TaxTMI 
TaxTMI 
2018 (1) TMI 2
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....s amended by Finance Act 2000 and as per CBDT Circular No. 793, dated 23/06/2000, the port could verify structures near the port for benefit under section 10(23G) & 80IA of the Act. The assessee had obtained such certificate from Visakhapatnam Port Trust. It was also submitted that the assessee got approval from the Ministry of Commerce & Industry and that the assessee has classified as Container Freight Station by the Commissioner of Customs. It was further submitted that in view of the amended provision from assessment year 2000-01, inland port falls within the definition of 'Infrastructure Facility' under section 80IA(4) and that the Ministry of Shipping vide letter dated 16/09/2008 has classified CFS as an 'inland port'. With reference to these circulars, the assessee has contended that it falls within the purview of 'Inland Port' and therefore is eligible for deduction under section 80IA(4). However, Assessing Officer did not accept the contentions of the assessee. For the sake of convenience, the relevant portion of the assessment order is extracted as under:- "The explanation offered vide the above referred letter has been carefully perused in the light of the notif....
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....the concerned port authority has issued a certificate that the said structures form part of the port." A perusal of the certificate issued by the Visakhapatnam Port Trust indicate that the structure on which the assessee has claimed deduction u/s.80IA (4) of the Income-tax Act, 1961 does not fulfil the conditions enumerated in circular No,793, dtd.23.06.2000 such as the Container Freight Station has not been built under BOT and BOLT scheme and there is no agreement that the same would be transferred to VPT on expiry of time stipulated in the agreement as mentioned in Circular No.793, dated 23.06.2000 or Circular No. 10/2005, dtd,16.12.2005. It can be seen from the above that the conditions enumerated vide circular No.793, dtd.23.06.2000 for such structures to be included in the definition of port is not fulfilled by the assessee-company. Coming to circular No. 10/2005, the conditions laid down for such structure to be eligible for deduction is that the concerned port authority has issued a certificate, that the said structures form part of the port. In support of the above, the assessee submitted a certificate from the Visakhapatnam Port Trust which mentions that the Conta....
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....ction is given to the income of an undertaking engaged in setting up of an infrastructure facility. The term "infrastructure facility" has been defined in section 80IA(4), inter alia, as under: "a port, airport, inland waterway, inland port or navigational channel in the sea." In order to clarify the term port, and whether the facilities of loading and unloading constitute a part of a port, the Board issued two circulars i.e., circular N.793 dated 23.06.2000 and circular No.10 dated 16,12.2005. In the first circular, it was Clarified that structures at ports for storage, loading and unloading will be covered by the definition of port for the purpose of section 10(23G) and section 80IA subject to the condition, that the concerned port authorities has issued a certificate that such structures form a part of the port and the same have been constructed under the BOLT scheme. This was again reiterated in the circular dtd.16.12,2005 wherein it was stated that for the assessment year 2002-03 onwards, structures at ports for storage, loading and unloading will be included in the definition of port. References have been received in the Board seeking clarification whether t....
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....ions of section 80IA(4)(i) and to decide whether CFS is an 'infrastructure facility' within the meaning of sec.80lA(4). It has been- clarified in the said circular dated 06.01.2011 that an ICD or a CFS is usually not located at the port and therefore is not a part of the 'Port' for the purpose-of sec.80IA(4). It has been further clarified that as ICDs and CSs are not ports located on any inland water way, river or canal they cannot be classified as 5|bnland ports' for the purpose of section 80(IA)(4). In the case of the present assessee, CFS is located away from the port premises and therefore as per the clarification issued by the Board, it does not form part of the 'Port' or 'Inland Port‟ as contemplated in sec.80IA(4). In the authorities referred by the ITAT while granting relief sought for by the assessee, the clarification issued by the CBDT Was not considered in proper perspective and the decision was rendered by simply relying on the definition of ICD and CFS explained in circulars issued under other enactments. The decision of the TTAT cannot be accepted when the Board has clarified the matter in no uncertain terms as to the meaning of ....
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....iscussion, the following facts emerge that make the assessee company M/s. Gateway East India Pvt. Ltd ineligible from claiming deduction u/s,80IA(4) of the Income-tax Act, 1961: As stated in para 9 of this order on definition of being part of the port, the ICD of the assessee is not located in the port, it is located on a premises situated away from the port taken on long lease of 30 years by the Visakhapatnam Port Trust, the land does not belong to the Visakhapatnam Port Trust and it is not located in the port. Since it is not located in the port the assessee does not fulfil the conditions as per the circular for claiming deduction. Importantly both ICD & CFS are not infrastructure facilities as clarified by the clarification cited above and hence are not eligible for deduction u/s.80IA(4). The case of the assessed squarely falls under this clarification. An important criteria for the claim u/s.80IA (4) of the Income-tax Act, 1961 is "the Indian Company should enter into an agreement with Central or State Government or a Government undertaking etc. for operating the said facility subject to the condition that such facility should be transferred to the sa....
