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2019 (9) TMI 497

..... ity' as defined u/s.80IA(4) includes' a port, airport, inland water way, inland port or navigational channel in the sea' but does not include Container Freight Station(CFS)? - HELD THAT:- CIT(A) by following the decision of the coordinate bench of the tribunal in assessee‟s own case for the A.Y. 2013-14 [2018 (1) TMI 2 - ITAT VISAKHAPATNAM] and also case of CIT Vs. Continental Warehousing Corporation [2015 (5) TMI 656 - BOMBAY HIGH COURT] as also the judgment of A.L. Logistics Pvt. Ltd. [2015 (1) TMI 401 - MADRAS HIGH COURT] correctly directed the Assessing Officer to allow deduction u/sec. 80IA (4) to the assessee. Before us, assessee has relied on the judgment of the Hon'ble Supreme Court in the case of Container Corporation of India [2018 (5) TMI 359 - SUPREME COURT] wherein inland container depots are inland ports subject to provisions 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 - 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. .....

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..... sessee was processed u/sec. 143(1) of the Income Tax Act, 1961 (hereinafter referred to as 'Act'). Subsequently, the case was selected for scrutiny and after following due procedure, assessment was completed u/sec. 143(3) of the Act, dated 05/12/2016. The Assessing Officer has asked the assessee as to how assessee is eligible for deduction u/sec. 80IA(4) of the Act. The assessee has submitted a detailed submission which was reproduced by the Assessing Officer in his order at para Nos. 4 to 7. 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 .....

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..... and has preferred an appeal before the Hon'ble High Court, Mumbai. The assessee has also relied on another recent decision of the ITAT, Visakhapatnam Bench in assessee‟s own case in ITA No.15/VIZ/2015, dated 29/04/2015 for the A.Y. 2011-12 in which the Hon'ble Tribunal has allowed the assessee‟s appeal regarding deduction u/sec. 80IA(4) of the Act. However, even on this issue, the Revenue has preferred appeal before the Hon'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, .....

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..... ons under the Sales Tax Acts, Central Excise Act and the provisions of other statutes for the contention that 'article' includes goods and goods could be an/mate objects and, viewed in this fight, the hatching of eggs would come within the meaning of the word roduce' which is of wider import than the word 'manufacture'. No doubt, several Sales Tax Acts have included an/mate 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) 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 .....

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..... elevant portion of the order of the Tribunal is extracted is under:- In Circular No. 18/2009 dated 8/6/2009 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: 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 .....

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..... declarations 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 examination of goods. A customs clea .....

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..... ation 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 proposal for setting up of an Container Freight Station at Ha/dia for handling import and export cargo. The approval is subject to the following terms and conditions:- a) The Letter o .....

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..... ow 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 section. The impugned order is set aside. The appeal of the assessee is allowed." Respectfully following the Coordinate Bench order, we hold that the contention of the AO that there is no agreement and hence the assessee is not eligible for exemption is not the correct position of law. The Hon'ble Delhi High Court in the case of Container Corporation Ltd. (supra) held as follows: The term "infrastructure f .....

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..... ed 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 (infrastructure facility), Container Freight Station is part of inland port and, therefore, is an infrastructure facility, as defined in Explanation to section 80-IA(4)(i) of the Act, assessee is eligible for deduction. In the case of Continental Warehousing Corporation (Nhava Sheva) Ltd. (supra), the Hon'ble Bombay High Court has held that profits and gains from infrastructure undertakings (infrastructure facility), set up within precincts of port, then, having considered its proximity to seaport .....

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..... 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 case of CIT Vs. A.L. Logistics Pvt. Ltd. [(374 ITR 609) (Madras - HC) directed the Assessing Officer to allow deduction u/sec. 80IA (4) to the assessee. Before us, ld.counsel for the assessee has relied on the judgment of the Hon'ble Supreme Court in the case of Container Corporation of India (supra) wherein inland container depots are inland ports subject to provisions of section 80IA and deduction can be claimed for income earned out of these depots. The coordinate bench of the tribunal in assessee‟s own case in ITA No. 342/VIZ/2017, dated 11/10/2017 by following the decision of the ITAT, Visakhapatnam Bench in assessee‟s own ca .....

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..... 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 CFS is nothing but a warehouse. (c) Distinction between ICD & CFS: "Inland Container Depot is a place that acts as a "self contained customs station" like a port or air cargo unit where - Filling of customs manifests, Bills of entry, 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, transhipment, 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 .....

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..... urisdiction 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 examination of goods. A Customs clearance facility could be established as a CFS at a port city for examination of imported/export goods, since the CFS would fall under the jurisdiction of Commissioner of Customs, having jurisdiction over the Customs port with which the CFS would be attached. Further, in a port city such as Chennai or Mumbai, it may be possible to develop an ICD within the territorial jurisdiction of the concerned Customs Commissionerate in addition to existing CFSs. Such an ICD should be capable of providing fullfledged 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 pro .....

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..... s 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 proposal for setting up of an Container Freight Station at Haldia for Handling import and export cargo. The approval is subject 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 compl .....

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..... ctfully following the Coordinate Bench order, we hold that the contention of 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 80IA(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 dededuction 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 .....

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..... 4)(i) of the Act, assessee is eligible for deduction. In the case of Continental Warehousing Corporation (Nhava Sheva) Ltd. (supra), the Hon'ble Bombay High Court has held that profits and gains from infrastructure undertakings (infrastructure facility), set up within precincts of port, then, having considered its proximity to sea-port and its activities, it can be safely concluded that deduction admissible under sub-section (4) of section 80-IA can be claimed by both ICDs and CFSs. 10. Keeping in view of the facts and circumstances of the case and by following the decision in assessee‟s own case for the Assessment Year 2011-12 in ITA No. 15/Vizag/2015, by order dated 29/04/2015 and also the decisions of Hon'ble Bombay High Court in the case of Continental Warehousing Corporation (Nhava Sheva) Ltd. (supra) and the Hon'ble Madras High Court in the case of A.L. Logistics (P) Ltd. (supra), the appeal filed by the Revenue is dismissed. 9. Keeping in view of the facts and circumstances of the case and by following the decision in assessee‟s own case for the Assessment Year 2011-12 in ITA No. 15/Vizag/2015, by order dated 29/04/2015 and also by following the decis .....

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