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  • K. SampathS. Krishna
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  • R.P. GargGeorge Mathan
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  • K. SampathS. Krishna
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  • R.P. GargGeorge Mathan
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Smart Summary

Structured Summary of the Court's Order

Factual and Procedural Background

This set of five appeals arises from assessment years 2003-04, 2004-05 and 2005-06 and concerns claims for deduction under section 80-IA of the Income-tax Act. The assessee is Container Corporation of India Ltd. (CONCOR), a public sector company formed by the Ministry of Railways to develop and operate end-to-end logistics facilities (Inland Container Depots (ICDs), Container Freight Stations (CFSs), Port Side Container Terminals and rolling stock/wagons connected to the Indian Railways network).

The disputed items include: (a) entitlement to deduction under section 80-IA in relation to income from inland ports/ICDs; (b) entitlement to deduction under section 80-IA in relation to income from rolling stock (wagons) operating on the Indian Railways system; and (c) a depreciation question—whether computer peripherals/accessories (printers, scanners, modems, servers etc.) qualify for 60% depreciation as part of 'computer' assets. The Assessing Officer disallowed the section 80-IA claims (for reasons including prior claims under section 80-I and customs-notification technicalities) and allowed only 25% depreciation on peripherals; the Commissioner of Income Tax (Appeals) (CIT(A)) partly reversed these findings (allowing deduction for rolling stock and 60% depreciation, but disallowing deduction for certain ICDs). The Tribunal heard rival submissions and issued the order summarized here.

Legal Issues Presented

  1. Whether income derived from the assessee's rolling stock (wagons owned by CONCOR and operating on Indian Railways) qualifies as income from an "infrastructure facility" (rail system) and therefore is eligible for deduction under section 80-IA.
  2. Whether income derived from the assessee's Inland Container Depots (ICDs) and related facilities qualify as "inland ports" or otherwise as "infrastructure facility" under the Explanation to section 80-IA after the amendment effective 1-4-2002, and thus whether such income is eligible for deduction under section 80-IA.
  3. Whether computer peripherals and accessories (printers, scanners, modems, servers) are to be treated as part of the computer for purposes of depreciation at the higher rate of 60% (rather than as general plant and machinery at 25%).
  4. Whether a prior (earlier-year) claim having been made under section 80-I (and disallowed) prevents the assessee from claiming deduction under section 80-IA for the same business/income.

Arguments of the Parties

Appellant (Assessee)'s Arguments

  • CONCOR argued that it develops, operates and maintains rail infrastructure (including its own wagons) and ICDs/CFSs, thus fulfilling the conditions of section 80-IA for deduction in respect of income from rail system and ICDs. It emphasized separate accounts, new machinery additions (post 1-4-2001), and CA certificates (Form 10CCB) for eligible units.
  • On rolling stock, the assessee relied on definitions in the Indian Railways Act, 1989 which include rolling stock as part of "railway" and contended that rolling stock is essential and inseparable from a rail system; consequently wagons owned and operated by CONCOR are part of the rail system and qualify as infrastructure facility under section 80-IA.
  • On ICDs, the assessee argued that ICDs and CFSs perform the functions and provide the facilities of ports (except being at sea) and that customs notifications and CBEC clarification (and the Customs Act provisions) show ICDs/CFSs are customs areas performing port-like functions; accordingly they qualify as "inland ports" under the Explanation to section 80-IA even after the 2002 amendment.
  • On depreciation, the assessee submitted that peripherals (printers, scanners etc.) are integral parts of the computer system and cannot function usefully in isolation; hence they qualify for depreciation at 60% as part of 'computer' assets.
  • The assessee also relied on administrative letters from the Ministry of Railways certifying that CONCOR-owned wagons run on Indian Railways for carriage of container traffic and on CBDT Circular No. 733 (1996) and CBDT/CUSTOM notifications recognising ICD/CFS as infrastructure (subject to conditions) to support its claims.

Respondent (Revenue / Assessing Officer)'s Arguments

  • The Assessing Officer refused the section 80-IA deduction in part on the ground that CONCOR had earlier claimed deduction under section 80-I (1991-92 to 1994-95) which were disallowed, and that prior denials and the Committee of Dispute findings meant CONCOR had reserved rights but had not created new infrastructure after 1-4-1995.
  • The AO contended rolling stock does not form part of rail system for section 80-IA purposes and relied on administrative correspondence (letter of 23-8-2005) and the Railway Act definition of rolling stock to argue against the deduction being allowed for rolling stock (and asserted deduction under section 80-IA is available only on the total infrastructure facility and not on parts such as rolling stock).
  • Regarding ICDs, the AO relied on the CBDT notification (1998) and Customs Act notifications to say that only certain notified ICDs were covered and that some of CONCOR's ICDs (Pondicherry, Dronagiri) were not notified; the AO also viewed that no new infrastructure was created after 1-4-1995 and that expansion/additions to existing facilities do not attract section 80-IA benefits.
  • On depreciation the AO allowed 25% for peripherals treating them as general plant and machinery, asserting the higher 60% rate applies only to computers and software, not peripherals.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
CIT v. Premier Cotton Mills Ltd. [1999] 240 ITR 434 (Mad.) Authority that deduction under section 80-IA applies to an "Undertaking" or "Enterprise" and is not strictly limited to the assessee as an entity. The court applied this principle to hold that substantial additions and new units/operations can create a new infrastructure undertaking eligible for section 80-IA even though the assessee existed earlier; used to support eligibility of CONCOR's rolling division and new ICDs commencing after 1-4-2001.
Textile Machinery Corpn. Ltd. v. CIT [1997] 107 ITR 195 (SC) Supreme Court authority on the concept that deduction under section 80-IA can apply to an 'Undertaking' or 'Enterprise' and that new machinery/expansion can make a unit qualifying even if the assessee existed previously. Relied upon with Premier Cotton Mills to conclude that CONCOR's substantial additions constituted a new infrastructure undertaking eligible for deduction under section 80-IA.
Commissioner Of Income-Tax v. Jokai India Ltd. [2001] 251 ITR 39 (Calcutta HC) Judicial authority relevant to treatment of computer-related assets and depreciation classification. The Tribunal relied on this High Court decision (as cited) to support allowance of higher rate depreciation for computer peripherals when treated as part of computer system.
ITO v. Samiran Majumdar [2006] 98 ITD 119 (Kolkata ITAT) Tribunal decision holding printers and scanners to be integral parts of a computer system and therefore eligible for higher rate depreciation (60%). The court followed this ITAT decision to allow 60% depreciation on printers, scanners and other peripherals as integral to computers.
Foreman v. Free Fishers of Whitstable (cited: 38 LJCP 350; LR 4 HL 266) Historic English authority used in the judgment to illustrate principles and traditional definitions about what constitutes a 'port'. Quoted and applied in the court's discussion of the meaning of 'port' (and by contrast 'inland port') to support the conclusion that a port, in common/technical usage, is associated with ships and seafaring functions and does not necessarily encompass an inland container depot.

