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2009 (2) TMI 499 - ITAT DELHIEligibility for deduction u/s 80-IA - income derived from rolling stock - Profits and gains from infrastructure development undertakings - ‘Rail system’ - Whether Inland Container Depot (ICD) and Central Freight Station (CFS) as separate infrastructure facility and are not part of Port? - HELD THAT:- In its business of handling and transportation of containerized cargo, the operating activities are mainly carried out at its Inland Container depots (ICDs), Container Freight Station (CFS) and Port Side Container Terminals (PSCT’s) spread all over the country. Its wagons are running on Indian Railway System for carriage of container traffic. Thus, assessee is engaged in developing, operating and maintaining infrastructure facilities, the income from which eligible for deduction u/s 80-IA. The assessee fulfils the conditions of section 80-IA for being eligible to the said deduction, namely; (a) it is a company registered in India; (b) it is providing infrastructure facility; (c) it has kept separate accounts for the eligible business and submitted separate P&L Account and Balance Sheet duly audited; (d) it is new industrial undertaking in view of the Supreme Court decision in Textile Machinery Corpn. Ltd. [1977 (1) TMI 3 - SUPREME COURT] and in Premier Cotton Mills Ltd.[1999 (2) TMI 41 - MADRAS HIGH COURT] as it had purchased huge new machinery for substantial expansion as evidenced by the depreciation chart from 1-4-2001; (e) it had filed the CA certificate, in Form No. 10CCB accompanied by accounts of eligible ICDs and Rail System as required under the law; (f) the places of its ICD/CFS are notified vide notification No. 10682 dated 1-9-1998 in exercise of powers conferred by section 80-IA(12)(ca) CBDT has notified ICDs and CFS as infrastructure facility eligible for deduction provided that such places are notified as ICDs and CFS under section 7(aa) of Customs Act. Custom Department has so notified the above places; (g) its ‘Rail System’ is part of the term ‘Infrastructure facilities’ as defined in Explanation to section 80-IA(4)(c); (h) its ‘rail system’ is clarified by the CBDT Circular No. 733, dated 3-1-1996 as infrastructure facilities; (i) the rolling stock, i.e., wagons etc. form part of Rail System vide definition of Railways under the Railways Act and Rail System is part of infrastructure facility vide Explanation (a ) to section 80-IA(4)(c) of the Act. The CBDT Circular No. 733 and Letter of Ministry of Railways supports the view that the assessee’s wagon etc. (Rolling Stock) running on Indian Railways System are part of infrastructure facilities; (j) it had not been allowed any deduction on these profits under any of the provisions of Chapter VIA of the Act therefore, it is not hit by the provisions of section 80-IA(9) of the Act; (k) it had created, developed, operated and maintained ICDs after 1-4-1995 as is evidenced from notifications stating : (i) The ICD at Jamshedpur vide notifications u/s 7(aa) of Customs Act and u/s 8 of the same Act and u/s 45 (ii) the ICD at Jaipur vide notification u/s 7(aa) and u/s 8 and u/s 45; (iii) the ICD at Jodhpur vide notification u/s 7(aa) and u/s 8 and u/s 45; (iv) the ICD at Pondicherry port vide notification u/s 7(a) and u/s 8; and (v) the ICD at Dronagiri vide copy of letter from Ministry of Commerce and Industries for setting up this ICD, Custom Notification u/s 8 and u/s 45. The provisions for deduction u/s 80-I are different than the provisions u/s 80-IA. Sub-section (9) only provides that the income to the extent of which deduction has been allowed under this other section of Chapter VIA, the same cannot be qualified for deduction under different section and the income pertaining to Rail System and ICD, has not been claimed as deduction under any other section the deduction cannot be denied only on the ground of its claim in earlier years claimed but disallowed u/s 80-I. The term ‘Rail system’ for deduction u/s 80-IA has not been defined under the Income-tax Act but as declared in letter issued by Government of India, Ministry of Railways, (Rail Board), the assessee Container Corporation of India Limited (CONCOR) is running on, for carriage of containers carriage trzaffic. The rolling stock of the assessee is, therefore, a part and parcel of rail system. Accordingly, we uphold the direction of CIT(A) to allow the deduction u/s 80-IA against the income derived from rolling stock. ‘A Port is a place for the lading and unlading of ships or vessels erected by Charter of the King or a lawful prescription.’(per Ld. Chelmsford Foreman v. Free Fishers of Whitstable). Thus in common parlance and commercial world and statutorily recognized a port is associated with ships and is a place of shelter where ships may load and unload their cargo. That seems to be the reason for stating in the definition ‘a port, airport, inland waterways, inland port’ which distinguishes the term port from inland port. A port, therefore, would not include an inland port. We, therefore, uphold the order of the CIT(A) in denying the deduction u/s 80-IA on the income derived from ICDs and SKFs situated in Jaipur, Jodhpur and Jamshedpur ICDs of Pondicherry and Drongiri. Inland Container Depot (ICD) and Central Freight Station (CFS) as separate infrastructure facility and are not part of Port. The ICDs and CFSs of the assessee were included in "infrastructure facility" by extended meaning given to it in terms of the phrase ‘any other public facility of similar nature as may be notified by the Board in this behalf in the Official Gazette’. But this phrase has been omitted from the Explanation as substituted by Finance Act, 2001 with effect from 1-4-2002 and, therefore, these ICDs and CFSs ceased to be infrastructure facility. We, therefore, are of the opinion that term "Inland Port" does not include the ICD. Had it been included in the term Inland Port, the CBDT would have not notified them as separate infrastructure facility and would have clarified that ICDs and CFSs are part and parcel of Inland Port. Thus after amendment of the section vide Finance Act, 2001 with effect from 1-4-2002 there is certain change in the definition of infrastructure facility given in the Explanation. Prior to the said amendment, sub-section (12)(ca) provided that "Infrastructure facility means (i) a road, bridge, airport, port, inland waterways and inland ports, rail system or any other public facility of similar nature as may be notified by the Board in this behalf in the Official Gazette." But Explanations (a) and (d ) to sub-section (4)(c) provide that "For the purpose of this clause infrastructure facility means - (a) a road including toll road, a bridge or a rail system;. . . (d) a port, airport, inland waterways or inland port." Thus the portion "as may be notified by the Board in this behalf in the Official Gazette" as appearing before the said amendment has been deleted in the new Explanation. Therefore, AO’s observation about the customs notification in respect of the ICD’s is irrelevant and unjustified. Not only that the assessee’s claim based on CBDT’s and customs notifications in respect of the ICD’s referred to above is not correct, after the said amendment dropping the words "as may be notified by the Board in this behalf in the Official Gazette" the claim is not allowable on the basis of the above Explanation independent of the notifications. Claimed Depreciation at 60 per cent on computer peripherals and accessories and peripherals like Printers, Scanner, Modems, and Servers etc - AO held that depreciation at 60 per cent was allowable only on computer and software but not on accessories and peripherals - He allowed depreciation at 25 per cent as normal plant and machinery - HELD THAT:- The claim of depreciation of 60 per cent gets justified in view of the fact that even computer software which is installed on computer system supports the computer hardware and is eligible for depreciation at 60 per cent. As held in CIT v. Jokai India Ltd.[2001 (6) TMI 45 - CALCUTTA HIGH COURT]. In view of the decision in the case of ITO v. Samiran Majumdar [2005 (8) TMI 293 - ITAT CALCUTTA-B], we hold that printers, scanners and other peripherals were part and parcel of computer and depreciation against such asset are allowable at the rate of 60 per cent. Therefore, this ground is decided in favour of the assessee and against the revenue. Hence, we uphold the order of CIT(A) in allowing depreciation at the rate of 60 per cent on computer peripherals and accessories by treating them as computers. In the result all the appeals by the assessee and revenue are dismissed.
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