2015 (7) TMI 1099 - HC - Income Tax

Eligibility of Container Freight Station as infrastructure facility for the purpose of deduction under section 80-IA(4) - Held that - In view of the status of CFS having been clarified by the Ministry of Commerce and Industry as inland ports and the Chennai Port Trust has issued a certificate stating that the CFS of the assessee may be considered as extended arm of the Port in accordance with the Central Board of Direct Taxes Circular No. 793 dated June 23 2000 read with Circular No. 133 of 1995-Cus dated December 22 1995 of the Central Board of Excise and Customs New Delhi we hold that the assessee is entitled to the benefit under section 80-IA of the Income-tax Act.- Decided in favour of assessee.

Summary

Issues:
1. Eligibility of Container Freight Station for deduction under section 80-IA(4) of the Income-tax Act.
2. Consideration of amended provisions of section 80-IA(4) from April 1, 2002.

Analysis:

Issue 1:
The case involved the eligibility of a Container Freight Station (CFS) for deduction under section 80-IA(4) of the Income-tax Act. The assessee, a private limited company engaged in shipping-related business, claimed deduction under section 80-IA for its CFS. The Assessing Officer initially disallowed the claim, stating that CFS did not qualify as an "inland port" for the deduction. However, the Commissioner of Income-tax (Appeals) allowed the deduction, citing that post-amendment, "inland ports" were included as infrastructure facilities eligible for deduction under section 80-IA(4)(i). This decision was supported by the Ministry of Commerce and Industry's clarification that ICDs and CFSs are inland ports. The Tribunal also upheld the decision, referencing various judgments supporting the assessee's case.

Issue 2:
The second issue raised was whether the Tribunal erred in following a Delhi High Court judgment regarding CFS eligibility for deduction, especially when the Department had not accepted it and an SLP was pending before the apex court. The Tribunal dismissed the appeal by stating that the facts of the case aligned with previous decisions, including those by the Tribunal's Special Bench and other courts. The Tribunal emphasized that CFSs were considered part of inland ports, as confirmed by certificates and circulars from relevant authorities. The High Court, in a similar case, had previously held that CFSs fell within the customs area attached to the port, making them eligible for deduction under section 80-IA(4)(i) Explanation (d) of the Income-tax Act.

In conclusion, the High Court upheld the Tribunal's decision, emphasizing the Ministry's clarification and certificates supporting the CFS's status as an inland port. The Court found no reason to interfere with the Tribunal's order and dismissed the Tax Case (Appeal) in favor of the assessee.