Provissio of sec 194C do not apply to the payment to CDLB

Court :
INCOME TAX APPELLATE TRIBUNAL

Brief :
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 did take note of the assessee’s explanation that as CDLB is a government body, and, therefore, no tax is required to be deducted from the payments to CDLB. He, however, rejected the said explanation by stating that “…it has been observed in the case of Vishakhapatnam Dock Labour Board that no deduction certificate has been issued to them by the income tax department and same was produced to the different parties for no deduction of tax” and, “thus, in my opinion, if Vishakhapatnam Dock Labour Board treats itself as a non government body, then Calcutta Dock Labour Board is also a non government body, and, as such, contention of the assessee is not acceptable”. The Assessing Officer then proceeded to observe as follows: “Calcutta Dock Labour Board’s main function is to provide labour to stevedores. Hence, it is required to deduct TDS u/s 194 C, if any payment is made to Calcutta Dock Labour Board. If assessee failed to deduct TDS, then section 40(a)(ia) will be applicable. In the instant case, assessee had not deducted any TDS from payment to Calcutta Dock Labour Board. As a result, amount paid to Calcutta Dock Labour Board is disallowed under section 40(a)(ia) of the Act, and added to the income of the assessee”

Citation :
Deputy Commissioner of Income Tax Circle 9, Kolkata ………………….Appellant Vs. Kamal Mukherjee & Co (Shipping) Pvt Ltd 8/1 Loudon Street, 1st floor Kolkata 700 001 [ PAN :AABCK0867D]…………….…Respondent