2017 (9) TMI 1746 - AT - Income Tax

ITAT Chandigarh: No TDS on Milling By-Products Retained by Millers

The District Manager, Punjab State Civil Supply Corp. Ltd. Versus The ACIT (TDS), Chandigarh.

The District Manager, Punjab State Civil Supply Corp. Ltd. Versus The ACIT (TDS), Chandigarh. - TMI Issues involved:- Correctness of separate orders dated 11.11.2016 of CIT (Appeals) Chandigarh for 2013-14 and 2014-15 assessment years- Whether the assessee was required to deduct TDS on the value of by-products retained by millers- Application of previous judgments and orders by ITAT in similar casesAnalysis:The judgment by the Appellate Tribunal ITAT Chandigarh involved appeals by the assessee challenging the correctness of separate orders by CIT (Appeals) Chandigarh for the 2013-14 and 2014-15 assessment years. The key issue revolved around whether the assessee was obligated to deduct TDS on the value of by-products retained by millers. The assessee argued that the issue was fully covered in their favor based on previous judgments and circumstances identical to those considered by the ITAT in other cases. The ld. CIT-DR did not present any contrary facts to support a different view. The record indicated that the assessee, a branch of a State Government agency, procured paddy from the market and engaged millers for milling, with contracts specifying payment terms and obligations regarding milling by-products.The judgment referred to specific agreements between the parties and highlighted that the transactions were in line with the agreements entered into by the related concerns. The agreement detailed the terms of production, quality standards, pricing, and dispute resolution mechanisms. It was emphasized that the by-products, waste, and residual materials belonged to the millers as per the agreement, and the assessee did not make any additional payments for the milling services. The ITAT held that, based on the facts and consistent precedents, the assessee was not required to deduct TDS on the value of the by-products, leading to the allowance of both appeals.In conclusion, the ITAT Chandigarh ruled in favor of the assessee, emphasizing the importance of contractual terms and the absence of payment for milling services beyond the agreed terms. The judgment underscored the significance of previous decisions and the application of consistent interpretations in similar cases. The appeals were allowed, affirming that the assessee was not liable to deduct TDS on the value of the milling by-products.