Calcutta High Court
Principal Commissioner Of Income ... vs M/S. T.M. International Logistic ... on 20 January, 2022
Form No.(J2)
IN THE HIGH COURT AT CALCUTTA
SPECIAL JURISDICTION (INCOME TAX)
ORIGINAL SIDE
PRESENT:
THE HON'BLE JUSTICE T.S.SIVAGNANAM
AND
THE HON'BLE JUSTICE HIRANMAY BHATTACHARYYA
ITAT/231/2017
IA NO:GA/2/2017
(Old No: GA/2128/2017)
PRINCIPAL COMMISSIONER OF INCOME TAX 3, KOLKATA
VS.
M/S. T.M. INTERNATIONAL LOGISTIC LTD.
ITAT/362/2017
IA NO. GA/2/2017
(OLD NO.GA/3628/2017)
PRINCIPAL COMMISSIONER OF INCOME TAX 3, KOLKATA
VS.
M/S. T.M. INTERNATIONAL LOGISTICS LTD.
Mr. Debashis Chowdhury, Adv.
...for appellant in
ITAT/231/2017
Ms. Sucharita Biswas, Adv.
Mr. Asok Bhowmick, Adv.
..for appellant in
ITAT/362/2017
Mr. J.P. Khaitan, Sr. Adv.
Mr. Pratyush Jhunjhunwala, Adv.
Ms. Swapna Das, Adv.
...for the respondent
Heard on : 03.01.2022 & 20.01.2022
Judgment on : 20.01.2022
T.S. SIVAGNANAM, J. :- These appeals have been filed by the
revenue under Section 260A of the Income Tax Act, 1961 against the
common order dated 4th October, 2016 passed by the Income Tax
Appellate Tribunal "A" Bench, Kolkata (Tribunal) in ITA/1513/Kol./2008
for the assessment year 2004-2005 and ITA/1914/Kol/2008 and C.O.
No. 133/Kol/2008 for the assessment year 2005-2006. The revenue has
raised the following substantial questions of law for consideration:-
1. Whether on the facts and the circumstances of the case, the
Learned Income Tax Appellate Tribunal, "A" Bench, Kolkata,
erred in law in allowing deduction u/s 80-IA of the Income Tax
Act, 1961 to the assessee, in respect of operating a multi-
purpose berth and not developing and/or operating and
maintaining a port as required under the act ?
2. Whether on the facts and circumstances of the case, the
Learned Income Tax Appellate Tribunal, "A" Bench, Kolkata,
erred in law in accepting the contention of the assessee in the
matter of claim of deduction u/s 80-IA despite the assessee
having failed to substantiate its claim by not maintaining
separate accounts for different units for the purpose of
claiming deduction u/s 80-IA of the Income Tax Act, 1961 ?
We have heard Mr. Debashis Chowdhury, learned Counsel and Ms.
Sucharita Biswas, learned Counsel duly assisted by Mr. Asok Bhowmick,
learned Advocate for the appellant/revenue today as well as on 3rd
January, 2022 and Mr. J.P. Khaitan, Learned Senior Counsel duly
assisted by Mr. Pratyush Jhunjhunwala and Ms. Swapna Das, on behalf
of respondent.
The facts which are to be noted are that assessee is a company
engaged in a business of terminal port operation including development,
operation and maintenance thereof, logistic solutions provider and
agency work. The head office of the assessee company is at Calcutta and
they are engaged in port activities at Haldia, Paradip and Mumbai. At
Haldia Port they have activities at Berth No. 12 and the question is
whether they are eligible for deduction under Section 80-IA of the Act.
