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2024 (4) TMI 583 - AT - Income TaxTDS u/s 194C - payments of purchase to various vendors - Non deduction of TDS - addition u/s 201(1) and interest u/s 201(1A) - CIT(A) came to the conclusion that the transaction on account of supply of finished goods to the assessee was principal to principal basis in pursuance of a contract for a sale and not a contract for work as alleged by the AO - Whether the transaction involving payment to various parties toward purchase of finished goods are under contract of purchase or contracts of works contract within the meaning of section 194C? - HELD THAT:- We are of the view that as per the definition of works given in section 194C it is only a contract of works only when the assessee supplies the raw materials or directs vendors to purchase from its associate and supplies the finished goods to the assessee then only it will fall under works contract. In the given case it is not brought on record that assessee has supplied the raw materials or directed the vendors to purchase from its associate to complete the manufacturing. As per the information available on record the assessee has given purchase order with the specification of the finished product with a condition that the finished goods should match the specifications and in case it does not match the goods will be returned back to the vendors. This is a standard purchase order given to the vendors to supply the goods as per the specification, without specifications the purchase order is not complete. Here, the payments made by the assessee is towards the contract of purchase or contracts of works is an issue under consideration, as held in the case of CIT v. Glenmark Pharmaceuticals Ltd. [2010 (3) TMI 289 - BOMBAY HIGH COURT], thus the transactions carried on by the assessee is clearly falls within the ambit of contract of purchase. Thus not to disturb the findings of the Ld. CIT(A) to treat the transactions as contract of purchase and not of works contracts. Accordingly, we direct the AO to delete the additions proposed u/s 201(1)/201(1A) - Grounds raised by the revenue are dismissed.
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