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TMI Blog2016 (6) TMI 1408X X X X Extracts X X X X X X X X Extracts X X X X ..... on ble High Court and have been accepted that it is a statutory body. Therefore, respectfully following the Hon ble Hon'ble jurisdictional High Court Order, we do not see any reason to interfere with the order of the CIT(A). Agreement entered with BIAL is for development, operation and maintenance of infrastructure facility u/s. 80IA(4) of the Income-tax Act. - Decided against revenue. - ITA No. 22/Bang/2014 - - - Dated:- 24-6-2016 - Smt. Asha Vijayaraghavan, Judicial Member And Shri Inturi Rama Rao, Accountant Member For the Appellant : Shri Sanjay Kumar, CIT-III ( DR ) For the Respondent : Shri V. Srinivasan, Advocate ORDER Per Asha Vijayaraghavan, Judicial Member This appeal by the assessee by the Revenue is directed against the order of the CIT(Appeals)-III, Bangalore dated 09.10.2013 for the assessment year 2007-08. 2. The assessee company, Menzies Aviation Bobba (Bangalore) Private Limited (MABB) is engaged in the business of providing cargo facilities at Bangalore International Airport. During the year under consideration, the assessee had claimed deduction u/s. 80IA(4)(i) of the Income-tax Act, 1961 [hereinafter referred to as the Act ] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... BB has been appointed as custodian of cargo by the customs authorities in accordance with Customs Act and Rules. MABB has constructed the cargo terminal and installed machineries at the Cargo Terminal at Bangalore International Airport, Bangalore. 6. Conditions for claiming deduction u/s.80IA (4)(i)(b) are that the assessee company should have entered into an agreement with the Central Government or a State Government or a Local authority or any other Statutory Body for (i) developing or (ii) operating and maintaining or (iii) developing, operating and maintaining a new infrastructure facility. Infrastructure facility includes a port, airport, inland waterway or inland port or navigational channel in the sea. 7. It is submitted that MABB, i e., assessee company, has signed an agreement with BIAL to develop, operate and maintain a cargo facility at airport, wherein BAIL is a statutory body as per the definition of Parliament (Prevention of Disqualification) Act (10 of 1959) since BIAL was established by KSIIDC Alternatively, BIAL has signed a concessional agreement with Government of India (GOI), wherein GOI authorises BIAL to enter into Service Provider Right Holders (SPRH) a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... air traffic and of aerodromes ... ' The Aircraft Act, 1934 and the Rules made there-under by the Central Government govern the development, maintenance and operation of all airports, including greenfield airports. Under the Act, Central Government has the sole right to grant a license for setting an airport, and the operations of the airport would be subject to its licensing conditions (Rule 78 of the Aircraft Rules) ..... Thus an airport can be developed and operated either by AAI or by an Airport Company that has been given a license by DGCA as per its license conditions. The Rules also allow the Central Government or a State Government to obtain a license ... 4.1.3 In the present case, BIAL was formed as a wholly-owned subsidiary of the State Government of Karnataka, and obtained the requisite clearances under the prevailing central laws to build and operate an airport facility. Thereafter, it obtained bids for investment from qualified private operators, and accordingly, the BIAL as a corporate body was set up. All through, the operation of the relevant statutes in its constitution and in regulating its functioning through conditions stipulated by statutory license ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n integral part of air traffic operations, whether by sharing of passenger flights or via dedicated cargo craft. It is also very common to find a large amount of non-passenger cargo being uploaded onto commercial aircraft in addition to passengers' luggage. Within this reality, the very location of the cargo-handling area, linked as it is with the critical Airside Service Road and partaking of statutory infrastructure relating to security, customs, X-rays etc. within its own operations, indicates that this service is very much a part-and-parcel of the commercial operations undertaken by aircargo operators and other air transporters, whose equipment and machinery are also integrated in to the definition of aerodrome as per Section 2(2) of the Aircraft Act, 1934. I note that the AO has not qualified the particular reasons why he considers the cargo-handling facility to be located in the vicinity of the Airport, but not within it. Since the cargo-handling area is flanked by the maintenance hangars, air catering services, fuel farm, fire station etc., there is no reason in my opinion to hold that the same is located in the vicinity of the airport and not within it. In that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ditions set out by the section are fulfilled in the cargohandling operations under a BOT arrangement with BIAL being carried on by it. The addition made by the AO by rejecting the claim is cancelled, and the AO is directed to allow the deduction to the appellant u/s 80IA(4)(i). 14. Aggrieved by the order of the CIT(Appeals), the department is in appeal before us on the following grounds of appeal:- 1. The order of the learned CIT(A) is opposed to law and facts of the case. 2. On the facts and in the circumstances of the case the learned CIT(A) erred in granting deduction u/s 80IA(4)(i) in respect of profits earned from cargo handling facility maintained and operated by the assessee at Bangalore International Airport, ignoring the fact that the principal condition for allowing this deduction is that the agreement for development of any infrastructure facility must be entered into with the Central Government or State Government or any local authority/statutory body, while the assessee had entered into a Service Provider Rightholder Agreement with Bangalore International Airport Ltd., a private limited company, for running this facility. 3. The CIT(A) ought to h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ional High Court Order, we do not see any reason to interfere with the order of the CIT(A). 17. Respectfully following the order of the coordinate Bench of this Tribunal in MP No.19/Bang/2014 (in ITA No.1160/Bang/2012 dated 30.01.2014), we dismiss ground Nos.2 3 raised by the department. 18. With respect to ground Nos.4 raised by the department that assessee is only a contractor to whom certain rights were granted by BIAL to operate the cargo facility and such contractor cannot be called as a developer of infrastructure facility, we find that this issue has been considered by the coordinate Bench of the Tribunal in ITA No.1160/Bang/2012 dated 30.01.2014 for the AY 2009-10 in assessee s own case, wherein it has been held that the agreement entered with BIAL is for development, operation and maintenance of infrastructure facility u/s. 80IA(4) of the Income-tax Act. The relevant portion of the decision is extracted below:- 14. As regards the other issues such as whether the cargo handling facility is a been a part of the airport facility and also whether the development operation and maintenance of the cargo handling facility is a part of infrastructure facility is conc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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