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TMI Blog2017 (1) TMI 509X X X X Extracts X X X X X X X X Extracts X X X X ..... has erred in allowing the appeal of the assessee by nullifying the assessment u/s 147 of the Act. 3. The re-assessment u/s 147 of the Act was completed by the Assessing Officer when it was noticed that the assessee failed to deduct tax at source from the warehousing charges of Rs. 4,49,7161 - debited in the Profit and Loss Account. 4. The Central Board of Direct Taxes (CBDT) in its circular No.718 dated 22- 8-1995 has clarified that the t.erm "rent" as defined in Explanation (i) below section 194-1 means any payment by whatever name called, under any lease, tenancy or any other agreement or arrangement for the use of any building or land. 5. In view of the above clarification, the warehousing charges paid by the assessee ought to hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. The CIT(A) considered the validity of reopening of assessment and decided the issue in favour of the assessee. Since the issue on validity of reassessment was decided in favour of the assessee, the contention raised on merits was not adjudicated. The CIT(A) held that in the original assessment, since the Assessing Officer had considered the issue of TDS on warehousing charges paid and had taken a conscious decision not to make the disallowance, the reopening of assessment is only 'change of opinion'. The CIT(A) in holding so, primarily relied on the judgment of the Hon'ble Apex Court in the case of CIT vs Kelvinator of India Ltd (320 ITR 561)(SC) 5 Aggrieved, the revenue is in appeal before the Tribunal. The ld Sr DR Shri A Dhanaraj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ges of Rs. 4,49,716/-. You are required to furnish whether you have deducted tax as per the provisions of the I T Act and if not, the reasons thereof." 6.1 The assessee has filed his reply on 25.10.11 and stated that warehousing charges paid is not for the exercise of 'property rights' and therefore, it was not rent and the provisions u/s 194I will not be applicable. The relevant portion of the reply submitted by the assessee to the Assessing Officer during the course of original assessment proceedings, reads as follows: "Regarding your query as to the applicability of tax deduction u/s 194I may state that the section applies to 'Rent'. Warehousing charges does not come under the definition of rent contained in Explanation (i) to this se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Kelvinator of India Ltd (supra). 6.3 With regard to the contention of the ld DR that audit party can bring to notice of the Assessing Officer the mistake which has crept in the original assessment and such information by audit party constitute reason to believe for reopening the assessment cannot be accepted for the following reasons. In the instant case, the audit party has raised an issue not with regard to factual matrix; but on a legal issue. The Hon'ble Apex Court has categorically held in the case of Indian and Eastern News Paper Society vs CIT reported in 119 ITR 996(SC) that opinion of an internal audit party on a point of law does not constitute an 'information' for the purpose of reopening an assessment. This position was rei ..... X X X X Extracts X X X X X X X X Extracts X X X X
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