Case Note & Summary
The present appeals were filed by the Revenue (Pr. Commissioner of Income Tax, Pune) against a common order dated 25th November 2016 passed by the Income Tax Appellate Tribunal (ITAT). The appeals pertain to Assessment Years 2009-10 and 2010-11. The Assessee, Punit Chettiar alias Punit Balan, had claimed deduction under Section 80IA(4)(iii) of the Income Tax Act, 1961 for an amount of Rs.3,70,52,575/- for the assessment year 2009-10. The Assessing Officer (AO) found that the Assessee had constructed commercial assets (shops and offices) and leased them out. The AO disallowed the deduction, holding that the activity did not constitute development of an 'infrastructure facility' as defined under Section 80IA. The Commissioner of Income Tax (Appeals) upheld the AO's order. The ITAT, however, allowed the Assessee's appeal, holding that the construction of commercial assets could be considered as an infrastructure facility. The Revenue challenged this before the High Court. The High Court considered the definition of 'infrastructure facility' under Section 80IA(4)(iii) and the relevant provisions. The Court held that the term 'infrastructure facility' must be interpreted strictly and does not include commercial assets like shops and offices. The deduction under Section 80IA is intended for facilities such as roads, bridges, ports, airports, etc. The Assessee's activity of constructing a commercial complex and leasing it out did not qualify as an infrastructure facility. The Court allowed the Revenue's appeals, setting aside the ITAT's order and restoring the order of the AO.
Headnote
A) Income Tax - Deduction under Section 80IA(4)(iii) - Infrastructure Facility - The issue was whether the Assessee, who constructed commercial assets (shops and offices) and leased them out, was entitled to deduction under Section 80IA(4)(iii) of the Income Tax Act, 1961. The Court held that the activity did not constitute development of an 'infrastructure facility' as defined under the Act, and therefore the deduction was not allowable. The Assessee's claim was rejected. (Paras 1-10) B) Income Tax - Interpretation of 'Infrastructure Facility' - Section 80IA(4)(iii) - The Court interpreted the term 'infrastructure facility' strictly, holding that it does not include commercial assets like shops and offices. The deduction is intended for facilities like roads, bridges, ports, etc. The Assessee's construction of a commercial complex did not qualify. (Paras 5-8)
Issue of Consideration
Whether the Assessee is entitled to deduction under Section 80IA(4)(iii) of the Income Tax Act, 1961 for the construction of commercial assets like shops and offices?
Final Decision
The High Court allowed the Revenue's appeals, set aside the ITAT order, and restored the order of the Assessing Officer disallowing the deduction under Section 80IA(4)(iii).
Law Points
- Section 80IA(4)(iii) of the Income Tax Act
- 1961
- deduction for infrastructure development
- eligibility for deduction
- interpretation of 'infrastructure facility'
- commercial asset construction
