2018 (6) TMI 511 - AT - Income Tax

Tribunal upholds assessee's claim for deduction under section 80IA, dismissing Revenue's appeals

The Tribunal upheld the CIT(A)'s decision, dismissing the Revenue's appeals. The Tribunal found that the assessee met the requirements of section 80IA ... Denial of deduction u/s 80-IA (4) - assessee did not enter into an agreement with any government/statutory body which is a pre-requisite for claiming deduction - 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 - 'Cargo facility' operated and maintained by the assessee is infrastructure facility eligible for deduction u/s 80IA(4). The assessee does not require a specific and independent agreement with the Government for claiming deduction under section 80IA(4) Thus following the decision of ITAT in assessee’s own case for AY 2012-13 [2017 (4) TMI 245 - ITAT HYDERABAD] we uphold the order of the CIT(A) in both the years under consideration and dismiss the grounds raised by the revenue in both the AYs under consideration - Decided in favor of assessee. Issues Involved:1. Whether the CIT(A) erred both on facts and in law.2. Whether the CIT(A) was correct in law in allowing the deduction u/s 80IA despite the assessee not entering into an agreement with any government/statutory body.3. Whether the CIT(A) was correct in law in allowing the deduction u/s 80IA despite the assessee not owning the facility and only leasing it from GHIAL.Issue-wise Detailed Analysis:1. Whether the CIT(A) erred both on facts and in law:The Revenue argued that the CIT(A) made errors both factually and legally in allowing the deduction under section 80IA. The Tribunal reviewed the CIT(A)'s decision and found it consistent with the ITAT's earlier decision in the assessee's own case for AY 2012-13. The Tribunal upheld the CIT(A)'s order, dismissing the Revenue's grounds.2. Whether the CIT(A) was correct in law in allowing the deduction u/s 80IA despite the assessee not entering into an agreement with any government/statutory body:The Tribunal examined whether the assessee's agreement with GHIAL, rather than a direct agreement with the government, met the requirements of section 80IA(4). The assessee argued that GHIAL, authorized by the Government of India, granted them rights, thus fulfilling the legal requirement. The Tribunal referred to the proviso to section 80IA(4)(i) and previous decisions, including Ocean Sparkles Ltd., which supported the view that a direct agreement with the government was not necessary if the primary developer (GHIAL) had such an agreement. The Tribunal concluded that the assessee's agreement with GHIAL sufficed for the deduction under section 80IA.3. Whether the CIT(A) was correct in law in allowing the deduction u/s 80IA despite the assessee not owning the facility and only leasing it from GHIAL:The Tribunal considered whether the leased cargo facility qualified as an 'infrastructure facility' under section 80IA(4). The Tribunal found that GHIAL developed the airport, including the cargo facility, and assigned its operation and maintenance to the assessee. Citing decisions like AL Logistics (P) Ltd. and Menzies Aviation Bobba (Bangalore) Pvt. Ltd., the Tribunal held that the cargo facility, integral to the airport, qualified as an infrastructure facility. The Tribunal also noted that section 80IA(4) allows deductions for operating and maintaining infrastructure facilities, not just developing them. Hence, the assessee's leased facility met the criteria for the deduction.Conclusion:The Tribunal upheld the CIT(A)'s decision, finding it consistent with prior rulings and the legal framework of section 80IA(4). The appeals filed by the Revenue were dismissed, affirming the assessee's eligibility for the deduction under section 80IA for both AY 2013-14 and 2014-15.Result:Both appeals of the Revenue were dismissed.