2023 (8) TMI 757 - AT - Income Tax

Tribunal affirms deduction under section 80IA(4)(i) for CFS Uran division

DCIT C. CIR 8 (1) Versus All cargo Logistic Ltd, Mumbai

The tribunal upheld the Commissioner of Income Tax (Appeals) [CIT(A)] decision, allowing the assessee's deduction under section 80IA(4)(i) for the CFS ... Deduction u/s 80IA for CFS division - acquisition of the business under a Slump Sale business agreement - HELD THAT:- AR contentions that the assessee company is entitled to the deduction U/sec 80IA of the Act as the transferor company has already entered into agreement in carrying on the business as CFS and benefit of deduction is available to the assessee company as it was acquired under Slump Sale and there is only change of ownership and activities of the assessee fall under sec 80IA(4) of the Actis acceptable. We find the CIT(A) has dealt on the facts, provisions of law, remand report, rejoinder and judicial decisions. The Ld. DR could not controvert the findings of the CIT(A) with any new cogent material or information to take different view. CIT(A) has passed a reasoned and logical order. Accordingly,no infirmity in the order of the CIT(A) and uphold the same and dismiss the grounds of appeal of the revenue. Issues Involved:1. Entitlement to deduction under section 80-IA of the Income Tax Act, 1961.2. Interpretation of the phrase 'on its behalf' in the first proviso to sub-section 4 of section 80-IA.Detailed Analysis:1. Entitlement to Deduction under Section 80-IA of the Income Tax Act, 1961:The assessee company, engaged in operating and maintaining container freight stations (CFS), claimed deductions under section 80IA(4)(i) of the Income Tax Act for various CFS divisions. The Assessing Officer (AO) restricted the deduction, arguing that the eligibility criteria under section 80IA(4) were not fulfilled since the infrastructure facility was not new but acquired through a slump sale from a wholly owned subsidiary, M/s Transindia Logistic Park Pvt Ltd. The AO concluded that the assessee neither developed new infrastructure nor operated and maintained the infrastructure of the transferor company, thus disallowing the deduction for the CFS Uran division.The Commissioner of Income Tax (Appeals) [CIT(A)] accepted the assessee's additional evidence and remand report, concluding that the deduction under section 80IA(4)(i) was justified. The CIT(A) emphasized that the deduction is attached to the undertaking or enterprise, not the assessee, and the proviso to section 80IA(4)(i) allows the transferee enterprise to claim the deduction for the unexpired period if the infrastructure facility is transferred as per the stipulated conditions.The tribunal upheld the CIT(A)'s decision, agreeing that the assessee met the eligibility criteria and the deduction was correctly claimed. The tribunal noted that the AO's argument that the infrastructure facility was not new in the hands of the assessee contradicted the provisions of section 80IA(4)(i) and relevant CBDT circulars, which clarify that the deduction is available to the transferee enterprise for the unexpired period.2. Interpretation of the Phrase 'on its behalf' in the First Proviso to Sub-Section 4 of Section 80-IA:The AO argued that the phrase 'on its behalf' in the proviso to section 80IA(4)(i) implied a principal-agent relationship between the transferor and transferee enterprises, which was not present in this case. The CIT(A) and the tribunal disagreed, interpreting 'on its behalf' as referring to the transferee enterprise operating and maintaining the infrastructure facility, not necessarily on behalf of the transferor enterprise. The tribunal concluded that the AO's interpretation was not mandated by the provisions of the Act and thus lacked merit.Conclusion:The tribunal dismissed the revenue's appeal, upholding the CIT(A)'s order that allowed the assessee's deduction under section 80IA(4)(i) for the CFS Uran division. The tribunal found no infirmity in the CIT(A)'s reasoned and logical order, which was based on a thorough analysis of the facts, provisions of law, remand report, rejoinder, and judicial decisions. The tribunal emphasized that the deduction under section 80IA(4)(i) is attached to the undertaking or enterprise and is available to the transferee enterprise for the unexpired period, provided the transfer is not by way of amalgamation or demerger.