Can deduction u/s 80-IA be claimed if the contract is awarded to Joint Venture formed by the assessee?
Case: TRANSTROY (INDIA) LTD vs ASSISTANT COMMISSIONER, CIRCLE 2(1), ITAT, Visakhapatnam
The assessee formed a joint venture (JV) to participate in the bidding process with the Government of India. The government allotted the project work to the JV and subsequently, the joint venture formed a company Special Purpose Vehicle (SPV) to execute the work.
- The assessee had not entered into an agreement with the government for developing the infrastructure project.
- The assessee was a contractor and the deduction u/s 80-IA(4) would be available only for following activities related to infrastructure facility:
- Operating and maintaining
- Developing, operating and maintaining
- The joint venture was formed for the sake of operational convenience and for participating in tender bidding.
- The assessee had entered into a contract with the SPV for participation and utilization of its technical expertise. Hence, the assessee should be held to be a developer and activities carried on by the assessee would fall u/s 80-IA (4)(i).
As the SPV was only a paper organisation and the assessee was responsible for using its men, material and resources to execute the project. Also, the government authority did not object to the assessee executing the work. Hence, the deduction should be allowed.