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The Asstt. Commissioner of Income-Tax And Others Versus M/s. Hyundai Motor India Ltd. And Others

2015 (8) TMI 1025 - ITAT CHENNAI

Non-deduction of TDS u/s 194C - DR pointed out that the assessee entered into job works with various companies for the purpose of purchasing the required spare parts for manufacturing passenger cars - Held that:- . Since the agreement does not clarify whether the goods purchased by the assessee is one of contract for sale or works contract, this Tribunal is of the considered opinion that the matter needs to be re-examined by the Assessing Officer. The CIT(A) has already observed after referring .....

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e, this Tribunal is of the considered opinion that giving one more opportunity to the assessee to place the material facts before the Assessing Officer would promote the cause of justice. - Decided in favour of assessee for statistical purposes.

Reopening of assessment - exclusion of processing charges and disallowance of deduction u/s 80HHC on export incentive - Held that:- Proviso to sec. 147 is very clear that after expiry of fours from the end of the relevant assessment year, the .....

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the assessee is not expected to anticipate the retrospective amendment that may be made by the Parliament in future. Therefore, the reopening of assessment u/s 147 is bad in law. Accordingly, the consequential assessment made by the Assessing Officer cannot stand in the eye of law. - Decided in favour of assessee. - ITA No. 218/Mds/2010, ITA No. 1784/Mds/2010 - Dated:- 17-7-2015 - N. R. S. Ganesan, JM And A. Mohan Alankamony, AM,JJ. For the Appellant : Shri Joe Sebastian, CIT For the Respondent .....

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submitted that the assessee engaged itself in the business of manufacturing and sale of passenger cars. During the course of business activity, the assessee entered into an agreement with M/s Hanil Automative India Pvt. Ltd. for manufacturing the components required for manufacturing of passenger cars. Referring to the order of the Assessing Officer, the ld. DR pointed out that the assessee entered into job works with various companies for the purpose of purchasing the required spare parts for m .....

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ssessment order, more particularly para 4.3.5, the ld. DR submitted that in fact the vendor was prohibited from manufacturing the same component for other parties therefore, the vender is manufacturing the goods for supplying the same to the assessee. The ld. DR further submitted that the vendor manufacture the goods as per the specification provided by the assessee therefore, the same cannot be used for other companies who are engaged in the business of manufacturing the passenger cars. The ld. .....

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d. DR submitted that the assessee shall supply the raw material for the purpose of manufacturing the spare parts ordered by the assessee. According to the ld. DR, since the entire parts were manufactured by the vendor on the basis of the material supplied by the assessee, the assessee is liable for deducting tax u/s 194C of the Act on the payment made to vendors. The ld. DR clarified that it is not a case of mere purchase of spare parts. It is a case of works contract by supplying the raw materi .....

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rial, according to the ld. DR, the assessee is liable to deduct tax at the time of payment or at the time of crediting the same in the accounts of the respective vendors. 5. On the contrary, Shri R. Vijayaraghavan, ld. Counsel for the assessee submitted that in the course of its business activity, admittedly, the assessee entered into an agreement for manufacturing spare parts by supplying the raw material and the assessee has also entered into an agreement for purchase of the goods. Wherever th .....

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t and not for purchase of the goods. Even otherwise, according to the ld. Counsel, the recipient of the amount has already paid the taxes. The confirmation letters from the respective vendors were also filed. According to the ld. Counsel, all the vendors have paid the taxes in advance under the scheme of the Income-tax Act. Therefore, there is no question of disallowing the claim of the assessee. The ld. Counsel further submitted that the recipients/vendors have confirmed the payment of income t .....

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provided by the respective parties. The builder has to furnish all labour, machinery, materials, equipment etc for the construction of the vessels to make them completely ready. In those circumstances, the Apex Court found that the contract in question involve sale of the respective vessel within the meaning of Andhra Pradesh General Sales Tax Act, 1957. The ld. Counsel has also placed his reliance on various other case laws and submitted that even though the spare parts were manufactured by the .....

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to sec. 194C(7) of the Act: "(iv) "work" shall include - (a) Advertising; (b) Broadcasting and telecasting including production of programmes for such broadcasting or telecasting; (c) Carriage of goods or passenges by any mode of transport other than by railways (d) Catering; (e) Manufacturing or supplying a product according to the requirement or specification of a customer by using material purchased from such customer, but does not include manufacturing or supplying a product .....

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ct was manufactured as per the specific requirement of the assessee and the specification provided by the assessee if the material was not supplied by the assessee then it may not fall within the definition of 'work' u/s 194C. In this backdrop, let us now examine the agreement said to be entered into between the parties. The assessee has filed copy of the sample agreement said to be entered into between he assessee and M/s Hanil Automotive India Pvt. Ltd. The title of the agreement is de .....

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y the assessee shall be used exclusively for manufacturing the products ordered by the assessee. The vendor has no right to divert the material for other use. From the above agreement, it is obvious that apart from providing drawings, documents, samples, moulds, machinery, facilities, the assessee has also to provide raw material so as to enable the vendor to manufacture the products ordered by the assessee. The vendor has no right to use the raw material supplied by the assessee for any other u .....

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fficer, is a contract for work. Therefore, the Assessing Officer found that the assessee has to deduct tax. The CIT(A), on the basis of the written submission filed by the assessee, called for the remand report from the Assessing Officer. The CIT(A), after reproducing the remand report filed by the Assessing Officer and the objections of the assessee, found that the supplies made by the assessee other than those under the job work basis is pure contract of sale, therefore, sec. 194C is not appli .....

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However, the CIT(A) has not quantified what are the components which were ordered by the assessee on contract basis and what are the components which were purchased by the assessee as one of contract for sale. After making a generalist discussion, the CIT(A) referred to various case laws and concluded that other than those under job work basis the supplies made by the vendor are of pure contract of sale. The contention of the assessee before this Tribunal is that in respect of the spare parts o .....

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ion that that the CIT(A) himself came to the conclusion that the assessee has to deduct tax in respect of the raw material supplied under the works contract. In the absence of any other provisions in the agreement which enable the assessee to purchase the goods directly other than the raw material supplied, it is not known how the CIT(A) came to the conclusion that the material supplied by the vendor is pure contract for sale. 10. The assessee has filed a copy of the letter dated 13.11.2009 from .....

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nt does not clarify whether the goods purchased by the assessee is one of contract for sale or works contract, this Tribunal is of the considered opinion that the matter needs to be re-examined by the Assessing Officer. The CIT(A) has already observed after referring to clause 5.1 of the agreement that this clause is made for works contract. However, he failed to point out what is the other clause which enables the assessee to purchase the goods on contract for sale. The CIT(A) has made a genera .....

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ties are set aside and the entire issue is remitted back to the file of the Assessing Officer. The Assessing Officer shall reexamine the issue afresh on the basis of the agreement said to be entered into by the assessee and the vendors and thereafter find out whether it is a simple purchase of goods by the assessee under a contract for sale or the agreement is for works contract. The Assessing Officer shall also verify whether the respective vendors/recipients of the money have paid the respecti .....

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77; 35,19,38,277/-. The assessee also filed an appeal before the CIT(A) and the CIT(A) by order dated 29.2.2008 partly allowed the claim of the assessee. However, the Assessing Officer found that deduction u/s 80HHC was wrongly allowed in the original assessment order. Therefore, he reopened the assessment u/s 147 by issuing notice u/s 148 of the Act on 17.3.2009. According to the ld. Counsel, the assessment year under consideration is 2002-03. The notice u/s 148 was issued only on 17.3.2009 whi .....

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pected to file the return of income on the basis of law which prevails on the last day of the financial year relevant to the assessment year. The assessee is not expected to anticipate the amendment made by the Parliament in 2005 retrospectively while filing the return of income for the assessment year 2002-03. Therefore, according to the ld. Counsel, there is no negligence on the part of the assessee in disclosing the material facts relevant for completing the assessment, hence the reopening of .....

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retrospective effect from 1.4.1998. Since the amendment bade by Taxation Laws (Amendment) Act, 2005 was not available in the statute book when the original assessment order was passed, the Assessing Officer could not take note of the same while completing the assessment. According to the ld. DR, the retrospective amendment made with effect from 1.4.1998 would be applicable for the year under consideration, therefore, the Assessing Officer, in order to give effect to the retrospective amendment .....

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n is 2002-03, therefore, the assessee is expected to file the return of income on the basis of the law which prevails as on 31.3.2002. The assessee cannot be expected to anticipate the retrospective amendment made by the Parliament by Taxation Laws (Amendment) Act, 2005, while filing the return of income for the assessment year 2002-03. Moreover, it is not the case of the Revenue that the assessee failed to furnish/disclose the material facts which are relevant for completing the assessment. Thi .....

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