COMMISSIONER OF INCOME TAX vs. TURAG MARKETING PVT LTD

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ITA - 844 / 2009HC Delhi16 September 20091 pages
For Petitioner: PREM LATA BANSAL
AI SummaryDismissed

What did the High Court hold?

The High Court held that the supply of outsourced manufactured goods by a contract manufacturer is to be treated as a sale of goods. Therefore, there was no requirement for deduction of tax at source under Section 194C of the Income Tax Act. The Court's reasoning was based on its own prior judgment in CIT Vs. Reebok India, 221 CTR 508, which it followed. The ratio decidendi is that the nature of the transaction, when it involves the supply of manufactured goods by a contract manufacturer, is that of a sale, not a works contract, for the purpose of Section 194C. The appeal filed by the Revenue was dismissed.

What were the facts?

The appeal before the High Court of Delhi concerned the classification of transactions where a contract manufacturer supplied outsourced manufactured goods. The Income Tax Appellate Tribunal (ITAT) had ruled that these transactions constituted a sale of goods, not a works contract. Consequently, the ITAT held that no tax deduction at source under Section 194C of the Income Tax Act was required. The Revenue has challenged this decision. The assessment year(s) are not explicitly stated in the provided text. The amount in dispute is also not mentioned.

What were the issues?

1. Whether the supply of outsourced manufactured goods by a contract manufacturer constitutes a sale of goods or a works contract of goods, for the purposes of Section 194C of the Income Tax Act, 1961. The Revenue contended that the ITAT erred in treating the transaction as a sale of goods, implying it should have been considered a works contract. The Assessee's position, as reflected in the ITAT's decision, was that it was a sale of goods, thus exempting it from TDS under Section 194C. The High Court noted that the issue was squarely covered by a previous judgment.

Which sections of the Income-tax Act were involved?

Section 194C

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF DELHI AT NEW DELHI . 16.09.2009 . Present: Ms. Prem Lata Bansal, Advocate with Mr. Paras Chaudhary, Advocate and Ms. Anshul Sharma, Advocate for the appellant. Mr. Ajay Vohra, Advocate with Ms. Kavita Jha, Advocate, Ms. Aakansha Aggarwal and Mr. Sriram Krishnan, Advocate for the respondent. . + I.T.A. No. 844/2009 . The question sought to be raised in this appeal is as to whether supply of outsourced manufactured goods by the contract manufacturer would be treated as sale of goods or works contract of goods. The Income Tax Appellate Tribunal had held it as a sale of goods and therefore it has opined that there was no need for deduction of tax at source under Section 194C of the Income Tax Act. This issue is squarely covered against the revenue by the judgment of this Court in CIT Vs. Reebok India 221 CTR 508. Therefore, following the judgment, this appeal is dismissed. . A.K.SIKRI, J . . . VALMIKI J.MEHTA, J . September 16, 2009 Ne . # 8 .

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