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2017 (10) TMI 227 - AT - Income TaxLiability to deduct Tax at source u/s. 194C/194J - work contract - Held that:- In respect of agreement for the supply of equipments, no TDS is deductible u/s 194C of the Income Tax Act 1961 as it is amounts to a contract of sale. We note that M/ s. HCL Infosystems Ltd. supplied equipments as per the specifications of the assessee but the same have not been purchased from MTNL. M/s. HCL Infosystems Ltd. has purchased the said equipments from person other than such customer i.e. not from MTNL. Hence, TDS provisions would not fall applicable on the supply of equipments. Further since billing for the supply of equipments is separate from that of the services, TDS would not be deducted on the supply of equipments. TDS would not liable to be deducted on the supply of equipments as the same is not being covered under the purview of Section 194C of the Act. In the view of the above all it is clear that in respect of agreement for the supply of equipments, no TDS is deductible u/s 194C of the Income Tax Act 1961. We further find that, TDS would only be liable to be deducted on the value of professional services of installation, deployment and redeployment availed by the appellant company u/s 194J of Income Tax Act 1961 which the Assessee has already deducted and deposited. It is also clear that assessee is not liable to deduct TDS on the said transaction of supplying of equipments as per the provisions of Section 194C of the Act. In the view of the clear provisions of Section 194C of the Act, we are of the view that the assessee is not liable to deduct TDS amounting to ₹ 6,64,00,359/- on the supply of equipments by M/ s HCL Infosystems Ltd., therefore, the Ld. CIT(A) under the circumstances has rightly held that the action of Assessing Officer of holding assessee company as in default for amount of ₹ 6,64,00,359/- was without any cogent basis. Accordingly, Ld. CIT(A) has rightly gave the relief to the assessee in respect of the total amount, which does not need any interference on our part, hence, we uphold the order of the Ld. CIT(A) on the issue in dispute and reject the grounds raised by the Revenue.
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