Income Tax Appellate Tribunal - Delhi
Acit, New Delhi vs M/S. Air India Sats Airport Services ... on 26 February, 2026
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH 'F', NEW DELHI
Before Sh. Satbeer Singh Godara, Judicial Member
&
Sh. Naveen Chandra, Accountant Member
ITA No. 5026/Del/2016 : Asstt. Year: 2011-12
ITA No. 645/Del/2018 : Asstt. Year: 2012-13
ITA No. 6533/Del/2017 : Asstt. Year: 2013-14
ACIT, Vs M/s Air India Sats Airport
Circle-2(1), Services Pvt. Ltd., A-63, IGI
New Delhi Airport Road, NH-08,
New Delhi-110037
(APPELLANT) (RESPONDENT)
PAN No. AAICA4279L
Assessee by : Sh. Percy Pardiwalla, Sr. Adv.,
Ms. Ananya Kapoor, Adv. &
Sh. Divesh Dhawan, CA
Revenue by : Ms. Monika Singh, CIT-DR
Date of Hearing: 05.02.2026 Date of Pronouncement: 26.02.2026
ORDER
Per Satbeer Singh Godara, Judicial Member:
These Revenue's three appeals perta ins to the single assessee/respondent herein namely, M/s Air India Sats Airport Services Pvt. Ltd. arise against the CIT(A)-I, Ne w Delhi (A.Ys.
2011-12 & 2013-14) and CIT(A)-32, New Delhi (A.Y.2012-13), orders dated 05.07.2016, 08.08.2017 & 19.09.2017, in case Nos. 432/14-15, 710/16-17 & 11/17-18, in pr oceedings u/s 143(3) of the Income Tax Act, 1961 (in short "the Act"), respectively.
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2. Heard both the parties at length. Case files perused.
3. It transpires at the outse t during the course of hearing that the Revenue's ide ntical sole substantive ground raised in all the three instant cases pleads that that CIT(A)'s impugned lower appella te findings have erred in law and on facts in holding the assessee as entitled for section 8 0IA deduction involving varying sums, assessment year wise, respectivley. We further find that this is the "second" round of proceedings before the tribunal as earlier le arned co -ordinate bench's order in ITA No. 5026/Del/2016 for assessment year 2011-12 had uphe ld the CIT (A)'s impugned findings as under:
"2. Fac ts , in brief, are that assessee company was incor por ated on 20.04.2010 and is engaged primarily in the bus iness o f providing ground handling and cargo handling se rv ices at Indian airpo rts. As per the de tails ava ilable on the record, SATS Ltd., Singapore and Air India Ltd. (AIL) entered into a joint ve nture agreement date d 16.04.2010 for se tting up the joint venture company a nd pro viding gro und & car go handling servic es (business divisio n) at Indian Airports. Acco rdingly, SATS and AIL incorporate d the assessee company on 20.04.2010 for the purpose of undertak ing o f the gro und handling & ca rgo handling se rv ices at various Airpo rts in India in accordance with the Cabinet appro val. In accordance with the Joint Venture Agreement, the 'ground handling services' and 'car go handling se rvices' business carried out by AI-SATS (unincorpo rated J V) inclusive o f all assets and liability was transfe rred to the newly established company on a slum exchange basis to the company. The business has been transferre d from 1st August, 2010 (the transfe r date) vide 'business transfer confirmation agre ement' (BTA Agre ement) between AIL, SATS and the co mpany executed on 30.03.2011. T he 3 ITA No. 5026/Del/2016 ITA No. 6533/Del/2017 ITA No. 645/Del/2018 Air India Sats Airport Services P. Ltd.
activities c arried o ut by AIL or SATS thro ugh the AI-SATS (unincorpo rated JV) in re la tion to the ground handling services at B anga lore and Hyder abad a irpo rt and Cargo handling services and Bangalo re Airports are s tate d to be carried out by the company since the transfer date . The assessee fo r re ndering the ground & cargo handling services at Airport had claimed deduction u/s 80IA of the Act, 1961.
3. The AO was not satisfied with its claim and s how caused the assessee to explain as to how its bus iness falls in the category o f infrastructure facility u/s 80IA because 80IA (4) only covers Air port and not cargo handling etc. AO observed that since the agreement is not directly w ith the Government of India, as required by Section 80-IA, and the agreement is with BIAL, so also benefit of Section 80IA sha ll no t be eligible.
4. On be half o f assessee , rely ing vario us judicial pronouncements, it was submitted that the ' Cargo handling' falls in the definition o f 'infr astruc ture facility' and further wi th regard to the a gre ement with Bengaluru International Air port Limited ('BIAL') it was s ubmitted that BIAL has entered into a Co nce ssion Agreement with the Government of India (' GOI') for developing, operating and maintaining the Bangalore airport. The GOI had granted BIAL the exclusive rights fo r de velopme nt, operation, ma intenance and m anagement of the Bangalo re airpo rt. Furthe r, the C oncession Agreem ent authorizes BIAL to grant 'service provider rights' to any person for ca rrying out the development and other activities originally entruste d on it. Acco rdingly, B IAL granted 'se rvice provider rights' for develo ping the cargo handling facility, providing cargo and ground handling services at the Bangalore airpo rt to the JV partners by way of an agreem ent.
4.1 Subsequently in accor dance with the Jo int ve nture agreement, necessary Cabinet appro val was communicate d vide its press release dated 23rd Fe bruary 2009 and upon receipt o f approval from Fo reign Investments Promotion Bo ard on 31st March 2010, the business of pro viding cargo and gro und handling se rvices was succee ded by the assessee . The said business w as effec tively tr ansferred from 1 August 2010 to the assessee. Co nsequently, all the rights granted by BAIL to JV Company we re transfe rre d to the assessee with effect 4 ITA No. 5026/Del/2016 ITA No. 6533/Del/2017 ITA No. 645/Del/2018 Air India Sats Airport Services P. Ltd.
from 1st A ugust 2010. Since 1 August 2010, the asses see carries on business of opera ting and maintaining of air- cargo fac ility at B engalur u air port in India in ac cordance with the rights provided by BIAL . Thus it was claim ed that GOI has gra nted rights of development, o peration etc, to BIAL by way of the Co ncession agreement and has also given the authority to BIA L to furthe r grant s uch rights to any o the r perso n. It subm itted that it would be difficult fo r GOI to enter into contract with eac h and every developer developing the relevant Airpo rt fac ility. Accordingly, GOI has allowed BIAL to grant service provide r rights to any pe rson fo r car rying out the develo pment and other activities entrusted on BIAL. Thus, the agreement with the assessee to grant the rights to perfo rm the service o f cargo and gro und handling facility should be considered as an agreem ent with GOI via BIAL .
4.2 Furthe r, pursuant to the concessional agreement, the assessee has been vested w ith all rights and o bligations with respect to the cargo and ground handling o perations from BIAL and is independently respons ible fo r all activities ca rried on by them. Conse quently, the assess ee company who is assigned the right to deve lop, ope rate and maintain the air-ca rgo facility will be eligible to deduc tio n unde r section 80-IA o f the Act.
5. Ho wever, learned AO was not satisfied and concluded that the company had come into existence in vio lation of clause (i) to sub-sectio n (3) o f Section 80-IA and concluded that assessee company is nothing but reconstitution/ reconstr uct ion o f the joint venture w hich was a lready be ing carried out by Air India SATS Airport services (JV), in the capacity of an unincorporate d joint venture , which wa s formed on 27.07,2006 and owne d by Air India Ltd. and SATS Ltd., Singapore. Furthe r, learned AO observed tha t assessee company has bee n formed by transfe r of machine and plant previous ly used by j oint venture and thus clause (i) o f subsection ( 3) of Section 80-IA of the Act w as vio lated.
5.1 Then, the learned AO conclude d that the assess ee company does no t fulfill all the essential conditions of Sub-section ( 4) of Section 80-IA o f the Act, as it is not a company registere d in India or ow ned by conso rtium of such companies.
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5.2 Le arned AO also o bser ved that since asses see company had not ente red into agr eement with Central Government for the eligible business , the case of assessee is not co vered by co nditions of Section 80-IA.
5.3 Learned AO concluded that ground handling and Cargo handling se rvices at Airport are not covere d in the activity o f maintaining or deve loping, ope rating and maintaining Airpo rt.
5.4 Learned AO a lso took note of the fact that erstwhile joint ve nture had not made any claim u/s 80-IA whose business was transferred to assesse e company on go ing concern basis and in the rele vant assessment year i.e. 2011-12 also the joint venture has shown income but no deduc tio n u/s 80-IA has been claimed in respect of income shown fo r the part perio d 1.4.2010 to 31.7.2010. Accordingly, deduction u/s 80-IA o f Rs . 23,90,03,420/- was dis allowe d.
6. F urther, the learne d AO e xamined the question of reconciliation of TDS for e ach head of e xpe nses and with regard to concession fees, found that a sum o f Rs. 11,65,38,217/- ha s been debited to P&L A/c for which assessee admitte d that tax has bee n deducted at source on payment of Rs. 6,44,37,848/-. As with regard to remaining Rs. 5,21,00,369/-, asses see claimed that Rs. 1.39 cro res a rises in transactio n with GMR, Hyde rabad, for which TDS certificate Nil was filed. Assessee had claimed that rema ining amount o f Rs. 3.82 crores was of provisio nal na ture FY 2010- 11 which was reversed on September , 20, 2011 and actual bill expenses were booked and TDS is deducted thereon. Le arne d AO too k it as an admissio n that no tax at source had bee n deduc ted while making pro vision of R s. 3.82 cro res in the year under co nsidera tio n.
6.1 The assesse e company relied on the acco unting standa rd a nd accounting policy o f the assessee company and submitte d that amounts were not quantifiable, and determined on be st estimate basis and pro vision were reverse d whe n the actual bills we re raised. However, learned AO did not accept the ple a and dis allowed Rs. 3.82 crores u/s 40(a)(ia) read w ith section 200 of the Act.
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7. In appeal, before learned CI T(A) the assessee succeeded o n bo th the counts, against which the Re ve nue is in appeal raising fo llowing gro unds:
"1. The Ld. CIT(A)has erre d in l aw and on facts in direc ting the AO to allo w deduction u/s 80IA of i nco me Tax without appre ciating the following fac tual pos itio n.
(i) The assessee company is a joint ve nture w hich was formed by Air India L td. and SATS Ltd., Singapo re and thus it is nothing but a reconstitution/reconstitution of the same joint venture fo r carrying out the same business activity.
(ii) As per 80IA(4) clause ( i) o f the Act, the ente rprise should be owned by a company registere d in I ndia where as the assessee company is formed by M/s Air India Ltd. an India Company and M/s SATS Ltd., a Singapore base d company and thus one of the owner or participant of the co nsortium is not a company regis tere d in India.
(iii) Deduc tio n u/s 80IA is allo wable for certain basic infras tr ucture facilities and not for providing utility services w hereas assessee is e ngage d in the business o f providing gro und handling and 8 ITA No .
5026/Del/2016 cargo handling se rvices at Indian Airpo rt which activities a re not co vered within the meaning of e xplanatio n referred to section 80IA.
2. T he L d. CIT(A) erred in law and on facts in dele ting addition o f Rs. 3,82,00,000/ on account o f disallowance u/s 40(a)(ia) of the Income Ta x Act.
3. The a ppe llant craves leave for reserving the right to amend, modify, a lter , add o r fore go any gro und(s) of appe al at any tim e befo re o r dur ing the hearing of this appe al .
