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2017 (1) TMI 249 - AT - Income TaxTDS u/s. 194I - addition of short deduction determined on account of TDS payment made to Central Warehousing Corporation (CWC) Container Freight Station (CFS) Bombay Port Trust (BPT) and Airport Authority of India (AAI) for services rendered by such entities which included use of space for storage of imported/exported materials - Held that - We approve the conclusion of CIT(A) that the payments made to CWC CFS BPT and AAI cannot be construed as rent for the purposes of Sec. 194I of the Act. Thus insofar as Ground of appeal nos. 1 and 2 are concerned same are dismissed. TDS u/s 194J - survey fees paid by the assessee on which no tax was deducted at source - Held that - No error on the part of CIT(A) because the payments have been made by the assessee in the capacity of an intermediary between its client exporter/importer and the recipients who have conducted the inspection of goods so as to facilitate customs clearance. The reasoning adverted by the CIT(A) is similar to that considered by us while dealing with the payments made to CWC CFS BPT and AAI and therefore the conclusion drawn by CIT(A) to the effect that assessee cannot be construed as an assessee in default within the meaning of Sec. 201(1) and 201(1A) of the Act is hereby upheld TDS u/s 194J - internet charges paid by the assessee on which no tax was deducted at source - Held that - The parity of reasoning laid down by the Hon ble Madras High Court in the case of Skycell Communications Ltd. 2001 (2) TMI 57 - MADRAS High Court eld that the mobile telephone facilities provided by the cell phone companies to their subscribers for making/receiving calls etc. cannot be construed as technical services and thus it cannot be brought into the ambit of Sec. 194J of the Act. In the present case when the assessee is availing internet services from the broadband service provider it does not entail that such broadband service provider is making available a technical service so as to require the assessee to deduct tax at source u/s 194J of the Act. Therefore we hereby affirm the order of CIT(A) on this aspect also TDS u/s 194C OR 194I - payment made towards hiring of Forklift/Cranes - Held that - . Factually speaking the payments have been made to the contractors for providing services of handling and transportation of cargo after the customs clearances were obtained. Such charges inter-alia entailed loading and unloading of cargo for which the contractors utilized Forklifts/Cranes being maintained by them. Quite clearly assessee has not entered into any contract for hiring of Forklifts or Cranes but it is a case where the contractor has utilized the same in discharge of his services to the assessee-firm. Therefore in such a situation it is not possible to conclude that assessee contracted for renting of Forklifts/Cranes so as to treat the payments as rent for the purposes of Sec. 194I of the Act. CIT(A) in our view correctly came to conclude that the payments have been made by the contractors against work executed on behalf of the assessee which clearly attracts deduction of tax at source u/s 194C of the Act and not u/s 194I of the Act as contended by the Assessing Officer. Thus on this aspect also Revenue fails. TDS u/s 194C OR 194J - payments made towards fumigation charges - Held that - the plea raised by Revenue is without any basis. Factually speaking it emerges from record that the persons entrusted with the job of fumigation carry out spraying of chemicals etc. to prevent attack of pests so that cargo/goods being handled by the assessee do not get damaged. Ostensibly the payments made by assessee would inter-alia include cost of chemicals pesticides etc. Apart from bald assertions Revenue has not been able to demonstrate the use of any technical information or skill which is required to perform such fumigation activities and therefore invoking of Sec. 194J of the Act in the present case is unwarranted and has been correctly negated by the CIT(A). Thus on this aspect also Revenue fails.
Issues Involved:
1. Short deduction of TDS on payments made to CWC, CFS, BPT, AAI under Section 194I. 2. TDS on survey fees under Section 194J. 3. TDS on internet charges under Section 194J. 4. TDS on hiring of forklifts/cranes under Section 194I. 5. TDS on fumigation charges under Section 194J. 6. Interest levied under Section 201(1A). 7. Demand for short deduction of tax. Detailed Analysis: 1. Short Deduction of TDS on Payments Made to CWC, CFS, BPT, AAI Under Section 194I: The Revenue contended that the assessee should have deducted tax at source under Section 194I on payments made to Central Warehousing Corporation (CWC), Container Freight Station (CFS), Bombay Port Trust (BPT), and Airport Authority of India (AAI) for services rendered, which included the use of space for storage of materials. The Assessing Officer treated these payments as 'rent'. However, the CIT(A) accepted the assessee’s plea that these payments were reimbursements made on behalf of its clients and did not constitute 'expenditure' for the assessee. The Tribunal upheld the CIT(A)’s decision, stating that the payments did not fall under the definition of 'rent' as per Section 194I, referencing various tribunal decisions supporting this view. 2. TDS on Survey Fees Under Section 194J: The Assessing Officer argued that survey fees paid by the assessee required TDS under Section 194J, as they were fees for professional or technical services. The CIT(A) disagreed, noting that the fees were paid for inspection of goods, an integral part of the customs clearance process, and were reimbursed by the clients. The Tribunal upheld the CIT(A)’s decision, concluding that the assessee acted merely as an intermediary and had no obligation to deduct TDS under Section 194J. 3. TDS on Internet Charges Under Section 194J: The Assessing Officer considered internet charges as payments for technical services, requiring TDS under Section 194J. The CIT(A) ruled that utilizing a standard telecommunication network did not involve rendering technical services, referencing the judgment in Skycell Communications Ltd. vs. DCIT. The Tribunal agreed, stating that the broadband service did not constitute 'technical service' under Section 194J. 4. TDS on Hiring of Forklifts/Cranes Under Section 194I: The Assessing Officer claimed that payments for hiring forklifts/cranes should attract TDS under Section 194I. The assessee contended that these were composite service payments for handling goods, subject to TDS under Section 194C. The CIT(A) supported the assessee, noting that the contractors hired the equipment and provided a composite service. The Tribunal upheld this view, stating that the payments were for services provided by contractors and not for renting machinery. 5. TDS on Fumigation Charges Under Section 194J: The Assessing Officer treated fumigation charges as fees for technical services, requiring TDS under Section 194J. The CIT(A) disagreed, stating that fumigation did not involve technical or professional services and was subject to TDS under Section 194C. The Tribunal affirmed this decision, noting the lack of technical skill involved in fumigation activities. 6. Interest Levied Under Section 201(1A): The interest levied under Section 201(1A) was deleted by the CIT(A) as the assessee was not found to be in default under Section 201(1). The Tribunal upheld this deletion, considering it consequential to the primary findings. 7. Demand for Short Deduction of Tax: The Tribunal dismissed the Revenue’s grounds related to the demand for short deduction of tax, reiterating the findings on the primary issues. Conclusion: The Tribunal dismissed all appeals of the Revenue, affirming the CIT(A)'s decisions on all issues for the assessment years 2008-09 to 2011-12. The order was pronounced on 23rd September 2016.
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