Continental Warehous... v. The Acit, Panvel Cir..., Income Tax Appellate Tribunal, Judgment, Law, casemine.com

Citation Codes

Equivalent Citations

citation codes

Case Number

ITA NO. 7055.Mum/2011, (A.Y 2008-09)

Advocates

Appellant by: S/Shri Vipul B. Joshi & Sameer G. Dalal
Respondent by: Shri A.C Tejpal

Judges

I.P Bansal, J.M
P.M Jagtap, A.M

Acts

section 80 IA(4) of the Income Tax Act,1961(the Act).
SECTION 80 IA INCOME TAX ACT 1961
section 80IA(4) of the I.T Act, 1961.The
Section 80 IA(4) of the I. T Act, 1961.
Section 801A(4) of the I T Act, 1961
Rule 18 BBB of IT rules, 1962.
Authority of India Act. 1985,
CUSTOMS ACT 1962
FINANCE ACT 2001
section 80 IA(4).

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Smart Summary

Factual and Procedural Background

This is an appeal filed by the assessee, Continental Warehousing Corporation (Nhava Sheva) Ltd, against the order dated 29/07/2011 of the learned CIT(A)-1, Thane, for the assessment year 2008-2009. The assessee claimed deduction under section 80IA(4) of the Income Tax Act, 1961 by filing an audit report in Form 10CCB (as per Rule 18BBB of the Income-tax Rules, 1962), asserting that its container freight station (CFS) qualifies as a “Port” or an “inland port” and is therefore entitled to the deduction. The assessee produced a certificate dated 13/07/2006 issued by Jawaharlal Nehru Port Trust (JNPT) stating that the CFS may be considered as an extended arm of port-related services. The Assessing Officer (AO) issued a notice under section 133(6) to JNPT, which informed the AO that the earlier certificate (No. JNP/CM(O)/2006/1287 dated 13-07-2006) had been withdrawn vide letter No. JNP/CM(O)/2007/3024 dated 05-10-2007 for the purpose of availing any benefit under the Income-tax Act or other statutory acts. On this basis the AO denied deduction under section 80IA(4) on grounds including that the structure is not part of the port, does not satisfy Explanation (d) to section 80IA(4), and there was no agreement with government/statutory body for developing/operating/maintaining a new infrastructure facility. The learned CIT(A) upheld the AO's denial. The assessee appealed to the Tribunal, relying principally on the Special Bench decision in All Cargo Global Logistics Ltd. v. DCIT (2012) 74 DTR 89, which held that a container freight station is an “inland port” and eligible for deduction under section 80IA(4).

Legal Issues Presented

Whether the assessee's container freight station (CFS) qualifies as a “Port” or an “inland port” within the meaning of section 80IA(4) of the Income-tax Act, 1961 and is therefore eligible for deduction under section 80IA(4).

Arguments of the Parties

Appellant's Arguments

The assessee claimed deduction under section 80IA(4) and filed the requisite audit report in Form 10CCB (Rule 18BBB).
The assessee relied on a certificate dated 13/07/2006 from Jawaharlal Nehru Port Trust stating that the CFS may be considered an extended arm of port-related services, and contended that the CFS performs functions—warehousing, customs clearance and movement of goods to/from the seaport—that qualify it as a “Port”/“inland port.”
The assessee argued that the Special Bench decision in All Cargo Global Logistics Ltd. v. DCIT (2012) 74 DTR 89 is directly applicable: on identical facts (except dates) the Special Bench held that a CFS is an “inland port” and thus eligible for deduction under section 80IA(4); therefore the present appeal is covered in favour of the assessee.
The assessee observed that the All Cargo Special Bench considered and accepted cases where port-trust certificates were withdrawn but still held the CFS to be an inland port; therefore withdrawal of JNPT’s earlier letter does not defeat the claim.

