ACIT, New Delhi V. M/s. Container Corporation of India Ltd., New Delhi

ITA 6375/DEL/2016

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 7896 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 1 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-01-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 14-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NIDHI SRIVASTAVA
• Assessee Lawyers: S KRISHNAN
• Keywords: Capital asset; Depreciation; Set aside
• Section: 80IA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B: NEW DELHI BEFORE SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER AND SHRI K.NARASIMHA CHARY, JUDICIAL MEMBER I.T.A. NO. 5860/DEL/2016 ASSESSMENT YEAR: 2011-12 M/S. CONTAINER CORPORATION OF INDIA LTD., VS. DCIT, CIRCLE 3(1), CONCOR BHAWAN, C-3, MATHURA ROAD, NEW DELHI. OPP. APOLLO HOSPITAL, NEW DELHI. PAN: AAACC 1205A I.T.A. NO. 6375/DEL/2016 ASSESSMENT YEAR: 2011-12 ACIT, CIRCLE 6(2), VS. M/S. CONTAINER CORPORATION O F INDIA LTD., NEW DELHI. CONCOR BHAWAN, C-3, MATHURA ROAD, OPP. APOLLO HOSPITAL, NEW DELHI. (APPELLANT) (RESPONDENT) ASSESSEE BY: SHRI S. KRISHNAN, ADVOCATE& SHRI V. RAJAKUMAR, ADVOCATE DEPARTMENT BY: MS. NIDHI SRIVASTAVA, CIT-DR DATE OF HEARING: 16/01/2020 DATE OF PRONOUNCEMENT: 22/01/2020 ORDER PER K. NARASIMHA CHARY, JM CHALLENGING THE ORDER DATED 31.08.2016 IN APPEAL NO . 504/14-15 PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (A PPEALS)-2, NEW DELHI (LD. CIT(A)), FOR ASSESSMENT YEAR 2011-12,M /S. CONTAINER CORPORATION OF INDIA LTD., (THE ASSESSEE) AS WELL AS THE REVENUE PREFERRED THESE CROSS APPEALS. 2 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF HANDLING AND TRANSPORTATION OF CONTAINE RISED CARGO. FOR THE ASSESSMENT YEAR 2011-12 THEY HAVE FILED THEIR RETUR N OF INCOME ON 23/9/2011 DECLARING TAXABLE INCOME OF RS.4,88,15,71 ,824/-AFTER AVAILING DEDUCTION UNDER SECTION 80IA OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT) IN THE COMPUTATION OF INCOME. LEARNED ASSESSI NG OFFICER, HOWEVER, COMPUTED THE INCOME OF THE ASSESSEE AT A RS.987,29, 09,951/-AFTER DISALLOWING THE DEDUCTION UNDER SECTION 80IA OF THE ACT IN RESPECT OF INLAND PORT AND THE RAIL SYSTEM, DEPRECIATION ON AS SETS RETIRED FROM ACTIVE USE, ON ASSETS NOT REGISTERED, ON LAND AND ALSO ON REGISTRATION FEES. 3. AGGRIEVED BY SUCH ACTION OF THE LEARNED ASSESSIN G OFFICER, ASSESSEE PREFERRED APPEAL BEFORE THE LD. CIT(A). LD. CIT(A) BY WAY OF IMPUGNED ORDER ALLOWED THE APPEAL IN PART WHILE GRANTING REL IEF TO