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Asst Commissioner of Income Tax -2 (1) , Mumbai Versus Ameya Logistics P Ltd, Mumbai and Ameya Logistics P Ltd Versus Asst Commissioner of Income Tax -2 (1) , Mumbai

2016 (9) TMI 656 - ITAT MUMBAI

Eligibility of deduction u/s 80IA(4) - assessee company is engaged in the providing “Container Freight Station” (CFS) which has been duly approved as ‘Inland Port’ by Ministry of Finance, Department of Revenue, CBEC in its Circular - Held that:- CFS has been defined as a common user facility with public authority status equipped with fixed installations and offering services for handling and temporary storage of import/export laden and empty containers carried under customs transit by any applic .....

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ls, the Hon’ble Court held that the profit derived from such activity is eligible for deduction under section 80IA(4). - Where assessee is carrying out CGS activities which is nothing but infrastructure facility as defined under section 80IA(4). Accordingly we confirm the order of the CIT(A) and direct the AO to allow the deduction under section 80IA(4). - Decided in favour of assessee - Disallowance under section 14A - Held that:- We find that so far as the disallowance of interest exp .....

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disallowance under section 8D(2)(iii) is confirmed. As regards the disallowance under section 14A under MAT provision, that is, under section 115JB, the disallowance as sustained under normal provision shall be added to the book profit, therefore grounds raised in Cross objections for both the impugned assessment years stands party allowed. - ITA No. : 6110/Mum/2014, ITA No. : 6111/Mum/2014 - Dated:- 4-8-2016 - SHRI B R BASKARAN, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA, JUDICIAL MEMBER For The A .....

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ommon ground raised reads as under (incorporated from the appeal for the AY 2010-11):- On the facts and in the circumstances of the case and in law, the learned CIT(A) has erred in allowing relief to the assessee to the extent impugned in the grounds enumerated below: 1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in holding that the assessee was entitled to deduction u/s 80IA(4) in respect of Container Freight Station (CFS) being inland port without consid .....

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13 Bombay High Court 2 Container Corporation of India Ltd. vs ACIT [2012] 21 taxmann.com 317 (Delhi) ITA No. 1411/2009 Delhi High Court 3 All Cargo Global Logistics Ltd. vs DCIT [2012] 21 taxman. Com 429(Mum)(SB) ITAT Special Bench (Mum) 4 CIT Chennai vs M/s A L Logistics Pvt Ltd vide ITA No.1031 of 2014 dated 23.12.2014 Madras High Court 4. The brief facts of the case are that, the assessee company is engaged in the business of providing warehousing services for container, container repair, con .....

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stipulated under Explanation to clause (4) of section 80IA. The assessment year 2009-10 was the first year of the claim which stood allowed in the assessment finalized under section 143(1)(a). During the year, the assessee had claimed the deduction of ₹ 18,69,48,980/- under section 80IA(4) and such a claim was duly accompanied continued in Form 10CCB. The AO has rejected the claim of deduction on various grounds which has been summarized by the Ld. CIT(A) in the following manner:- (i) Con .....

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ify for deduction u/s 80IA(4). (iv) Assessee has filed a certificate from Custom Authority as Notified area and custodian of Government for goods. However, assessee has not given proof that the structure was built on BOT or BOLT scheme. (v) Assessee failed to furnish any justification for treating Container Freight Station (CFS) to be treated as Port . Further Board clarification dated 6th January 2011 in which circular dated 18th December 2005 and 23rd June 2000 were considered. It has been cla .....

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0IA(4). The said structure does not form part of JNPT. (viii) Assessee failed to bring on record an agreement with Central Government or State Government or Local Body authority for: (a) Developing, (b) Operating & maintaining or (c) Developing, operating & maintaining a new infrastructure facility. (ix) The Container Freight Station (CFS) of Assessee is not Port as per the explanation to Section 80IA(4) of Income Tax Act, 1961 and CBDT circular No.10 of 2005 dated 16th December, 2005. ( .....

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s per agreement Assessee is representing CMA CGM & from this it is very clear that Assessee is acting as Contractor in respect of Container Freight Station (CFS) and as per amendment in Finance Act w.e.f. 2009 the contractors are not allowed to claim deduction u/s 80IA(4) Assessee is merely contractor & not developer . 5. Before the Ld. CIT(A), detailed submissions were made wherein it was stated that the said claim is also supported by the decision of Hon ble Delhi High Court in the cas .....

