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of <h1>Tribunal upholds CIT(A)'s decision on penalty for non-TDS, citing genuine belief & nature of charges.</h1> <h3>The ACIT (TDS), Circle-Panaji Versus M/s. Sadashiva Sugars Ltd., [aka. M/s. EID Parry (India) Ltd.]</h3> The ACIT (TDS), Circle-Panaji Versus M/s. Sadashiva Sugars Ltd., [aka. M/s. EID Parry (India) Ltd.] - TMI Issues involved:The judgment involves the issue of penalty imposition u/s 271C of the Income Tax Act, 1961 on harvesting charges paid by the assessee company.Facts of the case:The respondent-assessee, a limited company engaged in sugar production, was found to have made payments to harvesting contractors without deducting tax at source. The Tax Deducted at Source (TDS) Officer held the assessee as 'assessee-in-default' u/s 201(1) and 201(1A) of the Act and raised a TDS demand. Subsequently, penalty proceedings u/s 271C were initiated, and a penalty was levied. The CIT(A) deleted the penalty, stating that the assessee was under a genuine belief that no TDS was required on harvesting charges.Arguments presented:The Revenue contended that the CIT(A) should not have accepted the assessee's belief that no TDS was required on harvesting charges. The assessee argued that harvesting charges were part of sugar cane purchases and cited legal precedents supporting their position.Judgment:The Tribunal considered the explanations provided by both parties. The CIT(A) had deleted the penalty based on the assessee's genuine belief. The Tribunal noted that the harvesting charges formed part of the purchase price of sugar cane payable to the farmer by the assessee-company. Legal precedents were cited to support the position that there was no obligation to deduct TDS on purchase of goods. The Tribunal upheld the CIT(A)'s decision, stating that the assessee had a genuine belief and dismissed the Revenue's appeal.Conclusion:The Tribunal dismissed the appeal of the Revenue, upholding the CIT(A)'s decision to delete the penalty imposed on the assessee for non-deduction of TDS on harvesting charges.
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