9911796707
TMI Blog2004 (10) TMI 281X X X X Extracts X X X X X X X X Extracts X X X X ..... with regard to any specified area of land and its exclusive use by the assessee. In the case of Smt. Rajbir Kaur v. S. Chokesiri Co. [ 1988 (8) TMI 413 - SUPREME COURT] the Hon ble Supreme Court observed that a tenancy is created if tenant is granted the right to enjoyment of the property. It was further held that it is sufficient if the nature of the act done by the grantor shows that it was intended to have the right to exclusive possession. In the present case such intention is not found. The grantor i.e. the authority never intended to give out the exclusive possession to the assessee in relation to landing and parking area. Thus, we hold that the assessee was not a lessee of the premises nor there was any agreement to that effect between the said parties. The Airport Authorities of India simply granted permission to landing and parking. It did not grant any exclusive right or interest to J.A.L. in any specific portion of land or building. It granted a license and also provided certain other facilities not necessarily for use of land but for safe landing and parking in pursuance of the guidelines referred to above. Hence, the payments made by the assessee cannot be termed as p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt assessee the ingredients of section 194C are fully satisfied in as much as the assessee has been provided landing and parking facilities in compliance to the commitment made by the Airport Authority of India on behalf of the Government of India in compliance to the policy guidelines of ICAO and in pursuance of the agreements of IATA. To reiterate, the charging of fee etc. for these facilities was in accordance with the settled conditions which were applicable as per the policy protocol laid down for air traffic services. Further, the rule of consistency also requires that the Department should have adopted a consistent approach in all the years when the facts remain unchanged. In any case, no fault can be found against the assessee in depositing the TDS under section 194C as even the Airport Authority of India had advised it accordingly. The Assessing Officer, therefore, was not justified in invoking the provisions of section 201(1) of the Income-tax Act in working out the short deduction of Rs. 11,59,695. In our considered opinion, therefore, the learned CIT(A) was justified in deleting the same. Accordingly, we do not find any reason to interfere in the order of learned CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... created under Airport Authority Act provides various facilities to the Aircrafts. So far as the assessee i.e., JAL is concerned the Authority, while providing various facilities to it, also charged fee/charges/rent for such services including fee/charges for landing, parking route navigation and terminal navigation etc. 4.2 In the financial year 1997-98, the assessee made a payment of Rs. 61,60,486 on account of landing and parking fee and deducted tax at source (TDS) of Rs. 1,57,082 (which was 2 per cent of the said payment) the reason and basis for this payment, as stated by the assessee, was that landing and parking should be treated as facilities and services under the work contract and thus TDS was deductible as per provisions of section 194C of the IT. Act. 4.3 So far as this item is concerned, the Assessing Officer, on examination, held that landing and parking facilities provided by the Airport Authority of India fell within the purview of section 194-I and the charges for landing and parking were taken by way of rent and therefore the tax should be deducted at the rate of 20 per cent on the charges of Rs. 61,60,486. He, thus, worked out the short deduction at Rs. 11,59, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax at Rs. 11,59,695. 4.8 So far as the alleged short deductions in relation to RNFC and TNLC are concerned the learned CIT(A) agreed with Assessing Officer and held that services relating to route navigation and terminal navigation were well within the purview of technical services as contemplated under section 194-J of the Act and the Assessing Officer was justified in applying the rate of 5 per cent for such services. However, as the assessee pointed out that the amount due as TDS has already been paid, no additional demand of tax on the same as TDS under section 201(1) of the Act remains due. Hence, the learned CIT(A) only directed the Assessing Officer to verify this aspect. 4.9 The Revenue has effectively challenged the deletion of Rs. 11,59,695 under the first head that is short deduction of TDS on account of landing and parking charges by taking the ground as referred to above. 5. Before us, it was argued by the learned DR that the learned CIT(A) was not justified in holding that landing and parking charges were not on account of rent because the facilities of parking on the land of the Airport Authority of India amounted to lease of the premises. He placed reliance on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ithin the ambit of section 194-C of this Act. 7.1 Before dealing with the aforesaid issues, we wan t to clarify that neither the department nor the assessee has produced before us any written document in the shape of lease deed or license deed directly governing the conditions of such payments nor have they provided any other material in the shape of direct authority or any decision of Tribunal or Hon'ble High Court or Hon'ble Supreme Court of India. Thus, we are left with no option but to seek guidance and assistance from certain guiding principles governing the transactions as made available to us by the assessee in the shape of Airport Economic Manual, statement by the Council to the contracting States on charges for Airport and Air Navigation Services. We have also to closely examine the relevant statutory provisions of Airport Authority of India Act, 1994 and section 194-C, 194-I and 194-J of the Income-tax Act. 8. Issue No. A - Fees for professional or technical services is to be ascertained and determined as per provisions of section 194J. The relevant provision is as under: "194J(1) Any person, not being an individual or a Hindu undivided family, who is responsible for p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all these services are provided by professionals and technical personnel. Therefore, in view of the facts on record it is not possible to record a positive finding that the provisions of section 194J are attracted in the present case. This issue is decided in negative. 9. Issue No. B- In the order dated4-6-1999passed under section 201(1) the Assessing Officer has made only following observations: "The landing/parking charges paid by the company for Rs. 61,60,486 to Airport Authority of India come within the ambit of section 194-I of Income-tax Act." 9.1 As rightly observed by the learned CIT(A), the Assessing Officer has not assigned any reasons to support further his finding. Before us also the learned D.R., who supported the order of Assessing Officer could not further elaborate his finding. 9.2 The learned CIT(A) has incorporated the arguments of the assessee in his order, which are as under: "The AR explained that the assessee-company is a member of IATA and its aircrafts are regularly coming toIndiacarrying passengers and cargo. As per the international code of conduct, as prescribed by the International Civil Aviation Organisation to which India is also a contracting sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to AAI for the office space provided by them, as per section 194-I of the Act." 9.3 The learned CIT(A) thereafter has recorded his findings, which are as under: "I have considered the submissions of the appellant which are well founded. The learned Assessing Officer has unfortunately not given any reasons as to on what basis he considered the landing and parking charges as rent under section 194-I instead of payment as a contractor under section 194C of the Act. The landing and parking charges are inclusive of a number of facilities and services provided by the Airport Authority of India in compliance to the international protocol by International Civil Aviation Organisation amongst the contracting states.Indiais a contracting state and is bound by the protocol to provide the necessary facilities at its airport. The aircrafts land and are parked at times for a temporary periods and the Airport Authority of India has been charging the airline for the services extended. These services are not in the nature of rent as no specified area or land is allocated but it is only a facility extended for a short period at the airport. Considering these facts I am of the view that the action ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ken into account when landing charges are established: (i) Landing charges should be based on the weight formula, using the maximum permissible take-off weight and indicated in the certificate of airworthiness for other prescribed document) as the basis for assessment. However, allowance should be made for the use of fixed charge per aircraft or a combination of a fixed charge with a weight-related element, in certain circumstances such as at congested airports and during peak periods. (ii) The landing charge scale should be based on a constant rate per 1000 kilograms or pounds in weight, but the rate may be varied at a certain level or levels of weight if considered necessary. (iii) Where charges for approach and aerodrome control are levied as part of the landing charge or separately, they could take aircraft weight into account but less than in direct proportion. (Principles applicable to such charges are addressed more fully in the Statement on Charges for Air Navigation Services.) (iv) No differentiation in rates should be applied for international flights because of the stage length flown. (v) A single charge should be applied for costs of as many as possible of airport- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m permissible take off weight as indicated in the certificate of airworthiness (or other prescribed document) as the basis for assessment.' This is the practice followed by States with very few exceptions, since it has been found a particularly useful and accepted parameter to reflect how wear and tear, and use of airport provided facilities tend to increase as the weight of aircraft increase. It should be noted that while the charges are called landing charges they are based on maximum permissible take off weight, usually measured in kilogrammes (kg) or pounds (lb). The rate usually per metric tonne (1000 kg) or short ton (2000 lb), is determined by dividing the estimated cost basis for landing charges for the coming year by the accumulated maximum permissible take-off from the airport in that year. Separate divisions could be made for international traffic and domestic traffic if the costs so warrant." "5.19 The guidance provided in the Council Statements on parking and hangar charges is 'For the determination of charges associated with use of parking, hangar and long-term storage of aircraft, maximum permissible take-off weight and/or aircraft dimensions (area occupied) should ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be seen behind such event. So far as the present matter is concerned, the Airport Authority of India has itself not charged any rent from the assessee for providing the facility of land and parking. This is also clear from the letter of the Authority dated2-8-1996, available at page 5 of the paper book. 9.15 For deciding the true nature of a transaction certain tests have been laid down in some cases. In Shall Mex & B.P. Ltd. v. Manchester Garages Ltd. [1971] 1 All ER 841, Lord Denning M.R. observed that though the test of exclusive possession may be outdated but the other test i.e., intention of parties and whether the document creates any interest in the property or not, are very important considerations. The test was laid down more clearly in the case of Wood v. Lead Bitter 153 ER 351, Baron Anderson J, emphasized the element of transfer of interest in following words: "A dispensation of license properly pass no interest, nor alters or transfers property in anything, but only makes an action lawful which without it had been unlawful." 