2015 (11) TMI 1760 - AT - Income Tax

Deduction claimed u/s 80IB(11A) denied - assessee has not fulfilled the conditions as prescribed in the Act - assessee s claim that hiring Riksha will suffice the conditions of integrated business of transportation with handling and storage - Held that - Deduction u/s 80IB(11A) is available to undertakings who are deriving profit from the integrated business of handling, storage and transportation of foodgrains. Thus, the facilities of transportation, handling and transportation must exist as an integrated business and the undertaking must derive profit from such business. Transportation by hiring lorry or thela will not generate profit. The benefit must be from integrated business including transportation. The assessee s claim that hiring Riksha will suffice the conditions of integrated business of transportation with handling and storage shall not be sufficient. Rather it will go against the very spirit of the Act. This deduction is available only on the profit derived from the integrated business of handling, storage and transportation of foodgrains. No merit in the pleading of the assessee and sustain the orders of the authorities below. - Decided against assessee. Depreciation on the building and warehouse - assessee did not claim depreciation on the building - Held that - The assessee claims that the audited balance sheet of the assessee shows the addition of warehousing building to its assets at ₹ 1,78,62,323/- and also shows rental income from FCI and Cargil India Private Limited and the tax has been deducted from the rent, therefore, in our view, the assessee is entitled to depreciation on warehousing - Appeal of the assessee stands partly allowed.

Summary

Issues:
1. Disallowance of deduction claimed under section 80IB(11A) of the Income Tax Act, 1961.
2. Disallowance of depreciation on the building and warehouse.

Analysis:
1. The first issue pertains to the disallowance of the deduction claimed under section 80IB(11A) of the Income Tax Act, 1961. The assessee, engaged in warehousing business, claimed the deduction but was denied by the Assessing Officer and confirmed by the CIT(A). The main contention was the failure to fulfill the conditions prescribed in the Act related to transportation facilities. The assessee argued that the provision aimed at enhancing food security and storage facilities, with transportation being a part of the integrated business. However, the tribunal held that the deduction is only available to undertakings deriving profit from an integrated business of handling, storage, and transportation of foodgrains. The mere hiring of transportation facilities does not suffice, and the profit must be from an integrated business. Therefore, the claim was dismissed, upholding the decisions of the lower authorities.

2. The second issue concerns the disallowance of depreciation on the building and warehouse. The assessee had not initially claimed depreciation on the building, but later requested it during assessment. The Assessing Officer questioned the existence of the business during the relevant period, leading to disallowance upheld by the CIT(A). The assessee argued that the audited balance sheet evidenced the addition of the warehousing building to assets and rental income from clients, justifying the claim for depreciation. The tribunal, after considering the submissions, ruled in favor of the assessee, stating that the evidence presented supported the entitlement to depreciation on the warehousing building. As a result, the appeal was partly allowed, directing the allowance of depreciation on the building and warehouse.

In conclusion, the tribunal's judgment addressed the issues of deduction under section 80IB(11A) and depreciation on the building and warehouse, providing a detailed analysis of the legal provisions and factual circumstances to arrive at a reasoned decision in each matter.