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TMI Blog2013 (9) TMI 302X X X X Extracts X X X X X X X X Extracts X X X X ..... Without prejudice to the above, the ld CIT (A) erred in stating that the appellant's counsel had not objected to reopening of the assessment, when in reality the appellant objected to reopening but confined its arguments to written submissions only. 4. Without prejudice to the above, the ld CIT (A) erred in upholding the Assessing Officer's action of disallowing the deduction of Rs. 13,64,11,381/- claimed under section 80-lA (4) of the Income-tax Act, 1961. 5. The Id CIT (A) grossly erred in facts and circumstances of the case in not fully relying on the decisions of: i). The Hon'ble Special Bench of Mumbai in the case of All Cargo Global Logistics Ltd. & Others v/s. DCIT (2012) 74 DTR 89. ii). Hon'ble Delhi High Court in the case of Container Corporation of India in their order in ITA Nos. 1411/2009, 967/2011 and 968/2011 dated 11.05.2012. iii). Continental Warehousing Corporation (Nhava Seva) Ltd. Raigad v/s. The ACIT, Panvel Circle, Panvel in ITA No. 7055/MUM / 2011 (A.Y.2008-09). since all the facts of the aforesaid cases are very identical and similar to the facts of the appellant's case. 6. The ld CIT (A) grossly erred in facts and circumsta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 35,32,60,682/- claimed under section 80- IA(4 ) of the Income-tax Act, 1961. 2. The ld CIT (A) grossly erred in facts and circumstances of the case in not fully relying on the decisions of: i). The Hon'ble Special Bench of Mumbai in the case of All Cargo Global Logistics Ltd. & Others v/s. DCIT ( 2012 ) 74 DTR 89. ii). Hon'ble Delhi High Court in the case of Container Corporation of India in their order in ITA Nos. 1411 / 2009,967/2011 and 968/2011 dated 11.05.2012. iii). Continental Warehousing Corporation (Nhava Seva ) Ltd. Raigad v/s. The ACIT, Panvel Circle, Panvel in ITA No. 7055/MUM/2011 (A.Y. 2008-09). since all the facts of the aforesaid cases are very identical and similar to the facts of the Appellant's case. 3. The ld CIT (A) grossly erred in facts and circumstances of the case in stating that the Appellant has not entered into any agreement with the Central Government or a State Government or a local authority or any other statutory body for (i) developing or (ii ) operating and maintaining or ( iii ) developing, operating and maintaining a new infrastructure facility as provided in section 8OlA ( 4 ) (i). The ld CIT (A) failed to appreciate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A (4) of the Income Tax Act, 1961 relying on the decision of the Mumbai ITAT in the cases of All Cargo Global Logistics Ltd. (SB) and M/s. Continental Warehousing Corporation, since in the same order, the Ld. CIT(A) has held the assessee has not fulfilled the necessary conditions to be recognized as an inland port and hence the assessee is not eligible for the deductions u/s. 80IA (4). Therefore, the order of the Ld. CIT(A) is contradictory." 2. "Whether, on facts and in the circumstances of the case and in law, the Ld.CIT(A) is justified in holding the Container Freight Station of the assessee is an inland port for the purposes of deduction u/s. 80IA (4) of the Income Tax Act, 1961 relying on the decision of the Mumbai ITAT in the cases of All Cargo Global Logistics Ltd. (SB) and M/s. Continental Warehousing Corporation, since the Ld.CIT(A) has failed to appreciate that the relied on orders have not become final and the issue is pending before the jurisdictional High Court for adjudication." 2. So far as it relates to the assessee's appeal for assessment year 2006-07 Ld.A.R did not press Grounds No.1,2,3,9 & 10, therefore, these grounds are dismissed being not pressed. Grou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contrary decision of any other High Court. Therefore, following the aforementioned decision we hold that assessee is entitled to get depreciation on these items @60%. This ground of the assessee is allowed. 6. Now only one issue is left which is regarding eligibility or otherwise of the assessee to claim deduction under section 80IA(4)(i) of the Act for its business activity carried on in the shape of Container Freight Station(CFS). 7. Before proceeding further it may be mentioned that assessee started claiming deduction under section 80 IA(4)(i) on CFS owned and operated by it w.e.f. A.Y.2004-05. It has been allowed such deduction for A.Y 2004-05 and 2005-06 and also for A.Y 2006-07. However, later on reassessment proceedings were initiated for A.Y 2006-07 and the impugned assessment order is result of such reassessment proceedings. During the course of these appeals it was informed to us that department has initiated reassessment proceedings in relation to A.Y 2005-06 also. Assessment for A.Y 2004-05 has attained finality as initiation of reassessment proceedings have become time barred. 