2016 (1) TMI 40 - AT - Income Tax

Deduction under Section 80-IA - Held that - In view of the mandatory requirement under Section 80-IA(4)(i)(b) of the Act, the assessee has to necessarily enter into an agreement either with Central Government or State Government or with local authority or any other statutory body for developing Container Freight Station. As found by the Tribunal in the case of A.L. Logistics Pvt. Ltd. (2015 (1) TMI 401 - MADRAS HIGH COURT) even though no specific agreement was required, approval from Government or Government agency is required for claiming deduction under Section 80-IA of the Act. Since these aspects were not examined by the CIT(Appeals), even though a specific issue was raised by the Assessing Officer, this Tribunal is of the considered opinion that the matter needs to be re-examined by the Assessing Officer in the light of the judgment of Madras High Court in A.L. Logistics Pvt. Ltd. (supra). Accordingly, the orders of the lower authorities are set aside and issue of deduction under Section 80-IA of the Act is remitted back to the file of the Assessing Officer. The Assessing Officer shall re-examine the issue and find out whether the assessee has obtained any approval or entered into any agreement with Government or Government agency, as in the case of A.L. Logistics Pvt. Ltd. (supra) and thereafter decide the same in accordance with law, after giving reasonable opportunity to the assessee. - Decided in favour of revenue for statistical purposes.

Summary

Issues:
Interpretation of Section 80-IA of the Income-tax Act, 1961 regarding deduction eligibility for Container Freight Station. Requirement of agreement between the assessee and Government/local authority for establishing infrastructure facility.

Interpretation of Section 80-IA Eligibility - Container Freight Station:
The case involved appeals by the Revenue against orders of the Commissioner of Income Tax for multiple assessment years. The main issue was whether a Container Freight Station qualifies for deduction under Section 80-IA of the Income-tax Act. The Departmental Representative argued that the Station did not meet the criteria as an infrastructure facility under Section 80-IA. However, the CIT(Appeals) found in favor of the assessee, considering the Station as eligible based on previous tribunal decisions and a High Court judgment. The Tribunal analyzed the provisions of Section 80-IA, emphasizing the definition of infrastructure facility and the eligibility criteria. It noted that the Madras High Court had previously ruled that Container Freight Stations are part of inland ports, qualifying as infrastructure facilities under Section 80-IA.

Requirement of Agreement for Infrastructure Facility:
Another contention raised was the necessity of an agreement between the assessee and the Government or local authority for developing the infrastructure facility, as per Section 80-IA(4)(i)(b) of the Act. The Tribunal highlighted the mandatory requirement of such an agreement for claiming deduction under Section 80-IA. It referenced a case where the High Court found the assessee eligible for deduction based on approval from the Department of Commerce for setting up the Station. The Tribunal observed that the CIT(Appeals) did not adequately address the absence of an agreement in the present case. It emphasized the need for approval from the Government or its agencies, as highlighted in the Madras High Court judgment. Consequently, the Tribunal set aside the lower authorities' orders and remitted the issue of deduction eligibility back to the Assessing Officer for re-examination in light of the legal requirements.

In conclusion, the Tribunal allowed the Revenue's appeals for statistical purposes, emphasizing the importance of compliance with the legal provisions and agreements for claiming deductions under Section 80-IA of the Income-tax Act.