Income Tax Appellate Tribunal - Delhi
M/S. Airports Authority Of India,New ... vs Dcit, New Delhi on 2 February, 2026
IN THE INCOME TAX APPELLATE TRIBUNAL,
DELHI BENCH: 'F' NEW DELHI
BEFORE SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER
AND
SHRI NAVEEN CHANDRA, ACCOUNTANT MEMBER
ITA No.2408/Del/2017
Assessment Year: 2006-07
M/s. Airports Authority of Vs. DCIT,
India, Circle-1(1),
Block A, Rajiv Gandhi New Delhi
Bhawan, Safdarjung
Airport,
New Delhi
PAN: AAACA6412D
(Appellant) (Respondent)
Assessee by None
Department by Ms. Monika Singh, CIT(DR)
Date of hearing 02.02.2026
Date of pronouncement 02.02.2026
ORDER
PER SATBEER SINGH GODARA, JM
This assessee's appeal for assessment year 2006-07, arises against the Commissioner of Income Tax (Appeals)-I [in short, the "CIT(A)"], New Delhi's order dated 07.03.2017 in case no. 72/14- 15, involving proceedings under section 143(3)/254 of the Income- tax Act, 1961 (hereinafter referred to as 'the Act'). ITA No.2408/Del/2017
Case called twice. None appears at the assessee's behest. The very factual position appears to be there on the earlier hearings as well. We thus proceed ex-parte against the assessee/appellant.
2. We next note that the assessee's instant appeal raises the following substantive grounds:
"1) That the order passed by the Learned CIT (Appeals) - 1, New Delhi is arbitrary, biased and bad in law and facts of the case to the extent it confirms the order of the Assessing Officer.
2) That the Learned CIT (Appeals) has grossly erred in confirming an addition of Rs.35,92,16,124/-(out of Rs. 50 crores made by the assessing officer) provided by the assessee for eviction, shifting and rehabilitation of illegal hutment in and around the technical area of airports.
3) Without prejudice to above ground no. 2 that the addition sustained by the Learned CIT(A) deserve to be deleted, the Learned CIT (Appeals) has grossly erred in confirming an addition of Rs. 6,54,16,124/- from out of the above addition Rs. 35,92,16,124/- for alleged want of documentary evidence in support of the claimed payment ignoring the fact that the Airports Authority of India is fully owned by the Government of India and is also subject to audit by C&AG.
3. Learned CIT(DR) next invites out attention to the CIT(A)'s detailed discussion partly upholding the impugned disallowance/addition as under:
"7. Ground no. 3: The appellant has challenged the addition of Rs.50,00,00,000/-made by the AO on account of provision for rehabilitation by stating that provision is not an ascertained liability and the expenditure is capital in nature. Assessing Officer has discussed this issue at para 6 page 2 of the assessment order, I have considered the submission of the appellant and observation of the AO made in the assessment order. It is seen that the appellant company had made a provision of Rs.50,00,00,000/- towards expenses on eviction, shifting and rehabilitation of illegal hutments in an around the technical area of airports. Due to influx and increase in population in metropolitan cities, hutment and illegal encroachment
2|Page ITA No.2408/Del/2017 have taken place in and around the airport area endangering the landing and take-off of the aircrafts. In the original assessments for the year under consideration, the said provision for eviction, shifting and rehabilitation was added by the AO. The appellant had contested the said addition of Rs 50,00,00,000/- before CIT(A). However, the same was upheld by the CIT(A) vide his order dated 14.04.2010. Aggrieved with the said order of CIT(A), appellant filed an appeal before the Hon'ble ITAT. The Hon'ble ITAT vide its order dated 12.10.2012 vide para 9 of the said order restored the matter to the file of Assessing Officer with the direction to follow the order of Hon'ble Delhi High Court in the case of appellant for the A.Y 1998-99. The Hon'ble ITAT inadvertently mentioned the para 19 and 20 of the High Court order instead of para 17 and 18 of the High Court order while directing the AO to follow the High Court direction for allowing the claim of the appellant on account of provision made for eviction, shifting and rehabilitation. The directions of the Hon'ble ITAT are as under:
