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2024 (4) TMI 267 - ORISSA HIGH COURTTDS liability u/s 194C - 'Contract for Sale' and not a 'Works Contract' - Scope of the term "Work" - Seeking issue a Certificate u/s 197 r.w.s. 206(C)(9) for NIL Tax Deduction at Source (TDS) on all sales effected by the Petitioner/ Company - dealings between the buyer and seller were continuing smoothly until the Buyer started deducting TDS (Tax Deducted at Source) @ 2% under section 194 (C) on all Sale Invoices of the Petitioner Company with effect from May, 2019 - HELD THAT:- The onus of proving the transactions between the assessee and the HUL that it does not fall under section 194C completely lies with the assessee. He is required to provide sufficient documents in support of the transaction that it is not a contract under the meaning of section 194C of the Act, rather it is a contract for sale and falls under circular no.05/2010 issued by the CBDT. As per the purchase agreement entered into between the assessee and HUL, whether the materials used in manufacturing the products sold to HUL cannot be assessed and/or judged from the reading/ analysis of the agreement. The views in respect to purchase of materials can be only assessed from the verification of purchase invoices and books of accounts and confirmation from the HUL. Based on the Departmental analysis the rate of deduction has been derived and accordingly approval has been given by the competent authority. Based on the Estimated Net Profit of the assessee for the F.Y. 2020-21, the rate of deduction has been derived and accordingly approval has been given. The contention of the petitioner is not pertinent in this instant case, since the Petitioner itself submitted application in F.No.13 claiming receivable for the Hindustan I.ever as "contractual receipts". Further it had not made M/s. Hindustan lever Limited as a party to this case which indicates that it primarily had no objection with M/s. Hindustan Lever Limited treating it's payment to the applicant as "contractual payment". Petitioner's claim that the Hindustan lever had been wrongly deducting tax at source under section 194C, treating the contractual agreement for manufacturing of Hindustan Lever Limited products as "works contract" is not legally tenable since for all purposes the functioning of the applicant in respect of its transaction with Hindustan lever/ comes under the domain of “works contract". Further, it is also noted that the applicant had regularly claimed amount receivable from Hindustan Lever as 'contractual amount" in F.No.13 filed in earlier Financial Years including Financial Year 2019-20 and even in F. No. 13 filed for the Financial Year 2020-21. Petitioner did not adduce any documents/correspondences disputing the deduction of tax at source under section 194C of the I.T. Act by the Hindustan Lever Ltd. Evidently, the Petitioner did not consider such action by Hindustan Lever Limited as "dispute" suitable for agitation with Hindustan Lever Limited, unless rate of IDS for the Financial Year 2020-21 has been fixed at 1.25%.
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