ACIT (TDS) RG 2(1), MUMBAI V. JET AIRWAYS (INDIA) LTD, MUMBAI

ITA 5264/MUM/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 71566 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-10-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: J
• Next Hearing Date: 10-10-2013
• Assessment Year: 2010-2011
• Appeal Filed On: 21-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S D SHRIVASTAVA
• Section: 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL J , BENCH, MUMBAI , BEFORE SHRI VIJAY PAL RAO , JM & SHRI N.K.BILLAIYA , AM IT A NO. 5264 / MUM/ 20 12 ( ASSESSMENT YEAR : 20 10 - 2011 ) ACIT (TDS) - 2(1), MUMBAI - 400 002 VS. M/S JET AIRWAYS (INDIA) LTD., SIROYA CENTRE, SAHAR AIRPORT ROAD, ANDHERI (EAST), MUMBAI PAN/GIR NO. : AAACJ 0920 H ( APPELLANT ) .. ( RESPONDENT ) /REVENUE BY : MR. S.D.SHRIVASTAVA /ASSESSEE BY : MR. VIJAY MEHTA FCA DATE OF HEARING : DATE OF PRONOUNCE MENT : 23 RD OCTOBER, 2013 O R D E R PER N.K.BILLAIYA , AM : THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE CIT(A) - 14, MUMBAI , DATED 10 - 5 - 2012 , PERTAINING TO ASSESSMENT YEAR 2010 - 2011 . 2 . THE REVENUE HAS RAISED FIVE SUBSTANTI VE GROUNDS OF APPEAL. GROUND NO. 1 &2 RELATE TO SHORT DEDUCTION OF TDS ON PASSENGER SERVICE FEES (IN SHORT PSF) . THIS CONSTITUTES THE FIRST GRIEVANCE OF THE REVENUE . GROUNDS NO. 3 TO 5 RELATE TO THE NON - DEDUCTION OF TAX ON ACCOUNT OF ALLEGED COMMISSION PAID TO BANKS ON CREDIT CARDS. THIS CONSTITUTES THE SECOND GRIEVANCE OF THE REVENUE . ITA NO. 5264 /12 2 3 . FIRST, WE WILL TAKE UP THE SECOND GRIEVANCE OF THE REVENUE , WHICH HAS BEEN RAISED THROUGH GROUNDS NO. 3 TO 5 , AS BOTH SIDES AGREED THAT THE ISSUE IS COVERED IN FAVOUR OF TH E ASSESSEE BY THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEARS 2007 - 08, 2008 - 09 & 2009 - 10, RESPECTIVELY, DECIDED IN ITA NOS. 7439, 7440 & 7441/MUM/2010 , VIDE ORDER DATED 17 - 7 - 2013 . 4 . DURING THE COURSE OF THE PROCEEDINGS UNDER SECTION 201(1) /201(1A) OF THE ACT, THE AO NOTICED THAT THE ASSESSEE HAS NOT DEDUCTED TAX AT SOURCE UNDER SECTION 194H ON ACCOUNT OF COMMISSION FROM THE RETAINED AMOUNT OF COMMISSION BY THE CREDIT CARD COMPANIES/BANKS. THIS ISSUE HA S BEEN DISCUSSED BY THE AO IN PA RA 6 AT PAGE 6 OF HIS ORDER AND IN CLAUSE (G) AT PAGE7 , THE AO HAS COMPUTED THE AMOUNT OF TDS AND INTEREST PAYABLE THEREON AND MADE AN ADDITION OF RS. 48,45,64,490/ - . 5 . IN APPEAL, THE CIT(A) HAS CONSIDERED THE GRIEVANCE OF THE ASSESSEE IN PARA 5 AT PAG E 18 OF HIS ORDER WHILE DISPOSING OFF THE GROUNDS NO. 4, 5 & 6, RAISED BEFORE HIM AND IN PARA 5.12 AT PAGE 28, THE CIT(A) HAS FOLLOWED THE DECISION OF HIS PREDECESSOR IN EARLIER YEARS AS MENTIONED BY US AT THE VERY BEGINNING OF THIS ORDER , THE FINDINGS OF THE CIT(A) IN EARLIER YEARS , ARE COVERED BY THE DECISION OF THE TRIBUNAL DECIDED IN ITA NOS.7439, 7440 & 7441/MUM/2010 ( SUPRA ) . A PERUSAL OF THE SAID CONSOLIDATED ORDER OF THE TRIBUNAL SHOWS THAT ON IDENTICAL FACTS THE TRIBUNAL HAS CONSIDERED THE DECISIONS OF THE COORDINATE BENCHES OF JAIPUR IN ITA NO. 745/JP/ 2011, BANGALORE BENCHES ITA NO. 5264 /12 3 REPORTED IN 140 ITD 451 AND HYDERABAD BENCHES OF THE TRIBUNAL IN ITA NO. 905/HYD/2011. AFTER CONSIDERING THE DECISION OF THE COORDINATE BENCHES MENTIONED HEREINABOVE, THE TRIBUNAL HAS GIVEN ITS FINDINGS IN PARA 9 AT PAGE 6 OF ITS ORDER, WHICH READS AS UNDER : - 9. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE LD. REPRESENTATIVES OF THE PARTIES AND THE ORDERS OF THE AUTHORITIES BELOW. WE HAVE ALSO CAREFULLY CONSIDERED THE P ROVISIONS OF SECTION 194H OF THE ACT. WE OBSERVE THAT THE SIMILAR ISSUE HAS BEEN CONSIDERED BY THE JAIPUR BENCH OF THE TRIBUNAL IN THE CASE OF M/S. GEMS PARADISE (SUPRA) AND THE TRIBUNAL HELD VIDE PARAGRAPH 27 OF THE SAID ORDER THAT THE PROVISIONS OF SECTION 194H OF THE ACT ARE NOT APPLICABLE AS THE BANKS MAKE PAYMENTS TO THE ASSESSEE AFTER DEDUCTING CERTAIN FEES AS PER THE TERMS AND CONDITIONS IN THE CREDIT CARD AND IT IS NOT A COMMISSION BUT A FEE DEDUCTED BY THE BANKS. THE SAID PARAGRAPH 27 OF THE ORDER IS REPRODUCED BELOW : 27. AFTER CONSIDERING THE ORDERS OF THE AO AND LD. CIT (A), WE FIND THAT ASSESSEE DESERVES TO SUCCEED IN THIS REGARD. SECTION 194H IS APPLICABLE WHERE ANY COMMISSION HAS BEEN PAID BY THE PRINCIPAL TO THE COMMISSION A GENT. THIS IS NOT A CASE OF COMMISSION AGENT AS ASSESSEE SOLD ITS GOODS THROUGH CREDIT CARD AND ON PRESENTATION OF BILL ISSUED AGAINST CREDIT CARD, THE BANK MAKES PAYMENT TO THE ASSESSEE AFTER DEDUCTING AGREED FEES AS PER TERMS AND CONDITIONS IN CASE OF CR EDIT CARD. THIS IS NOT A COMMISSION PAYMENT BUT A FEES DEDUCTED BY THE BANK. IF THERE IS AN AGREEMENT, THAT IS AGREEMENT BETWEEN THE CREDIT CARDHOLDER AND THE BANK. BANK IS A PRINCIPAL AND TO SPREAD OVER ITS BUSINESS, A SCHEME IS FLOATED BY BANK I.E. ISSUA NCE OF CREDIT CARDS. BANK ISSUES CREDIT CARD TO THE VARIOUS CUSTOMERS WHO PURCHASE THE VARIOUS CREDIT CARDS ON THE AGREED TERMS AND CONDITIONS. ONE OF THE MAJOR CONDITION IS THAT IF CREDIT CARD HOLDER DOES NOT MAKE PAYMENT WITHIN THE PRESCRIBED TIME LIMIT THEN THEY CHARGE 2% PENAL AMOUNT OF BILL WHICH IS RAISED BY THE SHOP KEEPER AGAINST SALE OF ITS ITEMS THROUGH CREDIT CARD. BANK CANNOT REFUSE THE PAYMENT TO THE SHOP KEEPER WHO SALE THEIR GOODS THROUGH CREDIT CARD. ONLY IN THOSE CASES WHERE GOODS ARE FOUND DAMAGED AND CREDIT CARD HOLDER INFORM THE BANK THAT THE MATERIAL PURCHASED BY THEM IS DAMAGED OR DEFECTIVE AND REQUEST THE BANK NOT TO MAKE THE PAYMENT, IN SUCH CASES ONLY BANK CAN WITHHOLD THE PAYMENT, OTHERWISE THE BANK HAS TO MAKE THE PAYMENT TO THE SH OP KEEPER. THEREFORE, IN OUR