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Doubt about 194c???

Paramesh S (Finance Manager) (205 Points)

22 December 2012

Hai friends, i had a small doubt about advertising contract...... following is the case .....

We are the retail company, ordering the boxes which contain company logo on it. We are just purchase the boxes.

Is it comes under Advertising contract ?????

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10 Replies

CA Gaurav Ajit Potdar (Chartered Accountant) (846 Points)
Replied 22 December 2012

It is only purchase of boxes, if u had supplied raw materials to the manufacturer for making particular kind of boxes according to your specification TDS will be attracted u/s 194c.

Deepak Gupta (CA Student) (15922 Points)
Replied 22 December 2012

194C is not attracted.

‘work’ shall include -
.
manufacturing or supplying a product according to the requirement or specification of a customer by using material purchased from such customer, but does not include manufacturing or supplying a product according to the requirement or specification of a customer by using material purchased from a person, other than such customer.

In the case of CIT v. Silver Oak Laboratories P. Ltd. wherein the Hon’ble Supreme Court has held as follows:.
“On examining the terms and conditions and also on examination of the invoices, purchase orders as well as the challans indicating payment of excise duty, we are of the view that there is no material on record to indicate that the transaction in question is a “contract for carrying out works”. Hence, Section 194C of the Income Tax Act, 1961, (~Act’ , for short) is not attracted.

Our attention, in fact, is invited to the amendment in Section 194C of the Act vide Finance (No.2) Act, 2009, with effect from ₁st October, 2009, which defines ‘work’ to include manufacturing or supplying a product according to the requirement or specification of a customer by using material purchased from such customer. In fact, it is clarified that the definition of the word “work’ will not include manufacturing or supplying a product according to the requirement or specification of a customer by using material purchased from a person other than such customer.

CS,CA F,Numrologi TusharSampat (CS CA F Numerologist Astrologer Graphologist Face reader Vastu Expert) (85930 Points)
Replied 22 December 2012

Originally posted by : \|)eep @ k Gupt/\
	194C is not attracted. ‘work’ shall include - . manufacturing or supplying a product according to the requirement or specification of a customer by using material purchased from such customer, but does not include manufacturing or supplying a product according to the requirement or specification of a customer by using material purchased from a person, other than such customer. In the case of CIT v. Silver Oak Laboratories P. Ltd. wherein the Hon’ble Supreme Court has held as follows:. “On examining the terms and conditions and also on examination of the invoices, purchase orders as well as the challans indicating payment of excise duty, we are of the view that there is no material on record to indicate that the transaction in question is a “contract for carrying out works”. Hence, Section 194C of the Income Tax Act, 1961, (~Act’ , for short) is not attracted. Our attention, in fact, is invited to the amendment in Section 194C of the Act vide Finance (No.2) Act, 2009, with effect from 1st October, 2009, which defines ‘work’ to include manufacturing or supplying a product according to the requirement or specification of a customer by using material purchased from such customer. In fact, it is clarified that the definition of the word “work’ will not include manufacturing or supplying a product according to the requirement or specification of a customer by using material purchased from a person other than such customer.

CMA RAVI (ASSISTANT MANGER - FINANCE) (478 Points)
Replied 23 December 2012

Not at all...sec 194c is not applicable

Pratik Shah (Assistant Manager Business Process Specialist Accounting Technician B.Com (Specialization in Accounts & Finance) & Technology Savey) (151 Points)
Replied 24 December 2012

It is Purchase. there is no supply of Materials, also, specification are not given. Therefore, Sec194C is not attracted.

Paramesh S (Finance Manager) (205 Points)
Replied 24 December 2012

Thanks to all

Here some people are argueing that we are using our company logo on the boxes so its comes under advertising contract.

Is it correct ????

CMA RAVI (ASSISTANT MANGER - FINANCE) (478 Points)
Replied 24 December 2012

Originally posted by : Paramesh S
	Thanks to all Here some people are argueing that we are using our company logo on the boxes so its comes under advertising contract. Is it correct ????

Merely affixing logo on boxes doesnt attract sec 194c.

Paramesh S (Finance Manager) (205 Points)
Replied 24 December 2012

Thanks sam.....

Deepak Gupta (CA Student) (15922 Points)
Replied 24 December 2012

Circular : No. 681, dated 8-3-1994, para 7(vi)(b)
.
Where, however, the contractor undertakes to supply any article or thing fabricated according to the specifications given by Government or any other specified person and the property in such article or thing passes to the Government or such person only after such article or thing is delivered, the contract will be a contract for sale and as such outside the purview of this section.

CA Sourabh Goenka (Chartered Accountant) (249 Points)
Replied 28 December 2012

Jusy say those peoples that we are purchasing the boxes and after purchasing we are affixing our logo on the boxes by itself.. now what's the confusion??