DCIT, CHENNAI V. M/s. A.S.Shipping Agencies P. Ltd., CHENNAI

ITA 827/CHNY/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 64672 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 6 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-12-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 13-12-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 31-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T N BETGIRI
• Assessee Lawyers: S SRIDHAR
• Keywords: Depreciation; Procedural lapse

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH : CHENNAI [BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER] I.T.A.NO.852/MDS/2010 ASSESSMENT YEAR : 2006-07 M/S A.S.SHIPPING AGENCIES P. LTD 113, ARMENIAN STREET CHENNAI 600 001 [PAN AAACA2906N] VS THE DY. CIT COMPANY CIRCLE I(1) CHENNAI (APPELLANT) (RESPONDENT) I.T.A.NO.827/MDS/2010 ASSESSMENT YEAR : 2006-07 THE DY. CIT COMPANY CIRCLE I(1) CHENNAI VS M/S A.S.SHIPPING AGENCIES P. LTD 113, ARMENIAN STREET CHENNAI 600 001 (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI S. SRIDHAR, ADVOCATE DEPARTMENT BY : SHRI T.N.BETGIRI DATE OF HEARING : 13-12-2012 DATE OF PRONOUNCEMENT : 17-12-2012 O R D E R PER N.S. SAINI, ACCOUNTANT MEMBER THESE ARE CROSS APPEALS FILED BY T HE REVENUE AND THE ASSESSEE AGAINST THE ORDER OF THE CIT(A)-III, CHENN AI, DATED 18.3.2010. I.T.A.NO.852 & 827/10 :- 2 -: 2. IN ITS APPEAL, THE REVENUE HAS RAISED THE FOLLOW ING GROUNDS: 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOM E TAX(APPEALS) IS CONTRARY TO THE LAW AND FACTS OF TH E CASE. 2. THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) ERRED IN HOLDING THAT WAREHOUSING CHARGES SHOULD BE TREATED AS PART OF CFS (CONTAINER FREIGHT STATION) INCOME AND THE SAME WOULD BE ACCORDINGLY ELIGIBLE FOR DEDUCTION UJS.80IA. 2.1 IT IS SUBMITTED THAT THE ORDER RELIED UPON B Y THE CIT(A) IN THE ASSESSEE'S OWN CASE FOR THE A.Y 2004-05 AND A.Y 2005-06 IN ITA NO.599/06-07 AND 327/07-08/A-III HAS NOT BECOME FINAL AS APPEAL PREFERRED BY THE REVENUE IS PENDING BEFOR E THE APPELLATE TRIBUNAL. 2.2 THE LEARNED COMMISSIONER OF INCOME TAX(APPEAL S) FAILED TO CONSIDER THE DISTINCTION MADE BETWEEN THE PUBLIC BONDED WARE HOUSE AND A CONTAINER FREIGHT STATION AND THAT WHIL E THE CONTAINER FREIGHT STATION IS DECLARED AS AN INFRAST RUCTURE FACILITY UJS.80IA A BONDED WARE HOUSE HAS NOT BEEN DONE SO. 2.3 THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS ) OUGHT TO HAVE SEEN THAT THE WAREHOUSING CHARGES ADMITTED BY THE ASSESSEE HAVE BEEN COLLECTED FROM THREE CUSTOMERS W ITH WHOM LONG TERM AGREEMENTS HAVE BEEN MADE BY THE ASSESSEE AND AS PER THE AGREEMENT IRRESPECTIVE OF T HE USAGE OF THE SPACE, WAREHOUSING CHARGES ARE PAYABLE. 3. THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) ER RED IN HOLDING THAT INSURANCE RECEIPTS SHOULD BE TREATED A S PART OF CFS INCOME (AND ACCORDINGLY ELIGIBLE FOR DEDUCTION UJS.80IA). 3.1 HAVING REGARD TO THE NARROW IMPORT OF THE TERM 'DERIVED FROM' RECOGNISED BY THE APEX COURT ITSELF IN SEVERA L DECISIONS, THE THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) OUG HT TO HAVE UPHELD THE ACTION OF THE ASSESSING OFFICER. 4. THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) ERRED IN HOLDING THAT THE TRAVEL EXPENDITURE INCURRED BY THE DIRECTORS SHOULD NOT BE APPORTIONED TO CFS ACTIVITY. 4.1 HAVING UPHELD THE APPORTIONMENT OF NUMBAL PLO T MAINTENANCE CHARGES, THE LEARNED CIT(A) OUGHT TO HA VE UPHELD THE ACTION OF THE ASSESSING OFFICER IN RESPE CT OF TRAVEL EXPENSES ALSO WHICH IS ON SIMILAR FOOTING WI TH NUMBAL PLANT MAINTENANCE CHARGES. I.T.A.NO.852 & 827/10 :- 3 -: 4.2 THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS ) FAILED TO CONSIDER THE FACT THAT THE EXPENDITURE ON TRAVEL LING OF DIRECTORS INCLUDE BOTH DOMESTIC AS WELL AS FOREIGN TRAVEL AND THEREFORE THE EXPENDITURE ON DIRECTORS WHO ARE COMMON FOR BOTH CF S AND NON CFS ACTIVITIES SHOULD BE OBVIOUSLY APPORTIONED BETW EEN THEM. 5. FOR THESE AND OTHER GROUNDS THAT MAY BE ADDUCED AT THE TIME OF HEARING, IT IS PRAYED THAT THE ORDER OF THE LEAR NED COMMISSIONER OF INCOME TAX(APPALS) BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 3. THE DR SUBMITTED THAT THE ONLY ISSUE INVOLVED IN THE REVENUES APPEAL WAS THAT WHETHER THE CONTAINER FREIGHT STATI ON (CFS) WAS AN ELIGIBLE INFRASTRUCTURE FACILITY FOR THE PURPOSE OF DEDUCTION U/S 80IA(4) OR NOT. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RE CORD. IN THE INSTANT CASE, THE UNDISPUTED FACTS ARE THAT THE ASSESSEE C LAIMED DEDUCTION U/S 80IA ON WAREHOUSE INCOME OF ` 96,59,229/- WHICH WAS DENIED BY THE ASSESSING OFFICER ON THE GROUND THAT IT WAS NOT DERIVED FROM THE ACTIVITY OF CFS AND EXCLUDED THE SAME FROM THE PROF ITS ELIGIBLE FOR DEDUCTION U/S 80IA FOLLOWING HIS ORDER FOR ASSESSM ENT YEAR 2004-05. 5. ON APPEAL, THE CIT(A), FOLLOWING HIS ORDER FOR ASSE SSMENT YEARS 2004-05 AND 2005-06 IN I.T.A.NO. 599/06-07 AND 327/ 07-08/A-III, HAS ALLOWED THE CLAIM OF THE ASSESSEE. 6. BOTH THE PARTIES BEFORE US ADMITTED THAT THE ISSUE HAS BEEN CONSIDERED AND DECIDED BY THE CHENNAI C' BENCH OF THE TRIBUNAL IN I.T.A.NO.852 & 827/10 :- 4 -: ASSESSEES OWN CASE, VIDE ITS CONSOLIDATED ORDER DATED 30.4.2010 PASSED FOR ASSESSMENT YEARS 2002-03 TO 2006-06 IN I .T.A.NOS. 890 TO 893 & 991 TO 994/MDS/2009 IN FAVOUR OF THE ASSESSE E . IN THE ABOVE QUOTED ORDER, THE TRIBUNAL HAS UNDER AS UNDER: 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND THE M ATERIAL AVAILABLE ON RECORD. FIRST OF ALL, WE WOULD LIKE TO MAKE AN OBSERVATION THAT BY NOT FOLLOWING THE DIRECTIONS OF THE TRIBUNAL WHICH WERE VERY WELL AVAILABLE BEFORE THE AO AT THE TIME WHEN HE WAS GIVING EFFECT TO THE CITS DIRECTION, IS A SERIOUS PROCEDURAL LAPSE ON HIS PART. WHEN THE ORDER OF THE CIT HAD ALREADY MER GED WITH THAT OF THE TRIBUNAL, THE DIRECTIONS GIVEN BY THE CIT NO LO NGER SURVIVED AND THE AO HAS SIMPLY TRIED TO FLOG A DEAD HORSE. HIS R EMARKS ARE SIMPLISTIC AND DIDACTIC, WHICH CARRY NO MEANINGFUL RESULT. IT WAS ARGUED BY THE LEARNED AUTHORISED REPRESENTATIVE THA T AFTER MAKING DEEP INVESTIGATION, THE LEARNED CIT(A) HAS FOUND, S IMILAR CLAIM MADE BY THE ASSESSEE IN OTHER YEARS, AS A VALID CLAIM AG AINST WHICH FINDING THE REVENUE IS IN APPEAL AGAINST ALLOWANCE OF TRAVE LLING EXPENDITURE AS APPORTIONED TO CFS ACTIVITY. WE HAVE SEEN THE CO MMON ORDER PASSED BY THE SAME LEARNED CIT(A) FOR THE ASST. YRS . 2004-05 AND 2005-06 DT. 26TH FEB., 2009, WHICH IS ALSO A SUBJEC T MATTER OF APPEAL BEFORE US. IN FACT, IN THESE YEARS, INVESTIG ATION OF FACTS WITH REGARD TO WAREHOUSING CHARGES HAVE BEEN MADE AS DIR ECTED BY THE HONBLE TRIBUNAL IN EARLIER YEARS. THE SAME OFFICER HAS FOUND IN THIS REGARD THUS : '3.7 THE CONTENTIONS OF THE AO AND THE SUBMISSION O F THE APPELLANT WERE CAREFULLY CONSIDERED BY ME. I HAVE A LSO CONSIDERED THE ADDITIONAL SUBMISSION OF THE AO SENT TO ME VIDE HIS LETTER DT. 13TH DEC., 2007 ENCLOSING THE ORDERS OF THE CIT-I, CHENNAI, PASSED FOR THE ASST. YRS. 2002-03 AND 2003-04 WHEREIN AGRE EING WITH THE AOS ACTION OF EXCLUDING WAREHOUSING INCOME FROM CF S INCOME HE SET ASIDE THE ASSESSMENT OF ASST. YRS. 2002-03 AND 2003-04 FOR EXCLUDING THE WAREHOUSING INCOME FROM CFS RECEIPTS AND CONSIDERING THE INCOME AND EXPENDITURE ON NUMBAL PLOT AND DIREC TORS TRAVELLING EXPENSES AFTER DUE VERIFICATION OF THE FACTS. I HAV E ALSO CONSIDERED THE COUNTER SUBMISSION OF THE AUTHORISED REPRESENTA TIVE THEREON. NOW I PROCEED TO DECIDE THE ISSUE AS UNDER. THE APPROVING GUIDELINES EXPECTS THAT ADEQUATE WARE HOUSING FACILITIES SHOULD BE PROVIDED BY THE CFS OPERATOR. IN FACT, THE DEFINITION OF CFS MEANS : INLAND CONTAINER DEPOT (ICD)/CONTAINER FREIGHT STA TION (CFS) HAS BEEN DEFINED AS A COMMON USER FACILITY WITH PUBLIC AUTHORITY STATUS EQUIPPED WITH FIXED INSTALLATIONS AND OFFERING SERV ICES FOR HANDLING AND TEMPORARY STORAGE OF IMPORT/EXPORT LADEN AND EM PTY CONTAINERS CARRIED UNDER CUSTOMS TRANSIT BY ANY APPLICABLE MOD E OF TRANSPORT PLACED UNDER CUSTOMS CONTROL. ALL THE ACTIVITIES RE LATED TO CLEARANCE OF GOODS FOR HOME USE, WAREHOUSING TEMPORARY ADMISS IONS, I.T.A.NO.852 & 827/10 :- 5 -: REEXPORT, TEMPORARY STORAGE FOR ONWARD TRANSIT AND OUTRIGHT EXPORT, TRANS-SHIPMENT, TAKE PLACE FROM SUCH STATIONS. 3.8 THEREFORE THE CFS ACTIVITY PRESUPPOSES ADEQUATE INFRASTRUCTURE TOWARDS WAREHOUSING AND THE INCOME THEREFROM CANNOT BE CONTENDED AS NON-CFS INCOME. 3.9 THE FACT THAT WAREHOUSING ACTIVITY OUTSIDE CFS DOES NOT QUALIFY FOR DEDUCTION UNDER S. 80-IA BY NO STRETCH CAN BE A CONSIDERATION FOR TREATING THE ACTIVITY INSIDE A NOTIFIED CFS ALIKE. THE ACTIVITIES OF CFS ARE COMPLETELY DIFFERENT FROM WHAT HAPPENS OUTSIDE. 3.10 THE GOVERNMENT OF INDIA, FURTHER TO THE ISSUAN CE OF ITS POLICY GUIDELINES REGARDING SETTING UP OF INLAND CONTAINER DEPOT (ICD) AND CFS IN INDIA HAS RELEASED A SET OF SPECIFIC GUIDELI NES CONTAINING THREE PARTS, VIZ., PART A, PART B AND PART C FOR THE ABOV E PURPOSE. THE GUIDELINES ESSENTIALLY LAYS DOWN BASIC CONDITIONS O NE HAS TO COMPLY WITH IN ORDER TO SET UP A CFS AND OPERATE THE SAME. 3.11 PART C OF THE ABOVE GUIDELINES GOVERNS THE PRO CEDURE FOR APPROVAL OF CFS AND ITS IMPLEMENTATION. IN TERMS OF THE SAID POLICY GUIDELINES ISSUED BY THE MINISTRY OF COMMERCE, GOVE RNMENT OF INDIA THE APPELLANT-COMPANY MADE AN APPLICATION AND AFTER DUE EXAMINATION OF THE APPLICATION, THE MINISTRY OF COM MERCE, GOVERNMENT OF INDIA THROUGH ITS NOTIFICATION NO. 16 /4/1995-INFRA 1 DT. 23RD FEB., 1995 HAS NOTIFIED THE