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TMI Blog2015 (12) TMI 365X X X X Extracts X X X X X X X X Extracts X X X X ..... oms clearance also takes place in the inland container depot, the assessee’s claim that the inland container depots were inland ports under Explanation (d) to sec. 80IA(4) required to be upheld - Decided in favour of assessee. - ITA No. 15/Vizag/2015 & SP No. 15/Vizag/2015 - - - Dated:- 29-4-2015 - SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER Appellant by: Shri M. Agarwal, Adv. Respondent by: Shri D. Manoj Kumar, Sr. DR ORDER Per J.SUDHAKAR. REDDY: - This is an appeal filed by the assessee directed against the order of the Commissioner of Income Tax (Appeals)-1, Visakhapatnam dated 03.12.2014 for the assessment year 2011-12. 2. The brief facts relating to this case are that the assessee company filed return of income for the A.Y. 2011-12 on 26.09.2011 declaring gross total income of ₹ 2,40,68,838/-. Out of the gross total income, the assessee company claimed deduction u/s 80IA(4) of Income Tax Act, 1961 of ₹ 2,38,86,771/- and returned total income of ₹ 1,82,067/-. The appellant company is a subsidiary of Gateway Distriparks Ltd. and is doing operations of container Freight Station (CFS) at Sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3G) and 80IA of the Income Tax Act, 1961, if the following conditions are fulfilled: (a) the concerned port authority has issued a certficiate that the said structures form part of the port, and (b) such structures have been 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 the agreement . The above circular was superseded by circular No. 10/2005 dated 16.12.2005 which is reproduced as under: Reference is invited to Board circular No. 793 dated 23.06.2000 and amendment in section 80-IA by the Finance Act, 2001. 2. Port, for the purpose of section 10(23G) and 80IA 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 build udner 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 the agreement. This definition is applicable to A.Y. 2001- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee is not located in the port but an extended arm of the port i.e., in a premises away from the port. Since it is an extended arm which means away from the port it is clear that it is not a part of the port as enjoined in the circular. During the course of assessment proceedings, the ld. Counsels appearing on behalf of the assessee-company relied upon the decision of the Hon ble ITAT Special Bench, Mumbai and the said case law has been carefully perused. The decision of Hon ble ITAT, Special Bench, Mumbai in the case of M/s All Cargo Global Logistics Ltd. vs. DCIT for the assessment years 2004-05 to 2009-10 involved grounds regarding interpretation of section 153A and deduction u/s 80IA(4) of the Income Tax Act, 1961 and are, therefore, distinguishable on salient features and facts of the case. The department has not accepted the decision of the Hon ble ITAT Special Bench, Mumbai on the above issue and has preferred appeals before the Hon ble High Court, Mumbai. After having carefully considered the various issues emerging from the above cited circulars of the Board and the decision of the Hon ble Special Bench, Mumbai, it is important to reproduce a clarification issued b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. References 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 u/s 80IA(4)(i) of the Income-tax Act, 1961. In this context, I am further directed to convey that the Board has considered the issue and it has been decided that as ICDs and CPSs are not ports located on any inland waterway, river or canal, and, therefore, they cannot be classified as inland ports for the purpose of section 80IA(4) of the Income-tax Act. From the above clarification, the following facts emerge that make the assessee company M/s Gateway East India Pvt. Ltd. ineligible from claiming deduction u/s 80IA(4) of the Income Tax Act, 1961: As stated in para 9 of this order on definition of being part of the port, the ICD of the assessee is not located in the port, it is located on a premises situated away from the port taken on long lease of 30 years by the Visakhapatnam Port Trust, the land does not belong to the Visakhapatnam Port Trust and it is not located in the port. Since it is not located in the port the assessee does not fulfill the conditions as per the circu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the structure is already in the port, then the question of taking the certificate would not arise. Therefore, when the certificate states that the structure forms the extended arm of the port, it is a sufficient compliance in terms of Circular No. 10 of2005. The certificate further states that it is issued in respect of the claim of deduction under Section 80lA of the Act. The above grounds of appeal are without prejudice to each other. The Appellant reserves the right to add, alter, amend or withdraw any ground of appeal either before or at the time of hearing of this appeal. 5. The ld. Counsel for the assessee Shri Madhu Agarwal submitted that the issue in question is no more res integra and that it is covered by the judgment of the Hon ble Delhi High Court in the case of Container Corporation of India vs. ACIT, reported in 346 ITR 140, wherein it is stated that CFS is an Inland Port . He also placed reliance on the judgment of the Special Bench of the Mumbai Tribunal in the case of All Cargo Global Logistics Ltd. specifically at para 66. It was further submitted that the controversy in question is put to rest by the Circular of the CBEC i.e. Circular no. 18/2009 dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9 taxman.com 251. He contended that his case is that they run a facility in the Inland Port. 7. Rival contentions heard. On careful consideration of the facts and circumstances of the case and also on perusal of the papers on record, orders of the authorities below and the case law cited, we hold as follows: 8. In circular no. 18/2009 dated 08/06/2009 issued by the Central Board of Excise and Customs in F.No. 434/17/2009-CUS.IV the difference between Inland Container Depots (ICD) and Container Freight Stations(CFS) has been spelt out in the following manner: (a) DEFINITION OF ICD: An Inland Container Depot may be defined as: A common user facility with public authority status (emphasis supplied) equipped with fixed installations and offering services for handling and temporary storage of import/export laden and empty containers carried under customs control and with Customs and other agencies competent to clear goods for home use, warehousing, temporary admissions, re-export, temporary storage for onward transit and outright export. Transshipment of cargo can also take place from such stations. (b) DEFINITION OF CFS: A Container Freight Station may be defined ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the main objective of decongesting the ports. In a CFS only a part of the Customs processes mainly the examination of goods is normally carried out by Customs besides stuffing/destuffing of containers and aggregation/segregation of cargo. Thus, Custom's functions relating to processing of manifest, import/export declarations and assessment of Bill of Entry/Shipping Bill are performed in the Custom House/Custom Office that exercises jurisdiction over the parent port/airportlICD/LCS to which the said CFS is attached. In the case of Customs Stations having facility of automated processing of documents, terminals are provided at such CFSs for recording the result of examination, etc. In some CFSs, extension Service Centers are available for filing documents, amendments etc. However, the assessment of the documents etc. is carried out centrally. An ICD may also have a number of CFSs attached to it within the jurisdiction of the Commissioner of Customs just as in the case of a port and its CFSs (as on date there are 28 CFSs linked to Chennai port) [Refer Circular No. 18/2009-Cus. , dated 8- 6-2009]. A standalone Customs clearance facility in an inland Commissionerate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tor of the assessee company regarding setting up of a CFS at Visakhapatnam apropos the assessee s case. 10. In the case of A L Logistics P. Ltd. (supra) the Chennai Bench of the Tribunal at para 7 held as follows: 7. Now, we proceed to the next issue, whether in the absence of specific agreement with the Central/State Government, local authority or Statutory Body, the assessee is entitled to claim the benefit of section 80IA( 4 )(i)? The assessee had made an application for setting up of CFS at Haldia. In response to the application of assessee, the Department of Commerce, Infrastructure Division, Ministry of Commerce and Industry approved the proposal of the assessee for setting up of CFS at Haldia for handling import/export of cargo subject to execution of certain documents and compliance of other terms and conditions as stated in the letter. The Id. Counsel for the assessee has placed on record letter dt.27-05-2003 from the Ministry of Commerce and Industry permitting the assessee to set up CFS at Raldia. The contents of the letter are reproduced herein below: No. 16/6/2003-lnfra-I Government of India Ministry of Commerce Industry Deptt.of Commerce Infra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce of the terms and conditions as mentioned in the letter, was notified as CFS Complex for the purpose of receiving, storing, import containers, receiving/consolidating export cargo etc. vide Public Notice OUO-1l-2013. The Public Notices were issued by the office of the Commissioner of Customs (Port) Kolkata. 8. Thus, it is evident that the proposal of the assessee was accepted by the Government on certain conditions which were duly complied with by the assessee. There may not be any specific agreement, but the sequences of events clearly show that the assessee is providing CFS facility in accordance with the conditions laid down by the Government. In such circumstances there is no need to insist for the specific execution of agreements. The coordinate bench of the Tribunal in the case of United Liner Agencies of India (P.) Ltd (supra), has taken a similar view, Where no specific agreement with the State Government was entered into 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. Thus, we are of the considered view that the assessee has complied with all the provisions of s ..... 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