The Commissioner Of Income Tax v. M/S.kailash Shipping Services Pvt. Ltd

In the High Court of Judicature at Madras Dated: 23.07.2015 Coram The Honourable Mr.JUSTICE R.SUDHAKARandThe Honourable Ms.JUSTICE K.B.K.VASUKI Tax Case (Appeal) No.497 of 2015 The Commissioner of Income Tax-4121, Mahatma Gandhi Road,Chennai .... Appellant Vs. M/s.Kailash Shipping Services Pvt. Ltd.,No.23, PT Lee Chengalvaraya Naicker Maaligai,II Floor, Parrys, Chennai - 600 001. .... Respondent APPEAL under Section 260A of the Income Tax Act against the orderdated 8.10.2014 made in I.T.A.No.365/Mds/2014 on the file of theIncome Tax Appellate Tribunal, Chennai 'B' Bench. against the Order of the Commissioner of Income Tax(A)-II, 121,Mahatma Gandhi Road, Nungambakkam, Chennai - 600 034, dated29.10.2013 and made in ITA.No.550/2013-14 and against the AssistantCommissioner of Income Tax, Company Circle II(A), Room No.514, NewBlock 121 M.G.Road, Chennai 34 dated 30.12.2011 and made inPAN/GIR.No.AAACK 2806 R. For Appellant : Mr.T.R.Senthil KumarStanding Counsel for Income Tax J U D G M E N T(Delivered by R.SUDHAKAR,J.) This Tax Case (Appeal) is filed by the Revenue as against theorder of the Income Tax Appellate Tribunal raising the followingsubstantial questions of law: “ 1. Whether on the facts and in the circumstances ofthe case, the Appellate Tribunal was right in notconsidering the amended provisions of Section 80IA(4)w.e.f. 01.04.2002, Container Freight Station is not aneligible infrastructure facility for the purpose ofdeduction under Section 80IA(4)? 2. Whether under the facts and circumstances of the https://hcservices.ecourts.gov.in/hcservices/ case, the Income Tax Appellate Tribunal was right infollowing Delhi High Court judgment in the case ofContainer Corporation of India (346 ITR 140) which has notbeen accepted by the Department and SLP civil No.20901 of2012 is pending before the Apex Court?" 2. The assessment in this case relates to the assessment year2009-10. The assessee is a private limited company engaged in thebusiness relating to shipping, namely, clearing and forwarding agent(CFA). During the assessment year in question, the assessee filedits return of income admitting a sum of Rs.7.97 lakhs after claimingdeduction under Section 80IA on the Container Freight Station. Thecase of the assessee was selected for scrutiny and the AssessingOfficer disallowed the claim of deduction under Section 80IA of theIncome Tax Act holding that CFS could not be classified as 'inlandports' for the purpose of claiming deduction under Section 80IA(4)(i)of the Income Tax Act. The Assessing Officer, further held that thefacility of CFS does not constitute infrastructure facility asdefined in Explanation to Section 80IA(4)(i) and hence, disallowedthe claim of the assessee. Aggrieved by the said order of theAssessing Officer, the assessee filed an appeal before theCommissioner of Income Tax (Appeals), who, by following the decisionof the Tribunal Mumbai Bench in the case of All Cargo GlobalLogistics Ltd. V. DCIT, allowed the appeal holding that theassessee's Container Freight Station is an inland port for thepurpose of Explanation to Section 80IA(4)(i) of the Income Tax Act.The Commissioner of Income Tax (Appeals) further held that hesubsequent to the amendment, the 'inland ports' are brought into thestatutes as infrastructure facility for the purpose of Section 80IA(4)(i) of the Income Tax Act. The Commissioner of Income Tax(Appeals) also noted that the Ministry of Commerce and Industry,Government of India, vide its office Memorandum dated 21.05.2009addressed to the CBDT, clarified that the ICDs and CFSs are inlandports and eligible for deduction under Section 80IA of the Act.Accordingly, the Commissioner of Income Tax (Appeals) alloweddeduction under Section 80IA of the Act. 3. Aggrieved by the order of the Commissioner of Income Tax(Appeals), the Revenue pursued the matter before the Income TaxAppellate Tribunal. 4. The Tribunal after hearing both sides, dismissed the appealholding as follows: "After hearing both the sides and carefullyperusing the materials on record, we find the facts ofthe case is identical to that of the case decided bythe Tribunal's Special Bench. In the case of theassessee, Chennai Port Trust has issued a certificatedated 02.06.2010 stating that the Container FreightStation owned by the assessee at No.43 KadapakkamVillage, Vichur High Road, Manali New Town Chennai 103https://hcservices.ecourts.gov.in/hcservices/ may be considered as an extent arm of the port inaccordance with the CBDT circular No.793 dated23.06.2000 read with circular No.133/95 Cus dated22.12.1995 of the Central Board of Excise and Customs,New Delhi. Further circular No.10/2005 dated16.12.2005 has also clarified that the definition of"Port" for the purpose of Sec.10 (23G) and Sec.80IA ofthe Income Tax Act would mean the structures formingpart of the Port certified by the concerned PortAuthorities. The Ld. CIT(A) after examining the issuein detail had allowed the case of the assessee in itsfavour following the decision of the Tribunal's SpecialBench cited supra. The decisions relied by theassessee mentioned herein below also support the caseof the assessee, viz; (i) Special Bench in the case of All Cargo GlobalLogistics Ltd. & Others Vs.DCIT, 137 ITD 237.(ii) Continental Warehousing Corporation (NhavaSeva) Ltd. Raigad Vs. ACIT (Order dated 31/8/2012 inITA No.7055/Mum/2011)(iii) Hon'ble Delhi High Court in the case ofContainer Corporation of India Ltd. (CCI) Vs. ACIT 346ITR 140(iv) United Liner Agencies of India (Private) Ltd.Vs. The JCIT (OSD) Mumbai ITAT Mumbai - ITANo.273/Mum/2013,ITANo.275/Mum/2013,ITANo.943/Mum/2013, ITA No.944/Mum/2013 dated June, 28,2013." Therefore, we do not have any hesitation to confirm theorder of the Ld.CIT(A). It is ordered accordingly." 5. Aggrieved by the order of the Tribunal, the present appealhas been filed by the Revenue raising the above-mentioned substantialquestions of law. 6. Heard Mr.T.R.Senthil Kumar, learned standing counselappearing for the Revenue and perused the materials placed beforethis Court. 7. It is seen that the issue involved in this appeal has beenconsidered by this Court in the decision dated 23.12.2014 in T.C.(A)No.1031 of 2014, wherein, while considering the identical issue,whether the CFS is an inland port, this Court held that theGovernment of India, Ministry of Commerce, vide letter dated8.2.2003, has approved the proposal for setting up of a ContainerFreight Station at Haldia for handling import and export cargo.This Court, while holding that the container freight station is heldto be falling within the customs area attached to the port, held asfollows: "As has been observed by the Tribunal, in thedecision of the Delhi High Court in the case of https://hcservices.ecourts.gov.in/hcservices/ 7. It is seen that the issue involved in this appeal has beenconsidered by this Court in the decision dated 23.12.2014 in T.C.(A)No.1031 of 2014, wherein, while considering the identical issue,whether the CFS is an inland port, this Court held that theGovernment of India, Ministry of Commerce, vide letter dated8.2.2003, has approved the proposal for setting up of a ContainerFreight Station at Haldia for handling import and export cargo.This Court, while holding that the container freight station is heldto be falling within the customs area attached to the port, held asfollows: "As has been observed by the Tribunal, in thedecision of the Delhi High Court in the case of https://hcservices.ecourts.gov.in/hcservices/ Container Corporation of India Ltd., Vs. ACIT reportedin 346 ITR 140 (Del), container freight station isheld to be falling within the customs area attached tothe port. As the work relating to customs isperformed at these inland container depots/containerfreight stations, it would fall under the provision ofSection 80IA(4)(i) Explanation (d) of the Income TaxAct. The plea of Mr.T.Ravikumar, learned standingcounsel appearing for the Revenue that any otherpublic facility on similar nature has been omittedwith effect from 1.4.2002 will not make the case anydifferent in view of the decision of the Delhi HighCourt (supra), which holds that CSF is part of aninland port and there is no specific exclusion of CSFin clause (d) of Explanation to Section 80IA(4)(i).Therefore, on fact when it has been found by theTribunal that CSF is an infrastructure facility, wehave no hesitation to give a different conclusion onfact. " 8. In the present case, as rightly pointed out by theCommissioner of Income Tax (Appeals), which was confirmed by theTribunal, the Office Memorandum of the Ministry of Commerce andIndustry dated 21.5.2009 clarified the status of the CFS as inlandports. For better clarity, the Office Memorandum dated 21st May,2009 reads as follows:The 21st May, 2009 Office MemorandumSubject: Reference from CONCOR AND CFS Associationof India regarding confirming that ICDs/CFSs areInland Ports regarding - The undersigned is directed to refer to thisDepartment's O.M. of even number dated 01.09.2008 onthe above subject. In this regard, CONCOR and CFSAssociation of India have represented that in order toaccord tax benefit under section 80IA of the IncomeTax Act, 1961 Ministry of Finance required a morespecific reply clarifying the status of ICDs/CFSs inthe country. A copy oldie representation is enclosed.The matter has been examined in this Department and itis clarified that ICDs/CFSs are inland ports. CBDTmay accordingly take decision for the purpose ofexemption of ICDs/CFSs of CONCOR or a private partyu/s 80IA of Income Tax Act."(Emphasis Supplied) 9. In view of the status of CFS having been clarified by theMinistry of Commerce and Industry as 'inland ports' and the Chennaihttps://hcservices.ecourts.gov.in/hcservices/ Port Trust has issued a certificate stating that the CFS of theassessee may be considered as extended arm of the Port in accordancewith the CBDT Circular No.793 dated 23.06.2000 read with CircularNo.133/95 Cus dated 22.12.1995 of the Central Board of Excise andCustoms, New Delhi, we hold that the assessee is entitled to thebenefit under Section 80IA of the Income Tax Act. 10. In the light of the above, we find no reason to interferewith the order of the Tribunal. Accordingly, this Tax Case (Appeal)stands dismissed. No costs. 9. In view of the status of CFS having been clarified by theMinistry of Commerce and Industry as 'inland ports' and the Chennaihttps://hcservices.ecourts.gov.in/hcservices/ Port Trust has issued a certificate stating that the CFS of theassessee may be considered as extended arm of the Port in accordancewith the CBDT Circular No.793 dated 23.06.2000 read with CircularNo.133/95 Cus dated 22.12.1995 of the Central Board of Excise andCustoms, New Delhi, we hold that the assessee is entitled to thebenefit under Section 80IA of the Income Tax Act. 10. In the light of the above, we find no reason to interferewith the order of the Tribunal. Accordingly, this Tax Case (Appeal)stands dismissed. No costs. Sd/-Assistant Registrar True Copy Sub Assistant RegistrarslTo1. The Income Tax Appellate Tribunal, Chennai 'B' Bench.2. The Commissioner of Income Tax (Appeals) -II, Chennai.3. The Assistant Commissioner Income Tax, Company Circle II(4), Chennai - 34.1 cc to Mr.T.R.Senthilkumar, Advocate SR.37692 dated 24.7.2015T.C.(A) No.497 of 2015ev(co)pmk.20.8.2015