M/s Abhilash Garments & Estates P Ltd, Bangalore V. Assistant Commissioner of income Tax, Bangalore

ITA 1255/BANG/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 90049 (ITAT-BANGALORE)
• Duration Of Justice: 9 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-07-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 30-06-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 10-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR K SHANKAR PRA SAD
• Assessee Lawyers: R PRATIBHA
• Keywords: Question of law
• Section: 133A; 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRI BUNAL BANGALORE BENCH C, BANGALORE BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI JASON P BOAZ, ACCOUNTANT MEMBER ITA NOS.1255 TO 1257(B)/2014 (ASSESSMENT YEARS : 2006-07, 2007-08 & 2008-09) M/S ABHILASH GARMENTS & ESTATES PVT.LTD, NO.10, 3 RD FLOOR, 80 FT ROAD, RMV II STAGE, BANGALORE-560 094 PAN NO. AABCA 7087M/BLRA0197 APPELLANT VS THE ASST. COMMISSIONER OF INCOME-TAX CIRCLE-16(1), BANGALORE. RESPONDENT ASSESSEE BY : SMT R. PRATIBHA, ADVOCATE REVENUE BY : DR. K. SHANKAR PRASAD, JCIT DATE OF HEARING : 30-06-2015 DATE OF PRONOUNCEMENT : 17-07-2015 O R D E R PER BENCH: THESE APPEALS BY THE ASSESSEE ARE DIRECTED AGAINST THE COMPOSITE ORDER OF THE CIT(A) DATED 28-03-2014 ARISING FROM T HE ORDERS PASSED U/S 201 & 201(1A) OF THE IT ACT, 1961. 2. THE ASSESSEE HAS RAISED COMMON GROUNDS IN THESE APPEALS. THE GROUND FOR THE AY: 2006-07 ARE AS UNDER; ITA NOS.1255 TO 1257(B)/14 2 1.ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) ERRED IN UPHOLDING THE ORDER PASSED BY THE AO UNDER SECTION 201 & 201(1A) OF THE ACT FOR THE RELEVANT ASSESSMEN T YEAR. 2. THE LD.CIT(A) ERRED IN HOLDING THAT THE PROVISIO NS OF SECTION 194C OF THE ACT IS APPLICABLE TO THE ENTIRE CONTRACT VALUE BY TREATING THE SAME AS COMPOSITE CONTRACT. 3. THE LD.CIT(A) OUGHT TO HAVE APPRECIATED THE CLAI M OF THE APPELLANT ALONG WITH DOCUMENTS ENCLOSED THAT CONTRA CT ENTERED BY THE APPELLANT WITH M/S ENERCON WAS A DIV ISIBLE CONTRACT AND NOT COMPOSITE OR INDIVISIBLE CONTRACT. 4. ON THE FACTS, THELD.CIT(A) OUGHT TO HAVE ACCEPTE D THE EXPLANATION OF THE APPELLANT AND OUGHT NOT TO HAVE CONFIRMED THE LEVY AS MADE BY THE AO U/S201 & 201(1A) OF THE ACT. 5. THE LD.CIT(A) OUGHT TO HAVE APPRECIATED THAT CAS E LAW RELIED BY THE DEPARTMENT ARE DISTINGUISHABLE AND NO T APPLICABLE TO THE APPELLANTS CASE. 6. WITHOUT PREJUDICE, THE ADDITIONS SUSTAINED BY TH E CIT(A) ARE ARBITRARY, EXCESSIVE, UNREASONABLE AND OUGHT TO BE DELETED IN TOTO. 7. FOR THESE AND OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING OF THE APPEAL, THE APPELLANT PRAYS THAT THE APPEAL MAY BE ALLOWED. 3. THE ASSESSEE IS A PRIVATE LTD. COMPANY DERIVIN G INCOME FROM LEASE AND POWER GENERATION CHARGES. THE ASSESSEE F ILED AN APPLICATION ITA NOS.1255 TO 1257(B)/14 3 SEEKING CERTIFICATE OF EXEMPTION FROM DEDUCTING TAX AT SOURCE IN RESPECT OF THE RENT PAID TO M/S NEW GENERATION APPARELS, BANGA LORE. A SURVEY U/S 133A OF THE ACT WAS CONDUCTED IN THE BUSINESS PREMI SES OF THE ASSESSEE ON 05-06-2008 WHICH REVEALED THAT ASSESSEE HAS MADE PAYMENTS TO M/S ENERCON (IND.)LTD AMOUNTING TO RS.3,83,00,000/- WIT HOUT DEDUCTING TAX AT SOURCE. THE SAID PAYMENT WAS MADE DURING THE TH REE ASSESSMENT YEARS FROM 206-07 TO 2008-09. CONSEQUENTLY, THE A O PASSED A COMMON ORDER U/S 201 & 201(1A) OF THE ACT ON 30-01-2009 HO LDING THAT THE PAYMENTS MADE BY THE ASSESSEE TO MS/S ENERCON (IND. ) LTD WERE LIABLE TO TAX DEDUCTED AT SOURCE AND ACCORDINGLY, THE AO QUAN TIFY THE AMOUNT OF TDS AND THE INTEREST U/S 201 & 201(1A) OF THE ACT A S UNDER; AY PAYMENTS MADE(RS) 201(1)RS. 201(1A) RS TOTAL (RS.) 2006-07 2,40,50,000 5,39,682 1,99,682 7,39,364 2007-08 95,00,000 2,13,180 55,090 2,68,270 2008-09 47,50,000 1,07,635 18,298 1,25,933 TOTAL 3,03,00,000 8,60,497 2,73,070 11,33,567 4. AGGRIEVED BY THE ACTION OF THE AO THE ASSESSEE F ILED APPEAL BEFORE THE CIT(A) AND CONTENDED THAT THE PAYMENT IN QUEST ION MADE TO M/S ENERCON (IND.) LTD., COMPRISES THREE COMPONENTS NAM ELY., PAYMENT FOR SUPPLY OF EQUIPMENTS AND MACHINERY, PAYMENT FOR SUP PLY OF INDUSTRIAL CONSTRUCTION WORK AND PAYMENT FOR COMMISSIONING OF ENERCON (IND.) LTD., ITA NOS.1255 TO 1257(B)/14 4 (SUPRA). THE ASSESSEE ALSO POINTED OUT THAT AS FA R AS THE PAYMENTS FOR CONSTRUCTION WORK AS WELL AS COMMISSIONING THE ASSE SSEE DEDUCTED TDS AND PAID TO THE DEPARTMENT. AS FAR AS THE PAYMENT FOR SUPPLY OF WINDMILL EQUIPMENT THE ASSESSEE CONTENDED THAT THIS PAYMENT DOES NOT FALL UNDER THE PROVISIONS OF SEC.194C AND THEREFORE, THERE WAS NO QUESTION OF DEDUCTING TDS ON SAID PAYMENT. THE CIT(A) DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE AND HELD THAT THE CONTRA CT UNDER WHICH THE PAYMENTS ARE MADE IS AN INDIVISIBLE AND COMPOSITE C ONTRACT. THEREFORE, THE ASSESSEE PAID THE REMUNERATION FOR COMPREHENSIV E COMPOSITE DEAL OF SETTING UP OF WINDMILL. THUS, THE CIT(A) HELD THA T THE ENTIRE VALUE OF CONTRACT IS LIABLE FOR TDS AT THE RATE OF 2%. 5. BEFORE US THE LEARNED AR OF THE ASSESSEE SUBMITT ED THAT THOUGH, THERE WAS ONLY ONE CONTRACT BETWEEN THE PARTIES HOW EVER, THE PAYMENT MADE TO M/S ENERCON(SUPRA) ARE SEPARATELY SHOWN TO WARDS THE SUPPLY OF WINDMILL EQUIPMENT AND ACCESSORIES CONSTRUCTION, SUPPLY OF INDUSTRIAL/CONSTRUCTION WORK AS WELL AS COMMISSIONI NG. HE HAS REFERRED TO THE INVOICES ISSUED BY M/S ENERCON AND SUBMITTED THAT THE INVOICES CATEGORICALLY GIVEN THE SEPARATE DETAILS OF PAYMENT REGARDING SUPPLY OF WINDMILL TURBINES AND OTHER ACCESSORIES. EVEN SEPA RATE INVOICES WERE ISSUED IN RESPECT OF SEPARATE WORK AND SUPPLY OF EQ UIPMENTS. THEREFORE, THE PAYMENTS TOWARDS THE SUPPLY OF EQUIPMENT DOES N OT FALL UNDER THE AMBIT OF SEC.194C. IN SUPPORT OF HER CONTENTION, SHE HAS RELIED UPON THE ITA NOS.1255 TO 1257(B)/14 5 DECISION OF THE HONBLE GUJARAT HIGH COURT IN CASE OF CIT VS HINDUSTAN LEVER LTD., AND SUBMITTED THAT THE HONBLE HIGH COU RT HELD THAT THE TRANSACTIONS INCLUDING SALE AND SUPPLY OF GOODS WOU LD NOT AMOUNT TO WORK CONTRACT AND THEREFORE, THE ASSESSEE WAS NOT L IABLE TO DEDUCT TAX AT SOURCE U/S 194C. FURTHER, WHEN THE WORK CONTRACT I S FOR SUPPLY OF MATERIAL, IT CANNOT BE A CONTRACT FOR WORK AND LABO UR. THE LEARNED AR, THAN RELIED UPON THE DECISION OF THE HONBLE DELHI HIGH COURT IN CASE OF CIT VS REEBOK INDIA CO.306 ITR 124 AND SUBMITTED TH AT A SIMILAR VIEW HAS BEEN TAKEN BY THE HONBLE DELHI HIGH COURT IN T HE CASE BY UPHOLDING THE FINDING OF THE TRIBUNAL THAT TRANSACTION BETWEE N THE ASSESSEE THE MANUFACTURER WAS THAT OF PURCHASE AND SALE OF GOODS AND NOT OF WORK CONTRACT U/S 1494C OF THE SAID ACT. THE LEARNED AR HAS ALSO RELIED UPON THE DECISION OF THE CO-ORDINATE BENCH OF THIS TRIBU NAL DATED 23-03-2011 IN CASE OF M/S KARNATAKA POWER TRANSMISSION CORPN.LTD (KPTCL) VS ITO I ITA NOS.101,103,105,107 & 109(B)/2010 WHEREIN THE T RIBUNAL HAS CONSIDERED THE FACT THAT THE BREAK-UPS OF SEPARATE AGREEMENT REFLECTING SEPARATE CONSIDERATION GIVEN IN THE TENDER DOCUMENT AND THEREFORE, THE ASSESSEE WAS UNDER NO OBLIGATION TO DEDUCT TAX AT S OURCE U/S 194C TOWARDS THE PAYMENT MADE FOR SUPPLY PORTION AND CON SEQUENTLY, THERE WAS NO QUESTION OF ASSESSEE BE HELD LIABLE TO DEDUC T TAX U/S 201 AND CHARGING INTEREST U/S 201(1A) OF THE ACT. ITA NOS.1255 TO 1257(B)/14 6 6. THE LEARNED AR THEN RELIED UPON THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN CASE OF CIT VS KPTCL 2 08 TAXMANN 73 WHEREIN THE FINDING OF THIS TRIBUNAL HAS BEEN UPHEL D BY THE HONBLE HIGH COURT. THUS, THE LEARNED AR HAS SUBMITTED THAT THE PAYMENT MADE TOWARDS SUPPLY OF EQUIPMENTS DOES NOT FALL UNDER TH E SCOPE OF SEC.194C OF THE ACT. 7. ON THE OTHER HAND, LEARNED DR HAS SUBMITTED THAT IT IS A COMPOSITE CONTRACT AND THEREFORE, THE ENTIRE WORK C ARRIED OUT BY M/S ENERCON INDIA LTD IS A WORK CONTRACT AND CONSEQUENT LY, THE PROVISIONS OF SEC.194C ARE APPLICABLE ON THE PAYMENT MADE BY THE ASSESSEE UNDER THE CONTRACT. IN SUPPORT OF HIS CONTENTION, HE HAS RE LIED UPON THE DECISION OF THE HONBLE SUPREME COURT IN CASE OF SENTINEL ROLLI NG SHUTTERS AND OTHERS VS COMMISSIONER SALES TAX, AIR 1978 SC 1747. 8. THE LEARNED DR SUBMITTED THAT IN THE SAID CASE, THE ASSESSEE GOT THE WORK OF ROLLING SHUTTERS ERECTION AND INSTALLAT ION AND THEREFORE, THE ASSESSEE WAS NOT LIABLE TO PAY SALES TAX. THUS, TH E LEARNED DR HAS SUBMITTED THAT THE IN THE SAID CASE THE HONBLE SUP REME COURT HAS HELD THAT THE CONTRACT WAS A CONTRACT OF WORK AND LABOUR AND NOT A CONTRACT FOR SALE. IN THE CASE IN HAND, THE ENTIRE WORK WAS CAR RIED OUT BY M/S ENERCON ITA NOS.1255 TO 1257(B)/14 7 INDIA LTD UNDER THE CONTRACT WHICH IS WORK AND LABO UR AND NOT CONTRACT OF SALE. HE HAS RELIED UPON THE ORDERS OF THE AUTHORI TIES BELOW. 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND MAT ERIAL ON RECORD. THE ASSESSEE HAS ENTERED INTO AN AGREEMEN T WITH M/S ENERCON INDIA LTD FOR SUPPLY ERECTION AND COMMISSIONING OF WINDMILL FOR A TOTAL CONSIDERATION OF RS. 3.83 CRORES. THIS PAYMENT WA S SPREAD OVER FOR THREE ASSESSMENT YEARS 2006-07 TO 2008-09. THE AO HAS RE PRODUCED THE DETAILS OF THE PAYMENT INPARA-3 OF ITS ORDER; 10.1.2006 TO VYSYA BANK 0376 C NO.259127 BEING ADV.PAID TO PURCHASE OF WINDMILL FROM ENERCON IND.LTD. 1,15,50,000 30.1.2006 TO VYSYA BANK 0376 C NO.259436 BEING ADV.PAID TOWARDS PURCHASE FOR WINDMILL FROM ENERCON 1,25,00,000 21.11.2006 TO VYSYA BANK 0083 C NO.8586601 ISSUED TO ENERCON 50,00,000 03.01.2007 TO VYSYA BANK LTD -0083 C NO.858603 ISSUED TO ENERCON 25,00,000 26.02.2007 TO VYSYA BANK LTD -0083 C NO.858604 ISSUED TO ENERCON 20,00,000 ITA NOS.1255 TO 1257(B)/14 8 22.09.2007 TO VYSYA BANK 376 C NO.607421 ISSUED TO ABOVE PARTY TOWARDS SUPPLY OF WINDMILL BALANCE PAID 47,50,0 00 TOTAL PAYMENT. 3,83,00,000 THE TOTAL PAYMENT OF RS.3,83.00 CRORES THE BREAK-U P IN THREE MAJOR PART WHICH ARE GIVEN BY THE AO IN PARA-6 AS UNDER; A. SUPPLY OF WINDMILL EQUIPMENT WITH ITS ACCESSORIE S RS.3370000/- B. CIVIL & INDUSTRIAL CONSTRUCTION WORK RS. 26000 00/- C. COMMISSION OF ENERCON MAKE WIND TURBINE RS. 20 00000/- TOTAL RS.38300000 AS IT IS CLEAR FROM THE DETAILS REPRODUCED BY THE A O THAT SEPARATE PAYMENTS WERE MADE BY THE ASSESSEE FOR PURCHASE OF WINDMILL FOR CIVIL AND INDUSTRIAL CONSTRUCTION WORK AND FOR COMMISSIONING OF WINDMILL. WE FURTHER NOTE THAT THE ASSESSEE PRODUCED THE INVOICE S RAISED BY M/S ENERCON. THE BILLS WERE RAISED SEPARATELY FOR SUPP LY OF WING TURBINE CONVERTER AND OTHER ACCESSORIES AND COMPONENTS. TH EREFORE, THERE IS A CLEAR SEGREGATION OF THE PAYMENT AS WELL AS THE CON SIDERATION IN RESPECT OF THE SUPPLY OF WINDMILL AND OTHER COMPONENTS, CIVIL AND INDUSTRIAL CONSTRUCTION WORK AS WELL AS THE COMMISSIONING CHAR GES. THOUGH, ALL THESE WORK AND SUPPLY OF WINDMILL ARE COVERED UNDE R THE SINGLE CONTRACT, HOWEVER, EACH AND EVERY ITEM OF WORK AS WELL AS SUP PLY HAS BEEN SEPARATELY VALUED AND PRICED. WE FURTHER NOTE THAT THE PREDOMINANT PART ITA NOS.1255 TO 1257(B)/14 9 OF THE CONTRACT IS SUPPLY OF WINDMILL EQUIPMENT AND OTHER ACCESSORIES AMOUNTING TO RS.3.37 CRORES, OUT OF THE TOTAL CONTR ACT PRICE OF RS.3.83 CRORES. SINCE THE ASSESSEE HAS ALREADY DEDUCTED T HE TAX AND PAID THE SAME TO THE GOVERNMENT IN RESPECT OF THE REMAINING AMOUNT OF RS.46.00 CRORES TOWARDS CIVIL AND INDUSTRIAL CONSTRUCTION WO RK AS WELL AS COMMISSIONING CHARGES THEREFORE, THE ONLY DISPUTE B EFORE US IS REGARDING THE PAYMENT TOWARDS THE SUPPLY OF WINDMILL EQUIPMEN T WITH ITS ACCESSORIES OF RS.3.37 CRORES. IT IS MANIFEST FRO M THE PURCHASE ORDER FOR WIND ENERGY CONVERTERS AND OTHER EQUIPMENT AS WELL AS THE PURCHASE ORDER FOR CIVIL AND ELECTRICAL WORK THAT THE ASSESS EE PLACED SEPARATE ORDERS FOR PURCHASE OF THE EQUIPMENT INCLUDING THE WIND TU RBINE CONVERTERS AND OTHER ACCESSORIES FOR SEPARATE CONSIDERATION WHEREA S FOR CIVIL AND ELECTRICAL WORK FOR ERECTION OF THE WINDMILL ORDERS WERE ALSO PLACED SEPARATELY. THE INVOICES RAISED BY THE ENERCON ALSO CLEARLY EXHIBIT THE SEPARATE CONSIDERATION FOR THE PURCHASE OF WIND TUR BINE CONVERTERS AND OTHER ACCESSORIES. RATHER SEPARATE INVOICES WERE I SSUED FOR SUPPLY OF WIND MILL DEVICE AND CIVIL AND INDUSTRIAL CONSTRUCTION. FURTHER, IT IS CLEAR FROM THE UNDISPUTED DETAILS OF THE PAYMENTS THAT PREDOMI NANT PART OF THE AGREEMENT IS SUPPLY OF WINDMILL EQUIPMENTS AND ONLY A SMALL PART OF PAYMENT IS IN RESPECT OF CIVIL AND INDUSTRIAL CONST RUCTION WORK AND COMMISSIONING WORK. THEREFORE, THE CONTRACT IN QUE STION WAS MORE OF SUPPLY OF WINDMILL EQUIPMENT AND TURBINE CONVERTER THAN THE WORK OF CIVIL AND INDUSTRIAL CONSTRUCTION AS WELL AS COMMISSIONIN G. IN THE CASE OF CIT ITA NOS.1255 TO 1257(B)/14 10 VS KPTCL (SUPRA) THE HONBLE JURISDICTIONAL HIGH CO URT CONSIERED THE QUESTION OF LAW WHICH IS FRAMED UNDER PARA-7 AS UND ER; I) WHETHER THE TRIBUNAL WAS RIGHT IN SPLITTING UP THE CONTRACT WHICH, ACCORDING TO THE REVENUE WAS ONE AL B OF THE COMPOSITE CONTRACT INTO PARTS SUCH AS PART OF T HE CONTRACT ATTRIBUTABLE TO THE VALUE OF THE MATERIALS INVOLVED N THE EXECUTION OF THE WORK AND OTHER PART OF THE CON TRACT SUCH AS CIVIL WORKS AND TAKING THE VIEW THAT TAX WAS REQ UIRED TO BE DEDUCTED AT SOURCE ONLY IN RESPECT OF THE WORK PART OF THE CONTRACT AND NOT MATERIAL PART OF THE CONTRACT? II) WHETHER THE TRIBUNAL WAS JUSTIFIED IN CONCLUDI NG THAT INTEREST UNDER SECTION 201(1A) OF THE IT ACT, IS NO T LEVIABLE, AS THE ASSESSEE WAS NOT LIABLE TO MAKE ANY DEDUCTIO NS IN RESPECT OF THE VALUE OF THE MATERIAL PART OF THE CO NTRACT, THOUGH THE CONTRACT WAS ONE OF WHOLE CONTRACT? WHILE DECIDING THE QUESTION OF LAW THE HONBLE HIG H COURT HAS HELD IN PARA-13 TO 16 AS UNDER; 13. IT IS NOT IN DISPUTE THAT IN RESPECT OF AGREE MENT FOR SUPPLY, WHICH IS A DISTINCT CONTRACT, NO TDS IS DED UCTIBLE UNDER SECTION 194C AS IT IS NOT A CONTRACT FOR CARR YING OUT ANY WORK. CARRYING OUT ANY WORK IS A SIN QUA NON T O ATTRACT SECTION 194C. A CONTRACT UNDER WHICH A CONTRACTOR AGREES TO SUPPLY MATERIAL WHICH MAY BE USED BY HIM LATER IN C ARRYING OUT HE WORK WILL NOT RENDER THE AGREEMENT TO SUPPLY A ITA NOS.1255 TO 1257(B)/14 11 CONTRACT FOR CARRYING OUT ANY WORK. IN FACT, THE AM ENDMENTS IN 2009 EXPLAINS HIS POSITION. WHEN THEY AMENDED THE DEFINITION OF WORK AS CONTAINED IN EXPLANATION TO CLAUSE-4 SUB-CLAUSE(E). IN FACT, THE OBJECT AND REASONS FOR SUBSTITUTING SECTION 194C OF THE ACT MAKES IT CLEAR THAT THE AME NDMENT WAS INTRODUCED TO BRING CLARITY ON THE ISSUE WHICH READS AS UNDER; CLARIFICATION REGARDING WORK UNDER SECTION 194C. THERE IS ONGOING LITIGATION AS TO WHETHER TDS IS DEDUCTIBLE UNDER SECTION 194C ON OUTSOURCING CONTRA CTS AND WHETHER OUTSOURCING CONSTITUTES WORK OR NOT. TO BR ING CLARITY ON THIS ISSUE, IT IS PROPOSED TO PROVE THAT WORK SHALL NOT INCLUDE MANUFACTURING OR SUPPLYING A PRODUCT ACCORD ING TO THE REQUIREMENT OR SPECIFICATION OF A CUSTOMER BY U SING RAW MATERIAL PURCHASED FROM A PERSON OTHER THAN SUCH CU STOMER AS SUCH A CONTRACT IS A CONTRACT FOR SALE. THIS WILL HOWEVER, NOT APPLY TO A CONTRACT WHICH DIES NOT ENTAIL MANUF ACTURE OR SUPPLY OF AN ARTICLE OR THING (E.G. A CONSTRUCTION CONTRACT) IT IS ALSO PROPOSED TO INCLUDE MANUFACTURING OR SUPPLYING A PRODUCT ACCORDING TO THE REQUIREMENT OR SPECIFICATI ON OF A CUSTOMER BY USING MATERIAL PURCHASED FROM SUCH CUST OMER WITHIN THE DEFINITION OF WORK. IT IS FURTHER PROPO SED TO PROVIDE THAT IN SUCH A CASE TDS HALL BE DEDUCTED ON THE INVOICE VALUE EXCLUDING THE VALUE OF MATERIAL PURCH ASED FROM SUCH CUSTOMER IF SUCH VALUE IS MENTIONED SEPARATELY IN THE INVOICE. WHERE THE MATERIAL COMPONENT HAS NOT BEEN SEPARATELY MENTION IN THE INVOICE, TDS SHALL BE DED UCTED ON THE WHOLE OF THE INVOICE VALUE. ITA NOS.1255 TO 1257(B)/14 12 14. WHEN THE STATUTE WAS AMENDED TO CLARIFY THE WO RD WORK UNDER SECTION 194C BY INTRODUCING THE AFORES AID CLAUSE, IT IS OBVIOUS THT THE AMENDMENT IS ONLY CLA RIFICATORY IN NATURE AND THEREFORE IT IS RETROSPECTIVE. THE PARLIAMENT DID NOT INTEND TO CHANGE THE LAW BECUSA OF CONCLUSI ON WHICH RESULTED IN LITIGATION. THE PARLIAMENT THOUGH IT FIT TO CLARIFY BY WAY OF AMENDMENT SO THAT THE LITIGATION COULD BE AVOIDED. IN VIEW OF THE AFORESAID CLARIFICATION AN D THE STATUTORY PROVISION, IT IS CLEAR THAT WORK DID NO T INCLUDE MANUFACTURING OR SUPPLYING A PRODUCT ACCORDING TO T HE REQUIREMENT UPON SPECIFICATION OF A CUSTOMER BY USI NG RAW MATERIALS PURCHASED FROM A PERSON OTHER THAN SUCH CUSTOMER, AS SUCH CONTRACT IS A CONTRACT FOR SALE. FURTHER, IT IS ALSO CLARIFIED TDS SHALL BE DEDUCTED ON THE INVO ICE VALUE EXCLUDING THE VALUE OF MATERIAL PURCHASE FROM SUCH CUSTOMER, IF SUCH VALUE IS MENTIONED SEPARATELY IN THE INVOICE. IT IS ONLY IN CASES WHERE THE MATERIAL CO MPONENT HAS NOT BEEN SEPARATELY MENTIONED IN THE INVOICE. TDS SHALL BE DEDUCTED ON THE WHOLE OF THE INVOICE VALUE. TH EREFORE, WHATEVER AMBIGUITY WHICH PREVAILED EARLIER IS CLARI FIED. WHEN IN A COMPOSITE CONTRACT, IF AN INVOICE IS RAIS ED, SEPARATELY MENTIONING THE VALUE OF THE MATERIAL SUP PLIED, NO DEDUCTION IS PERMISSIBLE UNDER SECTION 194C. IN A CASE WHERE THREE SEPARATE AGREEMENTS ENTERED INTO AND ON E SUCH AGREEMENT IS AGREEMENT FOR SUPPLY OF MATERIAL AND B ECAUSE THE SAID AGREEMENT IS A PART OF A COMPOSITE TRANSAC TION. SECTION 194C CANNOT BE PRESSED INTO SERVICE TO DEDU CT TAX AT SOURCE. THE WHOLE OBJECT OF INTRODUCING THE SECTIO N IS THAT IT SHOULD DEDUCT TAX IN RESPECT OF PAYMENTS MADE FOR A WORKS CONTRACT. NO DEDUCTION IS PERMISSIBLE IN RESPECT O F CONTRACT ITA NOS.1255 TO 1257(B)/14 13 FOR SUPPLY OF MATERIAL FOR CARRYING OUT WORK. IN FA CT, THE TRIBUNAL BY A DETAILED CONSIDERATION OF THE STATUTO RY PROVISIONS, THE VARIOUS TERMS OF THE CONTRACT, THE LEGAL POSITION AS EXPLAINED IN THE VARIOUS JUDGMENTS HAS RIGHTLY COME TO THE CONCLUSION THAT, THE TRANSACTION IN QUE STION IS NOT A CASE OF COMPOSITE CONTRACT. IT IS A CASE OF TH E DISTINCT CONTRACTS AND THE CONTRACTS FOR SUPPLY OF MATERIALS IS A SEPARATE DISTINCT CONTRACT IN RESPECT OF WHICH NO D EDUCTION IS PERMISSIBLE UNDER SECTION 194C OF THE ACT. 15. IN THAT VIEW OF THE MATTER, WE DO NOT SEE ANY MERIT IN THIS APPEAL. THE SUBSTANTIAL QUESTION OF LAW FR AMED IS ANSWERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. 16. WHEN ONCE IT IS HELD THAT THE AUTHORITIES WERE NOT JUSTIFIED IN LEVYING TAX BY TREATING THE ASSESSEE I N DEFAULT AND WHEN THAT FINDING IS T ASIDE, THE LEVY OF INTER EST IS CONSEQUENTIAL AND ACCORDINGLY, THE LEVY OF INTEREST IS ALSO SET ASIDE. THE SECOND SUBSTANTIAL QUESTION OF LAW CONS EQUENTLY, IS TO BE ANSWERED IN FAVOUR OF THE ASSESSEE AND AGA INST THE REVENUE. IN THAT VIEW OF THE MATTER, WE DO NOT SE E ANY MERIT IN THESE APPEALS AND ACCORDINGLY, IT IS DISMISSED. NO COSTS. EVEN IN THE CLARIFICATION AS PER THE DEFINITION OF WORK AS CONTAINED IN THE EXPLANATION TO CLAUSE-4(E) TO SEC.194C THE V ALUE OF THE MATERIAL PURCHASED FROM SUCH CUSTOMER IS REQUIRED TO BE EXCL UDED IF SUCH VALUE MENTIONED SEPARATELY IN THE INVOICE. IN THE CASE I N HAND, THERE IS NO AMBIGUITY ABOUT THE FACT THAT A SEPARATE CONSIDERAT ION AND VALUE OF THE ITA NOS.1255 TO 1257(B)/14 14 SUPPLY OF GOODS/WINDMILL TURBINE CONVERTER AND OTHE R EQUIPMENTS IS SEPARATELY GIVEN. THEREFORE, IN THE FACTS AND CIR CUMSTANCES OF THE CASE, WHERE THE VALUE/CONSIDERATION OF SUPPLY OF WINDMILL TURBINE CONVERTERS AND OTHER EQUIPMENT IS SEPARATELY GIVEN IN THE INVO ICES AND RATHER SEPARATE INVOICES ARE PLACED BY THE SUPPLIER, THEN THE ASSESSEE IS NOT LIABLE TO DEDUCT ANY TAX AT SOURCE AS PER THE PROVI SIONS OF SEC.194C SO FAR THE PAYMENT IS MADE FOR SUPPLY OF THE WINDMILL TURB INE AND OTHER EQUIPMENTS. ACCORDINGLY, WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND DECIDE THE ISSUE IN FAVOUR OF THE ASSESSEE. 10. IN THE RESULT, THE APPEALS OF THE ASSESSEE ARE ALLOWED. PRONOUNCED IN THE OPEN COURT ON THE 17 TH JULY, 2015. SD/- SD/- (JASON P BOAZ) (VIJA Y PAL RAO) ACCOUNTANT MEMBER JUDICIAL MEMBER D A T E D : 17-07-2015 PLACE: BANGALORE AM* COPY TO : 1 APPELLANT 2 RESPONDENT 3 CIT(A) BANGALORE 4 CIT 5 DR, ITAT, BANGALORE. 6 GUARD FILE BY ORDER AR, ITAT, BANGALORE