THE ASSESSEE IN RESPECT OF THE DEDUCTION OF 80IA OF THE ACT ON RAIL SYSTEM (ROLLING STOCK), DEPRECIATION ON THE ASSETS RETIRED FROM ACTIVE USE AND DEPRECIATION ON THE ASSETS WHICH WERE NOT REGISTERED IN THE NAME OF THE ASSESSEE WHILE SUSTAINING THE OTHER ADDITIONS. AGGRIEVED BY THE DE LETION OF THE ADDITIONS, REVENUE PREFERRED ITA 6375/DEL/2016 WHEREAS IN RESP ECT OF THE ADDITIONS THAT ARE SUSTAINED, ASSESSEE PREFERRED IT A NO. 5660/DEL/2016. 4. AT THE OUTSET, IT IS THE SUBMISSION OF THE LD. A R THAT ALL THE ADDITIONS MADE BY THE LEARNED ASSESSING OFFICER AND WHICH ARE SUBJECT MATTER OF THESE APPEALS ARE COVERED IN FAVOUR OF TH E ASSESSEE IN ASSESSEES OWN CASE IN EARLIER YEARS BY THE ORDERS OF THE TRIBUNAL AS WELL AS THE HONBLE HIGH COURT. IT REMAINS AN ADMITTED F ACT AND THE COPIES OF THE ORDERS ARE PRODUCED BEFORE US. WE SHALL DEAL WI TH THESE ASPECTS IN 3 THE LIGHT OF THE OBSERVATIONS OF THE TRIBUNAL AND T HE HONBLE HIGH COURT ON RELEVANT GROUNDS. 5. IN RESPECT OF THE CLAIM UNDER SECTION 80IA OF TH E ACT ON INLAND CONTAINER DEPOTS COVERED BY GROUND NO. 1 OF ASSESSE ES APPEAL AND RAIL SYSTEM (ROLLING STOCK) COVERED BY GROUND NO. 1 OF T HE APPEAL OF THE REVENUE, IN ASSESSEES OWN CASE IN ITA NO. 917 AND 918/2017 BY ORDER DATED 31/10/2017 THE HONBLE HIGH COURT OBSERVED TH AT THE REVENUES CONTENTION WAS RESURRECTED FOR THE PREVIOUS YEARS I N ASSESSEES OWN CASE REPORTED IN 346 ITR 140 AND HONBLE HIGH COURT APPR OVED THE RELIANCE ON PREVIOUS RULING IN RESPECT OF ROLLING STOCK ALSO. H ONBLE SUPREME COURT IN ASSESSEES OWN CASE REPORTED IN (2018) 404 ITR 397 (SC) HELD THAT INLAND CONTAINER DEPOTS OR INLAND PORTS, SUBJECT TO PROVIS IONS OF SECTION 80IA OF THE ACT AND DEDUCTION CAN BE CLAIMED FOR INCOME EAR NED OUT OF THESE DEPOTS. ON THIS SCORE GROUND NO. 1 OF ASSESSEES AP PEAL STANDS ALLOWED AND GROUND NO. 1 OF REVENUES APPEAL STANDS DISMISS ED. 6. GROUND NO. 2 OF ASSESSEES APPEAL IS IN RESPECT OF THE DISALLOWANCE TO THE TUNE OF RS.95,06,934/-ON ACCOUNT OF DEPRECIA TION ON INTANGIBLE ASSETS BEING VALUE OF LICENSE ACQUIRED FROM THE IND IAN RAILWAYS FOR RUNNING THE CONTAINER TRAINS ON INDIAN RAILWAYS. IN ITA NO. 77 AND 186 /DEL/ 2015 IN ASSESSEES OWN CASE, A COORDINATE BEN CH OF THIS TRIBUNAL IN THE LIGHT OF THE DECISION OF THE COORDINATE BENCH I N ITA NO. 1876 AND 6377/DEL/2012 FOR THE ASSESSMENT YEAR 2008-09 AND 2 009-10 WHEREIN THIS ISSUE WAS COVERED AND DEALT WITH IN EXTENSO, R EACHED A CONCLUSION THAT THE LICENSE ACQUIRED BY THE ASSESSEE FROM THE