Passenger service fee is not rent when it primarily funds airport services, so no TDS applies.

Passenger service fee collected by an airline on behalf of airport operators was not "rent" under section 194-I because the payment was a statutory collection from embarking passengers and remitted to the operator, not consideration for the airline's own use of land or building. The charge was directed to security and passenger facilitation services, with any use of premises only incidental. Applying the Supreme Court's airport-charge principle, rent arises only where use of land or building is the essential substance of the payment. As a result, the airline was not required to deduct tax at source on the fee.

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Issues: Whether passenger service fee collected by the airline on behalf of airport operators was "rent" within the meaning of section 194-I of the Income-tax Act, 1961, so as to attract tax deduction at source.

Analysis: The fee was collected from embarking passengers and remitted to the airport operator under the governing aircraft rules and the civil aviation directions. The payment was not made by the airline for its own use of land or building, but was only routed through the airline as a statutory collection on behalf of the airport operator. The substance of the charge was for security and passenger facilitation services, while any use of land or building was only incidental. On the principle applied by the Supreme Court in the context of airport charges, a payment can be treated as rent only if it is essentially for use of land or building and not where such use is merely ancillary to services provided.

Conclusion: Passenger service fee was not rent under section 194-I, and the assessee was not liable to deduct tax at source on that amount.

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