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TMI Blog2015 (8) TMI 1025X X X X Extracts X X X X X X X X Extracts X X X X ..... ne more opportunity to the assessee to place the material facts before the Assessing Officer would promote the cause of justice. - Decided in favour of assessee for statistical purposes. Reopening of assessment - exclusion of processing charges and disallowance of deduction u/s 80HHC on export incentive - Held that:- Proviso to sec. 147 is very clear that after expiry of fours from the end of the relevant assessment year, the Assessing Officer cannot reopen the assessment which was completed u/s 143(3) of the Act unless there was negligence on the part of the assessee in disclosing fully and truly all material facts relevant for completing the assessment. In this case, the assessee has disclosed all material facts relevant for completing the assessment and the assessment was reopened by the Assessing Officer only on the basis of the retrospective amendment made by the Parliament in the year 2005. As already observed, the assessee is not expected to anticipate the retrospective amendment that may be made by the Parliament in future. Therefore, the reopening of assessment u/s 147 is bad in law. Accordingly, the consequential assessment made by the Assessing Officer cannot stand in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lause 12.5.1, the ld. DR submitted that the assessee has a right to audit the vendor's production process and the quality assurance system employed for manufacturing the parts order by the assessee. Therefore, according to the ld. DR, the entire manufacturing process was done on the guidance of the assessee. Moreover, referring to clause 5.1 of the agreement, the ld. DR submitted that the assessee shall supply the raw material for the purpose of manufacturing the spare parts ordered by the assessee. According to the ld. DR, since the entire parts were manufactured by the vendor on the basis of the material supplied by the assessee, the assessee is liable for deducting tax u/s 194C of the Act on the payment made to vendors. The ld. DR clarified that it is not a case of mere purchase of spare parts. It is a case of works contract by supplying the raw material by the assessee, therefore, the CIT(A) is not justified in allowing the claim of the assessee. Referring to the order of the CIT(A), the ld. DR submitted that the CIT(A), without going to the material facts of the case, allowed the claim on the basis of certain case law. According to the ld. DR, each case law has to be appli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the contract in question involve sale of the respective vessel within the meaning of Andhra Pradesh General Sales Tax Act, 1957. The ld. Counsel has also placed his reliance on various other case laws and submitted that even though the spare parts were manufactured by the respective vendors on the basis of the specification and technical details provided by the assessee, still the same has to be treated as 'sale' and not as 'works contract'. 7. We have considered the rival submissions on either side and also perused the material available on record. We have also gone through the provisions of section 194C of the Act. Sec. 194C(7) Explanation defines the word 'work'. For the purpose of convenience, we are reproducing below Explanation (iv) to sec. 194C(7) of the Act: (iv) work shall include - (a) Advertising; (b) Broadcasting and telecasting including production of programmes for such broadcasting or telecasting; (c) Carriage of goods or passenges by any mode of transport other than by railways (d) Catering; (e) Manufacturing or supplying a product according to the requirement or specification of a customer by using material purch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh the agreement, found that the agreement executed by the assessee with various vendors do not have the normal features of contract for sale. This agreement, according to the Assessing Officer, is a contract for work. Therefore, the Assessing Officer found that the assessee has to deduct tax. The CIT(A), on the basis of the written submission filed by the assessee, called for the remand report from the Assessing Officer. The CIT(A), after reproducing the remand report filed by the Assessing Officer and the objections of the assessee, found that the supplies made by the assessee other than those under the job work basis is pure contract of sale, therefore, sec. 194C is not applicable. While concluding that other than those under job work basis, the sales has to be treated as one of contract for sale, the CIT(A) made a reference about the agreement entered into between the parties at para 11.1 of his order. Referring to clause 5.1 of the agreement, the CIT(A) found that this clause is meant for job work given by the assessee to the vendors. The CIT(A) has also found that the Basic Purchase Agreement is an omnibus providing for both job work as well as the sale of parts. However, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bles the assessee to purchase the goods on contract for sale. The CIT(A) has made a general observation that the agreement is a comprehensive one which provides for purchase of goods under a contract also. As already observed, there is no clause in the agreement brought to the notice of the Bench which would suggest any contract for sale of goods. Therefore, this Tribunal is of the considered opinion that giving one more opportunity to the assessee to place the material facts before the Assessing Officer would promote the cause of justice. Accordingly, the orders of the lower authorities are set aside and the entire issue is remitted back to the file of the Assessing Officer. The Assessing Officer shall reexamine the issue afresh on the basis of the agreement said to be entered into by the assessee and the vendors and thereafter find out whether it is a simple purchase of goods by the assessee under a contract for sale or the agreement is for works contract. The Assessing Officer shall also verify whether the respective vendors/recipients of the money have paid the respective taxes as per the confirmation letter filed by them. With the above observation, the entire issue is remitte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... retrospective effect from 1.4.1998. Since the amendment bade by Taxation Laws (Amendment) Act, 2005 was not available in the statute book when the original assessment order was passed, the Assessing Officer could not take note of the same while completing the assessment. According to the ld. DR, the retrospective amendment made with effect from 1.4.1998 would be applicable for the year under consideration, therefore, the Assessing Officer, in order to give effect to the retrospective amendment made by the Parliament by Taxation Laws (Amendment)Act, 2005, reopened the assessment by issuing notice u/s 148 on 17.3.2009. 3. We have considered the rival submissions on either side and also perused the material available on record. As rightly submitted by the ld. Counsel for the assessee, every tax payer is filing return of income on the basis of the law stands as on the last day of the financial year relevant to the assessment year under consideration. The assessment year under consideration is 2002-03, therefore, the assessee is expected to file the return of income on the basis of the law which prevails as on 31.3.2002. The assessee cannot be expected to anticipate the retrospective ..... X X X X Extracts X X X X X X X X Extracts X X X X
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