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आदेश/Order
PER N.K. SAINI, VICE PRESIDENT These two appeals by the Department are directed against the separate orders dated 16/08/2019 and 05/08/2019 for the A.Y. 2012-13 & A.Y. 2013-14 respectively passed by the Ld. CIT(A), Patiala.
Common issues are involved in both these appeals which were heard together, so, these are being disposed off by this consolidated order for the sake of convenience and brevity.
Department has raised the following grounds in for the A.Y. 2012-13:
(i) Whether on the facts and circumstances of the case, the Ld. CIT(A) has erred in law in not upholding the order u/s 201(1)/201(1A) of the Income- Tax Act 1961 ignoring the fact that the assessee deductor applied provisions of Section 194C on the cash part of the payments but not on the payments which were made in kind. (ii) Whether on the facts and circumstances of the case, the Ld. CIT(A) has erred in law in relying upon the decision of Hon'ble ITAT, New Delhi in the case of M/s Ahaar Consumer Products Pvt. Ltd. which is on different facts. The case of M/s Ahaar Consumer Products Pvt. Ltd. did not involve any payments of consideration for the services rendered whereas in the present case execution of work is against a consideration which includes the cash and material in lieu of payments and the TDS has been deducted by the assessee on the cash part. (iii) Whether on the facts and circumstances of the case, the Ld. CIT(A) has erred in law by ignoring the fact that the provisions of section 194C are applicable on payment of any sum which should include both cash and cash equivalent. (iv) Whether on the facts and circumstances of the case, the Ld. CIT(A) has erred in law while wrongly relying on the decision of Hon'ble ITAT, Division Bench 'A', Chandigarh in 1310/CHD, ITA No.1312 & 1313/CHD/2016, ITA No 1314/CHD/2016 dated 30.10.2018 in which judgment of Hon'ble Supreme Court in the case of M/s Kanchanganga Sea Foods Ltd vs. Commissioner of Income Tax was incorrect appreciated. (v) Whether on the fact and circumstances of the case, the Ld. CIT(A) has erred in law while wrongly relying on the decision of Hon'ble ITAT, Division Bench 'A', Chandigarh in ITA Nos. 1309 1310/CHD, ITA No.1312 & 1313/CHD/2016, ITA No 1314/CHD/2016 dated 30.10.2018 in which wrong facts have been recorded under Para No. 13 of the judgment that "issue has been decided by the various Benches of the Tribunal in favour of the assessee and the Department has not challenged the same in High Court and in view of this, the findings arrived at in those cases have become final against the Department and thus the issue is squarely covered in favour of the assessee", whereas, admittedly, this office of the department has already filed about 20 such appeals on the same issue. (vi) Whether on the facts and circumstances of the case, the Ld. CIT(A) has erred in law in cancelling the order u / s 201(1)/201(1A) of the I.T. Act, 1961 ignoring the fact that the by-products has a substantial monetary value and the sale value of by-products is income of the deductee.
(vii) The appellant craves leave to amend, add, alter or delete any of the aforesaid grounds till the disposal.
Similar grounds have been raised in for the A.Y. 2013-14.
During the course of hearing the Ld. Counsel for the Assessee at the very outset stated that an identical issue having similar facts has been decided by the ITAT, Chandigarh Bench “A” in for the A.Y. 2014-15 in the assessee’s own case wherein the issue has been decided in favour of the assessee vide para 22 & 23 of the order, copy of the said order dated 30/10/2018 was furnished which is placed on record.
In his rival submissions the Ld. DR although supported the orders of the A.O. but could not controvert the aforesaid contention of the Ld. Counsel for the assessee. In his rejoinder the Ld. Counsel for the Assessee further submitted that the Ld. CIT(A) already decided the issue in favour of the assessee by considering the aforesaid referred to order dt. 30/10/2018 passed by the ITAT Chandigarh Bench “A” in assessee’s own case for the A.Y. 2014-15.
We have considered the submissions of both the parties and perused the material available on the record. In the present case, it is noticed that an identical issue having similar facts was a subject matter of the Departmental appeal in for the A.Y. 2014-15 in assessee’s own case wherein the issue has been decided vide para no. 22 & 23 by observing as under:
“22. So far as the question that whether the provisions of section 194C of the Act will be attracted only in case the consideration is passed to the contractor in cash or in any other identical / similar mode, such as, by cheques, draft, money order or other electronic mode but not in respect of consideration paid ‘in kind’ is concerned, we are of the view, that it cannot be held straight away in all the cases that provisions will not apply for consideration passed ‘in kind’. It all depends upon the relevant facts of each case. If the consideration or the value of the consideration for the ‘work contract’ is settled in monetary terms, or at a value of money, it will be immaterial if thereafter the consideration is passed in monetary terms or ‘in kind.’. Suppose, the consideration in the contract is settled at a certain price and instead of paying the said price in cash or through banking channel, such as, by way of cheque / draft / RTGS etc., the availer of the services / assessee pays / transfer valuable goods of the equal monetary value to the contractor such as gold or any other precious metal or anything else having almost equal monetary value at which the price was settled, to say that the provisions of section 194 will not be attracted in that case, will be against the spirit, intent and purpose of section 194C of the Act and such an interpretation will defeat the real intent and purpose of the provisions. Another important factor to be taken into consideration is that the assessee must be the owner / should have the authority to pass on the consideration ‘in kind’ to the contractor. As discussed above, in this case, the property in the byproducts comes into ownership of the millers from the very point of coming of it into existence, hence, in this case the assessees were not the owners of the by-products. Another factor for consideration is that the property passed ‘in kind’ should have some ascertainable and determinable value, which can be taken as part of the consideration paid for the work done. Further, it is the nature of the contract, term of the agreement, the intention of the parties and overall facts and circumstances of the case which are required to be analyzed and considered for determining whether the provisions of section 194C of the Act or other similar provisions of the Chapter would be attracted or not in a particular case. As discussed above in detail, since we have held that the property in the by-product was not passed on by the assessee / Procurement Agencies as milling charges, hence, it is held that TDS provisions of section 194C are not attracted in this case. This issue is decided in favour of the assessees / Procurement Agencies.
Even otherwise, while relying upon the decision of the Hon'ble Delhi Bench of the Tribunal in the case of ‘M/s Aahar Consumer Products Pvt. Ltd.’ (supra), the issue in the present appeals has already been decided in favour of the assessee and the Ld. CIT(A) in this case has followed the aforesaid decisions of the Tribunal in various cases and Department, as submitted before us, has not agitated the issue before higher Judicial authority, and even in the absence of any contrary decision of the higher Judicial Forum directly on this issue, the issue is otherwise covered in favour of the assessee by the various direct decisions of the Coordinate Benches of the Tribunal on this issue. In view of this, we do not find any infirmity in the order of the CIT(A) while allowing the appeals of the assessee.” So respectfully following the aforesaid referred to order dated 30/10/2018 of the ITAT Chandigarh Bench “A” in assessee’s own case, we do not see any infirmity in the findings given by the Ld. CIT(A) on this issue. Accordingly we do not see any merit in these appeals of the Department.
In the result, both the above appeals of the Department are dismissed.
(Order pronounced in the open Court on 19/11/2020).