$~8 * IN THE HIGH COURT OF DELHI AT NEW DELHI % Date of Decision : 22.01.2026 + ITA 187/2008 COMMISSIONER OF INCOME TAX DELHI XVII .....Appellant Through: Mr. Vipul Agrawal, SSC and Mr.

Gaoraang Ranjan, Adv.

versus ROYAL JORDANIAN AIRLINES .....Respondent Through: Mr. Anil Makhija, Adv.

CORAM:

HON'BLE MR. JUSTICE DINESH MEHTA HON'BLE MR. JUSTICE VINOD KUMAR

JUDGMENT

DINESH MEHTA, J. (ORAL)

1. Mr. Vipul Agrawal, learned Senior Standing Counsel for the appellant/Income Tax Department submitted that the issue involved in the present case is squarely covered in favour of Revenue by the judgment of this Court in Commissioner of Income Tax v. Singapore Airlines Ltd. reported in 2009 SCC OnLine Del 823 as affirmed by Hon’ble the Supreme Court in the case of Singapore Airlines Ltd. v. Commissioner of Income Tax, reported in (2023) 1 Supreme Court 497.

2. Learned counsel submitted that in light of the adjudication made by this Court and affirmed by Hon’ble the Supreme Court, the appeal deserves to be allowed.

3. Learned counsel for the respondent, on the other hand, submitted that since the tax effect in the instant case is about Rs.26,00,000/-, the appeal deserves to be dismissed in light of Circular No. 5/2024 read with Circular No. 9/2024 issued by Central Board of Direct Taxes (CBDT).

4. At this juncture, Mr. Agrawal submitted that as the case falls within the ambit of exception, inasmuch as sub-clause l of Clause 3.1 of the Circular No. 5/2024 covers the instant case because the present case is that of TDS between two parties.

5. Mr. Anil Makhija, learned counsel for the respondent-assessee while maintaining that the appeal deserves to be dismissed, however, alternatively prayed that the appeal be disposed of in terms of para No. 68 and 69 of the above judgment of Hon’ble the Supreme Court.

6. He further prayed that the Assessing Officer (AO) be directed to create demand in relation to the amount of interest only inasmuch as the agents of respondent-airline company have/must have deposited the amount of tax and if the AO starts disputing such position or directs the respondent to prove the payment of tax, it will be very difficult for the respondent- company to establish as to whether the agents have paid applicable tax or not. Because in the past ten years, the operations of the respondent-airlines remained closed in India and all its contacts with the earlier agents have severed. He submitted that no particulars are available with the respondent-

company, hence, so much indulgence be granted.

7. Having heard the rival submissions, we agree with the submission of the respondent that after more than ten years of the transactions having taken place, it will be very difficult for the respondent-company to prove the factum of the tax having been paid by the agents.

8. In view of the submission which Mr. Makhija has made, we dispose of the present appeal in light of para No. 68 to 71 of judgment of Hon’ble the Supreme Court, which are reproduced herein below:-

“68. Our conclusion in terms of the application of Section 194-H of the IT Act to the supplementary commission amounts earned by the travel agent is unequivocally in favour of the Revenue. Section 194- H is to be read with Section 182 of the Contract Act. If a relationship between two parties as culled out from their intentions as manifested in the terms of the contract between them indicate the existence of a principal-agent relationship as defined under d Section 182 of the Contract Act, then the definition of "commission" under Section 194- H of the IT Act stands attracted and the requirement to deduct TDS arises. The realities of how the airline industry functioned during the period in question bolsters our conclusion that it was practical and feasible for the assessees to utilise the information provided by the BSP and the payment machinery employed by the IATA to make a consolidated deduction of TDS from the supplementary commission to satisfy their mandatory duties under Chapter XVII-B