TMI Blog2023 (5) TMI 111X X X X Extracts X X X X X X X X Extracts X X X X ..... view was taken in the case of DCIT vs. Belair Logistics [ 2015 (5) TMI 387 - ITAT HYDERABAD] wherein the assessee had entered in an agreement with Kakinada Seaport Ltd. ie the same company with whom assessee had an agreement and the deduction claimed under section 80IA(4) was allowed on the basis of port certificate issued to it. Assessee had obtained the permission from Custom Authorities for construction and operation of Mechanised Coal Handling System for which the Commissioner of Central Excise, Customs and Service Tax, Visakhapatnam - II Commissionerate, Visakhapatnam has accorded the permission vide letter dated 01.02.2013. The said permission is deemed to be an approval granted by the competent authority of the Central Government. Documents placed on record, position of law and CBDT circulars, submissions made by both the parties and judicial precedents, as discussed above, we are of considered view to allow the claim of deduction made by the assessee under section 80IA(4) of the Act. Accordingly, ground nos. 01 to 09 taken by the assessee in this respect are allowed. - I.T.A. No. 2324/Kol/2019 AND I.T.A. No. 175/Kol/2021 - - - Dated:- 25-4-2023 - Shri Rajpal Yad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der section 80IA (4)(i), Kakinada Sea Port Limited should be considered to be a statutory authority as it is performing statutory functions on behalf of the Government of Andhra Pradesh, and as such, an agreement entered into by the Appellant with KSPL should be treated as sufficient compliance of the conditions of Section 80IA (4). 6. Without prejudice to the above, on the facts and circumstances of the case and in law, the Ld. DRP erred in affirming the action of the Ld. Assessing Officer in denying the claim of deduction in terms of the first proviso to section 80IA(4)(i) by observing that the conditions specified therein were not fulfilled. 7. That on the facts and circumstances of the case and in law, the Ld. DRP erred in affirming the action of Ld. AO in denying the benefit u/s 80- IA(4) of the Act, without appreciating the fact that the Appellant had duly produced a Port Certificate granted by the Concerned Port Authority that the infrastructural facility is a part of the port within the meaning of Section 80- IA(4) of the Act read with Circular No. 10/2005, and as such, is eligible for deduction. 8. Without prejudice to the above, that on the facts and circum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h government, thereby satisfying the condition prescribed in clause(b) of Section 80IA(4)(i). 4. That on the facts and circumstances of the case and in law, the Ld. DRP erred in affirming the action of Ld. AO in denying the benefit u/s 80- IA(4) of the Act without appreciating the fact that the appellant's case is squarely covered by the order of the Hon'ble Hyderabad Tribunal in the case of DCIT vs. Belair Logistics [2015 (5) TMI 387-ITAT Hyderabad]. 5. Without prejudice to the above, for the purposes of deduction under section 80IA(4)(i), Kakinada Sea Port Limited should be considered to be a statutory authority as it is performing statutory functions on behalf of the Government of Andhra Pradesh, and as such, an agreement entered into by the Appellant with KSPL should be treated as sufficient compliance of the conditions of Section 80IA(4). 6. Without prejudice to the above, on the facts and circumstances of the case and in law, the Ld. DRP erred in affirming the action of the Ld. AO in denying the claim of deduction in terms of the first proviso to section 80IA(4)(i) by observing that the conditions specified therein were not fulfilled. 7. That on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erred in making reference to TPO by invoking condition (b) of para 3.3 of Circular 3/2016 without considering the fact that the DRP is not appellate authority and thus condition is not satisfied for making reference to TPO. Hence, the reference to TPO is bad in law and consequently, the entire consequential transfer pricing and assessment proceeding is bad-in-law, time-barred and liable to be quashed. 14. Your appellant craves leave to add to, amend or alter or delete any of the above grounds of appeal. 3. In the two appeals, there are common grounds of appeal relating to disallowance of deduction claimed u/s 80IA(4) of the Act. For both the Assessment Years, grounds in this respect are from Ground Nos. 1 to 9. For disposing off these appeals, we will take the facts on the basis of Assessment Year 2015-16 and the findings will apply mutatis mutandis for the appeal for Assessment Year 2016-17. All other grounds for both the Assessment Years, are not pressed by assessee for which relevant documents is placed on record. Accordingly, Ground No. 10 for Assessment Year 2015-16 and Ground Nos. 10 to 13 for Assessment Year 2016-17, are dismissed as not pressed. 4. In respect o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion u/s 80IA(4) of the Act for AY 2015-16 and AY 2016-17. 5.5. In accordance with clause 9 of the Concession Agreement between GOAP and KSPL, the coal terminal will be taken over by GOAP at the expiry of concession period. KSPL has issued letter in this regard dated 02.02.2021 which has been signed by the assessee as well. 5.6. However, ld. AO and ld. DRP has disallowed the claim under section 80IA(4) on the ground that the conditions prescribed under sub-clause (b) of section 80IA(4)(i) of the Act is not fulfilled because there is no direct agreement between the assessee and the Central Government or a State Government or a local authority or any other statutory body. Hence, these appeals before the Tribunal. 6. Before adverting on the core issue, let us first apprise ourselves of the relevant provisions of the Act contained in Section 80IA(4), which is reproduced as under:- [Deductions in respect of profits and gains from industrial undertakings or enterprises engaged in infrastructure development, etc. 80-IA. (1) ******************** (2) **************************** (2A) ************************** (3) *************************** (4) This s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly project, water treatment system, irrigation project, sanitation and sewerage system or solid waste management system; (d) a port, airport, inland waterway, inland port or navigational channel in the sea; [emphasis supplied by us by bold for the provisions relevant to the present case] 7. From perusal of the above provision, it is noted that there are three substantive conditions required to be fulfilled in order to avail the benefit of deduction u/s 80IA(4) of the Act. The first one under sub-clause (a) being the undertaking should be owned by a registered Indian company or a consortium of Indian companies or any corporation or body corporate formed under any Indian statute. Meaning thereby any foreign entities or bodies corporate are not eligible to avail the benefit of this profit-linked deduction. In the facts of the present case, it is undisputed that assessee company is a registered Indian company who has developed the facility and is therefore fulfilling the first condition prescribed in Section 80IA(4) of the Act. Also, the third condition under sub-clause (c) which stipulates the date for commencement of the infrastructure facility is complied with. Assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of promoting a Special Project Company (hereinafter called the SPC) which will be a body corporate to be incorporated under the Companies Act, 1956. The prior approval of GOAP will be taken on the share holding pattern of the promoters in the SPC, GOAP will communicate its approval within 3 (three) weeks of receipt of application by Government. The parties agree hereto that the CONCESSIONAIRE shall be entitled to subrogate all its rights and obligations under this agreement in the form of an instrument in favour of the said body corporate which the GOAP consents. Before granting the subrogation the CONCESSIONAIRE shall inform the GOAP in respect thereof and all necessary steps shall be carried out by the parties to give effect to the said subrogation within 30 days from the date of such information. After the subrogation, the new body corporate (SPC) shall be recognized by the GOAP for all legal and operational purposes, it is further agreed that the ISPL shall cause to provide suitable required letter from the new body corporate (SPC) consenting to the above arrangement and for smooth implementation and the SPC shall be successor to the rights, duties and obligation un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt case and as noted above leaves little doubt in our minds that KSPL is a nodal agency constituted for the purpose of executing the rights, duties and obligations under the said agreement. This agreement vide clause 2.9 provides for subrogation of rights and obligations to a body corporate with the consent of GoAP and also with its prior approval, on the shareholding pattern. Pursuant to such a provision in the agreement, a Special Project Company (SPC) in the form of KSPL was set up. This SPC i.e KSPL is recognized by the GoAP for all legal and operational purposes and shall be a successor to ISPL for the rights, duties and obligations under the agreement. 11.1. In view of the above factual matrix, the assessee (BSSPL) and KSPL entered into an agreement dated 19/04/2012 for the establishment of '8 MMTPA Mechanised Coal Handling System for Unloading and Rail Despatch in Kakinada Deep Water Port at Berth No. 5 and its backup area . KSPL is acting as a nodal agency under the primary agreement between GoAP and ISPL. In this respect, the argument canvassed by the Revenue that the agreement is between assessee and KSPL does not satisfy the condition prescribed in sub-clause ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T Circular No. 10/2005 dt. 16/12/2005, whereby it had relaxed the second condition prescribed u/s 80IA(4) and, therefore, the only requirement which remained was to obtain the certificate from concerned Authority that the infrastructural facility forms part of the Port. 12.1. In this respect, CBDT had issued a Circular earlier on 23/06/2000, which had specified two conditions for the purpose of claiming deduction u/s 80IA(4) of the Act. In this circular, the second condition was that the infrastructural facility structure should have been completed under BOT or BOLT schemes or there is an agreement that the same would be transferred to the State Authority within the time period stipulated in the agreement. This second condition was relaxed by the later Circular dt. 16/12/2005 referred above. Para 3 of circular dated 16/12/2005 provides that from AY 2002-03 onwards, 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 structures form part of the port. 12.3. In compliance to the aforesaid CBDT circular, assessee placed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deduction under the section 80IA(4) of the Act in absence of the agreement entered into by it with the designated authority. 12.6. Similar view was taken by the Coordinate bench of ITAT Hyderabad in the case of DCIT vs. Belair Logistics in ITA No. 1377 others/Hyd/2014 dated 24/04/2015 wherein the assessee had entered in an agreement with Kakinada Seaport Ltd. ie the same company with whom assessee had an agreement and the deduction claimed under section 80IA(4) was allowed on the basis of port certificate issued to it. 13. We also take note of the fact that assessee had obtained the permission from Custom Authorities for construction and operation of Mechanised Coal Handling System for which the Commissioner of Central Excise, Customs and Service Tax, Visakhapatnam - II Commissionerate, Visakhapatnam has accorded the permission vide letter dated 01.02.2013. The said permission is deemed to be an approval granted by the competent authority of the Central Government. This aspect has been dealt by the Hon ble High Court of Madras allowing the claim of deduction to the assessee in the case of CIT vs. A.L. Logistics Pvt. Ltd. [2015] 374 ITR 609 (Mad.), which has held as under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we are of the considered view that the assessee has complied with all the provisions of section 80IA(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. 13. In paragraph 7 of the order of the Tribunal, the letter issued by the Government of India, Ministry of Commerce, which has been extracted as such, clearly state that with reference to the letter dated 8.2.2003, the Government has approved the proposal for setting up of a Container Freight Station at Haldia for handling import and export cargo. Therefore, there cannot be any doubt in the light of the approval given by the Government. The reason of the Tribunal is unimpeachable. 14. Considering the factual matrix, documents placed on record, position of law and CBDT circulars, submissions made by both the parties and judicial precedents, as discussed above, we are of considered view to allow the claim of deduction made by the assessee under section 80IA(4) of the Act. Accordingly, ground nos. 01 to 09 taken by the assessee in this respect are allowed. 15. Issue involved in appeal for AY 2016-17 is identical to what we have adjudicat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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