SETTING UP OF A CONTAINER FREIGHT STATION AT NUMBAL BY THE APPELLANT-COMPANY. THE NOT IFICATION REFERRED TO ABOVE CLEARLY STIPULATES THAT THE CONDI TIONS GIVEN IN PART A AND PART B OF THE GUIDELINES REFERRED TO ABOVE SH ALL BE SATISFIED AND IN ADDITION THE NOTIFICATION HAS LAID DOWN CERT AIN MINIMUM FACILITIES WHICH ARE REQUIRED AT THE CFS. THE SAID MINIMUM LEVEL OF FACILITIES REQUIRED UNDER CL. C READS AS FOLLOWS : THE WAREHOUSING FACILITY SEPARATELY FOR EXPORTS AN D IMPORTS AND LONG-TERM STORAGE OF BONDED CARGO. HERE IT IS ALSO WORTHWHILE TO REPRODUCE THE ABOVEME NTIONED NOTIFICATION AND MINIMUM LEVEL OF FACILITIES REQUIR ED FOR READY REFERENCE : NO.16/4/1995-INFM-1 GOVERNMENT OF INDIA,MINISTRY OF COMMERCE INFRA-I SECTION NEW DELHI, 23 RD FEB., 1995 M/S A.S.SHIPPING AGENCIES(P) LTD 55, ARMENIAN STREET MADRAS 600 001 SUBJECT: APPLICATION FOR SETTING UP A CONTAINER FR EIGHT STATION AT NUMBAL VILLAGE, MADRAS. I.T.A.NO.852 & 827/10 :- 6 -: I AM DIRECTED TO REFER TO YOUR APPLICATION DT.9 TH JUNE 1994 ON THE ABOVE SUBJECT AND TO SAY THAT THE GOVERNMENT HAS AP PROVED YOUR PROPOSAL FOR SETTING UP A CONTAINER FREIGHT STATION AT NUMBAL VILLAGE, MADRAS FOR HANDLING EXPORT CARGO ONLY. THE APPROVAL IS SUBJECT TO THE FOLLOWING TERMS AND CONDITIONS : (I) PROPER INFRASTRUCTURE WOULD BE CREATED BY YOU K EEPING IN VIEW THE NORMS GIVEN IN PARTS A AND B OF THE GUIDELINES FOR SETTING UP INLAND CONTAINER DEPOTS/CONTAINER FREIGHT STATIONS (ICDS/C FSS) AND TO THE SATISFACTION OF THE CONCERNED CCE WITHIN A PERIOD O F SIX MONTHS FROM THE DATE OF ISSUE OF THIS LETTER. (II) NECESSARY BOND AND GUARANTEES WOULD BE EXECUTE D BY YOU WITH THE CONCERNED CCE; (III) THE APPROVAL WOULD BE SUBJECT TO CANCELLATION IN THE EVENT OF VIOLATION OF THE CUSTOMS AND OTHER LAWS OF THE LAND AND RULES. YOURS FAITHFULLY, (SD.) (N.D.AGNIHOTRI) JOINT DIRECTOR. MINIMUM LEVEL OF FACILITIES REQUIRED AT ICDS/CFSS THE FOLLOWING MINIMUM LEVEL OF FACILITIES ARE REQU IRED TO BE PROVIDED AT ICDS/CFSS - (A) PROVISION OF STANDARD PAVEMENT FOR HEAVY DUTY E QUIPMENT FOR USE IN THE OPERATIONAL AND STACKING AREA OF THE TERMINAL, IN C ASE WHERE ONLY CHASSIS OPERATION IS TO BE PERFORMED, THE PAVEMENT STANDARD COULD BE LIMITED TO THAT OF A HIGHWAY. A MINIMUM OF 35 PER CENT OF THE LAND ARE A (PROVIDED AS PER THE GUIDELINES1 ACRE FOR THE PORT CFS AND 3 ACRES FOR ICDS IN THE HINTERLAND) WOULD BE PAVED. (B) OFFICE BUILDING FOR ICD, CUSTOMS OFFICE AND A S EPARATE BLOCK FOR USER AGENCIES EQUIPPED WITH BASIC FACILITIES. (C) WAREHOUSING FACILITY, SEPARATELY FOR EXPORTS AN D IMPORTS AND LONG-TERM STORAGE OF BONDED CARGO. (D) GATE COMPLEX WITH SEPARATE ENTRY AND EXIT. (E) ADEQUATE PARKING SPACE FOR VEHICLES AWAITING E NTRY TO THE TERMINAL.. 3.12 THEREFORE, IF ONE HAS TO QUALIFY AS AN ELIGIBL E CONTAINER FREIGHT STATION OPERATOR, ONE HAS TO PROVIDE THE MINIMUM LEVEL OF I NFRASTRUCTURE AS PROVIDED IN THE NOTIFICATION AND AS SUCH HAVING ADE QUATE WAREHOUSING FACILITY IS AN ESSENTIAL PART OF THE MINIMUM LEVEL OF INFRASTRUCTURE REQUIREMENTS. 