Court's Reasoning and Analysis

The Tribunal proceeded by examining statutory texts, administrative notifications, the Railways Act definitions, the factual matrix of CONCOR's operations and the precedents relied upon by the parties. The reasoning unfolded in several steps:

  1. Identification of eligible infrastructure activities: The court noted that section 80-IA allows deduction for enterprises engaged in developing, maintaining and operating infrastructure facilities, and that the Explanation to subsection (4)(i) expressly includes a "rail system" and "inland ports" among such facilities.
  2. Rolling stock analysis: The court examined the Indian Railways Act, 1989 definitions (which define 'Railway' to include rolling stock and define 'rolling stock' to include wagons, containers, etc.), administrative letters from the Ministry of Railways certifying that CONCOR-owned wagons run on the Indian Railways system, and CBDT Circular No. 733 (1996) which contemplates the build-own-lease-transfer (BOLT) scheme and distinguishes components of the rail system. The Tribunal concluded that wagons (rolling stock) are integral to and part of a rail system and therefore income from rolling stock qualifies as income from an infrastructure facility under section 80-IA. Accordingly, the Tribunal upheld the CIT(A)'s direction to allow section 80-IA deduction against income derived from rolling stock.
  3. ICD / Inland port analysis and statutory amendment: The court carefully compared the "old" Explanation (inserted effective 1-4-2001) and the "new" Explanation (substituted effective 1-4-2002) to section 80-IA. The old Explanation included the phrase "or any other public facility of a similar nature as may be notified by the Board in this behalf in the Official Gazette," which permitted the CBDT to notify ICDs/CFSs as infrastructure facilities (and CBDT had issued Notification No. 10682 dated 1-9-1998 doing so, subject to customs notification). However, that phrase was omitted in the 2002 substitution. The Tribunal reasoned that after omission of the phrase, ICDs/CFSs ceased to be brought in as infrastructure facilities by administrative notification alone, and the term "Inland Port" in the text does not, on its face or by statutory/lexical analysis, include ICDs. The court also reviewed dictionary and judicial definitions of "port" (including Halsbury, Chambers, Law Lexicon and English authorities) to conclude that a port is classically associated with ships and seafaring functions; that conceptual distinction supported the inference that an "inland port" is not automatically coterminous with an ICD. On this basis, the Tribunal upheld the CIT(A)'s conclusion that the five ICDs in question were not eligible for section 80-IA deduction in assessment year 2003-04 and that customs notification was no longer decisive after the 2002 amendment.
  4. Effect of prior section 80-I claims: The Tribunal accepted the CIT(A)'s view that the statutory bar in sub-section (9) of section 80-IA operates only where income has been allowed as a deduction under another section of Chapter VIA. Since the income in issue had not been allowed as deduction earlier under any other Chapter VIA provision, the earlier claim (and its disallowance) under section 80-I did not preclude a valid claim under section 80-IA.
  5. Depreciation on computer peripherals: The Tribunal analysed the nature and function of computer peripherals (printers, scanners, modems, servers) as output/input devices that are integral to the useful functioning of a computer system. Relying on the cited decisions (Jokai India Ltd. and Samiran Majumdar), the court held that such peripherals form part and parcel of the computer and are eligible for the higher rate of depreciation (60%). Accordingly, the Tribunal allowed depreciation at 60% on peripherals.

Holding and Implications

The Tribunal's dispositive rulings and their direct consequences are as follows:

Core Rulings:

  • Rolling stock / wagons: The Tribunal upheld the CIT(A)'s direction to allow deduction under section 80-IA in respect of income derived from CONCOR's rolling stock (wagons) because rolling stock is an integral part of the 'rail system' and thus an infrastructure facility under the Explanation to section 80-IA.
  • Inland Container Depots (ICDs) and CFSs: The Tribunal upheld the CIT(A)'s denial of section 80-IA deduction in respect of income derived from the five ICDs at issue (Jaipur, Jodhpur, Jamshedpur, Pondicherry and Dronagiri). The reasoning was that after the substitution of the Explanation effective 1-4-2002 (which omitted the phrase permitting Board-notified "other public facility"), ICDs/CFSs are not to be treated as part of the term "Inland Port" for section 80-IA purposes and are no longer covered simply by customs/CBDT notifications in the post-amendment regime.
  • Depreciation: The Tribunal allowed depreciation at the rate of 60% on computer peripherals and accessories (printers, scanners, modems, servers) by treating them as integral parts of the computer system.
  • Effect of prior section 80-I claims: The Tribunal held that earlier claims under section 80-I that were disallowed do not operate to bar a legitimate deduction under section 80-IA where no deduction was in fact allowed earlier under any other provision of Chapter VIA.

Final Disposition: All appeals by the assessee and the revenue were dismissed (the Tribunal's factual and legal conclusions upheld the CIT(A) on the mixed issues: allowance for rolling stock and 60% depreciation; denial of section 80-IA for the specified ICDs).

Implications: The direct consequences are: CONCOR is entitled to section 80-IA deduction for income from its rolling stock; the five specified ICDs are not entitled to section 80-IA deduction for the assessment year under appeal; computer peripherals are depreciable at 60%. The Tribunal applied existing case law and statutory/administrative texts rather than announcing a novel legal principle; the decision interprets the post-1-4-2002 Explanation to section 80-IA strictly and gives effect to the amended language concerning administrative notifications.

Show full summary ...

    Container Corporation of India Ltd. v. Assistant Commissioner of Income-tax, Circle 3(1), New Delhi

    ORDER

    R.P. Garg, Senior Vice President. - These five appeals are against the order of assessment years 2003-04, 2004-05 and 2005-06.

    2. In all these appeals, the dispute is with regard to deduction under section 80-IA - in assessee's appeals in respect of income from inland ports and in revenue's appeal profits in business of rolling stock. In assessee's appeal for assessment year 2004-05, the dispute regarding disallowance of earlier year expenses of Rs. 1,61,17,074 was not cleared by the Cabinet Committee and, therefore, rejected.

    3. The background facts of the case are that the Export Import cargos were traditionally moving in containers from abroad. Till mid-eighties the cargos were moved upto the sea in bulk and then they were stuffed into containers for onward EXIM transportation. Initially Indian Railways was carrying the cargo in wagons. Transportation of cargo (specially EXIM cargo) by wagons had its own inherent limitations. Wagons could move only on rails upto the designated rail terminals. From these terminals, the individual parties had to arrange for the onward transportation of cargo upto the port. The exporter/importer had to deal with a lot of intermediaries, which effectively increased their cost of logistics and finally the cost of product. Even then, the intervention of several agencies caused avoidable delay with dislocations. Hence the demand of the market specially for EXIM traffic to avail such benefit of end-to-end logistics where they would deal with only one agency who would take care of all the formalities of EXIM cargo alongwith its logistics became vocal and dominant. This precisely meant there would be only one nodal agency which will pick up the cargo from the exporter's doorstep and will facilitate its loading into the ship by complying with all the intermediary formalities, be it at the port or with the customs.

    4. Considering the dire need of the industry, the Government of India, through Indian Railways, attempted to introduce an 'end to end' logistics/support to boost the EXIM activities, which could obliterate the above hindrances and free it of the bottlenecks and could also provide an effective multi-modal logistic support to its customers at doorstep. The Indian Railways, at that point of time, did not by itself on its own want to have to launch such infrastructural facilities. Hence CONCOR, the assessee- company came into existence as Public Sector Undertaking under Ministry of Railways to fulfil that mission. The other reason for forming such an autonomous body by the Ministry of Railways is that it will be purely on-built and operate basis and Railways would facilitate the enterprise with the technological and operational support. The formation of the company was made with a Memorandum of Understanding between the Ministry of Railways and Concor with the different provisions including the following :


    (1) CONCOR will develop and create Inland Container depots on the spare lands of Indian Railways throughout the country.
    (2) CONCOR will create all the infrastructure facilities in its Inland Container Depots which a sea port has and will provide single window logistics support to the exporter/importers.
    (3) CONCOR will have to create its own Railway track inside the terminal i.e., Inland Container Depot and the same will be linked to the main lines of Railways. Apart from this Railway will also fit in Concor into the rail system by providing Railway Power for the wagons, Signalling system, transit security etc.
    (4) CONCOR will reimburse the cost of utilizing the Railway system to Indian Railways.
    (5) Indian Railways will provide its operational experts on deputation to look after the operational activities of Concor.

    5. An enterprise carrying on the business of (a) developing, or (b) maintaining and operating, or (c) developing, maintaining and operating any infrastructure facilities in accordance with the requirements of section 80-IA is eligible for deduction under that section. Explanation to sub- section (4)(i) of section 80-IA of the Income-tax Act, 1961, defines an infrastructure facility to mean and include a road including toll road, a bridge, or a rail system, port, airport, Inland Ports etc. In the context of Concor, infrastructure facility means the Rail System and its Inland Ports.

    6. The assessee claimed deduction under section 80-IA for this infrastructural facilities as it is engaged in the business of handling and transportation of containerized cargo. Its activities are stated mainly to carry out its Inland Container Depots (ICDs), Container Freight Stations (CFS) and Port Side Container Terminals (PSCTs) spread all over the country. Its wagons are running on Indian Railway system for carriage of container traffic. The assessee is thus claimed to be engaged in developing, operating and maintaining infrastructure facilities.

    7. The Assessing Officer did not allow the claim for the reasons - (i) that the assessee claimed deduction under section 80-I during assessment years 1991-92 to 1994-95 which were disallowed and the CIT(A) had confirmed the action of Assessing Officer and the Committee of Dispute (CoD) settled the matter in favour of the Department and that the assessee had reserved its right to claim deduction under section 80-I from 1995-96 onwards; (ii) that the assessee had maintained the infrastructure facilities of rolling stock and ICD since its insertion i.e., assessment year 1990-91 and the subsequent additions to number of wagons, i.e., rolling stock and ICDs after 1-4-1995 points out that it did not start any new infrastructure facilities; (iii) that 'rolling stock' does not form part of rail system and he referred to letter dated 23rd August, 2005, issued by Government of India, Ministry of Railways, (Rail Board, declaring the assessee as running on for carriage of containers carriage' traffic reading : "In reference to your letter No. Con./Operation/Misc./1, dated 23rd August, 2005, this is to certify that the CONCOR owned wagons "VLC, VLL and BFKN", are running on Indian Railways System for carriage of container traffic"....

    "Further in the Railways Act, 1989, para 37, the term 'rolling stock', has been defined which is being reproduced below:—(37) 'rolling stock' includes locomotives, lenders, carriages, wagons, rail-cars, containers, trucks, trolleys and vehicles of all kinds of moving on rails."; and (iv) that even though the rolling stock may be part of railway system, the assessee will not be entitled to the deduction because the deduction is available on the total infrastructure facility as a whole i.e., rail system and not on parts (rolling stock).

    8. Regarding deduction in respect of ICD's, the Assessing Officer, referring to CBDT Notification No. 10682 dated 1-9-1998 and Custom Department notification under section 7(aa) of Customs Act, observed that out of the five ICDs though three ICDs namely Jamshedpur, Jodhpur and Jaipur are covered by the Customs notifications yet, the specific areas of assessee ICDs were not covered in the notification. However, the remaining two ICDs namely Pondicherry and Draunagiri were not notified at all by Customs Department and that the assessee had already claimed deduc- tion under section 80-I in earlier assessment year 1994-95 and, therefore, the assessee cannot claim both deductions under sections 80-I and 80-IA for the same business. The Assessing Officer further observed that no new infrastructure facility was created by the appellant-company after 1-4-1995. The Expansion of or adding new units and fresh investments on existing facilities do not entitle to deduction under section 80-IA.

    9. The CIT(A), observed that the provision for deduction under section 80-I is different than for deduction under section 80-IA and there is no restriction under the Income-tax Act to the effect that where the deduction under section 80-I has been claimed, the deduction under section 80-IA cannot be claimed. The assessee fulfilled the conditions of section 80-IA and the income pertaining to rail system and ICDs. The assessee has not claimed as deduction under any other section, other than the claim made under section 80-IA, the deduction cannot be denied that too only on the ground that in earlier years, the assessee had already claimed (but was denied) the deduction under section 80-I of the Income-tax Act on the ground of the restriction under clause (9) of section 80-IA providing that such income which has been allowed as deduction under this other section of Chapter VIA, the same cannot be qualified for deduction under different section.

