2025 (2) TMI 1142 - HC - Income Tax

Section 80IA(4) denial: private concessionor not qualifying authority, tax officer's revision under s.263 upheld, exemption disallowed

Pr. Commissioner of Income Tax- 2 Versus M/s. Celebi Delhi Cargo Management India Pvt. Ltd.

HC held that the respondent-assessee could not claim Section 80IA benefits. The court found the statute's language clear and that s.80IA(4) requires the ... Revision u/s 263 - whether the respondent-assessee could have claimed benefits flowing from Section 80IA? - HELD THAT:- We, with due respect, note that principles which guide us in evaluating whether a writ petition would be maintainable under Article 226 of the Constitution cannot be extrapolated to answer whether a transaction would fall within the scope of Section 80IA. The language in which Section 80IA stands couched is unambiguous. The scope and extent of its coverage would clearly be governed and regulated by sub-section (4) and which in unequivocal terms explains the nature of activities and contracts which could lead to a claim being laid for benefits being derived therefrom. Sub-section (4) is prefaced by the Legislature stipulating that Section 80IA would apply to an enterprise carrying on business of developing, operating and maintaining any infrastructure facility. While it was sought to be contended by the appellants that a Cargo Terminal does not find specific mention in the Explanation, we proceed on the premise that since “infrastructure facility” is defined to include an airport, a facility integral or supportive and concomitant to an airport would also be covered. Whether the concession which was granted by DIAL in favour of the respondent-assessee would qualify the principal part of sub-section (4)? - This would necessarily entail it being found and established that the respondent-assessee was an enterprise carrying on either a business or operating and maintaining an infrastructure facility in terms of and pursuant to an agreement entered into with either the Central or State Governments, a local authority or any other statutory body. It is here that the claim of the respondent falters and falls. We, firstly find ourselves unable to countenance or acknowledge DIAL to be either the Central or State Government, a local authority or for that matter a statutory body. DIAL came into existence pursuant to a bidding process which was initiated by AAI in avowed fulfilment of objectives underlying Section 12A of the AAI Act. The OMDA represents a grant which was made, a concession granted by that authority to a consortium of private entities. That cannot possibly lead to DIAL being elevated to the status of a statutory body. Merely because AAI granted a concession to DIAL and enabled it to discharge some of its functions in terms of the scheme of the AAI Act, the same would clearly not result in DIAL itself being viewed as a statutory body. Whether the respondent-assessee could be viewed to be an enterprise which had entered into an agreement with either the Central or State Governments, a local authority or a statutory body? - The construct of the concession clearly fails to meet the aforesaid primordial requirement as laid in place by Section 80IA(4). Once it is held that DIAL does not fall within the ambit of the principal qualifying provision, the concession which it granted to the respondent would also not qualify for benefits under Section 80IA. We are thus of the considered opinion that the PCIT was justified in doubting whether the benefits flowing from Section 80IA could have been claimed by the respondent-assessee. Tribunal has clearly erred in holding otherwise and interfering with the order which had been framed by the PCIT in valid exercise of powers flowing from Section 263 of the Act. Decided against assessee. 1. ISSUES PRESENTED and CONSIDEREDThe core legal question considered was whether the Income Tax Appellate Tribunal (ITAT) was legally justified in quashing the order passed by the Principal Commissioner of Income Tax (PCIT) under Section 263 of the Income Tax Act, which had found the Assessing Officer's (AO) order erroneous and prejudicial to the interest of revenue. The principal issue was whether the respondent-assessee was eligible to claim benefits under Section 80IA of the Income Tax Act, 1961, which pertains to deductions for profits and gains from certain industrial undertakings or enterprises engaged in infrastructure development.2. ISSUE-WISE DETAILED ANALYSISRelevant Legal Framework and Precedents:Section 80IA of the Income Tax Act, 1961, provides deductions for profits and gains derived from certain businesses, including those engaged in developing, operating, and maintaining infrastructure facilities. Sub-section (4) specifies the conditions under which these deductions can be claimed, including the requirement for an agreement with the Central or State Government, a local authority, or a statutory body for developing or operating and maintaining a new infrastructure facility.Court's Interpretation and Reasoning:The Court examined whether the respondent-assessee's agreement with Delhi International Airport Pvt. Ltd. (DIAL) qualified under Section 80IA(4). The PCIT had determined that the respondent-assessee did not meet the criteria because DIAL was not a statutory body or government entity, and the agreement did not involve developing a new infrastructure facility as defined by the statute.Key Evidence and Findings:The PCIT found that the AO failed to adequately verify the respondent-assessee's claim for deductions under Section 80IA. The PCIT highlighted that the agreement between the respondent-assessee and DIAL did not confer ownership rights or involve an agreement with a government or statutory body. Furthermore, the activities undertaken by the respondent-assessee did not fall within the scope of 'developing, operating, and maintaining' an infrastructure facility as required by Section 80IA(4).Application of Law to Facts:The Court applied the legal framework of Section 80IA(4) to the facts, emphasizing that the respondent-assessee's agreement with DIAL did not meet the statutory requirements. The Court noted that DIAL, being a consortium of private entities, could not be considered a statutory body or government entity. Hence, the concession granted by DIAL to the respondent-assessee did not qualify for the benefits under Section 80IA.Treatment of Competing Arguments:The respondent-assessee argued that DIAL, having stepped into the shoes of the Airports Authority of India (AAI) through the Operation Management and Development Agreement (OMDA), should be considered a statutory body. The Court rejected this argument, stating that DIAL's status as a private consortium did not elevate it to a statutory body, and thus, the agreement with the respondent-assessee did not satisfy the conditions of Section 80IA(4).Conclusions:The Court concluded that the PCIT was justified in its decision, as the respondent-assessee did not meet the eligibility criteria under Section 80IA(4). The Tribunal's decision to quash the PCIT's order was erroneous, as it failed to consider the statutory requirements and the nature of the agreement between the respondent-assessee and DIAL.3. SIGNIFICANT HOLDINGSPreserve Verbatim Quotes of Crucial Legal Reasoning:The Court emphasized that 'principles which guide us in evaluating whether a writ petition would be maintainable under Article 226 of the Constitution cannot be extrapolated to answer whether a transaction would fall within the scope of Section 80IA.'Core Principles Established:The decision clarified that for an enterprise to claim benefits under Section 80IA, it must have an agreement with a government or statutory body for developing or operating and maintaining a new infrastructure facility. Private entities or consortia like DIAL do not qualify as statutory bodies under this provision.Final Determinations on Each Issue:The Court determined that the Tribunal erred in its judgment by failing to consider the statutory requirements under Section 80IA. The appeal was allowed, the Tribunal's order was set aside, and the PCIT's order was restored, affirming that the respondent-assessee was not eligible for the claimed deductions.