TMI Blog2015 (5) TMI 387X X X X Extracts X X X X X X X X Extracts X X X X ..... re, based on the material on record. The fact that the assessee was also maintaining the cranes was not disputed. The assessee was entitled to the special deduction under section 80IA. and this position is not disputed even by the learned D.R. - Decided in favour of assessee. Disallowance of expenditure incurred towards loan processing charges and rates and taxes for loan documentation - CIT(A) allowed the claim - Held that:- Assessee has relied on the definition of “Interest” given in section 2(28A) of the Act which provides that ‘interest’ means, interest payable in any manner in respect of any monies borrowed or debt incurred and includes any service fee or other charge in respect of the monies borrowed or debt incurred. Processing charges and other expenses incurred by the assessee in connection with the loan borrowed, thus, are to be considered in the nature of interest as per the definition given in section 2(28A) and the Ld. CIT(A) in our opinion, was fully justified in allowing the same as deduction as claimed by the assessee. We, therefore, uphold the impugned order of the Ld. CIT(A) on this issue - Decided in favour of assessee. - Decided in favour of assessee. - ITA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amined by the A.O. and on such examination, he found the same to be not allowable mainly for the following reasons : a. Warehouse is included under the infrastructure facility but not the open land. b. Even as per the certificate issued by the Port Authority, only the warehouse is infrastructure facility but not the open land. c. The infrastructure facility shall be owned by the assessee company to claim 80IA(4) deduction in this case, rather it is taken on lease from M/s.KSPL. d. That the assessee company did not enter into any agreement with Central Government or State Government or Local Authority or any e. That such an agreement should be entered by the company availing deduction u/s.80IA whereas in the instant case, it is the KSPL which entered into agreement with the Government of Andhra Pradesh and not the assessee. f. As per the proviso to section 80IA(4) the infrastructure is first to be developed by the transferor company and the same should be transferred to transferee company. Whereas in the instant case, M/s. KSPL entered into agreement with Government of Andhra Pradesh on 16.04.2001 and the same lease was transferred to the assessee company on 01.12 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al authority has to be entered by the transferor because as per the explanation of the same section, 80IA(4), infrastructure facility means road, rail, bridge, highway projects, water supply projects, irrigation projects, sewerage system, airport, seaport etc., all these facilities are owned by sovereign states not by private parties. In order to develop any infrastructure of these types, the person has to first enter into an agreement or an understanding with the state. Therefore, to my understanding, it company which has to enter an agreement with the state, thereafter it can develop the infrastructure, thereafter, it can transfer the same to some other company for operating and maintaining. In .he instant case, M/s. KSPL entered into an agreement with Government of Andhra Pradesh for developing infrastructure and Government of Andhra Pradesh has leased out the land for the same purpose. This land was subleased to many companies to develop the infrastructure. One of the companies is the appellant company - M/s. Belair Logistics Ltd. Such sub-lease to the appellant had the approval of Government of Andhra Pradesh vide its letter No.11694/B-1/2001 dated 15.12.2001, m effect, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titled to 80lA deduction. The Assessing Officer took the objection that, in the instant case, the transferor (KSPL) did not develop infrastructure rather it is the transferee which developed infrastructure. Therefore, 80lA deduction is not allowable to the assessee. However, I consider the spirit of the section is to allow deduction to the companies who are making investments in infrastructure. Whether transferor develops infrastructure or the transferee: develops the infrastructure is not a materially important. Moreover, it is the settled principle that the sections which are beneficial to the assessees have to be interpreted liberally to serve the purpose for which the section is intended to. The Hon'ble Supreme Court in the case of Bajaj Tempo Ltd. Vs. CIT 196 ITR 188 held that the a provision in taxing statute granting incentives for promoting growth and development should be construed liberally. Further, the Hon'ble Supreme Court in the case of Collector Land Acquisition Anantnag ANR. Vs Mst. Katiji and Others 1987 AIR 1353 held that when substantial justice and technical considerations are pitted against each other, the cause of substantial justice has to be preferre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould be transferred to the said authority on the expiry of the time stipulated in the agreement. This definition is applicable to assessment year 2001-02 and any earlier assessment year. 3. However, for and from assessment year 2002-03 onwards, structures at the ports for storage, loading and unloading etc. will be -included in the definition of port for the purpose of sections 10(23G) and 80-IA of the Income-tax Act, 1961, if the following condition is fulfilled: the concerned port authority has issued a certificate that the said structures form part of the port. 4.1. In the judgment passed in the case of ABG Heavy Industries Ltd., (supra) the relevance of the aforesaid two circulars issued by the CBDT was considered and discussed by the Hon ble Bombay High Court as under : 15. The importance of the circular, insofar as the subject-matter of these proceedings is concerned, lies in the fact that the Board noted that it was in receipt of representations seeking a clarification on whether structures at ports for storage, loading and unloading etc. would fall within the definition of a port inter alia for the purposes of s. 80-IA of the Act. The Board clarified that such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the Hon ble Bombay High Court allowed the claim of the assessee for deduction under section 80IA in the case of ABG Heavy Industries Ltd., (supra) by observing as under : On 31st May, 2004, JNPT issued a certificate confirming the award of contracts to the assessee on 2nd Sept., 1994 and 16th Oct., 1995 for supply, installation, testing, commissioning and maintenance of container handling equipment on lease for a period of ten years for loading and unloading of containers at the port and that the cranes that were to be supplied by the assessee form an integral part of the port. JNPT clarified that the contracts have been executed under the BOLT Scheme and in accordance with its directions, the cranes would be transferred to the Port Trust at no cost on the expiry of a period of ten years of the commencement of the contract. The obligations which had been assumed by the assessee under the terms of the contract were obligations involving the development of an infrastructure facility. Sec. 80-IA of the Act essentially contemplated a deduction in a situation where an enterprise carried on the business of developing, maintaining and operating an infrastructure facility. A port was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Heavy Industries Ltd., (supra) and this position is not disputed even by the learned D.R. We therefore respectfully follow the decision of Hon ble Bombay High Court in the case of ABG Heavy Industries Ltd., (supra) and uphold the impugned order of the Ld. CIT(A) allowing the claim of assessee for deduction under section 80IA. Ground Nos. 1 and 2 of the Revenue s appeals are accordingly dismissed. 5. As regards ground No.3 raised in the appeals of the assessee, it is observed that although this ground is raised by the Revenue in all its 5 appeals for A.Y.2006-07 to 2010- 2011, the issue involved therein relating to deletion by the Ld. CIT(A) of the disallowance made by the A.O. on account of expenditure incurred by the assessee towards loan processing charges and rates and taxes for loan documentation is involved only in A.Y. 2010-2011 as agreed even by the learned D.R. The issue involved in ground No.3 of the Revenue s appeal thus is not arising from the impugned order of the Ld. CIT(A) for A.Y. 2006-07 to 2009-2010 and accordingly ground No.3 raised by the Revenue in its appeal for the said years is liable to be dismissed as not arising from the impugned order of the Ld. CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e judicial precedents, the Assessing Officer is directed to allow the loan processing expenses of Rs,23,72,014/- and stamping charges of ₹ 3,01,180/- which were paid for mortgaging the property in favour of the bank for obtaining the loan. Therefore, these grounds of appeal are allowed. 7. We have heard the arguments of both the sides and also perused the relevant material on record. Although the learned D.R. has strongly relied on the order of the A.O. in support of Revenue s case on this issue, the learned Counsel for the assessee has relied on the definition of Interest given in section 2(28A) of the Act which provides that interest means, interest payable in any manner in respect of any monies borrowed or debt incurred and includes any service fee or other charge in respect of the monies borrowed or debt incurred. Processing charges and other expenses incurred by the assessee in connection with the loan borrowed, thus, are to be considered in the nature of interest as per the definition given in section 2(28A) and the Ld. CIT(A) in our opinion, was fully justified in allowing the same as deduction as claimed by the assessee. We, therefore, uphold the impugned orde ..... X X X X Extracts X X X X X X X X Extracts X X X X
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