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2023 (7) TMI 1075 - AT - Income TaxTDS u/s 194C - payments to several vendors in relation to its procurements from them, consisting of apparels/ clothes/ footwear/ goods manufactured by these vendors - ‘works contract’ v/s ‘purchase of goods’ - HELD THAT:- While examining clause (e) as introduced by the Finance (No.2) Act, 2009, noted that it contains a positive affirmation that the expression 'work' will cover manufacturing or supplying a product, according to the requirement or specification of a customer, by using material purchased from such customer. Also been noted by the Hon’ble High Court [2004 (3) TMI 11 - BOMBAY HIGH COURT] that clause (e) has placed the position beyond doubt by incorporating language to the effect that the expression ‘work' shall not include manufacture or supply of a product according to the requirement or specification of a customer by using material which is purchased from a person other than such customer. As noted that, (i) the agreement in the instant case, was on a principal to principal basis, (ii) the manufacturer had his own establishment where the product was manufactured, (iii) the material required in the manufacture of the article or thing was obtained by the manufacturer from a person other than the assessee, (iv) the property in the articles passed upon the delivery of the product manufactured, and (v) until delivery, the assessee had no title to the goods. Thus the provisions of Section 194C were not applicable, and more particularly the agreement did not fall within the definition of ‘works contract’ as laid down in Explanation to Section 194C of the Act. As in the present case, the assessee is not accustomed to providing specifications or designs to the suppliers. It is also not a case that the suppliers are manufacturing the goods at the instance of the assessee. Further, the goods supplied are not under the brand/name of the assessee and instead bear the brand/mark/name of the respective supplier/original manufacturer. No reason to interfere with the order of the Ld. CIT(A) in holding that the payments made under the SOR agreements did not fall within the ambit of Section 194C of the Act and therefore the assessee did not have any liability to deduct tax at source on such payments u/s 194C - Decided in favour of assessee.
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