Income Tax Appellate Tribunal - Indore
Lilasons Brewereis Ltd., Bhopal vs Department Of Income Tax on 24 November, 2011
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IN THE INCOME TAX APPELLATE TRIBUNAL
INDORE BENCH, INDORE
BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER
AND
SHRI R.C. SHARMA, ACCOUNTANT MEMBER
ITA No.607/Ind/2010
A.Y. 2007-08
ACIT-2(1), Bhopal ... Appellant
Vs
M/s. Lilasons Breweries Ltd.,
Bhopal
PAN - AAACL 5312 R ... Respondent
Appellant by : Shri Arun Dewan, Sr. DR
Respondent by : S/Shri H.P.Verma & Ashish Goyal
Date of Hearing : 24.11.2011
Date of Pronouncement : 24.11.2011
O R D E R
PER JOGINDER SINGH This appeal is by the Revenue challenging the order of learned Commissioner of Income Tax (Appeals) dated 18.8.2010.
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2. At the outset the learned counsel for the assessee contended that the impugned issue is covered by the decision of the Tribunal dated 25th June, 2010 for the assessment year 2006-07 (ITA Nos. 268 and 288/Ind/2009). This factual matrix was not controverted by the learned Sr. DR. However, Mr. Dewan invited our attention to section 194C of the Act.
3. We have considered the rival submissions and perused the material available on file. The facts of the above case are identical with the facts of the present case which have already been considered by the Bench in the aforesaid order for the assessment year 2006-07 and the issue involved is also identical. The relevant portion of the order is reproduced hereunder :-
" Both these appeals are filed by the Revenue and involve issues of applicability of Section 40(a)(ia) of the Act in respect of deduction of purchases made by the assessee of labels and crown corks, wherein the tax at source had not been deducted.
2. We have heard both the parties and have also perused the material available on record.
3. The facts, in brief, are that the assessee is engaged in manufacturing of Beer and purchased printed labels and crown corks for its manufacturing activities. The AO held that such purchases were of nature of work contract, therefore, 3 the assessee should have deducted tax at source u/s 194C and since the assessee had not done so, he disallowed the entire amount spent by the assessee on the purchases of these items by invoking provisions of Section 40(a)(ia). Aggrieved by this, the assessee preferred an appeal before the ld. CIT(A), wherein it was contended that purchase of these items were not covered within the definition of works contract u/s 194C of the Act. The assessee also submitted that the supplier had charged sales tax and excise duty, which fact also supported the claim of the assessee. The assessee also relied on various judicial decisions as well as relevant circulars issued by the CBDT from time to time, wherein it was mentioned that in respect of agreement of purchase, provisions of Section 194C were not applicable and even the customizes purchases did not cease to be purchases. Aggrieved by this, the Revenue is in appeal before us.
4. The ld. Senior D.R. placed strong reliance on the order of the AO, whereas the ld.counsel for the assessee submitted that the issue was squarely covered by the decision of the Hon'ble Bombay High Court in the case of BDA Limited vs. ITO, as reported in 281 ITR 99 and this decision was also approved by the Hon'ble Supreme Court in the case of CIT vs. Adidas India Marketing, as reported in 322 ITR (St) 9, wherein the SLP filed by the Department had been dismissed.
5. We have considered the submissions made by both the sides, material on record and the orders of the authorities below. \
6. As far as nature of transaction is concerned, it is not in dispute that it is a case of purchases from suppliers as per the requirement of the assessee. Hence, as per the relevant provisions applicable at that time, the provisions of Section 194C are not applicable. This view duly finds support from the decision of the Hon'ble Bombay High Court in the case of BDA Limited (supra) relied on by the assessee the ratio of which has been approved by the Hon'ble Supreme Court also. In these circumstances, we find no merit in both the grounds of the Revenue in both the years. Therefore, the same are dismissed.
7. In the result, both the appeals of the Revenue are dismissed.4
This order has been pronounced in the open court on th 25 June, 2010."
4. Section 194C(7)(iv)(e) of the Act speaks about work which includes manufacturing or supplying a product according to the requirement or specification of the customer by using material purchased from such customers and as per sub-clause (iii) contract includes sub-contract. Substitution was made by Finance (No.2) Act, 2009 with effect from 1.10.2009 and prior to its substitution section 194C as amended by Finance Act, 1972 and various other Acts, the section reads as under :-
"194C. Payments to contractors and sub-contractors (1) - Any person responsible for paying any sum to any resident (hereinafter in this section referred to as "the contractor" for carrying out any work (including supply of labour for carrying out any work) in pursuance to a contract between the contractor and......."
The Tribunal in the aforesaid order has already considered the decision from Hon'ble Bombay High Court in the case of BDA Limited (281 ITR 99) and also the decision from Hon'ble Apex Court in CIT v. Adidas India Marketing; 322 ITR (St.) 9 wherein the SLP of the department was dismissed. In the present appeal also the nature of transaction is not in dispute and the 5 purchases from suppliers were as per the requirement of the assessee. Since the facts and the issue are identical and the ld. CIT(A) has also followed the order of the Tribunal for assessment year 2006-07, therefore, respectfully following the aforesaid order of the Tribunal, we find no infirmity in the impugned order. It is affirmed.
Order was pronounced in the open in the presence of learned representatives from both the sides at the conclusion of the hearing.
Sd sd (R.C.SHARMA) (JOGINDER SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 24.11.2011
Copy to: Appellant, Respondent, CIT, CIT(A), DR, Guard File