TMI Blog2012 (8) TMI 981X X X X Extracts X X X X X X X X Extracts X X X X ..... rdance with the provisions of section 194I, the AO disallowed the expenditure u/s 40(a)(ia) of the Act. 3. Further, in the course of assessment proceedings, the assessee was asked to file the details of the sundry creditors. The AO noticed that an amount of ₹ 15,47,378/- was outstanding to one M/s Surya Graphics, Hyderabad, against the total bill amount of ₹ 25,47,378/-. It was stated that M/s Surya Graphics had done the printing work of text book solutions and audio visual solutions for the assessee company. The AR of the assessee submitted a letter from M/s Surya Graphics confirming the outstanding balance of ₹ 15,47,378/- along with a copy of the tax invoice issued by Surpya Graphics. The AO noted that though the let ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... total rent payments of ₹ 145,200/- had remained 'payable' as on 31/03/2007 and restrict the disallowance u/s 40(a)(ia) to that extent only. 5. As regards the disallowance of ₹ 25,47,378/- on account of payment to M/s Surya Graphics, the learned AR of the assessee before the CIT(A) submitted that during the year the assessee had got printed some of its educational material and audio visual solution CDs through M/s Surya Graphics. It was submitted that M/s Surya Graphics had supplied the books and other material by raising invoices, which included sales tax @ 4% on such sales/supplies made, which duly indicated that the transaction is purely a purchase transaction by the assessee and that the provisions of sale of goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t and finally after bringing the goods in a saleable form the same were sold to the appellant by raising invoices, wherein sales tax was also charged and thereby the property in the articles as a whole passed on to the appellant. Under the circumstances, it is to be held that the appellant's transaction with M/s Surya Graphics were in the nature of purchase transaction, which at best can be considered as a contract for sale and not a contract for work so as to attract the provisions of section 194C. In view of the above discussion, therefore, the addition of ₹ 25,47,578 is also deleted. 6. Aggrieved by the order of CIT(A), the revenue is in appeal before us raising the following grounds of appeal: 1) The CIT(A) has erred i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... independently obtained by the manufacturer from a third party; (iv) This position is now statutorily recognized in Expl. (e) to s. 194C inserted by the FA 2009 to provide that the expression 'work' shall not include manufacture or supply of a product according to the requirement or specification of a customer by using material which is purchased from a person other than such customer; 9. In the present case, the facts are (i) the agreement was on a principal to principal basis, (ii) the manufacturer had his own establishment where the product was manufactured, (iii) the materials is required in the manufacture of the article or thing was obtained by the manufacturer from a person other than the assessee and (iv) the property i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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