HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Income Tax Appeal No. 186 / 2017 Pr. Commissioner of Income Tax, Jaipur-3, Statute Circle, C- Scheme, Jaipur Appellant Versus Sikar & Jhunjhunu Zila Dugdh Utpadak Sahakari Sangh Ltd., V & P - Palsana, Sikar AY 2013-14 Respondent For Appellant(s) : Mr. Arjun Singh for Mr. Sameer Jain For Respondent(s) : HON'BLE MR. JUSTICE K.S. JHAVERI HON'BLE MR. JUSTICE INDERJEET SINGH Order 08/08/2017 1. By way of this appeal, appellant has assailed judgment and order of Tribunal whereby Tribunal has dismissed appeal of department. 2. Counsel for appellant has framed following questions of law:- i) Whether on facts and in circumstances of case Tribunal is justified in law in holding that payment of Rs. 1,69,68,809/- made to various milk societies on account of milk price difference, is not liable for TDS u/s 194H, ignoring substance of matter that such milk societies provide service of facilitating purchase of milk by assessee from cattle owners, and are liable for TDS? ii) Any other question of law as deemed fit in facts and circumstances of case may also be framed by Hon ble Court of law in interest of justice. (2 of 4) [ITA-186/2017] 3. Counsel for appellant has contended that issue is now squarely covered by decision of this Court in case of assessee itself in Tax Appeal No. 53/2017 decided on 12 th April, 2017 wherein it has been held as under:- Counsel for appellant has contended that in another case between same parties, in case of Pr. Commissioner of Income Tax vs. Sikar & Jhunjhunu Zila Dugdh Utpadak Sahakari Sangh Ltd. in DB Income Tax Appeal No.32/2016, decided on 16.11.2016, this Court has observed as under: 2. Counsel for appellant has framed following substantial questions of law for consideration: 1. Whether on facts and in circumstances of case ITAT is justified in law in holding that payment of Rs.42,41,575/- made to RCDF is not liable for TDS u/s 194H or u/s 194J of IT Act, 1961? 2. Whether on facts and in circumstances of case ITAT is justified in law in holding that payment of Rs.54,73,480/- made to various mil societies on account of milk price difference, is not liable for TDS u/s 194H, ignoring substance of matter that such milk societies provide service of facilitating purchase of milk by assessee from cattle owners, and are liable for TDS? 3. Whether on facts and in circumstances of case ITAT is justified in law in holding that payment of Rs.4,52,833/-, debited to Profit and Loss account under head sales promotion/advertisement made to RCDF and others is not liable for TDS? 3. Counsel for appellant has taken us to reasoning given by CIT (Appeals) and contended that issue which reads as under: In lieu of Services Charges RCDF would be providing following services to Unions: (3 of 4) [ITA-186/2017] marketing Support as per requirement. Coordination with state/central government and financial institutions for various schemes. Finalising rate contracts for purchase of raw material for cattlefeed plants, packing material for milk and milk products and cattlefeed etc. Assist in plant management, engineering and quality assurance projects. Preparation and monitoring of Integrated Business Planning and related financial analysis. (i) Use of SARAS brand. (ii) Development and launching of new products. (iii) MIS/system support. (iv) It is evident from perusal of aforesaid documents that amount was paid by appellant to RCDF for various services rendred by RCDF to appellant. services was partly in nature of managerial services and partly for promotion and marketing of products of appellant. RCDF itself treated receipts as Service Charges . payment made by appellant was not in nature of reimbursement of expenses incurred by RCDF. It is clearly mention in aforesaid letter dated 04.11.1997 that RCDF will create reserve of maximum of 10% of its receipts for incurring specific expenditure for member societies. excess amount spent would be recovered from member societies. It is not known that how much amount was spent by RCDF on behalf of appellant in this year. payment is made by appellant at fix percentage of its turnover, irrespective of expenditure incurred by RCDF. It is also evident from para 7 of assessment order that Rs.3,62,111/- was further paid to RCDF as sales promotion expenses . Hence, amount debited under head cess was not paid for any sales promotion or marketing activities undertook by RCDF. Considering all this facts and circumstances of case, I am of view that amount paid by appellant to RCDF is in nature of fees for professional or technical services on which provisions of section 194J is applicable. Since appellant has not deducted tax at source from such payment, expenditure is not allowable u/s 40(a)(ia) of Act. (4 of 4) [ITA-186/2017] However, I agree with contention of ld. AR that provisions of sectioin 40(a)(ia) are not applicable on payments made before end of previous year, as held by Hon'ble ITAT, Jaipur in case of JVVNL (supra). A.O. is directed to verify actual payments made by appellant to RCDF during year and allow expenditure to that extent. 4. Tribunal reads order dated 21.07.2015, in para 3.13, has observed as under: I have heard rival contentions and perused materials available on record. Apropos payment to RCDF cess, it has not been demonstrated by Department that any managerial services in this connection have been rendered to assessee by RCDF qua this amount. RCDF is apex cooperative body and cess is paid to it by virtue of federal structure in Rajasthan cooperative set up. Thus as far as assessee's business is concerned, there is no rendering of any managerial services by RCDF as alleged by AO u/s 194H and upheld ld. CIT(A) u/s194J. Since there is no rendering of any services and payment is not made for any managerial services to RCDF, therefore, payment can neither be held as liable for TDS u/s 194H of Act as commission/brokerage as held by AO nor u/s 194J for rendering any managerial services as held by ld. CIT(A). In view thereof, we hold that assessee's impugned payment to RCDF are not liable for TDS. This ground of assessee is allowed. 4. Taking into consideration aforesaid decision, no substantial question of law arises in present appeal for consideration of this Court. 5. In that view of matter, appeal being devoid of any merit deserves to be dismissed and same is dismissed. (INDERJEET SINGH),J. (K.S. JHAVERI),J. A.Sharma/40 Pr. Commissioner of Income-tax, Jaipur-3, Jaipur v. Sikar & Jhunjhunu Zila Dugdh Utpadak Sahakari Sangh Ltd