M/s Bothra Shipping Services Pvt. Ltd., Kolkata V. Addl./Joint/Dy./Asstt. Commissioner/ITO, National e-assessment Centre, Delhi

ITA 175/KOL/2021

AI Insights

Bothra Shipping Services Pvt. Ltd. appealed against the orders of the Dispute Resolution Panel (DRP) which affirmed the disallowance of deduction claimed under section 80IA(4) for the Assessment Years 2015-16 and 2016-17. The primary contention was whether the agreement with KSPL, a nodal agency for the government, satisfied the statutory requirement of having an agreement with the government or a statutory body for the development of infrastructure facilities. The Tribunal examined the agreements and certificates provided by the government and KSPL, and considered relevant CBDT circulars and judicial precedents, ultimately deciding in favor of the assessee.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 132516 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 11 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-04-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: C
• Next Hearing Date: 07-02-2023
• Assessment Year: 2016-2017
• Appeal Filed On: 10-05-2021
• Other Referred Cases: DCIT vs. Belair Logistics, CIT vs. Ranjit Projects Pvt. Ltd., United Liner Agencies of India (P) Ltd vs. JCIT (OSD), CIT vs. A.L. Logistics Pvt. Ltd.
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: TDS; Set aside
• Section: 80IA; 274; 13

Judgement Text

| आयकर अपीलȣय अͬधकरण Ûयायपीठ, कोलकाता | IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, KOLKATA BEFORE SHRI RAJPAL YADAV, HON’BLE VICE PRESIDENT & SHRI GIRISH AGRAWAL, HON’BLE ACCOUNTANT MEMBER I.T.A. No. 2324/Kol/2019 Assessment Year: 2015-16 Bothra Shipping Services Pvt. Ltd. Sagar Estate, 2 nd Floor Room No. 10, 2 Clive Ghat Street Kolkata - 700001 PAN: AAECB6711E Vs DCIT, Circle-9(1) Kolkata I.T.A. No. 175/Kol/2021 Assessment Year: 2016-17 Bothra Shipping Services Pvt. Ltd. Sagar Estate, 2 nd Floor Room No. 10, 2 Clive Ghat Street Kolkata - 700001 PAN: AAECB6711E Vs Additional/Joint/Deput y/ Assistant Commissioner of Income Tax/Income Tax Officer, National e- Assessment Centre, Delhi अपीलाथȸ/ (Appellant) Ĥ× यथȸ/ (Respondent) Assessee by: Shri Naresh Jain, Advocate Revenue by: Shri G. Hukuga Sema, CIT, D/R स ु नवाई कȧ तारȣख/Date of Hearing : 18/02/2023 घोषणा कȧ तारȣख /Date of Pronouncement: 25/04/2023 आदेश/O R D E R PER GIRISH AGRAWAL, ACCOUNTANT MEMBER: These two appeals filed by the assessee are against the directions of the Dispute Resolution Panel -2 (hereinafter the ‘DRP’) u/s. 144C(5) of the Income-tax Act, 1961 (hereinafter referred to as the “Act”) vide separate orders dt. 05/08/2019 for the Assessment Year 2015-16 and dt. 13/11/2020 for the Assessment Year 2016-17; respectively. 2. Grounds of appeal raised for both the assessment years are reproduced as under:- ITA No. 2324/Kol/2019 AY 2015-16 ITA No. 175/Kol/2021 AY 2016-17 Bothra Shipping Services Pvt. Ltd. 2 Grounds of appeal for Assessment Year 2015-16 “1. That on the facts and circumstances of the case and in law, the Ld. DRP erred in affirming the action of Ld. AO in disallowing deduction claimed u/s 801A (4) of the Act. 2. That on the facts and circumstances of the case and in law, the Ld. DRP erred in affirming the action of Ld. AO in denying the benefit u/s 80- IA(4) of the Act by observing that the assessee does not have any agreement with specified authority without appreciating the fact that the agreement entered into by assessee with KSPL was as per the terms of the parent Concession Agreement between KSPL & Government of AP, and with the knowledge of the Gov. of Andhra Pradesh, as such, the assessee could not be denied deduction u/s 80-IA(4). 3. That on the facts and circumstances of the case and in law, the Ld. DRP erred in affirming the action of Ld. AO in not considering the fact that the assessee had produced the Port Certificate granted by the specified authority which certified that the infrastructure facility developed by the assessee is an integral part of the Port and that the Port Certificate in itself would amount to agreement with government, thereby satisfying the condition prescribed in clause(b) of Section 801A(4) (i). 4. That on the facts and circumstances of the case and in law, the Ld. DRP erred in affirming the action of Ld. AO in denying the benefit u/s 80- IA(4) of the Act without appreciating the fact that the appellant's case is squarely covered by the order of the Hon'ble Hyderabad Tribunal in the case of DCIT vs. Belair Logistics [2015 (5) TMI 387-ITAT Hyderabad]. 5. Without prejudice to the above, for the purposes of deduction under section 801A (4)(i), Kakinada Sea Port Limited should be considered to be a statutory authority as it is performing statutory functions on behalf of the Government of Andhra Pradesh, and as such, an agreement entered into by the Appellant with KSPL should be treated as sufficient compliance of the conditions of Section 801A (4). 