M/s. Rishi Kiran Logistics Pvt. Ltd., GANDHIDHAM V. The Addl. Commr. of Income Tax, GANDHIDHAM

ITA 131/RJT/2018

• Counselvise Citation: [2024] 100 COUNSELVISE.COM (IT) 3215 (ITAT-RAJKOT)
• Duration Of Justice: 4 year(s) 9 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-03-2024
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: DB
• Next Hearing Date: 10-01-2024
• Assessment Year: 2013-2014
• Appeal Filed On: 31-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: FOLLOWING JURISDICTIONAL HIGH
• Keywords: Depreciation; Earning of tax free income; Rule 8D; Set aside
• Section: 143(3); 14A; 195; 80IA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT (Conducted Through Virtual Court) Before: Shri Waseem Ahmed, Accountant Member And Shri T.R. Senthil Kumar, Judicial Member M/s. Rishi Kiran Logistics Pvt. Ltd. Plot No. 8, Sector No. 8, Gandhidham Vs The Addl Commissioner of Income Tax, Gandhidham Range, Gandhidham The Addl Commissioner of Income Tax, Gandhidham Range, Gandhidham (Appellant) M/s. Rishi Kiran Logistics Pvt. Ltd. Plot No.8, Sector No.8, Gandhidham PAN No: AADCR4880P (Respondent) Assessee Represented: Shri Mehul Ranpura, A.R. Revenue Represented: Shri Shramdeep Sinha, CIT-DR Date of hearing : 11-01-2024 Date of pronouncement : 28-03-2024 आदेश/ORDER PER: T.R. SENTHIL KUMAR, JUDICIAL MEMBER:- These cross appeals are filed by the Assessee and the Revenue as against the appellate order dated 29.01.2018 passed by the Commissioner of Income Tax (Appeals)-3, Rajkot arising out of the assessment order passed under section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) relating to the Assessment Year (A.Y) 2013-14. ITA Nos: 131 & 135/Rjt/2018 Assessment Year: 2013-14 I.T.A Nos. 131 & 135/Rjt/2018 A.Y. 2013-14 Page No Rishi Kiran Logistics P. Ltd. Vs. ACIT 2 2. The brief facts of the case is that the assessee is Private Limited Company engaged in the business of clearing, forwarding, storage and warehousing, cargo handling through cranes and other equipment. The assessee also engaged in the Wind Mill Power generation and manufacturing of salt. For the Asst. Year 2013-14, the assessee filed its Return of Income on 30.11.2013 declaring total income of Rs.10,07,56,200/-. The Assessing Officer vide order dated 28.03.2016 assessed the total income of the assessee at Rs.13,38,55,190/- by making the following disallowances: (i) Disallowed the claim of deduction of Rs. 2,05,17,894/- (Rs.91,93,380/- from MDI storage tank plus Rs.1,13,24,514/- from EDI storage tank) made u/s 80IA(4) of the Act from profit of developing/operating/maintaining MDI and EDI storage tanks at port by alleging that the appellant failed to fulfill necessary conditions for claiming such deductions u/s 80IA(4) of the Act. (ii) Alleged that the assessee had incurred share issue expenses of Rs. 2,61,000/- in normal course and the same is not fit into criteria laid down u/s. 35D of the Act and accordingly disallowed the same. (iii) Disallowed Rs. 24,29,044/- by invoking provisions of section 14A of the Act on the alleged ground that assessee failed to prove one-to-one nexus from bank account that investment has been done entirely from its own funds. (iv) Alleged that assessee (i) paid excessive terminal handling charges to Shreeji Power and Insulators Pvt. Ltd. [SPIPL] and (ii) paid for the quantities which have not been used by the appellant. He also alleged that the assessee shifted profit from marketing & other activities to SPIPL for which no service has I.T.A Nos. 131 & 135/Rjt/2018 A.Y. 2013-14 Page No Rishi Kiran Logistics P. Ltd. Vs. ACIT 3 been provided by the SPIPL. Thus, the AO alleged that assessee routed the transactions from SPIPL at arbitrary & hypothetical rates and saved its tax on Rs.51,76,800/- and saved dividend distribution tax. In total disregards to the submissions of the assessee, the AO alleged that the payment made by appellant to SPIPL in excess of what SPIPL has paid to owners and warehouse is unreasonable and disallowed the same. (v) Alleged that expenses for providing free access to land and keeping area vacant surrounding to the land on which windmill is erected is not necessary for function of windmill and therefore not qualify for depreciation and thereby disallowed depreciation at Rs.24,16,316/- and added the same to the returned income. (vi) Cessation of Liability Rs. 6,68,703/-. 3. Aggrieved against the same, the assessee filed an appeal before Ld. CIT(A) who partly confirmed the additions and partly deleted the additions/disallowances made by the assessing officer. 4. Aggrieved against the same, both the Assessee and Revenue are in appeal before us. Grounds of Appeal filed by the Assessee in ITA No.131/RJT/2018 are as follows: 1.0 The grounds of appeal mentioned hereunder are without prejudice to one another. 2.0 The ld. Commissioner of Income-tax (Appeal)-3, Rajkot (hereinafter referred as to the "CIT(A)"] erred on facts as also in law in retaining disallowance of share expenses of Rs.2,61,000/- u/s. 35D of the Act on the alleged ground that the same is not fit into criteria laid down u/s. 35D of the Act. The disallowance made may kindly be deleted. I.T.A Nos. 131 & 135/Rjt/2018 A.Y. 2013-14 Page No Rishi Kiran Logistics P. Ltd. Vs. ACIT 4 3.0 The ld. CIT(A) erred on facts as also in law in retaining disallowance of interest expense of Rs.2,23,639/- out of total disallowance of Rs.24,29,044/- u/s. 14A r.w.s. 8D of the Act. The disallowance is totally unjustified on facts as also in law and may kindly be deleted. 