TMI Blog2012 (7) TMI 331X X X X Extracts X X X X X X X X Extracts X X X X ..... here was no liability to deduct tax on the amount of salary. The Assessing Officer has computed the total income which is other income i.e. interest etc. from bank. The company is liable to deduct tax on the amount of salary only which is less than Rs. 1,00,000/- and, therefore, there was no liability for deduction of tax - appeals of the assessee are allowed. - ITA NO. 70 & 71/JP/2012 - - - Dated:- 25-5-2012 - SHRI R.K. GUPTA, SHRI SANJAY ARORA, JJ. Appellant by : Shri PC Parwal Respondent by : Shri D.K. Meena ORDER PER BENCH : These are two appeals by assessee against the order of Ld. CIT (A) relating to assessment years 2005-06 and 06-07.. 2. Common issues are involved in both these appeals. The grounds of the assessee are as under :- (1) The Ld. Commissioner of Income Tax (Appeals) has erred on facts and in law in confirming the action of the Assessing Officer in holding that assessee s independent and separate contract with Enercon (India) Ltd. for supply of plant machinery of windmill, for civil/electrical works and erection and commission of windmill, is a composite work contract liable for deduction of tax at source u/s 194C on entire v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the material on record, we find that assessee deserves to succeed in the grounds raised before Tribunal. No doubt, the assessee has given order for supply of machinery to M/s. Enercon (India) Ltd. Total cost of the machinery was of about Rs. 9 crores or odd. The assessee has paid a separate amount for cost of civil work/electrical work and erection of the machines at the place of assessee. Therefore, though it is a single order but it has to be taken separate i.e. on account of supply of machinery and on account of cost of civil work/electrical work and erection work. The supplier has effect a separate sale bill in respect of supply of machines. The assessee has given C form to the supplier on account of purchase of machinery and on remaining amount the assessee has deducted TDS i.e. on account of erection work and civil work contract. We further noted that on similar circumstances in case of Rajasthan Rajya Vidhyut Utpadan Nigam Ltd., the department treated that assessee has committed default under section 201(1) and, therefore, an order under section 194C was passed. Matter came before the Tribunal and Tribunal discussing the issue in detail has confirmed the finding of Ld. CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... title by execution of supply portion, it cannot be said that the erection portion controls the supply portion even though fulfillment of erection contract is a condition precedent to fulfillment of supply contract. As the title in the equipments manufactured as per the design, engineering etc. supplied by assessee passed on to the assessee before commencement of the erection contract and assessee had entered the same in its stock register before issuing the same for erection, it was a contract of sale not attracting section 194C. Assessee having already deducted tax at source qua the erection portion, provision of section 194C shall not apply to remaining sale portion. In case of Haryana Power Corporation Ltd. vs. ITO, 103 TTJ 584 (Delhi), it was held that perusal of the components of the consideration for the contract would clearly show that the primary or the dominant intention of the appellant was to purchase the material namely, two ESPs for its power plant at Panipat. Freight and insurance payable in respect of its supply and the cost of material constituted a major portion of the contract value. The cost of spares will also fall in the category. As rightly contended by the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... considered view that on account purchase of plant, in our view, provisions of section 194C cannot be applied. In the above case, the primary object of the assessee that to purchase the plant and civil work erection and commission was incidental to business of the assessee. This contention of the assessee was upheld by the Tribunal. The ratio of the decision of the Tribunal was followed in case of Rajasthan Rajya Vidhyut Utpadan Nigam Ltd. in ITA No. 719 to 722/JP/2010. We further noted that in similar facts in case of Karnataka Power Transmission Corporation Ltd., the Bangalore Bench of the Tribunal has decided the issue in favour of the assessee by holding that on supply of machinery and even on erection work and civil work, provisions of section 194C are not applicable. In this case the contract was for supply of material and the installation, commissioning of equipments. It was held by the Tribunal that supply of machinery and even civil work and erection was not hit by the provisions of section 194C. Accordingly the issue has been decided in favour of the assessee. Copy of the order is placed on record which was decided in ITA Nos. 360 to 365/Bangalore/2010 vide order dated 17 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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