DCIT, V. M/s Menzies Aviation Bobba (Bangalore) Pvt. Ltd.,

ITA 22/BANG/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 0307 (ITAT-BANGALORE)
• Duration Of Justice: 2 year(s) 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-06-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 21-06-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 08-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJAY KUMAR CITIIIDR
• Assessee Lawyers: V SRINIVASAN

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ITA NO.22/BANG/2014 ASSESSMENT YEAR : 2010-11 THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 12(1), BANGALORE. VS. M/S. MENZIES AVIATION BOBBA (BLORE) PRIVATE LTD., PLOT NO.C-04L, BENGALURU INTERNATIONAL AIRPORT, DEVANAHALLI, BANGALORE 560 300. PAN: AAECM 6862D APPELLANT RESPONDENT APPELLANT BY : SHRI SANJAY KUMAR, CIT-III(DR) RESPONDENT BY : SHRI V. SRINIVASAN, ADVOCATE DATE OF HEARING : 21.06.2016 DATE OF PRONOUNCEMENT : 24.06.2016 O R D E R PER ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER THIS APPEAL BY THE ASSESSEE BY THE REVENUE IS DIR ECTED AGAINST THE ORDER OF THE CIT(APPEALS)-III, BANGALORE DATED 09.1 0.2013 FOR THE ASSESSMENT YEAR 2007-08. 2. THE ASSESSEE COMPANY, MENZIES AVIATION BOBBA (B ANGALORE) PRIVATE LIMITED (MABB) IS ENGAGED IN THE BUSINESS O F PROVIDING CARGO ITA NO.22/BANG/2014 PAGE 2 OF 13 FACILITIES AT BANGALORE INTERNATIONAL AIRPORT. DUR ING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD CLAIMED DEDUCTION U /S. 80IA(4)(I) OF THE INCOME-TAX ACT, 1961 [HEREINAFTER REFERRED TO AS T HE ACT]. 3. BANGALORE INTERNATIONAL AIRPORT LIMITED (BIAL) WAS ESTABLISHED BY KARNATAKA STATE INDUSTRIAL INFRASTRUCTURE DEVELOPME NT CORPORATION (KSIIDC), AS PER GREENFIELD AIRPORT POLICY ANNOUNCE D BY THE GOVERNMENT OF INDIA. PURSUANT TO A CONCESSION AGREEMENT, GOVER NMENT OF INDIA (GOI) HAS GRANTED BIAL EXCLUSIVE RIGHTS FOR DEVELOPMENT, CONSTRUCTION, OPERATION AND MAINTENANCE OF THE STATE OF THE ART INTERNATION AL AIRPORT AT BANGALORE. THE CONCESSION AGREEMENT RECOGNIZES THAT BIAL SUBJE CT TO THE CONCESSION AGREEMENT GRANT RIGHTS TO ANY PERSON FOR CARRYING O UT ACTIVITIES CONNECTED TO DEVELOPMENT, CONSTRUCTION, OPERATION AND MAINTEN ANCE OF CARGO TERMINAL/FACILITY. ONE OF THE KEY REQUIREMENT FOR T HE AIRPORT IS THE PROVISION OF ALL NECESSARY FACILITIES FOR AN EFFICIENT DOMEST IC AND INTERNATIONAL CARGO TERMINAL AND THE PROVISION OF CARGO SERVICES AT STA NDARDS COMPLIANT WITH GOOD INDUSTRY PRACTICE. ON THE BACKDROP OF THIS, BI AL HAS INVITED TENDERS ACROSS THE GLOBE FROM VARIOUS COMPANIES TO OFFER CA RGO HANDLING SERVICES AT THE UPCOMING INTERNATIONAL AIRPORT AT DEVANAHALL I, BANGALORE. 