Assessee company engaged in production and marketing of potato seeds—Multiplication of potatoes is carried out in tissue culture laboratory which are transplanted in green houses to produce "O" generation seed and sold to farmers—Expenditure of Rs. 23,86,522 claimed as buy-back production cost—AO came to the conclusion that the assessee had given work contract to the farmers for growing potatoes of desired specifications from seeds supplied by it—Since the tax was not deducted at source, the amount was to be disallowed under s. 40(a)(ia)—Operations carried out by the farmers are purely agricultural operations and cannot be said that they were in the nature of works contract—Similarly payments made to labourers were also not under works contract—Disallowances rightly deleted Held:

KALINDI AGRO BIOTECH LTD 29 CCH 0422 DelTrib