements for which purpose he could raise funds from the financial institutions, banks etc The land owners agreed to give necessary signatures, agreements, and even power of attorney to facilitate the work of the developer. In short, the assessee had undertaken the entire task of development, construction and sale of the housing units to be located on the land belonging to the original land owners. It was also agreed between the parties that the assessee would be entitled to use the full FSI as per the existing rules and regulations. However, in future, rules be amended and additional FSI be available, the assessee would have the full right to use the same also. The sale proceeds of the units allotted by the assessee in favour of the members enrolled would be appropriated towards the land price. Eventually after paying off the land owner and the erstwhile proposed purchasers, the surplus amount would remain with the assessee. Such terms and conditions under which the assessee undertook the development project and took over the possession of the land from the original owner, leaves little doubt in our mind that the assessee had total and complete control over the land in question. The assessee could put the land to use as agreed between the parties. The assessee had full authority and also responsibility to develop the housing project by not only putting up the construction but by carrying out various other acivities including enrolling members, accepting members, carrying out modifications engaging professional agencies and seen. Most significantly the risk element was entirely that of the assessee. The landowner agreed to accept only a fixed price for the land in question. The 141,89,142,13/CTK/2023 &CO No.02/CTK/2023 assesse agreed to pay off the landowner first before appropriating any part of the sale consideration of the housing units for his benefit be short, assessee took the full risk of executing the housing project and thereby making profit or loss as the case may be. The assessee invested its own funds in the cost of construction and engagement of several agencies Landowner would receive a fix pre-determined amount towards the price of land and was thus insulated against any risk

Emphasis Supplied 1.5.8] The Hon'ble ITAT Ahmedabad Bench 'D' in the case of En-vision Enviro Engineers (P.) Ltd. v. DCIT, Circle-1, Surat reported in [2012] 150 TTJ 621 (Ahmedabad - Trib.) has held that: “7. We have heard both the parties at some length. We have perused the compilation filed, in the light of the provisions of the Act. Section 801A was subject to a change on several occasions in the past, however for the year under consideration, Le. A.Y. 2005-06, the section substituted by the Finance Act, 2001 w.e.f. 1/4/2002 is applicable. This section prescribes that in respect of profits and gains from an Industrial Undertaking engaged in infrastructure development, a deduction of an amount equal to 100% of the profits shall be allowed. Section 801A(4) prescribes that an Enterprise carrying on the business of (i) developing or (ii)operating and maintaining or (ii) developing, operating and maintaining any infrastructure facility shall qualify for the deduction. This sub-section says that the Enterprise has to enter into an agreement with the Government, either Central or State, for developing or operating and maintenance or developing, operating and maintenance of a new infrastructure facility and that it has been started on or after first day of April-1995,as also owned by a company registered in India or by Consortium of such companies. Through an Explanation, annexed to the said section; "infrastructure facility is defined as road, bridge, rail system, high- way project, irrigation product, sewerage system or solid waste management system. With these submissions of legal requirement, our attention has been brought on the fact that the assessee has developed the infrastructure meant for solid waste management system. The assessee has entered into an agreement with the Municipal Council Udaipur (Rajasthan) dated 15/07/2004. The assessee has also entered into an another agreement with Surat Municipal Corporation dated 14/11/2002 We have examined both the agreements. Undisputedly, the assessee has been referred as a "Contractor in the agreement dated 15/07/2004. However, it was not so in the agreement dated 14/11/2002 executed with Surat Municipal Corporation. Be that as it was, merely mentioning the assessee as "Contractor the exact nature of the execution of the work do not alter. Rather, this controversy has been resolved by Respected Co- ordinate Bench in the case of Patel Engg. Ltd.(supra). We are convinced with the argument of the Id.AR that a contractor can also be a developer. In this context, our attention has been drawn on a latest decision 141,89,142,13/CTK/2023 &CO No.02/CTK/2023 of Hon'ble Gujarat High Court pronounced in the case of CIT v. Radhe Developers (2012) 341 ITR 403/204Taxman 543/17 taxmann.com 156 (Guj.), wherein the issue was in respect of claim of deduction u/s.80IB(10)of IT Act and the assessee happened to be "developer-cum-building contractor". The Hon'ble Court has held that the said developer had to make the construction and to engage labour on contract, therefore the term "developer" has to be understood in common parlance as well as in legal sense. The Hon'ble Court has taken the help of Websters- encyclopedia and other dictionaries and thereupon opined that the term "developer" carries a much wider connotation. As far as the agreement with Surat Municipal Corporation is concerned, the assessee has been referred as "party of the first part", hence no serous objection has been raised by the Revenue. On account of these reasons and following the view expressed by the Hon'ble Court as also considering the nature of the work executed by this assessee, we are not inclined to agree with the AO that the assessee has acted merely as a "contractor", rather, we hereby hold that the assessee has acted as a "developer". 1.8.91 The Henhle ITAT Mumbai Bench 'B' in the case of Bhinmal Contractors Prunett and Land Developers (P.) Ltd. v. ACIT/DCIT-4(1), Mumbai reported in [2018] 170 ITD 599 (Mumbai) has held that:

