The D D International Pvt. Ltd, Amritsar. V. The Income Tax Officer, Amritsar.

ITA 338/ASR/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8667 (ITAT-AMRITSAR)
• Duration Of Justice: 9 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-03-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 21-02-2017
• Assessment Year: 2013-2014
• Appeal Filed On: 08-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Rule of consistency; Question of law
• Section: 133A; 194C; 201(1); 32; 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. T. S. KAPOOR, ACCOUNTANT MEMBER AND SH. N.K. CHOUDHRY, JUDICIAL MEMBER ITA NOS.337 & 338 (ASR)/2016 ASSESSMENT YEARS: 2012-13 & 2013-14 D. D. INTERNATIONAL PVT. LTD. 26-THE MALL, AMRITSAR PAN:AABCD-0696B VS. INCOME TAX OFFICER TDS-II, AMRITSAR (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI. ASHWANI KALIA (CA) RESPONDENT BY: SHRI. CHARAN DAS (DR) DATE OF HEARING: 21/02/2017 DATE OF PRONOUNCEMENT: 29/03/2017 ORDER PER T. S. KAPOOR (AM): THESE ARE TWO APPEALS FILED BY ASSESSEE AGAINST THE CONSOLIDATED ORDER OF LD. CIT(A), AMRITSAR, DATED 02.03.2016, FO R ASST. YEAR 2012-13 & 2013-14. 2. IN ITA NO. 337(ASR)/2016, THE ASSESSEE IS AGGRIE VED WITH THE ORDER OF LD. CIT (A) BY WHICH HE HAS CONFIRMED THE INTERE ST CHARGED BY ASSESSING OFFICER U/S 201 (1A) OF THE ACT. IN ITA NO. 338(ASR/2016, THE ASSESSEE IS AGGRIEVED WITH THE ACTION OF LD. CIT(A) BY WHICH HE HAS CONFIRMED THE DISALLO WANCE MADE BY ASSESSING OFFICER ON ACCOUNT OF NON-DEDUCTION OF TA X ON RESIDUALS RETAINED BY MILLER FROM MILLING OF PADDY. ITA NOS. 337 & 338(ASR)/2016 ASST. YEARS : 2012-13 & 2013-14 2 3. THE BRIEF FACTS OF THE CASES AS NOTED IN THE ASS ESSMENT ORDER PASSED U/S 201 AND 201(1A) OF THE ACT ARE THAT A TD S INSPECTION U/S 133A WAS CARRIED OUT IN THE CASE OF THE APPELLANT O N 13.12.2013. DURING THE COURSE OF INSPECTIONS, THE ASSESSING OFFICER OB SERVED THAT ASSESSEE HAD GOT DONE MILLING FROM TWO PARTIES NAMELY SAT DE V SUNIL KUMAR & CO. AND DAS RICE AND OILS MILLS. THE ASSESSING OFFICER FURTHER OBSERVED THAT ASSESSEE HAD DEDUCTED TDS ONLY ON THE NOMINAL CHARG ES OF RS.80/- PER QUINTAL OF MILLING CHARGES PAID BY ASSESSEE. THE AS SESSING OFFICER FURTHER OBSERVED THAT THE MILLER HAD RETAINED THE BY PRODUC TS OBTAINED DURING PROCESSING OF PADDY. THE ASSESSING OFFICER WAS OF T HE VIEW THAT ASSESSEE SHOULD HAVE DEDUCTED TAX ON THE VALUE OF RESIDUALS RETAINED BY MILLERS AND THEREFORE HE CALCULATED THE TOTAL MILLING CHARG ES AT RS. 764/- PER QUINTAL AFTER TAKING INTO ACCOUNT THE COST OF BY PR ODUCTS RETAINED BY MILLERS AND THEREBY CREATED A DEMAND U/S 201(1A) FO R SHORT DEDUCTION OF TDS AND ALSO CREATED DEMAND AS INTEREST U/S 201(1A) OF THE ACT. 4. AGGRIEVED WITH THE ORDER THE ASSESSEE FILED APPE ALS BEFORE LD. CIT(A) WHO CONFIRMED THE ADDITIONS MADE BY THE ASSE SSING OFFICER. 5. AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE US. 6. AT THE OUTSET, THE LD. AR SUBMITTED THAT THE ISS UE OF DEDUCTION OF TDS FROM THE RESIDUALS RETAINED BY MILLERS IS DULY COVERED IN FAVOUR OF ITA NOS. 337 & 338(ASR)/2016 ASST. YEARS : 2012-13 & 2013-14 3 ASSESSEE BY THE ORDER OF AMRITSAR BENCH OF ITAT IN ITA NO. 214 TO 216(ASR)/2016, DATED 01.07.2016 AND WAS FURTHER COV ERED IN FAVOUR OF ASSESSEE BY THE ORDER OF HON'BLE TRIBUNAL VIDE ORDE R DATED 16.01.2017 IN ITA NO. 508, 509 AND 84 AND IN THIS RESPECT INVITED OUR ATTENTION TO THE ORDERS OF TRIBUNAL PLACED ON RECORD. AS REGARDS INT EREST U/S 201(1A) CONFIRMED BY LD. CIT(A) IN ITA NO. 337, THE LD. AR SUBMITTED THAT IT WAS CHARGED BY ASSESSING OFFICER AS CONSEQUENTIAL OF SH ORT DEDUCTION OF TAX AND IF THE HON'BLE BENCH HELD THAT THERE WAS NO SHO RT DEDUCTION OF TAX THEN INTEREST WAS ALSO NOT CHARGEABLE. 7. THE LD. DR ON THE OTHER HAND, HEAVILY PLACE D HIS RELIANCE ON THE ORDER OF AUTHORITIES BELOW. 8. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE TH OUGH THE MATERIAL PLACED ON RECORD. WE FIND THAT ASSESSEE HAD GOT MIL LING FROM THE TWO PARTIES MENTIONED IN THE ASSESSMENT ORDER AND HAD P AID RS.80/- PER QUINTAL AS MILLING CHARGES TO THE ABOVE PARTIES. TH E ASSESSEE HAD DULY DEDUCTED TDS ON THE MILLING CHARGES PAID BY ASSESSE E AND THERE IS NO DISPUTE UP TO THIS EXTENT. IT IS ALSO AN UNDISPUTED FACT THAT RESIDUALS LEFT AFTER PROCESSING OF RICE FROM PADDY WERE KEPT BY TH E MILLERS AS PER TERMS AND CONDITIONS OF THE MILLING AGREEMENT. THE ASSESS ING OFFICER HELD THAT SINCE THE RESIDUALS WERE RETAINED BY THE MILLERS AN D THEREFORE INDIRECTLY THE ASSESSEE HAD MADE PAYMENTS EQUIVALENT TO THE VA LUE OF RESIDUALS ITA NOS. 337 & 338(ASR)/2016 ASST. YEARS : 2012-13 & 2013-14 4 RETAINED BY MILLERS AND THEREFORE ASSESSEE WAS LIAB LE FOR TAX DEDUCTION AT SOURCE. WE FIND THAT ISSUE OF TAX DEDUCTION AT SOUR CE ON THE VALUE OF RESIDUALS RETAINED BY MILLERS IS DULY COVERED IN FA VOUR OF ASSESSEE BY THE ORDER OF ITAT AMRITSAR BENCH IN ITA NO.214 TO 216(A SR)/ 2016 AND WHICH HAS BEEN FOLLOWED BY THE TRIBUNAL IN ITA NO. 508, 5 09 & 84 VIDE ORDER DATED 16.01.2017. FOR THE SAKE OF COMPLETENESS, THE FINDINGS OF THE TRIBUNAL DATED 16.01.2017 IN ITA NO. 508, 509 & 84 (ASR)/ 2015-16 ARE REPRODUCED BELOW: 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND HAVE P ERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE ASSESSEE HAD ENGAGED TWO PARTIES M/S. SARASWATI TRADING COMPANY AD M/S. TAU AGRO SA LES P. LTD. FARIDKOT IN ASSESSMENT YEARS 2013-14 & 2012-13 FOR PROCESSING OF RICE FROM PADDY SUPPLIED BY THE ASSESSEE. THE PROCESSING CHARGES WERE FIXED AT RS.80/- PER QTL. AND FURTHER THE MILLERS WERE AL LOWED TO RETAIN BY- PRODUCTS OBTAINED WHICH WERE TO BE OBTAINED IN THE PROCESS OF MANUFACTURE OF RICE. THE CASE OF THE AUTHORITIES BE LOW IS THAT THE ASSESSEE SHOULD HAVE DEDUCTED TDS ON THE VALUE OF BY-PRODUCT S RETAINED BY THE MILLERS ALSO. WE FURTHER FIND THAT SIMILAR ISSUE HA S BEEN DECIDED BY THE ITAT, AMRITSAR BENCH, IN THE CASE OF ITO (TDS), JAL ADHAR VS. DISTRICT MANAGER, PUNJAB STATE GRAIN PROCUREMENT CORPN. LTD. HOSHIARPUR, IN ITA NOS. 214 TO 216(ASR)/2016, WHEREIN VIDE ORDER DATED 01.07.2016, THE TRIBUNAL UNDER SIMILAR FACTS AND CIRCUMSTANCES HAD HELD THAT THE ASSESSEE WAS NOT LIABLE FOR DEDUCTING TDS ON THE BY-PRODUCTS RETAINED BY THE MILLERS. THE TRIBUNAL HAS ALSO CONSIDERED IN ITS OR DER, THE CASE OF M/S. PUNJAB STATE CO-OPERATIVE SUPPLY AND MARKETING FEDE RATION LTD; NAWANSHAHAR VS ITO, TDS-1, JALANDHAR, IN ITA NO.54 TO 56(ASR)/2016, FOR THE ASSESSMENT YEARS 2012-13 TO 2014-15, WHEREIN SI MILAR ISSUE WAS ALSO DECIDED AGAINST THE REVENUE. THE LD. CIT(A) IN THES E TWO CASES HAD DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE AND AGA INST THE REVENUE. FOR THE SAKE OF COMPLETENESS, THE RELEVANT FINDINGS OF THE TRIBUNAL ARE REPRODUCED BELOW: 2. THE BRIEF FACTS OF THE CASES ARE THAT THE PR, D ISTT. MANAGER, PUNGRAIN IS A STATE GOVT. AGENCY WHICH PROCURES FO OD-GRAINS (WHEAT AND PADDY) FROM THE MARKET IN EVERY CROP SEASON ON THE BEHALF OF FOOD CORPORATION OF INDIA, GOVT. OF INDIA. THE MILLING O F THIS PADDY IS BEING DONE BY VARIOUS MILLERS WITH WHOM CONTRACTS ARE EXECUTE D. THE MILLERS HAVE TO SUPPLY THE 67/68 KGS. RICE FOR EVERY ONE QUINTAL OF PADDY DELIVERED TO ITA NOS. 337 & 338(ASR)/2016 ASST. YEARS : 2012-13 & 2013-14 5 THEM BY THE PUNGRAIN AND THE RESIDUALS ARE LEFT WIT H THE MILLERS. THE PUNGRAIN PAYS MILLING CHARGES OF RS.15/- PER QTL. O F PADDY SUPPLIED FOR MILLING. THE AGENCY DEDUCTS U/S 194C ON THE MILLING CHARGES PAID TO THE MILLERS. HOWEVER, THE AO WHILE PASSING ORDERS U/S 2 01(1)/201(1A) OF THE INCOME TAX ACT, 1961, TREATED THE ASSESSEE AS ASSES SEE IN DEFAULT. 3. THE ASSESSING OFFICER TREATED THE ASSESSEE IN DE FAULT FOR NON- DEDUCTION OF TAX AT SOURCE UNDER SECTION 194C OF T HE INCOME TAX ACT, 1961, OBSERVING AS FOLLOWS: 3. IN VIEW OF THE AFORESAID FACTS THE ASSESSEE WAS REQ UIRED TO SHOW CAUSE VIDE THIS OFFICE LETTER DATED 03.02.2014 WHY IT SHOULD NOT BE TREATED AS AN ASSESSEE IN DEFAULT AS IT WAS DEDUCTING TAX AT SOURCE PARTIALLY AND THUS, NOT COMPLYING WITH THE P ROVISIONS OF SECTION 194C OF INCOME TAX ACT. THE SHOW CAUSE NOTI CE IS EXTRACTED AS UNDER:- YOUR AGENCY AWARDS CONTRACTS FOR MILLING OF PADDY TO VARIOUS MILLERS EVERY YEAR. AS PER INFORMATION AVAILABLE, F OR EVERY QUINTAL OF PADDY SUPPLIED TO THE MILLER, THE AGENCIES PROCURE 67/68 KG RICE. MILLING CHARGES OF RS. 15/- PER QUINTAL ARE PAID IN CASH. SUCH MODEST AND UNAFFORDABLE RATE OF MILLING IS ACCEPTAB LE TO THE MILLERS AS THE AGENCIES, APART FROM THE AFORESAID MILLING C HARGES, ALSO PROVIDE IN THE CONTRACT THAT THE BY PRODUCTS OF PAD DY I.E. RICE BRAN, KHUDI PHAK AND HUSK ETC. SHALL BE THE PROPERTY OF T HE MILLER AND NOT THE AGENCY. THESE BY PRODUCTS ARE THUS, ACCOUNTED F OR AS THE STOCK OF THE MILLERS. THE VALUE OF THE BYPRODUCTS IS DETE RMINATE AS EACH OF THEM HAS ITS SPECIFIC USAGE IN DIFFERENT INDUSTRIES . FOR PRACTICAL PURPOSES, THE MILLING CHARGES ARE PAID IN TWO PARTS VIZ. RS. 15/- PER QUINTAL IN CASH AND VALUE OF THE BY PRODUCTS. THUS, FOR ALL INTENTS AND PURPOSES, DEDUCTION IS BEING MADE ON CASH PART OF THE MILLING EXPENSE I.E. RS. 15/- PER QUINTAL AND NOT ON THE TO TAL AMOUNT (IN CASH AND KIND). THUS, PARTIAL DEDUCTION OF TAX AT S OURCE IS BEING MADE UNDER SECTION 194C OF THE INCOME TAX ACT, 1961 . 4. IN REPLY, IT IS STATED BY THE ASSESSEE THAT THE RICE MILLERS ARE PAID MILLING CHARGES FOR CUSTOM MILLING OF PADDY AS FIXED BY THE GOVT. AND THAT ALL THE BY PRODUCTS SHALL BE PROPERT Y OF THE RICE MILLER. IT IS FURTHER STATED THAT IT WILL NOT BE AP PROPRIATE ON THE PART OF THE ASSESSEE OF GOVT, SINCE THE SAME IS THE PROP ERTY OF THE MILLERS AS PER POLICY. IT IS ALSO STATED THAT NO TRANSACTIO NS/ENTRIES OF BY PRODUCTS ARE AFFECTED IN THE BOOKS OF ACCOUNTS IN T HEIR OFFICE. 