D.C.I.T. - 8(2)(2), MUMBAI V. STAR TRACK TERMINALS P.LTD, MUMBAI

ITA 7114/MUM/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 7106 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-04-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2010-2011
• Appeal Filed On: 15-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHAUDHARY ARUN KUMAR SINGH
• Section: 143(3); 80IA; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH G, MUMBAI BEFORE SHRI RAJESH KUMAR, ACCOUNTANT MEMBER AND SHRI RAM LAL NEGI, JUDICIAL MEMBER ITA NOS.7114, 7119, 7115/M/2017 ASSESSMENT YEARS: 2010-11, 2011-12 & 2012-13 DCIT 8(2)(2), ROOM NO.348, M.K. ROAD, MUMBAI - 400020 VS. M/S. STAR TRACK TERMINALS PVT. LTD., C/O. APM TERMINALS INDIA PVT. LTD., URMI ESTATE, 11 TH FLOOR, 95, GANPATRAO KADAM MARG, LOWER PAREL (WEST), MUMBAI 400 013 PAN: AAHCS 5182K (APPELLANT) (R ESPONDENT) ITA NOS.156 & 157/M/2018 ASSESSMENT YEARS: 2013-14 & 2014-15 DCIT 8(2)(2), ROOM NO.348, M.K. ROAD, MUMBAI - 400020 VS. M/S. STAR TRACK TERMINALS PVT. LTD., C/O. APM TERMINALS INDIA PVT. LTD., URMI ESTATE, 11 TH FLOOR, 95, GANPATRAO KADAM MARG, LOWER PAREL (WEST), MUMBAI 400 013 PAN: AAHCS 5182K (APPELLANT) (R ESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI MANISH KANTH, A.R. REVENUE BY : SHRI CHAUDHARY ARUN KUMAR SINGH, D. R. DATE OF HEARING : 24.04.2019 DATE OF PRONOUNCEMENT : 30.04.2019 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: ITA NOS.7114, 7119, 7115/M/2017 & ORS. M/S. STAR TRACK TERMINALS PVT. LTD. 2 THE ABOVE TITLED FIVE APPEALS HAVE BEEN PREFERRED BY THE REVENUE AGAINST THE ORDERS DATED 21.09.2017 & 05.10 .2017 OF THE COMMISSIONER OF INCOME TAX (APPEALS) [HEREINAFT ER REFERRED TO AS THE CIT(A)] RELEVANT TO ASSESSMENT YEAR 2010- 11, 2011-12 & 2012-13 AND 2013 - 14 & 2014-15 RESPECTIVELY. ITA NO.7114/M/2017 2. THE ONLY ISSUE RAISED BY THE REVENUE IN THIS APP EAL IS AGAINST THE ORDER OF LD. CIT(A) ALLOWING THE DEDUCT ION UNDER SECTION 80IA(4) DESPITE THE FACT THAT ASSESSEE IS N OT ENTITLED TO CLAIM THE SAME. 3. THE FACTS IN BRIEF ARE THAT THE ASSESSEE COMPANY IS A JOINT VENTURE COMPANY BETWEEN APM TERMINALS INDIA LTD. (5 1%) AND CONTAINER CORPORATION OF INDIA LTD. (49%) A PUBLIC SECTOR UNDERTAKING (PSU). THE SAID COMPANY IS ENGAGED IN THE BUSINESS OF WAREHOUSING, CUSTOM CLEARANCE AND TRANS PORTATION OF GOODS FROM ITS LOCATION BY RAILWAY OR BY TRUCKS IN CONTAINERS TO OTHERS. DURING THE YEAR, THE ASSESSEE CLAIMED D EDUCTION UNDER SECTION 80IA(4) OF THE ACT OF