TMI Blog2015 (7) TMI 1074X X X X Extracts X X X X X X X X Extracts X X X X ..... . Since the liability has been fastened under misconception of facts, we hold that this payment also is not liable u/s 194H of the Act. In view thereof, second ground of the assessee with regard to disallowance u/s 40(a)(ia) stands allowed. - Decided in favour of assessee - ITA No. 277/JP/2013, ITA No. 382/JP/2013 - - - Dated:- 21-7-2015 - <!--[if gte mso 9]> <![endif]--> <!--[if gte mso 9]> Normal 0 false false false EN-IN X-NONE <![endif]--><!--[if gte mso 9]> ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act since the assessee has not deducted the tax at source. 2.2 The Revenue has raised following grounds in its appeal. (1) The ld. CIT(A) has erred in fact and in law restricting the disallowance of ₹ 42,41,575/- made u/s 40(a)(ia) to ₹ 97,110/- only and thus in deleting the disallowance of ₹ 41,44,465/-. (ii) The ld. CIT(A) has erred in fact and in law restricting the disallowance of ₹ 54,73,480/- made u/s 40(a)(ia) to ₹ 2,42,809/- only and thus, in deleting the disallowance of ₹ 52,30,671/-. (iii) The ld. CIT(A) has erred in relying upon the decision of Hon'ble ITAT Jaipur Bench in case of M/s. JVNL vs. DCIT (ITA No. 132/JP/2009 dated 30-04-2009 for A.Y. 2006-07) even when this decision was based on different facts and circumstances of a unrelated assessee and even when the appeal before the Hon'ble High Court was pending in that case. (iv) The ld. CIT(A) has erred in restricting the disallowance to the amount remaining unpaid at the end of the year and directed the Assessing Officer to verify this. (v) The ld. CIT(A) has erred in deleting the disallowance of ₹ 4.52 lacs and in holding that this expen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lect milk from the cattle owners and supply the same to assessee. The payment is bade on quantum of purchase through these samities as it is a fixed percentage. The expenditure is obviously in the nature of commission/ brokerage as understood in common parlance and also as per the inclusive definition given in the Explanation to Section 194H. Since the assessee has failed to deduct tax at source on the payment, expenditure is disallowed u/s 40(a)(ia) of the Act. This results in an addition of ₹ 54,73,480/- to the declared income of the assessee. 3.4 In first appeal, the ld. CIT(A) though held that payment was liable for TDS u/s 194H, however, applying the judgment of M/s. Merilyn Shipping(supra), held that the amount to the extent of outstanding as on 31-03-2008 ₹ 2,42,809/-was liable for disallowance, consequently disallowance u/s 40(a)(ia) r.w.s. 194H was restricted to this amount. Both the parties are in appeal. The assessee is by way of Ground No. 2 and Revenue is by way of Ground No. 2. 3.5 The Ground No. 3 and 4 of the Revenue are connected with Ground No. 1 and 2 inasmuch as to Ground No. 3 and 4 are in support of the contention that theory of paid and pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was made during the year itself, as held by Hon'ble ITAT Jaipur in the case of M/s. JVVNL (supra). The payments made to M/s. Bansal Printers and M/s. Mahalaxmi Welding Workshops was for the purchase of goods and not for advertisement. Hence, the ground raised by the appellant is allowed. 3.8 Aggrieved, the Revenue is in appeal. 3.9 The ld. counsel for the assessee contends that:- 1. In pursuance of these objectives, RCDF developed dairy market, coordinated with government/ financial institutions, finalized rate contract, developed the brand image, launches new products, develop MIS system etc. To recover part of the expenditure incurred by it for all these activities, it levy a cess of 1.25% of the turnover of the district societies. Thus, no specific service is rendered by the RCDF to societies. One cannot identify that payment made by the society as cess to RCDF is for any particular service more so managerial service. In fact, RCDF do not provide any managerial service as such to the society, rather it only develop the market, brand, liaison with government/ institutions, identify the new product etc. in general. Therefore, cess paid to RCDF is not liable for de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rchase the milk from the primary society who purchases the milk from the cattle owners and therefore payment of milk is made by the assessee to the primary society and not to the cattle owners. How the primary societies make payment to the cattle owners or from whom and at what rate the primary co-operative society procures the milk is there outlook with which the assessee is not at all concerned. The payment of fixed margin to the primary society is therefore not a payment of commission as envisaged u/s 194H of the Act. 3.11 Apropos Departmental grounds on the theory of paid and payable, the ld. counsel for the assessee contends that Merilyn Shipping Transport vs. ACIT judgment has been upheld by Hon'ble Allahbad High Court in the case of CIT vs. Vector Shipping Services Ltd. Revenue s SLP against the same also has been dismissed by the Hon'ble Supreme Court, thus the issue stands settled in favor of the assessee. Consequently, there is no merit in Revenue s ground. 3.12 The ld. DR is heard 3.13 I have heard the rival contentions and perused the materials available on record. Apropos the payment to RCDF cess, it has not been demonstrated by the Department that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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