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TMI Blog2014 (5) TMI 730X X X X Extracts X X X X X X X X Extracts X X X X ..... rs. The assessee company initially filed the return of income for the assessment year 2005-06 under S.139(1) admitting a total income of Rs.18,74,14,600, after claiming deduction under S.80IB of Rs.1,09,59,828 on 30.10.2005. Though the assessee subsequently filed revised return of income on 2.4.2007 admitting a total income of Rs.3,07,04,490 after claiming deduction under S.80IB of Rs.16,56,60,932, on the ground that the assessee has not filed the revised return within the time specified in the Act, the Assessing Officer ignoring the revised return, proceeded to complete the impugned assessment under S.143(3)of the Act, on the basis of original return. 4. While doing so, the Assessing Officer inter alia examining the claim of the assessee for deduction under S.80IB(11A) of the Act, noted that the following conditions shall have to be fulfilled by an assessee, who is in the integrated business of handling, storage and transportation of food grains, to claim deduction under S.80IB(11A). a) Profits and gains have to be derived from the eligible business, i.e. from the integrated business of handling, storage and transportation of foodgrains. &nb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ge and transportation. The word 'integrated', according to the Assessing Officer, might have been used specifically to see that all these activities are carried out by single person, so that it would give desired result. If that was not intention of the Parliament, the word 'integrated', according to the Assessing Officer, could have not found place in sub-section 11A of S.,80IB of the Act. For these reasons, the Assessing Officer concluded that the assessee is not eligible to claim the deduction under S.80IB(11A), and accordingly disallowed the claim made by the assessee in that behalf. 6. On appeal before the CIT(A), the assessee, reiterating the contentions urged before the Assessing Officer submitted that the assessee was earlier claiming exemption provided in S.10(29) of the Act upto the assessment year 2002-03, and the warehousing income was exempted under that provision and the other incomes were used to be taxed in the hands of the Corporation. Since S.10(29) was omitted by Finance Act, 2002 w.e.f. 1.4.2003, and Subsection 11A was introduced in S.80IB from assessment year 2002-03 in respect of undertakings deriving the profits from the integrated business of handling, stor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assed, upheld the disallowance made by the Assessing Officer, by following his order of the assessment year 2005-06. 8. Aggrieved by the orders of the CIT(A) sustaining the disallowance of the claim for relief under S.80IB(11A) of the Act, assessee preferred the present appeals before us. 9. The learned counsel for the assessee, reiterating the contentions urged before the lower authorities submitted that the assessee Corporation is rightly entitled to deduction under S.80IB(11A) in respect of the new warehouses constructed. He submitted that the assessee corporation has fulfilled all the conditions contained in sub-section (11A) of S.80IB of the Act. He submitted that the assessee-corporation has godowns either newly constructed by it or taken on lease that it stores food-grains belonging to Food Corporation of India mainly and handles and transports such foodgrains under its supervision by hiring men and material wherever necessary. Therefore, it is submitted that the lower authorities should have seen that the assessee has actually carried on integrated business of storage, and handling of foodgrains. It is further submitted that the exemption claimed by the assessee was only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her constructs or offers an investor to construct new godowns, which the corporation takes on lease. It is the claim of the assessee before the CIT(A) that the plinth area of construction of the godowns varies from minimum area of 10,000 sft. up to a maximum area of 50,000 sft. and the scheme of construction of godowns started in the year 2002. Each unit is an undertaking because food-grains are stored and handled and transported thereto and therefrom. It may be noted at this juncture that there is no restriction in S.80-IB that an existing business unit cannot set up new undertakings to carry on the integrated business of handling, storage and transportation of food grains. The godowns where this business is to be carried on need not be owned by the assessee. When the assessee-corporation has set up these godowns in as many as in 73 towns and at different places in those towns, it is very much entitled for relief under S.80IB(11A) of the Act in respect of each such new undertaking set up by it. It appears from the impugned orders that the lower authorities have proceeded as if the assessee's claim for relief under S.80IB(11A) is in respect of existing godowns, and not merely in re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot engaged in the integrated business of handling and storage of foodgrains. In the course of their integrated business, the assessee had collected rentals for storing foodgrains and had engaged outsiders to transport the food grains. Further, the fact that the assessee had been carrying on similar business would not disentitle the assessee from claiming relief u/s 80IB(11A), in respect of the new warehouses put to use after the introduction of sec 80IB(11A) i.e on or after 1.4.2001. The assessee has furnished in the paper-book list of new Godowns, which have been put to use by the assessee after 1.4.2001. It is well settled that deduction under Chap VIA, in respect of new undertakings set up by the assessee by way of expansion of the existing undertakings, as held by the Apex Court in the cases of Textile Machinery Corporation Ltd v CIT 107 ITR 195 SC and CIT v Indian Aluminium Company Ltd (108 ITR 367). The number of new godowns operated by the Assessee after 1.4.2001 clearly shows that there was substantial expansion of the assessee's business of handling, storing and transportation of food grains, which obviously could have been done only be undertaking new warehousing faciliti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ".......The contention of the Appellant has been carefully considered and it is found that the payment was in the form of advance for the construction of guest house in the premises of IAS quarters. In the premises of IAS quarters, the Corporation cannot build and own any property of its own. It is also noticed that the Corporation has not included the accommodation/guest house on which the amount of Rs.10 lakhs was paid in the assets list which shows that the appellant has no ownership rights on the building. The only condition for making the contribution was the direction from the government to make the payment and nothing else which shows the expenditure was not incurred wholly and exclusively for the purpose of the business. As pointed out by the Assessing Officer the Appellant could not substantiate the claim with any documentary proof either in the form of agreement or memorandum of understanding with the IAS Officers Association and it could not show how the payment would benefit the Corporation. Moreover, the Corporation has its own office building and the MD of the Corporation can organize meetings in its building and if necessary, it can use any g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich we have extracted in para 17 above, for rejecting the claim of the assessee. Further, as noted while dealing with the assessee's appeal on this issue for assessment year 2005-06 in the preceding para, the assessee itself has claimed for the assessment year 2005-06 that it has added the amount of Rs.2 lakhs in the computation of income, thereby admitting that it cannot be allowed. Further, it is an admitted fact that the amount of Rs.10 lakhs was advanced for the construction of a guest house and as such it is capital in nature, and hence not allowable as deduction under S.37 of the Act. In this view of the matter and in the absence of anything to the contrary brought on record by the assessee to substantiate its assertions with regard to allowability of deduction of the amount of contribution made by the assessee for the construction of the guest house, we find no infirmity in the action of the CIT(A) in upholding the disallowance made by the Assessing Officer. We accordingly reject the grounds of the assessee on this issue for the assessment year 2006- 07 as well. 23. In the result, all the three appeals of the assessee are treated as partly allowed for statistical purposes. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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