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TMI Blog2020 (10) TMI 34X X X X Extracts X X X X X X X X Extracts X X X X ..... ther hand the revenue has challenged the impugned order on the following grounds: "1. Whether on the facts and in the circumstances of the case and in law, the Ld. CTT(A) was right in holding that the assessee is entitled for deduction u/s 801A of the IT Act, 1961 even though activities undertaken by the assessee do not fall within clause (d) of the Explanation to section 801A(4) defining the term Infrastructure facility?" 2. on the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred in allowing relief to the assessee relying on the decision of Hon'ble Special Bench of ITAT Delhi in the case of Vireet Investment (P) Ltd., without appreciating the facts that the issue has not reached to its finality as the Hon'ble Delhi High Court in its decision in the case of Goetz India Ltd., reported in 361 ITR 505 held that while computing Book Profit disallowance u/s 14A is required to be made. However, in its later judgment the Hon'ble Delhi High Court in the case of Bhushan Steel Ltd. (ITA No. 593 & 594/2015) has taken a contrary view". 3. The appellant prays that the order of CIT(A) on the above ground be set-aside and that of the assessing officer b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o why its claim for deduction under Sec.80IA may not on the same lines be rejected. In reply, the assesee tried to impress upon the A.O that its claim for deduction u/s 80IA was within the four corners of law. However, the reply filed by the assessee did not find favour with the A.O. The A.O drawing support from the view that was taken by his predecessor while framing the assessment for A.Y. 2010-11, and also the CBDT clarification, dated 06.01.2011 r.w. circulars dated 16.12.2005 and 23.06.2000, therein concluded, that as Inland container depots and CFS were not 'ports' located on any Inland waterways, river or canal, therefore, they cannot be classified as Inland ports for the purpose of Sec.80IA(4) of the Act. On the issue as to whether or not the assessee was a contractor, the A.O relied on the view that was taken by his predecessor while framing the assessment in the case of the assessee for A.Y. 2010-11. Accordingly, it was observed by the A.O, that as the assessee was merely a contractor and not a developer, therefore, it was not entitled for deduction under Sec.80IA(4) of the Act. Insofar the decisions of the CIT(A) for A.Y. 2010-11 to A.Y. 2013-14 were concerned, the A.O o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 18,16,254/-. Further, the A.O added the disallowance worked out under Sec.14A r.w. Rule 8D to the assessee's 'book profit' under Sec.115JB of the Act. 5. Aggrieved, the assessee assailed the assessment framed by the A.O before the CIT(A). It was observed by the CIT(A) that the disallowance made by the AO of the assessee's claim for deduction under Sec. 80IA(4) in the assessee's own case for A.Y. 2012-13 was vacated by the Tribunal, vide its order passed in ITA No. 5606/Mum/2016. Further, it was noticed by the CIT(A), that his predecessor while disposing off the appeal in the assessee's own case for A.Y. 2014-15, had after relying on the judgement of the Hon'ble High Court of Bombay in the case of CIT Vs. Continental Warehousing Corporation Ltd. (2015) 374 ITR 0645 (Bom), and also, the order passed by the Tribunal in the case of the assessee for A.Y 2010-11 and A.Y 2011-12, had vacated the disallowance made by the A.O of the assessee's claim for deduction u/s 80IA of the Act. It was further observed by the CIT(A) that the Hon'ble Supreme Court in the case of CIT Vs. Container Corporation of India Ltd. (2018) 404 ITR 397 (SC), had observed, that ICDs were Inland ports, and subjec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ility with public authority status equipped with fixed installations and offering services for handling and temporary storage of import/export laden and empty containers carried under customs transit by any applicable mode of transport placed under customs control. All the activities related to clearance of goods for home use, warehousing temporary admissions, re-export, temporary storage for onward transit and outright export, trnas-shipment, take place from such stations. Hon'ble Delhi High Court in the case of Container Corporation India Ltd. (supra) where the assessee carried out activities of Inland Container Depot; Central Freight Stations and port Containers' Terminals, the Hon'ble Court held that the profit derived from such activity is eligible for deduction under section 80IA(4). Our Hon'ble jurisdictional High Court following the aforesaid decision of Hon'ble Delhi High Court has reiterated the same view. The relevant observations of their Lordship in the case of All Cargo Global Logistics Ltd. (supra) analyzing the sub-section (4) of section 80IA reads as under:- "39. A perusal thereof would indicate as to how the Legislature had in mind deduction in respect of prof ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le. 42. However, after considering these contentions, what the Special Bench observes is that the Delhi High Court's view in the case of Container Corporation of India Ltd. would enable it to conclude that ICD may not be a port but it is an inland port. The case of Container Freight Station (CFS) is similarly situated in the sense that both carry out similar functions viz. warehousing, customs clearance and transport of goods from its location to the sea-ports and vice versa by rail or by trucks in containers. The issue is no longer res integra. 43. The Tribunal also in the judgment under appeal followed this view of the Special Bench and that of the Container Corporation of India (supra). 44. The findings to which our attention has been invited by Mr. Suresh Kumar in Appeal No.523 of 2013 arising out of the Tribunal's order dated 31st August, 2012, pertaining to assessment year 2008-09 in the case of Continental Warehousing Corporation indicate that the said assessee had informed the Assessing Officer that JNPT had issued a certificate dated 13th July, 2006, to it in accordance with Point No.3 of CBDT circular No.10 dated 16th December, 2005, However, this letter / c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Government. 