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Issues Involved:
1. Whether the hire charges paid by the assessee for storage tanks are subject to tax deduction at source (TDS) under Section 194-I or Section 194C of the Income-tax Act. 2. Whether the storage tanks can be classified as "buildings" under Section 194-I. 3. Applicability of interest under Section 201(1A) and the assessee being considered as an assessee in default under Section 201(1). Issue-wise Detailed Analysis: 1. Applicability of TDS under Section 194-I or Section 194C: The primary issue is whether the hire charges paid by the assessee for storage tanks should be subjected to TDS under Section 194-I at 20% or under Section 194C at 2%. The assessee argued that the payments were for storage services and thus fell under Section 194C, while the Assessing Officer contended that these payments were for rent, falling under Section 194-I. 2. Classification of Storage Tanks as "Buildings": The assessee contended that the storage tanks, being metallic cylindrical vertical structures, could not be classified as "buildings" within the meaning of Section 194-I. The CIT(A) had upheld the Assessing Officer's view that these tanks should be treated as buildings, relying on the Supreme Court's decision in Municipal Corporation of Greater Bombay v. Indian Oil Corporation Ltd. The CIT(A) concluded that the storage tanks were "structures" or "things attached to the land" and thus fell within the ambit of Section 194-I. The Tribunal, however, found merit in the assessee's argument, citing the Bombay High Court's decision in Bharat Petroleum Corporation v. Municipal Corporation of Greater Bombay, which held that storage tanks could not be equated with buildings as they did not involve occupancy in the manner understood for buildings. The Tribunal also noted that the provisions of Section 194-I are not pari materia with Sections 3(r) and 3(s) of the Bombay Municipal Corporation Act, which were considered by the Supreme Court. 3. Applicability of Interest and Default Status under Sections 201(1A) and 201(1): The assessee argued that even if there was a short deduction of tax, the provisions of Sections 201 and 201(1A) would not apply, as there was no failure to deduct tax at source. They cited the Andhra Pradesh High Court's decision in P.V. Rajagopal v. Union of India, which held that short deduction does not attract the provisions of Section 201 or 201(1A). The Tribunal agreed with the assessee, noting that the storage tanks should be regarded as "plant" rather than "building" and thus not subject to TDS under Section 194-I. Consequently, the interest levied under Section 201(1A) was deleted, and the assessee was not considered in default under Section 201. Conclusion: The Tribunal concluded that the payments for storage tanks were not liable for TDS under Section 194-I of the Income-tax Act. The orders of the revenue authorities were set aside, and the interest levied under Section 201(1A) was deleted. The assessee was not considered an assessee in default under Section 201. The appeals were allowed, and the other grounds raised by the assessee, for which no arguments were advanced, were dismissed.
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