TaxTMI 
TaxTMI 
2015 (11) TMI 996
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....ore Hon'ble jurisdictional High Court and relief was granted to the assessee ignoring the fact that the assessee did not possess any certificate from the port authorities evidencing that the structures form part of the said port. 2.1. On the other hand, the ld. counsel for the assessee contended that the impugned issue is covered by the decision of the Tribunal in the case of assessee itself (ITA No.273, 275, 943 & 944/Mum/2013) order dated 28/06/2013. Reliance was also placed upon the decision in 374 ITR 645 (Bom.) This factual matrix was not controverted by the Revenue. 2.2. We have considered the rival submissions and perused the material available on record. If the observation made in the assessment order, leading to addition made to the total income, conclusion drawn in the impugned order, material available on record, assertions made by the ld. respective counsel, conclusion drawn in the order of the Tribunal dated 28/06/2013, if kept in juxtaposition and analyzed, we find merit in the contention of the ld. counsel for the assessee, therefore, we are reproducing hereunder the relevant portion from the aforesaid order of the Tribunal:- 4. Department in its appeals is ....
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....re initiated for A.Y 2006-07 and the impugned assessment order is result of such reassessment proceedings. During the course of these appeals it was informed to us that department has initiated reassessment proceedings in relation to A.Y 2005-06 also. Assessment for A.Y 2004-05 has attained finality as initiation of reassessment proceedings have become time barred. 8. It may also be mentioned here that Ld. CIT(A) has held that CFS of the assessee is an Inland Port (IP). For holding so he has followed the decision of Special Bench in the case of All Cargo Global Logistics Ltd. & Others vs. DCIT, 137 ITD 237 and Continental Warehousing Corporation (Nhava Seva) Ltd. Raigad Vs. ACIT (order dated 31/8/12 in ITA No.7055/Mum/2011). The decision of Special Bench in the case of All Cargo Global Logistics Ltd. has been rendered in favour of assessee by following the decision of Hon'ble Delhi High Court in the case of Container Corporation of India Ltd. (CCI) vs. ACIT, 346 ITR 140, wherein question of deduction under section 80 IA(4)(i) in respect of Inland Container Depot (ICD) was considered by Hon'ble Delhi High Court. It is observed by Special Bench in its decision that the case of CFS....
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....A.Y 1999-2000 inland ports started enjoying the deduction under section 80IA as an infrastructural facility. The object for insertion of this provision was to strengthen and improve country's infrastructure in general and transport infrastructure in particular. Inland ports facilitate the transport infrastructure by taking care of the transport of customs cleared goods meant for export from ICD/CFS to the sea port and the imported goods directly from sea port to ICD/CFS where then can be customs cleared. The entire section was recasted by Finance Act 1999 w.e.f.. 1/4/2000 and even after several amendments made to that section, inland ports continue to enjoy the deduction as infrastructural facility. 12. Reference can also be made to the notification issued by CBDT No.S.O.744(E) dated 1/9/1998 for the purpose of section 80 IA(12) (ca), 233 ITR (St) 126, the text of which is as follows: "Board of Direct Taxes hereby notifies inland container depot (ICD) and Central freight station (CFS) as infrastructure facility: Provided that such places are notified as inland container depot and Central freight station under section 7(aa) of the Customs Act, 1962." 13. Subs....
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....eted under a BOT or BOLT 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. The said Circular is reproduced below: Circular No. : 10 Date of Issue : 16.12.2005 Section(s) Referred : 10(23G) 180-IA Statute : Income-Tax Act Definition of Port as Infrastructure facility for the purpose of sections 10(23G) and 80-IA of the Income-tax Act, 1961 1. Reference is invited to Board's Circular No. 793, dated 23-6-2000 and amendment in section 80-IA 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 structures have been built under the BOT or 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. This definition is app....
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.... leller dated 26/9/2005 the assessee submitted an application to the Chairman, Jawaharlal Nehru Port Trust, Nhava Seva, Navi Mumbai for issue of certificate required by Income Tax Department, copy of this application is placed at Page-15 & 16 of the paper book. In the said application it was submitted by the assessee that its CFS is working at its full capacity in the first year and assessee is planning for further expansion. The Commissioner of Customs has declared CFS as "Customs Area" under section 8 of the Customs Act, 1962. The assessee is claiming exemption under section 80 IA for its CFS. As a result of various representations made by the Association, CBDT has issued a circular, according to which the structure put up for storage, loading and unloading of cargo intended for export will fall under the definition of Port for the purpose of section 10(23G) and 80 IA if the concerned Port Authority has issued a certificate that the said structure form part of the Port. Copy of the said circular was submitted. Reference was also made to clause 2(b) of the circular dated 23/6/2000 regarding agreement and transfer under BOT or BOLT scheme and it was submitted that the said stipulat....
