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2020 (11) TMI 862 - AT - Income TaxTDS u/s 194C - determination of milling cost paid by the assessee - payments which were made in kind - AO observed that the amount need to be increased by the cost of by-product for the purpose of deduction of tax at source - short deduction of TDS - HELD THAT - As decided in own case 2018 (12) TMI 398 - ITAT CHANDIGARH the property in the by-products comes into ownership of the millers from the very point of coming of it into existence, hence, in this case the assessee were not the owners of the by-products. Another factor for consideration is that the property passed 'in kind' should have some ascertainable and determinable value, which can be taken as part of the consideration paid for the work done. It is the nature of the contract, term of the agreement, the intention of the parties and overall facts and circumstances of the case which are required to be analyzed and considered for determining whether the provisions of section 194C or other similar provisions of the Chapter would be attracted or not in a particular case. As discussed above in detail, since we have held that the property in the by-product was not passed on by the assessee / Procurement Agencies as milling charges, hence, it is held that TDS provisions of section 194C are not attracted in this case. This issue is decided in favour of the assessee
Issues:
- Interpretation of Section 194C of the Income Tax Act 1961 regarding TDS applicability on payments made in kind. - Application of legal precedents and decisions in determining TDS liability on payments involving cash and material. - Consideration of the value of by-products in relation to TDS obligations. - Assessment of the correctness of the CIT(A)'s order in light of previous judgments. - Determination of ownership and passing of consideration in kind. - Compliance with TDS provisions in cases involving consideration passed in kind. - Review of the appeal and potential grounds for amendment. The judgment involved two appeals by the Department against separate orders for the A.Y. 2012-13 & A.Y. 2013-14 passed by the Ld. CIT(A), Patiala. Common issues were raised in both appeals, which were heard together for convenience. The Department contended that the CIT(A) erred in not upholding the order under Section 201(1)/201(1A) of the Income Tax Act 1961 regarding TDS application on payments made in kind. The Department argued that the CIT(A) wrongly relied on previous decisions and failed to consider that Section 194C applies to payments made in cash and cash equivalent. The Department also challenged the CIT(A)'s reliance on specific judgments, questioning the correctness of the interpretation of legal precedents. Moreover, the Department disputed the CIT(A)'s cancellation of the order under Section 201(1)/201(1A) concerning the substantial monetary value of by-products and their impact on TDS obligations. During the hearing, the Assessee's counsel highlighted a similar issue resolved in favor of the assessee by the ITAT, Chandigarh Bench "A" in a previous case. The Departmental Representative supported the AO's orders but could not counter the Assessee's contentions regarding the previous ITAT decision. The ITAT considered the submissions and the record, noting that a similar issue was previously decided in favor of the assessee by the ITAT Chandigarh Bench "A." The ITAT emphasized the importance of considering the nature of the contract, ownership, and determinable value of consideration passed in kind. Relying on the previous ITAT decision, the ITAT found no infirmity in the CIT(A)'s findings and dismissed the Department's appeals. In conclusion, the ITAT dismissed both appeals of the Department based on the precedents and findings presented during the proceedings, aligning with the previous decision in the assessee's favor. The judgment highlighted the significance of analyzing the specific facts of each case to determine the applicability of TDS provisions, especially concerning payments made in kind, and emphasized the importance of legal precedents in interpreting tax laws effectively.
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