Respondent's / Revenue's Arguments

The AO and the learned CIT(A) denied the deduction primarily on the basis that: (i) the structure is not an “infrastructure facility” as per Explanation (d) to section 80IA(4); (ii) the structure is not part of the port (JNPT); and (iii) there is no agreement with Central/State Government or any statutory body for developing/operating/maintaining a new infrastructure facility.
The Revenue relied on the JNPT communication withdrawing its earlier certificate (letter dated 05-10-2007) and pointed out that the CFS was not built under BOT/BOLT and that assets were not to be handed over to JNPT.
The Revenue referred to administrative clarifications (CBDT clarification dated 6 Jan 2011 and earlier circulars) and other authorities (including reference to the Inland Waterways Authority of India Act, 1985 and CBEC circulars) submitted to support the view that ICDs/CFSs are not to be treated as inland ports for the purpose of section 80IA(4) unless they have an access to the sea via a waterway; and urged strict interpretation of exemption/deduction provisions.
Before the Tribunal, the departmental representative relied on the AO and CIT(A) orders but did not dispute that the factual matrix was largely identical to that considered by the Special Bench in All Cargo, other than dates.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
All Cargo Global Logistics Ltd. v. DCIT, (2012) 74 DTR 89 (Special Bench)	Held that a container freight station (CFS) is an “inland port” because it performs warehousing, customs clearance and transportation of goods to/from seaports, and therefore its income is eligible for deduction under section 80IA(4).	The Tribunal considered this Special Bench decision directly on point, found the facts of the present case identical except for dates, and respectfully followed it to allow the assessee's appeal and grant deduction under section 80IA(4).
Container Corporation of India Ltd. — decision of the Hon'ble Delhi High Court (referenced; date 11 May 2012)	Held that Inland Container Depots (ICDs) may be treated as “inland ports” for the purpose of section 80IA(4), observing that customs-clearance also takes place in ICDs and that the legislative and administrative context supports treating ICDs as inland ports.	The Special Bench (in All Cargo) relied on this High Court reasoning in holding that ICDs/CFSs perform similar functions and can be regarded as inland ports; the Tribunal in the present appeal noted and followed this line of authority through the Special Bench decision.
Novopan India Ltd. v. CCE, 1994 Supp (3) SCC 606	Principle that exemption or notification provisions are construed strictly when determining whether a subject falls within them, but once applicability is established, a liberal construction may follow.	The principle was cited by the departmental side (in the All Cargo exposition) to argue for strict interpretation of exemption/deduction provisions when determining if the assessee falls within the notification or exemption; the Tribunal acknowledged these interpretive principles in considering the competing administrative clarifications and case law.
Commissioner of Income-Tax v. ABG Heavy Industries Limited, (2010) 231 CTR (Bom) 127 : (2010) 37 DTR (Bom) 233	Held that in facts where structures were located at the port and required to be handed over to the port trust on expiry of agreement, the assessee was entitled to deduction (under s. 80-IA/80-LA as applicable).	The departmental pleading relied on this case but the Tribunal noted a material factual distinction: in ABG the structures were located at the port and built on BOT/BOLT terms with reversion to the port trust, whereas in the present case the CFS was not built under BOT/BOLT and assets were not to be handed over; this distinction was used to differentiate ABG from the present facts.

Court's Reasoning and Analysis

The Tribunal's analysis proceeded by (i) identifying the sole issue as denial of deduction under section 80IA(4) in respect of the CFS; (ii) examining the factual record including the assessee's Form 10CCB, the certificate originally issued by JNPT (13/07/2006), and the subsequent withdrawal of that certificate (05/10/2007) communicated to the AO under section 133(6); (iii) assessing the comparable authorities and precedents, most importantly the Special Bench decision in All Cargo Global Logistics Ltd. v. DCIT (2012) 74 DTR 89.

The Tribunal noted that the Special Bench had ruled, on essentially identical facts, that a container freight station is an “inland port” because it carries out port-related functions—warehousing, customs clearance and transportation of goods to and from seaports—and therefore its income is eligible for deduction under section 80IA(4). The Tribunal also observed that the Special Bench had considered and applied the reasoning in the Delhi High Court's Container Corporation decision which treated ICDs as inland ports. The departmental contentions about administrative clarifications (including CBDT circulars) and other statutory materials were acknowledged, but the Tribunal emphasized that the Special Bench had considered similar materials and had nevertheless reached the conclusion that a CFS is an inland port for the purposes of section 80IA(4).

The Tribunal specifically addressed the relevance of the withdrawal of the JNPT certificate by noting that the Special Bench had dealt with a comparable situation (including certificates and their withdrawal) and still found the assessee to be an inland port. Given that the factual matrix in the present appeal matched the facts considered by the Special Bench (save for differences in dates), the Tribunal concluded that the Special Bench decision was directly applicable and binding for the purpose of deciding the present appeal. Accordingly, the Tribunal applied the Special Bench principle to the facts at hand and allowed the appeal.