“14. Here it is important to mention that the Legislature inserted the word ar between and with effect from 1-4-2002, which is applicable to assessment year 2002-03 onwards. So with effect from the assessment year 2002-03, not only the enterprise (1) developing. (1) operating and maintaining the infrastructure facility shall be entitled to deduction, but also the enterprise which is only ( developing, or (ii) operating and maintaining the infrastructure facility. From such year onwards the enterprise which only develops the infrastructure facility and thereafter transfers it to someone else for operating and maintaining on behalf of transferee shall also be covered for the purposes of granting benefit The difference in the situation between assessment year 2002-03 onwards and prior two years is that whereas the operation and maintenance of the infrastructure facility on behalf of the enterprise developing is necessary in the former period, but in the later period, the operation and maintenance shall be on behalf of the transferee enterprise itself the "works contract has not been defined in the context of section 80-IA and, hence, in the absence of assignment of any definition by the statute, its meaning should be understood in the common parlance. Accordingly a developer is a person who develops the facility and such person may or may not be a contractor. On the other hand, a contractor is stated to be a legal term whose rights and duties vis- à-vis contract are determined by way of legal document called the contract. For example if a contract to construct a highway from Mumbai to Delhi is given to a person he is contractor as well as developer. As against that a person who has been given a contract for painting or beautification is merely a contractor but not a developer. Accordingly while developing a project, a developer has to make technological inputs, entrepreneurial inputs, etc. Besides, there is financial involvement in terms of deployment of man and machine as well as bank guarantees. The developer 141,89,142,13/CTK/2023 &CO No.02/CTK/2023 undertakes the risk and reward of the project and is accountable to the authorities for the development work carried out by them. Therefore the assessee in the present case cannot and should not be characterized anything other than a developer.

3.14. The CIT (Appeal) has further examined as to whether the project assigned to the assessee was incapacity of a contractor or the same was executed as a developer with respect to the canal projects, agreements were entered into by the assessee W analysed and tendered documents containing the terms and conditions of the project were taken into consideration with respect to the following aspects as to the entire investment in the Project was to be made by the assessee. Interim payment to the tune of estimated contract value in respect of the development work done for each month after retention and other adjustments were to be made, security deposit was to be paid by the assessee, there was a penalty for delay, procurement of the material was the responsibility of the assessee, procurement of land for camp, for shop, labour camp etc. also the employment of qualified engineers, action and compensation in respect of bad work, defect liability of the accidents to persons in relation to Workman Compensation Act indemnity insurance of the workmen 141,89,142,13/CTK/2023 &CO No.02/CTK/2023 employed. The CIT (Appeal) and the Tribunal considering such aspects of the tendered agreement, concurrently held that the assessee has entered into a development of infrastructure facility agreement and not the works contract. Emphasis supplied! 1.5.11) The Hon'ble Supreme Court of India in the case of PCIT v. MBL Infrastructure Limited reported in [2023] 155 taxmann.com 657 (SC) has dismissed the SLP as filed by the Department against the decision of Hon'ble High Court of Calcutta in the case of PCIT v. MBL Infrastructure Limited reported in [2023] 155 taxmann.com 656 (Calcutta) wherein it was held that: 4. In paragraph 9 of the impugned order, learned Tribunal has noted the factual contend namely with regard to the purchases which were undertaken by the respondent/assessee as also the terms and conditions of the agreement entered into by the assessee with the concerned highways department and having been factually satisfied that the deduction claimed by the assessse i admissible, had granted relief More importantly the Tribunal and taken note of the fact that for the previous assessment years 2010-11 the learned Tribunal And adjudicated the issue and had granted relief for nasessee and for the subsequent years 2013-14 and 2014-15 disallowance has been made under section 80-1A of the Act That apart the learned Tribunal has alas taken note of various decisions of the Hon’ ble Supreme Court which had laid down the legal principle as to what and under what circumstances the Commissioner of Income-tax can exercise power under section 263 of the Act.

5. The revenue has not disputed before us that ne disallowance was made in the previous two assessment years as well as the subsequent two assessment years. Thus in the absence of any distinguished feature in the nature of contract the Rule of Consistency has to be upheld. Thus we find that no questions of law, much less substantial questions of law arise for consideration in this appeal." [Emphasis supplied)

1.6.1) It is being highlighted that the appellant brought in his own material according to the specification of the employer, skilled man power, technical expertise for the execution and timely completion of the work, responsibility of development, to rectify and/or indemnify against damages and had undertaken entrepreneurial and investment risks while carrying out the infrastructure development facilities. It was further submitted that all the agreements entered into by the appellant carried such clauses which proved that the appellant was taking all sorts of risk whether it be entrepreneurial risk, investment risk or business risk. A detail risk analysis table in respect of one of these agreements entered into with the employer which is also reproduced hereunder so as to prove that the appellant complied with all the conditions of being a developer and was not a mere works contractor:

141,89,142,13/CTK/2023 &CO No.02/CTK/2023

Agreement with Chief Engineer N.H. Division, Bhubaneswar (Odisha) Nature of work: Widening existing single/Intermediate lane to two lane with strengthening from 59/0 to 68/0km of Nh-200, Vide Job No-NH-049- ORS-2008-09-418, Ag No-SBD No-01/2009-10.

