Section 80-IA Deduction Allowed for Road Projects; SLP Dismissed on Delay and Merit
Issue
Whether an assessee executing road projects awarded by the Government is eligible for deduction under Section 80-IA(4) as a “Developer” of infrastructure facilities, or if they are merely executing a “Works Contract” (which is ineligible), and whether the Supreme Court should entertain an appeal filed with a gross delay.
Facts
Nature of Work: The assessee executed road projects awarded by the Government.
The Dispute: The Revenue contended that the assessee was merely a “Works Contractor” and thus not eligible for the tax holiday under Section 80-IA(4). The assessee argued they were “Developers” bearing risks and responsibilities.
Concurrent Findings: Both the Appellate Authorities (Tribunal and High Court) analyzed the agreements and arrived at concurrent findings of fact that the assessee had entered into a “development of infrastructure facility agreement” and not a simple works contract.
The Appeal: The Revenue challenged the High Court’s order before the Supreme Court via a Special Leave Petition (SLP).
Procedural Lapse: The SLP was filed with a gross delay of 358 days, for which no satisfactory explanation was provided.
Precedent: The High Court’s order was based on a prior judgment. The Revenue had not appealed against that prior judgment, allowing it to attain finality.
Decision
SLP Dismissed: The Supreme Court dismissed the Revenue’s petition on two grounds:
Delay: The 358-day delay was unjustified.
Merits: The Court refused to interfere with the concurrent findings of fact that established the assessee as a developer. Furthermore, since the Revenue accepted the earlier precedent (by not appealing it), they could not challenge the same principle in this case.
Outcome: The deduction under Section 80-IA(4) was sustained. In favour of assessee.
Key Takeaways
Developer vs. Works Contractor: To claim Section 80-IA, you must be a “Developer” (investing money, taking risks, maintaining the asset) and not just a “Works Contractor” (paid strictly for labor/material without risk). The distinction lies in the specific clauses of your agreement (risk transfer, financing, operation).
Concurrent Findings are Powerful: When the Tribunal and High Court agree on the facts (e.g., “This is a development agreement”), the Supreme Court rarely interferes.
Litigation Discipline: The Revenue cannot pick and choose when to appeal. If they accept a legal principle in one case (by not appealing), courts often bar them from challenging it in subsequent identical cases to ensure consistency.