Full Judgment Text
R EPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 8900 OF 2012
Commissioner of Income Tax, Delhi1 …..Appellant(s)
Versus
M/s Container Corporation of India Ltd. …..Respondent(s)
WITH
CIVIL APPEAL No. 8901 of 2012
CIVIL APPEAL No. 4409 of 2014
CIVIL APPEAL No. 4983 of 2015
CIVIL APPEAL No. 8546 of 2015
CIVIL APPEAL No. 66 of 2016
CIVIL APPEAL No. 8034 of 2016
CIVIL APPEAL No. 6982 of 2016
CIVIL APPEAL No. 6635 of 2016
CIVIL APPEAL No. 9651 of 2016
CIVIL APPEAL No. 7211 of 2016
CIVIL APPEAL No. 7210 of 2016
CIVIL APPEAL No. 7209 of 2016
CIVIL APPEAL No. 8033 of 2016
CIVIL APPEAL No. 8032 of 2016
CIVIL APPEAL No. 10336 of 2016
CIVIL APPEAL NO. 4487 OF 2018
(Arising out of Special Leave Petition (C)
Signature Not Verified
Digitally signed by
ANITA MALHOTRA
Date: 2018.09.22
12:42:53 IST
Reason:
No. 24512 OF 2016)
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CIVIL APPEAL No. 8755 of 2016
CIVIL APPEAL No. 9158 of 2016
CIVIL APPEAL No. 9157 of 2016
CIVIL APPEAL No. 8352 of 2016
CIVIL APPEAL No. 9159 of 2016
CIVIL APPEAL No. 10307 of 2016
CIVIL APPEAL No. 9744 of 2016
CIVIL APPEAL No. 9743 of 2016
CIVIL APPEAL No. 10308 of 2016
CIVIL APPEAL NO. 4543 OF 2018
(Arising out of Special Leave Petition (C)
No. 30630 OF 2016)
CIVIL APPEAL No. 10662 of 2016
CIVIL APPEAL No. 11709 of 2016
CIVIL APPEAL (C) NO. 4484 OF 2018
(Arising out of Special Leave Petition (C)
No.11067 OF 2018 @ SLP(C)... (CC) No. 3354 OF 2017)
CIVIL APPEAL No. 1441 of 2017
CIVIL APPEAL No. 4458 of 2017
CIVIL APPEAL NOs. 44934494 OF 2018
(Arising out of Special Leave Petition (C)
Nos. 1705617057 OF 2017)
CIVIL APPEAL No. 4459 of 2017
CIVIL APPEAL No. 5571 of 2017
CIVIL APPEAL No. 5573 of 2017
CIVIL APPEAL No. 6800 of 2017
CIVIL APPEAL No. 11075 of 2017
CIVIL APPEAL NO. 4499 OF 2018
2
(Arising out of Special Leave Petition (C)
No. 18849 OF 2017)
CIVIL APPEAL No. 9364 of 2017
CIVIL APPEAL No. 9487 of 2017
CIVIL APPEAL No. 9277 of 2017
CIVIL APPEAL No. 10236 of 2017
CIVIL APPEAL No. 14900 of 2017
CIVIL APPEAL No. 16162 of 2017
CIVIL APPEAL No. 11202 of 2017
CIVIL APPEAL NO. 4548 OF 2018
(Arising out of Special Leave Petition (C)
No. 23116 OF 2017)
CIVIL APPEAL No. 15028 of 2017
CIVIL APPEAL No. 11117 of 2017
CIVIL APPEAL No. 15033 of 2017
CIVIL APPEAL No. 11160 of 2017
CIVIL APPEAL NO. 4547 OF 2018
(Arising out of Special Leave Petition (C)
No. 23115 OF 2017)
CIVIL APPEAL No. 15494 of 2017
CIVIL APPEAL No. 15497 of 2017
CIVIL APPEAL No. 17315 of 2017
CIVIL APPEAL NO. 4655 OF 2018
(Arising out of Special Leave Petition (C)
No. 11525 OF 2018)
(DIARY NO. (s) 26081 of 2017)
CIVIL APPEAL No. 17534 of 2017
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CIVIL APPEAL No. 17317 of 2017
CIVIL APPEAL No. 17318 of 2017
CIVIL APPEAL No. 18272 of 2017
CIVIL APPEAL No. 19491 of 2017
CIVIL APPEAL No. 19535 of 2017
CIVIL APPEAL No. 19935 of 2017
CIVIL APPEAL NO. 4645 OF 2018
(Arising out of Special Leave Petition (C)
No. 32825 OF 2017)
J U D G M E N T
R.K.Agrawal, J.
1) Leave granted.
2) The present appeal has been filed against the judgment
and order dated 11.05.2012 passed by the High Court of Delhi
in ITA Nos.1411 of 2009, ITA Nos. 967 and 968 of 2011
wherein the Division Bench of the High Court while allowing
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the above appeals filed by the respondent herein set aside the
order dated 27.02.2009 passed by the Income Tax Appellate
Tribunal (in short ‘the Tribunal’) holding that the respondent
herein is entitled to claim the benefit of Section 80IA of the
Income Tax Act,1961(in short ‘the IT Act’).
3) Brief facts:
(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 200304 to 200506. The respondent herein filed the
returns on the income for all these years and claimed
deduction under various heads including deduction under
Section 80IA of the IT Act. This issue is with regard to the
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deduction claimed under Section 80IA 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. 325/0506 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
80IA 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 80IA can be claimed with regard to
the rolling stocks of the company but not with regard to the
ICDs.
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(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 80IA of the
IT Act. Being aggrieved by the judgment and order dated
11.05.2012, the Revenue has preferred this appeal before this
Court.
4) Heard learned senior counsel for the parties and perused
the factual matrix of the case.
Points for consideration:
5) The only point for consideration before this Court is
whether in the facts and circumstances of the case the Inland
Container Depots (ICDs) under the control of the Respondent,
during the relevant period, qualified for deduction under
Section 80IA(4) of the IT Act or not.
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Rival contentions:
6) Learned senior counsel appearing for the appellant
contended that the High Court was not right in holding that
the Respondent is entitled to deduction under Section 80IA of
the IT Act as the activities undertaken by the assessee cannot
be said to fall within Explanation (d) of Section 80IA(4)
defining the term infrastructure facility.
7) Learned senior counsel further contended that the High
Court was wrong in placing reliance on the Notification dated
01.09.1998 issued by the Central Board of Direct Taxes
(CBDT) to hold that the Respondent is allowed to claim
deduction under Section 80IA of the IT Act as the power of
the said Board was taken away by the Finance Act, 2001 with
effect from 01.04.2002. Learned senior counsel further
contended that in view of the aforesaid amendment, the
Notifications issued by the CBDT with regard to treating the
ICDs as infrastructure facility were applicable only upto the
Assessment Year 200203.
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8) Learned senior counsel finally contended that the ICDs
cannot be termed as ports or inland ports within the meaning
of Section 80IA(4) so as to allow them to claim deduction
under the said Section and the judgment rendered by the High
Court is erroneous in the eyes of the law and is liable to be set
aside.
9) Per contra , learned senior counsel appearing for the
Respondent contended that the High Court has rightly set
aside the judgment and order dated 27.02.2009 passed by the
Tribunal. Learned senior counsel further contended that once
the ICDs have been notified validly by the CBDT, by virtue of
the powers conferred upon them, the fact that at a later point
of time the power was taken away does not put an end to the
validity or effect of the notification and as per the relevant
Section as it stood at the time when the notification was
issued, the Respondent was eligible for deduction for a period
of 10 successive assessment years which covers the
Assessment Years 200304 to 200506 which are the years
under appeal. Learned senior counsel finally contended that
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the judgment and order passed by the High Court does not
call for any interference.
Discussion:
10) As the whole point in dispute revolves around the ICDs,
it would be appropriate to have an understanding about the
same. 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
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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 country’s 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 80IA of the IT Act.
Section 80IA of the IT Act talks about deduction in respect of
profits and gains from industrial undertaking or enterprises
engaged in the infrastructure development etc. The said
amendment for the first time brought a provision under which
a percentage of profits derived from the operation of
infrastructure facility was allowed a deduction while
computing the income of the assessee. A ten years tax
concession allowed to the enterprises in accordance with the
provisions of the Section subject to fulfillment of conditions
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given therein, which develops, maintains and operates any
new infrastructure facility such as roads, highways,
expressways, bridges, airports, ports and rail system or any
other public facility of similar nature as notified.
12) The relevant portion of Section 80IA (as it stood then)
reads as under:
“Section 80IA(4A):This section applies to:
any enterprise carrying on the business of developing,
maintaining and operating any infrastructure facility
which fulfills the following conditions, viz.,
Section 80IA(5) clause(ia): in the case of enterprise
referred to in subsection (4A) hundred percent of
profits and gains derived from such business for the
initial five assessment years and thereafter thirty per
cent of such profits and gains.”
13) The term infrastructure facility had also been defined
which at the relevant time stood as follows:
“Section 80IA(12)(ca): Infrastructure facility means:
a road, highway, bridge, airport, port or rail system or
any other public facility of similar nature as may be
notified by the Board in this behalf in Official Gazette;”
The said provision gives the power to the Board to notify
certain other enterprises which can avail the benefit of Section
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80IA of the IT Act, which do not fall within any of the
specified categories but carries out activities of similar nature.
14) Further, Central Board of Direct Taxes (CBDT), in
exercise of its power under Section 80IA(12)(ca), vide
Notification No.S.O.744(E) dated 01.09.1998 notified ICDs and
CFSs as infrastructure facility.
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. Now, the
definition reads as under:
“Infrastructure Facility means road, bridge, airport, port,
inland waterways and inland ports, rail system by any other
public facility of similar nature as may be notified by the
Board in this behalf in official Gazette.”
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. The new explanation
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to Section 80IA(4) of the IT Act as is substituted by the
Finance Act, 2001 reads as under:
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 system;
(d) a port, airport, inland waterways or inland port;
17) It was contended on behalf of the appellant that the High
Court erred in relying on the Notification issued by CBDT to
hold that the enterprises holding ICDs are allowed to claim
deductions under Section 80IA of the IT Act. As the said
power of the Board was specifically taken away by the
amendment made by Finance Act, 2001, in light of the said
amendment, the Notifications which were issued by the CBDT
would cease to operate after the Assessment Year 200203.
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
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legislature that the Notifications issued by the Board earlier
are of no effect after 200203, 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 200203.
19) Learned senior counsel for the appellant contended that
the High Court committed a grave error in holding ICDs as
Inland Ports. It was further contended that the ICDs are never
understood to fall in the category of ‘Inland Port’ under the
scheme of the IT Act. The argument in support of this
contention is that if the word ‘Inland Port’, as used in the
Explanation attached to Section 80IA(4) of the IT Act defining
‘infrastructure facility’ includes ICDs, there would have been
no need for the CBDT to separately exercise its power given
under the said Section, as it stood then, to notify it as
infrastructure facility. However, the argument does not hold
much weight behind it as the Notification which was issued by
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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 80IA(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.
21) Moving further to the issue whether the ICDs can be
termed as Inland Ports so as to entitle deduction under
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Section 80IA of the IT Act. 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 80IA(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
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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 80IA 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 80IA 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
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the Customs department with regard to different ICDs located
at different places.
23) In light of the forgoing discussion, we are of the view that
judgment of the High Court does not call for any interference
and, hence, the appeal is accordingly dismissed. All the
connected appeals are disposed of accordingly. The parties to
bear cost on their own.
…….....…………………………………J.
(R.K. AGRAWAL)
…….…………….………………………J.
(ABHAY MANOHAR SAPRE)
NEW DELHI;
APRIL 24, 2018.
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