2017 (5) TMI 1265

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.... facts and in the circumstances of the case and in law, the Ld.CIT(A) has erred while granting relief on account of nondeduction of tax on the payment of supply of printed packing material without appreciating the fact that the AO has collected material during survey and has established beyond doubt that the fixed contract with the vendor in this case is a contract for work and not a contract for sale as envisioned u/s.194C." 3. The AO is aggrieved by the order of the CIT(A) in granting relief on account of non-deduction of tax on the payment towards supply of printed packing material on the premise that the supply of printed packing material is 'contract for work' and not a 'contract for sale' as envisaged under s.194C of the Income Tax....

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....he order of AO, the CIT(A) examined the facts and the legal position in great length with reference to various case-laws as per para-10 of its order concluded that impugned transactions on account of supply of printed packing material to the assessee was in pursuance of a 'contract for sale' and not a 'contract for work' as alleged. Consequently, it was held by the CIT(A) that provisions of section 194C are not applicable to the said sale transactions. He accordingly held that the action of the AO in disallowing the expenditure incurred by the assessee towards printed packing material amounting to Rs. 3,15,56,185/- for non-deduction of tax at source under s.194C is unsustainable in law and accordingly reversed the action of the AO. 6. Th....

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....stomer'. With reference to the aforesaid definition, we note the contention advanced on behalf of the assessee that section 194-C would apply to a person responsible for paying any sum to any recipient for carrying out any work including supply of labour for carrying out any work in pursuance of a contract would be under statutory obligation to deduct TDS at a certain percentage of the contract as specified in aforesaid provision. Ostensibly, obligation under s.194-C towards expenditure incurred arises out of 'carrying out any work'. As noted, expression 'work' specifically includes supply of product as per specific requirement of customer however subject to a caveat. The definition 'work' seeks to include only those kinds of supply as per ....

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.... wherein question as to whether section 194C would apply in respect of supply of printed material as per prescribed specifications was noted in affirmative by the apex body for Direct Taxes. However, in the same vain, we note that expression 'work' is now similarly defined in clause (iv) of the substituted Explanation by the amendment carried out by the Finance (No.2) Act, 2009, w.e.f. 01/10/2009 as discussed above. We observe that the CIT(A) has dealt that the objections of the Revenue with regard to the aforesaid CBDT Circular in great length and distinguished the situation prevailing in the aforesaid impugned assessment year 2012-13 with reference to several judicial precedents. We also note that the Coordinate Bench of Tribunal in Panja....