Section 194H of the Income-tax Act, 1961 - Deduction of tax at source - Commission or brokerage etc. - Tax deduction at source on commission/supplementary commission received by travel agents from airlines

Letter F.No. 275/70/2009-IT(B), dated 22-12-2009

In the case of Around the World Travels & Tours (P) Ltd. Vs. Union of India report in 141 Taxman 53 (Mad), it was held that tax should be deducted at source under Section 194H on amount available to agents being difference between airfare fixed by Airlines and price at which agents are enabled to sell tickets, vide order dated 2nd October, 2009 the High Court of Madras. The above decision of the Madras High Court has been further reinforced by the decision of Hon'ble High Court of Delhi in the case of Commissioner of Income Tax Vs. Singapore Airlines Ltd. & Other Airlines dated 13.04.2009 reported in 180 Taxman 128 (Delhi) in which it has been held that commissions and supplementary commissions received by the travel agents from Airlines are liable to tax deduction at source under Section 194H and in case of default the mandatory interest under Section 201(1A) is leviable. The above decision of High Court is circulated for kind information and necessary action at your end.