ITAT Mumbai Denies Tax Deduction U/S 80 IA for Individuals in Works Contract

The claim of deduction u/s 80 IA of the Income Tax Act, 1961 expressing that the same is not available for the individuals encountered in performing work contracts has been rejected by the Mumbai bench of the Income Tax Appellate Tribunal (ITAT).

To claim deduction u/s 80IA of the Income Tax Act is the only problem in all such petitions concerned with the taxpayer’s eligibility. Both tax authorities ruled that the taxpayer is not qualified for the tax deduction u/s 80IA of the Income Tax Act.

The majority of the work has been finished in the earlier years and the taxpayer does not provide the evidence to indicate that the same has implemented works stated under the scope of work consequently, it ruled that for deduction u/s 80IA of the Income Tax Act the taxpayer was not qualified, in all the years under consideration.

Read Also: Fixed Deposits Are Eligible for Tax Deduction U/S 80IA of I-T Act

The taxpayer’s counsels Mr F.V. Irani & Mr Madhur Agrawal proposed that the taxpayer along with its consortium members be granted the work of development of an infrastructure facility. A Special Purpose Vehicle (SPV) was formed to execute the Concession Agreement with NHAI.

Before distinct consortium members, the work of development of infrastructure facilities was classified. As per that the same argued that the SPV is the only enterprise or undertaking of the taxpayer. As per that, it argued that the obtained income by the taxpayer from its undertaking is qualified for deduction u/s 80IA of the Income Tax Act.

A perusal of the provisions of Section 80IA (4) shows that the “Enterprise”, which is executing the infrastructure facility is qualified for the deduction u/s 80IA of the Act is subject to the condition that:

• (a) The stated enterprise is owned by an Indian company or other forms of organization cited u/s 80IA (4) (i) (a) of the Income Tax Act
• (b) The said enterprise has entered into an agreement with the Government or other legal body cited in Section 80IA (4) (i) (b) of the Income Tax Act
• (c) The said enterprise began its operation on or after the 1st day of April 1995.

The two-member bench of the tribunal constituting Pavan Kumar Gadale ( Judicial member) and B.R.Baskaran ( Accountant member) observed that the AO was correct in holding that the taxpayer has only executed a works contract allotted to it by the SPVs.

Any dispute must not be there that the deduction u/s 80IA of the Income Tax Act is not available to the persons executing the works contract.

ITAT concluded that the CIT (A) was explained in affirming the AO’s decision in rejecting the claim for deduction u/s 80IA of the Income Tax Act, therefore all the appeal filed by the taxpayer was dismissed.

Case Title	AJR Infra and Tolling Limited Vs. DCIT
Case Number	I.T.A. No. 1329/Mum/2022
Date	31.01.2024
Counsel For Appellant	Shri F.V. Irani & Shri Madhur Agrawal
Counsel For Respondent	Shri Manoj Kumar Sinha
Mumbai ITAT	Read Order