The ITO,TDS-3, Surat V. Shree Madhi Vibhag Khand Udyog Sahakari Mandali Ltd., Surat

ITA 2408/AHD/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 5953 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 8 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-05-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2011-2012
• Appeal Filed On: 28-08-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KAILASH RATNOO
• Keywords: Question of law
• Section: 133A; 194C; 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CAMP AT SURAT BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ./ ITA NO. 2408/AHD/2014 / ASSTT. YEAR: 2011-12 INCOME-TAX OFFICER, TDS-3, SURAT VS. SHREE MADHI VIBHAG KHAND UDYOG SAHAKARI MANDALI LTD, AT & POST :- MADHI, TAL. BARDOLI, DIST - SURAT PAN : AAAAS 4732 J / (APPELLANT) / (RESPONDENT) REVENUE BY : MR. KAILASH RATNOO, SR. DR ASSESSEE BY : MR. MITESH MODI WITH MR. AKSHAY MODI / DATE OF HEARING : 24/04/2017 / DATE OF PRONOUNCEMENT: 01/05/2017 / O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL AGAINS T THE ORDER OF LD. CIT(A)-IV, SURAT DATED 12.06.2014 PASSED FOR AY 201 1-2012. 2. THE SOLITARY GRIEVANCE OF THE REVENUE IS THAT TH E LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.86,80,505/- WHICH CO NTAINS AN AMOUNT OF RS.70,00,407/- WORKED OUT UNDER SECTION 201(1) AND AN AMOUNT OF RS.16,80,098/- WORKED OUT AS INTEREST UNDER SECTION 201(1A) OF THE INCOME- TAX ACT, 1961 (HEREIN AFTER REFERRED TO AS THE ACT ). ITA NO. 2408/AHD/2014 ITO VS. SHREE MADHI VIBHAG KHAND UDYOG KHAND UDYOG SAHAKARI MANDALI LTD AY : 2011-12 2 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A CO-OPERATIVE SOCIETY, ENGAGED IN THE MANUFACTURING AND SELLING O F SUGAR AND ITS BY- PRODUCTS. ACCORDING TO THE ASSESSING OFFICER, A SU RVEY UNDER SECTION 133A OF THE ACT WAS CONDUCTED AT THE PREMISES OF THE ASS ESSEE ON 05.02.2004 AND 07.12.2010. ON VERIFICATION OF THE DETAILS, IT WAS FOUND THAT THE ASSESSEE OUGHT TO HAVE DEDUCTED TDS ON THE PAYMENTS MADE TO THE FARMERS REPRESENTING CUTTING AND TRANSPORTING OF THE SUGARC ANE. HE FURTHER OBSERVED THAT THIS ASPECT WAS EXAMINED IN DETAILS I N AYS 2003-04 AND 2004- 05. AS A MATTER OF FACT, IT WAS FOUND THAT THE ASS ESSEE DID NOT DEDUCT THE TDS ON THE PAYMENTS MADE REPRESENTING HARVESTING AN D TRANSPORTING OF THE SUGARCANE. THE ASSESSING OFFICER HAS WORKED OUT T HE AMOUNT OUGHT TO BE PAID BY THE ASSESSEE @ RS.300 PER MT ON AN ESTIMATE BASIS. IN HIS OPINION, AN AMOUNT OF RS.33,98,25,600/- WAS PAID BY THE ASSE SSEE ON WHICH IT OUGHT TO HAVE DEDUCTED THE TDS @ 2% PLUS EDUCATION CESS O N INCOME-TAX. SINCE THE ASSESSEE FAILED TO DEDUCT THE TDS, THEREFORE, H E WORKED OUT AN AMOUNT OF RS.70,00,407/- AND CALCULATED INTEREST ON THIS A MOUNT AT RS.16,80,098/-. IN THIS WAY, THE ORDER UNDER SECTION 201(1) AND 201 (1A) OF THE ACT HAS BEEN PASSED BY THE LD. ASSESSING OFFICER ON 26.03.2013. 4. ON APPEAL, THE LD. CIT(A) DELETED THIS DISALLOWA NCE BY HOLDING THAT THIS ISSUE WAS EXAMINED BY THE TRIBUNAL IN AYS 2003 -04 AND 2004-05. IN AY 2003-04, THE ISSUE WAS TRAVELED UPTO THE HONBLE HI GH COURT. THE TRIBUNAL HAS CATEGORICALLY HELD THAT THE ASSESSEE WAS NOT UN DER THE OBLIGATION TO MAKE ARRANGEMENT FOR TRANSPORTING OF THE SUGARCANE UPTO THE FACTORY PREMISES. IT WAS DUTY OF THE FARMERS TO DELIVER IT AT FACTORY. IN OTHER WORDS, THE ASSESSEE USED TO PAY SUGARCANE PRICE TO THE GRO WERS AT EX-FACTORY PRICE AND ANY ADVANCE TO THE FARMER IS ONLY TOWARDS COST OF SUGARCANE FINALLY ITA NO. 2408/AHD/2014 ITO VS. SHREE MADHI VIBHAG KHAND UDYOG KHAND UDYOG SAHAKARI MANDALI LTD AY : 2011-12 3 ADJUSTED FROM THE SUGARCANE PRICE PAYABLE TO THE GR OWER ON THE BASIS OF FINAL PRICE DETERMINED. IN THIS WAY, LD. CIT(A) DE LETED THE DISALLOWANCE. 5. WITH THE ASSISTANCE OF LEARNED REPRESENTATIVES, WE HAVE GONE THROUGH THE RECORD CAREFULLY. WE FIND THAT THE TRIBUNAL HA S 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. TH E TRIBUNAL HAS FOLLOWED THE JUDGMENT OF HONBLE GUJARAT HIGH COURT IN ASSES SEES 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.D R AND GONE THROUGH THE WRITTEN SUBMISSIONS. WE FIND THAT THIS ISSUE WAS CO NSIDERED IN THE CASE OF THE ASSESSEE BY THE HON'BLE GUJARAT HIGH COURT IN THE A SSTT.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 TRIBUNA L HAS DECIDED THE ISSUE AGAINST THE ASSESSEE. THE QUESTION FRAMED BY THE HO N'BLE GUJARAT HIGH COURT READS AS UNDER: 'WHETHER IN THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE TRIBUNAL WAS RIGHT IN LAW IN HOLDING THAT THE ASSES SEE WAS LIABLE UNDER SECTION 194C TO DEDUCT TAX FROM THE PAYMENTS MADE BY THE FARMER'S SAMITI IN RESPECT OF VARIOUS EXPENSES INCL UDING LABOUR CHARGES, TRANSPORT CHARGES, INSURANCE CHARGES ETC. ON BEHALF OF FARMERS?' 7. THE HON'BLE GUJARAT HIGH COURT HAS RECORDED THE FOLLOWING FINDING: '9. HEARD, LEARNED COUNSELS FOR THE PARTIES AND PER USED THE MATERIAL ON RECORD AS WELL AS THE ORDERS PASSED BY THE LEARN ED CIT(A) AND THE TRIBUNAL. IT IS AN ADMITTED POSITION THAT IN THE CA SE ON HAND THE ASSESSES-COOPERATIVE SOCIETIES USED TO PURCHASE THE SUGARCANES FROM THE FARMERS, ON CONDITION THAT THE FARMERS SHALL SU PPLY THE SAME AT THE GATE OF THEIR RESPECTIVE FACTORY. MEANING THEREBY, HERE, THE SUPPLY OF SUGARCANE AT THE GATE OF THE FACTORIES OF THE ASSES SES IS NOT A SEPARATE ITA NO. 2408/AHD/2014 ITO VS. SHREE MADHI VIBHAG KHAND UDYOG KHAND UDYOG SAHAKARI MANDALI LTD AY : 2011-12 4 WORK CONTRACT, BUT, IT IS ESSENTIALLY THE PART OF T HE 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 BH ARTI CO- OPERATIVE LTD.'(SUPRA). IN THAT CASE, THE ASSESSEE WAS ENGAGED IN THE MANUFACTURE OF FERTILIZERS AND FOR THE SAID PURPOSE, IT USED TO CONSUME NATURAL GAS. THE ASSESSEE, THEREIN, WAS SUP PLIED NATURAL GAS BY DIFFERENT AGENCIES THROUGH PIPELINES. IN THAT CA SE, ACCORDING TO THE REVENUE, WHILE PURCHASING THE GAS FROM DIFFERENT AG ENCIES, THE ASSESSEE HAD ENTERED INTO A WORK CONTRACT FOR TRANS PORTATION OF NATURAL GAS FROM THE SELLER'S PREMISES TO THE BUYER'S CONSU MPTION POINT, AND THEREFORE, THEY HELD THAT THE ASSESSEE, THEREIN, WA S REQUIRED TO DEDUCT TDS. HOWEVER, THIS COURT, IN THAT CASE, HELD THAT T O 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 BH ARTI COOPERATIVE LTD.'(SUPRA) APPLIES IN FULL FORCE TO T HE FACTS OF THIS CASE. THE AFORESAID PROVISION WOULD APPLY TO T HE PERSON, WHO HAD PAID ANY SUM, AND THE RESPONDENT HAS NOT PAID ANY C HARGES. THE CASE OF THE ASSESSEE IN TAX APPEAL NO. 211 OF 2006 IS ID ENTICAL, AND HENCE, THE AUTHORITIES BELOW GROSSLY ERRED IN INTERPRETING THE PROVISIONS OF LAW, AND THEREFORE, THE GROUNDS URGED BY THE APPELL ANT FIND FAVOUR WITH US. 10. IN THE CASE ON HAND, THE SUPPLY OF SUGARCANES A T THE GATES OF FACTORIES OF THE RESPECTIVE 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 DE CISIONS RELIED ON BY MR. MEHTA SHALL NOT APPLY TO THE FACTS OF THE PR ESENT CASE. HENCE, THE PRESENT APPEALS DESERVE TO BE ALLOWED. 11. IN THE RESULT, BOTH THE APPEALS ARE ALLOWED. TH E ORDERS OF THE TRIBUNALS, DATED : 31.08.2005, ARE QUASHED AND SET ASIDE. THE QUESTION OF LAW ARISING IN THESE APPEALS IS ANSWERE D IN FAVOUR OF THE APPELLANT-ASSESSES AND AGAINST THE RESPONDENT-REVEN UE. NO ORDER AS TO COSTS.' 8. IN VIEW OF THE JUDGMENT OF THE HON'BLE GUJARAT H IGH COURT IN THE CASE OF ASSESSEE, WE ARE OF THE VIEW THAT NO INTERFERENCE I S CALLED FOR IN THE ORDER OF THE LD.CIT(A). HENCE, THE APPEAL OF THE REVENUE IS REJECTED. ITA NO. 2408/AHD/2014 ITO VS. SHREE MADHI VIBHAG KHAND UDYOG KHAND UDYOG SAHAKARI MANDALI LTD AY : 2011-12 5 6. RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL (SUPRA), WE DO NOT FIND ANY ERROR IN THE ORDER OF THE LD. CIT(A). ACC ORDINGLY, THIS APPEAL OF THE REVENUE IS DISMISSED. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE COURT ON 1 ST MAY, 2017 AT AHMEDABAD. SD/- SD/- (AMARJIT SINGH) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 01/05/2017 *BT ! '! / 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, TRUE COPY / (DY./ASSTT.REGISTRAR) & , / ITAT, AHMEDABAD