TaxTMI 
TaxTMI 
2009 (2) TMI 499
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....or onward EXIM transportation. Initially Indian Railways was carrying the cargo in wagons. Transportation of cargo (specially EXIM cargo) by wagons had its own inherent limitations. Wagons could move only on rails upto the designated rail terminals. From these terminals, the individual parties had to arrange for the onward transportation of cargo upto the port. The exporter/importer had to deal with a lot of intermediaries, which effectively increased their cost of logistics and finally the cost of product. Even then, the intervention of several agencies caused avoidable delay with dislocations. Hence the demand of the market specially for EXIM traffic to avail such benefit of end-to-end logistics where they would deal with only one agency who would take care of all the formalities of EXIM cargo alongwith its logistics became vocal and dominant. This precisely meant there would be only one nodal agency which will pick up the cargo from the exporter's doorstep and will facilitate its loading into the ship by complying with all the intermediary formalities, be it at the port or with the customs. 4. Considering the dire need of the industry, the Government of India, through Indian Ra....
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....-IA for this infrastructural facilities as it is engaged in the business of handling and transportation of containerized cargo. Its activities are stated mainly to carry out its Inland Container Depots (ICDs), Container Freight Stations (CFS) and Port Side Container Terminals (PSCTs) spread all over the country. Its wagons are running on Indian Railway system for carriage of container traffic. The assessee is thus claimed to be engaged in developing, operating and maintaining infrastructure facilities. 7. The Assessing Officer did not allow the claim for the reasons - (i) that the assessee claimed deduction under section 80-I during assessment years 1991-92 to 1994-95 which were disallowed and the CIT(A) had confirmed the action of Assessing Officer and the Committee of Dispute (CoD) settled the matter in favour of the Department and that the assessee had reserved its right to claim deduction under section 80-I from 1995-96 onwards; (ii) that the assessee had maintained the infrastructure facilities of rolling stock and ICD since its insertion i.e., assessment year 1990-91 and the subsequent additions to number of wagons, i.e., rolling stock and ICDs after 1-4-1995 points out that....
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.... The assessee fulfilled the conditions of section 80-IA and the income pertaining to rail system and ICDs. The assessee has not claimed as deduction under any other section, other than the claim made under section 80-IA, the deduction cannot be denied that too only on the ground that in earlier years, the assessee had already claimed (but was denied) the deduction under section 80-I of the Income-tax Act on the ground of the restriction under clause (9) of section 80-IA providing that such income which has been allowed as deduction under this other section of Chapter VIA, the same cannot be qualified for deduction under different section. 10. He further held that as per depreciation chart of rolling division, the WDV as on 1-4-2001 was nil and all the additions made during 1-4-2001 to 31-3-2003 of the 5 ICDs were of new machinery; that though the assessee was in existence, yet, its rolling division and 5 ICDs commenced operations only after 1-4-2001; that not only the business operation are handled independently but financial records are also maintained separately by each of the units; that the deduction under section 80-IA is available to an 'Undertaking' or 'Enterprise' in view ....
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....ection 80-IA of the Income-tax Act, 1961 (43 of 1961), the CBDT hereby notifies Inland Container Depot and Central Freight Station (CFS) is infrastructure facility. Provided that such places are notified as 'Inland Container Depot and Central Freight Station under section 7(ca) of the Customs Act, 1961'. Thus, looking to the old provision of Explanation inserted by Finance Act, 2000 with effect from 1-4-2001 and CBDT Notification dated 1-9-1998, I hold that the requirement of notification by the Custom Department treating the ICD as infrastructure facility was applicable only upto the assessment year 2002-03. Once the phrase 'any other facility of similar nature' has been taken away by the new Explanation substituted by Finance Act, 2001 with effect from 1-4-2002, the ICDs are no more infrastructure facility for the purposes of deduction under section 80-IA. In the light of these legal provisions, I hold that the appellant was not entitled for any deduction under section 80-IA against income derived from aforesaid 5 ICDs mentioned in preceding para. Thus, the question of notification by Custom Authorities is no more relevant for the deduction under section 80-IA in the assessment ....
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....efore all this infrastructure is developed by CONCOR on its own. (ii) Operating of Rail System - The Rails System which have been created are operated by the company in which it transports containers from sea ports/other places to its depots in the hinterland and vice versa. These operations are carried out by CONCOR on its own for which it bills its customers and collects freight and other charges. In this process for utilization of the railway track and the Railway locomotives it pays if the charges due to them. The company has set up in-house directional and monitoring operations departments which monitor the movement of the several container trains. These operations are carried out in close co-ordination and tie-up with the Railways and are attempted to be well integrated and synergies with their existing network and operations. The company has developed systems for carrying out all these activities optionally both functionally and time-wise. (iii) Maintaining of Rail System - The huge infrastructure which has been developed and operated by CONCOR is required to be assiduously maintained for its smooth functioning over a longer period. The wagons acquired by CONCOR are alway....
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....y, along with the track. 18. He also submitted that these wagons constitute Rail System where services over the Indian Railways network are offered by use of these wagons to the customers. In other words, the infrastructure facility provided by the Indian Railway System is enhanced by assessee's wagon deployment. These wagons ply as scheduled trains and on demand trains all over the Indian Railway network. 19. As per Para 2 of Circular No. 733 issued by CBDT dated 3rd January, 1996, he submitted that the Indian Railways have formulated a build-own-lease-transfer (BOLT) Scheme, hereunder a private enterprise will provide the necessary and crucial components of Railway System. From this para it is clear that this circular is applicable to BOLT schemes of Indian Railway and is applicable for each necessary and crucial component of Railway System. It is beyond denial that wagons constitute railway system. This circular clearly establishes the fact that the Rail system includes rolling stock and that is why the circular has specifically provided for the relaxation in the conditions as to maintain and operate under "BOLT Scheme" shall be restricted to Rail system other than rolling sto....
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....System, which is managed by Indian Railways. 22. As regards Inland Ports he submits that the CIT(A) has erred in confirming the order of Assessing Officer in holding that the Inland Container Depots are not Inland Ports as per clause (d) of Explanation to section 80-IA (4) by wrongly interpreting the amendments made in section 80-IA with effect from 1-4-2002 and, hence, denied the benefit of deduction under section 80-IA of the Act. In fact the deduction claimed by the company is under the category 'Inland Port', which term was there before the amendment and continuous even after the amendments. A clarification has been issued by Ministry of Finance, Department of Revenue, Central Board of Excise and Customs vide its Letter F.No. 450/24/2007-Cus.IV dated 24-4-2007 stating that Inland Container Depots (ICDs) and Container Freight Stations (CFSs) are 'Inland Ports'. Hence, there can be no more a doubt on this issue since the clarification is by the same Department which is responsible for custom clarification and notification. In the absence of any specific definition of inland port in the Income-tax Act, we have to understand its meaning and scope in terms of dictionary meaning, it....
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.... appointed under clause (aa) of that section to be an integral container depot. Notification No. SO 744(E) dated 1-9-1998 is referred to and amendment thereto vide notification No. SO 391(E) dated 28-5-1999, in exercise of the powers conferred by clause (ca) of sub-section (12) of section 80-IA of the Income-tax Act, 1961 (43 of 1961), the CBDT has notified Inland Container Depot (ICD) and Container Freight Station (CFS) as infrastructure facility eligible for deduction under section 80-IA, provided that such places are notified as Inland Container Depot and Container Freight Station under Customs Act, 1962. 25. He further submitted that it is important to mention here that the definition of 'infrastructure facility' introduced with effect from 1-4-2002 excludes 'any other public facility of a similar nature as may be notified by the Board in this behalf in the Official Gazette'. However asfaras the word 'inland port' is concerned, it was there in the Act prior to the amendment and continued to exist even after the amendments were made in the section. Even after amendment of the section vide Finance Act, 2001 with effect from 1-4-2002 the ICD and CFS will continue to be covered un....
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....ted 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 afte....
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....ion under section 80-IA has not been defined under the Income-tax Act but as declared in letter dated 23-8-2005, 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. It reads as under : "In reference to your letter No. Con./Operation/Misc./1, dated 23-8-2005, this is to certify that the CONCOR owned wagons "VLC, VLL & BFKN, are running on Indian Railways System for carriage of container traffic." Further in the Railways Act, 1989, para 37, the term "rolling stock", has been defined which is being reproduced below:-(37) "rolling stock" includes locomotives, lenders, carriages, wagons, rail-cars, containers, trucks, trolleys and vehicles of all kinds of moving on rails." 31. 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 under section 80-IA against the income derived from rolling stock. 32. A port as generally understood is a sea port, an access to sea. Judicial Dictionary by K.J. Aiyer, 8th Edition, 1980 defines it as 'a place of shelter wher....
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....een accustomed to receive and deliver cargo, consigned to the port designated, without any necessary regard to geographical or physical divisions, or to police or statutory regulations. 'The Franchise of Port may be in one person and the ownership of the Soil, within the limits of the port, in another.' (per Ld. Chelmsford, Foreman's case. Sup, citing De Portibus Maris.) 'Port' means any port, or any part of a navigable river or channel in which the Indian Ports Act, 1875 is for the time being in force. Bur. Act XII of 1883 (Pilots) S.2 PORT. A strong sweet red wine. 1.A harbour or place of shelter where ships arrive with their freight and customs for goods are taken [Sections 3(1) and 18(1), Emigration Act]; 2.To carry or convey." 33. 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 ....
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.... though it was already mentioned in the old Explanation inserted by Finance Act, 2000 with effect from 1-4-2001 and the same continued in existence in the new Explanation substituted by Finance Act, 2001 with effect from 1-4-2002. 37. 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. For the sake of convenience, relevant portion of CBDT Notification No. 10682 dated 1-9-1998 is reproduced below:- "Deduction under section 80-IA In exercise of the powers conferred by clause (ca) of sub-section (12) of section 80-IA of the Income-tax Act, 1961 (43 of 1961), the CBDT hereby notifies Inland Container Depot and Central Freight Station (CFS) is infrastructure facility. Provided that such places are notified as 'Inland Container Depot and Central Freight Station under section 7(ca) of the Customs Act, 1961'. Thus, looking to the old provision of Explanation inserted by Finance Act, 2000 with effect from 1-4-2001 and CBDT Notification dated 1-9-1998, I hold ....
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....uter peripherals and accessories. The claimed depreciation at 60 per cent on computers including their accessories and peripherals like Printers, Scanner, Modems, and Servers etc. the Assessing Officer 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. 40. The accessories and peripherals of computers provide input processing, storage and various output devices. The output devices such as printer, scanner etc. are computer peripherals and form essential parts of PC. These output devices cannot work in isolation and also working on computer system without an output device such as printer would be futile. In view of the above, the claim of depreciation at 60 per cent on printer, scanner and other computer peripherals is completely justified. The claim of depreciation of 60 per cent further 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. 41. As held by the Calcutta High Court decision in CIT v. Jokai India Ltd. [20....