TDS U/s.194I not applicable on parking & landing charges paid by airlines

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HIGH COURT OF MADRAS

Commissioner of Income-tax

v.

Singapore Airlines Ltd.

TAX CASE APPEAL NOS. 15 TO 20 OF 2006

JULY 13, 2012

 

Given the definition of ‘lease or tenancy’ and the definition of ‘rent’ as appearing in Section 194 I Explanation, unless the payment is with reference to the use of any specified land or a building, payment made for availing of the services as in the nature landing or parking, as available in the present case before us, cannot be construed as ‘rent’. It is difficult to accept the case of the Revenue that a mere touchdown on the land surface would bring the case of the assessee that there is a lease or an agreement or arrangement answering the character of lease that the charges would fall within the meaning of ‘rent’, as appearing in Section 194-I Explanation. It is no doubt true that in the decision reported in [2006] 287 ITR 281 (United Airlines v. CIT), the Delhi High Court pointed out that an aircraft on coming into an airport and on touching the surface of the airfield, the use of the land immediately beings. So too, on parking of the aircraft, there is a use of the land. But by this alone, one cannot come to the conclusion that the use of the land leads to an inference of the existence of a lease or an arrangement in the nature of lease. By the very nature of things, as a means of transport, an aircraft has to touch down for disembarking the passengers and the goods before it takes off; for this facility to be offered, the Airport Authority charges a price. Given the complexity in landing and take-off, unlike in the case of vehicles on road, the Airport Authority has to provide navigational facilities and the charges thus made are calculated based on certain criteria like the weight of the aircraft. Thus in so charging for the facility, we do not find, there is any scope of importing the concept of ‘rent’ as defined under Section 194-I Explanation.

With great respect we find it difficult to accept the view of the Delhi High Court holding that the payment would fit in with the definition of ‘rent’ and the use of the land on a touchdown of the air field would amount to a use of land for the purpose of treating the charges as rent under Section 194-I Explanation of the Income Tax Act.

As rightly pointed out by the learned Senior Counsel appearing for the assessee, the payment contemplated under the Explanation is for the use of the land under a lease, sub-lease or tenancy. This means, what is contemplated under the said definition is a systematic use of land specified for a consideration under an arrangement which carries the characteristics of lease or tenancy. Going by the logic of the said provisions, we feel that a mere use of the land for landing and payment charged, which is not for the use of the land, but for maintenance of the various services, including the technical services involving navigation, would not automatically bring the transaction and the charges within the meaning of either lease or sub-lease or tenancy or any other agreement or arrangement of a nature of lease or tenancy and rent. As far as the runway usage by an aircraft is concerned, it could be no different from the analogy of a road used by any vehicle or any other form of transport. If the use of tarmac could be characterised as use of land, so too the use of a road would be a use of land. We do not think that for the purpose of treating the payment as rent, such use would fall under the expression “use of land”. Thus, going by the nature of services offered by the Airport Authority of India for landing and parking charges thus collected from the assessee herein, we do not find any ground to accept that the payment would fit in with the definition of ‘rent’ as given under Section 194-I of the Income Tax Act.