6. Without prejudice to the above, on the facts and circumstances of the case and in law, the Ld. DRP erred in affirming the action of the Ld. Assessing Officer in denying the claim of deduction in terms of the first proviso to section 801A(4)(i) by observing that the conditions specified therein were not fulfilled. 7. That on the facts and circumstances of the case and in law, the Ld. DRP erred in affirming the action of Ld. AO in denying the benefit u/s 80- IA(4) of the Act, without appreciating the fact that the Appellant had duly produced a Port Certificate granted by the Concerned Port Authority that the infrastructural facility is a part of the port within the meaning of Section 80- IA(4) of the Act read with Circular No. 10/2005, and as such, is eligible for deduction. 8. Without prejudice to the above, that on the facts and circumstances of the case and in law, the Ld. DRP erred in affirming the action of Ld. AO in denying the benefit u/s 80-IA(4) of the Act, without appreciating that condition specified in clause (b) of 801A(4)(i) is not mandatory in nature, as held by the Hon'ble Bombay High Court in the case of United Liner Agencies ITA No. 2324/Kol/2019 AY 2015-16 ITA No. 175/Kol/2021 AY 2016-17 Bothra Shipping Services Pvt. Ltd. 3 of India (P) Ltd [ITA No. 2462 of 2013], and as such, the appellant is eligible for deduction under Section 80-IA(4) of the Act read with the Agreement entered into with M/s. KSPL. 9. Without prejudice to the above, on the facts and circumstances of the case and in law, the Ld. DRP erred in denying claim of deduction in terms of the first proviso to section 801A(4)(i) by observing that there is no condition to transfer the infrastructural facility to the GoAP or Specified Authority without considering the fact that this condition has been deleted by the Finance Act, 2001. 10. That on the facts and circumstances of the case and in law, the Ld. DRP erred in affirming the action of Ld. AO in disallowing interest of Rs. 5,85,392/- on late payments of TDS u/s 40 of the Act. 11. Your appellant craves leave to add to, amend or alter or delete any of the above grounds of appeal.” Grounds of appeal for Assessment Year 2016-17 “1. That on the facts and circumstances of the case and in law, the Ld. DRP erred in affirming the action of Ld. AO in disallowing deduction claimed u/s 801A(4) of the Act. 2. That on the facts and circumstances of the case and in law, the Ld. DRP erred in affirming the action of Ld. AO in denying the benefit u/s 80- IA(4) of the Act by observing that the assessee does not have any agreement with specified authority without appreciating the fact that the agreement entered into by assessee with KSPL was as per the terms of the parent Concession Agreement between KSPL & Government of AP, and with the knowledge of the Gov. of Andhra Pradesh, as such, the assessee could not be denied deduction u/s 80-IA(4). 3. That on the facts and circumstances of the case and in law, the Ld. DRP erred in affirming the action of Ld. AO in not considering the fact that the assessee had produced the Port Certificate granted by the specified authority which certified the infrastructure facility developed by the assessee is an integral part of the Port and that the Port Certificate in itself would amount to agreement with government, thereby satisfying the condition prescribed in clause(b) of Section 801A(4)(i). 4. That on the facts and circumstances of the case and in law, the Ld. DRP erred in affirming the action of Ld. AO in denying the benefit u/s 80- IA(4) of the Act without appreciating the fact that the appellant's case is squarely covered by the order of the Hon'ble Hyderabad Tribunal in the case of DCIT vs. Belair Logistics [2015 (5) TMI 387-ITAT Hyderabad]. 5. Without prejudice to the above, for the purposes of deduction under section 80IA(4)(i), Kakinada Sea Port Limited should be considered to be a statutory authority as it is performing statutory functions on behalf of the Government of Andhra Pradesh, and as such, an agreement entered into by ITA No. 2324/Kol/2019 AY 2015-16 ITA No. 175/Kol/2021 AY 2016-17 Bothra Shipping Services Pvt. Ltd. 4 the Appellant with KSPL should be treated as sufficient compliance of the conditions of Section 80IA(4). 6. Without prejudice to the above, on the facts and circumstances of the case and in law, the Ld. DRP erred in affirming the action of the Ld. AO in denying the claim of deduction in terms of the first proviso to section 80IA(4)(i) by observing that the conditions specified therein were not fulfilled. 