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Income Tax Appellate Tribunal, MUMBAI BENCH “G”, MUMBAI
Before: SHRI RAJESH KUMAR & SHRI RAM LAL NEGI
Per Rajesh Kumar, Accountant Member:
2 7119, 7115/M/2017 & ors. M/s. Star Track Terminals Pvt. Ltd. The above titled five appeals have been preferred by the Revenue against the orders dated 21.09.2017 & 05.10.2017 of the Commissioner of Income Tax (Appeals) [hereinafter referred to as the CIT(A)] relevant to assessment year 2010-11, 2011-12 & 2012-13 and 2013-14 & 2014-15 respectively.
The only issue raised by the Revenue in this appeal is against the order of Ld. CIT(A) allowing the deduction under section 80IA(4) despite the fact that assessee is not entitled to claim the same.
The facts in brief are that the assessee company is a joint venture company between APM Terminals India Ltd. (51%) and Container Corporation of India Ltd. (49%) a Public Sector Undertaking (PSU). The said company is engaged in the business of warehousing, custom clearance and transportation of goods from its location by railway or by trucks in containers to others. During the year, the assessee claimed deduction under section 80IA(4) of the act of Rs.6,51,02,975/- and in support of its claim furnished audit report in form No.10CCB. The assessee company generated income from operation of Inland Container Depots (ICD) situated at various locations which according to the assessee constitute inland port and is included in the definition of infrastructure facilities in terms of Explanation to section 80IA(4) of the Act. The assessee claimed that it falls within the definition of infrastructure facility in terms of section 80IA of the Act and hence the claimed the deduction. According to the AO provisions of section 80IA(4)
3 7119, 7115/M/2017 & ors. M/s. Star Track Terminals Pvt. Ltd. clause (i) sub clause (a) denotes the enterprise carrying on the business. Accordingly to the AO the infrastructure facility which includes real system irrigation project, a port and airport or inland port has to be owned by the enterprise. Hence, the AO concluded that assessee company’s container freight station (CFS) in respect of which the assessee claimed the deduction under section 80IA(4) is not owned by the company. The AO also observed that assessee has entered into sub lease agreement for rent at Dadri, Greater Noida with Container Corporation of India Ltd. (CCL) which holds 49% share capital of the assessee company and thus hired the business of infrastructure from others particularly Container Corporation of India Ltd. (CCL). Hence, the assessee has not fulfilled the conditions laid down in section 80IA(4) which state that the facility should be owned by the company registered in India and by a consortium of companies and thus rejected the claim of the assessee.
The Ld. CIT(A) allowed the appeal of the assessee by holding that CFS is an inland port and falls within the definition of infrastructure facility within the meaning of section 80IA(4) by following the decision of special bench in the case of All Cargo Global Logistics Ltd. vs. DCIT (2012) 23 taxmann.com 103 (Mum. – SB) and the decision of the Hon’ble Bombay High Court in the case of Container Corporation of India Ltd. vs. ACIT (2012) 21 taxmann.com 317 (Delhi).
At the outset, the Ld. Counsel of the assessee submitted before the Bench that the said issue has been decided in 4 7119, 7115/M/2017 & ors. M/s. Star Track Terminals Pvt. Ltd. assessee’s own case in ITA No.3221/M/2016 A.Y. 2011-12 by the coordinate bench in its favour by following the decision of Special Bench in the case of All Cargo Global Logistics Ltd. vs. DCIT (supra). We would like to mention that the decision of the special bench in the case of All Cargo Global Logistics Ltd. (supra) has been upheld by the Hon’ble Bombay High Court. The Ld. A.R. therefore prayed that by following the ratio laid down by the co-ordinate bench of the Tribunal in assessee’s own case, the appeal of the Revenue deserves to be dismissed.
The Ld. D.R., on the other hand, relied on the grounds of appeal and order of the AO.
After hearing both the parties and perusing the material on record including the decision of the co-ordinate bench of the Tribunal in A.Y. 2011-12 (supra), we observe that issue is squarely covered in favour of the assessee and against the Revenue by the said decision. The operative part is reproduced below: “9. We have perused the record and gone through the orders passed by the authorities below and the cases relied upon by the assessee and Ld. Pr. Commissioner. The only issue involved in this appeal is whether the assessee is entitled for the deduction claimed u/s 80IA (4) of the Act, or whether the assessment order passed by the AO is erroneous and prejudicial to the interest of the revenue to exercise jurisdiction u/s 263 of the Act by the Ld. Pr. Commissioner?
As pointed out by the Ld. counsel for the assessee the identical issue has already been decided by the special Bench of the Bombay Tribunal in All Cargo Global Logistics v. DCIT (supra). In the said case one of the issues to be adjudicated by the Bench was whether a Container Freight Station engaged in performing functions such as warehousing, customs clearance, and transport of goods from its location to sea-ports and vice-versa by railway or by trucks in containers, has to be regarded as an inland port whose income is entitled to deduction under section 80-I A(4). The special Bench decided the said issue in favour of the assessee. The relevant portion of the findings of the Special Bench on this issue reads as under:
5 7119, 7115/M/2017 & ors. M/s. Star Track Terminals Pvt. Ltd. “65. We have considered the facts of the cases and submissions made before us. It may be mentioned that one of the arguments advanced by the Ld. Counsel for the assessee is that the case of Container Corpn. of India Ltd. (supra) is not based on any of the circulars issued by the Port authorities, however, the CFS the assessee has been granted such certificate. The certificate mentions that the CFS carries on port related activities, and it may be considered as an extendable activity of the port related activities. It is clarified that the CFS has not been built on BOT or BOLT Scheme and that it is situated on land which does not belong to the port. The letters written by port trust to the assessee also state that the matter has been referred to the Income Tax Department. The department has clarified that an ICD/CFS does not constitute an inland port. In the case of CIT v. ABG Heavy Industries Ltd. [2010] 189 Taxman 54 (Bom.), the Hon'ble Court has held that the assessee is entitled to deduction u/s 80-IA. However there is a very salient difference in facts that structures were located at port and such structures had to be handed over to the Port Trust on expiry of the period of agreement. In the case at hand it is clear that the assets of the CFS are not to be handed over to the Port Trust at any point of time as it is not built on BOT & BOLT Scheme. The CFS is also not located at the Port. As against the aforesaid, the Ld. Standing Counsel has submitted that clarifications issued by other authorities including Central Board of Excise and Customs under the relevant Acts do not lay guidelines under the Income Tax Act and that the matter has to be decided under the Income-tax Act independently. For doing so, initially a strict interpretation has to be placed on the words "inland port" to examine that the assessee is entitled to the deduction. CBDT has furnished opinion that ICDs and CFSs are not entitled to such deduction as they do not constitute inland ports. Other Acts as well as study report lead to the conclusion that a port can be said to be an inland port only if it has an access to the sea via a waterway.
We find that the solitary decision in this case by any High Court is in the case of Container Corpn. of India Ltd. (supra). In this case it has been held that an ICD is not a port but it is an inland port. The case of CFS is similar situated in the sense that both carry out similar functions, i.e., ware housing, customs clearance, and transport of goods from its location to the seaports and vice-versa by railway or by trucks in containers. Thus, the issue is no longer resintegra. Respectfully following this decision, it is held that a CFS is an inland port whose income is entitled to deduction u/s 80-IA(4). Question No. 2 is answered accordingly.”
11. Since, the assessee was entitled to the deduction claimed u/s 80-IA(4) of the Act as per the decision of the Special Bench discussed above, the AO has rightly allowed the deduction in question claimed by the assessee. The assessment order is, therefore, neither erroneous nor prejudicial to the interest of the revenue. The cases relied upon by the Ld. Pr. Commissioner are distinguishable on facts. Hence, in our considered opinion the action of Ld. Pr. Commissioner is beyond jurisdiction and liable to be quashed. We, therefore, quash the order passed by the Ld. Pr.
6 7119, 7115/M/2017 & ors. M/s. Star Track Terminals Pvt. Ltd. Commissioner and allow the solitary ground of appeal of the assessee. In the result, appeal filed by the assessee for the assessment year 2011-12 is allowed.”
8. Since the facts in the instant case before us are materially same to the facts of the case as decided by the co-ordinate bench of the Tribunal in assessee’s own case. We are, therefore, inclined to uphold the order of Ld. CIT(A) by dismissing the appeal of the Revenue.
ITA No.7115/M/2017, & 157/M/2018 9. The issue involved in the present appeal is identical to the one as stated above in ITA No.7114/M/2017 for A.Y. 2010-11. Therefore, our finding in ITA No.7114/M/2017 for A.Y. 2010-11 would , mutatis mutandis, would apply to these appeals as well. Accordingly, these three appeals of the Revenue are dismissed.
10. In this appeal, the Revenue has challenged the order of Ld. CIT(A) dated 21.09.2017 which in turn arose out of the assessment order passed under section 143(3) read with section 263 of the Act.
Since co-ordinate bench of the Tribunal in A.Y. 2011-12 vide order dated 07.07.2017 quashed the revisionary order under section 263 dated 26.02.2016 by Pr. CIT. Therefore, the consequential assessment order passed under section 143(3) read with section 263 does not survive. The Revenue has challenged the order of Ld. CIT(A) arising out of the above assessment order passed under section 143(3) read with section 263 of the Act. Accordingly, the appeal of the Revenue is dismissed.
In the result, all the five appeals of the Revenue are dismissed as indicated hereinabove.
Order pronounced in the open court on 30.04.2019.