TaxTMI 
TaxTMI 
2018 (7) TMI 1806
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.... appeal along with Form 36:- 1. For that the Commissioner of Income Tax (Appeals) erred in holding that wharfage charges paid by the appellant to Kolkata Port Trust was in the nature of rental payments made for usage of land and tax was required to be deducted at source on such payment. The said finding is without any basis and illegal. 2. For that the Commissioner of Income Tax (Appeals) erred in not appreciating the fact that there is no fixed platform or space given by the Kolkata Port Trust to the appellant and also did not appreciate the fact that the appellant was in addition to wharfage charges separately paying rental charges for usage of land and for which TDS was deducted under section 1941 of the Act. 3. For that the Commissioner of Income Tax (Appeals) erred in not appreciating the fact that the wharfage charges were paid for various facilities provided by Kolkata Port Trust and was not for the purpose of usage of any particular space or platform and erred in not applying the principles enunciated in Circular No. 1 of 2008 issued b CBDT wherein in relation to cold storage it has been provided that when there is no right to use of any demarcated space provisions of....
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....1(1A) of the Act against the assessee for non deduction of TDS on wharfage charges paid to KPT and held that the assessee is in default and charged interest by an order dt. 31-03-2014 passed u/s. 201(1)/201(1) of the Act. As pointed out by the ld. AR, we find that this Tribunal in the case of M/s. Gourishankar Bihani supra had an occasion to decide an issue which is identical in the facts and circumstances of the present case involving additional ground as well as main grounds of appeal. In this regard, we may usefully reproduce the relevant portion at para's 2 to 7 of the order dt. 18-12-2014 in the case of M/s Gourishankar Bihari supra:- 2. Only issue in this appeal of assessee is against the order of CIT(A), confirming disallowance of expenditure for non-deduction of TDS u/s. 194-I of the act, by invoking provisions of section 40(a)(ia) of the act, on rent paid to Kolkata Port Trust (KPT). 3. Brief facts are that the assessee has claimed expenditure on account of rent paid to KPT at Rs. 54, 21, 256/-. The assessee has not deducted any tax at source on payment of this rent to KPT. The AO required the assessee to explain as to why expenditure claimed on account of payment of ....
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....isputed that the income of Kolkata Port Trust is not chargeable to tax under the provisions of the Act. Section 11 under which Kolkata Port Trust was assessed, inter alia, for the assessment year 2007-08 falls under Chapter III of the Act for "incomes which do not form part of total income'. We find that when income is not to be included in the total income, it is without a doubt, not chargeable under the provisions of the Act. In view of the above, we here referred to Section 2(45) of the Act, which defines "total income" and to mean the total amount of income referred to in section 5, computed in the manner laid down in the Act. Section 4 is the charging section and provides for levy of income tax on the total income, whereas, Section 5 lays down the scope of total income. Both sub-sections (1) and (2) of Section 5 of the Act start with the expression "subject to the provisions of this Act" and then go on to say what total income includes. Thus, where any income is not to be included in the total income, it is clearly not chargeable under the provisions of the Act. We then went through the provisions of section 194-I, which provides for deduction of tax from rent has to be read i....
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....t paid by the assessee to KPT. This is because such rent was not to be included in the taxable total income of the KPT and was, therefore, not chargeable under the provisions of the Act. As argued by Ld. Senior Advocate that in the instant case no tax was at all payable by KPT for AY 2007-08. U/s 191 of the Act the person making the payment can be deemed to be an assessee in default within the meaning of sub-section (1) of section 201 only where the deductee/payee has also failed to pay such tax directly. This issue has been considered by Hon'ble Allahabad High Court in the case of Jagran Prakashan Ltd. V. DCIT (TDS) (2012) 345 ITR 288 (All) and by ITAT Kolkata bench in the case of Ramakrishna Vedanta Math v. ITO (2013) 55 SOT 417 (Kol). In the instant case, KPT was not required to pay any tax and in turn the assessee cannot be treated to be in default within the meaning of section 201(1). Accordingly, we are of the view that no disallowance ought to have been made under section 40(a)(ia) of the Act. But, Ld. Senior DR, Shri Amitava Roy relied on this Tribunal's order of 'B' Bench in ITA No. 1091/Kol/2012 dated 14-10-2014 for the AY 2009-10 in the case of ACIT v. Hitech Logisti....
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.... are of the view that no disallowance ought to have been made under section 40(a)(ia) of the Act. 10. It is clear from the aforementioned order that this Tribunal directed the DIT(Exemption) to grant registration u/s. 12A of the Act w 01-04-2005 vide its order dt. 8-6-2007. The A under consideration in the aforementioned case was 2007-08 and the Coordinate Bench found there was no demand raised and granted refund of Rs. 91. 61 crores in the said A 2007-08. The ld. DR did not dispute the same. Therefore, it is clear from the record that the "KPT" was assessed in the status of Charitable Institution in pursuance of order of this Tribunal and its income is exempt in terms of section 11 of the Act having registration u/s. 12A of the Act. In view of above discussion, we find force in the submissions of the ld R that the 'KPT' is a pubic charitable trust and no TDS is liable to be deducted at source by the assessee and the additional ground raised by the assessee is allowed. 11 urther, the Ld R submits that, whether the wharfage charges paid by the assessee is in the nature of rent for use of dock in the "KPT". In this connection, he refers to the facts relating to wharfage charges and....
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....1 to 15-02-2011 for unloading of the said cargo and it is not a rent attracting the provisions of section 194I of the Act as there was no permanent and continuous usage of said platform. He referred to page-3 of the paper book and argued that the KPT allotted another berth no. 00105 for vessel by name M Sunny Dream, which was arrived on 07-01-2011 and departed on 08- 01-2011 and unloaded a quantity of 6242. 60 of paraexyne and the KPT charged Rs. 5, 26, 749/- @ Rs. 76. 50. He argued that there is no permanent allotment of berths and it changes from time to time and the rates also vary from cargo to cargo. The ld. AR further argues when there is no permanent allotment of berth demarcating the space and no fixed rate and the payments made thereon cannot be construed as rent as viewed by the AO and CIT-A. 14. The ld. AR further refers to clarification issued by the CBDT vide Circular No. 1/2008 dt. 10-01-08, placed at page-135 of the paper book and submitted that the CBDT clarified the applicability of provisions of section 194I of the Act for the payments by the customer on account of cooling charges to the cold storage owners. He further argued that the CBDT taken into consideratio....
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....be considered as rent attracting the provisions of section 194I of the Act. 16. On the other hand, the ld. DR relied on the orders of AO & CIT-A. 17. Heard rival submissions and perused the material on record. We may refer to the relevant provisions contained in the Major Ports Act 1963 explaining the powers of Board of Port Trust, which reads as under: - 35. Power of Board to execute works and provide appliances. - (1) A Board may execute such works within or without the limits of the port and provide such appliances as it may deem necessary or expedient. (2) Such works and appliances may include- (a) wharves, quays, docks, stages, jetties, piers and other works within the port or port approaches or on the foreshore of the port or port approaches, with all such convenient arches, drains, landing places, stairs, fences, roads, railways, bridges, tunnels and approaches and buildings required for the residence of the employees of the Board as the Board may consider necessary; (b) buses, railways, locomotives, rolling stock, sheds, hotels, warehouses and other accommodation for passengers aid goods and other appliances for carrying passengers and for conveying, receivin....
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....ing vessels. (2) As from the date of the publication of such notification for the third time, it shall be lawful for the Board, from time to time, when there is room at such dock, berth, wharf, quay, stage, jetty or pier, to order to come alongside of such dock, berth, wharf, quay, stage, jetty or pier for the purpose of landing and shipping goods or passengers or for landing or for shipping the same, any sea-going vessel within the port or port approaches which has not commenced to discharge goods or passengers, or which being about to take in goods or passengers, has not commenced to do so : Provided that before making such order, the Board shall have regard, as far as possible, to the convenience of such vessel and of the shippers, in respect of the use of any particular dock berth, wharf, quay, stage, jetty or pier: Provided further that if the Board is not the conservator of the port, the Board shall not itself make the order as aforesaid but shall require the conservator of the port, or other person exercising the rights, powers, and authorities of the conservator of the port, to snake such order. 18. As pointed out by the ld. AR that the section 35 of Major Ports Ac....
