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

ITA 379/AHD/2012

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 3666 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 3 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-06-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 13-05-2016
• Assessment Year: 2004-2005
• Appeal Filed On: 09-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SONIA KUMAR
• Keywords: Question of law
• Section: 133A; 194C; 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AHMEDABAD, D BENCH BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER ./ ITA.NO.379/AHD/2012 [ASSTT.YEAR 2004-2005] ITO, TDS - 3 SURAT. VS SHI MADHI VIBHAG KHAND UDYOG MANDLI LTD. AT & PO-MADHI, TAL-BARDOLI DIST. SURAT. / (APPELLANT) / (RESPONDENT) REVENUE BY : SMT.SONIA KUMAR, SR.DR ASSESSEE BY : NONE / DATE OF HEARING : 13/05/2016 / DATE OF PRONOUNCEMENT: 01/06/2016 !'#/ O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: THE PRESENT APPEAL IS DIRECTED AT THE INSTANCE OF T HE REVENUE AGAINST ORDER OF THE LD.CIT(A)-I, SURAT DATED 15.11 .2011 PASSED IN THE ASSTT.YEAR 2004-05. 2. SOLITARY GRIEVANCE OF THE REVENUE IS THAT THE LD .CIT(A) HAS ERRED IN DELETING THE DEMAND OF RS.46,66,999/- RAISED BY THE AO UNDER SECTION 201(1) AND INTEREST OF RS.44,80,320/- CHARGED UNDER SECTION 201(1A) OF THE INCOME TAX ACT. ITA NO.379/AHD/2012 2 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN MANUFACTURING OF SUGAR AND TRADING. A SURVEY UNDER SECTION 133A OF THE INCOME TAX, 1961 WAS CONDUCTED AT THE OFFICE PREMIS ES OF THE ASSESSEE ON 27.2.2004. ACCORDING TO THE AO, THE ASSESSEE WA S RESPONSIBLE FOR LIFTING THE SUGARCANE FROM THE FIELDS OF FARMERS, T HEREFORE, IT MUST HAVE INCURRED TRANSPORTATION CHARGES AND THE ASSESSEE FA ILED TO DEDUCT TDS ON PAYMENT OF TRANSPORTING EXPENSES FOR THE SUGARCANE. HE PASSED AN ORDER UNDER SECTION 201 AND CALCULATED THE AMOUNT OF TDS DEDUCTIBLE BY THE ASSESSEE AT RS.46,66,999/-. SINCE THE ASSESSEE HAS NOT DEDUCTED THE TDS AND NOT MADE ANY PAYMENT, HE CALCULATED THE INTERES T UNDER SECTION 201(1A) OF THE INCOME TAX ACT AT RS.44,80,320/-. 4. ON APPEAL, THE LD.CIT(A) HAS DELETED BOTH THESE ADDITIONS ON THE GROUND THAT THE ASSESSEE WAS NOT UNDER OBLIGATION T O DEDUCT TDS. THE LD.FIRST APPELLATE AUTHORITY WAS OF THE VIEW THAT F ARMERS WERE REQUIRED TO BRING SUGARCANE UPTO THE FACTORY GATE. THEREFOR E, THE ASSESSEE HAS NOT INCURRED ANY TRANSPORTATION EXPENSES. IT WAS THE O BLIGATION OF THE FARMERS TO DELIVER THEIR SUGARCANE TO THE FACTORY G ATE OF THE ASSESSEE. 5. IN RESPONSE TO THE NOTICE OF HEARING NONE HAS CO ME PRESENT ON BEHALF OF THE ASSESSEE. SHRI MITISH S. MODI, CA FI LED PAPER BOOK AS WELL AS WRITTEN SUBMISSIONS. IN THE WRITTEN SUBMISSIONS , IT HAS BEEN PLEADED THAT THE ISSUE IN DISPUTE IS SQUARELY COVERED IN FA VOUR OF THE ASSESSEE BY THE ORDERS OF THE ITAT AS WELL AS HONBLE GUJARAT H IGH COURT PASSED IN ASSESSEES OWN CASE IN TAX APPEAL NO.440 OF 2006. THE LD.DR WAS UNABLE TO CONTROVERT THE PLEADINGS IN THE WRITTEN S UBMISSIONS. ITA NO.379/AHD/2012 3 6. WE HAVE DULY CONSIDERED CONTENTIONS OF THE LD.DR AND GONE THROUGH THE WRITTEN SUBMISSIONS. WE FIND THAT THIS ISSUE WAS CONSIDERED IN THE CASE OF THE ASSESSEE BY THE HONBLE GUJARAT HIGH COURT IN THE ASSTT.YEAR 2003-04. THE JUDGMENT OF THE HONBLE GU JARAT HIGH COURT HAS BEEN PLACED ON PAGE NO.47 TO 52 OF THE PAPER BO OK. IN THAT ORDER, THE TRIBUNAL HAS DECIDED THE ISSUE AGAINST THE ASSESSEE . THE QUESTION FRAMED BY THE HONBLE GUJARAT 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 A SSESSEE WAS LIABLE UNDER SECTION 194C TO DEDUCT TAX FROM TH E PAYMENTS MADE BY THE FARMERS SAMITI IN RESPECT OF VARIOUS EXPENSES INCLUDING LABOUR CHARGES, TRANSPORT CHARGE S, INSURANCE CHARGES ETC. ON BEHALF OF FARMERS? 7. THE HONBLE 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 USED TO PURCHASE THE SUGARCANES FROM THE FARMERS, ON CONDITION THAT THE FARMERS SHALL SUPPLY THE SAME AT THE GATE OF THEIR RESPECTIVE FAC TORY. MEANING THEREBY, HERE, THE SUPPLY OF SUGARCANE AT THE GATE OF THE FACTORIES OF THE ASSESSES IS NOT A SEPARATE WORK CONTRACT, BU T, IT IS ESSENTIALLY THE PART OF THE SELL TRANSACTION. IN THAT VIEW OF T HE 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 MANUFACT URE OF FERTILIZERS AND FOR THE SAID PURPOSE, IT USED TO CO NSUME NATURAL GAS. THE ASSESSEE, THEREIN, WAS SUPPLIED NATURAL GAS BY DIFFERENT AGENCIES THROUGH PIPELINES. IN THAT CASE, ACCORDING TO THE REVENUE, WHILE PURCHASING THE GAS FROM DIFFERENT AGENCIES, T HE ASSESSEE HAD ENTERED INTO A WORK CONTRACT FOR TRANSPORTATION OF NATURAL GAS FROM THE SELLERS PREMISES TO THE BUYERS CONSUMPTION PO INT, AND THEREFORE, THEY HELD THAT THE ASSESSEE, THEREIN, WA S REQUIRED TO ITA NO.379/AHD/2012 4 DEDUCT TDS. HOWEVER, THIS COURT, IN THAT CASE, HELD THAT TO TRANSPORT THE GAS WAS A PART OF SALE TRANSACTION, A ND THEREFORE, THE ASSESSEE, THEREIN, WAS NOT REQUIRED TO DEDUCT TDS. IN OUR VIEW, THEREFORE, THE DECISION OF THE APEX COURT IN THE CA SE OF CIT (TDS) VS. KRISHAK BHARTI COOPERATIVE LTD.(SUPRA) APPLIES IN FULL FORCE TO THE FACTS OF THIS CASE. TH E AFORESAID PROVISION WOULD APPLY TO THE PERSON, WHO HAD PAID A NY SUM, AND THE RESPONDENT HAS NOT PAID ANY CHARGES. THE CASE O F THE ASSESSEE IN TAX APPEAL NO. 211 OF 2006 IS IDENTICAL, AND HEN CE, THE AUTHORITIES BELOW GROSSLY ERRED IN INTERPRETING THE PROVISIONS OF LAW, AND THEREFORE, THE GROUNDS URGED BY THE APPELL ANT 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 THAT THE ASSES SES ARE NOT LIABLE TO DEDUCT TDS. IN VIEW OF THE ABOVE DISCUSSI ON, THE DECISIONS RELIED ON BY MR. MEHTA SHALL 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 AND SET ASIDE. THE QUESTION OF LAW ARISING IN THESE APPEALS IS ANS WERED IN FAVOUR OF THE APPELLANT-ASSESSES AND AGAINST THE RESPONDEN T-REVENUE. NO ORDER AS TO COSTS. 8. IN VIEW OF THE JUDGMENT OF THE HONBLE GUJARAT H IGH COURT IN THE CASE OF ASSESSEE, WE ARE OF THE VIEW THAT NO INTERF ERENCE IS CALLED FOR IN THE ORDER OF THE LD.CIT(A). HENCE, THE APPEAL OF T HE REVENUE IS REJECTED. 9. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE COURT ON 1 ST JUNE, 2016 AT AHMEDABAD. SD/- SD/- ( N.K. BILLAIYA ) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 01/06/2016