CIT, CHANDIGARH V. M/S MILK SPECIALISTS LTD.

ITA/881/2008

AI Insights

The case involves the Commissioner of Income Tax (TDS), Chandigarh as the appellant and M/s Milk Specialties Ltd., Chandigarh as the respondent. The core issue revolves around whether the transaction between the assessee and the contractor for packing material falls under the purview of Section 194C of the Income Tax Act, 1961, which pertains to contracts for work. The Assessing Officer initially treated the transaction as a works contract, leading to a demand of `7,94,540/-, including interest. However, the CIT(A) and the Tribunal reversed this decision, categorizing the transaction as a sale of goods. The High Court found that the CIT(A) and the Tribunal did not adequately refer to material evidence to support their conclusions and thus remitted the matter back to the Assessing Officer for a fresh decision.

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 690060 (HC-CHANDIGARH)
• Appeal Type: Others
• Pronouncement Date: 08-09-2014
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: HIGH COURT
• Department Lawyers: S K MUKHI
• Assessee Lawyers: YOGESH PUTNEY
• Keywords: Income Tax; Packing material; Sale of goods; TDS; Works contract
• Section: 201; 194C; 260A; 201(1A); 201(A)

Judgement Text

"ITA No. 881 of 2008 -1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No. 881 of 2008 (O&M) Date of Decision: 8.9.2014 Commissioner of Income Tax (TDS), Chandigarh ....Appellant. Versus M/s Milk Specialties Ltd., Chandigarh ...Respondent. CORAM:- HON'BLE MR. JUSTICE AJAY KUMAR MITTAL. HON'BLE MR. JUSTICE FATEH DEEP SINGH. PRESENT: Mr. Yogesh Putney, Advocate for the appellant. Mr. S.K. Mukhi, Advocate for the respondent. AJAY KUMAR MITTAL, J. 1. This order shall dispose of two appeals bearing ITA Nos. 881 and 773 of 2008 as according to the learned counsel for the parties, the issue involved therein is identical. For brevity, the facts are being taken from ITA No. 881 of 2008. 2. ITA No. 881 of 2008 has been filed by the revenue under Section 260A of the Income Tax Act, 1961 (in short “the Act”) against the order dated 21.5.2008 (Annexure A-3) passed by the Income Tax Appellate Tribunal, Chandigarh Bench “B”, Chandigarh, in ITA No. 131/Chandi/2008, for the assessment year 2005-06 (Financial Year 2004-05). The appeal was admitted by this Court vide order dated 14.7.2009 for determination of the substantial question of law formulated in the order dated 19.2.2009. 3. A few facts necessary for adjudication of the instant appeal GURBACHAN SINGH 2014.10.17 14:50 I attest to the accuracy and authenticity of this document High Court Chandigarh ITA No. 881 of 2008 -2- as narrated therein may be noticed. On 4.1.2007, inspection was carried out at the premises of the assessee and certain discrepancies were noticed. The Assessing Officer vide order dated 12.4.2007 (Annexure A- 1) passed under Sections 201 and 201(A) read with Section 194C of the Act created a demand of ` 7,94,540/- which included interest under Section 201(1A) of the Act amounting to ` 2,14,573/-. Feeling aggrieved, the assessee filed an appeal before the Commissioner of Income Tax (Appeals) [for brevity “the CIT(A)”]. The CIT(A) vide order dated 28.12.2007 (Annexure A-2) allowed the appeal of the assessee holding that the purchase of packing material was in the nature of sale of goods and not a contract for work. The revenue being dissatisfied with the order dated 28.12.2007 (Annexure A-2) filed an appeal before the Tribunal. The Tribunal vide order dated 21.5.2008 (Annexure A-3) dismissed the appeal of the revenue. Hence, the present appeals. 4. Learned counsel for the revenue submitted that the CIT(A) and the Tribunal had allowed the appeal by holding that the contractor had supplied the packing material to the assessee and, therefore, the provisions of Section 194C of the Act were not attracted. According to the learned counsel, the assessee was supplying the packing material according to its specifications to the contractor who after carrying out printing work thereon was returning them to the assessee and, therefore, it was works contract and the case of the assessee falls under Section 194C of the Act. 5. It was also urged by the learned counsel for the revenue that the assessee had not appeared before the Assessing Officer and produced any material on the basis of which the CIT(A) as well as the Tribunal could record that it was a case of contract for sale and not a GURBACHAN SINGH 2014.10.17 14:50 I attest to the accuracy and authenticity of this document High Court Chandigarh ITA No. 881 of 2008 -3- works contract. In fact, the Tribunal on the basis of findings recorded in another case which was cited before it had accepted the claim of the assessee without referring to any material to record a finding in favour of the assessee which could not have been done. 6. On the other hand, learned counsel for the assessee supported the order passed by the Tribunal. 7. After hearing learned counsel for the parties, we find that the CIT(A) as well as the Tribunal have not referred to any material on the basis of which it could be concluded that the contractor was carrying out contract for sale and it was not works contract. In such circumstances, in the absence of any clear finding based on material before the CIT(A) and the Tribunal, it would be appropriate if the matter is remitted to the Assessing Officer who shall in the present case examine the factual aspect and decide the same afresh in accordance with law. 8. Accordingly, the appeals are allowed and the orders dated 28.12.2007 (Annexure A-2) and dated 21.5.2008 (Annexure A-3) passed by the CIT(A) and the Tribunal respectively are set aside. The matter is remitted to the Assessing Officer to decide the same afresh in accordance with law after affording an opportunity of hearing to the assessee. The substantial question of law is answered accordingly. (AJAY KUMAR MITTAL) JUDGE September 8, 2014 (FATEH DEEP SINGH) gbs JUDGE GURBACHAN SINGH 2014.10.17 14:50 I attest to the accuracy and authenticity of this document High Court Chandigarh ITA No. 881 of 2008 -4- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No. 773 of 2008 (O&M) Date of Decision: 8.9.2014 Commissioner of Income Tax (TDS), Chandigarh ....Appellant. Versus M/s Milk Specialties Ltd., Chandigarh ...Respondent. CORAM:- HON'BLE MR. JUSTICE AJAY KUMAR MITTAL. HON'BLE MR. JUSTICE FATEH DEEP SINGH. PRESENT: Mr. Yogesh Putney, Advocate for the appellant. Mr. S.K. Mukhi, Advocate for the respondent. AJAY KUMAR MITTAL, J. For orders, see ITA No. 881 of 2008 [Commissioner of Income Tax (TDS), Chandigarh v. M/s Milk Specialties Ltd., Chandigarh]. (AJAY KUMAR MITTAL) JUDGE September 8, 2014 (FATEH DEEP SINGH) gbs JUDGE GURBACHAN SINGH 2014.10.17 14:50 I attest to the accuracy and authenticity of this document High Court Chandigarh "