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2016 (2) TMI 883 - ITAT RAJKOT

2016 (2) TMI 883 - ITAT RAJKOT - TMI - TDS u/s 194I or 194C - logistic service for carrying goods by sea route in containers - Held that:- 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 t .....

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nable 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 viewed on standalone basis in its own character. On the facts of this case, as we ha .....

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see 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. - I. .....

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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 .....

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k, the assessee engaged the services of one Shreyas Relay Systems Limited. The nature of arrangement with this company was like this. These services were used for transportation of goods from shore to the ship, and vice versa. The goods required to be transported is first stuffed in the containers given by the logistic service provider and then it was transported, by sea, by the logistic service provider to the agreed place. As noted by the Assessing Officer himself, the ship which brings the go .....

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under section 194C of the Act, from the payments made to Shreyas for transportation of goods. In January 2009, the assessee was subjected 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 .....

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the definition of rent under section 194I also covers rent for equipment and proceeded to treat the payments made to Shreyas as payments for hire of containers on which tax ought to have been deducted at source under section 194I and at a rate much higher than the rate envisaged under section 194C. The assessee s contention that no demand can be raised under section 201 anyway since the recipient has discharged his tax liability on the income embedded in these payments was noted, and brushed as .....

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tation of goods and not mere rental of the containers. The Assessing Officer is aggrieved and is in appeal before us. 4. We have heard the rival contentions, perused the material on record and duly considered facts of the case in the light of the applicable legal position. 5. We find that the arrangement, for which the impugned payments are made, is an arrangement for transportation of goods from ship to the shore and vice versa, which, as the Assessing Officer himself puts it, unloading (and lo .....

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the container, it is size which determines how much 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 .....

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