2013 (2) TMI 622 - HC - Income Tax

Deduction u/s 80-IB(11) - cold chain facility - AO denied the benefit by stating that merely providing refrigerated storage facilities for potatoes cannot be regarded as an undertaking having cold chain facilities within the meaning of Section 80-IB of the Act - held that - Bare perusal of the aforesaid definition it is clear that cold chain facility means a chain of facilities for storage of agricultural produce under scientifically controlled conditions including refrigeration and other facilities necessary for the preservation of such produce. The words storage and transportation have been separated by using word or as such both the facilities of storage and transportation at the same time was not necessary for falling within the definition of cold chain facility Business of the assessee is covered within the definition of cold chain facility under Section 80-IB (14) (aa) of the Act and the assessee was entitled for exemption under Section 80-IB of the Act.

Summary

Issues:
1. Interpretation of the term 'cold chain facility' under Section 80-IB (14) (aa) of the Income Tax Act, 1961.
2. Justification of allowing deduction under Section 80-IB of the Act.
3. Reliance on earlier tribunal orders and their acceptance by the department.

Analysis:
1. The primary issue in this case revolves around the interpretation of the term 'cold chain facility' as defined under Section 80-IB (14) (aa) of the Income Tax Act, 1961. The appellant contended that providing refrigerated storage facilities alone does not qualify as a 'cold chain facility' under the Act, thus challenging the deduction claimed by the assessee. However, the court analyzed the definition of 'cold chain facility' which includes storage or transportation of agricultural produce under controlled conditions. The court emphasized that both storage and transportation facilities were not required simultaneously for falling within this definition. Referring to a previous judgment, the court concluded that the business activities of the assessee fell within the definition of 'cold chain facility,' thereby entitling them to the exemption under Section 80-IB of the Act.

2. The second issue pertains to the justification of allowing the deduction under Section 80-IB of the Act. The Assessing Officer initially disallowed the deduction, stating that the business activities did not meet the criteria for a 'cold chain facility.' However, the Commissioner Income-tax (Appeal) reversed this decision and directed the Assessing Officer to provide the benefits of Section 80-IB to the assessee. The court upheld this decision, emphasizing that the business activities of the assessee qualified for the deduction under the Act, as per the definition of 'cold chain facility.'

3. Lastly, the issue of reliance on earlier tribunal orders and their acceptance by the department was raised. The appellant argued against the Tribunal's reliance on previous orders related to the assessee's case for different assessment years, which were under appeal. The appellant contended that these orders were not accepted by the department and were sub-judice. However, the court did not find merit in this argument and focused on the current appeal's specific circumstances and the applicability of the law to the present case. Consequently, the appeal was dismissed, affirming the entitlement of the assessee to the deduction under Section 80-IB of the Act.