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TMI Blog2012 (8) TMI 643X X X X Extracts X X X X X X X X Extracts X X X X ..... laimed that the charges paid to International Airport Authority towards landing and parking charges would not come within the definition of 'rent' as defined under Section 194 I Explanation of the Income Tax Act and hence, the liability to deduct tax at source under Section 194 I or under Section 194 J of the Income Tax Act in respect of payment of navigation charges did not arise at all. 3. The Assessing Authority pointed out that the charges paid by the assessee on landing and parking to International Airport Authority of India for the use of runway for landing and takeoff and also the space in the tarmac of the airport for parking of the aircraft represented 'rent'. Since the assessee had failed to deduct TDS at 20%, the assessee was liable to be treated as one in default; consequently, an order under Section 201(1) and 201(1A) was made. Aggrieved by this, the assessee went on appeal before the Commissioner of Income Tax (Appeals), who confirmed the order of the Assessing Officer. Aggrieved by this, the assessee went on appeal before the Income Tax Appellate Tribunal. 4. A perusal of the order of the Tribunal shows that it followed the decision of the Delhi Bench of the Income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court accepted the case of the Revenue, thereby confirmed the order of assessment. 8. Considering the identical nature of facts prevailing in the present case, learned Standing Counsel appearing for the Revenue submits that the decision therein may be applied herein too. He, however, pointed out that the decision of the Delhi High Court reported in (2010) 325 ITR 298 (Delhi) (Commissioner of Income-Tax V. Japan Airlines Co. Ltd.) is pending in appeal before the Apex Court in Special Leave to Appeal (Civil) No.4102 of 2009 and the matter was directed to be listed on 7th October, 2009. On verification, it is learnt that the appeal is still pending on the files of the Apex Court. Referring to the decision of the Delhi High Court reported in (2006) 287 ITR 281 (United Airlines V. CIT), learned Standing Counsel appearing for the Revenue reiterated the contentions on the lines held by the Delhi High Court and thus submitted that in the light of the decisions of the Delhi High Court on the very same issue, the Tax Case (Appeals) be allowed. 9. Countering the submissions made by the Revenue, learned Senior Counsel appearing for the assessee took us through the decision of the Delhi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... definition of 'rent'. On the other hand, the Delhi High Court in the decision reported in (2006) 287 ITR 281 (United Airlines V. CIT) had merely interpreted the provision of law to come to a conclusion that when the wheels of an aircraft coming into an airport touches the surface of the air-field, there is an use of the land immediately, so too on the parking of the aircraft in the airport, there is use of the land; hence, parking and landing fee would be treated as rent. Thus following the said decision, the Tribunal's decision in the case of Japan Airlines was reversed. 10. Objecting to this line of reasoning, learned Senior Counsel appearing for the assessee submitted that on the issues raised, particularly with reference to the nature of services rendered, the decision requires a fresh consideration by this Court and that the decision referred to above cannot be applied straightaway to reject the assessee's contention herein. In the light of the various facilities offered by the Airport Authority of India for landing and parking, unless the facility offered fits in with the definition of 'rent', the case of the assessee could not be brought within the four corners of taxation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eceding the words "agreement or arrangement", that payment would not qualify as rent for the purpose of Section 194-I. 15. In the decision rendered in the case of United Airlines, we find that neither the Revenue nor the assessee produced before the Court any materials on the nature of services rendered or any arrangement or agreement in the nature of lease deed or for that matter, lease deed or license deed for the use of the land to speak on the character of the payments to be called as 'rent'. The decision of the Income Tax Appellate Tribunal, Delhi Bench in the case of Japan Airlines is the only case where the various details regarding the nature of services rendered and the payment charged for as per the policy guidelines and principles laid down by the Council of International Civil Aviation Organisation were considered to come to the conclusion that the charges paid did not fall under the definition of 'rent'. The Tribunal pointed out to the various materials and held that the Airport Authority of India provides various facilities to the aircrafts for which it charged fee/charges/rent. The services provided include charges for landing and takeoff facilities, taxiways with n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by various considerations on offering facilities to meet the requirement of passengers' safety and on safe landing and parking of the aircraft. Depending on the traffic, there is a shared use of the air field by the airliner. Thus the charges levied are, utmost, in the nature of fee for the services offered rather than in the nature of rent for the use of the land. 18. We may herein point out that we had referred to the order of the Tribunal in the case of Japan Airlines, by reason of the fact that the Tribunal, in the case before us, had merely followed the decision of Japan Airlines rendered by the Delhi Bench of the Income Tax Appellate Tribunal and the entire nature of the operation are dealt with elaborately by the Delhi Tribunal in Japan Airlines case. 19. Learned Senior Counsel appearing for the assessee took us through the literature on how the runways are maintained with various other technical details on runway lighting, runway safety area, runway marking etc. Reading those materials along with the order of the Tribunal in the case of Japan Airlines, we are constrained to hold that the nature of payments made by the assessee do not partake the character of 'rent' for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome Tax Act. 21. As rightly pointed out by the learned Senior Counsel appearing for the assessee, the payment contemplated under the Explanation is for the use of the land under a lease, sub-lease or tenancy. This means, what is contemplated under the said definition is a systematic use of land specified for a consideration under an arrangement which carries the characteristics of lease or tenancy. Going by the logic of the said provisions, we feel that a mere use of the land for landing and payment charged, which is not for the use of the land, but for maintenance of the various services, including the technical services involving navigation, would not automatically bring the transaction and the charges within the meaning of either lease or sub-lease or tenancy or any other agreement or arrangement of a nature of lease or tenancy and rent. As far as the runway usage by an aircraft is concerned, it could be no different from the analogy of a road used by any vehicle or any other form of transport. If the use of tarmac could be characterised as use of land, so too the use of a road would be a use of land. We do not think that for the purpose of treating the payment as rent, such ..... X X X X Extracts X X X X X X X X Extracts X X X X
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