2024 (2) TMI 1341 - HC - Income Tax

TDS u/s 194I or 194C - storage charges paid by assessee - TDS @ 20% or 2% - HELD THAT - The storage tanks in question do not qualify either as land or as building within the meaning of Section 194I of the Act. In terms of Section 194I of the Act, there has to be a lease, sub-lease or tenancy or any other agreement involving land or any building excluding factory building. It is not the case of the Revenue that the storage tank was taken on lease or sub-lease or tenancy. Assessee s case would fall under the part or any other agreement involving land or any building, together with furniture, fittings and the land appurtenant thereto . It is nobody s case that assessee has taken any land or building together with furniture, fittings and the land appurtenant thereto. Thus we hold that the payments in question are liable for deduction of tax at source under the provisions of Section 194I - Decided in favour of assessee.

Summary

Issues Involved:
The only issue in these appeals is whether the respondent ought to have deducted tax u/s 194I or u/s 194C of the Income Tax Act, 1961 from the storage charges paid.

Summary:
The assessee had agreements with parties for handling import of oil and paid storage charges. The Assessing Officer found that the storage charges fell under Section 194I, but the assessee argued it was under Section 194C. The CIT(A) partially allowed the appeal, directing verification of payee declarations. The ITAT set aside the assessment order, leading to the current appeals.

Section 194I Interpretation:
The ITAT found that the storage charges did not qualify as rent under Section 194I, citing a previous case. The ITAT's order noted similarities with the Gulf Oil India Ltd. case, where it was held that the storage tanks were not covered under Section 194I.

Legal Arguments:
The appellant relied on a Supreme Court judgment regarding property tax on storage tanks to support their case. The respondent argued that the provisions of Section 194I were not applicable and that they had deducted tax at 2% under Section 194C.

Court's Decision:
The Court found that the storage tanks did not meet the criteria of land or building under Section 194I. As there was no lease or agreement involving land or building, the payments were not subject to tax deduction u/s 194I. The Court upheld the ITAT's decision, ruling in favor of the assessee.

Conclusion:
The Court dismissed the appeals, affirming that the storage charges were not liable for tax deduction u/s 194I. The substantial questions of law were answered in favor of the assessee, and the appeals were disposed of accordingly.