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TMI Blog2017 (5) TMI 417X X X X Extracts X X X X X X X X Extracts X X X X ..... essee and labourers. The payment to the employees can be in the form of fixed salary plus incentive commission as mutually agreed. Similarly the payment of PF and ESI by the employer cannot be the basis of deciding whether there exist employer and employee relationship. For the applicability of PF and ESI there are certain conditions attached to an organization. The character of the relationship of the employer and employee cannot be changed on the basis whether an organization is registered under PF and ESI. Thus we hold that the assessee is not liable for TDS deduction under section 194C of the Act. The assessee gets the relief accordingly. - ITA No. 237/Kol /2014 - - - Dated:- 3-5-2017 - Shri Waseem Ahmed, Accountant Member And Sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s), having accepted that the sum of ₹ 80,19,210 representing daily wags paid to labour cannot be equated to payments made to contractors, erred in confirming the disallowance of the same made by Assessing Officer u/s. 40(a)(ia) of the Act. 4) That the Ld. Commissioner of Income Tax (Appeals) was not justified in confirming the disallowance of wages of ₹ 80,19,210 paid to daily workers employed by the Appellant, relying on the provisions of sec. 40(a)(ia) of the Act on the ground of alleged shortcomings in maintenance of wage register although the provisions of sec. 40(a)(ia) are applicable for failure to deduct tax and/or payment of the tax deducted at source in accordance with the provisions of Chapter XVII B of the Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in support of his claim also filed a monthly list of payments made to the labour and also produced the labour register. A remand report was called for from the AO wherein it was submitted that the wage register has been prepared after-thought and it did not contain the address of the labourers and details of work location. However, Ld. CIT(A) observed certain defects in the labour register produced by assessee and accordingly he rejected the contention of assessee by observing as under:- The claim of the assessee is not convincing. The assessee admits the apparent flaw but claims that it was by inadvertence. The assessee has not explained as to how a single serially numbered list of labour is enumerated in the computerized Register of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s it is held that in principle the Assessing Officer was justified in holding that section 40(a)(ia) of the Act was applicable to the assessee in respect of the labour payments and the Revised Ground No.1 is dismissed. Being aggrieved by this order of Ld. CIT(A) assessee came in second appeal before us. 6. Ld. AR for the assessee before us filed paper book which is running pages from 1 to 91 and submitted that all the labourers are employee of assessee and in none of the case payment is exceeding the limit to attract the provision of TDS. Ld AR drew our attention on the labour register which is placed on pages 27 to 91 of the paper book. On the other hand, Ld. DR heavily relied on the order of Authorities Below. 7. We have he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment to the employees can be in the form of fixed salary plus incentive commission as mutually agreed. Similarly the payment of PF and ESI by the employer cannot be the basis of deciding whether there exist employer and employee relationship. For the applicability of PF and ESI there are certain conditions attached to an organization. The character of the relationship of the employer and employee cannot be changed on the basis whether an organization is registered under PF and ESI. In this connection we also rely in the order of Hon ble Tribunal of Delhi in the case of St. Stephen s Hospital Vs. DCIT reported in 6 SOT 60 wherein it was held as under : A careful perusal of the said appointment letters showed that out of the 18 con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ra 16] There was an employer-employee relationship between the assessee and the consultant doctors and, consequently, remuneration paid to them was chargeable to tax under the head Salaries . The said payments, thus, were subject to deduction of tax as per provisions of section 192 and not as per provisions of section 194J. Thus, the Assessing Officer was fully justified in treating the assessee as in default for short deduction of tax at source from the payments made to the consultant doctors. [Para 17] The assessee s appeal was, accordingly, dismissed. In the light of above reasoning, we hold that the assessee is not liable for TDS deduction under section 194C of the Act. The assessee gets the relief accordingly. Hence, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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