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....e (b) of the said Section 8 wherein imported goods or export goods are ordinarily kept before clearance by the customs. Firstly, CFS do not have "public authority status" whereas ICD is a place that acts as a "self contained Customs Station" as categorically spelt in Circular of CBEC dt.8.6.2009. Further the said circular clearly distinguishes ICD and CFS and makes it very obvious that CFS is nothing but a warehouse. Distinction between ICT & CFS : "Inland Container Depot is a place that acts as a "self contained customs stations" like a port or air cargo unit where - Filling of customs manifests. Bills of entry Shipping bills and other declarations, assessment and all the activities related to clearance of goods for home use. Warehousing Temporary admissions Re-export, temporary storage for onward transit and outright export. Transshipment etc., takes place" Container Freight Stations are specified as customs area under Cause (b) of the said Section 8 wherein imported goods or export goods are ordinarily kept before clearance by the customs An ICD is a self contained customs station ....
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....al port) (Refer Circular No. 19/2009-Cust., dated 8-6-2009). A standalone Customs clearance facility in an inland Commssionerate cannot be approved by the Commissioner as a CFS, if there is no ICD / port within its jurisdiction to which the said CFS can be attached. Such a facility can, however, be notified as an ICD i.e., as an independent Customs station with provision for filing and assessment of documents and examination of goods. A customs clearance facility could be established as a CFS at a port city for examination of imported / export goods, since the CFS would fall under the jurisdiction of Commissioner of Customs, having jurisdiction over the Customs port with which the CFS would be attached. Further, in a port city such as Chennai or Mumbai, it may be possible to develop an ICD within the territorial jurisdiction of the concerned Customs Commissonerate in addition to existing CFSs. Such an ICD should be capable of providing full-fledged Customs services, independent EDT system, and all procedures meant for transshipment of cargo have to be followed for movement of goods from the port of import to the ICD. Further, such an ICD would function as an independent Cu....
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..../6/2003-Znfra-Z Government of India ministry of Commerce & industry Deptt. of Commerce Infrastructure Division ***** Udyog Bhawan, New Delhi Dated the 27th May, 2003. To The Director, M/s. AL Logicstics Pvt. Ltd, Chenni. Subject : Setting up of an CFS at Haldia Sir, I am directed to refer to your application dated 8.22003 on the above subject arid to say mat the Government has approved your proposal for setting up of an Container Freight Station at Haldia for handling import and export cargo. The approval is subject to the following terms and conditions:- a) The Letter of Intent holder shall take adequate steps to create proper /infrastructure keeping in view the indicative norms -given in Pairs A & B of the Guidelines for setting up Inland container Depots/ Container Freight Stations (ICDS/CF5) within a period of one year from the date of issue of this letter. b) Necessary bond and guarantees, as required, would be executed with the concerned Commissioner of Customs and Central Excise. c) The approval would be subject to cancellation in the event of violation of the Customs and other laws of the land and Rules. d) A quarterly progress r....
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....entered into an agreement with the State Government. Thus, we are of the considered view that the assessee has complied with all the provisions of section 80IA(4)(i) and is eligible to claim deduction under the said section. The impugned order is set aside. The appeal of the assessee is allowed." Respectfully following the Coordinate Bench order, we hold that the contention of the AO that there is no agreement and hence the assessee is not eligible for exemption is not the correct position of law. The Hon'ble Delhi High Court in the case of Container Corporation Ltd. (supra) held as follows: "The term "infrastructure facility" was defined in section 80-IA(12)(ca) of the Income Tax Act, 1961, to mean a road, highway, bridge, airport, port or rail system or any other public facility of a similar nature as may be notified by the Central Board of Direct Taxes. The Finance (No. 2), 1998, included the words "Inland water ways and inland ports" in the definition of "infrastructure facility" in sub-section (12), clause (ca), with effect from April 1, 1999. When the entire section was recast and even after several amendments were thereafter made to the section, in....
