The Dy. Commr. Of Income Tax, TDS Circle, RAJKOT-GUJARAT V. Maahi Milk Producer Co. Ltd., RAJKOT-GUJARAT

ITA 60/RJT/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 8880 (ITAT-RAJKOT)
• Duration Of Justice: 2 year(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-03-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2015-2016
• Appeal Filed On: 24-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RANJIT SINGH
• Assessee Lawyers: SANJAY SHAH
• Keywords: Rule of consistency; Revenue expenditure; TDS
• Section: 40(a)(ia); 194C; 201(1); 201; 191; 194J; 13

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT , ! '# $ , % ! & ' BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER SR NOS ITA NO(S)/COS ASSET. YEAR(S) APPEAL(S)/COS BY APPELLANT VS. RESPONDENT APPELLANT RESPONDENT 1. ITA NO.161/RJT/2017 2014 - 1 5 DCIT, CIR-TDS, RAJKOT M/S. MAAHI MILK PRODUCER CO. LTD., 3 RD AND 4 TH FLOOR, SAKAR BUILDING, OPP: RAJKUMAR COLLEGE, DR. RADHAKRISHNA ROAD, RAJKOT. PAN NO. AAICM 1550 E (ASSESSEE) 2. CO NO.9/RJT/2017 (IN ITA NO.161/RJT/2017) 201 4 - 1 5 ASSESSEE REVENUE 3. ITA NO.449/RJT/2016 2013 - 14 ACIT, CIR-1(2), RAJKOT. (REVENUE) ASSESSEE 4. CO NO.3/RJT/2017 (IN ITA NO.449/RJT/16) 2013 - 1 4 ASSESSEE REVENUE 5. ITA NO.60/RJT/2016 2015 - 16 DCIT, CIR-TDS, RAJKOT A SSESSEE 6. CO NO.7/RJT/2016 (IN ITA NO.60/RJT/2016) 2015 - 16 ASSESSEE REVENUE 7. ITA NO.420/RJT/2016 2013 - 14 ASSESSEE DCIT, CIR- 1(2), RAJKOT. REVENUE BY : SHRI RANJIT SINGH, D.R. ASSESSEE BY : SHRI SANJAY SHAH, A.R. ( ) * + / DATE OF HEARING 13/03/2018 ,- * + / DATE OF PRONOUNCEMENT 23 /03/2018 ITA NO.161/RJT/2017 & ITA NOS.449, 60 & 420/RJT2016 CO NOS.9&3/RJT/2017 AND CO NO.7/RJT/2016 M/S. MAAHI MILK PRODUCER CO. LTD. ASSESSMENT YEARS 2014-15, 2013-14 & 2015-16 - 2 - . / O R D E R PER MAHAVIR PRASAD JUDICIAL MEMBER: THE CAPTIONED APPEALS ALONGWITH CROSS OBJECTIONS HAVE BEEN FILED AT THE INSTANCE OF THE REVENUE AND ASSESSEE A GAINST THE APPELLATE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-1, RAJKOT [CIT(A) IN SHORT] DATED 10/03/2017, 24/10/2016, 29/12/2015, 24/10/2016 RELEVANT TO ASSESSMENT YEARS (AYS) 2014-15, 2013-14 , 2015-16, 2013-14 2. SINCE IN THESE APPEALS PARTIES ARE SAME AND GRO UNDS ARE ALMOST COMMON, THEREFORE, FOR THE SAKE OF CONVENIEN CE, WE WOULD LIKE TO DISPOSE OF ALL THESE APPEALS TOGETHER. FIRS T OF ALL WE WOULD LIKE TO TAKE UP ITA NO.161/RJT/2017 FOR ASST. YEAR 2014- 15: 1. THE LD. CIT(A) HAS ERRED IN LAW AS WELL AS O N FACTS OF THE CASE IN HOLDING THAT THE ASSESSEE SHOULD NOT TO BE TREATED AS ASSESSEE IN DEFAULT FOR NON DEDUCTION OF TAX AT SOURCE UNDER SE CTION 194J ON THE GROUND OF OUT OF POCKET EXPENSES OR AUDITORS OF RS.2,17,114/-. 2. THE LD. CIT(A) HAS ERRED IN LAW AS WELL AS ON FACTS OF THE CASE IN HOLDING THAT TAX IS NOT REQUIRED TO BE DEDUCTED AT SOURCE U/S.194H OF THE I. T. ACT ON COMMISSION PAYMENTS MA DE TO SAHAYAK. 3. THE LD. CIT(A) HAS ERRED IN LAW AS WELL AS ON FACTS OF THE CASE IN HOLDING THAT THE ASSESSEE SHOULD NOT TO BE TREATED AS ASSESSEE IN DEFAULT FOR NON DEDUCTION OF TAX AT SOURCE UNDER SE CTION 194J OF THE I.T. ACT, ON SHORT DEDUCTION OF TAX ON PAYMENT OF COMMISSIONER CHARGES PAID TO DAIRIES. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LD. CIT(A) OUGHT TO HAVE DECIDED THE ISSUE UNDER REFERENCE, IN THE LIGHT OF EVIDENCE OBTAINED BY HIM DURING THE APPELLATE PROCE EDINGS AFTER FOLLOWING THE DUE PROCEDURE OF LAW. ITA NO.161/RJT/2017 & ITA NOS.449, 60 & 420/RJT2016 CO NOS.9&3/RJT/2017 AND CO NO.7/RJT/2016 M/S. MAAHI MILK PRODUCER CO. LTD. ASSESSMENT YEARS 2014-15, 2013-14 & 2015-16 - 3 - 3. BRIEFLY STATED, FACTS ARE THAT THE APPELLANT IS A COMPANY INCORPORATED AS A PRODUCER COMPANY WHICH IS ENGAGED IN THE BUSINESS OF POOLING & PURCHASING MILK PRIMARILY FRO M ITS MEMBERS & PROCESSING MILK AND MILK PRODUCTS THROUGH THIRD PAR TY PROCESSORS. IT MARKETS THE MILK PRODUCTS UNDER BRAND NAME - 'MAAHI ' A SURVEY ACTION U/S.133(2A) WAS CARRIED OUT AT THE APPELLANT 'S PREMISES ON 25/11/2014 FOR VERIFICATION OF TDS COMPLIANCE AND T HEREAFTER A SHOW-CAUSE NOTICE WAS ISSUED. REQUESTING THE ASSESS EE TO FURNISH THE DETAILS OF TDS MADE TILL DATE. ASSESSING OFFICER PA SSED AN ORDER U/S.201(1) AND 201(1A) ON 28 TH MARCH, 2016 HOLDING THE APPELLANT TO BE AN ASSESSEE IN DEFAULT FOR SHORT DEDUCTION OF TA X AT SOURCE FROM AGGREGATE SUM OF RS.3,37,12,318/- AND RAISED DEMAND THEREOF ALONG WITH INTEREST U/S.201(1A) OF RS.1,05,13,514/-, WHIC H IS BEING CHALLENGED BY THE APPELLANT AND LD.CIT(A) PARTLY AL LOWED THE APPEAL OF THE ASSESSEE. 4. NOW DEPARTMENT IS BEFORE US. 5. WE HAVE GONE THROUGH THE RELEVANT RECORD AND IMP UGNED ORDER. SO FAR GROUND NO.1 IS CONCERNED. LD. AO HAS DISCUSSED THE ISSUE ON PAGE NO.10, PARA 4(I) AND LD. CIT(A) HAS D ISCUSSED THE DETAIL AT PAGE NO.6, PARA 5.3. AS WE CAN SEE THAT AO HAS C ONTENDED THAT THE PAYMENT FOR BOARDING AND LODGING EXPENSES WAS MADE BY THE ASSESSEE TO AUDITORS ON THE BASIS OF BILLS RAISED B Y THEM ON WHICH SERVICE TAX WAS ALSO CHARGED AND THEREFORE, HE CONS IDERED IT AS PAYMENT TO AUDITORS WHICH IS TAKEN AT SOURCE U/S.19 4J. HOWEVER, ASSESSEE SUBMITTED THAT THE PAYMENT FOR BOARDING AN D LODGING EXPENSES OF AUDITORS WAS MADE BY THE ASSESSEE DIREC TLY TO THE CONCERN HOTEL ON THE BASIS OF BILLS RAISED BY THE S AID HOTELS TO THE ITA NO.161/RJT/2017 & ITA NOS.449, 60 & 420/RJT2016 CO NOS.9&3/RJT/2017 AND CO NO.7/RJT/2016 M/S. MAAHI MILK PRODUCER CO. LTD. ASSESSMENT YEARS 2014-15, 2013-14 & 2015-16 - 4 - ASSESSEE AND THERE WAS NO PAYMENT FOR BOARDING AND LODGING EXPENSES TO THE AUDITORS. IN SUPPORT OF THESE FACTS , ASSESSEE HAS SUBMITTED COPY OF RELEVANT BILLS AND PROOF SHOWING PAYMENT THEREOF IN THE PAPER BOOK WHICH WERE ALSO FURNISHED TO THE AO AND SIMILAR ISSUE HAD ARISEN IN THE A.Y. 2015-16 IN APPELLANTS OWN CASE AND LD. CIT(A) GAVE THE RELIEF TO THE ASSESSEE. ASSESSEE FI LED DETAILED REPLY TO THE AO AND SAME IS PART OF PAPER BOOK AT PAGE NO.10 TO 26. 6. AS PER THE AR SOME AMOUNT WAS GIVEN TO AUDITOR F OR OUT OF POCKET EXPENSES WERE PAID BY THE ASSESSEE AFTER DED UCTION OF TAX. SO IN CONSIDERED OPINION, LD. CIT(A) HAS PASSED DETAIL ED AND REASONED ORDER, THEREFORE, WE DO NOT WANT TO INTERFERE IN TH E ORDER PASSED BY THE LD. CIT(A) HENCE, THIS GROUND OF APPEAL IS DISM ISSED. 7. SO FAR AS GROUND NO.2 WITH REGARD TO THAT LD.CIT (A) HAS ERRED IN LAW AS WELL AS ON FACTS OF THE CASE IN HOLDING T HAT TAX IS NOT REQUIRED TO BE DEDUCTED AT SOURCE U/S.194H OF THE I .T. ACT ON COMMISSION PAYMENTS MADE TO SAHAYAK. LD. AO HAS DIS CUSSED THE MATTER ON PAGE NO.12, PARA 4(II) AND LD. CIT(A) HAS DISCUSSED ON PAGE NO.19, PARA 6.3. IN THIS REGARD, LD AR STATED THAT ASSESSEE COMPANY IS ESTABLISHED UNDER PART IX-A OF THE COMPANIES ACT FO R PROCURING MILK FROM ITS MEMBERS. ACCORDINGLY, ASSESSEE HAS ESTABLI SHED MILK PROCUREMENT POINTS AT EVERY VILLAGE FOR POOLING OF MILK FROM ITS MEMBER PRODUCER AND ASSESSEE HAS ENGAGED PERSONS TE RMED AS SAHAYAK AT THESE MILK PROCUREMENT POINT TO COLLECT THE MILK. THE SAHAYAK COLLECTS MILK FROM THE MEMBERS, FEEDS THE S AME IN TESTING MACHINES FOR DETERMINING FAT & SNF CONTENT OF THE M ILK. HE STORES THE MILK TILL THE TIME THE TRANSPORTERS APPOINTED BY AS SESSEE TRANSPORT THE SAME TO THE BULK CHILLING CENTRE. MILK COLLECTI ON AND PAYMENT SYSTEM AT MILK PROCUREMENT POINT IS ENTIRELY IT ENA BLE AND THE ITA NO.161/RJT/2017 & ITA NOS.449, 60 & 420/RJT2016 CO NOS.9&3/RJT/2017 AND CO NO.7/RJT/2016 M/S. MAAHI MILK PRODUCER CO. LTD. ASSESSMENT YEARS 2014-15, 2013-14 & 2015-16 - 5 - SAHAYAK DOES NOT MAINTAIN ANY RECORDS OF INDIVIDUAL FARMERS AND QUALITY OF MILK PROCURED FOR THE ASSESSEE. THE AGRE EMENT WITH THE SAHAYAK IS ON PRINCIPAL TO PRINCIPAL BASIS. SAME IS PART OF PAPER BOOK AT PAGE NO.146 AND IT IS MENTIONED THEREIN THIS AGREEMENT HAS BEEN ENTERED INTO ON PRINCIPAL TO PRINCIPAL BASIS AND NO THING CONTAINED IN THIS AGREEMENT SHALL BE DEEMED TO NEITHER CONSTITUT E A JOINT VENTURE PARTNERSHIP OR AGENCY RELATIONSHIP BETWEEN THE COMP ANY AND MAAHI NOR AUTHORISE EITHER PARTY TO MADE A REPRESENTATION OR INCUR ANY LIABILITY ON BEHALF OF THE OTHER PARTY SIMILAR ISSUE WAS AROSE DURING THE ASST. YEAR 2015-16 IN ASSESSEES OWN CASE. LD. CIT(A) GRANTED THE RELIEF TO THE ASSESSEE. PAYMENT IS MADE TO SAHAYAK ON PERCENTAGE BASIS ON VARIOUS PARAMETERS LIKE NUMBER OF FARMERS POURING MILK, FAT AND SNF FACTOR IN MILK, QUANTITY TO MILD COLLECTED ETC. WHICH ENSURES PAYMENT IS COMMENSURATE WITH WORK PERFORMED. THE NA TURE OF WORK CARRIED OUT BY THE SAHAYAK ARE COVERED BY PROVISION S OF SECTION 194C AND ACCORDINGLY TAX WAS DEDUCTED ON THE SAME ACCORD INGLY. LD. AR CITED A DECISION OF BHOPAL SUGAR INDUSTRIES LTD. VS . STO 40 STC 42 (SC) AND CIT VS. AHMEDABAD STAMP VENDORS ASSOCIATIO N (25 TAXMANN.COM 201)(SC). ON THE BASIS OF THE CONSISTEN CY, WE DISMISS THIS GROUND OF APPEAL OF DEPARTMENT. 8. SO FAR AS GROUND NO.3 IS CONCERNED THAT THE LD. CIT(A) HAS ERRED IN LAW AS WELL AS ON FACTS OF THE CASE IN HOL DING THAT THE ASSESSEE SHOULD NOT BE TREATED AS ASSESSEE IN DEFAU LT FOR NON- DEDUCTION OF TAX AT SOURCE UNDER SECTION 194J OF TH E I.T. ACT, ON SHORT DEDUCTION OF TAX ON PAYMENT OF COMMISSIONER CHARGES PAID TO DAIRIES. LD. AO HAS DISCUSSED THIS ISSUE AT PAGE NO .14 PARA 4(III) AND LD. CIT(A) HAS DISCUSSED AT PAGE NO.26 PARA 7.3. IN THIS CASE, IN SUPPORT OF ITS CONTENTION, ASSESSEE SUBMITTED COPY OF CONVERSION AGREEMENT WITH MOTHER DAIRY FRUIT AND VEGETABLE PVT . LTD. & GIRIRAJ ITA NO.161/RJT/2017 & ITA NOS.449, 60 & 420/RJT2016 CO NOS.9&3/RJT/2017 AND CO NO.7/RJT/2016 M/S. MAAHI MILK PRODUCER CO. LTD. ASSESSMENT YEARS 2014-15, 2013-14 & 2015-16 - 6 - MILK PRODUCTS LTD. ASSESSEE FURTHER STATED THAT IT DOES NOT HAVE OWN MANUFACTURING FACILITY, HENCE, IT ENTERED INTO JOB WORK CONTRACT WITH VARIOUS DAIRIES FOR CONVERSION AND PACKING OF MILK AND MILK PRODUCTS. ASSESSEE PROVIDED RAW MILK AND NECESSARY MATERIALS TO THE DAIRIES FOR PROCESSING AS PER SPECIFICATION OF ASSESSEE. TH E DAIRIES CUSTOM PACK IT ON JOB WORK BASIS. ASSESSEE DEDUCTED TAX U/ S.194C ON CONVERSION CHARGES RS.19.77 CRORES PAID TO SUCH DAI RIES SINCE THE JOB WORK FALLS WITHIN DEFINITION OF WORK U/S.194C. CB DT CIRCULAR NO.13/2006 DATED 13 TH DEC, 2006 RELIED. FURTHER STATED THE SERVICES RENDERED BY THE DAIRIES ARE NOT TECHNICAL SERVICES SINCE THE DAIRIES ARE NOT EXPERT ON ANY TECHNOLOGY WHICH THEY COULD P ROVIDE TO THE ASSESSEE, NOR THEY PROVIDE ANY MANAGERIAL SERVICES/ CONSULTANCY SERVICES SINCE THERE IS NO ADVICE GIVEN BY DAIRIES TO THE ASSESSEE. THE DAIRIES ARE NOT ASSIGNED ANY EXCLUSIVE WORK RELATIN G TO QUALITY CHECK BUT ARE ASSIGNED WORK RELATING TO CONVERSION/PROCES SING OF MILK AND MILK PRODUCTS, WHEREIN ONE OF THE REQUIREMENTS IS T O ENSURE QUALITY PARAMETERS. THE MAIN AND BASIC NATURE OF TRANSACTIO N VIZ. CONVERSION/PROCESSING OF MILD ON JOB WORK BASIS DOE S NOT LOSE ITS TRUE CHARACTERISTIC. SIMILAR ISSUE WAS ARISEN FOR F INANCIAL YEAR 2014- 15. LD. CIT(A) HAD GIVEN RELIEF TO THE ASSESSEE BY THESE ISSUES AS FOLLOWS: CIT(A) HELD THAT IN VIEW OF THE FACTS AND NATURE O F TRANSACTION PAYMENT IS CONTRACTUAL IN NATURE AND APPELLANT IS J USTIFIED IN APPLYING PROVISIONS OF SECTION 194C OF THE I.T. ACT AND CANN OT BE CONSIDERED AS AN ASSESSEE IN DEFAULT. CIT(A) HELD THAT DAIRIES ARE NOT ASSIGNED ANY EXCLU SIVE WORK RELATING TO QUALITY CHECK BUT THEY ARE ASSIGNED WORK RELATIN G TO CONVERSION/PROCESSING OF MILK INTO PACKED MILK AND MILK PRODUCTS WHERE THEY ARE ALSO REQUIRED TO ENSURE CERTAIN QUAL ITY PARAMETERS AND THEREFORE THE MAIN AND BASIC NATURE OF TRANSACT ION VIZ. ITA NO.161/RJT/2017 & ITA NOS.449, 60 & 420/RJT2016 CO NOS.9&3/RJT/2017 AND CO NO.7/RJT/2016 M/S. MAAHI MILK PRODUCER CO. LTD. ASSESSMENT YEARS 2014-15, 2013-14 & 2015-16 - 7 - CONVERSION/PROCESSING OF MILK ON JOB WORK BASIS DOE S NOT LOSE ITS TRUE CHARACTERISTIC OF WORKS CONTRACT. IN SUPPORT OF ITS CONTENTION ASSESSEE FILED COPY OF THE ORDER OF THE LD. CIT(A). 9. IN SUPPORT OF ITS CONTENTION, LD. AR CITED A JUD GMENT OF MADRAS HIGH COURT IN CASE OF KUMUDAM PUBLICATIONS (P.) LTD . 55 TAXMAN 526 AND PUNE TRIBUNAL IN CASE OF BHARAT FORGE LTD. VS. ACIT 36 TAXMANN.COM 574 HELD THAT PAYMENT MADE FOR GETTING JOBS DONE LIKE TESTING, INSPECTION OF MATERIALS, ETC. WERE OF NATU RE OF MATERIAL & LABOUR CONTRACT LIABLE TO TDS U/S.194C. 10. RESPECTFULLY FOLLOWING THE ABOVE SAID JUDGMENTS , CIT(A) HAS ALREADY GIVEN THEM RELIEF IN F.Y. 2014-15 AND ON TH E PRINCIPLE OF CONSISTENCY, WE DISMISS THIS GROUND OF APPEAL OF TH E DEPARTMENT. 11. IN THE RESULT, APPEAL FILED BY THE DEPARTMENT I S DISMISSED. 12. NOW WE COME TO CROSS OBJECTION NO.9/RJT/2017 IN ITA NO.161/RJT/2017 FOR ASST. YEAR 2014-15. FOLLOWING G ROUNDS HAS TAKEN IN THIS CROSS OBJECTION: 1. THE CIT(A) ERRED UPHOLDING THE ORDER U/S. 201( 1) AND 201(1A) FOR SHORT DEDUCTION OF TAX WITHOUT APPRECIATING THA T SECTION 201(1) DOES NOT ENVISAGE SHORT DEDUCTION OF TAX ON ACCOUNT OF APPLICATION OF DIFFERENT SECTION AS A DEFAULT UNDER THAT SECTION. IT IS SUBMITTED IT BE SO HELD NOW. 2. THE CIT(A) ERRED IN NOT APPRECIATING THE FACT THAT PROVISO TO SECTION 201(1) R.W.S 191 DOES NOT CONSIDER AN ASSES SEE TO BE AN ASSESSEE IN DEFAULT WHEN THE PAYEE HAS PAID TAX DIR ECT ON INCOME SUBJECT TO DEDUCTION OF TAX AT SOURCE. IT IS SUBMITTED THAT IT BE SO HELD NOW. ITA NO.161/RJT/2017 & ITA NOS.449, 60 & 420/RJT2016 CO NOS.9&3/RJT/2017 AND CO NO.7/RJT/2016 M/S. MAAHI MILK PRODUCER CO. LTD. ASSESSMENT YEARS 2014-15, 2013-14 & 2015-16 - 8 - 13. SINCE WE HAVE ALREADY DISMISSED THIS GROUND IN CONNECTED APPEAL NO.161/RJT/2017. SO THIS CROSS OBJECTION IS DISMISSED AS INFRUCTUOUS. 14. NOW WE COME TO ITA NO.449/RJT/2016 FOR ASST. YE AR 2013-14. FOLLOWING GROUNDS HAS TAKEN IN THIS APPEAL: THE LD.CIT(A)-1, RAJKOT HAS ERRED IN LAW AND ON FA CTS OF THE CASE IN DELETING THE ADDITION ON ACCOUNT OF DISALLOWANCE OF RS.1,95,59,757/- MADE U/S.40(A)(IA) TREATING THE CONVERSION CHARGES U/S.194-C INSTEAD OF 194-J OF THE ACT. 15. WE HAVE ALREADY GIVEN RELIEF TO THE ASSESSEE AN D DISMISSED THE GROUND RAISED BY THE DEPARTMENT THAT ASSESSEE SHOUL D HAVE BEEN CHARGED U/S.194J OF THE I.T. ACT. IN ITA NO.161/RJT /2017, WE HAVE ALREADY GIVEN RELIEF TO THE ASSESSEE AND DECIDE THE MATTER AGAINST THE DEPARTMENT SO THIS APPEAL IS ALSO DISMISSED. 16. NOW WE COME TO CO NO.3/RJT/2017 IN ITA NO.449/R JT/2016 FOR ASST. YEAR 2013-14. FOLLOWING GROUND HAS TAKEN IN THIS CROSS OBJECTION: THE AO ERRONEOUSLY DISALLOWED PROPORTIONATE EXPENS ES OF RS.1,95,59,757/- U/S.40(A)(IA) EVEN THOUGH THE PROV ISIONS OF SECTION 40(A)(IA) DOES NOT PROVIDE SO. IT IS SUBMITTED IT B E SO HELD NOW. 17. IN ITA NO.161/RJT/2017, WE HAVE ALREADY DECIDED THIS GROUND IN FAVOUR OF THE ASSESSEE AND AGAINST THE DEPARTMEN T. THEREFORE, WE HOLD THAT AO SHOULD HAVE NOT DISALLOWED THE PROPORT IONATE EXPENSES OF RS.1,95,59,757/- U/S.40(A)(IA). THEREFORE, WE SE T ASIDE THIS MATTER TO THE FILE OF THE AO TO CALCULATE THE PROPORTIONAT E EXPENSES AND ITA NO.161/RJT/2017 & ITA NOS.449, 60 & 420/RJT2016 CO NOS.9&3/RJT/2017 AND CO NO.7/RJT/2016 M/S. MAAHI MILK PRODUCER CO. LTD. ASSESSMENT YEARS 2014-15, 2013-14 & 2015-16 - 9 - THEREAFTER GIVE EFFECT TO THE APPELLANT. IN THE RES ULT, THIS CROSS OBJECTION IS ALLOWED. 18. NOW WE COME TO ITA NO.60/RJT/2016 FOR ASST. YEA R 2015-16. IN THIS CASE, FOLLOWING GROUNDS HAS TAKEN: 1. THE LD. CIT(A) HAS ERRED IN LAW AS WELL AS FAC TS OF THE CASE IN HOLDING THAT THE ASSESSEE SHOULD NOT TO BE TREATED AS ASSESSEE IN DEFAULT FOR NON DEDUCTION OF TAX AT SOURCE UNDER SE CTION 194J ON THE GROUND OF OUT OF POCKET EXPENSES OF AUDITORS OF RS.2,48,069/-. 2. THE LD. CIT(A) HAS ERRED IN LAW AS WELL AS FACT S OF THE CASE IN HOLDING THAT TAX IS NOT REQUIRED TO BE DEDUCTED AT SOURCE U/S.194H OF THE I.T. ACT ON COMMISSION PAYMENTS MAD E TO SAHAYAK. 3. THE LD. CIT(A) HAS ERRED IN LAW AS WELL AS FACT S OF THE CASE IN HOLDING THAT THE ASSESSEE SHOULD NOT TO BE TREATED AS ASSESSEE IN DEFAULT FOR NON DEDUCTION OF TAX AT SOURCE UNDER SE CTION 194J OF THE I.T. ACT, ON SHORT DEDUCTION OF TAX ON PAYMENT OF CONVERSION CHARGES PAID TO DIARIES. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE A.O. PASSED U /S.201(1). 19. IN THIS CASE, ALL THESE COMMON GROUNDS HAVE DEC IDED IN FAVOUR OF THE ASSESSEE AND AGAINST THE DEPARTMENT. SO DECI SION OF ITA NO.161/RJT/2017 SHALL ALSO APPLY IN THIS APPEAL AS WELL. 20. IN THE RESULT, THIS APPEAL OF THE DEPARTMENT IS DISMISSED. 21. NOW WE COME TO CROSS OBJECTION NO.7/RJT/2016 IN ITA NO.60/RJT/2016 FOR ASST. YEAR 2015-16. FOLLOWING GR OUNDS HAVE TAKEN BY THE DEPARTMENT IN THE CROSS OBJECTION: ITA NO.161/RJT/2017 & ITA NOS.449, 60 & 420/RJT2016 CO NOS.9&3/RJT/2017 AND CO NO.7/RJT/2016 M/S. MAAHI MILK PRODUCER CO. LTD. ASSESSMENT YEARS 2014-15, 2013-14 & 2015-16 - 10 - 1. THE LD. CIT(A) ERRED UPHOLDING THE ORDER U/S.2 01(1) AND 201(1A) FOR SHORT DEDUCTION OF TAX WITHOUT APPRECIA TING THAT SECTION 201(1) DOES NOT ENVISAGE SHORT DEDUCTION OF TAX ON ACCOUNT OF APPLICATION OF DIFFERENT SECTION AS A DE FAULT UNDER THAT SECTION. IT IS SUBMITTED IT BE SO HELD NOW. 2. THE CIT(A) ERRED IN NOT APPRECIATING THE FACT TH AT PROVISO TO SECTION 201(1) R.W.S. 191 DOES NOT CONSIDER AN ASSE SSEE TO BE AN ASSESSEE IN DEFAULT WHEN THE PAYEE HAS PAID TAX DIR ECT ON INCOME SUBJECT TO DEDUCTION OF TAX AT SOURCE. IT IS SUBMITTED THAT IT BE SO HELD NOW. 22. SINCE WE HAVE ALREADY DISMISSED APPEAL OF THE D EPARTMENT AND WITH REGARD TO GROUND NO.1 WE HAVE ALREADY HOLD IN CONNECTED APPEAL THAT ASSESSEE HAS NOT SHORT DEDUCTED THE TAX HENCE, ASSESSEE IS NOT HIT BY SECTION 201(1). 23. WITH REGARD TO GROUND NO.2 OF THE CO, WE HOLD T HAT ASSESSEE HAS PAID TAX DIRECT ON INCOME SUBJECT TO DEDUCTION OF TAX AT SOURCE. 24. THEREFORE, WE ALLOW THIS CROSS OBJECTION OF THE ASSESSEE. 25. NOW WE COME TO ITA NO.420/RJT/2016 FOR ASST. YE AR 2013-14. ASSESSEE HAS MERELY TAKEN TWO GROUNDS IN THIS APPEA L: 1. THE LD. CIT(A) ERRED IN CONFIRMING THE ALLOWANCE O F ONE FIFTH OF RS.74,68,695/- MADE BY AO CONSIDERING THE SAME AS P RE-OPERATIVE EXPENSES. IT IS SUBMITTED IT BE SO HELD NOW. 2. THE CIT(A) ERRED IN NOT APPRECIATING THE FACT THAT THE ENTIRE EXPENSES WERE INCURRED AFTER THE BUSINESS WAS SET U P AND HENCE, SHOULD BE ALLOWED AS REVENUE EXPENDITURE. IT IS SUB MITTED THAT IT BE SO HELD NOW. 26. IN THIS CASE, ASSESSEE REQUESTED TO NOT PRESS T HESE TWO GROUNDS HENCE, THIS APPEAL IS DISMISSED AS WITHDRAWN. ITA NO.161/RJT/2017 & ITA NOS.449, 60 & 420/RJT2016 CO NOS.9&3/RJT/2017 AND CO NO.7/RJT/2016 M/S. MAAHI MILK PRODUCER CO. LTD. ASSESSMENT YEARS 2014-15, 2013-14 & 2015-16 - 11 - 27. IN THE RESULT, ITA NO.161/RJT/2017, ITA NOS.44 9 & 60/RJT/2016 ARE DISMISSED AND ITA NO.420/RJT/2016 D ISMISSED AS WITHDRAWN. CROSS OBJECTION NO.9/RJT/2017 IS ALLOWED AND CO NO.3/RJT/2017 AND CO NO.7/RJT/2016 ARE ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 23 /03 /2018 SD/- SD/- ( ) ($ ) ! % ! ( PRADIP KUMAR KEDIA ) ( MAHAVIR PRASAD ACCOUNTANT MEMBER JUDICIAL MEMBER DATED 23/03/2018 PRITI YADAV, SR. PS / COPY OF THE ORDER FORWARDED TO : 1. 23 / THE APPELLANT 2. 423 / THE RESPONDENT. 3. #5# + 6+ / CONCERNED CIT 4. 6+ () / THE CIT(A)-I, RAJKOT. 5. 78 9 %+%( , , /DR,ITAT, RAJKOT 6. 9 : ) / GUARD FILE. / BY ORDER, 4 7+ %+ //TRUE COPY// / ( DY./ASSTT.REGISTRAR) !', / ITAT, RAJKOT