TaxTMI 
TaxTMI 
2025 (2) TMI 1142
X X X X Extracts X X X X
X X X X Extracts X X X X
.... is whether the respondent-assessee could have claimed benefits flowing from Section 80IA of the Income Tax Act, 1961 [Act]. Although the respondent-assessee was held eligible to claim benefits under that provision by the Assessing Officer [AO], the Principal Commissioner of Income Tax [PCIT] while exercising powers under Section 263 chose to overturn the view so expressed. It is this order of the PCIT dated 31 March 2016 which was ultimately assailed before the Tribunal. 3. We find that the PCIT had, while dealing with the question of whether Section 80IA could apply in the case of the respondent-assessee, held as follows: - "No evidence is available on assessment record to suggest that any of these aspects of the Contract along with its other parts were either examined or verified by the A.O. in the course of the assessment proceedings. These features are a part of the contract which was executed for providing certain inputs to M/s DIAL during the F.Y. 2010-11 relevant to the A.Y. 2011-12. The agreement in question is silent on the role or any services to be provided by CELEBI HAYA SERVISI AS a Company. The reference to the OMDA (Operation Management and Development A....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the law after due diligence and verification of the evidence by the A.O." 4. The issue itself arose in the context of a Concession Agreement [Concession] which came to be executed between Delhi International Airport Pvt. Ltd. [DIAL] and the respondent-assessee on 24 August 2009. The scope of the said Concession was envisaged to include the upgradation, modernization, financing, operating, maintaining and management of the Cargo Terminal at DIAL. 5. The PCIT appears to have taken the view that the AO had clearly omitted to bear in consideration the plain text of Section 80IA and which would have enabled deductions being claimed, provided it were shown that the profits and gains in question had been derived by an undertaking or an enterprise from any business referred to in sub-section (4). 6. Although Section 80IA, and as it exists on the statute book today, is broadly couched in similar terms, we are in this matter concerned with the previous version of that section and which spoke of gross total income of an assessee derived from business of an industrial undertaking as well as a host of other activities which were spelt out. 7. Sub-section (4) of Section 80IA explaine....
X X X X Extracts X X X X
X X X X Extracts X X X X
...." means- (a) a road including toll road, a bridge or a rail system; (b) a highway project including housing or other activities being an integral part of the highway project; (c) a water supply project, water treatment system, irrigation project, sanitation and sewerage system or solid waste management system; (d) a port, airport, inland waterway [inland port or navigational channel in the sea]. [(ii) any undertaking which has started or starts providing telecommunication services whether basic or cellular, including radio paging, domestic satellite service, network of trunking, broadband network and internet services on or after the 1st day of April, 1995, but on or before the [31st day of March, 2005];] (iii) any undertaking which develops, develops and operates or maintains and operates an industrial park [or special economic zone] notified by the Central Government in accordance with the scheme framed and notified by that Government for the period beginning on the 1st day of April, 1997 and ending on the 31st day of March, [2006]: Provided that in a case where an undertaking develops an industrial park on or after t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....November, 2005 with majority equity participation by public sector companies for the purposes of enforcing the security interest of the lenders to the company owning the power generating plant and such Indian company is notified before the 31st day of December, 2005 by the Central Government for the purposes of this clause; (b) such undertaking begins to generate or transmit or distribute power before the [31st day of March, 2012].] [* * *]" 8. Prior to the aforesaid provision being amended by Finance Act, 2001, clause (b) of Section 80IA(4) had read as under:- "(b) it has entered into an agreement with the Central Government or a State Government or a local authority or any other statutory body for (i) developing, (ii) maintaining and operating or (iii) developing, maintaining and operating a new infrastructure facility subject to the condition that such infrastructure facility shall be transferred to the Central Government, State Government, local authority or such other statutory body, as the case may be, within the period stipulated in the agreement" 9. Undisputedly, it is Section 80IA(4) which would determine the eligibility to benefits that we....
X X X X Extracts X X X X
X X X X Extracts X X X X
....axmann.com 272 (Bombay). 31. In view of the above discussion on the facts vis a vis the judicial pronouncements on the subject, we set aside the order of the ld. PCIT and restore that of the Assessing Officer dated 14.03.2104 framed u/s 143 (3) of the Act." 12. As is manifest from the above, there was an evident failure on the part of the Tribunal to even briefly allude to the pre-conditions which must be satisfied for the purposes of an assessee claiming benefit of Section 80IA. 13. Ms. Jha, learned senior counsel who appeared for the respondent-assessee, however, has taken us in great detail through the following provisions and covenants which form part of the OMDA and which are reproduced hereinbelow:- "OPERATION, MANAGEMENT AND DEVELOPMENT AGREEMENT This Operation, Management and Development Agreement (the "Agreement" or "OMDA") made on this 4th day of April, 2006, BY AND BETWEEN: 1. The Airports Authority of India acting through its Chairman (hereinafter referred to as the "AAI", which expression shall, unless repugnant to the context or meaning thereof, include its successors and assigns) of the FIRST PART; and 2. De....
X X X X Extracts X X X X
X X X X Extracts X X X X
....to undertake functions on behalf of the JVC, and sub-lease and/or license the Demised Premises in accordance with Article 8.5.7. 2.2 Sole Purpose of the JVC 2.2.1 The JVC having been set up for the sole purpose of exercising the rights and observing and performing its obligations and liabilities under this Agreement, the JVC or any of its subsidiaries shall not, except with the previous written consent of AAI, be or become directly or indirectly engaged, concerned or interested in any business other than as envisaged herein. Provided however that the JVC may engage in developing, constructing, operating or maintaining a second airport pursuant to exercise of the Right of First Refusal granted to the JVC under the State Support Agreement. **** 8.5.7 Contracts, Lenses and Licenses (i) Sub-Contracting, Sub-leasing and Licensing (a) Any activity may be sub-contracted by the JVC, provided always that notwithstanding the sub-contract, the JVC retains overall management, responsibility, obligation and liability in relation to the sub-contracted Airport Service. Any such subcontracting shall not relieve the JVC from any of its ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ly came to observe as follows:- "32. With reference to the above rival legal contentions urged by the both the learned Senior Counsel for the parties and learned Counsel on behalf of the parties, on careful examination and consideration of the same by us, Point Nos. 1 and 2 have to be answered in favour of the petitioner for the following reasons.- (i) As per notification dated 26-4-2005 published by the State Government granting exemption under Section 9(1) of the Karnataka Stamp Act, 1957 for registration of the lease deed executed between BIAL and KSIIDC for establishment of International Airport, the KIADB has transferred the lands covered therein to KSIIDC and in turn in favour of BIAL. The registration fee of Rs. 25.33 crores is exempted by giving 100% concession under notification dated 15-4-2005. In view of this, the lands acquired by the State Government in favour of Karnataka Industrial Areas Development Board (in short referred to as 'KIADB') for the infrastructure facility defined under the Karnataka Industrial Areas Development Act, 1966 for establishing International Airport in exercise of its eminent domain powers under Section 28(1) and 28(4) of KI....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tive, the logically sequitur is that it really does not matter what guise the State adopts for this purpose, whether by a Corporation established by statute or incorporated under a law such as the Companies Act or the Societies Registration Act, 1860. Neither the ostensible form of the Corporation, nor is ostensible autonomy would take away from its character as 'State' and its constitutional accountability under Part II vis-a-vis the individual if it were in fact acting as an instrumentality or agencies of the Government. ....... 40. The picture that emerges is that the tests formulated in Ajay Hasia v. Khalid Mujib Sehravardi, (1981) 1 SCC 722, para 9, are not a rigid set of principles so that if a body falls within any one of them it must, ex hypothesi, be considered to be a State within the meaning of Article 12. The question in each case would be - whether in the light of the cumulative facts as established, the body is financially functionally and administratively dominated by or under the control of the Government. Such control must be particular to the body in question and must be pervasive. If this is found then the body is a State within Article....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y the Government to meet the whole or entire expenditure of the Board. The Board does enjoy a monopoly status in the field of cricket but such status is not State conferred or State protected. There is no existence of a deep and pervasive State control. The control if any is only regulatory in nature as applicable to other similar bodies. This control is not specifically exercised under any special statute applicable to the Board. All functions of the Board are not public functions. The Board is not created by transfer of a Government-owned Corporation. It is an autonomous body. (x) The decision of Smt. Ujjam Bai's case having regard to changing socio-economic policies in India and variety of methods by which Governmental functions are performed or by which the Government carries on trade or business by a society, corporation etc., the functions that would be carried on by BIAL is an instrumentality of the 'State' under Article 12 of the Constitution of India. The statutory body-second respondent may be empowered to divest its power and functions wholly or partially in any interest or juridical person or it may act generally or in collaboration with the other bodies, p....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 'public park', the relevant portion reads thus: "What is 'private' and what is 'State' action is not always easy to determine. Conduct that is formally private may become so entwined with Governmental policies or so impregnated with a Governmental character as to become subject to constitutional limitations placed upon State action. Under the circumstances of this case, we cannot but conclude that the public character of the park requires it to be treated as a public institution subject to the command of the Fourteenth Amendment, regardless of who now has titled under State law". (xiii) In another case Jackson, which decision has been referred to in the Ramana Dayaram Shetty's case, it is laid down as hereunder: "A particularised inquiry into the circumstances of each case in necessary in order to determine whether a given factual situation falls within 'the variety of individual - State relationship'... The dis-positive question in any State - action case is not whether any single fact or relationship presents a sufficient degree of State involvement, but rather whether the aggregate of all relevant factors compels a finding of State respon....
X X X X Extracts X X X X
X X X X Extracts X X X X
....o the extent reasonably necessary, the airport which for these purposes shall exclude any systems or equipment to be operated by AAI in accordance with the terms of the CNS/ATM agreement. All operation, maintenance, repair and other works shall be carried out in such a way as to minimise inconvenience to users of the airport. If any operation, maintenance, repair or other works necessitate interrupting or suspending the landing or taking-off of any aircraft, or the closure of the airport, for any period of time, BIAL shall, except in case of an emergency, give to the DGCA and to all affected users of the airport such prior written notice thereof as the DGCA may from time to time reasonably require". (xv) Section 22-A of the A.A.I. Act empowers the 2nd respondent to levy and collect development fee from embarking passengers under clause (b) for establishment or development of a new airport in lieu of the airport referred in clause (a) or (c) for investment in the equity in respect of shares to be subscribed by the authority in companies engaged in establishing, owning, developing, operating or maintaining a private airport in lieu of the airport referred to in clau....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on of India. In this regard, learned Senior Counsel for petitioner has rightly placed reliance upon the decisions in the case of Rohtas Industries Limited v. Rohtas Industries Staff Union [(1976) 2 SCC 82.], (1991) 1 SCC 171 (sic), (1995) 1 SCC 1811 (sic), G. Bassi Reddy v. International Crops Research Institute [AIR 2003 SC 1764 : (2003) 4 SCC 225.]. The principles laid down in those decisions with all fours applicable to the case on hand and therefore BIAL is amenable to writ jurisdiction of this Court under Article 226 of the Constitution of India as it has been discharging statutory functions/duties in establishing International Airport at Devanahalli as it has undertaken to discharge the statutory functions of the Airport Authority in establishing private airport and its maintenance. (xix) The word "Person" is with avowed object deliberately used in Article 226 of the Constitution of India, which may be a natural person or juridical person such as Government, private or public limited company, society, body, corporation etc., who will perform public functions/duties in the public interest. They are all amenable to judicial review power of this Court is the legal princ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ucational institution, is a public duty, that requires, to act fairly. ...... 83. The emphasis in this case is as to the nature of duty imposed on the body. It requires to be observed that the meaning of authority under Article 226 came to be laid down distinguishing the same term from Article 12. Inspite of it, if the emphasis is on the nature of duty on the same principle it has to be held that these educational institutions discharge public duties. Irrespective of the educational institutions receiving aid it should be held that it is a public duty. The absence of aid does not detract from the nature of duty". (xxii) The learned Senior Counsel for the petitioner has placed reliance upon the following decisions of the Apex Court wherein the scope of Article 226 is laid down by the Apex Court in G. Bassi Reddy's case, the Apex Court has laid down the law that "A writ under Article 226 can lie against a 'person' if it is a statutory body or performs a public function or discharges a public or statutory duty", in the case of Zee Tele Films Limited, referring to Andi Mukta's case, it has held that "Thus, it is clear that when a private body performs....
X X X X Extracts X X X X
X X X X Extracts X X X X
....or instance, in K.K. Saksena [K.K. Saksena v. International Commission on Irrigation & Drainage, (2015) 4 SCC 670 : (2015) 2 SCC (Civ) 654 : (2015) 2 SCC (L&S) 119] this Court held that when an employee is a workman governed by the Industrial Disputes Act, 1947, it constitutes an exception to the general principle that a contract of personal service is not capable of being specifically enforced or performed. 35. It is of relevance to note that the Act was enacted to provide for the regulation and registration of clinical establishments with a view to prescribe minimum standards of facilities and services. The Act, inter alia, stipulates conditions to be satisfied by clinical establishments for registration. However, the Act does not govern contracts of service entered into by the hospital with respect to its employees. These fall within the ambit of purely private contracts, against which writ jurisdiction cannot lie. The sanctity of this distinction must be preserved. 36. For the above reasons, we are of the view that the Division Bench of the High Court was not justified in coming to the conclusion that the appellants are amenable to the writ jurisdiction under ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....es of ICRISAT. The Court held that only functions which are similar or closely related to those that are performed by the State in its sovereign capacity qualify as "public functions" or a "public duty" : (SCC p. 237, para 28) "28. A writ under Article 226 can lie against a "person" if it is a statutory body or performs a public function or discharges a public or statutory duty ... ICRISAT has not been set up by a statute nor are its activities statutorily controlled. Although, it is not easy to define what a public function or public duty is, it can reasonably be said that such functions are similar to or closely related to those performable by the State in its sovereign capacity. The primary activity of ICRISAT is to conduct research and training programmes in the sphere of agriculture purely on a voluntary basis. A service voluntarily undertaken cannot be said to be a public duty. Besides ICRISAT has a role which extends beyond the territorial boundaries of India and its activities are designed to benefit people from all over the world. While the Indian public may be the beneficiary of the activities of the Institute, it certainly cannot be said that ICRISAT owes a duty....
X X X X Extracts X X X X
X X X X Extracts X X X X
....development'. The Commissioner of Income-tax (Appeals), vide order dated 11-6-2012, inter alia has held that from perusal of the layout map of the airport, it is evident that the cargo complex is connected to other infrastructure facilities by airside service road running parallel to the main runway. The aforesaid road serves the isolation bay, fire station, cargo complex, fuel farm and maintenance area as per clause 4 of the concession agreement between the BIAL and Government of India. It has further been held that cargo handling services have been classified as material but competitive by AERA by an order dated 16-8-2011 in the assessee's own case. It has also been held that the expression 'aerodrome' as defined in section 2 (2) of the Aircraft Act is an inclusive definition and uses the expression 'includes'. It has further been held that large amount of non-passenger cargo is being uploaded to the commercial aircraft in addition to passenger's luggage and therefore, location of cargo handling area is linked with critical airside service road and partaking of statutory infrastructure relating to security, customs, x-rays, etc. within its own operatio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e 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. 22. 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. The phrase "infrastructure facility" has been defined by the Explanation appended to sub-section (4) in the following terms:- "[Explanation.-For the purposes of this clause, "infrastructure facility" means- (a) a road including toll road, a bridge or a rail system; (b) a highway project including housing or other activities being an integral part of the highway project; (c) a water supply project, water treatment system, irrigation project, sanitation and sewerage system or solid waste management system; (d) a po....