2022 (1) TMI 1053 - HC - Income Tax

Deduction u/s.80IA - whether Assessee operating a multipurpose berth and not developing and/or operating and maintaining a port as required under the act? - HELD THAT - What is important is the substance of the letter and the agreement and not the form. It may be true that the port has issued Circular No. 10 of 2005 stating that the concerned port authorities have to issue a certificate since the definition of port stood amended and it was made as an inclusive definition to mean structures at the port for storage, loading and unloading etc. If AO had applied his mind and read the letter and the agreement in conjunction he should have arrived at a conclusion that the right granted to the assessee was an exclusive right to maintain the facility and undoubtedly the facility is meant for storage, loading and unloading and would fall within the definition of port . CIT(A) for the earlier assessment year 2003-2004 which is the first year when deduction under Section 80-IA was claimed has done a thorough factual examination and granted relief to the assessee. Thus the order passed by the CIT(A) was challenged before the Tribunal and the Tribunal by order dated 30th October, 2007 dismissed the appeal of the revenue and the assessing officer has also given effect to the order and allowed deduction under Section 80-IA for which is the first year in the period of ten years. It goes without saying if the assessee has been granted the benefit for the first year the assessing officer should take a consistent stand in the subsequent years unless there are any other change in circumstances warranting a different decision. In the case on hand, there is nothing on record that there was any change in the situation. We are of the considered view that the letter and the agreement which were produced by the assessee is undoubtedly a certificate issued by the port authorities and would satisfy the requirement in Circular No. 10 of 2005. The Tribunal on its part also re-examined the factual position and noted the decision in assessee s own case for the assessment year 2003-2004 while grating relief to the assessee. From the above factual position it is evidently clear that the Tribunal rightly rejected the revenue s appeal and confirmed the order passed by the CIT(A) granting relief to the assessee. - Decided in favour of assessee.

Summary

Issues:
1. Whether the Income Tax Appellate Tribunal erred in allowing deduction u/s 80-IA for operating a multipurpose berth instead of a port?
2. Whether the Tribunal erred in accepting the deduction claim without separate accounts for different units under Section 80-IA?

Analysis:
1. Issue 1 - Deduction for Operating a Berth:
The appeals were filed by the revenue challenging the Tribunal's order allowing deduction under Section 80-IA for operating a multipurpose berth instead of developing and maintaining a port. The assessing officer rejected the claim, stating the assessee was not developing a port but only operating a berth. However, the CIT(A) accepted the deduction claim based on the Tribunal's previous order for the assessment year 2003-2004. The High Court noted that the assessing officer's findings were flawed as the documents provided clearly indicated the exclusive license granted to the assessee for operating, managing, and maintaining the berth. The Court emphasized that the assessing officer should have recognized the berth as part of the port, as evident from the documents. The Tribunal upheld the relief granted to the assessee, considering the factual position and the previous order for the first year of deduction claim.

2. Issue 2 - Lack of Separate Accounts:
The revenue contended that the assessee failed to maintain separate accounts for different units, which was necessary for claiming deduction under Section 80-IA. However, the Tribunal's examination of the assessing officer's findings revealed that separate profit & loss accounts were prepared for the relevant unit, satisfying the requirements. The Tribunal also noted that under Circular No. 10/2005, the business activity related to the berth fell within the definition of "port." The High Court agreed with the Tribunal's decision, stating that there was no justification to deviate from the previous orders granting relief to the assessee. The Court dismissed the revenue's appeals and answered the substantial questions of law against the revenue, affirming the deduction under Section 80-IA for the assessee.

In conclusion, the High Court upheld the Tribunal's decision, emphasizing the importance of factual examination and consistency in granting deductions under Section 80-IA. The Court found no grounds to overturn the relief granted to the assessee and dismissed the revenue's appeals accordingly.