The Income Tax Officer v. M/S. Krishak Bharati Cooperative Limited....opponent(S

O/TAXAP/396/2007 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL NO. 396 of 2007 FOR APPROVAL AND SIGNATURE: HONOURABLE MR.JUSTICE KS JHAVERI and HONOURABLE MR.JUSTICE K.J.THAKER ================================================================ 1 Whether Reporters of Local Papers may be allowed to see the judgment ?the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ?judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the Constitution of India, 1950 or any order made thereunder ?to the interpretation of the Constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ================================================================ THE INCOME TAX OFFICER....Appellant(s) Versus M/S. KRISHAK BHARATI COOPERATIVE LIMITED....Opponent(s) ================================================================ Appearance: MR SUDHIR M MEHTA, ADVOCATE for the Appellant(s) No. 1MR BK DAMANI, ADVOCATE for the Opponent(s) No. 1 ================================================================ CORAM: HONOURABLE MR.JUSTICE KS JHAVERIandHONOURABLE MR.JUSTICE K.J.THAKER Date : 18/12/2014 ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE KS JHAVERI) 1. By way of this appeal, the appellant-Revenue has challenged the order dated 18.08.2005 passed by the Income-tax Appellate Tribunal, Ahmedabad Bench, in ITA No. 2607/Ahd/2006 for assessment year 2005-06. 2. While admitting this appeal on 18.01.2008, this Court has framed the following substantial question of law: “Whether on the facts and circumstances of the case, and in law, the Income Tax Appellate Tribunal is right in coming to the conclusion that payment made to M/s. Super Sack, Gwalior is not covered under the contract between the assessee and M/s. Super Sack, Gwalior for supply of goods as provided in Section 194C of the Income Tax Act and is covered by the provisions of Sales of Goods Act?” 3. The facts of the present case are that during the course of assessment proceedings, the assessee had not deducted tax at source on printing charges paid to M/s. Super Sack, Gwalior for getting packing material printed. The Assessing Officer after issuance of notice by order dated 15.02.2005 ordered the assessee to pay tax, surcharge and interest under Section 201 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’). The assessee appealed before Commissioner (Appeals), and CIT(A) upheld the order of Assessing Officer. On further appeal by the assessee, the Tribunal reversed the order of CIT(A) and allowed the appeal filed by the assessee. Against the said order of the Tribunal, the Revenue has preferred the present Tax Appeal. 4. Heard the learned advocates appearing for the parties and considered the submissions. The Tribunal while allowing the appeal filed by the assessee has relied upon the decision of the Tribunal in the case of Balsara Home Products Ltd. vs. ITO passed in [2005] 94 TTJ 970 (Ahd) and has come to the conclusion that the issue involved in the appeal before the Tribunal was similar to the one in Balsara Home Products (supra) and therefore relying on the same the Tribunal set aside the revenue’s orders creating demand u/s. 201(1) and 201(1A) of the Act. 5.Learned advocate for the respondent – assessee has drawn the attention of this Court to the fact that the decision in the case of Balsara Home Products (supra) has already been upheld by this Court vide order dated 29.04.2006 rendered in Tax Appeal No. 1239 of 2005 (Commissioner of Income Tax vs. Balsara Home Products Ltd). The relevant portion of the said order reads as under: 5.Learned advocate for the respondent – assessee has drawn the attention of this Court to the fact that the decision in the case of Balsara Home Products (supra) has already been upheld by this Court vide order dated 29.04.2006 rendered in Tax Appeal No. 1239 of 2005 (Commissioner of Income Tax vs. Balsara Home Products Ltd). The relevant portion of the said order reads as under: “Learned counsel for the appellant at the out-set brought to our notice a decision of this Court in Tax Appeal Nos. 1043 and 1044 of 2005 in the case of Commissioner of Income Tax Vs. Girnar Food & Beverages Pvt.Ltd., wherein the view has been taken by the Tribunal that in the facts and circumstances, that cannot be said as a work contract, but outright sale of printing material. Therefore, there is no question of deduction of TDS. The Court had finally come to the conclusion that where the contract is for supply of materials viz. sale of materials, it cannot be termed to be a contract for work and labour and therefore, provisions of Section 194C of the Act is not attracted, and the appeals were accordingly dismissed. When the issues are covered by the decision of this Court in the case of CIT Vs. Girnar Food & Beverages Pvt.Ltd., we see no substance in this appeal. The appeal stands dismissed.” 6.It shall be worth mentioning that this Court in Tax Appeal No. 1239 of 2005 has relied upon the decision of a co-ordinate Bench of this Court in the case of Commissioner of Income-tax vs. Girnar Food and Beverage P. Ltd reported in [2008] 306 ITR 23 and in the case of Commissioner of Income- tax vs. Hindustan Lever Ltd. reported in [2008] 306 ITR 25 wherein this Court considering the circulars placed before it, observed that where the contract is for supply of materials vis. Sale of materials it cannot be termed to be a contract for work and labour and is not amenable to the provisions of Section 194C of the Act. 7.Learned advocate appearing for the revenue is not in a position to dispute the said proposition of law and/or point out any decision contrary to the ones cited hereinabove. 8. In that view of the matter, no elaborate reasons are required more particularly when this Court has already taken a view on the same question of law vide decisions in the cases of Balsara Home Products (supra), Hindustan Lever Ltd (supra) and Girnar Food and Beverage (supra). Therefore, we answer the question raised in the present appeal in the affirmative i.e in favour of the assessee and against the Revenue. We hold that the Tribunal is right in coming to the conclusion that payment made to M/s. Super Sack, Gwalior is not covered under the contract between the assessee and M/s. Super Sack, Gwalior for supply of goods as provided in Section 194C of the Income Tax Act and is covered by the provisions of Sales of Goods Act. The impugned order passed by the Tribunal is hereby confirmed. Appeal is dismissed accordingly. (K.S.JHAVERI, J.) divya (K.J.THAKER, J)