February 27, 2026 :The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has upheld the eligibility of Air India SATS Airport Services Pvt. Ltd. to claim deduction under Section 80-IA of the Income Tax Act on income earned from airport ground handling and cargo handling operations. The Tribunal dismissed three appeals filed by the Revenue for Assessment Years 2011-12, 2012-13 and 2013-14.
The Bench comprising Judicial Member Satbeer Singh Godara and Accountant Member Naveen Chandra delivered the ruling while deciding appeals filed by the Assistant Commissioner of Income Tax (ACIT) against orders of the Commissioner of Income Tax (Appeals), which had granted relief to the assessee.
Air India SATS Airport Services Pvt. Ltd. was incorporated on 20 April 2010 pursuant to a joint venture agreement dated 16 April 2010 between Air India Ltd. and SATS Ltd., Singapore. The joint venture was formed to provide ground handling and cargo handling services at airports in India. The business earlier carried out through an unincorporated joint venture was transferred to the newly incorporated entity with effect from 1 August 2010 under a Business Transfer Agreement executed on 30 March 2011.
For the relevant assessment years, the company claimed deduction under Section 80-IA on profits derived from airport cargo and ground handling operations. However, the Assessing Officer disallowed the claim on several grounds. The officer held that the company was merely a reconstruction of an earlier joint venture, that the ownership condition under Section 80-IA was not satisfied due to the participation of a foreign shareholder, and that cargo and ground handling services constituted only utility services rather than development, operation or maintenance of airport infrastructure. The officer also observed that the assessee had no direct agreement with the Central Government as required under the provision.
Additionally, the Assessing Officer disallowed ₹3.82 crore under Section 40(a)(ia) relating to a year-end provision for concession fees, citing failure to deduct tax at source.
The Commissioner (Appeals) deleted both disallowances. In earlier proceedings, the Tribunal had affirmed the appellate authority’s findings and held that airport cargo and ground handling services form an integral part of airport infrastructure facilities. It observed that an airport cannot be viewed merely as a runway or aircraft-related structure, but includes all facilities necessary for the transportation of passengers and cargo.
The Tribunal further held that the statutory requirement under Section 80-IA(4) is only that the enterprise should be a company registered in India. Since the assessee was incorporated in India, the nationality of its shareholders did not affect its eligibility. It also accepted that agreements entered into with airport concessionaires authorised by the Government, pursuant to concession agreements executed with the Government of India, satisfied the statutory requirement of an agreement for the purposes of Section 80-IA.
The matter later reached the High Court, which remanded the case to the Tribunal for a limited examination of the applicability of the proviso to Section 80-IA(4). The Tribunal clarified that the remand was confined to this issue and did not reopen the question of the assessee’s eligibility for deduction, which had already been settled in its favour.
Examining the proviso, the Tribunal explained that it applies where an eligible enterprise transfers an infrastructure facility to another enterprise for operation and maintenance. The purpose of the proviso is to ensure that the total deduction claimed by the transferor and transferee together does not exceed the maximum period specified under the statute.
On the facts of the case, the Bench found no evidence showing that the deduction claimed by the assessee had exceeded the permissible period under Section 80-IA. The Tribunal therefore rejected the Revenue’s attempt to invoke the proviso and reaffirmed that the assessee was entitled to the deduction.
With regard to the disallowance under Section 40(a)(ia), the Tribunal noted that the provision for concession fees had been made on an estimated basis and was later reversed when actual invoices were received, at which stage tax was duly deducted at source. It also observed that once the assessee’s income was eligible for deduction under Section 80-IA, any enhancement of income arising from disallowance would also qualify for the same deduction. Accordingly, the deletion of the disallowance by the Commissioner (Appeals) was upheld.
In conclusion, the Tribunal dismissed all three appeals filed by the Revenue and affirmed Air India SATS Airport Services Pvt. Ltd.’s entitlement to deduction under Section 80-IA on income from airport ground handling and cargo handling operations.
Case: ACIT v. M/s Air India Sats Airport Services Pvt. Ltd.
Case Numbers: ITA No. 5026/Del/2016, ITA No. 645/Del/2018, ITA No. 6533/Del/2017
Coram: Satbeer Singh Godara (Judicial Member), Naveen Chandra (Accountant Member)
Decision Date: 26 February 2026
