DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 4(2), NEW DELHI, I.P.ESTATE, NEW DELHI V. BIRD WORLDWIDE FLIGHT SERVICE (INDIA) PRIVATE LIMITED, CONNAUGHT PLACE, NEW DELHI

ITA 2779/DEL/2023

AI Insights

The case revolves around the eligibility of the assessee, Bird Worldwide Flight Services (India) Private Limited, for a deduction under Section 80IA of the Income Tax Act, 1961, concerning its ground handling operations at Delhi and Cochin airports. The Revenue challenged the CIT(A)'s decision, which had favored the assessee, arguing that DIAL and CIAL are not statutory bodies as required by the Act, and that the assessee did not fulfill the conditions to claim the deduction. The Tribunal examined whether DIAL and CIAL could be considered statutory bodies and whether the assessee's activities qualified as operating and maintaining an infrastructure facility under Section 80IA(4).

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 793304 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 11 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-09-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2017-2018
• Appeal Filed On: 03-10-2023
• Other Referred Cases: Cochin International Airport Ltd vs. DCIT, Flemingo Duty Free Shop (P.) Ltd. v. Union of India, Delhi International Airport Private Limited Vs. Union of India and Others, CIT Vs. Ranjit Projects (P) Ltd.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Set aside; Relationship of principal and agent
• Section: 12A; 12; 115JB; 80IB

Judgement Text

" ORDER PER MAHAVIR SINGH, VP : The captioned appeal has been filed by the Revenue against the order of the First Appellate order dated 04.08.2023 passed by NFAC, New Delhi u/s 250 of the Income Tax Act, 1961 pertaining to assessment year 2017-18. 2. The Revenue has raised following grounds of appeal:- “(a) Whether the Ld. CIT(A) has erred on facts by considering CIAL and DIAL as statutory bodies. (b) Whether the Ld. CIT(A) has erred on facts and in law in deleting the disallowance of deduction u/s 80IA of the Act as the assessee has not fulfilled basic condition to claim the said deduction.” 3. The brief facts of the case are that assessee company filed its income tax return on 31.10.2017 declaring taxable income of Rs.4,13,13,970/-, on a total turnover of Rs.246.26 crores after ‘claiming deduction under section 80IA of Printed from counselvise.com 2 ITA-2779/Del/2023 the Act of Rs.50,08,76,152/- on profits derived from ground handling operations at Delhi and Cochin Airport. However, it paid tax on book profits of Rs.52,97,70,419/- since the tax payable under section 115JB of the Act was higher than the regular provision consequent to the claim of the deduction under section 80IA of the Act. Subsequently, the case was selected for scrutiny assessment and the assessment in this case was completed on 20.12.2019 at an assessed income of Rs.54,21,90,122/-. 4. Aggrieved, the assessee preferred appeal before the CIT(A). The CIT(A) deleted the addition made by the AO by observing and holding as under:- “1 1. I have perused the grounds of appeal and submission of the appellant. The learned AO has carried out disallowance of Rs.50,08,76,152/- on account of reversal of 80IA deduction as claimed by the Company. 2. The learned AO contended that the assessee company is not engaged in any business related to development, operation or maintenance of infrastructure facility. Furthermore the assessee company has not entered into any agreement with Central Government, State Government, local authority or statutory body as mandated section 80IA(4) of the I T Act. In this regard the appellant filed multiple grounds of appeal which are disposed off as under collectively. 3. The assessee company is providing ground handling services at the Indira Gandhi International Airport, Delhi (DIAL). Similarly assessee is undertaking ground handling services as per the Concession Agreement with Cochin International Airport (CIAL). 4. The moot point here remains that whether the DIAL/CIAL, as the case may be, can be considered a government entity with whom the assessee company has entered into an agreement and performing ground handling services for an airport is eligible for 80IA deduction or not. 5. Perusal of the relevant acts and submissions of the assessee makes it clear that Airport Authority of India (AAI) is responsible for the development, operation, management and maintenance of airports in India and pursuant to the Operation and Maintenance and Development Agreement (OMDA) has granted exclusive right to undertake the operations, maintenance, development, design, construction, upgradation, modernization, finance and management of Indira Gandhi International Airport to DIAL. The Airport Authority of India is a statutory body established under the Airport Authority of India Act, 1994. Delhi International Airport (DIAL) is a joint venture consortium of GMR Group (64%), Airports Authority of India (26%) and Fraport (10%). In CIAL also AAI has its shareholding. Printed from counselvise.com 3 ITA-2779/Del/2023 6. The DIAL/ CIAL are a private companies limited by shares incorporated under the laws of India, obligated to perform certain duties and functions as per the OMDA with the Airports Authority of India. Both are incorporated as a company and running through a concession themselves. Bodies that are statutory authorities will not need a separate concession because the statute will give them powers. Had the DIAL or CIAL been statutory bodies, they would have derived their powers from the statute themselves. 7. The ground handling services are provided as per permission granted by Govt. of India vide circular No. 9/1/2002-IR. Said circular prescribes eligibility criteria for performing ground handling services. This indicates that the ultimately Govt. of India is regulator for the underlined services. 8. Hon'ble Kerala High court in case of Cochin International Airport Ltd vs. DCIT [ITA Nos. 163,169, 176 of 2012), has dealt with the similar issue wherein the question under consideration was whether Cochin International Airport is eligible for 80IB deduction since the Section 80IA(4) mandates entering into agreement with Government of India or any other statutory body. The matter was determined in favour of the tax payer. The ratio of said judgment is applicable to appellants case as well. 9. In the instant case as well, it is worth noting that appellant is providing services of maintaining facility and the same is done pursuant to concession agreement. The airport authority of India ultimately represents Govt. of India and it is reasonable to conclude that ultimate beneficiary of services provided by the appellant is general public at large. 10. In case of Flemingo Duty Free Shop (P.) Ltd. v. Union of India [W.P. No. 14215 of 2006, dated 19-12-2008] (Karnataka HC), Hon'ble HC has upheld that functions carried out are pursuant to Airport Authority of India Act and thus, eligible for deduction under section 80IA. 2. 1. In view of the above, I am of the considerate view that in case of the appellant, the services are, provided pursuant to concession agreement which is originating from Airport Authority of India Act wherein ultimately the general public at large are recipient of said services, which is in line with intention of provision of Section 80IA. Therefore, it is reasonable to conclude that the appellant has satisfied conditions prescribed under section 80IA of the IT Act and eligible for deduction. The addition made by learned AO is liable to be deleted in entirety.” Aggrieved with the aforesaid findings of the CIT(A), Revenue is in appeal before Tribunal. Printed from counselvise.com 4 ITA-2779/Del/2023 5. Learned CIT-DR argued for the Revenue by stating that in this case, the basic issue involved is as regards the applicability of Section 80IA(4) of the Act and explained that this provision applies to any enterprise carrying on the business of (i) developing, (ii) operating and maintaining and (iii) developing, operating and maintaining any infrastructure facility which fulfills the following three conditions:- (a) It is owned by a company registered in India or a consortium of such companies. (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 or (ii) operating and maintaining or (iii) developing, operating and maintaining a new infrastructure facility. (c) It had started or starts operating and maintaining the infrastructure facility on or after the 1st day of April, 1995. He argued that the Assessing Officer has specifically noted that the assessee has not satisfied clause (b) of the said Section as the assessee has not entered into any agreement with the Central Government or a State Government or a local authority or any other statutory body for the above purpose. He argued that the agreement entered into by the assessee company was Indira Gandhi International Airport, Delhi (DIAL) and Cochin International Airport (CIAL). He stated that DIAL is a private company and is classified as company limited by shares and CIAL is a consortium of public private partnership with Government of Kerala holding 13%, Central Government holding 13% of shares and NRIs, the major shareholders having 74% of shares. Learned CIT-DR argued that the decision of Hon’ble Kerala High Court in the case of Cochin International Airport Ltd. is not applicable to the facts of the case because Hon’ble Kerala High Court has taken a view that such an agreement between Airports Authority of India and the assessee would qualify to be an agreement entered into with a statutory body for operating and maintaining the infrastructure facility such as the airport. He stated that before Hon’ble Kerala High Court, the issue was of Airports Authority of India, which is a statutory Printed from counselvise.com 5 ITA-2779/Del/2023 body. Such is not the case with DIAL or CIAL. He stated that the assessee is unable to fulfill the conditions mentioned in Section 80IA(4) of the Act, the conditions laid down have to be cumulatively fulfilled to be eligible for the claim of deduction. In terms of the above, he stated that the order of learned CIT(A) be reversed and that of the Assessing Officer be upheld. 6. On the other hand, learned Counsel for the assessee briefly stated the facts that the assessee Company Bird Worldwide Flight Services (India) Private Limited (BWFSPL) was incorporated on 10th October, 2008 for carrying on the business of providing ground handling services to various International & Domestic airlines at the Airports in India. Accordingly, concession Agreement dated 15-09-2008 was executed between Bird Group and Delhi International Airport Ltd. (DIAL) for providing Ground Handling Services at the Indira Gandhi International Airport, Delhi and Concession Agreement dated 23-01- 2009 was executed between Bird Group and Cochin International Airport Ltd. (CIAL) to develop international standard of Ground Handling Facilities & infrastructure at Cochin International Airport. Consequently the assessee company was incorporated by Bird Group to develop Ground Handling facilities at airport as per international standard and Government Policies in this regard. Accordingly, assessee claimed deduction under section 801A of the Act of Rs.50,08,76,152/- on profits derived from ground handling operations at Delhi & Cochin Airport. This is the second assessment year in which the assessee claimed deduction under section 801A on income derived from ground handling services rendered at Indira Gandhi International Airport and Cochin International Airport. The Audit report in Form 29B and in Form 10CCB duly certified by the chartered accountant was filed electronically along with the Income tax return. During the course of assessment proceedings detailed justification for claiming the deduction under section 80IA of the Act was filed through the tax portal along with the following agreements/documents: a. Tender Document issued by DIAL for Ground Handling Services. b. Operation & Management Development Agreement (OMDA) Printed from counselvise.com 6 ITA-2779/Del/2023 c. Circular dated 28-09-2007 issued by Government of India regarding grant of permission for providing Ground Handling Services at the Airport d. Concession Agreement with DIAL e. Tender Document issued by CIAL for Ground Handling Services, f. Concession Agreement with CIAL g. Detail of functions performed by manpower employed at the airport. h. Copy of sample agreements with the airlines. 7. The Assessing Officer raised objections against the deduction claimed under section 801A of the Act, since in his view, the assessee did not qualify the conditions laid down in the said section and accordingly made disallowance. The CIT(A) allowed the claim and aggrieved assessee preferred this appeal. Learned Counsel for the assessee narrated the facts that the Ground handling services is an essential infrastructure facility at the airport which includes the following services: A. Ramp Handling/Services B. Traffic (Terminal) Handling/Services The said services are an integral and inextricable part of the airport infrastructure facility. The assessee company is providing comprehensive ground handling services to the airlines at the airport without which the airport cannot operate & function. The ground handling services provided by the assessee company is essentially operating and maintaining of infrastructure facility at Delhi and Cochin Airport. The Ground handling function at airport includes: a. Transfer of passengers from Airport Terminal to Aircraft and vice-versa by air-conditioned high capacity passenger buses. b. Passenger Steps for enabling embarkation/disembarkation of passenger's to/from aircraft. c. Providing embarkation/disembarkation facility to disabled/critically ill passengers from aircraft through Ambulift. Printed from counselvise.com 7 ITA-2779/Del/2023 d. Transfer of passenger baggage or cargo baggage/pallets from airport terminal to aircraft and vice-versa through electric tractors, baggage trollies, palliate dollies. e. Loading/ un-loading of cargo/passenger baggage from aircrafts through heavy duty loaders, baggage conveyor belts, forklifts. f. Filling of aircraft water tanks prior to departure by water carts. g. Emptying toilet tanks of aircraft upon arrival at airport by toilet carts. h. Providing power supply through ground power unit (GPU) to aircraft after shutting of aircraft engines during the course of aircraft hault/ ground at airport. i. Providing cooling inside the aircraft through air-conditioning unit (ACU) to aircraft after shutting of aircraft engines during the course of aircraft hault/ground at airport. j. Providing aircraft engine start-up through air start unit (ASU) at time departure. k. Providing pushing back to aircraft to the run way / taxi bay through pushback & towbar for take-off. The assessee company is providing comprehensive ground handling services which involves: -Making Investment in Ground Support Equipment for infrastructure development at Delhi and Cochin Airport by way of deployment of state- of-the-art ground support equipment and maintenance of ground support equipment in maintenance work-shop/building at Delhi & Cochin Airports. - Perform activities by employing adequate trained manpower resources, - Assume all Operational and financial risks. -Enter into independent agreement with the airline companies to provide them comprehensive ground handling services at Indira Gandhi International Airport, Delhi and Cochin International Airport, Cochin. It is not rendering services to the airlines on behalf of DIAL & CIAL but acting as an independent contractor. Printed from counselvise.com 8 ITA-2779/Del/2023 - Assessee Company is liable to DIAL & CIAL for any acts of violation of terms of agreement but also to the airlines for any acts of operational lapses. The airlines can independently enforce claims for any damages that may occur due to services provided by the assessee company. The obligations, which the assessee assumed under the terms of the contract, was for continuous obligation right to provide ground handling services which included from the supply and operation of the various airport ground support equipment, vehicles, loaders, baggage lifts, trolleys etc.. 8. Learned Counsel explained that after the amendment effected by Finance Act, 1999 w.e.f. 1st April, 2000, the deduction under Section 80-1A (4) has become available to any enterprise carrying on the business of (a) developing, or (b) maintaining and operating, or (c) developing, maintaining and operating any infrastructure facility. Sub-clause (c) of clause (i) of Section801A(4) is obviously applicable to an enterprise which is engaged in 'operating and maintaining the infrastructure facility on or after 1st April, 1995. From the assessment year 2000-01, deduction is available if the assessee carries on the business of any one of the three types of activities specified in the aforesaid section. It was contended that for an airport to function numerous integrated activities need to be performed, some of which are critical and at the core of the said infrastructure facility without which the entire facility can fall apart and become non-operational. Ground handling service, which handles the passenger movement between the terminal of airport and the aircraft, is an integral part of the airport infrastructure facility without which an airport cannot operate. Ground handling is one of the essential infrastructure facility at the airport. It was brought to our notice that the appointment of Ground Handlers at Delhi and Cochin airport was in pursuance to Ground Handling policy which was notified by the Government of India vide S. No. 7/2007 dated 18-09-2007. Further, it Printed from counselvise.com 9 ITA-2779/Del/2023 was submitted that DIAL and CIAL are rendering a statutory function and the agreement with them is to be construed as an agreement with the government. 9. We have heard rival contentions and gone through the facts and circumstances of the case. We noted that the Assessing Officer primarily disallowed the claim of deduction under Section 80IA of the Act by stating that DIAL and CIAL cannot be considered either the Central Government or the State Government or statutory authority and, for this, he recorded his observation in Paragraph 4.10 as under:- “4.10 Reference here may be made to the operation, management and development agreement between AAI and the DIAL for Delhi Airport which clearly mentions that though functions would be leased out to DIAL company but the overarching regulation shall be that of the AAI and the Central Government. Even if we look at the provisions of the Constitution, in no way can we consider the two bodies DIAL or CIAL as either the Central Government/State Government. When the body is financially, functionally and administratively dominated by or under the control of the government and such control is particular to the body and is pervasive, then it will be “State” within Article 12. If the control is merely regulatory, it will not be a State. Hence, under no circumstances can the DIAL/CIAL may be considered as the government for the purposes of Section 80-IA of the Act.” 10. The Assessing Officer on second aspect that the assessee was not doing the eligible business as prescribed under Section 80IA(4) of the Act i.e., infrastructure development since assessee had entered into an agreement with DIAL/CIAL for undertaking ground handling services, which is one of the many functions sub-contracted out of DIAL/CIAL. The first aspect whether DIAL/CIAL is to be considered as a statutory body in compliance of the provisions of Section 80IA of the Act. This has been answered by Hon’ble Kerala High Court in the case of Cochin International Airport Ltd. Vs. DCIT – [2017] 398 ITR 400 (Ker), wherein it has considered that the memorandum of understanding entered into between the assessee and the Airports Authority of India and the subsequent agreements between the parties would show that the assessee had entered into an agreement as contemplated in clause (b) of Sub- section (4) of Section 80IA of the Act, which entitles the assessee for claim of Printed from counselvise.com 10 ITA-2779/Del/2023 deduction under Section 80IA of the Act. Hon’ble Kerala High Court considered this aspect as under:- “From the provisions of annexure C and annexure K, which contain the obligations of the Airports Authority of India, it is clear that the Airports Authority of India was only undertaking to discharge its functions as provided under section 12 of the Airports Authority of India Act, 1994 for the operation and maintenance of the airport which was developed by the Cochin International Airport Limited. Such an agreement between the Airports Authority of India and the assessee would qualify to be an agreement entered into with a statutory body for “operating and maintaining the infrastructure facility”, viz., the airport. It was argued by the senior counsel for the Revenue that to qualify for the benefit of deduction under section 80-IA of the Income-tax Act, the agreement with the statutory body should have been entered into by an airport which is already operational. According to him, the provisions of annexure C and annexure K would show that the obligations undertaken by the airport were, for making the airport operational, which according to the counsel, was a part of development of the airport. Having read clause (b) of sub-section (4) of section 80-IA, we are not persuaded to think that to satisfy the requirement of clause (b), the agreement should be one entered into by an airport which is already functional. An airport to be operational require the facilities that are agreed to be provided by the Airports Authority vide annexure C and annexure K. It is only on installation and operation of such equipment that the airport can be operated and maintained. Such an agreement would be an agreement for operating and maintaining the infrastructure facility, viz, the airport and for the purpose of section 80-IA, the statute does not contemplate that the airport should already be on stream and that the agreement should be entered into thereafter. Further, this argument of the Revenue would also militate against sub-section (2) which provides that the assessee would be entitled to the benefit of deduction from the year in which the undertaking or enterprise develops or begins to operate any infrastructure facility. Necessarily, therefore, the agreement and the installation of the equipment for the operation of the airport should precede the commencement of operation of the infrastructure facility to avail of the benefit of deduction. The statutory provision and the agreement being as above, we cannot uphold the conclusion of the Tribunal that both the agreements could not constitute agreements specified in clause (b). Accordingly, the findings of the Tribunal with reference to clause (b) of sub-section (4) of section 80-IA are set aside.” Printed from counselvise.com 11 ITA-2779/Del/2023 11. Similar aspect was considered by Hon’ble Gujarat High Court in the case of CIT Vs. Ranjit Projects (P) Ltd. – [2019] 104 taxmann.com 391 (Guj.), wherein exactly identical agreements and authorities were considered and claim of deduction under Section 80IA(4) of the Act was allowed by observing in Paragraph 3 as under:- “3. At the outset, it is required to be noted that in view of the decision of the Division Bench of this Court in the case of the very assessee, but for earlier Assessment Years, the issue is concluded in favour of the assessee and against the Revenue, so far as this Court is concerned. In the case of the very assessee, but for Assessment Years 2009-10, 2010-11 and 2011-12, the Division Bench of this Court vide order dated 02.05.2018 in Tax Appeal Nos.426, 427 and 433 of 2018, has dismissed the Tax Appeals preferred by the Revenue and confirmed the orders passed by the Income Tax Appellate Tribunal deleting disallowance and deduction made by the Assessing Officer under Section 80IA(4) of the Act. While dismissing the appeals, the Division Bench has observed in para 13 as under:- “13. The above statutory provisions and the relevant facts arising in the present case and noted above would leave little doubt in one’s mind that GSRDC was a nodal agency constituted by the State Government for the purpose of executing road development projects through private participation and was a Government agency as defined in section 2€ of the Act of 1999. Significant factors in the present case are that the road widening project was cleared by the Government, land for such purpose was allotted by the Government. The concession agreement which GSRDC executed was approved by the Government. It was under the Government Resolution that the assessee would collect toll upon completion of such project. Upon the completion of the project period, the entire infrastructure so developed would vest in the Government. Signatory to the applicant may be GSRDC for all practical purposes and in essence, it was the agreement between the assessee and the State Government. We are conscious that condition (b) of subsection (4) of section 80IA requires the assessee to have entered into agreement with the Central Government or a State Government or a local authority or any other statutory authority. However, rigid interpretation of this provision as canvassed by the Revenue would only result into the assessees involved in genuine infrastructure development projects for and on behalf of the Government or local authorities would be denied the deduction merely on the ground that the State Government had created a nodal agency for working out the finer details and nitty- gritty of such infrastructure development. The purpose of creating such nodal agencies as well as the legislative intent of granting Printed from counselvise.com 12 ITA-2779/Del/2023 deduction to the assessee engaged in developing, maintaining or operating any infrastructure projects for Central or State Government or local or statutory authorities would frustrate.”” 12. Similarly, Hon'ble Supreme Court in the case of Delhi International Airport Private Limited Vs. Union of India and Others – [2011] 12 Supreme Court Cases 449 has considered Delhi International Airport (P) Ltd. as statutory authority by observing in Paragraph 45 to 50 as under:- “45. In the impugned judgment, the Division Bench correctly held that \"the provisions of the AAI Act show that there is extensive control of the Central Government over the functioning of AAI.\" Section 12-A reveals control of the Central Government on AAI. AAI has to obtain approval from the Central Government before delegating any of its functions to third parties, such as DIAL. This clearly indicates that the Central Government has complete control over AAI. Sections 2, 6 and 10 of the AAI are further examples of governmental reservations of authority. The Central Government retains its statutory control over AAI. In the impugned judgment, the High Court correctly came to the conclusion that \"the authority of the Central Government is conferred by the statute itself.\" In fact, in these cases, we are merely concerned with very limited controversy whether DIAL works under the authority of the Central Government or not? DIAL, of course, claims that it does not. 46. In the SAIL judgment, the Constitution Bench held as under : \"30 …..the phrase \"any industry carried on under the authority of the Central Government\" implies an industry which is carried on by virtue of, pursuant to, conferment of, grant of, or delegation of power or permission by the Central Government to a Central Government company or other government company/undertaking. To put it differently, if there is lack of conferment of power or permission by the Central Government to a government company or undertaking, it would disable such a company/undertaking to carry on the industry in question.\" 47. In case the Central Government had never granted permission, pursuant to Section 12-A of the AAI Act, DIAL would not be able to carry out functions at the Delhi airports. The entire functioning of DIAL is fully dependent on the grant of permission by the Central Government. 48. The Constitution Bench, in the SAIL judgment further observed as under : Printed from counselvise.com 13 ITA-2779/Del/2023 \"39. …..may be conferred, either by a statute or by virtue of the relationship of principal and agent or delegation of power. Where the authority, to carry on any industry for or on behalf of the Central Government, is conferred on the government company/any undertaking by the statute under which it is created, no further question arises. But, if it is not so, the question that arises is whether there is any conferment of authority on the government/any undertaking by the Central Government to carry on the industry in question. This is a question of fact and has to be ascertained on the fact and in the circumstances of each case.\" 49. The undertakings need not be government undertakings to have had authority conferred upon them. But the word \"government\" clearly modifies \"company.\" However, it cannot modify \"undertaking,\" for the phrase \"government/any undertaking\". Thus, it would seem that any \"undertaking\"-even private undertakings, like DIAL - may function \"under the authority\" of the Central Government. Whether or not they do it, as the Constitution Bench noted, \"a question of fact which has to be ascertained on the facts and in the circumstances of each case.\" 50. In the facts and circumstances of these cases, it is abundantly clear that DIAL operates under the authority of the Central Government. In the impugned judgment, it was noted that \"the functions and powers of DIAL in relation to the Delhi airports are traceable to Section 12A of the AAI Act.\" It is clear that without Central Government's permission, AAI could not have delegated any power to DIAL. In other words, the functioning of DIAL at the Delhi airports itself was fully dependent on the approval of the Central Government. In other words, DIAL could not have received its contract with AAI without the Central Government's approval. That being the case, by a plain reading of the phrase it seems that \"DIAL functions under the authority of the Central Government\".” Further, Hon'ble Supreme Court has considered this aspect in Paragraph 70 to 73 as under:- “70. The fact that DIAL is a private entity is of no assistance to it. In SAIL's case, the Constitution Bench explicitly held that the definition of \"establishment\" in the CLRAA takes in its fold purely private undertakings. 71. This issue is fully settled by the foregoing analysis. From the analysis, DIAL falls under AAI establishment. For example, Clause 5.1 of OMDA, which notes that the \"rights and obligations associated with the operation and management of the Airport would stand transferred to\" DIAL, would seem to suggest that orders given to AAI establishment would also apply to DIAL establishment, even if the Printed from counselvise.com 14 ITA-2779/Del/2023 two were, as DIAL claims, separate establishments. If AAI establishment is obligated to abolish contract labour and DIAL establishment (even if it is somehow separate) has assumed AAI establishment's obligations through the OMDA, then DIAL is presumably required to fulfil those obligations. Critical to this inference is the fact that the Central Government's 26th July, 2004 notification was issued before OMDA was signed. 72. The contention that DIAL would not also be bound by the obligations of AAI establishment would once again lead to absurd consequences. In the impugned judgment, the Division Bench correctly observed that \"every time a fresh agreement is entered into, the entire process of getting a notification issued by the appropriate Government in relation to the same work of trolley retrieval and with the same establishment vis-a-vis such private player\" must be repeated. This interpretation would defeat the rights of the workers, which are meant to be protected by CLRAA. The Division Bench has correctly observed that the obligation flowing from the notification under Section 10(1) CLRAA shall continue to bind every private player that steps into the shoes of AAI. 73. We have carefully heard the learned counsel for the parties and perused the written submissions filed by them. In our considered view, the Central Government is the appropriate government for DIAL for the following reasons: (i) DIAL could not have entered into a contract with AAI without approval of the Central Government according to the mandate of Section 12A of the AAI Act. In this view of the matter, it is abundantly clear that DIAL functions \"under the authority\" of the Central Government; (ii) AAI clearly acts under the authority of the Central Government and DIAL acts under the authority of AAI because of its contract with DIAL. Then it can be logically stated that DIAL works under the authority of the Central Government; (iii) The Central Government has given AAI responsibility for overseeing the airports. To fulfil its obligations, AAI contracted with DIAL. However, it is clear that DIAL's work \"concerns\" AAI, if DIAL does not perform its work properly or adequately, then AAI will be breaching its statutory obligation and would be responsible for the consequences. (iv) AAI is under an obligation to follow the directions of the Central Government and if DIAL has admittedly assumed those obligations through the OMDA, then DIAL is presumably also obligated to follow such directions. Again, a contrary interpretation would allow AAI to Printed from counselvise.com 15 ITA-2779/Del/2023 circumvent the Central Government's exercise of authority over its work merely by contracting it out to third party (DIAL). (v) Clause 5.1 of the OMDA specifically notes that the \"rights and obligations associated with the operation and management of the Airport would stand transferred\" to DIAL. If AAI was admittedly obligated to follow the 26th July, 2004 notification and DIAL has assumed all of AAI's obligations, then DIAL must also be obligated to follow the notification. In other words, the notification issued by the Central Government is equally binding on DIAL. (vi) Holding the 26th July, 2004 notification inapplicable to DIAL would mean that the Government would have to issue separate notification every time AAI contracts with a third party. This would clearly violate the basic objects and reasons of CLRAA. (vii) The security of contract labour working for AAI envisaged, a law cannot be made to depend on the private sector. If the legislature had found it fit to specifically include AAI as an enumerated industry under the ID Act, it is extremely unlikely that it would have intended for AAI to be able to circumvent the Central Government orders by contracting with private parties. (viii) The privatization of the airports does not mean that the \"appropriate government\" cannot be the Central Government. According to the Constitution Bench judgment of this Court in the case of SAIL, the definition of `establishment' in the CLRAA takes in its fold purely private undertakings...\".Concerns about privatization are, therefore, unfounded. (ix) Under Section 12(2) of the AAI Act, AAI is obliged to provide air traffic service and air transport service at the airport. DIAL admits that AAI has transferred all of its responsibilities at the airports with the exception of certain reserved functions. Since industries concerning air transport service function under the authority of the Central Government, and since AAI has transferred its \"air transport service\" responsibilities to DIAL, the Central Government must be held to be the appropriate Government for DIAL. (x) The OMDA makes it clear that AAI maintains ultimate responsibility for the airports. The fact that DIAL was transferred only a portion of AAI's work which DIAL only has incomplete control over as well as the fact that DIAL meets the definition of a contractor under the CLRA Act further suggests that DIAL is nothing more than a contractor for AAI establishment. That being the case, notification dated 26th July, 2004 directed at AAI establishment must also apply to DIAL. Printed from counselvise.com 16 ITA-2779/Del/2023 (xi) The contention of DIAL that it would not be bound by the obligation of AAI establishment would lead to absurd consequences. The Division Bench in the impugned judgment has rightly pointed out that every time a fresh agreement is entered into, the entire process of getting a notification issued by the appropriate government in relation to the same work of trolley retrieval and with the same establishment via-a-vis such private player must be repeated. But this interpretation would defeat the rights of the workmen which are meant to be protected by the CLRAA. (xii) In the impugned judgment, the Division Bench of the High Court has correctly held that the obligation flowing from the said notification under Section 10(1) CLRAA should continue to bind every private player that steps into the shoes of AAI.” 13. We noted that the above judgment of Hon'ble Supreme Court in the case of Delhi International Airport Private Limited (supra) has considered the aspect of provisions of Section 12A of Airports Authority of India may in public interest or in the interest of a better management of the airport, make a lease of the premises of the airport to carry out some of its functions under Section 12 as the Authority may deem fit. Detailed functions of the Authority have been enumerated. Out of those functions under Section 12A some functions can be delegated on lease in the public interest or in the interest of better control and management of the airports. Consequent to the above in pursuance of the agreements with DIAL, some functions of AAI were leased out to DIAL. Hon'ble Supreme Court rejected the argument of DIAL that not only its own industry is not carried out under the authority of Central Government but further when not even AAI’s authority is carried out under the authority of the Central Government. Hon'ble Supreme Court answered this by noting that it is relevant to mention that DIAL derives its authority from AAI and AAI derives its authority and power given by the Central Government. In such circumstances, whether DIAL works under the authority of Central Government and therefore, Hon'ble Supreme Court answered that Division Bench of Hon'ble Delhi High Court was right in holding that AAI works under the authority of the Central Government and accordingly, DIAL, which derives power from the AAI, it is also directly under the authority of AAI. Printed from counselvise.com 17 ITA-2779/Del/2023 14. Similarly, Hon’ble Karnataka High Court in the case of Flemingo Dutyfree Shops Pvt.Ltd. Vs. Union of India in Writ Petition No.14215 of 2006, judgment dated 19th December, 2008, has framed the question whether the functions and duties discharged by Bangalore International Airport Limited are statutory/public duties and whether it is an authority of State under Article 12 of the Constitution of India and consequent to the above question, the Hon’ble High Court framed another question whether the nature and duties performed by Bangalore International Airport Limited at the international airport and operation of flights is a statutory function under Section 12 of the Airports Authority of India Act, 1994. Answering these above questions, Hon’ble Karnataka High Court has considered the issue of statutory authority as under:- “(xv). Section 22-A of the A.A.I.A Act empowers the 2nd respondent to levy and collect development fee from embarking passengers under Clauses (b) for establishment or development of a now 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 persona engaged in such activities. (xvi.) The effect of exclusion of provisions of Chapter V-A of the A.A.I.A Act from the ambit of Rent Control Act from the premises leased to BIAL is that the Government while dealing with the citizens in inspect of its properly, 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 Ltd. and Anr. v.Punjab National Bank and Ors. after referring to its earlier decision in the case of Dwarkadas Marfatia and Sons Vs. Board of Trustees of the Port of Bombay, has kid down the law as under: 69 ... every activity of a public authority especially I the background of the assumption on which such authority enjoys immunity from the rigours of the Rent Act, must be informed by reason and guided by the public interest All exercise of discretion or power by public authorities as the respondent, in respect of dealing with tenants in respect of which they have been treated separately and distinctly from other landlords on the assumption that they would not act as private landlords, must be judged by that standard. Printed from counselvise.com 18 ITA-2779/Del/2023 (xvii). The assistance provided by both the Union of India and State Government and other statutory authorities in permitting BIAL to establish and maintain BIAL at Devanahalli, without which the airport could not have been established, and Re. 250 crores provided to BIAL by the Government of Karnataka under the State agreement and capital of BIAL partly owned by it, 26% share capital owned by 2nd respondent, 13%by BIAL, in pursuant to the Concessional agreement referral to supra, there is transfer of powers of respondent No. 2 to R-3 in relation to air traffic services to be rendered to the public at large. The grant of monopoly status in the concession agreement given to the BIAL is State conferred or State protected as the concession agreement provides exclusivity of private concession to the existing airport and prohibits any airport being set-up within 150 Kms from BIAL. (xviii). Even if it is not an entity and ''State'' under Article 12 of the Constitution of India, the actions of BIAL are subject to judicial review under Article 226 of the Constitution of India. In this regard, learned Sr. counsel for petitioner has rightly placed reliance upon the decisions reported in Rohtas Industries Ltd. and Another Vs. Rohtas Industries Staff Union and Others, in the case of Rohtas Industries v. Rohtas Staff 1991(1) SCC171 : 1995(5) SCC 1811 : G. Basi Reddy Vs. International Crops Research Instt. and Another, in the case of G. Basi Reddy v. International Crops Research Instt. The principles laid down in those decisions with all fours applicable to the case on hand and therefore BIAL is amenable to writ jurisdiction of this Court under Article 226 of the Constitution of India as it has been discharging statutory functions/ duties in establishing International Airport at Devahanalli as it has undertaken to discharge the statutory functions of the Airport Authority in establishing private Airport and its maintenance. (xix). The word \"\"person\"\" is 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, Anadi Mukta and Unnikrishnan referred to supra, 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 Printed from counselvise.com 19 ITA-2779/Del/2023 instrumentalities of State for issuing writs against any persons. They may cover any person or body performing statutory, public functions and duties. Hue form of the body is not relevant for the purpose of exercise of power of this Court under Article 226 of Constitution of India. What is relevant is the nature of functions or duties imposed upon such person and performed by it. As per the development of law, Prof. D. Smith, whose statement is extracted in Anadi Muktas case at paras 17-23, it is stated thus: The words ''any person or authority'' used in Article 226 are, therefore, not to be confined only to statutory authorities and instrumentalities of the State. They may court any other person or body performing public duty. The form of the body concerned is not very much relevant. What ftp relevant is the nature of duly imposed on the body....Here again we may point out that mandamus cannot be denied on the ground that the duty to be enforced is not imposed by the status. Commencing on the development of the law, professor be Smith status ''To be enforceable by mandamus a public duty does not necessarily have to be one imposed by statute. It may be sufficient for the duty to have imposed character, common law, custom or even contract\"\". We share this view. (xxi). In Unnikrishnan''s case, after referring to Anadi Mukta and Drawakanath cases, it is held at paragraphs 81 and 83 as under: 81. As a sequel to this, an important question arises: what is the nature of functions discharged by these institutions? They discharge a public duty, If a student desires to acquire a degree, for example, in medicine, he will have to route through a medical college. These medical colleges are the instruments to attain the qualification. If, therefore, what is discharged by the educational institution is a public duty, that requires to act fairly. 83. The emphasis in this case is as to the nature of duty imposed on the body. It requires to be observed that the meaning of authority under Article226 came to be laid down distinguishing the same term from Article 12. In spite of it, if the emphasis is on the nature of duty on the same principle it has to be held that these educational institutions discharge public duties. Irrespective of the institutions receiving aid it should be held that it is a public duty. The absence of aid does not detract from the nature of duty. (xxii). The learned Sr. counsel for the petitioner has placed reliance upon the following decisions of the Apex Court wherein the scope of Article226 is laid down by the Apex Court in G. Basi Reddy Vs. International Crops Research Instt. and Another, the Apex Court has laid down the law that A Writ under Article 226 can lie against a ''person'' if it is a statutory body or performs a public function or Printed from counselvise.com 20 ITA-2779/Del/2023 discharge a public or statutory duty'', in the case of Zee Telefilms Ltd. v. Union of India referring to Anadi Mukta''s came 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 cave of Binny Ltd. and Another Vs. V. Sadasivan and Others, reported in Zee Telefilms Ltd. and Another Vs. Union of India (UOI) and Others, it has held that, ''Article226 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 function 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.” 15. The facts of the present case are that Airport Authority of India is responsible for development, operation, management and maintenance of airports in India and consequent to this function, it enters into agreements with the assessee vide Operation and Maintenance and Development Agreement (OMDA) dated 4th April, 2006 and granted exclusive rights to undertake the operations, maintenance, development, design, construction, up gradation, modernization, finance and management of DIAL. DIAL was incorporated in a joint venture with the following:- GMR Group : 54% Airports Authority of India : 26% Fraport AG : 10% Eraman Malaysia : 10% Pursuant to the provisions of OMDA, DIAL prepared the master plan for the development of the airport which set staged development of the full Airport area, covering aeronautical services and non-aeronautical services for 20 years horizon and the master plan of which was approved by the Government of India. The Director General of Civil Aviation (DGCA) in order to ensure the Printed from counselvise.com 21 ITA-2779/Del/2023 provision of most efficient, cost effective ground handling services in line with internationally accepted good industry practice and applicable laws issued the ground handling policy vide Sl.No.7/2007 dated 28-09-2007. In order to comply with the said ground handling policy and ensure the desired Service Level pursuant to the aforesaid circular DIAL invited tender for providing ground handling services at the Indira Gandhi International Airport, Delhi. A consortium was formed between Bird Consultancy Services Pvt.Ltd. (BCS) and Worldwide Flight Services Holding SA (WFS) for participating in tender invited by DIAL. WFS was the world third largest ground handling company. Bird Group and WFS had the requisite qualification and experience of Ground Handling Services, was awarded the Concession Agreement dated 15-09-2008 for providing Ground Handling Services at the Indira Gandhi International Airport, Delhi to develop international standard to Ground Handling Facilities &Infrastructure at airport by deploying ground support equipment & qualified manpower for the provision of Ground Handling Words & GH Services. The assessee company as a SPV (Special Purpose Vehicle) as per the terms of the tender was incorporated on 10-10-2008 to undertake Ground Handling Works & services at airport. The commercial operation of the assessee company started from 1st January 2009. 16. Similarly, Cochin International Airport Limited was the first Greenfield Airport in India and built on Public Private Partnership (PPP) model with the following joint venture partners: Govt. of Kerala – 13% Central Govt. – 13% NRI, Industrialist, Airport Service Providers & Public – 74% In 2008, the Ground Handling Services (GHS) was exclusively provided by Air India. The Government of India announced new Ground Handling Policy vide circular no.7/2007 dated 28-09-2007 (supra) pursuant to which tender for selection of ground handling agencies for providing Ground Handling Services at CIAL was issued on 24-07-2008. A consortium of Bird Consultancy Services Printed from counselvise.com 22 ITA-2779/Del/2023 Pvt.Ltd. and Worldwide Flight Services Holding SA, which had the requisite experience of Ground Handling Services, was awarded the Concession Agreement dated 23-01-2009 for providing Ground Handling Services at the Cochin International Airport to develop international standard to Ground Handling Infrastructure & Facilities for the provision of Ground Handling facilities at airport and airlines. The assessee company undertook GH works and started its commercial operation at Cochin International Airport on 9th June, 2009 for providing Ground Handling Services to international and domestic airlines at the Cochin Airport with world class state of the art equipment and trained manpower. The development, operation and maintenance of airports by DIAL and CIAL are granted by Airports Authority of India controlled by Government of India and consequently, is a state function. Admittedly, the discharge of functions by the above two is strictly controlled and monitored by Airports Authority of India. The above proposition and discussion was carried out by Hon’ble Karnataka High Court in the case of Flemingo Dutyfree Shops Pvt.Ltd. (supra) and by Hon'ble Supreme Court in the case of Delhi International Airport Private Limited (supra) that the functions carried out by the assessee under the control of DIAL and CIAL is a state function and hence, DIAL and CIAL are really statutory authorities under the direct control of the Government of India. Since the issue is covered, we hold that the acts done by these authorities are in the context of statutory authority and hence, assessee is eligible for claim of deduction under Section 80IA(4) of the Act and assessee squarely falls under sub-section (b) of Section 80IA(4) of the Act. 17. As regards to the issue of whether the assessee is engaged in maintaining and operating any infrastructure facility in the given facts and circumstances of the case, we noted that after the amendment effected by Finance Act, 1999 w.e.f. 1st April, 2000, the deduction under s. 80-1A (4) has become available to any enterprise carrying on the business of (a) developing, or (b) maintaining and operating, or Printed from counselvise.com 23 ITA-2779/Del/2023 (c) developing, maintaining and operating any infrastructure facility. Sub-clause (b) and (c) of clause (i) of Section801A(4) is obviously applicable to an enterprise which is engaged in 'operating and maintaining the infrastructure facility’ on or after 1st April, 1995. From the asst. yr. 2000-01, deduction is available if the assessee carries on the business of any one of the three types of activities specified in the aforesaid section. It was contended that for an airport to function numerous integrated activities need to be performed, some of which are critical and at the core of the said infrastructure facility without which the entire facility can fall apart and become non-operational. Ground handling service, which handles the passenger movement between the terminal of airport and the aircraft, is an integral part of the airport infrastructure facility without which an airport cannot operate. Ground handling is one of the essential infrastructure facility at the airport. It was brought to our notice that the appointment of Ground Handlers at Delhi and Cochin airport was in pursuance to Ground Handling policy which was notified by the Government of India vide S. No. 7/2007 dated 18-09-2007. Further, it was submitted that DIAL and CIAL are rendering a statutory function and the agreement with them is to be construed as an agreement with the government. In terms of the above, we are of the view that the assessee squarely falls under clause (b) and (c) of Section 80IA(4) of the Act as the assessee is rendering the function of ‘developing, maintaining and operating any infrastructure facility’. Hence, the assessee is eligible for claim of deduction under Section 80IA(4) of the Act. 18. In the result, the appeal of the Revenue is dismissed. Order pronounced in the Open Court on 24th September, 2025. Sd/- Sd/- (AMITABH SHUKLA) ACCOUNTANT MEMBER Date : 22.09.2025 (MAHAVIR SINGH) VICE PRESIDENT VK. Printed from counselvise.com 24 ITA-2779/Del/2023 Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR, ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI Printed from counselvise.com "