2000 (11) TMI 312 - AT - Income Tax

Summary

Issues Involved:
1. Condonation of delay in filing appeals.
2. Applicability of section 194C to the supply of packing material with printing.
3. Nature of the transaction: Sale of goods vs. works contract.
4. Competence of CIT(A) to admit appeals against orders u/s 201/201(1A).

Summary:

Condonation of Delay in Filing Appeals:
The assessee's appeals were delayed by seven days due to adverse financial conditions and staff issues. After hearing both parties, the delay was condoned, and the appeals were admitted.

Applicability of Section 194C:
The main issue was whether the provisions of section 194C cover the supply of packing material with printing. The I.T.O. (TDS) and CIT(A) held that these transactions were covered u/s 194C, requiring tax deduction at source. The I.T.O. relied on Board's Circular No. 715, dated 8-8-1995, and observed that the printed materials involved specialized jobs, indicating a contract rather than a simple sale.

Nature of the Transaction:
The assessee argued that the transactions were simple sales of goods, not contracts for work and labour. The packing materials were manufactured as per specifications, and the suppliers paid Excise duty and Sales-tax. The I.T.O. countered that the specialized nature of the printed materials and the detailed specifications indicated a works contract. However, the Tribunal referred to Board's Circular No. 681, which states that contracts for the sale of goods are outside the purview of section 194C. The Tribunal concluded that the main purpose was to obtain packing materials, and the incidental printing did not constitute a works contract. Therefore, the provisions of section 194C were not applicable.

Competence of CIT(A):
The department raised objections regarding the competence of CIT(A) to admit appeals against orders u/s 201/201(1A). However, these objections were not pressed during the hearing and were subsequently dismissed.

Conclusion:
The Tribunal allowed the assessee's appeals, holding that the transactions were sales of goods and not works contracts, thus reversing the findings of the authorities below. The cross objections of the Revenue were dismissed.