TaxTMI 
TaxTMI 
2023 (9) TMI 909
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....e 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 appeals are filed with a delay of 11 days. On this i....
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.... 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 levied as above for non deduction of TDS @ 2% on the payment made for purchase of packin....
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....x 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 conspectus of the case and in the light of foregoing findings vis-à-vis discussion, substantial force is found in the order....
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....he 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) dated 03/06/2019 of the IT Act was issued to the assessee interalia mentioning that during the course of survey it was found that you (i.e. the assessee) have made the payment for purchase of packing material for FY 2014-15 to 2018-19 relevant to asse....
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....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 being made or credit is being given to an individual or a Hindu undivided family; (ii) two per cent where the payment is being made or credit is being given to a person other than an individual or a Hindu undivided family, of such sum as income tax on income comprised therein. 194C (3) Where any sum is pa....
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....ailways; (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 supply of labour for carrying out any work) in pursuance of a contract between a specified person and the resident contractor, he is required to deduct tax at source. ii. Section 194C covers a person carrying out work for another person as a contractor in the ordinary sense and not merely carrying on activities of his own business or profession in the ordinary course of charging fees, remuneration etc., iii. Provisions of this section i.e. 194C relating to tax deduction from payment to contractors/sub-contractors are applicab....
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....t 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 Ltd. reported in (2008) 306 ITR 25 wherein the assessee placed order for supply of printed material. According to the assessee it had entered into a contract of purchase or supply simpliciter. The Tribunal held that this was a contract for sale of materials simpliciter relying on circular 715, dated 08/08/1995, wherein it was stated that in a case of sale no deduction u/s 194C is required. The hon'ble Gujrat High Court dismissed the appeal of the department by holding that the Tribunal having based its decision on the explanatory circular issued, there was no infirmity in the o....