OCTOBER 20, 2023

AMAN SHARMA
ENROLL NO. 00814703820
COURSE: BA LLB (A)

TAXATION LAW
Dell
[Company name]
[Company address]
 Psda Assignment:

Singapore Airelines LTD

Vs

CIT

CASE BACKGROUND

 Parties Involved

Appellant : Singapore Airlines Ltd

Respondent: Commission if Income Tax

Year of Decision: 2022

NATURE OF THE CASE: The Supreme court in this case

was dealing with a care whwere the department saddled the
airlines with liability to deduct tax at source in the output of
the amount which was charged to the consumer by the
agent and the met for which was charged to the consumer
by the agent which the for set by the airlines for the travel.

KEY ISSUES:
 In the case of the Singapore airlines limited Vs CIT DELHI
the key issues or the subject was that whether an airline
has responsible for the deducting tax at the source in
output of the supplementary commission which an
agent is paid on difference between the actual fact and
the net fare
 Section 194A of the Income tax act 1961 analysed
including whether liability to deduct when the tax can
be fastened when admitting the deduced has discharged
the tax liability.
 The Supreme court in the case was dealing with a acse
when the department saddled the airlines with thr
liability to deduct tax at source in output of the amount
which was over and above the octed fare which was
charged to the consumer by the agent and the net fare
by the airlines for the travel agent.
 The airline was already deducting tax in the commission
paid on the net fare. What was disputed by the airline
was the commission that was kept by the travel agent
when he sold the ticket at a higher price over and above
the net fare.
  It was argued that there was no liability to deduct ta on
such difference since their portion was from the
consumer to the agent and net fare to the government.
 The Supreme court dealt with at length the principle of
context act in relation to the agent and principle and
accepting the agreement of the revenue that the ticket
remained the property if the airline although and the
lock of the control that the airline have over the acted
fare charged by the travel agent over and the above net
fare, cannot form the legal basis for the assessee to the
avoid the liability. The accuration if the supplementary
commission to the travel agent in a accessory to the
actual principal agent relationship under the PSA and
the airlines was liable to deduct the TDS.

THE COURT THEREAFTER CONCLUDED-

“In the eventuality that any of the agents have yet not paid
on the supplementary commission, the Revenue will be at
the liability under the the IT ACT for the recover of the
shortfell in TDS from the airline. However we limit the ability
to levy penutive against the accusses in light of section 273B
of the IT ACT…We hope that clause has been brought to legal
controversy that the persisted for two decades.

CASE 2
 VATIKA TOWNSHIP PVT LTD

VS

CIT

CASE BACKGROUND:

PARTIES INVOLVED

APPELLANT (CIT) : Commissioner of Income Tax

Respondant ( Vatika Township Pvt Ltd )

Year of Decision : 2015

Nature of the Case : The case revolves around the tax

implication related to the development and transfer of immovable
property.

Key Issues:

1. Section 2(47)(v) of the Income Tax Act, 1961: This section

deals with the definition of a "transfer" for the purpose of capital
gains tax. The crux of the issue was whether the transaction in
question fell under the purview of this section.

2. Development Agreement and Transfer of Rights: The

primary contention was whether the development agreement
entered into by Vatika Township Pvt. Ltd. resulted in a transfer
 of rights in the immovable property and therefore, attracted
capital gains tax.

3. Real Estate Boom: During the period leading up to the case,

India experienced a real estate boom characterized by a robust
demand for residential, commercial, and mixed-use
developments. This surge was propelled by factors such as
urbanization, population growth, rising disposable incomes, and
increased foreign direct investment in the sector.

Arguments:

 CIT's Argument:

 The CIT contended that the development agreement

effectively transferred the rights in the land from the
assessee (Vatika Township Pvt. Ltd.) to the developer, and
hence, it should be considered as a "transfer" under section
2(47)(v) of the Income Tax Act.

 Vatika Township Pvt. Ltd.'s Argument:

 Vatika Township Pvt. Ltd. argued that the transaction did

not amount to a transfer as defined in section 2(47)(v) of
the Act, as there was no actual transfer of ownership or
possession of the property.
Landmark Decision and Justification:

The Income Tax Appellate Tribunal (ITAT) ultimately ruled in favor

of Vatika Township Pvt. Ltd. Their decision was grounded in the
understanding that the development agreement did not lead to an
immediate transfer of rights. They highlighted that possession and
control of the property remained with the assessee.

The ITAT further clarified that the development agreement served as

a precursor to the eventual transfer, which would occur upon the
completion of the project. Therefore, it did not qualify as a "transfer"
under Section 2(47)(v) of the Income Tax Act.

Decision and Rationale:

 ITAT's Decision:

 The ITAT held in favor of Vatika Township Pvt. Ltd.,

stating that the development agreement did not result in an
immediate transfer of rights and that the possession and
control of the property remained with the assessee.

 Rationale:

 The ITAT emphasized that the development agreement

was a precursor to the actual transfer, which would occur
upon completion of the project. Therefore, it did not
 constitute a "transfer" under section 2(47)(v) of the Income
Tax Act.

 Impact:

 This decision provided clarity on the tax implications of

such development agreements in the real estate sector, and
it set a precedent for similar cases.

Conclusion:

The case of CIT vs Vatika Township Pvt. Ltd. established an

important precedent in the interpretation of section 2(47)(v) of the
Income Tax Act, particularly in the context of development
agreements. It clarified that such agreements, where possession and
control of the property remain with the assessee, do not result in an
immediate transfer for the purpose of capital gains tax. This decision
has had a significant impact on the taxation of real estate transactions
in India.