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2022 (1) TMI 841 - HC - Income TaxTDS u/s 194H - Disallowing u/s 40(a)(ia) - amount of collection charges retained by the airlines on collection of passenger service fees amongst other disallowance - HELD THAT:- In the case of Additional Commissioner of Income Tax, Mumbai v. Mumbai International Airport (P) Ltd., [2017 (2) TMI 640 - ITAT MUMBAI] on which heavy reliance was placed by the learned counsel appearing for the appellant, the question that fell for consideration was with regard to PSF-(SC) which could not be characterized as income under Section 2(24) of the Act as the assessee merely acted in a fiduciary capacity for collection and disposal of the amount of PSF-(SC). The dispute herein is in a narrow compass with reference to 2.5% of PSF withheld by the Airlines Operators in terms of clause 1.4 of SOP. It is trite that no denial of allowance claimed under Section 40(a)(ia) of the Act could be made by the department, in the event, the Airlines Operators have offered the said 2.5% of commission, which is nothing but income to tax. In order to verify this factual aspect, the matter has been restored to the file of the assessing officer, which cannot be faulted with. Hence, the common substantial question of law No.1 is answered in favour of the Revenue and against the assessee. Addition u/s 14A r.w.r. 8D - HELD THAT:- As assessee do not have exempt income and as such no disallowance can be made under section 14A read with rule 8D The issue involved herein is squarely covered by the decision of the Coordinate Bench of this Court in the case of Commissioner of Income Tax v. M/s Quest Global Engineering Services Pvt. Ltd. [2021 (3) TMI 434 - KARNATAKA HIGH COURT] Recognised method of accounting - whether Tribunal is right in law in deleting addition of income by directing the assessing authority to allow it on cash basis which was made by assessing authority on accrual basis thereby recognizing mixed system of accounting for assessee-company which is not permissible as per the provisions of section 145 - HELD THAT:- It is clear that the assessee being a company has adopted the mercantile system of accounting only for the expenses relating to M/s NACIL without offering the corresponding income to tax in one year, the hybrid method of accounting in one Assessment Year is not permissible. Hence, we answer this question i.e., substantial question of law No.2 in favour of the Revenue and against the assessee. However, we confirm the order of the assessing officer inasmuch as the tax offered on receipt basis for the assessment year 2013-14 would be excluded and the same shall be given effect to in the proceedings for the assessment year 2013-14.
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