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2016 (5) TMI 535 - ITAT MUMBAI

2016 (5) TMI 535 - ITAT MUMBAI - TMI - Deduction u/s 80IA(4) - Held that:- The assessee is engaged in the business of developing, operating and maintenance of container freight station (CFS) at Nhava Sheva, Mumbai, which is also approved by the concerned ministry of Government of India and duly entered into an agreement with CIDCO. As per the terms of the agreement, CIDCO allowed the assessee to set up and operate the CFS for a period of 60 years. Since, the issue has been discussed in detail af .....

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isallowance made u/s 14A - Held that:- Where no exempt income was earned by the assessee in the relevant assessment years and since the genuineness of expenditure is not in doubt, there is no question of disallowance u/s 14A of the Act - Decided in favour of the assessee. - ITA NO.5746/MUM/2013 - Dated:- 7-4-2016 - Shri Joginder Singh, Judicial Member and Shri Rajendra, Accountant Member For The Revenue : Ms. Amrita Misra -DR For The Respondent : Shri Madhur Agarwal ORDER Per Joginder Singh (J .....

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n of the Tribunal dated 20/11/2015 (ITA No.5371 and 3654/Mum/2012), Assessment year 2008-09. This factual matrix was not controverted by the ld. DR, Ms. Amrita Misra. 2.1. We have considered the rival submissions and perused the material available on record. In view of the above, we are reproducing hereunder the relevant portion from the aforesaid order dated 20/11/2015 (ITA No.3654/Mum2012) for ready reference and analysis:- 2. The only issue involved in this appeal relates to the direction of .....

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he CFS in the financial year 1998-99 after duly entering into an agreement with CIDCO. As per the terms of agreement, CIDCO allowed the assessee to set-up and operate the CFS for a period of 60 years. For the assessment year 2008-09, the assessee filed its return of income on 29th September 2008, declaring total income of Rs. 17,23,16,060. Subsequently, revised return was filed by the assessee on 13th June 2009, declaring total income of Rs. 17,23,16,060. During the assessment proceedings, the A .....

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disallowed as the conditions of the said provision are not fulfilled. In response to the show cause notice, the assessee submitted that the CFS set-up by the assessee is an inland port, hence, is an infrastructure facility as per section 80IA(4). In this context, the assessee relied upon circulars issued by the Finance Ministry and Ministry of Shipping, Ministry of Commerce and Industry. It was also submitted that the assessee has entered into an agreement with the CIDCO which is a statutory bo .....

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facility. He further observed that as per the said circular, the assessee has to obtain a certificate from the competent authority if it seeks to claim deduction under section 80IA(4). However, the assessee has not obtained any such certificate for assessment year 1998-99. Therefore, the assessee does not qualify for the definition of Port as amended by the Finance Act, 1998. He further observed that section 80IA(4) is further amended by Finance Act, 2007, w.e.f. 1st April 2008 as per which inla .....

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tion under section 80IA(4). Finally, the Assessing Officer opined that the agreement entered into with CIDCO by the assessee is a lease deed under which the assessee was allowed a piece of land for commercial purpose. However, it cannot be considered to be an agreement with the Government as prescribed under section 80IA(4). He also observed that as per information obtained from CIDCO, the assessee has not entered into BOT / BOLT agreement, therefore, the conditions of section 80IA(4) are not co .....

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dering the submissions of the assessee in the light of facts and material onrecord as well as the decisions relied upon by the assessee, found that the assessee has commenced its business of CFS in the assessment year 1999-2000. He also found that the assessee has entered into a contract with CIDCO on BOT / BOLT basis for construction of CFS vide agreement dated 28th June 1997. He observed that the assessee had claimed deduction under section 80IA(4) for the CFS for the first time in the assessm .....

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eme Court in Bharat Sanchar Nigam Ltd. v/s Union of India, [2006] 282 ITR 273 (SC) and the decision of the Hon'ble Jurisdictional High Court in CIT v/s Paul Brothers, [1995] 216 ITR 548 (Bom.). He, therefore, held that disallowance of deduction by the Assessing Officer in the impugned assessment year cannot be sustained. Having held so, he noticed that as per the definition of infrastructure facilities under section 80IA(4), it includes any public facility as notified by the Board in the off .....

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He also found that the Ministry of Shipping has allowed the facility to be used as port for all practical purposes. He also noticed that as per the terms of agreement, after expiry of 60 years, the area allotted along with all facilities will revert back to the local authority. He, therefore, was of the opinion that all conditions of section 80IA(4) was satisfied. Thus, on the aforesaid basis, the learned Commissioner (Appeals) directed the Assessing Officer to allow assessee s claim of deductio .....

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rned Departmental Representative submitted, each assessment year being an independent unit, irrespective of fact whether deduction was allowed in the earlier assessment year still the Assessing Officer can form an independent opinion on the basis of information obtained in a subsequent assessment year with regard to the deduction claimed by the assessee. She, therefore, submitted, the Assessing Officer having found that assessee has not fulfilled all the conditions of section 80IA(4) was compete .....

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irst time claimed deduction under section 80IA(4) in respect of CFS. It was submitted, the Department also accepted assessee s claim in an assessment order passed under section 143(3). It was submitted up to the assessment year 2007-08, deduction under section 80IA(4) was allowed in assessments completed under section 143(3). He submitted, when a particular deduction is for a specific period, if such deduction is allowed in the initial / first year of claim, the same cannot be withdrawn in any s .....

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Taxman 378. 7. The learned Counsel submitted, the fact that the assessments for some of previous years have been re-opened on the basis of assessment order passed for the assessment year 2008-09 cannot have any impact on assessee s claim of deduction as the facts existing on the date of assessment for the assessment year 2008-09 has to be considered. It was submitted, even the re-opening of assessment was up to the assessment years 2004-05. Therefore, the deduction allowed to the assessee for th .....

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nland port was already included as an infrastructure facility under Explanation to section 80IA(4) since 1st April 2002, and in Finance Act, 2007, for the expression or inland port the following words were substituted - Inland port or navigational channel in the sea . Thus, it was submitted by the learned Counsel on merits also, CFS being an inland port is an infrastructure facility in terms with section 80IA(4), hence, is eligible for deduction. For such proposition, he relied upon the decision .....

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e in facts which existed in earlier assessment year, the Assessing Officer can take an independent view. However, when the facts are identical, the Assessing Officer on the basis of information obtained as a result of enquiry conducted by him, cannot take an independent view, more so, when the deduction provided under the statute is for a specific period and such deduction is allowed to the assessee in the initial assessment year. He submitted, the agreement with CICDO and all other relevant mat .....

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4)(i)(b). Thus, it was submitted by the learned counsel, the inference drawn by the Assessing Officer cannot be accepted. Finally, the learned counsel inviting the attention of the Bench to the grounds raised by the Department submitted, in none of the grounds the Department has challenged the finding of the first appellate authority that the assessee is an infrastructure facility. He, therefore, submitted, there is no reason to disturb the findings of the first appellate authority. 8. We have c .....

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held that CFS is not an infrastructure facility and further since the agreement with CIDCO is not BOT / BOLT, the assessee is not entitled for deduction under section 80IA. At the outset, it needs to be observed that as per Explanation to section 80IA(4), as it existed prior to its substitution by Finance Act, 2007 w.e.f. 1st April 2008, read as under:- Explanation - For the purpose of this clause, infrastructure facilities means - a) xxx b) xxx c) xxx d) A port, airport, inland water way or in .....

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d as an inland port. In fact, the Tribunal, Vizag Bench, in Gateway East India Pvt. Ltd. (supra), following the decision of the Hon'ble Delhi High Court in Container Corporation of India Ltd. v/s CIT, 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). 10. The second argument .....

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nce 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 agreem .....

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already been allowed to the assessee in the initial assessment years, whether the same can be disallowed in any subsequent assessment year. As can be seen from the material placed before us, the first year of claim of deduction by assessee under section 80IA(4) in respect of CFS was assessment year 2002-03. The Assessing Officer, while completing the assessment under section 143(3) of the Act accepted assessee s claim. Thereafter, from the assessment year 2003-04 to 2007-08, claim of deduction u .....

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the present assessee, it has opted for availing deduction under section 80IA(4) from the assessment year 2002-03. Thus, once the claim of deduction has been allowed by the Department by examining relevant facts and materials in the first assessment years, it cannot be withdrawn in any subsequent years when there is no material change in the relevant facts. In the present case, it is patent and obvious that there is no material difference in the facts involved in the assessment year 2002-03 and t .....

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ear 2008-09 has to be taken into account. If that is the case, it is very much clear that on the date, the Assessing Officer completed the assessment for assessment year 2008-09 the uncontroverted position was assessee s claim of deduction under section 80IA(4) in respect of CFS was allowed from the assessment year 2002-03 to 2007-08, that too, in assessments completed under section 143(3) of the Act. Therefore, the Department having allowed assessee s claim of deduction in the first assessment .....

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ent for preceding years is not an issue before us. On the basis of facts obtaining in the impugned assessment year, we have to decide assessee s eligibility under section 80IA(4). Even otherwise also, we have already negated Assessing Officer s argument in respect of CFS not being an infrastructure facility and non fulfillment of BOT / BOLT condition. Before concluding, we must observe that the learned Senior Counsel for the assessee has rightly pointed out at the time of hearing that the Depart .....

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fact that it has developed, operated and maintained an infrastructure facility which is supposed to revert back to Government after specified period. In view of the aforesaid, we do not find any reason to disturb the findings of the first appellate authority on the issue. Accordingly, we dismiss the ground raised by the Revenue. 2.2. We find that in the aforesaid order for Assessment year 2008-09, an elaborate discussion has been made on the issue in hand as the assessee is engaged in the busin .....

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Sanchar Nigam Ltd. vs UOI (2006) 282 ITR 273 (SC) and Hon ble jurisdictional High Court in CIT vs Paul Brothers (1995) 216 ITR 548 (Bom.), notification S.O. 744E, dated 01/09/1998, as amended by SO 391E dated 28/05/1999, decision in CIT vs Western Outdoor interactive Pvt. Ltd. 249 ITR 309 and then affirmed the decision of the CIT(A), in favour of the assessee. Following the aforesaid decision and the reasoning contained therein, the ground raised by the Revenue is having no merit, therefore, di .....

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rder dated 02/09/2015 held that where no exempt income was earned by the assessee in the relevant assessment years and since the genuineness of expenditure is not in doubt, there is no question of disallowance u/s 14A of the Act. While coming to this conclusion, the Hon ble High Court relief upon following decisions:- i. Cheminvest Ltd. v. CIT [2009] 317 ITR (AT) 86 (Delhi) [SB] (para 15) ii. CIT v. Chugandas and Co. [1964] 55 ITR 17 (SC) (para 14) iii. CIT v. Cocanada Radhaswami Bank Ltd. [1965 .....

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