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TMI Blog2006 (10) TMI 259X X X X Extracts X X X X X X X X Extracts X X X X ..... e also found that C F Agents was liable for all damages, pilferage and other losses incurred due to negligence, etc., and undertake to pay on demand in writing made by the assessee without protest the market value of the goods entrusted to such agents. The goods of the assessee was to be received and held by the C F Agents as bailee/trustee, for and on behalf of the assessee. Thus, it is crystal clear from the terms of the agreement that payment was made by the assessee to the C F Agents, was for consolidated set of services which have been broadly described. The main object of the agreement was to ensure correct handling and delivery of goods as per the terms of the assessee. We found that as per the nature of services rendered, the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Appeals) dated 20-9-2004 for the assessment years 2000-01 to 2003-04, in the matter of order passed under section 201(1) and 201(1A) of the Income-tax Act, 1961 wherein following common grounds have been raised by the assessee : "1. That the CIT (Appeals) erred on facts and in law in confirming the action of the Assessing Officer in treating the appellant as an assessee in default under section 201(1) of the Act for alleged short deduction of tax at source from payment made to Clearing and Forwarding Agents ( C FA ) during the relevant financial year. 2. That the CIT (Appeals) erred on facts and in law in confirming the action of the Assessing Officer holding that the payments made to C FA were for rendering managerial services and, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e liable to be an assessee in default under section 201(1)/201(1A) of the Act in respect of tax short deducted and the consequential interest. This action of the Assessing Officer in treating the assessee as an assessee in default has been confirmed by CIT (Appeals). The crucial issue to be decided is as to whether the services rendered by the C F Agents were in the nature of "work" in terms of section 194C or "managerial services" in terms of section 194J and how the tax should have been deducted on such payments under the provisions of the Income-tax Act, 1961. 3. We have considered the rival contentions carefully gone through the orders of the authorities below as well as provisions of the law contained under sections 194C and 194J o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee with C F Agents and perused the terms relating to services to be rendered by C F Agents. We found that the C F Agents was required to store, dispose, deliver or redeliver goods as may be determined and notified to such C F Agents by the assessee. The C F Agents was required to store the goods by the assessee with all care, prudence and responsibility so that such goods are free from risks as theft, pilferage and damages. He shall have full responsibility in respect of clearing consignment, loading/unloading, carriage, cartage to and for the warehouse and godown of the agents, staking or storing. He shall put such mark or marks in the warehouse to distinguish the goods of the assessee from the goods that such agents may receive from any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any person, not being an individual or a Hindu Undivided Family, who is responsible for paying to a resident any sum by way of ( a ) fee for professional services, or ( b ) fees for technical services, shall, at the time of credit of such sum to the account of the payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct an amount of equal to five per cent of such sum as income-tax on income comprised therein. Explanation ( a ) and ( b ) to section 194J of the Act defines "professional services" and "fees for technical services" respectively. The same reads as under : " Explanation. for the purposes of this section : ( a )"professional services" means servic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eals with a particular kind of payment to the exclusion of all other sections in this Chapter. Thus, any payment of any sum shall be liable for deduction of tax only under one section, therefore, payment is also liable for tax deduction only under one section, as warranted by the nature of services stipulated therein. Combined reading of provisions of sections 194C and 194J vis-a-vis C.B.D.T. Circular No. 720 makes it abundantly clear that in the instant case payment made by the assessee to the C F Agents, was for the services which was pre-dominantly for "carrying out work", inter alia, relating to storage despatch, transportation, loading and unloading of goods, etc. Thus, the assessee has rightly deducted tax at source under section ..... X X X X Extracts X X X X X X X X Extracts X X X X
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