1. The appeal has been preferred by the Revenue against the order dated 22.07.2019 of CIT (A)-33, New Delhi (hereinafter referred as Ld. First Appellate Authority or in short Ld. ‘FAA’) in appeal no. 411/17-18 arising out of an appeal before it against the order dated 26.12.2016 passed u/s 143(3) r.w.s. 144C of the Income Tax Act, 1961 (hereinafter referred as ‘the Act’) by the ACIT, Circle-5(2), New Delhi (hereinafter referred as the Ld. AO).
2. The facts in brief are that the Assessee company filed its return of income declaring an income of Rs. 1,60,14,260/- and claiming deduction under Chapter VI-A of Rs. 3,12,87,978/-.
3. Ld. AO was not satisfied with the deduction u/s 80IA as it considered the Cargo Services rendered by the assessee company to be not covered for the benefit of Section 80IA of the Act. The assessee had claimed that maintaining, managing, operating, upgrading, modernizing and developing the cargo terminal at the IGI Airport falls in the definition of infrastructural facility u/s 80IA and the reliance was also placed on the judgment of Hyderabad Bench in Menzis Air Cargo P. Ltd. vs. DCIT. ITA.No.421, 422 & 423/Hyd/2015 decided 6 October, 2016.
However, Ld. AO was not satisfied and made following relevant observations in para 5.4 and 5.5 reproduced as under :-
“5.4 The above submission of the assesse has been considered but not found to be tenable. This is because of the following facts.
(a) The assessee was not doing the eligible business i.e. infrastructure development specified in section 80IA(4)(i) of the I.T.Act.
(b) The company did not enter into an agreement with the Central Government or a State Government or a local authority or any other statutory body. DIAL does not come under this category.
(c) The agreement for upgradation and maintenance of cargo terminal was entered with different company from claiming deduction u/s 80IA.
The assessee claims that DIAL is a statutory body and hence eligible for deduction u/s 80IA. The website of Airports Authority of India mentions the following fact regarding DIAL.
(http://www.aai.aero/public_ notices/aaisite_test/faq_Gen.jsp)
“AAI initiated other actions for finalizing the transaction including the formation of two separate companies for Delhi and Mumbai airports. Delhi International Airport Pvt. Ltd. (DIAL) and \Mumbai International Airport Pvt. Ltd. (MIAL) were formed and Delhi and Mumbai airports were handed over to these companies respectively on 3rd May, 2006.”
Even the website of DIAL itself does not mention that it is a statutory body. It claims to be;
“DIAL is a joint venture consortium of GMR Group, Airports Authority of India, and Fraport.”
5.5 From the above fact it is evident that DIAL is a company which does not have any statutory identity. Therefore the assessee has not fulfilled all the conditions necessary for claiming the deduction under the relevant section. This fact was noted by the Revenue Audit party also vide letter DG(Audit) letter DGARC/RAIT/Review on 80IA/2015-16/613 dated 16.11.2015 for AY 2011-12, which was accepted by the department. Order U/S 263 was passed by the PCIT on 31.03.2016 for AY 2011-12 in which the deduction was not accepted.
Considering the above facts and circumstances of the case and in view of the violation of provisions as mentioned in section 80-IA, the amount of Rs. 3,10,37,976/- claimed as deduction is disallowed and added back to the income of the assessee income.
(Addition: Rs. 3,10,37,976/-)
For the above reason, I am satisfied that the assessee company has attracted the provisions of section 271(1)(c) of the 1.T. Act, 1961 by furnishing inaccurate particulars of its income, for which penalty proceedings u/s 271(1)(c) are being initiated separately.”
4. Further, Ld. AO had made a disallowance of miscellaneous expenses in the absence of supporting bills and vouchers.
5. Ld. CIT(A) has deleted the disallowance of deduction u/s 80IA of the Act following finding in assessee’s own case in ITA no. 3376/Del/2017 order dated 18.02.2019 for A.Y. 2012-13.
5.1 The disallowance of miscellaneous expenditure has also been deleted with following relevant finding para 11.1, 11.2 and 11.3 as under :-
“11.1 The Assessing Officer while disallowing the expenses against the heads mentioned in the above grounds of appeal, observed that the Assessee was asked to produce books of account alongwith supporting bills & vouchers for the expenses claimed. The Assessing Officer remarked that while perusing the books of account, bills & vouchers of some of the expenses he found them not properly vouched. When the Assessee was asked to explain the above condition, it was stated that some of the bills & vouchers were misplaced. Accordingly, the Assessing Officer disallowed the deduction on account of the expenses contested in the grounds of appeal.
11.2 The appellant has stated that it produced the ledger account of these expenses in a CD and explained that all the expenses were incurred wholly and exclusively in the course of Appellant’s business. It is submitted that the abovementioned claim of expenses may be allowed.
