TaxTMI 
TaxTMI 
2010 (2) TMI 108
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.....Ys) 1997-98, 1998-99, 1999-2000, 2000-01 and 2005-06. 4. The assessee, in terms of the policy of the Government of India to encourage private sector participation in the development of infrastructure, bid for and was awarded a contract for leasing of container handling cranes at the Jawaharlal Nehru Port Trust ("JNPT"). In pursuance of the contract, the assessee deployed rail mounted quay side cranes, rail mounted gantry cranes and rubber tyred gantry cranes ("the cranes") at the container handling terminal of the JNPT. JNPT has a dedicated container handling terminal. According to the assessee, the only activities of the terminal consist of loading, unloading and storage of containers. 5. Under contracts dated September 2, 1994 and October 16, 1995, JNPT accepted the bid submitted by the assessee for supply, installation, testing, commissioning and maintenance of the cranes. By the terms of the agreement, JNPT agreed to pay lease charges in a total sum of Rs.215.50 crores over a period of ten years. The contract envisaged two options. Under the first option, operation and maintenance was to be carried out by the asses see. Under the second option, only maintenance was to be....
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....y engaged in the business of supplying, installing, testing, commissioning and maintaining cranes at the port and was not in the business of developing, maintaining and operating a port. Consequently, the assessee was held not to be in the business of developing an infrastructural facility. The Commissioner of Income-tax (Appeals) allowed the benefit of a deduction under section 80of the Act to the assessee on appeal. The Tribunal in a further appeal held that the assessee was entitled to the benefit of a deduction under section 80 of the Act andconfirmed the order of the Commissioner of Income-tax (Appeals). 8. On behalf of the Revenue, it has been submitted that: (i) section 80-lA of the Act requires the assessee to have developed, operated and maintained an infrastructural facility in order to qualify for a deduction. The assessee is not a developer of the facility but had only supplied and installed the container handling cranes at JNPT (the assessee is not operating the equipment and is, therefore, not eligible for a deduction under section 80-IA of the Act; and (iii) the equipment which has been installed is not a structure for loading and unloading at a port. 9. In ord....
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....project, irrigation project, sanitation and sewerage system. 10. As noted earlier, sub-clause (4A) of section 80-IA of the Act as it originally stood, stated that the section applied to an enterprise carrying on the business of developing, maintaining and operating any infrastructure facility, which fulfils certain conditions. With effect from April 1, 2000, by the Finance Act of 1999, certain changes were brought about. Section 80-IA and section 80IB were substituted for section 80-IA. Sub-section (4) of section 80-IA of the Act provided that the section shall apply to any enterprise carrying on the business of (i) developing, (ii) maintaining and operating, or (iii) developing, maintaining and operating an infrastructure facility which fulfils certain conditions. The conditions provided for the ownership of the enterprise by a company or by a consortium of companies, registered in India and stipulated a requirement of an agreement with the Central and State 'Governments, a local authority or any other statutory body ; the agreement being required to envisage the transfer of the facility after the period stipulated in the agreement. Subsequently, the requirement for the transfe....
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....operate transfer) concepts have been utiised for developing new infrastructure. 34.3 Applying commercial principles in the operation of infra structure facilities can provide both managerial and financial efficiency. In view of this, a ten-year concession including a five-year tax holiday has been allowed for any enterprise which develops, maintains and operates any new infrastructure facility such as roads, high ways, expressways, bridges, airports, ports and rail systems or any other public facility of similar nature as may be notified by the Board on BOT or BOOT or similar other basis (where there is an ultimate transfer of the facility to a Government or public authority). The enterprise has to enter into an agreement with the Central or State Government or a local authority or any other statutory authority for this purpose. The period within which the infrastructure facility has to be transferred needs to be stipulated in the agreement between the undertaking and the Government concerned. The enterprise has to be owned by a company registered in India or a consortium of such companies. The tax holiday will be in respect of income derived from the use of the infrastructure f....
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....has been decided that such structures will be included in the definition of "port" for the purposes of sections l0(23G) and 80-IA of the Income-tax Act, 1961, if the following conditions are fulfilled: (a) the concerned port authority has issued a certificate that the said structures form part of the port, and (b) such structures have been built under BOT and BOLT schemes and there is an agreement that the same would be transferred to the said authority on the expiry of the time stipulated in the agreement." 15. The importance of the circular, in so far as the subject-matter of these proceedings is concerned, lies in the fact that the Board noted that it was in receipt of representations seeking a clarification on whether structures at ports for storage, loading and unloading, etc., would fall within the definition of a port, inter alia, for the purposes of section 80-IA of the Act. The Board clarified that such structures would be included in the definition of "port" for the purposes of section 80-IAof the Act, subject to the fulfillment of the condition that the port authority must issue a certificate that the structures form a part of the port; that such structures had ....
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.... period of ten years for loading and unloading of containers at the port and that the cranes that were to be supplied by the assessee form an integral part of the port. JNPT clarified that the contracts have been executed under the BOLT scheme and in accordance with its directions, the cranes would be transferred to the port trust at no cost on the expiry of a period of ten years of the commencement of the contract. 18. Now, it is in the background of the evolution of the law that the controversy in the present case would have to be considered. The contention of the Revenue is that the assessee was not engaged in developing the facility at all and that under the contract that was entered into between the assessee and JNPT all that the assessee was required to carry out was to supply and install cranes at the port. The submission cannot be accepted. The expression "development" has not been artificially defined for the purposes of section 80-IA of the Act and must, therefore, receive its ordinary and natural meaning. Under the terms of the contract between the assessee and JNPT, the assessee undertook an obligation for supplying, installing, testing, commissioning and maintenance....
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....on under section 80-IA. Parliament did not legislate a condition impossible of compliance. A port is defined to be an infrastructure hire facility and the circular of the Board clarified that a structure for load ing, unloading, storage, etc., at a port would qualify for deduction under section 80-IA. The condition of a certificate from the Port Authority was fulfilled and JNPI' certified that the facility provided by the assessee was an integral part of the port. The assessee developed the facility on a BOLT basis under the contract with JNPT. On the fulfilment of the lease of ten years, there was a vesting in the JNPT free of cost. 20. Before the Tribunal, material was placed on record by the assessee to indicate the nature and extent of the activities undertaken by it in ensuring that the equipment which was supplied was fully operational. The assessee had in its employment diverse employees, including a senior manager, a manager, assistant manager and five deputy managers (operations) in addition to assistant engineers, technical officers and operators-cum-technicians. On considering the material on record including letters of the Port Authority, the Tribunal came to the con....
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....the Act that Parliament eventually stepped in by amending the provisions of section 80-IA of the Act so as to clarify that in order to avail of a deduction, the assessee could (i) develop; or (ii) operate and maintain or (iii) develop, operate and maintain the facility. 23. While dealing with this submission, we note that neither in the memo of appeal nor in the submissions before us has any effort been made to suggest on the part of the Revenue that the circulars of the Board are not binding on the Revenue. Nor for that matter was it the submission of the Revenue that the circulars issued by the Board from time to time were in violation of or contrary to legal provisions. Plainly, right from 1996 the Central Board of Direct Taxes was seized with the question, as to whether infrastructure facilities developed under a BOLT project would qualify for exemption under section 80-IA of the Act. The first circular in that regard that was issued on January 23, 1996, specifically dealt with whether section 80-IA(4A) of the Act would be applicable to a BOLT scheme involving infrastructure facility for the Indian Railways. The circular clarified that an infrastructure facility set up on a ....
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....velopment of an infra structure facility. The provision was intended to give an incentive to investment for infrastructural growth in the country. In Bajaj Tempo v. CIT [1992] 196 ITR 188 the Supreme Court emphasized that a provision in a taxing statute granting incentives for promoting growth and development should be construed liberally. In the present case, the administrative circulars issued by the Central Board of Direct Taxes proceeded on that basis by adopting a liberal view of the scope and ambit of the provisions of section 80-IA of the Act. Parliamentary intervention endorsed the administrative practice. A provision inserted by the Legislature to supply an obvious omission and to make a section workable has in certain circumstances been regarded as retrospective particularly when it was intended to remedy unintended consequences. Allied Motors P. Limited v. CIT [1997] 224 ITR 677 (SC) and CIT v. Alom Extrusions Limited [2009] 319 ITR 306 (SC). The Tribunal having only followed these provisions, we do not find any just reason to interfere in our appellate jurisdiction. 24. Another submission which was urged on behalf of the Revenue is that under clause (iii) of sub-sect....