- (1.) The subject matter of challenge in this appeal is a judgement dated 12th May, 2006 passed by the learned Income Tax Appellate Tribunal pertaining to the assessment year 2004-2005. The question which was formulated at the time of admission of the appeal, at the instance of the revenue, reads as follows:- "Whether on the facts and in the circumstances of the case the order of the Tribunal without giving any reason at all for disagreeing with the findings of the First Adjudicating authority that the transaction between the assessee and its supplier was in the nature of work done by the supplier on behalf of the assessee i.e. 'outsourcing' and without reasons holding that the said transaction was a sale was perverse ?"
(2.) The undisputed facts of the case are that the assessee a well-known merchant in footwear made purchase worth Rs.46.30 Crores approximately. The purchase and sale transactions were duly offered for taxation.
(3.) The assessing officer was of the opinion that the purchase for the sum of Rs.46.30 Crores was, in fact, an outsourcing and therefore, the assessee should have deducted tax at source under section 194C. He on that basis held the assessee liable for payment of Rs.1.06 Crores approximately under section 201(1)(1A) read with section 194C. The assessee preferred an appeal. The appellate authority was of the opinion that purchase worth Rs.38.39 Crores was not within the purview of section 194C for the following reasons : "The appellant has furnished copies of audit report, audited accounts and break-up of purchase of finished footwear. It is seen that out of total purchase of Rs.46.29 Crores, from about 140 vendors; the purchase of shoes with the logo "khadim" amounted to Rs.7.90 crores only and that too from 10 manufacturers as named by the AO in the order sheet recorded on 31.3.2005. This fact is also veriable from the application U/S.154 dated 8.6.2005. As regards the purchase of footwear without any specified logo i.e. Rs.38.39 crores; (Rs.46.29-Rs.7.90), it is observed that the same was purchase simplicitor i.e. without any logo, label or identity mark. In view of what has been discussed in detail in the foregoing paras and in my considered opinion, purchase of footwear worth Rs.38.29 crore cannot be equated to "any work" so as to fall within the purview of Section 194C.";