1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL (L) NO.171 OF 2010 The Commissioner of Income Tax ..Appellant. V/s. M/s. Unichem Laboratories Ltd. ..Respondent. Mr. Suresh Kumar for appellant. Mr. Percy J. Pardiwala, senior Advocate with A.K. Jasani and P.C. Tripathi i/b. Ashok Bhogani & Co. for respondent. CORAM : DR. D.Y.CHANDRACHUD AND J.P.DEVADHAR, JJ. DATED : 12TH MARCH, 2010 P.C. :- 1. The appeal by the Revenue under Section 260A of the Income Tax Act, 1961 against the order of ITAT dated 29th July, 2009 raises the following questions of law:- 1. Whether on the facts and in circumstances of the case and in law, the ITAT was correct in holding that the agreement of the assessee with the manufacturers cannot be termed as "Works Contract" and the application of Section 194C is not justified whereas the assessee themselves had treated the transactions as contract and deducted TDS thereon ? 2 2. Whether on the facts and circumstances of the case and in law, the ITAT was correct in holding that the charging of interest u/s.201(1A) is not mandatory even though the assessee themselves treated the transactions as contract and deducted TDS thereon? 2. On a survey conducted under Section 133A, a notice to show cause was issued to the assessee as to why interest under Section 201(1A) should not be charged for not deducting tax at source. The Assessing Officer determined the interest payable under Section 201(1A) and rejected the explanation of the assessee. During the proceedings before the Commissioner of Income Tax (A), the assessee stated that without prejudice to its stand that it was not liable to deduct TDS on payments made for purchase of pharmaceutical products by it, it had deducted TDS and paid it in order to avoid litigation. Consequently, the assessee submitted that there being no liability to deduct TDS, the question of levying interest on the delay in deducting tax at source would not arise. 3. Counsel appearing on behalf of the the revenue fairly states that the facts relating to the transactions of the assessee are similar to those in the judgment delivered by this Court today in The Commissioner of Income Tax (TDS) V/s. M/s. Glenmark 3 Pharmaceuticals Ltd. [Income Tax Appeal No.2256 of 2009). In the circumstances, in view of the judgment of this Court delivered in the case of M/s. Glenmark Pharmaceuticals Ltd., it has not been disputed that the assessee cannot be treated as being in default for not deducting tax at source. Consequently, the levy of interest under Section 201(1A) would not arise. The Tribunal was, therefore, justified in allowing the appeal of the assessee. The appeal does not raise any substantial question of law and is accordingly dismissed. No order as to costs. (J.P.DEVADHAR, J.) (DR. D.Y.CHANDRACHUD, J.)