TMI Blog2019 (9) TMI 497X X X X Extracts X X X X X X X X Extracts X X X X ..... ons of section 80IA and deduction can be claimed for income earned out of these depots. - Decided in favour of assessee. - ITA No. 149/VIZ/2019 - - - Dated:- 6-9-2019 - 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 D.K. Sonawal 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 24/01/2019 for the Assessment Year 2014-15. 2. The Revenue has raised the following grounds of appeal:- 1. The Order of the Ld. CIT(A)-1, Visakhapatnam is erroneous in law. 2. The Ld. CIT(A) erred in directing the assessing officer to allow the deduction claimed by the assessee U/s 801A(4) of I.T.Act. 3. The Ld.CIT(A) ought to have appreciated that the definition of 'infrastructural facility' as defined uls.801A(4) includes' a port, airport, inland water way, inland port or naviga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. The Assessing Officer after considering the assessee‟s explanation noted that a perusal of the certificate issued by the Visakhapatnam Port Trust indicates that the structure on which the assessee has claimed deduction u/sec. 80IA(4) does not fulfil the conditions enumerated in Circular No. 793, dated 23/06/2000 such as the CFS has not been built under BOT and BOLT scheme and there is no agreement that the same would be transferred to VPT on expiry of time stipulated in the agreement as mentioned in Circular No.793, dated 23/06/2000 or Circular No.10/2005, dated 16/12/2005. It can be seen from the above that the conditions enumerated vide Circular No.793, dated 23/06/2000 for such structures to be included in the definition of port is not fulfilled by the assessee-company. Coming to Circular No.10/2005, the conditions laid down for such structure to be eligible for deduction is that the concerned port authority has issued a certificate, that the said structures form part of the port. In support of the above, the assessee submitted a certificate from the Visakhapatnam Port Trust which mentions that the CFS M/s. Gate East India Pvt. Ltd. may be considered as extended a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 'ble High Court of Andhra Pradesh. 7. In the assessment order, the Assessing Officer further observed that 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 whether 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 an undertaking engaged in setting up an infrastructure facility. The expression 'Infrastructure facility' has been defined in sec. 801A(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 a useful aid for interpretation of the provisions of section 80IA(4)(i) and to decide whether CFS is an 'infrastructure facility' within the meaning of sec. 80IA(4)(i). It has been clarified in the said circular dated 06.01.2011 that an ICD or a CFS is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng 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) 8. 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. 801A(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 above discussion, the following facts emerge that make the assessee company M/s. Gateway East India Pvt. Ltd ineligible from claiming deduction u/s. 80IA (4) of the I.T. Act, 1961. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ollowing 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 wherein imported goods or export goods are ordinarily kept before clearance by the customs. Firstly, CFS do not have public authority status whereas ICD is a place that acts as a self contained Customs Station as categorically spelt in Circular of CBEC dt.8.6.2009. Further the said circular clearly distinguishes ICD and CFS and makes it very obvious that CFS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... larations and assessment of Bill of Entry / Shipping Bill are performed in the Custom House / 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 Chennai port) (Refer Circular No. 18/2009-Cust., 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 Customs station with provision for filing and assessment of documents and ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authority or Statutory Body, the assessee is entitled to claim the benefit of sect/on 80IA(4)(i). The assessee had made an application for setting up of CFS at Ha/dia. 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 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 Haldia. The contents of the letter are reproduced herein below: No. 16/6/2003-In fra-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.AL Logistics Pvt. Ltd., Chennai. Subject: Setting up of an CFS at Haldia. Sir, I am directed to refer to your application dated 8.2.2003 on the above subject and to say that the Government has approved your p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ating export cargo etc. vide Public Notice dt. 10-11-2013. The Public Notices were issued by the office of the Commissioner of Customs (Port) Kolkatta. 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 dearly 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 co-ordinate bench of the Tribunal in the case of United Liner Agencies of India (Private) Ltd., Vs. Joint CIT (OSD) in ITA No5.273 275/Mum/2013 (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 801A(4)(i) and is eligible to claim deduction under the said se ..... 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 deduct/on 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. 801A(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 in/and 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. 801A(4) required to be upheld. The issue has also been clarified by the Government vide CBEC Circular No. 18/2009 dated 8/6/2009. 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 (in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he material available on record and gone through orders of the authorities below. 14. The only issue involved in this appeal is whether assessee engaged in the business of operation of CFS is eligible for claiming deduction u/sec. 80IA (4) or not. According to the Assessing Officer, 17 ITA No.149/VIZ/2019 (M/s. Gateway East India Pvt. Ltd.) the assessee is not within the premises of the port and therefore not eligible for deduction u/sec. 80IA (4) of the Act. The Assessing Officer has discussed in his order in detail at page Nos. 5 to 7 and held that the description of the activity of the assessee and the definition of ICD and CFS under the 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) of the Act. On appeal, ld. CIT(A) by following the decision of the coordinate bench of the tribunal in assessee‟s own case for the A.Y. 2013-14 and also the judgment of the Hon'ble Bombay High Court in the case of CIT Vs. Continental Warehousing Corporation [(374 ITR 645) (Bom. HC)] as also the judgment of the Hon'ble Madras High Court in the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 whereas ICD is a place that acts as a self contained Customs Station as categorically spelt in Circular of CBEC dt. 08.06.2009. Further the said circular clearly distinguishes ICD and CFS and makes it very obvious that C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... est, 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- 62009]. 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 Customs station with provision for filing and assessment of do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the aforesaid letter that the assessee was allowed to carry on the services of CFS. The assessee on 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 OUO1l-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 ent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rgo. The activity of the assessee was carried out mainly on its inland container deports, Central freight stations see had a total of 45 inland container depots. It claimed special deduction under 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. 13. The issue has also been clarified by the Government vide CBEC circular no. 18/2009 dated 08/06/2009. Respectfully followin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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