TMI Blog2005 (8) TMI 701X X X X Extracts X X X X X X X X Extracts X X X X ..... e appellant is a cooperative society and carried out the business of manufacturing sugar from crushing sugarcane purchased from its member farmers. 3.2 After the scrutiny of TDS return as filed by the appellant, the Assessing Officer noticed that the society was not deducting tax from the payment made to mukadams and transporters for cutting and transporting sugarcane from the sugarcane fields of the member farmers to the gate of the factory. In order to verify the above referred facts, a survey under section 133A of the Income-tax Act was carried out by the Assessing Officer on 6-1-2003 and during the survey proceedings it was found that the appellant was not deducting the tax according to the provision of section 194C of the Income-tax Act, 1961 from the aforesaid payment made to mukadams and transporters. The Assessing Officer had found that during the year under consideration, total payment of ₹ 13,73,67,269 was made to mukadams and transporters for cutting, harvesting and transporting the sugarcane from the fields to the factory gate without deducting the tax under section 194C of the Income-tax Act and in view of these facts he had asked the appellant to explain as t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he member farmers though it is an unregistered body. (l)The truck owners are the farmers and their incomes are exempt under section 2 of the Income-tax Act. (m)The mukadams receiving the cutting charges for the labourers engaged by them are having very low income and out of that no TDS is required to be deducted by the appellant. 3.3 The above stand taken by the appellant for non-deduction of tax in accordance with the provisions of section 194C of the Income-tax Act was not accepted by the Assessing Officer and for that he has had made elaborate discussion in the order passed under section 201 and 201(1A) of the Income-tax Act from pages 5 to 35. As referred above, it was submitted by the Authorised Representative of the appellant before the Assessing Officer that a Samiti of some member farmers was formed and these persons volunteered to look after the work of cutting and transportation of sugarcane from the fields to the mill rate on behalf of the other member farmers. According to the Assessing Officer, this Samiti which was known as Sabhasad/Zonal Samiti used to receive money in the form of advances from the appellant to incur the same on behalf of the member farmers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... embers in the books of the appellant and the same is quoted as below: Further, I would like to submit that the system prevailing in sugar industry is such that the gate delivery price payable to sugarcane grower members is used to fix in every crushing season. For example, in season 2001-02 (i.e. from Sept. 2001 to October 2002), the sugarcane price determined in the month of October, 2002 i.e. at the end of the season. However, for the very reason that the sugarcane grower members are always in need of money, the society used to pay in instalments determined on the basis of crushing and recovery of sugarcane, sale proceeds etc. following the instructions of sugar federation of Gujarat as also policy framed by the Government. Accordingly, at the time of payment of instalments towards purchase price payable to members for their supply of sugarcane to the society, the instalment towards harvesting and transport expenses, etc. is also paid to them. It is therefore the payments towards the sugarcane supplied by the members and not for any contract with outsiders. In support of this, the true copy of resolution Nos.8 and 10 dated 12-11-2001 and 7-12-2002 respectively are attached h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have taxable income and again they were eligible to claim deduction under section 44AE of the Act, i.e., by showing incomes of ₹ 3,500 per month and in that situation also they were not liable to pay tax and, hence, there was no question of deduction of tax on such payments. 3.6 Regarding the payments received by Mukadams for cutting charges on behalf of the labourers engaged by him, it was argued that their income was very low and hence no TDS was required to be made. The Assessing Officer had quoted the reply as made by the appellant before him vide letter dated 11-11-2003 in this regard and the same is given hereunder : I may add that the labour charges for any crushing season to a single labour is always maximum upto ₹ 7,500 because the other bare necessity such as food, residence, medical treatment are also provided by the farmers out of this instalment through their samiti and therefore, there is no question of tax deduction from payments of harvesting charges under section 194C of the Act. The view of jurisdiction officer is that the payments made to contractors/mukadams are liable of deduction of tax at source. In that eventuality also presenting that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no entity and recognition under any statute and in this way the existence and entity of the Samiti could not be proved by the appellant and therefore, there was no question of Samiti to be considered as third party. Thus, in view of the Assessing Officer, there were only two parties, i.e., the appellant on the one hand and the mukadams and transporters on the other hand and the payment for the cutting and transportation charges were made by the appellant to the mukadams and transporters in lieu of harvesting and transporting of sugarcane from the fields to the mill gate. In this way, as per the Assessing Officer, there were two parties to constitute the contracts under section 194C of the Income-tax Act. 3.8 Regarding books of account as maintained by the Samiti, it was pointed out by the Assessing Officer that its books of account were maintained as per the sugarcane crushing season of the factory, i.e., written from October to May of the respective year. These books were not written financial year wise, i.e., for the period from April to March and it was also important to note that the books of account of the Samiti was not kept for the period of more than one financial year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses for the purpose of cutting and transportation and other ancillary charges paid by the appellant through its books of account were income not in the hands of farmers but income of the transporters and mukadams. 3.9 Regarding the affidavits submitted by the appellant on behalf of the farmers, it has been commented by him (the Assessing Officer) that they were all of same nature as far as the contention of these affidavits were concerned and only signatures of the farmers and the details of agricultural land owned by them were different. According to the Assessing Officer, in these affidavits, the place, date, introducer and Notary before whom the farmers signed were the same. According to him (the Assessing Officer), the contents of the affidavit was pertaining to agricultural land holding of farmers, the tradition of sugar factory and discussion about the prime liability of the individual member regarding cutting and transportation of sugarcane up to the factory gate and it was narrated as per the bye laws of the society. He (the Assessing Officer) had further stated that the fact remained that the activities as narrated in affidavits were not conducted by the individual farm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00 per M.T. be paid as advance. In the subsequent paragraph, it is resolved that members are supposed to bear the expenditure of cutting and transportation charges, ₹ 165 are to be paid to the members as advance. In support of this, the Authorised Representative has filed the copy of sherdi advance payment voucher which is at the page No.95 in Volume No.1 of record. This voucher envisaged that ₹ 165 per M.T. is paid to the members on 9-7-2002 of a member whose sugarcane is reached to the factory on 18-3-2002. This is very important that the sugarcane of member Shri Pramodkumar Rambhai Patel is reached on 18-3-2002 and the voucher of advance payment at the rate of ₹ 165 per M.T. is prepared/made and payment is shown on 9-7-2002, i.e., after gap of four months period. If ₹ 165 per M.T. is an advance paid to the farmer to meet the expenditure of cutting and transportation charges, then it should have been paid to the farmers before his sugarcane was cut and transported to the factory in 18-03-2002. When the amount of ₹ 165 per M.T. is claimed to have been paid after gap of four months period, it can never be termed as advance. Looking to these aspects, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ukadams is with samiti, i.e., the agency of sugar mill and not individual member/farmer. The entire work of cutting and transportation done by the contractors and are controlled by sugar mill and samiti and ₹ 165 per M.T. is also charges not decided by individual member/farmer but decided by sugar factory in its resolution No. 8. This is very important that the amount of ₹ 165 decided per M.T. irrespective of distance involved in a particular case. Even this expenditure of cutting and transportation of sugarcane ₹ 165 per M. T. is decided much after goods is transported and used by the sugar factory. It is clear that the debit entries in the books of sugar mill under the head of Sabhasad sherdi advance in lump sum on various dates are the same amounts and dates credited in the books of samiti and from the books of samiti final payments to transporters and mukadams are made. Thus, the sugar factory makes payments to the transporters and mukadams through samiti which is a part of sugar factory only. The surplus in the books of samiti also suggests that no individual farmer/member undertake the task of cutting and harvesting. If individual farmer/member does so, no s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... carrying out the work of supervision of transportation of sugarcane to the mill gate. In this view, Zone Samiti was spending the farmers money while discharging the above mentioned duties, the money was received by it from the appellant on advance basis and finally when the works relating to harvesting and transporting was over at the end of the season, the final account for each farmer was prepared by it and adjustments out of advance received from the mill for such expenses was made by making out the expenses charged from each and every farmer against transport of his sugarcane. In this way according to Authorized Representative, the Samiti used to prepare a final account and after making adjustment of expenses incurred by it, return the balance money to the appellant and after that a final account for each farmer was prepared by the appellant and the payments were made to farmers. He has mentioned that Samiti maintained its books of account keeping all minute details of expenses incurred by in respect of farmers and its books of account were subject to audit. In this argument, by referring to various bye-laws of the appellant and which were binding on the farmers, it has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of labourers by mukadams, majuri barthi karchha, such as, food expenses, medical expenses and insurance expenses for the labourers were incurred by the Samiti and the appellant was nowhere responsible for the same. 11.4 Further, a remand report was received from the Assessing Officer and a copy of the same was given to the appellant for its comments and in response to that a submission was again made by it on 6-10-2004. In his remand letter, the Assessing Officer has categorically stated that by way of submission of the paper book, no new submission has been made and therefore, no new facts were brought to the surface. Again in the report he has stated that the detailed discussion has already been made with regard to the papers submitted by the appellant while finalizing the order under section 201 and 201(1A) of the Income-tax Act, 1961 and, therefore, to avoid repetition of the same, no comments were required to be made and thus, his stand remains the same as was taken by him at the time of passing of above order. But at the same time, in his report, he has discussed in brief about the applicability of the provisions of section 194C in the case of the appellant. It has been m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amiti were the employees of the appellant company and they were at its pay roll. 11.5 In response to the remand report of the Assessing Officer, it was replied by the Authorized Representative that he (Assessing Officer) did not consider the documents contained in the paper book in the right perspectives and repeatedly held the same view which was held by him while passing the order under section 201 and 201(1A) of the Income-tax Act, 1961. It has been mentioned by the Authorized Representative that it was very difficult for an individual farmer to deal with the problem of harvesting and transporting the sugarcane from the field to the mills gate and therefore, for a collective dealing with the appellant, the mukadams and the transporters, they created this Zone Samiti for the sake of their convenience and therefore the view of the Assessing Officer treating the Zone Samiti as an agent of the appellant is not correct. He has further mentioned that there was a written contract of sale of sugarcane between the farmers and the appellant regarding cutting and harvesting the sugarcane and transporting the same to the gate of the factory and for fulfilling the same, the farmers create ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d ultimately dismissed the assessee s appeals by observing under:- 12. I have carefully considered the findings of the Assessing Officer as referred above along with the remand report submitted by him and also went through the submission as made by the Authorized Representatives of the appellant company and the arguments made by them before me. After perusing the plethora of evidences and details as filed by the appellant, it is seen that no basis has been provided by the appellant for forming the Zone Samiti to handle the onerous job of arranging harvesting and transportation of sugarcane on behalf of the member farmers. It is seen that there was no written bye laws or rules on the basis of which such Zone Samiti was formed. It is also the fact that the appellant has carried out its business for years and as per the submission, it is clear that in every season the Zone Samiti, perhaps, was assigned this kind of work. It was also not been stated that what was the responsibilities assigned to each member of the Samiti, what was the basis of selecting the members of the Samiti amongst the old lot of member farmers. It is also seen that all the people who were carrying out the im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y Zone Samiti in the Rules which could be given the task of organizing such activities. It has been clearly pointed out by the Assessing Officer after referring the statements of some member farmers that vouchers of expenses were though signed by them but they were never paid the amounts in lieu of this to disburse the expenses for harvesting and transportation of sugarcane. In this regard the findings of the Assessing Officer regarding the affidavits filed by the farmers appear to be acceptable. In his order, the Assessing Officer stated that the farmers have given affidavits stating to abide by the rules and bye laws of the society regarding growing and harvesting and transportation of sugarcane to the mill gate of the appellant but in practice, they never followed the same and therefore, the contents of the affidavit as per the Assessing Officer bear no relevance to his findings. I, therefore, do not agree with the submission as made by the Authorised Representative before me regarding his objection that the Assessing Officer did not consider the contents of the affidavits nor he cross-examined the farmers who filed the same. I accept the findings of Hon ble Gujarat High Court a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wn that the farmer member on his own would carry out harvesting the transporting the sugarcane from the fields to the mill gate. Whereas, in practice, it was carried out by the appellant through mukadams and transporters and, thus, there is found a clear-cut contract between the bye-laws and its binding nature of the member farmers. Hence, the contention of the appellant is not accepted in this regard. 12.3 During the appellate proceedings, the Authorised Representative of the appellant again quoted the findings of Hon ble Supreme Court in the case of CIT v. R.M. Chidambaram Pillai 106 ITR 292. After the perusal of the said judgment, it is found that the Hon ble Court laid down the ratio that salary paid to a partner by a firm which gross and sells tea, is exempt from tax under rule 24 of the Indian Income-tax Rules, 1922, to the extent of 60 per cent, thereof representing agricultural income and is liable to tax only to the extent of 40 per cent. By citing this judgment of Court, perhaps, the Authorised Representative of the appellant wants to say that the farmers were earning agricultural income by way of selling of sugarcane and therefore that was not subject to any tax. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... referred to some of the documents (but not all) in paper-book (Vol.I II), such as, Page No. 72 which is copy of resolution No. 8 dated 12-11-2001, page No. 73 which is the copy of resolution No. 10 dated 7-10-2002. (English version of these two documents is placed at page No. 72A, and 74A, 74B respectively). Page No. 87(1), 287(4) which are copies of bye laws for the season 2003-04, some vouchers for accounting for the amount of ₹ 165 per M.T. towards the sale price of the farmer and copy of account (from the assessee s books of account) of the farmers showing total purchase price payable by the assessee and deductions, including the deduction of ₹ 165 M.T. towards payment to the Samiti, page Nos. 90 to 166 which are copies of vouchers for making payment to the Samiti in the form of alleged advance towards payment of purchase price to farmers and copies of notification by the Government fixing the purchase price of sugar cane for different sugar factories including assessee, during the different reasons submitted that farmers were under obligation to deliver the sugarcane at the factory gate of the assessee, i.e. at the gate of the factory and since it was time consum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eing paid by the Samiti and not by the assessee. To bring home his point, the ld. counsel for the assessee, strongly relied upon on the terms of Resolution No. 8 dated 12-11-2001, Resolution No. 10 dated 7-12-2002, Affidavits of the farmers, assessee s books of account wherein the advance payment of ₹ 165 per M.T. had been accounted for against purchase price payable by the assessee to various farmers (farmer-wise), the receipts given by the farmers in token of having received part purchase price at the rate of 165 per M.T. etc. etc. The ld.counsel for the assessee, further submitted that if the Samiti was considered to be a benami Organization of the assessee, onus was on the Revenue to establish that Samiti was assessee s benami Organization which has not been the case here. With respect to affidavits of various farmers filed by the assessee during the course of proceedings before the Assessing Officer, the ld. counsel for the assessee submitted that the Assessing Officer was not justified in rejecting the affidavits without cross-examining a single farmer. The ld. counsel for the assessee, further submitted that so far as transportation of the sugar-cane is concerne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -12, 8-A and Form No. 6 should be attached at the time of filling-up the plantation form. 3.The sanction of month and area may be permitted as requested by the member. 4.Registered new plant cane/ratoon crop to be given to organization compulsorily. Defaulter may be liable for penalty of ₹ 3000 per acre. 5.Member himself has to send his own harvested sugar cane to the organization. 6.Member has to fill-up the form of such village in which his name is enlisted in the voting list of the village. Member has to register in the share holding village only, though the actual cane plantation may fall in the dual territory villages in the area of operation and the villages falling outside the area of operation. Registration of plantation made in the area of operation except dual territory village, may be made in the concerned villages. 7.The plantation of sugarcane of following varieties may be made as accepted by the organization: (a) Varieties permitted for plantation from October till season end: COC 671, CO 86032, COAN 95132, O 92020, CO 86002, COSI 95071 Permission can be given to the plantation of above permitted sugar cane varieties only. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion than it, more ratoon can be kept. 17.No preference in cane harvesting will be given for the cane crop damage due to animals, railway or riots. 18.Block No. of the field in which cane plantation is done is required to be informed. 19.If any question/dispute arises in future for the planted land, organization shall not be liable. Total responsibility for fulfilling sugar cane shall be of the member. 20.Organization reserves the right for change in above rules and regulations. I have gone through the cane plantation rules and regulation for the season 2003-04 and thereafter I have filled this form with full understanding and with a condition to abide all the rules and regulations. Accordingly my cane plantation demand is as follows: Name of the member :____________Name of Village : ___________ Member s Code No. :____________Village Code No. :_____________ Share Areas of Block AT Canal/ Name Month Cane No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne Ana-mat Deposit and Development Deposit and further to repay the Development Deposit of year 1986-87 to the members. Sugar cane price of Registered sugar cane supplied by members Month Ex-factory (gate cane price) of good and Burnt sugar cane (per M.T.) October 1,005 November 1,005 December 1,026 January 1,051 February 1,081 March 1,111 Further resolved to deduct ₹ 1.50 per M.T. towards Sabhasad Kalyan fund, ₹ 1.50, per M.T. towards Hospital fund and ₹ 2 per M.T. towards Road Development Fund from members registered sugar cane price. Further resolved to deduct ₹ 30 per M.T. plus ₹ 10 per M.T. per week for the earlier period to scheduled crushing for the burnt sugar cane. It is further resolved unanimously to pay cane price for registered and unregistered cane su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plans the programme for cane plantation in the prescribed operational area of the Mandli. I am following the said programme of the Mandli and accordingly cultivating the cane crop from last so many years. Every year the Mandli process the received cane from all farmer members at factory gate/weigh bridge for production of white crystal sugar and the income of the sugar sale and other bye-products is distributed to every member in proportion with their cane receipt at factory gate after deduction of all the expenses thereof. Myself and other cane cultivating farmers are not getting the reasonable rates/returns of cultivated cane if we sale it directly in the open market. Moreover, the cane cultivating cost is increasing day by day, but cane prices are not increasing in that proportion. I am planting and cultivating the sugarcane crop in my own/tenancy land. The cultivated cane crop after maturity is being sent to the sugar factory by carts, trucks or tractors and the theft or any loss by any reason of the cane during transportation is absolutely my own responsibility. Nothing is being paid against theft or loss by any reason of cane by Mandli. I am the member of this Mandli and sen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... results in better sugar production, sales realization and cane price paid to us. All cane cultivating farmers have established this system of Sabhasad/Zone Samiti on the basis of Vina Sahakar Nahi Uddhar and One for each and each for all with no profit no loss basis. Accordingly, our Khedut Samiti is doing the total activities of cane harvesting and transportation up to factory gate/weigh, bridge. The expenses incurred for cane harvesting and transportation are borne by me and have authorized our Khedut Sabhasad Samiti by giving due consent to take the record amount as expensed for cane harvesting and transportation on account of our ex-factory cane price payment against our sugarcane supplied to sugar factory for crushing. The necessary vouchers for advance amount needed for cane harvesting and transportation from my cane payment is signed by me and in this way, the said amount of advance money taken from my account as per my will and consent are being transferred to this Sabhasad Zone Samiti with my willing consent as given to sugar factory. I am totally empowered to manage my ex-factory cane price payment as per my needs and necessity as I am the sole owner of my cane crop s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l 180 persons at the rate of ₹ 365 per annum per person under Krishi Shramik Samajik Suraksha Yojna (KSSSY) of the Central Government. (V.G.Khair) Assistant Government Labour Welfare Officer Palsana (vi)Clause 7(a) of Peta Niyam (translated in English) which are in the following terms:- Reaping of sugar-cane and bring it to the factory of Co-operative Society would be legal responsibility of the member. However, the Managing Committee of the Society, if possible will collectively decide for such kind of work and expenses thereof will be dived proportionately. 10. After considering the totality of the facts and circumstances of the case and the records, first of all, we would like to deal with the assessee s submission that the Revenue has rejected the Affidavits of farmers without cross-examining a single farmer. 10.1 So far as the Subject s right to file of an Affidavit is concerned, we are of the opinion that in proceedings before the ITAT, it is Rule No. 10 of ITAT Rules. 1963 which provides for furnishing of an Affidavit and according to this Rule, the Affidavit is to be filed where a fact much cannot be borne out or is contrary to, the record is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the inspection of the Court. Explanation 1 - Where a document is executed in several parts, each part is primary evidence of the document; Where a document is executed in counterpart, each counterpart being executed by one or some of the parties only, each counter part is primary evidence as against the parties executing it. Explanation 2 - Where a number of documents are all made by one uniform process, as in the case of printing, lithography or photography, each is primary evidence of the contents of the rest; but where they are all copies of a common original, they are not primary evidence of the contents of the original. Section 63: Secondary evidence - Secondary evidence means and includes- (1)Certified copies given under the provisions hereinafter contained; (2)Copies made from the original by mechanical processes, which in themselves ensure the accuracy of the copy, and copies compared with such copies; (3)Copies made from or compared with the original; (4)Counterparts of the documents as against the parties who did not execute them; (5)Oral accounts of the contents of a document given by some person who has himself seen total income. Section 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... then each part falls within the definition of Primary evidence of the document and if document is executed in counter parts, then each counter part is primary evidence as against the parties executing it, Explanation Nos. 1 and 2 to this section further elaborate on the subject as to which document is primary evidence. (ii)Section 63 defines the secondary evidence and according to it, the secondary evidence is of five kinds; (i) certified copy given in the provisions contained in the Evidence Act; (ii) Copies made from the original by Mechanical process, which in themselves ensure the accuracy of copies and copies compared with such copies; (iii) copies made from or compared with the original; (iv) counter parts of the documents as against parties, who did not execute them; and (v) oral accounts of the contents of the documents given by some person, who has himself seen it. 10.5 The provisions of section 64, on the other hand, speaks of proof of primary evidence and according to these provisions, to establish the proof of document by considering the same as primary evidence, the documents must be proved except in the case mentioned in other provisions of the Act. 10.6 So ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of Rule 10 of ITAT rules. Because there seems to be no necessity as all the submissions made in the affidavit and place in the pleadings and the documents relied upon in support of such pleadings - this observation is without prejudice to our findings as to whether pleadings and documents relied upon in support of such pleadings are found to be trustworthy/correct or a make belief affair. 16. In view of above facts and circumstances of the case, we are of the opinion that the assessee had no right to furnish any Affidavit of any farmer of its own without being directed or required by the Assessing Officer, and, therefore, there was no question for the Revenue to either consider the same or to cross-examine any of the farmers before rejecting the same. 17. Coming to the assessee s second plea, that in case Revenue was considering Samiti to be assessee s benami Unit/Organization/Outfit, then onus was on the Revenue to establish the same, we are of the opinion that - (i)Where the Unit/Organization/Outfit/ a work place is considered to be a part of the assessee s own organization, it falls, only within the ambit of Term Branch Office/Branch Unit or branch organization an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not by the farmers, but somebody-else and that somebody-else in the facts and circumstances of the present case, could not be anybody else other than the Samiti/assessee , meaning thereby that the transportation of the sugar-cane from the farmers fields was not the farmers liabilities because had it been so, then how the assessee was concerned with the location of the field. Such a condition can be imposed only by a person who is to face/work under that situation. If the transportation was not the assessee s headache, then how the assessee was concerned with the location of the field and how the assessee could impose such condition. This condition clearly confirms that transportation of sugar-cane from the fields even to the collection point, what to say of assessee s factory s gate, was not of the assessee. [Emphasis supplied] (b)This Rule does not specify as to what will happen to the sugarcane of a farmer, who is member of the Society, i.e. the Assessee, but do not have his fields by the side of Road. Could the assesses refuse to receive the sugarcane grown by such farmer - members in fields away from Road and if not, then how those farmers could be charged deduction at the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rplus with the Samiti used to come back to the Assessee, it has to be presumed that the total surplus remaining with the Samiti as on 31-3-2003 or 31-3-2004 at the end of each season had come back to the assessee. This aspect was not denied by the assessee. 22. The aforesaid facts dearly go to show that Samiti was nothing, but a branch office of the assessee to which the assessee was sending money in advance, but in the garb of a part of purchase price of sugar-cane payable to farmers. By adopting this Method or Modus Operandi , the assessee was not only avoiding its liability to deduct the tax at source on payments made to transporters and the mukadams through the so-called Branch office/Outfit in the garb of Samiti which admittedly, were in excess of the limits prescribed under section 194C of the Act, but has also evaded the tax payable on that part of income which remained as surplus with the Samiti at the end of each season/year, by claiming the same to be expenditure on account of purchase price. In fact, the payment to Samiti was not at all the payment on account of part payment of purchase price payable to farmer, rather was in the nature of impressed payments t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecause on for it is not established that Samiti was an Organization formed by the farmers. On the contrary as discussed above, the so-called Samiti was nothing, but a Branch office/Outfit of the assessee which was looking after the harvesting, cutting and transportation of sugar-cane from the fields of the farmers to the assessee s factory s gate. The Samiti was just a collection centre of the assessee. In view of above discussions and facts and circumstances of the case, we do not find any reason to interfere with the order of the CIT(Appeals) which is well reasoned and has dealt every aspect of the issue in a judicious, elaborate and legal manner. The order of the CIT(Appeals) is confirmed. 28. In view of aforesaid totality of the facts and circumstances of the case, we are of the opinion that so far as the present case is concerned, since, on facts we have found that the Samiti was assessee s own branch and payment to it were not on account of purchase price payable to farmers, the accounting for of the same by the Assessee in farmer s accounts or other entries in the books of account were not relevant. This plea is rejected. 29. In the result, the appeal of the Asse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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