7. That on the facts and circumstances of the case and in law, the Ld. DRP erred in affirming the action of Ld. AO in denying the benefit u/s 80- IA(4) of the Act, without appreciating the fact that the Appellant had duly produced a Port Certificate granted by the Concerned Port Authority that the infrastructural facility is a part of the port within the meaning of Section 80- IA(4) of the Act read with Circular No. 10/2005, and as such, is eligible for deduction. 8. Without prejudice to the above, that on the facts and circumstances of the case and in law, the Ld. DRP erred in affirming the action of Ld. AO in denying the benefit u/s 80-IA(4) of the Act, without appreciating that condition specified in clause (b) of 80IA(4)(i) is not mandatory in nature, as held by the Hon'ble Bombay High Court in the case of United Liner Agencies of India (P) Ltd [ITA No. 2462 of 2013], and as such, the appellant is eligible for deduction under Section 80-IA(4) of the Act read with the Agreement entered into with M/s. KSPL. 9. Without prejudice to the above, on the facts and circumstances of the case and in law, the Ld. DRP erred in denying claim of deduction in terms of the first proviso to section 801A(4)(i) by observing that there is no condition to transfer the infrastructural facility to the GoAP or Specified Authority without considering the fact that this condition has been deleted by the Finance Act, 2001. 10. That on the facts and circumstances of the case and in law, the Ld. DRP erred in affirming the action of Ld. AO in disallowing interest of Rs. 24,43,834/-on late payments of TDS u/s 40 of the Act. 11. Without prejudice to the above, on the facts and circumstances of the case and in law, the Ld. DRP erred in affirming the action of Ld. Assessing Officer without appreciating the facts that the interest on late payment of TDS is Rs. 1,96,354/- instead of Rs. 24,43,834/-. Therefore, if any, disallowance is made the same should be restricted to Rs. 1,96,354/-. 12. That on the facts and circumstances of the case and in law, the Ld. DRP erred in affirming the action of the Ld. AO in disallowing interest of Rs. 7,96,317/- on late payments of Income Tax u/s 40 of the Act. 13. That on the facts and circumstances of the case and in law, the Ld. DRP erred in affirming the action of the Ld. AO without appreciating the fact that the Ld. AO has grossly erred in making reference to TPO by invoking condition (b) of para 3.3 of Circular 3/2016 without considering the fact that the DRP is not appellate authority and thus condition is not satisfied for ITA No. 2324/Kol/2019 AY 2015-16 ITA No. 175/Kol/2021 AY 2016-17 Bothra Shipping Services Pvt. Ltd. 5 making reference to TPO. Hence, the reference to TPO is bad in law and consequently, the entire consequential transfer pricing and assessment proceeding is bad-in-law, time-barred and liable to be quashed. 14. Your appellant craves leave to add to, amend or alter or delete any of the above grounds of appeal.” 3. In the two appeals, there are common grounds of appeal relating to disallowance of deduction claimed u/s 80IA(4) of the Act. For both the Assessment Years, grounds in this respect are from Ground Nos. 1 to 9. For disposing off these appeals, we will take the facts on the basis of Assessment Year 2015-16 and the findings will apply mutatis mutandis for the appeal for Assessment Year 2016-17. All other grounds for both the Assessment Years, are not pressed by assessee for which relevant documents is placed on record. Accordingly, Ground No. 10 for Assessment Year 2015-16 and Ground Nos. 10 to 13 for Assessment Year 2016-17, are dismissed as not pressed. 4. In respect of the issue relating to the claim of deduction u/s 80IA(4) of the Act, we observe that assessee has taken several grounds covering various dimensions on the disallowance made, all of which converge into giving rise to core issue of fulfillment of prescribed conditions by the assessee to claim deduction u/s 80IA(4) of the Act, which is a profit-linked incentive. We will thus, deal with the core issue as aforesaid. 5. Brief facts of the case as culled out from the records are that the Government of Andhra Pradesh ("GoAP") had entered into an agreement with Kakinada Sea Port Limited ("KSPL") vide Concession Agreement dated 19.03.1999 for the operation of three existing berths, develop and operate one more berth and operation, maintenance and management of common facilities of the entire port through private participation. The role of KSPL is more particularly defined in Para 3.1 of the concession agreement. KSPL has been appointed as a Nodal agency by the GoAP to take over the existing port and also develop, operate and maintain further infrastructure facilities including new berths. ITA No. 2324/Kol/2019 AY 2015-16 ITA No. 175/Kol/2021 AY 2016-17 Bothra Shipping Services Pvt. Ltd. 6 5.1. Thereafter, GoAP had entered into Supplementary Agreement dated 28.01.2009 whereby it had given permission to KSPL to develop new berths. Accordingly, KSPL has developed Berth No 5. 