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.... issued by JNPT dated 31/12/2006 clearly stated that assessee's CFS was not located at the Port's land, therefore, the said certificate was not meant for claiming deduction under Income Tax Act. The assessee started considering itself as part of the Port on its own. Certificate issued by JNPT to the assessee was only for a limited purpose (Custom purpose) and the description made by JNPT that assessee's CFS being not located at the Port's land the other condition stipulated in Circular No.793 dated 23/6/2000 were also not satisfied. (3) Circular issued by CBDT also describe " structures at the Ports", therefore, even according to Circulars the claim of the assessee cannot be accepted. (4) Subsequently, in the letter obtained from JNPT dated 14/12/2011 it was made clear that the said certificate dated 31/3/2006 was subsequently withdrawn for preventing its misuse and thus it was clear that assessee was misusing the letter dated 31/3/2006 issued by JNPT. The aforementioned certificate issued on 31/3/2006 was withdrawn by JNPT vide letter dated 5/10/2007 with the following observations: "It is hereby brought to the notice that certificate issued to M/s. United Liner Age....
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....) (b) Continental Warehousing Corporation vs. ACIT, order dated 31/8/2012 in ITA No.7055/Mum/2011, "C" Bench Mumbai, copy placed at page 17 to 27 of the paper book. (c) Container Corporation of India Ltd. vs. ACIT, 346 ITR 140(Del) 18. Considering all the aforementioned decisions Ld. CIT(A) has held that CFS of the assessee is an "Inland Port" within the meaning of explanation (d) to section 80 IA(4)(i) of the Act and "Inland Port" is one of the infrastructure facility which is eligible to claim deduction under section 80 IA(4). However, the assessee did not fulfill other conditions specified in section 80IA(4). In this regard Ld. CIT(A) has referred to the provisions of section 80IA(4) of the Act and also the decision of Hon'ble Bombay High Court in the case of CIT vs. ABG Heavy Industries Ltd., 322 ITR 323 (Bom). The Ld. CIT(A) has arrived at the conclusion that as assessee did not enter into an agreement with the authority, which is mandatory condition, therefore, the assessee is not entitled to get deduction under section 80IA(4). Ld. CIT(A) has mentioned that in none of the decisions relied upon by the assessee it has been held that there is no requirement....
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.... 22. Ld AR further argued that according to the principle of consistency, as department has granted the deduction to the assessee in A.Y 2004-05, the same cannot be withdrawn for subsequent years. For this purpose Ld. A.R has referred to the decision of Hon'ble Bombay High Court in the case of CIT vs. Paul Brothers 216 ITR 548(Bom), wherein deduction under section 80 HH and 80J was granted for A.Y 1980-81 and subsequently these deductions were sought to be withdrawn under section 263 by CIT. It was held by the Hon'ble High Court that either in section 80HH or in section 80J there is no provision for withdrawal of special deduction for the subsequent years for breach of certain conditions. Hence, unless relief granted for A.Y 1980-81 was withdrawn, ITO could not have held the relief for the subsequent years. For holding so their Lordship have followed the decision of Hon'ble Gujarat High Court in the case of Saurashtra Cement and Chemical Industries Ltd., 123 ITR 669. Reference was also made to the following observations from the said decision of Hon'ble High Court. "Either in section 8OHH or in section 80J, there is no provision for 1 withdrawal .of special deduction for ....
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....rding consistency also does not support the case of the assessee as the principle of consistency rest upon doctrine of resjudicata which according to the well established law is not applicable to Income tax matters. Reference was made to the decision of Hon'ble Supreme Court in the case of New Jahangir Vakil Mill Company Ltd. vs. CIT 49 ITR 137 (SC), wherein it was held by the Court that revenue can reopen a question obviously decided if fresh facts come to light or if earlier decision was rendered without taking into consideration material evidence etc. Similar proposition was laid down in the decision in the case of Broken Hill Proprietary Company vs. Broken Hill Municipal Council (1926) AC 94 and Hoystead Vs. Commissioner of Taxation (1926) AC 155. Referring to above decisions it was pleaded by Ld. D.R that there is no estoppels in Income tax matter and each year is assessable independently of the earlier years. The AO can take a position on the earlier years income, without reopening those years, for assessing the nature of the current years income and reliance was placed on the decision in the case of M.M. Ipoh vs. CIT, 67 ITR 103(SC),Dwarakadas Kesardeo Murarkha vs. CIT, 44 I....
