I supplied, installed and maintained cranes at a port under a lease contract and hand them over free at the end. Can I claim section 80-IA when I do not own or run the port?
Yes. The Bombay High Court held that an enterprise which develops a part of an infrastructure facility qualifies under section 80-IA; it does not have to develop the whole port. The assessee supplied, installed, tested, commissioned, operated and maintained container handling cranes at Jawaharlal Nehru Port Trust for ten years on a build-own-lease-transfer basis, after which the cranes vested in the Port Trust free of cost. The port authority certified that the cranes formed an integral part of the port. The Court also held that developing, operating and maintaining were never cumulative conditions, the Board's circulars having consistently said so and the Finance Act 2001 amendment having put it beyond controversy.
Decided by the High Court (High Court of Judicature at Bombay, Ordinary Original Civil Jurisdiction - Dr D.Y. Chandrachud and J.P. Devadhar, JJ; oral judgment by Dr D.Y. Chandrachud, J) on 2010-02-15, reported as Income Tax Appeal No. 1687 of 2009 and connected appeals (Bombay High Court). It bears on section 80-IA, section 80-IA(4), section 80-IA(4A) of the Income Tax Act 1961, in Deductions & Disallowances and How Tax Law Is Read matters.
This is the leading Bombay High Court authority on who counts as a developer for section 80-IA(4), and it is the case to reach for when the officer says the assessee is a mere contractor or supplier rather than a developer of infrastructure. Two holdings do the work. First, a part of a facility is enough: a structure for loading, unloading and storage at a port is itself within the definition, and Parliament did not require an assessee to develop an entire port. Second, the three limbs - developing, operating and maintaining - are disjunctive, and were treated as disjunctive by the Board's circulars from 1996 onwards even for years before the Finance Act 2001 amendment, so the amendment was clarificatory of a position that always held the field. The judgment also shows the practical value of a certificate from the port authority and of evidence of the staff actually deployed.
Binding within that High Court's jurisdiction. Persuasive elsewhere.
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Under the Government's policy of encouraging private participation in infrastructure, the assessee bid for and was awarded contracts by Jawaharlal Nehru Port Trust dated 2 September 1994 and 16 October 1995 for the supply, installation, testing, commissioning and maintenance of rail mounted quay side cranes, rail mounted gantry cranes and rubber tyred gantry cranes at the Port's dedicated container handling terminal. Lease charges of Rs 215.50 crore were payable over ten years. The contract gave the Port Trust two options: the assessee to operate and maintain, or the assessee to maintain only while the Port Trust supplied operators, in which case the charges were lower by Rs 40 lakh a year. The assessee had to guarantee availability of the equipment for a minimum number of days, pay liquidated damages for non-availability, insure the equipment, indemnify the Port Trust and hand the cranes over free of cost after ten years. The Port Trust certified on 31 May 2004 that the cranes formed an integral part of the port and that the contracts were executed under the build-own-lease-transfer scheme. The Assessing Officer refused section 80-IA on the footing that the assessee merely supplied and maintained cranes. The Commissioner (Appeals) and the Tribunal allowed the claim for assessment years 1997-98 to 2000-01 and 2005-06.
The Revenue's appeals were dismissed and the question of law answered in favour of the assessee. The obligations the assessee assumed were obligations involving the development of an infrastructure facility, not merely supply and installation: they ran continuously from supply through installation, testing, commissioning, operation and maintenance for ten years, ending in the cranes vesting in the Port Trust free of cost. An assessee does not have to develop the entire port to qualify. A port is an infrastructure facility, and the Board's circular treats a structure for loading, unloading and storage at a port as within that definition; the certificate from the port authority was on record. The Tribunal's finding that the assessee also operated the cranes was based on material - the managers, engineers, technical officers and operators it employed - and the fact that the Port Trust supplied the crane operators did not displace the assessee's overall contractual responsibility for operating them. The Revenue's argument that the assessee had to satisfy development, operation and maintenance cumulatively, and its argument on the condition that operation and maintenance must have started after 1 April 1995, were both rejected.
