ITO TDS 3(3), MUMBAI V. SINGAPORE AIRLINES LTD, MUMBAI

ITA 3148/MUM/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1590 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 7 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-12-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2009-2010
• Appeal Filed On: 05-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 133A; 201(1); 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH E,MUM BAI BEFORE SHRI P.K.BANSAL, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO.3148/MUM/2014 FOR (ASSESSMENT YEAR : 2009-10 ) ITO TDS-3(3), 1010, 10 TH FLOOR, SMT. K.G. MITAL AYURVEDIC HOSPITAL BUILDING, CHARNI ROAD (W), MUMBAI-400002 VS. M/S. SINGAPORE AIRLINES LTD., TAJMAHAL INTERNATIONAL, APOLLO BUNDER, MUMBAI-400039 PAN: AAACS5269A (APPELLANT) (RESPONDENT) ITA NO.3149/MUM/2014 FOR (ASSESSMENT YEAR : 2010-11 ) ITO TDS-3(3), 1010, 10 TH FLOOR, SMT. K.G. MITAL AYURVEDIC HOSPITAL BUILDING, CHARNI ROAD (W), MUMBAI-400002 VS. M/S. SINGAPORE AIRLINES LTD., TAJMAHAL INTERNATIONAL, APOLLO BUNDER, MUMBAI-400039 PAN: AAACS5269A (APPELLANT) (RESPONDENT) REVENUE BY : SHRI B.S.BIST (DR) ASSESSEE BY : SHRI K.K. VED (AR) DATE OF HEARING : 19.12.2016 DATE OF PRONOUNCEMENT : 19.12.2016 ORDER UNDER SECTION 254(1) OF INCOME TAX ACT PER PAWAN SINGH, JM: 1. THESE TWO APPEALS FILED BY REVENUE UNDER SECTION 2 53 OF THE INCOME TAX ACT(ACT) ARE DIRECTED AGAINST THE COMMON ORDER O F LD. COMMISSIONER OF INCOME- TAX (APPEALS) [FOR SHORT THE CIT(A)] 13, MUMBAI D ATED 12.02.2004 FOR ASSESSMENT YEAR (AYS) 2009-10 & 2010-11. AS FACTS IN BOTH THE APPEAL ARE IDENTICAL, IMPUGNED ORDER IS COMMON, THUS BOTH WAS HEARD TOGETHER AND I S BEING DECIDED BY CONSOLIDATED 2 ITA NOS. 3148 & 3149 /M/2014 M/S. SINGAPORE AIRLINES LTD. ORDER. FOR APPRECIATION OF FACTS, WE ARE REFERRING THE FACTS OF AY 2010-11 IN ITA NO. 3149/MUM/2014. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APP EAL: (I) THE LD. CIT(A) HAS ERRED ON THE FACTS AND CIRCUMSTA NCES OF THE CASE AND IN LAW BY ALLOWING RELIEF ON COMMON USER TERMINAL C HARGES (CUTE CHARGES) WITHOUT APPRECIATING THE FACT THAT CUTE C HARGES ARE PAID FOR PROVIDING THE AIRLINE WITH TECHNICAL INFRASTRUCTURE , TELECOMMUNICATION FACILITIES AND TELECOMMUNICATION INFRASTRUCTURE AND IT IS THEREFORE LIABLE FOR DEDUCTION OF TAX U/S. 194I OF THE I.T. ACT. (II) THE LD. CIT(A) HAS ERRED ON THE FACTS AND CIRCUMSTA NCES OF THE CASE AND IN LAW BY ALLOWING RELIEF OF TAX U/S. 201(1) & INTE REST U/S. 201(1A) OF THE I. T. ACT FOR SHORT DEDUCTION OF TDS ON PASSENGER S ERVICE FEES (PSF) CONSISTING OF FACILITATION COMPONENT WITHOUT APPREC IATING THE FACT THAT THE FACILITATION CHARGES IS IN THE NATURE OF RENT WHICH IS PAID BY THE EMBANKING PASSENGERS FOR AVAILING THE USE OF FACILI TIES PROVIDED BY AIRPORT AUTHORITY OF INDIA WHICH IS COLLECTED BY TH E ASSESSEE AND IS THEREFORE LIABLE FOR DEDUCTION OF TAX U/S. 1941 OF THE I. T. ACT, 1961 & PAYMENT MADE TO AIRPORT AUTHORITY IS ABOVE THE PRES CRIBED LIMIT FOR DEDUCTION OF TAX UNDER THE SAID PROVISIONS OF I. T. ACT, 1961 . 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A FOREIGN AIRLINE AND FLYING ITS AIRCRAFTS TO VARIOUS DESTINATIONS ACROSS THE WORLD, INCLUDING IN INDIA. A SURVEY U/S 133A WAS CONDUCTED ON 20.01.2009 AT THE OFFICE OF T HE ASSESSEE. DURING THE SURVEY THE STATEMENT OF SH RAJIV TANDON, MANAGER FINANCE & ADMINISTRATION WAS RECORDED. IN THE SURVEY, IT WAS FOUND THAT ASSESSEE MADE THE PAYMENT ON ACCOUNT OF PASSENGER SERVICE FEE (PSF) AND COMMON UTILITY TERMINAL CHARG ES (CUTE). THE AO ISSUED SHOW CAUSE NOTICE TO THE ASSESSEE AS TO WHY CUTE SH OULD NOT BE TREATED AS FEE FOR PROFESSIONAL/TECHNICAL CHARGE U/S 194J AND PSE SHOU LD NOT BE TREATED U/S 194I. THE ASSESSEE FILED ITS DETAILED REPLY, EXPLAINING THE NATURE OF THE SERVICES AND CLAIMED THAT THE PAYMENT FOR CUTE ARE NOT FEE FOR TECHNICAL /PROMOTIONAL CHARGE. SIMILARIRLY, THE PSE ARE NOT IN THE NATURE OF RENT. THE CONTENTI ON OF ASSESSEE WAS NOT ACCEPTED BY AO, THE AO TREATED THE ASSESSEES IN DEFAULT UNDER THE PROVISIONS OF CHAPTER XXVII B OF THE I.T. ACT. THE AO COMPUTED THE TAX ON PSF C HARGE @ 21.33% ON RS. 5,82,37,428/- WHICH WAS WORKED OUT AT RS. 1,24,22,0 43/-. THE AO CALCULATED INTEREST U/S 201(A) W.E.F. 01.04.2001 TO 07.03.2011 OF RS. 14,90,640/-. SIMILARLY, FOR CUTE CHARGE, THE ASSESSEE WAS TREATE D IN DEFAULT UNDER CHAPTER XXVII B AND DIRECTED TO PAY CUTE CHARGE @ 10.33% ON RS. 7,04,546/- WHICH WAS WORKED OUT AT RS. 79,825/-. THE AO ALSO CALCULATED INTEREST U/S 201(A) W.E.F. 01.04.2010 TO 07.03.2011 OF RS. 9579/- IN ITS ORDER DATED 29.03.2011. ON APPEAL 3 ITA NOS. 3148 & 3149 /M/2014 M/S. SINGAPORE AIRLINES LTD. BEFORE THE LD. CIT(A), THE ORDER OF AO WAS SET-ASID E AND THE ADDITION WAS DELETED VIDE ORDER DATED 12.02.2014. THUS, BEING AGGRIEVED BY THE ORDER OF LD. CIT(A) THE REVENUE HAS FILED THE APPEAL BEFORE US. 4. WE HAVE HEARD LD. DEPARTMENTAL REPRESENTATIVE (DR) FOR THE REVENUE AND LD. AUTHORIZED REPRESENTATIVE (AR) FOR ASSESSEE AND PER USED THE MATERIAL AVAILABLE ON RECORD. AT THE OUTSET OF SUBMISSION, LD. AR FOR THE ASSESSEE SUBMITTED THAT BOTH THE GROUNDS OF APPEAL RAISED BY REVENUE ARE COVERED IN FAVOUR OF ASSESSEE BY THE DECISION OF HONBLE APEX COURT. THE LD DR FOR THE R EVENUE FAIRLY AGREED TO THE LEGAL POSITION IN THE DECISION OF HONBLE APEX COURT. 5. FIRST GROUND OF APPEAL RELATES TO THE CUTE CHARGES PAID FOR PROVIDING THE AIRLINE WITH TECHNICAL INFRASTRUCTURE, TELECOMMUNICATION FA CILITIES AND TELECOMMUNICATION INFRASTRUCTURE. THE LD. AR OF THE ASSESSEE ARGUED T HAT THIS GROUND OF APPEAL IS COVERED IN HIS FAVOUR BY THE DECISION OF HONBLE SU PREME COURT IN CIT VS. KOTAK SECURITIES REPORTED VIZ 383 ITR 1(SC). 6. WE HAVE CONSIDERED THE RIVAL CONTENTION OF THE PART IES AND FIND THAT THE HONBLE APEX COURT IN KOTAK SECURITIES (SUPRA) WHILE EXPLAI NING THE MEANING OF TECHNICAL SERVICES HELD: THAT WHERE THE SERVICES PROVIDED BY THE STOC K-EXCHANGE FOR WHICH TRANSACTION CHARGES WERE PAID, FAILED TO SATISFY TH E TEXT SPECIALIZE, EXCLUSIVE AND INDIVIDUAL REQUIREMENT OF THE USER OR CONSUMER WHO MAY APPROACH THE SERVICE PROVIDER FOR SUCH ASSISTANT OR SERVICES. IT WAS ONLY A SERVICE OF THE ABOVE KIND AND SHOULD GO WITHIN THE AMBIT OF EXPRESSION (TECHNICAL SERVICES) BEARING IN EXPLANATION 2 TO SE CTION 9(I)(VII) OF THE ACT. IN ABSENCE OF THE DISTINGUISHED FUTURE, SERVICE THO UGH RENDERED WOULD BE MERELY IN THE NATURE OF FACILITIES OFFERED OR AVAIL ABLE WHICH WOULD NOT COVERED BY THE PROVISIONS OF THE ACT. MOREOVER, A S ERVICE MADE BY THE BOMBAY STOCK EXCHANGE ONLINE TRADING SYSTEM