2019 (6) TMI 477 - AT - Income Tax

Tribunal affirms deduction for infrastructure facilities under Section 80IA(4) for multiple assessment years

The Asst. Commissioner of Income Tax Central Circle-2 Visakhapatnam Versus M/s Sravan Shipping Services Pvt. Ltd. And (Vice-Versa)

The Tribunal upheld the CIT(A)'s decision, allowing the assessee's claim for deduction under Section 80IA(4) for the A.Ys. 2011-12 to 2014-15. The ... Deduction u/s 80IA(4) - operating and maintenance of the infrastructure facility i.e. Container Freight Station (CFS) - objection regarding agreement with the Government and the status of CFS as port - allegation that the assessee has not entered into an agreement with Govt. of India or State or local authority for the purpose of developing the infrastructure - HELD THAT:- Respectfully following the view taken by this Tribunal and the decision of Hon’ble Madras High Court in CIT Vs. AL Logistics (P) Ltd. [2015 (1) TMI 401 - MADRAS HIGH COURT] and CIT Vs. Continental Warehousing Corporation [2015 (5) TMI 656 - BOMBAY HIGH COURT] we hold that the assessee is entitled for deduction u/s 80IA(4). Issues Involved:1. Disallowance of deduction claimed under Section 80IA of the Income Tax Act.2. Requirement of an agreement with the Central Government, State Government, or local authorities.3. Classification of Container Freight Station (CFS) as an infrastructure facility or port.4. Relevance of Board Circulars and previous judicial decisions.Issue-wise Detailed Analysis:1. Disallowance of Deduction Claimed under Section 80IA:The assessee, engaged in stevedoring, transportation, and warehousing, claimed a deduction under Section 80IA for operating and maintaining a Container Freight Station (CFS). The Assessing Officer (AO) disallowed the deduction, asserting that the assessee did not meet the conditions laid out in Section 80IA, particularly the lack of an agreement with the government and the classification of CFS as a port. The assessee provided evidence of necessary permissions and approvals from the Ministry of Commerce and Industry and the Commissioner of Customs, declaring the CFS area as a 'customs area'. The Commissioner of Income Tax (Appeals) [CIT(A)] allowed the appeal, following a similar decision in the case of Gateway East India (P) Ltd.2. Requirement of an Agreement with the Government:The AO argued that the assessee did not have an agreement with the Central Government, State Government, or any local authority for developing, operating, and maintaining the infrastructure facility. The Tribunal referenced the decision in A.L. Logistics P. Ltd., where it was held that even in the absence of a specific agreement, compliance with government conditions and approvals suffices. The Tribunal noted that the Ministry of Commerce and Industry had approved the assessee’s proposal and that the necessary bonds and guarantees were executed with the Commissioner of Customs.3. Classification of CFS as an Infrastructure Facility or Port:The AO contended that the CFS did not qualify as a port under Section 80IA(4). However, the Tribunal cited the Supreme Court's decision in Container Corporation of India Ltd., which held that Inland Container Depots (ICDs) and CFSs are considered inland ports for the purposes of Section 80IA(4). The Tribunal emphasized that once the Commissioner of Customs declares a CFS area as a customs area, it qualifies as an extension of a port. The Tribunal also referenced the decision of the Delhi High Court in Container Corporation of India Ltd., which affirmed that ICDs and CFSs are infrastructure facilities eligible for deductions under Section 80IA(4).4. Relevance of Board Circulars and Previous Judicial Decisions:The AO relied on CBDT Circular No.178/42/2010 to argue that CFS is not a port. However, the Tribunal pointed out that the Bombay High Court in Pr.CIT Vs. JWC Logistic Park (P) Ltd. dismissed similar arguments, holding that CFSs qualify as ports for the purposes of Section 80IA(4). The Tribunal also referenced the decision of the Madras High Court in CIT Vs. A.L. Logistics (P) Ltd., which supported the assessee's claim for deduction under Section 80IA(4).Conclusion:The Tribunal upheld the CIT(A)'s decision, allowing the assessee's claim for deduction under Section 80IA(4) for the A.Ys. 2011-12 to 2014-15. The Tribunal dismissed the revenue's appeals and the assessee's cross objections as infructuous. The Tribunal's decision was based on the comprehensive analysis of relevant judicial precedents and statutory provisions, affirming that CFSs qualify as infrastructure facilities eligible for deductions under Section 80IA(4).