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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 ..... argo Global Logistic Ltd. (2015 (5) TMI 656 - BOMBAY HIGH COURT) by following Container Corporation of India Ltd. vs ACIT (2012 (5) TMI 260 - DELHI HIGH COURT) wherein held having regard to the provisions of the Customs Act, the communications issued by the CBEC as well as the Ministry of Commerce and Industry, the object of including "inland port" as an infrastructure facility and also having regard to the fact that customs clearance also takes place in the ICD, the assessee's claim that the ICDs are Inland Ports under Explanation (d) of Section 80IA(4) requires to be upheld. - Decided in favor of assessee. - ITA NO.970/Mum/2014 - - - Dated:- 16-10-2015 - Shri Joginder Singh, Judicial Member, and Shri Ramit Kochar, Accountant Member For The Revenue : Shri Narendra Kumar CIT-DR For The Assessee : Shri Y. P. Trivedi Usha Dalal ORDER Per Joginder Singh (Judicial Member) The Revenue is aggrieved by the impugned order dated 21/11/2013 of the ld. First Appellate Authority, Mumbai. The only ground raised in this appeal pertains to holding that the container freight station of the assessee is an inland port for the purposes of deduction u/s 80IA(4) of the Inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e s appeal for A.Y. 2006-07), we have heard both the parties. Ld. A.R relied upon the decision of Hon ble Delhi High Court in the case of Orient Ceramics and Industries Ltd., 56 DTR 397, copy of the decision was placed on our record and was also given to Ld. D.R. The issue was decided by Hon ble Delhi High Court as per following observations: 13. The third issue pertaining to depreciation on UPS arises only in the asst. yr. 2005-06. The assessee had claimed depreciation on UPS @60 per cent whereas the AO had allowed it @25 per cent and on this basis, disallowance of ₹ 1,470 was made. The issue now stands covered by the judgment of this Court in the case of CIT vs. BSES Yamuna Power Ltd. (in IT Appeal No.1267 decided on 31st Aug., 2010) wherein it was held that the depreciation @ 60 per cent on such items shall be allowed. Ld. D.R could not cite any 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 deducti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 80-IA(4). Question No. 2 is answered accordingly. (Emphasis ours) 9. The history of legislation leading to notify Inland Water Ways and Inland Ports in the definition of Infrastructure Facility in sub-section (12) clause (ca), w.e.f. 1/4/1999 has been noted to be incorporated by Finance (No.2) Act, 1998. The relevant clause after such amendment read as under: infrastructure facility - means (i) a road, bridge, airport, port, inland waterways and inland ports, rail system or any other public facility of a similar nature as may be notified by the Board in this behalf in the Official Gazettee. 10. Board in its Circular No.772 dated 23/12/1995, 235 ITR St.35,67 in para 43.2 has explained the inclusion of inland waterways and inland 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 countr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n built under BOT and 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 agreement. 14. This Circular was issued by the Board with regard to representations seeking clarification on whether structures at ports for storage, loading and unloading etc. would fall within the definition of Port, inter-alia, for the purpose of section 80 IA of the Act. The Board clarified that such structure would be included in the definition of Port for the purpose of section 80 IA of the Act, subject to the fulfillment of the condition that the Port Authority must issue a certificate that the structure form a part of the Port; that such structures had been built under the BOT or BOLT scheme and there is an agreement for the transfer of the structure to the authority after fulfillment of the stipulated period. Such circular clearly postulated a concession 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/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3/2003 Commissioner Customs Export, Nhava Seva, Ministry of Finance (Department of Revenue) has issued notification No.4 of 2003 vide which CFS of the assessee is declared as Customs area for the purpose of storage, stuffing/destuffing and clearance of export/import (bonded as well as for home consumption) goods. This notification is issued in pursuance to power conferred on Commissioner of Customs Export under section 8 of the Customs Act, 1962. Copy of this notification is placed at page - 8 of the paper book. (iii) On the same date the same authority has also issued notification No.5/2003 vide which Commissioner of Customs, under the provisions of section 8 of the Customs Act, has notified the container road linking JNPT/NSICT container gate, container freight station, United Linear Agencies of India (P) Ltd., Sector -8, Dronagiri Node, as Customs Area for the purpose of transport of import and export cargo. Copy of this notification has been placed at 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 co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay be considered as an extended arm of the Port related activities in accordance with circular No.133/95- Cus dated 22.12.1995 of Central Board of Excise and Customs, New Delhi. They have commended their commercial operations with effect from March 2003 vide Customs notification No. 4/2003 dated 19/03/2003. The above said CFS is situated on land that does not belong to the Port. It is further stated that the Container Freight Station of M/s. United Liner Agencies Pvt. Ltd. (ULA) has not been built under BOT or BOLT scheme and there is no agreement that the said CFS would be transferred to JNPT on the expiry of the time stipulated in the agreement as per the circular no.793 dated 23.06.2000 issued by the Income Tax Department. This certificate is issued at the request of M/s. United Agencies Pvt. Ltd. (ULA) vide their letter dated 26.09.2005. Sd/- (R.T.Revankar) Chief Manager (0perations) (emphasis ours) 16. In aforesaid manner, the assessee has started claiming deduction under section 80IA(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 r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... JNPT is 15 Kms. away from the Port and they have also mentioned that assessee s CFS is providing the services of storage, stuffing, destuffing and clearance of import and export of goods. (6) Following observations of CBDT in its letter dated 6/1/2011 debars the assessee to claim deduction under section 80 IA(4)(i) of the Act in which it was mentioned that ICDs and CFS not located at the Port are not a part of the Port for the purpose of section 80 IA(4) : An ICD or a CFS is usually not located at the port and therefore it is not a part of the Port for the purpose of section 80IA(4)(i) and not covered by the Circular No.10/2005 dated 16/12/2005 and Circular No.793 dated 23.06.2000 on the subject. Reference have also been received as to whether Inland Container Depots (ICDs) and Container Freight Station (CFS) can be termed as Inland Ports and thereby classified as infrastructure facility under Section 80IA(4)(ii) of the Income Tax Act, 1961. In this context, I am further directed to convey that the Board has considered the 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 b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ific requirement laid down in section 80 IA(4)(ib) that agreement should be in writing. An oral agreement is sufficient and that can be seen in the form of correspondence and approvals obtained by the assessee from Finance Ministry, Commerce Ministry and JNPT. The word approve as per Oxford Dictionary means official accept as satisfactory . The word approval means the action of approving. As per Black s Law Dictionary the word approve is defined as to give formal sanction; to confirm authoritatively . Thus it is the case of Ld. AR that approval means that there is an agreement. He in this regard referred to the letters issued by Finance Ministry, Commerce Ministry and JNPT, copies of which are placed at pages 6- 8,9,10,17 18 of the paper book, which shows the approval was accorded by various authorities. By Finance Act (No.2) the necessity to have an agreement to transfer infrastructure facility under BOT/BOLT was removed. Reference was made to the memorandum of explaining Finance Bill, 248 ITR 166(St), wherein it was mentioned it is also proposed to do away with the mandatory requirement that such infrastructure facility shall be transferred to the Central Government, S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which the assessees owning CFS have been allowed similar deduction by the Special Bench. Reference was made to the decision of ITAT in the case of Continental Warehousing Corporation vs. ACIT(supra), where the fact of non-existence of agreement was also noted as it was one of the ground taken by AO for disallowance of deduction. Thus it was pleaded by Ld. A.R that the claim of deduction has wrongly been denied and it should be allowed to the assessee. 24. The arguments of Ld. DR in reply to the Ld. AR s arguments as well as arguments with regard to the appeals filed by the revenue are as under: 24.1 Ld. D.R submitted that AO was right in holding that assessee s structure of CFS not being situated at Port is not eligible for deduction under section 80 IA(4) of the Act. He submitted that in the circulars the word used by CBDT are at Port , therefore, even according to those circulars assessee s CFS being situated at a distance of 15 Kms from the main port cannot be considered to be eligible for deduction under section 80 IA(4). Ld. D.R submitted that certificate granted by JNPT was subsequently withdrawn and, therefore, the said certificate dated 31/3/2006 does not adva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad been arrived at / after due inquiry, if no fresh facts were placed before the Tribunal giving the later decision and if the Tribunal giving the earlier decision has taken into consideration all material evidence. There is also a further limitation, namely, that the effect of revising a decision in a subsequent year should not lead to injustice and the court must always be anxious to avoid injustice to the assessee. In the present case, we have to bear in mind that the authority which changed its stand was not the Income-tax Appellate Tribunal but the Income-tax Officer. Quite apart from this, in the present case, the Tribunal took the view that the earlier view taken by the income-tax authorities appeared to be patently unwarranted on the facts. In fact, as the Tribunal has pointed out in paragraph 6 of its order, the facts established by the assessee were so scanty and so much against the assessee that the Tribunal was left with no option but to hold that the action of the income-tax authorities was correct. 24.3 Ld. D.R further referred to the decision 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 fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hese issues raised by the AO to deny the deduction to the assessee, we find that all these issues were raised by the revenue while agitating the grant of similar deduction to the other assessees in similar cases. Despite all these arguments of the revenue, Special Bench has held that assessees are entitled for deduction under section 80IA(4) . To make it clear that all these issues were raised by the revenue before the Special Bench, we may refer to the following observations of the Special Bench: 63. The submission of the Ld. Counsel in the case of All Cargo Global Logistics Ltd. is that the Hon ble Delhi High Court has held that ICDs are landlocked and situated far off from the sea port such. The ICDs of the Container Corporation of India are located at places such as Jamshedpur, Jodhpur, Jaipur, etc. These have been held to be inland ports for the purpose of deduction u/s 801A(4). The case of the assessee is better placed than the case of Container Corporation of India Ltd. in as much as it is situated 5 kms away from the port and it is a part of the port for carrying out activities mentioned earlier. Customsclearance takes place from assessee s CFS. Therefore, it is argue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of Economic and Social Commission for Asia and pacific (a division of the United Nations) provides an insight in the concept of inland port vis. a vis. sea port . It is mentioned there that access should be provided to inland ports through waterways from sea by developing them. 65. We have considered the facts of the cases and submissions made before us. It may be mentioned that one of the arguments advanced by the Ld. Counsel for the assessee is that the case of Container Corporation of India is not based on any of the circulars issued by the Port authorities, however, the CFS the assessee has been granted such certificate. The certificate mentions that the CFS carries on port related activities, and it may be considered as an extendable activity of the port related activities. It is clarified that the CFS has not been built on BOT or BOLT Scheme and that it is situated on land which does not belong to the port. The letters written by port trust to the assessee also state that the matter has been referred to the Income Tax Department. The department has clarified that an ICD/CFS does not constitute an inland port. in the case of CIT Vs. ABG Heavy Industries Ltd., 189 T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Kms away from the Port. In the present case also CFS of the assessee is situated only 15 Kms away from the Port. So for the grant of deduction under section 80 IA(4), as per decision of Special Bench in the case of All Cargo (supra) and decision of Delhi High Court in Container Corporation of India (supra), it is not a condition precedent that CFS of the assessee should be situated at port. So, nonsituation of the CFS of the assessee at port does not disentitle it from claiming deduction u/s. 80 IA(4). 25.2 In the present case also the assessee has been provided with a certificate by JNPT that the assessee s CFS is an extended arm of the Port and similar certificate was provided in the cases dealt with by Special Bench according to highlighted portion of the decision of Special Bench. Such certificate issued by JNPT was also withdrawn in those cases (para 64). Such withdrawal by the JNPT was not considered as material by the Special Bench for denial of deduction under section 80IA(4). Moreover, in the certificate dated 31/3/2006, JNPT has clearly stated that assessee s CFS may be considered as an extended arm of the Port related activities in accordance with Circular No.133/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent by specifically pointing out that there is some difference in the facts and circumstances of the present case when they are compared to the facts of the cases before Special Bench. 25.5. So far as it relates to the aspect of consistency which was argued at length by both the parties. Ld. D.R while objecting to the submission of Ld. AR on the issue of consistency has relied on the decision in the case of B.R. Construction (supra) in which it has been held that broadly principle of consistency will cease to be binding precedent in five circumstances which are listed in para 24.3 of this order. It is the case of Ld. DR that the order of Special Bench is sub-silentio, therefore, it ceases to be a binding precedent. We do not find any force in such argument of Ld. D.R as the order of Special Bench cannot be said to be sub-silentio as all the contentions of the Revenue are considered and the matter is decided in accordance with solitary decision of Hon ble Delhi High Court available on the issue. Even till date revenue has not been able to cite any decision of any other High Court in which contrary decision is taken. The cases of CFS are better placed from the cases of ICD s co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the year under consideration, read as under: (b) it has entered into an 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;] 25.9 Both the parties have also argued on this issue at length. As mentioned earlier it is the case of the assessee that it is not necessary to have a written agreement. As against that it is the case of revenue that the agreement should be in writing and it should be in accordance with the provisions of Article 299(1). We have given careful thought to such arguments raised before us. The reply of the assessee dated 27/12/2011 submitted in response to show cause notice issued by AO has been reproduced in the assessment order in para 3.3 for A.Y 2006-07. In the reply reference has been made to both circulars issued by CBDT dated 23/6/2000 and dated 16/12/2005 and the relevant portion of those submissions are reproduced below: The Central Board of Direct Taxes (CBDT) vide its circular no. 10 of 2005, dated 16th December. 2005 (Annexure 1) has relax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the only requirement was to obtain a certificate from the concerned Port Authority that the structure of CFS form part of the Port. While holding that assessee is not entitled to get deduction under section 80IA(4) for want of agreement stipulated in clause (b) of section 80IA(4)(i), Ld. CIT(A) has ignored such submissions of the assessee. According to well established law Board is empowered to issue beneficial circulars in favour of assessee which tone down the rigor of law and such power is vested in the Board under the provisions of section 119 of the Act and such circular is also binding on the authorities employed in the administration of the Act. The benefit of such Circular is permissible even though the circular might have departed from the strict tenor of the statutory provision and mitigated the rigor of the law. Reference in this regard can be made to the following observations of Hon ble Supreme Court from the decision in the case of Keshavji Raoji Company vs. CIT (supra) However,-this is what Sri Ramachandran really has in mind -circulars beneficial to the assessees and which tone down the rigour of the law issued in exercise of the statutory power under s. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fied that the conditions that were spelt out in the earlier circular dt. 23rd June, 2000 would continue to operate in respect of assessment years prior to and culminating with asst. yr. 2001-02. With effect from asst. yr. 2002-03 all that was necessary was a certificate issued by the port authority that the structure in question forms a part of the port. Hence, the evolution of s. 80-IA would show a progressive liberalisation of the legislative scheme, in the interests of aiding the growth of infrastructure. The administrative circulars issued by CBDT in implementation of s. 80-IA similarly liberalised the scheme, consistent with the Act. (emphasis ours) 25.12 It may be mentioned here that Ld. CIT(A) has referred to the aforementioned decision of Hon ble High court in the case of CIT vs. ABG Heavy Industries Ltd.,(supra) to hold that execution of an agreement between the assessee and public authority is mandatory but the position is otherwise. The condition which was required to be fulfilled in the case of a CFS was only limited to obtaining the certificate from the Port Authority that the said structure form part of the Port which is clear from the aforementioned observatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the impugned bridge on BOT basis. It is not the case of the Revenue that the entire expenditure incurred in the construction of the aforesaid bridge was not borne by the assessee but by M/s Ajay Constructions, the main tenderer. The Revenue has rejected the claim of the assessee for the simple reason that the assessee had never entered into any contract with the State Government and the assesseecompany is nothing but a colourable device to evade tax. It is a settled position of law that the company is a juristic entity and it should be considered independent from the shareholders or the directors. Admittedly, M/s Ajay Construction, the original tenderer, have assigned the remaining work of the contract/tender along with the expenditure incurred by it to Smt Usha Agrawal, the promoter of the assessee-company though an agreement dt. 1St April, 1995 and thereafter the construction work was undertaken by the promoter of the assessee-company till its incorporation. When the permission of the assignment was granted by the State Government, fresh agreement was executed between the assesseecompany and the main tenderer, M/s Ajay Constructions, in which the assesseecompany has ratified ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubsequent year for breach of certain conditions unless the deduction granted in initial A.Y.2004-05 is withdrawn. Such proposition is supported by the decision of Jurisdictional High Court in the case of CIT vs. Paul Brothers (supra). No contrary decision was cited by the other side. Therefore, also deduction u/s. 80IA(4) cannot be denied to the assessee for the years under consideration. 2.3. We note that while deciding the issue, the Bench made an elaborate discussion on various cases, the provisions of section 80IA(4), CBDT Circular, reply of the assessee dated 27/12/2011 mentioning CBDT Circular dated 23/06/2000 and 16/12/2005. Circular dated 16/12/2005 has done away with the requirement of agreement and the said circular was discussed by their lordship of the Hon ble jurisdictional High Court in the case of CIT vs ABG Heavy Industries Ltd. 322 ITR 323(Bom.). The Bench finally concluded that the claimed deduction cannot be denied to the assessee. So far as, contention of the ld. DR that the decision in the case of AlL Cargo Global Logistic Ltd. vs DCIT (2012) 18 ITR (Trib) 106 (Mum.)(SB) has not been accepted by the department and appeal has been preferred before the H ..... X X X X Extracts X X X X X X X X Extracts X X X X
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