ITO TDS 3(3), MUMBAI vs. SINGAPORE AIRLINES LTD, MUMBAI

Order Under Section 254(1) of Income Tax Act PER PAWAN SINGH, JM: 1. These two appeals filed by Revenue under section 253 of the Income Tax Act(‘Act’) are directed against the common order of Ld. Commissioner of Income- tax (Appeals) [for short ‘the CIT(A)] –13, Mumbai dated 12.02.2004 for Assessment Year (AYs) 2009-10 & 2010-11. As facts in both the appeal are identical, impugned order is common, thus both was heard together and is being decided by consolidated 2 & 3149/M/2014 M/s. Singapore Airlines Ltd. order. For appreciation of facts, we are referring the facts of AY 2010-11 in ITA No. 3149/Mum/2014. 2. The Revenue has raised the following grounds of appeal: (i) The Ld. CIT(A) has erred on the facts and circumstances of the case and in law by allowing relief on Common User Terminal Charges (CUTE charges) without appreciating the fact that CUTE charges are paid for providing the airline with technical infrastructure, telecommunication facilities and telecommunication infrastructure and it is therefore liable for deduction of tax u/s. 194I of the I.T. Act. (ii) The Ld. CIT(A) has erred on the facts and circumstances of the case and in law by allowing relief of tax u/s. 201(1) & interest u/s. 201(1A) of the I. T. Act for short deduction of TDS on Passenger Service Fees (PSF) consisting of facilitation component without appreciating the fact that the facilitation charges is in the nature of rent which is paid by the embanking passengers for availing the use of facilities provided by Airport Authority of India which is collected by the assessee and is therefore liable for deduction of tax u/s. 1941 of the I. T. Act, 1961 & payment made to Airport Authority is above the prescribed limit for deduction of tax under the said provisions of I. T. Act, 1961 .

3. Brief facts of the case are that the assessee is a foreign Airline and flying its Aircrafts to various destinations across the World, including in India. A survey u/s 133A was conducted on 20.01.2009 at the office of the assessee. During the survey the statement of Sh Rajiv Tandon, Manager Finance & Administration was recorded. In the survey, it was found that assessee made the payment on account of Passenger Service Fee (PSF) and Common Utility Terminal Charges (CUTE). The AO issued show cause notice to the assessee as to why CUTE should not be treated as fee for professional/technical charge u/s 194J and PSE should not be treated u/s 194I. The assessee filed its detailed reply, explaining the nature of the services and claimed that the payment for CUTE are not fee for technical/promotional charge. Similarirly, the PSE are not in the nature of rent. The contention of assessee was not accepted by AO, the AO treated the assessee’s in default under the provisions of chapter XXVII B of the I.T. Act. The AO computed the tax on PSF charge @ 21.33% on Rs. 5,82,37,428/- which was worked out at Rs. 1,24,22,043/-. The AO calculated interest u/s 201(A) w.e.f. 01.04.2001 to 07.03.2011 of Rs. 14,90,640/-. Similarly, for CUTE charge, the assessee was treated in default under Chapter XXVII B and directed to pay CUTE charge @ 10.33% on Rs. 7,04,546/- which was worked out at Rs. 79,825/-. The AO also calculated interest u/s 201(A) w.e.f. 01.04.2010 to 07.03.2011 of Rs. 9579/- in its order dated 29.03.2011. On appeal 3 & 3149/M/2014 M/s. Singapore Airlines Ltd. before the ld. CIT(A), the order of AO was set-aside and the addition was deleted vide order dated 12.02.2014. Thus, being aggrieved by the order of ld. CIT(A) the Revenue has filed the appeal before us.

raised by Revenue are covered in favour of assessee by the decision of Hon’ble Apex Court. The ld DR for the revenue fairly agreed to the legal position in the decision of Hon’ble Apex Court.

5. First ground of appeal relates to the CUTE charges paid for providing the Airline with technical infrastructure, telecommunication facilities and telecommunication infrastructure. The Ld. AR of the assessee argued that this ground of appeal is covered in his favour by the decision of Hon’ble Supreme Court in CIT vs. Kotak Securities reported viz 383 ITR 1(SC).

6. We have considered the rival contention of the parties and find that the Hon’ble Apex Court in Kotak Securities (supra) while explaining the meaning of technical services held: “That where the services provided by the Stock-Exchange for which transaction charges were paid, failed to satisfy the text specialize, exclusive and individual requirement of the user or consumer who may approach the service provider for such assistant or services. It was only a service of the above kind and should go within the ambit of expression (technical services) bearing in Explanation 2 to section 9(i)(vii) of the Act. In absence of the distinguished future, service though rendered would be merely in the nature of facilities offered or available which would not covered by the provisions of the Act. Moreover, a service made by the Bombay Stock Exchange Online Trading System for which the charges in question has been paid by the assessee were common services that every member of Stock Exchange was necessarily required to avail to carry out trading in securities in the Stock Exchange. A member who wanted to conduct his daily business in the Stock Exchange had no option but to avail services. The service provided by Stock Exchange would be a kind of facilities provided by the Stock Exchange for transfer is rendering technical services provided to one or second of the members of Stock Exchange to deal with special situation faced by a member or special need 4 ITA Nos. 3148 & 3149/M/2014 M/s. Singapore Airlines Ltd. of such member to conduct business in the Stock Exchange. Such services, therefore, would undoubtedly be appropriate to be term as facilities provided by Stock Exchange on payment and would not amount to technical services provided by Stock Exchange, no being services specifically sought by the user or customer”.

is squarely covered by the decision of Hon’ble Apex Court in Kotak Securities (supra). Thus, the ground of appeal raised by Revenue is covered against the Revenue. In the result this ground of appeal is dismissed.

8. Ground No.2 relates to the short deduction of TDS on Passenger Service Fees (PSF). The Ld. AR of the assessee argued that this ground of appeal is also covered in favour of assessee by the decision of Hon’ble Supreme Court in assessee’s own case which was decided along with the case of Japan Airlines Company vs. CIT, reported viz 377 ITR 372 (SC). The Ld. DR for the Revenue not disputed about the factual and legal position.

9. We have gone through the order of Hon’ble Apex Court in Japan Airlines Co(supra) and seen that this ground of appeal is also squarely covered by this decision, wherein the Hon’ble Apex Court held that the charges paid by International Airlines to Airport Authority of India for landing and takeoff services as well as for parking of Aircraft, are not, in substance for use of land but for various other facilities extended by Airport Authority of India in connection of Airport operation and such charges are not covered u/s 194I of the Act. Thus this ground of appeal raised be the assessee has no force and the same is dismissed by following the decisions of Hon’ble Apex Court.

10. In the result, appeal of the Revenue is dismissed. For AY 2009-10)

11. The Revenue has raised the identical grounds of appeal. The facts of this order are also identical as we have already dismissed the appeal of Revenue for AY 2010-11. Hence, this appeal is also dismissed with similar observation.