AVANI FEEDS LTD vs. COMMISSIONER OF INCCOME TAX

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ITTA/340/2011HC TelanganaHBHC01035761201109 January 2026Bench: P.SAM KOSHY,SUDDALA CHALAPATHI RAO4 pages
AI SummaryDismissed

What did the High Court hold?

The Tribunal held that tax was to be deducted at source only on the work component of the contract, not the material component. Consequently, interest under Section 201(1A) was not leviable as the assessee was not liable for TDS on the material part.

What were the facts?

The Revenue appealed against the Tribunal's order concerning the Assessment Year 2009-10. The core issue was whether a composite contract should be split into parts for TDS purposes, specifically distinguishing between material and civil works.

What were the issues?

Whether a composite contract can be bifurcated for TDS purposes, and if interest under Section 201(1A) is leviable when TDS is not applicable to the material component of a contract.

Which sections of the Income-tax Act were involved?

Section 201(1A)

AI-generated summary — verify with the full judgment below

I IN THE HIGH CCXJRT OF KARNATAKA AT BANOALORE DAThD THIS THE 1S’ DAY OF MARCH 2012 PRESENT ¶L1{E HOWBLE MR.JUSTICE N. KUMAR AND THE HOWBLE MR. JUSTICE RAW MALIMA’Ifl rrA.NO.34012011 Bean: T& Commissioner of MU, JS8 Towers, 88K ifi Stage, Bangalora 2 The IncomesTax OI&er Tug Ward NalB (1) mer Beflary Road Bengalore 3. The income Tax Officer LIlT (ItS) 338 Towat 85K m Stage Bangaiore. .AWELLANTS (By Sri. WVS&iachala for K,V,Araiñnd, Advocate)

I Ala Kntac TrammIssion Cor,ration LM., Oki Zilla Panohayath Building Tuaur-572 1 RESNDENT (By Sri Ch)trwa iLL, Adincate) This ITA is filed under Sthn 260A of LTAct, 1%1 arising out of Order dated 21M2O11 passed in ITA No139/Bsng/2O1O, for the Assessment year 2009- 10, praying ilwt this Hon’ble Court may he pleased to formulate the substantial questions of law stated thn ir ifA co on br Hearing this day, NJLUMA*J, delivered the &wing: This apl is the rewnue. The subsffint1 questions of law tiat arise for consideration in this appeal are as under: (1)Whether the Tflbunal was tight in up the contract, which, ctcxxwdthg to the revenue, was one ALE of the composite contra4 into pasts such at part of the contract attributable

3 to the value of the materials involved In the execution ofthe work and otherpart of the eaa such as dvii works and taking the view that tax was required to be deducted at source only in respect of the work part of the contract and not materialpart ofthe contract? (2j4?wther the Trtsnal wasjustified in conduding that interest vndrr 4ion 201(IA) ofthe Income Tax A& I %I le not leviable, as the assessee was nor liable to make any deductions In respect of the value of the material part of the contrt though the cxmtrrsct was one of whole oonfrudP’ 2. ThIs Court had an occasion to ocnsider the apjak wire tkr said quations were inWed in the case of nwdnLcnar aflist and attn. va Eatnataka suer flunsntnkn Cmponztion flatted dIsposed of on even data arid has amwered the said substantial quatiom of law in hvour of tir asseesea and agaSt rnue

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