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TMI Blog2019 (6) TMI 477X X X X Extracts X X X X X X X X Extracts X X X X ..... For the Revenue : Shri D.K.Sonowal, DR ORDER PER BENCH: These appeals are filed by the revenue against the order of the Commissioner of Income Tax (Appeals) [CIT(A)]-3, Visakhapatnam dated 17.05.2018 and cross objections are filed by the assessee for the A.Y.2011- 12 to 2014-15. Since the facts involved in all these appeals are identical, the appeals are clubbed, heard together and disposed off in a common order for the sake of convenience as under: 2. We first take up the appeal for the A.Y. 2011-12 and extract the facts from the said assessment record. The assessee is engaged in the business of stevedoring, transportation and warehousing, filed it's return of income for the A.Y.2011-12 through e-filing on 29.09.2011 declaring total income of ₹ 3,77,21,730/- after claiming the deduction of ₹ 3,68,28,209/- u/s 80IA of the Income Tax Act, (in short 'Act'). The assessment was completed u/s 143(3) in this case on total income of ₹ 7,59,49,939/-. In the assessment made u/s 143(3), the AO disallowed deduction claimed by the assessee u/s 80IA of the Act. During the assessment proceedings, the AO observed that the assessee has claimed deduction u/s 80IA of the Act fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n that CFS is not an extension of Port. The Ld.AO did not follow the decision of Income Tax Settlement Commission (ITSC) on the ground that the Department has not accepted the decision of ITSC and filed writ petition before the Hon'ble High Court, Chennai, challenging the decision of Settlement Commission. Accordingly, disallowed the deduction claimed u/s.80IA(4) and made the addition of ₹ 3,68,28,209/- for the A.Y. 2011-12. Identical addition was made for the A.Y. 2012-13 to 2014-15 as under: A.Y. Amount of Addition (Rs.) 2012-13 4,77,64,091/- 2013-14 11,29,27,668/- 2014-15 13,66,14,719/- 3. Aggrieved by the order of the AO, the assessee went on appeal before the CIT(A) and the Ld.CIT(A) allowed the appeal of the assessee following the decision of this Tribunal in the case of Gateway East India (P) Ltd, vs ACIT in ITA No.15/Vizag/2015 dated 29/04/2012 for the A.Y.2011-12. 4. Against the order of the Ld.CIT(A), the revenue has filed appeal before this Tribunal. During the appeal hearing, the Ld.DR relied on the order of the AO and heavily placed reliance on CBDT Circular No.178/42/2010 dated 06.01.2011 and argued that the CFS is not a port for claiming deduction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uce the relevant part of the order of the Apex court which reads as under: 21. Moving further to the issue whether the ICDs can be termed as Inland Ports so as to entitle deduction under Section 80-IA of the IT Act. The term port, in commercial terms, is a place where vessels are in a habit of loading and unloading goods. The term 'Port' as is used in the Explanation attached to Section 80-IA(4) seems to have maritime connotation perhaps that is the reason why the word airport is found separately in the Explanation. Considering the nature of work that is performed at ICDs, they cannot be termed as Ports. However, taking into consideration the fact that a part of activities that are carried out at ports such as custom clearance are also carried out at these ICDs, the claim of the respondent herein can be considered within the term 'Inland port' as is used in the Explanation. It is significant to note that the word 'Inland Container Depots' was first introduced in the definition of 'Customs Port' as is given in Section 2(12) of the Customs Act, 1962, through amendment made by the Finance Act, 1983 with effect from 13.05.1983. 22. The term 'In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e No.3 to 8 in para No.6.1 to 6.5 which reads as under : 6.1) There are (4) grounds raised in the appeal. Ground Nos.(1) & (4) are general in nature, hence, no separate adjudication is required. The only effective ground in this appeal is Ground No.(2) which is with regard to the addition made by the Assessing Officer by disallowing the deduction claimed u/s 80IA of the Act. On a careful consideration of the submissions made by the appellant, I find that this issue is squarely covered by the decision of Hon'ble ITAT, Visakhapatnam Bench in the case of Gateway East India Pvt. Ltd.(Supra). In that case also, the assessee was operating a CFS at Sheelanagar, Port Road, Visakhapatnam. The Assessing Officer has disallowed the deduction claimed u/s. 80IA exactly on similar grounds. The Hon'ble Bench has discussed all the issues at length and held that the deduction u/s 80(IA) was rightly claimed. The relevant portion of the order is extracted hereunder: "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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng, temporary admissions, re-export, temporary storage for onward transit and outright export, transshipment, etc., take place. An ICD would have its own automated system with a separate station code [such as INTKD 6, INSNF6 etc.] being allotted by Directorate General of Systems and with in-built capacity to enter examination reports and enable assessment of documents, processing of manifest, amendments, etc. • 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. A CFS is only a Customs area located in the jurisdiction of a Commissioner of Customs exercising control over a specified Customs port, airport, LCS/lCD. A CFS cannot have an independent existence and has to be linked to a Customs station within the jurisdiction of the Commissioner of Customs. It is an extension of a Customs station set up 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one Customs station to another, governed by Goods Imported (Condition of Transshipment) Regulations, 1995. On the other hand, movement of goods from a port/airport/LCS or an ICD to a CFS is akin to local movement from a Customs area of the Customs station to another Customs area of the same station, covered by local procedure evolved by the Commissioner of Customs and covered by bonds, bank guarantee, etc. Further, the person undertaking the transshipment would be required to follow the prescribed procedure." As rightly contended by the learned AR of the appellant, the above circular answers in a very clear and categorical manner the objections raised by the Assessing Officer. 9. As far as the contention that there is no agreement with any Government or statutory authority, we find that the assessee has placed on record letter of intent. In fact the Ministry of Commerce and Industry, vide letter dated 10/02/2005, written to the Managing Director 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cancelled. 2. The facility to be set up shall be full computerized, with EDI compatibility and a minimum complement of equipment and accessories as necessary shall be made available at the facility. The indicative list of equipment/accessories considered necessary is annexed. The status regarding confirmation of the installation! availability of the items shall be furnished to the appropriate authorities to facilitate issue of requisite notification. 3. Please acknowledge receipt of this letter. Yours faithfully, Sd/- (N.G. Biswas) DIRECTOR" A perusal of clause 'b' of the above letter shows that the assessee was required to execute necessary bond and guarantees with the concerned Commissioner of customs an -Central Excise. It was only on the compliance of all the terms and conditions mentioned in the aforesaid letter that the assessee was allowed to carry on the services of CFS. The assessee on the compliance 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sec. 7(1) of the Act under which the CCHI issue notification appointing the places which alone shall be considered as inland container depots for the unloading of imported goods and loading of exported goods. The Central Board of Excise and Customs issued a clarification that inland container depots were inland ports. The power to notify infrastructure facilities for the purpose of the section was taken away from the Central Board of Direct Taxes w.e.f. April 1,2002. However, there was no provision made in the Act saying that notifications issued earlier would cease to have from April 1, 2002.The assessee, a public sector undertaking, was engaged in the business of handling and transportation of containerised cargo. The activity of the assessee was carried out mainly on its inland container deports, Central freight stations see had a total of 45 inland container depots. It claimed special deduction under section 80-IA(4) for the assessment years 2003-04 to 2005-06. The Assessing Officer denied special deduction but the Tribunal allowed it. On appeal to the High Court: Held, allowing the appeals, that out of the total 45 inland container depots operated by the assessee, except t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agreed with the view expressed by the Hon'ble Delhi High Court in the same case reported in 346 ITR 140 (Del.). The Jurisdictional Bench of ITAT (Vizag) followed this High Court order while rendering their decision. Thus, the issue stands settled in view of the decision of the Hon'ble Supreme Court. 6.5) In the light of the above discussion, the Assessing Officer is directed to delete the addition of ₹ 3,68,28,209/- made towards disallowance of deduction claimed u/s. 80(IA) of the Act. Thus, the order of this Tribunal in the case supra answered both the objections of the Assessing Officer with regard to agreement with the Government and the status of CFS as port. 6.3. The assessee relied on the decision of CIT Vs. A.L.Logistics (P) Ltd. vide 374 ITR 0609 of Hon'ble Madras High Court. The issue raised by the revenue before the Hon'ble High Court is as under : "5. Before the Tribunal, the Department contended that there is no proper agreement with the Central or the State Government and even in the approved proposal, certain other requirements are yet to be complied with. On this premise, the Department contended that the benefit of Section 890IA(4)(i) would not endure to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ision Bench in paragraphs 10 and 12 of it judgment extensively referred to the Tribunals conclusions; It also referred to the Special Bench decision of the Tribunal. Thus, when the proposal to set up a CFS has been accepted by the Government, there is no requirement of either a specific agreement as contended by Mr. Suresh Kumar, Nor can it be said that by virtue of any: certification of the JNPT and its subsequent withdrawal the position undergoes any change. Once the facility is nothing but a infrastructure facility set up and within the precincts of the port, then, considering and even otherwise having considered its proximity to the sea port and its activities that we have no doubt and it can be safely concluded that the deduction admissible under sub-section (4) of section 80-IA can be claimed by both the ICDs and CFSs. 8. Since the facts are identical and the department could not place any decision to controvert the case laws relied upon by the assessee, respectfully following the view taken by this Tribunal and the decision of Hon'ble Madras High Court in CIT Vs. AL Logistics (P) Ltd. supra and CIT Vs. Continental Warehousing Corporation of Hon'ble Bombay High Court, we hol ..... X X X X Extracts X X X X X X X X Extracts X X X X
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