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TMI Blog2011 (3) TMI 1618X X X X Extracts X X X X X X X X Extracts X X X X ..... ee was not a defaulter and the provisions of s.201(1) and 201(1A) of the Act were not applicable; (ii) the CIT (A) ought to have appreciated that the with regard to the value of materials supplied to the contractors, they belong to the assessee and, thus, the question of deduction of tax at source by applying the provisions of s. 194C of the Act would not arise; (iii) without prejudice, the CIT(A) ought to have appreciated that the recipient having paid the tax on the amount received from the assessee, there was no obligation on the part of the assessee to pay tax u/s 201(1) of the Act as ruled by the Hon'ble Supreme Court and, thus,, levy of tax as well as interest u/s 201(1A) are liable to be cancelled. 3. As the issues raised were identical pertaining to the same assessee, they were heard, considered together and disposed off in this common order for the sake of convenience and clarity. 4. Briefly stated, the assessee was a State Government Public Sector company, carrying on the business of transmission of electricity from electricity generating points to various electrical sub-stations in the State through the network of transmission lines and sub-station ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .1 to 4 are dismissed in view of the discussion made above. In ground No.5, the appellant has raised the contention that the recipient has paid the tax on the amount received from the appellant. In the written submissions, the appellant has referred to the decision of Supreme Court in the case of Hindustan Coco Cola Beverage P. Ltd. v. CIT 293 ITR 226 in this connection. No details or evidence was, however, given at the time of appeal hearing. At the time of last hearing, the appellant asked for more time for producing confirmation from contractors regarding tax payment. However, since sufficient opportunity has been provided to the appellant, no further time was given. In the absence of any supporting details and evidence on the above ground, appeal fails. 7. Agitated, the assessee has come up with the present appeals. During the course of hearing, the forceful submissions made by the Ld. A R are summarized as under: (i) S. 201(1) was not at all applicable in the case of the appellant as there was no requirement to deduct tax at source. S. 201 require a person who is required to deduct any sum in accordance with the provisions of the Act. Here, as there was no req ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated the agreement for supply of goods as part of the composite contract which, according to the appellant, was a wrong interpretation arrived at by the AO, considering only some portion of the documents referred to in her order; (v) though the complete contract work was awarded to a single contractor, still such contract was required to execute separate agreements for each of the work which means three contracts were documented separately and were considered as three contracts for all practical purposes; - the materials/equipments purchased were in the absolute ownership of the appellant and it was the appellant who supplied these materials for performing the other two contracts by the contractor. With regard to the supply, it was only a contract of sale for purchase of such materials/equipments which were purchased for consideration with a specific requirement; - the intention was quite clear that right from step one, both the parties knew that there would be three contract agreements that were to be executed and honoured separately; - thus, the transaction between the appellant and the contractor while executing the agreement for supply of goods was essential ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellant was not obliged to deduct tax at source from the payment made for purchase of materials from the contractors who undertook the other works of erection and civil engineering and in lieu of various judicial pronouncements, the appellant was not obliged to deduct tax at source. - That the appellant was under the bona fide belief that there was no liability to deduct tax when payments were made towards supply of materials/equipments. The bona fides of the appellant was further proved by the fact that the appellant had deducted tax at source when payments were made towards the other two contracts viz., erection and civil engineering works. Thus, there was reasonable cause for non-deduction of tax, if any, while making the payment towards supply of materials/equipments which was in accordance with the proviso to s.201(1) and that the appellant cannot be held to be a defaulter to enforce the demand us 201(1) of the Act. - Relies on the case law in the case of ITO v. Gujarat Narmada Valley Fertilizers Co. Ltd. (2001) 247 ITR 305 (Guj) In the case of Power Grid Corporation of India Ltd. v. ACIT (2007) 108 ITD 340. (viii) Every purchase (supply) was recorded b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to see the reason and to recognize the distinct meaning-SUPPLY and WORK; - it was wrongly visualized that the equipments, materials component parts were fabricated and installed at work site premises; - it was wrongly presumed that the contracts entered into between the assessee and the contractor were composite contract and an indivisible contract whereas there were three separate contracts, viz., (i) supply of materials; (ii) for erection (iii) for civil work portion; - Instruction to Bidders (Section -II -ITB) under clause 14. Taxes and duties [source P 123 of PB-AR] it has been made implicitly clear that - 14.1. As indicated in clause 35.2 of section ITB of the Bid Document, in case of Award of contract, a Divisible Contract covering the entire scope of the partial/total turnkey package will be entered into with the successful bidder, there shall be three separate contracts as under: (i) For supply of goods (ii) For erection works (iii) For Civil Engineering works Thus, tender clearly gives breaks-up of separate agreements reflecting separate consideration; - through a single bidding process, all the contracts were awarded distinc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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