TMI Blog2018 (3) TMI 1834X X X X Extracts X X X X X X X X Extracts X X X X ..... the view that the profit derived by the assessee-company from its stand alone warehouses was entitled for deduction under section 80IA and the ld. CIT(Appeals) was fully justified in directing the Assessing Officer to allow the claim of the assessee for the said deduction. We, therefore, uphold the impugned order of the ld. CIT(Appeals) on this issue and dismiss Ground No. 1 of the Revenue s appeal. Deduction u/s 80IB in respect of profit derived from the business of handling, storage and transportation of foodgrains - HELD THAT:- As rightly contended by the ld. Counsel for the assessee, this issue is squarely covered in favour of the assessee by the decision of the Hon ble Calcutta High Court in the case of ITC Limited [ 2015 (7) TMI 450 - CALCUTTA HIGH COURT] , wherein it was held that the claim made by the assessee for deduction under section 80IA in respect of profit derived from the business of generation of power could not be denied merely because power generated by the assessee was in its entirety consumed by other business of the assessee and was not sold to outsiders. Respectfully following the said decision of the Hon ble jurisdictional High Court, we uphold the imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... : Shri Art i Debnath, FCA For the Respondent : Shri S. Dasgupta, Addl . CIT, D.R. ORDER Per Shri P.M. Jagtap, A.M. :- These two appeals, one filed by the assessee being ITA No. 230/KOL/2013 and the other filed by the Revenue being ITA No. 340/KOL/2013 are cross appeals, which are directed against the order of ld. Commissioner of Income Tax (Appeals)-VIII, Kolkata dated 08.11.2012. 2. In the Revenue s appeal, the issues relating to deletion by the ld. CIT(Appeals) of the disallowances made by the Assessing Officer on account of assessee s claim for deduction under sections 80IA and 80IB of the Income Tax Act, 1961 are raised in Grounds No. 1 2, which read as under:- (1) That on the facts and in circumstances of the case and in law, the CIT(A) erred in allowing deduction in respect of profits derived from stand alone warehouse as eligible deduction u/s 80IA of the Income Tax Act, 1961, whereas the definition of infrastructural facilities provided in Explanation to Section 80IA of the Income Tax Act, 1961 does not include maintenance of stand alone warehouses. (2) That on the facts and in circumstances of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also found that in both these Divisions, the assessee had used its own warehouses for storage of its own foodgrains and there were no such services provided by the assessee to any third party or outside party. He also found that similar was the case in respect of handling and transportation services rendered by the assessee-company. According to him, the assessee-company thus had computed only the notional profit in respect of these two Divisions for the purpose of claiming deduction under section 80IB(11A), which was not correct. In this regard, he rejected the contention raised on behalf of the assessee by relying on sub-section (8) of section 80IA by observing that the assessee could not produce any supporting evidence to prove that it was engaged in an integrated business as contemplated in section 80IB(11A). He also observed that sub-section (8) of section 80IA envisaged transfer of goods or services from an eligible business to any other business carried on by the assessee. He held that the assessee could not prove any such transfer and, therefore, the provision of section 80IA(8) could not be pressed into service in the assessee s case. He accordingly disallowed the claim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dgements of the cases of Tamilnadu Petroproducts Ltd. v ACIT 238 CTR 454 and West Coast Paper Mills Ltd. v ACIT 105 TTJ 344 support this view of mine. (iv) In addition to my above finding, the submission made by the ld AR that the appellant company was allowed deduction under these sections in the assessment year 2006-07 hence, in view of Hon'ble Gujrat High Court's decision in the case of Saurashtra Cement and Chemical Industries Ltd. v CIT 11 CTR 139 and Hon'ble Supreme Court's decision in the case of Radha Saomi Satsang v CIT 193 IR 321, deduction under these sections has to be allowed to the appellant in the assessment year 2009-10 also. (v) Having regard to the totality of facts and circumstances of the case, and the legal position, I am of the considered view that the appellant is entitled for the continued claim of deduction under section 80-IA of the Act for the year under consideration as well. (vi) Considered the facts of the case, the material placed on record and the arguments as well as submissions put forth on behalf of the appellant. From the facts stated, it is clear that the appellant is an industrial undertaking, other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, referred