INDIAN RAILWAYS FOR RUNNING THE CONTAINER TRAINS ON INDIAN RAILWAYS IS A COMMERCIAL RIGHT AND IT IS ELIGIBLE FOR DEPRECIATION UNDER SECTION 3 2(1)(II) OF THE ACT. IN VIEW 4 OF THIS CONSISTENT VIEW,AND ALSO FORTIFIED BY THE D ECISION OF THE HONBLE DELHI HIGH COURT REPORTED IN 345 ITR 421 IN THE CAS E OF AREVA,WE HOLD THAT COMMERCIAL RIGHTACQUIRED BY THE ASSESSEE BY WA Y OF THIS LICENSE FOR AN ENDURING BENEFIT FOR A PERIOD OF 20 YEARS WOULD AMOUNT TO CAPITAL ASSET AND ELIGIBLE FOR DEPRECIATION UNDER SECTION 3 2(1)(II) OF THE ACT. GROUND NO. 2 OF ASSESSEES APPEAL IS ACCORDINGLY AL LOWED. 7. COMING TO GROUND NO. 3 OF ASSESSEES APPEAL, IT RELATES TO THE DISALLOWANCE OF RS.2,47,73,927/-BEING THE CLAIM OF DEDUCTION ON ACCOUNT OF ADVANCE LEASE RENT PAID FOR THE LAND TAKEN ON LO NG-TERM LEASE FOR BUSINESS PURPOSE ON PRO RATA BASIS. IN THE ORDER FO R THE ASSESSMENT YEAR 2008-09 AND 2009-10 (SUPRA), A COORDINATE BENCH OF THIS TRIBUNAL MINDFUL OF THE DIFFERENCE BETWEEN THE AMORTISATION OF LEASE HOLD PREMIUM PAID AND EQUALISATION OF LEASE CHARGES, WHICH CANNOT BE COMPARED AND SO SET ASIDE THE ISSUE TO THE FILE OF THE LEARNED ASSESSIN G OFFICER FOR VERIFICATION OF THE COMPLETED DETAILS OF THE CLAIM OF THE ASSESS EE. 8. IN ASSESSMENT YEAR 2010-11, A COORDINATE BENCH O F THIS TRIBUNAL, WHILE FOLLOWING THE EARLIER DECISION FOR THE ASSESS MENT YEARS 2008-09 AND 2009-10 OF THIS TRIBUNAL, HELD THAT THERE IS CHANGE IN THE FACTUAL MATRIX OF THE CASE ON THIS ASPECT AND THOUGHT IT FIT TO SET A SIDE THIS ISSUE TO THE FILE OF THE LEARNED ASSESSING OFFICER WITH A DIRECTION T O THE ASSESSEE TO FURNISH ALL REQUISITE DETAILS IN RESPECT OF THE CLA IM OF DEPRECIATION AND DIRECTED THE ASSESSING OFFICER TO VERIFY THE DETAIL S TO DETERMINE THE ALLOWABILITY OF THIS CLAIM. 9. IT IS SUBMITTED THAT THE FACTS AND CIRCUMSTANCES INVOLVED IN THIS MATTER ALSO ARE IDENTICAL TO THOSE OBTAINING FOR TH E ASSESSMENT YEAR 2008-09 AND 2009-10 AS WELL AS 2010-11 AND THEREFOR E THE ISSUE REQUIRES 5 FACTUAL VERIFICATION AT THE END OF THE LEARNED ASSE SSING OFFICER, AND IT IS PRAYED THAT THE SAME COURSE MAY BE FOLLOWED FOR THI S YEAR ALSO. WE GRANT THE REQUEST AND REMAND THE ISSUE TO THE FILE OF THE LEARNED ASSESSING OFFICER FOR NECESSARY VERIFICATION AND TO DECIDE IT ACCORDING TO LAW ON SUCH FACTUAL VERIFICATION OF THE DETAILS TO BE FURN ISHED BY THE ASSESSEE. GROUND NO. 3 OF THE ASSESSEES APPEAL IS, ACCORDING LY, ALLOWED FOR STATISTICAL PURPOSE. 