TDS on Agent Commission: Only Interest Recoverable if Tax Paid

CIT Vs Royal Jordanian Airlines (Delhi High Court)

Delhi High Court Disposes Revenue Appeal on TDS u/s 194H Against Royal Jordanian Airlines — Interest Only Recoverable Where Tax Already Paid by Agents

The Delhi High Court dealt with the Revenue’s appeal against Royal Jordanian Airlines concerning non-deduction of tax at source on supplementary commission paid to travel agents, allegedly attracting Section 194H of the Income-tax Act. The Revenue contended that the issue stood squarely covered in its favour by the earlier Delhi High Court decision in CIT v. Singapore Airlines Ltd., which had since been affirmed by the Supreme Court. On this basis, it was argued that the airline was clearly liable to deduct TDS, and the appeal deserved to be allowed

The assessee, on the other hand, raised a preliminary objection based on low tax effect, submitting that the appeal was liable to be dismissed in view of CBDT Circular No. 5/2024 read with Circular No. 9/2024, as the tax effect was only about ₹26 lakhs. Alternatively, the assessee urged that the matter be disposed of in line with paragraphs 68–71 of the Supreme Court judgment in Singapore Airlines, emphasizing that the travel agents had already paid tax on the commission income and, therefore, no further tax demand could be raised on the airline. It was further pleaded that, given the lapse of more than ten years and the cessation of the airline’s operations in India, it would be practically impossible for the assessee to prove whether the agents had paid tax, and any insistence on such proof would cause undue hardship