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2012 (11) TMI 164 - AT - Income TaxNon deduction of TDS - levy of tax u/s 201(1) and interest u/s 201(1A) - Held that:- The entire provision has been disallowed under section 40(a)(ia) and section 40(a)(i). Once the amount has been disallowed under the provisions of section 40(a)(i) on the reason that tax has not been deducted, it is surprising that AO holds that the said amounts are subject to TDS provisions again so as to demand the tax under the provisions of section 201 and also levy interest under section 201(1A). Unable to understand the logic of AO in considering the same as covered by the provisions of section 194C to 194J. Once an amount was disallowed under section 40(a)(i)/(ia) on the basis of the audit report of the Chartered Accountant, the same amount cannot be subject to the provisions of TDS under section 201(1) on the reason that assessee should have deducted the tax. Therefore, assessee’s ground on this issue are to be allowed as the entire amount has been disallowed under the provisions of section 40(a)(i)/(ia) in the computation of income on the reason that TDS was not made - in favour of assessee. Finished/Traded Goods - Held that:- After going through the agreement and its various clauses it is concluded that the contract with the various parties are contract for purchases of traded goods and not of the works contract - as decided in Glenmark Pharmaceuticals Ltd. Versus Income-tax Officer (TDS)-1(3), Mumbai [2009 (3) TMI 648 - ITAT MUMBAI] on identical facts that TDS is not required to be deducted on purchase of traded goods - in favour of assessee. Purchase of Packing Material - Held that:- As decided in BDA Ltd vs. Income Tax Officer (TDS) [2004 (3) TMI 11 - BOMBAY HIGH COURT] TDS is not required to be deducted under section 194C on purchase of packing material - in favour of assessee. Clinical Trials - Held that:- In order to carry out clinic trial, the person who carries out the trial must possess medical qualification and the person should be highly qualified and should possess technical expertise. Therefore, payment made in this respect is nothing but fees for professional/technical services. According the above payment of ₹ 7,68,21,907/- is a payment to professional fees, therefore, tax should have been deducted as per provisions of section 194J. AO is directed to calculate TDS liability under section 194J. Whatever TDS liability comes under section 194J credit for taxes paid of ₹ 42,45,914/- is to be allowed and balance amount needs to be recovered from the appellant.
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