TaxTMI 
TaxTMI 
2021 (6) TMI 501
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....ition for claiming deduction u/s 80IB (11 A) as the assessee 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) Hand....
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....reater efficiency in grain management system. • thirdly, he heavily relied upon the decision of ITAT Mumbai Bench in the case of ITO vs. 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) ....
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....t the storage charges are inclusive of handling and transportation charges in few cases. Therefore, this argument of AO is not tenable. 6.9 The appellant also distinguished the decision relied upon by the AO in the case of ITO 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 Offic....
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....ltry or marine or dairy products or from the integrated business of handling, storage and transportation of food grains, shall be hundred per cent of the profits and gains derived from such undertaking for five assessment years beginning with the initial assessment 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 b....
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....essee for claiming any deduction u/s 80IB (11A). The contribution of the assessee towards infrastructure development cannot be undermined, because the construction of the warehouses will be dependent on the requirement of business of handling, storage and transportation of the food grains. There is no fetter in the law; whether the 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....
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.... are stored and handled and transported thereto and therefrom. It may be noted at this juncture that there is no restriction in S.80-IB that an existing business unit cannot set up new undertakings to carry on the integrated business of handling, storage and transportation of food grains. The godowns where this business is to be carried on need not 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 f....
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.... in respect of the new warehouses put to use after the introduction of sec80IB(l 1A) i.e on or after 1.4.2001. The assessee has furnished in the paper-book list of new Godowns, which have been put to use by the assessee after 1.4.2001. It is well settled that deduction under Chap VIA, in respect of new undertakings set up by the assessee by way of expansion of the existing 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 opera....