S. Categorical Content from the contract sufficing the Reference Pg. No. No. requirements to criteria making him eligible for deduction Para No. of of Paper be a developer agreement Book u/s 801A 1 Not ordinary The eligibility criteria fulfilling which Para 4.1 928 Contractor but a contract was obtained by the assessee Developer which involved a description of method of work, schedule, drawings and charts, program for construction equipment planning, quality assurance procedures to be proposed to be adopted, justification of their ability of execution and completion as per technical specification and within stipulated time shows that the assessee was not a mere contractor but a developer. ii) Conditions fulfilled by the to obtain the contract showing that he is not a mere contractor but a developer. Appendix to ITB

2 Financial Risk i) Undertaking that the assessee would Undertaking 912 rest a minimum of 25% of the value of the work during the implementation of the contract. ii) EMD to be deposited at the time of Para c) to 912 filing bid Memorandum iii) Bank Guarantee furnished by the assessee against guarantee the performance Para'd) to 912 Memorandum

Para e) to 912 Memorandum

3 The assessee is required to submit Para 18 963 Technical specifications and drawings showing the Expertise proposed Temporary works to the engineer for approval thereby exhibiting Technical expertise

4 Entrepreneurial The assessee is required to bear all the Para 12 962 Risk risk of loss of or damage to physical property and of personal injury and death which may arise during the consequence and of in the performance of the contract thereby taking all entrepreneurial involved the risks

5 Human The assessee has required to admit Para 9 962 Resource staffs with approval of Engineer according to their Qualifications, abilities and relevant experience as of the personnel listed in the schedule thereby depicting. requirement of specially qualified people for execution of the contract

6 Material The assessee confirms that no material Para 4:1 928 supply has been made by the employer and all purchases made by the assessee from the third party has to undergo through quality assurance procedure proposed by the employer 141,89,142,13/CTK/2023 &CO No.02/CTK/2023

7 Labour The assessee was required make Para 1 arrangements his for OLLIFL the engagement of all staff and labour, local or other, and for their payment, housing. feeding and transport. 8 Indemnity/ Para 49.1 971 Liability for i) The assessee is liable to pay damages liquidated damages to the employer at the rate per day stated in contact thereby the assessee has to indemnify for the damages. 9 Correction of The assessee had undertaken to defects complete the undertaken to complete the Para 2 913 work and remedy any defects therein thereby taking the liability for correction of defects. ii) The assessee shall be notified for any Para 35.1 & 967 defects and shall have to correct the 35.2 same within time notified by the Engineer

1.6.2] On perusal of the above table, it could be well understood that the appellant not only carried business risk but also undertook entrepreneurial risk, financial risk and investment risk which are the well- settled parameters to distinguish a contractor-cum- developer from a mere contractor engaged in works contract.

1.6.3] To further substantiate the veracity of the above-narrated facts, the screenshots of the relevant extract of the tender documents are also reproduced hereunder for the ready reference of the Hon'ble Bench so as to justify that the appellant was required to furnish details of technical personnel, plant and machinery, past experience of similar work, financial strength etc. at the time of applying for tender which further proved beyond doubt that the appellant not only carried business risk but also undertook entrepreneurial risk, financial risk and investment risk:

141,89,142,13/CTK/2023 &CO No.02/CTK/2023 141,89,142,13/CTK/2023 &CO No.02/CTK/2023 141,89,142,13/CTK/2023 &CO No.02/CTK/2023

1.6.4] On perusal of the relevant extract of these documents furnished at the time of applying for tender, it becomes quite evident that the appellant was required to furnish various details such as qualification and experience of key personnel who shall be looking after the administration and execution of the project, list of machineries/ equipments deployed for execution of the projects, experience of similar work undertaken in the past and performance record etc. which clearly establish that the appellant worked as a developer-cum-contractor during the execution of these projects.

141,89,142,13/CTK/2023 &CO No.02/CTK/2023 1.6.5) In view of the parameters laid down in the judicial precedents (supra), on perusal of the relevant clauses of the agreements entered into by the appellant with these employers and on perusal of the documents furnished at the time of applying for tender, there remains absolutely no doubt that the appellant was a contractor performing the work in the nature of a developer-cum-contractor and was assuming risks and responsibilities which made it eligible for deduction under section 80-IA of the Act in respect of the eligible infrastructural facilities for the below-mentioned reasons:

(i) The appellant was assigned full responsibility to do all acts for execution and completion of work right from the beginning till handing over of the project to the employer. The contract was not for a specific work but for development of the infrastructural facility as a whole. The contract also bound the appellant for change of scope of work in respect of any deviation/modification/extra work as envisaged during the execution of the project. (ii) The appellant shouldered out investment and technical risk in respect of the work executed by it. It was merely provided with the site which it had to develop into an infrastructural facility by undertaking huge risks in terms of deployment of technical personnel, plant and machinery, technical knowhow, expertise and financial resources.

(iii) The material required for the project was purchased by the appellant from third party which had to undergo through quality assurance procedure proposed by the employer. The employer did not provide any material to the appellant.

(iv) The appellant was required to bring in plant and machineries to be used in the project. The appellant invested a huge amount in its plant and machineries for carrying out various projects

(v) The appellant executed managerial responsibility by engaging the requisite qualified/skilled/semi-skilled staff and labourers including the other supporting staff. The appellant undertook complete responsibility of the manpower to be used in developing the infrastructure facility including for their payment, housing, feeding and transport.

(vi) The appellant had to utilize its expertise, experience including its technical know-how in the development of the project.

(vii) The appellant provided all the necessary superintendence required during the executions of project. (viii) The appellant was required to hear all the risk of loss of or damage to physical Property and of personal injury and death which arose during the and in consequence of the 141,89,142,13/CTK/2023 &CO No.02/CTK/2023 performance of the contract thereby taking all the entrepreneurial risks involved.

(ix) The appellant undertook financial risk as it was required to invest some percentage of the value of the contract during the implementation of contract. The appellant was also required to deposit EMD at the time of filing bid The appellant also furnished irrevocable and unconditional bank guarantee against performance security of the project which in itself goes on to show that the appellant took all the financial risks involved. Thus, it is evident that the appellant undertook entrepreneurial and financial/ investment risk besides business risk.

(x) The appellant had undertaken to complete the work and remedy any defects arising therein thereby taking the liability for correction of defects (xi) The appellant was also liable to pay liquidated damages to the employer in the event of breach of any of the conditions stipulated in the contract.

1.6.6) The above-mentioned reasons clearly exhibit that the present case was not a case wherein the appellant was provided with the establishment and materials required to execute the work, which happens in case of works contract where the contractor gets the material and other requisites from the client and all he has to do is to employ labour. Rather, in the facts of the present case, the appellant was assigned with the responsibility of development of the infrastructural facility as a whole and the fact that the appellant deployed its resources (material, machinery, labour etc.) in the construction work and that the appellant was liable to indemnify the employer for any losses/ damage caused to any property/ life in the course of execution of work, clearly exhibited the risks undertaken by the appellant.

1.6.7) Further, it is also being highlighted that the appellant has executed work pertaining to agreement with Chief Engineer N.H. Division, Bhubaneswar (Odisha) for Widening existing single/Intermediate lane to two lane with strengthening from 59/0 to 68/0km of Nh-200, Vide Job No-NH-049-ORS-2008-09-418, Ag No- SBD No-01/2009-10 during the Assessment Year 2014-15 also wherein the Hon'ble ITAT 'Cuttack Bench itself has duly treated the appellant as a developer-cum-contractor and has allowed deduction under section 50-1A of the Act. Hence, it is evident that the infrastructural development preinstall undertaken by the appellant during Assessment Year 2011-12 were identical to the Infrastructural development projects undertaken by the appellant during the Assessment Year 2014-15 in respect of which the Jurisdictional Bench of ITAT itself had held that the appellant was eligible for claiming the benefit of deduction u/s 801A(4) of the Act and therefore, the appellant was eligible for claiming deduction u/s 141,89,142,13/CTK/2023 &CO No.02/CTK/2023 80-1A of the Act in respect of infrastructural facilities developed by it during the Assessment Year 2011-12 also 1.6.8] In view of the above discussion, it is humbly submitted that the observation of the Ld AO that the appellant was merely a "works contractor" is devoid of any merits. It has been comprehensively explained that the appellant was a contractor performing work in nature of a developer-cum-contractor and was also assuming risks and responsibilities akin to that of a developer and henceforth, the appellant was eligible for claiming deduction u/s 80-1A of the Act in respect of infrastructural facilities developed by it Hence, the aforesaid observation of the Ld. AO for disallowing the claim of deduction u/s 80-1A of the Act was untenable

1.7.1 Further, the observation of the Ld. AO that TDS was deducted by the principals u/s 194C of the Act and thus, such contracts were work contracts is again an observation which is devoid of any merits in light of the detailed analysis (supra) wherein it has been clearly established that the appellant was a contractor performing work in nature of a "developer-cum- contractor and was not a mere "works contractor". It was stated time and again that the appellant is engaged as a contractor only but contractor for development of infrastructure facilities. Hence, TDS was rightly deducted under section 194C of the Act.

1.7.2] The term, "works contract" is not defined u/s 80-IA of the Act and therefore, meaning of the said term shall be interpreted using its dictionary meaning as well as definition of "work" provided in section 194C of the Act. Relying on the definition of "work" provided in section 194C of the Act, it is submitted that the term, "work" does not include "manufacturing or supplying a product according to the requirement or specification of a customer by using material purchased from a person, other than such customer". It is further submitted that no material was supplied by the employer to the appellant and that the appellant was solely responsible to mobilize and procure all the material and other resources as per the specification of the employer and accordingly, it was contended that the appellant was not a works contractor as defined u/s 194C of the Act.

