M/S. JAPAN AIRLINES CO. LTD. versus COMMISSIONER OF INCOME TAX, NEW DELHI

Citation: [2015] 8 S.C.R. 838 · Decided: 04-08-2015 · Supreme Court of India · Bench: A.K. SIKRI · Disposal: Disposed off
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Judgment (excerpt)

A 
B 
[2015) 8 S.C.R. 838 
MIS. JAPAN AIRLINES CO. LTD. 
v. 
COMMISSIONER OF INCOME TAX, NEW DELHI 
(Civil Appeal No.9875 of 2013) 
AUGUST04, 2015 
[A.K. SIKRI AND ·R. F. NARIMAN, JJ.] 
Income Tax Act, 1961- ss. 194-1, 194 C- Payment of 
landing/take off and parking Charges in respect of aircrafts to 
C Airport Authorities of India by foreign airlines - Deduction of 
tax at source (TDS) uls. 194 C@ 2% or u!s. 194-1@ 20% -
Held: Payment of landing/take off and parking charges paid 
to Airport Authorities in respect of airlines are not for 'use of 
D land', therefore, cannot be treated as 'rent' as envisaged ins. 
194-1, thus, covered uls. 194 C for the purpose of deduction 
of TDS and not u/s. 194-1. 
E 
Allowing the appellant's-Airlines appeal and 
dismissing the Revenue's appeal, the Court 
HELD: 1.1 Section 194-1 of the Income Tax Act, 1961 
provides for deduction of tax at source in respect of 
payment of 'rent' by any person, other than an individual 
and a hindu undivided family, at the time of payment or 
F credit, whichever is.earlier. The rate at which deduction 
of tax is to be made at source is 20%. From the reading 
of Section 194-1, it becomes clear that TDS is to be made 
on the 'rent'. The expression 'rent' is given much wider 
meaning under this provision than what is normally 
G known in common parlance. In the first instance, it means 
any payment which is made under any· lease, sub-lease, 
tenancy. In the second place, such a payment made even 
under any other 'agreement or arrangement for the use 
H 
838 
M/S. JAPAN AIRLINES CO. LTD. v. COMMNR. OF INCOME 
839 
TAX, NEW DELHI 
of any lanti or any building' would also be treated as A 
'rent'. WL-ther or not such building is owned by the 
payee is not relevant. The expressions 'any payment', 
by whatever name called and 'any other agr~ement or 
arrangement' have the widest import. Likewise, payment 
made for the 'use of any land or any building' widens B 
the scope of the proviso. [Para 13, 14] [848-B-C, E-H] 
1.2 The assessee-Airlines are allowed to land and 
take-off their Aircrafts at IGIA for which landing fee is 
charged. Likewise, they are allowed to park their Aircrafts C 
at IGIA for which parking fee is charged. It is done under 
an agreement and/or arrangement with AAI. The charges 
which are fixed by the AAI for landing and take-off 
services as well as for parking of aircrafts are not for the 
'use of the land'. That would be too simplistic an D 
approach, ignoring other relevant details which would 
amply demonstrate that these charges are for services 
and facilities offered in connection with the aircraft 
operation at the airport. These services include providing 
of air traffic services, ground safety services, E 
aeronautical communication facilities, installation and 
maintenance of navigationat aids and meteorological 
services atthe airport. [Para 15, 18] [849-A-B; 850-D-E] 
1.3 Before the High Court of Madras, the assessee F 
had filed the material in the form of Airport Economics 
Manual, the International Airports Transport Agreement 
(IATA) to the contracting states on charges for airport 
and air navigation services. There are various 
international protocols which mandate all such G 
authorities manning and managing these airports to 
construct the airports of desired standards which are 
stipulated in the protocols. The services which are 
required to be provided by these authorities, like AAI, are H 
840 
SUPREME COURT REPORTS 
[2015] 8 S.C.R. 
A aimed at passengers' safety as well as on safe landing 
and parking of the aircrafts. Therefore, it is not mere 'use 
of the land'. On the contrary, it is the facilities that are to 
be comp!Jlsorily offered by the AAI in tune with the 
requirements of the protocol, which is the primary focus. 
B [Para 19] [850-F-H; 851-A] 
1.4 The charges which are taken from the aircrafts 
for landing and even for parking of the aircrafts are not 
dependent upon the use ofthe land. Chapter 4 of Airport 
C Economics Manual issued by International Civil Aviation 
Organization deals with 'Determine the cost basis for 
charging purposes'. The charges on air-traffic which 
includes Landing Charges, Lighting Charges, Approach 
and Aerodrome Control Charges, Aircraft Parking 
D Charges, Aerobridge Charges, Hangar Charges, 
Passenger Service Charges, Cargo Charges etc. are to 
be fixed applying the formulae stated. A reading thereof 
would clearly point out the cost analysis which is to be 
done for fix
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