TaxTMI 
TaxTMI 
2019 (6) TMI 477
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....it's return of income for the A.Y.2011-12 through e-filing on 29.09.2011 declaring total income of Rs. 3,77,21,730/- after claiming the deduction of Rs. 3,68,28,209/- u/s 80IA of the Income Tax Act, (in short 'Act'). The assessment was completed u/s 143(3) in this case on total income of Rs. 7,59,49,939/-. In the assessment made u/s 143(3), the AO disallowed deduction claimed by the assessee u/s 80IA of the Act. During the assessment proceedings, the AO observed that the assessee has claimed deduction u/s 80IA of the Act for an amount of R.3,68,28,209/- for operating and maintenance of the infrastructure facility i.e. Container Freight Station (CFS). The AO called for the explanation of the assessee as to why the deduction claimed u/s 80IA should not be disallowed for not having satisfied the conditions laid down u/s 80IA, i.e., not having an agreement with the Central Government or State Government or local authorities. Similarly, the AO was also of the view that CFS is not a port for the purpose of claiming the deduction u/s 80IA(4) and relied on Board Circular No.10/2005 dated 16.12.2005 and Circular No.793 dated 23.06.2000. The assessee filed explanation stating that the assess....
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....ssee went on appeal before the CIT(A) and the Ld.CIT(A) allowed the appeal of the assessee following the decision of this Tribunal in the case of Gateway East India (P) Ltd, vs ACIT in ITA No.15/Vizag/2015 dated 29/04/2012 for the A.Y.2011-12. 4. Against the order of the Ld.CIT(A), the revenue has filed appeal before this Tribunal. During the appeal hearing, the Ld.DR relied on the order of the AO and heavily placed reliance on CBDT Circular No.178/42/2010 dated 06.01.2011 and argued that the CFS is not a port for claiming deduction u/s 80IA(4) and also argued that the assessee has not satisfied the condition with regard to entering agreement with the Government or local authority for development of infrastructure. 5. On the other hand, the Ld.AR relied on the orders of the Ld.CIT(A). 6. We have heard both the parties and perused the material placed on record. In this case, the AO disallowed claim for deduction u/s 80IA for the following reasons. (i) The assessee has no agreement with the Govt. of India/State Government or any local authority or any other statutory body for (i) developing (ii) operating and maintenance (iii) developing, operating and maintaining t....
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....as Ports. However, taking into consideration the fact that a part of activities that are carried out at ports such as custom clearance are also carried out at these ICDs, the claim of the respondent herein can be considered within the term 'Inland port' as is used in the Explanation. It is significant to note that the word 'Inland Container Depots' was first introduced in the definition of 'Customs Port' as is given in Section 2(12) of the Customs Act, 1962, through amendment made by the Finance Act, 1983 with effect from 13.05.1983. 22. The term 'Inland Port' has been defined nowhere. But the Notification that has been issued by the Central Board of Excise & Customs (CBEC) dated 24.04.2007 in terms holds that considering the nature of work carried out at these ICDs they can be termed as Inland Ports. Further, the communication dated 25.05.2009 issued on behalf of the Ministry of Commerce and Industry confirming that the ICDs are Inland Ports, fortifies the claim of the respondent herein. Though both the Notification and communication are not binding on CBDT to decide whether ICDs can be termed as Inland Ports within the meaning of Section 8....
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....dia Pvt. Ltd.(Supra). In that case also, the assessee was operating a CFS at Sheelanagar, Port Road, Visakhapatnam. The Assessing Officer has disallowed the deduction claimed u/s. 80IA exactly on similar grounds. The Hon'ble Bench has discussed all the issues at length and held that the deduction u/s 80(IA) was rightly claimed. The relevant portion of the order is extracted hereunder: "7. Rival contentions heard. On careful consideration of the facts and circumstances of the case and also on perusal of the papers on record, orders of the authorities below and the case law cited, we hold as follows: 8. In circular no. 18/2009 dated 08/06/2009 issued by the Central Board of Excise and Customs in F.No. 434/17/2009-CUS.IV the difference between Inland Container Depots (ICD) and Container Freight Stations(CFS) has been spelt out in the following manner: "(a) DEFINITION OF ICD: An Inland Container Depot may be defined as: A common user facility with public authority status (emphasis supplied) equipped with fixed installations and offering services for handling and temporary storage of import/export laden and empty containers carried under customs control and wi....
