TMI Blog2004 (10) TMI 281X X X X Extracts X X X X X X X X Extracts X X X X ..... e contention of the assessee that payments were made to the contractor as per section 194C of the Act and not that payments were made under section 194J. This position will be clear by succeeding paras. On this basis, the ground itself as taken by the Revenue does not appear to be happily worded. However, we proceed to adjudicate the entire issue by making reference to the relevant material. 4. The assessee i.e., Japanese Air Lines ('JAL' in short), a foreign company, incorporated inJapan, is involved in business of air traffic/flights and carries passengers and cargo by its aircrafts. The nature of this business requires that there be certain facilities for international air flights. The international community i.e., UNO constituted International Civil Aviation Organization (ICAO in short), which framed certain guidelines and rules and enlisted certain facilities to be given to the international flights. The International Air Transport Agreement ('IATA' in short) also laid down certain stipulations which were to be followed by the member states; India being a signatory, has to comply with such rules, principles, policy guidelines and conventions formed by the ICAO or under IATA. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Authority of India Act of 1994 was given power to take payments for landing, housing and parking the aircrafts of the assessee. It was further contended thatIndiabeing a member and signatory to International Civil Aviation Organization ('ICAO' in short), agreed to levy charges for various facilities provided by it. It was pointed out that charges for landing and parking of aircrafts were based on weight formula and maximum permissible take off weight and these charges included landing and take off facilities, taxi ways with necessary draining, fencing of airport. Air Traffic Control for approach and landing of aircrafts and the parking charges which were based on the length of stay of aircraft beyond a permissible period of time at the airport also included certain other facilities. 4.6 On behalf of the assessee the submissions, therefore, were that the payments made for facilities to landing and parking cannot be treated as rent as the same were not for any fixed or enclosed area of land and were correctly treated by the assessee as payments made to the contractor as per section 194C of the Act. 4.7 The learned CIT(A) accepted the arguments submitted by the assessee and delet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded clear approach, taxiways, light, communication facilities, airdrome control, air traffic control, metrological information, fire and ambulance services, use of light and special radio aids for landing etc. According to him the landing and parking charges were based on the weight formulae and not on area of parking and hence the parking charges were for the work done under the contract and were covered within the provisions of section 194C of the I.T. Act. 7. We have considered the entire material on record and the rival submissions. For proper appreciation of the approach of departmental authorities and for correct adjudication of the core issue i.e., what is the basis for payment of landing and parking charges involved in this appeal, we have to analyse the facts and relevant legal position in relation to the following issues: A. Whether such payments are as fee for professional and technical services as provided under section 194J. B. Whether the charges made by the assessee to the Airport Authority of India on account of landing and parking facilities provided by the said Authority (Airport Authority of India), amount to payment of rent under section 194-I of the Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chnical services' means any consideration (including any lump sum consideration) for the rendering of any managerial, technical or consultancy services (including the provision of services of technical or other personnel) but does not include consideration for any construction, assembly mining or like project undertaken by the recipient or consideration which would be income of the recipient chargeable under the head 'salaries'." 8.3 The Assessing Officer as well as the learned CIT(A) have already treated certain services relating to route navigation and terminal navigation including flight information services, alerting services, as technical services as per section 194J and there is no dispute regarding the same and the assessee has also deducted required TDS on such professional or technical services which are covered under section 194J. 8.4 So far as the landing and parking facility is concerned, it is not the case of the Department that such services are to be provided by professional or by technical persons. Nothing has been brought on record to demonstrate that facilities relating to landing, parking taxiways etc. etc. are technical services. Although the composite servi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh the International Civil Aviation Organization to whichIndiais also a member and signatory have agreed to various charges levied for the facilities provided by the authority. The Airport Authority charges for landing, parking of the aircraft which are based on weight formulas using the maximum permissible take off weight of the aircraft. The landing charges include the landing, take off facilities, taxi ways with necessary drainage, fencing, air traffic control for approach and landing etc. The parking charges are based on length of stay of the aircraft beyond the permissible period at the airport. The AR pleaded that the payments for landing and parking charges cannot be treated as a rent as the same are not for any enclosed area/land and are correctly treated to be payments made to the contractor as per section 194C of the Act. The aircraft fly in and out and are allowed to land for a short while and are parked on the runway/hangars for boarding and dislodging of passengers and cargo. Further the facilities charged by the Airport Authority is for a number of other facilities as already mentioned earlier which cannot be by any stretch of imagination be considered as rent as cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purtenant thereto, whether or not such building is owned by the payee." 9.6 In view of this definition, there has to be either lease, sub-lease, tenancy agreement or arrangement for governing the use of any land. Such land to be specific portion of land and lease etc. of such land has to regulate the manner of use of such land or building and its tenure as well as manner of payment in lieu thereof. After taking into consideration the definition of rent, it apparently appears to be a composite concept. In Black's Law Dictionary, the term 'rent' means - 'consideration paid for use or occupation of property'. In a broader sense, it is the compensation or fee paid, usually periodically for the use of any rented property, land, building, equipment etc. 9.7 So far as the landing and parking facilities provided by Airport Authority of India to the assessee on its airport land is concerned, the same is regulated on the formula of weight and maximum permissible take off weight and not with regard to any specified area of land and its exclusive use by the assessee. 9.8 The statement by the council to the contracting states on charges for airports etc., and in particular on landing and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applied in establishing parking and hangar charges: (i) For the determination of charges associated with use of parking, hangar and long-term storage of aircraft, maximum permissible take-off weight and/or aircraft dimensions (area occupied) and length of stay should be used so far as possible as the basis. (ii) The period of free parking time for aircraft immediately following landing should be determined locally by considering aircraft scheduling, space availability and other pertinent factors." 9.9 In view of the above policy guidelines and principles laid down by the Council of International Civil Aviation Organisation it is clear that the charges to landing and parking are not governed in terms of exclusive use of land or building but are governed by various other considerations and facilities, which meet the requirement of safe landing and parking of the aircraft. 9.10 The Airport Economics Manual, First Edition -1991, in paras 5.11 to 5.15 and 5.19 also provides the same guidelines and these provisions are in consonance with the statement of the Council referred to above. 9.11 For example, the landing charges are to be governed in accordance with the following: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty is strongly influenced by its location, an airport would normally divide building space and land into different zones, setting a range of charges per unit of floot-space (particularly within terminal buildings) and lot of land, with much lower charges applying to space in more remote areas of the airport. In this context airports may wish to consider making a distinction between spaces required by airlines that is essential for their operations at the airport, as opposed to space required by them for other purposes. Apart from airlines, airports may also chose to charge certain categories of tenants less than others, for example other aviation enterprises, flying clubs, certain Government departments and non-profit organizations. Moreover some airports charge below what could be termed an adequate return for airport locations where they wish to encourage the establishment of certain activities." 9.13 From the above, it is clear that market value of the building space and land involved is the primary consideration for deciding rent. These considerations are different from the considerations, which govern the landing and parking charges as referred to above in the case of the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion continues with the owner, it is a license; and (iv) If under the document a party gets exclusive possession of the property, prima facie, he is considered to be a tenant; but circumstances which negative the intention to create a lease." Capt. B.V.D'souza v. Antonio Fausto Fernandes [1989] 3 SCC 574- "(i) Nomenclature is not conclusive thought it may be one of the guiding factors. (ii) The intention of the parties will have to be ascertained notwithstanding the various terms of the deed. However, that does not mean that the terms of the deed are to be ignored altogether." 9.18 These decisions were followed in the case of Om Prakash v. Dr. Ravinder Kumar Sharma 1994 SOL Case No. 426 in which case it was held that intention of the parties will have to be ascertained notwithstanding the various terms of the deed. 9.19 In the case of Smt. Rajbir Kaur v. S. Chokesiri Co. 1988 SOL Case No. 111 the Hon'ble Supreme Court observed that a tenancy is created if tenant is granted the right to enjoyment of the property. It was further held that it is sufficient if the nature of the act done by the grantor shows that it was intended to have the right to exclusive possession. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2(17) of the I.T. Act which includes within sub-clause (ii), "any body corporate incorporated by or under the laws of a country outsideIndia". As the assessee is a company incorporated in Japan, it is covered within the definition of 'company', as given under section 2(17)(ii) of the I.T. Act and therefore if Airport Authority of India and Japan Air Lines are parties to contract, they are covered under section 194C of the Act. It may be clarified that I.C.A.O. is a specialized agency of United Nations created as a result of Chicago Conference in 1944 and India as one of the contracting states to it, is bound by the conventions and guidelines laid down by it for operation of aircrafts in adopting international standards. As the contracting states have committed themselves to implement into their national legislation, Government of India enacted Airport Authority of India Act, under which Airport Authority has been created and the said Authority is to carry out the commitments by providing required facilities to the outside International aircrafts and J.A.L. is one such airlines. 10.3 Coming to the nature of work contract, we have to see as to whether the work done by the Airport A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he account of or pays it to the contractor, he shall deduct out of that sum an amount equal to two per cent, as income tax on income comprised therein." 10.6 In the case of Birla Cement Works v. CBDT [2001] 248 ITR 216 the Hon'ble Supreme Court has held that the word 'work' means engagement in the performance of a task, duty or the like. In this case also theHon'ble Courthas held as under: "To attract the provisions of section 194C, the following conditions have to be satisfied; namely (i) there must be a contract between the person responsible for making payment and the contractor; (ii) the contract must be for carrying out 'any work'; (iii) the work is being carrying out through the contractor; (iv) consideration for the contract should exceed Rs. 10,000 i.e. the amount fixed by section 194C and (v) the payment is made to the contractor for the work carried out by him." 10.7 In view of the above it is clear that one of the conditions is that there must be a contract between the person responsible for making the payment and the contractor; and secondly, the contract must be for carrying out any work and work must be carried out through such contractor. In the present case th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and essentially linked to the sale of property; (ii) Fee for technical services means - payment of any kind to any person other than payments to an employee of the person making the payment and to an individual for independent technical services provided; (iii) Fee for technical services means payment of any kind to any person in consideration for the rendering of any technical or consultancy services (including provision of services of technical or other personnel); (iv) Fee for making available technical knowledge, experience, skill, know how or process or consists of development and transfer of technical plan or technical design. Dy. CIT v. ITC Ltd. [2002] 76 TTJ ( Cal. ) 323. 11.1 These are only broad propositions and they cannot be taken to be exhaustive formulations, as for deciding the true nature of any transaction, the relevant agreement, the related facts and all other attending circumstances are to be examined for proper application of a provision. 12. In the present case, the conditions laid down in proposition No. (I) are satisfied and those of Nos. (II) and (III) are not satisfied, hence we hold that the assessee had rightly deposited TDS under section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rted by the department. If in the earlier and subsequent assessment years, the department has adopted a particular approach, then there appears to be no justification for deviating in this assessment year. The Hon'ble Gauhati High Court in the case of Dhansiram Agarwalla v. CIT [1996] 217 ITR 4 has observed as under: "Neither the principle of res judicata nor the rule of estoppel is applicable to assessment proceedings, yet the rule of consistency does apply to such proceedings." 14.1 In a recent decision in the case of CIT v. ARJ Security Printers [2003] 264 ITR 276, the Hon'ble Delhi High Court has observed as under: "Where a fundamental aspect permeating through the different assessment years has been found as a fact one way or the other and the parties have allowed that position to be sustained by not challenging the order, it would not be at all appropriate to allow the position to be changed in a subsequent year. Although each assessment year, being independent of the other, the principle of res judicata or estoppel by record which applies to civil courts, does not apply to income-tax proceedings, yet for the sake of consistency and for the purpose of finality in all li ..... X X X X Extracts X X X X X X X X Extracts X X X X
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