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e CFS are Inland Port which are one of the infrastructure facilities as covered under section 80IA. Thus, the claim under section 80IA(4) stood allowed by the Ld. CIT(A). 7. On the other hand, Ld. DR strongly relied upon the order of the AO. 8. After considering the relevant finding given in the impugned order as well as decisions relied upon by the Ld. Counsel, we find that it is an undisputed fact that assessee company is engaged in the providing Container Freight Station (CFS) which has been .....

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, re-export, temporary storage for onward transit and outright export, trnas-shipment, take place from such stations. Hon ble Delhi High Court in the case of Container Corporation India Ltd. (supra) where the assessee carried out activities of Inland Container Depot; Central Freight Stations and port Containers Terminals, the Hon ble Court held that the profit derived from such activity is eligible for deduction under section 80IA(4). Our Hon ble jurisdictional High Court following the aforesaid .....

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levant 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 SRP 47/61 ITXA523.13.doc 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, it has entered into an agreement with the Central Government or a .....

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hat 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. Dastur is right in his submission. 40. Mr. Suresh Kumar would .....

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ntainer 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 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 in the case of Container Corporation of India Ltd. would enable it to .....

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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 circular No.10 dated 16th December, 2005, Ho .....

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ould 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 import and export carg .....

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t relied upon the Special Bench decision in the case of All Cargo Global SRP 51/61 ITXA523.13.doc 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 dat .....

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ard to 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 SRP 52/61 ITXA523.13.doc 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 struct .....

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blic sector undertaking and functioning 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 star .....

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the entire Section was recast by 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 .....

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Station notified as infrastructure facility. In exercise of the powers conferred by clause (ca) of sub-section (12) of section 80IAof the Income-tax 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 f .....

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ligible for the deduction for a 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 w .....

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en notified by the Board on or before March 31, 2001, would continue to be exempt, subject to the fulfilment 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 SRP 55/61 ITXA523.13.doc ICDs can be considered to be inland ports. There is no definition of an inland port in the Act. However, a "port", which also qua .....

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s also been defined in the commercial sense as an enclosed 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 .....

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fined as those ports of the navigable channels leading to 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 .....

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r brought into the ICDs are brought or taken away either by railway wagons or by 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 "i .....

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s. On 24th April, 2007 the following clarification was issued by the Central Board 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 : Cl .....

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t; attached to a "port". The work related to Customs is performed at these ICDs/CFSs. Accordingly, ICDs and CFSs (i.e. Customs area of port) are "Inland Ports". Sd/- (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 24 th April, 2007, from the Government of India, Ministry of Finance, Department of SRP 58/61 ITXA523 .....

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the sea-port gives it certain advantages and benefits and which clearly accrue to those using the port for import 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 Hig .....

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be said that by virtue of any certification of the JNPT and its subsequent withdrawal the position undergoes any change. Once the facility is nothing but a infrastructural facility set up and within the precincts of the port, then, considering and even otherwise having considered its proximity to the sea port and its activities that we have no doubt and it can be safely concluded that the deduction admissible under sub-section (4) of section 80-IA can be claimed by both the ICDs and CFSs. 48. We .....

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23.13.doc the judgment of the Division Bench of the Delhi High Court and which finds approval even of the High Court of Madras and with which we broadly agree that the substantial questions of law on both counts need to be answered in favour of the assessee and against the Revenue . The aforesaid decision and ratio of the Hon ble jurisdictional High Court as well as that of Delhi High Court is squarely applicable here where assessee is carrying out CGS activities which is nothing but infrastruct .....

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10. In Cross Objections, the assessee has mainly challenged the disallowance under section 14A of ₹ 3,60,484/- in AY 2010-11 and Rs, 5,67,056/- in AY 2011-12. 11. Before us, Mr. Madhur Agarwal submitted that, here in this case, so far as disallowance of indirect expenditure is concerned made by the AO under Rule 8D(2)(iii) by taking 0.5% of average value of investment, the same is not pressed. However, with regard to the disallowance of interest expenditure is concerned under Rule 8D(2) (i .....

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