The Delhi bench of the Income Tax Appellate Tribunal (ITAT) granted relief to Air India Airport Services and held that deduction under Section 80IA of the Income Tax Act, 1961 shall be allowed as air cargo handling services fall within the scope of infrastructure facility.
The assessee company was incorporated and is engaged primarily in the business of providing ground handling and cargo handling services at Indian airports. SATS Ltd., Singapore, and Air India Ltd. (AIL) entered into a joint venture agreement for setting up the joint venture company and providing ground and cargo handling services at Indian Airports.
The activities carried out by AIL or SATS through the AI-SATS in relation to the ground handling services at Bangalore and Hyderabad airports and Cargo handling services and Bangalore Airports are stated to have been carried out by the company since the transfer date. The assessee for rendering the ground and cargo handling services at the Airport had claimed a deduction under Section 80IA of the Income Tax Act.
The Assessing Officer show caused the assessee to explain how its business falls in the category of infrastructure facility under Section 80IA of the Income Tax Act as it only covers Airport and not cargo handling etc. Thus, observed that since the agreement is not directly with the Government of India, as required by Section 80-IA, and the agreement is with BIAL, also benefit of Section 80IA shall not be eligible.
The assessee, relying on various judicial pronouncements, submitted that the ‘Cargo handling’ falls in the definition of ‘infrastructure facility’ and further with regard to the agreement with Bengaluru International Airport Limited (BIAL) it was submitted that BIAL has entered into a Concession Agreement with the Government of India (GOI) for developing, operating and maintaining the Bangalore airport.
The GOI had granted BIAL the exclusive rights for the development, operation, maintenance, and management of the Bangalore airport. Further, the Concession Agreement authorizes BIAL to grant ‘service provider rights’ to any person for carrying out the development and other activities originally entrusted to it.
The Assessing Officer held that ground handling and Cargo handling services at the Airport are not covered in the activity of maintaining or developing, operating, and maintaining the Airport. Therefore, a deduction under Section 80-IA of the Income Tax Act of Rs. 23,90,03,420/- was disallowed.
In the case of New Delhi vs Celebi Delhi Cargo Terminal, the issue has been considered and decided against the Revenue holding that “the air cargo handling facility falls into the scope of infrastructure facility. In that case the Assessing Officer was not satisfied with the deduction under Section 80IA of the Income Tax Act as it considered the Cargo Services rendered by the assessee company to be not covered for the benefit of Section 80IA of the Income Tax Act”.
The Two-member bench comprising of M. Balaganesh (Accountant member) and Anubhav Sharma (Judicial member) held that ground handling and cargo handling services provided by the assessee are covered within the meaning of the Explanation referred to Section 80-IA of the Income Tax Act and the assessee was entitled to claim the benefit of same. Thus, the appeal of the assessee was allowed.
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