AMEYA LOGISTICS P.LTD, RAIGAD V. DCIT 2(1), MUMBAI

CO 35/MUM/2016

• Counselvise Citation: [2016] 112 COUNSELVISE.COM (IT) 4325 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 12 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 04-08-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 22-03-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SANJIV DUTT
• Assessee Lawyers: NILESH PAREKH
• Keywords: Question of law; Rule 8D
• Section: 14A; 80IA; 201

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A , MUMBAI , , BEFORE SHRI B R BASKARAN , ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA , JUDICIAL MEMBER ITA NO. : 6110 /MUM/20 1 4 (ASSESSMENT YEAR: 20 1 0 - 11 ) ITA NO. : 6111 /MUM/20 14 (ASSESSMENT YEAR: 20 11 - 12 ) ASST COMMISSIONER OF INCOME TAX - 2(1), R. NO. 581, 5 TH FLOOR, AAYAKAR BHAVAN, M K ROAD, MUMBAI - 400 020 VS AMEYA LOGISTICS P LTD , VILLAGE DHASAKOSHI POST KHOPROLI KOPTE, TAUKA URAN DISTRICT RAIGAD, MUMBAI - 400 212 (APPELLANT) (RESPONDENT) CO NO.: 35/MUM/2016 ( ARISING OUT OF ITA NO. : 6110/MUM/2014 , AY 2010 - 11) CO NO.: 36/M UM/2016, ( ARISING OUT OF ITA NO. : 6111/MUM/2014 , AY 20 11 - 12 ) AMEYA LOGISTICS P LTD , VILLAGE DHASAKOSHI POST KHOPROLI KOPTE, TAUKA URAN DISTRICT RAIGAD, MUMBAI - 400 212 PAN: AAE CA 4 56 2 C VS ASST COMMISSIONER OF INCOM E TAX - 2(1), R. NO. 581, 5 TH FLOOR, AAYAKAR BHAVAN, M K ROAD, MUMBAI - 400 020 ( CROSS OBJECTOR ) (RESPONDENT) CROSS OBJECTOR - ASSESSEE BY : SHRI MADHUR AGARWAL AND SHRI NILESH PAREKH R EVENUE BY : SHRI SANJIV DUTT /DATE OF HEARING : 0 4 - 0 8 - 201 6 / DATE OF PRONOUNCEMENT : 0 4 - 0 8 - 2016 ORDER 2 ITA NO. : 6110 /MUM/2014 ITA NO. : 6 111 /MUM/2014 CO NO.: 35 /MUM/201 6 CO NO.:36/MUM /2016 AMEYA LOGISTICS P LTD , : PER AMIT SHUKLA , J M: THE AFORESAID APPEAL S AS WELL AS CROSS OBJECTIONS HA VE BEEN FILED BY THE REVENUE AND BY THE ASSESSEE RESPECTIVELY AGAINST SEPARATE IMPUGNED ORDER S OF EVEN DATE , 3 0 . 07 .201 4 , PASSED BY C OMMISSIONER OF I NCOME T AX (A PPEALS ) - 4 , MUMBAI FOR THE QUANTUM OF ASSESSMENT PASSED UNDER SECTION 143(3 ) FOR THE ASSESSMENT YEAR 20 1 0 - 11 AND 20 11 - 12. 2. IN THE REV E N UES APPEAL FOR BOTH THE YEARS, THE COMMON GROUND RAISED READS AS UNDER (I NCORPORATED FROM THE APPEAL FOR THE AY 2010 - 11): - ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LE ARNED CIT(A) HAS ERRED IN ALLOWING RELIEF TO THE ASSESSEE TO THE EXTENT IMPUGNED IN THE GROUNDS ENUMERATED BELOW: 1 . ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN HOLDING THAT THE ASSESSEE WAS ENTITLED TO DEDUCTION U/S 80IA(4) IN RESPECT OF CONTAINER FREIGHT STATION (CFS) BEING INLAND PORT WITHOUT CONSIDERING THE CBDTS CIRCULAR NO 10/2005 DTD. 16.12.2005 AND BOARDS CLARIFICATION DATED 06.01.2011. 3. AT THE OUTSET, THE LD. COUNSEL , SHRI MADHUR AGARWAL, SUBMITTED T HAT, THIS ISSUE NOW STANDS COVERED BY THE DECISION OF VARIOUS HIGH COURTS INCLUDING THAT OF THE JURISDICTIONAL HIGH COURT. IN SUPPORT, HE FILED THE COMPILATION OF FOLLOWING DECISIONS: - 3 ITA NO. : 6110 /MUM/2014 ITA NO. : 6 111 /MUM/2014 CO NO.: 35 /MUM/201 6 CO NO.:36/MUM /2016 AMEYA LOGISTICS P LTD SR.NO. PARTICULARS ITAT/ HIGH COURT 1 CIT - II, THANE V CONTINENTAL WARE HOUSING CORPORATION (NHAVA SHEVA) LTD. [2015] 58 TAXMAN.COM 78(BOM) ITA NO.523/2013 BOMBAY HIGH COURT 2 CONTAINER CORPORATION OF INDIA LTD. VS ACIT [2012] 21 TAXMANN.COM 317 (DELHI) ITA NO. 1411/2009 DELHI HIGH COURT 3 ALL CARGO GLOBAL LOGISTICS LTD. VS DCIT [2012] 21 TAXMAN. COM 429(MUM)(SB) ITAT SPECIAL BENCH (MUM) 4 CIT CHENNAI VS M/S A L LOGISTICS PVT LTD VIDE ITA NO.1031 OF 2014 DATED 23.12.2014 MADRAS HIGH COURT 4 . THE BRIEF FACTS OF THE CASE ARE THAT, THE ASSESSEE COMPANY IS ENGAGED IN THE BU SINESS OF PROVIDING WAREHOUSING SERVICES FOR CONTAINER, CONTAINER REPAIR, CONTAINER STORAGE, PACKAGING AND UN - PACKAGING OF ALL TYPES OF GOODS AND MERCHANDISE, ETC. IT HAS COMMENCED THE ACTIVITY OF CONTAINER FREIGHT STATION (CFS) FROM THE MONTH OF JANUARY , 2009. SUCH AN ACTIVITY WAS DULY APPROVED BY INLAND PORT BY THE MINISTRY OF FINANCE, DEPARTMENT OF REVENUE CBEC THROUGH ITS C IRCULAR. ACCORDINGLY, THE ASSESSEE CLAIMED THAT, INCOME IN RESPECT OF THE SAME IS ELIGIBLE FOR DEDUCTION UNDER SECTION 80IA, BEC AUSE THE SAID ACTIVITY IS IN THE NATURE OF INFRASTRUCTURE FACILITY AS STIPULATED UNDER EXPLANATION TO CLAUSE (4) OF SECTION 80IA. THE ASSESSMENT YEAR 2009 - 10 WAS THE FIRST YEAR OF THE CLAIM WHICH STOOD ALLOWED IN THE ASSESSMENT FINALIZED UNDER SECTION 14 3(1)(A). DURING THE YEAR, THE ASSESSEE HAD CLAIMED THE DEDUCTION OF RS.18,69,48,980/ - UNDER SECTION 80IA(4) AND SUCH A CLAIM WAS DULY ACCOMPANIED CONTINUED IN FORM 10CCB. THE AO HAS REJECTED THE CLAIM OF DEDUCTION ON VARIOUS GROUNDS WHICH HAS BEEN SUMMARIZ ED BY THE LD. CIT(A) IN THE FOLLOWING MANNER: - (I) CONTAINER FREIGHT STATION (CFS) IS NOT COVERED BY DEFINITION OF INFRASTRUCTURE FACILITY U/S 80IA(4). 4 ITA NO. : 6110 /MUM/2014 ITA NO. : 6 111 /MUM/2014 CO NO.: 35 /MUM/201 6 CO NO.:36/MUM /2016 AMEYA LOGISTICS P LTD (II) FURTHER ASSESSEE IS NOT ENGAGED IN ANY OF THE BUSINESS OF VIZ. DEVELOPING OR OPERATING AND MANUFACT URING OR DEVELOPING, OPERATING & MANUFACTURING ANY INFRASTRUCTURE FACILITY WHICH QUALIFIES FOR 80IA DEDUCTIONS. (III) INCOME SHOULD HAVE BEEN DERIVED FROM THE INDUSTRIAL UNDERTAKING AS DEFINED IN VARIOUS CASES. IN ASSESSEES CASE THE INCOME IS NOT DERIVED FROM AN INDUSTRIAL UNDERTAKING TO QUALIFY FOR DEDUCTION U/S 80IA(4). (IV) ASSESSEE HAS FILED A CERTIFICATE FROM CUSTOM AUTHORITY AS NOTIFIED AREA AND CUSTODIAN OF GOVERNMENT FOR GOODS. HOWEVER, ASSESSEE HAS NOT GIVEN PROOF THAT THE STRUCTURE WAS BUILT ON B OT OR BOLT SCHEME. (V) ASSESSEE FAILED TO FURNISH ANY JUSTIFICATION FOR TREATING CONTAINER FREIGHT STATION (CFS) TO BE TREATED AS PORT . FURTHER BOARD CLARIFICATION DATED 6 TH JANUARY 2011 IN WHICH CIRCULAR DATED 18 TH DECEMBER 2005 AND 23 RD JUNE 2000 WERE CONSIDERED. IT HAS BEEN CLARIFIED THAT INLAND CONTAINER DEPOT (ICD) & CONTAINER FREIGHT STATION (CFS) ARE NOT PORT OCATED ON ANY INLAND WATER WAY, RIVER, CANAL AND THEREFORE THEY CANNOT BE CLASSIFIED AS INLAND PORT FOR SECTION 80IA(4). (VI) CIRCULAR ISSUED BY CBEC OR OTHER AUTHORITY ARE NOT BINDING WHILE DECIDING MATTER IN INCOME TAX. ASSESSEE DID NOT FULFILL CONDITIONS WHICH ARE MANDATORY TO BE FOLLOWED. 5 ITA NO. : 6110 /MUM/2014 ITA NO. : 6 111 /MUM/2014 CO NO.: 35 /MUM/201 6 CO NO.:36/MUM /2016 AMEYA LOGISTICS P LTD (VII) STRUCTURE BUILT BY ASSESSEE IS NOT INFRASTRUCTURE FACILITY DEFINED IN CLAUSE (D) OF EXPLANATION T O SECTION 80IA(4). THE SAID STRUCTURE DOES NOT FORM PART OF JNPT. (VIII) ASSESSEE FAILED TO BRING ON RECORD AN AGREEMENT WITH CENTRAL GOVERNMENT OR STATE GOVERNMENT OR LOCAL BODY AUTHORITY FOR: ( A ) DEVELOPING, ( B ) OPERATING & MAINTAINING OR ( C ) DEVELOPING, OPERATING & MAINTAINING A NEW INFRASTRUCTURE FACILITY. (IX) THE CONTAINER FREIGHT STATION (CFS) OF ASSESSEE IS NOT PORT AS PER THE EXPLANATION TO SECTION 80IA(4) OF INCOME TAX ACT, 1961 AND CBDT CIRCULAR NO.10 OF 2005 DATED 16 TH DECEMBER, 2005. (X) THE CONTAINER FREI GHT STATION (CFS) OF ASSESSEE IS NOT AN INLAND PORT AS INTENDED IN THE EXPLANATION TO SECTION 80IA(4). THERE IS NO CBDT INSTRUCTION DECLARING CONTAINER FREIGHT STATION (CFS) OF ASSESSEE AS INLAND PORT. (XI) THE ASSESSEE COMPANY ENTERED INTO SERVICE AGREE MENT WITH CMA CGM AGENCIES INDIA PRIVATE LIMITED WHEREIN ASSESSEE IS WORKING AS A CONTRACTOR AND AGREE TO PROVIDE CONTAINER FREIGHT STATION (CFS) SERVICE AS CARGO & CONTAINER TO BE USED, LOCATED A T NHAVA SEVA, RAIGARH. AS PER AGREEMENT ASSESSEE IS REPRESEN TING CMA CGM & FROM THIS IT IS VERY CLEAR THAT ASSESSEE IS ACTING AS CONTRACTOR IN RESPECT OF CONTAINER FREIGHT STATION 6 ITA NO. : 6110 /MUM/2014 ITA NO. : 6 111 /MUM/2014 CO NO.: 35 /MUM/201 6 CO NO.:36/MUM /2016 AMEYA LOGISTICS P LTD (CFS) AND AS PER AMENDMENT IN FINANCE ACT W.E.F. 2009 THE CONTRACTORS ARE NOT ALLOWED TO CLAIM DEDUCTION U/S 80IA(4) ASSESSEE IS MERELY CONTRACTOR & NOT DEVELOPER. 5. BEFORE THE LD. CIT(A), DETAILED SUBMISSIONS WERE MADE WHEREIN IT WAS STATED THAT THE SAID CLAIM IS ALSO SUPPORTED BY THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CONTAINER CORPORATION OF INDIA VS ACIT, REPORT ED IN [2012] 346 ITR 140 AND ALSO THE DECISION OF ITAT SPECIAL BENCH IN THE CASE OF ALL - CARGO GLOBAL LOGISTIC LTD., [2012] 18 ITR (TRIB) 106 MUMBAI (SB). 6. THE LD. CIT(A) AFTER ANALYZING THE FACTS AND NATURE OF ACTIVITIES CARRIED OUT BY THE ASSESSEE AS W ELL AS THE DEFINITION OF PORT INFRASTRUCTURE FACILITY AND RELYING UPON DECISIONS CITED BY THE ASSESSEE, CAME TO THE CONCLUSION THAT, ASSESSEE IS ENTITLED FOR DEDUCTION UNDER SECTION 80IA, BECAUSE CFS ARE INLAND PORT WHICH ARE ONE OF THE INFRASTRUCTURE FACILITIES AS COVERED UNDER SECTION 80IA. THUS, THE CLAIM UNDER SECTION 80IA(4) STOOD ALLOWED BY THE LD. CIT(A). 