TaxTMI 
TaxTMI 
TaxTMI 
2019 (4) TMI 1431
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....nds raised in the appeal before him and deciding the issue on erroneous assumptions. 2.2 The Commissioner (Appeals) having noted that there is no tenancy by the Maharashtra Maritime Board nor it is meant to lease out any asset to the appellant and it is only a payment in the nature of 'toll' or 'fee' for providing the infrastructure facility and the measure for levy is merely based on loading and unloading weight and is collected for functioning, maintaining and running the Board and therefore to categorise it as a 'Rent' within the meaning of Section 194-I is totally misconceived. 2.3 The Commissioner (Appeals) also failed to appreciate that there are conflicting decisions on the attraction of tax withholding provisions based on 'payable and 'paid' and therefore in fiscal matters the interpretation which favours the assessee ought to have been followed [CIT v Vegetable Products Ltd 88 ITR 192 (SC)]. 2.4. The Commissioner (Appeals) also erred in not considering the fact that the nomenclature 'Wharfage' given by an assessee cannot determine the nature of payment and tax provisions cannot be applied on that basis without examining the true nature....
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.... to the location of the sellers and business needs the payment cannot be disallowed on technicalities. 5.3 The Commissioner (Appeals) ought to have noted that in so far as these purchases are concerned the employees are implied agents of the Appellant and therefore it falls under Sub rule (k) of Rule 6DD of the Income-tax Rules, 1962. 5.4 The observations of the Commissioner (Appeals) in para 15 of his order ignores realities and is only based on artificial reasons and therefore lacks judicious approach and practical wisdom and hence the conclusions. 4. At the outset, the learned Authorized Representative for the assessee pointed out that grounds of appeal No.1 and 2.1 are general in nature and do not require any adjudication. The ground of appeal No.2.2 is against non allowance of Wharfage charges. The grounds of appeal No.2.3 and 2.4 are not pressed. 5. Briefly, in the facts of the case, the assessee for the year under consideration had furnished return of income declaring total income of Rs. 64,740/-. The assessee was engaged in the business of providing port facilities for shipment of cargo, from its site near Jaigad in Ratnagiri District. The assessee had shown total jo....
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....to i.e. a landing place or pier where ships may tie up and load or unload; a shore or riverbank; a platform of timber, stone, concrete, etc. built parallel to the waterfront at a harbor or navigable river for the docking, loading and unloading of ships. The word 'Wharfage' was defined as use of Wharf and its facilities. The Assessing Officer noted that the word 'land' and 'Wharf' were not defined under the Act and he referred to general meaning of two expression and also relied on the ratio laid down by the Hon'ble Supreme Court in Anant Mills Co. Ltd. Vs. State of Gujrath & Others [AIR 1975 SC 1234, 1250 and held that land includes 'water'. He further held that Wharfage expenses paid to the Board were actually in the form of rent paid for using water front. Therefore, tax was to be deducted at source from the said payment under the provisions of section 194-I of the Act. 6. The explanation of assessee further was that Wharfage charges were shipping fees levied by MMB for the privilege of carrying out loading activities at the waterfront. It was levy imposed by the Board under Maharashtra Maritime Board Act, under the Notification issued by the Ministry of Shipping. The same w....
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....f had accepted that the Board does not provide any services to the assessee, then it was not fees. Further, as per dictionary meaning 'land' included water and since the assessee was charged for use of waterfront by the ships on which goods were loaded, then in fact payment was made for privilege to use waterfront and mooring of ships on which goods were loaded by the assessee. The said payment was held to be in the nature of rent. The CIT(A) observed that whether or not the ships belong to the assessee did not matter, ships were in the use of assessee. Further, the CIT(A) held that even if the assessee was under the Statutory obligation to pay Wharfage charges, the fact did not exclude the assessee from making TDS from the said payment. It also held that the Board was not covered under section 196 of the Act nor it was Government but a Board constituted by the Act of State Government. He stressed that the Boards and Corporations were not Government and had distinct status than the Government and hence, the disallowance made by Assessing Officer was upheld. 8. The assessee is in appeal against the order of CIT(A). 9. The learned Authorized Representative for the assessee pointed ....
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.... 23 (Bom), wherein the dispute was in the case of assessee distributing electricity to consumer. The Hon'ble Bombay High Court while deciding the wheeling and transmission charges levied for supply of electricity had held that these were not equated to rent or fees for technical services. Our attention was drawn to paras 37 to 39 of the said judgment and it was pointed out that reliance was placed on the ratio laid down by the Hon'ble High Court of Madras in CIT Vs. Singapore Airlines Ltd. (2013) 358 ITR 257 (Mad), wherein the meaning of rent was explained and it was held that the same must be understood in the context of which it is used. The issue was also case of toll rate and use of land. The learned Authorized Representative for the assessee stressed that when there was no possessory control over the water, which belong to the State, then there is no question of holding the said charge to be rent for use of water. He again pointed out that Wharfage charges were paid to the Board but water belongs to the State. He further stated that waterfront was used by the ships for docking and the assessee was not owner of ships. He stressed that in common parlance, the assessee could ....
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.... by P. Ramanatha Aiyyar & Justice Y.V. Chandrachud, wherein the 'land' was defined to include bed of the sea or river below high water mark, and also things attached to the earth or permanently fastened to anything attached to the earth. This was the definition under Major Port Trust Act in section 2(k). He then, referred to the definition of 'Wharf' as per the Oxford Dictionary i.e. a landing place or pier where ships may tie up and load or unload; a shore or riverbank; a platform of timber, stone, concrete, etc. built parallel to the waterfront at a harbor or navigable river for the docking, loading and unloading of ships. The word Wharfage was defined as payment made for use of Wharf and it facilities. 12. In order to understanding the nature of levy, we may refer to the relevant provisions of Maharashtra Maritime Board Act, 1997. This is an Act to make provision for constitution of Maritime Board for minor ports in the State of Maharashtra and to vest the administrative control and management of such ports, in that Board and to provide for matters connected therewith and incidental thereto. The Government of Maharashtra thought it fit to make law for the purpose of aforesaid a....
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....er section 42 of the said Act, State Government is empowered that whenever it considers necessary in the public interest so to do, it may, by order in writing, direct the Board to cancel any of the scales in force or modify the same within such period as it may specify. Sub-section (3) to section 43 provides that when in pursuance of this section any of the scales has been cancelled or modified, such cancellation or modification shall be published by the Government in the Official Gazette and shall thereupon have effect accordingly. 16. Reading the provisions of the said Act, it becomes clear that the Maharashtra Maritime Board which is no doubt a creation of the Stature, but levies are as prescribed by the State Government, wherein the Board may prescribe charges, taxes, fees but the same have to be approved by the State Government. Section 41 of the said Act very clearly provides that every scale of rates and every statement of conditions framed by the Board under the provisions of Chapter shall be submitted to the Government for sanction and shall have effect when so sanctioned and published by the Board in the Official Gazette. The Government further has power in public intere....
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.... tax at source out of such payments. However, if we look at the nature of charges paid, it is levy imposed by State Government through Board. 19. Further, the case of Revenue is that 'land' includes water and since Wharfage charges are paid for utilizing water space, the assessee was obliged to deduct tax out of such payments. The CIT(A) has held that where the assessee was paying charges for use of waterfront, then again there was obligation on the assessee to deduct tax at source. But the main issue which has escaped the attention of both the lower authorities is that the Board do not own water or the waterfront. The waterfront belongs to the State. The Board has levied certain charges which have to be statutorily paid by the assessee as is clear from the terms of the Act and any discharge of this obligation which is payment under the Act of State, such a levy cannot be said to be a contractual levy. The charge which the assessee was obliged to pay was the rate fixed by Board which in turn, was State entity and the Board prescribes the rates as per regulations and the approvals of the State. Even the receipt of Wharfage charges paid mentions the charge in respect of merchant veh....
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....y thereafter that the aircraft is said to be parked till it resumes it flight. The Hon'ble High Court referred to arguments of senior Counsel and an example was drawn to use of a toll road (instead of highway) and it was mentioned that if use of a toll road could be characterized as use of land, it would be an extreme view if it was held that toll to be paid for use of a toll road would be subject to deduction of tax at source only, because it could also be characterized as rent for use of land. The Hon'ble High Court then referred to the decision of Hon'ble Supreme Court in the case of Japan Airlines Co. Ltd. Vs. CIT and CIT Vs. Singapore Airlines Ltd. (2015) 377 ITR 372 (SC), wherein the meaning of 'rent' was explained to be understood in the context of which they are used. It was then observed by the Hon'ble High Court that the methodology for determining transmission tariff could not be determined in a mechanical manner as if the charge was only for the use of State transmission utility. It was thus, held that there was no merit in the case of Revenue that wheeling and transmission charges assume the character of 'rent'. 21. Drawing strength from the said decision of the H....
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....o.2.3 and 2.4 are not pressed. The ground of appeal No.3.1 is argumentative in nature and ground of appeal No.3.2 and 3.3 are general and does not need any deliberation. 25. The ground of appeal No.3.4 and ground of appeal No.4.1 to 4.3 are issues raised against the non allowance of foreign travel and salary expenses of employees of sister concern deputed to assessee. The assessee claimed that it was reimbursement of expenses of employees of flagship company deputed to it. The Assessing Officer asked the assessee to furnish various details of their employment and appointment, etc. and in the absence of the same, disallowed salary of Rs. 60,47,844/- and traveling expenses of Rs. 9,88,234/- of said persons. The CIT(A) upheld the order of Assessing Officer. 26. The assessee is in appeal against the order of CIT(A). 27. On hearing both the parties and on perusal of record, we find that the assessee had claimed expenditure on account of salary expenditure of employees of sister concern, who were deputed to the assessee in order to facilitate it in carrying on its business and also on account of travel expenses of such employees. The flagship company of the group was M/s. Chowgule Por....