    10. He further held that as per depreciation chart of rolling division, the WDV as on 1-4-2001 was nil and all the additions made during 1-4-2001 to 31-3-2003 of the 5 ICDs were of new machinery; that though the assessee was in existence, yet, its rolling division and 5 ICDs commenced operations only after 1-4-2001; that not only the business operation are handled independently but financial records are also maintained separately by each of the units; that the deduction under section 80-IA is available to an 'Undertaking' or 'Enterprise' in view of CIT v. Premier Cotton Mills Ltd. [1999] 240 ITR 434 (Mad.) ; Textile Machinery Corpn. Ltd. v. CIT [1997] 107 ITR 195 (SC) and not restricted to an assessee.

    11. He held that rolling stock is a part and parcel of rail system. Hence, the action of the Assessing Officer denying the deduction under section 80-IA against income derived from rolling stock is unjustified. He, therefore, directed the Assessing Officer to allow the deduction under section 80-IA against the income derived from rolling stock.

    12. However, as regards to 5 ICDs, he observed that the term 'Inland Container Depot was neither used in Explanation of section 80-IA inserted by Finance Act, 2000 with effect from 1-4-2001 nor in new provision of such Explanation substituted by Finance Act, 2001; that the phrase any other public facility of similar nature as may be notified by the Board in this behalf in the "Official Gazette" was mentioned, but that phrase has been omitted in new Explanation substituted by Finance Act, 2001 with effect from 1-4-2002. As the ICD were neither part of old Explanation nor it is mentioned in new Explanation, the deduction under section 80-IA against income derived from ICD cannot be allowed. The justification of notification was applicable upto last year, so long as the phrase 'any other public facility' was existed in the Explanation. He, therefore, rejected the claim for treating the ICD as part and parcel of "Inland Port". The word 'Inland Port' has been defined in the Act. Similarly, the phrase "Inland Port" was already mentioned in the old Explanation inserted by Finance Act, 2000 with effect from 1-4-2001 and the same is still in existence in the new Explanation substituted by Finance Act, 2001 with effect from 1-4-2002.

    13. On going through both the old and the new Explanations and also going through the CBDT Notification dated 1-9-1998, he found that the term "Inland Port" does not include the ICD. Had it been included in the term "Inland Port" the CBDT would have clarified that ICDs are part and parcel of Inland Port and it would have not notified the Inland Container Depot, (ICD) and Central Freight Station as separate infrastructure facility. He reproduced the relevant portion of CBDT Notification No. 10682 dated 1-9-1998 is reproduced below:—

    "Deduction under section 80-IA - In exercise of the powers conferred by clause (ca) of sub-section (12) of section 80-IA of the Income-tax Act, 1961 (43 of 1961), the CBDT hereby notifies Inland Container Depot and Central Freight Station (CFS) is infrastructure facility. Provided that such places are notified as 'Inland Container Depot and Central Freight Station under section 7(ca) of the Customs Act, 1961'.

    Thus, looking to the old provision of Explanation inserted by Finance Act, 2000 with effect from 1-4-2001 and CBDT Notification dated 1-9-1998, I hold that the requirement of notification by the Custom Department treating the ICD as infrastructure facility was applicable only upto the assessment year 2002-03. Once the phrase 'any other facility of similar nature' has been taken away by the new Explanation substituted by Finance Act, 2001 with effect from 1-4-2002, the ICDs are no more infrastructure facility for the purposes of deduction under section 80-IA. In the light of these legal provisions, I hold that the appellant was not entitled for any deduction under section 80-IA against income derived from aforesaid 5 ICDs mentioned in preceding para. Thus, the question of notification by Custom Authorities is no more relevant for the deduction under section 80-IA in the assessment year 2003-04 (under appeal). Hence, I direct the Assessing Officer not to allow deduction under section 80-IA against the income derived from the aforesaid 5 ICDs."

    14. The ld. counsel for the assessee Shri S. Sampath submitted that the assessee initially started its operation with the flats/rakes obtained from Indian Railways. In the Rail flat/rake having lesser carrying capacity, it could not load higher capacity in their containers to match with the load ability of the Railway flat/rake. Subsequently, it was realized that the flat/rake supplied by Indian Railways were not fully fit for movement of containers and further improvement was possible with the availability of fresh technology and new expertise. In such a scenario it felt the need of new wagons, which have a higher loading capacity and higher could move at speeds. Accordingly it acquired its new fleet of wagons as per the specification approved by Indian Railways and after the approval of RDSO. The new fleet of wagons were inducted into the Rail System and the wagons which were previously used were deployed by Indian Railways for other category of cargos. The new fleet of wagons were inducted into the system are part and parcel of the Rail System through which it is providing services to its customers. Various activities are explained as:


    (i) Development of Rail System - This activity involves decision about the design, technical specifications, speed, carrying capacity of the wagons, study of its compatibility with the Railway existing Railway system/network, specific requirements of Indian Railways for movement of wagons, etc. All these activities are carried out by CONCOR in house for which it has retained and developed the required expertise and knowledge. After these parameters have been set up, various activities start i.e., the activity of development of prototypes, finalizing the final product specifications, floating tenders for acquiring wagons, arranging manufacturing of those wagons as per our specifications, acquisition of those wagons, utilization of the wagons acquired for business. Further, to facilitate movement of containers CONCOR has to set up various other facilities which include railway lines in depots, signalling facilities, electrification, train monitoring systems, loading and unloading facilities to connect its container trains with the main line of the Railways. Therefore all this infrastructure is developed by CONCOR on its own.
    (ii) Operating of Rail System - The Rails System which have been created are operated by the company in which it transports containers from sea ports/other places to its depots in the hinterland and vice versa. These operations are carried out by CONCOR on its own for which it bills its customers and collects freight and other charges. In this process for utilization of the railway track and the Railway locomotives it pays if the charges due to them. The company has set up in-house directional and monitoring operations departments which monitor the movement of the several container trains.
    These operations are carried out in close co-ordination and tie-up with the Railways and are attempted to be well integrated and synergies with their existing network and operations. The company has developed systems for carrying out all these activities optionally both functionally and time-wise.
    (iii) Maintaining of Rail System - The huge infrastructure which has been developed and operated by CONCOR is required to be assiduously maintained for its smooth functioning over a longer period. The wagons acquired by CONCOR are always to be in line with the specifications of Indian Railways. The Railways have set up a large network for the up-keep and routine maintenance of all kinds of wagons. Since these wagons of CONCOR are also placed on the existing Railway System and are a part and parcel thereof, the company arranges for their up-keep and maintenance by the Indian Railways for which charges are normally paid to them."

