Bangalore International Airport Ltd. [BIAL] is a statutory body u/s 80IA(4)(i)

Brief of the case:

Revenue filed above appeal against the order of CIT (A) who held that BIAL is statutory body as per requirement of section 80IA (4) (i) of the Income-tax Act. Tribunal held that BIAL is not a statutory body as per requirement of the section. Later on it was held in another writ petition that BIAL is a statutory body as per Article 12 of the constitution of India. On the basis of this judgement a miscellaneous petition was filed and the same was recalled to reconsider the sole issue that whether BIAL is a statutory body. After considering the judgment of the Hon’ble HC in writ petition ITAT held that BIAL is a statutory body.

Facts of the case:

• The appeal was earlier heard and disposed of by order dated 30.01.2014 in which ITAT held that the activity carried on by the assessee is infrastructure development under section 80IA(4), but as far as its agreement with BIAL is concerned, it was held that the status of the BIAL is not that of statutory authority and therefore, disallowed the deduction under section 80IA of the Act.
• Tribunal also held that the activity carried on by the assessee is infrastructure development, but since the major shareholders in BIAL are not Government authorities, it is not a statutory authority and therefore the deduction u/s 80IA(4) is not allowable.
• Tribunal also have held that BIAL is not a statutory authority but is a company incorporated under the Companies Act and is not created by any statutory body or law. It was held that though it is constituted as per the policy of the Central Government, it cannot be said to be statutory body as required under section 80IA(4) of the Act with its public-private partnership.
• Hon’ble Karnataka HC in the case of M/s. Flemingo Duty Free Shops Pvt. Ltd. in WP No.14215 of 2006 dated 19.12.2008, had an occasion to go into the shareholdings of various parties in BIAL and after detailed examination of facts has held the BIAL to be a statutory body amenable to writ jurisdiction.
• It is on this ground, that the order of the Tribunal was recalled and reheard at length.

Contention of the revenue:

• According to the department the findings of the tribunal is ambiguous and liable be rectified.
• The revenue has sought recall of the order and rectification of the alleged mistake apparent from record.

Contention of the assessee:

• The Hon’ble High Court in the writ petition have held that BIAL is a statutory body and all the points were considered by HC at the time of delivering judgments.
• The ITAT should recall its earlier judgment and re consider it in the light of judgment passed in writ petition.

Held by the ITAT:

• Grounds on which this Tribunal has held that BIAL is not a statutory body, have been considered by the Hon’ble High Court and have been accepted that it is a statutory body.
• Therefore, respectfully following the Hon’ble jurisdictional High Court Order, we do not see any reason to interfere with the Order of the CIT(A).

Comments by the Author:

Important point in the decision of writ petition:-

• The writ petition was filed by the petitioner on the ground that it was not issued the tender document to bid for a shop in the BIAL premises though BIAL is a statutory authority and was supposed to call for open tenders.
• The Civil Aviation Department of the Government of India was the first respondent while Airport Authority of India and BIAL were 2nd and 3rd respondents respectively.
• The parties to whom tender documents were issued were the other respondents to the writ petition.
• The grievance of the petitioner in the writ petition was that BIAL, the 3rd respondent, was a statutory authority and therefore ought not to have restricted the issuance of tender document only to respondents 5 to 9 therein thereby excluding the petitioner from the competition.
• Before the Hon’ble High Court, BIAL had filed an affidavit stating that majority of the Board of Directors are private partners who constitute majority of the shareholders and the Board of Directors and therefore the petition filed against it, is not maintainable as it is neither a State or instrumentality of a State or a body discharging public duties for the purpose of Article 12 of the Constitution of India to exercise powers of the court under Article 226 of the Constitution of India.
• The Hon’ble High Court went into the Shareholders Agreement as well as the nature and functions and duties performed by BIAL to come to the conclusion that BIAL was discharging statutory functions/public functions for the convenience of travelling public and therefore is a State under Article 12 of the Constitution of India.
• It was held that though it is constituted as per the policy of the Central Government, it cannot be said to be statutory body as required under section 80IA(4) of the Act with its public-private partnership.
• the Hon’ble High Court of Karnataka in the case of M/s. Flemingo Duty Free Shops Pvt. Ltd., cited (supra) has also considered the constitution of BIAL, the shares of different parties in the said company and has come to the conclusion that it is a statutory body as it is discharging statutory functions of the Government.