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TMI Blog2015 (7) TMI 774X X X X Extracts X X X X X X X X Extracts X X X X ..... ide the issue in favour of the assessee. - ITA Nos.1255 to 1257(B)/2014 - - - Dated:- 17-7-2015 - Shri Vijay Pal Rao and Shri Jason P Boaz, JJ. For the Petitioner : Smt R. Pratibha, Advocate For the Respondent : Dr. K. Shankar Prasad, JCIT ORDER PER BENCH: These appeals by the assessee are directed against the composite order of the CIT(A) dated 28-03-2014 arising from the orders passed u/s 201 201(1A) of the IT Act, 1961. 2. The assessee has raised common grounds in these appeals. The ground for the AY: 2006-07 are as under; 1.On the facts and circumstances of the case, the ld.CIT(A) erred in upholding the order passed by the AO under section 201 201(1A) of the Act for the relevant assessment year. 2. The ld.CIT(A) erred in holding that the provisions of section 194C of the Act is applicable to the entire contract value by treating the same as composite contract. 3. The ld.CIT(A) ought to have appreciated the claim of the appellant along with documents enclosed that contract entered by the appellant with M/s Enercon was a divisible contract and not composite or indivisible contract. 4. On the facts, the ld.CIT(A) ought to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rial construction work and payment for commissioning of Enercon (Ind.) Ltd., (Supra). The assessee also pointed out that as far as the payments for construction work as well as commissioning the assessee deducted TDS and paid to the department. As far as the payment for supply of windmill equipment the assessee contended that this payment does not fall under the provisions of sec.194C and therefore, there was no question of deducting TDS on said payment. The CIT(A) did not accept the contention of the assessee and held that the contract under which the payments are made is an indivisible and composite contract. Therefore, the assessee paid the remuneration for comprehensive composite deal of setting up of windmill. Thus, the CIT(A) held that the entire value of contract is liable for TDS at the rate of 2%. 5. Before us the learned AR of the assessee submitted that though, there was only one contract between the parties however, the payment made to M/s Enercon (Supra) are separately shown towards the supply of windmill equipment and accessories construction, supply of industrial/construction work as well as commissioning. He has referred to the invoices issued by M/s Enercon and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the payment made by the assessee under the contract. In support of his contention, he has relied upon the decision of the Hon ble Supreme Court in case of Sentinel Rolling Shutters and others Vs Commissioner Sales Tax, AIR 1978 SC 1747. 8. The learned DR submitted that in the said case, the assessee got the work of rolling shutters erection and installation and therefore, the assessee was not liable to pay sales tax. Thus, the learned DR has submitted that the in the said case the Hon ble Supreme Court has held that the contract was a contract of work and labour and not a contract for sale. In the case in hand, the entire work was carried out by M/s Enercon India Ltd under the contract which is work and labour and not contract of sale. He has relied upon the orders of the authorities below. 9. We have considered the rival submissions and material on record. The assessee has entered into an agreement with M/s Enercon India Ltd for supply erection and commissioning of windmill for a total consideration of ₹ 3.83 Crores. This payment was spread over for three assessment years 2006-07 to 2008-09. The AO has reproduced the details of the payment inpara-3 of its order; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... minant part of the contract is supply of windmill equipment and other accessories amounting to ₹ 3.37 Crores, out of the total contract price of ₹ 3.83 Crores. Since the assessee has already deducted the tax and paid the same to the Government in respect of the remaining amount of ₹ 46.00 Crores towards civil and industrial construction work as well as commissioning charges therefore, the only dispute before us is regarding the payment towards the supply of windmill equipment with its accessories of ₹ 3.37 Crores. It is manifest from the purchase order for wind energy converters and other equipment as well as the purchase order for civil and electrical work that the assessee placed separate orders for purchase of the equipment including the wind turbine converters and other accessories for separate consideration whereas for civil and electrical work for erection of the windmill orders were also placed separately. The invoices raised by the Enercon also clearly exhibit the separate consideration for the purchase of wind turbine converters and other accessories. Rather separate invoices were issued for supply of wind mill device and civil and industrial constr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g constitutes work or not. To bring clarity on this issue, it is proposed to prove that work shall not include manufacturing or supplying a product according to the requirement or specification of a customer by using raw material purchased from a person other than such customer as such a contract is a contract for sale . This will however, not apply to a contract which dies not entail manufacture or supply of an article or thing (e.g. a construction contract) It is also proposed to include manufacturing or supplying a product according to the requirement or specification of a customer by using material purchased from such customer within the definition of work. It is further proposed to provide that in such a case TDS hall be deducted on the invoice value excluding the value of material purchased from such customer if such value is mentioned separately in the invoice. Where the material component has not been separately mention in the invoice, TDS shall be deducted on the whole of the invoice value. 14. When the statute was amended to clarify the word work under section 194C by introducing the aforesaid clause, it is obvious tht the amendment is only clarificatory in nat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s t aside, the levy of interest is consequential and accordingly, the levy of interest is also set aside. The second substantial question of law consequently, is to be answered in favour of the assessee and against the revenue. In that view of the matter, we do not see any merit in these appeals and accordingly, it is dismissed. No costs . Even in the clarification as per the definition of work as contained in the Explanation to clause-4(e) to sec.194C the value of the material purchased from such customer is required to be excluded if such value mentioned separately in the invoice. In the case in hand, there is no ambiguity about the fact that a separate consideration and value of the supply of goods/windmill turbine converter and other equipments is separately given. Therefore, in the facts and circumstances of the case, where the value/consideration of supply of windmill turbine converters and other equipment is separately given in the invoices and rather separate invoices are placed by the supplier, then the assessee is not liable to deduct any tax at source as per the provisions of sec.194C so far the payment is made for supply of the windmill turbine and other equipments ..... X X X X Extracts X X X X X X X X Extracts X X X X
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