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TMI Blog2023 (8) TMI 757X X X X Extracts X X X X X X X X Extracts X X X X ..... CIAL MEMBER For the Appellant : Mr. Manoj Kumar Sinha. DR For the Respondent : Mr. Madhur Agrawal, Mr Fenil Bhatt Mr. Chimanlal Dangi. AR ORDER PER PAVAN KUMAR GADALE JM: The revenue has filed the appeal against the order of the Commissioner of Income Tax (Appeals)-50, Mumbai, passed u/s 250 of the Act. The revenue has raised the fallowing grounds of appeal: 1. Whether on the facts and in the circumstances of the case and in law, the Ld.. CIT(A) is justified in holding that the assessee was entitled to deduction of Rs. 4,04,83,352/- under section 80-IA of the Income Tax Act, 1961 even though activities undertaken by the assessee do not fall section 80-IA(4) of the I.T. Act, 19613 2. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) is justified in interpreting the phrase on its behalf in first proviso to sub section 4 of section 80IA as on behalf of the transferee as against on behalf 2. The brief facts of the case are that the assessee company is engaged in the business of operating and maintaining container freight station (CFS), Mundra Chennai and JNPT Munro. The assessee has filed the return ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reement under Slump Sale and as per the agreement undertaking includes transferor s business along with the associated assets and liabilities and made interpretations on the claim of deduction u/s 80IA(4)(i) of the Act. The AO observed that the assessee has acquired the CFS as a going concern and the eligibility criteria u/s 80IA(4) of the Act was not fulfilled as the infrastructure facility of the assessee is not a new infrastructure facility which was already been in use by M/s Transindia Logistic Park Pvt Ltd. Finally, the AO was not satisfied the claim of deduction u/s 80IA(4)(i) of the Act in respect of the transaction of CFS Uran as the assessee company neither developed new infrastructure nor operating and maintaining the infrastructure of the transferor company observed at Para 8.5 to 9 of the order and restricted the deduction u/s 80IA of the Act to the extent of Rs. 49,44,80,208/- as against Rs. 53,49,63,560/- claimed by the assessee and assessed the total income of Rs. 111,31,64,900/- and passed the order u/s 143(3) of the Act dated 30.12.2019. 5. Aggrieved by the order, the assessee has filed an appeal before the CIT(A). Whereas the CIT(A) has considered the grounds ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lled all the conditions stipulated in sec 80IA(4) of the Act and hence are eligible for deduction u/s 80IA(4) of the Act. 7.4.2 From perusal of impugned order, it is observed that the Ld. AO has given a factual finding that during the year under consideration the appellant through Transfer Business Agreement (TBA), the appellant company has purchased/acquired a Container Freight Station (CFS) from its wholly owned subsidiary M/s Transindia Logistic Park P Ltd under Slump Sale . The Ld. AO has also noted that M/s Transindia Logistic P Ltd was notified as Custodian for container freight station (CFS) as per Notification No. 11/2012 dated 05.09.2012 issued by the Office of the Commissioner of Customs (Export)-JNPT, Nahavasheva and thereafter, the assessee company has informed the Customs Department about the Slump Sale agreement dated 11.08.2016 executed between M/s Transindia Logistic P Ltd and M/s Allcargo Logistics P Ltd and on the basis of same, the appellant company was appointed as Custodian of Container Freight Station vide Notification No.13/2016 dated 22.12.2016. 7.4.3 The Ld. AO's main reasons for denying the claim of deduction on CFS purchased/acquired ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions laid down therein. The proviso to sec 80IA(4)(i) of the Act provides for allowance of deduction where an infrastructure facility is transferred on or after the 1 st day of April, 1999 by an enterprise which developed such infrastructure facility (transferor enterprise) to another enterprise (transferee enterprise) for the purposes of operating and maintaining the infrastructure facility on its behalf in accordance with the agreement with Central Government, State Government, local authority or statutory body and it further provides that the provisions of this section shall apply to the transferee enterprise as if it were the enterprise to which this clause applies and the deduction from profits and gains would be available to such transferee enterprise for the unexpired period during which the transferor enterprise would have been entitled to the deduction, if the transfer had not taken place. 7.4.6 The said sec 80IA(4)(i) and proviso thereto clearly suggest that the deduction is attached to the undertaking or enterprise and not to the assessee. That is evident from the proviso of sec 80IA(4)(i) which provides that where any infrastructure facility is transferred from o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the deduction u/s 80IA(4)(i) of the Act would be available in the hands of transferee enterprise for the unexpired period provided the transfer is not by way of amalgamation or demerger. It is an admitted fact that in the present case the CFS under consideration was purchased/acquired under Slump Sale . 7.4.7 The above referred CBDT Circular No.10/2014 dated 06.05.2014 also clarifies that in case of such transfer of Infrastructure facility, it is to be ensured that there has been no splitting up or reconstruction of a business already in existence, transfer is in accordance with the proviso to clause (i) or clause (iii) of sub-section (4) of section 80IA(4) and the transfer is not by way of amalgamation or demerger. During the assessment proceedings, the appellant had specifically placed reliance on said CBDT Circular No.10/2014 and the Ld. AO has discussed the same in the impugned order and there is no finding of the Ld. AO that in the case of transfer of CFS under consideration, there was any splitting up or reconstruction of a business already in existence. During the appellate proceedings, the appellant had placed reliance on the CBDT Circular No.1/2013 dated 17.01.20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee the principle of reconstruction, splitting up and transfer of plant and machinery cannot be applied. According to the Tribunal the benefit of Section 10A attaches to the undertaking and not to the assessee which owns the undertaking. The benefit of Section 10A was held to have attached itself to the STP unit of the software division which was owned by IOCL till 19 October 1994 and it was owned by the assessee subsequent to that date. What is material, according to the Tribunal, is not who owns the undertaking but whether the undertaking is entitled to the benefit available under Section 10A. As regards the issue of transfer by IOCL to the assessee, the Tribunal noted that Section 10A(9) was substituted by the Finance Act 2000 with effect from 1 April 2002. Section 10A(9) provided that where during any previous year the ownership or beneficial interest in an undertaking of the business is transferred by any means, the deduction under sub- section (1) shall not be allowed to the assessee for the Assessment Year relevant to such previous year and the subsequent years. The Tribunal noted that if a transfer between IOCL and the assessee were to be effected after 1 April 2001, tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r produce product of any article or things not being any article or things specified in XI Schedule or operate one or more Cold-Storage or plant in any part of India. Further, there is no dispute that industrial undertaking manufactures or produce articles or things undertaking employed 10 or more workers in a manufacturing process carried out with the aid of power, or employed 20 or more workers in manufacturing process carried on without the aid of power. The AO has not disputed anyone of two negative terms. Even otherwise, the assessee has placed on record the sufficient evidence to substantiate the requirement of fulfilment of condition laid down under section 80IB consisting of evidence related with the challan of Provident Fund of more than 21 employees with the undertaking during the relevant period. Moreover, there is no dispute that the industrial undertaking is situated in industrial backward state. In our view, there is no bar or prohibition in section 80IB on sale (slump sale) of eligible undertaking to another assessee and the benefit attached with eligible undertaking cannot be denied to another assessee. There are only two negative terms prescribed under sub-se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expired period and if the arguments of the Ld. AO is accepted that in the hands of transferee enterprise such infrastructure facility will not be considered as new infrastructure facility, then in 90 case the Proviso to sec 80IA(4)(i) can be made applicable. It is settled law that no provisions of Act should be interpreted in such way that the same become redundant. Since, the said argument of the Ld. AO is contrary to the express provisions of law and also as clarified in above referred CBDT circulars so the same cannot be accepted. 7.4.10 The other argument of the Ld. AO is that there should be Principal and Agent relationship between the transferor enterprise and the transferee enterprise and the transferee enterprise should operate and maintain such transferred infrastructure facility on behalf of the transferor enterprise is also devoid of merits as the same is not mandated by the provisions of the Act. The usages of words on its behalf in the said proviso to sec 80IA(4)(i) of the Act is with reference to the transferee enterprise and not with reference to the transferor enterprise and the same is evident as said words on its behalf have been used after the words .. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted 23.02.2018( Mumbai ITAT) (iv) CIT Vs Heartland K G information Ltd (359 ITR1) (Madras) (v) CIT Vs Heartland Delhi Transcription services (p) Ltd. (366 ITR 523)(Dehi) (V) CIT. Udaipur Vs Chetak enterprises (P) Ltd (SC) (423 ITR 267) The Ld. AR contentions are that the assessee company is entitled to the deduction U/sec 80IA of the Act as the transferor company has already entered in to agreement in carrying on the business as CFS and benefit of deduction is available to the assessee company as it was acquired under Slump Sale and there is only change of ownership and activities of the assessee fall under sec 80IA(4) of the Act. We find the CIT(A) has dealt on the facts, provisions of law, remand report, rejoinder and judicial decisions. The Ld. DR could not controvert the findings of the CIT(A) with any new cogent material or information to take different view. We considered the facts, circumstances, submissions as discussed above are of the view that the CIT(A) has passed a reasoned and logical order. Accordingly, we do not find any infirmity in the order of the CIT(A) and uphold the same and dismiss the grounds of appeal of the revenue. 9. In the result, the app ..... X X X X Extracts X X X X X X X X Extracts X X X X
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