IN INCOME TAX APPELLATE TRIBUNAL PUNE BENCH , PUNE BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM ITA No.1778/PN/2014 Assessment Year : 2010-11 ACIT, Panvel Circle, Appellant Panvel v/s M/s. Continental Warehousing Corporation (Nhava Sheva) Ltd., D.No.1088, Respondent Khopta Village, Taluka : Uran, Dist. Raigad PAN : AAACC5849C Appellant by : Shri Rajeev Kumar, CIT Respondent by : Ms. Keuri Desai Date of Hearing :03.10.2016 Date of Pronouncement: 05.10.2016 ORDER PER R.K.PANDA, AM : This appeal filed by Revenue is directed against order dated 26-06-2014 of CIT(A)-I, Thane relating to Assessment Year 2010-11. 2. only ground raised by Revenue reads as under : Whether CIT(A)-I, Thane is right in law in holding that assessee is entitled to deduction u/s.80IA of Income Tax Act, 1961 even though activities undertaken by assessee do not fall within clause (d) of Explanation to 80IA(4) defining term infrastructure facilities? 3. Facts of case, in brief, are that assessee is company engaged in operating Container Freight Station (CFS) and filed its return of income on 11-10-2010 declaring total income of Rs.6,78,33,431/- after claiming deduction of Rs.34,27,47,435 2 ITA No.1778/PN/2014 u/s.80IA(4) of I.T. Act. During course of assessment proceedings AO observed that assessee company had set up Container Freight Station (CFSs) in Jawaharlal Nehru Port Trust over approx. 30 acres of land. Through CFSs, assessee company provides common user facility equipped with fixed installations. It offers services for handling and temporary storage of import/export laden and empty containers. All activities related to clearance of goods for home use, warehousing, temporary admissions, re-export, temporary storage for onward transit and outright export, transshipment, take place from this station. It started its operations on 19th January, 2006. It has three warehouses admeasuring 2,60,000 sq.ft. and container yard. 4. According to AO only issue for consideration is whether on facts and in facts of case and in law assessee is eligible for claiming deduction u/s.80IA(4) of Act. AO analysed provisions of section 80IA(4), CBDT Circular No.10/2005, dated 16-12-2005 and observed that for claiming deduction u/s.80IA(4) all of following conditions are to be fulfilled: (1) enterprise who claims deduction, should carry on business of (i) developing or (ii) operating and maintaining or (iii) developing, operating and maintaining any infrastructure facility. As per clause (d) of Explanation to section 80IA(4), infrastructure facility means port, airport, inland waterway. Central Board of Direct Taxes, New Delhi, vide Circular No.10 of 2004 dt. 16-12-2005 further clarified definition of port for purpose of deduction u/s.80IA including structures at ports for storage, loading and unloading etc. in definition of port, subject to issuance of certificate that said structures form part of port by concerned port authority. (2) It should be owned by company registered in India or by consortium of such companies. 3 ITA No.1778/PN/2014 (3) It should have entered into agreement with Central Govt. or State Govt. 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; AND (4) It should have started or starts operating and maintaining infrastructure facility on or after Ist day of April, 1995. 5. AO also referred to CBDT Instruction Vide F.No.178/42/2010/ITA-1, dated 06-01-2011 wherein guidelines have been given to AOs on infrastructure activities u/s.80IA(4) of I.T. Act, 1961 with respect to Container Freight Station and Inland Container Depots and which read as follows (Para 5 of AO s order) : . . . . .a port, airport, inland waterway, inland port or navigational channel in sea. In order to clarify term port, and whether facilities of loading and unloading constitute port, Board issued two Circulars, i.e. Circular No.793 dated 23-06-2000 and Circular No.10 dated 16-12- 2005. In first circular, it was clarified that structures at ports for storage, loading and unloading will be covered by definition of port for purpose of section 10(23G) and section 80IA subject to condition that concerned port authorities has issued certificate that such structures form part of port and same have been constructed under BOLT scheme. This was again reiterated in circular dated 16-12-2005 wherein it was stated that for assessment year 2002-03 onwards, structures at ports for storage, loading and unloading