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TMI Blog2005 (9) TMI 497X X X X Extracts X X X X X X X X Extracts X X X X ..... ces. However, most of these factories manufacture a single product like, the assessee s factory at Sumerpur manufactures only detergents whereas its factory in Orai manufactures only soaps. It is not feasible for the assessee to sell its products directly from the factory, as the customer/stockist requires a mix of all products and in much smaller quantity. Thus, goods are moved from factories to godowns, which are manned by clearing and forwarding agents (C F agents). The C F agents perform the task of handling of goods received from the factory and dispatch them to stockist under instructions from the assessee-company. The property in goods lying with the C F agents remain with the assessee-company. The assessee-company s Delhi Office has 29 C F agents within their area from where the assessee-company caters to the requirements of the northern region. The C F agents are required to operate from premises provided by the assessee-company. The assessee-company has taken on lease premises for storage of its goods. It has already deducted tax under section 194-I @ 24 per cent from rent paid to the landlords for lease of these premises. It is for the purposes of handling of the goods a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here as to the question whether tax is to be deducted at source from warehousing charges, it was stated that the rent as defined in Explanation I below section 194-I means any payments made by whatever name called under lease, sub-lease, tenancy or any other agreement or arrangement for the use of any building or land, held that warehousing charges would be subject to tax under section 194-I; that in this view the use of land and building, by whatever name called, attracted; that the resultant payment from the use of by whatever name called, would be rent even if it is a lease or sub-lease entered into by the deductor company; and that, therefore, tax shall be deductible at source @ 22 per cent. Thus, the Assessing Officer held the assessee-company to be an assessee deemed to be in default to the extent short deduction of Rs. 78,43,252 under section 201(1) and interest of Rs. 25,29,448 under section 201(1A) of the Act. 4. Before the learned Commissioner (Appeals) besides reiterating its stand before the Assessing Officer, the assessee-company filed the details of five C F agencies. It was contended that insofar as regards the rent for godowns/warehouses, the assessee had alre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - Rs. 1,000 sq. ft. 2 Rs. 5.50 Misc - Rs. 1,500 p.m. Remuneration - Rs. 10,000 p.m. Freight - Rs. 650 per trip. Godown Keeper - Rs. 2,000 p.m. Service Charges - 3% service charges for all reimbursement excluding above." The learned Commissioner (Appeals) further observed that on the payment to the C F agents, the assessee had been deducting tax at source under section 194C even before the provisions of section 194-I were brought on statute book, as was contended by the assessee, that a perusal of the payments, however, clearly indicated that these were not covered under the works contract as claimed by the assessee, that it appears that the assessee had joint and severe contracts for godown and also for all other types of services; that all such services were not covered under the works contract, for instance, salary payment, remuneration and service charges paid to agents which were not in the nature of a works contract. 6. In view of the above, the learned Commissioner (Appeals) held that godown rents were covered under section 194-I but other payment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 201 of the Act. The Assessing Officer treated the assessee as an assessee in default under section 194-I of the Act. Clause ( i ) of the Explanation to section 194-I has been read out. The payments in question are clearly not covered under section 194-I of the Act, since they are not payments made for use of land or building. Reliance has been placed on the decision of Delhi Bench of the Tribunal in the case of National Panasonic India (P.) Ltd. v. Dy. CIT [2005] 3 SOT 16 wherein it has been held that "rent" for the purposes of section 194-I is essentially a payment for the use of any land or building and that payment to C F agent was for services under section 194-I, even if the agent had to store the goods during the time gap between receipt of goods and their onward despatch. 8. The learned counsel for the assessee has further submitted that the details of the payments to the C F agents are also on record (page 73 of the assessee s Paper Book). 9. On the other hand, the learned DR has submitted while supporting the orders of the taxing authorities that the payment to the C F agents is not a one time or a composite payment. It is under different heads. The Asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 194C @ 2.2 per cent from payments made to its C F agents, for work done by them for the assessee. The stand of the assessee has been that the said payments in question made to the C F agents, were not for professional or technical services or as rent or salaries and that therefore, the provisions of section 194/ 194-I/194J did not apply to these payments; that the assessee had already deducted tax under section 194C, since it was under a bona fide belief that the payments in question were covered thereunder; and that since there had been no failure to deduct tax at source by the assessee, section 271C was not attracted. 14. The order of the learned Commissioner (Appeals) having found favour with the assessee, the department is in appeal before us. 15. Before us, the department has not been able to successfully call in question on the categorical finding recorded by the learned Commissioner (Appeals). The learned Commissioner (Appeals) has, inter alia , held that the belief held by the assessee was a bona fide one. It had taken on lease the premises for storage of goods. It had already deducted tax under section 194-I @ 22 per cent from rent to the landlords for ..... X X X X Extracts X X X X X X X X Extracts X X X X
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