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Income Tax Appellate Tribunal, INDORE BENCH, INDORE
Before: SHRI KUL BHARAT & SHRI MANISH BORAD
Appellant by Shri S.S. Deshpande, A.R. Respondent by Shri R.S. Ambedkar, Sr. D.R. Date of Hearing: 22.10.2019 Date of Pronouncement: 30.10.2019 आदेश / O R D E R PER KUL BHARAT, J.M: This bunch of three appeals pertaining to the assessment years 2012-13, 2013-14 & 2014-15 by the assessee are directed against different orders of the CIT(A)- 2, Indore dated 3.7.2017 and 12.7.2017. Facts and [ITA No.681, 682 & 683/Ind/2017] [M/s. Radheshyam Warehouse & Infrastructure, Indore] grounds in all these appeals are identical, therefore all the appeals were taken up together and are being disposed of by way of a consolidated order for the sake of convenience and brevity.
First we take up pertaining to the assessment year 2012-13. The assessee has raised following grounds of appeal:
[ITA No.681, 682 & 683/Ind/2017] [M/s. Radheshyam Warehouse & Infrastructure, Indore]
3. The facts giving rise to the present appeal are that in this case return of income was filed on 23.1.2013 by the assessee declaring total income at Rs.2,53,250/-. The assessee is engaged in the business of warehousing and his case was selected for scrutiny through CASS. A notice u/s 143(2) of the Income Tax Act, 1961 (hereinafter called as ‘the Act’) was issued. In response thereto, the authorized representative of the assessee attended the proceedings and filed submissions. The A.O. while framing the assessment disallowed claim of deduction u/s 80IB(11A) of the Act amounting to Rs.23,05,348/- against the total income declared at Rs.2,53,250/-. Aggrieved against this order, the assessee preferred an appeal before the Ld. CIT(A), who after considering the submissions confirmed the disallowance.
The only ground in this appeal is against rejection of claim of deduction u/s 80IB(11A) of the Act. Ld. Counsel 3
[ITA No.681, 682 & 683/Ind/2017] [M/s. Radheshyam Warehouse & Infrastructure, Indore] for the assessee vehemently argued that the authorities below were not justified in rejecting the claim of deduction u/s 80IB(11A) of the Act. Ld. Counsel for the assessee submitted that the assessing officer in para-4.11 of his order has given the reasoning for rejecting claim of deduction u/s 80IB(11A) of the Act. He submitted that the A.O. failed to appreciate the facts in right perspective. The assessee has not only provided the service of warehousing food grains, standardization and grading, packing of seeds and food grains and also transpiration. He submitted that the transportation services were provided on SOS basis.
He submitted that merely because the assessee did not own any truck would not mean that he is not providing the transportation facility. He submitted that the provisions of section 80IB(11A) of the Act is a beneficial provision and should be considered liberally. He further submitted that the objective of insertion of this provision were to address
[ITA No.681, 682 & 683/Ind/2017] [M/s. Radheshyam Warehouse & Infrastructure, Indore] the concern of the Government regarding storage of food grains and the companies held for undertakings engaged in the integrated handling, storage and transportation of food grains was given to address the country’s basic concerns relating to enhanced food security and agricultural development, up gradation and transportation of food grains. It was proposed to encourage building of storage capacities and the amendment u/s 80IB of the Act was brought to provide that any undertaking engaged in integrated bulk handing storage and transportation shall be allowed 100% deduction for the first 5 years. Ld. Counsel submitted that the SMC bench of this Tribunal allowed deduction in the case of ITO Nimuch Vs. Krishna Warehouse in ITA No.695/IND/2017.
On the contrary, ld. D.R. opposed these submissions and submitted that as per income and expenditure account, the assessee has claimed transportation charges 5
[ITA No.681, 682 & 683/Ind/2017] [M/s. Radheshyam Warehouse & Infrastructure, Indore] of a sum of Rs.12,670/-, whereas the warehousing rent and grading income amounts to Rs.53,85,151/- and Rs.2,53,250/- respectively.
We have heard the rival submissions, perused the materials available on record and gone through the orders of the authorities below. The only issue to be examined whether the assessee under the facts of the present case is eligible for deduction u/s 80IB(11A) of the Act as claimed by the assessee. For the sake of clarity, the section 80IB(11A) of the Act is reproduced as under:
“[(11A)The amount of deduction in a case of [an undertaking deriving profit from the business of processing, preservation and packaging of fruits or vegetables or [meat and meat products or poultry or marine or dairy products or] from] the integrated business of handling, storage and transportation of foodgrains, shall be hundred percent of the profits and gains derived from such undertaking for five assessment years beginning with the initial assessment year and thereafter, twenty five per cent (or thirty per cent where the assessee is a compny) of the profits and gains derived from the operation of such business in a manner that the total period of deduction does not exceed ten consecutive assessment years and subject to fulfilment of the condition that it begins to operate such business on or after the 1st day of April, 2001:] [Provided that the provisions of this section shall not apply to an undertaking engaged in the business of processing, preservation and packaging of meat or meat products or poultry or marine or 6
[ITA No.681, 682 & 683/Ind/2017] [M/s. Radheshyam Warehouse & Infrastructure, Indore] dairy products if it begins to operate such business before the 1st day of April, 2009.] 7. On a bare reading of above provision, it is clear that for claiming deduction the undertaking should be engaged in business as prescribed in this section, one of such business being the integrated business of handling, storage and transportation of food grains. The assessee’s claim is that it is engaged in the integrated business of handling, storage and transportation of food grains, however, looking to the facts of the present case, it cannot be inferred that the assessee is having an integrated business of handling, storage and transportation, which evident from the fact that in the profit & loss account the assessee has claimed a meager amount of Rs.12,670/- as a transportation charges. Nothing is brought on record suggesting that assessee owns trucks or otherwise as contractual understanding with any transport company. It is true that a beneficial provision is to be considered liberally but that [ITA No.681, 682 & 683/Ind/2017] [M/s. Radheshyam Warehouse & Infrastructure, Indore] does not mean that literal construction to frustrate the intent of the legislation itself. The provision speaks of integrated business. The literal meaning of ‘integrated’ is that to join things so that they become one thing or work together. The assessee has storage and handling facilities, which is not doubted and there is no dispute regarding that. Ld. Counsel for the assessee vehemently argued that the purport of inserting this provision was to enhance food security, agricultural development, upgradation and modernization of infrastructure or storage, handling and transportation of food grains. Hence, he contended that predominantly it is the storage and handling of the food grains was the major concern.
In the present case, there is no dispute with regard to the fact that the assessee is having integrated facility of storage and handling of food grains but in respect of transportation the assessee could not conclusively prove 8
[ITA No.681, 682 & 683/Ind/2017] [M/s. Radheshyam Warehouse & Infrastructure, Indore] that transportation facility is available. Merely, debiting a small sum as transportation charges would not ipso facto make the assessee having integral business of storing, handling and transportation. The assessee is required to prove that it is engaged in the integral business as envisaged u/s 80IB(11A). No bill or voucher is produced suggesting that the assessee has provided the service of transportation to its customers. The assessee has also not furnished any documents of ownership of any truck or any other goods carriage vehicles. Even, the assessee could not brought on record any agreement or understanding executed with any transporter. In the absence of such evidence it cannot be inferred that the assessee is engaged in integrated business as stipulated under section 80IB(11A) of the Act. We, therefore, do not see any reason to interfere in the findings of the Ld. CIT(A). Same is hereby affirmed, the grounds raised in the appeal are dismissed.
[ITA No.681, 682 & 683/Ind/2017] [M/s. Radheshyam Warehouse & Infrastructure, Indore]
Now coming to the assessee’s appeal in pertaining to A.Y. 2013-14. The assessee has raised following grounds of appeal:
“1. The Ld. CIT(A) has erred in disallowing the claim of the assessee u/s 80IB(11A). The deduction claimed by the assessee may please be allowed.
2. It was proved before the lower authorities that the assessee is engaged in the integrated business of warehousing, handling and transportation. The Ld. CIT(A) specifically observed that the assessee has incurred the expenses on handling and transportation.
It was proved before the lower authorities that the assessee receives the warehousing charges which includes the handling and transportation of goods and as such the provision of section 80IA(11A) are satisfied and the deduction should have been allowed.
4. The Ld. CIT(A) has erred in disallowing the claim of depreciation of Rs.224263/- and reducing the cost of the asset by Rs.22,42,637/- while calculating the depreciation. It was proved before the lower authorities that the subsidy has not been received for the construction of the warehouse but has been received for constructing the warehouse. The claim may please be allowed.
Ground Nos.1 to 3 are same as were in ITA No.681/Ind/2017. Parties have adopted the same arguments as were in ITA No.681/Ind/2017. We have already decided the issue as under:
“8. In the present case, there is no dispute with regard to the fact that the assessee is having integrated facility of storage and handling of food grains but in respect of 10
[ITA No.681, 682 & 683/Ind/2017] [M/s. Radheshyam Warehouse & Infrastructure, Indore] transportation the assessee could not conclusively prove that transportation facility is available. Merely, debiting a small sum as transportation charges would not ipso facto make the assessee having integral business of storing, handling and transportation. The assessee is required to prove that it is engaged in the integral business as envisaged u/s 80IB(11A). No bill or voucher is produced suggesting that the assessee has provided the service of transportation to its customers. The assessee has also not furnished any documents of ownership of any truck or any other goods carriage vehicles. Even, the assessee could not brought on record any agreement or understanding executed with any transporter. In the absence of such evidence it cannot be inferred that the assessee is engaged in integrated business as stipulated under section 80IB(11A) of the Act. We, therefore, do not see any reason to interfere in the findings of the Ld. CIT(A). Same is hereby affirmed, the grounds raised in the appeal are dismissed.” For the same reasoning as above, the grounds raised are dismissed.
