DCIT, Bangalore v. M/s NSL Sugars Ltd.,, Bangalore

ITA 37/BANG/2016 | 2011-2012
Pronouncement Date: 08-11-2019 | Result: Dismissed

Appeal Details

RSA Number 3721114 RSA 2016
Assessee PAN AAGCS0938Q
Bench Bangalore
Appeal Number ITA 37/BANG/2016
Duration Of Justice 3 year(s) 9 month(s) 24 day(s)
Appellant DCIT, Bangalore
Respondent M/s NSL Sugars Ltd.,, Bangalore
Appeal Type Income Tax Appeal
Pronouncement Date 08-11-2019
Appeal Filed By Department
Tags 80IA
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 08-11-2019
Date Of Final Hearing 05-11-2019
Next Hearing Date 05-11-2019
Last Hearing Date 05-11-2019
First Hearing Date 04-02-2019
Assessment Year 2011-2012
Appeal Filed On 14-01-2016
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI N V VASUDEVAN VICE PRESIDENT AND SHRI A K GARODIA ACCOUNTANT MEMBER ITA NO.37/BANG/2016 ASSESSMENT YEAR : 2011-12 THE DEPUTY COMMISSIONER OF INCOME TAX CIRCLE 5(1)(1) BANGALORE. VS. M/S. NSL SUGARS LTD. NO.60/1 2 ND CROSS RESIDENCY ROAD BANGALORE 560 025. PAN: AAGCS 0938Q APPELLANT RESPONDENT 1228/BANG/2017 & CO NO.66/BANG/2016 [IN ITA NO.37/BANG/2016] ASSESSMENT YEARS : 2012-13 & 2011- 12 M/S. NSL SUGARS LTD. BANGALORE 560 025. PAN: AAGCS 0938Q VS. THE DEPUTY COMMISSIONER OF INCOME TAX CIRCLE 5(1)(1) BANGALORE. APPELLANT RESPONDENT REVENUE BY : SHRI C.H. SUNDAR RAO CIT(DR-I) ITAT BANGALORE. ASSESSEE BY : SHRI B.S. BALACHANDRAN ADVOCATE DATE OF HEARING : 05.11.2019 DATE OF PRONOUNCEMENT : 08.11.2019 ITA NO. 37/B/2016 1228/B/17 & CO NO.66/B/2016 PAGE 2 OF 18 O R D E R PER N V VASUDEVAN VICE PRESIDENT ITA NO.37/BANG/2016 IS AN APPEAL BY THE REVENUE A GAINST THE ORDER DATED 12.10.2015 OF THE CIT(APPEALS)-5 BENGALURU R ELATING TO ASSESSMENT YEAR 2011-12. THE ASSESSEE HAS FILED CROSS OBJECTI ON IN CO NO.66/BANG/2016 AGAINST THE VERY SAME ORDER OF CIT( APPEALS). THE CO IS PURELY SUPPORTIVE IN NATURE AND THEREFORE NEEDS NO ADJUDICATION. 2. ITA NO. 1228/BANG/2017 IS AN APPEAL BY THE ASSES SEE AGAINST THE ORDER DATED 29.3.2017 OF THE CIT(APPEALS)-5 BENGAL URU RELATING TO ASSESSMENT YEAR 2012-13. 3. WE SHALL FIRST TAKE UP FOR CONSIDERATION THE APP EAL OF REVENUE FOR AY 2011-12. GROUND NOS.1 4 & 5 RAISED BY THE REVENUE ARE GENERAL IN NATURE AND CALLS FOR NO SPECIFIC ADJUDICATION. GROUND NO .2 RAISED BY THE REVENUE READS AS FOLLOWS:- 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE TH E CIT(A) ERRED IN LAW IN ALLOWING THE DEDUCTION CLAIMED U/S 80IA BY THE ASSESSEE WHEN AS PER SECTION 80IA(5) THE PROFITS OF THE ELIGIBLE BUSINESS HAS TO BE COMPUTED AS IF IT WERE THE ONLY BUSINESS OF THE ASSESSEE. HAVING COMPUTED THE DEDUCTION THE PROVIS ION OF SECTION 80A(1) COMES INTO PLAY IN LAYING THE GUIDEL INES OR PROCEDURE TO BE FOLLOWED FOR ACTUALLY ALLOWING THE DEDUCTION U/S. 80A(1) WHICH STATES THAT UNDER THIS CHAPTER SPECIFI ED IN SECTION 80C TO 80U SHALL BE ALLOWED FROM THE GROSS TOTAL IN COME OF THE ASSESSEE. HENCE CHAPTER VIA DEDUCTIONS ARE ALLOWED ONLY AFTER SET OFF OF LOSSES INCLUDING INTER UNIT LOSSES. FURT HER AS PER THE PROVISIONS OF SECTION 72 OF THE IT ACT THE BROUGHT FORWARD LOSSES HAVE TO BE ADJUSTED AGAINST THE GROSS TOTAL INCOME OF THE ASSESSEE BEFORE ARRIVING AT THE TAXABLE INCOME FOR THE YEAR THEREAFTER THE DEDUCTION ADMISSIBLE U/S.80IA HAS TO BE ALLOWED. ITA NO. 37/B/2016 1228/B/17 & CO NO.66/B/2016 PAGE 3 OF 18 4. AS FAR AS GROUND NO.2 IS CONCERNED THE FACTS AR E THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURE OF SUGAR. IN THE PROCESS OF MANUFACTURE OF SUGAR STEAM IS GENERATED. THAT STE AM IS USED TO GENERATE ELECTRICITY. THE INCOME EARNED FROM SUCH ACTIVITY IS REFERRED TO IN THE ORDER OF ASSESSMENT AS INCOME FROM COGENT PLANT. THE ASS ESSEE CLAIMED DEDUCTION OF RS.24 36 83 037 U/S. 80IA OF THE INCOM E TAX ACT 1961 (ACT) IN RESPECT OF PROFITS DERIVED FROM COGENT PLANT. T HERE IS NO DISPUTE THAT THE ASSESSEE WAS ENTITLED TO DEDUCTION U/S.80IA OF THE ACT AND THE QUANTUM OF DEDUCTION WAS RS.24 36 83 037 COMPUTED IN ACCORDANC E WITH THE PROVISIONS OF SEC.80IA(1) OF THE ACT. THE INCOME F ROM BUSINESS OF THE ASSESSEE AS PER THE COMPUTATION OF TOTAL INCOME WAS A SUM OF RS.22 09 10 637. THE GROSS TOTAL INCOME OF THE ASS ESSEE WAS RS.31 83 19 275. 