Ennore Cargo Containers Terminal P Ltd., CHENNAI V. DCIT, CHENNAI

CO 83/CHNY/2015

• Counselvise Citation: [2016] 123 COUNSELVISE.COM (IT) 2321 (ITAT-CHENNAI)
• Duration Of Justice: 9 month(s) 15 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 12-05-2016
• Appeal Filed By: Assessee
• Bench Allotted: D
• Assessment Year: 2007-2008
• Appeal Filed On: 27-07-2015
• Court: TRIBUNAL
• Department Lawyers: DR B NISCHAL
• Assessee Lawyers: A S SRIRAMAN
• Keywords: Deemed dividend

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH : CHENNAI . . . , . !' , # $ % [ BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ] ./ I.T.A.NOS.41 & 42/MDS/2015 & C.O NO.83/MDS/2015 [IN I.T.A.NO. 41/MDS/2015] / ASSESSMENT YEARS : 2007-08 & 2010-11 THE DY. COMMISSIONER OF INCOME-TAX CENTRAL CIRCLE 2(4) CHENNAI VS. M/S ENNORE CARGO CONTAINER TERMINAL P. LTD NO.144, VALLUR VILLAGE KONDAKARAI, SR PALAYAM CHENNAI 600 120 [PAN AABCE 4546 M ] ( APPELLANT ) ( RESPONDENT/CROSS OBJECTOR ) DEPARTMENT BY : DR. B. NISCHAL, JCIT ASSESSEE BY : SHRI A.S SRIRAMAN, ADVOCATE / DATE OF HEARING : 16 - 0 3 - 2016 / DATE OF PRONOUNCEMENT : 12 - 05 - 2016 / O R D E R PER N.R.S.GANESAN, JUDICIAL MEMBER THE REVENUE HAS FILED THE PRESENT APPEALS AGAINST THE COMMON ORDER OF THE COMMISSIONER OF INCOME-TAX (APP EALS)-II, CHENNAI, DATED 19.9.2014, FOR ASSESSMENT YEARS 2007 -08 AND 2010-11. THE ASSESSEE HAS ALSO FILED CROSS OBJECTION AGAINS T THE VERY SAME ORDER OF THE CIT(A) FOR ASSESSMENT YEAR 2007-08. T HEREFORE, WE ITA NOS.41 & 42/15 CO 83/15 :- 2 -: HEARD BOTH THE APPEALS OF THE REVENUE AND THE CROSS OBJECTION OF THE ASSESSEE TOGETHER AND DISPOSE OF THE SAME BY THIS C OMMON ORDER. 2. THE FIRST ISSUE ARISES FOR CONSIDERATION IS DEDUCTI ON U/S 80IA OF THE INCOME-TAX ACT, 1961. 2. DR.B. NISCHAL, LD. DEPARTMENTAL REPRESENTATIVE SUBM ITTED THAT THE ASSESSEE CLAIMED DEDUCTION U/S 80IA FROM THE PROFIT OF OPERATION OF CONTAINER FREIGHT STATION. REFERRING TO SEC. 80IA OF THE ACT, MORE PARTICULARLY, EXPLANATION THEREUNDER, THE LD. DR SUBMITTED THAT THE DEFINITION OF INFRASTRUCTURE FACILITY IN CLUDES A PORT, AIRPORT, INLAND WATERWAY OR INLAND PORT. AN INLAND PORT HAS BEEN INCLUDED IN THE DEFINITION OF INFRASTRUCTURE FACILITY IN ADDI TION TO INLAND WATERWAY AND PORT. THEREFORE, ACCORDING TO THE LD. DR, CONT AINER FREIGHT STATION FACILITY DONE BY THE ASSESSEE IS NOT COVERED BY TH E DEFINITION GIVEN IN SEC. 80IA OF THE ACT. ACCORDING TO THE LD. DR, INL AND PORT WAS NOT DEFINED EITHER IN THE INCOME-TAX ACT, 1961 OR IN TH E CUSTOMS ACT. THEREFORE, ACCORDING TO THE LD. DR, THE MEANING H AS TO BE TAKEN AS UNDERSTOOD IN COMMON PARLANCE. ACCORDING TO THE LD . DR, AN INLAND PORT IS JUST LIKE AN INLAND SITE LINKED TO A SEAPOR T. THIS KIND OF INLAND PORT DOES NOT REQUIRE A WATERWAY. THE KEY FEATURES OF AN INLAND PORT ARE THE TRANSFER OF CONTAINERS BETWEEN DIFFERENT MO DES OF TRANSPORTATION AND PROCESSING OF INTERNATIONAL TRAD E. ACCORDING TO THE ITA NOS.41 & 42/15 CO 83/15 :- 3 -: LD. DR, CONTAINER FREIGHT STATION CANNOT BE CONSTRU ED AS INFRASTRUCTURE FACILITY WITHIN THE DEFINITION GIVEN IN SEC. 80IA OF THE ACT. REFERRING TO THE NOTIFICATION ISSUED BY THE CBDT DATED 1.9.1998, THE LD. DR SUBMITTED THAT WHILE NOTIFYING CONTAINER FREIGHT ST ATION AS AN INFRASTRUCTURE FACILITY, IT WAS CLASSIFIED UNDER ANY OTHER PUBLIC FACILITY, THEREFORE, THE INTENTION OF THE BOARD WAS NOT TO TR EAT THE CONTAINER FREIGHT STATION AS INLAND PORT FOR THE PURPOSE OF A LLOWING DEDUCTION U/S 80IA OF THE ACT. 3. REFERRING TO THE ORDER OF THE CIT(A), THE LD. DR SU BMITTED THAT THE CIT(A) BY FOLLOWING HIS OWN ORDER IN ASSE SSEES OWN CASE FOR ASSESSMENT YEAR 2009-10, ALLOWED THE CLAIM OF THE ASSESSEE. REFERRING TO THE ORDER OF THE CIT(A) FOR ASSESSMENT YEAR 2009-10 IN ASSESSEES OWN CASE, THE LD. DR SUBMITTED THAT THE CIT(A) BY REFERRING TO THE JUDGMENT OF THE DELHI HIGH COURT IN THE CASE OF M/S CONTAINER CORPORATION OF INDIA LTD. VS ACIT, 346 ITR 140, ALL OWED THE CLAIM OF THE ASSESSEE. ACCORDING TO THE LD. DR, THE REVEN UE HAS ALREADY FILED APPEAL AGAINST THE JUDGMENT OF THE DELHI HIGH COURT IN M/S CONTAINER CORPORATION OF INDIA LTD(SUPRA). 4. SHRI A.S SRIRAMAN, LD. COUNSEL FOR THE ASSESSEE SUB MITTED THAT THE CIT(A) HAS RIGHTLY ALLOWED THE CLAIM OF TH E ASSESSEE U/S 80IA OF THE ACT BY FOLLOWING HIS OWN ORDER IN ASSESSEE S OWN CASE FOR ITA NOS.41 & 42/15 CO 83/15 :- 4 -: ASSESSMENT YEAR 2009-10, THEREFORE, NO INTERFERENCE IN THE ORDER OF THE CIT(A) IS CALLED FOR. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. TH E ONLY ISSUE ARISES FOR CONSIDERATION IS WHETHER CONTAINER FREIGHT STAT ION CAN BE CONSTRUED AS INLAND PORT FOR THE PURPOSE OF ALLOWIN G DEDUCTION U/S 80IA OF THE ACT? THIS ISSUE WAS CONSIDERED BY THE DELHI HIGH COURT IN M/S CONTAINER CORPORATION OF INDIA LTD(SUPRA) AFTER REFERRING TO THE CIRCULAR ISSUED BY THE CBDT, THE HIGH COURT FOUND T HAT CONTAINER FREIGHT STATION WAS NOTIFIED BY THE CUSTOMS AUTHORI TIES AND ALSO CUSTOMS CLEARANCE TOOK PLACE IN CONTAINER FREIGHT S TATION. THE OFFICE MEMORANDUM ISSUED BY THE MINISTRY OF COMMERCE CLAR IFIED THAT CONTAINER FREIGHT STATIONS ARE INLAND PORTS. ACCOR DINGLY, THE DELHI HIGH COURT FOUND THAT THE CONTAINER FREIGHT STATION S ARE INFRASTRUCTURE FACILITY WITHIN THE MEANING OF INLAND PORTS. TH E CIT(A), BY FOLLOWING THE JUDGMENT OF THE DELHI HIGH COURT IN M/S CONTAIN ER CORPORATION OF INDIA LTD(SUPRA), DIRECTED THE ASSESSING OFFICER TO ALLOW DEDUCTION U/S 80IA(4) OF THE ACT. SINCE THE DELHI HIGH COURT CON SIDERED SIMILAR ISSUE AND FOUND THAT CONTAINER FREIGHT STATION IS AN INF RASTRUCTURE FACILITY AND THE SAME WOULD FALL WITHIN THE DEFINITION OF I NLAND PORT, THIS TRIBUNAL DO NOT FIND ANY REASON TO INTERFERE WITH T HE ORDER OF THE LOWER AUTHORITY. ACCORDINGLY, THE SAME IS CONFIRMED. ITA NOS.41 & 42/15 CO 83/15 :- 5 -: 6. THE NEXT ISSUE ARISES FOR CONSIDERATION IS ADDITION MADE BY THE ASSESSING OFFICER U/S 2(22)(E) OF THE ACT. TH IS ISSUE ARISES FOR CONSIDERATION FOR ASSESSMENT YEAR 2007-08. 7. DR.B. NISCHAL, LD. DR SUBMITTED THAT DURING THE YEA R UNDER CONSIDERATION, THE ASSESSEE RECEIVED CAPITAL ADVAN CE OF ` 1,09,50,000/- FROM M/S INDEV LOGISTICS P. LTD. WHIC H HAS COMMON SHAREHOLDERS WHO HAVE SUBSTANTIAL INTEREST IN THE A SSESSEE-COMPANY. THE COMMON SHAREHOLDERS ARE SHRI XAVIER BRITTO AND SMT. VIMALARANI BRITTO. THE LD. DR FURTHER SUBMITTED THAT M/S INDE V LOGISTICS P. LTD. HAS SUBSTANTIAL RESERVES AS ON 31.3.2010, THEREFORE , THE AMOUNT RECEIVED BY THE ASSESSEE AS CAPITAL ADVANCE TO THE EXTENT OF ` 1,09,50,000/- IS NOTHING BUT DEEMED DIVIDEND U/S 2 (22)(E) OF THE ACT. THE CIT(A) DELETED THE ADDITION MADE BY THE ASSESSI NG OFFICER ON THE GROUND THAT THERE WAS A BUSINESS RELATIONSHIP BETWE EN THE ASSESSEE- COMPANY AND M/S INDEV LOGISTICS P. LTD. ACCORDINGL Y, THE CIT(A) FOUND THAT THE LOAN/ADVANCE RECEIVED BY THE ASSESS EE TO THE EXTENT OF ` 1,09,50,000/- FROM M/S INDEV LOGISTICS P. LTD. IS IN RELATION TO BUSINESS ACTIVITY, THEREFORE, BY FOLLOWING HIS OWN ORDER FOR ASSESSMENT YEAR 2009-10, DELETED THE ADDITION. THE LD. DR FUR THER SUBMITTED THAT THE CIT(A) REJECTED THE CONTENTION OF THE ASSESSEE THAT DEEMED DIVIDEND IS ONLY ASSESSED IN THE HANDS OF SHAREHOLD ERS AND NOT IN THE HANDS OF ANY OTHER PERSON. ACCORDING TO THE LD. DR , THE CIT(A), IN ITA NOS.41 & 42/15 CO 83/15 :- 6 -: FACT, PLACED HIS RELIANCE ON THE JUDGMENT OF THE DE LHI HIGH COURT IN THE CASE OF CIT VS GOPAL CLOTHING COMPANY P. LTD, 350 I TR 67, AND CIT VS ANKITECH P. LTD., 340 ITR 14. ACCORDING TO THE LD . DR, THE REVENUE HAS FILED APPEAL AGAINST THE JUDGMENTS OF THE DELHI HIGH COURT IN GOPAL CLOTHING COMPANY P. LTD (SUPRA) AND M/S ANKITECH P. LTD (SUPRA) AND THE SAME IS PENDING. SINCE ADMITTEDLY, THE ASSESS EE HAS RECEIVED CAPITAL ADVANCE FROM A COMPANY WHERE THERE ARE COMM ON SHAREHOLDERS, THE SAME HAS TO BE TREATED AS DEEMED DIVIDEND IN THE HANDS OF THE ASSESSEE-COMPANY. 8. ON THE CONTRARY, SHRI A.S SRIRAMAN, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE BUSINESS RELATIONSHIP B ETWEEN THE ASSESSEE-COMPANY AND M/S INDEV LOGISTICS P. LTD. IS NOT DISPUTED BY THE REVENUE. THE ADVANCE WAS RECEIVED BY THE ASSE SSEE ONLY FOR BUSINESS ACTIVITY AND NOT FOR ANY OTHER PURPOSE. T HE LD. COUNSEL FURTHER SUBMITTED THAT THE ASSESSEE-COMPANY IS NOT A SHAREHOLDER IN M/S INDEV LOGISTICS P. LTD., THEREFORE, EVEN ASSUMI NG THAT THE CAPITAL ADVANCE RECEIVED BY THE ASSESSEE IS A DEEMED DIVI DEND, IT HAS TO BE ASSESSED ONLY IN THE HANDS OF THE SHAREHOLDER FOR W HOSE BENEFIT THE MONEY WAS RECEIVED. SINCE THE ASSESSEE-COMPANY IS NOT A SHAREHOLDER OF M/S INDEV LOGISTICS P. LTD., ACCORDI NG TO THE LD. COUNSEL, THERE CANNOT BE ANY ADDITION IN THE HANDS OF THE ASSESSEE AS DEEMED DIVIDEND U/S 2(22)(E) OF THE ACT. THEREFOR E, THE CIT(A) HAS ITA NOS.41 & 42/15 CO 83/15 :- 7 -: RIGHTLY DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. THE LD. COUNSEL HAS PLACED HIS RELIANCE ON THE DECISION OF MUMBAI SPECIAL BENCH OF THIS TRIBUNAL IN CIT VS BHAUMIK COLOUR P. LTD, 313 ITR(AT) 146. 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. IT I S NOT IN DISPUTE THAT THE ASSESSEE HAS RECEIVED CAPITAL ADVANCE OF ` 1,09,50,000/- FROM M/S INDEV LOGISTICS P. LTD. IT IS ALSO NOT IN DISPUTE THAT THE ASSESSEE- COMPANY IS NOT A SHAREHOLDER OF M/S INDEV LOGISTICS P. LTD. THE ONLY CONTENTION OF THE REVENUE IS THAT THERE ARE COMMON SHAREHOLDERS FOR THE ASSESSEE-COMPANY AND M/S INDEV LOGISTICS P. LTD ., THEREFORE, THE CAPITAL ADVANCE RECEIVED BY THE ASSESSEE HAS TO BE ASSESSED AS DEEMED DIVIDEND IN THE HANDS OF THE ASSESSEE-COMPAN Y. 10. WE HAVE CAREFULLY GONE THROUGH THE PROVISIONS OF SE C. 2(22)(E) OF THE ACT. ANY ADVANCE OR LOAN RECEIVED BY THE REGISTERED SHAREHOLDER HAS TO BE TREATED AS DEEMED DIVIDEND IN THEIR HANDS. IN CASE THE ADVANCE/LOAN WAS ADVANCED FOR THE BENEFIT OF THE REGISTERED SHAREHOLDER OR ANY OTHER PERSON, STILL THE SAME HAS TO BE ASSESSED AS DEEMED DIVIDEND IN THE NAME OF THE REGISTERED SHARE HOLDER FOR WHOSE BENEFIT THE ADVANCE/LOAN WAS GIVEN. IN THE CASE BEF ORE US, THE ASSESSEE IS NOT A SHAREHOLDER IN M/S INDEV LOGISTI CS P. LTD. THE ITA NOS.41 & 42/15 CO 83/15 :- 8 -: COMMON SHAREHOLDERS ARE SHRI XAVIER BRITTO AND SMT. VIMALARANI BRITTO. SHRI XAVIER BRITTO IS HOLDING 50% OF THE SHARES IN THE ASSESSEE- COMPANY AND SMT. VIMALARANI BRITTO IS HOLDING 50% O F THE SHARES IN THE ASSESSEE-COMPANY. IN THE CASE OF M/S INDEV LOG ISTICS P. LTD. SHRI XAVIER BRITTO IS HOLDING 60% OF THE SHARES WHEREAS SMT. VIMALARANI BRITTO IS HOLDING 40% OF THE SHARES, THEREFORE, AS RIGHTLY SUBMITTED BY THE LD. DR THERE ARE COMMON SHAREHOLDERS IN BOTH TH E COMPANIES. THE ADVANCE RECEIVED BY THE ASSESSEE-COMPANY MAY BE FOR THE BENEFIT OF THE COMMON SHAREHOLDERS WHO ARE HOLDING THE SHAR ES IN THE ASSESSEE-COMPANY. HOWEVER, FOR THE PURPOSE OF ASSE SSING THE DEEMED DIVIDEND, IT HAS TO BE ASSESSED ONLY IN THE HANDS OF THE REGISTERED SHAREHOLDER FOR WHOSE BENEFIT THE MONEY WAS ADVANCED. IN THE CASE BEFORE US, IN FACT, THE MONEY WAS ADVANCED FOR THE BENEFIT OF THE SHAREHOLDERS, SHRI XAVIER BRITTO AND SMT. VIMA LARANI BRITTO, THEREFORE, THE ASSESSMENT, IF ANY, HAS TO BE MADE O NLY IN THE HANDS OF SHRI XAVIER BRITTO AND SMT. VIMALARANI BRITTO AND N OT DEFINITELY IN THE HANDS OF THE PRESENT ASSESSEE. THEREFORE, THIS TR IBUNAL DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE CIT(A ) AND ACCORDINGLY THE SAME IS CONFIRMED. 11. THE ASSESSEE HAS FILED THE CROSS OBJECTION ONLY TO SUPPORT THE ORDER OF CIT(A). SINCE THE ORDER OF THE CIT(A ) IS UPHELD, WE DO ITA NOS.41 & 42/15 CO 83/15 :- 9 -: NOT FIND ANY MERIT IN THE CROSS OBJECTION FILED BY THE ASSESSEE AND THE SAME IS DISMISSED. 12. IN THE RESULT, THE APPEALS OF THE REVENUE AND THE C ROSS OBJECTION OF THE ASSESSEE STAND DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 12 TH MAY, 2016, AT CHENNAI. SD/- SD/- ( . !' ) (A. MOHAN ALANKAMONY) # / ACCOUNTANT MEMBER ( . . . ) ) (N.R.S. GANESAN) / JUDICIAL MEMBER / CHENNAI ! / DATED: 12 TH MAY, 2016 RD !' # $% &% / COPY TO: 1 . '( / APPELLANT 4. ) / CIT 2. #*'( / RESPONDENT 5. %+, # - / DR 3. ) () / CIT(A) 6. ,/ 0 / GF