FOR WHI CH THE CHARGES IN QUESTION HAS BEEN PAID BY THE ASSESSEE WERE COMMON SERVICES THAT EVERY MEMBER OF STOCK EXCHANGE WAS NECESSARILY REQUIRED T O AVAIL TO CARRY OUT TRADING IN SECURITIES IN THE STOCK EXCHANGE. A MEMB ER WHO WANTED TO CONDUCT HIS DAILY BUSINESS IN THE STOCK EXCHANGE HA D NO OPTION BUT TO AVAIL SERVICES. THE SERVICE PROVIDED BY STOCK EXCHA NGE WOULD BE A KIND OF FACILITIES PROVIDED BY THE STOCK EXCHANGE FOR TRANS FER IS RENDERING TECHNICAL SERVICES PROVIDED TO ONE OR SECOND OF THE MEMBERS OF STOCK EXCHANGE TO DEAL WITH SPECIAL SITUATION FACED BY A MEMBER OR SPECIAL NEED 4 ITA NOS. 3148 & 3149 /M/2014 M/S. SINGAPORE AIRLINES LTD. OF SUCH MEMBER TO CONDUCT BUSINESS IN THE S TOCK EXCHANGE. SUCH SERVICES, THEREFORE, WOULD UNDOUBTEDLY BE APPROPRIATE TO BE T ERM AS FACILITIES PROVIDED BY STOCK EXCHANGE ON PAYMENT AND WOULD NOT AMOUNT TO TECHNICAL SERVICES PROVIDED BY STOCK EXCHANGE, NO B EING SERVICES SPECIFICALLY SOUGHT BY THE USER OR CUSTOMER . 7. WE HAVE SEEN THAT THE ASSESSEE HAS PAID FOR AVAILIN G COMMON USER TURNOVER CHARGES AND PAID FOR SUCH FACILITIES. THUS, THE PAYMENT MAD E ON ACCOUNT OF CUTE CHARGES IS IN THE NATURE OF FACILITIES. HENCE, THIS GROUND OF APPEAL IS SQUARELY COVERED BY THE DECISION OF HONBLE APEX COURT IN KOTAK SECURITIES (SUPRA). THUS, THE GROUND OF APPEAL RAISED BY REVENUE IS COVERED AGAINST THE REV ENUE. IN THE RESULT THIS GROUND OF APPEAL IS DISMISSED. 8. GROUND NO.2 RELATES TO THE SHORT DEDUCTION OF TDS O N PASSENGER SERVICE FEES (PSF). THE LD. AR OF THE ASSESSEE ARGUED THAT THIS GROUND OF APPEAL IS ALSO COVERED IN FAVOUR OF ASSESSEE BY THE DECISION OF HONBLE SUPRE ME COURT IN ASSESSEES OWN CASE WHICH WAS DECIDED ALONG WITH THE CASE OF JAPAN AIRL INES COMPANY VS. CIT, REPORTED VIZ 377 ITR 372 (SC). THE LD. DR FOR THE REVENUE NOT DISPUTED ABOUT THE FACTUAL AND LEGAL POSITION. 9. WE HAVE GONE THROUGH THE ORDER OF HONBLE APEX COU RT IN JAPAN AIRLINES CO(SUPRA) AND SEEN THAT THIS GROUND OF APPEAL IS ALSO SQUARE LY COVERED BY THIS DECISION, WHEREIN THE HONBLE APEX COURT HELD THAT THE CHARGE S PAID BY INTERNATIONAL AIRLINES TO AIRPORT AUTHORITY OF INDIA FOR LANDING AND TAKEO FF SERVICES AS WELL AS FOR PARKING OF AIRCRAFT, ARE NOT, IN SUBSTANCE FOR USE OF LAND BUT FOR VARIOUS OTHER FACILITIES EXTENDED BY AIRPORT AUTHORITY OF INDIA IN CONNECTIO N OF AIRPORT OPERATION AND SUCH CHARGES ARE NOT COVERED U/S 194I OF THE ACT. THUS T HIS GROUND OF APPEAL RAISED BE THE ASSESSEE HAS NO FORCE AND THE SAME IS DISMISSED BY FOLLOWING THE DECISIONS OF HONBLE APEX COURT. 10. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ITA NO. 3148/MUM/2014( FOR AY 2009-10) 11. THE REVENUE HAS RAISED THE IDENTICAL GROUNDS OF APP EAL. THE FACTS OF THIS ORDER ARE ALSO IDENTICAL AS WE HAVE ALREADY DISMISSED THE APP EAL OF REVENUE FOR AY 2010-11. HENCE, THIS APPEAL IS ALSO DISMISSED WITH SIMILAR O BSERVATION. 12. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISS ED. 5 ITA NOS. 3148 & 3149 /M/2014 M/S. SINGAPORE AIRLINES LTD. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 19 TH DECEMBER, 2016. SD/- SD/- (P.K.BANSAL) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED 19/12/2016 S.K.PS COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT.REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY/