ITO, New Delhi V. M/s. MDLR Airlines Pvt. Ltd., Gurgaon

ITA 3994/DEL/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4792 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 3 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-12-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 17-07-2013
• Assessment Year: misc
• Appeal Filed On: 02-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAMEER SHARMA
• Section: 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: E : NEW DELHI BEFORE SHRI I. C. SUDHIR, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOU NTANT MEMBER ITA NO. 3994/DEL/2011 ASSESSMENT YEAR: 2009-10 ITO, VS. MDLR AIRLINES PVT. LTD. WARD-50(4), ROOM NO. 501, SCO-2,3,4, JHARSA ROAD, AAYAKAR BHAWAN, LAXMI NAGAR OLD JUDICIAL COMPLEX, PASCHIM VIHAR, GURGAON, NEW DELHI 110 063. DELM130650 (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SAMEE R SHARMA, SR. DR RESPONDENT BY : SHRI SALI L AGRAWAL, ADVOCATE, WITH SHRI SHAILASH GUPTA ORDER PER I.C. SUDHIR, JUDICIAL MEMBER THE REVENUE HAS QUESTIONED FIRST APPELLA TE ORDER SOLELY ON THE GROUNDS THAT THE LD. CIT(A) HAS ERRED IN REDUCING THE DEMAN D RAISED ON ACCOUNT OF NON- DEDUCTION / SHORT DEDUCTION OF TAX U/S 194-I ON PAY MENT OF LANDING AND PARKING CHARGES TO AIRPORT AUTHORITY OF INDIA (AAI). 2. WE HAVE HEARD AND CONSIDERED THE ARGUMEN TS ADVANCED BY THE PARTIES IN VIEW OF ORDERS OF THE AUTHORITIES BELOW AND DECI SIONS RELIED UPON. ITA NO. 3994/DEL/2011 2 3. THE RELEVANT FACTS ARE THAT THE ASSESSEE W AS INCORPORATED W.E.F. 7.9.2005. INITIALLY AT THE TIME OF ITS INCORPORATION THE NAME OF THE ASSESSEE COMPANY WAS MDLR AVIATION PVT. LTD. AND THEREAFTER W.E.F. 28.8 .2006 ITS NAME WAS CHANGED TO MDLR AIRLINES PVT. LTD. THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF AIR PASSENGER TRAFFIC AS REASONABLE SCHEDULED AIRLI NES. IT WAS SUBJECTED TO SURVEY OPERATION U/S 133A OF THE ACT ON 22.1.2009 AND IT W AS FOUND THAT THE ASSESSEE COMPANY HAS NOT DEDUCTED TDS ON PAYMENTS MADE TO AI RPORT AUTHORITY OF INDIA, DELHI AMOUNTING TO RS. 2,01,48,295/- AND SIMILARLY RS. 89,71,832/- MADE TO AIRPORT AUTHORITY OF INDIA CHANDIGARH. THE ASSESSEE FILED DETAILS IN RESPECT OF PAYMENT MADE TO AIRPORT AUTHORITY OF INDIA DELHI SH OWING THAT RS. 96,50,203/- WERE PAID TO GMR DELHI INTERNATIONAL AIRPORT PVT. L TD. AND RS. 1,04,98,092/- WERE PAID TO AAI, DELHI. IT WAS FOUND THAT TDS WAS NOT DEDUCTED ON PAYMENTS MADE TO GMR DELHI INTERNATIONAL AIRPORT PVT. LTD. D UE TO LOWER DEDUCTION CERTIFICATE. ON THE PAYMENTS MADE TO AIRPORT AUTHOR ITY OF INDIA (IN SHORT AAI), THE ASSESSEE WAS DEDUCTING TAX AT SOURCE UNDER THE PROVISIONS OF SECTION 194-C @ 2.266%. IN VIEW OF THE HONBLE DELHI HIGH COURT I N THE CASE OF ASIANA AIRLINES IN ITA NO. 101/2007 THAT PAYMENT MADE FOR LANDING A ND PARKING CHARGES TO THE AIRPORT AUTHORITY OF INDIA SHALL BE DEEMED TO BE RE NT WITHIN THE MEANING OF SECTION 194-I OF THE INCOME TAX ACT, THE AO REQUIRE D THE ASSESSEE TO EXPLAIN WHY THE TDS LIABILITY ON PAYMENTS MADE TO AAI BE NO T CALCULATED @ 22.66% U/S 194-I OF THE ACT. FROM THE DETAILS FURNISHED BY THE ASSESSEE IN RESPONSE TO THE ITA NO. 3994/DEL/2011 3 QUERY RAISED BY THE AO, THE AO FOUND THAT THE ASSES EE HAS SHOWN TDS DEDUCTED ON NON-TRAFFIC CHARGES @ 22.66% AND ON TRAFFIC CHAR GES @ 2.266%. THE AO RAISED FURTHER QUERY AND AFTER CONSIDERING THE REPL Y OF THE ASSESSEE, THE AO CAME TO THE CONCLUSION THAT THE EXPENSES FURNISHED BY THE ASSESSEE IS IN THE NATURE OF RENT FOR USING THE PREMISES OF AAI, LANDI NG AND PARKING CHARGES ETC. THE AO ACCORDINGLY COMPUTED THE ASSESSEES TDS LIAB ILITY ON ACCOUNT OF PAYMENT MADE TO AAI UNDER THE HEAD AAI (NON-TRAFFIC) AND UN DER THE HEAD AAI (TRAFFIC) IN TOTAL RS. 4,93,52,917/-(DEDUCTING RS. 96,50,203/ -) I.E PAYMENT MADE TO GMR, DELHI ON WHICH NO TDS WAS TO BE DEDUCTED DUE TO LOW ER DEDUCTION CERTIFICATE, THE AO WORKED OUT RS. 3,97,02,714/- THE PAYMENT DEE MED TO BE RENT U/S 194-I OF THE ACT. LIKEWISE HE WORKED OUT PAYMENT MADE TO AAI, DELHI AND CHANDIGARH ( ON WHICH NO TDS WAS DEDUCTED) ON RS. 1,94,69,924/ - (RS. 2,01,48,295/- - RS. 96,50,203 = RS. 1,04,98,092 + 89,71,832/-). THE AO WORKED OUT TDS TOTAL ON PAYMENT MADE TO AAI DELHI AND CHANDIGARH U/S 194-I @22.66% AT RS. 44,11,884/-. BALANCE PAYMENT MADE TO AAI ON WHICH T DS WAS DEDUCTED @ 2.266% WAS WORKED OUT AT RS. 2,02,32,790/- (RS. 3,9 7,02,714/- RS. 1,94,69,924/-). TDS ON RS. 2,02,32,790/- @ 22.66% W AS WORKED OUT AT RS. 45,84,750/- AND AFTER DEDUCTION OF RS. 45,84,750/- I.E. TDS ALREADY DEDUCTED @ 2.266%, THE TOTAL TDS LIABILITY U/S 194-I WAS WORKE D OUT AT RS. 85,38,159/-. THUS THE AO WORKED OUT TOTAL TDS LIABILITY U/S 194- I ON ACCOUNT OF PAYMENT MADE TO AAI AT RS. 90,07,753/-(RS. 85,38,159/- + RS . 4,69,594/-) AFTER ADDING ITA NO. 3994/DEL/2011 4 RS. 4,69,594/- ON ACCOUNT OF INTEREST U/S 201(IA) O N AVERAGE BASIS IN THE ABSENCE OF MONTHWISE DETAILS. THIS ACTION OF THE AO WAS CHALLENGED BY THE ASSESSEE BEFORE THE LD. CIT(A). LD. CIT(A) AFTER CO NSIDERING THE CASE OF THE PARTIES IN DETAIL HAS COME TO THE CONCLUSION THAT A SSESEE WAS LIABLE TO DEDUCT TDS U/S 194-I / 194-C OF RS. 17,57,496/- (RS. 9,53, 147/- + RS. 8,04,349/-) AND NOT RS. 85,38,159/-. ACCORDINGLY HE HAD GIVEN RELIE F OF RS. 67,80,663/- U/S 201(I) OF THE ACT TO THE ASSESSEE. REGARDING INTEREST U/S 201(IA) OF THE ACT, HE HAS DIRECTED THE ITO (TDS) TO RECOMPUTE THE SAME IN THE LIGHT OF THE RE-DETERMINED LIABILITY U/S 201(I) OF THE ACT AS PER HIS ABOVE FI NDING IN THIS REGARD. THE REVENUE HAS QUESTIONED THIS RELIEF PROVIDED TO THE ASSESSEE BY THE LD. CIT(A). 4. IN SUPPORT OF THE GROUND THE LD. DR HAS BASICALLY PLACED RELIANCE ON THE ASSESSMENT ORDER, WHICH WE HAVE DISCUSSED ABOVE. HE SUBMITTED THAT IN ABSENCE OF DETERMINATION OF NATURE OF CHARGES THE LD. CIT(A ) WAS NOT JUSTIFIED IN APPLYING THE DECISION OF HONBLE DELHI HIGH COURT IN THE CAS E OF UNITED AIRLINES (2006) , 287 ITR 281 (DELHI). HE SUBMITTED THAT THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF ASIANA AIRLINES FOLLOWED BY THE AO I S APPLICABLE HOLDING THAT PAYMENT MADE FOR LANDING AND PARKING CHARGES TO THE AIRPORT AUTHORITY OF INDIA SHALL BE DEEMED TO BE RENT WITHIN THE MEANING OF SE CTION 194-I OF THE ACT. ITA NO. 3994/DEL/2011 5 5. LD. AR ON THE OTHER HAND TRIED TO JUSTIFY THE FIRST APPELLATE ORDER ON THE ISSUE, WHILE REITERATING THE SUBMISSIONS MADE ON BE HALF OF THE ASSESSEE BEFORE THE AUTHORITIES BELOW. HE ALSO DREW OUR ATTENTION T O THE CONTENTS OF FINDING OF THE LD. CIT(A) IN PARA NO. 7.4 OF THE APPELLATE ORD ER AND PLACED RELIANCE ON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF UNITED AIRLINES VS. CIT (SUPRA). 6. CONSIDERING THE ABOVE SUBMISSIONS WE FIND THAT IN THE CASE OF THE PRESENT ASSESEE BEFORE US THE ASSESSEE HAS PAID TOTAL SUM O F RS. 3,97,02,714/- AS DIFFERENT CHARGES DETAILS OF WHICH ARE AS UNDER :- SR. NO. NATURE OF ACTIVITY AMOUNT 1. PASSANGER SERVICE FEES RS. 1,14,68,240/- 2. X-RAY CHARGES RS. 5,65,503/- 3. ROUTE NAVIGATION FACILITY CHARGES (RNFC) RS. 1,38,45,421/- 4. TERMINAL NAVIGATION LANDING CHARGES (TNLC) RS. 67,21,650/- 5. WATCH EXTENSION CHARGES (WEC) RS. 28,95,401/- 6. COUNTER CHARGES RS. 4,18,523/- 7. PARKING CHARGES RS. 2,08,848/- 8. LANDING CHARGES RS. 35,78,928/- TOTAL RS. 3,97,02,714/- 7. OUT OF THE ABOVE CHARGES RS. 42,06,299/- IN TOTAL WAS PAID TOWARDS COUNTER CHARGES (RS.4,18,523/-) , PARKING CHARGES (RS. 2,08,848/-) AND LANDING CHARGES (RS. 35,78,928/-). FOLLOWING THE DECISION O F HONBLE DELHI HIGH COURT IN THE CASE OF UNITED AIRLINES VS. CIT(SUPRA) THAT LAN DING AND PARKING CHARGES SINCE ITA NO. 3994/DEL/2011 6 ARE FOR THE USE OF THE LAND, THEREFORE THE CHARGES SO PAID CONSTITUTE RENT FOR PURPOSE OF SECTION 194A OF THE ACT, LD. CIT(A) HELD THAT THE CHARGES OF RS. 42,06,299/- TOWARDS COUNTER CHARGES, PARKING CHARGE S AND LANDING CHARGES ARE FOR USE OF LAND AND THEREFORE ARE IN THE NATURE OF RENT U/S 194-I OF THE ACT. FOR THE REMAINING CHARGES AGGREGATING TO RS. 3,54,96,41 5/- (RS. 3,97,02,714/- AND RS. 42,06,299/-) I.E TOWARDS PASSENGER SERVICE FEES (RS. 1,14,68,240/-), X-RAY CHARGES (RS. 5,65,503/-)ROUTE NAVIGATION FACILITY C HARGES (RS. 1,38,45,421), TERMINAL NAVIGATION LANDING CHARGES (RS. 1,38,45,4 21), TERMINAL NAVIGATION LANDING CHARGES (RS. 67,21,850/-) AND EXTENSION CHA RGES (RS. 28,95,401/-), THE LD. CIT(A) HELD THAT THESE CHARGES ARE NOT FOR USE OF LAND THEREFORE DO NOT CONSTITUTE RENT FOR THE PURPOSE OF SECTION 194-I OF THE ACT. IN OTHER WORDS THE LD. CIT(A) HELD THAT THE CHARGES WHICH HAVE BEEN PAID F OR THE USE OF LAND CONSTITUTES RENT U/S 194 I OF THE ACT AND THE CHARG ES WHICH ARE NOT FOR USE OF LAND DO NOT CONSTITUTE RENT FOR THE PURPOSE OF SEC TION 194-I OF THE ACT AND WORKED OUT THE CHARGES PAID BY THE ASSESSEE IN QUES TION ACCORDINGLY. HE HELD THAT SECTION 194-C OF THE ACT WILL BE APPLICABLE ON THE CHARGES PAID AT RS. 3,54,96,415/-. THE LD. CIT(A) ACCORDINGLY HELD THAT THE ASSESSEE WAS LIABLE TO DEDUCT TDS U/S 194-I / 194-C OF RS. 17,57,496/- (RS . 