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Even a Contractor is a “Developer” for purposes of s. 80-IA(4)
Where the assessee entered into an agreement with the Vidharbha Irrigation department for supply, erection and installation of dam gates and the question arose whether it was “developing an infrastructural facility” so as to be eligible for deduction u/s 80-IA(4) or it was a mere contractor, HELD:
(i) Though the Explanation to s. 80IA (4) inserted by the FA 2007 w.r.e.f 1.4.2000 provides that s. 80-IA shall not apply to a person executing a works contract, the assessee was not a mere “contractor”. The term “developer” means a person who makes things happen and as the assessee was mobilizing and synthesizing people, plans, technical expertise, supervision, co-ordination and control etc, it could be regarded as the developer. The term “contractor” is not essentially contradictory to the term “developer”.
(ii) The Explanation to s. 80IA does not apply to a works contract entered into by the Government and the enterprise. It only applies to a work contract entered into between the enterprise and other party’s “sub-contractor”. The amendment merely aims at denying deduction to the sub-contractor who executes a works contract with the enterprise;
(iii) It is not required that the developer should also “operate and maintain” the infrastructure facilities so as to be eligible for deduction.
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