TaxTMI 
TaxTMI 
2021 (6) TMI 501
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....see could not have it own godown. 3. That the Ld. CIT(A) has erred in law and facts in holding that the assessee engaged the business of Handling Storage and Transportation of Food Grain, where as the AO has categorically held in the assessment order that the assessee has that only 6% revenue pertain to handling and transportation activities. 4. That the Ld. CIT(A) has also ignore the case law i.e. ITO vs Shankar K. Bhanage ITAT Mumbai, the facts of the case law are identical to the instant case by simply accepting the contention of the assessee that facts are different, without going through the judgment upon which AO was relied." 2. The facts, in brief, are that the assessee company carried out integrated business of storage, handling and transportation of food grains and similar kind of commodities. During the year, assessee has shown a net profit of Rs. 8,60,04,480/- from the total receipt of Rs. 38,00,15,441/-, which comprised of:- i) Storage charges of Rs. 34,76,98,228 ii) Assaying charges of Rs. 78,27,067/-; iii) Transportation charges of Rs. 71,40,254/; iv) Handling charges of Rs. 1,55,65,857/-; v) Collateral management charges of Rs. 16,19,520/-;. Besides t....
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....s. Shanker K. Bhanage reported in (2012) 125 taxmann.com310. In sums and substance, Assessing Officer has denied the deduction u/s 80 -IB(11A) for following two reasons :- i. The Assessee cannot be said to be engaged in the integrated business of handling, storage and transportation of food grains. ii. The assessee is simply earning income from sub-letting of godown which were in existence at the time of taking them on rent, which means that the assessee is deriving income from using the existing infrastructure, whereas the main purpose of bringing this provision is construction of godowns specifically for stocking food grains for greater efficiency in grain management system and minimize postharvest food grain losses. 5. Thereafter, Assessing Officer has computed the disallowance in the following manner:- "It is further noticed that the Assessee Company has earned interest income of Rs. 84,27,683/-which is as follows:- 1 Bank of India (FDR) 11,88,078.30 2 Oriental Rank of Commerce (FDR) 68,56,507.00 3 Bank of India 41,127.67 4 Oriental Bank of Commerce 34,19,870.00 Total Income 84,27,682.97 The assessee has also claimed corresponding intere....
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.... vs. Shankar K Bhange (Supra) where the facts are different. The appellant further relied upon the case of Orisa State Warehousing Corporation vs. ACIT (Supra) and other decisions to substantiate that it is not necessary to have warehouse of its own or construction of warehouse to be eligible for this claim. 6.10 Looking to the facts and circumstances of this case and in law, as discussed in foregoing paragraphs, the claim of appellant u/s 80IB(11A) is not required to be rejected on the reasoning as discussed in the assessment order and following the decision relied upon and considering the activities of the appellant, which is as per the provisions of section 80IB(11A), the appellant is found eligible for this claim. Accordingly the AO is directed to allow the claim as made by the appellant. This ground of appeal is allowed. " 7. Before us, Ld. DR after referring to the various observations and findings of the Ld. Assessing Officer, submitted that it has been clearly made out by the AO that the assessee company does not fulfil the conditions laid down in section 80-IB (!1A). He further submitted that assessee is only eligible to claim deduction u/s 80IB(11A) for each undertakin....
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....year and thereafter, twenty-five per cent (or thirty per cent where the assessee is a company) of the profits and gains derived from the operation of such business in a manner that the total period of deduction does not exceed ten consecutive assessment years and subject to fulfilment of the condition that it begins to operate such business on or after the 1st day of April, 2001: Provided that the provisions of this section shall not apply to an undertaking engaged in the business of processing, preservation and packaging of meat or meat products or poultry or marine or dairy products if it begins to operate such business before the 1st day of April, 2009. " On perusal of the relevant section, it is seen that the following conditions must be fulfilled to become eligible for claim deduction under the said section: - a. Profits and gains must be derived from the 'eligible businesses, i.e., integrated business of handling, storage and transportation of food grains. b. Such undertaking must begin such business from the initial year of claim of deduction. c. The units in respect of which deduction is claimed should have started operations on or after 1st day of April, 2001. 10....
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....e warehouses are constructed by the assessee itself, or warehouses are taken on rent from others. What is relevant is that, profit and gains have to be derived from eligible business from the integrated business of handling, transportation of food grains. Thus, the reasoning and the grounds given by the Ld. AO to reject the claim of deduction cannot be sustained. 13. In so far the decision of ITAT Mumbai bench in the case of ITO vs. Shankar K. Bhange, which has been heavily relied upon by the Assessing Officer, would not be applicable in the case of the assessee, because in that case the assessee was appointed by the Food Corporation of India as Contractor for handling of food grains. He was merely doing transportation business and there was no storage work/activity which was performed by the Contractor and neither there was any storage belonging to the assessee nor was any storage taken on rent by the assessee. In this background, it was held that assessee does not fulfil the condition as mentioned u/s 80IB (11A). Once the assessee is neither the owner nor lessee of the storage house and the ownership vested with the FCI and assessee was merely transporting food grain, it was in....
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.... be owned by the assessee. When the assessee- corporation has set up these godowns in as many as in 73 towns and at different places in those towns, it is very much entitled for relief under S.80IB(11A) of the Act in respect of each such new imdertakins set up by it. It appears from the impugned orders that the lower authorities have proceeded as if the assessee's claim for relief under S.80IB(11A) is in respect of existing godowns, and not merely in respect of the new ones started after 2001. It is so because the period of five years was sought to be counted from the year of incorporation of the assessee, viz. 1958; and also observing that no new activity was taken up after 2001.Since each new godown is an undertaking in itself assessee is entitled for such relief under S.80IB(11A) for five years in respect of each such undertaking from the 'initial year' in which it was set up. 13. As for the eligibility of the activity of the assessee to the relief under S.80IB(11A), it is worthwhile to refer to the intention of the Legislature in introducing sec 80IB(11 A), which is reproduced hereunder : "Under the existing provisions of Sec. 80-IB of the Income-tax Act, a dedu....
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....ting undertakings, as held by the Apex Court in the cases of Textile Machinery Corpn. Ltd. v. CIT [1977] 107ITR 195 (SC) and CIT v. Indian Aluminium Co. Ltd. [1977] 108 ITR 367 (SC). The number of new godowns operated by the Assessee after1.4.2001 clearly shows that there was substantial expansion of the assessee's business of handling, storing and transportation of food grains, which obviously could have been done only be undertaking new warehousing facilities year after year even after 2001. In respect of these new warehouses, each of which constitutes an eligible undertaking, assessee is separately entitled for deduction under S.80IB(11A) of the Act. In our opinion therefore, the assessee is entitled to deduction u/s 80IB(11A), in respect of income derived from the new undertakings, warehouses. set up and operated from 1.4.2001 for storage, handling and transportation of food grains. We accordingly set aside the impugned orders of the CIT(A) on this issue for all the three years and set aside the matter to the file of the Assessing Officer, with a direction to verify the claim of the assessee for deduction under S.801A(11A) of the Act in respect of new undertakings set up af....