CONSIDERED VIEW, THERE IS NO SUCH RELATION BETWEEN THE BANK AND THE SHOP KEEPER WHICH ESTABLISHES THE RELATIONSHIP OF A PRINCIPAL AND COMMISSION AGENT. TECHNICALLY IT MAY BE WRITTEN THAT BANK WILL CHARGE CERTAIN PERCENTAGE OF C OMMISSION BUT THIS IS NOT A COMMISSION BECAUSE ASSESSEE SELLS ITS GOODS AGAINST CREDIT CARDS, AND ON PRESENTATION OF BILLS, THE BANK HAS TO MAKE THE PAYMENT. IT IS NOT THE CASE THAT BANK HAS ADVISED THE ASSESSEE TO SELL THEIR GOODS TO ITS CUSTOMERS THEN HE WILL ITA NO. 5264 /12 4 PAY THE COMMISSION. IT IS REVERSED IN A SITUATION AS BANK ISSUED CREDIT CARDS TO THE CREDIT CARD HOLDERS ON CERTAIN FEES OR WHATEVER THE CASE MAY BE AND THE CARD HOLDER PURCHASES MATERIAL FROM THE MARKET THROUGH HIS CREDIT CARD WITHOUT MAKING ANY PAY MENT AND THAT SHOP KEEPER PRESENTS THE BILL TO THE BANK AGAINST WHOSE CREDIT CARD THE GOODS WERE SOLD AND ON PRESENTATION OF BILL AS STATED ABOVE THE BANK MAKES THE PAYMENT. THEREFORE, IN OUR CONSIDERED VIEW, PROVISIONS OF SECTION 194H ARE NOT ATTRACTED IN THIS TYPE OF TRANSACTION. THEREFORE, WE HOLD THAT ADDITION MADE AND CONFIRMED BY LD.CIT (A) WAS NOT JUSTIFIED. ACCORDINGLY, THE ADDITION MADE AND CONFIRMED BY LD. CIT (A) IS DELETED. 10. WE OBSERVE THAT THE SAID ISSUE WAS AGAIN CONSIDERED BY THE JAIPU R BENCH OF THE TRIBUNAL IN THE CASE OF BHANDARI JWELLERS (SUPRA) AND FOLLOWING THE ABOVE DECISION OF THE TRIBUNAL, THE TRIBUNAL VIDE PARAGRAPH 7 OF THE SAID ORDER AGAIN HELD THAT THE PROVISIONS OF SECTION 194H OF THE ACT ARE NOT ATTRACTED IN THIS TYPE OF TRANSACTIONS. IT WAS HELD THAT NO TDS IS REQUIRED TO BE DEDUCTED ON THE FEES CHARGED BY THE BANK ON CREDIT CARD TRANSACTIONS. WE ALSO OBSERVE THAT THE SIMILAR ISSUE AGAIN COME UP BEFORE THE HYDERABAD BENCH OF THE TRIBUNAL IN THE CASE OF M/S VAH M AGNA RETAIL (P) LTD (SUPRA) AND THE TRIBUNAL VIDE PARAGRAPH 4 OF THE SAID ORDER DISMISSED THE APPEAL OF THE DEPARTMENT BY HOLDING THAT THE AMOUNT RETAINED BY THE PRINCIPAL CONTRACTOR FROM THE PAYMENTS MADE TO THE CONTRACTING PERSONS AND THERE WAS NO REQU IREMENT FOR MAKING TDS ON THE AMOUNT. THE SAID PARAGRAPH 4 OF THE ORDER READS AS UNDER : 4. WE HEARD THE LEARNED DEPARTMENTAL REPRESENTATIVE AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND OTHER MATERIAL ON RECORD. ASSESSEE IS A COMPANY ENGAGE D IN THE BUSINESS OF DIRECT RETAIL TRADING IN CONSUMER GOODS. ASSESSEE CLAIMED DEDUCTION OF RS.16,34,000 ON ACCOUNT OF COMMISSION PAID TO THE CREDIT CARD COMPANIES, WHICH HAS BEEN DISALLOWED BY THE ASSESSING OFFICER IN TERMS OF S.40(A)(IA) ON ACCOUNT OF T HE FAILURE OF THE ASSESSEE TO DEDUCT TAX AT SOURCE IN TERMS OF S.194H OF THE ACT, WHILE MAKING THE SAID COMMISSION PAYMENTS. IT WAS THE CONTENTION OF THE ASSESSEE BEFORE THE LOWER AUTHORITIES THAT THE ASSESSEE ONLY RECEIVES THE PAYMENT FORM THE BANK/CREDI T CARD COMPANIES CONCERNED, AFTER DEDUCTION OF COMMISSION THEREON, AND THUS, THIS IS ONLY IN THE NATURE OF A POST FACTO ACCOUNTING AND DOES NOT INVOLVE ANY PAYMENT OR CREDITING OF THE ACCOUNT OF THE BANKS OR ANY OTHER ACCOUNT BEFORE SUCH PAYMENT BY THE ASS ESSEE. CONSIDERING THESE SUBMISSION OF THE ASSESSEE, THE CIT(A) ACCEPTED THE CLAIM OF THE ASSESSEE FOR DEDUCTION OF THE AMOUNT OF RS.16,34,000 ON THE FOLLOWING REASONING : 9.8 ON GOING THROUGH THE NATURE OF TRANSACTIONS, I FIND CONSIDERABLE MERIT IN THE CONTENTION OF THE APPELLANT THAT COMMISSION PAID TO THE CREDIT CARD COMPANIES CANNOT BE CONSIDERED AS FALLING WITH IN THE PURVIEW OF S.194H. EVEN THOUGH THE DEFINITION OF THE TERM COMMISSION OR ITA NO. 5264 /12 5 BROKERAGE USED IN THE SAID SECTION IS AN INCLUSIVE DEFINITI ON, IT IS CLEAR THAT THE LIABILITY TO MAKE TDS UNDER THE SAID SECTION ARISES ONLY WHEN A PERSON ACTS ON BEHALF OF ANOTHER PERSON. IN THE CASE OF COMMISSION RETAINED BY THE CREDIT CARD COMPANIES HOWEVER, IT CANNOT BE SAID THAT THE BANK ACTS ON BEHALF OF THE MERCHANT ESTABLISHMENT OR THAT EVEN THE MERCHANT ESTABLISHMENT CONDUCTS THE TRANSACTION FOR THE BANK. THE SALE MADE ON THE BASIS OF A CREDIT CARD IS CLEARLY A TRANSACTION OF THE MERCHANTS ESTABLISHMENT ONLY AND THE CREDIT CARD COMPANY ONLY FACILITATES THE ELECTRONIC PAYMENT, FOR A CERTAIN CHARGE. THE COMMISSION RETAINED BY THE CREDIT CARD COMPANY IS THEREFORE IN THE NATURE OF NORMAL BANK CHARGES AND NOT IN THE NATURE OF COMMISSION/BROKERAGE FOR ACTING ON BEHALF OF THE MERCHANT ESTABLISHMENT. ACCORDINGLY, C ONCLUDING THAT THERE WAS NO REQUIREMENT FOR MAKING TDS ON THE COMMISSION RETAINED BY THE CREDIT CARD COMPANIES, THE DISALLOWANCE OF RS.16,34,000 IS DELETED..... WE FIND NO INFIRMITY IN THE ABOVE REASONING GIVEN BY THE CIT(A). WE ACCORDINGLY UPHOLD THE O RDER OF THE CIT(A) AND REJECT THE GROUNDS OF THE REVENUE WHICH ARE DEVOID OF MERIT. WE ALSO OBSERVE THAT THE BANGALORE BENCH OF THE TRIBUNAL BY FOLLOWING THE SAID DECISION OF THE HYDERABAD BENCH OF THE TRIBUNAL HAS HELD THAT THE PAYMENTS MADE TO TH E BANKS ON ACCOUNT OF UTILIZATION OF CREDIT CARD FACILITIES WOULD BE IN THE NATURE OF BANK CHARGES AND NOT IN THE NATURE OF COMMISSION WITHIN THE MEANING OF SECTION 194H OF THE ACT AND HENCE NO TDS IS REQUIRED TO BE DEDUCTED U/S 194 H OF THE ACT. IN VIEW OF THE ABOVE WE HOLD THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE. RESPECTFULLY FOLLOWING THE DECISIONS OF THE CO - ORDINATE BENCHES OF THE TRIBUNAL WE UPHOLD THE ORDER OF THE LD. CIT(A) AND REJECT THE GROUNDS NO.1 TO 3 TAKEN BY THE DE PARTMENT FOR ALL THE THREE ASSESSMENT YEARS UNDER CONSIDERATION. 6 . THE FACTS OF THE PRESENT CASE AND THE ISSUES RAISED VIDE GROUNDS NO. 3,4 & 5 BEING IDENTICAL, HENCE, RESPECTFULLY FOLLOWING THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE I.E FOR T HE ASSESSMENT YEARS 2007 - 08, 2008 - 09 & 2009 - 10, RESPECTIVELY ( SUPRA ) , THE FINDINGS OF THE CIT(A) ARE HEREBY CONFIRMED. ACCORDINGLY, G ROUNDS NO. 3, 4 & 5 ARE DISMISSED. 7 . NOW, COMING TO THE FIRST GRIEVANCE OF THE REVENUE , WHICH RELATES TO ALLOWING THE RE LIEF OF TAX UNDER SECTION 201(1) AT ITA NO. 5264 /12 6 RS. 34,40,25,497/ - AND ALLOWING RELIEF OF INTEREST UNDER SECTION 201(1A) AT RS. 9,96,73,761/ - FOR SHORT DEDUCTION OF TDS ON THE 35% OF TOTAL PASSENGER SERVICE FEES (PSF) . 8 . DURING THE COURSE OF THE PROCEEDINGS UNDER SEC TION 201(A)/ 201(1A) OF THE ACT, THE AO NOTICED THAT THE ASSESSEE HAS PAID PSF TO THE AIRPORT AUTHORITY OF INDIA. THE AO WAS OF THE FIRM BELIEF THAT THE ASSESSEE OUGHT TO HAVE DEDUCTED TAX AT SOURCE AS PER THE PROVISIONS OF SECTION 194 - I OF THE ACT . THE ASS ESSEE WAS ASKED TO EXPLAIN AS TO WHY THE TDS HAS NOT BEEN MADE ON PSF. THE ASSESSEE EXPLAINED THAT THE PSF IS A STATUTORY LEVY COLLECTED BY THE AIRPORT OPERATORS IN ITS FIDUCIARY CAPACITY TO BE EVENTUALLY TURNED OVER TO THE GOVERNMENT. IT WAS FURTHER EXPLA INED THAT THE PSF CONSISTS OF TWO COMPONENTS I.E. THE SECURITY COMPONENT @ 65% TO THE DESIGNATED SECURITY AGENCY FOR PROVIDING SECURITY SERVICES TO THE PASSENGER AND FACILITATION @ 35% TO PRIVATE PASSENGERS FACILITATION SERVICES BY THE AIRPORT OPERATORS. T HE MAIN CONTENTION OF THE ASSESSEE WAS THAT IT IS ONLY COLLECTING THE PSF FROM THE PASSENGERS ON BEHALF OF THE AIRPORT OPERATORS AND HAS PAID TO THE AIRPORT OPERATORS. THE ASSESSEE HAS NOT CLAIMED SUCH PAYMENT AS EXPENSES IN ITS BOOKS OF ACCOUNTS. THEREFOR E, THERE IS NO LIABILITY OF TDS UNDER SECTION 194I OF THE ACT. THE AO DID NOT CONSIDER THIS SUBMISSION OF THE ASSESSEE AND COMPUTED THE TDS DEDUCTIBLE UNDER SECTION 194I OF THE ACT AT RS. 34,40, 25,497/ - AND COMPUTED INTEREST UNDER SECTION 201(1A) OF THE ACT AT RS. 239,54,04,894/ - . ITA NO. 5264 /12 7 9 . THE ASSESSEE CARRIED THE MATTER BEFORE THE CIT(A) AND REITERATED ITS STAND THAT IT IS ONLY COLLECTING THE PSF FOR AND ON BEHALF OF THE AIRPORT AUTHORITIES AND PAYING THE SAME TO THE AIRPORT AUTHORITIES WITHOUT CHARGING THE SAME TO ITS PROFIT AND LOSS ACCOUNT. IT WAS STRONGLY CONTENDED BEFORE THE CIT(A) THAT THE PSF DO ES NOT COME UNDER THE DEFINITION ON RENT AS PROVIDED UNDER SECTION 194 - I OF THE ACT. AFTER CONSIDERING THE FACTS AND THE SUBMISSIONS OF THE ASSESSEE , THE CIT(A) WENT ON TO DISCUSS THE DEFINITION OF RENT UNDER SECTION 194 - I OF THE ACT VIS - - VIS FACTS OF THE CASE AND FINALLY CONCLUDED THAT THE COLLECTION OF THE PSF FROM THE PASSENGERS IS I N NO WAY IN THE NATURE OF LEASE, SUB - LEASE, TENANCY AS PROVIDED UNDER SECTION 194I OF THE ACT. THE CIT(A) FURT H ER HELD THAT THE PSF IS NOT IN THE NATURE OF RENT AND, HENCE, THE ASSESSEE IS NOT REQUIRED TO DEDUCT THE TAX AT SOURCE ON THE PSF COLLECTED FROM THE PASSENGERS BEFORE MAKING PAYMENT TO THE RELEVANT AIRPORT OPERATORS. AGGRIEVED THER EBY, THE REVENUE IS IN APPEAL HERE BEFORE US. 10 . LEARNED DR STRONGLY SUPPORTED THE FINDINGS OF THE AO. IT IS THE SAY OF THE DR THAT THE PSF SO COLLECTED AND LATER ON PAID TO THE AIRPORT OPERATORS VERY MUCH COMES WITHIN THE PURVIEW OF SECTION 194I OF THE ACT AND THE ASSESSEE OUGHT TO HAVE DEDUCTED TAX AS PER THE PROVISIONS OF SECTION 194 - I OF THE ACT. 11 . PER CONTRA , THE COUNSEL FOR THE ASSESSEE STRONGLY SUPPORTING THE FINDINGS OF THE CIT(A), CONTENDED THAT THE ALLEGED SERVICES ARE USED BY ITA NO. 5264 /12 8 THE PASSENGERS AND, THEREFORE, EVEN IF ASSUMING THAT LIABILITY FOR TDS EXISTS, THEN SAID LIABIL ITY IS UPON THE PASSENGER, WHO IS UTILIZING THE SERVICES. THEREFORE, THE ASSESSEE CANNOT BE HELD LIABLE FOR THE SAME. THE COUNSEL FURTHER SUBMITTED THAT THE PAYMENT OF PSF IS A T THE RATE OF RS. 200/ - PER PASSENGER, WHICH IS MUCH BELOW THE THRESHOLD LIMIT OF RS. 1.20 LAKHS. THE COUNSEL STRONGLY CONTENDED THAT THE PSF IS NOT A RENT UNDER SECTION 194I OF THE ACT. THE TRANSACTION IS BETWEEN PASSENGERS AND THE AIRPORT OPERATORS, WHERE AS THE ASSESSEE IS ONLY A CONDUIT BETWEEN THE PASSENGER AND THE AIRPORT OPERATORS. THEREFORE, THE CIT(A) HAS VERY RIGHTLY HELD THAT THE ASSESSEE IS NOT LIABLE FOR TDS UNDER SECTION 194I OF THE ACT. 12 . WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS A ND PERUSED THE ORDERS OF THE AUTHORITIES BELOW AND THE RELEVANT MATERIAL EVIDENCE BROUGHT ON RECORD. LET US FIRST SEE THE CAUSE OF PSF, CAUSE LIES IN RULE 88 OF THE INDIAN AIRCRAFT RULES, 1937 , WHICH PROVIDES AS UNDER : - THE LICENSEE IS ENTITLED TO COLLEC T 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 PROVIDIN G THE SECURITY SERVICES A PERUSAL OF THE AFOREMENTIONED RULE CLEARLY SHOWS THAT IT IS A STATUTORY LIABILITY FOR EVERY LICENSEE TO COLLECT PSF. SINCE IT IS A STATUTORY LIABILITY AND THE MEANING GIVEN BY THE STATUTE HAS TO BE CONSIDERED AND IN THIS CASE THE INDIAN AIRCRAFT RULES, 1937 HAS USED THE TERM FEES , THEREFORE, SAME MEANING HAS TO BE GIVEN WHILE CONSIDERING THE PSF. IT IS NOT IN DISPUTE THAT THE ASSESSEE IS ONLY ACTING AS A CONDUIT BETWEEN ITA NO. 5264 /12 9 THE EMBARKING PASSENGERS AND THE CENTRAL GOVERNMENT AGEN CY. THIS VIEW IS ALSO FORTIFIED BY THE FACT THAT OUT OF RS. 200/ - , RS. 130/ - IS THE SECURITY COMPONENT, WH ICH IS DEPOSITED IN A SEPARATE E SCRO W ACCOUNT, WHICH IS OPERATED AND CAN BE UTILIZED BY AIRPORT CONCERNED ONLY TO MEET THE SECURITY RELATED EXPENSES OF THAT AIRPORT . 13 . FURTHER IT IS PERTINENT TO NOTE THAT THE CBDT IN ITS OFFICE MEMORANDUM DATED 30 - 06 - 2008 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 PAS SES 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 8 TH AUGUST, 1995, WHICH RELATES TO CLARIFICATION OF VARIOUS PROVISIONS RELATING TO TAX DE DUCTION 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 WOU LD 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 LIABILIT Y WITHOUT DEMARCATING/EARMARKING THE AREA TAKEN ON RENT , NOR IT IS A CASE OF SYSTEMATIC USE OF LAND SPECIFIED FOR CONSIDERATION UNDER AN ITA NO. 5264 /12 10 ARRANGEMENT, WHICH CARRIES THE CHARACTERISTICS OF LEASE OR TENANCY . A MERE USE OF THE LAND AND PAYMENT CHARGED, WHICH IS NOT FOR THE USE OF THE LAND BUT FOR MAINTENANCE OF THE VARIOUS SERVICES INCLUDING TECHNICAL SERVICES WOULD NOT TECHNICALLY BRING THE TRANSACTION AND THE CHARGES WITHIN THE MEANING OF EITHER LEASE OR SUB - LEASE OR TENANCY OR ANY OTHER AGREEMENT OR ARRANGE MENT OR ANY NATURE OF LEASE OR TENANCY AND RENT. FOR THESE OBSERVATIONS, WE DRAW SUPPORT FROM THE DECISION OF THE HON BLE MADRAS HIGH COURT IN THE CASE OF CIT VS. SINGAPORE AIRLINES LTD., REPORTED IN (2012) 252 CTR (MAD) 429 . 14 . IT WOULD NOT BE OUT OF P LACE TO CONSIDER THE CBDT C IRCULAR NO. 1/2008 , DATED 10 TH JANUARY, 2008 RELATING TO THE CLARIFICATION REGARDING THE APPLICABILITY OF PROVISIONS OF SECTION 194 - I OF THE ACT TO PAYMENTS MADE BY THE CUSTOMERS ON ACCOUNT OF COOLING CHARGES TO THE COLD STORAGE O WNERS, WHEREIN THE CBDT HAD THE OCCASION TO CONSIDER THE REPRESENTATIONS IN RESPECT OF THE ISSUE, WHETHER THE CUSTOMER HIRES THE BUILDING, PLANT AND MACHINERIES ETC., WITHOUT PACKAGES FOR RESERVATION FOR A REQUIRED PERIOD ARE KEPT IN COLD STORAGE AFTER PAY ING COOLING CHARGES. THE CBDT, THUS, CLARIFIED THAT THE CUSTOMER IS ALSO NOT GIVEN ANY RIGHT TO USE ANY DEMARCATED SPACE/PLACE OR THE MACHINERY OF THE COLD STORAGE AND THUS DOES NOT BECOME A TENANT. THEREFORE, THE PROVISIONS OF 194 - I IS NOT APPLICABLE TO T HE COOLING CHARGES PAID BY THE CUSTOMERS OF THE COLD STORAGE. APPLYING THE SAME ANALOGY, THE PSF CHARGES PAID BY THE ASSESSEE ON BEHALF OF ITS CUSTOMERS, DO NOT ATTRACT THE PROVISIONS OF SECTION 194 - I OF THE ACT. ITA NO. 5264 /12 11 15 . CONSIDERING ALL THESE JUDICIAL DECISIO NS IN THE LIGHT OF THE FACTS OF THE CASE, WE DO NOT FIND ANY ERROR/OMISSION IN THE FINDINGS OF THE CIT(A). HENCE, THE ASSESSEE SUCCEEDS AND THE REVENUE FAILS AND THE FINDINGS OF THE CIT(A) ARE CONFIRMED. ACCORDINGLY, GROUNDS NO. 1 & 2 ARE HEREBY DISMISSED. 1 6 . IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED ORDER PRONOUNCED IN THE OPEN COURT ON 23/10/ 2013 . SD/ - ( ) ( VIJAY PAL RAO ) SD/ - ( ) ( N.K .BILLAIYA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED : 23/10 /2013 /PKM , PS COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / THE CIT(A) , MUMBAI. 4. / CIT 5. / DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY// / BY ORDE R, ( ASSTT. REGISTRAR) / ITAT, MUMBAI