Law:

Section:

Section 194C, read with section 201, of the Income-tax Act, 1961 - Deduction of tax at source - Contractors/sub-contractors, payments to - Assessee-company was marketing footwear, apparel accessories and sports goods - For said purpose, it had entered into agreements with various manufacturers who manufactured said items according to specifications, drawings and designs provided by assessee - Revenue's case was that since assessee did not deduct any tax at source while making payments to manufacturers, it was in default in view of provisions of sections 201(1) and 201(1A) - Assessing Officer found that nature of transactions was that of a works contract and, therefore, by invoking provisions of section 194C, he held assessee to be in default - Whether since Commissioner (Appeals) as well as, Tribunal had, on consideration of facts and circumstances of case, returned a finding of fact that transactions between assessee and manufacturers were those of sale of goods and were not in nature of works contracts, no substantial question of law arose for consideration - Held, yes R.D. Jolly for the Appellant. Prem Nath Monga and Manu Monga for the Respondent. ORDER 1. The issue sought to be raised by the revenue in this appeal pertains to the nature of the transaction which the assessee has entered upon with its suppliers. The assessee markets footwear, apparel accessories and sport goods. For this purpose, the assessee has entered into agreements with various manufacturers who manufacture the said items according to the specifications, drawings and designs provided by the assessee. 2. The question arose as to whether the payments that the assessee makes to its manufacturers would fall within the purview of section 194C of the Income-tax Act, 1961. The issue is essentially as to whether the transaction is one of sale simplicitor or is a work contract. If the transaction is in the nature of a works contract, it would fall under section 194C and, therefore, the assessee would have had to deduct tax at source in terms thereof. Since the assessee had not deducted any tax at source, the revenue's contention was that the assessee was in default in…

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