10. NOW COMING TO GROUND NO. 2 OF REVENUES APPEAL, IT RELATES TO THE DISALLOWANCE OF RS.3,86,945/-MADE IN RESPECT OF DEP RECIATION ON THE ASSETS RETIRED FROM THE ACTIVE USE. IT IS SUBMITTED THAT THIS ISSUE IS ALSO SQUARELY COVERED BY THE DECISIONS IN EARLIER ASSESS MENT YEARS. IN CIT VS. YAMAHA MOTOR INDIA PRIVATE LIMITED 328 ITR 297, THE HONBLE JURISDICTIONAL HIGH COURT HELD THAT ACTUAL USER OF THE MACHINERY IS NOT REQUIRED WITH RESPECT TO DISCARDED MACHINERY AND TH E CONDITION WHICH WAS ELIGIBLE FOR DEPRECIATION IS THAT THE MACHINERY BEING USED FOR THE PURPOSE OF THE BUSINESS WOULD MEAN THAT THE DISCARD ED MISSIONARY IS USED FOR THE PURPOSE OF THE BUSINESS IN THE EARLIER YEARS FOR WHICH DEPRECIATION WAS ALLOWED. RELYING UPON SUCH OBSERVA TIONS OF THE HONBLE HIGH COURT IN ASSESSEES OWN CASE, A COORDINATE BEN CH OF THIS TRIBUNAL FOR THE ASSESSMENT YEAR 2008-09 HELD THE ISSUE IN FAVOU R OF THE ASSESSEE. SO ALSO, FOR THE ASSESSMENT YEAR 2010-11. ISSUE BEING IDENTICAL, IN THE ABSENCE OF ANY CHANGE IN CIRCUMSTANCES, WE FOLLOW T HE SAME AND CONSEQUENTLY DISMISS GROUND NO. 2 OF REVENUES APPE AL. 11. LASTLY, GROUND NO. 3 OF REVENUES APPEAL IS IN RESPECT OF THE DISALLOWANCE TO THE TUNE OF RS.3,08,178/-OF DEPRECI ATION ON THE ASSETS WHICH WERE NOT REGISTERED IN THE NAME OF THE ASSESS EE. THIS ISSUE IS ALSO 6 SQUARELY COVERED BY THE ORDER DATED 31/10/2017 OF T HE HONBLE HIGH COURT IN ITA NO. 917 & 18/2017 WHEREIN IT WAS HELD THAT INASMUCH AS THE ASSESSEE HAS BEEN PAYING ALL THE AMOUNTS TO THE TRA NSFEROR AND OBTAINED POSSESSION, AND HAS ALSO BEEN USING THE SAME FOR BU SINESS PURPOSE, DEPRECIATION IS ALLOWABLE AS HELD BY THE TRIBUNAL. 12. FROM THE ASSESSMENT ORDER, IT COULD BE SEEN THA T IT WAS BROUGHT TO THE NOTICE OF THE LEARNED ASSESSING OFFICER THAT TH E LD. CIT(A) DECIDED THIS ISSUE IN FAVOUR OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2008-09. LD. CIT(A) FOR THIS YEAR FOLLOWED THE ABOVE VIEW TAKEN IN ASSESSEES OWN CASE,IN VIEW OF THE FACTUAL AND LEGAL IDENTITY INVO LVED FOR THIS YEAR ALSO, AND ALLOWED DEPRECIATION. IN THIS SET OF CIRCUMSTAN CES, WE DO NOT FIND ANY ILLEGALITY OR IRREGULARITY IN THE VIEW TAKEN BY THE LD. CIT(A) AND CONSEQUENTLY FIND THIS GROUND OF APPEAL AS DEVOID O F MERITS AND IS LIABLE TO BE DISMISSED. 13. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D IN PART FOR STATISTICAL PURPOSE AND THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND JANUARY, 2020. SD/- SD/- (PRASHANT MAHARISHI) (K.NARASIMHA CHARY) ACCOUNTANT MEMBER JUDICIAL MEMB ER DATED: 22/01/2020 . *AKS