TMI Blog2015 (7) TMI 901X X X X Extracts X X X X X X X X Extracts X X X X ..... ises. As soon as goods are moved into the CFS premises for inspection, the assessee is liable for payment for use of premises. - So far as the contention of the assessee that the assessee makes the payments to the agencies and gets reimbursement of same from exporters, we are of the view that it is an inter-se arrangement between the assessee and the exporter. It does not in any way change the character of payment made for the use of CFS premises. The assessee has to comply with the provisions of the Act, as applicable at that point of time. Thus, the amount paid by assessee for use of premises to Central Warehousing Corporation, Concor and Continental Warehousing Corporation is in the nature of rent. The assessee ought to have complied wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Appeals)-III, Chennai dated 28.2.2014 for the assessment year 2009-10. The only issue raised by the assessee in its appeal is against the disallowance made under sec.40(a)(ia) of the Income-tax Act, 1961 (hereinafter referred to as 'the Act') on payments made to Central Warehousing Corporation, Concor and Continental Warehousing Corporation. 2. The assessee is a private limited company and is engaged in the business of freight forwarding. The assessee filed its return of income for the assessment year 2009-10 on 27.9.2009 declaring total income of ₹ 27,27,050/-. During the course of scrutiny assessment, the Assessing Officer observed that the assessee has made payments to Government agencies, viz., Central Warehousing Corpo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted. The ld. Counsel made an alternate submission, that even if there is violation of provisions of sec.194-I, disallowance under sec.40(a)(ia) applies only in respect of the amount payable and not the amounts already paid. To fortify his alternate submission, the ld. Counsel draws support from the decision of the Tribunal in the case of Merilyn Shipping and Transports v. Addl. CIT reported as 16 ITR(Trib) 1 (Visakhapatnam)(SB). 4. Shri S. Das Gupta, representing the Department vehemently supported the impugned order. The ld. DR submitted that the amount paid by the assessee to Central Warehousing Corporation, Concor and Continental Warehousing Corporation or other such agencies is rent and, therefore, the assessee was liable to deduct t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e; or (h) fittings, Whether or not any or all of the above are owned by the payee;] A plain reading of the aforesaid definition of 'rent' makes it unambiguously clear that rent is a payment for the use of land or/and building under any lease, tenancy or other arrangement/agreement. In the instant case, undisputedly, the assessee is using the building premises of CFS against payment. In our considered view, the said payment is nothing but a rent for the use of premises. As soon as goods are moved into the CFS premises for inspection, the assessee is liable for payment for use of premises. The assessee may not be storing goods in CFS premises but is using the same for other purposes. It is a well settled law that in a tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Syndicates (supra) and the Hon'ble Gujarat High Court in the case of CIT v. Sikandarkhan N. Tunvar (supra) on the other hand, have struck down the decision of the Special Bench. In such circumstances, rule of judicial precedent demands that the view favourable to the assessee must be adopted. The Hon'ble Supreme Court of India in the case of CIT v. Vegetable Products Ltd. reported as 88 ITR 192, has held that where two views are possible, the view in favour of the assessee has to be preferred. Respectfully following the same, we follow the judgment of Hon'ble Allahabad High Court in the case of Vector Shipping Services (P) Ltd. (supra) and hold that the disallowance under sec.40(a)(ia) applies only to the amounts payable and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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