4.0 The ld. CIT(A) erred on facts as also in law in retaining disallowance of Warehousing charges of Rs.51,76,800/- paid to the M/s. Shreeji Power and Insulators Pvt. Ltd. on the alleged ground that the same is excessive in nature as compared to payment made other parties. The disallowance is totally unjustified on facts as also in law and may kindly be deleted. 5.0 The ld. CIT(A) erred on facts as also in law in confirming addition of Rs.5,38,145/- u/s. 41(1)(a) of the Act on the alleged ground of cessation of liabilities. The addition made and confirmed was based on conjectures and surmises and may kindly be deleted. 4.1. Grounds of Appeal filed by the Revenue in ITA No. 135/RJT/ 2018 are as follows: 1. The Ld.CIT(A) has erred in deleting the addition made by the AO on account of disallowing of deduction u/s.801A(4)(i) on storage tank-MDI of Rs.91,93,380/- and storage tank-EDA of Rs.1,13,24,514/- 2. The Ld.CIT(A) has erred in law and on facts in deleting the addition made u/s.14A of Rs 22,05,405/-even though the assessee was not able to show one to one relation from its bank account that the investment was made entirely from its own funds. 3. The Ld.CIT(A) has erred in deleting the addition of Rs.24,16,316/- made by the AO on account of disallowance in connection with the windmill. It is therefore, prayed that the order of Ld. CIT(A) be set aside and that of AO be restored to the above extent. 5. Since the Grounds raised by both parties are interlinked with same issues, both the Assessee and Revenue appeals are disposed by dealing with each issue wise as below. I.T.A Nos. 131 & 135/Rjt/2018 A.Y. 2013-14 Page No Rishi Kiran Logistics P. Ltd. Vs. ACIT 5 6. Addition made by the A.O. on account of disallowance of deduction u/s. 80IA(4)(i) on storage tank MDI of Rs.1,34,66,469/- and storage tank EDA of Rs.90,77,246/-. The assessee submitted that that there is difference in the nature of business in case of MDI storage tank and other tanks at the Tank Farm. The full nomenclature of MDI means "DiphenylMethane Disocyanate” chemical product. This chemical “MDI" needs to be stored in a separate tank built at the Port with insulation cover to maintain temperature and pressure and Nitrogen gas for 24 hrs X 7 days to ensure the Tank is free from moisture as the chemical if comes into contact with moisture may react adversely producing hazardous gases. Not only the Tank, the supply and delivery pipelines are also insulated. As per MOU with DOW Chemical International Pvt. Ltd. the MDI Tank is fully dedicated to that party only which is used by them for storage of a specific cargo at a specific temperature as required to be maintained for that particular tank and the cargo of DOW Chemical is only stored as per the agreement with the party and assessee has filed copy of the agreement dated 22.10.2007 before the lower authorities. 6.1. The assessee explained that the storage facility is for loading and unloading of chemical, a copy of storage and terminal agreement with M/s Dow Chemical is also filed. Further the storage Tanks are connected with associated pumps, pipelines, connecting hoses, valves, metering and control devices and auxiliary equipment to carry out the loading and unloading functions. Thus, the MDI tanks are special tanks for specific liquid cargo, hence the tanker vessels carrying on the specific chemicals come to Kandla I.T.A Nos. 131 & 135/Rjt/2018 A.Y. 2013-14 Page No Rishi Kiran Logistics P. Ltd. Vs. ACIT 6 Port for discharge of the cargo. The vessels are berthed at Oil Cargo Jetty and after necessary Custom’s formalities; the cargo is unloaded in the storage tank by pumping with motors and stored through pipelines as per permission of Kandla Port Trust. 6.2 Thus the assessee claimed that their case is squarely falls under the clarification provided in Circular No. 10 of 2005. It is a fact that storage tanks are an integral part of Port operations and it can't be utilized for any other Non-Port operations. Moreover, the Assessing Officer, Addl. Commissioner of Income Tax after physical verification of the tanks/structure at assessee’s site, in his assessment order passed u/s.143(3), categorically given his finding that the assessee qualified the condition of new infrastructural facility of having structures at the Port for storage, loading and unloading. However, AO’s allegation is that storage tank is devoid of loading and unloading facility and same are not within the premises of Kandla Port Trust and held that MDI storage tank, for which assessee has claimed deduction is not an enterprise as held in the earlier asst. years namely (a) assessee is incapable of doing independent business in absence of loading & unloading facility (b) no separate accounts has been maintained, as most of expenses are allocated on pro-rate basis. 6.3. On appeal, the Ld CIT[A] held that there have to be structures at Port for storage, loading & unloading, etc. The assessee is in the business of operating & maintaining of storage tanks, and assessee own quite a few storage tanks, out of which assessee has claimed deduction u/s.80IA for two tanks namely MDI & EDA Tanks. The I.T.A Nos. 131 & 135/Rjt/2018 A.Y. 2013-14 Page No Rishi Kiran Logistics P. Ltd. Vs. ACIT 7 assessee is using its storage terminal, for which no deduction u/s. 80IA has been claimed for all other 15 storage tanks. The AO had carried out physical inspection of the pipelines, however despite his physical verification no conclusion could be reached as most part of the pipelines are underground, which could not be verified. Upon physical verification it was found that the MDI and EDA storage tanks are constructed on the same land leased out by the KPT in the year 1987. There are around 15 other storage tanks in the same facility. The only conclusion the Ld AO reached from physical verification is that the MDI and EDA storage Tanks are part of the tank farm of the group, if not an expansion of the existing facilities much less a new infrastructure facility and by no stretch of imagination an independent structure. However, as mentioned in para 4.14, during the assessment proceedings the assessee took strong objection of the findings of the AO in AY 2012-13 and demanded fresh inspection by the present AO. Accordingly, as mentioned in para 4.16 & 4.17 on fresh inspection the MDI and EDA storage tanks are found to be an independent and new infrastructure facility. Therefore, the assessee qualifies the condition of new infrastructure facility of having structures as part for storage, loading and unloading etc. and allowed the claim of the assessee. 7. During the pendency of the appeal, the Ld. CIT-DR Sri Shramdeep Sinha issued a letter dated 21.07.2023 to the Chairman, Kandla Port Trust (now known as Deendayal Port Authority) seeking further clarification in the case of the assessee/ Rishi Kiran Logistics Pvt. Ltd. about the claim of deduction u/s. I.T.A Nos. 131 & 135/Rjt/2018 A.Y. 2013-14 Page No Rishi Kiran Logistics P. Ltd. Vs. ACIT 8 10(23)(G) and 80IA of the Act, by asking for various details by way of a questioner. 7.1. The Ld. A.R. Sri. Mehul Ranpura appearing for the assessee strongly opposed the above enquiry made by Ld. CIT-DR by making fresh investigation on this issue, which has already adjudicated by the Co-ordinate Bench of this Tribunal in favour of the assessee. 7.2. On perusal of previous “order sheet entries” there is No Direction issued by this Tribunal to the department to carry out fresh enquiry on the deduction u/s.80IA of the Act claimed by the assessee. Thus in the absence of any specific Direction from the Tribunal, the Revenue Authorities are not correct in re-investigating or re-inquiring an issue which has already attained finality by the decision of the Co-ordinate Bench in assessee’s own case in ITA No. 160/Rjt/2015 vide order dated 31.01.2019 wherein it was held as follows: “... 10. Now we come to ground no. 1 related to deleting the addition made by the A.O. on account of disallowance of deduction u/s. 80IA(4)(i) on storage tank-MDI of Rs. 1,34,66,469/- and storage tank-EDA of Rs. 90,77,246/-. 11. In this case, AO’s allegation is that storage tank is devoid of loading and unloading facility and same are not within the premises of Kandla Port Trust and held that MDI-storage tank, for which assessee has claimed deduction is not an enterprise as (a) it is incapable of doing independent business in absence of loading & unloading facility (b) no separate accounts has been maintained, as most of expenses are allocated on pro-rate basis. I.T.A Nos. 131 & 135/Rjt/2018 A.Y. 2013-14 Page No Rishi Kiran Logistics P. Ltd. Vs. ACIT 9 12. In reply before the lower authorities, assessee stated that that there is difference in the nature of business in case of MDI storage tank and other tanks at the tank farm. The full nomenclature of MDI means "Diphenylmethane Diisocyanate chemical product. It is to submit that the chemical 'MDI" needs to be storage in a separate tanks built at the port as per MOU with DOW Chemical International Pvt. Ltd. and is fully dedicated to that party only which is used by them for storage of a specific cargo at a specific temperature required to be maintained for that particular tank and the cargo of Dow Chemical International Private Limited is only stored as per the agreement with the party and assessee has filed copy of the agreement before the lower authorities. 13. And assessee stated that storage facility is for loading and unloading of chemical, a copy of storage and terminal agreement with M/s Dow Chemical International Pvt. Ltd, dated 22.10.2007 is also filed. And the storage tanks are connected with associated pumps, pipelines, connecting hoses, valves, metering and control devices and auxiliary equipment to carry out the loading and unloading functions. Thus, the MDI tanks are special tanks for specific liquid cargo hence has separate dedicated pipeline and pump for the same has been installed. The tanker vessels carrying on the specific chemicals come to Kandla Port for discharge of the cargo. The vessels are berthed at Oil Cargo Jetty and after necessary customs formalities; the cargo is unloaded in the storage tank through pipelines as per permission of Kandla Port Trust. 14. As we can see, that case of the assessee case is squarely falls under the clarification provided in Circular No. 10 of 2005. It is fact that storage tanks are an integral part of Port operations and it can't be utilized for any other non-port operations, Moreover, in A.Y. 2013-14, the AO in his order u/s. 143(3) dated 28.03.2016, after physical verification of; the structure, categorically given his finding that the respondent qualified the condition of new infrastructural facility of having structures at the port for storage, loading and unloading. 15. Satellite image/map on the wikimapia.org clearly show the area/boundaries of Kandla Port, within which the Respondent has I.T.A Nos. 131 & 135/Rjt/2018 A.Y. 2013-14 Page No Rishi Kiran Logistics P. Ltd. Vs. ACIT 10 developed the structure, i.e., storage tanks. The AO's observation that the structure of Respondent is not part of port is incorrect and for Kandla port trust, commissioner of Custom has notified assessee as custodian and therefore the same is stipulated within the Custom Bonded Area i.e. port and same is part of paper book at page 285 to 287. Therefore, in our considered opinion, assessee is entitled for deduction u/s. 80IA(4)(i) of Rs. 2,25,43,715/- being the profit from enterprise carrying on the business of developing/operating/ maintaining infrastructure facilities i.e. port and also entitled for deduction. Thus, this ground of appeal is dismissed. 7.3. Thus we hereby reject the fresh enquiry or reinvestigation carried out by the Revenue and also taken on record the strong objections filed by the assessee on this count. Since this issue is no more res-integra as identical cases were considered by the Co- ordinate Bench of this Tribunal in the case of M/s. Friends Oil & Chemical Terminals Pvt Ltd in ITA No.936/RJT/2010 & Others dated 07-12-2018 and after verification of facts held as follows: “... 10. Ground No. 2 States that CIT (A) erred in law and facts in rejecting claim of the appellant of Rs. 1,49,36,396 under section 80IA of the Act in respect of income derived from operation and maintenance of storage tank by considering the same as integral part of Port. 11. Succinctly, facts as culled out from the orders of lower authorities are that the assessee has claimed deduction under section 80IA the assessee for building, storage tank, shore pipelines and other Infrastructure on the port of land leased to them by Kandla Port Trust (KPT). It was contended that the assessee has entered in to an agreement with KPT for the purpose of erection operation and maintenance of storage tanks along with pipelines and other infrastructure facilities on the leasehold land, which was allotted by them by KPT. The assessee has filed copies of agreement entered in to with KPT. However, the AO did not agree with the assessee and observed that construction of storage tank is the part of asset of the I.T.A Nos. 131 & 135/Rjt/2018 A.Y. 2013-14 Page No Rishi Kiran Logistics P. Ltd. Vs. ACIT 11 assessee. There is agreement between the assessee and KPT for development such facilities. Therefore, as per provision of section 80IA (4) (i) (b), there is no such agreement and construction made as storage is in own business, which in fact is being used by the assessee himself. Therefore, the ownership of Infrastructure facilities with the assessee himself. The assessee is engaged in the very work of storage and such storage is on its own tank. The assessee has himself sought permission from KPT for construction of storage tank, as it was required for the purpose of business of the assessee. The KPT has merely given permission to the assessee on his express request to construct the storage tanks. Therefore, the contention of the assessee that it had entered in to an agreement, in compliance to provisions of section 80IA(4)(i)(b) is not true and needs to be rejected. The assessee has relied on Circular No.10/2005 dtd. 16.12.2005 which seeks to clarify the definition of Port for the purpose of infrastructure facility, but it does not take away the essential character of section 80IA(4)(i)(b), which requires the existence of an agreement with government. In view of above, the AO disallowed the claim of Rs. 1,49,36,396 under section 80IA(4)(i)(b) of the Act. 12. Being aggrieved, the assessee filed an appeal before the ld. CIT(A). The CIT(A) observed that the assessee has entered into general agreement for 30 years could not be taken as an agreement town KPT and the appellant authorizing that loading and unloading of liquid cargo that would form part of the port operations for import and export. It also did not say that the said infrastructure and facilities developed built/ maintained/operated by the Appellant rested with government. Prima-facie the ownership of the said infrastructure facility was with the appellant. The appellant has produce a certificate from KPT which reads: This is to certify that M/s. Friends Oil & chemical Terminals Pvt. Ltd. built storage tank erected, shore pipelines and other infrastructure facilities on the plot of land leased to them by Kandla Port Trust at old Kandla (oil jetties) for loading and unloading of liquid cargo, which forms part of the Port operations for import and export.” However, the CIT (A) has written a letter to KPT which was clarified by the KPT authority vide letter dated 01.02.2010 that storage tanks, shore pipelines and other infrastructure facilities developed by M/s. Friends Oil and I.T.A Nos. 131 & 135/Rjt/2018 A.Y. 2013-14 Page No Rishi Kiran Logistics P. Ltd. Vs. ACIT 12 Chemical Terminals Private limited to KPT are not deemed part of KPT nor deemed as asset of the KPT. Thus, CIT (A) opined that this clarification shows that first certificate dtd. 20.10.2005 obtained by the Appellant from KPT in such a way that it serve the purpose of the appellant. However, the reply dtd. 01.02.2010 makes that the claim of the assessee is false. The CBDT Circular No.10/2005 dtd. 16.12.2005 says that from A.Y. 2002-03 onwards, structure at the ports for storage / loading / unloading etc. would be included in the definition of port for the purpose of section10(23G) and section 80IA. However, the non-presence of agreement loses its value as the said agreement simply allowed the appellant to use its land for building storage facilities and other allied facilities. The appellant`s reliance on Cochin ITAT in the case of M/s.HHA Tank Terminal Pvt. Ltd. I.T.A.No. 18/Coch/2006 did not include any clause for the ultimate transfer of facility due to amendment by Finance Act, 2001 with effect from that condition was no longer required. In the decision of Rajkot bench, the certificate from concerned authority was produced before the ITAT hence, ITAT has allowed deduction. In view of above, the CIT (A) was of the view that condition of agreement with KPT to construction storage tank, shore pipelines and infrastructure facilities at the site allotted to the appellant and on the strength of revised certificate of KPT as notified in Circular No. 10/2005 that the appellant structure did not form part of infrastructure facilities within the meaning of section 80IA, hence, disallowance, so made by the AO were confirmed. 13. Being aggrieved, the assessee filed this appeal before the Tribunal. The learned counsel for the assessee submitted that as per lease agreement, the KPT has allotted 250000 Sq. Ft. land to the assessee on which the assessee constructed building storage tanks with permission of KPT, and developed infrastructure facilities hence, claim under section 80IA(4)(i)(b) is allowable to the assessee. The learned counsel for the assessee referred CBDT Circular No. 10 of 2005 dtd. 16.12.2005 (PB-27) in which clause “3. However, for and from assessment year 2002-03 onwards, structure at the ports for storage, loading and unloading the company will be included in the definition of “port” for the purpose of section 10 (23G) and 80IA of Income Tax Act,1961, if the following conditions fulfilled:- the concerned port authority has issued a certificate that the said I.T.A Nos. 131 & 135/Rjt/2018 A.Y. 2013-14 Page No Rishi Kiran Logistics P. Ltd. Vs. ACIT 13 structure form part of the port.” The learned counsel for the assessee further referred certificate dtd. 20.10.2005 issued by the KPT wherein it is mentioned that the assessee has erected storage tanks and other infrastructure facilities on the plot of land leased to them by KPT for loading and unloading of liquid cargo which form part of port operations for import and export. The learned counsel for the assessee further, placed reliance in the case of Pr. CIT v. Seabird Marine Services Pvt. Ltd. [2017] 398 ITR 436 (Gujarat) and CIT v. A. L. Logistic Pvt. Ltd. 214] 374 ITR 609 (Mad) 230 Taxman 195 (Mad) , CIT v. HHA Tanks Terminals Ltd. I.T.A.No. 1279 of 2009 dtd. 19.03.2010 of Hon`ble Kerala High Court. In addition, HHA Tanks Pvt. Ltd. I.T.A.No.18/Coch/2006 dtd. 8.01.2008 of Cochin Tribunal in support of his contentions. 14. Per contra, the ld. Sr. D.R. submitted that there is no agreement with KPT entered in to by the assessee. The AO has brought in assessment order that the construction of building, storage tanks has been constructed of which ownership lies with the assessee and not with the KPT therefore, the lower authorities are justified in disallowing the claim made under section 80IA(4)(i)(b) of the Act. 15. We have heard the rival submissions and perused the relevant material on record. We find that the assessee has claimed deduction under section 80IA of the Act on account of building, storage tank, shore pipelines and other Infrastructure development on the port of land leased to them by Kandla Port Trust (KPT). It was contended that the assessee has entered in to an agreement with KPT for the purpose of erection operation and maintenance of storage tanks along with pipelines and other infrastructure facilities on the leasehold land, which was allotted by them by KPT. We notice that the assessee is engaged in the very work of storage and such storage is on its own tank. The assessee has himself sought permission from KPT for construction of storage tank, as it was required for the purpose of business of the assessee. The KPT has given permission to the assessee to construct the storage tanks. The learned counsel for the assessee referred CBDT Circular No. 10 of 2005 dtd. 16.12.2005 (PB-27) in which clause is as follows ?:- “3. However, for and from assessment year 2002-03 onwards, structure at the ports for storage , loading and unloading the company will be included in I.T.A Nos. 131 & 135/Rjt/2018 A.Y. 2013-14 Page No Rishi Kiran Logistics P. Ltd. Vs. ACIT 14 the definition of “port” for the purpose of section 10 (23G) and 80IA of Income Tax Act,1961, if the following conditions fulfilled:- the concerned port authority has issued a certificate that the said structure form part of the port.” The assessee has furnished a certificate dtd. 20.10.2015 from Kandla Port Trust wherein “This is to certify that M/s. Friends Oil Chemical and Chemical Terminals Pvt. Ltd. has built storage tank erected, shore pipelines and other infrastructure facilities on the plot of land leased to them by Kandla Port Trust at Old Kandla (Oil Jetties) for loading and unloading of liquid cargos which for part of the Port operations for import and export.” The above infrastructure facilities have been developed, built maintained and operated by M/s. Friends Oil and Chemical Terminals Pvt. Ltd... Therefore, the assessee is not required to entered in to an agreement, in the light of CBDT Circular No.10 of 2005. Therefore, the assessee has made sufficient in compliance of provisions of section 80IA(4)(i)(b). If we examined whether in the absence of specific agreement with the Central/State Government, local authority or Statutory Body, the assessee is entitled to claim the benefit of section 80IA(4)(i). The assessee had made an application for setting up of infrastructure facilities at Kandla Port. In response to the application of the assessee, the KPT has given permission for construction loading, storage tanks with infrastructure facilities at Kandla for loading and unloading liquid cargo. The ld. Counsel for the assessee has placed on record a letter dtd. 12.09.1995 issued by KPT .The contents of the letter are reproduced as follows:- I am to refer to letter on the subject cited above and to inform you that change in name of your firm M/s. Friends Group of Industries to M/s. Friends Oil and Chemical Terminals Pvt. Ltd. in respect of land allotted admg. 25,000 sq. meters at Kandla has been noted in the records of this office. Further, you are advised to execute the lease deed in respect of the aforesaid plot between Kandla Port Trust and Friends Oil Chemical Terminals Pvt. Ltd. The other terms and condition prescribed at the time of allotment and other terms indicated in this office letter No. LAW/PL/2152_II/637 dated 1-12- 94 will remain unaltered” (PB-7). In view of these facts, we are of the considered view that the assessee has developed infrastructure facilities, built maintained and operated within the meaning of provisions of section 80IA (4) (i) (b) of the Act. Therefore, the assessee is deemed to have made due compliance of provisions of I.T.A Nos. 131 & 135/Rjt/2018 A.Y. 2013-14 Page No Rishi Kiran Logistics P. Ltd. Vs. ACIT 15 section 80IA (4) (i) (b). The learned counsel for the assessee relied in the case of CIT v. A. L. Logistic Pvt. Ltd. [2015] 374 ITR 609 (Mad) held that it is evident that the proposal of the assessee was accepted by the Government on certain conditions which were duly complied with by the assessee. There may not be any specific agreement, but the sequences of events clearly show that the assessee is providing CFS facility in accordance with the conditions laid down by the Government. In such circumstances, there is no need to insist for the specific execution of agreements. 16. Further, the Co-ordinate Bench of Tribunal of Chennai in the case of A. L. Logistic Pvt. Ltd. v. ITO [2014] 49 taxmann.com 251( Chennai-Trib) held that the co-ordinate bench of the Tribunal in the case of United Liner Agencies of India (Private) Ltd., v. Joint CIT (OSD) in ITA Nos.273&275/Mum/2013 (supra), has taken a similar view. Where no specific agreement with the State Government was entered into but from the approvals granted to the assessee it was inferred that assessee should be deemed to have entered into an agreement with the State Government. Similarly, the issue of the assessee is also supported by the decision in the case of Pr. CIT Seabird Marine Services Pvt. Ltd. [2017] 398 ITR 436 (Gujarat) . Thus, we are of the considered view that the assessee has complied with all the provisions of section 80IA(4)(i) and is eligible to claim deduction under the said section. The impugned order is set aside. In view of the above, this ground is allowed.” 7.4. Further jurisdictional High Court in the case of Pr. CIT -Vs- Seabird Marine Services Pvt. Ltd. [2017] 398 ITR 436 (Gujarat) wherein also the AO inspected the Port premises in-person and after verification of the plant held as follows: “... 8. At the outset, it is required to be noted that in the present case, the assessment for A.Y 2005-06 and 2006-07 are sought to be reopened beyond the period of four years. Therefore, unless and until it is found that there was suppression of material facts on the part of the assessee in not disclosing the true and correct facts necessary for the assessment, it is not open for the Assessing Officer I.T.A Nos. 131 & 135/Rjt/2018 A.Y. 2013-14 Page No Rishi Kiran Logistics P. Ltd. Vs. ACIT 16 to reopen the assessment beyond the period of four years. However, it is required to be noted that the Assessing Officer, while framing scrutiny assessment under Section 143 (3) of the Act, considered the claim in detail of the assessee under Section 80IA of the Act and only thereafter, considering the activities and functionalities of CFS, treated and considered CFS as Port itself. Therefore, after a detailed scrutiny and even after Assessing Officer and Additional Commissioner of Income-tax, Jamnagar personally verifying the activities/functionalities of the CFS, having treated CFS as an Inland Port, granted benefit under Section 80IA pf the Act. Therefore, even if communication dated 29th October 2005 by Jawaharlal Nehru Port Trust to the assessee would have no direct effect on the grant of benefit under Section 80IA of the Act, as on facts and considering the activities of CFS, the Assessing Officer has already held CFS as a Port itself. Under the circumstances and in the facts and circumstances of the case, it cannot be said that there was any suppression of material facts on the part of the assessee in not disclosing true and correct facts necessary for the assessment. Even whether CFS can be said to be an Inland Port or not is squarely covered by the decision of Delhi High Court in case of Container Corporation of India Ltd. (supra) and the Bombay High Court in the case of Continental Warehousing Corporation (Nhava Sheva) Ltd. (supra). After considering the very CBDT Circular No. 10 of 2005 dated 16th December 2005, the Delhi High Court and Bombay High Court have specifically observed and held that looking to the facilities provided by CFS, the 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.” 7.4. Further the Hon’ble Supreme Court of India [reported in 93 Taxmann.com 31] upheld the judgement of the Delhi High Court in the case of Container Corporation of India Ltd. Other High Courts namely Bombay High Court in the case of Continental Warehousing Corporation (Nhava Sheva) Ltd. and Madras High Court in the case of CIT -Vs- A.L. Logistic Pvt. Ltd. 374 ITR 609 (Mad) held that looking to the facilities provided by the Container Freight Stations, I.T.A Nos. 131 & 135/Rjt/2018 A.Y. 2013-14 Page No Rishi Kiran Logistics P. Ltd. Vs. ACIT 17 the CFS is an Inland Port as it carries out the 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 the eligible to claim deduction u/s.80IA[4] of the Act. Respectfully following the above judicial precedents, we are of the considered view that the assessee herein has complied with all the provisions of section 80IA(4)(i) of the Act and is eligible to claim deduction on storage Tank MDI of Rs.91,93,380/- and storage Tank EDA of Rs.1,13,24,514/- under the Act. Thus the Ground No.1 raised by the Revenue is hereby dismissed. 8. The next issue is disallowance of Rs.2,61,000/= on account of amortization of share issue expenses u/s.35D of the Act which was debited by the assessee its Profit and Loss account. But ld.A.O. disallowed the same on the ground that assessee company is a Private Limited company and has made expenses in relation to normal issue of shares not for public issue and expenses has been done after startup of business and are not related to expansion of undertaking or setting up of new unit. Ld Counsel submitted that this issue is held in favour of the assessee by the Co-ordinate Bench in assessee’s own case in ITA No.160/Rjt/2015 vide order dated 31.01.2019 wherein it was held as follows: “... ... 44. We have gone through the relevant record and impugned order. The above said expenses has been incurred before the commencement of business and same are in the capital in nature. In our considered opinion, assessee has rightly claimed its amortization. Therefore, we dismiss this [Revenue] ground of appeal by holding that above expenses were incurred for business purpose and same are allowable. ” I.T.A Nos. 131 & 135/Rjt/2018 A.Y. 2013-14 Page No Rishi Kiran Logistics P. Ltd. Vs. ACIT 18 8.1. Ld CIT DR could not produce before any contra decision therefore respectfully following Co-ordinate Bench decision of this Tribunal this ground no.1 raised by the assessee is allowed. 9. The next issue is disallowance u/s.14A of the Act. The assessee is in appeal on CIT[A] confirming the interest expenses of Rs.2,23,639/- u/s. 14A r.w.s. 8D of the Act. The Revenue is in appeal on CIT[A] deleting the addition of Rs.22,05,405/- made u/s.14A, even though the assessee was not able to show one to one relation from its bank account that the investment was made entirely from its own funds. 9.1. Ld Counsel for the assessee submitted that this issue is also held in favour of the assessee by deleting the addition made u/s.14A of Rs.22,05,405/- by the Co-ordinate Bench in assessee’s own case in ITA No.160/Rjt/2015 vide order dated 31.01.2019 wherein it was held as follows: “... 18. As we can see, assessee was having substantial interest free funds, it is fact that as per paper book interest free funds went into investment, which generated exempt income. Therefore, no disallowance can be made u/s. 14A as no interest bearing funds has been deployed to earn exempt income. And ld. A.O. had not demonstrated any nexus between the earning of exempt income for such income. Therefore, in our considered opinion, ld. CIT(A) has rightly granted relief to the assessee. 19. But disallowance made under Rule 8D(iii) of Rs. 2,23,639/- are confirmed by lower authorities because assessee has not been able to prove one to one nexus of interest free funds as well as investment in securities because such investment require bank charges, clerical work and time of directors. Therefore, we are of the opinion that ld. CIT(A) has rightly confirmed the addition of Rs. 2,23,639/-. I.T.A Nos. 131 & 135/Rjt/2018 A.Y. 2013-14 Page No Rishi Kiran Logistics P. Ltd. Vs. ACIT 19 9.2. Ld CIT DR submitted that the addition of Rs.2,23,639/= is to be upheld in favour of the department following Co-ordinate Bench decision of this Tribunal. Thus there is no change in facts and following assessee’s own case in Co-ordinate Bench decision this ground no.2 raised by the assessee and Revenue are hereby dismissed. 10. The next issue is sustaining disallowance of warehousing charges of Rs.51,76,800/- paid to the M/s.Shreeji Power and Insulators Pvt. Ltd. on the alleged ground that the same is excessive in nature as compared to payment made other parties. 10.1. Ld Counsel for the assessee submitted that this issue is also held in favour of the assessee by deleting the addition made u/s.14A of Rs.22,05,405/- by the Co-ordinate Bench in assessee’s own case in ITA No.160/Rjt/2015 vide order dated 31.01.2019 wherein it was held as follows: “... 22. On the other hand, assessee’s contention is that "excessive" would mean something more than what is being considered as normal having regard to the general market policy. In the given case, the respondent has paid to the unrelated third parties at the same rate at which it has paid to related party i.e. SPIPL. The respondent has paid to SPIPL @ Rs. 140/- KL per month which is the same rate at which the payment is made to third unrelated parties, (i) Kesar Terminals & Infrastructure Limited; (ii) Friends Salt Works & Allied Industries and; (iii) CRL Terminal Pvt. Ltd. In fact, the payment made to SPIPL is on lower side when compared to Friends Salt Works & Allied Industries as follows: I.T.A Nos. 131 & 135/Rjt/2018 A.Y. 2013-14 Page No Rishi Kiran Logistics P. Ltd. Vs. ACIT 20 Sr. No. Name & Address of the party Bill No. Bill date Rate per KL per month 1 Kesar Terminal & Infrastructure Ltd. DTC/10-11/ 347 17.11.2010 140/- 2 Friends Salt Works & Allied Industries FSWAI-TP- 384 08.05.201 165/- 3 CRL Terminal P. Ltd. 1985 30.10.2010 140/- 23. In support of its contention assessee has filed detailed documents before the lower authorities when matter went before the ld. CIT(A), he held that assessee has not made excessive payment to the related party. 24. As we can see, that payment made to persons other than persons covered u/s.40A(2)(b) were comparable and interalia payment to the persons covered u/s.40A(2)(b) was not excessive either in comparison to the other independent parties as well as to the market rate which can assumed as to nearer to the rates at which the said third parties are being paid. Therefore, in our considered opinion, ld. CIT(A) has rightly granted part relief to the assessee. 10.2. Ld CIT DR could not produce before any contra decision therefore respectfully following Co-ordinate Bench decision of this Tribunal this ground no.3 raised by the assessee is allowed. 11. The next issue by Revenue is the Ld.CIT(A) erred in deleting the addition of Rs.24,16,316/- made by the AO on account of disallowance in connection with the windmills. 11.1. Ld Counsel for the assessee submitted that this issue is also held in favour of the assessee by following Jurisdictional High Court Judgement in the case of Parry Engineering & Electronics Pvt Ltd, the Co-ordinate Bench in assessee’s own case in ITA No.160/Rjt/2015 held as follows: I.T.A Nos. 131 & 135/Rjt/2018 A.Y. 2013-14 Page No Rishi Kiran Logistics P. Ltd. Vs. ACIT 21 “... 29. In support of its contention, assessee also cited a judgment of Hon’ble Gujarat High Court in the case of CIT vs. Parry Engineering and Electronics Pvt. Ltd. in Tax Appeal No. 604/2012 wherein it is held that windmill are entitled for depreciation and decided the matter on favour of the assessee and operative para of Hon’ble Gujarat High Court order is reproduced: 5. We are of the opinion that the approach of both the authorities is perfectly justified. Windmill would require a scientifically designed machinery in order to harness the wind energy to the maximum potential. Such device has to be fitted and mounted on a civil construction, equipped with electric fittings in order to transmit the electricity so generated. Such civil structure and electric fittings, therefore, it can be well imagined, would be highly specialized. Thus, such civil construction and electric fitting would have no use other than for the purpose of functioning of the windmill. On the other hand, it can be easily imagined that windmill cannot function without appropriate installation and electrification. In other words, the installation of windmill and the civil structure and the electric fittings are so closely interconnected and linked as to form the common plant. As already noted, the legislature has provided for higher rate of depreciation of 80 per cent on renewable energy devises including windmill and any specially designed devise, which runs on windmill. The civil structure and the electric fitting, equipment are part and parcel of the windmill and cannot be separated from the same. The assessee s claim for higher depreciation on such investment was, therefore, rightly allowed. 30. Therefore respectfully following the order of Jurisdictional High Court, we upheld the order of ld. CIT(A) and dismissed the ground of Revenue. “ 11.2. Ld CIT DR could not produce before us any contra decision therefore respectfully following jurisdictional high court judgement this ground no.3 raised by the Revenue is hereby dismissed. 12. The next issue by the assessee is the ld. CIT(A) erred on facts as also in law in confirming addition of Rs.5,38,145/- u/s. 41(1)(a) of the Act on the alleged ground of cessation of liabilities. Ld Counsel I.T.A Nos. 131 & 135/Rjt/2018 A.Y. 2013-14 Page No Rishi Kiran Logistics P. Ltd. Vs. ACIT 22 for the assessee fairly submitted that this issue is held against the assessee by the Co-ordinate Bench in assessee’s own case in ITA No.160/Rjt/2015 vide order dated 31.01.2019 wherein it was held as follows: “... 55. But before lower authorities and before us, assessee could not submit any explanation that why these amounts had been shown outstanding for such a long period and what steps have been taken by the assessee to recover these amounts and even before us assessee could not explain about the list in details. Therefore, we dismiss this ground of appeal by the assessee. 12.1. Respectfully following Co-ordinate Bench decision of this Tribunal this ground no.4 raised by the assessee is dismissed. 13. In the combined result both the Assessee and Revenue are partly allowed. Order pronounced in the open court on 28-03-2024 Sd/- Sd/- (WASEEM AHMED) (T.R. SENTHIL KUMAR) ACCOUNTANT MEMBER True Copy JUDICIAL MEMBER Ahmedabad : Dated 28/03/2024 आदेश कȧ ĤǓतͧलͪप अĒेͪषत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से, mउप/सहायक पंजीकार आयकर अपीलȣय अͬधकरण, राजकोट