TaxTMI 
TaxTMI 
2026 (6) TMI 937
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....eherji Cashinath Ltd., Mauritius and Chettinad Logistics Pvt. Ltd., India. In this regard, the said parties had executed a Memorandum of Understanding on 21st June 2000. A Letter of Acceptance had been issued by the Ministry of Surface Transport declaring their bid, to develop and manage the Chennai Container Terminal in accordance with the Major Port Trusts Act, 1963 and Guidelines issued there under, to be successful. The Petitioner had received Certificate for Commencement of Business as per the Companies Act, 1956, on 13th November 2000. From the financial year 2008-09, the Petitioner is a 100% subsidiary of P & O Ports (Chennai) Ltd., Mauritius, which in turn now is entirely held by D. P. World Ltd., Dubai. 5. On 9th August 2001, a License Agreement was executed between the Board of Trustees of Chennai Port and the Petitioner for the development and management of the Chennai Container Terminal. By the said License Agreement, the Petitioner was granted exclusive license for designing, redesigning, engineering, financing, constructing, equipping, operating and maintaining etc. the project facilities. Pursuant thereto, the Petitioner invested Rs.911 lakhs in the Bharathi Dock ....
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.... which in turn was a wholly owned subsidiary of D.P. World Ltd., Dubai. It was also clarified that the license agreement with the Chennai Port Trust was for a period of 30 years. 10. Further, in the Tax Audit Report to be obtained as per Section 44AB of the Act, read with Rule 6G of the Income-tax Rules, necessary disclosures were made with respect to P & O Ports (Chennai) Ltd., Mauritius, being its parent company and the transactions entered into with it. 11. Further, in accordance with the provisions of Section 80-IA(7) read with Rule 18BBB of the Rules, the Petitioner obtained an audit report from a Chartered Accountant reflecting the enterprise or undertaking which qualified for deduction under Section 80-IA, its ownership status, description of the eligible business and quantum of deduction to be claimed. 12. Since the Petitioner had entered into international transactions with its associate enterprises, including with P & O Ports (Chennai) Ltd., Mauritius, the said fact was duly reflected in the Audit Report obtained in Form 3CEB as per Section 92E of the Act. 13. The Petitioner filed its return of income for A.Y. 2014-15 on 28th November 2014. In the said return ....
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.... of Section 80-IA which requires that the enterprise carrying on the eligible business should be owned by a company registered in India. 19. The Petitioner filed its objections before Respondent No. 1 on 01st July 2021 inter alia urging that the initiation of reassessment proceedings was invalid in view of application of first proviso below Section 147 of the Act as there was no failure on the part of the Petitioner to disclose fully and truly all material facts necessary for the purposes of its assessment, that the belief as formed by Respondent No. 1 merely reflected a change of opinion and there was no basis for formation of this belief. The Petitioner also urged that the proposal was sent by Respondent No. 1 to Respondent No. 2 on 25th March 2021, who approved the same on the same date and in turn forwarded the said proposal to the Respondent No. 3, who recorded his satisfaction on 26th March 2021, resulting into effective recording of satisfaction in a mechanical manner and without application of mind. 20. The Petitioner's objections were rejected by Respondent No. 1 by his impugned order dated 14th February 2022. 21. Thereafter, the Petitioner was served with notices....
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....the notice of Respondent No. 1 as a part of the Annual Report, Tax Audit Report Form 3CEB and the Income Tax Return. 27. Mr. Joshi further submitted that it is further alleged in the said reasons that the record shows that the Petitioner is engaged in maintaining, managing and operating the existing container terminal at Chennai Port handed over to it by Chennai Port Trust and no new infrastructure facility was brought into existence. In this regard, reference has, also been made to Note 2.6 to the Notes to the Financial Statement, where the Petitioner has disclosed the fact that certain assets had been taken on lease from the Chennai Port Trust. Mr. Joshi submitted that, here again, Respondent No. 1 has overlooked the fact that the Petitioner had set-up 7 Quay gantry cranes (QCs) and 22 Rubber tyred gantry cranes (RTGs) facility at the dock and had incurred substantial expenditure of approximately Rs.35,210 lakhs. Mr. Joshi further submitted that it was also overlooked that consistently in the assessment orders passed by Respondent No. 1 for the earlier years, and the current year, the Petitioner's business had been referred to as including development of the Container Terminal....
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....eduction under Section 80IA(4) is that the Petitioner shall develop or operate and maintain a new infrastructure facility. Audit scrutiny or records however revealed that the Petitioner is engaged in maintaining, managing and operating the existing container terminal at Chennai Port handed over to it by Chennai Port Trust and no new infrastructure facilities were brought into existence by the Petitioner. Ms. Kanani submitted that this fact is also strengthened by the Petitioner's own submission vide Note 2.6 set out in the Notes to financial statements wherein the Petitioner disclosed that certain assets were taken on lease from the Chennai Port Trust. Ms. Kanani submitted that from the above it transpires that the Petitioner is not fulfilling the basic conditions prescribed for availing the deduction under Section 80-IA of the Act. Hence, the deduction allowed under Section 80-IA needs to be set aside. 32. Further, Ms. Kanani submitted that the Petitioner has claimed an inadmissible claim of deduction under Section 80-IA of the Act. The incorrect claim of such deduction, which was allowed in the assessment, has been brought out by the Revenue Audit, which is one of the agencies....
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....or solid waste management system; (d) a ports, airport, inland waterway [,inland port or navigational channel in the sea];] 34. The first reason given for re-opening the assessment is that the assessee (Petitioner) is an enterprise and that it is owned by a company named P&O (Chennai) Ltd., Mauritius, which is not a company registered in India, and, hence, the Petitioner has committed a breach of Section 80-IA(4) and is not entitled to a deduction under Section 80-IA. 35. In our view, this reason given by Respondent No. 2 is incorrect. Respondent No. 2 has made the mistake of equating the Petitioner with an enterprise. 36. The Concise Oxford English Dictionary (Twelfth Edition) defines enterprise as "enterprise - n. 1 a project or undertaking, especially a bold one. bold resourcefulness. 2 a business or company". 37. Thus, the primary meaning of an enterprise is a project or an undertaking. 38. In the present case, the enterprise is the Chennai Port Bharathi Dock undertaking of the Petitioner which is owned by the Petitioner which is a company registered in India. The Respondents have erred in equating the Petitioner as the 'enterprise' and, consequently, ho....
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....y income chargeable to tax has escaped assessment for any Assessment Year, he may, subject to the provisions of Sections 148 to 153, assess or reassess such income and also other income chargeable to tax which had escaped assessment and which comes to his notice subsequently in the course of the proceedings. The first proviso to Section 147 [as it stood then] reads thus:- "Provided that where an assessment under sub-Section (3) of Section 143 or this Section has been made for the relevant assessment year, no action shall be taken under this Section after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under Section 139 or in response to a notice issued under sub-Section (1) of Section 142 or Section 148 or to disclose fully and truly all material facts necessary for his assessment, for that assessment year;" (emphasis supplied) 45. A perusal of the said proviso makes it clear that where an assessment under Sections 143(3) or 147 has been carried out for the relevant assessment year, no a....