The ITO,TDS-3, Surat V. Shree Khedut Sahakari Khand Udhyog Mandali Ltd., Surat

ITA 2407/AHD/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 5814 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 8 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-05-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 08-05-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 28-08-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Question of law
• Section: 194C; 201(1)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL , D BENCH, AHMEDABAD BEFORE SHRI R. P. TOLANI, VICE PRESIDENT AND SHRI AMARJIT SINGH , ACCOUNTANT MEMBER ./ ITA.NO.2407 / AHD /201 4 / ASSTT. YEAR: 2011 - 2012 ITO, TDS - 3, SURAT VS . SHREE KHEDUT SAHAKARI KHAND UDYOG MANDALI LTD. AT BABEN POST - SARDARBAUG TALUKA BARDOLI, DIST. SURAT - 394602 PAN NO.AAAAS4554N (APPLICANT) (RESPONENT) REVENUE BY : SHRI MUKESH SHARMA , SR.DR ASSESSEE BY : SHRI MITISH MODI , AR / DATE OF HEARING : 0 8 / 05 / 201 7 / DATE OF PRONOUNCEMENT: 18 / 05 /201 7 / O R D E R PER AMARJIT SINGH, ACCOUNTANT MEMBER : PRESENT APPEAL IS DIRECTED AT THE INSTANCE OF THE REVENUE AGAINST THE ORDER OF THE L D. CIT(A) - IV, SURAT DATED 12.06 .2012 PASSED FOR THE ASSTT.YEAR 2011 - 12 . THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL. 1. THE ID. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITI ON MADE U/S.201(1) OF THE I.T. ACT AMOUNTING TO RS.98,10,960/ - AND THE INTEREST CHARGED U/S.201(1A) AMOUNTING TO RS.23,54,630/ - MADE BY THE A.O. 2. THE ID. CIT(A) HAS ERRED IN LAW AND ON FACTS BY REJECTING THE FINDINGS OF THE A.O. THAT THE PAYMENTS MADE BY THE ASSESSEE FOR CUTTING AND TRANSPORTATION OF SUGAR CANE WERE TOWARDS A CONTRACT AS DEFINED U/S.194C OF THE ACT. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE L D.CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. 4. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD A NEW GROUND, WHICH MAY BE NECESSARY. ITA NO. 2407 /AHD/201 4 ASSTT. YEAR2008 - 09 2 5. IT IS, THEREFORE, PRAYED THAT THE O RDER OF THE LD.CIT(A) MAY BE CANCELLED AND THAT OF THE ASSESSING OFFICER MAY BE RESTORED TO THE ABOVE EFFECT. . 2. IN THIS CASE THE ASSESSING OFFICER HAS MADE ORDER U/S.201(1) OF THE ACT ON 26/03/2013. THE ASSESSING OFFICER HAS STATED THAT THE ASSESSEE DEDUCTOR WAS A CO - OPERATIVE SOCIETY REGISTERED BY REGISTRAR OF CO - OPERATIVE SOCIETY, GUJARAT. THE ASSESSEE WAS ENGAGED IN THE MANUFACTURING AND S ELLING OF SUGAR AND ITS BY - PRODUCTS. HE FURTHER STATED THAT ASSESSEE PURCHASE D THE SUGAR CANE FROM ITS MEMBERS AND AFTER PROCESSING IT WAS SOLD TO OTHERS THROUGH CO - O PERATIVE SOCIETIES. HE FURTHER MENTIONED THAT IN THE CASE OF THE ASSESSEE SURVEY U/S.133A OF THE ACT WAS CONDUCTED ON 05/02/2004 AND 07/12/2010. DURING THE COURSE OF SURVEY, IT WAS FOUND THAT THE MANAGEMENT OF CUTTING AND TRANSPORTING THE SUGAR CANE FROM THE FIELDS OF ALL FARMERS W ERE DONE BY THE SUGAR FACTORIES. THEREAFTER , THE ASSESSING OFFIC ER OBSERVED THAT SUGAR FACTORY HAS NOT DEDUCTED TAX ON CONTRACTUAL PAYMENTS OF CUTTING AND TRANSPORTING SUGAR CANE FROM THE FIELDS TO THE FACTORY U/S.194C OF THE ACT. T HE ASSESSING OFFICER HAS TREATED THE ASSESSEE AS ASSESSEE IN DEFAULT WITH IN THE M EA NING OF SECTION 201(1) OF THE ACT . THEREAFTER ORDER U/S.201(1) AND 201(1A) OF THE ACT WAS PASSED AND ASSESSEE WAS REQUIRED TO PAY AN AMOUNT OF RS.1,21,65,590/ - FOR THE YEAR UNDER CONSIDERATION. 3 . AGGRIEVED BY THE DECISION OF ASSESSING OFFICER ASSESSEE PREFER RED APPEAL BEFORE THE LD.CIT(A). THE CIT(A) HAS ALLOWED THE APPEAL OF THE ASSESSEE BY OBSERVING AS FOLLOWS: ' . DURING THE COURSE OF APPEAL PROCEEDINGS, IT WAS SUBMITTED BY THE APPELLANT THAT IT PAYS ONLY CANE PRICE TO THE GROWER WHICH IS EX - FACTOR GATE PRICE AND ANY ADVANCE TO THE FARMER IS ONLY TOWARDS COST OF CANE, FINALLY ADJUSTED FROM THE CANE PRICE PAYABLE TO HIM ON THE BASIS OF FINAL PRICE DETERMINED. THE AMOUNT SPENT ON LABOUR/TRANSPORTATION ETC, EITHER BY THE ZONE SAMITEE OR THE ASSESSEE OR THE FARMER OUT OF SUCH ADVANCE IS FOR. BY AND ON BEHALF OF THE FARMER AND NOT FOR ANY W ORK DONE FOR THE ASSESSEE WHO WAS ONLY LIABLE TO PAY EX - FACTORY PRICE OF CANE TO THE GROWER. IT WAS ALSO SUBMITTED THAT THE SAMITEE CO NSTITUTED IN THIS REGARD ALSO ITA NO. 2407 /AHD/201 4 ASSTT. YEAR2008 - 09 3 W ORK ED FOR AN D ON BEHALF OF THE GROWER. IT W AS ARGUED THAT HARVESTING AND TRANSPORTATION WAS THE RESP ONSIBILITY OF THE GROWER AND ADVANCE FOR THIS W AS NOT AN EXPENSE OF THE ASSESSEE MILL BUT THE GROWER AND THE ASSESSEE WAS THEREFORE NOT LIABLE FOR DEDUCTION OF TAX AT SOURCE. IN APPEAL, THE APPELLANT ALSO SUBMITTED THAT FOR THE A.Y. 2004 - 05. 2009 - 10 AND 2010 - 11. THE C1T(A). VIDE ITS ORDER NO.CAS - I/14/11 - 12. DATED 28.06.2011. CAS - I V/15/12 - 13 DATED 19.12.2012 AND CAS - IV/ 16/12 - 13 DATED 19.12.2012 RESPECTIVELY HAS ALLOWED THE APPELLANT'S APPEAL ON THE SAME ISSUE .THE SAME ISSUE HAS ALSO BEEN DECIDED BY THE HON'BLE ITAT. AHMEDABAD VIDE ITS ORDER NO. ITA NO.3735/AHD/2004 IN THE APPELLANT'S OWN CASE FOR A.Y. - 2003 - 04 IN THE APPELLANT'S FAVOUR. THE HON'BLE ITAT FOLLOWIN G THE ORDER OF SPECIAL BENCH. ITA T. AHMEDABAD IN THE CASE OF SHRE E KAMREJ VIBHAG SAHAKARI KHAND UDHYOG MANDLI LTD. VS. - ITO REPORTED IN (2008) 1 16 TT.I (AHD)(SB) 425 FOR THE A.Y. 2003 - 04 AND 2004 - 05 HELD THAT THE APPELLANT WAS NOT LIABLE TO DEDUCT TAX AT SOURCE FROM THE PAYMENTS MADE TO MUKADDAMS AND TRANSPORTERS WHO ARE MEMBER FARMERS OF ZONE SAMITTEE AND HAVE NO CONTACT WITH THE APPELLANT. RESPECTFULLY FOLLOWING THE DECISIONS OF THE HON'BLE ITAT IN THE APPELLANT'S OWN CASE CITED ABOVE, IT IS HELD THAT TH E APPELLANT WA S UNDER NO OBLIGATION TO DEDUCT TAX UNDER SEC. 1 94C OF THE IT ACT ON PAYMENTS MADE TO MUKADAMS AND TRANSPORTERS. IT IS HELD THAT THE A.O WAS NOT JUSTIFIED IN INVOKING THE PROVISIONS OF SEC.194C OF THE ACT AGAINST THE APPELLANT. THE AOS ACTIO N IN TREATING THE APPELLANT AS ASSESSEE IN DEFAULT AND WORKING OUT LIABILITY U/S.201 & 201(1A) IS NOT SUSTAINABLE ' . 4 . WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORDS. DURING THE COURSE OF APPELLATE PROCEEDINGS THE LD. COUNSEL HAS CONTENDED THAT THE CASE OF THE ASSESSEE WAS COVERED BY THE DECISION OF CO - ORDINATE B ENCH, AHMEDABAD, IN ITA NO.2409/AHD/2014 IN THE CASE OF SHREE CHALTAN VIVHAG KHAND UDYOG SAHAKARI MANDALI LTD, PRONOUNCED ON 01/05/2017 . WE HAVE GONE THROUGH T HE DECISION OF CO - ORDINATE BENCH AND FIND THAT SIMILAR TYPE OF ISSUE HAS BEEN DECIDED IN FAVOUR OF ASSESSEE .THE RELEVANT PART OF THE DECISION IS REPRODUCED AS UNDER: - ' THE HONBLE JURISDICTIONAL HIGH COURT HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE B Y HOLDING THAT THE ASSESSEE WAS NOT UNDER THE OBLIGATION TO DEDUCT THE TDS BECAUSE THE FARMERS WERE REQUIRED TO DELIVER THE SUGARCANE AT THE FACTORY GATE OF THE ASSESSEE AND THE PRICE WHICH WAS PAID BY THE ASSESSEE TO THE FARMERS FOR SUGARCANE WAS EX - FACT ORY PRICE. WE HAVE ALSO CONSIDERED THE SIMILAR ISSUE IN THE CASE OF ITO VS. SHREE MADHI VIBHAG KHAND UDYOG SAHAKARI MANDALI LTD IN ITA NO.2408/AHD/2014, WHEREIN THE TRIBUNAL HAS FOLLOWED THE JUDGMENT OF HONBLE GUJARAT HIGH COURT IN ASSESSEES OWN CASE F OR AY 2003 - 04 AND DECISION OF TRIBUNAL DATED 01.06.2016 IN THE CASE OF SHREE MADHI VIBHAG KHAND UDYOG SAHAKARI MANDALI LTD IN ITA NO.379/AHD/2012 AND HELD AS UNDER: 5. WITH THE ASSISTANCE OF LEARNED REPRESENTATIVES, WE HAVE GONE THROUGH THE RECORD CAREFUL LY. WE FIND THAT THE TRIBUNAL HAS CONSIDERED THIS ASPECT IN THE CASE OF THE ASSESSEE FOR AY 2004 - 05 VIDE ITA NO.379/AHD/2012, WHICH HAS BEEN PLACED ON THE PAPER - BOOK AT PAGE NO.7. THE TRIBUNAL HAS FOLLOWED THE JUDGMENT OF HONBLE ITA NO. 2407 /AHD/201 4 ASSTT. YEAR2008 - 09 4 GUJARAT HIGH COURT IN AS SESSEES OWN CASE FOR AY 2003 - 04 AND UPHELD THE CONCLUSION OF THE LD. CIT(A). THE FINDINGS OF THE TRIBUNAL IN AY 2004 - 05 READ AS UNDER: - 6. WE HAVE DULY CONSIDERED CONTENTIONS OF THE LD.DR AND GONE THROUGH THE WRITTEN SUBMISSIONS. WE FIND THAT THIS ISSU E WAS CONSIDERED IN THE CASE OF THE ASSESSEE BY THE HON'BLE GUJARAT HIGH COURT IN THE ASSTT.YEAR 2003 - 04. THE JUDGMENT OF THE HON'BLE GUJARAT HIGH COURT HAS BEEN PLACED ON PAGE NO.47 TO 52 OF THE PAPER BOOK. IN THAT ORDER, THE TRIBUNAL HAS DECIDED THE ISSU E AGAINST THE ASSESSEE. THE QUESTION FRAMED BY THE HON'BLE GUJARAT HIGH COURT READS AS UNDER: 'WHETHER IN THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE TRIBUNAL WAS RIGHT IN LAW IN HOLDING THAT THE ASSESSEE WAS LIABLE UNDER SECTION 194C TO DEDUCT TAX FROM THE PAYMENTS MADE BY THE FARMER'S SAMITI IN RESPECT OF VARIOUS EXPENSES INCLUDING LABOUR CHARGES, TRANSPORT CHARGES, INSURANCE CHARGES ETC. ON BEHALF OF FARMERS?' 7. THE HON'BLE GUJARAT HIGH COURT HAS RECO RDED THE FOLLOWING FINDING: '9. HEARD, LEARNED COUNSELS FOR THE PARTIES AND PERUSED THE MATERIAL ON RECORD AS WELL AS THE ORDERS PASSED BY THE LEARNED CIT(A) AND THE TRIBUNAL. IT IS AN ADMITTED POSITION THAT IN THE CASE ON HAND THE ASSESSES - COOPERATIVE SO CIETIES USED TO PURCHASE THE SUGARCANES FROM THE FARMERS, ON CONDITION THAT THE FARMERS SHALL SUPPLY THE SAME AT THE GATE OF THEIR RESPECTIVE FACTORY. MEANING THEREBY, HERE, THE SUPPLY OF SUGARCANE AT THE GATE OF THE FACTORIES OF THE ASSESSES IS NOT A SEPA RATE WORK CONTRACT, BUT, IT IS ESSENTIALLY THE PART OF THE SELL TRANSACTION. IN THAT VIEW OF THE MATTER, HERE, IT WOULD BE RELEVANT TO REFER TO THE DECISION OF THIS COURT IN 'CIT (TDS) VS. KRISHAK BHARTI CO - OPERATIVE LTD.'(SUPRA). IN THAT CASE, THE ASSESSE E WAS ENGAGED IN THE MANUFACTURE OF FERTILIZERS AND FOR THE SAID PURPOSE, IT USED TO CONSUME NATURAL GAS. THE ASSESSEE, THEREIN, WAS SUPPLIED NATURAL GAS BY DIFFERENT AGENCIES THROUGH PIPELINES. IN THAT CASE, ACCORDING TO THE REVENUE, WHILE PURCHASING THE GAS FROM DIFFERENT AGENCIES, THE ASSESSEE HAD ENTERED INTO A WORK CONTRACT FOR TRANSPORTATION OF NATURAL GAS FROM THE SELLER'S PREMISES TO THE BUYER'S CONSUMPTION POINT, AND THEREFORE, THEY HELD THAT THE ASSESSEE, THEREIN, WAS REQUIRED TO DEDUCT TDS. HOWEV ER, THIS COURT, IN THAT CASE, HELD THAT TO TRANSPORT THE GAS WAS A PART OF SALE TRANSACTION, AND THEREFORE, THE ASSESSEE, THEREIN, WAS NOT REQUIRED TO DEDUCT TDS. IN OUR VIEW, THEREFORE, THE DECISION OF THE APEX COURT IN THE CASE OF 'CIT (TDS) VS. KRISHAK BHARTI COOPERATIVE LTD.'(SUPRA) APPLIES IN FULL FORCE TO THE FACTS OF THIS CASE. THE AFORESAID PROVISION WOULD APPLY TO THE PERSON, WHO HAD PAID ANY SUM, AND THE RESPONDENT HAS NOT PAID ANY CHARGES. THE CASE OF THE ASSESSEE IN TAX APPEAL NO. 211 OF 2006 IS IDENTICAL, AND HENCE, THE AUTHORITIES BELOW GROSSLY ERRED IN INTERPRETING THE PROVISIONS OF LAW, AND THEREFORE, THE GROUNDS URGED BY THE APPELLANT FIND FAVOUR WITH US. ITA NO. 2407 /AHD/201 4 ASSTT. YEAR2008 - 09 5 10. IN THE CASE ON HAND, THE SUPPLY OF SUGARCANES AT THE GATES OF FACTORIES OF THE RES PECTIVE ASSESSES WAS A PART OF SALE TRANSACTION, AND THEREFORE, WE ARE OF THE OPINION THAT THE ASSESSES ARE NOT LIABLE TO DEDUCT TDS. IN VIEW OF THE ABOVE DISCUSSION, THE DECISIONS RELIED ON BY MR. MEHTA SHALL NOT APPLY TO THE FACTS OF THE PRESENT CASE. HE NCE, THE PRESENT APPEALS DESERVE TO BE ALLOWED. 11. IN THE RESULT, BOTH THE APPEALS ARE ALLOWED. THE ORDERS OF THE TRIBUNALS, DATED : 31.08.2005, ARE QUASHED AND SET ASIDE. THE QUESTION OF LAW ARISING IN THESE APPEALS IS ANSWERED IN FAVOUR OF THE APPELLANT - ASSESSES AND AGAINST THE RESPONDENT - REVENUE. NO ORDER AS TO COSTS.' 8. IN VIEW OF THE JUDGMENT OF THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF ASSESSEE, WE ARE OF THE VIEW THAT NO INTERFERENCE IS CALLED FOR IN THE ORDER OF THE LD.CIT(A). HENCE, THE APPE AL OF THE REVENUE IS REJECTED. 5 . RESPECTFULLY, FOLLOWING THE DECISION OF CO - ORDINATE BENCH, ITAT, AHMEDABAD, WE FIND NO REASON TO INTERFERE IN THE DECISION OF THE LD.CIT(A) . 6 . IN THE RESULT , APPEAL OF THE REVENUE IS DISMISSED . ORDER PRONOUNCED IN THE COURT ON 18 TH MAY , 2017 AT AHMEDABAD. SD/ - SD/ - ( R.P. TOLANI ) VICE PRESIDENT ( AMARJIT SINGH ) ACCOUNTANT MEMBER TRUE COPY AHMEDABAD; DATED 18 / 05 /2017 MANISH / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A) 5. , / DR, ITAT, 6. / GUARD FILE . / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD