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TMI Blog2020 (1) TMI 318X X X X Extracts X X X X X X X X Extracts X X X X ..... ger service fees is collected in their bills by the Airline assessee. Against this the passengers who availed the services of the assessee are provided facility and security. Therefore, the payment by the assessee to the owner of the airport is for the purpose of work which is covered u/s 194C of the Act. Thus, we hold that assessee should have deducted tax at source u/s 194C Security portion is payable by the Airport Authority of India and others to CISF which is govt. Firstly, this argument is flawed because assessee does not pay any sum to CISF but it is paid by the owners and operators of the airport. Hence, in the case of the assessee it cannot take shelter u/s 196 of the Act as the assessee is not payee to CISF but airport operators pay it. Thus, we uphold the order of the ld CIT (A) to that extent. Deduction of tax at source on year-end provisions - According to the provisions of the income tax act the tax is required to be deducted as and when assessee becomes responsible for payment of above sum to other parties. The claim of the assessee is that it is maintaining its books of account on accrual basis of accounting and therefore the amount is required to be prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... file of the learned AO. Levy of interest under section 201(1A) - AO has charged the interest from the. Beginning from the month in which tax was deductible up to the end of the month in which the return was due to be filed by the deducted, without appreciating that interest under that section, if leviable, was required to be computed only till the end of the relevant previous year. To examine the above argument of the assessee the proviso to section 201(1A) is required to be seen which is added with effect from 01-07-2012 corresponding to the proviso added to section 201 of the income tax act. According to that proviso the interest shall be chargeable from the date on which such tax was deductible to the date of furnishing of return of income by the payee. However as the ground number two and three of the appeal of the assessee are set aside to the file of the learned assessing officer, the assessee is at liberty to raise the amount of chargeability of interest with respect to the period, we also set aside this ground of appeal to the file of the learned assessing officer with the liberty to assessee to raise all the pleas charging of interest. Accordingly ground number fou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re to deduct tax at source under the Act and levying interest u/s 201(1 A) of the Act. Deduction of tax at source on the Passenger Services Fees ( PSF ) 2. That the CIT(A) erred on facts and in law in holding the Appellant as an assessee in default under section 201(1) of the Act, for the alleged failure to deduct tax at source u/s 194C of the Act from the PSF - security component, paid to various airport operators/licensor, not appreciating that the said payment did not fall within ambit of that section. V 2.1 That without prejudice, the CIT(A) has erred on facts and in law in not appreciating that the amount of PSF-Security, constitutes payment to Government and is not subject to TDS having regard to the provision of section 196 of the Act. 2.2 That the CIT (A) erred on facts and in law in holding the appellant to be 'assessee in default u/s 201(1) for the alleged failure to deduct tax at source under section 194C of the Act from the amount of PSF-facilitation. 2.3 That the CIT(A) erred on facts and in law in not appreciating that section 194C of the Act had no application in rela ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 201(1 A) of the Act 4. That the CIT(A) erred on facts and in law in confirming the interest levied by the assessing officer u/s 201(1 A) of the Act, for the period beginning from the month in which tax was deductible upto the end of the month in which the return was due to be filed by the deductees, without appreciating that interest under that section, if leviable, was required to be computed only till the end of the relevant previous year. 3. Revenue has preferred appeal and has raised the following grounds of appeal:- 1) Holding that the payment of PSF (passenger Service Fee) made to airport operators are covered u/s 194C and not u/s 194J. As per Section 194J, the nature of payment on account of PSF made to airport operators by the airline companies is technical and, therefore, qualifies for tax deduction u/s 194J considering the two component thereof; Security component and (b) Facilitation component. 2) Admitting the additional evidence in the form of certificates issued by various airport operators to the effect that the PSF received from the assessee has been included in their income while filling ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Therefore, he held that on total payment shortfall of tax deduction at source was ₹ 135659952/- u/s 201(1) and computed interest u/s 201(1A) of ₹ 40095924/-. 7. On appeal before the ld CIT (A), he held that on security component assessee should have deducted tax at source as CISF is not Govt. He also held that on service component tax should have been deducted @ 2 % . Thus, he held that on total PSF payments tax should have been deducted @ 2% considering such payment falling u/s 194C of the Act and not @ 10% as AO considered them as fees for professional services. 8. Therefore, aggrieved with this finding of the ld CIT (A) the assessee is in appeal as per ground No. 2 and AO is also in the appeal as Ground No. 1 and 2 of the appeal. The ld Authorised Representative submitted that the issue is squarely covered in favour of the assessee by the decision of ACIT Vs. Jet Airways India Pvt. Ltd 395 ITR 230 wherein it has been held that these are not the charges falling u/s 194I of the Act. He specifically referred to the order of the coordinate bench in ITA No. 5264/Mum/2012 dated 23.10.2013 in case of Jet Airways whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve services do not fall u/s 194J of the Act. Some of decision relied up on by the ld AR also supports that view, i.e. in ACIT Vs. Spice Jet Ltd 6103/Del/2015 coordinate bench has held that on PSF tax is not required to be deducted u/s 194J of the Act. 11. Further several decision relied up on by ld AR also supports a view that PSF is not Rent and hence not covered u/s 194 I of the act. In case of Jet Airways India Ltd [158 TTJ 289] the issue was whether the facilitation components and security fees falls under the provisions of section 194I of the Act or not. Coordinate bench held that it is not a rent which was upheld by the Hon ble High Court. Further in case of Go Airlines Ltd the issue was also whether the tax on PSF are covered by the provisions of section 194I of the Act or not. Similarly, in Singapore Airlines [314/Mum/2014] the issue was whether the provisions of section 194I apply on these payments or not. Therefore, all these decisions relied upon by the assessee clearly deals with the issue that PSF charges are not rent and no tax is required to be deducted thereon u/s 194I of the Act. There is no quarrel on this issue. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irport is for the purpose of work which is covered u/s 194C of the Act. Thus, we hold that assessee should have deducted tax at source u/s 194C of the Act. Thus, we uphold the order of the ld CIT (A) to that extent. 14. The next argument is that security portion is payable by the Airport Authority of India and others to CISF which is govt. Firstly, this argument is flawed because assessee does not pay any sum to CISF but it is paid by the owners and operators of the airport. Hence, in the case of the assessee it cannot take shelter u/s 196 of the Act as the assessee is not payee to CISF but airport operators pay it. Thus, we uphold the order of the ld CIT (A) to that extent. 15. During the course of hearing, assessee submitted that in ground No. 2.5 assessee contends, without prejudice, that without making any enquiry as to whether or not the respective airport operators have included the above sum of PSF as their taxable income the assessee cannot be held to be an assessee in default. The assessee further submitted additional evidence invoking Rule 29 of the ITAT Rules being certificate issued by Cochin International Airport, Mihan Ltd and DIAL st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt of provisions unutilized. 17. The ld Authorised Representative submitted that the provisions are made at the end of the accounting year as assessee is operating at multiple locations. He submitted that the provisions have been made on the basis of ascertained liability. Such provisions are reversed as and when the bills for services are received. Tax is deducted by assessee at that particular time. He further stated that as bills are not received, the payees are not identified and therefore, credit for TDS cannot be passed on even if the tax is deducted. He further submitted that when the bills are received the tax is deducted thereon. Hence, according to him tax is not required to be deducted on year end provisions. 18. The ld Departmental Representative vehemently supported the order of the ld Assessing Officer. It was submitted that provisions cannot be made without identifying the party and the exact quantum of amount payable to them. Hence, it was submitted that the party are identified and the amount. are quantified therefore, the assessee cannot be say that payees are not identified. 19. We have carefull ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we do not find any infirmity in the order of the learned CIT(A) in holding that assessee has failed to deducted tax at source on year-end provisions. Thus the order of the learned CIT(A) is upheld to that extent. 20. To support its contention the assessee has relied upon the several decisions of various courts. The first decision relied upon is of honourable Delhi High Court in 369 ITR 335 in case of UCO Bank where the Hon ble High Court has held that where the recipient of the income is unidentified the provisions of section 194A does not apply. However in the present case assessee has made an ascertained provision therefore, naturally at the time of making of the provisions the payees identified because the provision is made only on the basis of terms and conditions agreed with the recipient of the income. Therefore, the decision of the Hon ble Delhi High Court does not apply on facts of the case. 21. The next decision relied upon is of Hon ble Karnataka High Court in 383 ITR 59 wherein it was noted that subsequently after making the provision it was noticed that the said interest would never be paid to suppliers and the corresponding reversal en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t assessee did not claim such expenditure is allowable expenditure and it was disallowed it under section 40(a)(i) of the act. Thus in that case assessee himself admitted that expose deductible at source and assessee did not deduct the tax on such expenditure and therefore same were disallowed. Here the assessee is denying the liability for deduction of tax and source itself as the peas are not identified. Therefore, the facts of that case do not apply to the facts of the case before us. 25. Now if the recipient of the income has shown the above provision in the income by filing the return of income and paying tax thereon, the assessee should be granted the benefit of the proviso to section 201 of the income tax act. In view of this, the assessee is directed to submit the relevant details in form number 26A of the income tax act rules before the assessing officer. On receipt of the above information from the assessee, the AO may determine the amount of default by the assessee and then rework the liability arising on the assessee under section 201 of the income tax act. In view of this ground number three of the appeal of the assessee is also set as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d gateway facility provided to various vendors such as assessee. According to the AO the assessee should have deducted tax and source of such payments under the provisions of section 194H of the income tax act. The learned CIT A , on appeal, held that assessee is not an assessee in default for non-deduction of tax on the above sum for the reason that banks actually made that payment to the appellant after retaining their fees and the liability to deduct tax was that of the bank and not the appellant. The revenue is in appeal against the order of the learned CIT(A). 29. We have carefully considered the contentions raised by both the parties. The circular dated 31 December 2012 has been brought to our notice wherein under section 197A of the income tax act no deduction is required to be made on specified payment with respect to the credit card or debit card commission for transaction between the merchant establishment and the bank. In view of the above circular is apparent that tax is not required to be deducted on such payment. Though the circular is applicable with effect from first day of January 2013 but it lays down the princi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Ground number two relates to the tax deduction at source on passenger service fee. This ground is identical to the ground number two of the appeal of the assessee for assessment year 2010-11. Therefore, for the reasons given while deciding that ground of appeal, we also set aside this ground of appeal to the file of the learned assessing officer with similar direction. 36. Ground number three relates to deduction of tax at source on here and provisions made by the assessee. This ground is identical to the ground number three of the appeal of the assessee for assessment year 2010-11 which we set aside to the file of the learned assessing officer. For similar reasons we also set aside this ground of appeal with similar direction to the file of the learned assessing officer. 37. Ground number four is with respect to the chargeability of interest under section 201 (1A) of the income tax act which is identical to ground number four of the appeal of the assessee for assessment year 2010 11 which has been set aside to the file of the learned assessing officer. For the similar reasons we also set aside this ground to the file of the learned assessing o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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