TMI Blog2014 (10) TMI 499X X X X Extracts X X X X X X X X Extracts X X X X ..... the services which was pre-dominantly for "carrying out work", inter alia, relating to storage dispatch, transportation, loading and unloading of goods, etc. - Thus, the assessee has rightly deducted tax at source under section 194C of the Act - assessee was not in default for deduction of tax as per provisions of section 194C at the rate of 2 per cent and that lower authorities were not justified for treating the services rendered to the assessee as falling under section 194J of the Act and thereby liable for deduction of tax at 5% - the decision taken by the CIT (A) in deleting the demand of tax u/s 201(1) of the Act in respect of Cargo Handling Charges is fair and reasonable and it does not call for any interference – Decided against revenue. - ITA No. 4635/M/2012, ITA No. 4636/M/2012, ITA No. 5114/M/2012, ITA No. 5115/M/2012 - - - Dated:- 9-7-2014 - D. Karunakara Rao, AM And Sanjay Garg, JM,JJ. For the Appellant : Shri Mourya Pratap For the Respondent : Shri Vijay Mehta ORDER Per D. Karunakara Rao,AM. There are 4 appeals under consideration. All the four appeals are filed by the Revenue involving the AYs 2009-10, 2010-11 and 2011-12. Since, the issues ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the said payment is in the nature of 'fees for technical / professional services' and therefore, the tax was liable to be deducted u/s 194J of the Act. Accordingly, AO passed order u/s 201(1) on 31.3.2011 by holding that the assessee is in default on account of non deduction of TDS on Passenger Service Fees (PSF) and Cargo Handling Charges paid to the extent of ₹ 76,24,59,852/- and ₹ 36,88,478/- respectively and raised demand of ₹ 17,27,73,402/- in respect of PSF and ₹ 3,03,930/- in respect of CHC. Before us, with reference to the applicability of TDS on PSF, ld Counsel mentioned that the AO did not raise the demand u/s 201(1) in respect of these payments considering the fact that the said amounts were offered to tax in the hands of the recipient and paid the taxes. He brought our attention to the order u/s 154 of the Act for the AY 2009-2010 and the contents of para 2 of the said order confirms the same. Further, he also mentioned that the TDS provisions should not apply to these PSF in view of the order of the ITAT in the case of ACIT vs. Jet Airways (India) Ltd [2013] 158 TTJ 289, which is relevant for the proposition that the Airlines collects ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order. For the sake of completeness of this order, the said relevant paras are reproduced here under: 3. We have considered the rival contentions carefully gone through the orders of the authorities below as well as provisions of the law contained under sections 194C and 194J of the Income-tax Act, 1961. In the instant case, from the record we found that the assessee had entered into clearing and forwarding agency agreements with various persons. On the payments made to the Clearing and Forwarding Agents, the assessee deducted tax at source under section 194C of the Act. The payment made by the assessee to the C F Agents was for a consolidated set of services. The services included receipt and dispatch of goods, storing the goods, keeping accounts/records of the same, ensuring the safety of the goods, complying with formalities for effecting receipt and dispatch of goods, etc. The object of the agreements was to ensure handling and delivery of the goods as per the directions of the assessee. Since the services involved carrying out of work within the meaning of the said term in section 194C of the Act, the assessee, therefore, correctly deducted tax at source under the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been broadly described above. The main object of the agreement was to ensure correct handling and delivery of goods as per the terms of the assessee. We found that as per the nature of services rendered, the same are in pari materiato the services as contemplated under section 194C, and the same was not for any professional or technical services as mentioned under section 194J of the Act. As per section 194J(1) of the Act, any person, not being an individual or a Hindu Undivided Family, who is responsible for paying to a resident any sum by way of (a) fee for professional services, or (b) fees for technical services, shall, at the time of credit of such sum to the account of the payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct an amount of equal to five per cent of such sum as income-tax on income comprised therein. Explanation (a) and (b) to section 194J of the Act defines professional services and fees for technical services respectively. The same reads as under : Explanation.-for the purposes of this section :- (a ) professional services means services rendered by a person in the cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of 2 per cent and that lower authorities were not justified for treating the services rendered to the assessee as falling under section 194J of the Act and thereby liable for deduction of tax at 5%. 