NDLI: Singapore Airlines Ltd. Vs. C.i.t., Delhi

Content Provider	Supreme Court of India
e-ISSN	30484839
Language	English
Access Restriction	NDLI
Subject Keyword	Income Tax Act 1961: s. 194H
Content Type	Text
Resource Type	Law Judgement
Jurisdiction	India
Case(s) Referred	Referred Case 0 Referred Case 1 Referred Case 2 Referred Case 3 Referred Case 4 Referred Case 5 Referred Case 6 Referred Case 7 Referred Case 8
Case Type	Appeal
Court	Supreme Court of India
Disposal Nature	Appeal Allowed
Headnote	Income Tax Act, 1961: s. 194H – Tax Deduction at the Source on Commission and brokerage – Interpretation of s. 194H – On facts, assessee airlines selling their flight tickets through the travel agents – Arrangement between the airlines and the travel agents governed by Passenger Sales Agency Agreements, wherein agents are entitled for 7% of the Base Fare as the Standard Commission, however, they were at liberty to set a price higher than the Net Fare demanded by the airline and the additional amount that the travel agents charged over and above the Net Fare that was quoted by the airlines as the agent’s own income – Issue pertaining to the characterization of the income earned by the agent besides the Standard Commission of 7% and if this additional portion would be subject to TDS requirements u/s. 194H – High Court held that assessees were required to deduct TDS u/s.194H, on the Supplementary Commission accrued to travel agents entrusted by the assesses to sell airline tickets, as a result of the assessees’ failure to carry out the subtraction of the requisite amount of TDS, they were declared “assessees in default” u/s.201 for not deducting the TDS from the supplementary commission of the travel agent other than the designated standard commission @ 7% and would thus, be subject to payment of interest and penalties u/s. 201(1A) and 271C – On appeal, held: Intentions as manifested in the terms of the contract between the parties indicate the existence of a principalagent relationship as defined u/s.182 of the Contract Act, the definition of ‘Commission’ u/s. 194H stands attracted and the requirement to deduct TDS arises – Lack of control that the airlines have over the Actual Fare charged by the travel agents over and above the Net Fare, cannot form the legal basis for the Assessees to avoid their lability – Accretion of the Supplementary Commission to the travel agents is an accessory to the actual principal-agent relationship under the PSA – Incidental benefit gained by an agent which has a reasonably close nexus with the responsibilities that were entrusted to it by the principal must come under the ambit of the relationship – Thus, the agents additional amount that the travel agents charged over and above the Net Fare comes under the ambit of Supplementary commission is liable for the deduction of TDS – However, the travel agents have already paid income tax on the Supplementary Commission, there can be no further recovery of the shortfall in TDS owed by the assessees – However, interest may be levied u/s. 201(1A) from the date of default by them in terms of failure to deduct TDS till the date of payment of income tax by the travel agents – ss. 201, 201(1A), 271C – Contract Act, 1872 – s. 182.
Judge	Hon'ble Mr. Justice Surya Kant
Neutral Citation	2022 INSC 1201
Petitioner	Singapore Airlines Ltd.
Respondent	C.i.t., Delhi
SCR	[2022] 9 S.C.R. 1
Judgement Date	2022-11-14
Case Number	6964-6965

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