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2016 (2) TMI 350 - AT - Income TaxTDS u/s 194C - whether the assessee is not liable to deduct tax at source u/s 194C in respect of contract manufacturing? - Held that - In the present case, the assessee has purchased goods manufactured by the third party and payments made towards goods purchased by assessee. In the section 194C, there is no whisper about the goods purchased from other person and TDS is to be deducted on this payment. The Hon ble Supreme Court also made clear that for purchasing of goods no TDS is to be deduced as held in CIT V/s Silver Oak Laboratories Pvt. Ltd 2010 (8) TMI 839 - SUPREME COURT - Decided in favour of assessee
Issues:
- Whether the assessee is liable to deduct tax at source u/s 194C of the Act in respect of contract manufacturing. Analysis: 1. The appeals were filed by the Revenue challenging a common order passed by the ld.CIT(A)-14, Mumbai for the assessment years 2003-04 to 2005-06. The issue in question was whether the assessee should have deducted tax at source u/s 194C of the Act for contract manufacturing. 2. The AO observed a discrepancy in TDS deduction during a survey at the assessee's premises. The AO contended that TDS should have been deducted for contract manufacturing as per the agreement terms. The assessee argued that it was a contract for the sale of goods, not services, and hence TDS was not required to be deducted. 3. The ld.CIT(A) allowed the assessee's claim, considering the nature of payment, contract documents, and a relevant decision. The Revenue, aggrieved by this decision, filed an appeal before the ITAT Mumbai. 4. The ITAT Mumbai noted that the assessee paid third parties for manufactured goods without deducting TDS. The tribunal agreed with the ld.CIT(A)'s decision, citing that Section 194C pertains to services provided, not goods purchased. Referring to a Supreme Court judgment, the tribunal upheld that TDS is not required for purchasing goods. 5. Consequently, the ITAT Mumbai dismissed the Revenue's appeals based on the interpretation of the law and the precedent set by the Supreme Court. The decision was pronounced on 3.2.2016. This detailed analysis covers the legal judgment comprehensively, addressing the issues involved and the reasoning behind the decision.
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