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TMI Blog2024 (4) TMI 495X X X X Extracts X X X X X X X X Extracts X X X X ..... t venture for carrying out the same business activity. (ii) As per 80IA(4) clause (i) of the Income-tax Act, 1961 the enterprise should be owned by a company registered in India whereas the assessee company is formed by M/s. Air India Ltd., an Indian Company and M/s. SATS Ltd. a Singapore based company and the one of the owner or participant of the consortium is not a company registered in India. (iii) Deduction u/s 80IA is allowable for certain basic infrastructure facilities and not providing utility services whereas assessee is engaged in the business of providing ground handling and cargo handling services at Indian Airport which activities a covered within the meaning of explanation referred to Section 80IA. 2. Ld. CIT(A) has erred in law and on facts in deleting the disallowances of Rs. 3,48,08,595/- made by AO on account of contingent liability. 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." 2. Ground No.1 and sub grounds are in respect of disallowance of deduction claimed by the assessee u/s 80IA of the Act. 3. Ld. Counsel for the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, which has been confirmed by Hon'ble Karnataka High Court on 25.01.2021 vide ITA no. 186 of 2016. 9.1 Learned DR, however, resisted the same, submitting that the nature of activity of maintaining the Airport is one where technical facilities connected with the flying of aircrafts is concerned and ground activities like Cargo handling do not fall in the category of maintenance of Airport. 10. Further Ld. Sr. Counsel submitted that there is no requirement that the share holders of an Indian Company, as mentioned in Section 80-IA(4)(i)(a), should also be Indian companies. For this, reliance was placed on the jud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 functions in the Airport," The said decision has been followed by the Bangalore Tribunal in the case of Menzies Aviation Bobba (Bangalore) Pvt. Ltd. (supra). 6.2 The facts of the appellant's case are similar to that of Menzies Aviation Bobba (Bangalore) Pvt. Ltd and Hyderabad Menzies Air Cargo P. Ltd which have entered into an agreement with BIAL and GHIAL respectively for Air Cargo facility at Bangalore and Hyderabad airport, Hence, respectfully following the decision of the Karnataka High Court in the case of Flemingo Dutyfree (supra) and the decision of the Bangalore Tribunal in the case of ACIT vs. M/s. Menzies ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 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. 12.2 Then the assessee has come into existence not by reconstitution or reconstruction of the joint venture of Air India Ltd. and SATS Ltd. Singapore on its own, rather it was at the initiation of the Government of India that the assessee came into existence and there is no rebuttal by way of any enquiry by Ld.AO, to the submissions of assessee that the Cabinet had given an approval of the establishment and functionality of assessee. The co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is 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. Menzies Aviation (supra) as duly appreciated by ld. CIT(A). 12.3 Then it comes up that Ld. CIT(A) has duly appreciated the fact that Ld. AO had fallen in error in applying provision of Section 80IA(iii) with regard to allegation of the assessee company being a mere reconstitution and reconstruction of unincorporated JV by taking into consideration that the said provision is not applicable to the assessee company claiming benefit by way of infrastructural facility of the nature of Airport. Ld. CIT(A) has also duly appreciated the fact that assessee is company incorporated India and owns the infrastructural facility and Ld. AO h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ancore) (P) Ltd. v. CIT [1971] 82 ITR 442 (Ker), wherein, it is held that for the purpose of computing yearly profits and gains for assessment to income-tax, each year is a separate and self-contained period of time, and losses and expenses incurred before commencement or after its expiry cannot be the subject of any allowance in assessing the income of that particular year. In making the assessment for any particular year, deductions can therefore be permitted only in respect of expenses which are found to have been incurred in the relevant accounting period. In adjudging the admissibility of a claim deduction, the determination of the question whether the assessee had incurred the expenditure during the relevant accounting period is an indispensable preliminary step. Thus, the claim of assessee is not admissible being provisional in nature. On this score, the amount of Rs. 3,48,08,595/- (Rs.4,57,20,236/- minus Rs. 1,09,11,641/-) is liable to be disallow being a provision made for contingent / uncertain liability. Accordingly, the amount Rs. 3,48,08,595/- is being disallowed." 9. We observe that the Ld.CIT(A) considering the submissions of the averments of the AO in the assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rties in that financial year. Once the invoice is raised by the parties and received by the appellant, the provision created for concession fees is reversed and the bill is recorded based on actual invoice. The corresponding TPS is deducted and deposited..." 5.2b Recollecting that the appellant is subjected to audit, the action of the appellant as well as its contention that it is within the ambit of Section 145 of the Act is plausible. Further, in view of the decision of the apex court in Bharat Earth Movers (200) 112 taxmann 61 wherein it has been held, inter alia, "...The law is settled: if a business liability has definitely arisen in the accounting year, the deduction should be allowed although the liability may have to be quantified and discharged at a future date. What should be certain is the incurring of the liability. It should also be capable of being estimated with reasonable certainty though the actual quantification may not be possible. If these requirements are satisfied, the liability is not a contingent one. The liability is in praesenti though it will be discharged at a future date. It does not make any difference if the future date on which the liability shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the view that the credit contemplated in sub-section (2) of section 194C is one that enables the person who has carried out the work to make a claim for the sum. The provision of Rs. 3,82,00,00,000/-, as made by assessee did not as such create a debt in favour of BIAL as the concession fee did not arise out of any contract performed by BIAL but was more in the form of royalty with uncertainty of actual amount due and therefore no income can be said to have accrued or arisen to BIAL. 16.1 Further, the methodology adopted for estimation of turnover / profits and subsequently creating the year-end provision and reversing the same in next financial year, remains the same 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. 17. The reliance as placed by Ld. Sr. Counsel on the decision of the Hon'ble Karnataka High Court in Toyota Kirloskar Motor (P.) Ltd. vs. ITO [2021] 128 taxmann.com 266 also supports the case of assessee as therein year end provisions were made fo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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