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TMI Blog2023 (7) TMI 681X X X X Extracts X X X X X X X X Extracts X X X X ..... .A. No. 38/Viz/2021 - - - Dated:- 14-7-2023 - Shri Duvvuru Rl Reddy, Hon ble Judicial Member And Shri S Balakrishnan, Hon ble Accountant Member For the Assessee : Sri Fenil Amit Bhatt, AR For the Revenue : Sri MN Murthy Naik, CIT-DR ORDER PER DUVVURU RL REDDY, JUDICIAL MEMBER : This appeal filed by the Revenue is against the order of the Ld. Commissioner of Income Tax (Appeals)-1, Visakhapatnam [Ld. CIT(A)] in ITA No. 10408/2019-20/CIT(A)-1/SP/2020-21, dated 19/06/2020 arising out of the order passed U/s. 143(3) of the Income Tax Act, 1961 dated 12/12/2019 for the AY 2017-18. 2. Brief facts of the case are that the assessee is a domestic company engaged in the operation of Container Freight Station and deriving income thereof, filed its return of income for the AY 2017-18 on 25/10/2017, declaring NIL income after claiming deduction under Chapter VIA at Rs. 20,17,70,857/- which includes deduction U/s. 80IA(4) of the Act at Rs. 20,05,66,144/-. Subsequently, the case was selected for complete scrutiny under CASS. Accordingly, notice U/s. 143(2) of the Act was issued on 13/08/2018. Thereafter, due to change in incumbency, as per the provisions of section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... raised by the assessee and sustained his [Ld. CIT(A) s] decision after examining the facts and circumstances of the case and applying the ratio of Hon ble Supreme Court in the case of M/s. Container Corporation [404 ITR 397 (SC) (2018)] and M/s. AL Logistics (P) Ltd of Hon ble Madras High Court [374 ITR 609, Madras HC], decision of the Hon ble Bombay High Court in the case of Continental Warehousing Corporation [374 ITR 645, Bom. HC] as well as the assessee s own case in ITA No. 149/Vizag/2019 for the AY 2014-15. Thus, the Ld. CIT(A) concluded that since there being no change in the facts of the case for the AY 2017-18, the disallowance made by the Ld. AO is deleted and allowed the appeal of the assessee. Aggrieved by the order of the Ld. CIT (A), the Revenue is in appeal before us by raising the following grounds of appeal: 1. The order of the Ld. CIT (A) is erroneous both on facts and in law. 2. On the facts and in the circumstances of the case, the Ld. CIT(A) erred in appreciating that the definition of infrastructure facility as defined U/s. 80IA(4) includes a port, airport, inland water way, inland port or navigational channel in the sea but does not include Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of All Cargo Global Logistics Ltd. The Ld. AR further also relied on the decision of the Coordinate Bench of ITAT, Visakhapatnam in the assessee s own case in ITA No. 15/Vizag/2015, dated 29/04/2015. Further, the Ld. AR also relied on the Circular of the CBEC i.e., Circular No. 18/2009, dated 08/06/2009. 5. On the other hand, Sri MN Murthy Naik, Ld. CIT-DR, strongly relied on the order of the Ld. AO and submitted that as per section 80IA(4) there should be an agreement with the Central Government, Statement, Local Authority or any statutory body. In the absence of any such agreement, the Ld. AO s observation vide para 3.3 holds good. Therefore, the Ld. DR vehemently argued in support of the order of the Ld. DR. 6. We have heard both the sides and perused the material placed on record as well as the orders of the Ld. Revenue Authorities. We have also gone through the case laws cited by the Ld. AR. The only issue involved in this appeal is whether the assessee is eligible for claiming deduction U/s. 80IA(4) of the Act or not? This issue was came up before the Tribunal in the assessee s own case for a the AY 2011-12 in ITA No. 15/Vizag/2015, dated 29/05/2015 wherein the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ort or air cargo unit where filing of Customs manifests, Bills of Entrys, 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., 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ors 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 is in the nature of movement from 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 se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll 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 automatically 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 c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ionaries. 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 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 totala of 45 inland container depots. It claimed special deduction undersection ..... 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