TMI Blog2015 (7) TMI 519X X X X Extracts X X X X X X X X Extracts X X X X ..... resentative. Being so, this is an admitted fact that once income of the letout of ware housing is treated as business income then tax deduction at source to be made u/s.194C of the Act. Being so, in our opinion the Commissioner of Income Tax (Appeals) is justified in observing that the assessee is liable to deduct tax at source u/s.194C, since the nature of the service rendered by the assessee is not only providing space but also providing warehousing activity and the income derived from such activity is "business income" and not income from "house property". Further, if the tax deducted and the same was deposited in the Government account, the due credit shall be given to that extent. If the recipient has declared income in their return of income, the assessee cannot be liable for payment of TDS once again in view of the judgment of Supreme Court in the case of Hindustan Coca Cola Beverage P. Ltd vs CIT [2007 (8) TMI 12 - SUPREME COURT OF INDIA] wherein it has been held that where deductee, recipient of income, has already paid taxes on amount received from deductor, department once again cannot recover tax from deductor on same income by treating deductor to be assessee in def ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment dated 22.02.2006 wherein the assessee had contracted with the owners of the property to do all the logistic support and other allied activates to be provided by the owners of the property. By virtue of this agreement for composite services, the earlier agreement of lease simpliciter was cancelled. This fact has not been properly appreciated by the Assessing Officer as she has given undue weightage only to the agreement of lease simplicitor and not the latter agreement which was a comprehensive agreement of providing various services. The Assessing Officer s omission to consider the latter agreement has resulted in concluding that the payments made to the concerned persons were for rentals and hence the tax to be deducted at source was to be in accordance with section 194I of the Act and not under section 194C of the Act as contended by the assessee and by viture of this interpretation, the Assessing Officer passed the impugned order under section 201 and 201(1A) of the Act for the assessment year 2008-09 to 2013-2014. The details of the taxes paid/payable u/s.201(1)/201 (1A) of the Act are as under:- F.Y TDS Payable @10% TDS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds and find that the assessee has deducted tax @2% on the payments made to the concerned persons in accordance with section 194C of the Act treating the payments as contract for service but whereas the assessing officer has treated the payment as a lease rental and therefore he opines that the tax to be deducted at source ought to be at 10% in accordance with section 194I of the Act. 3.2 The Authorised Representative for assessee emphasized that the assessee has deducted tax at source under section 194C of the act since the nature of services rendered by the deductees were of the nature that the payments made to them were for service rendered by them and not for the mere space provided by them. In support of his claim, the authorised representative relied on the following case laws:- 1. National Panasonic India(P) Ltd vs DCIT 4TTJ(Delhi) 2. CIT vs Hindustan Lever Ltd 216 Taxman 280(Del HC) 3. S.A.A Isphani Trust vs income tax officer (TDS) 216 Taxman (Madras) 4. Hindustan Coco Cola Beverage pvt Ltd vs. CIT 293 ITR 226 (SC) 5. CIT vs Samsung electronics Co. Ltd 320 ITR 209 (Karnataka) 6. Transmission corporation of AP Ltd vs CIT 289 ITR 587 SC 7. Vijay ship b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Delhi court held that section 194I of the act can be applied to cases where only the immovable properties are let out and the High Court further held in order to bring the case for Tax deduction under section 194I the burden is on the revenue to establish that the payments are only for rentals and not otherwise. 3.6 The CIT (A) observed that considering the aforesaid case laws with that of the assessee's case, it is clear that the agreement for composite services and corroborated with the bills raised by them amply goes to prove that the payments made to the concerned persons are for rendering services and not for mere letting out of the property and therefore the deduction of Tax in accordance with Section 194C of the Act is in order. 3.7 The Commissioner of Income Tax (Appeals) observed that on a further analysis of the facts and materials made available and considering the provisions of law and the ruling of the court, it is made clear that the assessee has made the correct deduction of tax in terms of section 194C of the act and therefore the order of the assessing officer to levy additional tax in terms of section 201 of the act is erroneous based on the misconc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ;income from house property' and not as a business income. The directors have not offered any income from business or profession in their individual return of income. If the argument of the deductor that fresh service agreement was made is correct, as argued by the deductor, then the income from such service should have been offered in their individual returns of income as income from contract / business for taxation and not under house property. The Id CIT(A) erred in admitting fresh evidence for the first time the bills raised for services provided by the lessors which were never submitted before the AO. As per the audited books of accounts of the deductor the said payments were booked under the head 'godown rent' and TDS liability was admitted as per the provisions of section 194I. 4.1 The ld. Departmental Representative submitted that Commissioner of Income Tax (Appeals) ought to have called for a remand report from the AO on the fresh evidence submitted by the deductor, which is in violation of Rule 46A. The Id CIT(A) went by the form of the agreement for composite services which was purportedly novated for original lease agreement without appreciating the fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement have come into force really on 22.02.2006, then the TDS dues would not be to the extent of M89,96,300/- as stated in form 3CD as the deductor would have deducted only at the rate of 2% which would be very much les; only when the TDS deducted was at the rate of 10% then the TDS dues would be to the extent mentioned above. This is more so because the company has remitted only very meagre amount of TDS from financial year 2008-09 onwards. This show that either the form 3CD issued by the Chartered Accoutant for assessment year 2010-11 is bogus or that the version of the dedcutor has revised agreement has come into force on 22.02.2006 is false, because both does not tally. 4.2 The ld. Departmental Representative further submitted that fearing disallowance u/s 40(a)(ia) the deductor has not filed its income tax returns for A.Y.2011-12 onwards. This is supported by the fact that the deductor has not furnished the details called for by the AO in the summons issued till the date of order, viz. trial balance, profit and loss account and balance sheet for the period 1.4.2011 to 31.8.2012 of branch account, copy of signed Form 3CA and Form 3CD of the deductor for AYs 11- 12 and 12-13. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eturns of the directors, which is clearly illegal and in violation of the provisions of the Act. The Hon'ble Supreme Court in the case of CIT vs Panipat Woollen General Mills Co Ltd (103 ITR 66) has held that a party cannot escape the consequences of law merely by describing an agreement in a particular form though in essence and in substance it may be a different transaction. The decision relied on by Id CIT(A) in the case of National Panasonic India (P) Ltd reported in 94TTJ of Hon'ble Delhi Tribunal is not applicable to the facts of the case. In that decision, it was held that where agreement or arrangement which gives rise to payment of rent must necessarily be an agreement or arrangement predominantly for use of land or building, then TDS has to be deducted at the rate applicable u/s 194I and not u/s 194C; that the case deals only with the business between a manufacturer and its agent, being C F agent and prayed the appeal may be allowed. 5. The ld. Authorised Representative for assessee relied on the order of the Commissioner of Income Tax (Appeals). 6. We have heard both the parties and perused the material on record. The main contention of the ld. Departme ..... X X X X Extracts X X X X X X X X Extracts X X X X
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