8. It may also be mentioned here that Ld. CIT(A) has held that CFS of the assessee is an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d ports". The definition of "infrastructure facility" is as under:- 43.2 The Government has identified national waterways, the fourth mode of transport, for improving the transport infrastructure in the country. Inland waterways and inland ports play a vital role in improving a country's infrastructure. With the objective of improving the transport infrastructure, the Act has included inland waterways and inland ports in the definition of 'infrastructure facility' as given in section 80-IA. The undertakings engaged in the development of such infrastructure would be entitled to two-tier fiscal benefits as outlined above." (underlining ours) 11. In view of the aforementioned legislation for the first time from A.Y 1999-2000 inland ports started enjoying the deduction under section 80IA as an infrastructural facility. The object for insertion of this provision was to strengthen and improve country's infrastructure in general and transport infrastructure in particular. Inland ports facilitate the transport infrastructure by taking care of the transport of customs cleared goods meant for export from ICD/CFS to the sea port and the imported goods directly from sea port ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncession being given in respect of a particular facility at Port, namely, a facility involved storage, loading and unloading. Subsequently Circular No.10 of 2005 dated 16/12/2005, 280 ITR (St) 1 was issued by CBDT which made a reference to the earlier circular dated 23/6/2000 and clarified that the definition of the expression "Port", for the purposes of section 80 IA of the Act, includes structures at Ports for storage , loading and unloading etc., subject to fulfillment of the conditions already noted earlier, would apply to assessment year 2001-02 and any earlier assessment year. However,. From assessment year 2003-03 onwards, the condition requiring that structure should have been completed under a BOT or BOLT scheme and that there should be an agreement for transfer of the facility to the competent authority on the expiry of the stipulated period was deleted. The said Circular is reproduced below: Circular No. : 10 Date of Issue : 16.12.2005 Section(s) Referred : 10(23G) 180-IA Statute : Income-Tax Act Definition of Port as Infrastructure facility for the purpose of sections 10(23G) and 80-IA of the Income-tax Act, 1961 1. Reference is invited to Board' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... page 9 of the paper book. (iv) On the same date notification No.6/2006 has been issued by the same authority and it has been declared that assessee will be custodian of the goods till they are cleared for the home consumption or/ are warehoused or/ are transshipped under the provisions of Chapter 8 of the Customs Act, 1962. Copy of this notification is placed at page 10 of the paper book. (v) Vide letter dated 26/3/2003, Executive Engineer of Industrial Development Division has issued occupancy certificate to the assessee for its CFS. Copy of this certificate is placed at page 11 of the paper book. (vi) Vide leller dated 26/9/2005 the assessee submitted an application to the Chairman, Jawaharlal Nehru Port Trust, Nhava Seva, Navi Mumbai for issue of certificate required by Income Tax Department, copy of this application is placed at Page-15 & 16 of the paper book. In the said application it was submitted by the assessee that its CFS is working at its full capacity in the first year and assessee is planning for further expansion. The Commissioner of Customs has declared CFS as "Customs Area" under section 8 of the Customs Act, 1962. The assessee is claiming exemption under secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4) of the Act and as mentioned earlier the assessee has been granted such deduction for A.Y 2004-05 and 2005-06. For impugned assessment year 2006-07 reassessment proceedings were initiated mainly for disallowance of the deduction as in the opinion of revenue assessee is not entitled to such deduction and the reasons as stated in the assessment order for making disallowance of the deduction are as under: (1) Deduction under section 80 IA is available only to the structures situated at the ports and assessee's CFS being not situated "at Port" is not eligible for deduction. (2) Certificate issued by JNPT dated 31/12/2006 clearly stated that assessee's CFS was not located at the Port's land, therefore, the said certificate was not meant for claiming deduction under Income Tax Act. The assessee started considering itself as part of the Port on its own. Certificate issued by JNPT to the assessee was only for a limited purpose (Custom purpose) and the description made by JNPT that assessee's CFS being not located at the Port's land the other condition stipulated in Circular No.793 dated 23/6/2000 were also not satisfied. (3) Circular issued by CBDT also