2013 (2) TMI 623 - HC - Income Tax

Deduction u/s 80-IB(11) - cold chain facilities - Integrated business of cold storage and cold transportation - held that - it is not necessary that there should be facility of transportation along with the facility of cold storage to constitute a cold chain facility. The business of cold storage alone without any transportation facility with refrigeration back to back upto consumption and linking farmer and market also qualifies for deduction in terms of provisions of Section 80-1B (11) of the Act. The word or in the context here means and should be interpreted as disjunctive particle. The statute should be read in its ordinary natural and grammatical sense. - Decided in favor of assessee.

Summary

Issues:
Interpretation of provisions of Section 80IB (11) of the Income Tax Act, 1961 regarding eligibility for deduction in the business of cold storage under the definition of "cold chain facility."

Analysis:
The High Court heard an Income Tax Appeal arising from the order of the Income Tax Appellate Tribunal related to Assessment Year 2001-02. The main issue was whether the income derived from running a stand-alone cold storage plant is eligible for deduction under Section 80IB (11) of the Act. The Tribunal confirmed the order of the CIT (A) allowing the appeal and setting aside the A.O.'s disallowance of deduction to the assessee in the business of cold storage.

The dispute centered around the interpretation of the term "cold chain facility" as defined under Section 80IB (14) (aa) of the Act. The A.O. contended that the business of running a cold storage alone is not entitled to deduction under Section 80IB (11) unless transportation facilities were also provided by the assessee. However, the Tribunal, supported by case law and legislative intent, concluded that the cold chain facility may not necessarily include transportation.

The Tribunal analyzed the definition of "cold chain facility" and emphasized that the words "storage" and "transportation" in the provision are disjunctive, indicating that both facilities may be offered separately or together within the chain of facilities. The Tribunal also considered the legislative intent behind promoting the preservation of agricultural produce through integrated cold storage and transportation facilities.

In its detailed reasoning, the Tribunal rejected the Revenue's interpretation that transportation facilities must be integral to cold storage for claiming the deduction under Section 80IB (11). It highlighted that the statute should be interpreted in favor of the assessee when two possible interpretations exist, citing relevant case law.

Ultimately, the High Court upheld the Tribunal's decision, ruling in favor of the assessee and against the Revenue. It concluded that the business of cold storage alone qualifies for deduction under Section 80IB (11) without the mandatory requirement of transportation facilities, as the term "cold chain facility" should be interpreted disjunctively.

In summary, the judgment clarified the eligibility criteria for deduction under Section 80IB (11) in the context of the business of cold storage, emphasizing the importance of interpreting statutory provisions in line with legislative intent and established legal principles.