2017 (5) TMI 122 - AT - Income Tax

TDS - whether the assessee was required to deduct the TDS under Section 194C of the Income-tax Act, 1961 on the payments made to sugarcane growers for harvesting and transporting sugarcane to the factory premises of the assessee? - Held that - the issue has been decided in favor of the assessee by holding that the assessee was not under the obligation to deduct the TDS because the farmers were required to deliver the sugarcane at the factory gate of the assessee and the price which was paid by the assessee to the farmers for sugarcane was Ex-factory Price - appeal dismissed - decided against Revenue.

Summary

Issues:
Whether the assessee was required to deduct TDS under Section 194C of the Income-tax Act, 1961 on payments made to sugarcane growers for harvesting and transporting sugarcane to the factory premises.

Analysis:
The appeal before the Tribunal revolved around the issue of whether the assessee was obligated to deduct TDS under Section 194C of the Income-tax Act, 1961 on payments made to sugarcane growers for harvesting and transporting sugarcane to the factory premises. The Assessing Officer contended that TDS should have been deducted, resulting in an addition under Section 201(1) of the Act. However, the ld. CIT(A) deleted the disallowance, citing precedents from the ITAT and the Hon'ble High Court. The Hon'ble jurisdictional High Court had previously ruled in favor of the assessee, stating that TDS was not required as the sugarcane was delivered at the factory gate, constituting part of the sale transaction. This decision was reinforced by the Tribunal's judgment in a similar case, upholding the conclusion of the ld. CIT(A) based on the High Court's ruling. The Hon'ble Gujarat High Court emphasized that the supply of sugarcane at the factory gates was part of the sale transaction, aligning with previous case law and determining that the assesses were not liable to deduct TDS. Consequently, the appeal of the Revenue was dismissed based on the established legal principles and precedents.

In conclusion, the Tribunal's decision aligned with the judgments of the Hon'ble High Court and previous Tribunal decisions, affirming that the assessee was not obligated to deduct TDS under Section 194C for payments made to sugarcane growers. The legal analysis focused on the nature of the transaction and established precedents, ultimately leading to the dismissal of the Revenue's appeal.