TaxTMI 
TaxTMI 
2022 (4) TMI 1623
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....tical in nature, they are heard together for being disposed of by a common order and the adjudication in lead case ITA/412/PAN/2018 laid in succeeding paragraphs, shall mutatis mutandis apply to the rest of five appeals. For the sake of convenience, the information of TDS assessments and first appellate orders are tabulated as under; Sr Appeal No Asstt Year TDS Assessment Order Details First Appellate Date of order Under Section Date of Order 1 ITA/412/PAN/2018 2011-2012 201(1) & 201(1A) 01/12/2017 20/08/2017 2 ITA/413/PAN/2018 2012-2013 201(1) & 201(1A) 01/12/2017 20/08/2017 3 ITA/414/PAN/2018 2013-2014 201(1) & 201(1A) 01/12/2017 20/08/2017 4 ITA/415/PAN/2018 2014-2015 201(1) & 201(1A) 01/12/2017 20/08/2017 5 ITA/416/PAN/2018 2015-2016 201(1) & 201(1A) 01/12/2017 20/08/2017 6 ITA/417/PAN/2018 2016-2017 201(1) & 201(1A) 01/12/2017 20/08/2017 4. Before advancing the matter on facts for adjudication, it is essential to reproduce grounds of grievance assailed by the appellant company as under; "1. The order of the Hon'ble Commissioner of Income ....
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....ted during the course of survey proceeding and after considering the submissions of the appellant, the Ld. AO held the appellant as "deemed to be an assessee-in-default" u/s 201(1) of the Act for failure to deduct tax (TDS) from the payments made to contractors u/s 194C of the Act, and consequently passed the orders for the respective assessment years separately, determining the amount of default u/s 201(1), consequential interest liable to be paid u/s 201(1A) and the penalty u/s 206AA(1) of the Act. 5.2 The aforementioned orders passed by the Ld. AO holding the appellant as "assessee in default" for not deducting TDS u/s 194C of the Act, were unsuccessfully challenged before CIT (A)-Belagavi. And aggrieved by the orders of lower tax authorities, the appellant company filed these present six appeals before the Income Tax Appellate Tribunal [for short "Tribunal"] with the grounds assailed herein before at foregoing paragraph 4. 6. After hearing to the rival contentions of both the parties; perused material placed on records and duly considered the facts of the case in the light of settled legal position and the case laws relied upon by the appellant assessee as well the respon....
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.... season year 2014-2015 with "Shri Gulappa Ningappa Haranatti" and in the light of statement recorded u/s 133A of "Shri Santosh Ponnapan" an Asstt General Manager (Finance & Accounts) of the assessee company, the Ld. AO, confuting each of the foresaid defence taken by the appellant, deduced that; a. Contract for harvesting cannot be claimed as contract for purchase of goods. b. Mere colouring of harvesting expenditure as purchase of raw material would not change the basic characteristic of the expenditure and liability to deduct. c. The non-taxability of payment in the hands of recipient contractors cannot absolve the deductor from the statutory liability cased under chapter XVII of the Act, and d. The 201(1) & 201(1A) proceedings are unconnected with disallowance of expenditure u/s 40(a)(ia) of the Act. 7.4 Nota bene, as regards to appellants claim that, the payments to harvesting contractors were made on behalf of the farmers was controverted by the Ld. AO with following categorical findings as laid at Para 3 of page 3 of the assessment order; "The claim of the deductor that payment to the harvesting contractor is made on behalf of t....
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....rmers. The consideration for contact services is paid directly to the contractors in advance through running accounts and such accounts are finally settled at the end of each crushing season without reference to sugarcane bill raised. During assessment proceedings, the Ld. AO's made categorical observation as regards to engagement of contractor for harvesting of sugarcane for company and payments were made to those contractors without deduction of TDS u/s 194C of the Act in-spite the individual / single payments were exceeded the ceiling of Rs.30,000/- or the aggregate annual payment to the individual / single contractor exceeded the ceiling of Rs.75,000/-. From statement recorded, the Ld. AO observed that, the assessee company engaged these harvesting contractors and transport contractors on its own account and not at the bequest of supplying farmers, furthermore the appellant was engaging them without reference to any farm field but under an open contract, whose financial accounts were settled based upon the quantum of services rendered at the end of each crushing season, thus these payments were noting but in the nature of contractual payments for independent services availed wi....
