Hindustan Coca-Cola Bev. (P.) Ltd. vs Commissioner of Income Tax

B.C. Patel, C.J.—Against the order made by the income tax Appellate Tribunal (Delhi Bench "C" Delhi), in ITA Nos. 226 and 227 (Delhi) of 2002 for the financial years 1998-99 and 1999-2000, this appeal is preferred by the assessee, inter alia, contending that in view of the provisions contained in sections 194C and 194-I, the amount paid by the assessee ought to be considered as warehousing service charges and not as rent. It is also contended that when the other party has paid the amount of tax which the assessee is liable to pay, then, in view of the Revenue''s own circular, the Assessing Officer and the Tribunal ought not to have held that the assessee is liable to pay. The learned counsel for the appellant has argued that though the Circular was not cited, but the relevant facts were already pointed out to the Tribunal and it was for the Tribunal to consider it in proper perspective. These questions are required to be examined from the facts of the case. On 30-3-2001, order was made u/s 201(1) and 201(1A) of the income tax Act, 1961, by the Dy. Commissioner of income tax. The Dy. Commissioner issued a show-cause notice pointing out as to why on the payment made to the Pradeep Oil Corporation (POC), TDS required to be deducted as per section 194-I should not be levied @ 20% notwithstanding surcharge. After considering the submissions and examining the record, the Dy. Commissioner arrived at a conclusion which reads as under :--

From the above facts, it is seen that even though the agreement is for providing the warehousing services but it is the composite nature of the arrangement that needs to be examined. In the assessee case as is evident from the above facts that the composite arrangement is in essence the arrangement for taking the premises on rent. Hence, the payment is covered u/s 194-I and tax needs to be deducted from payment thereof as per section 194I.

Accordingly, the Dy. Commissioner made an order for short deduction of tax and interest u/s 201(1A) and directed that the demand notice be issued. Similar notice was issued for another year, i.e., the next financial year. Against the order made by the CIT (Appeals), the Tribunal was approached and on appreciation of material placed before it, the Tribunal had arrived at a conclusion which reads as under :--

We have no hesitation in saying that none of the aforesaid facts exist in the present appeals before us. In our opinion, the agreement between the parties is only for the use of the land and warehouse and as already noted by us as a fact no services of any type are provided by the warehouse .As rightly contended by the learned Department Representative, the decision of the Bombay Bench (supra) squarely applies, but in favour of the Revenue.

The learned counsel drew our attention to the circular at page No. 20 being Circular No. 275/201/95-IT(B), dated 29-1-1997. However, it was fairly stated before the Court that this was not pointed out to any of the authorities and the question is being argued on the basis of the Circular before us for the first time. We are of the opinion that the Tribunal has disposed of the appeal on appreciation of material placed before it and its findings are purely based on facts. As such, in our opinion, no substantial question of law arises.

So far as the bona fide belief or reasonable cause is concerned, as referred in para 28 and onwards of the appeal, we are of the opinion that possibly, this finding is recorded as the arguments were advanced before the Tribunal otherwise, the Tribunal was not required to deal with these aspects and therefore, in this matter it is of no consequence. The appeal and the pending CMs are dismissed.