ITAT Delhi Reaffirms Section 80-IA Deduction for Air India SATS JV

The “F” Bench of the Income Tax Appellate Tribunal, Delhi, dismissed the Revenue’s appeals in the case of Air India Sats Airport Services Pvt. Ltd. for AYs 2011–12, 2012–13 and 2013–14. The dispute concerned eligibility for deduction under Section 80-IA and disallowance under Section 40(a)(ia).

Section 80-IA Deduction Upheld After High Court Remand

The assessee, a joint venture between Air India Ltd. and SATS Ltd., Singapore, provided ground and cargo handling services at airports. The Assessing Officer denied deduction under Section 80-IA, alleging that:

1. The company was a reconstruction of an earlier joint venture.
2. One shareholder was a foreign entity.
3. Cargo and ground handling were mere utility services.
4. No direct agreement existed with the Central Government.

The Tribunal noted that in earlier rounds, it had already held that cargo handling forms part of airport infrastructure and qualifies under Section 80-IA(4). The High Court remanded the matter only to examine the proviso to Section 80-IA(4), not the entire eligibility.

Reiterating its earlier findings, the ITAT held that the assessee was entitled to deduction in principle.

Proviso to Section 80-IA(4) Not Applicable

The Revenue argued that the statutory proviso applied where infrastructure facilities are transferred between enterprises. The Tribunal clarified that the proviso merely restricts the total deduction period between transferor and transferee. There was no material to show that the assessee’s claim exceeded the maximum permissible deduction period. Accordingly, the proviso did not apply. On the disallowance of ₹3.82 crore under Section 40(a)(ia), the Tribunal observed that once Section 80-IA relief is allowed, any enhancement of business income would also qualify for deduction, rendering the issue academic.

All three Revenue appeals were dismissed.