TMI Blog2018 (1) TMI 2X X X X Extracts X X X X X X X X Extracts X X X X ..... astructure facility and also that customs clearance also takes place in the inland container depot, the assessee’s claim that the inland container depots were inland ports under Explanation (d) to sec. 80IA(4) required to be upheld - Decided in favour of assessee. - ITA No. 342/VIZ/2017 - - - Dated:- 11-10-2017 - SHRI V. DURGA RAO, HON BLE JUDICIAL MEMBER AND SHRI D.S. SUNDER SINGH, HON BLE ACCOUNTANT MEMBER For The Assessee : Shri Madhur Agrawal Adv. For The Department : Shri R. Govindha Rajan CIT DR ORDER PER V. DURGA RAO, JUDICIAL MEMBER This appeal by the revenue is directed against the order of Commissioner of Income Tax (Appeals)-1, Visakhapatnam, dated 06/03/2017 for the Assessment Year 2013-14. 2. Facts of the case, in brief, are that the assessee-company is engaged in the business of operation of container freight station (CFS), filed its return of income by declaring total income of ₹ 29,23,530/- after claiming deduction under section 80IA(4) of the Income Tax Act, 1961 (hereinafter referred to as the 'Act'). The Assessing Officer has called the assessee to justify its claim under section 80IA(4) of the Act. It was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rred to the said authority on the expiry of the time stipulated in the agreement. The above circular was superseded by circular No.10/2005 dated 16.12.2005 which is reproduced as under: Reference is invited to Board circular No.793 dated 23,06,2000 and amendment in section 80-IA by the Finance Act, 2001. 2. Port, for the purpose of section 10(23G) and 80IA of the Income-tax Act, 1961, includes structures at the ports for storage, loading and unloading etc., if the following conditions are fulfilled. (a) the concerned port authority has issued a certificate that the said structures form part of the port, and (b) such structures have- been built under BOT and BOLT schemes and there is an agreement that the same would be transferred to the said authority on the expiry of the time stipulated in the agreement. This definition is applicable to assessment year 2Q01-02 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 section 10(23G) and 80-IA of the Income-tax Act, 1961, if the fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment proceedings, the learned counsels appearing on behalf of the assessee-company relied upon the decision of the Honourable ITAT Special Bench, Mumbai and the said case law has been carefully perused* The decision of Honourable ITAT, Special Bench, Mumbai in the case of M/s, All Cargo Global Logistics Ltd. Vs. DCIT for the assessment years 2004-05 to 2009- 10 involved grounds regarding interpretation of section 153A and deduction u/s.8QIA(4) of the Income-tax Act, 1961 and are therefore distinguishable on salient features and facts of the case. The department has not accepted the decision of the Honourable ITAT Special Bench, Mumbai on the above issue and has preferred appeals before the Honourable High Court, Mumbai. After having carefully considered the various issues emerging from the above cited circulars of the Board and the decision of the Honourable Special Bench, Mumbai, it is important to reproduce a clarification issued by the CBDT regarding infrastructure activities u/s.80IA(4)(i) of the Act with respect to CFS and ICDs vide letter addressed to all the Chief Commissioner of Income-tax in F.NO.178/42/2010-ITA-I, dt.06.01.2011. Under section 80IA (4)(I) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 80IA(4)(i) of the Income-tax Act, 1961. In this context, I am further directed to convey that the Board has considered the issue and it has been decided that as ICDs and CFSs are not ports located on any inland waterway, river or canal, and therefore they cannot be classified as inland ports for the purpose of section 8QIA(4) of the Income-tax Act. The sole controversy in the instant case is whether Container Freight Stations (CFS) operated by the assessee for shipping companies during the subject year is 'infrastructure facility' and the income derived from CFS is eligible for deduction u/s.80IA(4)(i). Under sec, 80IA(4)(i) of the I.T. Act, a deduction is admissible in respect of the income of ah undertaking engaged in setting up an infrastructure facility. The expression 'Infrastructure facility' has been defined in sec.80IA(4), which includes 'a port, airport, inland water way, inland port or navigational channel in the sea'. On this subject, CBDT issued a Circular dated 06.01.2011, in which earlier circulars dated 16.12,2005 and 23.6.2000 were considered. The clarification provided in Board's Circular is useful aid for an interpretation o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... meaning of the word 'produce' which is of wider import than the word 'manufacture'. No doubt, several Sales Tax Acts have included animate things for the purpose of levying tax on sales. But the meaning assigned to a particular word in a particular statute cannot be imported to a word used in a different statute/' (Para 16) In view of the above decision of the Hon'ble Supreme Court, the description of the activity of the assessee and definition of ICD and CFS under other enactments cannot be accepted as conclusive as regards the connotation of the word 'Infrastructure facility' or 'Port' or 'Inland Port' used in Sec.80IA(4)(i) of the Income Tax Act, 1961 because different enactments / statutes make different classification / categorization of goods and services for certain specific purposes and requirements. Thus, meaning of the same word may vary from one statute to another and it is not correct to go exclusively by the meaning given to a word in other enactments, more so when the CBDT has issued clarification under sec.80IA(4)(I) with respect to CFS and ICD and whether they form part of port or inland port. From the abov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... On careful consideration of the facts and circumstances of the case and also on rural of the papers on record, orders of the authorities below and the case law ' I d, we hold as follows: In Circular No. 18/2009 dated 8/6/2009 issued by the Central Board of Excise and Customs in F.No.434117/2009-CUS.IV the difference between Inland Container Depots (ICD) and Container Freight Stations. (CFS) has been spelt out in the following manner : DEFINITION OF ICD : An Inland Container Depot may be defined as : A common user facility with public authority status (emphasis supplied) equipped with fixed installations and offering services for handling and temporary storage of import / export laden and empty containers carried under customs control and with Customs and other agencies competent to clear goods for home use, warehousing, temporary admissions, re-export, temporary storage for onward transit and outright export. Transshipment of cargo can also take place from such stations. DEFINITION OF CFS : A container Freight Station may be defined as : Container Freight Stations are specified as customs area under Clause (b) of the said Section 8 w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is normally carried out by Customs besides stuffing / destuffing of containers and aggregation/segregation of cargo. Thus, Customs functions relating to processing of manifest, import / export declarations and assessment of Bill of Entry / Shipping Bill are performed in the Custom House / customs functions relating to processing of manifest, import / export declarations and assessment of bill of Entry / Shipping Bill are performed in the Custom House / Customs functions / Custom Officer that exercises jurisdiction over the parent port / airport / ICD / LCS to which the said CFS is attached. In the case of Customs Stations having facility of automated processing of documents, terminals are provided at such CFSs for recording the result of examination, etc. In some CFSs, extension Service Centers are available for filing documents, amendments etc. However, the assessment of the documents etc is carried out centrally. An ICD may also have a number of CFSs attached to it within the jurisdiction of the Commissioner of Customs just as in the case of a port and its CFSs (as on date there are 28 CFSs linked to Chennal port) (Refer Circular No. 19/2009-Cust., dated 8-6-2009). A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Director of the assessee company regarding setting up of a CF$ at Visakhapatnam apropos the assessee's case. In the case of A L Logistics P. Ltd. (supra) the Chennai bench of the Tribunal at para 7 held as follows : 7. Now, we proceed to the next issue, whether I? the absence of specific agreement with the Central/State Governnient local author/ty or Statutory Body, the assessee is entitled to c/afin the benefit of afl/n80lA4i. The assessee had made an application for setting up of CFS at fr/aid/a. -in response to the applicatIon of the assessee, the Department of Commerce, Infrastructure Division, Ministry of Commerce and Industry approved the proposal of the assessee for setting Up of CFS at I-/aId/a for handing impoit/export of cargo subject to execution of certain documents and compliance of other terms and conditions as stated in the letter; The Id. Counsel for the assessee has p/aced on record letter dt. 27-05-2003 from the Ministry of Commerce and Industry permitting the assessee to set up CFS at fr/aid/a. The contents of the letter are reproduced herein below: NoJ6/6/2003-Znfra-Z Government of India ministry of Commerce industry Deptt. of Commerce In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the compliance of the terms and conditions as mentioned in the letter, was notified as CFS Complex for the purpose of receiving, storing, import containers, receiving/consolidating export cargo etc. vide Public Notice OUO-1l-2013. The Public Notices were issued by the office of the Commissioner of Customs (Port) Kolkata. 8. Thus, it is evident that the proposal of the assessee was accepted by the Government on certain conditions which were duly complied with by the assessee. There may not be any specific agreement, but the sequences of events clearly show that the assessee is providing CFS facility in accordance with the conditions laid down by the Government. In such circumstances there is no need to insist for the specific execution of agreements. The coordinate bench of the Tribunal in the case of United Liner Agencies of India (P.) Ltd (supra), has taken a similar view, Where no specific agreement with the State Government was entered into but from the approvals granted to the assessee it was inferred that assessee should be deemed to have entered into an agreement with the State Government. Thus, we are of the considered view that the assessee has complied with all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 80-IA(4) for the assessment years 2003-04 to 2005-06. The Assessing Officer denied special deduction but the Tribunal allowed it. On appeal to the High Court: Held, allowing the appeals, that out of the total 45 inland container depots operated by the assessee, except two all others were notified by the Central Board of Direct Taxes for the purpose of sec. 80IA(12)(ca). Having regard to the provisions of the Customs Act, the communication issued by the Central Board of Excise and Customs as well as the Ministry of Commerce and Industry, the object of including inland port as an infrastructure facility and also that customs clearance also takes place in the inland container depot, the assessee s claim that the inland container depots were inland ports under Explanation (d) to sec. 80IA(4) required to be upheld. The issue has also been clarified by the Government vide CBEC circular no. 18/2009 dated 08/06/2009. Respectfully following the above decisions, we allow this appeal of the assessee. 5.3.1. Respectfully following the above order of the Hon ble Tribunal, the Assessing Officer is directed to allow deduction claimed by the assessee u/s. 80IA(4) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of the Tribunal is extracted is under:- 8. In circular no. 18/2009 dated 08/06/2009 issued by the Central Board of Excise and Customs in F.No. 434/17/2009-CUS.IV the difference between Inland Container Depots (ICD) and Container Freight Stations(CFS) has been spelt out in the following manner: (a) DEFINITION OF ICD: An Inland Container Depot may be defined as: A common user facility with public authority status (emphasis supplied) equipped with fixed installations and offering services for handling and temporary storage of import/export laden and empty containers carried under customs control and with Customs and other agencies competent to clear goods for home use, warehousing, temporary admissions, re-export, temporary storage for onward transit and outright export. Transhipment of cargo can also take place from such stations. (b) DEFINITION OF CFS: A Container Freight Station may be defined as: Container Freight Stations are specified as customs area under Clause (b) of the said Section 8 wherein imported goods or export goods are ordinarily kept before clearance by the customs. Firstly, CFS do not have public authority status wher ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egregation of cargo. Thus, Custom's functions relating to processing of manifest, import/export declarations and assessment of Bill of Entry/Shipping Bill are performed in the Custom House/Custom Office that exercises jurisdiction over the parent port/airport/ICD/LCS to which the said CFS is attached. In the case of Customs Stations having facility of automated processing of documents, terminals are provided at such CFSs for recording the result of examination, etc. In some CFSs, extension Service Centers are available for filing documents, amendments etc. However, the assessment of the documents etc. is carried out centrally. An ICD may also have a number of CFSs attached to it within the jurisdiction of the Commissioner of Customs just as in the case of a port and its CFSs (as on date there are 28 CFSs linked to Chennai port) [Refer Circular No. 18/2009-Cus. , dated 8- 6-2009]. A standalone Customs clearance facility in an inland Commissionerate cannot be approved by the Commissioner as a CFS, if there is no ICD/port within its jurisdiction to which the said CFS can be attached. Such a facility can, however, be notified as an ICD i.e., as an independent Custom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d as follows: 7. Now, we proceed to the next issue, whether in the absence of specific agreement with the Central/State Government, local authority or Statutory Body, the assessee is entitled to claim the benefit of section 80IA(4)(i)? The assessee had made an application for setting up of CFS at Haldia. In response to the application of assessee, the Department of Commerce, Infrastructure Division, Ministry of Commerce and Industry approved the proposal of the assessee for setting up of CFS at Haldia for handling import/export of cargo subject to execution of certain documents and compliance of other terms and conditions as stated in the letter. The Id. Counsel for the assessee has placed on record letter dt.27-05-2003 from the Ministry of Commerce and Industry permitting the assessee to set up CFS at Raldia. The contents of the letter are reproduced herein below: No. 16/6/2003-lnfra-I Government of India Ministry of Commerce Industry Deptt. of Commerce Infrastructure Division Udyog Bhawan, New Delhi, Dated the 27th May,2003. To The Director, M/s A L Logistics Pvt. Ltd., Chennai. Subject: Setting up of an CFS at Haldi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iners, receiving/consolidating export cargo etc. vide Public Notice OUO-1l-2013. The Public Notices were issued by the office of the Commissioner of Customs (Port) Kolkata. 8. Thus, it is evident that the proposal of the assessee was accepted by the Government on certain conditions which were duly complied with by the assessee. There may not be any specific agreement, but the sequences of events clearly show that the assessee is providing CFS facility in accordance with the conditions laid down by the Government. In such circumstances there is no need to insist for the specific execution of agreements. The coordinate bench of the Tribunal in the case of United Liner Agencies of India (P.) Ltd (supra), has taken a similar view, Where no specific agreement with the State Government was entered into but from the approvals granted to the assessee it was inferred that assessee should be deemed to have entered into an agreement with the State Government. Thus, we are of the considered view that the assessee has complied with all the provisions of section 80IA(4)(i) and is eligible to claim deduction under the said section. The impugned order is set aside. The appeal of the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. On appeal to the High Court: Held, allowing the appeals, that out of the total 45 inland container depots operated by the assessee, except two all others were notified by the Central Board of Direct Taxes for the purpose of sec. 80IA(12)(ca). Having regard to the provisions of the Customs Act, the communication issued by the Central Board of Excise and Customs as well as the Ministry of Commerce and Industry, the object of including inland port as an infrastructure facility and also that customs clearance also takes place in the inland container depot, the assessee‟s claim that the inland container depots were inland ports under Explanation (d) to sec. 80IA(4) required to be upheld. 13. The issue has also been clarified by the Government vide CBEC circular no. 18/2009 dated 08/06/2009. Respectfully following the above decisions, we allow this appeal of the assessee. 9. Insofar as case laws relied on by the assessee is concerned, in the case of A.L. Logistics (P) Ltd. (supra), the Hon'ble Madras High Court held that profits and gains from infrastructure undertakings (infrastructure facility), Container Freight Station is part of inland port and, the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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