3.13 HERE IT MAY BE MENTIONED THAT AS PER PART B O F THE GUIDELINES FOR SETTING UP INLAND CONTAINER DEPOT (ICD) AND CONTAIN ER FREIGHT STATION (CFS) IN INDIA THE FOLLOWING INFRASTRUCTURE SHOULD BE AVA ILABLE AT THE ICDS/CFS. I.T.A.NO.852 & 827/10 :- 7 -: PROVISION OF STANDARD PAVEMENT FOR HEAVY DUTY EQU IPMENT FOR USE IN THE OPERATIONAL AND STACKING AREA OF THE TERMINAL. IN C ASES WHERE ONLY CHASSIS OPERATION IS TO BE PERFORMED, THE PAVEMENT STANDARD COULD BE LIMITED TO THAT OF A HIGHWAY. OFFICE HOLDING FOR ICD, CUSTOMS OFFICE AND A SEPA RATE BLOCK FOR USER AGENCIES EQUIPPED WITH BASIC FACILITIES. WAREHOUSING FACILITY, SEPARATELY FOR EXPORTS AND IM PORTS AND LONG- TERM STORAGE OF BONDED CARGO. GATE COMPLEX WITH SEPARATE ENTRY AND EXIT. 3.14 NOW AS CAN BE SEEN FROM THE ABOVE NOTIFICATION OF MINISTRY OF COMMERCE AND THE GUIDELINES THE APPROVAL IS SUBJECT TO THE CREATION OF MINIMUM LEVEL OF INFRASTRUCTURE FACILITIES. HENCE I T IS AN ESSENTIAL PART OF THE CFS OPERATION BUSINESS OF THE APPELLANT. FURTHE R, THE COMMR. OF CUSTOMS HAS ALSO NOTIFIED THE STIPULATED AREA AS PU BLIC BONDED WAREHOUSE VIDE HIS LETTER DT. 26TH SEPT., 2000. FURTHERMORE, VIDE PUBLIC NOTICE 173 OF 2001 AND SEVERAL OTHER PUBLIC NOTICES THE WAREHOUSE HAS BEEN INCLUDED IN THE CUSTOMS AREA. 3.15 THEREFORE, AFTER A CAREFUL CONSIDERATION OF TH E FACTS AND CIRCUMSTANCES OF THE CASE, VARIOUS STATUTORY REQUIREMENTS AND CON DITIONAL APPROVAL OF THE MINISTRY OF COMMERCE I FIND THAT THE CLAIM OF THE A PPELLANT IS ALLOWABLE. THE AO HAS BEEN WRONGLY INFLUENCED BY THE FACT THAT WAREHOUSING FACILITIES MAY BE SITUATED OUTSIDE CFS AREA ALSO AND SUCH WARE HOUSING FACILITIES DO NOT GET ANY DEDUCTION. THE AO IS VERY CORRECT THAT WAREHOUSING FACILITIES ALONE MAY NOT GET ANY DEDUCTION BUT WHEN THEY ARE P ART OF CFS AS A NECESSARY INFRASTRUCTURE AS DISCUSSED ABOVE AND SUC H CFSS CAN COME INTO EXISTENCE AND OPERATE ONLY IF IT PROVIDES MINIMUM I NFRASTRUCTURE FACILITY AS ONLY THEN SANCTION FOR THE CFS STATUS IS GRANTED TH EN SUCH WAREHOUSING FACILITY IS DIFFERENT FROM THE STAND ALONE WAREHOUS ING FACILITY OPERATED OUTSIDE CFS. IN FACT, SITUATION IS LIKE THAT THERE CAN BE A WAREHOUSE WITHOUT CFS BUT NOT A CFS WITHOUT WAREHOUSING AS CAN BE SEE N FROM THE NOTIFICATION PERTAINING TO THE APPELLANT WHERE IT I S PART OF MINIMUM LEVEL OF INFRASTRUCTURE. HENCE, IN SUCH A SITUATION WAREHOUS ING INCOME, IN MY OPINION, HAS TO BE TREATED AS PART OF CFS INCOME AN D ELIGIBLE FOR THE DEDUCTION UNDER S. 80-IA. THEREFORE, THE APPELLANT SUCCEEDS ON THIS GROUND IN BOTH THE YEARS. 8. THE FACTS IN ALL THE YEARS REMAINED SAME AND STATI C. THE REASONS GIVEN BY THE LEARNED CIT(A) IN THE ABOVE PARAS TO ALLOW T HIS CLAIM OF THE ASSESSEE ARE SUFFICIENT TO DRIVE US ALSO TO COME TO A SIMILA R CONCLUSION. THEREFORE, WE ALLOW WAREHOUSING INCOME TO BE A PART OF CFS INCOME AND HOLD IT ELIGIBLE FOR DEDUCTION UNDER S. 80-IA. IT IS FOUND FOR A FAC T THAT WAREHOUSING FACILITIES IN THIS CASE ARE A PART OF CFS BEING A N ECESSARY INFRASTRUCTURE. THE NOTIFICATION OF THE MINISTRY IS VERY CLEARLY WORDED IN THIS RESPECT. IN ALL THESE YEARS, THIS COMMON ISSUE IS ALLOWED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. 7. RESPECTFULLY FOLLOWING THE ABOVE QUOTED ORDER OF TH E TRIBUNAL, WE DISMISS THE GROUNDS OF APPEAL OF THE REVENUE. I.T.A.NO.852 & 827/10 :- 8 -: 8. IN ASSESSEES APPEAL, THE A.R OF THE ASSESSEE SUB MITTED THAT IN GROUND NOS.2 TO 6, THE ISSUE INVOLVED WAS T HAT THE CIT(A) ERRED IN SUSTAINING THE APPORTIONMENT OF EXPENSES BOOKED UNDER THE HEAD MAINTENANCE OF NUMBAL PLOT WITH REFERENCE TO CLEA RING AND FORWARDING OPERATIONS AS WELL AS WITH REFERENCE TO CFS OPERATI ON WITHOUT ASSIGNING PROPER REASONS AND JUSTIFICATION. 9. THE A.R SUBMITTED THAT SPECIFIC GROUNDS VIDE GROUND NOS. 2- A, 2-B, 2-C AND 2-D WERE TAKEN BEFORE THE CIT(A) W HICH WERE NOT TAKEN INTO CONSIDERATION WHILE DECIDING THE ISSUE. HE, THEREFORE, SUBMITTED THAT THE MATTER MAY BE REMANDED BACK TO T HE FILE OF THE CIT(A) FOR ADJUDICATING THE ISSUE AFRESH AFTER CONS IDERING THE ABOVE GROUNDS RAISED BY THE ASSESSEE BEFORE HIM. 10. THE DR HAD NO OBJECTION TO RESTORING THE ISSUE BACK TO THE FILE OF THE CIT(A). 11. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. THE UNDISPUTED FACTS OF THE CASE ARE THAT THE ASSESSEE CARRIES ON SHIPPING AGENCY AND ALSO CLEARING AND FORWARDING WORK BESIDE S CFS ACTIVITY. IN REGARD TO THE SHIPPING AGENCY, THE ASSESSEE TRA NSPORTS GRANITE BLOCKS FROM RAILHEADS LIKE SURAREDDYAPALEM AND OTHE R PLACES, STORE THE SAME IN THE NUMBAL PLOT BEFORE TRANS-SHIPMENT TO TH E PORT FOR EXPORT. IT WAS HIS SUBMISSION THAT NUMBAL PLOT WAS USED FOR STORAGE OF GRANITE I.T.A.NO.852 & 827/10 :- 9 -: BLOCKS AND THE ASSESSING OFFICER TREATED THE EXPEND ITURE OF ` 16,33,780/- AS DEDUCTION FROM THE INCOME OF CFS ACT IVITY AND IGNORED THE INCOME EARNED ON THIS ACTIVITY WHICH HAS BEEN O FFERED AS INCOME FROM NON-CFS ACTIVITY. IT WAS ALSO SUBMITTED BEFOR E THE CIT(A) THAT THE ASSESSING OFFICER SHOULD HAVE APPRECIATED THE F ACT THAT THE ASSESSEE WAS COLLECTING THE HANDLING CHARGES FROM V ARIOUS EXPORTERS FOR THE TRANSPORT/STORAGE AND MAINTENANCE AND THERE FORE, THE EXPENDITURE INCURRED HAS TO BE TAKEN IN CONNECTION WITH INCOME EARNED FROM THIS ACTIVITY. SINCE THERE WAS ACTUALLY A SUR PLUS IN RESPECT OF EXPENDITURE INCURRED FOR NUMBAL PLOT MAINTENANCE, N O DISALLOWANCE WAS CALLED FOR. THE CIT(A), FOLLOWING HIS ORDER FO R ASSESSMENT YEARS 2004-05 AND 2005-06 IN I.T.A.NO.599/06-07 AND 327/0 7-08/A-III DATED 26.2.2009, DECIDED THE ISSUE AGAINST THE ASS ESSEE. THE ASSESSEE SUBMITTED THAT BEFORE THE CIT(A), THE ASS ESSEE HAS TAKEN THE FOLLOWING GROUNDS WHICH READ AS UNDER: 2-A) THE ASSISTANT COMMISSIONER ERRED IN TREATING 50% OF THE TOTAL EXPENDITURE INCURRED IN RESPECT OF NUMBAL PLOT MAINTENANCE AMOUNT 16,33,780/- AS EXPENSES RELATING TO CFS. 2-B) THE APPELLANT SUBMITS THAT THE MAINTENANCE OF NUMBAL PLOT IS ONLY FOR CLEARING & FORWARDING ACTIVITIES AND FOR HANDLING OF BULK CARGO (GRANITE BLOCKS), TRANSPORT FROM RAILWAY YARDS LIKE SURAREDDYPALEM AND OTHER PLACES FOR ONWARD SHIPMENT. 2-C) THE APPELLANT, THEREFORE, SUBMITS THAT THE EXPENDITURE DOES NOT RELATE TO CFS ACTIVITY, AND HENCE, THE ASSISTANT COMMISSIONER OF INCOME TAX I.T.A.NO.852 & 827/10 :- 10 -: ERRED IN DEDUCTING 50% OF THE TOTAL EXPENDITURE INCURRED FROM THE INCOME OF CFS, WHICH IN THE APPELLANTS VIEW IS COMPLETELY HYPOTHETICAL AND ADHOC. 2-D) THE ASSISTANT COMMISSIONER OVERLOOKED THE FAC T THAT EXPENSES RELATING TO CFS HAVE ALREADY BEEN APPORTIONED AND CHARGED OFF TO CFS ACCOUNT AND HENCE, NO FURTHER ADDITION IS CALLED FOR. 12. BOTH THE PARTIES BEFORE US AGREED THAT WHILE DECI DING THE APPEAL OF THE ASSESSEE, THE CIT(A) HAS NOT ADJUDIC ATED UPON THE ABOVE GROUNDS OF APPEAL TAKEN BY THE ASSESSEE. FU RTHER, WE OBSERVE THAT THE TRIBUNAL IN PARA 15 OF ITS ABOVE Q UOTED ORDER, HAS DECIDED SIMILAR ISSUE BY HOLDING AS UNDER: 15. GROUNDS NOS. 2 TO 4 RELATE TO MAINTENANCE CHARGES CLAIMED FOR THE NUMBAL PLOT, WHICH IS THE PLACE WHERE THE ASSES SEE-COMPANY CARRIES OUT ITS ACTIVITIES INCLUDING CFS ACTIVITY I N THE SAME COMPLEX SUCH AS SHIPPING AGENCY, CLEARING AND FORWARDING. T HE ASSESSEE HAS TREATED THE MAINTENANCE CHARGES AS PART OF 'NON-CFS ACTIVITY'. THE AO AS WELL AS THE LEARNED CIT(A) HAVE DISALLOWED TH IS CLAIM OF THE ASSESSEE. THE LEARNED AUTHORISED REPRESENTATIVE HAS PLEADED BEFORE US THAT FOR DISALLOWING EXPENSES OF NUMBAL P LOT NO PROPER REASONS AND JUSTIFICATION HAVE BEEN GIVEN RATHER TH E FINDINGS ARE CONTRARY TO THE FACTS OF THE CASE. THE LEARNED DEPA RTMENTAL REPRESENTATIVE HAS SUPPORTED THE FINDING GIVEN BY T HE LEARNED CIT(A). 13. THEREFORE, WE SET ASIDE THE ORDER OF THE CIT(A) A ND RESTORE THE ISSUE BACK TO HIS FILE TO ADJUDICATE THE ISSUE AFRE SH AFTER TAKING INTO CONSIDERATION THE ABOVE QUOTED GROUNDS AND ALSO TH E DECISION OF THE TRIBUNAL QUOTED ABOVE. THUS, THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. I.T.A.NO.852 & 827/10 :- 11 -: 14. GROUND NO.7, 8, 9 & 10 OF THE APPEAL ARE DIRECTED AGAINST THE ORDER OF THE CIT(A) IN TREATING THE REVENUE EARNED IN RESPECT OF CANTEEN AMOUNTING TO ` 1,80,000/- AS NOT RELATING TO CFS ACTIVITY. 15. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER TREATED GROSS RENT OF ` 1,80,000/- RECEIVED FROM THE CANTEEN CONTRACTOR IN RESPECT OF CANTEEN SPACE USED BY HIM AS NOT ELIGIBL E FOR DEDUCTION U/S 80IA OF THE ACT. THE ASSESSEE SUBMITTED THAT THIS WAS PART OF CFS ACTIVITY AND THAT THIS WAS A SUBSIDIZED CANTEEN FOR USE OF MOST OF EMPLOYEES OF CFS AND AS AGAINST THE RENT OF ` 1,80,000/- EXPENDITURE INCURRED WAS SHOWN UNDER STAFF WELFARE EXPENSES AND DEPRECIATION ETC. AT ` 22,77,201/-. IT WAS SUBMITTED THAT IF CANTEEN IS NOT CONSIDERED AS PART OF CFS ACTIVITY, THE ASSESSEE WOULD BE ENTITL ED TO DEDUCTION OF A HIGHER AMOUNT AS EXEMPT. 16. ON APPEAL, THE CIT(A), HAS DISMISSED THE GROUND OF THE ASSESSEE FOLLOWING HIS ORDER FOR ASSESSMENT YEARS 2 004-05 AND 2005- 06. 17. WE FIND THAT THE ISSUE HAD ARISEN BEFORE THE TRIBUN AL IN ASSESSEES OWN CASE IN ASSESSMENT YEARS 2002-03 TO 2005-06 WHEREIN THE TRIBUNAL, VIDE PARA 18 OF ITS ORDER, HAD RESTOR ED THE ISSUE BACK TO THE FILE OF THE CIT(A) FOR ADJUDICATING THE SAME AF RESH. THE SAID PARA 18 OF THE TRIBUNALS ORDER READS AS UNDER: I.T.A.NO.852 & 827/10 :- 12 -: 18. GROUND NOS. 5 AND 6 RELATE TO EXCLUSION OF RENT RE CEIVED FROM CANTEEN BUILDING AS PART OF ELIGIBLE PROFITS IN TER MS OF S. 80-IA(4) OF THE ACT WITHOUT ASSIGNING PROPER REASONING AS PER T HE ASSESSEE. THE ASSESSEE HAS CONSIDERED A SUM OF RS. 1,80,000 TOWAR DS RENT FROM CANTEEN BUILDING AS CFS RECEIPTS FOR THE ASST. YR. 2004-05. THE CANTEEN BUILDING IS ADMITTEDLY SITUATED IN CFS COMP LEX. AGAIN, THE LEARNED CIT(A) HAS NOT GIVEN ANY VALID REASONING FO R COMING TO A CONCLUSION THAT THIS EXPENDITURE IS NOT ALLOWABLE. PARA 8 OF HIS ORDER IS SKETCHY AND NOT A SPEAKING ORDER. CONSEQUENTLY, WE RESTORE THIS ISSUE TO THE FILE OF THE LEARNED CIT(A) TO DECIDE T HE SAME BY WAY OF A SPEAKING ORDER. 