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2013 (1) TMI 336 - HC - Income TaxTDS u/s 194C – Supply contract – Contract for sale – Work contract – Petitioner enter into an agreement with Government of Tripura for supply of salt on sale – As per agreement there shall be a deduction of 2% from each bill towards income tax - Circular No.13/2006 Assessee challenged incorporation of that clause that it was a contract for sale and so deduction of tax @ 2% at source from the bill is not permissible under the provisions of Income Tax Act, 1961 Held that:- The tender clause and agreement signed between the parties clearly specify that the order issued to the petitioner was for supply of ‘Super Fine Crushed White Iodised Salt’ in 1(one) kg poly packet to be supplied to the respective places as defined in the agreement at a clear rate of Rs.6,000/- per matric ton i.e. Rs.600/- (Rupees six hundred) per quintal, which makes it abundantly clear that it was a contract of supply on clear sale. There is no element of a supply on execution of a work contract. In view of circular No.13/2006, until and unless any other circular or clarification is made by the appropriate authority, the respondents shall not deduct income tax from the bills of the petitioners towards supply of salt under the agreement which is found to be agreement for supply on sale. In favour of petitioner
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