Tax Appeals Granted Deduction under Section 80IA(4)

The Tribunal allowed the appeals partly, granting the deduction under Section 80IA(4) for both AY 2015-16 and 2016-17. The other grounds related to the disallowance of interest on late payments of TDS and the reference to the Transfer Pricing Officer were dismissed as not pressed.

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Issues Involved:
1. Disallowance of deduction claimed under Section 80IA(4) of the Income-tax Act, 1961.
2. Disallowance of interest on late payments of TDS under Section 40 of the Act.
3. Reference to Transfer Pricing Officer (TPO) and related proceedings.

Summary of Judgment:

Issue 1: Disallowance of Deduction under Section 80IA(4)
The assessee claimed deductions under Section 80IA(4) for the Assessment Years (AY) 2015-16 and 2016-17, which were disallowed by the Assessing Officer (AO) and the Dispute Resolution Panel (DRP) on the grounds that the assessee did not have a direct agreement with the Central or State Government, local authority, or any other statutory body, as required by sub-clause (b) of Section 80IA(4)(i).

The Tribunal observed that the assessee had an agreement with Kakinada Sea Port Limited (KSPL), which was a Special Project Company (SPC) formed under a concession agreement between the Government of Andhra Pradesh (GoAP) and International Sea Ports PTE, Ltd. Singapore (ISPL). The Tribunal noted that KSPL acted as a nodal agency for GoAP, and the agreement between the assessee and KSPL should be considered as satisfying the requirement of an agreement with a statutory body.

The Tribunal also referred to CBDT Circular No. 10/2005, which relaxed the condition of having a direct agreement with the government, provided the infrastructure facility is certified by the concerned port authority. The assessee had obtained such a certificate from the Port Officer, Port Department, GoAP, certifying that the infrastructure facility developed by the assessee was part of the Kakinada Deep Water Port.

Additionally, the Tribunal cited various judicial precedents, including the decision of the Hon'ble High Court of Gujarat in CIT vs. Ranjit Projects Pvt. Ltd. and the ITAT Mumbai decision in United Liner Agencies of India (Private) Ltd. vs. JCIT (OSD), which supported the view that agreements with nodal agencies like KSPL fulfill the requirements of Section 80IA(4).

Based on these observations, the Tribunal allowed the assessee's claim for deduction under Section 80IA(4) for both AY 2015-16 and 2016-17.

Issue 2: Disallowance of Interest on Late Payments of TDS
The Tribunal noted that the assessee did not press the grounds related to the disallowance of interest on late payments of TDS for both assessment years. Accordingly, these grounds were dismissed as not pressed.

Issue 3: Reference to Transfer Pricing Officer (TPO)
For AY 2016-17, the assessee raised an issue regarding the reference to the TPO by the AO. The Tribunal noted that this ground was not pressed by the assessee and thus dismissed it as not pressed.

Conclusion:
The Tribunal allowed the appeals partly, granting the deduction under Section 80IA(4) for both AY 2015-16 and 2016-17, while dismissing the other grounds as not pressed. The judgment was pronounced on 25 April 2023 in Kolkata.

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