7. ON THE OTHER HAND, LD. DR STRONGLY RELIED UPON THE ORDER OF THE AO. 8. AFTER CONSIDERING THE RELEVANT FINDING GIVEN IN THE IMPUGNED ORDER AS WELL AS DECISIONS RELIED UPON BY THE LD. COUNSEL, WE FIND THAT IT IS AN UNDISPUTED FACT THAT ASSESSEE COMPANY IS ENGAGED IN THE PROVIDING CONTAINER FREIGHT STATION ( CFS ) WHICH HAS BEEN DULY APPROVED AS INLAND PORT 7 ITA NO. : 6110 /MUM/2014 ITA NO. : 6 111 /MUM/2014 CO NO.: 35 /MUM/201 6 CO NO.:36/MUM /2016 AMEYA LOGISTICS P LTD BY MINISTRY OF FINANCE, DEPARTMENT OF REVENUE, CBEC IN ITS CIRCULAR. CFS HAS BEEN DEFINED AS A COMMON USER FACILITY WITH PUBLIC AUTHORITY STATUS EQUIPPED WITH FIXED INSTALLATIONS AND OFFERING SERVICES FOR HANDLING AND TEMPORARY STORAGE OF IMPORT/EXPORT LADEN AND EMPTY CONTAINERS CARRIED UND ER CUSTOMS TRANSIT BY ANY APPLICABLE MODE OF TRANSPORT PLACED UNDER CUSTOMS CONTROL. ALL THE ACTIVITIES RELATED TO CLEARANCE OF GOODS FOR HOME USE, WAREHOUSING TEMPORARY ADMISSIONS, RE - EXPORT, TEMPORARY STORAGE FOR ONWARD TRANSIT AND OUTRIGHT EXPORT, TRNAS - SHIPMENT , TAKE PLACE FROM SUCH STATIONS . HONBLE DELHI HIGH COURT IN THE CASE OF CONTAINER CORPORATION INDIA LTD. ( SUPRA ) WHERE THE ASSESSEE CARR IED OUT ACTIVITIES OF INLAND CONTAINER DEPOT ; CENTRAL FREIGHT STATIONS AND PORT C ONTAINERS TERMINALS , THE HO NBLE COURT HELD THAT THE PROFIT DERIVED FROM SUCH ACTIVITY IS ELIGIBLE FOR DEDUCTION UNDER SECTION 80IA(4). OUR HONBLE JURISDICTIONAL HIGH COURT FOLLOWING THE AFORESAID DECISION OF HONBLE DELHI HIGH COURT HAS REITERATED THE SAME VIEW. THE RELEVANT OBSER VATION S OF T HEIR LORDSHIP IN THE CASE OF ALL CARGO GLOBAL LOGISTICS LTD. ( SUPRA ) ANALYZING THE SUB - SECTION (4) OF SECTION 80IA READS AS UNDER: - 39. A PERUSAL THEREOF WOULD INDICATE AS TO HOW THE LEGISLATURE HAD IN MIND DEDUCTION IN RESPECT OF PROFITS AND GAINS FROM INDUSTRIAL UNDERTAKINGS OR ENTERPRISES ENGAGED IN THE INFRASTRUCTURE DEVELOPMENT ETC. WE ARE CONCERNED WITH SUB - SECTION (4) AND AS IT READ AT THE RELEVANT TIME. IT SAYS THAT THIS SECTION APPLIES TO ANY ENTERPRISE CARRYING ON THE BUSINESS OF DEVE LOPING OR OPERATING AND MAINTAINING ANY INFRASTRUCTURE FACILITY WHICH FULFILLS ALL THE CONDITIONS, NAMELY, IT IS SRP 47/61 ITXA523.13.DOC OWNED BY A COMPANY REGISTERED IN INDIA OR BY A CONSORTIUM OF SUCH COMPANIES OR BY AN AUTHORITY OR A BOARD OR A CORPORA TION OR ANY OTHER BODY ESTABLISHED OR CONSTITUTED UNDER ANY CENTRAL OR STATE ACT , IT HAS ENTERED INTO 8 ITA NO. : 6110 /MUM/2014 ITA NO. : 6 111 /MUM/2014 CO NO.: 35 /MUM/201 6 CO NO.:36/MUM /2016 AMEYA LOGISTICS P LTD AN AGREEMENT WITH THE CENTRAL GOVERNMENT OR A LOCAL AUTHORITY OR ANY OTHER STATUTORY BODY FOR DEVELO PING OR OPERATING AND MAINTAINING OR DEVELOPING, OPERATING AND MAINTAINING A NEW INFRASTRUCTURE FACILITY AND IT HAS STARTED OR STARTS OPERATING AND MAINTAINING THE INFRASTRUCTURE FACILITY ON OR AFTER 1ST DAY OF APRIL, 1995. THE EXPLANATION DEFINES THE INFR ASTRUCTURE FACILITY TO MEAN, INTER ALIA, A PORT, AIRPORT, INLAND WATERWAY, INLAND PORT OR NAVIGATIONAL CHANNEL IN THE SEA. THE WORD 'INLAND PORT' WAS ALWAYS THERE IN CLAUSE (D). WHAT WAS THERE PRIOR TO ITS SUBSTITUTION BY FINANCE ACT OF 2007 WITH EFFECT FROM 1ST APRIL, 2008, WERE THE WORDS 'OR INLAND PORT'. NOW THE WORD 'OR' IS DELETED, BUT THE WORDS ARE 'INLAND PORT OR NAVIGATIONAL CHANNEL IN THE SEA'. THUS, AN 'INLAND PORT' WAS ALWAYS WITHIN THE CONTEMP LATION OF THE LEGISLATURE AND IT IS TREATED SPECIFICALLY AS A INFRASTRUCTURAL FACILITY. THEREFORE, TO THAT EXTENT MR. DASTUR IS RIGHT IN HIS SUBMISSION. 40. MR. SURESH KUMAR WOULD URGE THAT WHEN THERE IS AN AGREEMENT CONTEMPLATED WITH THE CENTRAL GOVERNME NT, THEN, A SPECIFIC WRITING TO THIS EFFECT IS NECESSARY WHICH MEANS A DOCUMENT AND A MERE CONSENT OR APPROVAL IN WRITING WOULD NOT SUFFICE. 41. IN THE PRESENT CASE, WHAT THE TRIBUNAL AND IN SPECIAL BENCH DECISION HAS HELD IS THAT THERE MAY BE A REFERENCE MADE TO A BOARD CLARIFICATION DATED 6TH JANUARY, 2011, AND PRIOR CIRCULARS DATED 16 TH DECEMBER, 2005 AND 23RD JUNE, 2006 WERE CONSIDERED AND WHICH CLARIFY THAT INLAND CONTAINER DEPOTS AND CONTAINER FREIGHT STATIONS ARE NOT PORTS LOCATED ON ANY INLAND WATE R WAY RIVER OR CANAL AND, THEREFORE, THEY CANNOT BE CLASSIFIED AS INLAND PORTS FOR THE PURPOSE OF SECTION 80 - IA(4) . EQUALLY, THE CERTIFICATE ISSUED BY THE JNPT HAVING BEEN WITHDRAWN, THE DEDUCTION WILL N OT BE PERMISSIBLE. 