9911796707
TMI Blog2007 (6) TMI 312X X X X Extracts X X X X X X X X Extracts X X X X ..... rein is a dealer in car, spares and services of vehicles manufactured by Maruti India Ltd. The assessee entered into a business collaboration agreement on 16-12-1997 with M/s. West Delhi Automobiles (P.) Ltd. (in short WDAPL ). Pursuant to the agreement the assessee made certain payments. The assessee treated the same as payment to contractor and accordingly, deducted tax at source under section 194C of the Act. The Assessing Officer held that in substance the payment is towards hire charges by way of rent for the premises of M/s. WDAPL utilized in the business of dealership of the car. He accordingly held that the assessee should have deducted tax @ 20 per cent on such payment under section 194-I of the Act. Learned CIT(A) interpreting th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rges in respect of servicing of vehicles was agreed for 900 vehicles per month. Though it is agreed that the assessee shall have no right as tenant, in substance the payment is for the use of the space and hence, in correct spirit should be treated as payment of rent for the premises and accordingly tax should have been deducted under section 194-I of the Act. Thus, the order of Commissioner holding that the payment should be treated as commission or brokerage within the meaning of section 194H is erroneous. As regards finding that if payee has offered the income, necessary material should be made available to the Assessing Officer so as to absolve the assessee from any further liability. However, the nature of payment should continue to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enance and protection of the premises and car by the assessee and in absence of any right by way of tenancy in favour of assessee which are specifically denied, the assessee cannot be considered as having paid the same by way of rent only. Thus, section 194-I cannot be attracted in such a situation. Even section 194H do not apply as the payment is not directly by way of commission as envisaged in section 194H but is only a mode of sharing the revenue with the payee. Thus, the payment should be treated as payment to a contractor within the meaning of section 194C and hence, no further liability should be enforced upon the assessee herein. He further submitted that though the assessee has not filed any appeal before the Tribunal against the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses No. B-1, Udyog Nagar, New Delhi. Party of the second part is authorized dealer and distributor of Maruti Udyog Limited for sale and service of Maruti Udyog Limited for sale and service of Maruti Cars/Vans and other vehicles etc. 1.That parties have mutually agreed to enter into the Business Collaboration Agreement on the terms and conditions hereinafter set out. 2.The party of the first part has offered 13,460 sq. ft. covered area and 11,200 sq. ft. approx. open area in the west side portion of building and decorated for display/sale, repair, parking and service (washing and cleaning) of Maruti vehicles (as shown in Annexure-C, map). 3.The party of the first part has provided one generator set, one hydraulic lift, air compressor, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the first part is entitled to enhance any number of employees which may be required for supervising the sale. 8.That the party of the second part has assured the party of the first part to employ security guards and other staff for the proper maintenance and protection of the premises as well as for the safety of the cars which are displayed in the premises. 9. 10. ****** 11.That the party of the second part shall have no right to permit any other person, party or firm to carry on the business from the premises in question as it has been categorically agreed between the party of the first part and the party of the second part that the possession of the premises shall remain with the party of the first part and the party of the se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... since it is not having qualified staff for sales and supervision of sales staff as well as servicing of vehicles, it has availed the services of M/s. WDAPL. The payments are quantified on the basis of number of vehicles sold and number of vehicles serviced. Thus, it is a mode of sharing revenue between the two parties. However, in such a circumstance, it cannot be said that the payment was either as rent simpliciter or as commission. Thus, the same cannot be considered as rent within the meaning of section 194-I or as commission within the meaning of section 194H of the Act. As rightly contended by Shri Chadha that though the assessee has not filed appeal against the impugned order, he can still support the order of CIT(A) on any of the gr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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