M/s Chaman Lal Setial Exports Ltd, Amritsar. V. The Income Tax Officer, Amritsar.

ITA 508/ASR/2015

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8815 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 3 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-01-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 02-11-2016
• Assessment Year: 2012-2013
• Appeal Filed On: 22-09-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Rule of consistency; Question of law; TDS
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 92; 194C; 201(1); 201; 192; 13

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.508, 509 & 84(ASR)/2015 & 2016 ASSESSMENT YEARS :2012-13, 2013-14 & 2012-13 PAN : AMRCI0235B M/S. CHAMAN LAL SETIA EXPORTS LTD. VS. INCOME TAX O FFICER, AJNALA ROAD, AMRITSAR. (TDS-II), AMRITSAR. (APPELLANT) (RESPONDENT) APPELLANT BY: SH.SH. SATISH BANSAL, CA RESPONDENT BY: SH. RAHUL DHAWAN, DR DATE OF HEARING: 02/11/2016 DATE OF PRONOUNCEMENT: 16/01/2017 ORDER PER T.S. KAPOOR, AM: THESE ARE THE THREE APPEALS FILED BY THE ASSESSEE AGAINST SEPARATE ORDERS OF LD. CIT(A)-2, AMRITSAR, DATED 08.07.2015, 08.07.2015 & 9.10.2015 RELATING TO ASSESSMENT YEARS 2012-13, 201 3-14 & 2012-13 RESPECTIVELY. 2. AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THERE WAS A INSPECTION OF TDS DEPARTMENT ON 19.11.2013 AN D ITO (TDS)-II, AMRITSAR FRAMED THE CONSOLIDATED ORDER UNDER SECTI ON 201(1)/201(1A) R.W.S 192 FOR THE ASSESSMENT YEARS 2012-13 & 2013-1 4. IT WAS SUBMITTED THAT THE AO FRAMED THE ASSESSMENT ORDER OBSERVING T HAT THE ASSESSEE HAD MADE PAYMENTS TO M/S. SARSWATI TRADING COMPANY AND M/S. TAU AGRO SALES P. LTD. IN ASSESSMENT YEARS 2013-14 & 20 12-13 RESPECTIVELY 2 AND HAD NOT DEDUCTED TDS ON DEEMED CHARGES ON ACCOU NT OF BY- PRODUCTS RETAINED BY MILLER. AGGRIEVED WITH THE ASS ESSMENT ORDERS, THE APPEALS WERE FILED BEFORE THE LD. CIT(A) AND THE L D. CIT(A) FIRST TOOK UP APPEAL FOR THE ASSESSMENT YEAR 2013-14, WHICH WAS I N RESPECT OF M/S. SARASWATI TRADING COMPANY AND WHEREBY THE LD. CIT(A ) CONFIRMED THE ADDITION AND IN THE SAME ORDER CONFIRMED THE ADDITI ON IN RESPECT OF M/S. TAU AGRO SALES (P) LTD. FOR THE ASSESSMENT YEAR 201 2-13. THEREFORE, THE ASSESSEE FILED TWO APPEALS BEFORE THE HONBLE ITAT BENCH, BEARING ITA NO. 509(ASR)/2015 IN RESPECT OF M/S. SARASWATI TRAD ING COMPANY FOR A.Y. 2013-14 AND ITA NO.508/ASR/2015 IN RESPECT OF M/S. TAU AGRO SALES P. LTD. FOR A.Y. 2012-13. IT WAS SUBMITTED TH AT SUBSEQUENTLY THE LD. CIT(A) FIXED THE APPEAL FOR A.Y. 2012-13 IN WHICH HE AGAIN CONSIDERED BOTH THE PARTIES RELATING TO BOTH THE ASSESSMENT YE ARS AND CONFIRMED THE APPLICABILITY OF TDS. IT WAS, THEREFORE SUBMITTED T HAT THE APPEAL IN ITA NO.508/ASR/2015 NEEDS TO BE WITHDRAWN, AS THE ISSUE HAS BEEN AGAIN TAKE UP IN APPEAL NO. ITA NO.84(ASR)/2015. 3. AS REGARDS THE APPEALS IN ITA NOS.509 & 84(ASR)/ 2015, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ISSUES INVOLVED IN BOTH THE CASES ARE THE SAME. IT WAS SUBMITTED THAT THE ASSES SEE HAD ENGAGED TWO PARTIES FOR MILLING OF RICE FROM PADDY AND IT WAS A GREED TO PAY RS.80/- PER QTL. AS MILLING CHARGES TO THESE PARTIES ON WHI CH TDS WAS DULY DEDUCTED. HE SUBMITTED THAT THE AO WAS OF THE VIEW THAT THE VALUE OF BY- PRODUCTS RETAINED BY MILLERS ALSO FORM PART OF THE CONTRACT VALUE AND 3 THEREFORE, THE ASSESSEE SHOULD HAVE ALSO DEDUCTED TDS ON THE VALUE OF THE ITEMS RETAIN BY THEM. THE LD. COUNSEL FOR THE A SSESSEE SUBMITTED THAT THE ISSUE IS SQUARELY COVERED IN FAVOR OF THE ASSES SEE AND INVITED OUR ATTENTION TO THE ORDER OF THE ITAT, AMRITSAR BENCH, DATED 01/07.2016 IN THE CASE OF ITO (TDS), JALANDHAR VS. DISTRICT MANAG ER, PUNJAB STATE GRAIN PROCUREMENT CORPN. LTD., HOSHIARPUR, IN ITA N OS. 214 TO 216(ASR)/2016 FOR THE ASSESSMENT YEARS 2012-13 TO 2 014-15. THE LD. COUNSEL SUBMITTED THAT THE TRIBUNAL HAD DISMISSED T HE APPEAL FILED BY THE REVENUE FOLLOWING THE CASE OF AHAAR CONSUMER PR ODUCTS P. LTD. AND IN THIS RESPECT OUR ATTENTION WAS INVITED TO PARA-1 6 OF THE SAID ORDER. IT WAS SUBMITTED THAT THE FINDINGS IN THE CASE OF AHA AR CONSUMER PRODUCTS (P) LTD., HAS BEEN NOTED BY THE TRIBUNAL A T PAGES 8 TO 11 OF ITS ORDER. 4. AS REGARDS THE INTEREST CHARGED UNDER SECTION 20 1(1A), THE LD. COUNSEL SUBMITTED THAT IT IS A CONSEQUENTIAL GROUN D. 5. THE LD. DR, ON THE OTHER HAND, STRONGLY DEFENDED THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE ASSESSEE W AS REQUIRED TO DEDUCT TDS ON THE AMOUNT OF PAYMENTS OF ANY KIND IN CLUDING VALUE OF GOODS RETAINED BY MILLERS AND IN THIS RESPECT INVIT ED OUR ATTENTION TO THE PROVISIONS OF SECTION 194C OF THE ACT FOR THE PROPO SITION THAT WORD BY ANY MODE INCLUDES THE PAYMENT THROUGH ANY METHOD INCLUDING BY RETAINING THE VALUE OF BY-PRODUCTS.. THE LD. DR ALS O PLACED HIS RELIANCE ON THE DECISION OF HONBLE SUPREME COURT IN THE CAS E OF ASSOCIATED 4 CEMENT COMPANY LTD. VS. COMMISSIONER OF INCOME TAX , REPORTED IN 201 ITR 435 FOR THE PROPOSITION THAT THE WORDS ANY WO RK IN SUB SECTION (1) OF SECTION 194C MEANS ANY WORK INCLUDING SUPPLY OF LABOUR TO CARRY OUT WORK AND IS NOT INTENDED TO BE CONFINED TO OR RESTR ICTED TO WORKS CONTRACT. THE LD. DR SUBMITTED THAT THIS DECISION O F THE HONBLE SUPREME COURT STRENGTHENS THE CASE OF THE REVENUE. IT WAS S UBMITTED THAT ANY WORK IS A BROADER ONE AND IT COVERS ALL TYPES OF P AYMENTS WHETHER MADE IN KIND OR IN CASH. THE LD. DR FURTHER RELIED ON TH E DECISION OF THE ITAT, PANJI BENCH IN THE CASE OF ITO, TDS, WARD-1, PANJI VS. DEPARTMENT OF TOURISM, GOVT. OF GOA, DATED 16.06.2015 PASSED IN I TA NOS. 330 & 331/PNJ/2014 AND READ THE RELEVANT FINDINGS OF THE TRIBUNAL. THE LD. DR SUBMITTED THAT IN THIS CASE AS PER THE AGREEMENT TH E CONTRACTOR WAS TO RETAIN THE SCRAP VALUE EQUIVALENT TO VALUE OF RS.1 0 CRORES AND THE BALANCE WAS TO BE DEPOSITED WITH THE ASSESSEE. THE LD. DR SUBMITTED THAT IN THIS CASE, THE TRIBUNAL HAD HELD THAT THE AMOUNT RETAINED BY THE CONTRACTOR WAS PART OF TOTAL CONTRACT VALUE AND HAS HELD THAT THE PROVISIONS OF SECTION 194C WERE CLEARLY APPLICABLE. 6. IN RESPECT OF THE ISSUE OF INTEREST, THE LD. DR PLACED HIS RELIANCE ON THE ORDER OF THE ITAT, LUCKNOW BENCH IN THE CASE O F DEFENCE ACCOUNTS DEPARTMENT AERONAUTICS LTD. FAIZABAD VS. DCIT (TDS) , LUCKNOW, IN ITA NOS. 441 TO 442 & 446/LKW/2012, DATED 21.08.2014 AN D SUBMITTED THAT CHARGING OF INTEREST IS MANDATORY EVEN IF D EDUCTEE PAYS ITS DUES IN 5 TIME. SIMILARLY RELIANCE WAS PLACED ON AN ORDER OF CUTTAK BENCH OF TRIBUNAL IN ITA NO.S 430 & 431 IN THE CASE OF ORTAL COMMUNICATIONS LTD. 7. THE LD. COUNSEL FOR THE ASSESSEE IN HIS REJOINDE R INVITED OUR ATTENTION TO PARA-2 OF THE TRIBUNAL ORDER IN THE CA SE OF DISTRICT MANAGER, PUNJAB STATE GRAIN PROCUREMENT CORPN. LTD., HOSHIAR PUR AND SUBMITTED THAT THE FACTS OF THE CASE LAW AS RELIED UPON BY HI M ARE PARI-MATERIA TO THE FACTS OF THE PRESENT CASE. AS REGARDS THE ISSU E OF INTEREST, THE LD. COUNSEL CONCEDED THAT THE CHARGING OF INTEREST IS MANDATORY BUT IT IS CONSEQUENTIAL AND IS LEVIABLE ONLY IF THE ASSESSEE IS HELD TO BE LIABLE FOR DEFAULT UNDER SECTION 201(1). 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND HAVE PER USED 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 B Y-PRODUCTS RETAINED BY THE MILLERS ALSO. WE FURTHER FIND THAT SIMILAR I SSUE HAS BEEN DECIDED BY THE ITAT, AMRITSAR BENCH, IN THE CASE OF ITO (TD S), JALADHAR VS. DISTRICT MANAGER, PUNJAB STATE GRAIN PROCUREMENT CO RPN. LTD. HOSHIARPUR, IN ITA NOS. 214 TO 216(ASR)/2016, WHERE IN VIDE ORDER DATED 6 01.07.2016, THE TRIBUNAL UNDER SIMILAR FACTS AND CI RCUMSTANCES 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 ORDER, THE CASE OF M/S. PUNJAB STATE CO-OPERATIVE S UPPLY AND MARKETING FEDERATION LTD; NAWANSHAHAR VS ITO, TDS-1, JALANDHA R, IN ITA NO.54 TO 56(ASR)/2016, FOR THE ASSESSMENT YEARS 2012-13 TO 2 014-15, WHEREIN SIMILAR ISSUE WAS ALSO DECIDED AGAINST THE REVENUE. THE LD. CIT(A) IN THESE TWO CASES HAD DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE AND AGAINST 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 SEA SON ON THE BEHALF OF FOOD CORPORATION OF INDIA, GOVT. OF INDIA . THE MILLING OF THIS PADDY IS BEING DONE BY VARIOUS MILLERS WITH WHOM CO NTRACTS ARE EXECUTED. THE MILLERS HAVE TO SUPPLY THE 67/68 KGS. RICE FOR EVERY ONE QUINTAL OF PADDY DELIVERED TO THEM BY THE PUNGR AIN AND THE RESIDUALS ARE LEFT WITH THE MILLERS. THE PUNGRAIN PAYS MILLING CHARGES OF RS.15/- PER QTL. OF PADDY SUPPLIED FOR M ILLING. THE AGENCY DEDUCTS U/S 194C ON THE MILLING CHARGES PAID TO THE MILLERS. HOWEVER, THE AO WHILE PASSING ORDERS U/S 201(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 REQUIRED TO SHOW CAUSE VIDE THIS OFFICE LETTER DATE D 03.02.2014 WHY IT SHOULD NOT BE TREATED AS AN ASSES SEE IN DEFAULT AS IT WAS DEDUCTING TAX AT SOURCE PARTIALLY AND THUS, NOT COMPLYING WITH THE PROVISIONS OF SECTION 194C O F INCOME TAX ACT. THE SHOW CAUSE NOTICE IS EXTRACTED AS UNDE R:- YOUR AGENCY AWARDS CONTRACTS FOR MILLING OF PADDY TO VARIOUS MILLERS EVERY YEAR. AS PER INFORMATION AVAILABLE, F OR EVERY 7 QUINTAL OF PADDY SUPPLIED TO THE MILLER, THE AGENCI ES PROCURE 67/68 KG RICE. MILLING CHARGES OF RS. 15/- PER QUIN TAL ARE PAID IN CASH. SUCH MODEST AND UNAFFORDABLE RATE OF MILLI NG IS ACCEPTABLE TO THE MILLERS AS THE AGENCIES, APART FR OM THE AFORESAID MILLING CHARGES, ALSO PROVIDE IN THE CONT RACT THAT THE BY PRODUCTS OF PADDY I.E. RICE BRAN, KHUDI PHAK AND HUSK ETC. SHALL BE THE PROPERTY OF THE MILLER AND NOT THE AGE NCY. THESE BY PRODUCTS ARE THUS, ACCOUNTED FOR AS THE STOCK OF THE MILLERS. THE VALUE OF THE BYPRODUCTS IS DETERMINATE 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 PRODUC TS. THUS, FOR ALL INTENTS AND PURPOSES, DEDUCTION IS BEING MA DE ON CASH PART OF THE MILLING EXPENSE I.E. RS. 15/- PER QUINT AL AND NOT ON THE TOTAL AMOUNT (IN CASH AND KIND). THUS, PARTIAL DEDUCTION OF TAX AT SOURCE IS BEING MADE UNDER SECTION 194C OF T HE 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 PADD Y AS FIXED BY THE GOVT. AND THAT ALL THE BY PRODUCTS SHALL BE PROPERTY OF THE RICE MILLER. IT IS FURTHER STATED THAT IT WILL NOT BE APPROPRIATE ON THE PART OF THE ASSESSEE OF GOVT, SINCE THE SAME IS THE PROPERTY OF THE MILLERS AS PER POLICY. IT IS ALSO S TATED THAT NO TRANSACTIONS/ENTRIES OF BY PRODUCTS ARE AFFECTED IN THE BOOKS OF ACCOUNTS IN THEIR OFFICE. 5. IN THE AFORESAID EXPLANATION, THE ASSESSEE HAS A DMITTED THAT ALL THE BY PRODUCTS OF PADDY, WHICH IS THE PRO PERTY OF THE AGENCY, IS LEFT WITH THE MILLER AS PER THE POLICY O F THE GOVERNMENT. OBVIOUSLY, SUCH A POLICY HAS BEEN FRAME D IN ORDER TO COMPENSATE THE MILLER IN KIND AS THE MILLI NG CHARGES OF RS. 15/- ARE TOO SMALL FOR THE OPERATIONAL COST OF MILLING WHICH INCLUDES TRANSPORTATION, STITCHING AND A NUMB ER OF OTHER EXPENSES BORNE BY THE MILLER. THUS, THE VALUE 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 RATE OF MILLING (IN CASH) IS BEING ACCEPTED B Y MILLERS YEAR AFTER YEAR AS THEY ARE BEING COMPENSATED WITH BY PRODUCTS WHOSE VALUE IS 8 MANY TIMES OF THIS CASH MILLING. IN ACTUALITY, THE COST OF THE MILLING PER QUINTAL IS MUCH 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 MILL ING CHARGES IN CASH SUITS THE AGENCIES AS IT WILL BE CUMBERSOME IF THEY TAKE THE BY PRODUCTS BACK WHICH ARE THEIR PROPERTY BEING A PART OF THE PADDY OWNED BY THEM. SO, IN ORDER TO FACILITATE THEMSELVES, THE GOVERNMENT HAS MADE A POLICY IN REGARD TO MILLING A S DISCUSSED ABOVE. ON THE OTHER HAND, THIS SYSTEM SUI TS THE MILLER AS WELL AS THE BY PRODUCTS ARE SOLD BY T HEM 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 COMPENSATED BY TRANSFERRING THE BY - PRODUCTS I.E. PAYING IN KIND. THUS, THE MILLING CHARGES BEING PAI D IN CASH ARE DISCOUNTED COST OF MILLING AND NEED TO BE INCREASED BY THE COST OF BY PRODUCTS FOR THE PURPOS E OF TDS. THE AGENCIES THUS, DO NOT MERELY PAY THE CASH CHARGES TO THE MILLER BUT A PAN OF THEIR PROPERTY I N THE SHAPE OF BY PRODUCTS WHICH IS NOTHING BUT PAYMENT O F 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 AMOUNT OR IN RESPECT OF PAYMENT BY WAY CASH/CHEQUE/DRAFT BUT ALSO OUT OF PAYMENT IN KIND ( BY ANY OTHER MODE) IRRESPECTIVE OF WHETHER THE SAME IS CREDITED IN THE MILLER'S ACCOUNT OR IN FAT T, THE B Y PRODUCTS (THEIR VALUE) ARC PASSED ON TO THE MILLER AT THE TUNE WHEN PADDY IS GIVEN FOR MILLING AS IN TURN, ON LY 67/68KG. OF RICE ARE TAKEN BACK PER EVERY QUINTAL O F PADDY. THUS, THE LAW TAKES CARE OF THE PAYMENT IN K IND ALSO AND FOR ALL INTENTS AND PURPOSES, THE BY PRODU CTS DO COMPENSATE FOR THE LOW COST OF MILLING AND THE GOVERNMENT HAS FAMED A POLICY IN TINS REGARD FAR TH EIR CONVENIENCE. 9 7. IN VIEW OF THE AFORESAID DISCUSSION, THE EXPLANA TION GIVEN BY THE ASSESSEE IS NOT ACCEPTED. J HOLD THE ASSESSEE IN DEFAULT FOR NOT DEDUCTING, TAX AT SOURCE ON FULL VALVE OF THE MILLING CHARGES I.E. PAID IN CASH AND PASSED ON IN KIND. TAX IS BEING DEDUCTED AT SOURCE ON THE MILLING CHARGES PAI D 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 FRO M ONE QUINTAL OF PADDY, AS PER INFORMATION GIVE BY DIFFER ENT PARTIES RANGES BETWEEN GIVEN BY THESE PARTIES IS ADOPTED FO R 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 A DOPTED IN FINANCIAL YEAR 2013-14. THE FIGURES OF PADDY GOT MI LLED DURING DIFFERENT YEARS HAVE BEEN PROVIDED BY THE ASSESEE. COL.I IN THE FED OWING CHART CONTAINS FIGURES OF TOTAL PADDY GOT MILLED BY THE ASSESEE IN A J PARTICULAR YEAR AND VALUE OF BY PRODUCTS IS WORKED OUT BY APPLYING THE AFORESAID FIGURES IN DIFFERENT YEARS. THE SHORT DEDUCTION OF TAX IS CALCULATED C, COL. 3 AND DEMAND UNDER SECTION 201(1)/201(1A) IS CREATED ACCO RDINGLY. 9. ALTHOUGH THE BY PRODUCTS GET PASSED ON TO THE M ILLER WHEN PADDY IS GIVEN TO HIM FOR MILLING, HOT THIS PA YMENT IS DEEMED TO HAVE BEEN MADE IN MARCH OF THE RELEVANT F INANCIAL YEAR WHEN THE ACCOUNTS ARE SETTLED, THUS, INTEREST UNDER SECTION 201(IA) HAS BEEN CALCULATED FROM APRIL FOLL OWING THE FINANCIAL YEAR TO THE DATE OF ORDER I.E. MARCH, 201 4. THE SHORT DEDUCTION OF TAX INTEREST -THEREON IS CALCULATED AS UNDER BY APPLYING THE AFORESAID VALUES OF BY PRODUCTS PER QU INTAL: 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/- 10 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 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) ALLOWED 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 BETWEEN THE CONTRACTS AS DISCUSSED IN THE DECISION OF THE I TAT, DELHI BENCH AND THE ASSESSEE GOVERNMENT AGENCY AND THE R ICE MILLERS IS THAT APART FROM THE BYE PRODUCTS LEFT WI TH 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. R EST OF THE FACTS ARE IDENTICAL. THE HONBLE ITAT, HAS DISCUSSE D IN GREAT DETAILS EVERY ASPECT OF THE TRANSACTION, LEGAL ISSU ES INVOLVED AND HAD EXAMINED THE ISSUE AT HAND FROM VARIOUS ANG LES AND FOUND THAT IN TERMS OF SECTION 194C OF THE ACT NO T AX WAS DEDUCTIBLE. MOREOVER, THIS IS THE ONLY DECISION AVA ILABLE BEFORE ME AND NO ADVERSE DECISION IS KNOWN AND RESP ECTFULLY FOLLOWING THE SAME AS WELL AS THE ORDER OF MY LD.C OLLEAGUES (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 SEC TION 201(1)/201(1A) OF THE I.T ACT ARE CONCERNED. 11 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 CONCER NED. THE ORDER 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 V S. ITO, TDS- 1, JALANDHAR, IN ITA NOS. 54 TO 56(ASR)/2016, FOR THE ASSESSMENT YEARS 2012-13 TO 2014-15, IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE BY HOLDING AS UNDER: 14. HAVING CONSIDERED THE RIVAL CONTENTIONS ON TH E MERITS OF THE LEGAL ISSUE RAISED BY THE ASSESSEE, WE FIND THA T THE FACTS, AS CONVASSED, ARE NOT IN DISPUTE, THE LD. IN THE CA SE OF PUNJAB STATE GRAIN PROCUREMENT CORPORATION LIMITED, VIDE O RDER DATED 25.01.2016, ON EXACTLY SIMILAR FACTS AND CIRCUMSTAN CES, AS DECIDING THE LEGAL ISSUE RAISED HEREIN, HELD TDS N OT LIABLE TO BE DEDUCTED, IN A SIMILAR SITUATION. THE RELEVANT P ORTION OF THE SAID 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 TH E HONBLE ITAT, DELHI, AS REFERRED ABOVE. THE ONLY DIFFERENCE BETWEEN THE CONTRACTS AS DISCUSSED IN THE DECISION OF THE H ONBLE ITAT, DELHI AND THE ASSESSEE GOVERNMENT AGENCY AND THE RI CE MILLERS IS THAT APART FROM THE BYE PRODUCTS LEFT WI TH MILLERS, THE MILLERS ARE PAID RS.15/- PER QTL. ON WHICH TDS IS D ULY DEDUCTED AND THERE IS NO DISPUTE AS TO THE FACTS. R EST OF THE FACTS ARE IDENTICAL. THE HONBLE ITAT HAS DISCUSSE D IN GREAT DETAILS EVERY ASPECT OF THE TRANSACTION, LEGAL ISSU ES INVOLVED AND HAD EXAMINED THE ISSUE AT HAND FROM VARIOUS ANG LES AND FOUND THAT IN TERMS OF SECTION 194C OF THE I.T. ACT NO TAX WAS DEDUCTIBLE. MOREOVER, THIS IS THE ONLY DECISION AVA ILABLE BEFORE ME AND NO ADVERSE DECISION IS KNOWN AND RESPECTFULL Y FOLLOWING THE SAME AS WELL AS THE ORDER OF MY LD. C OLLEAGUE (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 SEC TION 201/201(1A) OF THE I.T. ACT ARE CONCERNED. 15. HENCE, THE SAME LD. CIT(A), IN OUR CONSIDERED, COULD NOT HAVE BEEN TAKEN A DIFFERENT VIEW IN THE CASE OF A S IMILARLY PLACED ASSESSEE. THE RULE OF CONSISTENCY SQUARELY A PPLIES. THE ABOVE APART, IN AHAAR CONSUMER PRODUCTS (P) LTD. (SUPRA), IT HAS BEEN HELD AS FOLLOWS: 12 12. NOW, WE HAVE TO EXAMINE WHETHER THE ASSESSEE I S OBLIGED TO DEDUCT TAX AT SOURCE ON THE SO-CALLED CO NSTRUCTIVE PAYMENT AS CONSTRUED BY THE ASSESSING OFFICER IN TE RMS OF THE AGREEMENT. THE ASSESSEE, IN THIS CASE, SUPPLIES 100 KG OF WHEAT AND TAKES BACK 88 KGS. OF ATTA OR 85 KGS. OF DALIA AFTER ITS PROCESSING DONE BY THE AIL AND AM- IS REQ UIRED TO DELIVER THE END PRODUCT IN THIS PROPORTION TO THE A SSESSEE WHO HAS SUPPLIED THE RAW MATERIAL. DOES THE PROVISION O F SECTION 194C OF THE ACT CREATE AN OBLIGATION ON THE PART OF ASSESSEE TO DEDUCT TAX AT SOURCE IN RESPECT OF ANY OF THE TRANS ACTIONS IT HAS ENTERED INTO WITH THE AIL? SECTION 194C OF THE ACT WAS BROUGHT INTO STATUTE BY THE FINANCE ACT, 1972. CIRC ULAR NO. 86 DATED MAY 29, 1972 WAS ISSUED INTER ALIA STATING TH AT THE PROVISIONS OF SECTION 194C WOULD APPLY ONLY IN RELA TION TO LABOUR CONTACTS AND WOULD NOT COVER CONTRACTS FOR S ALE OF GOODS. IF A MANUFACTURER PURCHASES MATERIAL ON HIS OWN AND MANUFACTURES A PRODUCT AS PER THE REQUIREMENT OF A SPECIFIC CUSTOMER, IT WAS A CASE OF SALE AND NOT A CONTRACT FOR CARRYING OUT ANY WORK. THE FACT THAT THE GOODS MANUFACTURED WERE ACCORDING TO THE REQUIREMENT OF THE CUSTOMER DID NO T MEAN OR IMPLY THAT ANY WORK WAS CARRIED OUT ON BEHALF OF TH AT CUSTOMER. IN CASE OF ANY ISSUE WHERE THE CONTRACT IS A CONTRA CT OF SALE AND NOT A CONTRACT FOR CARRYING OUT ANY WOR K, 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 BOMB AY 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 PURCHASED MATERIALS REQUIRED FOR BOT TLING AND MARKETING FOREIGN MADE INDIAN LIQUOR, INCLUDING THE PRINTING AND PACKING MATERIAL. M, ANOTHER ESTABLI SHMENT SUPPLIED THE PRINTED LABELS TO BE WRAPPED ON THE BO TTLES TO THE ASSESSEE. THE ITO (TDS) DID NOT ACCEPT THE CONTENTI ONS OF THE ASSESSEE THAT THE TRANSACTION WITH IVI WAS A CONT RACT FOR SALE AND NOT A WORKS CONTRACT. WHEN THE PRINTING WORK WA S BEING CARRIED OUT IN THE PREMISES OF M, THOUGH AS PER T HE SPECIFICATIONS OF THE ASSESSEE, THE SUPPLY WAS LIMI TED TO THE QUANTITY SPECIFIED IN THE PURCHASE ORDER. THERE WAS NOTHING ON RECORD TO SHOW THAT, ALL OTHER ANCILLARY COSTS L IKE THE LABELS, INK, PAPERS, SCREEN- PRINTING SCREENS, ETC. WERE BE ING SUPPLIED BY THE ASSESSEE TO IVI. IN THE FACTS OF THIS CASE , THE SUPPLY OF PRINTED LABELS BY M TO THE ASSESSEE WAS 'CONTRACT OF SALE' AND IT COULD NOT BE TERMED A 'WORKS CONTRACT'. HENC E THE PROVISIONS OF SECTION 194C WERE HELD TO BE NOT APPL ICABLE. 13 13. THE HIGH COURT WHILE DECIDING THIS CASE HAS REV IEWED A NUMBER OF CASES AND DECIDED THAT THE SALE OF CONTRA CT DOES NOT CONVERT A CONTRACT OF SALE INTO A WORKS CONTRAC T ALTHOUGH WE AGREE THAT THESE CASES BY THEMSELVES MAY NOT BE ABLE TO THROW ANY LIGHT ON THE PRESENT CONTRACT ENTERED INT O BY THE ASSESSEE. HENCE, THE ASSESSEE IS SUPPLYING WHEAT AN D GETTING BACK ATTA OR DALIA AS THE CASE MAY BE, IN AN AGREED PROPORTION. FOR SUCH EXCHANGE, THERE IS ABSOLUTELY NO PAYMENT OF ANY CONSIDERATION. EVEN IF ONE WERE TO TREAT IT AS A WORK CONTRACT AND NOT A CONTRACT OF SALE, IT IS DIFFICUL T TO SAY THAT THERE IS A PAYMENT AS A CONSIDERATION FOR THE LABOU R OR THE WORK THAT IS RENDERED. THE ASSESSEE IS JUST EXCHANG ING THE PRODUCT; IN THE EXCHANGE HE IS NOT GETTING THE SAME PRODUCT BUT A DIFFERENT PRODUCT AND NOT TO THE SAME EXTENT BUT TO A DIFFERENT EXTENT. IN OTHER WORDS, IT IS DIFFICULT T O SAY THAT THE ASSESSEE HAS MADE ANY PAYMENT IN UNDERTAKING THIS C ONTRACT ON THE BASIS OF THE AGREEMENT THAT IS ACTED UPON BY THE PARTIES. THERE IS NO PAYMENT OF ANY SUM BY THE ASSE SSEE TO AIL. EVEN IF ONE WERE TO SAY THAT THERE IS A CONSTR UCTIVE 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 CREDITED SUCH CONSTRUED CONSIDERATION FOR SUPPLY OF LABOUR I N THE BOOKS OF ACCOUNT OF THE ASSESSEE. IN FACT, IT HAS NOT EVE N CLAIMED ANY EXPENDITURE AS DEDUCTION. TO SAY THAT SUCH EXPENDIT URE HAS RESULTED IN AN OUTFLOW WITHOUT DEDUCTION OF TAX AT SOURCE IS TOO MUCH AND IS NOT BORNE OUT FROM THE TRANSACTION ENTE RED INTO BETWEEN THE PARTIES. THE QUESTION OF DISALLOWANCE B Y APPLYING THE PROVISIONS OF SECTION 40(A)(IA ), IN OUR OPINIO N, IS NOT IN ACCORDANCE WITH LAW AS THE ASSESSEE IS UNDER NO OBL IGATION TO DEDUCT THE TAX AT SOURCE IN TERMS OF A CONTRACT WHE RE IT DOES NOT REQUIRE ANY PAYMENT OF ANY SUM EVEN IF THE SUM HERE MEANS THAT THE PAYMENT COULD BE OF SOME KIND BUT IT IS DIFFICULT TO SAY THAT THE ASSESSEE HAS MADE THESE P AYMENTS TO THE EXTENT OF SHORTFALL IN GETTING THE WHEAT SUPPLI ED BACK AND CONSTRUE IT AS THE PAYMENT TO THE OTHER FOR PROCESS ING THE WHEAT INTO ATTA OR DALIYA. THE DEPARTMENT MUST HAVE APPRECIATED THE CONTRACT AS A WHOLE WHICH DOES NOT INVOLVE ANY PAYMENT OR GETTING THE PAYMENT FOR SERVICES REN DERED. IT IS A CASE OF BARTER OR EXCHANGE 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 UNDERSTOOD BY THE COURTS IN CASES UNDER THE SALES TAX WHICH WAS DISCUSSED BY TH E HONBLE SUPREME COURT IN THE CASE CITED IN SIR THIR UMAGAL MILLS LTD. (SUPRA) OR IN THE CASE DEALT WITH BY THE BOMBAY HIGH COURT IN THE CASE OF BDA LTD. (SUPRA ). THE AS SESSEE 14 HAVING REGARD TO THE CONTRACT WHICH IT HAS ENTERED ON 2-2- 2005, IN OUR OPINION, DOES NOT GIVE RISE TO ANY OBL IGATION FOR IT TO DEDUCT TAX AT SOURCE AS IN OUR OPINION IT IS NOT SIMPLY A WORKS CONTRACT EXECUTED FOR CONSIDERATION IN THE FO RM OF SOME PAYMENT FOR WHICH DEDUCTION HAS BEEN CLAIMED UNDER THE ACT. THE ASSESSEE HAS NOWHERE CLAIMED THE PAYMENT AS DEDUCTION. 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 FOR OBTAINING A FINISHED PRODUCT IN THE FO RM OF ATTA OR DALIA, NOT INVOLVING THE MEDIUM OF PAYMENT. IT I S A CONTRACT OF BUSINESS WHICH DOES NOT INVOLVE ANY PAYMENT OF CONSIDERATION FOR THE SERVICES RENDERED. WE MUST EX AMINE THE ISSUE FROM ANOTHER ANGLE. HAD THE ASSESSEE OWNED TH E PLANT AND GOT THE ATTA AND DALIA MANUFACTURED FROM WHEAT, IT COULD HAVE CLAIMED A PROCESS LOSS AND THAT COULD HAVE BEE N IMPLIEDLY A PART OF BUSINESS TRANSACTION AND NO QUE STION OF ANY DISALLOWANCE OF SUCH LOSS COULD POSSIBLY HAVE A RISEN. MERELY BECAUSE THE ASSESSEE HAS GOT IT ROUTED THROU GH ANOTHER CONCERN ON A SORT OF OUTSOURCING BASIS, IT DOES NOT RESULT IN AN OUTFLOW. IT IS JUST AN EXCHANGE AND BA RTER OF ONE COMMODITY AGAINST THE OTHER AND THE WHOLE CONTRACT CANNOT BE TERMED AS WORKS CONTRACT IN THE STRICT SENSE OF THE TERM WHICH IS GENERALLY UNDERSTOOD UNDER THE PROVISIONS OF SEC TION 194C. IN OUR OPINION, THE ASSESSING OFFICER WENT WRONG IN PRESUMING THAT THE DIFFERENCE IN THE WHEAT SUPPLY AND THE ATT A OR DALIA GOT IN RETURN REPRESENTS SUM PAID FOR SERVICES REND ERED AND PAYMENTS FOR SUCH SERVICES ARE CLAIMED AS DEDUCTION FROM THE PROFIT AND GAINS OF BUSINESS UNDER SECTION 32 TO SE CTION 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 INVOK E SAID PROVISION OF SECTION 40(A)(IA ), FIRST OF ALL, THE CASE SHOULD BE MADE OUT BY THE DEPARTMENT THAT THE ASSESSEE IS CONTEMPLATING DEDUCTION UNDER SECTIONS 32 TO 38 ON WHICH TAX IS DEDUCTIBLE AND THE ASSESSEE HAS NOT DEDUCTED TAX AT SOURCE. IN OUR OPINION, TAX IS NOT DEDUCTIBLE AND T HE ASSESSEE HAS NOT CLAIMED ANY DEDUCTION UNDER SECTION 32 TO S ECTION 38. THIS LOSS, IF ANY, IS IN THE NET PROFIT IN THE TRAD ING ACCOUNT WHICH IS A COMPUTATION UNDER SECTIONS 28 AND 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 ASSESSEE IS ENTITLED TO SUCCEED AND THERE IS NO QUESTION OF DED UCTION OF TAX AT SOURCE AND CONSEQUENTLY NO QUESTION OF MAKING AN Y DISALLOWANCE BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA ) OF THE ACT. 15 14. WE MUST ALSO VIEW THE WHOLE TRANSACTION UNDER THE AGREEMENT FROM A DIFFERENT ANGLE. THE ASSESSEE GIVE S THE WHEAT AND ACCEPTS ATTA AND DALIA IN RETURN BY WEIGH T TO WEIGHT BASIS AND WHAT HE GOT IN RETURN ARE THE VALU E ADDED PRODUCTS OF LOWER QUANTITY. THE ASSESSEE BY THIS ME THOD HAS PREVENTED ITSELF FROM FACTORS LIKE FALL IN THE PRIC ES OF EITHER RAW MATERIAL OR OF THE FINISHED PRODUCTS. THE MARKET VA LUE OF THE WHEAT AND THE END PRODUCTS ARE TOTALLY DIFFERENT AN D FLUCTUATE IN DIFFERENT DIRECTIONS. ALL THESE FLUCTUATIONS ARE WARDED OFF BY THE PRESENT AGREEMENT, WHICH IS JUST EXCHANGE OF GO ODS FOR GOODS AND DOES NOT INVOLVE ANY CASH OUTFLOW. ALTHOU GH SERVICES WERE TAKEN, IT IS DIFFICULT TO SAY THAT TH E RESIDUALS AND THE LOSSES LEFT BY THE ASSESSEE IN FAVOUR OF AIL AR E PURELY CONSIDERATION FOR THE JOB THAT IS DONE THE MARKET F LUCTUATIONS IN THE PRICE STRUCTURE OF THE RAW MATERIAL AND THE END PRODUCT CANNOT BE JUST IGNORED IN THE WHOLE TRANSACTION NOR THE PROCESS LOSS. THE PROCESS LOSS COULD BE EITHER MORE OR LESS THAN THE PERCENTAGE AGREED TO BETWEEN THE PARTIES. BUT STILL THE PARTIES SETTLE THE TRANSACTIONS AT AN AGREED PR OPORTION. IN OTHER WORDS, THE RESIDUAL THAT IS LEFT BY THE ASSES SEE, APART FROM COVERING THE LABOUR COST OF PROCESSING, ALSO I NCLUDES THE PROTECTION FROM MARKET FLUCTUATIONS AS ALSO PROTECT ION FROM ADVERSE PROCESS LOSS. TO CONCLUDE, THE ENTIRE RESID UAL IS ONLY FOR THE PURPOSE OF JOB WORK IS NOT FAIR AND CORRECT HAVING REGARD TO THE TOTALITY OF THE TRANSACTION ENTERED I NTO 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 APPELLANT PRAYS THAT THE QUESTION OF LAW BE ANSWERE D IN FAVOUR 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 ISSUE IN FAVOUR OF THE ASSESSEE IN THE CASE OF PUNJAB STATE GRAIN PROCUREMENT CORPORATION LTD. (PUNGRAIN), HOSHIARPUR . TO REITERATE, THE STAND OF THE PRESENT ASSESSEE IS EXA CTLY SIMILAR TO THAT OF PUNGRAIN. THEREFORE, IT CANNOT BE DISPUT ED THAT THE OBSERVATIONS OF THE TRIBUNAL IN AHAAR CONSUMER PRO DUCTS P LTD. (SUPRA) ARE ALSO DIRECTLY APPLICABLE TO THE PRESENT 16 ASSESSEE AS WELL. THEREFORE, FOLLOWING AHAAR CONSU MER PRODUCTS P LTD. (SUPRA), WE HOLD THAT THE ASSESSEE WAS NOT REQUIRED TO MAKE TDS UNDER SECTION 194C ON THE VALU E OF THE BYE PRODUCTS. THIS ISSUE IS, ACCORDINGLY, DECIDED I N 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 A RE EXACTLY SIMILAR INTER-SE , THEREFORE, OUR OBSERVATIONS AR E, MUTATIS MUTANDIS, 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., NAW ANSHAHAR VS. ITO, TDS-1, JALANDHAR, IN ITA NOS. 54 TO 56(ASR)/2 016, FOR THE ASSESSMENT YEARS 2012-13 TO 2014-15, WHEREBY WE HAV E ALLOWED THE APPEALS OF THE ASSESSE, ALL THE THREE PRESENT A PPEALS OF THE REVENUE 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 PUNJ AB STATE GRAIN PROCUREMENT CORPN. LTD.(SUPRA). 9. THE ARGUMENT OF THE LD. DR THAT THE PAYMENT INCL UDE 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 PROVISI ONS 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 CONTRACTOR) FOR CARRYING OUT ANY WORK (INCLUDING SUPPLY OF LABOUR F OR CARRYING OUT ANY WORK) IN PURSUANCE OF A CONTRACT BETWEEN THE CO NTRACTOR AND A SPECIFIED PERSON SHALL, AT THE TIME OF CREDIT OF SU CH SUM TO THE ACCOUNT OF THE CONTRACTOR OR AT THE TIME OF PAYMENT THEREOF IN CASH OR 17 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; (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 HIN DU UNDIVIDED FAMILY, OF SUCH SUM AS INCOME-TAX ON INCOME COMPRIS ED THEREIN. (2) WHERE ANY SUM REFERRED TO IN SUB-SECTION (1) IS CREDITED TO ANY ACCOUNT, WHETHER CALLED 'SUSPENSE ACCOUNT' OR BY AN Y OTHER NAME, IN THE BOOKS OF ACCOUNT OF THE PERSON LIABLE TO PAY SUCH INCOME, SUCH CREDITING SHALL BE DEEMED TO BE CREDIT OF SUCH INCO ME TO THE ACCOUNT OF THE PAYEE AND THE PROVISIONS OF THIS SECTION SHA LL 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 E XPLANATION, 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 EXCLU SIVELY FOR PERSONAL PURPOSES OF SUCH INDIVIDUAL OR ANY MEMBER OF HINDU UNDIVIDED FAMILY. (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 ACC OUNT OF, OR TO, THE CONTRACTOR, IF SUCH SUM DOES NOT EXCEED [THIRTY] TH OUSAND RUPEES : PROVIDED THAT WHERE THE AGGREGATE OF THE AMOUNTS OF SUCH SU MS CREDITED OR PAID OR LIKELY TO BE CREDITED OR PAID D URING THE FINANCIAL YEAR EXCEEDS [SEVENTY-FIVE] THOUSAND RUPEES, THE PE RSON RESPONSIBLE 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 Y EAR TO THE ACCOUNT OF A CONTRACTOR DURING THE COURSE OF BUSINESS OF PL YING, HIRING OR 18 LEASING GOODS CARRIAGES, ON FURNISHING OF HIS PERMA NENT ACCOUNT NUMBER, TO THE 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 THE PRESCRIBED INCOME-TAX AUTHORITY OR THE PERSON AUTHORISED BY IT , SUCH PARTICULARS, IN SUCH FORM AND WITHIN SUCH TIME AS MAY BE PRESCRI BED. 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 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 T DS ON THE VALUE OF BY-PRODUCTS RETAINED BY A MILLER AND THE WORD BY AN Y OTHER MODE CANNOT BE EQUATED WITH THE VALUE OF GOODS IN AS THE WORD OTHER MODE MENTIONED IN THE SECTION DENOTES THE ACTUAL PAYMENT OTHER THA N BY CASH, CHEQUES OR DRAFT. THE FIRST REQUIREMENT OF SECTION 194C IS THAT THE PERSON SHOULD HAVE CREDITED SUCH AMOUNT TO THE ACCOUNT OF THE CON TRACTOR OR SHOULD HAVE MADE THE PAYMENT THEREOF. IN THE PRESENT CASES , NEITHER AMOUNT HAS BEEN CREDITED TO THE ACCOUNT OF THE CONTRACTOR NOR THE PAYMENT HAS BEEN MADE AND THEREFORE, THE PROVISIONS OF SECTION 194C ARE NOT APPLICABLE. AS FAR AS RELIANCE PLACED BY THE LD. DR ON THE CASE LAW OF HONBLE SUPREME COURT IN THE CASE OF ASSOCIATED CE MENT COMPANY LTD. VS. CIT (SUPRA) IS CONCERNED, WE FIND THAT IN THI S CASE, THE HONBLE SUPREME COURT HAD DEALT WITH THE DEFINITION OF WOR K AS ENVISAGED IN SUB-SECTION (1) OF SECTION 194C AND HAS DEFINED THE TERM WORK AND HAS 19 NOWHERE SAID THAT THE DEEMED VALUE OF BY-PRODUCT RE TAINED BY A MILLER OR A PERSON HAS TO BE TREATED AS PAYMENT MADE BY AN AS SESSEE. THE HONBLE COURT HAS JUST DEFINED THE WORD WORK. THEREFORE, THE CASE LAW OF HONBLE SUPREME COURT IN THE CASE OF ASSOCIATED CEMENT COMP ANY LTD. (SUPRA) IS NOT APPLICABLE IN THE PRESENT CASE. AS REGARDS THE RELIANCE PLACED BY THE LD. DR ON THE DECISION OF ITAT, PANAJI BENCH, I N THE CASE OF ITO VS. DEPARTMENT OF TOURISM GOA (SUPRA), WE ARE OF THE VI EW THAT THE FACTS AND CIRCUMSTANCES OF THAT CASE ARE NOT EXACTLY APPLICAB LE TO THE FACTS OF THE PRESENT CASES, AS IN THIS CASE THE CONTRACTOR HAD RETAINED THE AMOUNT REALISED FROM SALE OF SCRAP OF SHIP AND THE HONBLE TRIBUNAL HAD HELD THAT THE AMOUNT RETAINED BY THE CONTRACTOR WAS PART OF C ONTRACT AND THEREFORE, HELD THAT THE PROVISIONS OF SECTION 194C WERE ATTRACTED, WHEREAS IN THE PRESENT CASES THE AUTHORITIES BELOW HAS HYPOTHETICALLY CALCULATED THE DEEMED VALUE OF THE BY-PRODUCTS RE TAINED 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 AN D CIRCUMSTANCES OF THE PRESENT CASES AND IS SQUARELY APPLICABLE TO THESE C ASES. 11. IN VIEW OF THE ABOVE DISCUSSION AND FOLLOWING T HE JUDICIAL PRECEDENTS, GROUND NO.1 TAKEN BY THE ASSESSEE IN I TA 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 20 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. 13. IN THE RESULT, THE APPEALS IN ITA NO.509(ASR)/2 015 & ITA NO.84(ASR)/2016 ARE ALLOWED, WHEREAS APPEAL IN ITA NO.508(ASR)/2015 IS DISMISSED, AS WITHDRAWN. ORDER PRONOUNCED IN THE OPEN COURT ON 16/01/2017. SD/- SD/- (N.K. CHOUDHRY) (T.S. KAPO OR) JUDICIAL MEMBER ACCOUNTANT MEMBER /SKR/ DATED: 16/01/2017 COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:M/S.CHAMAN LAL SETIA EXPORTS LTD. AMRI TSAR. 2. THE ITO TDS-II, AMRITSAR 3. THE CIT(A), AMRITSAR 4. THE CIT, AMRITSAR. 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER INCOME TAX APPELLATE TRIBUNAL