TaxTMI 
TaxTMI 
2013 (6) TMI 665
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.... earns income from the business of operation of ships. For the AY 2008-09 the assessee filed its return of income on 21/10/2008 disclosing its total income of Rs. 55,76,190/- arrived at after claiming deduction of Rs. 54,81,140/- u/s 80IA of the IT Act. The assessment was taken up for scrutiny and was completed u/s 143(3) vide order dated 24/11/2010 determining the total income at Rs. 1,34,93,930/- after disallowing the claim of the assessee for deduction u/s 80IA of Rs. 54,81,140/- and disallowance of payments to M/s PSA Marine Pt. Ltd. of Rs. 24,36,600/-. 3. In respect of the disallowance of 80IA, the AO observed that the assessee is not found eligible for claim of deduction u/s 80IA for the following reasons: "i) The conditions spe....
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....ing out of any operations and much less providing expert services. He further observed that other part of explanation furnished by the assessee that it had other areas of work not covered by BIMCO agreement, etc. is also carefully considered and weighed against the various BIMCO clauses. The AO, therefore, held that the explanation is not found satisfactory as no such necessity was found warranted in making payment to PSAM in spite of BIMCO agreement and assessee having no man power/employees of its own. 5. On appeal, the CIT(A) observed that the additional evidence sought to be admitted during the appellate proceedings does not deserve admission. The CIT(A) held that the subsequent issuance of the above stated letter, as also the audit ....
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.... if there is no legal/contractual obligations, it is clear that only an expenditure shown as incurred wholly and exclusively for the purpose of business can be so allowed as a deduction. In view of the above observations, the CIT(A) confirmed the action of the AO. 7. Aggrieved, the assessee is in appeal before us and has raised the following grounds of appeal: "1. The learned CIT(A) has erred in law and in the facts and circumstances of the case in upholding the disallowance of claim of the assessee for deduction of Rs. 54,81,140 u/s 80IA of the Act. 2. The learned CIT(A) ought to have noted that the assessee has complied with the substantial requirements of section 80IA and therefore the deduction should not have been denied on pr....
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....held as follows:- "5. We have considered the rival submissions and also perused the material available on record. Admittedly, the assessee is a joint venture company of M/s. Ocean Sparkle Ltd. Assessee entered into an agreement with M/s. Ennore Port Ltd. for maintenance and operation. As rightly submitted by the learned representative for the assessee for the assessment year 2003-04 in ITA No.238/Hyd/2007, in the case of M/s. Ocean Sparkle Limited, after considering similar agreement with M/s. Ennore Port Ltd., this Tribunal, vide its order dated 18.7.2008, found that the assessee has complied with all the three conditions prescribed under S.80IA(4) of the Act. One of us, the Judicial Member, was a party to the order of the Tribunal date....
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....lly identical to that of the case decided by the coordinate bench in assessee's own case for AY 2006-07, respectfully following the same, we set aside the order of the CIT(A) and allow the claim of the assessee for deduction of Rs. 54,81,140 u/s 80IA of the Act. Accordingly, ground nos. 1, 2 & 3 are allowed. 10. With respect to ground Nos. 4 to 6, the learned counsel for the assessee submitted that the payment of Rs. 24,36,600/- to PSAM is to establish business contingency. Even though the assessee has already entered into BIMCO agreement with OSL. It was submitted by the learned counsel that BIMCO agreement between SSPTDL and Ocean Sparkle Ltd was placed at pages 72 to 92 of the paper book, which is different from consultancy agreement ....
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....e to PSAM is not genuine or not required except for saying that the assessee has already entered BIMCO agreement with OSL, which takes care of all the requirements of the assessee. The assessee's contention that the primary responsibility for carrying out services rests on the assessee and as such they are required to engage other consultancy service has been explained at para 3 of the letter dated 12/11/2010 submitted by the assessee, which is as under: "3. We invite your kind attention to Article 9 of the POSA agreement which mentioned various specific services to be rendered by us with reference to the LNG Terminal and related services. We specifically invite your attention to Clause No. 9.3 and 9.5. All these specific services and ex....