TaxTMI 
TaxTMI 
2016 (1) TMI 753
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....I. T. Act, 1961 for non deduction of tax u/s. 194C." 3. Briefly stated facts are that during the course of assessment proceedings, the AO noted that the assessee company had made the following payments on account of the job work for procuring printed materials as per the specification of the assessee company from various parties: Sl. No. Ledger Head Amount 1. Carton Larger 164189.50 2. Carton Bullet 4214639.53 3. Carton KFS 61278.00 4. Crown Bullet 1895343.00 5. Crown KFL 56454.00 6. Crown KFS 96035.00 7. Foil Bullet 1709170.80 8. Foil KFS 68040.00 9. Foil KPL 41925.37 10. Foil KPL 1087655.00 11. Label Bullet Back 1138995.00 12. Label KFL 178800.00 13. Label KFL Back 28645.00 14. Label KFS 249828.00 15. Label KFS Back 51999.00 Total : Rs. 11042997.20 The Assessing Officer noted that as per the CBDT's Circular No. 715 dated 08.08.1995 Section 194C of the Act is applicable for supply of printed materials as per prescribed specification. He observed from the bills submitted by the assessee company that the asse....
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.... there was an agreement for supply of corrugated boxes with labels printed on them, it was held that predominant object underlying the contract was one for sale of goods and not of work contract. [CIT v. Dabur India Ltd. (2006) 283 ITR 197 (Del.) 5.2.6 In Balsara Home Products Ltd. v. ITO 94 ITJ 970 (Ahd.) : The issue before Ahemadabad Tribunal was that the applicability or otherwise of Section 194C to purchase of preprinted packing materials like tubes, cartons, corrugated boxes, etc. The Assessing Officer contended that printing according to specifications settled by the assessee involves contract of work liable to TDS under Section 194C. The Tribunal did not accepted this view and following Bombay High Court's decision in the case of BDS Ltd. dated 08.03.2004, it held that the transaction is contract of sale not liable to TDS under Section 194C. It held that .the printing on the material is incidental to supply of material i.e. sale of material. The Bombay High Court in the case of BDA Ltd. cited supra held that where an independent establishment was engaged in the business of supplying printed packaging material to various units and was not a captive unit ....
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....t is to be unwarranted. Therefore, the consequent addition made to the income returned is hereby deleted." 4. We have heard rival submissions and gone through facts and circumstances of the case. We find that the assessee before AO argued that the supply of printed materials was a sale and could not be considered as work contract and tax was not required to be deducted u/s.194C of the Act, since the ancillary materials were not supplied by the assessee. It was also contended that Clause (iv)(e) of explanation with section 194C of the Act as introduced by Finance (No.2) Act, 2009, has placed the position beyond doubt by incorporating language to the effect that expression "Work" shall not include manufacture or supply of a material which is purchased from a person other than such customer. The assessee had further relied on Circular No.715 dated 08.08.1995 which provides that supply of printed material is covered by section 194C of the Act is also not applicable in this case since this circular does not mean that all cases of supply of printed material are liable to deduction of tax at source. We are of the view that it was only when the contract is for printing of materials and ....
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....will be a contract on sale and as such falls outside the purview of section 194C of the Act. Therefore, the Assessing Officer erred in law in making disallowance of Rs. 1,10,42,997/- despite the facts that the said amount is paid for purchases and section 194C of the Act is not applicable. Accordingly, no disallowance by invoking the provisions of section 40(a)(ia) of the Act can be made. The CIT(A) has rightly deleted the addition and we confirm the same. This issue of revenue's appeal is dismissed. 6. The next issue in this appeal of revenue is against the order of CIT(A) deleting the disallowance by allowing set off of unabsorbed depreciation loss against current year's income. For this, revenue has raised following ground no.2: "2. For that in the facts and in the circumstances of the case the Ld. CIT(A) is not correct by allowing set off of unabsorbed depreciation loss against the current years income." 7. Brief facts relating to the case are that in the assessment order, the AO noted that, the unabsorbed depreciation for the AY 1989-1999 & 1999-2000 claimed by the assessee is not allowed to be set off this year since as per the Act, unabsorbed depreciation allo....
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.... if necessary. 2. In the subsequent year(s), unabsorbed depreciation can be set off against any income whether chargeable under the head "Profits and gains of business or profession" or under any other head (except Income under the head "Salaries"). In the matter of set off, the following order of priority is followed in the subsequent year(s): . a) Current depreciation. b) Brought forward business loss c) Unabsorbed depreciation It may be said that if in the subsequent year(s), there is no brought forward business loss, unabsorbed depreciation can be added to current depreciation for the purpose of claiming deduction. 3. Continuity of business is not relevant for the purpose of above set off and carry forward. 4. Depreciation can be carry forward by the same assessee. This rule is, however, not applicable in some cases. In view of the foregoing discussion, the claim of the assessee company, in my opinion, the disallowance of the claim of set off of unabsorbed depreciation loss against the current income is not justified. The Assessing Officer is hereby directed to allow the same on the basis of the steps given....
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....the position as it was prevailing prior to the Finance Act No. 2 of 1996 and the period of 8 years was done away with. Accordingly, the unabsorbed depreciation loss for assessment year 1998-99 and 1999-2000 became the unabsorbed depreciation loss for assessment year 2008-09 and can be carried forward for set off indefinitely. In Circular No.14 of 2001, the CBDT clarified the removal of the 8 year time period was "with a view to enable the industry to conserve sufficient funds to replace plant and machinery". The effect of the amendment is that the unabsorbed depreciation available to an assessee on 1.4.2002 (AY 2002-03) has to be dealt with in accordance with the s. 32(2) as amended by the Finance Act, 2001 and not by s. 32(2) as it stood prior to the said amendment. 9. Hon'ble High Court of Gujarat in the case of General Motors India Pvt. Ltd V DCIT (2013) 354 ITR 244 (Guj) considering the same issue enunciated the proposition of law as under:- "Had the intention of the Legislature been to allow unabsorbed depreciation allowance worked out in AY 1997-98 only for eight subsequent assessment years even after the amendment of s. 32(2) by Finance Act, 2001 it would hav....