TaxTMI 
TaxTMI 
2006 (10) TMI 259
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....s have been raised by the assessee : "1. That the CIT (Appeals) erred on facts and in law in confirming the action of the Assessing Officer in treating the appellant as an assessee in default under section 201(1) of the Act for alleged short deduction of tax at source from payment made to Clearing and Forwarding Agents ('C&FA') during the relevant financial year. 2. That the CIT (Appeals) erred on facts and in law in confirming the action of the Assessing Officer holding that the payments made to C&FA were for rendering managerial services and, therefore, tax was required to be deducted therefrom under section 194J instead of section 194C of the Act. 3. That the CIT (Appeals) erred on facts and in law in not holding that interest u....
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....g the assessee as an assessee in default has been confirmed by CIT (Appeals). The crucial issue to be decided is as to whether the services rendered by the C&F Agents were in the nature of "work" in terms of section 194C or "managerial services" in terms of section 194J and how the tax should have been deducted on such payments under the provisions of the Income-tax Act, 1961. 3. We have considered the rival contentions carefully gone through the orders of the authorities below as well as provisions of the law contained under sections 194C and 194J of the Income-tax Act, 1961. In the instant case, from the record we found that the assessee had entered into clearing and forwarding agency agreements with various persons. On the payments ma....
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....determined and notified to such C&F Agents by the assessee. The C&F Agents was required to store the goods by the assessee with all care, prudence and responsibility so that such goods are free from risks as theft, pilferage and damages. He shall have full responsibility in respect of clearing consignment, loading/unloading, carriage, cartage to and for the warehouse and godown of the agents, staking or storing. He shall put such mark or marks in the warehouse to distinguish the goods of the assessee from the goods that such agents may receive from any other person. He shall indemnify the assessee against any loss in respect of the goods in its custody. Furthermore, the C&F Agents undertake to deliver the goods or consignment to such person....
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....s, shall, at the time of credit of such sum to the account of the payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct an amount of equal to five per cent of such sum as income-tax on income comprised therein. Explanation (a) and (b) to section 194J of the Act defines "professional services" and "fees for technical services" respectively. The same reads as under : "Explanation.-for the purposes of this section :- (a )"professional services" means services rendered by a person in the course of carrying on legal, medical, engineering or architectural professional or the profession of accountancy or technical consultancy or interior decoration or advertising o....