M/s Punjab State Grain Procurement Corporation Limited, Ropar V. ACIT (TDS), Chandigarh

ITA 276/CHANDI/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 6772 (ITAT-CHANDIGARH)
• Duration Of Justice: 7 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-10-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2014-2015
• Appeal Filed On: 10-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAVI SARANGA L
• Section: 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH A CHANDIGARH BEFORE MS. DIVA SINGH, JUDICIAL MEMBER AND SHRI B.R.R.KUMAR, ACCOUNTANT MEMBER ITA NO. 276/CHD/2017 ASSESSMENT YEAR : 2014-2015 THE DISTRICT MANAGER, VS. THE ACIT (TD S), PUNJAB STATE GRAINS PROCUREMENT CHANDIGARH. CORP.LTD., ROPAR. PAN NO. AADCP2892B (APPELLANT) (RESPONDENT) APPELLANT BY : NONE RESPONDENT BY : SHRI RAVI SARANGAL, CIT-DR DATE OF HEARING : 06.07.2017 DATE OF PRONOUNCEMENT : 04.10.2017 ORDER PER DIVA SINGH,JM THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE ASS AILING THE CORRECTNESS OF THE ORDER DATED 11.11.2016 OF CIT (APPEALS ) CHANDIGARH PERTAINING TO 2013-14 ASSESSMENT YEAR ON VARIOUS GROU NDS INCLUDING GROUND NO. 8. THE OTHER GROUNDS ARE TREATED AS ARGUM ENTS IN SUPPORT OF THE SAID GROUND AND THE SAME IS REPRODUCED HEREUNDER FOR READY REFERENCE: THAT THE CIT(A) HAS ERRED IN HOLDING THE APPELLANT AS DEEMED TO BE ASSESSEE IN DEFAULT UNDER THE PROVISIONS OF SECTION 201(1)/SECTION 201( 1A) OF THE INCOME TAX ACT. 2. ALTHOUGH AT THE TIME OF HEARING, NO ONE WAS PRESENT ON BEHALF OF THE ASSESSEE IN SUPPORT OF APPEAL, HOWEVER, THE SAID APPLICATIO N IS ACCOMPANIED BY ORDER DATED 11.08.2016 IN ITA 69 TO 71/CHD/2016 IN T HE CASE OF ACIT(TDS) VS PUNJAB STATE GRAIN PROCUREMENT C ORPORATION LTD., BARNALA. ON CONSIDERING THE GROUNDS AND THE MATERIAL AVAILA BLE ON RECORD, IT IS DEEMED APPROPRIATE TO PROCEED EX-PARTE QUA THE A SSESSEES APPEAL ON MERITS AFTER HEARING THE LD. CIT-DR. THE RECORD SHOWS THAT ALTHOUGH VARIOUS GROUNDS HAVE BEEN RAISED BY THE ASSESSEE WH ICH ADDRESS THE DIFFERENT APPEALS ON THE ISSUE, HOWEVER, SINCE GROUND NO. 8 SPECIFICALLY ADDRESSES THE GRIEVANCE. THE OTHER GROUNDS ON A CAREFUL READING, IT IS SEEN ARE ITA 276/CHD/2017 A.Y. 2014-15 PAGE 2 OF 5 INFACT ARGUMENTS IN SUPPORT OF THE SAID GRIEVANCE. ACCORDIN GLY, THE SAID GROUND IS BEING CONSIDERED FOR ADJUDICATION. THE SAME READS AS UN DER : 8. THAT THE CIT(A) HAS ERRED IN HOLDING THE APPELL ANT AS DEEMED TO BE ASSESSEE IN DEFAULT UNDER THE PROVISIONS OF SECTION 201(1)/SECTION 201(1A) OF THE INCOME TAX ACT.. 3. A PERUSAL OF THE REMAINING GROUNDS AS NOTED ARE INFACT ARGUMENTS IN SUPPORT OF GROUND NO. 8, WHEREIN RELIANCE HAS BEEN PLAC ED UPON ORDER OF THE ITAT DATED 28.02.2011 IN THE CASE OF ITO VS AHAAR CONSUMER PRODUCTS PVT. LTD. IN ITA 2910/DEL/2010. BASED ON THE A BOVE, THE PRAYER ON RECORD IS THAT RELIEF WAS ALLOWABLE. IN THE FACTS OF THE P RESENT CASE, THE ASSESSEE HAD CHALLENGED THE ORDER OF THE AO IN HOLDING TH E ASSESSEE IN DEFAULT OF DEDUCTION OF TDS. THE ASSESSEE BEFORE THE CIT(A ) HAD PLACED RELIANCE UPON ORDER OF THE ITAT. ON RECORD IT IS NOTED C OPY OF THE ORDER DATED 04.08.2016 IN THE CASE OF DM, PUNJAB STATE CIVIL SUP PLIES CORPORATION LTD. HOSHIARPUR VS ITO (TDS) JALANDHAR ITA 158&159/ASR/2016 FOR 2012-13 AND 2013-14 HAS ALSO BEE N PLACED. IT IS NOTED THAT THE FACTS AS CONSIDERED BY THE CO-ORDINATE BENCH IN THAT CASE ARE IDENTICAL TO THE FACTS IN THE PRESENT APPEAL WHICH FACT UAL POSITION IS ACCEPTED BY THE REVENUE ALSO. FOR READY REFERENCE, WE EXTRACT TH E SAME AS UNDER : 5. INVITING OUR ATTENTION TO THE FACTS OF THE CASE , THE LEARNED AR SUBMITTED THAT ASSESSEES ARE BRANCHES OF STATE GOVERNMENT AGENCY W HICH PROCURES PADDY FROM THE MARKET IN EVERY CROP SEASON AND CUSTOM MILLING OF T HIS PADDY IS DONE BY VARIOUS MILLERS WITH WHOM CONTRACTS ARE EXECUTED. AS PER THE CONTRA CTS, THE MILLERS ARE PAID RS. 15 PER QNTL, AS MILLING CHARGES AND MILLERS ARE ALSO ENTIT LED TO GET BY PRODUCTS GENERATED IN THE PROCESS OF MILLING OF RICE. FURTHER AS PER THE CONTRACT THE MILLERS ARE REQUIRED TO SUPPLY 67/68 KG OF RICE FOR EVERY QUINTAL OF PADDY SUPPLIED BY THE AGENCY. THE LEARNED AR SUBMITTED THAT DURING ASSESSMENT PROCEED INGS, THE ASSESSING OFFICER OBSERVED THAT ASSESSEE HAD DEDUCTED TDS ON THE AMOU NT OF MILLING CHARGES PAID TO THE MILLERS WHEREAS ON THE VALUE OF BYPRODUCTS RETAINED BY MI LLERS NO TDS WAS DEDUCTED. THE ASSESSING OFFICER HELD THAT A LL THE BYPRODUCTS OF PADDY, AS D EEMED PAYMENTS AND CONSIDERED THEM AS PART OF MILLI NG CHARGES AND THEREFORE, HELD THAT THE ASSESSEES WERE REQUIRE D 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 TRI BUNAL IN THE CASE OF DM, STATE CIVIL SUPPLIES CORPORATION LTD;, HOSHIARPUR I N ITA NO.214 TO 216 (ASR)/2016 AND IN THIS RESPECT FILED A COPY OF THE SAID ORDER. THE LEARNED AR SUBMITTED THAT HON'BLE TRIBUNAL IN THIS CASE HAD FO LLOWED THE CASE LAW OF M/S THE PUNJAB STATE CORPORATION SUPPLY AND FEDERATION LTD., NAWANSHAR VS. ITO, TDS- 1, JALANDHAR IN ITA NOS.54 TO 56(ASR)/2016, FOR ASST. YEARS:2012-13 & 2014-15. 6. THE LEARNED. DR, ON THE OTHER HAND SUBMITTED THA T LEARNED CIT(A) HAS ALREADY ALLOWED RELIEF TO THE ASSESSEE BY RELYI NG ON THE JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE OF HINDUSTAN COCA- COLA BEVERAGES (PVT.) LTD. VS. CIT, ARID LEARNED CJIT(A) HAS ONLY HELD THAT INTEREST WAS TO BE CHARGED FROM THE ASSESSEE, THEREFORE, THERE WAS NO GRIEVANCE LEF T AS LEARNED CIT(A) HAS ALREADY ALLOWED RELIEF TO THE ASSESSEE. ITA 276/CHD/2017 A.Y. 2014-15 PAGE 3 OF 5 3.1. WE NOTE THAT THE FACTS AND CIRCUMSTANCES ARE IDENTIC AL IN THE FACTS OF THE PRESENT CASE ALSO. WE FURTHER TAKE NOTE OF THE FA CT THAT THE SAID DECISION HAS BEEN CONSISTENTLY FOLLOWED IN VARIOUS BRANCH O FFICES OF THIS VERY PARTICULAR ASSESSEE ITSELF, A FACT WHICH WAS NOT DISPUT ED BY THE LD. CIT-DR ALSO WHO THOUGH PLACED RELIANCE ON THE ORDERS OF THE TAX AUTHORITIES. WE NOTE THAT THE FACTS IN THE AFORESAID DECIS ION OF THE ITAT HAVE BEEN REFERRED TO IN PARA 7 OF THE ORDER DATED 04.0 8.2016 IN THE CASE OF DM, PUNJAB STATE CIVIL SUPPLIES CORPORATION LTD., HOSHIARP UR, CONSIDERING WHICH THE CO-ORDINATE BENCH WAS PLEASED TO D ECIDE THE APPEAL OF THE ASSESSEE IN ITS FAVOUR. FOR READY REFERENCE SAME IS EXTRACTED HEREUNDER : 7. WE HAVE HEARD BOTH THE SIDES AND CAREFULLY GONE THROUGH THE RECORDS. THE ASSESSES WAS ASKED TO PRODUCE THE COPIES OF THE AGREEMENT DATED 2.2.2005 AND ALSO THE COPIES OF THE DELIVERY CHALLAN BY WHICH THE WHEAT WAS SUPPLIED TO AIL LTD. IT IS ALSO ASCERTAINED THAT AHAAR INTERNATIONAL (I) LTD. IS A SISTER CONCERN OF THE A SSESSEE. THE IMPUGNED TRANSACTIONS HAVE TAKEN PLACE UNDER THE AGREEMENT DATED 2.2.2005 BETW EEN THE PARTIES WHICH READS AS UNDER- ITA NO.2310/DEL/2010 & OTHERS 10 'THIS AGREEMENT IS EXECUTED AND SIGNED ON THIS 2ND DAY FEBRUARY, 2005 AT NEW DELHI BETWEEN M/S AHA AR CONSUMER PRODUCTS (P) LTD., A COMPANY INCORPORATED & REGISTERED UNDER THE COMPANIES ACT, 1956, THROUGH ITS DIRECTOR MR. GYAN PRAKASH GUPTA HEREINAFTER CALLED 'THE COMPANY - AHAAR' OF THE FIRST PART. AND M/S AHAAR INTERNATIONAL (I) LTD., 6-37, LAWRENC E ROAD, DELHI, A COMPANY HEREINAFTER CALLED 'THE COMPANY - AQIL' OF THE SECOND PART. WHEREAS AIL HAS AGREED TO GRIND THE WHEAT AND PRODU CE ATTA & DALIYA 'THE PRODUCTS' OF THE WHEAT PROVIDED BY AHAAR AND PACK THEM IN THEIR PACK ING ON THE TERMS AND CONDITIONS HEREINAFTER SET FORTH. NOW THIS AGREEMENT WITNESSETH AS UDER: L. PRODUCTS: 1.1 THE PRODUCTS SHALL BE MANUFACTURED IN ACCORDANCE WI TH THE SPECIFICATIONS AND DESCRIPTIONS MENTIONED IN ANNEXURE A HEREUNDER WRIT TEN AS WELL AS THE STANDARDS OF QUALITY AS PER PREVENTION OF FOOD ADULTERATION ACT, 1954 AR ID RULE MADE THEREUNDER (HEREINAFTER THE PRESCRIBED SPECIFICATIONS). 1.2 IN THE EVENT OF THE PRODUCTS SUPPLIED BY AIL DOES N OT CONFORM TO THE PRESCRIBED SPECIFICATIONS, THE COMPANY AHAAR RESERVES THE RIGH T TO REJECT SUCH PRODUCT. 1.3 IN THE EVENT OF AIL FAILS TO DELIVER THE PRODUCTS A S PER TERMS & CONDITIONS OF THIS AGREEMENT OR WITHIN THE DELIVERY TIME SPECIFIED, AH AAR SHALL HAVE THE RIGHT TO OUTSOURCE THE PRODUCTS AT THE COST & RISK OF AIL. IN THAT CASE AI L AGREES TO INDEMNIFY AHAAR THE COST THAT MAY HAVE INCURRED DUE TO THE REASON OF FAILURE OF T HE AIL TO CARRY OUT HIS OBLIGATIONS UNDER THIS AGREEMENT. ITA NO.2310/DEL/2010 & OTHRS 111.4 AHAAR SHALL BE E NTITLED, AT ITS DISCRETION, TO DEPUTE AND RETAIN A QUALITY CONTROL ADVISOR TO BE LOCATED IN P LANT (WHEN MANUFACTURING THE PRODUCT FOR AHAAAR) IN ORDER TO MONITOR THE PRODUCT SPECIFI CATION, HOWEVER, AHAAAR SHALL NOT RELEASE THE AIL OF ITS OBLIGATION TO MANUFACTURE TH E PRODUCT IN ACCORDANCE WITH THE SPECIFICATIONS. 1.5 THE AIL SHALL HAVE FULLY EQUIPPED QUALITY CONTROL L AB & QUALITY CONTROL OFFICER TO CHECK THE QUALITY OF RAW MATERIAL & FINISHED MATERIAL EVERY H OUR. 1.6 AHAAR SHALL BUY 30 MT OF ATTA/DALIYA PER WORKING DA Y INITIALLY AND IT COULD BE INCREASED UP TO 100 MT PER DAY (MAXIMUM CAPACITY OF PLANT) AS PER MARKET DEMAND. 1.7 THE AIL SHALL MAINTAIN THE PLANT INCLUDING CLEANING SECTION AND M ILLING SECTION AT HIS OWN COST. THE PLANT SHALL BE MAINTAINED AS PER INTERNATIONAL STANDARDS INCLUDING HACCP; FIFO, ETC. 1.8 THE PLANT SHALL BE COMPLETELY CLEANED STATING PRODUCTIO N. THE WORKERS SHALL WEAR CLEAN UNIFORM; CAP, SHOES, TOBBACO, CIGARETTES, GUTKHA ET C. ARE NOT ALLOWED IN PLANT. 1.9 AHAAR SHALL PROVIDE RAW MATERIAL (WHEAT) AND PACKAGING MA TERIAL I.E. HDPE/PP BAGS, LDPE PACKETS, LINERS AND OTHER CONSUMABLE REQUIRED IN PR ODUCTION AND PACKING I.E. CODING INK, STAMP, STITCHING THREAD ETC. ITA 276/CHD/2017 A.Y. 2014-15 PAGE 4 OF 5 2. PRICE: 2.1 AIL SHALL GIVE 85% DALIYA OR 88% ATTA OF THE WHEAT SUPPLIED BY AHAAR. THE REMAINING QUANTITY OF WHEAT/REFRACTION SHALL BE KEP T BY AIL AS ITS EXPENSES. 2.2 AIL HAS TO ARRANGE FROM UNLOADING OF WHEAT TILL FIN AL PACKING, LOADING OF ATTA/DALIYA. AIL HAS TO ARRANGE LABOUR, ELECTRICITY , POWER BACKUP ETC. AND WHEAT SHORTAGE. 2.3 WHEAT SHALL BE SUPPLIED IN GROSS WEIG HT. ATTA / DALIYA SHALL BE RECEIVED IN NET WEIGHT. ITA NO.2310/DEL/2O10 & OTHRS 12 2.4 THE PRODUCTS MAY BE PACKED IN ANY PACKING FROM I KG TO 90 KG AS PER MARKET REQUIREMEN T. THE PRODUCTS MAY BE PACKED IN ANY BRAND. HOWEVER, THE PACKING MATERIAL WILL BE SUPPLI ED BY AHAAR. 3. TERMS; THIS AGREEMENT SHALL COME INTO FORCE W.E.F. THE DAT E OF THE EXECUTION HEREOF AND SHALL INITIALLY BE VALID UP TO 31.3.2008 AND THEREA FTER SHALL BE AUTOMATICALLY RENEWED FOR ADDITIONAL ONE YEAR PERIODS UNLESS EITHER PARTY TERMINATES THIS AGREEMENT BY GIVING THE OTHER PARTY WRITTEN NOTICE 3 MONTHS PRIO R TO THE EXPIRATION OF THE INITIAL TERM OR ANY RENEWAL TERM. 3.1 NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN CON TAINED, EITHER PARTY HERETO SHALL BE ENTITLED TO TERMINATE THIS AGREEMENT. 3.3 ANY DISPUTES OR DIFFERENCES WHATSOEVER ARISING BETWEEN THE PARTIES OUT OF OR RELATED TO THIS AGREEMENT OR BREACH THEREOF SHALL B E SETTLED BY ARBITRATION IN ACCORDANCE WITH THE ARBITRATION & CONCILIATION ACT OF 1996. COURTS IN NEW DELHI WILL HAVE EXCLUSIVE JURISDICTION IN THE EVENT OF ANY LEG AL / JURISDICTIONAL PROCEEDINGS. IN WITNESS THEREOF THESE PRESENTS HAVE BEEN EXECUTE D ON BEHALF OF THE PARTIES HERETO AS OF THE DAY AND YEAR FIRST ABOVE WRITTEN. FOR AHAAR CONSUMER PRODUCTS PVT.LTD. FOR AHAAR INTE RNATIONAL (I) LTD. SD/- SD/- DIRECTOR DIRECTOR ANNEXURE 'A' AND 'B' WHICH ARE PART OF THE AGREEMEN T ARE ALSO REPRODUCED BELOW:- ITA NO.23L0/DEL/2010 & OTHRS 13 'QUALITY STANDARD A NNEXURE A THE SPECIFICATION OF ATTA WILL DEPEND ON THE MARKET IT IS SERVICING. HOWEVER, THE BROAD SPECIFICATION ARE AS UNDER- MOISTURE CONTENT 10% (MAXIMUM) TOTAL ASH 1.5% TO 1.75% ACID INSOLUBLE ASH 0.1% ALCOHOLIC ACIDITY 0.12% GLUTEIN 9% MINIMUM WATER ABSORPTION MORE THAN 80% FOREIGN MATTER NIL GRITS/STONE NIL PARTICLE SIZE DISTRIBUTION WILL BE INFORMED ACCORD ING TO MARKET CLEANED WHEAT SPECIFICATION SHOULD HAVE NIL EXTRAN EOUS MATTER QUALITY STANDARD ANNEXURE B WHEAT MAY CONTAIN MAXIMUM OF FOLLOWING: FOREIGN MATTER/REFRACTION A)MUD BULB/STONE 0.5% B)POISONOUS SEED NIL C)CHAFF 1.0% D)OTHER SEEDS OF FOOD GRAINS 0.5% E)DAMAGED GRAIN 0.5% DUNKY (VEVILLED) 0.5% BROKEN & SHREVILLED 4.0% KERNAL BURNT (KANTA) 0.5% POTIA 6.0% BULK DENSITY 78 GM/ML (MIN) 8. THERE IS NO DISPUTE THAT THE PARTIES, APART FROM ENTERING INTO AGREEMENT HAVE ALSO ACTED UPON THE AGREEMENT AND THE TRANSACTIONS APPEAR TO B E STRICTLY FALLING WITHIN THE AGREEMENT THAT IS ENTERED INTO BY THE PARTIES. THAT IS TO SAY , THIS AGREEMENT, ALTHOUGH BETWEEN THE TWO RELATED CONCERNS, IS ENTERED IN THE ITA NO.23IO/DEL /2OIO & OTHRS 14 COURSE OF BUSINESS AND IS ACTED UPON BY BOTH THE SIDES. THEREFORE, ONE CANNOT IGNORE THE TERMS OF THIS AGREEMENT IN DETERMINING THE NATURE OF THE TRANSACT ION THAT HAVE TAKEN PLACE BETWEEN THE PARTIES, AS THERE IS NOTHING IN THE IMPUGNED ORDERS TO DOUBT THE GENUINENESS OF THIS AGREEMENT. 8.1 NOW, IT IS FOR THE REVENUE TO UNDERSTAND THIS A GREEMENT AND DETERMINE THE NATURE OF THE ASSESSEE'S TAX LIABILITY ARISING FROM THE TR ANSACTION ENTERED INTO THROUGH THIS AGREEMENT. IN FACT, IT IS STATED THAT THE ASSESSEE HAS GIVEN T HE WHEAT UNDER A DELIVERY CHALLAN-CUM-INVOICE AND THE VALUE IS PROVIDED ONLY FOR SETTLEMENT OF CL AIMS. ON THE BASIS OF THE QUANTITY OF THE WHEAT SUPPLIED BY THE ASSESSEE TO AIL, THE ASSESSEE HAS COLLECTED THE END PRODUCTS NAMELY ATTA OR DALIA AND IS NOT BOTHERED ABOUT THE OTHER PRODUCTS AND WASTAGE ARISING ITA 276/CHD/2017 A.Y. 2014-15 PAGE 5 OF 5 THEREFROM. IN OTHER WORDS, UNDER THE TERMS OF AGREE MENT, BY-PRODUCTS, WASTE AND THE RESIDUAL OF THE WHEAT AFTER MANUFACTURE BELONG TO AIL AND NO T TO THE ASSESSEE. NOWHERE IN THE BOOKS OF THE ASSESSEE, THE ASSESSEE HAS MADE ANY PAYMENT TOWARDS THE SERVICES RENDERED BY AIL IN PRODUCING THE ATTA AND DALIA FOR AND ON BEHALF O F THE ASSESSEE IN THE PACKETS AND CONTAINERS PROVIDED BY THE ASSESSEE IN TERMS OF THE AGREEMENT. 3.2. CONSIDERING THE FACTS AND POSITION OF LAW AS CONSIDERED IN THE AFOREMENTIONED ORDERS OF THE ITAT WHERE NO CHANGE IN MA TERIAL FACTS AND CIRCUMSTANCES HAS BEEN POINTED BY THE REVENUE, RESPECT FULLY FOLLOWING THE PRECEDENT, WE HOLD THAT THE ASSESSEE WAS NOT REQUIRED TO MAKE TDS U/S 194C OF THE ACT ON THE VALUE OF THE BY-PRODUCTS. ACCORD INGLY, THE APPEAL OF THE ASSESSEE IS ALLOWED. SAID ORDER WAS PRONOUNCED ON T HE DATE OF HEARING ITSELF IN THE OPEN COURT. 4. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 04.10.2017. SD/- SD/- ( B.R.R.KUMAR) (D IVA SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER POONAM COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR ASSTT. REGISTRAR ITAT,CHANDIGARH.