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TMI Blog2015 (11) TMI 996X X X X Extracts X X X X X X X X Extracts X X X X ..... elief was granted to the assessee ignoring the fact that the assessee did not possess any certificate from the port authorities evidencing that the structures form part of the said port. 2.1. On the other hand, the ld. counsel for the assessee contended that the impugned issue is covered by the decision of the Tribunal in the case of assessee itself (ITA No.273, 275, 943 & 944/Mum/2013) order dated 28/06/2013. Reliance was also placed upon the decision in 374 ITR 645 (Bom.) This factual matrix was not controverted by the Revenue. 2.2. We have considered the rival submissions and perused the material available on record. If the observation made in the assessment order, leading to addition made to the total income, conclusion drawn in the impugned order, material available on record, assertions made by the ld. respective counsel, conclusion drawn in the order of the Tribunal dated 28/06/2013, if kept in juxtaposition and analyzed, we find merit in the contention of the ld. counsel for the assessee, therefore, we are reproducing hereunder the relevant portion from the aforesaid order of the Tribunal:- 4. Department in its appeals is agitating only one issue which relates to deducti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der 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 Inland Port (IP). For holding so he has followed the decision of Special Bench in the case of All Cargo Global Logistics Ltd. & Others vs. DCIT, 137 ITD 237 and Continental Warehousing Corporation (Nhava Seva) Ltd. Raigad Vs. ACIT (order dated 31/8/12 in ITA No.7055/Mum/2011). The decision of Special Bench in the case of All Cargo Global Logistics Ltd. has been rendered in favour of assessee by following the decision of Hon'ble Delhi High Court in the case of Container Corporation of India Ltd. (CCI) vs. ACIT, 346 ITR 140, wherein question of deduction under section 80 IA(4)(i) in respect of Inland Container Depot (ICD) was considered by Hon'ble Delhi High Court. It is observed by Special Bench in its decision that the case of CFS is similarly situated with the case of ICD as both of them ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 to ICD/CFS where then can be customs cleared. The entire section was recasted by Finance Act 1999 w.e.f.. 1/4/2000 and even after several amendments made to that section, inland ports continue to enjoy the deduction as infrastructural facility. 12. Reference can also be made to the notification issued by CBDT No.S.O.744(E) dated 1/9/1998 for the purpose of section 80 IA(12) (ca), 233 ITR (St) 126, the text of which is as follows: "Board of Direct Taxes hereby notifies inland container depot (ICD) and Central freight station (CFS) as infrastructure facility: Provided that such places are notified as inland container depot and Central freight station under section 7(aa) of the Customs Act, 1962." 13. Subsequently, the Board issued Circular No.793 dated 23/6/2000, 244 ITR (St) 103 postulated as follo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rity 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's Circular No. 793, dated 23-6-2000 and amendment in section 80-IA by the Finance Act, 2001. 2. "Port", for the purposes of sections 10(23G) and 80-IA of the Income-tax Act, 1961, includes structures at the ports for storage, loading and unloading etc., if the following conditions are fulfilled: (a) the concerned port authority has issued a certificate that the said structures form part of the port, and (b) such structures have been built under the BOT or BOLT schemes and there is an agreement that the same would be transferred to the said authority on the expiry of the time stipulated in the agreement. This definition is applicable to assessment year 2001-02 and any earlier assessment year. 3. However, for and from assessment y 2002-03 onwards, structures at the ports for storage, loading and unload ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 section 80 IA for its CFS. As a result of various representations made by the Association, CBDT has issued a circular, according to which the structure put up for storage, loading and unloading of cargo intended for export will fall under the definition of Port for the purpose of section 10(23G) and 80 IA if the concerned Port Authority has issued a certificate that the said structure form part of the Port. Copy of the said circular was submitted. Reference was also made to clause 2(b) of the circular dated 23/6/2000 regarding agreement and transfer under BOT or BOLT scheme and it was submitted that the said stipulation for transfer of facility has been withdrawn by Finance Act 2001. Reference to Circular No.133/95-Custom dated 22/12/1995 was also made in which in para No.2 it was mentioned "generally, CFS is ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 " structures at the Ports", therefore, even according to Circulars the claim of the assessee cannot be accepted. (4) Subsequently, in the letter obtained from JNPT dated 14/12/2011 it was made clear that the said certificate dated 31/3/2006 was subsequently withdrawn for preventing its misuse and thus it was clear that assessee was misusing the letter dated 31/3/2006 issued by JNPT. The aforementioned certificate issued on 31/3/2006 was withdrawn by JNPT vide letter dated 5/10/2007 with the following observations: "It is hereby brought to the notice that certificate issued to M/s. United Liner Agencies Pvt. Ltd. (ULA) vide our letter No.JNP/CM(O)/2006/830 dtd. 31/03/2006 based on their request dated 26.09.2005 is hereby treated as withdrawn for the purpose of availing any benefit under Income Tax Act or any other st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ering 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 80IA(4). In this regard Ld. CIT(A) has referred to the provisions of section 80IA(4) of the Act and also the decision of Hon'ble Bombay High Court in the case of CIT vs. ABG Heavy Industries Ltd., 322 ITR 323 (Bom). The Ld. CIT(A) has arrived at the conclusion that as assessee did not enter into an agreement with the authority, which is mandatory condition, therefore, the assessee is not entitled to get deduction under section 80IA(4). Ld. CIT(A) has mentioned that in none of the decisions relied upon by the assessee it has been held that there is no requirement to enter into an agreement as provided in clause (b) of section 80 IA(4)(i) of the Act. Therefore, for want of fulfillment of condition laid down in section 80 IA(4)(i)(b) Ld. CIT(A) has decided the issue against the assessee. 19. The assessee in its appeal is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay 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 withdrawal of special deduction for the subsequent years for breach of certain conditions. Hence, unless relief granted for A.Y 1980-81 was withdrawn, ITO could not have held the relief for the subsequent years. For holding so their Lordship have followed the decision of Hon'ble Gujarat High Court in the case of Saurashtra Cement and Chemical Industries Ltd., 123 ITR 669. Reference was also made to the following observations from the said decision of Hon'ble High Court. "Either in section 8OHH or in section 80J, there is no provision for 1 withdrawal .of special deduction for the subsequent years for breach of certain conditions. Hence unless. the relief granted for, the assessment year 1980-81 was withdrawn, the Income-tax Officer could not have withheld the relief for the subsequent years. [See Gujarat High Court decision in the case of Saura ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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 the decision in the case of Broken Hill Proprietary Company vs. Broken Hill Municipal Council (1926) AC 94 and Hoystead Vs. Commissioner of Taxation (1926) AC 155. Referring to above decisions it was pleaded by Ld. D.R that there is no estoppels in Income tax matter and each year is assessable independently of the earlier years. The AO can take a position on the earlier years income, without reopening those years, for assessing the nature of the current years income and reliance was placed on the decision in the case of M.M. Ipoh vs. CIT, 67 ITR 103(SC),Dwarakadas Kesardeo Murarkha vs. CIT, 44 ITR 529. Reference was also made to the decision of Hon'ble Bombay High Court in the case of Baijnath Brijmohan & Sons Ltd. vs. CIT, 161 ITR 234, wherein their Lordships have observed as under: "An assessment for a particular year is final and conclusive between the parties ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 hierarchy. Ld. DR also relied upon the decision of K.P. Choudhary vs. State of Madhya Pradesh, 1967 AIR 203(SC) to contend that contract with the Government should be executed in the manner provided in Article 299(1) of the Constitution of India and unless it is so executed it will not be a binding contract. Thus it was pleaded by Ld. DR that assessee's contention that there could be an oral agreement should not be accepted. In this manner Ld. D.R concluded his arguments. 25. We have carefully considered the submissions of both the parties. We have also carefully gone through the assessment order as well as order passed by Ld. CIT(A). We have also carefully gone through the papers and documents referred before us along with case laws relied upon by both the parties. It is the main case of AO that assessee's CFS not being structure situated "at Port" is not eligible for deduct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... biguity 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 clarification dated 6.1.201 1, in which circulars dated 16.12.2005 and 23.6.2000 were considered, it has been clarified that ICDs, and CFSs are not 'ports' located on any inland water way , river or canal and therefore they cannot be classified as "inland ports" for the purpose of section 80(IA)(4). It is further submitted that the certificate issued by Jawahar La! Nehru Port Trust has been withdrawn by the Port Trust. It is also submitted that Inland Waterways Authority of India Act, 1985, provides the definition of the term "infrastructure facilities", in its clauses (f), as the structures such as docks, wharves, jetties, stages, locks, buoys, inland ports, cargo handling equipments, road and rail access and cargo storage spaces and states that the expression "infrastructure facilities" shall be construed accordingly. In this Act, inland port is included as item, thus, this term has a distinct m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 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 study report lead to the conclusion that a port can be said to be an inland port only if it has an access to the sea via a water-way. 66. We find that the solitary decision in this case by any High Court is in the case of Container Corporation of India Ltd., In this case it has been held that an ICD is not a port but it is an inland port. The case of CFS is similar situated in the sense that both carry out similar functions, i.e., ware housing, customs clearance, and transport of goods from its location to the seaports and vice-versa by railway or by trucks m containers. Thus, the issue is no longer res-integra. Respectfully following this decision, it is held that a CFS is an inland port whose income is entitled to deduction u/s 80IA(4). Question No. 2 is answered accordingly. (Emphasis given by us) 25.1 The relevant portion of the Special Bench decision have been emphasized to show that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 canal and therefore, they cannot be classified as Inland Ports for the purpose of section 80 IA(4). The said circular was also not considered sufficient for denial of deduction to the assessee. Reference in this regard also can be made to the highlighted portion of the observations existing in para-64 of the order of Special Bench and it can be seen that despite such argument raised by the revenue, Special Bench has held that CFS was entitled for deduction under section 80 IA(4).. 25.4 Thus it can be seen that the arguments of the AO to deny the claim in the present case are same as they were raised before the Special Bench and these arguments of the revenue were not accepted and the assessee in Special Bench cases were held to be eligible for deduction under section 80IA(4) of the Act. According to precedent Division Bench is bound by the decision of Special Bench particularly when arguments for denial of d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in 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 provision of the Act by issuing circulars on the subject. This is too obvious a proposition to require any argument for it. A circular cannot even impose on the taxpayer a burden higher than what the Act itself, on a true interpretation, envisages." 25.7 Therefore, also in view of interpretation taken by Special Bench in the light of decision of Hon'ble Delhi High Court in the case of Container Corporation of India Ltd. (supra), the clarification issued by CBDT dated 6/1/2011 cannot come into play to disentitle the assessee from claiming deduction under section 80IA(4) as the view of the Special Bench and Hon'ble Delhi High Court would prevail against the view taken by CBDT. 25.8 Though Ld. CIT(A) has accepted the claim of the assessee that CFS are Inland port within the meaning of section 80IA(4) on the basis of aforementioned decision of Special Bench, decision of Hon'ble Delhi High Court in the case of Container Corporation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 2002-03 onwards, structures at the ports for storage loading and unloading etc will be Included in the definition of "port' for the purpose of sections 10(23G) and 80 IA of the Income tax Act, 1961, if the following condition is fulfilled: - the concerned port authority has issued a certificate that the said structures form part the port. In our case we had a Container Freight Station at JNPT and that fact has not been disputed and has In fact been acknowledged by JNPT vide their Certificate dated 31-03- 2006". (Emphasis ours) 25.10 In the aforementioned reply the assessee has explained that vide Circular issued on 23/6/2000 two conditions were to be complied to get the deduction. First was to obtain a certificate from concerned Port Authority that CFS Structure form part of the Port and the second condition was that such structure should have been built under BOT or BOLT scheme and there is an agreement that the same would be t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rcular 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 prospective liberalization of the legislative scheme, in the interest of aiding the growth of infrastructure. The administrative circulars issued by CBDT in implementation of section 80 IA similarly liberalise the scheme consistent with the Act. Reference can be made to the following observations of their Lordship. "14. On 16th Dec., 2005, Circular No. 10 of 2005 [(2005) 199 CTR (St) 97] was issued by the CBDT. The circular made a reference to the earlier circular dt. 23rd June, 2000 and clarified that the definition of the expression 'port' for the purposes of s. 80-IA of the Act so as to include structures at ports for storage, loading and unloading etc., subject to the fulfillment of the conditions already noted earlier, would apply to the asst. yr. 2001-02 and any earlier assessment year. However, from asst. yr. 2002-03 onwards, the condition requiring that the structure should have been completed under a BOT or BOLT Scheme and that ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterpreting 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 observations: "18. If we examine the relevant provisions of s. 80-IA(4A) of the Act and the object of its insertion to the tax statute in the light of the budget speech of the Hon'ble Finance Minister and the above said judicial pronouncements, we would find that the legislature has given a fillip of deductions to those enterprises who engage themselves in developing, maintaining and operating any infrastructure facilities for economic growth of the nation as it was felt by the legislature that inadequate infrastructure was a key constraint of our economic progress. As held by the apex Court in the case of Bajaj Tempo Ltd. vs. CIT (supra), the provisions of promoting economic growth should be interpreted liberally and the restriction on it too has to be construed so as to advance the objective of the provisions and not to frustrate it. If we put the facts of the case with the parameter laid down by the apex Court and the various High Courts, we would find th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 correspondence of the assessee with the State Government that the assignment of contract was duly recognised by the State Government and it was admitted by them that the actual construction work was undertaken by the assessee only." (Emphasis ours) In the above case also the deduction was not granted to the assessee as assessee had not entered into an agreement with the State Government but from the approvals granted to the assessee it was inferred that assessee should be deemed to have entered into an agreement with the State Government. 25.15 The above circular issued by CBDT dated 16/12/2005 has also waived the condition regarding entering into an agreement with the authority and such course of action taken by CBDT was in accordance with the law and Income Tax Authorities administering the Act cannot deny such benefit to the assessee. Therefore, we hold that Ld. CIT(A) has wrongly held that assessee is not entitled for deduction under section 80IA(4) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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