Holding and Implications

Holding: The appeal is allowed. Respectfully following the Special Bench decision in All Cargo Global Logistics Ltd. v. DCIT (2012) 74 DTR 89, the Tribunal held that the assessee's container freight station qualifies as an “inland port” and is therefore entitled to the deduction under section 80IA(4) of the Income-tax Act, 1961.

Implications:

Direct effect: The assessee's claim for deduction under section 80IA(4) for the assessment year 2008-2009 is allowed; the denial by the AO and confirmation by the CIT(A) are set aside to the extent that they refused the deduction on the grounds noted.
Broader precedent: The Tribunal expressly followed an existing Special Bench decision. The opinion does not purport to create a new precedent beyond applying the Special Bench authority to the present facts; it treats the issue as already authoritatively decided on similar facts and applies that decision to allow relief to the assessee.

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Continental Warehousing Corporation (Nhava Seva) Ltd., D. No. 1088, Khopta Village, Tal, Uran, Dist. Raigad () v. The Acit, Panvel Circle, Panvel, Dist. Raigad ().

I.P Bansal, J.M:— This is an appeal filed by the assessee. It is directed against the order dated 29/07/2011 of Ld. CIT(A)-1, Thane for the assessment year 2008-2009. The grounds of appeal raised by the assessee read as under:

“1.1 The learned Commissioner of Income tax (Appeals) — 1, Thane [“ld. CIT (A)”] erred in confirming the action of the Assessing Officer (“the A.O”) in denying the deduction u/s. 80 IA (4) of the Act, amounting to Rs. 21,07,13,675/-.

1.2 While doing so, the id. CIT (A) erred in)

(i) Failing to appreciate that the Appellant was denied effective, proper and fair opportunity of being heard by the A.O

(ii) Basing his finding on surmises, conjecture and suspicion; and)

(iii) Taking into account extraneous and irrelevant considerations while ignoring the material considerations.

1.3 It is submitted that in the facts and the circumstances of the case, and in law, no such disallowance was called for.”

2. The only issue raised in the present appeal is regarding denial of benefit of deduction under section 80 IA(4) of the Income Tax Act,1961(the Act). The assessee company had claimed deduction under section 80IA(4) of the Act by filing audit Report in Form 10 CCB as per Rule 18 BBB of IT rules, 1962. It was claimed that assessee is a “Port”, therefore, entitled to get deduction under section 80 IA (4) of the Act. It was mentioned in the report as under:—

1. Continental Warehousing Corporation (Nhaua Sheva) Ltd would be eligible for a tax holiday in respect of container freight station as container freight station qualifies as a ‘Port’ which is one of the infrastructure facilities for the purpose of section 80 IA of the Income tax Act. 1961. The term is interpreted in a wider sense which refers to compendium of services with container freight station forming an integral part of the same.

2. The container freight stations are largely expected to deal with break bulk cargo in the immediate hinter Land of the port. Therefore, it is interpreted that container freight station is effectively a structure of storage, loading and unloading of goods and should form part of the ‘Port’ as clarified by the CBDT vide its Circular No. 793 dated June 23, 2000.

3. The company has obtained a certificate from Jawaharlal Nehru Port Trust that Continental Warehousing Corporation (N1zava Sheva) Ltd be considered as an extended arm of ‘Port related services.”

2.1 A letter dated 13/7/2006 issued by Jawaharlal Nehru Port Trust (JNPT) having No. JNP/CM(O)/2006/1287 was also filed to support such contentions. The AO issued a letter to JNPT under section 133(6) of the Act and it was informed by JNPT as under:

“the JNPT had issued a certificate dated 13-07-2006 to the assessee company in accordance with point No. 3 of CBDT Circular No. 10 dated 16- 12-2005. However, while issuing the certificate it was stated that the Container Freight Station of the assessee company is not built under BOT or BOLT scheme and there is no agreement that the said CFS would be transferred to JNPT on expiry of the time stipulated in the agreement as per the circular No. 793 dated 23-06-2000 issued by the Income tax Department. Subsequently, letter No. JNP/CM(O/2006/1287 dated 13-7-2006 issued earlier to the assessee company was withdrawn vide letter No. JNP/CM(O)/2007/3024 dated 05-10-2007 for the purpose of availing any benefit under Income tax Act or any statutory, Acts in India with an advice to the assessee to bring the same to the notice of all concerned to whom, it was produced for the purpose of availing any concessions/benefits. The said structure of the assessee company is not the premises of the Port and not part JNPT. There is no change in the position from the date of issue of withdrawal of letter (i.e JNP/CM/2007/3024 dated 05-10-2007) to the assessee company.”

In view of these facts the AO denied the benefit of section 80 IA(4) to the assessee as the assessee did not fulfill the following conditions:

“(i) The structure built by the assessee company is not the infrastructure facility as defined in the clause (d) of Explanation to section 80IA(4) of the I.T Act, 1961.

The said structure of the assessee company does not form part of the Part - JNPT.

(iii) The assessee company has not entered into an agreement with the Central Govt for a State Govt or a local authority or any other statutory body for (i) developing (ii) operating and maintaining or (iii) developing, operating and maintaining a new infrastructure facility.”

2.2 In the process the AO rejected all the contentions of the assessee in which it was contended that the certificate issued by JNPT earlier still hold the filed and assessee is not entitled for deduction under section 80IA(4) of the Act and the final observation of the AO to reject the claim of the assessee regarding non fulfillment of conditions are as under:

“(i) The assessee company is not a ‘port’ (infrastructure facility) as per the Explanation to Section 801A(4) of the I T Act, 1961 and CBDT Circular No. 10 of 2005 dated 16th December, 2005.

(ii) The assessee company has not entered into an agreement with the Central Govt/State Govt/Local authority or any other statutory body for developing, or operating and maintaining or developing, operating, maintaining a new infrastructure facility.

(iii) The assessee company is not an ‘inland port’ as intended in the Explanation to section 80 IA(4) of the I. T Act, 1961. There is no CBDT Instruction declaring the assessee company as ‘inland port’”

2.3 The Ld. CIT(A) has upheld the action of AO. The assessee is aggrieved hence, in appeal.

3. At the outset it was submitted by Ld. A.R that this issue is now covered in favour of the assessee by the decision of Mumbai Special Bench in the case of All Cargo Global Logistics Ltd. v. DCIT, (2012) 74 DTR 89 vide decision dated 06/07/2012, wherein it has been held that container freight station is an “inland port” as it carries out the functions of warehousing, customer clearance and transportation of goods from its location to the port and vice versa by railways or by trucks and, therefore, its income is eligible for deduction under section 80 IA(4). He submitted that the facts of the present case are identical to the facts of the aforementioned case and the issue is governed by para 60 to 66 of the order, a copy of which was filed before us and was also given to the Ld. D.R

4. On the other hand, Ld. D.R relied upon the assessment order as well as on the order of Ld. CIT(A). However, he could not controvert the arguments of Ld. A.R that the facts of the present case and the facts involved in the aforementioned Special Bench case were identical except the difference in the dates.

5. It was submitted by Ld. A.R that similar letter was issued in that case also by JNPT, according to which earlier letter written by them was withdrawn and even after considering all these facts it was held by the Special Bench that assessee though not is a “Port” but it is a an “inland port”. Thus it was submitted by Ld. A.R that the issue is squarely covered in favour of the assessee and it should be held that the assessee is entitled for deduction under section 80 IA (4) of the Act on the ground that it is an “inland port”.

6. We have heard both the parties and their contentions have carefully been considered. We have also carefully gone through the aforementioned decision of the Special Bench in the case of All Cargo Global Logistics Ltd. (supra) and we find that on identical facts, except difference in the dates it was held by the Special Bench that the assessee is an “inland port” hence, eligible for deduction under section 80 IA(4) of the Act. For the sake of completeness we reproduce relevant portion of the Special Bench order.

“60. The second question before us is—whether, on the facts and in the circumstances of the case, the learned CIT(A) was justified in upholding the disallowance of deduction under s. 80-IA(4) of the Act on merits?

61. The facts in the case of All Cargo Global Logistics Ltd. are that the assessee commenced CFS activities on 7th April, 2003. In this connection a letter has been received from the Commr. of Custom (Import), bearing No. 3 of 2003, dt. 28th Feb., 2003, classifying the area of 3,282 sq. mtRs. as customs area for the purpose of storage, stuffing/destuffing and clearance of export/import cargo. Subsequently, the assessee has been certified as a custodian of cargo under Customs Act, 1962, by notifying the area as “customs area”. It has been submitted that a 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 a bonded warehouse facility where customers can clear the cargo for export to various countries and receive customs-cleared cargo for home consumption. The staff of Customs Department is posted in the CFS for such clearances. The assessee enclosed a certificate from the chartered accountant in Form No. 1OCCB, which is a precondition for claiming the deduction under s. 80-IA(4). A certificate from the port trust has also been enclosed to the effect that the activities may be considered as extended activities as of port-related activities in accordance with the Circular No. 793, dt. 23rd June, 2000 [(2000) 161 CTR (St) 211. r/w Circular No. 133/1995-Cus., dt. 22nd Dec.. 1995 of the Board of Excise and Customs. The CBDT had also issued Circular No. 10 of 2005, dt. 16th Dec., 2005 1 (2005) 199 C7R (St) 971 clarifying that the structures at the port for storage, loading and unloading constitute ‘port’ for the purpose of s. 1O(23G) and s. 80-IA.

62. Before us, learned counsel for the Container Corporation of India submitted at the outset that the decision of Hon'ble Dethi High Court dt. 11th May. 2012 has now been received, a copy of which is placed in paper book on page Nos. 14 to 33. The decision was rendered in respect of three appeals flied by the assessee bearing IT Appeal Nos. 1411 of 2009, 967 of 2011 and 968 of 2011. The assessment years involved are 2003-2004 to 2005-2006. After going through the 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. The object was to strengthen Infrastructure in general and the transport infrastructure in particular. Thereafter it is mentioned in para No. 9 that the question before the Court is—whether, the income from the Inland container depots (ICDs) qualify for deduction under s. 80-IA(4)(i) of the Act r/w Expln. (d) thereto. The Court referred to the facts of the case that the assessee operated 45 ICDs. All the ICDs except 2 were notified by the CBDT for the purpose of s. 80-IA(12)(ca) on 1st Sept., 1998. However the power to notify ‘Infrastructure facility’ for the purpose of this section was taken away from the CBDT w.e.f 1st April, 2002. The Court noted that wherever the word “port” is used, it carries with it maritime connection or connotation. It is for this reason that the section separately refers to airport as it does not have a maritime connection. The customs clearance takes place both at the airport and port. The ICDs are landlocked and V Is nobody's case that they are located in such a place where ships or. vessels have V direct access. The goods which are brought in or removed from the ICDs are brought or taken either by railway wagons or by container trucks, as the case may be. Finally, it has been held that although ICD may not be a port. but it is an Inland port. The relevant portion of the decision is reproduced below:

“19. The Tribunal erred in holding that because of the change made by the Finance Act, 2001 w.e.f 1st April, 2002 by dropping the power of the CBDT to notify any other public facility of similar nature for the purpose of s. 80-IA of the Act, the ICD cannot be considered as Inland port. The error committed by the Tribunal is to overlook that both before and after the above amendment, inland ports were specifically mentioned as an Infrastructure facility in the statutory provision and in the understanding of the CBEC, which administers the Customs Act, an ICD was actually an Inland port. There is also no dispute that even in 1983 amendments had been made to the Customs Act by treating the ICD as part of the customs port for purpose of customs formalities and clearances. In these circumstances, the real question was not whether the CBDT notified the. ICD as an inland port but whether the ICD can be considered to be an Inland port. In our opinion having regard to the provisions of the Customs Act, the communications issued by the CBEC as well as the Ministry of Commerce and Industry, the object of Including ‘Inland port’ as an infrastructure facility and also having regard to the fact that customs-clearance also takes place in the ICD, the assessee's claim that the ICDs are inland ports under Expln. (d) of s. 80-IA(4) requires to be upheld.”

63. The submission of the learned counsel in the case of All Cargo Global Logistics Ltd. is that the Hon'ble Delhi High Court has held that ICDs are landlocked and situated far off from the sea port as such. The ICDs of the Container Corporation of India are located at places such as Jamshedpur, Jodhpur, Jaipur, etc. These have been held to be inland ports for the purpose of deduction under s. 80-IA(4). The case of the assessee is better placed than the case of Container Corporation of India Ltd. (supra) in as much as it is situated 5 kms. away from the port and it is a part of the port for carrying out activities mentioned earlier. Customs-clearance takes place from assessee's CFS. Therefore, it is argued that the assessee is entitled to deduction under s. 80-TA.

64. In reply, the learned standing counsel submitted that whenever the assessee claims an Income to be exempt from tax or claims a deduction, the preconditions for exemption or deduction have to be strictly satisfied by him. as held in the case of Novopan India Ltd. v. CCE 1994 Supp (3) SCC 606. In respect of this decision, he laid stress on the finding that liberal and strict constructions of exempt provision are to be Invoked at different stages of its interpretation. When the question is whether a subject falls in the notification or in the exemption clause then it being in the nature of exemption is to be considered strictly and against the subject but once the ambiguity or doubt about applicability is lifted and the subject falls in the notification then full play should be given to it and it calls for a wider and liberal construction. In the light of this decision, he dealt with the claim of the assessee under s. 80- (IA). It is submitted that in Board clarification dt. 6th Jan., 2011, in which circulars 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 the purpose of s. 80-IA(4). It is further submitted that the certificate Issued by Jawahar Lal Nehru Port Trust has been withdrawn by the port trust. It is also submitted that Inland Waterways Authority of India Act. 1985, provides the definition of the term infrastructure facilities”, in its cl.. (f), as the 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 the expression “infrastructure facilities shall be construed accordingly. In this Act, Inland port is included as item, thus, this term has a distinct meaning, separate and apart from other terms. Therefore, ICDs and CFSs cannot be Interpreted to be Included in the term “inland port”. It is also submitted that Circular No. 74 of 1997-Cus., dt. 30th Dec., 1997 of the CBEC makes a distinction between inland ports and ICD5.CFSs for grant of duty drawback benefit. It is also submitted that a study prepared by Transport and Tourism Division of Economic and Social Commission for Asia and Pacific (a division of the United Nations) provides an insight in the concept of “inland port” vis-avis “sea port”. It is mentioned there that access should be provided to inland ports through waterways from sea by developing them.

65. We have considered the facts of the cases and submissions made before us. it may be mentioned that one of the arguments advanced by the learned counsel for the assessee is that the case of Container Corporation of India (supra) is not based on any of the circulars issued by the port authorities, however, the CFS of the assessee has been granted such certificate. The certificate mentions that the CFS carries on port related activities, and it may be considered as an extendable activity of the port related activities. It is clarified that the CFS has not been built on BOT or BOLT Scheme sand that it is situated on land which does not belong to the port. The letters written by port trust to the assessee also state that the matter has been referred to the IT Department. The Department has clarified that an ICD/CFS does not constitute an inland port. In the case of Commissioner Of Income-Tax v. Abg Heavy Industries Limited (2010) 231 CTR (Bom) 127 : (2010) 37 DTR (Bom) 233 : (2010) 189 Taxman 54 (Bom), the Hon'ble Court has held that the assessee is entitled to deduction under s. 80-LA. However there is a very salient difference in facts that structures were located at port and such structures had to be handed over to the port trust on expiry of the period of agreement. In the case at hand it is clear that the assets of the CFS are not to be handed over to the port trust at any point of time as it is not built on BOT and BOLT Scheme. The CFS is also not located at the port. As against the aforesaid, the learned standing counsel has submitted that clarifications issued by other authorities including CBEC under the relevant Acts do not lay guidelines under the IT Act and that the matter has to be decided under the IT Act Independently. For doing so, initially a strict Interpretation has to be placed on the words “inland port” to examine that the assessee is entitled to the 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 the conclusion that a port can be said to be an Inland port only if it has an access to the sea via a waterway.

66. We find that the solitary decision in this case by any High Court is in the case of Container Corporation Of India Ltd. (supra). In this case it has been held that an ICD is not a port but it is an inland port. The case of CFS is similarly situated in the sense that both carry out similar functions. i.e warehousing, 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 under s. 80-IA(4). Question No. 2 is answered accordingly,”

6.1 In this view of the situation, respectfully following the aforementioned decision of Special Bench we allow the appeal filed by the assessee and it is held that assessee is entitled to get deduction under section 80 IA (4) of the Act.

7. In the result, the appeal filed by the assessee is allowed in the manner aforesaid.

Continental Warehous... v. The Acit, Panvel Cir...