TaxTMI 
TaxTMI 
2015 (5) TMI 387
X X X X Extracts X X X X
X X X X Extracts X X X X
....Ltd., which changed its name to Kakinada Sea Ports Ltd., on 18th September, 2001. Thereafter, Kakinada Sea Port Ltd., on 01.12.2001 entered into sub-lease agreement with the assessee company to lease out 20.00 acres of land for a period of 20 years. This sub-lease agreement was duly approved by the Government of Andhra Pradesh vide Lr.No.11694/P1/2001 dated 15.12.2001. Out of the 20.00 acres of land taken on lease by the assessee company, part was utilized for construction of godowns for covering storage and the remaining part was used as a open yard for storage of goods like granite, iron ore and other dry bulk cargo. In the returns of income filed for all the 5 years under consideration, the assessee company claimed deduction under section 80IA in respect of profit derived from the business of providing storage facilities and handling on cargo as under : A.Y. Amount of deduction 2006-07 Rs.22,52,369 2007-08 Rs.1,04,18,618 2008-09 Rs.96,83,107 2009-10 Rs.1,74,89,995 2010-11 Rs.1,64,69,823 3.1. During the course of assessment proceedings the claim of the assessee for deduction under section 80IA was examined by the A.O. and on such examination....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e for storage includes close-d yard, open yard which is capable of storing and handling the inbound and outbound cargo. (e) The appellant relied on the decision of Ocean Sparkle Ltd. Vs. DCIT (2006) 155 Taxmann 133 (Hyd). (f) The A.R. also submitted agreement between Government of A.P. & KSPL, lease deed between KSPL and the appellant and the judicial precedents on issues raised in grounds of appeal etc." 3.3. The Ld. CIT(A) found merit in the above submissions made by the assessee and directed the A.O. to allow the claim of the assessee for deduction under section 80IA for all the five years under consideration for the following reasons given in paragraph Nos. 4.8.3 to 4.8.5 of his impugned order : "4.8.3. As per the proviso to section 80IA(4) the transferee company becomes entitled to 80IA(4) deduction if transferee company operates and maintains the infrastructure facility in accordance with the agreement entered into by the transferor company with the government. From careful reading of proviso to section 80IA(4) mentioned at para 4.2, one can understand that the agreement with the Central Government / State Government / local authority has to be entered by the tran....
X X X X Extracts X X X X
X X X X Extracts X X X X
....o availed godowns and open yard developed by it which includes M/s. Reliance Industries and Transocean Offshore Deepwater Drilling Inc. etc. In any case, the land is always owned by the Government of Andhra Pradesh. The KSPL has got lease rights which were sub-leased to the appellant. However, the infrastructure developed or sub-leased land belongs to appellant till it reverts back to government. The CBDT vide its Circular No. 793 dated 23.06.2000 had amply clarified that the structure and ports for storage, loading, unloading etc., fall under the definition of 'port' for the purpose of 80lA, if a certificate is issued by Port Authority stating that such structures form part of the Port and are operated under BOT or BOLT Schemes. If there is an agreement that the said structure is transferred to such an authority after expiry of time stipulated in the agreement. Therefore, all the conditions laid down in section 80IA(4) mentioned at para 4.3 are fulfilled. The only issue is, the proviso to section 80lA(4) reads that, in case the infrastructure developed is transferred to the transferee company then the transferee company would be entitled to 80lA deduction. The Assessing Of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....im of deduction under section 80IA is squarely covered in favour of the assessee inter alia by the decision of Hon'ble Bombay High Court in the case of CIT vs. ABG Heavy Industries Ltd., 322 ITR 323 wherein a similar claim of assessee for deduction under section 80IA was allowed by the Hon'ble Bombay High Court relying inter alia on Circular Nos. 793 dated 23.06.2000 and 10/2005 dated 16.12.2005 issued by the CBDT. The said circulars, copies of which are placed on record before us by the Ld. Counsel for the assessee, read as under : "Circular: No. 793, dated 23-6-2000. CLARIF1CATION ONE 1. Reference is invited to Board's Circular No. 793, dated 23-6-2000 and amendment in section 80-lA by the Finance Act, 2001. 