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....y following the above order of the Hon'ble Tribunal, the Assessing Officer is directed to allow deduction claimed by the assessee u/s. 80IA(4) of the I.T. Act." 4. On being aggrieved, revenue carried the matter in appeal before the Tribunal. 5. At the outset, learned counsel for the assessee has submitted that the issue involved in this appeal is squarely covered by the decision of the coordinate bench of the tribunal in assessee's own case for the Assessment Years 2011-12 & 2012-13 in ITA Nos. 15/VIZ/2015 & 178/VIZ/2016, by orders dated 29/04/2015 & 19/04/2017 respectively. It is submitted that the ld. CIT(A) by following the order passed by the tribunal, directed the Assessing Officer to allow the claim of the assessee under section 80IA(4) of the Act and submitted that the same may be upheld. He also relied upon the decision of the Hon'ble Bombay High Court in the case of CIT-II vs. Continental Warehousing Corporation (Nhava Sheva) Ltd. reported in [2015] 59 taxmann.com 78 (Bombay) and also the decision of Hon'ble Madras High Court in the case of CIT vs. A.L. Logistics (P) Ltd. reported in [2015] 55 taxmann.com 283 (Madras). 6. On the other hand, learned Departm....
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.... of the said Section 8 wherein imported goods or export goods are ordinarily kept before clearance by the customs. Firstly, CFS do not have "public authority status" whereas ICD is a place that acts as a "self contained Customs Station" as categorically spelt in Circular of CBEC dt. 08.06.2009. Further the said circular clearly distinguishes ICD and CFS and makes it very obvious that CFS is nothing but a warehouse. (c) Distinction between ICD & CFS: "Inland Container Depot is a place that acts as a "self contained customs station" like a port or air cargo unit where - * Filling of customs manifests, * Bills of entry, * Shipping bills and other declarations, assessment and all the activities related to clearance of goods for home use, * warehousing, * temporary admissions, * re-export, temporary storage for onward transit and outright export, transhipment, etc., takes place." *"Container Freight Stations are specified as customs area under Clause (b) of the said Section 8 wherein imported goods or export goods are ordinarily kept before clearance by the customs". * An ICD is a 'self contained Custom....
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....proved by the Commissioner as a CFS, if there is no ICD/port within its jurisdiction to which the said CFS can be attached. Such a facility can, however, be notified as an ICD i.e., as an independent Customs station with provision for filing and assessment of documents and examination of goods. A Customs clearance facility could be established as a CFS at a port city for examination of imported/export goods, since the CFS would fall under the jurisdiction of Commissioner of Customs, having jurisdiction over the Customs port with which the CFS would be attached. Further, in a port city such as Chennai or Mumbai, it may be possible to develop an ICD within the territorial jurisdiction of the concerned Customs Commissionerate in addition to existing CFSs. Such an ICD should be capable of providing full-fledged Customs services, independent EDI system, and all procedures meant for transhipment of cargo have to be followed for movement of goods from the port of import to the ICD. Further, such an ICD would function as an independent Customs Station in all respects and would not be attached to any other port or airport. Thus, in respect of proposals for setting up of ICD/Container Freigh....
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.... Deptt. of Commerce Infrastructure Division Udyog Bhawan, New Delhi, Dated the 27th May,2003. To The Director, M/s A L Logistics Pvt. Ltd., Chennai. Subject: Setting up of an CFS at Haldia. Sir, I am directed to refer to your application dated 8.2.2003 on the above subject and to say that the Government has approved your proposal for setting up of an Container Freight Station at Haldia for Handling import and export cargo. The approval is subject to t le following terms and conditions:- (a) The Letter of Intent holder shall take adequate steps to create proper infrastructure keeping in view the indicative norms given in Parts A& B of the Guidelines for setting up Inland container Depots I Container Freight Stations (ICDs/CFs) within a period of one year from the date of issue of this letter. (b) Necessary bond and guarantees, as required, would be executed with the concerned Commissioner of Customs and Central Excise. (c) The approval would be subject to cancellation in the event of violation of the Customs and other laws of the land and Rules. (d) A quarterly progress....
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....be deemed to have entered into an agreement with the State Government. Thus, we are of the considered view that the assessee has complied with all the provisions of section 80IA(4)(i) and is eligible to claim deduction under the said section. The impugned order is set aside. The appeal of the assessee is allowed." 11. Respectfully following the Coordinate Bench order, we hold that the contention of the AO that there is no agreement and hence the assessee is not eligible for exemption is not the correct position of law. 12. The Hon‟ble Delhi High Court in the case of Container Corporation Ltd. (supra) held as follows: "The term "infrastructure facility" was defined in section 80-IA(12)(ca) of the Income Tax Act, 1961, to mean a road, highway, bridge, airport, port or rail system or any other public facility of a similar nature as may be notified by the Central Board of Direct Taxes. The Finance (No. 2), 1998, included the words "Inland water ways and inland ports" in the definition of "infrastructure facility" in sub-section (12), clause (ca), with effect from April 1, 1999. When the entire section was recast and even after several amendments were th....