The ITO,TDS-3, Surat V. Shree Chalthan Vibhag Khand Udyog Sahakari Mandli Ltd., Surat

ITA 378/AHD/2012

• Counselvise Citation: 37820514 RSA 2012
• Duration Of Justice: 3 year(s) 9 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 21-10-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 09-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: MITESH S MODI
• Section: 133A; 194C; 201(1); 2

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI KUL BHARAT, JUDICIAL MEMBER ./ ITA NO. 378/AHD/2012 / ASSESSMENT YEAR: 2004-05 INCOME TAX OFFICER, TDS-3, SURAT VS. SHREE CHALTHAN VIBHAG KHAND UDYOG MANDLI LTD., AT & PO CHALTHAN, TAL- PALSANA, DIST. SURAT PAN : AAAAC 0477 C / (APPELLANT) / (RESPONDENT) REVENUE BY : SHRI K. MADHUSUDAN, SR. DR. ASSESSEE(S) BY : SHRI MITESH S. MODI, AR / DATE OF HEARING : 21/10/2015 / DATE OF PRONOUNCEMENT: 30/11/2015 / O R D E R PER KUL BHARAT, JUDICIAL MEMBER : THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-I, SURAT (CIT (A) IN SHORT) DATED 15.11.2011 FOR ASSESSMENT YEAR 2004-05. 2. THE REVENUE HAS RAISED FOLLOWING GROUNDS OF APPE AL:- 1. THE LD. CIT(A) ERRED IN LAW AS WELL AS FACTS OF THE CASE IN DELETING THE ORDER PASSED U/S 201(1) & INTEREST CHARGED U/S 2 01(1A) OF THE I.T. ACT OF RS.36,68,470/- AND RS.35,21,748/- RESPE CTIVELY, FOR A.Y. 2004-05 BY THE A.O. EVEN THOUGH DURING THE COURSE O F VERIFICATION IT WAS NOTICED THAT THE SUGARCANE FROM FIELD S OF ALL THE FARMERS WAS SPREAD IN LARGE AREAS. PROPER AND COST EFFECTIVE M ANAGEMENT OF CUTTING AND TRANSPORTING THE SUGARCANE IS DONE BY T HE ASSESSEE. IT IS ALSO OBSERVED THAT THE ASSESSEE WAS NOT DEDUCT TAX ON CONTRACTUAL PAYMENTS OF CUTTING AND TRANSPORTING THE SUGARCANE FROM FIELDS TO THE FACTORY GATE U/S 194C OF THE I.T. ACT. ITA NO. 378/AHD/2012 ITO VS. SHREE CHALTHAN VIBHAG KHAND UDYOG MANDLI LTD AY 2004-05 2 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFF ICER. 3. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GR OUND OR ADD A NEW GROUND, WHICH MAY BE NECESSARY. 4. IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE LD. CIT(A) MAY BE CANCELLED AND THAT OF THE ASSESSING OFFICER MAY BE RESTORED TO THE ABOVE EFFECT. 3. BRIEFLY STATED FACTS ARE THAT A SURVEY U/S 133A OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) WA S CONDUCTED AT THE OFFICE PREMISES OF THE ASSESSEE ON 22.02.2007 AND 0 7.12.2010. DURING THE COURSE OF SURVEY, IT WAS NOTICED THAT THE ASSES SEE HAD NOT DEDUCTED THE TAX ON CONTRACTUAL PAYMENTS OF CUTTING AND TRAN SPORTING OF SUGARCANE FROM THE FIELDS TO THE FACTORY GATE. THE ASSESSING OFFICER ISSUED NOTICE U/S 201(1) AND 201(A) AND AFTER CONSI DERING THE SUBMISSIONS OF THE ASSESSEE, PASSED AN ORDER U/S 20 1 AND 201(1A) OF THE ACT WHEREIN THE ASSESSING OFFICER DECLARED THE ASSESSEE AS ASSESSEE IN DEFAULT AND MADE AN ADDITION ON ACCOU NT OF TDS DEDUCTABLE AND INTEREST U/S 201(1A) OF THE ACT. TH E ASSESSEE, AGGRIEVED BY THE AFORESAID ORDER OF THE ASSESSING O FFICER, PREFERRED AN APPEAL BEFORE THE LD. CIT(A) WHO AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE ALLOWED THE APPEAL. AGGRIEVED BY THE ABOVE ORDER OF THE LD. CIT(A), THE REVENUE IS NOW IN APPEAL BEFORE US. 3. AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ONLY EFFECTIVE GROUND IS AGAINST THE DELETION OF AD DITION MADE U/S 201(1) AND 201(1A) OF THE ACT. HE SUBMITTED THAT T HE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION O F HONBLE GUJARAT HIGH COURT IN TAX APPEAL NO. 211 OF 2006 WITH TAX A PPEAL NO.440 OF ITA NO. 378/AHD/2012 ITO VS. SHREE CHALTHAN VIBHAG KHAND UDYOG MANDLI LTD AY 2004-05 3 2006 IN ASSESSEES OWN CASE. HOWEVER, THE LD. DEP ARTMENTAL REPRESENTATIVE OPPOSED THE SUBMISSION OF THE LD. CO UNSEL FOR THE ASSESSEE. HE SUBMITTED THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN DELETING THE IMPUGNED ADDITION. ON THE CONTRARY, THE LD. CO UNSEL FOR THE ASSESSEE SUBMITTED THAT IT HAS BEEN HELD BY THE HON BLE GUJARAT HIGH COURT IN TAX APPEAL NO. 211 OF 2006 ALONG WITH TAX APPEAL NO.440 OF 2006 IN ASSESSEES OWN CASE THAT THE SUPPLY OF SUGA RCANES AT THE GATES OF FACTORIES OF THE ASSESSEE WAS A PART OF SALE TRA NSACTION, AND THEREFORE, THE HONBLE GUJARAT HIGH COURT WAS OF THE OPINION T HAT THE ASSESSEE WAS NOT LIABLE TO DEDUCT THE TAX. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE LD. CIT(A) DELETED THE ADDITION BY OBSERVING AS UND ER:- 6. DECISION:- 6.1 I HAVE GONE THROUGH THE ORDER PASSED BY A.O. THE ARGUMENTS OF THE A.O. AS WELL AS APPELLANT HAS BEEN CONSIDERED. THE APPELLANT HAS MADE OUT A STRONG CASE AGAINST THE ASSESSING OFFICE RS ORDER. THE FOLLOWING EVIDENCE/ARGUMENTS OF APPELLANT CLINCH TH E MATTER IN FAVOUR OF THE APPELLANT. 1. THE APPELLANT PAYS EX-FACTORY / GATE DELIVERY CANE PRICE TO CANE GROWERS. 2. THE FARMER MEMBER IS RESPONSIBLE TO CUT HIS SUGARCA NE AND SUPPLY THE SAME AT THE FACTORY GATE OF THE APPELLANT. 3. PAYMENTS MADE TO CANE GROWING FARMER MEMBERS OF THE CO -OP SOCIETY IS IN THE NATURE OF PURCHASE PRICE, ON WHIC H SECTION 194 C DOES NOT APPLY. 4. THE APPELLANT PAYS EX- FACTORY / GATE DELIVERY PRIC E TO FARMERS AS PER MAXIMUM PRICE FIXED BY THE CENTRAL GOVERNMENT FROM TIME TO TIME. 5. THE APPELLANT PAYS ADVANCE PURCHASE PRICE TO CANE G ROWING MEMBERS TO MEET EXPENSES LIKE, HARVESTING, CUTTING AND TRANSPORTATION. ITA NO. 378/AHD/2012 ITO VS. SHREE CHALTHAN VIBHAG KHAND UDYOG MANDLI LTD AY 2004-05 4 6. FIRST INSTALLMENT OF RS 185/- M.T IS GIVEN AS ADVAN CE PURCHASE PRICE TO FARMER TO ENABLE THEM -TO MEET THE EXPENDITURE O F HARVESTING, CUTTING, AND TRANSPORTING. THEREAFTER, PURCHASE PRI CE IS AGAIN GIVEN TO FARMERS IN INSTALLMENTS. THIS ACCOUNT IS FINALLY SETTLED WHEN THE FINAL EX-FACTORY CANE PRICE IS DETERMINED BY THE AP PELLANT. [7] COPY OF MEMBER V S ACCOUNT IN APPELLANT'S BOOKS INDICATE THAT FIRST INSTALLMENT OF RS 185/ P.M.T GIVEN TO FARMERS IS AC TUALLY ADVANCE PURCHASE PRICE OF SUGAR CANE. 7. THE A.O, HAS WORKED OUT THE TOTAL PAYMENT COVERED U /S 194C ON THE BASIS OF PURE ESTIMATE BASED ON LAST YEARS PAYMENT TO FARMER MEMBERS. 8. THE ARGUMENTS OF THE APPELLANT ARE QUITE CONVINCING . THE A.O. HAS HARDLY BEEN ABLE TO SUPPORT HIS CASE WITH COGENT RE ASONS / CREDIBLE EVIDENCE. THE CRUX OF THE ARGUMENT OF APPELLANT IS THAT THEY ARE MAKING ADVANCE PAYMENT OF SUGAR CANE PURCHASE PRICE TO THEIR FARMER MEMBERS. THE FARMERS ARE AGRICULTURISTS. THE IR INCOME IS TAXABLE. IT IS CLEAR THAT SECTION 194 C OF THE I T ACT IS NOT APPLICABLE IN APPELLANTS CASE. HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS ARGUMENTS OF THE APPELLANT AND THE JUDGMENT OF HONB LE ITAT, IT IS HELD THAT THE ASSESSING OFFICER IS NOT JUSTIFIED IN INVOKING THE PROVISIONS OF SEC. 194C AGAINST THE APPELLANT. THE ASSESSING O FFICERS ACTION OF TREATING THE APPELLANT AS ASSESSEE IN DEFAULT AND WORKING OUT LIABILITY U/S 201 & 201(1A) IS NOT SUSTAINABLE. 5. THERE IS NO DISPUTE WITH REGARD TO THE FACT THAT THE PAYMENT @ RS.185/- P.M.T. WAS GIVEN AS ADVANCE PURCHASE PRICE TO FARMERS TO ENABLE THEM TO MEET THE EXPENDITURE OF HARVESTING, CUTTING AND TRANSPORTING. THEREFORE, IN OUR CONSIDERED VIEW, T HE ASSESSING OFFICER WAS NOT JUSTIFIED IN MAKING THE ASSESSEE LIABLE FOR DEDUCTING THE TAX ON SUCH PAYMENTS AS THE PAYMENTS WERE NOT GIVEN FOR CA RRYING OUT THE WORK OF HARVESTING, CUTTING AND TRANSPORTING ON BEH ALF OF THE ASSESSEE. THE HONBLE GUJARAT HIGH COURT IN ASSESSEES OWN CA SE (SUPRA), UNDER THE IDENTICAL FACTS HAS HELD AS UNDER:- ITA NO. 378/AHD/2012 ITO VS. SHREE CHALTHAN VIBHAG KHAND UDYOG MANDLI LTD AY 2004-05 5 10. IN THE CASE ON HAND, THE SUPPLY OF SUGARCANES AT THE GATES OF FACTORIES OF THE RESPECTIVE ASSESSEES WAS A PART OF SALE TRANSACTION, AND THEREFORE, WE ARE OF THE OPINION THAT THE ASSESSEES 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 PRESE NT CASE. HENCE, THE PRESENT APPEALS DESERVE TO BE ALLOWED. 6. IN THE LIGHT OF THE ABOVE JUDGEMENT OF THE HONB LE JURISDICTIONAL HIGH COURT, WE DO NOT SEE ANY INFIRMITY IN THE ORDE R OF THE LD. CIT(A) AND THE SAME IS HEREBY UPHELD. THUS, THE FIRST GRO UND RAISED BY THE REVENUE IS REJECTED. 7. ALL OTHER GROUNDS ARE GENERAL IN NATURE AND REQU IRE NO SEPARATE ADJUDICATION. 8. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE COURT ON 30 TH NOVEMBER, 2015 AT AHMEDABAD. SD/- SD/- (G.D. AGRAWAL) VICE-PRESIDENT (KUL BHARAT) JUDICIAL MEMBER AHMEDABAD; DATED 30/11/2015 BIJU T., PS !'#$%&%'# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ! ' ' # / CONCERNED CIT 4. ' ' # ( ) / THE CIT(A) 5. &'( ! , ' ! , / D R, ITAT, AHMEDABAD 6. (- . / GUARD FILE . / BY ORDER, TRUE COPY / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD