TaxTMI 
TaxTMI 
2015 (7) TMI 774
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....with documents enclosed that contract entered by the appellant with M/s Enercon was a divisible contract and not composite or indivisible contract. 4. On the facts, the ld.CIT(A) ought to have accepted the explanation of the appellant and ought not to have confirmed the levy as made by the AO u/s201 & 201(1A) of the Act. 5. The ld.CIT(A) ought to have appreciated that case law relied by the department are distinguishable and not applicable to the appellant's case. 6. Without prejudice, the additions sustained by the CIT(A) are arbitrary, excessive, unreasonable and ought to be deleted in toto. 7. For these and other grounds that may be urged at the time of hearing of the appeal, the appellant prays that the appeal may be allowed". 3. The assessee is a private ltd. company deriving income from lease and power generation charges. The assessee filed an application seeking certificate of exemption from deducting tax at source in respect of the rent paid to M/s New Generation Apparels, Bangalore. A survey u/s 133A of the Act was conducted in the business premises of the assessee on 05-06-2008 which revealed that assessee has made payments to M/s Enercon (Ind.)Ltd amountin....
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....e issued in respect of separate work and supply of equipments. Therefore, the payments towards the supply of equipment does not fall under the ambit of sec.194C. In support of her contention, she has relied upon the decision of the Hon'ble Gujarat High Court in case of CIT Vs Hindustan Lever Ltd., and submitted that the Hon'ble High Court held that the transactions including sale and supply of goods would not amount to work contract and therefore, the assessee was not liable to deduct tax at source u/s 194C. Further, when the work contract is for supply of material, it cannot be a contract for work and labour. The learned AR, than relied upon the decision of the Hon'ble Delhi High Court in case of CIT Vs Reebok India Co.306 ITR 124 and submitted that a similar view has been taken by the Hon'ble Delhi High Court in the case by upholding the finding of the Tribunal that transaction between the assessee the manufacturer was that of purchase and sale of goods and not of work contract u/s 1494C of the said Act. The learned AR has also relied upon the decision of the co-ordinate Bench of this Tribunal dated 23-03-2011 in case of M/s Karnataka Power Transmission Corpn.Ltd (KPTCL) Vs ITO I....
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.... Vysya Bank 0376 C No.259436 being adv.paid towards Purchase for windmill from Enercon 1,25,00,000 21.11.2006 To Vysya Bank 0083 C No.8586601 issued to Enercon 50,00,000 03.01.2007 To Vysya Bank ltd -0083 C No.858603 issued to Enercon 25,00,000 26.02.2007 To Vysya Bank ltd -0083 C No.858604 issued to Enercon 20,00,000 22.09.2007 To Vysya Bank 376 C No.607421 issued to above party towards supply of windmill balance paid Total payment.... 47,50,000 3,83,00,000 The total payment of Rs. 3,83.00 Crores the break-up in three major part which are given by the AO in para-6 as under; a. Supply of windmill equipment with its accessories Rs.3370000/- b. Civil & industrial construction work Rs. 2600000/- c. Commission of Enercon make wind turbine Rs. 2000000/- Total... Rs.38300000 As it is clear from the details reproduced by the AO that separate payments were made by the assessee for purchase of windmill for civil and industrial construction work and for commissioning of windmill. We further note that the....
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....ing up the contract which, according to the revenue was one ALB of the composite contract into parts such as part of the contract attributable to the value of the materials involved n the execution of the work and other part of the contract such as civil works and taking the view that tax was required to be deducted at source only in respect of the work part of the contract and not material part of the contract? ii) Whether the Tribunal was justified in concluding that interest under section 201(1A) of the IT Act, is not leviable, as the assessee was not liable to make any deductions in respect of the value of the material part of the contract, though the contract was one of whole contract? While deciding the question of law the Hon'ble High Court has held in para-13 to 16 as under; "13. It is not in dispute that in respect of agreement for supply, which is a distinct contract, no TDS is deductible under section 194C as it is not a contract for carrying out any work. Carrying out any work is a sin qua non to attract section 194C. A contract under which a contractor agrees to supply material which may be used by him later in carrying out he work will not render the agreemen....
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.... the value of material purchase from such customer, if such value is mentioned separately in the invoice. It is only in cases where the material component has not been separately mentioned in the invoice. TDS shall be deducted on the whole of the invoice value. Therefore, whatever ambiguity which prevailed earlier is clarified. When in a composite contract, if an invoice is raised, separately mentioning the value of the material supplied, no deduction is permissible under section 194C. In a case where three separate agreements entered into and one such agreement is agreement for supply of material and because the said agreement is a part of a composite transaction. Section 194C cannot be pressed into service to deduct tax at source. The whole object of introducing the section is that it should deduct tax in respect of payments made for a works contract. No deduction is permissible in respect of contract for supply of material for carrying out work. In fact, the Tribunal by a detailed consideration of the statutory provisions, the various terms of the contract, the legal position as explained in the various judgments has rightly come to the conclusion that, the transaction in questi....