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TMI Blog2007 (7) TMI 349X X X X Extracts X X X X X X X X Extracts X X X X ..... T(A) is passed in the matter of order under ss. 201(1) and 201(1A) r/w s. 194C of the Act. 2. Briefly, the material facts. The assessee is a well known name in the consumer electronic goods and home appliances etc. in the sense its brand 'whirlpool' has a certain brand image and recognition. The assessee is engaged in the business of manufacturing and trading of consumer electronics and home appliances, such as air conditioners, washing machines and refrigerators. In the relevant previous year, the assessee did not manufacture any of these products on its own and completely outsourced the manufacturing to various outside concerns, which are referred as OEMs. The goods purchased from these OEMs were made to the specifications of the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the character of work contract and not of contract of sales" and, therefore, the amounts paid or credited to the OEMs attracting tax withholding liability of the assessee. As the assessee had failed to discharge this liability, the AO held the assessee to be an assessee-in-default in respect of the non-deduction of tax at source from payments or credits to OEMs. A demand was accordingly raised under s. 201(1) r/w s. 194C. The AO also raised a consequential demand for delay in payment of TDS under s. 201(1A) r/w s. 194C. Aggrieved, assessee carried the matter in appeal before the CIT(A) but without any success. The CIT(A) was also of the view that entire outsourcing is controlled by the assessee, and in essence it is a works contract. The as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) 375 : (2006) 283 ITR 197 (Del) and of Hon'ble Bombay High Court in the case of BDA Ltd. vs. ITO (2006) 201 CTR (Bom) 413 : (2006) 281 ITR 99 (Bom). It is submitted that when predominant object is sale of goods, only because it requires some specialised work done, the fact of transaction being in the nature of sale will take it out of ambit of s. 194C. As an alternate contention, Shri Vohra submits that the provisions of s. 201 are only in the nature of collection mechanism, and since the primary liability of the OEMs is discharged as all the sale proceeds of these goods are included in their taxable receipts, the same amount cannot be collected again. It is contended that once the vendor discharges his tax liability, the vicarious tax wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e again emphasized that the relevant agreements were not produced before the authorities below. We are urged to confirm the orders of the authorities below. In rejoinder, Shri Vohra takes us through the judicial precedents cited by him and highlights ratio decidendi of these precedents. It is submitted that facts of each case are bound to have some distinction from each other but what is to be really examined is the ratio of these decisions. The point made by the Hon'ble Delhi High Court regarding special skills, secrecy or confidence was, according to Shri Vohra, in the context of their Lordships' observations on Anandam Vishwanathan's case in which printing of examination papers for the universities was considered to be a works contract. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... old by the OEMs. That is factually incorrect. The OEMs are free to dispose of the goods in whatever manner they deem fit but they are forbidden from affixing assessee's trademark on the same. That restriction is quite justified to protect the legitimate business interests of the assessee. The trademark can only be affixed in the case where the goods are purchased by the assessee, and rightly so, because the trademark belongs to the assessee and is to be used for his business purposes. Learned Departmental Representative's argument that only off the shelf goods can be considered to be purchases and made to order goods is to be considered as works contract, is devoid of any merits sustainable in law. In view of these discussions, and respectf ..... X X X X Extracts X X X X X X X X Extracts X X X X
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