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2017 (9) TMI 1746 - ITAT CHANDIGARHTDS u/s 194C on the value of the by-products - nature of liability - assumption of Payment in kind - assessee is a Branch of State Government agency which procures paddy from the market in every crop season and milling of this paddy is done by various millers with whom contracts are executed - Held that:- There is no dispute that the parties, apart from entering into agreement have also acted upon the agreement and the transactions appear to be strictly falling within the agreement that is entered into by the parties. One cannot ignore the terms of this agreement in determining the nature of the transaction that have taken place between the parties, as there is nothing in the impugned orders to doubt the genuineness of this agreement. It is for the revenue to understand this agreement and determine the nature of the assessee's tax liability arising from the transaction entered into through this agreement. In fact, it is stated that the assessee has given the wheat under a delivery challan-cum-invoice and the value is provided only for settlement of claims. On the basis of the quantity of the wheat supplied by the assessee to AIL, the assessee has collected the end products namely Atta or Dalia and is not bothered about the other products and wastage arising therefrom. Under the terms of agreement, by-products, waste and the residual of the wheat after manufacture belong to AIL and not to the assessee. Nowhere in the books of the assessee, the assessee has made any payment towards the services rendered by AIL in producing the Atta and Dalia for and on behalf of the assessee in the packets and containers provided by the assessee in terms of the agreement. The assessee was not required to make TDS u/s 194C of the Act on the value of the by-products. - Decided in favour of assessee.
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