The Commissioner Of Income Tax Chennai v. M/S.al Logistics P Ltd

Dated: 21/6/2016 C O R A M The Honourable Mr.Justice S.ManikumarandThe Honourable Mr.Justice D.Krishnakumar Tax Case Appeal No.405 of 2016 The Commissioner of Income TaxChennai. ...Appellant /AppellantVs M/s.AL Logistics P LtdNo.5 GNT RoadMoolakkadaiChennai 600 110. ...Respondent/Respondent Prayer:Appeal filed against the order of the Income TaxAppellate Tribunal, Madras 'B' Bench, Chennai dated 16/12/2016in ITA No.1412/Mds/2015 preferred against order of thecommissioner of Income Tax(Appeals) Chennai-34 made in ITANo.411/13-14/A-1 Dated 18.02.2015 and against order of theDeputy Commissioner of Income Tax Company Circle-I(1) Chennai,made in GIR/PAN, Ax-7133, , order dated 28.03.2013 forthe year of the Assessment, 2010-2011. For appellant : Mr.T.Ravikumar Senior Standing Counsel for Income Tax.- - - - - - J U D G M E N T(Judgment of the Court was made by S.Manikumar,J) Facts of the case deduced from the material on recordare that the respondent is a license holder of a warehousingcomplex consisting of buildings, godowns, weigh bridge and otherequipments for the purpose of maintaining a Container FreightStation (CFS). They suffered an adverse order and hence anappeal was filed. While adverting to the grounds of challenge,vide order, dated 18/2/2015, the Commissioner of Income Tax(Appeals) – I, Chennai, ordered as hereunder:- https://hcservices.ecourts.gov.in/hcservices/ “4. The first issue is with regard todisallowance of deduction of Rs.3,02,65,882under Section 80-IA (4) holding that theappellant's facility cannot be defined as“Infrastructure facility” or fit into thedefinition of either “Port” or “Inland Port”as per the provisions of the Act. The AOreferred to the provisions of Section 80-IAand statedthatall the definedinfrastructure facility will not be eligibleto claim deduction but which fulfills allthe conditions set out in Section 80-IA 4(i) (a), (b) & (c) will only be eligible.He also referred to Circular No.717 dated14/8/1995 and stated that the Board'scircular also reveals that the deductionscan be claimed only by the public facilitiescreated in agreement with the government andnot to the private facilities. 4.1 The Id.AR of the appellant opposedto the above disallowance. In the writtensubmissions it is stated as under;“1. The appellant is owning andmaintaining a container freight station(CFS) at Dabhog, Bowniput, Haldia, WestBengal 721 657 from 6/5/2003. On the basisof appellant's application to Ministry ofCommerce, Appellant's above facility wasnotified as CFS by Commissioner of Customs,Kolkotta vide public notice 84/2003 on10/11/2003 and the said CFS as 'customsarea'. The said authority declared theappellant as “custodian” of the containersand the imported goods received incontainers from Haldia Dock Complex and thegoods meant for export through Haldia Portvia their CFS at the above address – videpublic Notice B.No.85/03 dt 10/11/03.Import/Export procedures of appellant's CFSwas also notified by the said authoritythrough public Notice No.86/03 dt.10/11/2003. 2. In respect of the income from theabove CFS, appellant claimed deduction u/s.80IA to the tune of Rs.3,02,65,882. 3. In the scrutiny assessmentcompleted u/s.143 (3) on 28/3/2013, theId.AO disallowed the claim for the reasonsthat - a). assessee's facility cannot bedefined as 'infrastructure facility' or fitinto the definition of either 'port' or'inland port' b) that the conditions prescribed u/s.80IA (4) (i) i.e., assessee did not enterinto any agreement with the Govt. c). the assessee does not own anyimmovable property. 2. In respect of the income from theabove CFS, appellant claimed deduction u/s.80IA to the tune of Rs.3,02,65,882. 3. In the scrutiny assessmentcompleted u/s.143 (3) on 28/3/2013, theId.AO disallowed the claim for the reasonsthat - a). assessee's facility cannot bedefined as 'infrastructure facility' or fitinto the definition of either 'port' or'inland port' b) that the conditions prescribed u/s.80IA (4) (i) i.e., assessee did not enterinto any agreement with the Govt. c). the assessee does not own anyimmovable property. The appellant further stated that onsimilar issue in appellant's own case forA.Y.2009-10 the Hon'ble ITAT Chennai videITA No.469/Mds/2014 dt.14/7/2014 has decidedthe issue in favour of the appellant and thesame was confirmed by the Hon'ble MadrasHigh Court in Tax Case (Appeal) No.1031 to2014 dated 23/12/204 [2015-TIOL-93-HC-MAD-IT] and requested to delete the disallowanceof Rs.3,02,65,882. 4.2 I have carefully considered thefacts of the case and the submissions of theId.AR. I have gone through the decisionsrelied on by the Id.AR. Since on thesimilar issue in the appellant's own casefor AY 09-10, the ITAT, Chennai and theHon'ble Madras High Court has decided theissue in favour of the appellant asmentioned above, respectfully following thedecisions of the ITAT, Chennai and Hon'bleMadras High Court, the ground is allowed.” 2. Being aggrieved by the aforesaid order, the DeputyCommissioner of Income Tax, Corporate Circle – 1 (1), Chennaihas preferred an appeal to the Income Tax Appellate Tribunal,'B' Bench, Chennai. Taking note of an order on an identicalissue,decidedintheassessee'sowncase,inI.T.A.No.469/MDS/2014, dated 14th July 2014 and following theDelhi High Court judgment rendered in Container Corporation ofIndia Ltd., Vs. ACIT {346 ITR – 140 (Del)}, CESTAT Madras,dismissed the revenue appeal. 3. Testing the correctness of the same, instant Tax Case AppealNo.405 of 2016, has been raised on the following substantialquestions of law:- “(i). Whether on the facts and in thecircumstances of the case, the Tribunal wasright in deleting the disallowance madeunder Section 80IA(4) of the Income Tax Act?(ii). Whether the Tribunal was correctin holding that the Container FreightStation could be treated as inland port andtherefore, eligible for deduction underSection 80IA(4)? (iii). Is not the finding of theTribunal bad by deleting the disallowancemade under Section 80IA(4) especially whenthe Assessee has not fulfilled theconditions stipulated under Section 80IA(4) (i) (b)? (iv). Whether the Tribunal was rightin not considering the amendment to Section80IA(4) Explanation which was introducedwith effect from 1/4/2002 whereby the word“any other public facility of similarnature” was omitted and thereby wronglyallowed a deduction under Section 80IA(4) onincome from Container Freight Station?” 4. At the time when the instant Tax Case Appeal came upfor admission, Mr.T.Ravikumar, learned Senior Standing Counselfor the Income Tax fairly submitted that in the case of the verysame assessee, in Tax Case Appeal No.1031 of 2014, betweenCommissioner of Income Tax and A.L Logistics Pvt. Ltd) reportedin (2015) 374 ITR – 0609 (Mad), the above substantial questionsof law have been answered against the revenue, and that thesaid decision is under challenge before the Hon'ble Apex Courtin SLP (Civil) CC No.9566 of 2015. He also submitted that thedecision rendered by the Delhi High Court in ContainerCorporation of India Limited Vs. Assistant Commissioner ofIncome Tax & CIT, reported in {(2012) 81 CCH 0087 DelHC andfollowed in the case of AL Logistics Pvt Ltd., is also underchallenge in Appeal (Civil) No.8900 of 2012. 5. Based on the website information of the Hon'ble SupremeCourt, Mr.T.Ravikumar, learned counsel for the revenue submittedthat both the aforesaid civil appeals are likely to be listed on1/7/2016 and in as much as a challenge to the orders made inM/s.AL Logistics P Ltd and M/s.Container Corporation of IndiaLimited, are pending in the Hon'ble Supreme Court, instant TaxAppeal No.405 of 2016 be entertained and kept pending till the https://hcservices.ecourts.gov.in/hcservices/ Hon'ble Supreme Court passes appropriate orders, in the pendingCivil Appeals. 6. Contending interalia with the principles enunciated bythe Hon'ble Supreme Court in Kunhayammed and Others Vs. State ofKerala and Another {(2000) 6 SCC 359} on the doctrine of merger,would be applicable to the instant case and in the normalcircumstances, when an issue is pending before the Hon'bleSupreme Court, matters are entertained and kept alive,Mr.T.Ravikumar, learned Senior Standing Counsel for Income Tax,seeks for admission of the instant appeal. 7. Admittedly, facts and law, decided in ContainerCorporation of India Limited Vs. Assistant Commissioner ofIncome Tax & CIT followed in A.L.Logistics P Ltd's case arestated to be squarely applicable to the case on hand and thus,following the same, CESTAT, Madras, vide order, dated 16/12/2015has dismissed the revenue appeal. 8. In Kunhayammed and Others Vs. State of Kerala andAnother {(2000) 6 Supreme Court Cases – 359}, the Hon'bleSupreme Court, summarised as hereunder:- “45. Having thus made the law clear,the case at hand poses no problem forsolution. The earlier order of the HighCourt was sought to be subjected toexercise of appellate jurisdiction of theSupreme Court by the State of Keralawherein it did not succeed. The prayercontained in the petition seeking leave toappeal to this Court was found devoid ofany merits and hence dismissed. The orderis a non-speaking and unreasoned order.All that can be spelled out is that theCourt was not convinced of the need forexercising its appellate jurisdiction.The order of the High Court dated17/12/1982 did not merge in the orderdated 18/7/1983 passed by this Court. Soit is available to be reviewed by the HighCourt. Moreover, such a right of reviewis now statutorily conferred on the HighCourt by sub-section (2) of Section 8-C ofthe Kerala Act. The legislature has takencare to confer the jurisdiction to reviewon the High Court as to such appellateorders, also against which though anappeal was carried to the Supreme Court,the same was not admitted by it. Anappeal would be said to have been admitted by the Supreme Court if leave to appealwas granted. The constitutional validityof sub-section 92) of Section 8-C has notbeen challenged. Though, Shri.T.L.V.Iyer,the learned Senior Counsel for theappellant made a feeble attempt at raisingsuch a plea at the time of hearing butunsuccessfully, as such a plea has not sofar been raised before the High Court,also not in the petition filed before thisCourt.” by the Supreme Court if leave to appealwas granted. The constitutional validityof sub-section 92) of Section 8-C has notbeen challenged. Though, Shri.T.L.V.Iyer,the learned Senior Counsel for theappellant made a feeble attempt at raisingsuch a plea at the time of hearing butunsuccessfully, as such a plea has not sofar been raised before the High Court,also not in the petition filed before thisCourt.” 9. Though Container Corporation's case and A.L.Logistics'scase have been challenged by the revenue before the Hon'bleSupreme Court, we are of the considered view that there cannotbe any impediment in following the said decisions to casesarising out of similar set of facts and law. However, when apetition is filed before the Hon'ble Supreme Court seeking leaveto appeal and the same having been converted into an appeal bythe Supreme Court, the High Court should not entertain a reviewpetition. The High Court also cannot reverse and modify theorder impugned before the Supreme Court. But the judgmentrendered by the High Court is not erased. The principles of Lawenunciated by the Hon'ble Supreme Court in Kunhayammed andOthers Vs. State of Kerala and Another {(2000) 6 Supreme CourtCases 359}, with due respect is not in strict sense be appliedto the facts and law in hand. The case relates to exercise ofreview jurisdiction by the High Court, when Civil Appeal ispending in the Apex Court. We are not exercising such powers inthe case on hand. 10. Section 262 of the Income Tax Act relates to 'Appealsto Supreme Court'. As per sub-section 3 of Section 262 of theIncome Tax Act, where the judgment of the High Court is variedor reversed in the appeal, effect shall be given to the order ofthe Supreme Court in the manner provided in Section 260 of theAct. Statute itself, provides for a remedy to the revenue as tohow a judgment of the Hon'ble Supreme Court should be giveneffect. 11. In the light of the statutory provision anddiscussion, we are not inclined to accept the contentions of thelearned counsel for the appellant. Substantial questions of lawhave already been answered against the revenue in the case ofCommissioner of Income Tax Vs. A.L.Logistics Pvt Ltd {(2015) 374ITR 0609 (Mad). Following the same, instant Tax Case AppealNo.405 of 2016 is dismissed. No costs. -s/d-Assistant Registrar True CopySub-Assistant Registrar To1. The Income Tax Appellate Tribunal, Madras 'D' Bench, Chennai2.The Commissioner of Income Tax Appeals-IChennai-343.The Deputy Commissioner of Income Tax,Company Circle-I(1)Chennai +1 cc to Mr.T.Ravikumar Advocate sr.34085Tax Case Appeal No.405 of 2016aa20/07/2016