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of <h1>Tribunal rules in favor of assessees on tax deductions, overturns demands, and deletes disallowance.</h1> <h3>COMMISSIONER OF INCOME TAX (TDS) Versus KAMREJ VIBHAG SAHAKARI KHAND UDYOG MANDLI LTD</h3> The Tribunal held that the assessees were not liable to deduct tax at source under Section 194C of the Income Tax Act for payments made to farmers who ... TDS u/s 194C - payments made by the assessee to Mukamams and Transporters who are members farmers of the Zone Samiti - TDS laibility - Held that:- A decided in SHREE CHALTHAN VIBHAG KHAND Versus INCOME TAX OFFICER [2014 (12) TMI 1224 - GUJARAT HIGH COURT] the supply of sugarcanes at the gates of factories of the respective assesses was a part of sale transaction, and therefore, we are of the opinion that the assesses are not liable to deduct TDS as relying on COMMISSIONER OF INCOME TAX (TDS) Versus KRISHAK BHARATI COOPERATIVE LIMITED [2012 (10) TMI 655 - GUJARAT HIGH COURT] - Decided in favour of assessee Issues Involved:1. Interpretation of Section 194C of the Income Tax Act regarding payments to farmers.2. Liability to deduct tax at source under Section 194C for payments made to contractors.3. Disallowance under Section 40A(3) for cash payments towards transport and harvesting charges.4. Applicability of previous court decisions on similar cases to the present appeals.Analysis:Issue 1: Interpretation of Section 194CThe appeals raised questions on whether Section 194C of the Income Tax Act applied to payments made by the assessee to farmers who were members of the Zone Samiti. The Tribunal held that the assessees were not liable to deduct tax at source under Section 194C. This decision was based on a previous court ruling that the supply of sugarcane at the factory gates was part of a sale transaction and not a separate work contract. The court found that the relevant provisions did not apply to the assessee's case, leading to a favorable judgment for the assessees.Issue 2: Liability to Deduct Tax at SourceThe Assessing Officer had raised demands against the assessees for not deducting tax on payments to contractors as per Section 194C. The CIT(A) upheld the demands, but the Tribunal overturned this decision, stating that the assessees were not required to deduct tax at source under Section 194C. The Tribunal's decision was supported by a previous court ruling and the Apex Court's decision in a similar case, leading to the dismissal of the revenue's appeals.Issue 3: Disallowance under Section 40A(3)One of the appeals questioned the disallowance of a significant amount made by the Assessing Officer under Section 40A(3) for cash payments towards transport and harvesting charges. The Tribunal, after considering the arguments and previous court decisions, deleted the disallowance. The court found in favor of the assessees, confirming that the disallowance was not justified.Issue 4: Applicability of Previous Court DecisionsThe assessees' advocate referenced a previous court decision that supported their case, emphasizing that the supply of sugarcane at the factory gates was part of a sale transaction. The court agreed with this interpretation, citing the Apex Court's decision in a similar matter. The court found that the previous decisions were applicable to the present case and ruled in favor of the assessees, confirming the Tribunal's orders and dismissing the revenue's appeals.
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