4. MENZIES AVIATION PLC, UK IS A COMPANY INCORPORAT ED UNDER THE LAWS OF UK IS BASICALLY ENGAGED IN PROVIDING CARGO AND G ROUND HANDLING AND OTHER RELATED SERVICES ACROSS 70 INTERNATIONAL AIRP ORTS WORLDWIDE. BOBBA GROUP OF COMPANIES INCORPORATED AT BANGALORE RENDER S GROUND HANDLING ITA NO.22/BANG/2014 PAGE 3 OF 13 SERVICES TO LUFTHANSA AIRLINES. MENZIES AVIATION PL C AND BOBBA GROUP JOINED TOGETHER AND HAD BID FOR PROVIDING CARGO HAN DLING SERVICES AT THE INTERNATIONAL AIRPORT AT DEVANAHALLI AND WERE SUCCE SSFUL IN THE BID AND HAS BEEN AWARDED THE DESIGN, CONSTRUCTION, FINANCING, T ESTING, COMMISSIONING, MAINTENANCE, MANAGEMENT AND OPERATION OF THE CARGO FACILITY AT BANGALORE INTERNATIONAL AIRPORT, DEVANAHALLI. A SER VICE PROVIDER'S RIGHT HOLDERS AGREEMENT (SPRH) HAS BEEN EXECUTED BETWEEN BIAL AND MABB. THE AGREEMENT IS ON BOT - BUILD, OPERATE AND TRANSF ER BASIS FOR A PERIOD OF 15 YEARS AND FURTHER CAN BE EXTENDED FOR A PERIO D OF 5 YEARS. THE LAND ON WHICH CARGO TERMINAL IS CONSTRUCTED IS PART OF B IAL AIRPORT AND MABB WAS GIVEN THE LICENSE TO USE AND OCCUPY THE LAND FO R THE FACILITY AT THE ANNUAL CONSIDERATION OF RUPEE ONE. 5. MABB BASICALLY HANDLES ALL THE DOMESTIC AND INTE RNATIONAL CARGO AT THE NEW INTERNATIONAL AIRPORT. THE CARGO HANDLING O PERATIONS BASICALLY CONSIST OF HANDLING IMPORTS, EXPORTS AND DOMESTIC C ARGO. MABB HAS BEEN APPOINTED AS CUSTODIAN OF CARGO BY THE CUSTOMS AUTH ORITIES IN ACCORDANCE WITH CUSTOMS ACT AND RULES. MABB HAS CONSTRUCTED TH E CARGO TERMINAL AND INSTALLED MACHINERIES AT THE CARGO TERMINAL AT BANGALORE INTERNATIONAL AIRPORT, BANGALORE. 6. CONDITIONS FOR CLAIMING DEDUCTION U/S.80IA (4)(I )(B) ARE THAT THE ASSESSEE COMPANY SHOULD HAVE ENTERED INTO AN AGREEM ENT WITH THE CENTRAL GOVERNMENT OR A STATE GOVERNMENT OR A LOCAL AUTHORITY OR ANY ITA NO.22/BANG/2014 PAGE 4 OF 13 OTHER STATUTORY BODY FOR (I) DEVELOPING OR (II) OPE RATING AND MAINTAINING OR (III) DEVELOPING, OPERATING AND MAINTAINING A NEW I NFRASTRUCTURE FACILITY. INFRASTRUCTURE FACILITY INCLUDES A PORT, AIRPORT, I NLAND WATERWAY OR INLAND PORT OR NAVIGATIONAL CHANNEL IN THE SEA. 7. IT IS SUBMITTED THAT MABB, I E., ASSESSEE COMPAN Y, HAS SIGNED AN AGREEMENT WITH BIAL TO DEVELOP, OPERATE AND MAINTAI N A CARGO FACILITY AT AIRPORT, WHEREIN BAIL IS A STATUTORY BODY AS PER TH E DEFINITION OF PARLIAMENT (PREVENTION OF DISQUALIFICATION) ACT (10 OF 1959) S INCE BIAL WAS ESTABLISHED BY KSIIDC ALTERNATIVELY, BIAL HAS SIGNED A CONCESS IONAL AGREEMENT WITH GOVERNMENT OF INDIA (GOI), WHEREIN GOI AUTHORISES B IAL TO ENTER INTO SERVICE PROVIDER RIGHT HOLDERS (SPRH) AGREEMENT FOR CARGO FACILITY. ACCORDINGLY, THE AGREEMENT BETWEEN BIAL AND MABB FU LFILS THE CONDITION OF SIGNING WITH GOVERNMENT OR STATUTORY BODY FOR THE P URPOSE OF CLAIMING DEDUCTION U/S. 80IA. 8. FURTHER, THE ASSESSEE RELIED ON THE CIRCULAR IS SUED BY THE CENTRAL BOARD OF DIRECT TAXES (CBDT) VIDE NO. 10/2005 DATED 16.12.2005 (ALSO REFER CIRCULAR NO. 793 