    15. He submitted that as the wagons owned by the assessee are part of Indian Railway System for carriage of container traffic and are operated and maintained by it, they constitute rolling stock in terms of definition(s) given in paras 31 and 37 of the Indian Railway Act, 1989. They are thus wholly covered under the definition of 'Rail System'. The Income-tax Act does not give any definition of Rail System. In such circumstances the definition has to be looked for in the Indian Railways Act, 1989 which is a sister statute in this regard. As per Para 31 of Chapter I of the said Act, the meaning of Railways includes Rolling Stock. The definition contained in the Indian Railways Act cannot be ignored, especially since Indian Railways is the authority in this matter both functionally and holding-wise.

    16. He drew our attention to the Indian Railways Act, 1989, defining 'Railways' and 'Rolling Stock' have been defined as under :—

    "'Railway' means a railway, or any portion of a railway, for the public carriage of passengers or goods, and includes rolling stock besides other items. 'Rolling Stock' in turn has been defined to include locomotives, lenders, carriages, wagons, rail cars, containers, trucks, trolleys and vehicles of all kinds moving on rails." [Emphasis supplied]

    17. Rail system he submitted cannot function without rolling stock, as it is the essence of a rail system. There cannot be any connectivity in any rail system without rolling stock. A mere rail track cannot constitute infrastructure unless rolling stock is put to run on it. The capacity of a rail system is not measured by the length of the track but by the number of rolling stocks running on the rail system. The rail system's capacity to provide infrastructure services remains zero if there is no rolling stock running on the railway track, even if the railway track extends to thousands of kilometres. This is the reason why under Indian Railways Act, 1989 rolling stock is mentioned as part of Railway, along with the track.

    18. He also submitted that these wagons constitute Rail System where services over the Indian Railways network are offered by use of these wagons to the customers. In other words, the infrastructure facility provided by the Indian Railway System is enhanced by assessee's wagon deployment. These wagons ply as scheduled trains and on demand trains all over the Indian Railway network.

    19. As per Para 2 of Circular No. 733 issued by CBDT dated 3rd January, 1996, he submitted that the Indian Railways have formulated a build-own-lease-transfer (BOLT) Scheme, hereunder a private enterprise will provide the necessary and crucial components of Railway System. From this para it is clear that this circular is applicable to BOLT schemes of Indian Railway and is applicable for each necessary and crucial component of Railway System. It is beyond denial that wagons constitute railway system. This circular clearly establishes the fact that the Rail system includes rolling stock and that is why the circular has specifically provided for the relaxation in the conditions as to maintain and operate under "BOLT Scheme" shall be restricted to Rail system other than rolling stocks for claiming deduction under section 80-IA of the Act. Had the meaning of the words Rail system" been to not to include "rolling stock", there was no need to specifically exclude the same in the circular. Needless to say that without rolling stock a Rail system cannot be an infrastructure facility and cannot even function. However, this circular is not relevant since after the amendment of Act in 2001 such a position has become otiose.

    20. He further submitted that the assessee has built, operated and maintained the infrastructure facilities. It is not required to transfer the same. A clarification has been issued by Railway Ministry (MOR), vide its letter No. CON/Operation/Misc./1, dated 23-8-2005 which is the administrative ministry to the assessee certifying that the assessee owned wagons BLC, BLL and BFKN are running on Indian Railway System for carriage of container traffic. Another letter (No. 180 TRS/O/8/BLC pt.-IV/(V)-II dated 11-12-2006 issued by Northern Railway further substantiates the fact BLC, BLL and BFKHN wagons owned by the assessee are running as part of Indian Railway System and are being maintained by Indian Railways. The assessee is engaged in the business of transportation of containers from Inland Ports (ICDs) spread all over the country to other terminals and ports. Transportation of containers is done through wagons on the Indian Rail System. These wagons are acquired, manufactured and run as per the specifications/system provided by the Indian Railways and owned by CONCOR. These wagons operate as part of the network Indian Railway System in accordance with the understanding and agreement with Indian Railways. Hence, the wagons owned by the assessee are operated and maintained as part of Rail System, which is managed by Indian Railways.

    21. The assessee is engaged in the business of transportation of containers from inland ports (ICDs) spread all over the country to other terminals and ports. Transportation of containers is done through wagons on the Indian Rail System. These wagons are acquired, manufactured and run as per the specifications/system provided by the Indian Railways and owned by the assessee. These wagons operate as part of the network. Indian Railway System in accordance with the understanding and agreement with Indian Railways. Hence, the wagons owned by the assessee are operated and maintained as part of Rail System, which is managed by Indian Railways.

    22. As regards Inland Ports he submits that the CIT(A) has erred in confirming the order of Assessing Officer in holding that the Inland Container Depots are not Inland Ports as per clause (d) of Explanation to section 80-IA (4) by wrongly interpreting the amendments made in section 80-IA with effect from 1-4-2002 and, hence, denied the benefit of deduction under section 80-IA of the Act. In fact the deduction claimed by the company is under the category 'Inland Port', which term was there before the amendment and continuous even after the amendments. A clarification has been issued by Ministry of Finance, Department of Revenue, Central Board of Excise and Customs vide its Letter F.No. 450/24/2007-Cus.IV dated 24-4-2007 stating that Inland Container Depots (ICDs) and Container Freight Stations (CFSs) are 'Inland Ports'. Hence, there can be no more a doubt on this issue since the clarification is by the same Department which is responsible for custom clarification and notification. In the absence of any specific definition of inland port in the Income-tax Act, we have to understand its meaning and scope in terms of dictionary meaning, its functions and available facilities and the provisions of Customs Act and Notifications thereunder.

