ITO, (TDS), Ward-3(6), Tirupathi V. Depot Manager, Tirupathi

ITA 1763/HYD/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 69788 (ITAT-HYDERABAD)
• Duration Of Justice: 8 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-09-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 07-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y V S T SAI
• Assessee Lawyers: P JITENDRA KUMAR
• Section: 194C; 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NOS. 1763, 1770, 1771 & 1772/HYD/2012 ASSESSMENT YEARS : 2008-09, 2009-10, 2010-11 & 201 1-12 INCOME TAX OFFICER (TDS), WARD 3(6), TIRUPATHI ... APPELLANT VS. DEPOT MANAGER, APSRTC, TIRUPATHI ... RESPONDENT APPELLANT BY: SHRI Y.V.S.T SAI RESPONDENT BY: SHRI P. JITENDRA KUMAR DATE OF HEARING: 05/09/2013 DATE OF PRONOUNCEMENT: 05/09/2013 ORDER PER CHANDRA POOJARI, A.M.: ALL THESE APPEALS FILED BY THE REVENUE PERTAINING TO SAME ASSESSEE ARE DIRECTED AGAINST A COMMON ORDE R PASSED BY THE CIT(A), VIJAYAWADA, DATED 30/08/2012 , FOR THE ASSESSMENT YEARS 2008-09 TO 2011-12. AS THE ISSUE IS IDENTICAL IN ALL THESE APPEALS, THEY WERE CLUBBED AND HEARD TOGETHER, THEREFORE, A COMMON ORDER IS PASSED FOR THE SAKE OF CONVENIENCE. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER INVOKED THE PROVISIONS OF SECTION 201(1) AND 201(1A) OF THE IT ACT WITH REGARD TO PAYMENTS MADE TO CONTRACT EMPLOYEES I.E. CONTRACT 2 ITA NOS. 1763 & 1770 TO 1772/H/12 THE DEPOT MANAGER, APSRTC, TIRUPATHI ================================= DRIVERS AND CONTRACT CONDUCTORS, ETC. AS PAYMENTS LIABLE FOR DEDUCTION OF TAX AT SOURCE UNDER THE PROVISIONS OF SECTION 194C OF THE IT ACT. 3. ON APPEAL, THE CIT(A), AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE THAT CONTRACT OF EMPLOYMENT IS A CONTRACT FOR SERVICE AND NOT A CONT RACT OF SERVICE, HELD THAT THE RECIPIENTS ARE CONTRACT EMPLOYEES AND NOT CONTRACTORS AND THERE ARE NO INGREDIENTS OF A CONTRACTOR-CONTRACTEE RELATIONSHIP BETWEEN THE ASSESSEE AND THE DEDUCTEES, AS THE RELATIONSHIP IS MORE IN THE NATURE OF EMPLOYER- EMPLOYEE RELATIONSHIP. HE, THEREFORE, CONCLUDED THA T THE PROVISIONS OF SECTION 194C OF THE ACT ARE NOT ATTRACTED IN THE CASE OF THE ASSESSEE. FURTHER, THE CIT(A) HELD THAT THE INDIVIDUAL PAYMENTS MADE WERE BELOW TAXABLE LIMIT AND THEREFORE THERE WOULD BE NO NEED TO DEDUCT TAX U/S 192 OF THE ACT. ACCORDINGLY, HE DELETED THE DEMAND RAISED BY THE ASSESSING OFFICER U/S 201(1) OF THE ACT. 4. AGGRIEVED BY THE ORDER OF THE CIT(A) THE REVENUE IS IN APPEAL BEFORE US FOR ALL THE ASSESSMENT YEARS UNDER CONSIDERATION