TaxTMI 
TaxTMI 
2012 (2) TMI 734
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....the Income Tax Act is not applicable in the case of payments to Calcutta Dock Labour Board. 3. Learned representative fairly agree that whatever is decided by us in the Assessing Officer's appeal for the assessment year 2006-07, which was heard alongwith this appeal, will apply mutatis mutandi here as well. Vide our order of even date, we have allowed the said appeal for statistical purposes, and, while doing so, we have observed as follows: 2. Grievances raised by the Assessing Officer, as set out in the memorandum of appeal in the form of questions, are as follows: 3. The issue in appeal lies in a very narrow compass of material facts. The assessee is engaged in the business of rendering stevedoring and CFS (container freight station) services. During the course of assessment proceedings, the Assessing Officer noted that the assessee has made payments aggregating to Rs 2,22,58,795, on account of stevedoring expenses, to Calcutta Dock Labour Board (CDLB, in short) , but neither the assessee deducted any tax at source from these payments, nor did the assessee furnish any 'no deduction certificate' issued by the income tax department in favour of the CDLB. The Assessing Officer....
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....(AO's) action in adding back labour payments made to Calcutta Dock Labour Board on the ground that tax has not been deducted at source, inter alia, claiming that Section 40(a)(ia) is not applicable to it. The judgment of jurisdictional High Court which has been brought on record by the appellant, to delineate the position of Calcutta Dock Labour Board vis-à-vis the appellant and the workers, states that the Calcutta Dock Labour Board is not an employer of the workers and the workers are employed by the stevedores [ Calcutta Dock Labour Board vs. Wages Authority & Ors 1981-92 (86)CWN 113 dated 20.8.1981]. This position is a reiteration of the Hon'ble Apex Court's judgment in the case of Visakhapatnam Dock Labour Board Vs Stevedores Association & Ors, Vishakhapatnam [ 1969 CC801]. This judgment further observes that the Dock Labour Board is operating as an agent of stevedores, who are actual employers. Perusal of these two judgments, relevant portions of which have been incorporated above, reveals that there is no contractual relationship between the appellant and Calcutta Dock labour Board. As such, in my opinion, the provisions of Section 194 C does not apply to the appellan....
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.... undivided family, of such sum as income-tax on income comprised therein. (2) Where any sum referred to in sub-section (1) is credited to any account, whether called "Suspense account" or by any other name, in the books of account of the person liable to pay such income, such crediting shall be deemed to be credit of such income to the account of the payee and the provisions of this section shall apply accordingly. (3) Where any sum is paid or credited for carrying out any work mentioned in sub-clause (e) of clause (iv) of the Explanation, tax shall be deducted at source-- (i) on the invoice value excluding the value of material, if such value is mentioned separately in the invoice; or (ii) on the whole of the invoice value, if the value of material is not mentioned separately in the invoice. (4) No individual or Hindu undivided family shall be liable to deduct income-tax on the sum credited or paid to the account of the contractor where such sum is credited or paid exclusively for personal purposes of such individual or any member of Hindu undivided family. (5) No deduction shall be made from the amount of any sum credited or paid or likely to be credited or paid to ....
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....tion 44AB during the financial year immediately preceding the financial year in which such sum is credited or paid to the account of the contractor; (ii)"goods carriage" shall have the meaning assigned to it in the Explanation to sub-section (7) of section 44AE; (iii)"contract" shall include sub-contract; (iv)"work" shall include-- (a) advertising; (b) broadcasting and telecasting including production of programmes for such broadcasting or telecasting; (c) carriage of goods or passengers by any mode of transport other than by railways; (d) catering; (e) manufacturing or supplying a product according to the requirement or specification of a customer by using material purchased from such customer, but does not include manufacturing or supplying a product according to the requirement or specification of a customer by using material purchased from a person, other than such customer.] 8. A plain reading of this Section makes it clear that "any person responsible for paying any sum to any resident (hereafter in this section referred to as the contractor) for carrying out any work (including supply of labour for carrying out any work) in pursuance of a contract between....
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....may be treated as employed by the assessee for all practical purposes, the provisions of Section 194 C are clearly attracted. In such a situation, i.e. when labour hired by the assessee through CDLB is considered to be in assessee's employment, the payments made to CDLB cannot be treated as payments for 'any work' , but nevertheless these payments could still be covered by the provisions of Section 194 C because these are payments made for 'supply of labour' which are specifically covered by Section 194 C(1). CDLB is an agent of the stevedores like the assessee in the sense that the labour is recruited by the assessee through CDLB, but then this fact does not affect the nature of payment by the assessee to the CDLB which is admittedly in the nature of payment for supply of labour. The reasoning adopted by the learned CIT(A), though somewhat impressive at first glance, is fallacious. There is no cause and effect relationship between workers assigned by the CDLB having employer workman relationship with the assessee, and the payments being made by the assessee to CDLB being not in the nature of 'payment for supply of labour' . 9. In view of the above discussions, in our considered ....