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Commissioner of Income-Tax-II, Thane Versus Continental Warehousing Corporation (Nhava Sheva) Ltd., All Cargo Global Logistics Ltd.

2015 (5) TMI 656 - BOMBAY HIGH COURT

Eligibility of deduction u/s 80-IA - activities undertaken by the assessee do not fall within Clause (d) of the Explanation to 80- IA(4) defining the term infrastructure facilities - notice under section 153A challenged - Held that:- In the present case, the notice under section 153A is founded on search. If there is no incriminating material found during the search, then, the Special Bench was right in holding that the power under section 153A being not expected to be exercised routinely, shoul .....

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by this Court is binding on the Revenue. If that is binding then the questions of law and with regard to applicability of section 153A need to be answered against the Revenue and in favour of the assessee.

Income from ICDs - whether qualify for the deduction under Section 80IA(4)(i) of the Act read with the Explanation (d)? - Held that:- When the proposal to set up a CFS has been accepted by the Government, there is no requirement of either a specific agreement as contended by Mr. S .....

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he ICDs and CFSs.

We do not think that the view taken by the Tribunal is in any way perverse or runs contrary to the language of sub-section (4) of section 80-IA or the object of the Income Tax Act, 1961, as a whole. Once such a conclusion is reached, then, it is not necessary to refer to any other material, particularly any circulars of the Board or otherwise or the certificates issued by the authorities. Even their contents need not be referred to. We are of the view that the extens .....

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ts : Mr S E Dastur, Sr. Counsel, Mr B V Jhaveri, Mr Madhur Agarwal Mr Nishit Gandhi & Mr Vipul Joshi JUDGMENT [Per S C Dharmadhikari,J.] 1. These appeals were heard together and are being disposed of by a common judgment. It is conceded before us by both sides that the questions of law and the issues arising therefrom are common and, therefore, they advanced similar contentions. It is in these circumstances that we dispose of these appeals by this common judgment. 2. We will refer to the fac .....

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he Income Tax Act, 1961 (hereinafter referred to as the "IT Act") in the said sum, total income is declared at Rs. Nil. 4. During the assessment proceedings, the Assessing Officer noted that the assessee company is engaged in the operation of a Container Freight Station (CFS) and claimed that the activities therein qualify as a port. That is one of the infrastructure facilities for the purpose of section 80-IA(4) of the IT Act. The assessee produced a certificate dated 13th July, 2006, .....

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(Appeals), Thane. He dismissed the assessee's appeal on 29th July, 2010, and confirmed the view of the Assessing Officer. 5. Being aggrieved by the order passed by the Assessing Officer and the First Appellate Authority, the assessee approached the Tribunal and by the impugned order, the Tribunal allowed its appeal. 6. The appeal by the Revenue raises the following substantial question of law : "Whether, on the facts and in the circumstances of the case, and in law the Hon'ble ITAT .....

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10th July, 2009 whereupon a notice under section 153A of the IT Act was issued to the company to file a return of income. On 30th October, 2009, the company filed its return of income declaring total income of ₹ 5,54,63,220/- while claiming deduction under section 80 IA(4) of ₹ 1,25,77,637/-. The Assessing Officer relied upon an order passed by the Income Tax Appellate Tribunal's Bench at Delhi in the case of Container Corporation of India Limited vs. Assistant Commissioner of In .....

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nd the same was proposed for purposes of deciding two questions, namely, what is the scope of assessment under section 153A of the IT Act. Whether that encompasses additions not based on any incriminating material found during the search and whether the Commissioner of Income-tax (Appeals) was justified in upholding the disallowance of deduction under section 80-IA(4) of the IT Act, 1961. 10. After reviewing the entire case law, the special Bench held that by the clear language of section 153A t .....

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y found during the search. 11. On the issue of deduction under section 80-IA(4) it was concluded that the CFS is a inland port and its income is entitled to deduction under section 80-IA(4) of the IT Act. The special Bench decision to the extent relevant reads as under : "58. Thus, question No.1 before us is answered as under : a) In assessments that are abated, the AO retains the original jurisdiction as well as jurisdiction conferred on him u/s 153A for which assessments shall be made for .....

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hat the solitary decision in this case by any High Court is in the case of Container Corporation of India Ltd. In this case it has been held that an ICD is not a port but it is an inland port. The case of CFS is similar situated in the sense that both carry out similar functions, i.e. ware housing, customs clearance, and transport of goods from its location to the seaports and vice-versa by railway or by trucks in containers. Thus, the issue is no longer res-integra. Respectfully following this .....

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n the circumstances of the case, the Hon'ble ITAT is correct in narrowing down the scope of assessment u/s 153A in respect of completed assessments by holding that only undisclosed income and undisclosed assets detected during search could be brought to tax ? (ii) Whether on the facts and in the circumstances of the case, the Hon'ble ITAT is correct in law in holding that the scope of Section 153A is limited to assessing only search related income, thereby denying Revenue the opportunity .....

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rary to the Circular of the CBDT No. 10/2005 as also contrary to the fact that JNPT Port had withdrawn its certification of the company ?" 14. In the light of the fact that there are questions and of law which have been considered by the authorities under the IT Act and we are required to interpret not only the legal provisions but consider the correctness of the view taken in the special Bench decision, we proceed to admit these appeals on the above questions. By consent of the parties we .....

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earch. The mandate is to issue the notice for six assessment years. The assessment or reassessment is of the total income of the assessee disclosed or undisclosed and pertaining to these six years. Therefore, the Tribunal's view that the search will throw light on the interpretation of the legal provisions, namely, section 153A restricts its ambit and scope. That view is perverse and contrary to the plain language of the section. The assessment then is not restricted to the incriminating mat .....

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The argument of the assessee, if accepted would result in restricting the powers conferred on the Assessing Officer. Therefore, Mr. Pinto would submit that the Tribunal's view cannot be sustained. 16. On the applicability of section 80-IA(4) Mr. Pinto would submit that the Tribunal once again reads something into section 80-IA(4) which is not there. There is no question of any concession by the Revenue. The Special Bench decision may be on the point, but it does not bind this Court. Equally, .....

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, learned senior counsel appearing for the assessee - All Cargo Global Logistics Ltd. would submit that the power under section 153A of the IT Act and its ambit and scope has rightly been interpreted in the impugned judgment. Mr. Dastur submits that the title of the section itself is indicative of the object and namely assessment in case of search or requisition. This section contains a non-obstante clause so as to not to restrict the powers which are conferred by virtue of section 153A in the A .....

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-section (1) of section 153A and clause (b) postulates assessment or reassessment of the total income of six years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made. The first proviso mandates that the Assessing Officer shall assess or reassess the total income in respect of each assessment year falling within such six assessment years. The second proviso, according to Mr. Dastur, is important because the assessment o .....

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egal proceeding, then, notwithstanding anything contained in sub-section (1) or section 153, the assessment or reassessment relating to any assessment year which has abated under the second proviso to sub-section (1), shall stand revived with effect from the date of receipt of the order of such annulment by the Commissioner. Further, proviso to this sub-section says that such revival shall cease to have effect if the order of annulment is set aside. 18. Mr. Dastur would submit that the Revenue i .....

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nd the action under section 153A is a search under section 132 or requisition of books of account and other assets under section 132A. In the present case, the notice under section 153A is founded on search. If there is no incriminating material found during the search, then, the Special Bench was right in holding that the power under section 153A being not expected to be exercised routinely, should be exercised if the search reveals any incriminating material. If that is not found, then, in rel .....

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ons of law and with regard to applicability of section 153A need to be answered against the Revenue and in favour of the assessee. 19. Insofar as the next issue is concerned, namely, applicability of section 80-IA(4), Mr. Dastur would submit that in the appeals in which he is appearing, the assessees have an infrastructural facility of Inland Container Depot (ICD) which qualifies for deduction under section 80-IA(4) of the IT Act, but even the CFS clearly falls within the provisions. It is held .....

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031 of 2014 dated 23rd December, 2014. It is in these circumstances that it is submitted by Mr. Dastur, learned senior counsel and Mr. Gandhi that the Revenue appeals on both counts deserve to be dismissed. 20. Mr. Pinto in rejoinder has submitted that the judgment of the Division Bench of this Court would not bind us simply because that was rendered in the case of exercise of powers under section 263 of the Income Tax Act, 1961, by the Commissioner. The essential controversy revolved around the .....

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brought into section 80-IA(4) are not noted either by the special Bench or by the Delhi High Court. Similarly, the arguments presuppose that all conditions which enable claiming the deduction are fulfilled. However, in this case, the essential condition of operation of the facility in pursuance of an agreement with the Central Government has not been fulfilled. There is no agreement brought on record. Any communication emanating from any Ministry cannot partake the character of an agreement. An .....

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nder section 132 or books of account, other documents or any assets are requisitioned under section 132A after the 31st day of May, 2003, the Assessing Officer shall- (a) issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year falling within six assessment years referred to in clause (b), in the prescribed form and verified in the prescribed manner and setting forth such other particulars .....

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ix assessment years; Provided further that assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years referred to in this subsection pending on the date of initiation of the search under section 132 or making of requisition under section 132A, as the case may be, shall abate : Provided also that the Central Government may by rules made by it and published in the Official Gazette (except in cases where any assessment or reassessment has a .....

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n, notwithstanding anything contained in sub-section (1) or section 153, the assessment or reassessment relating to any assessment year which has abated under the second proviso to sub-section (1), shall stand revived with effect from the date of receipt of the order of such annulment by the Commissioner. Provided that such revival shall cease to have effect, if such order of annulment is set aside. Explanation.- For the removal of doubts, it is hereby declared that,- (i) save as otherwise provi .....

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he return of income is contemplated. These provisions fall in Chapter XIV entitled "Procedure For Assessment". Section 139 deals with return of income whereas section 140 states that such return has to be verified. Section 147 which also falls within this Chapter deals with income escaping assessment and section 148 provides for issuance of notice where income has escaped assessment. Section 149 sets out a time limit for notice. Then, appear sections 149, 151 and 153 which, inter-alia, .....

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andated to issue notice within the meaning of subsection (1) of section 153A. That is because the preceding Chapter, namely, Chapter XIII within which the powers of search and seizure and powers to requisition books of account are spelt out enable the Revenue to take care of cases where it effects a search and seizure. That search and seizure is effected and after the same is effected books of account, other documents, money, bullion, jewellery or other valuable article or thing is found as a re .....

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other documents for that might be useful and or any assets representing withholding or part income or property which has not been or would not have been disclosed for the purpose of the Indian Income Tax Act, 1922 or the Income Tax Act of 1961 by any person from whose possession or control they have been taken into custody. This is when the authorities have reason to believe that such powers need to be exercised. Therefore, the fetters and which are to be found in other provisions are removed an .....

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ent in case of search or requisition making specific reference to the provisions which enable carrying out of search or exercise of power of requisition that the assessment in furtherance thereof is contemplated. 24. His reliance upon the Division Bench judgment of this Court in that context is, therefore, well placed. 25. In the Division Bench judgment what had been decided is the justifiability of the Tribunal interfering with the order of the Commissioner of Income Tax passed under section 26 .....

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of the Act dated 13th September, 2004, a return of income was filed. That was pursuant to a notice issued under clause (a) of subsection (1) of section 153A of the Act. That return of income declared a loss. The Assessing Officer, therefore, passed an order under section 153A read with section 143(3) of the IT Act on 30th March, 2006 determining concealed income at ₹ 89,19,47/-. On appeal by the assessee, the Commissioner of Income Tax (Appeals) by his order dated 30th November, 2006, dele .....

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to the order of the Commissioner of Income Tax (Appeals). It is that order which was challenged before the Tribunal and the Tribunal set aside the same on the ground that there was no scope to take a different view on merits of the said order. The view taken by the Assessing Officer could not be said to be erroneous and prejudicial to the interest of the Revenue. 27. However, the Revenue's argument was that once proceedings under section 153A of the Act are initiated, then, the original asse .....

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was erroneous and prejudicial to the interest of the Revenue. 28. In dealing with those arguments, the Division Bench outlined the ambit and scope of the powers conferred by section 153A and observed thus : "8) We find it difficult to accept the above contention raised on behalf of the revenue. The object of inserting Sections 153A, 153B and 153C by Finance Act, 2003 by discarding the existing provisions relating to search cases contained in Chapter XIV B of the Income-tax Act, as stated i .....

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3, decided to discard Chapter XIV B provisions and introduce Sections 153A, 153B and 153C in the IT Act. 9) What Section 153A contemplates is that, notwithstanding the regular provisions for assessment/reassessment contained in the IT Act, where search is conducted under Section 132 or requisition is made under Section 132A on or after 31/5/2003 in the case of any person, the Assessing Officer shall issue notice to such person requiring him to furnish return of income within the time stipulated .....

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essment or reassessment that stood abated shall stand revived. 10) Thus on a plain reading of Section 153A of the Income-tax Act, it becomes clear that on initiation of the proceedings under Section 153A, it is only the assessment / reassessment proceedings that are pending on the date of conducting search under Section 132 or making requisition under Section 132A of the Act stand abated and not the assessments/reassessments already finalised for those assessment years covered under Section 153A .....

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the revenue, that on initiation of proceedings under Section 153A, the assessments/reassessments finalised for the assessment years covered under Section 153A of the Income-tax Act stand abated cannot be accepted. Similarly on annulment of assessment made under Section 153A (1) what stands revived is the pending assessment / reassessment proceedings which stood abated as per section 153A(1). 11) In the present case, as contended by Shri Mani, learned counsel for the assessee, the assessment for .....

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y. In such a case, the A.O. while passing the independent assessment order under Section 153A read with Section 143 (3) of the I.T. Act could not have disturbed the assessment /reassessment order which has attained finality, unless the materials gathered in the course of the proceedings under Section 153A of the Income-tax Act establish that the reliefs granted under the finalised assessment/ reassessment were contrary to the facts unearthed during the course of 153 A proceedings. 13) In the pre .....

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e are not in agreement with Mr. Pinto that these observations are made in passing or that they are not binding on us because the essential controversy before the Bench was somewhat different. He urges that was only in relation to the legality and validity of the order of the Commissioner under section 263 of the IT Act. Had that been the case, the Division Bench was not required to trace out the history of section 153A of the IT Act and the power that is conferred thereunder. When the Revenue ar .....

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initiation of the search under section 132 or making of requisition under section 132A, as the case may be, they abate. It is only pending proceedings that would abate and not where there are orders made of assessment or reassessment and which are in force on the date of initiation of the search or making of the requisition. As that specific argument was canvassed and dealt with by the Division Bench and that is how it was called upon to interpret section 153A of the IT Act, then, each of the a .....

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e read in the manner suggested by Mr. Pinto. Not only the finalised assessment cannot be touched by resorting to those provisions, but even while exercising the power can be exercised where a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A after 31st March, 2003. There is a mandate to issue notices under section 153(1)(a) and assess or reassess the total income of six assessment years immediately preceding the assessme .....

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se are the conclusions which can be reached and upon reading of the legal provisions in question. 31. We, therefore, hold that the Special Bench's understanding of the legal provision is not perverse nor does it suffer from any error of law apparent on the face of the record. The Special Bench in that regard held as under : "48. The provision under section 153A is applicable where a search or requisition is initiated after 31.5.2003. In such a case the AO is obliged to issue notice u/s .....

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t there is no divergence of views in so far as the provision contained in section 153A till the 1st proviso. The divergence starts from the second proviso which states that pending assessment or reassessment on the date of initiation of search shall abate. This means that an assessment or reassessment pending on the date of initiation of search shall cease to exist and no further action shall be taken thereon. The assessment shall now be made u/s 153A. The case of Ld. Counsel for the assessee is .....

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e into one assessment. The second proviso does not contain any word or words to the effect that no reassessment shall be made in respect of a completed assessment. The language is clear in this behalf and therefore literal interpretation should be followed. Such interpretation does not produce manifestly absurd or unjust results as section 153A (i)(b) and the first proviso clearly provide for assessment or reassessment of all six years. It may cause hardship to some assesses where one or more of .....

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emost being that the provision u/s 153A should be read in conjunction with the provision contained in section 132(1), the reason being that the latter deals with search and seizure and the former deals with assessment in case of search etc, thus, the two are inextricably linked with each other. 49. Before proceeding further, we may now examine the provision contained in sub-section (2) of section 153, which has been dealt with by Ld. Counsel. It provides that if any assessment made under subsect .....

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ions, we find that this provision also makes it clear that the abatement of pending proceedings is not of such permanent nature that they cease to exist for all times to come. The interpretation of the Ld. Counsel, though not specifically stated, would be that on annulment of the assessment made u/s 153(1), the AO gets the jurisdiction to assess the total income which was vested in him earlier independent of the search and which came to an end due to initiation of the search. 50. The provision c .....

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ey or bullion etc. which represents wholly or partly the income or property which has not been and which would not be disclosed for the purpose of assessment, called as undisclosed income or property. We find that the provision in section 132 (1) does not use the word "incriminating document". Clauses (a) and (b) of section 132(1) employ the words "books of account or other documents". For harmonious interpretation of this provision with provision contained in section 153A, a .....

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ed in section 153A, all these conditions will have to be taken into account. With this, we proceed to literally interpret to provision in 153A as it exists and read it alongside the provision contained in section 132(1). 52. The provision comes into operation if a search or requisition is initiated after 31.5.2003. On satisfaction of this condition, the AO is under obligation to issue notice to the person requiring him to furnish the return of income of six years immediately preceding the year o .....

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bate. In other words pending proceedings will not be proceeded with thereafter. The assessment has now to be made u/s 153A (1)(b) and the first proviso. It also means that only one assessment will be made under the aforesaid provisions as the two proceedings i.e. assessment or reassessment proceedings and proceedings under this provision merge into one. If assessment made under sub-section (1) is annulled in appeal or other legal proceedings, then the abated assessment or reassessment shall revi .....

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ginal assessment and found in the course of search in our humble opinion such books of account or other documents have to be taken into account while making assessment or reassessment of total income under the aforesaid provision. Similar position will obtain in a case where undisclosed income or undisclosed property has been found as a consequence of search. In other words, harmonious interpretation will produce the following results:- a) In so far as pending assessments are concerned, the juri .....

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losed property discovered in the course of search. 54. It may be mentioned here that Ld. Counsel for All Cargo Global Logistics Ltd. was questioned about the scope of pending assessments as it was his contention that all six assessments are to be made, if necessary, on the basis of undisclosed income discovered in the course of search. He was specifically questioned about the jurisdiction of the AO to make original assessment along with assessment u/s 153A, merging into one. However he took an e .....

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nd the High Court of Karnataka. Mr. Pinto would submit that the above observations and conclusions of the Special Bench and reproduced by us are specifically disapproved in Commissioner of Income Tax vs. Anil Kumar Bhatia by the Delhi High Court. We do not find this argument to be accurate. In Anil Kumar Bhatia as well the assessment involved the years 2000-01, 2002-03 and 2005-06. One of the questions and which was termed as substantial question of law was the correctness of the Tribunal's .....

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ix years as envisaged in that section. Notices under section 142(1) and 143(2) alongwith a detailed questionnaire were issued in response to which the assessee submitted an explanation. After consideration thereof, the Assessing Officer made additions to the income returned in respect of the assessment years under consideration which included an amount of ₹ 1,50,000/- given by the assessee as a loan to Smt. Mohini Sharma on 10th December, 2003. This information was made available but the l .....

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he addition was made did not contain the signature of the assessee; that no loan was given to Mohini Sharma. There was no admission of the statement of Mohini Sharma to that effect and there was only a proposal. The Commissioner of Income Tax confirmed this addition in the Assessing Officer's order. In respect of assessment years 2004-05 and 2005-06 there were appeals before the Commissioner of Income Tax (Appeals) questioning the additions made in the assessment orders for those years. Whil .....

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was taken in appeal to the High Court of Delhi under section 260A of the IT Act by the Revenue. 33. The arguments, therefore, have been noted and from paragraphs 16, section 153A was analysed. 34. Mr. Pinto heavily relied on paragraphs 18, 19 and 20 of the judgment of the Hon'ble High Court of Delhi. He also relied on paragraph 21 to contend that the Special Bench decision has not been approved by the High Court of Delhi. 35. The Delhi High Court's judgment must be seen in the context of .....

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disapproves the view taken by the Tribunal that its observations can be read torn from the context. Once these observations and noted by us from the paragraphs cited by Mr. Pinto are read as a whole and in entirety, it is not possible to agree with Mr. Pinto that the High Court of Delhi reached a conclusion different than the view taken by our Division Bench. 36. Similar is the case with the Division Bench judgment of the High Court of Karnataka at Bangalore. There as well a real estate firm wa .....

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ated 13th January, 2012. Return of income was filed pursuant to receipt of such notice and for six years as required by the provision. When this return was under consideration on 14th March, 2013, the Commissioner of Income Tax initiated proceedings under section 263 of the Act on the ground that the order dated 31st December, 2010 in relation to the return of income for assessment year 2008-09 and holding that the same is erroneous and prejudicial to the interest of the Revenue came to be passe .....

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e is no order of assessment in force and in regard to which any action under section 263 of the IT Act can be initiated. It is in dealing with this argument and which was negatived by the Tribunal that all the observations of the High Court of Karnataka have been made. In paragraphs 5 and 6, the arguments have been noted and thereafter the provision has been reproduced. In paragraph 9, extensive reference has been made to the judgment in Anil Kumar Bhatia of the High Court of Delhi (supra) and t .....

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licable by the non obstante clause. Section 151 which requires sanction to be obtained by the Assessing Officer by issue of notice to reopen the assessment under Section 148 has also been excluded in a case covered by Section 153A. The time-limit prescribed for completion of an assessment or reassessment by Section 153 has also been done away with in a case covered by Section 153A. With all the stops having been pulled out, the Assessing Officer under Section 153A has been entrusted with the dut .....

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d to assess or reassess the total income of the aforesaid years. The condition precedent for application of Section 153A is there should be a search under Section 132. Initiation of proceedings under Section 153A is not dependent on any undisclosed income being unearthed during such search. The proviso to the aforesaid section makes it clear the assessing officer shall assess or reassess the total income in respect of each assessment year falling within such six assessment years. If any assessme .....

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le assessments. Under Section 153A, however, the Assessing Officer has been given the power to assess or reassess the "total income" of the six assessment years in question in separate assessment orders. The Assessing Officer is empowered to reopen those proceedings and reassess the total income, taking note of the undisclosed income, if any, unearthed during the search. He has been entrusted with the duty of bringing to tax the total income of an assessee whose case is covered by Sect .....

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ain. It means the Assessing Officer shall assess or reassess the total income of six assessment years. Once the assessment is reopened, the assessing authority can take note of the income disclosed in the earlier return, any undisclosed income found during search or and also any other income which is not disclosed in the earlier return or which is not unearthed during the search, in order to find out what is the "total income" of each year and then pass the assessment order. Therefore, .....

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al to the interest of the revenue which confers jurisdiction on the Commissioner to exercise the power of the jurisdiction. 11. The Tribunal has proceeded on the assumption by virtue of the judgment of the special bench of the Mumbai, the scope of enquiry under Section 153A is to be confined only to the undisclosed income unearthed during search and if there is any other income which is not the subject matter of search, the same cannot be taken into consideration. Therefore, the revisional autho .....

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t the subject matter of aforesaid two income. If the commissioner has come across any income that the assessing authority has not taken note of while passing the earlier order, the said material can be furnished to the assessing authority and the assessing authority shall take note of the said income also in determining the total income of the assessee when the earlier proceedings are reopened and that income also shall become the subject matter of said proceedings. In that view of the matter th .....

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order will have to be made in that regard. While making the order the income or the return of income filed for all these assessment years is to be taken into account. A reference will have to be made to the income disclosed therein. However, the scope of enquiry, though not confined as held by the High Court of Karnataka, it essentially revolves around the search or the requisition under section 132A as the case may be. We do not find anything in these observations and reproduced above which wou .....

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ng on the business of (i) developing or (ii) operating and maintaining or (iii) developing, operating and maintaining any infrastructure facility which fulfills all the following conditions, namely:- (a) it is owned by a company registered in India or by a consortium of such companies or by an authority or a board or a corporation or any other body established or constituted under any Central or State Act; (b) it has entered into an agreement with the Central Government or a State Government or .....

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n as the transferor enterprise) to another enterprise (hereafter in this section referred to as the transferee enterprise) for the purpose of operating and maintaining the infrastructure facility on its behalf in accordance with the agreement with the Central Government, State Government, local authority or statutory body, the provisions of this section shall apply to the transferee enterprise as if it were the enterprise to which this clause applies and the deduction from profits and gains woul .....

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igation project, sanitation and sewerage system or solid waste management system; (d) a port, airport, inland waterway, inland port or navigational channel in the sea; (ii) any undertaking which has started or starts providing telecommunication services, whether basic or cellular, including radio paging, domestic satellite service, network of trunking, broadband network and internet services on or after the 1st day of April, 1995, but on or before the 31st day of March, 2005. Explanation - For t .....

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hat in a case where an undertaking develops an industrial park on or after the 1st day of April, 1999 or a special economic zone on or after 1st day of April, 2001 and transfers the operation and maintenance of such industrial park or such special economic zone, as the case may be, to another undertaking (hereafter in this section referred to as the transferee undertaking), the deduction under sub-section (1) shall be allowed to such transferee undertaking for the remaining period in the ten con .....

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) is set up in any part of India for the generation or generation and distribution of power it begins to generate power at any time during the period beginning on the 1st day of April, 1993 and ending on the 31st day of March, 2013; (b) starts transmission or distribution by laying a network of new transmission or distribution lines at any time during the period beginning on 1st day of April, 1999 and ending on the 31st day of March, 2013. Provided that the deduction under this section to an und .....

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ns an increase in the plant and machinery in the network of transmission or distribution lines by at least fifty per cent of the book value of such plant and machinery as on the 1st day of April, 2004; (v) an undertaking owned by an Indian company and set up for reconstruction or revival of a power generating plant, if- (a) such Indian company is formed before the 30th day of November, 2005 with majority equity participation by public sector companies for the purposes of enforcing the security i .....

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structure development etc. We are concerned with sub-section (4) and as it read at the relevant time. It says that this section applies to any enterprise carrying on the business of developing or operating and maintaining any infrastructure facility which fulfills all the conditions, namely, it is owned by a company registered in India or by a consortium of such companies or by an authority or a board or a corporation or any other body established or constituted under any Central or State Act, i .....

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e word "inland port" was always there in clause (d). What was there prior to its substitution by Finance Act of 2007 with effect from 1st April, 2008, were the words "or inland port". Now the word "or" is deleted, but the words are "inland port or navigational channel in the sea". Thus, an "inland port" was always within the contemplation of the Legislature and it is treated specifically as a infrastructural facility. Therefore, to that extent Mr .....

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23rd June, 2006 were considered and which clarify that inland container depots and container freight stations are not ports located on any inland water way river or canal and, therefore, they cannot be classified as inland ports for the purpose of section 80-IA(4). Equally, the certificate issued by the JNPT having been been withdrawn, the deduction will not be permissible. 42. However, after considering these contentions, what the Special Bench observes is that the Delhi High Court's view i .....

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f the Special Bench and that of the Container Corporation of India (supra). 44. The findings to which our attention has been invited by Mr. Suresh Kumar in Appeal No.523 of 2013 arising out of the Tribunal's order dated 31st August, 2012, pertaining to assessment year 2008-09 in the case of Continental Warehousing Corporation indicate that the said assessee had informed the Assessing Officer that JNPT had issued a certificate dated 13th July, 2006, to it in accordance with Point No.3 of CBDT .....

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vernment of India would not constitute an agreement with the Central Government. Further, the Department of Revenue, Ministry of Finance, issued a Notification dated 1st January, 2006, notifying the assessee as custodian of imported and exported goods received at the container freight station. The various contentions raised in this regard have been referred to by the Commissioner, including that the Ministry of Commerce and Industries granted approval for setting up CFS facility for handling imp .....

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nd the findings, but relied upon the Special Bench decision in the case of All Cargo Global Logistics Ltd. The conclusion is that CFS is an inland port as it carries out functions of warehousing, customs clearance and transport of goods from its location to sea-port and vice versa by rail or by trucks in containers and, therefore, its income is eligible to deduction under section 80-IA(4). We have before us a communication from the Government of India, Ministry of Commerce and Industry dated 28t .....

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this issue we find that the circular dated 16th December, 2005, firstly clarifies that there are certain conditions, including the agreement but pertinently on and from the assessment year 2002-03 structures at the ports for storage, loading and unloading etc. will be included in the definition of port for purposes of section 10(23G) and 80-IA of the Income Tax Act, 1961, if the condition that the concerned port authority has issued a certificate that these structures form part of the port is fu .....

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tioning directly under the administrative control of the Ministry of Railways, but the activity of the assessee is carried out mainly on the Inland Container Depot, Central Freight Stations and Port Container Terminals spread all over the country. The assessee has a total 45 Inland Container Depots. The Division Bench of the Delhi High Court then concluded as under : "10. Thus it was for the first time from the assessment year 1999-2000 that inland ports started enjoying the deduction under .....

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y the Finance Act, 1999 with effect from 1.4.2000 and even after several amendments were thereafter made to the Section, inland ports continued to enjoy the deduction as infrastructure facility. 11. The question before us is whether the income from ICDs qualify for the deduction under Section 80IA(4)(i) of the Act read with the Explanation (d). We may first notice that out of the total of 45 ICDs operated by the assessee, except two ICDs, all others were notified by the CBDT vide notification No .....

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re facility. In exercise of the powers conferred by clause (ca) of sub-section (12) of section 80IA of the Incometax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby notifies Inland Container Depot (ICD) and Central Freight Station (CFS) as infrastructure facility : Provided that such places are notified as Inland Container Depot and Central Freight Station under section 7(aa) of the Customs Act, 1962." 12. The power to notify infrastructure facilities for the purpose of the .....

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period of 10 successive assessment years which covers the assessment years 2003-04 to 2005-06 which are the years under appeal. 13. We have examined the contention. Prior to the amendment made with effect from 1.4.2002 by the Finance Act, 2001, as noticed earlier, the Board was empowered to notify any public facility of a similar nature, other than what was mentioned as infrastructure facility. But an amendment was made and the power to notify was dropped. There was no provision made in the Act .....

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efore March 31, 2001, would continue to be exempt, subject to the fulfillment of the conditions prescribed in section 80-IA(4)(i)(b), as it existed prior to its substitution by the Finance Act, 2001." This circular fortifies the assessee's claim. 14. The next question that arises is whether the ICDs can be considered to be inland ports. There is no definition of an inland port in the Act. However, a "port", which also qualifies for the deduction is defined in Section 3(4) of t .....

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ed place where vessels load and unload goods for export or import. Commercially considered, "a port is a place where vessels are in the habit of loading and unloading goods". The law lexicon also refers to a judgment of the Bombay High Court in the case of Amarship Management Pvt. Ltd. v. UOI, (1996) 86 ELT 15 (Bom). "Port is a place for loading and unloading of cargoes of vessels. The word "port" must be construed in its usual and limited popular or commercial sense as .....

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o the port in which the Indian Ports Act is in force. There are several other definitions such as port call, port charges, port mark, port of arrival, port of entry, port of departure, port of call and so on and so forth. The whole emphasis however is that whenever the word "port" is used, it carries with it a maritime connection or connotation. That is perhaps why the Section refers separately to airport. An airport does not have a maritime connection. But an airport is also a place w .....

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container trucks, as the case may be. But it is common ground that customs clearances take place in the ICDs. 16. It is, therefore, for consideration as to whether the ICDs can be said to be "inland ports" for the purposes of the Explanation (d) below sub-section (4) of Section 80IA. We were not able to find a definition of the words "inland port" in any of the dictionaries. But the words "inland container depot" were introduced in Section 2(12) of the Customs Act, .....

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rd of Excise and Customs apparently in response to a query raised by the assessee. "F. No. 450/24/2007-Cus.IV Government of India Ministry of Finance Department of Revenue Central Board of Excise & Customs New Delhi, April 24th, 2007 To, Ms P. Alli Rani, Executive Director (Finance), Container Corporation of India Limited, CONCOR Bhawan, C-3, Mathura Road, Opp. Appolo Hospital, New Delhi-110076. Subject : Clarification regarding 'Inland Port' - regarding Kindly refer to your let .....

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ese ICDs/CFSs. Accordingly, ICDs and CFSs (i.e. Customs area of port) are "Inland Ports". (M.M. Parthiban) Director (Customs) Ph-23093908 Copy to, Shri Jagdeep Goel, Director ITA-I, CBDT." 46. We have found that there is a specific reference made by the Delhi High Court to the communication dated 24th April, 2007, from the Government of India, Ministry of Finance, Department of Revenue. These are then classified as inland ports and categorised accordingly. There is a further commu .....

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t and export of cargo. Further, the location thereof is also a relevant factor as noted. In such circumstances, the reliance by the Special Bench and equally by the Bench of the Tribunal in the impugned orders on the Division Bench judgment of the Delhi High Court is thus well placed. 47. We do not find that anything other and further than this material is relied. However, even the High Court of Judicature at Madras has referred in its Division Bench decision to the view taken by the Delhi High .....

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