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TMI Blog2023 (11) TMI 859X X X X Extracts X X X X X X X X Extracts X X X X ..... from all the facilities which bring utility or add utility to the premises, convenience to passengers, crew, ground staff. Facilities like cargo handling, ground handling, announcement crew, security, check-in counter, baggage management facility, the Airport crew, airlines crew, aircraft crew facility etc. collectively and independently use the premises, the fixed structures, the equipments etc. The developing, operating and maintaining Airport, therefore, encompasses all these activities which are incidental or supplemental to the transportation of passengers or cargo or both together. These facilities of various kind may be provided by one company or different companies but in any way they operate in consortium and having interdependence. Learned AO has fallen in error in observing that different companies have developed the running of Bangalore Airport and the assessee is merely providing utility services beyond the scope of Airport for the purpose of Section 80-IA. Thus ground handling and cargo handling services provided by the assessee are covered within the meaning of Explanation referred to Section 80-IA and assessee is entitled to claim the benefit of same. There wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me in all subsequent years. Thus, given the fact that in AY 2014-15 the Department has now accepted that the disallowance is not required to be made under section 40(a)(ia) in respect of the year end provisions for concession fee, same sustains the claim of assessee. The reliance as placed by Ld. Sr. Counsel on the decision of Toyota Kirloskar Motor (P.) Ltd. [ 2021 (4) TMI 276 - KARNATAKA HIGH COURT] also supports the case of assessee as therein year end provisions were made for expenses on estimate basis in respect of which bills were yet to be submitted. The provisions were reversed upon receipt of invoice and expenses were booked as per the invoices and taxes were deducted there from. The Hon ble High Court referred to the principle laid down in CIT v. Shoorji Vallabhdas Co. [ 1962 (3) TMI 6 - SUPREME COURT] that if income does not result at all, there cannot be a levy of tax even though a book entry is made. Thus ground is determined against the appellant Revenue. - Shri M. Balaganesh, Accountant Member And Shri Anubhav Sharma, Judicial Member For the Assessee : Sh. Percy Pardiwalla, Adv., Sh. Mayur Kapoor, CA; Sh. Ashish R. Safi, CA; Sh. Kripa Ray, CA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 80IA (4) only covers Airport and not cargo handling etc. AO 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, so also benefit of Section 80IA shall not be eligible. 4. On behalf of assessee, relying various judicial pronouncements, it was 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 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 on it. Accordingly, BIAL granted service provider rights for developing the cargo handling facility, providing cargo and ground handling services at the Bangalore airport to the JV partne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee company has been formed by transfer of machine and plant previously used by joint venture and thus clause (i) of subsection (3) of Section 80-IA of the Act was violated. 5.1 Then, the learned AO concluded that the assessee company does not fulfill all the essential conditions of Sub-section (4) of Section 80-IA of the Act, as it is not a company registered in India or owned by consortium of such companies. 5.2 Learned AO also observed that since assessee company had not entered into agreement with Central Government for the eligible business, the case of assessee is not covered by conditions of Section 80-IA. 5.3 Learned AO concluded that ground handling and Cargo handling services at Airport are not covered in the activity of maintaining or developing, operating and maintaining Airport. 5.4 Learned AO also took note of the fact that erstwhile joint venture had not made any claim u/s 80-IA whose business was transferred to assessee company on going concern basis and in the relevant assessment year i.e. 2011-12 also the joint venture has shown income but no deduction u/s 80-IA has been claimed in respect of income shown for the part period 1.4.2010 to 31.7.2010. Accor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Airport which activities are not covered within the meaning of explanation referred to section 80IA. 2. The Ld. CIT(A) erred in law and on facts in deleting addition of Rs. 3,82,00,000/ on account of disallowance u/s 40(a)(ia) of the Income Tax Act. 3. The appellant craves leave for reserving the right to amend, modify, alter, add or forego any ground(s) of appeal at any time before or during the hearing of this appeal. 8. Heard and perused the records. The Ground-wise findings are as follows. 9. Ground no 1 with sub-grounds; After taking into consideration the material on record and the submissions, we are of the considered opinion that ground no. 1 along with its sub-grounds are based on common facts and can be conveniently disposed of together avoiding cost of repetition. At the outset learned Senior Counsel submitted that the issue with regard to provision of ground handling and Cargo handling services at Airport being covered under the activities of maintenance of Airport, is now a duly settled preposition of law and learned CIT(A) has rightly relied the judgment in the case of Menzies Aviation Bobba (Bangalore) Pvt. Ltd. in ITA no. 1160/Bang/2012, whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. It will be appropriate to reproduce here in below the relevant findings of CIT(A) in that case, which were approved in co-ordinate Bench order; 6.1. The appellant has submitted that these contentions are supported by the decisions of the Hyderabad ITAT in the case of Ocean Sparkle Ltd Vs Deputy Commissioner of Income Tax 155 Taxman 133, and in the case of Hyderabad Menzies Air Cargo P. Limited vs. DCIT at ITA No 421, 422 and 423/Hyd/2015 for AYS 2009-10 to 2011-12 and at ITA No 1094/Hyd/2016 for AY 2012-13, and of the Bangalore Tribunal in the case of ACIT vs. M/s Menzies Aviation Bobbe (Bangalore) Pvt. Ltd., at ITA No 1160/Bang/2012. The Karnataka High Court in the case of Ms. Flemingo Dutyfree Shops P Ltd in W.P. No. 14215 of 2006 dated 19.12.2008 has considered the functions as well as various aspects relating to Bangalore International Airport Ltd. (BIAL) for coming to the conclusion that BIAL is a statutory body. The Hon'ble Court has held that providing duty free shops in the BIAL is in the nature of statutory functions/public functions for the convenience of the public. All the facilities provided by BIAL, be it a state, lessee, or entity, performs statutory func ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pment connected with the Aircrafts maintenance, their running, flying or landing alone. The functionality of the Airport arise from all the facilities which bring utility or add utility to the premises, convenience to passengers, crew, ground staff. Facilities like cargo handling, ground handling, announcement crew, security, check-in counter, baggage management facility, the Airport crew, airlines crew, aircraft crew facility etc. collectively and independently use the premises, the fixed structures, the equipments etc. The developing, operating and maintaining Airport, therefore, encompasses all these activities which are incidental or supplemental to the transportation of passengers or cargo or both together. These facilities of various kind may be provided by one company or different companies but in any way they operate in consortium and having interdependence. Learned AO has fallen in error in observing that different companies have developed the running of Banglore Airport and the assessee is merely providing utility services beyond the scope of Airport for the purpose of Section 80-IA. Thus, on the basis of aforesaid decision, the Bench is inclined to hold that ground hand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erms and conditions as BIAL may determine are appropriate. Accordingly, on the basis of aforesaid tenders were invited for the cargo services. The SPRH agreement of AI and SATS with BIAL, at page no. 123 of the paper book has an important recital No. 1.3 which provides that in furtherance of agreement, the SPRH was under obligation to get incorporated a joint venture company under the Companies Act, 1956 and this recital further describe the liability of SPRH for subscription of shares by AI and SATS equally and that SPRH has right to transfer this agreement to the newly incorporated JVC by way of novation of agreement. This leaves no doubt in the mind of this bench that BIAL had delegated Authority from the Government of India to enter into SPRH agreement and the assessee is a natural child of this alliance. Ld. CIT(A) has not fallen in error in accepting that BIAL is statutory body as held by Hon ble Karnataka High Court in the case of M/s. Flemingo Duty-Free Shops P. ltd. Therefore, there was no substance in the allegation of Ld. AO that the basic condition provided in Section 80IA(iv)(i)(b) is not fulfilled. This was also the view of Banglore Tribunal in the case of M/s. Men ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... demic. 14. Still, for ending controversy for all purposes, it comes up that on merits Ld. Sr. Counsel has submitted that the concession fee was not debited in favour of BIAL unless invoice was raised after taking into consideration certain aspects regarding sale of scrap, parking fees, foreign exchange gain etc., which were uncertain and disputed. It was submitted that therefore on the basis of best estimate provision was made for concession fees. Creation of provision was necessary as actual turnover was more than projected turnover and liability had to be created as per mercantile system of accounting. In the year, provision of Rs. 3,82,00,000/- was reversed and expenses were booked as per the final invoice received in September, 2011 and taxes were duly deducted at source. 14.1 It was also submitted that infact in the present case, section 194C of the Act cannot have any application since no work has at all been carried out by BIAL for the assessee. If at all it is the assessee who has carried out work. BIAL has simply charged a concession fee as consideration for the rights it has granted the assessee by virtue of the SPRH agreement. 14.2 It is further submitted that i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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