COMMISSIONER OF INCOME TAX Vs. DABUR INDIA LTD.

JUDGEMENT

(1.) IN State of Himachal Pradesh vs. Associated Hotels of India Ltd. (1972) 29 STC 474 (SC) the Supreme Court declared that if the main object underlying the contract is to transfer property in or deliver the possession of a chattel as chattel, then the contract is one of sale. The test, observed their Lordships, is whether or not the work and labour bestowed end in anything that can properly become the subject of a sale. Neither the ownership of the materials nor the value of the skill and labour, as compared with the value of the materials is conclusive, although such matters may be taken into consideration in determining whether the contract is in substance one for work and labour or one for the sale of chattel.

(2.) RELYING upon the above decision, the Tribunal of Pune Bench in Wadilal Dairy International Ltd. vs. Asstt. CIT (2001) 70 TTJ (Pune) 77 : (2001) 118 Taxman 141 (Pune)(Mag) held that buying packing material was tantamount to purchasing goods for the purpose of packing and that just because some printing was required to be done by the supplier on such good was of no consequence.

(3.) IN the instant case also the supply of corrugated boxes was to be made with some labels printed on the same. The question that was raised before the Tribunal, therefore, was whether the supply of such boxes was a contract for sale of chattel and as such outside the purview of s. 194C of the IT Act, 1961. The Tribunal has, relying upon the decision of the Supreme Court in Associated Hotels (supra) and the order passed by the Pune Bench of the Tribunal in Wadilal Dairy referred to above, held that the dominant object underlying the contract in the instant case was the supply of goods in the form of corrugated boxes. It has accordingly, set aside the order passed by the CIT(A) and the consequent demand raised against the assessee under ss. 201(1) and 20(1A).