42. HOWEVER, AFTER CONSIDERING THESE CONTENTIONS, WHAT THE SPECIAL BENCH OBSERVES IS THAT THE DELHI HIGH COURT'S VIEW IN THE CASE OF CONTAINER CORPORATION OF INDIA LTD. WOULD ENABLE IT TO CONCLUDE THAT ICD MAY NOT BE A PORT BUT IT IS AN INLAND PORT. THE CASE OF CONTAINER SRP 49/61ITXA523.13.DOC FREIGHT STATION (CFS) IS SIMILARLY SITUATED IN THE SENSE THAT BOTH CARRY OUT SIMILAR FUNCTIONS VIZ. WAREHOUSING, CUSTOMS CLEARANCE AND TRANSPORT OF GOODS FROM ITS LOCATION TO THE SEA - PORTS AND VIC E VERSA BY RAIL OR BY TRUCKS IN CONTAINERS. THE ISSUE IS NO LONGER RES INTEGRA. 43. THE TRIBUNAL ALSO IN THE JUDGMENT UNDER APPEAL FOLLOWED THIS VIEW OF THE SPECIAL BENCH AND THAT OF THE CONTAINER CORPORATION OF INDIA (SUPRA). 9 ITA NO. : 6110 /MUM/2014 ITA NO. : 6 111 /MUM/2014 CO NO.: 35 /MUM/201 6 CO NO.:36/MUM /2016 AMEYA LOGISTICS P LTD 44. THE FINDINGS TO WHICH O UR ATTENTION HAS BEEN INVITED BY MR. SURESH KUMAR IN APPEAL NO.523 OF 2013 ARISING OUT OF THE TRIBUNAL'S ORDER DATED 31ST AUGUST, 2012, PERTAINING TO ASSESSMENT YEAR 2008 - 09 IN THE CASE OF CONTINENTAL WAREHOUSING CORPORATION INDICATE THAT THE SAID ASSESSEE HAD INFORMED THE ASSESSING OFFICER THAT JNPT HAD ISSUED A CERTIFICATE DATED 13TH JULY, 2006, TO IT IN ACCORDANCE WITH POINT NO.3 OF CBDT CIRCULAR NO.10 DATED 16TH DECEMBER, 2005, HOWEVER, THIS LETTER / CERTIFICATE WAS WITHDRAWN BY THE JNPT ON 5 TH OCTOBER , 2007. SECONDLY, THE ASSESSEE COMPANY HAS NOT ENTERED INTO AN AGREEMENT WITH THE CENTRAL GOVERNMENT OR A STATE GOVERNMENT OR A LOCAL AUTHORITY OR ANY OTHER STATUTORY BODY. THEREFORE, THE CONDITION WAS SRP 50/61 ITXA523.13.DOC NOT FULFILLED. THE COMMISSIO NER IN THE APPELLATE ORDER HAD BEFORE HIM THE GROUND AND WHILE DEALING WITH THE SAME, HE FOUND THAT THE APPROVAL GRANTED BY THE MINISTRY OF COMMERCE, GOVERNMENT OF INDIA WOULD NOT CONSTITUTE AN AGREEMENT WITH THE CENTRAL GOVERNMENT. FURTHER, THE DEPARTMENT OF REVENUE, MINISTRY OF FINANCE, ISSUED A NOTIFICATION DATED 1ST JANUARY, 2006, NOTIFYING THE ASSESSEE AS CUSTODIAN OF IMPORTED AND EXPORTED GOODS RECEIVED AT THE CONTAINER FREIGHT STATION. THE VARIOUS CONTENTIONS RAISED IN THIS REGARD HAVE BEEN REFERRED TO BY THE COMMISSIONER, INCLUDING THAT THE MINISTRY OF COMMERCE AND INDUSTRIES GRANTED APPROVAL FOR SETTING UP CFS FACILITY FOR HANDLING IMPORT AND EXPORT CARGO AND THAT THE ACCEPTANCE OF THE TERMS AND CONDITIONS CONSTITUTE AN AGREEMENT WITH THE CENTRAL GO VERNMENT AND ALL DOCUMENTS IN RELATION THERETO HAVE BEEN REFERRED. THE COMMISSIONER IN DEALING WITH THESE CONDITIONS HELD THAT CFS FACILITY OF THE ASSESSEE IS NOT AN INFRASTRUCTURE FACILITY WITHIN THE MEANING OF SECTION 80 - IA(4) AS THERE IS NO AGREEMENT ENTERED INTO WITH THE GOVERNMENT AND ASSESSEE. THEREFORE, THIS DEDUCTION CANNOT BE CLAIMED. THE TRIBUNAL NOTED THESE CONTENTIONS AND THE FINDINGS, BUT RELIED UPON THE SPECIAL BENCH DECISION IN THE CASE OF ALL CARGO GLOBAL SRP 51/61 ITXA523.13.DOC LOGISTICS LTD. THE CONCLUSION IS THAT CFS IS AN INLAND PORT AS IT CARRIES OUT FUNCTIONS OF WAREHOUSING, CUSTOMS CLEARANCE AND TRANSPORT OF GOODS FROM ITS LOCATION TO SEA - PORT AND VICE VERSA BY RAIL OR BY TRUCKS IN CONTAINERS AND, THEREFORE, ITS INCOME IS ELIGIBLE TO DEDUCTION UNDER SECTION 80 - IA(4) . WE HAVE BEFORE US A COMMUNICATION FROM THE GOVERNMENT OF INDIA, MINISTRY OF COMMERCE AND INDUSTRY DATED 28 TH DECEMB ER, 2011, WHICH IS ADDRESSED TO THE PRESIDENT OF THE CFS ASSOCIATION OF INDIA. IT TAKES NOTE OF 10 ITA NO. : 6110 /MUM/2014 ITA NO. : 6 111 /MUM/2014 CO NO.: 35 /MUM/201 6 CO NO.:36/MUM /2016 AMEYA LOGISTICS P LTD THEIR GRIEVANCE AND STATES THAT THE MATTER WAS EXAMINED IN THE LIGHT OF THE GUIDELINES AND ITS NORMS FOR SETTING UP OF INLAND CONTAINER DEPOT / CONTAINER FREIGH T STATION IN INDIA. AS PER THE PRESENT NORMS, OPERATORS OF THESE DEPOTS AND STATIONS WHO WERE ISSUED A LETTER OF INTENT FOR SETTING UP THE SAME DO NOT REQUIRE TO EXECUTE AN AGREEMENT WITH THE CENTRAL GOVERNMENT. 