2019-VIL-972-ITAT-AHM

Income Tax Appellate Tribunal AHMEDABAD

ITA No. 556/Ahd/2016 (Assessment Year: 2008-2009)

Date: 20.12.2019

DCIT, TDS CIRCLE AHMEDABAD.

Vs

M/s . GUJARAT AMBUJA EXPORT LTD.

BENCH

SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER

JUDGMENT

PER RAJPAL YADAV, JUDICIAL MEMBER :

Revenue is in appeal before the Tribunal against order of the ld.CIT(A)-8, Ahmedabad dated 27.1.2016 passed for the Asstt.Year 2008-09 challenging deletion of demand made by the Assessing Officer in an order passed under section 201(1)/201(1A) and 206C(6A)/206C(7) of the Income Tax Act, 1961.

2. Revenue has raised mainly two grounds, which read as under:

“1. The Ld. CIT(A) has erred on facts and in law in deleting the additions made u/s, 206C(A)/206C(7) of the IT Act on non collection of TCS of Rs. 15,40,67,019/- on sale of DOC, Maize husk and cotton waste Inspite of the fact that the provisions of section 206C(1) apply to the assessee.

2. The Ld CIT(A) has erred on facts and in law in deleting the additions made u/s. 201(1)7201(1) of the IT Act on short deduction of tax at source of Rs. 3,50,05,547/- by applying provisions of section 194C of the IT Act instead of 194J of the IT Act on payments made to C&F Agents.”

3. Brief facts emerging from the record are that assessee is an agro-processing industries engaged in manufacturing of de-oiled cake for export as animal meal, edible oil, refining, maize processing for starch etc. A TDS verification was carried out in the case of the assessee on 9.8.2011 and an order under section 201(1)/201(1A) and under section 206C(6A)/206C(7) of the Act was passed on 2.12.2011 for the F.Y.2008-09 to 2011-12 treating the assessee to be in default. Subsequently, since TDS verification for the Asstt.Year 2008-09 (F.Y.2007-08) has not been carried out, ld.AO by invoking amended provision in section 201(3) of the Act by Finance Act, 2014 issued notice under section 201(1)/201(1A) and under section 206C(6A)/206C(7) of the Act on 2.2.2015 for the Asstt.Year 2008-09, calling for details with regard to deduction of TDS on maize husk, cotton waste, and De-oil cake and also to furnish details of port charges and TDS thereon, and why the assessee be not treated as assessee-in-default in line with finding made by the AO for the Asstt.Years 2009-10 to 2012-13. The assessee objected to the notice and reiterated its stand taken for the Asstt.Years 2009-10 to 2012-13, wherein it had interalia pleaded that provisions of section 206C does not apply to the assessee, as the goods manufactured by the assessee were sold in the normal course of business, and the products were generated through manufacturing process, and such products cannot be categorized as waste or scrap. Assessee also submitted that so far as second issue regarding application of provisions of section 194C of the Act instead of 194J on payment made to C&F Agents is concerned, they are providing helping services at the ports and therefore they are contractors and not professionals, and therefore, provisions of section 194J did not applicable to the case of the assessee. However, the ld.AO did not buy explanation of the assessee, and based on his decision for the assessment years 2009-10 to 2012-13, held the assessee to be assessee-in-default and raised demand vide the impugned order. Thereafter, assessee went in appeal before the ld.CIT(A), deleted allowed the claim of the assessee and deleted the demand. Revenue is now before the Tribunal.

4. At the outset, the ld.counsel for the assessee submitted that both issues involved in the Revenue’s appeal have been decided in assessee’s favour for the subsequent assessment years i.e. Asstt.years 209-10 to 2012-13 by order of the ld.CIT(A) as well as ITAT in their appeal in ITA No.1542-1545/Ahd/2013 vide order dated 22.01.2016. This order has been upheld by the Hon’ble Gujarat High Court. He placed on record copies both the orders of the Tribunal as well as that of Hon’ble Gujarat High Court. In the present year, the ld.CIT(A) while granting the relief to the assessee has followed order of the ITAT passed in these assessment years. Therefore, appeal of the Revenue can be summarily dismissed on this very basis. The ld.DR was unable to controvert submissions of the ld.counsel for the assessee. He also not contested how the facts in present year differs from that of subsequent assessment years, wherein there was a concurrent finding by the ld.CIT(A) and the Tribunal on the issue. However, he supported order of the AO.

5. We have considered rival submissions and gone through the record carefully. We find merit in the contentions of the ld.counsel for the assessee that similar issue has been decided by the Tribunal in the Asstt.Year 2009-10 to 2012-13 in favour of the assessee. We find that the ld.CIT(A) while allowing claim of the assessee on both the issues recorded finding, which reads as under:

“…..

In view of the submission of the appellant and detailed order of the CIT(A)-XXI and ITAT order dtd. 22.1.2016 and various judicial pronouncements referred by the appellant and also by the C1T(A), I find no reason to differ and agree with the findings in above order of CIT(A) and ITAT that DOC (de-oiled Cake) is a by product and cannot be categorised as scrap and waste. In case of raw cotton, I agree that in case of the appellant such raw cotton does not arise from manufacturing or mechanical working and is merely a segregation of raw material. Similarly, maize husk fibre cannot be considered as a waste or scrap within the manufacturing process as it is subjected to various manufacturing stages and is a by - product.

In view of above discussion Ground No.2 & 3 are allowed as the items, DOC, Raw cotton waste and maize husk are not in the nature of scrap within the meaning of provisions of section 206C of IT Act. The AO is directed to delete the demand on this point. Accordingly, the appeal on Ground No.2 & 3 is allowed.

……

In view of the submission of the appellant and detailed order of the CIT(A)-XXI and ITAT order dtd. 22.1.2016 and various judicial pronouncements referred by the appellant and also by the CIT(A) and CBDT circular, I find no reason to differ and agree with the findings in above order of CIT(A) and ITAT that the C & F agents are in the nature of independent contractors, payment so made are not covered within the meaning of provisions of section 206C of IT Act. The AO is directed to delete the demand on this point. Accordingly, the appeal on Ground No.4 is allowed.”

6. In order to adjudicate the issues on hand, it will be sufficient for us to take note of finding of the ITAT on the similar issue raised by the assessee in the Asstt.years 209-10 to 2012-13 wherein after detailed analysis of facts, and on law points allowed the claim of the assessee. The relevant part of the order, read as under:

“6.4 We have heard the rival contentions and perused the material on record. The issue before us is whether the provisions of Section 194C or 194J to be made applicable for the payment made to C&F Agents? Out of the total port charges for any given assessment year; most of the port charges are paid directly to various services provided like fumigator, shipping line agent, transporter, etc. With respect to payment to C&F agents, the assessee has given complete details for breakup of payments made to C&F agents before the lower authorities. Such breakup includes all such expenditure which were in the nature of reimbursement and the agency charges by such C&F agents. For the total payments made to C&F agents, the assessee has deducted TDS u/s 194C or at a lower rate if such C&F agent has provided certificate of tax deduction at source at lower rate issued by their respective Assessing Officers. For example, for AY 2008-09, the detailed breakup of port charges is evident from the details narrated as under:-

….. ….. ……

….. ….. ……

From the aforesaid table, it is clear that for AY 2009-10 the assessee has made payments four C&F agents as is evident from the tabular sheet. The payment made to one of the C&F agents, namely, S, Ramdas Pragji Forwarders Pvt. Ltd, the assessee has made a total payment of Rs. 2,95,26,122/- which consists of Rs. 2,84,76,689/- being the expenditure which are directly reimbursed by the assessee and the agency charges for this C&F agent amounting to Rs. 10,49,433/-. The assessee has given further breakup of payments to this C&F agent before the lower authorities wherein they have shown TDS @ 0.26% as per the lower deduction certificate furnished by this C&F agent u/s. 197 of the Act. The detailed bills giving description of various services for payments made directly by the assessee were also placed on record. From this the CIT(A) found that that the assessee's contention that it was covered u/s. 194C is duly supported by the CBDT Circular No. 715 which categorically clarifies that C&F agents were in the nature of independent contractors and the same is evident from question/answer No. 7 of this Circular. The coverage of C & F agents u/s. 194C is also reinforced by the judgement given by the Tribunal in the case of Glaxo Smithcline Consumer Health Care Pvt Ltd. (supra). Further, the AO's contention that C&F agents are covered u/s 194K as they are included in the explanation defining professional services appears to be misplaced as professional services in 194J as defined as under:

"(a) "professional services" means services rendered by a person in the course of carrying on legal, medical, engineering or architectural profession or the profession of accountancy or technical consultancy or interior decoration or advertising or such other profession as is notified by the Board for the purposes of section 44AA or of this section;"

7. In this background, CIT(A) rightly found that C&F agents were nowhere remotely indicated in the explanation to section 194J of Income tax Act nor has been explained by the AO that how C&F was covered u/s. 194J of the Income-tax Act. Therefore, under the given facts and ITA Nos. 1542-1545 & CO No.183-186/Ahd/2013 Assessee : Gujarat Ambuja Exports Ltd AY : 2009-10 to 2012-13 circumstances of the case, the CIT(A) was justified in holding that the action of Assessing Officer invoking provision u/s 194J in respect to port charges payment for all the assessment years as unsustainable in law. Therefore, the order of the CIT(A) in this regard does not require any interference from our side, which is confirmed.

8. Similar two issues arose in other assessment years also, i.e., AYs 2010- 11, 2011-12 & 2012-13. Facts being identical, so following the same reasoning, we do not find any infirmity in the order of the CIT(A) as discussed above. Thus, all these appeal filed by the Revenue are dismissed.”

7. A perusal of the ITAT’s order reproduced hereinabove, it is clear that issues are same, and facts are identical, and the ld.CIT(A) relying on this order of the ITAT, allowed the claim of the assessee. This order of the Tribunal has been upheld by the Hon’ble Gujarat High Court in Tax Appeal No.531 and 534 of 2016 vide order dated 25.07.2016. Therefore, finding of the ld.CIT(A) order does not require our interference. The ld.DR could not point out as to how the ld.CIT(A) has erred in facts and law and how it differs from the subsequent decision in the Asstt.Year 2009-10 to 2012-13 taken by the ld.CIT(A) and upheld by the Tribunal. Therefore, finding no merit in the grounds of appeal, we uphold order of the ld.CIT(A) and reject the grounds of appeal.

8. In the result, appeal of the Revenue is dismissed.

Pronounced in the Open Court on 20th December, 2019.

 

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