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TMI Blog2010 (11) TMI 459X X X X Extracts X X X X X X X X Extracts X X X X ..... ed person and the property in such article or thing passes to the Govt. or such person only after such article or thing is delivered, the contract will be a contract for sale and outside the purview of section 194C of the Act - assessee acted bona fide in this case on the basis of the said belief and did not deduct tax at source - Still further the default, if any, was only of a technical nature and in the peculiar facts of the case, wherein the two Departments of the Government were involved, the action against the assessee was not required - Decided in the favour of assessee - 183 of 1999 - - - Dated:- 23-11-2010 - MR.JUSTICE ADARSH KUMAR GOEL, MR.JUSTICE AJAY KUMAR MITTAL, JJ. Mr. Yogesh Putney, Senior Standing Counsel for the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at no tax deduction at source (TDS) was made as the supply order was to be considered as supply of goods and not as a contract payment, and as such the same did not fall within the purview of Section 194C of the Act, in view of the CDBT circular No. 681 dated 8.3.94, para 7 (vib). After considering the reply furnished by the assessee, the Assessing Officer held that the provisions of Section 194-C of the Act were applicable and the respondent-assessee was assessee in default and liable to pay tax under Section 201 of the Act. The assessing officer also held the assessee to be liable to pay simple interest at the rate of 15% per annum, under Section 201(1A) of the Act. For the financial year 1994-95, the assessing officer computed tax at R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be supplied by HARTON to the assessee. However, at the same time the contents of para 7(vi)(b)and (c) of circular No.681 which are still valid and binding on the departmental authorities cannot be ignored. It is clearly mentioned in sub-clause (b) of clause (vi) of para 7 that where the contractor undertakes to supply any article or thing fabricated according to the specifications given by the Govt. or any other specified person and the property in such article or thing passes to the Govt. or such person only after such article or thing is delivered, the contract will be a contract for sale and outside the purview of section 194C of the Act. We feel that the transaction of preparing I-cards according to the specifications laid down by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eel that the default, if any, is only of technical nature and that the assessee acted in bona fide belief and considering overall circumstances of the case we feel that no interest is chargeable u/s 201(A) in this case. While holding so, we have taken into account the submissions made by Ld. D.R. that this decision of ours should not be taken as laying a general principle/proposition which may set in a chain reaction in similar cases enabling the assessee not to deduct tax at source u/s 194C. We may make it clear that our decision rests on the peculiar facts of the case wherein two Govt. Departments are involved and that the same has been taken in the context of particular transactions and should not be taken as a precedent laying down a ge ..... X X X X Extracts X X X X X X X X Extracts X X X X
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