DCIT, CHENNAI V. A L Logistics Pvt Ltd., CHENNAI

ITA 1412/CHNY/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 96510 (ITAT-CHENNAI)
• Duration Of Justice: 6 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-12-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 01-12-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 09-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH IRS
• Assessee Lawyers: K BALASUBR AMANIAN
• Section: 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI , . ! , '!# BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER ./ I.T.A.NO.1412/MDS/2015 ' $ %$ / ASSESSMENT YEAR : 2010-2011 THE DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE -1(1) CHENNAI VS. M/S. AL LOGISTICS P. LTD NO.5, GNT ROAD, MOOLAKKADAI, CHENNAI 600 110. [ PAN AAECA 5279L] ( / APPELLANT) ( /RESPONDENT) &' ( ) / APPELLANT BY : SHRI. A.V. SREEKANTH, IRS, JCIT, *+&' ( ) /RESPONDENT BY : SHRI. K. BALASUBRAMANIAN, ADVOCATE ( , / DATE OF HEARING : 01-12--2015 -.% ( , / DATE OF PRONOUNCEMENT : 16-12-2015 / O R D E R PER G. PAVAN KUMAR, JUDICIAL MEMBER : THE REVENUE HAS FILED AN APPEAL AGAINST ORDER O F COMMISSIONER OF INCOME TAX (APPEALS)-1, CHENNAI IN ITA NO.411/13- ITA NO.1412/MDS/2015 :- 2 -: 14/A-I (NEW NO. ITA 220/CIT(A)-1/2013-14) DATED 18. 02.2015 PASSED U/SEC. 143(3) AND 250 OF THE INCOME TAX ACT, 1961. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APP EAL:- 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) HAS ERRED IN DIRECTING THE ASSESSING OFFICER TO ALL OW DEDUCTION U/S.80IA(4) OF THE I.T. ACT TO THE TUNE O F 3,02,65,882/-. 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) ERRED IN ALLOWING DEDUCTION U/S.80IA(4) TO THE ASSE SSEE WHEN THE ASSESSEE HAD NOT DEVELOPED ANY INFRASTRUCT URE FACILITIES AS IT WAS ONLY A CUSTODIAN FOR THE MOVEM ENT AND HANDLING OF ALL CONTAINERIZED IMPORT/EXPORT CONSIGN MENT IN CONTAINER FREIGHT STATIONS. 4. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) OUGHT TO HAVE APPRECIATED THE AMENDMENT TO SECTION 80IA(4) WHEREBY EXPLANATION WAS INTRODUCED WITH EFF ECT FROM 04.04.2002 WHICH HAD OMITTED THE WORD ANY OT HER PUBLIC FACILITY OF SIMILAR NATURE THEREBY WRONGLY ALLOWING DEDUCTION U/S.80IA(4) ON CONTAINER FREIGHT STATION . 3. THE BRIEF FACTS OF THE CASE IS THAT THE ASSESSEE CO MPANY IS A LICENCE HOLDER OF WAREHOUSING COMPLEX CONSISTING OF BUILDINGS, GODOWNS, WEIGH BRIDGE AND OTHER EQUIPMENTS FOR THE PURPOSE OF MAINTAINING A CONTAINER FREIGHT STATION (CFS) AND T HE RETURN WAS FILED FOR THE ABOVE ASSESSMENT YEAR ON 22.09.2010 DECLAR ING A TOTAL INCOME OF @17,83,220/-. AFTER CLAIMING DEDUCTION U/S.80IA (4) FOR @3,02,73,659/-, THE RETURN WAS PROCESSED U/S.143(1) AND SELECTED FOR SCRUTINY THROUGH CASS AND ACCORDINGLY NOTICE U/S.14 3(2) OF THE ACT WAS ISSUED. IN RESPONSE TO THE NOTICE, THE AUTHORI SED REPRESENTATIVE ITA NO.1412/MDS/2015 :- 3 -: FOR ASSESSEE APPEARED FROM TIME TO TIME, FILED EXPL ANATIONS AND SUBMISSIONS IN RESPECT OF AUDITED ACCOUNTS AND ALS O CLAIMED DEDUCTION U/S.80IA OF THE ACT. BUT THE LD. ASSESSI NG OFFICER DISALLOWED THE CLAIM ON THE GROUND THAT THE ASSESSEE COMPANY F ACILITY CANNOT BE DEFINED AS INFRASTRUCTURE FACILITY OR CONSIDERED IT AS A FIT AS A PORT OR INLAND PORT AS PER THE PROVISIONS OF THE ACT AND DISALLOWED THE DEDUCTION AND ASSESSED TOTAL INCOME AT @3,20,49,10 2/-. AGGRIEVED, BY THE ORDER OF THE ASSESSING OFFICER THE ASSESSEE FILED AN APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS)-1, CHENNAI. 4. THE REVENUE RAISED THE GROUNDS THAT THE COMMISSION ER OF INCOME TAX (APPEALS) ERRED IN HOLDING THAT THE ASSE SSEE HAS COMPLIED WITH THE CONDITIONS U/S.80IA(4)(I) OF THE ACT AND INFRASTRUCTURE FACILITY IS ELIGIBLE TO CLAIM DEDUCTION AND FULFILS ALL THE CONDITIONS SET OUT IN SEC. 80IA4(I) (A)(B) & (C) OF THE ACT. 5. WE HAVE HEARD BOTH THE PARTIES. IN OUR OPINION, IDE NTICAL ISSUE WAS ALREADY DECIDED IN ASSESSESS OWN CASE IN ITA NO. NO.469/MDS/2014, DATED 14 TH JULY, 2014 WHEREIN HELD AS UNDER:- 5. BOTH SIDES HEARD. WE HAVE ALSO PERUSED THE O RDERS OF THE AUTHORITIES AND THE DECISIONS ON WHICH THE LD.COUNS EL FOR THE ASSESSEE HAS PLACED RELIANCE. A CLOSE READING OF T HE PROVISIONS OF SECTION 80IA(4) MAKES IT CLEAR THAT, FOR CLAIMING D EDUCTION U/S.80IA(4)(I), FOLLOWING CONDITIONS HAVE TO BE SAT ISFIED: ITA NO.1412/MDS/2015 :- 4 -: I. THE UNDERTAKING SHOULD CARRY ON THE BUSINESS OF (A) DEVELOPING OR (B) MAINTAINING AND OPERATING OR (C) DEVELOPING, MAINTAINING AND OPERATING ANY INFRASTRUCTURE FACILI TY; II. THE UNDERTAKING SHOULD BE OWNED BY AN INDIAN CO MPANY; III. THERE SHOULD BE AN AGREEMENT WITH THE CENTRAL GOVERNMENT; AND IV. THE UNDERTAKING SHOULD START OPERATIONS ON OR A FTER 1 ST APRIL, 1995; IN THE PRESENT CASE, THE BENEFIT OF SECTION 80IA(4) (I) HAS BEEN DENIED TO THE ASSESSEE ON TWO GROUNDS: A. THAT THE ASSESSEE IS NOT PROVIDING INFRASTRUCTUR E FACILITY AS ENVISAGED UNDER THE ACT; AND B. THAT THE ASSESSEE HAS NOT ENTERED INTO AN AGREEM ENT WITH THE GOVERNMENT OR ANY STATUTORY AUTHORITY AS PROVIDED U NDER THE PROVISIONS OF SECTION 80IA(4)(I)(B); THE TERM INFRASTRUCTURE FACILITY HAS BEEN DEFINED IN EXPLANATION TO SECTION 80IA(4)(I) AS UNDER : EXPLANATION FOR THE PURPOSES OF THIS CLAUSE INF RASTRUCTURE FACILITY MEANS (A) A ROAD INCLUDING TOLL ROAD, A BRIDGE OR A RAIL SYSTEM; (B) A HIGHWAY PROJECT INCLUDING HOUSING OR OTHER AC TIVITIES BEING AN INTEGRAL PART OF THE HIGHWAY PROJECT; (C) A WATER SUPPLY PROJECT, WATER TREATMENT SYSTEM, IRRIGATION PROJECT, SANITATION AND SEWERAGE SYSTEM OR SOLID WA STE MANAGEMENT SYSTEM; (D) A PORT, AIRPORT, INLAND WATERWAY [INLAND PORT O R NAVIGATIONAL CHANNEL IN THE SEA]. 6. A PERUSAL OF EXPLANATION DEFINING INFRASTRUCTUR E FACILITY SHOWS THAT CLAUSE (D) INCLUDES INLAND PORT. THE HONBLE DELHI HIGH COURT IN THE CASE OF CONTAINER CORPORATION OF INDIA LTD., VS . ACIT (SUPRA) HAS HELD THAT AN INLAND CONTAINER DEPOT IS ACTUALLY AN INLAND PORT AND THE CFSS ARE PART OF THE PORT. THE HON'BLE HIGH COURT IN THE AFORESAID CASE ALSO REFERRED TO THE COMMUNICATION FROM DEPART MENT OF REVENUE, CENTRAL BOARD OF EXCISE AND CUSTOMS, MINIS TRY OF FINANCE WHEREIN CLARIFICATION REGARDING INLAND PORT WAS G IVEN. IT WAS CLARIFIED: CONTAINER FREIGHT STATIONS (CFSS) ARE CUSTOMS ARE A ATTACHED TO A PORT. THE WORK RELATED TO CUSTOMS IS PERFORMED AT THESE INLAND CONTAINER DEPOTS/CONTAINER FREIGHT STA TIONS. ITA NO.1412/MDS/2015 :- 5 -: ACCORDINGLY, INLAND CONTAINER DEPOTS AND CONTAINER FREIGHT STATIONS (I.E., CUSTOMS AREA PORT) ARE INLAND PORTS . ANOTHER LETTER REFERRED TO IN THE ORDER OF THE HON' BLE HIGH COURT IS FROM THE DEPARTMENT OF COMMERCE, INFRASTRUCTURE DIVISION , MINISTRY OF COMMERCE AND INDUSTRY. IN THE SAID LETTER THE STAT US OF CFS WAS CLARIFIED. THE RELEVANT EXTRACT IS REPRODUCED AS U NDER: 3. THE MATTER HAS BEEN EXAMINED IN THIS DEPARTMENT AND IT IS CLARIFIED THAT INLAND CONTAINER DEPOTS/CONTAINER FREIGHT STATIONS ARE INLAND PORTS. THE CENTRAL BOARD OF DIRECT TAXE S MAY ACCORDINGLY TAKE DECISION FOR THE PURPOSE OF EXEMPT ION OF INLAND CONTAINER DEPOTS/CONTAINER FREIGHT STATIONS OF CONC OR OR A PRIVATE PARTY UNDER SECTION 80-IA OF INCOME-TAX ACT. THE VIEW OF THE HON'BLE DELHI HIGH COURT HAS BEEN F OLLOWED BY THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF ALL CA RGO GLOBAL LOGISTICS LTD., VS. DCIT (SUPRA). THE RELEVANT EXTRACT OF TH E ORDER OF THE SPECIAL BENCH IS RE-PRODUCED HEREIN BELOW: 66. WE FIND THAT THE SOLITARY DECISION IN THIS CAS E BY ANY HIGH COURT IS IN THE CASE OF CONTAINER CORPORATION OF IN DIA LTD.. IN THIS CASE IT HAS BEEN HELD THAT AN ICD IS NOT A PORT BUT IT IS AN INLAND PORT. THE CASE OF CFS IS SIMILAR SITUATED IN THE S ENSE THAT BOTH CARRY OUT SIMILAR FUNCTIONS, I.E., WARE HOUSING, CU STOMS CLEARANCE, AND TRANSPORT OF GOODS FROM ITS LOCATION TO THE SEA PORTS AND VICE- VERSA BY RAILWAY OR BY TRUCKS IN CONTAINERS. THUS, THE ISSUE IS NO LONGER RES-INTEGRA. RESPECTFULLY FOLLOWING THIS DE CISION, IT IS HELD THAT A CFS IS AN INLAND PORT WHOSE INCOME IS ENTITL ED TO DEDUCTION U/S.80IA(4). QUESTION NO.2 IS ANSWERED ACCORDINGLY . THUS, IN VIEW OF THE ABOVE DECISIONS OF THE HON'BLE DELHI HIGH COURT AND THE SPECIAL BENCH OF THE TRIBUNAL, IT IS UNAMBI GUOUSLY CLEAR THAT CFS IS AN INFRASTRUCTURE FACILITY. HENCE, THE FIRS T ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE. 7. NOW, WE PROCEED TO THE NEXT ISSUE, WHETHER IN TH E ABSENCE OF SPECIFIC AGREEMENT WITH THE CENTRAL/STATE GOVERNMEN T, LOCAL AUTHORITY OR STATUTORY BODY, THE ASSESSEE IS ENTITLED TO CLAI M THE BENEFIT OF SECTION 80IA(4)(I)? THE ASSESSEE HAD MADE AN APPLIC ATION FOR SETTING UP OF CFS AT HALDIA. IN RESPONSE TO THE APPLICATIO N OF ASSESSEE, THE DEPARTMENT OF COMMERCE, INFRASTRUCTURE DIVISION, MI NISTRY OF COMMERCE AND INDUSTRY APPROVED THE PROPOSAL OF THE ASSESSEE FOR SETTING UP OF CFS AT HALDIA FOR HANDLING IMPORT/EXP ORT OF CARGO SUBJECT TO EXECUTION OF CERTAIN DOCUMENTS AND COMPLIANCE OF OTHER TERMS AND CONDITIONS AS STATED IN THE LETTER. THE LD.COUNSEL FOR THE ASSESSEE HAS PLACED ON RECORD LETTER DT.27-05-2003 FROM THE MINI STRY OF COMMERCE ITA NO.1412/MDS/2015 :- 6 -: AND INDUSTRY PERMITTING THE ASSESSEE TO SET UP CFS AT HALDIA. THE CONTENTS OF THE LETTER ARE REPRODUCED HEREIN BELOW: NO.16/6/2003-INFRA-I GOVERNMENT OF INDIA MINISTRY OF COMMERCE & INDUSTRY DEPTT.OF COMMERCE INFRASTRUCTURE DIVISION ****** UDYOGBHAWAN, NEW DELHI, DATED THE 27 TH MAY,2003. TO THE DIRECTOR, M/S A L LOGISTICS PVT. LTD., CHENNAI. SUBJECT: SETTING UP OF AN CFS AT HALDIA . SIR, I AM DIRECTED TO REFER TO YOUR APPLICATION DATED 8. 2.2003 ON THE ABOVE SUBJECT AND TO SAY THAT THE GOVERNMENT HAS AP PROVED YOUR PROPOSAL FOR SETTING UP OF AN CONTAINER FREIGHT STA TION AT HALDIA FOR HANDLING IMPORT AND EXPORT CARGO. THE APPROVAL IS SUBJECT TO THE FOLLOWING TERMS AND CONDITIONS:- A) THE LETTER OF INTENT HOLDER SHALL TAKE ADEQUATE STEPS TO CREATE PROPER INFRASTRUCTURE KEEPING IN VIEW THE IN DICATIVE NORMS GIVEN IN PARTS A& B OF THE GUIDELINES FOR SE TTING UP INLAND CONTAINER DEPOTS / CONTAINER FREIGHT STA TIONS (ICDS/CFS) WITHIN A PERIOD OF ONE YEAR FROM THE DA TE OF ISSUE OF THIS LETTER. B) NECESSARY BOND AND GUARANTEES, AS REQUIRED, WOUL D BE EXECUTED WITH THE CONCERNED COMMISSIONER OF CUSTOMS AND CENTRAL EXCISE . C) THE APPROVAL WOULD BE SUBJECT TO CANCELLATION IN THE EVENT OF VIOLATION OF THE CUSTOMS AND OTHER LAWS OF THE LAND AND RULES. D) A QUARTERLY PROGRESS REPORT OF THE IMPLEMENTATIO N SHALL BE SENT TO THE MINISTRY OF COMMERCE. ITA NO.1412/MDS/2015 :- 7 -: E) THE WORKING OF THE CFS WILL BE OPEN TO REVIEW B Y THE INTER MINISTERIAL COMMITTEE. H) FORMALITIES IN RESPECT OF ACQUISITION/POSSESSION OF THE LAND SHALL BE COMPLETED WITHIN 60 DAYS AND INTIMATED TO THE M/O COMMERCE, FAILING WHICH THE APPROVAL GRANTED WOULD BE AUTOMATICALLY CANCELLED. 