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(d) The assessee challenged the orders of AO passed under Section 201/201(1A) of the Act for all the three years before the CIT(A). The submission of the assessee was that the contracts entered into by the assessee with M/s GEC India Ltd., were not for services, but were contracts for supply of material and, therefore, were covered by the Sale of Goods Act and the assessee had also paid excise duty and sales-tax on all the bills raised by the supplier. The learned counsel for the assessee also filed a letter dt. 30th June, 2000, before the CIT(A) in which again it was stated that none of the contracts were for supply plant and machinery on turnkey basis. Prior to it, another letter, dt. 21st June, 2000, was filed by the assessee company requesting that necessary inquiries may be made from GEC India Ltd. The learned CIT(A) made inquiry from GEC India Ltd., through Departmental sources and learnt that some dispute was going on between the assessee and M/s GEC India Ltd. before the Hon'ble High Court of Allahabad in which the Managing Director of the company had filed an affidavit dt. 22nd Feb., 1999. The learned CIT(A) after making reference to this affidavit held that in view of the contents of the affidavit, the contract was for completion of project on turnkey basis. He also noted that bills dt. 31st May, 1993, were also raised by the suppliers to the tune of Rs. 70 lakhs and these bills were for various kinds of works for assistance in setting up the project. The learned CIT(A) did not accept the contention of the assessee that the contracts were covered by sales of goods and no services was involved. On the other hand, he held that the company i.e., M/s GEC India had rendered services, which were for setting up the project on turnkey basis and also for parting with the technology and technical information like designs and drawings etc. According to him, therefore, the assessee was bound to deduct tax at source. Thus, he upheld the order of the AO regarding the liability of tax and interest levied by him in all the three assessment years. We consider it proper to reproduce paras 16, 17 & 18 of the order of the learned CIT(A), which are as under :
17. In the body of order I have repeatedly used the expression "setting up of the project on turnkey basis". The turnkey basis, as stated above is supply of things which are ready to use. In other words, M/s GEC India has set up these three projects, carried out the cold run, performed all the functions as mentioned in para 16 above. Another feature is detailed drawings and engineering documents have also to be given to appellant, Therefore, it is clear that M/s GEC India Ltd. has performed one single service i.e., setting up of project on turnkey basis. T'his would certainly include some material also. The entire payment has been made by the appellant is for all the services alongwith machinery, drawing, designs, technical data which have not been split up. Even the layout plan has been designed by M/s GEC India personnel and bills have also been raised by M/s GEC India Ltd. and separate payment of Rs. 70 lacs has been made by the appellant.

7(1) In support of this stand, the Department has assigned following reasons:

(A) That the agreements were basically for setting up of 220 KVA sub-station in the factory premises of the assesses, Thus, the contractor was asked to carry out the entire work on turnkey job basis.
(B) That the assessee had himself stated before the Allahabad High Court in the affidavit of its Chairman that the job was to be done by the GEC India Ltd. on turnkey project basis.
(C) That through second agreement dt. 22nd Sept, 1992, the assessee engaged the contractor for installation of 220/33KV Electric sub-station, for design, fabrication, procurement, supply, supervision of erection, commissioning and approval of design and drawing from UPSEB and these factors show that the contractor was interested with the entire work covering, designing, manufacturing procurement and supply etc. of the equipments.
"Right from civil to all related electrical works etc., the assessee company made its own effort and arrangement and also deputed some experts, consultants and work force to perform the job. Thus, whether M/s GEC Alsthom India Ltd. supervised the civil work, erection and commissioning or not, but atleast they did not do any civil, electrical and mechanical work."

[Clause (c) on p. 2 of the letter dt. 30th June, 2000]

58. In view of the above referred reply also, it is clear that the entire work of installation was not carried out by the company, rather the company provided the equipments, supplied the same and also undertook to install the same at the premises of the assessee, but the civil work, etc. was carried out by the assessee. So, it cannot be said that the work done by GEC India Ltd, was on 'turnkey job basis'. Under these circumstances, in our opinion, the learned CIT(A) was not justified in taking the contract/or setting up of project on turnkey basis. The learned CIT(A) has laid much emphasis on the affidavit of Shri R.K. Somani, Managing Director of the assessee company filed before the Hon'ble High Court in a writ petition and has tried to draw inference from that affidavit that the work was in the nature of turnkey project. The learned senior Departmental Representative has also made reference to that affidavit. In our opinion, it is extraneous material filed in different context and cannot be a valid and relevant criterion for deciding the nature of contract, particularly, in view of the main features or salient features, which have been recorded by us in the body of this order.