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....ncome Tax Department, Govt. of India clarified the applicability of provisions of section 194I, which reads as under:- Clarification regarding applicability of provisions of Section 194-I to payments made by the customers on account of cooling charges to the cold storage owners CIRCULAR NO. 1/2008, DATED 10-1-2008 Representations have been received from various quarters regarding applicability of the provisions of Section 194-I to cooling charges paid by the various customers to the owners of cold storages. It has been represented that the cold storage owners provide a composite service, which involves preservation of essential food items including perishable goods at various temperatures suitable for specific food items required periods and storage of goods being incidental to the activity of preservation. The cooling of building, plant/machinery etc. in any manner and does not become a tenant of any kind. 2. The matter has been eX4lmined. The main function of the cold storage is to preserve perishable goods by means of a mechanical process, and storage of such goods is only incidental in nature. The customer is also not given any right to use any demarcated space/place ....
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....under this provision than what is normally known in common parlance. In the first instance, it means any payment which is made under any lease, sub-lease, tenancy. Once the payment is made under lease, sub-lease or tenancy, the nomenclature which is given is inconsequential. Such payment under lease, sub-lease and/or tenancy would be treated as 'rent'. In the second place, such a payment made even under any other 'agreement or arrangement for the use of any land or any building' would also be treated as 'rent'. Whether or not such building is owned by the payee is not relevant. The expressions 'any payment', by whatever name called and 'any other agreement or arrangement' have the widest import. Likewise, payment made for the 'use of any land or any building' widens the scope of the proviso. 15. In the present case, we find that these Airlines are allowed to land and take-off their Aircrafts at IGIA for which landing fee is charged. Likewise, they are allowed to park their Aircrafts at IGIA for which parking fee is charged. It is done under an agreement and/or arrangement with AAI. The moot question is as to whether landing and ta....
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....vinced that the charges which are fixed by the AAI for landing and takeoff services as well as for parking of aircrafts are not for the 'use of the land'. That would be too simplistic an approach, ignoring other relevant details which would amply demonstrate that these charges are for services and facilities offered in connection with the aircraft operation at the airport. To point out at the outset, these services include providing of air traffic services, ground safety services, aeronautical communication facilities, installation and maintenance of navigational aids and meteorological services at the airport. 19. Before the High Court of Madras, the assessee had filed the material in the form of Airport Economics Manual, the International Airports Transport Agreement (IATA) to the contracting states on charges for airport and air navigation services. This material which was shown for our perusal as well, would candidly show that there are various international protocols which mandate all such authorities manning and managing these airports to construct the airports of desired standards which are stipulated in the protocols. The services which are required to be provided....
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.... emphasised the technological aspects of these runways in some detail to highlight the precision with which designing and engineering goes into making these runways to be fool proof for safety purposes. The purpose is to show that the AAI is providing all these facilities for landing and take-off of an aircraft and in this whole process, 'use of the land' pails into insignificance. What is important is that the charges payable are for providing of these facilities. 21. In fact, the charges which are taken from the aircrafts for landing and even for parking of the aircrafts are not dependent upon the use of the land. On the contrary, the protocol prescribes a detailed methodology of fixing these charges. Chapter 4 of Airport Economics Manual issued by International Civil Aviation Organization deals with 'Determine the cost basis for charging purposes'. The charges on air-traffic which includes Landing Charges, Lighting Charges, Approach and Aerodrome Control Charges, Aircraft Parking Charges, Aerobridge Charges, Hangar Charges, Passenger Service Charges, Cargo Charges etc. are to be fixed applying the formulae stated therein. A reading thereof would clearly point o....