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2006 (4) TMI 194 - AT - Income TaxComposite Contract Or Separate Contracts - Assessee-in-default - demand for short deduction of tax at source u/s 201(1) - charging interest on tax - HELD THAT:- We find that the primary object of the appellant was to purchase the plant in question and the civil work, erection and commissioning was only incidental to purchase the material by the appellant. We are, therefore, of the view that the Revenue authorities were not justified in considering the gross payments made by the appellant to BHEL for the purpose of determining the TDS by the appellant. In the present case, the supply of the power generator was an independent transaction and its erection was only ancillary or incidental to the purchase of the power generator. We are also of the view that in each case the terms of the contract need to be analyzed before coming to the conclusion whether it was a composite contract or not. As already stated, the contract, insofar as it relates to supply of the material, freight insurance and supply of spare parts, is clearly separable from the other part of the contract relating to carrying out civil work, commissioning and erection of the power generators. Thus, we direct the AO to work out the short deduction of tax at source, if any, by excluding the payments towards supply of machinery, spare parts as well as freight and insurance. We are of the view that the documents on record do not establish the case pleaded by the appellant. We, however, deem it fit and proper to direct the AO to verify this aspect and in case it is found that the contractor has offered the sums received from the appellant to tax then in that event the appellant should not be proceeded against as an appellant in default u/s 201 of the Act, as laid down in the case of Rishikesh Apartments Co-operative Housing Society Ltd.[2001 (6) TMI 17 - GUJARAT HIGH COURT]. We are of the view that the other grounds of appeal raised by the appellant do not require any consideration in view of our decision on the main contentions of the appellant. In the result, the appeal is allowed for statistical purposes.
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