5. THE AO WAS OF THE VIEW THAT U/S. 80IA OF THE ACT THE DEDUCTION ALLOWED CANNOT BE MORE THAN THE INCOME UNDER THE HE AD INCOME FROM BUSINESS. IN THIS REGARD THE AO HAS OBSERVED THAT IF THE ASSESSEE HAS 2 OR 3 SEGMENTS OF BUSINESS AND IF IN THE ELIGIBLE BUSIN ESS THE ASSESSEE HAS EARNED POSITIVE INCOME AND IN THE OTHER SEGMENTS TH ERE IS A LOSS THEN THE LOSS IN THE OTHER SEGMENTS OF BUSINESS HAVE TO BE A DJUSTED AGAINST INCOME OF THE ELIGIBLE BUSINESS AND ONLY ON THE RESULTANT FIGURE THE ASSESSEE WOULD BE ENTITLED TO DEDUCTION U/S. 80IA OF THE ACT . THE AO MADE A REFERENCE TO THE PROVISIONS OF SECTION 70 OF THE AC T AND ULTIMATELY CAME TO THE CONCLUSION THAT THE DEDUCTION CLAIMED BY THE AS SESSEE U/S. 80IA SHOULD BE RESTRICTED TO INCOME UNDER THE HEAD INCOME FROM BUSINESS VIZ. A SUM OF RS.22 09 10 637 AS AGAINST THE CLAIM OF ASSESSEE FO R DEDUCTION OF RS.24 36 83 037. AGGRIEVED BY THE AFORESAID ACTIO N OF THE AO THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT(APPEALS). ITA NO. 37/B/2016 1228/B/17 & CO NO.66/B/2016 PAGE 4 OF 18 6. BEFORE THE CIT(APPEALS) THE ASSESSEE CONTENDED THAT THE ASSESSEE HAS TWO BUSINESSES DURING THE RELEVANT ASSESSMENT Y EAR. ONE BUSINESS WAS IN THE NATURE OF INDUSTRIAL UNDERTAKING WHICH F ULFILS ALL THE CONDITIONS LAID DOWN IN SECTION 80IA AND IS ELIGIBLE FOR DEDUC TION U/S.80IA OF THE ACT. ANOTHER BUSINESS IS ADMITTEDLY NOT ELIGIBLE FOR DED UCTION UNDER SECTION 80IA OF THE ACT. THE ASSESSEE SUBMITTED THAT U/S.80IA(5 ) OF THE ACT THE PROFITS AND GAINS OF AN ELIGIBLE BUSINESS HAS TO BE COMPUTED OR DETERMINED AS IF SUCH BUSINESS WERE THE ONLY SOURCE OF INCOME OF THE ASSESSEE DURING THE RELEVANT YEAR AND THE ASSESSEE HAD NO OTHER SOU RCE OF INCOME. CONSEQUENTLY THE TOTAL INCOME OF THE ELIGIBLE BUSI NESS IS TO BE COMPUTED UNDER THE PROVISIONS OF THE ACT AS IF THE ELIGIBLE BUSINESS WERE THE ONLY SOURCE OF INCOME OF THE ASSESSEE. THE OPENING WORD S OF THE SUB SECTION 5 OF SECTION 80IA READS AS:- 'NOTWITHSTANDING ANYTHIN G CONTAINED IN ANY OTHER PROVISION OF THIS ACT THE PROFITS AND GAINS OF AN ELIGIBLE BUSINESS TO WHICH THE PROVISIONS OF SUB-SECTION (1) APPLY SHALL FOR T HE PURPOSE OF DETERMINING THE QUANTUM OF DEDUCTION UNDER THAT SUB-SECTION FOR THE ASSESSMENT YEAR IMMEDIATELY SUCCEEDING THE INITIAL ASSESSMENT YEAR OR ANY SUBSEQUENT ASSESSMENT YEAR BE COMPUTED AS IF SUCH ELIGIBLE BU SINESS WERE THE ONLY SOURCE OF INCOME OF THE ASSESSEE DURING THE PREVIOU S YEAR RELEVANT TO THE INITIAL ASSESSMENT YEAR AND TO EVERY SUBSEQUENT ASS ESSMENT YEAR UP TO AND INCLUDING THE ASSESSMENT YEAR FOR WHICH THE DET ERMINATION IS TO BE MADE.'. THEREFORE THE SUBSECTION 5 OF THE SECTION 80IA OVERRIDES ALL OTHER PROVISIONS OF THE ACT. HAVING REGARD TO THE CARDINA L PRINCIPLE OF INTERPRETATION EMERGED FROM THE MAXIM 'GENERALIA SP ECIALIBUS NON DEROGANT' THE SPECIAL PROVISION OF SECTION 80-IA(5) WHICH IS OVER RIDING IN THE NATURE MUST PREVAIL OVER GENERAL PROVISIONS TO THE EXTENT OF ITS SCOPE AND LIMIT. IN OTHER WORDS IT WAS SUBMITTED THAT FO R THE PURPOSE OF DETERMINING THE AMOUNT OF DEDUCTION U/S 80IA THE T AXABLE INCOME OF THE ELIGIBLE BUSINESS IS TO BE ASCERTAINED AND COMPUTED AS IF SUCH ELIGIBLE BUSINESS WERE AN INDEPENDENT BUSINESS OWNED BY THE ASSESSEE AND THE ITA NO. 37/B/2016 1228/B/17 & CO NO.66/B/2016 PAGE 5 OF 18 ASSESSEE HAD NO OTHER SOURCE OF INCOME. CONVERSALLY THE UNABSORBED LOSSES UNABSORBED DEPRECIATION ETC RELATING TO THE ELIGIBLE BUSINESS ARE TO BE TAKEN INTO ACCOUNT IN DETERMINING THE QUANTUM OF DEDUCTION ADMISSIBLE UNDER SECTION 80IA EVEN THOUGH THESE UNABSORBED LOS SES UNABSORBED DEPRECIATION ETC RELATING TO THE ELIGIBLE BUSINESS MAY ACTUALLY HAVE BEEN SET OFF AGAINST THE PROFITS OF THE ASSESSEE FROM THE NO N ELIGIBLE BUSINESS OR OTHER SOURCES. THUS THE GROSS TOTAL INCOME REFERRED IN SECTION 80A(1) AND (2) 80AB AND 80B(5) FOR THE PURPOSE OF DETERMINING THE QUANTUM OF DEDUCTION AVAILABLE UNDER SECTION 80IA FOR THE RELE VANT ASSESSMENT YEAR WOULD MEAN THE TOTAL INCOME COMPUTED IN ACCORDANCE WITH THE PROVISIONS OF THE ACT BEFORE MAKING ANY DEDUCTION UNDER CHAPT ER VI-A WITH REFERENCE TO THE PROFITS AND GAINS OF THE ELIGIBLE BUSINESS ONLY TO WHICH SECTION 80IA APPLIES AS IF SUCH ELIGIBLE BUSINESS WERE THE ONLY SOURCE OF INCOME OF THE ASSESSEE DURING THAT ASSESSMENT YEAR. THE ASSESSEE RELIED ON THE FOLLOWING DECISIONS IN SUPPORT OF ITS CONTENTION. CIT CENTRAL MADRAS V/S CANARA WORKSHOP PVT LTD (16 1 ITR 320) (SC) AND CIT (WB)-V/S O.BELLISS AND MORECOM(I) LTD.(136 ITR 481)(CAL). 7. THE CIT(APPEALS) AGREED WITH THE SUBMISSIONS SO MADE BY THE ASSESSEE AND HE DIRECTED THE AO TO ALLOW DEDUCTION U/S. 80IA OF THE ACT AS CLAIMED BY THE ASSESSEE. FOLLOWING ARE THE RELEVAN T OBSERVATIONS OF THE CIT(APPEALS):- 8. IN THE SECOND GROUND OF APPEAL THE DEDUCTION U /S.80IA HAS BEEN RESTRICTED TO RS.22 09 10 637/- AS AGAINST THE CLAIM MADE BY THE APPELLANT OF RS.24 36 83 037/- WITH RESPECT TO THE INCOME EARNED FROM ELIGIBLE BUSINESS I.E. COGEN PLANT THE APPELLANT IN ITS WRITTEN SUBMISSION HAS SUBMITTED THAT THE PLAIN REA DING OF SUB SECTION 5 OF SECTION 80A AMPLY CLEAR THAT PROFITS AND GAINS OF ELIGIBLE BUSINESS BE COMPUTED AS IF SUCH ELIGIBLE B USINESS WERE ITA NO. 37/B/2016 1228/B/17 & CO NO.66/B/2016 PAGE 6 OF 18 ONLY SOURCE OF THE INCOME OF THE ASSESSEE DURING TH E PREVIOUS YEAR. HAVING REGARD TO THE CARDINAL PRINCIPLE OF IN TERPRETATION EMERGED FROM THE MAXIM ' GENERALIA SPECIALIBUS NON DEROGANT THE SPECIAL PROVISION OF SECTION 80IA(5) WHICH IS OVERRIDING IN NATURE MUST PREVAIL OVER GENERAL PROVISION TO THE EXTENT OF ITS SCOPE AND LIMIT. THE APPELLANT RELYING ON THE HON' BLE SUPREME COURT JUDGMENT IN THE CASE OF CIT VS. CANARA WORKSH OP PVT LTD 161 ITR 320 AND ALSO CIT VS. O. BELLISS & MORECOM R EPORTED IN 136 ITR 481 WHEREIN IT WAS HELD THAT FOR THE PURPO SE OF ALLOWING A DEDUCTION U/S.80IA THE WORDS SUCH PROFIT OCCURRI NG IN THE SECTION MEAN 'THE PROFITS AND GAINS ATTRIBUTABLE TO ANY PRIORITY INDUSTRY' WITHOUT DEDUCTING THERE FROM ANY LOSS ARI SING IN ANOTHER BUSINESS ACTIVITY U/S.70 71 & 72 OF THE INCOME TAX ACT 1961. THEREFORE IN VIEW OF THE ABOVE I AM OF THE OPINIO N THAT THE ENTIRE DEDUCTION CLAIMED BY THE APPELLANT U/S.80IA( 5) HAS TO BE ALLOWED. 8. AGGRIEVED BY THE ORDER OF CIT(APPEALS) THE REVE NUE HAS RAISED GROUND NO.2 BEFORE THE TRIBUNAL. 9. WE HAVE HEARD THE SUBMISSIONS OF THE LD. COUNSEL FOR THE ASSESSEE WHO RELIED ON THE ORDER OF CIT(APPEALS). 10. THE LD. DR SUBMITTED THAT THE CIT(APPEALS) IN A GREEING WITH THE SUBMISSIONS OF ASSESSEE HAS PLACED RELIANCE ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT V. CANARA WORKSHOP PVT LTD. (SUPRA) . HE POINTED OUT THAT THE AFORESAID DECISION WAS R ENDERED IN THE CONTEXT OF ERSTWHILE SECTION 80E OF THE ACT AND WHE N THE PROVISIONS OF SECTION 80B(5) AND SECTION 80AB OF THE ACT WERE NOT PART OF THE ACT. HE BROUGHT TO OUR NOTICE THE DECISION OF THE HONBLE S UPREME COURT IN THE CASE OF SYNCO INDUSTRIES LTD. V. AO 299 ITR 444 (SC) WHEREIN THE HONBLE SUPREME COURT TOOK THE VIEW THAT WHILE WORKING OUT THE GROSS TOTAL INCOME LOSSES SUFFERED IN THE EARLIER YEARS HAVE TO BE ADJ USTED AND IF GROSS TOTAL INCOME OF ASSESSEE IS NIL THE ASSESSEE WILL NOT BE ENTITLED TO DEDUCTION UNDER CHAPTER VIA. THE COURT FURTHER HELD THAT THE NON OBSTANTE CLAUSE IN ITA NO. 37/B/2016 1228/B/17 & CO NO.66/B/2016 PAGE 7 OF 18 SECTION 80I(6) IS APPLICABLE ONLY TO QUANTUM OF DED UCTION WHEREAS THE TOTAL INCOME U/S. 80B(5) WHICH IS REFERRED TO IN SECTION 80 I (1) IS REQUIRED TO BE COMPUTED IN THE MANNER PROVIDED IN THE ACT WHICH P RE-SUPPOSES THAT GROSS TOTAL INCOME SHALL BE ARRIVED AT AFTER ADJUST ING LOSSES OF OTHER DEDUCTION AGAINST PROFITS DERIVED FROM AN INDUSTRIA L UNDERTAKING. OUR ATTENTION WAS ALSO DRAWN TO THE DECISION OF THE HON BLE GUJARAT HIGH COURT IN THE CASE OF SINTEX INDUSTRIES LTD. V. ACIT 219 TAXMAN 43 (GUJ) WHEREIN IDENTICAL PROPOSITION WAS LAID DOWN BY FOLLOWING TH E DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF SYNCO INDUSTRIES LTD. (SUPRA) . OUR ATTENTION WAS ALSO DRAWN TO PARA 8.2 OF THIS DECISION WHEREI N THE HONBLE HIGH COURT EXPLAINED AS TO HOW THE DECISION RENDERED BY THE HO NBLE SUPREME COURT IN THE CASE OF CANARA WORKSHOPS PVT. LTD. (SUPRA) IS NOT APPLICABLE IN THE CONTEXT OF DEDUCTION U/S. 80 I (6) OF THE ACT. 11. WE HAVE GIVEN A CAREFUL CONSIDERATION TO THE R IVAL SUBMISSIONS. IN THE DECISION OF SYNCO INDUSTRIES LTD.(SUPRA) RENDERED BY THE HONBLE SUPREME COURT THE FACTS WERE THAT T HE ASSESSEE WAS ENGAGED IN THE BUSINESS OF OIL AND CHEMICALS. IT HAD A UNIT FOR OI L DIVISION AT SIROHI DISTRICT RAJASTHAN. IT HAD ALSO A CHEMICAL DIVISION AT JODHP UR. THE ASSESSEE HAD EARNED PROFIT IN THE ASST. YRS. 1990-91 AND 1991-92 IN BOTH THE UNITS. HOWEVER THE ASSESSEE HAD SUFFERED LOSSES IN THE OI L DIVISION IN EARLIER YEARS. THE ASSESSEE CLAIMED DEDUCTIONS UNDER SS. 80 HH AND 80-I OF THE ACT CLAIMING THAT EACH UNIT SHOULD BE TREATED SEPA RATELY AND THE LOSS SUFFERED BY THE OIL DIVISION IN EARLIER YEARS IS NO T ADJUSTABLE AGAINST THE PROFITS OF THE CHEMICAL DIVISION WHILE CONSIDERING THE QUESTION WHETHER DEDUCTIONS UNDER SS. 80HH AND 80-I WERE ALLOWABLE. THE AO NOTICED THAT THE GROSS TOTAL INCOME OF THE APPELLANT BEFORE DEDU CTIONS UNDER CHAPTER VI- A WAS NIL. THEREFORE HE CONCLUDED THAT THE ASSES SEE WAS NOT ENTITLED TO THE BENEFIT OF DEDUCTIONS UNDER CHAPTER VI-A. ON THE ABOVE FACTS THE HONBLE SUPREME COURT CONSIDERED THE CORRECTNESS OF THE ACTION OF THE ITA NO. 37/B/2016 1228/B/17 & CO NO.66/B/2016 PAGE 8 OF 18 REVENUE AUTHORITIES THE TRIBUNAL AND THE HONBLE H IGH COURT CONCURRING WITH THE VIEW OF THE AO. THE HONBLE SUPREME COURT HELD CLAUSE (5) OF S. 80B DEFINES THE EXPRESSION GROSS TOTAL INCOME TO MEAN THE TOTAL INCOME COMPUTED IN ACCORDANCE WITH THE PROVISIONS OF THE A CT BEFORE MAKING ANY DEDUCTIONS UNDER CHAPTER VI-A. IT FOLLOWS THEREFOR E THAT DEDUCTIONS UNDER CHAPTER VI-A CAN BE GIVEN ONLY IF THE GROSS TOTAL I NCOME IS POSITIVE AND NOT NEGATIVE. IF THE GROSS TOTAL INCOME OF THE ASSESSEE IS DETERMINED AS NIL THEN THERE IS NO QUESTION OF ANY DEDUCTION BEING AL LOWED UNDER CHAPTER VI-A IN COMPUTING THE TOTAL INCOME. THE AO HAS TO T AKE INTO ACCOUNT THE PROVISIONS OF S. 71 PROVIDING FOR SET OFF OF LOSS F ROM ONE HEAD AGAINST INCOME FROM ANOTHER AND S. 72 PROVIDING FOR CARRY F ORWARD AND SET OFF OF BUSINESS LOSSES. SEC. 32(2) MAKES PROVISIONS FOR CA RRY FORWARD AND SET OFF OF THE UNABSORBED DEPRECIATION OF A PARTICULAR YEAR . THE EFFECT OF THE ABOVE MENTIONED PROVISIONS IS THAT WHILE COMPUTING THE TO TAL INCOME THE LOSSES CARRIED FORWARD AND DEPRECIATION HAVE TO BE ADJUSTE D AND THEREAFTER THE AO HAS TO WORK OUT THE GROSS TOTAL INCOME OF THE ASSES SEE. SUB-S. (2) OF S. 80A SPECIFICALLY ENACTS THAT THE AGGREGATE OF DEDUCTION S UNDER CHAPTER VI-A SHOULD NOT EXCEED THE GROSS TOTAL INCOME OF THE ASS ESSEE. IF THE GROSS TOTAL INCOME IS FOUND TO BE A NET LOSS ON ACCOUNT OF THE ADJUSTMENT OF LOSSES OF THE EARLIER YEARS OR NIL NO DEDUCTION UNDER THIS CHAPTER CAN BE ALLOWED. THE EFFECT OF CL. (5) OF S. 80B IS THAT GROSS TOTAL INCOME WILL BE ARRIVED AT AFTER MAKING THE COMPUTATION AS FOLLOWS :- (I) MAKING DEDUCTIONS UNDER THE APPROPRIATE COMPUT ATION PROVISIONS; (II) INCLUDING THE INCOMES IF ANY UNDER SS. 60 TO 64 IN THE TOTAL INCOME OF THE INDIVIDUAL; (III) ADJUSTING INTRA-HEAD AND/OR INTER-HEAD LOSS ES; AND (IV) SETTING OFF BROUGHT FORWARD UNABSORBED LOSSES AND UNABSORBED DEPRECIATION ETC. ITA NO. 37/B/2016 1228/B/17 & CO NO.66/B/2016 PAGE 9 OF 18 12. THE HONBLE SUPREME COURT FURTHER HELD THAT UN DER S. 80-I(6) THE PROFITS DERIVED FROM ONE INDUSTRIAL UNDERTAKING CAN NOT BE SET OFF AGAINST LOSS SUFFERED FROM ANOTHER AND THE PROFIT IS REQUIR ED TO BE COMPUTED AS IF PROFIT MAKING INDUSTRIAL UNDERTAKING WAS THE ONLY S OURCE OF INCOME HAS NO MERITS. SEC. 80-I(1) LAYS DOWN THE BROAD PARAMETERS INDICATING CIRCUMSTANCES UNDER WHICH AN ASSESSEE WOULD BE ENTI TLED TO CLAIM DEDUCTION. ON THE OTHER HAND S. 80-I(6) DEALS WITH DETERMINATION OF THE QUANTUM OF DEDUCTION. SEC. 80-I(6) LAYS DOWN THE MA NNER IN WHICH THE QUANTUM OF DEDUCTION HAS TO BE WORKED OUT. AFTER SU CH COMPUTATION OF THE QUANTUM OF DEDUCTION ONE HAS TO GO BACK TO S. 80-I (1) WHICH CATEGORICALLY STATES THAT WHERE THE GROSS TOTAL INCOME INCLUDES A NY PROFITS AND GAINS DERIVED FROM AN INDUSTRIAL UNDERTAKING TO WHICH S. 80-I APPLIES THEN THERE SHALL BE A DEDUCTION FROM SUCH PROFITS AND GAINS OF AN AMOUNT EQUAL TO 20 PER CENT. THE WORDS 'INCLUDES ANY PROFITS USED BY THE LEGISLATURE IN S. 80- I(1) ARE VERY IMPORTANT WHICH INDICATE THAT THE GRO SS TOTAL INCOME OF AN ASSESSEE SHALL INCLUDE PROFITS FROM A PRIORITY UNDE RTAKING. WHILE COMPUTING THE QUANTUM OF DEDUCTION UNDER S. 80-I(6) THE AO N O DOUBT HAS TO TREAT THE PROFITS DERIVED FROM AN INDUSTRIAL UNDERTAKING AS THE ONLY SOURCE OF INCOME IN ORDER TO ARRIVE AT THE DEDUCTION UNDER CH APTER VI-A. HOWEVER THE NON OBSTANTE CLAUSE APPEARING IN S. 80-I(6) IS APPLICABLE ONLY TO THE QUANTUM OF DEDUCTION WHEREAS THE GROSS TOTAL INCO ME UNDER S. 80B(5) WHICH IS ALSO REFERRED TO IN S. 80-I(1) IS REQUIRED TO BE COMPUTED IN THE MANNER PROVIDED UNDER THE ACT WHICH PRESUPPOSES THA T THE GROSS TOTAL INCOME SHALL BE ARRIVED AT AFTER ADJUSTING THE LOSS ES OF THE OTHER DIVISION AGAINST THE PROFITS DERIVED FROM AN INDUSTRIAL UNDE RTAKING. IF THE INTERPRETATION AS SUGGESTED BY THE APPELLANT IS ACC EPTED IT WOULD ALMOST RENDER THE PROVISIONS OF S. 80A(2) NUGATORY AND THE REFORE THE INTERPRETATION CANVASSED ON BEHALF OF THE APPELLANT CANNOT BE ACCE PTED. IT IS TRUE THAT UNDER S. 80-I(6) FOR THE PURPOSE OF CALCULATING THE DEDUCTION THE LOSS SUSTAINED IN ONE OF THE UNITS CANNOT BE TAKEN INTO ACCOUNT BECAUSE SUB-S. ITA NO. 37/B/2016 1228/B/17 & CO NO.66/B/2016 PAGE 10 OF 18 (6) CONTEMPLATES THAT ONLY THE PROFITS SHALL BE TAK EN INTO ACCOUNT AS IF IT WAS THE ONLY SOURCE OF INCOME. HOWEVER S. 80A(2) AND S . 80B(5) ARE DECLARATORY IN NATURE. THEY APPLY TO ALL THE SECTIO NS FALLING IN CHAPTER VI-A. THEY IMPOSE A CEILING ON THE TOTAL AMOUNT OF DEDUCT ION AND THEREFORE THE NON OBSTANTE CLAUSE IN S. 80-I(6) CANNOT RESTRICT T HE OPERATION OF SS. 80A(2) AND 80B(5) WHICH OPERATE IN DIFFERENT SPHERES. AS O BSERVED EARLIER S. 80- I(6) DEALS WITH ACTUAL COMPUTATION OF DEDUCTION WHE REAS S. 80-I(1) DEALS WITH THE TREATMENT TO BE GIVEN TO SUCH DEDUCTIONS I N ORDER TO ARRIVE AT THE TOTAL INCOME OF THE ASSESSEE AND THEREFORE WHILE IN TERPRETING S. 80-I(1) WHICH ALSO REFERS TO GROSS TOTAL INCOME ONE HAS TO READ THE EXPRESSION GROSS TOTAL INCOME AS DEFINED IN S. 80B(5). THERE FORE THE HIGH COURT WAS JUSTIFIED IN HOLDING THAT THE LOSS FROM THE OIL DIV ISION WAS REQUIRED TO BE ADJUSTED BEFORE DETERMINING THE GROSS TOTAL INCOME AND AS THE GROSS TOTAL INCOME WAS NIL THE ASSESSEE WAS NOT ENTITLED TO C LAIM DEDUCTION UNDER CHAPTER VI-A WHICH INCLUDES S. 80-I ALSO. 13. THE FINAL CONCLUSION OF THE HONBLE COURT WAS THAT GROSS TOTAL INCOME OF THE ASSESSEE HAS FIRST GOT TO BE DETERMIN ED AFTER ADJUSTING LOSSES OF EARLIER YEARS UNABSORBED DEPRECIATION ETC. AN D IF THE GROSS TOTAL INCOME OF THE ASSESSEE IS NIL THE ASSESSEE WOULD NOT BE ENTITLED TO DEDUCTION UNDER CHAPTER VI-A; NON OBSTANTE CLAUSE IN S. 80-I(6) CANNOT RESTRICT THE OPERATION OF SS. 80A(2) AND 80B(5) WHICH OPERATE IN DIFFERENT SPHERES AND THEREFORE LOSS FROM THE OIL DIVISION OF THE ASSESS EE WAS REQUIRED TO BE ADJUSTED BEFORE DETERMINING THE GROSS TOTAL INCOME AND SINCE THE GROSS TOTAL INCOME WAS NIL ASSESSEE WAS NOT ENTITLED T O CLAIM DEDUCTION UNDER S. 80-I. 14. IN CIT VS. RPG TELECOMS LTD. 292 ITR 355 (KARN) THE HONBLE KARNATAKA HIGH COURT CONSIDERED THE VERY SAME ISSUE OF DEDUCTION U/S.80-I OF THE ACT WHETHER IT SHOULD BE RESTRICTED TO GROS S TOTAL INCOME OR SHOULD BE ITA NO. 37/B/2016 1228/B/17 & CO NO.66/B/2016 PAGE 11 OF 18 ALLOWED AS COMPUTED UNDER SEC.80-I(1) OF THE ACT. AFTER CONSIDERING THE DECISION OF HONBLE SUPREME COURT RELIED UPON BY TH E CIT(A) IN THE CASE OF CANARA WORKSHOPS (SUPRA) IN THE IMPUGNED ORDER HEL D THAT LOSS INCURRED IN LEASING BUSINESS HAD TO BE TAKEN INTO CONSIDERATION FOR THE PURPOSE OF COMPUTATION OF DEDUCTION UNDER S. 80-I AS SEC. 80AB OVERRIDES ALL SECTIONS FOR THE PURPOSE OF DEDUCTIONS UNDER CHAPTER VI-A. 15. WE THEREFORE HOLD THE DEDUCTION U/S.80IA OF TH E ACT HAS TO BE ALLOWED AS PER SEC.80IA(1) OF THE ACT BUT THE DEDU CTION SO ARRIVED AT CANNOT EXCEED THE GROSS TOTAL INCOME OF THE ASSESSE E. 16. IN THE PRESENT CASE THE DEDUCTION U/S. 80IA O F THE ACT CONSIDERING THE BUSINESS ON WHICH DEDUCTION U/S.80IA WAS CLAIME D BY THE ASSESSEE AS THE ONLY INCOME OF THE ASSESSEE WAS RS.24 36 83 03 7/-. THE GROSS TOTAL INCOME OF THE ASSESSEE WAS RS.29 75 89 300/- (AS PE R THE RETURN OF INCOME OF THE ASSESSEE). INCOME UNDER THE HEAD IN COME FROM BUSINESS OR PROFESSION WAS RS.20 01 80 662/-. THE CEILING OF DEDUCTION U/S.80IA READ WITH SEC.80AB OR 80B(5) OR 80A(2) IS THAT IT C ANNOT EXCEED THE GROSS TOTAL INCOME NOT THE INCOME DETERMINED UNDER THE H EAD INCOME FROM BUSINESS OR PROFESSION. THIS ASPECT HAS NOT BEEN NOTICED BY THE AO OR THE CIT(A). WE THEREFORE HOLD THAT THE CONCLUSIONS OF THE CIT(A) THAT THE ASSESSEE SHOULD BE ALLOWED DEDUCTION U/S.80IA AT RS .24 39 83 037/- AS ALLOWING THE SAID DEDUCTION WOULD NOT VIOLATE THE M ANDATE OF LAW AS LAID DOWN IN THE DECISION OF THE HONBLE SUPREME COURT I N THE CASE OF SYNCO INDUSTRIES LTD. (SUPRA) . FOR THE REASONS GIVEN ABOVE WE SUSTAIN THE ORDE R OF CIT(A). WE THEREFORE FIND NO MERITS IN GR.NO.2 RAISED BY THE REVENUE IN ITS APPEAL FOR AY 2011-12. 17. GROUND NO.3 RAISED BY THE REVENUE IN ITS APPEAL READS AS FOLLOWS:- ITA NO. 37/B/2016 1228/B/17 & CO NO.66/B/2016 PAGE 12 OF 18 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE CIT(A) ERRED IN LAW BY STATING THAT HARVESTING CHARGES PAI D TO LABOURERS BY THE ASSESSEE ON BEHALF OF THE CANE GROWERS IS PA RT AND PARCEL OF THE COST PRICE OF SUGARCANE AND THE PAYMENT OF WHIC H CANNOT BE COVERED WITHIN THE EXPRESSION 'WORK CONTRACT' AS DE FINED U/S 194C WHEN AS PER ASSESSEE THE ALLAND UNIT CANE PR ICE WAS FIXED UNDER TWO DIFFERENT HEADS. 18. THIS GROUND OF APPEAL BY THE REVENUE FOR AY 201 1-12 CAN BE CONVENIENTLY DEALT WITH THE GROUNDS OF APPEAL RAISE D BY THE ASSESSEE IN ITA NO.1228/BANG/2017 FOR AY 2012-13 WHICH READS AS FOL LOWS:- 1. THE ORDER OF CIT (A) INSOFAR AS IT IS PREJUDIC IAL TO THE INTEREST OF THE APPELLANT IS BAD AND UNSUSTAINABLE IN THE EYE OF LAW. 2. THE CIT(A) GROSSLY ERRED IN CONFIRMING THE DISAL LOWANCE OF HARVESTING CHARGES DISREGARDING THE DOCUMENTARY EVIDENCES FURNISHED BEFORE HIM INCLUDING HIS OWN ORDER FOR AN EARLIER YEAR. 3. THE CIT(A) OUGHT TO HAVE APPRECIATED THE PLEA OF THE APPELLANT THAT ON THE PECULIAR FACTS THERE WAS NO A PPLICABILITY OF S.194C OF THE ACT 86 HENCE NO DEDUCTION OF TAS WAS REQUIRED TO BE MADE. CONSEQUENTLY THE SAME WAS NOT HIT BY S.40 (A)(IA) OF THE ACT. 4. WITHOUT PREJUDICE THE CIT(A) OUGHT TO HAVE APPR ECIATED THAT THERE WAS NO CONTRACT BETWEEN THE APPELLANT AN D THE LABOURERS WHO ARE ALL AGRICULTURISTS WITH THEIR RES PECTIVE INCOMES BELOW TAXABLE LIMIT; AND HENCE NO DEDUCTION OF TAS WAS TO BE MADE. 5. FOR THESE AND SUCH OTHER GROUNDS THAT MAY BE URG ED AT THE TIME OF HEARING THE APPELLANT PRAYS THAT THE APPEA L MAY BE ALLOWED. 19. THE FACTS AND CIRCUMSTANCES GIVING RISE TO THE AFORESAID GROUNDS OF APPEAL ARE AS FOLLOWS. IN AY 2010-11 THE ASSESSEE PURCHASED SUGARCANE ITA NO. 37/B/2016 1228/B/17 & CO NO.66/B/2016 PAGE 13 OF 18 FROM VARIOUS FARMERS. THE ASSESSEE MAKES PAYMENT O N ACCOUNT HARVESTING CHARGES. IN AY 2010-11 THE ASSESSEE PAI D A SUM OF RS.2 07 29 975 ON ACCOUNT OF HARVESTING CHARGES. I T IS AN ADMITTED POSITION THAT THE ASSESSEE DID NOT DEDUCT TAX AT SOURCE WHIL E MAKING PAYMENT TOWARDS HARVESTING CHARGES. ACCORDING TO THE AO T HE ASSESSEE OUGHT TO HAVE DEDUCTED TAX AT SOURCE U/S. 194C OF THE ACT ON THE AFORESAID PAYMENT AND SINCE ASSESSEE FAILED TO DO SO THE AFORESAID S UM WHICH WAS CLAIMED AS DEDUCTION IN COMPUTING INCOME CANNOT BE ALLOWED AS A DEDUCTION IN VIEW OF THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT WHICH PROVIDES THAT WHERE TAX IS LIABLE TO BE DEDUCTED ON A PAYMENT AND IS NOT SO DEDUCTED THE SAME CANNOT BE CLAIMED AS AN EXPENDITURE IN COM PUTING INCOME FROM BUSINESS. 20. BEFORE THE CIT(APPEALS) THE ASSESSEE SUBMITTED THAT THE HARVESTING CHARGES ARE NOTHING BUT PAYMENT FOR PURCHASE OF SUG ARCANE FROM THE FARMERS AND THAT PAYMENT BY ANY STRETCH OF IMAGINAT ION CANNOT BE CONSIDERED AS A PAYMENT TO A CONTRACTOR FOR CARRYIN G OUT ANY WORK AS CONTEMPLATED U/S. 194C OF THE ACT. IN THIS REGARD THE ASSESSEE POINTED OUT THAT THE PAYMENT MADE TO THE FARMERS ARE EX- FACTORY GATE PURCHASE PRICE IN INSTALMENTS FOLLOWING THE WELL ESTABLISHED POLICY O F CENTRAL GOVT. IN DETERMINING THE STATUTORY MINIMUM PRICE (SMP) OF SU GARCANE. THE ASSESSEE POINTED OUT THAT IT IS THE OBLIGATION AND RESPONSIBILITY OF THE FARMERS FOR CUTTING AND HARVESTING SUGARCANE AND TO TRANSPORT THE SAME FROM THE FIELD TO THE SUGARCANE FACTORY. THE FARME RS ARE PAID CONSOLIDATED PRICE FOR THEIR SUGARCANE FIXED BY GOVT. OF INDIA A ND THE SAID PRICE ALSO INCLUDES THE HARVESTING AND TRANSPORTATION CHARGES. THE ASSESSEE FURNISHED COPIES OF SUGARCANE PURCHASE BILLS DEPICT ING THE ADJUSTMENT OF HARVESTING AND TRANSPORTATION CHARGES FROM THE COST OF PURCHASES. THE ASSESSEE ALSO PLACED RELIANCE ON THE DECISION OF IT AT AHMEDABAD BENCH IN THE CASE OF SHREE MAHUVA PRASAD SAHAKARI KHAND UDYOG MANDAL LTD . V. ITA NO. 37/B/2016 1228/B/17 & CO NO.66/B/2016 PAGE 14 OF 18 ITO ITA NO.305/AHD/2009 WHEREIN THE TRIBUNAL TOOK THE VIEW THAT PROVISIONS OF SECTION 194-C OF THE ACT ARE NOT ATTR ACTED FOR PAYMENT MADE TO HARVESTING LABOURERS AND TRANSPORTERS BECAUSE IT WAS AN OBLIGATION OF CANE GROWERS TO BRING SUGARCANE TO THE ASSESSEES F ACTORY AND THE AFORESAID PAYMENTS CANNOT BE SAID TO BE PAYMENT CO VERED BY SECTION 194C OF THE ACT. SIMILAR DECISION RENDERED BY THE ITAT PUNE BENCH IN THE CASE OF DCIT V. DWARKADHEESH SAKHAR KARKHANA LTD. [2015] 55 TAXMANN.COM 415 (PUNE TRIB.) WAS ALSO RELIED UPON BY THE ASSESSEE. 21. THE CIT(APPEALS) ACCEPTED THE ARGUMENTS ON BEHA LF OF THE ASSESSEE AND HE FOUND ON PERUSAL OF THE SUGARCANE P URCHASE BILLS THAT FARMERS SUPPLIED SUGARCANE AND HARVESTED THEMSELVES AND INCURRED TRANSPORTATION CHARGES AND THOSE CHARGES WERE DEDUC TED FROM THE PURCHASE PRICE PAYABLE FOR SUGARCANE. THE CIT(APPE ALS) WAS THEREFORE OF THE VIEW THAT THE PAYMENT IN QUESTION DID NOT FALL WITHIN THE AMBIT OF SECTION 194C OF THE ACT AND HE ACCORDINGLY DELETED THE ADDI TION MADE BY THE AO. FOLLOWING WERE THE RELEVANT OBSERVATIONS OF THE CIT (APPEALS):- I HAVE CONSIDERED THE WRITTEN SUBMISSIONS FILED B Y THE APPELLANT AND ALSO GONE THROUGH THE ASSESSMENT ORDER PASSED B Y THE ASSESSING OFFICER. THE FIRST GROUNDS OF APPEAL IS R ELATED TO DISALLOWANCE OF HARVESTING CHARGES OF RS.2 07 29 29 5/- MADE BY THE ASSESSING OFFICER IN HIS ASSESSMENT ORDER STAT ING THAT THE APPELLANT COMPANY DURING THE YEAR UNDER CONSIDERATI ON HAS MADE PAYMENTS TOWARDS HARVESTING CHARGES ON WHICH NO TDS U/S.194C WAS MADE. THEREFORE THE ENTIRE EXPENSES UNDER THE HEAD WAS DISALLOWED BY INVOKING THE PROVISIONS OF SECTION 40 (A)(IA) OF THE INCOME TAX ACT WITHOUT POINTING OUT ANY VIOLATION O F SECTION 194C AND ALSO NOT MADE ANY OBSERVATION THAT THE HAR VESTING CHARGES PAID BY THE APPELLANT COMPANY ARE FALLING I N THE AMBIT OF SECTION 194C OR NOT. 7.1 DURING THE APPELLATE PROCEEDINGS THE APPELLANT SUBMITTED THAT THE HARVESTING CHARGES ARE PART AND PARCEL OF THE SUGAR CANE PURCHASE COST AS THE SAID CHARGES WERE DULY DEDUCTE D FROM THE ITA NO. 37/B/2016 1228/B/17 & CO NO.66/B/2016 PAGE 15 OF 18 SUGAR PAYMENTS MADE TO THE FARMERS. THE APPELLANT T HROUGH ITS REPRESENTATIVE HAS FURNISHED THE SUGAR CANE PURCHAS E BILLS BEFORE ME WHICH SHOW THAT THE FARMERS WHO SUPPLIED THE SU GARCANE AND HARVESTED THEMSELVES WERE PAID FULL AMOUNT OF SUGAR CANE PRICE AND FOR THOSE WHO COULD NOT PAY THE HARVESTING CHAR GES AND TRANSPORTATION CHARGES WAS PAID BY THE APPELLANT AS SUGARCANE PRICE IN THREE HEADS AS SUGAR CANE PURCHASE COST H ARVESTING CHARGES TRANSPORTATION COST. AS THE HARVESTING CHA RGES AND TRANSPORTATION CHARGES NEED TO BE PAID IN SHORT TIM E BEFORE THE SUGARCANE PAYMENT SUCH BIFURCATION WAS MADE TO HAVE THE CONTROL OVER THE PAYMENTS. HE FURTHER PLEADED THAT SINCE T HE PAYMENTS WERE MADE TO FARMERS AS SUGARCANE PURCHASE COST TH E PROVISIONS OF SECTION 194C R.W.S 40(A)(IA) ARE NOT APPLICABLE. HE FURTHER RELIED ON THE JUDGMENT OF THE AHMEDABAD TRIBUNAL IN THE CASE OF M/S. SHREE MAHUVA PRADESH SAHAKARI KHAND UDYOG MAND AL LTD VS. ITO WHEREIN IT WAS HELD THAT ON THE FACT AND C IRCUMSTANCES OF THE CASE THE ASSESSEE IS NOT LIABLE TO DEDUCT TH E TAX AT SOURCE FROM THE PAYMENT MADE TO MUKADAMS (HARVESTING LABOU RERS AND TRANSPORTERS BY ZONE SAMITI) AND ALSO IN THE CA SE OF DCIT VS. DWARAKADEESH SAHAKAR KHARKHANA LTD. IT WAS HELD BY THE SPECIAL BENCH THAT SUGAR FACTORY WAS NOT LIABLE TO MAKE TDS U/S.194C FROM THE PAYMENTS MADE TO MUKADAMS AND TRANSPORTERS BY THE SAMITI. IT WAS FOR THE CANE GROWER TO BRING THE SUG ARCANE TO THE APPELLANT'S FACTORY AND ON BEHALF OF THE CANE GROWE RS THE HARVESTING CHARGES WERE PAID TO THE LABOURERS BY TH E APPELLANT ALONG WITH TRANSPORT CHARGES WHICH ARE INCLUDED IN THE COST PRICE OF THE SUGAR CANE WHICH IS EVIDENT FROM THE INVOICE S FURNISHED BEFORE ME. THEREFORE IN THE LIGHT OF THE FACTUAL A ND THE LEGAL MATRIX OF THE CASE AS DISCUSSED ABOVE I AM OF THE OPINION THAT THE HARVESTING CHARGES PAID TO THE LABOURERS BY THE APP ELLANT ON BEHALF OF THE CANE GROWERS WHICH IS THE PART AND PA RCEL OF THE COST PRICE OF THE SUGAR CANE THE PAYMENT CAN NOT BE STA TED TO BE COVERED WITHIN THE EXPRESSION 'WORK CONTRACT 'AS DE FINED U/S 194C OF THE INCOME TAX ACT 1961. THEREFORE I HEREB Y DELETE THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT O F TDS NOT MADE U/S.194C. THE FIRST GROUND OF APPEAL IS HEREBY ALLOWED. 22. AGGRIEVED BY THE ORDER OF CIT(APPEALS) THE REV ENUE HAS RAISED GROUND NO.3 BEFORE THE TRIBUNAL. ITA NO. 37/B/2016 1228/B/17 & CO NO.66/B/2016 PAGE 16 OF 18 23. HOWEVER ON THE SAME SET OF FACTS THE CIT(APP EALS) IN AY 2012-13 HELD THAT THE PROVISIONS OF SECTION 194C WERE ATTRA CTED. IN AY 2012-13 THE SUM PAID ON ACCOUNT OF HARVESTING CHARGES WAS A SUM OF RS.9 54 22 413 AND THE SAID PAYMENT WAS DISALLOWED FOR NON-DEDUCTI ON OF TAX AT SOURCE U/S. 194C OF THE ACT BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. THE VERY SAME SUBMISSIONS MADE IN AY 2011-12 WERE MADE BEFORE THE CIT(APPEALS) FOR AY 2012-13. THE CIT(APPEALS) HAS NOTICED THESE ARGUMENT IN PARA 6 OF HIS ORDER BUT HAS NOT DEALT WITH THE SAME. RATHER THE CIT(APPEALS) PROCEEDED ON THE QUESTION WHERE SE CTION 40(A)(IA) OF THE ACT WOULD BE APPLICABLE TO A SUM WHICH IS NOT PAID BUT REMAINS PAYABLE BY THE ASSESSEE. ON THAT ASPECT THE CIT(APPEALS) CAM E TO THE CONCLUSION THAT THE CONSEQUENCE OF DISALLOWANCE U/S. 40(A)(IA) OF THE ACT WILL FOLLOW EVEN IN RESPECT OF AMOUNTS THAT WERE PAID AND NOT T HE SUMS WHICH REMAIN PAYABLE BY THE PERSON WHO MAKES THE PAYMENT. IT IS AGAINST THE AFORESAID ORDER OF CIT(A) THAT THE ASSESSEE HAS PREFERRED AP PEAL IN ITA NO.1228/BANG/2017. 24. WE HAVE HEARD THE RIVAL SUBMISSIONS. THE LD. CO UNSEL FOR THE ASSESSEE REITERATED SUBMISSIONS THAT WERE MADE BEFO RE THE CIT(APPEALS) AND RELIED ON THE ORDER OF CIT(APPEALS) FOR AY 2011 -12. THE LD. DR RELIED ON THE ORDER OF AO. 25. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. IN T HE ORDER OF ASSESSMENT FOR BOTH AYS 2011-12 & 2012-13 THERE HA S BEEN NO DISCUSSION WHATSOEVER BY THE AO AS TO WHY THE HARVE STING AND TRANSPORTATION PAYMENTS MADE BY THE ASSESSEE TO THE FARMERS WERE REGARDED AS PAYMENTS FALLING WITHIN THE AMBIT OF SE CTION 194C OF THE ACT. IN THE APPELLATE ORDER FOR AY 2012-13 THE CIT(A) HAS NOT DISCUSSED THIS ASPECT AT ALL AND HAS GONE ONLY BY THE LEGAL PROPOS ITION AS TO WHETHER SECTION 40(A)(IA) WOULD BE APPLICABLE TO SUMS WHICH HAVE ALREADY BEEN ITA NO. 37/B/2016 1228/B/17 & CO NO.66/B/2016 PAGE 17 OF 18 PAID OR ONLY TO SUMS WHICH REMAINS PAYABLE AS ON TH E LAST DATE OF THE PREVIOUS YEAR. THEREFORE THE REASONS GIVEN BY THE CIT(APPEALS) IN AY 2011-12 REGARDING PAYMENT ON ACCOUNT OF HARVESTING AND TRANSPORTATION CHARGES NOT BEING IN THE NATURE OF PAYMENT FALLING WITHIN THE AMBIT OF SECTION 194C OF THE ACT IS ONLY THE AVAILABLE MATER IAL. 26. WE HAVE PERUSED THE PAPERBOOK FILED BY THE ASSE SSEE CONTAINING SAMPLE BILLS FOR PURCHASE OF SUGARCANE ISSUED BY TH E ASSESSEE. THE SAMPLE BILL SHOWS THE VALUE OF CANE SUPPLIED BY IND IVIDUAL FARMERS AND THE TRANSPORTATION & HARVESTING CHARGES ARE SHOWN AS DE DUCTION WHICH BY IMPLICATION MEANS THAT THE CANE PRICE IS INCLUSIVE OF TRANSPORTATION & HARVESTING CHARGES. THE PLEA OF ASSESSEE THAT SUPP LY OF CANE BY THE FARMERS TO THE ASSESSEE IS ON EX GATE OF SUGAR FACT ORY BASIS APPEARS TO BE CORRECT. IN OUR OPINION IT WOULD DEPEND ON THE AG REEMENT BETWEEN THE ASSESSEE AND CANE FARMERS AS TO WHETHER THE CANE PR ICE FIXED BETWEEN THE PARTIES IS INCLUSIVE OF HARVESTING & TRANSPORTATION CHARGES. IF THE CONTRACT TO SUPPLY SUGARCANE IS EX FIELD (COST OF HARVESTING AND TRANSPORTATION TO BE BORNE BY THE SUGAR MANUFACTURER) THEN IT IS THE RESPONSIBILITY OF THE ASSESSEE TO LIFT THE SUGARCANE FROM THE FIELD TO IT S FACTORY I.E. THE ASSESSEE HAS TO BEAR THE HARVESTING AND TRANSPORTATION CHARG ES FOR THE SUGARCANE. THERE IS NO SUCH MATERIAL BROUGHT ON RECORD TO COME TO THE CONCLUSION THAT THE HARVESTING & TRANSPORTATION CHARGES PAID BY THE ASSESSEE IS ON EX- FIELD BASIS. IN SUCH CIRCUMSTANCES WE ARE OF THE VIEW T HAT ON THE BASIS OF PROBABILITY THE PLEA OF ASSESSEE HAS TO BE ACCEPTE D AND IT HAS TO BE HELD THAT THE PAYMENTS MADE BY THE ASSESSEE TOWARDS HARV ESTING AND TRANSPORTATION CHARGES HAVE TO BE REGARDED AS PAYME NT MADE FOR PURCHASE OF SUGARCANE AND CONSEQUENTLY THE PROVISIONS OF SEC TION 194C OF THE ACT DO NOT GET ATTRACTED. CONSEQUENTLY WE ARE OF THE VIEW THAT THE CIT(APPEALS) WAS JUSTIFIED IN DELETING THE ADDITION FOR AY 2011-12 AND WAS NOT JUSTIFIED IN NOT DELETING THE ADDITION FOR AY 2 012-13 APART FROM NOT ITA NO. 37/B/2016 1228/B/17 & CO NO.66/B/2016 PAGE 18 OF 18 DEALING WITH THE SUBMISSIONS OF ASSESSEE IN THIS RE GARD. WE THEREFORE FIND NO SUBSTANCE IN GROUND NO.3 RAISED BY THE REVENUE F OR AY 2011-12 AND DISMISS THE SAME. WE FIND MERIT IN THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE FOR THE AY 2012-13 AND ALLOW THE SAME. 27. IN THE RESULT THE APPEAL BY THE REVENUE IN ITA NO.37/BANG/2016 IS DISMISSED AND THE CO NO.66/BANG/2016 BY THE ASSESSE E IS DISMISSED WHILE ITA NO.1228/BANG/2017 BY THE ASSESSEE IS ALLO WED. PRONOUNCED IN THE OPEN COURT ON THIS 8 TH DAY OF NOVEMBER 2019. SD/- SD/- ( A K GARODIA ) ( N V VASUDEVAN ) ACCOUNTANT MEMBER VICE PRESIDENT BANGALORE DATED THE 8 TH NOVEMBER 2019. / DESAI SMURTHY / COPY TO: 1. REVENUE 2. ASSESSEE 3. CIT 4. CIT(A) 5. DR ITAT BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR ITAT BANGALORE.