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TMI Blog2024 (4) TMI 357X X X X Extracts X X X X X X X X Extracts X X X X ..... regard to payment of wages by the appellant/assessee to the dock workers through the Administrative Committee/Board. There is no contract of supply of labour between the Board/Administrative Committee and the appellant/assessee i.e., the registered employer. The appellant/assessee was not liable to deduct tax at source u/s 194C while making payment of wages to its employees i.e. the dock workers through the Administrative Committee/Board constituted under the Act, 1948 read with Regulation Scheme, 1970. Consequently, the provisions of Section 40(a)(ia) of the Act, 1961 would also not come into play. The impugned order of the Tribunal deserves to be set aside. Decided in favour of assessee. - HON BLE JUSTICE SURYA PRAKASH KESARWANI AND HON BLE JUSTICE RAJARSHI BHARADWAJ Appearance: For the Appellant : Dr. Samir Chakraborty, Senior Advocate Mr. Abhijit Biswas, Advocate Mr. Bhaskar Sengupta, Advocate. For the Respondent : Mr. Soumen Bhattacharjee, Advocate Mr. Ankan Das, Advocate Ms. Doyel Dey, Advocate. 1. Heard Dr. Samir Chakraborty, learned senior advocate assisted by Sri Abhijit Biswas and Sri Bhaskar Sengupta, learned counsel for the appellant assessee and Sri Soumen Bhattacha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Act 1961 but it failed to do so, therefore, Section 40(a)(ia) of the Act 1961 will be applicable. Consequently, he disallowed the aforesaid a sum of Rs. 2,22,58,795/- for the assessment year 2006-07 and Rs. 1,56,31,495/- for the assessment year 2007-08 representing the deposits made by the appellant assessee to the Board without deduction of tax at source under Section 194C. Thus, the amounts so disallowed became part of the total income of the appellant assessee and accordingly it was subjected to tax. 5. Aggrieved with the aforesaid assessment orders, the appellant assessee filed separate appeals against the assessment orders for the above-noted assessment years before the Commissioner of Income Tax (Appeals) which both were allowed. Aggrieved with the orders of the CIT(A), the revenue filed ITA No. 199/Kol/2010 [assessment year 2006-07] and ITA No. 1545/Kol/2010 [assessment year 2007-08] which both were allowed and the orders of the CIT(A) were set aside by the Tribunal returning a specific finding that the payments made by the appellant assessee to the Board were for supply of labour and thus Section 194C of the Act 1961 is clearly attracted. However, However, by the afor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the dock workers towards wages have been made by the appellant through the Board because of statutory requirement. He submits that the orders passed by the ITAT which are impugned in both the above-noted appeals deserve to be set aside and both the present appeals deserve to be allowed. 8. Learned Counsel for the respondent has supported the impugned orders of the ITAT. Discussion and findings 9. We have heard and carefully considered the submissions of learned counsels for the parties, perused the paper book and the provisions of the Act 1948, Regulation Scheme 1970, Section 194C of the Act 1961 and the judgments relied upon by the learned Counsel for the appellant/assessee. 10. It is undisputed that the appellant/assessee is a registered employer under the Act 1948 read with the Regulation Scheme 1970. It is also undisputed that the allocation of dock workers to the appellant/assessee is made by the Board in terms of the provisions of the Act 1948 read with Regulation Scheme 1970. The main point of controversy involved in the present two appeals is as to whether the Board is a supplier of dock workers to the appellant/assessee and consequently, the payments made by the appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mployment/of dock workers to whom the scheme does not apply and the employment of dock workers by employers to whom the scheme does not apply: (ii) for creating such fund or funds as may be necessary or expedient for the purposes of the scheme and for the administration of such fund or funds: Note : Every fund created or purporting to have been created and every provisions with respect thereto made or purporting to have been made under the principal Act before the commencement of this Act shall, for all purposes, be deemed to be, and to have always been, as validity and effectively created or made as if the provisions of section 3 of the principal Act, as amended by this Act, had been in force at all material times and accordingly, notwithstanding any Judgment, decree or order of any court. - (a) all contributions to any such fund received or collected before the commencement of this Act shall be deemed to be and shall be deemed always to have been as validly received or collected as if the provisions of section 3 of the principal Act, as amended by this Act were in force at all material times; (c) recoveries shall be made of all contributions to any such funds which have not been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s report within time bound period and to lay it before each House of Parliament. Section 6 provides for appointment of inspectors for the purposes of the Act. Section 6A provides for power to order inquiry to investigate or enquire into working of a Board. Section 6B provides for power to supersede a Board. Section 6C provides for circumstances in which acts or processing of the Board and Advisory Committee shall not be invalidated. Section 8 provides for power to make rules. Section 9 is the saving clause. The Regulation Scheme 1970 has been framed by the Government of India in exercise of powers conferred under the Act 1948 and more particularly Section 3 thereof which has been reproduced above. 13. The object of the Act as well as the provisions of the Act and more particularly those aforenoted leaves no manner of doubt that the Act 1948 provides for regulation of employment of dock workers. 14. The Regulation Scheme 1970 has been enacted with the object of greater regularity of employment of dock workers by maintaining adequate number of dock workers and achievement of efficiency of performance in dock work and attainment of satisfactory levels of productivity by the dock work ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lause (2) of Clause 20, a registered employer shall not employ a worker other than a dock worker who has been allocated to him by the Administrative Body in accordance with the provisions of item (g) of Clause 12. (3) A registered employer shall in accordance with the arrangement made by the Administrative Body submit all available information of his current and future labour requirements. (4) A registered employer shall lodge with the Administrative Body unless otherwise directed, particular of the tonnage handled by worker on piece-rate and such other statistical data as may be required in respect of the registered dock workers engaged by him. (5) (i) A registered employer shall pay to the Administrative Body in such manner and at such times as the Board may direct the levy payable under Sub-Clause (1) of Clause 56 and the gross wages due to pool workers; (ii) A registered employer shall make payments as contributions to the Dock Workers Welfare Fund under Clause 59; (iii) A registered employer shall pay to the Board the monthly Provident Fund subscriptions recovered form the wages of the workers and the contribution by the registered employers thereon, repayment of Provident Fun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shall obtain, if possible, the prior approval of the Chairman to the employment of such workers and where this is not possible, shall report to the Chairman within 24 hours the full circumstances under which such workers were employed and the Chairman shall duly inform the Board of such employment at its next meeting : (b) In the case referred to in Item (a), the person so employed as aforesaid by a registered employer shall, for the purposes of Sub-clauses (4), (5) and (6) or Clause 41 and Clauses 44 and 45 be treated In respect of that dock worker as if he was a dally worker. (3) A registered worker in the reserve pool may provided he fulfils fully his obligations under Clause 40, take up occasional employment under employers other than those registered under the Scheme on those days on which he is not allocated for work by the Administrative Body. 45. Wages, Allowance and other conditions of Service of Workers in categories in Schedule-I (1) Unless otherwise specifically provided for in the Scheme, it shall be an implied condition of the contract between a registered dock worker in the categories in Schedule-I and a registered employer that the rates of wages, allowances and ov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ayable by way of such levy shall not be less than such amount as the Board may fix at the minimum payable by every registered employer. Provided that, where wages are payable to workers at an interval of less than a month, the Board may at its discretion allow the amounts, other than gross wages, payable under this sub-clause to be paid monthly by such time as the Board may prescribe in this behalf. (2) In determining what payments are to be made by registered employers under Sub-clause (1), the Board may fix different rates of levy for different categories of work or workers, provided that the levy shall be so fixed that the same rate of levy will apply to all dock employers who are in the like circumstances. (3) The Board shall not sanction any levy exceeding hundred per cent of the estimated total wage bill calculated on the basis of the dally time rate wage and allowances without the prior approval of the Central Government. (4) A registered employer shall on-demand make a payment to the Board by way of deposit, or provide such other security for the due payment of the amount referred to in sub-clause (1), as the Board may consider necessary. (5) The Administrative Body shall f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of dock workers is between a registered employer and the registered dock workers. It is statutory obligation incorporated under the contract that the registered employer has to pay wages etc. to the dock workers by remitting the amount to the administrative body for disbursement of his (employer s) own dock workers/employees. Thus, neither the Board nor its administrative committee supplies any dock workers to the registered employer but it is as per the Act and the Regulation so as to protect the interest of the dock workers and employer that the registered employer furnishes his requirement and the administrative committee allocates from amongst registered dock workers to a particular registered employer and they become employee on such terms and conditions as have been stipulated in the Regulation Scheme, 1970. Therefore, the findings recorded by the ITAT in paragraphs 8, 9 and 10 of the impugned order, is patently incorrect, perverse and contrary to the provisions of the Act, 1948 and the Regulation Scheme 1970. Consequently, the finding deserves to be set aside. 18. The dock works employed by the appellant/assessee are his employees as per scheme of the Act and Regulation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the terms of the agreement set out in that document. Such an agreement has to be lawful as the definition of contract, as set out in Section 2(1) provides that an agreement enforceable by law is a contract . Section 2(g) sets out that an agreement not enforceable by law is said to be void . 21. Applying the principles as laid down by Hon ble Supreme Court, as aforenoted, as well as specific provisions of the Act, 1948 and the Regulation Scheme, 1970, we are of the firm view that the contract of employment is between the appellant and the dock workers and not between the appellant and the Board. The Board has merely discharged its statutory obligation with regard to regulation of dock workers. 22. For all the reasons afore-stated, we find that Section 194C of the Act, 1961 has no application on facts of the present case with regard to payment of wages by the appellant/assessee to the dock workers through the Administrative Committee/Board. There is no contract of supply of labour between the Board/Administrative Committee and the appellant/assessee i.e., the registered employer. The appellant/assessee was not liable to deduct tax at source under Section 194C while making payment of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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