will be included in definition of port. References have been received in Board seeking clarification whether Container "Freight Stations (CFSs). and Inland Container Depots (ICDs) are eligible for deduction under section 80IA(4)(i) and whether that are to be considered as infrastructure facility for purpose of said sub-section, especially in view of aforesaid circular No. 1012005, which states that structures for loading and unloading at port area are part of port. Board has considered above . issue and it is has been decided that aforesaid circular is applicable to structures for loading, unloading and storage at Port. ICD or CFS is usually not located at port and therefore it is not part of Port for purpose of Section 80IA(4)(i) and not covered by Circular No. 1012005 dated 16.12.2005 and circular No. 793 dated. 23.06.2000 on subject. In this regard, it is further added that if such facility is located at port then, it can be considered to be infrastructure facility being part of port. References have also been received as to whether Inland Container Depots (ICDs) and Container Freight Station (CFS) can be termed as Inland Ports and thereby classified as infrastructure facility under section 80IA(4)(i) of Income Tax Act, 1961. In this context, I am further directed to convey that Board has considered issue and it has been decided that as ICDS and CFSs are not ports located on any Inland waterway, river or canal, and therefore that cannot be classified as Inland ports for purpose of Section 80IA(4)(i) of Income Tax Act.---" 4 ITA No.1778/PN/2014 6. He further noted that during A.Yrs. 2008-09 and 2009-10 claim of assessee u/s.80IA(4) was also denied. He, therefore, asked assessee to explain as to how it is entitled to deduction u/s.80IA(4) of I.T. Act. 7. After considering various submissions given by assessee from time to time AO rejected claim u/s.80IA(4) on ground that assessee did not fulfil conditions for claiming deduction u/s.80IA(4) of Act for following reasons : (i) assessee company is not port (infrastructure facility) as per Explanation to section 80IA(4) of I.T. Act, 1961 and CBDT Circular No.10 of 2005 dated 16th December, 2005. (ii) assessee company has not entered into agreement with Central Govt./State Govt./ Local authority or any other statutory body for developing or operating and maintaining or developing, operating, maintaining new infrastructure facility. (iii) assessee company is not inland port as intended in Explanation to Section 80IA(4) of I.T. Act, 1961. There is no CBDT instruction declaring assessee company as inland port . AO accordingly disallowed claim of deduction of Rs.34,27,47,435/- u/s.80IA(4) made by assessee. 8. In appeal Ld.CIT(A) allowed claim of assessee on basis of decision of Hon ble Delhi High Court in case of Continental Warehousing of India Vs. ACIT vide ITA No.1411/2009, 967/2011 and 968/2011 order dated 11-05-2002 and decision of Special Bench of Tribunal in case of M/s. All Cargo Global Logistics Ltd. Vs. DCIT vide ITA No.5018 to 5022 and ITA No.5059 for A.Yrs.2004-05 to 2009-10. CIT(A) further relied on decision of Mumbai Bench of Tribunal in assessee s own case, i.e.Continental Warehousing Corporation (Nhava Sheva) Ltd. Vs. ACIT 5 ITA No.1778/PN/2014 vide ITA No.7055/Mum/2011 order dated 31-08-2012 for A.Y. 2008- 09. 9. Aggrieved with such order of CIT(A) Revenue is in appeal before us. 10. Ld. Counsel for assessee at outset submitted that Tribunal in assessee s own case for A.Yrs. 2008-09 and 2009-10 after considering various objections raised by AO has allowed claim of deduction u/s.80IA(4) of I.T. Act. Merely because Revenue has not accepted order of Tribunal and has filed appeal before Hon ble High Court same cannot be ground to reverse decision of Tribunal in absence of any contrary order. 11. Ld. Departmental Representative on other hand fairly conceded that issue stands decided in faovur of assessee by decision of Tribunal in assessee s own case for A.Yrs. 2008-09 and 2009-10. However, Revenue has not accepted decision of Tribunal and appeal has been filed before Hon ble High Court. Therefore, to keep matter alive Revenue has filed this appeal. 12. After hearing both sides, we find identical issue has come up before Tribunal in assessee s own case for A.Y. 2009-10. Tribunal vide ITA No.906/PN/2013 order dated 18-11-2014, following decision of Tribunal in assessee s own case for A.Y. 2008-09, has dismissed grounds raised by Revenue by observing as under : 6. After hearing both sides, we find identical issue had come up before Tribunal in assessee s own case in immediately preceding assessment year. We find Tribunal in assessee s own case vide ITA 6 ITA No.1778/PN/2014 No.7055/Mum/2011 order dated 31-08-2012 for A.Y. 2008-09 has decided issue in favour of assessee by observing as under : 6. We have heard both parties and their contentions have carefully been considered. We have also carefully gone through aforementioned decision of Special Bench in case of All Cargo Global Logistics Ltd. & Others (supra) and we find that on identical facts, except difference in dates it was held by Special Bench that assessee is "inland port" hence, eligible for deduction under section 80 IA(4) of Act. For sake of completeness we reproduce relevant portion of Special Bench order. "60. second question before us is whether, on facts and in circumstances of case, learned CIT(A) was justified in upholding disallowance of deduction under s. 80-IA(4) of Act on merits? 61. facts In case of All Cargo Global Logistics Ltd. are that assessee commenced CFS activities on 7th April, 2003. In this connection letter has been received from Commr. of Custom (Import), bearing No. 3 of 2003, at. 28th Feb., 2003, classifying area of 3,282 sq. mtrs. as customs area for purpose of storage, stuffing/destuffing and clearance of export/import cargo. Subsequently, assessee has been certified as custodian of cargo under Customs Act, 1962, by notifying area as "customs area". It has been submitted that CFS is common user facility offering services in handling and temporary storing of import/export laden empties carried under customs control and supervision. It is also bonded warehouse facility where customers can clear cargo for export to various countries and receive customs- cleared cargo for home consumption. staff of Customs Department is posted in CFS for such clearances. assessee enclosed certificate from chartered accountant in Form No. 1OCCB, which Is precondition for claiming deduction under s. 80-IA(4). certificate from port trust has also been enclosed to effect that activities may be considered as extended activities as of port-related activities in accordance with Circular No. 793, dt 23rd June, 2000 [(2000) 161 CTR (St) 211. r/w Circular No. 133/1995-Cus., dt. 22nd Dec.. 1995 of Board of Excise and Customs. CBDT had also issued Circular No. 10 of 2005, dt. 16th Dec., 2005 1(2005)199 CTR (St) 971 clarifying that structures at port for storage, loading and unloading constitute 'port" for purpose of s. 10(23G) and s. 80-IA. 62. Before us, learned counsel for Container Corporation of India submitted at outset that decision of Hon'ble Delhi High Court dt. 11th May. 2012 has now been received, copy of which is placed in paper book on page Nos. 14 to 33. decision was rendered In respect of three appeals filed by assessee bearing IT Appeal Nos. 1411 of 2009, 967 of 2011 and 968 of 2011. assessment years involved are 2003-04 to 2005-06. After going through history of legislation, it Is mentioned In para No. 8 that asst. yr. 1999-2000 was first year in which Inland ports were designated as 'Infrastructure facility" under s. 80-IA. object was to strengthen Infrastructure In general and transport 7 ITA No.1778/PN/2014 infrastructure In particular. Thereafter it is mentioned in para No. 9 that question before Court is whether, income from Inland container depots (ICDs) qualify for deduction under s. 80-IA(4)(i) of Act r/w Expln. (d) thereto. Court referred to facts of case that assesses operated 45 ICDs. All ICDs except 2 were notified by CBDT for purpose of s. 80- IA(12)(ca) on 1st Sept, 1998. However power to notify 'Infrastructure facility'' for purpose of this section was taken away from CBDT w.e.f. 1st April, 2002. Court noted that wherever word "port" is used, it carries with it maritime connection or connotation. It is for this reason that section separately refers to airport as it does not have maritime connection. customs clearance takes place both at airport and post. ICDs are landlocked and V Is nobody's case that they are located in such place where ships or vessels have V direct access. goods which are brought in or removed from ICDs are brought or taken either by railway wagons or by container trucks, as case may be. Finally, it has been held that although ICD may not be port, but it is Inland port. relevant portion of decision is reproduced below: "19. Tribunal erred in holding that because of change made by Finance Act, 2001 w.e.f. 1st April, 2002 by dropping power of CBDT to notify any other public facility of similar nature for purpose of s. 80-IA of Act, ICD cannot be considered as Inland port. error committed by Tribunal is to overlook that both before and after above amendment, inland ports were specifically mentioned as Infrastructure facility in statutory provision and In understanding of CBEC, which administers Customs Act, ICD was actually Inland port. There is also no dispute that even in 1983 amendments had been made to Customs Act by treating ICD as part of customs port for purpose of customs formalities and clearances. In these circumstances, real question was not whether CBDT notified the. ICD as inland port but whether ICD can be considered to be Inland port. In our opinion having regard to provisions of Customs Act, communications issued by CBEC as well as Ministry of Commerce and Industry, object of Including 'Inland port' as infrastructure facility and also having regard to fact that customs-clearance also takes place in ICD, assessee's claim that ICDs are inland ports under Expln. (d) of s. 80-IA(4) requires to be upheld." 63. submission of learned counsel In case of All Cargo Global Logistics Ltd. is that Hon'ble Delhi High Court has held that ICDs are landlocked and situated far off from sea port as such. ICDs of Container Corporation of India are located at places such as Jamshedpur, Jodhpur, Jaipur, etc. These have been held to be inland ports for purpose of deduction under s. 80- IA(4). case of assesses is better placed than case of Container Corporation of India Ltd. (supra) in as much as it Is situated 5 fans, away from port and it is apart of port for carrying out activities mentioned earlier. Customs-clearance takes place from assessee's CFS. Therefore, it is argued that assesses is entitled to deduction under s. 80-TA. 8 ITA No.1778/PN/2014 64. In reply, learned standing counsel submitted that whenever assessee claims Income to be exempt from tax or claims deduction, preconditions for exemption or deduction have to be strictly satisfied by him. as held in case of Novopan India Ltd. vs. CCB (1994) 3 SCC 606. In respect of this decision, he laid stress on finding that liberal and strict constructions of exempt provision are to be Invoked at different stages of its interpretation. When question is whether subject falls in notification or in exemption clause then it being In nature of exemption is to be considered strictly and against subject but once ambiguity or doubt about applicability is lifted and subject falls in notification then full play should be given to it and it calls for wider and liberal construction. In light of this decision, he dealt with claim of assessee under s. 80-IA). It is submitted that in Board clarification at. 6th Jan., 2011, in which dt. 16th .Dec., 2005 and 23rd June, 2000 were considered, It has been clarified that ICDs and CFSs are not 'ports' located on any Inland waterway, river or canal and therefore they cannot be classified as inland ports" for purpose of s. 80-IA(4). It is further submitted that certificate Issued by Jawahar Lal Nehru Port Trust has been withdrawn by port trust It is also submitted that Inland Waterways Authority of India Act. 1985, provides definition of term infrastructure facilities", in its cl. (f), as structures such as docks, wharves, Jetties, stages, locks; buoys, inland ports, cargo handling equipments, road and rail access and cargo storage spaces and states that expression "infrastructure facilities shall be construed accordingly. In this Act, Inland port is included as item, thus, this term has distinct meaning, separate and apart from other terms. Therefore, ICDs and CFSs cannot be Interpreted to be Included in term "inland port". It Is also submitted that Circular No. 74 of 1997-Cus., dt. 30th Dec., 1997 of CBEC makes distinction between inland ports and ICDS/CFSs for grant of duty drawback benefit. It is also submitted that study prepared by Transport and Tourism Division of Economic and Social Commission for Asia and Pacific (a division of United Nations) provides insight in concept of "inland port" vis-avis "seaport". It is mentioned there that access should be provided to inland ports through waterways from sea by developing them. 65. We have considered facts of cases and submissions made before us. it may be mentioned that one of arguments advanced by learned counsel for assessee Is that case of Container Corporation of India (supra) is not based on any of circulars issued by port authorities, however, CFS of assessee has been granted such certificate. certificate mentions that CFS carries on port related activities, and it may be considered as extendable activity of port related activities. It is clarified that CFS has not been built on BOT or BOLT Scheme sand that It is situated on land which does not belong to port letters written by port trust to assessee also state that matter has been referred to IT Department. Department has clarified that ICD/CFS does not constitute inland port. In case of GIT vs. ABG Heavy Industries Ltd. & Ors. (2010) 231 CTR (Bom) 127: (2010) 37 DTR (Bom) 233: (2010) 189 Taxman 54 (Bom), Hon'ble Court has held that assessee is entitled to deduction under s. 80-IA. However there is very salient difference 9 ITA No.1778/PN/2014 in facts that structures were located at port and such structures had to be handed over to port trust on expiry of period of agreement In case at hand it is clear that assets of CFS are not to be handed over to port trust at any point of time as it is not built on BOT and BOLT Scheme. CFS is also not located at port. As against aforesaid, learned standing counsel has submitted that clarifications issued by other authorities including CBEC under relevant Acts do not lay guidelines under IT Act and that matter has to be decided under IT Act Independently. For doing so, initially strict Interpretation has to be placed on words "inland port" to examine that assessee is entitled to deduction. CBDT has furnished opinion that ICDs and CFSs are not entitled to such deduction as they do not constitute Inland ports. Other Acts as well as study report lead to conclusion that port can said to be Inland port only if it has access to sea via waterway. 66. We find that solitary decision in this case by any High Court is in case of Container Corporation Of India Ltd. (supra). In this case it has been held that ICD is not port but It Is inland port. case of CFS is similarly situated In sense that both carry out similar functions. i.e.. warehousing, customs clearance and transport of goods from. Its location to seaports and vice versa by railway or by trucks in containers. Thus, issue is no longer res integra. Respectfully following this decision, it Is held that CFS is Inland port whose Income is entitled to deduction under s. 80-IA(4). Question No. 2 is answered accordingly," 6.1 In this view of situation, respectfully following aforesaid decision of Special bench we allow appeal filed by assessee and it is held that assessee is entitled to get deduction under section 80IA(4) of Act. 6.1 Respectfully following decision of Tribunal in assessee s own case in immediately preceding assessment year and in absence of any contrary material brought to our notice by Ld. Departmental Representative , we find no infirmity in order of CIT(A) allowing claim of assessee. Accordingly, order of CIT(A) is upheld and grounds raised by Revenue are dismissed. 13. Since Ld.CIT(A) while deciding issue in favour of assessee has followed decision of Tribunal in assessee s own case as well as various other decisions, therefore, in absence of any contrary material brought to our notice against decision of Tribunal in assessee s own case, we do not find any infirmity in order of CIT(A) allowing claim of deduction u/s.80IA(4). Merely because Revenue has filed appeal before Hon ble High 10 ITA No.1778/PN/2014 Court, same in our opinion cannot be ground to take contrary view than view taken by Tribunal especially in absence of any order reversing decision of Tribunal. Accordingly, we uphold order of CIT(A) and grounds raised by Revenue are dismissed. 14. In result, appeal filed by Revenue is dismissed. Order pronounced in open court on 05-10-2016. Sd/- Sd/- (VIKAS AWASTHY) (R.K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER Pune; " Dated : 05th October, 2016. Copy of Order forwarded to : 1. Appellant 2. Respondent 3. CIT(A),-I, Thane 4. CIT-I, Thane DR, 5. ITAT, Pune; 5. Guard file. BY ORDER, //True Copy // ( Sr. Private Secretary ( ITAT, Pune ACIT, Panvel Circle, Panvel v. M/s. Continental Warehousing Corporation (Nhava Sheva)