RS.6,51,02,975/ - AND IN SUPPORT OF ITS CLAIM FURNISHED AUDIT REPORT IN FORM NO.10CCB. THE ASSESSEE COMPANY GENERATED INCOME FROM OPERATIO N OF INLAND CONTAINER DEPOTS (ICD) SITUATED AT VARIOUS L OCATIONS WHICH ACCORDING TO THE ASSESSEE CONSTITUTE INLAND P ORT AND IS INCLUDED IN THE DEFINITION OF INFRASTRUCTURE FACILI TIES IN TERMS OF EXPLANATION TO SECTION 80IA(4) OF THE ACT. THE ASS ESSEE CLAIMED THAT IT FALLS WITHIN THE DEFINITION OF INFRASTRUCTU RE FACILITY IN TERMS OF SECTION 80IA OF THE ACT AND HENCE THE CLAI MED THE DEDUCTION. ACCORDING TO THE AO PROVISIONS OF SECTI ON 80IA(4) ITA NOS.7114, 7119, 7115/M/2017 & ORS. M/S. STAR TRACK TERMINALS PVT. LTD. 3 CLAUSE (I) SUB CLAUSE (A) DENOTES THE ENTERPRISE CA RRYING ON THE BUSINESS. ACCORDINGLY TO THE AO THE INFRASTRUCTURE FACILITY WHICH INCLUDES REAL SYSTEM IRRIGATION PROJECT, A PORT AND AIRPORT OR INLAND PORT HAS TO BE OWNED BY THE ENTERPRISE. HENCE, THE AO CONCLUDED THAT ASSESSEE COMPANYS CONTAINER FREIGHT STATION (CFS) IN RESPECT OF WHICH THE ASSESSEE CLAIMED THE DEDUCTION UNDER SECTION 80IA(4) IS NOT OWNED BY THE COMPANY. THE AO ALSO OBSERVED THAT ASSESSEE HAS ENTERED INTO SUB LE ASE AGREEMENT FOR RENT AT DADRI, GREATER NOIDA WITH CON TAINER CORPORATION OF INDIA LTD. (CCL) WHICH HOLDS 49% SHA RE CAPITAL OF THE ASSESSEE COMPANY AND THUS HIRED THE BUSINESS OF INFRASTRUCTURE FROM OTHERS PARTICULARLY CONTAINER CORPORATION OF INDIA LTD. (CCL). HENCE, THE ASSESSEE HAS NOT FULF ILLED THE CONDITIONS LAID DOWN IN SECTION 80IA(4) WHICH STATE THAT THE FACILITY SHOULD BE OWNED BY THE COMPANY REGISTERED IN INDIA AND BY A CONSORTIUM OF COMPANIES AND THUS REJECTED THE CLAIM OF THE ASSESSEE. 4. THE LD. CIT(A) ALLOWED THE APPEAL OF THE ASSESSE E BY HOLDING THAT CFS IS AN INLAND PORT AND FALLS WITHIN THE DEFINITION OF INFRASTRUCTURE FACILITY WITHIN THE MEANING OF SE CTION 80IA(4) BY FOLLOWING THE DECISION OF SPECIAL BENCH IN THE CASE OF ALL CARGO GLOBAL LOGISTICS LTD. VS. DCIT (2012) 23 TAXMANN.CO M 103 (MUM. SB) AND THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CONTAINER CORPORATION OF INDIA LTD. VS. ACIT (2012) 21 TAXMANN.COM 317 (DELHI). 5. AT THE OUTSET, THE LD. COUNSEL OF THE ASSESSEE S UBMITTED BEFORE THE BENCH THAT THE SAID ISSUE HAS BEEN DECID ED IN ITA NOS.7114, 7119, 7115/M/2017 & ORS. M/S. STAR TRACK TERMINALS PVT. LTD. 4 ASSESSEES OWN CASE IN ITA NO.3221/M/2016 A.Y. 2011 -12 BY THE COORDINATE BENCH IN ITS FAVOUR BY FOLLOWING TH E DECISION OF SPECIAL BENCH IN THE CASE OF ALL CARGO GLOBAL LOGIS TICS LTD. VS. DCIT (SUPRA). WE WOULD LIKE TO MENTION THAT THE DE CISION OF THE SPECIAL BENCH IN THE CASE OF ALL CARGO GLOBAL LOGIS TICS LTD. (SUPRA) HAS BEEN UPHELD BY THE HONBLE BOMBAY HIGH COURT. THE LD. A.R. THEREFORE PRAYED THAT BY FOLLOWING THE RATIO LAID DOWN BY THE CO-ORDINATE BENCH OF THE TRIBUNAL IN AS SESSEES OWN CASE, THE APPEAL OF THE REVENUE DESERVES TO BE DISM ISSED. 6. THE LD. D.R., ON THE OTHER HAND, RELIED ON THE G ROUNDS OF APPEAL AND ORDER OF THE AO. 7. AFTER HEARING BOTH THE PARTIES AND PERUSING THE MATERIAL ON RECORD INCLUDING THE DECISION OF THE CO-ORDINATE BE NCH OF THE TRIBUNAL IN ITA NO.3221/M/2016 A.Y. 2011-12 (SUPRA) , WE OBSERVE THAT ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE BY THE SAID DECISION. THE OPERATIVE PART IS REPRODUCED BELOW: 9. WE HAVE PERUSED THE RECORD AND GONE THROUGH THE ORDERS PASSED BY THE AUTHORITIES BELOW AND THE CASES RELIED UPON BY THE ASSESSEE AND LD. PR. COMMISSIONER. THE ONLY ISSUE INVOLVED IN THIS APPEA L IS WHETHER THE ASSESSEE IS ENTITLED FOR THE DEDUCTION CLAIMED U/S 80IA (4) OF THE ACT, OR WHETHER THE ASSESSMENT ORDER PASSED BY THE AO IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE TO EXERCISE JURISDICTION U/S 263 OF THE ACT BY THE LD. PR. COMMISSIONER? 10. AS POINTED OUT BY THE LD. COUNSEL FOR THE ASSES SEE THE IDENTICAL ISSUE HAS ALREADY BEEN DECIDED BY THE SPECIAL BENCH OF THE BO MBAY TRIBUNAL IN ALL CARGO GLOBAL LOGISTICS V. DCIT (SUPRA). IN THE SAID CASE ONE OF THE ISSUES TO BE ADJUDICATED BY THE BENCH WAS WHETHER A CONTAINER FREIGHT STATIO N ENGAGED IN PERFORMING FUNCTIONS SUCH AS WAREHOUSING, CUSTOMS CLEARANCE, A ND TRANSPORT OF GOODS FROM ITS LOCATION TO SEA-PORTS AND VICE-VERSA BY RAILWAY OR BY TRUCKS IN CONTAINERS, HAS TO BE REGARDED AS AN INLAND PORT WHOSE INCOME IS ENTITLED TO DEDUCTION UNDER SECTION 80-I A(4). THE SPECIAL BENCH DECIDED THE SAID ISSUE IN F AVOUR OF THE ASSESSEE. THE RELEVANT PORTION OF THE FINDINGS OF THE SPECIAL BEN CH ON THIS ISSUE READS AS UNDER: ITA NOS.7114, 7119, 7115/M/2017 & ORS. M/S. STAR TRACK TERMINALS PVT. LTD. 5 65. WE HAVE CONSIDERED THE FACTS OF THE CASES AND SUBMISSIONS MADE BEFORE US. IT MAY BE MENTIONED THAT ONE OF THE ARGU MENTS ADVANCED BY THE LD. COUNSEL FOR THE ASSESSEE IS THAT THE CASE OF CO NTAINER CORPN. OF INDIA LTD. (SUPRA) IS NOT BASED ON ANY OF THE CIRCULARS ISSUED BY THE PORT AUTHORITIES, HOWEVER, THE CFS THE ASSESSEE HAS BEEN GRANTED SUCH CERTIFICATE. THE CERTIFICATE MENTIONS THAT