INCOME TAX ACT, 1961

Section 80-IA(4)

Deduction undr section 80-IA(4) - Condition precedent - Agreement entered into by assessee - Airport and compliance of clause (b) and clause (c) of section 80-IA(4)(i)

The issue in revenue's appeal was with regard to allowability of deduction under section 80-IA on acount of non compliance of agreement and commencement under section 80-IA(4)(i)(b) and 80-IA(4)(i)(c). AO disallowed the claim on the ground that no agreement had been entered into for operation of the airport and that the airport started operations before 1-4-1995, which resulted in the non-compliance of conditions specified in section 80-IA(4) (i) -Clauses (b) & (c). Tribunal directed the AO to consider all records including the submissions made by the assessee and decide the issue afresh. Consequent to remand by the Tribunal again the AO disallowed the claim of the assessee on the ground of non compliance of clause (b) and clause (c) of section 80IA(4) (i). On appeal, the CIT(A) reversed the order of the AO and allowed the claim of the assessee under section 80-IA. The High Court vide consolidated order in ITA Nos. 163,169 &176 of 2012, dt. 7-8-2017 set aside the order of the Tribunal and held that the assessee had complied with section 80-IA(4)(i)(b). The order of the High Court was given effect to by the AO vide order passed under section 143(3) read with section 260.Held: The agreement and the installation of the equipments for the operation of the airport should precede the commencement of operation of the infrastructure facility to avail the benefit of deduction. The statutory provision and the agreement being as above, court cannot uphold the conclusion of the Tribunal that both the agreements could not constitute agreement! specified in clause-(b). Accordingly, the findings of the Tribunal with reference to clause(b) of sub-section (4) of section 80-IA were set aside. In view of the judgment of the High Court, the assessee was entitled for deduction under section 80-IA(4)(i)(b). Being so, there was no infirmity in the findings in judgment of the High Court in relation to section 80-IA(i)(c) and not related to section 80-IA(4)(i)(b) for these assessment years. Thus, this ground of appeals of the revenue for these assessment years was rejected. The assessee had started operating and maintaining the airport after 1-4-1995 and complied with section 80-IA(4)(i) (c). It was clear that the assessee had started operating and maintaining the Airport only from 1-7-1999, and hence, the assessee had satisfied the condition under section 80-IA (4)(i)(c). It was clear that the assessee had started operating and maintaining the Airport only from 1-7-1999, and hence, the assessee had satisfied the condition under section 80-IA(4)(i)(c). The AO had given effect to the order of High Court and allowed deduction under section 80-IA(4)(i)(c).

SUBSCRIBE FOR FULL CONTENT