DCIT 3(2)92), MUMBAI vs. M/S PNP MARTITIME SERVICES PVT LTD., MUMBAI

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ITA 667/MUM/2020Status: DisposedITAT Mumbai07 August 2023AY 2010-118 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that port rental charges for storage in the notified port area are directly related to port services and eligible for deduction under Section 80IA. The AO failed to establish a lack of direct nexus or change in facts from previous years.

What were the facts?

The Revenue appealed the deletion of disallowance of port charges claimed as deduction under Section 80IA. The Assessing Officer disallowed the deduction, arguing port rental charges were not directly related to port operations. The CIT(A) deleted the addition, relying on consistency and a Bombay High Court decision.

What were the issues?

Whether port rental charges for storage in a notified port area are eligible for deduction under Section 80IA. Whether the principle of consistency applies when the deduction was allowed in previous years without change in circumstances.

Which sections of the Income-tax Act were involved?

Section 80IA,Section 250,Section 143(3),Section 147,Section 115JB

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(2)Show list

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Income Tax Appellate Tribunal, “C” BENCH, MUMBAI

Before: SHRI PRASHANT MAHARISHI, AM & MS. KAVITHA RAJAGOPAL, JM

For Appellant: Ms. Neha Patel
For Respondent: Shri H. M. Bhatt
Hearing: 02.08.2023Pronounced: 07.08.2023

per the provision of section 80IA(4) which has been extracted herein below for ease of reference:

1.

Deductions in respect of profits and gains from industrial undertakings or enterprises engaged in infrastructure development, etc. 80-IA.(4) This section applies to— (i) any enterprise carrying on the business of (i) developing or (ii) operating and maintaining or (iii) developing, operating and maintaining any infrastructure facility which fulfils all the following conditions, namely :— (a) it is owned by a company registered in India or by a consortium of such companies or by an authority or a board or a corporation or any other body established or constituted under any Central or State Act; (b) it has entered into an agreement with the Central Government or a State Government or a local authority or any other statutory body for (i) developing or (ii) operating and maintaining or (iii) developing, operating and maintaining a new infrastructure facility; (c) it has started or starts operating and maintaining the infrastructure facility on or after the 1st day of April, 1995: Provided that where an infrastructure facility is transferred on or after the 1st day of April, 1999 by an enterprise which developed such infrastructure facility (hereafter referred to in this section as the transferor enterprise) to another enterprise (hereafter in this section referred to as the transferee enterprise) for the purpose of operating and maintaining the infrastructure facility on its behalf in accordance with the agreement with the Central Government, State Government,

(A.Y. 2010-11) DCIT vs. M/s. PNP Maritime Services Pvt. Ltd. local authority or statutory body, 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.

12.

The only issue in dispute is with regard to the port rental charges claimed by the assessee. There is no iota of doubt that the assessee is carrying on the business of developing or operating and maintaining of infrastructure facility for the purpose of storage, loading and unloading etc. It is also pertinent to note that the CBDT Circular No. 10/2005 dated 16.2.2005 has defined “Port” as infrastructural facility for the purpose of section 10(23G) and 80IA of the Act which includes structure at the ports for storage, loading and unloading, etc. subject to fulfillment of certain conditions which were duly complied with by the assessee. The port rental charges nevertheless pertain to the storage, loading and unloading activities which comes under the preview of the eligibility to claim deduction u/s. 80IA. We would also like to place our reliance on the decision of the Hon'ble Bombay High Court in the case of CIT vs. M/s. ABG Heavy Industries Ltd. (in of 2010 vide order dated 15.02.2010), wherein it was held that in case of deduction claimed u/s. 80IA, the intention of the legislature was to promote growth and development of infrastructure which has to be construed liberally. The relevant extract of the said decision is cited hereunder for ease of ready reference:

21.

………………… The Court cannot be unmindful in the present case of the underlying objects and reasons for a grant of deduction to an enterprise engaged in the development of an infrastructure facility. The provision was intended to give an incentive to investment for infrastructural growth in the country. In Bajaj Tempo V/s. Commissioner of Income Tax,1 the Supreme Court emphasized that a provision in a taxing statute granting incentives for promoting growth and development should be construed liberally. In the present case, the administrative circulars issued by the CBDT proceeded on that basis by adopting a liberal view of the scope and ambit of the provisions of Section 80IA of the Act.

(A.Y. 2010-11) DCIT vs. M/s. PNP Maritime Services Pvt. Ltd. 13. From the above observation, it is pertinent to note that the Hon'ble High Court in the above mentioned case has taken a liberal view in granting deduction u/s. 80IA even in case where the assessee was engaged in the contract for leasing of Container Handling Cranes at the Jawaharlal Nehru Port Trust (`JNPT'). In the present case in hand, the assessee itself has developed port at Alibaug and was directly engaged in the business of infrastructure development. We find no justification in denying the claim of the assessee and, hence, we find no reason to deviate from the finding of the ld. CIT(A). Therefore, the grounds raised by the Revenue does not hold merit and is dismissed.

14.

In the result, the appeal filed by the Revenue is dismissed.

Order pronounced in the open court on 07.08.2023.

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