IN INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI, BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER . ITA Nos.1522 & 1523 Mds 2016 Assessment Years : 2010-11 & 2011-12 Deputy Commissioner of M s Sanco Trans Ltd., Income Tax, v. New No.46, Moore Street, Corporate Circle 6(1), Chennai - 600 001. Chennai - 600 034. PAN : AAACS 7690 F ( Appellant) ( Respondent) Appellant by : Shri Supriyo Pal, JCIT Respondent by : Sh. R. Vijayaraghavan, Advocate Date of Hearing : 11.08.2016 Date of Pronouncement : 23.09.2016 ORDER PER N.R.S. GANESAN, JUDICIAL MEMBER: Both appeals of Revenue are directed against respective orders of Commissioner of Income Tax (Appeals)-15, Chennai, dated 11.03.2016 and pertain to assessment years 2010- 11 and 2011-12. Since common issue arises for consideration, we heard both appeals together and disposing of same by this common order. 2 I.T.A. Nos.1522 & 1523 Mds 16 2. only issue arises for consideration is deduction under Section 80-IA of Income-tax Act, 1961 (in short 'the Act'). 3. Shri Supriyo Pal, Ld. Departmental Representative, submitted that assessee claimed deduction under Section 80-IA of Act in respect of Container Freight Station. Assessing Officer disallowed claim of assessee on ground that there was no agreement between assessee and Government of India or its agency. However, CIT(Appeals) found that Container Freight Station established by assessee, being extended arm of port, is eligible for exemption under Section 80-IA of Act. According to Ld. D.R.,the CIT(Appeals) has not considered that agreement between assessee and Central Government or State Government is one of pre-conditions for grant of deduction under Section 80-IA of Act. Referring to sub-section (4) of Section 80-IA of Act, Ld. D.R. submitted that assessee has to enter into agreement with Central Government or State Government or Local authority or statutory board for developing or operating and maintaining or developing, operating and maintaining new infrastructure facility. In this case, according to Ld. D.R., there is no agreement 3 I.T.A. Nos.1522 & 1523 Mds 16 between assessee and Central Government or State Government. Referring to CBDT circular No.793 dated 23.06.2000, Ld. D.R. submitted that Container Freight Station may be extended arm of port, however, for purpose of claiming deduction, assessee has to necessarily enter into agreement with Central Government or State Government. Therefore, according to Ld. D.R., CIT(Appeals) is not justified in allowing claim of assessee. 4. On contrary, Sh. R. Vijayaraghavan, Ld.counsel for assessee, submitted that second Unit of Container Freight Station was owned by assessee and it was also declared as Customs Area by Commissioner of Customs for purpose of handling import FCL containers. only objection of Ld. D.R. is that there was no agreement between Government of India and assessee. Referring to circular No.10 of 2005 dated 16.12.2005, Ld.counsel submitted that for claiming deduction under Section 80-IA of Act, entering into agreement with Government is essential pre-condition. agreement shall be for purpose of transferring infrastructure facility to authority concerned on expiry of time stipulated. However, from 4 I.T.A. Nos.1522 & 1523 Mds 16 assessment year 2002-03, Container Freight Station is also considered as extended arm of port. According to Ld. counsel, for purpose of claiming deduction under Section 80-IA of Act, what is required is certificate from concerned port authority to effect that Container Freight Station is part of port. In this case, according to Ld. counsel, Chennai Port Trust authorities certified that Container Freight Station established by assessee is extended arm of port. CBDT does not say that there is need for agreement between assessee and Government for purpose of claiming deduction under Section 80-IA of Act. In view of this circular, according to Ld. counsel, CIT(Appeals) has rightly allowed claim of assessee. 5. We have considered rival submissions on either side and perused relevant material available on record. We have carefully gone through provisions of Section 80-IA(4) of Act which reads as under:- (4) This section applies to (i) any enterprise carrying on business of (i) developing or (ii) operating and maintaining or (iii) developing, operating and 5 I.T.A. Nos.1522 & 1523 Mds 16 maintaining any infrastructure facility which fulfils all following conditions, namely : (a) it is owned by company registered in India or by consortium of such companies or by authority or board or corporation or any other body established or constituted under any Central or State Act (b) it has entered into agreement with Central Government or State Government or local authority or any other statutory body for (i) developing or (ii) operating and maintaining or (iii) developing, operating and maintaining new infrastructure facility ; (c) it has started or starts operating and maintaining infrastructure facility on or after 1st day of April, 1995 : Provided that where infrastructure facility is transferred on or after 1st day of April, 1999 by enterprise which developed such infrastructure facility (hereafter referred to in this section as transferor enterprise) to another enterprise (hereafter in this section referred to as transferee enterprise) for purpose of operating and maintaining infrastructure facility on its behalf in accordance with agreement with Central Government, State Government, local authority or statutory body, provisions of this section shall apply to transferee enterprise as if it were enterprise to which this clause applies and deduction from profits and gains would be available to such transferee enterprise for unexpired period during which transferor enterprise would have been entitled to deduction, if transfer had not taken place. Explanation For purposes of this clause, infrastructure facility means (a) road including toll road, bridge or rail system ; (b) highway project including housing or other activities being integral part of highway project ; (c) water supply project, water treatment system, irrigation project, sanitation and sewerage system or solid waste management system ; 6 I.T.A. Nos.1522 & 1523 Mds 16 port, airport, inland waterway, inland port or navigational channel in sea; (ii) any undertaking which has started or starts providing telecommunication services whether basic or cellular, including radio paging, domestic satellite service, network of trunking, broadband network and internet services on or after 1st day of April, 1995, but on or before 31st day of March, 2005 : Explanation For purposes of this clause, domestic satellite means satellite owned and operated by Indian company for providing telecommunication service ; (iii) any undertaking which develops, develops and operates or maintains and operates industrial park or special economic zone notified by Central Government in accordance with scheme framed and notified by that Government for period beginning on 1st day of April, 1997 and ending on 31st day of March, 2006 : Provided that in case where undertaking develops industrial park on or after 1st day of April, 1999 or special economic zone on or after 1st day of April, 2001 and transfers operation and maintenance of such industrial park or such special economic zone, as case may be, to another undertaking (hereafter in this section referred to as transferee undertaking), deduction under sub-section (1) shall be allowed to such transferee undertaking for remaining period in ten consecutive assessment years as if operation and maintenance were not so transferred to transferee undertaking : Provided further that in case of any undertaking which develops, develops and operates or maintains and operates industrial park, provisions of this clause shall have effect as if for figures, letters and words 31st day of March, 2006 , figures, letters and words 31st day of March, 2011 had been substituted ; (iv) undertaking which, 7 I.T.A. Nos.1522 & 1523 Mds 16 (a) is set up in any part of India for generation or generation and distribution of power if it begins to generate power at any time during period beginning on 1st day of April, 1993 and ending on 31st day of March, 2017; (b) starts transmission or distribution by laying network of new transmission or distribution lines at any time during period beginning on 1st day of April, 1999 and ending on 31st day of March, 2017 : Provided that deduction under this section to 1undertaking under sub-clause (b) shall be allowed only in relation to profits derived from laying of such network of new lines for transmission or distribution ; (c) undertakes substantial renovation and modernisation of existing network of transmission or distribution lines at any time during period beginning on 1st day of April, 2004 and ending on 31st day of March, 2017. Explanation For purposes of this sub-clause, substantial renovation and modernisation means increase in plant and machinery in network of transmission or distribution lines by at least fifty per cent. of book value of such plant and machinery as on 1st day of April, 2004. (v) undertaking owned by Indian company and set up for reconstruction or revival of power generating plant, if (a) such Indian company is formed before 30th day of November, 2005, with majority equity participation by public sector companies for purposes of enforcing security interest of lenders to company owning power generating plant and such Indian company is notified before 31st day of December, 2005, by Central Government for purposes of this clause ; (b) such undertaking begins to generate or transmit or distribute power before 31st day of March, 2011. 8 I.T.A. Nos.1522 & 1523 Mds 16 Sub-clause (b) of Section 80-IA(4)(i) of Act clearly says that this section is applicable only in respect of enterprise which entered into agreement with Central Government or State Government for purpose of developing, maintaining, operating, etc. In case before us, assessee claims that from assessment year 2002-03, there is no need for any agreement with Government of India or State Government. Section 80-IA(4) does not say that there is no need for any agreement. Pre-condition for claiming deduction under Section 80-IA of Act is that there should be agreement between assessee and Central Government or State Government for developing or operating or maintaining or developing, operating, maintaining new infrastructure facility. Therefore, provisions of Income-tax Act very clearly says that there is need for agreement between assessee and Government for establishing new infrastructure facility. 6. We have carefully gone through Circular issued by CBDT in Circular No.10 of 2005 which reads as follows:- CIRCULAR NO.010 OF 2005 DT. 16TH DECEMBER, 2005 Sub Definition of port as infrastructural facility for purpose of sections 10(23G) and 80-IA of Income-tax Act, 1961 9 I.T.A. Nos.1522 & 1523 Mds 16 16 12 2005 EXEMPTIONS DEDUCTIONS SECTION 10(23G), 80-IA Reference is invited to Board s Circular No.793 dated 23rd June, 2000 [(2000) 161 CTR (St) 21] and amendment in section 80-IA by Finance Act, 2001. 2. Port , for purposes of sections 10(23G) and 80-IA of Income-tax Act, 1961, includes structures at ports for storage, loading and unloading etc, if following conditions are fulfilled: (a) concerned port authority has issued certificate that said structures form part of port, and (b) such structures have been built under BOT or BOLT schemes and there is agreement that same would be transferred to said authority on expiry of time stipulated in agreement. This definition is applicable to assessment year 2001-02 and any earlier assessment year. 3. However, for and from assessment year 2002-03 onwards, structures at ports for storage, loading and unloading etc will be included in definition of port for purpose of sections 10(23G) and 80-IA of Income-tax Act, 1961, if following condition is fulfilled : -the concerned port authority has issued certificate that said structures form part of port. 4. This may be brought to notice of all officers in your region. [F.No.205 51 2005-I.T.A. No. II] From above circular, it is obvious that for assessment year 2001-02 and for earlier assessment year, certificate is required 10 I.T.A. Nos.1522 & 1523 Mds 16 from concerned port authority indicating Container Freight Station forms part of port and there shall be agreement as infrastructure facility would be transferred to concerned authority on expiry of time stipulated in agreement. From assessment year 2002-03, CBDT has instructed that what is required for claiming 80-IA deduction is certificate from concerned port authority. 7. We find that this issue was considered by Madras High Court in CIT v. A.L. Logistics Pvt. Ltd. (2015) 374 ITR 609. Madras High Court, after considering Public Notification issued by Commissioner of Customs and approval granted by State Government, found that assessee is eligible for deduction under Section 80-IA of Act. In grounds of appeal, Revenue claims that Special Leave Petition was filed before Apex Court against judgment of Madras High Court in A.L. Logistics Pvt. Ltd. (supra). This Tribunal is of considered opinion that on identical situation in A.L. Logistics Pvt. Ltd. (supra), Madras High Court has allowed claim of assessee, therefore, CIT(Appeals) has rightly placed his reliance on judgment of Madras High Court and found that Container Freight Station established by assessee is extended arm of port, 11 I.T.A. Nos.1522 & 1523 Mds 16 therefore, eligible for exemption under Section 80-IA of Act. This Tribunal do not find any reason to interfere with order of lower authority and accordingly same is confirmed. 8. In result, both appeals filed by Revenue are dismissed. Order pronounced on 23rd September, 2016 at Chennai. sd - sd - (A. Mohan Alankamony) (N.R.S. Ganesan) Accountant Member Judicial Member Chennai, rd Dated, 23 September, 2016. Kri. Copy to: 1. Appellant 2. Respondent 3. ( ) CIT(A)-15, Chennai-34 4. CIT-6, Chennai-34 5. DR 6. GF. Deputy Commissioner of Income-tax, Corporate Circle 6(1), Chennai v. M/s Sanco Trans Ltd