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Passenger fees paid by Jet not liable to TDS, rules tribunal

The Mumbai Income-Tax Appellate Tribunal has held that Passenger Service Fees…

The Mumbai Income-Tax Appellate Tribunal (ITAT) has held that Passenger Service Fees (PSF) paid by Jet Airways (India) to the Airport Authority of India (AAI) is not liable to TDS. The tribunal also dismissed the revenue department’s appeal claiming a TDS liability of R34.40 crore and another penal interest liability of R239.54 crore against the airline.

The taxman, in this case, had issued notice to the airline directing it to explain as to why TDS had not been deducted by the company from the PSF paid to AAI for AY 2010-11.

Jet, in turn, told the assessing officer that PSF is a statutory levy collected by the airport operators in its fiduciary capacity to be eventually turned over to the government, adding that it was only collecting the PSF from the passengers on behalf of the airport operators and was paying the same to the airport operators.

Jet added that it had not claimed such payment as expenses in its books of accounts and therefore, there was no liability of TDS under Section 194 (I) of the Income Tax Act.

However, the AO refused to consider this submission of the assessee and computed the TDS deductible at R34.40 crore and computed interest as a consequence of failure to pay the amount at R239.54 crore under section 201 (1A) of the IT Act.

Subsequently, Jet lodged an appeal with the CIT (A) stating that since it was merely collecting the PSF for and on behalf of the AAI, without charging the same to its profit and loss account, the same was not liable to TDS.

The CIT (A), dismissed revenue’s argument that PSF constitutes ‘rent’ under section 194 (I) of the Income

Tax Act and concluded that ?the collection of the PSF from the passengers is in no way in the nature of lease, sub-lease, tenancy as provided under Section 194I of the Act.?

Aggrieved by the CIT (A) order, the revenue department knocked Mumbai ITAT’s door, which ruled against the department.

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First published on: 08-11-2013 at 02:43 IST
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