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2015 (9) TMI 433 - ITAT AHMEDABAD

2015 (9) TMI 433 - ITAT AHMEDABAD - TMI - Failure to deduct TDS under section 194C - assessee got transported the sugar cane from the fields of farmers to its premises with the help of transporters - assessee-in-default liable to tax under section 201 as well as interest under section 201(1A) - CIT(A) deleted the disallowance - Held that:- Assessee's contention that it has not got the sugar cane transported with the help of contractor rather, it was obligation of the farmers to supply sugar cane .....

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ssessee was not at all responsible for transportation of the sugar cane. Thus, section 194C is not applicable in the present situations. The ld.CIT(A) has rightly deleted the demand raised by the AO. - Decided in favour of assessee. - ITA No. 2341/Ahd/2011 - Dated:- 24-7-2015 - G. D. Agrawal, VP And Rajpal Yadav, JM, JJ. For the Petitioner : Smt. Sonia Kumar, Sr. DR For the Respondent : None ORDER Per Rajpal Yadav, Judicial Member The Revenue is in appeal before us against the order of learned C .....

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Income Tax Act, it is to be held as an assessee-in-default liable to tax under section 201 as well as interest under section 201(1A) of the Income Tax Act. 3. In response to the notice of hearing, no one has come present on behalf of the assessee. With the assistance of the learned DR, we have gone through the record carefully and proceed to dispose of the appeal ex parte qua the assessee. 4. Brief facts of the case are that the assessee is a co-operative society registered with the Registrar o .....

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l payment of getting and transporting the sugar cane from fields to the factory area under section 194C. In the opinion of the AO, the assessee failed to deducted TDS on such payment, therefore, order under sections 201(1) and 201(1A) ought to be passed. 5. In response to the notice of hearing, it was contended by the assessee that as per the arrangement with the farmers, the sugar cane is being supplied either by the farmers or registered societies at the factory area. The assessee has not been .....

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ociety duly registered, sanctioned and approved by the Registrar of Cooperative Society, the highest authority of the governing Act. i.e. The Gujarat Co-Operative Societies Act, 1961. The relevant Bye Laws No. 7(A) categorically provides that the cane grower members are exclusively responsible to cut, harvest and transport their sugarcane from their field to the factory gate for which they had been paid ex-factory gate cane price by virtue of the Sugar Cane Price Control Order, 1966 of the Centr .....

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harvest and cut his sugarcane and deliver the same to the factory gate of the assessee sugar mill. (iv) Copy of member account for the season 2003-04 showing therein the ex-factory price paid for the sugarcane supplied by the cane grower, member. This clearly proves that the assessee, sugar, mill has paid the, ex-factory price of ₹ 1,326/- per MT in various installments as approved by the Board of Directors (for which the copies of resolutions were already furnished. The copies of ledger a .....

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unts which were produced and verified during the survey proceedings conducted on 05.02.2004 and 07.12.2010 by the income tax authorities. Hence, when my client has not made any payment towards transportation and harvesting of the sugarcane to any agency or third person, there is no valid and legal ground in support of the allegation of default u/s. 201(1) and 201(1A) of the Act. 3. Your kind attention is invited to the very fact that the Divisional Bench of ITAT, Ahmedabad has already allowed th .....

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the assessee. He simply considered that the assessee is responsible for transporting the sugar from the fields of the farmers. It is pertinent to take note observation of the ld.AO from para-11, 12 and 13 of the assessment order. It reads as under: "11. The most important fact where assessee differs from all the cases mentioned by the assessee is that in all these cases, the deductee were assessed to tax 85 have paid tax on the income which they received from the deductor. Whereas, in the p .....

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asis of quantity of sugarcane purchased and advance per metric ton of sugarcane given to farmers which actually was utilized for payment to harvesting & transport contractors. 13. In the case of the assessee as per P & L A/c., it had purchased 17,71,699 MT of sugarcane. Further, in absence of details regarding amount per metric ton paid to farmers as advance, this rate is adopted at ₹ 185/-per metric ton, the rate at which assessee paid for the immediate preceding year. On the basi .....

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mount of TDS deductible at ₹ 67,19,168/- and interest for not depositing this amount in Government Treasury at ₹ 64,50,400/-. The learned AO has raised demand of ₹ 1,31,69,568/-. 8. On appeal, the ld.CIT(A) has deleted the additions by assigning following ten reasons: "[1] The appellant pays ex-factory / gate delivery cane price to Cane growers. [2] The farmer member is responsible to cut his sugarcane and supply the same at the factory gate of the appellant. [3] Payments .....

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ble them to meet the expenditure of harvesting, cutting, and transporting. Thereafter, purchase price is again given to farmers in installments. This account is finally settled when the final ex-factory cane price is determined by the appellant. [7] Copy of Member account in appellant's s books indicate that first installment of ₹ 185/ P.M.T given to farmers is actually advance purchase price of sugar cane. [8] The case of the appellant for A Y 2003-04 having identical facts, has been .....

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ers. The farmers are agriculturists. Their income is not taxable. It is clear that Section 194C of the IT Act is not applicable in appellant's case. Having regard to the facts and circumstances of the case as well as arguments of the appellant and the Judgment of Hon'ble ITAT, it is held that the assessing officer is not justified in invoking the provisions of Sec. 194C against the appellant. The Assessing Officer's action of treating the appellant as 'assessee in default and wor .....

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