Dismissed

Pr. Commissioner of Income Tax - 18 v. M/S National Agricultural Cooperative

Delhi HC9 Sept 2024ITA/527/2019

Case brief

AI extract

What is this about?

The Delhi High Court dismissed the Revenue's appeal in a tax dispute involving TDS deductions. The court held that agreements between NAFED and supporters did not establish a principal-agent relationship, rendering Section 194H inapplicable and the subsequent disallowance unjustified.

What did the court decide?

The appeal was dismissed as it failed to raise any substantial question of law.

Pr. Commissioner of Income Tax - 18 Vs M/S… — Contract and Commercial Disputes | Delhi HC (2024)

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$~17

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IN THE HIGH COURT OF DELHI AT NEW DELHI

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- ITA 527/2019

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PR. COMMISSIONER OF INCOME TAX – 18 .....Appellant

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Through: Mr.Indruj Singh Rai, Sr.SC with Mr.Sanjeev Menon and Mr.Rahul Singh, JSCs and Mr.Anmol Jagga, Advocate

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versus

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M/S NATIONAL AGRICULTURAL COOPERATIVE

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.....Respondent Through: Mr.Satyen Sethi and Mr.Arta Trana Panda, Advocates

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CORAM:

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HON'BLE MR. JUSTICE YASHWANT VARMA HON'BLE MR. JUSTICE RAVINDER DUDEJA

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O R D E R % 09.09.2024

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The Principal Commissioner seeks to challenge the judgment rendered by the Income Tax Appellate Tribunal [“ Tribunal ”] dated 11 July 2018 and has posited the following questions of law for our consideration.

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“A. Whether the Hon'ble ITAT was justified in deleting addition of Rs. 5,82,52,900/- made by the AO u/s 40(a)(ia) when the assessee had been paying service charges/ society charges/ samiti charges and commission, without deducting TDS, to various district level/ primary level and state level cooperative societies and there was relation of Principal and Agent between the two as per Agreement and when state/ district/ primary level co-operatives were working as procurement agents of the assessee and the provisions of section 194H read with section 40(a)(ia) of I.T. Act were clearly applicable?”

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The dispute pertaining to Section 194H of the Income Tax Act,

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This is a digitally signed order.

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The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 18/09/2024 at 12:27:45

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1961 [“ Act ”] and its applicability appears to have arisen in the context of the respondent-assessee which is a National Level Cooperative Agricultural Marketing Federation, having pursuant to the directives framed by the Government of India acted as the nodal agency for purchase of agricultural produce under the Price System Support Scheme and Marketing Intervention Scheme.

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We take note of the following pertinent clauses which appear in the Agreement between the respondent-assessee and the State Level Supporters for “Price Support Operations Rabi Season 2007” and which also formed the subject matter of scrutiny of the Assessing Officer:-

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“3. RELATIONSHIP OF THE SUPPORTER WITH THIRD PARTIES

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All transactions between the Supporter and third parties other than procuring societies shall be carried out as between the two principals without reference in any event to the NAFED. The Supporter also undertakes to make such third parties fully aware of the position aforesaid. NAFED will not be liable for any default or acts of omission or commission of the Supporter towards third parties and the Supporter agrees to indemnify NAFED in the event of any such claim against NAFED by the third parties. All persons employed by the Supporter shall be engaged by them as their own servants in all respects.

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xxxx xxxx xxxx

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16. INFORMATION/DOCUMENTS

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i. The Supporter understands that the Price Support Operations of mustard seed is in the account and on behalf of the Ministry of Agriculture, Government of India. They shall ensure that the same is undertaken by them on behalf of NAFED efficiently so that its maximum possible benefit is reaped by the farmers. The Supporter shall maintain all records/accounts of the said operation properly, making available timely information/ documents, etc. as and when required by NAFED/ Government of India.

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This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 18/09/2024 at 12:27:45

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ii. It is clearly understood by both the parties that this agreement does not confer the status of an agent of NAFED on the second part but it extends full authority to facilitate and support procurement of the commodities covered, subject to the terms and conditions specified herein.”

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Bearing in mind the aforesaid and the complete absence of any material which may have even remotely indicated that a relationship of “principal” and “agent” existed, we find that the provisions of Section 194H were correctly found to be inapplicable. Consequently, there would be no justification to resort of Section 40(a)(ia) of the Act. 5. The appeal fails to raise any substantial question of law. It shall, consequently, stand dismissed.

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YASHWANT VARMA, J.

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RAVINDER DUDEJA, J.

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SEPTEMBER 9, 2024 /sv

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This is a digitally signed order.

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The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 18/09/2024 at 12:27:45

Pr. Commissioner of Income Tax - 18 v. M/S National Agricultural Cooperative

Case brief

What is this about?

What did the court decide?

Pr. Commissioner of Income Tax - 18 v. M/S National Agricultural Cooperative

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

Parties & counsel

Coram

Case details

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