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TMI Blog1990 (8) TMI 199X X X X Extracts X X X X X X X X Extracts X X X X ..... rate of 15% of the fare paid. As far as the collection of this tax was concerned, section 45(2) provided that the tax can be collected by the carrier undertaking the carriage of the passengers. It would appear that the assessee, as a carrier, became obliged to collect the tax on behalf of the Govt. of India. For this, the Govt. had agreed to pay to the international airways, a certain percentage as collection by way of commission. The question in these appeals is, whether the assessee would be liable to be taxed in respect of such commission receivable from the Govt. 3. The ITO found that the assessee had not shown the income from commission in any of the returns filed from the assessment years 1977-78 to 1983-84. He therefore, reopened ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... based on the Double Taxation Avoidance Agreement. 5. Shri Ananthanarayanan, appearing for the assessee, submitted that the entire income would be exempt since it arises from the activity of the assessee and directly springs from their business. Under the Double Taxation Avoidance Agreement, such income would not be taxable inIndia. Assuming this agreement is not acceptable, he submitted that the assessee was accounting for receipts and expenditure on cash basis only and they have not received this amount so far from the Govt. of India. 6. We have considered the submissions. The first issue to be considered is, whether the income would be exempt under the Double Taxation Avoidance Agreement. What is exempted, is given in Article 1 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt of the sale of ticket. Therefore, it is also a trading receipt from the operation of the aircraft. Now it is undeniable that the assessee has been obliged to include foreign travel tax in the sale of the ticket. But the question is, whether by inclusion of the amount to be collected as foreign travel tax, it becomes part of the assessee's trading receipts. Shri Ananthanarayanan had referred to the analogy of the sales-tax. The sales-tax on sale of goods is collected by the dealers from the customers and it is well settled that such sales-tax collected also becomes part of the trading receipt. It is on this logic that he claims that the foreign travel tax is part of the trading receipt. We are afraid, the two are not analogous. As far as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch carrier, by the carrier to whom such tickets or other documents relate, as an addition to the fares payable by such passengers and shall be paid to the Central Govt." 8. It would be clear from the above that the levy is on the passenger. That is the distinction. In sales-tax, the levy is not on the customer. It is on the dealer. Here, the levy is on the customer and not on the carrier. Therefore, when the carrier collects this amount under section 45(2) and the regulations issued therein, he is merely collecting it as the agent of the Govt. In fact, that is why they become entitled to a commission. So, it is not possible to accept the submission that foreign travel tax is part of the sale proceeds of the tickets. It is something separa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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