8. Heard and perused the records. The Ground-w ise findings are as follows.
9. Ground no 1 with sub-gro unds; After taking into conside ra tion the material on record and the submiss ions, we are o f the co nsidere d o pinion that ground no . 1 alo ng w ith its sub-grounds are based on common facts a nd can be co nv enientl y dispose d of together a voiding cost of repe tition. A t the outset 7 ITA No. 5026/Del/2016 ITA No. 6533/Del/2017 ITA No. 645/Del/2018 Air India Sats Airport Services P. Ltd.
learned Senio r C ounsel submitted that the issue with regard to provision of gro und handling and Cargo handling se rv ices at Airport being covered under the activities of maintenance o f Airport, is no w a duly se ttled prepos ition o f law and learne d CIT( A) has rightly relied the judgment in the case of Menzies Aviation Bo bba (Bangalore) Pvt. L td. in ITA no. 1160/Bang/ 2012, which has been confirmed by Hon' ble Karnatak a High Court on 25.01.2021 v ide ITA no. 186 o f 2016.
9.1 Learned DR, however, resisted the same, submitting that the na ture of activity of maintaining the Airpo rt is one where technical faci lities connected wi th the flying of airc ra fts is concer ned and ground activities like Cargo handling do no t fall in the catego ry of maintenance of Airpo rt.
10. Fur ther Ld. Sr. Counsel submitted that the re is no requirement tha t the share holders of an Indian Company, as mentioned in Section 80-IA(4)(i)(a), sho uld also be India n companies. Fo r this, reliance was placed on the judgment of Chennai Tribunal in the case of PSA Sical Terminals Ltd. vs. ACIT , ITA no . 1604 to 1607/Mds./ 2012 o rder dated 06.12.2012.
11. O n the o the r hand, le arne d DR took the Bench ac ross the assessment o rder po inting out how learned AO has examine d every aspect meticulously to conclude that the assessee was inco rporate d in the manner that it is only a reorganized business set up. It was submitted that assessee company has not ente red into direct agreem ent with the Go vernment of India. He also po inted out that erstwhile joint venture was not claiming the exemption. It was submitted that learned CI T(A) has relied the Hon'ble Ka rnataka High Co urt judgment without tak ing into cons ide ration the facts were distinguishable.
12. Now appreciating the aforesaid, the first and foremost thing to be decided is whe ther the cargo handling facility which includes storage, loading and unloading is an infra structure facility for the purpose of Section 80-IA of the Act. This aspect is actually no more res-integr a, be fore Tribunal and in fact in an o rde r of Coordinate Be nch, in which one o f us (JM) was on the bench, v ide ITA N o. ITA No. 8301/Del/2019; Acit, Circ le- 5(2) , New De lhi v s Celebi De lhi Cargo Terminal decided on 24 August, 2023, the issue has been considered and 8 ITA No. 5026/Del/2016 ITA No. 6533/Del/2017 ITA No. 645/Del/2018 Air India Sats Airport Services P. Ltd.
decide d against the Revenue holding that air cargo handling facility fall into the sco pe of infrastruc ture fac ility . In tha t c ase too Ld. AO w as not satisfied w ith the deduction u/ s 80IA as it co nsidered the Cargo Services rendered by the assessee company to be not covered fo r the benefit of Sectio n 80IA of the Act. Ld. CIT(A) had deleted the disallo wance of deduction u/s 80IA o f the Ac t fo llow ing finding in assessee's own case in ITA no. 3376/ Del/ 2017 o rder dated 18.02.2019 for A.Y. 2012- 13. It will be appropri ate to reproduce here in below the relevant findings of CIT(A) in that case, w hich were approve d in co-ordinate Bench order;
6.1. The appellant has submitted that these contentions a re supporte d by the decisions of the Hyde rabad ITAT in the case of Ocean Spark le L td Vs Deputy Commissio ner of Income Tax 155 Taxman 133, and in the ca se of Hyderabad Menzies Air Cargo P. Limited vs. DC IT at ITA No 421, 422 and 423/Hyd/ 2015 for AYS 2009-10 to 2011-12 and at ITA No 1094/Hyd/2016 for AY 2012- 13, and of the Bangalo re Tribuna l in the case of ACIT vs. M/s Menzies Aviatio n Bobbe ( Bangalo re) Pvt. Ltd., at ITA No 1160/Bang/2012. The Karna tak a High Cour t in the case of Ms. F lemingo Dutyfree Sho ps P Ltd in W.P. No. 14215 of 2006 da ted 19.12.2008 has considered the func tio ns as we ll as v arious aspects relating to Bangalo re International Airpo rt Ltd. (BIAL) for coming to the co nclusio n that BIAL is a statuto ry body. The Hon'ble Cour t has held that pro viding duty free sho ps in the BIAL is in the nature of statutor y func tio ns/public functions for the convenience of the public . "A ll the facilities provided by BIAL , be it a state , lessee, or entity, performs statuto ry functions in the Airport," The said decision has been follo wed by the Bangalore Tribuna l in the case of Menzies Aviation Bobba (B angalore) Pvt. Ltd. (supr a).
6.2 The facts of the appellant's case are similar to that of Menzies A viation Bobba (Bangalore) Pvt. Ltd and Hyderabad Menzies Air Car go P. Ltd which have entere d into an agreement with BIAL and GHIA L respectively for Air Cargo facility at Bangalore and Hyde rabad airport, Hence, re spectfully following the decis ion of the K arnataka High Co urt in the case of Flemingo Dutyfre e (supra) and the decisio n of the Bangalo re Tribunal in the case of ACIT vs. M/s.
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Menzies Aviatio n Bobba (Bangalore ) Pvt. Ltd. (supra) whic h has he ld the agreement between that assessee and BIAL granting the assessee the concess ion to operate and maintain the cargo facility to be a valid agreement for the purpo ses of section 80IA( 4), it is held that the appe lla nt has entered into an agreement with a statutory body being DIAL for ope ration and mainte nance of an Infrastructure facility i .e . cargo fac ility at Delhi A irpo rt. T herefore the appe llant has satisfied the conditio n la id down In section 80IA( 4)(i)(b) .
