TaxTMI 
TaxTMI 
2025 (11) TMI 635
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.... its income tax return on 31.10.2017 declaring taxable income of Rs. 4,13,13,970/-, on a total turnover of Rs. 246.26 crores after 'claiming deduction under section 80IA of the Act of Rs. 50,08,76,152/- on profits derived from ground handling operations at Delhi and Cochin Airport. However, it paid tax on book profits of Rs. 52,97,70,419/- since the tax payable under section 115JB of the Act was higher than the regular provision consequent to the claim of the deduction under section 80IA of the Act. Subsequently, the case was selected for scrutiny assessment and the assessment in this case was completed on 20.12.2019 at an assessed income of Rs. 54,21,90,122/-. 4. Aggrieved, the assessee preferred appeal before the CIT(A). The CIT(A) deleted the addition made by the AO by observing and holding as under:- "1 1. I have perused the grounds of appeal and submission of the appellant. The learned AO has carried out disallowance of Rs. 50,08,76,152/- on account of reversal of 80IA deduction as claimed by the Company. 2. The learned AO contended that the assessee company is not engaged in any business related to development, operation or maintenance of infrastructure f....
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....ltimately Govt. of India is regulator for the underlined services. 8. Hon'ble Kerala High court in case of Cochin International Airport Ltd vs. DCIT [ITA Nos. 163,169, 176 of 2012), has dealt with the similar issue wherein the question under consideration was whether Cochin International Airport is eligible for 80IB deduction since the Section 80IA(4) mandates entering into agreement with Government of India or any other statutory body. The matter was determined in favour of the tax payer. The ratio of said judgment is applicable to appellants case as well. 9. In the instant case as well, it is worth noting that appellant is providing services of maintaining facility and the same is done pursuant to concession agreement. The airport authority of India ultimately represents Govt. of India and it is reasonable to conclude that ultimate beneficiary of services provided by the appellant is general public at large. 10. In case of Flemingo Duty Free Shop (P.) Ltd. v. Union of India [W.P. No. 14215 of 2006, dated 19-12-2008] (Karnataka HC), Hon'ble HC has upheld that functions carried out are pursuant to Airport Authority of India Act and thus, eligible ....
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....he decision of Hon'ble Kerala High Court in the case of Cochin International Airport Ltd. is not applicable to the facts of the case because Hon'ble Kerala High Court has taken a view that such an agreement between Airports Authority of India and the assessee would qualify to be an agreement entered into with a statutory body for operating and maintaining the infrastructure facility such as the airport. He stated that before Hon'ble Kerala High Court, the issue was of Airports Authority of India, which is a statutory body. Such is not the case with DIAL or CIAL. He stated that the assessee is unable to fulfill the conditions mentioned in Section 80IA(4) of the Act, the conditions laid down have to be cumulatively fulfilled to be eligible for the claim of deduction. In terms of the above, he stated that the order of learned CIT(A) be reversed and that of the Assessing Officer be upheld. 6. On the other hand, learned Counsel for the assessee briefly stated the facts that the assessee Company Bird Worldwide Flight Services (India) Private Limited (BWFSPL) was incorporated on 10th October, 2008 for carrying on the business of providing ground handling services to various Internation....
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....ervices is an essential infrastructure facility at the airport which includes the following services: A. Ramp Handling/Services B. Traffic (Terminal) Handling/Services The said services are an integral and inextricable part of the airport infrastructure facility. The assessee company is providing comprehensive ground handling services to the airlines at the airport without which the airport cannot operate & function. The ground handling services provided by the assessee company is essentially operating and maintaining of infrastructure facility at Delhi and Cochin Airport. The Ground handling function at airport includes: a. Transfer of passengers from Airport Terminal to Aircraft and vice-versa by air-conditioned high capacity passenger buses. b. Passenger Steps for enabling embarkation/disembarkation of passenger's to/from aircraft. c. Providing embarkation/disembarkation facility to disabled/critically ill passengers from aircraft through Ambulift. d. Transfer of passenger baggage or cargo baggage/pallets from airport terminal to aircraft and vice-versa through electric tractors, baggage trollies, palliate dollies. ....
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....under Section 80IA (4) has become available to any enterprise carrying on the business of (a) developing, or (b) maintaining and operating, or (c) developing, maintaining and operating any infrastructure facility. Sub-clause (c) of clause (i) of Section 80IA(4) is obviously applicable to an enterprise which is engaged in 'operating and maintaining the infrastructure facility on or after 1st April, 1995. From the assessment year 2000-01, deduction is available if the assessee carries on the business of any one of the three types of activities specified in the aforesaid section. It was contended that for an airport to function numerous integrated activities need to be performed, some of which are critical and at the core of the said infrastructure facility without which the entire facility can fall apart and become non-operational. Ground handling service, which handles the passenger movement between the terminal of airport and the aircraft, is an integral part of the airport infrastructure facility without which an airport cannot operate. Ground handling is one of the essential infrastructure facility at the airport. It was brought to our notice tha....
