2017 (4) TMI 245 - AT - Income Tax

Tribunal grants deduction under section 80-IA(4) for airport cargo terminal maintenance

The Tribunal allowed the assessee's appeal regarding the denial of deduction under section 80-IA(4) of the Income Tax Act, 1961. The Tribunal held that ... Denial of deduction u/s 80-IA (4) - Held that:- Deduction is allowable not only for development of a infrastructure facility, but is also allowable in case of operating and maintaining or developing, operating and maintaining an infrastructure facility. In the case before us, the Assessing Officer and the CIT(A) have held that the assessee has not created any new infrastructure facility but is only doing the operation on the existing leased infrastructure facility developed by GHIAL. Therefore, it is now necessary to see whether the Cargo facility being operated and maintained by the assessee is an 'infrastructure facility' within the meaning of section 80IA(4) of the Act. Having regard to the rival contentions and to the fact that the claim of deduction u/s 80IA(4) has been disallowed in the earlier years and the Tribunal has already considered and held that the assessee was eligible for such a deduction, we are of the opinion that the assessee’s appeal needs to be allowed. GHIAL has constructed the Cargo building as per the specification of the Menzies and Menzies has provided the facilities at the cargo building and while GHIAL has leased out the cargo terminal to the assessee, Menzies has leased the facilities to the assessee and it is the responsibility of the assessee to operate and maintain the cargo facility in accordance with the obligation of GHIAL to operate and maintain the facility by virtue of the concession granted by the Govt. of India. Each assessee is eligible to claim deduction u/s 80IA(4)(i) of the Act only in relation to the activity carried on by it and there cannot be any duplication of the claim. Therefore, we are of the opinion that the 'Cargo facility' operated and maintained by the assessee is infrastructure facility eligible for deduction u/s 80IA(4) of the Act. - Decided in favour of assessee Issues Involved:1. Denial of deduction under section 80-IA(4) of the Income Tax Act, 1961.Issue-wise Detailed Analysis:1. Denial of Deduction under Section 80-IA(4):The primary issue in this case is the denial of a deduction amounting to Rs. 13,95,18,459/- under section 80-IA(4) of the Income Tax Act, 1961. The assessee contended that they satisfied all the criteria set out under the proviso to section 80-IA(4) and that they were entitled to the deduction. The key points raised by the assessee include:- The assessee is a Joint Venture company owned by a consortium of companies.- They entered into an Operation & Maintenance (O&M) Agreement for operating and maintaining the air cargo terminal at the Airport, which was approved by the Ministry of Civil Aviation (MoCA) and received necessary security clearance from the Bureau of Civil Aviation Security.- The O&M Agreement with the Concessionaire (airport operator) is deemed to have been entered with the Government of India and is coterminous with the Concession Agreement between the Concessionaire and the Government of India.- The infrastructure facility (building) was transferred to the assessee after 01.04.1999, and the assessee is utilizing it for operating and maintaining the air cargo terminal.- Section 80-IA(4) does not require the assessee to own the infrastructure facility but permits any enterprise carrying on the business of developing, operating, and maintaining any infrastructure facility to claim the benefit, provided other conditions are met.Tribunal's Findings:The Tribunal noted that a similar issue had arisen in the assessee’s own case for the assessment years 2009-10, 2010-11, and 2011-12, where the Tribunal had decided in favor of the assessee. The Tribunal found that the assessee was eligible for the deduction under section 80-IA(4) based on the following points:- The assessee is engaged in maintaining the cargo terminal at Shamshabad Airport, Hyderabad, and filed its return of income claiming the deduction under section 80-IA(4).- The Assessing Officer (AO) had disallowed the deduction on the grounds that the assessee had not entered into an agreement with the Central Government, State Government, or any statutory body, and that the assessee had not created any new infrastructure facility but was only operating the existing facility leased out to them.- The Tribunal referred to the proviso to section 80-IA(4)(i), which allows the transferee enterprise to claim the deduction if the infrastructure facility is transferred for operating and maintaining it on behalf of the Government.- The Tribunal also referred to various judicial precedents, including the decision in the case of Ocean Sparkle Ltd., which supported the view that the assessee is entitled to the deduction under section 80-IA(4) even if the agreement is with a developer who has an agreement with the Government.Conclusion:The Tribunal concluded that the assessee's appeal should be allowed, as the cargo facility operated and maintained by the assessee qualifies as an 'infrastructure facility' under section 80-IA(4). The Tribunal held that the assessee does not require a separate agreement with the Government, as the agreement with GHIAL, which is authorized by the Government, suffices. The Tribunal thus allowed the deduction under section 80-IA(4) for the assessee.Final Order:The assessee’s appeal was allowed, and the order was pronounced in the Open Court on 31st March 2017.