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ITAT Mumbai: No TDS on Goods Purchase under Section 194C The ITAT Mumbai dismissed the Revenue's appeals challenging the non-deduction of tax at source u/s 194C for contract manufacturing. The tribunal upheld ...
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ITAT Mumbai: No TDS on Goods Purchase under Section 194C
The ITAT Mumbai dismissed the Revenue's appeals challenging the non-deduction of tax at source u/s 194C for contract manufacturing. The tribunal upheld that TDS is not required for purchasing goods, as Section 194C applies to services, not goods. Referring to a Supreme Court judgment, the tribunal concluded that the assessee's payments for manufactured goods did not necessitate TDS deduction. The decision was rendered on 3.2.2016.
Issues: - Whether the assessee is liable to deduct tax at source u/s 194C of the Act in respect of contract manufacturing.
Analysis: 1. The appeals were filed by the Revenue challenging a common order passed by the ld.CIT(A)-14, Mumbai for the assessment years 2003-04 to 2005-06. The issue in question was whether the assessee should have deducted tax at source u/s 194C of the Act for contract manufacturing. 2. The AO observed a discrepancy in TDS deduction during a survey at the assessee's premises. The AO contended that TDS should have been deducted for contract manufacturing as per the agreement terms. The assessee argued that it was a contract for the sale of goods, not services, and hence TDS was not required to be deducted. 3. The ld.CIT(A) allowed the assessee's claim, considering the nature of payment, contract documents, and a relevant decision. The Revenue, aggrieved by this decision, filed an appeal before the ITAT Mumbai. 4. The ITAT Mumbai noted that the assessee paid third parties for manufactured goods without deducting TDS. The tribunal agreed with the ld.CIT(A)'s decision, citing that Section 194C pertains to services provided, not goods purchased. Referring to a Supreme Court judgment, the tribunal upheld that TDS is not required for purchasing goods. 5. Consequently, the ITAT Mumbai dismissed the Revenue's appeals based on the interpretation of the law and the precedent set by the Supreme Court. The decision was pronounced on 3.2.2016.
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