Landing and parking charges payable by
Airlines in respect of aircrafts are not for the ‘use of land’ per se but the
charges are in respect of number of facilities provided by the Airport
Authority of India. Thus, landing and parking charges payable by Airlines would
attract TDS under Section 194C and not under Section 194-I.
Facts:
a) The
issue disputed in the instant case was as to whether landing and parking
charges paid by Airlines would attract TDS under Section 194-I or under Section
194C of the income-tax Act (‘the Act’)?
b) The
High Court of Delhi in case of CIT v.
Japan Airlines Co. Ltd. [2009] 180 Taxman 188 (Delhi) has held that landing
and parking charges would attract TDS under Section 194-I of the Act.
c) However,
the Madras High Court in case of CIT v.
Singapore Airlines Ltd. [2012] 24 taxmann.com 200 (Madras) has taken a
contrary view that landing and parking charges would attract TDS under Section
194C. The two judgments are in conflict with each other.It has to be determined
as to which judgment should be allowed to hold the field?
The Supreme Court held as under:
1) In
the instant case, the Airlines are allowed to land and take-off their Aircrafts
at Indira Gandhi International Airport (‘IGIA’) for which landing fee is
charged. Likewise, they are allowed to park their Aircrafts at IGIA for which
parking fee is charged. It is done under an agreement and/or arrangement with the
Airport Authority of India (‘AAI’). The moot question is as to whether landing
and take-off facilities on the one hand and parking facility on the other hand,
would mean ‘use of land’.
2) In
the opinion of the Delhi High Court (Supra) “when the wheels of an aircraft
coming into an airport touch the surface of the airfield, use of the land of
the airport immediately begins”. Similarly, for parking the aircraft in that
airport, there is use of the land. This is the basic, rather, the only reason
given by the Delhi High Court in support of its conclusion that landing and
parking charges would attract TDS under Section 194-I.
3) The
Madras High Court (Supra) examined the issue keeping wider perspective in mind
thereby encompassing the utilization of the airport providing the facility of
landing and take-off of the airplanes and also parking facility. After taken
into consideration these aspects, the Madras High Court came to the conclusion
that the facility was not of ‘use of land’ per se but the charges for landing
and taking-off these airlines were in respect of number of facilities provided
by the AAI which were to be necessarily provided in compliance with the various
international protocol. The charges, therefore, were not for land usage or area
allotted simpliciter. These were the charges for various services provided.
4) We
are convinced that the charges fixed by the AAI for landing and taking-off
services as well as for parking of aircrafts were not for the ‘use of land’.
That would be too simplistic an approach, ignoring other relevant details which
would amply demonstrate that these charges were for services and facilities
offered in connection with the aircraft operation at the airport. These
services included providing of air traffic services, safety services,
aeronautical communication facilities, installation and maintenance of
navigational aids and meteorological services at the airport.
5) Thus,
paymentsfor landing and parking charges wereliable for TDS under Section 194C
and not under Section 194-I of the Act.The view taken by the Madras High Court (Supra)
was correct view and the judgment of the Delhi High Court (Supra)was to be
over-ruled. -Japan Airlines Co.
Ltd. v. CIT [2015] 60 taxmann.com 71 (SC)