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....d goods or export goods are ordinarily kept before clearance by the customs. A CFS is only a Customs area located in the jurisdiction of a Commissioner of Customs exercising control over a specified Customs port, airport, LCS/lCD. A CFS cannot have an independent existence and has to be linked to a Customs station within the jurisdiction of the Commissioner of Customs. It is an extension of a Customs station set up with the main objective of decongesting the ports. In a CFS only a part of the Customs processes mainly the examination of goods is normally carried out by Customs besides stuffing/destuffing of containers and aggregation/segregation of cargo. Thus, Custom's functions relating to processing of manifest, import/export declarations and assessment of Bill of Entry/Shipping Bill are performed in the Custom House/Custom Office that exercises jurisdiction over the parent port/airport lICD/LCS to which the said CFS is attached. In the case of Customs Stations having facility of automated processing of documents, terminals are provided at such CFSs for recording the result of examination, etc. In some CFSs, extension Service Centers are available for filing documents, amendm....
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.... rightly contended by the learned AR of the appellant, the above circular answers in a very clear and categorical manner the objections raised by the Assessing Officer. 9. As far as the contention that there is no agreement with any Government or statutory authority, we find that the assessee has placed on record letter of intent. In fact the Ministry of Commerce and Industry, vide letter dated 10/02/2005, written to the Managing Director of the assessee company regarding setting up of a CFS at Visakhapatnam apropos the assessee's case. 10. In the case of A L Logistics P. Ltd. (supra) the Chennai Bench of the Tribunal at para 7 held as follows: "7. Now, we proceed to the next issue, whether in the absence of specific agreement with the Central/State Government, local authority or Statutory Body, the assessee is entitled to claim the benefit of section 80IA( 4 )(i)? The assessee had made an application for setting up of CFS at Haldia. In response to the application of assessee, the Department of Commerce, Infrastructure Division, Ministry of Commerce and Industry approved the proposal of the assessee for setting up of CFS at Haldia for handling im....
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.... the items shall be furnished to the appropriate authorities to facilitate issue of requisite notification. 3. Please acknowledge receipt of this letter. Yours faithfully, Sd/- (N.G. Biswas) DIRECTOR" A perusal of clause 'b' of the above letter shows that the assessee was required to execute necessary bond and guarantees with the concerned Commissioner of customs an -Central Excise. It was only on the compliance of all the terms and conditions mentioned in the aforesaid letter that the assessee was allowed to carry on the services of CFS. The assessee on the compliance of the terms and conditions as mentioned in the letter, was notified as CFS Complex for the purpose of receiving, storing, import containers, receiving/consolidating export cargo etc. vide Public Notice OUO-1l-2013. The Public Notices were issued by the office of the Commissioner of Customs (Port) Kolkata. 8. Thus, it is evident that the proposal of the assessee was accepted by the Government on certain conditions which were duly complied with by the assessee. There may not be any specific agreement, but the sequences of events clearly show that t....
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....ontainer depots were inland ports. The power to notify infrastructure facilities for the purpose of the section was taken away from the Central Board of Direct Taxes w.e.f. April 1,2002. However, there was no provision made in the Act saying that notifications issued earlier would cease to have from April 1, 2002.The assessee, a public sector undertaking, was engaged in the business of handling and transportation of containerised cargo. The activity of the assessee was carried out mainly on its inland container deports, Central freight stations see had a total of 45 inland container depots. It claimed special deduction under section 80-IA(4) for the assessment years 2003-04 to 2005-06. The Assessing Officer denied special deduction but the Tribunal allowed it. On appeal to the High Court: Held, allowing the appeals, that out of the total 45 inland container depots operated by the assessee, except two all others were notified by the Central Board of Direct Taxes for the purpose of sec. 80IA(12)(ca). Having regard to the provisions of the Customs Act, the communication issued by the Central Board of Excise and Customs as well as the Ministry of Commerce and Industry....
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....ds settled in view of the decision of the Hon'ble Supreme Court. 6.5) In the light of the above discussion, the Assessing Officer is directed to delete the addition of Rs. 3,68,28,209/- made towards disallowance of deduction claimed u/s. 80(IA) of the Act. Thus, the order of this Tribunal in the case supra answered both the objections of the Assessing Officer with regard to agreement with the Government and the status of CFS as port. 6.3. The assessee relied on the decision of CIT Vs. A.L.Logistics (P) Ltd. vide 374 ITR 0609 of Hon'ble Madras High Court. The issue raised by the revenue before the Hon'ble High Court is as under : "5. Before the Tribunal, the Department contended that there is no proper agreement with the Central or the State Government and even in the approved proposal, certain other requirements are yet to be complied with. On this premise, the Department contended that the benefit of Section 890IA(4)(i) would not endure to the benefit of the assessee." The Hon'ble High Court of Madras has answered the issue in favour of the assessee in para No.10 which reads as under : "10. As has been observed by the Tribunal, in the decision o....