Case Law Details
PCIT Vs Sanco Trans (Madras High Court)
The issue under consideration whether deduction under section 80IA(4) can be claimed on Container Freight Station (CFS) as it constitutes an ‘inland port’?
High Court states that, the term ‘Inland Port’ has been defined nowhere. But the Notification that has been issued by the Central Board of Excise & Customs (CBEC) dated 24.04.2007 in terms holds that considering the nature of work carried out at these ICDs they can be termed as Inland Ports. Further, the communication dated 25.05.2009 issued on behalf of the Ministry of Commerce and Industry confirming that the ICDs are Inland Ports, fortifies the claim of the respondent herein. Though both the Notification and communication are not binding on CBDT to decide whether ICDs can be termed as Inland Ports within the meaning of Section 80-IA of the IT Act, the appellant herein is unable to put forward any reasonable explanation as to why these notifications and communication should not be relied to hold ICDs as Inland Ports. Unless shown otherwise, it cannot be held that the term ‘Inland Ports’ is used differently under Section 80-IA of the IT Act. All these facts taken together clear the position beyond any doubt that the ICDs are Inland Ports and subject to the provisions of the 17 Section and deduction can be claimed for the income earned out of these Depots. However, the actual computation is to be made in accordance with the different Notifications issued by the Customs department with regard to different ICDs located at different places.” Thus, Appeals are dismissed and the substantial questions of law are answered against the Revenue.
FULL TEXT OF THE HIGH COURT ORDER /JUDGEMENT
These appeals, at the instance of the revenue filed under Section 260A of the Income Tax Act, 1961 (the ‘Act’ for brevity), are directed against the orders passed by the Income Tax Appellate Tribunal, Madras ‘A’ Bench, Chennai in ITA Nos.2573/Chny/2017; 2574/Chny/2017 dated 16.03.2018 for the Assessment Years 2013-2014 and 2014-2015 respectively.
2. The revenue has raised the following Substantial Questions of Law for consideration:
“1. Whether the Appellate Tribunal was right and justified in holding that Container Freight Station constitutes an ‘inland port’ and is therefore entitled for deduction under Section 801A(4) of the Income Tax Act?
2. Whether the Appellate Tribunal was correct and justified in holding that assessee is eligible for deduction u/s 801A(4) even though it had not entered into agreement with Central Government, State Government, local authority or any other statutory body for developing or operating are mandatory condition as per section 801A(4)(1)(b) of the IT Act?
3. Whether the Tribunal was correct and justified in holding that assessee is eligible u/s 80IA(4) even though it does not satisfy clause (c), not being a new infrastructure facility started on or after the 1st day of April, 1995, a mandatory condition as per section 80IA(4)(C), but only an extension of an already existing Container Freight Station which was functional from 1993 itself?
4. Whether the Tribunal is right in allowing the claim of assessee relying on CBDT Circular No.10/2005 dated 16.12.2005 even though the said circular only says that structures at the ports for storage, loading and unloading etc., will be included in the definition of ‘port’ but it nowhere treated it as a deemed agreement with government and thus misconstrued the content of the circular?”
3. We have heard Mr.J.Narayanasamy, learned senior standing counsel for the appellant / revenue and Mr.Vikaram Vijayaraghavan, learned counsel for M/s Subbaraya Aiyer Padmanabhan, learned counsel for the respondent / assessee.
4. We need not labor much to decide the substantial questions of law, as the Division Bench of this Court in Assessee’s own case in T.C.A. Nos.105 and 106 of 2018 has decided the questions of law against the revenue by order dated 19.11.2019. The operative portion of the judgment reads as follows:-
“2.The orders of the CIT(A), dated 11.03.2016 for the assessment years, 2010-11 to 2011-12 were challenged before the Tribunal by the Revenue. The Appellate Tribunal rejected the contention of the Revenue and dismissed the same. Against the order of the Appellate Tribunal only, present appeals have been filed.
3.These appeals were admitted on 27.03.2018 on the following substantial question of law :
“Whether Container Freight Station (CFS) is part of Inland Port and therefore, an infrastructure facility as defined in the Explanation to Section 80IA (A) (i) of the Income Tax Act, 1961 and entitled to deduction under the said Section?”
4.When the matter is called today Mr. Narayanaswamy, learned Senior Standing Counsel appearing on behalf of the appellant would submit that the substantial question of law raised in this case have already been answered against the revenue by the Division Bench of this court in a similar case in The Commissioner of Income Tax, Chennai Vs. A.L.Logistics Pvt. Ltd., reported in (2015) 374 ITR 609 and the Review Petition filed against the above judgment was also dismissed by the Hon’ble Supreme Court.
5. Since the present Appeal is covered by the above judgment, the present Appeals are dismissed. No costs. Consequently, connected Miscellaneous Petitions are closed.”
5. The above decision would fully apply to the facts and circumstances of the appeals on hand, because the Tribunal in the impugned order followed the decision of the assessee’s own case for the earlier assessment years, namely, 2010-2011 and 2011-2012, which were the subject matter on appeals before the Division Bench in TCA Nos.105 and 106 of 2018.
6. Further, it is beneficial to take note of the decision of the Hon’ble Supreme Court reported in [2018] 404 ITR 0397 (SC) [Commissioner of Income Tax Vs. Container Corporation of India Limited] wherein at Paragraph Nos.10, 20 and 22, it has been held as follows :
“10. As the whole point in dispute revolves around the ICDs, it would be appropriate to have an understanding about the same. The ICDs function for the benefit of exporters and importers located in industrial centers which are situated at distance from sea ports. The purpose of introducing them was to promote the export and import in the country as these depots acts as a facilitator and reduce inconvenience to the person who wishes to export or import but place of his business is situated in a land locked area i.e., away from the sea. These depots reduce the inconvenience in import and export in the sense that it reduces the bottlenecks that are arising out of handling and customs formalities that are required to be done at the sea ports by allowing the same to be done at these depots only that are situated near to them. The term ICDs was inserted in 1983 under Section 2 (12) of the Customs Act, 1962 which defines ‘customs port’ and by the provisions of Section 7(1)(aa) of the Customs Act,1962 power has been given to the Central Board of Excise and Custom(CBEC) to notify which place alone to be considered as Inland Container Depots for the unloading of imported goods and the loading of export goods by Notification in the official Gazette.
20. Moreover, we find that the Respondent has been held entitled for the benefit of Section 80IA of the IT Act much before the Finance Act, 2001 which came into force on 01.04.2002 and exemption for the period of 10 years cannot be curtailed or denied by any subsequent amendment regarding the eligibility conditions under the period is modified or specific provision is made that the benefit from 01.04.2002 onwards shall only be claimed by the existing eligible units if they fulfill the new conditions.
22. The term ‘Inland Port’ has been defined nowhere. But the Notification that has been issued by the Central Board of Excise & Customs (CBEC) dated 24.04.2007 in terms holds that considering the nature of work carried out at these ICDs they can be termed as Inland Ports. Further, the communication dated 25.05.2009 issued on behalf of the Ministry of Commerce and Industry confirming that the ICDs are Inland Ports, fortifies the claim of the respondent herein. Though both the Notification and communication are not binding on CBDT to decide whether ICDs can be termed as Inland Ports within the meaning of Section 80-IA of the IT Act, the appellant herein is unable to put forward any reasonable explanation as to why these notifications and communication should not be relied to hold ICDs as Inland Ports. Unless shown otherwise, it cannot be held that the term ‘Inland Ports’ is used differently under Section 80-IA of the IT Act. All these facts taken together clear the position beyond any doubt that the ICDs are Inland Ports and subject to the provisions of the 17 Section and deduction can be claimed for the income earned out of these Depots. However, the actual computation is to be made in accordance with the different Notifications issued by the Customs department with regard to different ICDs located at different places.”
Thus, Appeals are dismissed and the substantial questions of law are answered against the Revenue. Consequently, connected miscellaneous petition is closed. No costs.