Ground No.4, the issue raised in this ground is against reducing the cost of asset for the purpose of allowability of depreciation. Ld. counsel submitted that the authorities below were not justified in deleting the addition.
[ITA No.681, 682 & 683/Ind/2017] [M/s. Radheshyam Warehouse & Infrastructure, Indore]
On the contrary Ld. Sr. DR supported the orders of the authorities below.
We have heard the rival submissions, perused the materials available on record and gone through the orders of the authorities below. We find that the ld. CIT(A) has decided the issue as under:
“5.1 As per section 43(1) of the I.T. Act, “actual cost” means the actual cost of the assets to the appellant reduced by that portion of the cost thereof, if any, as has been met directly or indirectly by any other person or authority. The capital investment subsidy so claimed by the appellant had been devised by the government to subsidize the cost of investment of the appellant in the capital asset. Therefore, the AO had rightly reduced the capital investment subsidy so provided from the cost of the assets to determine the allowable depreciation. I find no error on the part of the AO and the addition so made is hereby confirmed and this ground of appeal is dismissed.”
We find that having gone through the material available on record and submission of the assessee, the ld. CIT(A) has recorded the above factual finding as per law which even before us could not be controverted by the assessee by [ITA No.681, 682 & 683/Ind/2017] [M/s. Radheshyam Warehouse & Infrastructure, Indore] bringing any cogent material which could disprove the factual finding recorded by the ld. CIT(A). Therefore, we do not find any infirmity in the orders of the revenue authorities. Accordingly, this ground no.4 of the appeal of the assessee is also dismissed.
Thus, for the assessment year 2013-14 is also dismissed.
Now, we take up the assessee’s appeal bearing for the assessment year 2014-15.
Ground Nos.1 to 3 are same as were in ITA No.681/Ind/2017. Parties have adopted the same arguments as were in ITA No.681/Ind/2017. We have already decided the issue as under:
“8. In the present case, there is no dispute with regard to the fact that the assessee is having integrated facility of storage and handling of food grains but in respect of transportation the assessee could not conclusively prove that transportation facility is available. Merely, debiting a small sum as transportation charges would not ipso facto 13
[ITA No.681, 682 & 683/Ind/2017] [M/s. Radheshyam Warehouse & Infrastructure, Indore] make the assessee having integral business of storing, handling and transportation. The assessee is required to prove that it is engaged in the integral business as envisaged u/s 80IB(11A). No bill or voucher is produced suggesting that the assessee has provided the service of transportation to its customers. The assessee has also not furnished any documents of ownership of any truck or any other goods carriage vehicles. Even, the assessee could not brought on record any agreement or understanding executed with any transporter. In the absence of such evidence it cannot be inferred that the assessee is engaged in integrated business as stipulated under section 80IB(11A) of the Act. We, therefore, do not see any reason to interfere in the findings of the Ld. CIT(A). Same is hereby affirmed, the grounds raised in the appeal are dismissed.” For the same reasoning as above, the grounds raised are dismissed.
Ground No.4, the issue raised in this ground is against reducing the cost of asset for the purpose of allowability of depreciation. This ground is same as was in ITA No.682/Ind/2017. Parties have adopted the same arguments as were in ITA No.682/Ind/2017. We have already decided the issue as under:
[ITA No.681, 682 & 683/Ind/2017] [M/s. Radheshyam Warehouse & Infrastructure, Indore]
“13. We have heard the rival submissions, perused the materials available on record and gone through the orders of the authorities below. We find that the ld. CIT(A) has decided the issue as under: “5.1 As per section 43(1) of the I.T. Act, “actual cost” means the actual cost of the assets to the appellant reduced by that portion of the cost thereof, if any, as has been met directly or indirectly by any other person or authority. The capital investment subsidy so claimed by the appellant had been devised by the government to subsidize the cost of investment of the appellant in the capital asset. Therefore, the AO had rightly reduced the capital investment subsidy so provided from the cost of the assets to determine the allowable depreciation. I find no error on the part of the AO and the addition so made is hereby confirmed and this ground of appeal is dismissed.”
We find that having gone through the material available on record and submission of the assessee, the ld. CIT(A) has recorded the above factual finding as per law which even before us could not be controverted by the assessee by bringing any cogent material which could disprove the factual finding recorded by the ld. CIT(A). Therefore, we do not find any infirmity in the orders of the revenue authorities. Accordingly, this ground of the appeal of the assessee is also dismissed.”
For the same reasoning as above, the ground no.4 raised is also dismissed.
[ITA No.681, 682 & 683/Ind/2017] [M/s. Radheshyam Warehouse & Infrastructure, Indore]
Accordingly, is also dismissed.
Finally, appeals filed by the assessee are dismissed.
Order was pronounced in the open court on 30 .10.2019.