45. EVEN WITH REGARD TO THIS ISSUE WE FIND THAT THE CIRCULAR DATED 16TH DECEMBER, 2005, FIRSTLY CLARIFIES THAT THERE ARE CERTAIN CONDITIONS, INCLUDING THE AGREEMENT BUT PERTINENTLY ON AND FROM THE ASSESSMENT YEAR 2002 - 03 STRUCTURES AT THE PORTS FOR STORAGE, LOADING AND UNLOADING ETC. WILL BE INCLUD ED IN THE DEFINITION OF PORT FOR PURPOSES OF SECTION SRP 52/61 ITXA523.13.DOC 10(23G) AND 80 - IA OF THE INCOME TAX ACT, 1961, IF THE CONDITION THAT THE CONCERNED PORT AUTHORITY HAS ISSUED A CERTIFICATE THAT THESE STRUCTURES FORM PART OF THE PORT IS FULFILLE D. HOWEVER, WHEN THE DELHI HIGH COURT WAS CONSIDERING THIS QUESTION IT REFERRED NOT ONLY TO THE FACTUAL POSITION BUT THE SPECIFIC SUBSTANTIAL QUESTION OF LAW AND THE ACTIVITY OF THE ASSESSEE BEFORE IT CARRIED OUT MAINLY ON ITS ICD'S (INLAND CONTAINER DEPOR TS), CENTRAL FREIGHT STATIONS AND PORT TERMINALS. THE ASSESSEE HAD 45 CONTAINER DEPOTS SPREAD OVER THE COUNTRY. IT IS IN THE BUSINESS OF TRANSPORTING CONTAINERISED CARGO. IT MAY BE CONCERNED WITH THE PUBLIC SECTOR UNDERTAKING AND FUNCTIONING DIRECTLY UNDER THE ADMINISTRATIVE CONTROL OF THE MINISTRY OF RAILWAYS, BUT THE ACTIVITY OF THE ASSESSEE IS CARRIED OUT MAINLY ON THE INLAND CONTAINER DEPOT, CENTRAL FREIGHT STATIONS AND PORT CONTAINER TERMINALS SPREAD ALL OVER THE COUNTRY. THE ASSESSEE HAS A TOTAL 45 IN LAND CONTAINER DEPOTS. THE DIVISION BENCH OF THE DELHI HIGH COURT THEN CONCLUDED AS UNDER : '10. THUS IT WAS FOR THE FIRST TIME FROM THE ASSESSMENT YEAR 1999 - 2000 THAT INLAND PORTS STARTED ENJOYING THE DEDUCTION UNDER SECTION 80IA AS AN 'INFRASTRUCTURE FACILITY'. THE OBJECT OF THE GOVERNMENT WAS TO STRENGTHEN AND IMPROVE THE COUNTRY'S INFRASTRUCTURE IN GENERAL AND THE TRANSPORT INFRASTRUCTURE IN PARTICULAR. INLAND PORTS FACILITATE THE TRANSPORT INFRASTRUC TURE BY TAKING CARE OF THE TRANSPORT OF THE CUSTOMS - CLEARED GOODS MEANT FOR EXPORT FROM THE ICD TO THE SEA - PORT AND THE IMPORTED GOODS DIRECTLY FROM THE SEA - PORT TO THE ICD WHERE THEY CAN BE CUSTOMS - CLEARED. WHEN THE ENTIRE SECTION WAS RECAST BY THE FINANCE ACT , 1999 WITH EFFECT FROM 1.4.2000 AND EVEN AFTER SEVERAL AMENDMENTS WERE THEREAFTER MADE TO THE SECTION, INLAND PORTS CONTINUED TO ENJOY THE DEDUCTION AS INFRASTRUCTURE FACILITY. 11. THE QUESTION BE FORE US IS WHETHER THE INCOME FROM ICDS QUALIFY FOR THE DEDUCTION UNDER SECTION 80IA(4)(I) OF THE ACT 11 ITA NO. : 6110 /MUM/2014 ITA NO. : 6 111 /MUM/2014 CO NO.: 35 /MUM/201 6 CO NO.:36/MUM /2016 AMEYA LOGISTICS P LTD READ WITH THE EXPLANATION (D). WE MAY FIRST NOTICE THAT OUT OF THE TOTAL OF 45 ICDS OPERATED BY THE A SSESSEE, EXCEPT TWO ICDS, ALL OTHERS WERE NOTIFIED BY THE CBDT VIDE NOTIFICATION NO. S.O.744(E) ISSUED ON 1ST SEPTEMBER, 1998 FOR THE PURPOSE OF SECTION 80IA(12)(CA) . IT MAY BE RECALLED THAT UNDER THIS P ROVISION, THE BOARD HAD THE POWER TO NOTIFY AN INFRASTRUCTURE FACILITY FOR THE PURPOSE OF THE SECTION. THE NOTIFICATION IS REPORTED IN (1999) 233 ITR 126 AND IS REPRODUCED BELOW: - ' NOTIFICATION NO. S.O.744(E), SEPTEMBER IST, 1998 - INCOME - TAX ACT , 1961: NOTIFICATION UNDER SECTION 80 - IA(12) (CA) : INLAND CONTAINER DEPOT AND CENTRAL FREIGHT STATION NOTIFIED AS INFRASTRUCTURE FACILITY. IN EXERCISE OF THE POWERS CONFERRED BY CLAUSE (CA) OF SUB - SECTION (12) OF SECTION 80IA OF THE INCOME - TAX ACT, 1961 (43 OF 1961), THE CENTRAL BOARD OF DIRECT TAXES HEREBY NOTIFIES INLAND CONTAINER DEPOT (ICD) AND CENTRAL FREIGHT STATION (CFS) AS INFRASTRUCTURE FACILITY : PROVIDED THAT SUCH PLACES ARE NOTIFIED AS INLAND CONTAINER DEPOT AND CENTRAL FREIGHT STATION UNDER SECTION 7(AA) OF THE CUSTOMS ACT, 1962.' 12. THE P OWER TO NOTIFY INFRASTRUCTURE FACILITIES FOR THE PURPOSE OF THE SECTION WAS TAKEN AWAY FROM THE CBDT WITH EFFECT FROM 1.4.2002. THE FIRST ARGUMENT OF THE LEARNED COUNSEL FOR THE ASSESSEE IS THAT ONCE THE ICDS HAVE BEEN NOTIFIED VALIDLY BY THE CBDT BY VIRTU E OF THE POWERS CONFERRED UPON THEM, THE FACT THAT AT A LATER POINT OF TIME THE POWER WAS TAKEN AWAY DOES NOT PUT AN END TO THE VALIDITY OR EFFECT OF THE NOTIFICATION AND AS PER THE RELEVANT SECTION AS IT STOOD AT THE TIME WHEN THE NOTIFICATION WAS ISSUED, THE ASSESSEE WAS ELIGIBLE FOR THE DEDUCTION FOR A PERIOD OF 10 SUCCESSIVE ASSESSMENT YEARS WHICH COVERS THE ASSESSMENT YEARS 2003 - 04 TO 2005 - 06 WHICH ARE THE YEARS UNDER APPEAL. 13. WE HAVE EXAMINED THE CONTENTION. PRIOR TO THE AMENDMENT MADE WITH EFFECT FROM 1.4.2002 BY THE FINANCE ACT , 2001, AS NOTICED EARLIER, THE BOARD WAS EMPOWERED TO NOTIFY ANY PUBLIC FACILITY OF A SIMILAR NATURE, OTHER THAN WHAT WAS MENTIONED AS INFRASTRUCTURE FACILITY. BUT AN AM ENDMENT WAS MADE AND THE POWER TO NOTIFY WAS DROPPED. THERE WAS NO PROVISION MADE IN THE ACT SAYING THAT THE NOTIFICATION ISSUED EARLIER WOULD CEASE TO HAVE EFFECT FROM 1.4.2002. SINCE THE NOTIFICATION CONTINUED TO HAVE EFFECT EVEN BEYOND 1.4.2002, THERE I S MERIT IN THE CONTENTION OF THE LEARNED COUNSEL FOR THE ASSESSEE. CIRCULAR NO. 7/2002, DATED 26TH AUGUST, 2002, REPORTED IN (2002) 257 ITR 28 CLARIFIED AS UNDER: 12 ITA NO. : 6110 /MUM/2014 ITA NO. : 6 111 /MUM/2014 CO NO.: 35 /MUM/201 6 CO NO.:36/MUM /2016 AMEYA LOGISTICS P LTD 'SUCH PROJECTS, FOR WHICH AGREEMENTS HAVE BEEN ENTERED INTO ON OR AFTER APRIL 1, 1995, BUT ON OR BEFORE MARCH 31, 2001, AND WHICH HAVE BEEN NOTIFIED BY THE BOARD ON OR BEFORE MARCH 31, 2001, WOULD CONTINUE TO BE EXEMPT, SUBJECT TO THE FULFILMENT OF THE CONDITIONS PRESCRIBED IN SECTION 80 - IA(4)( I)(B) , AS IT EXISTED PRIOR TO ITS SUBSTITUTION BY THE FINANCE ACT , 2001.' THIS CIRCULAR FORTIFIES THE ASSESSEE'S CLAIM. 14. THE NEXT QUESTION THAT ARISES IS WHETHER THE SRP 55/61 ITXA523.13.DOC ICDS CAN BE CONSIDERED TO BE INLAND PORTS. THERE IS NO DEFINITION OF AN INLAND PORT IN THE ACT. HOWEVER, A 'PORT', WHICH ALSO QUALIFIES FOR THE DEDUCTION IS DEFINED IN SECTION 3(4) OF THE INDIAN PORTS ACT, 19 08 (ACT 15 OF 1908) TO INCLUDE 'ALSO ANY PART OF A RIVER OR CHANNEL' IN WHICH THE SAID ACT IS FOR THE TIME BEING IN FORCE. THE WORD 'PORT' IS DEFINED IN T. RAMANATHA AIYAR'S LAW LEXICON, 4TH EDITION (2010) IN A NUMBER OF WAYS. THE MOST GENERAL MEANING WHIC H IS GIVEN IS THAT IT DENOTES A HARBOUR OR SHELTER TO THE VESSELS FROM A STORM OR AS A PLACE WITH A HARBOUR WHERE SHIPS LOAD OR UNLOAD. IT HAS ALSO BEEN DEFINED IN THE COMMERCIAL SENSE AS AN ENCLOSED PLACE WHERE VESSELS LOAD AND UNLOAD GOODS FOR EXPORT OR IMPORT. COMMERCIALLY CONSIDERED, 'A PORT IS A PLACE WHERE VESSELS ARE IN THE HABIT OF LOADING AND UNLOADING GOODS'. THE LAW LEXICON ALSO REFERS TO A JUDGMENT OF THE BOMBAY HIGH COURT IN THE CASE OF AMARSH IP MANAGEMENT PVT. LTD. V. UOI , (1996) 86 ELT 15 (BOM). 'PORT IS A PLACE FOR LOADING AND UNLOADING OF CARGOES OF VESSELS. THE WORD 'PORT' MUST BE CONSTRUED IN ITS USUAL AND LIMITED POPULAR OR COMMERCIAL SENSE AS A PLACE WHERE SHIPS ARE IN THE HABIT OF CO MING FOR THE PURPOSE OF LOADING OR UNLOADING, EMBARKING OR DISEMBARKING. IT DOES NOT MEAN THE PHYSICAL PORT. ON THIS BASIS, IT HAS BEEN HELD THAT AN OIL RIG STATIONED OUTSIDE TERRITORIAL WATERS IS A PORT WHERE SHIPS CALL FOR LOADING OR UNLOADING THE GOODS. AMARSHIP MANAGEMENT PVT. LTD. V. UOI , (1996) 86 ELT 15 (BOM).' 15. IT IS INTERESTING TO NOTE THAT THE WORD 'PORT APPROACHES' IS DEFINED AS THOSE PORTS OF THE NAVIGABLE CHANNELS LEADING TO THE PORT IN W HICH THE INDIAN PORTS ACT IS IN FORCE. THERE ARE SEVERAL OTHER DEFINITIONS SUCH AS PORT CALL, PORT CHARGES, PORT MARK, PORT OF ARRIVAL, PORT OF ENTRY, PORT OF DEPARTURE, PORT OF CALL AND SO ON AND SO 13 ITA NO. : 6110 /MUM/2014 ITA NO. : 6 111 /MUM/2014 CO NO.: 35 /MUM/201 6 CO NO.:36/MUM /2016 AMEYA LOGISTICS P LTD FOR TH. THE WHOLE EMPHASIS HOWEVER IS THAT WHENEVER THE WORD 'PORT' IS USED, IT CARRIES WITH IT A MARITIME CONNECTION OR CONNOTATION. THAT IS PERHAPS WHY THE SECTION REFERS SEPARATELY TO AIRPORT. AN AIRPORT DOES NOT HAVE A MARITIME SRP 56/61ITXA523.13.DOC CONN ECTION. BUT AN AIRPORT IS ALSO A PLACE WHERE CUSTOMS CLEARANCE ARE MADE BOTH FOR IMPORT AND EXPORT. IT WOULD BE DIFFICULT TO PUT THE ASSESSEE'S CASE AS FALLING WITHIN THE WORD 'PORT' HAVING REGARD TO THE FACT THAT THE WORD CARRIES WITH IT A MARITIME CONNOT ATION. THE ICDS ARE LAND - LOCKED AND IT IS NOBODY'S CASE THAT THEY ARE LOCATED IN SUCH A PLACE WHERE SHIPS OR VESSELS HAVE DIRECT ACCESS TO THEM. THE GOODS WHICH ARE EITHER REMOVED FROM OR BROUGHT INTO THE ICDS ARE BROUGHT OR TAKEN AWAY EITHER BY RAILWAY WA GONS OR BY CONTAINER TRUCKS, AS THE CASE MAY BE. BUT IT IS COMMON GROUND THAT CUSTOMS CLEARANCES TAKE PLACE IN THE ICDS. 16. IT IS, THEREFORE, FOR CONSIDERATION AS TO WHETHER THE ICDS CAN BE SAID TO BE 'INLAND PORTS' FOR THE PURPOSES OF THE EXPLANATION (D ) BELOW SUB - SECTION (4) OF SECTION 80IA . WE WERE NOT ABLE TO FIND A DEFINITION OF THE WORDS 'INLAND PORT' IN ANY OF THE DICTIONARIES. BUT THE WORDS 'INLAND CONTAINER DEPOT' WERE INTRODUCED IN SECTION 2(12) OF THE CUSTOMS ACT, 1962, WHICH DEFINES 'CUSTOMS PORT'. THIS WAS BY WAY OF AN AMENDMENT MADE BY THE FINANCE ACT , 1983 WITH EFFECT FROM 13TH MAY, 1 983. SIMULTANEOUSLY CLAUSE (AA) WAS INSERTED IN SECTION 7(1) OF THE SAID ACT UNDER WHICH THE CBEC WAS EMPOWERED TO ISSUE NOTIFICATION APPOINTING THE PLACES WHICH ALONE SHALL BE CONSIDERED AS INLAND CONT AINER DEPOTS FOR THE UNLOADING OF IMPORTED GOODS AND THE LOADING OF EXPORTED GOODS. ON 24TH APRIL, 2007 THE FOLLOWING CLARIFICATION WAS ISSUED BY THE CENTRAL BOARD OF EXCISE AND CUSTOMS APPARENTLY IN RESPONSE TO A QUERY RAISED BY THE ASSESSEE. 'F. NO. 450 /24/2007 - CUS.IV GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF REVENUE CENTRAL BOARD OF EXCISE & CUSTOMS NEW DELHI, 14 ITA NO. : 6110 /MUM/2014 ITA NO. : 6 111 /MUM/2014 CO NO.: 35 /MUM/201 6 CO NO.:36/MUM /2016 AMEYA LOGISTICS P LTD APRIL 24TH, 2007 TO, MS P. ALLI RANI, EXECUTIVE DIRECTOR (FINANCE), CONTAINER CORPORATION OF INDIA LIMITED, CONCOR BHAWAN, C - 3, MATHURA ROAD, OPP. APPOLO HOSPITAL, NEW DELHI - 110076. SUBJECT : CLARIFICATION REGARDING 'INLAND PORT' REGARDING KINDLY REFER TO YOUR LETTER CON/FA/128/VOL - 2/80IA/2003 - 04 DATED 18.04.2007 SEEKING CLARIFICATION REGARDING 'INLAND PO RT'. 2. IT IS STATED THAT AS PER CUSTOMS ACT , 1962 SECTION 2(12) DEFINES 'CUSTOMS PORT' AS ANY PORT APPOINTED UNDER CLAUSE (A) OF SECTION 7 TO BE A CUSTOMS PORT AND INCLUDES INLAND CONTAINER DEPOT (ICD) APPOINTED UNDER CLAUSE (AA) OF SECTION 7 . CONTAINER FREIGHT STATIONS (CFSS) ARE 'CUSTOMS ARE A' ATTACHED TO A 'PORT'. THE WORK RELATED TO CUSTOMS IS PERFORMED AT THESE ICDS/CFSS. ACCORDINGLY, ICDS AND CFSS (I.E. CUSTOMS AREA OF PORT) ARE 'INLAND PORTS'. SD/ - (M.M. PARTHIBAN) DIRECTOR (CUSTOMS) PH - 23093908 COPY TO, SHRI JAGDEEP GOEL, DIRECTOR ITA - I, CBDT.' 46. WE HAVE FOUND THAT THERE IS A SPECIFIC REFERENCE MADE BY THE DELHI HIGH COURT TO THE COMMUNICATION DATED 24 TH APRIL, 2007, FROM THE GOVERNMENT OF INDIA, MINISTRY OF FINANCE, DEPARTMENT OF SRP 58/61 ITXA523. 13.DOC REVENUE. THESE ARE THEN CLASSIFIED AS INLAND PORTS AND CATEGORISED ACCORDINGLY. THERE IS A FURTHER COMMUNICATION FROM THE MINISTRY OF COMMERCE AND INDUSTRY AS WELL. WE DO NOT FIND THAT A VIEW DIFFERENT THAN THE ONE TAKEN BY THE DELHI HIGH COURT IS P OSSIBLE. BEARING IN MIND THE FACILITIES THAT ARE EXTENDED AND FOR PURPOSES OF LOADING, UNLOADING, STORAGE AND WAREHOUSING OF THE GOODS THAT THE FACILITY IS A INFRASTRUCTURE FACILITY. THAT IT HAS EASY ACCESSIBILITY TO THE PORT AND PARTICULARLY THE SEA - PORT GIVES IT CERTAIN ADVANTAGES AND BENEFITS AND WHICH CLEARLY ACCRUE TO THOSE USING THE PORT FOR IMPORT AND EXPORT OF CARGO. FURTHER, THE LOCATION THEREOF IS ALSO A RELEVANT FACTOR AS NOTED. IN SUCH CIRCUMSTANCES, THE RELIANCE BY THE SPECIAL BENCH AND EQUALLY BY THE BENCH OF THE TRIBUNAL IN THE IMPUGNED ORDERS ON THE DIVISION BENCH JUDGMENT OF THE DELHI HIGH COURT IS THUS WELL PLACED. 15 ITA NO. : 6110 /MUM/2014 ITA NO. : 6 111 /MUM/2014 CO NO.: 35 /MUM/201 6 CO NO.:36/MUM /2016 AMEYA LOGISTICS P LTD 47. WE DO NOT FIND THAT ANYTHING OTHER AND FURTHER THAN THIS MATERIAL IS RELIED. HOWEVER, EVEN THE HIGH COURT OF JUDICATURE AT MADRAS HAS REFERRED IN ITS DIVISION BENCH DECISION TO THE VIEW TAKEN BY THE DELHI HIGH COURT. THE DIVISION BENCH IN PARAGRAPHS 10 AND 12 OF ITS JUDGMENT EXTENSIVELY REFERRED TO THE TRIBUNAL'S CONCLUSIONS. IT ALSO SRP 59/61 ITXA523.13.DOC REFERRED TO THE S PECIAL BENCH DECISION OF THE TRIBUNAL. THUS, WHEN THE PROPOSAL TO SET UP A CFS HAS BEEN ACCEPTED BY THE GOVERNMENT, THERE IS NO REQUIREMENT OF EITHER A SPECIFIC AGREEMENT AS CONTENDED BY MR. SURESH KUMAR. NOR CAN IT BE SAID THAT BY VIRTUE OF ANY CERTIFICAT ION OF THE JNPT AND ITS SUBSEQUENT WITHDRAWAL THE POSITION UNDERGOES ANY CHANGE. ONCE THE FACILITY IS NOTHING BUT A INFRASTRUCTURAL FACILITY SET UP AND WITHIN THE PRECINCTS OF THE PORT, THEN, CONSIDERING AND EVEN OTHERWISE HAVING CONSIDERED ITS PROXIMITY T O THE SEA PORT AND ITS ACTIVITIES THAT WE HAVE NO DOUBT AND IT CAN BE SAFELY CONCLUDED THAT THE DEDUCTION ADMISSIBLE UNDER SUB - SECTION (4) OF SECTION 80 - IA CAN BE CLAIMED BY BOTH THE ICDS AND CFSS. 48. WE DO NOT THINK THAT THE VIEW TAKEN BY THE TRIBUNAL IS IN ANY WAY PERVERSE OR RUNS CONTRARY TO THE LANGUAGE OF SUB - SECTION (4) OF SECTION 80 - IA OR THE OBJECT OF THE INCOME TAX ACT , 1961, AS A WHOLE. ONCE SUCH A CONCLUSION IS REACHED, THEN, IT IS NOT NECESSARY TO REFER TO ANY OTHER MATERIAL, PARTICULARLY ANY CIRCULARS OF THE BOARD OR OTHERWISE OR THE CERTIFICATES ISSUED BY THE AUTHORITIES. EVEN THEIR CON TENTS NEED NOT BE REFERRED TO. WE ARE OF THE VIEW THAT THE EXTENSIVE REASONING IN SRP 60/61 ITXA523.13.DOC THE JUDGMENT OF THE DIVISION BENCH OF THE DELHI HIGH COURT AND WHICH FINDS APPROVAL EVEN OF THE HIGH COURT OF MADRAS AND WITH WHICH WE BROADLY AGREE THAT THE SUBSTANTIAL QUESTIONS OF LAW ON BOTH COUNTS NEED TO BE ANSWERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE . THE AFORESAID DECISION AND RATIO OF THE HONBLE JURISDICTIONAL HIGH COURT AS WELL AS THAT OF DELHI HIGH COURT IS SQUARELY APPLI CA BLE HERE WHERE ASSESSEE IS CARRYING OUT CGS ACTIVITIES WHICH IS NOTHING BUT INFRASTRUCTURE FACILITY AS DEFINED UNDER SECTION 80IA(4). A CCORDINGLY RESPECTFULLY FOLLOWING THE SAME, WE CONFIRM THE ORDER OF THE CIT(A) AND DIRECT THE AO TO ALLOW THE DEDUCTION U NDER SECTION 80IA(4). 16 ITA NO. : 6110 /MUM/2014 ITA NO. : 6 111 /MUM/2014 CO NO.: 35 /MUM/201 6 CO NO.:36/MUM /2016 AMEYA LOGISTICS P LTD THUS, GROUND RAISED BY THE REVENUE DOES NOT STAND AND AS SUCH WE DISMISS THE SAME. RESULTANTLY, APPEAL OF THE REVENUE STANDS DISMISSED. 9. IN AY 2011 - 12 ALSO, SINCE THE REVENUE HAS RAISE SIMILAR ISSUE IN THE IMPUGNED APPEAL THEREFORE , IN VIEW OF OUR AFORESAID FINDING, THE APPEAL OF THE REVENUE IS DISMISSED. 10. IN CROSS OBJECTIONS, THE ASSESSEE HAS MAINLY CHALLENGED THE DISALLOWANCE UNDER SECTION 14A OF RS.3,60,484/ - IN AY 2010 - 11 AND RS, 5,67,056/ - IN AY 2011 - 12. 11. BEFORE US, MR. MADHUR AGARWAL SUBMITTED THAT, HERE IN THIS CASE, SO FAR AS DISALLOWANCE OF INDIRECT EXPENDITURE IS CONCERNED MADE BY THE AO UNDER RULE 8D(2)(III) BY TAKING 0.5% OF AVERAGE VALUE OF INVESTMENT, THE SAME IS NOT PRESSED. HOWEVER, WITH REGARD TO THE DISALLOW ANCE OF INTEREST EXPENDITURE IS CONCERNED UNDER RULE 8D(2) (II), HE SUBMITTED THAT ASSESSEE HAD HUGE SURPLUS / INTEREST FREE FUNDS WHICH FAR EXCEEDED THE INVESTMENTS MADE AND, THEREFORE, NO DISALLOWANCE OF INTEREST SHOULD BE MADE IN THE LIGHT OF THE DECISI ON OF HONBLE BOMBAY HIGH COURT IN THE CASE OF RELIANCE UTILITIES AND HDFC BANK. IN SUPPORT HE HAS FILED FOLLOWING CHART WITH REFERENCE TO THE DOCUMENTS PLACED IN THE PAPER BOOK: AS ON 31.03.2010 AS ON 31.03.2009 INVESTMENTS IN MUTUAL FUNDS NIL 1,00 ,48,020 DIVIDEND 4,08,564 48,020 SHARI CAPITAL ADD: RESERVES & SURPLUS 15,99,99,980 10,21,28,471 15,49,99,980 TOTAL 26,21,28,451 15,49,99,980 17 ITA NO. : 6110 /MUM/2014 ITA NO. : 6 111 /MUM/2014 CO NO.: 35 /MUM/201 6 CO NO.:36/MUM /2016 AMEYA LOGISTICS P LTD AS ON 31.03.201 1 AS ON 31.03.20 1 0 INVESTMENTS IN EQUITY SHARES OF SUBSIDIARY COMPANY 3,52,62,637 NIL DIVIDEND 3,27,638 4,08,564 SHARI CAPITAL ADD: RESERVES & SURPLUS 15,99,99,980 35,54,64,815 15,49,99,980 10,21,28,471 TOTAL 51,54,64,795 26,21,28,451 12. ON THE OTHER HAND, LD. DR STRONGLY RELIED UPO N THE ORDER OF THE CIT(A). 13. AFTER CONSIDERING THE AFORESAID SUBMISSION AND ON PERUSAL OF RELEVANT MATERIAL ON RECORD, WE FIND THAT SO FAR AS THE DISALLOWANCE OF INTEREST EXPENDITURE IS CONCERNED UNDER RULE 8D(2) (II) , THE SAME IS NOT SUSTAINABLE, BECAUS E ADMITTEDLY, THE SURPLUS FUNDS WITH THE ASSESSEE FAR EXCEED S THE INVESTMENTS MADE AND, THEREFORE, IN VIEW OF THE RATIO LAID DOWN BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE AFORESAID CASES, NO DISALLOWANCE CAN BE MADE. ACCORDINGLY, WE DIRECT THE AO TO DELETE THE SAME. 14. SO FAR AS DISALLOWANCE OF INDIRECT EXPENDITURE IS CONCERNED UNDER RULE 8D(2)(III), THE SAME STANDS ADMITTED BY THE LD. COUNSEL , THEREFORE THE DISALLOWANCE UNDER SECTION 8D(2)(III) IS CONFIRMED. A S REGARDS THE DISALLOWANCE UNDER SECT ION 14A UNDER MAT PROVISION , THAT IS, UNDER SECTION 115JB, THE DISALLOWANCE AS SUSTAINED UNDER NORMAL PROVISION SHALL BE ADDED TO THE BOOK PROFIT , THEREFORE GROUNDS RAISED IN CROSS OBJECTIONS FOR BOTH THE IMPUGNED ASSESSMENT YEARS STAND S PARTY ALLOWED. 18 ITA NO. : 6110 /MUM/2014 ITA NO. : 6 111 /MUM/2014 CO NO.: 35 /MUM/201 6 CO NO.:36/MUM /2016 AMEYA LOGISTICS P LTD 15 . IN THE RESULT, BOTH THE APPEAL OF THE REVENUE STANDS DISMISSED AND CROSS OBJECTION S OF THE ASSESSEE STAND S PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 4 TH AUGUST, 2016 . SD/ - SD/ - ( ) ( ) ( B R BASKARAN ) ( AMIT SHUKLA ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATE: 4 TH AUGUST , 2016 / COPY TO: - 1 ) / THE APPELLANT. 2 ) / THE RESPONDENT. 3 ) THE C IT 4 , MUMBAI . 4 ) THE C IT 2 , MUMBAI 5 ) , , / THE D.R. A BENCH, MUMBAI. 6 ) \ COPY TO GUARD FILE. / BY ORDER / / TRUE COPY / / / , DY. / ASSTT. REGISTRAR I.T.A.T., MUMBAI * . . *CHAVAN, SR.PS