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TMI Blog2018 (10) TMI 1865X X X X Extracts X X X X X X X X Extracts X X X X ..... e that there is any kind of works contract. Here it is not disputed by the department that the supplier was procuring the equipments as well as raw materials and supplying Chinese food to the assessee. Once that is so, then such a supply agreement ostensibly will fall in the category of works contract so as to invoke TDS provision u/s. 194C. Thus, the order of the ld. CIT(A) holding that it is a goods of supply and purchase of material on which VAT has been charged then such a payment for supply will not entail TDS provision u/s.194C and accordingly, no disallowance u/s.40(a)(ia) can be made. We hold that no disallowance u/s 40(a)(ia) can be made because no TDS provision is applicable u/s 194C on a payment for supply and purchase of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt of ₹ 1,34,08,792/- on which no TDS deducted on the payments. Accordingly, he has disallowed the said payment u/s 40(a)(ia). He held that since payment made by the assessee to M/s.Zen Chinese Foods for supply of chinese good was as per the terms of contract, therefore, TDS should have been deducted at the provision of section271(1)(c). Ld. CIT(A) following the first appellate order for the assessment year 2006-07 has deleted the said disallowance holding that purchases made by the assessee from M/s Zen Chinese Foods i.e food was based on same food supply arrangement agreement dated 13.7.2005 and since facts and circumstances are the same therefore he has no reason to defer from his predecessor s order, 3. After considering the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... MENT , wherein the assessee company is now the owner and M/s Zen Chinese Food is the supplier . The relevant portions of this arrangement document to be discussed in the following paragraphs are reproduced as follows: ...whereas for purpose of running a restaurant at B-25 Connaught Place, New Delhi- 110001 the Owners have available an airconditioned hall with kitchen space. And whereas the suppliers have offered to enter into a food supplying arrangement with the owners by supplying Chinese Food on the terms and conditions hereafter mentioned. 4. That the suppliers shall use the premise for purpose of business of supplying Chinese Food to Owners only and for no other purpose whatsoever. 5. The suppliers shall p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngly, he disallowed sum of ₹ 73,98,662/- u/s. 40(a)(ia). 4. Ld. CIT (A) deleted the said disallowance on the ground that it was not works contract but payment was for purchase of food material from another entity on which sales/VAT has been charged and after referring to various judgments, he held that there is no requirement for deduction of tax on supply of materials, and thus, he held that provision of Section 40(a)(ia) cannot be invoked. 5. After hearing both the parties and on perusal of the impugned order, we find that from 13.07.2008 the assessee had entered into an agreement viz., Food Supply Arrangement with M/s. Zen Chinese Food, whereas assessee was the owner of the restaurant and M/s. Zen Chinese Food was a supplie ..... X X X X Extracts X X X X X X X X Extracts X X X X
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