THE CFS CARRIES ON PORT R ELATED ACTIVITIES, AND IT MAY BE CONSIDERED AS AN EXTENDABLE ACTIVITY OF THE PORT RELATED ACTIVITIES. IT IS CLARIFIED THAT THE CFS HAS NOT BEEN BUILT ON BOT OR BOLT SCHEME AND THAT IT IS SITUATED ON LAND WHICH DOES NOT BELONG TO THE PORT. THE LETTERS WRITTEN BY PORT TRUST TO THE ASSESSEE ALSO STATE THAT THE M ATTER HAS BEEN REFERRED TO THE INCOME TAX DEPARTMENT. THE DEPARTMENT HAS CLARI FIED THAT AN ICD/CFS DOES NOT CONSTITUTE AN INLAND PORT. IN THE CASE OF CIT V. ABG HEAVY INDUSTRIES LTD. [2010] 189 TAXMAN 54 (BOM.), THE HO N'BLE COURT HAS HELD THAT THE ASSESSEE IS ENTITLED TO DEDUCTION U/S 80-I A. HOWEVER THERE IS A VERY SALIENT DIFFERENCE IN FACTS THAT STRUCTURES WERE LO CATED AT PORT AND SUCH STRUCTURES HAD TO BE HANDED OVER TO THE PORT TRUST ON EXPIRY OF THE PERIOD OF AGREEMENT. IN THE CASE AT HAND IT IS CLEAR THAT THE ASSETS OF THE CFS ARE NOT TO BE HANDED OVER TO THE PORT TRUST AT ANY POINT OF TIME AS IT IS NOT BUILT ON BOT & BOLT SCHEME. THE CFS IS ALSO NOT LOCATED AT T HE PORT. AS AGAINST THE AFORESAID, THE LD. STANDING COUNSEL HAS SUBMITTED T HAT CLARIFICATIONS ISSUED BY OTHER AUTHORITIES INCLUDING CENTRAL BOARD OF EXC ISE AND CUSTOMS UNDER THE RELEVANT ACTS DO NOT LAY GUIDELINES UNDER THE I NCOME TAX ACT AND THAT THE MATTER HAS TO BE DECIDED UNDER THE INCOME-TAX A CT INDEPENDENTLY. FOR DOING SO, INITIALLY A STRICT INTERPRETATION HAS TO BE PLACED ON THE WORDS 'INLAND PORT' TO EXAMINE THAT THE ASSESSEE IS ENTIT LED TO THE DEDUCTION. CBDT HAS FURNISHED OPINION THAT ICDS AND CFSS ARE N OT ENTITLED TO SUCH DEDUCTION AS THEY DO NOT CONSTITUTE INLAND PORTS. O THER ACTS AS WELL AS STUDY REPORT LEAD TO THE CONCLUSION THAT A PORT CAN BE SA ID TO BE AN INLAND PORT ONLY IF IT HAS AN ACCESS TO THE SEA VIA A WATERWAY. 66. WE FIND THAT THE SOLITARY DECISION IN THIS CASE BY ANY HIGH COURT IS IN THE CASE OF CONTAINER CORPN. OF INDIA LTD. (SUPRA). 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 SENSE THAT BOTH CARRY OUT SIMILAR F UNCTIONS, I.E., WARE HOUSING, CUSTOMS CLEARANCE, AND TRANSPORT OF GOODS FROM ITS LOCATION TO THE SEAPORTS AND VICE-VERSA BY RAILWAY OR BY TRUCKS IN CONTAINERS. THUS, THE ISSUE IS NO LONGER RESINTEGRA. RESPECTFULLY FOLLOWING THI S DECISION, IT IS HELD THAT A CFS IS AN INLAND PORT WHOSE INCOME IS ENTITLED TO D EDUCTION U/S 80-IA(4). QUESTION NO. 2 IS ANSWERED ACCORDINGLY. 