TMI Blog2003 (6) TMI 204X X X X Extracts X X X X X X X X Extracts X X X X ..... ch payment. 3. The Assessing Officer observed that the two assessees had used part of the property owned by M/s. Vinayak Cold Storage (VCS for short) by keeping their goods in the said cold storage. In consideration thereof, the assessees had made following payments to VCS:-- Ganesh Alu Bhandar Ashokkumar Narandas Co. Asst. Year Asst. Year Asst. Year Asst. Year 1998-99 1999-2000 1998-99 1999-2000 Rs.7,90,209 Rs.7,54,000 Rs.4,69,602 Rs. 1,44,760. The Assessing Officer was of the view that the payment made by the assessees was nothing but rent paid for the use of property of VCS and hence was covered by the provisions of section 194-I of the Act. However, since the assessees had not deducted tax at source from the payments made, and since no return in the prescribed Form No. 26J was filed, showcause notice was issued to the assessees to show-cause why the tax deductible under section 194-I should not be charged. Assessees made detailed submissions, the gist of which is as follows: (a) No space is taken on rent; (b) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 194-I expressly covered factory building, he held that assessee was liable to deduct tax under section 194-I. The CIT(A) also rejected the argument that section 194-I covered income from house property only. He observed that income by way of rent could be taxed either as income from house property, or business income or as income from other sources depending upon the facts of the case. The CIT(A) also placed reliance on the decision of the Supreme Court in the case of Delhi Cold Storage (P.) Ltd. v. CIT [1991] 191 ITR 656 to hold that no processing, and by implication no manufacturing was involved in a cold storage. The CIT(A) took note of the fact that VCS (the payee) had classified the cold storage building as ordinary building and not as plant and had claimed depreciation at lower rate 5 per cent for the years under consideration. He further observed that cold storage was a specialized storage or a warehouse with climatic control. According to him, climatic control was incidental to storage and not the other way round as was argued by the assessee. Thus, considering all the legal and factual aspects of the matter, CIT(A) held that assessee was liable to deduct tax under secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the one in Yamuna Cold Storages case referred to above. The question before the Delhi High Court was whether the assessee-company running a cold storage could be held to be an industrial company for purposes of section 2(7)(c) of the Finance Act, 1973 and the First Schedule thereto. The High Court rested its decision on the decision of the Supreme Court in the case of Chowgule Co. (P.) Ltd. v. Union of India [ ] 47 STC 124 to hold that process undertaken in a cold storage could not be considered a manufacturing process. The High Court did take note of the following decisions wherein the activity of a cold storage was held to be an activity of processing of goods: (a) Addl. CIT v. Farrukhabad Cold Storage (P.) Ltd. [1977] 107 ITR 816 (All). (b) CIT v. Radha Nagar Cold Storage (P.) Ltd. [1980] 126 ITR 66 (Cal). (c) Yamuna Cold Storage's case. The Delhi High Court went on to add that all the above cases were decided prior to the decision of the Supreme Court in the case of Chowgule Co. (P) Ltd. and hence could no longer be considered to be laying down a good law. In other words, in terms of the decision of the Delhi High Court, cold storage was not a factory building as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... td. in 1984, neither of these High Courts have referred to sub-clause (vi). In fact, Punjab Haryana High Court had held it to be processing on the basis of sub-clause (i), which is reproduced above and not on the basis of sub-clause (vi). To us, the reason appears to be that it is only by way of fiction that preserving and storing of article in a cold storage is deemed to be a manufacturing process. In the preamble to the Factories Act, it is mentioned to be an Act to consolidate and amend the law regulating labour in factories. The object of the Factories Act is to frame the benefits relating to employees' health, safety, security, welfare, proper working hours, leave and other benefits. Thus, the fiction created in the Factories Act to deem a cold storage to be a factory is only for the benefit of the employees working in a cold storage and the fiction so created cannot be extended to other laws. It is a rule of interpretation that definitions given for the terms in one statute cannot automatically be imported for the interpretation of the same words in another statute. It has been held that neither the meaning, nor the definition of the term in one statute, affords a guide to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n power generating station building belonging to the assessee. However, one particular observation of the Supreme Court is quite pertinent and relevant to the case on hand. The observation is as follows: "The question, basically, is a question of fact, and where it is found as a fact that a building has been so planned and constructed as to serve an assessee's special technical requirements, it will qualify to be treated as a plant for the purposes of investment allowance." It cannot be gainsaid that a cold storage building has a specialized planning and construction and is very much an integral part of the air-conditioning plant to enable the assessee to run its business of a cold storage. Hence, it cannot be put on the same footing as that of a warehouse. It is not necessary that in order to qualify as a plant, it needs to manufacture, produce, generate or process an article or thing. If that were to be the case, then the wide definition of 'plant' given in section 43(3) to include books and vessels would be rendered otiose. Thus, though it has been held that no manufacturing process is carried out in a cold storage, yet it will qualify as a plant. The view we are taking is f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessees were not liable to deduct tax at source under section 194-I of the Act. Therefore, there is no question of levying the impugned interest for non-deduction of tax. The levy of interest is accordingly cancelled in the cases of both the assessees for both the years. 13. In the case of Ganesh Alu Bhandar, the department has come up in appeal for both the years. The common ground in both the years is against relief of Rs. 1,58,042 and Rs. 1,51,200 for the two years respectively. 14. As mentioned earlier, the CIT(A) had upheld the applicability of section 194-I for payments made for the use of cold storage facilities. However, on finding that Vinayak Cold Storage, the payee, had already included these payments in its total income and that assessments in its case had become final, the CIT(A) rightly cancelled the demand of tax raised against the assessees. Interestingly, department came up in appeal against this relief only in the case of Ganesh Alu Bhandar but not in the case of Ashokkumar Narandas Co. In any case, since we have held that section 194-I is not applicable to payments made for the use of cold storage facilities, the ground raised by the department in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X
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