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TMI Blog2019 (9) TMI 497X X X X Extracts X X X X X X X X Extracts X X X X ..... to have considered that even as per the letter issued by the. Vishakhapatnam Port Trust, the structure (CFS) does not form part of the Port. 5. The Ld.CIT(A) ought to have seen that the Board, vide Circular dated 06-01-2011, clarified that an LCD or a CFS is usually not located at the Port and therefore, is not a part of the 'Port' for the purpose of computation of deduction u/s. 801A(4)(i) of the Act. 6. The Ld.CIT(A) ought to have appreciated that the assessing officer had categorically pointed out that the CFS is located far away from the Port premises, and therefore, does not form part of Port as contemplated u/s. 801A(4)(i) of the Act. 7. The Ld.CIT(A) erred in allowing the assessee's appeal solely relying on a Circular issued by Central Board of Excise & Customs issued under the provisions of Central Excise & Customs Act, which has no relevance to the provisions of the Income-tax Act, 1961, or the reliefs sought by the assessee under the provisions of the Income-tax Act. 8. The appellant craves leave to add or amend or alter or delete any ground at the time of hearing of the appeal. For these and other grounds that may be urged at the time of hearing, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ucture does not form part of the port inasmuch as it is not located in the port. There is no ambiguity in Circular No.10/2005 wherein it is clarified that the structure must be a part of the port. The literal meaning of part of the port is that it is within the precincts or premises of the port. This aspect will be clarified under subsequent paragraphs after taking into consideration a clarification issued by the Board on definition of inland ports for CFS and ICD‟s. At this juncture, it is important to take a look at the certificate issued by the Visakhapatnam Port Trust stating that the structure is an "extended arm of the port". This definition clearly reveals the fact that the infrastructure facility of the assessee is not located in the port but an extended arm of the port i.e. in the premises away from the port. Since it is an extended arm which means away from the port it is clear that it is not a part of the port as enjoined in the circular. 6. The Assessing Officer further observed that during the course of assessment proceedings, the ld.AR relied on the decision of the Hon'ble ITAT Special Bench, Mumbai and the said case law has been carefully perused. The dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sent assessee, the fact is that the CFS is located away from the port premises and therefore as per the clarification issued by the Board, it does not form part of the 'Port' or 'Inland Port' as contemplated in sec. 80IA(4). In the authorities referred by the ITAT while granting relief to the assessee, the clarification issued by the CBDT was not considered in proper perspective and the decision was rendered by the Hon'ble ITAT by simply relying on the definition of ICD and CFS explained in circulars issued under other enactments. The decision of the Hon'ble ITAT cannot be accepted when the Board has clarified the matter in no uncertain terms as to the meaning of 'port' and inland port for the purpose of deduction u/s 80IA(4)(i). While allowing the claim of the assessee for deduction u/s 801A(4), the ITAT has relied on Circular No. 18/2009, dated 08.06.2009 issued by Central Board of Excise and Customs wherein the distinction between Inland Container Depots (ICDs) and Container Freight Stations (CFS) was stated to have been spelt out. However, it is to be mentioned that the description of activity of the assessee under Central Excise Act or Sales Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allow the deduction claimed by the assessee u/sec. 80IA(4). For the sake of convenience, the relevant portion of the order of the ld.CIT(A) is extracted as under:- "I have carefully considered the above submissions. I have also perused the order of the Hon'ble Tribunal, Visakhapatnam Bench in assessee's own case for the Asst. Yr. 2013-14 in ITA No.342/VIZ/2017, dated 11-10-2017. The relevant portion of the decision of the Hon'ble Tribunal is extracted below: The issue involved in this appeal 'whether the assessee is eligible for deduction under sect/on 80IA (4) or not', has already been considered by the coordinate bench of the tribunal for the Assessment Year 2011-12 in ITA No. 15/VIZ/2015, by order dated 29/04/2015 and also for the Assessment Year 2012-13 in ITA No. 178/VIZ/2016 by order dated 19/04/2017, wherein the Tribunal held that the assessee 15 eligible for claim under sect/on 801A(4) and upheld the order passed by the ld. CIT(A). For the sake of convenience, the order passed by the Tribunal in ITA No. 178/VIZ/2016 is extracted as under:- "8. The only issue for consideration before us is whether the assessee is eligible for deduction under sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 Entries, Shipping Bills and other declarations, assessment and all the activities related to clearance of goods 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 section 8 wherein imported goods or export goods are ordinarily kept before clearance by the customs. A CFS is only a Customs area located in the jurisdiction of a Commissioner of Customs exercising control over a specified Customs port, airport, LCS/ICD. A CFS is only a Customs area located in the jurisdiction of a Commissioner of Customs exercising control over a specified Customs port, airport, LCS/ICD. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. Imported (Condition of Transshipment) Regulations, 1995. On the other hand, movement of goods from a port I 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 follow the prescribed procedure. As rightly contended by the learned AR of the appellant, the above circular answers in a very clear and categorical manner the objections raised by the assessing officer. As far as the contention that there is no agreement with any Government or statutory authority, we find that the assessee has placed on record letter of intent. In fact the Ministry of Commerce and Industry, vide letter dated 10/2/2005, written to the Managing Director of the assessee company regarding setting u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cquisition/possession of the land shall be completed within 60 days and intimated to the M/o 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 a minimum complement of equiment and accessories as necessary shall be made available at the facility. The indicative list of equipment/ accessories considered necessary is annexed. The status regarding confirmation of the installation/availability of the items shall be furnished to the appropriate authorities to facilitate issue of requisite notification. Please acknowledge receipt of this letter. Yours faithfully, sd/- (N.G. Biswas) DIRECTOR A perusal of clause 'b' of the above letter shows that the assessee was required to execute necessary bond and guarantees with the concerned Commissioner of Customs and Central Excise. It was only on the compliance of all the terms and conditions mentioned in 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uced 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, 1983. Simultaneously, clause (aa) was inserted in sec. 7(1) of the Act under which the CCHI issue notification appointing the places which alone shall be considered as in/and container depots for the unloading of imported goods and loading of exported goods. The Central Board of Excise and Customs issued a clarification that inland container depots were in/and ports. The power to notify infrastructure facilities for the purpose of the section was taken away from the Central Board of Direct Taxes w. e. f April 1, 2002. However, there was no provision made in the Act saying that notifications issued earlier would cease to have from April 1, 2002. The assessee, a public sector undertaking, was engaged in the business of handling and transportation of containerized cargo. 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s dismissed. Respectfully following the above order of the Hon'ble Tribunal, the Assessing Officer is directed to allow deduct/on claimed by the assessee u/s. 80IA of the I.T.Act." 10. On being aggrieved, Revenue carried the matter in appeal before this Tribunal. 11. Ld.DR strongly relied on the grounds of appeal and supported the order of the Assessing Officer. 12. Per contra, ld. counsel for the assessee has submitted that the issue involved in this appeal is squarely covered by the decision of the ITAT, Visakhapatnam Bench in assessee‟s own case in ITA No. 342/VIZ/2017, dated 11/10/2017. The ld. CIT(A) by following the same, directed the Assessing Officer to allow the deduction u/sec. 80IA to the assessee and requested the Bench to follow the same. He further relied on the decision of the Hon'ble Supreme Court in the case of CIT Vs. Container Corporation of India Ltd. [(2018) 404 ITR 397]. 13. We have heard both the parties, perused the 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/se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITA No. 178/VIZ/2016 is extracted as under:- "8. The only issue for consideration before us is whether the assessee is eligible for deduction under section 80-IA(4) of the Act or not? Under the similar set of facts for the earlier assessment year i.e. Assessment Year 2011-12, the coordinate bench of the Tribunal in ITA No. 15/Vizag/2015, by order dated 29/04/2015 has considered the facts and other relevant material, passed a detailed order by holding that the assessee is eligible for deduction under section 80-IA(4) of the Act. For the sake of convenience, the relevant portion of the order 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... risdiction of a Commissioner of Customs exercising control over a specified Customs port, airport, LCS/lCD. A CFS cannot have an independent existence and has to be linked to a Customs station within the jurisdiction of the Commissioner of Customs. It is an extension of a Customs station set up with the main objective of decongesting the ports. In a CFS only a part of the Customs processes mainly the examination of goods is normally carried out by Customs besides stuffing/destuffing of containers and aggregation/segregation 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing officer. 9. As far as the contention that there is no agreement with any Government or statutory authority, we find that the assessee has placed on record letter of intent. In fact the Ministry of Commerce and Industry, vide letter dated 10/02/2005, written to the Managing Director of the assessee company regarding setting up of a CFS at Visakhapatnam apropos the assessee‟s case. 10. 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 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 re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es with the concerned Commissioner of customs an -Central Excise. It was only on the compliance of all the terms and conditions mentioned in 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 int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 12 transportation of containerised cargo. 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 fol ..... 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