ACIT, UDAIPUR V. M/s. Udaipur Dugdh Utpadak Sahakari Sangh Ltd., UDAIPUR

ITA 351/JODH/2010

• Counselvise Citation: 35123314 RSA 2010
• Duration Of Justice: 1 year(s) 6 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-12-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 13-12-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 20-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M N MOURYA
• Keywords: Non-deduction of tax
• Section: 194C

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR (BEFORE SHRI R.K. GUPTA AND SHRI .N.L. KALR A ) ITA NOS. 351 & 352/JU/2010 ASSESSMENT YEAR : 2006-07 & 2007-08 PAN: AAAFU 4403 B THE ACIT VS. M/S. UDAIPUR DUGDH UTPADAK SAHAKARI SANGH LTD. CIRCLE- 1, UDAIPUR UDAIPUR (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE DEPARTMENT BY: SHRI M.N. MOURYA DATE OF HEARING: 13-12-2011 DATE OF PRONOUNCEMENT: 16-12-2011 ORDER PER N.L. KALRA, AM:- THE REVENUE HAS FILED THE APPEALS AGAINST THE ORDE R OF THE LD.CIT(A), UDAIPUR DATED 15-03-2010 FOR THE ASSESSMENT YEAR 2006-07 AN D 2007-08. 2.0 SINCE THE ISSUES RAISED IN BOTH THE APPEALS ARE THE SAME, THEREFORE, THESE APPEALS ARE BEING DECIDED BY A SINGLE CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 3.0 FIRST OF ALL, WE TAKE UP THE APPEAL FOR THE ASS ESSMENT YEAR 2006-07. 4.1 THE FIRST GROUND OF REVENUE IS THAT THE LD. CI T(A) HAS ERRED IN DELETING THE ADDITION OF RS. 14,61,385/- MADE U/S 36(I)(VA) R.W. S. 2(24)(X) WITHOUT CONSIDERING THE FACTS OF THE CASE. 2 4.2 WE HAVE HEARD THE LD. DR AND PERUSED THE MATERI ALS AVAILABLE ON RECORD. THE ISSUE STANDS COVERED BY THE DECISION OF APEX COURT IN THE CASE OF VINAY CEMENT 307 ITR 202. THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT V SABRI ENTERPRISE 298 ITR 141 HELD THAT EMPLOYEES CONTRIBUTION IS ALLOWABLE IF THE SAME IS PAID BEFORE THE DUE DATE OF RETURN. THE HONBLE DELHI HIGH COURT RECENTLY I N THE CASE OF EMPLOYEES CONTRIBUTION HAS ALSO HELD THAT THE SAME IS ALLOWABLE IN CASE TH E SAME IS PAID BEFORE THE DUE DATE OF RETURN CIT V SPL INDUSTRIES. HENCE THE LD.CIT(A) W AS JUSTIFIED IN DIRECTING THE A.O. TO ALLOW RS.14,61,385/-- 5.1 THE SECOND GROUND OF THE REVENUE IS THAT THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 2,06,548/- MADE U/S 40(A)(IA) O N ACCOUNT OF NON-DEDUCTION OF TAX ON AGMARK EXPENSES. 5.2 BEFORE THE AO, IT WAS SUBMITTED THAT THE AGMARK FEE IS DEPOSITED WITH THE WITH THE MINISTRY OF AGRICULTURE AND COOPERATIVE AND TO THE KRISHI UPAJ MANDI SAMITI, BEAWAR. SINCE THE AMOUNT IS PAID TO THE GOVT. IT IS NOT LIABLE TO TDS. SUCH CONTENTION OF THE ASSESSEE WAS REJECTED BY THE AO. 5.3 BEFORE THE LD.CIT(A), IT WAS SUBMITTED THAT FEE AS PRESCRIBED BY THE MINISTRY OF AGRICULTURE, GOVT. OF INDIA. AGRICULTURE PRODUCE (G RADING & MARKETING ACT, 1973) WAS INTRODUCED WITH A VIEW TO DISCOURAGE THE SUPPLY OF SUB-STANDARD OR MISS-GRADED GOODS . WITH A VIEW TO PROTECTING THE INTEREST OF THE CONSU MER, IMPRISONMENT FOR A TERM NOT EXCEEDING SIX MONTHS AND FINE NOT EXCEEDING RS. 5,0 00/- HAS BEEN PROVIDED IN THE ACT IN RESPECT OF MISS-GRADED ARTICLES. THE AGMARK CERTIF ICATION IS NECESSARY FOR THE BUSINESS PURPOSES OF THE ASSESSEE. THE PROVISIONS OF SECTION 194C ARE NOT APPLICABLE. THE 3 LD.CIT(A) AFTER CONSIDERING THE SUBMISSIONS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE AS UNDER:- I HAVE CONSIDERED THE FINDINGS OF THE AO VIS A VI S THE SUBMISSIONS OF THE LD. A/R ALONGWITH THE FACTS AND CIRCUMSTANCES OF THE CASE OF THE APPELLANT. I MY VIEW VIEW, THE P AYMENTS TO KRISHI UPAJ MANDI SAMITI, BEAWAR CAN BE TREATED AS PAYMENT TO THE GOVT. THE AGMARK CERTIFICATION IS A MANDATORY R EQUIREMENTS TO ENSURE QUALITY, GENUINENESS OF THE FOOD PRODUCTS ET C. THERE IS NO DISPUTE THAT SUCH MANDATORY REQUIREMENTS HAVE BEEN IMPOSED BY THE GOVT. AND THEREFORE, THE EXPENSES CLAIMED FOR S UCH MANDATORY REQUIREMENTS IS REQUIRED TO BE REGARDED AS PAYMENTS TO THE GOVT. EE THOUGH IT HAS BEEN PAID THROUGH KRISHI MANDI SAMTIE S WHO WERE AUTHORIZED BY THE GOVT. TO RECEIVE SUCH PAYMENTS AN D ADMITTEDLY, TDS PROVISIONS ON THE PAYMENTS MADE TO TNE GOVT. IS NOT APPLICABLE. EVEN OTHERWISE, NO DISALLOWANCE U/S 40( A)(IA) IS REQUIRED TO BE MADE ON ACCOUNT OF PAYMENTS MADE TO KRISHI UPAJ MANDI SAMITI AS THE INCOME OF SUCH SAMITIES IS HELD TO BE FULLY EXEMPT UNDER THE PROVISIONS OF THE ACT. IN SUCH CIR CUMSTANCES, IF THE TDS IS DEDUCTED THAT WOULD BE RESULTED IN A FU ND. IN VIEW OF THESE FACTS, IT IS HELD THAT THE DISALLOWANCE OF RS . 2,06,548/- IS LIABLE TO BE DELETED AND I ORDER ACCORDINGLY. 5.4 WE HAVE HEARD THE LD. DR AND HAVE CONSIDERED T HE FACTS ON RECORD. THE AO HAS HELD THAT THE ASSESSEE WAS REQUIRED TO DEDUCT THE T AX U/S 194C OF THE ACT. THE ASSESSEE IS PAYING FEE AND THERE IS NO PAYMENT AS PER AGREEMENT OR CONTRACT. THE PAYMENT OF FEE IS NOT COVERED U/S 194C OF THE ACT. SECTION 194J REFER S TO THE FEE FOR PROFESSIONAL OR TECHNICAL SERVICES. IT IS NOT THE CASE OF THE REVEN UE THAT FEE HAS BEEN PAID FOR PROFESSIONAL SERVICES OR TECHNICAL SERVICES. THE ASSESSEE IS AVA ILING OF STANDARD FACILITIES AND FOR SUCH STANDARD FACILITIES, THERE IS NO NEED OF DEDUCTING THE TAX AT SOURCE. REFERENCE IS MADE TO 4 THE DECISION OF HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS CHIEF MANAGER, SBI, 245 CTR 107 IN WHICH PAYMENT TO PNB F OR MICR CHARGES WAS HELD AS NOT ALLOWABLE FOR DEDUCTION OF TAX AT SOURCE. WE TH EREFORE, FEEL THAT THE LD.CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION. 6.0 NOW WE TAKE UP THE APPEAL OF THE REVENUE FOR TH E ASSESSMENT YEAR 20087-08. 7.1 THE FIRST GROUND OF REVENUE IS THAT THE LD. CI T(A) HAS ERRED IN DELETING THE ADDITION OF RS. 37,83,566/- MADE U/S 36(I)(VA) R.W. S. 2(24)(X) WITHOUT CONSIDERING THE FACTS OF THE CASE. 7.2 WE HAVE HEARD THE LD. DR AND PERUSED THE MATERI ALS AVAILABLE ON RECORD. THE ISSUE STANDS COVERED BY THE DECISION OF APEX COURT IN THE CASE OF VINAY CEMENT 307 ITR 202. THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT V SABRI ENTERPRISE 298 ITR 141 HELD THAT EMPLOYEES CONTRIBUTION IS ALLOWABLE IF THE SAME IS PAID BEFORE THE DUE DATE OF RETURN. THE HONBLE DELHI HIGH COURT RECENTLY I N THE CASE OF EMPLOYEES CONTRIBUTION HAS ALSO HELD THAT THE SAME IS ALLOWABLE IN CASE TH E SAME IS PAID BEFORE THE DUE DATE OF RETURN CIT V SPL INDUSTRIES. HENCE THE LD.CIT(A) W AS JUSTIFIED IN DIRECTING THE A.O. TO ALLOW RS.37,83,566/-. 8.1 THE SECOND GROUND OF THE REVENUE IS THAT THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.3,36,434/- MADE U/S 40(A)(IA) ON ACCOUNT OF NON-DEDUCTION OF TAX ON AGMARK EXPENSES. 8.2 THIS ISSUE HAS BEEN DECIDE IN FAVOUR OF THE ASS ESSEE IN THE PRECEDING PARA OF ASSESSMENT YEAR 2006-07. FOLLOWING OUR FINDINGS IN THAT CASE, WE HOLD THAT THE LD.CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION. 5 9.0 IN THE RESULT, THE APPEALS OF THE REVENUE ARE D ISMISSED THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 16-1 2-2011. SD/- SD/- (R.K. GUPTA) (N.L. KALRA) JUDICIAL MEMBER ACCOUNTANT MEMBER JODHPUR DATED: 16/12/2011 MISHRA COPY TO: 1. THE ACIT, CIRCLE- 1, UDAIPUR 2. M/S. UDAIPUR DUGDH UTPADAK SAHAKARI SANGH LTD., UDAIPUR 3.THE LD. CIT (A) BY ORDER 4.THE CIT 5.THE D/R 6.THE GUARD FILE (ITA NO. 351/JU/10) A.R.. ITAT: JODHPUR