TaxTMI 
TaxTMI 
2015 (4) TMI 597
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....ix of the case as clearly brought out by the Ld. A.O. in order u/s. 201 (1)/201 (1A) of the Income-tax Act, 1961. (iii) The Ld. CIT (A) has erred on facts and in law in giving relief to the assessee by holding that TOS is not deductible on payment made to Customs House Agents (CHA) on account of reimbursement of 'Clearing and Forwarding harges' without properly appreciating the factual and legal matrix of the case as clearly brought out by the Ld. A.O. in order u/s. 201 (1 )/201 (1A) of the Income- tax Act, 1961." 2. Ground no. 1 is regarding non deduction of TDS on the payment for supply of batteries. 3. From the examination of tax audit report, the Assessing Officer found that the assessee defaulted various TDS provisions. Accordingly a notice u/s 133(6) of Income Tax Act dated 8.08.2008 was issued to the assessee. But no compliance was made by the assessee. The Assessing Officer has observed that even the income tax inspector was deputed to collect the information in view of the requirement u/s 133(6). The assessee was taking its own time for furnishing the information, accordingly a survey u/s 133A was conducted at the premises of the assessee. On the basis of ....
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.... disputed that the assessee has not provided any raw material to the manufacturer and the manufacturing activity has been carried out by the manufacturer in its factory. The CIT(A) has given it finding in para 6 as under:- "6. I have gone through the above submissions very carefully and perused the order of the Assessing Officer. The appellant company purchases batteries from M/s. Power Cell Battery India Ltd., with its name 'Kodak' printed on .the cell The Assessinq Onicer has held that TDS was applicable on the payment made to Power Cell as per provisions of Sec. 194-C as the products were manufactured as per specifications of the appellant and it is a 'works contract'. The Assessinq Officer further observed that manufacturing of a branded Kodak battery with exclusive right of purchase having a specific control over every steps in manufacturing with all specifications and designs provided by Kodak Power Cell amounts to a works contract not a sale In this regard, tile appellant submitted that there is contract with the vendor for sale and not a works contract. The appellant has furnished copy of purchase order and invoices raised by power. cell as an evidence....
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.... (306 ITR 25)(Guj) - SLP dismissed 306 ITR (st) In view of the above facts, I find considerable merit in the arguments of the appellant The issue involved under this ground of appeal is quite clear in view of the CBDT's circulars as well as various decisions of courts including jurisdictional High Court as well as jurisdictional tribunals. In the instant case, the first and foremost thing is that the appellant has entered into a contract / agreement with vendors for purchase of Kodak batteries. It has not entered into a works contract at 'all. Further, the appellant has not supplied any raw material to the manufacturer. The manufacturing activities has been carried out by the manufacturer in its factory Only the printing name Kodak on batteries and also manufacturing with certain specifications does not convert the sale contract into works contract. The manufacturer also pay sales tax / VAT on such sales. The property in the goods and the delivery of the possession is given to the appellant at the ultimate point of sale. In view of the facts, and the CBDT's circulars as well as judicial decisions on this issue, I am of the view that the action of the Assessing Office....
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.... contract for carrying on any work within the meaning of section 194C. Conclusions : 34. For the reasons aforesaid, we are of the view that the revenue was not justified in treating the assessee, as an assessee in default. The Tribunal was justified in coming to the conclusion which it did, though for the reasons that we have indicated in this judgment. The Tribunal has during the course of its judgment observed and relied upon the circumstance that the manufacturer of the pharmaceutical products paid excise duty and sales tax. This circumstance has not been regarded in this judgment as conclusive for the purpose of the present case. The decision in the present case is structured, consistent with the law laid down by the Supreme Court, by the provisions of section 194C, by the dominant nature of the transaction as evidenced by the terms of the contract, and the circumstances of the case. For the reasons stated earlier, the question of law, as formulated shall stand answered in favour of the assessee and against the revenue. The appeal is dismissed. There shall be no order as to costs". 8. Accordingly, in the facts and circumstances of the case and in view of the Judgmen....
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....g Officer. 13. On the other hand, the Ld. Authorized Representative of the assessee has submitted that the assessee has not purchased any raw material required for manufacturing of Camera, therefore, the assessee does not supply any component required for manufacturing of the Camera for Hical Magnetic Pvt. Ltd. The Hical Magnetic Pvt. Ltd. purchases raw material on its on account and on its on cost and consequently manufactures the Camera which is sold to the clients of the assessee. The Cameras are supplied as per the invoice raised by the Hical Magnetic Pvt. Ltd. on which sale tax and VAT is paid as per the invoice value, therefore, it was only an agreement of purchase and not a job work contract. He has reiterated the contentions as raised before the CIT(A) and submitted that the tripartite agreement is only with regard to the tools/moulds used for manufacturing of Camera parts are given to the suppliers of the Camera parts to maintain the specifications and secrecy of the moulds of the assessee's product, therefore, this factor cannot change the sale contract into work contract . He has also submitted that the assessee has provided the film to be supplied along with Camera a....
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....e Assumption 600K 1. Labor & Burden 20.83 2. Material Total 110.00 3. Scrap Incl. Above 4. Profit 8.05 5. PKG (No Batteries) 25.00 6. Vendro's quote (W/o taxes & duties 163.88 7. Working Capital 4.89 Note a) The price does include Duties & taxes (excise duty and sales tax) b) Working capital tobe provided/funded by Kodak. Otherwise, Kodak will reimburse Rs. 4.89 Per camera. c) Cenvat Paid for films needs to be set off from the Excise amount charged by Hical adjusted d) price is ex-works Hical e) Film will be consigned free of cost to Hical. All duties, taxes and freight on the Film will be borne by Kodak. 17. As per the product pricing arrangement between the parties, Hical Magnetic Pvt. Ltd. has charged the price with cost + Rs. 8.05 mark up Per camera. Apart from this, the assessee has to provide the working capital and in the absence of which the cost of working capital will be reimbursed at Rs. 4.89 per Camera. Thus it is clear that either the assessee has to provide the working capital which the assessee provided in this case or the assessee has to reimburse the working capital....
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....greement for tools and moulds but it was actually an agreement for job work of Camera parts by supplier for use of assembling the camera by Hical Magnetic Pvt. Ltd. Therefore, it was not an agreement for tools and moulds but is an agreement for supply of Camera parts by various suppliers to Hical Magnetic Pvt. Ltd. The Camera parts are manufactured as per the tools and moulds provided by the assessee thus the raw material is supplied to the Hical Magnetic Pvt. Ltd. by the assessee through the suppliers under the tripartite agreement. The assessee has provided the working capital to Hical Magnetic Pvt. Ltd. for purchase of raw material / camera parts from suppliers and also for labor cost. This arrangement shows that the raw material is provided by the assessee to Hical Magnetic Pvt. Ltd. through these suppliers and the payment is made by providing working capital by the assessee to Hical Magnetic Pvt. Ltd. without any charge of interest. Hical Magnetic Pvt. Ltd., is doing only the assembling of the Cameras as per the specifications provided by the assessee by using the raw material provided under the tripartite agreement. 20. This arrangement under these two agreements is nothin....
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....1(1A) at Rs. 5,49,215/- 21. On appeal, the CIT(A) has held that no TDS was required to be deducted on mere reimbursement of expenses. 22. Before us, the Ld. DR has relied upon the order of Assessing Officer and submitted that when the payment is otherwise subjected to TDS then making the payment through the agent would not change the tax deduction liability of the assessee. 23. On the other hand, the Ld. Authorized Representative of the assessee has submitted that there is no dispute that the payment in question is only the reimbursement of expenses to the agents which were incurred on account of various payment made to the parties and other charges. He has relied upon the decision of Hon'ble Jurisdictional High Court in the case of CIT Vs. Siemens Aktiongesellschaft (310 ITR 320) as well as the decision of Hon'ble Punjab & Haryana High Court in the case of S.S. & Co. Octroi Contractors Vs. State of Punjab (268 ITR 398). 24. We have considered the rival submissions as well as relevant material on record. There is no dispute that the assessee paid this amount to the agent for making the payment to third parties for various services availed by the assessee. It is also....