SC to decide if foreign airlines can deduct TDS on agents’ commission

New Delhi: The Supreme Court would decide whether foreign airlines are liable to deduct tax at source (TDS) on commissions paid to travel agents for rendering ticketing services.
The issue for consideration before the apex court is if airlines would have to deduct TDS on the difference between the full value of tickets and the concessional tickets issued to their travel agents.
The question has been raised by the income tax department before a Bench headed by Justice SH Kapadia, which has sought reply from international airlines British Airways as to why it failed to deduct TDS on such amounts.
The department had challenged the Delhi High Court judgement that held that the difference between the full value of the tickets and the concessional tickets issued by airlines is not an income in terms of Section 194H of the Income Tax Act, 1961, and hence the carriers are liable to make such deductions on such differential amounts.
The high court verdict had come on batch of petitions filed by the department against various airlines—Air India, Lufthansa German Airlines, Air france, Kuwait Airways Corporation, United Airlines and others. The high court had also held that since the airlines had no obligation to deduct TDS on such notional commission, which had not been realised, it could not be held as that these airlines were defaulting assessees.
24/12/09 Indu Bhan/Indian Express

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Categories: Foreign Dec 2009