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2016 (10) TMI 497 - ITAT HYDERABAD

2016 (10) TMI 497 - ITAT HYDERABAD - TMI - Deduction under section 80IA(4) - eligibility - whether the Cargo facility being operated and maintained by the assessee is an ‘infrastructure facility’ within the meaning of section 80IA(4) of the Act? - Held that:- Under the Explanation to section 80IA(4), the definition of ‘infrastructure facility’ includes airport within its scope and the cargo facility is an integral part of the airport. The Coordinate Bench of this Tribunal at Bangalore in the cas .....

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ibility of the assessee to operate and maintain the cargo facility in accordance with the obligation of GHIAL to operate and maintain the facility by virtue of the concession granted by the Govt. of India. Each assessee is eligible to claim deduction u/s 80IA(4)(i) of the Act only in relation to the activity carried on by it and there cannot be any duplication of the claim. Therefore, we are of the opinion that the ‘Cargo facility’ operated and maintained by the assessee is infrastructure facili .....

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ed the assessee the right to handle the Cargo facilities by virtue of the agreement. The assessee’s contention is that the assessee has been recognized also as a ‘Service Provider Right Holder’ as stipulated under the Concession Agreement itself and that further that the Government has recognized the assessee as ‘a Regulated Agent’ and therefore, the decision of the Hon’ble Madras High Court in the case of CIT, Chennai vs. AL Logistics (P) Ltd.[2015 (1) TMI 401 - MADRAS HIGH COURT] is applicable .....

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& Mr. Sunil Jain For Revenue : Smt. Nivedita Biswas ORDER Per Smt. P. Madhavi Devi, J.M. All the appeals are filed by the assessee for the A.Ys. 2009-2010, 2010-2011 and 2011-2012 respectively. In all these appeals, the assessee is aggrieved by the denial of the claim of deduction under section 80IA(4) of the I.T. Act, 1961. 2. Brief facts of the case are that the assessee company, engaged in the business of maintaining cargo terminal at Shamshabad Airport at Hyderabad, filed its return of .....

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ed 28.11.2011 requiring the assessee to explain as to why the deduction claimed under section 80IA(4) should not be disallowed. In response thereto, the assessee filed a reply on 21.12.2011 stating that the assessee is a company registered in India and has entered into an agreement with GHIAL ( GMR Hyderabad International Airport Limited ) for operating and maintaining the cargo facilities at Hyderabad International Airport. It was submitted that though GHIAL is not a Government body, the Govern .....

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nd came to the conclusion that the assessee does not fulfill the conditions laid down under section 80IA(4) of the Act. He observed that one of the condition is that the assessee should have entered into an agreement with the Central Government or a State Government or a Local Authority or any other Statutory Body. He observed that the agreement with GHIAL cannot be considered as an agreement with the Government of India as assessee company has not furnished any clinching evidence that the Gover .....

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the entire enterprise to a transferee enterprise and that in such circumstances only a transferee enterprise can claim the deduction for the unexpired period as if the transfer had not taken place. He observed that the assessee had not created any new infrastructure facility except operating the existing infrastructure facility which has also only been leased out to the assessee. 4.1. He observed that it is the GHIAL which completed the entire infrastructure facility and in case it is not in a p .....

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sessment years and brought it to tax. Aggrieved, assessee preferred an appeal before the CIT(A) who confirmed the order of the Assessing Officer and the assessee is in second appeal before us. 5. The Learned Counsel for the assessee, while reiterating the submissions made by the assessee before the authorities below, has advanced the following arguments in support of the assessee s claim of deduction under section 80IA(4) of the Act. (1) According to the proviso to section 80IA(4)(b), the agreem .....

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the assessee, drew our attention to the concession agreement between the Ministry of Civil Aviation, Government of India and Hyderabad International Airport, Hyderabad Ltd., ( HIAL ), wherein the HIAL has been granted the exclusive right and privilege to carry-out the development, design, financing, construction, commissioning, maintenance, operation and management of the Airport [ but excluding the right to carry-out the reserved activities and to provide communication and navigation surveilla .....

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le 3.2.2. HIAL has further been granted right to grant Service Provider Rights (including the right of the Service Provider Right holders to grant sub-rights) to any person for the purpose of carrying-out the activities and businesses described in Article 3.2.1 on such terms and conditions as HIAL may determine are reasonably appropriate. 5.2. He has also drawn our attention to the Tripartite Agreement between GHIAL, Menzies Aviation PLC and the assessee placed at page-232 of the paper book and .....

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ent while the assessee company warranted to GHIAL that Menzies shall build the facilities/additional facilities in compliance with Cargo Agreements and that the design, engineering, construction, testing and commission of the Cargo terminal shall be free from defect and of correct design and workmanship, of good quality and internationally accepted standards. He has also drawn our attention to the Cargo Building Lease Agreement dated 28.04.2006 between the assessee and GHIAL, by virtue of which .....

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re includes the concessionaire fee and concessionaire rent paid to GHIAL and has drawn our attention to the relevant entries in its books i.e., P & L A/c and Schedule-L thereto. 5.4. In addition to the above submissions on facts, the Learned Counsel for the assessee, has also placed reliance on the decision of the Coordinate Bench of this Tribunal in the case of Ocean Sparkle Ltd., reported in (2006) 155 taxmann 133 (Hyd) (NAG) for the proposition that since GHIAL has been authorised to assi .....

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manner so as to mean the transfer of ownership of the infrastructure facility to the specified authority but it only means the handing over of the infrastructure facility to the specified authority at the end of the concession/license period. 5.5. In support of his contention that Cargo facility is part of airport and therefore, Infrastructure Facility under section 80IA(4), the Learned Counsel for the assessee, placed reliance upon the decision of the Coordinate Bench of the Tribunal at Bangal .....

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ee, placed reliance upon the decision of the Hon ble Supreme Court in the case of Bajaj Tempo Ltd., reported in (1992) 62 taxmann 480 (SC) and also in the case of Narang Diary Products reported in (1996) 85 taxman 375 (SC). 5.5.2. In support of his contention that the cargo facility approved by Customs Authorities is an Infrastructure Facility under section 80IA(4), the Learned Counsel for the assessee, placed reliance upon the decisions of the Hon ble Delhi High Court and Hon ble Bombay High Co .....

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y authority like Bangalore International Airport Ltd., and therefore, the agreement with GHIAL is an agreement with a statutory authority. 6. The Ld. D.R., on the other hand, supported the orders of the authorities below and submitted that the assessee is not eligible to the claim of deduction under section 80IA(4) as the conditions set-out therein are not fulfilled by the assessee. As regards the applicability of the decision of the Coordinate Bench in the case of Ocean Sparkle Ltd., (cited (su .....

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f, the Ld. D.R. submitted that the approvals given by various departments of the Government i.e., Customs Authorities etc., is only for carrying on the functions effectively, but cannot be deemed to have given the approval for the purposes of deduction under section 80IA(4) of the Act. Thus, according to him, the orders of the authorities below have to be confirmed. 7. Having regard to the rival contentions and the material on record, we find that the main question before us for adjudication is .....

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anies or by an authority or a board or a corporation or any other body established or constituted under any Central or State Act; (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 has started or starts operating and maintaining the infrastructure facility on or after the 1st .....

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vernment, local authority or statutory body, the provisions of this section shall apply to the transferee enterprise as if it were the enterprise to which this clause applies and the deduction from profits and gains would be available to such transferee enterprise for the unexpired period during which the transferor enterprise would have been entitled to the deduction, if the transfer had not taken place. Explanation.-For the purposes of this clause, "infrastructure facility" means- (a .....

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lopment of a infrastructure facility, but is also allowable in case of operating and maintaining or developing, operating and maintaining an infrastructure facility. In the case before us, the Assessing Officer and the CIT(A) have held that the assessee has not created any new infrastructure facility but is only doing the operation on the existing leased infrastructure facility developed by GHIAL. Therefore, it is now necessary to see whether the Cargo facility being operated and maintained by t .....

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Facilities and Additional Facilities (if any) to the assessee and vide operation and maintenance agreement, GHIAL has granted the assessee the right for the operation and maintenance of the cargo terminal. The assessee had relied upon the decision of the Hon'ble Madras High Court in the case of AL Logistics (P) Ltd (cited Supra) in support of his contention that cargo facility is also infrastructure facility u/s 80IA(4) of the Act. We find that in the said case, the Hon'ble High Court w .....

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nsport of goods from its location to the seaports and vice versa by railway or by trucks in containers. 7.3. In the case before us also, the assessee is handling the Cargo facility which is into similar activities. Further, the Coordinate Bench of the Tribunal in the case of Ocean Sparkles Ltd has held that where the assessee therein was required to fulfill the developers obligation pertaining to operation and maintenance of ports as laid down under the original agreement between the developers .....

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includes airport within its scope and the cargo facility is an integral part of the airport. The Coordinate Bench of this Tribunal at Bangalore in the case of Menzies Aviation Bobba (Bangalore) Pvt. Ltd (cited Supra) has held the cargo facility to be infrastructure facility eligible for deduction u/s 80IA(4) of the Act. Further, it is seen that GHIAL has constructed the Cargo building as per the specification of the Menzies and Menzies has provided the facilities at the cargo building and while .....

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laim. Therefore, we are of the opinion that the Cargo facility operated and maintained by the assessee is infrastructure facility eligible for deduction u/s 80IA(4) of the Act. 7.5. The second objection of the Revenue is that the assessee has not entered into any agreement with the Central Govt., or State Govt. or local authority or a statutory body as provided u/s 80IA(4) of the Act. It is the contention of the assessee that Govt. of India has authorized GHIAL to grant further rights in respect .....

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eement for operation and maintenance of port, with developers who were engaged in development and operation of ports and had entered into an agreement with specified authorities i.e. State Govt. for development and maintenance of certain ports. The Hon'ble Tribunal observed that later on, under an agreement, the operation and maintenance services of said ports were sub-contracted by the developer to assessee company in accordance with original agreement with specified authorities after 1-4-9 .....

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ified authority. 7.6. Further, the Learned Counsel for the assessee has also placed reliance upon the decision of Hon ble Madras High Court in the case of A.L. Logistics P. Ltd., wherein it has been held that where the proposal of the assessee was accepted by the Government on certain conditions, which were duly complied with by the assessee, there is no need to insist for specific execution of agreements. In the said case, the assessee therein had applied to the Ministry of Commerce and Industr .....

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y the assessee, there is no need to insist for the specific execution of the agreements. Similarly, in the case before us, the assessee has applied to the Government of India, Ministry of Civil Aviation for registration as a Regulated Agent for handling the Cargo facilities at Hyderabad International Airport and vide letter dated 24.11.2008, the assessee was granted the registration while GHIAL has granted the assessee the right to handle the Cargo facilities by virtue of the agreement. The asse .....

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t agreement with the Government for claiming deduction under section 80IA of the Act, has to be accepted. 7.7. The assessee has also placed reliance upon the definition of Regulated Agent under clause (5) of Rule-2 of the Aircraft (Security) Rules, 2011. Therefore, according to the assessee, the assessee being accepted as a regulated agent under the Aircraft (Security) Rules, 2011 needs no specific agreement with the Government for carrying on the work. However, we are unable to accept this cont .....

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