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2018 (1) TMI 751 - HC - Income TaxTDS u/s 194C - payments made by the Assessee to Mukadams and Transporters - Held that - on an identical facts, the Gujarat High Court in CIT (TDS) v/s. Khedut Sahakari Khand Udyog Mandli Ltd. 2016 (7) TMI 926 - GUJARAT HIGH COURT as held that there is no liability to deduct the tax at source on payments made to Mukadam and Transport Contractor for supply of sugarcane to sugarcane factories. There is a concurrent finding of fact recorded by the CIT(A) and the Tribunal that the payment made to the harvesting and transport contractor are on behalf of the Sugarcane farmers, is a part of the price payable to them. Further no separate deduction for payments made to the Mukadam and transport contractor was claimed by the Respondent-Assessee. - Decided against revenue TDS liability on payment made as bakshish - Held that - Both the CIT(A) as well as Tribunal have found as a matter of fact that the payment made as bakshish as an individual, did not exceed to threshold limit of ₹ 20,000/under Section 194C( 5) of the Act. No occasion to deduct the tax at source would arise - Decided against revenue
Issues:
1. Whether the provisions of Section 194C of the Income Tax Act are attracted in respect of payments made by the Assessee to Mukadams and Transporters? 2. Whether the Bakshish paid to the harvesting and transport contractors directly by the assessee sugar factory is made on behalf of the sugarcane grower farmers? Analysis: Re. Question (a): (a) The Respondent, engaged in sugar manufacturing, purchased sugarcane from farmers. The Assessing Officer noted payments made to harvesting and transport contractors without TDS deduction under Section 194C. The Respondent argued these payments were on behalf of sugarcane farmers, part of the purchase price, and not claimed separately. The AO disallowed the payments under Section 40(a)(ia). (b) The CIT(A) deleted the addition, stating the payments were made on behalf of farmers and considered in contractual payments to farmers. The Tribunal upheld this, noting the responsibility of farmers for harvesting and transport, and that these charges were part of the purchase price. (c) The Tribunal's findings were based on the agreement between the parties, where harvesting and transportation charges were included in the cane purchase price. The Gujarat High Court also ruled similarly in a related case. (d) The Tribunal found the payments to contractors were part of the purchase price to farmers, and no TDS deduction was required. The findings were deemed valid. (e) The Gujarat High Court's decision was cited to support the Tribunal's findings, and no justification was provided to differ from it. (f) The Revenue's appeal in a different case was mentioned but deemed irrelevant due to differing facts. The Tribunal's findings were upheld. (g) The question did not present a substantial legal issue due to the valid and concurrent findings of fact. Re. Question (b): (a) Both the CIT(A) and the Tribunal found that the bakshish payment did not exceed the threshold limit under Section 194C(5) of the Act. (b) As the payment did not cross the threshold, there was no requirement for TDS deduction. (c) The question was considered academic and did not raise a substantial legal issue. Therefore, the appeal was dismissed with no order as to costs.
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