Contact us   Feedback   Annual Subscription   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Extracts
Home List
← Previous Next →

2016 (7) TMI 519 - ITAT VISAKHAPATNAM

2016 (7) TMI 519 - ITAT VISAKHAPATNAM - TMI - TDS u/s 194C OR 194H - nature of contract - whether the contract between the assessee 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? - Held that:- The instant case consideration is paid in terms of remuneration payable to the personnel deployed in to the work plus service charge of 14% on t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

he 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, C.O. No.60/Vizag/2013 - Dated:- 10-6-2016 - SHRI V. DURGA RAO, JUDICIAL MEMBER AND SHR .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

eated 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 aegis of Central Government, develops National Highways on its own or Public Private Partnership and collects user fee from the users of National Highways. As such, the assessee established three Toll Plazas at Singarayakonda for collection of user fee and engaged the services of five agencies for collection of .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

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 entruste .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e collection and the consideration is paid in terms of total salary/wage paid to the number of personal deployed for the work plus 14% service charge on total salary paid to personal. It was further submitted that commission is carved out from the value of transaction, whereas in its case the consideration is paid in terms of salary/wages plus some percentage of service charge on the total salary paid to personnel, therefore it cannot be considered as commission within the meaning of sec. 194H o .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

contract under sec. 194C. The A.O. further held that the agents have been entrusted the work of Toll fees collection on behalf 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 circum .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

general provisions of laws under the contract Act and other enactments and has selectively chosen to analysis about the works contract and principle to principle argument and principle to agent argument to suit his convenience and left other important aspects of the agreement so as to come to the conclusion that it is a contract for agency and the impugned payments are covered under the provisions of sec. 194H of the Act. It was further submitted that it has engaged the services of agencies to p .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ry payable to the staff. Therefore, it is mere supply of labour for execution of work contract, but not a contract for agency so as to apply the provisions of sec. 194H of the Act. The CIT(A) after considering the submissions of the assessee, held that it is a simple contract having all the ingredients of works contract. The contract between the NHAI and the agencies is on principle to principle basis, but not on principle to agent basis. With these observation, held that the impugned payments a .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

nsport and Highways to carry out the development and maintenance of Highways across the country. The NHAI, under the aegis of Central Government, develops National Highways on its own or Public Private Partnership and collects user fee from the users of National Highways. As such, the assessee established three Toll Plazas at Singarayakonda for collection of user fee and engaged the services of five agencies for collection of Toll fees. The assessee has entered into agreement with the contractor .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ons of sec. 194C of the Act. The A.O. was of the 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. Accordingly, held assessee as an assessee in default under sec. 201(1) and 201(1A) of the Act and computed the short deducti .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ming 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 made on the basis of total wages/salary of staff employed plus 14% service charges on the total salary paid to staff employed for the wo .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

s business rules to provide services on contract basis through its personnel. The Collecting agency is liable to provide its services of Toll fees collection work under its own organizational structure and on deployment of personnel as per clause 11 of the agreement without binding on the NHAI for the said employees under clause 12 of the agreement. As per clause 17 of the agreement, a service charge of 14% shall be paid on total remuneration payable to the personnel deployed for the work. Norma .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version