Contractors performing work in the nature of Developer-cum-Contractor eligible for Deduction u/s 80A even after Amendment: ITAT

The Rajkot bench of the Income Tax Appellate Tribunal (ITAT) has held that the contractors performing the work in the nature of a developer-cum-contractor are still eligible to claim deduction under section 80-IA(4) of the Income Tax Act, 1961.

The assessee is a private limited company and engaged in the business of civil construction. The assessee is a Government approved “AA” class contractor. As such, it carries out projects like construction of hospitals, roads, bridges, etc. for Government, semi-government and other institutions, etc. The assessee in the year under consideration was awarded an infrastructure housing project by the Gujarat Industrial Development Corporation (GIDC), Ankleshwar. The assessee in respect of such contract claimed a deduction of Rs. 67,73,762/- under section 80IA(4) of the Act.However, the Assessing Officer denied the benefit since the provision has been amended in the year 2007.

Overruling the arguments of the department, the Tribunal observed that there was no issue in the cases cited by the learned DR whether the assessee is acting as a developer or as a contractor for claiming the deduction under section 80-IA (4) of the Act.

While granting the deduction benefit to the assessee, the Tribunal 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 section 80-IA in respect of the eligible infrastructural facilities. Hence the ground of appeal of the assessee is allowed.”