9911796707
TMI Blog2010 (8) TMI 944X X X X Extracts X X X X X X X X Extracts X X X X ..... le to the assessee. This can be observed from the order sheet noting dated 18.7.2006 on page 3, the assessee was to furnish details called for through notice u/s 142(1) dated 7.7.2006 on or before 1.8.2006. Subsequent to this hearing the assessee appeared only on 15.12.2006 and that too in response to the notice dated 1.12.2006. Hence there is no question of insufficient time or inadequate opportunity given to the assessee. Hence, subsequent evidences produced which were hidden from the purview of assessment cannot be taken on face value and needs to be discouraged. 3) In the assessment proceedings relevant to the assessment year 2002- 03, the assessee in his letter dated 18.3.2005 has stated we in the process do not know whether the fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er has traveled to the Tribunal and the Tribunal has finally decided the matter in favour of the assessees after holding that the payments made to the commission agents who are the representatives of the farmers are covered by the exemption under clause-f of rule 6 DD and hence the A.O. was directed to delete the additions made u/s 40A(3) of the I.T. Act. Copy of the Tribunal is placed on record for perusal. 3. These facts were not disputed by the Ld. D.R. 4. Having heard the rival submissions and from a careful perusal of record, we find that identical issue was raised before the Tribunal in the A.Y. 2002-03 and the Tribunal has examined the various aspect and the circulars of the CBDT before coming to the conclusion that the payment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion. Each transaction, therefo4re, requires to be examined with reference to its terms and conditions and no hard and fast rule can be laid down as to whether the agent is acting only as an agent or also as a principal The CBDT then proceed to explain the difference between a kachha arahtia and a pacca arahtia in the following terms:- a) A kachha arahtia acts only as an agent of his constituent and never acts as a principal. A pacca arahtia, on the other hand, is entitled to substitute his own goods towards the contract made ..and thus he (pacca arahtia) acts as a principal as regards his constituent. b) A kachha arahtia brings a privity contract between his constituent and the third party so that each becomes liable to the other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly, Mr. Yella Reddy of Munnangi village was examined. He has narrated that he used to receive the consideration for sale of paddy by cash from the assessee company and in turn distribute the amount to farmers . By deducting his commission. Hence, it is evident that the company is always paying cash to those commission agents for purchase of their paddy (page 4) (B) CIT(A) s order:- (a) The transaction was with the commission agent or middlemen who had been supplying the paddy to the company over the years. It is an admitted fact that the appellant company did not have any contract with the farmers The relationship between the company and the commission agents was of mutual trust (page 9) (b) For documentation the appellant did d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ifference between a pakka adatia and a broker is that the broker enters into the contract as agent for his client, he himself being not person liable to the person with whom he contracts while the adatia does not make the contract with third parties as the agent but as principal . The analysis of the legal definition of Arahtyas and the position of the Commission Agents in the present case show that the impugned commission agents are akin to Kachha arahtyas/broker. In view of the fact that they act as agents and only the name of farmers are entered in the records of the assessee company. As stated by the CBDT in its circular no.452, supra, the trade practices in the agency business is not uniform through out the country. The next que ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hha Arhatiya and Pucca Arhatiya. In its subsequent Circular No.452 dated 5.3.70, supra, such classification was made and the difference between them were explained as stated earlier. On analyzing the differences between the Kachha Arhatiya and Pucca Arhatia, it is clear that the Arhatiyas referred to in Circular No.34 are only Pucca Arhatiyas . On a conspectus of the matter, we come to the following conclusions on the facts and circumstances of the case (a) The impugned commission agents are akin to the Kachha arhatiyas and hence the Circular no.34 of the CBDT relied upon by the tax authorities does not apply to the present case. (b) The impugned commission agents are the agents/representatives of the farmers. (c) As per the ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