6.3 Besides, the appe llant has take n permissions from the office o f the Commissioner o f Customs (Import & General) and the Ministry of Civil A viatio n to enable it to carr y on the business o f ope ratio n and maintenanc e of the ca rgo fa cility at I GIA, New Delhi. As held by the Madras High Court in the case of CIT v A.L. Logis tics (P) Ltd. 55 taxmann.com 283 such approvals obtaine d From the government authorities would be regarded as an agreement with the gover nment for the purposes of section 801A(4)( i)(b) . Conside ring the afores aid legal position, I am of the view that the second co ndition of sec tion 80IA(4) is s at isfied in the appe llant's case and accor dingly, the said conte ntion of the appellant is upheld.
12.1 We are of the considere d view that learned AO has fallen in e rro r in considering Airpo rt as a fac ility standing in isolation and giving a very restrictive inte rpretatio n to the sco pe o f 'de veloping, operating and maintaining' Airpo rt. A irport is a facility for trans portation of passengers or cargo or both at the same time. The passengers may also travel alo ng with their baggage and cargo may be accompanied by people handling that cargo. Thus the facilities of Airport is not re strict to the fixed structure or equipment connecte d with the Aircr afts' maintenance, their running, flying or landing alone . The functionality o f the A irport arise from all the fac ilitie s which bring utility or add utility to the premises , convenience to passenge rs, crew, ground staff. Facilities like cargo handling, ground handling, announcement cre w, security, check -in counte r, baggage management facility, the Airport crew , airlines cr ew, airc ra ft crew facility etc. collective ly and independe ntly use the premises, the fixed structures, the equipments etc. The de velo ping, o perating and maintaining A irport, 10 ITA No. 5026/Del/2016 ITA No. 6533/Del/2017 ITA No. 645/Del/2018 Air India Sats Airport Services P. Ltd.
therefore, encom passes all these activities which are incidental or supplemental to the trans portation of passengers or car go or both together. These facilitie s of various kind may be provided by o ne company or different companies but in any w ay they o perate in consortium and ha ving interde pendence. Learne d AO has fallen in erro r in o bserving that diffe rent companies have develo ped the running o f Banglore Airport and the assessee is merely pro viding utility services beyond the scope of Airport for the purpose of Section 80-IA. T hus, on the basis of aforesaid decisio n, the Bench is inclined to hold that ground handling and cargo handling se rvices provide d by the assessee are co vere d within the meaning of Explanation referred to Sectio n 80-IA and assessee is entitle d to claim the be nefit of same .
12.2 Then the assessee has come i nto existe nce not by reconstitution or reconstructio n of the joint venture of Air I ndia Ltd. and SATS Ltd. Singapo re on its own, rather it was at the initiatio n o f the Gove rnment o f India that the assessee came into existence and there is no re buttal by way of any enquiry by Ld.AO, to the submissions of assessee that the Cabine t had given an appro val o f the establis hment and functionality o f assessee. The co py of lette r da ted 16th March, 2009 from the Ministr y of Aviatio n, Government of India addressed to Chairman and Managing Director, Air India L td. is made available at page no. 112 and 113 o f the paper book and s ame shows that o n 23rd February, 2009 the Cabinet in its meeting had appr oved the setting off of joint venture of Air India with SATS for ground and car go handling activities at Indian Airports. The le tter desc ribes as to how the wo rk for ce, assets and equipments shall be evaluated in the joint venture company. It specifically make a direction of getting the company incorporated under the Companies Act, 1956. It was also provided that assets and equipments would be tr ansferred to the j oint venture compa ny afte r appro val of this minis try. We are of firm vie w that such appro va l of Cabinet by all me ans amounts to appro val of incorpo ration of assessee under SPRHA a nd Ld. CIT(A) has duly taken cognizance of this lette r to set aside the findings of the Ld. Assessing officer that the re was absence of an agreement w ith the Central Gove rnment. T here is no fa ult in the conc lus ion of ld. CIT(A) as the SPRHA entered into by BIA L with Air India and SATS, dated 16.05.2006, the copy o f w hich is ava ilable in the paper book from page no. 114 to 191, 11 ITA No. 5026/Del/2016 ITA No. 6533/Del/2017 ITA No. 645/Del/2018 Air India Sats Airport Services P. Ltd.
specific ally o pens with the recitals that in pursuant to the conces sion agreement, the Government o f India has granted BIAL the inclusive rights to carry out the develo pment, design, fina ncing, construction, commissioning, maintenance, oper ation and management of the Airpor t, in accor dance with terms contained therein and that the concess ion agreement reco gnizes that BIAL may, subject to the co ncession agreement, grant service pro vider rights to any person for c arrying out afores aid activities on such terms and conditio ns as BIAL may de termine are appropriate . Accordingly, on the basis of aforesa id tende rs were invited fo r the cargo services. The SPRH agreement of AI and SATS with BIAL, at page no . 123 of the paper bo ok has an important recital No . 1.3 which pro vides that in furtherance of agreement, the SPRH was under obligation to get incor por ated a joint venture company under the Companies Act, 1956 and this recital furthe r desc ri be the lia bility of SPRH for subscription of shares by AI and SATS equally and that SPRH has right to transfer this agreement to the newly inco rpo rated JVC by way of novation o f a gree ment. This leaves no doubt in the mind of this bench that BIAL had delegated Authority from the Government of India to enter into SPRH agreement and the assessee is a natura l child o f this alliance . L d. CIT (A) has not fallen in error in acce pting that BIAL is statutory body as he ld by Hon'ble Karnata ka High Cour t in the case of M/s. Flemingo Duty-Free Sho ps P. ltd. The refo re, there was no s ubsta nce in the allegation of L d. A O that the basic condition pr ovided in Section 80IA( iv)(i)(b) is not fulfille d. This was also the v iew o f Banglore T ribunal in the case o f M/s. Menzies Aviation (supra) as duly appreciated by ld. CIT(A).
