TMI Blog1995 (5) TMI 7X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 194C which authorise the deduction of an amount towards income-tax from a contractor "for carrying out any work in pursuance of a contract" with the Government or any of the authorities, etc., mentioned in clauses (a) to (i) of sub-section (1) are not applicable in their cases. The petitioners question the validity of Circular No. 681 dated March 8, 1994 (only in so far as it applies to them) issued by the Central Board of Direct Taxes. They allege that the provisions of section 194C do not apply to "transport contracts" and that the directions to the contrary as issued through the impugned circular in spite of the clear stipulations contained in the circulars dated September 26, 1972, and March 20, 1973, are wholly illegal and withou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ask carried out by the petitioners to earn their livelihood. It is a duty performed by them in pursuance of a contract. It may not involve supply of labour for loading and unloading. Yet, the petitioners carry out the work of transporting goods from one place to another. Mr. Sawhney refers to the circular dated September 26, 1972 to point out that it is only where there was a composite contract involving transport as well as loading and unloading that income-tax could be deducted. However, in the case of a contract for mere transport of goods, the deduction was not permissible. It is true that in the aforesaid circular, a composite contract for transport of goods as well as supply of labour for loading and unloading has been described a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted Cement Co. Ltd. [1993] 201 ITR 435. The decision of the Supreme Court has been distinguished on the ground that the case "was limited to the applicability of section 194C to labour contracts" and that "the various circulars of the Central Board of Direct Taxes were not before the Supreme Court. It has also been held that "the word 'work' has been used as a noun in section 194C and not as a verb". Accordingly, it has been concluded that it has to be "understood in the limited sense as product or result". With utmos t respect, we are unable to accept the view taken by their Lordships. The end-product may be the "work" but the income derived by the contractor for "carrying out the work" is certainly covered by the provisions of section 194 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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