TMI Blog2011 (7) TMI 400X X X X Extracts X X X X X X X X Extracts X X X X ..... se Ld.CIT(A) erred holding that there is no TDS on payment for purchase of raw material/packing materials, as sale of a good Act is applicable. 2. On the facts and in the circumstances of the case Ld.CIT(A) erred in directing the A.O. to refund the TDS amount with interest ignoring the fact on record that during the survey proceedings the assessee itself admitted its default for nondeduction of TDS u/s 194C on the payment made to other companies for purchase of printing plastic pouches packing materials. 3. On the facts and in the circumstances of the case Ld.CIT(A) erred in observing that the A.O. should not repeat such mistake in future without going through the detailed findings recorded by the A.O. in order u/s 201(1)/201(1A) holding that the assessee deductor was liable for deduction of TDS on the payments made for purchase of printing plastic pouches from the parties. 4. On the facts and in the circumstances of the case Ld.CIT(A) erred in not considering the Board Circular no.715 dt. 18.8.95 wherein it has been clarified that TDS u/s 194C is applicable on the payments for purchase of packing/printed materials." 3. The short issue which falls for our considerat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lly so as to determine whether it is a 'contract of sale' or 'contract for work'. Accordingly he concluded as under. "The assessee has not brought any material on record to conclude that the purchase of packaging material as per its own specification was not a contract for work. The sample of the packaging material obtained during the survey proceedings bears the logo of the assessee company apart from the net weight, contents and ingredients, which means that the packing pouches were particularly made for the assessee company and could not have been used for any other concern. This clearly indicates that assessee company's payments for the purchase of packaging material were covered u/s 194-C. As far as the assesee's reliance upon the decision of the Hon'ble Bombay High Court, in the case of BDA Ltd. is concerned, it is stated with due deference that the department has not accepted the same and a Special Leave Petition filed before the Hon'ble Supreme Court which is pending adjudication. In view of the above the assessee is held to be a defaulter in terms of the provision of section 194-C for not deducting TDS on its payments towards the purchase of packaging/printed material ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s 194C. The Tribunal did not accept this view and followed Bombay High Court's decision in the case of BDA Ltd. vs. ITO (TDS) (2006) 281 ITR 99 dt. 8.3.2004, and thus held that this was a transaction of contract for sale not liable to TDS u/s 194C. It was stated that it had been held that the printing on the material is incidental to supply of material i.e. the sale of material. 8.1. Before the CIT(A), reliance was also placed upon the judgement of the Bombay High Court in the case of BDA Ltd. vs. ITO 261 ITR 99. 9. On facts it was argued that the assessee's company purchased printed packaging material as per its specifications from the independent parties. Before the purchase of the goods the property in the goods did not belong to the assessee. Only after delivery the right to use comes into operation and the property passes to the assessee. It was contended that the manufacturers/suppliers were independent entities manufacturing the articles. Accordingly it was a clear contract for sale and not a contract for work on which it was stated no TDS is deductible. 10. Considering these submissions the CIT(A) held that there is no need for TDS on payments for purchase of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se tax etc. is paid by the parties and is evident from the copies of the relevant invoices available on record. 14. Ld.D.R. in reply submitted that against the judgement of the Bombay High Court relied upon by the CIT(A) in the case of BDA Ltd. the department has not accepted the said decision and SLP or appeal has been filed. 15. We have heard the rival submissions and perused the material placed on record and the various judgements relied upon. It is necessary to reproduce the relevant provisions of the Act of S.194C which deals with payment to contractors reads as under. Hence we are concerned with Explanation (iv) to the said Section. Payment to Contractors: 194C. (1) Any person responsible for paying any sum to any resident (hereafter in this section referred to as the contractor) for carrying out any work (including supply of labour for carrying out any work) in pursuance of a contract between the contractor and a specified person shall, at the time of credit of such sum to the account of the contractor or at the time of payment thereof in cash or by issue of by a cheque or draft or by any other mode, whichever is earlier, deduct an amount equal to- (i) on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Lordships of the Jurisdictional High Court had an occasion to consider the judgement of the Apex Court in the case of State of Tamil Nadu vs. Anandama Viswanathan (1989) 73 STC 1 on which reliance has been placed by the department. Their Lordships rejected the departmental stand taking into consideration the fact that in the facts of that case printing of question papers at the behest of a university or educational institution was considered to be a delicate and confidential type of work and the price paid for supplying such printed question papers or printed material entails primarily the confidence and secondly the skill and to a very small extent the material. In the facts where corrugated boxes were made at the specification of the assessee the necessary display etc. their Lordships were of the view that it is nobody's case that the printing of the labels on the corrugated boxes require any special skill or involve any confidence or secrecy. 17. It may not be out of place here to refer to the order of the Coordinate Bench in the case of ITO vs. Dr.Willmar Schwabe India P.Ltd. 95 TTJ (Del) 53 : wherein the Coordinate Bench was seized of the facts where the assessee who was ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
