2023 (8) TMI 504 - AT - Income Tax

Disallowance of port charges claimed as deduction u/s. 80IA - assessee had claimed 100% deduction u/s. 80IA as being profit derived from port related business out of which the impugned amount was towards port rental charges collected by the assessee which according to the A.O. was for providing parking and other ancillary support services which does not directly relate to the business activity of the assessee - HELD THA - There is no iota of doubt that the assessee is carrying on the business of developing or operating and maintaining of infrastructure facility for the purpose of storage, loading and unloading etc. It is also pertinent to note that the CBDT Circular No. 10/2005 dated 16.2.2005 has defined Port as infrastructural facility for the purpose of section 10(23G) and 80IA of the Act which includes structure at the ports for storage, loading and unloading, etc. subject to fulfillment of certain conditions which were duly complied with by the assessee. The port rental charges nevertheless pertain to the storage, loading and unloading activities which comes under the preview of the eligibility to claim deduction u/s. 80IA. We would also like to place our reliance on the decision of M/s. ABG Heavy Industries Ltd 2010 (2) TMI 108 - BOMBAY HIGH COURT wherein it was held that in case of deduction claimed u/s. 80IA, the intention of the legislature was to promote growth and development of infrastructure which has to be construed liberally. In the present case in hand, the assessee itself has developed port at Alibaug and was directly engaged in the business of infrastructure development. We find no justification in denying the claim of the assessee and, hence, we find no reason to deviate from the finding of the ld. CIT(A). Decided against revenue.

Summary

Issues involved:
The appeal challenges the deletion of the addition made on account of disallowance of port charges claimed as deduction u/s. 80IA of the Income Tax Act, 1961 for the Assessment Year 2010-11.

Details of the Judgment:

Issue 1: Disallowance of Port Charges
The assessee, engaged in port operations, filed for deduction u/s. 80IA for port-related income. The Assessing Officer disallowed port rental charges claiming it lacked direct nexus with port operations. The Commissioner of Income Tax (Appeals) (CIT(A)) deleted the addition, citing consistency in allowing the deduction for previous years and a Bombay High Court decision. The Revenue challenged this deletion, arguing the charges were not directly related to port operations and citing a Supreme Court case. The CIT(A) held that the charges had a direct nexus to port maintenance and running, distinguishing the case from the Supreme Court precedent. The Tribunal noted the assessee's consistent deduction claims and found no change in circumstances to disallow the claim. It also highlighted the eligibility criteria under section 80IA(4) were met. The Tribunal referred to a CBDT Circular defining "Port" as an infrastructural facility, and a Bombay High Court decision emphasizing a liberal interpretation of deductions for infrastructure development. Ultimately, the Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s decision based on the liberal construction of the deduction provision for infrastructure growth.

Conclusion:
The Tribunal dismissed the appeal by the Revenue, upholding the CIT(A)'s decision to delete the addition of disallowed port charges claimed as deduction u/s. 80IA for the Assessment Year 2010-11.