Case Law Details
InterGlobe Aviation Ltd. Vs JCIT (ITAT Delhi)
Facts- The appellant has alleged disallowance of lease rental payment treating the same as capital expenditure. Further, the appellant has also alleged that CIT(A) has erred in upholding the payment of supplementary rent to Lessors in Ireland under Lease Agreements executed after 01st April 2007 attracts liability for TDS.
Conclusion- Following the decision of special bench it is concluded that there cannot be any disallowance of lease rent under section 37(1).
As regards the issue relating to disallowance u/s 40(a)(i) is concerned, we find that the Tribunal in assessee’s own case for A.Y. 2007-2008 had examined the nature of Supplementary Rent and it was held that payment of Supplementary Rent is nothing different than the character of basic rent which is also payable under the Lease Agreement to the Lessors. It was held that Supplementary Rent is not a payment made for use of spares, facilities or any services, whereas Basic Rent is a fixed amount. Supplementary Rent is determined taking into consideration the number of flying hours. Supplementary Rent, in our opinion, is a payment made for lease of aircraft. The Lease Agreement defines Rent as means collectively Base Rent and Supplementary Rent. Therefore, respectfully following the decision of Tribunal for A.Y. 20072008 which has also been followed in subsequent years, we hold that payment of Supplementary Rent is exempt from tax in hands of Lessors as per provisions of section 10(15A) and hence, disallowance under section 40(a)(i) is not called for.
Please become a Premium member. If you are already a Premium member, login here to access the full content.
Author Bio
