Infrastructure facility deduction turns on whether airport agreements with AAI amount to operating and maintaining the facility.

Section 80-IA(4) allows deduction for an enterprise developing, operating or maintaining an infrastructure facility, if the clause (a), (b) and (c) conditions are met. The note explains that an airport is an infrastructure facility and that the ownership condition was not disputed. It then examines whether memoranda and agreements with the Airports Authority of India, a statutory body responsible for airport management and allied services, amounted to an agreement for operating and maintaining the airport. On that reasoning, installation, calibration, maintenance and operational assistance required under the arrangements could satisfy clause (b), and the airport need not already be fully operational before the agreement qualifies.

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Issues: Whether the agreement with the Airports Authority of India satisfied clause (b) of section 80-IA(4) of the Income-tax Act, 1961 for deduction in respect of an infrastructure facility.

Analysis: Section 80-IA grants deduction to an enterprise developing, operating or maintaining an infrastructure facility, subject to the conditions in clause (a), clause (b) and clause (c) of sub-section (4). The airport was an infrastructure facility and the ownership condition was not in dispute. The controversy was whether the memoranda and agreements with the Airports Authority of India amounted to an agreement with a statutory body for operating and maintaining the airport. The Airports Authority of India Act, 1994 showed that the Authority was a statutory body charged with managing airports and providing air traffic and allied services. The agreements required the Authority to perform those very functions for the airport, including installation, calibration, maintenance and operational assistance. The statute did not require the airport to be already fully operational before such an agreement could qualify under clause (b); the arrangements necessary to make the airport operational could themselves constitute operating and maintaining the infrastructure facility.

Conclusion: The agreements satisfied clause (b) of section 80-IA(4), and the Tribunal was wrong in holding otherwise.

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