5.2. After that, KSPL had entered into an agreement with the assessee on 19.04.2012 for the development of the “8 MMTPA Mechanised Coal Handling System for Unloading and Rail Despatch” (in short, Mechanised Coal Handling System) in Kakinada Deep Water Port at Berth No. 5 and its backup area. Thereafter, assessee requested the Custom Authorities to give permission for construction and operation of Mechanised Coal Handling System. In response to the same, the Commissioner of Central Excise, Customs and Service Tax, Visakhapatnam - II Commissionerate, Visakhapatnam has accorded the permission vide letter dated 01.02.2013. 5.3. After receiving permission, assessee developed the aforesaid infrastructure facility. Thereafter, a Certificate was issued by the Port Officer, Port Department, GOAP dated 11.08.2015 wherein it is stated that the '8 MMTPA Mechanised Coal Handling System' is an infrastructural facility and a part of the Kakinada Deep Water Port, Kakinada. 5.4. The new infrastructure facility was developed, maintained and operated by the assessee, therefore, it claimed deduction u/s 80IA(4) of the Act for AY 2015-16 and AY 2016-17. 5.5. In accordance with clause 9 of the Concession Agreement between GOAP and KSPL, the coal terminal will be taken over by GOAP at the expiry of concession period. KSPL has issued letter in this regard dated 02.02.2021 which has been signed by the assessee as well. 5.6. However, ld. AO and ld. DRP has disallowed the claim under section 80IA(4) on the ground that the conditions prescribed under sub-clause (b) of section 80IA(4)(i) of the Act is not fulfilled because there is no direct ITA No. 2324/Kol/2019 AY 2015-16 ITA No. 175/Kol/2021 AY 2016-17 Bothra Shipping Services Pvt. Ltd. 7 agreement between the assessee and the Central Government or a State Government or a local authority or any other statutory body. Hence, these appeals before the Tribunal. 6. Before adverting on the core issue, let us first apprise ourselves of the relevant provisions of the Act contained in Section 80IA(4), which is reproduced as under:- “[Deductions in respect of profits and gains from industrial undertakings or enterprises engaged in infrastructure development, etc. 80-IA. (1) ******************** (2) **************************** (2A) ************************** (3) *************************** (4) This section applies to— (i) any enterprise carrying on the business [of (i) developing or (ii) operating and maintaining or (iii) developing, operating and maintaining] any infrastructure facility which fulfils all the following conditions, namely :— (a) it is owned by a company registered in India or by a consortium of such companies [or by an authority or a board or a corporation or any other body established or constituted under any Central or State Act;] H:\My Drive\Orders - Dragon & Self\'javascript:void(0);' (b) it has entered into an agreement with the Central Government or a State Government or a local authority or any other statutory body for (i) developing or (ii) operating and maintaining or (iii) developing, operating and maintaining a new infrastructure facility; (c) it has started or starts operating and maintaining the infrastructure facility on or after the 1st day of April, 1995: Provided that where an infrastructure facility is transferred on or after the 1st day of April, 1999 by an enterprise which developed such infrastructure facility (hereafter referred to in this section as the transferor enterprise) to another enterprise (hereafter in this section referred to as the transferee enterprise) for the purpose of operating and maintaining the infrastructure facility on its behalf in accordance with the agreement with the Central Government, State Government, local authority or statutory body, the provisions of this section shall apply to the transferee enterprise as if it were the enterprise to which this clause applies and the deduction from profits and gains would be available to such transferee enterprise for the unexpired period during which the transferor enterprise ITA No. 2324/Kol/2019 AY 2015-16 ITA No. 175/Kol/2021 AY 2016-17 Bothra Shipping Services Pvt. Ltd. 8 would have been entitled to the deduction, if the transfer had not taken place. Provided further that nothing contained in this section shall apply to any enterprise which starts the development or operation and maintenance of the infrastructure facility on or after the 1st day of April, 2017. [Explanation.