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2012 (10) TMI 466 - AT - Income TaxTDS u/s 194C of the IT Act - contract of work versus contract of sale - assessee has entered into a contract of manufacturing agreement with M/s Nicholas Piramal to manufacture certain products - M/s Nicholas Piramal was required to perform quality control testing of products - assessee reimbursed the validation charges to M/s Nicholas Piramal without deducting tax at source – Held that:- It is not clear as to the party which has to bear the expenses relating to the said quality control tests - in view of the statements of the assessee that there are certain documents to establish liability of the assessee to reimburse the expenditure to M/s Nicholas Piramal and in the interest of justice – matter remanded back to the AO Depreciation on machinery - whether it is used for the purpose of assessee's business or profession - assessee has entered into contract for manufacture of certain ophthalmic solutions and for the said purpose the machinery was purchased and installed in the premises of M/s Nicholas Piramal during the relevant financial years – Held that:- Manufacturing is done as per specification of the assessee and the goods are also recognized as manufactured by the assessee, since they are sold in the brand name of the assessee - it can be said that the goods are manufactured by the assessee itself. When the machine is being used for the manufacture of goods for the assessee, it cannot be said that they are not used for the purpose of business or profession of the assessee - assessee is entitled to depreciation on this machinery Denial of depreciation on plant & machinery – Held that:- Machinery though, was purchased in the year 1995-96, but was put to use in FYs: 1997-98 & 1998-99 - machines were written off in the books of assessee as obsolete in the FY: 1998-99, but was added in the computation of income filed along with its tax return for the assessment years 1999-2000 - assessee ought to have reduced the written down value of the said machinery from the block of assets and ought to have claimed depreciation on the balance of the block of assets – denial of depreciation upheld
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