Airport ground handling qualifies as infrastructure activity where concession arrangements operate under statutory authority for section 80IA(4) relief.

Ground handling operations at airports were treated as integral to airport infrastructure because they supported passenger movement, aircraft servicing, baggage handling and loading functions, and were carried on with operational responsibility under airport concession arrangements; on that basis, the activity was regarded as developing, operating or maintaining an infrastructure facility for section 80IA(4). Agreements with airport concessionaires were also held to satisfy the statutory requirement of an arrangement with a government or statutory body where the concessionaire functioned under the authority of the Airports Authority of India, a statutory body, and the substantive control remained statutory in character. The deduction claim was therefore sustained.

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Issues: (i) Whether the assessee's ground handling operations at airports qualified as the development, operation or maintenance of an infrastructure facility for deduction under section 80IA(4) of the Income-tax Act, 1961. (ii) Whether agreements with airport concessionaires functioning under the authority of the Airports Authority of India satisfied the requirement of an agreement with the Central Government, a State Government, a local authority or another statutory body under section 80IA(4).

Issue (i): Whether the assessee's ground handling operations at airports qualified as the development, operation or maintenance of an infrastructure facility for deduction under section 80IA(4) of the Income-tax Act, 1961.

Analysis: Ground handling was found to be an essential and inextricable part of airport infrastructure, because it enabled passenger movement, aircraft servicing, baggage handling, loading and unloading, and other operational functions without which the airport could not function effectively. The activities were carried on pursuant to airport policies and concession arrangements and involved deployment of equipment, manpower and operational responsibility for the airport facility. On that basis, the activities were treated as falling within the ambit of developing, maintaining and operating an infrastructure facility.

Conclusion: The issue was decided in favour of the assessee.

Issue (ii): Whether agreements with airport concessionaires functioning under the authority of the Airports Authority of India satisfied the requirement of an agreement with the Central Government, a State Government, a local authority or another statutory body under section 80IA(4).

Analysis: The airport operators were held to function under the authority of the Airports Authority of India, which is a statutory body under the Airports Authority of India Act, 1994, and the relevant airport arrangements traced their authority to statutory permissions and government policy. The Court treated the concession framework and the underlying statutory control as sufficient compliance with the statutory requirement, and relied on the principle that the form of the intermediary should not defeat the legislative intent where the substantive control and public function remain statutory in character.

Conclusion: The issue was decided in favour of the assessee.

Final Conclusion: The Revenue's challenge to the allowance of deduction under section 80IA(4) failed, and the assessee's claim was sustained on the footing that its airport ground handling business was eligible infrastructure activity under the statutory scheme.

Ratio Decidendi: For section 80IA(4), a concession-based airport arrangement may satisfy the statutory agreement requirement where the concessionaire functions under statutory authority, and ground handling services that are integral to airport functioning can constitute operating and maintaining an infrastructure facility.

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