TaxTMI 
TaxTMI 
2023 (8) TMI 504
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....ged the deletion of the addition made on account of disallowance of port charges amounting to Rs. 4,81,11,547/- claimed as deduction u/s. 80IA of the Act. 3. The brief facts of the case are that the assessee is engaged in the business of operating and maintenance of port developed by the assessee in Alibaug by the name Dharmatar PNP Jetty. The assessee filed its return of income dated 01.10.2010, declaring total income at Rs. 80,33,890/- and book profit u/s. 115JB of the Act at Rs. 6,22,29,730/-. The assessee's case was selected for scrutiny and the assessment order dated 14.12.2012 was passed u/s. 143(3) of the Act where the Assessing Officer ('A.O.' for short) assessed the total income at Rs. 1,18,05,460/-. The assessee's case ....
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....nt of Rs. 4,81,11,547/- claimed by the assessee as deduction u/s. 80IA(4) of I. T. Act has escaped the assessment for the relevant year. 4. The A.O. passed the assessment order dated 27.12.2017 u/s. 143(3) r.w.s. 147 of the Act by determining the total income at Rs. 6,53,22,663/- and book profit u/s. 115JB of the Act at Rs. 6,25,30,870/- where the A.O. disallowed the port rent charges of Rs. 4,81,11,547/- on the ground that it does not have a direct and first degree nexus with the business activity of running and maintaining of the port. 5. The assessee was in appeal before the first appellate authority, challenging the reassessment proceeding and the disallowance /addition made by the A.O. The ld. CIT(A) deleted the impugned addition....
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....lowed the said deduction and there was no change in circumstances for this year. The ld. AR relied on the ld. CIT(A)'s order in following the principle of consistency. 9. We have heard the rival submissions and perused the materials available on record. It is observed that the assessee's case was reopened for the reason that the assessee had claimed 100% deduction u/s. 80IA amounting to Rs. 5,69,87,628/- as being profit derived from port related business out of which the impugned amount of Rs. 4,81,11,547/- was towards port rental charges collected by the assessee which according to the A.O. was for providing parking and other ancillary support services which does not directly relate to the business activity of the assessee. The assessee....
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.... charges, port service charges and wharfage to be directly related to the activity of running and maintaining the ports and the port rental charges to be an ancillary activity, thereby allowing 10% of expenses on estimated basis incurred for such activity. The A.O. relied on the proposition laid down by the Hon'ble Apex Court in the case of Liberty India vs. CIT 317 ITR 218 (SC), which laid the distinction between 'profits derived from industrial undertaking' and 'profits attributable to industrial undertaking'. The ld. CIT(A), on the other hand, held that the port rental charges has a direct nexus to the maintenance and running of the port. The ld. CIT(A) distinguished the case of the Hon'ble Apex Court in the case of M/s. Liberty ....
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....acted herein below for ease of reference: Deductions in respect of profits and gains from industrial undertakings or enterprises engaged in infrastructure development, etc. 80-IA.(4) This section applies to- (i) any enterprise carrying on the business of (i) developing or (ii) operating and maintaining or (iii) developing, operating and maintaining any infrastructure facility which fulfils all the following conditions, namely :- (a) it is owned by a company registered in India or by a consortium of such companies or by an authority or a board or a corporation or any other body established or constituted under any Central or State Act; (b) it has entered into an agreement with the Central....
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....e of storage, loading and unloading etc. It is also pertinent to note that the CBDT Circular No. 10/2005 dated 16.2.2005 has defined "Port" as infrastructural facility for the purpose of section 10(23G) and 80IA of the Act which includes structure at the ports for storage, loading and unloading, etc. subject to fulfillment of certain conditions which were duly complied with by the assessee. The port rental charges nevertheless pertain to the storage, loading and unloading activities which comes under the preview of the eligibility to claim deduction u/s. 80IA. We would also like to place our reliance on the decision of the Hon'ble Bombay High Court in the case of CIT vs. M/s. ABG Heavy Industries Ltd. (in ITA No. 416 of 2010 vide order ....