The Court traced the provision from its original form through sub-section (4A) inserted by the Finance Act 1995, the definition of infrastructure facility inserted in 1996, the substitution by the Finance Act 1999 which set out developing, or maintaining and operating, or developing, maintaining and operating, and the Finance Act 2001 amendment which put the disjunctive reading beyond doubt. Development is not artificially defined and takes its ordinary and natural meaning. Alongside the statute the Court set the Board's circulars: Circular 717 of 1995 explaining the tax holiday for facilities on a build-operate-transfer, build-own-operate-transfer or similar basis; Circular 733 of 1996 holding the concession applicable to the Railways' build-own-lease-transfer scheme; Circular 793 of 2000 treating structures at ports for storage, loading and unloading as part of a port subject to a port authority certificate and a transfer agreement; and Circular 10 of 2005 removing the build-own-transfer condition from assessment year 2002-03. The Revenue never contended that these circulars were not binding or were contrary to law. Since a build-own-lease-transfer scheme by its nature does not involve the enterprise operating the facility, the Board's acceptance of such schemes showed that operation by the developer was never treated as indispensable - a practical recognition that a developer may lack the wherewithal to run what it has built. Parliament, aware of that administrative practice, then clarified the law. Applying Bajaj Tempo, an incentive provision for growth and development is to be construed liberally, and an amendment supplying an obvious omission to make a section workable can operate for earlier years.
An assessee did not have to develop the entire port in order to qualify for a deduction under Section 80IA. Parliament did not legislate a condition impossible of compliance.
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Handle my notice → Ask a CA on WhatsAppYes. The Bombay High Court held that an enterprise which develops a part of an infrastructure facility qualifies under section 80-IA; it does not have to develop the whole port. The assessee supplied, installed, tested, commissioned, operated and maintained container handling cranes at Jawaharlal Nehru Port Trust for ten years on a build-own-lease-transfer basis, after which the cranes vested in the Port Trust free of cost. The port authority certified that the cranes formed an integral part of the port. The Court also held that developing, operating and maintaining were never cumulative conditions, the Board's circulars having consistently said so and the Finance Act 2001 amendment having put it beyond controversy. This was decided by the High Court (High Court of Judicature at Bombay, Ordinary Original Civil Jurisdiction - Dr D.Y. Chandrachud and J.P. Devadhar, JJ; oral judgment by Dr D.Y. Chandrachud, J) and bears on section 80-IA, section 80-IA(4), section 80-IA(4A) of the Income Tax Act 1961. It is reported as Income Tax Appeal No. 1687 of 2009 and connected appeals (Bombay High Court). This is the leading Bombay High Court authority on who counts as a developer for section 80-IA(4), and it is the case to reach for when the officer says the assessee is a mere contractor or supplier rather than a developer of infrastructure. Two holdings do the work. First, a part of a facility is enough: a structure for loading, unloading and storage at a port is itself within the definition, and Parliament did not require an assessee to develop an entire port. Second, the three limbs - developing, operating and maintaining - are disjunctive, and were treated as disjunctive by the Board's circulars from 1996 onwards even for years before the Finance Act 2001 amendment, so the amendment was clarificatory of a position that always held the field. The judgment also shows the practical value of a certificate from the port authority and of evidence of the staff actually deployed. If it applies to you, the first step is this: Get the authority's certificate that your structure or equipment forms an integral part of the facility - it was decisive here and the Board's circular of 23 June 2000 requires it for years up to 2001-02.
Under the Government's policy of encouraging private participation in infrastructure, the assessee bid for and was awarded contracts by Jawaharlal Nehru Port Trust dated 2 September 1994 and 16 October 1995 for the supply, installation, testing, commissioning and maintenance of rail mounted quay side cranes, rail mounted gantry cranes and rubber tyred gantry cranes at the Port's dedicated container handling terminal. Lease charges of Rs 215.50 crore were payable over ten years. The contract gave the Port Trust two options: the assessee to operate and maintain, or the assessee to maintain only while the Port Trust supplied operators, in which case the charges were lower by Rs 40 lakh a year. The assessee had to guarantee availability of the equipment for a minimum number of days, pay liquidated damages for non-availability, insure the equipment, indemnify the Port Trust and hand the cranes over free of cost after ten years. The Port Trust certified on 31 May 2004 that the cranes formed an integral part of the port and that the contracts were executed under the build-own-lease-transfer scheme. The Assessing Officer refused section 80-IA on the footing that the assessee merely supplied and maintained cranes. The Commissioner (Appeals) and the Tribunal allowed the claim for assessment years 1997-98 to 2000-01 and 2005-06. The matter was decided on 2010-02-15 by the High Court (High Court of Judicature at Bombay, Ordinary Original Civil Jurisdiction - Dr D.Y. Chandrachud and J.P. Devadhar, JJ; oral judgment by Dr D.Y. Chandrachud, J). On those facts the High Court held as follows. The Revenue's appeals were dismissed and the question of law answered in favour of the assessee. The obligations the assessee assumed were obligations involving the development of an infrastructure facility, not merely supply and installation: they ran continuously from supply through installation, testing, commissioning, operation and maintenance for ten years, ending in the cranes vesting in the Port Trust free of cost. An assessee does not have to develop the entire port to qualify. A port is an infrastructure facility, and the Board's circular treats a structure for loading, unloading and storage at a port as within that definition; the certificate from the port authority was on record. The Tribunal's finding that the assessee also operated the cranes was based on material - the managers, engineers, technical officers and operators it employed - and the fact that the Port Trust supplied the crane operators did not displace the assessee's overall contractual responsibility for operating them. The Revenue's argument that the assessee had to satisfy development, operation and maintenance cumulatively, and its argument on the condition that operation and maintenance must have started after 1 April 1995, were both rejected.
The Court traced the provision from its original form through sub-section (4A) inserted by the Finance Act 1995, the definition of infrastructure facility inserted in 1996, the substitution by the Finance Act 1999 which set out developing, or maintaining and operating, or developing, maintaining and operating, and the Finance Act 2001 amendment which put the disjunctive reading beyond doubt. Development is not artificially defined and takes its ordinary and natural meaning. Alongside the statute the Court set the Board's circulars: Circular 717 of 1995 explaining the tax holiday for facilities on a build-operate-transfer, build-own-operate-transfer or similar basis; Circular 733 of 1996 holding the concession applicable to the Railways' build-own-lease-transfer scheme; Circular 793 of 2000 treating structures at ports for storage, loading and unloading as part of a port subject to a port authority certificate and a transfer agreement; and Circular 10 of 2005 removing the build-own-transfer condition from assessment year 2002-03. The Revenue never contended that these circulars were not binding or were contrary to law. Since a build-own-lease-transfer scheme by its nature does not involve the enterprise operating the facility, the Board's acceptance of such schemes showed that operation by the developer was never treated as indispensable - a practical recognition that a developer may lack the wherewithal to run what it has built. Parliament, aware of that administrative practice, then clarified the law. Applying Bajaj Tempo, an incentive provision for growth and development is to be construed liberally, and an amendment supplying an obvious omission to make a section workable can operate for earlier years. In the words reproduced by the source cited on this page: "An assessee did not have to develop the entire port in order to qualify for a deduction under Section 80IA. Parliament did not legislate a condition impossible of compliance."
It was decided by the High Court on 2010-02-15 and is reported as Income Tax Appeal No. 1687 of 2009 and connected appeals (Bombay High Court). Binding within that High Court's jurisdiction. Persuasive elsewhere. A High Court decision binds the assessing officer, the Commissioner (Appeals) and the Income Tax Appellate Tribunal within that state, and is persuasive elsewhere. If your assessment is in a different jurisdiction, check whether your own High Court has taken the same view before relying on it. On section 80-IA, section 80-IA(4), section 80-IA(4A), the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the taxpayer. The Revenue's appeals were dismissed and the question of law answered in favour of the assessee. The obligations the assessee assumed were obligations involving the development of an infrastructure facility, not merely supply and installation: they ran continuously from supply through installation, testing, commissioning, operation and maintenance for ten years, ending in the cranes vesting in the Port Trust free of cost. An assessee does not have to develop the entire port to qualify. A port is an infrastructure facility, and the Board's circular treats a structure for loading, unloading and storage at a port as within that definition; the certificate from the port authority was on record. The Tribunal's finding that the assessee also operated the cranes was based on material - the managers, engineers, technical officers and operators it employed - and the fact that the Port Trust supplied the crane operators did not displace the assessee's overall contractual responsibility for operating them. The Revenue's argument that the assessee had to satisfy development, operation and maintenance cumulatively, and its argument on the condition that operation and maintenance must have started after 1 April 1995, were both rejected. It arises in Deductions & Disallowances and How Tax Law Is Read matters, on section 80-IA, section 80-IA(4), section 80-IA(4A) of the Income Tax Act 1961, and was decided by High Court of Judicature at Bombay, Ordinary Original Civil Jurisdiction - Dr D.Y. Chandrachud and J.P. Devadhar, JJ; oral judgment by Dr D.Y. Chandrachud, J. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Build the file on what the contract actually obliges you to do: availability guarantees, liquidated damages for non-availability, insurance, indemnities and transfer of the asset free of cost all point to development rather than supply. Put the deployment of your own operations staff on record - the Tribunal's finding that the assessee operated the cranes rested on the managers, engineers and technicians it employed. For years before assessment year 2002-03, meet the argument that developing, operating and maintaining are cumulative by relying on the Board's circulars and on the clarificatory character of the Finance Act 2001 amendment.
Still good law. indiankanoon's citator is broken for this judgment - citedby returns nothing on any of its three document ids (446424, 91317, 234498) - so the check was run by name and citation instead. On that footing the judgment is being applied at the highest relevant level. In CIT v Patel Engineering Ltd (Bombay High Court, 11 March 2026) the Bench relied on it at paras 39, 45 and 56 - 'The said intent has also been relied on by this Court in CIT Vs. ABG Heavy Industries Ltd.' - and held, following it, that 'the condition of operating and maintaining the infrastructure facility is not necessary in order to be eligible for deduction under Section 80-IA', dismissing the Revenue's appeals. The Gujarat High Court in Pr.CIT v NCC-MSKEL (JV) (15 October 2024) also upholds an order that turned on it, though there the judgment appears inside the reproduced CIT(A) order rather than in the High Court's own reasoning, so it is the weaker of the two. Nothing overruling, doubting or confining the judgment was found, and no High Court taking the contrary view on part-development of an infrastructure facility was found. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
The batch line carried no reporter citations, so the case numbers from the judgment's own first page are used. The judgment is an oral judgment and its date line prints the month as Ferbuary; it is taken as 15 February 2010. Paragraph 21 refers to the Railways circular as issued on 23 January 1996 while paragraph 12 gives 3 January 1996 for Circular 733; the discrepancy is in the text and is not resolved here. The paragraph numbering runs 23 twice. The judgment does not set out the amounts of deduction in issue for each assessment year. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The Revenue's appeals were dismissed and the question of law answered in favour of the assessee. The obligations the assessee assumed were obligations involving the development of an infrastructure facility, not merely supply and installation: they ran continuously from supply through installation, testing, commissioning, operation and maintenance for ten years, ending in the cranes vesting in the Port Trust free of cost. An assessee does not have to develop the entire port to qualify. A port is an infrastructure facility, and the Board's circular treats a structure for loading, unloading and storage at a port as within that definition; the certificate from the port authority was on record. The Tribunal's finding that the assessee also operated the cranes was based on material - the managers, engineers, technical officers and operators it employed - and the fact that the Port Trust supplied the crane operators did not displace the assessee's overall contractual responsibility for operating them. The Revenue's argument that the assessee had to satisfy development, operation and maintenance cumulatively, and its argument on the condition that operation and maintenance must have started after 1 April 1995, were both rejected.
TaxSphere, “CIT v ABG Heavy Industries Ltd”, https://taxnotice.vittsphere.com/caselaw/case/cit-v-abg-heavy-industries-ltd/ (validity last checked 2026-08-29)
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