1.7.3] Reliance is also placed on the judgment of the Hon'ble ITAT Kolkata Bench in the case of Adhunik Infrastructure (P) Ltd. vs. J.C.LT, Range 10, Kolkata wherein it was held that: 9.3.2. Thus as per section 194C of the Act also, "works contract does not include a contract wherein, the contractor in addition to employing labour, procures material from a third party. Thus, contracts involving mere labour of the contractor are included in the purview of "works contract We find that the Hon'ble Supreme Court in case of Associated Cement Co. Ltd. us. CIT reported in 201 ITR 435 while interpreting the term 'work' u/s 194C of the Act had held that 141,89,142,13/CTK/2023 &CO No.02/CTK/2023 words any work in section 194C(1) of the Act means any work including supply of labour to carry out work and is not intended to be confined to or restricted to works contract, therefore, a person who credits to the account of or pays to a contractor any sum payable on behalf of organizations specified in section 194C(1) of the Act for carrying out any work (including supply of labour for carrying out any work) is liable to deduct income-tax as required under that sub- section. The words in the sub-section (1) of 194C of the Act on income comprised therein appearing immediately after the words 'deduct an amount equal to two per cent of such sum as income-tax from their purport, cannot be understood as the percentage amount deductible from the income of the contractor out of the sum credited to his account or paid to him in pursuance of the contract, but deduction is to be made out of payments made to the contractor. We see no reason to curtail or to cut down the meaning of the plain words used in the section. "Any work means any work and not a "works contract", which has a special connotation in the tax law. Indeed in the subsection, the "work" referred to therein expressly includes supply of labour to carry out a work. It is a clear indication of the Legislature that the "work" in the sub-section is not intended to be confined to or restricted to "works contract". The issue before the Hon'ble Supreme Court in the aforesaid case was whether the term "work" used in section 1940 needs to be restricted to "works contract". The Hon'ble Apex Court laid out that the term "work" used in section 194C need not be restricted to "works contracts" (ie. labour contracts) because the subsection expressly includes supply of labour to carry out work. In Page 870 other words, it is implied that works contract means supply of labour to carry out work. Thus from the above we may say that works contract constitutes a contract under which the contracter is merely employing his efforts or labour. Under such a contract. the contractee provides the material and other requisites complete infrastructure) needed to carry out the desired work te the contractor who by applying his labour to the said material turns the material into a desired product 1.7.4] The Hon'ble Jurisdictional Bench of ITAT in the case of ARISS Infrastructure Projects Ltd. Vs. ACIT, Circle-2(1), Bhubaneswar [ITA Nos. 142 & 143/CTK/2010) has categorically held as under: “10. Now coming to the merits of the deduction u/s 801A(4) of the Act. A of the provisions of section 801A(4) of the Act shows that in the explanation A perusal of the provisions of sections 80IA(4) of the Act shows that in the explanation infrastructure facility has been specified to mean a road including a toll road, a bridge or a rail system. Admittedly, the assessee is doing the business of development of railway tracks and bridges thereof as also roads. If, we are to accept the contention of the Ld. CIT that the provisions of 141,89,142,13/CTK/2023 &CO No.02/CTK/2023 section 801A(4) of the Act after the substitution of the explanation to section 801A of the Act was introduced was only for the purpose of giving the benefit to BOT contracts then, the explanation to section 801A(4) of the Act becomes otiose. This is as explanation to section 801A(4) of the Act specifically provides for the road to include a toll road, a bridge or a rail system. BOT contract in respect of the railway system can never exist. Further, a perusal of the provisions of section 801A of the Act shows that the term 'works contract' is not defined in the said section. However, the terms 'works' and 'contract' is defined in the provisions of section 194C of the Act. If a particular word or term is not defined in the specific section then, one could go to other sections in the said Act where the definition would be available to draw a meaning to the said terms. In the provisions of section 194C of the Act, work has been given an inclusive definition but in the subsequent portion it has excluded the manufacturing or supplying a product according to requirement or specification of a customer by using material purchased from a person other than such customer. As has been specified by the Ld. AR, the assessee is doing contract work but that work is according to the requirement and specification of the customer and the same has been done by using materials purchase from third parties other than the customers. Thus, though the assessee is doing a works contract the same would not fall within the meaning of the word 'works contract' for the purpose of the Act due to the exclusion provided in the meaning of 'work' in section 194C of the Act. The issue raised by the Ld. CIT that the assessee is not doing the development work but is only doing the contract also does not stand to test as the assessee admittedly is developing the roads and railway lines and the bridges thereof Development encompasses within itself contract work. The agreement between the assessee and the customer being the government is for the development of the infrastructure facility being roads and rail systems and bridges by participating in the tenders. Under these circumstances, we are of the view that the AO was right in law in granting the assessee the benefit of deduction u/s, 801A(4) of the Act. On this ground also, we are of the view that the Ld. CIT's order passed u/s. 263 of the Act is unsustainable and is liable to be quashed and we do so. Here, we may specifically mention that in view of the fact that the explanation to section 801A(4) of the Act which has been substituted by the Finance, Act, 2009 with retrospective effect of 01.04.2000 is attempting to take away the statutory benefit granted to the assessee u/s. 801A(4) of the Act without making any amendment to the explanation to section 801A(4) of the Act, the said explanation substituted by the Finance Act, 2009 w.e.f. 01.04.2000 being an hindrance to the statutory deduction available to the assessee under the provisions of section 801A(4), the said 141,89,142,13/CTK/2023 &CO No.02/CTK/2023 explanation would have to stand down in view of the decision of the Hon'ble Supreme Court in the case of S. Sundaram Pillai, referred to supra Consequently, on this ground also the order passed u/s. 263 of the Act by the Ld. CIT for AY 2006-07 and 2007-08 stands quashed. Appeals of the assessee are allowed." 1.7.5) In view of the above discussion and findings reiterated in the judicial precedents cited supra, it becomes quite clear that even though the definition of "work" provided in section 194C of the Act is "Inclusive" and not "exhaustive", yet, it specifically excludes from Purview, "manufacturing or supplying a product according to the requirement at specification of a customer by using material purchased from a person, other than such customer. Therefore, it is evident that a works contract constitutes a contract under which the contractor is merely employing his efforts of labour and under such contrast, the contractee provides the material and other requisites is complete infrastructure) needed to carry out the desired work to the contractor who by applying his labour to the said material turns the material into a desired product 1.7.6] However, in the facts of the present case, the appellant was assigned the responsibility for development of infrastructural facility as a whole and the appellant was solely responsible to mobilize and procure all the material and other resources as per the specification of the employers. The appellant also undertook entrepreneurial and investment/ financial risk besides business risk in executing the development project which was akin to performing work in the nature of developer-cum-contractor. The appellant did not merely employ its labour while executing the project nor was it provided with the material and other requisites la complete infrastructure) needed to carry out the desired work Hence, it can be conclusively held that work related to development of infrastructural facility undertaken by the appellant did not partake the nature of "works contract" by any stretch of imagination. Hence, the aforesaid observation of the Ld. AO also does not hold good. 1.8] The appellant also places reliance on the following judicial precedents wherein similar claim of deduction u/s 80-IA of the Act was examined and allowed by the Hon'ble High Court and Hon'ble Coordinate Benches:  CIT. TRG Industries (P.) Ltd reported in [2016) 76 taxmann.com 105 (Jammu & Kashmir)  Harish Chandra ARSSPL JV v. ACIT, Circle-2(1) (L.T.A. Nos. 116 to 119/CTK/2013/  ITO, Ward-4(3) v. Backbone ARSS JV (ITA No 274 & 275/CTK/2016/  DCIT, Circle 4(1) v. M/s. ARSS Triveni JV (ITA No. 271/CTK/2016]  DCIT, Corporate Circle 1(1) v. ARSS Infrastructure Projects Ltd. (ITA No. 247/CTK/2017)

141,89,142,13/CTK/2023 &CO No.02/CTK/2023  HCIL Adhikarya ARSS JV v. DCIT, Circle-4(1) [ITA No. 81/CTK/2018]  Sushee Hi Tech Constructions (P1 Lat. DCIT, Crede-32), Hyderabad reported in 12013 58 SOT 111 (Hyderabad Trib) (UNO  KAIC Constructions Ltd ACIT, Circle 2(2) reported in (2012) 21 taxmann.com 138 plud  Somdutt Builders - NCC (JV) ACIT reported in [TS-5050- ITAT-2017 Hyderabad)-0  ITO, Word -112) M/s Ayyappa Infra Projects Put LAI (ITA No. 1323/Hyd/2018)  Ayush Ajoy Construction Lid ITO reported in [TS-5240-ITAT- 2000dndere)-O]  Tantia Constructions Limited v. DCII reported in (TS-6372- ITAT-2016(Kolkata)  Simplex Som Datt Builders JV ITO reported in (TS-7085- ITAT-2013(Kolkata)  ACIT ICC)-45 Pratibha Industries Lid reported in 2012] 28 taxmann.com 246 (Mumbai- Trib 1.9] In view of the detailed explanations/justification discussed supra with respect to each observation of the Ld. AO as discussed in the assessment order for disallowing the claim of deduction u/s 80-1A of the Act, it becomes crystal clear that the appellant satisfied all the conditions prescribed u/s 80-IA(4) of the Act for claiming benefit of deduction therein. The deduction claimed by the appellant u/s 80-IA of the Act was within the four corners of law in light of the facts involved in the present case which was duly supported with the findings re- iterated in the numerous judicial precedents cited (supra). 1.10] In view of the elaborate discussion duly corroborated with the findings re-iterated in the Judicial precedents cited supra, it becomes abundantly clear that the appellant satisfied all the conditions prescribed therein for claiming the benefit of deductions u/s 80-1A(4) of the Act. The deductions claimed by the appellant were legitimate and within the four corners of law. The Ld. AO himself did not dispute the fact that the appellant did not satisfy any of the conditions prescribed therein except for the Explanation inserted below sub-section (13) of section 80-IA of the Act wherein it was stated that deduction shall not be allowed in relation to a business which is in the nature of a "works contract". However, the appellant has categorically explained in the previous paragraphs of this submission that it was a contractor performing work in nature of a developer-cum-contractor and was also assuming risks and responsibilities akin to that of a developer and was not engaged merely in works contract. Therefore, the Ld CIT(A) was correct in deleting the addition of Rs. 1,52,72,905/- made to the total income of the appellant on account of disallowance of deduction claimed u/s 80-1A a of the Act and Henceforth, the Hon'ble Bench is thereby kindly requested to affirm the findings of Ld CIT(A).

141,89,142,13/CTK/2023 &CO No.02/CTK/2023 61. We have heard the rival submissions and perused the material available on record. This Bench of the Tribunal in assessee’s own caser dated 23.12.2021, held as under :-

141,89,142,13/CTK/2023 &CO No.02/CTK/2023 22. Another submission which was urged on behalf of the Revenue is that under clause (iii) of sub-section (4A) of Section 80IA, one of the conditions imposed was that the enterprise must start operating and maintaining the infrastructure facility on or after 1st April 1995. The same requirement is embodied in sub-clause (c) of clause (i) of sub-section (4) of the amended provisions of Section 80IA. On this basis, it was urged that since the assessee was not operating and maintaining the facility, he did not fulfill the condition. This submission is fallacious both in fact and in law. As a matter of fact, the Tribunal has entered a finding that the assessee was operating the facility and this finding has been confirmed earlier in this judgment. That the assessee was maintaining the facility is not in dispute. The facility was commenced after 1st April 1995. Therefore, the requirement was met in fact. Moreover, as a matter of law, what the condition essentially means is that the infrastructure facility should have been operational after 1st April 1995. After Section 80IA was amended by the Finance Act of 2001, the section applies to an enterprise carrying on the business of (i) developing; or (ii) operating and maintaining; or (iii) developing, operating and maintaining any infrastructure facility which fulfills certain conditions. Those conditions are : (i) Ownership of the enterprise by a Company registered in India or by a consortium; (ii) An agreement with the Central or State Government, local authority or statutory body; and (iii) The start of operation and maintenance of the infrastructure facility on or after 1st April 1995. The requirement that the operation and maintenance of the infrastructure facility should commence after 1st April 1995 has to be harmoniously construed with the main provision under which a deduction is available to an assessee who develops; or operates and maintains; or develops, operates and maintains an infrastructure facility. Unless both the provisions are harmoniously construed, the object and intent underlying the amendment of the provision by the Finance Act of 2001 would be defeated. A harmonious reading of the provision in its entirety would lead to the conclusion that the deduction is available to an enterprise which (i) develops; or (ii) operates and maintains; or (iii) develops, maintains and operates that infrastructure facility. However, the commencement of the operation and maintenance of the infrastructure facility should be after 1st April 1995. In the present case, the assessee clearly fulfilled this condition.

47.4 The ld. CITDR has also placed reliance on the order of ITAT Delhi Bench in the case of Parnika Commercial & Estates (P) Ltd [2016] 72 taxmann.com 177 (Delhi-Trib.), where the Assessing Officer rejected the claim of deduction under section 80-IA(4) of assessee, engaged in Civil Contract Work, on ground that it was not engaged in eligible business as per section 80-IA(4), but before denying claim of assessee, AO did not make thorough enquiry in matter regarding nature of agreements, terms of payments, maintenance of account books with respect to project separately, etc., and matter was restored to the file of AO for readjudication after allowing due opportunity of hearing to the assessee but in the present case such position does not exit as the assessee by way of relevant documentary evidence, accounts, copies of the contract agreements and other facts has successfully demonstrated that the impugned income was earned to it from the business activity conducted in the capacity of developer-cum-contractor, therefore, benefit of this citation in favour of revenue is not available. 47.5 We find it relevant to go through the memorandum explaining the provisions in the Finance Bill 2007, which clearly lays out that the purpose of extending tax benefit u/s.80IA of the Act was to encourage investments from the private sector, hence, work contracts i.e. contracts involving merely labour or mere execution of construction work without making investment have been kept outside the purview of the provision of the section 80IA(4) of the Act. At the same time, from the said memorandum which reproduced below, clearly explains the purpose of tax benefit for encouraging private sector participation by way of investment in 141,89,142,13/CTK/2023 &CO No.02/CTK/2023 developing of the infrastructure sector and not to the persons who merely executes the civil construction work or any other works contract. The memorandum has been reported in (2007) 289 ITR(St.) 292 at page 312, which reads as under :- "Section 80-IA, inter alia, provides for a ten-year tax benefit to an enterprise or an undertaking engaged in development of infrastructure facilities, industrial parks and special economic zones. The tax benefit was introduced for the reason that industrial modernization requires a passive expansion of, and qualitative improvement in, infrastructure (viz., expressways, highways, airports, ports and rapid urban rail transport systems) which was lacking in our country. The purpose of the tax benefit has all along been for encouraging private sector participation by way of investment in development of the infrastructure sector and not (or the persons who merely execute the civil construction work or any other works contract. Accordingly, it is proposed to clarify that the provisions of section 80-IA shall not apply to a person who executes a works contract entered into with the undertaking or enterprise referred to in the said section. Thus, 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 under section 80-IA. In contrast to this, a person who enters into a contract with another person (i.e., undertaking or enterprise referred to in section 80-IA) for executing works contract, will not be eligible for tax benefit under section 80-IA.

