DCIT, CIRCLE- 6(2), NEW DELHI V. CONTAINER CORPORATION OF INDIA LTD., NEW DELHI

ITA 2367/DEL/2018

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 0052 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 11 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-03-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 05-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S KRISHNAN
• Assessee Lawyers: NIDHI SRIVASTAVA
• Keywords: Depreciation; Set aside
• Section: 143(3); 80IA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B: NEW DELHI (THROUGH VIDEO CONFERENCING) BEFORE SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER A ND SHRI K. NARASIMHA CHARY, JUDICIAL MEMBER ITA NO. 2367/DEL/2018 ASSESSMENT YEAR: 2014-15 DCIT CIRCLE-6(2), NEW DELHI VS. M/S CONTAINER CORPORATION OF INDIA LTD., CONCOR BHAWAN, C-3, MATHURA ROAD, SARITA VIHAR, NEW DELHI-110076 ITA NO.1616/DEL/2018 ASSESSMENT YEAR : 2014-15 M/S CONTAINER CORPORATION OF INDIA LTD., CONCOR BHAWAN, C-3, MATHURA ROAD, SARITA VIHAR, NEW DELHI-110076 PAN-AAACC1205A VS. ACIT, CIRCLE-6(2),NEW DELHI (APPELLANT) (RESPONDENT) APPELLANT BY : SH. S. KRISHNAN, ADV RESPONDENT BY : MS. NIDHI SRIVASTAVA, CIT DR DATE OF HEARING : 10.03.2021 DATE OF PRONOUNCEMENT : 10.03.2021 ORDER PER K. NARASIMHA CHARY, JM: AGGRIEVED BY THE ORDER DATED 30/11/2017 IN APPEAL NO. 10471/16-17/434/17-18 PASSED BY THE LEARNED COMMISS IONER OF INCOME TAX (APPEALS)-33, NEW DELHI (LD. CIT(A)) IN THE C ASE OF M/S CONTAINER ITAS-2367,1616 /DEL/2018 2 CORPORATION OF INDIA LTD (THE ASSESSEE) FOR THE A SSESSMENT YEAR 2014- 15, ASSESSEE PREFERRED ITA NO. 1616 /DEL/ 2018 WHER EAS THE REVENUE PREFERRED ITA NO. 2367 /DEL/ 2018. SINCE THESE APPE ALS EMANATE FROM THE SAME ASSESSMENT ORDER AND THE ORDER OF THE LD. CIT(A), IT WOULD BE JUST AND CONVENIENT TO DISPOSE THEM OF BY WAY OF TH IS COMMON ORDER. 2. BRIEF FACTS OF THE CASE AS COULD BE CULLED OUT F ROM THE RECORD ARE THAT THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINES S OF HANDLING AND TRANSPORTATION OF CONTAINERIZED CARGO. FOR THE ASSE SSMENT YEAR 2014-15, ASSESSEE FILED THE RETURN OF INCOME ON 23/9/2014 DE CLARING TAXABLE INCOME OF RS. 7 88, 18, 00, 850/- AFTER CLAIMING DE DUCTION UNDER CHAPTER VI-A OF THE INCOME TAX ACT, 1961 (FOR SHORT THE AC T) AMOUNTING TO RS. 3 83, 27, 14, 511. ASSESSMENT UNDER SECTION 143(3) OF THE ACT WAS, HOWEVER, COMPLETE BY ORDER DATED 6/12/2016 BY MAKIN G CERTAIN ADDITIONS, WHICH INSOFAR AS THESE 2 APPEALS ARE CON CERNED INCLUDE DISALLOWANCE OF DEDUCTION AMOUNTING TO RS. 52, 49, 79, 828/-CLAIMED UNDER SECTION 80IA OF THE ACT IN RESPECT OF THE INC OME FROM ICDS/CFS; RS. 5, 46, 47, 887/-BY DISALLOWING THE DEDUCTION ON ACCOUNT OF AMORTIZATION OF ADVANCE LEASE RENT PAID FOR THE LAN D TAKEN ON LONG-TERM LEASE FOR THE BUSINESS PURPOSE; AND RS. 3 30, 76, 8 4, 683/- DISALLOWING THE DEDUCTION UNDER SECTION 80IA OF THE ACT ON RAIL SYSTEM (ROLLING STOCK). 