TaxTMI 
TaxTMI 
2012 (5) TMI 260
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....ion 617 of the Companies Act, 1956 and is functioning under the direct administrative control of the Ministry of Railways. It is engaged in the business of handling and transportation of containarised cargo. The activity of the assessee is carried out mainly on its Inland Container Depots (ICDs), Central Freight Stations (CFSs) and Port Container Terminals (PCTs) which are spread all over the country. It would appear that the assessee has a total of 45 ICDs. 3. Before we proceed further, it would be useful to appreciate the nature of the business activity of the assessee. Before the advent of the ICD, the transportation of containerised cargo to and from industrial centres used to face bottlenecks at the sea ports due to logistical and handling issues and issues relating to customs. For instance, the exporter of handicrafts at Jaipur had to organize for the transport of his cargo to Mumbai Port where customs formalities would be completed and the cargo would then be loaded into containers which would be loaded into the ship for export. The advent of ICD permitted the exporter to complete the handling and customs formalities at the assessee's ICD at Jaipur, from where customs-sea....
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....in (1995) 215 ITR St.17, which explained the rationale behind the provision, the following was the objective:- "34.2 Industrial modernisation requires a massive expansion of, and qualitative improvement in infrastructure. Our country is very deficient in infrastructure such as expressways, highways, airports, ports and rapid urban rail transport systems. Additional resources are needed to fulfil the requirements of the country within a reasonable time frame. In many countries the BOT (build-operate-transfer) or the BOOT (build-own-operate-transfer) concepts have been utilised for developing new infrastructure. 34.3 Applying commercial principles in the operation of infrastructure 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, highways, 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 Gover....
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.... 5 years and a deduction of 30 per cent of profits for the next 5 years. These companies have the choice of availing of such benefits in any 10 consecutive years out of initial 12 years from the year in which they commence production. 43.2 The Government has identified national waterways, the fourth mode of transport, for improving the transport infrastructure in the country. Inland waterways and inland ports play a vital role in improving a country's infrastructure. With the objective of improving the transport infrastructure, the Act has included inland waterways and inland ports in the definition of "infrastructure facility" as given in section 80-IA. The undertakings engaged in the development of such infrastructure would be entitled to two-tier fiscal benefits as outlined above." (underlining ours) 8. Thus it was for the first time from the assessment year 1999-2000 that inland ports started enjoying the deduction under Section 80IA as an "infrastructure facility". The object of the Government was to strengthen and improve the country's infrastructure in general and the transport infrastructure in particular. Inland ports facilitate the transport infrastructure by tak....
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....tention. Prior to the amendment made with effect from 1.4.2002 by the Finance Act, 2001, as noticed earlier, the Board was empowered to notify any public facility of a similar nature, other than what was mentioned as infrastructure facility. But an amendment was made and the power to notify was dropped. There was no provision made in the Act saying that the notification issued earlier would cease to have effect from 1.4.2002. Since the notification continued to have effect even beyond 1.4.2002, there is merit in the contention of the learned counsel for the assessee. Circular No.7/2002, dated 26th August, 2002, reported in (2002) 257 ITR (St.) 28 clarified as under: "Such projects, for which agreements have been entered into on or after April 1, 1995, but on or before March 31, 2001, and which have been notified by the Board on or before March 31, 2001, would continue to be exempt, subject to the fulfillment of the conditions prescribed in section 80-IA(4)(i)(b), as it existed prior to its substitution by the Finance Act, 2001." This circular fortifies the assessee's claim. 12. The next question that arises is whether the ICDs can be considered to be inland ports. There is....
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....hey are located in such a place where ships or vessels have direct access to them. The goods which are either removed from or brought into the ICDs are brought or taken away either by railway wagons or by container trucks, as the case may be. But it is common ground that customs clearances take place in the ICDs. 14. It is, therefore, for consideration as to whether the ICDs can be said to be "inland ports" for the purposes of the Explanation (d) below sub-section (4) of Section 80IA. We were not able to find a definition of the words "inland port" in any of the dictionaries. But the words "inland container depot" were introduced in Section 2(12) of the Customs Act, 1962, which defines "customs port". This was by way of an amendment made by the Finance Act, 1983 with effect from 13th May, 1983. Simultaneously clause (aa) was inserted in Section 7(1) of the said Act under which the CBEC was empowered to issue notification appointing the places which alone shall be considered as inland container depots for the unloading of imported goods and the loading of exported goods. On 24th April, 2007 the following clarification was issued by the Central Board of Excise and Customs apparent....
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.... Department of Revenue (Shri Padam Singh, Under Secretary (ITA-I) CBDT, North Block, New Delhi. Fax : 23095417" 16. It is significant to note that copies of both the aforesaid communications have been marked to the CBDT. The position therefore has been put beyond doubt by these communications. 17. The learned counsel for the assessee has drawn our attention to the definition of "dry port" as per "Handbook on the management and operations of dry ports" published by UNCTAD(Union Nations Conference on Trade and Development). In this handbook, an ICD has also been defined. The extracts from this book have been given at page 253 (annexure 15) of the paper book and the same is reproduced below:- "DRY PORT - Customs Clearance Depot located inland away from Seaport (s) giving maritime access to it (see also ICD). ICD - Inland Clearance Depot-a terminal located in the hinterland of a Gateway Port serving as a Dry Port for Customs Examination and Clearance of cargoes, thereby eliminating Customs formalities at the Sea Port. Alternatively also known as "Inland Customs Depot" (see also Dry Port). It further goes on to give a more elaborate definition under the hea....