9.16 In Glenwood Lumber Co. v. Phillips 1904 AC 405, the distinction between lease and license was pointed out thus: "If the effect of the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to landing and parking area. 9.20 In view of the aforesaid discussion we hold that the assessee was not a lessee of the premises nor there was any agreement to that effect between the said parties. The Airport Authorities of India simply granted permission to landing and parking. It did not grant any exclusive right or interest to J.A.L. in any specific portion of land or building. It granted a license and also provided certain other facilities not necessarily for use of land but for safe landing and parking in pursuance of the guidelines referred to above. Hence, the payments made by the assessee cannot be termed as payment of rent so as to be covered within the purview of section 194-I of the Act. We, therefore, do not find much force in the arguments of the learned DR and uphold the findings of learned CIT(A) on this issue and decide the issue in negative i.e. against the Revenue. Issue No. C: 10. The payments made to contractors and sub-contractors are regulated by section 194C of the Income-tax Act. The section is as under: "194C. Payments to contractors and sub-contractors.-(1) Any person responsible for paying any sum to any resident (hereafter in this section referred t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e authorized representative of the assessee before the learned CIT(A) was that in pursuance of the policies and guidelines by I.C.A.O. of the contracting states including India which was also a member and signatory to such policies and guidelines provided various facilities and services including landing and parking facilities for the aircrafts, take off facilities, taxi-ways, traffic control for approach and landing etc. According to the learned counsel, Air Port Authority is bound to carry out the directions of I.C.A.O. as a contracting party as these directions or guidelines are like stipulations or undertakings under a contract and have force of a legal covenant. We find force in this submission. As Govt. of India was signatory to the policy guidelines of ICAO and IATA, the conditions laid down therein are binding on Airport Authority in the same way as terms of any contract are binding upon any person. 10.4 So far as the definition of work for the purpose of section 194 is concerned, the issue was considered by the Hon'ble Supreme Court in the case of Associated Cement Co. Ltd. v. CIT [1993] 201 ITR 435. In that case the Hon'ble Supreme Court has held as under: "Held, dismis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces and facilities were provided in pursuance of such a contract. Hence, in our opinion, the requisite conditions for section 194C are satisfied in the case of the assessee on the facts on record in this case. 11. From the discussion, made above, the legal position in relation to the applicability of provisions contained under sections 194C, 194-I and 194J of the Income-tax Act may be summarized by culling out the following postulations: (I) For ascertaining the applicability of section 194C the nature of the work contract is to be seen by applying the following tests: (i) There must be a contract between the person responsible for making the payment and the contractor; (ii) Any work or works should be carried out through a contractor including obtaining a supply of labour under a contract with the contractor and any of the organizations specified in sub-section (1) of section 194C. Associated Cement Co. Ltd v. CIT [1993] 201 ITR 435 (SC) (iii) The contract must be for carrying out any work and work must have been carried out through such contractor. Birla Cement Works v. CBDT [2001] 248 ITR 216 (SC) (II) For deciding the application of section 194-I and for knowing the nat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated25-7-1996, the assessee made inquiry from Airport Authority of India regarding the manner and mode for tax deduction at source on payments which were made by the assessee to it. In response and vide letter dated2-8-1996, the following reply/advice was given by the Authority: "2nd August,1996 Mr. Toru Ono Regional Manager -India JapanAirlines 36, Janpath New Delhi-110001 Subject: Tax Deductions at Source Dear Sir, We are in receipt of your letter No. JAL : ADM; 960236 dated25-7-1996. It is hereby clarified that though we have sought exemptions from Income Tax Authorities regarding tax deductions, the clearance is still awaited. We shall keep you apprised of any development in the matter. Meanwhile till such time, the exemptions are granted, you are requested to make deductions as per the provisions of the Income Tax Act applicable on the different payments to be made by you. In brief we give herein below the TDS rates as applicable to the various payments made to AAI (IAD): ITEM TDS RATES 1. Landing & Parking charges: @2.3% under section 194C of I.T. Act i.e. 2% + 15% surcharge on 2% 2. Rent: (A) Counter Charges 23% under section 194-I of I.T. Act i.e. 20% + ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... parking facilities in compliance to the commitment made by the Airport Authority of India on behalf of the Government of India in compliance to the policy guidelines of ICAO and in pursuance of the agreements of IATA. To reiterate, the charging of fee etc. for these facilities was in accordance with the settled conditions which were applicable as per the policy protocol laid down for air traffic services. Further, the rule of consistency also requires that the Department should have adopted a consistent approach in all the years when the facts remain unchanged. In any case, no fault can be found against the assessee in depositing the TDS under section 194C as even the Airport Authority of India had advised it accordingly. The Assessing Officer, therefore, was not justified in invoking the provisions of section 201(1) of the Income-tax Act in working out the short deduction of Rs. 11,59,695. In our considered opinion, therefore, the learned CIT(A) was justified in deleting the same. Accordingly, we do not find any reason to interfere in the order of learned CIT(A) and as such the ground taken by the Revenue in this appeal stands rejected. 16. In the result, Revenue's appeal stands ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
