SIKAR & JHUNJHNU ZILA DUGHDH UTPADAK SAHAKARI SANGH LTD., Jaipur V. ACIT, Jaipur

ITA 82/JPR/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 5376 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 1 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-03-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 23-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJ MEHRA
• Keywords: Recovery proceedings; Business income; Retrospective amendment
• Section: 133A; 194C; 201(1)

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH VKJ-IH-RKSYKUH] U;KF;D LNL; ,OA JH VH-VKJ-EHUK] YS[KK LNL; DS LE{K BEFORE: SHRI R.P. TOLANI, JM & SHRI T.R. MEENA, AM VK;DJ VIHY LA- @ ITA NOS. 82 TO 86/JP/2015 FU/KZKJ.K O'K Z @ ASSESSMENT YEARS : 2006-07 TO 2010-11 SIKAR & JHUNJHUNU ZILA DUGDH UTPADAK SAHAKARI SANGH LTD., N.H.-11, P.O.- PALSANA, SIKAR. CUKE VS. ASSISTANT COMMISSIONER OF INCOME TAX (TDS), JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ L A-@ PAN/GIR NO. TAN: JPRSO 5808 F VIHYKFKHZ @ APPELLANT IZR;FKHZ @ RESPONDENT VK;DJ VIHY LA- @ ITA NOS. 104 TO 108/JP/2015 FU/KZKJ.K O'K Z @ ASSESSMENT YEARS : 2006-07 TO 2010-11 ASSISTANT COMMISSIONER OF INCOME TAX (TDS), JAIPUR. CUKE VS. SIKAR & JHUNJHUNU ZILA DUGDH UTPADAK SAHAKARI SANGH LTD., N.H.-11, P.O.- PALSANA, SIKAR. LFKK;H YS[KK LA-@THVKBZVKJ L A-@ PAN/GIR NO. TAN: JPRSO 5808 F VIHYKFKHZ @ APPELLANT IZR;FKHZ @ RESPONDENT VK;DJ VIHY LA- @ ITA NO. 87/JP/2015 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2011-12 SIKAR & JHUNJHUNU ZILA DUGDH UTPADAK SAHAKARI SANGH LTD., N.H.-11, P.O.- PALSANA, SIKAR. CUKE VS. ASSISTANT COMMISSIONER OF INCOME TAX, SIKAR. LFKK;H YS[KK LA-@THVKBZVKJ L A-@ PAN/GIR NO. TAN: JPRSO 5808 F VIHYKFKHZ @ APPELLANT IZR;FKHZ @ RESPONDENT ITA 82 TO 87/JP/2015 & 104 TO 108/JP/2015 & 96/JP/2015 SIKAR & JHUNJHUNU ZILA DUGDH UTPADAK SAHKARI SAMITI VS ACIT (TDS) 2 VK;DJ VIHY LA- @ ITA NO. 96/JP/2015 FU/KZKJ.K O'K Z @ ASSESSMENT YEARS : 2011-12 ASSISTANT COMMISSIONER OF INCOME TAX, SIKAR. CUKE VS. SIKAR & JHUNJHUNU ZILA DUGDH UTPADAK SAHAKARI SANGH LTD., N.H.-11, P.O.- PALSANA, SIKAR. LFKK;H YS[KK LA-@THVKBZVKJ L A-@ PAN/GIR NO. TAN: JPRSO 5808 F VIHYKFKHZ @ APPELLANT IZR;FKHZ @ RESPONDENT FU/KZKFJRH DH VKSJ LS @ ASSESSEE BY : SHRI P.C. PARWAL (CA) JKTLO DH VKSJ LS @ REVENUE BY : SHRI RAJ MEHRA (JCIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 02/03/2016 MN~?KKSK.KK DH RKJH[ K @ DATE OF PRONOUNCEMENT : 04/03/2016 VKNS'K @ ORDER PER: BENCH ITA NOS. 82 TO 86/JP/2015 FILED BY THE ASSESSEE AN D ITA NO. 104 TO 108/JP/2015 FILED BY THE REVENUE ARISE AGAINST T HE ORDER DATED 24/11/2014 OF THE LD CIT(A)-III, JAIPUR FOR A.Y. 200 6-07 TO 2010-11. ITA NO. 87/JP/2015 FILED BY THE ASSESSEE AND CROSS APPEAL BEING ITA NO. 96/JP/2015 FILED BY THE REVENUE ARE AGAINST THE ORDER DATED 20/11/2014 PASSED BY THE LD CIT(A)-III, JAIPUR FOR A .Y. 2011-12. THE EFFECTIVE GROUNDS OF ALL THE APPEALS ARE AS UNDER:- GROUNDS OF ITA NO. 82/JP/2015 (A.Y. 2006-07) (ASSES SEES APPEAL) ITA 82 TO 87/JP/2015 & 104 TO 108/JP/2015 & 96/JP/2015 SIKAR & JHUNJHUNU ZILA DUGDH UTPADAK SAHKARI SAMITI VS ACIT (TDS) 3 1 THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED ON FACTS AND IN LAW IN CONFIRMING THE ACTION O F THE AO IN HOLDING THAT PAYMENT OF CESS MADE TO RCDF IS IN THE NATURE OF TECHNICAL AND PROFESSIONAL SERVICE AND THEREBY CONFIRMING THE LEVY OF INTEREST U/S 201(1A) AT RS. 10,268/-. HE HAS FURTHER ERRED I N CONFIRMING THE LEVY OF INTEREST U/S 201(1A) EVEN WHEN RCDF HAS PAID TAX MORE THAN THAT DUE AS PER RETURN AND THERE IS NO LOSS OF INTEREST TO THE REVENUE. 2. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED ON FACTS AND IN LAW IN CONFIRMING THE ACTION O F THE AO IN HOLDING THAT TAX IS TO BE DEDUCTED AT SOURCE IN RESPECT OF CONVERSION CHARGES AND AUDIT FEES AND THEREBY CONFIRMING THE LEVY OF INTEREST OF RS.656/- AND RS.228/- U/S 201(1A). HE HAS FURTHER ERRED IN CONFIRMING THE LEVY OF INTEREST U/S 201(1A ) EVEN WHEN THE RESPECTIVE PAYEES HAVE PAID TAX MORE THAN THAT DUE AS PER RETURN AND THERE IS NO LOSS OF INTEREST TO THE REVENUE. GROUNDS OF ITA NO. 83/JP/2015 (A.Y. 2007-08) (ASSES SEES APPEAL) 1. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED ON FACTS AND IN LAW IN CONFIRMING THE ACTION O F THE AO IN HOLDING THAT PAYMENT OF CESS MADE TO RCDF IS IN THE NATURE OF TECHNICAL AND PROFESSIONAL SERVICE AND THEREBY CONFIRMING THE LEVY OF INTEREST U/S 201(1A) AT RS. 11,240/-. HE HAS FURTHER ERRED I N CONFIRMING THE LEVY OF INTEREST U/S 201(1A) EVEN WHEN RCDF HAS PAID TAX MORE THAN THAT DUE AS PER RETURN AND THERE IS NO LOSS OF INTEREST TO THE REVENUE. ITA 82 TO 87/JP/2015 & 104 TO 108/JP/2015 & 96/JP/2015 SIKAR & JHUNJHUNU ZILA DUGDH UTPADAK SAHKARI SAMITI VS ACIT (TDS) 4 2. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED ON FACTS AND IN LAW IN CONFIRMING THE ACTION O F THE AO IN HOLDING THAT TAX IS TO BE DEDUCTED AT SOURCE IN RESPECT OF CONVERSION CHARGES, LEGAL FEES AND AUDIT FEES AND THEREBY CONFIRMING THE LEVY OF INTEREST OF RS. 9,358/-, RS.5,382/- AND RS.241/- U/ S 201(1A). HE HAS FURTHER ERRED IN CONFIRMING THE LEV Y OF INTEREST U/S 201(1A) EVEN WHEN THE RESPECTIVE PAYEES HAVE PAID TAX MORE THAN THAT DUE AS PER RETURN AND THERE IS NO LOSS OF INTEREST TO THE REVENUE. 3. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED ON FACTS AND IN LAW IN CONFIRMING THE ACTION O F THE AO IN HOLDING THAT TAX IS TO BE COLLECTED AT SOURCE IN RESPECT OF SALE OF SCRAP AND THEREBY CONFIRMING THE DEMAND OF TAX OF RS. 1,423/- U/S 206C(6A) AND INTEREST RS.854/- U/S 206C(7). HE HAS FURTHER ERRED IN CONFIRMING THE LEVY OF INTEREST U/ S 206C(7) EVEN WHEN THE PAYEE HAS PAID TAX MORE THAN THAT DUE AS PER RETURN AND THERE IS NO LOSS OF INTEREST TO THE REVENUE. GROUNDS OF ITA NO. 84/JP/2015 (A.Y. 2008-09) (ASSES SEES APPEAL) 1. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED ON FACTS AND IN LAW IN CONFIRMING THE ACTION O F THE AO IN HOLDING THAT PAYMENT OF CESS MADE TO RCDF IS IN THE NATURE OF TECHNICAL ARID PROFESSIONA L SERVICE AND THEREBY CONFIRMING THE LEVY OF INTEREST U/S 201(1 A) AT RS.23,329/-. HE HAS FURTHER ERRED I N CONFIRMING THE LEVY OF INTEREST U/S 201(1A) EVEN WHEN RCDF HAS PAID TAX MORE THAN THAT DUE AS PER ITA 82 TO 87/JP/2015 & 104 TO 108/JP/2015 & 96/JP/2015 SIKAR & JHUNJHUNU ZILA DUGDH UTPADAK SAHKARI SAMITI VS ACIT (TDS) 5 RETURN AND THERE IS NO LOSS OF INTEREST TO THE REVENUE. 2. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED ON FACTS AND IN LAW IN CONFIRMING THE ACTION O F THE AO IN HOLDING THAT TAX IS TO BE DEDUCTED AT SOURCE IN RESPECT OF CONVERSION CHARGES AND THEREBY CONFIRMING THE LEVY OF INTEREST OF RS.3,332/- U/S 201(1A). HE HAS FURTHER ERRED IN CONFIRMING THE LEV Y OF INTEREST U/S 201(1 A) EVEN WHEN THE PAYEE HAS PAID TAX MORE THAN THAT DUE AS PER RETURN AND THERE IS NO LOSS OF INTEREST TO THE REVENUE. 3. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED ON FACTS AND IN LAW IN CONFIRMING THE ACTION O F THE AO IN HOLDING THAT TAX IS TO BE COLLECTED AT SOURCE IN RESPECT OF SALE OF SCRAP AND THEREBY CONFIRMING THE DEMAND OF TAX OF RS. 1,048/- U/S 206C(6A) AND INTEREST RS.503/- U/S 206C(7). HE HAS FURTHER ERRED IN CONFIRMING THE LEVY OF INTEREST U/ S 206C(7) EVEN WHEN THE PAYEE HAS PAID TAX MORE THAN THAT DUE AS PER RETURN AND THERE IS NO LOSS OF INTEREST TO THE REVENUE. 4. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED ON FACTS AND IN LAW IN NOT GIVING ANY DECISION REGARDING THE ACTION OF THE AO IN HOLDING THAT PURCHASE OF PRINTED BANNERS AND IRON FRAME IS A CONTRACT FOR ADVERTISEMENT COVERED U/S 194C AND THEREBY LEVYING TAX OF RS. 503/- U/S 201(1 A) AND INTEREST OF RS.480 U/S 201(1A) ON ACCOUNT OF NON DEDUCTION OF TAX AT SOURCE ON SUCH PURCHASE. HE HAS FURTHER ERRED IN CONFIRMING THE LEVY OF INTEREST U/ S 201 (1A) EVEN WHEN THE PAYEE HAS PAID TAX MORE ITA 82 TO 87/JP/2015 & 104 TO 108/JP/2015 & 96/JP/2015 SIKAR & JHUNJHUNU ZILA DUGDH UTPADAK SAHKARI SAMITI VS ACIT (TDS) 6 THAN THAT DUE AS PER RETURN AND THERE IS NO LOSS OF INTEREST TO THE REVENUE. GROUNDS OF ITA NO. 85/JP/2015 (A.Y. 2009-10) (ASSES SEES APPEAL) 1. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED ON FACTS AND IN LAW IN CONFIRMING THE ACTION O F THE AO IN HOLDING THAT PAYMENT OF CESS MADE TO RCDF IS IN THE NATURE OF TECHNICAL AND PROFESSIONAL SERVICE AND THEREBY CONFIRMING THE LEVY OF INTEREST U/S 201(1A) AT RS.30,771/-. HE HAS FURTHER ERRED IN CONFIRMING THE LEVY OF INTEREST U/S 201(1 A) EVEN WHEN RCDF HAS PAID TAX MORE THAN THAT DUE AS PER RETURN AND THERE IS NO LOSS OF INTEREST TO THE REVENUE. 2. THE ID. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED ON FACTS AND IN LAW IN CONFIRMING THE ACTION O F THE AO IN HOLDING THAT TAX IS TO BE DEDUCTED AT SOURCE IN RESPECT OF CONVERSION CHARGES AND THEREBY CONFIRMING THE LEVY OF INTEREST OF RS. 4,240/- U/S 201(1A). HE HAS FURTHER ERRED IN CONFIRMING THE LEV Y OF INTEREST U/S 201(1A) EVEN WHEN THE PAYEE HAS PAID TAX MORE THAN THAT DUE AS PER RETURN AND THERE IS NO LOSS OF INTEREST TO THE REVENUE. 3. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED ON FACTS AND IN LAW IN CONFIRMING THE ACTION O F THE AO IN HOLDING THAT TAX IS TO BE COLLECTED AT SOURCE IN RESPECT OF SALE OF SCRAP AND THEREBY CONFIRMING THE DEMAND OF TAX OF RS.845/- U/S 206C(6A) AND INTEREST RS.304/- U/S 206C(7). HE HAS FURTHER ERRED IN CONFIRMING THE LEVY OF INTEREST U/ S 206C(7) EVEN WHEN THE PAYEE HAS PAID TAX MORE ITA 82 TO 87/JP/2015 & 104 TO 108/JP/2015 & 96/JP/2015 SIKAR & JHUNJHUNU ZILA DUGDH UTPADAK SAHKARI SAMITI VS ACIT (TDS) 7 THAN THAT DUE AS PER RETURN AND THERE IS NO LOSS OF INTEREST TO THE REVENUE. GROUNDS OF ITA NO. 86/JP/2015 (A.Y. 2010-11) (ASSES SEES APPEAL) 1. THE ID. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED ON FACTS AND IN LAW IN CONFIRMING THE ACTION O F THE AO IN HOLDING THAT TAX IS TO BE DEDUCTED AT SOURCE IN RESPECT OF CONVERSION CHARGES AND THEREBY CONFIRMING THE LEVY OF INTEREST OF RS.2,220/- U/S 201(1A). HE HAS FURTHER ERRED IN CONFIRMING THE LEV Y OF INTEREST U/S 201(1A) EVEN WHEN THE PAYEE HAS PAID TAX MORE THAN THAT DUE AS PER RETURN AND THERE IS NO LOSS OF INTEREST TO THE REVENUE. 2. THE ID. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED ON FACTS AND IN LAW IN CONFIRMING THE ACTION O F THE AO IN HOLDING THAT TAX IS TO BE COLLECTED AT SOURCE IN RESPECT OF SALE OF SCRAP AND THEREBY CONFIRMING THE DEMAND OF TAX OF RS.3,139/- U/S 206C(6A) AND INTEREST RS.752/- U/S 206C(7). HE HAS FURTHER ERRED IN CONFIRMING THE LEVY OF INTEREST U/ S 206C(7) EVEN WHEN THE PAYEE HAS PAID TAX MORE THAN THAT DUE AS PER RETURN AND THERE IS NO LOSS OF INTEREST TO THE REVENUE. GROUNDS OF ITA NO. 87/JP/2015 (A.Y. 2011-12) (ASSES SEES APPEAL) 1. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED ON FACTS AND IN LAW IN CONFIRMING THE ACTION O F AO IN HOLDING THAT PAYMENT OF MILK PURCHASE PRICE DIFFERENCE TO MILK SOCIETIES (DCS & PDCS) IS PAYMENT OF COMMISSION/BROKERAGE LIABLE FOR DEDUCTION OF TAX AT SOURCE U/S 194H WHICH THE ITA 82 TO 87/JP/2015 & 104 TO 108/JP/2015 & 96/JP/2015 SIKAR & JHUNJHUNU ZILA DUGDH UTPADAK SAHKARI SAMITI VS ACIT (TDS) 8 ASSESSEE HAS FAILED TO DECLARE AND THEREBY CONFIRMING THE DISALLOWANCE U/S 40(A)(IA)(THOUGH RESTRICTING IT TO THE AMOUNT OF RS.9,83,914/- WHICH REMAINED PAYABLE AT THE CLOSE OF THE YEAR). 2. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED ON FACTS AND IN LAW IN HOLDING THAT AMENDMENT TO SEC. 40(A)(IA) BY FINANCE ACT 2012,W.E.F. 1/04/2015 HAS NO RETROSPECTIVE EFFECT AND THEREBY NOT RESTRICTING THE DISALLOWANCE TO 30% OF THE AMOUNT COVERED U/S 40(A)(IA). COMMON GROUNDS OF ITA NO. 104 TO 108/JP/2015 (A.Y. 2006-07 TO 2010-11) (REVENUES APPEAL) 1. WHETHER ON FACTS AND IN LAW, LD. CIT(A) ERRED IN HOLDING THAT THE MARGIN OF DISTRIBUTION IN THE PAYMENTS MADE BY THE ASSESSEE TO ITS DISTRIBUTORS I S NOT COMMISSION LIABLE FOR DEDUCTION U/S 194H OF THE INCOME-TAX ACT, 1961? 2. WHETHER ON FACTS AND IN LAW, LD. CIT(A) ERRED IN HOLDING THAT THE ASSESSEE WAS NOT LIABLE TO PAY INTEREST U/S 201(1A) OF THE INCOME-TAX ACT, 1961 AS THERE WAS NO TAX LIABILITY ON THE INCOME OF THE DEDUCTEE ? GROUND OF ITA NO. 96/JP/2015 (A.Y. 2011-12) (REVENU ES APPEAL) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 1,22,38,131/- MADE BY THE A.O. ON ACCOUNT OF NON DEDUCTION OF TDS ON MILK PURCHASE PRICE DIFFERENCE U/S 40(A)(IA) OF THE I.T. ACT, WITHOUT CONSIDERING THE FINDINGS OF THE ASSESSING OFFICER I N THE ASSESSMENT ORDER. ITA 82 TO 87/JP/2015 & 104 TO 108/JP/2015 & 96/JP/2015 SIKAR & JHUNJHUNU ZILA DUGDH UTPADAK SAHKARI SAMITI VS ACIT (TDS) 9 2. FIRST GROUND OF ASSESSEES APPEAL IN A.YS. 2006- 07 TO 2010-11 IS AGAINST CONFIRMING THE ACTION OF THE ASSESSING OFFI CER IN HOLDING THAT PAYMENT OF CESS MADE TO RCDF IS IN THE NATURE OF TE CHNICAL AND PROFESSIONAL SERVICE AND LEVY OF INTEREST U/S 201(1 A) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) AT RS. 10,268/- IN A.Y . 2006-07, RS. 11,240/- IN A.Y. 2007-08, RS. 23,329/- IN A.Y. 2008 -09, RS. 30,771/- IN A.Y. 2009-10 AND RS. 2,220/- IN A.Y. 2010-11. THE AS SESSEE IS A COOPERATIVE SOCIETY, WHICH COLLECTS MILK FROM VILLAG E LEVEL PRIMARY SOCIETIES, WHICH IS ENGAGED IN THE PROCESSING OF MIL K AND MARKETING MILK AND MILK PRODUCTS TO THEIR MEMBER UNIONS. THERE WAS A SURVEY U/S 133A OF THE ACT ON 28/1/2010. DURING THE COURSE OF SURVEY, VARIOUS DISCREPANCIES WERE NOTICED BY THE ASSESSING OFFICER. ACCORDINGLY, PROCEEDING U/S 201(1) AND 201(1A) OF THE ACT WERE IN ITIATED. THE LD ASSESSING OFFICER GAVE REASONABLE OPPORTUNITY OF BE ING HEARD TO THE ASSESSEE DEDUCTOR ON MILK SOLD AND COMMISSION PAID, CESS PAID TO RCDF FOR F.Y. 2005-06 TO 2008-09 AND 2009-10, COMMI SSION TO MILK UDPADAK SAHAKARI SAMITI AND MILK COLLECTION CENTRES AND OTHER VARIOUS PAYMENTS MADE BY THE ASSESSEE. THE ASSESSEE REPLIED VIDE LETTER DATED 22/1/2011, WHICH HAS BEEN REPRODUCED BY THE A CIT(TDS) ON PAGE NO. 5 TO 27 OF THE ASSESSMENT ORDER. THE LD ASS ESSING OFFICER ITA 82 TO 87/JP/2015 & 104 TO 108/JP/2015 & 96/JP/2015 SIKAR & JHUNJHUNU ZILA DUGDH UTPADAK SAHKARI SAMITI VS ACIT (TDS) 10 OBSERVED THAT THE ASSESSEE MADE PAYMENT OF CESS TO RCDF U/S 194J FROM F.Y. 2005-06 TO 2009-10. THE ASSESSEE CLAIMED BEFORE THE ASSESSING OFFICER THAT IT IS REIMBURSEMENT OF EXPEN DITURE BUT THE ASSESSEE COULD NOT CLARIFY PARTICULARS OF EXPENDITU RE FOR WHICH REIMBURSEMENT HAD MADE BEFORE THE ASSESSING OFFICER . THE RCDF HAD PASSED EXPERTISE AND TECHNICAL KNOWLEDGE TO ITS MEMB ERS SOCIETY. THESE SERVICES MAKES THE MEMBER COOPERATIVE SOCIETY PROFITABLE AND VIABLE IN LIEU OF THESE SERVICES, THE MEMBER SOCIET Y PAID RCDF A CERTAIN AMOUNT OF MONEY, WHICH IS CLARIFIED ON THE BASIS OF A FIXED PERCENTAGE OF THE TOTAL SALES MADE BY EACH MEMBERS OF THE COOP ERATIVE SOCIETY. SUCH PAYMENT HAS BEEN SHOWN THE NOMENCLATURE CESS I N THE ABOVE BACKGROUND, HE FOUND THAT THESE PAYMENTS OF CESS WAS NOTHING BUT A DEMAND IN LIEU OF THE PROFESSIONAL/TECHNICAL SERVIC ES COVERED U/S 194J OF THE ACT, WHICH IS LIABLE TO DEDUCT TDS. ACCORDING LY, THE LD ASSESSING OFFICER HELD THAT THE ASSESSEE DEFAULTED U/S 201(1) IN RESPECT OF SUCH TAX WHICH OUGHT TO HAVE BEEN DEDUCTED THEREON AND IN TEREST U/S 201(1A) IS ALSO CHARGED. HOWEVER, AS THE PAYEES HAD PAID DUE TAX ON SUCH RECEIPTS/INCOME, THEREFORE, KEEPING IN VIEW TH E DECISION OF HONBLE APEX COURT IN THE CASE OF HINDUSTAN COCA CO LA BEVERAGES PVT. ITA 82 TO 87/JP/2015 & 104 TO 108/JP/2015 & 96/JP/2015 SIKAR & JHUNJHUNU ZILA DUGDH UTPADAK SAHKARI SAMITI VS ACIT (TDS) 11 LTD., NO DEMAND WAS RAISED U/S 201(1) OF THE ACT AND DEMAND WAS RAISED U/S 201(1A) OF THE ACT ON ACCOUNT OF INTERES T AS UNDER:- A.Y. INTEREST CREDITED DATE OF PAYMENT RATE OF TDS TDS DEDUCTIBLE TDS DEDUCTED DELAY (IN MONTH) DEMAND U/S 201(1) INTT. U/S 201(1A) TOTAL 2005-06 2933928 31.03.2006 5% 146696 NIL 7 NIL 10268 10268 2006-07 3746783 31.03.2007 5% 187339 NIL 6 NIL 11240 11240 2007-08 4251575 31.03.2008 5.1% & 10% 388811 NIL 6 NIL 23329 23329 2008-09 5128586 31.03.2009 10% 512859 NIL 6 NIL 30771 30771 TOTAL 75602 75602 3. THE ASSESSEE CHALLENGED THE INTEREST CHARGED U/S 201(1A) OF THE ACT FOR ALL THE YEARS BEFORE THE LD CIT(A), WHO HAD CONFIRMED THE ACTION OF THE ASSESSING OFFICER BY OBSERVING AS UNDER:- 4.3 I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF THE A PPELLANT AS ALSO THE FINDINGS OF THE A.O. IT MAY BE NOTED TH AT THE MAIN DISPUTE UNDER CONSIDERATION WAS WHETHER TDS WAS T O BE DEDUCTED OR NOT U/S 194J OF IT ACT ON ACCOUNT OF CESS PAYMENT TO M/S RCDF1BUT THE APPELLANT IN THE GROUND OF APPEAL HAS OBJECTED ONLY TO THE RAISING OF DEMAND O N ACCOUNT OF INTEREST U/S 201(1 A) OF IT ACT BECAUSE O F THE FACT THAT THE AO THOUGH HELD THE ASSESSEE TO BE ASS ESSEE IN DEFAULT FOR NON DEDUCTION OF TDS U/S 194J BUT DID NOT RAISE THE DEMAND U/S 201(1) OF IT ACT AS THE PAYEE H AS PAID DUE TAXES. HOWEVER THE ISSUE OF CHARGING OF IN TEREST U/S 201(1A) OF IT ACT IS CLOSELY RELATED WITH THE ISS UE OF APPLICABILITY OF PROVISIONS OF SEC. 194J OF IT ACT I N AS MUCH ITA 82 TO 87/JP/2015 & 104 TO 108/JP/2015 & 96/JP/2015 SIKAR & JHUNJHUNU ZILA DUGDH UTPADAK SAHKARI SAMITI VS ACIT (TDS) 12 AS IF THE ASSESSEE WAS LIABLE FOR DEDUCTION OF TDS U/ S 194J THEN INTEREST U/S 201(1 A) OF IT ACT WAS MANDATORILY REQUIRED TO BE CHARGED. THEREFORE FIRST ISSUE TO BE ADJUDICATED IS WHETHER PROVISIONS OF SEC. 194J OF IT ACT WERE APPLICABLE OF NOT. IT MAY BE NOTED THAT THE APP ELLANT HAS MADE PAYMENT TO M/S RCDF WHICH IS SHOWN AS CESS PAYMENT AND AS PER THE AO M/S RCDF IS A PROFESSION BODY HAVING EXPERTISE IN THE FIELD OF COOPERATIVES DAIRY INDUSTRIES AND THAT M/S RCDF PROVIDED EXPERT PROFES SIONAL GUIDANCE AND SERVICES TO THE ASSESSEE FOR WHICH SUCH PAYMENT OF CESS WAS MADE. ON THE OTHER HAND THE APPELLANT CASE IS THAT SUCH PAYMENT WAS BASICALLY ON ACCOUNT OF REIMBURSEMENT OF EXPENSES INCURRED BY M/ S RCDF ON BEHALF OF THE ASSESSEE. HOWEVER AS NOTED BY THE AO THERE IN NOTHING ON RECORD WHICH MAY INDICATE THA T ANY EXPENDITURE WAS INCURRED BY M/S RCDF ON BEHALF OF TH E ASSESSEE. THE FACTS AVAILABLE ON RECORD INDICATE TH AT THE APPELLANT HAS AVAILED TECHNICAL AND PROFESSIONAL SE RVICES / GUIDANCE FROM M/S RCDF AND THEREFORE THE PAYMENT MA DE TO THE M/S RCDF WAS IN THE NATURE OF FEE FOR TECHNIC AL / PROFESSIONAL SERVICES AND TDS U/S 194J OF IT ACT WAS T O BE DEDUCTED. IN THIS BACKGROUND THOUGH THE AO HAS NOT RAISED DEMAND U/S 201(1) OF IT ACT BECAUSE OF THE RE ASON THAT THE PAYEE HAS PAID DUE TAXES ON SUCH RECEIPTS / INCOME BUT INTEREST U/S 201(1A) OF IT ACT WAS TO BE ITA 82 TO 87/JP/2015 & 104 TO 108/JP/2015 & 96/JP/2015 SIKAR & JHUNJHUNU ZILA DUGDH UTPADAK SAHKARI SAMITI VS ACIT (TDS) 13 CHARGED / RECOVERED FROM THE ASSESSEE DEDUCTOR. THE ABOVE FINDING FINDS SUPPORT FROM THE FOLLOWING CASE LAWS: (I) CIT VS. ELI LILLY & COMPANY (I) PVT. LTD. (312ITR 225) (SC) (II) HINDUSTAN COCA COLA BEVERAGE LTD. VS. CIT, 293 ITR 163 (SC) (III) ITO, W-TDS-2, JAIPUR VS. M/S VODAFONE ESSAR DIGILINK LTD. (IV) ITA NO.239/JPR/2012, ITAS NO. 250 TO 252/JPR/2 012 (ITAT JAIPUR) KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES DISCUSS ED ABOVE AS ALSO PLACING RELIANCE ON THE CASE LAWS REFE RRED ABOVE THE ACTION OF THE AO IN CHARGING OF INTEREST U/S 201(1A) IS CONFIRMED. 4. NOW THE ASSESSEE IS APPEALS BEFORE US. THE LD AR O F THE ASSESSEE HAS SUBMITTED THAT THE ISSUE OF CHARGING I NTEREST U/S 201(1A) ARISES ONLY IF THE ASSESSEE IS LIABLE FOR DEDUCTION U/S 194J OF THE ACT BUT THE CESS PAID TO THE RCDF. THIS ISSUE IS COVERED BY THE DECISION OF THE HONBLE ITAT, JAIPUR BENCH DATED 21/07/2015 PAS SED IN ASSESSEES OWN CASE IN ITA NO. 277 & 382/JP/2013 FOR A.Y. 2008- 09. HE PARTICULARLY REFERRED PAGE NO. 9 AND 10 OF THE COOR DINATE BENCH DECISION WHEREIN IT HAS BEEN HELD AS UNDER:- APROPOS THE PAYMENT TO RCDF CESS, IT HAS NOT BEEN DEMONSTRATED BY THE DEPARTMENT THAT ANY MANAGERIAL ITA 82 TO 87/JP/2015 & 104 TO 108/JP/2015 & 96/JP/2015 SIKAR & JHUNJHUNU ZILA DUGDH UTPADAK SAHKARI SAMITI VS ACIT (TDS) 14 SERVICES IN THIS CONNECTION HAVE BEEN RENDERED TO ASSESSEE BY RCDF QUA THIS AMOUNT. RCDF IS AN APEX COOPERATIVE BODY AND CESS IS PAID TO IT BY VIRTUE O F FEDERAL STRUCTURE IN RAJASTHAN COOPERATIVE SET UP. THUS AS F AR AS ASSESSEE'S BUSINESS IS CONCERNED, THERE IS NO RENDE RING OF ANY MANAGERIAL SERVICES BY RCDF AS ALLEGED BY THE A O U/S 194H AND UPHELD ID. C1T(A) U/S 194J. SINCE THERE IS NO RENDERING OF ANY SERVICES AND THE PAYMENT IS NOT MA DE FOR ANY MANAGERIAL SERVICES TO RCDF, THEREFORE, PAYMENT CAN NEITHER BE HELD AS LIABLE FOR TDS U/S 194H OF THE A CT AS COMMISSION/ BROKERAGE AS HELD BY THE AO NOR U/S 194 JFOR RENDERING ANY MANAGERIAL SERVICES AS HELD BY THE ID . CIT(A). IN VIEW THEREOF, WE HOLD THAT ASSESSEES IMPUG NED PAYMENTS TO RCDF ARE NOT LIABLE FOR TDS. 5. AT THE OUTSET, THE LD DR HAS FAIRLY ACCEPTED THE ASSESSEES ARGUMENT THAT THIS ISSUE IS COVERED BY THE HONBLE ITATS ORDER CITED BY THE LD AR. 6. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. THE FA CTS AND NATURE OF PAYMENT ARE IDENTICAL TO A.Y. 2008-09 AND THE COORD INATE BENCH HAD DECIDED THAT THE PAYMENTS WERE NOT MADE FOR ANY MANA GERIAL SERVICE TO RCDF. THEREFORE, PAYMENT CANNOT BE HELD THE LOWER AUTHORITIES. BY ITA 82 TO 87/JP/2015 & 104 TO 108/JP/2015 & 96/JP/2015 SIKAR & JHUNJHUNU ZILA DUGDH UTPADAK SAHKARI SAMITI VS ACIT (TDS) 15 RESPECTFULLY FOLLOWING THE DECISION OF THE COORDINAT E BENCH IN ASSESSEES OWN CASE FOR A.Y. 2008-09, WE ALLOW THE ASS ESSEES APPEAL ON THIS GROUND IN ALL THE YEARS. 7. THE 2 ND GROUND OF ASSESSEES APPEALS IS AGAINST CONFIRMING THE CONVERSION CHARGES AND AUDIT FEES LIABLE TO BE DEDU CTED TDS AND CHARGING INTEREST U/S 201(1A) IN A.Y. 2006-07 AT RS . 656 AND RS. 228, IN A.Y. 2007-08 AT RS. 9,358/-, RS. 5,382/- AND RS. 241/-, IN A.Y. 2008- 09 RS. 3,332/-, IN A.Y. 2009-10 RS. 4,240/- AND IN A.Y. 2010-11 RS. 2,220/-. THE LD ASSESSING OFFICER OBSERVED THAT ON PAYMENT ON ACCOUNT OF CONVERSION CHARGES, LEGAL FEES ARE LIABLE TO BE DEDUCTED TDS U/S 194C AND 194J OF THE ACT RESPECTIVELY. THE CONVERSI ON CHARGES PAID BY THE ASSESSEE ON WHICH TDS IS LIABLE TO BE DEDUCTED A ND INTEREST U/S 201(1A) IS CALCULATED AS UNDER:- A.Y. NAME OF THE RECIPIENT SECTION/ RATES AMOUNT (RS.) DEMAND OF TAX U/S 201(1) DEMAND OF INTEREST U/S 201(1A)/ 206C(7) TOTAL DEMAND 2006 - 07 ALWAR DAIRY & JAIPUR DAIRY 194C/2% 2887 17 - 656 656 2007 - 08 ALWAR DAIRY & JAIPUR DAIRY 194C/2% 4059900 - 9358 9358 2008 - 09 ALWAR DAIRY & JAIPUR DAIRY 194C/2% 1466405 - 3332 3332 2009 - 10 ALWAR DAIRY & JAIPUR DAIRY 194C/2% 2019140 - 4240 4240 2010 - 11 ALWAR DAIRY & JAIPUR DAIRY 194C/2% 1057356 - 2220 2220 ITA 82 TO 87/JP/2015 & 104 TO 108/JP/2015 & 96/JP/2015 SIKAR & JHUNJHUNU ZILA DUGDH UTPADAK SAHKARI SAMITI VS ACIT (TDS) 16 THE AUDIT FEES AND REIMBURSEMENT EXPENSES ARE LIABLE TO BE DEDUCTED TDS AS PER ASSESSING OFFICER AS UNDER:- A.Y. AMOUNT 201(1A) AUDIT FEES REIMBURSEMENT OF EXPENSES 2006 - 07 27600 8988 228 2007 - 08 27600 20202 241 8. BEING AGGRIEVED BY THE ORDER OF THE ASSESSING OF FICER, THE ASSESSEE CARRIED THE MATTER BEFORE THE LD CIT(A), WH O HAD CONFIRMED THE ADDITION BY OBSERVING THAT THE APPELLANT MADE P AYMENT TO ALWAR DAIRY AND JAIPUR DAIRY FOR CONVERSION OF MILK INTO GHEE FOR MILK POWDER. THE APPELLANTS CASE IS THAT SUCH PAYMENTS WERE MADE TO THESE MILK DAIRIES ON COST TO COST BASIS WITHOUT ADDING ANY PRO FIT MARGIN AND THAT TDS U/S 194C WAS NOT TO BE DEDUCTED. ON THE OTHER HAN D, THE ASSESSING OFFICERS CASE IS THAT SUCH PAYMENTS WERE OF CONTRACTUAL NATURE FOR GETTING SPECIFIC WORK DONE AND THAT EVEN IF NO PROFIT IS GIVEN. THE TDS WAS TO BE DEDUCTED, THE LD CIT(A) HAS HELD THA T THE ASSESSEE HAD CONDUCTED SOME SPECIFIC WORK OF CONVERSION OF MI LK INTO GHEE AND MILK POWDER AS PER HIS OWN SPECIFICATION. IT IS ALSO A FACT THAT THE MILK WAS PROVIDED BY THE ASSESSEE, THEREFORE, HE HELD THE SE PAYMENTS AS CONTRACTUAL IN NATURE AND ALSO IS LIABLE FOR TDS. ITA 82 TO 87/JP/2015 & 104 TO 108/JP/2015 & 96/JP/2015 SIKAR & JHUNJHUNU ZILA DUGDH UTPADAK SAHKARI SAMITI VS ACIT (TDS) 17 8.1 FOR LEGAL FEES, IT HAS BEEN HELD THAT THE ASSES SEE IS LIABLE TO DEDUCT TDS IN A.Y. 2006-07 AND 2007-08 AS AUDIT FEES WAS PAID @ RS. 2300 PER MONTH AS CLAIMED BY THE ASSESSEE. HOWEVER, THESE FACTS HAD NOT BEEN PROVED BY THE ASSESSEE BEFORE BOTH THE AUT HORITIES. THEREFORE, HE CONFIRMED THE INTEREST ON NON DEDUCTIO N OF TDS U/S 194J ON AUDIT FEES BY RAISING THE DEMAND U/S 201(1A) OF THE ACT. 9. NOW THE ASSESSEE IS APPEALS BEFORE US. THE LD AR O F THE ASSESSEE HAS SUBMITTED THAT THE PAYMENT OF CONVERSI ON CHARGES IS MADE TO ALWAR DAIRY AND JAIPUR DAIRY FOR CONVERSION OF MILK INTO GHEE AND MILK POWDER. MILK IS PROCURED FROM PRIMARY SOCIE TIES AND PROCESSED BY DISTRICT LEVEL SOCIETIES. TO MAKE AVAIL ABLE THE MILK AT ALL PLACES, SURPLUS MILK FROM ONE UNION TO ANOTHER TRAN SFERRED OR SOME TIME MILK IS PROCESSED TO MAKE THE MILK POWDER OR GH EE. ALL THESE TRANSFER ACTIVITIES FROM ONE UNION TO ANOTHER IS DO NE ON COST TO COST BASIS WITHOUT ADDING ANY PROFIT MARGIN OR RATHER THE ACTUAL COST INCURRED BY OTHER MILK UNION IS JUST REIMBURSED WITH OUT GIVING ANY PROFIT. THE ASSESSEE HAS REIMBURSED ONLY ACTUAL COST INCURRED BY THESE MILK UNIONS. THUS WHEN NO INCOME IS PAID BY ASSESSEE TO OTHER MILK UNION, THE QUESTION OF DEDUCTION OF TAX AT SOURCE D OES NOT OTHERWISE ITA 82 TO 87/JP/2015 & 104 TO 108/JP/2015 & 96/JP/2015 SIKAR & JHUNJHUNU ZILA DUGDH UTPADAK SAHKARI SAMITI VS ACIT (TDS) 18 ARISE. ON ACTUAL REIMBURSEMENT, PROVISION OF DEDUCT ION OF TAX AT SOURCE WOULD NOT APPLY AS HELD IN CASE OF ITO VS. DR. WILLMA R SCHWABE INDIA (P) LTD. 95 TTJ 53 (DEL.). THE LOWER AUTHORITIES HAVE NOT APPRECIATED THE ABOVE FACTS AND HELD THAT SUCH TRANSACTIONS ARE COVERED U/S 194C IN AS MUCH AS PAYMENTS ARE OF CONTRACTUAL NATURE AN D THE FACT THAT NO PROFIT WAS GIVEN TO PARTY WHOM PAYMENT IS MADE WILL M AKE ANY MATERIAL DIFFERENCE. HOWEVER, IT IS IGNORED THAT WHEN THERE IS NO INCOME GIVEN, IT IS A CASE OF SIMPLE REIMBURSEMENT OF EXPENSES ON WHICH PROVISION OF CHAPTER XVII-B IS NOT APPLICABLE. HENCE, IS NOT LIABLE FOR DEDUCTION OF TAX AT SOURCE ON CONVERSION CHARGE S. 9.1 HE FURTHER SUBMITTED THAT AN AUDIT FEE IS PAID TO G.M. GUPTA & CO. FOR MONTHLY INTERNAL AUDIT. PAYMENT MADE TO IT IS @ RS.2,300/- P.M. SINCE THE MONTHLY PAYMENT IS BELOW RS.20,000/-, NO TAX IS DEDUCTABLE AT SOURCE. THE LD CIT(A) HAS NOT ACCEPTED THIS CONTENTION OF THE ASSESSEE FOR THE REASON THAT ASSESSEE HAS NO T FURNISHED THAT AUDIT FEES IS PAID ON MONTHLY BASIS. IN DOING SO HE IGNORED THAT AO HIMSELF HAS GIVEN THE DETAILS OF MONTHLY PAYMENT WHI CH IS AT PG 41 OF THE CIT(A) ORDER. THUS, WHEN NO TAX IS LIABLE TO BE DEDUCTED ON PAYMENT OF AUDIT FEES, QUESTION OF LEVY OF INTEREST DOES NOT ARISE. HE ITA 82 TO 87/JP/2015 & 104 TO 108/JP/2015 & 96/JP/2015 SIKAR & JHUNJHUNU ZILA DUGDH UTPADAK SAHKARI SAMITI VS ACIT (TDS) 19 HAS FURTHER SUBMITTED THAT THE CIT(A) HAS DIRECTED THE AO TO VERIFY WHETHER SHRI BHARAT VYAS, ADVOCATE TO WHOM PAYMENT IS MADE HAS PAID DUE TAXES ON SUCH AMOUNT. IF HE HAS PAID THAT TAX, DEMAND U/S 201(1) BE REDUCED BUT INTEREST U/S 201(1A) BE CHARG ED. IT IS SUBMITTED THAT WHEN THE RECIPIENT HAS PAID THE TAX ON THE LEGA L FEES PAID TO HIM AND THERE IS NO LOSS OF REVENUE TO THE DEPARTMENT, NO INTEREST U/S 201(1 A) BE LEVIED. IN VIEW OF ABOVE, THE INTEREST L EVIED U/S 201(1 A) IS UNCALLED FOR AND BE DELETED. 10. AT THE OUTSET, THE LD DR HAS VEHEMENTLY SUPPORT ED THE ORDER OF THE LD CIT(A). 11. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. THE CO NVERSION CHARGES WERE PAID ON COST TO COST BASIS AND NO PROFIT HAS BE EN CHARGED AS CLAIMED BY THE ASSESSEE. WHEN THERE IS NO ELEMENT O F PROFIT, THE TDS PROVISIONS ARE NOT APPLICABLE. THE CASE LAW REFERRED BY THE ASSESSEE I.E. ITO VS. DR. WILLMAR SCHWABE INDIA (P) LTD. (SUPR A) IS SQUARELY APPLICABLE. THEREFORE, WE DELETE THE ADDITION CONFIRM ED BY THE LD CIT(A) UNDER THE HEAD CONVERSION CHARGES. AUDIT FEES IS ALSO PAID ON MONTHLY BASIS TO G.M. GUPTA & COMPANY, WHICH IS ALSO BELOW RS. ITA 82 TO 87/JP/2015 & 104 TO 108/JP/2015 & 96/JP/2015 SIKAR & JHUNJHUNU ZILA DUGDH UTPADAK SAHKARI SAMITI VS ACIT (TDS) 20 20,000/- AS WELL AS ALSO BELOW THE SPECIFIED LIMIT AS PER THE TDS PROVISIONS, THEREFORE, THE SAME IS NOT LIABLE TO BE DEDUCTED TDS. INTEREST ON TDS DEDUCTIBLE ON LEGAL FEES PAID TO SH RI BHARAT VYAS HAS BEEN SET ASIDE BY THE LD CIT(A) FOR VERIFICATION, I F THE RECIPIENT HAS PAID ADVANCE TAX AND FULFILL THE CONDITION OF HON'BLE SU PREME COURT DECISION OF HINDUSTAN COCA COLA BEVERAGES PVT. LTD. THEN NO INTEREST IS TO BE CHARGED FROM THE ASSESSEE U/S 201(1A) AS THE ASSESS EE CLAIMED THAT ON LEGAL FEES SHRI BHARAT VYAS, ADVOCATE HAD PAID T AX ALREADY BY DISCLOSING THIS INCOME BEING NOMINAL AMOUNT OF INTE REST, THEREFORE, WE DELETE THE ADDITION CONFIRMED BY THE LD CIT(A). 12. GROUND NO. 3 OF THE ASSESSEES APPEAL IN A.Y. 2 007-08 IS AGAINST CONFIRMING THE DEMAND OF RS. 1423/- U/S 206C(6A) NO T DEDUCTING TCS AND LEVY OF INTEREST U/S 206C(7) OF THE ACT OF RS. 854 IN A.Y. 2007-08, RS. 503 IN A.Y. 2008-09, RS. 304/- IN A.Y. 2009-10 AND RS. 752/- IN A.Y. 2010-11. THE LD ASSESSING OFFICER HAS OBSERVED AS UNDER:- F.Y. SALES AMOUNT TCS DELAY (IN MONTH) DEMAND U/S 206C INTEREST 206C TOTAL 2006 - 07 142252 1423 60 1423 854 2277 2007 - 08 104826 1048 48 1048 503 1551 2008 - 09 84540 845 36 845 304 1149 2009 - 10 313883 3139 24 3139 753 3892 ITA 82 TO 87/JP/2015 & 104 TO 108/JP/2015 & 96/JP/2015 SIKAR & JHUNJHUNU ZILA DUGDH UTPADAK SAHKARI SAMITI VS ACIT (TDS) 21 THE LD ASSESSING OFFICER FURTHER OBSERVED THAT THE A SSESSEE SOLD SCRAP DURING THE YEAR UNDER CONSIDERATION, WHICH IS LIABLE FOR TCS U/S 206C OF THE ACT. THE ASSESSEE SUBMITTED THAT THE SCRAP MA TERIAL LIKE TIN, POLYTHIN, IRON SCRAP, PLASTIC DRUM ETC. WERE SOLD AN D THAT THESE SCRAP MATERIAL WERE NOT GENERATED DURING THE MANUFACTURING OR MECHANICAL PROCESS AND THEREFORE WERE NOT COVERED UNDER THE DEF INITION OF SCRAP U/S 206C OF THE ACT. THE ASSESSEE, ALTERNATIVELY, CL AIMED THAT THE PURCHASER HAD ALREADY PAID DUE TAX ON SUCH TRANSACT ION, THEREFORE, THERE IS NO DEFAULT U/S 206C OF THE ACT WHEREAS THE ASSESSING OFFICER HELD THAT THE ASSESSEE SOLD SCRAP AND IS COVERED U/ S 206 OF THE ACT. 13. BEING AGGRIEVED BY THE ORDER OF THE ASSESSING O FFICER, THE ASSESSEE CARRIED THE MATTER BEFORE THE LD CIT(A), WHO HAD DISMISSED THE GROUND OF APPEAL BY OBSERVING AS UNDER:- THE ASSESSEE HAS SOLD SOME SCRAPS ITEMS AND AS PER A.O. TCS WAS TO BE MADE U/S 206C OF IT ACT. ON THE OTHER HA ND THE APPELLANT CASE IS THAT PROVISIONS OF SEC. 206C WILL BE APPLICABLE ONLY IN RESPECT OF THAT SCRAPS WHICH IS O RIGINATED FROM MANUFACTURING OR MECHANICAL WORKING. ON CAREFU L CONSIDERATION OF RELEVANT FACTS STATED ABOVE, IT MA Y BE MENTIONED THAT THERE IS NO DISTINCTION IN THE DEFIN ITION OF SCRAP WHICH MAY INDICATE THAT THE SCRAP ORIGINATED FROM TH E ITA 82 TO 87/JP/2015 & 104 TO 108/JP/2015 & 96/JP/2015 SIKAR & JHUNJHUNU ZILA DUGDH UTPADAK SAHKARI SAMITI VS ACIT (TDS) 22 MANUFACTURING PROCESS WAS ONLY TO BE CONSIDERED FOR COLLECTION OF TCS. IN FACT THIS ISSUE HAS ALREADY BEEN CLARIFIE D BY THE CBDT VIDE CIRCULAR NO. F. NO. 275/86/2011-IT(B) DATE D 18/05/2012. KEEPING IN VIEW THE CLARIFICATION ISSUED BY THE CBDT, ON SALE OF SCRAP TCS WAS TO BE COLLECTED. IN VIE W OF THESE FACTS THE ACTION OF THE ASSESSING OFFICER IS CONFIRMED. 14. NOW THE ASSESSEE IS APPEALS BEFORE US. THE LD AR OF THE ASSESSEE HAS SUBMITTED THAT THE ASSESSEE SOLD SCRAP MATERIAL LIKE, TIN, POLYTHENE, IRON SCRAP, PLASTIC DRUM, ETC. THE LD ASS ESSING OFFICER HELD THAT SCRAP MATERIALS ARE PART OF MANUFACTURING PROC ESS AND WOULD CONSTITUTE SCRAP AS DEFINED U/S 206C OF THE ACT. AC CORDINGLY, HE TREATED THE ASSESSEE AS ASSESSEE IN DEFAULT U/S 206C(6A) AN D RAISED A DEMAND U/S 206C(6A) AND U/S 206C(7). CIT(A) CONFIRMED THE A CTION OF AO BY RELYING ON CBDT CIRCULAR DATED 18.05.2012. IT IS SUB MITTED THAT PROVISION OF SECTION 206C IS APPLICABLE IN RESPECT OF SALE OF SCRAP. THE WORD SCRAP HAS BEEN DEFINED IN EXPLANATION TO SECT ION 206C AS UNDER: SCRAP MEANS WASTE AND SCRAP FROM THE MANUFACTURE OR MECHANICAL WORKING OF MATERIALS WHICH IS DEFINITELY N OT USABLE AS SUCH BECAUSE OF BREAKAGE, CUTTING UP, WEAR AND OTHER REASONS. THE ITEM LIKE TIN, IRON SCRAP, PLASTIC DRUM, IRON SC RAP SOLD BY ASSESSEE ARE NOT GENERATED DURING THE MANUFACTURING OR MECHA NICAL WORKING OF ITA 82 TO 87/JP/2015 & 104 TO 108/JP/2015 & 96/JP/2015 SIKAR & JHUNJHUNU ZILA DUGDH UTPADAK SAHKARI SAMITI VS ACIT (TDS) 23 MATERIAL. THE ASSESSEE IS PROCESSING MILK AND SELLIN G THE SAME TO CUSTOMERS IN SARAS BRAND. NONE OF THESE SCRAP ARE GENERATED DURING THE MANUFACTURING OR MECHANICAL PROCESS OF MATERIAL . HENCE PROVISION OF SECTION 206C IS NOT APPLICABLE IN THE PRESENT CA SE. THE CBDT CIRCULAR ONLY CLARIFIES THAT EVEN TRADER OF SCRAP A RE LIABLE FOR TCS. THEREFORE, THIS CIRCULAR IS NOT APPLICABLE. IN VIEW O F ABOVE, THE DEMAND U/S 206C(6A)& U/S 206C(7) IS UNCALLED FOR AND BE DE LETED. 15. AT THE OUTSET, THE LD DR HAS VEHEMENTLY SUPPORT ED THE ORDER OF THE LD CIT(A). 16. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. AS PE R SECTION 206C(11)(B) OF THE ACT, THE SCRAP HAS BEEN DEFINED AS UNDER:- SCRAP MEANS WASTE AND SCRAP FROM THE MANUFACTURE O R MECHANICAL WORKING OF MATERIALS WHICH IS DEFINITELY NOT USABLE AS SUCH BECAUSE OF BREAKAGE, CUTTING UP, WEAR AND O THER REASONS. AS PER THIS DEFINITION, THE ITEM SOLD BY THE ASSESS EE IN SCRAP I.E. TIN, IRON SCRAP, PLASTIC DRUM ETC. IS NOT SCRAP GENERATE D FROM MANUFACTURING PROCESS. THEREFORE, IT IS NOT LIABLE TO BE DEDUCTED TCS U/S 206C OF THE ACT. ACCORDINGLY, ON THIS GROUND, THE ASSESSEES AP PEAL IS ALLOWED. ITA 82 TO 87/JP/2015 & 104 TO 108/JP/2015 & 96/JP/2015 SIKAR & JHUNJHUNU ZILA DUGDH UTPADAK SAHKARI SAMITI VS ACIT (TDS) 24 17. GROUND NO. 4 OF THE ASSESSEES APPEAL FOR A.Y. 2008-09 IS AGAINST INTEREST ON TDS U/S 194C OF THE ACT, ADVERT ISEMENT EXPENSES AT RS. 503 IN A.Y. 2008-09. THE LD ASSESSING OFFICE R OBSERVED THAT THE ASSESSEE PURCHASED PRINTED BANNER AND IRON FRAME IS A CONTRACT FOR ADVERTISEMENT IS COVERED U/S 194C OF THE ACT FOR WHI CH THE ASSESSEE HAS MADE PAYMENT TO M/S BANSAL PRINTERS AT RS. 66,3 12/- AND MAHALAXMI WELDING AT RS. 24,410/-. THE ASSESSEE SUBM ITTED THAT THE ASSESSEE HAD PAID VAT ON PRINTED BANNER PURCHASED FR OM M/S BANSAL PRINTERS AND MAHALAXMI WELDING, THEREFORE, SECTION 194C IS NOT APPLICABLE. THE LD CIT(A) HAS NOT GIVEN ANY FINDINGS ON IT, THEREFORE, HE PRAYED TO DELETE THE INTEREST CHARGED AT RS. 503/-. AFTER CONSIDERING THE FINDING OF BOTH THE LOWER AUTHORITIES, WE DO NOT FIND ANY MERIT IN THE CASE OF REVENUE THAT SUCH PAYMENTS ARE COVERED U/S 194C. BEING A NOMINAL AMOUNT AND FINDING GIVEN BY THE LOWER AUTHOR ITIES, WE DELETE THE ADDITION CONFIRMED BY THE LD CIT(A). 18. NOW WE TAKE REVENUES APPEALS. REGARDING REVENUE S APPEAL FROM A.Y. 2006-07 TO 2010-11, THE LD ASSESSING OFFI CER OBSERVED THAT THE ASSESSEE BEING IN THE DAIRY MARKETING THROUGH D IARY COOPERATIVE SOCIETIES, IT FIXES MRP PRICE OF MILK AND THE AMOUN T ON WHICH MILK WAS ITA 82 TO 87/JP/2015 & 104 TO 108/JP/2015 & 96/JP/2015 SIKAR & JHUNJHUNU ZILA DUGDH UTPADAK SAHKARI SAMITI VS ACIT (TDS) 25 SOLD TO THE CONSUMERS AND NOTED THAT THE MARGIN AMO UNT FIXED FOR EACH OF DISTRIBUTOR. ACCORDINGLY, THE LD ASSESSING OFFICER WAS OF THE OPINION THAT THE MARGIN AMOUNT RETAINED BY THE DIST RIBUTOR/AGENT WAS IN FACT COMMISSION PAYMENT ON WHICH TDS WAS DEDUCTIBLE U/S 194H OF THE ACT. AS PER ASSESSING OFFICER, SUCH TRANSACTION S WERE IN THE NATURE OF PRINCIPAL TO AGENT. THEREFORE, PROVISIONS OF SECT ION 194H WAS APPLICABLE. THE ASSESSEE SUBMITTED BEFORE THE ASSESS ING OFFICER THAT SECTION 194H IS APPLICABLE WHERE BROKERAGE OR COMMIS SION WAS PAID TO THE DISTRIBUTOR. THE ASSESSEE ENTERED INTO AN AGREEM ENT BETWEEN VARIOUS DISTRIBUTORS ON PRINCIPAL TO PRINCIPAL BASI S AND THAT THE TRANSACTION WITH THE DISTRIBUTOR WAS FOR PURCHASE AND SALE OF GOODS FOR A PRICE PAID OR PROMISED TO BE PAID. AS PER AGREEME NT, THE RISK AND REWARD RELATING TO MILK AND OTHER PRODUCT WERE TRANSF ERRED TO THE DISTRIBUTOR AND THE ASSESSEE WAS NOT RESPONSIBLE FOR LOSSES RELATING TO TRANSIT LOSS, PILFERAGE, WEIGHT AND LOSS ETC. THE ASS ESSEE RELIED UPON VARIOUS CASES BEFORE THE ASSESSING OFFICER. HE ALSO ALTERNATIVELY STATED BEFORE THE ASSESSING OFFICER THAT THE TDS IS A TRANS IABLE TAX AND IT IS A MODE OF COLLECTION AND RECOVERY OF TAX AND THE TAX DEDUCTED AT SOURCE BY PAYER IS TO BE ALLOWED CREDIT IN THE HANDS OF PAY EE. THE PAYEE ALREADY PAID TAX DUE ON THE DEMAND RECEIVED FROM TH E ASSESSEE ITA 82 TO 87/JP/2015 & 104 TO 108/JP/2015 & 96/JP/2015 SIKAR & JHUNJHUNU ZILA DUGDH UTPADAK SAHKARI SAMITI VS ACIT (TDS) 26 FURTHER RECOVERY CANNOT BE MADE FROM THE ASSESSEE. THE PAYEE HAD PAID MORE TAX THAN THE DUE AND CLAIMED REFUND ALSO. HE RELIED ON THE DECISION IN THE CASE OF HINDUSTAN COCA COLA BEVERAG ES PVT. LTD. VS. CIT (SUPRA). HOWEVER, THE LD ASSESSING OFFICER NOT CONVI NCED WITH THE SUBMISSION OF THE ASSESSEE BUT CALCULATED THE INTER EST U/S 201(1A) OF THE ACT ON TDS DEDUCTIBLE FROM A.Y. 2006-07 TO 2010- 11, WHICH WAS CHALLENGED BY THE ASSESSEE BEFORE THE LD CIT(A) IN A PPEAL. THE LD CIT(A) AFTER CONSIDERING THE ASSESSEES REPLY AS WELL AS CASE LAWS REFERRED ON IDENTICAL ISSUE BY THE ASSESSEE I.E. AC IT (TDS) VS M/S JAIPUR ZILA DUGDH UTPADAK SAHAKARI SANGH LIMITED IN ITA NO. 203 & 204/JP/2011 ORDER DATED 2/09/2011 HAS HELD THAT SUP PLY OF MILK AND MILK PRODUCTS BY ASSESSEE TO THE DISTRIBUTORS WAS A SALE AGREEMENT ON PRINCIPAL TO PRINCIPAL BASIS NOT LIABLE FOR DEDUCTI ON OF TAX AT SOURCE U/S 194H OF THE ACT. HE HAS REPRODUCED THE FINDING OF B OTH THE ORDERS OF THE HONBLE ITAT AT PAGE 32 TO 35 OF THE ORDER. ACCO RDINGLY, HE DELETED THE DEMAND RAISED U/S 201(1) AND INTEREST U/S 201(1 A) OF THE ACT. 19. NOW THE REVENUE IS IN APPEALS BEFORE US. THE LD D R HAS VEHEMENTLY SUPPORTED THE ORDER OF THE ASSESSING OFF ICER. AT THE OUTSET, THE LD AR OF THE ASSESSEE HAS ARGUED THAT THE ISSUE IS IDENTICAL TO ITA 82 TO 87/JP/2015 & 104 TO 108/JP/2015 & 96/JP/2015 SIKAR & JHUNJHUNU ZILA DUGDH UTPADAK SAHKARI SAMITI VS ACIT (TDS) 27 AJMER ZILA DUGDH UTPADAK SANGH LIMITED VS. ITO 30 D TR 418 AND ACIT (TDS) VS M/S JAIPUR ZILA DUGDH UTPADAK SAHAKARI SANGH LIMITED (SUPRA) WHEREIN THE HONBLE ITAT HAS DECIDED THAT AN Y SALE OF MILK BY THE ASSESSEE TO THE DISTRIBUTOR IS SALE AGREEMENT O N PRINCIPAL TO PRINCIPAL BASIS AND NOT LIABLE FOR DEDUCTION OF TAX U/S 194H OF THE ACT. RECENTLY, THE HONBLE ITAT, JAIPUR BENCH IN ITA NO. 277/JP/2013 A.Y. 2008-09 IN ASSESSEES OWN CASE ORDER DATED 21/7/2015 WHEREIN IN PARAGRAPH 3.14 HAS HELD THAT THE ASSESSEE SOCIETY D OES NOT PURCHASE MILK FROM CATTLE OWNERS AS MISTAKENLY HELD BY THE LD ASSESSING OFFICER. SINCE THE LIABILITY HAS BEEN FASTENED UNDER MISCONC EPTION OF FACTS, WE HOLD THAT THIS PAYMENT ALSO IS NOT LIABLE U/S 194H OF THE ACT. IN VIEW OF THIS, THE HONBLE ITAT HAS ALLOWED THE APPEAL AGAI NST THE ADDITION MADE U/S 40(A)(IA) OF THE ACT. 20. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. THE ID ENTICAL ISSUE HAS BEEN CONSIDERED BY THE COORDINATE BENCH IN VARIOUS CASES AS SUBMITTED BY THE ASSESSEE. THE ASSESSEES TRANSACTIO N WITH DISTRIBUTOR IS SALE. THE RISK AND REWARD IS WITH THE DISTRIBUTOR. THE TRANSACTION IS PRINCIPAL TO PRINCIPAL BASIS. THE DISTRIBUTOR IS NOT AGENT OF THE ASSESSEE. ITA 82 TO 87/JP/2015 & 104 TO 108/JP/2015 & 96/JP/2015 SIKAR & JHUNJHUNU ZILA DUGDH UTPADAK SAHKARI SAMITI VS ACIT (TDS) 28 FROM THE SIDE OF ASSESSEE, NO AMOUNT HAS BEEN PAID IN FORM OF COMMISSION OR BROKERAGE. THE CASE LAWS REFERRED BY TH E ASSESSEE ARE SQUARELY APPLICABLE, THEREFORE, WE UPHOLD THE ORDER OF THE LD CIT(A). 21. IN THE RESULT, ALL THE REVENUES APPEALS I.E. F OR A.Y. 2007-08 TO 2010-11 ARE DISMISSED. 22. NOW WE TAKE ITA NO. 87/JP/2015 OF THE ASSESSEE FO R A.Y. 2011- 12 AND CROSS APPEAL BEING ITA NO. 96/JP/2015 FOR A. Y. 2011-12. GROUNDS OF BOTH THE APPEALS ARE AGAINST NOT DEDUCT ING TDS U/S 194H ON PAYMENT OF MILK PURCHASE PRICE DIFFERENCE TO MIL K SOCIETIES AND DISALLOWANCE U/S 40(A)(IA) OF THE ACT. THE LD ASSESSI NG OFFICER OBSERVED THAT THE ASSESSEE IS A COOPERATIVE SOCIETY ENGAGED IN MANUFACTURING AND TRADING OF MILK AND MILK PRODUCT ETC. THE ASSESSEE HAD CLAIMED EXPENDITURE OF RS. 1,32,22,045/- ON ACC OUNT OF MILK PURCHASE PRICE DIFFERENCE. HE FURTHER HELD THAT THE SE PAYMENTS WERE IN THE NATURE OF COMMISSION/BROKERAGE AND WAS LIABLE FO R DEDUCTION OF TDS BUT THE ASSESSEE HAS NOT DEDUCTED TDS. THEREFORE, HE DISALLOWED U/S 40(A)(IA) OF THE ACT. AFTER CONSIDERING THE ASS ESSEES REPLY, HE MADE ADDITION OF SAME AMOUNT IN THE INCOME OF THE A SSESSEE. THE ASSESSEE CHALLENGED THIS ISSUE BEFORE THE LD CI T(A), WHO HAS ALLOWED THE APPEAL PARTLY AFTER CONSIDERING THE ASSE SSEES REPLY AND ITA 82 TO 87/JP/2015 & 104 TO 108/JP/2015 & 96/JP/2015 SIKAR & JHUNJHUNU ZILA DUGDH UTPADAK SAHKARI SAMITI VS ACIT (TDS) 29 CASE LAWS ON IT. BEFORE THE LD CIT(A), THE ASSESSEE S UBMITTED THAT THE MILK WAS PURCHASED FROM CATTLE OWNERS BUT THE PURCHAS ES MADE THROUGH PRIMARY COOPERATIVE SOCIETIES/SAMITIS AND P AYMENT TO THE CATTLE OWNERS ON ACCOUNT OF MILK WAS ALSO MADE THROUG H THESE SOCIETIES/SAMITIS. THE ASSESSEE HAS BEEN PAYING 3% O N COST OF THE PURCHASE MADE FROM THE CATTLE OWNERS AS A COMMISSION OF BROKERAGE, WHICH IS ALSO PART OF SALE AMOUNT. THE APPELLANT ALS O ARGUED BEFORE THE LD CIT(A) THAT EVEN IF ADDITION U/S 40(A)(IA) OF THE ACT IS TO BE MADE, SUCH DISALLOWANCE SHOULD BE WITH REFERENCE TO THE AMO UNT, WHICH WAS PAYABLE AND IF THE AMOUNT ALREADY BEEN PAID THEN NO SUCH DISALLOWANCE CAN BE MADE U/S 40(A)(IA) OF THE ACT, F OR WHICH HE RELIED ON THE DECISION OF HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. VECTOR SHIPPING SERVICE (P) LTD. 94 DTR 101 (ALL) AN D OTHER CASES ALSO. IT IS FURTHER SUBMITTED BEFORE THE LD CIT(A) THAT SE CTION 40(A)(IA) HAS BEEN AMENDED W.E.F. 1/4/2005 TO REMOVE ON INTENDED H ARDSHIP, THEREFORE, IT SHOULD BE APPLIED RETROSPECTIVELY. AC CORDINGLY, DISALLOWANCE SHOULD BE 30% OF TOTAL OUTSTANDING AMOU NT OF RS. 9,83,914/-. AFTER CONSIDERING THE VARIOUS DECISIONS OF HONBLE ITAT AND HIGH COURTS. THE CBDT HAS ISSUED A CIRCULAR NO. 10/DV /2013, F. NO. 279/MISC./M-61/2012-ITJ(VOL-II) ON SECTION 40(A)(IA) OF THE ACT AND ITA 82 TO 87/JP/2015 & 104 TO 108/JP/2015 & 96/JP/2015 SIKAR & JHUNJHUNU ZILA DUGDH UTPADAK SAHKARI SAMITI VS ACIT (TDS) 30 CLARIFIED THAT DISALLOWANCE U/S 40(A)(IA) IS TO BE M ADE NOT ONLY ON PAYABLE BUT PAID AMOUNT. HE FURTHER CONSIDERED THE HON'BLE SUPREME COURT DECISION IN THE CASE OF CIT VS/ HERO CYCLES P. LTD. (1997) 228 ITR 463 WHEREIN IT HAS BEEN HELD THAT THE CIRCULAR I SSUED BY THE BOARD IS BINDING ON ITO NOT ON APPELLATE AUTHORITY OR TRIB UNAL OR COURT OR EVEN THE ASSESSEE. KEEPING IN VIEW OF THESE FACTS, P ARTICULARLY PLACING RELIANCE ON THE DECISION OF HONBLE JURISDICTIONAL ITAT IN THE CASE OF JVVNL VS. DCIT (SUPRA), IT HAS BEEN HELD THAT DISALL OWANCE U/S 40(A)(IA) SHOULD BE RESTRICTED TO THE AMOUNT PAYABL E AS ON 31/3/2011 AND NOT ON THE AMOUNT ALREADY PAID DURING THE ASSES SMENT YEAR UNDER CONSIDERATION. ACCORDINGLY, HE ALLOWED APPEAL PARTLY . THE ARGUMENT OF THE ASSESSEE THAT AMENDMENT W.E.F. 1/4/2015 IN 40(A) (IA) IS APPLICABLE RETROSPECTIVELY, HAS NOT ACCEPTED BY THE LD CIT(A). 23. NOW BOTH I.E. REVENUE AND ASSESSEE ARE IN APPEAL S BEFORE US. THE LD AR OF THE ASSESSEE HAS SUBMITTED THAT THE ASS ESSEE IS A COOPERATIVE SOCIETY. IT WAS CONSTITUTED TO GIVE MOME NTUM TO CO- OPERATIVE MOVEMENT IN MILK SECTOR AND TO PUSH THE WH ITE REVOLUTION IN COUNTRY THROUGH DAIRY COOPERATIVES. THE DIARY COOPER ATIVE FOLLOW VERTICAL INTEGRATED THREE TIER STRUCTURE AS UNDER: - PRIMARY SOCIETY I.E. VILLAGE DIARY CO-OPERATIVE AT THE BOTTOM ITA 82 TO 87/JP/2015 & 104 TO 108/JP/2015 & 96/JP/2015 SIKAR & JHUNJHUNU ZILA DUGDH UTPADAK SAHKARI SAMITI VS ACIT (TDS) 31 - UNION I.E. DISTRICT PROCESSING UNION AT THE MID DLE LEVEL - FEDERAL SOCIEITY I.E. STATE CO-OPERATIVE DAIRY F EDERATION. EACH OF THESE SOCIETIES IS HAVING DIFFERENT FUNCTIO NAL RESPONSIBILITIES. THE PRIMARY SOCIETY COLLECT THE MILK, THE UNION I.E. DISTRICT SOCIETY PROCESS THE MILK COLLECTED BY THE PRIMARY SOCIETIES AND DISTRIBUTE IT TO THE CONSUMERS AND THE FEDERAL SOCIETY MARKET THE MI LK AND MILK PRODUCTS OF THEIR MEMBER. THE ABOVE SYSTEM IS FOLLOWE D THROUGHOUT THE COUNTRY BY THE ENTIRE DAIRY SECTOR. THE ASSESSEE IS PROCURING MILK FROM THE PRIMARY SOCIETIES. THE RATE OF MILK IS BASE D ON THE FAT AND SNF CONTENT IN THE MILK. COLLECTED MILK IS TESTED A ND PROCESSED IN THE PLANT OF THE ASSESSEE. ON THE BASIS OF QUALITY OF T HE MILK, THE AMOUNT PAYABLE TO THE PRIMARY SOCIETY AGAINST THE COST OF THE MILK IS DETERMINED. TO THIS COST 3% IS ADDED AS MILK PURCHAS E PRICE DIFFERENCE AGAINST THE MARGIN OF THE PRIMARY SOCIETIES. THIS AM OUNT ALONGWITH THE COST OF THE MILK IS PAID TO THE PRIMARY SOCIETIES. IN THE BOOKS OF ACCOUNT THE COST OF THE MILK IS DEBITED UNDER THE H EAD PURCHASE OF MILK AND MARGIN OF 3% IS DEBITED UNDER THE HEAD MILK PUR CHASE PRICE DIFFERENCE. HE FURTHER ARGUED THAT OWNERSHIP OF THE RISK OF GOODS SO PROCURED BY THE ASSESSEE FROM THE PRIMARY SOCIETIES REMAINS IN THEIR ACCOUNT TILL THE MILK IS TESTED AND THE QUALITY APP ROVED BY THE ASSESSEE. ITA 82 TO 87/JP/2015 & 104 TO 108/JP/2015 & 96/JP/2015 SIKAR & JHUNJHUNU ZILA DUGDH UTPADAK SAHKARI SAMITI VS ACIT (TDS) 32 TILL THEM THE PRIMARY SOCIETY IS RESPONSIBLE FOR ANY LOSS OR DAMAGE TO THE MILK. IN THE MILK BILL, FOR TRANSPARENCY, COST OF THE MILK IS SEPARATELY DISCLOSED AND THE MARGIN OF THE PRIMARY SOCIETY THE RETO AS THEIR CHARGES. THIS CHARGE IS A PROCUREMENT COST TO THE AS SESSEE AND NOT A PAYMENT OF COMMISSION TO THEM AS THE RELATIONSHIP B ETWEEN THE ASSESSEE AND THE PRIMARY SOCIETY IS ON PRINCIPAL TO PRINCIPAL BASIS AND NOT ON PRINCIPAL AGENT BASIS. HE HAS FURTHER DRAWN OUR ATTENTION ON DEFINITION OF SALES AS PER THE VAT ACT, 2003 AND ARG UED THAT THE COMMISSION IS PAID TO A PERSON WHEN HE ACTS ON BEHAL F OF THE OTHER PERSON. IN SUCH A CASE, THE PAYMENT FOR VALUE OF TH E GOODS OR SERVICE IS MADE DIRECTLY TO THE OWNER OF GOODS/PROVIDER OF S ERVICE AND THE PAYMENT OF COMMISSION IS MADE SEPARATELY TO THE PER SON WHO IS ACTING ON BEHALF OF THE OWNER OF GOODS OR PROVIDER OF SERV ICE. IN THE PRESENT CASE, THE ASSESSEE IS MAKING PAYMENT OF THE MILK TO THE PRIMARY SOCIETY AND NOT TO THE CATTLE OWNERS. THEREFORE, THE OBSERVATION OF THE A.O. THAT THE ASSESSEE PURCHASES MILK FROM INDIVIDU AL CATTLE OWNERS IS FACTUALLY INCORRECT. IN FACT, THE ASSESSEE PURCHASE D THE MILK FROM THE PRIMARY SOCIETIES AND THE PRIMARY SOCIETIES PURCHAS ED MILK FROM CATTLE OWNERS. THE PAYMENT MADE TO THE CATTLE OWNER IS NOT CO NCERNED OF THE ASSESSEE. THUS THE PAYMENT MADE TO THE PRIMARY SOCI ETY IS NOT A ITA 82 TO 87/JP/2015 & 104 TO 108/JP/2015 & 96/JP/2015 SIKAR & JHUNJHUNU ZILA DUGDH UTPADAK SAHKARI SAMITI VS ACIT (TDS) 33 COMMISSION COVERED U/S 194H OF THE ACT. THE LD ASSES SING OFFICER RELIED ON THE DECISION OF CIT(A) IN A.Y. 2008-09, WHI CH WAS DECIDED AGAINST THE ASSESSEE. THE HONBLE ITAT, JAIPUR BENCH HAD DECIDED THIS ISSUE IN ITA NO. 277/JP/2013 FOR A.Y. 2008-09 IN AS SESSEES OWN CASE VIDE ORDER DATED 21/7/2015. THE LD AR HAS DRAWN OUR A TTENTION ON PAGE NO. 8 PARAGRAPH NO. 3.10 OF THE ORDER WHEREIN T HE HONBLE ITAT HAS HELD THAT THE ASSESSING OFFICER HAS MISCONCEIVE D ENTIRE ISSUE WHILE HOLDING THAT SOCIETY PAYS THE AMOUNT TO CATTLE OWNER S. THE FACT OF THE MATTER IS THAT THE MILK PRICE DIFFERENCE IS PAID TO PRIMARY COOPERATIVE SOCIETIES AND NOT THE CATTLE OWNERS AS HELD BY THE A SSESSING OFFICER. AFTER CONSIDERING THE ASSESSEES ARGUMENT, THE HON BLE ITAT ALLOWED THE ASSESSEES APPEAL ON THIS ISSUE. ALTERNATIVELY, THE LD AR HAS ALSO ARGUED THAT IF NO TDS IS DEDUCTED U/S 194H, PAID AND PAYABLE ASPECT IS TO BE EXAMINED. THE ASSESSEE CLAIMED THAT THERE WAS N O AMOUNT PAYABLE DURING THE YEAR UNDER CONSIDERATION TO THE PRIMARY SOCIETY, FOR HE RELIED ON THE DECISIONS IN THE CASE OF CIT VS. VE CTOR SHIPPING SERVICES (P) LTD. (SUPRA), DCIT VS. ANANDA MARAKALA (2014) 150 ITD 323 (BANG.)(TRIB) AND ITO VS. M/S THEEKATHIR PRESS (CH ENNAI) (TRIB) ITA NO. 2076/(MDS)/2012 DATED 18/09/2013. IT IS FUR THER ARGUED THAT IF TWO OPINIONS HAVE BEEN EXPRESSED BY THE VARIOUS COUR TS, THE ITA 82 TO 87/JP/2015 & 104 TO 108/JP/2015 & 96/JP/2015 SIKAR & JHUNJHUNU ZILA DUGDH UTPADAK SAHKARI SAMITI VS ACIT (TDS) 34 FAVOURABLE VIEW OF THE ASSESSEE IS TO BE CONSIDERED AS HELD BY THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. VEGETA BLE PRODUCTS LTD. 88 ITR 192 AND RECENTLY IN THE CASE OF CIT VS. VATIKA TOWNSHIP P LTD. (2014) 367 ITR 466 (SC). THEREFORE, HE PRAYED TO DELE TE THE ADDITION CONFIRMED BY THE LD CIT(A). 24. THE LD DR HAS VEHEMENTLY SUPPORTED THE ORDER OF THE ASSESSING OFFICER AND ARGUED THAT THE PAYMENTS MADE BY THE AS SESSEE TO THE PRIMARY SOCIETY IS A COMMISSION AND IS COVERED U/S 194H OF THE ACT. 25. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. THE AS SESSEE PURCHASED MILK FROM THE PRIMARY SOCIETY NOT FROM THE CATTLE O WNERS. THE PAYMENTS ARE MADE TO THE PRIMARY SOCIETY. THE PRICE OF THE MILK IS DECIDED ON THE BASIS OF FATS BY THE ASSESSEE, THE M ILK IS PROCESSED IN THE PLANT OF THE ASSESSEE BUT AT THE STAGE OF TESTI NG, THE RISK AND REWARD IS WITH THE PRIMARY SOCIETY. THE ASSESSEE PAID 3% ON COST OF THE PURCHASE PRICE OF MILK TO THE PRIMARY SOCIETY. THE RELATIONSHIP BETWEEN THE ASSESSEE AND PRIMARY SOCIETY IS PRINCIP AL TO PRINCIPAL BASIS. IT IS UNDISPUTED FACT THAT THE PURCHASE PRIC E AND PURCHASE DIFFERENCE HAS BEEN CLAIMED BY THE ASSESSEE UNDER T WO HEADS BUT ITA 82 TO 87/JP/2015 & 104 TO 108/JP/2015 & 96/JP/2015 SIKAR & JHUNJHUNU ZILA DUGDH UTPADAK SAHKARI SAMITI VS ACIT (TDS) 35 EXPENSES DEBITED UNDER THE PURCHASE DIFFERENCE IS C OST OF GOODS PURCHASED. BY RESPECTFULLY FOLLOWING THE COORDINATE BENCH DECISION IN ASSESSEES OWN CASE FOR A.Y. 2008-09 WE HOLD THAT THE ASSESSEE IS NOT LIABLE TO DEDUCTION TDS U/S 194H OF THE ACT. ACCORDI NGLY, ASSESSEES APPEAL IS ALLOWED AND REVENUES APPEAL IS DISMISSED. 26. IN THE RESULT, ALL THE APPEALS OF THE ASSESSEE ARE ALLOWED AND ALL THE APPEALS OF THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 04/03/2016. SD/- SD/- VKJ-IH-RKSYKUH VH-VKJ-EHUK (R.P.TOLANI) (T.R. MEENA) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ @ JAIPUR FNUKAD @ DATED:- 04 TH MARCH, 2016 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- SIKAR & JHUNJHUNU ZILA DUGDH UTPADAK SAHAKARI SANGH LTD., SIKAR. 2. IZR;FKHZ @ THE RESPONDENT- THE ACIT, (TDS), JAIPUR/ACIT, SIKAR. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NOS. 82 TO 87/JP/2015, 104 TO 108/JP/2015 & 96/JP/2015) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR