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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 ..... in transit containers' handling, repair, storage, etc. The assessee claimed deduction amounting to Rs. 2,38,86,771/- u/s 80IA(4) of the Income Tax Act, 1961 read with the explanation thereto as 'infrastructure facility'. The AO called upon the assessee to justify its claim for deduction u/s 80IA(4). It was contended before the AO that the provisions of sec. 80IA was amended by the Finance Act, 2000 and as per CBDT Circular No. 793, dt. 23rd June, 2000, the Port Trust could certify structures near the port for benefit u/s 10(23G) and section 80IA of the Income Tax Act and that the assessee-appellant had obtained such certificate from Port Trust of Visakhapatnam. It was also submitted that the assessee-appellant got approval from Ministry of Commerce & Industry and that the assessee was classified as CFS by the Commissioner of Customs. It was further submitted that in view of the amended provision of section 80IA from A.Y. 2000-01, an 'Inland port' falls within the definition of 'Infrastrcuture facility' u/s 80IA(4), and that the Ministry of Shipping vide letter dtd. 16.09.2008 have classified CFS as 'Inland port'. With reference to these circulars, the assessee has contended that it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oading etc., will be included in the definition of port for the purpose of section 10(23G) and 80IA 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 of the port." On perusal of the certificate issued by the Visakhapatnam Port Trust indicate that the structure on which the assessee has claimed deduction u/s 80IA(4) of the Income Tax Act, 1961 does not fulfill the conditions enumerated in circular no. 793, dtd. 23.06.2000 such as Container Freight Station has not been built under BOT and BOLT scheme and there is no agreement that the same would be transferred to VPT on expiry of time stipulated in the agreement as mentioned in Circular No. 793, dtd. 23.06.2000 or Circular No. 10/2005, dtd. 16.12.2005. It can be seen from the above that the conditions enumerated vide circular no. 2005, dtd. 23.06.2000 for such structures to be included in the definition of port is not fulfilled by the assessee company. Coming to circular no. 10/2005, the conditions laid down for such structure to be eligible for deduction is that the concerned port authority has issued a certificate, that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issioner of Income tax in F.No. 178/42/2010-ITAT-I, dt. 06.01.2011. "Under section 80IA(4)(I) of Income-tax Act, a deduction is given to the income of an undertaking engaged in setting up of an infrastructure facility. The term "infrastructure facility" has been defined in section 80IA(4), inter alia, as under: "a port, airport, inland waterway, inland port or navigational channel in the sea. In order to clarify the term port, and whether the facilities of loading and unloading constitute a part of a port, the Board issued two circulars i.e., circular no. 793 dated 23.06.2000 and circular No. 10 dated 16.12.2005. In the first circular, it was clarified that structures at ports for storage, loading and unloading will be covered by the definition of port for the purpose of section 10(23G) and section 80IA subject to the condition that the concerned port authorities has issued a certificate that such structures form a part of the port and the same have been constructed under the BOLT scheme. This was again reiterated in the circular dtd. 16.12.2005 wherein it was stated that for the A.Y. 2002-03 onwards, structures at ports for storage, loading and unloading will be included in the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eligible for deduction u/s 80IA(4). The case of the assessee squarely falls under this clarification. An important criteria for the claim u/s 80IA(4) of the Income Tax Act, 1961 is "the Indian Company should enter into an agreement with Central or State Government or a Government undertaking etc. for operating the said facility subject to the condition that such facility should be transferred to the said Government undertaking within the period stipulated in the agreement." There is no agreement between the assessee company and the government or body, etc. as enjoined in section 80IA of the Act for development of the said structure. This is a major criteria governing the eligibility for claiming deduction/s. 80IA which the assessee also does not fulfill." Accordingly the AO has made the impugned disallowance u/s 80IA(4) and made the impugned addition of Rs. 2,39,86,771/-. 3. Aggrieved the assessee carried out the matter in appeal. The first appellate authority upheld the order of the AO and dismissed the appeal of the assessee. 4. Aggrieved the assessee has filed this appeal on the following grounds: "1. On the facts and in the circumstances of the case and in law, the Ld. CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... greement with the Central Government, State Government, local authority or statutory body and that such an agreement was not submitted by the assessee before the AO. He specifically drew the attention of the Bench to the last para at page 7 of the assessment order. He further argued that what the facility the assessee has is not part of the port and that it is located in a premises, which is situated far away from the port and hence the assessee becomes ineligible for deduction u/s 80IA of the Act. He referred to the CBDT circular no. 793 dated 23/06/2000 and submitted that the conditions laid down therein are: a) the concerned port authority has issued a certificate that the said structure forms part of the port and; b) that the structure has been build under BOT & BOLT scheme and there is an agreement that this would be transferred to the said authority on the expiry of the time stipulated in the agreement. He further submitted that this circular was superseded by CBDT circular no. 10/2005 dated 16/12/2005 and argued that on a perusal of the certificate issued by Visakhapatnam Port Trust, it is clear that the structures on which the assessee has claimed deduction u/s 80IA(4) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o not have "public authority status" whereas ICD is a place that acts as a "self contained Customs Station" as categorically spelt in Circular of CBEC dt. 08.06.2009. Further the said circular clearly distinguishes ICD and CFS and makes it very obvious that CFS is nothing but a warehouse. (c) Distinction between ICD & CFS: * "Inland Container Depot is a place that acts as a "self contained customs station" like a port or air cargo unit where - Filling of customs manifests, Bills of entry, Shipping bills and other declarations, assessment and all the activities related to clearance of goods for home use, warehousing, temporary admissions, re-export, temporary storage for onward transit and outright export, transshipment, etc., takes place." *"Container Freight Stations are specified as customs area under Clause (b) of the said Section 8 wherein imported goods or export goods are ordinarily kept before clearance by the customs". * An ICD is a 'self contained Customs station' like a port or air cargo unit where filing of Customs manifests, Bills of Entrys, Shipping Bills and other declarations, assessment and all the activit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dependent Customs station with provision for filing and assessment of documents and examination of goods. A Customs clearance facility could be established as a CFS at a port city for examination of imported/export goods, since the CFS would fall under the jurisdiction of Commissioner of Customs, having jurisdiction over the Customs port with which the CFS would be attached. Further, in a port city such as Chennai or Mumbai, it may be possible to develop an ICD within the territorial jurisdiction of the concerned Customs Commissionerate in addition to existing CFSs. Such an ICD should be capable of providing full-fledged Customs services, independent EDI system, and all procedures meant for transshipment of cargo have to be followed for movement of goods from the port of import to the ICD. Further, such an ICD would function as an independent Customs Station in all respects and would not be attached to any other port or airport. Thus, in respect of proposals for setting up of ICD/Container Freight Station from prospective operators it has to be examined whether the proposed facility is required to be approved as an ICD or CFS. * Movement of goods from a port/airport/LCS to an ICD ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted 8.2.2003 on the above subject and to say that the Government has approved your proposal for setting up of an Container Freight Station at Haldia for Handling import and export cargo. The approval is subject to t le following terms and conditions:- (a) The Letter of Intent holder shall take adequate steps to create proper infrastructure keeping in view the indicative norms given in Parts A& B of the Guidelines for setting up Inland container Depots I Container Freight Stations (ICDs/CFs) within a period of one year from the date of issue of this letter. (b) Necessary bond and guarantees, as required, would be executed with the concerned Commissioner of Customs and Central Excise. (c) The approval would be subject to cancellation in the event of violation of the Customs and other laws of the land and Rules. (d) A quarterly progress report of the implementation shall be sent to the Ministry of Commerce. (e) The working of the CFS will be open to review by the Inter Ministerial Committee. (f) Formalities in respect of acquisition/possession of the land shall be completed within 60 days and intimated to the Mlo Commerce, failing which the approval granted would be automaticall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment and hence the assessee is not eligible for exemption is not the correct position of law. 12. The Hon'ble Delhi High Court in the case of Container Corporation Ltd. (supra) held as follows: "The term "infrastructure facility" was defined in section 80-IA(12)(ca) of the Income Tax Act, 1961, to mean a road, highway, bridge, airport, port or rail system or any other public facility of a similar nature as may be notified by the Central Board of Direct Taxes. The Finance (No. 2), 1998, included the words "Inland water ways and inland ports" in the definition of "infrastructure facility" in sub-section (12), clause (ca), with effect from April 1, 1999. When the entire section was recast and even after several amendments were thereafter made to the section, inland ports continued to enjoy the dededuction as infrastructure facility. There is no definition of the words "inland ports" in any of the dictionaries. But the words "inland container depot" "were introduced in sec. 2(12) of the Customs Act, 1962, which defines "customs port". This was by way of an amendment made by the Finance Act, 1983, with effect from May 13, 1983. Simultaneously, clause (aa) was inserted in sec. 7(1) of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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