ACIT, Jaipur V. RAJASTHAN STATE CO-OPERATIVE, Jaipur

ITA 201/JPR/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 59542 (ITAT-JAIPUR)
• Duration Of Justice: 10 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 24-10-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 07-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VINOD JOHARI
• Assessee Lawyers: V K JAIN
• Keywords: Question of law

Judgement Text

1 ITA 201(4)-11 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH A JAIPUR BEFORE SHRI R.K. GUPTA AND SHRI N.L. KALRA ITA NO. 201 & 202/JP/2011 ASSTT. YEAR : 2006-07 & 07-08. THE ACIT, TDS, VS. M/S. RAJASTHAN STATE CO-OPERA TIVE JAIPUR. MARKETING FEDERATION LTD., JAIPUR. (APPELLANT) (RESPONDENT) C.O. NOS. 71 & 72/JP/2011 (ARISING OUT OF ITA NO. 201 & 202/JP/2011 ) ASSTT. YEARS : 2006-07 & 07-08. M/S. RAJASTHAN STATE CO-OPERATIVE VS. THE ACIT, TD S, MARKETING FEDERATION LTD., JAIPUR. JAIPUR. (CROSS OBJECTOR) (RESPONDENT) APPELLANT BY : SHRI VINOD JOHARI RESPONDENT BY : SHRI V.K. JAIN DATE OF HEARING : 16.01.2012. DATE OF PRONOUNCEMENT : 30.01.2012. ORDER DATE OF ORDER : 30/01/2012. PER R.K. GUPTA, J.M. THESE ARE TWO APPEALS BY THE DEPARTMENT AND TWO CR OSS OBJECTIONS BY ASSESSEE AGAINST THE ORDERS OF LD. CIT (A) RELATING TO ASSES SMENT YEARS 2006-07 & 07-08. 2. THE FOLLOWING SIMILAR GROUNDS HAVE BEEN TAKEN IN BOTH THE APPEALS OF THE DEPARTMENT :- 2 WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE, LD. CIT (A) WAS JUSTIFIED IN LAW IN HOLDING THAT THE SOCIETY CHARGES/ADMINISTRATIVE CHARGES PAID TO SOCIETIES ON PURCHASE OF AGRICULTURAL PRODUCE WERE NOT IN THE NATURE OF COMM ISSION, LIABLE FOR TDS U/S 194H OF THE INCOME TAX ACT, 1961. 3. THE LD. D/R PLACED RELIANCE ON THE ORDER OF THE AO. 4. ON THE OTHER HAND, THE LD. COUNSEL OF THE ASSESS EE PLACED RELIANCE ON THE ORDER OF LD. CIT (A). IT WAS FURTHER SUBMITTED THAT LD. CIT (A) HAS ALLOWED THE APPEAL OF THE ASSESSEE FOLLOWING THE ORDER OF TRIBUNAL IN CASE OF M/S. NATIONAL AGRICULTURAL COOPERATIVE MARKETING FEDERATION OF INDIA LTD. (NAF ED) WHEREIN IDENTICAL FACTS WERE INVOLVED. THEREFORE, THE ORDER LD. CIT (A) IS LIABL E TO BE CONFIRMED. IF THE ORDER OF LD. CIT (A) IS CONFIRMED THEN CROSS OBJECTION OF THE AS SESSEE MAY BE TREATED AS INFRUCTUOUS AS IN CROSS OBJECTION THE ALTERNATE GROUNDS TAKEN B EFORE LD. CIT (A) WHICH WERE NOT DECIDED, HAVE BEEN TAKEN. 5. AFTER CONSIDERING THE ORDERS OF THE AO AND LD. C IT (A) AND THE ORDER OF THE TRIBUNAL IN CASE OF BRANCH MANAGER, NATIONAL AGRICU LTURAL COOPERATIVE MARKETING FEDERATION OF INDIA LTD. DECIDED IN ITA NOS. 23, 24 & OTHERS FOR ASSESSMENT YEARS 2006- 07 TO 09-10 ORDER DATED 31.08.2010 FOUND THAT IDENT ICAL FACTS WERE INVOLVED IN THAT CASE ALSO DECIDED BY THE TRIBUNAL. SIMILAR GROUND WAS TAKEN BY THE DEPARTMENT AS TAKEN IN THESE APPEALS AND THE TRIBUNAL CONSIDERING VARIOUS ARGUMENTS OF BOTH SIDES AND TAKING INTO CONSIDERATION THE DECISION OF HONBLE PUNJAB & HARYANA HIGH COURT IN CASE OF CIT VS. ASSISTANT MANAGER (ACCOUNTS), FCI, 326 ITR 106 WHEREIN THE IDENTICAL ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE ALLOWED THE APPEA LS OF THE ABOVE ASSESSEE. FINDINGS OF THE TRIBUNAL HAVE BEEN RECORDED IN PARAS 7 AND 7.1 AT PAGES 13 TO 16 ARE AS UNDER :- 3 7. AFTER HEARING BOTH THE PARTIES AS WELL AS CON SIDERING THE ABOVE SUBMISSIONS AND ORDERS OF THE AUTHORITIES BELOW AND ALSO THE PAPER BOOK FILED BY THE LD.AR , IT IS NOTED THAT SECTION 194 H IS APPLICABLE WHERE ANY PERSON PAYS ANY INCOME BY WAY OF COMMISSION OR BROK ERAGE. EXPLANATION PROVIDES THAT COMMISSION OR BROKERAGE INCLUDES ANY PAYMENT RECEIVED OR RECEIVABLE, DIRECTLY OR INDIRECTLY, BY A PERSON ACT ING ON BEHALF OF ANOTHER PERSON FOR ANY SERVICES IN COURSE OF BUYING OR SELL ING OF GOODS. THE PROVISION OF SECTION 194H IS NOT APPLICABLE ON THE SOCIETIES COMMISSION REFLECTED BY THE SOCIETIES IN THERE SALE BILLS FOR THE REASONS STATED HERE UNDER:- (A) THE TRANSACTION BETWEEN THE ASSESSEE AND THE SOCIET IES IS ON PRINCIPAL TO PRINCIPAL BASIS AND NOT ON PRINCIPAL AND AGENT R ELATIONSHIP. (B) THE SOCIETIES WHILE PROCURING THE GOODS FROM THE M ANDI NO WHERE DISCLOSE THAT THE PURCHASES ARE MADE BY THEM FOR OR ON BEHALF OF THE ASSESSEE. THIS IS ALSO EVIDENT FROM THE AUCTION REG ISTER OF KRISHI UPAJ MANDI SAMITEE WHERE NAME OF THE SOCIETIES ARE MENTI ONED AS A PURCHASING PARTY. THE NAME OF THE ASSESSEE NO WHERE APPEARS IN THIS REGISTER. (C) AFTER PURCHASE OF GOODS BY THE SOCIETIES BUT BEFORE DELIVERY OF THE SAME TO THE SPECIFIED WAREHOUSE OF THE ASSESSEE, IF THERE IS ANY SHORTAGE/ PILFERAGE OR DAMAGE TO THE GOODS IT IS ON ACCOUNT OF THE SOCIETIES AND NOT OF THE ASSESSEE. IT BECOMES THE P ROPERTY OF THE ASSESSEE ONLY AFTER GOODS ARE DEPOSITED IN THE WARE HOUSE. (D) THE SOCIETIES DECLARE THE GOODS WHICH ARE MENTIONED IN THERE VAT INVOICE (IN WHICH SOCIETIES COMMISSION IS REFLECTED ) AS SALES IN THERE BOOKS OF ACCOUNTS AND THE ASSESSEE DECLARE THE SAME AS PURCHASE IN ITS BOOKS OF ACCOUNTS. THUS THE TRANSACTION IS OF PURCH ASE AND SALES AND NOT A PAYMENT OF COMMISSION. THE SOCIETIES COMMISSI ON IS THUS ONLY THE DISCLOSED MARGIN OF PROFIT OF THE SOCIETIES. IT IS JUST LIKE PROFIT PLUS AGREEMENT/ARRANGEMENT FOR PURCHASE OF GOODS. (E) IN THE VAT INVOICE RAISED BY THE SOCIETIES THEY SEP ARATELY DISCLOSE THE NAKED COST OF THE GOODS PURCHASED BY THEM, THE MAND I TAX PAID BY THEM, THE EXPENSES INCURRED BY THEM FOR BRINGING TH E GOODS TO THE SPECIFIED WAREHOUSE OF THE ASSESSEE AND THEIR PROFI T MARGIN NAMED AS SOCIETIES COMMISSION/CHARGES. ALL THESE COMPONENTS ARE SEPARATELY DISCLOSED IN VAT INVOICE AS PER THE REQUIREMENT OF THE GOVERNMENT AS PER PSS/MIS SCHEME. ON THE ENTIRE TOTAL OF THE ABOV E ITEMS, VAT IS 4 CHARGED AS PAR THE APPLICABLE RATES. SECTION 2(36) OF THE RAJASTHAN VAT ACT 2003 WHICH DEFINE SALES PRICE ALSO SPECIF IES THAT THE AMOUNT PAID OR PAYABLE TO A DEALER AS CONSIDERATION FOR SALE OF ANY GOODS INCLUSIVE OF ANY STATUTORY LEVY OR ANY SUM CH ARGED FOR ANY THING DONE BY THE DEALER IN RESPECT OF THE GOODS OR SERVI CES RENDERED AT THE TIME OF OR BEFORE THE DELIVERY THEREOF WOULD BE TAK EN AS SALES PRICE. THUS ASSESSEE ONLY PURCHASES THE GOODS FROM THE SOC IETIES WHEREIN THE MARGIN OF PROFIT OF THE SOCIETIES IS SEPARATELY DIS CLOSED AS SOCIETIES COMMISSION/CHARGES. 7.1 FROM THE ABOVE IT IS HELD THAT THE SOCIETIES C OMMISSION/CHARGE MENTIONED IN THE VAT INVOICE OF THE SOCIETIES, SELL ING GOODS TO THE ASSESSEE, IS NOT A PAYMENT OF THE COMMISSION AS ENV ISAGED IN SECTION 194H AND THEREFORE, THERE IS NO LIABILITY ON THE ASSESSE E TO DEDUCT TAX AT SOURCE ON SUCH PAYMENT OF PURCHASE PRICE WHICH INCLUDES TH E PAYMENT OF SOCIETIES CHARGES. VERY RECENTLY THE HON'BLE PUNJA B & HARYANA HIGH COURT IN THE CASE OF CIT (TDS) VS. ASSISTANT MANAGE R (ACCOUNTS) , FOOD CORPORATION OF INDIA, 326 ITR 106 ON IDENTICAL FACT S HAS OBSERVED AS UNDER:- THE ASSESSEE IN THE PRESENT CASE IS FOOD CORPORAT ION OF INDIA WHICH IS ENGAGED IN PROCUREMENT OF FOOD GRAIN S FOR THE CENTRAL POOL. THE FOOD GRAINS IS PROCURED THROUGH T HE STATE AGENCIES AND DIRECTLY AS WELL. PROCEEDINGS WERE INI TIATED U/S 201 OF THE INCOME-TAX ACT, 1961 WITH THE ALLEGATION THA T THE ASSESSEE HAD FAILED TO DEDUCT TAX AT SOURCE ON THE INTEREST, RENT AND TRANSPORTATION CHARGES PAID BY IT TO VARIOUS AGENCI ES. THE ORDER CAME TO BE PASSED BY THE ITO (TDS) ON FEB. 25, 2005 , RAISING A DEMAND OF RS. 12,34,814/-. THE ORDER WAS UPHELD BY THE COMMISSIONER OF INCOME TAX (APPEALS). IN FURTHER AP PEAL BEFORE THE TRIBUNAL, THE PLEA SET UP BY THE ASSESSEE WAS A CCEPTED. IT WAS NOTICED THAT IN THE INVOICES RAISED BY VARIOUS STAT E AGENCIES WHO PROCURED FOOD GRAINS ON BEHALF OF THE ASSESSEE, THE COST OF WHEAT HAS BEEN SHOWN APART FROM THE COST ON ACCOUNT OF OT HER INCIDENTAL EXPENSES INCURRED BY THE PROCUREMENT AGENCIES. VAT HAD ALSO 5 BEEN CHARGED. IT WAS NOT EVIDENT FROM THERE THAT TH E EXPENSES SO INCURRED BY THE PROCUREMENT AGENCIES WERE ON BEHALF OF THE ASSESSEE RATHER IT WAS FOUND TO BE PART OF THE COST AT WHICH THE FOOD GRAINS WERE TO BE TRANSFERRED BY THE PROCUREMENT AG ENCIES TO THE ASSESSEE . WITH THESE FACTS, IT WAS FOUND THAT AS T HE ASSESSEE HAD NOT PAID ANY AMOUNT TO THE PROCUREMENT AGENCIES ON ACCOUNT OF TRANSPORTATION, INTEREST OR STORAGE CHARGES AS SUCH , ACCORDINGLY THERE WAS NO LIABILITY FOR DEDUCTION OF TAX. THE CONTENTION OF THE LEARNED COUNSEL FOR THE REVEN UE THAT IN FACT ALL THESE FACTORS HAD BEEN TAKEN CARE OF WH ILE FIXING THE PRICE AT WHICH THE FOOD GRAIN WAS TO BE BILLED TO T HE ASSESSEE, CARRIES NO WEIGHT. IF EXPENSES INCURRED BY A PERSON ON ACCOUNT OF TRANSPORTATION, INTEREST, STORAGE ETC. ARE ADDED TO THE COST OF THE GOODS, IT CANNOT BE INFERRED THAT THE PERSON WHO IS BILLED HAD PAID CERTAIN AMOUNT ON ACCOUNT OF THOSE SERVICES SEPARAT ELY AS THE SAME BECOMES PART OF THE COMMODITY SO SOLD. FOR THE REASONS MENTIONED ABOVE, WE DO NOT FIND ANY SUBSTANTIAL QUESTION OF LAW ARISES IN THE PRESENT A PPEAL. THE SAME IS ACCORDINGLY DISMISSED. PLACING RELIANCE ON THE ABOVE DECISION AND THE FACT S AND CIRCUMSTANCES DISCUSSED IN FOREGOING PARAGRAPHS, WE ARE OF THE V IEW THAT THE FINDING OF LOWER AUTHORITIES THAT SOCIETY COMMISSION CHARGED I N THE SALE BILLS BY THESE SOCIETIES IS A PAYMENT OF COMMISSION BY ASSESSEE IN TERMS OF SECTION 194H IS NOT CORRECT AS PER LAW AND ACCORDINGLY THE ISS UE IS DECIDED AGAINST THE REVENUE. THUS GROUND NO. 1 OF ALL THE APPEALS OF TH E ASSESSEE ARE ALLOWED. THE LD. CIT (A) HAS FOLLOWED THIS DECISION OF THE T RIBUNAL AND THE FINDINGS OF THE TRIBUNAL HAVE BEEN REPRODUCED IN THE ORDER OF LD. C IT (A) AT PAGES 7 TO 9 OF HIS ORDER AND 6 THEN HAS ALLOWED THE ISSUE IN FAVOUR OF THE ASSESSE E. SINCE THE MAIN ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE, THE ALTERNATE PLEA RAISED B Y THE ASSESSEE WAS NOT DECIDED AS THE SAME WAS TREATED AS INFRUCTUOUS IN NATURE. 6. FACTS ARE IDENTICAL IN THE PRESENT CASE, THEREFO RE, IN VIEW OF THE CONSISTENCY, WE FIND NO REASON TO INTERFERE WITH THE FINDING OF LD. CIT (A) WHO HAS ALLOWED THE ISSUE IN FAVOUR OF THE ASSESSEE FOLLOWING THE DECISION AS ME NTIONED ABOVE. ACCORDINGLY, WE CONFIRM THE ORDER OF LD. CIT (A) FOR BOTH THE YEARS . 7. SINCE WE HAVE CONFIRMED THE ORDER OF LD. CIT (A) ON THE MAIN ISSUE, THEREFORE, CROSS OBJECTION RAISED BY ASSESSEE, WHICH ARE ON AC COUNT OF NON CONSIDERING OF ALTERNATE PLEA, HAVE BECOME INFRUCTUOUS. THE LD. A/R HAS ADM ITTED THIS FACT. ACCORDINGLY, CROSS OBJECTION OF THE ASSESSEE ARE DISMISSED. 8. IN THE RESULT, APPEALS OF THE DEPARTMENT AS WELL AS CROSS OBJECTIONS OF THE ASSESSEE ARE DISMISSED. 9. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 30. 01.2012. SD/- SD/- ( N.L. KALRA ) ( R.K. GUPTA ) ACCOUNTANT MEMBER JUDICIAL MEMBER JAIPUR, D/- COPY FORWARDED TO :- THE ACIT, TDS, JAIPUR. M/S. RAJASTHAN STATE COOPERATIVE MARKETING FED. LTD ., JAIPUR. THE CIT (A) THE CIT THE D/R GUARD FILE (ITA NO. 201(4)/JP/2011) BY ORDER, AR ITAT JAIPUR. 7