Calcutta High Court
Commissioner Of Income Tax vs M/S. Blue Bird Leisure And Holidays Ltd on 25 August, 2008
Author: Pinaki Chandra Ghose
Bench: Pinaki Chandra Ghose
ITA No.434 of 2008
G.A.No.1884 of 2008
IN THE HIGH COURT AT CALCUTTA
Special Jurisdiction (Income Tax)
COMMISSIONER OF INCOME TAX,TDS, KOLKATA
Versus
M/S. BLUE BIRD LEISURE AND HOLIDAYS LTD.
BEFORE:
The Hon'ble JUSTICE PINAKI CHANDRA GHOSE
AND The Hon'ble JUSTICE SANKAR PRASAD MITRA Date : 25TH August, 2008.
The Court : We have perused the application for condonation of delay. We are satisfied that sufficient cause has been shown in the petition to condone the delay of 111 days. Hence delay is condoned. The application being G.A.No.1884 of 2008 is allowed.
We now take up the appeal. We have perused the order so passed by the learned Tribunal. It appears that in order to increase the sale the assessee allowed discount to the travel agents but there was no relation between the assessee and the purchasers as principal and agents and also there was no agreement between them. It is also a fact that the Assessing Officer could not bring any evidence on record contrary to the facts as stated by the assessee. It also appears to us that the discount allowed by the assessee could not be brought within the purview of the provision of Section 194H of the Income Tax Act. Accordingly, the learned Tribunal held as follows : 2
"We have carefully considered the submissions of the rival parties and perused the material available on record. We find that there is no dispute that in the profit and loss account the assessee has claimed discount/handling charges allowed to sub- agents as business expenditure. We further find that on the discount/rebate allowed on the sale of air tickets directly to the individual/corporate customers, the AO did not invoke the provision of Section 194H of the IT Act. However, the AO has invoked provision of section 194H of the Act on the handling charges/discount allowed on the sale of tickets to the passengers through sub-agents. According to the AO, it is a commission therefore the provision of section 194H are applicable. Whereas the assessee claims that is a discount/rebate which does not fall under the Explanation to section 194H of the IT Act. By the Finance Act, 2001, Section 194H was inserted in the Act with effect from June 1, 2001. The relevant provisions of section 194H and its explanation (i) read as under :-
"Commission or brokerage 194H. Any person, not being an individual or a Hindu undivided family, who is responsible for paying, on or after the 1st day of June 2001, to a resident, any income by way of commission (not being insurance 3 commission referred to in section 194D) or brokerage, shall, at the time of credit of such income to the account of the payee or at the time of payment of such income in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rate of five per cent:
(i)"Commission or brokerage" includes any payment received or receivable, directly or indirectly, by a person acting on behalf of another person for services rendered (not being professional services) or for any services in the course of buying or selling of goods or in relation to any transaction relating to any asset, valuable article or thing, not being securities;"
Thus to fall within the aforesaid Explanation, the payment received or
receivable directly or indirectly, is by a person acting on behalf of another person
(i) for services rendered (not being professional services), or (ii) for any services in the course of buying or selling of goods, or (iii) in relation to any transaction relating to any asset, valuable article or thing. The element of agency is to be there in case of all services or transactions contemplated by Explanation (i) to section 194H."4
The learned Tribunal is also of the view that the handling charges do not come within the definition of Explanation (i) to Section 194H of the Income Tax Act and has held that there is no default on the part of the assessee. This view was taken by the Tribunal relying upon the decision of the Tribunal in Singapore Airlines vs. ACIT in TDS A NO.58/Del/2003 dated October 19, 2004 and followed by another decision in the case of Korean Air vs. DCIT in ITA No.1979/M/2003 dated 28th December, 2004. Accordingly, the learned Tribunal passed the impugned order deleting the demand made by the Assessing Officer under Section 201(1)/201(1A) of the Income Tax Act.
After perusing the order so passed by the learned Tribunal and the facts and materials placed before us we find that no substantial question of law is involved in this matter. Hence the appeal is dismissed.
All parties concerned are to act on a xerox signed copy of this order on the usual undertakings.
Urgent xerox certified copy of this order, if applied for, be supplied to the parties subject to compliance with all requisite formalities.
(PINAKI CHANDRA GHOSE, J.) (SANKAR PRASAD MITRA, J.) 5