18. WE, THEREFORE, SET ASIDE THIS ISSUE BACK TO THE FIL E OF THE CIT(A) TO ADJUDICATE THE SAME AFRESH IN TERMS OF THE DIREC TIONS ISSUED BY THE TRIBUNAL AS QUOTED ABOVE. THE GROUNDS RAISED BY TH E ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. 19. GROUND NOS. 11 TO 14 OF THE APPEAL ARE DIRECTED AGA INST THE ORDER OF THE CIT(A) EXCLUDING ` 8,59,694/- BEING MISCELLANEOUS INCOME EARNED AS NOT FORMING PART OF ELIGIBLE PROFITS RELA TABLE TO CFS ACTIVITY. 20. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER, WHILE COMPUTING THE DEDUCTION U/S 80IA OF THE ACT EXCLUD ED THE MISCELLANEOUS INCOME OF ` 8,59,694/- WITHOUT ASSIGNING ANY REASON. 21. ON APPEAL BEFORE THE CIT(A), THE ASSESSEE SUBMITTE D THAT UNDER THE IMPORT PROCEDURE, IF THERE WAS A LONG DEL AY AND DEFAULT ON THE PART OF THE IMPORTERS IN RELEASING THE CONTAINE RS AND PAYMENT OF DUTY UNDER THE CUSTOMS REGULATIONS, THE CARGO WAS A UCTIONED AND THE SALE PROCEEDS WERE ADJUSTED AGAINST STORAGE CHARGES DUE AND OTHER EXPENSES. DURING THE YEAR UNDER APPEAL, THE ASSES SEE WITH THE I.T.A.NO.852 & 827/10 :- 13 -: PERMISSION OF THE CUSTOMS DEPARTMENT ADVERTISED IN THE DAILY PAPERS AND AUCTIONED CARGO, THE NET INCOME FROM WHICH AMOU NTED TO ` 8,56,694/- AND HENCE, THE SAME WAS ELIGIBLE FOR DED UCTION U/S 80IA OF THE ACT. 22. THE CIT(A), FOLLOWING HIS CONSOLIDATED ORDER FOR AS SESSMENT YEARS 2004-05 AND 2005-06 (SUPRA), DISMISSED THE GR OUND OF APPEAL OF THE ASSESSEE. 23. WE FIND THAT THE TRIBUNAL IN ASSESSMENT YEARS 2002- 03 TO 2005-06, WHILE DECIDING SIMILAR ISSUE, VIDE ITS ORD ER DATED 30.4.2010 (SUPRA) HAS HELD VIDE PARA 23 OF ITS ORDER, AS UNDE R: 23. LIKEWISE, GROUND NOS. 5 AND 6 RELATE TO EXCLUSION OF INCOME EARNED FROM AUCTION OF CONTAINERS NOT TAKEN BY THE CONSIGNEES/IMPORTERS AS PER CUSTOMS REGULATIONS AND THE EXPENSES INCURRED THEREON. THIS ISSUE IS SIMILAR TO GROUND NOS. 7 AND 8 RAISED IN THE ASST. YR. 2004-05. WITH SIMILAR REASONING, THIS ISSUE IS ALSO RESTORED TO THE FILE OF THE LEARNED C IT(A) TO PASS A SPEAKING ORDER. 24. HENCE, WE SET ASIDE THE ORDER OF THE CIT(A) AND REM AND THE ISSUE BACK TO HIS FILE FOR ADJUDICATING THE ISSUE A FRESH IN TERMS OF THE DIRECTIONS GIVEN BY THE TRIBUNAL IN THE ABOVE QUOTE D ORDER. THUS, THE GROUNDS OF APPEAL OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. I.T.A.NO.852 & 827/10 :- 14 -: 25. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED WHEREAS THAT OF THE ASSESSEE IS ALLOWED FOR STATIS TICAL PURPOSES. ORDER PRONOUNCED ON MONDAY, THE 17 TH OF DECEMBER, 2012, AT CHENNAI. SD/- SD/- (CHALLA NAGENDRA PRASAD) JUDICIAL MEMBER (N.S.SAINI) ACCOUNTANT MEMBER DATED: 17 TH DECEMBER, 2012 RD COPY TO: APPELLANT/RESPONDENT/CIT(A)/CIT/DR