TMI Blog2018 (7) TMI 1806X X X X Extracts X X X X X X X X Extracts X X X X ..... issioner of Income-tax (Appeals), 24, Kolkata both dated 30-11-2015 for assessment years 2011-12 2012-13 respectively. 2. Since the issues raised in both the appeals are based on identical facts and, therefore, with the consent of both the parties, we proceed to hear both the appeals above together and dispose of the same by this consolidated order for the sake of convenience. 3. First, we shall take up the appeal in ITA No. 151/Kol/2016 for A 2011-12 by the assessee. ITA No. 151/Kol/2016 A 2011-12-by assessee 4. The assessee has filed the following grounds of appeal along with Form 36:- 1. For that the Commissioner of Income Tax (Appeals) erred in holding that wharfage charges paid by the appellant to Kolkata Port Trust was in the nature of rental payments made for usage of land and tax was required to be deducted at source on such payment. The said finding is without any basis and illegal. 2. For that the Commissioner of Income Tax (Appeals) erred in not appreciating the fact that there is no fixed platform or space given by the Kolkata Port Trust to the appellant and also did not appreciate the fact that the appellant was in addition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is a charitable Institution and no tax is deductible at source u/s 194I of the Act. The ld. AR drew our attention to the issue in challenge involving main grounds of appeal and submitted that the AO initiated proceedings u/s. 201(1)/201(1A) of the Act for non deduction of TDS u/sec 194I of the Act on account of payment made to KPT is identical to the facts and circumstances in the case of M/s. Gourishankar Bihani supra . 8. On the other hand, the ld. DR did not controvert the above submissions of ld R. 9. After hearing both the parties and perusing the record, we find that in the present case, the AO initiated proceedings U/Sec. 201(1)/201(1A) of the Act against the assessee for non deduction of TDS on wharfage charges paid to KPT and held that the assessee is in default and charged interest by an order dt. 31-03-2014 passed u/s. 201(1)/201(1) of the Act. As pointed out by the ld. AR, we find that this Tribunal in the case of M/s. Gourishankar Bihani supra had an occasion to decide an issue which is identical in the facts and circumstances of the present case involving additional ground as well as main grounds of appeal. In this regard, we may usefully reproduce the rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Port Trust is a charitable institution entitled for registration under section 12A of the Act. For assessment year 2007-08 involved in this appeal, Kolkata Port Trust was assessed in the status of a charitable institution and there was no demand raised against it and refund of the order of Rs. 91. 61 crores was issued to it. The aforesaid facts are mentioned in the letter dated May 4, 2012 of the Kolkata Port Trust enclosed at page 17 of assessee s paper book. In view of the above facts and as argued by Ld. counsel for the assessee that the aforesaid position obtained in the case of Kolkata Port Trust viz. that it was granted registration and assessed as a charitable institution under the provisions of the Act, it cannot be disputed that the income of Kolkata Port Trust is not chargeable to tax under the provisions of the Act. Section 11 under which Kolkata Port Trust was assessed, inter alia, for the assessment year 2007-08 falls under Chapter III of the Act for incomes which do not form part of total income . We find that when income is not to be included in the total income, it is without a doubt, not chargeable under the provisions of the Act. In view of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yment to a non-resident was considered by the Hon'ble Supreme Court in GE India Technology Centre P. Ltd CIT, (2010) 327 ITR 456 (SC), where it was held that provisions relating to tax deduction at source applied only to those sums which were chargeable to tax under the Act. The said case dealt with section 195 of the Act but the principle laid down therein is equally applicable even in respect of provisions relating to deduction of tax at source from payments to residents which have to be read along with section 204 of the Act. In the said case, the provisions of section 204 of the Act did not come up for consideration. 6. In term of the above, we are of the view that in the instant case no tax was deductible at source under section 194-I read with section 204 comprised in Chapter XVIIB from the rent paid by the assessee to KPT. This is because such rent was not to be included in the taxable total income of the KPT and was, therefore, not chargeable under the provisions of the Act. As argued by Ld. Senior Advocate that in the instant case no tax was at all payable by KPT for AY 2007-08. U/s 191 of the Act the person making the payment can be deemed to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the disallowance and the order of CIT(A) is reversed. This issue of revenue s appeal is allowed. Accordingly Ld Senior DR stated that the issue is covered in favour of Revenue. But other facet of arguments has not been countered. 7. In view of the above fact, we are of the view that in the instant case no tax was deductible at source under section 194-I read with section 204 comprised in Chapter XVIIB from the rent paid by the assessee to KPT. This is because such rent was not to be included in the total income of the KPT and was, therefore, not chargeable under the provisions of the Act. In the case law referred by Ld. Sr. DR the fact relating to the claim of exemption of the income of KPT was not before Tribunal or that issue was not raised but in the instant case, KPT was not required to pay any tax and in turn cannot be treated to be in default within the meaning of section 201(1). Accordingly, we are of the view that no disallowance ought to have been made under section 40(a)(ia) of the Act. 10. It is clear from the aforementioned order that this Tribunal directed the DIT(Exemption) to grant registration u/s. 12A of the Act w 01-04-2005 v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or pier is ready for receiving, landing and shipping or for landing or for shipping goods or passengers from and upon sea-going vessels. 13. The ld R argued that wharfage is a fee charged by the KPT for the use of a platform built out from the shore into the water supported by piles and provides access to ships and boats for loading and unloading of cargo. He referred to page-1 of the paper book and submitted that the KPT issued cargo bill in the name of assessee mentioning name of vessel, particulars of cargo, quantity and rates. The vessel by name M Golden Dream was arrived in the KPT on 12- 02-2011. The KPT has allotted berth no. 00065 for unloading of imported acetic acid through pipeline, for which, the KPT charged ₹ 1, 28, 878/- for a quantity of 1997. 30 of acetic acid @ ₹ 58. 50. The ld. AR argued that the said vessel arrived on 12-02-2011 and departed from the KPT on 15-02-2011. The assessee used such platform temporarily from 12-02-2011 to 15-02-2011 for unloading of the said cargo and it is not a rent attracting the provisions of section 194I of the Act as there was no permanent and continuous usage of said platform. He referred to page-3 of the paper book ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The Hon ble High Court of Delhi held that when the wheels of an aircraft coming into airport and touched the surface of the airfield and parking the aircraft in the airport is use of land and attracts the provisions of section 194I of the Act. The Hon ble High Court of Madras held that the facility was not use of land per se and was provided in compliance with the various international protocol and there was no use of land and held no applicability of section 194I of the Act. The ld. AR submits that the Hon ble Supreme Court affirmed the view taken by the Hon ble High Court of Madras in the case of Singapore Airlines Ltd supra and overruled the view of Hon ble High Court of Delhi in the case of Japan Airlines Co. Ltd. He also submits that the issue raised before the Hon ble Supreme Court in the case of Japan Airlines Co td is similar and identical to the facts of present case and argued that the payments made by the assessee to KPT on account of wharfage charges cannot be considered as rent attracting the provisions of section 194I of the Act. 16. On the other hand, the ld. DR relied on the orders of AO CIT-A. 17. Heard rival submissions and perused the material on reco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es and other appliances for the purpose of the supply of water at the port; ( j) engines and other appliances necessary for the extinguishing of fires; ( k) construction of models and plans for carrying out hydraulic studies; ( l) dry docks, slipways, boat basins and workshops to carry out repairs or overhauling of vessels, tugs, boats, machinery or other appliances. 37. Power of Board to order sea-going vessels to use docks, wharves, etc. - ( 1) When any dock, berth, wharf, quay, stage, jetty or pier erected at any port or port approaches under the provisions of this Act has been completed with sufficient warehouses, sheds and appliances for receiving, landing or shipping goods or passengers from and upon sea-going vessels, the Board may, after obtaining the approval of the Collector of Customs and by notification published in three consecutive issues of the Official Gazette, declare that such dock, berth, wharf, quay, stage, jetty or pier is ready for receiving, landing and shipping or for landing or for shipping goods or passengers from and upon sea-going vessels. ( 2) As from the date of the publication of such notifica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... racting the provision u/section 194I of the Act. 19. On perusal of details-(Cargo Bill), it is noticed that the KPT (Haldia Complex) issued the Cargo Bill to assessee, wherein details of cargo wharfage, bill No. Date, Vessel Name, Import Rot No. Particulars, quantity, Rate Amount, Vessel Arrival Departure Date/Time are reflected from pages 1-95 of the paper book. As discussed above, on perusal of pages 96-134, it is noticed that the KPT approved scale of rates applicable for major ports, wherein it is found that wharfage was defined under section 2 (xxiii), wherein wharfage was defined as a basic dues recoverable on all cargo/container landed or shipped or transshipped within the port limit and approaches or passing through the declared landing stage of the port, whether the porterage was provided by the port or not and shall include hooking/unhooking operation on shore. We also find break up of bulk cargo charges in section 4. 1, wherein the KPT levies rates varying on liquids/gas handled through pipeline and other than pipeline, though mechanical system and other than mechanical system. 20. It is further noticed that the Income Tax Department, Govt. of India clarified the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ind no demarcated space/place was given to assessee permanently and no fixed rate collected. Therefore, in our opinion the clarification issued by the CBDT is applicable to the facts in hand and the impugned order of the CIT-A confirming the view of the AO in finding that the assessee is in default and imposing interest thereon u/s 201/201(1A) of the Act for non deduction of TDS U/Sec 194 I of the Act is not maintainable and the same is liable to be quashed. 22. Further, the Hon ble Supreme Court in the case of Japan Airlines pleases to explain the scope of applicability of section 194I of the Act and affirmed the decision of the Hon ble High Court of Madras in the case of Singapore Airlines Ltd reported in 358 ITR 237 (Mad. ), which held utilization of airport for providing the facility of landing and takeoff of airplanes and also for parking facility is not used of land. Relevant portion of decision of Hon ble Supreme Court in the case of Japan Airlines Co. Ltd reported in 377 ITR 372(SC) is reproduced herein below:- 14. From the reading of this Section, it becomes clear that TDS is to be made on the 'rent'. The expression 'rent' is given much wider m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssary hues and colours. Instead of taking a myopic view taken by the Delhi High Court by only considering use of the land per se, the Madras High Court examined the matter keeping wider perspective in mind thereby encompassing the utilization of the airport providing the facility of landing and take-off of the airplanes and also parking facility. After taken into consideration these aspects, the Madras High Court came to the conclusion that the facility was not of 'use of land' per se but the charges on landing and take-off by the AAI from these airlines were in respect of number of facilities provided by the AAI which was to be necessarily provided in compliance with the various international protocol. The charges, therefore, were not for land usage or area allotted simpliciter. These were the charges for various services provided. The substance of these charges was ingrained in the various facilities offered to meet the requirement of passengers' safety and on safe landing and parking of the aircraft and these were the consideration that, in reality, governed the fixation of the charges. To our mind, the aforesaid conclusion of the High Court of Madras is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al specifications for such lighting, safety area and markings are stipulated which have to be provided. Insofar as runway lighting is concerned which is essentially used at airports that allow night landings, requires that there has to be Runway End Identification Lights, Runway End Lights, Runway Edge Lights, Runway Centerline Lighting System, Touchdown Zone Lights, Taxiway Centerline Lead-Off Lights, Taxiway Centerline Lead-On Lights, Land and Hold Short Lights, Approach Lighting System etc. Technical specifications for all these lights have to be complied with Same applies to runway markings. Runway markings and signs on most large runways include Threshold, Touch Down Zone, Fixed Distance Marks, Center Line etc. and all these have specific purpose. So much so, designs and quality of pavement on these runways are also to be taken compliant. All these technical specifications keep in mind the basic fact, namely, on landing the aircraft is light on fuel and usually less than 5% of the weight of the aircraft touches the runway in one go. On take-off the aircraft is heavy but as the aircraft accelerates the weight gradually moves from the wheels to the wings. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e ld R and in view of the discussion made herein above, we hold that the wharfage charges paid to the KPT is not rent and no TDS is liable to be deducted under the provisions of section 194I of the Act. In view of the same, the order dt. 30-11-2015 passed by the CIT-A in confirming the order of AO that the assessee is in default and charging of interest thereon u/s. 201/201(1A) of the Act is not justified and it is set aside. Therefore, the ground nos. 1 to 3 raised by the assessee along with Form No. 36 are answered as indicated above. ITA No. 152/Kol/2016 for A 2012-13- by assessee 24. We find that the additional ground raised in this appeal is similar to additional ground raised in ITA No. 151/Kol/2016 for A 2011-12. Since, we answered the said additional ground in favour of assessee in the aforementioned paragraphs and we adopt the same view in this appeal also. Accordingly, additional ground raised in this appeal by the assessee is allowed. Further, we find ground no s. 1 to 3 raised along with From No. 36 are similar to the ground no s. 1 to 3 raised in ITA No. 151/Kol/2016 for A 2011-12 and we answered the said grounds in favour of assessee by setting ..... 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