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Income Tax Appellate Tribunal, MUMBAI BENCH “G”, MUMBAI
Before: Shri Pawan Singh (JM) & Shri S Rifaur Rahman (A.M.)
Assessee by Shri YP Trivedi Sr Advocate with Smt. Usha Dalal Advocate Respondent by Simti Samant, CIT -DR Date of hearing 22-01-2020 Date of pronouncement 22-01-2020 O R D E R PER BENCH :
2 International Cargo Terminals & Infrastructure P Ltd 1. This set of 5 appeals are directed against the orders of Ld.CIT(A)-54, Mumbai dated 06-09-2016 and 23-06-2017, all for the assessment year 2013-14.
At the outset of hearing, the Ld.AR of the assessee submits that appeals in 7358/Mum/2016 & 3661/Mum/2016 have become infructuous, in view of fact the Ld.CIT(A) passed another order on the e-appeal filed by the assessee, vide order dated 23-06- 2017 granting part relief to the assessee against which both the parties have filed their cross appeal. Considering the contentions of both the parties, these three appeals are treated as dismissed being infructuous.
The Ld.DR for the revenue fairly agreed that appeals in 7358/Mum/2016 & 3661/Mum/2016 have become infructuous.
The assessee has filed appeal vide and the revenue has filed its appeal in ITA No.5774/Mum/2017.
The revenue, in its appeal in has raised the following grounds of appeal :-
“(i) "Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was justified in holding that the assessee was entitled to deduction u/s 80-IA(4) of the Income Tax Act, 1961, which was contrary to the Circular of the CBDT No. 10/2005 as also contrary to the fact that JNPT had withdrawn its certification of the Company?" (ii) "Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was justified in holding that the condition provided in sub-clause(b) of section 80-IA(4)(i) of the Act is not mandatory and 3 International Cargo Terminals & Infrastructure P Ltd therefore, the assessee is entitled to get deduction u/s 80-IA(4) of the Income Tax Act, 1961?" (iii) "Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in holding that the container Freight Station (CFS) is an extension of port activity and thus eligible for deduction u/s 80IA (4)(i)." 5. At the outset of hearing, the Ld.AR of the assessee submits that the grounds of appeal raised by revenue is covered by the decision of Tribunal in assessee’s own case for AYs 2007-08, 2008-09, 2010-11, 2011-12 and 2012-13 wherein on identical grounds of appeal, the Tribunal dismissed the appeals of the revenue. The Ld.AR of the assessee furnished the copy of order of the Tribunal dated 21-08-2019.
On the other hand, the Ld. DR for the revenue, after going through the grounds of appeal and the decision of Tribunal for AYs 2007-08 to 2012-13 on identical grounds, agreed that the appeals of revenue on identical grounds of appeal were dismissed for those assessment years.
The Ld. DR, however, relied upon the order of AO.
We have considered the submissions of both the parties and perused the orders of lower authorities. We have seen that on identical grounds of appeal, similar issue was decided by the Tribunal in favour of the assessee by relying upon the decision of Hon’ble Supreme Court in Container Corporation of India reported in 404 ITR 397 (SC) wherein freight station is held as eligible for deduction u/s 80IA(4). For 4 International Cargo Terminals & Infrastructure P Ltd completeness of order, the relevant part of finding of Tribunal is reproduced below:-
“The only issue to be decided in this appeal is with regard to deletion of disallowance of deduction u/s.80IA (4) of the Act by the Id. CIT(A). We find the issue involved is whether the income of container freight station is eligible for deduction u/s.80IA (4) of the Act. Both the parties mutually agreed at the time of hearing that this issue is covered by the decision of Hon'ble Supreme Court in the case of CIT vs. Container Corporation of India Ltd., reported in 404 ITR 397 (SC) wherein it was held that container freight station is eligible for deduction u/s. 80IA (4) of the Act. Since the facts recorded by the Id. CIT(A) in his order are not in dispute before us, respectfully following the aforesaid Supreme Court decision which is also not disputed by the parties before us, the grounds raised by the revenue for the A.Y.2007-08 are dismissed.”
8. In view of the aforesaid decision of Tribunal on identical set of facts, and respectfully following the same the grounds of appeal raised by revenue is dismissed.
In the result, appeal of the revenue is dismissed.
The assessee, in its appeal in has raised the following grounds of appeal:-
“1. The Learned CIT (A) erred in confirming action of the Assessing Officer for not granting a sum of Rs 37,86,600/- as deduction under section 80 IA of the Income tax Act, 1961, thus granting only partial relief u/s.80IA. Above sum is aggregate of Income shown under the head rent of Rs. 27,95,9377- and interest on FD of Rs. 9,90,663/-.
2. The Learned CIT (A) erred in confirming disallowance of Rs. 1,02,75,9257-being 0.5 % of average investment of Rs.205,51,85,0007- without appreciating the fact that it has been held in the case of M/s. Magna 5 International Cargo Terminals & Infrastructure P Ltd Publishing Co. Ltd. vs. ITO in 7 Mum / 2014 and also in the case of ACIT vs. Punjab state Coop & Marketing Fed Ltd. in ITA Nos. 548/Chd/ 2011 that no disallowances under section 14 A of the Act can be made where no exempt income is earned.
3. The Learned CIT (A) erred in confirming disallowance of Rs. 90,0007- being 30 % of Rs. 3,00,0007- disallowed by the assessing officer under the head as staff welfare expenses on an ad hoc basis, alleging that the same were not incurred wholly and exclusively for the business.
4. The Learned CIT (A) erred in confirming disallowance of Rs. 90,0007- being 30 % of Rs. 3,00,0007- disallowed by the assessing officer under the head ' entertainment expenses on an ad hoc basis by alleging that the same were not incurred wholly and exclusively for the business.
The Learned CIT (A) erred in confirming disallowance a sum of Rs.1,05,000/- being 30 % of Rs. 3,50,0007- disallowed by the assessing officer out of Miscellaneous expenses on an ad hoc basis, alleging that the same were not incurred wholly and exclusively for the business.
6. The Learned CIT (A) erred in abruptly allowing only part relief to the aforesaid expenses without appreciating the fact that the same were incurred for the purpose of appellant's business only. More so, major expenses were allowed by the Hon'ble IT AT in earlier years on the basis of the same set of facts.”
Ground 1 of the appeal relates to deduction for various components of income on which deduction u/s 80IA was claimed consisting head rent and interest on Fixed Deposits. The Ld.AR of the assessee submits that on similar grounds of appeal for AY 2009-10 in the issue was restored to the file of the AO.
The Ld. DR for the revenue, however, relied upon the orders of lower authorities.
6 International Cargo Terminals & Infrastructure P Ltd 13. We have noted that interest on FD was held to be not inextricably linked with the business of the assessee and was decided against the assessee. However, the other component of income, viz. Rental income was restored back to the file of the AO to adjudicate the same denovo with the following directions:-
“8. The ground No.Ill raised by the assessee is with regard to action of the Id. CIT(A) confirming the disallowance of deduction u/s.80IA of Act by holding that the rental income of Rs.22,11,070/- and interest on FDR of Rs.23,56,455/- as not derived from the industrial undertaking. 8.1. We have heard rival submissions. We find that interest income of FDR's were not made with inextricable link with the business of the assessee and the Id. AR fairly stated that the same is not eligible for deduction u/s.80IA of the Act. Accordingly, we uphold the action of the Id. CIT(A) in this regard. 8.2. With regard to rental income of Rs.22,11,070, the Id. AR argued that the same only represents demurrage charges and we find that the Id. AR filed a note in this regard as under:- Note on Rent Income. Assessment Years: 2008-09 to 2013-14. "The appellant carries the business of providing containers freight services. This is given recognition as an inland port. This facilitates the exporters and importers to use the services of these inland ports and save (hem the troubles of rushing to either Mumbai or to any other port near the sea.
7 International Cargo Terminals & Infrastructure P Ltd When the exporter or importer brings the goods to be exported or imported to our inland port, their responsibility ends and our facilities thereafter send the goods to the ports.
Sometimes the goods remain in our ports when the importer or exporter finds it unprofitable to remove the goods. If the goods would have remained at regular ports then either importer or exporter might have to pay demurrage. Our inland port charges such demurrage to the importer or exporter and if the goods are not removed within reasonable time then they are auctioned by us. We therefore submit that the rent so named are only demurrage charges or auction charges arising from our activities of carrying on container freight services and therefore the same are deductible under section 801 A of Income Tax Act, 1961. " 8,3. The Id. AR fairly admitted that let this fact be examined by the Id. AO and the issue be decided accordingly. Per contra, the Id. DR vehement!y objected to setting aside of this issue to the file of the Id. AO as ssessee itself had classified the receipt as rental income. We find that assessee had given a detailed note supra explaining the nature of Transaction which requires to be examined. It is well settled that substance of the transaction would .always prevail over its form. Accordingly, we deem it fit and appropriate, in the interest of justice and fair play, to remand this issue to the file of the Id. AO for denovo adjudication. Accordingly, the ground No. Ill raised by the assessee is partly allowed for statistical purposes.”
8 International Cargo Terminals & Infrastructure P Ltd 14. Considering the fact that issue on interest income on fixed deposits was held against the assessee in AY 2009-10; however, the issue related to rental income was restored to the file of the AO for denovo adjudication. Therefore, following the principle of consistency, the issue with regard to the interest on FDR which is against the assessee is upheld; however, on the issue with regard to the rental income is restored back to the file of the AO with similar direction as contained in order of the Tribunal for AY 2009-10. This ground of appeal is partly allowed.
15. Ground 2 relates to disallowance u/s 14A. The Ld.AR of the assessee submits that during the relevant period under consideration, no exempt income was earned by assessee, therefore, no disallowance u/s 14A is warranted.
On the other hand, the Ld.DR for the revenue submits that the AO may be directed to verify the fact, if any exempt income was earned by the assessee or not.
We have considered the submission of both the parties, perused the material available on record. We have noted that during the period under consideration, the assessee has not earned any exempt income.
There is no finding of AO, whether the assessee has earned any exempt income. Therefore, we direct the AO to verify the fact if any exempt
9 International Cargo Terminals & Infrastructure P Ltd income has been earned by the assessee and if no exempt income has been earned by the assessee, then no disallowance u/s 14A be made. This ground of appeal is treated as allowed.
18. Ground 3 to 5 was not pressed by ld. AR for the assessee, hence dismissed as not presses. Ground No.6 is consequential in nature, therefore, dismissed, as such.
19. Ground 7 is general in nature, which does not need any adjudication.
In the result the appeal of the assessee is partly allowed.
Order pronounced in the open court on 22 -01-2020.