"9. We have heard both the parties and have perused the material on record. This issue, it is seen, stands squarely covered by the decision (supra) of the Hon'ble High Court in the assessee's own case. Therein, the matter was restored to the file of the Assessing Officer to re-examine it in the light of the observations (supra) made by their Lordships in paras 19 and 20 of the judgment, which stands reproduced in the preceding paragraph of this order. Accordingly, the issue for this year also is remitted to the file of the Assessing Officer to be examined and re-decided in the light of the aforesaid observations of the Hon'ble High Court"
The Hon'ble Delhi High Court in the case of appellant has given the direction to the AO for A.Y. 1998-99 vide para 17 and 18 of the said order. The directions of the Hon'ble Delhi High Court are reproduced hereunder:
"17. No doubt, having regard to the judgement of the Apex Court in Bharat Earth Movers Vs. CIT, 245 ITR 428 which laid down that the liability should have been actually incurred in the year and it should be capable of reasonable ascertainment, the assessee is to prove that such a liability had actually been arrived at that no such ascertainment of liability could be proved by the assessee. To that extent the order of the Tribunal cannot be faulted with. However, it would be necessary to mention at this stage that certain documents were produced before us by the learned counsel for the assessee to show that amount of Rs. 16.01 crores in the assessment year 1998-99 was in fact paid and similar amounts were paid in other years as well. Once we have held that such amounts are paid, these are admissible deductions being revenue in nature, we answer the question no.1 in favour of the assessee and against the Revenue. At the same time, we hold that the deduction would be allowed by the Assessing Officer only after the assessee furnishes proof of having made such a payment in the different assessment year in question.
18 We may also state that the criteria laid down by the Tribunal that for admissibility of the expenditure there has to be an agreement between the
3|Page ITA No.2408/Del/2017 assessee and the hutments dweller is clearly wrong. It is a matter of record that in these schemes no such agreement is actually arrived at between the persons who make the payment like the assessee herein and the hutments dweliers. Therefore, even if, in a given case, the assessee is able to show that rehabilitation scheme was formulated by the Government and the assessee as beneficiary was asked to make the payment under the said scheme, that would be sufficient evidence to claim the deduction on expenditure as held by the Supreme Court in Bikaner Gyupsum (supra) However, we find that in the present case, a finding of fact is recorded by the Tribunal that no such scheme could be furnished by the assessee for which the assessee was supposed to make the provision, To that extent, therefore, the Tribunal is correct in its view. At the same time, following Bikaner Gyupsum (supra), this finding has become irrelevant as we are allowing the deductions on the basis of actual payment."
On the basis of the said judgment, the assessment was set aside by the Hon'ble ITAT to the file of AO and the findings recorded by the Hon'ble ITAT at para 9 of its order dated 12.10.2012 and directions have been given to the AO to follow the order of Hon'ble Delhi High Court passed in appellant's own case in A.Y. 1998-99 as discussed above. However, it is seen from the assessment order that Assessing Officer passed the assessment order on 29.03.2014 u/s 143(3) r.w.s. 254 ignoring the directions of ITAT and has added the entire amount of provision of Rs.50,00,00,000/- made for eviction, shifting and rehabilitation. The AO has held that expenditure is in relation of re- possession and re-acquisition of capital asset i.e. land which is to be used for the expansion of airport. Such re-possession or re-acquisition is going to give enduring benefit to the appellant and thus, a capital expenditure. It is submitted by the appellant that Assessing Officer has not followed the directions of Hon'ble ITAT given vide para 9 of the order dated 12.10.2012 wherein the Hon'ble Tribunal has directed the AO to follow the directions of Hon'ble Delhi High Court given in para 17 and 18 of its order for A.Y. 1998-99. It is also submitted by the appellant that Hon'ble Delhi High Court vide its order for A.Y. 1998-99 vide para 14 of the said order has held that such expenditure if incurred by the assessee would be on revenue account and is not capital in nature. The observations made by the Hon'ble Delhi High Court in the said order vide para 13, 14 and 15 are reproduced hereunder.
"13. When we apply the aforesaid test laid down by this Court as well as the ratio of Bikarner Gyupaum (supra) to the facts of this case, a conclusion would be that the expenditure in question by the assessee was revenue in nature it is not in dispute that the land belongs to the assessee. Certain encroachers in all these airports had encroached upon the part of the land, in the schemes formulated by the Government for removal of these encroachers and rehabilitate them at other places, if the assessee had paid the amount that amount is not for acquisition of new assets. The payment was made to facilitate its smooth functioning of the business ie, in relation to carrying on the business in a profitable manner
4|Page ITA No.2408/Del/2017 14 We are therefore of the opinion that the Division Bench of this Court in Airport Authority of India Vs. CIT, 303 ITR 433 does not lay down the correct law We accordingly over rule the same holding that such an expenditure if incurred by the assessee would be on revenue account and is not capital in nature. Having held so, we tum to the reasons given by the Tribunal in denying this expenditure.
15 The Tribunal proceeded to discuss the case on the basis that only a provision for such an expenditure was made and in fact there was no payment made in the assessment year (s) in question. It, thus, went on the determine whether it was a contingent liability to be accrued at a future date on happening of certain events. The Tribunal first observed that the liability was not a statutory in nature. If at all, it was contractual. Thereafter, it addressed the issue as to whether the liability was contractual in nature and was capable of fair ascertainment taking note of Bikaner Gyupsum (supra). Such an expenditure if incurred in the year would be revenue in nature as is clear from the following observations of the Tribunal-
"We may also refer to the decision of Hon'ble Supreme Court in the case of Bikaner Gypsum Ltd. in which it was held that any sum paid for removal of disability in carrying on the business will be of revenue nature. Obviously, removal of hutments is in the nature of removal of disability and, therefore, if any liability has been incurred in this year, it will constitute an admissible deduction.
The observations of the Hon'ble Delhi High Court clearly makes it clear that the expenditure incurred by the appellant on account of rehabilitation / eviction /shifting as per the scheme formulated by the Government for removal of these encroachers at other places would not be acquisition of new assets. The payment was made to facilitate its smooth functioning of business i.e. in relation to carrying on business in a profitable manner. In this regard, the Hon'ble Delhi High Court overruled the decision of Division Bench in appellant's own case and held that such an expenditure if incurred by an assessee would be on revenue account and is not capital in nature. Therefore, the observation made by the AO that provision for rehabilitation, shifting and eviction would be of capital nature was not based on proper appreciation of the directions of Delhi High Court as well as Delhi Tribunal in appellant's own case. Hence, it is held that the actual expenditure incurred by the appellant on eviction, rehabilitation and shifting would be on revenue account.
During the course of appellate proceedings, the AR of the appellant brought to my notice that during the year the appellant has incurred an expenditure of Rs.20,62,00,000/- towards rehabilitation, eviction. The details of such expenditure are as under:
5|Page ITA No.2408/Del/2017 The appellant has submitted that it is in process of procuring the evidence for expenditure amounting to Rs.6.55 crores incurred towards rehabilitation which may also be allowed subject to verification by the Assessing Officer at the time of granting appeal effect. The appellant further submitted that in view of the decision of Hon'ble Delhi High Court given for A.Y. 1998-99 vide para 17 and 18 and directions of Hon'ble ITAT vide para 9 of the order dated 12.10.2012, the expenditure which has been actually incurred has to be allowed to the appellant. During the course of appellate proceedings, the appellant has filed a payment voucher of Rs.
6,61,41,000/-which has been paid towards the rehabilitation expenses for Mumbai Airport on 27.09.2005. The appellant has also paid Rs. 3,22,34,335/- on 26.06.2007 to DDA for resettlement of evictees of Village Nangal Dewat - electrification of Rangpuri plotted area. The appellant has paid Rs. 2,50,00,000/- to DDA for development of land at Rangpuri as maintenance charges for the newly developed colony upto the year 2010 for public utility services. The appellant has also submitted a payment voucher of Rs. 1,67,74,541/- paid towards rehabilitation for slum dwellers at Mumbai Airport. The amount was paid on 18.03.2009. Appellant submitted that all these payments were made towards provision made in A.Y. 2006-07 of Rs 50,00,00,000/-. It is seen that the appellant could produce the vouchers of Rs. 14,07,83,876/- before me which has been actually incurred by the appellant towards rehabilitation scheme for the slum dwellers. As per the direction of Hon'ble Delhi High Court, the expenditure has to be allowed on the basis of submission of proof of having made such a payment in different assessment year. Since, the appellant could produce the vouchers of payment of Rs. 14,87,83,876/-, therefore, the AO is directed to allow deduction to the extent of Rs. 14,87,83,876/- for which the actual expenditure has been done by the appellant towards the rehabilitation scheme. The appellant claims that it has also incurred expenditure of Rs.6.55,00,000/- towards rehabilitation scheme. However, no such payment voucher has been produced
6|Page ITA No.2408/Del/2017 before me by the appellant. Hence, the appellant gets a relief to the extent of Rs. 14,87,83,876/- out of the provision of Rs.50,00,00,000/- made by the appellant in this year. As a result, an addition of Rs. 35,92,16,124/- is confirmed."
4. We have given our thoughtful consideration to the assessee's pleadings all along as well as the Revenue's vehement contention supporting the CIT(A)'s above extracted impugned discussion. It is made clear that there does not appear to be much a dispute between the parties that the assessee, namely, M/s. Airport Authority of India, a public sector undertaking, had been regularly making a provision towards such rehabilitation charges etc. in its books in each assessment year on account of various exigencies towards clearing land title and encroachments etc. And that it is such a provision of Rs.50 crores which has been allowed to the extent of Rs.14.87 crores only in the CIT(A)'s order on account of the assessee' failure to file all the relevant details, payment vouchers etc.
5. That being the case, we are of the considered view that so far as allowability of the impugned provision in principle is concerned, the same already stand resolved in the assessee's favour going by Bharat Earth Movers(supra). And that its impugned claim has been
7|Page ITA No.2408/Del/2017 accepted in the past going by the hon'ble jurisdictional high court's decision as well as the intervening developments.
Learned CIT(DR) at this stage, seeks to buttress the point that given the fact that the assessee could file payment vouchers of Rs. 14.87 crores only; balance provision has rightly been allowed in its hands which ought to be confirmed by the tribunal.
6. We find no reason to accept either the assessee's or the Revenue's stand in entirety. This is for the precise reason that it has come on record that the assessee's impugned claim is a recurring one all along, the fact remains that there are indeed serious lapses on its part in not proving the same by way of a payment vouchers which forms the main requirement herein. We are further mindful of the fact that the assessee-company faces compulsory audit at various regulatory levels wherein possibility of either the corresponding evidence getting misplaced in such an instance could not be altogether denied as well. We thus deem it appropriate in these peculiar facts that a further relief of Rs. 1,00,00,000/- in the assessee's favour would be just and proper with a rider that the same shall not be treated as a precedent. The impugned disallowance is hereby upheld to the extent of
8|Page ITA No.2408/Del/2017 Rs.34,92,16,124/- in other words. Necessary computation shall follow.
7. This assessee's appeal is partly allowed in above terms.
Order pronounced in the open court on 2nd February, 2026 Sd/- Sd/-
(NAVEEN CHANDRA) (SATBEER SINGH GODARA)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated: 16th February, 2026.
RK/-
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(A)
5. DR
Asst. Registrar, ITAT, New Delhi
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