S. 194C TDS does not apply to contract manufacturing agreements
The assessee, a manufacturer of pharmaceutical products, entered into agreements with various manufacturers who manufactured the said items according to the specifications provided by the assessee. The AO held that the transaction between the assessee and the manufacturer was in the nature of a "works contract" and fell within the purview of s. 194C and that the assessee ought to have deducted TDS thereon. The assessee was held to be in default and liable to pay the tax and interest u/s 201(1) & 201(1A). On appeal by the assessee, the Tribunal held that the transaction was one of sale simplicitor and was not in the nature of a work contract and that the assessee was not liable to deduct TDS u/s 194C. The department's appeal to the High Court was dismissed by following Reebok India 306 ITR 124 (Del). On appeal by the department to the Supreme Court, HELD dismissing the SLP:
On examining the terms and conditions, invoices, purchase orders and challans indicating payment of excise duty, there is no material on record to indicate that the transaction in question is a "contract for carrying out works". Hence, s. 194C is not attracted. S. 194C has been amended by the Finance (No.2) Act, 2009, w.e.f. 1.10.2009 to provide that "work" includes manufacturing or supplying a product according to the requirement or specification of a customer by using material purchased from such customer. It is clarified that the definition of the word "work" will not include manufacturing or supplying a product according to the requirement or specification of a customer by using material purchased from a person other than such customer.
This impliedly approves the view taken in Glenmark Pharmaceuticals 324 ITR 199 (Bom)
15 June 2013
SC on S. 194C TDS does not apply to contract manufacturing agreements
Looking current situation CA Exam is rescheduled: CA inter and final exams will from 21st Nov . CA foundation will be from 8th Dec 2020.
Gentlemen: AmtInWords.xla is attached to this mail. It is an MS Excel Add-in written by me to convert amount available in figures to words. ...
*1. What is Pradhan Mantri Garib Kalyan Deposit Scheme (PMGKDS), 2016?* Pradhan Mantri Garib Kalyan Deposit Scheme (PMGKDS), 2016 is a sche...
ICAI: Registration for the 2nd Batch of *Five Days Residential Programme on Advanced Leadership for Chartered Accountants at IIM Ahmedabad *...