Ita/1279/2009 Of The Commissioner Of Income Tax, Cochin v. Hha Tank Terminal (P) Ltd., Cochin

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE P.S.GOPINATHAN FRIDAY, THE 19TH MARCH 2010 / 28TH PHALGUNA 1931 ITA.No. 1279 of 2009() --------------------------- ITA.18/COCH/2006 of INCOME TAX APPELLATE TRIBUNAL,COCHIN BENCH .................... APPELLANT/APPELLANT -------------------- THE COMMISSIONER OF INCOME TAX, COCHIN BY ADV. SRI.P.K.R.MENON,SR.COUNSEL, GOI(TAXES) SRI.JOSE JOSEPH, SC, FOR INCOME TAX RESPONDENT(S): RESPONDENT ------------------------ HHA TANK TERMINAL (P) LTD WILLINGDON ISLAND, COCHIN 682 003. ADV. SRI.JOSEPH KODIANTHARA THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 19/03/2010 , THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: C.N.Ramachandran Nair & P.S.Gopinathan, JJ. ==================================================I.T.A.1279 of 2009 ================================================== Dated this the 19[th] day of March, 2010. JUDGMENT Ramachandran Nair, J. 1.The question raised in the appeal filed by theRevenue is whether the Tribunal was justified indeclaring the eligibility of the assessee forgetting deduction under Section 80(1A)(4) inrespect of infrastructure facility set up by theCochin Port Trust for the assessment year 2003-04. 2.We have heard the standing counsel appearing fortheappellantandSr.counselSr.JosephKodianthara appearing for the assessee. 3.The assessee entered into an agreement with theCochin Port Trust for erecting, maintaining andrunning of storage tank and other facilities in ITA1279/09 -:2:- the Cochin Port Trust area for pumping andstorage of liquid cargo from ships and fordispensing the same for inland use. Admittedly,the infrastructure facility set up is qualifiedfor deduction under Section 80(1A) of the IncomeTax Act. Even though agreement was executed in1998 and the plant was set up and becameoperational and assessee started earning incomewithin two years, the assessee could not claimany deduction under Section 80(1A) by virtue ofthe proviso contained in Section 80(1A) 4(i)(b)of the I.T.Act, which prohibits grant ofdeduction, if the agreement with the Governmentor the authority concerned did not provide fortransfer of facility to the Government or anylocal or statutory authority, as the case may be.However, this provision was amended with effectfrom 1.4.2002 deleting therefrom the condition oftransfer for claiming the benefit of deductionunder Section 80(1A) 4(i)(b) extracted hereunderprior to and after the amendment. “(b)it has entered into an agreementwith the Central Government or a StateGovernment or a local authority or anyotherstatutorybodyfor(i)developing, (ii) maintaining andoperating, or (iii) developing,maintaining and operating a newinfrastructure facility subject to thecondition that such infrastructurefacility shall be transferred to theCentral Government, State Government,local authority or such otherstatutory body, as the case may be,within the period stipulated in theagreement.” “(b) it has entered into an agreementwith the Central Government or a StateGovernment or a local authority or anyotherstatutorybodyfor(i)developing or (ii) operating andmaintaining or (iii) developing,operating and maintaining a newinfrastructure facility.” Revenue is that, the benefit of exemption isavailable only for new infrastructure facilityset up after the amendment. On the other hand,counsel for the Assessee contended that, thebenefit of deduction is available from the year “(b) it has entered into an agreementwith the Central Government or a StateGovernment or a local authority or anyotherstatutorybodyfor(i)developing or (ii) operating andmaintaining or (iii) developing,operating and maintaining a newinfrastructure facility.” Revenue is that, the benefit of exemption isavailable only for new infrastructure facilityset up after the amendment. On the other hand,counsel for the Assessee contended that, thebenefit of deduction is available from the year ITA1279/09-:4:-assessee becomes eligible by virtue of theamendment, which applies even for existinginfrastructure facility. On going through theother provisions of the 80(1A), we find that theDepartment's contention is not tenable because,the tax payers benefit under Section 80(1A) isinitially for a period of five years and from1.4.2002 it was increased to ten years. However,it is made clear that in Clause 4(1)(c), in orderto qualify for exemption, the assessee should havestartedoperatingandmaintaininginfrastructure facility on 1.4.1995. Admittedly,the assessee entered into an agreement in 1998and set up the plant, which became operationalwithin two years from the date of entry.Therefore, the assessee was entitled to exemptionfor the period covered by sub section (1), whichmay be five years or ten years. However, thecontention of the Revenue that new infrastructurefacility set up before the amendment in 2002 onlyare eligible for reduction is unacceptable ITA1279/09-:5:-because, the word “new” in sub clause 4(i)(b) isnot a new introduction and was already there evenprior to the amendment in 2002. The newinfrastructure facility referred to therein isnothing but a facility, which was not availableuntil the assessee sets up the same. TheDepartment has no case that what assessee has setup in 1998 is not an infrastructure facility forbeing considered for the benefit of deduction.We therefore hold that, running infrastructurefacilities set apart on 1.4.1995 will qualify forreduction, even if there is no provision fortransfer of facility under the agreement to theCentral Government or the State Government, localauthority or concerned statutory body, as thecase may be. We therefore uphold the order ofthe Tribunal and dismiss the Department appeal. C.N.Ramachandran Nair, Judge. sl. P.S.Gopinathan, Judge.