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TMI Blog2025 (2) TMI 1142X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax Act, 1961 [Act]. Although the respondent-assessee was held eligible to claim benefits under that provision by the Assessing Officer [AO], the Principal Commissioner of Income Tax [PCIT] while exercising powers under Section 263 chose to overturn the view so expressed. It is this order of the PCIT dated 31 March 2016 which was ultimately assailed before the Tribunal. 3. We find that the PCIT had, while dealing with the question of whether Section 80IA could apply in the case of the respondent-assessee, held as follows: - "No evidence is available on assessment record to suggest that any of these aspects of the Contract along with its other parts were either examined or verified by the A.O. in the course of the assessment proceedings. These features are a part of the contract which was executed for providing certain inputs to M/s DIAL during the F.Y. 2010-11 relevant to the A.Y. 2011-12. The agreement in question is silent on the role or any services to be provided by CELEBI HAYA SERVISI AS a Company. The reference to the OMDA (Operation Management and Development Agreement) was made on 4 April 2006 in between AAIL and DIAL. The company in question neither was in existence nor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ame to be executed between Delhi International Airport Pvt. Ltd. [DIAL] and the respondent-assessee on 24 August 2009. The scope of the said Concession was envisaged to include the upgradation, modernization, financing, operating, maintaining and management of the Cargo Terminal at DIAL. 5. The PCIT appears to have taken the view that the AO had clearly omitted to bear in consideration the plain text of Section 80IA and which would have enabled deductions being claimed, provided it were shown that the profits and gains in question had been derived by an undertaking or an enterprise from any business referred to in sub-section (4). 6. Although Section 80IA, and as it exists on the statute book today, is broadly couched in similar terms, we are in this matter concerned with the previous version of that section and which spoke of gross total income of an assessee derived from business of an industrial undertaking as well as a host of other activities which were spelt out. 7. Sub-section (4) of Section 80IA explained that the provision would apply to any enterprise carrying on the business of "developing", "operating and maintaining" or "developing, operating and maintaining" any in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tment system, irrigation project, sanitation and sewerage system or solid waste management system; (d) a port, airport, inland waterway [inland port or navigational channel in the sea]. [(ii) any undertaking which has started or starts providing telecommunication services whether basic or cellular, including radio paging, domestic satellite service, network of trunking, broadband network and internet services on or after the 1st day of April, 1995, but on or before the [31st day of March, 2005];] (iii) any undertaking which develops, develops and operates or maintains and operates an industrial park [or special economic zone] notified by the Central Government in accordance with the scheme framed and notified by that Government for the period beginning on the 1st day of April, 1997 and ending on the 31st day of March, [2006]: Provided that in a case where an undertaking develops an industrial park on or after the 1st day of April, 1999 or a special economic zone on or after the 1st day of April, 2001 and transfers the operation and maintenance of such industrial park or such special economic zone, as the case may be, to another undertaking (hereafter in this section referre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such undertaking begins to generate or transmit or distribute power before the [31st day of March, 2012].] [* * *]" 8. Prior to the aforesaid provision being amended by Finance Act, 2001, clause (b) of Section 80IA(4) had read as under:- "(b) it has entered into an agreement with the Central Government or a State Government or a local authority or any other statutory body for (i) developing, (ii) maintaining and operating or (iii) developing, maintaining and operating a new infrastructure facility subject to the condition that such infrastructure facility shall be transferred to the Central Government, State Government, local authority or such other statutory body, as the case may be, within the period stipulated in the agreement" 9. Undisputedly, it is Section 80IA(4) which would determine the eligibility to benefits that were claimed. The PCIT bearing the aforesaid statutory position in mind has come to hold that the grant as made to the respondent-assessee by DIAL would not fall within the ambit of Section 80IA(4) since it was not pertaining to an agreement with the Central Government, State Government, local authority or any other statutory body for the purposes of devel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y allude to the pre-conditions which must be satisfied for the purposes of an assessee claiming benefit of Section 80IA. 13. Ms. Jha, learned senior counsel who appeared for the respondent-assessee, however, has taken us in great detail through the following provisions and covenants which form part of the OMDA and which are reproduced hereinbelow:- "OPERATION, MANAGEMENT AND DEVELOPMENT AGREEMENT This Operation, Management and Development Agreement (the "Agreement" or "OMDA") made on this 4th day of April, 2006, BY AND BETWEEN: 1. The Airports Authority of India acting through its Chairman (hereinafter referred to as the "AAI", which expression shall, unless repugnant to the context or meaning thereof, include its successors and assigns) of the FIRST PART; and 2. Delhi International Airport Private Limited, a company incorporated under the Companies Act, 1956 having its registered office at Delhi Airport, New 'Delhi (hereinafter referred to as the "JVC", which expression shall, unless repugnant to the context or meaning thereof, include its successors and permitted assigns) of the SECOND PART. AAI and JVC are hereinafter collectively referred to as "Parties" and in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n any business other than as envisaged herein. Provided however that the JVC may engage in developing, constructing, operating or maintaining a second airport pursuant to exercise of the Right of First Refusal granted to the JVC under the State Support Agreement. **** 8.5.7 Contracts, Lenses and Licenses (i) Sub-Contracting, Sub-leasing and Licensing (a) Any activity may be sub-contracted by the JVC, provided always that notwithstanding the sub-contract, the JVC retains overall management, responsibility, obligation and liability in relation to the sub-contracted Airport Service. Any such subcontracting shall not relieve the JVC from any of its obligations in respect of the provision of such Airport Services under this Agreement. It is clarified that JVC shall remain liable and responsible for any acts, omissions or defaults of any sub-contractor, and shall indemnify AAI in respect thereof. Provided however that any sub-contract involving foreign manpower or materials shall be subject to the political sensitivities of GOI. (b) AAI hereby recognizes the right of JVC to sub-lease and license any part (but not whole) of the Airport Site to third parties for the purpose of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en BIAL and KSIIDC for establishment of International Airport, the KIADB has transferred the lands covered therein to KSIIDC and in turn in favour of BIAL. The registration fee of Rs. 25.33 crores is exempted by giving 100% concession under notification dated 15-4-2005. In view of this, the lands acquired by the State Government in favour of Karnataka Industrial Areas Development Board (in short referred to as 'KIADB') for the infrastructure facility defined under the Karnataka Industrial Areas Development Act, 1966 for establishing International Airport in exercise of its eminent domain powers under Section 28(1) and 28(4) of KIADB Act, the vast extent of land nearly four thousand and odd acres was acquired under the KIADB Act, the same was subsequently transferred by KIADB to KSIIDC for establishment of International Airport and vast extent of land was leased in favour of BIAL for that purpose, the acquisition of vast extent is for the above public purpose. As per the explanation of Section 28-A of the A.A.I. Act for removal of doubts, it is declared that for the purposes of aforesaid clause, 'airport' includes private airport. The benefit of Chapter V-A of the A.A.I. Act is inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ehravardi, (1981) 1 SCC 722, para 9, are not a rigid set of principles so that if a body falls within any one of them it must, ex hypothesi, be considered to be a State within the meaning of Article 12. The question in each case would be - whether in the light of the cumulative facts as established, the body is financially functionally and administratively dominated by or under the control of the Government. Such control must be particular to the body in question and must be pervasive. If this is found then the body is a State within Article 12. On the other hand, when the control is merely regulatory whether under statute or otherwise, it would not serve to make the body a State. 41. Coming now to the facts of CSIR, we have no doubt that it is well-within the range of Article 12, a conclusion which is sustainable when judged according to the test judicially evolved for the purpose. ...... 98. Simply by holding a legal entity to be an instrumentality or agency of the State it does not necessarily become an authority within the meaning of "other authorities" in Article 12. To be an authority, the entity should have been created by a statute or under a statute and functioning w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es in India and variety of methods by which Governmental functions are performed or by which the Government carries on trade or business by a society, corporation etc., the functions that would be carried on by BIAL is an instrumentality of the 'State' under Article 12 of the Constitution of India. The statutory body-second respondent may be empowered to divest its power and functions wholly or partially in any interest or juridical person or it may act generally or in collaboration with the other bodies, public or private, for performing its functions. (xi) In the case of Burton, after referring to the act of a private lessee to a private authority has held to be State action in violation of 14th amendment as the lessee of the parking authority was operating a restaurant in the automobile parking building and was refusing to serve solely on the ground that he was a negro, the relevant para of the law laid down reads thus: "Only by sifting facts and weighing circumstances can the non-obvious involvement of the State in private conduct be attributed its true significance. The land and building were publicly owned. As an entity, the building was dedicated to 'public uses' in pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ereunder: "A particularised inquiry into the circumstances of each case in necessary in order to determine whether a given factual situation falls within 'the variety of individual - State relationship'... The dis-positive question in any State - action case is not whether any single fact or relationship presents a sufficient degree of State involvement, but rather whether the aggregate of all relevant factors compels a finding of State responsibility. It is not enough to examine seriatim each of the factors upon which a claimant relies and to dismiss each individually as being insufficient to support a finding of State action. It is the aggregate that is controlling. In the aggregate, these factors depict a monopolist providing essential services as a licensee of the State and within a framework of extensive State supervision and control. The particular regulations at issue, were authorised by State law and were made enforceable by the weight and authority of the State. Moreover, the State retains the power of oversight to review and amend the regulations if the public interest so requires. Respondent's actions are sufficiently intertwined with those of the State, and it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd collect development fee from embarking passengers under clause (b) for establishment or development of a new airport in lieu of the airport referred in clause (a) or (c) for investment in the equity in respect of shares to be subscribed by the authority in companies engaged in establishing, owning, developing, operating or maintaining a private airport in lieu of the airport referred to in clause (a) or advancement of loans to such companies or other persons engaged in such activities. (xvi) The effect of the exclusion of provisions of Chapter V-A of the A.A.I. Act from the ambit of Rent Control Act from the premises leased to BIAL is that the Government while dealing with the citizens in respect of its property, would not act for its own purpose as a private landlord but would act in public interest. In this regard, the Constitutional Bench of the Apex Court at para 69 in the case of Ashoka Marketing Limited v. Punjab National Bank [(1990) 4 SCC 406.], after referring to its earlier decision in the case of Dwarkadas Marfatia and Sons v. Board of Trustees of the Port of Bombay [AIR 1989 SC 1642 : (1989) 3 SCC 293.], has laid down the law as under: "69....... every activity o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with avowed object deliberately used in Article 226 of the Constitution of India, which may be a natural person or juridical person such as Government, private or public limited company, society, body, corporation etc., who will perform public functions/duties in the public interest. They are all amenable to judicial review power of this Court is the legal principle, enunciated by the Apex Court in the above referred cases. (xx) Further as per the decisions in Rohtas Industries Limited, Andi Mukta and Unni Krishnan's cases, the Supreme Court has succinctly held that the scope of High Court power under Article 226 of the Constitution of India is also to issue writs against a private body/person. The words "any person or authority" referred to in Article 226 of the Constitution of India is therefore not to be confined only to statutory authorities and instrumentalities of State for issuing writs against any persons. They may cover any person or body performing statutory, public functions and duties. The form of the body is not relevant for the purpose of exercise of power of this Court under Article 226 of the Constitution of India. What is relevant is the nature of functions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "A writ under Article 226 can lie against a 'person' if it is a statutory body or performs a public function or discharges a public or statutory duty", in the case of Zee Tele Films Limited, referring to Andi Mukta's case, it has held that "Thus, it is clear that when a private body performs its public functions even if it is not a State, the aggrieved person has a remedy not only under the ordinary law but also under the Constitution by way of a writ petition under Article 226". Lastly referring to the cases of Binny Limited and Zee Tele Films Limited, it has held that : 'Article 226 is couched, in such a way that a writ of mandamus could be issued even against a private authority.... discharging a public function... A body is performing a 'public function' when it seeks to achieve some collective benefit for the public or a section of the public and is accepted by the public or that section of the public as having authority to do so. Bodies therefore exercise public functions when they intervene or participate in social or economic affairs in the public interest. (xxiii) For the foregoing reasons, we answer Point Nos. 1 to 3 in favour of the petitioner." 17. It becomes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t lie. The sanctity of this distinction must be preserved. 36. For the above reasons, we are of the view that the Division Bench of the High Court was not justified in coming to the conclusion that the appellants are amenable to the writ jurisdiction under Article 226 of the Constitution as an authority within the meaning of the Article. 37. For the reasons that we have adduced above, we hold that neither the Ramakrishna Mission, nor the hospital would constitute an authority within the meaning of Article 226 of the Constitution. 38. Before concluding, it would be necessary to also advert to the fact that while the learned Single Judge had come to the conclusion that the appellants are "State" within the meaning of Article 12, the Division Bench has not accepted that finding. The Division Bench ruled, as we have noticed earlier, that the appellants do not fall within the description of "State" under Article 12. This finding has not been challenged before this Court by the State of Arunachal Pradesh. 39. Even otherwise, we are clearly of the view that the tests which have been propounded in the line of authority of this Court in Ajay Hasia v. Khalid Mujib Sehravardi [Ajay Ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndia and its activities are designed to benefit people from all over the world. While the Indian public may be the beneficiary of the activities of the Institute, it certainly cannot be said that ICRISAT owes a duty to the Indian public to provide research and training facilities." Applying the above test, this Court upheld the decision of the High Court that the writ petition against ICRISAT was not maintainable. **** 30. Thus, even if the body discharges a public function in a wider sense, there is no public law element involved in the enforcement of a private contract of service." 20. It is thus evident that it was an opinion rendered in the context of maintainability of a writ petition under Article 226 of the Constitution which was adopted by the Karnataka High Court in Menzies Aviation to answer the question posited with reference to Section 80IA as under:- "8. We have considered the submissions made on both sides and have perused the record. Before proceeding further, it is apposite to take note of section 80-IA of the Act, the relevant extract of which is reproduced below for the facility of reference:......... Thus, from close scrutiny of section 80-IA(4)(i)(b) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ling area is linked with 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 part of commercial operations undertaken by air cargo operators and other air transporters whose equipment and machinery are also integrated in to the definition of aerodrome as per Section 2(22) of the Aircraft Act, 1934. Thus, it has been held by the Commissioner of Income-tax (Appeals) that cargo handling services are located within the airport and are critical infrastructure facilities and are deemed to be part of the airport. 11. The Appellate Authority has also taken note of the fact that SPRH agreement gives rights for design, construction, financing, testing, commissioning, management and operation of the facility for a total period of 20 years to the assessee and the concession is on built, operate and transfer basis. Therefore, it has been held that every contractor may not be a developer but every developer developing infrastructure facility on behalf of the Government is a contractor. In Chettinad Lignite Transport Services (P.) Ltd., (supra), it has been held that proviso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ater treatment system, irrigation project, sanitation and sewerage system or solid waste management system; (d) a port, airport, inland waterway [inland port or navigational channel in the sea]." 23. While it was sought to be contended by the appellants that a Cargo Terminal does not find specific mention in the Explanation, we proceed on the premise that since "infrastructure facility" is defined to include an airport, a facility integral or supportive and concomitant to an airport would also be covered. 24. That would still leave us to examine whether the concession which was granted by DIAL in favour of the respondent-assessee would qualify the principal part of sub-section (4). This would necessarily entail it being found and established that the respondent-assessee was an enterprise carrying on either a business or operating and maintaining an infrastructure facility in terms of and pursuant to an agreement entered into with either the Central or State Governments, a local authority or any other statutory body. 25. It is here that the claim of the respondent falters and falls. We, firstly find ourselves unable to countenance or acknowledge DIAL to be either the Central or ..... X X X X Extracts X X X X X X X X Extracts X X X X
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