TMI Blog2024 (4) TMI 495X X X X Extracts X X X X X X X X Extracts X X X X ..... enance, their running, flying or landing alone. The functionality of the Airport arise from all the facilities which bring utility or add utility to the premises, convenience to passengers, crew, ground staff. Facilities like cargo handling, ground handling, announcement crew, security, check-in counter, baggage management facility, the Airport crew, airlines crew, aircraft crew facility etc. collectively and independently use the premises, the fixed structures, the equipments etc. The developing, operating and maintaining Airport, therefore, encompasses all these activities which are incidental or supplemental to the transportation of passengers or cargo or both together. These facilities of various kind may be provided by one company or different companies but in any way they operate in consortium and having interdependence. Learned AO has fallen in error in observing that different companies have developed the running of Banglore Airport and the assessee is merely providing utility services beyond the scope of Airport for the purpose of Section 80-IA. Thus, on the basis of aforesaid decision, the Bench is inclined to hold that ground handling and cargo handling services provided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T(A) erred in law and on facts in directing the AO to allow deduction of Rs. 27,76,94,183/- made by the AO on account of disallowance of assessee's claim of deduction u/s 80IA of Income-tax Act, 1961 without appreciation the following factual position: (i) The assessee company is a joint venture which was formed by Air India Ltd. and SATS Ltd., Singapore and thus it is nothing but a reconstitution/reconstruction of the same joint venture for carrying out the same business activity. (ii) As per 80IA(4) clause (i) of the Income-tax Act, 1961 the enterprise should be owned by a company registered in India whereas the assessee company is formed by M/s. Air India Ltd., an Indian Company and M/s. SATS Ltd. a Singapore based company and the one of the owner or participant of the consortium is not a company registered in India. (iii) Deduction u/s 80IA is allowable for certain basic infrastructure facilities and not providing utility services whereas assessee is engaged in the business of providing ground handling and cargo handling services at Indian Airport which activities a covered within the meaning of explanation referred to Section 80IA. 2. Ld. CIT(A) has erred in law and on fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... account of disallowance u/s 40(a)(ia) of the Income Tax Act. 3. The appellant craves leave for reserving the right to amend, modify, alter, add or forego any ground(s) of appeal at any time before or during the hearing of this appeal. 8. Heard and perused the records. The Ground-wise findings are as follows. 9. Ground no 1 with sub-grounds; After taking into consideration the material on record and the submissions, we are of the considered opinion that ground no. 1 along with its sub-grounds are based on common facts and can be conveniently disposed of together avoiding cost of repetition. At the outset learned Senior Counsel submitted that the issue with regard to provision of ground handling and Cargo handling services at Airport being covered under the activities of maintenance of Airport, is now a duly settled preposition of law and learned CIT(A) has rightly relied the judgment in the case of Menzies Aviation Bobba (Bangalore) Pvt. Ltd. in ITA no. 1160/Bang/2012, which has been confirmed by Hon ble Karnataka High Court on 25.01.2021 vide ITA no. 186 of 2016. 9.1 Learned DR, however, resisted the same, submitting that the nature of activity of maintaining the Airport is one whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions of the Hyderabad ITAT in the case of Ocean Sparkle Ltd Vs Deputy Commissioner of Income Tax 155 Taxman 133, and in the case of Hyderabad Menzies Air Cargo P. Limited vs. DCIT 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 Bangalore Tribunal in the case of ACIT vs. M/s Menzies Aviation Bobbe (Bangalore) Pvt. Ltd., at ITA No 1160/Bang/2012. The Karnataka High Court in the case of Ms. Flemingo Dutyfree Shops P Ltd in W.P. No. 14215 of 2006 dated 19.12.2008 has considered the functions as well as various aspects relating to Bangalore International Airport Ltd. (BIAL) for coming to the conclusion that BIAL is a statutory body. The Hon'ble Court has held that providing duty free shops in the BIAL is in the nature of statutory functions/public functions for the convenience of the public. All the facilities provided by BIAL, be it a state, lessee, or entity, performs statutory functions in the Airport, The said decision has been followed by the Bangalore Tribunal in the case of Menzies Aviation Bobba (Bangalore) Pvt. Ltd. (supra). 