Commissioner Of Income Tax, Delhi-1 v. M/S Container Corporation Of India Ltd

COMMISSIONER OF INCOME TAX, DELHI-1 M/S CONTAINER CORPORATION OF INDIA LTD. (Civil Appeal No. 8900 of 2012) APRIL 24, 2018 [R. K. AGRAWAL AND ABHAY MANOHAR SAPRE, JJ.] Income Tax Act, 1961 – s.80-IA – Deduction under s.80-IAon the profits earned from the Inland Container Depots – Held:The ICDs are Inland Ports and are subject to the provisions ofs.80-IA – Deduction can be claimed for the income earned out ofthese Depots – Customs Act, 1962 – s.2(12), 7(1)(aa). Disposing of the appeals, the Court HELD: 1. The Inland Container Depots (ICDs) functionfor the benefit of exporters and importers located in industrialcenters which are situated at distance from sea ports. The purposeof introducing them was to promote the export and import in thecountry as these depots acts as a facilitator and reduceinconvenience to the person who wishes to export or import butplace of his business is situated in a land locked area i.e., awayfrom the sea. These depots reduce the inconvenience in importand export in the sense that it reduces the bottlenecks that arearising out of handling and customs formalities that are requiredto be done at the sea ports by allowing the same to be done atthese depots only that are situated near to them. The term ICDswas inserted in 1983 under Section 2(12) of the Customs Act,1962 which defines ‘customs port’ and by the provisions of Section7(1)(aa) of the Customs Act, 1962 power has been given to theCentral Board of Excise and Custom(CBEC) to notify which placealone to be considered as ICDs for the unloading of importedgoods and the loading of export goods. [Para 10][613-F-H;614-A-B] 2. With the purpose of boosting country’s infrastructureand specially the transport infrastructure, the Finance Act, 1995which came into effect from 01.04.1996 brought an amendmentto the provisions of Section 80-IA of the IT Act. Section 80-IA ofthe IT Act talks about deduction in respect of profits and gains 607 607 Afrom industrial undertaking or enterprises engaged in theinfrastructure development etc. The said amendment for the firsttime brought a provision under which a percentage of profitsderived from the operation of infrastructure facility was alloweda deduction while computing the income of the assessee. A tenyears tax concession allowed to the enterprises in accordanceBwith the provisions of the Section subject to fulfillment ofconditions given therein, which develops, maintains and operatesany new infrastructure facility such as roads, highways,expressways, bridges, airports, ports and rail system or any otherpublic facility of similar nature as notified. Section 80 IA (12) (a)Cgives the power to the Board to notify certain other enterpriseswhich can avail the benefit of Section 80-IA of the IT Act, whichdo not fall within any of the specified categories but carries outactivities of similar nature. Further, Central Board of Direct Taxes(CBDT), in exercise of its power under Section 80-IA(12)(ca),vide Notification No.S.O.744(E) dated 01.09.1998 notified ICDsDand CFSs as infrastructure facility. In addition to the above, theFinance Act, 1998, which came into effect on 01.04.1999, made achange in the definition of ‘Infrastructure facility’ as is relevantto the present case. The words ‘Inland water ways and inlandports’ were added in the definition of infrastructure facility. AEnoticeable change was further brought by the Finance Act, 2001,which came into effect from 01.04.2002, in the terms that thepower of the Board to extend the benefit of the said provisionsto any infrastructure facility of similar nature by issuing aNotification was taken away. The new explanation to Section 80-IA(4) of the IT Act as is substituted by the Finance Act, 2001.FThe said amendment is silent with regard to any effect it wouldhave upon the Notifications issued earlier by the Board in dueexercise of its power. Had it been the intention of the legislaturethat the Notifications issued by the Board earlier are of no effectafter 2002-03, it would have had found a place in the saidGamendment. In the absence of the same, the Notifications whichwere issued in legitimate exercise of the power conferred on theBoard would not cease to have effect after the Assessment Year2002-03. [Paras 11, 13, 15, 16, 18] [614-B-D; 615-A-C, D-E;616-A-C] 3. The Respondent has been held entitled for the benefitof Section 80IA of the IT Act much before the Finance Act, 2001which came into force on 01.04.2002 and exemption for the periodof 10 years cannot be curtailed or denied by any subsequentamendment regarding the eligibility conditions under the periodis modified or specific provision is made that the benefit from01.04.2002 onwards shall only be claimed by the existing eligibleunits if they fulfill the new conditions. [Para 20] [616-F-G] 4. Now the issue is whether the ICDs can be termed asInland Ports so as to entitle deduction under Section 80-IA ofthe IT Act. The term port, in commercial terms, is a place wherevessels are in a habit of loading and unloading goods. The term‘Port’ as is used in the Explanation attached to Section 80-IA(4)seems to have maritime connotation perhaps that is the reasonwhy the word airport is found separately in the Explanation.Considering the nature of work that is performed at ICDs, theycannot be termed as Ports. However, taking into considerationthe fact that a part of activities that are carried out at ports suchas custom clearance are also carried out at these ICDs, the claimof the respondent can be considered within the term ‘Inland port’as is used in the Explanation. The word ‘Inland Container Depots’was first introduced in the definition of ‘Customs Port’ as is givenin Section 2(12) of the Customs Act, 1962, through amendmentmade by the Finance Act, 1983 with effect from 13.05.1983.[Para 21] [617-A-C] 5. The term ‘Inland Port’ has been defined nowhere. Butthe Notification that has been issued by the Central Board ofExcise & Customs (CBEC) dated 24.04.2007 in terms holds thatconsidering the nature of work carried out at these ICDs theycan be termed as Inland Ports. Further, the communication dated25.05.2009 issued on behalf of the Ministry of Commerce andIndustry confirming that the ICDs are Inland Ports, fortifies theclaim of the respondent. Though both the Notification andcommunication are not binding on CBDT to decide whether ICDscan be termed as Inland Ports within the meaning of Section 80-IAof the IT Act, the appellant is unable to put forward any reasonableexplanation as to why these notifications and communication Ashould not be relied to hold ICDs as Inland Ports. Unless shownotherwise, it cannot be held that the term ‘Inland Ports’ is useddifferently under Section 80-IA of the IT Act. The ICDs are InlandPorts and subject to the provisions of the Section and deductioncan be claimed for the income earned out of these Depots.However, the actual computation is to be made in accordanceBwith the different Notifications issued by the Customs departmentwith regard to different ICDs located at different places.[Para 22] [617-D-G]CIVIL APPELLATE JURISDICTION: Civil Appeal No. 8900of 2012.CFrom the Judgment and Order dated 11.05.2012 of the High Courtof Delhi in ITA Nos. 1411 of 2009, ITA Nos. 967 and 968 of 2011 WITH C. A. No. 8901 of 2012, C. A. No. 4409 of 2014, C. A. Nos. 4983Dand 8546 of 2015, C. A. Nos. 66, 6411, 8034, 6982, 6635, 9651, 7211,7210, 7209, 8033, 8032, 10336, 8755, 9158, 9157, 8352, 9159, 10307,9744, 9743, 10308, 10662, 11709 of 2017, C.A. Nos. 1441, 4458, 4459,5571, 5573, 6800, 11075, 9364, 9487, 9277, 10236, 14900, 16162, 11202,15028, 11117, 15033, 11160, 15494, 15497, 17315, 17534, 17317, 17318,E18272, 19491, 19535, 19935 of 2017, C. A. Nos. 4487, 4543, 4484,4493-4494, 4499, 4548, 4547, 4655 and 4645 of 2018. K. Radhakrishnan, Rakesh Dwivedi, S. K. Bagaria, PercyPardiwala, Jehagir Mistry, Sr. Advs., Sanjai Kumar Pathak, Arijit Prasad,Zoheb Hossain, Tara Chandra Sharma, Rupesh Kumar, D.L. Chidananda,Ms. Sadhna Sandhu, Ms. Gargi Khanna, Ms. Niranjana Singh, Mrs. AnilFKatiyar, Kaushik Poddar, Ms. Isha Singh, Ms. Snehil Sonam, PreeteshKapur, Sanjay Kapur, Ms. Megha Karnwal, Ms. Shubhra Kapur, I. P.Bansal, Vivek Bansal, Aneesh Mittal, Siddarth Bhatnagar, DebmalyaBanerjee, Kartik Bhatnagar, Manish Sharma, A.S. Aman,M/s. Karanjawala & Co., Praveen Swarup, Dr. Rakesh Gupta,GMs. Monika Ghai, Mrs. Shyamalima Borah, Ambhoj Kumar Sinha, SalilAgarwal, Bhargava V. Desai, Akshat Malpani, Rameshwar Prasad Goyal,V. Ramasubramanian, A. Lakshminarayanan, Sunny Choudhary,Dr. Shashwat Bajpai, Sharad Agarwal, Nipun Sharma, S. Krishnan,Bikash Chandra, Inder Mohan Singh, Mrs. Rani Chhabra, K. Gandhi, Ms. Srishti Singh, Rajeev, Vijay Kumar, Farman Ali, Ravi Prakash, RaheelKohli, M/s D.S.K. Legal, Ranjit B. Raut, Ms. Surbhi Kapoor,Mrs. Bina Gupta, Ninad Laud, Karan Mathur, Anjuman Tripathy, IvoD’Costa, Jayant Mohan, S. Vasudevan, Mahendra Singh, Saurabh Sood,Aditya Bhattacharya, Victor Das, Punit Dutt Tyagi, S. Vasudevan, DhruvMehta, Ms. Nupur Maheshwari, M. P. Devanath, Ms. Kavita Jha, VaibhavKulkarni, Praveen Swarup, Ms. Archana Pathak Dave, Ms. AnkitaChaudhary, Advs. for the appearing parties. The Judgment of the Court was delivered by R. K. AGRAWAL, J. 1. Leave granted. 2. The present appeal has been filed against the judgment andorder dated 11.05.2012 passed by the High Court of Delhi in ITANos.1411 of 2009, ITA Nos. 967 and 968 of 2011 wherein the DivisionBench of the High Court while allowing the above appeals filed by therespondent herein set aside the order dated 27.02.2009 passed by theIncome Tax Appellate Tribunal (in short ‘the Tribunal’) holding that therespondent herein is entitled to claim the benefit of Section 80-IA of theIncome Tax Act,1961(in short ‘the IT Act’). 3. Brief facts: (a) M/s Container Corporation of India Ltd. (CONCOR)-therespondent herein is a government Company and is engaged in thebusiness of handling and transportation of containerized cargo and isunder the direct administrative control of Ministry of Railways. Itsoperating activities are mainly carried out at its Inland Container Depots(ICDs), Container Freight Stations (CFSs) and Port Side ContainerTerminals (PSCTs) spread all over the country. (b) The issue in the present case pertains to the assessment year2003-04 to 2005-06. The respondent herein filed the returns on the incomefor all these years and claimed deduction under various heads includingdeduction under Section 80-IA of the IT Act. This issue is with regard tothe deduction claimed under Section 80-IA on the profits earned fromthe Inland Container Depots (ICDs) and on rolling stocks. The claim fordeduction on the profits earned from the ICDs and further the deductionon account of rolling stocks has been rejected by the Assessing Officervide Assessment Order dated 28.02.2006. A(c) The respondent herein, being aggrieved with the aforesaidorder, filed an appeal being No. 325/05-06 to the Commissioner of IncomeTax (Appeals)-VI, New Delhi. Learned CIT (Appeals), vide order dated29.05.2007, partly allowed the appeal while rejecting the deductionclaimed under Section 80-IA of the IT Act. Being aggrieved, therespondent herein further preferred ITA Nos. 2851 & 3680/DEL./2007,B2753 & 4477/DEL/2007 before the Tribunal. The Tribunal, vide orderdated 27.02.2009, partly allowed the appeal and held that the deductionunder Section 80-IA can be claimed with regard to the rolling stocks ofthe company but not with regard to the ICDs. (d) Being aggrieved by the order dated 27.02.2009, the respondentCherein challenged the same before the High Court by filing three IncomeTax Appeals being Nos. 967 of 2011, 1411 of 2009 and 968 of 2011. TheDivision Bench of the High Court, vide judgment and order dated11.05.2012, allowed the appeals and held that the Respondent herein isentitled to claim deduction on the income earned from the ICDs for theDrelevant period under consideration under Section 80-IA of the IT Act.Being aggrieved by the judgment and order dated 11.05.2012, the Revenuehas preferred this appeal before this Court. 4. Heard learned senior counsel for the parties and perused thefactual matrix of the case. Points for consideration:- 5. The only point for consideration before this Court is whether inthe facts and circumstances of the case the Inland Container Depots(ICDs) under the control of the Respondent, during the relevant period,qualified for deduction under Section 80-IA(4) of the IT Act or not. Rival contentions:- 6. Learned senior counsel appearing for the appellant contendedthat the High Court was not right in holding that the Respondent is e