3. IN APPEAL, LD. CIT(A) DELETED THE DISALLOWANCE O F DEDUCTION CLAIMED TO THE TUNE OF RS. 3 30, 76, 84, 683/-ON RA IL SYSTEM (ROLLING STOCK), BUT CONFIRMED THE DISALLOWANCE OF RS. 52, 4 9, 79, 828/-UNDER SECTION 80IA OF THE ACT AND ALSO THE DISALLOWANCE O F RS. 5, 46, 47, 887/- THE CLAIM OF DEDUCTION ON ACCOUNT OF AMORTIZATION O F ADVANCE LEASE RENT ITAS-2367,1616 /DEL/2018 3 PAID FOR THE LAND TAKEN ON LONG-TERM LEASE FOR BUSI NESS PURPOSE. 4. NOW COMING TO THE APPEAL OF THE ASSESSEE, AND CO NFIRMATION OF THE DISALLOWANCE TO THE TUNE OF RS. 52, 49, 79, 828 /-CLAIMED UNDER SECTION 80IA OF THE ACT, RECORD REVEALS THAT THE AS SESSEE ARGUED BEFORE THE AUTHORITIES THAT THE HONBLE JURISDICTIONAL HIG H COURT HAD DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE FOR THE ASSESSM ENT YEARS 2003-04, 2004-05 AND 2005-06, BUT THE AUTHORITIES REFUSED TO FOLLOW THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT ON THE GRO UND THAT THE DEPARTMENT HAD PREFERRED AN SLP ADMITTED BY THE HON BLE APEX COURT IN ITA NUMBERS 1411/2009, 967/2011 AND IN 968/2011 DATED 26/1/2011. 5. IT IS SUBMITTED BY THE LD. AR THAT THE HONBLE A PEX COURT VIDE THE DECISION REPORTED IN 404 ITR 397 (SC) DECIDED THE I SSUE IN FAVOUR OF THE ASSESSEE AND THEREFORE, IN VIEW OF THE DECISION OF THE HONBLE APEX COURT, THE DISALLOWANCE CANNOT BE SUSTAINED. 6. WE HAVE ON THROUGH THE RECORD IN THE LIGHT OF TH E SUBMISSIONS MADE ON EITHER SIDE. IT COULD BE SEEN FROM THE REC ORD THAT ON A PERUSAL OF THE RECORD, LEARNED ASSESSING OFFICER NOTICED TH AT THE DEDUCTION UNDER SECTION 8 EIA ON INLAND CONTAINER DEPOT WAS N OT ALLOWED TO THE ASSESSEE IN THE EARLIER ASSESSMENT YEARS AND ON THA T GROUND THE SAME COULD NOT BE ALLOWED FOR THIS YEAR ALSO. AS STATED EARLIER, LD. CIT(A) ALSO CONFIRMED SUCH DISALLOWANCE ON THE GROUND THAT THE DECISION OF THE HONBLE HIGH COURT WAS UNDER CHALLENGE BEFORE THE H ONBLE SUPREME COURT AND TO KEEP THE ISSUE ALIVE THE DISALLOWANCE HAS TO BE CONTINUED. NOW, HOWEVER, THE HONBLE APEX COURT HELD THE ISSUE IN FAVOUR OF THE ITAS-2367,1616 /DEL/2018 4 ASSESSEE IN THE DECISION REPORTED IN CIT VS. CONTAI NER CORPORATION OF INDIA (SUPRA) AND THE RELEVANT OBSERVATIONS OF THE HONBLE APEX COURT ON THE ISSUE ARE,- 21. MOVING FURTHER TO THE ISSUE WHETHER THE ICDS CA N BE TERMED AS INLAND PORTS SO AS TO ENTITLE DEDUCTION UNDER SECTI ON 80-IA OF THE IT ACT. THE TERM PORT, IN COMMERCIAL TERMS, IS A PLACE WHER E VESSELS ARE IN A HABIT OF LOADING AND UNLOADING GOODS. THE TERM POR T' AS IS USED IN THE EXPLANATION ATTACHED TO SECTION 80-IA(4) SEEMS TO H AVE MARITIME CONNOTATION PERHAPS THAT IS THE REASON WHY THE WORD AIRPORT IS FOUND SEPARATELY IN THE EXPLANATION. CONSIDERING THE NATU RE OF WORK THAT IS PERFORMED AT ICDS, THEY CANNOT BE TERMED AS PORTS. HOWEVER, TAKING INTO CONSIDERATION THE FACT THAT A PART OF ACTIVITI ES THAT ARE CARRIED OUT AT PORTS SUCH AS CUSTOM CLEARANCE ARE ALSO CARRIED OUT AT THESE ICDS, THE CLAIM OF THE RESPONDENT HEREIN CAN BE CONSIDERE D WITHIN THE TERM INLAND PORT' AS IS USED IN THE EXPLANATION. IT IS SIGNIFICANT TO NOTE THAT THE WORD INLAND CONTAINER DEPOTS' WAS FIRST INTROD UCED IN THE DEFINITION OF CUSTOMS PORT' AS IS GIVEN IN SECTION 2(12) OF THE CUSTOMS ACT, 1962, THROUGH AMENDMENT MADE BY THE FINANCE AC T, 1983 WITH EFFECT FROM 13.05.1983. 22. THE TERM INLAND PORT' HAS BEEN DEFINED NOWHERE . BUT THE NOTIFICATION THAT HAS BEEN ISSUED BY THE CENTRAL BO ARD OF EXCISE & CUSTOMS (CBEC) DATED 24.04.2007 IN TERMS HOLDS THAT CONSIDERING THE NATURE OF WORK CARRIED OUT AT THESE ICDS THEY CAN B E TERMED AS INLAND PORTS. FURTHER, THE COMMUNICATION DATED 25.05.2009 ISSUED ON BEHALF OF THE MINISTRY OF COMMERCE AND INDUSTRY CONFIRMING THAT THE ICDS ARE INLAND PORTS, FORTIFIES THE CLAIM OF THE RESPONDENT HEREIN. THOUGH BOTH THE NOTIFICATION AND COMMUNICATION ARE NOT BINDING ON CBDT TO DECIDE WHETHER ICDS CAN BE TERMED AS INLAND PORTS WITHIN T HE MEANING OF SECTION 80-IA OF THE IT ACT, THE APPELLANT HEREIN I S UNABLE TO PUT FORWARD ANY REASONABLE EXPLANATION AS TO WHY THESE NOTIFICATIONS AND COMMUNICATION SHOULD NOT BE RELIED TO HOLD ICDS AS INLAND PORTS. UNLESS SHOWN OTHERWISE, IT CANNOT BE HELD THAT THE TERM INLAND PORTS' IS USED DIFFERENTLY UNDER SECTION 80-IA OF THE IT A CT. ALL THESE FACTS TAKEN TOGETHER CLEAR THE POSITION BEYOND ANY DOUBT THAT THE ICDS ARE INLAND PORTS AND SUBJECT TO THE PROVISIONS OF THE 1 7 SECTION AND DEDUCTION CAN BE CLAIMED FOR THE INCOME EARNED OUT OF THESE DEPOTS. HOWEVER, THE ACTUAL COMPUTATION IS TO BE MADE IN AC CORDANCE WITH THE DIFFERENT NOTIFICATIONS ISSUED BY THE CUSTOMS DEPAR TMENT WITH REGARD TO DIFFERENT ICDS LOCATED AT DIFFERENT PLACES. ITAS-2367,1616 /DEL/2018 5 7. SINCE THE ISSUE IS NO LONGER RES INTEGRA AND DEC IDED BY THE HONBLE APEX COURT WITH THE ABOVE OBSERVATIONS WHIL E RESPECTFULLY FOLLOWING THE SAME, WE HOLD THAT THE DISALLOWANCE C ANNOT BE SUSTAINED AND DIRECT THE ASSESSING OFFICER TO DELETE THE SAME . 8. NEXT COMING TO THE DISALLOWANCE OF RS. 5, 46, 47 ,887/- , LEARNED ASSESSING OFFICER OBSERVED THAT LAND CANNOT BE CONS IDERED AS A DIP RECEIVABLE AND NO DEPRECIATION RATES ARE PRESCRIBED AS PER THE INCOME TAX RULES1962 . LD. CIT(A) FOLLOWED THE VIEW TAKEN FOR THE ASSESSMENT YEAR 2007-08 AND CONFIRMED THE ADDITION. 9. AT THE OUTSET, LD. AR SUBMITTED THAT THIS ISSUE IS NO LONGER RES INTEGRA AND IN ASSESSEES OWN CASE FOR THE ASSESSME NT YEAR 2010-11 IN ITA NO. 186/DEL/2015, A COORDINATE BENCH OF THIS TR IBUNAL HELD THE ISSUE IN FAVOUR OF THE ASSESSEE. HE FILED A COPY OF THE O RDER DATED 23/08/2018. THERE IS NO DISPUTE AS TO THE TRIBUNAL DEALING WITH THIS ISSUE IN THE EARLIER ASSESSMENT YEAR AND HOLDING TH E SAME IN FAVOUR OF THE ASSESSEE. FOR THE SAKE OF COMPLETENESS, HOWEVER , WE FIND IT JUST AND NECESSARY TO