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2016 (5) TMI 876 - ITAT JAIPUR

2016 (5) TMI 876 - ITAT JAIPUR - TMI - TDS u/s 194H - whether payment of milk purchase price difference to the milk societies (DCS and PDCS) is a payment of commission/brokerage liable for deduction of tax at source? - Held that:- The Coordinate Bench has considered the identical issue in A.Y. 2008- 09 and 2011-12, which is squarely applicable on the facts and circumstances of the case for the years under consideration as the assessee’s transaction with distributor is sale. The risk and reward i .....

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h Limited V. ITO [2009 (7) TMI 827 - ITAT JAIPUR-B] and ACIT (TDS) V. M/s Jaipur Zila Dugadh Utpadak Sahakari Sangh Limited [2011 (9) TMI 1080 - ITAT JAIPUR] - Decided in favour of assessee

TCS U/s 206C - Non collection of tax at source on sale of scrap - Held that:- The Coordinate Bench has considered this issue in earlier years and held that this scrap has not been generated during the manufacturing process and circular noted by the ld CIT(A) is also not applicable on the given fact .....

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P/2014 filed by the revenue arise against the order dated 13/10/2014 of the ld CIT(A)-III, Jaipur for A.Y. 2011-12 to 2013-14. The effective grounds of the assessee s appeal for A.Y. 2011-12 are as under:- 1 The Ld. Commissioner of Income Tax (Appeals) has erred on facts and in law in confirming the actions of the AO in holding that payment of milk purchase price difference to the milk societies (DCS and PDCS) is a payment of commission/brokerage liable for deduction of tax at source U/s 194H an .....

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7) on account of non collection of tax at source on sale of scrap. In other appeals of the assessee for A.Y. 2012-13 and 2013-14, similar identical grounds have been taken. Grounds of Revenue s appeal Whether on facts and in law, Ld. CIT(A) erred in holding that the margin of distribution in the payments made by the assessee to its distributors is not commission liable for deduction u/s 194H of the Income-tax Act, 1961? Whether on the facts and in law, Ld CIT(A) erred in holding that the assesse .....

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Ground No. 1 of the assessee s appeal in all the years are against confirming the action of the ld Assessing Officer holding that payment of milk purchase price difference to milk society is payment of commission/brokerage and liable to deduction of tax at source U/s 194H of the Income Tax Act, 1961 (in short the Act). The assessee is a Cooperative Society at district level, which collects milk from village level primary societies, which is engaged in the processing of milk and marketing milk a .....

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iven reasonable opportunity of being heard on this issue, which was replied by the assessee vide letter dated 13/3/2013, which has been reproduced by the Assessing Officer on page No. 12 of the impugned order. It is contended that this issue has been examined in detail by his predecessor, in view of that, this is the payment to principal to principal hence no element of commission. The ld Assessing Officer considered the order of the Assessing Officer in assessee s case for F.Y. 2009-10 and CIT( .....

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assessee s reply, the ld Assessing Officer held that the assessee is in default within the meaning of Section 200(1) read with Section 200(1A) of the Act for non-deduction of tax of ₹ 17,02,918/-. 4. Being aggrieved by the order of the Assessing Officer, the assessee carried the matter before the ld CIT(A), who had dismissed the appeal on this ground by observing that the assessee had made payment on account of purchase of milk to different milk societies and these milk societies subseque .....

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Now the assessee is in appeal before us. The ld AR of the assessee has submitted that the Hon ble ITAT vide order dated 21/07/2015 has decided the assessee s case for A.Y. 2008-09 and in ITA No. 382/JP/2013 order dated 21/07/2015 by holding that the payment is not liable for deduction of tax U/s 194H of the Act. Inasmuch as the assessee society does not purchase milk from the cattle owners as mistakenly held by the Assessing Officer and thus the liability has been fastened under misconception of .....

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ction and disposal of milk produced by them. The assessee society purchased milk directly from the primary society on principal to principal basis. Therefore, payments made to primary cooperative societies alongwith fixed margin called milk price difference is only a payment towards purchase of milk and not a payment of any commission or brokerage, which includes cost of milk and services provided directly to the assessee but commission is paid separately to the person, who is acting on behalf o .....

