ITO (TDS), Gurgaon v. M/s Bata India Pvt. Ltd.,, Gurgaon

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A : NEW DELHI BEFORE SHRI R.P.TOLANI JM AND SHRI K.G.BANSAL AM ITA NOS.4887/DEL/2009 TO 4889/DEL/2009 ASSESSMENT YEARS : 2006-07 TO 2008-09 INCOME TAX OFFICER (TDS) GURGAON. VS. M/S BATA INDIA PVT.LTD. 418/2 BATA HOUSE SECTOR-17 GURGAON. PAN NO.AABCB1043Q. (APPELLANT) (RESPONDENT) APPELLANT BY : MS.ANUSHA KHURANA SR.DR. RESPONDENT BY : SHRI S.JHAJHARIA CA AND SHRI MAHIRANJAN SAHU SR.MANAGER TAXATION. ORDER PER R.P.TOLANI JM : THESE ARE THREE APPEALS FILED BY THE REVENUE AGAINS T THE CONSOLIDATED ORDER OF THE CIT(A) PANCHKULA DATED 9 .10.2009 FOR THE ASSESSMENT YEARS 2006-07 TO 2008-09. SINCE THE ISS UES INVOLVED IN THESE APPEALS ARE COMMON THESE APPEALS WERE HEARD TOGETH ER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CO NVENIENCE. 2. THE IDENTICAL GROUNDS OF APPEAL RAISED ARE AS UN DER:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD.COMMISSIONER OF INCOME TAX (A) VIDE HIS ORDE R DATED 09.10.2009 IN APPEAL NO.18-20/GGN/09-10 HAS ERRED IN ALLOWING THE APPEAL OF THE ASSESSEE BY REL YING UPON THE DECISIONS OF THE ITAT MUMBAI IN THE CASE O F NOVARTIS HEALTH CARE PVT.LTD. VS ITO 29 SOT 425 AND ITA NOS.4887 TO 4889/DEL/09 2 ALSO ON THE DECISION OF THE JURISDICTIONAL HIGH COU RT IN THE CASE OF CIT VS. DEPUTY CAO MARKFED 2008-TIOL/374- HC-P&H-IT (304 ITR 17) DATED 28.02.2008 IN WHICH IT HAS BEEN HELD THAT PURCHASE OF MATERIAL WITH LOGO I S TO BE TREATED AS CONTRACT OF SALE. THE HON'BLE HIGH C OURT MADE CIRCULAR NO.681 DATED 08.03.1994 THE BASIS OF ITS ORDER WITH OUT GOING IN TO THE CLARIFICATION ISSUED BY THE CBDT IN CIRCULAR NO.13 DATED 13.12.2006 IN WHICH IT HAS BEEN CLARIFIED THAT IN EACH CASE IT HAS TO BE EXAMI NED WHETHER THE CONTRACT IN QUESTION IS A CONTRACT FOR WORKS OR A CONTRACT FOR SALE. 2. IT IS PRAYED THAT THE ORDER OF THE LD.COMMISSION ER OF INCOME TAX (A) BE CANCELLED AND THAT OF THE ASSESSI NG OFFICER BE RESTORED. 3. THE LD. D.R. RELIED ON ORDER OF ASSESSING OFFICE R AND CONTENDS THAT ASSESSING OFFICER RIGHTLY OBSERVED THAT THE NATURE OF TRANSACTION OF GETTING THE MATERIAL PRINTED AMOUNTED TO CONTRACT FOR SUPPL Y OF PRINTED MATERIAL IN TERMS OF SECTION 194C AND THE ABOVE DEMAND WAS RIGH TLY RAISED BY THE ASSESSING OFFICER. 4. LD. COUNSEL FOR THE ASSESSEE ON THE OTHER HAND CONTENDS THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURIN G AS WELL AS TRADING IN FOOTWEARS AND ALLIED MATERIALS. FOR THE PURPOSE OF MANUFACTURING FOOTWEARS ASSESSEE PLACES SPECIFIC ORDERS FOR PURC HASE OF PRINTED MATERIAL WITH DIFFERENT SUPPLIERS/DEALERS. TO CONFORM WITH THE COMPANYS TRADEMARK AND BRAND WITH SPECIFIC PRINTING DESIGN ASSESSEE P URCHASES THE PRINTED ITA NOS.4887 TO 4889/DEL/09 3 MATERIAL FROM THESE SUPPLIERS IN THE COURSE OF ITS BUSINESS ON SALE PURCHASE BASIS WHICH IS FURTHER EVIDENT FROM THE FA CT THAT SUPPLIERS CHARGED VAT @ 4%. THIS BEING A TRANSACTION OF SALE AND PURC HASE CANNOT BE TERMED AS CONTRACT FOR SUPPLY AND HELD LIABLE FOR DEDUCTIO N U/S 194C. SIMILAR ISSUE AROSE BEFORE THE C-BENCH OF THE ITAT KOLKATA IN RE SPECT OF ITS KOLKATA BRANCH IN M/S BATA INDIA LTD. KOLKATA IN I.T.A.NO .431(KOL) OF 2007 FOR THE ASSESSMENT YEAR 2004-05 WHEREIN THE ITAT RELYING O N THE DECISIONS OF THE TRIBUNAL IN THE CASES OF DCIT VS. REEBOK INDIALTD. 100 TTJ 976 (DEL) AND KHADIM SHOE PVT. LTD. VS. ACIT IN I.T.A.NO.2132 /KOL/2005 ORDER DATED 12 .05.2006 FOR THE ASSESSMENT YEAR 2004-05 HELD IT TO BE A TRANSACTION OF PURCHASE AND SALE AND ASSESSEE WAS N OT LIABLE FOR TDS BY OBSERVING AS UNDER:- ITAT KOLKATA BENCH IN THE CASE OF KHADIM SHOE (P) LTD. (SUPRA) HAS ALSO RELIED ON DECISION OF ITAT DELHI BENCH IN THE CASE OF REEBOK SHOE CO. (SUPRA). THE RATIO OF ALL THE ABOVE DECISIONS SQUARELY APPLIES TO THE CASE OF THE ASSESSEE. IN T HIS CASE ALSO THE ASSESSEE MADE THE PURCHASES OF FOOTWEAR WITH LOGO B ATA. THE TRANSACTION WAS OF PURCHASE AND SALE OF GOODS AND N OT WORKS CONTRACT WITHIN THE MEANING OF SECTION 194C OF THE ACT. 4.3 IN VIEW OF ABOVE RESPECTFULLY FOLLOWING THE DE CISION OF HON'BLE DELHI HIGH COURT AND THOSE OF I.T.A.T. REFERRED TO ABOVE WE HOLD THAT THE ASSESSEE IS NOT LIABLE TO DEDUCT TAX IN RE SPECT OF PURCHASE OF FOOTWEAR WITH THE LOGO BATA. ITA NOS.4887 TO 4889/DEL/09 4 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND CAREFULL Y PERUSED THE MATERIAL AVAILABLE ON RECORD. IN ASSESSEE'S OWN CA SE ON SIMILAR FACTS AND CIRCUMSTANCES IT HAS BEEN HELD THAT THE SUPPLY OF PRINTED MATERIAL PURCHASED BY THE ASSESSEE FOR USE IN MANUFACTURE AN D TRADING OF FOOTWEARS WAS TRANSACTION FOR PURCHASE AND SALE. T HIS IS STRENGTHENED BY THE FACT THAT SUPPLIERS CHARGED 4% VAT WHICH IS NOT DISPUTED. FOLLOWING THE AFORESAID DECISION IN ASSESSEE'S OWN CASE OF KOLKAT A BRANCH WE UPHOLD THE ORDER OF THE CIT(A) HOLDING THAT THE ASSESSEE W AS NOT LIABLE TO DEDUCT TDS U/S 194C ON THE PAYMENTS MADE FOR PURCHASE OF P RINTED MATERIAL. 6. IN THE RESULT APPEALS FILED BY THE REVENUE ARE DISMISSED. DECISION PRONOUNCED IN THE OPEN COURT ON 30 TH APRIL 2010. SD/- SD/- (K.G.BANSAL) (R.P.TOLANI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 30.04.2010. VSK. COPY FORWARDED TO: - 1. APPELLANT-REVENUE 2. RESPONDENT-ASSESSEE 3. CIT 4. CIT(A) 5. DR ITAT DEPUTY REGISTRAR ITA NOS.4887 TO 4889/DEL/09 5