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TMI Blog2022 (5) TMI 821X X X X Extracts X X X X X X X X Extracts X X X X ..... or the work done. Further, 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 / Procurement Agencies. - ITA No. 1450/Chd/2019 - - - Dated:- 26-4-2022 - Diva Singh , Member ( J ) And Vikram Singh Yadav , Member ( A ) For the Appellant : Vibhor Garg , CA For the Respondents : Sarabjeet Singh , CIT , DR ORDER Per Vikram Singh Yadav , Accountant Member This is an appeal filed by the revenue against the order of Learned Commissioner of Income Tax (Appeals), Patiala [in short the 'Ld. CIT(A)'] passed u/s. 250(6) of the Income Tax Act, 1961 (in short 'the Act') dated 07.08.2019 wherei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issue. (vi) Whether on the facts and circumstances of the case, the Ld. CIT(A) has erred in law in cancelling the order u/s. 201(1)/201(1A) of the I.T. Act, 1961 ignoring the fact that the by-products has a substantial monetary value and the sale value of by-products is income of the deductee. (vii) The appellant craves leave to amend, add, alter or delete any of the aforesaid grounds till the disposal. 2. Briefly the facts of the case are that the appellant is procurement agency of government which is meant for procurement of food grains. Apart from other activities it is engaged in procurement of paddy, its handling storage, subsequent Milling holding rice and then forwarding it to its destinations on behalf of Central Government/Agencies mainly FCI as per the government policy decisions. As per policy of the government appellant is procuring paddy from the farmers and giving the same to the rice millers for the purpose of milling. During the year under consideration, the Assessing Officer noted that the appellant deductor has allotted paddy for milling to various millers. The milling charges are being paid @ Rs. 15/- per Quintal. As per the policy laid down ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... meet even the actual cost of services rendered by the millers including milling and drying of the paddy, 'katai' of the paddy before de-husking, de-husking of the paddy, filling up bags of the rice, transportation, weight check etc., apart from the milling of the paddy. That the real consideration lies in the value of the by-product retained by the miller, therefore, the assessees i.e. Procurement Agencies were required to deduct 'TDS' on the value of the by-products paid 'in kind' as consideration for the milling charges. 16. On the other hand, the stand of the assessees before us is that the by-product did not constitute as a payment of consideration for the work contract of milling of the paddy. That the assessees have not debited even the value of the by-product as their expenditure in their books of account and have not claimed any deduction in respect thereof. Further, that even the provisions of section 194C of the Act were applicable in respect of the monetary payment and not for payment 'in kind'. That, even otherwise, the issue has now been squarely covered by the various decisions, not only of the Chandigarh Bench of the Tribunal, bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of any sum credited or paid or likely to be credited or paid to the account of, or to, the contractor, if such sum does not exceed thirty thousand rupees: Provided that where the aggregate of the amounts of such sums credited or paid or likely to be credited or paid during the financial year exceeds [one lakh] rupees, the person responsible for paying such sums referred to in sub-section (1) shall be liable to deduct income-tax under this section. (6) No deduction shall be made from any sum credited or paid or likely to be credited or paid during the previous year to the account of a contractor during the course of business of plying, hiring or leasing goods carriages, where such contractor owns ten or less goods carriages at any time during the previous year and furnishes a declaration to that effect along with his Permanent Account Number, to the person paying or crediting such sum. (7) The person responsible for paying or crediting any sum to the person referred to in sub-section (6) shall furnish, to the prescribed income-tax authority or the person authorised by it, such particulars, in such form and within such time as may be prescribed. 