    23. It is clear from CBEC notification that the ICDs whose income has been claimed as deduction under section 80-IA has been notified as customs areas having the available facilities of ports as mentioned above under section 7 of the Customs Act. ICDs/CFS are inland ports, inasmuch as they are providing facilities and performing functions of ports as the inland ports i.e., ports in the interior regions of the country on the land. By adding the prefix 'inland' to the word 'port', the scope of port has been extended to places beyond seaport, i.e., to inland or to the interior region. The fact that ICDs and CFSs are 'Inland Ports' is also supported by Halsbury's Laws of England which defines 'port' as a natural or artificial heaven or access of the sea to which ships may conveniently come and at which they may load or unload. A seaside by itself is not a port. Ports refer to a compendium of services with CFSs in modern context form an integral part of the same. A port or for that matter an inland port is a port or an inland port because of available facilities therefor unloading of import goods and the loading of assessee's export goods, parking of containers of such goods and custom services for the clearance of import/export goods. Whether ICDs are inland ports or not, it has to be judged from the angle of the functions and available facilities and in the light of the provisions of the Customs Act. Assessee's ICDs/CFSs are all notified under the Customs Act. Hence, they shall qualify as 'inland ports' for the grant of benefit of section 80-IA from assessment year 2002-03 onwards. By adding the prefix 'inland' to the word 'port', the scope of port has been extended to places beyond sea port, i.e., to inland or to interior region. Since similar facilities are available at ICDs and as they have been notified as customs areas under the Customs Act, they fully qualify to be treated as inland ports. These ICDs have been working as inland ports, providing all the required facilities of inland ports as mentioned above, which fact has also been duly certified by the Customs Department.

    24. He also submitted that as per section 2(12) of the Customs Act, 1962, a customs port means any port appointed under clause (a) of section 7 to the customs port and includes a place appointed under clause (aa) of that section to be an integral container depot. Notification No. SO 744(E) dated 1-9-1998 is referred to and amendment thereto vide notification No. SO 391(E) dated 28-5-1999, in exercise of the powers conferred by clause (ca) of sub-section (12) of section 80-IA of the Income-tax Act, 1961 (43 of 1961), the CBDT has notified Inland Container Depot (ICD) and Container Freight Station (CFS) as infrastructure facility eligible for deduction under section 80-IA, provided that such places are notified as Inland Container Depot and Container Freight Station under Customs Act, 1962.

    25. He further submitted that it is important to mention here that the definition of 'infrastructure facility' introduced with effect from 1-4-2002 excludes 'any other public facility of a similar nature as may be notified by the Board in this behalf in the Official Gazette'. However asfaras the word 'inland port' is concerned, it was there in the Act prior to the amendment and continued to exist even after the amendments were made in the section. Even after amendment of the section vide Finance Act, 2001 with effect from 1-4-2002 the ICD and CFS will continue to be covered under the definition of Inland Ports under clause (d) of Explanation to sub-section (4) of section 80-IA. The meaning of port, inland port cannot undergo a change merely by the removal of "any other public facility of a similar nature as may be notified by the Board in this behalf in the Official Gazette". The Inland Container Depots (ICDs)/Container Freight Stations will continue to be covered under the definition of Inland Ports. Thus after the amendment, the claim is more genuine and allowable on the basis of the above explanation independent of the notifications. The ICDs are, therefore, both legally and factually inland ports and, as such, they are infrastructure facilities as per the aforesaid Explanation to section 80-IA. The assessee created ICD throughout the country with all infrastructure facilities which a sea port has. A table to substantiate the fact that ICD undertakes the same activities as a sea port except the sea and berthing of ships is filed.

    26. We have heard the parties and considered the rival submissions. In its business of handling and transportation of containerized cargo, the operating activities are mainly carried out at its Inland Container depots (ICDs), Container Freight Station (CFS) and Port Side Container Terminals (PSCT's) spread all over the country. Its wagons are running on Indian Railway System for carriage of container traffic. Thus, assessee is engaged in developing, operating and maintaining infrastructure facilities, the income from which eligible for deduction under section 80-IA.

    27. The assessee fulfils the conditions of section 80-IA for being eligible to the said deduction, namely; (a) it is a company registered in India; (b) it is providing infrastructure facility; (c) it has kept separate accounts for the eligible business and submitted separate P&L Account and Balance Sheet duly audited; (d) it is new industrial undertaking in view of the Supreme Court decision in Textile Machinery Corpn. Ltd.'s case (supra) and Madras High Court decision in Premier Cotton Mills Ltd.'s case (supra) as it had purchased huge new machinery for substantial expansion as evidenced by the depreciation chart from 1-4-2001; (e) it had filed the CA certificate, in Form No. 10CCB accompanied by accounts of eligible ICDs and Rail System as required under the law; (f) the places of its ICD/CFS are notified vide notification No. 10682 dated 1-9-1998 in exercise of powers conferred by section 80-IA(12)(ca) CBDT has notified ICDs and CFS as infrastructure facility eligible for deduction provided that such places are notified as ICDs and CFS under section 7(aa) of Customs Act. Custom Department has so notified the above places; (g) its 'Rail System' is part of the term 'Infrastructure facilities' as defined in Explanation to section 80-IA(4)(c); (h) its 'rail system' is clarified by the CBDT Circular No. 733, dated 3-1-1996 as infrastructure facilities; (i) the rolling stock, i.e., wagons etc. form part of Rail System vide definition of Railways under the Railways Act and Rail System is part of infrastructure facility videExplanation (a ) to section 80-IA(4)(c) of the Act. The CBDT Circular No. 733 and Letter of Ministry of Railways supports the view that the assessee's wagon etc. (Rolling Stock) running on Indian Railways System are part of infrastructure facilities; (j) it had not been allowed any deduction on these profits under any of the provisions of Chapter VIA of the Act therefore, it is not hit by the provisions of section 80-IA(9) of the Act; (k) it had created, developed, operated and maintained ICDs after 1-4-1995 as is evidenced from notifications stating : (i) The ICD at Jamshedpur vide notifications under section 7(aa) of Customs Act dated 9-10-2001 and under section 8 of the same Act dated 2-1-2002 and under section 45 dated 25-2-2002; (ii) the ICD at Jaipur vide notification under section 7(aa) 2-4-1997 and under section 8 dated 23-6-2001 and under section 45 dated 29-11-2001; (iii) the ICD at Jodhpur vide notification under section 7(aa) dated 2-4-1997 and under section 8 dated 2001 and under section 45 dated 27-06-2001; (iv) the ICD at Pondicherry port vide notification under section 7(a) dated 21-11-1994 and under section 8 dated 12-7-2001; and (v) the ICD at Dronagiri vide copy of letter from Ministry of Commerce and Industries for setting up this ICD dated 19-10-2001, Custom Notification under section 8 dated 3-12-2003 and under section 45 dated 11-11-2003.

    28. The provisions for deduction under section 80-I are different than the provisions under section 80-IA. Sub-section (9) only provides that the income to the extent of which deduction has been allowed under this other section of Chapter VIA, the same cannot be qualified for deduction under different section and the income pertaining to Rail System and ICD, discussed above, has not been claimed as deduction under any other section the deduction cannot be denied only on the ground of its claim in earlier years claimed but disallowed under section 80-I.

    29. The depreciation chart shows that the additions of new machinery were made during 1-4-2001 to 31-3-2003. Thus, the entire assets of the 5 ICDs were new machinery. The business operations are handled independently so also financial records are maintained separately by each of the units. The deduction under section 80-IA is applicable to 'Undertaking' or 'Enterprise' and not to the 'assessee'. It is true that the assessee had maintained the infrastructure facilities of rolling stock and ICD since its inception from assessment year 1990-91 but the substantial addition to number of wagons, i.e., rolling stock and ICDs have made it new infrastructure undertaking in view of Premier Cotton Mills Ltd.'s case (supra) and Textile Machinery Corpn. Ltd.'s case (supra) and, therefore, the rolling division and 5 new ICDs which commenced its operation after 1-4-2001 would be entitled to deduction under section 80-IA.

    30. The term 'Rail system' for deduction under section 80-IA has not been defined under the Income-tax Act but as declared in letter dated 23-8-2005, issued by Government of India, Ministry of Railways, (Rail Board), the assessee Container Corporation of India Limited (CONCOR) is running on, for carriage of containers carriage trzaffic. It reads as under :

    "In reference to your letter No. Con./Operation/Misc./1, dated 23-8-2005, this is to certify that the CONCOR owned wagons "VLC, VLL & BFKN, are running on Indian Railways System for carriage of container traffic."

    Further in the Railways Act, 1989, para 37, the term "rolling stock", has been defined which is being reproduced below:—(37) "rolling stock" includes locomotives, lenders, carriages, wagons, rail-cars, containers, trucks, trolleys and vehicles of all kinds of moving on rails."

    31. The rolling stock of the assessee is, therefore, a part and parcel of rail system. Accordingly we uphold the direction of CIT(A) to allow the deduction under section 80-IA against the income derived from rolling stock.

    32. A port as generally understood is a sea port, an access to sea. Judicial Dictionary by K.J. Aiyer, 8th Edition, 1980 defines it as 'a place of shelter where ships arrive with their cargo. It includes any part of a river or channel in which the Indian Ports Act XV of 1908 is for the time being in force". Halsbury Laws of England defines 'port' "as a natural or artificial heaven or access of the sea to which ships may conveniently come and at which they may load or unload". In Chambers 21st Century Dictionary a port means '1'., a harbour. '2' a town with a harbour" The harbour is '1. a place of shelter for ships.' In Law Lexicon by P. Ramanatha Aiyer explains a port as under :

    "'Port' means generally a harbour or shelter to vessels from a storm.

    'Port' means the waters within the gate or door or outlet towards the sea.

    'Port' defined (see also Customs-port; Foreign Port; Warehousing port), Act 7, 1880, section 2 ; Act 12, 1883, section 2 ; Act 15, 1908, section 2(4); Ben. Act 3, 1867, section 1 ; Ben. Act 4, 1887, section 2 ; Bom. Act 6, 1879, section 3(2) ; Bom. Act 6, 1886, section 2(1); Bom. Act 5, 1888, section 2(a) ; Bom. Act 4, 1905 section 4(a); Mad Act 3, 1885 section 3(1); Mad. Act 2, 1905 section 5(10).

    PORT. (Portus.) A harbour or place of shelter, where ships arrive with their freight and customs for goods are taken. (Tomlins Law Dic.)

    'A Port is a place for the lading and unlading of ships or vessels erected by Charter of the King or a lawful prescription.' (per Ld. Chelmsford Foreman v. Free Fishers of Whitstable 38 LJCP 350; LR 4 HL 266).

    'A Port is a Haven and somewhat more,—


    1. It is a place for arriving and unlading of Ships or Vessels;
    2. It hath a super induction of a civil signature upon it, somewhat of Franchise and Privilege;
    3. It hath Ville or City or Borough that is the capus portus for the receipt of mariners and merchants, and the securing and vending of their goods, and victualling their ships.

    A port, in the commercial sense and by the most ancient definitions is an enclosed place where vessels load and unload goods for export or import. The port is not any place within the geographical limits of the same name where ships might load and unload, but where they in fact do so; i.e., where they are accustomed to do so. Commercially considered, a port is a place where vessels are in the habit of loading and unloading goods, and the limits of the port, as respects a delivery under a bill of lading, turn purely on the question of fact, within what limit ships and merchants have been accustomed to receive and deliver cargo, consigned to the port designated, without any necessary regard to geographical or physical divisions, or to police or statutory regulations.

    'The Franchise of Port may be in one person and the ownership of the Soil, within the limits of the port, in another.' (per Ld. Chelmsford, Foreman's case. Sup, citing De Portibus Maris.)

    'Port' means any port, or any part of a navigable river or channel in which the Indian Ports Act, 1875 is for the time being in force. Bur. Act XII of 1883 (Pilots) S.2

    PORT. A strong sweet red wine.


    1. A harbour or place of shelter where ships arrive with their freight and customs for goods are taken [Sections 3(1) and 18(1), Emigration Act];
    2. To carry or convey."

    33. Thus in common parlance and commercial world and statutorily recognized a port is associated with ships and is a place of shelter where ships may load and unload their cargo. That seems to be the reason for stating in the definition 'a port, airport, inland waterways, inland port' which distinguishes the term port from inland port. A port, therefore, would not include an inland port. We, therefore, uphold the order of the CIT(A) in denying the deduction under section 80-IA on the income derived from ICDs and SKFs situated in Jaipur, Jodhpur and Jamshedpur ICDs of Pondicherry and Drongiri. Inland Container Depot (ICD) and Central Freight Station (CFS) as separate infrastructure facility and are not part of Port.

    34. The ICDs and CFSs of the assessee were included in "infrastructure facility" by extended meaning given to it in terms of the phrase 'any other public facility of similar nature as may be notified by the Board in this behalf in the Official Gazette'. But this phrase has been omitted from the Explanation as substituted by Finance Act, 2001 with effect from 1-4-2002 and, therefore, these ICDs and CFSs ceased to be infrastructure facility.

    35. The relevant portion of the Explanations prior to and after amendment with effect from 1-4-2002 are reproduced below :—

    Old Explanation

    "For the purposes of this clause, 'infrastructure facility' means :—


    (a) a road bridge airport, port, inland waterways and inland ports, rail system or any other public facility of a similar nature as may be notified by the Board in this behalf in the Official Gazette;
    (b) a highway project including housing or other activities being an integral part of the highway project; and
    (c) a water supply project, water treatment system, irrigation project, sanitation and sewerage system or solid waste management system."

    New Explanation

    "For the purpose of this clause 'infrastructure facility' means:—


    (a) a road including toll road, a bridge or a rail system;
    (b) a highway project including housing or other activities being an integral part of the highway project;
    (c) a water supply project, water treatment system, irrigation project, sanitation and sewerage system or solid waste management;
    (d) a port, airport, inland waterway or inland port."

    36. On a close reading of the Explanation inserted by Finance Act, 2000 with effect from 1-4-2001 and the Explanation as substituted by Finance Act, 2001 with effect from 1-4-2002, it may be noticed that the phrase "any other public facility of similar nature as may be notified by the Board in this behalf in the Official Gazette" has been omitted from the Explanation as substituted by Finance Act, 2001 with effect from 1-4-2002. The contention of the assessee that ICD are part and parcel of "Inland Port" has no force. The word 'Inland Port' has not been defined in the Act though it was already mentioned in the old Explanation inserted by Finance Act, 2000 with effect from 1-4-2001 and the same continued in existence in the new Explanation substituted by Finance Act, 2001 with effect from 1-4-2002.

    37. We, therefore, are of the opinion that term "Inland Port" does not include the ICD. Had it been included in the term Inland Port, the CBDT would have not notified them as separate infrastructure facility and would have clarified that ICDs and CFSs are part and parcel of Inland Port. For the sake of convenience, relevant portion of CBDT Notification No. 10682 dated 1-9-1998 is reproduced below:—

    "Deduction under section 80-IA

    In exercise of the powers conferred by clause (ca) of sub-section (12) of section 80-IA of the Income-tax Act, 1961 (43 of 1961), the CBDT hereby notifies Inland Container Depot and Central Freight Station (CFS) is infrastructure facility. Provided that such places are notified as 'Inland Container Depot and Central Freight Station under section 7(ca) of the Customs Act, 1961'.

    Thus, looking to the old provision of Explanation inserted by Finance Act, 2000 with effect from 1-4-2001 and CBDT Notification dated 1-9-1998, I hold that the requirement of notification by the Custom department treating the ICD as infrastructure facility was applicable only upto the assessment year 2002-03. Once the phrase 'any other facility of similar nature' has been taken away by the new Explanation substituted by Finance Act, 2001 with effect from 1-4-2002, the ICDs are no more infrastructure facility for the purposes of deduction under section 80-IA. In the light of these legal provisions, I hold that the appellant was not entitled for any deduction under section 80-IA against income derived from aforesaid 5 ICDs mentioned in preceding para. Thus, the question of notification by Customs Authorities is no more relevant for the deduction under section 80-IA in the assessment year 2003-04 (under appeal). Hence, I direct the Assessing Officer not to allow deduction under section 80-IA against the income derived from the aforesaid 5 ICDs."

    38. Thus after amendment of the section vide Finance Act, 2001 with effect from 1-4-2002 there is certain change in the definition of infrastructure facility given in the Explanation. Prior to the said amendment, sub-section (12)(ca) provided that "Infrastructure facility means (i) a road, bridge, airport, port, inland waterways and inland ports, rail system or any other public facility of similar nature as may be notified by the Board in this behalf in the Official Gazette." But Explanations (a) and (d ) to sub-section (4)(c) provide that "For the purpose of this clause infrastructure facility means - (a) a road including toll road, a bridge or a rail system;. . . (d) a port, airport, inland waterways or inland port." Thus the portion "as may be notified by the Board in this behalf in the Official Gazette" as appearing before the said amendment has been deleted in the new Explanation. Therefore, the Assessing Officer's observation about the customs notification in respect of the ICD's is irrelevant and unjustified. Not only that the assessee's claim based on CBDT's and customs notifications in respect of the ICD's referred to above is not correct, after the said amendment dropping the words "as may be notified by the Board in this behalf in the Official Gazette" the claim is not allowable on the basis of the above Explanation independent of the notifications.

    39. The second common dispute in the revenue's appeal is with regard to depreciation at 60 per cent on computer peripherals and accessories. The claimed depreciation at 60 per cent on computers including their accessories and peripherals like Printers, Scanner, Modems, and Servers etc. the Assessing Officer held that depreciation at 60 per cent was allowable only on computer and software but not on accessories and peripherals. He allowed depreciation at 25 per cent as normal plant and machinery.

    40. The accessories and peripherals of computers provide input processing, storage and various output devices. The output devices such as printer, scanner etc. are computer peripherals and form essential parts of PC. These output devices cannot work in isolation and also working on computer system without an output device such as printer would be futile. In view of the above, the claim of depreciation at 60 per cent on printer, scanner and other computer peripherals is completely justified. The claim of depreciation of 60 per cent further gets justified in view of the fact that even computer software which is installed on computer system supports the computer hardware and is eligible for depreciation at 60 per cent.

    41. As held by the Calcutta High Court decision in Commissioner Of Income-Tax v. Jokai India Ltd. [2001] 251 ITR 39 . In view of decision of Kolkata ITAT in the case of ITO v. Samiran Majumdar [2006] 98 ITD 119 , we hold that printers, scanners and other peripherals were part and parcel of computer and depreciation against such asset are allowable at the rate of 60 per cent. This ground is to be decided in favour of the assessee and against the revenue in view of the decision of the Kolkata Bench 'B' of the Tribunal in the case of Samiran Majumdar (supra) wherein the Tribunal allowed the claim by observing as under :

    "Therefore, the printer and scanner were integral part of the computer system and were to be treated as computer for the purposes of allowing higher rate of depreciation, i.e., 60 per cent and accordingly, no interference was required in the order passed by the Commissioner (Appeals) on that account. Therefore, the effective ground remains with regard to deduction under section 80-IA in respect of inland ports."

    42. We accordingly uphold the order of the CIT(A) in allowing depreciation at the rate of 60 per cent on computer peripherals and accessories by treating them as computers.

    43. In the result all the appeals by the assessee and revenue are dismissed.

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