Section 194C :When the Section 194C is not applicable

Contract of manufacturing goods as per specification without supply of material isn't a work contract under sec. 194C

[2015] 57 taxmann.com 371 (Karnataka)

HIGH COURT OF KARNATAKA

Commissioner of Income-tax, Bangalore

v.

Allergan India (P.) Ltd.

Section 194C of the Income-tax Act, 1961 - Deduction of tax at source - Contactors/sub-contractors, payments to (Works contract) - Assessment years 2009-10 to 2011-12 - Assessee was engaged in business of trading of ophthalmic products - It had entered into an agreement with PHL under which PHL had agreed to manufacture and sell to assessee certain pharmaceutical and contact lens care products on a principal to principal basis - Specifications had been given, according to which PHL had to manufacture and supply products - Property in goods passed on to assessee only on delivery - Raw materials required in manufacture of product were purchased by PHL itself and not from assessee - Whether, on facts, contract entered into by assessee was contract of sale and not a contract for carrying on any work within meaning of section 194C - Held, yes [Paras 6, 12 & 13][In favour of assessee]