AND HAS RAISED THE FOLLOWING GROUNDS OF APPEAL, WHICH ARE COMMON IN ALL THE YEAR S: 1.THE ORDER OF THE LEARNED CIT (A) IS ERRONEOUS BOTH IN FACT AND IN LAW. 2. THE LEARNED CIT (A) HAS ERRED IN HOLDING THAT THE CONTRACT WITH THE WORKER IS A CONTRACT FOR SERVICE AND NOT A CONTRACT OF SERVICE AS THE PAYMENTS ARE MADE ON CONTRACT BASIS AND HENCE 3 ITA NOS. 1763 & 1770 TO 1772/H/12 THE DEPOT MANAGER, APSRTC, TIRUPATHI ================================= THESE PAYMENTS UNDISPUTEDLY ARE CONTRACT PAYMENTS.THERE LIE CONTRACTS BETWEEN THE ASSESSEE-DEDUCTOR AND THE CONTRACT WORKERS VIZ. CONTRACT DRIVERS, AND CONTRACT CONDUCTORS. HENCE, THE PAYMENTS MADE ON SUCH 'CONTRACT' DO GROSSLY FALL WITHIN THE PURVIEW OF THE PROVISIONS OF SECTION 194C OF THE INCOME TAX ACT, 1961. 3. THE LEARNED CIT(A) HAS ERRED IN DELETING THE ADDITION ON THE GROUND THAT THE RECIPIENTS ARE CONTRACT EMPLOYEES AND NOT CONTRACTORS AS THE PAYEES ARE THE PERSONS WHO HAVE BEEN AWARDED THE WORKS OF DRIVING/CONDUCTING THE BUSES PERTAINING TO THE ASSESSEE-DEDUCTOR AND THE PAYMENT IS MUTUALLY AGREED UPON TO BE PAID IN LUMP-SUM PERIODICALLY. THE RECIPIENTS ARE NOT EVEN TEMPORARY EMPLOYEES ON THE ROLLS OF THE ASSESSEE-DEDUCLOR AT ANY POINT OF TIME. IT IS NOT IN DISPUTE THAT THE RECIPIENTS ARE NOT EMPLOYEES OF ANY KIND OF THE ASSESSEE- DEDUCTOR. IT IS ALSO NOT IN DISPUTE THAT THERE IS NO EMPLOYER- EMPLOYEE RELATIONSHIP BETWEEN THE ASSESSEE- DEDUCTOR AND THE PAYEE I.E CONTRACT/ CONDUCTORS. 4. THE VIEW OF LEARNED CIT(A) THAT THERE IS EMPLOYER AND EMPLOYEE RELATIONSHIP EXISTS IS NOT CORRECT FOR THE REASON THAT AS AND WHEN THERE 15 NO WORK GIVEN TO THE DRIVERS/CONDUCTORS OR IF THESE PARTIES ABSENT FROM ATTENDING THEMSELVES FROM THE DUTIES, PAYMENTS WERE NOT PAID BY THE ASSESSEE DEDUCTOR. DEDUCTION WILL BE MADE FOR THE PERIOD OF ABSENCE AND PAYMENT WILL BE PAID IN FULL FOR THE PERIOD OF WORK DONE. HENCE THE STAND TAKEN BY THE ASSESSEE DEDUCTOR AND CIT(A) AS THERE IS EMPLOYER-EMPLOYEE RELATIONSHIP EXISTS IS ILL FOUNDED WITHOUT ANY BASIS. FURTHER, THE APSRTC IS A STATE GOVT.ORGANIZATION BOUND BY THE LABOUR LAWS OF THIS COUNTRY. IF SUCH A CASE, THE APSRTC HAS TO MAKE BENEFITS TO THE EMPLOYEES SUCH AS E.F. PF, GPF ETC. IN THE INSTANT CASE THE APSRTC IS NOT MAKING ANY BENEFITS TO THE SAID DRIVERS/CONDUCTORS AND HENCE THERE IS NO EMPLOYER-EMPLOYEE RELATIONSHIP EXISTS BETWEEN THEM. TO AVOID THE TDS ON PAYMENTS MADE TO DRIVERS AND CONDUCTORS, THE ASSESSEE DEDUCTOR HAD EQUATED 4 ITA NOS. 1763 & 1770 TO 1772/H/12 THE DEPOT MANAGER, APSRTC, TIRUPATHI ================================= THE RELATIONSHIP BETWEEN THE DEDUCTOR AND DEDUCTEES AS EMPLOYER-EMPLOYEE RELATIONSHIP. AS SUCH, THE STAND TAKEN BYCIT(A) IN RESPECT OF EMPLOYER- EMPLOYEE RELATIONSHIP IS NOT ACCEPTABLE. 5. THE CIT(A) HAS ERRED IN TREATING THE PROVISIONS OF SEC.194C ARE NOT APPLICABLE IN THIS CASE IS NOT CORRECT AS THE PROVISIONS OF SEC.194C( 1) SAYS THAT ANY PERSON RESPONSIBLE FOR PAYING ANY SUM TO ANY RESIDENT (HERE-IN-AFTER IN THIS SECTION REFERRED TO AS THE CONTRACTOR) FOR CARRYING OUT ANY WORK. ACCORDING TO EXPLANATION (IV)(C) OF SUB SEC.(7) OF SEC.194C 'WORK' SHALL INCLUDE (C) CARRIAGE OF GOODS OR PASSENGERS BY ANY MODE OF TRANSPORT OTHER THAN BY RAILWAYS' IN VIEW OF THE ABOVE IT IS UNDER STOOD THAT THE ASSESSEE DEDUCTOR HAS AWARDED 'WORK' TO DRIVERS/CONDUCTORS FOR CARRIAGE OF PASSENGERS BY ANY MODE OF TRANSPORT OTHER THAN BY RAILWAYS WHICH IS 'A WORK CONTRACT' AND COMES UNDER THE PURVIEW OF THE PROVISIONS OF SEC. 194C OF I.T. ACT, 1961 AND THE STAND TAKEN IN PASSING THE ORDER BY THE A.O IS IN LINE. 5. WE HAVE HEARD THE ARGUMENTS OF BOTH THE PARTIES, PERUSED THE RECORD AND HAVE GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE ASSESSEE IS ENGAGED DRIVERS AND CONDUCTORS, WHO ARE CONTRACT EMPLOYEES AND THE RELATIONSHIP BETWEEN THE ASSESSEE AND THE RECIPIENTS IS IN THE NATURE EMPLOYER-EMPLOY EE, THEREFORE, THE PROVISIONS OF SECTION 194C OF THE AC T ARE NOT ATTRACTED IN THEIR CASES AND ONLY THE PROVISION S OF SECTION 192 OF THE IT ACT ARE APPLICABLE. FURTHER, THE PAYMENTS RECEIVED BY THE RECIPIENTS ARE BELOW THE 5 ITA NOS. 1763 & 1770 TO 1772/H/12 THE DEPOT MANAGER, APSRTC, TIRUPATHI ================================= TAXABLE LIMIT, THEREFORE, NOT LIABLE FOR TDS DEDUCT ION. BEING SO, IN OUR CONSIDERED VIEW, THE CIT(A) IS JUS TIFIED IN DELETING THE DEMAND RAISED BY THE ASSESSING OFFI CER U/S 201(1) AND 201(1A) OF THE ACT AND THE ORDER OF THE CIT(A) IS HEREBY CONFIRMED. THE GROUNDS RAISED BY T HE REVENUE IN THIS REGARD, IN ALL THE APPEALS UNDER CONSIDERATION, ARE DISMISSED. 6. IN THE RESULT, ALL THE THREE APPEALS OF THE REVE NUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 5 TH SEPTEMBER, 2013 SD/- SD/- (ASHA VIJAYARAGHAVAN) JUDICIAL MEMBER (CHANDRA POOJARI) ACCOUNTANT MEMBER HYDERABAD, DATED 5 TH SEPTEMBER, 2013 KV COPY TO:- 1. ITO, TDS-2, W-3(6), GROUND FLOOR, AAYAKAR BHAVAN, TIRUPATHI - 517501 2. THE DEPOT MANAGER, APSRTC, TP AREA, TIRUPATHI 3. THE CIT (A), VIJAYAWADA 4. THE CIT(TDS), HYDERABAD 5. THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDERABAD.