Naba Diganta Water Management Ltd. Vs. ACIT, Circle-2(1), Kolkata

Parties Involved

Facts Summary

The assessee, Naba Diganta Water Management Ltd., is a special purpose vehicle set up by Jamshedpur Utility and Services Co. Ltd. and Voltas Ltd. under a Development Agreement with Kolkata Metropolitan Development Authority for setting up a water supply and sewerage plant in Sector-V, Salt Lake, Kolkata. The plant was completed in December 2010 and became operational in January 2011. The assessee treated the receipt of connection charges as capital receipt and amortized it in the profit and loss account in AY 2012-13. However, in subsequent assessment years, the department treated these charges as revenue receipt and taxed them on receipt basis. In AY 2017-18, the assessee filed its return offering connection charges on an amortized basis, which was accepted by the AO. The assessee later accepted the department's stance on taxing connection charges on receipt basis under the Direct Vivad-se-Viswas scheme. The assessee also claimed deduction under section 80-IA(4) for the infrastructure facility set up in FY 2008 and commissioned in FY 2010-11.…

Legal Issues

• 1. Whether the income from connection charges should be taxed on an amortized basis or on receipt basis.
• 2. Whether the assessee is entitled to claim deduction under section 80-IA for the infrastructure facility.

Judgment Outcome

Decided in favour of Assessee.

Precedents Relied Upon

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