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2015 (12) TMI 461 - AT - Income TaxEligibility for deduction u/s 80IA(4) in respect of CFS - whether CFS is an infrastructure facility under section 80IA(4)? - Held that:- The Hon'ble Jurisdictional High Court in CIT v/s Continental Warehousing Corporation Ltd.[2015 (5) TMI 656 - BOMBAY HIGH COURT] has held that CFS for the purpose of section 80IA(4) is to be considered as an inland port In fact, the Tribunal, Vizag Bench, in Gateway East India Pvt. Ltd. (2015 (12) TMI 365 - ITAT Visakhapatnam), following the decision of Container Corporation of India Ltd. v/s CIT [2012 (5) TMI 260 - DELHI HIGH COURT] held that CFS being an inland port is an infrastructure facility for the purpose of section 80IA(4). In view of the aforesaid, we have no hesitation in holding that assessee having developed, operated and maintained a CFS is eligible for deduction under section 80IA(4). On a reading of the provisions of section 80IA(4)(i)(b), as it existed from 1st April 2002, it is clear that the condition that such infrastructure facility shall be transferred to the Government, local authority or statutory body has been done away with by Finance Act, 2001 w.e.f. 1st April 2002. Therefore, the reasoning of the Assessing Officer that the assessee would not get deduction under section 80IA(4) agreement BOT / BOLT stipulating handing over the infrastructure facility to the Government is wholly without basis. Even assuming for the argument sake that such condition is applicable for the impugned assessment year, still in our view, the stand of the Department is wholly misconceived as the first appellate authority after perusing the agreement with CIDCO has given a categorical finding that CFS developed, operated and maintained by the assessee would revert back to the statutory body after expiry of lease period of 60 years. This finding of fact recorded by the first appellate authority has not at all been controverted by the Department. Thus, both the arguments of the Assessing Officer for denying assessee's claim of deduction would fail. - Decided against revenue Disallowance of interest expenditure claimed under section 36(1)(iii) - CIT(A) deleted the disallowance - Held that:- Assessing Officer has disallowed interest expenditure only on the allegation that assessee has failed to prove the fact that borrowed funds were not diverted for investing in share capital of the subsidiary. However, on a perusal of the facts and materials placed on record, it is seen that as against the investment made in the subsidiary during the relevant previous year amounting to ₹ 85.86 crore, the assessee had own interest free funds on account of share capital and reserves to the tune of ₹ 633 crore. This fact has not been controverted by the Department. Therefore, when both borrowed funds and interest free funds are available to the assessee, as per the principles laid down by the Hon'ble Jurisdictional High Court in CIT v/s Reliance Utilities and Power Ltd. (2009 (1) TMI 4 - HIGH COURT BOMBAY), the presumption would be, investment in subsidiary is from own interest free funds. In that view of the matter, we do not find any reason to interfere with the order of the first appellate authority. Moreover, on a perusal of the loan agreement with the Bank, it is very much evident that there is stipulation in the agreement that from time-to-time the bank will make inspection for ensuring utilisation of funds for the purpose for which it was taken. Therefore, when there is no allegation by the bank that borrowed funds were not utilised for the specific purpose for which it was given, the Assessing Officer cannot assume or presume that borrowed funds were utilised for making investment in the subsidiary. - Decided against revenue
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