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Commissioner of Income Tax, TDS, Mumbai Versus M/s. Jet Airways (India) Ltd.

2017 (1) TMI 899 - BOMBAY HIGH COURT

TDS u/s 194I - Passenger Service Fees (PSF) paid by the asssessee to the airport operators - whether payment was not covered under the definition of rent given in the Explanation (i) to Section 194-I - Held that:- As the substance of the PSF is not for use of land or building but for providing security services and facilities to the embarking passengers the decision of the Apex Court in Singapore Airlines (2015 (8) TMI 185 - SUPREME COURT ) would cover the issue in favour of the respondent-asses .....

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t card agency out of the sale consideration of the tickets booked through credit cards is not covered under the definition of “commission or brokerage” given in the Explanation (i) to Section 194H of the Act and the assessee was not liable to deduct tax at source under Section 194H in respect of this amount?” - Income Tax Appeal No. 1181 of 2014 - Dated:- 4-1-2017 - M. S. Sanklecha And A. K. Menon, JJ. Mr. P. C. Chhotaray for the Appellant Mr. P.J. Pardiwala, Senior Advocate, i/b. Atul Jasani fo .....

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ome Tax (Appeals) (CIT(A)) and holding that the PSF paid by the asssessee to the airport operators was not covered under the definition of rent given in the Explanation (i) to Section 194-I of the Act and the assessee was not liable to deduct tax at source under Section 194-I of the Act? (ii) Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in holding the order of the CIT(A) and holding that the amount retained by a bank/credit card agency out of t .....

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s the respondent-assessee collects on behalf of the Airport Operators, a Passenger Service Fees (PSF) and hands it over to the Airport Operators. However, as no tax was deducted at source while handing over the PSF to the Airport Operator, a notice under Section 201(1)/201(1A) of the Act was issued seeking the respondent-asessee's explanation. The basis of the notice was that the PSF paid over to the Airport Operator was Rent falling within the scope under Section 194-I of the Act. It was co .....

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unt of tax at source (TDS) and the interest thereon under Section 201(1) and 201(1A) of the Act. (b) Being aggrieved the respondent carried the issue in appeal to the Commissioner of Income Tax (Appeals) (CIT(A)). By an order dated 10th May, 2012, the CIT(A) held that the PSF collected from the passengers and paid over to the Airport Operator was not in the nature of rent as defined in Section 194-I of the Act. Consequently there was no obligation on the respondent to deduct tax at source under .....

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rder holds that the same is in the nature of a statutory liability. Besides the impugned order further holds that the Airport Operator is entitled under the above Rule to collect PSF from the passengers and the collection of PSF by the respondent-assessee is handed over to the Airport Operator. Thus the collection by the respondent-assessee is on behalf of the Airport Operator. It further records that the payment which is made by the passenger to the Airport Operator through the Airline cannot b .....

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evenue before us is that the passenger service fee is in fact rent paid within the meaning of the Explanation to Section 194-I of the Act. Mr. Chhotaray, the learned counsel appearing for the Revenue invites our attention to paragraph (e) of his grounds of appeal to submit that the PSF which has been collected is essentially for providing for use of a secure building and furniture. At this we are asked Mr. Chhotaray to identify the facts as reflected in the orders of the Revenue Authorities in s .....

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: the licensee is entitled to collect fees to be called as Passengers Services Fees (PSF) from the embarking passengers at such rate as the Central Government may specify and is also liable to pay for security component to any security agency designated by the Central Government for providing the security services. (f) Thereafter attention was invited to an order dated 9th May, 2006 of the Ministry of Civil Aviation (Government of India) which entitle the Airport Operator to collect the PSF from .....

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the Airport Operator is not claimed as an expenditure by the respondent-assessee. Further the impugned order places reliance upon the decision of the Madras High Court in Singapore Airlines (supra). This decision of the Madras High Court was carried in appeal by the Revenue to the Supreme Court. By its decision reported as CIT v/s. Singapore Airlines Ltd. 377 ITR 372, the view of the Madras High Court was upheld. In the case before the Supreme Court, the issue for consideration was whether land .....

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