ITO (TDS) Vs. M/s Punjab State Warehousing Corporation (ITAT Chandigarh)
The main contention of the Department is that by-product retained by the millers have considerable market value and further that a sum of Rs. 15/- paid as ‘milling charges’ is a nominal cost which is insufficient to meet even the actual cost of services rendered by the millers including milling and drying of the paddy, ‘katai’ of the paddy before de-husking, de- husking of the paddy, filling up bags of the rice, transportation, weight check etc., apart from the milling of the paddy. That the real consideration lies in the value of the by-product retained by the miller, therefore, the assessees i.e. Procurement Agencies were required to deduct ‘TDS’ on the value of the by-products paid ‘in kind’ as consideration for the milling charges.
On the other hand, the stand of the assessees before us is that the by-product did not constitute as a payment of consideration for the work contract of milling of the paddy. That the assessees have not debited even the value of the by-product as their expenditure in their books of account and have not claimed any deduction in respect. Further, that even the provisions of section 194 C of the Act were applicable in respect of the monetary payment and not for payment ‘in kind’.
