TMI Blog2017 (1) TMI 249X X X X Extracts X X X X X X X X Extracts X X X X ..... the conclusion drawn by CIT(A) to the effect that assessee cannot be construed as an ‘assessee in default’ within the meaning of Sec. 201(1) and 201(1A) of the Act is hereby upheld TDS u/s 194J - internet charges paid by the assessee on which no tax was deducted at source - Held that:- The parity of reasoning laid down by the Hon'ble Madras High Court in the case of Skycell Communications Ltd. [2001 (2) TMI 57 - MADRAS High Court] eld that the mobile telephone facilities provided by the cell phone companies to their subscribers for making/receiving calls etc. cannot be construed as ‘technical services’ and thus, it cannot be brought into the ambit of Sec. 194J of the Act. In the present case, when the assessee is availing internet services from the broadband service provider, it does not entail that such broadband service provider is making available a ‘technical service’ so as to require the assessee to deduct tax at source u/s 194J of the Act. Therefore, we hereby affirm the order of CIT(A) on this aspect also TDS u/s 194C OR 194I - payment made towards hiring of Forklift/Cranes - Held that:- . Factually speaking, the payments have been made to the contractors for providi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d for the sake of convenience and brevity. Appeal for Assessment Year 2008-09 is taken as the lead case to appreciate the controversy. ITA No.1515/MUM/2013 (A.Y 2008-09) 2. The captioned appeal by the Revenue is directed against the order of CIT(A)-14, Mumbai dated 23.11.2012, pertaining to the Assessment Year 2008-09, which in turn has arisen from the order passed by the Assessing Officer, Mumbai dated 30.3.2011 under section 201(1) and 201(1A) of the Income Tax Act, 1961 (in short the Act ). 3. In this appeal, Revenue has raised the following Grounds of appeal :- 1. The Ld. CIT(A) has erred on the facts and in circumstances of the case and in law in deleting the addition of short deduction determined on account of TDS payment made to CWC, CFS BPT, AAI u/s. 194I and without properly appreciating the factual and legal matrix of the case as clearly brought out in order u/s. 201(1)/201(1A) of the Income-tax Act, 1961. 2. The Ld. CIT(A) has erred on the facts and in circumstances of the case and in law in not appreciating the fact that the definition of rent in explanation (1) to section 194I is very wide in its ambit and includes within its sweep, payment by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Internet Charges and Fumigation charges u/s. 194J of the I.T. Act., without appreciating the factual and legal matrix of the case, as clearly brought out by the A.O. in his order u/s. 201(1) / 201(1A) of the Income-tax Act, 1961. 9. The learned CIT(A) has erred on the facts and circumstances in law in deleting the interest u/s 201(1A) of the IT Act, 1961 on the short deduction of tax determined by the AO as the tax determined has already been deleted by him and interest deletion is consequential to the quantum deletion for which further appeal has been recommended vide ground No.1 to 8. 4. Before we proceed to adjudicate the individual Grounds of appeal, the brief background can be summarized as follows. The respondent-assessee is a Partnership firm which is, inter-alia , engaged in the business of Customs House Agent (CHA) in accordance with the licensing conditions prescribed by the Customs Act, 1961. A survey action u/s 133A of the Act was carried out in the premises of assessee on 24.2.2011 in consequence of which orders u/s 201(1) and 201(1A) of the Act were passed by the Assessing Officer for the captioned Assessment Years. For Assessment Year 2008-09, Assessin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t (CHA), only acts as an intermediary and its services are consumed by the respective importer/exporter and that any arrangement reflected by impugned payments is to be viewed between such importer/exporter and the ultimate recipients of payments, namely CWC, CFS, BPT and AAI. In this background, CIT(A) held that assessee had no obligation to deduct tax at source u/s 194I of the Act, and therefore, it could not be treated as an assessee in default within the meaning of Sec. 201(1) and 201(1A) of the Act. 6. Against the aforesaid, the only plea brought out by the ld. DR is that the meaning of expression rent used in Sec. 194I of the Act is very wide and would include within its sweep payment by whatever name called, made in pursuance of any arrangement or agreement and, therefore, under the present circumstances the payment made by the assessee constituted rent which was liable for deduction of tax at source u/s 194I of the Act. 7. On the other hand, the learned representative for the assessee pointed out that the Department had taken similar action in a multiple set of cases involving Customs House Agents and that in a few of such cases, Tribunal has already adjudicated t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aning of Sec. 201(1) and 201(1A) of the Act as assessee had no obligation to deduct tax at source. 10. On this aspect of the controversy also, we find no error on the part of CIT(A) because the payments have been made by the assessee in the capacity of an intermediary between its client exporter/importer and the recipients who have conducted the inspection of goods so as to facilitate customs clearance. The reasoning adverted by the CIT(A) is similar to that considered by us while dealing with the payments made to CWC, CFS, BPT and AAI and, therefore, the conclusion drawn by CIT(A) to the effect that assessee cannot be construed as an assessee in default within the meaning of Sec. 201(1) and 201(1A) of the Act is hereby upheld. Thus, in Ground of appeal no. 3 also Revenue fails. 11. The issue raised by the Revenue in Ground of appeal no. 4 relates to internet charges paid by the assessee on which no tax was deducted at source. The fact-position is that such payments have been made by the assessee-firm to concerns providing broadband facilities. As per the Assessing Officer, payments have been made for obtaining a technical service and, therefore, tax was liable to be deduct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ducted tax at source in terms of Sec. 194C of the Act, whereas as per the Assessing Officer, tax was liable to be deducted u/s 194I of the Act treating the payments to be in the nature of rent . Accordingly, assessee was held to be an assessee in default for short deduction of tax at source u/s 201(1) and 201(1A) of the Act. In this context, the plea of the assessee was that the payments were made to the contractors for services of handling and transportation of cargo after the customs clearance. Assessee explained that it hired services of contractors for handling of the goods and in the course of providing such service, the contractors engaged the services of Cranes and Forklift operators. The assessee explained that it considered the services being provided by the contractors as a composite service for handling of goods on which the requisite tax was deducted at source in terms of Sec. 194C of the Act. It was pointed out that there was no contract entered by the assessee for hiring of Forklifts and Cranes specifically so as to hold that assessee had made any payments towards rental of Forklifts and Cranes. The CIT(A) has accepted the plea of assessee by noticing that the pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s contended by the Assessing Officer. Thus, on this aspect also Revenue fails. 17. The next issue raised by the Revenue by way of Ground of appeal no. 6 relates to payments made towards fumigation charges. In this context, Assessing Officer noticed that assessee had paid fumigation (pest control) charges on which tax was deducted u/s 194C of the Act whereas according to Assessing Officer, tax ought to have been deducted in terms of Sec. 194J of the Act considering such payments as fees for technical or professional services. CIT(A) upheld the stand of assessee by concluding that such services do not involve rendering of any professional or technical services and that deduction of tax at source u/s 194C of the Act was correctly done by the assessee. Against such a decision, Revenue is in appeal before us. 18. Before us, ld. DR has reiterated the stand of the Assessing Officer that the services are in the nature of technical or professional services, which would require deduction of tax at source u/s 194J of the Act. In our considered opinion, the plea raised by Revenue is without any basis. Factually speaking, it emerges from record that the persons entrusted with the job of f ..... 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