Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2011 (2) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2011 (2) TMI 488 - ITAT, DELHIDisallowance u/s 40(a)(ia) - TDS u/s 194C - assumption of Payment in kind - 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. In other words, 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. - AO has invoked the provisions of section 194C and was of the opinion that even under the terms of the agreement, the assessee is under an obligation to deduct tax at source on this job work. Held that:- which is just exchange of goods for goods and does not involve any cash outflow. Although services were taken, it is difficult to say that the residuals and the losses left by the assessee in favour of AIL are purely consideration for the job that is done. The market fluctuations in the price structure of the raw material and the end product cannot be just ignored in the whole transaction nor the process loss. The process loss could be either more or less than the percentage agreed to between the parties. - the residual that is left by the assessee, apart from covering the labour cost of processing, also includes the protection from market fluctuations as also protection from adverse process loss. - Decided in favor of assessee.
|