Siannar Taluka Sahkari Dudh Utpadak & Prakriya Sangh Maryadit, Nashik V. Income-tax Officer,

CO 65/PUN/2014

• Counselvise Citation: [2014] 122 COUNSELVISE.COM (IT) 9634 (ITAT-PUNE)
• Duration Of Justice: 13 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 28-05-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: misc
• Appeal Filed On: 15-05-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S P WALIMBE
• Assessee Lawyers: R P DAWARE
• Keywords: Opportunity of being heard
• Section: 143(3); 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI R.S. PADVEKAR, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO.1553/PN/2013 (ASSESSMENT YEAR : 2009-10) ITO, WARD-1(3), NASHIK .. APPELLANT VS. SINNAR TALUKA SAHAKARI DUDH UTPADAK AND PRAKRIYA SANGH MARYADIT, SINNAR,TAL : SINNAR, DIST : NASHIK-422103 PAN NO.AADAS3474Q .. RESPONDENT CO NO.65/PN/2014 (ASSESSMENT YEAR : 2009-10) SINNAR TALUKA SAHAKARI DUDH UTPADAK AND PRAKRIYA SANGH MARYADIT, SINNAR,TAL : SINNAR, DIST : NASHIK-422103 PAN NO.AADAS3474Q .. CROSS OBJECTOR VS. ITO, WARD-1(3), NASHIK .. APPELLANT IN THE APPEAL ASSESSEE BY : SHRI R.P. DAWARE REVENUE BY : SHRI S.P. WALIMBE DATE OF HEARING : 22-05-2014 DATE OF PRONOUNCEMENT : 28 -05-2014 ORDER PER R.K. PANDA, AM : THE APPEAL FILED BY THE REVENUE AND THE CO FILED BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER DATED 02-05-2013 OF THE CIT(A)-I, NASHIK RELATING TO A.Y. 2009-10. FOR THE SAKE OF CONVENIE NCE, BOTH THE APPEALS WERE HEARD TOGETHER ARE BEING DISPOSED OF BY THIS C OMMON ORDER. 2 ITA NO.1553/PN/2013 (A.Y. 2009-10) : 2. THIS IS THE SECOND ROUND OF LITIGATION BEFORE TH E TRIBUNAL. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE IS A F EDERAL MILK SOCIETY. IT FILED ITS RETURN OF INCOME ON 29-09-2009 DECLARING TOTAL LOSS OF RS.5,62,195/-. ORIGINAL ASSESSMENT WAS COMPLETED O N 23-12-2001 DETERMINING THE TOTAL INCOME AT RS.37,85,501/-. IN THE SAID ASSESSMENT THE ASSESSING OFFICER HAD DISALLOWED AN AMOUNT OF R S.37,85,501/- U/S.40(A)(IA) ON THE GROUND THAT THE ASSESSEE HAS N OT DEDUCTED TDS FROM THE COMMISSION PAID. IN FIRST APPEAL, THE CIT(A) D ISMISSED THE APPEAL OF THE ASSESSEE. THE ASSESSEE CARRIED THE MATTER IN T HE SECOND APPEAL TO THE ITAT, PUNE. THE TRIBUNAL VIDE ITA NO.535/PN/2012 O RDER DATED 25- 06-2012 HELD THAT THERE IS A DIFFERENCE BETWEEN A C ONTRACT OF SALE AND A CONTRACT OF AGENCY. THE TRIBUNAL, THEREFORE, SET ASIDE THE ORDER OF THE CIT(A) AND RESTORED THE MATTER TO THE FILE OF THE AO WITH A DIRECTION TO DECIDE THE MATTER DENOVO. 2.1 DURING THE COURSE OF ASSESSMENT PROCEEDINGS, TH E ASSESSEE SOUGHT FOR DIRECTIONS OF THE JT. COMMISSIONER OF IN COME TAX, RANGE-1, NASHIK WHO ISSUED THE DIRECTIONS HOLDING THAT THE T RANSACTION BETWEEN THE ASSESSEE AND THE PRIMARY SOCIETY CANNOT BE SAID TO BE ON PRINCIPAL TO PRINCIPAL BASIS. THE ASSESSING OFFICER VIDE ASSE SSMENT ORDER DATED 23/11/2012 U/S 143(3) R.W.S. 254 DATED 23/11/2012 H ELD THAT THE TRANSACTION BETWEEN THE ASSESSEE AND THE PRIMARY SO CIETIES CANNOT BE PRINCIPAL TO PRINCIPAL. HE, THEREFORE, TREATED THE ASSESSEE IN DEFAULT IN APPLYING THE PROVISIONS OF SECTION 194H. SECONDLY, HE DISALLOWED THE COMMISSION EXPENDITURE OF RS.37,85,501/- U/S 40(A)( IA) OF THE ACT. 3 3. BEFORE THE CIT(A) IT WAS SUBMITTED THAT THE ASSE SSING OFFICER DID NOT CONSIDER PROPERLY THE FATS THAT THE RELATIONSHI P OF THE ASSESSEE AND THAT PRIMARY SOCIETIES FOR THE PURCHASE OF SALE OF MILK IS ON PRINCIPAL TO PRINCIPAL BASIS AND THEREFORE THE DISALLOWANCE OF R S.37,85,501/- WAS UNCALLED FOR. 4. BASED ON THE ARGUMENTS ADVANCED BY THE ASSESSEE THE LD.CIT(A), FOLLOWING THE DECISION OF THE PUNE BENCH OF THE TRI BUNAL IN THE CASE OF GOVERNMENT MILK SCHEME VS. ACIT REPORTED IN 98 ITD 306, DELETED THE ADDITION OF RS.37,85,501/-. THE RELEVANT OBSERVATI ON OF THE CIT(A) READS AS UNDER : 5. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE , THE ASSESSMENT ORDER, THE ORDER OF THE ITAT AND THE SUBMISSIONS OF THE APPELLANT. THE ITAT IN I.T.A. NO.0.535/PN/2012 VIDE ORDER DATED 25 /06/2012 HAD SET ASIDE THE MATTER TO THE FILE OF THE AO HOLDING AS UND ER: 'AFTER GOING THE SUBMISSIONS AND THE MATERIAL ON RECORD , WE FIND THAT THE ASSESSEE HAS BEEN COLLECTING THE MILK ON DAILY BASIS BY WAY OF PURCHASES FROM VARIOUS SMALL PRIMARY MILK SOCIET IES LOCATED AT DIFFERENT PLACES. AFTER COLLECTING THE MI LK, THE ASSESSEE SOCIETY DOES THE MINOR PROCESSING OF MILK LIKE BULK COO LING OF MILK AND SALE OF MILK TO THE GOVERNMENT DIARY NAMELY MAHA RASHTRA GOVT. AND OTHER FEW MILK COOPERATIVE SOCIETIES. PURCH ASE RATE OF THE MILK HAS BEEN CLAIMED TO BE DECIDED BY DAIRY DEP ARTMENT OF THE STATE GOVERNMENT FROM TIME TO TIME. THE RATE DEP ENDS ON QUALITY OF MILK, TRANSPORTATION CHARGES, MAINTENANCE OF CHARGES, COMMISSION, ETC. TO THE PRIMARY ETC. LEARNED AUTHORIZ ED REPRESENTATIVE FOR ASSESSEE SUBMITTED THAT THERE IS NOTHI NG ON RECORD TO SUGGEST THAT PRIMARY SOCIETY HAS BEEN ACTING AS AGENT TO THE SOCIETY. BUYING OF MILK FROM PRIMARY SOCIETY AND SELLING OF MILK TO THE VARIOUS SOCIETIES ARE INDEPENDENT ACTIVITI ES. ACCORDING TO THE LEARNED AUTHORISED REPRESENTATIVE ASSESSEE HAS TO PAY ENTIRE COST OF MILK SUPPLIED BY PRIMARY SOCIETIES IRRESP ECTIVE OF THE QUALITY OF MILK SOLD BY THE ASSESSEE SOCIETY. THE AMO UNT OF RS.37,85,501/- PAID UNDER NOMENCLATURE COMMISSION WAS CLAIMED COMPOSITION OF PURCHASE PRICE OF MILK INCLUDI NG COMMISSION AND THEREFORE TDS PROVISIONS HAS TO BE LOOKED IN ITS FACTS AND CIRCUMSTANCES. THE ASSESSEE HAS SUBMITTED THAT THE ASSESSEE IS DOING BUSINESS ON PRINCIPAL TO PRINCIPAL BASIS A ND NOT ON THE AGENCY BASIS AND THE ASSESSEE'S INCOME IS ALSO EXEMPT ED UNDER THE PROVISIONS OF SECTION 80P(2)(A)(B). WE FIND THAT THE CONCEPT OF AGENCY AND PRINCIPAL TO PRINCIPAL HAS NOT BEEN APPRECIATED PROPERLY BY THE LOWER AUTHORITIES BEFORE REACHING TO THE CONCLUSION. THE LOWER AUTHORITIES HAVE ALSO NOT AP PRECIATED THE FACT THAT THE ASSESSEE HAS TO PURCHASE THE MILK AS P ER THE 4 DIRECTIONS OF THE STATE GOVERNMENT AND PURCHASE PRICE INCLUDES SO MANY ELEMENTS SUCH AS TRANSPORTATION CHARGES, COMMISSION, ETC. 6. ELEMENT OF AGENCIES ESSENTIALLY TO BE THERE IN CASE OF ALL SERVICES AND TRANSACTIONS CONTEMPLATED BY EXPLANATION (1) TO SECTION 194H. THERE IS A DIFFERENCE BETWEEN A CONTRACT OF SALE AND A CONT RACT OF AGENCY. HON'BLE GUJARAT HIGH COURT IN THE CASE OF AHMEDABAD STAMP VENDORS ASSOCIATION VS. UNION OF INDIA REPORTED IN (2000) 257 ITR 202 (GUJ.) WHEREIN STAMP VENDORS WERE REQUIRED TO PURCHASE STAMP P APERS FROM GOVERNMENT ON PAYMENT OF PRICE LESS DISCOUNT ON PRINCI PAL TO PRINCIPAL BASIS AND THERE WAS NO CONTRACT OF AGENCY AT ANY POINT OF TIME. THE LIABILITY OF STAMP VENDORS IS TO PAY PRICE LESS DISCOUNT WAS NOT DEPENDING OR CONTINGENT OPEN SALE AND STAMP PAPER BY VENDOR RE STRICTION OF SALE AND PROVISION OF GUJARAT STAMP SUPPLY AND SALES TAX R ULES, 1987, FOR SURRENDERING OF STAMP PAPER TO THE GOVERNMENT WOULD N OT RENDER ANY STAMP VENDOR AS AGENT. TRANSACTIONS AMOUNTED TO SALE, DI SCOUNT ALLOWED TO SUCH LICENSED STAMP VENDORS U/S GUJARAT STAMP SUPPLY A ND SALE RULES, 1987 DOES NOT FALL WITHIN THE EXPRESSION OF COMMISSION U /S 194H OF THE ACT. THEREFORE, DISCOUNT OF SALE OF STAMP PAPER DO NOT ATTRACT PROVISIONS OF SECTION 194H OF THE ACT. THERE IS A DISTINCTION BET WEEN CONTRACT OF SALE AND A CONTRACT OF AGENCY BY WHICH THE AGENT IS AUTHO RIZED TO SELL OR BUY ON BEHALF OF PRINCIPAL. THE ESSENCE OF THE CONTRACT O F SALE IS TRANSFER TO TITLE TO THE GOODS FOR A PRICE PAID OR A DEBTOR FOR THE PRICE TO BE PAID AND NOT AS AGENT FOR THE PROCEEDS OF SALE. THE ESSENCE OF AG ENCY TO SELL IS THE DELIVERY OF THE GOODS TO A PERSON WHO IS TO SELL THEM, NOT AS HIS OWN PROPERTY, BUT AS THE PROPERTY OF THE PRINCIPAL WHO C ONTINUES TO BE THE OWNER OF THE GOODS, AND WILL THEREFORE BE LIABLE TO ACCOUNT FOR THE SALE PROCEEDS, SECTION 194H DOES NOT CONTEMPLATE DISCOUNT G RANTED BY SELLER TO BUYER AS COMMISSION OR BROKERAGE. NO DOUBT THE PAYM ENT OF COMMISSION AND BROKERAGE IN RELATION TO SALE OR PURCHA SE OF GOODS WOULD ALSO ATTRACT DEDUCTION AT SOURCE U/S 194H OF THE ACT. HOWEVER, SUCH A SITUATION ARISE ONLY THERE IS A INVOLVEMENT OF SERVICE S OF A THIRD PARTY ON PAYMENT, AND OTHER THAN A SALE AND PURCHASE OF GOODS O R WHEN RECIPIENT BENEFIT MARKET GOODS AS AGENT AND NOT AS AN INDEPENDEN T DEALER. IN FACT THE ISSUE HAS NOT BEEN ANALYSED IN ITS TRUE PROPER PERSPE CTIVE. ACCORDING TO US, IT NEEDS DEEP PROBE INTO THE MATTER IN THE LIG HT OF ABOVE LEGAL DISCUSSION. SO, IN THE INTEREST OF JUSTICE WE SET-ASIDE TH E ORDER OF CIT(A) AND RESTORE THE MATTER TO THE AO WITH A DIRECTION TO DECIDE THE MATTER WHOLLY DENOVO AS PER FACTS AND LAW AFTER PROVIDING DU E OPPORTUNITY OF BEING HEARD TO THE ASSESSEE' ON AN IDENTICAL ISSUE THE ITAT, PUNE IN THE CASE OF GO VERNMENT MILK SCHEME VS. ACIT IN ITA NO.98 ITD 306 PUNE AND 281 IT R 288 PUNE HAS HELD UNDER : ON CAREFUL ANALYSIS OF THE ABOVE REFERRED PRECEDENT S, A CONCLUSION CAN BE DRAWN THAT THE PAYMENT IN QUESTION WAS NOT WITHIN THE EXPRESSION COMMISSION OR BROKERAGE AS PRE SCRIBED UNDER SECTION 194H. EXPLANATION(I) OF I.T. ACT. WE FIND THAT THE EXPRESSION 'COMMISSION AND BROKERAGE' HAVE BEEN USED NOT ONLY IN JUXTAPOSITION BUT IN COLLOCATION WITH ANOTHER PHR ASE, I.E. 'ACTING ON BEHALF OF ANOTHER PERSON FOR SERVICES RENDERED'. I T IS WELL- ESTABLISHED THAT ALL STATUTORY DEFINITIONS OR PROVISIONS MUST BE READ SUBJECT TO THE QUALIFICATION VARIOUSLY EXPRESSED D EPENDING UPON THE SUBJECT OR THE CONTEXT. SO, A JUDICIAL AUTH ORITY HAS NOT ONLY TO LOOK AT THE WORDS BUT ALSO TO LOOK AT THE CON TEXT, THE COLLOCATION AND THE OBJECT OF SUCH WORDS RELATING TO SUCH MATTER AND INTERPRET THE MEANING INTENDED TO BE CONVEYED B Y THE USE OF WORDS UNDER THE CIRCUMSTANCES. HENCE, THE RULE OF 'EJU SDEM GENERIS' HAS TO BE OBSERVED, I.E., WHETHER STATUTES ARE TO BE 5 UNDERSTOOD IN TERMS OF THEIR PLAIN LANGUAGE OR IN TER MS OF EITHER INTENTION HAVE LONG BEEN A MATTER OF CONTROVERSY AND THERE ARE NUMEROUS JUDGMENTS UPHOLDING THE STRENGTH OF THE ARGUM ENTS ON EITHER SIDE. IN THE FINAL ANALYSIS THERE IS NO CONTROVE RSY AND IT IS ONLY A QUESTION OF APPROACH. THE FIRST APPROACH SHOULD BE TO READ THE WORDS AS THEY ARE. IF THEY GIVE A COHERENT AND CO GENT MEANING WITHOUT LEADING TO ABSURD OR ANOMALOUS RESULTS, THEN THE ONLY THING THAT SHOULD BE DONE IS TO FOLLOW THE WORDS OF TH E STATUTE, LITERALLY. THIS IS THE RULE OF LITERAL INTERPRETATION . LITERAL INTERPRETATION PREVAILS, WHERE THE PLAIN WORDS OF THE STATUTE ARE CLEAR AND UNAMBIGUOUS AND NOT ABSURD OR UNJUST. OTHER WISE ALSO, THE LEGAL CONNOTATIONS OF THESE TWO EXPRESSIONS NAMELY 'COMMISSION' AND 'BROKERAGE' OBSERVED THAT IN COMMERCI AL LAW, THE COMMISSION IS A COMPENSATION TO AN AGENT FOR SERVICE S TO BE RENDERED. ACCORDING TO THE GIVEN DEFINITION, ALREAD Y DESCRIBED HEREINABOVE, IT IS AN ALLOWANCE OR REWARD MADE TO AG ENTS. THIS IS GENERALLY CALCULATED ON CERTAIN PERCENTAGE BASIS ON T HE AMOUNT OF THE TRANSACTION ON THE PROFITS TO THE PRINCIPAL. SO I T IS CLEAR FROM THE ABOVE DISCUSSION THAT AS A MATTER OF LAW, THERE IS A DISTINCTION BETWEEN A CONTRACT OF SALE AND CONTRACT OF AGENCY. T HROUGH A CONTRACT OF AGENCY, AN AGENT IS AUTHORIZED TO SELL OR BUY ON BEHALF OF THE PRINCIPAL. ON THE OTHER HAND, THE ESSENCE OF A CONTRACT OF SALE IS THE TRANSFER OF TITLE OF THE GOODS FOR A PRICE PAID OR PROMISED TO BE PAID. IN THE CONTEXT OF 'CONTRACT OF SALE', THE TRANSFEREE IS LIABLE TO THE TRANSFEROR AS A DEBTOR FOR THE PRICE PAID AND NOT AS AN AGENT FOR THE PROCEEDS OF THE SALE', THE TRANSFEREE IS LIABLE TO THE TRANSFEROR AS A DEBTOR FOR THE PRICE PA ID AND NOT AS AN AGENT FOR THE PROCEEDS OF THE SALE. DISTINCTION BETWEE N THE TWO IS APPARENT BECAUSE THE ESSENCE OF 'AGENCY TO SELL' IS THE DELIVERY OF GOODS TO A PERSON WHO IS TO SELL THEM NOT AS HIS OWN PR OPERTY BUT AS THE PROPERTY OF THE PRINCIPAL WHO CONTINUES TO BE THE OWNER OF THE GOODS. IN VIEW OF ABOVE DISCUSSION, THE ESSENCE OF TH E MATTER IS THAT IN THE PRESENT CONTEXT, WHILE DEALING WITH TH E MILK PROCURED AND SUPPLIED, IN BOTH THE CASES, THERE WAS A C ONTRACT OF SALE AND NOT CONTRACT OF AGENCY. ONCE THE BUYER BECO ME THE OWNER OF THE PROPERTY AND THE SELLER HAS NO VESTIGE OF TITLE LEFT IN THE PROPERTY, THE CONCEPT OF SALE PREVAILS. RESULTANTLY, A PPLYING THE AFORESAID DEFINITIONS AND THE JUDICIAL PRONOUNCEMENTS TO THE FACTS OF PRESENT CASE AND THE BACKDROP OF THE ABOVE DISCUSSION ON FACTS, WE HEREBY HOLD THAT THE TRANSACTION WAS ON PRINCIPAL TO PRINCIPAL BASIS AND THE APPELLANT WAS NOT LIABLE FOR DEDUCTION OF TAX AT SOURCE, HENCE THERE WAS NO INFRINGEMENT OF SECTION 19 4H OF THE I.T. ACT. WITH THE RESULT, THE LIABILITY CREATED BY AN ORDER UNDER SECTION 201(1) AND 201(1A) WAS BAD IN LAW. THE APP ELLANT SUCCEEDS AND GROUNDS ALLOWED'. 7 . FROM THE ABOVE REFERRED DECISION OF HON'BLE ITAT, PU NE IT HAS BEEN NOTICED THAT IN THE SAID CASE THE ASSESSEE HAS TO PROCURE MILK FROM MILK FEDERATIONS AND DISTRICT MILK SANGHS AND OTHER AGE NCIES. THEREAFTER, THE ASSESSEE HAS TO PROCESS THE MILK SO PROCURED AND ALSO PRODUCES PRODUCTS LIKE PANEER, SHRIKHAND, GHEE, LASSI, ETC. AND SOLD THE SAME IN OPEN MARKET THROUGH AUTHORIZED AGENTS. THE ASSESSEE HAS MADE PAYMENT TOWARDS MILK PROCURE FROM VARIOUS MILK FEDERAT IONS AND MILK SANGHS WHICH INCLUDED TRANSPORTATION CHARGES AND COMMI SSION TO SANGHS AND FEDERATIONS. THE AO HAS HELD THAT THE ABO VE PAYMENTS ARE COVERED BY PROVISIONS OF SECTION 194H OF THE ACT AND AS NO TDS HAS BEEN DEDUCTED AND PAID THE SAID COMMISSION PAYMENT FOR PROCU RING MILK IS LIABLE FOR DISALLOWANCE U/S 40(A)(IA). THE HON'BLE IT AT, HAS HELD THAT THE TRANSACTION OF PROCURING MILK AND SUPPLYING THE SAME THERE WAS 6 CONTRACT OF SALE AND NOT CONTRACT OF AGENCY. IN BOT H THESE TRANSACTIONS, THE BUYER HAS BECOME THE OWNER OF THE GOODS AND HEN CE THE TRANSACTION WAS ON PRINCIPLE TO PRINCIPLE BASIS. IN THE CASE UNDER APPEAL THE APPELLANT FEDERATION HAS PROCURED GOODS FROM PRIMARY SOCIETIES AND HAS BECOME OWNER OF THE SAID MILK PROCURED. THE SAID PRIMAR Y SOCIETIES WERE ALSO PAID PRICE FOR MILK PROCURED BY THEM, FIXED B Y STATE GOVERNMENT, WHICH INCLUDES COMMISSION, TRANSPORTATIO N CHARGES, ETC. AND THE AO HAS HELD THAT THE SAID COMMISSION INCLUDED IN THE PURCHASE PRICE IS LIABLE FOR TDS U/S 194H OF THE ACT. IN VIEW OF THE ABOVE FACTS, THE FACTS OF THE CASE DECIDED BY THE HON'BLE ITAT, PUNE IN THE CASE OF GOVERNMENT MILK SCHEME(SUPRA) ARE IDENTICAL. THE ISSUE TO BE DECIDED IN THE APPEAL UNDER CONSIDERATION IS, THEREFORE, COVER ED BY THE DECISION OF HON'BLE ITAT, PUNE IN THE CASE OF GOVERNMENT MILK SCHEME (SUPRA). IN VIEW OF THE ABOVE FACTS AND RESPECTFULLY FOLLOWING THE RATIO LAID DOWN BY THE ABOVE MENTIONED DECISION OF THE HON'BLE ITAT, PUNE, I HOLD THAT THE APPELLANT FEDERATION IS NOT LIABLE TO DEDUCT TDS U/S 194H ON THE AMOUNT OF RS.37,85,501/- PAID TO PRIMARY MILK SOCIETIE S FOR SUPPLYING MILK. THE AO IS, THEREFORE, NOT JUSTIFIED IN MAKING AD DITION OF RS.37,85,501/- ON ACCOUNT OF DISALLOWANCE U/S 40(A)( IA) OF THE ACT. THE ADDITION OF RS.37,85,501/- IS, THEREFORE, DELETED. TH E AO IS DIRECTED ACCORDINGLY. THE SUBSTANTIVE GROUND OF APPEAL IS ALLOWED. 5. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE REVE NUE IS IN APPEAL BEFORE US WITH THE FOLLOWING GROUNDS : 1) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A)-I, NASHIK WAS JUSTIFIED IN DELETING THE ADDITIO N OF RS. 37,85,501/- U/S. 40(A)(IA) OF THE I.T. ACT AS ASSESSEE MADE COMMISSION PAYMENTS WITHOUT DEDUCTING IDS AS PER PROVISIONS OF SECTION 194H OF THE I.T. ACT. 2) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE LD. CLT(A)-L, NASHIK WAS JUSTIFIED THE RELATION OF ASSESSEE AN D OTHER MILK SOCIETIES PRINCIPAL TO PRINCIPAL BASIS BUT ACTUALLY IT IS PRINCIPAL TO AGENT BASIS WHILE DEALING COMMISSION PAYMENT TO OTHER SOCIETIE S. 3) THE APPELLANT PRAYS THAT THE ORDER OF THE LD. CIT (A)-I, NASHIK MAY PLEASE BE CANCELLED AND THE ORDER OF THE ASSESSING OFFIC ER MAY PLEASE BE RESTORED. 6. THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED TH AT THE DECISION OF CIT(A) IS NOT ACCEPTABLE IN PRINCIPLE AS KEEPING IN VIEW OF THE DIRECTIONS U/S 144A OF THE IT. ACT GIVEN BY THE JT. CIT. R-L, NASHIK, THE TRANSACTION BETWEEN ASSESSEE AND PRIMARY SOCIETIES CANNOT BE SAID TO BE ON PRINCIPAL TO PRINCIPAL BASIS. THIS IS BECAUSE TH E TRANSACTIONS ARE GOVERNED BY LAW OF CO-OP SOCIETY AND PRIMARY MILK S OCIETIES HAVE TO SELL MILK TO ASSESSEE WHO IN TURN HAS TO SELL THE MILK T O THE STATE FEDERATIONS. 7 THE PURPOSE OF THE TRANSACTIONS/RULES AND REGULATIO NS OF FEDERATION IS TO STRENGTHEN THE CO-OPERATIVE SOCIETIES AND TO INCREA SE MILK SUPPLIES. THUS, THE CLAIM OF THE ASSESSEE THAT TRANSACTION BETWEEN IT AND THE PRIMARY CO- OP SOCIETIES ARE ON PRINCIPAL TO PRINCIPAL BASIS WA S NOT CORRECT. THE ASSESSEE IS EARNING COMMISSION INCOME AND IS PASSIN G A PORTION THEREOF TO THE SOCIETIES AND THE TRANSACTION IS OF COMMISSI ON AS ACCEPTED BY ASSESSEE ITSELF IN ITS FINANCIAL STATEMENT. THUS IT IS CLEAR IN THE FACTS OF THE CASE THAT COMMISSION IS BEING PAID FOR THE SERVICES RENDERED BY THE PRIMARY SOCIETIES. THEREFORE, THE ASSESSEE SOCIETY IS FOUND TO HAVE DEFAULTED IN COMPLYING WITH THE TDS PROVISIONS BY N OT DEDUCTING TDS AND HENCE, THE COMMISSION EXPENDITURE OF RS.37,85,5 01/- IS BEING DISALLOWED U/S 40(A)(IA) OF THE I. T. ACT. 7. THE LD. COUNSEL FOR THE ASSESSEE ON THE OTHER HA ND HEAVILY RELIED ON THE ORDER OF THE CIT(A). HE SUBMITTED THAT THE ISSUE STANDS DECIDED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF GOVERNMENT MILK SCHEME (SUPRA) WHICH HAS BEEN FOLLOWED BY THE CIT(A). NOTHING CONTRARY HAS BEEN BROUGHT BY THE LD. DEPARTMENTAL REPRESENTATIVE, THEREFORE, THE ORDER O F THE CIT SHOULD BE UPHELD. 8. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAV E ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE US. WE FIND THE LD. CIT(A) WHILE DECIDING THE ISSUE HAS FOLLOWED THE DECISION OF THE PUNE BEN CH OF THE TRIBUNAL IN THE CASE OF GOVERNMENT MILK SCHEME (SUPRA). NOTHIN G CONTRARY WAS 8 BROUGHT TO OUR NOTICE AGAINST THE SAID ORDER OF THE TRIBUNAL WHICH HAS BEEN RELIED ON BY THE LD. CIT(A). THEREFORE, THIS BEING A COVERED MATTER WE UPHOLD THE ORDER OF THE CIT(A) ON THIS ISSUE. T HE GROUNDS RAISED BY THE REVENUE AREA ACCORDINGLY DISMISSED. CO NO.65/PN/2014 (A.Y.2009-10) : 9. AFTER HEARING BOTH THE SIDES, WE FIND THE GROUND S RAISED BY THE ASSESSEE IN THE CO ARE MERELY IN SUPPORT OF THE ORD ER OF THE CIT(A). WE HAVE ALREADY DISMISSED APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE CIT(A), THEREFORE, THE GROUNDS IN THE CO WHICH ARE MERELY IN SUPPORT OF THE ORDER OF THE CIT(A) BECOME INFRUCTUO US. ACCORDINGLY, THE SAME IS DISMISSED. 10. IN THE RESULT, THE APPEAL FILED BY THE REVENUE AS WELL AS THE CO FILED BY THE ASSESSEE ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON 28-05-2014. SD/- SD/- (R.S. PADVEKAR) (R.K. PAND A) JUDICIAL MEMBER ACCOUN TANT MEMBER PUNE DATED: 28 TH MAY, 2014 SATISH COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. DEPARTMENT 3. THE CIT(A)-I, NASHIK 4. THE CIT-I, NASHIK 5. THE D.R, B PUNE BENCH 6. GUARD FILE BY ORDER // TRUE COPY // SENIOR PRIVATE SECRETARY ITAT, PUNE BENCHES, PUNE