B. T. Patil & Sons v. ACIT
ITA Nos. 1408 & 1409/Pn/2003
A.Ys. : 2000-01 and 2001-02
Dated : 26-10-2009
S. 80IA(4), Explanation to S. 80IA(13), S. 255(3) and S.
255(4) — There is a material difference in the circumstances where a reference
is made to a Special bench u/s.255(3) and a Third Member or Larger Bench
u/s.255(4) — A Third Member/Larger Bench is constituted only when there are
differing orders — A Bench constituted u/s.255(4) has to apply the law as
amended with retrospective effect even though such law was not available at
the time of passing of the separate orders by the dissenting Members — S.
80IA(4) (even prior to amendment) applies to a ‘developer’ and not to a
‘contractor’ —Deduction u/s.80IA(4) is allowable only to a person directly
engaged in developing, maintaining and operating the facility — There should
be a complete development of the facility and not just a part of it.
Facts :
The assessee was a civil contractor engaged in construction
of various projects of Governments and local authorities. It claimed deduction
u/s.80IA on the ground that it had undertaken ‘infrastructure projects’. The
Assessing Officer (AO) did not allow the deduction on the ground that the
assessee did not do any business in infrastructure facility but had merely
constructed the properties belonging to the Government/statutory bodies for a
fixed consideration. He also held that the other conditions of S. 80IA(4) were
not satisfied.
The CIT(A) confirmed the action of the AO.
Aggrieved, the assessee preferred an appeal to the
Tribunal. The JM upheld the claim on the ground that the assessee is a
developer. The AM dissented after taking note of Explanation to S. 80IA then
proposed to be inserted by Finance Bill, 2007 w.e.f. 1-4-2000, rejected the
claim. The President, acting as Third Member, noted that as the AM had decided
on the basis of a point not raised by the parties during the hearing, a
solitary TM decision on the issue may create complications and so the issue
was referred to a Larger Bench.
Before the Larger Bench, apart from the issue under
consideration, two more questions arose (i) whether the reference was made
u/s.255(4) or u/s.255(3) since scope and limitations in both the situations
are different; and (ii) whether the Bench constituted u/s.255(4) has to apply
the law as amended with retrospective effect even though such law was not
available at the time of passing of the separate orders by the dissenting
Members.
Held :
(i) There is a material difference in the circumstances
where a reference is made to a Special Bench u/s.255(3) and a Third Member or
a Larger Bench u/s.255(4). Ss.(4) is a special provision dealing only with a
particular situation in which the members who earlier heard the case differ on
a point or points, as against the language of the relevant part of Ss.(3)
which refers to constituting a Special Bench consisting of three or more
members couched in a general manner. Special Bench u/s.255(3) is always
constituted in the absence of differing opinion expressed by the Members in
that particular case through their separate orders.
(ii) In the present case, the Members had passed differing
orders. Consequently, the reference was u/s.255(4). A Third Member/Larger
Bench is constituted only when there are differing orders.
(iii) Proceedings u/s.255(4) are confined to the point or
points on which Members of the Division Bench differ. One or more of the other
Members appointed under Ss.(4) are supposed to confine himself/themselves only
to the facts of the case before the Bench. Since the Bench has to confine
itself to the facts of the case, interveners are normally not allowed.
(iv) The rule that interveners are not allowed in
proceedings u/s.255(4) is subject to the exception where pure and substantial
question of law is involved in proceedings u/s.255(4). Interveners are allowed
provided their arguments are confined to the substantial legal question posed
before the Bench u/s.255(4).
(v) Proceedings qua the point of difference continue before
the Bench constituted u/s.255(4) and are deemed to continue till passing of
order under this sub-section. A bench constituted u/s.255(4) has to apply the
law as amended with retrospective effect even though such law was not
available at the time of passing of the separate orders by the dissenting
members. The order of the TM/Bench is final and conclusive on the point in
difference and the failure to apply the applicable law will render the order
of the TM/Bench absurd and erroneous.
(vi) On merits, S. 80IA(4) [even prior to insertion of
Explanation below S. 80IA(13)] applies to a ‘developer’ and not to a
‘contractor’. ‘Developer’ is a person who conceives the project which he may
execute himself or assign some parts of it to others. On the contrary
Contractor is the one who is assigned a particular job to be accomplished on
behalf of the developer. His duty is to translate such design into reality.
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. The role of a developer is much larger than that of contractor.
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. The assessee in
this case was held to be a contractor. Moreover, it did not even own the
facility.
