Tribunal upholds deductions for warehouses, food grains; disallows ocean freight payments to NRI owners.

The Tribunal upheld the CIT(A)'s decision to allow the assessee's deduction under Section 80IA for profits from standalone warehouses, citing a certificate from the Port Authority. It also upheld the deduction under Section 80IB for handling food grains, rejecting the Revenue's argument on notional profits. Disallowance of ocean freight payments to NRI shipping owners was deleted based on CBDT Circular No. 723, but the matter was sent back for payments to Indian beneficiaries. The Tribunal supported the CIT(A)'s deletion of disallowance for loan redemption reserve and commission expenses, while dismissing issues on freight payment to suppliers and sale of DEPB license. The case was remanded for fresh consideration on reimbursement of freight charges. The Revenue's appeal was dismissed, and the assessee's appeal was partly allowed.

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Issues Involved:
1. Deduction under Section 80IA for profits derived from standalone warehouses.
2. Deduction under Section 80IB for profits derived from handling, storage, and transportation of food grains.
3. Disallowance under Section 40(a)(ia) on account of payment of ocean freight.
4. Disallowance of provision for loan redemption reserve while computing book profit under Section 115JB.
5. Disallowance of freight payment to suppliers.
6. Disallowance of commission expenses under Section 40(a)(ia).
7. Addition on account of sale of DEPB license.
8. Reimbursement of freight charges.

Issue-wise Detailed Analysis:

1. Deduction under Section 80IA for Profits Derived from Standalone Warehouses:
The Revenue contested the CIT(A)'s decision to allow the assessee's deduction under Section 80IA for profits derived from standalone warehouses, arguing that standalone warehouses do not fall under the definition of "infrastructure facility" in the Explanation to Section 80IA. The Tribunal upheld the CIT(A)'s decision, referencing CBDT Circular No. 10 of 2005, which includes structures at ports for storage, loading, and unloading as part of port infrastructure if certified by the Port Authority. The Visakhapatnam Port Trust had issued such a certificate for the assessee's warehouses.

2. Deduction under Section 80IB for Profits Derived from Handling, Storage, and Transportation of Food Grains:
The Revenue argued that the assessee was not eligible for deduction under Section 80IB as the business was not conducted with third parties, but rather involved notional profits. The Tribunal upheld the CIT(A)'s decision, citing the Calcutta High Court's ruling in the case of ITC Limited, which held that deduction under Section 80IA cannot be denied merely because the generated power was consumed internally and not sold to outsiders.

3. Disallowance under Section 40(a)(ia) on Account of Payment of Ocean Freight:
The Assessing Officer disallowed the ocean freight payments due to the assessee's failure to deduct tax at source. The CIT(A) deleted the disallowance for payments made to NRI shipping owners or their resident sub-agents, based on CBDT Circular No. 723. For payments to Indian beneficiaries, the CIT(A) relied on the Special Bench decision in Merlin Shipping & Transporters, which was later overruled. The Tribunal upheld the deletion for payments to NRI ship owners but restored the matter to the Assessing Officer for payments to Indian beneficiaries, allowing the assessee to present alternative contentions.

4. Disallowance of Provision for Loan Redemption Reserve while Computing Book Profit under Section 115JB:
The Assessing Officer disallowed the deduction for the loan redemption reserve as it was shown in the appropriation account, not debited to the profit & loss account. The CIT(A) deleted the disallowance, reasoning that the reserve was for an ascertained liability and citing the ITAT Kolkata Bench decision in IOL Ltd. The Tribunal upheld the CIT(A)'s decision, referencing the Mumbai and Hyderabad Bench decisions that the profit & loss appropriation account should be considered for computing book profit under Section 115JB.

5. Disallowance of Freight Payment to Suppliers:
The assessee did not press this ground during the hearing, leading to its dismissal.

6. Disallowance of Commission Expenses under Section 40(a)(ia):
The Assessing Officer disallowed commission expenses due to non-deduction of tax at source. The CIT(A) directed the Assessing Officer to verify payments made before 31st March 2009. The Tribunal restored the matter to the Assessing Officer for fresh consideration, allowing the assessee to present alternative contentions.

7. Addition on Account of Sale of DEPB License:
The assessee did not press this ground during the hearing, leading to its dismissal.

8. Reimbursement of Freight Charges:
The Tribunal noted that the CIT(A) did not decide on this issue despite specific submissions from the assessee. The matter was restored to the Assessing Officer for fresh consideration.

Conclusion:
The Tribunal dismissed the Revenue's appeal and partly allowed the assessee's appeal for statistical purposes, directing the Assessing Officer to reconsider certain issues after providing the assessee an opportunity to present its case.

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