The DCIT, TDS Circle, Ahmedabad V. M/s. Gujarat Ambuja Exports Ltd., Ahmedabad

ITA 556/AHD/2016

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 0873 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 9 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-12-2019
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 07-08-2019
• Assessment Year: 2008-2009
• Appeal Filed On: 04-03-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: APARNA A GARWAL
• Keywords: TDS
• Section: 194C; 194J; 194K

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ./ ITA NO. 556/AHD/2016 / ASSESSMENT YEAR: 2008-2009 DCIT, TDS CIRCLE AHMEDABAD. VS M/S.GUJARAT AMBUJA EXPORT LTD. AMBUJA TOWER OPP: MEMNAGAR FIRE STATION NR.VIJAY CHAR RASTA NAVRANGPURA 380009. PAN : AAACG 3980 A. / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI TUSHAR HEMANI, AR REVENUE BY : SHRI APARNA AGARWAL , CIT-DR / DATE OF HEARING : 18/12/2019 /DATE OF PRONOUNCEMENT : 20/12/2019 O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER : REVENUE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST ORDER OF THE LD.CIT(A)- 8, AHMEDABAD DATED 27.1.2016 PASSED FOR THE ASSTT.YEAR 2008-09 CHALLEN GING DELETION OF DEMAND MADE BY THE ASSESSING OFFICER IN AN ORDER PA SSED UNDER SECTION 201(1)/201(1A) AND 206C(6A)/206C(7) OF THE INCOME T AX ACT, 1961. 2. REVENUE HAS RAISED MAINLY TWO GROUNDS, WHICH REA D AS UNDER: 1. THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN DELETING THE ADDITIONS MADE U/S, 206C(A)/206C(7) OF THE IT ACT ON NON COLLE CTION OF TCS OF ITA NO.556/AHD/2016 - 2 - RS.15,40,67,019/- ON SALE OF DOC, MAIZE HUSK AND CO TTON WASTE INSPITE OF THE FACT THAT THE PROVISIONS OF SECTION 206C(1) A PPLY TO THE ASSESSEE. 2. THE LD CIT(A) HAS ERRED ON FACTS AND IN LAW IN DE LETING THE ADDITIONS MADE U/S. 201(1)7201(1) OF THE IT ACT ON SHORT DEDUC TION OF TAX AT SOURCE OF RS. 3,50,05,547/- BY APPLYING PROVISIONS OF SECT ION 194C OF THE IT ACT INSTEAD OF 194J OF THE IT ACT ON PAYMENTS MADE TO C& F AGENTS. 3. BRIEF FACTS EMERGING FROM THE RECORD ARE THAT AS SESSEE IS AN AGRO- PROCESSING INDUSTRIES ENGAGED IN MANUFACTURING OF D E-OILED CAKE FOR EXPORT AS ANIMAL MEAL, EDIBLE OIL, REFINING, MAIZE PROCESSING FOR STARCH ETC. A TDS VERIFICATION WAS CARRIED OUT IN THE CAS E OF THE ASSESSEE ON 9.8.2011 AND AN ORDER UNDER SECTION 201(1)/201(1A) AND UNDER SECTION 206C(6A)/206C(7) OF THE ACT WAS PASSED ON 2.12.2011 FOR THE F.Y.2008-09 TO 2011-12 TREATING THE ASSESSEE TO BE IN DEFAULT. SUBSEQUENTLY, SINCE TDS VERIFICATION FOR THE ASSTT.YEAR 2008-09 (F.Y.20 07-08) HAS NOT BEEN CARRIED OUT, LD.AO BY INVOKING AMENDED PROVISION IN SECTION 201(3) OF THE ACT BY FINANCE ACT, 2014 ISSUED NOTICE UNDER SE CTION 201(1)/201(1A) AND UNDER SECTION 206C(6A)/206C(7) OF THE ACT ON 2. 