Case Law Details
Spice Jet Limited Vs Addl. CIT (ITAT Delhi)
ITAT Delhi held that supplemental rent/maintenance reserve would be exempt from tax in the hands of lesser in India as per Section 10(15A) of the Act and hence, no disallowance u/s 40(a)(ia) for non-deduction of TDS. Hence, TDS not deductible on such amount paid to foreign company for acquiring aircraft on lease.
Facts- The Assessee company debited an amount of Rs.168,72,51,723/- under the head “supplementary rent” in its profit and loss account which has been paid to foreign companies/entities from whom the assessee acquired aircrafts on lease.
AO held that the supplementary rent is actually for the replacement of parts/spares and in connection of services related to operational of lease aircrafts. The payment instead of being at the time of replacement of parts is being done on a regular basis based on the actual usage of various parts. Therefore, it is clear that exemption u/s 10(15A) of the Act would not apply to supplemental rent/maintenance reserve. Therefore, he concluded that as the payment was not exempt u/s 10(15A) of the Act the assessee was liable to deduct tax at Accordingly, an amount of Rs.84,07,89,542/- was disallowed u/s 40(a)(i) for non- deduction of tax at source in respect of the supplemental rent/maintenance reserve paid for the aircrafts taken on lease prior to 01.04.2007.
CIT(A) deleted the disallowances. Being aggrieved, revenue has preferred the present appeal.
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