This amendment will take retrospective effect from April 1, 2000 and will accordingly apply in relation to the assessment year 2000-01 and subsequent years."

47.6 The above noted factual matrix, placed before the bench by way of relevant documentary evidence, copies of the contract development agreements and other legal propositions and citations on the issue pertaining to present assessee M/s Balaji Engicon Pvt. Ltd. (ITA No.195/CTK/2019) have not been controverted by the ld. CITDR. Therefore, we hold that the AO was right in allowing the claim of assessee u/s.80IA(4) of the Act after due examination and verification of the relevant materials, documents, copies of the contract and evidence etc., thus, on merits the assessment order cannot be alleged as erroneous and prejudicial to the interest of revenue.

141,89,142,13/CTK/2023 &CO No.02/CTK/2023 141,89,142,13/CTK/2023 &CO No.02/CTK/2023 141,89,142,13/CTK/2023 &CO No.02/CTK/2023 141,89,142,13/CTK/2023 &CO No.02/CTK/2023 141,89,142,13/CTK/2023 &CO No.02/CTK/2023

141,89,142,13/CTK/2023 &CO No.02/CTK/2023 (AY:2017-2018) (by the revenue)

We direct accordingly.

(AY : 2018-2019)( by the revenue)

1. The CITIA) erred in law in allowing deduction u/s 801A(4) to the assesse when the assesse doesn't satisfy the requisite conditions to be eligible to get the deduction u/s 801A(4) of the Act.

3. The CITIA) was not correct in holding that the infrastructure facility executed by the assesse (Contractor) can be considered to be owned by it within the meaning of item (a) of clause (i) of sub section (4) of Section 801A. 4. The CIT(A) erred in treating the Contract receipts received by assesse- company in lieu of execution of contract work be considered as profit and gains of business for deduction u/s 801A. 5. The deduction u/s 801A as per the condition in item (c) of clause (i) of sub section (4) of Section 80 IA can be availed only after the infrastructure facility has started (i.e got completion Certificate). However, the assesse being a contractor does not get any compensation after completion of project. In view of the above, whether the CIT(A) was justified in holding the eligibility of assesee company for deduction u/s.80IA on receipts accrued prior to completion of the project. 6. Any other ground of appeal that may arise at the time of hearing.

71. The issue raised by the revenue has already been decided by us while considering the appeal of the revenue for A.Y.2017-2018, wherein we have directed the AO to identify those projects where no new 141,89,142,13/CTK/2023 &CO No.02/CTK/2023 infrastructure facilities is created and disallowed u/s.80IA of the Act only on such projects and the profits for the remaining projects where new infrastructure facilities have been developed, the assesee is entitled for deduction u/s.80IA(4) of the Act. Thus, following the same reasoning, we also restore this issue to the file of AO with the above directions.

CO No.02/CTK/2023 (AY : 2018-2019) (by the assesee)

1. That on the facts and in the circumstances of the case and in law, the Ld CIT(A) erred in not allowing additional claim of Rs. 5,26,73,234/- as lodged during the course of appellant proceedings even when it was eligible for deduction u/s 80-IA of the Act in respect of profit earned from work undertaken by the respondent as a member of the consortium in respect of the projects undertaken by the joint ventures/ consortiums.

2. That on the facts and in the circumstances of the case and in law, the appellant is also eligible for deduction of Rs. 5,26,73,234/- under section 80-IA of the Income-tax Act, 1961 in respect of profit earned from work undertaken by the respondent as a member of the consortium in respect of the projects undertaken by the joint ventures/consortiums.

141,89,142,13/CTK/2023 &CO No.02/CTK/2023 75. This issue has already been discussed and decided against the assesee in assessee’s appeal for A.Y.2011-2012 in IT(SS)A No.77/CTK/2023, the facts of the year under appeal are identical and the arguments put forth by the assesee are also same. Both the parties has stated that facts existed in the year under appeal are identical to facts in A.Y.2011-2012. Thus, following the reasoning given in the said appeal of the assesee for A.Y.2011-2012, all the cross objections of the assesee are dismissed.

Order pronounced in the open court on 07/01/2025.

Sd/- Sd/- (GEORGE MATHAN) (MANISH AGARWAL) लेखा सद�य/ ACCOUNTANT MEMBER �याियक �याियक सद�य �याियक �याियक सद�य सद�य / JUDICIAL MEMBER सद�य कटक कटक Cuttack; �दनांक Dated 07/01/2025 कटक कटक Prakash Kumar Mishra, Sr.P.S. आदेश आदेश क� आदेश आदेश क� क� �ितिलिप क� �ितिलिप �ितिलिप अ�ेिषत �ितिलिप अ�ेिषत अ�ेिषत/Copy of the Order forwarded to : अ�ेिषत 1. अपीलाथ� / The Appellant- ��यथ� / The Respondent- 2.