An issue was raised before the CBDT to clarify the applicability of TDS on cooling charged paid to cold storage owners.

CBDT has issued a Circular No. 1/2008 Dated 10-1-2008 and clarified that:

"Since the arrangement between the customers and cold storage owners are basically contractual in nature, the provision of section 194-C will be applicable to the amounts paid as cooling charges by the customers of the cold storage."

Therefore, TDS under section 194-I shall  not be deducted. 

(Income Tax Chapter - XVII - B - COLLECTION AND RECOVERY OF TAX - B. - Deduction at source)

Contractual service characterization: TDS on cooling charges governed by section 194C, not section 194I, per CBDT circular. The CBDT Circular No. 1/2008 states that cooling charges paid by customers to cold storage owners are contractual service payments and thus the TDS rules applicable to contracts (section 194-C) apply; TDS under section 194-I is not to be deducted.