5. IN THE AFORESAID EXPLANATION, THE ASSESSEE HAS A DMITTED THAT ALL THE BY PRODUCTS OF PADDY, WHICH IS THE PROPERTY OF THE AGENCY, IS LEFT WITH THE MILLER AS PER THE POLICY OF THE GOVER NMENT. OBVIOUSLY, SUCH A POLICY HAS BEEN FRAMED IN ORDER TO COMPENSAT E THE MILLER IN KIND AS THE MILLING CHARGES OF RS. 15/- ARE TOO SMA LL FOR THE OPERATIONAL COST OF MILLING WHICH INCLUDES TRANSPOR TATION, STITCHING AND A NUMBER OF OTHER EXPENSES BORNE BY THE MILLER. THUS, THE VALUE ITA NOS. 337 & 338(ASR)/2016 ASST. YEARS : 2012-13 & 2013-14 6 OF BY PRODUCTS IS PART OF THE MILLING EXPENSES PAID IN CASH. HOWEVER, TAX IS DEDUCTED AT SOURCE ONLY OUT OF CASH CHARGES PAID. 6. THE EXPLANATION IS NOT ACCEPTABLE FOR THE FOLLOW ING REASONS: 1. THE MILLING CHARES PAID IN CASH @ RS. 15/- PER QUINTAL ARE THE DISCOUNTED COST OF MILLING AND THIS PETTY R ATE OF MILLING (IN CASH) IS BEING ACCEPTED BY MILLERS YEAR AFTER YEAR AS THEY ARE BEING COMPENSATED WITH BY PRODUCTS WHOSE VALUE IS MANY TIMES OF THIS CASH MILLING. IN ACTUALITY, THE COST OF THE MILLING PER QUINTAL IS M UCH HIGHER THAN RS. 15/- AND THE SAME IS SUPPLEMENTED BY THE COST OF BY PRODUCTS WHICH GET TRANSFERRED TO THE MILLER. IN CASE, THESE ARE TAKEN BY THE AGENCY, IT WILL BE HAVE TO PAY HIGHER AMOUNT IN CASH AS MILLING CHARGES. II. IN FACT, THIS POLICY OF MILLERS RETAINING THE B Y PRODUCTS AND THE AGENCIES PAYING A FRACTION OF MILLING CHARG ES IN CASH SUITS THE AGENCIES AS IT WILL BE CUMBERSOME IF THEY TAKE THE BY PRODUCTS BACK WHICH ARE THEIR PROPERTY BEING A P ART OF THE PADDY OWNED BY THEM. SO, IN ORDER TO FACILITATE THE MSELVES, THE GOVERNMENT HAS MADE A POLICY IN REGARD TO MILLI NG AS DISCUSSED ABOVE. ON THE OTHER HAND, THIS SYSTEM SUI TS THE MILLER AS WELL AS THE BY PRODUCTS ARE SOLD BY THEM AS THEIR STOCK. III. IT DOES NOT MATTER IF THE MILLING CHARGES BEIN G PAID IN CASH ARE ONLY RS.15/- WHEN THE MILLERS ARE COMPENSA TED BY TRANSFERRING THE BY - PRODUCTS I.E. PAYING IN KIND. THUS, THE MILLING CHARGES BEING PAID IN CASH ARE DISCOUNTED C OST OF MILLING AND NEED TO BE INCREASED BY THE COST OF BY PRODUCTS FOR THE PURPOSE OF TDS. THE AGENCIES THUS, DO NOT M ERELY PAY THE CASH CHARGES TO THE MILLER BUT A PAN OF THEIR P ROPERTY IN THE SHAPE OF BY PRODUCTS WHICH IS NOTHING BUT PAYME NT OF MILLING CHARGES IN KIND. IV THE RELEVANT TDS PROVISIONS AS REPRODUCE ABOVE, ARE VERY CLEAR ON THE ISSUE AS THEY PROVIDE FOR TDS ON NOT ONLY THE CREDIT OF A CONTRACTORS ACCOUNT WITH SOME AMOU NT OR IN RESPECT OF PAYMENT BY WAY CASH/CHEQUE/DRAFT BUT ALS O OUT OF PAYMENT IN KIND (BY ANY OTHER MODE) IRRESPECTIVE OF WHETHER THE SAME IS CREDITED IN THE MILLER'S ACCOUN T OR IN FAT T, THE BY PRODUCTS (THEIR VALUE) ARC PASSED ON TO T HE MILLER AT THE TUNE WHEN PADDY IS GIVEN FOR MILLING AS IN TURN , ONLY 67/68KG. OF RICE ARE TAKEN BACK PER EVERY QUINTAL O F PADDY. THUS, THE LAW TAKES CARE OF THE PAYMENT IN KIND ALS O AND FOR ALL INTENTS AND PURPOSES, THE BY PRODUCTS DO COMPENSATE FOR ITA NOS. 337 & 338(ASR)/2016 ASST. YEARS : 2012-13 & 2013-14 7 THE LOW COST OF MILLING AND THE GOVERNMENT HAS FAME D A POLICY IN TINS REGARD FAR THEIR CONVENIENCE. 7. IN VIEW OF THE AFORESAID DISCUSSION, THE EXPLANA TION GIVEN BY THE ASSESSEE IS NOT ACCEPTED. J HOLD THE ASSESSEE IN DE FAULT FOR NOT DEDUCTING, TAX AT SOURCE ON FULL VALVE OF THE MILLING CHARGES I.E. PA ID IN CASH AND PASSED ON IN KIND. TAX IS BEING DEDUCTED AT SOURCE ON THE MILLING CHARGES PAID IN CASH WHILE NO DEDUCTION IS BEING MADE IN RESPECT OF THE PRODUCTS WHICH ARE TOKEN US STUCK OF THE ADDER AND SOLD AT HIS CONVENIENCE. 8. AS REGARDS BY PRODUCTS, THE MAIN BY PRODUCTS OF PADDY ARE RICE BRAN, KHUDI PHAK AND HUSK. ENQUIRIES WERE MADE FROM SOME RICE SHELTERS TO ARRIVE AT THE VALUE PER QUINTAL OF THE THESE BY PRODUCTS. THE VALUE OF BY PRODUCTS FROM ONE QUINTAL OF PADDY, AS PER INFORMATION GIVE BY DIFFERENT PARTIES RANGES BE TWEEN GIVEN BY THESE PARTIES IS ADOPTED FOR WORKING OUT THE SHORT DEDUCTION. THE AVERAGE VALUE COMES TO RS. 82/- PER QUINTAL DURING FINANCIAL YEAR '2011-12 AND RS. 86/- DURING FINANCIAL YEAR 2012-13 . THE LATTER FIGURE IS ALSO ADOPTED IN FINANCIAL YEAR 2013-14. T HE FIGURES OF PADDY GOT MILLED DURING DIFFERENT YEARS HAVE BEEN P ROVIDED BY THE ASSESEE. COL.I IN THE FED OWING CHART CONTAINS FIG URES OF TOTAL PADDY GOT MILLED BY THE ASSESEE IN A J PARTICULAR YEAR AN D VALUE OF BY PRODUCTS IS WORKED OUT BY APPLYING THE AFORESAID FI GURES IN DIFFERENT YEARS. THE SHORT DEDUCTION OF TAX IS CALCULATED C, COL. 3 AND DEMAND UNDER SECTION 201(1)/201(1A) IS CREATED ACCORDINGLY . 9. ALTHOUGH THE BY PRODUCTS GET PASSED ON TO THE M ILLER WHEN PADDY IS GIVEN TO HIM FOR MILLING, HOT THIS PAYMENT IS DEEMED TO HAVE BEEN MADE IN MARCH OF THE RELEVANT FINANCIAL Y EAR WHEN THE ACCOUNTS ARE SETTLED, THUS, INTEREST UNDER SECTION 201(IA) HAS BEEN CALCULATED FROM APRIL FOLLOWING THE FINANCIAL YEAR TO THE DATE OF ORDER I.E. MARCH, 2014. THE SHORT DEDUCTION OF TAX INTERE ST -THEREON IS CALCULATED AS UNDER BY APPLYING THE AFORESAID VALUE S OF BY PRODUCTS PER QUINTAL: F.Y.2011-12 F.Y.2012-13 F.Y.2013-14 1. TOTAL PADDY GOT MILLED FROM MILLERS 818570QTL. 715156QTL. 776772QTL. 2 VALUE OF BY PRODUCTS 6,71,22,740 6,15,03,416 6,68,02,392/ - 3 TDS DEDUCTIBLE @ 2% A 13,42,454 12,30,068 13,36,047/- 4 PERIOD OF DEFAULT 24 MONTHS 12 MONTHS 5 INTEREST @ 1% PER MONTH B 3,22,188 1,47,608 ITA NOS. 337 & 338(ASR)/2016 ASST. YEARS : 2012-13 & 2013-14 8 6 TOTAL TAX PLUS INTEREST (A+B) 16,64,642/- 13,77,676/- 13,36,047/- 10. IN VIEW OF THE ABOVE CALCULATION, DEMAND IS CRE ATED AS WIDER: FINANCIAL YEAR TAX DEMAND UNDER SECTION 201(1) INTEREST DEMAND UNDER SECTION 201(1A) TOTAL DEMAND 2011-12 13,42,454/- 3,22,188 16,64,642/- 2012-13 12,30,068/- 1,47,608/- 13,77,676/- 2013 -14 13,36,047- - 13,36,047/- 5. BY VIRTUE OF THE IMPUGNED ORDER, THE LD. CIT(A) ALL OWED THE APPEALS OF THE ASSESSEE HOLDING AS UNDER: 8. I HAVE VERY CAREFULLY GONE THROUGH THE ORDER OF MY LD. COLLEAGUE (CIT(A), PATIALA AND ALSO THE ORDER OF TH E HONBLE ITAT, DELHI, AS REFERRED ABOVE. THE ONLY DIFFERENCE BETWE EN THE CONTRACTS AS DISCUSSED IN THE DECISION OF THE ITAT, DELHI BEN CH AND THE ASSESSEE GOVERNMENT AGENCY AND THE RICE MILLERS IS THAT APART FROM THE BYE PRODUCTS LEFT WITH THE MILLERS, THE MILLERS ARE PAID RS.15/- PER QTL. ON WHICH TDS IS DULY DEDUCTED AND THERE IS NO DISPUTE AS TO THE FACTS. REST OF THE FACTS ARE IDENTICAL. THE HONBLE ITAT, HAS DISCUSSED IN GREAT DETAILS EVERY ASPECT OF THE TRAN SACTION, LEGAL ISSUES INVOLVED AND HAD EXAMINED THE ISSUE AT HAND FROM VARIOUS ANGLES AND FOUND THAT IN TERMS OF SECTION 194C OF T HE ACT NO TAX WAS DEDUCTIBLE. MOREOVER, THIS IS THE ONLY DECISION AVAILABLE BEFORE ME AND NO ADVERSE DECISION IS KNOWN AND RESPECTFULL Y FOLLOWING THE SAME AS WELL AS THE ORDER OF MY LD.COLLEAGUES ( CIT(A), PATIALA WHO HAS, IN HIS ORDER DATED 29.11.2015 AS REFERRED ABOVE, I HEREBY DIRECT THE AO NOT TO TREAT THE ASSESSEE IN DEFAULT AS FAR AS THE PROVISIONS OF SECTION 201(1)/201(1A) OF THE I.T ACT ARE CONCERNED. 6. HAVING HEARD THE RIVAL CONTENTIONS IN THE LIGHT OF THE MATERIAL AVAILABLE ON RECORD, WE FIND THAT THE LD. CIT(A) HA S RIGHTLY DIRECTED THE AO NOT TO TREAT THE ASSESSEE IN DEFAULT AS FAR AS THE PROVISIONS OF SECTION 201(1)/201(1A) OF THE I.T ACT ARE CONCERNED. THE OR DER OF THE LD. CIT(A) IS REASONED ONE AND DOES NOT REQUIRE ANY INTERFERENCE. 7. AN IDENTICAL ISSUE HAS ALSO BEEN DECIDED BY THIS BENCH BY AN ORDER OF EVEN DATE IN THE CASE OF M/S. THE PUNJAB STATE CO-OPERATIVE SUPPLY AND MARKETING FEDERATION LTD., NAWANSHAHAR VS. ITO, TDS -1, JALANDHAR, IN ITA NOS. 54 TO 56(ASR)/2016, FOR THE ASSESSMENT YEA RS 2012-13 TO 2014- 15, IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVEN UE BY HOLDING AS UNDER: ITA NOS. 337 & 338(ASR)/2016 ASST. YEARS : 2012-13 & 2013-14 9 14. HAVING CONSIDERED THE RIVAL CONTENTIONS ON TH E MERITS OF THE LEGAL ISSUE RAISED BY THE ASSESSEE, WE FIND THAT TH E FACTS, AS CANVASSED, ARE NOT IN DISPUTE, THE LD. IN THE CASE OF PUNJAB STATE GRAIN PROCUREMENT CORPORATION LIMITED, VIDE ORDER D ATED 25.01.2016, ON EXACTLY SIMILAR FACTS AND CIRCUMSTAN CES, AS DECIDING THE LEGAL ISSUE RAISED HEREIN, HELD TDS NOT LIABLE TO BE DEDUCTED, IN A SIMILAR SITUATION. THE RELEVANT PORTION OF THE SA ID ORDER, READS AS FOLLOWS: 8. I HAVE CAREFULLY GONE THROUGH THE ORDER OF MY L D. COLLEAGUE (CIT(A), PATIALA AND ALSO THE ORDER OF THE HONBLE ITAT, DELHI, AS REFERRED ABOVE. THE ONLY DIFFERENCE BETWEEN THE CON TRACTS AS DISCUSSED IN THE DECISION OF THE HONBLE ITAT, DELH I AND THE ASSESSEE GOVERNMENT AGENCY AND THE RICE MILLERS IS THAT APART FROM THE BYE PRODUCTS LEFT WITH MILLERS, THE MILLERS ARE PAID RS.15/- PER QTL. ON WHICH TDS IS DULY DEDUCTED AND THERE IS NO DISPUTE AS TO THE FACTS. REST OF THE FACTS ARE IDENTICAL. THE HONBLE ITAT HAS DISCUSSED IN GREAT DETAILS EVERY ASPECT OF THE TRAN SACTION, LEGAL ISSUES INVOLVED AND HAD EXAMINED THE ISSUE AT HAND FROM VARIOUS ANGLES AND FOUND THAT IN TERMS OF SECTION 194C OF T HE I.T. ACT NO TAX WAS DEDUCTIBLE. MOREOVER, THIS IS THE ONLY DECISION AVAILABLE BEFORE ME AND NO ADVERSE DECISION IS KNOWN AND RESPECTFULL Y FOLLOWING THE SAME AS WELL AS THE ORDER OF MY LD. COLLEAGUE (CIT( A), PATIALA WHO HAS, IN HIS ORDER DATED 29.11.2015 AS REFERRED ABOV E, I HEREBY DIRECT THE AO NOT TO TREAT THE ASSESSEE IN DEFAULT AS FAR AS THE PROVISIONS OF SECTION 201/201(1A) OF THE I.T. ACT A RE CONCERNED. 