Infrastructure facility deduction for airport hangar operations allowed where aircraft maintenance structure formed integral part of the airport.

Income from aircraft repair and maintenance carried on through a hangar developed under a BOT arrangement at an airport was treated as eligible for deduction under section 80-IA(4). The hangar was regarded as an essential and integral part of the airport infrastructure, because the material showed that an airport includes aircraft maintenance facilities and related aerodrome structures. The reasoning also accepted that the deduction is not limited to development of an entire infrastructure facility; it can extend to development of a part of the facility where that part itself forms an integral component. The disallowance was rejected.

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Issues: Whether the income derived from repair and maintenance of aircraft through hangars developed under a BOT arrangement at the airport qualified for deduction under section 80-IA(4) of the Income-tax Act, 1961.

Analysis: The hangar was developed pursuant to an agreement with the airport authority and was to be used exclusively for aircraft maintenance, servicing and repairs. The statutory definition of infrastructure facility includes an airport, and the material on record showed that an airport includes aircraft maintenance facilities and aerodrome structures. The hangar was therefore treated as an essential and integral part of the airport facility, not as a merely incidental structure. The reasoning also accepted that deduction under section 80-IA(4) is not confined to development of the entire infrastructure facility, but can extend to development of a part of such facility when that part itself forms an integral component of the infrastructure.

Conclusion: The claim for deduction under section 80-IA(4) was held allowable in respect of income from repair and maintenance operations carried on through the hangar, and the disallowance was rejected.

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