2. THE FACILITY TO BE SET UP SHALL BE FULL COMPUTER IZED, WITH EDI COMPATIBILITY AND A MINIMUM COMPLEMENT OF EQUIPMENT AND ACCESSORIES AS NECESSARY SHALL BE MADE AVAILABLE AT THE FACILITY. THE INDICATIVE LIST OF EQUIPMENT/ACCESSORIES CONSIDERED NECESSARY IS ANNEXED. THE STATUS REGARDING CONFIRMATION OF THE INSTALLATION/ AVAILABILITY OF THE ITEMS SHALL BE FURNISHED TO THE APPROPRIATE AUTHORITIES TO FACILITATE ISSUE OF REQUISITE NOTIFI CATION. 3. PLEASE ACKNOWLEDGE RECEIPT OF THIS LETTER. YOURS FAITHFULLY, SD/- (N.G.BISWAS) DIRECTOR A PERUSAL OF CLAUSE B OF THE ABOVE LETTER SHOWS T HAT THE ASSESSEE WAS REQUIRED TO EXECUTE NECESSARY BOND AND GUARANTE ES WITH THE CONCERNED COMMISSIONER OF CUSTOMS AND CENTRAL EXCIS E. IT WAS ONLY ON THE COMPLIANCE OF ALL THE TERMS AND CONDITIONS M ENTIONED IN THE AFORESAID LETTER THAT THE ASSESSEE WAS ALLOWED TO C ARRY ON THE SERVICES OF CFS. THE ASSESSEE ON THE COMPLIANCE OF THE TERM S AND CONDITIONS AS MENTIONED IN THE LETTER, WAS NOTIFIED AS CFS COM PLEX FOR THE PURPOSE OF RECEIVING, STORING, IMPORT CONTAINERS, RECEIVING/CONSOLIDATING EXPORT CARGO ETC. VIDE PUBL IC NOTICE DT.10-11- 2013. THE PUBLIC NOTICES WERE ISSUED BY THE OFFICE OF THE COMMISSIONER OF CUSTOMS (PORT) KOLKATTA. 8. THUS, IT IS EVIDENT THAT THE PROPOSAL OF THE ASS ESSEE WAS ACCEPTED BY THE GOVERNMENT ON CERTAIN CONDITIONS WH ICH WERE DULY COMPLIED WITH BY THE ASSESSEE. THERE MAY NOT BE AN Y SPECIFIC AGREEMENT, BUT THE SEQUENCES OF EVENTS CLEARLY SHOW THAT THE ASSESSEE IS PROVIDING CFS FACILITY IN ACCORDANCE WI TH THE CONDITIONS LAID DOWN BY THE GOVERNMENT. IN SUCH CIRCUMSTANCES THERE IS NO NEED TO INSIST FOR THE SPECIFIC EXECUTION OF AGREEM ENTS. THE CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CASE O F UNITED LINER AGENCIES OF INDIA (PRIVATE) LTD., VS. JOINT CIT (OS D) IN ITA NOS.273 & 275/MUM/2013 (SUPRA), HAS TAKEN A SIMILAR VIEW, WH ERE NO SPECIFIC ITA NO.1412/MDS/2015 :- 8 -: AGREEMENT WITH THE STATE GOVERNMENT WAS ENTERED INT O BUT FROM THE APPROVALS GRANTED TO THE ASSESSEE IT WAS INFERRED T HAT ASSESSEE SHOULD BE DEEMED TO HAVE ENTERED INTO AN AGREEMENT WITH THE STATE GOVERNMENT. THUS, WE ARE OF THE CONSIDERED VIEW TH AT THE ASSESSEE HAS COMPLIED WITH ALL THE PROVISIONS OF SECTION 80I A(4)(I) AND IS ELIGIBLE TO CLAIM DEDUCTION UNDER THE SAID SECTION. THE IMP UGNED ORDER IS SET ASIDE. THE APPEAL OF THE ASSESSEE IS ALLOWED . IN VIEW OF THE ABOVE ORDER OF THE TRIBUNAL IN ASSES SEES OWN CASE, WE ARE INCLINED TO DISMISS THE APPEAL OF THE REVENUE. 07. IN THE RESULT, THE APPEAL OF THE REVENUE IN IT A NO.1412/MDS/2015 IS DISMISSED. ORDER PRONOUNCED ON WEDNESDAY, THE 16TH DAY OF D ECEMBER, 2015, AT CHENNAI. SD/- SD/- ( ) (CHANDRA POOJARI) / ACCOUNTANT MEMBER ( . ! ) (G. PAVAN KUMAR) /JUDICIAL MEMBER / CHENNAI / / DATED:16.12.2015 KV 0 ( *',23 43%, / COPY TO: 1 . &' / APPELLANT 3. 5, () / CIT(A) 5. 389 *',' / DR 2. *+&' / RESPONDENT 4. 5, / CIT 6. 9:$ ; / GF