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....- (i) if it is reversed or overruled by a higher court, (ii) when it is affirmed or reversed on a different ground; (iii) when it is inconsistent with the earlier decisions of the same rank (iv) when it is sub silentio and (v) when it is rendered per incuriam." Ld DR also referred to the decision of Ahmedabad ITAT in the case of Kanel Oil & Export Industries Ltd. vs. JCIT, 121 ITD 596, wherein it was held that judgment of non-jurisdictional High Court would prevail upon the Special Bench decision on the basis of principle that High Court is above the Tribunal in judicial hierarchy. Ld. DR also relied upon the decision of K.P. Choudhary vs. State of Madhya Pradesh, 1967 AIR 203(SC) to contend that contract with the Government should be executed in the manner provided in Article 299(1) of the Constitution of India and unless it is so executed it will not be a binding contract. Thus it was pleaded by Ld. DR that assessee's contention that there could be an oral agreement should not be accepted. In this manner Ld. D.R concluded his arguments. 25. We have carefully considered the submissions of both the parties. We have also carefully g....
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....e finding that liberal and strict construction of exempt provision are to be invoked at different stages of its interpretation. When the question is whether a subject falls in the notification or in the exemption clause then it being in the nature of exemption is to be considered strictly and against the subject but once the ambiguity or doubt about applicability is lifted and the subject falls in the notification then full play should be given to it and it calls for a wider and liberal construction. In the light of this decision, he dealt with the claim of the assessee u/s 8O(IA). It is submitted that in Board clarification dated 6.1.201 1, in which circulars dated 16.12.2005 and 23.6.2000 were considered, it has been clarified that ICDs, and CFSs are not 'ports' located on any inland water way , river or canal and therefore they cannot be classified as "inland ports" for the purpose of section 80(IA)(4). It is further submitted that the certificate issued by Jawahar La! Nehru Port Trust has been withdrawn by the Port Trust. It is also submitted that Inland Waterways Authority of India Act, 1985, provides the definition of the term "infrastructure facilities", in its clauses (f), ....
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....not located at the Port. As against the aforesaid, the Ld. Standing Counsel has submitted that clarifications issued by other authorities including Central Board of Excise and Customs under the relevant Acts do not lay guidelines under the Income Tax Act and that the matter has to be decided under the Income Tax Act independently. For doing so, initially a strict interpretation has to be placed on the words "inland port" to examine that the assessee is entitled to the deduction. CBDT has furnished opinion that ICDs and CFSs are not entitled to such deduction as they do not constitute inland ports. Other Acts as well as study report lead to the conclusion that a port can be said to be an inland port only if it has an access to the sea via a water-way. 66. We find that the solitary decision in this case by any High Court is in the case of Container Corporation of India Ltd., In this case it has been held that an ICD is not a port but it is an inland port. The case of CFS is similar situated in the sense that both carry out similar functions, i.e., ware housing, customs clearance, and transport of goods from its location to the seaports and vice-versa by railway or by trucks ....
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....ed the basis on which assessee's CFS has been considered to be an extended arm of the Port but in subsequent letter dated 5/10/2007 no basis has been mentioned. Such withdrawal letter dated 5/10/2007 cannot take any precedence over the judicial view taken by Special Bench in the case of All Cargo Global Logistics Ltd. vs. DCIT(supra). 25.3 It was also one of the arguments before Special Bench by the revenue that Board vide its clarification dated 6/1/2011 by considering the earlier circulars dated 23/6/2000 and 16/12/2005, has clarified that ICDs and CFS are not "Ports" located on any Inland water way, river or canal and therefore, they cannot be classified as Inland Ports for the purpose of section 80 IA(4). The said circular was also not considered sufficient for denial of deduction to the assessee. Reference in this regard also can be made to the highlighted portion of the observations existing in para-64 of the order of Special Bench and it can be seen that despite such argument raised by the revenue, Special Bench has held that CFS was entitled for deduction under section 80 IA(4).. 25.4 Thus it can be seen that the arguments of the AO to deny the claim in the present ca....
