Inter Globe Aviation Ltd Vs ACIT (ITAT Delhi)
Summary: ITAT Delhi considered cross-appeals of Inter Globe Aviation Ltd., which operates passenger airline “Indigo”, concerning tax deduction at source on Passenger Service Fee (PSF), year-end provisions, credit-card gateway charges and consequential interest under section 201(1A) for AYs 2010-11 and 2011-12. PSF collected from passengers comprised security and facilitation components. The Assessing Officer treated both components as fees for professional/technical services liable to TDS under section 194J, whereas the CIT(A) held that section 194C applied.
The Tribunal held that airport facilities made available to the assessee were standard facilities available to all airlines and lacked the specialised, exclusive or customised character required for technical services under section 194J. Following the principle recognised by the Supreme Court in CIT Vs. Kotak Securities Ltd., 383 ITR 1, the Tribunal upheld the CIT(A)’s conclusion that section 194J was inapplicable. However, the airport operators were providing services to passengers and the payments represented consideration for work within section 194C. Accordingly, TDS was deductible under section 194C. The assessee could not invoke section 196 for the security component because it did not make payment directly to CISF; the airport owners/operators made such payment.
On the assessee’s alternative contention, the Tribunal held that if airport operators had included the PSF receipts in their taxable income and paid due tax, the assessee could obtain the benefit of the proviso to section 201 by satisfying the prescribed conditions, including Rule 31ACB and Form No. 26A. The matter was accordingly restored for verification. On year-end provisions, the Tribunal held that the provisions represented ascertained liabilities. The mere time lag in receipt of invoices did not eliminate the TDS obligation where the liability, recipient and basis for quantification were ascertainable. Nevertheless, benefit of the proviso to section 201 was again directed to be allowed where the recipients had offered the corresponding income and the prescribed Form 26A requirements were fulfilled.
