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2013 (9) TMI 644 - AT - Income TaxTDS u/s 194C - Works contract or contract for sale - Assessee has entered into two separate contracts for procurement and installation of plant and equipments required for commissioning 1000MW SSTPP Stage-II - First contract is entered up to the stage of making the plant and equipment ready at the site of the manufacturer and the second contract is entered in connection with the transportation from manufacturer's place, installation and commissioning, conducting performance and guarantee tests and handing over of all the equipments - Second contract was treated as "Contract of Work" and accordingly deducted at source u/s 194C of the Act - First contract was treated by the assessee as a "Contract for sale" and hence it did not deduct tax at source u/s 194C of the Act – Held that:- Reliance has been placed upon the ratio laid down by Hon'ble Supreme Court in the case of State of Andhra Pradesh v. Kone Elevators (India) Ltd. [2005 (2) TMI 519 - SUPREME COURT OF INDIA], wherein it has been held that the issue is as to the time and situs of passing of the property and as to whether the property passes "brick by brick" on the theory of accretion or as a chattel qua chattel- If the erection portion cannot be taken as the main object of these contracts, title in goods was transferred as movables prior to erection. The erection portion being subsequent to passing of title by execution of the supply portion, it cannot be said that the erection portion controls the supply portion, though the fulfillment of the conditions of the erection contract has a bearing on the fulfillment of the condition of supply portion of the contract, and though in some cases both the contracts are in the same document. The scope and object of each part of the contract is different - Though the supply portion and erection portion dovetail into each other, the erection portion does not control the supply portion and the supply contract does not become a works contract, just because there is an obligation cast on the supplier to erect the equipment which by that time has become the property of the purchaser. In view of the foregoing discussions, "Supply Contract" entered into by the assessee is in the nature of "Contract of sale" and hence the provisions of sec. 194C shall not apply to it, in the present case – Appeal allowed – Decided in favor of Assessee.
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