TaxTMI 
TaxTMI 
2018 (1) TMI 1614
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....e ld. Commissioner of Income Tax, had exercised the jurisdiction u/s 263 of the Income Tax Act, 1961 and directed the Assessing Officer to pass Denovo assessment order. Later, the assessee filed an appeal before the Hon`ble ITAT challenging the validity of the order passed by the CIT under section 263 of the I.T. Act. The revision order dated 28.03.2014 passed under section 263 by the CIT had been cancelled and quashed by the Hon'ble Income Tax Appellate Tribunal, Kolkata in ITA No.643/Kol/2014 dated 20.01.2016, and therefore, the impugned order in appeal is no longer valid and has become infructuous. We have heard both the parties on this preliminary issue. We note that order passed by the ld CIT under section 263 of the Act, dated 28.03.2014 has been quashed by the coordinate Bench of ITAT Kolkata, vide ITA No.643/Kol/2014, dated 20.01.2016,therefore, the said appeal filed by the Revenue, in ITA No.1633/Kol/2016, does not have any leg to stand, and hence, the appeal filed by the Revenue becomes infructuous in the eyes of law. 3.1 In the result, appeal filed by the Revenue ( in ITA No.1633/Kol/2016), is dismissed. 4. Now, we shall take appeals filed by the Revenue in ITA ....
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....consideration to the rival submissions. It is an admitted fact that M/s Shyam Century Ferrous Ltd established a new undertaking in the state of Meghalaya in AY 2002-03 for manufacturing of ferro alloys. In respect of profits derived from the said undertaking that the assessee was entitled to claim deduction u/s.80IB(4) of the Act. The deduction u/s. 80IB of the Act was available for a period of ten years. M/s Shyam Century Ferreous Ltd established a new undertaking in AY 2002-03 and was entitled to claim deduction for a period of 10 years. For AY 200304 the said assessee claimed deduction and was allowed deduction u/s 80IB of the Act. In AY 2004-05 there was a change in the Act whereby deduction u/s. 80IC of the Act was available for an undertaking situated in the North Eastern states. Since the undertaking of M/s Shyam Century Ferreous Ltd was in Meghalaya, the undertaking can claim deduction u//s 80IC of the Act which was hitherto claimed by the said assessee u/s. 80IB(4) of the Act. The only requirement for claiming deduction u/s 80IC of the Act was that the total period of deduction including the period of deduction u/s. 80IB of the Act should not exceed 10 years. This conditio....
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....ed by the assessee u/s 80IA of the Act on the ground that assessee is not engaged in business of infrastructure facilities. However, Ld. CIT(A) granted the relief to assessee by observing that assessee is engaged in CFS activity which is infrastructure facility and therefore eligible for deduction u/s 80IA of the Act. 11.1 Now the issue before us arises whether assessee is eligible for deduction u/s. 80IA of the Act in respect of CFS in the given facts and circumstances. There are certain undisputed facts which are enumerated below :- i) The assessee has acquired land on lease form KPT and also paid lease premium to KPT which is reflecting in the financial statement of assessee. ii) The assessee is approved CFS as evident from the letter written by KPT which reads as under:- Kolkata Port Trust 15, Strand Road Kolkata-700001 Fax No.033-2230-4901/ 2213-7367 Telephone No.2230-2045 (direct) 2230-3451 Extn.371 E.mail:[email protected] [email protected] Webside: ww.kolkataporttrust.gov.in Administration Department No.Admn/140/E January, 31, 2013 M/s Century Plyboards(I)Ltd., 4, Fairlie Place, HMP House, ....
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....our of the assessee by the decision of the coordinate bench, in assessee`s own case and there is no change in facts and law and the Revenue is unable to produce any material to controvert the aforesaid findings and the ld CIT(A) has allowed the appeal of the assessee by following the decision of Tribunal in assessee`s own case for A.Y. 2010-11, we find no reason to interfere in the said order of the ld CIT(A) and the same is hereby upheld. Therefore, these grounds Nos.3 & 4 for A.Y.2011-12 and ground No.1 for A.Y.2012-13 of appeals of Revenue are dismissed. 8.Ground No.2 in ITA No.1635/Kol/2016, for A.Y. 2012-13 raised by the revenue is regarding disallowance of deduction under 80lA for CFS (JJP) Kolkata (infrastructural facility). This issue is covered in assessee`s own case in ITA No.1873/Kol/2014 for A.Y. 2010-11,andfinding are given in Para 11 at Page12&13 of the order, which read as under: "11.We have heard the rival contentions of both the parties and perused the material available on record. From the foregoing discussion, we find that AO has denied the deduction claimed by the assessee u/s 80IA of the Act on the ground that assessee is not engaged in business of inf....
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....he port for the purpose of Section 80IA of the Act would include structures used for the purpose of loading & unloading if the Port Authority issues certificate in this regard. On perusal of the above stated facts, we find that there remains no ambiguity with regard to the fact that assessee is engaged in CFS which is an infrastructure facilities as envisaged u/s 80IA of the Act. The deduction was denied by the AO on the ground that assessee is not engaged in the business of development of infrastructure facilities. However, after examining the above stated facts we find that the assessee has taken a land on lease for setting up the infrastructure facilities at KP and has incurred the cost for its development. Therefore, we hold that the assessee has set up the CFS facility and operating the same and accordingly eligible for claiming the deduction u/s. 80IA of the Act. In the light of above reasoning, we hold that the order of the Ld. CIT(A) is correct and in accordance with law and no interference is called for. We uphold the same. This ground of Revenue's appeal is dismissed." 8.1 As the issue is squarely covered in favour of the assessee by the decision of the coordinate b....
