ISSUE
Whether profits derived from
inland container depots can be treated as an infrastructure facility eligible
for deduction under section 80-IA.?
FACTS:
1.M/s. Container Corporation of
India Ltd. (CONCOR) is a Government company engaged in the business of handling
and transportation of containerized cargo.
2.Its operating activities are
mainly carried out at its Inland Container Depots (ICDs), Container Freight
Stations and Port Side Container Terminals.
3.CONCOR filed its income-tax
returns for the relevant assessment years and claimed deduction under various
heads including deduction under section 80-IA for profits derived from inland
container depots.
4.The claim for deduction on the
profits earned from inland container depots was, however, rejected by the AO on
the ground that ICDs cannot be said to fall within Explanation (d) of
Sec.80-IA(4) defining the term
PROVISION APPLICABLE
1. Section 80-IA provides for a
deduction of profits derived from operation of an infrastructure facility.
2. The Finance Act, 2001
substituted section 80-IA(4), consequent to which the definition of
“infrastructure facility” in Explanation to section 80-IA(4)(i) included an
inland port.
ANALYSIS:
ICDs act as facilitators for
custom clearances SC stated that the term port in commercial terms, is a place
where vessels are in a habit of loading and unloading goods and the term as
also used in the Explanation attached to Sec.80-IA(4) seemed to have maritime
connotation. SC stated that the purpose of introducing ICDs was to promote the
export and import in the country as these depots acts as a facilitator for
person having place of business situated in a land locked area i.e., away from
the sea. SC noted that ICDs reduced the bottlenecks that are arising out of
handling and customs formalities that are required to be done at the sea ports
by allowing the same to be done at these depots only that are situated near to
them. SC stated that though the nature of work that is performed at ICDs
disentitled them to be termed as Ports , the fact that a part of activities
that are carried out at ICDs such as custom clearance, the claim of the
assessee herein can be considered within the term ‘Inland port’ as is used in
the Explanation.
2) Inland Port defined by CBEC
Notification includes ICDs SC stated that the term ‘Inland Port’ has not been
defined anywhere but the Notification issued by CBEC on April 24, 2007 held
that considering the nature of work carried out at these ICDs they can be
termed as Inland Ports. Further SC held that the communication dated May 25,
2009 issued on behalf of the Ministry of Commerce and Industry confirm that the
ICDs are Inland Ports fortified the claim of the assessee. SC thus remarked
that, “Unless shown otherwise, it cannot be held that the term ‘Inland Ports’
is used differently under Section 80-IA of the IT Act.”
3) Considering the nature of work
such as custom clearance carried out at inland container depots, it can be
considered as an inland port within the meaning of section 80- IA(4). Thus,
deduction under section 80-IA can be claimed in respect of income earned
therefrom.
CONCLUSION: CONCOR can claim for
deduction under Section 80-IA in respect of profits derived from Inland
Container Depots
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