45. Even with regard to this issue we find that the circular dated 16th December, 2005, firstly clarifies that there are certain conditions, including the agreement but pertinently on and from the assessment year 2002-03 structures at the ports for storage, loading and unloading etc. will be included in the definition of port for purposes of section 10(23G) and 80-IA of the Income Tax Act, 1961, if the condition that the concerned port authority has issued a certificate that these structures form part of the port is fulfilled. However, when the Delhi High Court was considering this question it referred not only to the factual position but the specific substantial question of law and the activity of the assessee before it carried out mainly on its ICD's (Inland Container Deports), Central Freight Stations and Port Terminals. The assessee had 45 container depots spread over the country. It is in the business of transporting containerised cargo. It may be concerned with the public sector undertaking and functioning directly under the administrative control of the Ministry of Railways, but the activity of the assessee is carried out mainly on the Inland Container D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rgument of the learned counsel for the assessee is that once the ICDs have been notified validly by the CBDT by virtue of the powers conferred upon them, the fact that at a later point of time the power was taken away does not put an end to the validity or effect of the notification and as per the relevant Section as it stood at the time when the notification was issued, the assessee was eligible for the deduction for a period of 10 successive assessment years which covers the assessment years 2003-04 to 2005-06 which are the years under appeal. 13. We have examined the contention. Prior to the amendment made with effect from 1.4.2002 by the Finance Act, 2001, as noticed earlier, the Board was empowered to notify any public facility of a similar nature, other than what was mentioned as infrastructure facility. But an amendment was made and the power to notify was dropped. There was no provision made in the Act saying that the notification issued earlier would cease to have effect from 1.4.2002. Since the notification continued to have effect even beyond 1.4.2002, there is merit in the contention of the learned counsel for the assessee. Circular No. 7/2002, dated 26th August, 2002 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ver is that whenever the word "port" is used, it carries with it a maritime connection or connotation. That is perhaps why the Section refers separately to airport. An airport does not have a maritime SRP 56/61ITXA523.13.doc connection. But an airport is also a place where customs clearance are made both for import and export. It would be difficult to put the assessee's case as falling within the word "port" having regard to the fact that the word carries with it a maritime connotation. The ICDs are land-locked and it is nobody's case that they are located in such a place where ships or vessels have direct access to them. The goods which are either removed from or brought into the ICDs are brought or taken away either by railway wagons or by container trucks, as the case may be. But it is common ground that customs clearances take place in the ICDs. 16. It is, therefore, for consideration as to whether the ICDs can be said to be "inland ports" for the purposes of the Explanation (d) below sub-section (4) of Section 80IA. We were not able to find a definition of the words "inland port" in any of the dictionaries. But the words "inland container depot" were introduced in Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s it certain advantages and benefits and which clearly accrue to those using the port for import and export of cargo. Further, the location thereof is also a relevant factor as noted. In such circumstances, the reliance by the Special Bench and equally by the Bench of the Tribunal in the impugned orders on the Division Bench judgment of the Delhi High Court is thus well placed. 47. We do not find that anything other and further than this material is relied. However, even the High Court of Judicature at Madras has referred in its Division Bench decision to the view taken by the Delhi High Court. The Division Bench in paragraphs 10 and 12 of its judgment extensively referred to the Tribunal's 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 infrastructural facility set up and within the precincts of the port, then, consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 25.01.2019, had after relying on the judgment of the Hon'ble Supreme Court in the case of CIT Vs M/s Container Corporation of India Ltd. (2018) 404 ITR 397 (SC) concluded, that the CIT(A) was right in holding that the assessee was entitled for deduction under Sec.80IA(4) of the Act. In the backdrop of the aforesaid factual matrix, we are of the considered view that the issue as regards the assessee's entitlement for claim of deduction under Sec.80IA(4) is squarely covered by the aforesaid judicial pronouncements and also the orders passed in the assessee's own case. Accordingly, finding no infirmity in the order of the CIT(A) who had rightly concluded that the assessee was duly entitled for claim of deduction u/s 80IA of the Act, we uphold his order to the said extent. Ground of appeal No. 1 raised by the revenue is dismissed. 7. We shall now advert to the respective grounds raised by both the assessee and the revenue, on the basis of which they have assailed the observation of the CIT(A), insofar the same pertains to considering of the disallowance under Sec.14A r.w.Rule 8D, for the purpose of calculating the 'book profit' under Sec.115JB of the Act. As is discernible from the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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