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TMI Blog2016 (12) TMI 460X X X X Extracts X X X X X X X X Extracts X X X X ..... e of a claim of Rs. 1,26,12,282/- under section 80IA(4) of the Income Tax Act, 1961 (in short the ''Act'') by ld. Commissioner of Income Tax (Appeals). As against this, assessee in its appeal is aggrieved on notional charge of interest @9% on outstanding balance of unsecured loans thereby reducing the deduction u/s.80IA claimed by it. One other ground taken by the assessee is on disallowance of depreciation of warehousing facilities, which ld. Assessing Officer considered as part of capital work in progress. 4. Facts apropos are that assessee engaged in the business of operating container freight station and inland container depots at Chennai, Tuticorin, Tiruppur and Karur had filed return of income for the impugned assessment year disclosing Nil income. Assessee had claimed deduction u/s.80IA(4) of the Act for its earnings from warehouse rental. Assessee received warehouse rentals of Rs. 19,51,367/- from Deccan and Pondy at its Corporate Office, Rs. 1,06,60,915/- from M/s. ITC at its Ennore facility and Rs. 98,35,215/- at its Pondicherry CFS. The ld. Assessing Officer was of the opinion that ware housing facility at Ennore and corporate office were not approved container freight ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax (Appeals) observed that conclusion of the ld. Assessing Officer regarding temporary nature of the warehousing facilities was incorrect. According to him, ld. Assessing Officer had relied on turnover percentage of Pondy facilities for coming to this conclusion which was incorrect. As for the exclusion of transportation revenue, ld. Commissioner of Income Tax (Appeals) noted that ld. Assessing Officer had considered transportation cost incurred at Pondicherry and Tuticorin to be not related to out bound traffic of CFS without any evidence. As per Ld. Commissioner of Income Tax (Appeals), assessee was doing transportation of cargo containers only for export and import and there was no question of any transportation charges unrelated to this activity. As for the transportation and incidental charges, ld. Commissioner of Income Tax (Appeals) noted that assessee was offering CFS services as a bouquet and division of the Revenue and activity could not be done. Thus, he ruled against exclusion of transport charges as well as incidental charges while computing deduction available to the assessee u/s.80IA(4) of the Act. He held that assessee was eligible to include all these amounts in i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rporate office Ennore and Pondicherry were eligible for deduction u/s.80IA(4) of the Act considering these as part of the CFS facility. 12. With respect to transportation revenue relating to Pondicherry and Tuticorin to ports, it is not disputed that such transportation charges were received for moving goods in cargo containers to the ports. Hence, the distinction sought to be made between areas of transport was not in our opinion justified. Similarly, incidental charges on account of trailer detention and vehicle lease, were a part of the bouquet of services offered by the assessee as a part of its CFS division. Hence, we are of the opinion that ld. Commissioner of Income Tax (Appeals) was justified in allowing the claim of the assessee u/s. 80IA(4) of the Act on these items. 13. Now coming to the cross appeal of the assessee, ld. Assessing Officer had found that there were unsecured loans of Rs. 11,99,12,541/- in the books of the assessee. As per ld. Assessing Officer, if 9% interest was imputed on such loans then profit available for deduction u/s.80IA(4) of the Act would be lower by that amount. According to the ld.Assessing Officer, assessee was arranging its business transa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purposes of the deduction under this section, take the amount of profits as may be reasonably deemed to have been derived therefrom''. It is stated by the assessee itself that lenders were ex-partners. Hence there is every reason for ld. Assessing Officer to believe that course of business was arranged in such a manner that more than eligible amount was shown as the profit. Assessee was not able to show why interest was not charged by the above mentioned persons when substantial unsecured loans were outstanding in their names. We do not find any reason to interfere with the order of the ld. Commissioner of Income Tax (Appeals). 18. The only other issue raised by the assessee is on a disallowance of depreciation on its warehousing facility at Bangalore. 19. Ld. Commissioner of Income Tax (Appeals) specifically noted that value of the above asset was shown as a part of capital work in progress in the fixed asset schedule of the assessee. There was no income whatsoever credited in the profit and loss from the facility. If it was operational assessee would have earned at least a nominal income from this facility. Hence, in our opinion, depreciation was rightly disallowed. We do not ..... X X X X Extracts X X X X X X X X Extracts X X X X
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