TaxTMI 
TaxTMI 
2015 (3) TMI 669
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....ion of AO in holding that assessee's independent and separate contract with Enercon (India) Ltd. [in A.Y. 06-07 & 10-11] & Sulzon Group [in A.Y. 08-09 & 10-11] 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 value including the payment made for supply of plant & machinery. & Confirming the action of AO in holding that the advance payment to Suzlon Energy Ltd. and Enercon India Ltd. towards supply of Plant & machinery of windmill is liable to deduction u/s 194C (A.Y. 10-11) & Confirming the action of AO in holding that assessee is in default u/s 201(1) for not deducting tax at sour....
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....cordingly raised the demand in all these years. 2.3 The ld. CIT(A) upheld the order of the AO in all these years by following common observations. "In view of the above facts and circumstance and detailed deliberation, it is held that infact the appellant was having the sole intention of installing a turnkey project of 'Windmill', which was inclusive of supply of plants & equipments and also erection and installation of such project only. In view of the same all the separate orders of supply of equipments and service related aspects, are infact amounts to a single 'work contract' only. Accordingly, payments made towards such 'work contract' do fall under the ambit of sec. 194C of the Act. Accordingly, the separate work orders, placed ....
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.... assessee vehemently argued that the Department has assumed that there is a turnkey project of windmill whereas the fact of the matter is that the Suzulon Group has umbrella of different entities which deal in different type of activities. There are units which only deal in sale of windmill plants. There are entities which take the contract of installation of windmill. Likewise, there are entities which take contract for maintenance of the plants so that optimum electrical energy is produced. The assessee submitted sufficient evidence in the form of sale bills or purchase of windmill plants on which VAT was collected which clearly indicates the transactions depicted in these bills relating to sales and purchases as per the provision of Sect....
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.... A.Y. 05-06, 06-07, 08-09 & 10-11. This was followed in case of M/s Gem Craft Enterprises Pvt. Ltd. Vs. ITO in ITA No. 70 & 71/JP/12 dt. 25.05.2012 for A.Y. 05-06 & 06-07 (copy of order enclosed). In these cases also, AO held that assessee is liable to deduct tax at source on the total value of the composite contract for supply & erection of power plant. However, Hon'ble Tribunal held that though it is a single order but it has to be taken separate i.e. on account of supply of machinery & on account of cost of civil work/electrical work & erection work. The supplier has raised a separate bill in respect of supply of machines. The assessee has given 'C' Form to the supplier on account of purchase of machinery & on remaining amount assessee h....
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....ct is applicable for contract work and not for sale of goods. Even if the contract is a composite contract which prescribes various stages including sale part, commissioning part and electrification part and each part is treated separately by the party. In these circumstances, each transaction is to be examined for the applicability of Section 194C of the Act. Merely because the word 'turnkey project' is referred to does not mean that intrinsic nature of the contract will be given go by. It is therefore, pleaded that the assessee has no liability qua the purchase and sale of machinery. Therefore, the demand raised is unjustified and deserves to be deleted. 2.6 The ld. DR on the other hand contends that the ld. CIT(A) has been reasonable ....