For the assessment year 2004-2005 the assessee filed the return of
income and claimed deduction under Section 80-IA for expenses for
repairs and maintenance. Similar was the claim made by the assessee for
the assessment year 2005-2006. The assessing officer by two separate
orders dated 29th December, 2006 and 31st December, 2007 for the
assessment years 2003-2004 and 2004-2005 respectively rejected the
claim. Since the assessment order is verbatim the same and the
assessing officer is also the same person suffice to refer to the
assessment order dated 29th December, 2006 for the assessment year
2004-2005. The assessing officer noted that the assessee company had
claimed deduction under Section 80-IA for operating and maintaining
multi purpose Berth No. 12 at Haldia Dock Complex. They submitted a
letter dated 20th November, 2006 issued by the port authorities stating
that Berth No. 12 at Haldia Dock Complex has been allotted to the
assessee on leave and license basis for thirty years and it has exclusive
license to equip, construct, finance, operate, manage, maintain and
replace the project facilities and services. The assessing officer upon
noting the letter observed that the letter nowhere indicates or mentions
or reveals the nature and extent of work done by the assessee during the
year under consideration as it only indicates that there is an agreement
between port authorities and the assessee company for a specified
purpose and work and, therefore, was of the opinion that the letter can
have no significance with regard to the deduction claimed under Section
80-IA of the Act. Further, the assessing officer opined that the assessee
has not been developing but only operating a multi purpose berth and
not a port. During the course of assessment proceedings the assessee
placed reliance on a circular being Circular No. 793 dated 23rd June,
2000, stating that they are entitled for deduction under Section 80-IA of
the Act. The assessing officer came to the conclusion that the letter
which was relied on by the assessee issued by the port authorities no
where states that the Berth No. 12 is a part of the port. The assessing
officer further stated that Haldia Dock Complex is much larger area and
only a part within a port. The assessing officer further noted that in the
said letter issued by the port authorities it was mentioned that assessee
company was granted exclusive license for equipping, constructing,
financing, operating, managing, maintaining, and replacing the project
facilities at Berth No. 12. Though the assessing officer noted the said
fact he opined that no details were furnished in respect of the
arrangement for construction of Berth No. 12 either on BOT or BOLT
basis and transfer of Berth No. 12 to the port authorities. With such
reasoning the assessing officer held that assessee company is not eligible
for claiming deduction under Section 80-IA of the Act. The assessee filed
appeal before the Commissioner of Income Tax (Appeals) -VIII Kolkata
(CITA). Apart from factual details placed before the assessing officer the
assessee contended that for the assessment year 2003-2004 which was
the first year of the claim under Section 80-IA the same was not allowed
by the assessing officer for the said assessment year against which
appeal was filed before the CITA wherein it was held that the assessee
was entitled for the deduction under Section 80-IA of the Act which order
has been affirmed by the Tribunal by order dated 30th October, 2007.
Therefore, the assessee contended that they are entitled for deduction for
the assessment year under consideration before us as for the first year
such benefit had been granted which stood concluded by the order
passed by the Tribunal. The CIT(A) upon taking note of the said order
passed by the Tribunal for the assessment year 2003-2004 accepted the
case of the assessee and directed the assessing officer to allow the
deduction under Section 80-IA in respect of profits of the industrial
undertaking styled as Berth No. 12, Haldia Dock Complex. The other
grounds were also discussed by the CIT(A) and relief was granted to the
assessee on the quantum claimed by them. The revenue preferred
appeal before the Tribunal contending that the CIT(A) ought not to have
allowed the claim of deduction as aforementioned, under Section 80-IA
since assessee is not operating a port but only operating Berth No. 12 at
Haldia Dock. Further the revenue contended that assessee had not
furnished any evidence to support their claim that they have been
maintaining the said facility. The Tribunal considered the submissions
made by the revenue and after noting that the assessee has been granted
the deduction under Section 80-IA for the first year namely 2003-2004
and the said order passed by the Tribunal had been given effect to by the
assessing officer, following the decision for the assessment year 2003-
2004 the appeals filed by the revenue were dismissed. Challenging those
orders revenue is before us by way of these appeals. The learned Senior
Standing Counsel appearing for the revenue, have in extenso taken us
through the factual position and reiterated the submissions made by the
revenue before the Tribunal stating that the assessee is not operating
and maintaining a port but they are engaged in activities of Berth No. 12
alone, and therefore, assessing officer was right in not granting the relief.
Furthermore, it is contended that no documents were produced by the
assessee to establish their case before the assessing officer. Relying
upon the Circular No. 10 of 2005 dated 16th December, 2005 issued by
the Central Board of Direct Taxes inviting the attention to the
amendment made in Section 80-IA by Finance Act, 2001 it is submitted
that unless and until the concerned port authority has issued a
certificate that the structures formed part of the port, deduction under
Section 80-IA cannot be granted. Firstly, we need to point out that the
assessing officer has not disputed the fact that the assessee produced a
letter issued by the port authorities. Apart from that an agreement has
also been produced for the consideration of the assessing officer. The
documents which were placed before the assessing officer in no
uncertain terms states that assessee has been granted exclusive license
for equiping, constructing, financing, operating, managing, maintaining
and replacing the project/project facilities at the said Berth No. 12. The
assessing officer has noted these facts however states that the letter does
not state whether the said Berth is part of the port. To say the least, the
said finding is utterly perverse. Admittedly a Berth can be located only
in a seaport and if unfortunately the assessing officer was not even aware
of that he should have refrained from taking up the case of the assessee
for assessment. That apart, having noted the contents of the letter the
assessing officer states that it is not clear whether exclusive license was
granted to the assessee. This also, in our considered opinion a perverse
finding. What is important is the substance of the letter and the
agreement and not the form. It may be true that the port has issued
Circular No. 10 of 2005 stating that the concerned port authorities have
to issue a certificate since the definition of port stood amended and it
was made as an inclusive definition to mean structures at the port for
storage, loading and unloading etc. If the assessing officer had applied
his mind and read the letter and the agreement in conjunction he should
have arrived at a conclusion that the right granted to the assessee was
an exclusive right to maintain the facility and undoubtedly the facility is
meant for storage, loading and unloading and would fall within the
definition "of port". Fortunately for us the CIT(A) for the earlier
assessment year 2003-2004 which is the first year when deduction
under Section 80-IA was claimed has done a thorough factual
examination and granted relief to the assessee. Thus the order passed by
the CIT(A) was challenged before the Tribunal and the Tribunal by order
dated 30th October, 2007 dismissed the appeal of the revenue and the
assessing officer has also given effect to the order and allowed deduction
under Section 80-IA of the Act for which is the first year in the period of
ten years. It goes without saying if the assessee has been granted the
benefit for the first year the assessing officer should take a consistent
stand in the subsequent years unless there are any other change in
circumstances warranting a different decision. In the case on hand, there
is nothing on record that there was any change in the situation.
Therefore, we are of the considered view that the letter and the
agreement which were produced by the assessee is undoubtedly a
certificate issued by the port authorities and would satisfy the
requirement in Circular No. 10 of 2005. The Tribunal on its part also
reexamined the factual position and noted the decision in assessee's own
case for the assessment year 2003-2004 while grating relief to the
assessee. Furthermore, the Tribunal noted the finding of the assessing
officer while giving effect to the order of the CIT(A) for the assessment
year 2003-2004 wherein he has stated as follows:-
"It is found from the assessment records that a separate profit
& loss account & balance sheet was prepared for Berth No. 12,
Haldia Dock Complex. These documents were submitted along
with return of income. Further, it is found that as per provision of
Act, there is no need for assessee to give evidence of acquisition of
new plant and machinery for the eligible unit for claiming
deduction u/s.80IA of Income Tax Act, 1961 because the assessee
maintains port. As per Circular No. 10/2005 dated 16.12.2005,
the business activity of assessee in relation to Berth No. 12.
Haldia Dock Complex falls within the meaning of "Port" in
Explanation below Section 80(IA)(i)(c) of the Income Tax Act,
1961."
From the above factual position it is evidently clear that the
Tribunal rightly rejected the revenue's appeal and confirmed the order
passed by the CIT(A) granting relief to the assessee.
Thus we find there is no grounds to take a different view in the
matter.
For the above reasons the appeals filed by the revenue are
dismissed and the substantial questions of law are answered against the
revenue.
Consequently, the applications are also dismissed.
(T.S.SIVAGNANAM, J.)
I agree.
(HIRANMAY BHATTACHARYYA, J.)
pkd/GH.
