• Notification Date: 16-11-2022
• Notification No: N/A

Section 194H applicable in the case of Supplementary Commission: Supreme Court

The Supreme Court has held that Section 194H is applicable in the case of Supplementary Commission amounts that are earned by the travel agent. Hence, Airlines are liable to deduct TDS. The Supreme Court bench comprising Justices Surya Kant and MM Sundresh has upheld the Delhi High Court judgment, declining the Bombay High Court judgment in CIT v. Qatar Airways [2009 SCC Online Bom 2179] that had ruled otherwise.  

In the above-mentioned case, the High Court of Delhi passed the judgment that the airlines-assessees were required to deduct TDS under Section 194H on the Supplementary Commission that is received by the travel agents entrusted Page 6 of 53 by the Appellants to sell the flight tickets. 

The appellant airlines had raised some crucial contentions. Some of them were: (i) The amount realized by the travel agent over and above the Net Fare that is owed to the air carrier is income in its own hands. The amount is payable by the customer purchasing the ticket rather than the airline.  

(ii) The Supplementary Commission was the income that was earned via proceeds from the sale of the tickets, and it was not a commission received from the Assessee airline.  

(iii) Another concern raised by the appellant airlines was that in such cases the airline itself would have no way of knowing the price at which the travel agent eventually sold the flight tickets. 

The bench observed that the revenue contended that the language of Section 194H is inclusive and covers any "direct or indirect" payments to the airline agents. Hence, the Court held that there was no necessity for the Assessee to make a direct payment to the agent to make it fall under the category of “Commission” and to be subjected to TDS.