11. SINCE, THE ASSESSEE WAS ENTITLED TO THE DEDUCTI ON CLAIMED U/S 80-IA(4) OF THE ACT AS PER THE DECISION OF THE SPECIAL BENCH DISCUSSED ABOVE, THE AO HAS RIGHTLY ALLOWED THE DEDUCTION IN QUESTION CLAIMED BY THE ASSESSEE. THE ASSESSMENT ORDER IS, THEREFORE, NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE CASES RELIED UPON BY THE LD. PR. COMMISSIONER ARE D ISTINGUISHABLE ON FACTS. HENCE, IN OUR CONSIDERED OPINION THE ACTION OF LD. PR. COM MISSIONER IS BEYOND JURISDICTION AND LIABLE TO BE QUASHED. WE, THEREFORE, QUASH THE ORDER PASSED BY THE LD. PR. ITA NOS.7114, 7119, 7115/M/2017 & ORS. M/S. STAR TRACK TERMINALS PVT. LTD. 6 COMMISSIONER AND ALLOW THE SOLITARY GROUND OF APPEA L OF THE ASSESSEE. IN THE RESULT, APPEAL FILED BY THE ASSESSEE FOR THE ASSESSMENT YEA R 2011-12 IS ALLOWED. 8. SINCE THE FACTS IN THE INSTANT CASE BEFORE US AR E MATERIALLY SAME TO THE FACTS OF THE CASE AS DECIDED BY THE CO- ORDINATE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE. WE AR E, THEREFORE, INCLINED TO UPHOLD THE ORDER OF LD. CIT(A) BY DISMI SSING THE APPEAL OF THE REVENUE. ITA NO.7115/M/2017, ITA NOS.156 & 157/M/2018 9. THE ISSUE INVOLVED IN THE PRESENT APPEAL IS IDEN TICAL TO THE ONE AS STATED ABOVE IN ITA NO.7114/M/2017 FOR A.Y. 2010-11. THEREFORE, OUR FINDING IN ITA NO.7114/M/2017 FOR A. Y. 2010-11 WOULD , MUTATIS MUTANDIS, WOULD APPLY TO THESE APPE ALS AS WELL. ACCORDINGLY, THESE THREE APPEALS OF THE REVENUE ARE DISMISSED. ITA NO.7119/M/2017 10. IN THIS APPEAL, THE REVENUE HAS CHALLENGED THE ORDER OF LD. CIT(A) DATED 21.09.2017 WHICH IN TURN AROSE OUT OF THE ASSESSMENT ORDER PASSED UNDER SECTION 143(3) READ W ITH SECTION 263 OF THE ACT. 11. SINCE CO-ORDINATE BENCH OF THE TRIBUNAL IN ITA NO.3221/M/2016 A.Y. 2011-12 VIDE ORDER DATED 07.07. 2017 QUASHED THE REVISIONARY ORDER UNDER SECTION 263 DAT ED 26.02.2016 BY PR. CIT. THEREFORE, THE CONSEQUENTIA L ASSESSMENT ORDER PASSED UNDER SECTION 143(3) READ WITH SECTION 263 DOES NOT SURVIVE. THE REVENUE HAS CHALLENGED THE ORDER O F LD. CIT(A) ARISING OUT OF THE ABOVE ASSESSMENT ORDER PASSED UN DER SECTION 143(3) READ WITH SECTION 263 OF THE ACT. ACCORDING LY, THE APPEAL OF THE REVENUE IS DISMISSED. ITA NOS.7114, 7119, 7115/M/2017 & ORS. M/S. STAR TRACK TERMINALS PVT. LTD. 7 12. IN THE RESULT, ALL THE FIVE APPEALS OF THE REVE NUE ARE DISMISSED AS INDICATED HEREINABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 30.04.2019. SD/- SD/- ( RAM LAL NEGI) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 30.04.2019. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORDER DY/ASS TT. REGISTRAR, ITAT, MUMBAI.