TaxTMI 
TaxTMI 
2022 (1) TMI 841
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....ating, maintaining, developing, designing, constructing, upgrading, modernizing, financing and managing the airport and related infrastructure. The appellant has entered into an agreement titled "Operation Management and Development Agreement" (OMDA) with Airport Authority of India on 4.4.2006, under which exclusive rights and authority is said to have been given to the appellant with respect to operation, maintenance, development, construction, modernization etc., of the Indira Gandhi International Airport, New Delhi (IGIA for short) and to perform certain aeronautical and non-aeronautical services at the IGIA. 3. The appellant filed its return of income for the assessment year under consideration which was taken up for scrutiny assessment. The assessing officer passed assessment order under Section 143(3) r/w 153A of the Act for the assessment year under consideration disallowing the claim of the assessee under Section 40(a)(ia) of the Act being the amount of collection charges retained by the airlines on collection of passenger service fees amongst other disallowance. Being aggrieved, the appellant preferred an appeal before the Commissioner of Income Tax (Appeals)-11, Bengal....
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....)(ia) of the Act. 6. Learned counsel appearing for the Revenue, justifying the impugned order of the Tribunal submitted that, the Airlines Operators while paying Passenger Service Fees [PSF (SC & FC) were retaining the amount of 2.5% of the invoice value on account of prompt payment by them to the assessee before due date which would part take the characteristic of commission, thereby attracting the provisions of Section 194H of the Act. The appellant - assessee was required to deduct TDS on the amount retained by the Airlines while making payment to the assessee, for not complying with the mandate of Section 194H, no claim made by the assessee under Section 40(a)(ia) of the Act is allowable. 7. Learned counsel appearing for both the parties have referred to host of judgments which are discussed infra. 8. We have bestowed our anxious consideration to the arguments advanced by the learned counsel appearing for the parties and perused the material on record. 9. Passenger Service Fee (PSF) chargeable at the Airport is inclusive of the cost of the security expenditure on the designated security agency (65%) of the PSF per embarking passenger (Security Component) (PSF....
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....sident, any income by way of commission (not being insurance commission referred to in section 194D) or brokerage, shall, at the time of credit of such income to the account of the payee or at the time of payment of such income in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rate of five per cent : x x x x x Explanation.-For the purposes of this section,- (i) "commission or brokerage" includes any payment received or receivable, directly or indirectly, by a person acting on behalf of another person for services rendered (not being professional services) or for any services in the course of buying or selling of goods or in relation to any transaction relating to any asset, valuable article or thing, not being securities; x x x x Section 40(a)(ia) of the Act during the relevant period reads thus; "any interest, commission or brokerage, rent, royalty, fees for professional services or fees for technical services payable to a resident, or amounts payable to a contractor or subcontractor, being resident, for carrying out any work (including supply of labour fo....
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.... had entered into an agreement with several advertising agencies. In terms of the agreement, advertising agency was required to make an application to the appellant therein to get the "accredited status". In that scenario, the appellant therein and Prasar Bharati - Doordarshan Kendra would get 15% by way of commission from the Agency. The argument advanced therein was that the relationship between Prasar Bharati - Doordarshan Kendra and the Accredited Agencies was not that of Principal and Agent, but was in the nature of Principal to Principal. Secondly, the amount withheld by the advertising agency is not commission or brokerage to attract the provisions of Section 194H of the Act. Adverting to the said arguments, the Hon'ble Apex Court held that the said transaction in question was in the nature of commission which would attract Section 194H of the Act. The relevant paragraphs are extracted hereunder for ready reference; "26. The aforementioned Section was inserted in the Act with effect from 01.06.2001 by replacing the earlier Section 194H. This Section deals with the payment of "commission or brokerage". 27. It provides that any person other than individual or....
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....ational Airport (P) Ltd., reported in (2017) 88 taxmann.com 663 (Mumbai), on which heavy reliance was placed by the learned counsel appearing for the appellant, the question that fell for consideration was with regard to PSF-(SC) which could not be characterized as income under Section 2(24) of the Act as the assessee merely acted in a fiduciary capacity for collection and disposal of the amount of PSF-(SC). 20. As aforesaid, the dispute herein is in a narrow compass with reference to 2.5% of PSF withheld by the Airlines Operators in terms of clause 1.4 of SOP. It is trite that no denial of allowance claimed under Section 40(a)(ia) of the Act could be made by the department, in the event, the Airlines Operators have offered the said 2.5% of commission, which is nothing but income to tax. In order to verify this factual aspect, the matter has been restored to the file of the assessing officer, which cannot be faulted with. Hence, the common substantial question of law No.1 is answered in favour of the Revenue and against the assessee. 21. Common substantial question of law No.2 and additional substantial question of law in ITA No.513/2018 are not pressed. 22. Resulta....
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....ourt in the case of Commissioner of Income Tax v. M/s Quest Global Engineering Services Pvt. Ltd., (ITA No.133/2015, D.D. 15.2.2021). Concurring with the same, we answer the said substantial question of law in favour of the assessee and against the Revenue. 26. Re: Additional substantial question of law in ITA.No.702/2018; [substantial question of law No.2] In the case of Commissioner of Income Tax v. Excel Industries Ltd., reported in (2013) 38 taxmann.com 100 (SC) it has been held that if the rate of tax remained the same for the assessment year under consideration as well as in the subsequent year, the dispute raised by the Revenue would entirely be academic or at best would have a minor tax effect. This judgment was rendered in the background that the Tribunal applying the three tests laid down by various decisions, namely, whether the income accrued to the assessee is real or hypothetical; whether there is a corresponding liability of the other party to pass on the benefits of duty free import to the assessee even without any imports having been made; and the probability or improbability of realization of the benefits by the assessee considered from a realistic and practica....