7. We have also perused the order of the CIT (A) for the assessment year 2009-2010 and find that the para 5.2 and 5.3 of the said order of the CIT (A), dated 30.04.2012 are relevant here and the same read as under: 5.2. In regard to this issue, also, the appellant has given various arguments and made submissions which are discussed in detail in my appellate order of even date for AY 2008-09. After the said discussion, I have in AY 2008-2009 held as under: 5.7. I have considered the facts of the case, the submissions on behalf of the appellant as well as the AO's order on this issue. I agree with the contention that the Cargo Handling Charges paid by the appellant company are not in the nature of professional or technical services or royalty as specified u/s 194J. Further, the decision of the Hon'ble Delhi ITAT relied by the appellant is squarely on the same issue and is applicable to the case of the appellant. Hence, I hold that the provisions of section 194J are no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st u/s 201(1A) of ₹ 1,32,07,423/- which is levied for delay of deduction of TDS on Passenger Service Fees (PSF) Cargo Handling Charges u/s 194I 194J, without appreciating the fact that the assessee had failed to deduct the tax the subsequent payment of tax by the respective payees does not absolve the assessee from the default committed u/s 201(1A) for delay of payment of tax liability. 3. The Ld CIT (A) has erred in facts and circumstances of the case and in law in deleting the demand of interest of ₹ 1,32,07,423/- without properly appreciating the factual and legal matrix of the case as clearly brought out by the learned AO in order u/s 201(1A) of the Act. 4. The Ld CIT (A) on the facts and circumstances of the case and in law erred in not appreciating the fact that assessee company is changing @ 2.5% for collecting PSF and not merely acting as a 'collecting agency' without any obligation, in other words, without deriving any monetary benefits. 11. All the above grounds raised by the Revenue in this appeal are regarding the interest charges u/s 201(1A) of the Act. While adjudicating the issue of demand raised by the AO u/s 201(1) of the Act, wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... killed persons to handle highly complicated and mechanized machinery. v) The Ld CIT (A) on the facts and the circumstances of the case and in law by deleting interest levied under section 201(1A) of the Act amounting to ₹ 1,98,24,565/- by holding that 'Passenger Service Fee' is not subject to deduction of tax at source under the Act. vi) The Ld CIT (A) has erred on facts and circumstances of the case and in law by deleting the interest amounting to ₹ 2,44,250/- levied u/s 201(1A) of the Act by holding that cargo handling charges do not fall within the purview of section 194J but fall within the purview of section 194C of the Act. 14. At the outset, Ld Counsel for the assessee brought our attention to the above ground nos.(i) (ii) and mentioned that both these grounds relate to the treatment of Passenger Service Fee (PSF) paid by the assessee on behalf of its customers and whether it attracts the provisions of section 194I of the Act or not. In the regard, Ld Counsel brought our attention to the order of the ITAT, Mumbai in the case of ACIT vs. Jet Airways (India) Ltd [2013] 158 TTJ 289 and mentioned that an identical issue was came up before the Trib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 08 has clearly stated the fact that the licensee of the airport i.e. the airport operator, is required to collect the PSF is initially collected by the concerning airlines from the passengers and then handed over to the respective airport operator/authority. Thus, it is absolutely clear that the assessee only collects the PSF from the passengers for and on behalf of the airport authority/operator and passes the same to the airport authority/operator. This view would also be made very clear by the answer to question No.24 given by the CBDT it is Circular No.715, dated 8th August, 1995, which relates to clarification of various provisions relating to tax deduction at source. Question No.24 reads as under :- Question 24 : Whether in a case of composite arrangement for user of premises and provision of manpower for which consideration is paid as a specified percentage of turnover, section 194-I of the Act would be attracted ? Answer : If the composite arrangement is in essence the agreement for taking premises on rent, the tax will be deducted under section 194-I from payments thereof. The facts under consideration show that the PSF is a statutory liability without demarcati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2,29,02,139/- in respect of PSF payments is hereby directed to be deleted. 18. From the above it is clear that the issue under consideration is squarely covered by the order of the Tribunal in the case of Jet Airways (India) Ltd (supra). Therefore, considering the same and respectfully following the said order of the Tribunal (supra), we are of the opinion that the decision taken by the CIT (A) is fair and reasonable and it does not call for any interference. Accordingly, grounds no.(i) (ii) raised by the Revenue are dismissed. 19. Ground no.(iii) (iv) relate to the cargo handling charges. This issue is already discussed and decided by us in the above paragraphs of this order while adjudicating the appeal ITA No.4635/M/2012 (AY 2009-2010). Since, the facts are identical, therefore, the adjudication given by us given in the said appeal for the AY 2009-10 applies to the instant ground nos.(iii) (iv) too. Accordingly, grounds no. (iii) (iv) raised by the Revenue are dismissed. 20. Ground no. (v) (vi) relate to the interest charges u/s 201(1A) on account of Passenger Service Fee (ground no. v) and Cargo Handling Charges (ground no.vi). Since, the grounds raised by t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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