12.3 Then it comes up that Ld. CIT(A) has duly appreciated the fact that Ld. A O had fallen in er ror in apply ing provisio n of Section 80I A(iii) with re gard to alle gation o f the assessee company bei ng a mere reconstitution and reconstruction o f unincor porated JV by taking into co nsideration that the said provisio n is not applic able to the assessee company claim ing benefit by way o f infrastructura l faci lity of the nature of Airpo rt. Ld. CIT(A) has also duly apprec iate d the fact that asses see is company incor porated India and ow ns the infrastructural fac ility a nd Ld. AO has fallen in erro r in alleging violation of the condition o f Section 80IA(iv)(i)(a). In this context, as relied by Ld. Sr . Counse l in the case of M/s. PSA Sical 12 ITA No. 5026/Del/2016 ITA No. 6533/Del/2017 ITA No. 645/Del/2018 Air India Sats Airport Services P. Ltd.
Terminals (supra) , laying down tha t there is distinction between the com pany and the share holders , as in the case o f tha t assessee also the company equity w as subsc ribed by three companies and the Tribunal had conside red the fact that being a registe red company independe ntly ho lding the assets was entitled to benefit u/s 80IA.
12.4 This also ta k es care o f the a llegation of the ld. AO that ea rlier joint venture was not taking the benefit of Section 80IA as that was for the reason that the e arlie r 16 ITA No . 5026/Del/2016 joint venture w as not company incor por ated Indian and was mere ly an Associatio n of person which was not entitled for reduc tion u/s 80IA. Thus, we are dete rmine the ground no. 1 along with sub- grounds against the appellant Revenue.
13. Ground No. 2: At outset we agree with the submiss ion o f Ld. Sr. Counse l tha t as ground no . 1 on deduc tio n unde r section 80IA is decided in the assesse e's favour and it is held that the assessee is entitled to a deduc tio n unde r section 80IA of the Act, then, any incre ase in the a ssessee's income as a conseque nce of the disallowance would be offset, since the inc reas ed income would also be eligible for de duction unde r section 80IA. In this regard, the reliance is rightly place by him on CBDT circular no. 37/2016 wherein the CBDT has accepte d the po sition that when there are spec ific disallo wances in the assessment / appeal proceedings leading to enhanced business pro fits, the de duction under C hapter VI-A shall be admissible o n suc h enhanced business profits. A ccordingly, the issue raised in grounds of a ppe al no . 2 will be rende red who lly academic .
14. Still, for ending controversy for all purpose s, it comes up that on merits Ld. Sr. C ounsel has submitted that the concessio n fee was not debited in favour of BIAL unless invoice was raised after taking into consideration certain as pects regarding sale of scrap, parking fe es, foreign e xcha nge gain e tc., which were unce rtain and dispute d. It was submitted that the refore o n the basis of best estimate pro vision was made for concess ion fe es. Creation o f pro vision was necessary as ac tual turno ver was more than pr ojected turnover and liabili ty had to be create d as pe r me rcantile system of accounting. In the year, provisio n of Rs. 3,82,00,000/ - was reversed and expenses we re bo oked as per the final invo ice receive d in 13 ITA No. 5026/Del/2016 ITA No. 6533/Del/2017 ITA No. 645/Del/2018 Air India Sats Airport Services P. Ltd.
September , 2011 and taxes we re duly deducted at source.
14.1 It was also submitted that infac t in the present case, sec tion 194C of the Act cannot have any applic ation since no work has at a ll been carrie d out by BIAL fo r the assessee. I f at all it is the assessee who has c arried out work . BIAL ha s simply charged a concession fee as conside ra tion fo r the rights it has granted the assessee by vi rtue o f the SPRH agreement.
14.2 It is fur the r submitted that in subsequent years, namely, asses sment ye ar 2012-13 and 2013-14, the said provisio n is disa llowed only o n the ground that it is a conti ngent liability. In other words, the issue about section 40(a)( ia) is no t raised. The rele vant e xtract of the assessment o rder for AY 2012-13 and AY 2013-14 were re lied by Ld. Sr. Counsel. It was submitted that thereafter in subsequent assessment years, no disallo wance of the prov isio n is made. A copy of the assessment o rder for AY 2014-15 was relie d in that context.
15. Learned DR, howeve r, relied the findings of learned AO and relied the Banglore Bench order in case of IBM India (P) Ltd. V ITO(TDS) LTU, Bangalo re (2015) 59 taxmann.com 107 and Delhi Bench or der in ITA No 5347/Del/2012 Inter Globe Aviatio n Ltd V ACI t or der date d 07/01/ 2019 to submit that the pro vis ion is made by prese nt assessee under the specified head, provision is also made to on certain basis the reby ascertaining the amount. It is no t the case of the assessee that it has made an ad hoc pro vision. The payee is ide ntified. Therefore, accor ding to Ld. DR, the tax is required to be deduc ted o n the year-e nd pro visions made by the assessee which ar e ascertained liabilities.
16. After giving thoughtful conside ration to the matter on record and the contentions we are of the vie w that the credit contemplate d in sub-sectio n ( 2) of sectio n 194C is one that enables the perso n who has carried o ut the w ork to make a claim for the sum. The pro vision o f Rs.3,82,00,00,000/-, as made by assessee did not as such c rea te a de bt in favour of BIAL as the concession fee did not arise out of a ny contract per formed by B IAL but w as more in the form of ro yalty with unce rtainty of 14 ITA No. 5026/Del/2016 ITA No. 6533/Del/2017 ITA No. 645/Del/2018 Air India Sats Airport Services P. Ltd.
actual amount due and therefo re no income can be said to have accrue d o r arisen to BIAL.
16.1 Further , the methodolo gy ado pted for estimation of turnover / pro fits and subseque ntly creating the ye ar-end provisio n and reversing the same in next financial year, remains the same in all subsequent years . Thus, given the fac t that in AY 2014-15 the Department has now accepte d that the disallo wance is not required to be made under sectio n 40(a)(ia) in respect o f the year e nd provisio ns for concession fee, same sustains the claim of asseessee.
17. The reliance as placed by L d. Sr. Counsel o n the decis ion of the Hon'ble Karnataka High Co urt in Toyota Kirlosk ar Motor (P.) Ltd. vs. ITO [2021] 128 taxmann.com 266 also suppo rts the case of as sessee as therein year end provisio ns were m ade fo r expe nses on estimate basis in respect o f which bills we re yet to be submitted. The provisions were reversed upon receipt of invo ice and e xpe nses were booked as per the invo ices and taxes were deducte d there from. The Hon' ble High Court re ferred to the principle laid down in CIT v. Sho orji Vallabhdas & Co . 46 ITR 144 (SC) that if income does not result at all, the re cannot be a levy of tax even tho ugh a book entry is made. Thus ground is determined against the appellant Re venue.
18. As a sequel to the aforesaid determination o f the grounds against the appellant Revenue, the appe al is dismisse d."
4. There is further no dispute that this tribunal's latter co-
ordinate benc h order dated 09.04.2024 in Revenue's remaining twin appeals herein IT A Nos. 645/Del/2018 and 6533/Del/2017 (supr a) had reiterated the ver y findings on 09.0 4.2024 whilst affirming the CIT(A)'s impugned action.
5. A combined perusal of the entire case recor d reveals that the Revenue thereafter preferre d it's as many appeals ITA Nos.
15 ITA No. 5026/Del/2016 ITA No. 6533/Del/2017 ITA No. 645/Del/2018Air India Sats Airport Services P. Ltd.
535, 536 & 537/2024 dated 01.05.2025 before the hon'ble jurisdictional high court where in their lordships have res tored the issue back to the tribunal as under:
"1. After some arguments, the le arne d counse l appe ar ing fo r the parties are ad idem that the issue regarding the applicability of the pro viso to s ub-sec tio n 4 of Section 80IA of the Income Tax Act, 1961 was not adv ance d and e xamined befo re the lear ned ITAT and therefore, the le arned ITAT had no occasio n to examine the s ame.
2. The learned counsel submits that the matter be remanded to the learned ITAT to co nside r afresh.
3. The parties are also ad idem that no objectio n would be taken by the respondent on the ground that the appos ite grounds of appeal, which could possibly le ad to the ques tio ns of law as projected by the Revenue in this appe al , were not r aised be fore the le arne d ITAT.
4. In view o f the above, we set aside the impugne d order and remand the matter to the learne d ITAT to conside r afresh.
5. The above captioned appeals are disposed of in the afores aid terms.
6. It is clarifie d that this or der has been passed w ith the co nsent of the pa rties."
5.1 It is in this factual backdrop that we now take up the Revenue's instant three appeals in the second round in furtherance to their lor dships' remand directions.
6. Learned CIT-DR, Ms. Monika Singh at this stage sought to revive the Assessing Officer's action holding the assessee as not eligible for section 80IA deduction in entirety. She has further 16 ITA No. 5026/Del/2016 ITA No. 6533/Del/2017 ITA No. 645/Del/2018 Air India Sats Airport Services P. Ltd.
taken pains to file the Revenue's written submis sions/synopsis reading as under:
"WRITTEN SUBMISSIONS ON BEHALF OF REVEN UE A. Lis t o f da tes and eve nts -
SI . L ist o f D at es Ev e nt s No
1. 3 0. 1 1 .20 1 1 O ri g i n a l retu rn fi l ed sh o w i n g i n co me o f R s .6 ,6 9 ,8 2 , 7 70 a f t e r c l ai mi n g d ed u ct i on u/ s 8 0 IA o f R s .23 ,5 2 , 43 ,6 2 2
2. 2 8. 0 3 .20 1 3 R e vi s ed r etu rn fi l ed sh ow i ng i nc o m e of R s . 6 ,80 ,9 6 , 66 4 a ft e r cl a i m i n g r e vi s ed ded uct i on u /s 8 0 1 A o f 2 3, 9 0 ,03 ,4 20
3. 0 8. 0 8 .20 1 3 N oti c e i ssu e d u/s 1 4 3( 2 ) f or s c rut i n y a s s e ss m en t
4. 1 5. 1 1 .20 1 4 N ot i fi ca t i on N o . C IT - l / Ju ri s / 2 0 1 4- 1 5 i s su ed f o r j uri sd i cti o n ch a n g e by C om m i s si o n e r of In c o m e Ta x , D el hi -1 O rd e r N o. A dd l . C IT /R a n g e- 2/ J u ri s /2 0 14 -1 5 i ss u ed u/ s 1 2 0 b y A d dl .
C 1 T, R a n g e- 2 , N e w D el h i fo r ju ri sd i ct i on c ha n g e
5. P ost F r e sh n ot i ce u/ s 1 4 2( 1 ) i s s u ed a ft e r 1 5. 1 1 .20 1 4 j uri sd i cti o n w a s r e a l l oca t e d
6. 3 0. 0 1 .20 1 5 A s s e s s m en t o r d e r p a s s ed u / s 1 43 ( 3)
7. 0 5. 0 7 .20 1 6 C I T( A) d el e te d th e a dd i t i on ma d e b y A O
8. 2 0. 0 9 .20 1 6 D epa rt m ent w e n t o n a n Ap p ea l a g a i n st t h e C I T( A) o rd e r .
B. Statement of Facts-
The appe llant is a joint venture company between Air India Ltd. and Singapore Airpo rt T erminal Services Ltd. (SATS).
The Gove rnment o f India (GOI) signed a Concess ion Agreement with B angalore Inte rnational Air por t Ltd. (BIAL) on 5 July 2004, authorizing BIAL to grant service prov ider rights.
BIAL entered into a C argo Ha ndling Agreement with Air India (fo rmerly NACIL) and SATS .