9,53,147/- + RS. 8,04,349/-) AND NOT RS. 85,38,159/- AS HELD BY THE AO. HAVING GONE THROUGH THE DECISIONS OF THE HONBLE DELHI HIGH COURT IN THE CA SES OF ASIANA AIRLINES (SUPRA) AND UNITED AIRLINES (SUPRA) AS WELL AS IN THE CASES OF CIT VS. JAPAN AIRLINES CO. ITA NO. 3994/DEL/2011 7 LTD. (2009) 180 TAXMAN 188 (DEL), WE FIND THAT THER E IS NO DISPUTE ON THE RATIO LAID DOWN IN THE DECISIONS THAT LANDING AND PARKING CHARGES CAN BE DEEMED TO BE RENT U/S 194 I OF THE ACT. FOR A READY REFERENCE TH E RELEVANT EXTRACT OF THE DECISION IN THE CASE OF UNITED AIRLINES IS BEING RE PRODUCED HEREUNDER :- 'A PERUSAL OF THE ABOVE PROVISION SHOWS THAT THE WO RD 'RENT' AS DEFINED ABOVE HAS A WIDER MEANING THAN 'RENT' IN COMMON PAR LANCE. IT INCLUDES ANY AGREEMENT OR ARRANGEMENT FOR USE OF LAND. WHEN THE WHEELS OF AN AIRCRAFT COMING INTO AN AIRPO RT TOUCHES THE SURFACE OF THE AIR-FIELD, USE OF THE LAND OF THE AIRPORT IM MEDIATELY BEGINS. SIMILARLY, FOR PARKING THE AIRCRAFT IN THAT AIRPORT, AGAIN, TH ERE IS USE OF THE LAND. HENCE WE ARE OF THE OPINION THAT LANDING AND PARKIN G FEE IS DEFINITELY 'RENT' WITHIN THE MEANING OF THE AFORESAID DEFINITI ON AS THEY ARE PAYMENTS MADE FOR USE OF THE LAND OF THE AIRPORT. IN OUR OPINION, THE DEFINITION OF THE WORD 'RENT' I N EXPLANATION (I) TO SECTION 194-1 IS VERY CLEAR AND THE PLAIN MEANING OF THAT P ROVISION SHOWS THAT EVEN THE LANDING OF AIRCRAFT OR PARKING AIRCRAFT AM OUNTS TO USER OF THE LAND OF THE AIRPORT. HENCE, THE LANDING FEE AND PARKING FEE WILL AMOUNT TO 'RENT' WITHIN THE MEANING OF THE AFORESAID PROVISION, EVEN IF IT COULD NOT HAVE SUCH A MEANING IN COMMON PARLANCE. 8. SINCE IT IS NOT IN DISPUTE BEFORE THE TRIB UNAL THAT THE PAYMENT OF RS. 42,06,299/- MADE BY THE ASSESSEE ON ACCOUNT OF THE COUNTER CHARGES, PARKING CHARGES AND LANDING CHARGES ARE FOR THE USE OF LAND AND RS. 3,54,96,415/- PAID TOWARDS PASSENGER SERVICE FEES , X-RAY CHARGES , RO UTE NAVIGATION FACILITY CHARGES, TERMINAL NAVIGATION LANDING CHARGES AND WA TCH EXTENSION CHARGES ARE NOT FOR THE USE OF LAND, WE DO NOT FIND INFIRMITY I N THE ABOVE CITED DECISIONS OF ITA NO. 3994/DEL/2011 8 THE HONBLE DELHI HIGH COURT. THE FIRST APPELLATE O RDER ON THE ISSUE IS THUS UPHELD. THE GROUND IS ACCORDINGLY REJECTED. 9. CONSEQUENTLY APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 13 TH DECEMBER, 2013. SD/- SD/- (SHAMIM YAHYA) ( I.C. SUDHIR ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATE 13 TH DECEMBER, 2013 *VEENA COPY OF ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR BY ORDER DEPUTY REGISTRAR, ITAT