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
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 for required periods and storage of goods being incidental
to the activity of preservation. The
cooling of goods is controlled through mechanical process. The customer brings its packages for
preservation for a required period and takes away its packages after paying
cooling charges. The customer does not
hire the building, plant/machinery etc. in any manner and does not become a
tenant of any kind.
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 to the notice of the Assessing Officers under your charge.
F.No.275/59/2007-IT(B)