The Commissioner Of Income Tax ... vs Asiana Airlines
2008 Latest Caselaw 1355 Del

*            THE HIGH COURT OF DELHI AT NEW DELHI

%                                  Judgment delivered on : 14.08.2008

+                              ITA No.101/2007

THE COMMISSIONER OF INCOME
TAX DELHI -XVII                                              ..... Appellant

                                    versus


ASIANA AIRLINES                                             ..... Respondent

Advocates who appeared in this case:

For the Appellant : Mr R.D.Jolly with Mr Paras Chaudhary For the Respondent : Mr Salil Aggarwal with Mr Prakash Kumar

CORAM :-

HON'BLE MR JUSTICE BADAR DURREZ AHMED HON'BLE MR JUSTICE RAJIV SHAKDHER

1. Whether the Reporters of local papers may be allowed to see the judgment ?

2. To be referred to Reporters or not ?

3. Whether the judgment should be reported in the Digest ?

BADAR DURREZ AHMED, J (ORAL)

1. This appeal by the revenue has been filed against the

order dated 28.02.2006 passed by the Income Tax Appellate

Tribunal in ITA No. 65/Del/02 pertaining to the assessment year

2001-02.

2. The sole question for our consideration is :-

Whether the Income Tax Appellate Tribunal was correct in law in holding that the payment for landing charges and parking charges made by the assessee to the Airport Authority of India would be covered within the meaning of Section 194-C of the Income Tax Act, 1961?

3. The assessee had deducted tax at source under the

provisions of Section 194-C of the said Act at the rate of 2% on such

payments. The Assessing Officer, however, held that the present

case fell within the purview of Section 194-I of the said Act and that

the deduction of tax at source should have been at the rate of 20%.

The Commissioner Income-tax (Appeals) took an entirely different

view and arrived at the conclusion that neither the provisions of

section 194-C nor those of section 194-I of the said Act were

applicable but that the tax was deductable under section 194-J of the

said Act. The Commissioner Income-tax (Appeals) also directed the

Assessing Officer to verify as to whether Airport Authority of India

had paid the taxes.

4. The Tribunal, in the impugned order, has relied upon its

decision in the case of DCIT Vs. Japan Airlines wherein it had been

held that the payments of the nature involved in the present case fell

under section 194-C of the said Act. Consequently, following its

decision in the case of Japan Airlines (supra), the Tribunal

concluded that the assessee was right in deducting tax at source at

2% as per section 194-C of the said Act. The Tribunal also held, as

a consequence, that no interest under Section 201 (1A) of the said

Act could be charged in the facts and circumstances of the case and

in view of decision with regard to the deductibility of tax at source

under section 194-C of the said Act.

5. Mr Jolly, who appears on behalf of the appellant,

submits that the decision of the Tribunal is liable to be set aside and

the question is liable to be decided in favour of the Revenue

inasmuch as the very issue of whether landing and parking charges

could be deemed to be rent under Section 194-I of the said Act had

come up for consideration before this Court in the case of United

Airlines v. CIT : 287 ITR 281 when this Court had concluded that

payments made for landing and parking charges would be deemed to

be 'rent' under Section 194-I of the said Act.

6. We have heard the learned counsel for the parties and

have examined the decision in the case of United Airlines (supra).

The issue is entirely covered by the decision of this Court in United

Airlines (supra) wherein the Court has categorically held payments

made for landing and parking charges to be deemed to be 'rent'

under Section 194-I of the said Act. Our answer to the question

formulated in this appeal is that the Tribunal was not justified in law

in holding that the payment for landing charges and parking charges

made by the assessee to the Airport Authority of India would be

covered within the meaning of section 194-C of the said Act. On the

contrary, such payments would be deemed to be 'rent' under section

194-I of the said Act.

7. The appeal, therefore, succeeds. We make it clear that

any consequential benefits that the assessee would be entitled to

would be granted by the department in case the assessee is able to

demonstrate that the Airport Authority of India has paid the taxes.

The department shall also calculate interest under Section 201 (1A)

of the said Act in accordance with the relevant provisions and as a

consequence of this order.

BADAR DURREZ AHMED, J

RAJIV SHAKDHER, J

August 14, 2008/sb