describe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same and it has been decided that and ICDs and CFS are not ports located on any inland waterway, river or cannal, and thereby they cannot be classified as inland ports for the purpose of Section 80IA (4)(i) of the Income Tax Act." 17. In the above manner A.O has discarded the claim of the assessee regarding deduction under section 80IA(4) of the Act. Aggrieved, assessee filed an appeal before Ld. CIT(A). The submissions made before A.O were reiterated before Ld. CIT(A). Reference was made to the following decisions: (a) All Cargo Global Logistics Ltd. vs. DCIT,137 ITD 287 (SB) (b) Continental Warehousing Corporation vs. ACIT, order dated 31/8/2012 in ITA No.7055/Mum/2011, "C" Bench Mumbai, copy placed at page 17 to 27 of the paper book. (c) Container Corporation of India Ltd. vs. ACIT, 346 ITR 140(Del) 18. Considering all the aforementioned decisions Ld. CIT(A) has held that CFS of the assessee is an "Inland Port" within the meaning of explanation (d) to section 80 IA(4)(i) of the Act and "Inland Port" is one of the infrastructure facility which is eligible to claim deduction under section 80 IA(4). However, the assessee did not fulfill other conditions specified in section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... way with the mandatory requirement that such infrastructure facility shall be transferred to the Central Government, State Government, Local Authority or any other Statutory Authority. The amendment was made applicable from assessment year 2002-03 onwards. It was further argued by Ld AR that as per section 2(b) of the Contract Act an agreement does not need to be in writing. As per provisions of section 164A oral trust are taxed at maximum marginal rate. Even according to section 194C tax is liable to be deducted even in a case where contract is not reduced into writing. 22. Ld AR further argued that according to the principle of consistency, as department has granted the deduction to the assessee in A.Y 2004-05, the same cannot be withdrawn for subsequent years. For this purpose Ld. A.R has referred to the decision of Hon'ble Bombay High Court in the case of CIT vs. Paul Brothers 216 ITR 548(Bom), wherein deduction under section 80 HH and 80J was granted for A.Y 1980-81 and subsequently these deductions were sought to be withdrawn under section 263 by CIT. It was held by the Hon'ble High Court that either in section 80HH or in section 80J there is no provision for withdra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that certificate granted by JNPT was subsequently withdrawn and, therefore, the said certificate dated 31/3/2006 does not advance the case of the assessee in view of its withdrawal in the year 2007. Ld. D.R made reference to the clarification issued by CBDT dated 6/1/2011 vide which it was clarified that CFS structures which are not situated at Port are not entitled for deduction under section 80 IA(4). Thus, it was pleaded by Ld. DR that assessee's CFS does not come within the definition of "Port" or "Inland Port". 24.2 Ld. D.R further submitted that the arguments raised by Ld. AR regarding consistency also does not support the case of the assessee as the principle of consistency rest upon doctrine of res-judicata which according to the well established law is not applicable to Income tax matters. Reference was made to the decision of Hon'ble Supreme Court in the case of New Jahangir Vakil Mill Company Ltd. vs. CIT 49 ITR 137 (SC), wherein it was held by the Court that revenue can reopen a question obviously decided if fresh facts come to light or if earlier decision was rendered without taking into consideration material evidence etc. Similar proposition was laid down in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ision of ITAT Mumbai Bench in the case of ACIT vs. Hitesh S. Bhagat order dated 15/5/2013 in ITA No.6586/Mum/2010, wherein following aforementioned decision of Hon'ble Supreme Court in the case of New Jahangir Vakil Mill Company Ltd. vs. CIT(supra) it was held that doctrine of res-judicata is not applicable. Ld. DR also referred to the decision of Hon'ble Andhra Pradesh High Court in the case of B.R. Construction, 73 Taxmann 473(AP)(FB) to contend that precedent ceases to be binding precedent in the following conditions: "29. It may be noticed that precedent ceases to be binding precedent- (i) if it is reversed or overruled by a higher court, (ii) when it is affirmed or reversed on a different ground; (iii) when it is inconsistent with the earlier decisions of the same rank (iv) when it is sub silentio and (v) when it is rendered per incuriam." Ld DR also referred to the decision of Ahmedabad ITAT in the case of Kanel Oil & Export Industries Ltd. vs. JCIT, 121 ITD 596, wherein it was held that judgment of non-jurisdictional High Court would prevail upon the Special Bench decision on the basis of principle that High Court is above the Tribunal in judicial hierar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out activities mentioned earlier. Customs-clearance takes place from assessee's CFS. Therefore, it is argued that the assessee is entitled to deduction u/s 801A. 64. In reply, the Ld. Standing Counsel submitted that whenever the assessee claims an income to be exempt from tax or claims a deduction, the pre-conditions for exemption or deduction have to be strictly satisfied by him, as held in the case of M/s. Novopan India Ltd., Hyderabad vs. Collector of Central Excise and Customs, Hyderabad (1994)3SCC 606. In respect of this decision, he laid stress on the finding that liberal and strict construction of exempt provision are to be invoked at different stages of its interpretation. When the question is whether a subject falls in the notification or in the exemption clause then it being in the nature of exemption is to be considered strictly and against the subject but once the ambiguity or doubt about applicability is lifted and the subject falls in the notification then full play should be given to it and it calls for a wider and liberal construction. In the light of this decision, he dealt with the claim of the assessee u/s 8O(IA). It is submitted that in Board clarificatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fied that an ICD/CFS does not constitute an inland port. in the case of CIT Vs. ABG Heavy Industries Ltd., 189 Taxman 54, the Hon'ble Court has held that the assessee is entitled to deduction u/s 801A. However there is a very salient difference in facts that structures were located at port and such structures had to be handed over to the Port Trust on expiry of the period of agreement. In the case at hand it is clear that the assets of the CFS are not to be handed over to the Port Trust at any point of time as it is not built on BOT & BOLT Scheme. The CFS is also not located at the Port. As against the aforesaid, the Ld. Standing Counsel has submitted that clarifications issued by other authorities including Central Board of Excise and Customs under the relevant Acts do not lay guidelines under the Income Tax Act and that the matter has to be decided under the Income Tax Act independently. For doing so, initially a strict interpretation has to be placed on the words "inland port" to examine that the assessee is entitled to the deduction. CBDT has furnished opinion that ICDs and CFSs are not entitled to such deduction as they do not constitute inland ports. Other Acts as well as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CFS may be considered as an extended arm of the Port related activities in accordance with Circular No.133/95 dated 22/12/95 issued by Central Board of Excise & Customs, New Delhi, whereas in the so called withdrawal letter, which is highly relied upon by the revenue, it has no where been stated that how and on what basis the CFS of the assessee has suddenly ceased to be an extended arm of the Port. Both the letters ( Dt. 31/3/2006 & 5/10/2007) are reproduced in Para 16 of this order and from their perusal it can be seen that though the letters dated 31/3/2006 stated the basis on which assessee's CFS has been considered to be an extended arm of the Port but in subsequent letter dated 5/10/2007 no basis has been mentioned. Such withdrawal letter dated 5/10/2007 cannot take any precedence over the judicial view taken by Special Bench in the case of All Cargo Global Logistics Ltd. vs. DCIT(supra). 25.3 It was also one of the arguments before Special Bench by the revenue that Board vide its clarification dated 6/1/2011 by considering the earlier circulars dated 23/6/2000 and 16/12/2005, has clarified that ICDs and CFS are not "Ports" located on any Inland water way, river or cana ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt in which contrary decision is taken. The cases of CFS are better placed from the cases of ICD's considered by Hon'ble Delhi High Court and Hon'ble Delhi High Court even without referring to the circulars of CBDT dated 23/6/2002, 16/12/2005 has held that ICD being infrastructure facility is Inland Port and is eligible for deduction u/s. 80 IA(4) of the Act. Therefore, there is no breach of principle of consistency and applying the rule of consistency the benefit of deduction under section 80IA(4) has to be granted to the assessee. 25.6 In any case Board's clarification dated 6/1/2011 can only be said to be judicial interpretation of the scope and ambit of the provision of the Act. According to well established law a circular/clarification cannot even impose on the tax payer a burden higher than what the Act itself, on a true interpretation envisages. The task of interpretation of law is an exclusive domain of the Courts. Reference in this regard can be made to the three judges decision of Hon'ble Supreme Court in the case of Keshavi Raoji & Company vs. CIT, 183 ITR 1(SC) "The Board cannot pre-empt a judicial interpretation of the scope and ambit of a provis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Taxes (CBDT) vide its circular no. 10 of 2005, dated 16th December. 2005 (Annexure 1) has relaxed the conditions to be fulfilled towards creation of structures at the ports for staring, loading and unloading to form part of the definition of "ports" and, thereby, become entitled far the tax concessions available for developing operating or maintaining infrastructure facilities such as ports. According to the Revenue Department a certificate from the port authority concerned stating the structures form part be enough for counting them as part of ports for the purpose section 10(23G) and section 80IA of the Income Tax Act. The relaxation would be applicable with retrospective effect from 2002-03. For 2001-02 and earlier assessment years, two conditions have to be met for the structures should have been built under the build, operate and transfer (BOOT) or build-own-operate-transfer (BOOT) scheme and that these would be transferred the port authority on the expiry of the time stipulated in the agreement "From the assessment year 2002-03 there would only one condition, - that there is certificate issued by the Port Authorities" In other words for and from the assessment year 2002-0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tone down the rigour of the law issued in exercise of the statutory power under s. 119 of the Act or under corresponding provisions of the predecessor Act are binding on the authorities in the administration of the Act. The Tribunal, much less the High Court, is an authority under the Act. The circulars do not bind them. But the benefits of such circulars to assessees have been held to be permissible even though the circulars might have departed from the strict tenor of the statutory provision and mitigated the rigour of the law." 25.11 In the present case Circular dated 16/12/2005 has done away with the requirement of agreement though the circular has deviated from the strict tenor of statutory provisions. Such course of action is within the power of CBDT and benefit arising there from is permissible to the assessee and cannot be denied according to aforementioned decision of Hon'ble Supreme Court. Here, it may be mentioned that Circular dated 16/12/2005 was also considered by their Lordships of Hon'ble Jurisdictional High court in the case of CIT vs. ABG Heavy Industries Ltd., 322 ITR 323, a case law relied upon by Ld. CIT(A). It was observed that such circular was a pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the said structure form part of the Port which is clear from the aforementioned observations and the said certificate has been obtained by the assessee. 25.13 The above discussion is de-hors to the arguments taken by Ld. AR that in the case of M/s. Continental Warehousing Corporation (supra) there is a specific reference of the fact that there was no agreement entered into by that assessee with the designated authority and also the arguments that in all the cases discussed by Special Bench there was no such agreement as the entire structures were owned by the assessee and they were permitted to be operated as per approvals given to them by the concerned authorities and the facts of those cases and the case of the assessee are similar for which an affidavit has also been submitted by him which has not been controverted by the revenue. 25.14. Moreover, Co-ordinate Bench in the case of Ayush Ajay Construction Ltd. vs. ITO, 79 ITD 213 (Indore) while interpreting the provisions of section 80IA(4), even in the absence of agreement, on recognition of the work done has come to a conclusion that assessee was entitled to get deduction and reference can be made to the following observa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the main tenderer, M/s Ajay Constructions, in which the assessee-company has ratified all the deeds and acts of its promoter, Smt. Usha Agrawal, and owned/taken over all the assets and liabilities of its promoter. The action of assigning and the work of construction undertaken by the assessee was recognised by the State Government and a tripartite agreement was executed between the assessee, M/s Ajay Constructions and the State Government through which the State Government have recognised that the assessee has stepped into the shoes of MIs Ajay Constructions and notified authorising the assessee to collect the toll tax for a particular period. A copy of the letter dt. 22nd May, 2000, to this effect is also placed before us. The assessee has also placed various correspondence entered into between the assessee and the State Government and the letter dt. 26th Aug., 1995, through which the assessee was informed about the notification in his favour to collect the toll tax. A copy of the letter placed at p. 140 of the compilation of the assessee. Copies of the notification and various receipts of toll tax are also placed on record for our perusal. It is also revealed from various corres ..... 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