The Income Tax Appellate Tribunal (ITAT), Mumbai Bench has held that Air India cannot be deemed as ‘Assessee in Default’ in respect of payment to Air India Engineering Services Ltd (AIESL) and directs fresh adjudication.
The appellant, Air India Ltdis in the business of transportation of passengers and cargo by air, mail, parcel, etc. The assessee being a Public Sector Unit as a national carrier owns and operatesaircraft of different types. Air India Engineering Services Ltd (AIESL) is a wholly-owned subsidiary of the assessee which is approved by DGCA for repairs and maintenance of aircraft placed in various cities.
The appellant paid Rs.8,58,12,303/- to AIESL for repairs/maintenance on which TDS at 2% was made. During assessment proceedings ,the Assessing Officer concluded that the services were like fees for technical services which are liable for TDS at 10%,anddetermined a shortfall of TDS and demanded Rs.68,64,984/- along with interest of Rs.41,18,990/- under section 201(1A). The CIT (A) confirms the assessment order.
Before ITAT the counsel for the appellant submitted that the appellant was liable to deduct TDS under the provisions of section 194C instead of section 194J as, according to the appellant, the services rendered by AIESL were like ‘fees for works contract’ and not like ‘fees for technical services’.
The Counsel for the appellant made an alternative submission that M/s AIESL has duly offered these payments as its income hence the benefit of proviso to sec. 201(1) may kindly be given to the appellant. It was pointed out by the bench that the assessee is required to furnish a certificate from an accountant to avail the benefit of the proviso and the appellant agreed on the same.
The Coram of Mr. Baskaran B.R. (Accountant Member) and Kavitha Rajagopal (Judicial Member) “we are of the view that, in the interest of natural justice, the alternative contention of the assessee may be accepted. However, the claim of the assessee requires verification at the end of the AO. Accordingly, we set aside the order passed by CIT(A) and restore the alternative contention in all the years under consideration to the file of the AO for examining it by the law”.
Mr. Rajnish Aggarwal and Mr. Manoj Sinha appeared on behalf of the appellant and respondent.
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