Case Law Details
M/s. Delhi International Tax Airport Pvt. Ltd Vs DCIT (ITAT Bangalore)
Once it has been repeatedly held that Airlines Operators are collecting the PSF on behalf of the Airport Authorities/Operators and the PSF is to be paid to the airport authority in terms of the notifications issued by the MOCA at different points of time,the relationship of Principal and the Agent exists between the airport authority and the airlines operator. We have also examined other contentions of the assessee that TDS can only be deducted where the assessee makes the payment of commission. In the instant case, since the collection charges or the commission are retained by the Airlines at 2.5% of the invoice amount, the remaining was paid to the assessee, there was no occasion to deduct the TDS. In this regard, our attention was invited to judgment of the Rajasthan High Court in the case of Hindustan Coca Cola Beverages Pvt. Ltd. [2017] 87 com295 (Rajasthan). But in this regard, the Board has issued a circular No.619 dated 04.12.1991 in which it has been clarified in para 6 that the retention of commission by the consignee/agent amounts to constructive payment of the same to him by the consignor/principal, deduction of tax at source is required to be made from the amount of commission. Para 6 of the circular is extracted hereunder for the sake of reference:
“6. A question may raise whether there would be deduction of tax at source under section 194H where commission or brokerage is retained by the consignee/agent and not remitted to the consignor/principal while remitting the sale consideration. It may be clarified that since the retention of commission by the consign-ee/agent amounts to constructive payment of the same to him by the consignor/principal, deduction of tax at source is required to be made from the amount of commission. Therefore, the consignor/principal will have to deposit the tax deductible on the amount of commission income to the credit of the Central Government, within the prescribed time, as explained in the succeeding paragraphs.”
In the judgments referred to by the assessee, this clarification by the Board was not at all examined. Therefore, we are of the view that the judgments would not render much assistance to the assessee. Once it has been held in the case of assessee that they were collecting the PSF on behalf of the Airport Authorities/Airlines Operators, the collection charges or the commission, whatever nomenclature is given, retained by them assumes the character of commission paid by the Principal to its agents and the Principal is required to deduct the TDS on such payments to its agent under section 194H of the IT Act. In the light of these facts, we are of the considered view that the assessee is required to deduct the TDS on the amount retained by the Airlines while making the payment to the assessee.
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