While allowing a major relief to the Cochin International Airport, Justices Antony Dominic and Dama seshadri Naidu of Kerala High Court held that the airport authority is eligible for the benefit of deduction under section 80-IB of the income Tax Act, 1961.
Before the High Court, the assesse, M/s Cochin International Airport Ltd, argued that it is eligible for the benefit under section 80-IB of the Income Tax Act which provides for deductions in respect of profits and gains from industrial undertakings or enterprises engaged in infrastructure development, etc.
On second appeal, the ITAT sustained the departments’ view and rejected the claim for deduction by holding that the agreement contemplated in clause (b) of Section 80-IA(4) is the agreement with the Government or Government bodies and not agreement with the Airports Authority of India the statutory body, is Airports Authority of India.
The bench noted that under the provisions of the Airports Authority of India Act, 1994, providing of air traffic service and air transport service at any airport and civil enclaves in India is the duty of the Airport Authority of India. It shall also be the function of the Authority to manage the airports and the Aeronautical Communication Stations efficiently.
The assesse, in the year 1999, entered into a Memorandum of Understanding with the Authority as per which, the Airport 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.
In view of the above facts, the bench noted that “such an agreement between the Airports Authority of India and the assesse would qualify to be an agreement entered into with a statutory body for “operating and maintaining the infrastructure facility”, viz the airport.”
Quashing the Tribunal order, the bench also noted that “Necessarily, the agreement and the installation of the equipment 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 agreements specified in clause-(b).”
Read the full text of the Judgment below.