6.2 The facts of the appellant's case are similar to that of Menzies Aviation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilities like cargo handling, ground handling, announcement crew, security, check-in counter, baggage management facility, the Airport crew, airlines crew, aircraft crew facility etc. collectively and independently use the premises, the fixed structures, the equipments etc. The developing, operating and maintaining Airport, therefore, encompasses all these activities which are incidental or supplemental to the transportation of passengers or cargo or both together. These facilities of various kind may be provided by one company or different companies but in any way they operate in consortium and having interdependence. Learned AO has fallen in error in observing that different companies have developed the running of Banglore Airport and the assessee is merely providing utility services beyond the scope of Airport for the purpose of Section 80-IA. Thus, on the basis of aforesaid decision, the Bench is inclined to hold that ground handling and cargo handling services provided by the assessee are covered within the meaning of Explanation referred to Section 80-IA and assessee is entitled to claim the benefit of same. 12.2 Then the assessee has come into existence not by reconstitution ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich provides that in furtherance of agreement, the SPRH was under obligation to get incorporated a joint venture company under the Companies Act, 1956 and this recital further describe the liability of SPRH for subscription of shares by AI and SATS equally and that SPRH has right to transfer this agreement to the newly incorporated JVC by way of innovation of agreement. 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 natural child of this alliance. Ld. CIT(A) has not fallen in error in accepting that BIAL is statutory body as held by Hon ble Karnataka High Court in the case of M/s. Flemingo Duty-Free Shops P. ltd. Therefore, there was no substance in the allegation of Ld. AO that the basic condition provided in Section 80IA(iv)(i)(b) is not fulfilled. This was also the view of Banglore Tribunal in the case of 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. AO had fallen in error in applying provision of Section 80IA(iii) with regard to allegation of the assessee company being a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Income-tax Act, 1961 and not as per the choice of assessee whereas in the instant case, the assessee is claiming an expenditure even bills for which have not been received till the end of the year. Thus, the claim of assessee is purely a provision and cannot be allowed as a deductible expenditure. Here, I would also quote the decision of Seshasayee Br (Travancore) (P) Ltd. v. CIT [1971] 82 ITR 442 (Ker), wherein, it is held that for the purpose of computing yearly profits and gains for assessment to income-tax, each year is a separate and self-contained period of time, and losses and expenses incurred before commencement or after its expiry cannot be the subject of any allowance in assessing the income of that particular year. In making the assessment for any particular year, deductions can therefore be permitted only in respect of expenses which are found to have been incurred in the relevant accounting period. In adjudging the admissibility of a claim deduction, the determination of the question whether the assessee had incurred the expenditure during the relevant accounting period is an indispensable preliminary step. Thus, the claim of assessee is not admissible being provis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndent upon the amount of turnover). Since the books of the appellant are maintained on mercantile basis, the provision for concession fees is created in the books of accounts as per mercantile system of accounting and as allowed and accepted under section 145 of the Act on best estimated basis, though the invoice is not raised by the respective parties in that financial year. Once the invoice is raised by the parties and received by the appellant, the provision created for concession fees is reversed and the bill is recorded based on actual invoice. The corresponding TPS is deducted and deposited... 5.2b Recollecting that the appellant is subjected to audit, the action of the appellant as well as its contention that it is within the ambit of Section 145 of the Act is plausible. Further, in view of the decision of the apex court in Bharat Earth Movers (200) 112 taxmann 61 wherein it has been held, inter alia, ...The law is settled: if a business liability has definitely arisen in the accounting year, the deduction should be allowed although the liability may have to be quantified and discharged at a future date. What should be certain is the incurring of the liability. It should als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of the assessee that it has made an ad hoc provision. The payee is identified. Therefore, according to Ld. DR, the tax is required to be deducted on the year-end provisions made by the assessee which are ascertained liabilities. 16. After giving thoughtful consideration to the matter on record and the contentions we are of the view that the credit contemplated in sub-section (2) of section 194C is one that enables the person who has carried out the work to make a claim for the sum. The provision of Rs. 3,82,00,00,000/-, as made by assessee did not as such create a debt in favour of BIAL as the concession fee did not arise out of any contract performed by BIAL but was more in the form of royalty with uncertainty of actual amount due and therefore no income can be said to have accrued or arisen to BIAL. 16.1 Further, the methodology adopted for estimation of turnover / profits and subsequently creating the year-end provision and reversing the same in next financial year, remains the same in all subsequent years. Thus, given the fact that in AY 2014-15 the Department has now accepted that the disallowance is not required to be made under section 40(a)(ia) in respect of the y ..... X X X X Extracts X X X X X X X X Extracts X X X X
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