2016 (10) TMI 1367 - AT - Income Tax

Deduction u/s.80IA - operating of Container Freight Station (CFS) - scope of term infrastructure facilities - HELD THAT - As decided in own case 2012 (5) TMI 260 - DELHI HIGH COURT held that an ICD is not a port but It Is an inland port. The case of CFS is similarly situated In the sense that both carry out similar functions. i.e.. warehousing customs clearance and transport of goods from. Its location to the seaports and vice versa by railway or by trucks in containers. Thus the issue is no longer res integra. Respectfully following this decision it Is held that a CFS is an Inland port whose Income is entitled to deduction u/s 80-IA(4). Since the Ld.CIT(A) while deciding the issue in favour of the assessee has followed the decision of the Tribunal in assessee s own case as well as various other decisions therefore in absence of any contrary material brought to our notice against the decision of the Tribunal in assessee s own case we do not find any infirmity in the order of the CIT(A) allowing the claim of deduction u/s.80IA(4). Merely because the Revenue has filed an appeal before the Hon ble High Court the same in our opinion cannot be a ground to take a contrary view than the view taken by the Tribunal especially in absence of any order reversing the decision of the Tribunal. Accordingly we uphold the order of the CIT(A) and the grounds raised by the Revenue are dismissed.

Summary

Issues Involved:
1. Eligibility of the assessee for deduction under section 80IA(4) of the Income Tax Act, 1961.
2. Interpretation of the term "infrastructure facility" under section 80IA(4).
3. Applicability of CBDT Circulars and Instructions regarding the definition of "port" and "inland port."

Issue-wise Detailed Analysis:

1. Eligibility of the Assessee for Deduction under Section 80IA(4):
The primary issue was whether the assessee, operating a Container Freight Station (CFS), was entitled to a deduction under section 80IA(4) of the Income Tax Act, 1961. The Assessing Officer (AO) disallowed the deduction claim of Rs. 34,27,47,435/- on the grounds that the assessee did not meet the conditions specified under section 80IA(4). The AO argued that the assessee was not a "port" or "inland port" as per the explanation to section 80IA(4) and relevant CBDT Circulars. Additionally, the AO noted that the assessee had not entered into an agreement with the Central or State Government or any statutory body for developing, operating, and maintaining a new infrastructure facility.

2. Interpretation of the Term "Infrastructure Facility":
The AO's interpretation was based on the provisions of section 80IA(4) and CBDT Circular No.10/2005, which clarified that for claiming the deduction, the enterprise must develop, operate, and maintain an infrastructure facility such as a port, airport, or inland waterway. The AO also referred to CBDT Instruction F.No.178/42/2010/ITA-1, which stated that CFSs and Inland Container Depots (ICDs) are not considered as "ports" or "inland ports" for the purpose of section 80IA(4). The AO concluded that since the assessee's CFS was not located at a port and did not fall within the definition of "inland port," it was not eligible for the deduction.

3. Applicability of CBDT Circulars and Instructions:
The CIT(A) allowed the assessee's claim for deduction under section 80IA(4), relying on the decisions of the Hon'ble Delhi High Court in the case of Continental Warehousing of India Vs. ACIT and the Special Bench of the Tribunal in the case of M/s. All Cargo Global Logistics Ltd. Vs. DCIT. These decisions held that CFSs could be considered as "inland ports" and thus eligible for the deduction. The CIT(A) also referred to the Mumbai Bench of the Tribunal's decision in the assessee's own case for A.Y. 2008-09, which supported the deduction claim.

Tribunal's Decision:
The Tribunal upheld the CIT(A)'s order, noting that the issue had already been decided in favor of the assessee in its own case for A.Y. 2008-09 and 2009-10. The Tribunal observed that the Revenue's appeal to the High Court did not constitute a valid ground to reverse the Tribunal's earlier decision. The Tribunal emphasized that in the absence of any contrary material or order reversing the Tribunal's decision, the CIT(A)'s order allowing the deduction under section 80IA(4) was correct. Consequently, the Tribunal dismissed the Revenue's appeal.

Conclusion:
The Tribunal concluded that the assessee's CFS qualifies as an "inland port" under section 80IA(4) and is thus entitled to the deduction. The appeal filed by the Revenue was dismissed, and the CIT(A)'s order was upheld. The Tribunal's decision was pronounced in the open court on 05-10-2016.