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TMI Blog2015 (12) TMI 461X X X X Extracts X X X X X X X X Extracts X X X X ..... uthority or statutory body has been done away with by Finance Act, 2001 w.e.f. 1st April 2002. Therefore, the reasoning of the Assessing Officer that the assessee would not get deduction under section 80IA(4) agreement BOT / BOLT stipulating handing over the infrastructure facility to the Government is wholly without basis. Even assuming for the argument sake that such condition is applicable for the impugned assessment year, still in our view, the stand of the Department is wholly misconceived as the first appellate authority after perusing the agreement with CIDCO has given a categorical finding that CFS developed, operated and maintained by the assessee would revert back to the statutory body after expiry of lease period of 60 years. This finding of fact recorded by the first appellate authority has not at all been controverted by the Department. Thus, both the arguments of the Assessing Officer for denying assessee's claim of deduction would fail. - Decided against revenue Disallowance of interest expenditure claimed under section 36(1)(iii) - CIT(A) deleted the disallowance - Held that:- Assessing Officer has disallowed interest expenditure only on the allegation that asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is engaged in the business of developing operating and maintaining a container freight station (CFS) at Nhava Sheva, Mumbai, which is also approved by the Ministries of Revenue, Commerce and Shipping, as well as Customs Department, Government of India. As stated by the assessee, it has set-up the CFS in the financial year 1998-99 after duly entering into an agreement with CIDCO. As per the terms of agreement, CIDCO allowed the assessee to set-up and operate the CFS for a period of 60 years. For the assessment year 2008-09, the assessee filed its return of income on 29th September 2008, declaring total income of ₹ 17,23,16,060. Subsequently, revised return was filed by the assessee on 13th June 2009, declaring total income of ₹ 17,23,16,060. During the assessment proceedings, the Assessing Officer, on examining the audited financial statements submitted by the assessee, found that it has claimed deduction under section 80IA(4) for an amount of ₹ 66,11,00,325. The Assessing Officer, after considering the submissions of the assessee and perusing the agreement with CIDCO was of the view that the said agreement is not a BOT / BOLT agreement. He, therefore, issued a sho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt as prescribed under section 80IA(4). He also observed that as per information obtained from CIDCO, the assessee has not entered into BOT / BOLT agreement, therefore, the conditions of section 80IA(4) are not complied. On the aforesaid premise, the Assessing Officer finally disallowed assessee's claim of deduction under section 80IA(4). Being aggrieved of such disallowance, the assessee preferred appeal before the first appellate authority. 4. In the course of hearing of appeal before the first appellate authority, the assessee made detail submissions contesting each of the findings of the Assessing Officer while disallowing assessee's claim of deduction. The learned Commissioner (Appeals), after considering the submissions of the assessee in the light of facts and material onrecord as well as the decisions relied upon by the assessee, found that the assessee has commenced its business of CFS in the assessment year 1999-2000. He also found that the assessee has entered into a contract with CIDCO on BOT / BOLT basis for construction of CFS vide agreement dated 28th June 1997. He observed that the assessee had claimed deduction under section 80IA(4) for the CFS for the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the possession of the Assessing Officer which revealed that assessee has not fulfilled the condition of section 80IA(4). The learned Departmental Representative submitted, each assessment year being an independent unit, irrespective of fact whether deduction was allowed in the earlier assessment year still the Assessing Officer can form an independent opinion on the basis of information obtained in a subsequent assessment year with regard to the deduction claimed by the assessee. She, therefore, submitted, the Assessing Officer having found that assessee has not fulfilled all the conditions of section 80IA(4) was competent to disallow assessee's claim of deduction. Further, the learned Departmental Representative submitted on the basis of the assessment made for the assessment year 2008-09, assessments for preceding years have been re-opened under section 147. She, therefore, submitted that the learned Commissioner (Appeals) was not justified in allowing assessee's claim. 6. The learned Senior Counsel for the assessee, Shri S.E. Dastur, submitted before us, in the assessment year 2002-03, the assessee for the first time claimed deduction under section 80IA(4) in respe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igible for deduction. For such proposition, he relied upon the decision of the Tribunal in another group company i.e., Gateway East India Pvt. Ltd. v/s ACIT, ITA no.15/ Vizag./2015, order dated 29th April 2015. As far as the contention of the learned Departmental Representative that each assessment year being separate and independent unit, the Assessing Officer can form an independent opinion on a particular issue if additional information come to his possession, the learned counsel strongly contesting such submissions submitted, only in a case where there is change in facts which existed in earlier assessment year, the Assessing Officer can take an independent view. However, when the facts are identical, the Assessing Officer on the basis of information obtained as a result of enquiry conducted by him, cannot take an independent view, more so, when the deduction provided under the statute is for a specific period and such deduction is allowed to the assessee in the initial assessment year. He submitted, the agreement with CICDO and all other relevant materials were already before the Assessing Officer in the initial assessment year and there is no change in these facts. He submitt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is to be considered as an inland port. In fact, the Tribunal, Vizag Bench, in Gateway East India Pvt. Ltd. (supra), following the decision of the Hon'ble Delhi High Court in Container Corporation of India Ltd. v/s CIT, held that CFS being an inland port is an infrastructure facility for the purpose of section 80IA(4). In view of the aforesaid, we have no hesitation in holding that assessee having developed, operated and maintained a CFS is eligible for deduction under section 80IA(4). 10. The second argument of the Department is the agreement with CIDCO is not BOT / BOLT by virtue of which infrastructure facility developed by the assessee would revert back to the Government after a specified period, it is not eligible for deduction. However, on a reading of the provisions of section 80IA(4)(i)(b), as it existed from 1st April 2002, it is clear that the condition that such infrastructure facility shall be transferred to the Government, local authority or statutory body has been done away with by Finance Act, 2001 w.e.f. 1st April 2002. Therefore, the reasoning of the Assessing Officer that the assessee would not get deduction under section 80IA(4) agreement BOT / BOLT stipul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her related facts remain same. That being the case, in our view, when deduction is allowed to the assessee in the first year of claim it cannot be withdrawn in any subsequent year. The argument by the Department that the assessment in the case of some of the preceding assessment years has been re-opened under section 147 cannot improve the situation of the Department as the position on the date of assessment for the assessment year 2008-09 has to be taken into account. If that is the case, it is very much clear that on the date, the Assessing Officer completed the assessment for assessment year 2008-09 the uncontroverted position was assessee's claim of deduction under section 80IA(4) in respect of CFS was allowed from the assessment year 2002-03 to 2007-08, that too, in assessments completed under section 143(3) of the Act. Therefore, the Department having allowed assessee's claim of deduction in the first assessment year it cannot withdraw such claim in the impugned assessment year. In this context, we refer to the decisions of the Hon'ble Jurisdictional High Court in CIT v/s Western Outdoor Interactive Pvt. Ltd., [2012] 349 ITR 309 (Bom.) and CIT v/s Paul Brothers, [ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 and no decision was rendered vis-a-vis withdrawal of deduction? 3. Whether the Ld.CIT (A) was justified in relying on the decision of the Hon'ble SC in the case of Radhasoami Satsang Vs. Commissioner of Income Tax (193 ITR 321) in as much as a. The Hon'ble SC has endorsed the view that res judicata does not apply to income tax proceedings. b. The Revenue is justified in taking contrary view where there is a material change to adopt a different stance. c. The Hon'ble SC itself has accepted that its decision in the case of Radhasoami Satsang is specific to the facts of the case and cannot be taken as having general application. 4. Whether the Ld.CIT(A) was justified in holding that it is not open for the AO to disallow the deduction granted in earlier years, without appreciating that the provisions of 5.143(3) would become redundant for subsequent years, and which is not what is provided for in the law? 5. Whether the Ld.CIT(A) was justified in holding that it is not open for the AO to disallow the deduction granted in earlier years, without appreciating that the AO had already initiated remedial measures u/ s. 148 of the I-T Act, in respe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee that the term loan was used entirely for the purpose of purchasing capital asset required for expansion of its business. To prove such claim, the assessee also submitted loan agreement with the bank for obtaining term loan of ₹ 25 crore. The Assessing Officer not being convinced with the explanation of the assessee and further alleging that the assessee has not furnished any evidence for utilisation of loan fund observed that the assessee's investment in equity shares of subsidiary as on 31st March 2008, stood at ₹ 167.79 crore which increased to ₹ 253.65 crore as on 31st March 2009. Thus, the Assessing Officer alleging that the assessee has failed to establish the fact that borrowed funds were not utilised for investment in subsidiaries disallowed assessee's claim of expenditure towards payment of interest. While doing so, the Assessing Officer also observed that as entire money in a business entity comes to a common kitty share capital, term loan, working capital, loan, sale proceeds, etc., they have the same colour. Being aggrieved of the disallowance made by the Assessing Officer the assessee challenged the same before the first appellate authorit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee had own interest free funds on account of share capital and reserves to the tune of ₹ 633 crore. This fact has not been controverted by the Department. Therefore, when both borrowed funds and interest free funds are available to the assessee, as per the principles laid down by the Hon'ble Jurisdictional High Court in CIT v/s Reliance Utilities and Power Ltd. (supra), the presumption would be, investment in subsidiary is from own interest free funds. In that view of the matter, we do not find any reason to interfere with the order of the first appellate authority. Moreover, on a perusal of the loan agreement with the Bank, it is very much evident that there is stipulation in the agreement that from time-to-time the bank will make inspection for ensuring utilisation of funds for the purpose for which it was taken. Therefore, when there is no allegation by the bank that borrowed funds were not utilised for the specific purpose for which it was given, the Assessing Officer cannot assume or presume that borrowed funds were utilised for making investment in the subsidiary. For the aforesaid reasons, we uphold the order of the learned Commissioner (Appeals) by dismissing t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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