17 ITA No. 5026/Del/2016 ITA No. 6533/Del/2017 ITA No. 645/Del/2018Air India Sats Airport Services P. Ltd.
This led to the fo rmation o f an unincorpo rated joint venture (JV) be tween Al and SATS, which began operations in FY 2008-09.
Formation of the Comp any Following a Ca bine t press rele ase dated 23 Feb 2009, GOI re quired the par ties to incorporate a JV company:
With equal share holding and Equal boa rd re pre sentatio n.
Ministry of Civil Aviatio n granted approval o n 16 March 2009.
FIPB approved the JV on 31 March 2010. Consequently, Air India SATS Airport Services Pvt. Ltd. was inco rporate d on 20 April 2010 via JV Agreement dated 16 April 2010.
The incorpo ra ted entity took over the J V business w.e .f. 1 August 2010.
Claim and Disallowance by A O The appe llant invested 61.17 crore to deve lop c argo infras tr ucture at Bangalore Airport. Claimed deduction of ^ 23,90,03,420/- u/s 80IA of the Income Ta x Act for deve loping infrastructure . Assessing Officer (AO) disallowed the deduc tion, stating that the appe llant is not an infrastruc ture company under Se ction 801 A .
AO also disallow ed 3.82 crore as a pro vision for concession fees, citing non- deduc tion o f TDS u/s 40(a)(ia) .
App eal F iled by Assessee before CIT(A) The assessee file d an appe al against both disallo wances made by the AO:
Denial of de duction u/s 801 A .
Dis allo wance of concession fee provision due to no n- deduc tio n o f T DS.18 ITA No. 5026/Del/2016 ITA No. 6533/Del/2017 ITA No. 645/Del/2018
Air India Sats Airport Services P. Ltd.
CIT(A) decision Deductio n u/s 80- IA of Rs. 23,90,03,420/- de leted. (Ref- Page 13- 21 of the CIT (A) o rder). Dis allo wance of Rs. 3,82,00,000/ - u/s 40(a)(ia) delete d. (Ref- Page 22-24 o f the CIT (A) or der) .
C. Grounds of Ap peal-
The Ld. CIT (A) has erred in law and on facts in directing the AO to a llo w deduction u/s 80IA of Income Tax w ithout appreciating the following factual po sition.
(i) The assessee company is a joint ve nture which was formed by Air India L td and SATS Itd, S ingapore and thus it is nothing but a reconstitution/reconstitution o f the same joint venture for carryi ng o ut the s ame business activity .
(ii) As per 801A (4) clause (i) of the ac t, the enterpr ise should be ow ned by a company registered in India w here as the assessee company is fo rmed by M/s Air India Ltd.
an Indian Company and M/s SATS Ltd. a Singapore based company and thus one of the owne r or partic ipant of the consortium is not a company registe red in India.
(iii) Deductio n u/s 801A is allow able for certain bas ic infras tr ucture facilities and nor for providing utility services where as assessee is engaged in the bus iness of providing ground handling and cargo handling service s at Indian A irpor t w hich activities are not cove red within the meaning of e xplanatio n referred to section 801 A .
The Ld. CTT(A) erred in law and on facts in de leting addition of Rs. 3,82,00,000/- on account of disallowance u/s 40(a)(ia) of the Income Ta x Act.
The appe llant cr aves le ave for reserving the right to amend, modify, alte r, a dd or for ego any ground(s) of appe al at any ti me before or dur ing the hear ing of this appe al .
D. Issues raised-
1. Whether the a ssessee company has been fulfilling the deduc tio n claimed unde r sectio n 801 A. 19 ITA No. 5026/Del/2016 ITA No. 6533/Del/2017 ITA No. 645/Del/2018 Air India Sats Airport Services P. Ltd.
E. Arguments Advanced-
1. Assesse Comp any is JV company The assessee company is a joi nt venture which was fo rmed by A ir India Ltd a nd SATS Ltd., Singapore and thus it is nothing but a reconstitution/reconstitution of the same joint ve nture for carrying out the sa me business activity.
2. Ownership Condit ion Not Met (Clause a of Sect ion 80IA (4)(i)) Section 801A allo ws deduction only if the ente rprise is owned by:
A company registe red in India,, o r A consortium of India n-registe red co mpanies, or A statutory body under a Central/S tate Act.
The assessee company is a jo int venture of:
Air I ndia Ltd. - re giste red in Indi a.
SATS Ltd., Singa pore - inco rporated in Singapore .
Since one pa rtner (SATS Ltd.) is a foreign company, the owners hip conditio n is v iola ted, and the assessee fails the first eligibi lity test.
3. Nature of Activ it ies Not E ligible Section 801A (4) covers bus inesses e ngage d in:
Developing, Operating and mainta ining, o r Developing, oper ating and maintaining infrastructure fac ilitie s ( including air ports as per clause (d)).
Moreover, the assessee pro vides ground handling and cargo handling services at airports.
AO held that such utility service s do not amount to develo pment or operation of a irport infrastruc ture . The airports (Bangalore and Hyderabad) are develo ped/o perate d by BIAL and GMR Hyderabad Ltd., not by the assessee.20 ITA No. 5026/Del/2016 ITA No. 6533/Del/2017 ITA No. 645/Del/2018
Air India Sats Airport Services P. Ltd.
Assessee is a third-tier service pro vide r, hence does not qual ify as a develope r/operato r of infras tructure .
4. No Agree men t with Central Government (Clause b of Sect ion 80 1A( 4)(i)) The assessee has no such agreement with the Ce ntral Government.
Agreements were entered w ith BIAL and GMR, not the Central Gover nment.
The business was taken o ver from an unincorporate d JV; no new agree ments were made by the assessee with the gove rnme nt.
Thus, the assesse e fails to meet all three key eligibility conditio ns unde r Section 801 A( 4)(i):
Not owned solely by Indian companies. Not engaged in the specified infrastructure activities. No agreement with the Ce ntral Go vernment. Therefore, the claim for deduction u/s 801A is rejected.
F. Case Laws in support-
1. CIT v. Contain er Corporat ion of India Ltd.
[2012] 18 taxm ann.com 13 2 (De lhi HC)
Facts: Asses see claimed 80-1A deduction for operating Inland Co ntaine r Depots (ICDs) and pro viding cargo handling services .
Held: Only opera tion of infrastructure facility like port/ICD is eligible. C ar go handling per se is not infras tr uc ture develo pment.
Ratio: C argo handling is a support ser vice , not an infras tr ucture fa cility under section 80-IA(4).
2. United Liner Agencies (India) Pvt. Ltd. v. DCIT [2009] 29 SOT 152 (Mumb ai ITAT) Facts: Assessee provided cargo handling and related logis tic s support to po rt o perators . Claimed 801A deduc tio n.21 ITA No. 5026/Del/2016 ITA No. 6533/Del/2017 ITA No. 645/Del/2018
Air India Sats Airport Services P. Ltd.
Held: Assessee no t engaged in development o r operatio n of port itself.
Ratio: T he service provide r is not the one who develo ped, maintained or o perate d the infrastructure.
3. ACIT v. Gateway Termina ls India Pvt . Ltd. [2015] 69 SOT 306 (Mu mbai - Trib.) Facts: Assessee operated a te rmina l at port and claimed 8O- 1A(4) de ductio n.
Held: Assessee did not develop the port; merely provided services o n port premises.
Ratio: Only deve lo pers/ope rators of port infrastructure are eligible for de duction, not service provide rs.
4. Hindustan Cargo Ltd. v. DCIT (2014) 47taxmann.com 387 (Mumbai Trib.) Facts: Claimed 80-1A on cargo and gro und handling services.
Held: Activities not invo lving develo pment / mainte nance/o per atio n o f port or infrastructure fac ility.
Ratio: Service provision alo ne doe sn't qualify unless the assessee is develo per/ope rato r.
5. Menzies Aviat ion Bobba (Bangalore) Pvt. Ltd. v. DCIT [2016] 6 9 tax mann.com 448 (Banga lore - Trib.) Facts: G round ha ndl ing and air car go services at air port. Claimed 80-IA de ductio n.
Held: Such serv ices are ancillary and do not amount to develo pment or operation of a irport.
Ratio: Ground handling is no t operation of airport infras tr ucture as envisage d unde r 80-IA(4)."
7. Mr. Percy Pardiwalla on the other hand has invite d our attention to the asse ssee's detailed paper book(s) thereby 22 ITA No. 5026/Del/2016 ITA No. 6533/Del/2017 ITA No. 645/Del/2018 Air India Sats Airport Services P. Ltd.
explaining the brief background of the first and foremost agreement da ted 16.04.2010 forming a JV betwe en SATS Ltd., Singapore and Air India Ltd. fo llowed by the business transfer agreement dated 30.03.2011 which further culminated in the assessee entering in the field as the developer of the Bangalore International Airport Ltd. (supra).
8. Mr. Pardiwalla further seeks to clarify that all this voluminous evidence and facts emerging therefrom are admittedly not in dispute between the parties. His case there fore is that we are now to decide the so litary iss ue of applicability of section 80IA(4) proviso her ein than the entitlement o f the assessee's claim u/s 80IA which has already attained finality in the above former round.
9. It is in this factual backdrop of these rival pleadings that we first of a ll need to ascertain as to whether we need to examine assessee's section 80IA deduction in entire ty or applicability o f section 80IA(4) Proviso only. We find that their lords hips remand directions restored the issue of applicability of foregoing statutory proviso than the entire provision itse lf vis-
à-vis the assessee's deduction claim. We must reiterate the fact that the earlier learned co-ordinate bench's detailed discussion 23 ITA No. 5026/Del/2016 ITA No. 6533/Del/2017 ITA No. 645/Del/2018 Air India Sats Airport Services P. Ltd.
had already recorde d it's categorical finding(s) that the assessee's is indeed entitled to claim section 80IA relief in light of the detailed/overwhelming supportive evide nce. We thus reiterate the very findings herein as well so as to avoid any mutuality contradictory approach; more particularly, in light of the fact that the Revenue has nothing more to say than to place reliance on the Assessing Officer's assessment findings. We thus upho ld the as sessee's section 80IA deduction claim in principle in very terms.
10. Next comes the remaining issue of applicability of section 80IA proviso which admittedly applies in an instance wherein an eligible enter prise tra nsfers the corresponding infrastructure facility to ano ther enterprise for the purpose of operation and maintenance thereof. We are of the co nsidered view tha t the purport of the said proviso is to restrict the impugned section 80IA deduction to the maximum specified perio d; inclus ive of that claim by the transferor as well as the trans feree enter prise, as the case may be . Faced with this situation, we observe that there is no mater ial in the case re cords that the assessee's impugned deduction claim has any way travelled beyo nd the maximum specified period in section 80IA of the Act 24 ITA No. 5026/Del/2016 ITA No. 6533/Del/2017 ITA No. 645/Del/2018 Air India Sats Airport Services P. Ltd.
so as to attra ct the foregoing statutory proviso. We thus reject the Revenue's instant legal grounds/arguments seeking to invoke section 80IA(4) 1 s t proviso in the assessee's case in very terms. Ordered accordingly.
11. Same order to follow in the Revenue's latter twin appeals since involving commo n/identical facts.
12. These Revenue's three appeals ITA Nos. 5026/Del/2016, 6533/Del/2017 and 645/Del/2018 are dismissed. A copy of this common order be placed in the respective case files.
Order Pronounced in the Open Court on 26/02/202 6.
Sd/- Sd/-
(Naveen Chandra) (Satbeer Singh Godara)
Accountant Member Judicial Member
Dated: 26/02/2026
*Subodh Kumar, Sr. PS*
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(Appeals)
5. DR: ITAT
ASSISTANT REGISTRAR