Links of Interest: Glenmark (meaning of 'work') and Digest of Cases

1. Shantanu Naravane has discussed the recent judgment of the Bombay High Court in Glenmark here. The decision deals with the meaning of work under Section 194C of the Income Tax Act, 1961. A summary of the decision is available on ITAT Online here, and the judgment can be downloaded from the same link. Justice Chandrachud laid down the test as follows:

“A contract for sale has hence to be distinguished from a contract of work. Whether a particular agreement falls within one or the other category depends upon the object and intent of the parties, as evidenced by the terms of the contract, the circumstances in which it was entered into and the custom of the trade. The substance of the matter and not the form is what is of importance. If a contract involves the sale of movable property as movable property, it would constitute a contract for sale. On the other hand, if the contract primarily involves carrying on of work involving labour and service and the use of materials is incidental to the execution of the work, the contract would constitute a contract of work and labour. One of the circumstances which is of relevance is whether the article which has to be delivered has an identifiable existence prior to its delivery to the purchaser upon the payment of a price. If the article has an identifiable existence prior to its delivery to the purchaser, and when the title to the property vests with the purchaser only upon delivery, that is an important indicator to suggest that the contract is a contract for sale and not a contract for work.”

2. The ITAT Online digest of cases for March 2010 is available here.