No TDS on contract manufacturing, Bombay HC ruled in the case of Glenmark Pharmaceuticals

Tests laid down to determine when contract manufacturing will amount to a contract of sale for S. 194C TDS. The assessee entered into an agreement with a third party for the manufacture of certain pharmaceutical products under which it provided the formulations and specifications and the manufacturer affixed the trademark of the assessee on the articles produced. The raw materials were purchased by the manufacturer and property in the goods passed to the assessee only on delivery. The agreement was on a principal to principal basis. The AO took the view that the contract was a contract of ‘w...