43. CIT vs. Chettinad Lignite Transport Services Pvt. Ltd.; [2019] 415
ITR 107 (Mad.) Date of order: 12th March, 2019; A.Y.: 2006-07
Special Deduction u/s 80-IA – Infrastructure facility – Transferee or
contractor approved and recognised by authority and undertaking development of
infrastructure facility or operating or maintaining it eligible for deduction –
Assessee maintaining and operating railway siding under agreement with principal
contractor who had entered into agreement with Railways and recognised by
Railways as transferee – Assessee entitled to benefit of special deduction
For the A.Y. 2006-07, the AO denied the assessee
the benefit u/s 80-IA of the Income-tax Act, 1961 on the ground that the
assessee itself did not enter into a contract with the Railways or with the
Central Government and did not satisfy the requirement u/s 80-IA(4).
The Tribunal found that though the assessee had
only an agreement with the principal contractor who had entered into an
agreement with the Railway authorities to put up rail tracks, sidings, etc.,
the Railways had recognised the assessee as a contractor. The Tribunal held
that impliedly the Department had accepted the fact that the assessee had
provided ‘infrastructure facility’ to the specified authority, to maintain a
rail system by operating and maintaining such infrastructure facility as
defined, and that the assessee performed the contract according to the terms
agreed upon, that the services rendered by the assessee were an integral and
inseparable part of the operation and maintenance of a lignite transport
system, and that the assessee’s claim that it had complied with the requisite
condition specified under the proviso and was entitled to deduction u/s 80-IA
in terms of the proviso to sub-section (4) had to be accepted.
On appeal by the Revenue, the Madras High Court
upheld the decision of the Tribunal and held as under:
‘i) The term
“infrastructure facility” has been defined in the Explanation to section 80-IA
and it includes a toll road, a bridge or a rail system, a highway project,
etc., which are big infrastructure facilities for which the enterprises have
entered into a contract with the Central Government or the State Government or
local authority. The proviso to section 80-IA(4) extends the benefit of such
deduction even to a transferee or a contractor who is approved and recognised
by the concerned authority and undertakes the work of development of the
infrastructure facility or only operating and maintaining it. The proviso to
sub-section (4) stipulates that subject to the fulfilment of the conditions,
the transferee will be entitled to such benefit, as if the transfer in question
had not taken place.
ii) The
Tribunal had rightly applied the proviso to section 80-IA(4) and had held that
the assessee was recognised as a contractor for the railway sidings, which fell
under the definition of “infrastructure facility” and that it was entitled to
the benefit u/s 80-IA. It had also rightly held that the proviso did not
require that there should be a direct agreement between the transferee
enterprise and the specified authority to avail the benefit u/s 80-IA.
iii) There
was no dispute that the assessee was duly recognised as a transferee or
assignee of the principal contractor and was duly so recognised by the Railways
to operate and maintain the railway sidings in the two railway stations. It has
been found by the AO himself that the assessee under an agreement with the
principal contractor had undertaken the work of development of the railway
sidings and had operated and maintained them.
iv) The
findings of fact with regard to such position recorded by the Tribunal were
unassailable and that attracted the first proviso to section 80-IA(4). The
grounds on which the assessing authority had denied the benefit to the assessee
ignoring the effect of the proviso to section 80-IA(4) could not be sustained.’
