TMI Blog2018 (1) TMI 1614X X X X Extracts X X X X X X X X Extracts X X X X ..... f development of infrastructure facilities. However, after examining the above stated facts we find that the assessee has taken a land on lease for setting up the infrastructure facilities at KP and has incurred the cost for its development. Therefore, we hold that the assessee has set up the CFS facility and operating the same and accordingly eligible for claiming the deduction u/s. 80IA of the Act. In the light of above reasoning, we hold that the order of the Ld. CIT(A) is correct - Decided against revenue. Disallowance of deduction under 80lA for CFS (JJP) Kolkata (infrastructural facility) - AO has denied the deduction on the ground that assessee is not engaged in business of infrastructure facilities - HELD THAT:- ssessee is engaged in CFS which is an infrastructure facilities as envisaged u/s 80IA of the Act. The deduction was denied by the AO on the ground that assessee is not engaged in the business of development of infrastructure facilities. However, after examining the above stated facts we find that the assessee has taken a land on lease for setting up the infrastructure facilities at KP and has incurred the cost for its development. Therefore, we hold that the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1-2018 - Shri N.V. Vasudevan, JM And Dr. A.L.Saini, AM Appellant by: Md. Usman, CIT(DR) Respondent by: Shri D. S. Damle, FCA ORDER Dr. Arjun Lal Saini, AM: The captioned three appeals filed by the Revenue, pertaining to Assessment Years 2009-10, 2011-12 2012-13, are directed against the orderspassed by the ld. Commissioner of Income Tax (Appeals), which in turn arise out of assessment orders passed by the Assessing Officerunder section 143(3)/263 of the Income Tax Act, 1961 (hereinafter referred to as the Act ). 2. Since, these three appeals relate to the same assessee, different assessment years, identical issues are involved, therefore, these have been clubbed and heard together and a consolidated order is being passed for the sake of convenience and brevity. 3. First we take Revenue s appeal in ITA No.1633/Kol/2016, A.Y. 2009-10. At the outset, itself the ld. Counsel for the Assessee pointed out that in this case the ld. Commissioner of Income Tax, had exercised the jurisdiction u/s 263 of the Income Tax Act, 1961 and directed the Assessing Officer to pass Denovo assessment order. Later, the assessee filed an appeal before the Hon`ble ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Para 11 at Page12 13 of the order. 4. Disallowance of Leaserent amortization Ground No. 5 Ground No. 4 This issue is covered in ITA No. 1873/Kol/2014 for AY 2010-11 and finding are given in Para 16 at Page18 of the order. 5. Disallowance under section 14A read with 8D of the Rules Ground Nos. 6 and 7 Ground No.3 This issue is covered in ITA No. 1873/Kol/2014 for AY 2010-11, and finding are given in Para 20 at Page26 of the order. 6. Ground Nos.1 2 raised by the Revenue in A.Y 2011-12 in ITA No.1634/Kol/2016 wherein the issues involved is regarding disallowance of deduction under 80-lC for Ferro unit, since the assessee failed to make any substantial expansion. This issue is squarely covered by assessee`s own case in ITA No. 1873/Kol/2014, for AY 2010-11, and finding are given in Para 6 of this order which read as follows: 6.We have heard the rival contentions of both the parties and perused the material available on record. At the outset, we find that the instant case has already been deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ismissed. Respectfully following the same, we find no reason to interfere with the finding arrived by the Ld. CIT(A). Under the circumstances, this ground of Revenue s appeal is dismissed. 6.1 As the issue is squarely covered in favour of the assessee by the decision of the coordinate bench, in assessee`s own case and there is no change in facts and law and the Revenue is unable to produce any material to controvert the aforesaid findings and the ld CIT(A) has allowed the appeal of the assessee by following the decision of Tribunal in assessee`s own case for A.Y. 2010-11, we find no reason to interfere in the said order of the ld CIT(A) and the same is hereby upheld. Therefore, these grounds Nos.1 2 of appeal of Revenue are dismissed. 7. Ground Nos.3 4 in ITA No.1634/Kol/2016 for AY 2011-12 and Ground No.1 in ITA No.1635/Kol/2016 for AY 2012-13 raised by the revenue is regarding disallowance of deduction under 80-lA for CFS (Sonai) Kolkata,( an infrastructural facility). This issue is covered in assessee`s own case, in ITA No. 1873/Kol/2014, for A.Y. 2010-11, and findings are given in Para 11 at Page12 13 of the order, which read as under: 11.We have heard the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CFS at KP. v) The CBDT has clarified in its Circular No. 10/2005 issued on 16.12.2005 by stating that the port for the purpose of Section 80IA of the Act would include structures used for the purpose of loading unloading if the Port Authority issues certificate in this regard. On perusal of the above stated facts, we find that there remains no ambiguity with regard to the fact that assessee is engaged in CFS which is an infrastructure facilities as envisaged u/s 80IA of the Act. The deduction was denied by the AO on the ground that assessee is not engaged in the business of development of infrastructure facilities. However, after examining the above stated facts we find that the assessee has taken a land on lease for setting up the infrastructure facilities at KP and has incurred the cost for its development. Therefore, we hold that the assessee has set up the CFS facility and operating the same and accordingly eligible for claiming the deduction u/s. 80IA of the Act. In the light of above reasoning, we hold that the order of the Ld. CIT(A) is correct and in accordance with law and no interference is called for. We uphold the same. This ground of Revenue s appeal is dismis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... td. is a CFS operator-confirmation With reference to your letter dated 22.1.2013, this is to confirm as follows:- Kolkata Prot Trust has given on lease land measuring 22096 sq. mtrs. At B and c Block, Sonai for setting up and operating Container Freight Station (CFS) that came into operation on 24th November, 2008 and that the said CFS is an extended part of port and provide infrastructural support to decongest the port by carrying out activities relating to handling of containers which otherwise would have been carried out by the port. Yours faithfully, Sd/- (A.K.Mukhopadhyaya) Secretary (I/C) iii) The name of assessee for setting up of CFS was duly approved by the Letter of Intent dated 08.09.2008 issued by the Ministry of Commerce Industries. iv) The name of the assessee is reflecting in the Notification issued by the Commissioner of Custom in the Public Notice No.59/2008 dated 05.11.2008 wherein it was notified that the assessee is custodian for operating the CFS at KP. v) The CBDT has clarified in its Circular No. 10/2005 issued on 16.12.2005 by stating that the port for the purpose of Section 80IA of the Act would include structures used for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng to the year under consideration. Undisputedly the proportionate deduction was claimed by assessee u/s 37(1) of the Act after the commencement of its business. 16.1 Indeed, case law relied on by Ld DR as discussed above is against the assessee wherein it has been held by the Hon'ble Madras High Court in the case of Enterprising Enterprise (supra) and aforesaid judgment was delivered by the Hon'ble Madras High Court vide order dated 01-04-2004 which was subsequently affirmed by Hon'ble Supreme Court vide order dated 04.12.2006. However, subsequent to the aforesaid judgment, we find that the CBDT has issued a Circular 9/2014 dated 23.04.2014 wherein the impugned expenditure was allowed over the lease period after the commencement of business and relevant extract of the Circular is reproduced below:- 2. In such projects, the developer (hereinafter referred to as assessee ), in terms of concessionaire agreement with Government or its agencies is required to construct, develop and maintain the infrastructural facility of roads/highways which, inter-alia, includes laying of roads, bridges, highways, approach roads, culverts, public amenities etc. at its own cost and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rojects brings to it an enduring benefit in the form of right to collect the toll during the period of the agreement. Hon ble Supreme Court in the case of Madras Industrial Investment Corporation Ltd. vs. CIT in 225 ITR 802 , 2002-TIOL-290-SC-IT-LB allowed spreading over of liability over a number of years on the ground that there was continuing benefit to the company over a period. Therefore, analogously, expenditure incurred on an infrastructure project for development of roads/highways under BOT agreement may be treated as having been made/incurred for the purposes of business or profession of the assessee and same may be allowed to be spread during the tenure of concessionaire agreement. 5. In view of above, Central Board of Direct Taxes, in exercise of the powers conferred under section 119 of the Act hereby clarifies that the cost of construction on development of infrastructure facility of roads/highways under BOT projects may be amortized and claimed as allowable business expenditure under the Act. 6. The amortization allowable may be computed at the rate which ensures that the whole of the cost incurred in creation of infrastructural facility of road/highway is amort ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the order, which read as under: 20.Ld. DR before us submitted that it is the duty of the assessee to demonstrate that none of the borrowed fund has been used for the purpose of making the impugned investment and the assessee failed to discharge the onus lied on it. Therefore, AO had to make the disallowance as per the Rule 8D of the Rule. Ld. DR in this connection relied on the judgment of Hon'ble jurisdictional High Court in the case of Dhanuka and Sons reported in 339 ITR 319. Ld. DR vehemently relied on the order of AO and he requested the Bench to confirm the same. On the other hand, Ld. AR before us submitted that AO in the assessment year 2009-10 has admitted the fact that no borrowed fund has been utilized for the purpose of making the impugned investment. Ld. AR in support of assessee s claim has relied on the assessment order for AY 2009-10 in the assessee s own case which is placed on pages 139 to 142 of the paper book. Thus, in the year under consideration there is no question of alleging that borrowed fund has been utilized in the investment without bringing any iota of evidence by the AO. He further submitted that there was sufficient fund available with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntions of both the parties and perused the material available on record. In the instant issue, AO has made the disallowance as per Rule 8D of the Rule on the ground that the assessee has earned dividend income which is exempted from tax though the assessee has made a disallowance of ₹1.60 lakh and furnished the manner of working out the disallowance which is placed on pages 134 to 137 of the paper book. However, we find that the explanation submitted by the assessee while framing the assessment proceedings was rejected by AO without adducing any reason thereon. Therefore, it can be concluded that no defect of whatsoever was pointed out by the AO at the time of assessment proceedings. Rather the AO had resorted to the provision of Rule 8D of the Rule for the purpose of disallowance. However, the provision of law requires the AO before resorting to the disallowance has to record the satisfaction after referring the books of account of the assessee. But in the instant case, the AO has failed to do so. Therefore, we hold that the AO has passed his order against the provision of law. In holding so, we draw support from judgment of Hon'ble Delhi High Court dt. 25.2.2015 reporte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the AO in assessee s own case in the immediate preceding AY 2009-10 has given the finding that no borrowed fund has been invested by the assessee in the impugned investment. The relevant extract of the assessment order for AY 2009-10 is reproduced below:- The assessee also filed details of source of fund for investment in subsidiaries and it was noticed that investment in subsidiaries is from assessee s own capital/fund and not from borrowed fund attracting interest incident. On examination of consolidated accounts it was noticed that the subsidiaries were operating business of manufacturing cement, plywood and generation of power. All subsidiaries has their full fledged management team and company was incurring no administrative expenses on running of these subsidiaries and only Board Room control exist over such subsidiaries . We also find that all the investments were made by the assessee in the subsidiary and group companies with the purpose of having the control over those companies. Thus, the dividend income was incidental to the assessee. In rejoinder Ld. DR has not brought anything on record to the argument advanced by Ld. AR. In this connection, we find that Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X
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