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2015 (12) TMI 97 - AT - Income TaxDeduction of tax at source on berth hire charges paid to Mumbai Port Trust - TDS u/s 194C or 194I - Held that - The parity of reasoning laid down by the Hon ble Supreme Court in the case of Japan Airlines Co. Ltd. (2015 (8) TMI 185 - SUPREME COURT) are required to be applied to the present case also. As per Hon ble Supreme Court to treat the charges paid to the Airport Authority of India as merely for use of land would a be simplistic approach and that one will have to keep in mind the substance behind such charges . In this background, the nature of the charges paid was understood not as rent for the purposes of section 194-I of the Act. In our view it would be in appropriate to consider the payment of berth charges as rent simplicitor, and rather the same is being paid for a host of other services when the vessels are anchored at the Port area. Therefore, assessee has rightly deducted the tax at source on berth hire charges paid to Mumbai Port Trust in terms of section 194C of the Act as contractual charges - Decided in favour of assessee.
Issues:
Deduction of tax at source on berth hire charges paid to Mumbai Port Trust. Analysis: 1. The appeals involved a common issue regarding the deduction of tax at source on berth hire charges paid to Mumbai Port Trust, with the Assessee appealing for assessment years 2008-09 and 2010-11, and the Revenue appealing for assessment year 2009-10. 2. The primary contention was whether the berth hire charges paid by the Assessee should be subject to deduction of tax at source under section 194C of the Income Tax Act as contract charges or under section 194I of the Act as rent. 3. The Assessing Officer considered the payments as rent and issued orders for short deduction of tax at source under section 201(1) of the Act, along with charging interest under section 201(1A) for the respective assessment years. 4. The CIT(A) ruled against the Assessee for the years 2008-09 and 2010-11, citing the judgment of the Delhi High Court in the case of United Airlines. However, for the year 2009-10, the CIT(A) held that the berth hire charges were subject to deduction under section 194C, relying on decisions by the Delhi Tribunal and the Chennai Bench of the Tribunal. 5. During the hearing, the Assessee's representative referenced a decision by the Madras High Court upholding a similar case, supporting the CIT(A)'s order for the assessment year 2009-10. 6. The Departmental Representative supported the CIT(A)'s orders for the years 2008-09 and 2010-11, maintaining that the berth hire charges should be treated as rent for tax deduction purposes under section 194-I of the Act. 7. The Tribunal considered the recent Supreme Court decision in the case of Japan Airlines Co. Ltd., which overturned the Delhi High Court's ruling and upheld the Madras High Court's view on charges paid to the Airport Authority of India. The Supreme Court emphasized the substance behind such charges and rejected the simplistic approach of treating them as rent under section 194-I. 8. Applying the Supreme Court's reasoning to the present case, the Tribunal analyzed the services provided by Mumbai Port Trust in exchange for berth hire charges, concluding that the charges were not merely rent but encompassed various port services. Therefore, the Assessee rightfully deducted tax at source under section 194C, and the Revenue's appeal for the year 2009-10 was dismissed while the Assessee's appeals for 2008-09 and 2010-11 were allowed.
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