11.3 On careful consideration of the facts of the case, I find that the Assessing Officer has disallowed the expenses on general remarks without pointing out any of the expenses found by him not vouched or vouchers in respect of which were bogus. The law does not permit disallowance of expenses on sweeping remarks having no reference to the context. It is not the case of the Assessing Officer tha the payments against the expenses were not made through banking channel or any party denied to have received the payments in respect of concerned expenses. In view of this, the disallowances of expenses made by the Assessing Officer cannot be sustained. The disallowances are accordingly deleted and the grounds of appeal are allowed.”
6. Revenue is in appeal raising following grounds;
“1. On the facts and the circumstances of the case and law, the Ld. CIT(A) has erred in deleting the disallowance made u/s 80IA of the Income Tax Act, 1961 amounting to Rs. 3,12,87976/- without examining the merits of the case.
2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting addition of Rs. 24,64,351/- on account of miscellaneous expenditure even though the assessee company failed to produce bills and vouchers before the Assessing Officer.
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.”
7. Heard and perused the record.
8. Ld. DR has submitted that Ld. CIT(A) has fallen in error in considering the judgment of Tribunal dated 18.02.2019 as that was in regard to challenge of the correctness of order of Ld. DCIT u/s 263. He also submitted that Ld. AO has given definitive findings in para 5.4 which still hold the field. It was submitted that the question still required to be determined if the assessee is a transferee company and for which the agreement between DIAL and Celebi Hava Servisi is required to be examined. He also submitted that the Articles of Association and Memorandum of the assessee should be examine to see if infrastructure includes Cargo services.
8.1 In regard to deletion of miscellaneous expenditure, he has submitted that before Ld. AO, assessee had claimed bills and vouchers were misplaced and Ld. CIT(A) without examining the ledger accounts has deleted the disallowance.
9. On the other hand, Ld. AR relied the order in ITA no. 354/Del/2021 for A.Y. 2017-18 in assessee’s own case to submit that the allowability of claim of deduction u/s 80IA of the Act has been decided in favour of the assessee and there are no distinguishing facts. In regard to disallowances of expenditure he submitted that Ld. CIT(A) has duly considered the evidence before it.
10. The Bench has giving thoughtful consideration to the matter on record and groundwise findings are as follows.
11. Ground no. 1. It can be appreciated that while determining the appeal preferred challenging 263 proceedings, the co-ordinate bench in case of assessee in ITA no. 3376/Del/2017 A.Y. 2012-13 vide order dated 18.02.2019 had primarily observed that the Assessing Officer had examined the issue about applicability of provision of Section 80IC and the assessment order cannot be considered to be erroneous, if there are two possible views of which one assessing officer has followed. In para 25 the Bench had observed as follows :
“25. Before closing, on identical set of facts, the ld. PCIT issued a similar notice u/s 263 of the Act as he found that the assessment order framed u/s 143(3) of the Act dated 14.03.2014 was erroneous, in as much as it was prejudicial to the interest of the revenue for at 2011-12. The Tribunal considered the issue in ITA No. 3182/DEL/2016 and set aside the order of the ld. PCIT and restored that of the Assessing Officer. We find that the facts of assessment year 2011-12 are same as the facts of the year under consideration except the claim of deduction under Chapter VI is different in value. Since the Tribunal has quashed the order framed u/s 263 of the Act, we are of the considered opinion that the claim of deduction in the initial assessment year i.e. 2011-12 was justified and, therefore, the same cannot be disturbed in the subsequent assessment year when the facts are identical and law has not changed.”
12. There is no substance in the arguments of Ld. DR that findings of Tribunal while examining the validity of 263 proceedings could not be taken as finding of fact to say the issue is covered in favour of assessee because in ITA No. 354/Del/2021 for A.Y. 2017-18, while deciding the quantum appeal, the issue has been decided in favour of the assessee by following relevant findings in para no. 7 as below :
“7. We have heard and rival submissions and perused the material available on record. The issue in the present ground is with respect to the allowability of claim of deduction u/s 80IA of the Act which is denied by AO but allowed by CIT(A). We find that CIT(A) in his order has reproduced the findings of Co-ordinate Bench of Tribunal in assessee's own case for A.Ys. 2011-12 & 2012-13 wherein it was held that assessee was eligible for deduction u/s 80IA(4) of the Act. He has further noted that since the facts are identical to that of earlier years, the assessee is eligible for claiming the deduction. Before us, Revenue has not pointed to any distinguishing facts of the case in the year under consideration and that of earlier years nor has placed any material to demonstrate that the order of Delhi Tribunal in assessee's own case for A.Ys. 2011-12 & 2012-13 has been set aside/stayed/over ruled by the Higher Judicial forum. In such a situation, we find no reason to interfere with the order of CIT(A) and thus dismiss the grounds of the Revenue.”
12.1 Further more, Ld. CIT(A) in para no. 7.22.1 has reproduced the findings given by CIT(A), in favour of the assessee while deciding the appeal of assessee arising out of assessment order passed u/s 143(3) r.w.s. 263 for A.Y. 2011-12 and A.Y. 2012-13 as follows ;
“7.22.1 Appeal number-TR 119/17-18 for AY 2011-12, Para 6 to 7.1 date of order 17.07.2017:
"6 The second observation of the AO was that the appellant does not satisfy the second condition of section 801A(4), namely that the enterprise should enter 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 u/s 80IA. According to the AO, the appellant has entered into an agreement with DIAL and not directly with AAI, and since DIAL is not a government, a local authority, or a statutory body, the second condition to claim deductions 80IA(4)(i) is not fulfilled in to case. The AO has referred to the websites of AAI and DIAL and observed that none of these websites mentioned tha DIAL is a statutory body. In this connection, the appellant has advanced the following 3 arguments in support of its claim of deduction under section 80IA(4) of the Act:
(1) According to the proviso to section 80IA(4)(i), the agreement of DIAL with the AAI is sufficient compliance of the provision and a separate and independent agreement by the appellant with the AAI is not necessary.
(2) Approvals received from various other departments of the government itself constitutes the agreement with the government, and
(3) DIAL is a statutory body and accordingly, the Concession Agreement entered into between the appellant and DIAL is a sufficient compliance.
6.1. The appellant has submitted that these contentions are supported by the decisions 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 Bobba (Bangalore) Pvt. Ltd and Hyderabad Menzies Air Cargo P. Ltd which have entered into an agreement with BIAL and GHIAL respectively for Air Cargo facility at Bangalore and Hyderabad airport, Hence, respectfully following the decision of the Karnataka High Court in the case of Flemingo Dutyfree (supra) and the decision of the Bangalore Tribunal in the case of ACIT vs. M/s. Menzies Aviation Bobba (Bangalore) Pvt. Ltd. (supra) which has held the agreement between that assessee and BIAL granting the assessee the concession to operate and maintain the cargo facility to be a valid agreement for the purposes of section 80IA(4), it is held that the appellant has entered into an agreement with a statutory body being DIAL for operation and maintenance of an Infrastructure facility i.e. cargo facility at Delhi Airport. Therefore the appellant has satisfied the condition laid down In section 80IA(4)(i)(b).
6.3 Besides, the appellant has taken permissions from the office of the Commissioner of Customs (Import & General) and the Ministry of Civil Aviation to enable it to carry on the business of operation and maintenance of the cargo facility at IGIA, New Delhi. As held by the Madras High Court in the case of CIT v A.L. Logistics (P) Ltd. 55 taxmann.com 283 such approvals obtained From the government authorities would be regarded as an agreement with the government for the purposes of section 801A(4)(i)(b). Considering the aforesaid legal position, I am of the view that the second condition of section 80IA(4) is satisfied in the appellant’s case and accordingly, the said contention of the appellant is upheld.
7. The AO's third reasoning to deny the deduction u/s 80-IA is that "the agreement for upgradation and maintenance of the cargo terminal was entered with a different company from claiming deduction u/s 80IA.” There is no further discussion about this point anywhere in the assessment order. The appellant has pointed out that the Concession Agreement has been entered into between DIAL, CHS and the appellant. Hence, the appellant submits that the said statement of the AO is factually incorrect.
7.1 In view of the factual and legal position discussed above, I am of the considered view that the appellant has satisfied all the conditions to claim deduction under section 80IA of the Act. Accordingly, the claim made by the appellant for deduction of Rs. 83,15,39,055/- u/s 80IA(4) is allowed."
12.2 The aforesaid when considered, leaves no doubt in the mind of the Bench that issue has been fully considered on merits and decided in favour of the assessee and as there are no distinguishing facts or law contrary to same, the same requires no interference. Ground is decided not sustainable.
13. In regard to ground no. 2. It can be observed that the order of Ld. CIT(A) mentions that in CD relevant information was provided to Ld.AO but the same was not considered on behalf of the Revenue. The ground raised by Revenue is that the assessee had failed to produce bills and vouchers still Ld. CIT(A) has deleted the addition. The order of Ld. CIT(A) indicates that like AO he has also gone on the general observations however he was correct in holding that if an expenditure is to be disallowed then the same needs to be examined ascertaining if the same is wholly and exclusively in the course of business. There being no finding on that aspect with regard to disallowance of expenses, other than miscellaneous expense of Rs. 8,20,210/-, which certainly required production of bills and vouchers, to examine the head under which they can be considered for being allowed, having been incurred wholly and exclusively in the course of business. As no specific bills and vouchers were filed, at any stage, the miscellaneous expenses of Rs. 8,20,210/- was wrongly deleted by Ld. CIT(A) and to that extend the ground no. 2 of the Revenue is allowed partly. As consequence of above, the appeal of Revenue is allowed partly.
