TMI Blog2016 (2) TMI 883X X X X Extracts X X X X X X X X Extracts X X X X ..... space is taken by the goods transported. The billing on the basis of the size of the container cannot lead to the conclusion that the billing is for container rental rather than transportation of goods contained in the container. The very foundation of the impugned demands raised by the Assessing Officer is thus devoid of any legally sustainable foundation. The activity, for which the impugned payments are made, is the activity of transporting the goods which is a service in nature. The assessee was thus quite justified in deducting tax at source under section 194C. What is to be seen is whether use of the asset which is said to have been used, is incidental activity for attaining some other goal or is it the core activity which can be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y way of this common order. The impugned orders are two separate, but materially similar, orders dated 10th September 2013 passed by the CIT(A) in the matter of tax withholding demands raised under section 201 r.w.s. 194I of the Income Tax Act, 1961, for the assessment years 2008-09 and 2009-10. 2. The short issue that we are required to adjudicate in these appeals is whether or not the CIT(A) was justified in holding that the tax was not required to be deducted at source under section 194I from payments made by the assessee, as the Assessing Officer himself puts it, for logistic service for carrying goods by sea route in containers . When we put it to the learned representatives that notwithstanding somewhat elaborate, and rather argum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cted to a survey under section 133A. During the course of this survey, it was noted that the assessee was deducting tax at source under section 194 C, even though, as is the stand of the Assessing Officer, tax is deductible under section 194 I of the Act. The reasoning was this. The Assessing Officer was of the view that the activity of carrying the goods from ship to the shore cannot be termed as transportation and that in the present case, the barges are used as equipment for unloading the goods from the ship which, by no stretch of imagination, can be termed as transporting . The Assessing Officer further observed that by using the incorrect nomenclature in the bills, the basic nature of activities cannot be changed and that in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for transportation of goods from ship to the shore and vice versa, which, as the Assessing Officer himself puts it, unloading (and loading) the goods from the ships . The use of containers is incidental to the whole process of transportation of goods between ship and shore and it cannot be considered as a standalone transaction in its own character. The question of tax deduction under section 194I could have, if at all, arisen only when it was a rental simplictor of the equipment. That is not even the case here. No doubt the bills have been raised on the basis of the size of the container because irrespective of the weight of the container, it is size which determines how much space is taken by the goods transported. The billing on the bas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity is only a vicarious liability and when the principal liability of the assessee is discharged, it ceases exist. In the present case, the assessee has filed tax returns of the recipient to demonstrate that the recipient has duly included the payments in question in the computation of his income, and duly discharged tax liability on the same. No infirmity is pointed out in the information so furnished. The Assessing Officer was, for this reason also, not justified in raising the demands in question. He had noted the contention of the assessee, in this respect, but left it at that. Such an approach cannot meet any judicial approval. 6. In view of these discussions, as also bearing in mind entirety of the case, we approve the conclusions ..... X X X X Extracts X X X X X X X X Extracts X X X X
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