Gujarat Ambuja Exports Ltd., Ahmedabad V. The DCIT.TDS Circle, Ahmedabad

CO 183/AHD/2013

• Counselvise Citation: [2016] 123 COUNSELVISE.COM (IT) 1856 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 2 month(s) 23 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 22-01-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 07-01-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 29-10-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Question of law; Non-deduction of tax
• Section: 133A; 194C

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER ./ ITA NOS. 1542 TO 1545/AHD/2013 & CO NOS. 183 TO 186/AHD/2013 / ASSESSMENT YEAR: 2009-10 TO 2012-13 THE DY. COMMISSIONER OF INCOME-TAX, TDS CIRCLE, AHMEDABAD .. APPELLANT VS GUJARAT AMBUJA EXPORTS LTD, AMBUJA TOWER, OPP. MEMNAGAR FIRE STATION, POST NAVJIVAN, AHMEDABAD .. RESPONDENT/ PAN : AAACG 3980 A CROSS-OBJECTOR REVENUE BY : SHRI R.I. PATEL,CIT-DR WITH SHRI DINESH SINGH, SR. DR ASSESSEE(S) BY : SHRI S.N. SOPARKAR, AR / DATE OF HEARING 07/01/2016 /DATE OF PRONOUNCEMENT 22/01/2016 / O R D E R PER BENCH : THESE APPEALS FILED BY THE REVENUE AND THE CORRESP ONDING CROSS- OBJECTIONS THEREOF FILED BY THE ASSESSEE ARE DIRECT ED AGAINST A CONSOLIDATED ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-X XI, AHMEDABAD, DATED 04.03.2013 FOR ASSESSMENT YEARS 2009-10 TO 20 12-13. SINCE ALL THE APPEALS FILED BY REVENUE AND CROSS-OBJECTIONS THERE OF FILED BY THE ITA NOS. 1542-1545 & CO NO.183-186/AHD/2013 ASSESSEE : GUJARAT AMBUJA EXPORTS LTD AY : 2009-10 TO 2012-13 2 ASSESSEE PERTAIN TO SIMILAR ISSUE, SO THESE ARE BEI NG DISPOSED OF BY THIS COMMON ORDER FOR SAKE OF CONVENIENCE. 2. AT THE OUTSET, LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT HE IS NOT PRESSING CROSS-OBJECTIONS; HENCE, ALL THE CROSS- OBJECTIONS FILED BY THE ASSESSEE ARE DISMISSED BEIN G NOT PRESSED. 3. COMING TO THE REVENUES APPEALS, FOR THE FACILIT Y OF REFERENCE, WE TAKE THE LEAD CASE AS ITA NO. 1542/AHD/2013 FOR AY 2009-10. THE REVENUE HAS RAISED FOLLOWING GROUNDS OF APPEAL IN I TA NO. 1542/AHD/2013 FOR ASSESSMENT YEAR 2009-10:- 1. THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW BE CAUSE WHILE PASSING THE ORDER HE HAS COMPLETELY VIOLATED THE RU LE 46(A) HENCE HIS ORDER IS NULL AND VOID, 2. THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN DELETING THE ADDITIONS MADE U/S. 206C(6)/206C(7) OF THE I.T. ACT ON NON COLLECTION OF TCS OF RS. 8,16,68,350/- ON SALE OF D OC (DE-OILED CAKE), MAIZE HUSK AND COTTON WASTE INSPITE OF THE F ACT THAT THOSE ITEMS WERE SCRAP AS DEFINED U/S 206(C). 3. THE LD. CIT (A) HAS ERRED ON FACTS AND IN LAW I N HOLDING THAT THE ABOVE ITEMS WERE 'BY PRODUCTS AND THERE BY FAILED T O APPRECIATE THAT EVEN BY PRODUCTS LIKE MOLASSES AND BAGASSES HA VE BEEN HELD AS SCRAP WITHIN THE DEFINITION OF SCRAP U/S 206(C) AS THE DEFINITION IS OF WIDER IMPORT TO COVER EVEN BY PRODUCT WITHIN IT' S SPHERE. 4. THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN DELETING THE ADDITION MADE U/S 206C(6) / 206C(7) BY WRONGLY RELY ING ON THE I.T.A.T DECISION IN THE CASE OF NAVIN FLOURINE INDU STRIES VS. A.C.I.T, TDS CIRCLE IN I.T.A. NO. 1213 & 1214/AHD/2010 BECAU SE THE FACTS OF THE ASSESSEE'S CASE WERE DISTINGUISHABLE AND ALS O NO APPEAL WAS FILED AGAINST THAT CASE DUE TO MONETARY LIMIT AND T HE DECISION CANNOT BE FOLLOWED AS PRECEDENT. ITA NOS. 1542-1545 & CO NO.183-186/AHD/2013 ASSESSEE : GUJARAT AMBUJA EXPORTS LTD AY : 2009-10 TO 2012-13 3 5. THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW I N DELETING THE ADDITIONS MADE U/S 201(1)/201(1A) OF THE I.T. ACT O N SHORT DEDUCTION OF TAX AT SOURCE OF RS. 1,56,24,221/- BY APPLYING PROVISIONS OF SECTION 194C OF THE I.T. ACT INSTEAD OF 194J OF THE I.T. ACT ON PAYMENTS OF 'PORT CHARGES' MADE TO C&F AGENT S. 6. THE LD. CIT (A) HAS ERRED ON FACTS AND IN LAW IN OVERLOOKING THE FACT THAT THE SERVICES OF C&F AGENTS WERE HIGHL Y PROFESSIONAL SERVICES REQUIRING SPECIALIZED KNOWLEDGE ABOUT CUST OMS ACT AND OTHER LAWS HENCE WAS FALLS WITHIN THE PARAMETER OF SECTION 194J. 7. THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW I N OVERLOOKING THE HEAD NOTE OF SEC. 194J WHICH CLEARLY SPEAKS THAT TD S PROVISION U/S 194J ARE APPLICABLE IN RESPECT OF FEES FOR PROFESSI ONAL SERVICES AND THEREFORE THE PORT CHARGES BEING PROFESSIONAL SERVI CES WERE COVERED BY SECTION 194J. 8. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LD. CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFF ICER. 9. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER AN Y GROUND OR ADD A NEW GROUND, WHICH MAY BE NECESSARY. 10. IT IS THEREFORE, PRAYED THAT THE ORDER OF 1HE LD. CLT(A) MAY BE SET ASIDE AND THAT OF THE ASSESSING OFFICER MAY BE RESTORED TO THE ABOVE FACT. 4. THE BRIEF FACTS OF THE CASE AS CULLED OUT FROM THE RECORDS ARE THAT THE ASSESSEE-COMPANY IS STATED TO BE A MANUFACTURER, DE ALING WITH AGRO WASTE PRODUCTS OPERATING MAINLY IN SOLVENT EXTRACTI ON, EDIBLE OIL REFINING, COTTON SPINNING AND MANUFACTURER OF MAIZE, MAIZE ST ARCH AND DERIVATIVES. A SURVEY U/S 133A WAS CARRIED OUT IN THE HEAD OFFICE OF THE ASSESSEE IN AHMEDABAD ON 09.10.2011. IT WAS GATHER ED DURING THE COURSE OF SURVEY THAT THE ASSESSEE-COMPANY HAS MADE SALES OF VARIOUS ITEMS SUCH AS COTTON WASTE, MAIZE HUSK AND DE-OILED CAKE ('DOC' FOR SHORT), WHICH IN THE OPINION OF THE ASSESSING OFFICER WERE 'SCRAP' WITHIN THE ITA NOS. 1542-1545 & CO NO.183-186/AHD/2013 ASSESSEE : GUJARAT AMBUJA EXPORTS LTD AY : 2009-10 TO 2012-13 4 MEANING OF SECTION 206C OF INCOME TAX ACT. THE ASSE SSING OFFICER OBSERVED THAT NO TCS WAS MADE AS PER PROVISIONS OF SECTION 206C NOR ANY DECLARATION IN FORM NO. 27C WAS FILED ON OR BEF ORE 7 TH OF THE MONTH FOLLOWING THE MONTHS IN WHICH SALES OF THESE SCRAP ITEMS TOOK PLACE. THE BREAK-UP OF SALES MADE FOR THE FOUR ASSESSMENT YEAR S AND UPTO THE DATE OF SURVEY IS AS UNDER: (RS. CRORES) UNIT TYPE OF SCRAP ASST. YEAR 2009-10 ASST. YEAR 2010-11 ASST. YEAR 2011 -12 ASST, YEAR 2012-13 TOTAL BIO HIMMATNAGAR MAIZE HUSK 8.05 11.24 7.47 2.13 28.89 BIO UTTARANCHAL MAIZE HUSK 0.99 4.64 6.48 2.58 14.6 COTSPIN HIMMATNAGAR COTTON WASTE 20.56 27.44 30.69 11.26 89.95 DOC ALL UNITS DOC 533.63 303.69 413.36 65.54 1316.2 2 TOTAL 566.23 347.01 458.20 81.51 1452.75 4.1 DURING THE COURSE OF SURVEY, STATEMENT OF SHRI N. GIRIDHAR, CFO WAS ALSO RECORDED, INTER ALIA, HE SUBMITTED THAT TH E ASSESSEE-COMPANY HAS NEITHER COLLECTED TCS ON SALE OF COTTON WASTE, MAIZ E HUSK AND DOC. IT WAS FURTHER SUBMITTED THAT NO DECLARATION IN FORM N O. 27C WAS SUBMITTED TO THE OFFICE OF CHIEF COMMISSIONER OF IN COME-TAX, AHMEDABAD AS PER PROVISIONS OF SECTION 206C(1B) OF THE ACT. BEFORE THE ASSESSING OFFICER, VARIOUS CONTENTIONS WERE RAISED ON BEHALF OF THE ASSESSEE. THE STAND OF THE ASSESSEE HAS BEEN THAT THEY ARE MANUFACTURER AND EXPORTER DEALING WITH AGRO BASED PRODUCTS. IT W AS SUBMITTED THAT THE MANUFACTURING PROCESS WITH RESPECT TO SOLVENT EXTRA CTION AND REFINERY DIVISION, COTTON YARN DIVISION, BIO-CHEMICAL DIVISI ON TO EMPHASIZE A POINT ITA NOS. 1542-1545 & CO NO.183-186/AHD/2013 ASSESSEE : GUJARAT AMBUJA EXPORTS LTD AY : 2009-10 TO 2012-13 5 THAT THE DOC COTTON WASTE AND MAIZE HUSK COULD NOT BE CONSIDERED AS SCRAP WITHIN THE MEANING OF SECTION 206C OF THE INC OME-TAX ACT. ACCORDING TO THE ASSESSEE, THE AFORESAID ITEMS WERE USEABLE AS SUCH FOR AND HENCE SAME COULD NOT BE TERMED AS 'SCRAP' WITHI N THE MEANING OF SECTION 206C AND THEREFORE PROVISIONS OF TCS WERE N OT APPLICABLE ON IT. FOR THE SAKE OF CLARITY, THE SUBMISSIONS MADE BY TH E ASSESSEE BEFORE THE ASSESSING OFFICER ARE REPRODUCED HEREIN AS UNDER: I) SOLVENT EXTRACTION AND REFINERY DIVISION: UNDE R THIS DIVISION, COMPANY MANUFACTURES DE-OILED CAKE (DOC), EDIBLE OI LS, ETC., MANUFACTURING PROCESS FURNISHED IN THE EXHIBIT-1. T HE MAIN RAW MATERIALS ARE SOYA SEEDS, MUSTARD SEEDS, CASTOR SEE DS, COTTON SEEDS, ETC. INSOLVENT EXTRACTION PLANT FROM SEEDS T WO PRECUTS ARE GENERATED