—For the purposes of this clause, H:\My Drive\Orders - Dragon & Self\'javascript:void(0);'"infrastructure facility" means— (a) a road including toll road, a bridge or a rail system; (b) a highway project including housing or other activities being an integral part of the highway project; (c) a water supply project, water treatment system, irrigation project, sanitation and sewerage system or solid waste management system; (d) a port, airport, inland waterway, inland port or navigational channel in the sea;” [emphasis supplied by us by bold for the provisions relevant to the present case] 7. From perusal of the above provision, it is noted that there are three substantive conditions required to be fulfilled in order to avail the benefit of deduction u/s 80IA(4) of the Act. The first one under sub-clause (a) being the undertaking should be owned by a registered Indian company or a consortium of Indian companies or any corporation or body corporate formed under any Indian statute. Meaning thereby any foreign entities or bodies corporate are not eligible to avail the benefit of this profit-linked deduction. In the facts of the present case, it is undisputed that assessee company is a registered Indian company who has developed the facility and is therefore fulfilling the first condition prescribed in Section 80IA(4) of the Act. Also, the third condition under sub-clause (c) which stipulates the date for commencement of the infrastructure facility is complied with. Assessee had put to use the impugned infrastructure facility from 13/10/2013 as certified by the Port Officer in its certificate. 7.1. The second condition vide sub-clause (b) is that the undertaking which is being developed, developed & operated or developed, operated & maintained has ITA No. 2324/Kol/2019 AY 2015-16 ITA No. 175/Kol/2021 AY 2016-17 Bothra Shipping Services Pvt. Ltd. 9 to be pursuant to an agreement entered into with either (a) Central Government, (b) State Government, (e) local authority or (d) any other statutory body. The language employed in this condition is plain & unambiguous. Now the question which is required to be answered is whether the agreement between the assessee company (BSSPL) and Kakinada Sea Ports Ltd. (KSPL) satisfies the second condition prescribed under Section 80IA(4) of the Act. 7.2. Ld. CIT(DR) has placed on record a written submission dated 16.12.2021. It is stated by him that the undisputed factual position in the present case is that the agreement of assessee is with KSPL. From the RoC data available in the public domain, it is observed that KSPL is an unlisted public non-government company. Accordingly, the agreement with KSPL cannot be said to be either with Central Government or State Government or local authority or any other statutory body. According to him, it is undeniable that this second condition contained in Section 80IA(4) is a substantive one and cannot be said to be directory or procedural. Opposing the submission furnished by the assessee, according to him, the only case which has been made out is that the provisions of the Section 80IA is a deduction provision and therefore should be construed liberally. 8. With the aforesaid background, submissions and position of law, we look at the terms and conditions contained in the concession agreement entered into by the Government of Andhra Pradesh and International Sea Ports PTE, Ltd. Singapore (hereinafter ‘ISPL’), dt. 19/03/1999 along with two supplementary agreements entered by way of Government of Andhra Pradesh and Kakinada Sea Ports Ltd., (hereinafter ‘KSPL’), dt. 25/08/2003 and 28/01/2009, copies of all these agreements are placed in the paper book. The primary agreement is between Government of Andhra Pradesh and ISPL, wherein Clause 2.9. contains provision for formation of Special Project Company (SPC), which reads as under:- “2.9 FORMATION OF SPECIAL PROJECT COMPANY (SPC) It is recognized by the parties that the ISPL is in the process of promoting a Special Project Company (hereinafter called the SPC) which will be a body corporate to be incorporated under the Companies Act, 1956. The prior approval of GOAP will be taken on the share holding pattern of the promoters in the SPC, GOAP will communicate its approval within 3 (three) weeks of receipt of application by Government. ITA No. 2324/Kol/2019 AY 2015-16 ITA No. 175/Kol/2021 AY 2016-17 Bothra Shipping Services Pvt. Ltd. 10 The parties agree hereto that the CONCESSIONAIRE shall be entitled to subrogate all its rights and obligations under this agreement in the form of an instrument in favour of the said body corporate which the GOAP consents. Before granting the subrogation the CONCESSIONAIRE shall inform the GOAP in respect thereof and all necessary steps shall be carried out by the parties to give effect to the said subrogation within 30 days from the date of such information. After the subrogation, the new body corporate (SPC) shall be recognized by the GOAP for all legal and operational purposes, it is further agreed that the ISPL shall cause to provide suitable required letter from the new body corporate (SPC) consenting to the above arrangement and for smooth implementation and the SPC shall be successor to the rights, duties and obligation under this agreement.” 9. By the provision of this Clause, a SPC was created in the name of Cocinada Port Company Ltd. (CPCL) incorporated by ISPL, who assigned all its rights, titles, benefits in the concession agreement to CPCL by assignment deed dt. 02/04/1999 executed by ISPL in favour of CPCL. Subsequently, CPCL changed its name to Kakinada Sea Ports Ltd. (KSPL) on 18/09/2001, for which fresh certificate of incorporation consequent to conversion u/s 31 and 44 of the Companies Act, 1956, was issued by the Registrar of Companies, Andhra Pradesh, Hyderabad. It is also noted that in primary concession agreement that concessionaire will include their respective successors and assignees intending to be legally bound under the agreement. Thus, KSPL as a SPC is responsible for discharge of terms and conditions stated in primary concession agreement as an assignee of ISPL. Furthermore, subrogation has been granted to KSPL (as a SPC) under the approval of GoAP as contained in clause 2.9 extracted above. 9.1. Subsequently, an agreement was entered into between KSPL and assessee. The assessee for establishment of “'8 MMTPA Mechanised Coal Handling System for Unloading and Rail Despatch in Kakinada Deep Water Port at Berth No. 5 and its backup area” vide agreement dt. 19/04/2012. The role of KSPL in the said agreement is depicted before us as under:- {Primary Concession Agreement} Dt. 19/03/1999 dt. 02/04/1999 dt. 19/04/2012 Govt. of Andhra Pradesh ISPL CPCL (Now, KSPL) [SPC of ISPL] BSSPL (i.e., the assessee) ITA No. 2324/Kol/2019 AY 2015-16 ITA No. 175/Kol/2021 AY 2016-17 Bothra Shipping Services Pvt. Ltd. 11 10. From the above, the undisputed fact which emerges is that assessee had entered into an agreement with KSPL. However, KSPL is the SPC of ISPL. Assessee has developed the mechanised coal handling system for unloading and rail despatch, in terms of agreement entered into by it with KSPL. For the purpose of this agreement, assessee obtained approval from Customs Authorities which was accorded by the Office of Commissioner of Customs, Central Excise & Service Tax, Visakhapatnam –II, vide letter dt. 03/02/2013. Also, the Port Officer, Port Department, Government of Andhra Pradesh, issued a certificate dt. 11/08/2015 wherein it was certified that infrastructural facility developed by the assessee is part of Kakinada Deep Water Port, Kakinada. The sole contention of the revenue is that whether the agreement between the assessee and KSPL satisfies the second condition prescribed u/s 80IA(4)(i)(b) of the Act. 11. The fact arising from clause 2.9 of the primary agreement between GoAP and ISPL in the present case and as noted above leaves little doubt in our minds that KSPL is a nodal agency constituted for the purpose of executing the rights, duties and obligations under the said agreement. This agreement vide clause 2.9 provides for subrogation of rights and obligations to a body corporate with the consent of GoAP and also with its prior approval, on the shareholding pattern. Pursuant to such a provision in the agreement, a ‘Special Project Company’ (SPC) in the form of KSPL was set up. This SPC i.e KSPL is recognized by the GoAP for all legal and operational purposes and shall be a successor to ISPL for the rights, duties and obligations under the agreement. 11.1. In view of the above factual matrix, the assessee (BSSPL) and KSPL entered into an agreement dated 19/04/2012 for the establishment of “'8 MMTPA Mechanised Coal Handling System for Unloading and Rail Despatch in Kakinada Deep Water Port at Berth No. 5 and its backup area”. KSPL is acting as a nodal agency under the primary agreement between GoAP and ISPL. In this respect, the argument canvassed by the Revenue that the agreement is between assessee and KSPL does not satisfy the condition prescribed in sub-clause (b) of section 80IA(4)(i) is too rigid interpretation and frustrates both, the purpose of creating such nodal agencies and the legislative intent of granting deduction to the assessee engaged in infrastructure development projects. ITA No. 2324/Kol/2019 AY 2015-16 ITA No. 175/Kol/2021 AY 2016-17 Bothra Shipping Services Pvt. Ltd. 12 11.2. On the above discussed view, we draw gainful support from the decision by Hon’ble High Court of Gujarat in the case of CIT vs. Ranjit Projects Pvt. Ltd. [2018] 408 ITR 274 (Guj), which held as under:- “13. The above statutory provisions and the relevant facts arising in the present case and noted above would leave little doubt in one's mind that GSRDC was a nodal agency constituted by the State Government for the purpose of executing road development projects through private participation and was a Government agency as defined in section 2(e) of the Act of 1999. Significant factors in the present case are that the road widening project was cleared by the Government, land for such purpose was alloted by the Government. The concession agreement which