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TMI Blog2011 (9) TMI 1080X X X X Extracts X X X X X X X X Extracts X X X X ..... ment and principal to principal basis and were not liable for tax to be deducted at source under section 194H of the IT Act. 3. The ld. D/R has placed reliance on the order of the AO. Further reliance was placed on the decision of Hon ble Delhi High Court in the case of Delhi Milk Scheme, 301 ITR 373 (Del.). 4. The ld. Counsel of the assessee placed reliance on the order of ld. CIT (A). It was further submitted that on identical facts in the case of Ajmer Zila Dugdh Utpadak Sangh Ltd., 30 DTR 418 (JPR.), the Jaipur Bench of the Tribunal has decided the issue in favour of the assessee and ld. CIT (A) has followed the same. Therefore, order of ld. CIT (A) is liable to be confirmed. 5. Regarding the decision of Hon ble Delhi High Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etc in a prescribed area as per terms and conditions laid down in the agreement. AO also observed that milk and other milk products were to be distributed at a fixed margin as determined by the assessee. The AO further observed that as per terms and conditions of the agreement, it was evident that there existed a principal and agent relationship between the assessee and the distributors and that the fixed margin at which products are to be distributed is the commission of the distributor on which TDS under section 194H of the IT Act was to be made. However, the assessee has not deducted TDS in respect of the aforesaid payment of commission. Therefore, a show cause notice was issued to the assessee whereby it was required to explain as to wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or both the years. Ground of the department fails. 7. Now we will take the cross objection of the assessee. 8. The AO invoked provisions of section 194-I by holding that assessment of chilling charges was liable for deduction of tax at source under section 194-I and not under section 194C of the Act. Accordingly liability of ₹ 1,12,80,258/- was created under section 201(1)/201(IA) of the Act. 9. The brief facts in this regard are that during the assessment proceedings AO noted that assessee deductor had entered into agreement with various persons for providing godown with chilling and storage facility for the raw material and final products manufactured by assessee. The main feature of these agreements include specifications ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .1.2008 it has been clarified that main function of cold storage to preserve perishable items by means of mechanical process and storage of such goods is incidental in nature and not right to use of the premises has been granted. The Board has clarified that agreement between the customers and cold storage owners are basically contractual in nature and, therefore, provisions of section 194C will be applicable. Copy of the circular was also filed. However, the AO was not satisfied. In his view the assessee is liable to deduct tax under section 194-I. It was further noted that assessee himself is deducting tax under section 194-I from February, 2008 and, therefore, the assessee was liable to deduct TDS under section 194-I. Accordingly, the AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on which the TDS was to be made till the date of actual payment of tax by the concerned deductee, which is to be reasonably taken as the date of filing of return of income by the concerned deductee because only on that date it came to the notice of the department that the concerned deductee has paid due tax as per the returned income filed by it. Accordingly, the AO was directed to allow relief to the assessee. 11. The contentions raised before ld. CIT (A) were reiterated here before the Tribunal by ld. A/R. It was submitted that assessee has not paid any hiring charges but has paid fixed rate and variable rate as per agreement. The assessee is liable to deduct tax in view of section 194C and not under section 194-I. All the conditions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... control over the plant and machinery of the assessee. Lock and key of the plant and machineries are with the contractor and not with the assessee. Therefore, it cannot be said that assessee has taken the plant and machinery on hire and used by it for its own purpose. The assessee has paid only chilling charges which is on account of storage of milk by it. Payment of godown charges is paid as per agreement. Therefore, we are of the view that AO was not correct in holding that provisions of section 194-I is applicable. Provisions of section 194C will be applicable on the facts of the present case and as per provisions of section 194C, the assessee has already deducted tax. Board circular is also in support of the case of the assessee. Theref ..... X X X X Extracts X X X X X X X X Extracts X X X X
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