Sec. 80-IA relief can’t be denied just because assessee was referred to as contractor

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  • Last Updated on 9 September, 2022

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deduction u/s 80-IA

Case Details: Akash Infra Projects (P.) Ltd. v. ITO - [2022] 141 taxmann.com 516 (Ahmedabad-Trib.)

Judiciary and Counsel Details

    • Waseem Ahmed, Accountant Member & Ms Madhumita Roy, Judicial Member
    • Mehul K. Patel, A.R. for the Appellant.
    • R.R. Makwana, Sr. DR for the Respondent.

Facts of the Case

Assessee-company, engaged in the business of Infrastructure Development, claimed deduction under section 80-IA in respect of income arising out of contract for development of roads.

Assessing Officer disallowed the assessee’s claim under section 80-IA, which was in turn confirmed by First Appellate Authority by treating the assessee-company as a ‘Contractor’ and not a ‘Developer’.

ITAT Held

On further appeal, the Tribunal held that the contractors might not be eligible for the deduction under section 80-IA as they are not developing any infrastructure facility but only providing assistance to the actual developer.

To ascertain whether civil construction work is assigned on a development basis or on a contract basis only, the agreement’s terms and conditions must be considered. Only on the basis of the terms and conditions and the scope, ambit and nature of the contract assigned, it could be ascertained whether it is a “work contract” or a “development contract”.

On examining the tender document, the Tribunal noted that the assessee had been entrusted with the work of development of infrastructure facilities. Merely because assessee was referred to as contractor in the agreement, it did not detract assessee from the position of being a developer, nor will deprive it from claiming deduction under section 80-IA.

List of Cases Reviewed

List of Cases Referred to

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