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2025 (10) TMI 26
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....." 4. We next come to learned lower appellate authority's detailed discussion partly accepting the assessee's section 80IB(11A) deduction claim of Rs. 7,19,52,067/- as under: "4.2.1 I have carefully considered the submission of the appellant, assessment order, details brought on record and the judgments relied upon. Ground 1, 5, and 6 are general in nature and require no specific adjudication and are therefore, dismissed. Ground no. 2 relates to disallowance of section 80IB deduction amounting to Rs. 7,19,52,067/-. 4.2.2 The appellant is engaged in the business of storage, handling and transportation of various commodities and during the year under consideration it has shown total receipt of Rs. 31,55,26,587/- from storage charges Rs. 65,28,571/- from Assaying charges Rs. 3,36,821/- from transportation charges Rs. 28,31,773/- from handling charges and Rs. 22,69,187/-on account of net interest income. The entire receipt including interest income has been treated as business receipt in the computation of income; after allowing for depreciation and other expenses as per I.T. Act the income from Business has been worked out at Rs. 8,18,96,197/- out of which an amount of Rs....
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....ed business of appellant of handling, storage and transportation of food grains is over whelmed by the receipts from storage charges which is much more in comparison to the handling and transportation charges. Bulk of the receipts relates to the godowns and thus appellant is not eligible for this deduction, looking to the major godown receipts and the godowns are not owned by appellant therefore the appellant cannot be said to have been engaged in the integrated business of handling storage and transportation of food grains. The remarks of AO in this regard is reproduced as follows:- "I have carefully gone through the submission of the Assessee Company as discussed in the show cause letter dated 20.12.2016 the receipt of the Assessee Company from Transportation and Handling charges is almost negligible and the submission of the Assessee that it is engaged in the integrated business of handling storage and transportation of food grains does not hold good. The word Integrated has been defined in Oxford dictionary as 'with various parts or aspects linked or coordinated' In common parlance, it means combining or coordinating separate elements so as to provide a harmonious interrelated ....
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....ss in a manner that the total period of deduction does not exceed ten consecutive assessment years and subject to fulfillment of the condition that it begins to operate such business on or after the 1st day of April, 2009." 4.2.9 A plain reading of the Act reveals that it is not a basic and essential condition that appellant should own such warehouses. Further, it is also held in the case of AP State Warehousing Corporation (Supra) by the Hon'ble ITAT that the warehouse need not be owned by the appellant. Further, it is also to be mentioned that appellant has carried out the integrated business of handling storage and transportation of food grains, which is also accepted by the AO. Therefore, if one part is yielding more revenue in comparison to other part, it will not make the claim of appellant u/s 80IB(11A) as not an allowable claim. It is to be seen whether these activities are being carried out by the appellant or not irrespective of the amount of revenue received for these activities. Further, it is also stated by the appellant that the storage charges are also inclusive of handling and transportation charges in few cases. Therefore, this argument of AO is not tenable. ....
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.... 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. Ergo, we have to examine, firstly, whether the assessee company is ....
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....s 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 fulfill 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 this background the claim for deduction u/s 80IB(11A) of transport activity was denied. On the contrar....
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....owns 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. 80IB of the Income-tax Act, a deduction is allowed, in computing the taxable income, in respect of profits derived from a new industrial....
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.... 107ITR 195 (SC) and CIT v. Indian Aluminium Co. Ltd. [1977] 108 ITR 367(SC). The number of new godowns operated by the Assessee after 1.4.2001 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 after 2001, and allow the same in accordance with law, and after giving due opportunity of hearing to the a....