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.... subsequent agreements between the parties would show that the assessee had entered into an agreement as contemplated in clause (b) of Subsection (4) of Section 80IA of the Act, which entitles the assessee for claim of deduction under Section 80IA of the Act. Hon'ble Kerala High Court considered this aspect as under:- "From the provisions of annexure C and annexure K, which contain the obligations of the Airports Authority of India, it is clear that the Airports Authority of India was only undertaking to discharge its functions as provided under section 12 of the Airports Authority of India Act, 1994 for the operation and maintenance of the airport which was developed by the Cochin International Airport Limited. Such an agreement between the Airports Authority of India and the assessee would qualify to be an agreement entered into with a statutory body for "operating and maintaining the infrastructure facility", viz., the airport. It was argued by the senior counsel for the Revenue that to qualify for the benefit of deduction under section 80IA of the Income-tax Act, the agreement with the statutory body should have been entered into by an airport which is already....
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....the Revenue, so far as this Court is concerned. In the case of the very assessee, but for Assessment Years 2009-10, 2010-11 and 2011-12, the Division Bench of this Court vide order dated 02.05.2018 in Tax Appeal Nos.426, 427 and 433 of 2018, has dismissed the Tax Appeals preferred by the Revenue and confirmed the orders passed by the Income Tax Appellate Tribunal deleting disallowance and deduction made by the Assessing Officer under Section 80IA(4) of the Act. While dismissing the appeals, the Division Bench has observed in para 13 as under:- "13. The above statutory provisions and the relevant facts arising in the present case and noted above would leave little doubt in one's mind that GSRDC was a nodal agency constituted by the State Government for the purpose of executing road development projects through private participation and was a Government agency as defined in section 2EUR of the Act of 1999. Significant factors in the present case are that the road widening project was cleared by the Government, land for such purpose was allotted by the Government. The concession agreement which GSRDC executed was approved by the Government. It was under the Government Resolut....
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....ited controversy whether DIAL works under the authority of the Central Government or not? DIAL, of course, claims that it does not. 46. In the SAIL judgment, the Constitution Bench held as under : "30 .....the phrase "any industry carried on under the authority of the Central Government" implies an industry which is carried on by virtue of, pursuant to, conferment of, grant of, or delegation of power or permission by the Central Government to a Central Government company or other government company/undertaking. To put it differently, if there is lack of conferment of power or permission by the Central Government to a government company or undertaking, it would disable such a company/undertaking to carry on the industry in question." 47. In case the Central Government had never granted permission, pursuant to Section 12-A of the AAI Act, DIAL would not be able to carry out functions at the Delhi airports. The entire functioning of DIAL is fully dependent on the grant of permission by the Central Government. 48. The Constitution Bench, in the SAIL judgment further observed as under : "39. .....may be conferred, either by a statute or by vi....
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....or example, Clause 5.1 of OMDA, which notes that the "rights and obligations associated with the operation and management of the Airport would stand transferred to" DIAL, would seem to suggest that orders given to AAI establishment would also apply to DIAL establishment, even if the two were, as DIAL claims, separate establishments. If AAI establishment is obligated to abolish contract labour and DIAL establishment (even if it is somehow separate) has assumed AAI establishment's obligations through the OMDA, then DIAL is presumably required to fulfil those obligations. Critical to this inference is the fact that the Central Government's 26th July, 2004 notification was issued before OMDA was signed. 72. The contention that DIAL would not also be bound by the obligations of AAI establishment would once again lead to absurd consequences. In the impugned judgment, the Division Bench correctly observed that "every time a fresh agreement is entered into, the entire process of getting a notification issued by the appropriate Government in relation to the same work of trolley retrieval and with the same establishment vis-a-vis such private player" must be repeated. This i....
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....ment would have to issue separate notification every time AAI contracts with a third party. This would clearly violate the basic objects and reasons of CLRAA. (vii) The security of contract labour working for AAI envisaged, a law cannot be made to depend on the private sector. If the legislature had found it fit to specifically include AAI as an enumerated industry under the ID Act, it is extremely unlikely that it would have intended for AAI to be able to circumvent the Central Government orders by contracting with private parties. (viii) The privatization of the airports does not mean that the "appropriate government" cannot be the Central Government. According to the Constitution Bench judgment of this Court in the case of SAIL, the definition of `establishment' in the CLRAA takes in its fold purely private undertakings...".Concerns about privatization are, therefore, unfounded. (ix) Under Section 12(2) of the AAI Act, AAI is obliged to provide air traffic service and air transport service at the airport. DIAL admits that AAI has transferred all of its responsibilities at the airports with the exception of certain reserved functions. Since industri....
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....ment of DIAL that not only its own industry is not carried out under the authority of Central Government but further when not even AAI's authority is carried out under the authority of the Central Government. Hon'ble Supreme Court answered this by noting that it is relevant to mention that DIAL derives its authority from AAI and AAI derives its authority and power given by the Central Government. In such circumstances, whether DIAL works under the authority of Central Government and therefore, Hon'ble Supreme Court answered that Division Bench of Hon'ble Delhi High Court was right in holding that AAI works under the authority of the Central Government and accordingly, DIAL, which derives power from the AAI, it is also directly under the authority of AAI. 14. Similarly, Hon'ble Karnataka High Court in the case of Flemingo Dutyfree Shops Pvt.Ltd. Vs. Union of India in Writ Petition No.14215 of 2006, judgment dated 19th December, 2008, has framed the question whether the functions and duties discharged by Bangalore International Airport Limited are statutory/public duties and whether it is an authority of State under Article 12 of the Constitution of India and consequen....
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....blished, and Re. 250 crores provided to BIAL by the Government of Karnataka under the State agreement and capital of BIAL partly owned by it, 26% share capital owned by 2nd respondent, 13% by BIAL, in pursuant to the Concessional agreement referral to supra, there is transfer of powers of respondent No. 2 to R-3 in relation to air traffic services to be rendered to the public at large. The grant of monopoly status in the concession agreement given to the BIAL is State conferred or State protected as the concession agreement provides exclusivity of private concession to the existing airport and prohibits any airport being set-up within 150 Kms from BIAL. (xviii). Even if it is not an entity and ''State'' under Article 12 of the Constitution of India, the actions of BIAL are subject to judicial review under Article 226 of the Constitution of India. In this regard, learned Sr. counsel for petitioner has rightly placed reliance upon the decisions reported in Rohtas Industries Ltd. and Another Vs. Rohtas Industries Staff Union and Others, in the case of Rohtas Industries v. Rohtas Staff 1991(1) SCC171 : 1995(5) SCC 1811 : G. Basi Reddy Vs. International Crops Re....
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....he ground that the duty to be enforced is not imposed by the status. Commencing on the development of the law, professor be Smith status ''To be enforceable by mandamus a public duty does not necessarily have to be one imposed by statute. It may be sufficient for the duty to have imposed character, common law, custom or even contract"". We share this view. (xxi). In Unnikrishnan''s case, after referring to Anadi Mukta and Drawakanath cases, it is held at paragraphs 81 and 83 as under: 81. As a sequel to this, an important question arises: what is the nature of functions discharged by these institutions? They discharge a public duty, If a student desires to acquire a degree, for example, in medicine, he will have to route through a medical college. These medical colleges are the instruments to attain the qualification. If, therefore, what is discharged by the educational 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 Articl....
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...., up gradation, modernization, finance and management of DIAL. DIAL was incorporated in a joint venture with the following:- GMR Group 54% Airports Authority of India 26% Fraport AG 10% Eraman Malaysia 10% Pursuant to the provisions of OMDA, DIAL prepared the master plan for the development of the airport which set staged development of the full Airport area, covering aeronautical services and non-aeronautical services for 20 years horizon and the master plan of which was approved by the Government of India. The Director General of Civil Aviation (DGCA) in order to ensure the provision of most efficient, cost effective ground handling services in line with internationally accepted good industry practice and applicable laws issued the ground handling policy vide Sl.No.7/2007 dated 28-09-2007. In order to comply with the said ground handling policy and ensure the desired Service Level pursuant to the aforesaid circular DIAL invited tender for providing ground handling services at the Indira Gandhi International Airport, Delhi. A consortium was formed between Bird Consultancy Services Pvt.Ltd. (BCS) and Worldwide Flight Services Holding SA (WFS) for particip....
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....functions by the above two is strictly controlled and monitored by Airports Authority of India. The above proposition and discussion was carried out by Hon'ble Karnataka High Court in the case of Flemingo Dutyfree Shops Pvt.Ltd. (supra) and by Hon'ble Supreme Court in the case of Delhi International Airport Private Limited (supra) that the functions carried out by the assessee under the control of DIAL and CIAL is a state function and hence, DIAL and CIAL are really statutory authorities under the direct control of the Government of India. Since the issue is covered, we hold that the acts done by these authorities are in the context of statutory authority and hence, assessee is eligible for claim of deduction under Section 80IA(4) of the Act and assessee squarely falls under sub-section (b) of Section 80IA(4) of the Act. 17. As regards to the issue of whether the assessee is engaged in maintaining and operating any infrastructure facility in the given facts and circumstances of the case, we noted that after the amendment effected by Finance Act, 1999 w.e.f. 1st April, 2000, the deduction under s. 80IA (4) has become available to any enterprise carrying on the business of ....