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2015 (4) TMI 629 - HC - Income TaxTDS u/s 194C - nature of contract - works contract or sale purchase contract - purchase of footwear with logo from the job worker - Tribunal disagreeing with the findings of the First Adjudicating authority that the transaction between the assessee and its supplier was in the nature of work done by the supplier on behalf of the assessee i.e. ‘outsourcing’ and holding that the said transaction was a sale - Held that:- As regards the purchase of footwear without any specified logo i.e. ₹ 38.39 crores (Rs.46.29-Rs.7.90), it is observed that the same was purchase simplicitor i.e. without any logo, label or identity mark. In view of this purchase of footwear worth ₹ 38.29 crore cannot be equated to “any work” so as to fall within the purview of Section 194C. For the balance purchase for a sum of ₹ 7.90 crores the reasoning advanced by the CIT for the purpose of holding that the purchase amounted to awarding a specific job work to the vendors is neither supported by law nor is factually a correct finding. Goods can be sold either by sample or by description or manufactured as per requirement of the buyer. The assessee has purchased the goods and has admittedly paid sales tax, central excise duty and has in its turn availed the benefit of cenvat credit which is inconsistent with a job contract contemplated by section 194C of the Income Tax Act. Section 194C contemplates payment to a contractor for carrying out any work including supply of labour or carrying out any work. It was not the case of the revenue that the vendor of the assessee carried out any work of or for the assessee. The CIT could not dispute the fact that it was “purchase of shoes from 10 manufacturers only which were labeled and marked with the logo ‘khadim’.” Section 194C contemplates a transaction between a principal and an agent. Whereas a transaction in the nature of sell and purchase is on principal to principal basis. The fact that goods for ₹ 7.90 crores were purchased by the assessee has been accepted by the CIT (A). In spite thereof insistence upon bringing the case within Section 194C was an improper exercise of power. - Decied in favour of assessee.
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