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Income Tax Appellate Tribunal, ‘B’ BENCH, CHENNAI
Before: SHRI N.R.S. GANESAN & SHRI A. MOHAN ALANKAMONY
आदेश /O R D E R
PER N.R.S. GANESAN, JUDICIAL MEMBER:
Both the appeals of Revenue are directed against the respective orders of the Commissioner of Income Tax (Appeals)-15, Chennai, dated 11.03.2016 and pertain to assessment years 2010- 11 and 2011-12. Since common issue arises for consideration, we heard both the appeals together and disposing of the same by this common order.
2. The only issue arises for consideration is deduction under Section 80-IA of the Income-tax Act, 1961 (in short 'the Act').
3. Shri Supriyo Pal, the Ld. Departmental Representative, submitted that the assessee claimed deduction under Section 80-IA of the Act in respect of Container Freight Station. The Assessing Officer disallowed the claim of the assessee on the ground that there was no agreement between the assessee and the Government of India or its agency. However, the CIT(Appeals) found that the Container Freight Station established by the assessee, being extended arm of port, is eligible for exemption under Section 80-IA of the Act. According to the Ld. D.R.,the CIT(Appeals) has not considered that agreement between the assessee and Central Government or State Government is one of the pre-conditions for grant of deduction under Section 80-IA of the Act. Referring to sub-section (4) of Section 80-IA of the Act, the Ld. D.R. submitted that the assessee has to enter into an agreement with Central Government or State Government or Local authority or a statutory board for developing or operating and maintaining or developing, operating and maintaining a new infrastructure facility.
In this case, according to the Ld. D.R., there is no agreement between the assessee and the Central Government or State Government. Referring to CBDT circular No.793 dated 23.06.2000, the Ld. D.R. submitted that the Container Freight Station may be an extended arm of the port, however, for the purpose of claiming deduction, the assessee has to necessarily enter into an agreement with Central Government or State Government. Therefore, according to the Ld. D.R., the CIT(Appeals) is not justified in allowing the claim of the assessee.
On the contrary, Sh. R. Vijayaraghavan, the Ld.counsel for the assessee, submitted that the second Unit of Container Freight Station was owned by the assessee and it was also declared as “Customs Area” by the Commissioner of Customs for the purpose of handling import FCL containers. The only objection of the Ld. D.R. is that there was no agreement between Government of India and the assessee. Referring to the circular No.10 of 2005 dated 16.12.2005, the Ld.counsel submitted that for claiming deduction under Section 80-IA of the Act, entering into an agreement with Government is essential pre-condition. The agreement shall be for the purpose of transferring the infrastructure facility to the authority concerned on the expiry of the time stipulated. However, from the assessment year 2002-03, the Container Freight Station is also considered as extended arm of the port. According to the Ld. counsel, for the purpose of claiming deduction under Section 80-IA of the Act, what is required is certificate from the concerned port authority to the effect that the Container Freight Station is a part of the port. In this case, according to the Ld. counsel, the Chennai Port Trust authorities certified that the Container Freight Station established by the assessee is an extended arm of the port. The CBDT does not say that there is a need for agreement between the assessee and the Government for the purpose of claiming deduction under Section 80-IA of the Act. In view of this circular, according to the Ld. counsel, the CIT(Appeals) has rightly allowed the claim of the assessee.
We have considered the rival submissions on either side and perused the relevant material available on record. We have carefully gone through the provisions of Section 80-IA(4) of the Act which reads as under:-
(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, 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. Explanation For the purposes of this clause, “infrastructure facility” means— (a) a road including toll road, a bridge or a rail system ; (b) a highway project including housing or other activities being an integral part of the highway project ; (c) a water supply project, water treatment system, irrigation project, sanitation and sewerage system or solid waste management system ; a port, airport, inland waterway, inland port or navigational channel in the sea; (ii) any undertaking which has started or starts providing telecommunication services whether basic or cellular, including radio paging, domestic satellite service, network of trunking, broadband network and internet services on or after the 1st day of April, 1995, but on or before the 31st day of March, 2005 : Explanation For the purposes of this clause, “domestic satellite” means a satellite owned and operated by an Indian company for providing telecommunication service ; (iii) any undertaking which develops, develops and operates or maintains and operates an industrial park or special economic zone notified by the Central Government in accordance with the scheme framed and notified by that Government for the period beginning on the 1st day of April, 1997 and ending on the 31st day of March, 2006 : Provided that in a case where an undertaking develops an industrial park on or after the 1st day of April, 1999 or a special economic zone on or after the 1st day of April, 2001 and transfers the operation and maintenance of such industrial park or such special economic zone, as the case may be, to another undertaking (hereafter in this section referred to as the transferee undertaking), the deduction under sub-section (1) shall be allowed to such transferee undertaking for the remaining period in the ten consecutive assessment years as if the operation and maintenance were not so transferred to the transferee undertaking : Provided further that in the case of any undertaking which develops, develops and operates or maintains and operates an industrial park, the provisions of this clause shall have effect as if for the figures, letters and words “31st day of March, 2006”, the figures, letters and words the 31st day of March, 2011” had been substituted ; (iv) an undertaking which,—
(a) is set up in any part of India for the generation or generation and distribution of power if it begins to generate power at any time during the period beginning on the 1st day of April, 1993 and ending on the 31st day of March, 2017; (b) starts transmission or distribution by laying a network of new transmission or distribution lines at any time during the period beginning on the 1st day of April, 1999 and ending on the 31st day of March, 2017 : Provided that the deduction under this section to an 1undertaking under sub-clause (b) shall be allowed only in relation to the profits derived from laying of such network of new lines for transmission or distribution ; (c) undertakes substantial renovation and modernisation of the existing network of transmission or distribution lines at any time during the period beginning on the 1st day of April, 2004 and ending on the 31st day of March, 2017. Explanation For the purposes of this sub-clause, “substantial renovation and modernisation” means an increase in the plant and machinery in the network of transmission or distribution lines by at least fifty per cent. of the book value of such plant and machinery as on the 1st day of April, 2004. (v) an undertaking owned by an Indian company and set up for reconstruction or revival of a power generating plant, if— (a) such Indian company is formed before the 30th day of November, 2005, with majority equity participation by public sector companies for the purposes of enforcing the security interest of the lenders to the company owning the power generating plant and such Indian company is notified before the 31st day of December, 2005, by the Central Government for the purposes of this clause ; (b) such undertaking begins to generate or transmit or distribute power before the 31st day of March, 2011.
Sub-clause (b) of Section 80-IA(4)(i) of the Act clearly says that this section is applicable only in respect of enterprise which entered into an agreement with Central Government or State Government for the purpose of developing, maintaining, operating, etc. In the case before us, the assessee claims that from the assessment year 2002-03, there is no need for any agreement with Government of India or State Government. Section 80-IA(4) does not say that there is no need for any agreement. Pre-condition for claiming deduction under Section 80-IA of the Act is that there should be an agreement between the assessee and the Central Government or State Government for developing or operating or maintaining or developing, operating, maintaining a new infrastructure facility.
Therefore, the provisions of Income-tax Act very clearly says that there is need for agreement between the assessee and the Government for establishing a new infrastructure facility.
We have carefully gone through the Circular issued by the CBDT in Circular No.10 of 2005 which reads as follows:-
CIRCULAR NO.010 OF 2005 DT. 16TH DECEMBER, 2005 Sub Definition of “port” as infrastructural facility for the purpose of sections 10(23G) and 80-IA of the Income-tax Act, 1961
16/12/2005 EXEMPTIONS / DEDUCTIONS SECTION 10(23G), 80-IA Reference is invited to Board’s Circular No.793 dated 23rd June, 2000 [(2000) 161 CTR (St) 21] and amendment in section 80-IA by the Finance Act, 2001.
“Port”, for the purposes of sections 10(23G) and 80-IA of the Income-tax Act, 1961, includes structures at the ports for storage, loading and unloading etc, if the following conditions are fulfilled:
(a) the concerned port authority has issued a certificate that the said structures form part of the port, and (b) such structures have been built under the BOT or BOLT schemes and there is an agreement that the same would be transferred to the said authority on the expiry of the time stipulated in the agreement.
This definition is applicable to assessment year 2001-02 and any earlier assessment year.
However, for and from assessment year 2002-03 onwards, structures at the ports for storage, loading and unloading etc will be included in the definition of “port” for the purpose of sections 10(23G) and 80-IA of the Income-tax Act, 1961, if the following condition is fulfilled :
-the concerned port authority has issued a certificate that the said structures form part of the port.
4. This may be brought to the notice of all the officers in your region.
[F.No.205/51/2005-I.T.A. No. II] From the above circular, it is obvious that for the assessment year 2001-02 and for earlier assessment year, a certificate is required from concerned port authority indicating the Container Freight Station forms part of port and there shall be an agreement as infrastructure facility would be transferred to the concerned authority on expiry of time stipulated in the agreement. From the assessment year 2002-03, the CBDT has instructed that what is required for claiming 80-IA deduction is certificate from concerned port authority.
We find that this issue was considered by the Madras High Court in CIT v. A.L. Logistics Pvt. Ltd. (2015) 374 ITR 609. The Madras High Court, after considering the Public Notification issued by the Commissioner of Customs and approval granted by the State Government, found that the assessee is eligible for deduction under Section 80-IA of the Act. In the grounds of appeal, the Revenue claims that a Special Leave Petition was filed before the Apex Court against the judgment of Madras High Court in A.L. Logistics Pvt. Ltd. (supra). This Tribunal is of the considered opinion that on identical situation in A.L. Logistics Pvt. Ltd. (supra), the Madras High Court has allowed the claim of the assessee, therefore, the CIT(Appeals) has rightly placed his reliance on the judgment of Madras High Court and found that the Container Freight Station established by the assessee is an extended arm of the port, therefore, eligible for exemption under Section 80-IA of the Act. This Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed.
In the result, both the appeals filed by the Revenue are dismissed.
Order pronounced on 23rd September, 2016 at Chennai.