2016 (5) TMI 1487 - AT - Income Tax

Assessee's Appeals Partly Allowed, Revenue's Appeals Dismissed

The Tribunal partially allowed the assessee's appeals, remitting certain issues back to the Assessing Officer for further verification and granting relief ... Disallowance of deduction u/s. 80IB(11A) - Held that:- Remit the file back to the Assessing Officer to consider the claim of the assessee. The assessee would be eligible to claim deduction u/s. 80IB(11A) on the share of income from the business of warehousing, transportation and handling of foodgrains of the units (warehouses) which have started operating on or after 01-04-2001. Disallowance of deduction u/s. 80IA(4) - assessee has set up Inland Container Depot (ICD) and Container Freight Station (CFS) for handling bonded warehousing facilities on leasehold land of SIDCO - Held that:- The Hon'ble Madras High Court in the case of Commissioner of Income Tax Vs. A.L. Logistics (P.) Ltd. [2015 (1) TMI 401 - MADRAS HIGH COURT] has held that CFS is part of Inland port and therefore, is an infrastructure facility as defined in Explanation to section 80IA(4)(i) of the Act. In view of the various decisions discussed above and the facts of the instant case we accept ground no. 2 raised in the appeal of the assessee for assessment year 2009-10. Thus, we hold that the assessee is eligible to claim deduction u/s. 80IA(4) in respect of the ICD/CFS set up by the assessee. Addition in respect of payment made by the assessee to the Maharashtra State Warehousing Corporation Karmachari Welfare Fund - Addition u/s 40A(a) - Held that:- In Vinay Narayan Vajpayee [1980 (1) TMI 204 - SUPREME COURT] held that the contribution made by the assessee towards Karamchari Welfare Fund falls within the expression ‘as required by or under any other law” for the purpose of section 40A(a) of the Act. We do not find any error in the findings of Commissioner of Income Tax (Appeals) on this issue. Neither, the ld. DR has been able to controvert the said findings nor the ld. DR has placed on record any judgment contrary to the view taken by the Co-ordinate Bench of the Tribunal. Hence, the ground raised in the appeal of Department are dismissed being devoid of any merit. Addition on account of “understatement of warehousing charges” - addition on the basis of remarks made in the Audit report - Held that:- A perusal of the impugned findings by Commissioner of Income Tax (Appeals) shows that the assessee has furnished explanation in respect of alleged understatement of warehousing charges. The assessee has purportedly offered the amount of insurance claim for tax in the year of receipt. In support of his submissions the assessee has furnished computation statements for assessment years 2007-08, 2008-09 and 2009-10. The Commissioner of Income Tax (Appeals) has deleted the addition after considering the same. We do not see any infirmity in the action of Commissioner of Income Tax (Appeals) in deleting the addition. Once the assessee has offered the amount to tax in the year of receipt of claim, the same amount cannot be taxed twice. Addition of fixed deposit closing balance differences - whether or not the assessee has offered the differences as its income for the respective assessment years - Held that:- A perusal of the impugned order shows that the Commissioner of Income Tax (Appeals) has rejected the claim of the assessee and sustained the addition made by the Assessing Officer. Since, the claim of the assessee in respect of aforesaid ground has been rejected by the Commissioner of Income Tax (Appeals) there should be no grouse for the Revenue against the said findings of the Commissioner of Income Tax (Appeals). Addition of understatement of income resulting from overstatement of “other liability” under the heads fire at Kalamboli warehouse and fire at Kopargaon warehouse - Held that:- DR has not been able to show from records that the findings of Commissioner of Income Tax (Appeals) on this issue are erroneous. The assessee has received insurance claim on account of loss of capital asset, therefore, there is no infirmity in treating the claim amount as capital receipt. The ld. DR has not been able to controvert the finding of Commissioner of Income Tax (Appeals) on this issue. The findings of Commissioner of Income Tax (Appeals) are upheld Issues Involved:1. Disallowance of deduction claimed under Section 80IB(11A) of the Income Tax Act.2. Disallowance of deduction claimed under Section 80IA(4) of the Income Tax Act.3. Deletion of additions made during assessment proceedings related to payments to welfare funds, warehousing charges, fixed deposits, and other liabilities.4. Allowance of prior period expenses.Issue-wise Detailed Analysis:1. Disallowance of Deduction Claimed under Section 80IB(11A):The assessee, a state government undertaking providing warehousing facilities, claimed deductions under Section 80IB(11A) for income derived from warehousing services. The Assessing Officer disallowed these claims for assessment years 2008-09 and 2009-10. The Commissioner of Income Tax (Appeals) upheld the disallowance, noting that the assessee did not maintain separate accounts for warehouses storing food grains. However, the Tribunal found that the assessee was engaged in the integrated business of handling, storage, and transportation of food grains, making it eligible for the deduction. The Tribunal remitted the matter back to the Assessing Officer to determine the deduction based on the utilization of warehouses for food grains storage.2. Disallowance of Deduction Claimed under Section 80IA(4):For assessment year 2009-10, the assessee claimed deductions under Section 80IA(4) for warehousing facilities, arguing that these fell within the definition of infrastructure facilities. The Assessing Officer disallowed the claim, stating that the warehouses were not built under BOT or BOLT schemes and did not fall within the definition of 'infrastructure facilities.' The Tribunal, referencing the decision in ACIT Vs. JWC Logistics Park Pvt. Ltd., held that the assessee's facilities met the criteria for infrastructure facilities and were eligible for the deduction under Section 80IA(4).3. Deletion of Additions Made During Assessment Proceedings:- Payments to Welfare Funds: The Commissioner of Income Tax (Appeals) deleted the addition of Rs. 20,08,350/- paid to the Maharashtra State Warehousing Karmachari Welfare Fund, following the Tribunal's earlier decision in the assessee's favor.- Warehousing Charges: The addition of Rs. 31,34,000/- for understated warehousing charges was deleted after the Commissioner found that the income was accounted for on a cash basis in the books and on an accrual basis in the computation statement.- Fixed Deposits: The Commissioner rejected the claim for differences in fixed deposits, sustaining the Assessing Officer's addition.- Other Liabilities: The addition of Rs. 16.85 lakhs due to the overstatement of other liabilities was deleted. The Commissioner found that the insurance claim received was a capital receipt and thus correctly treated by the assessee.4. Allowance of Prior Period Expenses:The Assessing Officer added Rs. 24,99,713/- for prior period expenses. The Commissioner of Income Tax (Appeals) allowed Rs. 19,27,386/- of these expenses, noting that they crystallized during the relevant assessment year. The Tribunal upheld this decision, finding it well-reasoned and justified.Conclusion:The Tribunal allowed the assessee's appeals in part, remitting certain issues back to the Assessing Officer for further verification and granting relief on others. The Revenue's appeals were dismissed, upholding the deletions and allowances made by the Commissioner of Income Tax (Appeals).