INCOME TAX ACT, 1961

Section 80-IA(4)

Deduction under section 80-IA(4) - Development of infrastructure facility - Four laning of existing road - Condition precedent satisfied

NHAI floated a bid for construction of the 4-lane project on BOT basis under annuity scheme. As per the bid requirement, two entities, i.e., Gammon India Ltd. (GIL) and Punj Lloyd Ltd., came forward to compete for the bid by forming a consortium and being successful, both Gammon India Ltd. and Punj Lloyd Ltd. incorporated the assessee company as a special purpose vehicle (SPV) to implement the project. On completion of the BOT project on 20-9-2004, the assessee started its commercial operation. In the return of income filed for the assessment year 2006-07, for the first time the assessee claimed deduction under section 80IA. in respect of the aforesaid project. Assessment in case of the assessee was completed under section 143(3), vide Order, dated 30-11-2010 disallowing assessee‟s claim of deduction under section 80-IA on the reasoning that such deduction is allowable only on a new infrastructure project and not on repair widening of an existing road. AO ultimately completed the assessment disallowing assessee's claim of deduction under section 80-IA. CIT(A) upheld the disallowance of deduction claimed under section 80-IA, thougn, on a completely different reasoning.Held: The most crucial factor which needs to be kept in mind was, assessee‟s claim of deduction under section 80-IA in respect of the same infrastructure facility was allowed by CIT(A) in the assessment years 2007-08 and 2008-09 and the Tribunal also approved it. It was worth mentioning, while deciding identical issue in assessment year 2012-13, which was after the date of search and seizure operation, CIT(A) following the decision of the Tribunal had allowed assessee's claim of deduction under section 80-IA. Thus, it was very much clear that the appellate authorities on verifying identical facts and materials have never considered the assessee as a paper company or it was not a developer of the infrastructure facility, hence, allowed assessee‟s claim of deduction. There was no doubt that the BOT Toll Road built by the assessee was a infrastructure facility as defined under section 80-IA(4). An entity which developed such a facility was, therefore, eligible to claim deduction, provided, he fulfills the conditions of section 80-IA(4)(i) . In the fact of the present case, if neither the assessee nor GIL were held as ineligible then no one else could get the benefit of section 80-IA. and the very object for which the provision had been brought would fail. The assessee was hence, eligible to claim deduction under section 80-IA.

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