to the grounds raised by the Revenue on the issues of deductions under sections 80IA and 80IB to point out that the relief given by the ld. CIT(Appeals) on these issues is challenged by the Revenue on specific points and the ld. D.R. cannot raise any new issue, which is not raised by the revenue in its grounds. In support of the ld. CIT(Appeals) s decision to treat its stand alone godown as port infrastructure for the purpose of allowing deduction under section 80IA, he relied on the CBDT Circular No. 10 of 2005 issued on 16.12.2005 (copy at page no. 8 of the paper book), wherein it was clarified that structures at the Ports for storage, loading and unloading, etc. will be included in the definition of Port for the purpose of section 80IA, if the concerned Port Authority has issued a certificate that the said structure formed part of the Port. He submitted that such certificate has been issued by the Visakhapatnam Port Trust on 09.12.2011 certifying that the storage sheds constructed by the assessee on the lease land are part and parcel of the Port infrastructure facility at Visakhapatnam. He contended that there was no adverse comments offered by the Assessing Office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sakhapatnam Port Trust on 09.12.2011 certifying that this storage sheds constructed by the assesseecompany on the lease land were part and parcel of the Port for the infrastructure facility at Visakhapatnam. Keeping in view the said certificate as well as the Circular No. 10 of 2005 issued by the CBDT, we are of the view that the profit derived by the assesseecompany from its stand alone warehouses was entitled for deduction under section 80IA and the ld. CIT(Appeals) was fully justified in directing the Assessing Officer to allow the claim of the assessee for the said deduction. We, therefore, uphold the impugned order of the ld. CIT(Appeals) on this issue and dismiss Ground No. 1 of the Revenue s appeal. 10. As regards the relief allowed by the ld. CIT(Appeals) by directing the Assessing Officer to allow the claim of the assessee for deduction under section 80IB in respect of profit derived from the business of handling, storage and transportation of foodgrains, it is observed that the same is challenged by the Revenue on the ground that such business was not carried on by the assessee-company with any outside or third party and it was, therefore, not eligible for deduc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before the ld. CIT(Appeals). During the course of appellate proceedings before the ld. CIT(Appeals), details and documents were filed by the assessee to support and substantiate its case that the amount of ocean freight was paid either to NRI shipping owners or their resident sub-agents. The said details and documents were forwarded by the ld. CIT(Appeals) to the Assessing Officer for verification. On verification, the Assessing Officer accepted the claim of the assessee to the extent of ₹ 28.24 crores and keeping in view the same, the ld. CIT(Appeals) deleted the disallowance made by the Assessing Officer under section 40(a)(ia) on account of ocean freight to the extent of ₹ 28.24 crores by relying on the CBDT Circular No. 723 dated 19.09.1995. As regards the balance disallowance of ₹ 1.40 crores paid to Indian beneficiaries, the ld. CIT(Appeals) found merit in the alternative contention raised on behalf of the assessee-company that the said amount having been paid during the year under consideration, no disallowance could be made under section 40(a)(ia) in view of the decision of Special Bench of ITAT in the case of Merlin Shipping Transporters. He accordingly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 29.06 crores on account of ocean freight by invoking the provisions of section 40(a)(ia), the claim of the assessee that ocean freight having paid to the NRI Ship owners or agents of the NRI Ship owners, there was no requirement of deduction of tax at source as per the CBDT Circular No. 723 dated 19.09.1995 was accepted by the Assessing Officer himself to the extent of ₹ 28.24 crores in the remand report submitted to the ld. CIT(Appeals) after verifying the relevant details and documents filed by the assessee. In view of the said remand report, the ld. CIT(Appeals) deleted the disallowance made by the Assessing Officer on this issue to the extent of ₹ 28.24 crores. As pointed out by the ld. Counsel for the assessee, the amount of ₹ 28.24 crores, however, was inclusive of an amount of ₹ 3.56 crores paid by the assessee on account of ocean freight to resident sub-agents of NRI ship owners and, therefore, the same is not covered by the CBDT Circular No. 723 dated 19.09.1995. The said amount still cannot be disallowed under section 40(a)(ia) in view of the decision of the Hon ble Delhi High Court in the case of Continental Carriers (Pvt.) Limited (supra) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... computing its book profit under section 115JB. 18. The disallowance made by the Assessing Officer on account of its claim for deduction for loan redemption reserve while computing the book profit under section 115JB was challenged by the assessee in the appeal filed before the ld. CIT(Appeals) and after considering the submission made by the assessee as well as the material available on record, the ld. CIT(Appeals) deleted the said disallowance for the following reasons given in his impugned order:- I have considered the facts. I have also gone through the submissions put forth on behalf of the appellant as also the ratio laid down in the reported cases relied upon by the appellant. The Assessing Officer while computing the income under section 115JB has only the power of examining whether the books of account are certified by the authorities under the Companies Act as having been properly maintained in accordance with the Companies Act. The Assessing Officer has the limited power of making increases and reductions (i) if profit and loss account is not prepared according to the Companies Act and (ii) if accounting policies, accounting standards or rates or met ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DCIT [45 SOT 399] as well as the decision of the Hyderabad Bench of this Tribunal in the case of Gulf Oil Corporation Limited vs.- ACIT [111 ITD 124]. He also contended that the nature of loan redemption reserve is similar to the debenture redemption reserve and the same, therefore, is allowable as deduction while computing book profit under section 115JB as per clause (b) of Explanation 1 to Section 115JB. In support of this contention, he relied on the decision dated 02.06.2017 of this Tribunal in the case of DCIT vs.- LMJ Logistics Limited in ITA No. 1800/Kol/2010. 21. We have considered the rival submissions on this issue and also perused the relevant material available on record. It is observed from the profit loss account of the assessee-company for the year under consideration placed at page no. 11 of the paper book that profit before tax and prior period items was shown at ₹ 1393.87 lakhs, while the amount of loan redemption reserve of ₹ 500 lakhs was shown in the appropriation account. While computing book profit under section 115JB, the profit of ₹ 1393.87 lakhs was taken by the assessee-company as the starting point and the same was reduce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Now we shall take up the appeal of the assessee being ITA No. 230/KOL/2013, in which the following grounds are raised:- (1) For that the ld. CIT(A) has erred in sustaining the disallowance of ₹ 2,53,227/- on account of freight payment to the supplier of the goods without appreciating the fact that it is reimbursement of freight cost and thus not subject to TDS. (2) For that the ld. CIT(A) has erred in asking the AO to allow the commission expenses of ₹ 37,39,560/- only if payments are made before the end of the 31.03.2009 completely ignoring the fact that it was paid to non-residents agents for services rendered outside India and thus not subject to TDS. (3) for that the ld. CIT(A) has erred in sustaining the addition on account of sale of DEPB licence amounting to ₹ 39,17,711/- without appreciating the fact that the said income on sale of DEPB licence was offered for taxation in the assessment year 2010-11 thereby amounting to double taxation. (4) For that the ld. CIT(A) has erred in not allowing reimbursement of freight charges amounting to ₹ 10,27,480/- as per ground 4(vi) . 23. At the time of hearing b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he ld. CIT(Appeals) on this issue and restore the matter to the file of the Assessing Officer for deciding the same afresh after giving the assessee proper and sufficient opportunity of being heard. Ground No. 2 of the assessee s appeal is thus treated as allowed for statistical purposes. 26. As regards the issue raised in Ground No. 4 of the assessee s appeal, the ld. Counsel for the assessee has submitted that the same has not been decided by the ld. CIT(Appeals) vide his impugned order inspite of fact that specific submission was made on behalf of the assessee-company before him in support of its case on this issue. He has contended that this issue may also be sent back to the Assessing Officer for deciding the same afresh after giving the assessee an opportunity of being heard. Since the ld. D.R. has not raised any objection in this regard, we restore this issue also to the file of the Assessing Officer for deciding the same afresh after giving the assessee an opportunity of being heard. Ground No. 4 of the assessee s appeal is accordingly treated as allowed for statistical purposes. 27. In the result, the appeal of the Revenue is dismissed, while the appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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