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

ITA 2409/AHD/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 5950 (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: A
• Assessment Year: 2011-2012
• Appeal Filed On: 28-08-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANILKUMAR BHARADWAJ
• Keywords: Question of law
• Section: 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. 2409/AHD/2014 / ASSTT. YEAR: 2011-12 INCOME-TAX OFFICER, TDS-3, SURAT VS. SHREE CHALTAN VIBHAG KHAND UDYOG SAHAKARI MANDALI LTD, AT & POST SUGAR FACTORY CHALTAN, TAL: PALSANA, DIST: SURAT 394305 PAN : AAAAS 0477 A / (APPELLANT) / (RESPONDENT) REVENUE BY : MR. ANILKUMAR BHARADWAJ, SR DR ASSESSEE BY : MR. MITESH MODI WITH MR. AKSHAY MODI / DATE OF HEARING : 25/04/2017 / 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. THOUGH THE REVENUE HAS TAKEN FIVE GROUNDS OF APP EAL, BUT ITS GRIEVANCE REVOLVES AROUND A SINGLE ISSUE VIZ., WHET HER THE ASSESSEE WAS REQUIRED TO DEDUCT THE TDS UNDER SECTION 194C OF TH E INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) ON THE PAYME NTS MADE TO SUGARCANE GROWERS FOR HARVESTING AND TRANSPORTING SUGARCANE T O THE FACTORY PREMISES OF THE ASSESSEE? ITA NO. 2409/AHD/2014 ITO VS. SHREE CHALTHAN VIBHAG KHAND UDYOG SAHAKARI MANDLI LTD AY : 2011-12 2 3. ACCORDING TO THE ASSESSING OFFICER, THE ASSESSEE OUGHT TO HAVE DEDUCTED THE TDS ON PAYMENTS MADE BY IT TO THE FARM ERS FOR TRANSPORTING SUGARCANE TO ITS FACTORY. SINCE THE ASSESSEE FAILE D TO DEDUCT THE TDS, THE ASSESSING OFFICER MADE AN ADDITION OF RS.54,09,542/ - UNDER SECTION 201(1) OF THE ACT AND CALCULATED THE INTEREST OF RS.12,98, 290/- UNDER SECTION 201(1A) OF THE ACT. 4. ON APPEAL, THE LD. CIT(A) DELETED THE DISALLOWAN CE BY FOLLOWING THE ORDER OF THE ITAT IN ASSESSEES OWN CASE AS WELL AS OTHER SIMILARLY SITUATED CO-OPERATIVE SOCIETIES WHICH ARE ENGAGED IN MANUFAC TURING AND SELLING OF SUGARCANE. 5. WITH THE ASSISTANCE OF LEARNED REPRESENTATIVES, WE HAVE GONE THROUGH THE RECORD CAREFULLY. WE FIND THAT IN AY 2003-04 T HIS ISSUE TRAVELLED UPTO THE HONBLE HIGH COURT AND THE HONBLE HIGH COURT H AS FORMULATED THE FOLLOWING QUESTION FOR CONSIDERATION:- WHETHER IN THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE TRIBUNAL WAS RIGHT IN LAW IN HOLDING THAT THE ASSESSEE WAS LIABL E UNDER SECTION 194C TO DEDUCT TAX FROM THE PAYMENTS MADE BY THE FARMERS S AMITI IN RESPECT OF VARIOUS EXPENSES INCLUDING LABOUR CHARGES, TRANSPOR T CHARGES, INSURANCE CHARGES ETC. ON BEHALF OF FARMERS? 6. THE HONBLE JURISDICTIONAL HIGH COURT HAS DECIDE D THE ISSUE IN FAVOUR OF THE ASSESSEE BY HOLDING THAT THE ASSESSEE WAS NO T 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 W HICH WAS PAID BY THE ASSESSEE TO THE FARMERS FOR SUGARCANE WAS EX-FACTO RY 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 ITA NO. 2409/AHD/2014 ITO VS. SHREE CHALTHAN VIBHAG KHAND UDYOG SAHAKARI MANDLI LTD AY : 2011-12 3 THE TRIBUNAL HAS FOLLOWED THE JUDGMENT OF HONBLE G UJARAT HIGH COURT IN ASSESSEES OWN CASE FOR 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 UNDE R: 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 CONSIDERED IN THE CASE OF THE ASSESSEE BY THE HON'B LE GUJARAT HIGH COURT IN THE ASSTT.YEAR 2003-04. THE JUDGMENT OF TH E 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 I SSUE AGAINST THE ASSESSEE. THE QUESTION FRAMED BY THE HON'BLE GUJARA T 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 PA YMENTS MADE BY THE FARMER'S SAMITI IN RESPECT OF VARIOUS E XPENSES INCLUDING LABOUR CHARGES, TRANSPORT CHARGES, INSURA NCE 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 LEARNED CIT(A) AND THE TRIBUNAL. IT IS AN ADMITTED POSITION THAT IN THE CASE ON HAND THE ASSESSES-COOPERATIVE SOCIETIES USE D TO PURCHASE THE SUGARCANES FROM THE FARMERS, ON CONDITION THAT THE FARMERS SHALL SUPPLY THE SAME AT THE GATE OF THEIR RESPECTI VE FACTORY. MEANING THEREBY, HERE, THE SUPPLY OF SUGARCANE AT T HE GATE OF THE FACTORIES OF THE ASSESSES IS NOT A SEPARATE WOR K CONTRACT, BUT, ITA NO. 2409/AHD/2014 ITO VS. SHREE CHALTHAN VIBHAG KHAND UDYOG SAHAKARI MANDLI LTD AY : 2011-12 4 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 ASSESSEE WAS ENGAGED IN THE MANUFACTURE OF FERTILIZERS AND FOR T HE SAID PURPOSE, IT USED TO CONSUME NATURAL GAS. THE ASSESS EE, THEREIN, WAS SUPPLIED NATURAL GAS BY DIFFERENT AGENCIES THRO UGH PIPELINES. IN THAT CASE, ACCORDING TO THE REVENUE, WHILE PURCHASING THE GAS FROM DIFFERENT AGENCIES, THE ASS ESSEE HAD ENTERED INTO A WORK CONTRACT FOR TRANSPORTATION OF NATURAL GAS FROM THE SELLER'S PREMISES TO THE BUYER'S CONSUMPTI ON POINT, AND THEREFORE, THEY HELD THAT THE ASSESSEE, THEREIN , WAS REQUIRED TO DEDUCT TDS. HOWEVER, THIS COURT, IN THAT CASE, H ELD THAT TO TRANSPORT THE GAS WAS A PART OF SALE TRANSACTION, A ND THEREFORE, THE ASSESSEE, THEREIN, WAS NOT REQUIRED TO DEDUCT T DS. 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 CHARGE S. THE CASE OF THE ASSESSEE IN TAX APPEAL NO. 211 OF 2006 IS IDENTICAL, AND HENCE, THE AUTHORITIES BELOW GROSSLY ERRED IN I NTERPRETING THE PROVISIONS OF LAW, AND THEREFORE, THE GROUNDS U RGED BY THE APPELLANT 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 T HAT THE ASSESSES ARE NOT LIABLE TO DEDUCT TDS. IN VIEW OF T HE ABOVE DISCUSSION, THE DECISIONS RELIED ON BY MR. MEHTA SH ALL NOT APPLY TO THE FACTS OF THE PRESENT 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 A ND 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 H IGH COURT IN THE CASE OF ASSESSEE, WE ARE OF THE VIEW THAT NO INTERF ERENCE IS CALLED FOR IN ITA NO. 2409/AHD/2014 ITO VS. SHREE CHALTHAN VIBHAG KHAND UDYOG SAHAKARI MANDLI LTD AY : 2011-12 5 THE ORDER OF THE LD.CIT(A). HENCE, THE APPEAL OF TH E REVENUE IS REJECTED. 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. RESPECTFULLY FOLLOWING THE JUDGMENT OF HONBLE H IGH COURT IN ASSESSEES OWN CASE AS WELL AS THE DECISION OF TRIB UNAL IN THE CASE OF SHREE MADHI VIBHAG KHAND UDYOG SAHAKARI MANDALI LTD (SUPR A), WE DO NOT FIND ANY ERROR IN THE ORDER OF THE LD. CIT(A). ACCORDIN GLY, THIS APPEAL OF THE REVENUE IS DISMISSED. 8. 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