DATED 23.06.2000) WHEREIN PO RT HAS BEEN DEFINED AS 'PORT', FOR THE PURPOSES OF SECTIONS 10(23G) AND 8O IA OF THE INCOME-TAX ACT, 1961, INCLUDES STRUCTURES AT THE PORTS FOR STO RAGE, LOADING AND UNLOADING ETC., IF THE FOLLOWING CONDITIONS ARE FUL FILLED : (A)THE CONCERNED PORT AUTHORITY HAS ISSUED A CERTIFICATE THAT THE SAID ST RUCTURES FORM PART OF THE PORT, AND (B) SUCH STRUCTURES HAVE BEEN BUILT UNDER THE BOT OR BOLT ITA NO.22/BANG/2014 PAGE 5 OF 13 SCHEMES AND THERE IS AN AGREEMENT THAT THE SAME WOU LD BE TRANSFERRED TO THE SAID AUTHORITY ON THE EXPIRY OF THE TIME STIPUL ATED IN THE AGREEMENT. ACCORDINGLY, AIRPORT FOR THE PURPOSE OF SECTION 8OI A INCLUDES CARGO FACILITY, ACCORDING TO THE ASSESSEE. 9. HOWEVER, THE ASSESSING OFFICER HAS NOT ACCEPTE D THE CONTENTIONS OF THE ASSESSEE AND DISALLOWED THE CLAIM FOR DEDUCT ION U/S. 8OIA. 10. AGGRIEVED, THE ASSESSEE WENT IN APPEAL BEFORE T HE CIT(APPEALS). 11. THE CIT(APPEALS) NOTED THAT AN IDENTICAL ISSUE WAS CONSIDERED FOR THE AY 2009-10 IN ITA NO.351/C-12(1)/CIT(A)-III/BAN G/11-12 WHEREIN THE CIT(A)S FINDING WAS AS FOLLOWS:- I HAVE CAREFULLY CONSIDERED THE ISSUE. THERE ARE TWO WELL- DOCUMENTED STAGES IN THE EVOLUTION OF THE ENTITY CA LLED THE BIAL. FIRSTLY, AS PER THE MINISTRY OF CIVIL AVIATION (MOC A) POLICY, A SPECIAL PURPOSE VEHICLE (SPV) WAS SET UP WHICH WAS WHOLLY OWNED BY THE STATE GOVERNMENT OF KARNATAKA. AT THE SECOND STAGE, BIDDING WAS INVITED FOR SHAREHOLDING IN THE SPV FROM QUALIF IED PRIVATE INVESTORS TO THE EXTENT OF 74%. THEREAFTER, THE GOV T. OF KARNATAKA INCORPORATED THE BIAL AS A CORPORATE BODY UNDER THE COMPANIES ACT, 1956. IT ALSO CONTINUES TO RETAIN A 26% SHAREH OLDING IN THE BODY. ON PERUSAL OF THE GREENFIELD AIRPORTS POLICY OF THE GOVT. OF INDIA, I FIND THAT CERTAIN BASIC PREMISES OF THE PO LICY ARE THAT (CLAUSES 2.1-2.5) : 'THE PRIMARY RESPONSIBILITY FOR DEVELOPMENT OF AIRPORTS RESTS WITH THE CENTRAL GOVERNMENT. THE UNION ALONE HAS COMPETENCE TO LEGISLATE IN RESPECT OF 'AIRWAYS, AIRCRAFT AND AIR NAVIGATION; PROVISION OF AERODROMES; REGULATION AND ORGANIZATION OF AIR TRAFFIC AND OF AERODROMES ... ' THE AIRCRAFT ACT, 1 934 AND THE RULES MADE THERE-UNDER BY THE CENTRAL GOVERNMENT GOVERN THE DEVELOPMENT, MAINTENANCE AND OPERATION OF ALL AIRPORTS, INCLUDING GREENFIELD AIRPORTS. UNDER THE ACT, CENTRAL GOVERNMENT HAS ITA NO.22/BANG/2014 PAGE 6 OF 13 THE SOLE RIGHT TO GRANT A LICENSE FOR SETTING AN AIRPORT, AND THE OPERATIONS OF THE AIRPORT WOULD BE SUBJECT TO ITS LICENSING CONDITIONS (RULE 78 OF THE AIRCRAFT RULES) ..... THUS AN AIRPORT CAN BE DEVELO PED AND OPERATED EITHER BY AAI OR BY AN AIRPORT COMPANY THAT HAS BEEN GIVEN A LICENSE BY DGCA AS PER ITS LICENSE CONDITIONS. THE RULES ALSO ALLOW TH E CENTRAL GOVERNMENT OR A STATE GOVERNMENT TO OBTAIN A LICENSE ... 4.1.3 IN THE PRESENT CASE, BIAL WAS FORMED AS A WH OLLY-OWNED SUBSIDIARY OF THE STATE GOVERNMENT OF KARNATAKA, AN D OBTAINED THE REQUISITE CLEARANCES UNDER THE PREVAILING CENTR AL LAWS TO BUILD AND OPERATE AN AIRPORT FACILITY. THEREAFTER, IT OBT AINED BIDS FOR INVESTMENT FROM QUALIFIED PRIVATE OPERATORS, AND AC CORDINGLY, THE BIAL AS A CORPORATE BODY WAS SET UP. ALL THROUGH, T HE OPERATION OF THE RELEVANT STATUTES IN ITS CONSTITUTION AND IN REGULATING ITS FUNCTIONING THROUGH CONDITIONS STIPULATED BY STATUT ORY LICENSES IS VERY EVIDENT. EVEN WHEN BIAL LICENSED OUT SOME AIRP ORT FUNCTIONS SUCH AS CARGO HANDLING THROUGH A SPRH AGR EEMENT, THAT VERY RIGHT WAS ALSO VESTED IN BIAL ONLY BY THE CENTRAL GOVERNMENT THROUGH THE OPERATION OF THE CONCESSION AGREEMENT. IN THIS CONTEXT, I ALSO NOTE THAT THE FUNCTION OF ' HANDLING OF CARGO' FINDS SPECIFIC MENTION AT CLAUSE 3.2.1 (II). I AM T HEREFORE INCLINED TO AGREE WITH THE APPELLANT THAT THE BIAL IS A 'STA TUTORY BODY' FOR PURPOSE OF SEC. 80IA(4)(I)(B), BEING AN ENTITY ESTA BLISHED UNDER LAWS FOR THE TIME BEING IN FORCE, BEING THE GREENFI ELD AIRPORTS POLICY OF THE MOCA, THE AIRCRAFT ACT, 1934, THE AIR PORTS AUTHORITY ACT, 1994, AND THE COMPANIES ACT, 1956. I FEEL THAT THE ARGUMENT OF THE AO THAT BIAL IS 'MERELY A COMPANY W HEREIN THE KSIIDC, GOVT. OF KARNATAKA AND AIRPORT AUTHORITY OF INDIA, GOVT. OF INDIA, HAVE SOME SHAREHOLDINGS' IS NOT FOU ND TO REFLECT THE TRUE CHARACTER AND STATUS OF THE BODY, WHICH IS ENTRUSTED UNDER THE RELEVANT LAWS WITH THE ESTABLISHMENT AND OPERAT ION OF A GREENFIELD AIRPORT, THE CONSTITUTION AND FUNCTIONIN G OF WHICH IS CLEARLY STAGE-MANAGED BY PROVISIONS OF EXISTING STA TUTES. 12. HENCE, THE CIT(APPEALS) ACCEPTED THE CONTENTION OF THE ASSESSEE THAT BIAL IS A STATUTORY BODY FOR THE PURPOSE OF SE CTION 80IA(4)(I)(B), BEING AN ENTITY ESTABLISHED UNDER THE LAWS FOR THE TIME B EING IN FORCE. ITA NO.22/BANG/2014 PAGE 7 OF 13 13. THE NEXT ISSUE WAS WHETHER THE COMPANY OUGHT TO COMPLY WITH THE CONDITION THAT IT SHOULD BE DEVELOPING, OPERATING A ND MAINTAINING ANY INFRASTRUCTURAL FACILITIES. THE AO WAS OF THE OP INION THAT THE CONDITION OF THE PROVISO AS REGARDS ITS TRANSFER OF INFRASTRUCTU RAL FACILITIES FROM THE TRANSFEROR ENTERPRISE TO TRANSFEREE ENTERPRISE IS N OT BEING FULFILLED IN THE PRESENT CASE. THE CIT(APPEALS) FOLLOWING THE ORDE R OF THE CIT(A) FOR THE AY 2009-10 ALLOWED THE ASSESSEES APPEAL. THE FIND INGS OF THE CIT(A) FOR THE AY 2009-10 WERE AS FOLLOWS:- IN THE LIGHT OF THESE VARIOUS CONFLICTING CLAIMS, THE BASIC QUESTION THEREFORE COMES DOWN TO WHETHER HANDLING O F CARGO AT ALL CONSTITUTES AN INTEGRAL PART OF AIRPORT OPERATI ONS OR NOT. GOING BY THE STRICT PARAMETERS TAKEN BY THE AO, AN 'AIRPO RT' BY DEFINITION SHOULD NOT INCLUDE COMMERCIAL CARGO HAND LING ACTIVITIES AT ALL. YET, IT IS COMMON KNOWLEDGE THAT ALL AIRPORTS RESERVE A SIGNIFICANT PART OF THEIR AREA FOR CARGO. APART FROM THE BAGGAGE OF PASSENGERS, COMMERCIAL CARGO HANDLING IS AN INTEGRAL PART OF AIR TRAFFIC OPERATIONS, WHETHER BY SHARING OF PASSENGER FLIGHTS OR VIA DEDICATED CARGO CRAFT. IT IS ALSO VE RY COMMON TO FIND A LARGE AMOUNT OF NON-PASSENGER CARGO BEING UPLOADE D ONTO COMMERCIAL AIRCRAFT IN ADDITION TO PASSENGERS' LUGG AGE. WITHIN THIS REALITY, THE VERY LOCATION OF THE CARGO-HANDLI NG AREA, LINKED AS IT IS WITH THE CRITICAL AIRSIDE SERVICE ROAD AND PA RTAKING OF STATUTORY INFRASTRUCTURE RELATING TO SECURITY, CUST OMS, X-RAYS ETC. WITHIN ITS OWN OPERATIONS, INDICATES THAT THIS SERV ICE IS VERY MUCH A PART-AND-PARCEL OF THE COMMERCIAL OPERATIONS UNDE RTAKEN BY AIR- CARGO OPERATORS AND OTHER AIR TRANSPORTERS, WHOSE E QUIPMENT AND MACHINERY ARE ALSO INTEGRATED IN TO THE DEFINITION OF 'AERODROME' AS PER SECTION 2(2) OF THE AIRCRAFT ACT, 1934. I NO TE THAT THE AO HAS NOT QUALIFIED THE PARTICULAR REASONS WHY HE CON SIDERS THE CARGO-HANDLING FACILITY TO BE LOCATED IN THE 'VICIN ITY' OF THE AIRPORT, BUT NOT 'WITHIN' IT. SINCE THE CARGO-HANDL ING AREA IS FLANKED BY THE MAINTENANCE HANGARS, AIR CATERING SE RVICES, FUEL FARM, FIRE STATION ETC., THERE IS NO REASON IN MY O PINION TO HOLD THAT THE SAME IS LOCATED IN THE 'VICINITY' OF THE A IRPORT AND NOT WITHIN IT. IN THAT CASE, ALL THE OTHER CRITICAL IN FRASTRUCTURE FACILITIES ITA NO.22/BANG/2014 PAGE 8 OF 13 NAMED ABOVE WOULD ALSO LIKEWISE BE DEEMED TO BE NOT A PART OF THE AIRPORT, WHICH WOULD RESULT IN AN ABSURDITY. I FEEL THE AO HAS STRETCHED HIS POINT WITHOUT SUFFICIENT SUBSTRATUM O N THIS ISSUE. THIS BRINGS US TO THE POINT ABOUT WHETHER THE APPEL LANT'S STATUS IN THE SCHEME OF THE BANGALORE AIRPORT IS ONE OF A STA KEHOLDER, OR OF A CONTRACTOR. IT IS SIGNIFICANT TO NOTE THAT SEC 8OIA(4)(I) REQUI RES DEVELOPMENT, OPERATION AND MAINTENANCE OF AN INFRASTRUCTURE FACI LITY. THE AO HAS RAISED THE POINT OF THE APPELLANT BEING A MERE CONTRACTOR TO SHOW THAT THE BIAL HAD NOT ACTUALLY TRANSFERRED THE CARGO- HANDLING FACILITY TO THE APPELLANT. HOWEVER, THE SP RH AGREEMENT GIVES RIGHTS FOR 'DESIGN, CONSTRUCTION, FINANCING, TESTING, COMMISSIONING, MAINTENANCE, MANAGEMENT AND OPERATIO N OF THE FACILITY' FOR A TOTAL PERIOD OF 20 YEARS TO THE APP ELLANT. IT IS SPECIFICALLY MENTIONED THAT ' .. THE CONCESSION IS ON A BOT BASIS AND THE FACILITY SHALL BE TRANSFERRED TO BIAL AT TH E END OF THE TERM.' THE HYDERABAD TRIBUNAL IN THE CASE OF GVPR E NGINEERS LTD VS. ACIT 21 TAXMAN 25 HAS HELD THAT THOUGH EVER Y PERSON WHO ENTERS INTO A CONTRACT FOR THE DEVELOPMENT OF A N INFRASTRUCTURE FACILITY IS A CONTRACTOR, IN SUCH A CASE, THE CONTRACTOR AND THE DEVELOPER CANNOT BE VIEWED DIFFE RENTLY; IT FOUND THAT 'EVERY CONTRACTOR MAY NOT BE A DEVELOPER BUT EVERY DEVELOPER DEVELOPINQ INFRASTRUCTURE FACILITY ON BEH ALF OF THE GOVERNMENT IS A CONTRACTOR.' IN THE INSTANT CASE, T HE SECTION REQUIRES (I) DEVELOPMENT, OR (II) OPERATING AND MAI NTENANCE, OR (III) DEVELOPMENT, OPERATING AND MAINTENANCE, OF AN INFRASTRUCTURE FACILITY. IT IS EVIDENT THAT THE APPELLANT IS ENTRU STED WITH ALL THE THREE FUNCTIONS SPECIFIED IN (III) HEREINBEFORE, BY VIRTUE OF THE SPRH AGREEMENT, WHICH ITSELF DRAWS ITS STATUTORY VA LIDITY FROM THE CONCESSION AGREEMENT. THUS, IT IS CLEAR THAT TH E WORK PERFORMED IS NOT IN THE NATURE OF A MERE WORKS CONT RACT, WHICH THE AO APPEARS TO SUGGEST BY INVOKING CLAUSE 3.2.1 IN ISOLATION. THE FACT OF THE 20-YEAR DURATION OF THE CONTRACT, W HICH INVOLVES DESIGN, CONSTRUCTION, TESTING, MAINTENANCE, OPERATI ONS AND ALL OTHER MYRIAD FUNCTIONS ASSOCIATED WITH AN EXTENDED BOT ARRANGEMENT, IS A MATERIAL FACT. IN VIEW OF ALL THE ABOVE, I COME TO THE CONCLUSION THAT THE APPELLANT IS ENTITLED TO THE BENEFIT OF DEDUCTION U /S 80IA(4), SINCE ALL THE CONDITIONS SET OUT BY THE SECTION ARE FULFI LLED IN THE CARGO- HANDLING OPERATIONS UNDER A BOT ARRANGEMENT WITH BI AL BEING ITA NO.22/BANG/2014 PAGE 9 OF 13 CARRIED ON BY IT. THE ADDITION MADE BY THE AO BY R EJECTING THE CLAIM IS CANCELLED, AND THE AO IS DIRECTED TO ALLOW THE DEDUCTION TO THE APPELLANT U/S 80IA(4)(I). 14. AGGRIEVED BY THE ORDER OF THE CIT(APPEALS), THE DEPARTMENT IS IN APPEAL BEFORE US ON THE FOLLOWING GROUNDS OF APPEAL :- 1. THE ORDER OF THE LEARNED CIT(A) IS OPPOSED TO L AW AND FACTS OF THE CASE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LEARNED CIT(A) ERRED IN GRANTING DEDUCTION U/S 80IA (4)(I) IN RESPECT OF PROFITS EARNED FROM CARGO HANDLING FACIL ITY MAINTAINED AND OPERATED BY THE ASSESSEE AT BANGALORE INTERNATI ONAL AIRPORT, IGNORING THE FACT THAT THE PRINCIPAL CONDITION FOR ALLOWING THIS DEDUCTION IS THAT THE AGREEMENT FOR DEVELOPMENT OF ANY INFRASTRUCTURE FACILITY MUST BE ENTERED INTO WITH T HE CENTRAL GOVERNMENT OR STATE GOVERNMENT OR ANY LOCAL AUTHORI TY/STATUTORY BODY, WHILE THE ASSESSEE HAD ENTERED INTO A SERVICE PROVIDER RIGHTHOLDER AGREEMENT WITH BANGALORE INTERNATIONAL AIRPORT LTD., A PRIVATE LIMITED COMPANY, FOR RUNNING THIS F ACILITY. 3. THE CIT(A) OUGHT TO HAVE APPRECIATED THAT EVERY FACILITY OF THIS NATURE IN THE VICINITY OF THE AIRPORT CANNO T FIT INTO THE DEFINITION OF 'AIRPORT'. THE DEFINITION OF 'AIRPORT ' AS PROVIDED IN OTHER ALLIED ACTS DOES NOT BRING INTO ITS AMBIT THE CARGO HANDLING FACILITY ALTHOUGH SITUATED WITHIN THE AIRPORT AREA. 4. THE CIT(A) OUGHT TO HAVE APPRECIATED THAT THE AS SESSEE IS ONLY A CONTRACTOR TO WHOM CERTAIN RIGHTS WERE GRANT ED BY BIAL TO OPERATE THE CARGO HANDLING FACILITY AND SUCH CONTRA CTOR CANNOT BE CALLED AS A DEVELOPER OF INFRASTRUCTURE FACILITY. F URTHER, THE CIT(A) OUGHT TO HAVE APPRECIATED THAT THE INTENTION OF THE LEGISLATURE IS TO PROVIDE THIS DEDUCTION ONLY TO TH E PERSONS DIRECTLY DEVELOPING, MAINTAINING AND OPERATING THE FACILITY BUT NOT TO THE CONTRACTORS AS HELD BY THE MUMBAI LARGER BEN CH OF ITAT, IN THE CASE OF B T PATIL & SONS VS ACIT. 5. FOR THESE AND OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING, IT IS PRAYED THAT THE ORDER OF THE CIT( A) IN SO FAR AS IT ITA NO.22/BANG/2014 PAGE 10 OF 13 RELATES TO THE ABOVE GROUNDS MAY BE REVERSED AND TH AT OF THE ASSESSING OFFICER MAY BE RESTORED. 6. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND AND / OR DELETE ANY OF THE GROUNDS MENTIONED ABOVE. 15. THE LD. COUNSEL FOR THE ASSESSEE, SHRI V. SRINI VASAN, TOOK US THROUGH THE ORDER OF THE COORDINATE BENCH OF THIS TRIBUNAL FOR THE PREVIOUS YEAR I.E., AY 2009-10 IN ITA NO.1160/BANG/2012 DATED 30.01.201 4 WHEREIN AT PARA 12 OF THE ORDER, IT HAS BEEN HELD AS FOLLOWS:- . NO DOUBT IT IS CONSTITUTED AS PER THE POL ICY OF THE CENTRAL GOVERNMENT BUT IT CANNOT BE SAID TO BE A S TATUTORY BODY AS REQUIRED UNDER SEC. 80IA(4) OF THE INCOME-TAX AC T. THEREFORE, WE ARE UNABLE TO AGREE WITH THE FINDING OF THE CIT( A) THAT THE ASSESSEE SATISFIED THE CONDITION OF ENTERING INTO A N AGREEMENT WITH THE CENTRAL OR STATE GOVERNMENTS OR LOCAL AUTH ORITIES OR STATUTORY BODY. 16. THE LD. COUNSEL FOR THE ASSESSEE FURTHER POINTE D OUT TO ORDER OF THE TRIBUNAL DATED 05.10.2015 IN MP NO.19/BANG/2014 (IN ITA NO.1160/BANG/2012 DATED 30.01.2014) WHEREIN THE REV ENUES APPEAL ON THIS ISSUE WAS DISMISSED BY HOLDING AT PARA 7 OF TH E ORDER AS FOLLOWS:- 7. AS THE VERY SAME GROUNDS ON WHICH THIS TRIBUNAL HAS HELD THAT BIAL IS NOT A STATUTORY BODY, HAVE BEEN CONSID ERED BY THE HONBLE HIGH COURT AND HAVE BEEN ACCEPTED THAT IT I S A STATUTORY BODY. THEREFORE, RESPECTFULLY FOLLOWING THE HONBL E HON'BLE JURISDICTIONAL HIGH COURT ORDER, WE DO NOT SEE ANY REASON TO INTERFERE WITH THE ORDER OF THE CIT(A). ITA NO.22/BANG/2014 PAGE 11 OF 13 17. RESPECTFULLY FOLLOWING THE ORDER OF THE COORDIN ATE BENCH OF THIS TRIBUNAL IN MP NO.19/BANG/2014 (IN ITA NO.1160/BANG /2012 DATED 30.01.2014), WE DISMISS GROUND NOS.2 & 3 RAISED BY THE DEPARTMENT. 18. WITH RESPECT TO GROUND NOS.4 RAISED BY THE DEPA RTMENT THAT ASSESSEE IS ONLY A CONTRACTOR TO WHOM CERTAIN RIGHT S WERE GRANTED BY BIAL TO OPERATE THE CARGO FACILITY AND SUCH CONTRACTOR C ANNOT BE CALLED AS A DEVELOPER OF INFRASTRUCTURE FACILITY, WE FIND THAT THIS ISSUE HAS BEEN CONSIDERED BY THE COORDINATE BENCH OF THE TRIBUNAL IN ITA NO.1160/BANG/2012 DATED 30.01.2014 FOR THE AY 2009- 10 IN ASSESSEES OWN CASE, WHEREIN IT HAS BEEN HELD THAT THE AGREEME NT ENTERED WITH BIAL IS FOR DEVELOPMENT, OPERATION AND MAINTENANCE OF IN FRASTRUCTURE FACILITY U/S. 80IA(4) OF THE INCOME-TAX ACT. THE RELEVANT PORTIO N OF THE DECISION IS EXTRACTED BELOW:- 14. AS REGARDS THE OTHER ISSUES SUCH AS WHETHER TH E CARGO HANDLING FACILITY IS A BEEN A PART OF THE AIRPORT FACILITY AND ALSO WHETHER THE DEVELOPMENT OPERATION AND MAINTENANCE O F THE CARGO HANDLING FACILITY IS A PART OF INFRASTRUCTURE FACIL ITY IS CONCERNED, WE ARE IN AGREEMENT WITH THE FINDINGS OF THE CIT(A) WHICH IS ALSO IN ACCORDANCE WITH THE DECISION OF THE TRIBUNAL AT HYDERABAD IN THE CASE OF GVPR ENGINEERS PVT. LTD., (CITED SUPRA) , WHICH IS ALSO RELIED UPON BY THE CIT(A). THE CASE OF B.T. PATIL & SONS (CITED SUPRA) ON WHICH, THE REVENUE HAS PLACED RELIANCE UP ON, IS DISTINGUISHABLE ON FACTS. IN THE SAID CASE, THE SP ECIAL BENCH WAS CONSIDERING THE CASE OF A CIVIL CONTRACTOR WHO WAS ENGAGED IN CONSTRUCTION OF VARIOUS PROJECTS OF GOVT. OF MAHARA SHTRA AND GOVT. OF KARNATAKA AND DURING THE RELEVANT PREVIOUS YEARS, IT HAD CLAIMED DEDUCTION U/S 80IA(4) OF THE INCOME-TAX ACT . THE HONBLE SPECIAL BENCH WAS CONSIDERING THE NATURE OF THE WORK UNDERTAKEN BY THE ASSESSEE THEREIN WHETHER TO BE CO NSIDERED AS DEVELOPMENT OF THE INFRASTRUCTURE FACILITY AND IT W AS HELD THAT THE ITA NO.22/BANG/2014 PAGE 12 OF 13 ASSESSEE DOES NOT OWN THE PROJECT BUT ONLY INVOLVES IN CONSTRUCTION OF THE PROJECT AND, THEREFORE, IT WAS HELD THAT THE ASSESSEE THEREIN DOES NOT SATISFY THE CONDITIONS ST IPULATED U/S 80IA(4) OF THE INCOME-TAX. THE SPECIAL BENCH HELD THE ASSESSEE TO BE ONLY A CONTRACTOR AND NOT DEVELOPER AND, THEREFORE, NOT ELIGIBLE FOR DEDUCTION U/S 80IA(4) OF THE INCOME-TA X ACT. IN THE CASE BEFORE US, THE ASSESSEE IS NOT A CONTRACTOR BU T IS HOLDING A LICENSE TO DEVELOP, OPERATE AND MAINTAIN THE CARGO HANDLING FACILITY AND IS REQUIRED TO TRANSFER HIS RIGHTS IN THE PROPERTY TO BANGALORE INTERNATIONAL DEVELOPMENT AUTHORITY AFTER THE EXPIRY OF THE TERM STIPULATED UNDER THE AGREEMENT. UNLESS AND UNTIL THE ASSESSEE HAS RIGHT OVER THE PROPERTY DURING THE PER IOD OF THE AGREEMENT, IT IS NOT REQUIRED TO TRANSFER THE SAME AFTER THE EXPIRY OF THE PERIOD. 15. IN VIEW OF THE SAME, WE ARE IN AGREEMENT THAT T HE FINDING OF THE CIT(A) THAT THE AGREEMENT ENTERED INTO BY TH E ASSESSEE WITH BIAL IS FOR DEVELOPMENT, OPERATION AND MAINTEN ANCE OF INFRASTRUCTURE FACILITY U/S 80IA(4) OF THE INCOME-T AX ACT. THEREFORE, THE GROUNDS OF APPEAL RELATING TO THIS I SSUE ARE REJECTED. 19. RESPECTFULLY FOLLOWING THE DECISION OF THE COOR DINATE BENCH FOR THE AY 2009-10 IN ASSESSEES OWN CASE IN ITA NO.1160/BA NG/2012 DATED 30.01.2014, WE DISMISS GROUND NO.4 RAISED BY THE A SSESSEE. 20. IN THE RESULT, THE APPEAL BY THE REVENUE IS DIS MISSED. PRONOUNCED IN THE OPEN COURT ON THIS 24 TH DAY OF JUNE, 2016. SD/- SD/- ( INTURI RAMA RAO ) (ASHA VIJAYARAGHAVAN ) ACCOUNTANT MEMBER JUDICIAL M EMBER BANGALORE, DATED, THE 24 TH JUNE, 2016. /D S/ ITA NO.22/BANG/2014 PAGE 13 OF 13 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE.