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TMI Blog2012 (4) TMI 803X X X X Extracts X X X X X X X X Extracts X X X X ..... ility was contingent in nature and that the provisions of Section 40(a)(i) were applicable in this case. 2. In the facts circumstances of the case, Ld. CIT(A) was not justified in deleting addition of ₹ 35,29,04,787/- made by the AO u/s 40(a)(ia) when assessee had been paying service charges/society charges/samiti charges and commission to various district level/primary level and state level cooperative societies and there was relation of Principal and Agent between the two as per Agreements and the state/district/primary level co-operatives were working as procurements agents of the assessee thereby ensuring that the provisions of section 194H read with section 40(a)(ia) of I.T. Act, 1961 were clearly applicable. 3. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ties, and perusing the material on record, we find that the identical issue came for consideration before the Tribunal in Asstt. year 2003-04 where the matter was decided in favour of the assessee. This fact has also been accepted by the AO in his order but he was not inclined to follow the Tribunal s order for the reason that the department has filed an appeal before the Hon ble High Court. However, the fact remains, the issue has been decided in favour of the assessee in Asstt. year 2003-04 which has also been followed in Asstt. year 2004-05. This position that the issue involved in this year is identical to the issue involved in Asstt. years 2003- 04 and 2004-05 has not been disputed by any of the party. It is also equally true that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0. The finding of the Tribunal recorded in paragraph No. 7.1 is that the instant Commissions are the society charge mentioned in VAT invoice of the societies, selling goods to the assessee and it is not a payment of commission as understood u/s 194H. Therefore, there is no liability fastened on the assessee to deduct tax from such payments. Consequently the provision containing 40(a)(ia) is not applicable. This paragraph is reproduced below for ready reference:- 7.1 From the above it is held that the societies commission/charge mentioned in the VAT invoice of the societies, selling goods to the assessee, is not a payment of the commission as envisaged in section 194H and therefore, there is no liability on the assessee to deduct tax at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee. With these facts, it was found that as the assessee had not paid any amount to the procurement agencies on account of transportation, interest or storage charges as such, accordingly there was no liability for deduction of tax. The contention of the learned Counsel for the Revenue that in fact all these factors had been taken care of while fixing the price at which the food grain was to be billed to the assessee, carries no weight. If expenses incurred by a person on account of transportation, interest, storage etc. are added to the cost of the goods, it cannot be inferred that the person who is billed had paid certain amount on account of those services separately as the same becomes part of the commodity so sold. For the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dividend income has not been excluded from the total income as seen from the aforesaid facts. Further the income is not of such a nature which has to be excluded from the total income by dividend of section 10(34) as the dividend has been received from cooperative societies and not the company. The deduction u/s 80P(2)(d) would ordinarily be available to cooperative societies on such income in case there is a positive gross total income. Since there is a loss in this year, the deduction has not been claimed. The Ld. CIT(A) referred to the decision in the case of Punjab State Cooperative Milk Producer Federation Ltd. vs. ITO in ITA No. 1068 of 2005 dated 27.4.2006 in which it has been held that the provision contained in section 14A is appli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lable to the assessee. Sub section (1) of section 14A provides that no deduction shall be allowed in respect of expenditure incurred by an assessee in relation to income which does not form part of the total income under this Act. According to us, the operative words which require interpretation are income which does not form part of the total income. Having considered this matter, we are of the view that the provision speaks of positive exclusion of the income from the total income and not theoretical exclusion of the income from the total income by deeming that gross total income is a positive figure. In this case, gross total income results into loss and therefore, the dividend income does not get excluded from the total income, which ..... X X X X Extracts X X X X X X X X Extracts X X X X
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