15. HENCE, THE SAME LD. CIT(A), IN OUR CONSIDERED, COULD NOT HAVE BEEN TAKEN A DIFFERENT VIEW IN THE CASE OF A SIMILA RLY PLACED ASSESSEE. THE RULE OF CONSISTENCY SQUARELY APPLIES. THE ABOVE APART, IN AHAAR CONSUMER PRODUCTS (P) LTD. (SUPRA ), IT HAS BEEN HELD AS FOLLOWS: 12. NOW, WE HAVE TO EXAMINE WHETHER THE ASSESSEE I S OBLIGED TO DEDUCT TAX AT SOURCE ON THE SO-CALLED CONSTRUCTIVE PAYMENT AS CONSTRUED BY THE ASSESSING OFFICER IN TERMS OF THE AGREEMENT. THE ASSESSEE, IN THIS CASE, SUPPLIES 100 KG OF WHEAT AN D TAKES BACK 88 KGS. OF ATTA OR 85 KGS. OF DALIA AFTER ITS PROCESSI NG DONE BY THE AIL AND AM- IS REQUIRED TO DELIVER THE END PRODUCT IN T HIS PROPORTION TO THE ASSESSEE WHO HAS SUPPLIED THE RAW MATERIAL. DOE S THE PROVISION OF SECTION 194C OF THE ACT CREATE AN OBLIGATION ON THE PART OF ASSESSEE TO DEDUCT TAX AT SOURCE IN RESPECT OF ANY OF THE TRANSACTIONS IT HAS ENTERED INTO WITH THE AIL? SECTION 194C OF THE ACT WAS BROUGHT INTO STATUTE BY THE FINANCE ACT, 19 72. CIRCULAR NO. 86 DATED MAY 29, 1972 WAS ISSUED INTER ALIA STATING THAT THE PROVISIONS OF SECTION 194C WOULD APPLY ONLY IN RELA TION TO LABOUR CONTACTS AND WOULD NOT COVER CONTRACTS FOR SALE OF GOODS. IF A MANUFACTURER PURCHASES MATERIAL ON HIS OWN AND MANU FACTURES A PRODUCT AS PER THE REQUIREMENT OF A SPECIFIC CUSTOM ER, IT WAS A CASE ITA NOS. 337 & 338(ASR)/2016 ASST. YEARS : 2012-13 & 2013-14 10 OF SALE AND NOT A CONTRACT FOR CARRYING OUT ANY WOR K. THE FACT THAT THE GOODS MANUFACTURED WERE ACCORDING TO THE REQUIR EMENT OF THE CUSTOMER DID NOT MEAN OR IMPLY THAT ANY WORK WAS CA RRIED OUT ON BEHALF OF THAT CUSTOMER. IN CASE OF ANY ISSUE WHERE THE CONTRACT IS A CONTRACT OF SALE AND NOT A CONTRACT FOR CARRYING OU T ANY WORK, THE MATTER SHOULD BE DECIDED IN THE LIGHT OF THE PRINCI PLES LAID DOWN BY THE HONBLE SUPREME COURT IN STATE OF TAMIL NADU V. SH THIRUMAGAL MILLS LTD. AIR 1972 SC 1148. THE BOMBAY HIGH COURT HAS ALSO ANALYZED THE DIFFERENCE BETWEEN THE SALE AND WORKS CONTRACT IN THE CASE OF BDA LTD. V. ITO (TDS) [2006] 281 ITR 99 1 . THE ASSESSEE IN THAT CASE HAD A DISTILLERY AT AURANGABAD AND PURCHA SED MATERIALS REQUIRED FOR BOTTLING AND MARKETING FOREIGN MADE IN DIAN LIQUOR, INCLUDING THE PRINTING AND PACKING MATERIAL. M, A NOTHER ESTABLISHMENT SUPPLIED THE PRINTED LABELS TO BE WRA PPED ON THE BOTTLES TO THE ASSESSEE. THE ITO (TDS) DID NOT ACCE PT THE CONTENTIONS OF THE ASSESSEE THAT THE TRANSACTION WITH IVI WAS A CONTRACT FOR SALE AND NOT A WORKS CONTRACT. WHEN THE PRINTING WO RK WAS BEING CARRIED OUT IN THE PREMISES OF M, THOUGH AS PER T HE SPECIFICATIONS OF THE ASSESSEE, THE SUPPLY WAS LIMITED TO THE QUANTIT Y SPECIFIED IN THE PURCHASE ORDER. THERE WAS NOTHING ON RECORD TO SHOW THAT, ALL OTHER ANCILLARY COSTS LIKE THE LABELS, INK, PAPERS, SCREE N- PRINTING SCREENS, ETC. WERE BEING SUPPLIED BY THE ASSESSEE TO IVI. IN THE FACTS OF THIS CASE, THE SUPPLY OF PRINTED LABELS BY M TO THE AS SESSEE WAS 'CONTRACT OF SALE' AND IT COULD NOT BE TERMED A 'WO RKS CONTRACT'. HENCE THE PROVISIONS OF SECTION 194C WERE HELD TO B E NOT APPLICABLE. 13. THE HIGH COURT WHILE DECIDING THIS CASE HAS REV IEWED A NUMBER OF CASES AND DECIDED THAT THE SALE OF CONTRACT DOES NOT CONVERT A CONTRACT OF SALE INTO A WORKS CONTRACT ALTHOUGH WE AGREE THAT THESE CASES BY THEMSELVES MAY NOT BE ABLE TO THROW ANY LI GHT ON THE PRESENT CONTRACT ENTERED INTO BY THE ASSESSEE. HENC E, THE ASSESSEE IS SUPPLYING WHEAT AND GETTING BACK ATTA OR DALIA A S THE CASE MAY BE, IN AN AGREED PROPORTION. FOR SUCH EXCHANGE, THE RE IS ABSOLUTELY NO PAYMENT OF ANY CONSIDERATION. EVEN IF ONE WERE T O TREAT IT AS A WORK CONTRACT AND NOT A CONTRACT OF SALE, IT IS DIF FICULT TO SAY THAT THERE IS A PAYMENT AS A CONSIDERATION FOR THE LABOU R OR THE WORK THAT IS RENDERED. THE ASSESSEE IS JUST EXCHANGING T HE PRODUCT; IN THE EXCHANGE HE IS NOT GETTING THE SAME PRODUCT BUT A D IFFERENT PRODUCT AND NOT TO THE SAME EXTENT BUT TO A DIFFERENT EXTEN T. IN OTHER WORDS, IT IS DIFFICULT TO SAY THAT THE ASSESSEE HAS MADE A NY PAYMENT IN UNDERTAKING THIS CONTRACT ON THE BASIS OF THE AGREE MENT THAT IS ACTED UPON BY THE PARTIES. THERE IS NO PAYMENT OF A NY SUM BY THE ASSESSEE TO AIL. EVEN IF ONE WERE TO SAY THAT THERE IS A CONSTRUCTIVE PAYMENT, IT IS DIFFICULT TO QUANTIFY THE SAME AND S AY THAT THE ASSESSEE WAS UNDER AN OBLIGATION TO DEDUCT TAX AT S OURCE AT SUCH CONSTRUED PAYMENTS. THE ASSESSEE HAS NOT EVEN CREDI TED SUCH CONSTRUED CONSIDERATION FOR SUPPLY OF LABOUR IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. IN FACT, IT HAS NOT EVEN CLAIMED A NY EXPENDITURE AS DEDUCTION. TO SAY THAT SUCH EXPENDITURE HAS RESULTE D IN AN OUTFLOW ITA NOS. 337 & 338(ASR)/2016 ASST. YEARS : 2012-13 & 2013-14 11 WITHOUT DEDUCTION OF TAX AT SOURCE IS TOO MUCH AND IS NOT BORNE OUT FROM THE TRANSACTION ENTERED INTO BETWEEN THE PARTI ES. THE QUESTION OF DISALLOWANCE BY APPLYING THE PROVISIONS OF SECTI ON 40(A)(IA ), IN OUR OPINION, IS NOT IN ACCORDANCE WITH LAW AS THE A SSESSEE IS UNDER NO OBLIGATION TO DEDUCT THE TAX AT SOURCE IN TERMS OF A CONTRACT WHERE IT DOES NOT REQUIRE ANY PAYMENT OF ANY SUM EV EN IF THE SUM HERE MEANS THAT THE PAYMENT COULD BE OF SOME KIND B UT IT IS DIFFICULT TO SAY THAT THE ASSESSEE HAS MADE THESE PAYMENTS TO THE EXTENT OF SHORTFALL IN GETTING THE WHEAT SUPPLIED BACK AND CO NSTRUE IT AS THE PAYMENT TO THE OTHER FOR PROCESSING THE WHEAT INTO ATTA OR DALIYA. THE DEPARTMENT MUST HAVE APPRECIATED THE CONTRACT A S A WHOLE WHICH DOES NOT INVOLVE ANY PAYMENT OR GETTING THE P AYMENT FOR SERVICES RENDERED. IT IS A CASE OF BARTER OR EXCHAN GE OR ONE GOOD AGAINST THE OTHER. IT IS A TYPE OF SALE CONTRACT IN A VERY CRUDE FORM BUT IT IS CERTAINLY NOT A WORKS CONTRACT AS UNDERST OOD BY THE COURTS IN CASES UNDER THE SALES TAX WHICH WAS DISCUSSED BY THE HONBLE SUPREME COURT IN THE CASE CITED IN SIR THIRUMAGAL M ILLS LTD. (SUPRA) OR IN THE CASE DEALT WITH BY THE BOMBAY HIGH COURT IN THE CASE OF BDA LTD. (SUPRA ). THE ASSESSEE HAVING REGARD TO TH E CONTRACT WHICH IT HAS ENTERED ON 2-2-2005, IN OUR OPINION, DOES NO T GIVE RISE TO ANY OBLIGATION FOR IT TO DEDUCT TAX AT SOURCE AS IN OUR OPINION IT IS NOT SIMPLY A WORKS CONTRACT EXECUTED FOR CONSIDERATION IN THE FORM OF SOME PAYMENT FOR WHICH DEDUCTION HAS BEEN CLAIMED U NDER THE ACT. THE ASSESSEE HAS NOWHERE CLAIMED THE PAYMENT AS DED UCTION. ONLY PU R CHASE ONCE OF WHEAT IS WHAT IT HAD PAID ON WHICH NO DEDUCTION OF TAX IS REQUIRED AND THAT GOT LOST IN EXCHANGE FO R OBTAINING A FINISHED PRODUCT IN THE FORM OF ATTA OR DALIA, NOT INVOLVING THE MEDIUM OF PAYMENT. IT IS A CONTRACT OF BUSINESS WHI CH DOES NOT INVOLVE ANY PAYMENT OF CONSIDERATION FOR THE SERVIC ES RENDERED. WE MUST EXAMINE THE ISSUE FROM ANOTHER ANGLE. HAD THE ASSESSEE OWNED THE PLANT AND GOT THE ATTA AND DALIA MANUFACT URED FROM WHEAT, IT COULD HAVE CLAIMED A PROCESS LOSS AND THA T COULD HAVE BEEN IMPLIEDLY A PART OF BUSINESS TRANSACTION AND N O QUESTION OF ANY DISALLOWANCE OF SUCH LOSS COULD POSSIBLY HAVE A RISEN. MERELY BECAUSE THE ASSESSEE HAS GOT IT ROUTED THROUGH ANOT HER CONCERN ON A SORT OF OUTSOURCING BASIS, IT DOES NOT RESULT IN AN OUTFLOW. IT IS JUST AN EXCHANGE AND BARTER OF ONE COMMODITY AGAINST THE OTHER AND THE WHOLE CONTRACT CANNOT BE TERMED AS WORKS CONTRACT I N THE STRICT SENSE OF THE TERM WHICH IS GENERALLY UNDERSTOOD UND ER THE PROVISIONS OF SECTION 194C. IN OUR OPINION, THE ASS ESSING OFFICER WENT WRONG IN PRESUMING THAT THE DIFFERENCE IN THE WHEAT SUPPLY AND THE ATTA OR DALIA GOT IN RETURN REPRESENTS SUM PAID FOR SERVICES RENDERED AND PAYMENTS FOR SUCH SERVICES ARE CLAIMED AS DEDUCTION FROM THE PROFIT AND GAINS OF BUSINESS UNDER SECTION 32 TO SECTION 38. ONLY WHEN THE CLAIM OF THE ASSESSEE FOR DEDUCTION I S UNDER SECTION 32 TO SECTION 38, THE PROVISIONS OF SECTION 40(A)( IA) CAN BE PRESSED INTO SERVICE TO DISALLOW SUCH CLAIMS FOR DEDUCTION. AT THE COST OF REPETITION, WE MAY SAY THAT TO INVOKE SAID PROVISIO N OF SECTION 40(A)(IA ), FIRST OF ALL, THE CASE SHOULD BE MADE O UT BY THE ITA NOS. 337 & 338(ASR)/2016 ASST. YEARS : 2012-13 & 2013-14 12 DEPARTMENT THAT THE ASSESSEE IS CONTEMPLATING DEDUC TION UNDER SECTIONS 32 TO 38 ON WHICH TAX IS DEDUCTIBLE AND TH E ASSESSEE HAS NOT DEDUCTED TAX AT SOURCE. IN OUR OPINION, TAX IS NOT DEDUCTIBLE AND THE ASSESSEE HAS NOT CLAIMED ANY DEDUCTION UNDER SE CTION 32 TO SECTION 38. THIS LOSS, IF ANY, IS IN THE NET PROFIT IN THE TRADING ACCOUNT WHICH IS A COMPUTATION UNDER SECTIONS 28 AN D 29 AND NOT CLAIMS UNDER SECTIONS 32 TO 38 OF THE INCOME-TAX AC T. EVEN TAKING THIS VIEW OF THE MATTER, IN OUR OPINION, THE ASSESS EE IS ENTITLED TO SUCCEED AND THERE IS NO QUESTION OF DEDUCTION OF TA X AT SOURCE AND CONSEQUENTLY NO QUESTION OF MAKING ANY DISALLOWANCE BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA ) OF THE ACT. 14. WE MUST ALSO VIEW THE WHOLE TRANSACTION UNDER THE AGREEMENT FROM A DIFFERENT ANGLE. THE ASSESSEE GIVES THE WHEA T AND ACCEPTS ATTA AND DALIA IN RETURN BY WEIGHT TO WEIGHT BASIS AND WHAT HE GOT IN RETURN ARE THE VALUE ADDED PRODUCTS OF LOWER QUA NTITY. THE ASSESSEE BY THIS METHOD HAS PREVENTED ITSELF FROM F ACTORS LIKE FALL IN THE PRICES OF EITHER RAW MATERIAL OR OF THE FINISHE D PRODUCTS. THE MARKET VALUE OF THE WHEAT AND THE END PRODUCTS ARE TOTALLY DIFFERENT AND FLUCTUATE IN DIFFERENT DIRECTIONS. ALL THESE FL UCTUATIONS ARE WARDED OFF BY THE PRESENT AGREEMENT, WHICH IS JUST EXCHANGE OF GOODS FOR GOODS AND DOES NOT INVOLVE ANY CASH OUTFL OW. ALTHOUGH SERVICES WERE TAKEN, IT IS DIFFICULT TO SAY THAT TH E RESIDUALS AND THE LOSSES LEFT BY THE ASSESSEE IN FAVOUR OF AIL ARE PU RELY CONSIDERATION FOR THE JOB THAT IS DONE THE MARKET FLUCTUATIONS IN THE PRICE STRUCTURE OF THE RAW MATERIAL AND THE END PRODUCT CANNOT BE J UST IGNORED IN THE WHOLE TRANSACTION NOR THE PROCESS LOSS. THE PRO CESS LOSS COULD BE EITHER MORE OR LESS THAN THE PERCENTAGE AGREED T O BETWEEN THE PARTIES. BUT STILL THE PARTIES SETTLE THE TRANSACTIONS AT AN AGREED PROPORTION. IN OTHER WORDS, THE RESIDUAL THAT IS LE FT BY THE ASSESSEE, APART FROM COVERING THE LABOUR COST OF PROCESSING, ALSO INCLUDES THE PROTECTION FROM MARKET FLUCTUATIONS AS ALSO PROTECT ION FROM ADVERSE PROCESS LOSS. TO CONCLUDE, THE ENTIRE RESIDUAL IS O NLY FOR THE PURPOSE OF JOB WORK IS NOT FAIR AND CORRECT HAVING REGARD T O THE TOTALITY OF THE TRANSACTION ENTERED INTO BY THE PARTIES. THE CIT(A) HAS GIVEN THE FAVOURABLE ORDER RELYING U PON THE ORDER OF THE HONBLE DELHI ITAT IN THE ABOVE NOTED CASE. IN LIGHT OF THE ABOVE, THE PROVISIONS OF SECTION 19 4C ARE NOT APPLICABLE TO THE CASE OF THE APPELLANT AND THE APP ELLANT PRAYS THAT THE QUESTION OF LAW BE ANSWERED IN FAVOU R OF THE APPELLANT. 16. THE FACTS IN THE PRESENT CASE ARE DIRECTLY AND SQUARELY COVERED BY AHAAR CONSUMER PRODUCTS P LTD. (SUPR A). IN FACT, AHAAR CONSUMER PRODUCTS P LTD. (SUPRA) FORMED THE BASIS OF THE DECISION OF THE LD. CIT(A), DECIDING THE LEGAL ISSU E IN FAVOUR OF THE ITA NOS. 337 & 338(ASR)/2016 ASST. YEARS : 2012-13 & 2013-14 13 ASSESSEE IN THE CASE OF PUNJAB STATE GRAIN PROCURE MENT CORPORATION LTD. (PUNGRAIN), HOSHIARPUR. TO REITER ATE, THE STAND OF THE PRESENT ASSESSEE IS EXACTLY SIMILAR TO THAT OF PUNGRAIN. THEREFORE, IT CANNOT BE DISPUTED THAT THE OBSERVATI ONS OF THE TRIBUNAL IN AHAAR CONSUMER PRODUCTS P LTD. (SUPRA ) ARE ALSO DIRECTLY APPLICABLE TO THE PRESENT ASSESSEE AS WELL . THEREFORE, FOLLOWING AHAAR CONSUMER PRODUCTS P LTD. (SUPRA), WE HOLD THAT THE ASSESSEE WAS NOT REQUIRED TO MAKE TDS UNDER SEC TION 194C ON THE VALUE OF THE BYE PRODUCTS. THIS ISSUE IS, ACCOR DINGLY, DECIDED IN FAVOUR OF THE ASSESSEE. 17. AS NOTED IN THE INITIAL PORTION OF THIS ORDER, THE FACTS IN ALL THE APPEALS OF THE YEARS UNDER CONSIDERATION ARE EXACT LY SIMILAR INTER- SE , THEREFORE, OUR OBSERVATIONS ARE, MUTATIS MUT ANDIS, EQUALLY APPLICABLE TO THE OTHER YEARS. 18. IN THE RESULT, ALL THE THREE APPEALS OF THE ASS ESSEE ARE ALLOWED. 8. THEREFORE, RESPECTFULLY FOLLOWING THE AFORESAID DECISION OF THE TRIBUNAL OF EVEN DATE IN THE CASE OF M/S. THE PUNJ AB STATE CO-OPERATIVE SUPPLY AND MARKETING FEDERATION LTD., NAWANSHAHAR V S. ITO, TDS-1, JALANDHAR, IN ITA NOS. 54 TO 56(ASR)/2016, FOR THE ASSESSMENT YEARS 2012-13 TO 2014-15, WHEREBY WE HAVE ALLOWED THE APP EALS OF THE ASSESSEE, ALL THE THREE PRESENT APPEALS OF THE REVE NUE ARE DISMISSED THE FACTS IN THE PRESENT CASES ARE EXACTLY SAME AS IN THE CASE LAW DECIDED BY THE HONBLE TRIBUNAL IN THE CASE OF PUNJAB STATE GRAIN PROCUREMENT CORPN. LTD.(SUPRA). 9. THE ARGUMENT OF THE LD. DR THAT THE PAYMENT INCL UDES PAYMENT OF ANY KIND ALSO DOES NOT HOLD ANY FORCE IN VIEW OF TH E SPECIFIC PROVISIONS OF SECTION 194C. FOR THE SAKE OF COMPLETENESS PROVISIO NS OF SECTION 194C ARE REPRODUCED BELOW: PAYMENTS TO CONTRACTORS. 194C. (1) ANY PERSON RESPONSIBLE FOR PAYING ANY SUM TO A NY RESIDENT (HEREAFTER IN THIS SECTION REFERRED TO AS THE CONTR ACTOR) FOR CARRYING OUT ANY WORK (INCLUDING SUPPLY OF LABOUR FOR CARRYING OUT A NY WORK) IN PURSUANCE OF A CONTRACT BETWEEN THE CONTRACTOR AND A SPECIFIED P ERSON SHALL, AT THE TIME OF CREDIT OF SUCH SUM TO THE ACCOUNT OF THE CONTRAC TOR OR AT THE TIME OF PAYMENT THEREOF IN CASH OR BY ISSUE OF A CHEQUE OR DRAFT OR BY ANY OTHER MODE, WHICHEVER IS EARLIER, DEDUCT AN AMOUNT EQUAL TO (I) ONE PER CENT WHERE THE PAYMENT IS BEING MADE OR CREDIT IS BEING GIVEN TO AN INDIVIDUAL OR A HINDU UNDIVIDED FAMILY; ITA NOS. 337 & 338(ASR)/2016 ASST. YEARS : 2012-13 & 2013-14 14 (II) TWO PER CENT WHERE THE PAYMENT IS BEING MADE O R CREDIT IS BEING GIVEN TO A PERSON OTHER THAN AN INDIVIDUAL OR A HINDU UND IVIDED FAMILY, OF SUCH SUM AS INCOME-TAX ON INCOME COMPRISED THEREIN. (2) WHERE ANY SUM REFERRED TO IN SUB-SECTION (1) IS CREDITED TO ANY ACCOUNT, WHETHER CALLED 'SUSPENSE ACCOUNT' OR BY ANY OTHER N AME, IN THE BOOKS OF ACCOUNT OF THE PERSON LIABLE TO PAY SUCH INCOME, SU CH CREDITING SHALL BE DEEMED TO BE CREDIT OF SUCH INCOME TO THE ACCOUNT O F THE PAYEE AND THE PROVISIONS OF THIS SECTION SHALL APPLY ACCORDINGLY. (3) WHERE ANY SUM IS PAID OR CREDITED FOR CARRYING OUT ANY WORK MENTIONED IN SUB-CLAUSE (E) OF CLAUSE (IV) OF THE EXPLANATION , TAX SHALL BE DEDUCTED AT SOURCE (I) ON THE INVOICE VALUE EXCLUDING THE VALUE OF MAT ERIAL, IF SUCH VALUE IS MENTIONED SEPARATELY IN THE INVOICE; OR (II) ON THE WHOLE OF THE INVOICE VALUE, IF THE VALU E OF MATERIAL IS NOT MENTIONED SEPARATELY IN THE INVOICE. (4) NO INDIVIDUAL OR HINDU UNDIVIDED FAMILY SHALL B E LIABLE TO DEDUCT INCOME-TAX ON THE SUM CREDITED OR PAID TO THE ACCOU NT OF THE CONTRACTOR WHERE SUCH SUM IS CREDITED OR PAID EXCLUSIVELY FOR PERSONAL PURPOSES OF SUCH INDIVIDUAL OR ANY MEMBER OF HINDU UNDIVIDED FA MILY. (5) NO DEDUCTION SHALL BE MADE FROM THE AMOUNT OF A NY SUM CREDITED OR PAID OR LIKELY TO BE CREDITED OR PAID TO THE ACCOUN T OF, OR TO, THE CONTRACTOR, IF SUCH SUM DOES NOT EXCEED [THIRTY] THOUSAND RUPEES : PROVIDED THAT WHERE THE AGGREGATE OF THE AMOUNTS OF SUCH SU MS CREDITED OR PAID OR LIKELY TO BE CREDITED OR PAID DURING THE FINANCIAL YEAR EXCEEDS [SEVENTY-FIVE] THOUSAND RUPEES, THE PERSON RESPONSI BLE FOR PAYING SUCH SUMS REFERRED TO IN SUB-SECTION (1) SHALL BE LIABLE TO DEDUCT INCOME-TAX UNDER THIS SECTION. (6) NO DEDUCTION SHALL BE MADE FROM ANY SUM CREDITE D OR PAID OR LIKELY TO BE CREDITED OR PAID DURING THE PREVIOUS YEAR TO THE ACCOUNT OF A CONTRACTOR DURING THE COURSE OF BUSINESS OF PLYING, HIRING OR LEASING GOODS CARRIAGES, ON FURNISHING OF HIS PERMANENT ACCOUNT NUMBER, TO T HE PERSON PAYING OR CREDITING SUCH SUM. (7) THE PERSON RESPONSIBLE FOR PAYING OR CREDITING ANY SUM TO THE PERSON REFERRED TO IN SUB-SECTION (6) SHALL FURNISH, TO TH E PRESCRIBED INCOME-TAX AUTHORITY OR THE PERSON AUTHORIZED BY IT, SUCH PART ICULARS, IN SUCH FORM AND WITHIN SUCH TIME AS MAY BE PRESCRIBED. 10. FROM THE ABOVE PROVISIONS OF SECTION 194C, WE F IND THAT THE ANY PERSON RESPONSIBLE FOR PAYING ANY SUM TO ANY RESIDE NT FOR CARRYING OUT ITA NOS. 337 & 338(ASR)/2016 ASST. YEARS : 2012-13 & 2013-14 15 ANY WORK IS LIABLE TO DEDUCT TDS AT THE TIME OF CRE DIT OF SUCH SUM TO THE ACCOUNT OF THE CONTRACTOR OR AT THE TIME OF PAYMENT THEREOF IN CASH OR BY ISSUE OF A CHEQUE OR DRAFT OR BY ANY OTHER MODE, WHICHEVER IS EARLIER. THE PROVISION DOES NOT REQUIRE A PERSON TO DEDUCT TDS O N THE VALUE OF BY- PRODUCTS RETAINED BY A MILLER AND THE WORD BY ANY O THER MODE CANNOT BE EQUATED WITH THE VALUE OF GOODS IN AS THE WORD OTH ER MODE MENTIONED IN THE SECTION DENOTES THE ACTUAL PAYMENT OTHER THAN B Y CASH, CHEQUES OR DRAFT. THE FIRST REQUIREMENT OF SECTION 194C IS THA T THE PERSON SHOULD HAVE CREDITED SUCH AMOUNT TO THE ACCOUNT OF THE CONTRACT OR OR SHOULD HAVE MADE THE PAYMENT THEREOF. IN THE PRESENT CASES, NEITHER AMOUNT HAS BEEN CREDITED TO THE ACCOUNT OF THE CONTRACTOR NOR THE P AYMENT HAS BEEN MADE AND THEREFORE, THE PROVISIONS OF SECTION 194C ARE N OT APPLICABLE. AS FAR AS RELIANCE PLACED BY THE LD. DR ON THE CASE LAW OF HO NBLE SUPREME COURT IN THE CASE OF ASSOCIATED CEMENT COMPANY LTD. VS. CIT (SUPRA) IS CONCERNED, WE FIND THAT IN THIS CASE, THE HONBLE SUPREME COU RT HAD DEALT WITH THE DEFINITION OF WORK AS ENVISAGED IN SUB-SECTION (1 ) OF SECTION 194C AND HAS DEFINED THE TERM WORK AND HAS NOWHERE SAID THAT T HE DEEMED VALUE OF BY-PRODUCT RETAINED BY A MILLER OR A PERSON HAS TO BE TREATED AS PAYMENT MADE BY AN ASSESSEE. THE HONBLE COURT HAS JUST DEF INED THE WORD WORK. THEREFORE, THE CASE LAW OF HONBLE SUPREME COURT IN THE CASE OF ASSOCIATED CEMENT COMPANY LTD. (SUPRA) IS NOT APPLICABLE IN T HE PRESENT CASE. AS REGARDS THE RELIANCE PLACED BY THE LD. DR ON THE DE CISION OF ITAT, PANAJI BENCH, IN THE CASE OF ITO VS. DEPARTMENT OF TOURISM GOA (SUPRA), WE ARE OF THE VIEW THAT THE FACTS AND CIRCUMSTANCES OF THAT C ASE ARE NOT EXACTLY APPLICABLE TO THE FACTS OF THE PRESENT CASES, AS IN THIS CASE THE CONTRACTOR HAD RETAINED THE AMOUNT REALIZED FROM SALE OF SCRAP OF SHIP AND THE HONBLE TRIBUNAL HAD HELD THAT THE AMOUNT RETAINED BY THE CONTRACTOR WAS PART OF CONTRACT AND THEREFORE, HELD THAT THE PROVI SIONS OF SECTION 194C WERE ATTRACTED, WHEREAS IN THE PRESENT CASES THE AU THORITIES BELOW HAS HYPOTHETICALLY CALCULATED THE DEEMED VALUE OF THE BY-PRODUCTS RETAINED BY THE MILLER. MOREOVER, THE FACTS OF THE CASE LAW RELIED UPON BY THE LD. COUNSEL FOR THE ASSESSEE ARE EXACTLY PARI-MATERIA TO THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASES AND IS SQUARELY APPLICABLE TO THESE CASES. 11. IN VIEW OF THE ABOVE DISCUSSION AND FOLLOWING T HE JUDICIAL PRECEDENTS, GROUND NO.1 TAKEN BY THE ASSESSEE IN IT A NO.509 (ASR)/2015 AND ITA NO.84 (ASR)/2016 IS ALLOWED. 12. AS REGARDS, GROUND NO.2, WE FIND THAT CHARGING OF INTEREST IS MANDATORY AND IS CONSEQUENTIAL. SINCE WE HAVE ALREA DY DECIDED GROUND NO.1 IN FAVOUR OF THE ASSESSEE, THEREFORE, GROUND N O.2 WHICH IS A CONSEQUENTIAL GROUND IS ALSO DECIDED IN FAVOUR OF T HE ASSESSEE. ITA NOS. 337 & 338(ASR)/2016 ASST. YEARS : 2012-13 & 2013-14 16 9. THE FACTS AND CIRCUMSTANCES OF THE PRESENT APPEA L IN ITA NO. 338 ARE EXACTLY SIMILAR AND THEREFORE RESPECTIVELY FOLL OWING ORDERS OF HON'BLE ITAT, WE ALLOW THE APPEAL OF ASSESSEE IN ITA NO. 33 8. 10. AS REGARDS APPEAL IN ITA NO. 337, WE ALSO ALLOW THE SAME AS THE ISSUE INVOLVED HEREIN IS THE CHARGING OF INTEREST O F 201 (1A) ON SUCH ALLEGED SHORT DEDUCTION OF TAX WHICH WE HAVE HELD T HAT THERE WAS NO SHORT DEDUCTION OF TAX AND THEREFORE THE INTEREST U /S 201(1A) WAS ALSO NOT IMPOSABLE. 11. IN VIEW OF THE FACTS AND CIRCUMSTANCES OF APPEA L IN ITA NO. 337 IS ALSO ALLOWED. 12. IN NUTSHELL, THE APPEALS FILED BY THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 29.03.2017. SD/- SD/- (N.K. CHOUDHRY) (T.S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER GP/SR.PS/ DATED: 29/03/2017 COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE: 2. THE 3. THE CIT(A) 4. THE CIT 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER