TaxTMI 
TaxTMI 
2019 (12) TMI 360
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....08, 2008-09, 2009-10 and 2010-11. The appeals filed by the assessee in ITA Nos. 344/Coch/2014, 396/Coch/2014 and 310/Coch/2015, arising out of assessment orders passed u/s. 143(3) of the I.T. Act and 143(3) r.w.s. 263 of the I.T. Act respectively are directed against the different orders of the CIT(A)-II, Kochi and pertain to the assessment years 2008-09 to 2010-11. ITA Nos. 190 to 192/Coch/2017: Revenue's'Appeals: AYs 2005-06 to 2007-08 2. The first common ground in Revenue's appeals in ITA Nos. 190 to 192/Coch/2017 for the assessment years 2005-06 to 2007-08 is with regard to allowability of deduction u/s. 80IA on account of non compliance of agreement and commencement u/s. 80IA(4)(i)(b) of the I.T. Act and 80IA(4)(i)(c) of the Act. 3. The facts of the issue as narrated in ITA No. 190/Coch/2017 for the assessment year 2005-06 are that the assessee claimed deduction u/s. 80IA in their return of income for the assessment year 2005-06. The Assessing Officer disallowed the claim on the ground that no agreement had been entered into for operation of the airport and that the airport started operations before 01/04/1995, which resulted in the non-compliance of conditions specif....
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.... of clause (b) and clause (c) of section 80IA(4)(i) of the I.T. Act. On appeal, the CIT(A) reversed the order of the Assessing Officer and allowed the claim of the assessee u/s. 80IA of the Act. This issue was the subject matter of appeals of both the assessee and the revenue before the Jurisdictional High Court against the original order of the Tribunal ITA Nos. 807/Coch/2008, 375/Coch/2009 and 392/Coch/2010 supra. In the meantime, on assessee's appeals, the High Court vide consolidated order in ITA Nos. 163,169 &176 of 2012 dated 07/08/2017 set aside the order of the Tribunal and held that the assessee had complied with section 80IA(4)(i)(b) of the Act. The order of the High Court was given effect to by the Assessing Officer vide order passed u/s. 143(3) r.w.s. 260 of the I.T. Act dated 31/12/2018 and allowed deduction u/s. 8IA(4)(i)(b) of the I.T. Act. Further, the SLP filed by the Department against the order of the High Court was rejected by the Supreme Court. Hence, the matter has attained finality and covered in favor of the assessee and against the Department. 3.2.1 Against this, the Revenue is in appeal before us. 3.3 We have heard the rival submissions and peruse....
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....cture facility. Necessarily, therefore, the agreement and the installation of the equipments for the operation of the airport should precede the commencement of operation of the infrastructure facility to avail the benefit of deduction. The statutory provision and the agreement being as above, we cannot uphold the conclusion of the Tribunal that both the agreements could not constitute agreement! specified in clause-(b). Accordingly, the findings of the Tribunal with reference to clause(b) of sub-section (4) of Section 80-IA are set aside. 15. The matter will stand remitted to the Assessing Officer for fresh examination as ordered by the Tribunal in paragraph 7 of its order." In view of the above judgment of the High Court, the assessee is entitled for deduction u/s. 80IA(4)(i)(b) of the I.T. Act. Being so, we do not find any infirmity in the findings in para 15 of the judgment of the High Court in relation to section 80IA(i)(c) of the I.T. Act and not related to section 80IA(4)(i)(b) of the I.T. Act for these assessment years. Thus, this ground of appeals of the Revenue for these assessment years is rejected. 4. The next common ground in ITA Nos. 190 to 192/Coch/201....
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....T (A) considered this issue in the light of the directions of the Tribunal for earlier years, and held that the assessee had started operating and maintaining the airport after 1.4.1995 and complied with section 80 IA (4) (i) (c). The Ld. AR submitted that an airport would start operating and maintaining only when it is authorised to operate by the regulatory authority of the country and aircrafts are allowed to land /take off from the airport. Assessee airport was granted provisional authorization to operate by Government of India, Ministry of Civil Aviation as per the order dated 9th June 1999. The final authorization was issued on 10.06.1999. Subsequently, the Government of India notified by way of Notification dated 22nd June 1999, that all civil commercial flights will operate (to and from) the assessee airport with effect from 1st July 1999. Thus, it was clear that the assessee had started operating and maintaining the Airport only from 1st July 1999, and hence, the assessee has satisfied the condition under section 80 (IA)(4)(i)(c) of the I.T. Act. The High Court had confirmed the order remanding the ground to the AO for fresh adjudication and the Assessing Officer had gi....
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.... the I.T. Act. The relevant portion reads as follows: "10. The question to be considered is whether such rent and services and royalty received by the assessee would qualify to be 'profits and gains' derived from the business of the assessee. We have referred to section 80 IA and indicated that what is permitted to be deducted in computing the total income of the assessee is an amount equal to 100% of profits and gains derived from such business, viz. the business of operating an airport. Therefore, the first issue to be considered is whether the rent and services and royalty received by the assessee are profits and gains derived by the assessee from its business. The term 'profit and gains derived', used in Section 801A, is also used in other provisions of the Income Tax Act. The Apex Court in Cambay Electric Supply Industrial Co.Ltd. v CIT ([1978] 113 ITR 84), referring to section 80J (since omitted by Finance Act (No.2, 1996), inter alia held thus: "In this connection it may be pointed out that whenever the legislature wanted to give a restricted meaning in the manner suggested by the learned Solicitor-General it has used the expression 'derived....
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....by the judgment of the Court of Appeal and the copies of agreements which were seen to have been produced. Necessarily, therefore, the orders will have to be set aside and the matter has to be remitted to the assessing officer to reconsider each and every item of the income derived by the assessee towards rent and services and royalty and decide whether the income of the assessee was derived by it from its core business. 15. Therefore, the orders of the Assessing Officer, appellate authority and the Tribunal, in so far as it is decided that the income derived by the assessee from royalty, rent and services are assessable under the head 'income from business' are set aside. The matter will stand remitted to the assessing officer, who will issue notice to the assessee and decide the matter afresh in the manner as indicated above. The questions of law framed are answered in the above manner and the appeals are accordingly disposed of." 5.6 The Assessing Officer had already given effect to the above order of the High Court vide order dated 31/12/2008 by allowing the claim of the assessee u/s. 80IA of the Act. Hence, the department cannot contest this issue ....
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....lty from Air India for Ground handling 195,224,205.22 Royalty from Fuel/BPCL for aircraft fuelling 4,530,104.14 Royalty Terminal Handling Services & Valet Services 3,016.631.56 Total 204,306,040.92 7.3 However, it was observed that the following heads of royalty income are incidental and related to providing better passenger services, but they cannot be treated as derived from airport operations. These include- Royalty Mobile Phone Counters 4,713,263.10 Royalty on Mobile Charger box 2,226,219.00 Royalty/Restaurants 5,039,404.53 Royalty/foreign Exchange/Thomas Cook 879,494.70 Royalty/Vending Machines 2,018,552.94 Royalty-Others(Video Walls/Conferencing etc.) 6,059,681.46 Total 20,936,615.73 7.4 Thus, in view of the above, the CIT(A) held that the following heads of income are treated as not derived from the operation and maintenance of the airport/eligible business of running of infrastructure facility, and hence, would not be eligible for computation of deduction u/s. 80-IA: i) Income from rent and services at Rs. 13,74,34,981/- ii) Miscellaneous income at Rs. 14,786,972/- iii) Interest ....
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....income but filed an appeal against the issue of Income from Royalty, Rent and Services, which was decided by the Hon High Court vide its order dated 17.08.2017 (ITA 194 Of 2012). The High Court held in Para 13 of its order that what qualifies to be the business income of the assessee would be the income derived by the assessee from its core and essential activities of the airport and not from its incidental activities providing amenities to passengers in the airport. The High Court remitted the matter back to the assessing officer to reconsider each and every item of the income derived by the assessee and decide whether the income of the assessee was derived by it from its core business. 8.2 The question is whether the income referred above is from core and essential activities of airport and not from incidental activities of providing amenities to passengers. In this regard it was submitted that the term "airport" is not defined in the Act. Accordingly, the High court vide its order dated 07.08.2017 in assessee's own case for the AYs 2005-06, 2006-07 & 2007-08, held that as per Section 2(b) of "The Airports Authority of India Act 1994 an "Airport" means a landing and taking off....
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.... customs clearing of export of cargo, movement of cargo within the airport, facilities for check in, security screening and handling passenger baggage , arrival /departure information etc., The assessee had engaged Air India as its associate for operation of ground handling, where assessee provides necessary space, water and electricity, security, telephone, fixed installation at the Airport counters, conveyor belts, departure and arrival information boards, baggage x-ray machines, weighing scales, owned and maintained by the assessee, as also electricity, water, security related infrastructure/facilities and Air India handles these works in the airport , and pay assessee a percentage of their gross turnover from airlines in this regard. The tariff for ground handling is fixed in consultation with assessee and assessee is also a party to the agreements entered with airlines for ground handling. Since, ground handling is an essential service and a core activity without which the airport cannot function, the income thereon has a direct and immediate nexus with the operation of the Airport and is not an incidental amenity. Royalty from Terminal Handling - Rs. 0.30 Crores 8.6 It ....
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....es aerodrome as defined in clause (2) of section 2 of the Aircraft Act, 1934". Thus, the operations and maintenance of the airport mainly consist of are: a. Ensuring safe landing / taking off of aircrafts in/from the airport. b. Providing passenger facilities within the airport as required and expected at an international airport 9.1 The Assessing Officer had considered this issue in AYs 2005-06 to 2007-08 and granted deduction u/s. 80IA of the I.T. Act in respect of above income and denied deduction u/s. 80IA in respect of income from surcharge from pre paid taxi, income from sale of scrap, notice pay, interest on delayed payment, income from film shooting and bond from staff. Hence, in these assessment years also, the assessee is not entitled for deduction u/s. 80IA in respect of these items only. Being so, the CIT(A) is justified in granting deduction u/s. 80IA of the Act in respect of royalty income, treating it as business income. Accordingly, this ground of appeals of the Revenue is dismissed. Thus, the appeals of the Revenue in ITA Nos. 360/Coch/2014 and 464/Coch/2014 are dismissed. ITA No. 344/Coch/2014 : Assessee's Appeals: A.Y. 2008-09 ITA No. 3....
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....as buildings and allowed depreciation accordingly. 11.2. On appeal, the CIT(A) relying on the decision of JCIT Vs. National Airport Authority of India(2008-TIOL-135-ITAT Delhi) wherein it was held that the assets of such nature are to be treated as plant and machinery and allowed the claim of the assessee. He also relied on the unreported decision in the case of HAL Vs. ACIT in ITA 776/Bang/86 by Bangalore Bench of ITAT. 11.3 It was observed that similar issue had come up before the ITAT in the appeals of the assessee in ITA Nos. 807/Coch/2008, 375/Coch/2009, and 392/Coch/2010 dt 04.05.2012 wherein it was stated that they are inclined to follow the decisions referred in those cases, but observed that the CIT(A) did not verify whether all the assets stated above were covered by the said decision. For the purpose of verifying this aspect, the ITAT restored the issue to the file of the assessing officer with a direction to follow decisions of the Tribunals referred above and decide the issue accordingly. 11.4 In the set aside proceedings, the AO stated that from the decisions referred as above, it is seen that only runway is covered, whereas, isolation parking bay and roads, ....
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....on and hence they should be allowed depreciation @ 25%. However, the AO took the view that they fall in the category of building and hence he restricted the depreciation to 10%. The Ld CIT(A) allowed the claim of the assessee by following the decision rendered by the tribunal in the following cases:- (a) JCIT Vs. National Airport Authority of India (2008-TIOL-135-ITAT-DEL) (b) HAL Vs. ACIT in ITA No.776/Bang/86 by Bangalore bench of ITAT. Since a particular view has been taken by the above said benches of Tribunal, we are inclined to follow the decision rendered in those cases. However, we notice that the Ld CIT(A) did not verify whether all the assets stated above are covered by the above said decisions. Hence for the purpose of carrying on necessary verification, we set aside the order of Ld CIT(A) on this issue and restore the same to the file of AO with the direction to follow the decision of the Tribunals referred supra and decide the issue accordingly." 11.8 In view of the above order of the Tribunal, this issue is remitted to the file of the Assessing Officer on similar directions. Thus, this ground of appeals of the assessee in ITA Nos....
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.... 13. The facts of the case are that this appeal was filed against the order of the Commissioner of Income tax, Kochi passed u/s.263 of the IT Act. The CIT had set aside the assessment order passed u/s.143(3) of the IT Act dt.27-3-2013 with a direction to redo the assessment as indicated in the order. 13.1 In the said order passed u/s.263 of the IT Act, the CIT held as below: "In the 263 proceedings for the assessment year 2010-11 also the assessee's representative filed those agreements whatever filed before the Hon. ITAT and before the Ld. AO, ie. The Additional Commissioner of Income tax, Range-1, Kochi and no fresh agreements or any composite agreement as envisaged u/s.80IA (4)(i)(b) have been filed." 3. From the above facts available on records, I am of the opinion that the order passed by the Additional Commissioner of Income tax, Range-1, Kochi, dt.27-3- 13 u/s.143(3) is erroneous and prejudicial to the interest of the revenue and accordingly, the Commissioner of Income tax, Kochi, set aside the order dt.27- 3-13, passed by the above AO and direct him/her to redo the assessment as indicated above". 13.1.1 Against this, the assessee is in appeal bef....