TaxTMI 
TaxTMI 
2017 (8) TMI 1190
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....of the case the Tribunal erred in setting aside the decision of the Commissioner of Income Tax (Appeals) and holding that Annexure C agreement does not constitute the agreement specified in clause (b) of subsection (4) and it relates only to facilities inside the Airport, ignoring that the said equipments and high-tech services provided by Annexure C are mandatory statutory requirements for operation and maintenance of an Airport? 3. Whether on the facts and in the circumstances of the case the Tribunal was right in law in interfering with the order of the Commissioner of Income Tax (Appeals)? 2. The appellant company has established an airport. In the assessment years 2005-2006, 2006-2007 and 2007-2008, the company claimed the benefit of deduction under Section80-IA of the Income Tax Act ('IT Act'). The Assessing Officer took the view that the assessee did not satisfy all the conditions specified in sub-section (4) of 80-IA and accordingly rejected the claim of the assessee. Appeals were filed before the Commissioner of Income Tax (Appeals) and the first appellate authority held that the MOU entered into by the assessee with the Airport Authority of India could be taken....
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.... It is also to be considered whether Annexures C and K, the MOU and agreement respectively, satisfied the requirements of clause (b) of sub-section (4) of Section 80-IA of the IT Act. Section 80-IA(1) provides that where gross total income of an assessee includes any profits and gains derived by an undertaking or an enterprise from any business referred to in sub-section (4), there shall, in accordance with and subject to the provisions of the Section, be allowed, in computing the total income of the assessee, a deduction of an amount equal to hundred per cent of profits and gains derived from such business for ten consecutive assessment years. Sub-section (2) provides that the deduction in terms of sub-section (1) may, at the option of the assessee, be claimed by the assessee for any ten consecutive assessment years out of fifteen years beginning from the year in which the undertaking or the enterprise develops and begins to operate any infrastructure facility referred to in clause (iii) of sub-section (4). 7. Sub-Section (4) provides that Section 80-IA would apply to any enterprise carrying on the business of (i) developing or (ii) operating and maintaining or (iii) developing, ....
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....ection 12(1) provides that subject to the Rules, if any, made by the Central Government in this behalf, it shall be the function of the Authority to manage the Airports, the civil enclaves and aeronautical communication stations efficiently. Section 12(2) further provides that it shall be the duty of the Authority to provide air traffic service and air transport service at any airport and civil enclaves. The Authority is also empowered, among others, to plan, procure, install and maintain navigational aids, communication equipments, beacons and ground aids at the airports and at such locations as may be considered necessary for safe navigation and operation of aircrafts, vide clause (b) of sub-Section (3) of the Act. Airport has been defined in Section 2(b) as a landing and taking off area for aircrafts, usually with runways and aircraft maintenance and passenger facilities and includes aerodrome as defined in sub-section (2) of Section 2 of the Aircraft Act, 1934. The air transport service, which the Airport Authority is duty bound to provide under Section 12 (2), is defined in Section 2(e) as any service for any kind of remmuneration, whatsoever, for the transport by air of perso....
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....unication Services, Search & Rescue and other associated service as per the ICAO guidelines. 6. AAI would prepare all laid-down procedures, charts, etc as may be necessary for safe aircraft operation at the airport. 7. AAI would maintain an Anti-hijacking Control Center to deal with contingencies arising out of hijacking of aircraft or any such act. 8. AAI would maintain its administrative office at the airport as may be necessary to support its operational activities. 9. AAI would deploy manpower as considered necessary by it for providing the services as detailed above. 11. Although the MOU was to remain valid for a period of one year from the date of its execution and the parties were to enter into a formal agreement within the said period, it would appear that the parties carried on their activities on the basis of the MOU until they entered into Annexure K, a comprehensive agreement dated 25.02.2010, which is given effect to from 16.09.2006. The obligations of the Airport Authority as enumerated under the agreement read thus: OBLIGATIONS OF AAI 2.1 Operating and Future Commissioning Services 2.2 During the Operational and any Future Commissioning services for t....
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....(i) as a minimum to comply with the relevant provisions contained in the relevant ICAO Annexes and documents (as amended from time to time) and (ii) as a result of expansion/upgradation of the airport required by it. 2.5.4 Purchase at its own cost such equipment as may be the requirement from time to time to enable AAI to provide the CNS/ATM Services at the Airport. 2.5.5 Procure meteorological facilities and services for provision of CNS/ATM Services at the Airport in accordance with the practices established or recommended from time to time pursuant to the Chicago Convention or as notified by Govt. of India from time to time. 2.5.6 Relocate AAI Equipment at its own cost and in coordination with CIAL for its operative convenience provided such relocation does not affect the CIAL obligations and or smooth operation of the airport. 2.5.7 AAI shall provide at its own cost all the communication lines/facilities, telephone lines, internet services, broadband service etc. for the smooth functioning of the CNS/ATM services. 2.5.8 AAI shall provide at its own cost the vehicles required for the transportation of men and materials for the operation, maintenance, installation, test....