2. "Port" for the purposes of sections 10(23G) and 80-IA of the Income-tax Act, 1961, includes structures at the ports for storage, loading and unloading etc., 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 structure have been built under the BOT or BOLT schemes and there is an agreement that the same would be transferred to the said authority ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....T Scheme and that there should be an agreement for transfer of the facility to the competent authority on the expiry of the stipulated period was deleted. In other words, the conditions which were prescribed by CBDT's Circular dt. 23rd June, 2000 were liberalized by the subsequent circular dt. 16th Dec., 2005. By the subsequent circular it was clarified that the conditions that were spelt out in the earlier circular dt. 23rd June, 2000 would continue to operate in respect of assessment years prior to and culminating with asst. yr. 2001-02. With effect from asst. yr. 2002-03 all that was necessary was a certificate issued by the port authority that the structure in question forms a part of the port. Hence, the evolution of s. 80-IA would show a progressive liberalisation of the legislative scheme, in the interests of aiding the growth of infrastructure. The administrative circulars issued by CBDT in implementation of s. 80-IA similarly liberalised the scheme, consistent with the Act." 4.2. After taking note of the relevance of the two Board Circulars issued by the CBDT as well as the certificate issued by the concerned port i.e., JNPT, the Hon'ble Bombay High Court allowed th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....duction under section 80-IA." 4.3. In the present case, the concerned port namely Kakinada Deep Water Port has also issued a certificate to the assessee (copy placed at page 28 of the paper book) which reads as under : "GOVERNMENTOFANDHRAPRADESH PORT DEPARTMENT **** 0/0. the Port Officer, Kakinada. Dated: 08-04-2005 TO WHOM SO EVER IT MAY CONCERN This is to certify that the infrastructure facilities developed for storage of cargoes and other facilities constructed and owned by M/s. Belair Logistics Limited, Kakinada are part of infrastructural facilities of the Kakinada Deep Water Port. The same has been put into use from 1st April, 2005. Sd/- PORT OFFICER KAKINADA To, M/s. Belair Logistics Limited Kakinada." 4.4. Keeping in view the certificate dated 08.04.2005 issued by the Kakinada Deep Water Port in the light of CBDT Circular Nos. 793 dated 23.06.2000 and 10/2005 dated 16.12.2005, we are of the view that the issue involved in the present case relating to the claim of the assessee for deduction under section 80IA is squarely covered by the decision of Hon'ble Bombay High Court in the case of ABG Heavy Industries Ltd., (supra) and this po....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... loan processing is revenue expenditure. In the case of India Cements Vs. CIT (1966) 60 ITR 52 the Hon'ble Supreme Court held that there is no distinction between the interest on loan and expenditure incurred on obtaining loan, both are allowable. The object for which the loan is obtained was considered as irrelevant by the Hon'ble Supreme Court. Further, the Hon'ble Supreme Court in the case of DCIT vs. Gujarat Alkali Chemicals (2008) 299 ITR 85 held that finance charges paid by assessee in connection with the loan taken for expansion of business was allowable. Similarly, the Hon'ble Supreme Court in the case of Akkamamba Textiles Ltd. (1997) 227 ITR 464 held that the guarantee commission paid to the bank and to the insurance company for purchase of machinery was revenue expenditure. Further, the Hon'ble ITAT, Pune Bench in the case of Chintamani Hatcheries Ltd. Vs. DCIT (2000) 68 TTJ (Pune) 47 held that once the business has started, the fact that the loan was obtained for acquisition of capital asset is immaterial. Bank evaluation fee for sanctioning loan was considered as allowable. Therefore, in view of the above judicial precedents, the Assessing Officer is di....