2.2015 FOR THE ASSTT.YEAR 2008-09, CALLING FOR DETAILS WITH REGARD TO DEDUCTION OF TDS ON MAIZE HUSK, COTTON WASTE, AND DE-OIL CAKE AND AL SO TO FURNISH DETAILS OF PORT CHARGES AND TDS THEREON, AND WHY THE ASSESS EE BE NOT TREATED AS ASSESSEE-IN-DEFAULT IN LINE WITH FINDING MADE BY TH E AO FOR THE ASSTT.YEARS 2009-10 TO 2012-13. THE ASSESSEE OBJEC TED TO THE NOTICE AND REITERATED ITS STAND TAKEN FOR THE ASSTT.YEARS 2009 -10 TO 2012-13, WHEREIN IT HAD INTERALIA PLEADED THAT PROVISIONS OF SECTION 206C DOES NOT A PPLY TO THE ASSESSEE, AS THE GOODS MANUFACTURED BY THE ASSE SSEE WERE SOLD IN THE NORMAL COURSE OF BUSINESS, AND THE PRODUCTS WERE GE NERATED THROUGH MANUFACTURING PROCESS, AND SUCH PRODUCTS CANNOT BE CATEGORIZED AS WASTE OR SCRAP. ASSESSEE ALSO SUBMITTED THAT SO FAR AS SECOND ISSUE ITA NO.556/AHD/2016 - 3 - REGARDING APPLICATION OF PROVISIONS OF SECTION 194C OF THE ACT INSTEAD OF 194J ON PAYMENT MADE TO C&F AGENTS IS CONCERNED, THE Y ARE PROVIDING HELPING SERVICES AT THE PORTS AND THEREFORE THEY AR E CONTRACTORS AND NOT PROFESSIONALS, AND THEREFORE, PROVISIONS OF SECTION 194J DID NOT APPLICABLE TO THE CASE OF THE ASSESSEE. HOWEVER, T HE LD.AO DID NOT BUY EXPLANATION OF THE ASSESSEE, AND BASED ON HIS DECIS ION FOR THE ASSESSMENT YEARS 2009-10 TO 2012-13, HELD THE ASSESSEE TO BE A SSESSEE-IN-DEFAULT AND RAISED DEMAND VIDE THE IMPUGNED ORDER. THEREAFTER, ASSESSEE WENT IN APPEAL BEFORE THE LD.CIT(A), DELETED ALLOWED THE CL AIM OF THE ASSESSEE AND DELETED THE DEMAND. REVENUE IS NOW BEFORE THE TRIBUNAL. 4. AT THE OUTSET, THE LD.COUNSEL FOR THE ASSESSEE S UBMITTED THAT BOTH ISSUES INVOLVED IN THE REVENUES APPEAL HAVE BEEN D ECIDED IN ASSESSEES FAVOUR FOR THE SUBSEQUENT ASSESSMENT YEARS I.E. ASS TT.YEARS 209-10 TO 2012-13 BY ORDER OF THE LD.CIT(A) AS WELL AS ITAT I N THEIR APPEAL IN ITA NO.1542-1545/AHD/2013 VIDE ORDER DATED 22.01.2016. THIS ORDER HAS BEEN UPHELD BY THE HONBLE GUJARAT HIGH COURT. HE PLACED ON RECORD COPIES BOTH THE ORDERS OF THE TRIBUNAL AS WELL AS T HAT OF HONBLE GUJARAT HIGH COURT. IN THE PRESENT YEAR, THE LD.CIT(A) WHI LE GRANTING THE RELIEF TO THE ASSESSEE HAS FOLLOWED ORDER OF THE ITAT PASS ED IN THESE ASSESSMENT YEARS. THEREFORE, APPEAL OF THE REVENUE CAN BE SUMMARILY DISMISSED ON THIS VERY BASIS. THE LD.DR WAS UNABLE TO CONTROVERT SUBMISSIONS OF THE LD.COUNSEL FOR THE ASSESSEE. HE ALSO NOT CONTESTED HOW THE FACTS IN PRESENT YEAR DIFFERS FROM THAT OF SUBSEQUENT ASSESSMENT YEARS, WHEREIN THERE WAS A CONCURRENT FINDING BY TH E LD.CIT(A) AND THE TRIBUNAL ON THE ISSUE. HOWEVER, HE SUPPORTED ORDER OF THE AO. ITA NO.556/AHD/2016 - 4 - 5. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND GONE TH ROUGH THE RECORD CAREFULLY. WE FIND MERIT IN THE CONTENTIONS OF THE LD.COUNSEL FOR THE ASSESSEE THAT SIMILAR ISSUE HAS BEEN DECIDED BY THE TRIBUNAL IN THE ASSTT.YEAR 2009-10 TO 2012-13 IN FAVOUR OF THE ASSE SSEE. WE FIND THAT THE LD.CIT(A) WHILE ALLOWING CLAIM OF THE ASSESSEE ON B OTH THE ISSUES RECORDED FINDING, WHICH READS AS UNDER: .. IN VIEW OF THE SUBMISSION OF THE APPELLANT AND DETA ILED ORDER OF THE CIT(A)-XXI AND ITAT ORDER DTD. 22.1.2016 AND VARIOU S JUDICIAL PRONOUNCEMENTS REFERRED BY THE APPELLANT AND ALSO B Y THE C1T(A), I FIND NO REASON TO DIFFER AND AGREE WITH THE FINDINGS IN ABOVE ORDER OF CIT(A) AND ITAT THAT DOC (DE-OILED CAKE) IS A BY PRODUCT AN D CANNOT BE CATEGORISED AS SCRAP AND WASTE. IN CASE OF RAW COTT ON, I AGREE THAT IN CASE OF THE APPELLANT SUCH RAW COTTON DOES NOT ARISE FRO M MANUFACTURING OR MECHANICAL WORKING AND IS MERELY A SEGREGATION OF R AW MATERIAL. SIMILARLY, MAIZE HUSK FIBRE CANNOT BE CONSIDERED AS A WASTE OR SCRAP WITHIN THE MANUFACTURING PROCESS AS IT IS SUBJECTED TO VARIOUS MANUFACTURING STAGES AND IS A BY - PRODUCT. IN VIEW OF ABOVE DISCUSSION GROUND NO.2 & 3 ARE ALL OWED AS THE ITEMS, DOC, RAW COTTON WASTE AND MAIZE HUSK ARE NOT IN THE NATURE OF SCRAP WITHIN THE MEANING OF PROVISIONS OF SECTION 2 06C OF IT ACT. THE AO IS DIRECTED TO DELETE THE DEMAND ON THIS POINT. ACCORDINGLY, THE APPEAL ON GROUND NO.2 & 3 IS ALLOWED. IN VIEW OF THE SUBMISSION OF THE APPELLANT AND DET AILED ORDER OF THE CIT(A)-XXI AND ITAT ORDER DTD. 22.1.2016 AND VARIOU S JUDICIAL PRONOUNCEMENTS REFERRED BY THE APPELLANT AND ALSO B Y THE CIT(A) AND CBDT CIRCULAR, I FIND NO REASON TO DIFFER AND AGREE WITH THE FINDINGS IN ABOVE ORDER OF CIT(A) AND ITAT THAT THE C & F AGENTS ARE IN THE NATURE OF INDEPENDENT CONTRACTORS, PAYMENT SO MADE ARE NOT COVERED WITHIN THE MEANING OF PROVISIONS OF SECTION 206C OF IT ACT. TH E AO IS DIRECTED TO DELETE THE DEMAND ON THIS POINT. ACCORDINGLY, THE A PPEAL ON GROUND NO.4 IS ALLOWED. ITA NO.556/AHD/2016 - 5 - 6. IN ORDER TO ADJUDICATE THE ISSUES ON HAND, IT WI LL BE SUFFICIENT FOR US TO TAKE NOTE OF FINDING OF THE ITAT ON THE SIMILAR ISSUE RAISED BY THE ASSESSEE IN THE ASSTT.YEARS 209-10 TO 2012-13 WHERE IN AFTER DETAILED ANALYSIS OF FACTS, AND ON LAW POINTS ALLOWED THE CL AIM OF THE ASSESSEE. THE RELEVANT PART OF THE ORDER, READ AS UNDER: 6.4 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE MATERIAL ON RECORD. THE ISSUE BEFORE US IS WHETHER THE PROVISIO NS OF SECTION 194C OR 194J TO BE MADE APPLICABLE FOR THE PAYMENT MADE TO C &F AGENTS? OUT OF THE TOTAL PORT CHARGES FOR ANY GIVEN ASSESSMENT YEA R; MOST OF THE PORT CHARGES ARE PAID DIRECTLY TO VARIOUS SERVICES PROVI DED LIKE FUMIGATOR, SHIPPING LINE AGENT, TRANSPORTER, ETC. WITH RESPECT TO PAYMENT TO C&F AGENTS, THE ASSESSEE HAS GIVEN COMPLETE DETAILS FOR BREAKUP OF PAYMENTS MADE TO C&F AGENTS BEFORE THE LOWER AUTHORITIES. SU CH BREAKUP INCLUDES ALL SUCH EXPENDITURE WHICH WERE IN THE NATURE OF RE IMBURSEMENT AND THE AGENCY CHARGES BY SUCH C&F AGENTS. FOR THE TOTAL PA YMENTS MADE TO C&F AGENTS, THE ASSESSEE HAS DEDUCTED TDS U/S 194C OR AT A LOWER RATE IF SUCH C&F AGENT HAS PROVIDED CERTIFICATE OF TAX DEDU CTION AT SOURCE AT LOWER RATE ISSUED BY THEIR RESPECTIVE ASSESSING OFF ICERS. FOR EXAMPLE, FOR AY 2008-09, THE DETAILED BREAKUP OF PORT CHARGES IS EVIDENT FROM THE DETAILS NARRATED AS UNDER:- .. .. .. .. FROM THE AFORESAID TABLE, IT IS CLEAR THAT FOR AY 2 009-10 THE ASSESSEE HAS MADE PAYMENTS FOUR C&F AGENTS AS IS EVIDENT FROM TH E TABULAR SHEET. THE PAYMENT MADE TO ONE OF THE C&F AGENTS, NAMELY, S, R AMDAS PRAGJI FORWARDERS PVT. LTD, THE ASSESSEE HAS MADE A TOTAL PAYMENT OF RS.2,95,26,122/- WHICH CONSISTS OF RS.2,84,76,689/- BEING THE EXPENDITURE WHICH ARE DIRECTLY REIMBURSED BY THE ASSESSEE AND T HE AGENCY CHARGES FOR THIS C&F AGENT AMOUNTING TO RS.10,49,433/-. THE ASS ESSEE HAS GIVEN FURTHER BREAKUP OF PAYMENTS TO THIS C&F AGENT BEFOR E THE LOWER AUTHORITIES WHEREIN THEY HAVE SHOWN TDS @ 0.26% AS PER THE LOWER DEDUCTION CERTIFICATE FURNISHED BY THIS C&F AGENT U /S. 197 OF THE ACT. THE DETAILED BILLS GIVING DESCRIPTION OF VARIOUS SERVIC ES FOR PAYMENTS MADE DIRECTLY BY THE ASSESSEE WERE ALSO PLACED ON RECORD . FROM THIS THE CIT(A) ITA NO.556/AHD/2016 - 6 - FOUND THAT THAT THE ASSESSEE'S CONTENTION THAT IT W AS COVERED U/S. 194C IS DULY SUPPORTED BY THE CBDT CIRCULAR NO. 715 WHICH C ATEGORICALLY CLARIFIES THAT C&F AGENTS WERE IN THE NATURE OF IND EPENDENT CONTRACTORS AND THE SAME IS EVIDENT FROM QUESTION/ANSWER NO. 7 OF THIS CIRCULAR. THE COVERAGE OF C & F AGENTS U/S. 194C IS ALSO REINFORC ED BY THE JUDGEMENT GIVEN BY THE TRIBUNAL IN THE CASE OF GLAXO SMITHCLI NE CONSUMER HEALTH CARE PVT LTD. (SUPRA). FURTHER, THE AO'S CONTENTION THAT C&F AGENTS ARE COVERED U/S 194K AS THEY ARE INCLUDED IN THE EXPLAN ATION DEFINING PROFESSIONAL SERVICES APPEARS TO BE MISPLACED AS PR OFESSIONAL SERVICES IN 194J AS DEFINED AS UNDER: '(A) 'PROFESSIONAL SERVICES' MEANS SERVICES RENDERED BY A PERSON IN THE COURSE OF CARRYING ON LEGAL, MEDICAL, ENGINEERING O R ARCHITECTURAL PROFESSION OR THE PROFESSION OF ACCOUNTANCY OR TECH NICAL CONSULTANCY OR INTERIOR DECORATION OR ADVERTISING OR SUCH OTHER PR OFESSION AS IS NOTIFIED BY THE BOARD FOR THE PURPOSES OF SECTION 44AA OR OF THIS SECTION;' 7. IN THIS BACKGROUND, CIT(A) RIGHTLY FOUND THAT C&F AGENTS WERE NOWHERE REMOTELY INDICATED IN THE EXPLANATION TO SE CTION 194J OF INCOME TAX ACT NOR HAS BEEN EXPLAINED BY THE AO THAT HOW C &F WAS COVERED U/S. 194J OF THE INCOME-TAX ACT. THEREFORE, UNDER THE GIV EN FACTS AND ITA NOS. 1542-1545 & CO NO.183-186/AHD/2013 ASSESSEE : GUJARAT AMBUJA EXPORTS LTD AY : 2009-10 TO 2012-13 CIRCUMST ANCES OF THE CASE, THE CIT(A) WAS JUSTIFIED IN HOLDING THAT THE ACTION OF ASSESSING OFFICER INVOKING PROVISION U/S 194J IN RESPECT TO PORT CHARG ES PAYMENT FOR ALL THE ASSESSMENT YEARS AS UNSUSTAINABLE IN LAW. THEREFORE , THE ORDER OF THE CIT(A) IN THIS REGARD DOES NOT REQUIRE ANY INTERFERE NCE FROM OUR SIDE, WHICH IS CONFIRMED. 8. SIMILAR TWO ISSUES AROSE IN OTHER ASSESSMENT YEA RS ALSO, I.E., AYS 2010- 11, 2011-12 & 2012-13. FACTS BEING IDENTICAL, SO FO LLOWING THE SAME REASONING, WE DO NOT FIND ANY INFIRMITY IN THE ORDE R OF THE CIT(A) AS DISCUSSED ABOVE. THUS, ALL THESE APPEAL FILED BY TH E REVENUE ARE DISMISSED. 7. A PERUSAL OF THE ITATS ORDER REPRODUCED HEREINA BOVE, IT IS CLEAR THAT ISSUES ARE SAME, AND FACTS ARE IDENTICAL, AND THE LD.CIT(A) RELYING ON THIS ORDER OF THE ITAT, ALLOWED THE CLAIM OF THE AS SESSEE. THIS ORDER OF THE TRIBUNAL HAS BEEN UPHELD BY THE HONBLE GUJARAT HIGH COURT IN TAX APPEAL NO.531 AND 534 OF 2016 VIDE ORDER DATED 25.0 7.2016. THEREFORE, ITA NO.556/AHD/2016 - 7 - FINDING OF THE LD.CIT(A) ORDER DOES NOT REQUIRE OU R INTERFERENCE. THE LD.DR COULD NOT POINT OUT AS TO HOW THE LD.CIT(A) H AS ERRED IN FACTS AND LAW AND HOW IT DIFFERS FROM THE SUBSEQUENT DECISION IN THE ASSTT.YEAR 2009-10 TO 2012-13 TAKEN BY THE LD.CIT(A) AND UPHEL D BY THE TRIBUNAL. THEREFORE, FINDING NO MERIT IN THE GROUNDS OF APPEA L, WE UPHOLD ORDER OF THE LD.CIT(A) AND REJECT THE GROUNDS OF APPEAL. 8. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. PRONOUNCED IN THE OPEN COURT ON 20 TH DECEMBER, 2019. SD/- SD/- (WASEEM AHMED) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER