TMI Blog2016 (5) TMI 1487X X X X Extracts X X X X X X X X Extracts X X X X ..... , is an infrastructure facility as defined in Explanation to section 80IA(4)(i) of the Act. In view of the various decisions discussed above and the facts of the instant case we accept ground no. 2 raised in the appeal of the assessee for assessment year 2009-10. Thus, we hold that the assessee is eligible to claim deduction u/s. 80IA(4) in respect of the ICD/CFS set up by the assessee. Addition in respect of payment made by the assessee to the Maharashtra State Warehousing Corporation Karmachari Welfare Fund - Addition u/s 40A(a) - Held that:- In Vinay Narayan Vajpayee [1980 (1) TMI 204 - SUPREME COURT] held that the contribution made by the assessee towards Karamchari Welfare Fund falls within the expression ‘as required by or under any other law” for the purpose of section 40A(a) of the Act. We do not find any error in the findings of Commissioner of Income Tax (Appeals) on this issue. Neither, the ld. DR has been able to controvert the said findings nor the ld. DR has placed on record any judgment contrary to the view taken by the Co-ordinate Bench of the Tribunal. Hence, the ground raised in the appeal of Department are dismissed being devoid of any merit. Addition on ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... against the orders of Commissioner of Income Tax (Appeals)-I, Pune dated 01-02-2013 for the assessment year 2008-09 and separate order of even date for assessment year 2009-10. 2. The brief facts of the case as emanating from records are: The assessee is a State Govt. undertaking established under the Warehousing Corporations Act, 1962 with the main object of providing warehousing facilities primarily for agricultural produce, seeds, fertilizers etc. During the period relevant to the assessment years under appeal the assessee derived income from warehousing charges, fumigation charges, handling charges, weightment charges, supervision charges, EDI service charges, weighbridge charges and from disinfection extension service scheme, etc. For providing warehousing services the assessee claimed deduction u/s. 80IB(11A) of the Income Tax Act, 1961 (hereinafter referred to as the Act ). During the course of scrutiny assessment proceedings for assessment year 2008-09, the Assessing Officer inter alia disallowed the claim of deduction made by the assessee u/s. 80IB(11A) of the Act. Similarly, in the assessment year 2009-10 the Assessing Officer apart from disallowing deduction u/s. 80I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ertaking. The assessee has been established under the provisions of the Agricultural Produce (Development and Warehousing) Corporation Act, 1956 and the Warehousing Corporations Act, 1962, with the objective of providing warehousing, integrated facilities for transportation, handling of agricultural produce and various other products and commodities. The assessee is having 160 units in the entire state. During the assessment years under appeal, the assessee had claimed deduction u/s. 80IB(11A) of the Act. The assessee had claimed deduction on income from warehouses constructed and utilized after 1st April, 2001. The assessee had filed Audit Report in the prescribed form during the course of assessment proceedings. Admittedly, the assessee is providing warehousing facilities for storage of fertilizers, cotton bales and other miscellaneous items in addition to storage of food grains. The ld. AR referred to page 48 of the paper book to show commodity wise breakup of average utilization of warehouse during the financial years 2007-08 and 2008-09. A commodities wise breakup of average utilization of warehouse for the period relevant to assessment years under appeal is : Commodities ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax in ITA No. 672/H/2014 for the assessment year 2008-09 decided on 28-08-2014. 5.2 In respect of disallowance of claim of deduction u/s. 80IA(4) in assessment year 2009-10, the ld. AR submitted that the warehousing facilities provided by the assessee falls within the definition of infrastructure facilities as defined in Explanation to section 80IA(4). The ld. AR submitted that the case of the assessee is squarely covered by the decision of Co-ordinate Bench of the Tribunal in the case of ACIT Vs. JWC Logistics Park Pvt. Ltd. in ITA Nos. 1121 and 1122/PN/2013 for the assessment years 2008-09 and 2009-10 decided on 21-08-2014. The ld. AR further to buttress his submissions placed reliance on the following judgments : i. Commissioner of Income Tax Vs. continental Warehousing Corporation, 374 ITR 645 (Bom); ii. Commissioner of Income Tax Vs. A.L. Logistics (P.) Ltd., 55 taxmann.com 283 (Mad). 6. On the other hand Shri Achal Sharma representing the Department vehemently supported the findings of the Commissioner of Income Tax (Appeals) in rejecting the claim of the assessee u/s. 80IB(11A) of the Act. The ld. DR submitted that the deduction u/s. 80IB(11A) is granted wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (11A) undertaking should derive profit from the integrated business of handling, storage and transportation of food grains. The assessee in the present case is a state warehousing corporation set up under the provisions of the Warehousing Corporations Act, 1962. Section 24 of the Warehousing Corporations Act enumerates the functions of the State Warehousing Corporation. The same is reproduced here-in-under: 24. Subject to the provisions of this Act, a State Warehousing Corporation may (a) acquire and build godowns and warehouses at such places within the state as it may with the previous approval of the Central Warehousing Corporation, determine; (b) run warehouses in the State for the storage of agricultural produce, seeds, manures, fertilizers, agricultural, implements and notified commodities; (c) arrange facilities for the transport of agricultural produce, seeds, manures, fertilizers, agricultural implements and notified commodities to and from warehouses; (d) act as an agent of the-Central Warehousing Corporation or of the Government for the purposes of the purchase, sale, storage and distribution, of agricultural produce, seeds, manures, fer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f foodgrains apart from other products viz. fertilizers, cotton bales, etc. The ld. AR of the assessee has made two fold submissions. The first prayer of the assessee is that the assessee should be allowed 100% deduction on the warehousing business by liberally interpreting the provisions of statute. However, we do not find merit in this contention of the assessee. As by granting deduction on the entire income from warehousing business which includes receipts for warehousing products other than food grains, the spirit of subsection (11A) would be vitiated. The assessee is eligible to claim deduction u/s. 80IB(11A) on the income arising from integrated business of storage, transport and handling of foodgrains alone. Here it would be relevant to clarify further that the assessee would be eligible to claim deduction u/s. 80IB(11A) on the units (warehouses) that have started operating on or after 01-04-2001. 10. As has been pointed out earlier the assessee has several warehouses in the state of Maharashtra. The ld. AR of the assessee has submitted that statistics of the individual warehouses are not available. The consolidated Audit report giving the details of commodities wise brea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee. We do not find merit in these reasons of the lower authorities for making the disallowance. We may now examine the correctness or otherwise of these reasons given by the lower authorities. 12. We find that the assessee-corporation owns premises accommodating godowns at different places all over the State. In each area it either constructs or offers an investor to construct new godowns, which the corporation takes on lease. It is the claim of the assessee before the CIT(A) that the plinth area of construction of the godowns varies from minimum area of 10,000 sft. up to a maximum area of 50,000 sft. and the scheme of construction of godowns started in the year 2002. Each unit is an undertaking because food-grains are stored and handled and transported thereto and therefrom. It may be noted at this juncture that there is no restriction in S.80-IB that an existing business unit cannot set up new undertakings to carry on the integrated business of handling, storage and transportation of food grains. The godowns where this business is to be carried on need not be owned by the assessee. When the assessee-corporation has set up these godowns in as many as in 73 towns and at di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here is no dispute the assessee s main business is to provide warehousing facility for foodgrains. The Assessee has been constituted under with these very objects in view. Merely because the Assessee has engaged outsiders for transportation or leased out some of the godowns for storage does not mean that the Assessee is not engaged in the integrated business of handling and storage of foodgrains. In the course of their integrated business, the assessee had collected rentals for storing foodgrains and had engaged outsiders to transport the food grains. Further, the fact that the assessee had been carrying on similar business would not disentitle the assessee from claiming relief u/s 80IB(11A), in respect of the new warehouses put to use after the introduction of sec 80IB(11A) i.e on or after 1.4.2001. The assessee has furnished in the paper-book list of new Godowns, which have been put to use by the assessee after 1.4.2001. It is well settled that deduction under Chap VIA, in respect of new undertakings set up by the assessee by way of expansion of the existing undertakings, as held by the Apex Court in the cases of Textile Machinery Corporation Ltd v CIT 107 ITR 195 SC and CIT v In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee for the assessment years 2008-09 and 2009-10 for statistical purpose. 12. The ground no. 2 in the appeal of the assessee for assessment year 2008-09 relates to disallowance of claim of ₹ 79,62,582/- towards leave encashment paid during the period relevant to the assessment year 2008-09. The ld. AR of the assessee stated at the Bar that he is not pressing ground no. 2. Accordingly, same is dismissed as not pressed. 13. The ground no. 2 in the appeal of the assessee for assessment year 2009-10 relates to disallowance of deduction ₹ 4,50,17,204/- u/s. 80IA(4) of the Act. The assessee has set up Inland Container Depot (ICD) and Container Freight Station (CFS) for handling bonded warehousing facilities on leasehold land of SIDCO. The ICD established by the assessee is located at about 3-4 Kms. away from the boundary wall of Jawaharlal Nehru Port Trust and the unit commenced its activities in December, 2004. The unit is said to be modified under Customs Act as Customs Area for the purpose of storage, stuffing, destuffing and clearance of export and import. The assessee claimed deduction u/s. 80IA(4) in view of Board s Notification No. F.No.205/17/2000/ITA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /s. 80IA of the Income Tax Act, 1961 even though activities undertaken by the assessee do not fall within Clause (d) of the Explanation to 80IA(4) defining the term infrastructure facilities? The Tribunal dismissed the appeal of the Department by holding as under: 4. We have considered the rival arguments made by both the sides, perused the orders of the Assessing Officer and the CIT(A) and the Paper Book filed on behalf of the assessee. We have also considered the various decisions cited before us. From the statement of facts filed by the Revenue, we find the only grievance of the Revenue against the order of the CIT(A) is that the order relied on by the CIT(A) in the case of Continental Warehousing Corporation (Nhave Sheva) Ltd. (Supra) has been challenged by the Revenue before the Hon ble High court and the same is pending. The Ld. Departmental Representative fairly conceded that the issue has been decided in favour of the assessee by the decision of the Mumbai Bench of the Tribunal and to keep the matter alive the Revenue has filed this appeal since the decision of the Tribunal in the case of Continental Warehousing Corporation (Nhave Sheva) Ltd. (Supra) has been cha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting and maintaining a new infrastructure facility and it has started or starts operating and maintaining the infrastructure facility on or after 1st day of April, 1995. The explanation defines the infrastructure facility to mean, inter alia, a port, airport, inland waterway, inland port or navigational channel in the sea. The 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. Dastur is right in his submission. The Hon'ble Court further after considering the decision of Hon'ble Delhi High Court in the case of Container Corporation of India Ltd. Vs. Asstt. Commissioner of Income Tax reported as 346 ITR 140 (Delhi) concluded as under : 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 Gove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... raised in the appeal of the assessee for assessment year 2009-10. Thus, we hold that the assessee is eligible to claim deduction u/s. 80IA(4) in respect of the ICD/CFS set up by the assessee. 18. In the result, the appeal of the assessee in ITA No. 819/PN/2013 for the assessment year 2008-09 is partly allowed for statistical purpose and the appeal of the assessee in ITA No. 820/PN/2013 for assessment year 2009-10 is partly allowed. ITA Nos. 968 969/PN/2013 (Revenue s Appeals) 19. The Revenue in its appeal for assessment year 2008-09 has raised 11 grounds. The ground nos. 1, 10 and 11 are general in nature hence, require no adjudication. 20. The ground nos. 2 and 3 raised in the appeal of the Revenue are against the findings of Commissioner of Income Tax (Appeals) in deleting the addition of ₹ 20,08,350/- in respect of payment made by the assessee to the Maharashtra State Warehousing Corporation Karmachari Welfare Fund (hereinafter referred to as the MSWCKWF ). The Assessing Officer disallowed the contribution towards MSWCKWF by following his own order in the earlier assessment year. In the first appeal the Commissioner of Income Tax (Appeals) accepted the clai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fficer has erroneously interpreted the remarks of the auditors. In actual fact, the appellant has consistently followed the method of accounting of warehousing income for bonded warehouses on cash basis in the books of accounts and accrual basis in the computation of income. Considering the above, Ground No. 5 is allowed in favour of the appellant. The amount of ₹ 31,34,000/- is received by assessee as insurance claim. A perusal of the impugned findings by Commissioner of Income Tax (Appeals) shows that the assessee has furnished explanation in respect of alleged understatement of warehousing charges. The assessee has purportedly offered the amount of insurance claim for tax in the year of receipt. In support of his submissions the assessee has furnished computation statements for assessment years 2007-08, 2008-09 and 2009-10. The Commissioner of Income Tax (Appeals) has deleted the addition after considering the same. We do not see any infirmity in the action of Commissioner of Income Tax (Appeals) in deleting the addition. Once the assessee has offered the amount to tax in the year of receipt of claim, the same amount cannot be taxed twice. The ground nos. 4 and 5 rai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f ₹ 8.78 lakhs pertaining to Kalamboli Warehouse. So far as the Kopargaon Warehouse building is concerned, the amount of ₹ 8.07 lakhs received from Govt. Insurance company was shown under the head other liability and was debited to the Kopargaon Warehouse Construction account in the A.Y. 2010-11. However the appellant had incurred an amount of ₹ 15,33,092 on the re-construction of the Kopargaon Warehouse during the relevant assessment year as is demonstrated in the ledger account of Kopargaon Warehouse filed vide page no. 33 of the paper book. The appellant's submission that the loss suffered is on account of capital asset therefore, the insurance claim has been debited to capital account is perfectly reasonable. Further, it is seen that neither the receipt of insurance claimed nor the actual claim for insurance pertains to AY. 2008-09 hence the Assessing Officer was not justified in making the addition of ₹ 8.07 lakhs. So far as the second part is concerned, the addition is not warranted since no separate sanction was received from the insurance company with reference to fire fighting expenses. Therefore, the appellant was correct in not quoting ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ;s warehouse at Vashi. Since the demand was made vide such claim dated 22.7.2008 and 11.4.2008 the amounts in question relate to the current year and are to be allowed. The third item relates to the differential in DA relating to the period 1.1.2008 to 31.3.2008 and amounts to ₹ 10,52,060. It has been brought to my notice that the differential DA has been paid as per Govt. of Maharashtra order dated 20.5.2008. Accordingly, this amount is also allowable. The fourth item of ₹ 5,00,954 relates to back wages, arrears of pay and differential gratuity paid to Shri S.V. Bapat, Ex Asst. Manager, Head Office pursuant to Court order dated 27.3.2008 which the appellant received during the current year. The payments made in pursuance to the Court's order received during the year are considered allowable expenditure. The fifth item of ₹ 1,00,877 pertains to the construction of compound wall at Gultekadi warehouse complex. Though the bill in respect of such repairs was raised and approved during the F.Y. 2008-09, the price variation charges were raised by the contractor during the year and therefore, the expenditure stands crystalized during the year. Accordingly, the Asses ..... X X X X Extracts X X X X X X X X Extracts X X X X
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