2016 (7) TMI 926 - HC - Income Tax

TDS u/s 194C - payments made to Mukadams and Transporters - Held that - Considering the decision of this Court in the case of Krishak Bharati Co-operative Ltd. (2012 (10) TMI 655 - GUJARAT HIGH COURT ) wherein this Court has held that to transport the gas was a part of sale transaction, and therefore, the assessee, therein, was not required to deduct TDS, the question, which is raised in the present appeal is required to be answered in favour of the assessee. Decided in favour of the assessee

Summary

Issues:
Whether the assessee was liable to deduct tax at source under section 194C of the Income Tax Act, 1961 from the payments made to Mukadams and Transporters.

Analysis:

Issue 1: Liability to deduct tax at source under section 194C
The assessee, engaged in sugar manufacturing, did not deduct tax on payments to contractors like mukadams and transporters. The Assessing Officer held the assessee responsible for non-deduction. The CIT (Appeals) agreed that TDS was required under section 194C. However, the ITAT overturned this decision, stating the assessee was not liable for TDS on these payments.

Issue 2: Interpretation of the law
The respondent's counsel referred to a previous judgment where it was held that certain transactions, like supplying sugarcane at factory gates, were part of the sale transaction and not separate work contracts. This interpretation was based on a similar case involving the transportation of natural gas, where TDS was not required as it was part of the sale transaction. The court found the facts of the present case aligned with the previous judgment, leading to the conclusion that TDS was not necessary for the assessee.

Issue 3: Court's decision
Considering the previous judgment and the interpretation of the law, the court ruled in favor of the assessee, citing consistency with past decisions. The court highlighted that the facts of the case mirrored those of previous appeals where TDS was not mandated. Therefore, the court confirmed the ITAT's decision and dismissed the Tax Appeal, favoring the assessee. The court did not provide detailed reasoning, as the matter had been extensively discussed in a previous case.

In conclusion, the court upheld the ITAT's decision, stating that the assessee was not liable to deduct tax at source under section 194C for payments made to mukadams and transporters. The judgment was based on the interpretation of the law and previous court decisions, ultimately ruling in favor of the assessee and dismissing the Tax Appeal brought by the revenue.