COMMISSIONER OF INCOME TAX vs. H.C.FRUITS LTD.

O/TAXAP/460/2005 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL NO. 460 of 2005

FOR APPROVAL AND SIGNATURE: HONOURABLE MR.JUSTICE KS JHAVERI and HONOURABLE MR.JUSTICE K.J.THAKER ================================================================ 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the Constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ================================================================ COMMISSIONER OF INCOME TAX....Appellant(s) Versus H.C.FRUITS LTD.....Opponent(s) ================================================================ Appearance: MRS MAUNA M BHATT, ADVOCATE for the Appellant(s) No. 1 MR HM TALATI, ADVOCATE for the Opponent(s) No. 1 MR TEJ SHAH, ADVOCATE for the Opponent(s) No. 1 ================================================================ CORAM: HONOURABLE MR.JUSTICE KS JHAVERI and HONOURABLE MR.JUSTICE K.J.THAKER Date : 11/11/2014 ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE KS JHAVERI) Page 1 of 4

O/TAXAP/460/2005 JUDGMENT 1. By way of this appeal, the appellant- Revenue has challenged the order of the ITAT, Ahmedabad (‘the Tribunal’ for short), Dated : 19.01.2004, rendered in ITA No. 985/Ahd/02 for the Assessment Year-1996-97. 2. The brief facts of the case are that the respondent-assessee incurred certain expenses towards the payment of rent of cold storage during the relevant year. Therefore, the Assessing Officer held that, since, such payment was liable for TDS u/s 194 of the Act and as the respondent-assessee had failed to do so, he had committed the breach of the said section. Being aggrieved by the same, the respondent-assessee preferred appeal before the CIT(A), which partly allowed the appeal filed by the respondent- assessee. Against the order of the CIT(A), the appellant-revenue preferred an appeal before the Tribunal, wherein, the Tribunal passed the impugned order. Hence, the appellant-revenue preferred the present appeal, raising the following substantial question of law; “Whether on the facts and in the circumstances of the case, the Tribunal is justified in law in holding that the cold storage facility utilized by the assessee is a plant, and hence, provisions of section 194.I of the Income-tax

Act,

1961

are

not applicable?” Page 2 of 4

O/TAXAP/460/2005 JUDGMENT 3. At the outset, learned Counsel for the parties invited the attention of this Court to a decision of this Court in Tax Appeal No. 76 of 2004 and the allied matters, wherein, this Court by relying on a Government Circular bearing No.1/2008, Dated : 10.01.2008, whereby, the Government has clarified the position with regard to applicability of the provisions of Section 194-I of the Income Tax Axt, 1961, to the payment made by the assessees on account of cooling charges to the cold storage owners, dismissed the said group of appeals filed by appellant-Revenue. The relevant portion of the Circular reads as under; “2. The matter has been examined. 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 or the machinery of the cold store and thus does not become a tenant. Therefore, the provision of 194-I is not applicable to the cooling charges paid by the customers of the cold storage. 3. However, 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. This may be brought Page 3 of 4

O/TAXAP/460/2005 JUDGMENT to the notice of the Assessing Officers under your charge.” 4. In above view of the matter, since, the issue is squarely covered by the decision of this Court, as above, we refrain ourselves from making any detailed observations and dismiss the appeal. 5. In the result, the appeal fails and is dismissed. No order as to costs. (K.S.JHAVERI, J.) (K.J.THAKER, J) UMESH Page 4 of 4