18. Now coming to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the Government of India/FCI is interested to receive back/return of the by-product of the paddy nor the Procuring Agencies who gets the rice shelling on behalf of the Government of India. As noted above, it has been mentioned in the specific term 'that the by-product is the property of the miller' which means that the property in the by-product passes immediately to the miller on the very coming of it into existence. Though, before the milling of the paddy, the Government/procurement agencies remain the owner of the paddy, however, the moment the paddy is milled, the Government/procurement agencies lose their ownership and control over the paddy and the by-product but have right only on the 'milled rice' for which they pay a stipulated amount of Rs. 15/- as milling charges. The relevant words in the clause (8) of the Agreement that the Government/Procuring Agency shall have no right or responsibility in this regard speaks that to retain the by-product cannot always said to be 'right' over a thing but sometimes it becomes a 'responsibility' also and the Government/Procurement Agencies are not willing to own this responsibility. This decision is t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t be said to be consideration for the contract. As observed above, though such benefit may be of worth value to the miller, but it may prove to be a liability to the Procurement agencies, hence, taking into consideration the peculiar circumstances and in the interest of business, a decision has been arrived at by the Government of India not to take responsibility of the by-product, thereby, also losing any rights in the said by-product. As observed above, if the contention of the Revenue is to be accepted, then under the circumstances, the miller can insist upon to say to the other party that he is not interested in retaining the by-product or to negotiate on the milling charges or to claim higher milling charges, irrespective of the value of the by-product either at a negotiable rate or at fixed rate. However, as observed above, neither such an option is available to the miller under the contract nor the property in the byproduct, any time comes into the ownership of the procurement agency. Hence, in view of this, neither the value of the by-product can be said to be consideration for the work contract nor the provisions of section 194C of the Act will be applicable in this respec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Owners should pay the charterers Rs. 75,000/- or 15% of the gross value of the catch whichever is more. 1 b) Annual charter fee shall be maximum of US $ 600,000 per vessel per annum payable by way of 85% of gross earning from the fish sales subject to the condition that this will not exceed 85% of the sales value of the catch per vessel per annum on voyage to voyage basis. Minimum 15% of the earning by way of sales value of catch of fish should accrue to the charterer. Payment to the Deponent Owners should not exceed the above charter fee. c) Export value of catch from the chartered vessels should not be lower than the prevailing international market price at the time of export. Thus, according to the terms of the agreement the Eastwide Shipping Co. (UK) Ltd., the owner of the fishing Trawlers (hereinafter referred to as the nonresident company ) was to provide fishing Trawlers to the assessee for all inclusive charter fee of US $ 600,000 per vessel per annum. In terms of the agreement the assessee was to receive Rs. 75,000/- or 15% of the gross value of catch, whichever is more. The charter fee was payable from earning from the sale of fish and for that purpose 8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it cannot be said that the consideration was passed in kind, rather, it was passed in terms of the monetary value of the sale price received from the catch, subject to the condition that it would not be more than US$ 6,00,000. In the aforesaid case of 'Kanchanganga Sea Foods Ltd.', the assessee, Kanchanganga Sea Foods Ltd., remained the owner of the catch until its sale value was realized and had right to retain the realized value that was more than US$ 6,00,000 and at the same time it was entitled to retain the sale value of the 15% catch, even though, the sale value of the remaining 85% of the purchase would fetch less than US$ 6,00,000. It was the sale value of the catch which was the determining factor and till the catch was not sold or its value was not determined, the property in the catch fish would remain under the ownership of the assessee 'Kanchanganga Sea Foods Ltd'. However, in the case in hand, the neither the Procurement agency becomes the owner of the by-product nor there is any ascertainable value of the by-product. Even, the Procurement Agencies have neither any inclination to know the price of the by-product nor they have right to claim any amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 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 of the Act 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 assessees/Procurement Agencies. 23. Even otherwise, while relying upon the decision of the Hon'ble Delhi Bench of the Tribunal in the case of 'M/s. Aahar Consumer Products Pvt. Ltd.' (supra), the issue in the present appeals has already been decided in favour of the assessee and the Ld. CIT(A) in this case has followed the aforesaid decisions of the Tribunal in various cases and Department, as submitted before us, has not agitated the issue before higher Judicial authority, and even in the absence of any contrary decision of the higher Judicial Forum directly on this issue, the issue is otherwise covered i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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