Case: COMMISSIONER OF INCOME TAX, DELHI-I Vs. M/S. CONTAINER CORPORATION OF INDIA LTD

a. M/s Container Corporation of India Ltd. (CONCOR)-the respondent herein is a government Company and is engaged in the business of handling and transportation of containerized cargo and is under the direct administrative control of Ministry of Railways. Its operating activities are mainly carried out at its Inland Container Depots (ICDs), Container Freight Stations (CFSs) and Port Side Container Terminals (PSCTs) spread all over the country.b. The issue in the present case pertains to the assessment year 2003-04 to 2005-06. The respondent herein filed the returns on the income for all these years and claimed deduction under various heads including deduction under Section 80-IA of the IT Act. This issue is with regard to the deduction claimed under Section 80-IA on the profits earned from the Inland Container Depots (ICDs) and on rolling stocks. The claim for deduction on the profits earned from the ICDs and further the deduction on account of rolling stocks has been rejected by the Assessing Officer vide Assessment Order dated 28.02.2006.c. The respondent herein, being aggrieved with the aforesaid order, filed an appeal being No. 325/05-06 to the Commissioner of Income Tax (Appeals)-VI, New Delhi. Learned CIT (Appeals), vide order dated 29.05.2007, partly allowed the appeal while rejecting the deduction claimed under Section 80-IA of the IT Act. Being aggrieved, the respondent herein further preferred ITA Nos. 2851 & 3680/DEL./2007, 2753 & 4477/DEL/2007 before the Tribunal. The Tribunal, vide order dated 27.02.2009, partly allowed the appeal and held that the deduction under Section 80-IA can be claimed with regard to the rolling stocks of the company but not with regard to the ICDs.d. Being aggrieved by the order dated 27.02.2009, the respondent herein challenged the same before the High Court by filing three Income Tax Appeals being Nos. 967 of 2011, 1411 of 2009 and 968 of 2011. The Division Bench of the High Court, vide judgment and order dated 11.05.2012, allowed the appeals and held that the Respondent herein is entitled to claim deduction on the income earned from the ICDs for the relevant period under consideration under Section 80-IA of the IT Act. Being aggrieved by the judgment and order dated 11.05.2012, the Revenue has preferred this appeal before this Court.

Reasoning: The ICDs function for the benefit of exporters and importers located in industrial centers which are situated at distance from sea ports. The purpose of introducing them was to promote the export and import in the country as these depots acts as a facilitator and reduce inconvenience to the person who wishes to export or import but place of his business is situated in a land locked area i.e., away from the sea. These depots reduce the inconvenience in import and export in the sense that it reduces 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. The term ICDs was inserted in 1983 under Section 2(12) of the Customs Act, 1962 which defines customs port and by the provisions of Section 7(1)(aa) of the Customs Act,1962 power has been given to the Central Board of Excise and Custom(CBEC) to notify which place alone to be considered as Inland Container Depots for the unloading of imported goods and the loading of export goods by Notification in the official Gazette.11. With the purpose of boosting countrys infrastructure and specially the transport infrastructure, the Finance Act, 1995 which came into effect from 01.04.1996 brought an amendment to the provisions of Section 80-IA of the IT Act. Section 80-IA of the IT Act talks about deduction in respect of profits and gains from industrial undertaking or enterprises engaged in the infrastructure development etc.15. In addition to the above, the Finance Act, 1998, which came into effect on 01.04.1999, made a change in the definition of Infrastructure facility as is relevant to the present case. The words Inland water ways and inland ports were added in the definition of infrastructure facility.16. A noticeable change was further brought by the Finance Act, 2001, which came into effect from 01.04.2002, in the terms that the power of the Board to extend the benefit of the said provisions to any infrastructure facility of similar nature by issuing a Notification was taken away.18. The argument put forward by learned senior counsel for the appellant does not have much force as the said amendment is silent with regard to any effect it would have upon the Notifications issued earlier by the Board in due exercise of its power. Had it been the intention of the legislature that the Notifications issued by the Board earlier are of no effect after 2002-03, it would have had found a place in the said amendment. In the absence of the same, we are unable to concur with learned senior counsel that the Notifications which were issued in legitimate exercise of the power conferred on the Board would cease to have effect after the Assessment Year 2002-03.However, the argument does not hold much weight behind it as the Notification which was issued by the CBDT came into effect on 01.09.1998 i.e., the time when the term Inland Port was not in itself inserted in the provisions of Explanation attached to Section 80-IA(4) of the IT Act defining the term infrastructure facility. It was inserted through Finance Act, 1998 which came into effect from 01.04.1999. So there seems to be no conflict within the Notification issued by the Board and the fact that the ICDs are Inland Ports or not.20. Moreover, we find that the Respondent has been held entitled for the benefit of Section 80IA of the IT Act much before the Finance Act, 2001 which came into force on 01.04.2002 and exemption for the period of 10 years cannot be curtailed or denied by any subsequent amendment regarding the eligibility conditions under the period is modified or specific provision is made that the benefit from 01.04.2002 onwards shall only be claimed by the existing eligible units if they fulfill the new conditions.The term port, in commercial terms, is a place where vessels are in a habit of loading and unloading goods. The term Port as is used in the Explanation attached to Section 80-IA(4) seems to have maritime connotation perhaps that is the reason why the word airport is found separately in the Explanation. Considering the nature of work that is performed at ICDs, they cannot be termed as Ports. However, taking into consideration the fact that a part of activities that are carried out at ports such as custom clearance are also carried out at these ICDs, the claim of the respondent herein can be considered within the term Inland port as is used in the Explanation. It is significant to note that the word Inland Container Depots was first introduced in the definition of Customs Port as is given in Section 2(12) of the Customs Act, 1962, through amendment made by the Finance Act, 1983 with effect from 13.05.1983.22. The term Inland Port has been defined nowhere. But the Notification that has been issued by the Central Board of Excise & Customs (CBEC) dated 24.04.2007 in terms holds that considering the nature of work carried out at these ICDs they can be termed as Inland Ports. Further, the communication dated 25.05.2009 issued on behalf of the Ministry of Commerce and Industry confirming that the ICDs are Inland Ports, fortifies the claim of the respondent herein. Though both the Notification and communication are not binding on CBDT to decide whether ICDs can be termed as Inland Ports within the meaning of Section 80-IA of the IT Act, the appellant herein is unable to put forward any reasonable explanation as to why these notifications and communication should not be relied to hold ICDs as Inland Ports. Unless shown otherwise, it cannot be held that the term Inland Ports is used differently under Section 80-IA of the IT Act. All these facts taken together clear the position beyond any doubt that the ICDs are Inland Ports and subject to the provisions of the Section and deduction can be claimed for the income earned out of these Depots. However, the actual computation is to be made in accordance with the different Notifications issued by the Customs department with regard to different ICDs located at different places.