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2017 (5) TMI 417 - AT - Income TaxTDS u/s 194C - non deduction of tds on labour charges - whether the labourers are the employees of assessee or they are working in contractual capacity attracting the provisions of TDS? - Held that:- In the instant case we find that the labourers are working under the direct supervision of the assessee. They have no other separate business organization. They are representing the organization of the assessee. The payment was made to individual labourers and not to the labour contractor. Therefore the individual labourers can be treated as employee of the assessee. Thus in our considered view there exists an employer and employee relationship between the assessee 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.
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