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2017 (5) TMI 1265 - AT - Income TaxTDS u/s 194C - non-deduction of tax on the payment of supply of printed packing material - whether the fixed contract with the vendor in this case is a contract for work and not a contract for sale as envisioned u/s.194C? - Held that:- It is undisputed fact in the instant case that the supply of printed packing material is the responsibility and the supplier without involving any cross-supply of raw-material from the assessee. Such phraseology employed in the provision of the statue to include supply as per specification by using the material supplied by the assessee gives a resounding impression that supply of packing material albeit as per the requirement and specification of the customer but without seeking supply material from the customers stands excluded from the scope of expression “work” as provided in the aforesaid provision. Circular No.715 dated 08/08/1995 held that where a person had provided only specification for supply of printed material without supply of material do not fall within the ambit of section 194C. See Punjab Tractors Ltd. Versus Income-tax Officer (TDS-II), Chandigarh [2012 (10) TMI 287 - ITAT CHANDIGARH ] We also simultaneously note from the invoices raised by the supplier that the printed packing material so supplied to the assessee are subjected to various taxes viz. excise duty, VAT, and CST on the sale price. Ostensibly, it is the ownership of the printed packing material which is passed on to the assessee on delivery of the goods by the vendor by a sale contract. Thus, in the totality of the circumstances, we find it manifest that the transaction on account of supply of printed packing material to the assessee was in pursuance of a contract for a ‘sale’ and not a contract for ‘work’ as alleged. Consequently, provisions of section 194C do not get triggered in the facts of the case. Hence, section 40(a)(ia) has no application in the given facts. The disallowance made by the AO were thus unwarranted - Decided in favour of assessee.
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