TMI Blog2019 (6) TMI 477X X X X Extracts X X X X X X X X Extracts X X X X ..... : Shri D.K.Sonowal, DR ORDER PER BENCH: These appeals are filed by the revenue against the order of the Commissioner of Income Tax (Appeals) [CIT(A)]-3, Visakhapatnam dated 17.05.2018 and cross objections are filed by the assessee for the A.Y.2011- 12 to 2014-15. Since the facts involved in all these appeals are identical, the appeals are clubbed, heard together and disposed off in a common order for the sake of convenience as under: 2. We first take up the appeal for the A.Y. 2011-12 and extract the facts from the said assessment record. The assessee is engaged in the business of stevedoring, transportation and warehousing, filed it s return of income for the A.Y.2011-12 through e-filing on 29.09.2011 declaring total income of ₹ 3,77,21,730/- after claiming the deduction of ₹ 3,68,28,209/- u/s 80IA of the Income Tax Act, (in short Act ). The assessment was completed u/s 143(3) in this case on total income of ₹ 7,59,49,939/-. In the assessment made u/s 143(3), the AO disallowed deduction claimed by the assessee u/s 80IA of the Act. During the assessment proceedings, the AO observed that the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urview of Inland Port and also made observation that CFS is not an extension of Port. The Ld.AO did not follow the decision of Income Tax Settlement Commission (ITSC) on the ground that the Department has not accepted the decision of ITSC and filed writ petition before the Hon ble High Court, Chennai, challenging the decision of Settlement Commission. Accordingly, disallowed the deduction claimed u/s.80IA(4) and made the addition of ₹ 3,68,28,209/- for the A.Y. 2011-12. Identical addition was made for the A.Y. 2012-13 to 2014-15 as under: A.Y. Amount of Addition (Rs.) 2012-13 4,77,64,091/- 2013-14 11,29,27,668/- 2014-15 13,66,14,719/- 3. Aggrieved by the order of the AO, the assessee went on appeal before the CIT(A) and the Ld.CIT(A) allowed the appeal of the assessee following the decision of this Tribunal in the case of Gateway East India (P) Ltd, vs ACIT in ITA No.15/Vizag/2015 dated 29/04/2012 for the A.Y.2011-12 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commissioner customs issues notification declaring the CFS area as customs area, the dispute stands addressed as held in various judgments of Hon'ble High Courts. 6.1. Hon ble Supreme Court in the case of Container Corporation of India Ltd., in civil appeal No.8900 of 2012 dated 24.04.2018 held that the ICDs are inland port for the purpose of deduction u/s 80IA(4). For the sake of clarity we reproduce the relevant part of the order of the Apex court which reads as under: 21. Moving further to the issue whether the ICDs can be termed as Inland Ports so as to entitle deduction under Section 80-IA of the IT Act. The term port, in commercial terms, is a place where vessels are in a habit of loading and unloading goods. The term 'Port' as is used in the Explanation attached to Section 80-IA(4) seems to have maritime connotation perhaps that is the reason why the word airport is found separately in the Explanation. Considering the nature of work that is performed at ICDs, they cannot be termed as Ports. However, taking into consideration the fact that a part of activities that are carried out at ports such as custom clearance ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . No.15/Viz/2015. The facts in Gateway East India (P) Ltd. are identical to the facts of the assessee s case. The Coordinate Bench of ITAT has considered the issue with regard to agreement, definition of inland port and whether CFS falls under inland port or not? and allowed the appeal of the assessee. The Ld.CIT(A) followed the decision of this Tribunal and allowed the appeal of the assessee. For the sake of clarity and convenience, we extract relevant part of the order of the ld.CIT(A) which is made available in page No.3 to 8 in para No.6.1 to 6.5 which reads as under : 6.1) There are (4) grounds raised in the appeal. Ground Nos.(1) (4) are general in nature, hence, no separate adjudication is required. The only effective ground in this appeal is Ground No.(2) which is with regard to the addition made by the Assessing Officer by disallowing the deduction claimed u/s 80IA of the Act. On a careful consideration of the submissions made by the appellant, I find that this issue is squarely covered by the decision of Hon ble ITAT, Visakhapatnam Bench in the case of Gateway East India Pvt. Ltd.(Supra). In that case also, the assessee was operating a CFS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ousing, temporary admissions, re-export, temporary storage for onward transit and outright export, transshipment, etc., takes place. 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 . An ICD is a 'self contained Customs station' like a port or air cargo unit where filing of Customs manifests, Bills of Entrys, Shipping Bills and other declarations, assessment and all the activities related to clearance of goods for home use, warehousing, temporary admissions, re-export, temporary storage for onward transit and outright export, transshipment, etc., take place. An ICD would have its own automated system with a separate station code [such as INTKD 6, INSNF6 etc.] being allotted by Directorate General of Systems and with in-built capacity to enter examination reports and enable assessment of documents, processing of manifest, amendments, etc. Container Freight Stations are specified as customs area under Clause (b) of the said Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issionerate in addition to existing CFSs. Such an ICD should be capable of providing full-fledged Customs services, independent EDI system, and all procedures meant for transhipment of cargo have to be followed for movement of goods from the port of import to the ICD. Further, such an ICD would function as an independent Customs Station in all respects and would not be attached to any other port or airport. Thus, in respect of proposals for setting up of ICD/Container Freight Station from prospective operators it has to be examined whether the proposed facility is required to be approved as an ICD or CFS. Movement of goods from a port/airport/LCS to an ICD is in the nature of movement from one Customs station to another, governed by Goods Imported (Condition of Transshipment) Regulations, 1995. On the other hand, movement of goods from a port/airport/LCS or an ICD to a CFS is akin to local movement from a Customs area of the Customs station to another Customs area of the same station, covered by local procedure evolved by the Commissioner of Customs and covered by bonds, bank guarantee, etc. Further, the person undertaking the transshipment would be required to f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to t le following terms and conditions:- (a) The Letter of Intent holder shall take adequate steps to create proper infrastructure keeping in view the indicative norms given in Parts A B of the Guidelines for setting up Inland container Depots I Container Freight Stations (ICDs/CFs) within a period of one year from the date of issue of this letter. (b) Necessary bond and guarantees, as required, would be executed with the concerned Commissioner of Customs and Central Excise. (c) The approval would be subject to cancellation in the event of violation of the Customs and other laws of the land and Rules. (d) A quarterly progress report of the implementation shall be sent to the Ministry of Commerce. (e) The working of the CFS will be open to review by the Inter Ministerial Committee. (f) Formalities in respect of acquisition/possession of the land shall be completed within 60 days and intimated to the Mlo Commerce, failing which the approval granted would be automatically cancelled. 2. The facility to be set up shall be full computerized, with EDI compatibility and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the AO that there is no agreement and hence the assessee is not eligible for exemption is not the correct position of law. 12. The Hon ble Delhi High Court in the case of Container Corporation Ltd. (supra) held as follows: The term infrastructure facility was defined in section 80-IA(12)(ca) of the Income Tax Act, 1961, to mean a road, highway, bridge, airport, port or rail system or any other public facility of a similar nature as may be notified by the Central Board of Direct Taxes. The Finance (No. 2), 1998, included the words Inland water ways and inland ports in the definition of infrastructure facility in sub-section (12), clause (ca), with effect from April 1, 1999. When the entire section was recast and even after several amendments were thereafter made to the section, inland ports continued to enjoy the deduction as infrastructure facility. There is no definition of the words inland ports in any of the dictionaries. But the words inland container depot were introduced in sec. 2(12) of the Customs Act, 1962, which defines customs port . This was by way of an amendment made by the Finance Act, 1983, with effect from May 13, 198 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her to the above, the issue has been already considered by the Income Tax Settlement Commission, Chennai Bench and it was held that the appellant is eligible for deduction u/s 80(IA) in respect of the CFS. The Assessing Officer has declined to follow this decision simply on the ground that the decision of the Settlement Commission is challenged by the Revenue before the Hon ble Chennai High Court. I am unable to agree with the view taken by the Assessing Officer. The Hon ble Madras High Court while delivering the judgement in the case of Velayuda Swamy Spinning Mills (P) Ltd. 348 ITR 477 (Mad) held that pendency of SLP before the Hon ble Supreme Court would not reverse or erase the dictum. Till such time, the decision rendered by the Hon ble Settlement Commission will hold good. 6.3) More than anything else, the Hon ble Supreme Court in their order dt.24.4.2018 in the case of Container Corporation of India Limited (supra) approved the view taken by the Hon ble Delhi High Court. While dealing with the issue, the Hon ble Supreme Court has examined the Finance Act, 1995 1998 and also the Notification issued by the CBDT in No.744(E), dated 01.09.1998 has come to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clusion of CFS in clause (d) of Explanation to Section 80IA(4)(i), Therefore, on fact when it has been found by the Tribunal that CFS is an Infrastructure facility, we find no good reason to differ on fact. We respectfully agree with the Delhi High Court. 6.4. The Ld.DR heavily placed reliance on the Board Circular No.178/42/2010-ITA-1 dated 06.01.2011. Hon'ble Bombay High Court considered the Board Circular and decided the issue in favour of assessee holding that CFS is a port for the purpose of deduction u/s 80IA(4) and accordingly dismissed the appeals of the revenue in the case of Pr.CIT Vs. JWC Logistic Park (P) Ltd. reported in 404 ITR 0310. Hon ble Supreme Court has dismissed the SLP filed by the revenue against the judgement of Hon ble Bombay High Court in JWC Logistic Park (P) Ltd. which is reported in [2018] 100 taxmann.com 356 (SC). 7. Similarly, the assessee relied on the decision of CIT Vs. Continental Warehousing Corporation (2015) 374 ITR 0645, Hon ble Bombay High Court has discussed the issue with regard to the agreement and decided the issue in favour of the assessee. We extract relevant part of the order of the Hon'ble Bomba ..... X X X X Extracts X X X X X X X X Extracts X X X X
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