Gujarat High Court
Commissioner Of Income Tax (Tds) vs Kamrej Vibhag Sahakari Khand Udyog ... on 16 June, 2016
Author: Ks Jhaveri
Bench: Ks Jhaveri, G.R.Udhwani
O/TAXAP/1625/2008 JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
TAX APPEAL NO. 1625 of 2008
With
TAX APPEAL NO. 2397 of 2009
With
TAX APPEAL NO. 759 of 2010
With
TAX APPEAL NO. 1627 of 2008
With
TAX APPEAL NO. 1628 of 2008
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR.JUSTICE KS JHAVERI
and
HONOURABLE MR.JUSTICE G.R.UDHWANI
==========================================================
1 Whether Reporters of Local Papers may be allowed
to see the judgment ?
2 To be referred to the Reporter or not ?
3 Whether their Lordships wish to see the fair copy of
the judgment ?
4 Whether this case involves a substantial question of
law as to the interpretation of the Constitution of
India or any order made thereunder ?
==========================================================
COMMISSIONER OF INCOME TAX (TDS)....Appellant(s)
Versus
KAMREJ VIBHAG SAHAKARI KHAND UDYOG MANDLI LTD....Opponent(s)
==========================================================
Appearance:
Page 1 of 7
HC-NIC Page 1 of 7 Created On Tue Jun 21 01:35:45 IST 2016
O/TAXAP/1625/2008 JUDGMENT
MRS MAUNA M BHATT, ADVOCATE for the Appellant(s) No. 1
MR RK PATEL, ADVOCATE for the Opponent(s) No. 1
==========================================================
CORAM: HONOURABLE MR.JUSTICE KS JHAVERI
and
HONOURABLE MR.JUSTICE G.R.UDHWANI
Date : 16/06/2016
ORAL JUDGMENT
(PER : HONOURABLE MR.JUSTICE KS JHAVERI)
1. Being aggrieved and dissatisfied with the following impugned orders passed by the Income Tax Appellate Tribunal, Ahmedabad Bench 'Special Bench' (hereinafter referred to as 'the Tribunal'), the revenue has preferred the following appeals:
Tax Appeal No. Order date ITA No. Assessment Year 1625 of 2008 30.05.2008 3553/Ahd/2004 2003-04 2397 of 2009 26.06.2009 2491/Ahd/2006 2003-04 759 of 2010 29.10.2009 1214/Ahd/2008 2003-04 1627 of 2008 30.05.2008 3554/Ahd/2004 2003-04 1628 of 2008 30.05.2008 2950/Ahd/2006 2004-05 1.1 The following substantial question of law was raised while admitting the following appeals:
Tax Appeal No. 1625 of 2008 Whether the Appellate Tribunal is right in law and on facts in holding that the provisions of Section 194C of Page 2 of 7 HC-NIC Page 2 of 7 Created On Tue Jun 21 01:35:45 IST 2016 O/TAXAP/1625/2008 JUDGMENT the Act are not attracted in respect of payments made by the assessee to Mukamams and Transporters who are members farmers of the Zone Samiti?
Tax Appeal No. 2397 of 2009 Whether the Appellate Tribunal is right in law and on facts in reversing the order passed by the CIT(A) and thereby holding that the assessee was not liable to deduct tax at source u/s 194C from the payments made to Mukadams and Transporters?
Tax Appeal No. 759 of 2010 Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal is right in law in deleting the disallowance of Rs. 3,05,05,792/- made by the Assessing Officer under Section 40A(3) of the Income Tax Act and confirmed by the Appellate Commissioner on account of payment made towards transport and harvesting charges in cash amounting to Rs. 15,25,28,958/-?
Tax Appeal No. 1627 of 2008 Whether the Appellate Tribunal is right in law and on facts in holding that the provisions of Section 194C of the Act are not attracted in respect of payments made by the assessee to Mukamams and Transporters who are members farmers of the Zone Samiti?
Page 3 of 7
HC-NIC Page 3 of 7 Created On Tue Jun 21 01:35:45 IST 2016
O/TAXAP/1625/2008 JUDGMENT
Tax Appeal No. 1628 of 2008
Whether the Appellate Tribunal is right in law and on facts in holding that the provisions of Section 194C of the Act are not attracted in respect of payments made by the assessee to Mukamams and Transporters who are members farmers of the Zone Samiti?
2. The assessees are engaged in the business of manufacturing of sugar from sugarcane. On verification of the TDS returns it was noticed that the assessees were not deducting tax on payment to contractors i.e. payments made to the Mukadams and to transporters in accordance with the provisions of Section 194C of the I.T. Act. Accordingly, the Assessing Officer held that the assessees were responsible for making the payment and not deducting tax on such payments and thereby passed order u/s 201 & 201(1A) of the Act and raised appropriate demand. On appeal preferred by the assessees before CIT(A), the CIT (Appeals) dismissed the appeals and confirmed the order passed by the Assessing Officer.
3. On appeal before the Tribunal by the assessees, by impugned order, Tribunal allowed the appeals and held that the assessees were not liable to deduct tax at source u/s 194C of the Act. Being aggrieved and dissatisfied with the impugned order passed by the Tribunal, the revenue has preferred the present Tax Appeals for consideration of the aforesaid substantial question of law.
4. Mr. R.K. Patel, learned advocate appearing for the Page 4 of 7 HC-NIC Page 4 of 7 Created On Tue Jun 21 01:35:45 IST 2016 O/TAXAP/1625/2008 JUDGMENT assessees submitted that the present case is squarely covered by a decision of this Court dated 01.12.2014 rendered in Tax Appeal No. 211 of 2006 with Tax Appeal No. 440 of 2006. He submitted that this Court has already held in the said decision that the supply of sugarcanes at the gates of factories of the assessee were a part of sale transaction and therefore the assessee shall not be liable to deduct TDS.
5. Mr. Manish Bhatt, learned Senior Counsel appearing with Ms. Mauna Bhatt, learned advocate for the revenue could not dispute the same.
6. Having heard learned advocates appearing on behalf of the parties and the question posed for consideration before us reproduced hereinabove and considering the decision of the this Court in Tax Appeal No. 211 of 2006 and allied matter, the question, which is raised in the present appeals is required to be answered in favour of the assessees. The relevant portion of the decision dated 01.12.2014 reads as under:
"9. Heard, learned Counsels for the parties and perused the material on record as well as the orders passed by the learned CIT(A) and the Tribunal. It is an admitted position that in the case on hand the assesses-cooperative societies used to purchase the sugarcanes from the farmers, on condition that the farmers shall supply the same at the gate of their respective factory. Meaning thereby, here, the supply of sugarcane at the gate of the factories of the assesses is not a separate work contract, but, it is essentially the part of the sell transaction. In that view of the matter, here, it would be relevant to refer to the decision of this Court in CIT (TDS) VS. KRISHAK BHARTI CO-
Page 5 of 7
HC-NIC Page 5 of 7 Created On Tue Jun 21 01:35:45 IST 2016
O/TAXAP/1625/2008 JUDGMENT
OPERATIVE LTD.(Supra). In that case, the assessee was engaged in the manufacture of fertilizers and for the said purpose, it used to consume natural gas. The assessee, therein, was supplied natural gas by different agencies through pipelines. In that case, according to the Revenue, while purchasing the gas from different agencies, the assessee had entered into a work contract for transportation of natural gas from the sellers premises to the buyers consumption point, and therefore, they held that the assessee, therein, was required to deduct TDS. However, this Court, in that case, held that to transport the gas was a part of sale transaction, and therefore, the assessee, therein, was not required to deduct TDS. In our view, therefore, the decision of the Apex Court in the case of CIT (TDS) VS. KRISHAK BHARTI CO-OPERATIVE LTD.(Supra) applies in full force to the facts of this case. The aforesaid provision would apply to the person, who had paid any sum, and the respondent has not paid any charges. The case of the assessee in Tax Appeal No. 211 of 2006 is identical, and hence, the authorities below grossly erred in interpreting the provisions of law, and therefore, the grounds urged by the appellant find favour with us.
10. In the case on hand, the supply of sugarcanes at the gates of factories of the respective assesses was a part of sale transaction, and therefore, we are of the opinion that the assesses are not liable to deduct TDS. In view of the above discussion, the decisions relied on by Mr. Mehta shall not apply to the facts of the present case. Hence, the present appeals deserve to be allowed."
6.1 The Tribunal has rightly reversed the order of the CIT(A). Moreover, we have also referred to the decision of the Apex Court in the case of CIT (TDS) vs. Krishak Bharti Co- operative Ltd reported in [2012] 349 ITR 68 (Guj) and the said decision is squarely applicable to the facts of the present case. Therefore, we are of the view that the question Page 6 of 7 HC-NIC Page 6 of 7 Created On Tue Jun 21 01:35:45 IST 2016 O/TAXAP/1625/2008 JUDGMENT raised in the present appeals is required to be answered in favour of the assessees.
7. Accordingly, question raised in the present appeals is answered in favour of assessees and against the revenue. The orders passed by the Tribunal are hereby confirmed. Appeals are dismissed accordingly.
(K.S.JHAVERI, J.) (G.R.UDHWANI, J.) divya Page 7 of 7 HC-NIC Page 7 of 7 Created On Tue Jun 21 01:35:45 IST 2016