Taxpayer is Eligible for Deduction u/s 80IA (4) for Operating and Maintaining Infrastructure Facility: ITAT [Read Order]

In a recent judgment, the Ahmedabad bench of the Income Tax Appellate Tribunal (ITAT)  has ruled that the taxpayer is eligible for a deduction amounting to Rs. 295,58,08,285 under Section 80IA(4) of the Income Tax Act, 1961, for operating and maintaining the infrastructure facility.

The assessee, Mundra International Container Terminal Pvt. Ltd, sought a deduction amounting to Rs. 295,58,08,285 under Section 80IA(4) of the Income Tax Act for the operation and maintenance of an infrastructure facility. This claim was disallowed by the Assessing Officer (AO) on the grounds that the assessee did not meet the conditions specified in Section 80IA (4)(i)(b). The AO determined that there was no agreement between the assessee and the Central Government, State Government, Local Authority, or any statutory body—specifically, the Gujarat Maritime Board (GMB)—for developing or maintaining the port infrastructure, thus deeming the assessee ineligible for the deduction.

The assessee contended that it was engaged in the operation and maintenance of a port infrastructure and had filed Form No. 10CCB to claim the deduction under Section 80IA (4). The assessee argued that the objection raised by the AO was unfounded. According to the assessee, a Concession Agreement dated February 17, 2001, between GMB and APSEZ (formerly Gujarat Adani Port Limited) granted the rights to develop and operate the port facility. Subsequently, APSEZ, through a letter dated September 21, 2002, requested GMB's consent to enter into a Sub-Concession Agreement with the assessee for operating and maintaining the port facilities.

GMB provided its consent on September 30, 2002, for the sub-concession in accordance with Clause 8.5(b) of the Concession Agreement. Consequently, a Sub-Concession Agreement was executed between APSEZ and the assessee on January 7, 2003. The assessee argued that this agreement was essentially an extension of the APSEZ’s agreement with GMB and did not necessitate a separate agreement with GMB.

The assessee supported its claim with judicial precedents. Citing the decision of the Madras High Court in CIT Vs. A.L. Logistic Pvt. Ltd, the Hyderabad Tribunal in Ocean Sparkle Limited vs. DCIT, and Hyderabad Menzies Air Cargo Pvt. Ltd, the assessee argued that similar claims had been upheld in favor of the assessee in those cases. The assessee also referenced the Madras High Court's decision in CIT Vs. Chettinad Lignite Transport Services Pvt. Ltd., emphasizing that a direct agreement with specified authorities was not required under the proviso to Section 80IA(4).

The CIT (A) reviewed various tribunal and high court orders and decided in favor of the assessee. S.N. Soparkar, representing the assessee, argued that the matter was covered by favorable rulings from the High Court of Madras and the Hyderabad ITAT.

Ms. Saumya Pandey Jain, representing the revenue, supported the AO’s decision and requested the tribunal to uphold the disallowance.

The tribunal, consisting of members Annapurna Gupta (Accountant Member) and T.R. Senthil Kumar (Judicial Member), reviewed the submissions and found that the CIT (A) had appropriately considered the Sub-Concession Agreement and other relevant documentation. The tribunal noted that the port was developed by APSEZ and handed over to the assessee for operation and maintenance as per the agreement. The AO’s denial of the claim was found to be in disregard of the provision to Section 80IA (4).

The tribunal concluded that the assessee had provided sufficient documentation, including Form No. 10CCB and proof of commercial operations commenced during FY 2002-03. Despite not claiming the deduction in the initial year due to negative gross total income, the assessee claimed it for AY 2015-16 when positive income was reported. The tribunal found no merit in the additional grounds raised by the revenue, as the required details and statutory forms were submitted within the permissible period of 15 years.

Further ITAT upheld the CIT (A)’s decision to allow the deduction under Section 80IA (4) as claimed by the assessee.

To Read the full text of the Order CLICK HERE

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