TaxTMI 
TaxTMI 
2025 (9) TMI 423
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.... u/s. 250 of the Income Tax Act, 1961 (hereinafter referred to as the "Act") for Assessment Years (AY) 2013-14 to 2017-18. 2. Since identical issue is involved in all these appeals, hence, these appeals have been heard together, and are being disposed of by this common order for the sake of convenience. 3. The sole issue involved in these appeals is as to whether the assessee is to be treated as assessee in default u/s. 201(1)/(1A) of the Act for not deducting tax at source (TDS) as per the provisions of section 194C of the Act. 4. The brief facts of the case are that the assessee is a State owned corporation and is engaged in the generation of electricity and also responsible for distribution of generated electricity to the electr....
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....tion to relevant part of the order of the Ld. CIT(A) to submit that the assessee is a company incorporated under the Companies Act, 1956 and is engaged in the business of generation of electricity. The assessee is owned by the State Govt. of Bihar. That the assessee nominated Bharat Heavy Electricals Ltd. for setting up of Power Plant on turnkey basis. That the assessee after nomination entered into two separate and distinct contracts i.e. first, for supply of plant, machinery and equipment and the other for erection of the project. The agreements, inter-alia, elucidate the value of the contract both in terms of value for supply of goods and the cost of the execution of the contract. The Ld. AR has further submitted that the two contracts, ....
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....parts of the contract i.e. supply of material as well as the cost of services were separate and segregated. However, the Ld. CIT(A) noted that though there were two separate contracts i.e. one relating to supply of material and the other relating to the erection/setting up of power plant, however, there was a clause that any breach to any one of the two contracts shall automatically be deemed as breach of both the contracts. He, therefore, upheld the finding of the AO that it was a composite contract. He observed that it was clear that all the material supplied was meant for setting up of Barauni Thermal Power Station. He observed that had the work of setting up of project was not undertaken, the supply of material would have not taken plac....
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....t of the contract would always be dependant upon the availability of material. If both the contracts are given to one party and the said party supplies only the material and would not perform its service part of setting up the project then such material/plant and machinery would be of no use for such an assessee. It is to ensure that the other contracting party performs its obligations in full and to the satisfaction and as per the contract between the parties, the first contracting party if insists upon a clause that in the event of breach of one contract it will be considered breach of both the contracts that itself, does not make both the contracts, as a composite service contract. The provisions of section 194C of the Act are attracted ....