TaxTMI 
TaxTMI 
1991 (1) TMI 121
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....een the assessee and the printer containing certain terms and conditions which we shall notice in some detail later in the course of this judgment. During the assessment years 1974-75 and 1975-76, the assessee paid to the printer substantial amounts by way of charges for composing, striking, taking colour form impression, printing cover pages and binding. In the course of the assessment proceedings for the assessment years 1974-75 and 1975-76, the Income-tax Officer noticed that the assessee should have deducted tax under section 194C of the Income-tax Act, 1961 (hereinafter referred to as "the Act"). According to him the tax deductible by the assessee for the relevant assessment years amounted to Rs. 44,063 and Rs. 42,600, respectively. Si....
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....tion 194C of the Act. In the result, the Tribunal upheld the cancellation of the levy of interest under section 201 ( 1A) of the Act and dismissed the appeals. That is how the following two common questions of law, under section 256(1) of the Act, have been referred to this court, for its opinion : "1. Whether on the facts and in the circumstances of the case, and having regard to the provisions of Section 194C of the Income-tax Act, 1961, the Appellate Tribunal was right in cancelling the interest levied under section 201(lA) of the Income-tax Act, in the assessee's case for non-deduction of tax at source on the amounts paid by the assessee to Kumudam Printers Private Ltd. as per the agreement dated August 1, 1972 ? 2. Whether the Ap....
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....e Central Government or any State Government; or (b) any local authority ;or (c) any corporation established by or under a Central, State or Provincial Act ;or (d) any company ; or (e) any cooperative society, shall, at the time of credit of such sum to the account of the contractor or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct an amount equal to two per cent. of such sum as income-tax on income comprised therein. 201. (1) If any such person and in the cases referred to in section 194, the principal officer and the company of which he is the principal officer does not deduct or after deducting fails to pay the tax as required by or under this A....
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....eed to supply the blocks necessary for the printing of the magazines Kumudam and Kalkandu and the newsprint, art paper and such other necessary printing materials as may be required and as the exigencies demand. Clause 4 enabled the assessee to give the print order to the printer for the number of copies with supply of the paper required for the purposes early, according to schedule "A" to the agreement. Clause 7 was to the effect that the printer shall print the magazines in the rotary machine held by it or such other machinery as is suitable for the neat execution of the printing of the magazines, Kumudam and Kalkandu. Under clauses 8 and 9, the assessee was enabled to order the number of pages and the number of copies required and the pr....
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....rticles, stories, editorials, caricatures and material for cover pages to be printed and published, the newsprint and other varieties of paper therefor, the blocks, etc., and the printer, by the use of the rotary machine held by it, prints the magazines as required by the assessee according to its requirements and specifications and the number of copies as per the time schedule for which the assessee pays the printer the printing charges, binding charges and other incidental charges within thirty days of the submission of the bill by the printer. Essentially, therefore, under the terms of the agreement, with the help of the materials supplied by the assessee, the printer produces the magazines and supplies them to the assessee for the purpo....
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....idered the nature, scope and the result of the operations carried on by the printer under the terms of the agreement, though with the materials supplied by the assessee. The Tribunal, in paragraph 9 of its order, merely referred to the decision of this court in State of Tamil Nadu v. Anandam Viswanathan [1977] 39 STC 226, since affirmed by the Supreme Court in State of Tamil Nadu v. Anandam Viswanathan [1989] 73 STC 1 ; AIR 1989 SC 962, to hold that the agreement between the assessee and the printer was in the nature of a contract of service. The word "service" also means work and by printing, the printer had carried out the work within the meaning of section 194C(1) of the Act. We also do not find any support whatever from the circular rel....