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TMI Blog2018 (1) TMI 1614X X X X Extracts X X X X X X X X Extracts X X X X ..... ised 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 ITAT challenging the validity of the order passed by the CIT under section 263 of the I.T. Act. The revision order dated 28.03.2014 passed under section 263 by the CIT had been cancelled and quashed by the Hon'ble Income Tax Appellate Tribunal, Kolkata in ITA No.643/Kol/2014 dated 20.01.2016, and therefore, the impugned order in appeal is no longer valid and has become infructuous. We have heard both the parties on this preliminary issue. We note that order passed by the ld CIT under section 263 of the Act, dated 28.03.2014 has been quashed by the coordinate Bench of ITAT Kolkata, vide ITA No.643/Kol/2014, dated 20.01.2016,therefore, the said appeal filed by the Revenue, in ITA No.1633/Kol/2016, does not have any leg to stand, and hence, the appeal filed by the Revenue becomes infructuous in the eyes of law. 3.1 In the result, appeal filed by the Revenue ( in ITA No.1633/Kol/2016), is dismissed. 4. Now, we shall take appeals filed by the Revenue in ITA No.1634/Kol/2016 for A.Y. 2011-12 and Appeal No.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the state of Meghalaya in AY 2002-03 for manufacturing of ferro alloys. In respect of profits derived from the said undertaking that the assessee was entitled to claim deduction u/s.80IB(4) of the Act. The deduction u/s. 80IB of the Act was available for a period of ten years. M/s Shyam Century Ferreous Ltd established a new undertaking in AY 2002-03 and was entitled to claim deduction for a period of 10 years. For AY 200304 the said assessee claimed deduction and was allowed deduction u/s 80IB of the Act. In AY 2004-05 there was a change in the Act whereby deduction u/s. 80IC of the Act was available for an undertaking situated in the North Eastern states. Since the undertaking of M/s Shyam Century Ferreous Ltd was in Meghalaya, the undertaking can claim deduction u//s 80IC of the Act which was hitherto claimed by the said assessee u/s. 80IB(4) of the Act. The only requirement for claiming deduction u/s 80IC of the Act was that the total period of deduction including the period of deduction u/s. 80IB of the Act should not exceed 10 years. This condition was admittedly satisfied in the case of M/s Shyam Century Ferreous Ltd. M/s Shyam Century Ferreous Ltd amalgamated with the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elief to assessee by observing that assessee is engaged in CFS activity which is infrastructure facility and therefore eligible for deduction u/s 80IA of the Act. 11.1 Now the issue before us arises whether assessee is eligible for deduction u/s. 80IA of the Act in respect of CFS in the given facts and circumstances. There are certain undisputed facts which are enumerated below :- i) The assessee has acquired land on lease form KPT and also paid lease premium to KPT which is reflecting in the financial statement of assessee. ii) The assessee is approved CFS as evident from the letter written by KPT which reads as under:- Kolkata Port Trust 15, Strand Road Kolkata-700001 Fax No.033-2230-4901/ 2213-7367 Telephone No.2230-2045 (direct) 2230-3451 Extn.371 E.mail:[email protected] [email protected] Webside: ww.kolkataporttrust.gov.in Administration Department No.Admn/140/E January, 31, 2013 M/s Century Plyboards(I)Ltd., 4, Fairlie Place, HMP House, 2nd Floor, Kolkata-700001. Sir, Sub: M/s Century Plyboards (I) Ltd. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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.3 & 4 for A.Y.2011-12 and ground No.1 for A.Y.2012-13 of appeals of Revenue are dismissed. 8.Ground No.2 in ITA No.1635/Kol/2016, for A.Y. 2012-13 raised by the revenue is regarding disallowance of deduction under 80lA for CFS (JJP) Kolkata (infrastructural facility). This issue is covered in assessee`s own case in ITA No.1873/Kol/2014 for A.Y. 2010-11,andfinding are given in Para 11 at Page12&13 of the order, which read as under: "11.We have heard the rival contentions of both the parties and perused the material available on record. From the foregoing discussion, we find that AO has denied the deduction claimed by the assessee u/s 80IA of the Act on the ground that assessee is not engaged in business of infrastructure facilities. However, Ld. CIT(A) granted the relief to assessee by observing that assessee is engaged in CFS activity which is infrastructure facility and therefore eligible for deduction u/s 80IA of the Act. 11.1 Now the issue before us arises whether assessee is eligible for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd 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 dismissed." 