DM, Nawanshahr V. The Income Tax Officer, (TDS) I, Jalandhar

ITA 161/ASR/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 9626 (ITAT-AMRITSAR)
• Duration Of Justice: 4 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 03-08-2016
• Assessment Year: 2013-2014
• Appeal Filed On: 14-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: P N ARORA; PARSHOTAM K SINGLA
• Keywords: Rule of consistency
• Section: 194C; 32; 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR BEFORE SH. A.D.JAIN, JUDICIAL MEMBER AND SH. T.S. KAPOOR, ACCOUNTANT MEMBER I.T.A NOS. 158 & 159 (ASR)/2016 ASSESSMENT YEARS: 2012-13 & 2013-14 DM, PUNJAB STATE CIVIL SUPPLIES CORPORATION LTD., HOSHIARPUR. PAN:JLDP00121C VS. ITO (TDS)-1, JALANDHAR (APPELLANT) (RESPONDENT) I.T.A NOS. 160 &161 (ASR)/2016 ASSESSMENT YEARS: 2012-13 & 2013-14 DM, PUNJAB STATE CIVIL SUPPLIES CORPORATION LTD., NAWANSHAR. PAN:JLDD00397F VS. ITO (TDS)-1, JALANDHAR (APPELLANT) (RESPONDENT) APPELLANT BY: SH. P.N.ARORA & SH. PARSHOTAM K. SINGLA (ADV.) RESPONDENT BY: SH. RAHUL DHAWAN (DR.) DATE OF HEARING: 03.08.2016 DATE OF PRONO UNCEMENT: 04.08.2016 ORDER PER T. S. KAPOOR (AM): THIS IS A BUNCH OF FOUR APPEALS FILED BY TWO DIFFE RENT ASSESSEES AGAINST THE SEPARATE ORDERS OF LEARNED CIT(A), JALA NDHAR, BOTH DATED 30.12.2015. IN BOTH CASES THE LEARNED CIT(A) HAS PA SSED CONSOLIDATED ORDERS FOR ASST. YEARS: 2012-13 & 2013-14. ITA NOS. 158 TO 161 (ASR) /2016 ASST. YEARS: 2012-13 & 2013-14 2 2. ITA NOS.158 & 159(ASR)/2016 HAS BEEN FILED BY DM , STATE CIVIL SUPPLIES CORPORATION LTD., HOSHIARPUR AND ITA NOS.1 60 & 161(ASR)/2016 HAS BEEN FILED BY DM, STATE CIVIL SUPPLIES CORPORAT ION LTD., NAWANSHAR. 3. SIMILAR ISSUES ARE INVOLVED IN ALL THESE FOUR AP PEALS AND THESE WERE HEARD TOGETHER, THEREFORE, FOR THE SAKE OF CONVENIE NCE A COMMON AND CONSOLIDATED ORDER IS BEING PASSED. 4. AT THE OUTSET, THE LEARNED AR INVITED OUR ATTENT ION TO ADDITIONAL GROUNDS OF APPEAL RAISED BY ASSESSEE VIDE LETTER DA TED 01.06.2016 AND SUBMITTED THAT ASSESSEE WAS NOT INTERESTED IN PRESS ING THE ADDITIONAL GROUND OF APPEAL AND THEREFORE, THE SAME MAY BE DIS MISSED AS NOT PRESSED. 5. INVITING OUR ATTENTION TO THE FACTS OF THE CASE, THE LEARNED AR SUBMITTED THAT ASSESSEES ARE BRANCHES OF STATE GOVE RNMENT AGENCY WHICH PROCURES PADDY FROM THE MARKET IN EVERY CROP SEASON AND CUSTOM MILLING OF THIS PADDY IS DONE BY VARIOUS MILLERS WI TH WHOM CONTRACTS ARE EXECUTED. AS PER THE CONTRACTS, THE MILLERS ARE PA ID RS. 15 PER QNTL, AS MILLING CHARGES AND MILLERS ARE ALSO ENTITLED TO GE T BY PRODUCTS GENERATED IN THE PROCESS OF MILLING OF RICE. FURTHER AS PER T HE CONTRACT THE MILLERS ARE REQUIRED TO SUPPLY 67/68 KG OF RICE FOR EVERY Q UINTAL OF PADDY SUPPLIED BY THE AGENCY. THE LEARNED AR SUBMITTED TH AT DURING ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER OBSER VED THAT ASSESSEE HAD DEDUCTED TDS ON THE AMOUNT OF MILLING CHARGES P AID TO THE MILLERS ITA NOS. 158 TO 161 (ASR) /2016 ASST. YEARS: 2012-13 & 2013-14 3 WHEREAS ON THE VALUE OF BYPRODUCTS RETAINED BY MILL ERS NO TDS WAS DEDUCTED. THE ASSESSING OFFICER HELD THAT ALL THE B YPRODUCTS OF PADDY, AS DEEMED PAYMENTS AND CONSIDERED THEM AS PART OF MILL ING CHARGES AND THEREFORE, HELD THAT THE ASSESSEES WERE REQUIRED TO DEDUCT TDS ON THE VALUE OF BYPRODUCTS RETAINED BY THEM. THE LEARNED A R SUBMITTED THAT SIMILAR ISSUES HAVE ALREADY BEEN DECIDED BY THE HON BLE TRIBUNAL IN THE CASE OF DM, STATE CIVIL SUPPLIES CORPORATION LTD., HOSHIARPUR IN ITA NO.214 TO 216 (ASR)/2016 AND IN THIS RESPECT FILED A COPY OF THE SAID ORDER. THE LEARNED AR SUBMITTED THAT HONBLE TRIBUN AL IN THIS CASE HAD FOLLOWED THE CASE LAW OF M/S THE PUNJAB STATE CORPO RATION SUPPLY AND FEDERATION LTD., NAWANSHAR VS. ITO, TDS-1, JALANDHA R. IN ITA NOS.54 TO 56(ASR)/2016, FOR ASST. YEARS:2012-13 & 2014-15. 6. THE LEARNED DR, ON THE OTHER HAND SUBMITTED THAT L EARNED CIT(A) HAS ALREADY ALLOWED RELIEF TO THE ASSESSEE B Y RELYING ON THE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF HINDUSTAN COCA- COLA BEVERAGES (PVT.) LTD. VS. CIT, AND LEARNED CIT(A) HAS ONLY HELD THAT INTEREST WAS TO BE CHARGED FROM THE ASSESSEE, THEREFORE, THERE WAS NO GRIEVANCE LEFT AS LEARNED CIT(A) HAS ALREADY ALLOWED RELIEF TO THE ASSESSEE. 7. THE LEARNED AR IN HIS REJOINDER SUBMITTED THA T THE ASSESSEES ARE CONTESTING THE LIABILITY TO DEDUCT TDS AND WHEN THE ASSESSEE WAS NOT LIABLE TO DEDUCT TDS THERE IS NO QUESTION O F LEVYING OF ANY INTEREST. ITA NOS. 158 TO 161 (ASR) /2016 ASST. YEARS: 2012-13 & 2013-14 4 8. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE TH ROUGH THE MATERIAL PLACED ON RECORD. WE FIND THAT SIMILAR ISS UE HAS BEEN DECIDED BY THE TRIBUNAL IN ITA NOS.214 TO 216(ASR)/2016 VIDE O RDER DATED 01.07.2016 WHEREIN THE HONBLE TRIBUNAL HAS DECIDED THE ISSUE AFTER RELYING UPON THE ORDER OF THE TRIBUNAL IN THE CASE OF M/S. THE PUNJAB STATE CO.OPERATIVE SUPPLY AND MARKETING FEDERATION LTD., NAWANSHAHAR VS. ITO, TDS-1, JLANDHAR, IN ITA NOS.54 TO 56(ASR) /2016. THE FINDINGS OF HONBLE TRIBUNAL AS CONTAINED FROM 6 ONWARDS ARE RE PRODUCED BELOW. 6. HAVING HEARD THE RIVAL CONTENTIONS IN THE LIGHT OF THE MATERIAL AVAILABLE ON RECORD, WE FIND THAT THE LD. CIT(A) HA S RIGHTLY DIRECTED THE AO NOT TO TREAT THE ASSESSEE IN DEFAULT AS FAR AS T HE PROVISIONS OF SECTION 201(1)/201(1A) OF THE I.T ACT ARE CONCERNED. THE OR DER OF THE LD. CIT(A) IS REASONED ONE AND DOES NOT REQUIRE ANY INTERFERENCE. 7. AN IDENTICAL ISSUE HAS ALSO BEEN DECIDED BY THIS BENCH BY AN ORDER OF EVEN DATE IN THE CASE OF M/S. THE PUNJAB STATE CO-OPERATIVE SUPPLY AND MARKETING FEDERATION LTD., NAWANSHAHAR V S. ITO, TDS-1, JALANDHAR, IN ITA NOS. 54 TO 56(ASR)/2016, FOR THE ASSESSMENT YEARS 2012-13 TO 2014-15, IN FAVOUR OF THE ASSESSEE AND A GAINST THE REVENUE BY HOLDING AS UNDER: 14. HAVING CONSIDERED THE RIVAL CONTENTIONS ON TH E MERITS OF THE LEGAL ISSUE RAISED BY THE ASSESSEE, WE FIND THAT TH E FACTS, AS CONVASSED, ARE NOT IN DISPUTE, THE LD. IN THE CASE OF PUNJAB STATE GRAIN PROCUREMENT CORPORATION LIMITED, VIDE ORDER D ATED 25.01.2016, ON EXACTLY SIMILAR FACTS AND CIRCUMSTAN CES, AS DECIDING THE LEGAL ISSUE RAISED HEREIN, HELD TDS NOT LIABLE TO BE DEDUCTED, IN A SIMILAR SITUATION. THE RELEVANT PORTION OF THE SA ID ORDER, READS AS FOLLOWS: 8. I HAVE CAREFULLY GONE THROUGH THE ORDER OF MY L D. COLLEAGUE (CIT(A), PATIALA AND ALSO THE ORDER OF TH E HONBLE ITAT, DELHI, AS REFERRED ABOVE. THE ONLY DIFFERENCE BETWEEN ITA NOS. 158 TO 161 (ASR) /2016 ASST. YEARS: 2012-13 & 2013-14 5 THE CONTRACTS AS DISCUSSED IN THE DECISION OF THE H ONBLE ITAT, DELHI AND THE ASSESSEE GOVERNMENT AGENCY AND THE RICE MILLERS IS THAT APART FROM THE BYE PRODUCTS LE FT WITH MILLERS, THE MILLERS ARE PAID RS.15/- PER QTL. ON W HICH TDS IS DULY DEDUCTED AND THERE IS NO DISPUTE AS TO THE FAC TS. REST OF THE FACTS ARE IDENTICAL. THE HONBLE ITAT HAS DISC USSED IN GREAT DETAILS EVERY ASPECT OF THE TRANSACTION, LEGA L ISSUES INVOLVED AND HAD EXAMINED THE ISSUE AT HAND FROM VA RIOUS ANGLES AND FOUND THAT IN TERMS OF SECTION 194C OF T HE I.T. ACT NO TAX WAS DEDUCTIBLE. MOREOVER, THIS IS THE ONLY D ECISION AVAILABLE BEFORE ME AND NO ADVERSE DECISION IS KNOW N AND RESPECTFULLY FOLLOWING THE SAME AS WELL AS THE ORDE R OF MY LD. COLLEAGUE (CIT(A), PATIALA WHO HAS, IN HIS ORDER DA TED 29.11.2015 AS REFERRED ABOVE, I HEREBY DIRECT THE A O NOT TO TREAT THE ASSESSEE IN DEFAULT AS FAR AS THE PROVISI ONS OF SECTION 201/201(1A) OF THE I.T. ACT ARE CONCERNED. 15. HENCE, THE SAME LD. CIT(A), IN OUR CONSIDERED, COULD NOT HAVE BEEN TAKEN A DIFFERENT VIEW IN THE CASE OF A SIMILA RLY PLACED ASSESSEE. THE RULE OF CONSISTENCY SQUARELY APPLIES. THE ABOVE APART, IN AHAAR CONSUMER PRODUCTS (P) LTD. (SUPRA ), IT HAS BEEN HELD AS FOLLOWS: 12. NOW, WE HAVE TO EXAMINE WHETHER THE ASSESSEE I S OBLIGED TO DEDUCT TAX AT SOURCE ON THE SO-CALLED CO NSTRUCTIVE PAYMENT AS CONSTRUED BY THE ASSESSING OFFICER IN TE RMS OF THE AGREEMENT. THE ASSESSEE, IN THIS CASE, SUPPLIES 100 KG OF WHEAT AND TAKES BACK 88 KGS. OF ATTA OR 85 KGS. OF DALIA AFTER ITS PROCESSING DONE BY THE AIL AND AM- IS REQ UIRED TO DELIVER THE END PRODUCT IN THIS PROPORTION TO THE A SSESSEE WHO HAS SUPPLIED THE RAW MATERIAL. DOES THE PROVISI ON OF SECTION 194C OF THE ACT CREATE AN OBLIGATION ON THE PART OF ASSESSEE TO DEDUCT TAX AT SOURCE IN RESPECT OF ANY OF THE TRANSACTIONS IT HAS ENTERED INTO WITH THE AIL? SECTION 194C OF THE ACT WAS BROUGHT INTO STATUTE BY THE FINANCE ACT , 1972. CIRCULAR NO. 86 DATED MAY 29, 1972 WAS ISSUED INTER ALIA STATING THAT THE PROVISIONS OF SECTION 194C WOULD A PPLY ONLY IN RELATION TO LABOUR CONTACTS AND WOULD NOT COVER CONTRACTS FOR SALE OF GOODS. IF A MANUFACTURER PURCHASES MATE RIAL ON HIS OWN AND MANUFACTURES A PRODUCT AS PER THE REQUI REMENT OF A SPECIFIC CUSTOMER, IT WAS A CASE OF SALE AND N OT A CONTRACT FOR CARRYING OUT ANY WORK. THE FACT THAT T HE GOODS MANUFACTURED WERE ACCORDING TO THE REQUIREMENT OF T HE CUSTOMER DID NOT MEAN OR IMPLY THAT ANY WORK WAS CA RRIED ITA NOS. 158 TO 161 (ASR) /2016 ASST. YEARS: 2012-13 & 2013-14 6 OUT ON BEHALF OF THAT CUSTOMER. IN CASE OF ANY ISSUE WHERE THE CONTRACT IS A CONTRACT OF SALE AND NOT A CONTRA CT FOR CARRYING OUT ANY WORK, THE MATTER SHOULD BE DECIDED IN THE LIGHT OF THE PRINCIPLES LAID DOWN BY THE HONBLE SU PREME COURT IN STATE OF TAMIL NADU V. SH THIRUMAGAL MILLS LTD. AIR 1972 SC 1148. THE BOMBAY HIGH COURT HAS ALSO ANALYZ ED THE DIFFERENCE BETWEEN THE SALE AND WORKS CONTRACT IN THE CASE OF BDA LTD. V. ITO (TDS) [2006] 281 ITR 99 1 . THE ASSESSEE IN THAT CASE HAD A DISTILLERY AT AURANGABA D AND PURCHASED MATERIALS REQUIRED FOR BOTTLING AND MARKE TING FOREIGN MADE INDIAN LIQUOR, INCLUDING THE PRINTING AND PACKING MATERIAL. M, ANOTHER ESTABLISHMENT SUPPLI ED THE PRINTED LABELS TO BE WRAPPED ON THE BOTTLES TO THE ASSESSEE. THE ITO (TDS) DID NOT ACCEPT THE CONTENTIONS OF THE ASSESSEE THAT THE TRANSACTION WITH IVI WAS A CONTRACT FOR SALE AND NOT A WORKS CONTRACT. WHEN THE PRINTING WORK WAS BEING CARRIED OUT IN THE PREMISES OF M, THOUGH AS PER THE SPECI FICATIONS OF THE ASSESSEE, THE SUPPLY WAS LIMITED TO THE QUANTIT Y SPECIFIED IN THE PURCHASE ORDER. THERE WAS NOTHING ON RECORD TO SHOW THAT, ALL OTHER ANCILLARY COSTS LIKE THE LA BELS, INK, PAPERS, SCREEN- PRINTING SCREENS, ETC. WERE BEING S UPPLIED BY THE ASSESSEE TO IVI. IN THE FACTS OF THIS CASE, T HE SUPPLY OF PRINTED LABELS BY M TO THE ASSESSEE WAS 'CONTRACT OF SALE' AND IT COULD NOT BE TERMED A 'WORKS CONTRACT'. HENC E THE PROVISIONS OF SECTION 194C WERE HELD TO BE NOT APPL ICABLE. 13. THE HIGH COURT WHILE DECIDING THIS CASE HAS REV IEWED A NUMBER OF CASES AND DECIDED THAT THE SALE OF CONTRA CT DOES NOT CONVERT A CONTRACT OF SALE INTO A WORKS CONTRAC T ALTHOUGH WE AGREE THAT THESE CASES BY THEMSELVES MAY NOT BE ABLE TO THROW ANY LIGHT ON THE PRESENT CONTRACT ENTERED INT O BY THE ASSESSEE. HENCE, THE ASSESSEE IS SUPPLYING WHEAT AN D GETTING BACK ATTA OR DALIA AS THE CASE MAY BE, IN A N AGREED PROPORTION. FOR SUCH EXCHANGE, THERE IS ABSOLUTELY NO PAYMENT OF ANY CONSIDERATION. EVEN IF ONE WERE TO T REAT IT AS A WORK CONTRACT AND NOT A CONTRACT OF SALE, IT IS D IFFICULT TO SAY THAT THERE IS A PAYMENT AS A CONSIDERATION FOR THE LABOUR OR THE WORK THAT IS RENDERED. THE ASSESSEE IS JUST EXC HANGING THE PRODUCT; IN THE EXCHANGE HE IS NOT GETTING THE SAME PRODUCT BUT A DIFFERENT PRODUCT AND NOT TO THE SAME EXTENT BUT TO A DIFFERENT EXTENT. IN OTHER WORDS, IT IS DI FFICULT TO SAY THAT THE ASSESSEE HAS MADE ANY PAYMENT IN UNDERTAKI NG THIS CONTRACT ON THE BASIS OF THE AGREEMENT THAT IS ACTED UPON BY THE PARTIES. THERE IS NO PAYMENT OF ANY SUM BY T HE ITA NOS. 158 TO 161 (ASR) /2016 ASST. YEARS: 2012-13 & 2013-14 7 ASSESSEE TO AIL. EVEN IF ONE WERE TO SAY THAT THERE IS A CONSTRUCTIVE PAYMENT, IT IS DIFFICULT TO QUANTIFY T HE SAME AND SAY THAT THE ASSESSEE WAS UNDER AN OBLIGATION TO DE DUCT TAX AT SOURCE AT SUCH CONSTRUED PAYMENTS. THE ASSESSEE HAS NOT EVEN CREDITED SUCH CONSTRUED CONSIDERATION FOR SUPP LY OF LABOUR IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. IN FACT, IT HAS NOT EVEN CLAIMED ANY EXPENDITURE AS DEDUCTION. TO S AY THAT SUCH EXPENDITURE HAS RESULTED IN AN OUTFLOW WITHOUT DEDUCTION OF TAX AT SOURCE IS TOO MUCH AND IS NOT B ORNE OUT FROM THE TRANSACTION ENTERED INTO BETWEEN THE PARTI ES. THE QUESTION OF DISALLOWANCE BY APPLYING THE PROVISIONS OF SECTION 40(A)(IA ), IN OUR OPINION, IS NOT IN ACCOR DANCE WITH LAW AS THE ASSESSEE IS UNDER NO OBLIGATION TO DEDUC T THE TAX AT SOURCE IN TERMS OF A CONTRACT WHERE IT DOES NOT REQUIRE ANY PAYMENT OF ANY SUM EVEN IF THE SUM HERE MEANS THAT THE PAYMENT COULD BE OF SOME KIND BUT IT IS DIFFICULT T O SAY THAT THE ASSESSEE HAS MADE THESE PAYMENTS TO THE EXTENT OF SHORTFALL IN GETTING THE WHEAT SUPPLIED BACK AND CO NSTRUE IT AS THE PAYMENT TO THE OTHER FOR PROCESSING THE WHEA T INTO ATTA OR DALIYA. THE DEPARTMENT MUST HAVE APPRECIATE D THE CONTRACT AS A WHOLE WHICH DOES NOT INVOLVE ANY PAYM ENT OR GETTING THE PAYMENT FOR SERVICES RENDERED. IT IS A CASE OF BARTER OR EXCHANGE OR ONE GOOD AGAINST THE OTHER. I T IS A TYPE OF SALE CONTRACT IN A VERY CRUDE FORM BUT IT IS CER TAINLY NOT A WORKS CONTRACT AS UNDERSTOOD BY THE COURTS IN CASES UNDER THE SALES TAX WHICH WAS DISCUSSED BY THE HONBLE SU PREME COURT IN THE CASE CITED IN SIR THIRUMAGAL MILLS LTD . (SUPRA) OR IN THE CASE DEALT WITH BY THE BOMBAY HIGH COURT IN THE CASE OF BDA LTD. (SUPRA ). THE ASSESSEE HAVING REGARD TO THE CONTRACT WHICH IT HAS ENTERED ON 2-2-2005, IN OUR O PINION, DOES NOT GIVE RISE TO ANY OBLIGATION FOR IT TO DEDU CT TAX AT SOURCE AS IN OUR OPINION IT IS NOT SIMPLY A WORKS C ONTRACT EXECUTED FOR CONSIDERATION IN THE FORM OF SOME PAYM ENT FOR WHICH DEDUCTION HAS BEEN CLAIMED UNDER THE ACT. THE ASSESSEE HAS NOWHERE CLAIMED THE PAYMENT AS DEDUCTI ON. ONLY PU R CHASE ONCE OF WHEAT IS WHAT IT HAD PAID ON WHICH NO DEDUCTION OF TAX IS REQUIRED AND THAT GOT LOST IN E XCHANGE FOR OBTAINING A FINISHED PRODUCT IN THE FORM OF ATTA OR DALIA, NOT INVOLVING THE MEDIUM OF PAYMENT. IT IS A CONTRACT O F BUSINESS WHICH DOES NOT INVOLVE ANY PAYMENT OF CONSIDERATION FOR THE SERVICES RENDERED. WE MUST EXAMINE THE ISSUE FROM A NOTHER ANGLE. HAD THE ASSESSEE OWNED THE PLANT AND GOT THE ATTA AND DALIA MANUFACTURED FROM WHEAT, IT COULD HAVE CL AIMED A PROCESS LOSS AND THAT COULD HAVE BEEN IMPLIEDLY A P ART OF ITA NOS. 158 TO 161 (ASR) /2016 ASST. YEARS: 2012-13 & 2013-14 8 BUSINESS TRANSACTION AND NO QUESTION OF ANY DISALLO WANCE OF SUCH LOSS COULD POSSIBLY HAVE ARISEN. MERELY BECAUS E THE ASSESSEE HAS GOT IT ROUTED THROUGH ANOTHER CONCERN ON A SORT OF OUTSOURCING BASIS, IT DOES NOT RESULT IN AN OUTF LOW. IT IS JUST AN EXCHANGE AND BARTER OF ONE COMMODITY AGAINST THE OTHER AND THE WHOLE CONTRACT CANNOT BE TERMED AS WORKS CO NTRACT IN THE STRICT SENSE OF THE TERM WHICH IS GENERALLY UNDERSTOOD UNDER THE PROVISIONS OF SECTION 194C. IN OUR OPINIO N, THE ASSESSING OFFICER WENT WRONG IN PRESUMING THAT THE DIFFERENCE IN THE WHEAT SUPPLY AND THE ATTA OR DALI A GOT IN RETURN REPRESENTS SUM PAID FOR SERVICES RENDERED AN D PAYMENTS FOR SUCH SERVICES ARE CLAIMED AS DEDUCTION FROM THE PROFIT AND GAINS OF BUSINESS UNDER SECTION 32 T O SECTION 38. ONLY WHEN THE CLAIM OF THE ASSESSEE FOR DEDUCTI ON IS UNDER SECTION 32 TO SECTION 38, THE PROVISIONS OF S ECTION 40(A)( IA) CAN BE PRESSED INTO SERVICE TO DISALLOW SUCH CLAIMS FOR DEDUCTION. AT THE COST OF REPETITION, WE MAY SA Y THAT TO INVOKE SAID PROVISION OF SECTION 40(A)(IA ), FIRST OF ALL, THE CASE SHOULD BE MADE OUT BY THE DEPARTMENT THAT THE ASSES SEE IS CONTEMPLATING DEDUCTION UNDER SECTIONS 32 TO 38 ON WHICH TAX IS DEDUCTIBLE AND THE ASSESSEE HAS NOT DEDUCTED TAX AT SOURCE. IN OUR OPINION, TAX IS NOT DEDUCTIBLE AND T HE ASSESSEE HAS NOT CLAIMED ANY DEDUCTION UNDER SECTION 32 TO S ECTION 38. THIS LOSS, IF ANY, IS IN THE NET PROFIT IN THE TRADING ACCOUNT WHICH IS A COMPUTATION UNDER SECTIONS 28 AND 29 AND NOT CLAIMS UNDER SECTIONS 32 TO 38 OF THE INCOME-TAX AC T. EVEN TAKING THIS VIEW OF THE MATTER, IN OUR OPINION, THE ASSESSEE IS ENTITLED TO SUCCEED AND THERE IS NO QUESTION OF DED UCTION OF TAX AT SOURCE AND CONSEQUENTLY NO QUESTION OF MAKIN G ANY DISALLOWANCE BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA ) OF THE ACT. 14. WE MUST ALSO VIEW THE WHOLE TRANSACTION UNDER THE AGREEMENT FROM A DIFFERENT ANGLE. THE ASSESSEE GIVE S THE WHEAT AND ACCEPTS ATTA AND DALIA IN RETURN BY WEIGH T TO WEIGHT BASIS AND WHAT HE GOT IN RETURN ARE THE VALU E ADDED PRODUCTS OF LOWER QUANTITY. THE ASSESSEE BY THIS ME THOD HAS PREVENTED ITSELF FROM FACTORS LIKE FALL IN THE PRIC ES OF EITHER RAW MATERIAL OR OF THE FINISHED PRODUCTS. THE MARKE T VALUE OF THE WHEAT AND THE END PRODUCTS ARE TOTALLY DIFFEREN T AND FLUCTUATE IN DIFFERENT DIRECTIONS. ALL THESE FLUCTU ATIONS ARE WARDED OFF BY THE PRESENT AGREEMENT, WHICH IS JUST EXCHANGE OF GOODS FOR GOODS AND DOES NOT INVOLVE ANY CASH OU TFLOW. ALTHOUGH SERVICES WERE TAKEN, IT IS DIFFICULT TO SA Y THAT THE ITA NOS. 158 TO 161 (ASR) /2016 ASST. YEARS: 2012-13 & 2013-14 9 RESIDUALS AND THE LOSSES LEFT BY THE ASSESSEE IN FA VOUR OF AIL ARE PURELY CONSIDERATION FOR THE JOB THAT IS DONE T HE MARKET FLUCTUATIONS IN THE PRICE STRUCTURE OF THE RAW MATE RIAL AND THE END PRODUCT CANNOT BE JUST IGNORED IN THE WHOLE TRA NSACTION NOR THE PROCESS LOSS. THE PROCESS LOSS COULD BE EIT HER MORE OR LESS THAN THE PERCENTAGE AGREED TO BETWEEN THE PART IES. BUT STILL THE PARTIES SETTLE THE TRANSACTIONS AT AN AGR EED PROPORTION. IN OTHER WORDS, THE RESIDUAL THAT IS LE FT BY THE ASSESSEE, APART FROM COVERING THE LABOUR COST OF PR OCESSING, ALSO INCLUDES THE PROTECTION FROM MARKET FLUCTUATIO NS AS ALSO PROTECTION FROM ADVERSE PROCESS LOSS. TO CONCLUDE, THE ENTIRE RESIDUAL IS ONLY FOR THE PURPOSE OF JOB WORK IS NOT FAIR AND CORRECT HAVING REGARD TO THE TOTALITY OF THE TRANSA CTION ENTERED INTO BY THE PARTIES. THE CIT(A) HAS GIVEN THE FAVOURABLE ORDER RELYING U PON THE ORDER OF THE HONBLE DELHI ITAT IN THE ABOVE NOTED CASE. 16. THE FACTS IN THE PRESENT CASE ARE DIRECTLY AND SQUARELY COVERED BY AHAAR CONSUMER PRODUCTS P LTD. (SUPR A). IN FACT, AHAAR CONSUMER PRODUCTS P LTD. (SUPRA) FORMED THE BASIS OF THE DECISION OF THE LD. CIT(A), DECIDING THE LEGAL ISSU E IN FAVOUR OF THE ASSESSEE IN THE CASE OF PUNJAB STATE GRAIN PROCURE MENT CORPORATION LTD. (PUNGRAIN), HOSHIARPUR. TO REITER ATE, THE STAND OF THE PRESENT ASSESSEE IS EXACTLY SIMILAR TO THAT OF PUNGRAIN. THEREFORE, IT CANNOT BE DISPUTED THAT THE OBSERVATI ONS OF THE TRIBUNAL IN AHAAR CONSUMER PRODUCTS P LTD. (SUPRA ) ARE ALSO DIRECTLY APPLICABLE TO THE PRESENT ASSESSEE AS WEL L. THEREFORE, FOLLOWING AHAAR CONSUMER PRODUCTS P LTD. (SUPRA), WE HOLD THAT THE ASSESSEE WAS NOT REQUIRED TO MAKE TDS UNDER SEC TION 194C ON THE VALUE OF THE BYE PRODUCTS. THIS ISSUE IS, ACCOR DINGLY, DECIDED IN FAVOUR OF THE ASSESSEE. 17. AS NOTED IN THE INITIAL PORTION OF THIS ORDER, THE FACTS IN ALL THE APPEALS OF THE YEARS UNDER CONSIDERATION ARE EXACT LY SIMILAR INTER- SE , THEREFORE, OUR OBSERVATIONS ARE, MUTATIS MUT ANDIS, EQUALLY APPLICABLE TO THE OTHER YEARS. 18. IN THE RESULT, ALL THE THREE APPEALS OF THE ASS ESSEE ARE ALLOWED. 8. THEREFORE, RESPECTFULLY FOLLOWING THE AFORESAID DECISION OF THE TRIBUNAL OF EVEN DATE IN THE CASE OF M/S. THE PUNJ AB STATE CO-OPERATIVE SUPPLY AND MARKETING FEDERATION LTD., NAWANSHAHAR V S. ITO, TDS-1, ITA NOS. 158 TO 161 (ASR) /2016 ASST. YEARS: 2012-13 & 2013-14 10 JALANDHAR, IN ITA NOS. 54 TO 56(ASR)/2016, FOR THE ASSESSMENT YEARS 2012-13 TO 2014-15, WHEREBY WE HAVE ALLOWED THE APP EALS OF THE ASSESSE, ALL THE THREE PRESENT APPEALS OF THE REVEN UE ARE DISMISSED. THEREFORE, RESPECTFULLY FOLLOWING THE AFORESAID DEC ISION OF THE TRIBUNAL OF EVEN DATE IN THE CASE OF DM, PUNJAB STATE GRAIN PRO CUREMENT CORPORATION LTD. HOSHIARPUR IN ITA NOS.214 TO 216 ( ASR)/2016 FOR ASST. YEAR 2012-13 & 2014-15, WE ALLOW THE APPEALS OF THE ASSESSEE. 9. IN VIEW OF THE ABOVE, ALL THE FOUR APPEALS FILE D BY ASSESSEES ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 04 .08.2016. SD/- SD/- (A.D. JAIN) (T. S. KAPOOR) JUDICIAL MEMBER ACCOUN TANT MEMBER DATED:04.08.2016. /PK/ PS. COPY OF THE ORDER FORWARDED TO: (1) THE ASSESSEE: (2) THE (3) THE CIT(A), (4) THE CIT, (5) THE SR DR, I.T.A.T., TRUE COPY BY ORDER