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TMI Blog2015 (4) TMI 711X X X X Extracts X X X X X X X X Extracts X X X X ..... on this issue. Regarding the management fee payment the assessee heavily relied on the decision of the Income-tax Appellate Tribunal in the case of Glaxo Smithkline Consumer Healthcare Ltd. v. ITO [2006 (10) TMI 259 - ITAT DELHI]. In this regard, we have examined clause 5 of the agreement and the services rendered by the payee which are narrated in sub-clauses from "(a) to (w)" of clause 5 of the agreement and noticed that none of the services constitutes any professional or technical services as mentioned in section 194J of the Act. In fact, the order of the Commissioner of Income- tax (Appeals) is not clear as to whether these payments are considered by the Revenue as either for professional services or for technical service. They do not have clarity. The Commissioner of Income-tax (Appeals) summarily confirmed the applicability of the provisions of section 194J to these payments and approach of the Revenue is not appreciated. Therefore, in our opinion, the order of the Commissioner of Income-tax (Appeals) should be set aside on this issue and claim of the assessee should be allowed. - Decided partly in favour of assessee. There is a reference to "handling charges" in the g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t appreciating that the services rendered do not fall within the ambit of the term 'professional service' or 'technical service' as referred to in section 194J. Thus demand of ₹ 7,649 raised under section 201(1) due to short deduction of TDS under section 194J is bad in law and needs to be cancelled. 3. Briefly stated the relevant facts of the case are that the assessee is engaged in the business of manufacturing of oil, conductor and NBR and he appointed depot agents by entering into an written agreements. During the year, the assessee entered into such agreements with M/s. Tolaram Sons, New Delhi and M/s. Ketki Enterprises, Aurangabad. There is dispute about the applicability of the TDS provisions in respect of the payment made to M/s Ketki Enterprises and however, the payment made to M/s. Tolaram Sons is a matter of dispute and the Assessing Officer claims that the assessee is defaulter in short deduction of TDS. During the year, the assessee made payment of ₹ 2.8 lakhs towards rent and ₹ 92,000 towards management fees to M/s. Tolaram Sons and the same is done in accordance with the mandate of the depot agreement dated June 1, 2007. At ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he depot agent and the premises is not under the control or possession of the assessee. Actually, it is in the possession of depot agent. The premises may not be owned by the depot manager. Under such circumstances, the payments made strictly are not rent as per the said Explanation of the provisions of section 194-I of the Act. In this regard, learned counsel relied on the decision of the Income-tax Appellate Tribunal, Delhi Bench in the case of National Panasonic India P. Ltd. v. Deputy CIT [2005] 94 TTJ (Delhi) 899 and also the Board's Circular No. 1 of 2008, dated January 10, 2008 (2008] 297 ITR (St.) 83 ), which clarifies the provisions of section 194-I to the payments made by the customers on account of cooling charges to the cold storage owners. Thus, payments do not attract TDS provisions, as the cold storage owners providing composite services. Regarding management fees payments, the assessee submitted that the payments made do not constitute professional services as defined in the Explanation to section 194J of the Act. The services rendered by M/s. Tolaram Sons to the assessee do not fall under any of the specified services. Further, the assessee relied on the Delh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance the payment is made as rent against use of depot. The rental payment made by the appellant in any way cannot be covered under work contract or provisions of section 194C when there is a specific section for deduction of tax, i.e., section 194-I. the case laws cited by the appellant are different in facts, hence, not applicable in view of the fact, the action of the Assessing Officer on this issue is upheld. As regards payment of management fees, the argument put forth by the appellant is again not acceptable as the payment is duly covered under the provisions of section 194J. The same cannot be considered as part of composite contract or work contract under section 194C. The very nature of the payment is covered under the provisions of section 194J, i.e., fees for professional/technical services. The assessee itself has given the nomenclature of the payment as fees for management services. The case law cited by the appellant are different in facts, hence, not applicable. In view of the fact, the action of the Assessing Officer on this issue is upheld. 6. Aggrieved with the same, assessee filed the present appeal before us. 7. During the proceedings before us, Shri Vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laram Sons and the warehouse on specifications. Further, we have also gone through the decisions cited by learned counsel, i.e., National Panasonic India P. Ltd. v. Deputy CIT [2005] 94 TTJ (Delhi) 899; [2005] 3 SOT 16 (Delhi) for the proposition that the payments made to the clearing and forwarding agents were for the services rendered under section 194C and not for rent under section 194-I of the Act, even if the agent had to store the goods during the time gap between the receipt of goods and onward dispatch. As per the assessee, the depot agents are pari materia with the clearing and forwarding agents. Further, it is the case of the assessee that the payment is part of the composite services and the aim of the payment is security of the goods. Further, we have examined the provisions relating to section 194-I regarding rent and for the purpose of completeness of the order, the said provisions are reproduced as under : (i) 'rent' means any payment, by whatever name called, under any lease, sub-lease, tenancy or any other agreement or arrangement for the use of (either separately or together) any,- (a) land ; or (b) building (including factory building) ; or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Delhi) is distinguishable on facts. Accordingly, we confirm the order of the Commissioner of Income-tax (Appeals) on this issue. 13. Regarding the management fee payment of ₹ 92,000, the assessee heavily relied on the decision of the Income-tax Appellate Tribunal in the case of Glaxo Smithkline Consumer Healthcare Ltd. v. ITO [2007] 12 SOT 221 (Delhi). In this regard, we have examined clause 5 of the agreement and the services rendered by the payee which are narrated in sub-clauses from (a) to (w) of clause 5 of the agreement and noticed that none of the services constitutes any professional or technical services as mentioned in section 194J of the Act. In fact, the order of the Commissioner of Income- tax (Appeals) is not clear as to whether these payments are considered by the Revenue as either for professional services or for technical service. They do not have clarity. The Commissioner of Income-tax (Appeals) summarily confirmed the applicability of the provisions of section 194J to these payments and approach of the Revenue is not appreciated. Therefore, in our opinion, the order of the Commissioner of Income-tax (Appeals) should be set aside on this issue and claim ..... X X X X Extracts X X X X X X X X Extracts X X X X
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