Infrastructure Facility – Deduction u/s 80-IA(4) whether admissible to inland container depots and inland freight stations – SLP Granted-

The assessee company is engaged in the operation of a Container Freight Station (CFS) and claimed that the activities therein qualify as a port. That is one of the infrastructure facilities for the purpose of section 80- IA(4) of the IT Act. The assessee produced a certificate dated 13th July, 2006, from the Jawaharlal Nehru Port Trust (JNPT) Nhava Sheva declaring that the assessee is considered as an extended arm of port related services. However, on enquiry u/s. 133(6) of the IT Act, it was revealed that this certificate was withdrawn by JNPT on 5th October, 2007. That is how the deduction claimed came to be disallowed.

Being aggrieved by this order of the Assessing Officer, the assessee preferred an appeal before the First Appellate Authority. He dismissed the assessee’s appeal and confirmed the view of the Assessing Officer.

Being aggrieved by the order passed by the CIT(A) , the assessee approached the Tribunal, the Tribunal allowed its appeal. On the issue of deduction under section 80- IA(4) it was concluded that the CFS is a inland port and its income is entitled to deduction under section 80-IA(4) of the IT Act.

Aggrieved by the ITAT order, Revenue filed an appeal before High Court.

The other appeal being Income Tax Appeal No.1969 of 2013 (All Cargo Global Logistics Ltd.), was also heard alongwith the present appeal before High Court. A special Bench of the Tribunal was constituted to hear the this appeal and the same was proposed for purposes of deciding two questions, namely, what is the scope of assessment u/s. 153A of the IT Act. Whether that encompasses additions not based on any incriminating material found during the search and whether the Commissioner of Income-tax (Appeals) was justified in upholding the disallowance of deduction under section 80-IA(4) of the IT Act, 1961.

The High Court held that an ICD is not a port but it is an inland port. The case of CFS is similar situated in the sense that both carry out similar functions, i.e. ware housing, customs clearance, and transport of goods from its location to the seaports and vice-versa by railway or by trucks in containers. Thus, the issue is no longer res-integra. Respectfully following this decision, it is held that a CFS is an inland port whose income is entitled to deduction u/s 80IA(4).Therefore, dismiss the Revenue appeals and answer the substantial questions of law against the Revenue and in favour of the assessee.

The Revenue filed SLP before Supreme Court which was granted