Pramod Kumar, A.M.

1. By way of this appeal, the Assessee has called into question correctness of CIT(A)s order dated 26th June, 2009, in the matter of assessment under section 143(3) of the Income tax Act, 1961, for the assessment year 2005-06 on the following ground:

The ld AO has erred in law and facts and further the CIT(A) erred in confirming the action of AO in disallowing purchase of stickers and printing materials amounting to`4,14,786 on account of non deduction of tax at source.

2. Briefly stated the relevant material facts are like this. During the course of assessment proceedings, the Assessing Officer noted that the Assessee has paid an amount of Rs. 4,14,786 ( i.e`3,05,852 to Mankul Industries,`25,740 to San Printers Pvt Ltd., and`83,194 to Sony Prints), but has not deducted tax at source under section 194C from the same. In reply to Assessing officers requisition, it was submitted by the Assessee that the amount was paid for purchase of stickers and other printing materials, therefore, not covered under the purview of section 194C of the I.T.Act. The contention of the Assessee was not acceptable to the AO and he disallowed the same in terms of provisions of section 40(a)(ia) of the Act in view of the fact that the Assessee has not deducted tax at source from this payment. Aggrieved, the Assessee carried the matter in appeal before the CIT(A) but without any success.

3. Learned Representatives agree that this issue is squarely covered in favour of the assesee by the Honble Jurisdictional High Courts judgment in the case of BDA Limited v. ITO, : 281 ITR 99 (Bom), wherein, it was held that supply of printed labels was a sale and could not be considered as a works contract and tax was not required to be deducted under section 194C. Respectfully following the decision of the Honble Jurisdictional High Court in the case of BDA Ltd (supra), we direct the AO to allow to delete the disallowance of`4,14,786 made on account of non deduction of tax under section 194C of the Act. The Assessee gets relief accordingly.

4. In the result, appeal is allowed.

Pronounced in the open court at the time of hearing i.e. on 1.6.2011.