2017 (4) TMI 667 - HC - Income Tax

Disallowance of deduction u/s 80IA(4) - income derived from the industrial undertaking of Container Freight Stand at JNPT - Held that - Issue is squarely covered against the revenue in light of the decision of the Delhi High Court in the case of Container Corporation of India Limited Vs. Assistant Commissioner of Income-tax 2012 (5) TMI 260 - DELHI HIGH COURT as well as the decision of the Bombay High Court in the case of Commissioner of Income-tax II, Thane Vs. Continental Warehousing Corporation Nhava Sheva Limited (2015 (5) TMI 656 - BOMBAY HIGH COURT). In the aforesaid two decisions, Delhi High Court as well as Bombay High Court, after considering CBDT Circular No.10 of 2005 dated 16/12/2005 have specifically observed and held that looking to the facilities provided by Container Freight Stand, the Container Freight Stand is an Inland Port as it carries out functions of warehousing, customs clearance and transport of goods from its location to sea-port and vice versa by rail or by trucks in containers. Under the circumstances, the learned tribunal has rightly deleted the disallowance of deduction claimed by the assessee under Section 80IA(4) of the Act. At this stage, it is required to be noted that with respect to the earlier orders the assessee has been granted the deduction under Section 80IA(4) of the Act pursuant to the order passed by the learned tribunal and the same has attained finality.

Summary

Issues:
1. Disallowance of deduction claimed under Section 80IA(4) by the assessee.

Analysis:
The case involved the disallowance of a deduction claimed by the assessee under Section 80IA(4) of the Income Tax Act, 1996 for the Assessment Year 2011-12. The assessee had set up a Container Freight Station at Nava Sheva Port in Navi Mumbai and claimed a deduction of &8377; 51,98,73,810 under Section 80IA(4). The Assessing Officer disallowed this claim, stating that the facility did not qualify for the deduction under Section 80IA(4) as it was not a specified infrastructure facility. The Assessing Officer considered the Certificate issued by JNPT, which stated that the Container Freight Stand was an extended activity of the port and not situated on port land. The CIT(A) allowed the appeal by the assessee, and the tribunal confirmed this decision, leading to the revenue filing a Tax Appeal questioning the deduction claimed under Section 80IA(4).

The main issue before the court was whether the assessee was entitled to the deduction under Section 80IA(4) for the income derived from the industrial undertaking of the Container Freight Station at JNPT. The court considered the conditions of Section 80IA(4) vis-a-vis Circular No.10 of 2005 and the Certificate issued by JNPT. The court noted that the Delhi High Court and Bombay High Court had previously held in similar cases that Container Freight Stations qualified as Inland Ports, providing facilities for warehousing, customs clearance, and transport of goods to and from sea-ports.

The court found that the tribunal had rightly deleted the disallowance of the deduction claimed by the assessee under Section 80IA(4) based on precedents and the facilities provided by the Container Freight Station. The court also noted that previous orders had granted the deduction to the assessee, which had attained finality. Consequently, the court held that no substantial question of law arose in the present Tax Appeal and dismissed the appeal, affirming the tribunal's decision to allow the deduction claimed under Section 80IA(4).