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....ing of roads, bridges, highways, approach roads, culverts, public amenities etc. at its own cost and its utilization thereof for a specified period. In lieu of consideration of the expenditure incurred on construction, operation and maintenance of the infrastructure facility covered by the period of the agreement, the assessee is accorded a right to collect toll from users of such facility. The expenditure incurred by such assessee on development and construction of such infrastructural facility are capitalized in the accounts. It is seen that in returns-of- income, assessees are generally claiming depreciation on such capitalized expenditure treating it as an 'intangible asset' in terms of section 32(1)(ii) of the Act while in assessments, such claims are being disallowed by the Assessing Officer on the grounds that such infrastructural facility is not owned, wholly or partly, by the taxpayer which is an essential condition for claiming depreciation and further right to collect toll does not fall in any of the categories of 'intangible assets' specified in sub-clause(ii) of subsection (1) of section 32 of the Act. 3. In BOT arrangements for development of roads/highways, ....
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....t the rate which ensures that the whole of the cost incurred in creation of infrastructural facility of road/highway is amortized evenly over the period of concessionaire agreement after excluding the time taken for creation of such facility. 7. In the case where an assessee has claimed any deduction out of initial cost of development of infrastructure facility of roads/highways under BOT projects in earlier year, the total deduction so claimed for the Assessment Years prior to the Assessment Year under consideration maybe deducted from the initial cost of infrastructure facility of roads /highways and the cost 'so reduced' shall be amortized equally over the remaining period of toll concessionaire agreement. 8. It is hereby clarified that this Circular is applicable only to those infrastructure projects for development of road/highways on BOT basis where ownership is not vested with the assessee under the concessionaire agreement. 9. This may be brought to the notice of all concerned The aforesaid Circular was issued on 23.04.2014 and subsequent to the judgment of Hon'ble Madras High Court as well as Hon'ble Supreme Court. The Circular b....
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....rowed fund has been utilized in the investment without bringing any iota of evidence by the AO. He further submitted that there was sufficient fund available with the assessee and therefore it can be inferred that the impugned investment has been made out of own fund of the assessee. In this connection, Ld. AR submitted that the Hon'ble jurisdictional High Court after considering the judgment of Dhanuka& Sons reported in 339 ITR 319 in the case of Pr. CIT vs. Rasoi Ltd in GA No.633 of 2016 has observed as under:- "it appears for both the assessment years the Appellate Authority held that there was no finding of direct nexus between the borrowed fund and investment in shares. The assessee's own funds were far in excess of the average total investments. There could not be any presumption of utilization of borrowed funds. Hence disallowance under section 14A read with Rule 8D(2)(ii) was deleted while disallowance of indirect expenses of Rs. 1,82,346/- by application of Rule 8D(2)(iii) upheld with the direction to allow relief of the sum already disallowed by the appellant itself. On appeal preferred by the Revenue the Tribunal held as follows:- 'we have heard rival submis....
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....refore, we hold that the AO has passed his order against the provision of law. In holding so, we draw support from judgment of Hon'ble Delhi High Court dt. 25.2.2015 reported in (2015) 372 ITR 694 (Del.) wherein it was held that without recording satisfaction there could be no question of disallowance u/s 14A read with Rule 8D. Besides the above, we find that there was sufficient fund available with the assessee. Therefore any inference can be drawn that the impugned investment was made out own fund of assessee. In this connection, we rely in the case of Pr. CIT vs. Rasoi Ltd.(supra) The relevant extract reads as under:- "It appears for both the assessment years the Appellate Authority held that there was no finding of direct nexus between the borrowed fund and investment in shares. The assessee's own funds were far in excess of the average total investments. There could not be any presumption of utilization of borrowed funds. Hence disallowance under section 14A read with Rule 8D(2)(ii) was deleted while disallowance of indirect expenses of Rs. 1,82,346/- by application of Rule 8D(2)(iii) upheld with the direction to allow relief of the sum already disallowed....
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....ontrol over those companies. Thus, the dividend income was incidental to the assessee. In rejoinder Ld. DR has not brought anything on record to the argument advanced by Ld. AR. In this connection, we find that Hon'ble Delhi High Court in the case of CIT vs. Oriental Structural Engineers Pvt. Ltd. (supra) reported in 216 taxman 92 (Del). The relevant extract of the judgment reads as under:- "3. On going through the above observations we are of the view that this is merely a question of fact and does not involve any question of law much less a substantial question of la as the Tribunal held that the expenses which have been claimed by the assessee were not towards the exempted income. The disallowance, therefore was rightly limited to a sum of Rs. 40,556/-. The question of interpreting Rule 8D is not in dispute only the only dispute is with regard to facts which have been settled by the Tribunal." 20.1 Now coming to the disallowance made by the AO under rule 8D(2)(iii) of the Rules, we find that Ld. CIT(A) has given direction to AO to consider only those investments which have yielded the dividend income during the year after having reliance in the order of Co-....