GSRDC executed was approved by the Government. It was under the Government Resolution that the assessee would collect toll upon completion of such project. Upon the completion of the project period, the entire infrastructure so developed would vest in the Government. Signatory to the applicant may be GSRDC for all practical purposes and in essence, it was the agreement between the assessee and the State Government. We are conscious that condition-(b) of sub-section (4) of section 80IA requires the assessee to have entered into agreement with the Central Government or a State Government or a local authority or any other statutory authority. However, rigid interpretation of this provision as canvassed by the Revenue would only result into the assessees involved in genuine infrastructure development projects for and on behalf of the Government or local authorities would be denied the deduction merely on the ground that the State Government had created a nodal agency for working out the finer details and nitty-gritty of such infrastructure development. The purpose of creating such nodal agencies as well as the legislative intent of granting deduction to the assessee engaged in developing, maintaining or operating any infrastructure projects for Central or State Government or local or statutory authorities would frustrate.” 12. Ld. Counsel for the assessee referred to CBDT Circular No. 10/2005 dt. 16/12/2005, whereby it had relaxed the second condition prescribed u/s 80IA(4) and, therefore, the only requirement which remained was to obtain the certificate from concerned Authority that the infrastructural facility forms part of the Port. 12.1. In this respect, CBDT had issued a Circular earlier on 23/06/2000, which had specified two conditions for the purpose of claiming deduction u/s 80IA(4) of the Act. In this circular, the second condition was that the infrastructural facility structure should have been completed under “BOT or BOLT schemes” or there is an agreement that the same would be transferred to the State Authority within the time period stipulated in the agreement. This second condition was relaxed ITA No. 2324/Kol/2019 AY 2015-16 ITA No. 175/Kol/2021 AY 2016-17 Bothra Shipping Services Pvt. Ltd. 13 by the later Circular dt. 16/12/2005 referred above. Para 3 of circular dated 16/12/2005 provides that from AY 2002-03 onwards, structures at the ports for storage, loading and unloading, etc. will be included in the definition of “port” for the purpose of section 80IA if the concerned port authority has issued a certificate that the said structures form part of the port. 12.3. In compliance to the aforesaid CBDT circular, assessee placed on record a certificate dated 11.08.2015 issued by the Port Officer, Port Department, Kakinada, GoAP certifying that the infrastructure facilities developed for handling of coal through mechanized coal handling system, constructed and owned by the assessee are part of infrastructural facilities of the Kakinada Deep water port which has been put to use from 13/10/2013. The same is placed in the paper book at page 193. 12.4. Despite relaxation of the second condition by the CBDT in its circular, assessee placed on record a letter issued by KSPL which confirms that on expiry of the concession period, the structures, buildings constructed by or belonging to KSPL or their sub-contractors, sub-lessees and assignees free from all encumbrances and liabilities shall automatically become property of GoAP without any obligation to reimburse therefor. Accordingly, the mechanized coal handling terminal installations of BSSPL shall be taken over by GoAP at the expiry of concession period in accordance with the terms and conditions of concession agreement between GoAP and KSPL. 12.5. Considering the above factual matrix we are of the view that deduction claimed by the assessee under section 80IA(4) cannot be denied. To buttress our view, we place reliance on the decision of coordinate bench of ITAT Mumbai in the case of United Liner Agencies of India (Private) Ltd. vs. JCIT (OSD) 2013 (9) TMI 302 – ITAT Mumbai, which held as follows:- “25.15 The above circular issued by CBDT dated 16/12/2005 has also waived the condition regarding entering into an agreement with the authority and such course of action taken by CBDT was in accordance with the law and Income Tax Authorities administering the Act cannot deny such benefit to the assessee. Therefore, we hold that Ld. CIT(A) has wrongly held that assessee is not entitled for deduction under section 801A(4) of the Act in absence of the agreement entered into by it with the designated authority. ............. ITA No. 2324/Kol/2019 AY 2015-16 ITA No. 175/Kol/2021 AY 2016-17 Bothra Shipping Services Pvt. Ltd. 14 ............. ............. 25.15. The above circular issued by CBDT dated 16/12/2005 has also waived the condition regarding entering into an agreement with the authority and such course of action taken by the CBDT is in accordance with the law and Income Tax Authorities administering the Act cannot deny such benefit to the assessee. Therefore, we hold that Ld. CIT(A) has wrongly held that assessee is not entitled for deduction under the section 80IA(4) of the Act in absence of the agreement entered into by it with the designated authority.” 12.6. Similar view was taken by the Coordinate bench of ITAT Hyderabad in the case of DCIT vs. Belair Logistics in ITA No. 1377 & others/Hyd/2014 dated 24/04/2015 wherein the assessee had entered in an agreement with Kakinada Seaport Ltd. ie the same company with whom assessee had an agreement and the deduction claimed under section 80IA(4) was allowed on the basis of port certificate issued to it. 13. We also take note of the fact that assessee had obtained the permission from Custom Authorities for construction and operation of Mechanised Coal Handling System for which the Commissioner of Central Excise, Customs and Service Tax, Visakhapatnam - II Commissionerate, Visakhapatnam has accorded the permission vide letter dated 01.02.2013. The said permission is deemed to be an approval granted by the competent authority of the Central Government. This aspect has been dealt by the Hon’ble High Court of Madras allowing the claim of deduction to the assessee in the case of CIT vs. A.L. Logistics Pvt. Ltd. [2015] 374 ITR 609 (Mad.), which has held as under:- “7. Now, we proceed to the next issue, 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 CFS at Haldia. In response to the application of the assessee, the Department of Commerce, Infrastructure Division, Ministry of Commerce and Industry approved the proposal of the assessee for setting up of CFS at Haldia for handling import/export 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 ITA No. 2324/Kol/2019 AY 2015-16 ITA No. 175/Kol/2021 AY 2016-17 Bothra Shipping Services Pvt. Ltd. 15 the Ministry of Commerce and Industry permitting the assessee to set up CFS at Haldia. .......... .......... A perusal of clause 'b' of the above letter shows that the assessee was required to execute necessary bond and guarantees with the concerned Commissioner of Customs and Central Excise. It was only on the compliance of all the terms and conditions mentioned in the aforesaid letter that the assessee was allowed to carry on the services of CFS. The assessee on the compliance of the terms and conditions as mentioned in the letter, was notified as CFS Complex for the purpose of receiving, storing, import containers, receiving/consolidating export cargo etc. vide Public Notice dt.10-11-2013. The Public Notices were issued by the office of the Commissioner of Customs (Port) Kolkata. 8. Thus, 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. 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. 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. The appeal of the assessee is allowed." 13. In paragraph 7 of the order of the Tribunal, the letter issued by the Government of India, Ministry of Commerce, which has been extracted as such, clearly state that with reference to the letter dated 8.2.2003, the Government has approved the proposal for setting up of a Container Freight Station at Haldia for handling import and export cargo. Therefore, there cannot be any doubt in the light of the approval given by the Government. The reason of the Tribunal is unimpeachable.” 14. Considering the factual matrix, documents placed on record, position of law and CBDT circulars, submissions made by both the parties and judicial precedents, as discussed above, we are of considered view to allow the claim of deduction made by the assessee under section 80IA(4) of the Act. Accordingly, ground nos. 01 to 09 taken by the assessee in this respect are allowed. ITA No. 2324/Kol/2019 AY 2015-16 ITA No. 175/Kol/2021 AY 2016-17 Bothra Shipping Services Pvt. Ltd. 16 15. Issue involved in appeal for AY 2016-17 is identical to what we have adjudicated upon for AY 2015-16 except for change in quantum of deduction claimed. There being no change in material facts and position of law, our finding for AY 2015-16 above applies mutatis mutandis to the appeal for AY 2016-17. 16. In the result, appeal for both the years is partly allowed. Order pronounced in the Court on 25 April, 2023 at Kolkata. Sd/- Sd/- (RAJPAL YADAV) (GIRISH AGRAWAL) VICE-PRESIDENT ACCOUNTANT MEMBER Kolkata, Dated 25/04/2023 *SC SrPs आदेश कȧ ĤǓतͧलͪप अĒेͪषत/Copy of the Order forwarded to : 1. अपीलाथȸ / The Appellant 2. Ĥ×यथȸ / The Respondent 3. संबंͬधत आयकर आय ु Èत / Concerned Pr. CIT 4. आयकर आय ु Èत)अपील (/ The CIT(A)- 5. ͪवभागीय ĤǓतǓनͬध ,आयकर अपीलीय अिधकरण, कोलकाता/DR,ITAT, Kolkata, 6. गाड[ फाईल /Guard file. आदेशान ु सार/ BY ORDER, TRUE COPY Assistant Registrar आयकर अपीलȣय अͬधकरण ITAT, Kolkata