NOTE THE OBSERVATIONS OF THE TRIBUNAL WHILE DEALING WITH THE ISSUE BECAUSE THE SAME HAVE A BEARING ON THE IS SUE FOR THIS YEAR ALSO. THIS ISSUE WAS GROUND NO. 4 IN REVENUES APPE AL IN THE SAID APPEAL AND THE OBSERVATIONS OF THE TRIBUNAL ARE AS FOLLOWS : 12. GROUND NO. 4 IS IN RESPECT OF DISALLOWANCE OF D EDUCTION ON ACCOUNT OF LEASE RENT PAID IN ADVANCE AGAINST THE L AND TAKEN ON LONG- TERM LEASE FOR BUSINESS PURPOSES ON PRO RATA BASIS. 12.1. LD.COUNSEL SUBMITTED THAT THIS ISSUE IS ALSO COVERED BY ORDER OF THIS TRIBUNAL IN ASSESSEE'S OWN CASE FOR ASSESSMENT YEAR 2008-09 AND 2009-10 WHEREIN FOLLOWING VIEW HAS BEEN TAKEN: ITAS-2367,1616 /DEL/2018 6 '52. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENT IONS AND ALSO NOTED THE PARA EXTRACTED BY LD CIT(A) IN PARA NO. 7.1 OF HIS ORDER OF AY 2004-05. THE LD ASSESSING OFFICER HAS F OLLOWED THE DECISION OF HON'BLE BOMBAY HIGH COURT IN CASE CIT V S. INDIAN OIL CORPORATION WHEREIN PREMIUM PAID ON LEASEHOLD LAND IS DISALLOWED AND ALSO IT WAS HELD THAT SUCH PREMIUM S AID CANNOT BE INCLUDED IN THE COST OF THE BUILDING CONSTRUCTED THEREON. THE LD.CIT(A) FOLLOWED HIS OWN DECISION FOR AY 2004-05 WHICH WAS IN RESPECT OF AMORTIZATION OF LEASEHOLD LAND AND IT IS NOT THE ISSUE OF DEPRECATION ON LEASEHOLD LAND. THE DECISION OF H ON'BLE DELHI HIGH COURT RELIED UPON BY THE LD AR ALSO DO NOT APP LY TO THE FACTS OF THE EASE BECAUSE THAT DECISION ALSO DO NOT APPLY TO THE LEASEHOLD LAND. WE ARE CONSCIOUS ABOUT THE DIFFERENCE BETWEEN AMORT IZATION OF LEASEHOLD PREMIUM PAID AND EQUALIZATION OF LEASE CH ARGES AND THEREFORE BOTH CANNOT BE COMPARED. IT IS ALSO NOT A SCERTAINED BY THE LOWER AUTHORITY WHETHER THE CLAIM OF THE ASS ESSEE ON DEPRECIATION CAN BE CONSIDERED U/S 32(1) (II) OF TH E INCOME TAX ACT OR NOT AND THIS FACT IS NOT AVAILABLE ON RECORD WE SET ASIDE THIS GROUND OF APPEAL OF THE REVENUE BACK TO THE FI LE OF ASSESSING OFFICER WITH A DIRECTION TO THE ASSESSEE TO FURNISH THE COMPLETE DETAILS OF THE CLAIM OF THE ASSESSEE CLEAR LY BRINGING OUT THE FACTS WHETHER IT IS A CLAIM OF THE DEPRECIA TION OR WHETHER IT IS A CLAIM OF THE ALLOWABILITY OF EXPEND ITURE.' 12.2. LD. CIT DR DID NOT OBJECT FOR THE ISSUE BEING SET ASIDE WITH A DIRECTION CLEARLY BRINGING ON THE FACTS WHETHER IT IS THE CLAIM OF DEPRECIATION OR WHETHER THE CLAIM OF ALLOWABILITY O F EXPENDITURE. 10. FOR THIS ASSESSMENT YEAR ALSO, LD. CIT DR DID N OT OBJECT FOR THE ISSUE BEING SET ASIDE WITH A DIRECTION CLEARLY BRIN GING ON THE FACTS WHETHER IT IS THE CLAIM OF DEPRECIATION OR WHETHER THE CLAIM OF ALLOWABILITY OF EXPENDITURE. RECORDING THE SAME WE SET ASIDE THE FINDINGS OF THE LD. CIT(A) ON THIS ISSUE AND REMAIN ED THE SAME TO THE FILE OF THE LEARNED ASSESSING OFFICER WITH A DIRECTION T O THE ASSESSEE TO FURNISH THE COMPLETE DETAILS OF THE CLAIM OF THE AS SESSEE CLEARLY BRINGING OUT THE FACTS WHETHER IT IS A CLAIM OF THE DEPRECIA TION OR WHETHER IT IS A ITAS-2367,1616 /DEL/2018 7 CLAIM OF THE ALLOWABILITY OF EXPENDITURE. GROUND NO . 2 OF ASSESSEES APPEAL IS ACCORDINGLY ALLOWED FOR STATISTICAL PURPO SE. 11. NOW COMING TO THE REVENUES APPEAL, ONLY GROUND IS IN RESPECT OF THE ELIGIBILITY OF THE ASSESSEE FURTHER DIRECTION U NDER SECTION 80IA OF THE ACT. LEARNED ASSESSING OFFICER WHILE FOLLOWING THE ASSESSMENT ORDERS WERE THE ASSESSMENT YEARS 2012-13 AND 2013-14 WHERE UNDER THE CLAIM OF DEDUCTION UNDER SECTION 80IA OF THE ACT ON THE R AIL SYSTEM (ROLLING STOCK) WAS DISALLOWED, DISALLOWED THE SAME FOR THE YEAR ALSO AND ADDED BACK A SUM OF RS. 3 30, 76, 84, 683/-TO THE INCOME OF THE ASSESSEE. 12. LD. CIT(A) HOWEVER, FOLLOWED THE REASONING FOR DELETING THE SAME IN THE ASSESSMENT YEAR 2013-14 BY THE FIRST APPELLA TE AUTHORITY. HE FURTHER NOTED THE SUBMISSION OF THE ASSESSEE THAT T HE DEDUCTION FOR RAIL SYSTEM WAS GRANTED BY THE TRIBUNAL FOR THE ASSESSME NT YEARS 2003-04 TO 2005-06 AND THE DEPARTMENT ACCEPTED THE SAID ALLOWA NCE AND NOT FILED ANY APPEAL TO THE HIGH COURT. HE THEREFORE, PROCEED ED TO HOLD THE ISSUE IN FAVOUR OF THE ASSESSEE FOR THIS YEAR ALSO. 13. ASSESSMENT ORDER ITSELF SHOWS THAT THE LEARNED ASSESSING OFFICER IS AWARE OF THE FACT OF LD. CIT(A) AND ITAT IN ALLO WING THE DEDUCTION, BUT OBSERVED THAT IT WAS NOT ACCEPTABLE TO THE REVENUE AND SINCE THE DEPARTMENT FILED APPEAL BEFORE THE HIGHER APPELLATE FORUM IS, THE ISSUE HAD NOT ATTAINED FINALITY. REVENUE, HOWEVER, DID NO T PRODUCE ANY MATERIAL BEFORE US TO CONTRADICT THE OBSERVATIONS O F THE LD. CIT(A) THAT THE DEPARTMENT HAD ACCEPTED THE ORDERS OF THE ITAT FOR THE ASSESSMENT YEAR 2003-04 AND NO APPEAL WAS FILED BEFORE THE HON BLE HIGH COURT. SHOULD BE ANY APPEAL BEFORE THE HONBLE HIGH COURT, THE REVENUE SHOULD HAVE SUBMITTED THE DETAILS THEREOF. ITAS-2367,1616 /DEL/2018 8 14. SINCE A CONSISTENT VIEW HAS BEEN TAKEN BY THE A PPELLATE AUTHORITIES RIGHT FROM ASSESSMENT YEAR 2003-04 AND FOR ALL THE SUCCESSIVE YEARS SUCH DISALLOWANCE WAS DELETED, IN THE ABSENCE OF ANY MATERIAL TO SHOW THAT SUCH VIEW TAKEN BY THE APPELL ATE AUTHORITIES HAD NOT ATTAINED FINALITY, WE FIND IT DIFFICULT TO DEVI ATE FROM SUCH CONSISTENT VIEW. WHILE RESPECTFULLY FOLLOWING THE VIEW TAKEN B Y THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2003-04 AND ALSO THE SUBSEQUENT DELETIONS MADE BY THE APPELLATE AUTHORIT IES, WE HOLD THAT THIS DISALLOWANCE CANNOT BE SUSTAINED HAS TO BE DEL ETED. WE THEREFORE, DIRECT THE ASSESSING OFFICER TO DELETE THIS ADDITIO N. 15. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED AND THE APPEAL OF THE ASSESSEE IS ALLOWED IN PART FOR STATISTICAL PURPOSE. ABOVE DECISION WAS PRONOUNCED ON CONCLUSION OF VIRT UAL HEARING ON 10.03.2021. SD/- SD/- (PRASHANT MAHARISHI) (K. NARASIMH A CHARY) ACCOUNTANT MEMBER JUDICIAL MEMBE R SH COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT BY ORDER ASSISTANT REGISTRAR