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TMI Blog2016 (7) TMI 519X X X X Extracts X X X X X X X X Extracts X X X X ..... for supply of labour for execution of work contract as defined under the provisions of sec. 194C, but not a contract of agency as defined under sec. 194H of the Act. As on perusal of the nature of work and contract between assessee and agencies, there is no element of contract in the nature of principle to agent so as to invoke the provisions of sec. 194H of the Act. It is merely a contract for supply of labour for execution of work contract as defined under sec. 194C, having all the ingredients of a contract of principle to principle basis. The assessee has rightly deducted TDS @ 2.266% under the provisions of sec. 194C of the Act. The CIT(A) has rightly deleted the additions. - Decided in favour of assessee - I.T.A.No.69/Vizag/2013, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e opinion that the contract between NHAI and the Agencies is a contract of agency and the agents are appointed as agents on behalf of NHAI to collect toll fee and hence, any payment made in pursuance of the said contract of agency partakes the nature of commission within the meaning of section 194H of the Income Tax Act, 1961. Therefore, issued a show cause notice and asked to explain why the assessee shall not be treated as assessee in default u/s 201(1) and 201(1A) of the Act. In response to show-cause notice, the assessee has filed a written submission dated 30-03-2011 and contends that the nature of work entrusted to contractors is a mere supply of labour for execution of work as defined under sec. 194C of the Act, accordingly the payme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alf of NHAI and paid service charges as per the agreement. There may be instance of commission is being paid as a percentage of value of the transaction, but it is not correct to say that commission should be calculated on the basis of fixed percentage on the value of contract and there is nothing wrong if the commission is paid on a different yardstick. The facts and circumstances of the instant case are found to be falling within the definition of commission as mentioned in section 194H. Therefore, held the assessee as an assessee in default under sec. 201(1) and 201(1A) of the Income Tax Act 1961 and computed the short deduction of tax and interest. 5. Aggrieved by the assessment order, the assessee preferred an appeal before CIT(A). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is on principle to principle basis, but not on principle to agent basis. With these observation, held that the impugned payments are covered under the provisions of sec. 194C, but not under the provisions of sec. 194H of the Income Tax Act, 1961. Aggrieved by the CIT(A), the Revenue is in appeal before us. 6. We have heard both the parties, perused the materials available on record and gone through the orders of the authorities below. The factual matrix of the case is that the assessee, National Highway Authority of India (NHAI) is an autonomous body created under the NHAI Act, 1988 under the Ministry of Shipping, Road Transport and Highways to carry out the development and maintenance of Highways across the country. The NHAI, under the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee and the agencies, is one for supply of manpower/labour for execution of works contract attracting TDS provisions of section 194C of the Act, or is the contract for agency attracting provisions of section 194H of the Act. According to the A.O., it is a contract for agency, therefore, the provisions of section 194H of the Act applies. The A.O. has given elaborate reasons for coming to the conclusion that the impugned payments are coming within the provisions of section 194H of the Act. It is the contention of the assessee that the contract entered into with agencies is for the purpose of Toll fee collection. The assessee further contended that the contractor needs to employ his own staff to carry out the work and the payment has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mere contract for supply of labour for execution of work contract as defined under the provisions of sec. 194C, but not a contract of agency as defined under sec. 194H of the Act. We further observed that on perusal of the nature of work and contract between assessee and agencies, there is no element of contract in the nature of principle to agent so as to invoke the provisions of sec. 194H of the Act. It is merely a contract for supply of labour for execution of work contract as defined under sec. 194C, having all the ingredients of a contract of principle to principle basis. The assessee has rightly deducted TDS @ 2.266% under the provisions of sec. 194C of the Act. The A.O. without appreciating the facts simply, held that the payments ar ..... X X X X Extracts X X X X X X X X Extracts X X X X
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