2017 (5) TMI 120 - AT - Income Tax

TDS - payments made to the farmers representing cutting and transporting of the sugarcane - assessee claims that the assessee used to pay sugarcane price to the growers at ex-factory price and any advance to the farmer is only towards cost of sugarcane finally adjusted from the sugarcane price payable to the grower on the basis of final price determined - Held that - The Tribunal has followed the judgment of Hon ble Gujarat High Court in assessee s own case for AY 2003-04 and held that the supply of sugarcanes at the gates of factories of the respective assesses was a part of sale transaction, and therefore, the assesses are not liable to deduct TDS - appeal dismissed - decided against Revenue.

Summary

Issues:
Appeal against deletion of addition under Section 201(1) and 201(1A) of the Income Tax Act, 1961 for AY 2011-2012.

Analysis:
1. The Revenue appealed to the Tribunal against the order of the ld. CIT(A)-IV, Surat for AY 2011-2012, challenging the deletion of an addition amounting to ?86,80,505, which included ?70,00,407 under Section 201(1) and ?16,80,098 as interest under Section 201(1A) of the Act.

2. The Assessing Officer found that the assessee, a Co-operative Society engaged in sugar manufacturing, failed to deduct TDS on payments made to farmers for sugarcane-related activities. The AO calculated the amount to be paid by the assessee at ?300 per MT, totaling ?33,98,25,600, on which TDS should have been deducted. Consequently, an order under Section 201(1) and 201(1A) was passed on 26.03.2013.

3. The ld. CIT(A) deleted the disallowance, citing previous Tribunal and High Court decisions. The Tribunal had previously ruled that the assessee was not obligated to arrange transportation of sugarcane to the factory premises, as it was the farmers' responsibility. The ld. CIT(A) concluded that any advances to farmers were part of the sugarcane price adjustment process, leading to the disallowance deletion.

4. The Tribunal reviewed the case records and upheld the ld. CIT(A)'s decision based on previous judgments. The Hon'ble Gujarat High Court's decision in the assessee's case for AY 2003-04 and 2004-05 supported the conclusion that the assessee was not liable to deduct TDS on payments to farmers for sugarcane delivery. The High Court's ruling emphasized that sugarcane supply at the factory gates was part of the sale transaction, not a separate work contract, aligning with previous legal interpretations.

5. Consequently, the Tribunal dismissed the Revenue's appeal, stating that the ld. CIT(A)'s order did not warrant interference. The decision was made in line with the judgments of the Hon'ble Gujarat High Court and previous Tribunal rulings.

6. The appeal filed by the Revenue was ultimately dismissed by the Tribunal, following the precedent set by previous judicial decisions and upholding the deletion of the addition under Section 201(1) and 201(1A) of the Income Tax Act for AY 2011-2012.

This detailed analysis highlights the key legal arguments, interpretations, and precedents considered in the judgment, resulting in the dismissal of the Revenue's appeal.