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2017 (1) TMI 899 - HC - Income TaxTDS u/s 194I - Passenger Service Fees (PSF) paid by the asssessee to the airport operators - whether payment was not covered under the definition of rent given in the Explanation (i) to Section 194-I - Held that - As the substance of the PSF is not for use of land or building but for providing security services and facilities to the embarking passengers the decision of the Apex Court in Singapore Airlines (2015 (8) TMI 185 - SUPREME COURT ) would cover the issue in favour of the respondent-assessee.Tribunal was justified in upholding the order of the Commissioner of Income Tax (Appeals) (CIT(A)) and holding that the PSF paid by the asssessee to the airport operators was not covered under the definition of rent given in the Explanation (i) to Section 194-I. Appeal admitted on second question Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in holding the order of the CIT(A) and holding that the amount retained by a bank/credit card agency out of the sale consideration of the tickets booked through credit cards is not covered under the definition of commission or brokerage given in the Explanation (i) to Section 194H of the Act and the assessee was not liable to deduct tax at source under Section 194H in respect of this amount?
Issues involved:
1. Interpretation of the definition of rent under Section 194-I of the Income Tax Act, 1961 regarding Passenger Service Fees (PSF) paid by the assessee to airport operators. 2. Interpretation of the definition of commission or brokerage under Section 194H of the Income Tax Act, 1961 regarding amounts retained by a bank/credit card agency from ticket sales. Analysis: Issue 1: Interpretation of rent under Section 194-I for PSF paid to airport operators: The respondent-assessee, engaged in aircraft transportation, collected Passenger Service Fees (PSF) from passengers and handed it over to Airport Operators. The Income Tax department contended that PSF was rent under Section 194-I, thus liable for TDS. However, the CIT(A) ruled in favor of the assessee, stating PSF was not rent. The Tribunal upheld this decision, citing Rule 88 of Indian Aircraft Rules, stating PSF collection was a statutory liability for Airport Operators, not rent. The Revenue argued that PSF was essentially for building use, but the Tribunal found PSF collection by the assessee on behalf of Airport Operators did not constitute rent. Referring to a Ministry of Civil Aviation order, the Tribunal noted the PSF was not claimed as expenditure by the assessee. Citing a Supreme Court decision on airline landing charges, the Tribunal concluded PSF was for security services, not building use, thus not rent under Section 194-I. Issue 2: Interpretation of commission or brokerage under Section 194H for amounts retained by bank/credit card agency: The second question raised concerned whether amounts retained by a bank/credit card agency from ticket sales were commission or brokerage under Section 194H. This issue was admitted for further consideration by the court, indicating a need for detailed analysis in a subsequent hearing. In conclusion, the High Court of Bombay decided on the interpretation of rent under Section 194-I regarding PSF paid to airport operators, ruling in favor of the respondent-assessee based on the nature of PSF as a payment for security services and not for building use. The court admitted the second issue for further examination, highlighting the complexity of determining whether amounts retained by a bank/credit card agency constituted commission or brokerage under Section 194H.
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