2017 (8) TMI 1409 - HC - Income Tax

TDS u/s 194H or 194J - TDS liability on payment made to various milk societies on account of milk price difference - Held that - As decided in assessee s own case 2017 (4) TMI 1363 - RAJASTHAN HIGH COURT since there is no rendering of any services and the payment is not made for any managerial services to RCDF therefore payment can neither be held as liable for TDS u/s 194H of the Act as commission/brokerage as held by the AO nor u/s 194J for rendering any managerial services as held by the ld. CIT(A). In view thereof we hold that assessee s impugned payment to RCDF are not liable for TDS. This ground of the assessee is allowed

Summary

Issues:
1. Appellant challenging Tribunal's decision on TDS liability for payment to milk societies.
2. Interpretation of services provided by milk societies and RCDF for TDS applicability.
3. Applicability of section 194H and 194J of the IT Act on payments made.
4. Comparison with previous court decisions on similar issues.
5. Tribunal's ruling on managerial services and TDS liability for payment to RCDF.

Analysis:
1. The appellant contested the Tribunal's decision regarding the liability for TDS on payments made to milk societies. The primary argument revolved around whether the amount paid to milk societies on account of milk price difference should be subject to TDS under section 194H, considering the services provided by the societies in facilitating milk purchases from cattle owners. The appellant emphasized the substance of the matter and previous court decisions to support their stance.

2. The issue extended to the interpretation of services rendered by milk societies and Rajasthan Cooperative Dairy Federation (RCDF) to ascertain the applicability of TDS provisions. The appellant highlighted the services provided by RCDF, including marketing support, coordination with government entities, rate contracts finalization, and other assistance. The contention was that the payments made were for professional or technical services falling under section 194J, thus requiring TDS deduction.

3. The debate further delved into the specific sections of the IT Act, namely 194H and 194J, concerning TDS obligations on the payments in question. The appellant argued that the nature of services provided warranted TDS deduction, while the Tribunal's decision favored non-applicability based on the absence of managerial services or specific service categories qualifying for TDS under the mentioned sections.

4. Reference to previous court decisions, including one involving RCDF and another case between the same parties, was made to draw parallels and establish consistency in interpreting TDS liability scenarios. These comparisons aimed to strengthen the appellant's position by aligning with past judgments and legal interpretations on similar payment issues.

5. The Tribunal's ruling specifically addressed the managerial services aspect and TDS liability concerning the payment to RCDF. It emphasized that the payments were not for managerial services or commission/brokerage, leading to the conclusion that TDS was not applicable under sections 194H or 194J. The decision highlighted the absence of services rendered for TDS obligations, ultimately dismissing the appellant's appeal based on the lack of merit in challenging the Tribunal's decision.