The ITO.TDS-4, Surat V. Shree Mahuva Pradesh Sahakari Khand Udyog Mandli Ltd., Surat

ITA 380/AHD/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 9423 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-03-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 15-12-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 09-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS SAMOGYAN PAL
• Assessee Lawyers: MITESH MODI
• Section: 133A; 194C; 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH AHMEDABAD BEFORE S/SHRI RAJPAL YADAV, JM, & MANISH BORAD, AM. ITA NO.380/AHD/2012 ASST. YEAR: 2004-05 INCOME-TAX OFFICER (TDS)-4, SURAT. VS. SHRI MAHUVA PRADESH SAHAKARI KHAND UDYOG MANDALI LTD., AT & POOST SUGAR FACTORY,BAMANIA, TAL. MAHUVA, DIST. SURAT. APPELLANT RESPONDENT TAN SRTSOO558F APPELLANT BY MRS. SAMOGYAN PAL, SR.DR RESPONDENT BY SHRI MITESH MODI, AR DATE OF HEARING: 15/12/2015 DATE OF PRONOUNCEMENT: 02/03/2016 O R D E R PER MANISH BORAD, ACCOUNTANT MEMBER. THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST THE ORDER OF LD. CIT(A)-I, SURAT, DATED 15/11/2011. ORDER U/S 201(1) & 201(1A) OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT) FOR ASST. Y EAR 2004-05 WAS FRAMED BY ITO(TDS)-4, SURAT. REVENUE HAS RAISED THE FOLLOWING GROUNDS:- 1. THE LD. CIT(A) ERRED IN LAW AS WELL AS FACTS OF THE CASE IN DELETING THE ORDER PASSED U/S 201(1) AND INTEREST C HARGED U/S 201(1A) OF THE IT ACT OF RS.28,23,468/- AND RS.27,1 0,528/- RESPECTIVELY FOR AY 2004-05 BY THE AO EVEN THOUGH D URING THE ITA NO. 380/AHD/2012 ASST. YEAR2004-05 2 COURSE OF VERIFICATION IT WAS NOTICED THAT THE SUGA RCANE FROM FIELDS OF ALL THE FARMERS WAS SPREAD IN LARGE AREA. PROPER AND COST EFFECTIVE MANAGEMENT OF CUTTING AND TRANSPORTI NG THE SUGARCANE IS DONE BY THE ASSESSEE. IT IS ALSO OBSER VED THAT THE ASSESSEE WAS NOT DEDUCTING TAX ON CONTRACTUAL PAYME NTS OF CUTTING AND TRANSPORTING THE SUGARCANE FROM FIELDS TO THE FACTORY GATE U/S 194C OF THE IT ACT. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE AO. 3. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD A NEW GROUND WHICH MAY BE NECESSARY. 4. IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE L D. CIT(A) MAY BE CANCELLED AND THAT OF THE AO MAY BE RESTORED TO THE ABOVE EFFECT. 2. BRIEFLY STATED FACTS AS CULLED OUT FROM THE RECO RDS ARE THAT THE ASSESSEE IS A CO-OP. SOCIETY REGISTERED WITH THE RE GISTRAR OF CO-OP. SOCIETIES, GUJARAT, ENGAGED IN THE MANUFACTURING OF SUGAR AND TRADING OF SUGAR CANE FROM ITS MEMBERS. A SURVEY U/S 133A O F THE ACT WAS CONDUCTED AT THE OFFICE PREMISES OF THE ASSESSEE ON 22/02/2007. IT WAS OBSERVED BY THE ASSESSING OFFICER THAT NO TDS W AS DEDUCTED ON THE PAYMENT OF CUTTING AND COST OF TRANSPORTING THE SUGARCANE THROUGH TRANSPORT CONTRACTORS AND NOR THERE WAS ANY DETAILS REGARDING THE AMOUNT PER M T RATE OF HARVESTING AND TRANSPORTING CONTRACT EXPENDITURE. IN ABSENCE OF THESE DETAILS LD. ASSESS ING OFFICER ADOPTED THE RATE OF RS.205 PER MT ON TOTAL SUGARCAN E PURCHASED OF 671854.330 MT OF SUGAR CANE GIVING RISE TO THE FIGU RE OF RS.13,77,30,138/- ONLY AND TREATED IT AS EXPENDITUR E TOWARDS HARVESTING AND TRANSPORTING CONTRACT AND ACCORDINGL Y APPLIED TDS RATE OF 2% ON RS.13,77,30,138/- AND CALCULATED TDS DEDUCTIBLE AT ITA NO. 380/AHD/2012 ASST. YEAR2004-05 3 RS.28,23,468/- AND INTEREST U/S 201(1A) OF THE ACT AT RS.27,10,528/- AND ACCORDINGLY ISSUED DEMAND NOTICE AT RS.55,33,99 6/-. 3. AGGRIEVED, ASSESSEE WENT IN APPEAL BEFORE LD. CI T(A) WHO DELETED THE ADDITION MADE BY THE ASSESSING OFFICER AND ALLOWED THE APPEAL OF ASSESSEE BY OBSERVING AS UNDER :- 6.1 I HAVE GONE THROUGH THE ORDER PASSED BY A.O. T HE ARGUMENTS OF THE A.O. AS WELL AS APPELLANT HAS BEEN CONSIDERED. THE APPELLAN T HAS MADE OUT A STRONG CASE AGAINST THE ASSESSING OFFICER S ORDER. THE FOLLOWING EVIDENCE / ARGUMENTS OF APPELLANT CLINCH THE MATTER IN FAVOUR OF THE APP ELLANT. [1] THE APPELLANT PAYS EX- FACTORY / GATE DEL IVERY CANE PRICE TO CANE GROWERS. [2] THE FARMER MEMBER IS RESPONSIBLE TO CU T HIS SUGARCANE AND SUPPLY THE SAME AT THE FACTORY GATE OF THE APPELLANT. [3] PAYMENTS MADE TO CANE GROWING FARMER MEM BERS OF THE CO OP SOCIETY IS IN THE NATURE OF PURCHASE PRICE, ON WHI CH SECTION 194 C DOES NOT APPLY. [4] THE APPELLANT PAYS EX- FACTORY / GATE DELI VERY PRICE TO FARMERS AS PER MAXIMUM PRICE FIXED BY THE CENTRAL GOVERNMENT FROM TIME TO TIME. [5] THE APPELLANT PAYS ADVANCE PURCHASE PRI CE TO CANE GROWING MEMBERS TO MEET EXPENSES LIKE, HARVESTING, CUTTING AND TRANSPORTATION. [6] FIRST INSTALLMENT OF RS 205/- M.T IS GIVE N AS ADVANCE PURCHASE PRICE TO FARMER TO ENABLE THEM TO MEET THE EXPEN DITURE OF HARVESTING, CUTTING, AND TRANSPORTING. THEREAFTER, PURCHASE PRICE IS AGAIN GIVEN TO FARMERS IN INSTALLMENTS. THIS ACCOUNT IS FINALLY SE TTLED WHEN THE FINAL EX- FACTORY CANE PRICE IS DETERMINED BY THE APPELLANT. [7] COPY OF MEMBERS 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. [8] THE A.O. HAS WORKED OUT THE TOTAL PAYMENT COVE RED U/S 194C ON THE BASIS OF PURE ESTIMATE BASED ON LAST YEARS PAYMENT TO FAR MER MEMBERS. ITA NO. 380/AHD/2012 ASST. YEAR2004-05 4 [9] THE ARGUMENTS OF THE APPELLANT ARE QUITE CONVI NCING. THE A.O. HAS HARDLY BEEN ABLE TO SUPPORT HIS CASE WITH COGENT REASONS / CREDIBLE EVIDENCE. THE CRUX OF THE ARGUMENT OF APPELLANT IS THAT THEY ARE MAKING ADVANCE PAYMENT OF SUGAR CANE PURCHASE PRICE TO THEIR FARME R MEMBERS. THE FARMERS ARE AGRICULTURISTS . THEIR INCOME IS NOT TA XABLE. IT IS CLEAR THAT SECTIONL94 C OF THE I T ACT IS NOT APPLICABLE IN AP PELLANT 'S CASE. HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS ARGUMENTS OF THE APPELLANT AND THE JUDGMENT OF HONBLE I T AT , IT IS HELD THAT THE ASSESSING OFFICER IS NOT JUSTIFIED IN INVOKING THE PROVISIONS OF SEC. 194C AGAINST THE APPELLANT . THE ASSESSING OFFICERS ACTION OF TREAT ING THE APPELLANT AS 'ASSESSEE IN DEFAULT' AND WORKING OUT LIABILITY U/S 201 & 20I (LA) IS NOT SUSTAINABLE. IN VIEW OF THE ABOVE, ALL THE GROUNDS OF APPEAL F ROM SI. NO. 1 TO 7 ARE DECIDED IN FAVOUR OF THE APPELLANT. IN THE RESULT, APPEAL STANDS ALLOWED. 4. AGGRIEVED, REVENUE IS NOW IN APPEAL BEFORE THE T RIBUNAL. 5. THE LD. DR SUPPORTED THE OBSERVATIONS MADE BY TH E ASSESSING OFFICER. 6. ON THE OTHER HAND LD. AR SUBMITTED THAT THE ISSU E UNDER APPEAL IS NOW SQUARELY COVERED IN FAVOUR OF ASSESSEE BY TH E DECISION OF THE TRIBUNAL IN THE CASE OF ITO VS. SHREE CHALTHAN VIBH AG KHAND UDYOG MANDLI LTD. IN ITA NO.378/AHD/2012 FOR ASST. YEAR 2 004-05 (COPY PLACED ON RECORD), WHEREIN SIMILAR GROUNDS HAVE BEE N ADJUDICATED AND THE ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASS ESSEE DISMISSING THE APPEAL OF REVENUE. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE BEFORE US IS TO EXAMINE ABOUT THE LIABILITY OF ITA NO. 380/AHD/2012 ASST. YEAR2004-05 5 ASSESSEE TO DEDUCT TDS ON THE CONTRACTUAL PAYMENTS OF CUTTING AND TRANSPORTING THE SUGARCANE FROM THE FIELD TO THE SU GARCANE FACTORY UNDER THE PROVISIONS OF SECTION 194C OF THE ACT. ON GOING THROUGH THE SUBMISSIONS OF LD. AR, WE FIND THAT SIMILAR GROUNDS HAVE BEEN ADJUDICATED BY THE CO-ORDINATE BENCH IN THE CASE OF ITO VS. SHREE CHALTHAN VIBHAG KHAND UDYOG MANDLI LTD IN ITA NO. 378/ AHD/2012 AY 2004-05, WHEREIN THE GROUNDS TAKEN BY THE REVENUE W ERE AS UNDER :- 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 201(1 A) OF THE I.T. ACT OF RS.36,68,470/- AND RS.35,21,748/- RESPECTIVELY, FOR A.Y. 2004-05 B Y THE A.O. EVEN THOUGH DURING THE COURSE OF VERIFICATION IT WAS NOTICED THAT THE SUGARCANE FROM FIELD S OF ALL THE FARMERS WAS SPREAD IN LARGE AREAS. PROPER AND COST EFFECTIVE MANAGEMENT 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 FACTO RY GATE U/S 194C OF THE I.T. ACT. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. 3. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD A NEW GROUND, WHICH MAY BE NECESSARY. 4. IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE L D. CIT(A) MAY BE CANCELLED AND THAT OF THE ASSESSING OFFICER MAY BE RESTORED TO TH E ABOVE EFFECT. 8. THE CO-ORDINATE BENCH HAS DECIDED THE ABOVE GROU ND(S) GIVING FOLLOWING DECISIONS:- 4. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED TH E ORDERS OF THE LOWER AUTHORITIES AND MATERIAL AVAILABLE ON RECORD. WE FI ND THAT THE LD. CIT(A) DELETED THE ADDITION BY OBSERVING AS UNDER:- '6. DECISION:- 6.1 I HAVE GONE THROUGH THE ORDER PASSED BY A.O. TH E ARGUMENTS OF THE A.O. AS WELL AS APPELLANT HAS BEEN CONSIDERED. THE APPELLANT HAS MADE OUT A STRONG CASE AGAINST THE ASSESSING OFFICER'S ORDER . THE FOLLOWING ITA NO. 380/AHD/2012 ASST. YEAR2004-05 6 EVIDENCE/ARGUMENTS OF APPELLANT CLINCH THE MATTER I N FAVOUR OF THE APPELLANT. 1. THE APPELLANT PAYS EX-FACTORY / GATE DELIVERY CA NE PRICE TO CANE GROWERS. 2. THE FARMER MEMBER IS RESPONSIBLE TO CUT HIS SUGA RCANE 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 WHICH SECTIO N 194 C DOES NOT APPLY. 4. THE APPELLANT PAYS EX- FACTORY / GATE DELIVERY P RICE TO FARMERS AS PER MAXIMUM PRICE FIXED BY THE CENTRAL GOVERNMENT FROM TIME TO TIME. 5. THE APPELLANT PAYS ADVANCE PURCHASE PRICE TO CAN E GROWING MEMBERS TO MEET EXPENSES LIKE, HARVESTING, CUTTING AND TRANSPO RTATION. 6. FIRST INSTALLMENT OF RS 185/- M.T IS GIVEN AS AD VANCE PURCHASE PRICE TO FARMER TO ENABLE THEM -TO MEET THE EXPENDITURE OF H ARVESTING, CUTTING, AND TRANSPORTING. THEREAFTER, PURCHASE PRICE IS AGAIN G IVEN TO FARMERS IN INSTALLMENTS. THIS ACCOUNT IS FINALLY SETTLED WHEN THE FINAL EX-FACTORY CANE PRICE IS DETERMINED BY THE APPELLANT. [7] COPY OF M EMBER V S ACCOUNT IN APPELLANT'S BOOKS INDICATE THAT FIRST INSTALLMENT O F RS 185/ P.M.T GIVEN TO FARMERS IS ACTUALLY ADVANCE PURCHASE PRICE OF SUGAR CANE. 7. THE A.O, HAS WORKED OUT THE TOTAL PAYMENT COVERE D 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 CONVINC ING. 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 THE IR FARMER MEMBERS. THE FARMERS ARE AGRICULTURISTS. THEIR INCOME IS TAX ABLE. IT IS CLEAR THAT SECTION 194 C OF THE I T ACT IS NOT APPLICABLE IN A PPELLANT'S CASE.' HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS ARGUMENTS OF THE APPELLANT AND THE JUDGMENT OF HON' BLE ITAT, IT IS HELD THAT THE ASSESSING OFFICER IS NOT JUSTIFIED IN INVO KING THE PROVISIONS OF SEC. 194C AGAINST THE APPELLANT. THE ASSESSING OFFICER'S 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 E NABLE THEM TO MEET THE EXPENDITURE OF HARVESTING, CUTTING AND TRANSPORTING . THEREFORE, IN OUR CONSIDERED VIEW, THE ASSESSING OFFICER WAS NOT JUSTIFIED IN MA KING THE ASSESSEE LIABLE FOR DEDUCTING THE TAX ON SUCH PAYMENTS AS THE PAYMENTS WERE NOT GIVEN FOR CARRYING OUT THE WORK OF HARVESTING, CUTTING AND TRANSPORTIN G ON BEHALF OF THE ASSESSEE. THE HON'BLE GUJARAT HIGH COURT IN ASSESSEE'S OWN CA SE (SUPRA), UNDER THE IDENTICAL FACTS HAS HELD AS UNDER:- ITA NO. 380/AHD/2012 ASST. YEAR2004-05 7 10. IN THE CASE ON HAND, THE SUPPLY OF SUGARCANES AT THE GATES OF FACTORIES OF THE RESPECTIVE ASSESSEES WAS A PART OF SALE TRAN SACTION, AND THEREFORE, WE ARE OF THE OPINION THAT THE ASSESSEES ARE NOT LIABL E TO DEDUCT TDS. IN VIEW OF THE ABOVE DISCUSSION, 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.' 6. IN THE LIGHT OF THE ABOVE JUDGEMENT OF THE HON'B LE JURISDICTIONAL HIGH COURT, WE DO NOT SEE ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) AND THE SAME IS HEREBY UPHELD. THUS, THE FIRST GROUND RAISED BY THE REVENU E IS REJECTED. 7. ALL OTHER GROUNDS ARE GENERAL IN NATURE AND REQU IRE NO SEPARATE ADJUDICATION. 8. IN THE RESULT, REVENUE'S APPEAL IS DISMISSED. 9. FROM GOING THROUGH THE ABOVE DECISION WE FIND TH AT THE FACTS IN THE ABOVE REFERRED DECISION OF THE TRIBUNAL ARE SI MILAR TO THOSE OF THIS APPEAL BEFORE US WHEREIN IT HAS BEEN HELD THAT THE SUPPLY OF SUGAR CANE TO THE GATES OF SUGAR FACTORY WAS THE PART OF SALE TRANSACTION AND, THEREFORE, NOT LIABLE TO DEDUCT TDS. RESPECTFU LLY FOLLOWING THE ABOVE DECISION, WE FIND THAT LD. CIT(A) HAS MADE NO MISTAKE IN DELETING THE ADDITION AND WE CONFIRM HIS ORDER AND DISMISS THE GROUND OF REVENUE. 10. OTHER GROUNDS ARE OF GENERAL NATURE WHICH NEED NO ADJUDICATION. 11. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 2 ND MARCH, 2016 SD/- SD/- (RAJPAL YADAV) JUDICIAL MEMBER (MANISH BORAD) ACCOUNTANT MEMBER DATED 02/03/2016 MAHATA/- ITA NO. 380/AHD/2012 ASST. YEAR2004-05 8 COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, AHMEDABAD 1. DATE OF DICTATION: 15/02/2016 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: 16/02/2016 OTHER MEMBER: 3. DATE ON WHICH APPROVED DRAFT COMES TO THE SR. P. S./P.S.: 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: __________ 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S./P.S.: 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK:2 /3/16 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK: 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER: 9. DATE OF DESPATCH OF THE ORDER: