आदेश/ORDER

PER: SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER:-

1. The captioned cross-appeals have been preferred by the Assessee and the Revenue against the separate orders of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as ‘CIT(A)’], dated 19/09/2022, 30/01/2023 & 02/02/2023 pertaining to different Assessment Years (AYs) 2017-18, 2018-19 & 2019-20 respectively. Since common facts and issues are involved in all these appeals, these were heard together and are being disposed of by a consolidated order.

2. The brief facts of the case are that the assessee, Gujarat Maritime Board, filed its return of income for Assessment Year 2017-18 claiming exemption under sections 11 and 12 of the Income-tax Act, 1961 ("the Act") and treating its capital expenditure as application of income. The case was selected for complete scrutiny and during the course of assessment proceedings the Assessing Officer examined in depth the nature of the assessee’s statutory functions, its audited accounts, the sources of its receipts, the quantum of surplus generated, the pattern of its investments, the claim of depreciation on fixed assets and the treatment of tax deducted at source in the computation of income.

3. During assessment, the Assessing Officer observed that the assessee was constituted under the Gujarat Maritime Board Act, 1981 for development and management of minor ports in the State and that its objects fell within the limb of “advancement of any other object of general public utility”. However, after analysing the income and expenditure account and various schedules, he found that the assessee was earning substantial receipts from port infrastructure facilities, marine services, clearing and stevedoring, storage and land rentals, harbour craft rentals, ship recycling and ship-building yards, other port services and administrative charges from the State Government. The Assessing Officer observed that the total receipts from such activities were about Rs. 550 crores, that the surplus for the year exceeded Rs. 405 crores and that accumulated reserves stood at more than Rs. 2,861 crores. According to the Assessing Officer, the scale of operations, recurring surpluses and charging of various fees showed that the activities were being carried on in a commercial manner comparable to private port operators in Gujarat. Applying the amended proviso to section 2(15) of the Act, the Assessing Officer held that the assessee was hit by the bar contained therein and, by virtue of section 13(8) of the Act, and accordingly the assessee was not entitled to exemption under sections 11 and 12 of the Act.

4. In addition to denying exemption, the Assessing Officer examined the investments made by the assessee in various companies such as GACL, GSFC, GCPTCL and Gujarat State Petronet Ltd. On the basis of shareholding patterns available in the public domain, the Assessing Officer held that these concerns were no longer “public sector companies” as defined in section 2(36A) of the Act and that the investments were therefore not in modes specified under section 11(5) of the Act. The Assessing Officer invoked section 13(1)(d) of the Act on this ground as well and held that, independently of the proviso to section 2(15) of the Act, the assessee was disentitled to exemption under sections 11 and 12 of the Act.

5. The Assessing Officer further noticed that the assessee had claimed depreciation of Rs. 30,47,53,583/- on fixed assets even though the cost of those assets had already been treated as application of income in earlier years while claiming exemption under section 11 of the Act. Although the assessee relied upon favourable appellate orders in its own case, the Assessing Officer observed that the Department had not accepted those decisions and that appeals on the same issue were pending before the High Court in earlier assessment years. The Assessing Officer recorded that the Department was consistently