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the years. 6. At the outset the ld DR has vehemently supported the order of the ld CIT(A). 7. We have heard the rival contentions of both the parties and perused the material available on the record. The Coordinate Bench has considered the identical issue in ITA No. 277/JP/2013, ITA No. 382/JP/2013, ITA No. 87/JP/2015 and ITA No. 96/JP/2015 for A.Y. 2008- 09 and 2011-12, which is squarely applicable on the facts and circumstances of the case for the years under consideration. Therefore, we dele .....

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U/s 206C(7) of the Act in A.Y. 2012-13 and ₹ 2340/- U/s 206C(6A) and ₹ 394/- U/s 206C(7) of the Act in A.Y. 2013-14. The ld Assessing Officer observed that the assessee had made sales of scrap but no TCS has been deducted by the assessee. The ld Assessing Officer gave reasonable opportunity of being on this issue, which has been considered by considering the assessee s reply and held that the assessee has not deducted TDS on sale of scrap. The ld CIT(A) also confirmed the order of th .....

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Hon ble ITAT vide order dated 04/3/2016 in ITA No. 82 to 86/JP/2015 had deleted the disallowance by holding that the item sold by the assessee is scrap like Tin, polythin, iron scrap, plastic drum etc. is not the scrap generated from manufacturing process, is not liable to TCS U/s 206C of the Act. The circular referred by the ld CIT(A) is for trading of scrap, therefore, he prayed to delete the addition. 10. At the outset, the ld DR has vehemently supported the order of the ld CIT(A). 11. We ha .....

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The revenue is against allowing the appeal by the ld CIT(A) by holding that the margin of distribution in the payments made by the assessee to its distributor is not commission liable for deduction U/s 194H of the Act in all the years. The ld Assessing Officer has observed that the assessee had paid commission to the distributors at ₹ 1,35,28,711/- in A.Y. 2011-12, ₹ 1,69,25,223/- in A.Y. 2012-13 and ₹ 1,56,49,706/- in A.Y. 2013-14. Ld Assessing Officer further observed that t .....

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uction of tax is required to be done from the amount of commission. As per assessee, this was the sale on the basis of principle to principle and the assessee is not liable for any transit loss, pilferage loss, weight loss etc. cost of distribution is borne by the distributor which is not being reimbursed by the assessee. The distributor is to be made payment in advance. There is no chance of bad debt but the ld Assessing Officer held that the ownership of goods has not been transferred as the a .....

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Scheme Vs. CIT (2008) 173 Taxman 54/301 ITR 373 (Delhi). (ii) Hindustan Coca Cola Beverages (P) Ltd. Vs. ITO (ITAT JP) 97 ITD 105. (iii) ACIT Vs Bharti Cellular Ltd. (Cal) 61 DTR 225. (iv) Vodafone Essar Cellular Ltd. Vs. ACIT (Ker) 332 ITR 255. (v) CIT Vs Idea Cellular Ltd. (Del) 325 ITR 148 (vi) ITO Vs Vodafone Essar Cellular Ltd. (ITAT Chennai) 141 TTJ 461. (vii) CIT Vs Singapore Airlines Ltd. (Del) 319 ITR 29 (viii) CIT Vs Director, Prasar Bharti (Ker) 325 ITR 205 (ix) ACIT Vs Edroos Syed M .....

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nd. Accordingly, he created demand U/s 201(1) and 201(1A) of the Act at ₹ 17,68,165 in A.Y. 2011-12, ₹ 20,97,029/- in A.Y. 2012-12 and ₹ 17,60,476/- in A.Y. 2013-14. 13. Being aggrieved by the order of the Assessing Officer, the assessee carried the matter before the ld CIT(A), who had allowed the appeal by observing that there was an agreement between the assessee and the distributors. These distributors, subsequently supplied milk through various retailers and while making su .....

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the distributor was a sale agreement and on principal to principal basis and the assessee deductor was not liable for tax to be deducted at source U/s 194H of the Act. He has reproduced the finding of both the cases on page Nos. 33, 34 and 35 of the appeal order and by following the decision of the Hon ble ITAT, he deleted the addition. 14. Now the revenue is in appeals before us. The ld DR has vehemently supported the order of the Assessing Officer and at the outset, the ld AR of the assessee .....

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