Case Law Details
ACIT (OSD) TDS 2(2) Vs Shoppers Stop Limited (ITAT Mumbai)
ITAT Mumbai held that payment made under the Sales or Return agreement are not in nature of ‘works contract’ but ‘purchase of goods’ and hence not liable to deduct tax at source under section 194C of the Income Tax Act.
Facts- The main grievance of the Revenue is directed against the action of the Ld. CIT(A) in holding that, the payments made by the assessee to several vendors in relation to its procurements from them, consisting of apparels/ clothes/ footwear/ goods manufactured by these vendors, were not in the nature of ‘works contract’ but ‘purchase of goods’ and that, therefore, the provisions of Section 194C of the Income-tax Act, 1961 [in short ‘the Act’] invoked by the Assessing Officer [in short ‘AO’] in relation thereto, were not applicable.
Conclusion- We agree with the Ld. CIT(A) that, the mere deputation of sales staff, subsequent to sale of goods, cannot be viewed adversely so as to allege that these SOR arrangements are in the nature of ‘works contract’.
Held that the payments made under the Sales or Return (SOR) agreements did not fall within the ambit of Section 194C of the Act and therefore the assessee did not have any liability to deduct tax at source on such payments u/s 194C of the Act. Accordingly, all the grounds raised by the Revenue stands dismissed.
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