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....cation dated 6/1/2011 can only be said to be judicial interpretation of the scope and ambit of the provision of the Act. According to well established law a circular/clarification cannot even impose on the tax payer a burden higher than what the Act itself, on a true interpretation envisages. The task of interpretation of law is an exclusive domain of the Courts. Reference in this regard can be made to the three judges decision of Hon'ble Supreme Court in the case of Keshavi Raoji & Company vs. CIT, 183 ITR 1(SC) "The Board cannot pre-empt a judicial interpretation of the scope and ambit of a provision of the Act by issuing circulars on the subject. This is too obvious a proposition to require any argument for it. A circular cannot even impose on the taxpayer a burden higher than what the Act itself, on a true interpretation, envisages." 25.7 Therefore, also in view of interpretation taken by Special Bench in the light of decision of Hon'ble Delhi High Court in the case of Container Corporation of India Ltd. (supra), the clarification issued by CBDT dated 6/1/2011 cannot come into play to disentitle the assessee from claiming deduction under section 80IA(4) as the view ....
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....pose section 10(23G) and section 80IA of the Income Tax Act. The relaxation would be applicable with retrospective effect from 2002-03. For 2001-02 and earlier assessment years, two conditions have to be met for the structures should have been built under the build, operate and transfer (BOOT) or build-own-operate-transfer (BOOT) scheme and that these would be transferred the port authority on the expiry of the time stipulated in the agreement "From the assessment year 2002-03 there would only one condition, - that there is certificate issued by the Port Authorities" In other words for and from the assessment year 2002-03 onwards, structures at the ports for storage loading and unloading etc will be Included in the definition of "port' for the purpose of sections 10(23G) and 80 IA of the Income tax Act, 1961, if the following condition is fulfilled: - the concerned port authority has issued a certificate that the said structures form part the port. In our case we had a Container Freight Station at JNPT and that fact has not been disputed and has In fact been acknowledged by JNPT vide their Certificate dated 31-03- 2006". (Emphasis ours) 25.10 In the af....
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.... the present case Circular dated 16/12/2005 has done away with the requirement of agreement though the circular has deviated from the strict tenor of statutory provisions. Such course of action is within the power of CBDT and benefit arising there from is permissible to the assessee and cannot be denied according to aforementioned decision of Hon'ble Supreme Court. Here, it may be mentioned that Circular dated 16/12/2005 was also considered by their Lordships of Hon'ble Jurisdictional High court in the case of CIT vs. ABG Heavy Industries Ltd., 322 ITR 323, a case law relied upon by Ld. CIT(A). It was observed that such circular was a prospective liberalization of the legislative scheme, in the interest of aiding the growth of infrastructure. The administrative circulars issued by CBDT in implementation of section 80 IA similarly liberalise the scheme consistent with the Act. Reference can be made to the following observations of their Lordship. "14. On 16th Dec., 2005, Circular No. 10 of 2005 [(2005) 199 CTR (St) 97] was issued by the CBDT. The circular made a reference to the earlier circular dt. 23rd June, 2000 and clarified that the definition of the expression 'port' ....
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....wned by the assessee and they were permitted to be operated as per approvals given to them by the concerned authorities and the facts of those cases and the case of the assessee are similar for which an affidavit has also been submitted by him which has not been controverted by the revenue. 25.14. Moreover, Co-ordinate Bench in the case of Ayush Ajay Construction Ltd. vs. ITO, 79 ITD 213 (Indore) while interpreting the provisions of section 80IA(4), even in the absence of agreement, on recognition of the work done has come to a conclusion that assessee was entitled to get deduction and reference can be made to the following observations: "18. If we examine the relevant provisions of s. 80-IA(4A) of the Act and the object of its insertion to the tax statute in the light of the budget speech of the Hon'ble Finance Minister and the above said judicial pronouncements, we would find that the legislature has given a fillip of deductions to those enterprises who engage themselves in developing, maintaining and operating any infrastructure facilities for economic growth of the nation as it was felt by the legislature that inadequate infrastructure was a key constraint of our ec....
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....ructions and notified authorising the assessee to collect the toll tax for a particular period. A copy of the letter dt. 22nd May, 2000, to this effect is also placed before us. The assessee has also placed various correspondence entered into between the assessee and the State Government and the letter dt. 26th Aug., 1995, through which the assessee was informed about the notification in his favour to collect the toll tax. A copy of the letter placed at p. 140 of the compilation of the assessee. Copies of the notification and various receipts of toll tax are also placed on record for our perusal. It is also revealed from various correspondence of the assessee with the State Government that the assignment of contract was duly recognised by the State Government and it was admitted by them that the actual construction work was undertaken by the assessee only." (Emphasis ours) In the above case also the deduction was not granted to the assessee as assessee had not entered into an agreement with the State Government but from the approvals granted to the assessee it was inferred that assessee should be deemed to have entered into an agreement with the State Government. 25.15 The ab....