TaxTMI 
TaxTMI 
2023 (9) TMI 909
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....ed order. 3. At the outset of the hearing the ld. AR submitted that the matter pertaining to Bharatpur Dugdha Utpadak Sahkari Sangh Limited in ITA no. 321/JPR/2023 may be taken as a lead case for discussions as the issues involved in the lead case are common and inextricably interlinked or in fact interwoven and the facts and circumstances of other cases are identical except the difference in the amount in other assessment year. The ld. DR did not raise any specific objection against taking that case as a lead case. Therefore, for the purpose of the present discussions, the case of ITA No. 321/JPR/2023 is taken as a lead case. 3.1 Based on the above arguments we have also seen that for these appeals are on similar facts, similar arguments were raised and grounds of appeal are also similar. Therefore, were heard together these five appeals and are disposed by taking lead case facts, grounds and arguments from the folder in ITA No. 321/JPR/2023 for the assessment year 2015-16 and the order there in passed shall mutatis mutandis apply to the ITA Nos. 322 to 325/JPR/2023. 4. Before we move to the merits of the case the bench noted that as per the report of the registry these a....
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....rial, but TDS not deducted under the head contractor payment as per u/s 194C of the I.T. Act, 1961 and TDS required to be deducted @ 1%/2% as applicable as per u/s 194C amounts to Rs. 63,700/-. Therefore, assessee was asked to furnish the details of TDS/TCS deducted by them on packing material of an amount of Rs. 31.85 lacs. On perusal of the details filed it is noted by the ld. AO that the assessee has made purchase of packing material but the TDS has not been deducted. Thus, assessee failed to deduct TDS under the provisions of section 194C of the Act. In this regard the show cause was issued to the assessee and the assessee filed the reply which was considered but the ld. AO held the assessee in default for short/non deduction of TDS of Rs. 63,700/- u/s. 194C of the Act. The interest u/s. 201(1A) was also worked out at Rs. 36,309/-. 7. Aggrieved from the order of the Assessing Officer, assessee preferred an appeal before the ld. CIT(A)/NFAC. A propose to the grounds so raised the relevant finding of the ld. CIT(A)/NFAC is reiterated here in below: "I find from the above order passed by assessing officer (AO) u/s 201(1)/206C(6)/206C(7) of the I.T. Act that tax was lev....
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.... discussion I find that the AO is justified in imposing tax & interest u/s 201(1)/201(1A) of the Income Tax Act after providing ample opportunity to appellant. Accordingly, the levy of tax with interest stand confirmed. In view of above I find no logic in appellant's submission of contractual purchase of packing material won't be qualified as a contract. The assesseefirm since engaged this resident contractors [M/s Shakun Plastics (P) Ltd., M/s Satyam Industries, M/s Radhey Polymerrs etc..] on its own account on principal-to-principal basis, for a services under a valid enforceable contracts and paid them sum of money in terms of such contracts/agreements for the services availed, consequently, held as liable to comply with the provisions of section 194C. I find that the appellant is unable to submit any cogent, justified reason in support of his claim raised in "grounds". At the same time the appellant has miserably failed to comply with the provision of section 194 C of the Income Tax Act and therefore the ground taken by the appellant is misconceived, incorrect and not corroborated with supporting evidence as per law. Considering the entire con....
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....nder such state of affairs and to avoid the repetition, the appellant craves leave to make common written submissions . However before making written submissions the appellant craves leave to give in brief the facts of the case which are as under:- BRIEF FACTS 1. The assessee is engaged in the work of collecting milk from various rural primary co-operative societies and after processing/manufacturing, supplies milk and the milk products, namely, Ghee, Dahi, Chhach etc. 2. Packing material used in supply of milk and milk products are purchased from local dealers. The amount of purchase of packing material and levy of tax u/s 201(1) and charging of interest u/s 201(1A) of the I.T Act and consequencial demands raised in relation to a particular financial year is mentioned in the chart given above in the preamble. 3. The facts giving rise to above mentioned issue of non-deduction of tax at source from the payment made by the assessee in relation to purchase of packing material arose after a TDS survey u/s 133A (2A) of the IT Act was conducted on 28/01/2019 at the business premises of the assessee. Thereafter a show cause notice u/s 201(1)/201(1A) dat....
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....h these grounds of appeal are against invoking of provisions of section 194C of the I.T. Act and consequential levy of tax u/s 201(1) and charging of interest u/s 201(1A) of the I.T.Act on the payments made by the assessee for purchase of packing material . In support of both these grounds of appeal it is respectfully submitted as under :- 1. First of all the appellant craves leave to reproduce the relevant provisions of section 194C of the IT ACT 1961 which contain the provisions of tax deduction at source on payment to contractors. Section 194C (1) which is a charging section reads as under :- Payments to contractors. 194C (1) Any person responsible for paying any sum to any resident (hereafter in this section referred to as the contractor) for carrying out any work (including supply of labour for carrying out any work) in pursuance of a contact between the contractor and a specified person shall, at the time of credit of such sum to the account of the contractor or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever, is earlier deduct an amount equal to - (i) one per cent where the payment is....
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....sum is credited or paid to the account of the contractor; (ii) "goods carriage" shall have the meaning assigned to it in the Explanation to sub-section (7) of section 44AE; (iii) "contract" shall include sub-contract; (iv) "work" shall include - (a) advertising ; (b) broadcasting and telecasting including production of programmes for such broadcasting or telecasting; (c) carriage of goods or passengers by any mode of transport other than by railways; (d) catering; (e) manufacturing or supplying a product according to the requirement or specification of a customer by using material purchased from such customer; but does not include manufacturing or supplying a product according to the requirement or specification of a customer by using material purchased from a person, other than such customer. 2. That it is respectfully submitted that from reading together the above given relevant provisions of section 194C (1), 194C (3) and Explanation to section 194C it comes out as under :- i. Any person responsible for paying any sum to any resident contractor for carrying out any work (including ....
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.... the years) interalia explained to the AO that it (assessee) has purchased packing material from the sellers i.e. manufacturers for packing of its products for sale . The assessee also mentioned in the reply that it purchased packing material as per requirement and only colours and design are decided by it. The assessee also submitted before the AO in the above mentioned reply that the provisions of section 194C would apply only in relation to work contracts or labour contracts and would not cover contracts for sale of goods. It further mentioned in this reply letter that as the manufacturer purchased material on his own and manufactured products as per the requirement of a specific customer like him, it is a case of sale and not a contract for carrying out any work and hence provisions of section 194C are not attracted. It further mentioned in the reply that as it purchase packing material on which there is no liability of TDS and as such it has not deducted the TDS on the purchase of packing material in all the five years. 4. That, the humble appellant craves leave to refer to and rely upon the judgement of hon'ble Gujrat High Court in the case of CIT vs Hindustan Lever ....
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....ion of section 194C of the Act is applicable to work and not for purchase made which are liable for VAT. Based on the evidences so produced and argument advanced before us we are of the considered view that all are purchases of material with some specifications supported by the levy of the value added tax on material and therefore, the same is no for any work contract. Since, the assessee has discharged the burden that all these payments made by the assessee is not for any work contract the provision of section 194C of the Act is wrongly invoked by the lower authorities and therefore, the levy TDS made by the ld. AO is quashed for an amount of Rs. 63,700/- and therefore the appeal filed by the assessee in ITA NO. 321/JPR/2023 stands allowed. 11. The fact of the case in ITA Nos. 322 to 325/JPR/2023 are similar to the facts of the case in ITA No. 321/JPR/2023 and we have heard both the parties and persuaded the materials available on record. The bench has noticed that the issues raised by the assessee in appeal No. 322 to 325 /JPR/2023 is equally similar on set of facts and grounds. Therefore, it is not imperative to repeat the facts and various grounds raised by the assessee. Hen....