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....,616 29,380 2 Transport Contractor u/s 194C 2.1 Having PAN 0 0 0 0 0 0 2.2 Not having PAN 3,90,400 4,94,496 9,75,016 1,80,180 80,576 33,600 Total Interest u/s 201(1A) Rs. 16,61,760 13,15,596 19,43,032 6,81,780 4,90,086 4,30,020 Total Liability as per Order (B+C) Rs. 37,39,062 32,50,490 54,12,865 22,31,366 20,21,974 25,80,203 8. Aggrieved, in an appeal before first appellate authority, the assessee company through its authorised representative [for short "AR"] filed analogous submission and in sum & substance contended that, harvesting activity is a part and parcel of growing sugarcane which is done by the farmers, for which the company is facilitating the farmers in harvesting activity by paying gang leader who takes care of the said activity as the farmer is not found be expert in carrying these techniques. It is also contended before the Ld. CIT(A) that, total cost of sugarcane in fact include cost payable to farmer and harvester as raw material are delivered at the factory gate, and the claim of expe....
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....uance of a contract 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 ) . . . . . . . (ii ) . . . . . . . (2) Where any sum referred to in sub-section (1) is credited to any account, whether called "Suspense account" or by any other name, in the books of account of the person liable to pay such income, such crediting shall be deemed to be credit of such income to the account of the payee and the provisions of this section shall apply accordingly. (3) Where any sum is paid or credited for carrying out any work mentioned in sub-clause (e) of clause (iv) of the Explanation, tax shall be deducted at source- (i) . . . . . . . (ii) . . . . . . . (4) . . . . . . . . (5) No deduction shall be made from the amount of any sum credited or paid or likely to be credited or paid to the account of, or to, the contractor, if such sum does not exceed thirty thousand rupees: Provided that where the aggregate of th....
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.... to the account of the contractor; (ii) "goods carriage" . . . . . . . . (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.] (Emphasis supplied) 11.1 From the text of the provision, it can be evinced that, the prime constituent of section 194C of the Act are fourfold viz; a specified person responsible for making payment to a resident for work in pursuance of a Contract with such specified person. Any transaction which is characterised with a forestated four key constituents, shall be mandatorily liable for compliance u/s 194C of the Act. 11.2 Insofar as....
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....any contractual terms without the reference to farmer or field. It is also an admitted fact that, in terms of open contract or agreement, the assessee extends advance payments to the contractors creating a contractual rights and obligation without reference to farm-field or farmer and raises a separate bill for harvesting services against the services availed from respective contractors and the financial accounts of each of such contractors is settled at the end of each crushing seasons. Eventually the total payments made towards harvesting services and transport services availed by the company, is then added to the total cost of material in terms generally accepted accounting principle and norms of inventory valuation regularly employed by the appellant company. 11.4 In this backdrop of undisputed facts, the case of the assessee for various years were taken for scrutiny and according due opportunity, the Ld. AO clearly brought on record that, the assessee company since engaged these resident contractors 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 th....
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....precative material in rebuttal, except contending that, in the present case there wasn't any disallowance of expenses u/s 40(a)(ia) of the Act, which is not the matter of adjudication before us. In resting the case, the appellant assessee has also relied upon the decision of Hon'ble Supreme Court in the case of "Ryatar Sahakari Sakkare Karkhane Niyamit Vs ACIT" reported at 308 CTR 507 (SC), however we find that, the appeal of the assessee therein is remanded back to the Hon'ble Jurisdictional High Court to decide the appeal a fresh on merits in accordance with law, consequently, would be of no help to the appellant company before us, for the reason of dissimilar facts as to constitution of appellant, relation of farmer with that of appellant, mandate of bye-laws, mode of raising bills and contract or agreement with contractors etc. Insofar as the decision of Hon'ble Bombay Hight Court in "CIT Vs Dwarkadheesh Sakhar Karkhana Ltd" (2018-TIOL-118-HC-Mumb- IT) is concern, at the outset, it shall be indispensable to mention that, the Hon'ble High court dismissed the aforesaid appeal in the absence of substantial question of law arising out of the order of lower authorities. Nevertheless....