$~62 * IN THE HIGH COURT OF DELHI AT NEW DELHI % Judgment delivered on: 30.01.2025 + ITA 619/2019 PR. COMMISSIONER OF INCOME TAX- 2 .....Appellant Through: Mr. Indruj Singh Rai, SSC with Mr. Sanjeev Menon, JSC, Mr. Rahul Singh, JSC, Mr. Anmol Jagga & Mr. Prathviraj Day, Advs. versus M/S CELEBI DELHI CARGO MANAGEMENT INDIA PVT. LTD. .....Respondent Through: Ms. Kavita Jha, Sr. Adv. with Mr. Himanshu Aggarwal, Adv.

CORAM:

HON'BLE MR. JUSTICE YASHWANT VARMA HON'BLE MR. JUSTICE HARISH VAIDYANATHAN SHANKAR

J U D G M E N T

YASHWANT VARMA, J. (Oral)

1. This appeal is directed against the order of the Income Tax Appellate Tribunal, [Tribunal] dated 23 October 2018 and came to be admitted on the following question of law: -

“(a). Whether the ITAT was legally justified in quashing the order passed by the PCIT-2 under Section 263 of the Act which had been passed as the order of the Assessing Officer ["AO"] was erroneous and prejudicial to the interest of revenue?”

2. The principal issue which arises for our consideration is Signature Not VeriIfTieAd 619/2019 Page 1 of 31

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whether the respondent-assessee could have claimed benefits flowing from Section 80IA of the Income Tax Act, 1961, [Act]. Although the respondent-assessee was held eligible to claim benefits under that provision by the Assessing Officer, [AO], the Principal Commissioner of Income Tax, [PCIT] while exercising powers under Section 263 chose to overturn the view so expressed. It is this order of the PCIT dated 31 March 2016 which was ultimately assailed before the Tribunal.

3. We find that the PCIT had, while dealing with the question of whether Section 80IA could apply in the case of the respondent-

assessee, held as follows: -

“No evidence is available on assessment record to suggest that any of these aspects of the Contract along with its other parts were either examined or verified by the A.O. in the course of the assessment proceedings. These features are a part of the contract which was executed for providing certain inputs to M/s DIAL during the F.Y. 2010-11 relevant to the A.Y. 2011-12. The agreement in question is silent on the role or any services to be provided by CELEBI HAYA SERVISI AS a Company. The reference to the OMDA (Operation Management and Development Agreement) was made on 4 April 2006 in between AAIL and DIAL. The company in question neither was in existence nor was it an Executants of the agreement on 4 April 2006.

In view of the above facts, it is a case where a sub-contractor (the assessee) has been asked by DIAL to provide services on contractual basis without conferring and or assigning any ownership rights to the assessee i.e. (CELEBI). Its claim that it comes within the provisions of section· 80IA and is eligible for deduction under that section is contrary to the facts on records.

The A.O. failed to examine the source of income derived during the year. There is neither any substance in the contention of the assessee on this issue nor is there any evidence to confirm this Signature Not VeriIfTieAd 619/2019 Page 2 of 31

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view. The income declared by the assessee along with the deduction u/s 80IA is contrary to the law. The decision of the assessing officer on this issue was a prejudicial order being erroneous on law.

The company failed to place on assessment record any verifiable documentary evidence in support of the deduction it claimed u/s 80IA. In fact, the company is ineligible for the allowance of deduction @ 100 % of such profit u/s 80IA for the following reasons: -

i. The assessee was not doing the eligible business i.e. infrastructure development specified in section 80IA (4) (i) of the Act, Up gradation and maintenance of Cargo Terminal is not in the list of allowable infrastructure for deduction u/s

80IA.

ii. The company did not enter into an agreement with the Central Government or a State Government or a Local authority or any other salutatory body for (i) developing or (ii) operating and maintaining or (iii) developing,