8.1 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, this ground No.2, for A.Y.2012-13 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... struction of such infrastructural facility are capitalized in the accounts. It is seen that in returns-of- income, assessees are generally claiming depreciation on such capitalized expenditure treating it as an 'intangible asset' in terms of section 32(1)(ii) of the Act while in assessments, such claims are being disallowed by the Assessing Officer on the grounds that such infrastructural facility is not owned, wholly or partly, by the taxpayer which is an essential condition for claiming depreciation and further right to collect toll does not fall in any of the categories of 'intangible assets' specified in sub-clause(ii) of subsection (1) of section 32 of the Act. 3. In BOT arrangements for development of roads/highways, as a matter of general practice, possession of land is handed over to the assessee by the Government/notified authority for the purposes of Construction of the project without any actual transfer of ownership and such assessee has only a right to develop and maintain such asset. It also enjoys the benefits arising from use of asset through collection of Toll for a specified period without having actual ownership over such asset. Therefore, the rights in the lan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Assessment Year under consideration maybe deducted from the initial cost of infrastructure facility of roads /highways and the cost 'so reduced' shall be amortized equally over the remaining period of toll concessionaire agreement. 8. It is hereby clarified that this Circular is applicable only to those infrastructure projects for development of road/highways on BOT basis where ownership is not vested with the assessee under the concessionaire agreement. 9. This may be brought to the notice of all concerned The aforesaid Circular was issued on 23.04.2014 and subsequent to the judgment of Hon'ble Madras High Court as well as Hon'ble Supreme Court. The Circular being beneficial to the assessee is binding on the lower authorities. In our considered view, the AO before making any disallowance should have referred to the aforesaid Circular. In the background of the above discussion and precedent of the cases we do not find any infirmity in the order of Ld. CIT(A) and accordingly we uphold the same. This ground of Revenue is dismissed." 9.1 As the issue is squarely covered in favour of the assessee by the decision of the coordinate bench, in assessee`s own case and ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ars for both the assessment years the Appellate Authority held that there was no finding of direct nexus between the borrowed fund and investment in shares. The assessee's own funds were far in excess of the average total investments. There could not be any presumption of utilization of borrowed funds. Hence disallowance under section 14A read with Rule 8D(2)(ii) was deleted while disallowance of indirect expenses of Rs. 1,82,346/- by application of Rule 8D(2)(iii) upheld with the direction to allow relief of the sum already disallowed by the appellant itself. On appeal preferred by the Revenue the Tribunal held as follows:- 'we have heard rival submissions and gone through facts and circumstances of the case. We find that now the revenue could not establish that the investments made in shares giving exempted income is out of borrowed funds on which interest is paid by assessee. There is no nexus whatsoever. On specific query Ld. Sr. DR could not controvert that the assessee has made in investment in shares giving exempt income out of own funds which is at about 2429 lacs and investment is at Rs. 365 lacs only. Once this fact has not been denied and CIT(A) has categorically observe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of Pr. CIT vs. Rasoi Ltd.(supra) The relevant extract reads as under:- "It appears for both the assessment years the Appellate Authority held that there was no finding of direct nexus between the borrowed fund and investment in shares. The assessee's own funds were far in excess of the average total investments. There could not be any presumption of utilization of borrowed funds. Hence disallowance under section 14A read with Rule 8D(2)(ii) was deleted while disallowance of indirect expenses of Rs. 1,82,346/- by application of Rule 8D(2)(iii) upheld with the direction to allow relief of the sum already disallowed by the appellant itself. On appeal preferred by the Revenue the Tribunal held as follows:- 'we have heard rival submissions and gone through facts and circumstances of the case. We find that now the revenue could not establish that the investments made in shares giving exempted income is out of borrowed funds on which interest is paid by assessee. There is no nexus whatsoever. On specific query Ld. Sr. DR could not controvert that the assessee has made in investment in shares giving exempt income out of own funds which is at about 2429 lacs and investment is at Rs. 36 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the expenses which have been claimed by the assessee were not towards the exempted income. The disallowance, therefore was rightly limited to a sum of Rs. 40,556/-. The question of interpreting Rule 8D is not in dispute only the only dispute is with regard to facts which have been settled by the Tribunal." 20.1 Now coming to the disallowance made by the AO under rule 8D(2)(iii) of the Rules, we find that Ld. CIT(A) has given direction to AO to consider only those investments which have yielded the dividend income during the year after having reliance in the order of Co-ordinate Bench of this Tribunal in the case of REI Agro Ltd. (supra) in ITA No.1331/Kol/2011 which was subsequently affirmed by the Hon'ble jurisdictional High Court. 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. Accordingly, we uphold the same. This ground of Revenue's appeal is dismissed." 10.1 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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