NAMEIY CRUDE OIL AND DOC, DOC IS A PRODUC T WHICH IS USABLE AS SUCH IN THE MANUFACTURING OF CATTLE FEED, VARIOUS TYPES OF EDIBLE PRECUTS, ETC. CRUDE OIL ALSO IS FURTHER PROC ESSED AND REFINED, FROM WHICH FURTHER TWO PRODUCTS ARE GENERATED NAMEL Y, REFINED OIL AND GUMS. FROM PROCESSING SEEDS APPROXIMATELY 82-84 % OF DOC AND 16-18% OF OIL IS GENERATED. II) COTTON YARN DIVISION: UNDER THIS DIVISION, COMP ANY MANUFACTURES COTTON YARN, RE-PROCESSABLE RAW MATERI AL IS RAW COTTON. IN COTTON YARN DIVISION, RAW COTTON IS PROC ESSED AND COTTON YARN IS GENERATED, WHICH IS ALSO LARGELY EXPORTED. IN THAT PROCESS, THE LOWER QUALITY OF COTTON IS SEPARATED, WHICH IS USABLE AS SUCH. EXHIBIT 2. II) BIOCHEMICAL DIVISION: UNDER THIS DIVISION, COMP ANY MANUFACTURES MAIZE STARCH, LIQUID GLUCOSE, DEXTROSE , MALTO DEXTRIN, MAIZE FIBER (HUSK), MAIZE OIL, ETC. THE MANUFACTURI NG PROCESS IS FURNISHED IN THE EXHIBIT-3. THE MAIN RAW MATERIAL I S MAIZE. IN THE MAIZE PROCESSING PLANT, MAIZE SEEDS ARE PROCESSED A ND THE PRODUCTS VIZ. MAIZE STARCH, GLUTEN, GERMS, FIBER (H USK) AND MAIZE OIL ARE PRODUCED. FURTHER, FROM STARCH, VARIOUS VAL UE ADDED DERIVATIVES ARE PRODUCED VIZ. LIQUID GLUCOSE, DEXTR OSE, MALTOSE, ETC. PACKING MATERIAL/GUNNY BAGS ARE SCRAP/WASTE OR NOT? AS PER THE PROVISIONS OF THE ACT, MEANING OF THE SCRAP AS PROV IDED IN EXPLANATION (B) TO SECTION 206C OF THE I.T.ACT, PAC KING MATERIAL LIKE ITA NOS. 1542-1545 & CO NO.183-186/AHD/2013 ASSESSEE : GUJARAT AMBUJA EXPORTS LTD AY : 2009-10 TO 2012-13 6 GUNNY BAGS, TINS, SS & PLASTICS DRUMS, PLASTIC BAGS , ETC. ARE NOT COVERED UNDER THE DEFINITION OF WASTE AND SCRAP. FU RTHER, IT IS SUBMITTED THAT APPELLANT WAS NOT MANUFACTURING ANY OF THESE MATERIALS. IT IS FURTHER SUBMITTED THAT PACKING MAT ERIALS ARE PURCHASED BY THE COMPANY WHICH IS USED FOR PACKING THE FINISHED GOODS IN LOCAL AS WELL AS IN EXPORT MARKET AS PER T HE REQUIREMENT OF THE BUYER. THE DAMAGED PACKING MATERIAL/GUNNY BAGS, WHICH ARE OF NO USE ARE SOLD OUT BY COMPANY AS DEFECTIVE. THU S, SUCH ITEMS ARE NOT GENERATED FROM MANUFACTURING/MECHANICAL WOR KING AS REQUIRED IN THE DEFINITION OF SCRAP, THE SAID FACT AND POSITION OF LAW IS CLARIFIED BY THE HON'BLE ITAT, AHMEDABAD IN THE CASE OF NAVIN FLUORINE INTERNATIONAL LTD. MAIZE HUSK (FIBER) IS SCRAP/WASTE OR NOT? IN THE MA IZE PROCESSING PLANT, MAIZE SEEDS ARE PROCESSED AND THE PRODUCTS V IZ. MAIZE STARCH, GLUTEN, GERMS, FIBER (HUSK) AND MAIZE OIL A RE PRODUCED. FURTHER FROM STARCH VARIOUS VALUE ADDED DERIVATIVES ARE PRODUCED VIZ. LIQUID GLUCOSE, DEXTROSE, MALTOSE, SORBITOL, E TC. THE COMPLETE ANATOMY OF MAIZE GRAIN IS ENCLOSED AS EXHIBIT-4 WHI CH CLEARLY SPECIFIES THAT THE VARIOUS PRODUCTS ARE GENERATED D URING VARIOUS STAGES OF MAIZE PROCESSING, WHICH ARE USED AS SUCH. THUS, MAIZE HUSK (FIBRE) IS A PRODUCT MANUFACTURED AND IT IS SA LEABLE PRODUCT AND IT IS NOT A SCRAP OR WASTE. COTTON WASTE IS SCRAP/WASTE OR NOT? IN COTTON YARN DIVISION, RAW COTTON IS PROCESSED AND COTTON YARN IS GENERATED, W HICH IS ALSO LARGELY EXPORTED. IN PROCESS, THE LOWER QUALITY OF COTTON IS SEPARATED, WHICH IS USABLE AS SUCH. FROM SUCH LOWER QUALITY COTTON, THICK QUALITY COTTON YARN IS MANUFACTURE OR SUCH CO TTON IN SOLD OUT TO THE MANUFACTURES OF COTTON YARN. DURING THE PROC ESS, THE LOWER QUALITY COTTON IS SEPARATED AT VARIOUS PROCESSES, W HICH ARE CALLED AS DROPPING, COMBER NOIL AND FLAT & HARD SWEEPING COTT ON WHICH ARE SOLD OUT AS COTTON AND FETCHES GOOD VALUE OF TH E RAW MATERIAL. IN PROCESS, MICRO DUST AND INVISIBLE WASTE ARE GENE RATED, WHICH ARE APPROXIMATELY 2% TO 2.5% OF INPUTS AND BROKEN YARN ARE GENERATED WHICH ARE CALLED AS WASTE. COTTON IS A NATURAL FIBE R HAVING DIFFERENT VARIETIES ACCORDING TO THEIR PROPERTIES. DIFFERENT VARIETIES OF COTTON ARE TO BE SELECTED FOR MAKING COARSE AND FINE YARNS . RAW COTTON IS BEING FED TO DIFFERENT MACHINES TO PRODUCE YARN WHI CH IS BEING SOLD IN THE MARKET FOR DIFFERENT USES. THE LOWER CO UNT COTTON IS USED FOR MANUFACTURING OPEN ENDED/THICK COTTON YARN, PAR T OF WHICH IS SELF CONSUMED FOR MANUFACTURING OPEN END/THICK YARN FOR SOME ITA NOS. 1542-1545 & CO NO.183-186/AHD/2013 ASSESSEE : GUJARAT AMBUJA EXPORTS LTD AY : 2009-10 TO 2012-13 7 YEARS BY US ALSO BUT AS THERE WAS LESSER DEMAND IN EXPORT, WE ARE SELLING THE LOWER COUNT COTTON, KNOWN AS DROPPING, COMBER NOIL AND FLAT & HARD SWEEPING COTTON, WHICH IS SPOKEN AS COTTON WASTE BUT IT IS A RAW MATERIAL I.E. LOWER COUNT COTTON ON LY. THUS, LOWER COUNT COTTON IS RAW MATERIAL I.E. COTTON ITSELF AND SALEABLE AT A VERY HIGH PRICE. THE LOWER COLD COTTON IS USABLE AS RAW MATERIAL ONLY, THE SAME IS SOLD OUT TO MANUFACTURES OR YARN/OTHER COTT ON ITEMS, AND IT IS NOT A SCRAP OR WASTE. DE-OILED CAKE (DOC) IS SCRAP/WASTE OR NOT? IN SOLV ENT EXTRACTION PLANT FROM SEEDS, TWO PRODUCTS ARE GENERATED NAMELY , CRUDE OIL AND DOC. DOC IS A PRODUCT WHICH IS USABLE AS SUCH I N THE MANUFACTURING OF CATTLE FEED, VARIOUS TYPES OF EDIB LE PRECUTS, ETC. CRUDE OIL ALSO IS FURTHER PROCESSED AND REFINED, FR OM WHICH FURTHER TWO PRODUCTS ARE GENERATED NAMELY, REFINED OIL AND GUMS. FROM PROCESSING SEEDS, APPROXIMATELY 82-84% OF DOC AND 1 6-18% OF OIL IS GENERATED. THUS, DOC IS A PRODUCT MANUFACTURED A ND IT IS A SALEABLE PRODUCT AND IT IS NOT A SCRAP OR WASTE.' 4.2 THE ASSESSING OFFICER REJECTED THE CONTENTION O F THE ASSESSEE PRIMARILY ON THE GROUND THAT THE AFORESAID ITEMS WE RE OF THE NATURE OF SCRAP AND THE ASSESSEE AS WELL AS ITS BUYER WAS COV ERED WITHIN THE DEFINITION OF SELLER AND BUYER RESPECTIVELY AS PROV IDED IN SECTION 206C OF THE INCOME-TAX ACT. THE ASSESSING OFFICER REJECTED THE CONTENTIONS OF THE ASSESSEE VIDE PARA-8 OF HIS ORDER WHICH IS REPRODUC ED HEREIN AS UNDER, FOR THE SAKE OF CONVENIENCE:- 'IN THE INSTANT CASE, THE DE-OILED CAKE (DOC) AS AD MITTED BY THE ASSESSEE IS MAINLY USED AS ANIMAL FEED IS NOT SOLD TO THE ACTUAL USER I.E. THE ANIMAL KEEPERS. THE FACT IS THAT DOC IS SO LD TO OTHER TRADERS OR INTERMEDIATES WHO IN TURN SALES IT TO THE ACTUAL USERS BECAUSE DE- OILED CAKE (DOC) IS OF NO USE TO THE TRADERS AS SUC H. SIMILARLY, COTTON WASTE AND HUSK WERE ALSO SOLD TO OTHER TRADERS/INTERMEDIATORIES. AS ALTERNATIVE ARGUMENT, IN CASE, THE ASSESSEE COMPANY IS SELLING THE ABOVE ITEMS, WHICH IT TERMS AS ITA NOS. 1542-1545 & CO NO.183-186/AHD/2013 ASSESSEE : GUJARAT AMBUJA EXPORTS LTD AY : 2009-10 TO 2012-13 8 SOLVABLE/MANUFACTURED PRODUCT TO ACTUAL USERS/MANUF ACTURERS. THEN, THE COMPANY SHOULD HAVE OBTAINED DECLARATION IN FORM 27C FROM THE BUYER AND SHOULD HAVE FURNISHED THE SAME W ITHIN 7 DAYS OF THE NEXT MONTH IN THE OFFICE OF CONCERNED CCIT/C IT(TDS) WHICH IS NOT THE CASE HERE'. 4.3. THUS, THE BASIC DISPUTE HAS ARISEN BECAU SE OF THE FACT THAT THE ASSESSING OFFICER CATEGORIZED DOC, RAW COTTON WASTE AND MAIZE HUSK AS 'SCRAP' WITHIN THE MEANING OF SECTION 206C OF THE I T ACT. THE ASSESSEE, HOWEVER, HAS CONTESTED, ALL ALONG, THAT SUCH ITEMS ARE NOT IN THE NATURE OF SCRAP. SUCH ITEMS EITHER MANUFACTURED ITEMS OR BY-P RODUCTS AND HENCE THE DEFINITION SCRAP CANNOT BE APPLIED AND HENCE SE CTION 206C COULD NOT BE INVOKED WITH RESPECT TO SUCH ITEMS. THE DEMAND I SSUED U/S 201(1)/201(1A) BY THE ASSESSING OFFICER IN RESPECT TO EACH OF THE ITEMS NAMELY, DOC, RAW COTTON WASTE AND MAIZE HUSK WAS SE GREGATED AND THE BREAK-UP OF SUCH DEMAND OF TCS AND TDS FOR 4 YEARS ARE AS UNDER:- ITEM OF SAFE DEMAND AMOUNT (IN CRORES) SALE OF DOC TCS 13.17 SALE OF RAW COTTON WASTE TCS 0.19 SAFE OF MAIZE HUSK TCS 0.44 PORT CHARGES (LEVY OF TDS ON SHORT DEDUCTION (2% CHARGED BY THE ASSESSEE U/S. 194C 10% CONSIDERED BY THE AO U/S. 194J) TDS 3.38 INTEREST ON ABOVE INTEREST 5.73 TOTAL 23.62 4.4 MATTER WAS CARRIED BEFORE THE FIRST APPELLATE AUTHORITY, WHEREIN VARIOUS CONTENTIONS WERE RAISED ON BEHALF OF THE AS SESSEE AND HAVING ITA NOS. 1542-1545 & CO NO.183-186/AHD/2013 ASSESSEE : GUJARAT AMBUJA EXPORTS LTD AY : 2009-10 TO 2012-13 9 CONSIDERED THE SAME, THE CIT(A) ALLOWED THE CLAIM O F THE ASSESSEE, WHICH HAS BEEN OPPOSED BEFORE US BY THE REVENUE, INTER ALIA, SUBMITTING THAT THE CIT(A) ERRED IN DELETING THE ADDITIONS MADE U/S 206 C(6)/206C(7) OF THE INCOME-TAX ACT FOR NON-DEDUCTION OF TDS FOR ASSESSM ENT YEAR 2009-10, AMOUNTING TO RS.8,16,68,350/- ON SALE OF DOC (DE-OI LED CAKE), MAIZE HUSK AND COTTON WASTE INSPITE OF THE FACT THAT THOS E ITEMS WERE SCRAP AS DEFINED U/S 206(C) OF THE ACT. THE REVENUE ALSO CO NTENDED THAT THE CIT(A) ERRED IN LAW IN HOLDING THAT BY-PRODUCTS AN D THEREBY FAILED TO APPRECIATE THAT EVEN BY-PRODUCTS LIKE MOLASSES AND BAGASSES HAVE BEEN HELD AS SCRAP WITHIN THE DEFINITION OF SCRAP U/S 20 6(C) AS THE DEFINITION IS OF WIDER IMPORT TO COVER EVEN BY-PRODUCT WITHIN IT S SPHERE. HE ALSO SUBMITTED THAT THE CIT(A) ERRED IN HOLDING THAT THE ADDITION MADE U/S 206C(6)/206C(7) BY WRONGLY RELYING ON THE DECISION OF ITAT IN THE CASE OF NAVIN FLUORINE INTERNATIONAL LTD. VS. ACIT IN IT A NO.1213 & 1214/AHD/2010, BECAUSE THE FACTS OF THE ASSESSEES CASE WERE DISTINGUISHABLE AND ALSO NO APPEAL WAS FILED AGAINS T THAT CASE DUE TO MONETARY LIMIT AND THE DECISION COULD NOT BE FOLLOW ED AS PRECEDENT. BESIDES, THE LD. DEPARTMENTAL REPRESENTATIVE RELIED ON THE DETAILED STATEMENT OF FACTS FILED BEFORE US, INTER ALIA, SUBMITTING THAT THE ASSESSEE- COMPANY IS MANUFACTURER AND EXPORTER OF AGRO WASTE PRODUCTS. IN THE CASE OF ASSESSEE A SURVEY U/S 133A OF THE ACT WAS C ARRIED OUT ON ITA NOS. 1542-1545 & CO NO.183-186/AHD/2013 ASSESSEE : GUJARAT AMBUJA EXPORTS LTD AY : 2009-10 TO 2012-13 10 09.08.2011 AND DURING THE COURSE OF SURVEY, IT WAS NOTICED BY THE ASSESSING OFFICER THAT THE ASSESSEE-COMPANY WAS MAI NLY ENGAGED IN EXTRACTION OF SOLVENT FROM SOYA SEEDS, MUSTARD SEED S, CASTOR SEEDS, COTTON SEEDS, ETC. ON PROCESSING OF THESE SEEDS THE ASSESS EE BESIDES OIL RECEIVED DE-OILED CAKE (DOC) WHICH IS MAINLY USED AS CATTLE FEED. THE ASSESSEE ALSO HAS UNITS AT HIMMATNAGAR AND UTTARANCHAL WHICH PROCESSES MAIZE. THE PROCESSING OF MAIZE BESIDES STARCH GENERATES LI QUID GLUCOSE, DEXTROSE, SORBITOL AND OTHER PRODUCTS INCLUDING MAI ZE HUSK (FIBRE). THE ASSESSEE-COMPANY ALSO HAS UNIT AT HIMMATNAGAR WHICH MANUFACTURES COTTON YARN AND RE-PROCESSABLE RAW COTTON. THE MAIN RAW MATERIAL USED IN THIS UNIT IS RAW COTTON FROM WHICH COTTON YARN I S MANUFACTURED. IN THE PROCESS THE LOWER QUALITY OF COTTON IS SEPARATED WH ICH IS SCRAP AND WASTE. THE ASSESSING OFFICER OBSERVED THAT THE DOC, MAIZE HUSK AND COTTON WASTE GENERATED DURING THE MANUFACTURING ACTIVITY A T VARIOUS UNITS OF THE ASSESSEE COMPANY WHERE OF THE NATURE OF 'SCRAP' WHI CH FALLS WITHIN THE AMBIT OF PROVISION OF SECTION 206C OF THE ACT. ACC ORDING TO LD. DEPARTMENTAL REPRESENTATIVE, THE CIT(A) HAS DECIDED THE ISSUE AGAINST THE DEPARTMENT BY HOLDING THAT BY-PRODUCTS CANNOT B E HELD AS SCRAP AND WASTE WHICH IS NOT FACTUALLY OR LEGALLY CORRECT. FO R WHICH HE RELIED UPON THE PROPOSITION FROM THE BOOK OF J.M. JAINA & BROTH ERS TITLED AS TDS IS NOT TEDIOUS BY SANJAY KUMAR VERMA. THE STAND OF TH E LD. DEPARTMENTAL ITA NOS. 1542-1545 & CO NO.183-186/AHD/2013 ASSESSEE : GUJARAT AMBUJA EXPORTS LTD AY : 2009-10 TO 2012-13 11 REPRESENTATIVE HAS BEEN THAT ON PERUSAL OF SECTION 206C, IT IS CLEAR THAT NO CRITERIA LIKE ENORMOUS ECONOMIC VALUE WAS PROVIDED IN THAT SECTION THAT THE SO-CALLED BY PRODUCT HAVING ENORMOUS ECONOMIC V ALUE CANNOT BE TREATED AS SCARP UNDER SECTION 206C. LIKEWISE THER E IS NO CRITERION PROVIDED IN SECTION 206C TO STATE THAT THE SO CALLE D BY-PRODUCT HAVING 80- 82% BY WEIGHT CANNOT BE CONSIDERED AS SCRAP. HENCE , THE DECISION OF CIT(A) IS AGAINST THE STATUTORY PROVISIONS OF SECTI ON 206C WHICH IS NOT TENABLE IN THE EYES OF LAW. 4.4.1 REGARDING CONTENTION OF THE ASSESSEE THAT MOS T OF THE SALE OF DOC WAS TOWARDS EXPORT SALE AND ONLY A VERY SMALL PORTI ON CONSTITUTED A LOCAL SALE, IT IS SUBMITTED BY THE DEPARTMENTAL REPRESENT ATIVE THAT NO CRITERIA HAS BEEN PROVIDED IN THE SECTION THAT IF 90% OF THE SO-CALLED BY-PRODUCT IS EXPORTED AND 10% IS TRADED LOCALLY THEN THE SO CALL ED BY-PRODUCT CANNOT BE TREATED AS SCRAP AND WASTE AS DEFINED U/S 206C. IF MAJOR PORTION IS EXPORT, THEN THAT DOES NOT MEAN THAT THE SAME CANNO T BE SCRAP AND WASTE, HENCE THE DECISION OF LD. CIT(A) IS AGAINST THE STA TUTORY PROVISIONS OF SECTION 206C WHICH IS NOT TENABLE IN THE EYES OF LA W. 4.4.2 REGARDING THE LAW RELIED UPON BY THE CIT(A) I N THE CASE OF NAVIN FLUORINE INTERNATIONAL LTD. VS. ACIT IN ITA NO.1313 & 1214/AHD/2010, WHEREIN IT WAS HELD THAT THE SCRAP AND WASTE SHOULD ARISES GENERATED FROM MANUFACTURING AND MECHANICAL WORKING OF MATERI ALS. IN THIS REGARD, ITA NOS. 1542-1545 & CO NO.183-186/AHD/2013 ASSESSEE : GUJARAT AMBUJA EXPORTS LTD AY : 2009-10 TO 2012-13 12 LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE SO CALLED BY PRODUCTS WHICH HAS BEEN TREATED AS SCRAP AND WASTE BY THE AS SESSING OFFICER WERE CERTAINLY GENERATED FROM MANUFACTURING PROCESS OF T HE AGRO PRODUCTS OF THE ASSESSEE. HENCE ON THE CONTRARY, THE DEPARTMEN T STANDS GET SUPPORT FROM THIS DECISION ALSO AS ALL THE SO CALLED BY PRO DUCTS WERE GENERATED FROM MANUFACTURING PROCESS OF THE ASSESSEE. FURTHE R THE CIT(A) RELYING ON THE CASE OF NAVIN FLUORINE INTERNATIONAL LTD. (S UPRA) OBSERVED THAT SUCH SCRAP SHOULD NOT BE DEFINITELY USABLE AS SUCH. ACCORDING TO THE DEPARTMENTAL REPRESENTATIVE, THIS OBSERVATION IS AL SO STRENGTHENS THE STAND OF THE DEPARTMENT BECAUSE THE SO CALLED BY PR ODUCTS COULD NOT BE DEFINITELY USABLE AS SUCH LIKE THE RAW MATERIAL WHI CH WAS USED IN THE PROCESS OF MANUFACTURING FOR EXAMPLE. DE OIL CAKE CANNOT BE USED AS RAW MATERIAL AND ALSO NO OIL WILL COME OUT FROM DOC BY INPUTTING THE SAME IN THE MANUFACTURING PROCESS AS RAW MATERIAL H ENCE, IT CANNOT BE DEFINITELY USABLE AS SUCH. HENCE, HE SUBMITTED THAT THE CIT(A) WAS NOT CORRECT IN HIS OBSERVATION THAT THE BY-PRODUCTS GEN ERATED FROM MANUFACTURING PROCESS ARE NOT COVERED BY ABOVE DEFI NITION SINCE SAME COULD BE USED AS SUCH BY OTHER CONSUMERS. HE HAS FU RTHER ERRED IN HOLDING THAT DOC IS A BY-PRODUCT AND IT CERTAINLY C ANNOT BE CATEGORIZED AS SCRAP AND WASTE HAVING ITS OWN MARKET VALUE BECA USE HE HAS FAILED TO APPRECIATE THAT EVEN SCRAP AND WASTE HAS ALSO HAVE ITS OWN MARKET VALUE ITA NOS. 1542-1545 & CO NO.183-186/AHD/2013 ASSESSEE : GUJARAT AMBUJA EXPORTS LTD AY : 2009-10 TO 2012-13 13 AND THE SAME CANNOT BE SOLD ON NO OR NIL VALUE. LIK EWISE, THE OBSERVATION OF CIT(A) WAS ALSO NOT CORRECT THAT SCRAP IS EITHER THROWN OUT OR SOLD AT CHEAPER RATE BECAUSE IF THE SAME IS THROWN THEN THE RE WILL BE NO VALUE AND QUESTION OF ATTRACTING PROVISIONS OF SECTION 20 6C DOES NOT ARISE VALUE BEING NIL AND IF THE SAME IS SOLD FOR EITHER AT WHA TSOEVER HIGHER VALUE OR WHATSOEVER LOWER VALUE, THE PROVISIONS OF THE SECTI ON ARE VERY MUCH ATTRACTED. HENCE LD.CIT(A) WAS NOT JUSTIFIED IN NOT TREATING THE SO CALLED BY PRODUCTS (WHICH WERE IN FACT SCRAP AND WASTE) WI THIN THE DEFINITION OF SCRAP UNDER SECTION 206C. 4.4.3 REGARDING DECISION OF ITAT IN THE CASE OF NAV IN FLUORINE INTERNATIONAL LTD. (SUPRA), THE LD. DEPARTMENTAL RE PRESENTATIVE SUBMITTED THAT NOWHERE SUCH KIND OF OBSERVATION WAS FOUND IN THE ORDER; THEREFORE, THE CIT(A) WAS WRONG IN HIS DECISION AS HE HAS NOT PROPERLY READ OR UNDERSTOOD THE JUDGMENT OF THE ITAT IN THE CASE OF NAVIN FLUORINE INTERNATIONAL LTD. (SUPRA) IN ITS RIGHT PERSPECTIVE ; THEREFORE THE DECISION OF CIT(A) WAS NOT SUSTAINABLE IN THE EYES OF LAW. HE ALSO SUBMITTED THAT ALMOST SIMILAR WAS THE OBSERVATION OF THE LD. CIT(A ) IN RESPECT OF OTHER SO CALLED BY-PRODUCTS. THEREFORE, HE SUBMITTED THAT T HE ORDER OF THE CIT(A) MAY BE SET ASIDE AND THAT OF ASSESSING OFFICER MAY BE RESTORED. 4.5 ON THE OTHER HAND, LD. AUTHORIZED REPRESENTATIV E SUPPORTED THE ORDER OF THE LD. CIT(A) ON THIS ISSUE. HE ALSO PLA CED RELIANCE ON THE ITA NOS. 1542-1545 & CO NO.183-186/AHD/2013 ASSESSEE : GUJARAT AMBUJA EXPORTS LTD AY : 2009-10 TO 2012-13 14 DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. M/S. PRIYA BLUE INDUSTRIES PVT LTD IN TAX APPEAL NO. 604 OF 20 15, WHEREIN IT WAS HELD AS UNDER:- 6. THE TRIBUNAL, AFTER CONSIDERING THE DEFINITION OF SCRAP UNDER CLAUSE (B) TO SECTION 206C OF THE ACT, HAS NOTED TH AT THE ASSESSEE IS ENGAGED IN SHIP BREAKING ACTIVITY AND THE ITEMS IN QUESTION ARE FINISHED PRODUCTS OBTAINED FROM THE ACTIVITY AND CO NSTITUTE SIZEABLE CHUNK OF PRODUCTION DONE BY SHIP BREAKERS. THOUGH S UCH PRODUCTS MAY BE COMMERCIALLY KNOWN AS SCRAP THEY ARE NOT WASTE AND SCRAP, AS SUCH ITEMS ARE USABLE AS SUCH, AND, THER EFORE, DO NOT FALL WITHIN THE DEFINITION OF SCRAP AS ENVISAGED IN THE EXPLANATION TO SECTION 206C(1) OF THE ACT. 7. SECTION 206C OF THE ACT BEARS THE HEADING, PROF ITS AND GAINS FROM THE BUSINESS OF TRADING IN ALCOHOLIC LIQUOR, F OREST PRODUCE, SCRAP ETC. AND PROVIDES THAT EVERY PERSON, BEING A SELLER SHALL, AT THE TIME OF DEBITING OF THE AMOUNT PAYABLE BY THE B UYER TO THE ACCOUNT OF THE BUYER OR AT THE TIME OF RECEIPT OF S UCH AMOUNT FROM THE SAID BUYER IN CASH OR BY THE ISSUE OF A CHEQUE OR DRAFT OR BY ANY OTHER MODE, WHICHEVER IS EARLIER, COLLECT FROM THE BUYER OF ANY GOODS OF THE NATURE SPECIFIED IN COLUMN (2) OF THE TABLE BELOW, A SUM EQUAL TO THE PERCENTAGE SPECIFIED IN THE CORRES PONDING ENTRY IN COLUMN (3) OF THE SAID TABLE, OF SUCH AMOUNT AS INC OME-TAX. THE NATURE OF GOODS SPECIFIED AT SERIAL NO.(VI) IS SCRA P, AND THE PERCENTAGE PROVIDED IS 1%. THE EXPRESSION OF SCRAP IS DEFINED UNDER CLAUSE (B) TO THE EXPLANATION TO SECTION 206 OF THE ACT, TO MEAN WASTE AND SCRAP FROM MANUFACTURE OR MECHANICAL WORKING OF MATERIALS WHICH IS DEFINITELY NOT USABLE AS SUCH BE CAUSE OF BREAKAGE, CUTTING UP, WEAR AND OTHER REASONS. ON A PLAIN READING OF THE SAID EXPRESSION, IT IS EVIDENT THAT ANY MATERIA L WHICH IS USABLE AS SUCH WOULD NOT FALL WITHIN THE AMBIT OF THE EXPR ESSION SCRAP AS ENVISAGED UNDER CLAUSE (B) OF THE EXPLANATION TO SE CTION 206C OF THE ACT. 8. THE TRIBUNAL, IN THE IMPUGNED ORDER, HAS RECORDE D THAT THE ITEMS/PRODUCTS IN QUESTION OBTAINED FROM THE ACTIVI TY OF SHIP BREAKING ARE USABLE AS SUCH AND, THEREFORE, DO NOT FALL WITHIN THE DEFINITION OF SCRAP. HOWEVER, SINCE THE ASSESSEE HA D NOT COLLECTED ITA NOS. 1542-1545 & CO NO.183-186/AHD/2013 ASSESSEE : GUJARAT AMBUJA EXPORTS LTD AY : 2009-10 TO 2012-13 15 TAX AT SOURCE ON ITEMS OTHER THAN ITEMS OBTAINED OU T OF THE MANUFACTURING ACTIVITY IN THE COURSE OF SHIP BREAKI NG, THE TRIBUNAL HAS REMITTED THE MATTER TO THE ASSESSING OFFICER FO R THE PURPOSE GRANTING RELIEF TO THE ASSESSEE UNDER THE PROVISION S OF SECTION 206C (1) OF THE ACT WITH REGARD TO ONLY SALE OF SCRAP AR ISING OUT OF MANUFACTURING ACTIVITY IN THE COURSE OF SHIP BREAKI NG AFTER PROVIDING DUE OPPORTUNITY OF HEARING TO THE ASSESSE E. THUS, THE TRIBUNAL AFTER RECORDING A FINDING OF FACT TO THE E FFECT THAT THE PRODUCTS OBTAINED BY THE ASSESSEE IN THE COURSE OF SHIP BREAKING ACTIVITY ARE USABLE AS SUCH, AND, THEREFORE, DO NOT FALL WITHIN THE DEFINITION OF SCRAP HAS REMITTED THE MATTER TO THE ASSESSING OFFICER TO GRANT RELIEF ACCORDINGLY. ESSENTIALLY, THEREFORE , THE IMPUGNED ORDER OF THE TRIBUNAL IS BASED UPON A FINDING OF FA CT WHICH DOES NOT GIVE RISE TO ANY QUESTION OF LAW. 9. INSOFAR AS THE COURSE OF ACTION ADOPTED BY THE T RIBUNAL IN REMITTING THE MATTER TO THE ASSESSING OFFICER TO DE CIDE IN RELATION TO WHICH OF THE ITEMS THE ASSESSEE IS ENTITLED TO RELI EF UNDER THE PROVISIONS OF SECTION 206C(1) OF THE ACT IS CONCERN ED, NO FAULT CAN BE FOUND IN THE APPROACH ADOPTED BY THE TRIBUNAL, I NASMUCH AS, OUT OF THE FOUR ITEMS OF WHICH TAX WAS NOT COLLECTE D AT SOURCE, THE MATTER HAS MERELY BEEN REFERRED TO THE ASSESSING OF FICER FOR THE PURPOSE OF EXAMINING AS TO WHAT EXTENT RELIEF IS RE QUIRED TO BE GRANTED TO THE ASSESSEE UNDER THE PROVISIONS OF SEC TION 206C(1) OF THE ACT HAVING REGARD TO THE FINDINGS OF FACT RENDE RED BY IT. 10. IN THE OPINION OF THIS COURT, THE IMPUGNED ORDE R PASSED BY THE TRIBUNAL DOES NOT SUFFER FROM ANY LEGAL INFIRMITY S O AS TO GIVE RISE TO ANY QUESTION OF LAW, MUCH LESS, A SUBSTANTIAL QU ESTION OF LAW WARRANTING INTERFERENCE. THE APPEAL, THEREFORE, FAI LS AND IS, ACCORDINGLY, DISMISSED. THUS, THE AUTHORIZED REPRESENTATIVE FOR THE ASSESSE E SUBMITTED THAT RATIO IN PRIYA BLUE INDUSTRIES PVT LTD SUPPORT S THE ORDER OF THE CIT(A) . 5. AFTER GOING THROUGH THE RIVAL SUBMISSIONS AND PE RUSING THE MATERIAL ON RECORD, THE REMAND REPORT AND THE CASE LAWS AS RELIED UPON ITA NOS. 1542-1545 & CO NO.183-186/AHD/2013 ASSESSEE : GUJARAT AMBUJA EXPORTS LTD AY : 2009-10 TO 2012-13 16 BY THE ASSESSEE, WE FIND THAT THE ISSUE BEFORE US F OR ADJUDICATION IS WHETHER THE DOC, COTTON WASTE AND MAIZE HUSK IS TO BE TREATED AS SCRAP OR WASTE WITHIN THE MEANING OF DEFINITION PROVIDE D IN SECTION 206C OF THE IT ACT. SECTION 206C READS AS UNDER:- PROFITS AND GAINS FROM THE BUSINESS OF TRADING IN ALCOHOLIC LIQUOR, FOREST PRODUCE, SCRAP, ETC. 206C. (1) EVERY PERSON, BEING A SELLER SHALL, AT THE TI ME OF DEBITING OF THE AMOUNT PAYABLE BY THE BUYER TO THE ACCOUNT OF THE BUYER OR AT THE TIME OF RECEIPT OF SUCH AMOUNT FROM THE SAID BUYER IN CASH OR BY THE ISSUE OF A CHEQUE OR DRAFT OR BY ANY OTHER MODE, WHICHEVER IS EARLIER, COLLECT FROM THE BUYER OF ANY GOODS OF THE NATURE SPECIFIED IN COLUMN (2) OF THE TABLE BELOW, A SUM E QUAL TO THE PERCENTAGE, SPECIFIED IN THE CORRESPONDING ENTRY IN COLUMN (3) OF THE SAI D TABLE, OF SUCH AMOUNT AS INCOME-TAX: TABLE SL. NO. NATURE OF GOODS PERCENTAGE (1) (2) (3) ( I ) ALCOHOLIC LIQUOR FOR HUMAN CONSUMPTION ONE PER CENT ( II ) TENDU LEAVES FIVE PER CENT ( III ) TIMBER OBTAINED UNDER A FOREST LEASE TWO AND ONE-HALF PER CENT ( IV ) TIMBER OBTAINED BY ANY MODE OTHER THAN UNDER A FOREST LEASE TWO AND ONE-HALF PER CENT ( V ) ANY OTHER FOREST PRODUCE NOT BEING TIMBER OR TENDU LEAVES TWO AND ONE-HALF PER CENT ( VI ) SCRAP ONE PER CENT ( VII ) MINERALS, BEING COAL OR LIGNITE OR IRON ORE ONE PER CENT:] [ EXPLANATION. FOR THE PURPOSES OF THIS SECTION, ( A ) 'ACCOUNTANT' ; ( AA ) 'BUYER' .. ( I ) SUB-SECTION (1) MEANS A PERSON WHO OBTAINS IN ANY SALE, BY WAY OF AUCTION, TENDER OR ANY OTHER MODE, GOODS OF THE NAT URE SPECIFIED IN THE TABLE IN SUB-SECTION (1) OR THE RIGHT TO RECEIV E ANY SUCH GOODS BUT DOES NOT INCLUDE, ( A ) A PUBLIC SECTOR COMPANY, THE CENTRAL GOVERNMENT, A STATE GOVERNMENT, AND AN EMBASSY, A HIGH COMMISSION, LEGA TION, COMMISSION, CONSULATE AND THE TRADE REPRESENTATION, OF A FOREIGN STATE AND A CLUB; OR ITA NOS. 1542-1545 & CO NO.183-186/AHD/2013 ASSESSEE : GUJARAT AMBUJA EXPORTS LTD AY : 2009-10 TO 2012-13 17 ( B ) A BUYER IN THE RETAIL SALE OF SUCH GOODS PURCHASE D BY HIM FOR PERSONAL CONSUMPTION; ( II ) SUB-SECTION (1D) MEANS A PERSON WHO OBTAINS IN AN Y SALE, GOODS OF THE NATURE SPECIFIED IN THE SAID SUB-SECTION; ( AB ) 'JEWELLERY' SHALL HAVE THE MEANING ASSIGNED TO IT IN THE EXPLANATION TO SUB-CLAUSE ( II ) OF CLAUSE ( 14 ) OF SECTION 2 ; ( B ) 'SCRAP' MEANS WASTE AND SCRAP FROM THE MANUFACTUR E OR MECHANICAL WORKING OF MATERIALS WHICH IS DEFINITELY NOT USABLE AS SUCH BECAUSE OF BREAKAGE, CUTTING UP, WEAR AND OTHER REASONS; ( C ) 'SELLER' MEANS THE CENTRAL GOVERNMENT, A STATE GO VERNMENT OR ANY LOCAL AUTHORITY OR CORPORATION OR AUTHORITY ESTABLISHED B Y OR UNDER A CENTRAL, STATE OR PROVINCIAL ACT, OR ANY COMPANY OR FIRM OR CO-OPERATIVE SOCIETY AND ALSO INCLUDES AN INDIVIDUAL OR A HINDU UNDIVIDED FA MILY WHOSE TOTAL SALES, GROSS RECEIPTS OR TURNOVER FROM THE BUSINESS OR PRO FESSION CARRIED ON BY HIM EXCEED THE MONETARY LIMITS SPECIFIED UNDER CLAU SE ( A ) OR CLAUSE ( B ) OF SECTION 44AB DURING THE FINANCIAL YEAR IMMEDIATELY PRECEDING TH E FINANCIAL YEAR IN WHICH THE GOODS OF THE NATURE SPE CIFIED IN THE TABLE IN SUB-SECTION (1) OR SUB-SECTION (1D) ARE SOLD. 5.1 WITH RESPECT TO 'SCRAP' AS IN SECTION 206C, THE HON'BLE ITAT, AHMEDABAD HAPPENS TO CLARIFY THE DEFINITION OF SCRA P IN THE CASE OF NAVIN FLUORINE INTERNATIONAL LTD. VS. ACIT, 14 ITR 481 (AHMEDABAD). THE MAIN PORTION OF THIS JUDGEMENT IS REPRODUCED HE REIN AS UNDER: 10. THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS . DEEP CHAND (2002) 176 CTR (DEL) 239 : (2002) 257 ITR 756 (DEL) RELIED UPON THE DECISION OF THE HONBLE SUPREME COURT IN T HE CASE OF GURUDEVDATTA VKSSS MARYADIT VS. STATE OF MAHARASHTRA AIR 2001 SC 1980 IN WHICH IT WAS HELD AS UNDER : 'IT IS A CARDINAL PRINCIPLE OF INTERPRETATION OF ST ATUTE THAT THE WORDS OF A STATUTE MUST BE UNDERSTOOD IN THEIR NATU RAL, ORDINARY OR POPULAR SENSE AND CONSTRUED ACCORDING T O THEIR GRAMMATICAL MEANING, UNLESS SUCH CONSTRUCTION LEADS TO SOME ABSURDITY OR UNLESS THERE IS SOMETHING IN THE CONTEXT OR IN THE OBJECT OF THE STATUTE TO SUGGEST TO THE CONT RARY. THE GOLDEN RULE IS THAT THE WORDS OF A STATUTE MUST PRI MA FACIE BE GIVEN THEIR ORDINARY MEANING. IT IS YET ANOTHER RUL E OF CONSTRUCTION THAT WHEN THE WORDS OF THE STATUTE ARE CLEAR, PLAIN AND UNAMBIGUOUS, THEN THE COURTS ARE BOUND TO GIVE EFFECT TO THAT MEANING, IRRESPECTIVE OF THE CONSEQU ENCES. IT IS ITA NOS. 1542-1545 & CO NO.183-186/AHD/2013 ASSESSEE : GUJARAT AMBUJA EXPORTS LTD AY : 2009-10 TO 2012-13 18 SAID THAT THE WORDS THEMSELVES BEST DECLARE THE INT ENTION OF THE LAW GIVER. THE COURTS HAVE ADHERED TO THE PRINC IPLE THAT EFFORTS SHOULD BE MADE TO GIVE MEANING TO EACH AND EVERY WORD USED BY THE LEGISLATURE AND IT IS NOT A SOUND PRINCIPLE OF CONSTRUCTION TO BRUSH ASIDE WORDS IN A STATUTE A S BEING INAPPOSITE SURPLUSES, IF THEY CAN HAVE A PROPER APP LICATION IN CIRCUMSTANCES CONCEIVABLE WITHIN THE CONTEMPLATION OF THE STATUTE.' 10.1 BY FOLLOWING THE ABOVE DECISION, THE HONBLE HIGH COURT HELD AS UNDER : 'IT IS NOW A WELL-SETTLED PRINCIPLE OF LAW THAT A L ITERAL MEANING SHOULD BE ATTRIBUTED TO A STATUTE. THE GOLD EN RULE OF INTERPRETATION SHOULD ORDINARILY BE ADHERED TO.' 11. THE ORDINARY MEANING OF SCRAP AND WASTE AS HAVE BE EN PROVIDED IN OXFORD ENGLISH DICTIONARY PROVIDES : (A) SCRAPSMALL PIECE OR AMOUNT OF SOMETHING ESPECI ALLY ONE THAT IS LEFTOVER AFTER GREATER PART HAS BEEN USEDMATERI AL DISCARDED FOR REPROCESSING. (B) WASTEELIMINATED OR DISCARDED AS NO LONGER USEF UL OR REQUIRED. 11.1 THE ORDINARY MEANING OF SCRAP AND WASTE THUS HAS A SIMILARITY IN WORDS. ORDINARILY, THE WORD 'AND' IS USED IN A C ONJUNCTIVE SENSE. THIS WORD IS USED TO CONNECT CLAUSES OR SENTENCES O R TO CO-ORDINATE WORDS IN THE SAME CLAUSES. 12. THE EXPLANATION TO S. 206C OF THE IT ACT PROVIDES THE MEANING OF SCRAP MEANS 'WASTE AND SCRAP' FROM MANUFACTURE O R MECHANICAL WORKING OF MATERIAL WHICH IS DEFINITELY NOT USABLE AS SUCH BECAUSE OF BREAKAGE, CUTTING UP, WEAR AND OTHER REASONS. IN THE ABOVE DEFINITION THE IMPORTANT WORDS USED IN THE DEFINITI ON OF SCRAP ARE 'WASTE AND SCRAP''FROM MANUFACTURE' AND 'WHICH IS' . THE WORD 'WASTE AND SCRAP' ARE ONE ITEM. THEREAFTER, THE WOR D USED IS 'FROM' THE MANUFACTURE OR MECHANICAL WORKING OF MATERIAL. IT WOULD MEAN THAT THE WASTE AND SCRAP BEING ONE ITEM SHOULD ARIS E FROM THE MANUFACTURE OR MECHANICAL WORKING OF MATERIAL. IT I S, THEREFORE, NECESSARY TO READ THE WORDS WASTE AND SCRAP TOGETHE R WHICH ARE GENERATED OUT OF MANUFACTURING PROCESS OF THE ASSES SEE. THE WORDS WASTE AND SCRAP SHOULD HAVE NEXUS WITH THE MANUFACT URING OR MECHANICAL WORKING OF MATERIAL. THEREAFTER, THE WOR D USED IS 'WHICH IS' DEFINITELY NOT USABLE. THE WORD 'IS' AS USED IN THIS ITA NOS. 1542-1545 & CO NO.183-186/AHD/2013 ASSESSEE : GUJARAT AMBUJA EXPORTS LTD AY : 2009-10 TO 2012-13 19 DEFINITION OF THE SCRAP MEANT FOR SINGULAR ITEM I.E ., 'WASTE AND SCRAP'. THE WORD WASTE 'WHICH IS' DENOTES TO SINGUL AR ITEM AND THUS THE SINGULAR ITEM WOULD BE WASTE AND SCRAP. TH E WORDS WASTE AND SCRAP THUS CANNOT BE READ DIFFERENTLY AS IS ARG UED BY THE LEARNED DEPARTMENTAL REPRESENTATIVE. THE LIST OF SC RAP SOLD BY THE ASSESSEE IS REPRODUCED ABOVE WHICH ARE NOT CONNECTE D WITH MANUFACTURE OR MECHANICAL WORKING OF MATERIAL. THE FINDINGS OF THE LEARNED CIT(A) ARE BASED ON PRESUMPTION ONLY TH AT SINCE THE ASSESSEE IS ENGAGED IN MANUFACTURE OF FLUORINE AND OTHER REFRIGERANT GASES, THEREFORE, ENTIRE SCRAP IS GENER ATED OUT OF ITS MANUFACTURING ACTIVITIES. THE FINDINGS OF THE LEARN ED CIT(A) ARE NOT BASED ON ANY MATERIAL OR EVIDENCE. THE ASSESSEE IS ADMITTEDLY ENGAGED IN MANUFACTURING OF FLUORINE AND OTHER REFR IGERANT GASES AND LIST OF SCRAP ITEMS NOTED ABOVE WOULD INDICATE THAT SAME CANNOT BE USED FOR MANUFACTURING OR MECHANICAL WORK ING OF MATERIAL OF FLUORINE AND OTHER REFRIGERANT GASES. B Y THE NATURE OF THE SCRAP ITEMS NOTED ABOVE, THE SAME CANNOT BE USE D WHILE MANUFACTURING GASES OR DOING ANY MECHANICAL WORKING OF THE MATERIAL FOR THE GASES. THE ITEMS OF THE SCRAP IN T HE CASE OF THE ASSESSEE WOULD NOT FORM PART OF THE DEFINITION OF T HE SCRAP AS IS PROVIDED IN EXPLN. (B) TO S. 206C OF THE IT ACT. TH US, THE EXPLANATION IS WRONGLY APPLIED IN THE CASE OF THE A SSESSEE. 5.2 ACCORDING TO THIS JUDGEMENT, THE ITAT-AHMEDABA D HAS HELD THAT WASTE AND SCRAP ARE ONE ITEM AND IT IS NECESSARY TO READ WASTE AND SCRAP TOGETHER. IT IS FURTHER POINTED BY THE TRIBUNAL THA T WASTE AND SCRAP IS A SINGULAR ITEM, SAME ARISE OUT OF THE MANUFACTURING/ MECHANICAL WORKING ON THE MATERIAL AND SAME IS NOT USABLE AS SUCH. IT WAS ALSO POINTED OUT BY THE TRIBUNAL THAT FUNDAMENTALLY SCRAP AND WASTE IS SMALL OR LESSER QUANTITY OF MATERIAL WHICH IS LEFT AFTER THE GREATE R PART IS USED IN MANUFACTURING PROCESS. ACCORDING TO AMERICAN DICTI ONARY, DOC IS DEFINED AS THE SOLID RESIDUE THAT IS LEFT AFTER CE RTAIN OILY SEEDS, SUCH AS COTTON SEEDS AND LINSEEDS HAVE BEEN PRESSED OF THEI R OIL. IT IS GROUND AND ITA NOS. 1542-1545 & CO NO.183-186/AHD/2013 ASSESSEE : GUJARAT AMBUJA EXPORTS LTD AY : 2009-10 TO 2012-13 20 USED AS CATTLE FEED OR FERTILIZER. FURTHER, IN AN ORDER BY THE GOVERNMENT OF INDIA NAMELY THE SOLVENT EXTRACTED OIL, DE-OILE D MEAL AND EDIBLE FLOUR (CONTROL) ORDER OF 1967' DEFINES DE-OILED MEA L (ANOTHER NOMENCLATURE OF DOC) AS DE-OILED MEAL MEANS THE R ESIDUE MATERIAL LEFT OVER WHEN OIL IS EXTRACTED BY A SOLVENT FRONT ANY O IL BEARING MATERIAL. THE PLAIN READING OF THE DEFINITION ABOVE INDICATES THAT IT IS A RESIDUE MATERIAL HAVING ENORMOUS ECONOMIC VALUE DUE TO PRES ENCE OF PROTEINS EVEN UPTO AN EXTENT OF 46%. THE EXTENT OF DOC FROM THE MANUFACTURING PROCESS IS TO THE TUNE OF 80-82% BY WEIGHT, MEANING THEREBY, FOR 100KG OF RAW MATERIAL, ABOUT 80 KG OF DOC IS GENERATED AND R EST IS OIL. MOST OF THE SALE OF DOC IS TOWARDS EXPORT SALE AND ONLY A VERY SMALL PORTION CONSTITUTES A LOCAL SALE WHICH IS NOT IN DISPUTE. A PLAIN READING OF DEFINITION OF SCRAP IN LIGHT OF THE JUDGEMENT IN TH E CASE OF NAVIN FLOURINE INTERNATIONAL LTD (SUPRA) WOULD SUGGEST THAT SCRAP WOULD INCLUDE ONLY SUCH WASTE AND SCRAP WHICH ARISES FROM MANUFACTURIN G OR MECHANICAL WORKING OF MATERIALS. FURTHER, SUCH SCRAP SHOULD NO T BE DEFINITELY USABLE AS SUCH. ACCORDINGLY, IT WOULD NOT INCLUDE IN WASTE OR SCRAP WHICH EITHER DOES NOT ARISE OR MANUFACTURING OR MECHANICAL WORKI NG OF MATERIALS WHICH IS USABLE AS SUCH. AS A COROLLARY, THE BY-PRO DUCTS GENERATED FROM MANUFACTURING PROCESS ARE NOT COVERED IN ABOVE DEFI NITION SINCE SAME COULD BE AS SUCH BY OTHER CONSUMERS. TO ELABORATE, PERUSAL OF ITA NOS. 1542-1545 & CO NO.183-186/AHD/2013 ASSESSEE : GUJARAT AMBUJA EXPORTS LTD AY : 2009-10 TO 2012-13 21 MANUFACTURING PROCESS OF DOC AMPLY TESTIFIES THAT T HE ENTIRE MANUFACTURING PROCESS IS DESIGNED TO OBTAIN TWO MAI N PRODUCTS WHICH ARE USABLE AS SUCH, NAMELY, OIL AND DOC. THIS DOC W HICH IS HIGH IN PROTEIN CONTENT IS USED AS A FERTILIZER OR CHICKEN FEED OR CATTLE FEED. THIS DOC ALSO IS PASS THROUGH VARIOUS OTHER MANUFACTURIN G STAGES TO SUIT THE CUSTOMERS AS IS REQUIRED BY THEM. THE ENORMOUS ECON OMICAL VALUE OF DOC IS TESTIFIED BY THE FACT THAT MORE THAN 80% IS GENERATED AND OUT OF SUCH GENERATION, AROUND 90% IS EXPORTED TO DIFFEREN T COUNTRIES. ALL THE AFORESAID FACTS INDICATE THAT DOC IS A BY-PRODUCT A ND IT CERTAINLY CANNOT BE CATEGORIZED AS SCRAP AND WASTE AND IT HAS ITS OW N MARKET VALUE. GENERALLY, THE SCRAP IS EITHER THROWN OUT OR SOLD A T CHEAPER RATE BECAUSE IT CANNOT BE USED AS RAW MATERIAL FOR MANUFACTURED OR DIFFERENT ITEMS. IN THE CASE OF A BY-PRODUCT, IT HAS ITS OWN MARKET VAL UE AND CAN BE USED AS SUCH. IN VIEW OF ABOVE, WE FIND THAT THE CIT(A) WAS JUSTIFIED IN HOLDING THAT THE ASSESSING OFFICER HAS ERRED IN CATEGORIZIN G DOC AS SCRAP WITHIN THE MEANING OF EXPLANATION TO SECTION 206C OF THE I NCOME-TAX ACT. THIS VIEW IS ALSO FORTIFIED BY THE DECISION IN M/S. PRIY A BLUE INDUSTRIES PVT LTD (SUPRA). 5.3 REGARDING THE RAW COTTON BEING TREATED AS SCRAP , THE CIT(A) HAS REFERRED TO THE MANUFACTURING PROCESS OF COTTON YAR N WHICH IS REPRODUCED BELOW:- ITA NOS. 1542-1545 & CO NO.183-186/AHD/2013 ASSESSEE : GUJARAT AMBUJA EXPORTS LTD AY : 2009-10 TO 2012-13 22 UNDER THIS DIVISION COMPANY MANUFACTURES COTTON YA RN, RE- PROCESSABLE RAW COTTON, ETC., MANUFACTURING PROCESS IS FURNISHED IN THE EXHIBIT-2. THE MAIN RAW MATERIAL IS RAW COTTON. IN COTTON YARN DIVISION RAW COTTON IS PROCESSED AND COTTON YARN IS GENERATED, WHICH IS ALSO LARGELY EXPORTED. IN THAT PROCESS THE LOWER QUALITY OF COTTON IS SEPARATED, WHICH IS USABLE AS SUCH. FROM SUCH LOWER QUALITY COTTON THICK QUALIFY COTTON YARN IS M ANUFACTURED OR SUCH COTTON IS SOLD OUT TO THE MANUFACTURERS OF COT TON YARN. DURING THE PROCESS THE LOWER QUALITY COTTON IS SEPARATED A T VARIOUS PROCESSES, WHICH ARE CALLED AS DROPPING, COMBER NOI L, AND FLAT & HARD SWEEPING COTTON, WHICH ARE SOLD OUT AS COTTON AND FETCHES GOOD VALUE OF THE RAW MATERIAL. IN PROCESS MICRO DU ST AND INVISIBLE WASTE ARE GENERATED, WHICH ARE APPROXIMATELY 2% TO 2.5% OF INPUTS AND BROKEN YARN ARE GENERATED WHICH ARE CALLED AS W ASTE. IT SHOWS THAT THE ASSESSEE COMPANY MANUFACTURES COT TON YARN OF SPECIFIC QUALITY FROM RAW COTTON. IT WAS SUBMITTED THAT THE RAW MATERIAL IS SOURCED FROM DIFFERENT SUPPLIERS AND ACCORDINGLY TH E RAW MATERIAL OF DIFFERENT QUALITY ARRIVES IN ITS WAREHOUSE WHERE TH E FIRST TASK IS TO SEGREGATE THE COTTON OF ACCEPTABLE QUALITY FROM THE RAW MATERIAL SO THAT IT GOES INTO MANUFACTURING PROCESS FOR THE PRODUCTION OF COTTON YARN. IT WAS POINTED OUT THAT THE COTTON IS A NATURAL PRODUCT AN D LOWER COUNT COTTON IS SEPARATED IN ALL THE PROCESSES, NAMELY, CARDING, LA PPING, COMBER, SWEEPING, ETC. THIS PROCESS, AS POINTED OUT EARLIER , SEGREGATE COTTON INTO ACCEPTABLE RAW MATERIAL FOR ITS MANUFACTURING PROCE SS. THE OTHER RAW MATERIAL IS THEN SOLD OFF AS COTTON ONLY TO OTHER M ANUFACTURERS SINCE IT DOES NOT NEED A QUALITY STANDARDS OF COTTON YARN PR ODUCED BY THE APPELLANT, IT WAS POINTED OUT THAT SCRAP IN APPELLA NT'S CASE IS BROKEN YARN ITA NOS. 1542-1545 & CO NO.183-186/AHD/2013 ASSESSEE : GUJARAT AMBUJA EXPORTS LTD AY : 2009-10 TO 2012-13 23 OUT OF THE MANUFACTURING PROCESS OF COTTON YARN. SU CH BROKEN YARN IS CONSUMED IN A HOUSE FOR MACHINE CLEANING, FLOOR CLE ANING AND OTHER PURPOSES I.E. CONSUMED INTERNALLY AND NOT SOLD OUT AT ALL. IN THIS BACKGROUND, WE FIND THAT THE RAW MATERIAL ITSELF IS SEGREGATED. THE SEPARATED RAW COTTON, WHICH CANNOT PUT INTO MANUFAC TURING FOR THE PRODUCTION OF COTTON YARN, IS SOLD OFF AS RAW COTTO N. THE PERCENTAGE OF SO CALLED 'COTTON WASTE' AS A RESULT OF THIS SEGREGATI ON WAS AS HIGH AS 41% AND CONSTITUTE SUBSTANTIAL SALE AS WAS POINTED OUT BY THE ASSESSEE. THE RATIO OF RAW COTTON SALE AGAINST THE COTTON PURCHAS E UNDER VARIOUS YIELDS IS TABULATED AS UNDER: FIN. YEAR COTTON PURCHASE COTTON WASTE SALES %OF COTTON WASTE SALES QTY(MT) AMOUNT (RS.) QTY (MT) AMOUNT (RS) 2008-09 15805.291 1055687632 5005.368 205652575 31. 67 2009-10 23114.147 1530877054 5057.117 2743958B9 21.88 2010-11 10627.443 1188750768 4429.826 306810133 41.68 2011-12* 5118.464 579554390 1630.171 112605250 31.85 *UP TO THE DATE OF SURVEY U/S 133AOF INCOME TAX ACT 5.3.1 CONSIDERING ALL THESE FACTS ABOVE, WE FIND THAT THAT RAW COTTON IS ONLY A PART OF RAW MATERIAL WHICH IS OF LOWER QUALI TY (LOWER COUNT COTTON) FROM WHICH THE THIN YARN CANNOT BE MANUFACTURED SUC H THICK QUALITY COTTON WAS SEPARATED AT THE INITIAL WAREHOUSING STA GE AND SOLD OFF TO OTHER YARN MANUFACTURERS INCLUDING THAT FOR EXPORT. SO, THE CIT(A) WAS ITA NOS. 1542-1545 & CO NO.183-186/AHD/2013 ASSESSEE : GUJARAT AMBUJA EXPORTS LTD AY : 2009-10 TO 2012-13 24 JUSTIFIED IN HOLDING THAT SUCH RAW COTTON DOES NOT ARISE FROM MANUFACTURING OR MECHANICAL WORKING AS IT IS MERELY A SEGREGATION OF RAW MATERIAL AS WAS POINTED OUT BY THE ASSESSEE. T HEREFORE, THESE REASONED FINDING OF THE CIT(A) NEED NO INTERFERENCE FROM OUR SIDE, WHICH IS CONFIRMED. 5.4 REGARDING MAIZE HUSK (FIBER), THE STAND OF THE ASSESSEE HAS BEEN THAT IT IS A BY-PRODUCT AND IS SOLD OFF COMMERCIALL Y. THE MANUFACTURING PROCESS SUGGESTS THAT THE MAIZE SEEDS ARE PROCESSED AND VARIOUS PRODUCTS LIKE MAIZE STARCH, BLULAN, GEMS, FIBER (HUSK) AND M AIZE OIL ARE PRODUCED. FROM MAIZE STARCH, VARIOUS VALUE ADDED PRODUCTS LIK E LIQUID GLUCOSE, DEXTROSE, MALTOS, SORBITOL, ETC ARE PRODUCED. EVEN MAIZE HUSK IS A LIQUID OR IN A DRY FORM AFTER DUE PROCESSING AS PER THE RE QUIREMENT OF THE CUSTOMERS. THE PERCENTAGES OF HUSK AS A BY-PRODUCT IS CLOSE TO 10% AND IT IS MAINLY USED IN POULTRY FARM, ANIMAL FOOD AND PHA RMA INDUSTRIES. SINCE MAIZE HUSK FIBER IS ITSELF SUBJECTED TO VARIOUS MAN UFACTURING STAGES AND AS ENORMOUS ECONOMIC VALUE, IT IS ONE PRODUCT MANUF ACTURED AND CANNOT BE CONSIDERED AS A WASTE OR SCRAP WITHIN THE MANUFA CTURING PROCESS. IN VIEW OF THE ABOVE, THE CIT(A) WAS JUSTIFIED IN HOLD ING THAT MAIN HUSK IS A BY-PRODUCT AND THE SAME CANNOT BE CONSIDERED AS SCR AP AND WASTE AS PROVIDED IN THE EXPLANATION TO SECTION 206C OF THE INCOME-TAX ACT. ITA NOS. 1542-1545 & CO NO.183-186/AHD/2013 ASSESSEE : GUJARAT AMBUJA EXPORTS LTD AY : 2009-10 TO 2012-13 25 6. NEXT ISSUE IS WITH REGARD TO THE DEDUCTION OF TA X AT SOURCE ON PAYMENT OF PORT CHARGES AMOUNTING TO RS.2,76,26,489 /-. THE ASSESSEE ON SUCH PORT CHARGES HAS DEDUCTED TAX U/S 194C @ 2%. HOWEVER, THE ASSESSING OFFICER WAS OF THE VIEW THAT THE TDS SHOU LD HAVE BEEN MADE U/S 194J @ 10% SINCE NATURE OF SUCH PORT CHARGES WA S THAT OF PROFESSIONAL SERVICES. THE ASSESSING OFFICER THUS RAISED A DEMAN D U/S 201/201(1A) FOR NON-DEDUCTION OF TAX AT SOURCE ON THE DIFFERENT IAL AMOUNT. BEFORE THE ASSESSING OFFICER, THE ASSESSEE MADE DETAILED SUBMI SSIONS WHICH ARE REPRODUCED AS UNDER:- PORT CHARGES AND APPLICABILITY OF SEC 194C/194J IN THIS REGARD, WE WOULD LIKE TO INFORM TO YOUR GOO D SELF THAT WE APPOINTED C&F AGENTS AT VARIOUS PORTS FROM WHERE WE ARE EXPORTING/IMPORTING GOODS FROM & TO INDIA. BEFORE E NTERING INTO BUSINESS WITH THESE AGENTS, APPELLANT COMPANY ENTER ED INTO AN AGREEMENT WITH THESE AGENTS WHICH COMPRISES OF FOLL OWING FACTORS:- A) RECEIVING THE GOODS FROM THE FACTORIES OR PREMI SES OF THE PRINCIPAL OR HIS AGENTS; B) ARRANGING OF LABOURER FOR DOING VARIOUS WORKS AT PORT & VARIOUS WAREHOUSES. C) WAREHOUSING THESE GOODS AT PORT: D) RECEIVING DISPATCH ORDERS FROM THE PRINCIPAL; E) ARRANGING DISPATCH OF GOODS AS PER THE DIRECTI ONS OF THE PRINCIPAL BY ENGAGING TRANSPORT ON HIS OWN OR THROU GH THE AUTHORIZED TRANSPORTERS OF THE PRINCIPAL; F) MAINTAINING RECORDS OF THE RECEIPT AND DISPA TCH OF GOODS AND THE STACK AVAILABLE AT THE PORTS- G) PREPARING INVOICE ON BEHALF OF THE PRINCIPAL . H) SUBMITTING OF VARIOUS DOCUMENTS ON BEHALF OF PRINCIPAL WITH CUSTOM AUTHORITIES. ITA NOS. 1542-1545 & CO NO.183-186/AHD/2013 ASSESSEE : GUJARAT AMBUJA EXPORTS LTD AY : 2009-10 TO 2012-13 26 I) PAYMENT OF WARFARE, DEMURRAGE, PORT CHARGES, ETC ON BEHALF OF PRINCIPAL AS AND WHEN REQUIRE. J) ANY OTHER ACTIVITY WHICH IS REQUIRE TO DO IN CL EARANCE OF EXPORTING/IMPORTING OF DOCUMENTS, GOODS ETC ON BEHA LF OF PRINCIPAL. IT IS SUBMITTED THAT AS PER THE SEC 194COFTHE ACT, MEANING OF THE 'CONTRACT' 'ANY PERSON RESPONSIBLE FOR PAYING ANY SUM TO ANY R ESIDENT (HEREAFTER IN THIS SECTION REFERRED TO AS THE CONTR ACTOR) FOR CARRYING OUT ANY WORK (INCLUDING SUPPLY OF LABOUR FOR CARRYI NG OUT ANY WORK0 IN PURSUANCE OF A CONTRACT BETWEEN CONTRACTOR AND A SPECIFIED PERSON SHALL, AT THE TIME OF CREDIT OF SU CH SUM TO THE ACCOUNT OF THE CONTRACTOR OR AT THE TIME OF PAYMENT THEREOF IN CASH OR BY ISSUE OF A CHEQUE OR DRAFT OR BY ANY OTHER MO DE.' 'IT IS FURTHER SUBMITTED THAT IN CIRCULAR NO. 715 D ATED 08-08-1995, THE CLARIFICATION ON VARIOUS PROVISIONS RELATING TO TDS WERE GIVEN IN THE FORM OF QUESTIONS AND ANSWERS, Q. NO. 6 & 7 ARE REPRODUCED WITH REPLIES: QUESTION 6: WHETHER PAYMENT UNDER O CONTRACT FOR CA RRIAGE OF GOODS OR PASSENGERS BY ANY MODE OF TRANSPORT WOULD INCLUDE PAYMENT MADE TO A TRAVEL AGENT FOR PURCHASE OF A TI CKET OR PAYMENT MADE TO A CLEARING AND FORWARDING AGENT FOR CARRIAG E OF GOODS? ANSWER: THE PROVISION OF SECTION 194C SHALL, HOWEVE R, APPLY WHEN A PLANE OR A BUS OR ANY OTHER MODE OF TRANSPORT IS CHARTERED BY ONE OF THE ENTITIES MENTIONED IN SECTION 194C OF THE AC T AS REGARDS PAYMENTS MADE TO CLEARING AND FORWARDING AGENT FOR CARRIAGE OF GOODS, THE SAME SHALL BE SUBJECTED TO TAX DEDUCTION AT SOURCE UNDER SECTION 194C OF THE ACT. QUESTION 7: WHETHER A TRAVEL AGENT/CLEARING AND FO RWARDING AGENT WOULD BE REQUIRED TO DEDUCT TAX AT SOURCE FROM THE SUM PAYABLE BY THE AGENT TO AN AIRLINE OR OTHER CARRIER OF GOODS O R PASSENGERS? ANSWER: THE TRAVEL AGENT, ISSUING TICKETS ON BEHALF OF THE AIRLINES FOR TRAVEL OF INDIVIDUAL PASSENGERS WOULD NOT BE RE QUIRED TO DEDUCT TAX AT SOURCE AS THE ACTS ON BEHALF OF THE AIRLINES . THE POSITION OF CLEARING AND FORWARDING AGENTS IS DIFFERENT. THEY A CT AS INDEPENDENT CONTRACTORS. ANY PAYMENT MADE TO THEM W OULD, ITA NOS. 1542-1545 & CO NO.183-186/AHD/2013 ASSESSEE : GUJARAT AMBUJA EXPORTS LTD AY : 2009-10 TO 2012-13 27 HENCE, BE LIABLE FOR DEDUCTION OF TAX AT SOURCE. TH EY WOULD ALSO BE LIABLE TO DEDUCT TAX AT SOURCE WHILE MAKING PAYMENT S TO A CARRIER OF GOODS. THE ABOVE DEFINITION OF CONTRACT U/S. 194C AND CIR CULAR IT IS DEAR THAT THE CLEARING AND FORWARDING AGENTS ARE CONTRAC TORS AND NOT PROFESSIONALS AS STATED BY YOUR GOOD SELF, IT IS FU RTHER SUBMITTED THAT THE C&F AGENTS ARE PROVIDING HELPING SERVICES AT PORTS, IN THE ORGANIZED WAY, IT DOES NOT MEAN THAT THEY ARE PROFE SSION LIKE DOCTORS, CHARTERED ACCOUNTANTS, ENGINEERS, ETC. THE ACT ALSO VERY DEARLY DEFINES THE STATUS OF CLEARING AND FORWARDIN G AGENT AS INDEPENDENT CONTRACTORS AND THUS, THE PAYMENTS TO C LEARING AND FORWARDING AGENTS, AND THE TDS DEDUCTED U/S. 194C I S AS PER PROVISIONS OF THE ACT AND WITH REFERENCE TO CIRCULA R ISSUED BY CBDT.' 'ASSESSEE COMPANY HAS FURNISHED THE SPECIMEN INVOIC ES OF CHA PARTIES FOR REFERENCE IN ANNEXURE (1-17) VIDE LETTE R DATED 14-11-2011 INTERALIA, STATING WE ONCE AGAIN SUBMIT THAT CLEARI NG AND FORWARDING AGENTS ARE CONTRACTORS AND NOT PROFESSIO NS. THEIR STATUS ALSO IS DEFINED AS INDEPENDENT CONTRACTORS A ND THUS PAYMENTS TO THEM ATTRACT TDS AS PER THE PROVISIONS OF SECTION 194(C) OF THE ACT' 6.1 THE ASSESSING OFFICER REJECTED THE CONTENTION OF THE ASSESSEE BY OBSERVING THAT THE ASSESSEE HAS TAKEN A VERY NARROW MEANING OF THE TERM 'PROFESSIONAL SERVICES'. ACCORDING TO THE ASSESSING OFFICER, THE PROFESSIONAL SERVICES DEFINED IN INCOME-TAX ACT WER E ONLY INDICATIVE AND NOT EXHAUSTIVE. THE ASSESSING OFFICER FURTHER OBSER VED THAT THE ASSESSEE HAS ENTERED INTO AN AGREEMENT WITH C&F AGENTS AT VA RIOUS PORTS IN INDIA. SUCH AGREEMENT COMPRISES OF VARIOUS SERVICES TO BE PROVIDED BY C & F AGENTS WHICH INCLUDE RECEIVING OF GOODS, ARRANGING LABOUR, MAINTENANCE OF RECORDS AND ALSO PREPARATION OF INVOICES AND SUB MISSION OF VARIOUS ITA NOS. 1542-1545 & CO NO.183-186/AHD/2013 ASSESSEE : GUJARAT AMBUJA EXPORTS LTD AY : 2009-10 TO 2012-13 28 DOCUMENTS TO THE CUSTOM AUTHORITIES. THE ASSESSING OFFICER CONCLUDED THAT SINCE SERVICES RENDERED BY C& F AGENTS INCLUDE PREPARATION AND SUBMISSION OF DOCUMENTS TO CUSTOM AUTHORITIES FOR G ETTING IMPORT AND EXPORT CLEARANCE, IT IS CLEARLY THE SERVICES IN THE NATURE OF PROFESSIONAL SERVICES. ACCORDING TO THE ASSESSING OFFICER, ON SU CH SERVICES SQUARELY FALL WITHIN THE AMBIT OF PROVISIONS OF SECTION 194J BEING THE PROFESSIONAL SERVICES, TDS @ 10% SHOULD HAVE BEEN DEDUCTED. WITH RESPECT TO CIRCULAR NO. 715 DATED 8.8.1995, THE ASSESSING OFFICER OBSER VED THAT QUESTION NO. 6 OF THE CIRCULAR REFERS TO PAYMENTS MADE TO C & F AGENTS FOR CARRIAGE OF GOODS AND NOT FOR DOCUMENTATION OR PAPER WORK DONE BY C & F AGENTS. THE ASSESSING OFFICER THUS REJECTED THE CONTENTION OF THE ASSESSEE AND HELD THAT FOR SUCH PAYMENTS UNDER THE HEAD 'PORT CH ARGES', TDS @ 10% AS PROVIDED U/S. 194J SHOULD HAVE BEEN DEDUCTED. 6.2 MATTER WAS CARRIED BEFORE THE FIRST APPELLATE A UTHORITY, WHEREIN VARIOUS CONTENTIONS WERE RAISED ON BEHALF OF THE AS SESSEE. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE BEFORE T HE CIT(A) POINTED OUT THE RECENT DECISION OF ITAT-DELHI BENCH IN THE CASE OF GLAXO SMITHCLINE CONSUMER HEALTH CARE PVT. LTD. VS ITO, 12 SOT 221 (DELHI) WHEREIN IT WAS HELD THAT PAYMENT TO C&F AGENTS IN PURSUANT TO AGREEMENT ENTERED WITH THEM WOULD ATTRACT TDS U/S. 194C AND NOT 194J. THE RELEVANT PORTION OF THE DECISION IS REPRODUCED BELOW:- ITA NOS. 1542-1545 & CO NO.183-186/AHD/2013 ASSESSEE : GUJARAT AMBUJA EXPORTS LTD AY : 2009-10 TO 2012-13 29 SECTION I94C, READ WITH SECTION 194J OF THE INCOME -TAX ACT, 1961 - DEDUCTION OF TAX AT SOURCE- CONTRACTORS /SUB-CONTRA CTORS, PAYMENT TO ASSESSMENT YEAR 2000-01 TO 2003-04 - WHETHER OF CLEARING AND FORWARDING AGENTS ARE NEITHER PROFESSIONAL SERVICES , NOR TECHNICAL SERVICES AND THEREFORE, TAX IN RESPECT OF THESE SER VICES IS NOT DEDUCTIBLE UNDER SECTION 194J - HELD, YES ASSESSE E, ON PAYMENT MADE TO CLEARING AND FORWARDING AGENT HAD DEDUCTED TAX AT SOURCE AS PER PROVISIONS OF SECTION 194C ASSESSING OFFIC ER HELD THAT SERVICES RENDERED BY AGENT TO ASSESSEE WERE IN NATU RE OF MANAGERIAL SERVICES AND, THEREFORE, TAX SHOULD HAVE BEEN DEDUCTED ON SUCH PAYMENT UNDER SECTION 194J - WHETHER SINCE PAYMENT MADE BY ASSESSEE TO AGENT WAS FOR SERVICES RELATING TO STORAGE, DISPATCH, TRANSPORTATION, LOADING AND UNLOADING OF GOODS ETC., ASSESSEE HAD RIGHTLY DEDUCTED TAX AT SOURCE UNDER S ECTION 194C- HELD, YES, - WHETHER, THEREFORE, LOWER AUTHORITIES WERE NOT JUSTIFIED FOR TREATING SERVICES RENDERED TO ASSESSE E AS FALLING UNDER SECTION 194J- HELD, YES CIRCULARS AND NOTIFICATIONS -CBDT CIRCULAR NO. 720, DATED 30-8- .. (JUDGEMENT IN PARA 7) 'IT WAS CRYSTAL CLEAR FROM THE TERMS OF THE AGREEME NT THAT THE PAYMENT MADE BY THE ASSESSEE TO THE C&F AGENT WAS F OR CONSOLIDATED SET OF SERVICES. THE MAIN OBJECT OF TH E AGREEMENT WAS TO ENSURE CORRECT HANDLING AND DELIVERY OF GOADS AS PER THE TERMS OF THE ASSESSEE. AS PER THE NATURE OF SERVICES REND ERED, THE SAME WAS IN PARI MATERIA TO THE SERVICES AS CONTEMPLATED UNDER SECTION 194C, AND THE SAME WAS NOT FOR ANY PROFESSIONAL OR TECHNICAL SERVICES AS MENTIONED UNDER SECTION 194J. [PARA 6) IT IS CRYSTAL DEAR FROM THE PROVISIONS OF SECTION 1 94J THAT SERVICES OF THE AGENTS ARE NEITHER PROFESSIONAL SERVICES, NOR T ECHNICAL SERVICES. SUCH SERVICES ARE ALSO CLEARLY NOT IN THE NATURE OF TECHNICAL, CONSULTANCY OR MANAGERIAL SERVICES. THEREFORE, TAX IN RESPECT OF THESE SERVICES IS NOT TO BE DEDUCTIBLE UNDER SECTIO N 194J. THE CBDT, IN ITS CIRCULAR NO. 720 DATED 30-8-1995, HAD ALSO P ROVIDED THAT VARIOUS PROVISIONS OF CHAPTER XVII, RELATING TO DED UCTION OF TAX AT SOURCE ARE MUTUALLY EXCLUSIVE AND THAT CHAPTER XVII DEALS WITH A PARTICULAR KIND OF PAYMENT TO THE EXCLUSION OF ALL OTHER SECTIONS IN THIS CHAPTER. THUS, PAYMENT OF ANY SUM SHALL BE LIA BLE FOR DEDUCTION OF TAX ONLY UNDER ONE SECTION. THEREFORE, PAYMENT IS ALSO LIABLE FOR TAX DEDUCTION ONLY UNDER ONE SECTION, AS WARRANTED BY ITA NOS. 1542-1545 & CO NO.183-186/AHD/2013 ASSESSEE : GUJARAT AMBUJA EXPORTS LTD AY : 2009-10 TO 2012-13 30 THE NATURE OF SERVICES STIPULATED THEREIN. SINCE, I N THE INSTANT CASE, PAYMENT MADE BY THE ASSESSES TO THE AGENT WAS FOR T HE SERVICES, WHICH WAS PREDOMINANTLY FOR 'CARRYING OUT WORK' INT ER ALIA, RELATING TO STORAGE, DISPATCH, TRANSPORTATION, LOAD ING AND UNLOADING OF GOODS, ETC., THE ASSESSES HAD RIGHTLY DEDUCTED T AX AT SOURCE UNDER SECTION 194C. [PARA 7] 6.3 IN THIS BACKGROUND, THE CIT(A), HAVING CONSIDER ED THE AFORESAID SUBMISSIONS OF THE ASSESSEE, ALLOWED THE CLAIM OF T HE ASSESSEE AS CLAIMED AND THE SAME HAS BEEN OPPOSED BEFORE US ON BEHALF O F THE REVENUE, INTER ALIA, SUBMITTING THAT THE CIT(A) ERRED IN DELETING THE ADDITION MADE U/S. 201(1)/201(1A) OF THE ACT FOR AY 2009-10, ON SHORT DEDUCTION OF TAX AT SOURCE OF 1,56,24,221/- BY APPLYING PROVISIONS OF SECTION 194C OF THE IT ACT INSTEAD OF 194J OF THE ACT ON PAYMENT OF PORT CHARGES MADE TO C&F AGENTS. ON THE OTHER HAND, LD. AUTHORIZED REPRESEN TATIVE FOR THE ASSESSEE SUPPORTED THE ORDER OF THE CIT(A) AND RELI ED UPON VARIOUS JUDICIAL PRONOUNCEMENTS TO SUPPORT THE SAME. 6.4 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE BEFORE US IS WHETHER THE PROVISI ONS OF SECTION 194C OR 194J TO BE MADE APPLICABLE FOR THE PAYMENT MADE TO C&F AGENTS? OUT OF THE TOTAL PORT CHARGES FOR ANY GIVEN ASSESSMENT YEA R; MOST OF THE PORT CHARGES ARE PAID DIRECTLY TO VARIOUS SERVICES PROVI DED LIKE FUMIGATOR, SHIPPING LINE AGENT, TRANSPORTER, ETC. WITH RESPECT TO PAYMENT TO C&F AGENTS, THE ASSESSEE HAS GIVEN COMPLETE DETAILS FOR BREAKUP OF PAYMENTS ITA NOS. 1542-1545 & CO NO.183-186/AHD/2013 ASSESSEE : GUJARAT AMBUJA EXPORTS LTD AY : 2009-10 TO 2012-13 31 MADE TO C&F AGENTS BEFORE THE LOWER AUTHORITIES. SU CH BREAKUP INCLUDES ALL SUCH EXPENDITURE WHICH WERE IN THE NATURE OF RE IMBURSEMENT AND THE AGENCY CHARGES BY SUCH C&F AGENTS. FOR THE TOTAL PA YMENTS MADE TO C&F AGENTS, THE ASSESSEE HAS DEDUCTED TDS U/S 194C OR A T A LOWER RATE IF SUCH C&F AGENT HAS PROVIDED CERTIFICATE OF TAX DEDUCTION AT SOURCE AT LOWER RATE ISSUED BY THEIR RESPECTIVE ASSESSING OFFICERS. FOR EXAMPLE, FOR AY 2008-09, THE DETAILED BREAKUP OF PORT CHARGES IS EV IDENT FROM THE DETAILS NARRATED AS UNDER:- VENDOR NAME NATURE OF SERVICE TOTAL AMOUNT TPS AMOUNT PESTALERT CHEMICALS PVT LTD FUMIGATOR 571,117 12940 CONTAINER MOVEMENT (BOM) TRANSPORT SHIPPING LINE AGENT 22,390 516 MARINE CONTAINER SERVICES ( I) P LTD SHIPPING LIN E AGENT 56,497 1,280 DIGRANI SHIPPING S LOGISTICS TRANSPORTER 701,498 15,898 KOTAK GLOBAL. LOGISTICS LTD TRANSPORTER 16,533,328 76,831 SEATRANS LOGISTICS TRANSPORTER 2,885,168 65,380 S ANAND CARGO MOVERS TRANSPORTER 96,857 2,194 ASHAPURA FORWARDERS PVT LTD C& F AGENT 5,364,051 121,435 DEI GRATIA LOGISTICS PVT LTD TRANSPORTER 153,500 3,479 GAUTAM FREIGHT PVT LTD TRANSPORTER 37,721,256 854,763 KHIMJI POONJA FREIGHT FORWARDS P C&F AGENT 6,237,609 8,513 LEO SHIPPING & LOGISTICS TRANSPORTER 12,877,161 291,792 OMEGA SHIPPING AGENCIES PVT LTD SHIPPING LINE AGENT 1,097,907 24,874 PEST CONTROL INDIA PVT LTD FUMI GATOR 525,892 11,915 PEST MORTEM (INDIA) PVT LTD FUMI GATOR 250,537 5,676 R C GUPTA LOGISTICS PVT LTD TRANSPORTER 2,873,804 65,150 S RAMDAS PPRAGJI FORWARDERS PVT LTD C&F AGENT 29,526,122 371,075 THE SHIPPING CORPORATION OF INDIA L SHIPPING LINE AGENT 2,609,273 59,125 PANLLOYD LOGISTICS PVT LTD TRANSPORTER 230,379 5,221 LILADHAR PASO O FORWARDERS C&F AGENT 3,890,628 88,126 ITA NOS. 1542-1545 & CO NO.183-186/AHD/2013 ASSESSEE : GUJARAT AMBUJA EXPORTS LTD AY : 2009-10 TO 2012-13 32 P LTD ALMIGHTY INTERNATIONAL LOGISTICS TRANSPORTER 450,477 10,208 INOIAL SHIPPING PVT LD SHIPPING LINE AGENT 223,250 5,058 POSEIDON SHIPPING AGENCY PVT LTD SHIPPING LIME AGENT 29,117 659 WSA SHIPPING SOMQAV PVT LTD SHIP PING LINE AGENT 6,252 142 SEAWAY S SHIPPING AND LOGISTICS LTD SHIPPING LINE AGENT 18,727 423 BENCHMAR X LOGISTICS SOLUTIONS P,LTD TRANSPORTER 90,127 2,042 GRAND TOTAL 125,049,423 2,104,765 BREAK-UP OF PAYMENT TO C & F AGENTS I.E.. REIMBURSEMENTS AND AGENCY CHARGES NAME OF CFIF AGENT REIMBURSEMENTS AGENCY CHARGES TOTAL ASHAPURA FORWARDERS PVT LTD 3,808,202 1,555,849 5,364,051 KHIMJI POONJA FREIGHT FORWARDERS PVT. LTD, 3,231,357 3,006,252 6,237,609 S RAMDAS PRAGJI FORWARDERS PVT LTD 28,476,689 1,049,433 29,526,122 LILADHAR PASOO FORWARDERS P LTD 3,105,067 785,561 3,890,628 TOTAL 38,621,314 6,397,095 45,018,409 6.5 FROM THE AFORESAID TABLE, IT IS CLEAR THAT FOR AY 2009-10 THE ASSESSEE HAS MADE PAYMENTS FOUR C&F AGENTS AS IS EVIDENT FRO M THE TABULAR SHEET. THE PAYMENT MADE TO ONE OF THE C&F AGENTS, NAMELY, S, RAMDAS PRAGJI FORWARDERS PVT. LTD, THE ASSESSEE HAS MADE A TOTAL PAYMENT OF RS.2,95,26,122/- WHICH CONSISTS OF RS.2,84,76,689/ - BEING THE EXPENDITURE WHICH ARE DIRECTLY REIMBURSED BY THE ASSESSEE AND T HE AGENCY CHARGES FOR THIS C&F AGENT AMOUNTING TO RS.10,49,433/-. THE ASS ESSEE HAS GIVEN FURTHER BREAKUP OF PAYMENTS TO THIS C&F AGENT BEFOR E THE LOWER ITA NOS. 1542-1545 & CO NO.183-186/AHD/2013 ASSESSEE : GUJARAT AMBUJA EXPORTS LTD AY : 2009-10 TO 2012-13 33 AUTHORITIES WHEREIN THEY HAVE SHOWN TDS @ 0.26% AS PER THE LOWER DEDUCTION CERTIFICATE FURNISHED BY THIS C&F AGENT U /S. 197 OF THE ACT. THE DETAILED BILLS GIVING DESCRIPTION OF VARIOUS SERVIC ES FOR PAYMENTS MADE DIRECTLY BY THE ASSESSEE WERE ALSO PLACED ON RECORD . FROM THIS THE CIT(A) FOUND THAT THAT THE ASSESSEES CONTENTION THAT IT W AS COVERED U/S. 194C IS DULY SUPPORTED BY THE CBDT CIRCULAR NO. 715 WHICH C ATEGORICALLY CLARIFIES THAT C&F AGENTS WERE IN THE NATURE OF IND EPENDENT CONTRACTORS AND THE SAME IS EVIDENT FROM QUESTION/ANSWER NO. 7 OF THIS CIRCULAR. THE COVERAGE OF C & F AGENTS U/S. 194C IS ALSO REINFORC ED BY THE JUDGEMENT GIVEN BY THE TRIBUNAL IN THE CASE OF GLAXO SMITHCLI NE CONSUMER HEALTH CARE PVT LTD. (SUPRA). FURTHER, THE AO'S CONTENTION THAT C&F AGENTS ARE COVERED U/S 194K AS THEY ARE INCLUDED IN THE EXPLAN ATION DEFINING PROFESSIONAL SERVICES APPEARS TO BE MISPLACED AS PR OFESSIONAL SERVICES IN 194J AS DEFINED AS UNDER: (A) 'PROFESSIONAL SERVICES' MEANS SERVICES RENDERE D BY A PERSON IN THE COURSE OF CARRYING ON LEGAL, MEDICAL, ENGINEERI NG OR ARCHITECTURAL PROFESSION OR THE PROFESSION OF ACCOU NTANCY OR TECHNICAL CONSULTANCY OR INTERIOR DECORATION OR ADV ERTISING OR SUCH OTHER PROFESSION AS IS NOTIFIED BY THE BOARD FOR TH E PURPOSES OF SECTION 44AA OR OF THIS SECTION; 7. IN THIS BACKGROUND, CIT(A) RIGHTLY FOUND THAT C &F AGENTS WERE NOWHERE REMOTELY INDICATED IN THE EXPLANATION TO SE CTION 194J OF INCOME TAX ACT NOR HAS BEEN EXPLAINED BY THE AO THAT HOW C &F WAS COVERED U/S. 194J OF THE INCOME-TAX ACT. THEREFORE, UNDER T HE GIVEN FACTS AND ITA NOS. 1542-1545 & CO NO.183-186/AHD/2013 ASSESSEE : GUJARAT AMBUJA EXPORTS LTD AY : 2009-10 TO 2012-13 34 CIRCUMSTANCES OF THE CASE, THE CIT(A) WAS JUSTIFIED IN HOLDING THAT THE ACTION OF ASSESSING OFFICER INVOKING PROVISION U/S 194J IN RESPECT TO PORT CHARGES PAYMENT FOR ALL THE ASSESSMENT YEARS AS UNS USTAINABLE IN LAW. THEREFORE, THE ORDER OF THE CIT(A) IN THIS REGARD D OES NOT REQUIRE ANY INTERFERENCE FROM OUR SIDE, WHICH IS CONFIRMED. 8. SIMILAR TWO ISSUES AROSE IN OTHER ASSESSMENT YEA RS ALSO, I.E., AYS 2010-11, 2011-12 & 2012-13. FACTS BEING IDENTICAL , SO FOLLOWING THE SAME REASONING, WE DO NOT FIND ANY INFIRMITY IN THE ORDE R OF THE CIT(A) AS DISCUSSED ABOVE. THUS, ALL THESE APPEAL FILED BY T HE REVENUE ARE DISMISSED. 9. IN THE RESULT, ALL APPEALS FILED BY THE REVENUE AND ALL CROSS- OBJECTIONS THEREOF FILED BY THE ASSESSEE ARE DISMIS SED AS INDICATED ABOVE. ORDER PRONOUNCED IN THE COURT ON 22NDJANUARY 2016 A T AHMEDABAD. SD/- SD/- ANIL CHATURVEDI SHAILENDRA KU MAR YADAV (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) AHMEDABAD; DATED 22/01/2016 BIJU T., PS !' #'$ / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ! ' ' # / CONCERNED CIT 4. ' ' # ( ) / THE CIT(A) 5. &'( ! , ' ! , / D R, ITAT, AHMEDABAD 6. (- . / GUARD FILE . / BY ORDER, TRUE COPY / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD