TDS under section 194C not applicable on contract for sale: Bombay High Court
The question whether contract manufacturing agreements are subject to s. 194C has been decided by the Bombay High Court in Glenmark Pharmaceuticals Ltd ITA No. 2256 of 2009 and other matters in favour of the assessees.
In an oral judgment pronounced today 12th March 2010, the Court held that while “works contracts” were subject to TDS under section 194C, “sales contracts” were not.
It upheld the arguments of the pharmaceutical companies that the contract manufacturing agreements entered into by them with other manufacturers amounted to a “sales contract” which was not liable to TDS u/s 194C.
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